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Depuriitteni 



bulletin 



ie Official Monthly Record of United States Foreign Policy / Volume 83 / Number 2073 

April 1983 






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The U.S. 

and Sweden: 

An Enduring Friendship / 1 



Departntpnt of State 

bulletin 



Volume 83 / Number 2073 / April 1983 



Cover: 

Copy of last page of U.S.-Swedish Treaty 
of Amity and Commerce, signed in Paris on 
April 3, 1783. 

(Courtesy National Archives) 



The Department of State Bulletin, 
published by the Office of Public 
Communication in the Bureau of Public 
Affairs, is the official record of U.S. 
foreign policy. Its purpose is to provide the 
public, the Congress, and government 
agencies with information on developments 
in U.S. foreign relations and the work of 
the Department of State and the Foreign 
Service. 

The Bulletin's contents include major 
addresses and news conferences of the 
President and the Secretary of State; 
statements made before congressional 
committees by the Secretary and other 
senior State Department officials; selected 
press releases issued by the White House, 
the Department, and the U.S. Mission to 
the United Nations; and treaties and other 
agreements to which the United States is 
or may become a party. Special features, 
articles, and other supportive material 
(such as maps, charts, photographs, and 
graphs) are published frequently to 
provide additional information on current 
issues but should not necessarily be 
interpreted as official U.S. policy 
statements. 



GEORGE P. SHULTZ 

Secretary of State 

JOHN HUGHES 

Assistant Secretary for Public Affairs 

PAUL E. AUERSWALD 

Director, 

Office of Public Communication 

NORMAN HOWARD 

Chief, Editorial Division 

PHYLLIS A. YOUNG 

Editor 

JUANITA ADAMS 

Assistant Editor 



The Secretary of State has determined that the 
publication of this periodical is necessary in the 
transaction of the public business required by law of 
this Department. Use of funds for printing this 
periodical has been approved by the Director of the 
Office of Management and Budget through March 31, 
1987. 



NOTE: Contents of tliis publication are not copyrighted 
and items contained herein may be reprinted. Citation 
of the Department OF State Bulletin as the source 
will be appreciated. The Bulletin is indexed in the 
Readers' Guide to Periodical Literature. 



For sale by the Superintendent of Documents, L 
Government Printing Office, Washington, D.C. 



CONTENTS 



FEATURE 

1 The U.S. and Sweden: An Enduring Friendship {Janie^ Edward Miller) 



President 

Peace.and National Security 

The Trade Challenge for the 
1980s 

Strategic Importance of El Salva- 
dor and Central America 

News Conference of February 16 
(Excerptfi) 

i Secretary 

J Foreign Aid and U.S. National 
Interests 

1 Question-and-Answer Session 

' Following Atlanta Address 

I The U.S. and East Asia: A Part- 
nership for the Future 
Question-and-Answer Session 

Following San Francisco Address 
Strengthening Democracy in 
Central America 

I American Principles and Foreign 
Policy 

1 Interview on "This Week With 

i David Brinkley" 

I Project Democracy 

ka 

The Search for Regional Security 
in Southern Africa {Chester A. 
Crocker) 

Our Development Dialogue With 
Africa {Chester A. Crocker) 

ris Control 

Ensuring Security in the Nuclear 
Age {Kenneth W. Dam) 
I ACDA Annual Report {Message to 
I the Congress) 



East Asia 

63 Developing an Enduring Relation- 
ship With China {Paul Wolfowitz) 

Europe 

65 U.S. Relations With Europe 

and Ties to NATO {Richard Burt) 

66 Poland's Debt {Department State- 

ment) 

67 12th Report on Cyprus {Message 

to the Congress) 

69 Visit of Austrian Chancellor 

Kreisky {President Reagan, 
Bruno Kreisky) 

70 Visit of Norwegian Prime 

Minister Willoch {President 
Reagan, Kaare Willoch) 

71 Visit of Queen Elizabeth II {Queen 

Elizabeth II. President Reagan) 



Human Rights 

73 \ 



KiKhts I'rogres 
\ny (Elli„ft Ahi 



in El 
ns) 



International Law 

74 r S.-lr:iii Claims Tribunal: Recent 
l)vyv\n]mv<ns {James H.Michel} 

Military Affairs 

77 Yelli.w Rain: The Arms Control 
Implications {Lawrence S. 
Ka,,lch„r,rr) 



Nuclear Policy 

79 U.S. Completes Assessment of 
IAEA {Richard T. Kennedy) 



United Nations 

81 Liliya {.lca,ir.J. Kirkjialnrk) 

81 L;.S. I'articipation in the UN, 

1981 {Message to the Congress) 

82 Funding the Law of the Sea Pre- 

paratorv Commi.ssion {President 
Reagan] 



Western Hemisphere 

83 Aiiiliassa.lur Himcn Interviewed 

on "This Week With David 
Brinkley" {Deane R. Hinton) 

84 Ambassador Kirkpatrick Inter- 

viewed on "Meet the Press" 
{Jeane J. Kirkpatrick) 

87 El Salvador Announces Peace 

Commission {Department 

88 CaniaK'an llasm Initiative Legis- 

lation (President Reagan. Message 
to the Cangress) 

89 Radio Broadcasting to Cuba 

{Prpartmcit Statement) 

Treaties 

90 Current Actions 

Chronology 

92 Friiruarv 1983 



Press Releases 

92 Department of Slate 

93 U.S.UN 



Publications 

94 DepartimMit of State 



smess 



Department of State Activities in 
the Private Sector Area 



•partment 

! Foreign Policy Planning Council 

Members Announced {Secretary 
'■ Shultz) 



Pacific 

80 



Index 



I'alau Approves Free Association 

With the U.S. 
U.S. -Micronesia Plebiscite 



EDITOR'S NOTE 

The article "Armenian Terrorism: A Profile," which appeared in the August 1982 
issue of the Bulletin, and its accompanying note and footnotes were not intended 
as statements of policy of the United States. Nor did they represent any change in 
U.S. policy. 



^ 




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Copy of the first page of the instrument of ratification of the Treaty of Amity and Commerce 

exchanged on February 6, 1784. (Courtesy National Archives) 



I 




FEATURE 



The U.S. 

and Sweden: 

An Enduring Friendship 

by James Edward Miller 



A he treaty of amity 
and commerce signed 
by the United States 
and Sweden on April 
3, 1783, was the first 
between the newly in- 
dependent American 
Republic and a Euro- 
pean neutral state. 
Recognition by Sweden 
of American independ- 
ence facilitated the 
establishment of 
diplomatic relations 
with most of the other 
European states. Conn- 



menting on the treaty, 
John Adams stated: 
'The King of Sweden 
has done the United 
States [a] great honor 
in his commission 
. ... by insisting that 
he has a great desire 
for connexion with 
States which had so 
fully established their 
independence and by 
their wise and gallant 
conduct so well de- 
served it. " 



983 



Sweden and 

the American Revolution 



M. oUowing the outbreak of the war for 
independence in 1775, Sweden, although 
officially a neutral power, showed a 
strong sympathy for the American 
cause. Before the Revolution all Swedish 
trade with the Colonies had to pass 
through England and was subject to 
high customs duties. American in- 
dependence offered the prospect for 
direct and less costly trade between 
Sweden and the United States. Mer- 
chants from both countries eagerly ex- 
ploited this opportunity, and the volume 
of trade between the two nations rose 
dramatically during the Revolutionary 
War. 

Sweden's brilliant and dynamic 
King, Gustav III, was eager to 
reestablish his nation in the great power 
role it had played prior to 1718. Support 
for the American colonists permitted the 
King to cooperate with Sweden's closest 
ally, France, and simultaneously under- 
cut a major commercial rival, the United 
Kingdom. The King also hoped to gain a 
trading colony in the West Indies. More- 
over, Gustav genuinely admired the 
American patriots and their struggle for 
independence. The King granted leaves 
of absence for a number of Swedish of- 
ficers to serve with the Colonial Armies 
and French Navy. More than one 
American diplomat in Europe gratefully 
reported back to the Continental Con- 
gress on the moral and practical 
assistance they received from Sweden 
during the war years, and Swedish ports 
became a safehaven for Colonial mer- 
chant ships seeking to avoid capture by 
the British Navy. 

After France entered the war on the 
side of the United States in 1778, 
Sweden took an even more active role in 
assisting the Colonies. When the British 
attempted to cut off all trade between 
Europe and the rebellious Colonies by 
unleashing full-scale privateering, the 
Swedish Government issued so strong a 
protest that one British minister called 
it indistinguishable from a declaration of 



war. Sweden also was one of the north- 
ern European powers that responded 
favorably to the appeal in February 1780 
by Catherine II of Russia for the 
establishment of a League of Armed 
Neutrality. Sweden enforced its neutral- 
ity through a system of heavily pro- 
tected convoys. By 1782 almost all the 
neutral states of Europe had joined the 
Armed Neutrality, undermining Britain's 
ability to wage a two-front war and 
challenging its control of the seas and its 
leadership in trade. The free passage of 
neutral merchant shipping to and from 
the Colonies together with the ability of 
American seamen to avoid the British 
Navy defeated the blockade and the 
privateering campaign. 



First Approaches 



JLA.lthough Sweden aided the Colonies, 
no formal diplomatic relations existed 
between the two states. When the 
British used French recognition of 
American independence as its caus^is 
belli in 1778, the Swedes, seeking to 
avoid a war, refrained from a similar 
act. After the surrender of Lord Corn- 
wallis' army at Yorktown on October 18, 
1781, British political leadership slowly 
reconciled itself to the loss of the Col- 
onies and, in April 1782, opened secret 
peace talks with the American repre- 
sentative in Paris, Benjamin Franklin. 

The Swedish Government had 
already decided that it should establish 
permanent diplomatic ties with the 
American Republic. In late March Count 
Gustav Creutz, the Swedish Ambassador 
to France, approached Franklin to ask if 
he had powers from the Continental 
Congress to conclude a treaty of amity 
with Sweden. After Franklin replied af- 
firmatively, Creutz stated that King 
Gustav III wished to conclude a treaty 
and noted that Sweden was the first 
neutral European power to offer 
recognition to the United States. The 



Swedes, however, washed to keep tl 
negotiations secret for fear of Briti 
reaction. Swedish caution on this pt 
delayed the completion of a treaty : 
over a year but was well founded. 

Although serious fighting in the 
United States ceased after Yorktow 
the war still raged in Europe. Each 
the powers which allied with the Ui 
States against the United Kingdom 
entered the war to achieve its own 
political objectives. France wanted ' 
reduce British power by depriving ; 
United Kingdom of its most valuab 
Colonies. Spain wanted to break th 
British hold on the western Medite :■ 
nean by recapturing the fortress of 
Gibraltar. In order to concentrate I ii 
forces for the defense of their Eur( a 
interests the British were willing t( i 
with their American Colonies. 

The Marquis de LaFayette, wh U 
recently returned from service witl hi 
Continental Army, approached Cre ! 
shortly after the latter's meeting w i 
Franklin. LaFayette had a commis i 
from the Continental Congress to j ■■ 
mote a peace settlement. He also e 
joyed the confidence of the French 
Minister of Foreign Affairs, Count ! 
Vergennes. Unaware of Creutz's e< ie 
talks with Franklin and acting on 
Vergennes instructions, LaFayette 
urged that the Swedes open negoti lOi 
with the United States with the ob ;t 
granting it full diplomatic recogniti i. 

Spurred by this request, Creut: ne 
with Franklin on the following day 
April 22, 1782, and offered a treat.)! 
amity and commerce. Franklin rep d 
enthusiastically, telling Creutz thate 
would immediately inform Congres of 
this offer and again promising to k p 
the matter secret. Creutz then met nl 
Vergennes and informed him of th' 
Swedish initiative. Vergennes was |Ui 
ly pleased but cautioned Creutz to fCf 
the approach a secret from the Bri ih 
Government. France had achieved > 
political objectives in its war with ji- 
tain and with its treasury bankrupva 
now seeking a quick peace settlemi t. 
Spain continued to resist peace tal as 
long as it believed it could recover 
Gibraltar. Announcement of Swedf s 
pact with the United States could < ly 
complicate French diplomatic effor'to 
end the conflict. 



Department of State Btbti 



FEATURE 

The U.S. 

and Sweden: 

An Enduring Friendship 




"^^^^S^^ 



Gustav III: 
Enlightened Monarch 



Gustav III (1746-92) gave his name to a 
glittering era of Swedish history. During 
his reign from 1771-1792, Swedish arts 
and crafts reached their high points. His 
court, like those of Prussia and Russia, 
nurtured the culture of the French 
Enlightenment. The King was a man of 
immense personal talent and widerang- 
ing interests, including a passion for 
theater. 

As a statesman, Gustav was a model 
enlightened despot. In 1772, he staged a 
coup against the aristocratic parties 
which ruled Sweden and centralized all 
powers in his own hands. Gustav 
energetically reformed the legal and 
fiscal systems of Sweden, extended 
religious toleration, suppressed corrup- 
tion within the bureaucracy, and em- 
barked on large-scale public works pro- 
grams. He also curtailed freedom of the 
press and weakened representative in- 
stitutions. 

Despite his absolutism, Gustav 
greatly admired the courage of 
American patriots and provided them 
with moral and material support in the 
war for independence. On March 16, 
1792, he was shot during a masked ball 
at the opera in Stockholm and died 13 
days later. His tragic end provided 
Giuseppi Verdi with the inspiration for 
the opera "Un Ballo in Maschera." ■ 



{Courtesy Embassy of Swei 



Waiting on Peace 

^J ecause of his concern with the 
British reaction to disclosure of the pro- 
posed treaty, Creutz planned to 
negotiate at a slow pace, awaiting the 
completion of peace treaties recognizing 
American independence, before signing 
an agreement with the United States. 
As further insurance against premature 
disclosure, Creutz would only discuss the 
proposed treaty orally. 

Creutz could also count on long 
delays in communications between 
Franklin and the Continental Congress 
to slow the pace of negotiations. It was 
September 19, 1782, before the Con- 
tinental Congress appointed a three-man 
committee consisting of Arthur Lee, 
Ralph Izard, and James Duane to draft 
a treaty with Sweden and prepare 
negotiating instructions for Franklin. On 
September 28 the committee reported 
back with a draft treaty and instructions 
based largely on the treaty of amity and 
commerce with the Netherlands which 
would be signed on October 8, 1782. In 
addition to recognizing the United 
States and establishing friendly relations 
between the two states, the treaty pro- 
vided equal access for American and 
Swedish merchants to the other state's 
markets, and set out the protections 
which each state would provide the 
citizens of the other. These instructions 
were immediately sent to Franklin. 

On November 9, 1782, Robert Liv- 
ingston, the Secretary for Foreign Af- 
fairs of the Congress, wrote Franklin 
urging quick action on the treaty. Liv- 
ingston told Franklin that "We are much 
flattered by the proposals of Sweden," 
which would widen the scope of foreign 
recognition of American independence 
and add weight to the forces driving the 
United Kingdom "to acknowledge us 
foreign and independent." 

By November 1782 negotiations be- 
tween the United States and United 
Kingdom on a preliminary peace treaty 
were well advanced, and the Swedish 
Government also wanted to speed up the 
negotiations on the treaty. The Swedish 
foreign office, on November 21, 
authorized Creutz to sign a treaty with 



the United States. British and American 
negotiators signed a preliminary peace 
and requested ratification by their 
governments on November 30. On 
December 14 Franklin and Creutz ex- 
changed the documents which granted 
them power to act for their govern- 
ments in completing a treaty. 

The Swedes, however, continued to 
pace their negotiations with Spanish, 
French, and British discussions on a 
preliminary peace in Europe. On 
December 24, Franklin reported to 
Livingston that after a number of con- 
ferences on the treaty, Creutz had 
suspended the talks pending new in- 
structions from his government. 
Gustav III approved Creutz's view that 
the wisest course for Sweden was to 
delay negotiations with the United 
States until the signature of the 
preliminary peace among the European 
powers removed recognition as a caitsus 
belli with the United Kingdom. On 



January 16, 1783, as European peac, 
negotiations entered their last stage, 
Gustav instructed his ambassador tl | 
view of the "high importance" of thf , 
negotiations with the United States , 
Creutz should take no further actioi , 
until he received specific instruction 
However, Creutz acted before he re 
ed the King's orders. 



Signature 

and Ratification 



^ n early February Creutz decidec 
that the time had come to conclude 
treaty with the United States. On 
January 20, 1783, France and Spain 
finally came to terms with the Unita 



U.S. Ambassador to Sweden 




Franklin S. Forsberg holds a B.S. in 
economics, an M.B.A. in foreign trade, a 
an honorary Doctor of Laws degree. He i 
the recipient of the U.S. Distinguished T 
ice Medal; the Order of the British Empij 
the Royal Order of Vasa from the Swedi 
Kmg; and several awards from the publii 
mdustry. 

Before his appointment as U.S. Am- 
bassador to Sweden in December 1981, 1 
was President of Forsberg Associates, Ir 
New York organization consulting in ( 
niunication matters with newspapers, 
magazines, books, radio, and television o 
panies. He was also Executive Vice Pres 
and Director of Holt, Rinehart, & Winsti: 
publisher of Field and Stream magazine i 
four other periodicals; publisher and boa 
member of Popular Mechanics Publishin; 
Company and Street and Smith Pul>lishii 
Company, Inc.; and publisher ol Mudi m: 
and Charm magazines. 

During World War II, Ambassador 
Forsberg created Yank and reactivateil ,' - 
and Stripes for distribution to U.S. troo[ 
throughout the world. ■ 



Department of State Bull i" 



FEATURE 

The U.S. 

and Sweden: 

An Enduring Friendship 



lom. The three powers, together 
U.S. representatives, also signed an 
tice agreement which ended the 
ng in Europe and formalized the 
-fire which had been in effect in the 
d States since October 1781. On 
lary 5, 1783, Creutz and Franklin 
d a treaty of amity and commerce 
fier with a separate article limiting 
aration of the treaty to 15 years, 
negotiators agreed to keep the 
I secret until they could exchange 
;ations. 

reutz received Gustav's instructions 
)llowing day, and immediately 
ted to Stockholm that he had 
iy signed the treaty. Explaining his 
1, Creutz noted that in a recent 
ige to parliament. King George III 
tated that U.S. sovereignty would 
ly recognized as soon as the final 
treaty was signed. Since other 
rs were lining up to grant recogni- 
.nd establish commercial and 
natic ties, Creutz felt that Sweden 
d firmly establish itself in the 
Tide of the new republic by being 
rst neutral to grant it recognition. 
;z then met wth Franklin and ex- 
ed the predicament in which 
iv's instructions placed him. 
din, recognizing that cooperation 
1 win more for the American cause 
aggrieved protestations, im- 
itely agreed to destroy the original 
y and sign another which would re- 
undated until after the ratification 
3 preliminary peace between the 
■d States and United Kingdom. The 
"ican representative also agreed to 
a public signing of yet another copy 
fe treaty at a later date and to con- 
to keep the existence of the agree- 
! a secret until that time. In return, 
Iklin asked that the public ceremony 
j-ld as soon as possible after the 
ng of the preliminary peace treaty 
iig the European powers. 
;ormal ratification of the treaty 
-A on events in the United 
Horn. On February 14, King George 
nrmally declared the termination of 
titles by the British Government, 
bver, Lord Shelburne's ministry fell 
''<" a severe parliamentary attack on 
jaary 20, and Lord North returned 



to power. Charles Fox, an early propo- 
nent of American independence, took 
over the foreign office, and the new 
government pledged only to seek 
modifications in the preliminary peace 
with the United States. Creutz decided 
he could proceed with the signature of 
the treaty and on March 2, 1783, 
reported that he would immediately set 
a date for the formal signature of the 
treaty. He and Franklin then dated the 
earlier signed copies of the treaty and 
sent them to their respective govern- 
ments for ratification. The formal sign- 
ing ceremony took place in Paris on 
April 3, 1783. During the ceremony, 
Creutz informed Franklin that Sweden 
was favorably disposed to the ideas of a 
special reduction of its port duties in 
favor of American shipping. 

Shortly after the signature of the 



treaty, Creutz was recalled to Stockholm 
to become foreign minister. His replace- 
ment. Baron de Stael, informed Franklin 
that he had received Sweden's ratifica- 
tion of the treaty on June 12, 1783. 
Franklin, meanwhile, was reaping the 
diplomatic rewards of American military 
and political success as other neutral 
states lined up to negotiate recognition 
and commercial treaties. The Swedish 
treaty served as the model for these set- 
tlements. 

On July 29, 1783, the Continental 
Congress took up and speedily approved 
the Swedish treaty. Instructions sent to 
Franklin that same day authorized him 
to deliver the U.S. ratification as quickly 
as possible to the Swedes. Franklin ex- 
changed ratifications with Baron de 
Stael on February 6, 1784. 



Ambassador to the United States 



Count Wilhelm Wachtmeister was bom in 
1923. Upon completion of his law studies in 
1946, he began his career in the Swedish 
Foreign Ministry. His first assignments sent 
him to Vienna, Madrid, and Lisbon. 

During the mid-1950s. Ambassador 
Wachtmeister was stationed in Moscow for 3 
years and was a personal assistant to U.N. 
Secretary General Dag Hammarskjold 
(1958-61). Following 5 years in Stockholm as 
head of the U.N. section of the Foreign 
Ministry, he was named Ambassador to 
Algeria. After a year in Algeria, he was 
recalled -to Stockholm to take the position as 
head of the Political Department. He was ap- 
pointed Ambassador to the United States in 
May 1974. ■ 





Gustav Philip Creutz: 
Poet and Diplomat 



Count Gustav Creutz (1731-85), scholar, 
linguist, and poet, was also one of 
Sweden's most successful diplomats. 
Creutz began his diplomatic career in 
1764 as Minister to Spain. After his ap- 
prenticeship at Madrid, the Swedish 
Government nominated Creutz Minister 
to France in 1766. Thoroughly steeped 
in the culture of the French Enlighten- 
ment, Creutz won the admiration and 
trust of Kings Louis XV and Louis XVI 
and the affection of Voltaire. In the 
1760s he repaired Sweden's damaged 
relations with France and was promoted 
to full ambassador for his achievements. 
During the American Revolution, Creutz 
managed to keep those relations in good 
repair despite Sweden's refusal to join 
France in a war against the United 
Kingdom. An early supporter of 
American independence and a warm 
friend of Benjamin Franklin, Creutz was 
the ideal man to negotiate a treaty with 
the United States. In 1783, King Gustav 
III recalled Creutz from Paris to serve 
as his foreign minister and chancellor. In 
addition to his broadened diplomatic 
duties, Creutz used his new position to 
promote educational reforms during the 
brief period before his death. ■ 



(Courtesy Embassy of Sweden) 



Department of State Bull " 



FEATURE 

The U.S. 

and Sweden: 

An Enduring Friendship 




Benjamin Franklin 

(National Portrait Gallen,', Smithsonian Institu 



jmin Franklin (1706-90) was the 
snification of the American EnHght- 
rnt with its emphasis on the prac- 
i^ipplication of scientific knowledge. 
f establishing a successful printing 
i?ss in Philadelphia, Franklin at- 
:'d Colonial and then European at- 
tin with his Poor Richard's 
r^nac, a collection of useful informa- 
i.nd witticisms which he published 
rl732-1757. A passionate believer 
><f-improvement, Franklin founded 

rst lending library in the Colonies 
151, launched the American 
J^ophical Society in 1743, and found- 
t; first city hospital in Philadelphia 
ihe University of Pennsylvania in 
>| He served as an assemblyman in 
ipylvania's legislature and as deputy 
piaster for the Colonies from 
i^a774. 

'i 17.54 Franklin became active in 
I'iolonial struggles against arbitrary 
'h laws. He twice went to the 
i d Kingdom for extended missions 
"■epresentative of Colonial interests. 



In 1775-76, Franklin, as a member of 
the Second Continental Congress, helped 
to organize the national government 
which led the Colonies through the 
American Revolution. Late in 1776, the 
Congress sent him to France to seek an 
alliance. Franklin's fame preceded him, 
and he shrewdly cultivated his popular 
image as an American sage. Utilizing his 
immense popularity, Franklin estab- 
lished a close working relationship with 
the French Government and organized 
the shipment of badly needed supplies to 
the embattled American patriots. In 
1778, he took a leading role in 
negotiating a formal alliance with 
France which proved to be the key to 
eventual American victory. In 1781, 
Congress appointed Franklin one of the 
commissioners to conclude peace with 
the United Kingdom. At his own re- 
quest. Congress finally recalled Franklin 
from France in 1785. He then served as 
a delegate at the constitutional conven- 
tion of 1787, playing an important role 
in forging the compromises which pro- 
duced the U.S. Constitution. ■ 



Conclusion 



A. he Swedish treaty of 1783 provided 
a major psychological boost for the new 
American Republic. Following quickly on 
the military successes of the war for in- 
dependence, Sweden's offer of 
diplomatic recognition opened the way 
for a rapid normalization of relations 
with the states of continental Europe 
and gave legitimacy to the state created 
by the American Revolution. The treaty 
also regularized commercial relations 
between the two states and prompted 
Sweden to expand its trade and invest- 
ment in the United States. Within weeks 
of the ratification, the Swedish Govern- 
ment sent communications to Richard 
Soderstrom and Charles Hellstedt to 
serve as its counsels in Boston and 
Philadelphia. This friendship, established 
during the American Revolution, has en- 
dured for 200 years. ■ 



James Edward Miller is with the 
General European Division, Office of the 
Historian, Bureau of Public Affairs. 



'rl983 



THE PRESIDENT 



Peace and National 
Security 

by President Reagan 



Address to the nation 

Washington, D.C., 

March 23, 1983^ 



The subject I want to discuss with you, 
peace and national security, is both time- 
ly and important. Timely, because I've 
reached a decision which offers a new 
hope for our children in the 21st cen- 
tury, a decision I'll tell you about in a 
few minutes. And important because 
there's a very big decision that you must 
make for yourselves. 

This subject involves the most basic 
duty that any President and any people 
share— the duty to protect and 
strengthen the peace. At the beginning 
of this year, I submitted to the Congress 
a defense budget which reflects my best 
judgment of the best understanding of 
the experts and specialists who advised 
me about what we and our allies must 
do to protect our people in the years 
ahead. That budget is much more than a 
long list of numbers. For behind all the 
numbers lies America's ability to prevent 
the greatest of human tragedies and 
preserve our free way of life in a 
sometimes dangerous world. It is part of 
a careful, long-term plan to make 
America strong again after too many 
years of neglect and mistakes. 

Our efforts to rebuild America's 
defenses and strengthen the peace 
began 2 years ago when we requested a 
major increase in the defense program. 



Since then, the amount of those in- 
creases we first proposed has been 
reduced by half, through improveme) 
in management and procurement am 
other savings. 

The budget request that is now 
before the Congress has been trimm« 
to the limits of safety. Further deep • 
cannot be made without seriously em 
dangering the security of the nation. 
The choice is up to the men and won 
you've elected to the Congress, and I 
means the choice is up to you. 

Tonight, I want to explain to yoi 
what this defense debate is all abouti 
and why I'm convinced that the budg 
now before the Congress is necessar 
responsible, and deserving of your i 
port. And I want to offer hope for tl 
future. 

But first, let me say what the 
defense debate is not about. It is not 
about spending arithmetic. I know tf 
in the last few weeks you have been 
bombarded with numbers and percer 
ages. Some say we need only a 5% i 
crease in defense spending. The so-c 
alternate budget backed by liberals i 
the House of Representatives would 
lower the figure to 2%-3%, cutting < 
defense spending by $163 billion ove 
the next 5 years. 

The trouble with all these numk! 
is that they tell us little about the ki; 
of defense program America needs c 



Department of State Bull i" 



THE PRESIDENT 



snefits and security and freedom 
')ur defense effort buys for us. 
'i seems to have been lost in all this 
^e is the simple truth of how a 
^se budget is arrived at. It isn't 
^by deciding to spend a certain 
jer of dollars. Those loud voices 
jre occasionally heard charging that 
i)vernment is trying to solve a 
ifty problem by throwing money at 
^ nothing more than noise based on 
^nce. We start by considering what 
.|be done to maintain peace and 
ff all the possible threats against 
■curity. Then, a strategy for 
jthening peace and defending 
5t those threat must be agreed 
And, finally, our defense establish- 
must be evaluated to see what is 
fary to protect against any or all of 
itential threats. The cost of achiev- 
;se ends is totaled up, and the 
is the budget for national defense, 
lere is no logical way that you can 

spend X billion dollars less. 
an only say, which part of our 
;e measures do we believe we can 
hout and still have security 
;t all contingencies? Anyone in the 
ess who advocates a percentage or 
jific dollar cut in defense spending 
i be made to say what part of our 
hes he would eliminate, and he 
I be candid enough to acknowledge 
is cuts mean cutting our com- 
nts to allies or inviting greater 
• both. 



)efensive Strategy 

Ijfense policy of the United States 
[;d on a simple premise: The 
il States does not start fights. We 
)!ver be an aggressor. We maintain 
(rength in order to deter and de- 
gainst aggression— to preserve 
jm and peace. 

:nce the dawn of the atomic age, 
isought to reduce the risk of war 
fntaining a strong deterrent and 
iking genuine arms control. "Deter- 
1 means simply this; making sure 
:iversary who thinks about attack- 
;s United States, or our allies, or 
'tal interests, concludes that the 
f-o him outweigh any potential 
; Once he understands that, he 
^attack. We maintain the peace 
irh our strength; weakness only in- 
liggression. 

'lis strategy of deterrence has not 
i3d. It still works. But what it 
jto maintain deterrence has 
led. It took one kind of military 
:".o deter an attack when we had 



far more nuclear weapons than any 
other power; it takes another kind now 
that the Soviets, for example, have 
enough accurate and powerful nuclear 
weapons to destroy virtually all of our 
missiles on the ground. Now this is not 
to say that the Soviet Union is planning 
to make war on us. Nor do I believe a 
war is inevitable— quite the contrary. 
But what must be recognized is that our 
security is based on being prepared to 
meet all threats. 

There was a time when we depended 
on coastal forts and artillery batteries 
because, with the weaponry of that day, 
any attack would have had to come by 
sea. Well, this is a different world, and 
our defenses must be based on recogni- 
tion and awarenesss of the weaponry 
possessed by other nations in the 
nuclear age. 

We can't afford to believe that we 
will never be threatened. There have 
been two World Wars in my lifetime. 
We didn't start them and, indeed, did 
everything we could to avoid being 
drawn into them. But we were ill 
prepared for both— had we been better 
prepared, peace might have been 
preserved. 

For 20 years the Soviet Union has 
been accumulating enormous military 
might. They didn't stop when their 
forces exceeded all requirements of a 
legitimate defensive capability, and they 
haven't stopped now. During the past 
decade and a half, the Soviets have built 
up a massive arsenal of new strategic 
nuclear weapons— weapons that can 
strike directly at the United States. 

As an example, the United States in- 
troduced its last new intercontinental 
ballistic missile, the Minuteman III, in 
1969; and we're now dismantling our 
even older Titan missiles. But what has 
the Soviet Union done in these interven- 
ing years? Well, since 1969, the Soviet 
Union has built five new classes of 
ICBMs [intercontinental ballistic 



INTERCONTINENTAL MISSILES 



ki 



missiles] and upgraded these eight 
times. As a result, their missiles are 
much more powerful and accurate than 
they were several years ago; and they 
continue to develop more, while ours are 
increasingly obsolete. 

The same thing has happened in 
other areas. Over the same period, the 
Soviet Union built four new classes of 
submarine-launched ballistic missiles and 
over 60 new missile submarines. We 
built two new types of submarine 
missiles and actually withdrew 10 sub- 
marines from strategic missions. The 
Soviet Union built over 200 new 
Backfire bombers, and their brand new 
Blackjack bomber is now under develop- 
ment. We haven't built a new long-range 
bomber since our B-52s were deployed 
about a quarter of a century ago, and 
we've already retired several hundred of 
those because of old age. Indeed, despite 
what many people think, our strategic 
forces only cost about 15% of the 
defense budget. 

Another example of what's hap- 
pened. In 1978, the Soviets had 600 
intermediate-range nuclear missiles 
based on land and were beginning to add 
the SS-20— a new, highly accurate 
mobile missile with three warheads. We 
had none. Since then the Soviets have 
strengthened their lead. By the end of 
1979, when Soviet leader Brezhnev 
declared "a balance now exists," the 
Soviets had over 800 warheads. We still 
had none. A year ago this month, Mr. 
Brezhnev pledged a moratorium, or 
freeze, on SS-20 deployment. But by 
last August, their 800 warheads had 
become more than 1,200. We still had 
none— some freeze. At this time Soviet 
Defense Minister Ustinov announced 
"approximate parity of forces continues 
to exist." But the Soviets are still adding 
an average of three new warheads a 
week and now have 1,300. These 
warheads can reach their targets in a 
matter of a few minutes. We still have 
none. So far, it seems that the Soviet 
definition of parity is a box score of 
1 ,300 to nothing, in their favor. 

So, together with our NATO allies, 
we decided in 1979 to deploy new 
weapons, beginning this year as a deter- 
rent to their SS-20s and as an incentive 
to the Soviet Union to meet us in 
serious arms control negotiations. We 
will begin that deployment late this 



(White House photos) 



1983 



THE PRESIDENT 



1300 



INTERMEDIATE RANGE 

WEAPONS (LAND BASED) 



WEAPONS PRODUCTKi 
1974-1982 



PARITY. 
FREEZE 



RIT^ 



BALANCE 




SS-20 



USSR 1300 



US 



600 



1978 



1980 



1982 



year. At the same time, however, we're 
willing to cancel our program if the 
Soviets will dismantle theirs. This is 
what we've called a zero-Zero plan. The 
Soviets are now at the negotiating table; 
and I think it's fair to say that without 
our planned deployments, they wouldn't 
be there. 

Now, let's consider conventional 
forces. Since 1974, the United States 
has produced 3,050 tactical combat air- 
craft. By contrast, the Soviet Union has 
produced twice as many. When we look 
at attack submarines, the United States 
has produced 27 while the Soviet Union 
has produced 61. For armored vehicles, 
including tanks, we have produced 
11,200. The Soviet Union has produced 
54,000— nearly 5 to 1 in their favor. 
Finally, with artillery, we have produced 
950 artillery and rocket launchers while 
the Soviets have produced more than 
13,000— a staggering 14-to-l ratio. 



Spread of Soviet Military Influence 

There was a time when we were able to 
offset superior Soviet numbers with 
higher quality. But today, they are 
building weapons as sophisticated and 
modern as our own. As the Soviets have 
increased their military power, they 
have been emboldened to extend that 
power. They are spreading their military 
influence in ways that can directly 
challenge our vital interests and those of 
our allies. 

The following aerial photographs, 
most of them secret until now, illustrate 
this point in a crucial area very close to 
home: Central America and the Carib- 
bean Basin. They are not dramatic 
photographs. But I think they help give 
you a better understanding of what I am 
talking about. 



® 



AIR( 

__5S 



® 






SUBMARINES 



10 



Department of State Bl Jti 



THE PRESIDENT 



rhis Soviet intelligence collection 
ity less than 100 miles from our 
t is the largest of its kind in the 
d. The acres and acres of antennae 

nd intelligence monitors are 
eted on key U.S. military installa- 

and sensitive activities. The in- 
ation in Lourdes, Cuba, is manned 
,500 Soviet technicians. And the 
lite ground station allows instant 
■nunications with Moscow. This 
juare-mile facility has grown by 

than 60% in size and capability 
ig the past decade, 
n western Cuba, we see this mili- 
airfield and its compliment of 
em, Soviet-built MiG-23 aircraft. 
Soviet Union uses this Cuban air- 
for its own long-range reconnais- 
e missions. And earlier this month, 
modern Soviet antisubmarine war- 
aircraft began operating from it. 
ng the past 2 years, the level of 
jet arms exports to Cuba can only be 
pared to the levels reached during 
Cuban missile crisis 20 years ago. 
rhis third photo, which is the only 
lin this series that has been previous- 
jade public, shows Soviet military 
ware that has made its way to Cen- 
JAmerica. This airfield with its MI-8 
opters, antiaircraft guns, and pro- 
;d fighter sites is one of a number of 
ary facilities in Nicaragua which has 
ved Soviet equipment funneled 
agh Cuba and reflects the massive 
ary buildup going on in that coun- 

Dn the small island of Grenada at 
iouthern end of the Caribbean chain, 
Cubans with Soviet financing and 

are in the process of building an 
sld with a 10,000-foot runway. 

ida doesn't even have an air force. 

is it intended for? The Caribbean is 
ry important passageway for our in- 
itional commerce and military lines 
immunication. More than half of all 
rican oil imports now pass through 
Caribbean. The rapid buildup of 

's military potential is unrelated 
ly conceivable threat to this island 
try of under 110,000 people and 
ly at odds with the patterns of the 
3rn Caribbean states, most of which 
inarmed. 

The Soviet-Cuban militarization of 
lada, in short, can only be seen as 





THE PRESIDENT 




power projection into the re^on. Am 
is in this important economic and 
strategic area that we're trying to he 
the Governments of El Salvador, Cos 
Rica, Honduras, and others in their 
struggles for democracy against guei 
rillas supported through Cuba and 
Nicaragua. 

These pictures only tell a small p 
of the story. I wish I could show you 
more without compromising our mos 
sensitive intelligence sources and 
methods. But the Soviet Union is als 
supporting Cuban military forces in 
Angola and Ethiopia. They have bas 
Ethiopia and South Yemen, near the 
Persian Gulf oil fields. They have tal 
over the port that we built at Cam F 
Bay in Vietnam. And now for the fif 
time in history, the Soviet Navy is 
force to be reckoned with in the So 
Pacific. 

Some people may still ask: Wou) 
the Soviets ever use their formidablt 
military power? Well, again, can we 
ford to believe they won't? There is 
Afghanistan. And in Poland the Sov 
denied the will of the people and, in 
doing, demonstrated to the world he 
their military power could also be us 
to intimidate. 

The final fact is that the Soviet 
Union is acquiring what can only be 
sidered an offensive military force. ' 
have continued to build far more int 
continental ballistic missiles than thf 
could possibly need simply to deter ; 
attack. Their conventional forces ari' 
trained and equipped not so much tc 
fend against an attack as they are ti 
permit sudden surprise offenses of t 



Repairing U.S. Defenses 

Our NATO allies have assumed a gr 
defense burden, including the militai 
draft in most countries. We're work) 
with them and our other friends arc 
the world to do more. Our defensive 
strategy means we need military for 
that can move very quickly, forces ti 
are trained and ready to respond to. 
emergency. 

Every item in our defense pro- 
gram—our ships, our tanks, our pla 
our funds for training and spare 
parts— is intended for one all-import 
purpose: to keep the peace. Unfortu 
ly, a decade of neglecting our milita; 
forces has called into question our a 
to do that. 

When I took office in January V 
I was appalled by what I found: 
American planes that couldn't fly an ' 
American ships that couldn't sail for^d 
of spare parts and trained personne f 



12 



Department of State Bui i" 



THE PRESIDENT 



cient fuel and ammunition for 
ial training. The inevitable result 

was poor morale in our Armed 
i, difficulty in recruiting the 
young Americans to wear the 
and difficulty in convincing our 
sxperienced military personnel to 
ri. 

lere was a real question then 
how well we could meet a crisis. 
was obvious that we had to begin 
ir modernization program to en- 
e could deter aggression and 
ve the peace in the years ahead. 
d to move immediately to improve 
sic readiness and staying power of 
nventional forces, so they could 
■and, therefore, help deter — a 
We had to make up for lost years 
^stment by moving forward with a 

Frm plan to prepare our forces to 
r the military capabilities our 
aries were developing for the 

now that all of you want peace, 
do I. I know, too, that many of 
riously believe that a nuclear 
would further the cause of peace, 
freeze now would make us less, 
're, secure and would raise, not 
, the risks of war. It would be 
unverifiable and would seriously 
ut our negotiations on arms 
ion. It would reward the Soviets 
ir massive military buildup while 
ting us from modernizing our ag- 
i increasingly vulnerable forces. 
Jheir present margin of superiori- 
«y should they agree to arms 
(ions knowing that we were pro- 
i from catching up? 
:lieve me, it wasn't pleasant for 
!ne who had come to Washington 
iiined to reduce government 
(ng, but we had to move forward 
ne task of repairing our defenses 
•would lose our ability to deter 
lit now and in the future. We had 
ijionstrate to any adversary that 
ision could not succeed and that 
ly real solution was substantial, 
pie, and effectively verifiable arms 
(ion— the kind we're working for 
Slow in Geneva. 

lanks to your strong support, and 
<san support from the Congress, 
pn to turn things around. Already 
neeing some very encouraging 
(•. Quality recruitment and reten- 
|e up dramatically— more high 
I graduates are choosing military 
Is and more experienced career 
|ne! are choosing to stay. Our men 
Umen in uniform at last are get- 
|e tools and training they need to 
Ir jobs. 



Ask around today, especially among 
our young people, and I think you will 
find a whole new attitude toward serv- 
ing their country. This reflects more 
than just better pay, equipment, and 
leadership. You, the American people, 
have sent a signal to these young people 
that it is once again an honor to wear 
the uniform. That's not something you 
measure in a budget, but it's a very real 
part of our nation's strength. 

It'll take us longer to build the kind 
of equipment we need to keep peace in 
the future, but we've made a good start. 
We haven't built a new long-range 
bomber for 21 years. Now we're building 
the B-1. We hadn't launched one new 
strategic submarine for 17 years. Now 
we're building one Trident submarine a 
year. Our land-based missiles are in- 
creasingly threatened by the many huge, 
new Soviet ICBMs. We're determining 
how to solve that problem. At the same 
time, we're working in the START 
[Strategic Arms Reduction Talks] and 
INF [intermediate-range nuclear forces] 
negotiations with the goal of achieving 
deep reductions in the strategic and in- 
termediate nuclear arsenals of both 
sides. 

We have also begun the long-needed 
modernization of our conventional 
forces. The Army is getting its first new 
tank in 20 years. The Air Force is 
modernizing. We're rebuilding our Navy 
which shrank from about 1,000 ships in 
the late 1960s to 453 during the 1970s. 
Our nation needs a superior Navy to 
support our military forces and vital in- 
terests overseas. We're now on the road 
to achieving a 600-ship Navy and in- 
creasing the amphibious capabilities of 
our Marines, who are now ser\'ing the 
cause of peace in Lebanon. And we're 
building a real capability to assist our 
friends in the vitally important Indian 
Ocean and Persian Gulf region. 

The Need for Defense Resources 

This adds up to a major effort, and it 
isn't cheap. It comes at a time when 
there are many other pressures on our 
budget, and when the American people 
have already had to make major sacri- 
fices during the recession. But we must 
not be misled by those who would make 
defense once again the scapegoat of the 
Federal budget. 

The fact is that in the past few 
decades we have seen a dramatic shift in 
how we spend the taxpayer's dollar. 
Back in 1955, payments to individuals 
took up only about 20% of the Federal 
budget. For nearly three decades, these 



payments steadily increased, and this 
year will account for 49% of the budget. 
By contrast, in 1955 defense took up 
more than half of the Federal budget. 
By 1980, this spending had fallen to a 
low of 23%. Even with the increase that 
I am requesting this year, defense will 
still amount to only 28% of the budget. 

The calls for cutting back the 
defense budget come in nice, simple 
arithmetic. They're the same kind of talk 
that led the democracies to neglect their 
defenses in the 1930s and invited the 
tragedy of World War II. We must not 
let that grim chapter of history repeat 
itself through apathy or neglect. 

This is why I'm speaking to you 
tonight— to urge you to tell your 
Senators and Congressmen that you 
know we must continue to restore our 
military strength. If we stop in mid- 
stream, we will send a signal of decline, 
of lessened will, to friends and adver- 
saries alike. Free people must voluntari- 
ly, through open debate and democratic 
means, meet the challenge that totali- 
tarians pose by compulsion. It's up to us, 
in our time, to choose and choose wisely 
between the hard but necessary task of 
preserving peace and freedom and the 
temptation to ignore our duty and blind- 
ly hope for the best while the enemies of 
freedom grow stronger day by day. 

The solution is well within our 
grasp. But to reach it, there is simply no 
alternative but to continue this year, in 
this budget, to provide the resources we 
need to preserve the peace and guaran- 
tee our freedom. 

Commitment to Arms Control 

Now, thus far tonight I've shared with 
you my thoughts on the problems of na- 
tional security we must face together. 
My predecessors in the Oval Office have 
appeared before you on other occasions 
to describe the threat posed by Soviet 
power and have proposed steps to ad- 
dress that threat. But since the advent 
of nuclear weapons, those steps have 
been increasingly directed toward deter- 
rence of aggression through the promise 
of retaliation. This approach to stability 
through offensive threat has worked. 
We and our allies have succeeded in 
preventing nuclear war for more than 
three decades. 

In recent months, however, my ad- 
visers, including, in particular, the Joint 
Chiefs of Staff, have underscored the 
necessity to break out of a future that 
relies solely on offensive retaliation for 
our security. Over the course of these 
discussions, I've become more and more 



983 



13 



THE PRESIDENT 



PERCENT OF BUDGET 

50 n 



SOCIAL 
SPENDING 




1960 



1970 



1980 



deeply convinced that the human spirit 
must be capable of rising above deaHng 
with other nations and human beings by 
threatening their existence. Feeling this 
way, I believe we must thoroughly ex- 
amine every opportunity for reducing 
tensions and for introducing greater 
stability into the strategic calculus on 
both sides. 

One of the most important contribu- 
tions we can make is, of course, to lower 
the level of all arms and particularly 
nuclear arms. We are engaged right 
now in several negotiations with the 
Soviet Union to bring about a mutual 
reduction of weapons. 

I will report to you a week from 
tomorrow my thoughts on that score. 
But let me just say, I am totally commit- 
ted to this course. If the Soviet Union 
will join with us in our effort to achieve 
major arms reduction, we will have suc- 
ceeded in stabilizing the nuclear balance. 
Nevertheless, it will still be necessary to 
rely on the specter of retaliation, on 
mutual threat. And that's a sad commen- 
tary on the human condition. Wouldn't it 
be better to save lives than to avenge 
them? Are we not capable of demon- 
strating our peaceful intentions by 
applying all our abilities and our ingenui- 
ty to achieving a truly lasting stability? 

I think we are. Indeed, we must. 
After careful consultation with my ad- 
visers, including the Joint Chiefs of 



Staff, I believe there is a way. Let me 
share with you a vision of the future 
which offers hope. It is that we embark 
on a program to counter the awesome 
Soviet missile threat with measures that 
are defensive. Let us turn to the very 
strengths in technology that spawned 
our great industrial base and that have 
given us the quality of life we enjoy to- 
day. 

What if free people could live secure 
in the knowledge that their security did 
not rest upon the threat of instant U.S. 
retaliation to deter a Soviet attack, that 
we could intercept and destroy strategic 
ballistic missiles before they reached our 
own soil or that of our allies? 

I know this is a formidable, technical 
task; one that may not be accomplished 
before the end of this century. Yet, cur- 
rent technology has attained a level of 
sophistication where it is reasonable for 
us to begin this effort. It will take years, 
probably decades of effort on many 
fronts. There will be failures and set- 
backs, just as there will be successes and 
breakthroughs. And as we proceed, we 
must remain constant in preserving the 
nuclear deterrent and maintaining a 
solid capability for flexible response. 

But isn't it worth every investment 
necessary to free the world from the 
threat of nuclear war? We know it is. In 
the meantime, we will continue to pur- 
sue real reductions in nuclear arms, 
negotiating from a position of strength 



that can be ensured only by moderni; 
our strategic forces. 

At the same time, we must take 
steps to reduce the risk of a conven- 
tional military conflict escalating to 
nuclear war by improving our non- 
nuclear capabilities. America does 
possess— now— the technologies to at 
very significant improvements in the 
fectiveness of our conventional, non- 
nuclear forces. Proceeding boldly wil 
these new technologies, we can signi 
cantly reduce any incentive that the 
Soviet Union may have to threaten j 
tack against the United States or its! 
allies. I 

As we pursue our goal of defens j 
technologies, we recognize that our ,■ 
rely upon our strategic offensive po\ j 
to deter attacks against them. Their ! 
vital interests and ours are inextrica 
linked. Their safety and ours are one 
And no change in technology can or 
alter that reality. We must and shall 
continue to honor our commitments. 
I clearly recognize that defensive 
systems have limitations and raise o 
tain problems and ambiguities. If pa 
with offensive systems, they can be 
viewed as fostering an aggressive p( 
and no one wants that. But with the 
considerations firmly in mind, I a 
upon the scientific community in oui 
country, those who gave us nuclear 
weapons, to turn their great talents 
to the cause of mankind and world 
peace, to give us the means of rende 
these nuclear weapons impotent and 
solete. 

Tonight, consistent with our ( 
tions of the ABM [antiballistic missil 
Treaty and recognizing the need fori 
closer consultation with our allies, I' 
taking an important first step. I am 
directing a comprehensive and inten 
effort to define a long-term research 
development program to begin to 
achieve our ultimate goal of eliminat 
the threat posed by strategic nucleai 
missiles. This could pave the way fbi 
arms control measures to eliminate i 
weapons themselves. We seek neith« 
military superiority nor political adv 
tage. Our only purpose— one all peoj 
share— is to search for ways to redu 
the danger of nuclear war. 

My fellow Americans, tonight w 
launching an effort which holds the 
promise of changing the course of 
human history. There will be risks, i 
results take time. But I believe we c 
do it. As we cross this threshold, I i 
for your prayers and your support. 



'Text from White House press relea; 



14 



Department of State Bui *" 



THE PRESIDENT 



le Trade Challenge for the 1980s 



ddress before the Commonwealth 
San Francisco, California, on 
1 4. 1983.^ 

pleasure to be back here where 
ossroads of trade are meeting 
for ideas that stretch our sights 
limits of the horizon and beyond, 
iolden Gate city is a place where 
)reneurs with great dreams, dar- 
nd determination chart new paths 
igress through the winds and 
B of commerce. 

DU provide an appropriate setting 
American challenge for the 1980s, 
the help of your vision, courage, 
adership, we can begin the first 
a new voyage into the future, a 
in which commerce will be king, 
gle will soar, and America will be 
jightiest trading nation on Earth, 
haven't come here to echo those 
bearts who have little faith in 
can enterprise and ingenuity, 
ijlead for retreat and seek refuge 
rusty armor of a failed, protec- 
past. I believe, and I think you do 
lat the world hungers for leader- 
nd growth and that America can 
e it. And my message is that our 
listration will fight to give you the 
'ou need, because we know you 
t the job done. 

ir forefathers didn't shed their 
to create this union so that we 
become a victim nation. We're not 
nd daughters of second-rate stock, 
ive no mission of mediocrity. We 
Dorn to carry liberty's banner and 
he very meaning of progress, and 
)portunities have never been 
!r. We can improve the well-being 
people, and we can enhance the 
for democracy, freedom, peace, 
iman fulfillment around the world, 
stand up for principles of trade ex- 
)n through freer markets and 
!r competition among nations. 
dealing with our economy, more 
uestion than just prosperity, 
ately, peace and freedom are at 
The United States took the lead 
World War II in creating an inter- 
lal trading and financial system 
mited government's ability to 
)t trade. We did this because 
y had taught us the freer the flow 
de across borders, the greater the 
economic progress and the 
;r the impetus for world peace. 



But the deterioration of the free world 
and the U.S. economy in the 1970s led 
to the decline of Western security and 
the confidence of the people of the free 
world. 

Too many otherwise free nations 
adopted policies of government interven- 
tion in the marketplace. Many people 
began thinking that equity was incom- 
patible with growth. And they argued 
for no-growth societies, for policies that 
undermined free markets and com- 
promised our collective security. There 
can be no real security without a strong 
Western economy. And there can be no 
freedom unless we preserve the open 
and competitive international and finan- 
cial systems that we created after World 
War II. Prosperity alone cannot restore 
confidence or protect our basic values. 
We must also remember our objectives 
of peace and freedom. And then we can 
build a prosperity that will, once again, 
lift our heads and renew our spirits. 

Now, I'm not going to minimize the 
problems that we face or the long, tough 
road that we must travel to solve them. 
For a quarter of a century after the Sec- 
ond World War, we exported more 
goods each year to the rest of the world 
than we imported. We accumulated a 
surplus of funds which was invested at 
home and abroad and which created jobs 



Since 1976, imports have 
exceeded exports every 
year. And our trade 
deficit is expected to rise 
sharply in this year of 
1983. 



and increased economic prosperity. But 
during the past decade, we began im- 
porting more than we were exporting. 
Since 1976, imports have exceeded ex- 
ports every year. And our trade deficit 
is expected to rise sharply in this year of 
1983. 



In the past few years, high real in- 
terest rates have inhibited investment, 
greatly increased the value of the dollar, 
and made our goods— as a result— less 
competitive. High interest rates reflect 
skepticism by financial markets that our 
government has the courage to keep in- 
flation dovm by reducing deficit spend- 
ing. 

The Potential for Growth 

If the history of our great nation and 
the character of this breed called 
American mean anything at all, it is 
that, when we have believed in 
ourselves, when we pulled together- 
putting our wisdom and faith into 
action — we made the future work for 
us. And we can do that now. 

Wealth is not created inside some 
think tank on the Potomac. It is born in 
the hearts and minds of entrepreneurs 
all across Main Street America. For too 
long, government has treated the en- 
trepreneur more as an enemy than an 
ally. Our Administration has a better 
idea. We'll give you less bureaucracy, if 
you give America your audacity. We 
want you to out plan, out produce, and 
out sell the pants off this nation's com- 
petitors. You see, I believe in what 
General Patton once said, and I'm par- 
tial to cavalry officers. He said, "Don't 
tell people how to do things. Tell them 
what needs doing and then watch them 
surprise you with their ingenuity." 

Every citizen has a role and a stake 
in helping the United States meet her 
trade challenge in the 1980s. We need 
jobs. Well, one of the best job programs 
we can have is a great national drive to 
expand exports and that's part of our 
program. We have only to look beyond 
our own borders. The potential for 
growth is enormous: a $2-trillion market 
abroad, a chance to create millions of 
jobs and more income security for our 
people. We have barely seen the tip of 
that iceberg. Four out of five new 
manufacturing jobs created in the last 5 
years were in export-related industries. 
And yet, 90% of American manufac- 
turers do not export at all. We believe 



rl983 



15 



THE PRESIDENT 



tens of thousands of U.S. producers of- 
fer products and services which can be 
competitive abroad. Now, many of these 
are small- and medium-sized firms. 

Our Administration has a positive 
plan to meet the trade challenge on 
three key points. 

First, to lay a firm foundation for 
noninflationary growth based on endur- 
ing economic principles of fiscal and 
monetary discipline, competition incen- 
tives, thrift, and reward; 

Second, to enhance the ability of 
U.S. producers and industries to com- 
pete on a fair and equal basis in the in- 
ternational marketplace, to work with 
our trading partners to resolve outstand- 
ing problems of market access, and to 
chart new directions for free and fair 
trade in the products of the future. 

Third, to take the lead in assisting 
international financial and trade institu- 
tions to strengthen world growth and 
bolster the forces of freedom and 
democracy. 

Taken together, these actions give 
the United States a positive framework 
for leading our producers and trading 
partners toward more open markets, 
greater freedom, and human progress. 

But progress begins at home. Our 
economic reforms are based on time- 
tested principles: spending and 
monetary restraint to bring down infla- 
tion and interest rates and to give 
lenders confidence in long-term price 
stability; less regulatory interference so 
as to stimulate greater competition; and 
growth of enterprise and employment 
through tax incentives to ecncourage 
work, thrift, investment, and produc- 
tivity. 

Now, we've suffered a long, painful 
recession brought about by more than a 
decade of overtaxing and spending and, 
yes, government intervention. But reces- 
sion is giving way to a rainbow of 
recovery, reflecting a renaissance in 
enterprise. America is on the mend. In- 
flation has plunged from 12.4% in 1980 
to just 3.8% in the last 12 months. And 
in the last 6 months, it's been running at 
1.4%. We've sought common sense in 
government and competition, not con- 
trols, in the marketplace. Two years 
ago, we accelerated the deregulation of 
crude oil. And we heard ourselves de- 
nounced for fueling inflation. The na- 
tional average for a gallon of gasoline 
when we took office was $1.27, and now 
you can buy it in most places for less 
than a dollar. The prime interest rate 
was a crippling 21.5%. Now, it's down to 
10.5%. Tax rates have been cut. Real 



wages are improving. Personal savings 
and productivity are growing again. The 
stock market has hit a record high. Ven- 
ture capital investments have reached 
record levels. Production in housing, 
autos, and steel is gaining strength. And 
new breakthroughs in high technology 
are busting out all over. Katie, bar the 
door. We're on our way back. 

Let me say to the pessimists who 
would cancel our remaining tax incen- 
tives, I have one thing to say: Don't lay 
a hand on the third year of the people's 
tax cut or the indexing provision. Index- 
ing is our promise to every working man 
and woman that the future will not be 



made America the greatest nation od 
Earth. Let us create more opportuni' 
for all our citizens. And let us encoui 
achievement and excellence. We wanj 
America to be a nation of winners ag. 

Promoting Free Trade j 

So you might as well know that we \, 
not turn our backs on the principles j 
our recovery programs, especially orj 
principles of free trade. The great , 
English historian, Thomas Babingtoi| 
Macaulay, wrote more than a centur 
ago that free trade, one of the great 
blessings which a government can c( 



America is on the mend. Inflation has plunged 
from 12.4% in 1980 to just 3.8% in the last 12 
months. And in the last 6 months, it's been runni 

at 1.4%. 



like the past. There will be no more 
sneaky, midnight tax increases by a 
government resorting to bracket creep 
to indulge its thirst for deficit spending. 
To pretend eliminating indexes is 
somehow fair to working people remind 
me of Samuel Johnson's comment about 
the fellow who couldn't see any dif- 
ference between vice and virtue. He 
said, "Well, when he leaves the house, 
let's count the spoons." 

Capping the third year tax cut and 
eliminating indexing and our remaining 
tax cuts would send the worst possible 
signal to potential exporters. As I men- 
tioned, 90% of U.S. businesses do not 
export at all. And about 85% of our 
firms pay their taxes by the personal in- 
come tax. If those who would dismantle 
the tax cuts get their way, the chilling 
message to the business community will 
be: "Don't scrap and struggle to succeed, 
export, expand your business, and hire 
more workers because we won't thank 
and reward you for helping your coun- 
try. We'll punish you." 

Well, maybe I'm old-fashioned, but I 
don't think pitting one group of 
Americans against another is what the 
Founding Fathers had in mind. This na- 
tion was not built on a foundation of 
envy and resentment. The dream I've 
always believed in is, no matter who you 
are, no matter where you come from, if 
you work hard, pull yourself up, and 
succeed, then, by golly, you deserve 
life's pri-e. A.nd trying for that prize 



on a people, is unpopular in almost 
every country. Well, for some, time: 
haven't changed. 

There's a great hue and cry for 
bend to protectionist pressures. I've 
been around long enough to rememl 
that when we did that once before :' 
this century, something called Smoc 
Hawley, we lived through a nightm; 
World trade fell by 60%, contributii 
the great depression and to the poll 
turmoil that led to World War II. Ml 
and our trading partners are in the 
same boat. If one partner shoots a 1' 
in the bottom of the boat, does it m I 
sense for the other partner to shoot I 
another hole in the boat? There are ' 
those who say yes and call it gettinfjj 
tough. I call it getting wet— all over j 

We must plug the holes in the b 
of open markets and free trade and 
sail again in the direction of prospei 
No one should mistake our determii 
tion to use our full power and influt 
to prevent anyone from destroying 
boat and sinking us all. There's a fu 
damental difference between positi\ 
support of legitimate American inte 
and rights in world trade and the 
negative actions of protectionists. F 
trade can only survive if all parties 
by the same rules. But we're detern 
to insure equity in our markets. De: 
ing workers in industries from unfa 



Department of State Bu ti 



THE PRESIDENT 



redatory trade practices is not pro- 
[lism. It's legitimate action under 
^nd international law. 
pw, one example of protectionist 
[tion that could quickly sabotage 
^ry is the local content rule. This 
^tion, proposed in the Congress, 
force foreign and domestic 
"acturers of automobiles sold in the 
i States to build their cars with an 
ting percentage of U.S. parts and 
Stic labor. The Congressional 
^t Office concluded that this would 
\y more jobs than it would save, 
hat's true. It would add substan- 
to the cost of a new car. 
,"hat the proponents of this bunker 
tlity never point out is that the 
bf protectionism for one group of 
irs are always passed on to 
er group down the line. And once 
fegislation is passed, every other in- 
I' would be a target for foreign 
Ition. We would buy less from our 
i;rs. They'd buy less from us. The 
I economic pie would shrink. 
|es for political turmoil would in- 
I dramatically. 

ither than reacting in fear with 
r-thy-neighbor policies, let us lead 
Utrength and believe in our 
j's. Let's work at home and abroad 
lance the ability of U.S. producers 
jdustries to compete on a fair and 
basis in the international 
tplace. 

e're very excited about some land- 
legislation that I signed last 
■signed, as a matter of fact, here 
ifornia— the Export Trading Com- 
\.ct. It's an innovative idea based 
mwork. I'm confident it will create 
inds of new exporters, and I hope 
of them are sitting in this room, 
.w is designed to attract manufac- 
, export-management companies, 
, freightforwarders, and other ex- 
ervices into joint efforts to gain 
n markets. "The Commerce Depart- 
is holding seminars across the 
7 to promote the legislation, and 
sponse has been remarkable, 
lousands have attended, and in 
cases, the numbers were so over- 
ling people had to be turned away. 
lajority of attendees have not been 
rs, tax accountants, or, forgive me, 
rs, but business people— the people 
an take this legislation and use it. 
can expand our markets, become 
ters, or sell to export trading com- 
i who can do it for them. The bot- 
ne will be a breakthrough in ex- 



ports, higher growth, lower deficits, and 
a tremendous surge in new jobs and op- 
portunities for our people. Each billion 
dollars that we add in exports means 
tens of thousands of new jobs. 

More companies will seek the world 
of exports when they realize that 
government is not an adversary. It's 
your partner. And I don't mean senior 
partner. We have eased, substantially, 
taxation of foreign-earned income, and 
introduced a 25% tax credit for research 
and development. We're also working to 
reform the Foreign Corrupt Practices 
Act, not to weaken safeguards against 
bribery but to remove disincentives that 
discourage legitimate business transac- 
tions overseas. 

Another obstacle is export controls 
on technology. A backlog of two thou- 
sand applications greeted us when we 
arrived in office. We eliminated those 
and relaxed export controls on low 
technology items that do not jeopardize 
our national security. Still, there are 
limits. I'm confident each of you 



to the increases this year in the regular 
loan guarantee program for promoting 
U.S. farm exports. 

To retain America's technological 
edge— of which there is no greater 
evidence than California's Silicon 
Valley— and to revive our leadership in 
manufacturing, we've implemented a 
research and development policy to 
enhance the competitiveness of U.S. in- 
dustry in the world economy. In our 
1984 budget, we've asked for significant 
increases for basic research. And we will 
seek to improve the teaching of science 
and mathematics in secondary schools, 
so tomorrow's work force can better 
contribute to economic growth. We will 
also seek to encourage greater and more 
creative interaction between university 
and industry scientists and engineers, 
through programs similar to the one be- 
tween Hewlett Packard and Stanford 
University. 

Finally, we're taking steps to en- 
courage more industrial research and 
development through changes in our tax 



Either the free world continues to move forward 
and sustain the postwar drive toward more open 
markets, or we risk sliding back to the tragic 
mistakes of the 1930s, when governments convinced 
themselves that bureaucrats could do it better than 
entrepreneurs. The choice we make affects not only 
our prosperity but our peace and freedom. 



understands that we must avoid 
strengthening those who wish us ill by 
pursuing short-term profits at the ex- 
pense of free-world security. Trade must 
serve the cause of freedom, not the foes 
of freedom. 

To export more, we must do a bet- 
ter job promoting our products. We're 
strengthening our export credit pro- 
grams by increasing the level of the 
Export-Import Bank ceiling on export 
guarantees. We're also designing a tax 
alternative to the Domestic International 
Sales Corporation that will fully main- 
tain existing incentives to our exporters. 
We've begun a Commodity Credit Cor- 
poration blended export credit program 
for our farmers. And that's in addition 



and antitrust policy. And we will at- 
tempt to remove legal impediments that 
prevent inventors of new technology 
from reaping the rewards of their 
discoveries. 

Supporting American producers 
gives us the means to press our trading 
partners toward more free and open 
markets. We're challenging the unfair 
agricultural trade practices of Japan and 
the European Community. And we're 
charting a new course for the products 
of the future. We have agreed to a work 
program with the Government of Japan 
to eliminate trade and investment bar- 
riers to high technology industries. We 
have also established a working group 
with the Japanese to actively explore op- 
portunities for the development of abun- 
dant energy resources. 



THE PRESIDENT 



Leading Role of the U.S. 

By restoring strength to our economy, 
enhancing the ability of our producers to 
compete, America is leading its trading 
partners toward renewed growth around 
the world. The world economy, like ours, 
has been through a wrenching experi- 
ence: a decade of inflation, ballooning 
government spending, and creeping con- 
straints on productive enterprise. Other 
countries, including many of the devel- 
oping countries, are now making major 
efforts to restrain inflation and restore 
growth. The United States applauds 
these efforts, and we're working in the 
International Monetary Fund to keep a 
firm focus on the role of effective 
domestic policies in the growth and 
stability of the world economy. 

But for all countries, international 
trade and financial flows are extremely 
important. Either the free world con- 
tinues to move forward and sustain the 
postwar drive toward more open 
markets, or we risk sliding back to the 
tragic mistakes of the 1930s, when 
governments convinced themselves that 
bureaucrats could do it better than 
entrepreneurs. The choice we make af- 
fects not only our prosperity but our 
peace and freedom. If we abandon the 
principle of limiting government inter- 
vention in the world economy, political 
conflicts will multiply and peace will suf- 
fer, and that's no choice at all. 

The United States will carry the 
banner for free trade and a responsible 
financial system. These were the great 
principles at Bretton Woods, New 
Hampshire, in 1944, and they remain 
the core of U.S. policy. We will do so 
well aware of the changes that have oc- 
curred in the international trade and 
monetary system. 

In trade, for example, we've prac- 
tically eliminated the barriers which in- 
dustrial countries maintain at the border 
on manufactured products. Today, 
tariffs among these countries average 
less than 5%. Our problems arise instead 
from nontariff barriers which often 
reflect basic differences in domestic 
economic policies and structures among 
countries. These barriers are tougher to 
remove. We're determined to reduce 
government intervention as far as possi- 
ble and, where that is unrealistic, to in- 
sist on Hmits to such intervention. 



In trade with developing countries, 
on the other hand, tariffs and quotas 
still play a significant role. Here, the 
task is to find a way to integrate the 
developing countries into the liberal 
trading order of lower tariffs and dis- 
mantled quotas. They must come to ex- 
perience the full benefits and respon- 
sibilities of the system that has produced 
unprecedented prosperity among the in- 
dustrial countries. We've taken the lead, 
proposing the Caribbean Basin initiative 
to encourage poor and middle-income 
countries to trade more, and we pro- 
posed a North-South round of trade 
negotiations to maintain expanding 
trading opportunities for more advanced 
developing countries. We seek to build a 
collective partnership with all developing 
countries for peace, prosperity, and 
democracy. 

At the GATT [General Agreement 
on Tariffs and Trade] ministerial 
meeting last November, the United 
States took the lead in resisting protec- 
tionism, strengthening existing institu- 
tions, and addressing the key trade 
issues of the future. While we're not 
totally satisfied with the outcome of that 
meeting, we'll continue in our support of 
free and equal trade opportunities for all 
countries. 

Expanding trade is also the answer 
to our most pressing international finan- 
cial problem— the mounting debt of 
many developing countries. Without the 
opportunity to export, debt-troubled 
countries will have difficulty servicing, 
and eventually reducing, their large 
debts. Meanwhile, the United States will 
support the efforts of the international 
financial community to provide adequate 
financing to sustain trade and to en- 
courage developing countries in the ef- 
forts they are making to improve the 
basic elements of their domestic eco- 
nomic programs. 

Earlier this week I forwarded draft 
legislation to the Congress for additional 
American support for the International 
Monetary Fund. Lending by the IMF 
has a direct impact on American jobs 
and supports continued lending by com- 
mercial institutions. If such lending were 
to stop, the consequences for the Ameri- 
can economy would be very negative. 

This spring, in May, the United 
States will host the annual economic 
summit of the major industrial countries 
in Williamsburg, Virginia. The leaders of 
the greatest democracies will have a 



quiet opportunity to discuss the cri1 
issues of domestic and Internationa 
economic policy and reflect on then 
dividual and collective responsibiliti 
free peoples throughout the world, 
not a forum for decisionmaking. E; 
leader is responsible primarily to h 
her own electorate. But by exchanj, 
views, these leaders can gain a bet 
understanding of how the future ol 
own people depends on that of othi 

And may I just interject here, 
thing brand new in international n 
tions has been brought about by or 
Prime Minister Margaret Thatcher 
When we sit around those summit 
tables, the protocol is gone, and wi 
on a first-name basis. And she saw 
that. 

I began today by saying that ii 
believe in our abilities and work 
together, we can make America th 
mightiest trading nation on Earth, 
in this room, and not far from thi? 
building, are people and companiei 
the burning commitment that we i 
to make our country great. One oi 
companies, the Daisy Systems Coi 
tion, is a computer firm in Sunnyv 
California. It was formed in Augu 
1980, and it made $7 million in sal 
first shipping year. This year it ex 
to earn $25 million and by 1986, $ 
million. Daisy Corporation is a" 
selling its products in the markets 
France, Norway, Belgium, Great 1 
tain, Germany, Israel, and Japan, 
work force has nearly quadrupled 
last year. 

Well, my dream for America, 
know it's one you share, is to take 
kind of success story and multiply 
a million. We can do it. Albert Eii 
told us, "Everything that is really 
and inspiring is created by indivld: 
who labor in freedom." With all tb 
wisdom in our minds, and all the 1 
our hearts, let's give of ourselves 
make these coming years the grea 
America has ever known. 



'Text from Weekly Compilation of 
Presidential Documents of Mar. 7, 198 



Department of State E, He 



THE PRESIDENT 



rategic Importance of El Salvador 
d Central America 



ddr-ess before the National Associa- 
)f Manufacturers, Washington, 
on March 10, 1983.^ 

idn't come to Washington at an 
time, and we've certainly had our 
! of problems. But the signs of 
'ery are springing up all around us. 
e's no mistaking the fact that, at 
last, America is on the mend, and 
ourage and the vision of the people 
nstitutions represented here today 
•ve a big share of the credit for this 
earned but inflation-free recovery, 
n behalf of all your fellow citizens 
have been freed from the ravages 
naway inflation and can look again 
future of better times and then new 
rtunity, I thank you. 
America is meeting her challenge 
at home. But there are other 
Bnges, equally important, that we 

face. And today I'd like to talk to 
ibout one of them. Late last year, I 
;d Central America. Just a few 
;s ago, our U.N. Ambassador, Jeane 
Patrick, also toured the area. And 
e last few days, I have met with 
irs of the Congress to discuss recent 
ts in Central America and our 
ies in that troubled part of the 
i. So, today I'd like to report to you 
lese consultations and why they are 
■rtant to us all. 

Phe nations of Central America are 
ig our nearest neighbors. El Salva- 
for example, is nearer to Texas 

Texas is to Massachusetts. Central 
rica is simply too close, and the 
;egic stakes are too high, for us to 
re the danger of governments seiz- 
)ower there with ideological and 
ary ties to the Soviet Union, 
^et me show you just how important 
;ral America is. At the base of Cen- 
America is the Panama Canal. Half 
1 the foreign trade of the United 
es passes through either the canal 
ther Caribbean sealanes on its way 
• from our ports. And, of course, to 
lorth is Mexico, a country of enor- 
s human and material importance, 

which we share 1,800 miles of 
eful frontier. 

And between Mexico and the canal 
Central America. As I speak to you 
y, its countries are in the midst of 



the gravest crisis in their history. Ac- 
cumulated grievances and social and eco- 
nomic change are challenging traditional 
ways. New leaders with new aspirations 
have emerged who want a new and bet- 
ter deal for their peoples. That is good. 

The problem is that an aggressive 
minority has thrown in its lot with the 
Communists, looking to the Soviets and 
their own Cuban henchmen to help them 
pursue political change through violence. 
Nicaragua has become their base. These 
extremists make no secret of their goal. 
They preach the doctrine of a "revolu- 
tion without frontiers." Their first target 
is El Salvador. 



Importance of El Salvador 

Why is El Salvador important? Well, to 
begin with, there is the sheer human 
tragedy. Thousands of people have 
already died, and, unless the conflict is 
ended democratically, millions more 
could be affected throughout the hemi- 
sphere. The people of El Salvador have 
proved they want democracy. But if 
guerrilla violence succeeds, they won't 
get it. El Salvador will join Cuba and 
Nicaragua as a base for spreading fresh 
violence to Guatemala, Honduras, Costa 
Rica— probably the most democratic 
country in the world today. The killing 
will increase and so will the threat to 
Panama, the canal, and ultimately Mex- 
ico. In the process, vast numbers of 
men, women, and children will lose their 
homes, their countries, and their lives. 

Make no mistake. We want the same 
thing the people of Central America 
want— an end to the killing. We want to 
see freedom preserved where it now ex- 
ists and its rebirth where it does not. 
The Communist agenda, on the other 
hand, is to exploit human suffering in 
Central America to strike at the heart of 
the Western Hemisphere. By preventing 
reform and instilling their own brand of 
totalitarianism, they can threaten free- 
dom and peace and weaken our national 
security. 

I know a good many people wonder 
why we should care about whether Com- 
munist governments come into power in 
Nicaragua, El Salvador, or such other 



countries as Costa Rica, Honduras, 
Guatemala, and the islands of the Carib- 
bean. One columnist argued last week 
that we shouldn't care because their 
products are not that vital to our 
economy. That's like the argument of 
another so-called expert that we 
shouldn't worry about Castro's control 
over the island of Grenada— their only 
important product is nutmeg. 

Well, let me just interject right here. 
Grenada— that tiny, little island with 
Cuba at the west end of the Caribbean, 
Grenada at the east end— that tiny, lit- 
tle island is building now, or having built 
for it, on its soil and shores a naval 
base, a superior air base, storage bases 
and facilities for the storage of muni- 
tions, barracks and training grounds for 
the military. I'm sure all of that is simp- 
ly to encourage the export of nutmeg. 

People who make these arguments 
haven't taken a good look at a map late- 
ly or followed the extraordinary buildup 
of Soviet and Cuban military power in 
the region or read the Soviets' dis- 
cussions about why the region is import- 
ant to them and how they intend to use 
it. 

It isn't nutmeg that is at stake in the 
Caribbean and Central America. It is the 
U.S. national security. Soviet military 
theorists want to destroy our capacity to 
resupply Western Europe in case of an 
emergency. They want to tie down our 
attention and forces on our own 
southern border and so limit our capaci- 
ty to act in more distant places such as 
Europe, the Persian Gulf, the Indian 
Ocean, the Sea of Japan. Those Soviet 
theorists noticed what we failed to 
notice— that the Caribbean Sea and Cen- 
tral America constitute this nation's 
fourth border. 

If we must defend ourselves against 
a large hostile military presence on our 
border, our freedom to act elsewhere, to 
help others, and to protect strategically 
vital sealanes and resources has been 
drastically diminished. 

They know this. They have written 
about this. We have been slow to under- 
stand that the defense of the Caribbean 
and Central America against Marxist- 
Leninist takeover is vital to our national 
security in ways we're not accustomed 
to thinking about. For the past 3 years, 
under two presidents, the United States 
has been engaged in an effort to stop 
the advance of communism in Central 
America by doing what we do best — by 
supporting democracy. For 3 years, our 
goal has been to support fundamental 



THE PRESIDENT 



change in this region— to replace pover- 
ty with development and dictatorship 
with democracy. 

These objectives are not easy to at- 
tain, but we're on the right track. Costa 
Rica continues to set a democratic exam- 
ple, even in the midst of economic crisis 
and Nicaraguan intimidation. Honduras 
has gone from military rule to a freely 
elected civilian government. Despite in- 
credible obstacles, the democratic center 
is holding in El Salvador, implementing 
land reform and working to replace the 
politics of death with the life of 
democracy. 

So the good news is that our new 
policies have begun to work. Democracy, 
with free elections, free labor unions, 
freedom of religion, and respect for the 
integrity of the individual, is the clear 
choice of the overwhelming majority of 
Central Americans. In fact, except for 
Cuba and its followers, no government 
and no significant sector of the public 
anywhere in this hemisphere want to see 
the guerrillas seize power in El 
Salvador. 

The bad news is that the struggle 
for democracy is still far from over. 
Despite their success in largely eliminat- 
ing guerrilla political influence in popu- 
lated areas, and despite some improve- 
ments in military armaments and mobili- 
ty. El Salvador's people remain under 
strong pressure from armed guerrillas 
controlled by extremists with Cuban- 
Soviet support. 

The military capability of these guer- 
rillas—and I would like to stress military 
capability, for these are not peasant ir- 
regulars, they are trained military 
forces— this has kept political and 
economic progress from being turned in- 
to the peace the Salvadoran people so 
obviously want. Part of the trouble is in- 
ternal to El Salvador. But an important 
part is external: the availability of train- 
ing, tactical guidance, and military sup- 
plies coming into El Salvador from 
Marxist Nicaragua. 

I'm sure you've read about guerrillas 
capturing rifles from government na- 
tional guard units, and recently this has 
happened. But much more critical to 
guerrilla operations are the supplies and 
munitions that are infiltrated into El 
Salvador by land, sea, and air— by pack 
mules, by small boats, and by small air- 
craft. These pipelines fuel the guerrilla 
offensives and keep alive the conviction 
of their extremist leaders that power 
will ultimately come from the barrels of 
their guns. 



Now, all this is happening in El 
Salvador just as a constitution is being 
written, as open presidential elections 
are being prepared, and as a peace com- 
mission named last week has begun to 
work on amnesty and national reconcilia- 
tion to bring all social and political 
groups into the democratic process. It is 
the guerrilla militants who have so far 
refused to use democratic means, have 
ignored the voice of the people of El 
Salvador, and have resorted to terror, 
sabotage, and bullets instead of the 
ballot box. 



It isn't nutmeg that is at 
stake in the Caribbean 
and Central America. It 
is the U.S. national 
security. 



Questions Concerning El Salvador 

During the past week, we have dis- 
cussed all of these issues and more with 
leaders and Members of the Congress. 
Their views have helped shape our own 
thinking, and I believe that we've de- 
veloped a common course to follow. 
Here are some of the questions raised 
most often. 

First: How bad is the military 
situation? It is not good. Salvadoran 
soldiers have proved that when they are 
well trained, led, and supplied, they can 
protect the people from guerrilla at- 
tacks. But so far, U.S. trainers have 
been able to train only 1 soldier in 10. 
There is a shortage of experienced of- 
ficers; supplies are unsure. The guer- 
rillas have taken advantage of these 
shortcomings. For the moment, at least, 
they have taken the tactical initiative 
just when the sharply limited funding 
Congress has so far approved is running 
out. 

A second vital question is: Are we 
going to send American soldiers into 
combat? And the answer to that is a flat 



A third question: Are we going to 
Americanize the war with a lot of U.S. 
combat advisers? And again the answer 
is no. Only Salvadorans can fight this 
war, just as only Salvadorans can decide 



El Salvador's future. What we can ■ 
help to give them the skills and sup 
they need to do the job for themsel ■ 
That mostly means training. Witho' 
playing a combat role themselves a: 
without accompanying Salvadoran i ' 
into combat, American specialists c ' 
help the Salvadoran Army improve I 
operations. Over the last year, desj I 
manifest needs for more training, \ ' 
have scrupulously kept our training ' 
tivities well below our self-imposed ' 
numerical limit on numbers of trail I 
We are currently reviewing what v I 
do to provide the most effective tn I 
possible to determine the minimum ) 
of trainers needed and where the t ■ 
ing should best take place. We thir I 
best way is to provide training out ' 
El Salvador, in the United States, ' 
elsewhere, but that costs a lot mor I 
the number of U.S. trainers in El f 
Salvador will depend upon the res( I 
available. ' 

Question four: Are we seekiri 
political or a military solution? I j 

all I and others have said, some pe I 
still seem to think that our concen j 
security assistance means that all j 
care about is a military solution. T | 
nonsense. Bullets are no answer t( j 
nomic inequities, social tensions, o n 
political disagreements. Democrac 
what we want. And what we want ti 
enable Salvadorans to stop the kill 
and sabotage so that economic anc 
political reforms can take root. Th a 
solution can only be a political one 

This reality leads directly to 
fifth question: Why not stop the l 
ings and start talking? Why not 
negotiate? Well, negotiations are 
already a key part of our policy. V a 
port negotiations among all the na .m 
of the region to strengthen democ y 
to halt subversion, to stop the llov : 
arms, to respect borders, and to r 
all the foreign military advisers— 1 
Soviets, the Cubans, the East Ger J« 
the PLO [Palestine Liberation Or^ 'H 
tion], as well as our own— from th 
region. A regional peace initiative ;Di 
emerging. We've been in close tou 
with its sponsors and wish it well. M 
we support negotiations within na '- 
aimed at expanding participation 
democratic institutions— at get t mi I 
parties to participate in free, nnii\ 
elections. 

What we oppose are negotiati 
that would be used as a cynical dt ' 
for dividing up power behind the 
people's back. We cannot support 



Departnnent of State B le' 



THE PRESIDENT 



lations which, instead of expanding 
fracy, try to destroy it— negotia- 
Ivhich would simply distribute 
i among armed groups without the 
nt of the people of El Salvador, 
lade that mistake some years ago 
KS when we pressed and pressured 
[^otian Government to form a 
oment, a co-op, with the Pathet 
■armed guerrillas who'd been doing 
the guerrillas are doing in El 
flor. And once they had that tri- 
ip government, they didn't rest un- 
ee guerrillas, the Pathet Lao, had 
I total control of the government of 
! 

;ie thousands upon thousands of 
dorans who risked their lives to 
kst year should not have their 
fe thrown into the trash heap this 
iy letting a tiny minority on the 
•' of a wide and diverse political 
um shoot its way into power. No, 
ly legitimate road to power, the 
oad we can support, is through the 
booth, so that the people can 
; for themselves— choose, as His 
!ss the Pope said Sunday, "far 
:error and in a climate of demo- 
i conviviality." This is fundamental, 
: is a moral as well as a practical 
^that all free people of the 
Seas share. 



folicy Toward El Salvador 

ig consulted with the Congress, let 
til you where we are now and what 
<i\\ be doing in the days ahead. We'll 
;me all the help we can get. We will 
i^mitting a comprehensive, inte- 
il, economic and military assistance 
lor Central America. 

Irst, we will bridge the existing 
li military assistance. Our projec- 
bf the amount of military assist- 
Eieeded for El Salvador have re- 
id relatively stable over the past 2 
r However, the Continuing Resolu- 
I udget procedure in the Congress 
"ecember led to a level of U.S. 
Jty assistance for El Salvador in 
Jbelow what we'd requested, below 
(Provided in 1982, and below that re- 
^d for 1984. I am proposing that 
'Million of the monies already ap- 
>>'iated for our worldwide military 
iiance programs be immediately re- 
■^ted to El Salvador. 

urther, to build the kind of disci- 
L4, skilled army that can take and 
r.he initiative while respecting the 
i^; of its people, I will be amending 

ipplemental that is currently before 



the Congress, to reallocate $50 million 
to El Salvador. These funds will be 
sought without increasing the overall 
amount of the supplemental that we 
have already presented to Congress. 
And, as I have said, the focus of this 
assistance will remain the same: to train 
Salvadorans so that they can defend 
themselves. Because El Salvador's 
security problems are not unique in the 
region, I will also be asking for an addi- 
tional $20 million for regional security 
assistance. These funds will be used to 
help neighboring states to maintain their 
national security and will, of course, be 
subject to full congressional review. 

Second, we will work hard to sup- 
port reform, human rights, and democ- 
racy in El Salvador. Last Thursday, the 
Salvadoran Government extended the 
land reform program which has already 
distributed 20% of all the arable land in 
the country and transformed more than 
65,000 farm workers into farm owners. 
What they ask is our continued eco- 
nomic support while the reform is com- 
pleted. And we will provide it. With our 
support, we expect that the steady prog- 
ress toward more equitable distribution 
of wealth and power in El Salvador will 
continue. 

Third, we will, I repeat, continue to 
work for human rights. Progress in this 
area has been slow, sometimes disap- 
pointing. But human rights means work- 
ing at problems, not walking away from 
them. To make more progress, we must 
continue our support, advice, and help to 
El Salvador's people and democratic 
leaders. Lawbreakers must be brought 
to justice, and the rule of law must sup- 
plant violence in settling disputes. The 
key to ending violations of human rights 
is to build a stable, working democracy. 
Democracies are accountable to their 
citizens. And when abuses occur in a 
democracy, they cannot be covered up. 
With our support, we expect the govern- 
ment of El Salvador to be able to move 
ahead in prosecuting the accused and in 
building a criminal justice system appli- 
cable to all and ultimately accountable to 
the elected representatives of the peo- 
ple. 

Now, I hope you've noticed that I 
was speaking in millions, not billions, 
and that, after 2 years in Federal office, 
is hard to do. In fact, there are some 
areas of government where, I think, 
they spill as much as I've talked about 
here over a weekend. 

Fourth, the El Salvador Govern- 
ment proposes to solve its problems the 



only way they can be solved fairly— by 
having the people decide. President 
Magana has just announced nationwide 
elections moved up to this year, calling 
on all to participate— adversaries as well 
as friends. To help political adversaries 
participate in the elections, he has ap- 
pointed a peace commission, including a 
Roman Catholic bishop and two inde- 
pendents. And he has called on the 
Organization of American States (OAS) 
and the international community to help. 
We were proud to participate, along 
with representatives of other democratic 
nations, as observers in last March's 
Constituent Assembly elections. We 
would be equally pleased to contribute 
again to any international effort, 
perhaps in conjunction with the OAS, to 
help the government insure the broadest 
possible participation in the upcoming 
elections— with guarantees that all, in- 
cluding critics and adversaries, can be 
protected as they participate. 

Let me just say a word about those 
elections last March. A great worldwide 
propaganda campaign had, for more 
than a year, portrayed the guerrillas as 
somehow representative of the people of 
El Salvador. We were told over and 
over again that the government was the 
oppressor of the people. 

Came the elections, and suddenly it 
was the guerrilla force threatening 
death to any who would attempt to vote. 
More than 200 busses and trucks were 
attacked and burned and bombed in an 
effort to keep the people from going to 
the polls. But they went to the polls, 
they walked miles to do so and stood in 
long lines for hours and hours. Our own 
congressional observers came back and 
reported one instance that they saw 
themselves of a woman, who had been 
shot by the guerrillas for trying to get 
to the polls, standing in the line refusing 
medical attention until she had had her 
opportunity to go in and vote. More 
than 80% of the electorate voted. I don't 
believe here in our land, where voting is 
so easy, we've had a turnout that great 
in the last half century. They elected the 
present government, and they voted for 
order, peace, and democratic rule. 

Promoting Regional 
Economic Progress 

Finally, we must continue to help the 
people of El Salvador and the rest of 
Central America and the Caribbean to 
make economic progress. More than 



THE PRESIDENT 



three-quarters of our assistance to this 
region has been economic. Because of 
the importance of economic development 
to that re^on, I will ask the Congress 
for $65 million in new monies and the 
reprogramming of $103 million from 
already appropriated worldwide funds 
for a total of $168 million in increased 
economic assistance for Central 
America. And to make sure that this 
assistance is as productive as possible, 
I'll continue to work with the Congress 
for the urgent enactment of the long- 
term opportunities for trade and free 
initiative that are contained in the Carib- 
bean Basin initiative. 

In El Salvador and in the rest of 
Central America, there are today thous- 
ands of small businessmen, farmers, and 
workers who have kept up their produc- 
tivity as well as their spirits in the face 
of personal danger, guerrilla sabotage, 
and adverse economic conditions. With 
them stand countless national and local 
officials, military and civic leaders, and 
priests who have refused to give up on 
democracy. Their struggle for a better 
future deserves our help. We should be 
proud to offer it, for, in the last 
analysis, they are fighting for us, too. 

The Need for U.S. Support 

By acting responsibly and avoiding il- 
lusory shortcuts, we can be both loyal to 
our friends and true to our peaceful, 
democratic principles. A nation's char- 
acter is measured by the relations it has 
with its neighbors. We need strong, 
stable neighbors with whom we can 
cooperate. And we will not let them 
down. 

Our neighbors are risking life and 
limb to better their lives, to improve 
their lands, and to build democracy. All 
they ask is our help and understanding 
as they face dangerous, armed enemies 
of liberty, and that our help be as sus- 
tained as their own commitment. None 
of this will work if we tire or falter in 
our support. I don't think that is what 
the American people want or what our 
traditions and faith require. Our neigh- 
bors' struggle for a better future de- 
serves our help, and we should be proud 
to offer it. 

We would, in truth, be opening a 
two-way street. We have never, I 
believe, fully realized the great potential 
of this Western Hemisphere. Oh, yes, I 
know in the past we have talked of 
plans, we've gone down there every once 
in a while with a great plan somehow 
for our neighbors to the south, but it 
was always a plan which we— the big 



colossus of the north— would impose on 
them. It was our idea. 

On my trip to Central and South 
America, I asked for their ideas. I 
pointed out that we had a common heri- 
tage. We'd all come as pioneers to these 
two great continents. We worshipped 
the same God, and we'd lived at peace 
with each other longer than most people 
in other parts of the world. 

There are more than 600 million of 
us calling ourselves Americans— North, 
Central, and South. We haven't really 
begun to tap the vast resources of these 
continents. 

Without sacrificing our national 
sovereignties, our own individual 
cultures or national pride, we could as 
neighbors make this Western Hemi- 
sphere — our hemisphere— a force for 
good such as the Old World has never 
seen. But it starts with the word neigh- 
bor. And that is what I talked about 
down there and sought their partner- 
ship — their equal partnership — in we of 



the Western Hemisphere coming 
together to truly develop fully the ] 
tial this hemisphere has. 

Last Sunday, His Holiness Popei 
John Paul II prayed that the measu: 
announced by President Magana wo 
"contribute to orderly and peaceful ] 
ress" in El Salvador, progress "foun 
on the respect for the rights of all, i 
that all have the possibility to coope 
in a climate of true democracy for t 
promotion of the common good." 

My fellow Americans, we in the 
United States join in that prayer foi 
democracy and peace in El Salvadoi 
and we pledge our moral and mater 
support to help the Salvadoran peo{ '■ 
achieve a more just and peaceful fu' 
And in doing so, we stand true to b 
the highest values of our free societ 
and our own vital interests. 



'Text from Weekly Compilation of 
Presidential Documents of Mar. 14, 198 



News Conference of February 16 
(Excerpts) 



Q. The Senate Foreign Relations Com- 
mittee today held off your nomination 
of Kenneth Adelman as arms control 
director, and several Senators asked 
that you withdraw his nomination. 
Will you? 

A. No, I believe the young man is 
eminently qualified for this. All of his 
experience indicates it. He is well 
educated. He is a very intelligent 
man— his experience with Jeane 
Kirkpatrick up at the United Nations 
and all. And I don't believe that they, in 
delaying this, have done anything to 
help us in our efforts to get an arms 
reductions agreement. I look very much 
forward to having him doing this, and I 
have to disagree with those who — 

First of all, arms reduction should 
not be a political problem on the Hill. 
It's too serious, and we are too con- 
cerned with it. Frankly, I feel that since 
I was the one who took the lead in 
bringing about the first real arms reduc- 
tion talks that we've ever been able to 
hold with the Soviet Union— and they 
are engaged in those talks right now — I 
believe that I had a right to ask for my 
choice of whom I thought could be of 
help to me in that. 



Q. What do you expect to do i 
the next week to turn around thai 
majority that is now against Mr. 
Adelman? And if Mr. Adelman caii 
win the confidence of the Republi 
majority in the Senate Foreign R( 
tions Committee, how do you expr 
him to be an effective spokesman 
the United States with the Soviet. 
Union and our European allies? 

A. I think that what I'll do— yd 
don't give away trade secrets or 
anything, but I will try to be as per 
suasive as I can and make them see 
light. If that falls short, maybe I'll t 
make them feel the heat. 

Q. Since November 1981 youri 
ministration has stuck to the so-c;B 
zero option in the INF [intermedi:^ 
range nuclear forces] phase, and fit 
tack so far has just led to deadloe 
There's been a good deal of debat(jnr 
side the Administration about off Jul 
a different position, one that migl 
lead to more bargaining. You've a 
parently chosen not to do that. Ca' 
you tell us why? 

A. No, the situation is just v\:i< > 
what [Vice President] George Bush 
telling our friends in Europe — callii.a' 
tention back to when I first, before « 



22 



Department of State BuJ 



THE PRESIDENT 



; (lull, introduced this proposal for 
' i|iiin[i — I said that we would 
.Male III good faith any legitimate 
' wal that might be offered. We still 

•ir Mime thing. So far, no legitimate 
I fipioposal has been offered that 
il warrant negotiation or study. But 

1 lulii've that the zero option is the 
ill hmii ground in this situation, that 
■ lipiirtunity in that area to get rid of 
111 ire i-lass of weapons and release 
itln' ."^iiviet Union, the Eastern bloc, 
if\estern Europe from the threat 
lis hanging over them warrants do- 
;lir best to get that solution, 

^. By clinging to that position, if 
ipading nowhere, don't you run the 
lof the worst of both worlds— no 
ijement with the Soviets and a 
;ing down by the European allies 
jjt deployment of the new cruise 
ales and Pershings? 

\. Let nie just say, without getting 
dhe strategy- of negotiating, I don't 

J':'e we've reached that point yet. 
I don't think that's a valid threat. 



^. Back on your arms control 
(tor nomination, Kenneth 
(man. He was quoted today in the 
tie Foreign Relations Committee 
)ing as having said that, "Arms 
1; are a sham that we just have to 
I out to keep the American people 
[European allies happy." With that 

!of statement on the record from 
and with the fact that he doesn't 
a lot of practical experience in 
ii control negotiations, are you not 
iling the Soviet Union a propagan- 
dvantage in that propaganda war 
urope by presenting this man as 
ilead man on arms control? 
A. No, I don't believe so, and I 
t— I know that he is aware of what 
fe proposing and what we're trying 
p. And it isn't — he knows it isn't a 
n, that we're as on the level as 
ne can be in trying to promote this. 
I think he can be helpful in that. I 
c that it would be far more destruc- 
to our allies and their peace of mind 
!e me repudiated by a Senate com- 
ee on someone that I want to help in 
after the great success that George 
1 has had and George Shultz in Asia. 

Q. In not voting on him today, as 
derstand the committee action, 
ler than vote against your choice, 
're asking you not to make them 



do that, but to withdraw him so they 
won't have to. But if they did have a 
vote, they would have voted against 
him. So — 

A. Either way I would lose then, 
wouldn't I? And what's the difference 
whether I surrender or they beat me by 
one vote? 



Q. There's a report tonight that 
we have sent AWACS [airborne warn- 
ing and control system] to Egypt and 
that we've sent a carrier nearby. And I 
wanted to ask you, do you fear that 
there's going to be a Libyan attack on 
Egypt, or could you explain why we've 
taken these actions that we apparently 
have taken? 

A. I don't believe that there's been 
any naval movement of any kind. And 
we're well aware of Libya's attempts to 
destabilize its neighbors and other coun- 
tries there in that part of the world. 

But the AWACS, this is not an 
unusual happening. We have conducted 
joint exercises and training exercises 
with the Egyptian Air Force— one, last 
year. We'll do more in the future. These 
planes have been there for quite some 
time in Egypt, the AWACS planes, for 
this kind of an exercise, and that's what 
they're going to conduct. 

Q. You don't see, then, any 
unusual or particular threat from 
Libya toward Egypt or its neighbors 
at this moment beyond the general at- 
titude the Libyans have had? 

A. As I've said to you, we're well 
aware of their propensity for doing 
things like that, so we wouldn't be sur- 
prised. But this is an exercise that we've 
done before, are going to do again, and 
going to do it now. And there, as I say, 
has been no naval movement at all. 

Q. We understand that the threat 
may be from [Col. Muammer] Qadhafi 
to the Sudan. How serious is the 
threat to the Sudan? And. if neces- 
sary, would you use American forces 
to stop Qadhafi? 

A. I don't think there's any occasion 
for that; it's never been contemplated. 
But we've known that the Sudan is one 
of the neighboring states that he has 
threatened with destabilizing and so 



forth, just as he has with Chad. And 
that's all I can say about that. But, no, 
we don't have any forces in that area 
that would be involved. 

