§2540. Establishment of loan guarantee program

(a) Establishment.-In order to meet the national security objectives in section 2501(a) of this title, the Secretary of Defense shall establish a program under which the Secretary may issue guarantees assuring a lender against losses of principal or interest, or both principal and interest, arising out of the financing of the sale or long-term lease of defense articles, defense services, or design and construction services to a country referred to in subsection (b).

(b) Covered Countries.-The authority under subsection (a) applies with respect to the following countries:

(1) A member nation of the North Atlantic Treaty Organization (NATO).

(2) A country designated as of March 31, 1995, as a major non-NATO ally pursuant to section 2350a(i)(3) of this title.

(3) A country in Central Europe that, as determined by the Secretary of State-

(A) has changed its form of national government from a nondemocratic form of government to a democratic form of government since October 1, 1989; or

(B) is in the process of changing its form of national government from a nondemocratic form of government to a democratic form of government.

(4) A noncommunist country that was a member nation of the Asia Pacific Economic Cooperation (APEC) as of October 31, 1993.

(c) Authority Subject to Provisions of Appropriations.-The Secretary may guarantee a loan under this subchapter only to such extent or in such amounts as may be provided in advance in appropriations Acts.

(Added Pub. L. 104–106, div. A, title XIII, §1321(a)(1), Feb. 10, 1996, 110 Stat. 475 .)

Prior Provisions

A prior section 2540, acts Aug. 10, 1956, ch. 1041, 70A Stat. 141 , §2511; renumbered §2521, Nov. 5, 1990, Pub. L. 101–510, div. A, title VIII, §823(a)(2), 104 Stat. 1600 ; renumbered §2540, Dec. 5, 1991, Pub. L. 102–190, div. A, title VIII, §821(e)(3), 105 Stat. 1432 , related to availability or issuance to reserve components of supplies, services, and facilities of armed forces, prior to repeal by Pub. L. 103–337, div. A, title XVI, §§1664(c)(2), 1691, Oct. 5, 1994, 108 Stat. 3012 , 3026, effective Dec. 1, 1994. See section 18502 of this title.

Another prior section 2540 was renumbered section 2539a of this title.

Report on Defense Export Loan Guarantee Program

Section 1321(b) of Pub. L. 104–106 provided that: "Not later than two years after the date of the enactment of this Act [Feb. 10, 1996], the President shall submit to Congress a report on the loan guarantee program established pursuant to section 2540 of title 10, United States Code, as added by subsection (a). The report shall include-

"(1) an analysis of the costs and benefits of the loan guarantee program; and

"(2) any recommendations for modification of the program that the President considers appropriate, including-

"(A) any recommended addition to the list of countries for which a guarantee may be issued under the program; and

"(B) any proposed legislation necessary to authorize a recommended modification."