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1 1 (Updated January 26, 1998)

handle is hein.crs/crsaanz0001 and id is 1 raw text is: 97-948 F Updated January 26, 1998 CRS Report for Congress Received through the CRS Web Defense Export Loan Guarantee Program (DELG) Richard F. Grimmett Specialist in National Defense Foreign Affairs and National Defense Summary This report provides an overview of the Defense Export Loan Guarantee Program (DELG) which became operational on November 8, 1996. It discusses the major features of the program, which is aimed at assisting prospective foreign purchasers of U.S. defense equipment finance those purchases through private sector loans. This report will be revised only as notable events relating to the program warrant. Introduction The Defense Export Loan Guarantee (DELG) program originated with Section 3201 of P.L. 104-106, the National Defense Authorization Act for Fiscal Year 1996. This provision of law directed the Secretary of Defense to establish a loan guarantee program for the sale or long-term lease of defense articles and services. Circumstances that gave rise to the DELG program were concerns by U.S. weapons producers that they were at a competitive disadvantage in marketing their products internationally. Representatives of the U.S. defense industry argued that having a U.S. loan guarantee program that could induce private lending institutions to make loans to less-wealthy nations for purchases of armaments would enhance the ability of American companies to compete effectively for prospective weapons contracts abroad. Critics of such a loan program argued that the United States should not expend funds to help underwrite loans for weapons purchases by developing nations that already lacked sufficient resources to pay for major domestic social services. Other critics of this loan program argued that the United States should not provide loan guarantees to nations that were poor credit risks and might default on the loans underwritten by the United States. The DELG program that was enacted is a legislative amalgam that reflects the wishes of those who wished to create a new defense loan program to support U.S. defense exports, but also is structured in such a way to address the policy and fiscal concerns of those in Congress critical of the program and its purposes. On November 8, 1996, the Defense Department implemented P. L. 104-106 by publishing in the Federal Register the basic framework and elements of this new Congressional Research Service ** The Library of Congress

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