Q. The question arises because, 
you'll remember very well, in 1981 we 
shot down two of Qadhafi's aircraft 
that we said were challenging us in 
the Gulf of Sidra. I take it if we do 
have naval forces there we'd repeat 
that, if necessary? 

A. This was an exercise that is held 
annually by our Navy, and part of the 
force was deployed narrowly in the Gulf 
of Sidra, which he had tried to claim— 
international water or was— not interna- 
tional waters, I'm sorry— was his 
waters. This is as if we ran a line from 
the Texas border over to the tip of 
Florida and said the Gulf of Mexico is 
American waters. No one else can get 
in. 

But in that instance, it was just very 
clearcut. They sent out planes, and they 
shot missiles at two of our airplanes. 
And two of our airplanes turned around 
and shot missiles at them. We were just 
better shots than they were. 

Q. Would we do it again if 
necessary? 

A. I think that any time that our 
forces, wherever we have put them, are 
fired upon, I have said, they've got a 
right to defend themselves, yes. 



Q. In a recent interview, you in- 
dicated that if the stabilization of 
Lebanon would require more peace- 
keeping forces that we ought to be 
willing to do that. Is the United 
States proposing or is it backing a 
plan that would include more peace- 
keeping forces in Lebanon, and would 
those forces be somewhere other than 
the Beirut area? 

A. We have said— and there had 
been talk of this with regard to the dif- 
ficulty in getting the present forces of 
the PLO, the Syrians, and the Israelis 
out of Lebanon while they establish 
themselves and their government — we 
have said that if in consultation with our 
allies, the multinational forces, if an in- 
crease and redeployment of those forces 
could aid and speed up this getting of 
the other forces out of there, I would be 
willing to go along with that. Of course, 
we would have to have the equal agree- 
ment of our allies in that, or maybe 
other countries could join, too. 



THE PRESIDENT 



I think it would be well worth it, 
this is too great an opportunity 
to finally bring peace to the Middle East 
for us to let this go by. And I would 
like— as I say, I think it would be well 
worth the price to have them there. It 
doesn't mean that their duty would be 
very much different than it is today. It's 
to be a stabilizing force while Libya 
[Lebanon] recovers from this long period 
of warlords with their own armies and 
so forth, and establishes its sovereignty 
over its own borders. 

Q. You seem to be indicating that 
you have decided. Have you proposed 
it? Is it part of the plan that Mr. 
Habib [Philip C. Habib, special repre- 
sentative of the President to the Mid- 
dle East] has taken? 

A. No, this is just, as I've said, that 
if this should become a factor, and this 
could be the key element in resolving 
this situation, this departure of forces 
from Lebanon. Then, yes, I would be 
willing to go along with this. 

Q. As you know, there's an elec- 
tion approaching in West Germany, 
and the latest polls appear to give the 
opposition a prospect at least of win- 
ning those elections in March. What 
do you think the consequences would 
be for the Western alliance if a new 
German Government took office and 
declined to deploy the Pershing 



A. I think it would be a terrible set- 
back to the cause of peace and disarma- 
ment. So far, I've had no indication that 



that would be a possibility. Herr Vogel 
[Hans-Jochen Vogel, Social Democratic 
Party candidate for chancellor] has been 
here in this country. He indicated sup- 
port of what it is that we're proposing in 
the arms reduction talks, and he seemed 
to indicate his knowledge of how impor- 
tant our continued plan to deploy — re- 
member, at their request— those 
missiles would be in securing this reduc- 
tion in armaments. 

So, we're not going to inject 
ourselves into anyone else's internal af- 
fairs or elections at all. But I believe 
that the Vice President's trip there 
found great support all over Europe of 
what it is we're doing, and in Germany, 
even, from the fact that there is— 
they're preparing for an election. 

Q. So you think the deployment 
question will not turn on the West 
German elections, then? 

A. No, I don't. I don't really believe 
that. 

When I said it would be terrible, I 
did not mean that to infer as that some- 
one else might win an election. I meant 
that it would be terrible if any of our 
allies withdrew from their present posi- 
tion of support for this. 



Q. The message that Vice Presi- 
dent Bush seemed to bring back and 
that we heard from him on television 
last week was that they do support 
your zero option proposal, but since it 
has gotten nowhere that they would 



very much like the consideration ol 
so-called interim move toward less 
progress. Coming out of your spok 
man in the past 2 or 3 days seems I 
be a very hard line against that, ar 
wonder, don't you think that is ma 
ing it politically more difficult for 
NATO leaders to— 

A. No, what he came back with 
support expressed for our zero optic 
And what he also did— there's no qu 
tion about, they wanted to know 
whether we're going to be willing to 
other issues— and he pointed out to 
them my original statement, and thf 
has been our position. If somebody 
wants to present another offer, wel 
negotiate in good faith with this. 

Q. Since your zero option, Mr 
Andropov [Yuriy V. Andropov, Ge 
Secretary of the Communist Part) 
the Soviet Union] made a counter- 
proposal which has been rejected 
Doesn't that leave a lot of NATO j 
leaders feeling like the ball shoul 
in your court if there is going to 1 
some— 

A. No, when you— you know, 1 j 
a reasonable proposal. A hundred a , 
sixty-two missiles with three warhe | 
on each one— we are up to the r 
neighborhood of 500 missiles— and i 
we would still be zero; we would nc | 
have any deterrent force on our | 
side — that does not sound to me likj] 
reasonable proposal. Now, I think t j 
ball is still in their court. I 



Text from Weekly Compilation of Presi 
tial Documents of Feb. 21, 1983. I" 



Deoartment of State BiBti 



SECRETARY 



ireign Aid and U.S. 
iitional Interests 



)^ret<iry Shultz's address before the 
h-n Ceyiter for International 
', Atlanta, Georgia, on Febru- 



^h such as today's provides an op- 
lity for me to use a wide-angle 
ilthough the broad picture is ever 
imind, the day-to-day business of 
lite Department generally finds us 
;iot the broad brush but the 
•'s glass as we examine the 
individual issues on which our 
■ relations turn. So today I want 
ji by opening the lens full scope. I 
fecribe the fundamental tenets 
iinderlie President Reagan's 

i policy, 
m I'd like to turn the lens down 
successive notches: first, a 
•te turn to discuss the importance 
^foreign policy of the more than 
keloping countries of the Third 
f-Asia, Africa, and South 
b. 

Jially, I plan to focus way down 
|n this time of tight budgets— 
i the funds which the United 
(must expend to achieve its objec- 
itontrary to popular opinion, the 
!':y of foreign affairs is not 
';. It takes resources— modest but 
,ed, applied credibly over time— to 
1 international peace, foster 
3iic growth, and help insure the 
ling of each of our citizens. But 
Urt with the broader view. 

(mental Tenets of 
foreign Policy 

!iis inauguration 2 years ago, 
unt Reagan has sought to 
lize U.S. foreign policy. He is 
'd to reduce a decade's accumula- 
? doubt about the U.S. commit- 
:,nd staying power. Our watch- 
lin doing this are four ideas: 

'.•st, we start with realism. 
^cond, we build our strength. 
lird, we stress the indispensable 
o negotiate and to reach agree- 

'urth, we keep the faith. We 
'■ that progress is possible even 
ii the tasks are difficult and com- 



jt me take each of these very 
' in turn. I'm very conscious of 



them, because as I get caught up in the 
day-to-day details of foreign policy and 
go over to the White House to discuss 
my current problems with the President, 
he has the habit of bringing me back to 
these fundamentals. And I believe they 
are truly fundamental. 

Realism. If we're going to improve 

our world, we have to understand it. 
And it's got a lot of good things about it; 
it's got a lot of bad things about it. We 
have to be willing to describe them to 
ourselves. We have to be willing if we 
see aggression to call it aggression. We 
have to be willing if we see the use of 
chemical and biological warfare contrary 
to agreements to get up and say so and 
document the point. When we see perse- 
cution, we have to be willing to get up 
and say that's the reality, whether it 
happens to be in a country that is friend- 
ly to us or not. 

When we look at economic problems 
around the world, we have to be able to 
describe them to ourselves candidly and 
recognize that there are problems. 
That's where you have to start, if you're 
going to do something about them. So, I 
think realism is an essential ingredient 
in the conduct of our foreign policy. 

Strength. Next, I believe is 
strength. We must have military 
strength, if we're going to stand up to 
the problems that we confront around 
the world and the problems imposed on 
us by the military strength of the Soviet 
Union and the demonstrated willingness 
of the Soviet Union to use its strength 
without any compunction whatever. 

So, military strength is essential, but 
I think we delude ourselves if we don't 
recognize — as we do, as the President 
does— that military strength rests on a 
strong economy; on an economy that has 
the capacity to invest in its future, 
believe in its future— as you do here in 
Altanta; an economy that brings infla- 
tion under control and that stimulates 
the productivity that goes with adequate 
savings and investment and has given us 
the rising standard of living and 
remarkable economic development that 
our country has known. But more than 
that, we have to go back to our own 
beliefs and ideals and be sure that we 
believe in them. And there is no way to 
do that better than to live by them 
ourselves. So, we have to maintain our 
own self-confidence and our own will 



power and our own notion that we are 
on the right track to go with the 
strength in our economy and our 
military capability. 

Negotiation. Of course, beyond this, 
if we are realistic and we are strong, I 
believe it is essential that we also are 
ready to go out and solve problems, to 
negotiate with people, to try to resolve 
the difficulties that we see all around 
the world— not simply because in doing 
so we help the places where those dif- 
ficulties are but because in doing so we 
also help ourselves, we further our own 
interests. So, negotiation and working 
out problems has got to be a watchword 
for us, and we do that all around the 
world. I think it is no exaggeration to 
say that the efforts of the United States 
resulted in saving the city of Beirut 
from complete destruction. We are ac- 
tive in trying to resolve difficulties in 
Kampuchea. We have called attention to 
the problems in Afghanistan. We're 
working in southern Africa in a most 
difficult situation to bring about a 
resolution of the Namibia issues, and so 
on around the world. But I like to think 
that the United States must be con- 
ceived of as part of the solution and not 
part of the problem. That's where we 
want to be standing. 

Finally, if we can achieve these 
things, if we can be strong enough so 
that people must take us seriously, and 
put our ideas forward in a realistic man- 
ner, then we will be able to solve prob- 
lems and have some competence to be 
successful, and, if we're successful, cer- 
tainly the world can be better. 



Relations With the Third World 

Against that background, let me turn to 
the problems of the Third World and our 
dealings with them and our stake in 
doing so successfully. Many of our 
citizens still see the developing countries 
as accessories to our basic interests. But 
over the past two decades, these coun- 
tries have increasingly moved to the 
front of the stage where issues of peace 
and prosperity are played out. I believe 
this trend has assumed such proportions 
that I can advance two fundamental 
propositions. 

First, there will be no enduring 
economic prosperity for our country 
without economic growth in the Third 
World. 



25 



THE SECRETARY 



Second, there will not be security 
and peace for our citizens without 
stability and peace in developing coun- 
tries. 

Let me explain these propositions. 
For the past 15 years, until the current 
recession took its toll, the developing 
countries as a whole have been growing 
more rapidly than the United States and 
Europe. As they have grown, they have 
become increasingly important as 
customers and suppliers for ourselves 
and other industrial nations. 

In 1980, developing countries pur- 
chased about 40% of U.S. exports- 
more than bought by Western Europe, 
Eastern Europe, the Soviet Union, and 
China combined. These countries have 
accounted for more than half the growth 
in U.S. exports since 1975. At this junc- 
ture, approximately 1 out of every 20 
workers in our manufacturing plants 
and 1 out of every 5 acres of our 
farmland produce for Third World 
markets. I might say that 2 out of every 
5 acres of our farmland produce for ex- 
port. That's how interrelated our farm 
community is with the international 
community. 

The current worldwide recession has 
vividly— if painfully— highlighted these 
relationships. In the past several years, 
growth rates in the developing countries 
have dropped from over 5% per year to 
around 2%. Partly as a result, our ex- 
ports to these countries— which were in- 
creasing at more than 30% a year in the 
late 1970s— have tapered off. For exam- 
ple, in the first 8 months of 1982, U.S. 
exports to Mexico dropped 26%; to 
Chile, 59%; and to Thailand, 25%. Ac- 
cording to estimates, every $1 billion 
decline in U.S. exports erases 
60,000-70,000 U.S. jobs after multiplier 
effects are taken into account. There's a 
direct correlation. Today some of the 
workers in our unemployment lines and 
some of the businesses and farms on the 
auction block are living, if unwanted, 
proof that the well-being of our citizens 
is linked to the well-being of citizens in 
the Third World. 

On the other side of the trade 
ledger, the developing countries supply 
about 40%-45% of the goods which we 
import for our factories and consumers. 
Although we are richer in minerals than 
most industrialized countries, the Third 
World supplies more than half the baux- 
ite, tin, and cobalt used by U.S. indus- 
try. For some 11 other strategic metals 
and minerals, the developing countries 
supply more than half of our imports. 
For some natural products, such as rub- 
ber, coffee, cocoa, and hard fibers, the 
Third World supplies everything we use. 

This intertwining of the European 



and our economy with those of the Third 
World will increase in the 1980s and 
1990s. As the recession fades, we can 
expect the faster growing countries— 
particularly in Asia but also in South 
America — to resume their role as 
engines of growth in the world economy. 
They will open up new opportunities for 
our exports and jobs for our citizens. We 
have an abiding interest in fostering this 
growth. 

It is for this reason that we are join- 
ing with other industrial nations to add 
funds to the International Monetary 
Fund. These funds are critical to helping 
debt-plagued developing countries make 
painful but unavoidable adjustments in 
their economies and thereby resume 
healthy growth rates. We have a direct 
stake in their success. 

For this reason, also, we resist— and 
call on all Americans to resist— pleas for 
further protectionism. Putting up bar- 
riers to imports will only result in losing 
markets for our exports and paying 
higher prices for goods. Resorting to 
protectionism as an antidote to recession 
is like turning to alcohol to ward off the 
cold. It may feel good at first, but it 
shortly becomes corrosive. The tonic for 
our ills is noninflationary growth, not 
stiff draughts of old Smoot-Hawley. 



Beyond the demands 
of economies, the Third 
World is fundamental to 
our aspirations for 
security and peace. 



Beyond the demands of economies, 
the Third World is fundamental to our 
aspirations for security and peace. Since 
1950, most of the major threats to inter- 
national stability, and the chief oppor- 
tunities for expansion of the Soviet 
Union's political reach, have come in 
the Third World. The headlines have 
rung with now familiar names: Korea 
in 1950; Dienbienphu in 1954; Suez, 
Cuba, and more recently Iran, Angola, 
Afghanistan, Kampuchea, El Salvador, 
and Ethiopia. 

A study by the Brookings Institution 
has identified no fewer than 185 in- 
cidents in developing countries since the 
end of World War II when U.S. military 
forces were used in situations which 
threatened our political or economic in- 
terests. As we speak today, 1,200 
Marines are on duty in Lebanon helping 
again to patch the torn fabric of peace. 

The point is clear. The fault line of 



global instability runs strongly acres 
the continents of the Third World. T 
instability is inimical to our security 
many ways. Small incidents can flar 
to larger conflagrations and potentif 
into confrontations between the supi 
powers. Korea and Cuba teach this 
lesson well. 

More subtly, the Soviet Union a 
its allies are able to feed on political 
stability. Some of the most significa 
uses by the SoNnets of military powt 
since World War II have been in thi 
developing world. The Soviet deploj 
ment of a deepwater navy, an airlifi 
capacity, and mobile ground forces 
given them the ability to intervene • 
they perceive opportunities. 

In addition, the Soviet Union 
supports 870,000 troops in North 
Korea— 60% more than maintained 
South Korea. It bankrolls the Viet- 
namese Army, which has positionec 
180,000 troops directly on the bord 
Thailand. It supports about 40,000 
Cuban troops in Angola, Ethopia, a 
Mozambique. In 1981, the Soviet U i 
supplied about three times as many i 
tanks, aircraft, and artillary pieces 
did the United States. 

We cannot ignore these realitie 
they challenge oar national interest 
Strategically, some of the least sec 
Third World countries are sources i 
critical raw materials or lie astride ( 
sealanes which carry our military f { 
and world commerce. The premier H 
ample is the Persian Gulf. About 3; I 
the free world's oil supplies is pum) n 
there. The region is vital to the i 
economic and political security of 
Europe, Japan, and the United Sta ^ 
It is in our interest to build stability 
this region and thereby help assure ' 
cess to those supplies. |j 

As a parenthetical remark, I w | 
mention my belief that the recent i 
decline in oil prices — and the possill 
of further declines— will spur the f i 
world's economic recovery. For sor|j 
countries— such as Venezuela and 
ico— cheaper oil surely means tougl 
times. But it will be good for most [ 
I have seen one illustrative estimatj 
a decline in oil prices to $20 per bai 
would boost real growth rates in thl 
dustrial countries by up to 1.5%. Ai 
steep decline would have proportio| 
positive effects. So, I have the seni: 
that as people contemplate the dec \ 
in oil prices, there's a tendency for \ 
pie to wring their hands about whf 
pened to this or that business or fi "■ 
cial institution or country— and th( ' 
are problems and we need to look 
them, all right. But let's not forget if 



I 



Department of State BiB'i' 



THE SECRETARY 



point, it's going to be good for us 
[ood for economic growth, which 
ed. 

16 job of building our security also 
■es that we maintain military 
ies and strengthen indigenous 
se forces around the world. This 
[es U.S. bases in the Philippines 
1 Turkey, the Azores, Morocco, and 
strategically placed countries, 
le United States cannot defend its 
sts by operating out of the United 

and Europe alone. We need the 
ration of countries in the Third 
1 to grant transit, refueling, and 
ights. Otherwise, while we may 
,0 build up a rapid deployment 
we will be unable to deploy it 
lit Third World friends who will 
us to use their facilities. We must 
pared, in turn, to help these key 
ries achieve their aspirations for 
ty and economic growth. This is 
st a short-term proposition. The 
5S of mutual cooperation weaves 
f interdependence and friendship 
will redound to our benefit in 
to come. 

goes without saying that the least 
ble method for preserving our 
gic interests and insuring stability 
developing countries is by sending 
5. forces. The 185 incidents which I 
oned earlier represent, in essence, 
lilures to resolve problems by more 
ired means. If we are to reduce in- 

in the future, we need a signifi- 
)rogram— sustained over time— to 
; peace and economic well-being in 
IS vital to our security. 



security and Development 
sration Program 

;t, we have such a program. It is 
i the U.S. Security and Develop- 
)Cooperation Program. Although 
(dministration has clarified its goals 
harpened its focus, it is essentially 
^me program endorsed by every 
President since Harry Truman. It's 
fimes called foreign aid and all too 
depicted as a giveaway. But that is 
Inomer. The program's purpose is 
iate those conditions of growth, 
ity, and freedom in developing 
jries which serve the fundamental 
fsts of each U.S. citizen, 
jet me give some examples of how 
fks. Our highest priority in this 
Jam is bringing peace to the Middle 



East. Because of the ties between the 
United States and Israel, a crisis in this 
region has always placed us in the 
center of a potentially serious world con- 
frontation. 'This has been so for more 
tlian 25 years. Achieving a lasting peace 
in the Middle East will not only benefit 
each and every citizen in those lands but 
will ease one of the fundamental threats 
to world peace and our own security. 

Making peace there means more 
than holding talks, as vital as these are. 
Sustained economic growth is needed in 
Egypt, Israel, and Jordan. Lebanon 
needs to open roads, restore electrical 
service, restart its economic engines, 
and resume its place as a stable and 
friendly nation in that part of the world. 
These countries also need to be able to 
defend themselves against those they 
see as aggressors. In this circumstance, 
we and other nations provide both 
economic and military aid. This aid is in- 
dispensable to the peace process. 

Another program— with particular 
bearing here in the south— is the Presi- 
dent's Caribbean Basin initiative. Some 
of you have dealt directly with the con- 
sequences of poverty, political turmoil, 
and SovietyCuban interventionism near 
our shores. These have come in human 
form— off airplanes and out of boats — 
to present in person their claims for a 
better deal. For the south, the need to 
help the Caribbean and Central 
American nations grow economically and 
build democratic institutions is not an 
abstract issue. It is one which can direct- 
ly affect your economy and society. 

Another part of our program is help- 
ing curb the rampant population growth 
which underlies much of the Third 
\\'orld's poverty and threatens our 
planet's resource base. The arithmetic is 
inexorable. Before World War II there 
were more than 2 billion people in the 
world. Now there are 4.3 billion. Even 
though growth rates have slowed in re- 
cent years, 17 years from now, in the 
year 2000, there will be 6 billion. If we 
act effectively, the world population may 
stabilize at between 12 and 16 billion in 
the last half of the next century. That's 
12-16 billion people to feed, clothe, and 
provide jobs for. 

To bring it closer to home, Mexico 
currently has 62 million people. If they 
ai-e able to lower their birth rate to the 
two-children-per-family level in the first 
20 years of the next century, they will 
have "only" about 250 million people 
when their popuation stops growing. 

Faced with these numbers, the 
United States provides direct technical 



advice and training to 27 countries to 
assist them to mount voluntary family 
planning programs. It's been an effective 
effort. We have a deep interest in 
continuing it. 

Similarly, we provide funds for U.S. 
agricultural universities to help develop- 
ing countries grow more food. Although 
there are food surpluses now, population 
increase, plus growth in the world 
economy, means that food production in 
the developing countries must keep 
growing at 3%-4% per year, or we may 
all face shortages and rising prices again 
by the end of the decade. 

So with U.S. funds, Mississippi State 
is introducing improved seed in 
Thailand. The University of Florida is 
increasing crop production in Ecuador. 
Auburn is working in Jamaica and In- 
donesia on fish production. It is in all 
our interests that these universities, and 
others across our agricultural heartland, 
continue with our support to devote 
some of their considerable talents to 
building secure food supplies in the 
world. 

Let me give one more example, this 
time on the security side. A glance at a 
map indicates the importance of Turkey 
to our strategic interests. It sits like a 
wedge between the Soviet Union, the 
Middle East, and the western flank of 
the Persian oil fields. With Iran and Iraq 
in turmoil, the importance of an 
economically and militarily strong 
Turkey has increased. In the last few 
years, the Russians have increased the 
size of their forces stationed north of 
Turkey. 

Hence, we and other countries of 
Europe, led by the Germans, are helping 
the Turks spur their economy and 
replace obsolete tanks and other equip- 
ment in their armed forces. The cost to 
us of assisting Turkey maintain strong 
defense forces between Russia and the 
Middle East is less than one-sixth of the 
cost of maintaining U.S. solidiers over- 
seas for the same purpose. 

These are examples of how an in- 
vestment of our resources contributes to 
the well-being and security of each of us 
in this room. The cost is modest. For the 
coming fiscal year, the amounts we've 
requested from the Congress for the ex- 
amples I've given work out as follows 
for each U.S. citizen: 

For building peace in the Middle 
East $12.35 per person 

For the Caribbean Basin $3.84 per 

person 

For curbing population growth . . 92C per 
person 

For building secure food supplies . .$3.15 
per person 

For helping Turkey . . .$1.78 per person 



1983 



THE SECRETARY 



The total request for all our security 
and economic assistance programs in the 
developing countries is $43.91 per per- 
son.' By contrast, we Americans spend 
$104 per person a year for TV and radio 
sets, $35 per person per year for barber- 
shops and beauty parlors, $97 per per- 
son per year for soap and cleaning sup- 
plies, and $21 per person per year for 
flowers and potted plants. 

I'm not belittling any of these ex- 
penses. That's not my intent. They're 
part of our commerce, which provides us 
with jobs as producers and satisfies us 
as consumers. I am simply trying to 
establish some relative values. 

Every American must understand 
that it's necessary to spend a fraction of 
our collective resources to secure our 
most precious goals of freedom, 
economic well-being, and peace. An 
esteemed son of Georgia and prede- 
cessor of mine. Dean Rusk, said it suc- 
cinctly: "Freedom is not free." 

Progress Is Possible 

Let me close by opening my lens back 
up and reverting to the fourth of the 
tenets which guide our conduct of 
foreign affairs: namely, our conviction 
that progress is possible. We Americans 
have lived for over 40 years in a 
tumultuous world in which we have pur- 
sued four basic goals: 

First, building world peace and 
deterring war— above all, nuclear war 
which would threaten human existence; 

Second, containing the influence of 
nations which are fundamentally op- 
posed to our values and interests — 
notably the Soviet Union and its allies; 

Third, fostering a growing world 
economy and protecting U.S. access to 
free markets and critical resources; and 

Fourth, encouraging other nations 
to adopt principles of self-determination, 
economic freedom, and the rule of law 
which are the foundation stones of 
American society. 

In these endeavors, we have had 
some signal successes. Some formerly 



troubled countries of the world— for in- 
stance, the countries of East Asia— are 
now relatively strong and prosperous. 
Western Europe, a cockpit of warring 
nationalities for a century, has been at 
peace for 37 years. Progress has been 
made in fundamental areas affecting the 
mass of mankind: better health, longer 
life expectancy, more schooling, in- 
creased income. We have a chance in the 
coming year to make major strides in 
fashioning peace in the Middle East. 
Americans as a people are prag- 
matists, suspicious of grand assurances 
or easy promises. But I'm convinced that 
if we persevere— proceeding realistical- 
ly, backed by strength, fully willing to 
negotiate and search for agreement — we 



will be able to brighten the future for 
ourselves and for others throughout t 
world. 



'Press release 62. 

The figures cited are derived by 
dividing the Administration's FY 1984 re 
quest for development assistance, PL 480 
economic support funds, military educatic 
and training program, military assistance 
foreign military grants by the U.S. populi 
of approximately $230 million. The figure 
not include foreign military sales guarant 
loans which are extended at market or nf 
market rates to foreign governments. Tb 
loans by law are not included in the U.S. 
budget. ■ 



Question-and-Answer Session 
Following Atlanta Address 



Following is an excerpt from a 
question-and-answer session Secretary 
Shultz held with the audience at the con- 
clusion of his address before the Southern. 
Center for International Studies in 
Atlanta on February 2U, 1983. 



Q. Today's New York Times 
reports on page 1 that Moshe Arens is 
reported to be saying that Jordan is 
the Palestinian homeland. Would you 
comment on that? 

A. There are many Palestinians liv- 
ing in Jordan. The point is, however, 
that there are also many Palestinians 
living on the West Bank and Gaza. 
There are also many Palestinians who 
are homeless and refugees in other coun- 
tries, notably Lebanon. And it must be 
true that one of the principal reasons 
why we have so much difficulty with 
peace in the Middle East is that we 
haven't been able to find the answer to 
the legitimate rights and aspirations of 
the Palestinian people. We have to ad- 
dress ourselves to that issue, and the 
President's September 1 "fresh start 
proposal"— fully consistent with the 
Camp David accords which have tremen- 
dous ingenuity and creativity in 
them— aspires to do that. So, without in 
any way commenting on whatever the 
context was of that comment, I don't 
think you can pass off the Palestinian 



issue with a statement about the Pal.i| 
tinians and Jordan. The problem is 
deeper and bigger than that. [Applai i 

Q. What strength and special 
skills does Mr. [Kenneth] Adelmar 
bring to his new post? What speci: . 
cally do you expect him to accomp. j! 

A. First of all, he is smart; seco- 
he works hard— he is full of energy; '. 
third, he knows a good bit about the 
subject; fourth, he is quite experienc 
in this area; and finally — I would sa; 
this particularly since he has been 
criticized on this score heavily— he i 
years old. Now, some of my kids thi 
that when you're 36 years old, you'n 
pretty old guy. But the point is this: ■ 
Someone who is in his 30s is going t 
have to live with the results of what ■' 
fruits we're able to get from arms C( 
trol negotiations a lot longer than s( 
of the older people who are criticizir 
him for being young. So I'm for him 
and I think some of the 36-year-()liip 
our country ought to get a crack at > 
issue. 

Q. During your recent visit to 
People's Republic of China, was tl 
textile quota dispute discussed in 
detail? And was an agreement reai^ 
to resume negotiations on it? 

A. The textile negotiations whic 
reached an impasse, as you perhaps ' 
know, were discussed, although I di'W' 
go there to negotiate a textile agree ' 
ment and made that clear. It is very^' 
portant, as we have negotiations goi ' 



Department of State Bui 



THE SECRETARY 



great variety of subjects all over 
*'orld, that we support the people 
«ave put out there to do the 
jtiating, not to undercut them by 
ig to make a deal by the Secretary 
late or some other intermediary who 
ts along. It you want the negotiator 
I effective, you have to support him 
ck him up, and that's what we're 

.S. positions in that negotiation are 
reasonable, and we're ready to 

to that bargaining table 
lever they are ready. So, I think, 
nly, the subject was discussed; I 
I say that I made any particular 
<way about it, although it may be 
jas a result of the conversations we 
ithey understand a little more clear- 
^at our position is, what some of the 
j)unding negotiations have brought 
Sard, and why it is that we feel as 
jigly as we do about the positions we 
j taken. 

5. How low do you expect the 
is of oil to go before it stabilizes? 

\. I don't have any idea, but I know 
Ut's going down. And as I said to 
i after due regard to the prob- 
[— and there will be some severe 
:|lems for some countries, some 
iicial institutions, and for some com- 
Ks— the overall result of a signifi- 
i fall in the price of oil will be good 
■is. [Applause] 

5. Could we fight a conventional 
1 with the Soviet Union and win 
'vhere in the world? 

\. I don't like to think, talk about 
rher you win a war or not. Certain- 

•e want to equip ourselves so that 
;an defend our interests and help our 
lids and allies defend our interests. 

1 have spent quite a number of years 
Ving in a very fine company, and like 
iompanies, you wind up with lawsuits 
itlawyers advising you on this, that, 
I'the other. We would occasionally 
i;' our lawyer come in and pound the 
h and say, "By gosh, we can win this 

)urt." We would say to him, "Look! 
'don't want to be in court." [Ap- 
E'se] I think the United States is 
ihg; we're going to continue our 
lingth, but we don't want to be in a 
i We want to avoid war. [Applause] 

Q. When you have facts, you argue 
I facts; when you have the law on 
•r side, you argue the law. When 
y have neither, you pound on the 
t,e. 

A. I didn't pound on the table. You 
; I've got both. [Laughter] 



Q. How much of a threat does 
Libya pose to peace in the Middle 
East? Did the Sixth Fleet play a 
pivotal role in the recent Sudan crisis? 
And how far is the nation prepared to 
go to contain Libyan terrorism? 

A. Libya is a threat to peace and 
stability because it supports terrorism. 
Remember what country harbored the 
murderers in the Munich Olympics? 
They have supported assassinations. 
They have threatened their neigh- 
bors — Chad and the Sudan— there's no 
question about it. They say so. So, they 
are a problem. It behooves us all to 
watch them and to see to it that they 
know that we're watching, and that 
there is the strength and determination 
to see that they don't succeed in these 
efforts to destabilize their region and 
peoples' lives. 

Now what the actions the President 
took may have had to do with their not 
being able to carry off their effort to 
destabilize Sudan, you'll have to ask 
them. I don't know. All I know is that 
there was very clear evidence of a plot; 
there was definite movement of Libyan 
armed forces. The President, to quote 
myself from last Sunday, "acted 
decisively, quickly, and effectively; and 
at least for now, Qaddafi is back in his 
box where he belongs." [Applause] 

Q. Could you give us your view of 
the future relationship between the 
Soviet Union and the People's 
Republic of China? 

A. That, of course, is something that 
they are working on, and I would 
hesitate to try to put forth some view 
about that. Many of the issues that trou- 
ble the People's Republic of China about 
the behavior of the Soviet Union are, for 
example, the Soviet invasion of 
Afghanistan and the Soviet support and 
instigation through Vietnam of the tur- 
moil in Kampuchea; they bother the Peo- 
ple's Republic of China, and they bother 
us. 

If, through their negotiation, they 
can do something about those problems, 
I'm all for it. It bothers us that there are 
so many SS-20s in Asia. I wonder who 
those SS-20S are pointed at? It bothers 
us that the so-called proposal made by 
Mr. Andropov [Yuriy V. Andropov, 
General Secretary of the Communist 
Party of the Soviet Union] on arms 
reduction seemed to contemplate, to the 
extent you can read it at all, taking 
these mobile SS-20s and moving some 
of them from being a threat to Europe, 
to being a threat to Asia. That didn't 



thrill our Asian friends at all; the 
Chinese can talk to them about that. 
That's fine with us. 

We thought the Andropov proposal, 
if I may again revert to the kind of lingo 
we used to use when I was in the busi- 
ness world— if a business guy made you 
that kind of a proposition, you'd say he 
offered you the sleeves from his vest. 
[Laughter] So, as far as where their 
relationship may go, I don't know, but 
there are lots of difficult problems be- 
tween them and between us and the 
Soviet Union. If the Chinese can resolve 
some of them, I'm for that. 

Q. It has been reported that Am- 
bassador [Soviet Ambassador to the 
United States Anatoliy F.] Dobrynin 
will be recalled to the Soviet Union. Is 
there any particular significance to 
that, in your view? 

A. I've read rumors. I don't pay any 
attention to them. When there is a reali- 
ty, then we'll deal with that as it comes. 
But I don't want to comment on what 
the future plans of the Soviet Union 
may be for Ambassador Dobrynin. He 
has been in Washington a long time; he 
is well known in Washington— a very ef- 
fective ambassador. 

Q. Given Mexico's dire economic 
predicament, what can the United 
States do to keep Mexicans from flee- 
ing to the United States? 

A. Part of the burden of my talk 
here today was to that point, namely, 
we want to do everything we can to 
restore the international economy to a 
healthy state, to a point where it is 
growing vigorously and where inflation, 
by and large, is under control. There are 
a lot of things that we are trying to do 
now, and must do, to make that happen. 

I mentioned the IMF [International 
Monetary Fund] quota increase, on 
which we have agreed with other coun- 
tries. This is designed to give the IMF, 
which I might say has outstanding 
leadership from a truly gifted interna- 
tional civil servant, a man named 
Jacques de Larosiere — more funds to 
use in helping debt-ridden countries that 
are having great difficulty with their 
balance-of-payments bridge over from 
the situation they are in to one where 
more disciplined programs will bring 
them out. I think we want to support 
that kind of an effort, efforts that will 
promote prosperity in the world. 

Beyond that, of course, we have 
worked directly with Mexico to help 
resolve some of its problems during the 
last 3, 4, or 5 months. And I think 
Secretary [Donald T.j Regan, in the 



|il 1983 



THE SECRETARY 



Treasury, and Paul [A.] Volcker, [Chair- 
man of the Board of Governors] in the 
Federal Reserve, working with the IMF, 
have really done a brilliant job of it. But 
there are different problems, and as I 
said earlier, we have to look at them 
realistically and deal with them. 

It is the case that all the programs 
having to do with debt rescheduling and 
rearrangements, and so forth, ultimately 
depend for their success on economic 
growth in the world. This is the under- 
lying ingredient that we must have. I 
think that we can see some pretty good 
signs that it is coming. 

First, The U.S. economy is starting 
its upward movement. In concept, as 
you look at it, as an economist, we have 
a very expensive policy in place. When 
you look at the statistics, the statistics 
are almost unambiguous that the begin- 
ning of growth is occurring. 

Second, the fall in the price of oil, 
difficult though it may be for Mexico, 
will be a great stimulant to economic 
growth in the industrialized countries 
and for most of the developing coun- 
tries, which are importers of oil, and 
which have been hurt badly by the in- 
creasing prices. So that is, basically, a 
very positive factor in the outlook. 

Third, with growth in the U.S. 
economy and in the growth stimulated 
by a lower price for a key resource, we 
will see the other industrial economies 
pick up a little bit more than they might 
otherwise have done — Japan, a very im- 
portant country, and the European 
countries. 

Finally, if we keep our wits about 
us, the developing countries again can 
resume growth, and there is plenty of 
room for it and plenty of need for it, 
and plenty of drive to get it out there. 

The key here, if this starts to take 
place, is to keep our markets open and 
to persuade others to do likewise so that 
the interactive effects of these develop- 
ments can have their impact. It would 
be a terrible thing if, in the light of 
these positive things, the world turns in- 
ward, country by country, and insulates 
one country from another, and aborts 
the kind of prosperity that we can see. 
That is why, with all of the cries for pro- 
tection, we pound the table and say, 
"Let us keep our markets open. Let us 
work on others to do the same," so that 
the interactive effects of these 
developments can take hold. It's that 
kind of expansion that is going to help 
Mexico, that is going to help us, that is 
going to help everybody! 



Q. Would an expanded Bretton 
Woods conference help get some order 
back into the world economy? 

A. Of course, a conference doesn't 
mean anything; it's what takes place and 
whether there are some ideas that some- 
body has that are concrete and opera- 
tional and will really help. 

I believe, to a certain extent, those 
kind of questions focused on currency 
relationships in the system which 
governs international exchange markets. 
I believe that there is too much volatility 
in exchange markets. We saw, for exam- 
ple, a situation involving the yen /dollar 
relationship, where it went from about 
230 yen to the dollar, in mid-May last 
year, to 276, I think— a big depreciation 
of the value of the yen in the fall some- 
time — and by the end of the year was 
back to 230. In the process of doing 
that, it changed the relative cost of a 
Japanese and American piece of manu- 
factured product tremendously, just to 
take that example, in a way that no 
amount of managerial improvement, or 
whatever, could account for. We had 
outstanding companies like Caterpillar 
Tractor priced out of third markets. 
That's a problem. I don't by any means 
suggest that the Japanese manipulated 
the yen. There is absolutely no evidence 
of that. 

I think our dollar right now is feel- 
ing what we might call a "Switzerland" 
effect; that is, a lot of money is coming 
into the United States, to be sure, in 
part because of high interest rates here, 
although it's interesting that as interest 
rates decline, it still comes. So, it must 
be that there is a big "safe haven" effect. 
But in the meantime, of course, what 
that means is that the dollar is very, 
very strong. So, we feel that in our 
trade relationships. 

This is a long way around to say 
that if the problem you're speaking of is 
volatility in the exchange markets, I've 
scratched my head about that, and I 
acknowledge it is a problem. If you 
asked me what to do about it, well, I've 
got an idea or two, but I wouldn't want 
to advance them in a serious interna- 
tional conference designed to solve the 
world's problems— at least not yet, until 
they're thought through some more. 

Q. Back to Japan and China, do 
you foresee closer relationships grow- 
ing between those two countries? 

A. There is a close relationship, a 
working relationship, between Japan 
and China. They live right next door to 
each other; they have a lot to offer each 
other just as we have a lot to offer 



mutually with China and with Japan, 
I would certainly expect to see that r 
tionship grow. 

Q. The Reagan Administration 
policy of constructive engagement i 
friendly way with the Government ■ 
South Africa has come under recen " 
criticism. Do you see this policy as ■ 
useful in producing a real change ii 
the apartheid policies of South Afr 
or in a successful conclusion to the 
negotiations for an independent 
Namibia? 

A. I do. I think it is helpful U< ha 
a relationship and to work with th>' 
South Africans. That doesn't by any 
means condone the existence of an 
apartheid policy which is repreht-iisil: 
and unacceptable. We have to be ab- 
solutely clear about that. However, 
there are important problems in the 
region. There is the possibility of s.n 
progress, and we should be on the si 
of that progress. 

Furthermore, insofar as the 
emergence of an independent, self- 
governing Namibia is concerned, olv 
viously, the attitudes and policies ( if 
South Africa will be an important m 
dient in bringing that about. And if 
you're going to have some impact m- 
what their policies are, you have tn 1 
able to talk to them. So we are tryii 
have ourselves in a position of talkin 
them, even though on the aparthenl 
policy, we have no time at all for tli; 
policy. 

Q. Does the United States also 
endeavor to get not only Israel but 
Syria to withdraw from Lebanon? 

A. Of course. And people fre(iue v 
say, "Wliy is it that you're spenditi.u 
your time on the negotiations witii I >' 
and not with Syria?" The answer i- i ■ 
The Lebanese have talked to the 
Syrians; so have we and others, and f 
Syrians say that when the Israelis 
withdraw, they will withdraw. In on : 
to call that card, we then have to go id 
say, "All right," to Israel, "What areie 
conditions under which you will with 
draw?" In view of the history whei'i' 
southern Lebanon has been a base t' 
which guerrilla war, in effect, was r 
ducted on Israel, it's true and justifi ' 
that Israel would be concerned ali"ii 
creating conditions in that part of 
Lebanon that will avoid having that 
threat exist again. We agree on thai 
and so do the Lebanese. 

Having said that, though, it posi 



Department of State Bui ti" 



THE SECRETARY 



tough issues for negotiation about 
y how you bring that about, while 
. same time being consistent with 
ea of a free and sovereign 
ion. It's not the easiest problem in 
orld, but it is being given very high 
ion, and I'm sure that before long, 
be resolved. Out of it, we will 
lave a program under which the 
i forces will withdraw; and at that 
the Syrians will be confronted 
;hat, and I expect them to 
raw as they have said they would, 
them, I believe, will go the PLO 
itine Liberation Organization] 
rs that remain in Lebanon. 

. How do you feel the United 
s could make more effective use 
; United Nations? 

.. I think the way to behave in the 
Id Nations is to be realistic about 
it is that our interests are, to 
, up unceasingly about it, not have 
e make outrageous statements, and 
just let it go, but get up and say 
we object to and why. And when 
;t outrageous behavior such as the 
ised vote on Puerto Rico, to work 
vith our friends. Then we will see, 
■ did last year, that we got a very 
vote. When the United Nations 
tens to expel Israel, for no reason, 
.nd up and say, as we did last year, 
lU expel Israel, good-bye. We'll 
and take our money with us." [Ap- 
e] 

[aving said that, I think, "Why 
lid we care that much? I think the 
sn is that the United Nations can 
nd has been under many cir- 
rtances, a constructive course for 
1^ and stability. The United Nations 
;iut peace-keeping forces in various 
tkl situations. That is useful. It pro- 
\ a place for dialogue and 
Jlogue. and it has spun a number of, 
iiight say, technical or professional 
;liizations such as the World Health 
iiization or Relief and Rehabilitation 
1 Relief and Rehabilitation Ad- 
rttration] that perform very useful 
roses and which we should support. 
,he way to get something out of the 
ltd Nations, our money's worth, you 
dt say, is as one of the adver- 
ients puts it, "the old fashioned 
i to work at it," and that's what 
^ doing. [Applause] 



'ress release 62A of Feb. 28, 1983. 



The U.S. and East Asia: 

A Partnership for the Future 



Address before the World Affairs 
Council in San Francisco on March 5, 
1983.^ 

Phil Habib's [Philip C. Habib, special 
representative of the President to the 
Middle East] magnificent work in the 
Middle East has made him almost a 
legend— and in his own time no less. We 
salute him for his tireless efforts and for 
what those efforts have achieved. But 
remember: In the course of his outstand- 
ing career, he has been involved in every 
part of the world. In East Asia and the 
Pacific, he served with distinction as am- 
bassador and assistant secretary. The 
ambassador's residence in Seoul is 
known admiringly as "the house Habib 
built." Phil will agree and note ruefully 
that he never lived in it. I have just 
returned from a trip to Phil's old stomp- 
ing ground convinced more than ever 
that if you want to understand the 
future, you must— like Phil— understand 
the Pacific region. 

Understanding Asia and the Pacific 

My recent trip to Northeast Asia, and 2 
days of meetings with our chiefs of mis- 
sions from all of the Asian Pacific area, 
underlined for me the importance of this 
vibrant area for the United States and 
for the world. The dynamism that I saw 
convinces me that, as important as the 
region is today, it will only be more im- 
portant tomorrow. The people are 
smart, they learn, they work, they have 
resources. They have an important 
future, and we should be part of it. 
Nothing underscores the direct interest 
of the United States in this region more 
than two simple facts. 

• We trade more today with the na- 
tions of the Asian Pacific than with any 
other region on Earth. 

• We have fought three wars in the 
Pacific in the last 40 years. We do not 
want to fight another, and this is a 
reason why the United States will con- 
tinue to maintain a presence there. 

My trip left me with many strong 
impressions. Some features of the 
region— such as its economic and politi- 
cal progress— offer great hope. 



Others — such as the poverty and in- 
justice that can still be found and the 
menacing military postures of Vietnam, 
North Korea, and the Soviet Union- 
present all too familiar challenges. But 
all observers would agree that the 
region is less troubled than it was in the 
eariy 1970s. 

Tlie great majority of nations in the 
region have used the last decade well. 
They have developed a new self-confi- 
dence, and they have much to be self- 
confident about. It is a confidence born 
of economic success and of an emerging 
political maturity. Responsible leader- 
ship has come to the fore in Asia and 
the Pacific. The result is that our rela- 
tions with most nations of the region are 
strong and getting stronger. If there is 
a symbol of the dramatic change that 
has marked the region in recent years, 
and of the benefits that such develop- 
ments can bring to us all, it is perhaps 
China's emerging role as a constructive 
force. But this is only one of many im- 
portant factors in the region's success 
and in the progress that has been made 
since earlier years of the post- World 
War II period. 

The new success and maturity in 
Asia today provide a pattern for the 
future but, as well, valuable lessons for 
the present. Tonight, I would like to dis- 
cuss four of these lessons. 

First, there is a need for a global, 
not merely a regional, view. 

Second, despite great diversity, a 
growing community of interests is ap- 
parent in the Pacific region. 

Third, the extension of economic 
and political freedom is of essential im- 
portance to the region's future. 

Fourth, the United States has both 
vital interests and a unique and critical 
role to play in the area. 



The Need for a Global View 

First and foremost, the trip reinforced 
what we all know: The fate of regions 
and nations around the world are inter- 
twined. No one area of the world can 
pull up the drawbridge and ignore prob- 
lems elsewhere. 



31 1983 



THE SECRETARY 



Thirty years ago, in his famous fare- 
well address to Congress, General 
MacArthur said: 

The issues are global and so interlocked 
that to consider the problems of one sector, 
oblivious to those of another, is but to court 
disaster for the whole. 

While Asia is commonly referred to as 
the gateway to Europe, it is no less true that 
Europe is the gateway to Asia, and the broad 
influence of the one cannot fail to have its im- 
pact upon the other. 

MacArthur's statement is today 
more true than ever. 

• Decisions about nuclear missile 
deployments in Europe could have a ma- 
jor impact upon Asian security, a fact 
dramatized by proposals by the Soviet 
Union which would have the effect of 
shifting the Soviet intermediate-range 
missile threat from Europe to Asia. 

• Decisions on trade and free 
markets in Asian lands influence the ac- 
tions of legislators in Washington and 
governments worldwide. The world is 
watching Japan, in particular, to see if 
its markets will be more open to compe- 
tition from abroad. 

• The continued growth of Asian 
economies is an essential element of 
U.S. and European recovery, while im- 
provement in those economies will send 
waves coursing across the Pacific. 

• The sealanes and resources of the 
region are not only of strategic import- 
ance to the countries in the region, they 
are crucial to the defense of the Indian 
Ocean, East Africa, and the Middle 
East. 

As East Asian and Pacific nations 
prosper, we hope to see them adopt an 
increasingly global view. Indeed, we 
already see encouraging steps in this 
direction. 

• East Asian and Pacific nations, 
and most importantly Japan, have 
acknowledged their responsibilities for 
strengthening the General Agreement 
on Tariffs and Trade (GATT) and main- 
taining an open international trading 
system, as they see with growing clarity 
the threat of protectionism around the 
world. 

• Even smaller Asian countries, 
such as Korea, see that they must con- 
sider modification of their own protec- 
tionist policies (local content legislation, 
for example) to help insure their own 
continued access to larger markets. 

• On the security front, Australia, 
New Zealand, and Fiji have contributed 
peacekeeping forces for the Sinai. 



• ASEAN [Association of South 
East Asian Nations] governments are 
playing an effective and constructive 
role in the Nonaligned Movement, the 
Islamic Conference, and other interna- 
tional fora. 

• Japan has provided economic as- 
sistance to states in the Middle East and 
Caribbean. 

• China, while not yet a wealthy na- 
tion, has proven itself among the most 
sophisticated, with a decidedly global ap- 
proach to economic and security issues 
and a clear view of the importance of re- 
sisting Soviet aggression. 

As the Pacific region gains strength 
and confidence, it will be increasingly 
aware of, and increasingly influential in, 
the global agenda. 

A Growing Community of Interests 

The second lesson about the Pacific 
region is that our policy must reflect the 
growing community of interests among 
nations there in preserving peace and 
promoting economic progress. There are 
no broad regional institutions like NATO 
and the European Communities (EC) to 
provide a framework for regional co- 
operation. The great differences and 
historical animosities that separate dif- 
ferent countries probably preclude the 
establishment of such institutions for the 
immediate future. But, despite enormous 
diversity, the nations of the region are 
increasingly cooperating with one 
another. This new and encouraging pat- 
tern is driven by two factors: 

• The immense stake that they have 
in continued economic growth and an 
open world economy and 



No one area of the world 
can pull up the draw- 
bridge and ignore prob- 
lems elsewhere. 



• A clear-eyed perception of the 
military threat posed by the forces of 
the Soviet Union, Vietnam, and North 
Korea. 

Economically, the area leads the 
world in economic growth. During the 
1960s, Japan's annual rate of growth 



averaged above 10%. Later, during t 
1970s, Hong Kong, Taiwan, Singapou 
and Korea all achieved average grow 
rates above 8%, while the Philippines 
Thailand, Indonesia, and Malaysia 
posted average growth rates of from 
to 8%— all above the average even f( 
developing countries. 

These economic achievements ha 
given the nations of the Asian Pacifi 
new weight in the world. For examp 
the region now accounts for one-sixt 
total world trade. These achievemen 
are not accidental. They are the frui 
a commitment to hard work, a willin 
ness to sacrifice immediate benefits 
future growth, and generally sound 
policies of economic management. B 
Pacific region nations recognize that j 
continued success is dependent on a | 
healthy world economy. | 

Nations of the region are similai 
aware of the keen threat to the regi 
security posed by the Soviet Union < 
its clients. A decade and a half ago, 
Soviet warships seldom ventured soi 
into the Pacific. Now, the Soviets I 
their largest fleet in that ocean, ba 
by modern, long-range bombers. Sc 
land forces in the region have also 
grown during that time, from 20 to 
more than 50 divisions. Most ominc 
of all, some 100 intermediate-range 
SS-20 missiles, each equipped with 
three warheads, threaten Asia. 

With massive Soviet assistance, 
180,000 Vietnamese troops occupy 1 
puchea, use toxin and chemical weal 
on innocent civilians, and threaten t 
peace and stability of Southeast Asii 
The North Koreans, who spend 209f 
their gross national product on theij 
armed forces, threaten their southa 
neighbors with an armed force of ot 
700,000, one of the largest armies ii 
world. When you visit the DMZ [de 
tarized zone] in Korea, as I did rece 
the tension is palpable. You know 
it means to confront real danger, as 
American soldiers and their South 
Korean allies do every day. 

Nonetheless, common economic* 
security concerns are breaking dow- 
communication barriers, reducing 
historical animosities, and spurring « 
nations of the region to take respor il< 
steps in their own interests. Let mt i*' 
just a few examples. 

• The Japanese Government hi 
acknowledged its responsibility for iil 
taining an open world economy and , 



Department of State Bu ' 



THE SECRETARY 



• ng- its own markets for freer trade. 
;ie\\ prime minister's attitude 
'■(i this effort is refreshingly opera- 
1,, recognizing that procedures for, 
.iceiising, inspection, and registra- 
iire as important as policy pro- 
1 ■finents. In addition, Japan has af- 
i(i Its commitment to undertake 
:ler ii'sponsibilities for its own de- 
;. appropriate to its abilities and its 
isitutional requirements. 

Prime Minister Nakasone's recent 
ito Seoul, and Japan's sizable 
(•rn assistance to Korea, have put 
nportant Japanese-Korean relation- 
fin a new and stronger footing. 

The ASEAN states have put be- 
othem many of their differences. 
f: are working effectively together to 
! Vietnamese aggression and to 
1 ize international support for a 
i'ful outcome in Kampuchea. 

Thailand, Malaysia, Indonesia, the 
iiipines, Australia, Hong Kong, 
j|"i, and China have all played major 
e in handling the massive exodus of 
i?hinese refugees. 

The new Pacific island states are 
ing both regional and national in- 
b.ions simultaneously, with the help 
t?ir neighbors in Australia and New 
ind. 

The Republic of Korea has ini- 
tl a productive dialogue with states 
t3 region. 

And China has begun to seek 
iSr cooperation with a number of its 
labors and to play a constructive 
^nal role, especially in its efforts to 
mat Vietnam's aggression in Kam- 
Ka and elsewhere. 

'learly, there is more that can be 
r and more that we would like to see 
r. We will continue to urge Japan to 
sue a greater share of the burden of 
I vn defense and to open its own 
i:et to the free competition that 
.f nese products enjoy in the United 
a;s. 

iut both we and Japan must also 
D beyond these bilateral concerns to 
u;hared responsibilities. As President 
B;;an recently said, "... no two na- 
)i are more mutually dependent than 
ifiJnited States and Japan . . . Our 
i.'liership is so essential, we have a 
Mg obligation to our own peoples, to 
u other, to insure its continued vitali- 

Vs .hipan's weight has grown, so too 
1 its responsibilities. Decisions on 
c5 issues, bank credit to developing 
n'tries in Asia and Latin America, 
^'official economic assistance must re- 
e Japan's global interests. If we are 



patient, as well as persistent, we can do 
more than just maintain the remarkable 
post- World War II record of Japanese- 
American cooperation. We can build on 
it and make it an increasingly important 
part of our future. 

China's new, more constructive, 
though guarded, role is welcome, and a 
closer relationship with China will bene- 
fit the people of both our countries. 
However, frustrations and problems in 
our relationship are inevitable. They will 
arise not only out of differences concern- 
ing Taiwan but out of the differences be- 
tween our systems. We believe that 
these problems can be managed and that 
the community of interests that prom- 
ises further progress is real. Our rela- 
tionship with China has brought tangible 
results and can be a potent force for 
stability in the future of the region. As 
President Reagan has said, "Our rela- 
tionship with the People's Republic of 
China is important not only for stability 
and peace in Asia but around the globe 
. . . Despite our differences, it is clear 
that both sides value this relationship 
and are committed to improve it." 

Progress in U.S. -China relations 
need not come at the expense of rela- 
tions with our other friends in the 
region, including our close unofficial 
relationship with the people of Taiwan. 
To the contrary, it can contribute to the 
peace and economic progress of the en- 
tire region. The key to managing our 
differences over Taiwan lies in observing 
the commitments made in our three 
joint communiques and allowing the par- 
ties themselves to resolve their differ- 
ences peacefully with the passage of 
time. To improve our relations we must 
both work to reduce impediments to ex- 
panding trade in technology, as well as 
other economic relations, consistent with 
our long-term security needs. We must 
also seek to resolve any misunderstand- 
ing or dispute through consultations and 
negotiations rather than by unilateral ac- 
tion. 

In so doing, we work to build a long- 
term, enduring, and constructive rela- 
tionship on a basis of mutual confidence. 
As I made clear in Beijing, Chinese 
leaders will find the United States ready 
to join with them on that basis in pursu- 
ing our common interests in peace and 
modernization. We value Sino-American 
relations and want them to advance. 



Importance of Economic and 
Political Freedom 

The third lesson is the importance of 
economic and political freedom for the 
region's progress and security. Our 
bilateral relations are on their most solid 
footing with those countries that share 
our commitment to democratic values. 
We believe that democratic nations are 
more likely to follow the just and sensi- 
ble policies that will best serve the 
future of the region and the globe. 

The Pacific region's economic 
growth has shown the efficiency of a 
free-market system. The progress of the 
ASEAN states. South Korea, Hong 
Kong, and Taiwan has become a model 
of successful development for the Third 
World. 

Political progress is more difficult to 
gauge than economic change. And usual- 
ly it seems to move at a slower and less 
even pace than we would all desire. But 
a long-range perspective of free-market 
nations in East Asia and the Pacific 
clearly reveals, I believe, a trend toward 
the growth of democratic institutional 
arrangements for economic and political 
conduct. 

Japan is the most obvious example, 
but younger nations are moving in a 
similar direction. Indonesia last year 
added to an increasingly long record of 
regularly held elections. And Malaysia 
has accomplished that most difficult 
task: peaceful changes of leadership 
through an electoral process. The new 
Pacific nations have laid strong founda- 
tions for popular participation in govern- 
ment. The Republic of Korea, despite 
continuing intense pressure from the 
north that creates severe internal 
pressures as well, has taken additional 
welcome steps recently toward liberali- 
zation and toward an eventual constitu- 
tional transition of power in 1987. 

The extension of democratic proc- 
esses and institutions and the respect of 
human rights in general are integral ele- 
ments to the achievement of lasting 
progress and legitimacy. Abuses of 
human rights undermine the progress, 
legitimacy, and even the stability of 
governments, thereby vitiating other 
gains. 

In the end, economic and political 
freedom, both important in their own 
right, are closely intertwined with 
security concerns. For economic and 
political progress provides the resources 
for defense and, at once, reduces the 
risks of internal chaos and the oppor- 
tunities for external aggression. As 



C1 1983 



THE SECRETARY 



President Reagan has said, "economic 
freedom is the world's mightiest engine 
for abundance and social justice." 

The Unique U.S. Role 

The fourth and final lesson is that our 
role in the region is unique. We are the 
one nation of the region with both a 
worldwide view and the capacity to im- 
plement a worldwide policy. As a great 
power, we have great responsibilities. 
We have borne them well, and we must 
continue to do so. 

It is necessary and proper that we 
encourage those countries that share the 
benefits of a peaceful and prosperous 
world order to assume greater responsi- 
bilities for maintaining it. We will not 
ask how we can perform that task by 
ourselves or how we can get others to 
do it for us, but how we can combine 
our strength with those who share our 
commitment to peace and economic 
progress. Fortunately, in the Pacific 
region there are many who share those 
interests, and their strength is growing. 

Our goal in asking others to increase 
their efforts is to gain added strength 
together, not to decrease our own ef- 
forts. The United States will remain a 
Pacific power. Although specific tasks 
may change, our overall responsibilities 
will not be diminished in importance nor 
shifted to others. This is particularly 
true of our security relationships with 
our friends and allies in the area. 

• Our treaty commitments — particu- 
larly to the front-line states of Korea 
and Thailand — are essential to give our 
partners the self-confidence necessary to 
face potential threats. 

• These commitments and our 
alliances with Japan, with Australia and 
New Zealand, with the Philippines, and 
others provide a security framework and 
coordinating element in a region where 
broader alliance arrangements are not 
feasible. 

• And because our influence is so 
broadly felt throughout the region, the 
way we handle each of our bilateral rela- 
tionships affects the interests of many 
others. As we seek, for example, to 
build a stronger relationship with China 
and to manage the differences between 
us, we must remember that the interests 
of many other friends in the region may 
be affected as well. 



• In Asia, as in the rest of the 
world, there remain threats that only 
the United States can meet. If we do not 
play our role, the shadow cast by So\iet 
military power will threaten the region's 
hopes for progress. 

In playing that security role in the 
world, we intend to be attentive to 
Asian interests. That specifically in- 
cludes our approach to the Geneva 
negotiations with the Soviet Union on 
intermediate-range nuclear missiles. As 
President Reagan recently said, "Soviet 
proposals which have the effect merely 
of shifting the threat from Europe to 
Asia cannot be considered reasonable. 
Security in this sense is— and will re- 
main—indivisible." 

In the years since the Vietnam war 
ended, we have made great progress in 
overcoming the inevitable doubts that 
arose in the region about the will and 



Our goal in asking 
others to increase their 
efforts is to gain added 
strength together, not 
to decrease our own 
efforts. 



capability of the United States to fulfill 
its important role in Asia. President 
Reagan's strong efforts to continue that 
progress have increased the credibility 
of our role in Asia and, in the process, 
increased the self-confidence of our 
friends in the area as well. 



Conclusion 

If it is true that much of the future ' 
be shaped in Asia, then our policies 
toward this region are of special imp 
ance. The record of the nations of tl; 
Asian Pacific in recent years is en- 
couraging too. Not that the region is 
free of problems— far from it. Butr 
of the nations of the region— despiti 
enormous differences of every kind- 
share a realistic and confident apprc 
toward solving problems. And a dyn 
community of economic, political, ar 
security interests has begun to take 
shape. 

• Most nations of the area have 
faced— and many still face— immen 
problems of poverty and dislocation 
these problems are being addressed 
imagination, with self-reliance, and ' 
remarkable success. ' 

• The countries of the region ii ' 
great threats from the Soviet Unioi 
Vietnam, and North Korea. But the ' 
meeting these threats with realism ' 
with a determination not to be intin ' 
dated, ' 

• Great national and cultural di ' 
ences, deepened by historical antag ' 
nisms, place obstacles in the way ot 
cooperation among nations of the 
region. But increasingly these natio ' 
are recognizing the overriding impc ' 
ance of working together in the inti k 
of peace and economic progress. 

We Americans recognize — and , 
welcome— this progress. Our Asian , 
Pacific partners are developing rew ,■ 
ing relationships not only with us bi 
with each other. They also are joini 
with us in cooperative efforts that ( 
tend beyond the Pacific region and 
creasingly bring their positive influi ; 
into the world at large. These steps t 
the basis for a global role that will : ' 
the region's growing strength and ' 
responsibilities. We Americans are ' 
determined to join in these steps to ^' 
ther our community of interests. Tl 
results will have much to say about ■' 
future— for us and for others throu* 
the world. 



'Press release 68 of Mar. 7, 1983. I 



Department of State Bi* 



THE SECRETARY 



lestion-and-Answer Session 
Sllowing San Francisco Address 



pUoinng is the qnestwn-and-answer 
.11 Sirri'tary Shultz held with the 
iii-i ill Ike conclusion of his address 
till Wdiid Affairs Council in San 
•/,sr,. n„ March 5. 19S3.^ 

(ould YOU comment upon the talks 
began in the fall of 1982 between 
copies Republic of China and the 
■t Union, and their effect, if any, 
Sno-American relationships? 
.. There are quite a number of 
IS that the Chinese and the Soviet 
;-i have to discuss. Some of them in- 
, prclilfms in which we have as 
■ij an interest and stake as do the 

he Chinese believe, and we believe, 
1 he i;ussians should get their 
tite. \'ietnam, out of Kampuchea, 
that we should have an independent, 
leratie Kampuchea. If they can 
1: some headway on that with the 
it Union, I'm all for it. 

he Chinese believe, and we believe, 
i\here is no excuse for the Soviet in- 
iin of Afghanistan. The Soviets 
)d leave Afghanistan. If they can 
J some progress in that, we're all 

n other words, there are things that 
! lare in our concern about Soviet 
tivHor, and we wish the Chinese luck 
t,ang to do something about it. 

t is, nevertheless, true that the 
liese have to remember, as other 
m countries do and we do, that those 
)-',0s are pointed at Asia. 

J. Your comment in China regard- 
ghe problems which American 
isiessmen were experiencing was 
yically caustic. Why shouldn't the 
ae Department help American 
laiess? 

'^. The American businessmen that I 
i()nto in Beijing had it coming to 
ei. They had it coming to them 
!(use there I was negotiating on their 
illf— I'm on your side, remember— 
)i t a whole range of extremely 
>,'ate and difficult issues. Everybody 
Ta's that everything that is said in a 
5-1 room privately is listened to and is 
iright back into the kind of negotia- 
'■i that I'm having. So after awhile, 
ang the Chinese position thrown at 
K'l began to wonder who was on 
'He side. I knew pretty well what side 
\is on, so I gave them a piece of my 



mind, and I don't apologize for it. [Ap- 
plause] 

Q. In Cambodia there is and has 
been genocide taking place. How are 
we exerting our influence to end it? 

A. It's interesting that you say Cam- 
bodia. It's hard to know what to call 
that poor country; some people say 
Kampuchea. It took me a while to catch 
up with that. We are exerting our in- 
fluence to get Vietnam out of there by 
supporting countries in the region in all 
the effective ways that we can think of. 

We are helping the ASEAN 
[Association of South East Asian Na- 
tions], countries which have taken a 
lead. We work with the Chinese, the 
People's Republic of China. We provide 
humanitarian help to those in need. 
There has been a tremendous exodus of 
refugees, as we all know. We've done 
our part in that. We have worked at the 
United Nations where Vietnam is totally 
isolated, and the Soviet Union isolated, 
on this issue. So we have worked with 
people in the region, and our approach 
has been to support their effort— they 
live there— and to make it clear on a 
world basis not only the wrongness of 
that invasion but the horrors that are 
taking place in that country. It makes 
you wonder about all the people who 
thought North Vietnam was such a 
wonderful country. [Applause] 

Q. Are the Philippine bases in 
jeopardy because of political instabil- 
ity in the Philippines? 

A. No. The Philippine bases are very 
important to us and to the Philippines. 
We have periodically and are now in the 
midst of base negotiations, and we 
believe that the Government of the 
Philippines is quite able to negotiate and 
carry through agreements with us. 
Q. What are the chances of a 
nuclear arms reduction agreement 
with Russia on something other than 
the zero-option plan? 

A. Are you trying to ask me 
whether we're going to change our posi- 
tion? [Laughter] 

I don't know what the chances are. I 
know what we will do. We will take 
reasonable positions. We believe that the 
positions of eliminating a whole class of 
these destabilizing and lethal weapons 
from the globe is the right position; it's 
the moral position; it's the position that 
we can all be proud of. 



The President has also said from the 
first speech he made on the subject that 
we recognize we're in a negotiation. Our 
position is not take-it-or-leave-it. We're 
flexible. We're willing to listen. But we 
think that the position the United States 
has taken on behalf of our allies, as well 
as ourselves, is a wonderful position to 
support. 

Whether the Soviet Union would 
ever agree to the deployment of U.S. 
weapons replacing those that are there 
now, I don't know. But we will be there 
at the negotiating table, we will be 
reasonable, and in the meantime, we 
must be realistic about what is going on 
in the world and in the Soviet Union. 
We must maintain our basic strength so 
that we are able to continue as we can 
now to defend our interests around the 
world, and to help our allies defend 
theirs. [Applause] 



Q. Yesterday President Reagan 
assured the American people that El 
Salvador would not become another 
Vietnam. It's difficult to deny, 
however, that the building tension and 
fighting there are reminiscent of the 
early days of Vietnam. How are we to- 
day better prepared to accurately 
assess the conflict in El Salvador? 

A. Of course, we are constantly 
assessing what is taking place, and in re- 
cent days we have been especially work- 
ing hard at that and consulting with the 
Congress. The President met with the 
bipartisan leadership last Tuesday and 
undoubtedly will be meeting again in the 
coming week to hear their views and to 
give ours. 

I think it's important to recognize 
several things. First of all, there are 
many, many differences between the El 
Salvador situation and Vietnam. One of 
them is that El Salvador is nearby. It is 
part of an area of the region of the 
world that is literally connected 
geographically to us. 

It is not a pleasant thing to con- 
template that the Soviet Union might in- 
crease its influence from Cuba, 
Nicaragua, Grenada— where it now 
holds sway— to additional countries in 
Central America. So that's something 
we have to remember about the direct 
security interests of the United States. 

But I think also we must remind 
ourselves that the program that the peo- 
ple of El Salvador, and the Government 
of El Salvador, have in place and are 
trying to implement and which we are 
trying to help them implement, has got 
several strands to it. 

The first, of course, is to try to do 
everything we can to help those people 



^|il1983 



THE SECRETARY 



develop themselves economically. We 
have provided aid. We have provided en- 
couragement for the development of 
economic capacity there. We have sup- 
ported the land reform program, which 
has just been extended for another 10 
months, and it's quite possible that it 
might be completed in that time. 

We have sought to support the 
development of democratic government 
in El Salvador. We have supported a 
diplomatic initiative in the region which 
was taken in the first instance in San 
Jose as the democratic countries of the 
region came together and laid down a 
diplomatic program calling for the 
elimination of offensive weapons from 
the region, the cessation of the shipment 
of arms from one country to another on 
a verifiable basis, the removal of all 
foreign advisers of a military sort, and 
efforts toward reconciliation and amnes- 
ty in the region; all of this in the in- 
terests of trying to bring about peace. 
So I think those are all very strong and 
important efforts that are being made. 

It must also be apparent to everyone 
that if you have a foreign-supplied, 
reasonably sizable guerrilla movement 
blowing up bridges— 55 bridges— blow- 
ing up power plants, disrupting the in- 
frastructure, it's very hard to imagine 
that you attain that threshold of security 
necessary for economic development to 
take place for people to serve their own 
interests and to be able to achieve a 
stable and decent life. 

I think it's pretty apparent that the 
same people who tried desperately to 
stop an election about a year ago— 
threatened people to keep them away 
from the polls but nevertheless 80% of 
the people turned out to vote— are now 
trying to shoot their way into the 
government. I think the answer to that 
should be "no dice." 

But we need to continue to support 
the efforts of the people not only in El 
Salvador but Honduras, Costa Rica, and 
throughout the Caribbean region in their 
effort to develop democratic institutions, 
to serve their own economic interests 
and development, and to resist efforts to 
destabilize them through the shipment of 
arms to guerrillas who are out to unseat 
those governments. 

There is a great deal of discussion 
about military aid and should it be in- 
creased. That's not really the question. 
The numbers are as follows. Last year 
the United States helped the Salvadoran 
Government to the tune of $80 million of 
military aid. In this fiscal year, which 
began October 1, through a curious 



Washington program known as a contin- 
uing resolution, we have managed $25 
million. 

You can take 25 as a proportion of 
80 and compare it with 5 months out of 
12, and you can see the kind of support 
that we are giving. It's not adequate. I 
believe very strongly that in our own 
security interests and in the interests of 
having in our neighborhood democratic 
governments in societies where people 
have a chance to develop themselves and 
achieve economic gains for themselves 
that we simply must continue to support 
the people who are on our side and 
resist those who are against us. 
[Applause] 

Q. How will the outcome of the 
West German elections affect our 
policy toward that country, especially 
if the Social Democrats come out on 
top? 

A. One of the things I've learned 
from Phil Habib [special representative 
of the President to the Middle East] and 
others is never comment on the internal 
political arrangements of another coun- 
try. That is up to them to determine, 
and we will work with the government 
that the German people put there, and I 
believe we'll be able to work successfully 
with it. [Applause] 

Q. Why should the United States 
support the IMF [International 
Monetary Fund] quota increase? 

A. The IMF quota increase amounts 
to a commitment on the part of the 
United States to exchange assets for 
assets; that is, money that we put in, 
like a loan, and we get an asset back to 
the tune of $5.8 million. 

In addition, the Treasury, working 
with the 10 principal industrial coun- 
tries—known as the Group of 10— has 
worked out an increase in the scope of 
what are called the general ar- 
rangements to borrow amounting, I 
think, to $2.8 billion. 

What is this money for? It is for the 
purpose of helping to keep the interna- 
tional financial system on an even keel. I 
believe this can be done without our los- 
ing money, and if we don't do it, we ex- 
pose ourselves and all of the trading na- 
tions to a tremendous exposure of finan- 
cial mishaps that could well be avoided. 

I think it is especially important to 
do this and do it properly right now 
because, as it happens, with all of the 
economic troubles of the world, I think 
we are right now at a point where 
there's a good chance that we can see a 
kind of interacting expansion in the 



world economy. And we don't wan 
see it aborted by the failure to do 
that we can do and that we should 

I think it's clear, number one, 
the economy of the United States 
starting an expansion, one that 1 1: 
will be considerably more vigorous 
was forecasted in the President's 
economic report issued about a r 
so ago. 

Second, fully recognizing the | 
lems for some that a fall in the pr 
crude oil may bring, I think that a 
decline in the price of crude oil is 
basically very good news for most 
and it will have a positive effect o 
economic growth in our country i 
most other countries. So that's thii 
ond thing, and I think that in turri 
tend to have the other industrial ( 
tries' economies expand a little mc 
than otherwise. Under those cir- 
cumstances, perhaps the Third W 
the developing countries — will om 
again be able to pick up the very 
pace of growth that they have suf 

If those things happen, and if 
have the wit to avoid the pressun 
protection which are fierce in this 
try and around the world— but if 
avoid that so that these developm 
can interact with each other, ther | 
can see the kind of expansion in 1 1 
world economy that will enable pi | 
the end to pay their debts. 

So you ask about the IMF qui I 
crease. It is connected with all th I 
way of putting the IMF -which, i \ 
all, we're a big part of and which I 
might say has superb leadership i I 
a Frenchman named Jacques de I 
Larosiere— enabling the IMF to c f 
job of keeping stability in the intet 
tional financial house. I think it is t 
very much to our advantage. i 

I have testified quite a bit on J 
and I find that people are terribl} bi 
cerned that if this is done, there ;i)i 
some bankers who made bad loan i 
they won't pay a big enough pens j 
that misjudgment. J 

I believe that people who mal IM 
judgments ought to pay a penalty br| 
but I'm certainly not ready to sayM 
would rather have the world go t tie! 
for the sake of seeing a few bank 'S ( 
fer. [Laughter] Frankly, I would 1 4 
ing to let some people get away \ thi 
little bit in order to have this eco imi 
expansion that we need, we can 1 ve/ 
and I believe we will have if we l<!p< 
wits about us properly. [Applaus« 



'Press release 68A of Mar. 7, 19f '■ 



Department of State I Hl«' 

1^ 



THE SECRETARY 



engthening Democracy in Central America 



atement before the Subcommittee 

n Operations of the Senate Ap- 
■ations Committee on March 22, 



irch 10, the President described 
learly the national security stake 
ve in Central America and the 
)ean. Many factors are involved, 
le remedies are complex, but the 
ssues are relatively simple: Cen- 
merica is in transition, trying to 
e the tensions of the past by 
ping democratic institutions and 
ble reforms. Violent, antidemo- 
minorities with close military and 
jical ties to Cuba and the Soviet 

are attempting to disrupt this ef- 
id seize power by force of arms, 
il America is too close and of too 
strategic importance for us to 
idly by while that happens. Our 
ty is at stake, and our most basic 
Dies are being tested, 
is not surprising that our con- 
ons with a wide spectrum of the 

over the last 3 weeks have 
iced the President and all of us 

bipartisan consensus on goals 
in fact, exist. No one wants to see 
unist guerrillas take power in El 
lor. No one wants to see a second 
rd or fourth Nicaragua in Central 
ica. We are unanimous in wanting 
itcome of the crisis in the region to 
^ceful and democratic. 
i would like to focus today on the 
.3 to achieve these common objec- 
ll would like to review our regional 
tgy and explain why we believe the 
bl strategy the President set forth 
'. March 10 speech can help end the 
Ind produce a democratic outcome 
ISalvador. I wOl then discuss the 
jrces we need to make it work. 



regional Strategy 

ttrategy proceeds from an analysis 
j-ecognizes, in fact emphasizes, that 
jare legitimate social, economic, 
[olitical grievances in many parts of 
Egion. For example, many of El 
Idor's problems stem directly from 
js of past Salvadoran govern- 
s—failings that often go back 
es but which must be addressed 



The second critical factor is the deci- 
sion by Cuba with Soviet-bloc support to 
organize and arm guerrilla forces under 
Marxist-Leninist control. This tactic— 
and its fruits— are evident in Nicaragua, 
which since 1979 has become a base for 
the export of violence to its neighbors. 
Almost immediately after the Sandinista 
takeover in Nicaragua, El Salvador 
became a target, with the expectation 
that communist bloc training and sup- 
plies would bring a quick military victory 
to Cuban-backed extremists. 

Our conclusion is that we face two 
related challenges; to help alleviate 
longstanding political, economic, and 
social problems; and to help counter a 
communist strategy which seeks to ag- 
gravate and exploit these problems and 
so to seize power by force of arms. 

The strategy we have developed is 
comprehensive and regional. Much of it 
has been elaborated in consultation with 
the region's democracies. It consists of 
six mutually reinforcing elements. Each 
is necessary to ensure the success of the 
whole. 

The first and critical component is 
support for democracy, reform, and 
the protection of human rights. 
Violence feeds on the failure of local in- 
stitutions to provide responsive govern- 
ment, justice under law, or means to 
achieve peaceful social and economic 
change. We know that democratic 
governments are far less likely to abuse 
their citizens than dictatorial regimes 
whether of the right or left. And we 
know that democracy cannot flourish in 
the presence of extreme inequalities in 
access to land, opportunity, or justice. 
We cannot hope to succeed unless we 
address these first-order concerns. 

The second element is support for 
economic development. Underdevelop- 
ment, recession, and, in the case of El 
Salvador, the guerrillas' "prolonged war" 
against jobs, transport, and crops create 
human hardship and misery that are be- 
ing exploited by the enemies of democ- 
racy. Three-quarters of the resources in 
support of our Central American policy 
go to economic assistance. 

The third element is support for the 
security of the nations of the region. 
We must provide El Salvador and our 
other friends struggling for democracy 



enough military training and assistance 
to protect against the military power of 
the guerrillas so that nonmilitary solu- 
tions can be found. Security assistance is 
not an end in itself but a shield for the 
region's democratization and develop- 
ment. 

The fourth element is to give the 
area hope in the future. That is why 
our economic efforts go beyond the 
traditional forms of assistance: the 
President's Caribbean Basin Initiative 
proposes unique long-term incentives to 
spur the sustained economic growth 
these countries have demonstrated in 
the past they are capable of achieving. 

The fifth element is to deter the 
Sandinista attempt to promote a 
"revolution without frontiers." We are 
providing essential economic and securi- 
ty support to Costa Rica and Honduras. 
And together with other democratic 
countries of the region, we are working 
to persuade the Sandinistas that they 
should come to the bargaining table 
ready to come to terms with their own 
society and their neighbors. 

The sixth element is support for 
peaceful solutions. Internal reconcila- 
tion— through democratic elections, 
guarantees of personal security, and 
amnesty— can be an alternative to 
violence and the consequences of 
violence for all concerned. Similarly, 
regional agreements can strengthen 
democracy and reduce sources of con- 
flict and militarization. 

All six of these elements must be ap- 
plied and sustained for the strategy to 
succeed. No amount of reform alone can 
bring peace so long as the guerrillas ex- 
pect and seek military victory. No 
amount of economic assistance alone can 
suffice if the guerrillas can destroy basic 
infrastructures again and again with im- 
punity. And even sustained government 
military superiority alone will not bring 
sustained peace in the absence of more 
freedom and of better opportunities for 
social and economic development. 

Situation in El Salvador 

Let me turn now to El Salvador. How is 
our strategy working there? 

First, respect for human rights has 
grown slowly, but steadily. Political 



1983 



37 



THE SECRETARY 



violence against noncombatants is a 
serious problem but is down markedly 
since our assistance began 3 years ago. 
Military operations have resulted in the 
capture of prisoners. The treatment of 
individuals in prison for security reasons 
has improved— international access to 
detained individuals is regular and 
prison facilities are cleaner and better 
administered. Even so, the criminal 
justice system remains a major concern, 
one I will examine in greater detail in a 
moment. 

Second, in 3 short years and despite 
determined guerrilla opposition, El 
Salvador's Government has redistributed 
more than 20% of all arable land. Some 
450,000 people— about 1 Salvadoran in 
every 10— have benefited directly. 
Strong peasant organizations have 
emerged. An AID-financed [Agency for 
International Development] study by in- 
dependent consultants visiting El 
Salvador reported that: "Members of the 
team . . . were under the impression that 
the conservative coalition that won the 
March 1982 election had attempted to 
annul the reforms. During 2 months 
of field work, however, we discovered 
that reforms were still very much alive." 
The recent extension of land reform 
legislation confirms this judgment. The 
distributive aspects of the reform, if con- 
tinued at the present pace, can be com- 
pleted this year. 

Third, the general economic situa- 
tion is poor. In the last 4 years, the 
Salvadoran economy has contracted by 
25%. Overall unemployment is in the 
neighborhood of 40%. Imports of 
medicines and food have been hampered. 
To maintain even zero growth in real 
terms. El Salvador needs substantial 
assistance to import materials, in- 
termediate goods, and essential 
agricultural inputs for which it lacks 
foreign exchange. 

Part of the problem is that the inter- 
national recession has depressed com- 
modity and agricultural markets on 
which El Salvador depends for foreign 
exchange. But the more serious weak 
point is that since the failure of their 
1981 "final offensive," the guerrillas 
have moved against the economic in- 
frastructure. They have destroyed 55 of 
the country's 260 bridges and damaged 
many more. The national water authori- 
ty is carrying out 112 reconstruction 



projects to restore facilities damaged by 
guerrilla action. Two hundred forty-nine 
separate attacks have caused millions of 
dollars of damages to the telephone 
system. Electrical systems have suffered 
over 5,000 power interruptions in a 
22-month period ending last Novem- 
ber—an average of almost eight a day. 
The eastern region was blacked out for 
over a third of the year in both 1981 and 
1982. Thirteen crop-dusting planes have 
been destroyed or damaged since last 
October. Over 200 buses were destroyed 
in 1982 alone. Less than half the rolling 
stock of the railways remains opera- 
tional. 

In short, guerrilla sabotage is 
depriving the people of El Salvador of 
food, water, transportation, light, sanita- 
tion, and work. 

It cannot be stressed enough that 
this guerrilla campaign of "rule or ruin" 
is contrary to the will of the overwhelm- 
ing majority of Salvadorans. The Arch- 
bishop of El Salvador put it this way on 
March 18: "The population wants there 
to be peace. I do not see that the guer- 
rillas, who have progressed militarily 
and in experience, have popular 
support . . . There have been about four 
or five offensives and who knows how 
many more to come. But the people 
want [peace]." 

This brings me to a fourth point. 
The military situation is not desperate 
but could become so if we fail to help. 
The Salvadoran Armed Forces face the 
difficult task of fighting mobile and well- 
trained enemy units supported from the 
outside, while also protecting static 
targets and population and production 
centers. Ten days ago, we had to pro- 
vide an emergency airlift of critically 
needed small arms ammunition. The 
Salvadoran soldier, when well-trained 
and well-led, is capable; guerrilla opera- 
tions have for the most part been local- 
ized to certain areas of the country, and 
the government forces we have trained 
are performing effectively. The three 
U.S. -trained units conduct themselves 
professionally both on the battlefield and 
in their relations with noncombatant 
populations. But only 10% at most of 
the Salvadoran Armed Forces have 
received our training. 

Fifth, democracy and reconcilation 
have made major advances this past 
year. The Constituent Assembly has 
engaged a wide and diverse political 
spectrum, from ARENA [National 
Republican Alliance] on the right to 



Christian Democracy on the left. It 
not been easy for often bitter politii 
rivals to deal with each other in a 
parliamentary forum with the outsi 
world watching skeptically. But gn 
ly they are coming to listen to each 
other, moderate, compromise, acco 
modate. In addition to working on 
constitution, the Assembly has reac 
agreement on a Government of Na 
Unity guided by the multiparty pac 
Apaneca and proceeded seriously v 
land reform including the vital lane 
the-tiller program. 

As envisioned in the pact of 
Apaneca, the Salvadoran Governm 
has designated three high-level cor 
sions— on the political process, on 
human rights, and on peace. The I 
Commission is specifically charged 
developing measures of national re 
ciliation. Its members include a Ca 
bishop and two civilians— one a 
representative of the political part 
the other a former foreign ministe 
March 17, this independent commi 
formally proposed legislation prov 
for a general amnesty. 

It is this atmosphere— the yea 
for peace, the viability of El Salva 
new democratic institutions, and v 
Archbishop Rivera has called "a dr 
for understanding more than 
revenge"— that gives impetus to t 
decision to hold presidential electii 
this year— a decision greeted with 
and approval by all, including His 
Holiness Pope John Paul II, when 
announced. 

In sum, despite continued hun 
rights problems and troubled econ 
and security conditions, particular 
side major population centers, hea 
ing progress has been made in po! 
economic, and social reform. Esse 
groundwork has been laid for pro) 
in national reconciliation. 

Resource Needs and Objectives 

Economic assistance is vitally neet 
permit the purchase of essential in 
and to help restore basic services 
frastructure disrupted by the gue: 
It is needed to strengthen the agr 
reform and to help finance labor- 
intensive reconstruction that will 
work to those deprived of it by gi' 
sabotage. It is needed to help the 
private sector, now cut off from c 
markets, regain access to credit f 
critical imports. 



Department of State E 



THE SECRETARY 



D accomplish these objectives, we 
anning to provide El Salvador 
$227 million in FY 1983 economic 
ance, including economic support 
(ESF), development assistance, 
L 480 commodity financing. This 
es $67.1 million the President has 
sed to reallocate for El Salvador 
current funds. This additional 
ince— for which no new appropria- 
are being sought— will be heavily 
itted to public services, medical 
, and food imports. A major com- 
t will support a comprehensive 
irogram of services and reconstruc- 

I two parts of the country most 
illy affected by the guerrilla war. 
) continue building the kind of 
lined, skilled armed forces that can 
ind hold the initiative while re- 

ng the rights of its people, we sub- 
i to Congress on March 10 a 
;ation of our intent to reprogram 
lillion in foreign military sales 
) loan guarantees to El Salvador, 
•e also planning to reallocate to El 
dor $50 million in grant military 
ance program (MAP) funds from 
muary supplemental request. As 
'conomic assistance, none of this 
ise will involve funds other than 
previously requested, 
'e are not planning to send El 
dor advanced heavy weapons like 
)viet tanks acquired by Nicaragua, 
ave we any intention of American- 
the fighting by introducing U.S. 
it advisers. Rather our emphasis is 
eatly expanded training for 
doran soldiers, with all or most of 
Iditional training taking place out- 

II Salvador if funds permit. The 
we have requested would enable 
train some 50% of El Salvador's 
fighting units — compared to 10% 
;iow. They would also help El 
dor's Armed Forces to increase 
mobility with additional 

pters, small naval craft, and trucks 
3 acquire necessary munitions and 
parts. Some of this military 
ance will also be used for engineer- 
juipment and medical supplies to 
ie relief for the people suffering 
the effects of the guerrilla war. 
ime is important to this objective, 
nore quickly we help these armed 
5 become more effective and 
nsible instruments of El Salvador's 
aal policy, the sooner their shield 
e available to protect the emerging 
cracy and developing economy we 



all seek. To quote Senator Jackson, "if 
you're going to have the ballot box free 
and open, there must be a shield behind 
which the people can participate." 

Let me return here to one problem 
that is not primarily a question of 
resources— the deeply troubling ineffec- 
tiveness of El Salvador's system of 
criminal justice. It is true that this 
stems directly from the larger problem 
of violence. But it is equally true that ef- 
forts to protect human rights and instill 
respect for the law are gravely 
hampered if the courts are unable to 
bring cases to a timely and impartial 
conclusion. 

The Salvadoran Peace Commission 
and Human Rights Commission together 
have a mandate to review all laws and 
procedures governing political crimes 
and to make recommendations for im- 
proving the judicial system as a whole. 
Some problems may be subject to 
relatively prompt action; for example, 
increasing security for judges and other 
court officials or transferring jurisdic- 
tion over military offenders to military 
courts. Other problems, such as review- 
ing rules of evidence and substantive 
criminal law or upgrading case manage- 
ment, investigative techniques, and 
judicial administration will by their very 
nature take longer. 

We have been asked for help in this 
delicate area and want to be of 
assistance. However, because El 
Salvador's judicial system is quite dif- 
ferent from our own, specific recommen- 
dations will require more detailed 
knowledge and cooperative programs 
than we have now. We are working on 
both. And we hope that Latin American 
democracies, like Costa Rica and 
Venezuela whose legal systems are 
closer to that of El Salvador, will also 
help. 

Negotiations 

The President has emphasized our sup- 
port for negotiations aimed at "expand- 
ing participation in democratic institu- 
tions—at getting all parties to par- 
ticipate in free, nonviolent elections." 
We will not support negotiations that 
short-circuit the democratic process and 
carve up power behind the people's back. 



We will support negotiations to help pro- 
vide guarantees of electoral fairness and 
protection for voters and candidates of 
all persuasions. 

For 18 months, the Government of 
El Salvador has been attempting to open 
democratic political processes to all 
political forces including the Marxist 
ones. The Peace Commission has the 
specific mandate to help incorporate all 
social and political groups in the elec- 
tions this year. The President of the 
Constituent Assembly has called for the 
main political unit of the guerrillas, the 
Frente Democratico Revolucionario 
(FDR), to take part in the election. 

As the President indicated, we are 
willing to help. Surely there will be in- 
terest in measures which would guar- 
antee the personal security of candidates 
and their supporters, in the provision of 
observers to encourage fairness and 
discourage coercion or intimidation, and 
in specific ways to ensure access to 
media, an accurate tally, and— ulti- 
mately— respect for the results. 

We will be making proposals to the 
Salvadorans on how we, the Organiza- 
tion of American States, and other con- 
cerned countries can help to achieve 
each of these objectives. We are fully 
committed to this course. 

We also support negotiations among 
countries, as the President has said, "to 
strengthen democracy, to halt subver- 
sion, to stop the flow of arms, to respect 
borders, and to remove all the foreign 
military advisers— the Soviets, Cubans, 
East Germans, PLO [Palestine Libera- 
tion Organization], as well as our 
own — from the region." Eight 
democratic countries of the region, 
meeting in San Jose, Costa Rica, in Oc- 
tober 1982 called on Nicaragua to join 
them in pledging an end to cross-border 
support of guerrilla violence, a freeze on 
the growth of military arsenals, and 
freedom of action for peaceful 
democratic groups. Nicaragua refused to 
discuss these principles. The San Jose 
proposals, if accepted, would reduce 
East-West tensions in Central America 
and contribute to a regional political 
solution. 



1983 



THE SECRETARY 



Discussion now centers on the 
possibility of a meeting of Foreign 
Ministers of the five Central American 
countries— Costa Rica, El Salvador, 
Honduras, Nicaragua, and Guate- 
mala—observed by the Foreign 
Ministers of five other countries within 
the region— Colombia, the Dominican 
Republic, Mexico, Panama, and 
Venezuela. This is what the President 
referred to in saying that a regional 
peace initiative is emerging. Nicaragua 
would be engaged in the process. Its 
good faith, or lack of it, will be tested. 

Regional Development and Security 

Pending a peaceful solution, we must 
also seek to bolster Honduras and Costa 
Rica, two democracies with troubled 
economies where major externally 
directed terrorist incidents have oc- 
curred. These nations— on the borders 
of Nicaragua— feel most strongly the 
growing threat of Nicaraguan military 
power, which is fortified by some 2,000 
Cuban and Soviet-bloc military advisers. 

Both Honduras and Costa Rica have 
democratic systems. Yet they too are 
prey to self-proclaimed Marxist 
"liberators" who despise democracy and 
attack reform. By strengthening these 
democracies and by helping them to pass 
through difficult economic times, we can 
help both countries to provide stability 
and hope even in the midst of regional 
crisis. 

We, therefore, plan to provide an 
additional $101 million in economic 
assistance in FY 1983 for Honduras, 
Costa Rica, and Belize. With the critical 
$67.1 million in additional economic 
assistance for El Salvador, this is a 
regionwide economic assistance increase 
of $168 million, of which $65 million has 
been added to our January supplemental 
request. With respect to military 
assistance, we are increasing our 
January supplemental request for MAP 
funding by $20 million, mainly for Hon- 
duras, with some assistance for Costa 
Rica and the Panama Canal area 
schools. Thus, as called for by the Presi- 
dent, total additional military assistance 
for Central America, including El 
Salvador, will be $130 million in FY 



Conclusion 

Let me conclude with a final observa- 
tion. The President eloquently set forth 
the reasons why the outcome of the cur- 
rent conflict in Central America is im- 
portant to our national security. I would 
like to suggest an additional reason. Our 
communist adversaries the world over 
depict the United States as a reac- 
tionary, stattis quo power standing in 
the way of legitimate aspirations for 
change. Their propaganda dismisses the 
relevance of political democracy to the 
problems of the developing world and 
asserts that we seek weak, unstable 
neighbors that we can dominate and ex- 
ploit. 



These assertions are lies. We a 
fact, allied with progressive forces 
ing for economic development, refc 
and democracy. We seek not weak 
ploitable neighbors but ones that 
strong, secure, and independent. ^ 
democracy irrelevant to the proble 
faced by the developing nations. 
Democracy, not communism, is th( 
way to deal with their problems. T 
what the struggle in Central Amet 
all about. 



'Press release 80. The complete 
transcript of the hearings will be publi 
by the committee and will be available 
the Superintendent of Documents, U.S 
Government Printing Office, Washingi 
D.C. 20402. ■ 



American Principles and 
Foreign Policy 



Following is a speech by Secretary 
Shultz and a question-and-answer ses- 
sion at the Conservative Political Action 
Conference on February 18, 1983.^ 



SECRETARY SHULTZ 

Thank you very much. I appreciate your 
introduction and especially the job 
history. Insofar as my business career is 
concerned, I do have some advice to 
you, and it's pretty unambiguous as to 
how to get ahead, and that is, start at 
the top. [Laughter] 

As you can see, I've held many jobs, 
and the most recent one— the one I'm 
on now — I've been on for about 7 
months. So, I thought I'd give you a lit- 
tle report on what it's like to be working 
for President Reagan in the foreign 
policy arena. 

Of course, in my job, I'm sort of 
down in the problems all the time, and 
they have an endless amount of detail 
connected with them. Quite frequently, 
I'm over in the White House talking 
with the President and getting his 
guidance and advice on one thing or 
another, and I find that he has a per- 
spective in quality that is very helpful to 
me and, I think, all of us who are work- 
ing with him. That is a capacity to stand 
back from these details that tend to con- 
sume you all the time and take you back 
to certain fundamentals in your think- 
ing. I thought what I might do— just in- 
formally here for a few minutes— is talk 



about those fundamentals and wh 
mean and where they are leading 
our foreign policy. 

Economic and 
Military Realities 

The first one the President alway 
comes back to is the importance c 
realistic and honest with yourself 
what is taking place. We have to 
realistic about the problems we fs 
have to be realistic about the nati 
the world that we're living in. Th« 
thing in the world we can do is b« 
wishful thinkers about what is tat 
place. 

Insofar as some of our econor 
problems and international econoi 
problems are concerned, we have 
those in the eye and recognize thi 
the President inherited in the wa; 
economy was way out of kilter; tl; 
taken some very tough action to ! 
correct those problems. There ha- 
major results in terms of inflation 
particular. 

Beyond that, there are many 
in the international economy we m 
look at. Not all is well. On the otll" 
hand, the cure for most all of the i 
issues is expansion in the world 
economy— healthy expansion— aril' 
think it is beyond doubt now that B1 
the world economy — namely, the I.S 
economy— is starting that expansm.i 
Since the inflation rate is really ' 
down — and we're very conscious 'tk 



Department of State I Ills 



THE SECRETARY 



tance of keeping it that way— we 
pact that expansion to be a 
ly one, and it is going to do 
srs for everybody else around the 

I 

iving said that, I think we have to 

icognize that our way of looking at 

nic organization in terms of the 

tplace, in terms of freedom of 

irise, has a rival. That rival is the 

ind economy approach. 

lave found, in traveling around the 

as a businessman and in my pres- 

pacities, that it widely recog- 

increasingly widely recognized — 
le command economy approach to 
nic development doesn't work. It 
t serve people in a material way 
f course, everywhere it is 
ited with human repression that 
uldn't tolerate. 

, our way of organizing things— 
jt perfect, we have our difficulties, 
ouldn't kid ourselves about them, 
e're getting some place— is basical- 
rking; the other way isn't, and peo- 
^ increasingly realizing that fact, 
here is another reality, and it's a 
jmore military reality. Perhaps I 
i't it across to you— although I'm 
ou all recognize it— by just a few 
Dies. In the Christmas season of 
Inearly 200,000 Vietnamese troops 
\'A Kampuchea. They're still there 
' years later along with 40,000 
kmese troops in Laos. That's a 

I the Christmas season of 1979, 
i 100,000 Soviet forces invaded 
inistan. They're still there 3 years 
wacticing chemical warfare. We 

il be realistic about these practices 
i willing to say what we observe, 
'ry reassured to have been able to 
t the NATO ministerial meeting in 
■els last December that all of the 
Jers present subscribe to a com- 

II ue noting and condemning this use 
smical warfare. 

■ the Christmas season of 1980, 
efore President Reagan took of- 
ioviet- and Cuban-supported guer- 
isought to overthrow, by force, the 
i,nment of El Salvador. Last spring 
•ivador held free elections; the 
iillas continue their efforts, and 
<is a very considerable problem in 
sivador as a result of the Soviet- 
luban-supported guerrilla efforts. 
I the Christmas season of 1981, the 
': Union culminated a year of 
tal and military pressure to crush 
!d's experiment in democratization, 
're all know the sad results of that 



These are realities, just as the thou- 
sand nuclear warheads on Soviet SS-20s 
are realities. We have to look at all of 
these things. There are some good 
things to look at on the economic side. 
There are some threatening things to 
look at, and we have to be clear about 
them. 

