Sec. 1270. Modernizing the defense capabilities of the Philippines
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In addition to the purposes otherwise authorized for Foreign Military Financing with respect to the Philippines, the Secretary of State shall use the authorities under this section to— strengthen the United States-Philippines alliance in accordance with the historic agreement reached at the United States-Philippines 2+2 Ministerial Dialogue on August 2, 2024; enable the acceleration of phase three of the modernization of the Armed Forces of the Philippines; provide additional information to the Chairs of the United States-Philippine Bilateral Security Dialogue to enable planning and prioritization of Joint Capability Areas; support the execution of the Philippines-Security Sector Assistance Roadmap; and provide assistance, including equipment, training, and other support, to modernize the defense capabilities of the Armed Forces of the Philippines in order to— safeguard the territorial sovereignty of the Philippines; improve maritime domain awareness; counter coercive military activities; improve the military and civilian infrastructure and capabilities necessary to prepare for regional contingencies; and strengthen cooperation between the United States and the Philippines on counterterrorism-related efforts.
Not later than March 1, 2026, and annually thereafter for a period of 4 years, the Secretary of State, in coordination with the Secretary of Defense, shall submit to the appropriate congressional committees a plan describing how amounts authorized to be appropriated pursuant to subsection (e), if made available, would be used to achieve the purpose described in subsection (a). Not later than 270 days after the date of the enactment of this Act, and annually thereafter for a period of 4 years, the Secretary of State, in consultation with the Secretary of Defense and such other heads of Federal departments and agencies as the Secretary of State considers appropriate, shall submit to the appropriate congressional committees a report that describes steps taken to enhance the United States-Philippines defense relationship.
Each report required under paragraph
(1)shall include the following: A description of the capabilities and defense infrastructure improvements needed to modernize the defense capabilities of the Philippines, including with respect to— coastal defense; long-range fires; integrated air defenses; maritime security; manned and unmanned aerial systems; mechanized ground mobility vehicles; intelligence, surveillance, and reconnaissance; defensive cybersecurity; military construction; maintenance and sustainment of military capabilities; and any other defense capabilities that the Secretary of State determines, including jointly with the Philippines, are crucial to the defense of the Philippines. An assessment of the absorptive capacity of the Armed Forces of the Philippines, including the coast guard, over the next 5 years. A description of how statutory authorities under title 10, United States Code, including under section 333 of such title and authorities relating to unspecified minor military construction and overseas humanitarian, disaster, and civic aid, will be used to provide support for the Philippines-Security Sector Assistance Roadmap and the defense capabilities described in subparagraph (A), prioritized according to the assessment of the absorptive capacity of the Armed Forces of the Philippines required under subparagraph (B). Each report required under paragraph
(1)shall be submitted in unclassified form, but may contain a classified annex. During fiscal years 2026 through 2030, the Secretary of State may make direct loans available for the Philippines pursuant to section 23 of the Arms Export Control Act ( 22 U.S.C. 2763 ). Gross obligations for the principal amounts of loans authorized under subparagraph
(A)may not exceed $1,000,000,000. In this subparagraph, the term cost — has the meaning given such term in section 502(5) of the Congressional Budget Act of 1974 ( 2 U.S.C. 661a(5) ); shall include the cost of modifying a loan authorized under subparagraph (A); and may include the costs of selling, reducing, or cancelling any amounts owed to the United States or to any agency of the United States. Amounts authorized to be appropriated under subsection
(e)may be made available to pay for the cost of loans authorized under subparagraph (A). The Government of the United States may charge processing and origination fees for a loan made pursuant to subparagraph (A), not to exceed the cost to the Government of making such loan, which shall be collected from borrowers through a financing account (as defined in section 502(7) of the Congressional Budget Act of 1974 ( 2 U.S.C. 661a(7) ). Amounts made available under any appropriations Act for any fiscal year may not be used to pay any fees associated with a loan authorized under subparagraph (A). Loans made pursuant to subparagraph
(A)shall be repaid not later than 17 years after the loan is received by the borrower, including a grace period of not more than 1 year on repayment of principal. Notwithstanding section 23(c)(1) of the Arms Export Control Act ( 22 U.S.C. 2763(c)(1) ), interest for loans made pursuant to subparagraph
(A)may be charged at a rate determined by the Secretary of State. Amounts made available under this paragraph for interest costs shall not be considered assistance for the purposes of any statutory limitation on assistance to a country. Amounts authorized to be appropriated under subsection
(e)may be made available for the costs of loan guarantees for the Philippines under section 24 of the Arms Export Control Act ( 22 U.S.C. 2764 ) for the Philippines to subsidize gross obligations for the principal amount of commercial loans and total loan principal, any part of which may be guaranteed. Loan guarantees authorized under subparagraph (A)— may be made only to the extent that the total loan principal, any part of which is guaranteed, does not exceed $1,000,000,000; and may not exceed 80 percent of the loan principal with respect to any single borrower. Any loan guaranteed pursuant to subparagraph
(A)may not be subordinated to— another debt contracted by the borrower; or any other claims against the borrower in the case of default. Repayment in United States dollars of any loan guaranteed under this paragraph shall be required not later than 17 years after the loan agreement is signed. Notwithstanding section 24 of the Arms Export Control Act ( 22 U.S.C. 2764 ), the Government of the United States may charge processing and origination fees for a loan guarantee authorized under subparagraph (A), not to exceed the cost to the Government of such loan guarantee, which shall be collected from borrowers, or from third parties on behalf of such borrowers, through a financing account (as defined in section 502(7) of the Congressional Budget Act of 1974 ( 2 U.S.C. 661a(7) ). Amounts made available under this paragraph for the costs of loan guarantees authorized under subparagraph
(A)shall not be considered assistance for the purposes of any statutory limitation on assistance to a country. Loan guarantees authorized under subparagraph
(A)may be provided to entities doing business inside or outside the United States, notwithstanding any provision of the Arms Export Control Act ( 22 U.S.C. 2751 et seq. ) that would otherwise limit eligibility for such guarantees based on geographic location or business operations. Amounts authorized to be appropriated to carry out this subsection may not be expended without prior notification of the appropriate committees of Congress. In addition to amounts otherwise authorized to be appropriated for Foreign Military Financing, there are authorized to be appropriated to the Department of State for Foreign Military Financing grant assistance for the Philippines not more than $500,000,000 for each of fiscal years 2026 through 2030. Of the amounts authorized to be appropriated pursuant to paragraph (1), not less than $500,000 is authorized to be appropriated each fiscal year for one or more blanket order agreements for Foreign Military Financing training programs related to the defense needs of the Philippines. Assistance may not be provided under this section after September 30, 2035. In this section: The term appropriate congressional committees means— the Committee on Foreign Relations, the Committee on Armed Services, and the Committee on Appropriations of the Senate; and the Committee on Foreign Affairs, the Committee on Armed Services, and the Committee on Appropriations of the House of Representatives. The term blanket order agreement means an agreement between a foreign customer and the United States Government for a specific category of items or services (including training) that— does not include a definitive list of items or quantities; and specifies a dollar ceiling against which orders may be placed.
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Sec. 1270
Modernizing the defense capabilities of the Philippines
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