To amend the Foreign Assistance Act of 1961 to require the governments of low income oil-producing countries to meet certain requirements relating to their oil revenues in order to be eligible to receive United States economic assistance.

May 13, 2004

Mr. HYDE introduced the following bill; which was referred to the Committee on International Relations, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

To amend the Foreign Assistance Act of 1961 to require the governments of low income oil-producing countries to meet certain requirements relating to their oil revenues in order to be eligible to receive United States economic assistance.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `United States Economic Assistance Conditionality Act of 2004'.

SEC. 2. FINDINGS.

Congress finds the following:

(1) The governments of low income oil-producing countries often do not provide information to the people of such countries regarding their oil revenues. Such opacity can hide billions of dollars worth of financial impropriety.

(2) The governments of such countries have generally refused to disclose information regarding their oil revenues when pressed by international organizations and others, proclaiming that such disclosure is an infringement on national sovereignty.

(3) As a result, the people of such countries are left without the necessary information to ensure proper management and accountability regarding such oil revenues. Dispossessed, the people of such countries are often left marginalized and at the mercy of donor assistance. In Angola, for example, one in every four oil dollars earned is unaccounted for. At the same time, one in four Angolan children dies before the age of five from preventable diseases.

(4) In some low income oil-producing countries, government-imposed royalties and fees on the revenues of business enterprises engaged in oil production are often misappropriated and squandered. These businesses are then left vulnerable to accusations of complicity with corruption.

(5) The governments of low income oil-producing countries that mismanage oil revenues are often unstable and do not survive, creating further instability that threatens the supply of vital industrial commodities and forcing the international community to respond with costly emergency assistance to those countries.

(6) A key to promoting political, economic, and social reform in low income oil-producing is transparency in public finances.

(7) If the governments of such countries tell their people how much oil revenue the government receives and how that revenue is allocated and expended, the resulting transparency will engender more realistic public expectations, more plausible national development programs, and better means to combat corruption and promote democracy, respect for human rights, and the rule of law.

(8) Transparency by such foreign governments will benefit United States business enterprises as well. Respect for the rule of law, codified regulatory practices, and transparent bidding and award practices deter corruption and encourage a level playing field in such countries for United States business enterprises.

(9) Export credit activities and other bilateral concessional loan programs of the United States Government for low income oil-producing countries should require that any assistance under such activities and programs be conditional on appropriate transparency by the governments of such countries relating to oil revenues.

(10) International financial institutions such as the World Bank should incorporate revenue transparency across their lending and technical assistance portfolios by making full transparency a condition of all their financial support and by including it in their national poverty reduction strategy consultations.

(11) One bold and promising model is the Chad/Cameroon Pipeline Project, under which the Government of Chad, private investors, and the World Bank Group have established an accountability and oversight mechanism for the country's revenues derived from oil production.

(12) Donald Norland, former United States Ambassador to Chad, in testimony on April 18, 2002, before the Committee on International Relations of the House of Representatives stated that the Chad/Cameroon Pipeline Project `has addressed these extraordinarily challenging issues in ways that may well serve as a model for developing natural resources in other countries'.

(13) Ambassador Norland further testified that: `Success will require keeping the project in the spotlight of public attention as well as under constant scrutiny and monitoring by outside groups . . . Scrutiny is the key to transparency. Transparency is, in turn, indispensable in guaranteeing that oil resources go . . . to projects that reduce poverty while preserving the environment and advancing human rights . . . to make sure that revenues go to benefit the people of Chad and not to private bank accounts.'.

SEC. 3. LIMITATION ON UNITED STATES ECONOMIC ASSISTANCE FOR LOW INCOME OIL-PRODUCING COUNTRIES.

Chapter 1 of part III of the Foreign Assistance Act of 1961 (22 U.S.C. 2351 et seq.) is amended--

(1) by redesignating the second section 620G (as added by section 149 of Public Law 104-164 (110 Stat. 1436)) as section 620J; and

(2) by adding at the end the following new section:

`SEC. 620K. LIMITATION ON UNITED STATES ECONOMIC ASSISTANCE FOR LOW INCOME OIL-PRODUCING COUNTRIES.

`(a) Definitions- In this section:

`(1) Low income country- The term `low income country' means a country that has a per capita income equal to or less than the historical ceiling of the International Development Association, as defined by the International Bank for Reconstruction and Development.

`(2) Low income oil producing country- The term `low income oil-producing country' means a low-income country that produces an average of not less than 100,000 barrels of oil or equivalent per day based on the most recent information available by the Energy Information Administration of the Department of Energy.

`(3) Oil- The term `oil' includes crude oil, natural gas plant liquids, other petroleum-based liquids, and petroleum-based refinery byproducts.

`(4) United states economic assistance- The term `United States economic assistance' means any of the following:

`(A) Bilateral economic, development, or technical assistance (other than military assistance, humanitarian assistance, or assistance to prevent, treat, and monitor HIV/AIDS) provided by any department or agency of the United States Government to a foreign country under any program, project, or activity that is contained within the major budget functional category 150 (relating to International Affairs), including assistance under--

`(i) chapter 1 of part I of the Foreign Assistance Act of 1961 (relating to development assistance);

`(ii) chapter 10 of part I of that Act (relating to the Development Fund for Africa);

`(iii) chapter 11 of part I of that Act (relating to assistance for the independent states of the former Soviet Union);

`(iv) chapter 12 of part I of that Act (relating to assistance for the countries of the South Caucasus and Central Asia region);

`(v) chapter 4 of part II of that Act (relating to the Economic Support Fund); or

`(vi) the Support for East European Democracy (SEED) Act of 1989.

