THE BUSH ADMINISTRATION CONTINUES TO SUPPORT INTERNATIONAL LOANS TO SYRIA

(Washington, D.C.): On 9 July 1992,
the Center for Security Policy revealed
that the Bush Administration has been
playing fast and loose with the law
regarding World Bank efforts to release
new loans to the Syrian regime.
Apparently unchastened by congressional
and press reaction to that revelation,
the Administration is evidently pressing
ahead with yet another scheme at variance
with U.S. statute.

The World Bank Scam

In a Decision Brief entitled,
“Bush-Baker Open a New
Personal Diplomacy Slush Fund: World Bank
To Be For Syria What C.C.C. Was For Iraq,
USSR,” ( href=”index.jsp?section=papers&code=92-D_76″>No.92-D 76), the
Center reported that the Administration
was failing to comply with Section 555 of
the FY1990 Foreign Appropriations Act
(Public Law 101-513) which requires
U.S. representatives to international
development institutions to vote against
loans to any country on the State
Department’s terrorism list.
Syria — as a leading state sponsor of
international terrorist activities —
continues to be on that list.

Notwithstanding this statutory
requirement, the Bush Administration
actively supported: a freeze on
Syria’s four-year old $360-plus million
in debt held by the World Bank; a
collaborative effort with the Syrian
government to induce the Gulf states to
loan Damascus sufficient funds to
liquidate its debt and arrearages to the
Bank; this step, in turn, would permit
Syria once again to be able to regain
access to new World Bank credit flows. As
the World Bank imprimatur serves as the
equivalent of a “Good Housekeeping
Seal of Approval” for the world
financial community, the
institution’s renewed lending would
inevitably have a powerful multiplier
effect in garnering additional
multilateral, bilateral and private
sector credit flows.

Reprise at IFAD

The Center for Security Policy has now
learned that on 9 September, the U.S.
representative to the International Fund
for Agricultural Development (IFAD) was
not instructed to vote against a plan to
provide Syria with an $18 million
IFAD loan for a “Southern
Agricultural Regional Development
Project.” Rather than take a clear
stance against the loan — as it is
required to do by law — the
Administration simply abstained.

IFAD is a special international
development agency of the United Nations,
independently funded by all of the
countries that are members of the U.N.
Its mandate is to provide loans for
relatively small agricultural projects. In
1991, the United States contributed $82.9
million to IFAD’s three-year
replenishment fund, representing between
16-17% of that budget.

The loan which was approved at the
September IFAD Board meeting in Rome
features very generous terms: It is made
for 20 years with a five-year grace
period and a below-market interest rate
of just 4% per annum. Thanks to
consortium underwriting of the project,
including the Arab Fund for Economic and
Social Development (which has
administrative oversight over the loans)
and the United Nations Development
Program (UNDP), contributions bring the
loan total to $31 million.
The Syrian government will also
contribute $11.3 million bringing the
total cost of the project to $42.3
million.

The U.S. Helps Syria Get
Its Loan

As IFAD is an international
development agency, one could be forgiven
for assuming that the United States would
be obliged, pursuant to Section 555, to
vote “No” on the Syrian loan
proposal. Administration lawyers,
however, claimed otherwise. Their
rationale was that, because IFAD
is not mentioned by name in Section 555,
a “No” vote is not required.
Incredibly, they contend that the U.S.
could legally have voted for the
Syrian project; the fact that the
Administration chose instead to abstain
is an indication of its willingness to
go-the-extra-mile in keeping with the
spirit of the law.

This claim is specious on its face. The
law was not designed to single out by
name every international development
agency to which its strictures apply.
What is more, the contention that the
Bush Administration was acting in
accordance with the spirit of
Section 555 even as it violated the
letter is belied by its
representative’s actions at the IFAD
Board meeting.

Sources at the United Nations have
told the Center for Security Policy that the
U.S. representative to the International
Fund for Agricultural Development played
an important role in securing IFAD
approval of the Syrian loan by being
“very supportive” of the
project. Far from “working
against” such assistance to a state
sponsor of terrorism, the Bush
Administration offered no criticism
whatsoever of the plan and took no
actions to stop it from going through.
Had the United States been determined to
oppose the loan, the sources stated, it
could have created serious difficulties
for the project.

The Bottom Line

The Center for Security Policy
believes that the Administration has
violated both the letter and spirit of
the law. Regrettably, this relatively
minor infraction is just one of a number
of examples where the Bush Administration
has acted in a manner inconsistent with
U.S. statute and/or interests in order to
aid Syria’s despotic regime.

If Congress is serious about thwarting
American assistance to states on the
terrorism list, it must hold the
executive branch accountable for its
refusal to conform to the law banning the
use of taxpayer-supported international
development organizations for this
purpose. Hearings should be promptly held
to examine this behavior and, if deemed
necessary, to prepare legislative changes
that would strengthen the law and ensure
that it is properly enforced.

– 30 –

1. This is the
sixth in a series of Center for Security
Policy Decision Briefs on the
Bush Administration’s misbegotten and
potentially recklessly dangerous policy
toward Hafez Assad’s Syria.