At any rate, across the board — and 
I've just hit some examples, some good, 
some not so good— we have to be 
realistic about what is going on. That's 
the first thing the President always 
comes back to. Don't kid yourself now. 
What's really taking place? Good, bad, 
or indifferent— we have to call it as we 
see it. 

Economic and 
Military Strength 

The second thing that we must come 
back to always is the importance of 
strength. Economic strength— ourselves 
and our economy— and we all know our 
economy is fabulous. It's very produc- 
tive. It is going through a rough spot, 
but it's coming out more healthy than it 
has been in the recent past. It's a very 
powerful, dynamic, strong economy, and 
we need to keep it that way. 

We need to keep and develop our 
strength of will and our recognition and 
adherence to the principles and the 
values that we stand for; and that what 
strength we can muster seeks to defend 
and to find allies around the world who 
have the same values. 

But, of course, beyond that, we must 
look to our military capabilities and our 
military strength. The President has 
placed tremendous emphasis on the im- 
portance of strength, and there is no 
substitute for it. There is no foreign 
policy for the United States unless we're 
strong and unless we have a healthy and 
vibrant economy. These are the fun- 
damental underpinnings of anything 
you're going to do around the world. 

There's no question about the fact 
that the President has been brilliantly 
successful in turning around the defense 
attitude and the defense strength of the 
United States. The battle continues, 
however, and it's certainly joined right 
now. I'm glad to notice on your program 
that Cap [Caspar] Weinberger will be 
here. Cap Weinberger seems to be the 
center of criticism these days. He gets a 
lot of criticism, and they say Cap is in- 
flexible. Let me say, he has a lot to be 
inflexible about. [Applause] He needs 
support, and he's getting support. We 



must recognize the importance of 
developing and maintaining our capacity 
to defend ourselves, to defend our in- 
terests, to defend our values, and to 
help our allies and friends around defend 
those same objectives. Strength — mili- 
tary strength, economic strength, 
strength of will and purpose are fun- 
damentals that the President comes 
back to time and time again. 

Constructive Problem Solving 

That, of course, is not the end of the 
matter because, as you all know, the 
President is a problem solver. As we 
look at problems at home and around 
the world, we have to scratch our heads 
and say, "What can we do about them?" 
It's not enough just to be realistic and to 
be strong, we've got to be able to use 
that strength and determination for con- 
structive purposes. 

I believe we can be proud to say that 
around the world the United States is 
always trying to be part of the solution, 
not part of the problem. It's fair to say 
that the diplomacy of the United States 
under the President's direction saved 
Beirut from destruction. [Applause] We 
are striving to bring about a more 
peaceful situation in the Middle East. 
It's a tough struggle. It's been going on 
a long while. But we're making some 
headway. At any rate, in all cases we're 
trying to be part of the solution. We're 
bringing suggestions. 

In another part of the world we are 
working with the ASEAN [Association 
of South East Asian Nations] countries 
to try to get the Vietnamese forces out 
of Kampuchea and to create a better 
situation there — a situation that will 
serve our interest as well as theirs. You 
can look at the situation in southern 
Africa and see similar efforts. You can 
look at the problems in the economic 
sphere of our friends around the world 
and see that the United States again is 
trying to be helpful, and, at the same 
time, trying to carry, with that help, a 
sense of the kind of principles on which 
we think economic development can 
properly proceed. I think that with our 
realism, with our strength, with our 
alliances— I've been in Asia recently, in- 
cidentally, visiting Japan and China, 
Korea — how many of you here have 
stood up at the DMZ [demilitarized zone] 
in Korea? Probably a few of you. [Show 
of hands] Let me tell you, if you ever 
have a chance to do that, go do it, 
because you can feel the hostility. You 



THE SECRETARY 



know that you're on a front line. You 
can also be very proud of the American 
soldiers there and of the Korean soldiers 
who are there, and of our capacity to 
work together with them in defense of 
freedom. 

But I found in all of the countries 
that I visited a very realistic and clear 
view of what country is the root cause 
of the big problems that we have around 
the world. That was reassuring. We are 
realistic, we are strong, we try to solve 
problems, and I suppose any tour of the 
horizon on those principles is incomplete 
without saying something about the 
Soviet relationship. This is something 
that we must address ourselves to. It's 
important because the Soviet Union is a 
large country with a tremendous 
military capacity and a demonstrated 
willingness to use that military strength 
without scruple. So it's there, and we 
have to deal with the Soviet Union. 

Again, I think the principles the 
President has laid out are the ones to 
follow, and they're the ones he's follow- 
ing. Namely, be realistic, first of all. 
Don't allow yourself to kid yourself 
about what's going on. Be ready to say 
what's going on. Be strong, but also be 
wOling to solve problems. 

What has been happening in recent 
days is the President's policy has been in 
place— it is in place, it will be in 
place— based on those ideas. With new 
leadership in the Soviet Union the Presi- 
dent has, on several occasions, sought to 
underline the third point: Don't forget 
the other two points. And in underlining 
the third point, always the message is, if 
you're genuinely ready to solve problems 
in terms of behavior — not words, 
deeds— then the United States will be 
there to be a constructive partner 
always, but with realism, strength, and 
determination. 

I think there's also a fourth point, 
and it's a point that is very much in the 
spirit that the President brings to 
things. Because he is a great believer 
that if you will counsel realistically with 
yourself— you'll be strong and you'll 
solve problems on the basis of that kind 
of an approach— it's possible that life 
can be better; that we can have an 
economy that's more bountiful; that we 
can have a world that's more stable and 
peaceful if we're determined about it. 

In terms of stability and economic 
terms— but not just in those terms— 
that we can have a world that's better in 
terms of freedom: Freedom to worship, 
freedom to vote, freedom to speak, 
freedom to write, freedom to object, to 
find peace, with liberty and justice for 
all. [Applause] 



QUESTION-AND-ANSWER SESSION 

Q. You said, during your speech, that 
the command economic approach 
doesn't work. Would you go so far as 
to recommend that we stop any and all 
taxpayers' guaranteed loans to Com- 
munist economies? If not, why not? 
[Applause] 

A. I think always in our — you're 
speaking of the multinational lending in- 
stitutions, of course. In our policies 
toward those institutions, we need to 
represent and to call to their attention 
this fact of what works and what doesn't 
work, and to look for projects that are 
truly justified. 

Countries vary across a broad spec- 
trum as to how they're organized, and 
we don't have to make the decision in 
terms of the Soviet Union and its im- 
mediate bloc, which I think are the real 
typical command economies. In terms of 
others, of course, we are a participant in 
those multinational banks, and we have 
a strong vote and a strong voice. We get 
mileage out of our money by having it 
attract other money, and we have to 
compose ourselves with our allies in 
those banks. I would say, certainly, that 
is what we expect and that is mostly 
what happens. But, no doubt, there are 
some cases in which loans go to things 
that we would not particularly favor, 
and we can work against that. But I 
would not support withdrawing from all 
of the international financial institutions 
on that account, which I guess is the 
gist of your question. 

Q. I meant the Export-Import 
Bank, particularly. 

A. The Eximbank loans — certainly, I 
would expect to see that criterion upheld 
and to expect, also, to see us looking at 
projects in the Eximbank — a case, of 
course, that definitely benefits American 
exporters. That's the purpose of it. 

Q. This Administration, as the 
previous Administration, in the Mid- 
dle East has operated on the assump- 
tion that certain Arab nations were 
moderate and could be induced into 
more moderation. Therefore, Presi- 
dent Reagan has proposed a peace 
plan in which King Hussein of Jordan 
would play an enormous role, and he 
has also led the fight to sell AWACS 
[airborne warning and control sys- 
tems] to Saudi Arabia. At this point 
certain conservatives, including 
William Safire, asked what have we 
gotten in return. In light of Saudi 
Arabia's continuing funding of the 
FLO, what evidence is there that the 
original assumption is sound and that 



the current policy is prudent? 
[Applause] 

A. I don't like the alternatives i 
effort to attain peace in the Middle 
East. It is terrifically important to 
everyone, including Israel— especia 
Israel — to have peace in the Middk 
East. Look at what has happened t 
Lebanon. Really savaged over man 
years by the fact that the problems 
the Palestinians have simply not b€ 
addressed in any legitimate way. I 
believe that uiJess and until they a 
dressed and some reasonable soluti 
found to the legitimate rights of th 
Palestinians, we will not have peac 
the Middle East. 

They're people, they live there, 
they've lived there a long time, anc 
can't be ignored. They won't go av, 
That being the case, it seems to m 
proper and pnjdent, necessary set 
policies to be seeking all the time, 
kind of setting, the kind of negotis 
that will lead to normal relations t 
tween the countries in that part of 
world. 

The President on September 1 
posed a plan that is within the Cai i 
David framework, and, of course, | 
to bringing about the sort of resul | 
seek, and the President seeks, is t 
additional countries represented a 
bargaining table and, particularly, 
dan. Certainly, we have been worl 
with King Hussein to see if the co 
tions can't be created that will lea( 
to the bargaining table, and with £ 
implicit suppoit from other Arabs 
from the Palestinian population, g I 
ly. I think it's a worthy objective, ; .1 
necessary objective. li 

We're not there yet, but that c I 
mean that we can't get there or th i 
shouldn't be trying, because I thinj I 
alternative to trying is to throw u] | 
hands and say, "Let there be what 8 
measure of security there can be 1: 1 
on armed force." In the end you hi| 
reckon— and people are fond of qil 
statements like "an eye for an eye | 
"a tooth for a tooth"— I think you i 
to remember, too, that if you live li 
sword, you can die by the sword. .'M 
try to be peacemakers in that part f 
the world and bring these populat; i 
together. That is what we're tryin ^ 
do, and it's not impossible; it sure '& 
ficult. [Applause] 

Q. I'm from Phoenix, Arizon; th 
only state to defeat the nuclear i '« 
[Applause] In light of that. I'd li t( 
ask two questions. First of all, cJil 



42 



Department of State B et' 



THE SECRETARY 



jmment on the reported attempts 
: Administration to suppress the 
igation of the Italian Govern- 
that the Pope's attempted 
sination was. in fact, headed up 
t present Premier of the Soviet 
), Yuriy Andropov, who, at the 
was head of the KGB [Commit- 
r State Security (U.S.S.R.)] in 

nothing happens of that sort 
they get the okay from the head 

KGB; and, if this were the case, 
aid be tremendous in opposing 
esent-day nuclear freeze, 
he second question: Would you 
; comment on the Administra- 

attempt at the so-called playing 

China card and the selling of 
in, in general, and the lack of 
g the F-5C Tiger Shark, in par- 
r, to Taiwan to defend her coun- 
\pplau8e] 

. I can see that in addition to 
:ing the nuclear freeze, you're real- 
led. [Laughter] I don't know of 
'fort on the part of the U.S. 
nment to suppress the investiga- 
f the attempted assassination of 
)pe. Quite the contrary. That in- 
ation is being carried on by the 
nment of Italy. We await the 
s of what the Italian Government 
j; up with. We regard it as a most 
is matter and look to the Italian 
(nment to conduct that. We're not 
It to discourage them in any way or 
less any evidence whatsoever. [Ap- 

k 

Js far as the relationship of the 
Ijd States and the People's Republic 
*ina is concerned, I believe that it is 
^tant for us to have a reasonable 
■tinship with the country. It's a vast 
ijry. It's an important country. It's 
1 to develop— develop very strong- 
[n sure. 

he issue of Taiwan is one of the 
i that is very troublesome with 
Et to that relationship. On the one 
i the Chinese on Taiwan and the 
ise on the mainland both agree that 
Kin is part of China. We say, "Well, 
ti their problem to work out." But 
je on Taiwan have been friends of 
nited States for a long while. 



They've fought on our side in Korea. 
They fought on our side in Vietnam. 
They have constructed a very in- 
teresting and strong economy and socie- 
ty. We're not going to turn our backs on 
them, by which we mean that we will 
have commercial and cultural relations 
with the people of Taiwan, and we stand 
for the idea that whatever composure of 
the issues comes about, it must be by 
peaceful means. Therefore, as specified 
in the Taiwan Relations Act, we'll sell 
the armaments to Taiwan needed to 
uphold that idea. [Applause] 

I think what is said in the communi- 
que simply describes, following the 
statement made on the Chinese side, 
that the situation is peaceful, but the 
level of arms needed basically is a reflec- 
tion of the conditions that exist. If there 
is a peaceful situation, one could expect 
the level of armaments to decline, but 
that doesn't change our commitment 
that any resolution of the issues would 
be by peaceful means. 

■This is one of the issues that makes 
our relationship with the People's 
Republic of China difficult to 
achieve— one kind of relationship we 
want. It's a hard issue to manage, but I 
believe that we can do so and do so with 
honor to our commitments to longstand- 
ing friends and with a sense of reason 
anci good sense about the importance of 
a relationship with the People's Republic 
of China. [Applause] 

Q. I'm from Georgetown Universi- 
ty. While President Reagan was in 
Europe last summer, he proposed U.S. 
action to promote democratic values in 
institutions across the globe. What 
specific steps will the Administration 
be taking in this initiative? 

A. We've taken quite a few steps on 
that initiative. There have been a couple 
of conferences attended by people from 
throughout the world, including people 
from totalitarian, Communist societies, 
and we have talked in those conferences. 
They've gotten a fair amount of 
publicity— about democratic values, 
about free elections, and it has been sur- 
prising to me to see how much reaction 
we've gotten from the Soviet Union. 
They sort of shake their finger at us and 
say, "What do you mean talking about 



principles of freedom and democracy 
around the world." So it's got their 
attention. 

Beyond that, we seek to put these 
values forward as part of an effort of 
what is being called "public diplomacy." 
We are seeking, in connection with the 
President's budget, a fair sum of money 
to help us to do that— to take concrete 
steps, to call attention to these values, 
to put them forward, to see that people 
come here, and back and forth, and get 
exposed, and so on— a program of pro- 
moting the values that we believe in 
rather than just sitting here and expect- 
ing people will naturally recognize them. 
We're very much in favor of this effort 
that flows from the President's speech 
before the British Parliament, and it's 
getting a lot of attention and a lot of ef- 
fort. 

Q. In light of the constant covert 
terror emanating from Bulgaria, what 
is Bulgaria's status of relations with 
the United States, and what do you 
see as its future status of relations? 

A. The harboring of terror is 
something that we abhor, and we don't 
have any prospect of any kind of a fruit- 
ful relationship with a country that does 
that, as Bulgaria does. 



'Press release 54. 



THE SECRETARY 



Interview on "This Week 
With David Brinkley" 



Secretary Shultz was interviewed on 
ABC-TV's 'rhis Week With David 
Brinkley" on February 20, 1983. by 
David Brinkley, Sam Donaldson, Peter 
Jennings, and Pierre Salinger, ABC 
News, and George F. Will, ABC News 



Q. We've had now roughly 100 
days of the new administration in the 
Soviet Union, Mr. Andropov. What are 
your impressions of him at this point? 

A. My impression is, starting with 
my observations at the Brezhnev 
funeral, that he has taken charge; he's 
the person with authority. So far, the ef- 
forts that we have made to emphasize 
our willingness to discuss substantive 
problems and work them out have not 
produced anything fruitful; nevertheless, 
we continue to follow our policies— the 
President's policies — of being realistic, 
of being strong, and of being ready to 
seek constructive solutions to problems. 

Q. Would you say he is less dif- 
ficult or more difficult to deal with 
than his predecessor? 

A. He has said that his policy is to 
continue those of his predecessor, and so 
far as we can see, that's what he's do- 
ing. 

Q. Just below the general issue of 
the economy, which is worldwide, in 
Europe, as you well know, is the sub- 
ject of intermediate-range nuclear 
missiles. Can you point publicly to 
some evidence now that the inter- 
mediate-range missile negotiations at 
Geneva are not stalemated? 

A. The negotiations are taking 
place, the Soviet negotiators are there, 
we have very good proposals on the 
table, they are supported by our allies. I 
think it's quite apparent that the Soviet 
Union does not want to see the Pershing 
lis and the ground-launched cruise 
missiles deployed in Europe, as the allies 
and we have agreed to do. 

So with a proposal for eliminating 
that whole class of missiles on the table, 
I think there are big incentives on 
everyone's part to do just that. We have 
a good proposal, we're discussing it, and 
that's the way you conduct a negotia- 
tion. 



Q. There is a certain feeling in 
Europe that negotiations and really 
serious debate about deployment is 
suspended until after the German elec- 
tions on March 6th. Do you think that 
election is so crucial to the NATO 
deployment? 

A. I don't think there is such a big 
debate about deployment, especially 
among the leaders. They all have said 
that it's important to deploy on schedule 
unless there is some breakthrough in 
negotiations. That is our position; that is 
their position. 

The negotiations themselves have to 
follow their own pace, and any 
developments in the negotiations, it 
seems to me, can't be connected to any 
particular election. 

Q. My point about the German 
election was that we're not altogether 
sure who the leader will be after 
March 6th; whether it will be Mr. 
Vogel, the opposition candidate, who 
is not altogether sure that he would 
deploy the missiles. 

A. We can't try to predict election 
results. They're difficult to predict 
anywhere, and I think it's very impor- 
tant, from the standpoint of the United 
States, to be neutral in elections. So I 
don't want to comment on the can- 
didates. 

Q. One of the most predominant 
European perceptions is that the zero 
option, while being a very good plan 
and even a moral plan, is unattainable. 
When Vice President Bush was in 
Europe, he kind of threw open the 
debate, suggesting that maybe if 
somebody had some ideas, they could 
put them on the table. 

Now. former French President 
Valerie Giscard d'Estaing yesterday in 
a very long article in the French 
newspaper La Monde did make a pro- 
posal. What he suggested was to 
change the zero option to the zero ob- 
jective, and what he said was that the 
missiles should be deployed, but 
deployed on a staged basis, agreed to 
by the governments of the countries 
where they're going to be deployed, 
and if the Soviet Union decided to 
destroy part of their SS-20s and other 
missiles, you could stop the deploy- 
ment at a point of equality between 



the East and West and Europe, bm 
the final objective being no mediui 
range missiles on either side. Wha 
you think of that proposal? 

A. I like very much the emphasi 
that Giscard put on deployment and 
importance of that unless there is a 
satisfactory agreement. Of course, t 
fact of the matter is that these | 

deployments don't take place instan- 
taneously, all at once; they take placi 
a schedule over a period of time, th( 
first being toward the end of this ye 
So there's plenty of time for the Soi 
Union to come forward with worthw 
suggestions. 

Q. What about the part of Mr 
Giscard d'Estaing's proposal wher 
suggests that the European leadei ' 
the countries involved get togethf 
and work out the stages, in conju ' 
tion with the United States? Wou ' 
you approve such a plan? ' 

A. I think that it's very import j 
that the allies together work out wl ' 
the strategy should be. First of all, i 
strategy of a two-track approach, t 
is, deployment and negotiations, vii ' 
worked out jointly, and the zero op I 
so-called the elimination option, wa 
a product of joint consultations. Th 
consultations are going on constant 
As I have watched the cable traffic 
and forth across the Atlantic and h j 
to people, one of the refrains that I 
heard is how appreciative people ai 
the fact that there is a rich and full 
sultant process going on. It should 
alliance process, not a European or 
then a U.S. one. 

Q. Haven't we lost sight of a . 
ess or portion of the negotiating 
ess, a lot of talk about numbers- 
reduce the SS-20S, not put in the 
Pershing, not put in the cruise? I 
there a more basic problem? We \ 
a worldwide limit on intermediatt 
range nuclear missiles and the Sd 
want ceilings only on those in Eu 
Is the Administration— and this ( 
concern Europeans— flexible enon 
to be able to harmonize those tw« 
positions? 

A. I think you make a very got 
point, and, of course, we are harmo 
ing those positions. The zero option 
global proposal, and one of the thin 
that was wrong with the proposal t 
fered by Mr. Andropov was that it 
ply seemed to propose moving a Id 
SS-20S from the European theater 



Department of State Bu ti 



THE SECRETARY 



ar Eastern theater. I happen to 
been in the Far East recently, and 
/roposal was not a hit in the Far 
by a long shot. There's very firm 
rt there for the U.S. position, 
he proposal of Mr. Andropov, if 
)ody had made that to me when I 

businessman, I would have said he 
sed to give me the sleeves from his 
All he was going to do was move 
missiles over here, and they could 

be moved back again, 
think there's another point, 
h, that I'd like to comment on in 
ction with your question. I think 
! right in saying that with all of the 
asis on arms and missiles and so 

there is an important point being 
d, and there is. And the important 
is this: What this is all about is not 

it's about values, the values of 
3m— of the freedom to speak, the 
)m to vote, the freedom to wor- 
the freedom to choose the way of 
lat we want. That's what it's all 

le only reason why we have the 
ifense effort that we have in this 
ry and abroad and the only reason 
.'e are debating these things is that 
:ognize that we have to be willing 
:end these freedoms. But the 
i)ms are what this is all about. 

|. Another European perception 
e United States no longer has any 
ige over the State of Israel and, 
fore, it cannot move the State of 
,! toward adoption of the Reagan 
I What would you say to that 
:ption? 

.. I think the leverage, not only 
}he State of Israel but everybody in 
'igion, is the leverage given by the 
!)ility of peace. That is the goal that 
•jve talked about and others have 
i about. I think it is increasingly 
(nized as something that is obvious- 

i desirable but perhaps even at- 
;, and it's that possibility that we 
keep in front of people as the 
•eason why an effort should be 
sit down and work out the con- 
that will lead to peace. 

\. Have you heard any more news 
(King Hussein about the peace 
lithe progress? Is he going to join 
ill he take part in it? Anything 
on that? 

I. There's nothing new that can be 
'1 publicly, but I think it is well 
«n by this time that King Hussein 
;i to enter the peace process. He 
:nizes the importance of working 



out peace problems with Israel, and I'm 
pretty optimistic that one of these fine 
days the conditions will be right for rais- 
ing that negotiating level a new notch. 

Q. He was on this program a few 
weeks ago, and one of the conditions 
he seemed to be insisting on was the 
Israeli withdrawal, or something, 
from the West Bank, which does not 
seem to be a live prospect. 

A. Of course, one of the issues in 
what are called final status negotiations, 
whenever those are gotten to, will be 
the jurisdiction over those territories 
and the establishment of that in a way 
that's consistent with the security needs 
of Israel. There are a lot of difficult 
issues there. 

There is also in the Camp David 
process envisaged something called the 
transition arrangements. I think that 
they are perhaps less controversial but 
very important, so presumably that 
would be the first thing that would be 
tackled if these negotiations can be got- 
ten going again. 

Q. This Administration came into 
power with a lot of hopes that the 
Saudis would play a moderating and 
constructive role, and to that end a lot 
of sophisticated weaponry was sold to 
them. It is not perhaps the case that 
one reason Hussein won't enter is the 
Saudis won't give him the go-ahead, 
and he's afraid they'll do to him what 
they did to Sadat, which is cut off 
their substantial support to him, 
which would be much more damaging 
to him, even than it was to Egypt? 

A. No, I don't think so. I think that 
the Saudis have been playing a construc- 
tive role in the region, not only with 
respect to King Hussein but also with 
respect to Lebanon. It doesn't mean that 
they have done everything that at least 
we think they might do, but they've 
done a lot and will continue to do a lot. I 
think they're a very constructive partner 
in this whole process. 

Q. Do they want Hussein to enter 
the negotiations? 

A. Under the right conditions, I 
think they do. 

Q. It's reported that the President 
has ordered the return of the four 
AWACS [airborne warning and con- 
trol system] planes sent to Egypt. Can 
you tell us about that, and what is the 
threat at the moment from Libya 
toward the Sudan? 

A. As far as we know, the threat 
that was clearly present has receded. I 



don't want to go into all of the ins and 
outs of it, but I think the net of the 
whole thing is, as your broadcast 
brought out, that the President of the 
United States acted quickly and decisive- 
ly and effectively, and at least for the 
moment, Qadhafi is back in his box 
where he belongs. 

Q. For the moment. What are the 
plans for the future? What can be 
done to keep Qadhafi in that box and 
to keep him from trying to break out 
again? 

A. Of course, there is a long history 
of reprehensible behavior on the part of 
Qadhafi. Perhaps you remember the 
murders at the Munich Olympics and 
who harbored and gave asylum to those 
who conducted the murders. This is just 
one among a great many things that he 
has done, both in terms of destabilizing 
his neighbors and in various other ways. 

So I expect that he will continue to 
cause trouble, and our approach, I think, 
is to let him see that his options are 
limited and we know what's going on 
and to conduct ourselves accordingly. 

Q. You say his options are limited. 
Is one of the lessons the President 
wants out this week is that Qadhafi 
will not be allowed to cause trouble? 
Are you really serving notice to 
Qadhafi in Libya that he's not to try to 
destabilize his neighbors? 

A. We certainly oppose these 
destabilization efforts, have consistently 
over a period of several Administrations 
and will continue to do so. I think that 
it's apparent that Qadhafi's actions are 
not at all appreciated by his neighbors. 
After all, it's interesting that the OAU 
[Organization of African Unity] meeting 
under his leadership never took place. 
Why? Not because of us, but because of 
the attitude of his neighbors toward him 
and his behavior. 

Q. Your Assistant Secretary for 
African Affairs [Chester A. Crocker] 
has an essay or an article published 
today in which he says Qadhafi is try- 
ing to destabilize about half the coun- 
tries in North Africa. That could keep 
us pretty busy if we are going to try 
to contain him. 

A. I think the fact of the matter is 
that people are pretty well onto him. It 
isn't that we have to do everything; 
other people, too, have identified the 
nature of the problem he presents. So I 
think that he has been pretty well con- 
tained, and he'll continue to be so. It 
isn't just the United States that's in- 
volved or aware. 



THE SECRETARY 



Q. American policy is a speedy 
withdrawal of Israel from parts of 
Lebanon it now occupies, but 
Lebanese politics seem to be at least 
as murderous as always with one fac- 
tion murdering another and a third 
faction joining them. Is there not a 
danger that if Israel was to withdraw, 
you'd have a massacre, or many 
massacres, much more brutal than the 
one that occurred in the two refugee 
camps? 

A. There are problems in Lebanon 
absent the foreign forces, although I 
think it's fair to say that the problems 
have been less evident in areas of 
Lebanon where the foreign forces have 
not been present and where the 
Lebanese Armed Forces have been 
responsible for security. 

Having said that, I think it's an 
oversimplification that our policy is 
speedy withdrawal of Israeli forces. Our 
policies are speedy withdrawal of all 
forces in a manner that's consistent with 
the security needs of Israel, recognizing 
the implications of southern Lebanon 
and their historic destabilizing effect on 
Israel and the emergence of a Lebanon 
that can govern itself. 

Q. That sounds like a very long 
process. 

A. It will be long in some respects, 
but it can be rapid in others. 

Q. You've just come back shortly 
from a trip to China, where you found, 
what I'm sure you already knew, that 
the— 

A. I went to Japan, China, Korea, 
and Hong Kong, but China was a very 
important part of that trip. 

Q. That's why I wanted to ask you 
about it. You heard what you already 
knew, that the Chinese are somewhat 
restless and irritable about the 
Taiwan issue and the American sale of 
arms to Taiwan. What can we do 
about it? Isn't that going to continue 
to— poison is too strong a word, 
but— make difficult our relations with 
China for the foreseeable future? 

A. It's been a difficult part of our 
relations with China from the beginning, 
and each time a communique has been 
negotiated, that issue has been taken up 
and treated. I think that we must 
recognize that a relationship with China 
is a very important one to us, and in- 
sofar as the difficulty that our relations 
with the people of Tawian, which are 
unofficial, pose a problem, it seems to 
me the thing for us to do is manage that 
in a way that meets the commitments 
that have been made in the various com- 



muniques, and that's what we undertake 
to do. 

Q. Why can't Taiwan buy whatever 
weapons it needs somewhere else? The 
French are big weapons manufac- 
turers, for example. 

A. You mean you want us to take a 
cop-out? Why should we do that? 

Q. No, they would just buy their 
weapons somewhere else and get us 
off the hook. 

A. Oh, come on. 

Q. What we've paid for our 
Chinese relationship is fairly 
clear— an attenuated, downgraded 
relationship with Taiwan. What have 
we got out of this in 11 years? What 
do we have to show for it? What value 
is China to us? 

A. China is an important country 
now, it will be more important as time 
goes on. It has similar interests to ours 
in some respects, internationally, so we 
have been able to work effectively 
together there. I think that there is a 
strong possibility of a developing 
economic relationship with China, so I 
think that it's important for us to have a 
stable and reasonable relationship with 
China. 

Q. In an interview this morning in 
The New York Times, Moshe Arens, 
the man selected by Prime Minister 
Begin to be the new Defense Minister 
of Israel— 

A. Yes, outstanding man. 

Q. He said some Washington of- 
ficials have idealized notions of what's 
possible in Lebanon, as far as with- 
drawal. Are you one of them? Do you 
plead guilty to that? 

A. I don't know who he's talking 
about, but if idealized means that we 
should aspire to help the Lebanese 
recreate their country so that the 
Lebanese people can live in peace and 
prosperity, I plead guilty. That is an im- 
portant objective. I have been to 
Lebanon and Beirut in the days before 
the PLO [Palestine Liberation Organiza- 
tion] ravaged the country and seen what 
a beautiful and central place it can be in 
the Middle East. 

Q. He seems to mean, judging 
from the interview, that some officials 
in Washington are putting too much 
pressure on Israel to withdraw too 
quickly, consistent with Israel's 
security needs. 

A. Israel's security needs are an im- 
portant and legitimate aspect of any 



withdrawal plan, and there is no con 
troversy about that whatever. The p 
lem is how do you do it? I think that 
proposals to have a permanent Israt 
armed force presence in Lebanon is 
hardly consistent with the idea of 
sovereignty for Lebanon. Neverthel 
it seems to me that there are ways ' 
give the kind of insurance that Israt 
properly wants in southern Lebanor 
that are consistent with sovereignty 
That's sort of the nature of the prol 
as we're trying to work it out. 

Q. What is one of these ways? 

A. There are a host of problems 
There is the need for intelligence al 
what is going on, and is there any i 
filtration taking place, and I think t 
kind of thing can be met. Of course 
think one of the important matters 
that's sometimes talked about as 
separate, although I think it's conm 
is the degree of normalization betw 
Lebanon and Israel that is present. ■ 
Some normalization in a process th ' 
can unfold I think is important, am 
course, the more of that there is, tl | 
more that lends to security aspects 
because there are people there goir 
back and forth in the normal coursi 
events, and they can see for thems' 
what's taking place. 

Q. Nigeria this morning anno 
a cut of $5.50 a barrel for oil. No 
and Britain some $3 earlier in th( 
week. Is OPEC [Organization of 
Petroleum Exporting Countries] 
breaking up? Is this a good thing 
that's happening. 

A. I think in the history of cart 
takes time for them to run into the 
ficulties, but history shows that tht 
always do. I think the fact of the n 
is that the price that had been set 
earlier was too high for the econon 
the situation, and the market has t 
over. Where it will go, I don't knov 
I think with whatever problems for 
dividual countries a fall in the price' 
oil may pose, for the world in gene 
it's a good thing. It will help us in (| 
effort to have our GNP grow in re!« 
terms and to have inflation kept ur 
control and deal with some of the i f 
national flows involved. ( 

Q. The President has emphati 
reaffirmed his support for Ken 
Adelman as his choice to be Diret 
of the Arms Control and Disarms 
Agency. Some Senators opposing 
say that you and the President an 
[Defense Secretary] Cap Weinber 
are busy rookies, you don't knowi 
enough about this and your schec 



Department of State Bi9* 



THE SECRETARY 



i» busy, and, therefore, you need 
iveteran of the arms control 
?.s. Do you need Adelman, do you 
idelman, and how serious a 
3 you will it be if you can't get 
in you choose? 

W'c iii'fii him and we want him 
n\' uniiij; to fight for him and 
iijnu to get him. He is a person, 
;all. of great ability. He has 
; and thought about this subject a 
eal over a period of time. The 
lit he's young — I don't know, 
re pt'ople who tell me that when 
'.St'i years old. they're old, depends 
r perspective. But personally I 

you can get some of that zest in 
Kil lie brings, it'll be a good 
M'ter all. we have to remember 
- people who are really going to 
the future are not those of us 
^ in our sixties; it's the people 
in their thirties. And what's 
with a little youth in this picture, 

as it's competent and conscien- 
^hich he is. 

jYou mentioned the declining 
[f oil, which will be a difficulty 
xico, for example, which owes a 
dous amount of money to 
•an banks and others and will 

able to pay it, selling oil at low 

You were Secretary of 

ry before you were Secretary of 

ind an economist. Are you 

)ed about this— all the money 

o American banks which seems 

singly unlikely to be paid? 

The debt problems are a problem. 

•e they can be handled with good 

IS we have been getting good 

rom our own Secretary of the 

ry, Don Regan, and from Paul 

r at the Fed, working with 

s de Larosiere, who is a terrific 

at the IMF [International 

iry Fund], and people from other 

es around. I think that problem 

handled, although it's a difficult 

Even though the money seems, 
moment, unlikely to be paid, it 
handled? 

The real way out of the dilemmas 
e debt problems is expansion in 
rid economy. If we get expansion, 
'erything gets into a little differ- 
irspective. That's the name of the 
ight now, in my opinion, and I 
hat the U.S. economy is poised 
start of a healthy expansion and 
s some others will be, too. 

!ss release 59 of Feb. 23, 1983. ■ 



Project Democracy 



Statement before the Subcommittee 
on International Operations of the House 
Foreign Affairs Committee on February 
23, 1983.'^ 

On a few occasions since I became 
Secretary of State, a new policy or pro- 
gram has been presented to me whose 
purpose was so clearly in our interest 
that I asked, "Why hasn't this been done 
before?" I asked that question when 
presented with this democracy program. 
The answer was that although the U.S. 
Government has programs to support 
the development of democracy abroad, 
they are inadequate. Some programs 
have even been weakened in the past 
few years, victims of our all too typical 
preference for quick results over sus- 
tained effort. 

The United States, as a great power 
with worldwide interests and obliga- 
tions, must take a long-range view of 
the international environment. We can- 
not allow our preoccupation with the 
policies and events of the next days or 
months to lead us to neglect the trends 
in attitudes and values which will shape 
the world in the decades to come. The 
U.S. Government— the executive and 
the Congress— has a responsibility to 
look far ahead to insure that the values 
and principles that Americans of all 
political persuasions share with many 
peoples throughout the world will shape 
the course of events in the future and 
will insure that the world evolves in a 
way that will maximize the chances for 
peaceful cooperation, freedom, enhance- 
ment of human rights, and economic de- 
velopment. 

President Reagan exercised this 
responsibility in his speech before the 
British Parliament on June 8, 1982. He 
promised that the United States would 
make a major effort to help ". . . foster 
the infrastructure of democracy — the 
system of a free press, unions, political 
parties, universities— which allows a 
people to choose their own way, to 
develop their own culture, to reconcile 
their own differences through peaceful 
means." He also called upon our country 
to stand up more vigorously for the 
principles and values which underpin our 
democratic society. He emphasized that 
the ultimate determinant in the struggle 
now going on for the world "... will not 
be bombs and rockets, but a test of wills 
and ideas, a trial of spiritual resolve. . . ." 



The program I am presenting to you 
today is an important step in the imple- 
mentation of President Reagan's London 
initiative. But it is just a beginning. It is 
the Federal Government's initial contri- 
bution to what must become a larger ef- 
fort for all America. Support of democ- 
racy is an activity in which communities, 
organizations, and individuals through- 
out our country can and must partici- 
pate. In this regard, we are especially 
pleased that the chairmen of the two 
political parties, the president of the 
AFL-CIO, and representatives from the 
Congress and business are conducting a 
study on how the United States — par- 
ticularly its nongovernmental organiza- 
tions—can work to strengthen democ- 
racy abroad. We are in close consulta- 
tion with the study's executive board 
and staff and look forward to their 
recommendations. We believe that the 
program we are proposing today is com- 
patible with the direction of this study, 
and, indeed, both will become part of a 
larger, broader effort. 

Support for Democracy 

Many in our society have for years ad- 
vocated a stronger American effort to 
support the institutions and proponents 
of democracy abroad. They have recog- 
nized that only in democracies is there 
inherent respect for individual liberties 
and rights. In democracies, there is free- 
dom of expression and real participation 
in choosing leaders, both of which insure 
that governments serve their citizens, 
not vice versa. In the postwar world, 
democracies have exhibited extraordi- 
nary economic vitality. With their more 
flexible economies, democracies have 
continued to demonstrate the efficiency 
and dynamism necessary to maintain 
strength in a complex and difficult inter- 
national economic environment. Democ- 
racies stand for peaceful cooperation; 
they do not invade or subvert their 
neighbors. 

If we are to achieve the kind of 
world we all hope to see — with peace, 
freedom, and economic progress— de- 
mocracy has to continue to expand. 
Democracy is a vital, even revolutionary, 
force. It exists as an expression of the 
basic human drive for freedom. While it 
is threatened or repressed by those 
forces for whom power takes precedence 



THE SECRETARY 



over liberty, with the hard work, perse- 
verence, and courage of its proponents 
throughout the world, democracy will 
flourish. It is not the preserve of in- 
dustrialized nations. Today, in a number 
of countries in varying stages of eco- 
nomic development, democracy is grow- 
ing stronger. President Monge of Costa 
Rica pointed out to us last November 
that democracy can thrive in developing 
countries. Democracy is not just the 
hope of the distant future; it is the pres- 
ent. 

Support for the development of 
democracy is an essential part of our 
human rights policy. This Administra- 
tion is committed to promoting the ob- 
servance of human rights worldwide 
through concrete actions. While we con- 
tinue to talk to governments about 
specific human rights violations, we 
know well that the protection of human 
rights and liberties over the long term 
can only be insured by a democratic 
form of government. 

We are not so naive to believe that 
imitations of the U.S. system will or 
even should spring up around the globe. 
Democracy is more a set of basic prin- 
ciples and institutions than a single, im- 
mutable model. The principles and basic 
institutions are valid worldwide; the 
overall structure has to be adapted to 
take into account historic, cultural, and 
social conditions. 

It is naive to believe that we do not 
have to work for democracy— that mere- 
ly its existence somewhere in the world 
is sufficient incentive for its growth else- 
where. Some claim that the United 
States must be a beacon for democracy, 
and that, if we make sure the beacon is 
bright, others will inevitably follow. Cer- 
tainly, if we are successful in meeting 
the economic, social, and political needs 
of our own people, we will give democ- 
racy more momentum throughout the 
world. But that is not enough. Many in 
the world cannot see our beacon, and for 
many more it has been distorted. And 
still others who are able to see it and 
are inspired by it need help in the form 
of practical assistance. 

We have provided assistance before, 
in postwar Western Europe and Japan. 
What we helped achieve there con- 
stitutes one of the most remarkable, 
positive chapters of recent history. Since 
then, we have let this critical dimension 
of our foreign relations atrophy. In some 
instances in the past it became a func- 
tion of covert activity— to counter the 
substantial efforts by the Soviets and 



their allies to spread their oppressive 
system throughout the world. Our sup- 
port for democracy should not be hid- 
den; we should be proud to be seen to 
provide it. Those nations and institu- 
tions — such as certain West European 
parties and our own labor unions— that 
have been active in supporting demo- 
cratic forces in the past two decades 
have demonstrated that this is a legiti- 
mate and important activity that can 
and should be done openly. There is 
democracy today in Spain and Portugal 
in large part because of the substantial 
support provided democratic parties in 
these two countries by their West Euro- 
pean counterparts. 

We are interested in assisting con- 
structive change which can lead to 
greater political stability, social justice, 
and economic progress. We do not seek 
destabilization. Change must come from 
within, not be imposed from outside. It 



Democracies stand for 
peaceful cooperation; 
they do not invade or 
subvert their neighbors. 



must follow a path dictated by national 
and local traditions. In some instances, 
the United States may not have that 
much to offer. Instead, assistance and 
guidance might better be provided by 
other democracies. And change may be 
slow. Patience, respect for different 
cultures and political traditions, and rec- 
ognition of our own limitations must be 
hallmarks of our effort; but our ultimate 
objectives must remain uppermost in our 
minds. 



Project Democracy 

Project Democracy emphasizes five 
closely related areas. 

Leadership Training. This includes 
making available to current and future 
leaders education and training in the 
theory and practice of democracy and 
the skills necessary both to build the 
basic institutions of democracy and to 
counter the actions of nondemocratic 
forces. Programs would be conducted 
both in the United States and foreign 
countries. Nongovernmental institutions 



such as political parties, labor, univi 
sities, business, state and local govt 
ment associations, legal and commn 
action organizations, and others wi 
a key role. 

Education. We should strive U 
courage exposure to the principles 
practice of democracy and to the d 
acter and values of the United Stai 
the educational systems of other n; 
We, therefore, intend to strengthe 
book programs, American studies i 
stitutions, English teaching, schola 
and fellowships, and related progri 

Strengthening the Institutioil 
Democracy. A number of our prog I 
will strengthen the basic institutioi I 
democratic society— unions, partie ! 
media, universities, business, legal j 
cial systems, religious and comniui 
action groups, and others. Here ag I 
we will rely on American nongovei 
mental organizations to carry mosi 
the load. 

Conveying Ideas and Informs 

Through conferences; meetings; di ; 
nation of books and journals; and ; ^ 
programs in universities, other ins 
tions, and the media, we hope in j: 
mote an intellectual and political ii , 
in democracy and a reinvigorated , 
of the shared values of democratic 
societies. 

Development of Personal and J 
stitutional Ties. Perhaps the mos i 
portant result of all our programs 
be the development of lasting ties 
working relationships between Arr 
individuals and organizations and 1 
foreign counterparts. The propone 
democracy need an international n . 
work which will provide them with 
moral support, intellectual stimulaj 
practical and technical assistance, j 
protection against their adversarie 

The specific projects we are pr 
ing contain several traditional prof 
that need strengthening. There is ■■ 
increased support for nongovernm' 
organizations such as the AFL-CI' 
the Asia Foundation, which over t! 
years have built a unique and adm: 
record. There are new programs a 
proaches, particularly in the areas 
training and support for democrat 
stitutions. There is an emphasis or 
veloping regional approaches to pr 
moting democratic development. A 
there is an important and urgent { 



Department of State I 



THE SECRETARY 



) assist Liberia in its ongoing 
on to a democratic government, 
st of the programs are directed 
n America, Africa, and Asia, 
^re a few which involve Western 
p. While we hope that West Euro- 
^ill be our partners in supporting 
|-acy in other areas of the world, 
t) believe that we must give atten- 

I strengthening the perception— 
larly of the successor generations 
tern Europe and the United 

—of shared values and a common 
. Our young people, who did not 
ince the postwar period, are 
r farther apart. If this trend con- 
democracy itself will ultimately 
jkened. The economic summit na- 
^cognized this problem last year 
reed to take one important step 
?r— a substantial expansion of 
jxchange programs. Other steps 
allow. The democracy project con- 
few suggestions, hut even these 
from adequate. 

oject Democracy also addresses 
n Europe and the Soviet Union, 
we are limited in our ability to 
'ith such closed societies, we pro- 
i) strengthen, both in quality and 
;y, our information programs 
iig these countries. This includes 
'ination of books and journals, 
igful and reciprocal exchanges, 
pport for research and publica- 
■n issues facing the Soviets and 
Europeans. Our goal is to make 
iile to the people of the Soviet 
land Eastern Europe full, objec- 
scussions of political, economic, 
cial concepts and events. We hope 

II contribute to an evolution in 



these countries toward more open, re- 
sponsive, and humane societies — and 
eventually toward democracy. The 
Soviets and their allies accepted in 
Helsinki the concept of free flow of in- 
formation and ideas. They are active 
throughout the world promoting their 
own ideology and their distorted version 



While we are limited in 
our ability to deal with 
such closed societies [as 
the Soviet Union and 
Eastern Europe], we pro- 
pose to strengthen, both 
in quality and quantity, 
our information pro- 
grams reaching these 
countries. 



of world events. They have no grounds 
to complain that our information pro- 
grams are an interference in their inter- 
nal affairs. We should not be inhibited in 
our proper mission to provide alterna- 
tive sources of information to the people 
of these nations. 

The proposed programs in Project 
Democracy are not set in concrete. A 
number need further refinement, and 
some may be dropped as they prove less 
feasible or productive than others. Three 
agencies— the U.S. Information Agency 
(USIA), State Department, and the 
Agency for International Development- 
have worked together to develop these 
proposals. Though Project Democracy is 
contained in the USIA budget, funds 



will be allocated to the other agencies to 
carry out certain programs. Decisions on 
programs, allocation of funds, and ulti- 
mate recipients will be made by an inter- 
agency committee structure. 

Conclusion 

We invite this committee to work with 
us as we develop and implement this 
program. We want this to be a biparti- 
san effort. I believe that we all share the 
same objectives and that we must now 
create together a program that will last 
through many administrations— a pro- 
gram that will become a fundamental 
dimension of the foreign relations of the 
United States. This $65 million proposal 
is just a beginning. The Administration, 
Congress, and the private sector should 
build a more comprehensive program 
over the course of the next few years. 
I realize this is a difficult time to 
begin any new program. But we have 
neglected this area for too many years 
already, and we cannot afford to let any 
more time pass. The needs of those 
striving for democracy are immediate. 
They will grow in the years ahead. We 
must develop a better capability to help. 
This is a matter critical to our national 
security. I ask you to give it your sym- 
pathetic consideration. 



'Press release 60. The complete 
transcript of the hearings will be published 
by the committee and will be available from 
the Superintendent of Documents, U.S. 
Government Printing Office, Washington, 
D.C. 20402. ■ 



AFRICA 



The Search for Regional 
Security in Southern Africa 



by Chester A. Crocker 

Statement before the Subcommittee 
on Africa of the House Foreign Affairs 
Committee on February 15, 1983. Mr. 
Crocker is Assistant Secretary for 
African Affairs.^ 

It gives me great pleasure to be able to 
report to you on developments in 
southern Africa at the mid-point in the 
first term of President Reagan's Ad- 
ministration. 

These hearings on progress toward 
independence for Namibia and the 
broader subject of "destabilization" in 
southern Africa are, indeed, important, 
for they address issues at the core of 
our southern Africa policy. Over the 
past 25 years, virtually all of formerly 
colonial Africa has gained independence 
from the European metropolitan 
powers. These newly independent na- 
tions, many with which we have signifi- 
cant economic, commercial, and political 
ties, have made clear the importance 
they attach to eliminating colonialism 
from their continent. Thus, even apart 
from the traditional American desire to 
help the spread of self-government and 
democracy, there are profound political 
reasons for engaging in the effort to 
bring independence to Namibia. 

There are equally important reasons 
for our concern about tension and in- 
stability in the region. Clearly, our 
desire to strengthen economic and com- 
mercial links with Africa are not served 
by local conflicts or arms races, or by ef- 
forts of outside powers to exploit them 
from unilateral advantage. On the con- 
trary, our national interests are best 
served by an atmosphere of political 
stability and economic growth, which 
alone can nurture modern African eco- 
nomic and political institutions. It is ob- 
viously to our advantage to do whatever 
we can to ease tensions and work 
toward the peaceful resolution of prob- 
lems and disputes among the nations of 
the region. This is the fundamental prin- 
ciple behind our policy of constructive 
engagement in the search for a more 
stable, secure, prosperous, and demo- 
cratic southern Africa. 

I would like to start by restating the 
Administration's objectives, so it will be 



clear that they have not changed and 
that we are continuing to pursue them 
with vigor and purpose. 

• The United States seeks to help 
strengthen communication between the 
countries of southern Africa in order to 
ease tensions, bolster regional security, 
and encourage negotiated solutions and 
peaceful change. 

• We are intent upon using every 
diplomatic tool at our command in order 
to bring about conditions which will lead 
to Namibia's independence at the 
earliest possible date. 

• Believing that "apartheid," as a 
structure of legally entrenched racial 
separation, is morally unacceptable to a 
democracy such as ours, we have sought 
to encourage those elements within 
South Africa seeking constructive 
change, in order to see widened the base 
of participation in government and the 
economy to include all the elements of 
South Africa's varied population. 

• Finally, we seek constructive 
engagement with all the states of the 
region which wish the same with us. We 
do not approach the region with the 
belief that our task is to choose sides; on 
the contrary, it is the fact of our desire 
for strengthened relations with all the 
states of the region that enables us to 
play a role— where such is welcome — in 
working for regional security, develop- 
ment, and peaceful change. The United 
States is on the side of peaceful change 
and negotiated solutions. This is where 
our interests lie, and this is what makes 
us uniquely relevant to the region. 



REGIONAL SECURITY 

It has long been clear to all who were 
genuinely concerned about Africa's ef- 
forts to develop modern democratic in- 
stitutions and processes — social, eco- 
nomic, and political— that tension and 
hostility were inimical to those efforts. 
Certainly, a region threatened with the 
prospect of heightened violence and 
polarization would find it difficult, at 
best, to focus positive efforts on its own 
development. 

The recent history of southern 
Africa must serve as a cause of alarm to 
us. With the collapse of the Portuguese 



Empire in the mid-1970s, violence hi 
escalated throughout the region to i 
point today where the fact or threat 
violence is a major feature of the ar 
Cross-border conflict risks becoming 
endemic. The question the United S 
faces— alone and with its allies— is 
whether diplomacy can provide an i 
native to violence or whether soutb 
Africa is in the process of condemn 
itself to violence as a way of life. W 
have seen this happen elsewhere in 
world — in the Middle East— with S| 
calculable consequences for world p 
and our national security. It is in o\ 
tional interests to seek to avoid sue 
development. 

This Administration did not inv i 
violence in southern Africa. We did 
make it our purpose to do somethir | 
about it. We have set out as a cons I 
objective of policy to provide an alt i 
native to conflict — not only in Nair i 
our most visible effort,, but through \ 
the region. We have made it our pi i 
pose to work with the nations of th 
region to see if a framework of res 
and broad rules of conduct could b< j 
veloped which could contain conflic ' 
and provide this basis for solutions 
Vice President summed up our poli 
Nairobi on November 19, 1982, wh 
said: "We are determined to help ti 
the sad tide of growing conflict anc 
sion in southern Africa." 

U.S. Communication With 
African Nations 

From the outset of this Administra 
we sought to establish effective coi 
munication with all those nations a 
other political elements with which 
munication was inadequate or had 
lapsed. It seemed self-evident that 
unilaterally isolating ourselves fror 
those with which we had difference 
however strongly felt, served no pi 
other than to cut us off from an ab 
to influence or affect their policies. 
We began with a series of intei 
discussions with all of the major ao 
in the region in order to identify th 
concerns, see how these fit in with' 
objectives, and determine how best 
might proceed to advance America 
Western interests. The priorities w 
seemed apparent to us were enumt 
earlier: regional security, independ 
for Namibia, the encouragement ol 
ments favoring peaceful change wi 
South Africa away from the syster 
apartheid, and constructive engage 



Department of State BiB 



AFRICA 



jgional states in tackling the 
problems of economic and politi- 
elopment. 

th respect to regional security, it 
1 clear that one of the major bar- 
■if not the principle stumbling 
-was the inability or unwillingness 
;ies on either side of South 
s borders to speak to each other, 
ility, coupled with a self-imposed 
mce on the part of the United 
to act in concert with potential 
; on behalf of our interests, had 
openings which were being ex- 
by our adversaries. Another ma- 
iblem was our own lack of a credi- 
logue with significant actors in 
ithern African region— not the 
f which were the Governments of 
Africa and Angola, 
'er the course of the past 2 years, 
fe worked assiduously to restore 
iinication and get a dialogue going 
I believe we can point to a con- 
ble record of success. 

;We have now had an extensive 
iof discussions at senior levels with 
jigolan Government, exploring 
jif improving our bilateral relation- 
lith that country and seeking to 
iibout circumstances which will 
bossible agreement on Namibian 
jndence. 

'After a period of difficulty in our 
inship with Zambia, we have 
\i hard to re-establish a basis of 
fence and improved communica- 
dminating in a highly successful 
aat Vice President Bush paid to 
funtry in November 1982. We 
p have President [Kenneth] 
]a visit the United States in the 
Uture. 

'We have continued to attach a 
riority to assisting Zimbabwe, now 
^.hird year of independence, as it 
!to meet pressures from the world 
■nic downturn, a devastating 
,nt sweeping across much of 
SjTn Africa, and the stresses and 
i^ from political divisions within. 
:bwe has traveled a rough road 
'he past 2 years, but those who 
:o judge its performance should 
i^he humility to recall our own 
V at a similar stage in America's 
indence, as well as the daunting 
nges facing Zimbabwe's leadership, 
jtend to continue our efforts to 
jthis new country, convinced that it 
9 important prospects for becoming 
|tone in the economic development 
''igional stability of southern Africa. 



Just as we seek to foster a regional 
climate of security and confidence that 
will encourage constructive change in 
South Africa, so, too, do we seek a 
regional climate conducive to 
Zimbabwe's success as an independent 
nation. 

• This Administration took office 
just as U.S. relations with Mozambique 
reached a low-water mark. Communica- 
tion with the Mozambican Government 
was practically nonexistent; that coun- 
try's policies seemed unalterably aligned 
with those of the Soviet Union and its 
satrapies, its perceptions warped by 
hostile disinformation. But the utter in- 
capacity of Marxist economics to cope 
with the problems of a developing coun- 
try, and the conspicuous inability of the 
Soviet Union to assist Mozambique with 
security and political problems stemming 
from its isolation, led to indications that 
the Mozambican Government wished to 
reestablish communication with the 
United States. We responded by making 
clear that we were interested in a 
positive relationship based upon respect 
for each other's interests and were will- 
ing to engage in building bridges be- 
tween us based upon mutual respect. 
Within just the past 3 months, we have 
had two sets of discussions between 
senior American and Mozambican of- 
ficials aimed at engaging the Mozam- 
bican Government in a constructive ef- 
fort to improve regional stability and 
restore communications between us. We 
believe that a solid basis now exists for 
a meaningful improvement in relations 
between us. 

Similarly, in our contacts with South 
Africa, we quickly moved beyond discus- 
sion of the Namibia issue and bilateral 
questions to the overarching question of 
regional security. We believe our exten- 
sive contacts with Pretoria have enabled 
us to more fully grasp the South African 
Government's concerns about the 
region's dynamics while also making 
clear the terms on which we must oper- 
ate if we are to be credible and effective 
there. While much remains to be done, 
the conditions now exist for a candid, 
sensitive, and productive dialogue on 
regional matters with that country. 

Effective Communication 
Between Neighbors 

I would like to turn now to another facet 
of our diplomacy in southern 
Africa— encouraging effective com- 
munication between South Africa and its 
neighbors. We have not engaged in this 



effort as a search for glory or out of our 
own ambition. We have done so for the 
good and sufficient reason that it is ob- 
viously in our national interest. The cy- 
cle of violence that threatens southern 
Africa is antithetical to everything this 
country stands for. Militarized conflict 
and the recourse to violent means can 
only advance the interests of our adver- 
saries. 

Dialogue alone, of course, will not 
necessarily solve the problems, but com- 
munication among countries that have 
serious disputes and basic political dif- 
ferences is an obvious first step. Within 
the past 6 months. South Africa has had 
significant and positive discussions with 
Angola, with Mozambique, and, in fact, 
with virtually all of its immediate neigh- 
bors. It is difficult to overstate the sig- 
nificance of the developing dialogue be- 
tween South Africa and its neighbors, a 
dialogue we have sought— in unintrusive 
ways— to further. We welcome the fact 
of these contacts and hope that by a 
thorough airing of differences, a con- 
structive effort can be made toward 
their resolution. 

It is important, we believe, to recog- 
nize that as dialogue itself is, by defini- 
tion, a two-way street, so, too, is 
regional security. There is a compelling 
need for all the parties to recognize this. 
Although at any given moment, follow- 
ing some specific development or event, 
it might be possible to pronounce a 
moral or political judgment upon that 
event, it is not always useful, or even 
wise, to do so. For that matter, it is not 
always even possible to know precisely 
what has taken place, or why. Public 
posturing and the passing of judgment, 
however gratifying to those who do it, is 
not usually the most helpful way to deal 
with the root causes of disputes. We 
seek results. This Administration is pro- 
foundly conscious of the fact that 
southern Africa is a highly charged, 
politically polarized environment. Some 
would say it is a minefield. There is am- 
ple public posturing by the regional ac- 
tors themselves without adding our own 
rhetoric to the mix. 

Regional security runs in both direc- 
tions across international borders, and in 
southern Africa each side in every dis- 
pute claims grievances against the other. 
We have not chosen to condemn each 
transgression by one or another of the 
parties, but have, rather, chosen the 
perhaps less gratifying but certainly 
more important long-term task of trying 
to ease tensions. In our view, our effec- 
tiveness depends on our ability to be a 
credible partner of all who wish our 



1983 



AFRICA 



partnership and are prepared to engage 
in good-faith efforts to solve problems. 
Apart from Namibia, all states of the 
region are sovereign and recognize each 
other's sovereignty. That is a fact, and it 
carries with it certain obvious implica- 
tions. Some states are not more sover- 
eign than others. We recognize no 
state's right to harbor plotters or perpe- 
trators of violence across borders and 
against other lands. 

I recognize that some observers are 
less than satisfied with the balance and 
discretion inherent in what I have just 
said. But we believe that those who 
would have us take sides among the par- 
ties in southern Africa would have us 
unlearn every important role of diplo- 
macy. In southern Africa as in the Mid- 
dle East, it is not by choosing sides that 
we shape events or resolve conflicts. Our 
nation should be proud to stand on the 
side of peace and diplomacy and be pre- 
pared to weigh the concerns and in- 
terests of the parties involved as we 
seek to build bridges and explore 
avenues for agreement. 



NAMIBIA 

When President Reagan took office in 
January 1981, the Namibia negotiations 
had broken down, despite the substantial 
efforts and accomplishments of our 
predecessors. There was an atmosphere 
of mutual suspicion and recrimination 
among the parties whose agreement was 
essential for Namibia to secure its free- 
dom. The obstacles to agreement be- 
tween the parties were so great that it 
would have been tempting for us to walk 
away from the problem, washing our 
hands of the negotiations, and leaving it 
to debate and doubtful resolution by 
others. Certainly, there were other 
urgent priorities. 

Instead, partly in response to what 
we were clearly told by our African 
friends and our key allies in NATO, and 
partly because of America's historic 
tradition of support for self-determina- 
tion, we set out to find a way to move 
toward Namibian independence. In 
preparation for this, we conducted ex- 
tensive and exhaustive discussions with 
each of the major parties to the negotia- 
tion—the front-line states, SWAPO 
[South West Africa People's Organiza- 
tion], other states in Africa, the South 
Africans and the internal parties inside 
Namibia, and our European allies. 

We concluded that Namibia's inde- 
pendence could not be achieved in the 
absence of conditions which gave all par- 
ticipants reasonable confidence that 



their security interests would be pro- 
tected. It was obvious to any observer 
that irrespective of the reasons for their 
being there, the presence of Cuban com- 
bat forces in Angola was an integral 
part of the regional security problem. 

I know that the members of this dis- 
tinguished subcommittee are familiar 
with the charges and countercharges 
from both Angola and South Africa 
about the fighting across the Namibian- 
Angolan frontier. My point is a simple 
one: The Cuban troop issue is not an 
issue we made up; it is an objective 
reality at the core of the question of 
regional security. The South Africans, 
whose concurrence and cooperation 
must be secured for any agreement 
leading to Namibian independence, have 
repeatedly made clear that they regard 
the Cuban troop issue as fundamental to 
their security concerns. Quite apart from 
that, the United States, as Vice Presi- 
dent Bush said in Nairobi on Novem- 
ber 19, 1982, "is not ashamed to state 
the U.S. interest in seeing an end to the 
presence of Cuban forces in Angola," 
just as we seek internationally recog- 
nized independence for Namibia. Such 
an outcome would contribute to both 
regional security and a global climate of 
restraint. 

We have, for more than a year now, 
been engaged in intensive discussions 
with the Angolan Government in an ef- 
fort to reach a broadly acceptable for- 
mula for parallel withdrawal of foreign 
forces from Namibia and Angola. These 
bilateral discussions have been held out- 
side the framework of U.N. Security 
Council Resolution 435, and are not part 
of the Western contact group's mandate. 
We are fully prepared to respond to 
Angola's security concerns as well as to 
deal forthrightly with the reality of 
South Africa's concerns. We believe that 
this is a viable means of achieving the 
goal of Namibian independence to which 
we are profoundly committed. We know 
of no other means. 

We believe that Angola wishes to 
contribute to a Namibian independence 
agreement, so long as its own security 
interests are preserved. We have 
achieved real progress in our talks with 
the Angolans and will spare no effort in 
continuing our search for a comprehen- 
sive, peaceful settlement. 

Your letter inviting me to partici- 
pate in these hearings, asked what the 
"short- and long-run prospects" are for a 
Namibian settlement, as well as a 
number of specific questions about 
"when" South Africa and the United 



States made Cuban troop withdraws, 
necessary accompaniment to Namibij 
independence. 

The answer to the first question 
"Reasonably good." Certainly, we in^ 
to continue the effort. But this is a ■ 
plicated and difficult negotiation, ari 
involves fundamental issues and chc , 
for both sides. It has taken time, an 
may take more. I believe the greate 
mistake that we could make would 1 
yield to the historic American impa- 
tience with the progress of negotiat 

That carries with it the answer , 
your second question, about "when" [ 
Cuban troop issue became a prereqi j 
for Namibian independence. Securit | 
which the Cuban troop issue is an ii | 
tegral part, has always been a pre- | 
requisite for agreement on Namibia ^ 
dependence. As a practical diploma ^ 
matter, it will not be possible to obi 
Namibian independence agreement , 
without satisfactory regional securi ^ 
assurances. Quite apart from the di | 
matic problem, it would not be desi | 
to bring Namibia to independence i | 
cumstances that held the prospects ] 
greater regional instability and tun . 
This Administration would not be a 
ty to it, and I would hope that no o 
this room would wish to see that ei , 

This approach does not mean a 
definite delay for Namibia's transit 
independence. Some in the media a i 
elsewhere press for our forecasts o 
these negotiations. In reply, I woul 
that we are neither optimistic nor j 
mistic; instead, we have a realistic 
tive, and we are determined to mo\ 
steadily toward it. 



CONCLUSION 

I would emphasize that we have sei 
selves goals worthy of the support 
Americans and developed a road m 
for reaching them. The parties in tl 
region are well aware of our seriou 
ness. Not surprisingly, all of them i 
find fault with this or that aspect o 
diplomacy. But our goals and metb 
are increasingly understood. Despit 
inherent difficulties, the Administn 
sees no reason to shift course and ( 
reason to persevere. 



'The complete transcript of the heal 
will be publisned by the committee and p 
be available from the Superintendent of. 
Documents, U.S. Government Printing ; 
fice, Washington, D.C. 20402. ■ 



Department of State Bu I 



AFRICA 



r Development Dialogue With Africa 



'lister A. Crocker 

^'(itrKK at the Georgetown Universi- 
-trr fur Strategic and International 
■s, IVa.'^hington, D.C., on March 3, 
Ii\ ( 'rocker is Assistant Secretary 
.■inni Affairs. 

■iiiif World War II, men of good- 
\t' lu'i'ii debating the problem of 
Ifvrldiiment in the Third World. 
tVw countries, mostly in East and 
least Asia, the issue is now a sub- 
historical research. The 
lOres and South Koreas are 
our concern; and, if they keep 
ing at current levels, the time 
t be far away when their develop- 
xperts deliberate over the stagna- 
d backwardness of the West, 
ewhere, however, and most 
in sub-Saharan Africa, the 
continues with heightened urgen- 
s is not surprising: Africa was the 
ntinent to gain independence, and 
50 with the least preparation. The 
t world recession has, at least, 
rarily aggravated the results of 
c underdevelopment. Today, 
's economic crisis threatens the 
il viability of many states, en- 
rs Western interests, and wreaks 
lardship on millions of individual 



isting Perspectives 

it glance there is a striking, if 
surprising, contrast between 
n and Western perspectives on 
•oblem. At the risk of some over- 
"ication, let me spell out in very 
il terms these differing views. The 
n viewpoint, particularly that of 
rican politician, must assume a 
that is economically viable and 
illy sustainable. It must assume 
rialization and, at least, a promise 
inological equality with the West 
iing Japan). It must encompass 
al health and self-reliance as well 
;erial well-being. The perspective 
e naturally Africa-centric, 
though there are, of course, many 
ts, the African perspective is often 
ieply influenced by the trauma of 
ilism. Because colonial economic 
is were totally subservient to 



metropole interests, the African perspec- 
tive is frequently suspicious of external 
economic orientation and sympathetic to 
import-substitution models. Because 
Africans recognize the widespread prob- 
lem of weak, fragmented, national 
economies, this perspective places great 
stress on regional integration. Because 
modern capitalism was associated with 
colonialism, there is, as in other areas of 
the Third World, an instinctive sym- 
pathy for statist solutions. Last, but not 
least, foreign aid is often seen as an 
open-ended moral obligation on the part 
of the West to compensate for 
underdevelopment and the perceived 
wrongs of the colonial past. 

The Western perspective is even 
more varied, so let me take one variant, 
that of the policymaker. First of all, 
Africa does not dominate his perspec- 
tive; it is only one of a panoply of global 
concerns. Unlike the African politician, 
the Western bureaucrat is not compelled 
to assume politically viable solutions 
within Africa, nor does he take for 
granted the feasibility of rapid economic 
progress. Quite the contrary, he is usual- 
ly more impressed by the negative, 
short-term implications of Africa's 
economic crisis, particularly its effect on 
political stability. Likewise, he sees 
economic growth as beginning necessari- 
ly with assets in hand and is not easily 
persuaded by such long-term solutions 
as regional economic integration. He is 
deeply aware of the potential costs— 
both political and budgetary— of his 
country's involvement with Africa. At 
the same time he is eager for success 
stories— one or two non-oil-exporting 
countries growing at 7%, hopefully 
governed by parliamentary democracies 
or, at least, by benevolent, technocratic 
despots. 

The apparent contrast between 
African and Western perspectives is 
nowhere greater than with regard to 
aid. The Westerner— and here I speak of 
the citizen as well as policymaker- 
has forgotten about colonialism and 
regards aid not as a moral obligation but 
as a burden whose relationship to na- 
tional interest is ill articulated and il! 
understood, especially when domestic 
programs are strapped for funds. 
Beyond this point there is a noticeable 
divergence between Americans and 
Europeans: Americans, still inspired by 



basic faith in the potential for human 
progress, want their aid to have rapid 
transforming results and are discour- 
aged when it doesn't. The Europeans 
and Japanese, more inclined to a skep- 
tical view of history, are more easily 
satisfied by short-term political or com- 
mercial goals and not as disturbed by 
the implications of open-ended involve- 
ment in a process whose benchmarks 
are barely visible. 

These differing perspectives, African 
and Western, are reflected in two much 
discussed documents, the "Lagos Plan of 
Action" and the report of the World 
Bank entitled "Accelerated Development 
in Sub-Saharan Africa: An Agenda for 
Action." The Lagos plan is a unique ex- 
pression of African economic goals, ap- 
proved by the African heads of state in 
1980. It looks toward a prospering, in- 
dustrializing Africa, internally self- 
reliant and well on the road to economic 
integration across national boundaries. 
It is essentially a statement of targets 
which, once achieved, will comprise a 
just and prosperous Africa. While it 
stresses self-reliance, it also states flatly 
that Africa is owed a "massive and ap- 
propriate contribution" of aid by the 
developed countries. 

Although the Lagos plan decries ex- 
cessive dependence on export of a few 
commodities, it does not, in general, say 
very much about how its numerous goals 
and targets should be achieved. It is 
careful not to dictate national develop- 
ment strategies on such sensitive topics 
as the mix between public and private 
sectors. It does not attempt to calculate 
the cost of development or to speculate 
on where the massive sums of money re- 
quired will come from. 

The World Bank report was pro- 
duced 2 years later in a completely dif- 
ferent context. Suggested by the African 
governors of the Bank in response to 
growing signs of economic crisis, it 
delineates a strategy to meet the am- 
bitious goals of the Lagos plan. The 
report differs most notably from the 
plan in advocating export orientation. It 
says, in effect, that exportable com- 
modities are Africa's "bird in the hand," 
and argues that African countries which 
have done well at exporting have also 
done comparatively well in other areas 
(e.g., food production). While the report 
accepts the goals of the Lagos plan as 
valid, it is deeply concerned about the 
feasibility of attaining them— in other 
words, about tactics and costs. It puts 
much more emphasis on the importance 
of better economic management by 
African countries, concluding that both a 



AFRICA 



doubling of foreign aid and a greatly im- 
proved African policy environment will 
be necessary to achieve acceptable 
economic growth in sub-Saharan Africa. 

At present there is a tendency to 
debate African development in terms 
which exaggerate the differences be- 
tween plan and report and between 
African and Western perspectives. The 
key issue involves the relative role of ex- 
ternal versus internal causative factors 
in contributing to the present unsatisfac- 
tory state of affairs. At best this debate 
can result in a failure of communica- 
tion—of Africans and Westerners talk- 
ing past each other. At worst it can 
degenerate into polemics and sterile ef- 
forts to blame one party or another. So 
it is important to remember that in- 
formed observers, whether African or 
non-African, agree more than they 
disagree. In fact, a considerable intellec- 
tual consensus, not yet adequately 
translated into concerted policy, has 
emerged in the last 2 or 3 years on 
many of the key issues of African 
development. 

I would like to spend the rest of my 
time talking about these areas of agree- 
ment and then conclude by considering 
some policy implications. 



America, the possibility of default by 
one or more major African countries 
nonetheless poses an incremental threat 
to the health of the global financial 
system. 

Second, there is implicit agreement 
that there can be no meaningful equity 
without economic growth. Among devel- 
opment experts there is broad and bipar- 
tisan agreement that the more extreme 
manifestations of the "basic human 
needs" aid philosophy of the 1970s 
overlooked this fundamental point. 

Third, and a logical corollary of con- 
cern with growth, aid programs must 
strive to stimulate productivity and must 
be wary of creating government- 
dominated "pilot projects" which are not 
productive and which are often too ex- 
pensive for host governments to 
operate, much less to replicate. 

Fourth, aid donors have unwittingly 
contributed to the African economic 
crisis by failure to cooperate in a man- 
ner which will insure the most efficient 
use of their resources, by insisting on 
their own complex yet highly diverse ad- 
ministrative requirements, by constantly 
changing their own policies, and some- 
times by the pursuit of short-term 
political and commercial advantage. 



The Westerner . . . the citizen as well as policy- 
maker . . . has forgotten about colonialism and 
regards aid not as a moral obligation but as a 
burden whose relationship to national interest is ill 
articulated and ill understood, especially when 
domestic programs are strapped for funds. 



Areas of Agreement 
First and foremost, everyone agrees 
that the African crisis is sufficiently 
deep so that status quo solutions are not 
acceptable. From both the African and 
Western perspectives, it is dangerous 
and, indeed, intolerable that Africa's 
economic performance should lag so 
badly behind that of other regions. From 
our perspective, the African crisis delays 
a potentially significant contribution to 
world trade, thereby diminishing U.S. 
growth prospects. Although debt prob- 
lems are not on the scale of Latin 



Fifth, there is no doubt that African 
economic management capability is a 
critical constraint, as is the pervasive 
shortage of mid-level management skills 
and experience. 

Sixth, there is also no doubt that 
rapid deterioration in terms of trade has 
been sufficient to swamp some countries 
which might otherwise have been 
making respectable progress. A ton of 
Zairian or Zambian copper which would 
pay for 115 barrels of oil in 1975 bought 
only 43 barrels last July. Similarly, the 



purchasing power of coffee in tern 
oil is down to roughly one-half whj 
was, of cotton to one-third, of cocc 
almost one-quarter. 

Seventh, agriculture is at the 1 
of the crisis. Today, while food sel 
sufficiency remains a fundamental 
African aspiration, food imports ai 
costing Africa more than oil impor 
While it is well known that the Wi 
Bank report stresses the need for 
agricultural policy reform, it is les 
predated that the Lagos plan mat 
much the same point. To quote fn 
latter: 

For an improvement of the food si 
in Africa, the fundamental requisite is 
strong political will to channel a great 
creased volume of resources to agricu] 
carry through essential reorientations 
social systems, to apply policies that v 
duce small farmers and members of ai 
tural cooperatives to achieve higher le-l 
of productivity, and to set up effective I 
machineries for the formulation of ret \ 
programs and for their execution. (Enj 
added.) , 

Eighth, regional economic int i 
tion is a valid long-term objective, | 
problem of weak, fragmented nat i 
economies and small market size : I 
Africa needs no elaboration. Beca ( 
the incredible political problems ii i 
volved, the Africans have, in the 
Charter of the Organization of Al 
Unity (OAU), explicitly ruled out ■ 
ing boundaries, and instead are pi 
ahead with a more realistic coope 
agenda involving such organizatio 
the Economic Community of Wes 
African States (ECOWAS), the F 
cophone structure in West Africa, 
the new preferential trade area ir 
eastern and southern Africa. But 
be years, if not a generation or tv 
before this effort results in appree 
economic integration, for reasons 
known. The economies that must ' 
tegrate are frequently competitiv* 
rather than complementary, and ' 
process is often further complicati 
fear of dominance by one relative 
or advanced partner. 

Ninth, there is no questioning 
Africa's critical need for institutid 
development and human skills. A 
generation or two from now, histt 
may well conclude that foreign ai» 
its greatest contribution in these 
related areas. 

Finally, there is growing awa 
that the various elements in the I 
economic crisis must be seen and i 



Department of State Eleli 



AFRICA 



(if one complex problem. Ex- 
(Iflit, the drying up of new credit 
ick (if investment, the inade- 
r institutions, policy, and 
,rial shortcomings, and even lack 
ical will all are part of a chain. 
A, for example, an inexorable, cir- 
ijlationship between food short- 
■platile urban consumers, over- 
ption, weak institutions, official 
ia about autonomous nongovern- 
foower centers (worker, farmer, 
fprise groups), and poor policies, 
jch stimulating the other. It re- 
jhe primary objective of foreign 

tee to help enlightened leaders 
le vicious circle at whatever 
ill serve the purpose. 

[mplications 

go on at greater length, but I've 
)ugh to illustrate the point: Peo- 
oodwill, whether Africans or 
•icans, development experts or 
erts, liberals or conservatives, 
lore than they disagree on the 
and extent of Africa's economic 
a. What are the policy implica- 
l' this consensus? 
ibegin with, it is important that 
I the Africans talk to each other 
lolutions geared to the specifics of 
v^aried country situations. There 
of practical value to be gained by 
over those areas, mainly 
ical, where disagreement seems 
•ish. There is a great deal to be 
by getting down to cases, 
lilarly, in a situation where there 
ty of blame to go around, we 
lot overlook the fact that both 
H and external factors are in- 
land avoid the temptation to seek 
^ats. Weighing the blame is a 
|r historians, not policymakers, 
•ofar as external factors are at 
;here is no doubt that the United 
because of its enormous in- 
! on the world economy, bears a 
responsibility. For that reason, 
iministration has consistently em- 
3d the importance of restoring our 
jmestic prosperity and getting in- 
rates down as the most important 
)ution that we can make to the 
and prosperity of the world, most 
illy the Third World, 
you know, commercial loans to 
ign states are usually tied to an 
itional interest rate which varies 
lay to day. For that reason, the 
ational Monetary Fund (IMF) now 
ites that every 1% shift in world 



interest rates translates into roughly a 
$2 billion net increase in interest pay- 
ments by the non-oil developing coun- 
tries. The IMF also reports that bench- 
mark interest rates for international 
lending increased in real terms— after 
adjusting for inflation— from 0.9% in 
1973 to 5.2% in 1979-81. Leaving aside 
the problem of increased cost, these 
violent fluctuations pose an almost im- 
possible challenge to national economic 
policymaking. 

Commodity prices will, of course, 
respond as restored world economic 
health gives strength to weakened 
markets. Nevertheless, this is one area 
where developing nation producers 
should be especially careful to avoid 
complacency. The improvement in 
markets is likely to be both slow and er- 
ratic. The development of substitutes 
(for example, fiber glass optics in place 
of copper and corn fructose in place of 
sugar), plus the ever-increasing efficien- 
cy of industrial consumers, bode ill for 
long-term consumption trends. A recent 
article in Forbes magazine, describing 
the impact on Liberia of a 50% drop in 
rubber prices in the last 3 years, 
observes that the implication is ominous: 
". . . that Africa's hope, its legendary 
storehouse of raw materials, may not be 
able to lift the continent's people from 
backwardness and poverty." 

We know from long experience that 
interference with market forces is not 
the way to solve the commodity prob- 
lem. Yet we must also recognize, just as 
we do in the case of our own domestic 
agriculture, that goverments and inter- 
national authorities have some respon- 
sibility to cushion producers from the 
shock of extreme market fluctuations 
and to facilitate necessary restructuring. 
Certainly, we favor full use of existing 
international mechanisms, such as the 
IMF's compensatory finance facility, to 
provide temporary relief where ap- 
propriate. We believe it is important to 
distinguish between viable commodity 
agreements, which attempt to iron out 
destructive boom-and-bust price fluctua- 
tions and those which are nothing more 
than resource transfer mechanisms- 
disguised aid, if you will. We remain 
open to suggestions for better ways to 
tackle this vexing problem. 

The extent of the African crisis has 
additional implications for the way that 
we do business, and by "we" I mean both 
the U.S. Government and the broader 
community of aid donors to Africa. The 
basic lesson is that a more coherent, 



purposeful, efficient, coordinated effort 
is needed. Within the U.S. Government 
we must try to improve the interconnec- 
tion between various aspects of our 
foreign economic policy toward the 
Third World. For example, there may be 
occasions when AID [Agency for Inter- 
national Development] and export pro- 
motion programs can work together, 
enabling the same scarce budget dollar 
to serve multiple policy ends. The rele- 
vant bureaucracies— State, AID, 
Treasury, Overseas Private Investment 
Corporation (OPIC), Export-Import 
Bank, and Commerce — must evolve a 
system which relies more on cooperation 
and communication and less on the 
traditional Washington pattern of 
bureaucratic compartmentalization or 
conflict. 

The same need for better coordina- 
tion is visible at the international level. 
The day has long passed when in almost 
any situation the United States was the 
dominant aid donor. We never have 
been number one in Africa. Today, in 
Africa, we are number three among 
bilateral donors, behind France and Ger- 
many, and we contribute less than 10% 
of total official development assistance. 
In many countries our own efforts to 
enhance economic stability and growth 
are heavily dependent on the efforts of 
the World" Bank and the IMF. Only a 
massive increase in our bilateral assist- 
ance, virtually unthinkable under cur- 
rent budgetary circumstances, would 
change this pattern. 

It follows that to improve the effec- 
tiveness of our own policies, we must 
work more closely with our allies and 
with the international financial institu- 
tions. This cooperation encompasses a 
series of subagendas. To minimize the 
burden on host governments, donors can 
attempt to simplify and regularize their 
administrative requirements. To increase 
efficiency and avoid duplication of ef- 
fort, they can better coordinate activities 
within sectors. Such sector-level coor- 
dination is the major activity of the 
seven-nation donor group known as 
Cooperation for Development in Africa 
(CDA). 

By their own behavior, donors can 
have enormous impact on the effec- 
tiveness of the multilateral institutions 
as they proceed with the delicate busi- 
ness of persuading governments to im- 
plement improved policies which may be 
painful or expensive or both. For exam- 
ple, increased bilateral aid as well as 
generous debt relief is often required in 
the early phases of an IMF stabilization 



AFRICA 



program, when austerity measures 
would otherwise create politically in- 
tolerable budget pressures and a 
growth-throttling shortage of foreign ex- 
change. On the down side, ill-advised 
donor activities— such as the promotion 
of complex projects that are unrealis- 
tically expensive to build or operate— 
can slow down a fledgling recovery ef- 
fort. We must recognize that the World 
Bank and the IMF need the active, in- 
telligent support of member govern- 
ments in order to do their own difficult 
jobs. 

To provide such support, we have 
launched an effort to coordinate our own 
bilateral programs with those of other 
donors, the IMF, and the Bank. The key 
mechanism is an informal interagency 
working group— attended by State, AID, 
Treasury, and U.S. representatives to 
the Fund and Bank— which convenes 
periodically to consider specific country 
situations. While this is still a new in- 
itiative, it is clearly a promising ap- 
proach to the problem of more effective 
and efficient use of our scarce resources. 

We must also think through the im- 
plications of the emerging consensus on 
the vital role of the private sector- 
always defined to include both large and 
small producers— in the search for in- 
creased productivity and self-sustaining 
growth. Spurred by adversity, African 
leaders are beginning to get over some 
of the ideological hangups and en- 
trenched bureaucratic habits of the past. 
We should listen when they tell us, as 
they increasingly do, that they want 
more American trade and investment. 

Our response to them correctly em- 
phasizes the importance of self-help ef- 
forts to achieve the kind of economic 
climate that will both stimulate local 
enterprise and attract outside capital. 
But we must go further, lest our 
rhetoric on the virtues of the private 
sector be seen by the Africans as a 
hollow joke. If we are serious about the 
developmental impact of the private sec- 
tor, we must increase the resources we 
devote to private sector programs in- 
cluding Eximbank and OPIC. We must 
continue and expand the major new ef- 
fort launched by AID's Bureau for 
Private Enterprise. 

That untapped possibilities may be 
present is suggested by the case of 
Somalia. In that country, long regarded 
as an archtype of poverty and backward- 
ness, economic liberalization and decon- 
trol has recently given a sudden stimu- 
lus to commercial agriculture: the 



result— new opportunities, identified by 
an AID consultant, to provide assistance 
directly to local producers, including 
cooperatives, rather than following the 
more traditional pattern of channeling 
aid into government bureaus. Another 
example is found in Zimbabwe, where 
aid's commodity import program 
enables the local subsidiary of Cater- 
pillar, Inc. to obtain the U.S. parts and 



. . . we must not be seen 
as hectoring or 
preaching nor lose sight 
of the fact that the reex- 
amination of past 
policies should be a 
mutual undertaking. In 
the end, it will be the 
Africans who take the 
risks and make most of 
the sacrifices. 



equipment needed to sustain healthy and 
expanding operations at a time of great 
foreign exchange constraint. This, in 
turn, will help enable Caterpillar to 
maintain its ambitious training pro- 
gram—covering everything from sales 
to engineering— for black Zimbabweans. 

But we do not have nearly enough 
commodity import programs in Africa, 
and those that exist are under severe 
budgetary pressures. Legal and budget 
constraints on Eximbank and OPIC in- 
evitably make those agencies loath to 
commit funds in the comparatively high- 
risk circumstances that prevail in Africa. 

Up to now I have spoken mainly of 
policy implications for the industrialized 
countries, but there are, of course, 
similar implications for the Africans. 
They must redouble their efforts to 
think through how, in practical fact, the 
goals of the Lagos plan may be reached. 
They must recognize the jarring reality, 
not likely to be reversed, of static, or at 
best, slowly rising aid levels. Some old 
shibboleths badly need reexamination, 
including the notion that a country must 
physically produce its own food supplies, 
when in some cases it may be more effi- 
cient—and no less self-sufficient— to 
concentrate on cash crops and buy food 



with the money thus earned. Misgi 
preconceptions of bureaucracies as 
benevolent, of profits as evil, are 
diminishing but still widespread. 

Conclusion 

I began this talk by noting the dif- 
ferences in perspective that charac 
African and Western views of devi 
ment policy. I suggested that, in f; 
we agree more than we disagree a 
that the reality of the economic cri 
which grips Africa today has unde 
lined the core problem — stagnatini 
growth— in a manner which has al 
compelled us some distance towan 
sensus. One of the central element 
that consensus is awareness that a 
us— Africans and non- Africans— r 
reexamine the habits and mindsets 
the past to see how we can apply 1 
resources more effectively to solve 
crisis. 

This Administration has alreac | 
barked on an expanded process of | 
sultation and dialogue with Africa: | 
with other donors. The tone of voi | 
with which we conduct this dialog! 
important, for we must not be i 
hectoring or preaching nor lose sij 
the fact that the reexamination of 
policies should be a mutual undert 
In the end, it will be the Africans 
take the risks and make most of tl , 
sacrifices. 

The kind of dialogue that we r. 
not painless. For the industrializec 
tries it demands flexibility, innovai 
and an increased commitment of b 
cratic and budgetary resources. F( 
Africans it involves a willingness t 
discuss policy issues which are the 
sovereign prerogatives of indepenc 
governments. If we are serious, th 
bound to be friction from time to t 
My comment would be that assista ' 
relationships are never completely j 
tion free, nor should they be unles: i 
want them perpetuated indefiniteh 
I am reminded of India, a com ' 
which for many years received ma i 
U.S. aid, often accompanied by ad'! 
that was not always completely 
welcome. Today India has made in 
pressive developmental strides anc > 
parently achieved food self-sufficie /■ 
There is continuing debate over th ^ 
of foreign aid in this achievement, i 
own preferred version of India's si es 
story would give some credit to th f 
forts of American and other donor ' 
invested millions in Indian agricult-'i 



Department of State B p" 



ARMS CONTROL 



iOs and 1960s. But I would also 
Sbelieve the theory which holds 
ie Indians were, as time went by, 
Id by the volume of advice they 
(accept from well-meaning for- 
5 and increasingly determined to 
he point where they no longer 
: such help. 

ispite the enormously varying cir- 
i,nces which prevail in Africa, our 
■ere must be similar. We must 
c and share the vision of human 
[ and prosperity that pervades the 
[plan of action. That vision can 
l! achieved through economic 
1, which will require new levels of 
ie cooperation among the in- 
ilized countries and African na- 
rhe issues involved are complex, 
mes seemingly insoluble. The 
t for solutions will be arduous and 
; burdens on both sides. We must 
afraid to speak frankly to each 
because we are hopefully beyond 
.ge of paternalism and double 
irds. But above all we must, as 
s partners linked by mutual in- 
■ persist in the search, 
r success or failure will, of course, 
ected in the development 
iements of African nations. And 
jlespite the vicissitudes of world 
on, there are new grounds for 
Por example, in Sudan, coopera- 
fort between donors and Africans 
mched a new stabilization and 
pment program involving extraor- 
I debt rescheduling, aid, and wide- 
ig policy reform efforts. If sus- 
', this program can bring Sudan 
its deep-seated economic crisis, 
r efforts are underway in Kenya, 
a, Senegal, and are beginning 
aere. In short, expanding our 
pment dialogue is not a theoretical 
As our consensus grows, it can 
ust be used as a basis for 



Ensuring Security in the Nuclear Age 



by Kenneth W. Dam 

Addreas before a regional foreign 
policy conference sponsored by the 
Department of State and the Institute of 
International Education, Denver, Col- 
orado, on March 8, 1983. Mr. Dam is 
Deputy Secretary of State. 

As a native of Kansas speaking in Col- 
orado, I am reminded of former Presi- 
dent Truman's remarks about the 
disputes that have occasionally arisen 
between these two great states. "When 
Kansas and Colorado have a quarrel 
over the water in the Arkansas River," 
Truman said, "they don't call out the 
National Guard in each state and go to 
war over it. They bring a suit in the 
Supreme Court of the United States and 
abide by the decision." 

As a former law professor, I can 
testify to the role the Supreme Court 
plays in resolving conflicts among states. 
There is, of course, no ultimate arbiter 
of disputes among nations. As a result, 
each nation must develop its own 
strategy for resolving disputes. The U.S. 
strategy for ensuring security in the 
nuclear age is, like our judicial system, 
based on a commitment to the peaceful 
resolution of conflicts. This Administra- 
tion seeks to ensure our continued 
security by maintaining a credible 
military deterrent, while simultaneously 
negotiating significant arms reduction 
agreements. 

Our strategic policy has been the 
result of a consensus shared by 
presidents, representatives of Congress, 
the public, our allies, and our friends. 
That consensus is based on two princi- 
ples. The first is that war is best avoided 
by maintaining sufficient arms to deter 
it in the first place. The second is that 
the risk of war is lessened by reducing 
the armaments of war. These two prin- 
ciples are complementary, not contradic- 
tory. Mutual reductions to equal and 
verifiable levels can simultaneously 
reduce the risk of war and the quantity 
of arms needed to deter it. Thus the 
strategic program of the Reagan Ad- 
ministration is based squarely on the 
conviction that the two paths to peace 
are deterrence and arms reduction. 

I should like to begin my remarks by 
discussing the strategy of deterrence 



and the changing military balance. I 
shall then discuss how our moderniza- 
tion program seeks to restore that 
balance by improving our deterrent. 
Finally, I shall describe this Administra- 
tion's arms control proposals, which 
have already moved us beyond the con- 
cept of a freeze at current levels and 
toward the higher goal of meaningful 
arms reductions. 

The Strategy of Deterrence 

The foundation of peace in the nuclear 
age has been America's strategy of 
deterrence. Since we first acquired 
nuclear weapons, the United States has 
sought to prevent war by discouraging 
aggression against the United States 
and its allies. By presenting any poten- 
tial aggressor with the prospect of cer- 
tain retaliation, peace has been main- 
tained for nearly 40 years. The history 
of the 20th century makes it sadly clear 
that peaceful intentions and good 
motives alone will not stop aggressors. 
Adequate military strength does do so, 
and the strategy of deterrence has been 
successful in protecting the security of 
America and Western Europe since the 
end of World War II. 

However, while our policy of deter- 
rence has remained constant, the means 
of achieving it have changed dramatical- 
ly. In the late 1950s, a few hundred 
American bombers were sufficient to 
discourage an attack against us or our 
allies. Today, maintaining an effective 
deterrent requires a triad of manned 
bombers, land-based intercontinental 
missiles, and sea-launched ballistic 
missiles. The task of adjusting to 
technological change and Soviet 
developments was not easy. Yet it 
preserved the peace because it main- 
tained a balance of forces between the 
United States and the Soviet Union. 

The Changing Military Balance 

That stabilizing balance of forces has 
now been upset by the Soviet military 
buildup, which contrasts sharply with 
our own military restraint. U.S. defense 
spending has actually declined over the 
last several decades, both as a percen- 
tage of the nation's gross national prod- 
uct (GNP) and as a fraction of the 
Federal budget. In 1962, when John 



57 



ARMS CONTROL 



Kennedy was president, 46%, or almost 
half of the Federal budget, went to our 
national defense; in recent years, only 
one-quarter of our budget has gone to 
defense. Even with our planned in- 
creases, defense spending will represent 
only 6.8% of our GNP in 1984— just 1% 
more than the 5.9% we averaged in the 
1970s. 

By contrast, Soviet military invest- 
ment has grown constantly over the last 
two decades and was nearly double ours 
by the early 1980s. In particular, for 
strategic nuclear forces, Soviet invest- 
ment was about three times higher than 
ours during 1980-81; for general pur- 
pose forces, it was 50% higher; and for 
research and development expenditures, 
it proceeded at approximately twice our 
rate. 

This increase in Soviet defense 
spending has resulted in a dramatic in- 



more numerous but also more modern 
than our own. The U.S. bomber fleet is 
a product of the Eisenhower and Ken- 
nedy years. Few of us would regularly 
drive 25-year-old automobiles except in 
antique car rallies, yet some of our B-52 
bombers are older than the pilots who 
fly them. Similarly, our land-based 
missiles were conceived in the 1950s and 
installed in the 1960s. We have not 
deployed a new land-based intercon- 
tinental ballistic missile in 13 years. In 
some cases, even the safety of these 
systems has decreased over time. 

In contrast, the Soviets have gained 
qualitative advantages by continually 
upgrading their strategic weapons. In- 
deed, there has been a marked improve- 
ment in the accuracy of Soviet missile 
warheads over the last decade. The 
lethal combination of greater numbers 
and improved accuracy makes our own 



. . . for strategic nuclear forces, Soviet investment 
was about three times higher than ours during 
1980-81; for general purpose forces, it was 50% 
higher; and for research and development expendi- 
tures, it proceeded at approximately twice our 
rate. 



land-based missile force vulnerable to a 
Soviet first strike. 

These Soviet strides in arms invest- 
ment, numbers, and quality have 
resulted in an imbalance in the strategic 
relationship between the United States 
and the Soviet Union. As the events in 
Washington this week demonstrate, 
many concerned Americans believe that 
the United States and the Soviet Union 
should agree to freeze their nuclear 
arsenals at existing levels. Yet a freeze 
would leave uncorrected the very im- 
balance that unsettles the world. 
Moreover, a freeze would saddle the 
United States with an aging strategic 
force. Meanwhile, the Soviet Union 
would be free to maintain the advan- 
tages of its more modern nuclear 
arsenal. 



in the number of their strategic 
systems. For example, in the 8 years 
from 1974 to 1982, the Soviet Union 
deployed almost six times as many inter- 
continental ballistic missiles as the 
United States and over 16 times as 
many ballistic missile-firing submarines. 
And in the past 6 years, while the 
United States withdrew 1,000 nuclear 
warheads from Europe, the Soviet 
Union de-ployed over 1,000 highly ac- 
curate warheads on mobile SS-20 
ballistic missiles. NATO currently has 
nothing comparable to the SS-20. In 
short, as former Secretary of Defense 
Harold Brown has described the history 
of the U.S. -Soviet arms relationship, 
"When we build, they build; when we 
stop, they build." 

As a result of the sustained Soviet 
buildup and corresponding American 
restraint, the Soviet arsenal is not only 



The President's Modernization 
Program 

This brief overview of the U.S.-Soi 
arms relationship reveals the fact : 
as the President has said, althougl 
has been much talk of an arms rac 
"the truth is that, while the Soviet 
Union has raced, we have not." Ni 
we intend to enter any such race. 
Rather, we intend to modernize o\ 
nuclear deterrent and restore thai 
essential balance that has preserv 
peace since World War II. The So 
must understand that while we wiJ 
seek superiority, neither will we a| 
them to achieve it. I 

As a result, the President has ' 
posed a vigorous modernization p 
gram. That program is not inexpt 
But even with our proposed budg 
creases, defense spending as a pe 
age of our GNP will rise less thar 
over the next 4 years to an estimi i 
7.7% in 1988-about half the com 
estimate for the Soviet Union. 

Though the President has dec 
his political career to reducing go 
ment spending, he believes it esse 
ask for this increase in our defens 
budget. He does so in order to en 
the prospects for peace at minimi 
cost. The President's modernizati' 
gram will reduce the risk of war 
increasing the Soviet incentive to 
negotiate arms reduction. The he: 
that program is our effort to incr 
the survivability and capability of 
strategic deterrent of air, sea, an 
based systems. 

Improving the Strategic Trij. 

modernize the air leg of our strat 
triad, the President has proposed 
program of procuring a mixed foi 
B-1 bombers to be deployed begii 
in 1985, and the Advanced Techn 
Bomber— the so-called "Stealth 
Bomber"— to be deployed in the e 
1990s. 

Since our current ballistic mis 
submarines will become more vuli 
in the face of Soviet advances, tb 
dent's program calls for moderniz 
sea-based leg of the triad with thi 
Trident submarine and Trident I ; 
missiles. The first Trident becamt' 
tional last December. 

The third element of the mod 
tion program involves our effort 1 
prove the survivability and capab 
our land-based intercontinental bi 
missiles. This effort is currently t 
reviewed by the Scowcroft Comn 
which will report to the President 
few weeks. I shall not try to pred 



Department of State Eil' 



ARMS CONTROL 



(' I if I his review, but I will say 
' mitroine is important, not only 
fuiLiii' strategic posture, but also 
ichaiR-i's for meaningful arms 
ifi. A modern, land-based intercon- 
i ballistic missile (ICBM), such as 

1! MX missile, is essential to help 
lish the strategic balance. It also 
important bearing on our ability 
ttiate a meaningful arms reduc- 
•eement with the Soviet Union. 

viding a Negotiating Incentive. 

vyer, I know that negotiations 
nly when both parties believe 
ve something to gain by talking 
jthing to lose by failing to talk, 
t the incentive of gain or loss 
d by our modernization program, 
lets would see no advantage in 
to the table in the first place. 
Vlarch of 1977, for example, the 
States presented to Moscow an 
us proposal for redirecting the 
Strategic Arms Limitation Talks] 
. What we sought was a commit- 
) genuine reduction of nuclear 
Vhat we received from the 

was a blunt refusal even to 

the proposal. They had no incen- 

discuss reductions. For two 

the Soviets had been investing 
)us sums in modernizing their 
• weapons, and the military 

was tipping in their favor, 
entually, of course, a SALT ac- 
as negotiated. That accord pro- 
as its name implied, for strategic 
imitation— meaning that, with 
captions, it merely limited further 

in certain strategic systems. 
■eaty was never ratified by the 



gsident Reagan took office in 
■y 1981 with a pledge to restore 
^ategic balance. On October 2, 
tie announced the comprehensive 
.m, which I have just described, 
kdernizing America's strategic 
and on November 18 of that year, 
lounced that his Administration 
seek a strategic arms reduction 
nent with the Soviet Union. The 
s thus had an incentive to come 
the table, and they remain at the 



^rms Reduction Proposals 



i, we are now engaged in two sets 
lear arms negotiations with the 
; Union in Geneva. One is the 
^gic Arms Reduction Talks or 
.T; the other is the intermediate- 
nuclear forces, or INF, talks. Our 



approach in both these negotiations— 
and, indeed, in all our arms control ef- 
forts—is based on the four principles 
first outlined by President Reagan in his 
speech at the National Press Club in 
1981. 

