Conference Approves $12.5 Million in Direct Aid to Karabakh $87.5 Million to Armenia Maintains 907

* Adoption of non-binding report language passes responsibility to the White House for a decision on US economic assistance to Azerbaijan.

WASHINGTON–A joint Senate-House panel finalized the 1998 foreign aid bill Wednesday–authorizing an unprecedented $12.5 million in assistance to Nagorno-Karabakh–approving an $87.5 million aid package for Armenia–and maintaining the Freedom Support Act ban on US aid to Azerbaijan in the face of an intense attack against the restriction by Azerbaijan and its oil industry partners–reported the Armenian National Committee of America.

"Against tremendous odds–we have successfully defeated the oil industry’s multi-million dollar campaign on Section 907 and–for the first time–we have secured direct US aid to Nagorno Karabakh," said ANCA Executive Director Aram Hamparian. "This was the result of a powerful grassroots campaign by Armenian-Americans and those committed to peace in the Caucasus. The Congressional leadership responded to this grassroots campaign. They have passed the buck to the White House–which must now decide if it will allow US foreign aid agencies to deliver taxpayer funds to Azerbaijan–even though that nation maintains a nine-year blockade of Armenia and Karabakh. The ball is clearly in the Administration’s court."

"We will now impress upon the White House–as we have done within Congress–that providing taxpayer subsidies to wealthy corporations involved in Caspian oil–works against US interests in bringing peace and stability to the region. We will make clear that Section 907 must remain in force and that Azerbaijan and its allies in the oil industry will not be allowed to manipulate the American political system to their ends," added Hamparian. $87.5 Million for Armenia; $12.5 Million for Karabakh

Of the $250 million allocated by the bill for the South Caucasus–$87.5 million has been earmarked for Armenia–$92.5 million for Georgia–$12.5 million for Nagorno-Karabakh–and $5 million for Abkhazia.

The aid level for Armenia is $7.5 million less than last year’s appropriation–although the total amount allocated this year for both Armenia and Karabakh represents a $5 million increase over last year’s $95 million earmark for Armenia.

Of the remaining $52.5 million in the South Caucasus Fund–committee sources report that $50 million will be provided to the Caucasus states contingent upon the acceptance of the terms of a first stage peace agreement to the Nagorno-Karabakh conflict by May 30–1998. The first stage agreement–as negotiated by the OSCE Minsk Group–would involve the pulling back of Karabakh forces from Azeri firing points–the repatriation of refugees and discussion of security guarantees for the people of Karabakh. If a first stage peace agreement is not reached by the deadline–the $50 million could then be reallocated to former Soviet states outside of the Caucasus. Rep. Porter Leads Efforts To Increase Aid to Armenia Congressman John Edward Porter (R-Ill.)–the Co-Chair of the Congressional Armenian Caucus successfully amended the bill to add $5 million in assistance to both Armenia and Georgia–bringing their respective totals to $87.5 million and $92.5 million. The measure passed over opposition from the House Appropriations Committee Chairman Robert Livingston (R-La.) and Foreign Operations Subcommittee Chairman Sonny Callahan (R-Ala.).

The House Conference Committee members voted 8-3 for this increased assistance. Representatives joining Rep. Porter in support of the measure included Ranking Democrat Nancy Pelosi (D-Calif.)–Nita Lowey (D-NY)–Esteban Torres (D-Calif.)–David Obey (D-Wis.)–Frank Wolf (R-Va.)–Joe Knollenberg (R-Mich.)–and Rodney Frelinghuysen (R-NJ). California Republican Ron Packard joined Representatives Livingston and Callahan in voting against the Porter amendment. Section 907 Survives Intense Attack from Oil Industry Despite intense pressure by Azeri and oil industry lobbyists–the Conferees rejected efforts to weaken Section 907 of the Freedom Support Act. Specifically–the panel refused to include any of the Senate’s language which would allow the Overseas Private Investment Corporation and other trade development agencies to operate in Azerbaijan. The conferees did however–take a step toward satisfying the interests of the oil lobby by adopting non-binding report language which states that Congress does not view Section 907 as prohibiting these agencies from becoming involved in Azerbaijan. This action places the responsibility on the White House to determine if this form of economic assistance should be extended to Azerbaijan.

Senate Foreign Operations Subcommittee Chairman Mitch McConnell explained during the conference that "apparently the Administration decided that the Senate bill language was not needed and that report language was sufficient to clarify there are no legal restrictions preventing the US trade agencies involved."