`(B) Bilateral economic, development, or technical assistance (other than military assistance, humanitarian assistance, or assistance to prevent, treat, and monitor HIV/AIDS) provided by any department or agency of the United States Government to a foreign country under any program, project, or activity that is contained within any of the following major budget functional categories:

`(i) 270 (relating to Energy).

`(ii) 300 (relating to Natural Resources and the Environment), including programs, projects, and activities of the Environmental Protection Agency, the Department of the Interior, and the United States Army Corps of Engineers).

`(iii) 350 (relating to Agriculture), including assistance provided under title I of the Agricultural Trade Development and Assistance Act of 1954, the Food for Progress program, and other programs administered by the Department of Agriculture, such as programs administered by the Commodity Credit Corporation.

`(iv) 370 (relating to Commerce and Housing Credit).

`(v) 400 (relating to Transportation).

`(vi) 500 (relating to Education, Training, Employment, and Social Services).

`(vii) 550 (relating to Health).

`(viii) 750 (relating to the Administration of Justice).

`(ix) 800 (relating to the General Government).

`(b) Identification; Determinations- Not later than October 1, 2005, and not later than each October 1 thereafter, the President, acting through the Board of Directors of the Millennium Challenge Corporation--

`(1) shall identify all countries in the world that are low income oil-producing countries (as defined in subsection (a)(1)); and

`(2) for each country identified under paragraph (1)--

`(A) shall determine whether or not the country scores in the top quartile of all low income countries in each of the three indicators described in subsection (d), as required under subsection (c)(1)(A); and

`(B) shall determine whether or not the government of the country meets the requirements of subsection (e), as required under subsection (c)(1)(B).

`(c) Limitation on Economic Assistance-

`(1) Limitation- Notwithstanding any other provision of law (other than a provision of this section), United States economic assistance may be provided for fiscal year 2007 and each subsequent fiscal year for a low income oil-producing country only if the President, acting through the Board of Directors of the Millennium Challenge Corporation, determines that--

`(A) the country scores in the top quartile of all low income countries in each of the three indicators described in subsection (d); and

`(B) the government of the country meets the requirements of subsection (e).

`(2) Rule of construction- The limitation on assistance under paragraph (1) shall not apply to a low income oil-producing country that is determined by the Board of Directors of the Millennium Challenge Corporation to be an eligible country under section 607 of the Millennium Challenge Act of 2003 (22 U.S.C. 7706) and is identified as such by the Chief Executive Officer of the Corporation under section 608(d) of such Act (22 U.S.C. 7707(d)).

`(d) Indicators- The indicators referred to in subsection (c)(1)(A) are the following:

`(1) Total expenditures on health- The amount expended by the government of the country at all levels on health divided by the gross domestic product of the country.

`(2) Total expenditures on primary education- The amount expended by the government of the country at all levels on primary education divided by the gross domestic product of the country.

`(3) Primary education completion rate- The number of students who complete primary education divided by the total population of individuals of the same age in the country.

`(e) Requirements- The requirements referred to in subsection (c)(1)(B) are the following:

`(1) Transparency relating to oil revenues- The government of the country makes publicly available information on--

`(A) the amount of revenues received by the government through the production of oil in the country for the preceding calendar year, whether through royalties, rents, taxes, customs, duties, or otherwise; and

`(B) the allocation of such revenues among the various departments and agencies of the government.

`(2) Allocation and expenditure of oil revenues- The government of the country allocates and expends an appropriate amount of the revenues referred to in paragraph (1) on education, food and nutrition assistance, and public health programs for the people of the country.

`(3) UN convention against corruption- The country is a signatory to the United Nations Convention Against Corruption (Document A/58/422), as adopted by the United Nations General Assembly on October 31, 2003.

`(f) Report-

`(1) In general- Not later than October 1, 2006, and not later than October 1 of each year thereafter, the President, acting through the Board of Directors of the Millennium Challenge Corporation, shall prepare and transmit to Congress a report that contains--

`(A) for the fiscal year beginning on the applicable October 1--

`(i) the identification each low income oil-producing country, as required under subsection (b)(1); and

`(ii) the determinations with respect to each such low income oil-producing country, as required under subparagraphs (A) and (B) of subsection (b)(2); and

`(B) for the prior fiscal year, an identification of each low income oil-producing country that received United States economic assistance by reason of the application of subsection (c)(1) and the amounts and purposes of such assistance.

`(2) Special rule for initial report- The requirement to include information described in subparagraph (B) of paragraph (1) shall not apply to the initial report required to be submitted under such paragraph.'.

SEC. 4. LIMITATION ON UNITED STATES SUPPORT FOR MULTILATERAL ASSISTANCE FOR CERTAIN COUNTRIES.

The Bretton Woods Agreements Act (22 U.S.C. 286-286oo) is amended by adding at the end the following:

`SEC. 64. LIMITATION ON UNITED STATES SUPPORT FOR MULTILATERAL ASSISTANCE FOR CERTAIN COUNTRIES.

`The Secretary of the Treasury shall instruct the United States Executive Directors at the Fund and at the Bank to use the voice, vote, and influence of the United States to oppose the making of a loan by the Fund or the Bank, respectively, to the government of any country not eligible to receive United States economic assistance by reason of section 620K of the Foreign Assistance Act of 1961.'.

END