First, we insist on significant reduc- 
tions. We are committed to reducing the 
number and destructive potential of 
weapons, not just freezing them at cur- 
rent high levels. 

Second, we seek equality and will 
accept nothing less. We believe that a 
reduction to equal levels is absolutely 
necessary to restore that essential 
balance that can provide our country 
with adequate security. 

Third, we insist on verif lability. 
Arms control agreements cannot be 
based on trust alone: Witness the Soviet 
use of biological and chemical weapons— 
"yellow rain"— against the peoples of 
Afghanistan and Southeast Asia, in 
direct violation of international treaties 
to which the Soviets are a party. The 
United States will thus insist that any 
future arms control agreements contain 
effective measures to ensure compliance 
by both sides. 

Finally, we will insist that arms con- 
trol agreements genuinely enhance U.S. 
and allied security. We must not accept 
cosmetic agreements that engender a 
false sense of security. 

START Negotiations. Our START 
proposals are based on these four prin- 



. . . "the truth is that, 
while the Soviet Union 
has raced, we have not. 
Nor do we intend to 
enter any such race. 



ciples. We have proposed, as a first 
step, that both sides reduce their 
ballistic missiles to about half of what is 
now in the U.S. inventory. We also pro- 
pose that the number of warheads for 
these missiles be reduced by one-third, 
only half of which would be allowed on 
the most destabilizing systems— the 
land-based ICBMs. We are prepared in a 
later phase to seek a reduction in the 
throw-weight of these missiles to equal 



levels below current U.S. levels. We also 
intend to propose limits on other kinds 
of strategic nuclear systems. In short, 
the United States is not seeking negotia- 
tions for its own sake. The United 
States is not seeking an agreement that 
would merely limit the growth of 
strategic forces. Rather, we are seeking 
a START agreement that would result 
in substantial, equitable, and verifiable 
reductions in nuclear weapons. 

INF Talks. The other nuclear arms 
negotiation underway in Geneva is the 
intermediate-range nuclear forces (INF) 
talks. The U.S. position in the INF talks 
is based on the initiative which Presi- 
dent Reagan announced in November of 
1981 and which has been fully supported 
by our allies. He proposed cancellation 
of the NATO decision to start deploying 
U.S. Pershing II and ground-launched 
cruise missiles in Europe later this year 
if the Soviet Union agreed to dismantle 
its INF missiles-the SS-4, SS-5, and 
SS-20. This proposal was based upon 
the belief that, as the President stated 
in his speech to the American Legion on 
Washington's birthday, "the complete 
elimination of the entire class of longer 
range, land-based INF missiles remains 
the best and most moral outcome" to the 
negotiations. 

The President has made it clear, 
however, that ours "is not a take-it-or- 
leave-it proposal." He has instructed 
Paul Nitze, our ambassador to the INF 
talks, "to explore in Geneva every pro- 
posed solution" that is consistent with 
the principles supported by our Euro- 
pean allies. These principles state first 
that a fair agreement must be based on 
equal levels of U.S. and Soviet forces. 
As a corollary, British and French na- 
tional strategic systems are, by defini- 
tion, not a part of these negotiations and 
not to be considered in them. In addi- 
tion, Soviet proposals which have the ef- 
fect of merely shifting the Soviet threat 
from Europe to Asia cannot be con- 
sidered reasonable. Finally, a fair agree- 
ment must be underwritten by effective 
verification measures. 

Thus far, however, the Soviets have 
responded to our INF proposal with 
ones designed to retain the current 
Soviet monopoly in longer range land- 
based INF missiles— a monopoly that 
has been strengthened by the addition, 
on average, of one SS-20 a week since 
the talks have begun. The Soviet pro- 
posals would permit them to keep a 
formidable arsenal of INF missiles, in- 
cluding every SS-20 deployed to date, 
while NATO would be prevented from 
deploying any counterbalancing missiles 



1983 



ARMS CONTROL 



in Europe. Moreover, there would be 
nothing to prevent the Soviets from 
deploying even more INF missiles in 
Asia or moving missiles from Europe to 
Asia— from where these mobile weapons 
could be returned to Europe in short 
order. 

In sum, our INF and START pro- 
posals aim to achieve substantial, 
equitable, and verifiable reductions, 
especially in the most powerful, ac- 
curate, and rapid systems— ballistic 



missiles. Our proposals thus will not ad- 
vance the national interests of one side 
at the expense of the other's but will ad- 
vance the best interests of both. The 
Soviets have not yet responded in kind. 
But our efforts to modernize our nuclear 
deterrent have simultaneously reduced 
the risk of conflict, while providing the 
Soviets with the necessary incentive to 
sit down with us at the negotiating 
table. 

It is important to note, however, 



ACDA Annual Report 



MESSAGE TO THE CONGRESS, 
FEB. 9, 19831 



I am pleased to transmit to you the 1982 An- 
nual Report of the United States Arms Con- 
trol and Disarmament Agency. This report, 
the 22d submitted since the creation of the 
agency, provides a complete review of the im- 
portant work of an Agency which plays a 
crucial role in our country's national security 
program. 

On September 21, 1982, I met at the 
White House with the three U.S. arms con- 
trol negotiators. Ambassadors Rowny, Nitze, 
and Starr before they returned to Europe for 
the final 1982 sessions of the START 
[Strategic Arms Reduction Talks], INF 
[intermediate-range nuclear forces], and 
MBFR [mutual and balanced force reduc- 
tions] negotiations, respectively. At that 
time, I outlined the following general prin- 
ciples which guide the formation of our arms 
control policies: 

• Arms control must be an instrument 
of, and not a substitute for, a coherent securi- 
ty policy aimed in the first instance at the 
Soviet advantage in the most destabilizing 
class of weapons— ballistic missiles and, 
especially, intercontinental ballistic missiles 
(ICBMs). We will work for agreements that 
truly enhance security by reinforcing peace 
through deterrence. 

• We must seek agreements that involve 
substantial and military significant reductions 
on both sides. 

• Agreements must be based on the prin- 
ciple of equality of rights and limits. 

• Arms control agreements must include 
effective means of verification. They cannot 
be based on trust alone. 

• Our efforts will be guided by serious- 
ness of purpose, reflected in our willingness 
to seek reduction to significantly lower levels 
of nuclear forces based on equal, balanced 
levels of comparable systems. 

These principles are in full accord with 
the basic purpose of both U.S. and NATO 
security policy— ensuring the peace through 
deterrence of aggression. Deterring nuclear 



or conventional attack against us or our 
Allies must guide our approach to defense 
and arms control. These principles also lie at 
the heart of the comprehensive and in- 
novative arms control approaches which this 
Administration has adopted. In each of the 
three most important areas of arms con- 
trol—strategic nuclear arms, intermediate- 
range nuclear forces, and conventional forces 
in Europe— we have presented to the Soviet 
Union bold and equitable proposals which are 
in our mutual interest and which provide an 
opportunity to enhance world security and 
peace by significantly reducing the arsenals 
of both sides. 

In each of these three negotiations, the 
United States has presented considered and 
equitable proposals which seek to establish a 
military equilibrium at reduced levels, 
eliminate the most destabilizing factors in the 
existing military balance, and enhance the 
security of both sides. When our national 
security, and that of our Allies, is at stake, 
we must approach arms control realistically. 
We do not seek agreements for their own 
sake; we seek them to build international 
security and stability. This Administration's 
reductions proposals for strategic and 
intermediate-range nuclear forces and for 
conventional forces reflect this approach. We 
are encouraged by the serious and business- 
like conduct of these negotiations thus far. 
Although much hard bargaining lies ahead, I 
am determined to bargain in good faith until 
our objectives can be realized. We urge our 
Soviet negotiating partners equal seriousness 
of purpose. 

The 1982 Annual Report not only in- 
cludes details on all aspects of the three 
negotiations, but also refers to such other im- 
portant elements of ACDA's responsibilities 
as providing expertise on both policy and 
technical levels for all other multilateral arms 
control negotiations, for our nuclear non- 
proliferation efforts, and for research and 
analysis of military budget and arms 
transfer. 

Ronald Reagan 



that a freeze at existing levels, su 
that proposed in last November's 
resolution, would remove the ince 
to negotiate by preserving the cui 
rough Soviet advantages in strate 
arms. Indeed, if we achieved agre 
on a verifiable freeze— a task whi( 
might take precious months— the 
would have an incentive to prolon 
freeze and avoid any serious talk 
significant arms reductions to low 
equal levels. More importantly, oi 
gram of modernization and negot 
has already compelled the Soviets 
acknowledge the desirability of so 
moderate arms reductions. A free 
therefore, would actually represei 
step back from the progress we h 
made. We have, in short, moved 1 
the freeze. 

Conclusion 

I began these remarks by speakin i 
the peaceful resolution of conflict- 
between states or between nation I 
I should like to close on the same ' 
The path to peace in the nuclear ; | 
the proven course I have outlined i 
deterrence and arms reduction. T 
two concepts are complementary. ^ 
Mutual arms reduction to lower b ' 
equal levels will reduce the risk ol 
flict and the level of arms needed 
deter it in the first place. Admittc 
the President said in his address t 
nation, it is a sad irony that it "sti 
takes weapons to prevent war." B 
proposals for deep reductions will 
in both diminished stockpiles and ; 
diminished risk of war. 

In seeking to ensure our secur 
the nuclear age, however, we shot 
remember that peace is an aspirat 
and it is not an aspiration unique 1 
peace marchers. 

Indeed, peace is the goal to wl 
we all aspire. The President's poli( 
achieving that goal is one of deter: 
obtained through modernization, a 
arms reduction, obtained through 
negotiation. With our arms contro; 
posals, we have already moved bey 
the concept of a freeze and toward 
higher goal of deep reductions and 
lasting peace. We should not step 
backward now. ■ 



'Text from Weekly Conipilation of 
Presidential Documents of Feb. 14, 1983. 



Department of State Bi 3'" 



NESS 



rtment of State Activities 
le Private Sector Area 



t year, the Department of 
b worked closely with the 
[ector toward achieving a 
^f foreign policy objectives. This 
lion is designed to encourage 
[and economic growth abroad, 
y in the developing world; to 
j free trade and investment 
[id to promote understanding 
jjort for U.S. international 
i 

^rtment officials have conferred 
[with private sector representa- 
iarticularly with business groups, 
It foundations, and univer- 
jo elicit ideas on how the sector 
ingthen, expand, and take on ac- 
erformed by the U.S. Govern- 
e response has been extensive, 
nd encouraging— focusing on 
ways to reinforce and, in some 
pplant government efforts. Im- 
tion has taken place around the 



{-ibbean 

I of our strong interest in 
'c and political well-being in the 
:ie Department has worked with 
^ate sector and other U.S. 
inent agencies to formulate a 
jan Basin initiative. Allied in this 
bve been the Council of the 
as, Caribbean /Central American 
ithe U.S. Chamber of Commerce, 
ler private sector organizations, 
■in thrust of the initiative is the 
iion of incentives for expanded 
'nd private investment for 
lie growth. Close contact with 
iJ.S. firms interested in the Carib- 
ilntinues to engender promising 
Jes ranging from feasibility 
^for a regional trading company 

ions for traditional transporta- 

;tlenecks in the area. 



imerica 

}: of a broadened effort in Latin 
?a, the Department, through the 
■ission to the Organization of 
^an States (OAS), has obtained an 
I'solution calling for a study of 
5 sector involvement in all its pro- 
( with the accent on increasing 
'involvement. 



Asia 

Links with the private sector are equally 
strong in Asia. Having been instrumen- 
tal in the formation of the ASEAN-U.S. 
Business Council several years ago, the 
Department of State maintains a close 
working relationship with the council, 
helping to spark a number of programs 
directly helpful to our economic position 
in Asia. The Department has for some 
time conducted a series of joint action 
programs with the Asia Pacific Council 
of American Chambers of Commerce. It 
has also sponsored the formation of 
U.S. -Korean subcabinet level study 
groups to expand cooperation and solve 
problems in science and technology, in- 
vestment, and fisheries by utilizing 
specific inputs from the private sector 
through "AmCham" committees. SimOar 
activities are carried out with embassy 
encouragment in Japan, one typical proj- 
ect being an analysis of U.S. manufac- 
turing investment in that country. 



Africa 

In Africa the Department takes a 
leading role in establishing bilateral 
business councils and chambers of com- 
merce. The U.S.-Nigeria Business Coun- 
cil was established in March 1982 and 
held its first operating meeting in 
Washington in September. The purpose 
of the council is to provide a mechanism 
to solve practical problems between the 
business people of both countries and to 
influence government policies as needed. 
Through government-to-government 
dialogue and direct staff support, we 
assist the Joint Agricultural Con- 
sultative Committee, a group of promi- 
nent U.S. and Nigerian firms which pro- 
mote agricultural joint ventures. 

The Department has cosponsored 
with local business associations regional 
conferences in the United States to in- 
form the public about opportunities in 
Africa. In addition, the Department's 
Bureau of African Affairs has par- 
ticipated with public affairs organiza- 
tions in programs that engage academ- 
ics, policymakers, and business in assess- 
ing the political and economic climate in 
Africa. The Department has also invited 
representatives of American business 
with long experience in less developed 
countries to symposia to discuss 
strategies for government and business 



cooperation in promoting Africa's 
economic growth and development. 

Worldwide Initiatives 

On a global basis, the Department has 
made a concerted effort to identify ways 
in which the private sector might more 
effectively assist developing countries. 
We have conducted a dialogue with over 
250 business organizations in the United 
States and with all Foreign Service 
posts in the developing world. Through 
this dialogue, we first elicited proposals 
from the private sector, then trans- 
formed ideas into actual working 
models. Sharing examples and informa- 
tion on this project stimulated further 
action from others. Programs for train- 
ing laboratory technicians and other 
specialists in a variety of fields, inviting 
participants from developing countries 
to U.S. symposia and industrial conven- 
tions, expanding companies' overseas 
training programs, and distributing used 
or surplus equipment are but a few of 
the initiatives under this project. 

The Department is also working 
with our executive directors at the 
Inter-American Development Bank, the 
Asian Development Bank, and the 
World Bank and with foreign govern- 
ments to encourage greater dependence 
on the private sector in the development 
process. There has been progress in get- 
ting the multilateral development banks 
to involve American banks and other 
private institutions in cofinancing 
development projects and in contributing 
to growth in ways that supplement the 
efforts of the developing countries 
themselves. 

A State Department official serves 
as a director on the board of the 
Overseas Private Investment Corpora- 
tion (OPIC), a self-sustaining, 
semiautonomous agency of the U.S. 
Government which provides political risk 
insurance and financial services to en- 
courage U.S. private investment in 
developing nations. In FY 1983, OPIC 
doubled its volume of insurance business 
worldwide and now insures over $3 
billion in U.S. private investment in the 
developing world. 



DEPARTMENT 



A Philosophy of 
Private Sector Initiative 

Our many discussions with the private 
sector produced tactics and a strategy 
and also yielded a philosophy. Repre- 
sentatives from business and other 
organizations stressed that in order to 
be lasting and productive, activities 
should benefit both the American "giver" 
and the "receiver" abroad. As far as 



possible, existing private sector groups 
and mechanisms should manage ac- 
tivities and programs. The government's 
principal role should be as a backstopper 
and reinforcer, as a supplier of informa- 
tion and, on occasion, of seed money to 
make possible a new initiative. In short, 
activities should be those in which all 
participants gain. 



Press release 44 of Feb. 9, 1983. 



Foreign Policy Planning 
Council Members Announced 



Following is Secretary ShuUz's state- 
ment of February 23, 1983, announcing 
the members of the Foreign Policy Plan- 
ning Council. ^ 

One of the great challenges, I think, in 
working effectively in any active 
organization responsible for things that 
are going on and have to be ad- 
ministered and managed day-to-day and 
hour-to-hour is to find some way of 
standing back and thinking a little more 
broadly and strategically about what it 
is that you want to do, where you want 
to see things go. 

Beyond that, of course, in the 
Department of State, there are different 
geographic and functional bureaus; and 
while the coverage of the world and the 
functions are pretty complete, neverthe- 
less, there are always issues that cut 
across and are broader than any one 
unit finds naturally within its scope. 

I find myself searching around for 
ways to contend with the tendency to be 
preoccupied with what is right in front 
of you each day, on the one hand, and to 
be sure that things don't fall between 
the cracks, and that we think broadly 
about our problems, on the other. There 
are a lot of devices for doing that in this 
organization or any other. 

One is to take some time to scratch 
your head and think things over. 
Another, of course, is to have people in 
the various bureaus who have the 
capacity to think beyond the confines of 
the particular assignment that they 
have, and I believe we have people of 
that kind in the Department. 

At the same time, it is useful to 
have some sort of institutionalized way 
for being sure that a broad perspective 



is brought to bear and is available to 
everyone, and that's been recognized 
here in the Department of State for a 
long time. I had dinner last night with 
George Kennan. I guess he was the 
first— he was the first Director of the 
policy planning staff. 

It has existed for a long time, 
basically for the reasons that I have 
outlined, and I guess it has sometimes 
been great and not so great other times. 
But, at any rate, the idea's been around 
for quite awhile. 

As I, Ken Dam, and others have 
thought about it, it seemed to us that a 
good way to use the policy planning 
staff, and the concept there is to create 
a council; that is, to have a number of 
people of eminence, in a variety of 
fields, who were, in our thinking about 
it, council members; to have a chairman 
who's also a council member, of course, 
and who runs the staff; to have it set up 
so that there would be permanent people 
there. But also, it would be structured 
so that somebody could come in for 6 
months and work on something and so 
on. So, last December we announced 
this idea. 

Since that time we've been working 
to identify top-notch people to hold these 
positions. Today, we'll announce four 
people who will be council members. 

• Mr. Jeremy R. Azrael, former 
professor of political science at — you 
guessed it— the University of Chicago. 



He has both academic and goverr 
experience in the East-West rela1 
and Soviet affairs areas. He'll be 
the Council from his present post 
Bureau of Politico-Military Affair 
where he has been a senior advis.. 
the Soviet affairs area. 

• Paul Boeker, a career mini 
the Foreign Service. His orientat 
the economic area. He's had seve 
positions in international econom 
policy, including senior Deputy A 
Secretary of State for Economic 
Business Affairs in the Ford Adn 
tration. In terms of area expertis 
would be a European and Latin 
American specialist. 

• Robert Osgood, who's a pn 
author. He's a Christian A. Herte 
fessor of American Foreign Polic 
Johns Hopkins School of Advano 
ternational Studies where, until ] 
was also Dean. He was a senior s 
member at the National Security 
(NSC) in the Nixon Administrate 
will join the Council this summer 

• Peter Rodman, who has mi > 
recently been a Fellow in Diplom i 
Studies at Georgetown Universit; | 
Center for Strategic and Internal | 
Studies. He was a member of the j 
staff from 1969 through 1977, an 
participated in negotiations and t 
about a range of major issues am 
very central in the drafting of po 
statements by the President and 
Secretary of State at the time; ar 
has been a close associate of Hen 
Kissinger's. 

Those are four outstanding p« 
each different, each with consider 
power of intellect and perspective 
pect to meet with members of the 
cil individually and as a group, an 
use them to help me in my own t\ 
about the directions in which we ; 
be going. Steve Bosworth, of coui 
will be the ringmaster as well < 
thinker himself. 



'Press release 63 of Feb. 25, 1983 
Secretary announced the appointment 
Stephen W. Bosworth as Chairman of 
Council of Dec. 8, 1982.) ■ 



Department of State Bi6l 



r ASIA 



eloping an Enduring Relationship 
1 China 



[ Wolfowitz 

ement before the Subcommittee 
n and Pacific Affairs of the 
"oreign Affairs Committee on 
•y 28, 1983. Mr. Wolfowitz is 
It Secretai-y for East Asian and 
Affairs.^ 

ing a strong, stable, and endur- 
.-China relationship is an impor- 
Tient of President Reagan's 
policy. For compelling historical 
, it has occupied a central place 
jreign policies of four successive 
trations. We ought not forget 
the more than two decades 
ig the Shanghai communique, 
ina relations were predominantly 
China was a large and menacing 
vith which we maintained no 
communication, cultural contact, 
omic relations. We were at war 
a; nearly came to war over 
/ and Matsu; and supported op- 
;ides in Vietnam. Indeed, China 

supported guerrilla movements 
3oil of many of our Asian allies 
?nds. We maintained at great 
;ignificant naval presence be- 
Taiwan and the mainland at the 
me that we faced a growing 
from the Soviet Union. 
1972 it had become clear to the 
hip of both sides that continua- 
this hostile atmosphere was in 

country's short- or long-term in- 
ind that our respective interests 
DC better served through a 
itive and productive relationship, 
suit was a reconciliation of 
; importance. Developments dur- 
■ 11 years since that time have 
strated the importance of that 
illation. 

lile I might cite many important 
■s in our relations, let me mention 
)articular instances that illustrate 
iw far we have come and what has 
chieved. 

Perhaps nothing more dramatical- 
trates the changes of the last 1 1 
than the fact that China has 
ed as a major restraint on further 
imese aggression in Asia. 
I As another important indicator of 
te, our economic relations have 
A substantially. Our bilateral trade 



with China has jumped from zero to a 
present figure of more than $5 billion 
per year. 

• Perhaps most important of all for 
the long-term strength of the relation- 
ship between ourselves and China, 
cultural relations and personal ties have 
resumed at many different levels. 
People-to-people contacts have virtually 
exploded, with nearly 10,000 Chinese 
students studying at American univer- 
sities, 100 Chinese delegations per 
month visiting the United States, and 
over 100,000 Americans visiting China 
each year as tourists or in other 
capacities. These exchanges cannot help 
but bring to each of our societies in- 
creasingly sophisticated appreciation of 
the other. 

There are other benefits I should 
mention. We no longer have to plan and 
spend to confront a Chinese threat. Our 
parallel interests in containing the 
Soviet Union have been repeatedly reaf- 
firmed, and we are in fundamental 
agreement that the Soviets remain the 
principal threat to the peace of the 
world. We have common interests in 
containing not only Vietnamese aggres- 
sion in Southeast Asia and encouraging 
a peaceful settlement of the Kam- 
puchean problem based on Khmer self- 
determination, but also in resisting 
Soviet aggression in Afghanistan. We 
are able to maintain a useful dialogue 
with China on a wide range of important 
international problems of common con- 
cern. China has developed constructive 
regional policies and cooperative rela- 
tions with our Asian allies. China has 
developed increasingly strong ties to the 
Western-oriented international economic 
system. Trade and investment oppor- 
tunities for American business have 
grown tremendously; despite problems. 
East Asia has emerged as one of the 
more stable and prosperous regions of 
the world with China playing an mcreas- 
ingly responsible regional role. Even 
Taiwan has never been more prosper- 
ous, and the situation in the Taiwan 
Strait is peaceful. 



Underlying Principles 

These benefits have flowed over an 
11 -year period. They are an outgrowth 
of a wide variety of agreements that 



have established the framework for an 
extensive relationship. Throughout this 
process, we have been guided by consist- 
ent adherence to three underlying funda- 
mental principles and realities: 

First, that China, with its many 
talented and resourceful people and with 
a sophisticated concern about global as 
well as regional problems, is already a 
significant factor in Asia and is destined 
to be an important element in interna- 
tional affairs in the future. It is a coun- 
try with which we hope to be able to 
work with constructively and coop- 
eratively for mutual benefit; 

Second, that the United States and 
China share certain common and impor- 
tant international perceptions and con- 
cerns and that the development of 
U.S. -China relations serves the interests 
of both our peoples and the cause of 
peace and stability in East Asia and the 
world; and 

Third, that progress in U.S. -China 
relations could be made without sacri- 
ficing the interests of our friends and 
allies in the region or our valued com- 
mercial, cultural, and other unofficial 
relations with the people of Taiwan. 

Adhering to these fundamentals, in 
1979 we negotiated a normalization 
agreement which established diplomatic 
relations between the United States and 
China and under which it was under- 
stood that, henceforth, commercial, 
cultural, and other contacts with the 
people of Taiwan would be conducted on 
an unofficial basis. Both sides, reflecting 
the importance they placed on good rela- 
tions and their confidence in the rela- 
tionship's evolution and progress, chose 
to move ahead with normalization even 
though not all of their differences had 
been resolved. 

Among the differences left unre- 
solved by the normalization communique 
was the question of arms sales to 
Taiwan. In the August 17 joint com- 
munique of last year, we addressed this 
difficult matter. The communique, which 
was the result of 10 months of negotia- 
tions, does not settle the issue but does 
provide a framework for managing our 
differences with the Chinese over a mat- 
ter of great sensitivity to us both. The 
negotiating process, however, which was 
intense and difficult, placed a con- 
siderable strain on the relationship, and 
it created a long hiatus in high-level con- 
tacts and exchanges— a part of our rela- 
tionship with China that is particularly 
important for allaying suspicions. We 



EAST ASIA 



needed to clear the air to revive con- 
fidence that the relationship would pro- 
gress as we wished. 

Secretary Shultz's 
Visit to Beijing 

Thus, the Secretary's objectives in 
visiting Beijing [February 2-6, 1983] at 
this time were to put U.S. -China rela- 
tions back on a stable, realistic footing; 
to resume the process of building the 
essential elements of confidence and 
trust; to continue our dialogue on impor- 
tant international issues; and to address 
openly and honestly the various bilateral 
issues that were commanding attention 
on both sides. 

The atmosphere in which the visit 
took place was very good, which is itself 
an indication of the value both sides 
place on the relations. Secretary Shultz 
had 9 hours of intense, substantive, and 
constructive discussion with Foreign 
Minister Wu Xueqian, as well as exten- 
sive talks with a range of other Chinese 
leaders including Premier Zhao Ziyang 
and Chairman Deng Xiaoping. Secretary 
Shultz presented U.S. positions forth- 
rightly, at the same time that he earned 
Chinese respect and public compliments 
for what the Chinese called "his patience 
in listening to the views of others." 
Foreign Minister Wu was equally candid 
in stating his government's position on 



not help but be impressed with the 
serious, constructive, and realistic ap- 
proach the Chinese leadership took to a 
wide variety of key issues. 

On the Soviets— the Chinese im- 
pressed us all with their realistic ap- 
proach and their recognition of the con- 
tinued threat posed by Soviet expan- 
sionism. 

On Afghanistan and Kampuchea— 
we share common assessments of the 
situations and discussed these issues in 
depth. We welcome Chinese support for 
the ASEAN [Association of South East 
Asian Nations] position calling for Viet- 
namese withdrawal; an independent, 
peaceful, neutral, and nonaligned Kam- 
puchea; and a Soviet withdrawal from 
Afghanistan. The Chinese were equally 
appreciative of our policies. 

On the Middle East— while there 
are important differences, we agree on 
the goal of a just and stable peace in 
which all parties can survive and pros- 
per. Our differences are in how best to 
achieve peace in the region, not on its 
desirability or on Israel's basic right to 
exist. 

On southern Africa— despite impor- 
tant differences on strategy, we do not 
disagree on the desirability of Namibian 
independence from South Africa or on 
the desirability of the withdrawal of 
Cuban troops from Angola. The 



. . . despite problems, East Asia has emerged as 
one of the more stable and prosperous regions of 
the world with China playing an increasingly 
responsible regional role. 



the various matters discussed, and there 
was a useful exchange both on points of 
agreement and difference. Indeed, the 
constructive and substantive relationship 
that the Secretary and the Foreign 
Minister established was one of the 
more useful results of the visit. 

The two men succeeded in restoring 
the international dialogue to its rightful 
place in the relationship. It was a 
dialogue of high quality, proving that, 
while China may not yet be among the 
world's wealthiest nations, it is among 
the more sophisticated, with a decidedly 
global approach. Our delegation could " 



Secretary held in-depth discussions with 
Premier Zhao and Foreign Minister Wu 
who had just returned from a month- 
long trip to Africa and were willing to 
provide us with the benefit of the views 
and insights they brought back. 

On arms control— we were able to 
clarify for the Chinese the U.S. position 
and reassure them that we have the 
security of East Asia in mind as we ad- 
dress the issue. 

On Taiwan— we continue to have 
some differences over Taiwan. However, 
the relationship with China is important 



enough to us— and it seems also t 
Chinese— that we will work hard 
manage those differences in a wa 
preserves our focus on our strong, 
terest in bilateral and Internationa 
cooperation. 

The Secretary's visit was not 
tended to, and did not attempt to, 
renegotiate or go beyond the Aug 
communique, or any previous con- 
ques we have negotiated with Chi 
about Taiwan. But the Secretary ■ 
reassure the Chinese that, consist 
with our intent to rebuild mutual 
and confidence, we will faithfully 
out the policies we enunciated in 1 i 
communiques. The Secretary and j 
President have made clear that w I 
adhere to the communiques that v ! 
previous administrations have neg I 
tiated, and we are confident that i 
Chinese will do the same. That is I 
key, I believe, to managing effecti ' 
our differences over Taiwan. At tl I 
same time, we have consistently n 
clear to the Chinese that we have 
interest in the well-being of the pe 
of Taiwan, as reflected in the Tai\ 
Relations Act, and will continue tl 
ductive, unofficial relationship we 
with them. 

We also have differences on s( 
other matters of bilateral concern, 
ing Secretary Shultz's visit, we ha^ 
variety of differences and disagree 
with which to deal. Indeed, it is in 
evitable, as relations mature and 
develop, and as trade and exchang 
vance and multiply, that the attem 
bilateral problems grow progressiv 
more complex. This is especially th 
for two countries such as ours whi 
maintain such fundamentally differ 
systems. 

Some of our remaining bilatera 
problems are born of the progress ' 
have made. The technology transfe' 
issue is a good illustration of a pro! 
born of progress. Since 1979, and i 
ticularly under this Administration, 
great effort has been undertaken ti 
facilitate Chinese access to advance 
American technology. Licenses issu 
have gone up 300% in the last 3 ye 
reaching 1,700 in 1982. The Secret! 
made clear to the Chinese that we : 
tend to support their modernizatior 
forts and will continue to provide tl 
with a broad range of American 
technology from agricultural know- 
to advanced scientific information. . 
of these items are not subject to ex- 
controls. We intend to administer o 
regulations in a manner that suppojU 
China's development and maintain crj 
those restrictions that are necessarjl 



Department of State Bu H" 



EUROPE 



security purposes. We en- 
1 the Chinese to consider the 
re of items made available in 
few years, to appreciate how 
ave come in this important area, 
ork together in streamlining 
ir bureaucracy and ours in order 
smoother interaction between 
economies. 

iid not seek to resolve the tex- 
lem during this brief visit. 
r, we were able to clarify ap- 
; and, with goodwill and mutual 
we should be able to arrive at a 
ory agreement. We hope for an 
sumption of negotiations leading 
entual settlement, 
le of the bilateral difficulties now 
; U.S. -China relations may be 
stem from an insufficient 
inding of our differing legal 
and societies. The Secretary 
le Chinese to learn more about 
• system operates, offering to 
B Chinese efforts to do so. As an 
we will send a briefing team to 
to explain our legal system to 
officials there. 

)oking back over the events of 
month, as well as the rapid 
of U.S. -China relations over 
1 1 years, it is noteworthy that 
es, despite the peaks and valleys 
e characterized various episodes 
jlationship's development, con- 
place high value on it, wish to 
; what has been accomplished, 
ve forward where possible and 
y beneficial. As the Secretary 
) the Chinese, enduring relation- 
ore often emerge from a process 
ing out satisfactory arrange- 
or seemingly intractable disputes 
)m choosing to deal only with the 
oblems. 

n the progress made thus far 
undeniable benefits to both 
. is clear that there will be no 
back. Some difficult problems lie 
n U.S. -China relations. We intend 
with them fairly and openly and 
e the relationship for granted, 
jodwill, appreciation of the value 
elationship, adherence to our 
rinciples, and Chinese re- 
y— for good relations are a two- 
•eet— the prospects for further 
s are encouraging. The stable 
during relationship we seek are 
int to the healthy economic 
we all desire and make an im- 
t contribution to regional stability 
irld peace. 

mplete transcript of the hearings 
)ipublished by the committee and will 
'lable from the Superintendent of 
i-nts, U.S. Government Prmtmg Of- 
'ashington. D.C. 20402. ■ 



U.S. Relations With Europe 
and Ties to NATO 



by Richard Burt 

Statement before the Subcommittee 
on Europe and the Middle East of the 
House Foreign Affairs Committee on 
March 7, 1983. Mr. Burt is Assistant 
Secretary for European Affairs.'^ 

In the past few months, we have main- 
tained an especially intensive dialogue 
with our European allies. Both the Vice 
President and the Secretary of State 
have recently undertaken extensive con- 
sultations with Europe's most important 
leaders. Despite reports to the contrary, 
both were struck by the fundamental 
vitality of the transatlantic relationship. 
My own impressions are of the same 
nature. They differ sharply from the 
talk one hears these days about a new 
and dangerous rift in the Western 
alliance over economic and security 
issues. The challenges facing us are, in- 
deed, important, even fundamental, to 
the future of the alliance. But the debate 
which accompanies these challenges is 
over ways and means of achieving our 
common goals of prosperity, security, 
and peace with justice; it is not over 
basic values or interest. 

I believe it is also important to keep 
in mind that many of our current dif- 
ficulties can be traced to the global 
economic recession from which we are 
now beginning to emerge. This recession 
has been the most severe in the postwar 
period. It has limited the ability of all 
Western governments to meet defense 
goals, and it has strained our common 
commitment to free trade. The fact that 
we are coming through this recession 
with our relationships intact demon- 
strates once again the underlying 
strength of Western institutions. 

Alliance Consultations 

An alliance of free nations can endure 
only if its undertakings can be harmo- 
nized with differing national perspec- 
tives and attract public understandmg 
and support. We pursue this consensus 
through a never-ending process of con- 
sultations. One should not mistake the 
process of consensus-building for disar- 
ray or weakness. 

In reality our relations with Western 
Europe reflect a remarkable shared 



commitment to common ideals and ob- 
jectives. This emerges in both day-to-day 
conduct of business and in our consulta- 
tions at the highest levels. The informal 
meeting of allied foreign ministers at La 
Sapiniere in Canada last October provid- 
ed impetus for resolving the pipeline 
dispute and establishing a process for 
reaching a consensus on the main 
elements of East-West economic rela- 
tions. In Europe last December, Sec- 
retary Shultz built on that consensus 
and achieved agreement on a program 
of studies which will help us give con- 
crete expression to a Western policy on 
economic relations with the East over 
the longer term. 

At the meeting in Canada, at the 
December NATO ministerial in Brussels, 
and in intense consultations here and 
abroad, the Secretary has found strong 
European support for our approach to 
East- West security issues, including the 
President's arms control program. He 
also has found a deep commitment on 
the part of our allies to resolving any 
differences, fairly and with good will, 
through our transatlantic consultative 
mechanisms, such as NATO, our discus- 
sions in various forums with the Euro- 
pean Communities, the Organization for 
Economic Cooperation and Development 
(OECD), and the Coordinating Commit- 
tee for Multinational Security Export 
Controls (COCOM). 



Intermediate-Range Nuclear Forces 

The value of our intense consultative 
process on both the deployment and 
negotiation aspects of the 1979 NATO 
decision on intermediate-range nuclear 
forces (INF) was reflected in the contin- 
uing allied resolve and unity 
demonstrated during Vice President 
Bush's trip to Europe last month. The 
Vice President presented our assess- 
ment of the negotiations and listened 
carefully to what our allies had to say. 
The result was virtually complete accord 
on what we are trying to achieve and 
what is necessary for a satisfactory 
agreement. Most importantly, the Vice 
President was able to dispel a number of 
myths about the alliance's two-track 
decision which have confused publics in 
Europe and the United States. These 



EUROPE 



myths are, in part, the result of the 
enormous Soviet propaganda campaign 
directed at dividing the Atlantic alliance 
and decoupling Europe from the U.S. 
nuclear guarantee. 

The debate over INF is not over. 
People in Europe are concerned about 
nuclear weapons issues, as they rightly 
should be. No other issue is of more im- 
portance in our time. The President has 
a deep, personal commitment to achiev- 
ing an arms reduction agreement at the 
negotiations in Geneva on intermediate- 
range nuclear forces. We and our allies 
are in full agreement that our proposal 
for the complete elimination of the en- 
tire class of longer range, land-based 
INF missiles remain the best and most 
moral outcome. We are negotiating in 
good faith, and ours is not a take-it-or- 
leave-it proposal. Our negotiations in 
Geneva are premised upon sound prin- 
ciples. 

• The only basis on which a fair 
agreement can be reached is that of 
equality of rights and limits between the 
United States and the Soviet Union. 

• As a corollary, British and French 
strategic systems are, by definition, not 
a part of these bilateral negotiations 
and, therefore, not to be considered in 
them. 

• In addition, Soviet proposals — 
which have the effect of shifting the 
threat from Europe to Asia— cannot be 
considered reasonable. 

• As in all areas of arms control, it 
will be essential that an INF agreement 
be underwritten by effective measures 
for verification. 

While we continue our negotiations, 
we are making a major effort to better 
inform our publics about the INF issue. 
As more people on both sides of the 
Atlantic learn more about what the 
Soviets are doing, rather than what the 
Soviets are saying, they are realizing 
that the West must remain united 
behind the NATO decision if Moscow is 
going to have any incentive to negotiate 
an equitable agreement. 

In sum, transatlantic consultations 
are functioning effectively. We should 
not be overly concerned about inevitable 
differences of view on some issues, and 
we should expect and welcome scrutiny 
of our policies and actions by publics on 
both sides of the Atlantic. The alliance 
has repeatedly shown that it is as 
resilient as the peoples and institutions 
which it protects. 



European Integration 

In the past several years, we have seen 
further progress on the long road 
toward West European integration. The 
10 members of the European Communi- 
ty (EC) are seeking to expand their col- 
lective influence in world political as well 
as economic affairs. This is a process 
which we have long supported and will 
continue to support. Through it, the EC 
is playing an increasing role in address- 
ing the West's global concerns. We view 
this greater European activism on the 
world stage as a positive development. 
In expanding their cooperation on 
political matters, the EC countries have 
begun to search for common positions 
on security issues which also concern 
NATO. They have been careful to in- 
sure, however, that questions of defense 
are left to NATO. The EC does not 
have, and does not foresee acquiring, an 
independent defense capability. Our 
partners clearly understand that the 
Atlantic alliance is the vital underpin- 
ning of Western security. 

Conventional Defense Issues 

Last June at the NATO summit, allied 
leaders agreed to a series of initiatives 
to improve NATO's defense capability. 
These included an emphasis on improv- 
ing burdensharing within the alliance, 
applying emerging technologies to con- 
ventional defense, a renewed effort to 
restrict the transfer of militarily rele- 
vant technology to the Warsaw Pact, 
and recognition that the threat to allied 
interests outside of the NATO treaty 
area must be deterred. 

Allied defense spending generally is 
the only sector of European budgets 
that has not been cut as a result of the 
economic recession. Many allies still 
register defense budget growth in real 
terms, some at significant levels. New 
and affordable technologies offer the 
alliance an opportunity to multiply the 
effectiveness of conventional forces. 
Within NATO work is going forward to 
identify the most promising of these 
technologies with an eye to accelerating 
their deployment through allied defense 
industrial cooperation. 

While progress is being made in im- 
proving allied contributions to the com- 
mon defense, recent U.S. legislation has 
caused our allies to question the extent 
of the U.S. commitment to NATO. For 
the first time. Congress has legislated a 
limit to the number of U.S. troops sta- 
tioned in Europe. Production funds have 



been eliminated for the Pershing II 
cut from the cruise missile progran 
There is no money for the U.S. sha 
jointly funded programs with our a 
for the storage of military equipme 
Europe and for allied support pers( 
dedicated to U.S. reinforcements. I 
forts to improve weapons standard 
tion and reduce costs through grea 
allied defense industrial cooperatioi 
must contend with such "buy Amer 
provisions as a specialty metals am 
ment. Initiatives such as those ougl 
be reconsidered and reversed; raisi 
doubts about America's commitmer ' 
the alliance and to constructive rel; ' 
with the allies will only weaken NA j 
and detract from the security we Sf | 
promote. 



Poland's Debt 



DEPARTMENT STATEMENT, 
MAR. 3, 19831 

We understand the official position 
the Polish Government to be that it 
wishes to meet its debt obligations, 
although it admits it cannot make a 
payments due. In fact, Poland has k 
paying only a small fraction of inter 
due on official debt obligations whili 
maintaining its professed desire to i 
obligations under a rescheduling agi 
ment. Western government creditor 
eluding the United States, have refi 
to reschedule Poland's 1982 official ' 
obligations in protest over the impo: 
of martial law in Poland. A substani 
net outflow of payments from Polan 
private and other creditors has con- 
tinued, however. 

While calling the Poles into forn 
default remains an option, it would i 
force the Polish Government to pay 
debt arrears to the West and might 
to an illegal debt repudiation by the 
Poles. 

The implications of the Europea 
Community (EC) statement are not 
clear. We understand the EC wants 
consult with the other Polish credito 
governments in the near future. We 
not wish to speculate on the EC pos 
before such consultations. 



'Made available to news corresponde 
by Department spokesman John Hughes. 



Department of State Bulli" 



EUROPE 



[ssues 

rid recession has put an enor- 
;rain on the world trading 
Nowhere has this been more 
than in the case of agricultural 
[vhere the United States is a large 
icient producer, and the EC coun- 
ive long subsidized inefficient 
6. This has permitted the EC 
y to become a major competitor 
svorld market for agricultural 
jOur farmers are naturally con- 
l We are trying to resolve this 
h in a way which is fair to U.S. 
B and which preserves a liberal 
ten trading system. It will be a dif- 
lUt not impossible task, and I 
jncouragement from the success 
1 last October in negotiating a 
lly successful arrangement on 
hade. The United States and the 
ire able to work together in that 
[e to resolve a vexing situation. 
5 both committed to a similarly 
iative approach on the agricultural 
Issue, and we have already had 
!1 high-level rounds of talks. 



iVest Relations 

(.proach to East- West relations 
oi course, take into account that 
jviet Union is in the midst of its 
iadership transition in 18 years. 
lis accession to the post of 
ill Secretary, Yuriy Andropov in- 
fl from his predecessor a mixed 
! of impressive gains in foreign and 
itic policy and a host of pressing 
ims. 

1 one side of the ledger, the Soviet 
, during the Brezhnev period, 
■ed as a global military power with 
ern and massive military arsenal 
global network of friends, allies, 
lent states that enabled Moscow to 
iQge Western interests around the 
. On the domestic scene, un- 
dented stability was maintained 
■1 Soviet society and the ranks of 
ommunist Party, and slow but 
'/ growth was made in the civilian 
my. 

it the same time, these accom- 
;aents of the Brezhnev period car- 
:vithin them the seeds of the policy 
mas which now confront his suc- 
rs. The unprecedented military 
ip and geopolitical expansionism of 
rezhnev period generated a strong, 
ated, American response and 
lately raised the risk for the Soviet 



Union of imperial overextension in 
places like Afghanistan. The domestic 
stability of the Brezhnev era ultimately 
degenerated into immobility as the 
politics of consensus became increasingly 
inadequate to deal with mounting 
economic problems and the deep-seated 
malaise of Soviet society. Thus, by the 
time of Brezhnev's death, the new 
Soviet leadership faced a set of mutually 
reinforcing foreign and domestic prob- 
lems as severe as that confronted by any 
Soviet leadership since the death of 
Stalin. 

Internationally, detente with the 
United States— which was the center- 
piece of Brezhnev's foreign policy— has 
collapsed, and a more confident and 
assertive Administration has taken 
charge in Washington. Despite an un- 
precedented Soviet "peace offensive" in 
Western Europe, NATO remains united 
in its determination to follow through on 
the two-track alliance decision on INF. 
At a time when its own resources are 
under greater strain, the Soviet Union 
must cope with continuing discontent 



and potential instability in Eastern 
Europe and a stalemated war in 
Afghanistan. Farther afield, the burdens 
of empire continue to grow as Soviet- 
supported regimes in Africa, Asia, the 
Middle East, and Latin America seek to 
cope with a host of challenges, many of 
their own making. 

At home, economic growth rates 
continue to decline, threatening the 
regime's ability to maintain growth in 
defense capabilities without cutting liv- 
ing standards. On this political side, the 
advanced age of the top leadership 
group suggests that we may be at the 
beginning of a necessarily far-reaching 
transition in the Soviet leadership over 
the next decade. 

It is too early to make any definitive 
judgments about the approach which 
Andropov and his colleagues will take to 
these problems. Andropov almost cer- 
tainly played a major role in the person- 
nel shifts made since Brezhnev's death, 
which appear to be aimed at putting in 
place a network of younger and possibly 
more energetic supporters capable of in- 



12th Report on Cyprus 



MESSAGE TO THE CONGRESS, 
JAN. 27, 19831 

In accordance with the provisions of Public 
Law 95-384, I am submitting the following 
report on progress made during the past 60 
days toward reaching a negotiated settlement 
of the Cyprus problem. 

The intercommunal negotiations between 
Greek Cypriot and Turkish Cypriot repre- 
sentatives recessed from December 4 until 
mid-January, a period during which the 
United Nations Secretary General's Special 
Representative, Ambassador Gobbi, visited 
New York and Geneva on U.N. business. 

On December 1, U.N. Secretary General 
Perez de Cuellar submitted his latest semi- 
annual report on Cyprus to the Security 
Council. In the report, a copy of which is at- 
tached, the Secretary General reviews prog- 
ress in' the peacekeeping operations of 
UNFICYP and in the parallel humanitarian 
assistance programs, ile also reports the in- 
tercommunal negotiations continue to focus 
on the "evaluation" previously submitted by 
Ambassador Gobbi to the two sides. This ap- 
proach, the Secretary General reports, is the 
best means available to provide a "structured, 
substantive" method of discussing the dif- 
ferences. He states further that the discus-^^ 
sions "remain cooperative and constructive" 
and that the interlocutors, having essentially 
completed discussion of constititutional 
issues, will now focus on territorial matters. 
Perez de Cuellar observes that the task of 
developing "an overall package deal" should 



be undertaken soon in the talks and that he is 
confident that, "with the political will" on 
both sides, such a package can be accom- 
plished. 

Subsequent to the Secretary General's 
report, on December 14, the Security Council 
voted unanimously to extend the mandate of 
the U.N. forces in Cyprus until June 15, 
1983. 

We fully concur with the Secretary 
General's assessment. We remain in very 
close touch with him, his staff, and, in par- 
ticular, with Ambassador Gobbi. During the 
period the Special Cyprus Coordinator, 
Christian A. Chapman, visited New York 
twice to discuss the situation with senior 
U.N. officials. At present we, the U.N. of- 
ficials, and the parties to the negotiations 
doubt much progress can be made during the 
present electoral campaign in Cyprus. The 
possibilities for progress should improve, 
however, after the February 13 election. 

This Administration continues strongly to 
support efforts to find just and lasting solu- 
tions for the serious problems facing the peo- 
ple of Cyprus. 
Sincerely, 

Ronald Reagan 



'Identical letters addressed to Thomas P. 
O'Neill, Jr.. Speaker of the House of Repre- 
sentatives, and Charles H. Percy, chairman 
of the Senate Foreign Relations Committee 
(text from Weekly Compilation of Presiden- 
tial Documents of Jan. 31, 1983.) ■ 



1983 



EUROPE 



suring execution of his policy once it is 
more fully developed. These personnel 
changes have been more numerous than 
Khrushchev's or Brezhnev's at com- 
parable stages in their incumbencies, but 
they are still essentially limited in scope 
as Andropov functions within a basically 
unreconstructed Politburo. 

With regard to policy, the hallmark 
of Andropov's first 100 days has been 
continuity in both the domestic and 
foreign arenas. In domestic policy, 
Andropov has been extraordinarily frank 
in public about Soviet economic dif- 
ficulties and the need for greater 
discipline throughout the economy. This 
theme has been implemented in policy 
through a campaign to enforce labor 
discipline on the shop floor and to 
replace a number of officials in the 
economic bureaucracies. These dismis- 
sals have been accompanied by an an- 
ticorruption campaign in the Soviet 
media. 

Beyond this clear determination to 
administer a dose of discipline to the ail- 
ing Soviet economy, Andropov has 
revealed little of whatever longer term 
plans he may have for getting the coun- 
try moving again. This may reflect cau- 
tion in the face of the extremely for- 
midable structural and bureaucratic bar- 
riers that would impede any effort at 
far-reaching and meaningful reform of 
the Soviet economy. It may also reflect 
Andropov's desire to solidify his own 
political position before staking out a 
more innovative policy position. 
Whatever the reason," there is littie 
evidence yet to suggest that Andropov 
and his colleagues are ready to under- 
take important reforms of the Soviet 
economy. 

In foreign policy, the emphasis has 
also been on continuity. The number one 
objective of Soviet policy remains to 
derail INF deployments in Europe. We 
can expect the Soviet anti-INF campaign 
to accelerate now that the German elec- 
tions are over. While the primary focus 
of Soviet arms control propaganda is 
INF, Moscow's larger objective is to 
complicate and, if possible, undermine 
our efforts to rebuild Western military 
strength. However, as we make clear 
that in the absence of an acceptable 
agreement, we will not be diverted from 
our INF goal, the Soviets may negotiate 
more seriously. We are hopeftil that this 
will prove to be the case. 



In the Far East, the Soviets con- 
tinue to seek greater manuever room 
through their talks with China— the sec- 
ond round of which has just begun. 
Although neither side in these talks 
seems inclined to make concessions that 
would open the way for substantial 
movement forward in the dialogue, the 
Soviets almost certainly view this proc- 
ess as positive and will seek to keep it 
going. 

Moscow has not been able to achieve 
even a modest degree of improvement in 
its relations with Japan. Indeed, the 
heavy-handed public threats made by 
Soviets following Prime Minister 
Nakosone's visit to the United States 
have further damaged Soviet-Japanese 
relations. The mounting Soviet military 
capability in East Asia and the Pacific 
only reinforces this posture of intimida- 
tion. 

The new Soviet leadership has as yet 
developed no new discernible strategy 
for dealing with the dilemma of 
Afghanistan. The Afghan resistance con- 
tinues to fight with courage and 
resourcefulness and to deny the Soviets 
a victory on the ground. Internationally, 
the occupation remains a major impedi- 
ment to improvement of Soviet relations 
with the Islamic world and with the 
West, including the United States. 
Beyond strengthening its existing 
military supply and assistance relation- 
ships with Syria, the Soviet Union re- 
mains on the sidelines in the Middle 
East as U.S. diplomacy seeks to move 
the region toward peace. 

U.S. Policy 

The Soviet record of the past decade 
compels us to be realistic and sober in 
our calculation of our policy toward the 
Soviet Union, and particularly in our 
assessments of prospects for an im- 
provement of relations. At the same 
time, it would be unrealistic and short- 
sighted of us to exclude the possibility of 
a change in Soviet behavior that would 
make an improvement in relations possi- 
ble, particularly as a new Soviet leader- 
ship wresties with its policy options. If 
in these circumstances Andropov and his 



colleagues encounter a firm and ui 
West under revitalized American 1 
ship, there is a possibility that pro, 
can be made toward a real and las 
reduction of East- West tensions. / 
same time, it is essential that we 
demonstrate the will and the capac 
correct the military imbalances wh 
have been created by the Soviet m 
buildup of recent years. 

With regard to regional issues 
do not seek to prevent the Soviet ' 
from pursuing its foreign policy, b 
do insist that it do so within establ 
rules of international law and with 
restraint expected of a major nucli 
power. Against the background of 
pansionism by the Soviet Union ar ; 
allies over the past decade, we mu 
sure that we follow through on sec j 
commitments made to our Third V 
allies and friends. In addition, we i 
continue to seek regional settlemei 
in the Middle East and southern A 
where conflicts would otherwise pi 
fertile ground for the expansion of 
Soviet influence. 

The fundamental difference be 
U.S. and Soviet societies is nowhei 
more apparent than in the area of 
human rights. Our objective is clea 
encourage Soviet fulfillment of the 
obligations which it freely assumec 
under the Helsinki Final Act and o 
international agreements on humaii 
rights. We will also continue to spa 
out on the Soviet human rights rec< 
for to fail to do so would be neithei 
morally defensible nor effective in : 
porting those Soviet citizens who r 
repression in the cause of human rr 
In all these areas, as well as in 
U.S. -Soviet bilateral relationship, w 
prepared for an improvement in re ii 
tions on the basis of the compreher « 
agenda we have established over th ■ 
past 2 years. At the same time, we ui 
make a clear distinction between w is 
and actions. It is up to the Soviet 1( l« 
ship to determine whether its inten s 
lie in the direction of changes in So 't 
behavior that would make possible : 
meaningful and lasting reduction of » 
sions. If so, the Soviet Union will fi a 
ready partner in the United States. 



'The complete transcript of the hea)B 
will be published by the committee and 1 
be available from the Superintendent of 
Documents, U.S. Government Printing ( 
fice, Washington, D.C. 20402. ■ 



Department of State Bui tin 



it of Austrian Chancellor Kreisky 



EUROPE 



•nifi'lUo- Bruno Kreisky of the 
>,' ni Austria made an official 
,, .-.,-// to Washington, D.C., 
rm ' ;. 198S, to meet with Presi- 
,n.iii,i iind other government of- 

• lh:iri>iii are remarks made by 
jrnt h'ragan and Chancellor 
}rr their meeting on Fehru- 



ent Reagan 

low, of course, that our guest 
)day has been Chancellor Kreisky 
Republic of Austria. And in the 
of our meeting in the Oval Office 
r working lunch today, Chancellor 
y and I have had the opportunity 
;uss two areas of the world that 
al to the maintenance of peace 
iman dignity— the Middle East 
Dland. 

le Chancellor is a man of extensive 
jence in international affairs. And 
leased that I was able, like the 
!J American Presidents before me, 
Se the opportunity to exchange 
Jwith him. Our bilateral relation- 
iHth Austria remains close and 
rative. 

Jnd I was also pleased today to be 
lb tell him and to have his im- 
|te approval of my intention to 
iate as our next Ambassador to 
ilia Helene von Damm, who has 

Srith our Administration from the 
eginning. 
s been a pleasure to welcome 
ifcellor Kreisky to Washington again 
lb reaffirm our friendship with the 
ian people. 




Chancellor Kreisky 

I am very happy that today I had this 
opportunity for an exchange of views 
with you. 

The relations between the United 
States and Austria are completely 
without frictions. They are characterized 
by long lasting friendship between the 
two peoples and by close cooperation 
between the two governments. 

Austria today, at the time when it is 
prosperous and in a good position, is still 



grateful for all which has been done dur- 
ing more than 35 years by the United 
States. And all this has established an 
unshakeable friendship which connects 
the great democracy of the United 
States with the small Republic of 
Austria. 

I am extremely grateful to tell you 
that the Austrian Republic and the 
government and the federal president 
would be happy to see Mrs. von Damm 
in Austria as the next Ambassador of 
the United States. 



'Text from White House press release. 



EUROPE 



Visit of Norwegian Prime IViinister Wilioch 




Prime Minister Kaare Wilioch of 
Norway made an official working visit 
to Washington. D.C., February 16-18, 
1983. Following are remarks made by 
President Reagan and Prime Minister 
Wilioch after their meeting on Febru- 
ary 18^ 

President Reagan 

I can tell you that I'm very pleased— 
and we all are— with the meetings that 
we've had with Prime Minister Wilioch. 
Norway and the United States enjoy 
close ties that long predate our alliance, 
and it's always a happy occasion when 
we fmd a friend like Prime Minister 
Wilioch paying us a visit. 

Our discussions today come at a 
critical time for our alliance, a time 
when it's more important than ever for 
freedom-loving people on both sides of 



the Atlantic to reaffirm their shared 
security interests. For our part, I assure 
the Prime Minister of a firm American 
commitment to the preservation of 
peace and freedom and of our continuing 
efforts in coordination with our allies in 
the North Atlantic Community to 
achieve reductions in the military 
arsenals of both the East and the West. 

The Prime Minister and I also 
discussed general NATO security issues 
and the importance of Norwegian 
energy supplies to the West. Our talks 
on all these matters were positive and 
upbeat, as was our discussion of the in- 
ternational economic issues. 



I'm deeply impressed that in tf 
challenging times Norway and the 
United States— two long-time frie: 
continue to have strong commonal 
interests. I hope that Prime Minis) 
Wilioch found the visit as useful a; 
and I look forward to maintaining 
close and friendly relationship thai 
traditional between the leaders of 
people and our two countries. It's 
good to have you here. 

Prime Minister Wilioch 

I would first like to thank you for 
gracious words. My visit to Washi:- 
my discussions with a number of t ' 
American leaders, and of course, i 
ticular, the meeting with you toda} 
indeed, been very, very useful to u 
And I would like to add that we fe^ 
here, as we felt in Minnesota earli' 
week, how close our two nations a 

I have had the opportunity to 
sent Norwegian views on a numbe 
problems facing us today. The moi 
portant current issue is the questi( 
disarmament and arms control, an 
particular, the Geneva negotiation: 

The Western goal remains cleg 
want to reach a balance of forces i 
Europe with as few nuclear weapo 
possible. The zero option with no ii 
termediate nuclear weapons on eiti 
side is the optimum outcome. We I 
that the United States will make 
possible efforts to get an agreemei 
with the Soviet Union as close to t 
optimum as possible. And to achie\ 
this, it is of the utmost importance 
the allies stand united. 

We also had the opportunity to 
cuss a number of other issues, , 
President mentioned. We discussed' 
among other issues, the economic c 
look and the possibilities for imprG^ 
international cooperation to achievf 
revival of our economies and a redi 
of unemployment. 

I wish to thank you once again i 
wholeheartedly for your kindness a 
for all the useful discussions we ha^ 
had. 



'Text from Weekly Compilation of 
Presidential Documents of Feb. 21, 198' 



Department of State Bu ti 



t of Queen Elizabeth II 



EUROPE 



Majesty Queen Elizabeth II 

I official visit to the United 
'ebruary 26-March 7, 1983. 
owing is an exchange of dinner 
stween President Reagan and ^ 
jesty at the De Young Museum in 
incisco on March 3. ' 

^nt Reagan 

iajesty, I welcome you this eve- 
j behalf of the American people 
iparticular, on behalf of the peo- 
ny home State of California. [Ap- 
j We're honored by your presence 
ountry and in this State, 
fitting that this evening's ban- 
ould be held in this place and in 
I. The De Young Museum is one 
rica's great cultural landmarks, 
inks to Her Majesty's gracious- 
e will soon have Leonardo da 
horse drawings— some 50 of 
from the Royal Library of Wind- 
tie that will be touring the 
States. [Applause] From 
ber 1985 through February 1986, 

II be on view in the California 
of the Legion of Honor. The tour 
janized by the Fine Arts 
ns of San Francisco, the National 

of Art of Washington, and the 
;titute of Chicago. 
It particular tour and this cultural 
rk that we're in tonight reflects 
ersity of our people who have 
unique nation from many cultures 
firm foundations of democracy 
V which, in large measure, we in- 
^. from Britain. It represents a 
don we share with our British 
s: the peaceful furtherance of art 
ience for the enrichment and 
|ss of all mankind, 
i also appropriate to recall that, in 
sal way, San Francisco, which has 
e home to so many different peo- 
spresents the culmination of our 
I s great wartime alliance. Of 
E, the local links to great Great 
SI go back much further. One of 
'st titled tourists to visit this area, 
ancis Drake, arrived long before 
y did. Not only was there no room 
i inn, there was no inn. [Laughter] 
■5 greatest hours came centuries 
sin August of 1941, President 
iVelt and Prime Minister Churchill 




set down in the Atlantic Charter their 
hope "to see established a peace which 
will afford to all nations the means of 
dwelling in safety within their own 
boundaries, and which will afford 
assurance that all the men in all the 
lands may live out their lives in freedom 
from fear and want." 

And almost 4 years later in this city, 
America, Britain, and 44 other nations 
formed the U.N. Organization as a 
means of putting those great principles 
of the Atlantic Charter into practice. 

Unhappily, subsequent events have 
continued to put our values and our 
ideals to the test. We have seen con- 
tinued war, terrorism, and human op- 
pression in too many quarters of the 
globe. We are challenged to restrain and 
reduce the destructive power of nuclear 
weapons. Yet we must maintain our 
strength in the face of the enormous 
military buildup of our adversaries. And, 
nationally and internationally, we face 
the challenge of restimulating economic 
growth and development without re- 
kindling inflation. 

All this, we can do. We will find the 
strength to meet these dangers and face 
these challenges because it beats within 
the hearts of free societies and free 
men. We need only look about us for in- 
spiration. This beautiful city and this 
great State testify to the power and the 
vision of free men inspired by the ideals 



and dedication to liberty of John Locke, 
Thomas Jefferson, John Stuart Mill, and 
Abraham Lincoln. 

In the words of a great American 
and warm friend of Britain, Franklin 
Roosevelt: "The only limit to our realiza- 
tion of tomorrow will be our doubts of 
today. Let us move forward with strong 
and active faith." 

Happily and conscious of the honor 
that is ours tonight, I ask you to join me 
in a toast to Her Majesty the Queen. 

Her Majesty Queen Elizabeth II 

Thank you for the very kind things you 
have said tonight. It is only 9 months 
since we had the great pleasure of hav- 
ing you and Mrs. Reagan stay with us at 
Windsor. Now we have had the 
memorable experience of visiting you in 
your home State of California and of 
seeing your ranch at Santa Barbara. I 
knew before we came that we have ex- 
ported many of our traditions to the 
United States, but I had not realized 
before that weather was one of them. 
[Laughter. Applause] But if the climate 
has been cool, your welcome and that of 
the American people have been wonder- 
fully warm. We are very grateful for 
your charming hospitality and for the 
generous reception we have had 
everywhere since our arrival in Califor- 
nia last week. 

The past few days have been a vivid 
and sometimes poignant reminder of the 
human drama and achievement which 



EUROPE 



account for the greatness of America to- 
day. We have seen some magnificent 
technological achievements: the space 
shuttle which has begun to turn the 
adventure of space exploration into the 
equally adventurous but more tangible 
reality of scheduled space travel; Silicon 
Valley which has brought the world of 
yesterday's science fiction into today's 
home office, and classroom, and into 
Buckingham Palace too. [Laughter] 

This image of the United States at 
the forefront of technological invention 
is one of which you are rightly proud as 
we are proud of our continued inven- 
tiveness in an era of pressing competi- 
tion. But the miracle of the space shuttle 
or of the silicon chip lies not in the 
wizardry of electronics but in the genuis 
and shared dedicated determination of 
men and women. That is what speaks 
loudest in California. 

I think of the families who struggled 
against impossible odds leaving their 
dead in places whose names still bear 
witness to their desperation to make 
their way to the west coast. In today's 
prosperity, their fortitude is often 
overlooked. But it is their character and 
courage which have permeated each suc- 
ceeding generation. 

I have seen that courage at work for 
myself this week as many California 
families have coped with the hardship 
brought by the storms and tornado 
which have hit this State so hard. 

Prince Philip and I made a 
memorable visit to your country in 1976 
to share with so many Americans in 
celebration of your bicentenary. Nine- 
teen eighty-three marks another bi- 
centenary—the signing of the Treaty of 
Paris, formally bringing the War of In- 
dependence to an end. 

Two years before that, British 
troops had marched to surrender at 
Yorktown to the tune of "The World 
Turned Upside Down." So it must have 
seemed to men at that time. But what 
would our world, 200 years later, be like 
if theirs had not been turned upside 
down? 



Since then, the hand of friendship 
has reached out from your shores and 
ours at critical periods in our history to 
insure not just our own survival but the 
survival of freedom itself. 

In 1939 my father was the first 
reigning British sovereign to visit 
America, and he and President 
Roosevelt talked long and earnestly 
about the coming crisis. At the end of 
their visit, Mrs. Roosevelt wrote that "in 
time of danger," as she put it, 
"something deeper comes to the surface 
and the British and we stand firmly 
together with confidence in our common 
heritage and ideas." 




At the President's ranch. 



By far the most important idea 
which we share is our belief in free 
as you made clear in your speech a 
Westminister last year. It is an ide 
whose power is such that some mei 
go to a great length to suppress it 
others will to keep it alive, as our t 
countries have fought to keep it ali 

We are deeply grateful for the 
unstinting contribution of the Unit* 
States to the maintenance of the 
Western alliance. For our part, no 
who knows the British and their hi 
could have any doubt about our ste 
fastness as an ally or our willingne 
stand up in defense of the values w 
we hold dear. 

I say that not to strike a solem 
note but to state a simple truth. "W 
have had a visit which has been sp 
ular and has fulfilled a longstandin 
bition on my part to visit Californi; 
the west coast. What better time t 
when the President is a CaliforniarJ 
[Laughter] i 

We have enjoyed ourselves anc i 
greatly appreciate the warmth of j i 
hospitality. What will remain after i 
is more significant— the cementing i 
relationship. From time to time, fr i 
ships must be publicly reaffirmed, 
visit has given me the opportunity i 
reaffirm the ideals which we share '• 
the affection that exists between oi I 
peoples without which the formalit I 
alliance would be meaningless but 1 1 
the certainty of which our two coui I 
continue to draw strength. I 

I raise my glass to you and to 1 1 
Reagan, to the friendship between 
two countries, to the people of Cali » 
nia, and to the people of the Unitec ' 
States. 



'Text from White House press rele: ' 



72 



Department of State Bu ti 



rtAN RIGHTS 



fnan Rights Progress 
:l Salvador 



ott Abrams 

ktement before the Senate Foreign 

E Committee on February 2, 
Abrams is Assistant Secretary 
n Rights and Humanitarian 

[Itant secretary abrams, 

lUARY 2, 1983 

ome this opportunity to appear 
iyou today to discuss the human 
eituation in El Salvador. As the 
lation we have submitted to the 
[ttee indicates, we believe the 
8 rights situation in El Salvador 
iproved over the last 6 months. 
!;heless, it is still the case that 
ill violence is extraordinarily wide- 
i in El Salvador. Innocent civilians 
dng their lives there. This being 
',ie, the human rights situation in 
jvador necessarily confronts us 

troubling question: In view of the 
i. rights violations occurring there, 
fe the justification for American 
ay assistance to the Government of 
iivador? Why not cut off this mili- 
ssistance and disassociate 
wes completely from the human 
t violations in that country? 
1 establishing the certification proc- 
ongress has set certain precondi- 
s'or our military assistance. We 
S5 that these conditions have been 
Jhe behavior of the Salvadoran 
ni Forces is better than it was 6 or 
cths ago; the overall level of 
ece continues to decline; the land 
)n program is proceeding; political 
))n is underway. But these condi- 
inf certification, though they permit 
, D not compel it. I hope we will look 
a not only at the narrowly defined 
rt of the certification but beyond 
s terms to the overall situation in El 
vdor. We must do so to achieve any 
lent view of American interests in 
itountry. 

1 Salvador is a country with little 
i>-;ion of moderate, democratic, re- 
Tst politics but with a long history 
jverty, repression, military rule, 
^hce, and fear. Today there are two 
a ies which exist side by side in El 
il'idor: violence and reform. It is 
itvorthy that the conditions for cer- 
'iction which you have set require us 

ialyze both. 

'he violence has destroyed a sub- 
a ial portion of El Salvador's 



economy, has created hundreds of 
thousands of displaced persons and 
refugees, and has largely subverted the 
system of law and justice in El Salvador. 

But side by side with this record of 
violence is another reality: reform. For 
El Salvador is a country which has 
undertaken an extraordinary program of 
economic reforms. The data we have 
presented make it quite clear that these 
reforms continue and that efforts to 
derail them have failed. Moreover, El 
Salvador is beginning to try democratic 
politics. With vast public support, an 
election was held last March, and a con- 
stituent assembly now sits debating the 
country's future and writing a new con- 
stitution. Next year there will be a 
presidential election. El Salvador is 
beginning what is always an extremely 
difficult process: the transition to 
democracy. The habits of moderation, 
compromise, and submission to law are 
not easily learned; and they will not be 
easily learned in El Salvador. The prog- 
ress already made is remarkable. El 
Salvador now has a civilian president 
and cabinet and a vigorous political par- 
ty structure. 

The ultimate solution to the crisis of 
violence in El Salvador is this process of 
building democratic institutions. The 
guerrillas will not be defeated in one 
great battle some day; rather, they will 
be defeated because the process of 
political and economic reform makes 
them utterly irrelevant to the future of 
El Salvador. 

Our purpose in El Salvador is two- 
fold: to encourage the process of reform 
and to assist the army in fighting the 
guerrillas. For if one thing is certain in 
El Salvador, it is this: Guerrillas armed 
and led by Communists who are allied 
with Moscow, Havana, and Managua are 
not fighting for human rights and are 
not fighting for reform. They are fight- 
ing for power, and we know from the 
models they seek to emulate that they 
mean power for themselves, power 
never to be shared with the people of El 
Salvador. 

It is not certain that the Govern- 
ment of El Salvador and the people of 
El Salvador will win this struggle for 
peace and for reform. On the extreme 
left and extreme right, people with 



radically different views share a com- 
mon detestation of democracy and a 
common determination to block El 
Salvador's progress toward reform and 
peace. But it is quite clear that their 
aims do not have the support of the vast 
majority of the people of El Salvador. 
Our policy is to help the people of El 
Salvador win their struggle. Because of 
the strength of the right- and leftwing 
extremists and the outside support the 
guerrillas receive from various Marxist 
states, reform in El Salvador depends in 
no small part on our willingness to help. 

It is a task which many Americans 
resist because it enmeshes us in the 
violent, sometimes obscure, always com- 
plex, life of a small and poor society at 
the most difficult stage in its history. All 
of us wish sometimes we could turn 
from these kinds of involvements in 
regions of turmoil. But let us face the 
fact that we cannot, if we take seriously 
our responsibility to promote democracy 
and respect for human rights. 

Those who seek peaceful change in 
El Salvador look to us because they 
know that their cause may well be 
doomed without us, without our help. 
We can, of course, turn away; but let us 
not be under any illusions about the 
results of that action. It would lead to 
more and more violence in El Salvador. 
We have a responsibility, if we take 
seriously a commitment to help the 
cause of democracy in El Salvador, to 
give the Salvadoran people the help they 
need. If we refuse, with the full 
knowledge that our refusal will 
strengthen extremists of the left and 
right, let us, at least, acknowledge that 
we act out of a desire to avoid political 
controversy. But let us not delude our- 
selves into thinking that such an act 
would have anything to do with advanc- 
ing the cause of human rights in El 
Salvador, which is the common goal that 
brings us together here today. 



'The complete transcript of the hearings 
will be published by the committee and will 
be available from tne Superintendent of 
Documents, U.S. Government Printing Of- 
fice, Washington, D.C. 20402. ■ 



pi 1983 



INTERNATIONAL LAW 



U.S.-lran Claims Tribunal: 
Recent Developments 



by James H. Michel 

Statement before the Subcommittee 
on International Economic Policy and 
Trade of the House Foreign Affairs Com- 
mittee on December 7, 1982. Mr. Michel 
is Deputy Legal . 



It is a privilege to appear before you to- 
day to testify in support of the proposed 
legislation relating to the settlement of 
claims against Iran. 

The Algiers Accords 

As you know, under the Algiers accords, 
which led to the release of the American 
hostages held in Tehran, the United 
States and Iran agreed to establish an 
international arbitral tribunal, the Iran- 
U.S. Claims Tribunal. This tribunal- 
composed of three members appointed 
by the United States, three by Iran, and 
three third-country arbitrators chosen by 
the six party-appointed members— was 
empowered by the accords to decide 
claims of U.S. nationals against Iran 
arising out of debts, contracts, ex- 
propriations, and other measures affec- 
ting property rights. The tribunal may 
also hear certain Iranian claims against 
the United States. Awards issued by the 
tribunal are binding on the parties and 
are enforceable in the courts of any na- 
tion. To assure payment of awards in 
favor of U.S. nationals, a security ac- 
count was established at a subsidiary of 
the Netherlands Central Bank, with an 
initial deposit of $1 billion, using certain 
Iranian assets which had been frozen in 
the United States. Under the accords, 
Iran has an obligation to replenish the 
security account when payments to suc- 
cessful U.S. claimants cause the amount 
in that account to fall below $500 
million. 

The accords established the basic 
framework for the operation of the 
tribunal. They set filing deadlines for 
claims, adopted the arbitration rules of 
the U.N. Commission on International 
Trade Law (UNCITRAL) as the basis 
for the tribunal's procedural rules, 
designated The Hague as the seat of the 



tribunal, and provided that the expenses 
shall be borne equally by the two gov- 
ernments. In addition, the accords 
stipulated that claims under $250,000— 
so-called small claims — must be 
presented to the tribunal by the govern- 
ment of the claimant. So-called large 
claims— those of $250,000 or more- 
were to be presented directly to the 
tribunal by the claimant. The accords 
also gave the tribunal the authority to 
decide disputes between the parties con- 
cerning interpretation or application of 
this agreement. 

Operation of the Tribunal 

When the tribunal first convened in May 
1981, the arbitrators confronted the 
monumental task of "setting up 
shop" — establishing a claims registry, 
hiring essential staff, finding competent 
interpreters and translators to enable 
proceedings to be conducted in both of- 
ficial languages, adopting special rules 
of procedure, and deciding a series of 
threshold issues of jurisdiction and inter- 
pretation on which the parties could not 
agree. 

More than 4,000 claims have been 
filed with the tribunal: 2,795 small 
claims and approximately 650 large 
claims of U.S. nationals against Iran; 
about 100 contract disputes between the 
two governments; more than 200 claims 
of Iranian banks based on standby let- 
ters of credit and some 200 based on 
disputed amounts of deposits in U.S. 
banks; and several hundred claims 
raised by Iran and Iranian nationals. In 
order to expedite hearing this tremen- 
dous case load, the tribunal divided itself 
into three chambers, each headed by a 
third-country arbitrator and containing 
an American and an Iranian arbitrator. 
While the chambers hear the individual 
claims, the full tribunal convenes to 
decide interpretation disputes and 
significant legal issues common to many 
claims when those issues are relin- 
quished by the chambers. 

The tribunal is a unique institution, 
representing one of the most ambitious 
and complex international claims ad- 
judication programs ever undertaken. To 
appreciate its progress to date, you 



must keep in mind that it labors ui' 
difficult circumstances. The tribun 
operation is affected by the contin I 
absence of diplomatic relations bet j 
the United States and Iran and tb 
ongoing domestic revolution and e 
nal war of Iran. 

Against this background, the 
tribunal has made considerable pn | 
in the past year and a half. During ' 
first year of operation, the full tril \ 
ruled on several major issues, sett i 
the framework for future decision; ' 

In an important decision prote | 
U.S. nationals who chose not to fil ' 
claims with the tribunal, the tribui ' 
decided that it had no jurisdiction ' 
claims by one government against ' 
nationals of the other. As a result 1 
decision, Iran withdrew over 1,40( 
claims from the tribunal. ' 

In another decision, the tribur \ 
that settlements between arbitrat ' 
parties could be paid from the sec > 
account when the tribunal approvi i 
settlement and issues an award oi ' 
agreed terms. This decision benef 
American claimants in two ways. ' 
courages settlements by making t ' 
security account available for this • 
pose. At the same time, it assures 
American claimants who are unab ' 
obtain settlements that the securi' i 
count will not be depleted unfairlj ' 
all settlements to be paid from tht ' 
count are subject to tribunal revie 

The tribunal has also decided ( 
terest earned on the security acco ' 
should not be paid to Iran but sho 
continue to be credited to a sepan ' 
suspense account in the depositor] \ 
Interest may be used by Iran to r< 
plenish the security account. Until 
claims are decided and all awards i 
however, use of the interest for ai 
other purpose will require the agri ' 
ment of both the United States an 
Iran. 

The tribunal recently issued ai • 
major decision in the choice-of-fon ' 
forum selection cases. Here, the tu 
had to decide whether its jurisdict 
eluded claims brought under contr 5 
within contained language referrir ; 
tractual disputes to Iranian courts 1 
essence, the tribunal held that onl; t 
contracts which explicitly state thi J 
disputes are to be referred only tc n 
petent Iranian courts are outside t' 



74 



Department of State B ' 



INTERNATIONAL LAW 



jtion of the tribunal. It should be 
^at the tribunal did not dismiss 
lithe claims found to contain such 
ji selection clause but remanded 
(' them to the individual chambers 
etermination of whether any 
;gal bases exist under which the 
nl may retain jurisdiction. The 
nl declined to decide whether any 
Stual election of an Iranian forum 
?rceable in light of the dramatic 
3S in the Iranian court system 
'le contract was signed and the 
bconcerning the ability of 
nan claimants to obtain a fair 
^ in the present Iranian courts, 
pre, the tribunal's decision will 
f rate to bar a claimant from rais- 
(ih arguments in another forum, 
ij a U.S. court, if the claim is 

I sly found to be outside the 
I's jurisdiction. 
Kth a number of interpretive ques- 
^solved, the tribunal has turned 
:jntion to arbitrating the individual 
ilof Americans. There is no ques- 
tat the pace has been slow. The 
.ijis have repeatedly requested ex- 
as of filing dates, interposed many 
ci-tional and procedural questions, 
ri^de numerous untimely demands. 
,()delaying tactics probably reflect 
ie real burden faced by Iran in 
X with so many claims and the 
in desire to defer rulings on the 
tof claims they oppose. We have 
^dly expressed our concern in the 
upst possible terms to the tribunal 
itts tolerance of Iranian delays and 
rsulting slow pace of operation. We 
jeen some progress, for example, 
S automatic approval of requests 
ie extensions. 

[spite the delays, the tribunal has 
progress in arbitrating the private 
r. It has assigned all 650 large 
r to the individual chambers for 
•ig, and the chambers have set 
ii.i response dates for almost all of 
;e:laims. Iran has filed approximate- 
f statements of defense so far. By 
td of the year, the three chambers 
live held approximately 75 prehear- 
oiferences. Over 20 more have 
fy been scheduled for early next 
rWhile only about 20 hearings on 
srits have been held so far, about 
' re are scheduled for the coming 
lis. To date, the tribunal has issued 
aards in favor of American claim- 
<.^ approving settlements, and 2 



contested awards, for a total of about $8 
million. In addition, the tribunal has 
dismissed 2 claims for lack of jurisdic- 
tion. 

The tribunal registry has completed 
serving the statements of claim for the 
2,795 small claims on the Iranian agent 
in The Hague. The tribunal is currently 
deciding how most efficiently to handle 
the arbitration of the small claims and is 
considering the appointment of experts 
or special masters to assist in this 
process. 

The tribunal's record to date, while 
less than satisfactory in several 
respects, compares favorably with 
previous claims proceedings. Histori- 
cally, Americans who have asserted 
claims against foreign governments have 
normally had to wait many years and 
often have recovered only a fraction of 
their actual losses. Here, only 4 years 
have passed since the beginning of the 
Iranian revolution, in which longstand- 
ing commercial ties were destroyed and 
huge losses were incurred by Americans 
living or working in Iran, Resolution of 
their financial disputes with Iran is now 
foreseeable. An agreement to adjudicate 
American claims against Iran has been 
signed, a fund from which to pay awards 
has been established, an arbitration 
tribunal has been set up and is now 
operational, and arbitration of individual 
claims has begun in earnest. 

Costs to the U.S. Government 

The U.S. Government has incurred, and 
will continue to incur, substantial ex- 
penses in seeking to make the tribunal 
an effective forum in which deserving 
American claimants can obtain timely 
relief. As I mentioned earlier, the ac- 
cords divided the tribunal expenses 
equally between Iran and the United 
States. The United States also pays one- 
half of the security account management 
fees. The Federal Reserve Bank of New 
York incurred expenses in transferring 
Iranian assets and will incur further ex- 
penses in processing payments of tri- 
bunal awards. The State Department 
and other government departments have 
devoted, and will continue to devote, 
substantial resources to maintaining the 
arbitral process. The exact total of 
future U.S. expenses depends on the 
lifespan of the tribunal and the extent to 
which some claims can be settled 



through negotiation rather than arbitra- 
tion. However, we estimate that the 
government's expenses may well exceed 
$80 million. 

Tribunal Expenses. Tribunal costs, 
shared by the United States and Iran, 
consist primarily of the salaries and 
allowances of tribunal personnel; rental, 
operation, and maintenance of the tri- 
bunal building; and necessary supplies 
and equipment. 

During FY 1981, the U.S. contribu- 
tion was $303,000; during FY 1982, it 
was $2.05 million. The tribunal's recent- 
ly adopted budget calls for payment of 
$2,083 million during the period July 1, 
1982, to June 30, 1983. The Department 
had originally anticipated that a higher 
contribution would be required for this 
fiscal period on the assumption that 
agreement would be reached during this 
period to expand the tribunal's decison- 
making capacity, by adding additional 
arbitrators, employing special masters, 
or through some other mechanism. 
While no such agreement has yet been 
reached, some form of expansion is con- 
sidered likely during the next year or 
two, requiring a corresponding increase 
in the contributions of both the United 
States and Iran. 

Security Account Management 
Fees. The management fees of the N.V. 
Settlement Bank of the Netherlands the 
depositary for the security account, are 
now set by agreement of Iran, the 
United States, and the Dutch Central 
Bank. These fees amount to $1.8 million 
per year, of which the United States 
pays $900,000— or $75,000 a month. 
That amount reflects considerable front- 
end "start-up" expenses incurred by the 
Central Bank and is not tied to the 
amount of principal or interest in the ac- 
count. We would expect, then, that any 
increase in the fees due to inflation will 
be largely offset by actual reductions in 
expenses incurred. 

Expenses of the Federal Reserve 
Bank. In its capacity as fiscal agent of 
the United States for purposes of im- 
plementing the Algiers accords, the New 
York Fed has incurred certain expenses, 
primarily in connection with the mar- 
shaling of Iranian assets and the proc- 
essing of awards of the tribunal. 'To date 
these expenses have totaled approx- 
imately $100,000. This figure in large 
part represents one-time costs and will 



INTERNATIONAL LAW 



be subject to a substantial reduction 
beginning in FY 1983. We project an- 
nual expenses directly related to proc- 
essing tribunal awards to be between 
$20,000 and $40,000. 

State Department. The State 

Department has made Iran claims one of 
the top priorities in the Legal Adviser's 
office. The Office of Iranian Claims, 
staffed by 10 full-time attorneys, five 
paralegals, and other support personnel, 
has incurred sizable expenses in terms 
of personnel, services, and equipment in 
connection with the establishment of the 
tribunal and its continuing operation. 
Apart from the presentation and 
defense of the official claims and inter- 
pretation disputes between the two 
governments, the office devotes substan- 
tial resources to the preparation and 
presentation of U.S. positions on major 
common issues of importance to both 
large and small claimants. The office 
monitors tribunal activities, analyzes 
Iranian factual and legal arguments, and 
prepares factual and legal materials to 
support U.S. positions. It acts as a coor- 
dination point for the presentation of 
American claims before the tribunal. In 
addition, the office analyzes and 
distributes tribunal decisions and other 
information about the tribunal. 

The U.S. agent in The Hague pro- 
vides invaluable assistance to attorneys 
for large claimants and essential 
representation of U.S. interests across 
the entire range of tribunal issues. The 
agent receives and serves tribunal 
documents on the claimants, briefs at- 
torneys on procedural and substantive 
matters, attends prehearing conferences 
and hearings, and addresses issues of a 
general nature that inevitably arise in 
the adjudication of individual claims. 
In addition to the services I just 
mentioned, the Office of the Legal Ad- 
viser is now preparing to present before 
the tribunal the 2,795 small claims. 

For FY 1982, the costs attributable 
directly to the office totaled approx- 
imately $1 million. The FY 1983 and 
1984 estimates are $1.2 million each. 

Other U.S. Government Expenses. 

Both the Treasury and Justice Depart- 
ments have incurred, and will continue 
to incur, direct and indirect costs in con- 
nection with the establishment and 
operation of the tribunal. These agencies 



have substantial responsibilities for 
assuring U.S. compliance with the provi- 
sions of the claims settlement agreement 
and the various technical agreements. 
And the State Department relies heavily 
on their expertise in preparing U.S. 
positions on interpretive questions 
before the tribunal. In addition. 
Treasury plays a major coordinating role 
in matters relating to banks and their 
customers. 



The Proposed Legislation 

The legislative proposal before the sub- 
committee authorizes the Foreign 
Claims Settlement Commission to ad- 
judicate any category of claims by U.S. 
nationals against Iran that may be set- 
tled by lump sum agreement between 
the United States and Iran. It also 
authorizes the Secretary of the Treasury 
to make payments to individual claim- 
ants in satisfaction of the commission's 
determinations. 

Of course, the exercise of these 
authorities will depend upon the ability 
of the two governments to come into 
agreement on a settlement of some 
category of claims. We expect settle- 
ments of large claims to occur only 
through direct negotiations by claimants 
on a case-by-case basis. Such individual 
settlements will not involve the 
authorities contained in this bill. We do, 
however, hope to avoid for both govern- 
ments the time, effort, and expense of 
arbitrating each one of the more than 
2,700 small claims now before the 
tribunal. While we are prepared to go 
forward with arbitration of the small 
claims and to represent the claimants 
vigorously before the tribunal, there are 
obvious advantages to settlement of the 
small claims. And if such a settlement 
can be achieved, we believe the fastest, 
most economical, and fairest way to 
divide the amount received in the settle- 
ment among the members of the class of 
claimants will be through adjudication 
by the Foreign Claims Settlement Com- 
mission. 



The proposed legislation also 
vides authority and procedures f< 
bursement to the U.S. Governme 
expenses incurred by the Depart 
of State and the Treasury, the F 
Reserve Bank of New York, and 
agencies for the benefit of U.S. r 
who have filed claims with the tr 
This cost recovery would be achii 
deducting 2% from each arbitral 
against Iran paid from the securi 
count to a successful U.S. claima 
We have transmitted with th 
ministration's draft bill a detailec 
tional analysis. Chairman Bell is 
address the grant of standby aut 
to the Foreign Claims Settlemen 
mission. With respect to recover 
governor's costs, this legislation ' 
tended to help finance the efforts 
United States to provide Americ: 
claimants with an appropriate ; 
tive forum for the resolution of t 
disputes with Iran. In proposing 
recovery of 2% of each tribunal £ 
favor of an American claimant, t 
seeks to recover an amount that 
pected to approximate the costs i 
government of this arbitration. V 
the Department cannot predict tl 
gregate amount the tribunal ultir 
will award to American claimants 
have based our projections on th( 
expectation that the tribunal will 
$1 billion during its first 4 years 
operation and an additional $1 bil 
each subsequent 3-year period. A 
2% rate of recovery of costs whic 
are proposing, the maximum amc \ 
U.S. expenses exceeds our projec 
costs recovered. 

Conclusion 

In sum, we think that the tribuna 
provide American claimants with 
fective forum for the resolution ol 
financial disputes with Iran. The 1 
ment of State and other concerned 
ernment agencies are providing si 
tial services to claimants in connen 
with the operation of the tribunal 
are incurring significant costs in t ,"] 
regard. We believe that the propo i , 
legislation will facilitate this arbiti 
process and will fairly allocate am i 
the claimants the costs of providir 
forum. 

'The complete transcript of the tu- 
will be published by the committee am " 
be available from tlie Superintendent ( 
Documents, U.S. Government Printing f- 
fice, Washington, D.C. 20402. ■ 



Department of State B et« 



ARY AFFAIRS 



ow Rain: The Arms 
trol Implications 



ence S. Eaglehurger 

ment before the Subcommittee 
Control, Oceans, International 
IS, and Environment of the 
ireign Relatione Committee on 
2Jf, 1983. Ambassador 
ger is Under Secretary for 
Ajfairs. ' 

ite the opportunity to appear 
ur subcommittee to discuss the 
trol impUcations of the use of 
and toxin weapons. Our goal is 
;ir complete elimination. Our 
ss and dedication was shown 
!ntly during Vice President 
p to Europe. While in Geneva, 
!sed the Committee on Disar- 
ind spoke forcefully and per- 
of the need to rid the world of 
and toxin weapons. He took 
ional constructive step of an- 
an important U.S. initiative to 
hat goal. 

than 12 years ago we uni- 
■enounced the possession of all 
and toxin weapons. Subse- 
ve played a major role in 
ig an international agreement 
;hese weapons. A large number 
ies, including the Soviet Union, 
in ratifying the treaty. We ex- 
at the threat of this whole class 
ns would disappear. Yet, that 
it to be a false hope. Toxin 
are being used right now in 
tan and Southeast Asia. Re- 
lUs to stop violating interna- 
•eements go unheeded. Out- 
linst the dignity of humanity 
But the Soviet Union, Viet- 
Laos continue to deny their 
h we and others have docu- 

annot, and will not, remain 
i )ut the death and suffering 

f chemical and toxin weapons 
) mid-1970s. Yet, we know it is 
E;ient merely to exhort the world 

Tin those who supply and use 

■ther, we must constructively 
■Ay to insure that these weapons 
itively abolished. 



Evidence of Soviet Use 

Toxins and chemical warfare agents 
have been developed in the Soviet Union 
and provided to Laos and Vietnam. The 
Soviets use these agents, themselves, in 
Afghanistan and have participated in 
their preparation and use in Southeast 
Asia. Neither the Vietnamese, Laotians, 
nor Afghans could have developed or 
produced these weapons. The Soviet 
Union can, however, and has extensively 
trained and equipped its forces for this 
type of warfare. 

An incident which occurred in 1979, 
in Sverdlovsk, in the Soviet Union raised 
questions about Soviet compliance with 
the prohibition on production of biologi- 
cal weapons as well. A sudden major 
pulmonary anthrax outbreak occurred 
near a suspected biological weapons 
facility. The Soviet explanation con- 
tinues to be inconsistent with available 
evidence. 

Nearly 8 years ago, the world first 
heard of the use of lethal chemical 
weapons in Laos. In 1978, similar 
reports began coming out of Kam- 
puchea, and in 1979 from Afghanistan. 
We now have accumulated a large body 
of evidence on the use of these weapons 
and the plight of their victims. The judg- 
ments are well documented, and the 
facts do not support any other conclu- 
sion. The United States has raised this 
issue publicly in the United Nations, 
with Congress, and elsewhere. We have 
issued a series of reports providing ex- 
tensive evidence of these attacks and the 
agents used. The most recent report was 
submitted to the Congress and United 
Nations by Secretary Shultz on Novem- 
ber 29, 1982. 

Canada, Thailand, and the United 
Nations have produced documentation. 
Other nations have also voiced their con- 
cern through their votes in the United 
Nations and individual and collective 
statements. Private individuals and 
organizations are also being heard. 
Some of these individuals are here to- 
day. 

It is not as if we were deahng m an 
area in which civilized standards are 
vague or international law inadequate. 
To the contrary: There are two principal 
international agreements which place 
restrictions on chemical, biological, and 
toxin warfare. The first is the 1925 



Geneva protocol, one of the oldest 
treaties on weapons still in force, which 
prohibits the first use of these types of 
weapons. The second treaty is the 1972 
Biological and Toxin Weapons Conven- 
tion which bans the development, pro- 
duction, stockpiling, transfer, and 
possession of biological and toxin 
weapons. Both the United States and 
the Soviet Union are parties to this trea- 
ty as are Afghanistan, Laos, and Viet- 
nam. Not only are both these treaties 
being violated in Southeast Asia and 
Afghanistan but so are universally ac- 
cepted standards of international law 
and respect for humanity. 

Implications for U.S.-Soviet Relations 

The continuing use of chemical and toxin 
weapons in Southeast Asia and Afghani- 
stan has obvious implications for 
U.S.-Soviet relations. It does not mean 
that we can no longer work with the 
Soviet Union to build a more stable and 
secure world, for as the two super- 
powers we have a special responsibility. 
It does mean, however, that the policies 
of our nation cannot be based on a be- 
nign or naive view of the Soviet Union 
and its intentions. The President has 
noted the responsibilities we carry and 
the need for strength and preparedness. 
With a realistic appraisal of Soviet goals 
and an appreciation that they are not 
constrained by some of the values we 
espouse, we can proceed, with caution 
and prudence, to help build a world 
eventually free from chemical, biological, 
and toxin weapons. 

We have all heard the charges that 
the continuing Soviet defiance of inter- 
national norms through the use of 
chemical and toxin weapons proves that 
arms control cannot work. Further, if 
the Soviets would so blatantly violate 
two important international treaties, 
what will keep them from violating 
other arms control agreements as well? 
We would contend that Soviet actions 
lead to a different conclusion— real, 
equitable, and fully verifiable arms con- 
trol is an absolute necessity. It is not 
that arms control is pointless; it is that 
we have to do a better job of it. 

Effective arms control is necessary 
if we are to reduce the number of de- 
structive weapons in the world and re- 
duce the risk of war. As the President 
has said, arms control is not an end in 
itself, but a vital means toward insuring 
peace and international stability. 



77 



MILITARY AFFAIRS 



Effective Procedures for 
Compliance With Treaties 

Yet, if arms control is to work, agree- 
ments of this kind must be fully and ef- 
fectively verified. The Soviet Union will 
not feel compelled to live by its interna- 
tional agreements if it knows that 
digression from those agreements will 
go undetected and unchallenged, and it 
is not obliged to pay a political cost. To 
sign agreements which lack tough verifi- 
cation standards would be not only mis- 
leading but also a disservice to all who 
want real arms control. To refuse to 
sign equitable agreements with strong 
verification procedures which are in our 
own interest would be equally mis- 
guided. 

The Geneva protocol and the 1972 
Biological and Toxin Weapons Conven- 
tion do not contain verification provi- 
sions or adequate measures to address 
questions of compliance. We are seek- 
ing, with others, to remedy these short- 
comings and to establish Soviet com- 
pliance with both agreements. In 
December, the U.N. General Assembly 
recommended by an overwhelming vote 
to call on the states that are parties to 
the Biological and Toxin Weapons Con- 
vention to hold a special conference as 
soon as possible to establish effective 
procedures for compliance with its provi- 
sions. In December the U.N. General 
Assembly also requested the Secretary 
General to establish procedures to in- 
vestigate promptly possible violations of 
the 1925 Geneva protocol. We believe it 
is important that both resolutions be im- 
plemented promptly, and we will con- 
tinue to participate in follow-on actions. 

The United States strongly sup- 
ported the adoption of both resolutions. 
The Soviet Union and a number of its 
allies did not. Soviet cooperation is 
necessary if we are to achieve the goals 
embodied in the resolutions which are 
directed at making these two treaties ef- 
fective. Opportunities are available to 
the Soviet Union for such cooperation. 

Impartial Verification 

We have taken steps to achieve a com- 
prehensive ban on chemical weapons. On 
February 10 we tabled, in the 40-nation 
Committee on Disarmament in Geneva, 
our detailed views on the content of a 
complete and verifiable chemical 



weapons convention. In presenting this 
initiative, we reiterated our commitment 
to the objective of a chemical weapons 
ban and stressed its urgency. 

We propose that any activity to 
create or maintain a chemical weapons 
capability should be forbidden. Existing 
chemical weapons stocks and production 
and filling facilities should be promptly 
declared and destroyed over a specified 
time period. 

Our proposal emphasizes the import- 
ance of mandatory on-site inspection. An 
independent, impartial verification 
system observed by, and responsive to, 
all parties is essential if we are to be 
confident that the provisions of the con- 
vention are faithfully observed. National 
technical means alone are insufficient, as 
they are available only to a few and 
have only a limited verification useful- 
ness. Systems of "national verification," 
or self-inspection, are not the answer. 

We have proposed that the following 
be subject to mandatory on-site inspec- 
tion: 

• Declared chemical weapons stocks 
and the process of their elimination; 

• Declared chemical weapons pro- 
duction and filling facilities and the proc- 
ess of their elimination; and 

• Declared facilities for permitted 
production of chemicals which pose par- 
ticular risks. 

We have also proposed an obligation 
to permit inspections on a challenge 
basis when questions of compliance 
arise. The verification approach we have 
proposed is tough but fair and practical. 
Although no one can guarantee absolute 
verification, we believe that our security 
and that of all other countries would be 
safeguarded. We are insisting on a level 
of verification which meets that objec- 
tive, and we are prepared to explore 
seriously any alternative suggestions by 
other nations to achieve effective verifi- 
cation. 



