Pub. L. 88-633, pt. II, ch. 2, sec. 201

Sec. 201. Chapter 2 of part II of the Foreign Assistance Act of 1961, as amended, which relates to military assistance, is amended as follows: (a) Amend section 503, which relates to general authority, as follows: (1) In subsection (c) strike out “and” at the end thereof and in subsection (d) strike out the period at the end thereof and substitute “; and”. (2) Add the following new subsection (e): “(e) guarantying, insuring, coinsuring, and reinsuring any individual, corporation, partnership, or other association doing business in the United States against political and credit risks of nonpayment arising in connection with credit sales financed by such individual, corporation, partnership or other association for defense articles and defense services procured in the United States by such friendly country or international organization.” (b) Amend section 504(a), which relates to authorization, by striking out “1964” and “$1,000,000,000” and substituting “1965” and “$1,055,000,000”, respectively, and by adding at the end thereof the following new sentence: “Of the funds made available for the fiscal year 1965 to carry out the purposes of this part, not less than $200,000,000 shall be available solely for use in Vietnam, unless the President determines otherwise and promptly reports such determination to the Committees on Foreign Relations and Appropriations of the Senate and to the Speaker of the House of Representatives.”. (c) Amend section 507(b), which relates to sales, by inserting after “are due” at the end of the first sentence the following: “: Provided, That the President may, when he determines it. to be in the national interest, accept a dependable undertaking to make full payment within one hundred and twenty days after delivery of the defense articles, or the rendering of the defense services, and appropriations available to the Department of Defense may be used to meet the payments required by the contracts and shall be reimbursed by the amounts subsequently received from the country or international organization”. (d) Amend section 509, which relates to exchanges, as follows: (1) The section heading is amended to read as follows: “Exchanges and Guaranties”. (2) After the section heading insert “(a)”. (3) Add the following new subsection (b): “(b) In issuing guaranties, insurance, coinsurance, and reinsurance, the President may enter into contracts with exporters, insurance companies, financial institutions, or others, or groups thereof, and where appropriate may employ any of the same to act as agent in the issuance and servicing of such guaranties, insurance, coinsurance, and reinsurance, and the adjustment of claims arising thereunder. Fees and premiums shall be charged in connection with contracts of guaranty, insurance, coinsurance, and reinsurance. Obligations shall be recorded against the funds available for credit sales under this part in an amount not less than 25 per centum of the contractual liability related to any guaranty, insurance, coinsurance, and reinsurance issued pursuant to this part and the funds so obligated together with fees and premiums shall constitute a single reserve for the payment of claims under such contracts. Any guaranties, insurance, coinsur-78 Stat. 1012ance, and reinsurance issued pursuant to this part shall be considered contingent obligations backed by the full faith and credit of the United States of America.” (e) Section 510(a), which relates to special authority, is amended by striking out “1964” in the first and second sentences thereof and substituting “1965”. (f) Section 512, which relates to restrictions on military aid to Africa, is amended by striking out “1964” and substituting “1965”. (g) Add the following new section at the end thereof: “Sec. 513. Certification of Recipient’s Capability.— (a) Except as provided in subsection (b) of this section, no defense article having a value in excess of $100,000 shall hereafter be furnished to any country or international organization under the authority of this Act (except under the authority of section 507) unless the chief of the appropriate military assistance advisory group representing the United States with respect to defense articles used by such country or international organization or the head of any other group representing the United States with respect to defense articles used by such country or international organization has certified in writing within six months prior to delivery that the country or international organization has the capability to utilize effectively such article in carrying out the purposes of this part. “(b) Defense articles included in approved military assistance programs may be furnished to any country or international organization for which the certification required by subsection (a) of this section cannot, be made when determined necessary and specifically approved in advance by the Secretary of State (or, upon appropriate delegation of authority by an Under Secretary or Assistant Secretary of State) and the Secretary of Defense (or, upon appropriate delegation of authority by the Deputy Secretary or an Assistant Secretary of Defense). The Secretary of State, or his delegate, shall make a complete report to the Speaker of the House of Representatives and to the Committee on Foreign Relations and the Committee on Appropriations of the Senate of each such determination and approval and the reasons therefor.”