H.R. 4152 - Senate Amendment: To provide for the costs of loan guarantees for Ukraine

H.R. 4152

To provide for the costs of loan guarantees for Ukraine

Sponsor
Rep. Hal Rogers

Date
April 1, 2014 (113th Congress, 2nd Session)

Staff Contact
Communications

Floor Situation

On Tuesday, April 1, 2014, the House will consider the Senate Amendment to H.R. 4152, a bill to provide for the costs of loan guarantees for Ukraine, under a suspension of the rules.  The bill was introduced on March 5, 2014 by Representative Hal Rogers, Chairman of House Committee on Appropriations.  It passed the House by a vote of 385-23 (See Roll Call #114).  The bill was received in the Senate, where it passed with an amendment, by voice vote on March 27, 2014.

Bill Summary

H.R. 4152 modifies previous appropriations to allow Ukraine to be eligible for U.S.-backed loan guarantees.  The Senate-passed substitute text authorizes the State Department to provide funds for loan guarantees for Ukraine using existing appropriated funds.  This language is identical to the House-passed version of H.R 4152.  Furthermore, this legislation authorizes $100 million over FY2015-2017 for security assistance to Ukraine and $50 million in FY2015 for democracy and civil assistance for Ukraine.

This legislation also imposes mandatory sanctions, including asset freezes and visa bans on: 1) persons engaged in violence or human rights abuses in Ukraine; 2) persons engaged in activities that undermine the sovereignty and territorial integrity of Ukraine; and 3) Russian officials and their associates involved in significant corruption in Ukraine.  Finally, the Senate amendment provides for the additional imposition of sanctions upon Russian officials and their associates that are responsible for, or involved in significant corruption in Russia.

Background

On February 22, 2014, former President Viktor Yanukovych fled Kiev as a result of protracted conflicts between antigovernment protestors and Ukrainian security forces in which up to 100 people were killed.[1]  The origin of the conflicts can be traced to the former President’s decision to suspend plans to sign an Association Agreement (AA) with the European Union (EU), which would have included a free trade zone, in favor of economic support from Russia.[2]  An interim government was installed and a presidential election is scheduled to be held on May 25th, 2014.[3]  On March 21, 2014, Ukraine’s interim government and the EU signed portions of the AA dealing with political issues.[4]  Portions of the AA dealing with economic issues are expected to be signed once the new Ukrainian President takes office.[5]

Subsequent to Yanukovych’s departure, Russia condemned Ukraine’s new interim government as illegitimate and dispatched Russian Federation forces to seize the Crimea peninsula in Ukraine’s southern region.[6]  Crimea’s Parliament held a referendum on Crimea’s future on March 16, 2014 that “was allegedly approved by 96.77% of those voting, with a turnout of 83.1%.”  On March 18, 2014, Russia officially annexed Crimea.[7]  Ukraine, the United States, the E.U., and other countries denounced the vote as illegal and criticized Russia’s actions as a violation of Ukraine’s sovereignty and international law.[8]

Loan guarantees leverage the United States’ assistance to a country and have been previously provided to Israel, Egypt, Jordan and Tunisia.  Loan guarantees consist of guarantees for the repayment of part or all of the principal and interest of a country’s sovereign borrowing. The United States’ guarantee reduces the riskiness of the underlying asset to lenders and reduces the borrowing cost to Ukraine. The loan guarantee to Ukraine would be packaged with significant assistance focusing on four key areas: implementing critical economic reforms and mitigating their impact on vulnerable Ukrainians; conducting free, fair and inclusive elections, including the media and independent civil society; combating corruption and recovering stolen assets; and withstanding politically-motivated trade actions by Russia.   The loan guarantee would be in concert with international efforts to support Ukraine which include a $14-18 billion loan from the IMF, $2.2 billion in grants and $15 billion in loans from the European Union and $1.4 billion annually from the European Bank for Reconstruction and Development.



[1] Steven Woehrel, Ukraine: Current Issues and U.S. Policy, Congressional Research Service (Mar. 24, 2014) at 1-2.

[2] Id.

[3] Id. at 4.

[4] Id. at 5.

[5] Id.

[6] Id. at 4.

[7] Id.

[8] Id.

Cost

While a formal CBO score is currently unavailable, the loan guarantee language is identical to the House-passed version of H.R 4152.  In addition, the bill authorizes discretionary appropriations of $100 million over FY2015-2017 for security assistance to Ukraine and $50 million in FY2015 for democracy and civil assistance for Ukraine.

Additional Information

For questions or further information contact the GOP Conference at 5-5107.