Conclusion 

Our views are not fixed but subject to 
further refinement. The possibility of 
resuming bilateral negotiations with the 
Soviet Union remains open. Such 
negotiations occurred earlier but lapsed 
in deadlock in mid-1980, principally over 



the issue of verification. We ha\ 
peatedly stated that for bilatera 
ations to be fruitful, the Soviet 
would need to demonstrate, rat 
simply profess, that it is ready 
effective provisions to verify co 
with a chemical weapons prohib 
must also be assured that the S 
Union is willing to abide by exis 
agreements. 

The focus of negotiations si 
on the difficult issues which are 
peding progress, especially veri 
and compliance. Such issues nu 
solved if genuine achievements 
take place. Concentrating on th 
contentious issues, or even drat 
ty texts, would be a fruitless ex 
an effective verification framew 
not be built. 

We hope that our arms con 
datives regarding these weapor 
succeed. We do not have any ill 
Agreement will require a major 
of Soviet military strategy- whic 
use of these weapons. We must 
overcome longstanding Soviet ; 
to effective on-site monitoring, 
fore, conclusion of an acceptabl 
ment cannot be guaranteed. 

This Administration remain 
cated to the goal of completely 
ing all chemical, biological, and 
weapons. Success in this enterp 
would enhance not only our sec 
that of the whole world. 



'The complete transcript of the 
will be published by the committee 
be available from the Superintende 
Documents, U.S. Government Print 
fice, Washington. D.C. 20402. I 



Department of State ul 



EAR POLICY 



Completes Assessment of IAEA 



<d T. Kennedy 

n<')it Id the board of governors 
h-iiiitiiinal Ato7nir Energy 
{\EA> III Viriiini nil Fehniaj-y 

Amhas,a,l„r Krni,r,lii /s U.S. 
\t rrpirsnit.ilnr t., th, IAEA 

,sa,lnral Laivr.nnI sprrnil 
tlwSrrirlarii.n, ,in,i pml iln;,- 

\j anil iiurlnir riimjii iijjiiiis. 

advise the board of certain 
recently taken by my govern- 
you all are aware, last 
r the United States suspended 
pation in the IAEA. Since that 
government has been engaged 
msive review and assessment 
EA and the future role of the 

; in this agency. I would 
B this opportunity to share with 
y some of the conclusions 
have reached from our inten- 

, which is now completed, 
le begin by recalling for the 

the message President 
ent to the delegates on the oc- 
the 26th general conference, 
me the President said: 

lited States is determined to 
other countries to assure that this 
1 successfully meet the challenges 
)m strengthening technical 
n for sharing the benefits of 
ergy to finding ways of improving 
' technical and institutional 

against its misuse. It is our pro- 
■ that others will share this deter- 

for it would be a tragedy for sue- 
nerations if we permit this 
m to be weakened or undermined 
1 issues and concerns, which, 
trong the emotions they arouse, are 
5 to the central technical purposes 
the agency was founded. 

with these thoughts in mind 
assessment was conducted. Our 
nt underscored two basic 



First, it is overwhelmingly clear that 
the IAEA has played and should con- 
tinue to play a critical role in support of 
very substantial interests of all of its 
member states. The IAEA has con- 
tributed in a major way to progress in 
the expanded and safe use of nuclear- 
generated electric power and through its 
other development programs such as 
those in medicine, industry, agriculture, 
health, and safety. At the same time, we 
are all beneficiaries of the assurance 
provided through the application of in- 
ternational safeguards that nuclear 
material is not being misused for illicit 
and destructive purposes. Perpetuation 
of this assurance is essential if progress 
in peaceful nuclear development is to 
continue. 

We, therefore, need to work to- 
gether to improve the effectiveness of 
IAEA technical assistance programs, to 
improve the agency's safeguard system, 
and to maintain an effective secretariat. 
The director general is aware of the con- 
cerns we have expressed, and I am con- 
fident that we can achieve these needed 
improvements if we all exert our best ef- 
forts to that end. 

The second major point emerging 
from our assessment is that, just as we 
are all the beneficiaries of the work con- 
ducted by the IAEA, we will all pay a 
considerable price if the viability and ef- 
fectiveness of the IAEA are threatened. 
Yet it is clear to us that the growing 
trend toward controversy and divisive- 
ness over political issues extraneous to 
the work of the IAEA is such a direct 
threat. We believe that unless this tend- 
ency is promptly checked, it will render 
the IAEA ineffective and will fatally 
corrode the enthusiasm with which 
member states have participated here 
for the last 25 years. 

This is not to say that there will not 
continue to be legitimate differences 
among us regarding the allocation of 
agency resources and the relative em- 
phasis placed on its programs. There 
are, of course, legitimate differences in 
perspectives and interests among the 



member states of the agency. We must 
not, however, abandon debate of issues 
germane to the IAEA in favor of debate 
of controversial political issues which 
should be addressed elsewhere. To do 
that would be to abandon our mutual 
and important interests in the IAEA. 

In short, the agency must respect 
the statute and not, for reasons of 
political expediency, act in ways that are 
inconsistent with that statute. The agen- 
cy's role in promoting the peaceful uses 
of nuclear energy during this critical 
period depends entirely on the credibility 
of its technical expertise. 

As members of the IAEA's govern- 
ing body, we bear a singular responsibil- 
ity for determining the agency's future 
course. I believe we should make a 
determined effort to reestablish the 
tradition of member state cooperation 
which characterized its first 25 years. I 
look forward to working actively toward 
this end with you. 

My government and, we are confi- 
dent, other concerned governments will 
be watching carefully to see which direc- 
tion the agency pursues in the months 
ahead. We hope and trust that the agen- 
cy can put behind it the unfortunate 
political wrangling of the recent past 
and get back to the basic purposes which 
brought us all together in the first place. 

The United States for its part then 
is prepared to renew its commitment to 
the IAEA and its important programs. 
Within the constraint of U.S. law, the 
United States intends to support fully 
these programs. At the same time, I 
must note that our commitment must 
depend on the degree to which other 
members are also determined to return 
this agency to its status as an effective 
international technical organization. It is 
our deep desire that all member states 
will join with us in this sincere effort. 
Together we can strengthen this unique 
international organization and see that 
the agency lives up to the principles con- 
tained in its statute. ■ 



PACIFIC 



Palau Approves Free 
Association With the U.S. 



Final unofficial results of the February 
10, 1983, plebiscite in Palau represent a 
strong victory for the Compact of Free 
Association. In the yes-or-no vote, 
Palauans awarded the Compact of Free 
Association a mandate of better than 
62%. The voter turnout was very heavy, 
substantiating the high degree of sup- 
port for the compact in Palau. 

Under the compact, Palau will 
achieve its long-sought goal of full 
autonomy. The United States will 
assume the obligation and authority to 
defend the island nation. The compact 
and its related agreements were 
negotiated over a 14-year period. Two 
other prospective freely associated 
states— the Marshall Islands and the 
Federated States of Micronesia — will 
vote on the compact in coming months. 
The United States recognizes that 
the plebiscite is a valid and sovereign act 
of self-determination by the people of 
Palau. The compact they approve 
defines their relationship with the 
United States, as well as their interna- 
tional political status after the present 
trusteeship is terminated. Now that the 
people and Government of Palau have 
approved the compact, it must receive 
majority approval in both houses of the 
U.S. Congress. 

The Palauan voters were asked 
other questions on the plebiscite ballot, 
including the political status they would 
prefer if free association were not ap- 
proved. Slightly more than half of the 
voters chose to answer this question, 
which was optional. Here, the vote was 
about 56% in favor of a relationship 
with the United States closer than free 
association and 44% in favor of in- 
dependence. 

The ballot included an internal 
referendum question which asked the 
voters to approve a Palauan-American 
agreement relating to hazardous, in- 
cluding nuclear, substances. A ma- 
jority— 53%— voted to approve this 
agreement. However, because of provi- 
sions in the Palau Constitution, this, or 
a similar specific question, requires ap- 
proval by a 75% margin before the Com- 
pact of Free Association can come into 
effect. This means that the Palauan 
authorities must now devise an ac- 
ceptable method of reconciling their con- 



stitutional provisions to comply with the 
mandate of the Palauan electorate for 
free association with the United States. 
The United States has expressed its will- 
ingness to consult with Palau on this 
matter and awaits Palau's initiatives. 

The Government of Palau mounted 
an intensive and thorough public educa- 
tion program in advance of the 
plebiscite. That program, which started 
more than 5 months before the vote, in- 
cluded translation of all the pertinent 
documents, radio and television pro- 
grams and debates, town hall meetings, 
and village discussions. An official team 
from the U.N. Trusteeship Council was 
in Palau to observe the final days of the 
education program, the voting, and the 
tabulation of ballots. Their report is ex- 
pected shortly. 

Palau is the westernmost chain of 
islands in the Trust Territory of the 
Pacific Islands, which the United States 
has administered since 1947 under a 
trusteeship agreement with the United 
Nations. Palau, with a population of 
15,000, is located east of the Philippines 
and south of Guam. 

The Northern Mariana Islands, a 



fourth political jurisdiction in the T 
Territory, voted in 1975 to become 
ritory of the United States. Under i 
arrangement, the people of the Nc^ 
Mariana Islands, of which Sapian i 
largest, will become U.S. citizens i 
the trusteeship agreement ends. A 
political jurisdictions of the Trust ' ' 
ritory have locally elected constitu i 
governments. Palau's first such go I 
ment was inaugurated on January I 
1981. 

Palau and the other island gro | 
the Trust Territory were administ I 
by Japan under a League of Natio I 
mandate after World War I. The 1 1 
States liberated the islands from 
Japanese occupation during the la; 
years of World War II. Palau was 
as the site of especially ferocious 
fighting during that campaign. To 
the islands of Palau, marked by th 
spectacular beauty and their unusvi 
rich and diverse marine ecology, a 
positioning themselves for future 
economic development. Fishing, a; 
culture, and tourism are expected 
contribute to this growth. The Coi 
of Free Association contains incen 
for investment, trade, and busines 
development and also guarantees 
economic development i 
the United States. 



Press release 52 of Feb. 23, 1983. 



U.S.-IVIicronesia Plebiscite 



The Governments of the United States 
and the Federated States of Micronesia 
(FSM) have announced the holding of a 
plebiscite in the Federated States of 
Micronesia on Tuesday, June 21, 1983. 
The plebiscite will be an act of self- 
determination by the people of the 
Federated States of Micronesia regard- 
ing their future political status and is a 
step toward termination of the last re- 
maining U.N. trusteeship. 

In the plebiscite, the voters of the 
Federated States of Micronesia will be 
asked whether they approve or disap- 
prove a Compact of Free Association 
and a number of agreements subidiary 
to it, all of which were signed by 
representatives of the two govern- 
ments — Ambassador Fred M. Zeder, 
personal representative of the President 
of the United States for Micronesian 



status negotiations, and Andon L. 
Amaraich, chairman of the FSM's J 
mission on Future Political Status 1 
Transition— in Honolulu on Octobe , 
1982. 

At the request of the United S S 
the U.N. Trusteeship Council agret )' 
December 20, 1982, to organize a s « 
of observer missions to witness th€ 
plebiscites in the FSM and in two ( ei 
jurisdictions of the Trust Territory 
the Pacific Islands. The first such i • 
sion observed a plebiscite in the R( bl 
of Palau on February 10, 1983, am le 
mission to the FSM will, similarly, 
observe the final stages of the pubi 
education program now underway th 
FSM, the voting in the plebiscite it i 
and the counting of the ballots. Th 
education program in the FSM is b ig 



80 



Department of State Bl !!i< 



UNITED NATIONS 



ed by a commission under the 
nship of Vice President Petrus 

United States and the FSM 

n the compact to call the 
;e jointly, and an announcement 
ate is being made simultaneously 
aia, Ponape, capital of the FSM, 
ident Tosiwo Nakayama. Pro- 
I for the plebiscite are established 

Public Law 2-54, enacted in late 

ddition to addressing the ques- 
'ree association, voters will be 
) state their preference for an 
ive political status to be 
:ed with the United States in the 
fiat free association is not ap- 
I The choices will be independence 
tie form of continuing relation- 
th the United States other than 
lociation, with the voter being 
|ie further opportunity to describe 
ptionship. 

nature of the compact and its 
jagreements last October repre- 
the completion of more than a 
[of negotiations. U.N. observation 
plebiscite is among several gov- 
principles for free association 
i by the negotiators in a meeting 
I Hawaii, in April 1978. 

ilease 66 of Mar. 2, 1983. ■ 



Libya 



by Jeane J. Kirkpatrick 

Statement made in the U.N. Security 
Council on February 22, 1983. Ambas- 
sador Kirkpatrick is U.S. Permanent 
Representative to the United Nations. ' 

I have, today, addressed the following 
letter to you for circulation as an official 
document in the Security Council. 

The Government of the United States re- 
jects the false and malicious charges of the 
Government of Libya and calls the attention 
of the Council to yet another example of a 
threat to international peace and security 
posed by the policies of the Libyan Govern- 
ment. 

Furious that its plans for illegal, violent 
action were frustrated, the Government of 
Libya comes now to the Security Council 
with lying complaints against the United 
States. In fact, the United States committed 
none of the acts charged by the Government 
of Libya. 

The United States dispatched no offen- 
sive aircraft into the region, violated no 
Libyan airspace. As a matter of fact, neither 



the U.S. carrier Nimitz nor its aircraft 
entered waters or airspace claimed by Libya 
on the days in question, although we have 
every right to enter these international 
waters, recognized as such under interna- 
tional law. We also have every right to con- 
duct, under appropriate circumstances, train- 
ing exercises with friendly governments. 

The United States affirms its rights 
under international law and the Charter of 
the United Nations and intends to exercise 
them. 

Naturally, the Government of Libya 
would prefer that no obstacles— however 
legal— be interposed to its plots and expan- 
sionist projects. But peace-loving nations can- 
not accommodate Libya's designs on its 
neighbors. 

In calling attention to Libya's false 
charges, the United States notes that such 
lies mock the serious work of building inter- 
national peace, just as Libya's repeated ef- 
forts to interfere in the affairs of its 
neighbors destroys security in the region. 

The United States did not seek this 
confrontation in the U.N. Security Coun- 
cil with the Governments of Libya, but 
we welcome the opportunity thus pre- 
sented to put facts on the record— not 
the fabrications of Col. Qadhafi's 
spokesman — and to assign res 



U.S. Participation In the UN, 1981 



MESSAGE TO THE CONGRESS, 
FEB. 2, 1983' 

I am pleased to transmit herewith a report of 
the activities of the United States Govern- 
ment in the United Nations and its affiliated 
agencies, as required by the United Nations 
Participation Act (Public Law 264, 79th Con- 
gress). The report covers calendar year 1981, 
the first year of my Administration. 

During this first year we devoted much 
time and effort to making our participation in 
the organization of the United Nations 
system more effective and to rendering the 
system more efficient. We have urged the 
United Nations and its affiliated agencies to 
slow budget growth, define priorities, 
upgrade personnel, and purge debate of ir- 
relevant and divisive rhetoric. We have pur- 
sued these changes in order to strengthen the 
United Nations and help it realize its enor- 
mous potential for maintaining international 
peace and security and for contributing to the 
economic and social betterment of the world's 
peoples. 

The year 1981 saw the United Nations 
constructively engaged in a number of impor- 
tant areas. United Nations peacekeeping 
forces have helped prevent serious fighting in 
Cyprus and the Golan Heights; the United 
Nations General Assembly called for an end 
to Soviet and Vietnamese aggression in 
Afghanistan and Kampuchea; and several 



United Nations organizations and agencies 
continued their valuable humanitarian and 
technical work around the world. The year 
also saw the election of a new United Nations 
Secretary General, Javier Perez de Cuellar, 
an experienced and able international 
diplomat. 

At the same time, the United Nations' 
1981 performance left much room for im- 
provement. Ex-treme United Nations resolu- 
tions on the Middle East and Southern Africa 
often increased tensions rather than pro- 
moted solutions. The General Assembly called 
for the Government of El Salvador to 
negotiate with the guerrillas opposing it, dis- 
counting in advance the value of elections 
which proved a resounding success. Resolu- 
tions on arms control were often prop- 
agandistic and worked against the goal of 
genuine, balanced, and verifiable arms reduc- 
tions. The General Assembly approved an un- 
justifiably large biennial budget in the face of 
United States opposition. 

My Administration will continue to work 
strenuously and constructively to defend 
United States interests in the United Nations 
setting and to make the Organization itself 
increasingly more responsive to global prob- 
lems and needs. 

Ronald Reagan 



'Text from White House press release. 



UNITED NATIONS 



for this grave threat to international 
peace and security where that respon- 
sibility belongs. 

I speak, of course, of the Govern- 
ment of Qadhafi's Libya. And I wish to 
put this threat, which seems for the mo- 
ment to have receded, in the context of 
Libyan-sponsored worldwide terrorism 
and adventurism directed against its 
neighbors— indeed, throughout north- 
ern, eastern, and central Africa. This 
pattern of lawless expansionism con- 
stitutes a continuing threat to the peace 
and security in the region and beyond. 
My government and the American 
people have never sought, and do not 
now seek, any confrontation with the 
Government or people of Libya. We 
have never engaged, and do not now 
engage, in any acts of provocation. But 
we are deeply sensitive to threats to in- 
ternational peace, to our own security, 
and to the security and national in- 
dependence of Libya's neighbors. And 
let there be no doubt: We will respond 
as appropriate to Libyan threats. 

Briefly, I wish to recall the salient 
events that led to this situation. 

Last Friday, February 18, official 
Sudanese radio announced the discovery 
of a Libyan-backed coup plot against the 
government of President Gaafar 
Nimeiri. It announced the apprehension 
of Libyan-sponsored dissidents and in- 
filtrators. It also reported that the 
Government of Sudan had been closely 
watching concentrations of Libyan 
bombers and fighters in southeast Libya 
close to the Sudanese and Egyptian 
borders. 

This concentration of Libyan aircraft 
had been of particular concern to the 
Sudanese. In view of the successful 
steps which the Sudan has now taken to 
deal with this latest Libyan effort to 
destabilize one of its neighbors, we are 
now able to put the spotlight of world 
attention on events in the region. 

We follow Qadhafi's irresponsible in- 
cursions into the affairs of his neighbors 
closely and with deep concern. We have 
been aware for some time of his efforts 
directed against President Nimeiri. We 
were also aware of the concentrations of 
Libyan aircraft which were of concern tc 
the Sudanese and Egyptians. Because of 
the situation, we moved up the date of 
an A WAGS [airborne warning and con- 
trol system] training exercise, which had 
already been scheduled about a month 



hence, and sent our AWACS and tanker 
aircraft into Egypt. We have also had 
U.S. naval forces deployed in the 
eastern Mediterranean. Their presence 
in international waters sometimes seems 
to have a deterring effect on Libyan 
adventurism in the region. 

The desired result seems to have 
been achieved, at least for the present. 
The statement on Sudanese radio, and 
yesterday's statement by the Sudanese 
Assembly, speak for themselves. We can 
be reassured by the bold and decisive 
manner in which the Sudanese dealt 
with the threat of Libyan expansionism. 

Fortunately, the most recent threat 
has receded. But the pattern of Libyan 
misconduct is longstanding. 

Col. Qadhafi conducts a virulent, 
hostile foreign policy which respects the 
territorial integrity, national independ- 
ence, right to peace and security, and 
self-determination of no one. Because of 
a relative lack of conventional military 
power, Col. Qadhafi has tried to ac- 
complish his goals through a combina- 
tion of economic and military aid to 
radical governments; bribery of officials; 



help to international terrorists hyi 
viding sanctuary, funds, weapons 
planning; assassination of exiled > 
ponents; planned assassination of 
government officials; and assistai 
guerrilla groups working to overt 
established governments. 

The Qadhafi regime has been 
gaged in these activities almost si 
took power. For example, in 197i 
provided sanctuary to the perpeti 
of the Munich Olympics murders. 
Qadhafi also gave refuge to the t( 
rorists who held hostages at the : 
Vienna OPEC [Organization of 
Petroleum Exporting Countries] 
meeting. Libya has been used as ; 
area in which terrorist groups ha 
planned acts to be committed in r 
Europe's capitals. The infamous " 
has operated out of Libya over se 
years. The weapons found on the 
terrorists Breguet and Kopp had 
sold to the Libyan Army. It was I 
release which Carlos demanded. 

Assassination has been an imj 
Libyan tool, and the proof of Libi 
utilization of this tool is not hard' 



Funding the Law of the Sea 
Preparatory Commission 



PRESIDENTS STATEMENT, 
DEC. 30, 19821 

On December 3, 1982, the U.N. General 
Assembly passed a resolution that 
would, among other things, finance the 
preparatory commission under the Law 
of the Sea Treaty from the regular U.N. 
budget. 

My Administration has fought hard 
to uphold fiscal responsibility in the 
U.N. system and, in this case, con- 
sistently opposed this financing scheme. 
It is not a proper expense of the United 
Nations, within the meaning of its own 
Charter, as the Law of the Sea 
preparatory commission is legally in- 
dependent of and distinct from the 
United Nations. It is not a U.N. sub- 
sidiary organ and not answerable to that 
body. Membership in the United Nations 
does not obligate a member to finance or 
otherwise support this Law of the Sea 
organization. 

Moreover these funds are destined 
to finance the very aspects of the Law 
of the Sea Treaty that are unacceptable 
to the United States and that have re- 
sulted in our decision, as I announced on 



July 9, 1982, not to sign that trea 
preparatory commission is called i 
develop rules and regulations for 
seabed mining regime under the t 
It has no authority to change the 
damaging provisions and preceder 
that part of the treaty. For that r 
the United States is not participafe 
the commission. 

My Administration has conduci 
review of the financing scheme foi 
commission. That review has confi 
that is an improper assessment un 
the U.N. Charter that is not legall 
ing upon members. It is also adveh 
the interests of the United States.' 
the United States normally pays 2 
the regular U.N. budget, the Unite 
States is opposed to improper asse 
ments and is determined to resist .' 
abuses of the U.N. budget. 

In this light, I have decided th. 
United States will withhold its pro 
share of the costs to the U.N. budj 
funding the preparatory commissic 



'Text irom U.S. UN press release 1 
Jan. 3, 1983. ■ 



Department of State Bi !" 



WESTERN HEMISPHERE 



J. The 1980-81 murders of a 
xiled Libyans, primarily in 
a European capitals, have been 
d by the international press in 
;jess widely known are a 1975 
murder the prime minister of a 
iring country; plans to kill 
an Ambassadors in several Mid- 
tern countries and at least one 
an capital; and a November 1981 
t to plant explosives in the 
an Embassy Club in Khartoum, 
(xplosives were concealed in 
speakers, designed to detonate on 
day evening when scores of peo- 
ild have been present and killed, 
najor facet of Libyan foreign 
las been and remains subversion 
jtabilization of independent 
ments in the Middle East, Africa, 
ewhere. Chad has been a recent 
1 victim of the aggressive policy 
a. Currently, Libyan intentions 
Chad are a major concern. Col. 
'i has brought large numbers of 
n followers to Libya, trained and 
2d them, and is moving them into 
•thern parts of Chad. Other ef- 
) increase its own strength in that 
•e underway. Most disturbing was 
i-January deployment of a dozen 
. SU-22 ground-attack fighters to 
uzou Airbase in northern Chad, 
ntly in preparation of a Libyan 
to provide air cover to an assault 
lidents and infiltrators against the 
,n Government and Chadian-held 
tion centers. A Libyan team of 
^imately 80 "advisers" in another 
jn republic may be assisting anti- 
mment Chadians there. Libya has a 
ecord of training g-uerrillas, sup- 
[weapons, plotting subversion, and 
Jilization of its North African 
|)ors. 

I the Horn of Africa, Libya con- 
^ to try to overthrow the Govern- 
1 of Sudan and Somalia. A number 
ijyans are in Ethiopia advising 
iji and Sudanese guerrillas. Libyan 
lift and ships continue to train guer- 
iind to supply arms, ammunition, 
ifives, and materiel to the Somali 
fion Front and to Sudanese rebels, 
i^jibya's deliveries of increasingly 
reed weapons to warring tribes in 
jdan have contributed to death and 
■' ce in that region. 
Isewhere, Libya delivers military 
ment and is involving itself increas- 



ingly, for example, in this hemisphere, 
always on behalf of military dictator- 
ships, always opposed to democratic 
regimes and movements. 

That is the pattern of Libyan 
misconduct worldwide. It constitutes, as 
I have said, a grave threat to interna- 
tional peace and security. The culprit in 
this proceeding is identified beyond any 
reasonable doubt or question. 

What has happened to Libya may 
happen to other states, the representa- 
tive of Libya has suggested. I should 



like to say that we hope so. We hope 
that what happened to Libya will happen 
to other states. We hope that all states 
with aggressive designs on their 
neighbors will be discouraged by the 
lawful response of others and thus to 
desist in their unlawful plans. My 
government rests its case on the factual 
record— and its adherence to the prin- 
ciples of the U.N. Charter in the cause 
of international peace and security. 



'Text from U.S.UN press release 13. 



Ambassador Hinton Interviewed on 
"This Week With David Brinkiey" 



Deane R. Hinton. U.S. Ambassador 
to El Salvador, was interviewed on 
ABC-TVs "This Week With David 
Brivkley" on March 6, 1983, by David 
Bnnkley and Sam Donaldson, ABC 
News, and George F. Will, ABC News 
analyst. 

Q. As you know, we have a 
substantial debate going on here in 
Washington about sending more ad- 
visers, pushing the two sides to 
negotiate, or doing both. You are 
there on the scene. What is your view? 

A. I think on negotiations that it's 
absolutely crazy to talk about nego- 
tiating with people with guns and 
bombs. These people are going to be of- 
fered a chance, I am certain, to come 
back into the political process, the 
democratic process, to have a right to 
elect their representatives if they have 
the votes. That's the way democracy 
works. 

As far as advisers, we're talking, I 
guess, about trainers. There's only a 
handful of advisers here from the 
military group, but the trainers, you 
know, were about something in the 
neighborhood of 50 today. 

Q. We'll all recall about a year ago 
the people in El Salvador voted on a 
Sunday, which we— 
A. Overwhelmingly. 

Q. Right. And the results were 
slightly ambiguous, but it was clear 
that they were voting for stability. Is 
that correct in your view? 

A. They were voting for peace, and 
they wanted violence to end, and they 
wanted to give democracy a chance. 
Now they've formed a government of 



national unity where all the parties are 
working together, and that government 
has slowly been evolving a new peace 
program with a Commission on Human 
Rights that's official; a Peace Commis- 
sion, which will be a conduit to those 
people on the extreme left who want to 
come in and participate in elections. The 
program is going forward on many 
fronts. They're going to formulate an 
amnesty. They are considering the 
release of political prisoners at the ap- 
propriate moment. And this government 
while it— you know, they work by con- 
sensus and it is slow, is working. 

Q. What is your assessment of the 
threat to the Government of El 
Salvador? There are conflicting views 
as to just how important the guerrilla 
movement has gone these days as far 
as achieving on the battlefield their 
objectives. 

A. I think it's evident that the guer- 
rillas have won a couple of rounds in a 
continuing conflict. They certainly 
haven't won and they're not imminently 
likely to win the war. But if we do not 
provide more military assistance, the ar- 
my here, which is short of trained and 
well-equipped troops— we had a plan to 
do more, and then the Congress turned 
the money down last year. That gave 
heart to the guerrillas. It kept the war 
going. It will result in more people being 
killed, but with resources, this army can 
hold. They're not about to lose, and I 
think it's perfectly clear that what they 
need is some ammunition and some 
more trained and equipped units. 

Q. In your view, is it just a ques- 
tion of money and resources or do you 



1983 



WESTERN HEMISPHERE 



think that more American advisers or 
trainers have to be sent to El 
Salvador? 

A. I have made my recommenda- 
tions to the Secretary of State in 
Washington on the trainers issue; I 
think that will be worked out in 
Washington with the various con- 
cerned—Defense and State and the 
White House and the National Security 
Council in consultation. I'd love to tell 
you what my recommendations are, but 
I don't think that that's exactly what we 
should put on ABC television, if you'll 
forgive me. 

Q. You said a moment ago that 
the government is not about to lose. 
Let's look at it from the other direc- 
tion. Perhaps it is because of Korea 
and Vietnam and other experiences 
that Americans— many of them— think 
it's almost impossible to win any war. 
Is it possible? And if not, why is it not 
possible for these 6,000, and I guess 
that's the accepted number, of the 
guerrillas to be beaten militarily? 

A. Six to eight. 

Q. Is this within the realm of 
possibility? To win the war? 

A. Everything is possible. It's a 
function of resources and training. What 
we need to do is to be sure these people 
don't run out of ammunition, of the 
resources of the radios, of the medical 
equipment, of the trucks, of the 
helicopters, of the rifles. This is needed 
to defend this democracy. 

Q. Yes, but the question is often 
asked why should we support the 
regime down there? The death squads 
operate. There have been at least 
seven Americans whom we know have 
been murdered in El Salvador and no 
one convicted yet. Why should we sup- 
port that government? 

A. You have a government that is 
trying, after 50 years of military dic- 
tatorship, to play by democratic rules. It 
is carrying out social reforms. Just 
Thursday of this past week, the 
assembly renewed the third phase of the 
land reform program for another 10 
months. This is a government that is 
trying, under teriffic pressure from an 
armed guerrilla terrorist movement sup- 
ported by Nicaragua and Cuba. It is a 
government that has a peace program 
that makes sense. 

They have an effort — an increasing 
effort— to correct the abuses. Of course, 
they're terrible, and they're unac- 
ceptable, but these people are going in 
the right direction. 

Q. Some of the people on the other 



side, however, are opposing increased 
aid and cite the public statements by 
Central American and Mexican Gov- 
ernment officials calling really for 
negotiation and accommodation and 
including the disaffected left and the 
government and all the rest, and they 
say they are not as alarmed as we, far- 
ther to the north, are. Do they talk a 
different game in private than they do 
in public, some of these Central 
American leaders? 

A. I think there's negotiation and 
negotiation in the first place. It is 
perfectly clear to me that throughout 
the Central American isthmus, there is 
great alarm and concern over Nicara- 
gua. What it is doing in excursions into 
northern Costa Rica: the terrorist acts 
in San Jose; their incursions into Hon- 
duran territory. The continuing flow of 
arms and trained men into El Salvador 
is a source of concern to everyone. And 
as one watches the tightening of the 
Marxist control and the imposition of a 
police state in Nicaragua, it becomes a 
greater source of concern. 

Negotiations between governments 
makes sense; the Hondurans, the El 
Salvadorans, the Costa Ricans are all 
ready to put the regional problems on 
the table and see if there isn't a political 
solution to be negotiated between 
governments. 

Q. Do you buy the domino theory? 
If El Salvador should fall to the guer- 
rillas, would other states in that area 
inevitably fall? 

Q. Inevitably is a strong word, but I 



think the chances would be great. 
domino theory that I do buy is tha 
democracy in Costa Rica, Hondurr 
El Salvador, it's going to work in 
reverse one of these days, and we'' 
going to have a democratic goverr 
in Nicaragua which is what the Sa II 
dinistas and other political leaders J| 
ised their people in 1979. ii 

Q. The Pope is spending sevti 
days traveling in your part of th« 
world. What impact has he had, | 
you say? | 

A. I think it's tremendous. An I 
know, the heckling in Nicaragua a| 
sort of party members pushing thii 
representatives to the fore with | 
bullhorns to heckle the Pope, I thi | 
that gives us a picture. Everybodj | 
very very excited, and expectant i I 
thusiastic. jl 

Q. What about the security f.i 
tions? Do you know anything abi i 
this plot— that apparently there t 
some evidence concerning— agai i 
the Pope's life? 

A. Yes, I think the evidence v 
that something rather drastic was 
ing from the left. I am not sure if 
an assassination plot, but it could 
been. It's an old technique to do tl 
like this and then blame the gover 
or the right. Various people from 
on, through the Communists and ( 
places, have done it. 



'Taped earlier and broadcast by sa 
from San Salvador. ■ 



Ambassador Kirkpatrick Interviewed 
on "Meet the Press" 



Ambassador Jeane J. Kirkpatrick, 
U.S. Permanent Representative to the 
United Nations, was interviewed on 
NBC-TV's "Meet the Press" on March 6, 
1983, by Bill Monroe, moderator; Marvin 
Kalb, NBC News; Pat Buchanan, 
Chicago Trihwyie syndicate; Karen 
DeYoung, The Washington Post; and 
Morton Kondracke, New Republic. 

Q. When the Pope arrived in El 
Salvador this morning, the President 
of El Salvador announced, among 
other things, that there'd be elections 
by the end of the year, an amnesty 
program, and a Peace Commission 



that he said would set up mechu 
to guarantee full democratic pan 
tion. I think that's a direct quotd 
that something that the U.S. Gd 
ment could agree with, and whaij 
you think he has in mind? . 

A. Of course, we would agree 
it. We would not only agree with i j 
we would, of course, welcome it. 

Q. What does that mean, the I 
democratic participation? Does tlj 
mean dialogue? i 

A. I think what that means is i 
he's hoping that the Peace Commis] 
will establish rules governing the e; 
tion and also any amnesty progran | 



Department of State BiJ 



WESTERN HEMISPHERE 



)vide an opportunity for full 
ion in the democratic process 
jps in Salvadoran society. 

it that means that the elec- 
hat we're talking about— 

lat's right. We're talking 

fbut not a dialogue proceeding 
on. 

u know, dialogue is one of 
cal words. I think we're talk- 
democratic elections. We're 
ut an amnesty program, in 
ons who are willing to give up 
bd turn to ballots presumably 
Lrticipate in, and some sort of 
|)rogram that would provide op- 

Ifor full participation of all sec- 
ilvadoran society in those 
ic elections. 

^ide from the different words 
(used about full democratic 
ition, does this represent a 
n the government's position? 

think what it represents is the 
ment of institutional mech- 
Ind, of course, there is a change 
resident Magana also announc- 
he elections would be held dur- 
jalendar year. 

Lit none in the sense of a 
I with the Marxist rebels and 
irnment starting prior to the 

litself? 

,ou know, I really don't know 
fet that means. 

jcould ask it again. 

^kay, why don't you? 

Jlright. I think the point here 
i the U.S. Government and the 
iient of El Salvador have op- 
idialogue being established 
ithe election between the 
lent and the Marxist rebels 
) unseat that government. Is 
ement now to say that that 
can begin prior to the elec- 

take it that to establish an 
program and provide for the 
IS for full participation of all 
in Salvadoran society willing to 
te in those democratic elections 
quire some discussion between 

rhich is an opening then to 
dialogue between the two 
ng sides prior to an election, if 
itand you right. 

take it that it would involve in- 
any kind of discussions neces- 
istablish open elections, in which 



all parts of the society could participate 
in those democratic elections. 

Q. Including those two major par- 
ties I mentioned? 

A. Including any party. I think 
President Magana has been very clear 
when he said, "mechanisms to guarantee 
full democratic participation." I think he 
meant full democratic participation. 

Q. The New York Times said last 
week, "Americans can best help by not 
seeing the war as an expression of the 
East- West conflict." Do you see the 
war in El Salvador as an expression of 
the East- West conflict? 

A. You quote the Times; I'll quote 
myself— in a speech recently that what 
is perfectly clear is that there's a very 
large Eastern presence in Central 
America and the Caribbean today in the 
form of Soviet arms— Soviet bloc arms, 
I should say — training, a lot of advice on 
guerrilla warfare, but most especially 
arms, steady inflow of arms. 

There's also a large Eastern 
presence in a sort of cultural offensive, 
with radio and television saturation in 
some areas, a very large program for 
Radio Venceramos out of Cuba, for ex- 
ample, large effort of radio and televi- 
sion, offensive out of Nicaragua now to 
adjoining countries like Costa Rica; very 
large fellowship programs, hundreds for 
example of fully funded fellowship pro- 
grams for Costa Rica, Panama, et 
cetera. Those constitute a kind of large 
Eastern presence in Central America. 

Whether there is a Western 
response to this, I think, depends on the 
decision of the American people and the 
American Congress, quite bluntly. 
Otherwise, it's just an Eastern offensive 
on our southern borders. 

Q. Do you see the outcome of the 
war in El Salvador as being decisive 
in terms of the war in Central 
America? In other words, if hypothet- 
ically El Salvador should fall to the 
guerrillas or Marxists, do you think 
that would pretty much determine the 
fate of Guatemala and Honduras and 
Central America, and how vital is that 
to the national security interests of 
the United States? 

A. One of the things that most sur- 
prised me during my trip in the 
region— which included Panama, Costa 
Rica, Honduras, El Salvador, and 
Venezuela— was the extent to which 
they see the outcomes of the Salvador 
conflict. Given the presence of 
Nicaragua today and its powerful 
military machine, they see it as relevant 



to their fate. And they talk a great deal 
about contagion. They talk a great deal 
about the contagion of the effects from 
Salvador to Honduras and Guatemala 
and Costa Rica and Panama and, even- 
tually, Mexico. They think that it would 
be very difficult to contain that con- 
tagion. They say that this is a very 
culturally homogenous region, that there 
aren't many barriers. 

Q. The Administration has said 
repeatedly that it's not seeking a 
military solution in El Salvador. Yet it 
seems like we've been unable to work 
out any kind of political or diplomatic 
end to the fighting there; in fact, the 
fighting seems to have gotten worse. 
When it was first reported earlier this 
week that there were early elections 
planned, the guerrillas have already 
rejected that. Do we have a long-term 
strategy there? Do we just expect 
them eventually to give up? I'm not 
sure I understood your answer to the 
question before in terms of whether in 
the long term we are willing to let 
them sit down and negotiate some 
kind of power with the government 
there. 

A. Certainly, we hope very much 
that the guerrillas in El Salvador will 
just give up, as it were, the pursuit of 
power by military— it's they who are 
seeking a military solution, if I may say 
so. We hope they'll give up the pursuit 
of power by military means. We hope 
that theyll be willing to accept 
democratic elections and a democratic 
solution to the political problems and 
compete for power by peaceful demo- 
cratic methods rather than by military 
methods. That is certainly our hope. 
And our strategy, I suppose, is designed 
to try to encourage that kind of 
democratic political solution for El 
Salvador and, indeed, for the region. 

Q. But they've said that they will 
not participate in elections unless 
there is some discussion of structural 
changes in El Salvador before they 
even begin to talk about elections. If 
they won't participate in elections and 
if they're committed to keep on 
fighting, what is our strategy at that 
point? 

A. They said various things. You 
know, they have said from time to time 
that they wouldn't participate in elec- 
tions because they didn't feel that their 
security would be guaranteed. They 
didn't think they would be safe. They 
thought they might be shot, for exam- 
ple, as they left the polling places or just 



WESTERN HEMISPHERE 



after or something. And sometimes they 
say they won't participate in elections at 

all. We hope that they will change their 
minds and be willing, in fact, to give up 
the search for a military solution and 
join in democratic elections for El 
Salvador. The ultimate political solution, 
you know, is democratic elections. The 
ultimate powersharing arrangement is 
democratic elections. 

Q. We've been on this same track 
before, last year. Do we have any 
reason to believe that it's going to 
work better this time than it did last 
time, particularly considering they're 
in a better military position now than 
they were last year? 

A. Oh, I think so. For one thing, the 
Government of El Salvador today is, in 
a very real sense, stronger. Today El 
Salvador has a democratic government, 
and it will be a democratic elected 
government, which itself has much more 
legitimacy in the society running its own 
elections. I think that's new and dif- 
ferent. By the way, that makes a big dif- 
ference in the way that other countries 
in the region feel about it. Costa Rica, 
for example, is enormously encouraged 
by the spread of democratic institutions 
in the region, in Honduras and El 
Salvador. 

Q. She [Karen DeYoung] said that 
the military situation seemed to be 
much worse than it had been before. 
You were quoted when you were down 
there as saying that the guerrillas 
were nearly beaten, and you were 
quoted in the paper today as saying 
that the situation was not that 
"dicey." Yet you're reported to have 
delivered a report to the President 
that was exceptionally gloomy, and at 
a White House meeting on Monday, 
you apparently inspired people to 
think that the situation was critical. 
Which is it? 

A. I can't take the responsibility for 
the way I'm reported, if I may say so. I 
can do my best to make clear what I 
think about it. 

My comment out of Honduras came 
in response to a question by a Swedish 
reporter, whose question assumed— he 
asserted that the military situation in El 
Salvador had deteriorated from the 
point of view of the government very 
dramatically in the previous 2 years and 
that the guerrillas were much closer to a 
military victory than they had been 2 
years previously. 

I said to him that was not the case. 
And I reminded him that the leader of 
the Salvadoran Communist Party, 
Shafik Handal, had written in the fall of 



1980 that they expected fully to achieve 
a full military victory through their so- 
called final offensive in the month of 
December; then they postponed to 
January of 1981. And I said, as we all 
knew, they had not achieved that 
military victory in the "final offensive" 
and that now no one even was expecting 
such a full victory by a "final offensive." 
That got a little distorted in the report- 
ing from Honduras, but that's what hap- 
pened. 

Q. But the reports out of El 
Salvador are that the guerrillas are 
able to do things militarily that they 
have not been able to do before, and 
the reports from the President— from 
the White House— describe the situa- 
tion as critical. Some people say that 
there's not enough ammunition to last 
more than 30 days. That has been con- 
tradicted by other Administration 
statements. What is the military situa- 
tion down there? 

A. First of all, let me just say, as 
you know, I'm not a military expert. I'm 
no expert on military affairs. I will tell 
you my understanding of the situation 
without any great claims for reliability 
of my military— I don't have any in- 
dependent judgments on this. That's 
what I want to say. 

There is a general view that the 
guerrillas today are better trained than 
they were 2 or 3 years ago; that their 
arms are more sophisticated, in some 
cases more sophisticated than those of 
the Government of El Salvador. That, as 
I understand it, is no critical military 
problem at this time, but it would be if 
the United States did not continue 
military assistance to El Salvador at the 
levels that it has been sustaining that 
and at the levels that the Soviet bloc is 
ultimately providing arms to the guer- 
rillas. That's really the point; that it 
could happen if the Soviets continue to 
provide arms at the rate they have been 
providing them, and we don't provide 
comparable to the Government of El 
Salvador, then there could indeed be a 
very serious situation. 

Q. The Administration wants $60 
million right now from the Congress, 
right? That's in military aid to El 
Salvador. 

A. Right. 

Q. On the face of it, that doesn't 
seem like a great deal of money, con- 
sidering sometimes billions that the 
United States has given out. Why do 
you think there is this kind of an 



outroar then? Why does the Con 
seem to be so resistant to the 
thought? 

A. First of all, I don't think til 
United States generally and Ame' 
generally, including our policymal 
have thought very seriously abou 
America — maybe since John Ken 
actually. He may have been the 1; ' 
President to give much very seri( ' 
thought to Latin America and th( ' 
importance of this hemisphere to ' 
And I don't think we probably ev ' 
much thought to Central Americ? ! 
the Caribbean, quite frankly. So ] ] 
think that there's a very good or 
curate perception of the relevanc' 
area to us and to our national set 
and well-being, for one thing. 

And for another, I think that 
because the decision was made, f 
reasons of legislative tactics, to d 
the request for sustaining militar 
assistance at the same level as la 
until later, as it were, and not de 
it at the time that all the other sa 
of the assistance bill were being ( 
with last year, it causes more att 
to be focused on it now that it's 
necessary to deal with it. 

Q. When Ronald Reagan w» 
elected, it was said that the Uw 
States had gotten over the politi 
paralysis induced by Vietnam, t 
we're ready to play our role in J 
world again. But back in Vietna 
1968, for better or worse, we w 
spending $30 billion a year and , 
half a million troops 10,000 mill 
away to prevent a Communist ti i 
in Vietnam. We are now arguin; 
the $60 million figure in El Sah i 
whether or not there should be ; 
55 advisers, whether or not the , 
visers should be allowed to can I 
M-16 rifle. Now does this not 8\) 
that the policy paralysis endurei ( 
the United States, in Washingtt j 
D.C.? 

A. I think it does sugge.'^t th; 
there's a certain distortion in nur 
sideration of the whole possibility 
use of American power and the il 
of the use of American power in ' 
world. The truth is we've used Ai 
power and American strength— e 
nomic and military, not arms I iii' 
but assistance — in a good many c ' 
the period since World War II. .M 
the times, we've used that succes, 
and with very good consequences 
people involved. 

Vietnam is, I think, our coins; 
failure. And there is a kind of. I t '' 



Department of State E'el 



WESTERN HEMISPHERE 



sort of Vietnam hangover still 
icts some sectors of our 
our policy community— with 
fative, distorting kinds of effects 
lonsideration of the American 
he world today. 

Ifou mentioned that we have 
[n Central America or Latin 
^ the attention it deserves. To 
tent is that the fault of this 
stration, which has not given, I 
iJentral America or El Salvador 
! of attention it gives the Mid- 
t and the situation in Europe. 

Administration focused on it? 

President addressed the issue 
1 the American people its im- 



portance to the extent that you would 
like to see? 

A. The President is certainly doing 
so now. I said clearly that I didn't think 
that American Governments had paid as 
much attention to Latin America, prob- 
ably since John Kennedy, as I think it 
deserves. Now I think in this Adminis- 
tration, the President entered with a 
greater sensitivity to Latin America, 
mainly as a consequence of his ex- 
perience as Governor of California. For 
a variety of reasons, I think we have 
perhaps been diverted from as much 
focus on it as I might have hoped, but I 
think it's being rapidly corrected. 

Q. I'd like to go back a little bit to 



El Salvador Announces 
Peace Commission 



JTMENT STATEMENT, 
1, 1983' 



(pleased that the Government of 
idor has moved forward with the 
ijiment of the Peace Commission 
brmation was envisioned in the 
ill982 pact of Apaneca. Of par- 
inportance, in our estimate, is 
:| Peace Commission, along with 
Hously formed Political and 
iRights Commissions, has the en- 
int of the major political parties 
)untry and thus broad popular 

1 in spirit and substance, the an- 
ient of the formation of the 
ommission demonstrates the 
political reconciliation will 
■'in anticipation of El Salvador's 
i984 presidential elections. As 
int Magana indicated in his an- 
ient, this reaffirms the "un- 
r,g decision to maintain 
'. . [and the] firm determination 
ilish respect and tolerance for 
«t ideologies in order to achieve a 
ijtic, democratic, and just society." 
[fernment's proposal. President 
A stated, underlies the point that 
fiution to the problem of violence 
;> essentially a political and 
(Catic one." The president noted 
{i commission's success would de- 
toon an end to "the irrational 
By of violence, destruction, and 



revenge" regardless of what ideology 
motivates it. 



DEPARTMENT STATEMENT, 
MAR. 1, 1983= 

The United States is fully committed to 
the democratic process in El Salvador 
and to a political resolution of the situa- 
tion there. In that regard, we are 
pleased to note that yesterday, Presi- 
dent Magana swore in the three 
members of the El Salvador Peace Com- 
mission. 

In his speech announcing the 
members, President Magana outlined 
the objectives of the commission: 
(1) revision of the amnesty law and its 
efficient and just implementation; (2) the 
creation of adequate social conditions 
and improvement in mechanisms to in- 
sure peace, i.e., elections, communica- 
tions, and so forth; and (3) promoting 
the participation of all social and 
political sectors in the democratic 
process. 

We view the announcement as pro- 
viding an institutional basis for national 
reconciliation in El Salvador within the 
electoral framework and look forward to 
progress as the commission pursues its 
objectives. 



'Read to news correspondents by acting 
Department spokesman Alan Romberg^ 

2Read to news correspondents by Depart- 
ment spokesman John Hughes. ■ 



last summer around the time of the 
resignation of Secretary of State 
Haig. At the time, it was said that you 
were involved in some policy disputes 
with him, and we can argue about 
whether or not that was true, but I 
think it was— you would agree that 
there was some confusion about who 
was speaking for foreign policy, who 
was making foreign policy. It's assum- 
ed now that you have the ear of Presi- 
dent Reagan. Over the past few 
weeks, as we've seen the Central 
America issue come up again. Sec- 
retary Shultz has not had very much to 
say about it other than one day of 
testimony on Capitol Hill. And yet, 
we've seen your trip to Central 
America, a number of newspaper in- 
terviews, television interviews. Are 
you running Central American policy 
now? 

A. I should say not. I should say 
not. You know, there's a very strange 
kind of a notion that there's something 
inappropriate, as it were, about people 
who sit in the Cabinet and sit on the Na- 
tional Security Council having an oppor- 
tunity to talk to the President about 
policies of concern to the Administra- 
tion. The fact is every member of the 
U.S. Cabinet has the opportunity to talk 
to the President about questions that 
concern them. Every member of the Na- 
tional Security Council has that oppor- 
tunity, too. That's almost part of the 
definition, by the way, is that you can 
speak to the President about things that 
concern you. 

I made the trip to Central America 
because the President asked me to, and 
Secretary Shultz asked me to, I may 
say. Secretary Shultz was going 
someplace else at that time, on another 
very important trip, as I know you 
know. 

The Vice President was going to a 
third area of the world on another very 
important trip. And there was a lot of 
public attention to those trips im- 
mediately on their return. Now there's a 
little more attention to my Central 
American trip, but I think that's more a 
matter of media focus than anything 
else, quite frankly. 

Q. President Reagan has dis- 
missed any parallel between El 
Salvador and Vietnam in a sense that 
he says that American ground troops 
will not be sent there, and yet he 
revives the domino theory, saying that 
if the communism isn't stopped in El 
Salvador, it may come all the way up 
to the southern border. My question 



WESTERN HEMISPHERE 



is, if that's the case, if that's the 
danger and it's that kind of threat to 
national security, why rule out the use 
of U.S. troops, and under what cir- 
cumstances would U.S. troops be ad- 
visable? 

A. I want to go back and say 
something in response to Ms. DeYoung's 
question, if I may, that's relative to 
yours. 

It's the President who speaks for the 
Administration. It was the President 
last summer and it's the President right 
now who speaks for the Administration. 
And when the President refers to a 
domino theory, it's mainly because 
everybody else talks about dominoes. 
They say in Central America that you 
North Americans are always talking 
about dominoes. I think they think it's 
the national pastime. 

So far as I know, there has been no 
discussion at any level in our govern- 
ment by anyone, certainly in any 
authoritative role, of any use of 
American troops. We cannot imagine 
circumstances under which it would be 
necessary. We're quite sure that if we 
make wise, prudent policy decisions now 
to deal with the problems as they exist 
in Central America today, we will never 
be confronted with the necessity of 
using American troops in this 
Hemisphere. 

Q. You were said to be against the 
idea of a two-track policy of negotia- 
tions and supplying more military aid. 
That was suggested by the State 
Department. Is that accurate? And if 
it's not accurate, how did the reports 
come to be so persistent? 

A. One, I don't know. I was out of 
the country. Two, I'm in favor of a 
multitrack approach. I'm very strongly 
in favor of increased economic aid, let 
me say, rapidly increased economic aid, 
humanitarian aid. I'm also in favor of 
anything we can do to promote a 
political solution through democratic 
elections. ■ 



Caribbean Basin 
Initiative Legislation 



PRESIDENT'S STATEMENT, 
FEB. 16, 19831 

In December, I pledged that the Carib- 
bean Basin initiative would be among 
the very first pieces of legislation that I 
would submit to the 98th Congress, and 
today I have taken the opportunity to 
focus again on this initiative, which is 
close to my heart and one of my highest 
priorities. 

As you know, last year the Carib- 
bean Basin initiative enjoyed strong, 
bipartisan support and was actually 
passed by the House. It is essential that 
we renew our efforts now to complete 
this vital task. 

When we think of our country's 
security — about strategic areas absolute- 
ly essential to our safety— certainly the 
Western Hemisphere must top the list. 
If we cannot respond to upheavals in 
our own front yard, how can we expect 
to play a strong role for peace in the 
faraway Middle East, for example? 

Today our democratic neighbors in 
the Caribbean Basin area are confronted 
with unprecedented political and 
economic pressures. Aid is important, 
but it is not enough. We must help these 
countries to renew their economies and 
strengthen their democracies. We must 
open new markets and encourage invest- 
ment and business expansion, which, I 
would stress, will lead to direct benefits 
to the U.S. economy. The tax and trade 
provisions of the Caribbean Basin ini- 
tiative that we are seeking are the 
essential elements that would make our 
program more promising than past ef- 
forts; leaving them out would gut the 
program of its greatest strengths. 

There are those who believe it takes 
a general crisis to get action out of 
Washington. We cannot afford to wait 
for a crisis to erupt so close to home. It 
has been almost a year since I met with 
Caribbean leaders in Barbados. Their 
people believe in democracy and want 
nothing more than an opportunity to live 
and work in freedom. We owe it to 
them — but more importantly, to 
ourselves— to follow through on a pro- 
gram so vital to the well-being of our 
closest neighbors. 

It is no coincidence that I have con- 
centrated considerable efforts on the 
Western Hemisphere over these last 2 
years. Shortly after my election, I 



visited the President of Mexico a 
forged close ties with his success 
first head of state to visit the W 
House during my Administratior 
Prime Minister Seaga from Jam; 
And just a few months ago I visi 
South and Central America, mee 
with six neighboring heads of st; 
Since entering office it has been 
privilege to have conferred direc 
the leaders of 15 donor and recij 
tions of the Caribbean Basin init 
But I cannot do it alone. Su( 
require a bipartisan legislative e: 
is the only way we can finish tht 
started last year and put into ef 
tax and trade provisions of the ( 
bean Basin initiative. If there is 
thing I have learned since gettin 
White House, it is that we have 
work together if anything is to \ 
complished. I am counting on m^ 
women of both parties — as repr 
by today's visitors— to work wit 
securing this vital program for j 
in the Caribbean region and gre 
security, freedom, and prosperit 
the Americas. 



MESSAGE TO THE CONGRE 
FEB. 18, 19832 

Last year I proposed a major new p 
for economic cooperation for the Ca 
Basin. I am pleased to report that tl 
portion of the Caribbean Basin Initii 
acted upon last year, and that the n 
already reaped some of the benefits 
$350 million of this emergency a 
However, while the House of Repre; 
also approved the trade and tax por 
this integrated program, Congress i 
before favorable consideration could ' 
place in the Senate. Today I am trai '■ 
to the Congress for swift action the 
and tax plan as approved by a majoi 
members during the last session. 

The economic, political, and sect 
challenges in the Caribbean Basin ail 
midable. Our neighbors are struggliil 
keep up with the rapidly changing g 1 
economic system, while striving to c «J 
nurture representative and responsi 'i 
tions. These tasks would be burden t« 
for any nation, but they are also bei'f 
to defend themselves against attem] I 
externally-supported minorities to ii t* 
alien, hostile, and unworkable systei fl 
them by force. These challenges mu Ix 
ed foursquare. The alternative is fui er 
pansion of political violence from th xt 



88 



Department of Statef 



WESTERN HEMISPHERE 



jthe extreme right, leading inevitably 
Ir economic decline, and more human 
f and dislocation. 

Kconomic crisis facing most of the 
juntries is acute. Deteriorating trade 
titles, worldwide recession, mounting 
lldens, growing unemployment, and 
Sted structural problems are having a 
phic impact throughout the region, 
evelopments have forced thousands of 
D emigrate and have left even the 
ablished democracies severely 
This is a crisis we cannot afford to 

emergency funding approved last 
helped these fragile economies cope 
r mounting balance-of-payments 
. I must stress, however, that the 
i tax portions I am transmitting to- 
lesigned to improve the lives of the 
)f the Caribbean Basin by enabling 
earn their own way to a better 
.t the same time, given the in- 
dence between U.S. and Caribbean 



Basin economies, this bill will also benefit the 
U.S. by expanding markets for our exports 
and hence improving U.S. job opportunities. 
It should also reduce the pressures of 
economically-inspired immigration into this 
country from the region. 

Thanks to the cooperative, bipartisan 
spirit with which this program has been con- 
sidered, and the changes that were made last 
year by Congress to ensure beyond any doubt 
adequate safeguards for domestic interests, I 
am hopeful that the Caribbean Basin Ini- 
tiative will be acted upon with maximum 
speed by the Congress. 

Ronald Reagan 



'Issued by the Office of the Press 
Secretary following the President's meeting 
with a bipartisan group of Congressmen to 
discuss the proposed legislation (text from 
Weekly Compilation of Presidential 
Documents of Feb. 21, 1983). 

^Text from Weekly Compilation of 
Presidential Documents of Feb. 21. ■ 



io Broadcasting to Cuba 



RTMENT STATEMENT. 

|5, 1983' 

ruary 24, 1983, Senator Hawkins 
Hawkins (R.-Fla.)] introduced the 
3tration's bill on radio broad- 
to Cuba in the Senate. This 
a period of close consultation 
dio broadcasters, the National 
tion of Broadcasters, and key 
•s of Congress. The objective of 
)nsultations was to find a for- 
r the radio broadcasting to Cuba 
ch would attract the widest possi- 
)ort. 

I meeting on February 22, 1983, 
jipartisan group of legislators, 
nt Reagan stressed that the Ad- 
ition believes strongly that the 
Jeople have the right to know 
going on in their country and 
leir government's activities 
the world. This bill is designed to 
i radio which will make such in- 
on available to the Cuban 
-information that is now denied 
f their own government. In the 
lished tradition of Radio Free 
/Radio Liberty, the proposed 
isting will be a reliable source of 
e, objective news and informa- 
lis is a peaceful foreign policy ini- 
designed not to provoke a con- 
ion wdth Castro but to promote 



the free flow of ideas and the truth. 
Last year, in the 97th Congress, a bill 
authorizing the creation of such a radio 
passed the House of Representatives 
with bipartisan support by an almost 
2-1 margin and was reported favorably, 
also with bipartisan support, by the 
Senate Foreign Relations Committee. 

American broadcasters have had a 
number of concerns about the bill, 
primarily that the establishment of 
broadcasting to Cuba would result in an 
increase in longstanding Cuban in- 
terference with U.S. AM broadcasting. 
The Administration did its utmost to 
reach a compromise that responded to 
those broadcasters' concerns, as well as 
to the national interest. However, in the 
end, the Administration did not believe 
that all of the modifications requested 
by the National Association of Broad- 
casters could be accommodated consis- 
tent with the establishment of effective 
radio broadcasting to Cuba. 

Nevertheless, we believe the bill in- 
troduced on February 24, which contains 
significant accommodations to the con- 
cerns of broadcasters, meets in almost 
all respects the provisions they have 



sought. In fact, most of the recommen- 
dations made by the National Associa- 
tion of Broadcasters in a letter dated 
November 16, 1982, to all members of 
the Senate have been incorporated in 
this bill. The most important of these ac- 
commodations is not to establish a new 
station on the commercial portion of the 
AM band (535 kHz to 1605 kHz), other 
than possibly on 1180 kHz, which has 
been allocated to and used by the 
government for Voice of America broad- 
casting to Cuba for over 20 years. 
Although the accommodations made in 
this new bill are significant, the bill, as 
introduced, gives the Administration the 
options necessary to insure that radio 
broadcasting to Cuba would be done 
right. 

Broadcasters' concerns over Cuban 
interference with U.S. AM broadcasting 
are not new; this is a significant problem 
that has been growing over the past 15 
years. The Cuban Government, in its ef- 
forts to defeat this bill, has sought to 
give the impression that interference 
would increase. The Administration has 
stated repeatedly that this is a peaceful, 
legal, and nonconfrontational foreign 
policy initiative in the national interest 
patterned after the successful models of 
Radio Free Europe and Radio Liberty. 
The Administration believes that we 
should not allow our foreign policy to be 
determined by threats of the Cuban 
Government. We believe that the Con- 
gress and American broadcasters share 
that determination, and we look forward 
to early passage of this important 
legislation. 

'Made available to news correspondents 
by acting Department spokesman Alan 
Romberg. ■ 



TREATIES 



Current Actions 



MULTILATERAL 

Antarctica 

Recommendations relating to the furtherance 
of the principles and objectives of the Antarc- 
tic Treaty (TIAS 4780). Adopted at Buenos 
Aires July 7, 1981.' 
Notification of approval : U.S., Feb. 24, 1983. 

Atomic Energy 

Statute of the International Atomic Energy 
Agency. Done at New York Oct. 26, 1956. 
Entered into force July 29, 1957. TIAS 3873. 
Acceptance deposited : Namibia, Feb. 17, 
1983. 

Agreement extending the agreement of June 
26, 1979 (TIAS 9627) on research participa- 
tion and technical exchange in the U.S. 
power burst facility (PBF) and heavy section 
steel technology (HSST) research programs 
and the Nordic Group's water reactor safety 
research programs. Effected by exchange of 
letters at Washington and Nykoping Oct. 8 
and Dec. 23, 1982. Entered into force 
Dec. 23, 1982; effective Aug. 28, 1982. 

Coffee 

Extension of the international coffee agree- 
ment, 1976 (TIAS 8683). Done at London 
Sept. 25, 1981. Entered into force Oct. 1, 
1982. TIAS 10439. 

Definitive acceptance deposited : Singapore, 
Feb. 3, 1983. 

Commodities — Common Fund 

Agreement establishing the Common Fund 
for Commodities, with schedules. Done at 
Geneva June 27, 1980.' 
Ratification deposited : Cameroon, Feb. 1, 



Customs 

Amendments to the customs convention on 

the international transport of goods under 

cover of TIR carnets of Nov. 14, 1975. 

Adopted by the administration committee for 

the TIR convention 1975 at Geneva Oct. 23, 

1981. 

Entered into force : Oct. 1, 1982. 

Education— UNESCO 

Convention on the recognition of studies, 
diplomas, and degrees concerning higher 
education in the states belonging to the 
Europe region. Done at Paris, Dec. 21, 1979. 
Entered into force Feb. 19, 1982.^ 
Ratification deposited : Denmark, Dec. 9, 
1982. 

Expositions 

Protocol revising the convention of Nov. 22, 
1928 (TIAS 6548) relating to international ex- 
positions, with appendix and annex. Done at 
Paris Nov. 30, 1972. Entered into force 
June 9, 1980. TIAS 9948. 
Accessions deposited : Argentina, Bolivia, 



Chile, El Salvador, Mexico, Nicaragua, Peru, 
Dec. 7, 1982; Costa Rica, Venezuela, Nov. 23, 
1982; Cuba, Nov. 17, 1982; Panama, Dec. 3, 



Finance 

Agreement establishing the International 
Fund for Agricultural Development. Done at 
Rome June 13, 1976. Entered into force 
Nov. 30, 1977. TIAS 8765. 
Accession deposited : Belize, Dec. 15, 
1982. 

Genocide 

Convention on the prevention and punish- 
ment of the crime of genocide. Adopted at 
Paris Dec. 9, 1948. Entered into force 
Jan. 12, 1951.2 
Accessions deposited : Gabon, Jan. 21, 1983. 

Human Rights 

International covenant on civil and political 
rights. Done at New York Dec. 16, 1966. 
Entered into force Mar. 23, 1976. ^ 
Accessions deposited : Afghanistan, Jan. 24, 
1983; Gabon, Jan. 21, 1983. 

International covenant on economic, social, 

and cultural rights. Done at New York 

Dec. 16, 1966. Entered into force Jan. 3, 

1976.' 

Accessions deposited : Afghanistan, Jan. 24, 

1983; Gabon, Jan. 21, 1983. 

Judicial Procedure 

Convention on the taking of evidence abroad 
in civil or commercial matters. Done at The 
Hague Mar. 18, 1970. Entered into force 
Oct. 7, 1972. TIAS 7444. 
Accessions deposited : Cyprus, Jan. 13, 1983. 

Marriage 

Convention on consent to marriage, minimum 
age for marriage, and registration of mar- 
riages. Done at New York Dec. 10, 1962. 
Entered into force Dec. 9, 1964.^ 
Accession depo sited: Guatemala, Jan. 18, 



Nuclear Material— Physical Protection 

Convention on the physical protection of 
nuclear material, with annexes. Done at Vien- 
na Oct. 26, 1979.' 
Ratification dep osited: U.S., Dec. 13, 1982. 

Patents 

Patent cooperation treaty, with regulations. 
Done at Washington June 19, 1970. Entered 
into force Jan. 24, 1978, except for Chapter 
II which entered into force Mar. 29, 1978,3 
TIAS 8733. 
Accession deposited : Mauritania, Jan. 13, 



Racial Discrimination 

International convention on the elimination of 
all forms of racial discrimination. Done at 
New York Dec. 21, 1965. Entered into force 
Jan. 4, 1969.2 
Ratification deposited : Guatemala, Jan. 18, 



Safety at Sea i 

Proces-verba] of rectification to the ii I 
tional convention for the safety of lifii 
1974 (TIAS 9700). Done at London El 
1982. 

Space 

Convention on international liability : 
damage caused by space objects. Dor 
Washington, London, and Moscow M 

1972. Entered into force Sept. 1, : " 
the U.S. Oct. 9, 1973. TIAS 7762. 
Ratification deposited : Italy, Feb. 24i 

Telecommunications 

International telecommunications cor 
with annexes and protocols. Done at 
Torremolinos Oct. 25, 1973. Entered 
force Jan. 1, 1975; for the U.S. Apr. 
TIAS 8572. 
Ratification deposited : Sudan, Oct. 2 

Radio regulations, with appendices a 
protocol. Done at (Geneva Dec. 6, 19' 
Entered into force Jan. 1, 1982, exci 
(1) arts. 25 and 66 and appendix 43 ' 
entered into force Jan. 1, 1981 and ( 
provisions concerning aeronautical n 
service which entered into force Feb 
Approval deposited : Hungary, Oct. 

Terrorism 

Convention on the prevention and pi 
ment of crimes against international 
tected persons, including diplomatic 
Done at New York Dec. 14, 1973. E 
to force Feb. 20, 1977. TIAS 8532. 
Ratification deposited : Guatemala, 
Jan. 18, 1983. 

Trade 

U.N. convention on contracts for the 

tional sale of goods. Done at Vienna 

1980.' 

Accession deposited : Syrian Arab 

Oct. 19, 1982. 

Protocol extending the arrangment i 
international trade in textiles of Dec 

1973, as extended (TIAS 7840, 8939 
at Geneva Dec. 22, 1981. Entered in 
Jan. 1, 1982. TIAS 10323. 
Acceptances deposited : Peru, Jan. 5, 
Yugoslavia, Jan. 18, 1983.'' 

U.N. Industrial Development Orgai 

Constitution of the U.N. Industrial I 
ment Organization, with annexes. Di 
Vienna Apr. 8, 1979.' 
Signature : Cape Verde, Jan. 28, 198' 
Ratification deposited : Rwanda, Jan. 
1983; Venezuela, Jan. 28, 1983. 

Whaling 

International whaling convention ani 
schedule of whaling regulations, 
by 1956 protocol. Done at Washingt^ 
Dec. 2, 1946. Entered into force No' 
1948. TIAS 1849, 4228. 
Adherence deposited : Finland, Feb. 

I 



Department of State ui 



TREATIES 



I for the sixth extension of the 

,)<■ .■..nvention, 1971 (TIAS 7144). 
VasliinKnon Mar. 24, 1981, Entered 
.hiiv 1. 1981: for the U.S. Jan. 12, 
\S iii:-:.".o. 
ii'e lie ■posited: Netherlands, Feb. 18, 



ncol tor the first extension of the 
■i.nvfntion, 1980 (TIAS 10015). 
.Vashiiitrton Mar. 24, 1981. Entered 
. Jiilv 1, 1981; for the U.S. Jan. 12, 
\S Id.'i.Sl. 
ce .li'posited: Netherlands, Feb. 18, 



an on the elimination of all forms of 

ation against women. Adopted at 

k Dee. 18, 1979. Entered into force 

981.2 

on deposited : Gabon, Jan. 21, 1983. 

eritage 

on concerning the protection of the 
tural and natural heritage. Done at 
V. 23, 1972. Entered into force 
1975. TIAS 8226. 
ons deposited : Cameroon, Dec. 7, 



izambique, Nov. 27, 



esh 



nt amending the agreement for sales 
Itural commodities of Mar. 8, 1982 
|)483). Effected by exchange of notes 
li Dec. 30, 1982. Entered into force 

1982. 

nt amending the agreement for sales 
iltural commodities of Mar. 8, 1982 
)483). Effected by exchange of notes 
I Feb. 6, 1983. Entered into force 



ndum of understanding concerning 
ion in aerospace experiments employ- 
ding rockets. Signed at Brasilia 
5. Entered into force Jan. 31, 



»nt extending the agreement of June 
(TIAS 9020), as extended, on ex- 
I and cooperation in cultural, scien- 
Licational, technological, and other 
Effected by exchange of notes at Sofia 
and Apr." 9, 1982. Entered into force 



ent concerning the test and evalua- 
J.S. defense weapons systems in 
Effected by exchange of notes at 
?ton Feb. 10, 1983. Entered into 
Jb. 10, 1983. 



Dominican Republic 

Agreement for sales of agricultural com- 
modities, relating to the agreement of 
Sept. 28, 1977 (TIAS 8944), with memoran- 
dum of understanding. Signed at Santo Dom- 
ingo Dec. 11, 1982. Entered into force 
Dec. 11, 1982. 

El Salvador 

Agreement for sales of agricultural com- 
modities relating to the agreement of 
Jan. 22, 1981, as amended. Signed at San 
Salvador Dec. 15, 1982. Entered into force 
Dec. 22, 1982. 

France 

Convention on the transfer of sentenced per- 
sons. Signed at Washington Jan. 25, 1983. 
Enters into force on the first day of the sec- 
ond month after exchange of notifications of 
completion of constitutional procedures. 

Agreement regarding participation in the 
U.S. NRC steam generator safety research 
project, with appendix. Signed at Washington 
and Paris Mar. 18 and June 8, 1982. Entered 
into force June 8, 1982. 

Amendment to agreement of Mar. 18 and 
June 8, 1982 regarding participation in the 
U.S. NRC steam generator safety research 
project. Signed at Washington and Paris 
Oct. 8 and 22, 1982. Entered into force 
Oct. 22, 1982. 

International Coffee Organization 

Agreement relating to a procedure for U.S. 
income tax reimbursement. Effected by ex- 
change of letters at London Dec. 17, 1982. 
Entered into force Jan. 1, 1983. 
Supersedes : Agreement of Mar. 20 and 
25, 1980 (TIAS 9739). 

International Sugar Organization 

Agreement relating to a procedure for U.S. 
income tax reimbursement. Effected by ex- 
change of letters at London Dec. 17, 1982. 
Entered into force Jan. 1, 1983. 
Supersedes : Agreement of July 10, 1980 
(TIAS 9807). 

Israel 

Grant agreement to support the economic 
and political stability of Israel. Signed at 
Washington Dec. 16, 1982. Entered into 
force Dec. 16, 1982. 

Japan 

Agreement amending and extending the 
agreement of Jan. 28, 1980 (TIAS 9915) 
relating to space shuttle contingency landing 
sites. Effected by exchange of notes at Tokyo 
Nov. 11, 1982. Entered into force Nov. 11, 
1982. 

Liberia 

Agreement extending the agreement of 
Jan. 11, 1951, as amended and extended 
(TIAS 2171, 8846), relating to a military mis- 
sion. Effected by exchange of notes at 
Monrovia Dec. 12, 1980 and Jan. 15, 1981. 
Entered into force Jan. 15, 1981; effective 
Jan. 11, 1981. 



Agreement on construction of additional 
facilities at Roberts International Airport. 
Signed at Monrovia Feb. 3, 1983. Entered in- 
to force Feb. 3, 1983. 

Agreement for sales of agricultural com- 
modities, relating to the agreement of 
Aug. 13, 1980 (TIAS 9841). Signed at 
Monrovia Dec. 17, 1982. Entered into force 
Dec. 17, 1982. 

Agreement amending the agreement for sales 
of agricultural commodities of Apr. 6, 1982. 
Effected by exchange of notes at Monrovia 
Nov. 19 and Dec. 8, 1982. Entered into force 
Dec. 8, 1982. 

Madagascar 

Agreement for sales of agricultural com- 
modities, relating to the agreement of 
Aug. 19, 1981 (TIAS 10218). Signed at An- 
tananarivo Dec. 28, 1982. Entered into force 
Dec. 28, 1982. 

Mauritius 

Agreement for sales of agricultural com- 
modities, relating to the agreement of 
June 29, 1979 (TIAS 9541), with minutes of 
negotiation. Signed at Port Louis Dec. 30, 
1982. Entered into force Dec. 30, 1982. 

Mexico 

Agreement concerning land mobile service in 
the bands 470-512 MHz and 806-890 MHz 
along the common U.S. -Mexico border. 
Signed at Mexico June 18, 1982. 
Entry into force : Jan. 17, 1983. 

Agreement relating to assignments and usage 
of television broadcasting channels in the fre- 
quency range 470-806 MHz (channels 14-69) 
along the U.S. -Mexico border. Signed at Mex- 
ico June 18, 1982. 
Entry into force : Jan. 17, 1983. 
Supersedes : Agreement of July 16, 1958 
(TIAS 4089). 

Agreement extending the air transport 
agreement of Aug. 15, 1960, as amended and 
extended (TIAS 4675, 7167). Effected by ex- 
change of notes at Mexico Sept. 16 and 
Dec. 13, 1982. Entered into force Dec. 13, 
1982. 

Agreement extending the agreement of 
Jan. 20, 1978 relating to reduced air fares 
and charter air services (TIAS 10115). Ef- 
fected by exchange of notes at Mexico 
Dec. 27, 1982 and Jan. 13, 1983. Entered in- 
to force Jan. 13, 1983. 

Philippines 

Agreement relating to trade in cotton, wool, 
and manmade fiber textiles and textile prod- 
ucts, with annexes. Effected by exchange of 
notes at Washington Nov. 24, 1982. Entered 
into force Jan. 1, 1983. 

Senegal 

Agreement amending the agreement for sales 
of agricultural commodities and memorandum 
of understanding of May 16, 1980 (TIAS 



983 



CHRONOLOGY 



PRESS RELEASES 



10239). Effected by letter of July 14, 1982 at 
Dakar. Entered into force July 16, 1982. 



February 1983 



ACTeement concerning fisheries off the coasts February 1 ^ ,-, 

of^he U S ^th annexes and agreed minutes. Honduran and U.S. troops conduct joint 

Si^ed at Washington July 29tl982. military exercises in Gracious A Dios depart- 
Entered into force: Jan. 17, 1983. 



Sudan 

Agreement for sales of agricultural com- 
modities, relating to the agreement of 
Dec. 24, 1977 (TIAS 9157). Signed at Khar- 
toum Jan. 20, 1983. Entered into force 
Jan. 20, 1983. 

Sweden 

Memorandum of agreement on the exchange 
of military personnel and on the general con- 
ditions which will apply. Signed at Wash- 
ington Jan. 13 and 17, 1983. Entered into 
force Jan. 17, 1983. 

Turkey 

Agreement to support and promote the finan- 
cial stability and economic recovery of 
Turkey. Signed at Ankara Dec. 17, 1982. 
Entered into force Dec. 17, 1982. 

United Kingdom 

Agreement extending the arrangement of 
July 20 and Aug. 3, 1977 (TIAS 8688) in the 
field of nuclear safety research and develop- 
ment. Effected by exchange of letters at 
Warrington and Washington Feb. 18 and 
June 11, 1982. Entered into force June 11, 
1982; effective Aug. 3, 1982. 

Venezuela 

Memorandum of understanding relating to in- 
terim agreement on maritime matters. 
Signed at Washington Jan. 14, 1983. Entered 
into force Jan. 14, 1983. 



•Not in force. 

2Not in force for U.S. 

'Chapter II not in force for U.S. 

^Subject to approval. 

^Applicable to Kingdom in Europe. 



military exercises i 
ment Feb. 1-9, 1983. 

February 2 

Austrian Chancellor Bruno Kreisky makes an 
official working visit to Washington, D.C. 
Feb. 2-4. 

President Reagan meets with six Afghan 
freedom fighters at the White House to ex- 
press U.S. concern and sympathy for these 
people because of the continuing Soviet oc- 
cupation of their country. 

February 8 

The United States formally joins the African 
Development Bank. 

State Department submits annual human 
rights report to the Congress. The Report, 
required by U.S. law, reviews human rights 
practices in 162 nations including those na- 
tions receiving U.S. assistance and those that 
are U.N. members. 

February 9 

Nepalese Prime Minister Surya Bahadur 
Thapa, during a private visit to Washington, 
D.C. Feb. 9-16, meets with Vice President 
Bush Feb. 16 and with Secretary Shultz 
Feb. 14. 

February 13 

In the first contested presidential election in 
Cyprus in 22 years, the incumbent President 
of Cyprus, Spyros Kyprianou, is re-elected to 
a second 5-year term. 

February 14 

The Interim Committee of the Board of 
Governors of the International Monetary 
Fund agrees in its 20th meeting in 
Washington, D.C. to an increase in quotas by 
47.4%. 

State Department releases to Congress 
and makes public a new report on Soviet 
forced labor. The report stresses the Soviet 
policy of using forced labor as a punishment 
for crimes, as well as to build the country's 
economy. 

February 15 

By a vote of 28-9 with 4 abstentions, the 
U.N. Commission on Human Rights adopts a 
resolution calling for "immediate and uncondi- 
tional withdrawal of foreign forces from 
Kampuchea." 

February 16 

President Reagan announces that Air Force 
AWACS reconnaissance planes have been 
sent to Egypt for exercises designated for 
training. 

Norwegian Prime Minister Kaare Willoch 
makes an official working visit to 
Washington, D.C. Feb. 16-18. 



By a vote of 29-7 with 5 abstentiijl: 
U.N. Commission on Human Rights p 
resolution: i 

• Urging a political solution for t j, 
istan based on self-determination free* 
outside interference; [ 

• Calling for immediate withdra»4 
foreign troops from Afghanistan. f 

February 22 

During a private visit to the United S || 
Jamaican Prime Minister Edward Se . 
vited by President Reagan to receive ' 
American Friendship medal. 

February 23 

Israeli ambassador to the United Sta • 
Moshe Arens, is confirmed as Israeli ' 
Minister. r 

February 27 

Her Majesty Queen Elizabeth II arri' 
12-day official visit to the west coast 
the visit, the Queen will meet with P j 
Reagan and other U.S. officials. 

Chief Hiteswar Saikia is sworn ij 
Chief Minister of the Indian state of 
following state elections. ■ 



f 

Department of Stati^ 



Press releases may be obtained f t 
Office of Press Relations, Departmei | 
State, Washington, D.C. 20520. 

I 



Subject 



Program for the offi 
working visit of A 
Chancellor Bruno 
Feb. 2-4. 

U.S., Japan exchang 
on cooperation in 
research and dev6 

Shultz: arrival statei 
Tokyo, Jan. 30. 

Shultz: luncheon ren 
Tokyo, Feb. 1. 

Shultz: news confer* 
Tokyo, Feb. 1. ' 

Shultz: news confer* j 
route to Beijing, 1 

Shultz: toast, Beijin): 

Subcommittee on Ss 
Life at Sea (SOLi 
ping Coordinating I 
mittee(SCC), Fel' 
tional Committee 
Prevention of Ma 
Pollution fNCPMl 
Mar. 10. 

U.S. Organization f( ' 
International Rad 
sultative Commit! 
(CCIR), study gro 
Mar. 16. 



Department of State 



PRESS RELEASES 



Shultz: remarks to the 
American business com- 
munity, Beijing, Feb. 3. 
Shultz: press conference, 

Beijing, Feb. 5. 
Shultz: interview. Radio 

Beijing, Beijing, Feb. 6. 
Shultz: dinner toast, Seoul, 

Feb. 6. 
Shultz: news conference en 

route to Seoul, Feb. 6. 
Shultz: toast, Beijing, Feb. 5. 
Department of State activ- 
ities in the private sector 
initiatives area. 
Shultz: news conference, 

Seoul, Feb. 8. 
Shultz: news conference. 

Hong Kong, Feb. 9. 
Program for the official 
working visit of 
Norwegian Prime 
Minister Kaare Willoch, 
Feb. 16-18. 
U.S. Organization for the 
International Telegraph 
and Telephone Con- 
sultative Committee 
(CCITT), study groups A 
and B, Mar. 2. 
Shultz: statement before the 
Senate Foreign Relations 
Committee. 
Shultz: statement before the 
House Foreign Affairs 
Committee. 
Shultz: press conference, on 
Williamsburg Economic 
Summit, Feb. 17. 
Palau approves free asso- 
ciation with the U.S. 
(revised). 
Regional foreign policy con- 
ference, Denver, Mar. 8. 
Shultz: address and question- 
and-answer session before 
the Conservative Political 
Action Conference. 
CCITT, Integrated Services 
Digital Network (ISDN), 
working party, Mar. 10. 
CCIR, study group CMIT, 

Mar. 15. 
Shultz: statement before the 
Senate Budget Committee. 
Shultz: arrival statement, 

Washington, Feb. 10. 
Shultz: interview on ABC-TV 
"This Week With David 
Brinkley," Feb. 20. 
Shultz: statement before 
the Subcommittee on In- 
ternational Operations, 
House Foreign Affairs 
Committee. 
Shultz: remarks before the 
Subcommittee on Interna- 
tional Operations, House 
Foreign Affairs Commit- 
tee. 
Shultz: address at the 

Southern Center for Inter- 
national Studies, Atlanta. 



Shultz: question-and-answer 
session following the 
Atlanta address, Feb. 24. 

Shultz: statement announc- 
ing members of the 
Foreign Policy Planning 
Commission. 

Shultz: press conference, Bal 
Harbour, Florida, Feb. 25. 

Shultz: statement before the 
Subcommittee on Foreign 
Operations, Appropria- 
tions Committee, Senate 
Foreign Relations Commit- 
tee. 



*Not printed in the Bulletin. 



USUN 



Press releases may be obtained from the 
Public Affairs Office, U.S. Mission to the 
United Nations, 799 United Nations Plaza, 
New York, N.Y. 10017. 

No. Date Subject 



104 


11/1 


Gershman: world social 
situation. Committee III. 


105 


11/3 


Zimmerman: world charter 
for nature. General 
Assembly. 


106 


11/2 


Fields: chemical weapons 
convention. Committee I. 


107 


11/3 


Gershman: vote on Decade 
for Action to Combat 
Racism and Racial 
Discrimination, General 
Assembly. 


108 


11/4 


Adelman: worid disarmament 
campaign. Committee I. 


109 


11/4 


Bennett: personnel. 
Committee V. 


110 


11/3 


Sherman: Falkland Islands, 
General Assembly. 


•111 


11/4 


Lichenstein: peaceful uses of 
outer space. Special 
Political Committee. 


•112 


11/4 


Adelman: Falkland Islands, 
General Assembly. 


•113 


11/4 


Bond: non-use of force. 
Committee VI. 


•114 


11/4 


Bond: Central America, 
Committee VI. 


•115 


11/4 


Bond: Central America, 
Committee VI. 


•116 


11/4 


Akalousky: worid dis- 
armament campaign, Com- 
mittee I. 


•117 


11/5 


Reynolds: Decade for 

Women, equality, develop- 
ment. Committee III. 


•118 


11/5 


Clark: Central America, 
Committee I. 


•119 


11/9 


Housholder: joint inspection 
unit, Committee V. 


•120 


11/12 


Sherman: TTPI, Committee 
IV. 



121 


11/11 


122 


11/11 


123 


11/12 


124 


11/12 


125 


11/15 


126 


11/15 


127 


11/15 


128 


11/16 



130 


11/16 


131 


11/16 


132 


11/16 


133 


11/16 


134 


11/18 


135 


11/17 


136 


11/18 


137 


11/18 


138 


11/19 


139 


11/22 


140 


11/22 



11/23 
11/23 



145 


11/24 


146 


11/24 


147 


11/24 


148 


11/26 



Sherman: U.S. territories. 

Committee IV. 
Kirkpatrick: death of 

Brezhnev, General 

Assembly. 
Luce; apartheid. General 

Assembly. 
Sherman: South Africa, 

Committee IV. 
Douglas: refugees. 

Committee III. 
Johnston: peaceful settle- 
ment of disputes, General 

Assembly. 
Gershman: youth. Committee 

ni. 

Johnston: International Civil 
Service Commission, Com- 
mittee V. 

Sorzano: state property, 
archives, and debts. 
General Assembly. 

Johnston: U.N.-OAU cooper- 
ation, (General Assembly. 

Johnston: U.N.-OAU cooper- 
ation. General Assembly. 

Johnston: U.N. -League of 
Arab States cooperation. 
General Assembly. 

Johnston: Israeli attack on 
Iraqi nuclear installation. 
General Assembly. 

Hoskins: operational ac- 
tivities for development. 
Committee II. 

Gershman: refugees. Com- 
mittee III. 

Lodge: nuclear freeze. Com- 
mittee I. 

Johnston: IAEA report, 
CJeneral Assembly. 

Duggan: contributions to 
UNHCR, General 
Assembly. 

Gundersen: peace and dis- 
armament movements. 
Committee I. 

Lichenstein: use of satellites 
for direct television broad- 
casting, Special Political 
Committee. 

Lichenstein: contributions 
to UNRWA, General 
Assembly. 

Kasten: religious intolerance, 
Committee III. 

Padilla: decolonization. Gen- 
eral Assembly. 

Schwab: International Law 
Commission, Committee 
VI. 

Luce: decolonization. Gen- 
eral Assembly. 

Kirkpatrick: Afghanistan, 
General Assembly. 

Feldman: Iran, Committee 
III. 

Gershman: human rights, 
Committee III. 



PUBLICATIONS 



1 1/26 Sherman: Cuba and Laos, 
General Assembly. 

11/26 Milton: prevention of an 

arms race in outer space, 
Committee I. 

11/29 Gershman: drug trafficking, 
Committee III. 

12/1 Gundersen: non-first-use of 
nuclear weapons. Commit- 
tee I. 

12/1 U.S. and Republic of Palau 
call plebiscite on compact 
of free association. 

12/1 Gershman: drug trafficking. 
Committee III. 

12/1 Lichenstein: UNRWA, Spe- 
cial Political Committee. 

[Not issued.] 



'l57 12/2 Lichenstein: information. 

Special Political Commit- 
tee. 

'158 12/2 Lichenstein: information. 

Special Political Commit- 
tee. 

'159 12/2 Lichenstein: information, 

Special Political Commit- 
tee. 

■160 [Not issued.] 

'161 12/3 Reich: program of action 
concerning disabled per- 
sons. General Assembly. 

'162 12/3 Adelman: Law of the Sea 
Conference, General 
Assembly. 

163 12/3 Adelman: Law of the Sea 
Conference, General 
Assembly. 

164 12/3 Papendorp: program plan- 
ning. Committee V. 

165 12/3 Lodge: ECOSOC report. 

Committee III. 

166 12/6 Kasten: human rights in 

Poland, Committee III. 

167 12/7 Kirkpatrick: human rights. 

Committee III. 

168 12/7 Kuttner: U.N. pension sys- 

tem. Committee V. 

169 12/8 Gershman: UNHCR report. 

Committee III. 

170 12/8 Lichenstein: apartheid. Gen- 

eral Assembly. 

171 12/8 Gershman: religious intoler- 

ance, Committee III. 

172 12/8 Adelman: chemical and bio- 

logical weapons. Commit- 
tee I. 

173 12/9 Lichenstein: IAEA report. 

General Assembly. 

174 12/9 Lichenstein: Israeli practices 

in the occupied territories. 
General Assembly. 

175 12/9 Luce: apartheid. General 

Assembly. 

176 12/9 Lodge: military spending, 

Committee I. 



•177 


12/10 


'178 


12/10 


•179 


12/10 


•180 


12/10 


•181 


12/10 


•182 


12/10 


•183 


12/13 


•184 


12/15 


•185 


12/15 



Craighead: international 
security, Committee I. 

Sherman: question of Pal- 
estine. General Assembly. 

Craighead: international 
security. Committee I. 

Adelman: comprehensive test 
ban. General Assembly. 

Gershman: Guatemala, Com- 
mittee III. 

Gershman: Chile, Committee 
III. 

Luce: world disarmament 
campaign, General 
Assembly. 

Gershman: ECOSOC report. 
Committee III. 

Gershman: ECOSOC report. 
Committee III. 



•Not printed in the Bulletin 



Department off State 



Free, single copies of the following Depart- 
ment of State publications are available from 
the Public Information Service, Bureau of 
Public Affairs, Department of State, 
Washington, D.C. 20520. 

President Reagan 

Progress in the Quest for Peace and 
Freedom, American Legion, Feb. 22, 1983 
(Current Policy #455). 

Vice President Bush 

U.S. Commitment to Peace and Security in 
Europe, Royal Institute of International Af- 
fairs, London, Feb. 9, 1983 (Current Policy 
#452). 

Advancing the Cause of Peace and Arms 
Control, Committee on Disarmament, 
Geneva, Feb. 4, 1983 (Current Policy #448). 

Peace and Security in Europe (includes a 
letter from President Reagan to the people 
of Europe), West Berlin, Jan. 31, 1983 
(Current Policy #447). 

Secretary Shultz 

Restoring Prosperity to the World Economy, 
Senate Foreign Relations Committee, 
Feb. 15, 1983 (Current Policy #451). 



Africa 

The Horn of Africa: U.S. Policy (GIST, 
January 1983). 

The Search for Regional Security in Southern 
Africa, Assistant Secretary Crocker, Sub- 
committee on Africa, House Foreign Af- 
fairs Committee, Feb. 15, 1983 (Current 
Policy #453). 

Background Notes on Mozambique (Jan. 
1983). 

Background Notes on Namibia (Jan. 1983). 



East Asia I 

Assessment of U.S. Relations With 
Assistant Secretary Holdridge, N| 
Council on U.S. -China Relations, ' 
York, Dec. 13, 1982 (Current Pol 

Economics 

Agriculture in U.S. Foreign Econoii 
(GIST, January 1983). U.S. E.xpol 
sion (GIST, January 1983). I 

Europe 

Economic Health of the Western A 
Ambassador Burns, Deutsche At! 
Gesellschaft, Bonn, Dec. 9, 1982 
Policy #445). 

Review of U.S. Relations With the 
Union, Under Secretary Eaglebu 
Governing Board of the World Ji 
gress, Feb. 1, 1983 (Current Poll 

Food 

World Food Security (GIST, Feb. : 

Human Rights 

Implementation of Helsinki Final I 
teenth Semiannual Report (June 
1982-November 30, 1982), Presi 
Reagan's report to the Commissi 
Security and Cooperation in Eur 
January 1983 (Special Report #1 

Middle East 

Lebanon (GIST, Jan. 1983). 

Nuclear Policy 

Nuclear Nonproliferation: Our Sha 
sponsibility. Ambassador Kennec 
American Nuclear Society, San I 
Jan. 25, 1983 (Current Policy #4' 

Western Hemisphere 

Background Notes on Brazil 

(December 1982). 
Background Notes on Guyana 

(December 1982). 
Background Notes on Nicaragua 

(January 1983). 
Background Notes on Uruguay 

(December 1982). 
Certification of Progress in El Sali 

Assistant Secretary Enders, Hou 

Affairs Committee, Feb. 4; and 1 

Secretary Abrams, Senate Foreij 

tions Committee, Feb. 2 (Curren 

#449). 
El Salvador: Certification Process ■ 

Feb. 1983). ■ 



Department of Stat 



983 

9 83, No. 2073 



1. Yellow Rain: The Arms Control 
))ns (Eagleburger) 77 

Ipment Dialogue With Africa 

id-Answer Session Following 

^ddress (Shultz) 28 

or Regional Security in Southern 

rocker) 50 

'inciples 

'rinciples and Foreign Policy 

ocracy (Shultz) 47 

»1 

ual Report (message to the 

) 60 

ecurity in the Nuclear Age 

ence of February 16 (Reagan) . 22 

itional Security (Reagan) 8 

-Answer Session Following San 

) Address (Shultz) 35 

lultz's Interview on "This Week 

nd Brinkley" 44 

is With Europe and Ties to NATO 

65 

; The Arms Control Implications 
rger) 77 

of State Activities in the Private 

rea 61 

d East Asia: A Partnership for 

re (Shultz) 31 

'isit of Austrian Chancellor 

Kreisky, Reagan) 69 

epartment of State Activities in 
ite Sector Area 61 

an Enduring Relationship With 

'olfowitz) 63 

id-Answer Session Following 

Wdress (Shultz) 28 

,-Answer Session Following San 

D Address (Shultz) 35 

lultz's Interview on "This Week 

vid Brinkley" 44 

id East Asia: A Partnership for 
ire (Shultz) 31 

lual Report (message to the 

i) 60 

Basin Initiative Legislation 
message to the Congress) .... 88 
an Enduring Relationship With 

/■olfowitz) 63 

rhts Progress in El Salvador 

I) 73 

iocracy (Shultz) 47 

for Regional Security in Southern 

>ocker) 50 

ig Democracy in Central Amer- 

tz) 37 

t on Cyprus (message to the 

s) 67 

laims Tribunal: Recent Develqp- 

lichel) 74 

ipatinn in the UN, 1981 (mess^e 

longress) 81 

Ins With Europe and Ties to NATO 
' 65 

idcasting to Cuba (Department 

nt) 89 

;h Report on Cyprus (message to 

gressi 67 

t and Foreign Service. Foreign 
Planning Council Members An- 

(Shultz) 62 

Countries. Foreign Aid and U.S. 
1 Interests (Shultz) 25 



Economics 

American Principles and Foreign Policy 
(Shultz) 40 

Caribbean Basin Initiative Legislation 
(Reagan, message to the Confess) . . . .88 

Our Development Dialogue With Africa 
(Crocker) 53 

Question-and-Answer Session Following 
Atlanta Address (Shultz) 28 

The U.S. and East Asia: A Partnership for 
the Future (Shultz) 31 

El Salvador 

Ambassador Hinton Interviewed on "This 
Week With David Brinkley" 83 

Ambassador Kirkpatrick Interviewed on "Meet 
the Press" 84 

El Salvador Announces Peace Commission 
(Department statements) 87 

Human Rights Progress in El Salvador 
(Abrams) 73 

Question-and-Answer Session Following San 
Francisco Address (Shultz) 35 

Strategic Importance of El Salvador and Cen- 
tral America (Reagan) 19 

Europe 

Secretary Shultz's Interview on "This Week 
With David Brinkley" 44 

U.S. Relations With Europe and Ties to NATO 
(Burt) 65 

Foreign Aid 

Foreign Aid and U.S. National Interests 
(Shultz) 25 

Our Development Dialogue With Africa 
(Crocker) 53 

Strengthening Democracy in Central America 
(Shultz) 37 

Human Rights 

Human Rights Progress in El Salvador 
(Abrams) 73 

Information Policy. Radio Broadcasting to 
Cuba (Department statement) 89 

International Law. U.S. -Iran Claims Tri- 
bunal: Recent Developments (Michel) . .74 

International Organizations. U.S. Completes 
Assessment of IAEA (Kennedy) 79 

Iran. U.S. -Iran Claims Tribunal: Recent 
Developments (Michel) 74 

Japan. The U.S. and East Asia: A Partnership 
for the Future (Shultz) 31 

Laos. Yellow Rain: The Arms Control Implica- 
tions (Eagleburger) 77 

Latin America and the Caribbean 

Caribbean Basin Initiative Legislation 
(Reagan, message to the Congress) ... .88 

Peace and National Security (Reagan) 8 

Strategic Importance of El Salvador and Cen- 
tral America (Reagan) 19 

Strengthening Democracy in Central 
America (Shultz) 37 

Libya 

Libya (Kirkpatrick) 81 

Micronesia. U.S. -Micronesia Plebiscite . . .80 

Middle East 

News Conference of February 16 (Reagan) . 22 

Question-and-Answer Session Following 
Atlantic Address (Shultz) 28 

Secretary Shultz's Interview on "This Week 
With David Brinkley" 44 

Military Affairs 

American Principles and Foreign Policy 
(Shultz) 40 

Monetary Affairs. Question-and-Answer Ses- 
sion Following San Francisco Address 
(Shultz) 35 

Namibia. The Search for Regional Security in 
Southern Africa (Crocker) 50 

Non-Self-Governing Territories 

Palau Approves Free Association With the 
U.S 80 

U.S.-Micronesia Plebiscite 80 

North Atlantic Treaty Organization 

News Conference of February 16 (Reagan) . 22 

U.S. Relations With Europe and Ties to NATO 
(Burt) 65 

Norway. Visit of Norwegian Prime Minister 
Willoch (Reagan, Willoch) 70 



Nuclear Policy 

Ensuring Security in the Nuclear Age 
(Dam) 57 

U.S. Completes Assessment of IAEA 
(Kennedy) 79 

Oceans. Funding the Law of the Sea Pre- 
paratory Commission (Reagan) 82 

Palau. Palau Approves Free Association 
With the U.S 80 

Poland. Poland's Debt (Department state- 
ment) 66 

Presidential Documents 

ACDA Annual Report (message to the Con- 
gress) 60 

Caribbean Basin Initiative Legislation 
(Reagan, message to the Congress) .... 88 

Funding the Law of the Sea Preparatory 
Commission (Reagan) 82 

News Conference of February 16 (Reagan) . 22 

Peace and National Security (Reagan) 8 

Strategic Importance of El Salvador and 
Central America (Reagan) 19 

The Trade Challenge for the 1980s (Reagan) 15 

12th Report on Cyprus (message to the Con- 
gress) 67 

U.S. Participation in the UN, 1981 (message 
to the Congress) 81 

Visit of Austrian Chancellor Kreisky (Kreisky, 
Reagan) 69 

Visit of Norwegian Prime Minister Willoch 
(Reagan, Willoch) 70 

Visit of Queen Elizabeth II (Queen 
Elizabeth II, Reagan) 71 

Publications. Department of State 94 

Security Assistance 

Strateeic Importance of El Salvador and Cen- 
tral America (Reagan) 19 

Sweden. The U.S. and Sweden: An Enduring 
Friendship (Miller) 1 

Trade. The Trade Challenge for the 1980s 
(Reagan) 15 

Treaties. Current Actions 90 

U.S.S.R. 

