46 



My bill gives the President the authority to achieve these goals. Under it, he 

 may write-down outstanding USDA debt under agreements with the Russians, or 

 other states of the former Soviet Union, if they agree: to dismantle military 

 facilities, to convert military facilities to peaceful uses, to permit US businesses to 

 enter into commercial joint ventures with state-owned enterprises, or for other 

 reasons the President determines in the US national interest. 



The President may extend additional export loans and release previously 

 approved credits to make new sales once a state enters into debt reduction 

 agreement. He may also donate surplus commodities to those states and provide 

 technical assistance to achieve the terms of the agreements. 



The legislation is based on a practice common in the private sector. Debt for 

 equity swaps are frequently used to help debtors restructure their affairs. What I am 

 proposing has a precedent in the public sector. Western creditors wrote-down Latin 

 American debt in return for programs those governments initiated for such things as 

 preventing environmental degradation. 



The US needs to act now to restart food shipments to the Russian population 

 to meet their needs and so the American agricultural economy does not become 

 weaker. These steps need to be taken now. We would be foolhardy simply to wait, 

 doing nothing but hoping for the Russian economy to improve enough, on its own, 

 to permit Moscow to become current on the debt it owes us. 



As pressing as the immediate problems in Russia are, we must also be 

 cognizant of the long term. Whatever we do, we need to provide assistance which 

 will yield long term results in the US interest, such as dismantling of the Russian 

 military and opening of its economy to US investment. 



To those who will criticize my proposal because it will relieve the Russians of 

 some of their repayment obligation, I would point out that even if the loans are not 

 repaid or can not be repaid, for whatever reason, this legislation will make sure the 

 US gets something in return. Instead of simply writing off the loans as uncollectible, 

 this legislation establishes a quid pro quo for the benefit of both sides. 



Let me acknowledge that this legislation will have a cost, dependent on the 

 amount of debt forgiven. I know that will concern you, Mr. Chairman, as it should. 

 But, those costs are minuscule compared to the costs we have spent winning the Cold 

 War and to the costs we might face if the Russian reform process fails. 



In closing, I believe we need to be both bold and imaginative in meeting the 

 challenge before us. I think this proposal offers a creative and constructive 

 component to solving the problem. I am attaching to my statement an explanation 

 of the legislation as well as an article I wrote about it. I appreciate your 

 consideration of .the idea and for the time to testify before you. 



(Attachments follow:) 



