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Corporation. USDA has always provided regulatory procedures Involving 

 credit risk assessments to protect the sanctity of the credit 

 guarantee and direct credit programs that were operational. 



What changed In 1990 was that tight statutory requirements on both .^ 

 credit risk and foreign policy restrictions substantially reduced 

 USOA's flexibility In Interpreting and Implementing Its program 

 mandates . 



What seems to have occurred under the 1990 law Is that specific 

 accountability Issues were viewed as more critical to U.S. agriculture 

 than the overriding objective of expanding U.S. farm exports In this 

 case to countries that do not require long-term, deeply concessional 

 food aid, but still require back-up support In securing financing for 

 Imports on competitive conanerclal terms. 



We must consider the effect of the 1990 language on the 

 competitiveness and responsiveness of our programs to market 

 development and market maintenance objectives? 



First and foremost, the very reason for export credit guarantee 

 authority Is to expand markets for U.S. farm products by assisting 

 countries which are higher risk borrowers to buy our products on 

 commercial terms. 



Second, credit wforthiness and credit risk management must be a 

 cornerstone of our policy. The risks inherent In this business must, 

 however, be evaluated both in the context of the potential costs to 

 the U.S. Treasury versus the benefits of moving our products to 

 market, and in the context of meeting the competition. Certainly, the 

 assets of the CCC will deteriorate significantly if we do not move 

 exports and end up with mounting commodity program outlays and 

 stocks. 



Third, speaking as a taxpayer, the fiduciary responsibility of the 

 U.S. Government In operating a wide range of programs to move U.S. 

 farm exports — from deeply concessional aid or outright grant programs 

 to commercial credit guarantees — must be focused on expanding exports 

 at the lowest cost to the taxpayer. Credit guarantees are far onre 

 cost-effective than concessional aid programs. 



This Issue of "credit worthiness" clearly presents a real dilemma at 

 present as USDA seeks to address the problem of an export program for 

 Russia and for other FSU states. 



Until Russia becomes current In Its GSM 102 account. It remains 

 Ineligible to receive further credit guarantees. If It does bring Its 

 arrears current, what program or programs are then appropriate? Do we 

 need a new program? 



I believe that we have the full authority within our wide-spanning mix 

 of programs already mandated to handle Russia's needs and our own 

 Interest. 