Ensuring Security in the Nuclear Age 
(Dam) 57 

Question-and-Answer Session Following 
Atlanta Address (Shultz) 28 

Secretary Shultz's Interview on "This Week 
With David Brinkley" 44 

Yellow Rain: The Arms Control Implications 
(Eagleburger) 77 

United Kingdom. Visit of Queen Elizabeth II 
(Queen Elizabeth II, Reagan) 71 

United Nations 

Funding the Law of the Sea Preparatory 
Commission (Reagan) 82 

Libya (Kirkpatrick) 81 

U.S. Participation in the UN, 1981 (message 
to the Congress) 81 



Name Index 

Abrams, Elliott 73 

Burt, Richard 65 

Crocker, Chester A 50, 53 

Dam, Kenneth W 57 

Eagleburger, Lawrence S '77 

Queen Elizabeth II 71 

Hinton, Deane R 83 

Kennedy, Richard T 79 

Kirkpatrick, Jeane J 81, 84 

Kreisky, Bruno 69 

Michel, James H 74 

Miller, James Edward 1 

Reagan, President .8, 15, 19, 22, 60, 67, 69, 70 

71, 81, 82,88 

Shultz, Secretary . . .25, 28, 31, 35, 37, 40, 44, 

47, 62 

Willoch, Kaare 70 

Wolfowitz, Paul 63 



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ih^purtmvnl 



bulletin 

Official Monthly Record of United States Foreign Policy / Volume 83 / Number 2074 



«l 






^e^^^** axvlvJ(N' 



Oe<^^'* 



May 1983 



The President / 1 
The Secretary / 10 
FY 1984 Assistance 
Africa / 20 
East Asia / 30 
Europe / 44 
IVIiddle East / 57 
Western 
Hemisphere / 83 



Uvpartmvnl of State 

bulletin 



Volume 83 / Number 2074 / May 1983 



The Department ov State Bulletin, 
published by the Office of PubHc 
Communication in the Bureau of Public 
Affairs, is the official record of U.S. 
foreign policy. Its purpose is to provide the 
public, the Congress, and government 
agencies with information on developments 
in U.S. foreign relations and the work of 
the Department of State and the Foreign 
Service. 

The Biilletin'.s contents include major 
addresses and news conferences of the 
President and the Secretary of State; 
statements made before congi-essional 
committees by the Secretary and other 
senior State Department officials; selected 
press releases issued by the White House, 
the Department, and the U.S. Mission to 
the United Nations; and treaties and other 
agreements to which the United States is 
or may become a party. Special features, 
articles, and other supportive material 
(such as maps, charts, photographs, and 
graphs) are published frequently to 
provide additional information on current 
issues but should not necessarily be 
interpreted as official U.S. policy 
statements. 



GEORGE P. SHULTZ 

Secretary of State 

JOHN HUGHES 

A.s.si.-^tant Secretary for Public Affai 

PAUL E. AUERSWALD 

Director, 

Office of fulilie Conimunicatioii 

NORMAN HOWARD 

Chief, Editorial Divi.-^ion 

PHYLLIS A. YOUNG 

Editor 

JUANITA ADAMS 

Assistant Editor 



The Secretary of State has determined that the 
publication of this periodical is necessary in the 
transaction of the public business required by law of 
this Department. Use of funds for printing this 
periodical has been approved by the Director of the 
Office of Management and Budget through March 31, 
19S7. 



For sale by the Superintendent of Docu 



and items contained herein may be reprinted. Citation 
of the Departmknt OK State Bcli.etin as the source 
will be appreciated. The Bulletin is indexed in the 
Readers' Guide to Periodical Literature. 


Government Prin 
20402 


ting Office, Washington, ( 









CONTENTS 



The President 

1 Reducing the Danger of Nuclear 

Weapons 
6 Challenge of U.S. Security Interests 

in Central America 



The Secretary 

10 Struggle for Democracy in Central 
America 

13 Caribbean Basin Economic Recov- 
ery Act 

16 FY 1984 and 1985 Authorization 

Requests 

17 News Briefing on Arms Control 

Africa 

20 FY 1984 Assistance Requests for 
Africa {Chester A. Crocker) 

25 U.S. Export Policy Toward 

South Africa (Princeton Lyman) 



l\/liiitary Affairs 

65 U.S. Defense Policy {President 

Reagan) 

Nuclear Policy 

66 U.S. Nuclear Policy Toward South 

Africa {Harry R. Marshall, Jr.) 

69 Nuclear Cooperation With 

EURATOM {Letter to the 
Con gress) 

Refugees 

70 FY 1984 Requests for Migration 

and Refugee Assistance 
{James R. Purcell, Jr.) 

Security Assistance 

71 FY 1984 Security Assistance Re- 

quests {William Schneider, Jr.) 



East Asia 

30 FY 1984 Assistance Requests 

for East Asia and the Pacific 
{PaulD. Wolfou'itz) 

36 FY 1984 Assistance Requests for 
Korea {Thomas P. Shoesmith) 

39 FY 1984 Assistance Requests for 
Thailand {Daniel A. O'Donohue) 

41 FY 1984 Assistance Requests for 
the Philippines and Indonesia 
{Daniel A. O'Donohue) 

Europe 

44 FY 1984 Assistance Requests for 
Europe {Richard R. Burt) 

46 Northern Ireland (President 

Reagan) 

Foreign Aid 

47 FY 1984 Request for Economic 

Assistance Programs (M. Peter 
McPherson) 

Middle East 

57 FY 1984 Assistance Requests for 
the Near East and South Asia 
(Nicholas A. Veliotes) 

61 FY 1984 Assistance Requests for 
Israel (Nicholas A. Veliotes) 

63 FY 1984 Assistance Requests for 

Egypt (Nicholas A. Veliotes) 

64 FY 1983 Supplemental Request for 

Lebanon (Nicholas A. Veliotes) 



South Asia 

78 Afghanistan Day, 1983 (Department 

Statement) 

United Nations 

79 FY 1984 Assistance Requests for 

Organizations and Programs 
(Gregory J. Newell) 

Western Hemisphere 

83 F^' 1984 Assistance Requests for 
Latin America and the Carib- 
bean (Thoynas 0. Ekders) 

85 Presidential Elections in El Salva- 
dor (President Reagan) 

87 U.S., Brazil Establish Working 
Groups (Joint Statement) 

Treaties 

90 Cuirent Actions 

Chronology 

92 March 1983 



Press Releases 

93 Department of State 

94 US LIN 



Publications 

94 Department of State 



Index 




All the moral values which this country cherishes 
. . . are fundamentally challenged by a powerful 
adversary which does not wish these values to 



THE PRESIDENT 



Reducing the Danger 
of Nuclear Weapons 

by President Reagan 



Address before the 

Los Angeles World Affairs Council 

on March 31, 1983, and 

statement of March 30 

made at the White House. ^ 



Last week I spoke to the American peo- 
ple about our plans for safeguarding this 
nation's security and that of our allies. 
And I announced a long-term effort in 
scientific research to counter some day 
the menace of offensive nuclear missiles. 
What I have proposed is that nations 
should turn their best energies to mov- 
ing away from the nuclear nightmare. 
We must not resign ourselves to a 
future in which security on both sides 
depends on threatening the lives of 
millions of innocent men, women, and 
children. 

And today, I would like to discuss 
another vital aspect of our national 
security: our efforts to limit and reduce 
the danger of modern weaponry. We 
live in a world in which total war would 
mean catastrophe. We also live in a 
world that's torn by a great moral strug- 
gle between democracy and its enemies, 
between the spirit of freedom and those 
who fear freedom. 

In the last 15 years or more, the 
Soviet Union has engaged in a relentless 
military buildup, overtaking and surpass- 
ing the United States in major cate- 
gories of military power, acquiring what 
can only be considered an offensive mili- 
tary capability. All the moral values 
which this country cherishes — freedom; 
democracy; the right of peoples and na- 



tions to determine their own destiny, to 
speak and write, to live and worship as 
they choose— all these basic rights are 
fundamentally challenged by a powerful 
adversary which does not wish these 
values to survive. 

This is our dilemma, and it's a pro- 
found one. We must both defend free- 
dom and preserve the peace. We must 
stand true to our principles and our 
friends while preventing a holocaust. 

The Western commitment to peace 
through strength has given Europe its 
longest period of peace in a century. We 
cannot conduct ourselves as if the 
special danger of nuclear weapons did 
not exist. But we must not allow our- 
selves to be paralyzed by the problem, to 
abdicate our moral duty. This is the 
challenge that history has left us. 

We of the 20th century, who so 
pride ourselves on mastering even the 
forces of nature— except last week when 
the Queen was here— we're forced to 
wrestle with one of the most complex 
moral challenges ever faced by any 
generation. Now, my views about the 
Soviet Union are well known, although 
sometimes I don't recognize them when 
they're played back to me. And our pro- 
gram for maintaining, strengthening, 
and modernizing our national defense 
has been clearly stated. 



^983 



THE PRESIDENT 



The American Record 

Today let me tell you something of what 
we're doing to reduce the danger of 
nuclear war. Since the end of World 
War II, the United States has been the 
leader in the international effort to 
negotiate nuclear arms limitations. In 
1946, when the United States was the 
only country in the world possessing 
these awesome weapons, we did not 
blackmail others with threats to use 
them, nor did we use our enormous 
power to conquer territory, to advance 
our position, or to seek domination. 

Doesn't our record alone refute the 
charge that we seek superiority, that we 
represent a threat to peace? We pro- 
posed the Baruch plan for international 
control of all nuclear weapons and 
nuclear energy, for everything nuclear 
to be turned over to an international 
agency. And this was rejected by the 
Soviet Union. Several years later, in 
1955, President Eisenhower presented 
his "open skies" proposal that the United 
States and the Soviet Union would ex- 
change blueprints of military 
establishments and permit aerial recon- 
naissance to ensure against the danger 
of surprise attack. This, too, was re- 
jected by the Soviet Union. 

Now, since then, some progress has 
been made, largely at American in- 
itiative. The 1963 "Limited Test Ban 
Treaty prohibited nuclear testing in the 
atmosphere, in outer space, or under 
water. The creation of the "hotline" in 
1963, upgraded in 1971, provides direct 
communication between Washington and 
Moscow to avoid miscalculation during a 
crisis. The Nuclear Nonproliferation 
Treaty of 1968 sought to prevent the 
spread of nuclear weapons. In 1971, we 
reached an agreement on special com- 
munication procedures to safeguard 
against accidental or unauthorized use of 
nuclear weapons and on a seabed arms 
control treaty, which prohibits the plac- 
ing of nuclear weapons on the seabed of 
the ocean floor. The strategic arms 
limitation agreements of 1972 imposed 
limits on antiballistic missile systems 
and on numbers of strategic offensive 
missiles. And the 1972 Biological War- 
fare Convention bans— or was supposed 
to ban— the development, production, 
and stockpiling of biological and toxin 
weapons. 

But while many agreements have 
been reached, we've also suffered many 
disappointments. The American people 
had hoped by these measures to reduce 



tensions and start to build a constructive 
relationship with the Soviet Union. 

Instead, we have seen Soviet 
military arsenals continue to grow in vir- 
tually every significant category. We've 
seen the Soviet Union project its power 
around the globe. We've seen Soviet 
resistance to significant reductions and 
measures of effective verification, 
especially the latter. And, I'm sorry to 
say, there have been increasingly serious 
grounds for questioning their compliance 
with the arms control agreements that 
have already been signed and that we 
both pledged to uphold. I may have 
more to say on this in the near future. 

Coming into office, I made two pro- 
mises to the American people about 



In 1946, when the 
United States was the 
only country in the 
world possessing these 
awesome weapons, we 
did not blackmail others 
with threats to use them, 
nor did we use our enor- 
mous power to conquer 
territory, to advance our 
position, or to seek 
domination. 



peace and security: I promised to 
restore our neglected defenses in order 
to strengthen and preserve the peace, 
and I promised to pursue reliable 
agreements to reduce nuclear weapons. 
Both these promises are being kept. 

Today, not only the peace but also 
the chances for real arms control depend 
on restoring the military balance. We 
know that the ideology of the Soviet 
leaders does not permit them to leave 
any Western weakness unprobed, any 
vacuum of power unfilled. It would seem 
that to them negotiation is only another 
form of struggle. Yet, I believe the 
Soviets can be persuaded to reduce their 
arsenals— but only if they see it's ab- 
solutely necessary. Only if they 
recognize the West's determination to 



modernize its own military forces 
they see an incentive to negotiate 
verifiable agreement establishing 
lower levels. And, very simply, th 
one of the main reasons why we i 
rebuild our defensive strength. 

All of our strategic force mod 
tion has been approved by the Co 
except for the land-based leg of ti 
triad. We expect to get congressi 
approval of this final program lat 
spring. A strategic forces modert 
program depends on a national bi 
tisan consensus. Over the last dec 
four successive Administrations l 
made proposals for arms control 
modernization that have become 
broiled in political controversy. N 
gained from this divisiveness; 
are going to have to take a fresh 
our previous positions. I pledge t 
my participation in such a fresh '. 
my determination to assist in for] 
renewed bipartisan consensus. 

My other national security pr 
on assuming office was to thorou 
examine the entire arms control ; 
Since then, in coordination with c 
allies, we've launched the most cc 
hensive program of arms control 
fives ever undertaken. Never bef 
history has a nation engaged in s 
major simultaneous efforts to lim 
reduce the instruments of war. 

• Last month in Geneva, the< 
President committed the United I 
to negotiate a total and verifiable! 
chemical weapons. Such inhuman 
weapons, as well as toxin weapor 
being used in violation of interna) 
law in Afghanistan, in Laos, and I 
puchea. 

• Together with our allies, w 
fered a comprehensive new propc 
mutual and balanced reduction of 
ventional forces in Europe. 

• We have recently proposed 
Soviet Union a series of further 
measures to reduce the risk of w; 
accident or miscalculation. And w 
considering significant new measi 
resulting in part from consultatio 
several distinguished senators. 

• We've joined our allies in p: 
ing a conference on disarmament 
Europe. On the basis of a balance 
come of the Madrid meeting, sucJ 
ference will discuss new ways to 
enhance European stability and s 

• We have proposed to the T 
Union improving the verification 
sions of two agreements to limit i 
ground nuclear testing, but, so fa 
response has been negative. We ^ 
tinue to try. 



Department of State f [II' 



THE PRESIDENT 



\nd, most importantly, we have 
ar-reaching proposals, which I 
cuss further in a moment, for 
;ductions in strategic weapons 
• elimination of an entire class of 
sdiate-range weapons. 

tn determined to achieve real 
Dntrol— reliable agreements that 
,nd the test of time, not cosmetic 
lents that raise expectations only 
I hopes cruelly dashed, 
ill these negotiations certain 
rinciples guide our policy. 



First, our efforts to control arms 
should seek reductions on both sides- 
significant reductions. 

Second, we insist that arms control 
agreements be equal and balanced. 

Third, arms control agreements 
must be effectively verifiable. We cannot 
gamble with the safety of our people and 
the people of the world. 

Fourth, we recognize that arms con- 
trol is not an end in itself but a vital 
part of a broad policy designed to 
strengthen peace and stability. 



It's with these firm principles in 
mind that this Administration has ap- 
proached negotiations on the most 
powerful weapons in the American and 
Soviet arsenals — strategic nuclear 
weapons. 

Strategic Arms 
Reduction Talks 

In June of 1982, American and Soviet 
negotiators convened in Geneva to begin 



President's Statement, March 30, 1983 



ek, when I addressed the American 
n this Administration's defense pro- 
[arch 23. 1983], I expressed our 
lation to reduce our reliance on the 
power of nuclear weapons to assure 
e. Today, I want to say a few words 
is critical aspect of our security 
our efforts to drastically reduce the 
which burden the lives of our own 
of our friends and allies, and, yes. of 
-rsaries as well. 

ou know, over the last year and a 
; Administration has undertaken a 
ensive and far-reaching arms control 

designed to achieve deep reductions 
ir arms, to rid the world of chemical 
, and to cut the size of conventional 

Europe. I will be saying more about 
■tiatives in my speech tomorrow, 
this morning, let me focus on one of 
gotiations. I have just met with the 
dors of the countries of the North 
alliance. We invited them here 
the citizens of their countries share 
.ericans a profound hope for success 
;neva negotiations on intermediate- 
clear missiles. 

forces being discussed in the INF 
ons directly affect the security of 
As I told you last week, the Soviet 
deployed hundreds of powerful. 
) missiles, armed with multiple 
s, and capable of striking the cities 
nse installations of our allies in 
md of our friends and allies in Asia 
The Soviets have built up these 
'en though there has been no com- 
hreat from NATO. They've deployed 
bout letup — there now are more 

SS-20 missiles with more than 
clear warheads. NATO will begin 
? a specific deterrent to this threat 
year, unless, as we hope, an agree- 
eliminate such weapons would make 
oyment unnecessary. 
United States, with the full support 
lies, has been negotiating in Geneva 

than a year to persuade the Soviet 
at it is a far better course for both 
agree to eliminate totally this entire 

of weapons. Such an ag^reement 



would be fair and far reaching. It would 
enhance the security of the Soviet Union as 
well as the security of NATO. And it would 
fulfill the aspiration of people throughout 
Europe and Asia for an end to the threat 
posed by these missiles. 

So far, the Soviet Union has resisted this 
proposal and has failed to come up with any 
serious alternative. They insist on preserving 
their present monopoly of these weapons. 
Under their latest proposal, the Soviets 
would retain almost 500 warheads on their 
SS-20 missiles in Europe alone and hundreds 
more in the Far East, while we would con- 
tinue to have zero. Their proposal would ac- 
tually leave them with more SS-20 missiles 
than they had when the talks began in 1981. 
In addition, the Soviets have launched a prop- 
aganda campaign, aimed apparently at 
dividing America from our allies and our 
allies from each other. 

From the opening of these negotiations 
nearly 18 months ago, I have repeatedly 
urged the Soviets to respond to our zero-zero 
proposal with a proposal of their own. I have 
also repeated our willingness to consider any 
serious alternative proposal. Their failure to 
make such a proposal is a source of deep 
disappointment to all of us who've wished 
that these weapons might be eliminated — or 
at least significantly reduced. But I do not in- 
tend to let this shadow that has been cast 
over the Geneva negotiations further darken 
our search for peace. 

When it comes to intermediate nuclear 
missiles in Europe, it would be better to have 
none than to have some. But. if there must 
be some, it is better to have few than to have 
m.any. If the Soviets will not now agree to 
the total elimination of these weapons, I hope 
that they will at least join us in an interim 
agreement that would substantially reduce 
these forces to equal levels on both sides. 

To this end. Ambassador Paul Nitze has 
informed his Soviet counterpart that we are 
prepared to negotiate an interim agreement 
in which the United States would substantial- 
ly reduce its planned deployment of Persh- 
ing II and ground-launched cruise missiles 
provided the Soviet Union reduced the 
number of its warheads on longer range INF 
missiles to an equal level on a global basis. 



Ambassador Nitze has explained that the 
United States views this proposal as a serious 
initial step toward the total elimination of 
this class of weapons, and he has conveyed 
my hope that the Soviet Union will join us in 
this view. Our proposal for the entire elimina- 
tion of these systems remains on the table. 

We've suggested that the negotiations 
resume several weeks earlier than originally 
planned. The Soviets have agreed to that, 
and talks will resume on May 17th. I hope 
this initiative will lead to an early agreement. 
We remain ready to explore any serious 
Soviet suggestions that meet the fundamental 
concerns which we have expressed. 

I invited the NATO ambassadors here to- 
day not only to review these developments 
but to express my appreciation for the firm 
support which the allies have given to our 
negotiating effort in Geneva. And I can 
assure them of my personal commitment to 
the closest possible consultations with them 
on INF. This consultation process has already 
proven one of the most intensive and produc- 
tive in the history of the North Atlantic 
alliance. It's made the initiative announced to- 
day an alliance initiative in the best sense of 
that term. 

Over the past months, we and our allies 
have consulted intensively on the INF 
negotiations. I have been in frequent and 
close contact with other heads of govern- 
ment. Vice President Bush had very produc- 
tive discussions with allied leaders on INF 
during his trip to Europe. Secretaries Shultz 
and Weinberger have exchanged views with 
their counterparts from allied governments. 
And the NATO special consultative group has 
met regularly to review the negotiations and 
consider criteria which should form the basis 
for the alliance position in INF. The very 
thoughtful views expressed by the allies in 
these consultations have been a significant 
help in shaping this new initiative. 

This process is a model for how an 
alliance of free and democratic nations can 
and must work together on critical issues. It 
is the source of our unity and gives us a 
strength that no one can hope to match. And 
it gives me great confidence in the eventual 
success of our efforts in Geneva to create a 
safer world for all the Earth's people. ■ 



THE PRESIDENT 



the strategic arms reduction talks, what 
we call START. We've sought to work 
out an agreement reducing the levels of 
strategic weapons on both sides. I pro- 
posed reducing the number of ballistic 
missiles by one-half and the number of 
warheads by one-third. No more than 
half the remaining warheads could be on 
land-based missiles. This would leave 
both sides with greater security at equal 
and lower levels of forces. Not only 
would this reduce numbers, it would also 
put specific limits on precisely those 
tj-pes of nuclear weapons that pose the 
most danger. 

The Soviets have made a counter- 
proposal. We've raised a number of 
serious concerns about it. But— and this 
is important— they have accepted the 
concept of reductions. Now, I expect 
this is because of the firm resolve that 
we've demonstrated. In the current 
round of negotiations, we have 
presented them with the basic elements 
of a treaty for comprehensive reductions 
in strategic arsenals. The United States 
also has, in START, recently proposed a 
draft agreement on a number of signifi- 
cant measures to build confidence and 
reduce the risks of conflict. This negotia- 
tion is proceeding under the able leader- 
ship of Ambassador Edward Rowny on 
our side. 



Intermediate-Range 
Nuclear Forces 

We're also negotiating in Geneva to 
eliminate and entire class of new 
weapons from the face of the Earth. 
Since the end of the mid-1970s, the 
Soviet Union has been deploying an 
intermediate-range nuclear missile, the 
SS-20, at a rate of one a week. There 
are now 351 of these missiles, each with 
three highly accurate warheads capable 
of destroying cities and military bases in 
Western Europe, Asia, and the Middle 
East. 

NATO has no comparable weapon, 
nor did NATO in any way provoke this 
new, unprecedented escalation. In fact, 
while the Soviets were deploying their 
SS-20s, we were taking a thousand 
nuclear warheads from shorter range 
weapons out of Europe. 

This major shift in the European 
military balance prompted our West 
European allies themselves to propose 
that NATO find a means of righting the 
balance. And in December of 1979, they 
announced a collective two-track deci- 
sion: 



First, to deploy in Western Europe 
572 land-based cruise missiles and 
Pershing II ballistic missiles, capable of 
reaching the Soviet Union. The purpose: 
to offset and deter the Soviet SS-20s. 
The first of these NATO weapons are 
scheduled for deployment by the end of 
this year; and 

Second, to seek negotiations with 
the Soviet Union for the mutual reduc- 
tion of these intermediate-range 
missiles. 

In November of 1981, the United 
States, in concert with our allies, made a 



Since the end of the 
mid-1970s, the Soviet 
Union has been deploy- 
ing an intermediate- 
range nuclear missile, 
the SS-20, at a rate 
of one a week. There 
are now 351 ... . NATO 
has no comparable 
weapon .... 



sweeping new proposal: NATO would 
cancel its own deployment if the Soviets 
eliminated theirs. The Soviet Union 
refuLed and set out to intensify public 
pressures in the West to block the 
NATO deployment, which has not even 
started. Meanwhile, the Soviet weapons 
continue to grow in number. 

Our proposal was not made on a 
take-it-or-leave-it basis. We're willing to 
consider any Soviet proposal that meets 
these standards of fairness. 

• An agreement must establish 
equal numbers for both Soviet and 
American intermediate- range nuclear 
forces. 

• Other countries' nuclear forces, 
such as the British and French, are in- 
dependent and are not part of the 
bilateral U.S. -Soviet negotiations. They 
are, in fact, strategic weapons, and the 
Soviet strategic arsenal more than com- 
pensates for them. 

• Next, an agreement must not shift 
the threat from Europe to Asia. Given 
the range in mobility of the SS-20s, 
meaningful limits on these and com- 



parable American systems iiv 
global. 

• An agreement must 1 h 
verifiable. 

• And an agreement niu 
undermine NATO's ability t.- 
itself with conventional force: 

We've been consulting closel; 
our Atlantic allies, and they stro 
dorse these principles. 

Earlier this week, I authorize 
negotiator in Geneva, Ambassad 
Nitze, to inform the Soviet deleg 
a new American proposal which 
full support of our allies. We're j 
to negotiate an interim agreeme 
reduce our planned deployment ' 
Soviet Union will reduce their cc 
responding warheads to an equa 
This would include all U.S. and ! 
weapons of this class, wherever 
located. Our offer of zero on bot 
will, of course, remain on the tal 
our ultimate goal. At the same t 
remain open — as we have been 1 
very outset — to serious counter 
posals. The Soviet negotiators h; 
returned to Moscow where we h! 
new proposal will receive careful 
sideration during the recess. Am 
bassador Nitze has proposed and 
Soviets have agreed that negotid 
resume in mid-May, several weel 
earlier than scheduled. 

I'm sorry that the Soviet Un? 
far, has not been willing to accef 
complete elimination of these sys 
both sides. The question I now p 
the Soviet Government is: If not 
tion, to what equal level are you 
to reduce? The new proposal is d 
to promote early and genuine pn 
at Geneva. For arms control to h 
complete and world security stre 
ened, however, we must also inci 
our efforts to halt the spread of : 
arms. Every country that values 
peaceful world order must play i1 

Our allies, as important nucle 
porters, also have a very imports 
responsibility to prevent the spre 
nuclear arms. To advance this go 
should all adopt comprehensive 
safeguards as a condition for nuc 
suppply commitments that we m: 
the future. In the days ahead. IT 
talking to other world leaders ab 
need for urgent movement on th; 
other measures against nuclear p 
liferation. 



Department of State 



THE PRESIDENT 



"Juclear Freeze 

lat's the arms control agenda 
een pursuing. Our proposals are 
ey're far reaching and com- 
iive. But we still have a long way 
Ve Americans are sometimes an 
nt people. I guess it's a symptom 
raditional optimism, energy, and 
)ften, this is a source of strength, 
jotiation, however, impatience 
1 real handicap. Any of you 
been involved in labor- 
iment negotiations or any kintl of 
ing know that patience 
hens your bargaining position. If 
; seems too eager or desperate, 
ir side has no reason to offer a 
mise and every reason to hold 
{pecting that the more eager side 
e in first. 

II, this is a basic fact of life we 
ford to lose sight of when dealing 
3 Soviet Union. Generosity in 
tion has never been a trademark 
s. It runs counter to the basic 
■y of Marxist-Leninist ideology, 
'ital that we show patience, 
nation, and, above all, national 
f we appear to be divided, if the 
suspect that domestic political 
3 will undercut our position, 
ig in their heels. And that can 
ay an agreement and may 

all hope for an agreement, 
t's why I've been concerned 
16 nuclear freeze proposals, one 
1 is being considered at this time 
■iouse of Representatives. Most 
f who support the freeze, I'm 
e well intentioned, concerned 
16 arms race and the danger of 
war. No one shares their con- 
)re than I do. But, however well- 
ned they are, these freeze pro- 
I'ould do more harm than good, 
ay seem to offer a simple solu- 
t there are no simple solutions 
lex problems. As H. L. Mencken 
yly remarked, "For every prob- 
ire's one solution which is simple, 
nd wrong." 

freeze concept is dangerous for 
iasons. 

would preserve today's high, 
, and unstable levels of nuclear 
nd, by so doing, reduce Soviet 
6s to negotiate for real reduc- 

would pull the rug out from 
or negotiators in Geneva, as they 
tified. After all, why should the 



Soviets negotiate if they've already 
achieved a freeze in a position of ad- 
vantage to them? 

• Also, some think a freeze would 
be easy to agree on, but it raises enor- 
mously complicated problems of what is 
to be frozen, how it is to be achieved, 
and, most of all, verified. Attempting to 
negotiate these critical details would on- 
ly divert us from the goal of negotiating 
reductions for who knows how long. 

• The freeze proposal would also 
make a lot more sense if a similar move- 



If we appear to be 
divided, if the Soviets 
suspect that domestic 
political pressure will 
undercut our position, 
they'll dig in their heels. 



ment against nuclear weapons were put- 
ting similar pressures on Soviet leaders 
in Moscow. As former Secretary of 
Defense Harold Brown has pointed out, 
the effect of the freeze "is to put 
pressure on the United States, but not 
on the Soviet Union." 

• Finally, the freeze would reward 
the Soviets for their 15-year buildup 
while locking us into our existing equip- 
ment, which in many cases is obsolete 
and badly in need of modernization. 
Three-quarters of Soviet strategic war- 
heads are on delivery systems 5 years 
old or less. Three-quarters of the 
American strategic warheads are on 
delivery systems 15 years old or older. 
The time comes when everything wears 
out. The trouble is, it comes a lot sooner 
for us than for them. And, under a 
freeze, we couldn't do anything about it. 

Our B-52 bombers are older than 
many of the pilots who fly them. If they 
were automobiles, they'd qualify as 
antiques. A freeze could lock us into ob- 
solescence. It's asking too much to ex- 
pect our servicemen and women to risk 
their lives in obsolete equipment. The 2 
million patriotic Americans in the armed 
services deserve the best and most 
modern equipment to protect them and 
us. 

I'm sure that every President has 
dreamed of leaving the world a safer 
place than he found it. I pledge to you. 



my goal — and I consider it a sacred 
trust— will be to make progress toward 
arms reductions in every one of the 
several negotiations now underway. 

I call on all Americans of both par- 
ties and all branches of government to 
join in this effort. We must not let our 
disagreements or partisan politics keep 
us from strengthening the peace and 
reducing armaments. 

I pledge to our allies and friends in 
Europe and Asia: We will continue to 
consult with you closely. We're conscious 
of our responsibility when we negotiate 
with our adversaries on issues of con- 
cern to you and your safety and well- 
being. 

To the leaders and people of the 
Soviet Union, I say: Join us in the path 
to a more peaceful, secure world. Let us 
vie in the realm of ideas, on the field of 
peaceful competition. Let history record 
that we tested our theories through 
human experience, not that we de- 
stroyed ourselves in the name of vindi- 
cating our way of life. And let us prac- 
tice restraint in our international con- 
duct, so that the present climate of mis- 
trust can some day give way to mutual 
confidence and a secure peace. 

What better time to rededicate our- 
selves to this undertaking than in the 
Easter season, when millions of the 
world's people pay homage to the one 
who taught us peace on Earth, goodwill 
toward men? 

This is the goal, my fellow Ameri- 
cans, of all the democratic nations — a 
goal that requires firmness, patience, 
and understanding. If the Soviet Union 
responds in the same spirit, we're ready. 
And we can pass on to our posterity the 
gift of peace — that and freedom are the 
greatest gifts that one generation can 
bequeath to another. 



' Texts from Weekly Compilation of 
Presidential Documents of Apr. 4, 1983. I 



THE PRESIDENT 



Challenge to U.S. Security Interests 
in Central America 



President Reagan's remarks at the 
annual meeting of the National Associa- 
tion of Manufacturers at the Washington 
Hilton Hotel on March 10, 1983.^ 

Late last year, I visited Central 
America. Just a few weeks ago, our Am- 
bassador [to the United Nations], Jeane 
Kirkpatrick, also toured the area. And 
in the last few days I have met with 
leaders of the Congress to discuss recent 
events in Central America and our 
policies in that troubled part of the 
world. Today I'd like to report to you on 
these consultations and why they're im- 
portant to all of us. 

The nations of Central America are 
among our nearest neighbors. El 
Salvador, for example, is nearer to 
Texas than Texas is to Massachusetts. 
Central America is simply too close, and 
the strategic stakes are too high, for us 
to ignore the danger of governments 
seizing power there with ideological and 
military ties to the Soviet Union. 

Let me just show you how important 
Central America is. Here at the base of 
Central America is the Panama Canal. 
Half of all the foreign trade of the 
United States passes through either the 
canal or the other Caribbean sealanes on 
its way to or from our ports. And, of 
course, to the north, as you can see, is 
Mexico, a country of enormous human 
and material importance with which we 
share 1,800 miles of peaceful frontier. 

And between Mexico and the canal 
lies Central America. As I speak to you 
today, its countries are in the midst of 
the gravest crisis in their history. Ac- 
cumulated grievances and social and 
economic change are challenging tradi- 
tional ways. New leaders with new 
aspirations have emerged who want a 
new and better deal for their peoples. 
And that is good. 

The Threat 

The problem is that an aggressive 
minority has thrown in its lot with the 
communists, looking to the Soviets and 
their own Cuban henchmen to help them 
pursue political change through violence. 
Nicaragua has become their base. And 
these extremists make no secret of their 
goal. They preach the doctrine of a 
"revolution without frontiers." Their 
first target is El Salvador. 



Important? To begin with, there's 
the sheer human tragedy. Thousands of 
people have already died and, unless the 
conflict is ended democratically, millions 
more could be affected throughout the 
hemisphere. The people of El Salvador 
have proved they want democracy. But 
if guerrilla violence succeeds, they won't 
get it. El Salvador will join Cuba and 
Nicaragua as a base for spreading fresh 
violence to Guatemala, Honduras, Costa 
Rica — probably the most democratic 
country in the world today. The killing 
will increase and so will the threat to 
Panama, the canal, and, ultimately, 
Mexico. In the process, vast numbers of 
men, women, and children will lose their 
homes, their countries, and their lives. 

Make no mistake. We want the same 
thing the people of Central America 
want— an end to the killing. We want to 



. . . if guerrilla violence 
succeeds, [the people of 
El Salvador] won't get 
[democracy]. El Salva- 
dor will join Cuba and 
Nicaragua as a base for 
spreading fresh violence 
in Guatemala, Hon- 
duras, Costa Rica . . . 



see freedom preserved where it now ex- 
ists and its rebirth where it does not. 
The communist agenda, on the other 
hand, is to exploit human suffering in 
Central America to strike at the heart of 
the Western Hemisphere. By preventing 
reform and instilling their own brand of 
totalitarianism, they can threaten 
freedom and peace and weaken our na- 
tional security. 

I know a good many people wonder 
why we should care about whether com- 
munist governments come into power in 
Nicaragua, El Salvador, or other such 
countries as Costa Rica and Honduras, 
Guatemala, and the islands of the Carib- 
bean. One columnist argued last week 
that we shouldn't care, because their 



products are not that vital to oi 
economy. That's like the arguim 
another so-called expert that w 
shouldn't worry about Castro's ( 
over the island of Grenada— tin 
important product is nutmeg. 

Let me just interject rigli! 
Grenada, that tiny little islam i 
Cuba at the west end of the ( ',.i 
Grenada at the east end— is bui 
now, or having built for it, on il 
and shores a naval base, a suv'' 
base, storage bases and facilith 
storage of munitions, barrack - 
training grounds for the militai , 
sure all of that is simply to encour 
the export of nutmeg. 

People who make these argun- 
haven't taken a good look at a ma 
ly or followed the extraordinary b 
of Soviet and Cuban military pow< 
the region or read the Soviets' diS' 
sions about why the region is impo 
to them and how. they intend to us. 

It isn't nutmeg that's at stake 
Caribbean and Central America; it 
U.S. national security. 

Soviet military theorists want 
destroy our capacity to resupply 
Western Europe in case of an erne 
cy. They want to tie down our attt 
and forces on our own southern be 
and so limit our capacity to act in 
distant places, such as Europe, the 
sian Gulf, the Indian Ocean, the Se 
Japan. 

Those Soviet theorists noticed 
we failed to notice: that the Caribt 
Sea and Central America constitut 
nation's fourth border. If we must 
fend ourselves against a large, hos- 
military presence on our border, m 
freedom to act elsewhere to help o 
and to protect strategically vital 
sealanes and resources has been 
drastically diminished. They know 
they've written about this. 

We've been slow to understand 
the defense of the Caribbean and C<- 
tral America against Marxist-Lenir; 
takeover is vital to our national sec il 
in ways we're not accustomed i'< tl '> 
ing about. 

For the past 3 years, under w 
Presidents, the United States has in 
engaged in an effort to stop the ad n' 
of communism in Central America 
doing what we do best— by suppon'g 



Department of State Bl 



THE PRESIDENT 



racy. For 3 years, oiu- goal has 
support fundamental change in 
gion. to replace poverty with 
pment and dictatorship with 
racy. 

lese objectives are not easy to ob- 
Ve're on the right track. Costa 
ontinues to set a democratic exam- 
en in the midst of economic crisis 
icaraguan intimidation. Honduras 
ne from military rule to a freely 
i civilian government. Despite in- 
,e obstacles, the democratic center 
ing in El Salvador, implementing 
'form and working to replace the 
5 of death with a life of 
racy. 

e good news is that our new 
3 have begun to work. Democracy, 
•ee elections, free labor unions, 
m of religion and respect for the 
ty of the individual, is the clear 
of the overwhelming majority of 
.1 Americans. In fact, except for 
ind its followers, no government 
significant sector of the public 
ere in this hemisphere wants to 
' guerrillas seize power in El 
or. 

e bad news is that the struggle 
nocracy is still far from over. 
3 their success in largely 
'.ting guerrilla political influence in 
ted areas, and despite some im- 
lents in military armaments and 
y, El Salvador's people remain 
strong pressure from armed guer- 
ontrolled by extremists with 
Soviet support. 

8 military capability of these guer- 
•and I would like to stress 
•y capability, for these are not 
t irregulars; they are trained, 
y forces. This has kept political 
)nomic progress from being 
into the peace the Salvadoran 
so obviously want, 
rt of the trouble is internal to El 
,Dr, but an important part is exter- 
le availability of training, tactical 
ce, and military supplies coming 
Salvador from Marxist 
?ua. I'm sure you've read about 
rrillas capturing rifles from 
ment national guard units. And 
this has happened. But much 
ritical to guerrilla operations are 
plies and munitions that are in- 
d into El Salvador by land, sea, 
—by pack mules, by small boats, 
small aircraft. 

;se pipelines fuel the guerrilla of- 
s and keep alive the conviction of 
ctremist leaders that power will 
ely come from the barrels of their 



guns. All this is happening in El 
Salvador just as a constitution is being 
written, as open presidential elections 
are being prepared, and as a peace com- 
mission — named last week — has begun 
to work on amnesty and national recon- 
ciliation to bring all social and political 
groups into the democratic process. 

It is the guerrilla militants who have 
so far refused to use democratic means, 
have ignored the voice of the people of 
El Salvador, and have resorted to ter- 
ror, sabotage, and bullets, instead of the 
ballot box. 

During the past week, we've dis- 
cussed all of these issues and more with 



We've been slow to 
understand that the 
defense of the Caribbean 
and Central America 
against Marxist-Leninist 
takeover is vital to our 
national security in 
ways we're not accus- 
tomed to thinking about. 



leaders and Members of the Congress. 
Their views have helped shape our own 
thinking. And I believe that we've 
developed a common course to follow. 

Now, here are some of the questions 
that are raised most often. 

U.S. Concerns 

First, how bad is the military situa- 
tion? It is not good. Salvadoran soldiers 
have proved that when they're well 
trained, led, and supplied, they can pro- 
tect the people from guerrilla attacks. 
But so far, U.S. trainers have been able 
to train only one soldier in ten. There's a 
shortage of experienced officers. Sup- 
plies are unsure. The guerrillas have 
taken advantage of these shortcomings. 
For the moment, at least, they have 
taken the tactical initiative just when 
the sharply limited funding Congress 
has so far approved is running out. 

A second vital question is: Are we 
going to send American soldiers into 
combat? And the answer to that is a flat 



A third question: Are we going to 
Americanize the war with a lot of U.S. 
combat advisers? And again, the 
answer is no. 

Only Salvadorans can fight this war, 
just as only Salvadorans can decide El 
Salvador's future. What we can do is 
help to give them the skills and supplies 
they need to do the job for themselves. 
That, mostly, means training. Without 
playing a combat role themselves and 
without accompanying Salvadoran units 
into combat, American specialists can 
help the Salvadoran Army improve its 
operations. 

Over the last year, despite manifest 
needs for more training, we have 
scrupulously kept our training activities 
well below our self-imposed numerical 
limit on numbers of trainers. We're cur- 
rently reviewing what we can do to pro- 
vide the most effective training possible, 
to determine the minimum level of 
trainers needed, and where the training 
should best take place. We think the 
best way is to provide training outside 
of El Salvador, in the United States or 
elsewhere, but that costs a lot more. So 
the number of U.S. trainers in El 
Salvador will depend upon the resources 
available. 

Question four: Are we seeking a 
political or a military solution? Despite 
all I and others have said, some people 
still seem to think that our concern for 
security assistance means that all we 
care about is a military solution. That's 
nonsense. Bullets are no answer to 
economic inequities, social tensions, or 
political disagreements. Democracy is 
what we want, and what we want is to 
enable Salvadorans to stop the killing 
and sabotage so that economic and 
political reforms can take root. The real 
solution can only be a political one. 

This reality leads directly to a 
fifth question: Why not stop the kill- 
ings and start talking? Why not 
negotiate? Negotiations are already a 
key part of our policy. We support 
negotiations among all the nations of the 
region to strengthen democracy, to halt 
subversion, to stop the flow of arms, to 
respect borders, and to remove all the 
foreign military advisers — the Soviets, 
the Cubans, the East Germans, the PLO 
[Palestine Liberation Organization], as 
well as our own from the region. 

A regional peace initiative is now 
emerging. We've been in close touch 
with its sponsors and wish it well. And 
we support negotiations within nations 
aimed at expanding participation in 
democratic institutions, at getting all 



THE PRESIDENT 



parties to participate in free and non- 
violent elections. 

What we oppose are negotiations 
that would be used as a cynical device 
for dividing up power behind the 
people's back. We cannot support 
negotiations which, instead of expanding 
democracy, try to destroy it; negotia- 
tions which would simply distribute 
power among armed groups without the 
consent of the people of El Salvador. 

We made that mistake some years 
ago— in Laos— when we pressed and 
pressured the Laotian Government to 
form a government, a co-op, with the 
Pathet Lao, the armed guerrillas who'd 
been doing what the guerrillas are doing 
in El Salvador. And once they had that 
tripartite government, they didn't rest 
until those guerrillas— the Pathet 
Lao— had seized total control of the 
Government of Laos. 

The thousands of Salvadorans who 
risked their lives to vote last year should 
not have their ballots thrown into the 



A great worldwide prop- 
aganda campaign had 
. . . portrayed the guer- 
rillas as somehow repre- 
sentative of the people of 
El Salvador. . . . Came 
the elections, and sud- 
denly it was the guer- 
rilla force threatening 
death to any who would 
attempt to vote. 



trash heap this year by letting a tiny 
minority on the fringe of a wide and 
diverse political spectrum shoot its way 
into power. No, the only legitimate road 
to power, the only road we can support, 
is through the voting booth so that the 
people can choose for themselves; 
choose, as His Holiness the Pope said 
Sunday, "far from terror and in a 
climate of democratic conviviality." This 
is fundamental, and it is a moral as well 
as a practical belief that all free people 
of the Americas share. 



U.S. Position 

Having consulted with the Congress, let 
me tell you where we are now and what 
we'll be doing in the days ahead. We 
welcome all the help we can get. We will 
be submitting a comprehensive, in- 
tegrated economic and military 
assistance plan for Central America. 

First, we will bridge the existing 
gap in military assistance. Our projec- 
tions of the amount of military 
assistance needed for El Salvador have 
remained relatively stable over the past 
2 years. However, the continuing resolu- 
tion budget procedure in the Congress 
last December led to a level of U.S. 
security assistance for El Salvador in 
1983 below what we'd requested, below 
that provided in 1982, and below that re- 
quested for 1984. I'm proposing that $60 
million of the moneys already appro- 
priated for our worldwide military 
assistance programs be immediately 
reallocated to El Salvador. 

Further, to build the kind of 
disciplined, skilled army that can take 
and hold the initiative while respecting 
the rights of its people, I will be amend- 
ing my supplemental that is currently 
before the Congress to reallocate $50 
million to El Salvador. And these funds 
will be sought without increasing the 
overall amount of the supplemental that 
we have already presented to the Con- 
gress. And, as I've said, the focus of this 
assistance will remain the same — to 
train Salvadorans so that they can de- 
fend themselves. 

Because El Salvador's problems are 
not unique in this region, I will also be 
asking for an additional $20 million for 
regional security assistance. These funds 
will be used to help neighboring states 
to maintain their national security and 
will, of course, be subject to full congres- 
sional review. 

Secondly, we will work hard to sup- 
port reform, human rights, and 
democracy in El Salvador. Last Thurs- 
day, the Salvadoran Government ex- 
tended the land reform program which 
has already distributed 20% of all the 
arable land in the country and 
transformed more than 65,000 farm 
workers into farm owners. What they 
ask is our continued economic support 
while the reform is completed. And we 
will provide it. With our support, we ex- 
pect that the steady progress toward 
more equitable distribution of wealth 
and power in El Salvador will continue. 

And third, we will, I repeat, con- 
tinue to work for human rights. Prog- 
ress in this area has been slow, some- 



times disappointing. But human i 
means working at problems, not 
away from them. To make more 
ress, we must continue our suppc 
vice, and help to El Salvador's pe 
and democratic leaders. Lawbrea 
must be brought to justice, and t 
of law must supplant violence in 
disputes. The key to ending viola 
human rights is to build a stable, 
ing democracy. Democracies are 
countable to their citizens, and w 
abuses occur in a democracy, the 
not be covered up. With our supp 
expect the Government of El Sal 
to be able to move ahead in prose, 
the accused and in building a crir 
justice system applicable to all ar 
ultimately, accountable to the ele 
representatives of the people. 

And I hope you've noticed th. 
speaking in millions, not billions, 
that, after 2 years in Federal offi 
hard to do. [Laughter] In fact, th 
some areas of government where 
they spill as much as I've talked 
here over a weekend. 

Fourth, the El Salvador Gov 
ment proposes to solve its problc 
only way they can be solved fairl 
having the people decide. Presidf 
Magana had just announced natii 
elections moved up to this year, 
on all to participate, adversaries 
as friends. To help political advei 
participate in the elections, he ha 
pointed a peace commission, inch 
Roman Catholic bishop and two i 
dependents. And he has called or 
Organization of American States 
international community to help, 
were proud to participate, along 
representatives of other democra 
tions, as observers in last March' 
stituent Assembly elections. We ' 
be equally pleased to contribute a 
an international effort, perhaps ii 
junction with the Organization of 
American States, to help the goV' 
ment ensure the broadest possibl* 
ticipation in the upcoming electio: 
guarantees that all, including crit 
adversaries, can be protected 
participate. 

Let me just say a word about 
elections last March. A great won 
propaganda campaign had, for m( 
than a year, portrayed the guerrt 
somehow representative of the pe 
El Salvador. We were told over a 
over again that the government v 
oppressor of the people. Came tb 
tions, and suddenly it was the gui' 
force threatening death to any wl 
would attempt to vote. More thai 01 



Department of State Ble 



THE PRESIDENT 



ind trucks were attacked and 
I and bombed in an effort to keep 
jple from going to the polls. But 
ent to the polls; they walked 

do so. They stood in long lines 
irs and hours. Our own congres- 
observers came back and reported 
incident that they saw them- 
-of a woman who had been shot 
guerrillas for trying to get to the 
itanding in the line, refusing 

,1 attention until she had had her 

unity to go in and vote. 

re than 80% of the electorate 

1 don't believe here in our land, 
voting is so easy, that we've had 
)ut that great in the last half cen- 
'hey elected the present govern- 
md they voted for order, peace, 
mocratic rule. 

lally, we must continue to help 
)ple of El Salvador and the rest of 
1 America and the Caribbean to 
iconomic progress. More than 
uarters of our assistance to this 
has been economic. Because of 
jortance of economic development 
region, I will ask the Congress 

million in new moneys and the 
-aming of $103 million from 

appropriated worldwide funds, 
■)tal of $168 million in increased 
lie assistance for Central 
a. And to make sure that this 
ice is as productive as possible, 
;inue to work with the Congress 
urgent enactment of the long- 
jportunities for trade and free 
■'e that are contained in the Carib- 
asin Initiative. 

El Salvador and in the rest of 
I America, there are today thou- 
if small businessmen, farmers, 
!rkers who have kept up their pro- 
;y as well as their spirits in the 
personal danger, guerrilla 
:e, and adverse economic condi- 
Vith them stand countless na- 
nd local officials, military and 
iders, and priests who have 

to give up on democracy. Their 
e for a better future deserves our 

e should be proud to offer it. For 
ast analysis, they're fighting for 



By acting responsibly and avoiding 
illusory shortcuts, we can be both loyal 
to our friends and true to our peaceful 
democratic principles. A nation's 
character is measured by the relations it 
has with its neighbors. We need strong, 
stable neighbors with which we can 
cooperate. And we will not let them 
down. Our neighbors are risking life and 



There are more than 600 
million of us calling 
ourselves Americans — 
North, Central, and 
South. We haven Y really 
begun to tap the vast 
resources of these two 
great continents. 



limb to better their lives, to improve 
their lands, and to build democracy. All 
they ask is our help and understanding 
as they face dangerous armed enemies 
of liberty and that our help be as sus- 
tained as their own commitment. 

None of this will work if we tire or 
falter in our support. I don't think that's 
what the American people want or what 
our traditions and faith require. Our 
neighbors struggle for a better future, 
and that struggle deserves our help, and 
we should be proud to offer it. 

We would, in truth, be opening a 
two-way street. We have never, I 
believe, fully realized the great potential 
of this Western Hemisphere. Oh, yes, I 
know in the past we've talked of plans. 
We've gone down there every once in a 
while with a great plan, somehow, for 
our neighbors to the south. But it was 
always a plan in which we, the big co- 
lossus of the north, would impose on 
them. It was our idea. 

On my trip to Central and South 
America, I asked for their ideas. I 
pointed out that we had a common 
heritage. We'd all come as pioneers to 



these two great continents. We worship 
the same God. And we'd lived at peace 
with each other longer than most people 
in other parts of the world. There are 
more than 600 million of us calling 
ourselves Americans— North, Central, 
and South. We haven't really begun to 
tap the vast resources of these two 
great continents. 

Without sacrificing our national 
sovereignties, our own individual 
cultures, or national pride, we could, as 
neighbors, make this Western Hemi- 
sphere, our hemisphere, a force for good 
such as the Old World has never seen. 
But it starts with the word "neighbor." 
And that is what I talked about down 
there and sought their partnership, their 
equal partnership in we of the Western 
Hemisphere coming together to truly 
develop, fully, the potential this 
hemisphere has. 

Last Sunday, His Holiness Pope 
John Paul II prayed that the measures 
announced by President Magana would 
"contribute to orderly and peaceful prog- 
ress" in El Salvador, progress "founded 
on the respect," he said, "for the rights 
of all, and that all have the possibility to 
cooperate in a climate of true democracy 
for the promotion of the common good." 

My fellow Americans, we in the 
United States join in that prayer for 
democracy and peace in El Salvador, 
and we pledge our moral and material 
support to help the Salvadoran people 
achieve a more just and peaceful future. 
And in doing so, we stand true to both 
the highest values of our free society 
and our own vital interests. 



'Opening remarks omitted (text from 
Weekly Compilation of Presidential 
Documents of Mar. 14, 1983). ■ 



THE SECRETARY 



Struggle for Democracy 
in Central America 



Secretary Shultz's address before the 
World Affairs Council and the Chamber 
of Commerce in Dallas on April 15, 



I thought about what I might discuss 
here, and there's always a temptation 
for a Secretary of State to go around 
the world and make a few comments 
about this place and that place. But it 
seemed to me right now and right here 
that the subject to talk about should be 
Central America because it's very much 
on our minds in Washington, and I'm 
sure it's very much on your minds right 
here, close as in the sense you are. 

I think that any discussion of Cen- 
tral America must address three ques- 
tions. 

• First of all, why should we care 
about Central America? 

• Second, what's going on there 
now? 

• And, third, what should we do 
about it? 

Importance to the U.S. 

The questions are important, and I'll try 
to answer them plainly and clearly. I 
think, first of all, that Central America's 
importance to the United States cannot 
be denied. Central America is so close 
that its troubles automatically spill over 
onto us; so close that the strategic 
posture of its countries affect ours; so 
close that its people's suffering brings 
pain to us as well. 

I need not remind Texans that only 
the stability of our neighbors will pre- 
vent unprecedented flows of refugees 
northward to this country. Especially 
now, when a troubled world economy in- 
vites unrest, we must safeguard democ- 
racy and stability in our immediate 
neighborhood. 

I did not use the word "strategic" 
lightly. Despite the 1962 Cuban missile 
crisis, and despite last year's war be- 
tween Argentina and the United 
Kingdom, most Americans think of 
Latin America as not involved in the 
global strategic balance. People are 
aware, of course, that Cuba has inter- 
vened militarily in Africa, but they may 



not realize that Cuba's Army is today 
three times larger than it was in 1962, 
or that 40,000 Cuban troops are now 
stationed in Africa, or that 2,000 Cuban 
military and security advisers are in 
Nicaragua. Some of you may also not 
have noticed that Nicaragua's Minister 
of Defense said on April 9 that Nicar- 
agua would consider accepting Soviet 
missiles if asked. 

In the great debate about how best 
to protect our interests in the Panama 
Canal, the only thing all sides agreed on 
was that the canal is critical and must 
be kept open and defended. Yet the 
security of the Panama Canal is directly 
affected by the stability and security of 
Central America. 

The canal itself is but a 50-mile span 
in thousands of miles of sealanes across 
the Caribbean. In peacetime, 44% of all 
foreign trade tonnage and 45% of the 
crude oil to the United States pass 
through the Caribbean. In a European 
war, 65% of our mobilization require- 
ments would go by sea from gulf ports 
through the Florida Straits onward to 
Europe. 

During World War II— just to re- 
mind you again— our defenses were so 
weak, our lifeline so exposed, that in the 
first months of 1942 a handful of enemy 
subs sank hundreds of ships in the 
Caribbean and the Gulf of Mexico and 
did it more easily and faster than did 
Hitler's whole fleet in the North Atlan- 
tic. The Caribbean was a better target 
for them. Almost exactly 41 years ago a 
Mexican tanker— running with full 
lights, as was the custom for 
neutrals— was sunk off Miami. That 
June, a single submarine, U-159, sank 
eight American ships in 4 days, two of 
them just off the entrance to the 
Panama Canal. Remember, Hitler's Ger- 
many had no bases in the Caribbean, not 
even access to ports for fuel and sup- 
plies. 

Most Americans have assumed that, 
because the Soviet Union knows that we 
will not accept the emplacement of stra- 
tegic weapons in Cuba, we had nothing 
more to fear. It's true that there are no 
nuclear weapons in Cuba, and it is true 
that Cuba's communist Utopia has 
proved such an economic disaster that it 
is entirely dependent on massive Soviet 



aid to the tune of some $4 billion 
ly. Yet this has not kept Cuba fro 
traying itself as the vanguard of 
future and mounting a campaign 
establish new communist dictator 
Central America. 

The Danger in Central Americai 

There are some people I know wl 
we in the Administration are exai 
ing the danger. Let me, however' 
you this quote: 

The revolutionary process of Cen 
America is a single process. The triui, 
one are the triumphs of the other, 
mala will have its hour. Honduras its- 
Rica, too, will have its hour of glory, 
first note was heard in Nicaragua. 

In case you're wondering, the 
speaker was not an Administratic 
spokesman. That confident predii 
comes from Cayetano Carpio, pri 
leader of the Salvadoran guerrillt 
the August 25, 1980, edition of tl 
lean magazine Proceso. Look it u; 

Our analysis, our strategy, oi 
predictions for the future of Ceni 
America are rooted in two percej 
One is that democracy cannot flo 
the presence of extreme inequalit 
access to land, opportunity, or ju.. 
The second perception is that Mr 
pio and his allies are exploiting si 
quities for antidemocratic ends. 

I quoted a terrorist leader bei 
is beliefs like his, backed by arme 
violence, that so concern our friei 
Central America. In Costa Rica, 
democracy and respect for humar 
are an ancient tradition; in Hondv 
where democratic institutions are 
ing hold; in El Salvador, where di 
racy is beginning to work; even 
agua, where disillusionment is the 
of the day. 

Ask the people who live there 
will tell you, as they have told us- 
through their governments, in the 
public opinion polls, and in their r 
paper and radio editorials— that t 
revolution about which Carpio boj 
a frightening phenomenon: a diret 
threat to their democracy and wel 
being. They will tell you that we I 
Americans should also be concern' 
Not because Mr. Carpio will toma 
lead an FMLN [Farabundo Marti 
tional Liberation Front] battalion 
the Rio Grande but because the i 
democracy and human rights is ou 
cause too. 

Frankly, I agree. We cannot ii 
conscience look the other way wh« 



Department of State B « 



THE SECRETARY 



)cracy and human rights are 
snged in countries very near to us, 
tries that look to us for help. Presi- 
Reagan put it well last month: 
lan rights," he said, "means work- 
t problems, not walking away from 



Strategy 

le key question is: What should we 
I primary element of our strategy 
be to support democracy, reform, 
he protection of human rights. 
)cracies are far less likely to threat- 
eir neighbors or abuse their citizens 
dictatorships. 

'he forces of democracy are many 
■aried. Some are deeply rooted, as 
sta Rica, which has known nothing 
emocracy for 35 years. Others are 
fragile but have grown steadily as 
imic development has strengthened 
liddle class and as trade unions and 
.nt organizations are making 
lism a reality. The Catholic Church 
Iso made important contributions to 
cracy and social progress. So also 
le United States through culture, 
pie, and more recently through 
nacy as well. 

ie forces of dictatorship are of two 
One is old, the other new. The old 
y is that of economic oligarchy, 
■a.\ despotism, and military repres- 
Except for Costa Rica, this has 
;he traditional method of social 
ization for most of Central 
ica's history. The new form of die- 
hip is that of a command economy, 
■appointed elitist vanguard, and 
j.lla war. Nicaragua has become its 
lall of Central America its target, 
sfore the Sandinistas came to 
r in Nicaragua in 1979, they prom- 
i*ee elections, political pluralism, 
Dnalignment. Today every one of 
promises is being betrayed. First 
indinistas moved to squeeze the 
;rats out of the governing junta; 

restrict all political opposition, 
:ss freedom, and the independence 
church; then to build what is now 

rgest armed force in the history of 
il America; then to align them- 

with the Soviet Union and Cuba 
verting their neighbors. 

Salvador became the first target. 
'0, at Cuban direction, several 
ioran extremist groups were uni- 

1 Managua, where their operational 
Ijarters remains to this day. Cuba 
H Soviet-bloc allies then provided 
'ig and supplies which began to 



tlow clandestinely through Nicaragua to 
El Salvador to fuel an armed assault. 
The communist intervention has not 
brought guerrillas to power, but it has 
cost thousands of lives and widened an 
already bitter conflict. Today El Salva- 
dor hangs in the balance with reforming 
democrats pitted against the forces of 
old and new dictatorships alike. 

The struggle for democracy is made 
even more difficult by the heavy legacy 
of decades of social and economic in- 
equities. And in El Salvador, as else- 
where, the world recession has hit with 
devastating effects. 

We must also, therefore, support 
economic development. Underdevelop- 
ment, recession, and the guerrillas' "pro- 
longed war" against El Salvador's econo- 
my cause human hardship and misery 
that are being cynically exploited by the 
enemies of democracy. Three-quarters of 
the funds that we are spending in sup- 
port of our Central American policy go 
to economic assistance. And our eco- 
nomic program goes beyond traditional 
aid: The President's Caribbean Basin In- 
itiative is meant to provide powerful 
trade and investment incentives to help 
these countries achieve self-sustaining 
economic growth. 

But just as no amount of reform can 
bring peace so long as guerrillas believe 
they can win a military victory, no 
amount of economic help will suffice if 
guerrilla units can destroy roads, 
bridges, power stations, and crops again 
and again with impunity. So we must 
also support the security of El Salvador 
and the other threatened nations of the 
region. 

Finally, faced with a grave region- 
wide crisis, we must seek regional, 
peaceful solutions. We are trying to per- 
suade the Sandinistas that they should 
come to the bargaining table, ready to 
come to terms with their neighbors and 
with their own increasingly troubled 
society. 



El Salvador 

Let's now look at how this strategy 
works in practice, and let me turn first 
to El Salvador. The basic fact about El 
Salvador today is that its people want 
peace. Because they do, they have laid 
the essential groundwork for national 
reconciliation and renewal. Let me give 
you some details. 

First: Even in the midst of guerrilla 
war, respect for human rights has 
grown. Violence against noncombatants 
is still high, but it has diminished mark- 



edly since our assistance began 3 years 
ago. The criminal justice system does re- 
main a major concern, and I'll come back 
to that in a moment. 

Second: In 3 short years and despite 
determined guerrilla opposition, El 
Salvador's Government has redistributed 
more than 20% of all arable land. Some 
450,000 people— about 1 Salvadoran in 
every 10— have benefited directly and 
have acquired a personal stake in a 
secure future. 

Third: The general economic situa- 
tion is poor. Just to stay even this year, 
El Salvador will need substantial eco- 
nomic assistance to import seed, fer- 
tilizer, and pesticides for its farms and 
raw materials for its factories. 

The economic crisis stems in part 
from the international recession which 
has depressed prices of agricultural ex- 
ports—coffee, cotton, sugar— on which 
El Salvador depends for foreign ex- 
change. But the more serious problem is 
the guerrilla war against the economy. 
Some of the most fertile land cannot be 
cultivated because of guerrilla attacks. 
They have destroyed 55 of the country's 
260 bridges and damaged many more. 

The national water authority must 
rebuild 112 water facilities damaged by 
guerrilla action; 249 attacks on the tele- 
phone system have caused millions of 
dollars in damage. The guerrillas caused 
over 5,000 interruptions of electrical 
power in a 22-month period ending last 
November— an average of almost 8 a 
day. The entire eastern region of the 
country was blacked out for over a third 
of the year in both 1981 and 1982. The 
guerrillas destroyed over 200 buses in 
1982 alone. Less than half the rolling 
stock of the railways remains opera- 
tional. 

In short, unable to win the free 
loyalty of El Salvador's people, the guer- 
rillas are deliberately and systematically 
depriving them of food, water, trans- 
portation, light, sanitation, and work. 
These are the people who are claiming 
that their objective is to help the com- 
mon people. 

Fourth: This brings me to a fourth 
point. The three government battalions 
we have trained conduct themselves pro- 
fessionally, both on the battlefield and in 
their relations with civilians. But only 1 
Salvadoran soldier in 10 has received 
our training— fewer than the many guer- 
rillas trained by Nicaragua and Cuba. 

Fifth: And, finally, what is at issue 
in El Salvador is the cause of democ- 
racy. I cannot stress this point enough, 
and here the progress has been substan- 
tial. The Constituent Assembly, elected 



THE SECRETARY 



a year ago, has drafted a new constitu- 
tion, sustained a moderate government 
of national unity, and extended land 
reform. 

I remind you of that election just 
over a year ago with over 80% of the 
people voting— not a bad percentage— in 
the face of armed, violent efforts to pre- 
vent people from coming to the polls. 

Most important, perhaps, the politi- 
cians and parties who participated in the 
March 1982 elections and are now repre- 
sented in the assembly have begun to fix 
common goals in the pursuit of a 
political solution to their country's prob- 
lems. 

The most concrete indication of the 
self-confidence and growing strength of 
El Salvador's new democratic leaders 
took place last month in the presence of 
His Holiness, Pope John Paul H. On 
March 6, the President of El Salvador, 
Alvaro Magana, announced that national 
elections will be held in El Salvador this 
year and that they will be open to all 
political parties and groups. You have to 
have some confidence in the democratic 
process to move up the election and say, 
"All right, let's decide by the electoral 
process who should be the president." 

On March 17, El Salvador's Peace 
Commission, made up of a Catholic 
bishop and two civilians, proposed 
legislation for a general amnesty that is 
now before the Constituent Assembly. 
And the president of the Constituent 
Assembly has explicitly called for the 
main political unit of the guerrillas, the 
FDR [Revolutionary Democratic Front], 
to take part in the elections. 

As President Reagan has made 
clear, we support negotiations aimed at 
"expanding participation in democratic 
institutions, at getting all parties to par- 
ticipate in free, nonviolent elections." 
We will not support negotiations that 
short circuit the very democratic process 
El Salvador is trying to establish. We 
will not carve up power behind people's 
backs as happened in Nicaragua. I'm 
shocked at the suggestions I sometimes 
hear when I'm testifying that what we 
ought to do— having observed these peo- 
ple try by violence to prevent an election 
from happening, should by violence and 
with our agreement shoot their way into 
the government. No dice. We will not 
support that kind of activity. 

We will help El Salvador to guaran- 
tee the personal security of candidates 
and their supporters; discourage coer- 
cion or intimidation; and help insure ac- 
cess to media, an honest tally, and ulti- 
mately respect for the people's verdict. 



Let me turn a moment to the deeply 
troubling problem of El Salvador's in- 
effective system of criminal justice. They 
must do much better. The courts must 
bring cases to a timely and impartial 
conclusion, and we have to make that 
point to them unequivocally and very 
clearly. I might say, Attorney General 
Bill Smith is in El Salvador today, and a 
legal team has been down there, and 
we're doing our best to be helpful in that 
regard. 

Nicaragua 

Let me turn now to Nicaragua. Nicar- 
aguans in growing numbers have con- 
cluded that their struggle for democracy 
has been betrayed. The preeminent hero 
of the anti-Somoza revolution, Eden 
Pastora, who as Commander Zero led 
the takeover of the Somoza National 
Assembly in 1978, is now in exile. So is 
Alfonso Robelo, a key member of the 
governing junta that replaced Somoza. 
So is Miskito Indian leader, Brooklyn 
Rivera. And so now is Adolfo Calero, 
the anti-Somoza businessman who for 3 
years tried hard to play the role of "loyal 
opposition" inside Nicaragua. They and 
thousands of others in and out of 
Nicaragua bear witness that what began 
as an extraordinary national coalition 
against Somoza has cracked and 
shriveled under the manipulation of a 
handful of ideologues, fortified by their 
Cuban and Soviet-bloc military advisers. 

But there is an answer to 
Nicaragua's problems. As in El 
Salvador, it is a political one. Last Oc- 
tober, eight democratic countries of the 
region, meeting in San Jose, Costa Rica, 
called on Nicaragua to join them in 
allowing freedom of action for peaceful 
democratic groups, ending cross-border 
guerrilla violence, and freezing the 
growth of military arsenals. We support 
such negotiations. President Reagan has 
said, 

... to strengthen democracy, to halt 
subversion, to stop the flow of arms, to 
respect borders, and to remove ail the 
foreign military advisers — the Soviets. 
Cubans, East Germans, PLO [Palestine 
Liberation Organization], as well as our 
own— from the region. 

If accepted, the San Jose proposals 
would reduce East-West tensions in 
Central America and lead to a regional 
political solution. Yet Nicaragua has so 
far refused even to discuss these prin- 
ciples, just as it earlier spurned our own 
efforts to reach a bilateral understand- 
ing to deal with mutual concerns. 



U.S. Commitment to Regional 
Peace and Democracy 

Our commitment to peace and den 
racy in Central America is not, of 
course, limited to El Salvador and 
agua. Like us, Costa Rica and Hor 
have not given up hope that Nicar; 
will return to the tenets of democf 
and peace for which its people fou; 
1979. But as Nicaragua's immedial 
neighbor, they feel directly the spii 
of Nicaragua's militarization and g 
ing internal troubles. Six thousand 
Nicaraguans are now living in exili 
Costa Rica. In Honduras the flow 
refugees from Nicaragua continue? 
rise. Last year alone, some 15,000i 
Miskito Indians fled to Honduras v 
than accept forced relocation by tM 
Nicaraguan Government. 

Until a peaceful solution is foui 
we must continue to bolster Hondv 
and Costa Rica. Both are democra 
Both have been hit hard economic; 
the regional turmoil and the world 
sion. And both have been victimize 
terrorism directed from Nicaragua 
want to strengthen these democran 
and help them provide their people 
stability and hope, even in the miJ 
regional crisis. 

Democracy in Central AmericE 
not be achieved overnight, and it \ 
not be achieved without sustained 
support. To support our objectives 
Central America — democracy, dev 
ment, justice, and the security to r 
them possible— Congress has autb 
substantial economic assistance. C( 
versy continues, however, over mil 
aid to El Salvador — the country lit 
under the gun. 

The security assistance we hav 
asked for is to build disciplined, sk: 
armed forces to serve as a shield f( 
democratization and development- 
shield. We are not planning to Ami 
canize the fighting or to send El Si 
dor advanced, heavy weapons, like 
Nicaragua's Soviet tanks. We will 1 
El Salvador's Armed Forces to inci 
their mobility and to acquire necess 
munitions, spare parts, engineering 
equipment, and medical supplies. B 
our primary emphasis is on greatly 
panded training for Salvadoran sol< 
As I mentioned earlier, only a tent) 
the soldiers have received our train 
and those who have, have a superic 
performance. So if we can increase 
level of training, we can expect per 
mance to improve. 

Time is important. To quote Sei 
Henry Jackson, "If you're going to i 



12 



Department of State Bu I 



THE SECRETARY 



illot box free and open, tliere must 
hield behind which the people can 
ipate." WTiether we will be able to 
irovide this shield in time depends 
; Congress. In the middle of a war. 
ingress has cut security assistance 
;vel two-thirds below the previous 
year. So here you are — you're an 
you're fighting, and all of a sud- 
18 flow of what you need to fight 
3 cut by two-thirds. Then people 
How come that army isn't doing 
?" It's a terrific blow, 
le Administration is seeking to 
e these funds. The people of El 
lor must have confidence that we 
e their struggle through, or else 
or democracy may not survive. 



imation, let me say again that 
are many reasons for us to care 
what happens in Central America, 
strategic, and we better remem- 
What is happening in Central 
ca could endanger our own securi- 
that of our friends throughout 
ribbean Basin, from Mexico to the 
a Canal. 

t an equal reason is moral. How 
■, in the name of human rights, 
m our neighbors to a brutal, mili- 
ikeover by a totalitarian minority? 
concern is freedom, will a corn- 
victory provide it? If our concern 
:ial fairness, will a communist 
provide it? If our concern is 
y, will a communist economic 
provide prosperity? 
e American people and their 
representatives have difficult 
; to make. It is easy to play the 
ogue, and it is tempting to avoid 
ecisions. But if we walk away 
lis challenge, we will have let 
lot only all those in Central 
^a who yearn for democracy, but 
have let ourselves down. We 
be for freedom and human rights 
the abstract. If our ideals are to 
eaning, we must defend them 
hey are threatened. Let us meet 
ponsibility. 

!SS release 109. ■ 



Caribbean Basin Economic 
Recovery Act 



Secretary ShuUz's statement before 
the Senate Finance Committee on 
April 13, 198SJ 

I welcome this opportunity to continue 
our dialogue on the Caribbean region 
and specifically the Caribbean Basin 
Economic Recovery Act. The legislation 
we have proposed is a far-sighted 
response to a deepening economic and 
social crisis troubling some of our closest 
neighbors. It deserves to become law 
this year— the sooner this year, the 
better. 



Our Vital Interests 

Let me begin by reviewing our own vital 
interests in the Caribbean Basin. The 
Caribbean is an unfenced neighborhood 
that we share with 27 island and coastal 
nations. Their security and economic 
well-being have a direct impact on our 
own strategic and economic interests. 

We do not have to go to Miami to 
come in daily contact with people born 
in the Caribbean region or to appreciate 
the rapid impact of turmoil there on our 
own society. In fact, our country has 
become a safehaven for thousands upon 
thousands of Caribbean citizens who pin 
their hopes for a better life on a 
dangerous, uncertain, and clandestine 
migration to this country. As a result, 
the basin area is now the second largest 
source of illegal immigration to the 
United States. This situation will not im- 
prove until the nations of the Caribbean 
Basin are better able to offer their peo- 
ple opportunities to build secure, produc- 
tive lives at home. 

Economically, the Caribbean Basin 
region is a vital strategic and commer- 
cial artery for the United States. Nearly 
half our trade, three-quarters of our im- 
ported oil, and over half our imported 
strategic minerals pass through the 
Panama Canal or the Gulf of Mexico. If 
this region should become prey to social 
and economic upheaval, and dominated 
by regimes hostile to us, the conse- 
quences for our security would be im- 
mediate and far reaching. 



The health of the Caribbean econo- 
mies also affects our economy. The area 
is now a $7 billion market for U.S. ex- 
ports. Thousands of American jobs were 
lost when our exports to the region fell 
$L50 million last year as income in the 
region declined. A large portion of the 
debt of Caribbean countries is owed to 
banks in this country. At the end of 
1981, U.S. direct investment in the 
region was approximately $8 billion. 

The Caribbean Basin Economic Re- 
covery Act is the cornerstone of our ef- 
fort to come to grips with these issues. 
This legislation recognizes the critical 
relationship between economic develop- 
ment and political stability. It is de- 
signed to promote self-sustaining 
economic growth; to enable countries in 
the region to strengthen democratic in- 
stitutions; and to implement political, 
social, and economic reforms. Ultimate- 
ly, its purpose is to help restore the 
faith of people of the region in their 
countries' ability to offer them hope for 
a better future. 

Economic Problems 

The societies of the Caribbean Basin 
republics are undergoing inevitable 
change that puts them under con- 
siderable stress. Declining employment 
in agriculture, high birth rates, and slow 
creation of urban jobs have diminished 
hopes for combating poverty and caused 
appalling rates of unemployment, 
especially among the young. Youth 
unemployment in Jamaica, for example, 
is estimated to be 50%. Without 
dramatic increases in investment to im- 
prove living standards and to create 
jobs, rising crime and urban instability 
will create a downward spiral of social 
disintegration. And because the Carib- 
bean economies are so small, new in- 
vestment—domestic as well as 
foreign— will not take place without 
assured access to outside markets. 

The diminutive size of individual 
Caribbean markets— averaging just 1.5 
million people, with 16 countries under 
0.5 million— makes them uniquely de- 
pendent on the outside world in ways we 
can only dimly imagine. The national in- 
comes of most Caribbean Basin coun- 
tries are less than that of a U.S. metro- 
politan area of 300,000 people, such as 



THE SECRETARY 



Omaha, Nebraska, or Charlotte, North 
Carolina. Dominica, for example, with a 
population of only 80,000, is the least 
developed country in the eastern Carib- 
bean. It is also one of the most 
democratic and pro- Western. If small, 
vulnerable economies like Dominica are 
to be at all viable, they must have access 
to bigger markets. In Central America 
where the economies tend to be a bit 
larger, the disruptions in recent years of 
the Central American Common Market 
have made economies such as Costa Rica 
much more dependent on markets out- 
side its region. As long as they are 
limited to production for their small and 
poor domestic markets, the small econo- 
mies of the Caribbean Basin cannot 
diversify their economies. Nor can they 
develop the expertise and efficiency 
needed to become prosperous interna- 
tional traders. 

We recognize that the Caribbean 
Basin economies will always be depend- 
ent to some degree on markets outside 
the region. But developments of the past 
few years have had a devastating im- 
pact. Prices of the non-oil commodities 
the Caribbean republics export— sugar, 
coffee, bananas, bauxite— have fallen 
drastically. And this is at a time when 
they are still struggling to cope with the 
massive increases of the 1970s in the 
price of their most basic import: oil. 
Recession in the United States has 
caused a steep drop in revenue from 
tourism. Foreign debt has mounted to 
increasingly burdensome levels. The 
withering of government revenues has 
stopped or delayed development proj- 
ects. Real per capita incomes have 
declined throughout most of the basin 
region. 

All this adds up to a massive prob- 
lem: the governments of the Caribbean 
republics must find ways to assure 
sociopolitical stability and revive 
economic growth while also accommo- 
dating rapid internal change. Their suc- 
cess or failure in meeting this challenge 
will greatly affect the environment in 
which we live. 

The Challenge/The Alternatives 

The United States thus has a vital stake 
in helping its Caribbean neighbors pur- 
sue their goals of open societies and 
growing economies through productive 
exchange with us and the rest of the 
world. The Administration has ap- 
proached this task with full recognition 
that we have great assets and advan- 
tages when it comes to supporting 
democratic development. 



This becomes most clear when we 
look at the alternatives. One alternative 
is the closed solution: the society which, 
while not a viable economy, turns in on 
itself and enforces by fiat the distribu- 
tion of the limited economic benefits a 
small economy can generate itself or 
receive in aid. This is a recipe for 
totalitarian force— because people will 
not take it willingly— and economic 
stagnation. It is the Cuban solution. It 
poses continuing threats to our interests 
in this hemisphere which we have had to 
counter for the last 20 years. 

A second alternative is decline of the 
population to the level which a small 
economy can support on its own. With 
the young populations and high birth- 
rates of these countries, this alternative 
entails massive emigration from the 
Caribbean Basin region. Our country is 
inevitably the preferred destination. As 
much as we welcome the rich contribu- 
tion of the region's immigrants to our 
own life, massive immigration is not 
what we want. Nor is it what the coun- 
tries of the region want. That is not at 
issue. Nor is it the only reason we care. 

The President's proposed legislation 
supports a third alternative— democratic 
development. This is the only alternative 
that meets our vital self-interests and 
our nation's long tradition as a source of 
progress and hope in the world. Politi- 
cally, the people of these societies have 
shown they want a voice in their own 
fate and that they reject totalitarian for- 
mulas. Two-thirds of the governments of 
the region have democratically elected 
governments. Significant progress 
toward democracy is occurring in others 
as well, despite the obstacles. Democ- 
racy represents a set of values that vir- 
tually all the peoples of the region see as 
sympathetic to their own aspirations. 
The Cuban and now Nicaraguan models 
stand as clear demonstrations of both 
political repression and economic failure. 

Economically we have the assets 
that can be ultimately decisive in the 
orientation of Caribbean development. 
We represent a market economy that 
works, a natural market for Caribbean 
exports, the major source of private in- 
vestment in the region, and the manage- 
ment and technology that come with it. 

The Caribbean initiative of the Ad- 
ministration is an imaginative and com- 
prehensive approach to bringing these 
assets to bear on the problems of our 
Caribbean neighbors. It is a forward- 
looking effort to boost both development 
and stability. Because it builds on 
private resources and enterprise, it has 
the potential to deal with their deep 



economic plight in a fundaments 
Because it can help to ease delic 
social and political transitions be 
they create security problems of 
ternational dimension, it is a pn 
get ahead of history, instead of . 
countering its unwelcome effect 

Caribbean Basin Program 

Our program is part of a major 
eral effort. Other higher income- 
tries of the region are also incre 
their efforts significantly. Canao 
embarked on a 5-year program 
area providing over $500 millior 
Canada currently provides duty- 
treatment or preferential access 
of its imports from the Caribbes 
Mexico and Venezuela, despite t 
financial difficulties, are continu 
cessional credits to the region tl 
their oil facility. Venezuelan fin; 
support has been over $2.5 billi( 
last 5 years. Colombia is initiati 
technical assistance of up to S')! .i 
new credit lines of $10 million | 
try, and additional balance-(if-|i: i 
financing and a trust fund for It 
developed countries of the easti 
Caribbean. The collective effort ii 
these democracies are a stroiiu ■ 
couragement to open societit-;- a 
democratic development in tlu^ i r 
But success would be imperiled 1 ; 
us. Our full participation is \ ii.il 
needed. 

The U.S. contribution integi.i 
three types of mutually reinforc g 
economic measures— trade oppop 
tax incentives, and aid. The proii 
been developed in continuint: > o ; 
tion with the governments ai;>l i 
private sectors of the region- I 
their own priorities and ass( 
their needs. 

As you know, we were ali:r 
a start on our Caribbean ecoiioir 
tiatives last summer, when tlio ( i 
approved an emergency suiipl'ii i 
aid package of $350 million — a I 
ment in the President's original 
bean Basin program. Our ain : o 
for both FY 1983 and FY H'.-i 
the new higher priority we ha.t 
the Caribbean Basin area in ila- k 
tion of our scarce economic assii' 
resources. As a percentage oi di 
overall economic assistance luid! 
sistance to the Caribbean rcuior 
double in FY 1983 and 1984. ov 1 
1980, from 6.6% authorized in 1 " 
13.6% proposed in FY 1984. 

Most of the $350 million api 
priated last year has been ohligE,<' 



Department of State Jl 



THE SECRETARY 



the private sector in those coun- 
ith the most serious financial 
ns. This assistance has helped 
istablished, productive private 
ontinue to olitain needed raw 
lis and equipment from the 
States. In addition, it has pro- 
ritical support for balance-of- 
its problems and infrastructure 
s in the small, least developed 
es. 

have also been able to use a por- 
these funds to support training 
lolarship opportunities for in- 
Is from the Caribbean region 
idership potential. These oppor- 
I support our goal of transferring 
dge and skills, enhancing eco- 
;ooperation among nations of the 
and strengthening political ties 
n recipient countries and the 
States. We are currently offering 
cholarships each year. As new 
is available, the number of 
ship recipients will continue to in- 
These programs have high devel- 
, economic, and political impact 

a key element in our assistance 
'aribbean Basin region. 

as the President said when he 
ed that emergency CBI [Carib- 
isin Initiative] appropriation, 
.1 assistance is only a short-term 
. Indeed, financial assistance and 
ment projects will be wasted if 
elopment process is not a broad- 
nd integrated process. We 
that such development can only 
;ved through a strategy which 
.ges private initiative and invest- 



Market 

I' to new production and employ- 
the Caribbean is assured access 
itural market in this country, 
•s in the Caribbean need help to 
ted in the competition with 
nore experienced, and estab- 
roducers elsewhere. That sug- 
bold solution that reinforces the 
pole of attraction of the U.S. 

President's proposal to grant 
e entry to Caribbean Basin prod- 
a 12-year period is the center- 
the Caribbean Basin Initiative, 
rovide a decisive boost to Carib- 
/elopment. The proposal is 
2 and simple. It offers long-term 
c benefits of free trade and the 
te impact of a major political 
nent to the region. By assuring 
e access to the vast U.S. 



market, this measure will provide strong 
and continuing incentives for invest- 
ment, innovation, and risktaking in 
Caribbean countries. 

As I have pointed out, the domestic 
economies of most Caribbean Basin na- 
tions are simply too small to permit the 
diversification essential for noninfla- 
tionary growth. An opening of the U.S. 
market to the nontraditional products of 
these countries will provide important 
opportunities to develop new production 
and an incentive to produce more effi- 
ciently. Increased and diversified pro- 
duction will mean higher wages, a 
strengthened middle class, more 
resources available for education and 
health— and more demand for raw 
materials, equipment, and finished goods 
from the United States. 

I recognize that these are difficult 
economic times in our own country. 
Understandably, there is concern over 
the impact this legislation will have on 
workers in the United States. I am con- 
vinced that the impact on our economy 
will be positive. Because the Caribbean 
countries are so closely linked to our 
economy, our sales to them will grow 
apace with their economies. Excluding 
petroleum trade, we have a $2 billion 
trade surplus with the Caribbean Basin 
and are already the major trade partner 
of most countries there. A stronger 
Caribbean Basin will be an even better 
and more reliable customer for U.S. 
products. As countries in the region pro- 
duce more, they will import more. 
American workers will share in the 
fruits of that growth. 

The Caribbean Basin economies are 
equal to only 2% of our GNP, and our 
imports from the region are less than 
4% of our total imports. Imports not 
already entering duty-free are an even 
smaller percentage. Therefore, even a 
significant increase in Caribbean Basin 
production and exports will not have a 
significant negative impact on our 
economy. And if American industries 
are injured by Caribbean imports, they 
have the remedy of seeking relief under 
the safeguard provisions of the 1974 
Trade Act. 

The United States is the world's 
most open major market. A large share 
of the Caribbean Basin's exports to the 
United States already enter duty free. 
Petroleum accounts for almost 60% of 
our imports from the region. In 1982, 
70% of our nonpetroleum imports from 
the Caribbean Basin entered duty free. 
Sixteen percent of these nonpetroleum 
imports entered under GSP [generalized 
system of preferences]. But GSP is due 



to expire next year. While the Ad- 
ministration strongly supports the ex- 
tension of GSP, it contains competitive 
need restrictions and product exclusions 
which limit its usefulness as a stimulus 
to broad-based recovery by the small 
Caribbean Basin countries. The products 
that would be extended duty-free entry 
as a result of the proposed CBI legisla- 
tion comprised only one-quarter of 1% of 
U.S. imports in 1982. Yet these products 
represent an important area of potential 
new production for the Caribbean Basin 
countries. 

I would like to mention briefly a sec- 
tion of this bill that was not included 
when I addressed this committee last 
August on this legislation. I refer to the 
convention tax deduction. This provision 
recognizes the vital importance of 
tourism and travel to the economies of 
many Caribbean nations. I should em- 
phasize that this provision would simply 
grant Caribbean Basin conventions tax 
status equal to that presently enjoyed by 
Mexico, Canada, and Jamaica. In our 
consultations with Caribbean Basin 
business and government leaders, they 
have frequently cited the disadvan- 
tageous present tax treatment of Carib- 
bean conventions as being an obstacle to 
the recovery of their travel industries. 
We should also keep in mind that many 
American travel dollars spent in the 
Caribbean come back via U.S. -owned 
airlines, hotels, and recreation facilities. 

Let me reiterate the important role 
that Puerto Rico and the U.S. Virgin 
Islands have in the Caribbean Basin Ini- 
tiative. Since the earliest days of this 
Administration, we have consulted close- 
ly with the governments of Puerto Rico 
and the U.S. Virgin Islands to fashion 
the initiative in a way that would foster 
the development of the U.S. Caribbean. 
The legislation reflects that in several 
ways. It liberalizes duty-free imports 
into the United States from insular 
possessions. It explicitly permits in- 
dustries in Puerto Rico and U.S. ter- 
ritories to petition for relief under the 
safeguard provisions of U.S. trade law. 
It also modifies environmental restric- 
tions on the U.S. Virgin Islands rum in- 
dustry and constructs the rules-of-origin 
requirements to encourage the use of 
products of Puerto Rico and the U.S. 
Virgin Islands. An important provision 
would transfer excise taxes on all im- 
ported rum to the treasuries of Puerto 
Rico and the U.S. Virgin Islands. In 
sum, the facilities, skills, and people of 
Puerto Rico and the U.S. Virgin Islands 
are a major component of our develop- 
ment cooperation efforts elsewhere in 
the Caribbean. 



THE SECRETARY 



The Political Dimension 

The political dimension of Caribbean 
progress is of great and ultimate impor- 
tance to us. We do not seek clients. Our 
goal is a region of independent countries 
in which people can choose their leaders 
and their own path to economic and 
social progress. We are confident that 
will produce societies and regimes which 
are not hostile to us. That same belief 
underlies the strong commitment of the 
other democracies in the region to the 
Caribbean initiative. Together with Mex- 
ico, Venezuela, Colombia, and the 
region's other democratic governments, 
we seek to encourage economic and 
social reforms which address the real 
grievances of various sectors of the 
population of Central America and 
Caribbean countries. 

Stability in societies based on free 
association rather than coercion must 
depend on addressing people's right to 
own their own land. They must be able 
to organize in cooperatives and unions to 
promote their economic interests. And 
they must be able to exercise their 
political rights, free of intimidation. 
That is the course we encourage through 
our support in the Caribbean Basin 
region. That is also the course which the 
peoples of the region seek— as they have 
shown repeatedly in their own political 
life. 



Conclusion 

The Caribbean Basin Initiative is solidly 
grounded in the tradition and values of 
both this country and the Caribbean 
region. It is a strong and multilateral ef- 
fort in which the U.S. Government has 
cooperated and consulted with the 
Governments of Canada, Venezuela, 
Mexico, and Colombia; with other donor 
countries; and with the international 
financial institutions. The proposals 
before this committee are the result of 
extensive discussions with business and 
government leaders in the Caribbean 
Basin region about the obstacles to their 
economic revival. The focus of our ef- 
forts is on the private sector, which 
must be the engine of a lasting economic 
growth. 

The nations of the Caribbean Basin 
are counting on us. It is now over a year 
since President Reagan outlined his 
Caribbean Basin Initiative proposals 
before the Organization of American 
States. Those proposals were warmly, 
even enthusiastically, received by most 
government, labor, and private sector 
leaders in the region. For those in the 
Caribbean Basin countries who believe 



in cooperation with the United States, in 
pluralistic democracy and private enter- 
prise, the announcement of the initiative 
demonstrated that the United States 
realizes the importance of urgent and 
far-reaching action to promote the 
region's prosperity. They were bitterly 
disappointed that this legislation did not 
reach the Senate floor during the last 
Congress. If we fail to act now, our in- 
action will be interpreted as lack of in- 
terest and a broken promise. It would 
undercut moderate leaders in the region 
who have geared their policies to 
cooperation with the United States and 
to serious efforts for economic develop- 
ment and democracy. It would ex- 
tinguish the hopes that have been raised 



in the region that the United Stat 
willing to give significant help to : 
economic and social progress in tl 
Caribbean Basin. 

I am confident that after care 
amination, this committee and the 
Senate will recognize that this leg 
tion is important to the interests i 
United States and the Caribbean : 
countries. I strongly urge favorab 
tion. 



' Press release 108. The complete 
transcript of the hearings will be publ 
by the committee and will be avaitabli 
the Superintendent of Docimients. U. 
Government Printing Office. Washing 
D.C. 20402. ■ 



FY 1984 and 1985 
Authorization Requests 



Excerpt from Secretary Shultz's 
statement before the Subcommittee on 
International Operations of the House 
Foreign Affairs Committee on Febru- 
ary 23, 1983.^ 

I appreciate the opportunity to meet 
with you to begin discussion of the 
Department of State authorization re- 
quest for fiscal years 1984 and 1985. Of 
all my appearances before Congress, 
none is more important. Indeed, our suc- 
cess in the world depends on our will- 
ingness to allocate the resources 
necessary to support a foreign policy 
worthy of our traditions and the role we 
must play in today's world. 

I iDelieve I know as well as anyone 
the competition for our nation's 
resources. I also understand the in- 
evitable trade-offs between our domestic 
and international priorities that are a 
part of that process. I firmly believe, 
however, that just as we cannot com- 
promise on funding vital to America's 
defense, it is equally important that our 
diplomatic efforts receive the resources 
essential for their success. Indeed, to the 
extent we succeed diplomatically in 
assuring the security and well-being of 
ourselves, our friends, and allies, our 
military strength need never be tested. 



U.S. Agenda Goals 

Our nation's foreign policy agenda is a 
very ambitious one. Three broad goals 



dominate that agenda— goals whi 
at once interdependent and mutal 
forcing. 

• The first goal is our commi 
to a more peaceful, secure world, 
countries are free to pursue peace 
change and to realize their politic; 
economic aspirations safe from th 
or intimidation. To address this g 
President Reagan is moving decis 
restore our military strength, to 
negotiate on disarmament and an 
trol, and to act decisively and ima 
inatively to help make peace a rea 
regions of the world which have k 
only anguish and strife for genera 

• The second goal is to restor 
order and stability to the internati 
economic system by recognizing tl 
own domestic and foreign econom 
policies must interact effectively t 
achieve sustainable noninflationar 
growth. 

• A third goal is the Presiden 
commitment to expanding the fori 
democracy and freedom. Last Jun 
speech to the British Parliament, 
President pointed out the need to 
decisively to strengthen the infras 
ture of democracy; a free press, ft 
trade unions, free political parties 
institutions which allow people to 
mine their own future. 



Department of State B ' 



THE SECRETARY 



lary Resources 

1 like now, however, to discuss 
ources needed by the Department 
e to advance U.S. interests 
IS. I am requesting appropriation 
ty for $2.4 billion in 1984 and 
lion in 1985. The 1984 request 
mts an increase of $169 million or 
)ver 1983 estimates. 
5 largest component of this in- 
-$85 million— results from com- 
a previously approved change in 
ing of our payment of assessed 
utions to the major international 
;ations. This, therefore, does not 
ite an increase in the budgets of 
rganizations. In fact, without this 
1 process, our 1984 authorization 
. would be only 4% greater than 
i3 level. If the budget request is 
iroved, the U.S. payment will be 
irs. This would be inconsistent 
r global responsibilities. 
3t of the Department's 1984 in- 
s necessary to continue opera- 
existing levels and to correct 
jnal deficiencies. We must meet 
d wage and price increases 
s, where inflation rates have 
niificantly higher than domestic 
Bspond to the growing demand 
'estic and overseas passport and 
- services; and continue efforts 
ct life and property abroad in an 
ngly dangerous international en- 
■nt. 

remaining growth in the 
nent's budget is devoted to 
ng several programs of critical 
nee to U.S. interests. 
:it, we must continue the 
ir effort to strengthen reporting 
lysis of foreign political and 
c events. Our ability to influence 
ional events is dependent upon 
Ige of and sensitivity to unique 
situations. The Iranian crises of 
jw what can happen when we 
equately informed. 
)nd, we must continue to renew 
rade our operational capability, 
to make these investments not 
pardizes the effective conduct of 
affairs but also increases the 
uch necessary investments in 
re. In this area, it is necessary 



iprove the security and reliabili- 
Department's telecommunica- 

items. The Falklands and 
conflicts demonstrated the 
upgrading our crisis manage- 

nmunications system; 



• Provide new facilities where 
needed and restore the condition of 
existing overseas property. Maintenance 
activities have been seriously neglected, 
and renewal of our existing capital in- 
vestment is both cost-effective and a 
high priority; 

• Meet increased demands for the 
continued security of life and property; 

• Expand the Department's world- 
wide information processing capability 
to meet increased workload demands 
and to improve our management effi- 
ciency; and 

• Improve our administrative sup- 
port for U.S. Government activities 
abroad, particularly in lesser developed 
countries. 

Finally, there are several matters of 
current interest to this committee that I 
would like to address briefly. First, this 
request provides authorization to sup- 
port the 1983 reopening of seven con- 
sulates closed in 1980— Brisbane, Man- 
dalay, Salzburg, Nice, Bremen, Turin, 



and Goteborg. Our authorization also 
will support the opening of three new 
posts in Chengdu, People's Republic of 
China; Bandar, Brunei; and Enugu, 
Nigeria. Each of these is important to 
our foreign policy and commercial in- 
terests. 

I would like to report that our Office 
of Foreign Missions is steadily expand- 
ing its operations, including a careful 
review of ways to ensure reciprocity. 
The Department also is establishing a 
Coordinator for International Com- 
munication and Information Policy. The 
coordinator will provide executive 
branch leadership and we welcome your 
continuing interest and support for our 
efforts in this important area. 



' Press release 61. The complete 
transcript of the hearings will be published 
by the committee and will be available from 
the Superintendent of Documents, U.S. 
Government Printing Office, Washington, 
D.C. 20402. ■ 



Secretary's News Briefing on Arms Control 



Secretary Shultz held a new>> briefing 
at the White House on March 31. 1983^ 

I thought I would make a few opening 
comments and then we can just have the 
questions we wish. I have been trying to 
think to myself what is this really all 
about. And obviously it is about reduc- 
tions in nuclear arms, particularly a par- 
ticular class of armaments in Europe 
that are highly destabilizing and, 
therefore, especially dangerous. And 
clearly we have been in the position — 
the President has— of wanting to see 
that whole class of weapons eliminated 
globally. We continue to think that is the 
best solution. 

We recognize that this is a negotia- 
tion and the Soviet Union has rejected 
that, and so the President has made 
another proposal. The new proposal you 
will have so I won't repeat it other than 
to say that it is a further effort to 
negotiate something that still aspires, 
although it isn't a condition, to get to 
elimination of these weapons but is will- 
ing to take, as an interim step, some 
finite number somewhere between zero 
and 572 warheads on both sides, accord- 
ing to specified criteria that has been set 
out. 



