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This differentiation would not make Intermediate programs less 

 "comnercial'. If they are operated on coaanerclal ly acceptable market 

 terms. Here. I would note that 7-10 year commercial loans are 

 currently granted, with grace periods on principal, or balloon 

 payments of principal In out-years. Moreover, even If there Is a 

 grace on principal. Russia would still need to maintain annual and 

 semi-annual Interest payments at commercial rates and on commercial 

 terms. These terms would not damage the commercial viability of the 

 program, nor would it subject these credit guarantees to cargo 

 preference. 



A Cost; Benefit View of Export Credit Guarantees 



The record Is clear: Export credit guarantees, where applicable to 

 assist farm exports, provide the lowest cost and highest return to the 

 U.S. economy. 



Where Russia Is concerned, or any other buyer, the overall approach of 

 Congress to responsible operation of the GSU Export Credit Guarantee 

 Programs Is the issue at stake. USDA has operated the program very 

 responsibly since its inception. The proof is In the results. 



The USDA. between 1979 and 30 September 1992. authorized guarantees 

 for $43 billion in U.S. farm commodities under the GSM programs. Of 

 the $43 billion in export sales. $35.5 billion of those credits had 

 come due by September. 1992. of which USOA had to pay claims on $4.2 

 billion in principal, or 12.5 percent of the total. Close to 30 

 percent of that $4.2 billion In claims paid by the U.S.. or $1.2 

 billion were paid on Iraq GSM. We would note here that Iraq's failure 

 to repay was not a credit problem, but a state of war; Iraq was 

 current on its GSM payments until the Gulf War. 



Given the fact that the U.S. Government has only had to pay claims out 

 12 percent on a total $43 billion of exported coomod I t I es doesn't 

 appear to us to be a bad record, particularly since the GSM programs 

 are directed to countries that have high credit risk. Even when 

 claims are paid, those monies should eventually be recovered by the 

 U.S. Government. 



So, I would argue that this has not been undue cost or risk to be 

 borne by the U.S. taxpayer, in fact. It could be one of the biggest 

 bargains taxpayers have received for their tax dollars, because every 

 $1 billion in agricultural exports creates around 20,000 Jobs and 

 every $1 in farm exports adds $1.40 In additional economic activity. 

 Looking at the cost:beneflt ratio in another way. every dollar in 

 exports not only creates Jobs, but saves in government farm program 

 spending. Those exports would not have occurred without the program 

 guarantees, or without a far more costly concessional food aid program 

 which would have required direct appropriations and resulted in lower 

 repayment rates. 



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