Congressman Knollenberg–who crafted the original compromise which provided aid to Karabakh and placed the House on record against any OPIC assistance to Azerbaijan–proposed an amendment which would impose conditions on any future US economic aid to Azerbaijan.

According to his proposal–the State Department would have to certify that any such assistance to Azerbaijan would "not jeopardize or interfere with the ongoing efforts of the OSCE Minsk group to resolve the regional conflict." The amendment was withdrawn under heavy pressure from the Senate side. The bill does include a one-year exemption to Section 907 for limited US democracy and human rights assistance to Azerbaijan. Eagleburger Fails to Reveal Potential Conflict of Interest

The hearing’s most strident attack on Section 907 came from former Secretary of State Lawrence Eagleburger–who pressed Congress to "Get rid of section 907," but failed to reveal his affiliation with a major energy firm doing business in Azerbaijan.

Eagleburger–who serves as a senior advisor for the firm of Baker–Donelson–Bearman and Caldwell–acknowledged toward the end of the hearing that his firm represents Phillips Petroleum–but said that this affiliation did not represent a conflict of interest because Phillips does not do business in Azerbaijan. According to the Dresser Industries–Inc. Jan. 27–1997 Security and Exchange Commission filing as well as the Dresser home-page–Eagleburger also serves on the twelve member board of directors of Dresser Industries–a multi-billion dollar energy services and equipment company with business interests in Azerbaijan. The Dallas Morning News on March 10 reported that Dresser Industries–"the giant of oil field and equipment companies," had registered to do business in Azerbaijan. Azerbaijan International magazine has run full-page Dresser ads featuring the address of Dresser’s Baku office.

Eagleburger said–"One of the things I like about being out of government is that I don’t have to be responsible for what I have to say. It’s the kind of ethnic legislation for domestic political reasons that just skews the whole effort when it comes to the management of a sensible foreign policy. As Secretary Eizenstat said–it is one sided – there is enough blame to go around on both sides in terms of Azerbaijan and Armenia. And as my colleague here stated the fact that it exists is a major psychological problem for any American company that is trying to export this oil. In a way I was sorry to hear Secretary Eizenstat say there is some middle ground… you ought to get rid of Section 907." Rep. Pallone Rallies Congressional Support for Section 907 Rep. Frank Pallone–the Co-Chair of the Congressional Armenian Caucus was joined this week by a bipartisan group of legislators in urging the House and Senate Foreign Operations conferees to maintain Section 907 as part of the foreign aid bill. In an October 22 letter to the 29 members of the foreign aid conference members–they wrote:

We are extremely concerned about indications that the Conference may be seeking to carve our major exceptions to the current prohibition on aid to Azerbaijan–particularly with regard to the Overseas Private Investment Corporation political risk insurance… Modifying Section 907 to permit funds for OPIC–the Export-Import Bank or the Trade Development Agency would be completely contrary to the spirit of the law–and would only encourage Azerbaijan to maintain its intransigent stance with regard to the blockades of Armenia and Nagorno-Karabakh.

The letter also called for maintaining the $95 million appropriation for Armenia–arguing that "it would be inappropriate to extend benefits to the country that is imposing the blockade (Azerbaijan) while reducing aid to the victim of the blockade (Armenia)." Representatives joining Congressman Frank Pallone (D-NJ) in writing to the conferees included George Radanovich (R-Calif.)–Stephen Horn (R-Calif.)–Gary Ackerman (D-NY)–Thomas Manton (D-NY)–Anna Eshoo (D-Calif.)–Lynn Woolsey (D-Calif.)–Barney Frank (D-Mass.)–Edward Markey (D-Mass.)–Brad Sherman (D-Calif.)–Carolyn Maloney (D-NY)–Lynn Rivers (D-Mich.)–Edolphus Towns (D-NY)–Martin Meehan (D-Mass.)–Barbara Kennelly (D-Conn.)–Maurice Hinchey (D-NY)–Bob Filner (D-Calif.)–Bobby Rush (D-Ill.)–and Sherrod Brown (D-Ohio)–Lucille Royball-Allard (D-Calif.)–Michael McNulty (D-NY)–Edward Royce (R-Calif.)–David Bonior (D-Mich.)–Sander Levin (D-Mich.)–Howard "Buck" McKeon (R-Calif.)–Lloyd Doggett (D-Texas) Bob Franks (R-NJ)–Joe Kennedy (D-Mass.)–Patrick Kennedy (D-RI).

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