So partly this is about that. But I 
think that in the full perspective of 
things, we tend to mislead ourselves if 
we concentrate overly on the weapons 
aspect of this problem. And it is a fact 
that we have had an extensive rich con- 
sultative process with our allies on the 
original 1979 dual-track decision, in the 
first place, then on the elimination op- 
tion, in the second place, and now on the 
President's most recent proposal. 

And we have had really sort of an 
alliance view throughout. It is very 
unified and strong and determined. So I 
think that raises a question of how it is 
possible to get so many countries that 
are geographically spread around and 
which have varying interests on many 
things to be so unified on something of 
this kind. And I think you have to come 
back to the values that these countries 
share in a determination to be able to 
defend those values against a very clear 
threat to them. 

It is really that that underlies the 
unity that we have and the fact that we 
are undertaking both to confront the 
Soviet Union with the strength implied 
by the first-track and the dual-track 
decision, but at the same time hold out 
to everyone the prospect of a reduction 



THE SECRETARY 



or, in our basic prospect, elimination of 
these very destabilizing weapons. 

The perspective that I want to lend 
is the strength of the alliance and the 
reason for that, namely our jointly held 
values, as really the underlying source of 
strength. And I don't say that in any 
way to neglect the importance of the 
particulars of the arms reduction 
negotiation and the weapons systems 
and all that. 

Q. From Moscow recently, we have 
heard from Andropov and we have had 
some journalists reporting on the 
temper of the talk over there. And the 
general feeling seems to be that the 
Russians have had it up to here, if you 
will, with dealing with the Reagan 
Administration. Is that, do you find 
that is their reading? 

A. There have been some very 
sharp statements made, and I think it is 
fair to characterize the U.S. -Soviet rela- 
tionship as not a particularly good one 
right now. It is tense. At the same time, 
I think it is important to point out that 
we have discussions going on with the 
Soviet Union in two fora in Geneva that 
include both the INF [intermediate- 
range nuclear forces] and the START 
[strategic arms reduction talks] talks 
also kind of adjoining each one of those 
talks about confidence-building 
measures. 

There is a continuing discussion in 
Vienna and MBFR [mutual and balanced 
force reduction] talks. We are engaged 
with them across a range of Helsinki 
Final Act and disarmament issues in 
Madrid. And we have quite a number of 
other settings in which there are from 
time-to-time meetings, for example, 
meetings that I have with Ambassador 
Dobrynin. So there is a dialogue. 

And it is our feeling that the impor- 
tant element here is to see and to probe 
and to find out whether there are some 
areas of importance where substantive 
agreements can be made. That is, tone 
reflects substance, not the other way 
around. And there are a great many 
substantive matters where we are in 
deep disagreement with the Soviet 
Union, and that is the essence of it. 

We need to work at the substance. 
And if it turns out that the substance 
can be improved, then I think the tone 
of the relationship will improve. 

Q. There are some very sharp dif- 
ferences in statements which the 
President made over a period of some 
weeks— very, very harsh denuncia- 
tions of the Soviet Union— and what 
everyone seems to feel is a verv con- 



structive proposal at this time. Why is 
there such a great variance between 
the President's rhetoric on some of 
these occasions when he speaks so 
sharply and so strongly of the Soviet 
Union, the focus of all evil, and then 
made movement toward this kind of 
substantive thing? Because the first 
statements almost indicate that it 
wouldn't matter what negotiation we 
had, we wouldn't trust them to carry 
it out. And it would be almost im- 
possible to negotiate. Is there a plan 
here? Is it by accident? Why are these 
enormous differences in tone? 

A. I think that if we didn't feel that 
there was a reasonable possibility of ar- 
riving at significant agreements in these 
discussions, we wouldn't be having them. 
The fact that they are going on, at least 
from our standpoint, shows that we 
think there is a chance that things can 
improve and that the improvement can 
be genuine in the sense that it can be 
built on substance. 

The range of issues that one can 
discuss is quite broad. And, of course, 
on many of them, particularly when you 
are talking about something like arms 
control, I think that it is not so much a 
matter of trust as it is verifiability, that 
you are going to aspire to an agreement 
that is inherently capable of being car- 
ried out because you can know on both 
sides, they as ourselves, that it actually 
is being carried out. The key here is the 
subject of verifiability. 

Q. Do you get any indication from 
the Soviets at all of a shift in their 
position on verifiability? Are they 
moving toward a more acceptable posi- 
tion as far as we are concerned? Is 
there any shift in that whole area? 

A. Our negotiations are ongoing in 
various areas, and I think that the no- 
tion that an agreement ought to be 
verifiable is an accepted notion. The 
question of what it takes to satisfy 
yourself on that is where all of the argu- 
ment comes. For example, the President 
feels that the Threshold Test Ban 
Treaty is capable of considerable 
improvements in the area of verifiability, 
and the Soviets have told us that they 
do not agree with that. The Soviets have 
a difference of opinion there. It is not 
over whether verifiability is a proper 
concept; it is over the implementation of 
the concept. 

Q. Given that you have said that 
the tone for that meeting reflects 
substantive disagreements between us 
and the Soviet Union, wherein lies the 
possibility for an improvement or a 



chance of an agreement on impr 
ment of the relationship? Why dij 
think there might be such a thin, 
do you think there is any prospe 
summit meeting before the end ' 
first term in this Administratior 

A. I think you have to re\ nw 
the issues and then appraise tlun : 
by one and see what the prosiir-i ; 
be piece by piece, so if you sa> ";i 
agreement," that can cover a bm; 
range. The focus of attention li^ii' 
is on the major arms reduction ik • 
tions and particularly today the 1.' ' 
negotiations. But there are a !> it ■ i 
things. 

The President has said, ami a ' 
I can read it Mr. Andropov has al 
said, that in principle they are lu'i 
to have a summit meeting but onl 
the basis of the prospect that sorr 
really significant could be achieve 
the meeting. So the idea of a simj 
acquainted meeting doesn't seem 
in the cards. 

Q. You have expressed the 
wonder— the pleasurable wondc 
that at the— 

A. No, I didn't express any w 
ment. I insist that it is remarkabl 
that it is important and then I tri. 
to have wonderment but rather tc 
you an answer, namely our share( 
values. 

Q. Isn't it true though that J 
dent Reagan would have stayed 
original zero-zero option had it 
been for pressure from our alliei 
Europe? 

A. The President has said — a 
has been an alliance proposition 
as I understand it, I am relatively 
to it, but the 1979 decision— the o 
proposal— has been an alliance pr* 
tion all along and it has been disci 
continuously about what position 
should take and what our negotiat 
strategy should be, and so on. Am 
have been lots of discussions withi 
U.S. Government, as well as withi 
European governments and amon; 
think it was a shared view that th 
ing is right now to make this chan 
our position. So I don't think it is 
tion of pressure this way or that v 
is a question of a continuous proce 
consultation, and I think there em 
a very broad consensus in our gov 
ment and in the governments abrc 
that this was the time to make a c 
as the President has done. 

Q. You didn't find a reluctani 
the Pentagon to make this chang 



Department of State Bie 



THE SECRETARY 



. No. We had lots of discussions of 
■actically ever since I got here — I 
minded this morning 9 months 
omebody implied that it ought to 
e for me to produce something. 
Iter] 

Isn't there perhaps a con- 
ble danger that offering the in- 
proposal at this point, shortly 
he hurdle of the West German 
ms, will suggest or be inter- 
: as meaning that the Adminis- 

1 was not terribly intent on zero- 
ption to begin with, that once 
litical hurdle had been cleared 
ow out a more specific bargain- 
sition and that this might tend 
ercut the substance of zero- 

I don't think there is really a 
ate question about what the 
;nt feels and, for that matter, 
ur allies feel is the best outcome. 
e elimination of these weapons. 
nk so, we continue to think so, 
hink that that position has a kind 
•d appeal to mankind in a sense, 
pported by the Japanese. The 
? think that is the right proposal 
on. There is a worldwide accept- 
that. I think there is also a 
tion of the reality that we are 
to bring about arms reduction 
it, in the process of conducting 
jotiation, we need to try out 
ptions, and so we have, 
link it is worth pointing out that 
/ the President has constructed 
)posal, he did not substitute some 
■ for zero. He rather said, in ef- 
at there are a variety of numbers 

2 conceivable, and we are saying 
50viet Union that we are willing 

an interim number. And if they 
iccept this concept, maybe there 
le numbers that they think are 
;han other numbers. Obviously, 
mot just pick any number for a 
lunch of reasons. But I think it is 
rt to put this forward in a man- 
t maximizes the potential for 
tion and for some reality of the 
;t of getting some place as much 

cannot do it, of course. It takes 
es to make an agreement. 

Ooes this put the onus on the 
Union now to come up with a 
—an acceptable number— and 
s of the public relations battle 
is the ball now to be perceived 
ioviet court? 

I think that the ball has always 
the Soviet court because we 



have tabled a complete and very good 
proposal in what has been called the 
zero option. I guess you could say that 
they have made a response but the 
response is so far out of the ballpark 
that I don't think anyone really took it 
that seriously. But at any rate, certainly 
this is another effort to put forward 
something as they have said very clearly 
that they do not accept the idea "that 
they will have none of these weapons. 
So this is another way of trying to 
get at it consistent with the principles 
that have been implicit in the President's 
position and the alliance position all 
along and has been enunciated most 
recently in his American Legion speech 
and again by Paul Nitze [head of the 
U.S. delegation to the INF negotiations] 
in Geneva. 

Q. You are saying to the Soviets in 
effect, what number will you take? Is 
that the way that you read it? 

A. It leaves it open to the 
negotiators to say, well, you think this 
number, we might think "that number, 
but if we can get the thing into that 
ballpark then it seems to me that that is 
a big advance. I don't know whether the 
Soviets will respond that way, but at 
any rate, I think that our position is a 
good one. It has a good ultimate objec- 
tive, and it is a negotiating position, and 
it has strong alliance support. 

Q. We are truly trying to maximize 
the prospects of coming up with an 
agreement. Will there be some way to 
take account of the fact that the 
British and the French are moderniz- 
ing their strategic nuclear forces in a 
significant way and either in this 
negotiation or in START might we ac- 
commodate that fact somehow? Be- 
cause it doesn't seem to me from the 
Soviet perspective of a priori crazy to 
insist that these forces be factored in 
this tabulation of forces. 

A. I will just focus on the negotia- 
tions we are talking about. You used a 
good word, "strategic," and these are 
intermediate-range missiles that we are 
talking about. We are talking about 
land-based missiles, and we are talking 
about the United States and the Soviet 
Union. I don't think that it is reasonable 
to consider— we should not consider a 
proposition broadly that equality con- 
sists of adding up the armed forces of 
every country in the world and then say- 
ing that the Soviet Union has to have 
the same as everybody else combined. 



I think this problem that we have 
has to be put in terms of the United 
States and the Soviet Union and equality 
and capacity to deter on our part based 
on that notion. As you know, the over- 
whelming number of U.K. and French 
systems are submarine-based so that 
they are not land-based systems— I 
believe only a very small number of the 
French systems are land-based. Stra- 
tegic land-based— those are national 
systems. They are not NATO systems. I 
don't think that they should be counted, 
let alone taken into account in this 
negotiation. 

Q. I wondered if the United States 
would feel that the number of SS-4 
and SS-5 missiles that the Soviet 
Union has, if they eliminated those 
would this be a realistic approach to 
the thing? Because the Soviets have 
never given an indication in their 
history of eliminating a new weapons 
system. 

A. You must be kidding. 

Q. No. I am not. 

A. You must be kidding. 

Q. The Soviet Union has never 
eliminated an operating weapons 
system. They have only gotten rid of 
the old obsolete systems, and they 
haven't given any indication in these 
negotiations, I am sure, that they 
wish to dismantle any of the SS-20s. 

A. We cannot appraise proposals ac- 
cording to what the Soviet Union would 
like. We have to appraise proposals ac- 
cording to what would be sensible and 
reasonable from the standpoint of our 
allies and which one would think would 
be reasonable for them. If they feel, as 
it has been said so often, that they are 
threatened, then why isn't it reasonable 
to say let's just eliminate all of these 
weapons and then they don't threaten 
anybody. 

Q. I wasn't talking about what 
was reasonable — 

A. I think that there are all sorts of 
responses to these things, but to think 
that we could accept— the number of 
SS-20 warheads now deployed, I think, 
well exceeds 1,000 and not have any- 
thing to confront that and to be used as 
a component of our deterrence would be 
absolutely ridiculous. 



19 



AFRICA 



FY 1984 Assistance Requests for Africa 



by Chester A. Crocker 

Statemevt before the Svhrommittee 
on Africa oflli<' Hmis,' Fnrr!,ii, Affairs 
Committee on Mnrrh A', I'is.r Mr. 
Crocker is A^^sishiiil Sirrrhirii fm- 
African Affairs.^ 

I appreciate this opportunity to discuss 
with you publicly and for the record our 
proposals for Africa for 1984. I am most 
concerned that those of us who are truly 
committed to a positive future for Africa 
carefully examine the role of foreign 
assistance in achieving that future. 

The West's interests in Africa in- 
clude such obvious material and 
strategic interests as access to vital 
materials and the importance of main- 
taining partnership with friendly nations 
flanking the transportation lanes to the 
Persian Gulf. They include our deep con- 
cern for the economic development and 
growth of Africa, without which the con- 
tinent cannot realize its great potential. 

Americans are tied to Africa by 
bonds of ancestry and culture. We re- 
main committed to helping Africans suf- 
fering the effects of famine and civil 
strife, all too common in the world's 
most recently independent continent. 
We are actively seeking peaceful solu- 
tions to the conflicts and problems in 
southern Africa. We remain equally 
determined to prevent Soviet, Cuban, 
and Libyan adversaries from taking ad- 
vantage of Africa's current weaknesses 
to pursue strategies of destabilization, 
which could further delay Africa's prog- 
ress toward economic and political well- 
being. 

The United States, by virtue of our 
technical skills, economic strength, and 
humanitarian concern, has the where- 
withal to forge a growing and mutually 
advantageous partnership with Africa. 
And we know that increasing numbers 
of African leaders look to the West for 
help. 

The request for economic and 
military assistance now under construc- 
tion is certainly not the only means to 
help us achieve a more effective partner- 
ship with Africa— much can be done by 
private individuals and organizations— 
but there can be no doubt that aid is of 
critical importance. 

We are not alone in this effort. Our 
allies, particularly the Europeans, bear a 
major share of the burden. Our own con- 
tribution of bilateral economic aid ranks 



third behind France and West Germany. 
The United States is taking the lead in 
only a few countries, such as Liberia and 
Sudan, which are of special importance 
to us. While we welcome the key role of 
our allies, it is nonetheless clear that in- 
adequate assistance levels will threaten 
our ability to promote U.S. interests or 
even to cooperate effectively with our 
allies. In this connection, it must be a 
matter of concern that although our in- 
terests in Africa are steadily increasing, 
American aid is barely keeping pace 
with inflation. A recent General Ac- 
counting Office (GAO) study notes that 
in the early 1960s, the United States 
contributed 60% of total economic aid 
worldwide. Today the level of U.S. 
bilateral aid is down to 16% of world- 
wide official aid flows. In Africa, U.S. 
bilateral economic aid is less than 10% 
of official aid from all sources. 

Economic Crisis: The Threat 
to Africa's Political Viability 

In the past year, we have witnessed 
growing economic crisis in African coun- 
tries, most of which are dependent on 
one or two primary products for their 
income, as they have had to suffer the 
painful consequences of continued low 
commodity prices. For these countries, 
declining food production, mushrooming 
population, and skyrocketing interna- 
tional indebtedness are not descriptive 
terms but threats to the lives of their 
people and to their very existence as na- 
tions. The impact of today's world reces- 
sion has been aggravated substantially 
by the growth-inhibiting economic 
policies pursued by many African coun- 
tries over the past generation. 

In the last year, some two dozen 
African countries have sought the 
assistance of the International Monetary 
Fund (IMF) in dealing with their 
economic difficulties. A dozen or so of 
these nations have also had to 
reschedule their external government 
debt. And still the great majority of 
African nations face extremely limited 
short-run prospects for improvement in 
their financial situations. 

The unprecedented economic crisis 
in Africa threatens U.S. interests on 
several levels. Unless it is alleviated, 
African leaders will be increasingly at- 
tracted by authoritarian or repressive 
political strategies with destructive con- 
sequences. Although Africa does not 



have debt problems on the scale < 
America, default by one or more 
African countries would certainly 
crease present strains on the inte 
tional financial system. Unchecke 
economic crisis will, in time, geni 
further burden on famine, refuge 
civil strife, deplorable in itself am 
demanding expensive internation' 
efforts in response. Finally I woi 
mind you that one out of five U.i: 
depends in some way on internat 
trade and that 40% of our cropla 
devoted to production for export 
performance in Africa reduces t\ 
growth in our export sales, depn 
our economic growth, and slows 
creation in the United States. 

The Successful Uses of Assistai 

We must not conclude, however, 
is doom and gloom. There are br 
spots on the African horizon, anc 
aid programs have a significant : 
some of them. In Senegal, for ex 
the U.S. Agency for Internation; 
Development (AID) has been insi 
tal in improving health condition 
bringing to rural villages the res 
agricultural research and new te 
ical developments, and in increas 
crop yields significantly. Our aid 
been equally successful in Zimbal 
where, despite political problems 
government has clearly demonst; 
ability to absorb and use effectiv 
assistance in support of pragmat 
economic policies. An economic s 
funds (ESF) commodity import p 
has provided badly needed direct 
port for the private sector, amon 
things enabling a major America 
firm— Caterpillar— to continue 
gram which trains black employe 
wide range of skills. 

For many countries in Africa 
present crisis requires a two-pha: 
response. The first phase is usua 
IMF-supported stabilization progi 
which emphasizes short-term I 
payments adjustment. If success! 
stabilization phase will eliminate 
disincentives to exporters and otl 
domestic producers and set the s 
renewed growth. The second pha 
typically an investment program 
by the World Bank (IBRD) and o 
donors encourage and help finan« 
growth-producing development a 
tivities. 



Department of State Ijl 



AFRICA 



aid is essentia! in both phases, 
igrams often demand painful 
tieasures, including adjustment 
alued exchange rates, reduction 
stic budgets, and elimination of 
3. Fast disbursing balance-of- 
;s assistance, often provided in 
1 of ESF, may be required to 
;e the balance-of-payments gap 
iction with the IMF and other 
Our balance-of-payments sup- 
.irectly keyed to economic 
;fforts being urged by the IBRD 
'. Later in the investment phase, 
ject and nonproject aid funded 
'elopment assistance, ESF, and 
can be provided with accom- 
technical assistance to help get 
/th process going again. It is 
I that the two phases — stabiliza- 
growth— be presented together, 
unless African leaders perceive 
erstand and can reasonably 
I the relationship between 
I and growth, they will hardly be 
take the political risks which 
;ess demands of them. Our 
ip over the past 6 months has 
trumental in organizing a multi- 
response to Sudan's economic 
it takes these two phases into 
Within the past month, donors 
•eed to support a World Bank 
i investment program, the IMF 
oved a new stabilization pro- 
• Sudan, and official creditors 
■vided needed debt relief. 
\T kinds of ESF programs also 
|h developmentally oriented con- 
e common means of disbursing 
is the commodity import pro- 
lis program enables us to pro- 
. made capital goods and spare 
thout which local American 
ten squeezed by severe foreign 
i shortages, might go under. 
It is a boost to the private sec- 
uently to firms which are train- 
;ans, contributing to agricultural 
lent, and serving as agents of 
^, as in Zimbabwe. A signifi- 
iponent of our commodity im- 
jrams in Africa consists of in- 
mportance to food production 
3edy people: fertilizer and farm 
•y are two examples which 
) mind. Finally, when commodi- 
im-fmanced goods are sold, 
erate local currencies which are 
iministered by AID and the host 
ent to fund development ac- 

lort, Mrica's crisis demands a 
and tlexible mixture of project 
)roject economic assistance. 



The growth in nonproject aid in re- 
cent years, delivered through ESF and 
Title I PL 480, reflects the depth of the 
current crisis and the consequent em- 
phasis on successful economic stabiliza- 
tion. The need for such assistance is 
recognized by virtually all development 
experts and was endorsed li\' tho World 
Bank's 1981 study, AcceU-r„)nl lirrrh.p^ 
ment in Sub-Saharan Afm-n: An Aijiniln 
for Action, which noted that "quick 
disbursing balance-of-payments assist- 
ance is critically needed in some coun- 
tries to permit fuller operation and 
maintenance of existing productive 
capacity and infrastructure." 

Addressing Africa's Security 
and Development Needs 

Whatever we and the Africans 
themselves may wish, the politics of sur- 
vival dictate that for the majority of 
African countries security, economic 
growth, and development are in- 
separable. In Africa the security pro- 
gram is particularly difficult because not 
only are the economies weak and 
vulnerable but the means of legitimate 
self-defense are expensive and draw on 
scarce resources. Our answer to Africa 
must include a response to legitimate 
needs, both for self-defense and for 
development. In shaping our response, 
we have focused most heavily on the 
economic requirement, but we have not 
and must not neglect the defense needs 
of our friends in Africa who face direct 
threats from abroad. 

Terms of Partnership. In undertak- 
ing a response to Africa's several prob- 
lems, we cannot force on Africa solu- 
tions that we would reject for ourselves 
as untenable and unrealistic. Instead, in 
his speech this past November in Kenya, 
Vice President Bush spoke explicitly of 
the kind of partnership with Africa that 
this Administration views as possible 
and desirable. 

Because we believe that Africa has the 
capacity and will to be master of its destiny. 
President Reagan has over the past 20 
months worked to forge a new and mature 
partnership with the nations and people of 
Africa. We speak of a partnership that begins 
with mutual respect. We speak of a partner- 
ship that includes honest discussions. We 
speak of a partnership which recognizes that 
each nation must do its part if the goals we 
share are to be achieved. Partnership is a 
two way street based on shared goals, com- 
mon principles, and mutual interests. 

What we envision and propose for 
Africa is a program of security and 
developmental assistance that takes into 



consideration African needs and realities 
as well as our own interests and 
capabilities. In view of the importance of 
this proposal, I want to make clear to 
you the process by which we arrived at 
the request levels we are placing before 
you today. 

Security Assistance: Myths and 
Realities. I believe we need to begin by 
dealing with the pernicious misconcep- 
tion that this Administration's goal is to 
arm Africa and in so doing contribute to 
both the diversion of funds that could be 
used for development and the increase 
of Africa's debt burden. In 1981, all of 
Africa, with the exception of Egypt, ac- 
counted for less than 1% of the total 
value of U.S. exports of defense articles 
and services. The foremost supplier of 
military equipment in Africa continues 
to be the Soviet Union; the United 
States is fourth or fifth on the list. 
African nations themselves have asked 
us for assistance in assuring their 
security. 

The Administration is often criti- 
cized for requesting funds for large, ex- 
pensive military assistance programs 
that wind up in ruins and that detract 
from the critical need for economic 
development. I would like to take a mo- 
ment to set the record straight. The 
United States can point with pride to 
the fact that the great majority of our 
programs in Africa are successful. These 
programs run the gamut from engineer- 
ing in Liberia, Senegal, and Sudan to 
aviation in Kenya and mechanized infan- 
try and armor in Botswana, Gabon, and 
Somalia. These programs have not only 
added to the capabilities of the host 
military but have introduced senior of- 
ficials to the concepts of planning, 
budgeting, and logistics that are vital to 
the success of any military organization. 
I would also like to point out that all of 
the U.S. foreign military sales (FMS) 
programs in Africa have come in at, or 
under, the projected cost. 

These programs also provide direct 
civilian benefits. The engineering and 
construction programs in Kenya, 
Liberia, Senegal, and Sudan have made 
direct contributions in the form of new 
facility and housing construction and of 
building and improving roads in both ur- 
ban and rural areas. Communications 
programs in Somalia and Sudan allow 
units in remote areas to communicate 
with population centers, not only for 
military purposes but also to obtain 
needed attention to civilian requirements 
and emergencies. 



AFRICA 



Finally, I must once again bring to 
your attention the tremendous success 
of our international military education 
and training (IMET) program. Without 
exception, each of our ambassadors 
reports that IMET is one of the most 
valuable programs we have to offer. 
Each of our missions would like to have 
more of such programs to offer to the 
host country. We have trained large 
numbers of managers and technicians 
who are now providing much needed 
skills in their own countries. These skills 
range from finance, to administration, to 
engineering, to avionics, to electronics 
and vehicle maintenance, to name a few. 
We are beginning to see remarkable im- 
provements in military management and 
equipment operation and maintenance in 
those countries where we have these 
programs. I cannot overemphasize the 
importance and value of our IMET pro- 
gram in Africa. 

The Vetting Process. With regard 
to requests from African nations 
themselves for security assistance, let 
me point out that the close scrutiny the 
American people rightfully demand of 
such assistance requires that the Ad- 
ministration employ a very careful 
screening process to assess the validity 
of a country's declaration of need. In the 
case of FMS/MAP, for example, the 
Department of Defense is often asked to 
lend its expertise and undertake a 
survey of needs. When the survey in- 
dicates that a need does exist, a strin- 
gent vetting process within the Adminis- 
tration as a whole measures individual 
country requirements against other 
policy demands, both foreign and 
domestic. The bulk of our FMS/MAP 
program is concentrated in a few key 
countries such as Sudan, Somalia, Niger, 
and Kenya. 

The record proves that we are not 
ignoring developmental goals in favor of 
military sales. The 1983 supplemental 
request for $47 million for ESF and 
$106 million for MAP/FMS before you 
does not involve increases over our 
original FY 1983 proposals. Rather, 
these funds are needed to make up for 
the shortfall which our programs for 
Africa suffered as a result of overall ap- 
propriations levels set by the continuing 
resolution. Including the supplemental, 
we are proposing $868.7 million in 
economic assistance and $193.5 million 
for military programs for Africa in FY 
1983. For FY 1984, we are asking for 
$963.7 million in economic assistance 
against a total of $202.3 million for 
military programs. We continue to 
emphasize economic over military 



assistance at a ratio of better than 
4 to 1. 

I have, of course, been discussing 
the totality of our assistance effort, in- 
cluding MAP/FMS, IMET, ESF, devel- 
opment assistance, and PL 480. I will 
now turn to some of the ESF and 
MAP/FMS programs for Africa for 
which the State Department has 
primary responsibilities within the ex- 
ecutive branch. 

Southern Africa 

Perhaps nowhere in Africa have our 
own security concerns, and our own 
security policies, coincided with African 
security needs and been more intensely 
engaged than in southern Africa. This 
region, from Zaire to the Cape of Good 
Hope, contains the bulk of Africa's 
mineral wealth, its most developed in- 
dustrial structure, and almost two-thirds 
of the continent's GNP. It is also a 
region threatened with the prospect of 
heightened violence and polarization that 
could lead to great power confrontation. 

It is precisely to avoid that possibili- 
ty of violence and confrontation that we 
have fashioned a major effort to bring 
about regional peace and security. We 
have launched a policy of constructive 
engagement with all the states of the 
region that wish the same with us. A 
major policy objective is to provide an 
alternative to conflict, not only in 
Namibia but throughout the region. Vice 
President Bush summed up our policy in 
Nairobi last November when he said: 
"We are determined to help turn the sad 
tide of growing conflict and tension in 
southern Africa." 

The United States and its Western 
allies are in a unique position to play a 
leading role in helping southern Africa 
reverse the trend of mounting violence 
and avoid disaster. The material 
resources we require in support of this 
regional diplomatic effort are com- 
paratively modest but absolutely essen- 
tial to its success. 

Our security assistance request for 
southern Africa in FY 1984 includes 
$155 million for ESF, $24 million for 
FMS/MAP, and $1,975 million IMET, 
for a total of $180,975 million. Our sup- 
plemental request for 1983 totals $22 
million in ESF and $11.5 million in 
FMS/MAP. 

In order to elucidate how these re- 
quests fit into our strategy for the 
region, however, I shall address some 
specific programs. 



Zaire. Zaire's size, mineral • 
and the fact that much of its sou 
border— including the borders oi 
invaded Shaba Province— are cc 
with Angola's and Zambia's norti 
borders make Zaire's continued 
and viability important to our sc 
Africa strategy. We are concern 
recurrence of turmoil in Shaba II 
could have a disquieting affect o 
Angola and Zambia that would 1' 
the West's efforts to engage the 
states in the process of resolvinj 
southern Africa's regional confli 

Zaire faces critical economic 
lems, and we are engaged with 
allies — especially Belgium and F 
the World Bank and the IMF— 
broadly based assistance effort. 
France's total assistance to Zair 
about $60 million and Belgium's 
$90 million. Our own FY 1983 a 
level, including development ass 
and the supplemental, will total 
million. In FY 1984 we are prof 
total of $43.4 million. 

From the FMS/MAP perspe 
have a C-130 program that is a 
tant part of an agreement on oi 
with our allies and with Zaire tc 
with military airlift capability fc 
brigades now being trained by I 
France, China, and Israel. Since 
were able to provide only $2 mi 
MAP and $2 million FMS under 
tinuing resolution for FY 1983, 
requesting an additional $8 milli 
in the supplemental for a total c 
million in 1983, as well as $10 n 
FY 1984 in order to begin to res 
C-130 program to a working le\ 

We are also requesting $7 n 
ESF in the FY 1983 supplement 
$10 million in 1984 to be used fc 
modify import programs. We ar 
that this subcommittee last year 
the expenditure of ESF monies 
We have reason to hope, howev< 
the current effort being made bj 
Zairian Government to deal with 
economic problems, including mi 
agement and lack of accountabil; 
lead to an accord with the IMF i 
1983. Disbursements of our assis 
will depend upon the existence o 
accord. 

Our ESF program will be di: 
toward revitalization of the priv; 
tor. Zaire's domestic industry is 
operating at from 25% to 40% o 
ty because of shortages of impor 
equipment, spare parts, and raw 
materials. The $7 million ESF ir 
would be expended in those area 



Department of State 



AFRICA 



llion ESF" in i;>84 would help 
r importation of agricultural 
lery. 

mbabwe. Zimbabwe's emergence 
3 ago as a newly independent na- 
is a seminal event in the political 
on of southern Africa. The West's 
n to assist Zimbabwe was based 
hope that Zimbabwe's develop- 
rould reflect the best of our own 
—commitment to respect for in- 
il rights and freedoms, racial 
y and integration, economic pro- 
ty, and growth leading to a better 
its citizens. 

is year, under the continuing 
ion, we fell $15 million short of 
) million we requested for 1983 as 
' our pledge to provide $75 million 
3 years 1982-84. I hope this sub- 
ttee will assist us in keeping that 
in 1983 and in 1984 by giving 
)we the funds we are requesting, 
cent widely reported events in 
)we may lead some to question 
ir we should keep our commit- 
' hope this subcommittee will 
tand that it is critical that we re- 
ngaged in Zimbabwe's future, 
■we is a new nation whose leader- 
;es many competing and 
neous pressures and demands, 
ernment has committed itself to a 
itic course of economic policy, to 
; of law. and to the path of recon- 
1 and respect for international 
•s. We take those commitments 
ly and have made our views 
in an appropriate manner when 
'e concerns about developments in 
antry. In the current context of 
ths in Matabeleland, for example, 
e made clear our concern not 
the human rights implications 
at the implications for Zim- 
stability and the reconciliation 

'eover, we are sensitive to public 
ion in this country of our rela- 
I with key countries in Africa- 
Zimbabwe and South Africa— 
we are in other regions. 
nng said this, we are also deeply 
>f the long-term and complex 
af the process of building stabili- 
ostering peaceful change in 
n Africa. If we expect to achieve 
results or consistent improve- 
le are bound to be disappointed. 
icy recognizes this reality and the 
nee of this region to the West, 
rtain degree, we are exposed to 
of occasional disappointment, 
because we have assumed an ac- 



tive, positive, and conciliatory stance 
toward the states of southern Africa, 
not a self-righteous, admonitory one. 
Africa's political future will hinge in 
substantial part on the ways in which 
the deep tensions of southern Africa are 
resolved. 

It is for these reasons that this Ad- 
ministration has adopted a policy of con- 
structive engagement in southern 
Africa. There is no other responsible 
course for American policy. The goal we 
seek in southern Africa involves Zim- 
babwe as well as South Africa, Angola 
as well as Namibia, Botswana as well as 
Mozambique. Our reason for not turning 
our backs on Zimbabwe is the same 
reason for not turning our backs on 
South Africa— the price of success may 
be great, but the price of failure cannot 
be borne. 

Other Programs. The compelling 
nature of our interests in southern 
Africa demands a response that, indeed, 
encompasses all of the states of the 
region. It is for this reason that we are 
requesting assistance both for specific 
countries and for a southern Africa 
regional program. 

In Botswana, our objective is to 
strengthen that country's border securi- 
ty and thus provide a deterrent to 
destabilizing forces in the region. Past 
unresponsiveness on the part of the 
United States to Botswana's security 
concerns contributed to the formation of 
a limited military supply relationship 
with the Soviet Union. We view our 
FMS and ESF requests for Botswana as 
important to the continued ability of this 
moderate, democratic, multiparty state 
to make an active, positive contribution 
to the peaceful evolution of the region. 
We are requesting $10 million in ESF 
and $11 million in MAP/FMS guarantees 
in 1984 as well as an additional $2 
million FMS in the FY 1983 supplemen- 
tal to assist Botswana with building an 
adequate air defense, while at the same 
time helping to meet the developmental 
needs of its people. Our ESF program is 
focused on the country's agriculture and 
health sectors. 

Our FY 1984 request for $20 million 
in ESF for Zambia is based on equal 
concern about the continuing ability of a 
key player to sustain an important role 
in the evolution of events in southern 
Africa. The strategic location of Zambia, 
its mineral wealth in cobalt and copper, 
and the support it has lent to the con- 
cept of peaceful solutions to the conflicts 
of the region make it important that we 
contribute to efforts to help that nation 



survive its current economic difficulties. 
Our programs in Zambia are principally 
related to agriculture and specifically 
focused on increasing productivity and 
reducing imports. 

The southern Africa regional pro- 
gram for which we are requesting $40 
million in ESF in 1984 is designed to 
complement our country-specific pro- 
grams in addressing developmental 
issues that must be resolved if regional 
stability is to be achieved. The program 
is specifically directed toward two goals: 
(1) assisting the regional development ef- 
forts of the black-majority ruled coun- 
tries in the Southern Africa Regional 
Coordinating Conference (SADCC) in 
the fields of transportation, communica- 
tions, and manpower training; and (2) 
educational assistance to South African 
youth disadvantaged by the practice of 
apartheid in South Africa's educational 
system. For example, 116 students are 
currently studying in the United States 
and we hope eventually to place over 
400 disadvantaged South Africans in 
U.S. universities. 



East Africa 

Our interests in East Africa and the 
Horn reflect to a great extent the 
region's considerable strategic sig- 
nificance to the West because of ship- 
ping and oil tanker lanes leading to 
Europe. Somalia and Kenya are critical 
to our logistical supply systems in the 
event of a security crisis in the gulf or 
Middle East, and Sudan plays a key role 
in containing Libyan aggression in East 
and Central Africa. The three recipients 
of a major portion of our total assistance 
to East Africa are Sudan, Somalia, and 
Kenya, which together account for 
$498.9 million of the total $520.6 million 
(including development assistance, PL 
480, and security assistance) we are re- 
questing for East African and Indian 
Ocean countries in 1984. 

Sudan. Sudan's greatest needs are 
economic, but recent events involving 
Libya make clear the need for tradi- 
tional military assistance as well. We are 
asking for $25 million ESF for Sudan in 
the supplemental as well as $50 million 
FMS/MAP. This will mean $25 million 
more in ESF for 1983 than we originally 
requested for Sudan, but $32 million less 
in FMS/MAP in 1983 than we had 
originally requested. For 1984 we are 
requesting $120 million ESF and $60 
million MAP monies. 

Our emphasis on quick-disbursing 
ESF money stems from our concern 



AFRICA 



that the most serious threat to stability 
in Sudan is internal political discontent 
as a result of poor economic conditions. 
Over the past 18 months, Sudan has im- 
plemented a series of politically difficult 
economic reforms and far-reaching 
austerity measures. Despite these ef- 
forts, and despite increased agricultural 
productivity, Sudan's balance-of- 
payments gap remains close to the 1981 
level when the United States gave $100 
million in a worldwide effort that pro- 
vided $800 million to Sudan. The World 
Bank's recent reappraisal of Sudan's 
debt commitments in light of declining 
world prices for Sudan's principal ex- 
ports has led the Bank to conclude that 
Sudan will need continued high levels of 
assistance for several years. As Sudan's 
closest Western friend, we are seeking 
to maintain the level of assistance need- 
ed both to help sustain Sudan through 
this difficult period and to encourage 
other countries to be as supportive as 
possible. 

Our diplomatic efforts, supported by 
our significant assistance level, were in- 
strumental in securing about $780 
million in new aid commitments from 
donors at the World Bank sponsored 
consultative group meeting in mid- 
January. This aid level will enable Sudan 
to implement the first year of a 3-year, 
World Bank designed recovery program. 
It has also, in combination with devalua- 
tion and other economic reforms by the 
Sudanese and with the debt relief pro- 
vided by Sudan's creditors, made a new 
IMF economic stabilization program 
possible. 

Somalia. As one of the countries on 
the Horn with which we have a facilities 
access agreement, Somalia's stability 
and independence are important to 
Western interests in the Horn. Somalia 
was attacked last year by Ethiopian 
forces which continue to hold two towns 
in Somali territory. Somalia's own past 
history of irredentism has contributed to 
tensions in the region and raised ques- 
tions on the part of some about possible 
provocations by Somalia. In this in- 
stance, however, we believe Ethiopia 
was the aggressor. Ethiopia possesses 
massive amounts of Soviet arms and has 
the largest standing army in sub-Sahara 
Africa, one much larger and better 
equipped than the Somali Army. It also 
has a security treaty with Libya and 
South Yemen. The apparent purpose of 
this incursion was to try to provoke the 
downfall of the Somali Government. 

In response to the Ethiopian incur- 
sions, we provided two emergency 



airlifts of needed military supplies and 
equipment to Somalia. This was an ap- 
propriate response to help a friend 
whose territorial integrity was threat- 
ened. In recognition of Somalia's contin- 
uing military inferiority to Ethiopia and 
vulnerability to attack, we are continu- 
ing to provide military assistance design- 
ed to enhance Somalia's ability to deter 
and defend against such attacks. It is in 
this context that we are seeking $9 
million in MAP/FMS for Somalia in the 
1983 supplemental— to bring the total 
up to the $30 million originally re- 
quested—and $40 million in MAP in FY 
1984. 

Important as it is, however, I would 
not want to leave the impression that 
military assistance is the only or even 
the principal instrument of our policy 
with respect to Somalia and the prob- 
lems of the Horn. In the long term, 
there is no military solution to the prob- 
lems of this area; the only route to 
lasting solutions to deepseated conflicts, 
such as that between Ethiopia and 
Somalia, is through negotiated, political 
settlements. We fully recognize this and 
are working to encourage and support 
movement toward negotiations. Our as- 
sistance policies are part of this ap- 
proach. We cannot be passive in the face 
of aggression, and we must and will sup- 
port our friends, but our response has 
been characterized by moderation and 
restraint. The amounts of our assistance 
are very modest in absolute terms; the 
minimum necessary to support deter- 
rence and defense. We are demonstrably 
not arming Somalia to a degree that 
need arouse legitimate concerns on the 
part of Ethiopia or any other state in 
the region about possible Somali aggres- 
sion. Further, we have made clear that 
we are open to dialogue and discussion 
with all the states in the region, in- 
cluding Ethiopia, and are encouraging 
others whose relations with Ethiopia are 
better than ours to do the same. No one 
wants more than we to move from de- 
terrence to dialogue, but it is only 
realistic to recognize that an ability to 
deter plays a part in inducing others to 
engage in dialogue as well. 

Finally, we are also fully aware that 
long-term security is only possible under 
conditions of basic economic health, and 
in the case of Somalia we are devoting 
significant amounts of our assistance— 
nearly two-thirds of the total, counting 
food aid and development assistance as 
well as ESF— to economic support. 
Somalia has, in fact, made significant 
progress on the economic side, including 
freeing up the economy through a series 



of reforms endorsed by the LMl li 
believe this process of reform ai 
recovery needs to be encoura,u,ei a 
one of the ways we are doing s( ^ 
through our request for $35 mil ni 
ESF for FY 1984 which will he je 
commodity import program dirtje 
providing raw materials, spare ]f' 
and the capital equipment neces 
rehabilitate the agricultural sect 

Kenya. The August 1982 co 
tempt in Kenya raised critical q 
about the viability of a countr 
has been viewed by the West as 
Africa's success stories and as 1- 
protection of Western strategic 
in the region. The coup attempt 
ever, destroyed neither our i 
with Kenya nor civilian instituti 
that country. What the coup die 
force Kenya and the Western e( 
ty to focus on the interplay bet\ 
economic and political stability, 
for economic reforms in Kenya, 
vulnerability of even the most s 
of developing nations when face 
worldwide economic crisis. 

We are asking for $19.5 mil 
FMS/MAP in the supplemental 
the $35 million level we had ori; 
requested. For 1984 we are ask 
$35 million MAP/FMS and $42 
ESF. The FMS/MAP funds will 
in part to help maintain the F-! 
helicopter programs, as request 
Kenyan Government. The ESF 
will be used for a commodity im 
gram designed to finance items 
to the agricultural production p; 
The purpose is to ensure that tl 
foreign exchange shortages now 
ing Kenya do not have a harmfi 
on food and export crop produc 
counterpart funds generated by 
modity import program will be 
credit programs, extension serv 
other activities directed to farm 
tion. 

West and Central Africa 

Our primary security concerns i 
and Central Africa are the conti 
stability and viability of Nigeria, 
needs of nations facing threats ( 
version or outright aggression f 
Libya. Nigeria is one of our cou: 
primary sources of imported oil 
dominant economic force within 
16-nation Economic Community 
Africa States (ECOWAS). Due 1 
sharp drop in world oil prices, b 
faces a precipitous reduction in 
budgetary revenues and foreign 
change, which is having a seven 



Department of State t 



AFRICA 



ts domestic economy. While we 
10 economic or security assistance 
ims for Nigeria, and none is con- 
ited for FY 1984, we will give sus- 
attention to Nigeria's economic 
Ities in our continuing high-level 
lie with this important country in 
)nths to come. 

lad. Chad is one of two countries 
ica— the other was Uganda under 
lin— in which Libyan troops have 
intervened in an attempt to im- 
government to Libya's liking, 
it did from December 1980 until 
iber 1981, when Libyan forces 
ew under pressure from the 
ization of African Unity (OAU). 
nited States on that occasion 
ed $12 million for airlift and sup- 
• Zairian and Nigerian contingents 
OAU peacekeeping force. We also 
ed $17.8 million to Chad in FY 
or emergency economic assistance, 
ng food aid. 

ice then we have joined a multi- 
effort to revive Chad's war- 
d economy and central govern- 
■perations. We plan to provide ap- 
lately $10 million for food and 
itarian assistance in FY 1983 and 
jquested $9 million in develop- 
issistance in FY 1984. Without 
!p, Chad will have difficulty with- 
(g continuing Libyan subversion 
? threat of a second military in- 
.. Although we look to France and 
.Hies to provide Chad with needed 
y assistance, we are seeking 
I) in IMET for FY 1984 and are 
» Chad's needs under regular 
in light of the recently height- 
Sbyan menace. 

jer and Senegal. Niger and 
jl are two moderate states in the 
inder regular political, economic, 
urity-related subversive 
es from Libya but which publicly 
hem. Niger shares a common 
with Libya and stands in the way 
Qadhafi's pan-Sahara expan- 
ambitions. Senegalese troops had 
put down a bloody coup attempt 
■an-inspired revolutionaries in 
)ring Gambia, which has led to 
■nal creation of the Sene-Gambian 
tion. in large part because of 
n security needs caused by 
efforts at subversion, 
meet Niger's additional re- 
;nts, we are requesting $2.5 
in MAP in FY 1983 supplemental 
nd $.5 million in ESF in FY 1984. 
also seeking to assist Senegal at 
le of particularly urgent need 



with an FY 1983 supplemental request 
for $2.5 million MAP; $10 million in 
ESF in FY 1984 is also requested. 

Liberia. Because Liberia is our 
oldest friend in Africa, and because of 
our substantial interests there, we have 
taken the lead among foreign donors in 
assisting to promote its economic 
recovery and political stability. There 
has been substantial progress on the 
political front, with the release of all 
political prisoners, a general amnesty for 
exiles, and a commitment by the govern- 
ment to return Liberia to democracy by 
April 12, 1985. The economic situation 
remains fragile due to depressed 
markets for Liberia's major exports, but 
the government has instituted difficult 
austerity measures, including sharp cuts 
in civil service salaries and compliance 
for 2'/2 years with an IMF standby pro- 
gram—one of the best records in Africa. 

Our security assistance has been an 
important factor in helping to bring 
stability to Liberia. The $3.5 million in 
MAP amount we are requesting under 
the FY 1983 supplemental is to be used 
for the construction of military housing. 
This amount will restore the shortfall in 
this long-planned program which oc- 
curred as a result of the FY 1983 con- 
tinuing resolution. Inadequate housing 
contributed to instability in the past, and 
the government has linked provision of 
decent housing for the troops with the 
return to civilian rule. We consider this 
a high priority. Our ESF has all been 
used for economic support, specifically 
for oil payments and to help meet IMF 
targets. Our FY 1984 request for $13 



million in MAP and $35 million in ESF 
reflect modest increases in security 
assistance which we believe are 
necessary to promote economic recovery 
and progress toward democracy. We 
have also requested funds under the 
U.S. Information Agency's Project 
Democracy to assist with Liberia's 
return to civilian rule. 

Conclusion 

At a time when domestic budgetary con- 
straints demand scrupulous examination 
of any proposed expenditures, we all 
face difficult decisions with regard to re- 
quests for foreign assistance. The 
amount we are asking for sub-Sahara 
Africa, however, comes to about 14% of 
our total foreign assistance budget re- 
quest. It is the minimum the United 
States needs to sustain its part of the 
commitment we have undertaken with 
our allies to further Africa's develop- 
ment. In asking you to support this re- 
quest, I also ask you to keep in mind the 
gravity of Africa's need and the impor- 
tance to our own future, in terms of ex- 
port markets, trade, and jobs, not to 
mention meeting humanitarian concerns 
which are central to the Western tradi- 
tion of helping Africa to survive the 
threat to its political and economic 
growth and stability that is posed by the 
current economic crisis. 



'The complete transcript of the hearings 
will be published by the committee and will 
be available from the Superintendent of 



Documents. U.S. Government Printing Of- 
fice, Washington, D.C. 20402. ■ 



U.S. Export Policy 
Toward South Africa 

by Princeton Lyman 

Statement before the Subcommittees 
on Africa and on Inlcniatintiol 
Economic Policy it ml Trail, iftheHoust 
Foreign Affairs Com nutter on Decem- 
ber 2, 1982. Mr. Lyman is Deputy As- 
Secretaryfor African Affairs^ 



The Administration welcomes this op- 
portunity to testify before your respec- 
tive subcommittees concerning U.S. 
policy toward South Africa and the role 
that economic, trade, and investment 
policy play in U.S. -South African rela- 
tions. In the context of this hearing, I 
would like to begin by responding to the 



subcommittees' interest in the broader 
approach of U.S. relations with South 
Africa, our policy of constructive 
engagement. To put the economic issues 
in perspective, let me then begin with an 
overview of Administration policy. 

U.S policy objectives toward the 
Republic of South Africa include: 

• Fostering movement toward a 
system of government by consent of the 
governed and away from the racial 
policy of apartheid both as a form of 
racial discrimination and national 
political disenfranchisement of blacks. 

• Continued access to four strategic 
nonfuel minerals where the United 



AFRICA 



States and OECD [Organization for 
Economic Cooperation and Develop- 
ment] countries are either import or 
price dependent on South Africa, assur- 
ing the strategic security of the Cape 
sea routes through which pass vital U.S. 
oil supplies from the Middle East; and 

• Regional security in southern 
Africa. 

Peace and stability are needed so 
that this key region can develop and 
prosper, so that peaceful change can oc- 
cur in South Africa, and so that the 
region does not slide into an escalating 
cycle of destructive cross-border violence 
exploited by our adversaries as we are 
pursuing these goals. Our objectives are 
pursued through a regional policy of 
constructive engagement — constructive 
engagement not only with South Africa 
but with all the states of the region. The 
specific components of our regional ap- 
proach include: 

First, internationally recognized in- 
dependence for Namibia; 

Second, internationally supported 
programs of economic development in all 
the developing countries of the region; 

Third, a negotiated framework that 
will permit agreement on the issue of 
withdrawal of Cuban troops from 
Angola; 

Fourth, detente between South 
Africa and the other states in the 
region; and 

Fifth, peaceful, evolutionary change 
in South Africa itself, away from apart- 
heid and toward a system of govern- 
ment to be defined by South Africans 
themselves but firmly rooted in the prin- 
ciple of government by consent of the 
governed. 



Diplomatic Efforts 

The United States is presently leading a 
major diplomatic effort designed to 
achieve independence for the territory of 
Namibia based on implementation of 
U.N. Security Council Resolution 435. In 
a separate but parallel negotiating proc- 
ess, the United States is seeking to 
resolve the related issue of the presence 
of Cuban forces in adjacent Angola with 
the impact that their presence has in 
terms of southern African regional 
security. The United States believes that 
a resolution of these conflicts is essential 
to build a regional climate conducive to 
constructive change inside South Africa 
away from apartheid. U.S. policy toward 
South Africa is thus both a bilateral 
policy and also an important part of our 
policy toward a key region, a region also 
vital in global terms. 



President Reagan indicated that the 
United States views the apartheid 
system as repugnant to basic U.S. 
values. He has stated that as long as 
there is a sincere and honest effort to 
move away from apartheid in South 
Africa, the United States should be 
helpful in encouraging that process. On 
this basis, the United States has in- 
dicated to South Africa that relations 
with the United States are based on the 
commitment of the South African 
Government to reform away from apart- 
heid and on South African cooperation 
in moving toward an internationally 
recognized settlement for Namibian in- 
dependence. 

The United States has no blueprint 
for a future political system for South 
Africa. Nor would we have a right to at- 
tempt to impose such a plan if we had 
one. We do have a right to ask South 
Africa to respect the same universal 
principles of human rights and human 
freedoms that we seek for peoples 
everywhere. For all South Africans, as 
for people everywhere, we ask for 
government based squarely on the freely 
expressed consent of the governed. 
South Africa's present system of govern- 
ment is not, although there are signs of 
a willingness to move toward such 
government. 

The subcommittees have asked 
whether, as a result of South Africa's 
apartheid policy, the Department con- 
siders that country to be a gross violator 
of internationally recognized human 
rights. The Department's view with 
respect to the human rights situation in 
South Africa is expressed in some detail 
in our annual human rights report to 
Congress. The Department would not 
argue that South Africa is not a violator 
of internationally recognized human 
rights. However, the Department does 
not advocate a formal determination 
that South Africa— or any other coun- 
try — is a gross violator, because such 
determinations are barriers to dialogue 
that might serve to induce the human 
rights improvements that we seek. In 
situations where there is a consistent 
pattern of gross violations, the intent of 
the legislation is being carried out by 
refraining from security assistance and 
from issuance of licenses for crime con- 
trol equipment. However, formal 
designations would largely rob the 
legislation of its desired effect by signal- 
ing to the designated party that the 
United States saw no hope for improve- 
ment. 



Ending Apartheid 

Apartheid is by no means the onl 
system by which contemporary g; 
ments deny citizens freedom of s 
and assembly, the right to democ 
participation in government, and 
ty under the law. Government by 
with the consent of the governed' 
mains a rare commodity in our w 
The principles of freedom, equali 
democracy, and the standards of 
rights which so many endorse foi 
Africa are also utterly absent fro 
political practice of many other r 
not similarly subject to either the 
scrutiny or sanctions applied to J 
Africa. This double standard has 
hindered constructive changes in 
country by persuading some Soui 
Africans that their country will 
be singled out for negative pressi 
be held accountable to standards 
plied uniformly elsewhere, and b, 
suading others that constructive 
when it does occur, will not be hi 
recognized for what it is. 

The United States is looking 
mere expressions of sympathy ai 
outrage toward practical and effi' 
means to help end apartheid. Thi 
ing focuses specific attention on 
port of several items to South A 
might be said to address the gen 
issue of what influence we have 1 
change in South Africa. The real 
whether a policy of denial is, in ; 
itself, going to cause such disrup 
the South African economy that 
South African Government will h 
choice but to abandon apartheid, 
believe that the change we wish 1 
in South Africa is more likely to ' 
place in a relationship of mutual » 
fidence. 

The subcommittees have aske 
an explanation of how trade cont 
relate generally to U.S. relations 
South Africa. I speak to what thii 
tion — and to the question of whal 
regime of trade controls can playi 
in the effective pursuit of peacefu 
evolutionary change in South Afr 
away from apartheid. 



Trade Restrictions I 

The United States has restricted I 
with South Africa since 1961 to a)^ 
greater or lesser extent as a meai|<i 
denial and symbolic disassociationi'O 
its racial system. A strict U.S. ar'i 
bargo was followed by a mandate 
U.N. arms embargo in 1977. 

The decision of the Carter Ad 
ministration to go beyond the maiJ' 



26 



Department of State El< 



AFRICA 



imbargo to also restrict all exports 
police and military was not 
■ly emulated by other nations. A 
oil-exporting countries for a 
t of oil shipments to South Africa 
ith very mixed adherence. 
;perience presents questions that 
gitimately be asked with regard 
use of trade controls as a coercive 
nent of foreign policy with regard 
th Africa. It would seem a fair 
Dtion to make, that symbolism per 
)t the only objective of trade con- 
nplemented for foreign policy pur- 
Trade controls are also expected 
; a substantive impact on the 
)n which one is trying to affect; in 
stance, South Africa's apartheid 

lat, then, has been the effect of 
;ontrols on internal change in 
Africa? There are some rather 
liar results. Over the course of the 
) years. South Africa has 
Ded the world's 10th largest arms 
•y and is now becoming an ex- 
of arms. Over the course of the 
I years. South Africa has become 
i leader in sjmthetic fuel produc- 
ver the course of the past 5 
South Africa has made giant 
toward nuclear self-sufficiency in 
duction and fabrication of low 
d uranium. 

; logic of this sequence does not 
the conclusion that all controls 
be abolished. On the contrary, 
ministration has continued to im- 
t a wide set of controls on trade 
wrts to South Africa. But we do 

question seriously the efficacy of 
lar controls and to look carefully 

to see whether they are, indeed, 
g their objective — or if in some 
hether the objective is better ad- 

by other policy tools. The 

should be the impact these con- 
ve on events in the country. The 
shows that controls have en- 
id greater self-sufficiency and 

y have not in themselves been 
It to encourage a process of 



.Objective 

' It I it < >ur policy is not merely to 
I '>r ^cem to criticize practices of 
I mitiit. If our views are to have 
'111- 'il'jective must be to devise 
Ifiiirnt an effective and con- 
t .' means policy by which the 
'■^tati's can encourage genuine 
(Ml South Africa. 

jlescribed earlier, the objective of 
P'tive engagement is to create a 



climate of confidence in which persons 
can be encouraged to make difficult 
changes, on Namibia and on domestic 
change. In specific reference to export 
controls, we need to maintain those con- 
trols which serve as an instrument for 
symbolically and substantively 
disassociating ourselves from the apart- 
heid regime in South Africa. At the 
same time, we do not believe that a 
regime of controls or coercive leverage 
by itself is a sufficient means to en- 
courage the process of change in South 
Africa. In that regard, we oppose pro- 
posals for total embargoes to South 
Africa. 

The United States had identified 
three areas where significant change is 
underway in South Africa and which can 
lead to meaningful reform away from 
apartheid: economic growth, education, 
and trade union development. In order 
to help insure that the change which is 
beginning to take place moves in a 
peaceful direction away from apartheid, 
the Administration has moved to sup- 
port people and programs both inside 
and outside the government in South 
Africa seeking to develop a new 
nonracial system. Because this hearing 
focuses on trade controls as an instru- 
ment of foreign policy, let me address 
the relationship between economic 
growth and movement away from apart- 
heid as it affects our policy and the ac- 
tivities of the U.S. private sector. 

The South African Government and 
its business community even more so 
recognize that it is not possible to 
segregate South Africa into separate 
economies. The growth of the economy 
has resulted in a growing demand for 
skilled manpower. While South Africa's 
economic growth is historically based on 
the exploitation of unskilled black labor, 
the development of a modern diversified 
economic system requires that blacks be 
included on an equal wage base with 
whites. Economic growth, therefore, 
renders ineffective the apartheid 
political system. The United States has 
traditionally supported American private 
sector trade and investment in South 
Africa. While not promoting U.S. trade 
and investment in South Africa, we op- 
posed disinvestment by U.S. firms from 
South Africa and have supported the 
Sullivan principles, a voluntary code of 
fair employment practices. 

The Reagan Administration believes 
that U.S. firms can help to foster mean- 
ingful change away from apartheid. U.S. 
economic interests in South Africa are 
substantial. Two-way trade totaled over 
$5.3 billion in 1981, with the United 
States holding its position as South 



Africa's leading trade partner. U.S. 
direct investment in South Africa now 
stands at over $2.5 billion. Over 200 
U.S. firms, affiliates, and subsidiaries do 
business in South Africa. While the 
United States continues to fully adhere 
to the arms embargo, the vast majority 
of U.S. exports to South Africa are 
unaffected by any special export con- 
trols. 

I have prepared for the sub- 
committees a detailed description of the 
legislative and administrative 
mechanisms of controls which are cur- 
rently being administered. In the de- 
tailed description, it will be evident that 
the existing controls are substantial. The 
arms embargo remains fully in force and 
remains an important symbol of dis- 
association from apartheid. Where 
changes have been made in other con- 
trols — such as those made earlier this 
year and discussed with these subcom- 
mittees — they were made because they 
were found to be counterproductive and 
to be having no effect in encouraging 
the process of change. 

Current Restrictions on Exports 

Let me, then, review for the sub- 
committees what specific controls do af- 
fect U.S. exports to South Africa. U.S. 
export restrictions of importance to our 
policy toward South Africa fall very 
generally under three separate 
regulatory regimes: 

• That administered by the State 
Department under the Arms Export 
Control Act (AECA) and the Interna- 
tional Traffic in Arms Regulation 
(ITAR); 

• That administered by the Com- 
merce Department pursuant to the Ex- 
port Administration Act (EAA) of 1979, 
the Nuclear Nonproliferation Act 
(NNPA) of 1978, and the Export Ad- 
ministration Regulations (EAR); and 

• That administered by the Nuclear 
Regulatory Commission (NRC) and the 
Department of Energy (DOE) under the 
NNPA and regulations promulgated 
thereunder. 

Nuclear nonprofileration related con- 
trols are discussed in detail in the 
testimony of the other agencies. I will 
concentrate here on controls promul- 
gated under the authority of the AECA 
and the EAA. 

Arms Embargo. The United States 
has, since 1962. enforced an embargo on 
the sale of military equipment to South 
Africa. From 1963 to 1977, the United 
States observed a voluntary arms em- 



113 



AFRICA 



bargo pursuant to U.N. Security Council 
Resolutions 181 and 182 (1963). In 1977 
the Security Council, with U.S. support, 
established a mandatory embargo on the 
export of arms and related material to 
South Africa. 

Security Council Resolution 418 
(1977) provides in pertinent part that 
the Security Council "Decides" that all 
States shall cease forthwith any provi- 
sion to South Africa of arms and related 
material of all types, including the sale 
or transfer of weapons and ammunition, 
military vehicles and equipment, para- 
military police equipment, and spare 
parts for the aforementioned, and shall 
cease as well the provision of all types of 
equipment and supplies and grants of 
licensing arrangements for the manufac- 
ture and maintenance of the aforemen- 
tioned . . . ." 

The U.S. Government has imple- 
mented the arms embargo primarily 
through control of items on the U.S. 
munitions list. Under the provisions of 
the AECA of 1976 and the ITAR pro- 
mulgated pursuant to the act, no item 
on the munitions list may be exported 
without a license issued by the Depart- 
ment of State. The ITAR also require 
such a license for the export of technical 
data useful in the production of muni- 
tions list items and State Department 
approval for manufacturing license 
agreements and technical assistance 
agreements relating to items on the 
munitions list. Applications for licenses 
or other approvals for exports to South 
Africa, with very rare exceptions for 
items for non-military use, are denied. 

In addition. Section 385.4(a)(1) of the 
EAR provides that: 

An embargo is in effect on the export or 
reexport to the Republic of South Africa and 
Namibia of arms, munitions, military equip- 
ment and materials and machinery for use in 
manufacture and maintenance of such equip- 
ment. Commodities to which this embargo ap- 
plies are listed in Supplement No. 2 to Part 
379 [15 C.F.R. Section 385.4(aXl)]. 

The commodities listed in that sup- 
plement are items on the commodity 
control list— and so not on the munitions 
list— that are military-related or capable 
of military use. They include machinery 
for the manufacture of arms and mili- 
tary equipment, military construction 
equipment designed for airborne 
transport, certain vehicles designed for 
military purposes, ammunition com- 
ponents, nonmilitary shotguns, and 
shotgun shells. These controls, designed 
to implement the U.N. arms embargo, 
were not altered by the 1982 revision of 
the trade controls. 



The subcommittees have asked for 
the Department's views regarding en- 
forcement of the Department's export 
control regulations and the arms em- 
bargo against South Africa. You re- 
quested our reaction to a staff study of 
the subcommittee that was published as 
an appendix to the hearing on "Enforce- 
ment of the United States Embargo 
Against South Africa" and inquired 
about actions taken subsequently to 
strengthen the enforcement of export 
controls and embargoes. 

The Department attaches great im- 
portance to its statutory functions and 
responsibilities under the AECA. As you 
know, under the supervision of the 
Director of the Bureau of Politico- 
Military Affairs, the Director of the Of- 
fice of Munitions Control is responsible 
for carrying out the functions assigned 
to the Department by law to control the 
commercial export of defense articles 
and services. In discharging these func- 
tions, the office of Munitions Control is 
directly concerned with enforcing export 
control regulations. It is standard pro- 
cedure to refer reports of violations, 
which the Office of Munitions Control 
obtains from a variety of sources in- 
cluding the intelligence community, to 
the U.S. Customs Service for investiga- 
tion. The Office of Munitions Control 
provides appropriate support to Customs 
and other law enforcement agencies in 



the investigation and prosecution 
alleged violations. This support ' 
form of record searches and certii 
tions, research material related Ui 
ed violations, and testimonies bef' 
grand juries and courts. 

In direct response to your inq; 
would like to apprise you specific:; 
the Department's recent efforts t 
prove and strengthen export contt 
forcement. Interagency consultat; 
coordination through established 
nels have been increased on a wic 
range of enforcement-related mat n 
Our Foreign Service posts, havinj M 
reminded of the importance of th Di 
of Munitions Control's enforce' ■ ^ 
tion, have been prompt in rei •• 
alleged or possible violations, 
of Munition Control has also ii 
more frequent end-use checks 
our posts in order to verify pr 
ports. During the summer, thi ' ' 
Munitions Control conducted i ■ 
the licensing history of certain ■ 
related items to selected coun; 
ascertain the likelihood of di\r 
other than the authorized em I 

In this connection, you sli' 
that the Department is deeply 
in Operation Exodus, a U.S. i 
Service enforcement program 
to stop the illegal export of <ii ' 
tides and dual-use technolog> - . 
end, the Office of Munitions Cmit '■■ 



South Africa— Economic Profile 



3 




Economy 

GNP(1981): $81.9 billion. GDP(1981): S78.4 
billion. Annual growth rate (tJDP): 13.7% 
nominal, 4.6% real. Per capita GNP: $2,800. 
Avg. inflation rate (1981); 15.2%. 

Natural resources: Nearly all essential 
minerals except oil. 



Agriculture (7.4">n of 1981 GNP); 
nets — corn, wool, dairy products, whe 
sugarcane, tobacco, citrus fruits. Cult 
Innd-lOVo. 

Mining; 16.7% of GDP. Manufaci 
2r,% of GDP. 

Industries (24.4%, of GNP); Mineo 
ucts, automobiles, fabricated metal, 
machinery, textiles, chemicals, fertilize 

Trade (1980): Erports—$25.o billi 
gold, diamonds, corn, wool, sugar, fru- 
and skins, fish products, metals, : 
ores, metal products, coal. Major 
markets— VS. UK, Switzerland, Japa 
ports — $18.3 billion: machinery, electr 
equipment, transportation equipment, 
machinery and data processing equipn 
textiles, metal products. Major sup- 
pliers— VS. FRG, Japan. 

Official exchange rate: The South 
African rand is under a managed float 
rand = US$1, 1981 avg. 

Membership in international org! 
tions: UN and many related agencies, 
General Agreement on Tariffs and Tr? 
(GATT); INTELSAT. 



Department of State B el 



AFRICA 



1 a Customs officer on detail, 
has markedly increased its 
jity to support Operation Exodus 
wide range of related enforcement 
; and has enhanced the already 
lollaboration between the Depart- 
ind the Customs Service. To date 
have been 765 seizures of all kinds 
Operation Exodus, including 10 
snts destined for South Africa. 
e have noted the recommendations 
staff study regarding the 
zation and mission of the Depart- 
, enforcement function. In this 
1, we believe that the reinforced 
zation arrangements and in- 
d level of effort within the Depart- 
in addition to the more active par- 
ion of Foreign Service posts in en- 
lent and enhanced interagency coi- 
tion, are adequate to carry out our 
)ry export control responsibilities, 
ng enforcement of the arms em- 
against South Africa. 

strictions on Exports to the 
ry and Police. In 1978 the United 
unilaterally went beyond the re- 
lent of the 1977 U.N. arms em- 
ind imposed a total ban on all ex- 
■f goods and technical data to the 
African police and military. In 
ae exception was established for 
)ort of medicines, medical sup- 
quipment, and related technical 
s well as parts and components 
imarily destined for the South 
1 police and military. In 1981 two 
ons were established to permit 
I exports to the police and 
/ and to permit the export of 
dities, data, parts, and com- 
3 "to be used in efforts to prevent 
unlawful interference with inter- 
J ci\il aviation" (i.e., airport x-ray 
ig equipment). 

March 1, 1982, further modifica- 
ere introduced that have the ef- 

letaining the ban on exports to 
ce and military as to those goods 
hnical data controlled for na- 
ecurity purposes; 
'ermitting the export of five 
ies of goods and data to the 
' and police under a general 

'ermitting the export of all other 
nd data under a validated license 
to a determination that the ex- 
uld not "contribute significantly 
iry or police functions;" and 
Establishing two de minimis pro- 
one allowing the export of U.S. 
ents that will constitute up to 



20% by value of goods assembled over- 
seas and sold to the South African 
military or police, and the other permit- 
ting reexport or resale to the military or 
police of insubstantial portions of items 
originally sold to purchasers other than 
the military and police if the item would 
not contribute significantly to military 
and police functions. 

On September 15, 1982, the regula- 
tions were further modified to allow 
companies which have sold equipment to 
the police and military, under approved 
license, to supply service manuals 
without submitting a separate license 
application, to place air ambulances 
under the exception for medical equip- 
ment, and to allow the export without 
license of items falling under the "basket 
entries" of the commodity control list, 
namely miscellaneous electronic products 
and other products not elsewhere 
specified. In addition, subsidiaries of the 
South African parastatal arms manufac- 
turing organization, ARMSCOR, were 
specifically defined as military entities. 

Crime Control Equipment. Section 
385.4 (a)(5) of the EAR requires a 
validated license for the export to any 
end-user in South Africa or Namibia of 
"any instrument and equipment partic- 
ularly useful in crime control and detec- 
tion. ..." The commodities controlled 
under this section are listed in EAR Sec- 
tion 376.14. This restriction is not 
unique to South Africa; pursuant to Sec- 
tion 6(j) of the EAA, a validated license 
is required for the export of such equip- 
ment to any country except NATO 
members, Japan, Australia, and New 
Zealand. EAR Section 376.14 provides 
that applications for validated licenses 
will generally be considered favorably on 
a case-by-case basis "unless there is 
evidence that the government of the im- 
porting country may have violated inter- 
nationally recognized human rights and 
that the judicious use of export control 
would be helpful in deterring the 
development of a consistent pattern of 
such violations or in distancing the 
United States from such violations." 

The Department does not view 
favorably the proposal to transfer all 
crime control equipment to the U.S. 
munitions list. The munitions list, which 
derives its authority from the AECA, 
covers arms, ammunition, and imple- 
ments of war. Crime control equipment, 
such as handcuffs or lie detectors, do 
not logically fall into these categories. 

In addition, pursuant to Section 107 
of the International Security and 
Development Cooperation Act of 1981, 
the munitions list is subject to periodic 



review to determine whether any items 
should be removed from it and perhaps 
transferred to the Commerce commodity 
control list. Our Office of Munitions Con- 
trol, in consultation with the Depart- 
ment of Defense, thus endeavors to limit 
the munitions list to defense articles and 
defense services. To add items which are 
arguably not defense articles would not 
be consistent with this effort. 

The other two types of e.xport con- 
trols— nonproliferation and short sup- 
ply—also affect trade with South Africa. 
Short supply controls restrict the export 
of commodities of which there is a 
critical shortage in the United States. 
The nuclear nonproliferation controls ef- 
fectively supplement those administered 
by the NRC and DOE. 

In processing applications for vali- 
dated licenses, the Commerce Depart- 
ment must consult "to the extent neces- 
sary" with other interested agencies. 
The Secretary of State has the right to 
review any application for export of 
commodities controlled for foreign policy 
purposes. 

Aircraft. Section 385.4(a)(8) of the 
EAR states that a validated license is 
required for the export to any South 
African consignee of aircraft and 
helicopters. Applications for exports for 
civil use are generally considered 
favorably on a case-by-case basis, subject 
to a license condition that the aircraft 
will not be put to military, paramilitary, 
or police use. This provision thus assists 
in enforcing the arms embargo in the 
classic "grey area" of nonmilitary air- 
craft and addresses the problem of 
South Africa's paramilitary Air Kom- 
mandos. 

Computers. Section 385.4(a)(9) of 
the EAR requires a validated license for 
the export of computers as defined in 
commodity control list entry 1565A to 
the Ministry of Cooperation and 
Development, the Department of the In- 
terior, the Department of Community 
Development, the Department of 
Justice, the Department of Manpower, 
and administrative bodies of the 
"homelands" that carry out similar func- 
tions. Applications for validated licenses 
will generally be considered favorably on 
a case-by-case basis for the export of 
computers that would not be used to en- 
force the South African policy of 
apartheid. 



'The complete transcript of the hearings 
will be published by the committee and wiU 
be available from tne Superintendent of 
Documents, U.S. Government Printing Of- 
fice, Washington, D.C. 20402. ■ 



133 



EAST ASIA 



FY 1984 Assistance Requests for 
East Asia and the Pacific 



by Paul D. Wolfowitz 

Statement before the Subcommittee 
on East Asian and Pacific Affairs of the 
Senate Foreign Relntions Cmmittee on 
March 11. 1983. Mr. Wnlfninl: ,s Assist- 
ant Secretary for En st Asian mill Pacific 
Affairs. ' 

I am delighted to have this opportunity 
to present both our FY 1984 foreign as- 
sistance request and the need for a sup- 
plemental appropriation for FY 1983. I 
would like to give you a brief overview 
of how both requests relate to our 
foreign policy objectives in East Asia 
and the Pacific. This will be followed by 
supplemental material presenting a more 
detailed discussion of our proposals 
country-by-country. 



U.S. INTERESTS AND OBJECTIVES 

The Secretary's recent Northeast Asian 
trip and our recent chiefs of mission 
conference in Hong Kong underscored 
for me the serious need for additional 
foreign assistance. As important as Asia 
and the Pacific are today, they will only 
be more important tomorrow. There is 
perhaps no other area of the world 
about which this can be said with such 
confidence. There are myriad ways in 
which to support this view. But to make 
this point today, in shorthand, let me 
point to just two facts. 

First, we trade more today with 
East Asia and the Pacific than with any 
other region on Earth, including 
Western Europe; and East Asia's share 
of the pie is gaining. 

Second, we have fought two wars 
since World War II, both in Asia. We do 
not want to fight another. 

The resources we seek for East 
Asian and Pacific countries serve in 
numerous ways. 

• They bolster our treaty relation- 
ships with Korea and Thailand, two 
front-line states, and with the Philip- 
pines, with which we will shortly enter 
important base negotiations. 

• They strengthen our relationships 
with other treaty allies such as Japan, 
Australia, and New Zealand which do 
not receive credit or grant assistance 
but, nevertheless, view U.S. assistance 
to other key Pacific nations as an in- 



dicator of our resolve to remain a 
Pacific power. 

• They reinforce our defense rela- 
tions with countries, such as the 
Association of South East Asian Nations 
(ASEAN), in strategic proximity to sea 
lanes of communication essential not 
only to the region but to access to the 
Indian Ocean and the Middle East as 
well. 

• They help to assure our access to 
key commercial markets and raw 
material. 

• They strengthen movement to- 
ward democracy in those countries, such 
as the ASEAN states, that have become 
a voice for peace in the region. 

These are some of the major 
benefits we gain, but I could have easily 
mentioned half a dozen more, such as 
managing refugee flows, impeding the 
flow of narcotics, promoting peaceful 
resolution of regional conflicts, and 
reducing the abject poverty and social 
strains that spawn domestic violence and 
weigh heavily on all of us. 

Finally, all of these benefits serve 
as useful components of our efforts to 
improve human rights practices in the 
region. Governments which are secure 
and prosperous are better able to imple- 
ment human rights policies. Closer ties 
with the United States, furthered by our 
assistance programs, make it more likely 
that our concern with human rights will 
be given consideration. Progress on 
human rights, vitally important on its 
own, in turn is an integral part of all our 
other concerns. Human rights abuses 
undermine the legitimacy, progress, and 
even stability of governments, thereby 
vitiating other components of our 
strategy. 

With that brief background, let me 
discuss in very broad terms East Asia 
and the Pacific's share of the requests 
before you. 



THE REQUESTS 

In the supplemental bill for FY 1983, we 
seek only to restore foreign military 
sales (FMS) guaranteed credits and 
military assistance program (MAP) 
funds to the amounts initially sought. 

• The FMS funds which can be 
feasibly allocated to East Asia under the 



current continuing resolution — $2 
million— fall 20% below the level 
tually funded last year and 30% b 
what we sought for this year. Sue 
substantial reduction poses seriot 
lems for us in terms of our key n 
ships, the gravest being with Kor 
Thailand. 

• Regarding MAP, we face 
situation. The $9 million proposed 
East Asia under the continuing r 
tion level is barely a third of the 
we have requested. 

• Rapid restoration of these 
required to prevent hazardous de 
and disruptions in urgent militar; 
modernization programs and to 6 
that the United States is perceiv< 
steady, reliable security partner. 

Our FY 1984 request, of coui 
covers not only FMS and MAP, 
ternational military education an 
ing (IMET), economic support fu 
(ESF), development assistance, a 
480. Over four-fifths of the regio 
economic assistance would go to 
key countries— the Philippines, 
Thailand, and Indonesia— and th 
amounts requested are virtually 
lined from last year's requests ar 
real terms, are virtually the sam^ 
amounts funded in FY 1982. 

The $436 million in FMS gua 
credits sought for FY 1984 excet 
FY 1983 request by 12%. The m. 
real dollar increase sought is tarj 
two front-line states— Korea and 
Thailand. The FMS requests for 
other three FMS recipients— the 
pines, Indonesia, and Malaysia— 
straight-lined from the FY 1983 

The increases sought for Kor 
Thailand are well justified. As he 
recently at the DMZ [demilitarize 
in Korea, Secretary Shultz remai 
how strong an impression standii 
the edge of hostility leaves and 
great contribution the people of I 
are making to their own security 
the world's. Much the same migh 
said of the Thai, whose contribut 
the front-line state are crucial to 
ASEAN's and the world's efforts' 
resist Vietnamese aggression in 
neighboring Kampuchea. Funds i 
these front-line states will serve i 
purposes and send an important 
message to others. 

Ironically, due to the limited 
available, we have reduced our F 
MAP request for Thailand to $5 ! 
a reduction of 80%. 

Similarly, we have reduced oi 
requests below the FY 1983 requ( 



Department of State B! 



EAST ASIA 



iVe would retain the $50 million 
r the Philippines as part of the 

bases agreement but permit 
)n of the ESF to Thailand from 
inal FY 1983 request, 
illy, we have requested $9.69 
in IMET funds, a mere 4.6% in- 
)ver the FY 1983 request level, 
mall in total dollars, IMET is 

our most cost-effective form of 

assistance. 

believe that these requests, 
as they have been with an eye to 
esource constraints, and the in- 
f Soviet, North Korean, and 
lese threat, represent the 
n resources needed to protect 
it-line allies and preserve our 
•eements. The needed restora- 
''MS and MAP funds initially re- 
fer this year, and the small real 
icrease sought for next, will 

an important investment in the 
future and in our own. 



lental .Appropriation — 

standing East Asia's vast 
ay, rich resources, and signifi- 
tribution to many of our highest 
wlicy objectives, our requested 
?MS guaranteed credits for FY 
ounted to only $388.5 million, or 
I of the global request level, 
pest level would be an increase 
over the FY 1982 level of 
lillion in nominal dollars and, of 
nuch less an increase in real 

jht also mention that a by- 
)f the lower worldwide level 
e continuing resolution has been 
; East Asia's percentage of 
irantees from 9% of the larger 
le request level of $4,323.3 
) 7.4% of the smaller continuing 
n level of $3,638 million. Both 
ional earmarks and the require- 
:und new high priority pro- 
itside of East Asia have con- 
to this effect. 

59 million FMS/MAP proposed 
Asia under the continuing 
1 level, although double the FY 
led level of $4.5 million, is a 
lotion from the FY' 1983 re- 
el of $25 million. Moreover, the 
funded level itself was far 
! concessionality requested for 
program in that the $4.5 
AP program was in lieu of an 
equest for $50 million in direct 
>ur original FY 1983 request 
e million FMS/MAP program is 



designed to provide a degree of conces- 
sionality that would both help compen- 
sate for last year's shortfall and permit 
reduction of concessional financing 
beginning with the FY' 1984 program. 
As with FMS guarantees, the reduction 
in FMS/MAP worldwide levels under the 
continuing resolution has had the effect 
of reducing the percentage of the total 
available to East Asia. Thus, under the 
continuing resolution. East Asia would 
receive 3.6% of the worldwide allocation 
for country programs of $250 million 
vice 5.8% of $427 million under the 
original request level. Let me now turn 
to some of the country programs; that is 
those for which we are requesting a sup- 
plemental appropriation. 

Korea. For the past 30 years, the 
combined U.S. -Republic of Korea deter- 
rent has been successful in preventing 
renewed aggression on the Korean 
Peninsula. The peace has been main- 
tained, and the Republic of Korea has 
enjoyed an era of unprecedented 
economic and social progress. Despite 
this impressive record, however, the 
need for continued U.S. support re- 
mains. In the past 10 years. North 
Koi-ea, which spends between 15% and 
20% of its GNP on defense, carried out 
a major force buildup which has serious- 
ly affected the military balance on the 
peninsula. North Korea has about 1.25 
times as many men under arms as the 
South, and 2V2 times as many armored 
personnel carriers, artillery pieces, and 
tanks— which are larger and more 
modern than those of the South. The 
North also possesses more combat air- 
craft than the South and maintains a 
100,000-man commando force, probably 
the largest such force in the world. 
Because it is a totalitarian state. North 
Korea can and does maintain a high 
state of readiness. With its forces only 
some 35 miles from Seoul, North Korea 
could mount an attack with very little 
notice. 

To counter this threat, South Korea, 
which spends 6% of its GNP on defense, 
is engaged in a major force improve- 
ment program, designed to improve its 
warning capability, increase its effective 
firepower, and enhance its air defense 
capability. The program, which includes 
the coproduction of F-5s and the ac- 
quisition of the F-16, is projected to 
cost some $10.3 billion during the period 
FY 1982-86, with $4.7 billion slated for 
procurement in the United States. 

To assist the vital efforts of this im- 
portant ally, we provided $166 bilHon in 
FMS credits in FY 1982. Our FY 1983 



proposal for $210 million was limited by 
the continuing resolution to $140 million, 
some 16% below last year's figure. This 
has been a major blow to Korean 
defense planning in a time when South 
Korea's budget, like our own, faces 
unusual constraints and pressures 
because of economic conditions. It is 
worth noting in this context that during 
FY 1982, the South Korean Government 
paid some $254 million to the U.S. 
Government on principal and interest 
charged for previous loans, exceeding by 
some $88 million the amount of new 
credits provided in that year. 

In order to ease the very real 
burden Korea faces in maintaining a 
credible deterrent against North Korean 
aggression, we are proposing the 
restoration of $70 million to the FY 
1983 budget for Korea. 

Our Korean allies are doing their ut- 
most for their own security. We believe 
it is in our interest to assist Korea in 
meeting its force improvement goals and 
our mutual security objectives. We 
should bear in mind that Korean combat 
forces, whose capabilities would be 
enhanced by higher FMS levels, are sta- 
tioned with our own forces along the 
DMZ and would operate with ours under 
a joint command in time of war. Thus, 
we have a very direct stake in the force 
improvement efforts of this front-line 
ally. 

Thailand. Restoration of all or most 
of Thailand's FY' 1983 request levels is 
necessary to maintain our support for its 
position as the ASEAN front-line state 
in its confrontation with improved Viet- 
namese forces in Kampuchea. Thus, we 
are requesting restoration of $9 million 
in FMS guaranteed credits and $16 
million in FMS/MAP to provide the $66 
million and $25 million in FMS guaran- 
tees and FMS/MAP, respectively, which 
were originally requested for FY' 1983. 

The continuing resolution FMS level 
of $57 million in guaranteed credits and 
$9 million in MAP for a total FMS pro- 
gram of $66 million falls 27.5% short of 
the $91 million request level for FY' 
1983 and 16.6% below the FY 1982 total 
FMS program of $79.2 million. More- 
over, the original request included $25 
million in FMS/MAP which would have 
provided badly needed concessionality. 

Thailand is confronted with a serious 
military threat from Vietnam. Soviet- 
supplied Vietnamese troops occupy 
Kampuchea, operate in strength along 
the Thai-Kampuchea border, and have 
already begun to exploit the dry season 
by launching combined armor— infantry 



EAST ASIA 



operations against all elements of the 
Khmer coalition government's resistance 
forces. Moreover, the Vietnamese opera- 
tions suggest further improvements in 
their force capability— specifically in 
command and control, target acquisition, 
and logistical support. 

In response to this increasing 
military threat, the Royal Thai Govern- 
ment has continued a major force im- 
provement program to deter or defend 
itself against an invasion, while continu- 
ing operations to contain a small but 
troublesome insurgency in rural 
Thailand. President Reagan has publicly 
reiterated our commitment to Thailand 
under the Manila pact and made clear 
our continued support to Thailand under 
the Manila pact. In the context of in- 
creasing Vietnamese capabilities and ac- 
tivities, cutting Thailand's FMS program 
below the FY 1982 levels might lead the 
Thais, the other ASEAN states, and the 
Vietnamese to feel that the United 
States is unlikely to remain a serious 
player in the area. 

Maintaining adequate, consistent 
levels of military assistance is necessary 
to maintaining U.S. influence in an im- 
portant part of the world at relatively 
low cost, without risking involvement in 
military hostilities. 

Finally, permitting the Thai pro- 
gram to fall below the FY 1982 level 
could impair Royal Thai Government 
cooperation with us on some of our 
other objectives, such as assistance to 
refugees seeking first asylum, control of 
narcotics traffic, and support for other 
U.S. policies in the international arena. 

Indonesia. Although not allied with 
us or with other powers, Indonesia is a 
major regional power with which we 
have significant relationships. Indonesia, 
the largest ASEAN state, is a central 
element in ASEAN's resistance to ex- 
panding Soviet and Vietnamese in- 
fluence in the region and plays a con- 
structive, moderate role in the Non- 
aligned Movement, the Islamic Con- 
ference, and other international fora. 

The continuing resolution level of 
$20 million in FMS guarantees, a reduc- 
tion of 60% from the requested $50 
million and of 50% from the FY 1982 
funded level of $40 million, is likely to be 
interpreted by the Indonesian Govern- 
ment as a downgrading by the United 
States of its security relationship with 
Indonesia, especially since it comes so 
soon after the state visit of President 
Soeharto. We have expected that the In- 
donesian Government would use most of 
its FY 1983 credits for four C-130 air- 



craft, after which Jakarta would use its 
FY 1983 FMS credit for badly needed 
air or naval force improvements. A ma- 
jor cut below the FY 1982 level will 
undercut the credibility of our commit- 
ment to support Indonesia's military 
modernization program and could conse- 
quently harm our overall relationship. In 
order to avoid these adverse conse- 
quences, we urge that a supplemental 
appropriation include an additional $30 
million for Indonesia's FMS program to 
bring it up to the requested $50 million. 

Malaysia. A reduction from the re- 
quest level of $12.5 million to $4 million, 
a drop of 68%, will impede Malaysian 
efforts to modernize its forces and 
restructure them to address an external 
threat. Moreover, the unavailability of 
FMS credits will lessen the attrac- 
tiveness of American military equipment 
to the Malaysians and may lead to 
greater reliance on other suppliers. It 
may also give the Malaysians second 
thoughts as to the wisdom of seeking 
closer security relations with the United 
States. Therefore, we are requesting 
that a supplemental appropriation in- 
clude an additional $8.5 million to 
restore the FY 1983 request level, which 
exceeds the $10 million FY 1982 funded 
level by only $2.5 million. 

Assistance Request— FY 1984 

I would like now to turn to our foreign 
assistance request for FY 1984. FY 

1983 was the first year in which this Ad- 
ministration integrated military and 
economic assistance into a single 
strategic package. The FY 1984 foreign 
assistance proposal continues to refine 
this concept in linking all components of 
U.S. assistance to our strategic interests 
and foreign policy objectives. 

Although my remarks concern 
primarily security assistance, that is, 
FMS guaranteed credits, FMS/MAP, 
ESF, and IMET, I will touch on the 
total request to include development 
assistance and PL 480. 

Our total East Asia and Pacific 
foreign assistance request for the 
aforementioned kinds of bilateral 
assistance during FY 1984 is $722 
million, or an increase of less than 5% 
over the FY 1983 request level of $689 
million. It exceeds the FY 1982 funded 
level of $606 million by 19.1%. Thus, full 
funding of the requested levels for FY 

1984 would be a decrease from fully 
funded FY 1983 programs in real terms, 
since inflation exceeded 5%. Even for 
the 2-year period, full funding would, at 
best, keep pace with inflation. 



Our development assistancf ki 
level of approximately $168.;" nn c 
virtually a straight line from \-'\ '< 
and exceeds the FY 1982 fun.!., e 
about $163 million by only 3.7";..)!, 
quested levels for PL 480 of $:;nii 
for Title I and $17 million for Ti > 
respectively, both represent \ in 
straight line from the revisei I ' ' ' 
request. 

Some $180 million of oui- ici e 
economic assistance — developnu ; 
assistance and PL 480, or 8.'^.:'.": 
go to Indonesia, the Philippines, 
Thailand. Thus, most of our res( 
would be allocated to a country 
which we have a military bases ; 
ment, the ASEAN front-line sta 
to Indonesia which occupies a ke 
strategic position, both geograpl 
and politically and is the poorest 
in ASEAN. The remaining porti 
allocated to Burma and regional 
are small in dollar amounts but 
ly and economically significant a 
shall discuss later. 

Turning to our FY 1984 seci 
assistance request levels, you ca 
that most — in fact about 87%— 
total FMS guarantees, FMS/MA 
and IMET requested is to protei 
treaty relationships with Korea, 
Philippines, and Thailand. I shoi 
that the FY 1984 military assist 
quest of $506.09 million is less tl 
5% increase over the FY 1983 n 
level of $482.65 million; in other 
no increase at all in real terms. ' 
1984 request level exceeds the F 
funded level of $407,103 million 
24.3% in nominal dollars and thi 
little more than keep pace with i 

Our request for FMS guaran 
credits for FY 1984 totals $436.; 
million. It exceeds the FY 1983 i 
level of $388.5 million by 12.3% 
FY 1982 funded level of $340.7 1 
28.1%. Thus, if fully funded for 1 
1983 and FY 1984, our overall F 
quest is an extremely small incre 
real terms. In addition to FMS 
guaranteed credits, we have reqi 
$5 million in FMS/MAP for Thai 
decrease of $20 million from the 
1983 requested level. The reduce 
quest was necessitated by the shi 
of MAP funds available and othe 
priorities. Nevertheless, a MAP ] 
has significance in Thailand and 
throughout ASEAN as an indical 
U.S. commitment to the region. 

The modest nominal dollar in' 
sought in East Asia's overall FMf 
both guaranteed credits and MAI 
level is targeted on two front-line 



Department of State El 



EAST ASIA 



—Korea and Thailand. The FMS 
5ts for our other three FMS recip- 
-the Philippines, Indonesia, and 
sia— are all straight-lined from the 
'83 request. We believe that these 
it levels, devised as they have been 
,n eye on severe resource cen- 
ts and on the increasing Soviet, 
Korean, and Vietnamese threats 
region, represent the minimum 
ces to protect our front-line treaty 
ind preserve our base agreements, 
ir ESF request level of $55 million 
ents a $5 million reduction from 
' 1983 request level. This would 
the $50 million level for the 
)ines as part of the military bases 
nent but permit reduction of the 
3 Thailand in anticipation of a 
singly adverse impact on Thai 
3 from refugee flows. The lower 
t level also is predicated on full 
I of Thailand's FY 1983 ESF re- 
evel of $10 million, 
r IMET request for FY 1984 of 
nillion represents a 4.8% increase 
le FY 1983 request level of $9.15 
and a 38.7% increase over the 
82 funded level of $6.91. IMET is 
s our most cost-effective form of 
/ assistance. For FY 1984, we are 
dng slight increases for seven of 
'rent IMET recipients, straight- 
wo of them from FY 1983, and 
ng one new $30,000 program for 
a country whose government has 
itly supported U.S. objectives in 
.1 organizations and has rejected 
approaches in the form of aid of- 
d the establishment of a 
iitic mission. Let me now address 
: the specific country programs 
M for FY 1984. 

•ea. Our proposed program of 
illion in FMS credits for the 
c of Korea is designed to help 
eans address more effectively 
gerous military balance on the 
la, an imbalance likely to worsen 
bsence of even heavier South 
defense expenditures, 
ds are m-gently needed to permit 
;inuation of the F-5 coproduction 
1, the completion of a tactical air 
system, and the procurement of 
;overy vehicles, TOW [tube- 
i, optically tracked, wire-guided 
:] missiles, and Hawk modifica- 
he $230 million request level to 
Republic of Korea sustain its 
provement program objectives is 
ncrease over the FY 1983 re- 
rel of $210 million, but a 38.5% 
over the FY 1982 funded level 
million. The adequacy of the FY 



1984 request level is predicated upon full 
funding of the FY 1983 request. 

For IMET, we seek to hold the FY 
1983 request level of $1.85 million, 
which is an increase of $450,000 over 
the FY 1982 level. The proposed IMET 
program is essential to assure the 
necessary training to support the force 
improvement program, as well as to im- 
prove the interoperability of South 
Korean and U.S. forces, enhance the 
commonality of U.S. -South Korean tac- 
tics, and to assist the development of 
modern management expertise in the 
South Korean Armed Forces. 

For FY 1984 we are proposing that 
Korea receive $230 million in FMS 
credits. In order to permit more effec- 
tive use of resources available for this 
important program, we are also propos- 
ing for FY 1984 that Korea be granted 
better repayment terms. Specifically, we 
are proposing that Korea be permitted a 
10-year grace period as to principal with 
a total of 30 years for repayment. 

The diversity and slower economic 
growth that characterizes Southeast 
Asia necessitates that U.S. assistance to 
the subregion include diverse forms of 
assistance— economic and military— and 
be spread among a number of recipients. 

Philippines. The Philippines is the 
United States' oldest Asian ally and 
shares U.S. perceptions about the 
danger to peace in Southeast Asia. The 
state visit of President Marcos in 
September 1982 and his discussions with 
President Reagan served to reaffirm the 
excellent state of U.S. -Philippine rela- 
tions. 

U.S. military facilities at Subic 
Naval Base and Clark Air Base in the 
Philippines are of central strategic im- 
portance. With their advantageous geo- 
graphic position, they help the United 
States protect the Western Pacific sea- 
and airlanes and respond to contingen- 
cies in the Indian and Pacific Oceans. 
They enable the United States to fulfill 
its treaty obligation to defend the Philip- 
pines under our mutual defense treaty. 

The requested FMS and ESF levels 
for FY 1984— $50 million for each pro- 
gram — are unchanged from FY 1983 
and FY 1982. They reflect President 
Carter's pledge at the time of the 1979 
amendment to the U.S.-Philippine 
military bases agreement that the 
United States would make its "best ef- 
fort" to secure $500 million in security 
assistance for the Philippines during the 
period FY 1980-84. Security assistance 
is a prime element of our good relations 
with the Philippines and thus of con- 



tinued and effective U.S. military opera- 
tions at the bases. It assumes added 
significance in view of the growing 
challenge of the communist New 
People's Army insurgency which, if un- 
checked, could ultimately threaten U.S. 
military facilities. Your support for our 
FY 1984 request for the full $100 million 
combined FMS and ESF total— continu- 
ing the support the Congress has con- 
sistently given to honoring the 1979 
pledge— is highly important. 

The Philippines is expected to re- 
quest use of the proposed FMS financ- 
ing for aircraft, including helicopters, 
naval combat systems, ground vehicles, 
communications gear, engineering and 
electronics equipment, and other defense 
articles. 

The ESF requested will continue to 
make a major contribution to improving 
the lot of Filipinos residing in the areas 
surrounding our military base facilities. 
This close association with base security 
distinguishes our ESF from the less 
directly connected projects which come 
under development assistance projects in 
the Philippines. The ESF funds will con- 
tinue to fund such major activities as: (1) 
a municipal development fund to im- 
prove local government administration 
and construct public works and in- 
frastructure projects in about 21 cities 
and municipalities adjacent to U.S. 
military facilities; (2) improvement of 
municipal market operations and con- 
struction of new or rehabilitation of ex- 
isting markets throughout the country; 
(3) improvement of social and economic 
conditions in six provinces adjacent to 
U.S. military facilities through the 
development of high growth related in- 
frastructure projects; and (4) a 



renewable 



energy resources project m 



rural areas using gasifiers, wood, and 
charcoal. 

In IMET we are requesting $1.3 
million for FY 1984, the same figure as 
requested for FY 1983. IMET is closely 
related to, but not a part of, our military 
bases agreement with the Philippines. 
At the time of the 1979 military bases 
agreement amendment. Secretary Vance 
wrote Foreign Minister Romulo that "we 
will support those efforts [to achieve 
military self-reliance] by means of our 
security assistance programs, including 
the important training component." The 
Philippine Government has always 
placed a high value on IMET training in 
increasing the efficiency and profes- 
sionalism of its armed forces. 

In addition to military assistance, we 
have requested $40 million in develop- 



EAST ASIA 



ment assistance and $7.78 million PL 
480, Title II. A significant portion of the 
Philippine population lives below the 
poverty line. The communist New Peo- 
ple's Army exploits rural poverty to 
build support. The Philippine Govern- 
ment is working to improve living stand- 
ards. Our assistance program em- 
phasizes agricultural production, rural 
employment, and family planning. 
Although these broad economic and 
social projects are not as directly tied to 
our military security as those under 
ESF and, therefore, are not categorized 
under the broad rubric of "military 
assistance," they, nevertheless, are 
linked to our broad strategy in the 
Pacific in the sense that I outlined in my 
opening remarks on U.S. interests and 
objectives in East Asia. It was 
understood at the time of the 1979 
military bases agreement amendment 
that the United States would maintain 
approximately the 1979 level of develop- 
ment assistance through 1984. 

The United States and the Philip- 
pines will begin a complete review of the 
military bases agreement in April 1983 
to ensure that it continues to meet our 
mutual interests. 

Thailand. Thailand's overall FMS re- 
quest level of $99 million— $94 million in 
FMS guaranteed credits and $.5 million 
in FMS/MAP— is an 8.8% increase over 
the FY 1983 request level of $91 mil- 
lion and an increase of 20% over the 
FY 1982 funded level of $79.2 million. 
However, the $5 million in FMS/MAP 
requested for FY 1984 represents a 
sharp drop in concessionality from the 
requested FY 1983 level of $25 million, 
but a drop which we believe Thailand 
can handle if the FY 1983 request is ful- 
ly funded and the overall request levels 
for all of our bilateral assistance pro- 
grams requested for FY 1984 are fully 
funded. 

