UPDATE 1-U.S. Congress backs bill authorizing $633 bln for defense in 2013

WASHINGTON, Dec 21 (Reuters) - The U.S. Congress approved

the final version of the annual defense policy bill on Friday,

authorizing $633 billion in defense spending for 2013,

tightening sanctions on Iran over its nuclear program and

beefing up security at U.S. embassies.

The Democratic-controlled Senate voted 81-14 in favor the

National Defense Authorization Act. The vote followed approval

of the legislation by the Republican-controlled House of

Representatives on Thursday and sent the measure to President

Barack Obama for his signature.

The legislation authorizes a Pentagon base budget of $527.5

billion, plus $88.5 billion for overseas operations, primarily

the war in Afghanistan. The base budget includes $17.4 billion

for defense-related nuclear programs at the Department of

Energy.

The NDAA sets defense policy for the year. While it

authorizes spending levels for different military programs, it

does not appropriate the money. That is done under separate

legislation in the House and Senate.

In addition to authorizing the size of the military budget,

the bill approved a 1.7 percent pay increase for military

personnel and blocked a Pentagon effort to offset rising

healthcare costs for retirees by raising some health insurance

fees.

The bill calls for tightening sanctions on Iran because of

its nuclear program, targeting shipbuilding, shipping and energy

sectors for additional restrictions in an effort to boost

pressure on Tehran to abandon its uranium enrichment.

The measure directs Defense Secretary Leon Panetta to

develop and implement a plan to increase the number of Marines

assigned to American embassies and consulates worldwide by up to

1,000.

The move aims to bolster diplomatic security following the

deaths of U.S. Ambassador Christopher Stevens and three other

Americans in an attack on the consulate in Benghazi, Libya.

The bill eases restrictions on the export of satellites to

help U.S. manufacturers, who have seen their global share of the

market shrink to less than 25 percent from 65 percent 15 years

ago, officials said.

It also allows the Pentagon to continue its efforts to

develop biofuels, rejecting a House attempt to prevent the

purchase of fuels that are more expensive than petroleum.

The measure prohibits a final U.S. payment of $400.9 million

for development of the Medium Extended Air and Missile Defense

System, known as MEADS, which is being developed by Lockheed

Martin with partners in Italy and Germany.

Lawmakers say Washington has no plans to produce the system,

which has been in development for a decade at a cost of $4

billion. But officials say termination fees may nearly equal the

cost of completing the system and the White House has warned

that failure to approve the funding could hurt ties with allies.

The final measure also extends restrictions blocking any

administration effort to imprison Guantanamo detainees in the

United States.

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