We expect that most of the FMS 
financing will be used to purchase 
military equipment which will supple- 
ment or replace equipment previously 
purchased; this includes tanks and 
missiles. Equipment to be purchased for 
the first time will probably include air- 
craft capable of operating against ar- 
mored units which constitute a major 
threat to Thailand. 

The $5 million which we are re- 
questing in ESF for FY 1984 is half of 
the FY 1983 request level of $10 million, 
and the same as the FY 1982 funded 
level. The requested funds will continue 
to be used to supplement Royal Thai 
Government resources directed to 
assistance programs in areas which have 



been most seriously affected by past 
military incursions and the inflow of 
refugees. About 200,000 Thais along the 
border are so affected. 

Under this program, the government 
is restoring homes, building or repairing 
roads, furnishing medical facilities, and 
other essential services to Thai villagers. 
Such economic assistance to Thais 
adversely affected by refugee inflow is 
still funded under ESF as a form of 
security assistance, due in part to the 
military or security importance of coping 
effectively with refugees and our securi- 
ty interests in maintaining Thai political 
support for handling refugees as a coun- 
try of first asylum. 

We are requesting $2.4 million in 
IMET, an increase of 9% over the FY 
1983 request level of $2.2 million in 
order to maintain the training levels 
necessary to support Thailand's urgent 
military modernization efforts, on which 
the Royal Thai Government places so 
much emphasis. The Thais always make 
maximum use of IMET funds allocated 
to them. 

The $29 million in development 
assistance proposed for FY 1984 is a 
$1 million increase over the FY 1983 re- 
quest level and some $400,000 over the 
FY 1982 level. It is designed to abet 
government efforts to mitigate poverty 
and facilitate social and economic 
development in backward areas, par- 
ticularly such politically sensitive regions 
as the northeast. The Thai Government 
fully recognizes the political hazards in- 
herent in a "grapes-of-wrath" economy 
and, accordingly, gives development its 
highest budgetary priority. Finally, our 
development assistance to Thailand is 
designed to promote growth in the 
private sector to help limit the time 
period in which Thailand will require 
economic assistance. 

Indonesia. The $50 million FMS re- 
quested for FY 1984 is the same as the 
FY 1983 request level but exceeds the 
FY 1982 funded level by $10 million, or 
25%. Modernization of existing forces 
continues to be the major thrust of the 
FMS financing program. However, if 
the Indonesians select a U.S. fighter air- 
craft and it is approved for sale, we ex- 
pect that over half of its FY 1984 
credits will be used for initial payments 
for the purchase of such aircraft from 
the United States. The remainder may 
be spent on other air defense systems 
such as the Stinger missile, the Vulcan, 
or Chapparal air defense equipment. The 
government also has a strong, continu- 
ing interest in purchasing four to six 
used ships, particularly Corvettes, 



frigates, and patrol craft. If sulj. 
become available, the Indonesian 
Government may give high priorii 
such purchases. 

The IMET request level of $2 
million is an increase of less than 
the FY 1983 request level of $2.6 
exceeds the FY 1982 funded level 
$2.2 million by 22.7%. The top le^ 
Indonesia's leadership continue to 
the importance of proper training 
component of military modernizal 
and regard U.S. provision of adec 
IMET levels as indicative of the I 
commitment to Indonesia's securi 
donesia's military remains in criti 
need of more qualified technician: 
managers, and officers with adeq 
professional military education. IV 
students in the FY 1984 program 
take courses in these fields. This 
gram will permit about 300 Indor 
middle-grade officers, who will b( 
backbone of their country's futun 
military and government establisl 
to travel to and train in the Units 
States. The mobile training team 
nent of the program provides for 
instruction in technical subjects ti 
military technicians. 

Our development assistance r 
for FY 1984 is for $64 million, a 
tion of $1 million from the FY 19 
quest and a little over $3 million ; 
the FY 1982 funded level. Our re 
for $30 million in PL 480, Title I, 
hold the line at the FY 1983 level 
the requested $9,246 million in Ti 
would be a slight increase over th 
1983 level. 

Our development assistance a 
480 requests are aimed at fosterii 
continued stability of the Indones) 
economy and Government in the 1 
a deteriorating global economy. Ii 
past 2 years, Indonesia's export e 
ings, which have fueled its past in 
pressive development, have dropp 
a third. A serious drought and otl 
natural disasters reduced the 198! 
rice crops substantially, slowing I: 
donesia's drive to reach food graii 
sufficiency in the face of a growin 
population. In this context, Indom 
continues to need and deserve dev 
ment and PL 480 assistance at thi 
quested levels. 

Malaysia. The $12.5 million F 
quest level for Malaysia in FY 198 
straight-line of the FY 1983 reque 
level and a 25% increase over the 
FY 1982 $10 million program. Ma 
is expected to use the FMS credits 
quested toward purchase of F-5E " 
A-4 aircraft and for radar equipm ' 



Department of State B I 



EAST ASIA 



B its air defense capability. 
'. IMET request of $900,000 is 
iase of $50,000, or 6%, over the 
3 requested level of $850,000 and 
1 FY 1982s $500,000 program by 
'0, or 80%. These higher levels 
;ntial to provide the trained per- 
;o mold the conventional force 
'6 already mentioned. These 
: requirements should be ad- 
now, on a priority basis, and the 
build the relationships with the 
an military and Government by 
ig the training desired is now. 
T, Malaysian budgetary con- 
suggest that that government 
send military students to any 
which does not provide the 

japore. U.S. interests in 
re relate to our objectives of 
ng Southeast Asian stability and 
ling unimpeded transit for U.S. 
:d commercial and military air 
traffic between the Pacific and 
•ceans, as well as maintaining 
y U.S. naval and air forces to 
i-e's excellent sea port, ship sup- 
i-epair services, and air terminal 
The economic vitality of 
;, its active role internationally, 
fcegic location at the entrance to 
ts of Malacca accord Singapore 
tance far in excess of what its 
lically small size would suggest, 
military assistance to 
e in FY 1983 consisted of 
n IMET. The same level is be- 
3sed for FY 1984. Because of 
•e's relatively advanced 
, additional assistance is not 

d. This nominal level of 

e, however, demonstrates to a 
nonaligned nation our continu- 
9St in its security and helps en- 

the Singaporean Armed 
mtinue to look to the United 
r training and equipment pur- 
'his assistance program is con- 
ith U.S. policy supporting 

While we do not expect a 
1 Burma's basic commitment to 
nent, it is in our interest to en- 
ts continued, quiet opening to 
Although it is currently one of 
's poorest countries in per 
;ome, it has significant mineral 
ultural resources which, if 
developed, could ensure inter- 
erity and contribute to 
prosperity in the region as a 



whole. A small investment now could, 
therefore, yield significant dividends 
later. 

U.S. Agency for International 
Development (AID) and IMET programs 
resumed in FY 1980 after a 16-year 
hiatus and have grown rapidly although 
they remain relatively small. Together 
with our antinarcotics assistance to Bur- 
ma, these programs have promoted a 
warming of our bilateral relations at the 
same time that Burma has been spurn- 
ing approaches by the Soviet Union. 
They have also supported our broader 
interests, including narcotics coopera- 
tion, and have responded to specific 
Burmese requests. 

The $12.5 million in development 
assistance proposed for FY 1984 
represents a $1.3 million decrease from 
FY 1983, which has been necessitated by 
current budgetary constraints. While 
this figure is sufficient to maintain ex- 
isting agricultural development and 
public health projects, the planned ex- 
pansion of our AID program will require 
slightly higher funding levels in subse- 
quent years. The modest increases con- 
templated will maintain the momentum 
of our program, assist Burmese develop- 
ment efforts in a number of promising 
new areas, and demonstrate to the 
Burmese our continued concern and 
commitment. 

The proposed 25% increase in IMET 
funding in FY 1984 to $250,000 will 
enable about 45 Burmese officers to 
receive U.S. military training, compared 
to 35 officers in FY 1983. These officers 
will gain exposure to U.S. concepts and 
systems by attending courses in the U.S. 
Army Command and General Staff Col- 
lege program, helicopter maintenance, 
field artillery, and other subjects. Given 
the key role of the military in Burma's 
political structure, IMET "training will 
have a favorable long-term impact on 
Burmese attitudes toward the United 
States far out of proportion to its 
modest cost. 

We will continue to assist Burmese 
antinarcotics efforts, primarily through 
maintenance support for aircraft which 
we have supplied for use in antinarcotics 
operations. Both we and the Burmese 
attach high priority to curbing narcotics 
production and trafficking in Burma and 
maintain an active dialogue regarding 
ways in which we might cooperate more 
closely to achieve this objective. 

World War II demonstrated the im- 
portance of the Pacific Islands, which lie 
across the lines of communication be- 
tween the U.S. west coast and 
Australia, New Zealand, and Southeast 



Asia to our security. The importance of 
these lines of communication has in- 
creased greatly over the past 40 years. 

Since the war, island states have 
undergone great changes and in the past 
20 years have, in the main, transformed 
themselves from dependent to independ- 
ent states. Our relations with them are 
friendly; we share a belief in democratic 
government and a devotion to individual 
liberties. It is in the U.S. interest to 
assist island governments in their ef- 
forts to promote economic growth. 

For the third straight year, we have 
requested $5.1 million in development 
assistance to support an innovative, 
region-wide program to improve agri- 
cultural and fishing techniques and to 
promote regional cooperation in this 
area of small populations and small 
markets. Our military assistance pro- 
grams are even more modest in size. 

Fiji. The $80,000 IMET program re- 
quested for FY 1984 would be a $25,000 
increase over the FY 1983 initial fund- 
ing level. The additional money will 
assist the Royal Fiji military forces in 
acquiring needed professional and 
technical skills to better operate a small 
but modern defense force, which permits 
them to continue their participation in 
Middle East peacekeeping forces. 

The Fiji Government is pro- Western 
and broadly supportive of U.S. policy 
goals in international fora, Fiji's par- 
ticipation, at our request, in the Sinai 
multinational force and observers was 
critical to international acceptance of the 
organization; Fiji has also provided, 
since 1978, one of the best trained bat- 
talions to the U.N. forces in Lebanon. 
Fiji stations more troops in the Middle 
East to try to keep peace there than it 
garrisons at home. 

Papua New Guinea. The United 
States has enjoyed friendly relations 
with Papua New Guinea before and 
since its independence from Australia in 
1975. The country's size, strategic loca- 
tion, and resources make it a major ac- 
tor in the South Pacific. 

Papua New Guinea maintains the 
largest defense force in the Pacific 
island region, and it has recently in- 
creased its military's cooperation with 
the U.S. Army's western command. The 
proposed FY 1984 IMET program of 
$30,000 is an increase of $10,000 over 
last year's request level, enough to per- 
mit adding one, or perhaps two. addi- 
tional training programs. Papua New 
Guinea is expected to use its IMET 
grant to provide staff or technical train- 
ing for two or three officers and equip- 



EAST ASIA 



ment repair and maintenance courses 
for the same number of enlisted men. 

Tonga. The United States has a long 
history of missionary and merchant con- 
tacts with the Kingdom of Tonga. This 
small, pro-Western and staunchly anti- 
communist nation has publicly welcomed 
U.S. Navy ships and has done so when 
other island governments, concerned 
over an upsurge in public sensitivity to 
nuclear energy uses, have been reluctant 
to do so. Tonga's defense budget is very 
small, and the nation is still recovering 
from the effects of a disastrous hur- 
ricane which swept through Tonga in 
early 1982. 

This is the first IMET program that 
we have proposed for Tonga. The re- 
quested $30,000 will be used to train 
Tonga defense force officers and men in 
a mix of professional and technical 
courses, from midlevel command train- 
ing to patrol boat maintenance and 
disaster relief techniques. 

ASEAN. ASEAN continues as a 
major force for stability in Southeast 
Asia and is of central importance to 
U.S. interests in the region. The 
ASEAN nations are united in their op- 
position to the continuing Soviet- 
supported Vietnamese occupation of 
Kampuchea, and they are resisting the 
expanding Soviet military presence in 
the region. Soviet port calls are denied 
by all member countries, for example. 

The proposed $4.5 million develop- 
ment assistance program for FY 1984 
will fund scholarships and training in 
Southeast Asia studies and regional pro- 
grams in agricultural planning, plant 
quarantine, watershed conservation, and 
tropical medicine. Although only a por- 
tion of the $18.3 million in Asia regional 
development assistance will be allocated 
to East Asia, we urge full funding of 
this request. Full funding will permit ini- 
tiation of an ASEAN small industries 
project. We feel strongly that it is in the 
U.S. interest and cost-effective to 
strengthen the free market economies of 
ASEAN countries. 



have meshed well with our alliance and 
security relationships in Asia and 
Europe. 

The relationship has also produced 
many other bilateral benefits. Our ex- 
panding economic, scientific, and 
cultural ties have been mutually 
beneficial and have become a very im- 
portant element in our overall relation- 
ship. A strong factor is our two-way 
trade in goods which totaled $5.2 billion 
during 1982, with a surplus of $628 
million in the U.S. favor. We share a 
broad range of official exchanges— over 
100 Chinese delegations visit the United 
States each month and over 9,000 
Chinese students now study in the 
United States. In 1982, more than 
100,000 Americans visited China. The 17 
protocols under the U.S. -China science 
and technology agreement have pro- 
moted valuable exchanges in such widely 
varying fields as earthquake studies, 
hydropower, and health. 

Consistent with our growing rela- 
tionship, the President in June 1981 
decided to seek legislative change to 
laws that link China with the Soviet 
bloc. I am pleased to note that with your 
assistance, important progress was 
made in this effort during the past year. 
Congressional clarification of language 
in the Agi-icultural Trade Development 
and Assistance Act now permits the 
President to declare China eligible for 
PL 480 programs. In addition, the Presi- 
dent recently signed legislation lifting 
the prohibition on importation of 
Chinese furskins. 

The proposal to eliminate the pro- 
hibition of foreign assistance to China, 
which was submitted to the Congress in 
our FY 1983 authorization bill, received 
favorable consideration in both the 
Senate Foreign Relations and House 
Foreign Affairs Committees. However, 
the overall bill was not passed by the 



97th Congress for reasons unrelaii 
China. We have resubmitted the \{ 
posal concerning China in this yef 
foreign assistance bill. 

I would again emphasize that 
have no plans to establish bilater 
development assistance or PL 48 
grams for China. Our principal ii 
in amending these laws is to ensi 
that, in principle, we treat China 
same way that we treat other fri 
nonaligned countries. We do not 
request additional funds for Chin 
result of these amendments. 

Amendment of the Foreign I 
ance Act would allow China to p; 
ticipate in ongoing AID technical 
ance programs, under current fu 
levels, in the same manner as do 
countries. We previously provide 
committee staff a paper outlining 
type of ongoing projects which w 
consider for China. We have not 
cussed any of these ideas with th 
Chinese and will not do so until 
is amended. I would stress that ( 
participation in these programs 
threaten AID programs with oth 
tries but will contribute to China 
development through existing A] 
research and training projects w 
familiarizing China with comnier 
available U.S. technology. 

We would, of course, consult 
with the Congess if, in the futun 
should decide that development ; 
ance programs for China were ir 
U.S. interest. The initiation of ai 
assistance program for China wc 
be subject to the normal authoriz 
and appropriation procedures. 



' The complete transcript of the ■ 
will be published by the committee ai 
be available from the Superintendent 
Documents, U.S. Government Printii 
fice, Washington, D.C. 20402.H 



FY 1984 Assistance Requests for K( 



China 

Having now completed the discussion of 
security assistance recipients, I now 
want to emphasize the importance the 
Administration places on completing ac- 
tion on proposed legislative changes for 
China. 

Our rapprochement with China over 
the past decade has made important 
contributions to global and regional 
peace and stability. U.S. -China relations 



by Thomas P. Shoesmith 

Statement before the Subcommittee 
on Asian and Pacific Affairs of the 
House Foreign Affairs Committee on 
March 9, 198S. Mr. Shoesmith is Deputy 
Assistant Secretary for East Asian and 
Pacific Affairs.^ 

I am pleased to appear before you today 
to discuss an issue important to Korea, 
to the U.S. -Korea relationship, and to 



American interests in Northeast 
Asia— security assistance for the 
Republic of Korea. We firmly bel 
that the level of foreign military 
(FMS) credits available under the 
uing resolution, which is 16% lesi 
was provided last year and 3? " 
than our original FY 1983 requef 
sufficient to meet the pressing re 
quirements of this front-line ally. 
However, before turning to that 
subject, and in order to place it ii 



Department of State )' 



EAST ASIA 



' context, I would like to speak 
ibout the full-range of our in- 
in Korea and the policy 
ork within which we seek to ad- 
bose interests. 

overriding objective in Korea, 
throughout the past 30 years, is 
!rve peace on the peninsula. We 
immense stake in the mainte- 
f stability in Northeast Asia, and 
1 Korea is absolutely essential to 
active. North Korean hostility 
the South appears unabated, and 
; remain high. War in Korea, 
our view not likely to occur so 
South Korea and U.S. strength 
ained, is always possible— and 
itial consequences are sobering 
mplate. In addition to massive 
;ion and loss of life in Korea 
icluding the lives of American 
, a North Korean attack upon 
th would risk direct confronta- 
ween the United States and the 
Jnion. At the least, it would 
rains between ourselves and the 
unprecedented since the Cuban 
:risis. It would sharply disrupt 
laps end for the medium term 
ving relationship with China. It 
ireaten directly the security of 
do not believe I have overstated 
ssible effects of renewed war- 
;he Korean Peninsula, nor do I 
hey need further elaboration 
ffice it to say that deterring war 
nain a basic and urgent objec- 
le United States in Korea, and 
lat context that we have put 
le Congress our request for 
assistance funds. 

erests 

urn to that request later in my 
It, but first I want to sketch for 
variety of our other interests 
;y objectives in Korea, all of 
e interrelated and which 
have given our ties with that 
considerable— and growing — 
ice. 

la's dramatic economic progress 
lown to this committee. In one 
)n, Korean per capita GNP has 
m less than $100 to more than 
ts international trade has 
;cordingly, making Korea a 
t factor in world trade and an 
gly important trading partner 
lited States. Last year, two-way 
-■ween Korea and the United 
irtually in balance, amounted to 
.n $12 billion. During 1982, and 
he effects of worldwide reces- 



sion upon this traditionally export-led 
economy, Korea's GNP recorded more 
than 5% real growth. The Korean per- 
formance is, of course, all the more im- 
pressive when one considers that Korea 
lacks natural resources and must rely 
heavily on imported sources of energy 
and industrial raw materials. Korean 
progress instead stems from the en- 
trepreneurial and managerial talents of 
its economic leaders and the unsur- 
passed industriousness of its people. We 
anticipate that Korea, drawing on its 
abundant human strengths, will continue 
to make impressive progress in its ef- 
forts to develop its economy. As it does 
so, the importance of our economic in- 
terests in Korea will grow apace. 

In policy terms, we seek greater ac- 
cess to Korea's expanding domestic 
market and the smooth management of 
sectoral trade problems. In a more 
general sense, we want to enlist Korean 
support in the global battle against pro- 
tectionism. We also seek improved in- 
vestment opportunities for American 
business. We are encouraged by pros- 
pects in all of these areas. Korean 
leaders appear to recognize the signifi- 
cant benefits to be derived from greater 
American private sector involvement in 
their development process, and we 
believe they are as determined as we to 
manage successfully this increasingly 
complex and constructive economic rela- 
tionship. 



Diplomatic Objectives 

Related to both our security and 
economic interests in Korea, we have 
certain diplomatic objectives, which form 
a third element of our policy toward the 
peninsula. Broadly speaking, we seek to 
alleviate tension between North and 
South Korea and thereby to reduce the 
possibility of dangerous confrontation. 
The Government of the Republic of 
Korea shares that objective, faced as it 
is with a constant military threat and 
the consequent need to devote fully 6% 
of the country's GNP to defense. There 
has been little progress, however. The 
North remains unwilling to accept the 
legitimacy of South Korea or to have 
any dealings with its government. In- 
stead, it insists on preconditions to 
dialogue— a change of leadership in the 
South, dismantling of the "anticom- 
munist system" there, and a withdrawal 
of U.S. forces. Thus, North Korea has 
rejected a series of proposals put for- 
ward by the Republic of Korea for 
resuming a dialogue; has blocked ini- 
tiatives by the UN Command in the 



Military Armistice Commission at Pan- 
munjom designed to reduce possibilities 
for incidents along the DMZ and to build 
mutual confidence concerning the inten- 
tions of both sides; and, we believe, 
resists strongly any moves by its major 
allies to develop even informal contacts 
with the South. 

The United States has expressed 
support for the initiatives put forward 
by Seoul, which we believe are both 
comprehensive and realistic. Consistent 
with our view that the reunification of 
Korea is something which must be 
worked out by the Korean people 
themselves, we have maintained our 
position that we will have no direct con- 
tact with North Korea unless the South 
is represented as a full and equal partici- 
pant. We have continued to make pro- 
posals in the Military Armistice Com- 
mand which we believe could, if ac- 
cepted, reduce the danger of military 
confrontation without prejudging the 
fundamental political issues at stake. We 
also support South Korea's efforts to 
develop contacts with the Soviets, 
Chinese, and other communist countries, 
and we continue to have as a long-term 
objective "cross-recognition" of the two 
Koreas by each other's major allies. 

Given North Korean attitudes, we do 
not anticipate major progress in any of 
these areas in the near future. We will, 
nonetheless, continue to do what we can, 
when we can, to reduce tension on the 
peninsula and consolidate the diplomatic 
framework which helps to maintain 
stability there. 

But Korean diplomacy, and our own 
diplomatic objectives in relation to 
Korea, are not confined exclusively to 
North-South Korea issues. The South 
Korean Government has sought, with in- 
creasing success, to develop a more ac- 
tive and influential role in the East Asia 
region and globally, befitting Korea's 
growing economic importance. Koreans 
take pride in having been named host 
for the 1988 Olympics. In the more im- 
mediate future, Seoul will also be the 
venue for the 1983 conference of the In- 
terparliamentary Union, the 1984 Inter- 
national Monetary Fund (IMF) world 
conference, and the 1986 Asian Games. 
All of these events will underscore the 
new and more substantial role of Korea 
and its considerable potential. We sup- 
port these Korean efforts, which are 
consistent with our interest in greater 
regional cohesion and broader interna- 
tional acceptance for an important ally. 



EAST ASIA 



Human Rights Issue 

There is a fourth major strand in 
American policy toward Korea, of par- 
ticular interest to several members of 
this committee, which is to seek con- 
tinued progress toward liberalization of 
the political environment there and 
greater respect for human rights. We 
have made, and continue to make, our 
views known to Korean Government 
leaders on these issues. We do so to the 
maximum extent possible through quiet 
diplomatic means, in the belief that this 
is not only the most effective approach 
but the most appropriate in a relation- 
ship of friendship and alliance. 

Korean political life is remarkably 
active and, by the standards of many 
countries, unfettered. It, nonetheless, is 
constrained within what has to be called 
an authoritarian framework. While I 
believe one should exercise restraint in 
making judgments about the politics of 
other countries, we, nonetheless, believe 
that a more open and participatory 
political system and greater respect for 
human rights are important for the long- 
term stability of Korea, and we hope 
that Korea will continue to move in this 
direction. 

We are encouraged by recent devel- 
opments, including the December release 
of Mr. Kim Dae Jung and more than 40 
other persons imprisoned for political 
reasons; the recent removal of the ban 
on political activity by some 250 promi- 
nent politicians of the Park Chung Hee 
era; and the increasingly assertive role 
of the National Assembly and the 
political parties. We would welcome fur- 
ther progress. 

As I hope my remarks have made 
clear, our relations with the Republic of 
Korea in the 1980s have several impor- 
tant dimensions, reflecting the variety of 
our interests in this increasingly impor- 
tant country. And yet, while security 
issues are by no means our only policy 
concern with respect to Korea, they are, 
as I stated at the outset, of fundamental 
importance. Economic and political prog- 
ress in Korea, as well as Korea's ability 
to play its deserved role internation- 
ally—developments very much in our in- 
terest—are dependent upon the 
maintenance of security. So too are the 
broader strategic concerns I outlined 
earlier in commenting upon the effects 
war in Korea could have for the peace 
and stability of the entire region. The 
threat to that security posed by North 
Korea is both immediate and unrelent- 
ing. 



Security Threat 

The major force buildup undertaken by 
North Korea over the past 10 years has 
resulted in a significant military im- 
balance on the peninsula. This effort has 
annually absorbed some 20% or more of 
North Korean GNP. The North has 
more men under arms than the South 
and a pronounced superiority— more 
than 2 to 1— in several important 
categories of offensive weaponry, 
notably tanks, long-range artillery, and 
armored personnel carriers. The North's 
80,000 -100,000-man commando force, 
one of the largest such contingents in 
the world, would pose a serious threat 
to South Korea's military facilities and 
population centers behind the lines in 
time of war. North Korea's well- 
equipped and modern forces are 
deployed well forward, with major 
elements arrayed along the DMZ only 35 
miles from Seoul, and they are maintain- 
ed in a high state of readiness. The 
North could mount an attack with very 
little warning. 

While we are able to assess with 
some clarity North Korean military 
capabilities. North Korean intentions re- 
main obscure. We believe, however, that 
there has been no diminution in North 
Korea's determination to achieve the 
reunification of the peninsula on its own 
terms. Its arms buildup had given it an 
impressive force with which to pursue 
that objective militarily should it so 
choose. Thus, while we believe the North 
Korean leadership must recognize the 
risks any attack upon the South would 
entail, we cannot rule out the possibility 
that the North might accept those risks. 
Prudence, therefore, requires that the 
Republic of Korea forces and our own 
also maintain a high state of readiness 
and that there be no room for doubt 
about either our determination or our 
ability to defeat an attack. 

In view of continuing North Korean 
efforts to strengthen their forces, and 
with no sign of change in North Korean 
attitudes or policy toward the South, 
Republic of Korea military capabilities 
must also be further strengthened. Ac- 
cordingly, South Korea— which as I 
have noted devotes 6% of its GNP to 
defense— is pursuing a major force im- 
provement program designed to enhance 
warning capabilities, increase effective 
firepower, and improve air defenses. 
That carefully phased program includes 
the coproduction of F-5s and acquisition 
of the F-16. It is projected to cost some 
$10.3 billion over the next 5 years, with 
$3.2 billion for new equipment purchases 
in the United States. 'Total procurement 



from the United States during th: 
period will come to $4.7 billion. V 
and when this program will be su 
to eliminate the military imbalanc 
the peninsula is difficult to predic 
it should help to narrow the gap; 
tainly without it the North's lead 
widen dangerously. 

Assistance Request 

Our Korean allies are doing their 
to counter the North Korean thr( 
restore a military balance on the 
sula. I believe it is clearly in our 
to assist this crucial, long-term el 
To that end, we provided $166 m 
FMS credits in FY 1982. Our FY 
request of $210 million was redu( 
under the continuing resolution t 
million, 16% below last year's fig 
This has severely complicated Kc 
defense planning at a time when 
like ourselves, faces unusual budj 
straints due to economic conditio 
Despite having achieved more th; S 
real growth in 1982, Korea still Y i 
sizeable current account deficit— | 
imately $2.5 billion— sharply limi [ 
availability of foreign exchange f 
equipment purchases. Moreover, ( 
repayments of interest and princ 
previous credits during FY li'^- 
million— exceeded by some $^^ n 
the new credits provided, furtlui 
stricting the funds available {"r i 
equipment procurement. We, the 
believe that in the absence of a si 
mental appropriation, the Kdicai ■ 
improvement program would I >e : . 
and our mutual security objective o 
some degree jeopardized. 

Accordingly, we believe it is ipi 
tant to restore the FY 1983 level i 
figure previously requested, and ]| 
viously supported unanimously bjl 
subcommittee and by the full com^ 
This is what our proposed suppleii 
would do. I 

For FY 1984, we are requesti 
$230 million in FMS credits. The | 
these proposed credits would be ( 
to ongoing projects involving F-5 
F-16 aircraft, automated air d 
systems, antiaircraft missiles, : 
TOW [tube-launched, optically tra« 
wire-guided antitank] missiles anc 
similar equipment. We are also rt.e 
ing authorization to provide exters 
repayment terms in FY 1984. Sp<| 
ly, we are proposing that Korea \' 
mitted a 10-year grace period as ilp' 
cipal followed by 20 years for rep ■ 
ment. While this would mean sub:-" 



tially higher total interest paymei 



Department of State El' 



EAST ASIA 



over the full life of the loan, an- 
lyments would be much less than 
axisting terms. This would enable 
rean Government to devote pro- 
lately more each year to needed 
ent purchases. We believe it 
oe in Korea's interest, and ours, 
flit through this means a more ef- 
use of available resources in 
J essential Korean security re- 
ents. Prospects for attaining 

force improvement goals, and 
rowing the North's military lead, 
)e enhanced by this action, 
lay, no less than 30 years ago, 

security is of vital importance to 
ted States. Then, Korea was at 
tex of an area in transition and 
il. Today it is at the center of an 
lere the interests of four of the 
iwerful nations of the world come 
r. Then, Korea was a newly inde- 
; and weak nation. Today it is an 
ngly consequential factor in the 



political and economic life of East Asia 
and the world. Today, as in 1950, war in 
Korea would have implications reaching 
far beyond the peninsula. In sum, today 
more than ever before Korean security 
is essential for the peace, stability, and 
continuing prosperity of Northeast 
Asia — a condition in which our own 
stake is very great indeed. Our commit- 
ment to the security of Korea must, 
therefore, remain at the center of our 
policy concerns in East Asia, and we 
must insure that the credibility of the 
deterrent represented by U.S. and 
Korean forces on the peninsula remains 
unquestioned. It is in this context that 
we ask your support for the proposals 
now before this committee. 



'The complete transcript of the hearings 
will be published by the committee and will 
be available from t'he Superintendent of 
Documents, U.S. Government Printing Of- 
fice, Washington. D.C. 20402. ■ 



1984 Assistance Requests 
fhailand 



el A. O'Donohue 

?7ne)it before the Subcommittee 
1 and Pacific Affairs of the 
oreign Affairs Committee on 
It, 1983. Mr. O'Donohue is Depu- 
tant Secretary for East Asian 
ific Affairs.'^ 

ighted at this opportunity to ap- 
ore you to discuss our assistance 

for Thailand, one of our closest 

an allies. 



objectives and Interests 

fowitz [Paul D. Wolfowitz, 
t Secretary for East Asian and 
ffairs], in his testimony before 
ommittee, set forth our basic 
s and interests in East Asia. All 
lai programs are in direct sup- 
he objectives he outlined. 

ailand is a long time security 
ly and is the Association of 
ist Asian Nations (ASEAN) 
state facing a direct threat 
det-supported Vietnamese 
Kampuchea. 

ailand is a key member of 
which has emerged as the ma- 
rf for stability in Southeast Asia 



and a subregional grouping of central 
importance to U.S. interests. 

• Thailand is in strategic proximity 
to the key sealanes of communication 
linking East Asia to the Indian Ocean 
and Middle East. 

• Thailand has borne the heaviest 
burden of refugees in Southeast Asia 
and is central to maintaining the first 
asylum principle and the continuation of 
the major international efforts which 
have allowed us to cope with this im- 
mense human problem. 

• Thailand's cooperation is essential 
in our efforts to stem the flow of nar- 
cotics out of the Golden Triangle. 

Program Summary 

In the FY 1983 supplemental, we have 
asked for $19 million in foreign military 
sales (FMS) guaranteed credits and $6 
million in FMS and the military assist- 
ance program (MAP). These sums would 
bring our FY 1983 level up to the 
amount requested by the Administration 
originally, which was supported by this 
committee. 

In FY 1984 the Administration is re- 
questing: 

• $94 million in FMS guaranteed 
credits and $5 million in MAP. This is a 
9% increase over our FY 1982 request; 



• $2.4 million in international mili- 
tary education and training (IMET) 
funds, a moderate increase over the 

1983 continuing resolution amount of 
$1.7 million; 

• $5 million in economic support 
funds (ESF), the same as FY 1983, to be 
used to assist the Thai directly affected 
by the heavy refugee inflow and border 
fighting; and 

• $29 million in development assist- 
ance, $1 million over this year's level. 

Policy Justification 

These programs directly support U.S. 
interests in Thailand and contribute to 
its security and economic development. 
They also support security, economic, 
political, and humanitarian interests of 
regional and global, as well as bilateral, 
importance. 

The security assistance levels we 
have requested for FY 1983 and FY 

1984 reflect the Administration's deter- 
mination to strengthen the defense capa- 
bilities of a close treaty ally manning the 
front-lines against a threat to the region 
as a whole. The program is not only an 
essential signal of our commitment to 
Thailand and its ASEAN policies but 
also demonstrates our determination to 
play an appropriate security role in the 
area. 

ASEAN has emerged as a dynamic 
force for peace and progress in South- 
east Asia and deserves our full support. 
The Thai and their ASEAN partners 
have been defending the region's con- 
tinued stability by resolutely opposing 
the Vietnamese occupation of Kam- 
puchea and by determinedly pursuing a 
political solution to this problem. A 
strong, confident Thailand, around 
which the other ASEAN states and 
most of the international community 
have rallied, is central to this task. Our 
assistance to Thailand consequently con- 
tributes significantly to the overall 
ASEAN efforts to bring about a 
comprehensive political solution to the 
Kampuchea problem. 

FMS/MAP. Unfortunately, as a 
result of the FY 1983 reduction, not 
only have we been unable to increase the 
Thai FMS program, as we had hoped, 
but, in fact, the overall level is $13.2 
million less than that provided in FY 
1982. This undercuts our whole ap- 
proach, creating an erroneous impres- 
sion of diminishing U.S. interest at a 
time when the Vietnamese threat re- 
mains unchanged. Consequently, we 
have, as a matter of high priority, re- 



EAST ASIA 



quested that the Congress, in the supple- 
mental, restore the FMS and MAP 
funds which we have requested. 

In looking at our FY 1984 program 
levels, we are projecting a measured in- 
crease in the FMS/MAP program. This 
program is the most visible and concrete 
manifestation of our security relation- 
ship and of our readiness to play an ap- 
propriate security role with Thailand. 
The Thai have indicated they believe 
they can manage their own security 
problems without U.S. military involve- 
ment but have stressed their hope that 
we would provide the security assistance 
needed to allow them to meet the Viet- 
namese challenge. Our program does 
that. The funds we have requested will 
enable the Thai to proceed with their 
force modernization program as well as 
build an inventory of badly needed spare 
parts for existing weaponry. 

IMET. Our military training pro- 
gram will be devoted to expanding space 
allocations for training of officers and 
enlisted men in use of modern weapons, 
management of logisitics, and technical 
fields such as intelligence and com- 
munications. The Thai are making a gen- 
uine effort to improve their logistics 
systems, which will be a great step for- 
ward in their overall defense effec- 
tiveness. In FY 1983, we have projected 
training for about 369 military personnel 
and a larger total in FY 1984. 

ESF. The large number of refugees 
and displaced persons which remain on 
Thai soil constitute a serious 
humanitarian problem, as well as a 
threat to the region's stability. It is an 
international problem which requires an 
international solution. The United States 
is firmly committed to helping alleviate 
this burden by providing relief and 
resettlement within the framework of an 
international program. Tangible expres- 
sion of our continued support is 
necessary to maintain the momentum of 
the international effort and the principle 
of first asylum. 

As part of this cooperation, we and 
other countries provide assistance to 
Thai villages affected by border fighting 
and the influx of refugees. We believe 
the ESF will be needed in FY 1984 at 



about the same levels as FY 1983. The 
recent Vietnamese attacks in the area of 
Nong Chan, on the Kampuchea border, 
have added to the number of refugees in 
Thailand and caused new losses of Thai 
lives and property. In addition, ESF 
funds are being directed to areas of the 
Thai-Lao border, also affected by 
refugee flows, where many of the na- 
tion's poorest people live. These pro- 
grams will fund improvements in basic 
services in the villages, assist in improv- 
ing agricultural productivity, and help 
bind these areas into the economic and 
political mainstream of the country. 
Most importantly, they encourage the 
Thai to maintain first-asylum policies 
and to facilitate international relief and 
resettlement efforts. 

Development Assistance. Thailand 
has suffered from the world recession 
and spiraling energy costs over the past 
several years along with most Third 
World countries. Yet due to favorable 
harvests, Thailand has managed to re- 
tain relatively high growth rates in both 
its agricultural and industrial sectors. 
Agricultural productivity, however, re- 
mains low relative to its potential. 
Significant disparities of income persist 
both between regions and between dif- 
ferent occupational groups. Our develop- 
ment assistance to Thailand is part of a 
much larger international effort to assist 
this important developing country, 
which has proven its determination to 
put such resources to effective use. 
Besides our bilateral assistance, the 
United States contributes significantly 
to the international effort through the 
World Bank and the Asian Development 
Bank (ADB). 

U.S. development assistance for 
Thailand will increase slightly over 1983 
if the FY 1984 program is approved at 
the requested level. This program sup- 
ports current Thai Government efforts 
to redirect public and private investment 
toward rural growth and development. 
Other projects will seek to enhance effi- 
ciency of the private sector in Thailand 
in meeting overall development objec- 
tives. Finally, the program is designed 
to aid the Thai Government in directing 
economic growth toward increased 
equity for the poorest sectors of its 
population. 



Conclusion 

I have outlined a balanced : 
program for Thailand reflecting f 
strengths and diversity of our rel 
ship. There is a proper emphasis 
security assistance given the thre 
Thailand faces from Vietnam anc 
own security treaty commitment. 
President, Secretary Shultz, and 
[Defense] Secretary Weinberger 
reaffirmed our clear commitment 
Thailand embodied in the Manila 
Our military assistance and the s 
sends of U.S. constancy and supj 
essential elements in strengtheni 
security. 

At the same time, we recogn 
economic development is equally 
tant in enhancing domestic stabil 
social development. Through dev 
ment assistance, we remain dete 
to contribute along with other dc 
such as the World Bank and Jap 
help Thailand maintain its priori- 
education, economic developmen 
more equitable income distributi< 

Both of these programs also 
secure Thai cooperation on refug 
narcotics matters. In the broade 
text, the ASEAN countries look 
our security relationship with Th 
and our assistance program as ti 
measure of our support to their 
to reach a comprehensive politic: 
ment in Kampuchea. 

The levels we have requeste( 
the severe budgetary constraints 
working under. They are necess; 
are to demonstrate our continue^ 
port for Thailand— a treaty ally 
ASEAN front-line state. 



' The complete transcript of the 
will be published by the committee a 
be avaikble from the Superintendeir 
Documents, U.S. Government Print! 
fice, Washington, D.C. 20402. ■ 



Department of State ul 



EAST ASIA 



1984 Assistance Requests for 
Philippines and Indonesia 



Uel A. O'Donohue 

tement before the Subcommittee 
m and Pacific Affairs of the 
'''oreign Affairs Committee on 
18, 1983. Mr. O'Donohue is 
Assistant Secretary for East 
md Pacific Affairs.^ 

eased to address today our 
ice requests and U.S. interests 
icies toward two key countries in 
It Asian and Pacific area, both 
rs of the Association of South 
sian Nations (ASEAN)— the 
nes and Indonesia. The United 
ind the Philippines have had 
istoric ties this entire century, 
ilippines has been our ally since 
dence in 1946. Indonesia, the 
ASEAN state, is a major 
I power with which we have im- 
poiitical and economic relation- 

' policies toward these two 
Southeast Asian states stem 
3 set of regional foreign policy 
3S that Assistant Secretary Paul 
stz outlined to this subcommittee 
iruary 23. These objectives are 

potect our existing treaty rela- 

|aintain unhampered use of our 
I facilities in the Philippines; 
aintain and enhance defense 
hips with countries with 
; proximity to key sealanes; 
ssure continued access to signifi- 
imercial markets and basic raw 

s; 

ipport ASEAN and strengthen 
; to ASEAN countries; 
rengthen domestic efforts to 
ioverty and social strains that 
iolence and political instability; 

iprove human rights practices. 



fVM SUMMARY 

lest for the Philippines in FY 

million in foreign military 
IS) guaranteed credits. This is a 
line of our FY 1983 request and 



corresponds to the presidential best ef- 
fort pledge made in 1979, when our 
military bases agreement was amended, 
to provide security assistance at in- 
dicated levels over a 5-year period; 

• $1.3 million in international 
military education and training (IMET). 
This is equal to the FY 1983 level; 

• $50 million in economic support 
funds (ESF), the same as FY 1983, cor- 
responding to the presidential best ef- 
fort pledge made in 1979; 

• $40 million in development assist- 
ance and $7.8 million in PL 480, Title II. 
Development assistance levels have re- 
mained roughly constant since 1979, 
when during military bases agreement 
negotiations it was understood that 
development assistance would not be 
supplanted by ESF. 

Our request for Indonesia is for FY 
1983, $21 million in supplemental FMS 
guaranteed credits, bringing the FY 
1983 request to $41 million. 

For FY 1984, we are requesting: 

• $50 million in FMS guaranteed 
credits, a straight line projection of our 
original FY 1983 requests; 

• $2.7 million in IMET, an 11% in- 
crease over FY 1983; 

• $64 million in development assist- 
ance, $1 million less than last year 
because of overall budget stringencies; 
and 

• $39.2 million in PL 480 assistance, 
up approximately $500,000 over FY 
1983. 



THE PHILIPPINES 

There is no country in the region with 
which the United States enjoys a deeper, 
longer relationship than the Philippines. 
This oldest of our Asian allies, which 
shared with us the suffering of World 
War II and has inherited so much from 
the United States, today shares our 
perceptions about the dangers in 
Southeast Asia. We have had a mutual 
defense treaty with the Philippines since 
1952. Economic ties are strong; the 
United States continues to be the largest 
source of foreign investment and largest 
market for Philippine goods. Our 
cultural links span this entire century. 
Most recently, the state visit of Presi- 
dent Marcos last September, and his 
discussions with President " 



served to underscore the excellent state 
of our bilateral relations and to reaffirm 
our security ties. 

Current Economic Situation 

Like many nations, the Philippines today 
is passing through a period of political 
transition and economic difficulties 
brought on by the world recession. The 
country maintained a good growth 
record of around 6% during the 1970s. 
However, rising oil prices and escalating 
interest costs have created financial 
limitations on growth over the past 3 
years. Debt service costs increased dur- 
ing the past year, but self-imposed 
restraints have controlled large in- 
creases in debts. Balance-of-payments 
deficits widened as terms of trade, 
reflecting decreased world market prices 
for the country's prime exports, 
deteriorated. It is important to note that 
about one-third of the population of the 
Philippines depends in some way upon 
income derived from one of these, 
coconut products. 

In contrast, exports of electronic 
components have continued vigorous 
growth, the government has pressed 
ahead with a broad export development 
program, and new financial policies 
recently show a capacity to face 
economic adjustment problems and lay a 
firm foundation for future growth. The 
International Monetary Fund (IMF), the 
World Bank, and the international finan- 
cial community have all recently 
recognized those positive steps by 
negotiating support of well over $1 
billion for the Philippines. 

Political and Human Rights 
Developments 

As this was happening, changes were 
taking place within a political system in 
which a strong president unquestionably 
dominates the arena. Martial law ended 
in 1981, a presidential election was held, 
and the political climate became more 
relaxed. Controls on the press have been 
eased, although on occasion reasserted, 
as witnessed by the recent closure of an 
opposition newspaper. Nevertheless, 
criticism of the government continues in 
the media, though subdued. It is fair to 
say that some gradual expansion in the 
exercise of civil and political liberties has 
continued in the Philippines. At the 
same time, of course, problems remain, 
and church groups and others have not 
hesitated to bring them to the govern- 
ment's attention. Initial indications are 
that the government is ready to engage 



EAST ASIA 



in dialogue. We welcome any such ef- 
forts on the part of the government and 
concerned Filipinos to address human 
rights concerns through dialogue. 

The human rights situation in the 
Philippines is a complex picture which 
we have attempted to portray in detail 
in our annual human rights reports. It is 
a situation made more difficult by the 
existence of active rural insurgencies, 
particularly the New People's Army in 
the remote areas of many provinces, 
government efforts to control them, an 
inefficient judicial system, a depressed 
international market for traditional 
Filipino exports, and resulting rural 
poverty. In particular, abuses of civilians 
by some members of the military, pre- 
dominantly in insurgency areas, are a 
continuing problem for the Philippine 
Government. 

For our part we continue to pay 
close attention to the human rights 
situation in the Philippines. We look 
toward progress in the direction of a 
more open political system. Parliamen- 
tary elections in 1984 will be a step for- 
ward in this process. We deal with 
human rights through a policy of quiet 
dialogue, not only with the government 
but also with a wide spectrum of Philip- 
pine society. This policy is pursued in 
consonance with our other objectives 
and is an integral element in our overall 
approach in the Philippines. 

Strategic Relationship 

Two treaties are central to the U.S. 
strategic relationship with the Philip- 
pines. Our military bases agreement of 
1947 enables us to maintain advan- 
tageous geographic position through our 
military facilities at Subic Naval Base 
and Clark Air Force Base. These 
facilities allow us to protect the Western 
Pacific sea and airlanes and to project 
U.S. power into the Indian Ocean and 
beyond at a time of growing Soviet 
military power in the Far East. They 
also permit us to fulfill our obligation to 
defend the Philippines under our 1952 
mutual defense treaty. 

Our present security assistance 
levels reflect President Carter's best ef- 
fort pledge in 1979 to provide $500 
million from FY 1980 to 1984 to the 
Philippines. However, the maintenance 
of a $100 million level annually does con- 
siderably more than ensure continued 
and effective U.S. military operations at 
the bases. It assists the Philippines to 
meet its own defense needs, which these 
days include the threat of a slowly grow- 
ing communist insurgency, and to ad- 



vance toward its goal of military mod- 
ernization. Through the ESF compo- 
nent, we are contributing to municipal 
and provincial development activities, 
which bring improvements to the hves of 
Filipinos. 

The United States and the Philip- 
pines will begin a complete review of the 
military bases agreement in April 1983 
to ensure that it continues to meet our 
mutual interests. 



Development Assistance and PL 480 

Promoting Philippine economic develop- 
ment is an essential component of our 
constructive relationship with the Philip- 
pines. It is aimed at reaching that part 
of the Philippine population which lives 
below the poverty line. Our PL 480 Title 
II, assistance provides feeding programs 
to the poorest Filipinos. Indeed when 
ESF, development assistance, and PL 
480 programs are considered together, 
we provide twice as much bilateral 
economic assistance as we do military 
assistance. We also contribute in a 
major way to Philippine economic 
development through our participation 
in such multilateral development banks 
as the World Bank and Asian Develop- 
ment Bank (ADB). 

Program Descriptions 

EMS— $50 million. FMS credits 
enable the Philippine Armed Forces to 
continue to modernize during a period of 
serious financial stringency. Contem- 
plated FMS purchases include 
helicopters, ground vehicles, engineering 
equipment for development-related proj- 
ects, light aircraft, communications 
gear, and other needed defense items. 
Maintenance of FMS at levels of $50 
million for the 5-year period from FY 
1980 to 1984 was contemplated in the 
President's "best effort" pledge at the 
time of the amendment to our military 
bases agreement in 1979. 

IMET— $1.3 million. Heaviest em- 
phasis would be on the training of 
selected junior to midlevel officers, not 
only to provide technical and managerial 
training that assists in force moderniza- 
tion but also to give them better under- 
standing of the United States, our 
political institutions, and U.S. policies. 
This is particularly important in dealing 
with a new generation of Filipinos who 
does not recall the shared World War II 
experience of our two countries. Ap- 
proximately 400 members of the Philip- 
pine military would benefit from these 
programs. 



ESF— $50 million. The ESF - 

nent, about half of the securif. 
ance package, is making an ir; 
contribution to Philippine soci. - ■ 
development, especially for Fill pii 
ing in areas near the U.S. milit;ir\ 
facilities. In FY 1984, we proii.ise i 
continue to fund municipal ami pr i 
cial infrastructure activities (i.e., " i 
systems, markets, flood control, 
hospitals, nonconventional eneru'A 
systems). 

Development Assistance— S^t 
million. Our development assistai '= 
emphasizes agricultural productio 
rural employment, and family pla ii 
Of this total, $7.78 million is PL 
Title II. 



INDONESIA 

I would turn now to our relati(in.- 
Indonesia, a nation strategical!) I 
astride vital interocean scalane s, 
portant member of ASEAN, and 
moderate, friendly voice in \\t>r\d 



Policy Framework 

For nearly two decades, we ha\ e i- 
joyed close and cooperative politi 
economic relations with Indont-si; n 
on three essential pillars: 

• Common strategic peretpt 
interests in Southeast Asia, e-^i •- 
our mutual commitment to tli. 
and independence of the state 
region; 

• Mutually beneficial, mult ill > 
dollar trade and investment relat ; 
and 

• Political dialogue and frt- qi u 
cooperation, bilaterally and in nu i- 
lateral fora, on such diverse issiu :•■ 
the Indochinese refugee prohKni. 
situation in Kampuchea, and luiii 
rights. 

The state visit of President -^ 
last October underscored the imi 
we attach to our relationship wit n 
donesia and imparted to it a new li 
and warmth. This new momentui it 
our relations comes at an opjinrti 
time, as Soeharto embarks on hi^ 
term as Indonesia's President :!n' ■ 
confront such challenges as gr< i\\ ^ 
Soviet military presence in the f 
and the severe impact of the ,el"l 
recession. 



Program Justification 

Our developmental and security 
assistance programs play a key r ' 



Department of State lH 



EAST ASIA 



ring strong relations with and 
rving our interests in Indonesia. 
; programs aim at three general 

They help ensure the stability and 
ng prosperity of Indonesia, one of 
ichpins of a stable Southeast Asia. 

They provide a measure of U.S. 
3 to key Indonesian decision- 
rs. 

They are a concrete manifestation 

humanitarian concerns which 
ly our policies. 

Economic Assistance 

esia has made major economic 
;ss during the past 15 years. By 
ndonesia, in fact, joined the ranks 
world's middle income per capita 
s, as measured by the World 
The reelection of President 
rto March 11, and the likelihood 
3 will continue to rely on many of 
me members of his economic 
•ement team, indicate that the 
^'s moderate and pragmatic 
lie policies will continue, 
t the economic challenges which 
sia faces are formidable. Some of 
olems are long-term and struc- 
1 nature— overdependence on oil 
IS, daunting unemployment in a 
whose workforce grows 2 million 
iy, and an agricultural economy 
to the limit to meet its basic food 

more immediate concern are the 
impact of the global recession, 
lias cut Indonesia's export earn- 
out 49% the past 2 years; the 
Irtain further drop in oil prices, 
;h the country has depended 
to fund its ambitious and suc- 
development efforts; and the ef- 
a prolonged drought, which has 
;d adversely on the 1982 and 
;e crop. This coincidence of 
essentially beyond the control of 
onesian Government, presents 
ntry with a serious economic 
e. 

Indonesian Government has 
taken several important steps to 
;h these problems. President 
recently announced an austeri- 
et, putting a lid on government 
ig expenditures. The government 
subsidies on key consumables 
fertilizers and refined petroleum 
s and taken measures to improve 
n of public revenues. New trade 
ons will probably result in fewer 



consumer imports, while a major effort 
IS underway to spur nonpetroleum ex- 
ports. 

The past strong record of economic 
management of Indonesia's leadership 
indicates it will succeed in surmounting 
its problems. We are commited to help, 
as the President pledged we would to 
President Soeharto last October, As you 
know, we have already increased our FY 
1982 PL 480 Title I assistance to In- 
donesia from the originally projected 
$20 million to $30 million, in recognition 
of the drought's impact. For FY 1984, 
we are seeking $30 million in PL 480 ' 
Title I and $64 million in developmental 
assistance, essentially a straight line 
projection from this year. 

Our developmental aid will be 
directed at four main targets: (1) helping 
Indonesia achieve food self-sufficiency; 
(2) expanding rural employment oppor- 
tunities, especially in nonfarm jobs; (3) 
improving family planning and basic 
health care; and (4) improving selected 
aspects of education and training. 

Our PL 480 assistance will help 
minimize the amounts of scarce foreign 
exchange that Indonesia need commit to 
grain imports, while generating funds 
for specifically designated projects 
aimed at the neediest elements of 
society. 

I would also note that our bilateral 
economic assistance programs are sup- 
plemented by important U.S. contribu- 
tions to the international financial in- 
stitutions. The World Bank and the 
ADB, in particular, work cooperatively 
with the Indonesian Government and 
have made major contributions to In- 
donesia's development effort. 

Security Assistance 

Turning to security assistance, I would 
like first to address our request for both 
an FY 1983 FMS supplemental of $21 
million and an FY 1984 FMS level of 
$50 million. 

As the subcommittee is aware, we 
regret deeply that extremely tight 
budgetary constraints forced the 
slashing by 60% of our original FY 1983 
FMS request of $50 million. The cut 
came at a particularly unfortunate time: 
immediately on the heels of the Soeharto 
visit, just when Jakarta was beginning 
to feel the impact of its economic prob- 
lems, and at a time when we are looking 
to strong and stable governments in 
countries like Indonesia to contribute to 
the stability of Southeast Asia. More 
generally, such a cut contributes to the 
erroneous impression that the United 
States is lessening its interest in the 



area and in ASEAN at a time when we 
wish to support just the opposite. 

We believe that a restoration of FY 
1983 FMS through a $21 million sup- 
plemental—yielding a level slightly 
above the FY 1982 total— would 
mitigate much of the disappointment in 
Jakarta over the initial cut. It would 
also be of particular substantive impor- 
tance to the Indonesian Government 
now in light of its tight foreign ex- 
change situation. We anticipate that the 
bulk of the funds would be used in pro- 
curement of badly needed war reserve 
munitions and the overhaul of C-130 air- 
craft, which are essential to give the In- 
donesian Armed Forces even a minimal 
capability to defend their far-flung 
archipelago. 

We believe with equal vigor, and for 
many of the same reasons, that an FY 
1984 FMS level of $50 million is war- 
ranted and needed. While respecting In- 
donesia's nonaligned status, we have 
developed a constructive security 
assistance relationship. This reflects our 
mutually shared strategic perceptions 
and demonstrates our readiness to assist 
Indonesia in meeting its legitimate 
defense needs. The FMS we provide will 
be used in essential military modern- 
ization programs. We anticipate, for ex- 
ample, that substantial portions of the 
funds would be used in procurement of 
an adequate air defense system and 
shipborne weapons systems. 

Before concluding the discussion of 
security assistance programs, I would 
say a brief word about our FY 1984 
IMET request of $2.7 million. 
Indonesia's military leaders regard per- 
sonnel training as a key element in their 
force modernization program, and our 
IMET program as one of the most im- 
portant aspects of their training effort. 
The FY 1984 program will permit about 
300 Indonesian middle- and upper-grade 
officers to travel to and train in the 
United States, while U.S. mobile train- 
ing teams train additional hundreds of 
Indonesian officers in Indonesia. This 
overall effort makes a considerable con- 
tribution to upgrading Indonesian 
managerial and technical capabilities in 
critical defense-related fields and, in- 
cidentally, provides those officers who 
will be the backbone of their country's 
future military and political leadership 
with an understanding and appreciation 
of the United States. 



EUROPE 



CONCLUSION 

I would conclude my comments this 
afternoon with three observations. 

First, we have substantial security, 
political, and economic interests in the 
Philippines, in Indonesia, and, more 
generally, in Southeast Asia, where as 
ASEAN members these countries play 
leading roles. It is important that we 
provide sufficient resources to match 
and promote these bilateral and regional 
interests. 

Second, our assistance programs 
are tied to our continuing humanitarian 
interests in the Philippines and In- 
donesia. Our developmental and food aid 
programs, of course, address those in- 
terests directly. Our total aid effort, in- 



cluding security assistance, fosters 
stronger bilateral relationships. Out of 
these grow bilateral dialogues and 
cooperation on other important issues 
such as human rights and refugees. 

Third, we seek to be a nation clear 
in our strategic goals, faithful in our 
friendships, and reliable in our long-term 
commitments. That, too, is what our 
friends want of us. I would hope that 
our assistance programs for the Philip- 
pines and Indonesia for FY 1983 and FY 
1984 can be constructed and imple- 
mented according to those principles. 

' The complete transcript of the hearings 
will be published by the committee and will 
be available from the Superintendent of 
Documents, U.S. Government Printing 
Office, Washington, D.C. 20402. ■ 



FY 1984 Assistance Requests 
for Europe 



by Richard R. Burt 

Statement before the House Foreign 
Affairs Committee on March 16, 1983. 
Mr. Burt is Assistant Secretary for 
European Affairs.^ 

I appreciate the opportunity to appear 
before this committee in support of the 
European portions of the Administra- 
tion's proposals for security assistance in 
FY 1984. 

As Secretary Shultz emphasized to 
this committee on February 15, 1983, 
the general program of security assist- 
ance and economic assistance is of great 
importance to us in our foreign policy. 
He also emphasized before the House 
Foreign Affairs Committee on Febru- 
ary 16, in support of our foreign 
assistance programs, that NATO is an 
alliance that serves the interest of the 
United States as well as of our allies. I 
have participated in the development of 
the integrated foreign assistance pro- 
gram to meet our national economic and 
security objectives, as well as those of 
our close allies who share these objec- 
tives. I want to emphasize that security 
assistance is an essential part of both 
our foreign policy and defense planning, 
and I would now like to describe our 
major programs in support of the NATO 
allies requiring assistance, as well as a 
program for Cyprus. 



Spain 

Spain has been an important strategic 
partner since 1953. Now, with its entry 
into NATO last May and its democracy 
firmly in place following elections and a 
peaceful change of government last fall, 
Spain has become an important demo- 
cratic ally as well. The basis for our 
security cooperation has thus broadened, 
modernization of Spanish military forces 
to NATO standards has gained new im- 
portance, and our security assistance 
relationship has become more vital than 
ever. 

In this context, the United States 
and Spain signed a successor agreement 
to the 1976 treaty of friendship and 
cooperation on July 2, 1982. The new 
Spanish Government, after negotiating a 
supplementary protocol which clarifies 
the relationship between the agreement 
and NATO, has proceeded with the rati- 
fication process which is expected to be 
completed in late April or early May. It 
has, however, "frozen" further military 
integration into NATO pending an 
overall review of its security policy. The 
new agreement provides for U.S. "best 
efforts" in security assistance and en- 
sures continued U.S. use of important 
Spanish military facilities. 

U.S. security assistance is, thus, an 
integral part of this important security 
relationship. It is vital to the credibility 
of our "best efforts" pledge and to our 
reliability as an ally, and it is vital to 
Spanish efforts to bring their force to 



NATO standards. And, apart from 
securing U.S. direct military benefr 
Spain, U.S. security assistance willl 
broader security interests, encoura.; 
Spain to see the greater benefits oJ 
cooperation in a NATO context, an 
signal our continuing support for S 
still young democracy. 

The proposed FY 1984 securitj 
sistance program for Spain consist: 
$400 million of foreign military sale 
(FMS) financing, $3 million of'intei 
tional military education and traini 
(IMET), and $12 million of econom 
support fund (ESF) assistance. 

The FMS financing request wil 
Spain to purchase advanced fightej 
craft, an air defense missile systen 
helicopters, harpoon missiles, torpt' 
improvement kits, and ground sup] 
weapons (tracked-landing vehicles 
tanks). 

The FY 1984 IMET will suppo 
armed forces modernization by inc 
ing the overall professionalism of t 
Spanish Armed Forces. It will also 
vide specific training courses (pilot 
training missile systems, maintena 
logistics, administration) to help er 
the most efficient use of FMS-sup{ 
resources. 

The FY 1984 ESF request willi 
the educational, cultural, and scieni 
programs administered by the Dep 
ment of State and the U.S. Inform 
Agency. These programs enhance ■ 
nonmilitary aspects of our relation: 
with Spain and are important in 
developing a broad range of ties ap 
propriate for two friends and allies 

Portugal 

Portugal is a close, reliable, and 
strategically important ally. It ha 
sistently stood by us, taking a foEi 
stand on such international issue 
Poland and Afghanistan, an intec 
and helpful stance on problems i 
Middle East, and it is a valued i" 
terlocutor regarding developmen 
southern Africa. Furthermore, ' 
facilities it makes available for o^ 
as part of our security cooperati^ 
tionship are critical to NATO : 
and reinforcement and to possible 
tingencies in other parts of the 

We are currently engaged in nel 
tiations regarding that relationships- 
While the negotiations are in abeya* 
at the moment pending the electio;.''' 
new government in Portugal, we ar 
confident that it will be possible to • 
rive at a new and mutually satisfac 1 
agreement in the course of this yea' 



Department of State Bui" 



EUROPE 



is clearly in our own interests to 
Not only are the facilities to 
we have access vital, but our 
;y cooperation relationship is close- 
to the process through which Por- 
ieeks to expand its own direct and 
contribution to Western defense 

rtugal is a charter member of 
and takes seriously its alliance 
sibilities. It wants to play a more 
role in NATO, and we welcome 
sire. At the same time, the Por- 
e economy has been very hard-hit 
international recession, and Por- 
leeds help from its friends if it is 
ble to carry out the military 
lization required for it to meet 
force goals and expand its own 
Dation and contribution to the 
n defense. 

s clearly in our own interests to 
ige this effort, and we and other 
.partners are engaged in a con- 
leffort to do so. 

multilateral program, to which 
1 security assistance is partially 
1, focuses on the construction of 
■w antisubmarine warfare 
, which would enable Portugal to 
an important role in antisub- 
warfare protection of the central 

Other anticipated purposes of 
stance include a second squadron 
lircraft, a few more C-130s for 
of a NATO-dedicated airlift 
and P-3 aircraft to contribute 
jbmarine warfare effort, 
training is a further and in- 
art of the effort to enable Por- 
contribute more actively and ef- 
to the defense of the West, 
nomic support funds are also im- 
■ Portugal is the poorest country 
;rn Europe, and the Azores 
where most of these funds 
), have a per capita income one- 
it of the country as a whole, 
nds are an important expression 
ipport for Portuguese democ- 
of our friendship for the Por- 
people. The remaining portion 

i' funds would be aimed at 
a Luso-American Foundation to 
te private efforts at economic 
lical cooperation following the 
an of our program in Portugal. 

Mediterranean 

ow turn to the Administration's 
issistance proposals for Greece, 
ind Cyprus for FY 1984 and to 

9f.S. relations with the countries 

ejtern Mediterranean. 



Several political areas of key impor- 
tance to U.S. interest come together in 
the eastern Mediterranean— Western 
Europe, the Balkans, the Soviet Union, 
and the Middle East-Southwest Asia. 
The area continues to be of great 
strategic significance. For example, 
Greece and Turkey face the Warsaw 
Pact in the Balkans and Black Sea 
Straits area, and Turkey has an impor- 
tant role in the Caucasus where it abuts 
directly potential Soviet lines of advance 
to the gulf. A strong and effective 
NATO southern flank is essential to pro- 
tect our interests and those of our allies. 
Unfortunately, the effectiveness of this 
flank has been weakened in recent years 
to the point where it is a matter of 
grave concern to our allies and to the 
United States. 

Several fundamental aims guide 
U.S. policy in this region. It is essential 
that we strengthen our bilateral rela- 
tions with two firm and longstanding 
friends and allies— Greece and Turkey. 
Furtherm.ore, it is vital to strengthen 
NATO's southern flank, thus advancing 
Western security interests in the eastern 
Mediterranean and beyond. 

At the same time, the President and 
all of us in the Administration remain 
fully committed to help in the search for 
a solution in Cyprus that will enable the 
two Cypriot communities to live peace- 
fully together as one country. I want to 
emphasize that each of these goals is im- 
portant, and full effort and attention 
must be paid to them if we are to suc- 
ceed. What I want to do today is to out- 
line the Administration's program for 
assistance which we believe will help 
meet our goals and contribute to resolv- 
ing some of the outstanding problems in 
this critical region. 

Greece. Security assistance for 
Greece demonstrates continuing Ameri- 
can support for a traditional close 
friend. It is an integral part of our com- 
mitment to a strong, mutually beneficial 
bilateral relationship. As the Congress is 
aware, we are currently negotiating 
with the Greek Government a new 
defense and economic cooperation agree- 
ment to modernize and define our 
security relationship with Greece, in- 
cluding the status of the U.S. facilities 
there. In view of these on-going discus- 
sions, we felt it would not be prudent to 
propose an increase in the level of assist- 
ance until our overall security relation- 
ship with Greece had been determined. 
However, we have informed the Greek 
Government that, in the context of an 
agreement, the United States will seek 



increased levels of defense support 
above the level currently proposed. 

U.S. assistance is also intended to 
assist recipients to carry out NATO 
defense missions. Greece, in recent 
years, has made substantial progress in 
modernizing its military equipment, us- 
ing significant U.S. assistance as well as 
its own resources. However, further 
U.S. assistance is needed to continue the 
process. I would note that Greece's im- 
portance is reflected in the Administra- 
tion's proposal which makes it the sixth 
largest recipient in our FY 1984 pro- 
gram, aside from any increase which 
may be requested in the context of the 
current negotiations. 

Turkey. Our assistance program for 
Turkey has significant changes. Eco- 
nomic assistance drops from the high 
level of recent years, reflecting con- 
tinued strong recovery of the Turkish 
economy. Military assistance, on the 
other hand, increases substantially, 
reflecting our strong conviction that 
prompt measures to modernize the 
Turkish Armed Forces can be delayed 
no longer. In addition to its borders with 
the U.S.S.R. and Bulgaria, Turkey faces 
Iran, Iraq, and Syria, the first two pres- 
ently engaged in a shooting war and the 
third closely tied to the U.S.S.R. The 
age of their major equipment lines 
makes it difficult for the Turkish Armed 
Forces to fulfill NATO responsibilities, 
much less adequately defend their other 
borders and make a contribution to 
stability and security in that region. 

Turkey's military government has 
been in power 2V2 years and has re- 
stored law and order, curbed political 
violence, bolstered public confidence, 
and continued an impressive economic 
recovery program. While the effort to 
eliminate the terrorism which wracked 
Turkey before September 1980 in- 
evitably produced limitations on political 
freedoms and some abuses of human 
rights, we think the military govern- 
ment, by and large, has observed the 
rule of law. Equally important, it has 
adhered to its timetable for returning 
power to civilian authority, a process 
which will culminate this fall with parlia- 
mentary elections and installation of a 
representative democratic government 
established under the recently approved 
Constitution which was overwhelmingly 
endorsed by more than 90% of Turkey's 
voters. 

The significant reduction in eco- 
nomic support funds reflects the 
substantial progress Turkey has made 
under its stringent economic stabiliza- 



EUROPE 



tion program. While Turkey still faces 
long-term economic problems, its strong 
performance over the past 2 years 
should enable it to begin to return to 
private capital markets, thus reducmg 
dependence on the need for balance-of- 
payments support from other govern- 
ments. 

Cyprus. Concerning Cyprus, this 
Administration has from its very first 
days placed a high priority on the 
achievement of a just settlement. We 
are committed to that goal, for as long 
as Cyprus is divided and its status 
uncertain, it constitutes a humanitarian 
issue and it also remains a serious bar- 
rier to good relations between Greece 
and Turkey. 

In support of our commitment to 
achieving a Cyprus settlement, the Ad- 
ministration has made extensive efforts 
to encourage realistic and meaningful 
negotiations between the parties which 
are being conducted under the auspices 
of the U.N. Secretary General. The 
Secretary of State has appointed a 
special Cyprus coordinator who is re- 
sponsible for orchestrating our activities 
with the parties in support of the U.N. 
talks. Unfortunately, despite these ef- 
forts, the talks have so far produced no 
dramatic breakthrough. However, there 
has been progress in narrowing the 
difference, and we are hopeful that fur- 
ther gains can be made in the months 
ahead. 

Authorization Requests. For 
Greece, we would continue the level of 
FMS funds at last year's level— that is, 
$280 million— for the purchase of equip- 
ment, spare parts, and ammunition and 
also propose $1.7 million in IMET to im- 
prove managerial and technical exper- 
tise. Again, it is important to note that 
in the context of a new base agreement, 
we are prepared to return to the Con- 
gress to ask for additional assistance for 
Greece. 

For Turkey, our request is for $755 
million in military assistance ($230 
million in MAP and $525 million in FMS 
guarantees), $175 million in ESF, and 
$4 million in IMET. Turkey's Armed 
Forces are the second largest in NATO 
and consume over 17% of the govern- 
ment budget. But because Turkey does 
not enjoy the wealth and industrial 
capability of most other NATO coun- 
tries, we and other allies must help fill 
the gap. Some of our assistance will con- 
tinue to provide maintenance and sup- 
port of equipment for which spare parts 
are no longer in the U.S. military inven- 
tory and to replace that equipment with 



newer but still outdated equipment. 
Some will be used for procurement of 
new equipment for naval modernization 
and for a first tranche of modern fight 
aircraft for future delivery. While our 
request falls short of meeting all of 
Turkey's urgent military equipment 
needs, it will begin the task of helping 
Turkey meet NATO commitments con- 
tributing directly to our own defense. 

For Cyprus, we propose $3 million 
in ESF grant authority to be applied to 
the existing university scholarship pro- 
gram. The program is presently fully 
funded to bring 150 Cypriots from both 
communities to the United States for 
their studies. There are no universities 
in Cyprus, and our program, therefore, 
provides an opportunity, and often an 
alternative to study in the Eastern bloc, 
for young Cypriots. 

The provision of security assistance 
to Greece and Turkey is consistent with 
our policy of encouraging these two 
countries to find a peaceful resolution of 
their differences, and with U.S. support 
for efforts to solve the Cyprus problem. 



•The completed transcript of the hearings 
will be published by the committee and will 
be available from the Superintendent of 
Documents, U.S. Government Prmtmg Of- 
fice, Washington, D.C. 20402. ■ 



Northern Ireland 



PRESIDENTS STATEMENT, 
MAR. 17, 1983' 

For those of us whose ancestors come 
from Ireland and for those of us who 
share the spirit of Irish humor, hard 
work, and spiritual faith, St. Patrick's 
Day is a time of grateful celebration and 
much happiness. 

Today is a time to honor and cele- 
brate the enormous contribution to 
American life made by Irish immigrants. 
As frontiersmen in the American Col- 
onies and citizen soldiers in Washing- 
ton's army, they helped found our 
republic. Their 'ingenuity and effort built 
our economy, added to our spiritual 
values, and enriched our literature. 
Their humor enriches life's happy 
moments and makes life's setbacks more 
bearable. 

And yet our joy is tempered by the 
tragedy that divides neighbor from 
neighbor in Northern Ireland. We deeply 
regret that some would use this day to 
enlist support for more violence and con- 



flict on that small island which 
much in our hearts today. Wr 
main indifferent to the tragfo 
fronts the people of Northern i 
and which affects the Republu 
Ireland, Britain, and their fru i 
United States. Those who aii\^ 
engage in violence and ternu-: 
find no welcome in the Unitf i 
We condemn all such act- 
pose the forces of discord in '■ 
Ireland, which obstruct the |h 
reconciliation so essential for \ 
ask all Americans to refrain fr 
porting, with financial or other ai 
organizations involved directly or 
directly in perpetuating violence, 
we urge that those Americans— : 
there are many— who wish to he 
their support and contributions t< 
mate groups and organizations w 
work to promote reconciliation ai 
nomic cooperation. 

The U.S. Government contini 
take specific actions to hasten an 
this violence and discord by: 

• Discouraging Americans fr 
tributing to organizations engage 
violence; 

• Arresting and prosecuting 
engaged in the illegal export of a 
those groups; and 

• Confiscating weapons intei 
terrorists. 

Next to peace and reconcili_ 
Northern Ireland's greatest need 
jobs to bring hope and opportuni 
its people, especially the young. 
American companies which have 
vested in Northern Ireland alrea' 
employ a significant percentage i 
dustrial work force, making a re; 
tribution to its well-being. This A 
ministration will continue to enc( 
private investment in and the en 
more job opportunities in both N 
Ireland and the Republic. 

We recognize that it is not fc 
United States to chart a course f 
people of Northern Ireland, but \ 
have an obligation to urge our lo 
friends in that part of the world • 
reconciliation between the two tr 
in Northern Ireland and accomm 
through democratic means. Dura 
equitable solutions and peace car 
imposed by outsiders, however w 
meaning. Our role, accordingly, i 
support efforts by the people anc 
governments directly involved. 



Department of State 



REIGN AID 



o, on St. Patrick's Day 1983, let us 
lebrate our Irish heritage in fine 
But let us also remember those in 
lern Ireland for which 1983 is one 
year of terrorism and dim eco- 
: prospects— and let us rededicate 



ourselves to helping to bring these twin 
evils to an end. 



'Text from Weekly Compilation of 
Presidential Documents of Mar. 21. li)83. 



1984 Request for Economic 
sistance Programs 



. Peter McPherson 

tateinent before the House Budget 
littee Task Force on International 

iceainl Trad,: nn March J. IHSS. 
IrPhrrsn,, is A,l n, , inst n,l,T nl the 
■!ltnrlntrr„at,.,nallh',;'l,,pnient 
ami Arfing Director of the Inter- 
'lal III rclopment Cooperation 
■II I II n- A) A 

.n honor to be here today to 
;s our foreign assistance proposals 
e coming fiscal year and the rela- 
ip of our aid program to the 
itic economy. The foreign assist- 
mdget which we have submitted to 
)ngress is the product of intensive 
'3 to integrate our various pro- 
of international seciu-ity and 
'pment assistance, food assistance, 
ir contributions to the multilateral 
ial institutions. 
ider Secretary [for Security 
ance. Science, and Technology] 
ider will address the security 
mce portion of our request, and I 
3CUSS the development and eco- 
assistance programs. The latter 
; development assistance, the eco- 
support fund (ESF), the PL 480 
'or Peace program, and the multi- 
assistance programs, including 
;ernational Fund for Agricultural 
pment (IFAD), the multilateral 
pment banks (with the Treasury 
;ment having a primary respon- 
), and international organizations 
ograms (with the Department of 
Bureau of International 
zations taking the lead here), 
ese foreign assistance programs 
s different but related aspects of 
•eign policy objectives and the 
rf the developing countries. The 
)ment assistance program helps 
it nations address their funda- 
, long-term constraints to devel- 
t. The ESF is a flexible program 
issists with both short-term eco- 



nomic crises— such as balance-of- 
payments problems— and longer term 
development needs in countries of stra- 
tegic importance to the United States. 
The PL 480 program helps enhance food 
security and reduce malnutrition and 
serves to augment local production. Our 
various military assistance programs 
help our allies and friends acquire and 
maintain the capability for self-defense. 
And our contributions to multilateral 
organizations help leverage contributions 
from other donors and guide the efforts 
of these organizations to support ac- 
tivities which complement our own bi- 
lateral efforts. 

The Administration has sought to in- 
tegrate the activities of each of these 
foreign assistance programs in such a 
way that allocations to each recipient 
are fully complementary and take full 
account of both priority foreign policy 
objectives and the economic and security 
needs of the developing countries. 



THIRD WORLD 
ECONOMIC SITUATION 

We meet at a time when nations around 
the globe are beset by serious economic 
problems. Particularly hard hit have 
been the nations of the Third World. 
Developing countries as a group have 
faced severe difficulties in recent years 
as a result of the world's deep economic 
recession. Most developing countries 
have suffered significant reductions in 
their rate of growth. The average 
growth rate of the non-oil-developing 
countries dropped from 5.3% in 1978 to 
about 1.5% last year. Coupled with con- 
tinued rapid population increases, more 
than half of the lowest income countries 
had lower per capita real GDP in 1982 
than 10 years ago. 

During the last 3 years, non-oil- 
developing countries have experienced 
record current account deficits— totaling 
.$97 billion last year. These deficits can 



be traced to several factors: the recent 
doubling of oil prices and sharp rise in 
interest rates, the decline in world trade 
as a result of the economic slowdown in 
the industrial countries, and the deterio- 
rating terms of trade in the developing 
countries, particularly for those which 
export primary products. As a result, 
they have experienced a sharp contrac- 
tion in export earnings, and their 
foreign exchange receipts have been in- 
creasingly diverted from investment pur- 
poses to financing immediate import re- 
quirements, such as food and oil, and to 
short-term debt servicing. 

With respect to the debt picture, it 
has been estimated that the average 
ratio of debt-service payments to ex- 
ports in the developing countries rose by 
50% or more over the last 6 years. Ac- 
cording to the International Monetary 
Fund (IMF), total outstanding external 
debt of non-oil-developing countries in- 
creased from $375 billion in 1980 to 
$505 billion in 1982. In 1981, 13 coun- 
tries had to undergo debt rescheduling, 
and the situation worsened in 1982, as a 
number of major middle-income coun- 
tries in Latin America and Eastern 
Europe began to have difficulties serv- 
icing their commercial debt. In response 
commercial lenders tightened up their 
risk exposure in many developing coun- 
tries. 

This combination of trade and debt 
pressure is particularly serious for 
stability and longer run economic prog- 
ress in the low income countries— coun- 
tries important to the interests of the 
United States and our economy. With 
the beginnings of economic recovery, 
suggested by recent reductions in in- 
terest rates and the possibility of declin- 
ing oil prices, the economic picture for 
the developing nations may begin to im- 
prove. Our, foreign assistance pi-ogram 
can play an important role in their eco- 
nomic recovery just as our supporting 
their economic development is important 
to the economic, humanitarian, political, 
and security interests of the United 
States. 



U.S. INTERESTS IN THE 
THIRD WORLD 

These economic problems in the Third 
World have a very direct impact on the 
domestic economy of the United States. 
In terms of our economic interests, it 
has become a well-recognized fact that 
our interdependence with the Third 
World has increased markedly in recent 
years. Trade with developing countries 



183 



FOREIGN AID 



has become an important part of the 
U.S. economy. In short, every State in 
the Union is involved in exporting to 
developing countries. 

Let me cite some numbers. In 1981 
our exports came to about $230 billion, 
of which exports to the developing 
world, including the oil exporters, 
totaled over $99 billion— nearly 43% of 
the total. Just 10 short years ago, these 
countries absorbed only $15 billion, or 
30%, of our total trade in that year. 

In recent years, the oil-importing 
developing countries have represented 
the fastest growing market for U.S. 
products— our exports to these coun- 
tries have been increasing at an average 
of 25% a year. The growth of U.S. ex- 
ports has been particularly dynamic in 
those countries which have achieved 
rapid economic growth and have pur- 
sued policies which promote economic 
efficiency and development, including 
outward-looking trade policies, such as 
Kenya and Brazil. 

U.S. exports of manufactures have 
shown particularly strong growth. More 
than 80% of the manufacturing jobs 
created in the late 1970s were linked to 
exports and fully one-eighth of all U.S. 
jobs in manufacturing are now export 
related. 

Exports of agricultural products are 
also very important. Total U.S. agricul- 
tural exports reached $43 billion in 1981 
compared with less than $18 billion in 
1973. It is estimated that the harvest of 
one out of every four farm acres in the 
United States is now shipped to the 
developing countries. Overall, exports to 
the developing countries have come to 
account for 20-25% of U.S. gross farm 
income. 

Foreign aid programs have expand- 
ed the capacity of developing countries 
to be customers for such U.S. exports. 
When the developing countries' econo- 
mies grow, they tend to buy more U.S. 
exports. Conversely a slackening of the 
developing world's capacity to buy our 
products weakens our production for ex- 
port and thereby our economic situation. 
According to one study, when multiplier 
effects are taken into account, every $1 
billion drop in exports erases some 
60,000-70,000 jobs in this country. 

In addition to generating income for 
workers directly involved in producing 
export goods, many more U.S. jobs are 
provided indirectly by associated exports 
of services, such as grain elevators, 
transportation, insurance, banking, 
management, technical assistance, and 
other service areas. Exports of services 
have been a major positive element in 



the U.S. balance of payments. As the 
developing countries have improved 
their economic performance, their 
capacity to buy our goods and services 
has increased— and substantially so. 

Besides providing a market for U.S. 
goods and services, the developing coun- 
tries are a source of important, some- 
times crucial, imports. Over 44% of our 
imports currently are raw materials 
essential to the functioning of our 
economy, a large proportion of which 
come from Third World nations. In par- 
ticular, developing countries provide 
75% of the total amount of tin, bauxite, 
zinc, and cobalt we require. Further- 
more, imports of other goods stimulates 
cost-cutting technological change which 
increases our economic efficiency and 
helps to reduce inflationary pressures. 
Not only are the developing coun- 
tries becoming more important as 
trading partners, they have become ma- 
jor recipients of U.S. private capital 
flows as well. U.S. private bank lending 
to the non-OPEC [Organization of Petro- 
leum Exporting Countries] developing 
countries has increased significantly, 
both in absolute amount and as a pro- 
portion of their total foreign loans. 
Whereas in 1970, only 8% of U.S. inter- 
national lending went to these countries, 
by 1980 they were absorbing fully 47% 
of the total. And these external capital 
flows, by helping foster economic de- 
velopment, have facilitated the entry of 
these countries into the international 
commercial capital market to fulfill their 
capital needs. 

In addition to the long-term con- 
tribution which our assistance programs 
make to the U.S. economy and trade 
through the promotion of development, 
the U.S. foreign assistance program 
directly promotes U.S. exports of goods 
and services. Of total spending for 
foreign assistance, about 70% is spent in 
this country on purchases of U.S. goods 
and services, including agricultural com- 
modities procured through the PL 480 
Food for Peace program. Also, require- 
ments for replacement parts for aid- 
funded equipment and follow-on or com- 
plementary activities increase the poten- 
tial for future demands for U.S. prod- 
ucts. Technical assistance in the 
preparation and design of activities can 
further increase the potential of U.S. 
sales. Finally, aid activities can increase 
the general familiarity of developing 
country officials, contractors, and bene- 
ficiaries with U.S. products and com- 
panies. 

Our contributions to the multilateral 
development institutions also have a 



positive impact on the U.S. eeonon 
Total procurement of U.S. goods a 
services deriving from their operat 
exceeds the amount of budgetary ( 
lays for our contributions to them. 

Besides these economic benefit 
development assistance addresses 
traditional humanitarian concerns 
American people by promoting Ion 
term, self-sustaining, equitable de\ 
ment which increases the developl 
countries' capacity to address the ! 
human needs of the poor majority 
their countries. Through our progi 
we contribute to the fight against 
hunger and disease throughout th( 
world. We also help to raise the st 
ard of living for a broad range of 
world's population. The PL 480 pr 
gram, for example, provides assisi 
to meet critical food needs, comba 
hunger and malnutrition, and incr 
resources for development. Our di 
assistance provides relief to help ( 
with natural and man-made catas- 
trophes, including refugee probler 
Also, foreign assistance promotes 
development in which traditional . 
can concern with individual civil a 
nomic rights is respected and enh. 

In terms of U.S. political and 
ty concerns, recent events in the 1 
East, the Horn of Africa, Afghan: 
Central America, and the Caribbe 
have clearly demonstrated that co 
problems, and instability involving 
developing countries have a very i 
effect on our political and security 
terests. Often the policies and act: 
an individual developing country c 
group of developing countries can 
significant impact on key regional 
global disputes and issues of impO' 
to the United States. 

Widespread poverty, economic 
and severe economic dislocation ci 
create an environment that is sus( 
ble to violence, political instability 
the possible intrusion of those win 
to exploit instability to their own i 
tage. However, when people have 
reasonable hope that living conditi 
will improve over time and actions 
being taken to address the most p 
ing economic problems, they have 
greater stake in the achievement i 
stability and peace. Our efforts in 
port of economic progress constiti 
key element in helping to maintaii 
stability in countries and regions i 
tant to' U.S. interests. They also C 
tribute to furthering peaceful chai 
and the development of open, deff 
cratic institutions in friendly coun 



48 



Department of State B< 



FOREIGN AID 



>RY OF U.S. FOREIGN 
TANCE 

;he current economic situation 
3 importance of foreign assistance 
country, it is worth spending a 
nutes retracing the various 
through which the U.S. develop- 
ssistance policy has moved since 
ption. 

3 present day foreign aid program 
)ed, of course, out of our initial 
ful experience with assisting 

lan and Japanese reconstruction 
ig World War II. Our subsequent 
during the 1950s and 1960s, in 
ting to replicate that success in 
Ay emerging nations of the Third 
focused on growth of the capital 
1 the form of infrastructure and 
ial development, combined with 
ements in human capital through 
Dn and training. With this em- 
little attention was paid to the 
nt role of agriculture in the 
ment process or to the employ- 
iiplications of capital-intensive in- 
ization, or even to the impor- 
■ trade as a means of securing 
based on each country's com- 
advantage in production, 
ard the mid-1960s it became in- 
ly clear, though, that population 
!S were eroding a large pro- 
of the gains in income which had 
lieved by many countries, 
more, grave doubts arose with 
to the distribution of these in- 
ins. Equity considerations came 
:ognized as important factors in 
dopment process. It became evi- 
t the political, social, and 
c structure which had evolved in 
3S developed countries had pro- 
tie improvement in economic 
ig for the poor of these coun- 
help correct this situation, a 
cern with the effect of our 
;e on the poor majority emerged 
ago, in the form of the current 
ctions legislation, 
lonse to this mandate has taken 
orms. Development projects 
be designed to encourage local 
tion. Involvement and commit- 
key population groups to shap- 
own future came to be seen as 
to broad-based and self- 
g development. The new atten- 
irticipatory development also 
ed a basic shift in emphasis 
iistrialization to agriculture as a 
focus, since the bulk of the 
n in the developing countries 
ural areas. A further response 

4 increased attention to allo- 



cating assistance directly to specific sec- 
tors and groups. As a result, we are 
now structuring the aid program so that 
we are focusing our efforts on those 
areas in which the United States has 
particular expertise— institutional and 
human resource development, appro- 
priate technology transfer, and mobili- 
zation of private sector resourcefulness 
in support of national development 
goals. I will go into this in more detail 
later. 

In addition to this evolution in our 
own program, over time the United 
States has been highly successful in 
achieving increased sharing of the 
foreign assistance burden by other coun- 
tries and institutions. Worldwide official 
development assistance grew by over 
40% between 1970 and 1981. As other 
donors have been involved in the 
development effort, the U.S. share of of- 
ficial bilateral development assistance 
flows— excluding contributions from 
East European countries— has dropped. 
In 1960 we provided 60% of official 
development assistance, by 1981 our 
share was down to 17%. Also in just the 
last decade, assistance from multilateral 
institutions almost tripled in real terms. 
And the OPEC countries, led by Saudi 
Arabia, have increased their share of of- 
ficial assistance to other developing 
countries from 5% in 1970 to 22% in 
1981. 

Also, as Third World nations have 
developed, they have become increasing- 
ly able to generate their own resources 
for development. As a result, between 
1960 and 1980, we have seen the pro- 
portion of official development 
assistance from the OECD [Organization 
for Economic Cooperation and Develop- 
ment] countries decline relative to the 
developing countries' gross investment 
expenditures — excluding capital-surplus 
countries — from 10% to 5% and the 
U.S. share has decreased corresponding- 
ly from about 6% to just over 1 %. 

Foreign economic assistance is a 
very small— and shrinking — part of the 
total Federal budget. The combined con- 
tributions to AID, the ESF, Food for 
Peace, UN programs, and the multi- 
lateral development banks represented 
only le out of every Federal budget 
dollar and less than 0.3% of our GNP. 
By comparison, during the 1950s, 
economic assistance represented an 
average 3« out of every Federal budget 
dollar and over 0.6% of the GNP. 



RESULTS OF THE FOREIGN 
ASSISTANCE PROGRAM 

What has this foreign assistance invest- 
ment brought the developing countries? 
While they currently face serious finan- 
cial problems, from a longer term 
perspective there has been dramatic im- 
provement in many aspects of their 
economic and human condition. 
Although progress in many cases may 
not have been as rapid as we might 
wish, there is no denying that advances 
have occurred in the standard of living 
of much of the world's population. 
Throughout much of the developing 
world, population growth rates have 
leveled off. Average life expectancy has 
increased as advances in health care 
have become more widespread and 
nutrition has improved. Mortality rates 
of children under 5 years of age have 
been more than cut in half since 1960. 
And average school enrollment and 
adult literacy rates registered important 
increases for most countries. 

Technological advances in agri- 
culture, including the development of 
high-yielding crops, and increased 
availability of energy— at least until the 
early 1970s— set the stage for relatively 
rapid growth for the developing coun- 
tries during the 1960s and early 1970s. 
Overall rates of growth for non-oil coun- 
tries averaged more than 5% annually, 
with middle income countries showing 
even better performance. 

As a result of these improvements, 
we now have a situation where some of 
the countries which we have assisted 
over the years are able to compete in 
their own right on the world market; 
Korea and Brazil are two such exam- 
ples. And we see the emergence of mid- 
dle income countries, which by all 
economic and social indices are no 
longer underdeveloped. 

By and large, the countries which 
have shown the most rapid advances are 
those which have used their resources 
wisely and have promoted their develop- 
ment through appropriate and consis- 
tent, generally outward-oriented, eco- 
nomic policies. The so-called newly in- 
dustrializing countries have living stand- 
ards and levels of development com- 
parable to what some OECD countries 
had a short time ago, although pockets 
of severe poverty still persist in some. 
Their needs for concessional assistance 
are minimal. 

The low income countries are those 
which suffer from the worst human, 
social, and economic manifestations of 
underdevelopment, and there exist wide 
differences in the basic human needs 



49 



FOREIGN AID 



situation of individual countries. Most of 
the countries of Africa and the Indian 
Subcontinent fall in this low income 
category. These countries have inade- 
quate human, physical, and institutional 
infrastructures and are often highly 
vulnerable to the vagaries of climate and 
international markets. These problems 
have frequently been compounded by 
economic policies which created distor- 
tions and reduced growth. It is this lat- 
ter group of countries at which our cur- 
rent development efforts are principally 
aimed. 



CURRENT DEVELOPMENT 
PICTURE 

A basic lesson learned from our ex- 
perience with economic assistance over 
the past decades is that development is 
truly a long-term process. The task of 
improving conditions for the millions of 
people living in absolute poverty in the 
developing countries is tremendous, and 
achieving desirable changes takes time. 
In spite of the advances which have been 
made, there still are serious develop- 
ment problems in many countries. 
Though food production in the develop- 
ing countries as a whole has risen, on a 
per capita basis it has just barely stayed 
ahead of expanding population and in 
the low income countries has declined 
during the last decade. Population 
growth, though leveling off, is still high. 
At the present 2.1% annual rate of in- 
crease, the population of the developing 
world will double in 33 years. Despite 
recent health improvements, in much of 
the Third World life expectancy still 
does not exceed 50 years, one-third of 
infants die before the age of 5, and hun- 
dreds of millions of adults suffer from 
chronic, debilitating illness. Despite past 
gains in literacy, more than half of the 
adults in the developing world remain 
illiterate. Besides lack of capital, ability 
to address these problems is hindered by 
such constraints as lack of infrastruc- 
ture, including poor transport and com- 
munications, inadequate management 
and institutional capacity to plan and 
direct sound development programs, 
lack of a skilled workforce and of the 
means to acquire and adapt technology, 
and policies which inhibit the most effi- 
cient use of available resources. 

Given the severity of these prob- 
lems, presently compounded by the ef- 
fects of the worldwide recession, it is, 
therefore, imperative that the interna- 
tional community provide the help which 
will permit these countries to continue 
to address their fundamental long-term 



economic problems and lay the basis for 
more dynamic long-term growth. With- 
out such assistance, there is danger that 
countries will be forced to make drastic 
cuts in their long-term development pro- 
grams as they endeavor to undertake 
the structural adjustments in their 
economies necessary to reestablish a 
sustainable economic position. Such a 
curtailment of the development effort 
could have serious negative long-term 
consequences neither the developing 
countries nor we can afford. 



FUTURE OF THE FOREIGN 
ASSISTANCE PROGRAM 

What role should our foreign assistance 
program play in the recovery effort, 
both in the near term and beyond? In 
looking to the future, it is instructive to 
consider the lessons of the past. I 
believe there are some fundamental 
tenets which can guide us in shaping the 
future of our foreign assistance program 
to be derived from history. 

As noted earlier, the situation in the 
developing countries has evolved con- 
siderably over the last two decades. 
Changes in the development situation 
and in the role of foreign aid as a 
catalyst to the development process 
have been paralleled by an evolution in 
our thinking with respect to three key 
questions. First, what is development? 
Second, how is it best achieved? Third, 
how can AID best contribute to the 
development process? 

At the cornerstone of our response 
to these questions, is our continued com- 
mitment to a basic needs approach to 
development. This orientation is more 
widely shared in the international com- 
munity today than it was a decade ago 
when Congress initiated the new direc- 
tions legislation. However, even if ac- 
cepted in principle, the political will to 
translate commitment into policies, in- 
vestments, and budgets is often lacking. 

We hold the dignity of the in- 
dividual, with maximum freedom of 
choice and freedom of action, to be im- 
portant goals of the development proc- 
ess. We see the process as the emer- 
gence of systems which provide for the 
sustained satisfaction of the basic needs 
of its people, including their need to par- 
ticipate in a free and open society. If 
there is economic growth, but the basic 
needs of the poor majority remain 
unmet, development has been bypassed 
and the ultimate goal will not be 
achieved. If basic needs are met but 
there is not opportunity for social, 
economic, or spiritual growth, then the 



investment process is still inconipl ;, 
Both social and economic needs— Ui 
human needs and economic better 
ment— are important complement v 
the overall development process. 

Secondly, there are wide liiHV' 
in the extent to which nations at - , 
levels of per capita income have n li 
progress in dealing with the basic i 
lems of hunger, infant mortalit\ , 
disease, and illiteracy. We now ki 
that substantial progress in sati.-r t 
basic needs can be made without ■ 
for aggregate income to double or 
We endorse and seek to promote 
opment patterns which are efficie 
translating overall growth into tb 
widespread satisfaction of basic n 
Finally, we recognize that by 
vesting in people, in their health, 
tion, and capacity to adopt new te 
nologies, we are investing in a ke; 
development resource. Satisfying 
needs is not just an end; it is also 
means to further development. 

Within this commitment, we 1 
identified several tenets which sh 
guide our assistance. 

First is a recognition that teo 
assistance, rather than resource 
transfers, is by and large the bes- 
to foster self-sustaining developn" 
particularly given our overall bud 
constraints. 

Second, our assistance shouk 
focused in those areas where the 
States has recognized expertise- 
as the sharing of our superb tech 
ical capacity in agriculture. 

Third, in identifying technolo 
transfer, and in setting our resea 
priorities, we must carefully cons 
conditions in recipient countries s 
provide scientific and technologic, 
appropriate to their needs and wl 
will lead to the creation of self-su 
taining development institutions. 
Fourth, we need to maintain 
ibility in our program to permit u 
take advantage of promising, inn' 
ways of providing assistance and 
allow us to adapt to changing cor 
in the Third World. 

Fifth, we need to pay much i 
tention than we once did to the c 
importance of host country polici' 
determining the outcome of deve 
efforts, and we must program ou 
resources accordingly. 

Sixth, we need to pay close a 
tion to the planning and managei. 
our program— to ensure the polic 
establish are implemented— so th 
are, in fact, maximizing the imp 
the resources available to us. 



1^ 



Department of State!" 



FOREIGN AID 



tnally, we need to bear in mind 
ur limited resources will not per- 
) to do the job alone and that we 
leed to exercise our leadership to 
ze and help direct the far greater 
•ces available from the private sec- 
i well as from other donors and in- 
ons, on behalf of development, 
liile we cannot ignore the short- 
;rises in which many developing 
•ies currently find themselves, the 
Dal focus of our economic assist- 
vill remain the basic, long-term 
)f development. Certainly the 
Tiental development problems of 
lird World will persist even as 
recovery gets under way. The 
ping countries will continue to re- 
;xternal support as they strive to 
the goal of self-sustaining develop- 
Thus, our assistance must con- 
,0 address the basic, long-term 
ige of development: to foster in- 
us, self-sustaining productivity 
at alleviating poverty and meeting 
3ic human needs of the Third 
s poor. Our assistance will con- 

concentrate in the functional 

n which we have been successful 

1 the past. 

our leadership role, we must help 
climate necessary for sus- 
e, broadly based development to 
ace— in those societies which 
strate a readiness to assume the 
sibility for their own future. Ob- 
, though, it is neither possible nor 
lie for this country to be all things 
eople. The development needs of 
ird World far outweigh the 
;es available from us and our 
donors. Our foreign assistance 
;es are constrained by the same 
lie conditions which have dictated 
it on the overall level of Federal 
ig. As a result, it is essential for 
irefully allocate, and leverage, 
ited foreign assistance resources 
r to make best use of what we 
'ailable. 

3lieve our proposed program does 
it. First, we have come to recog- 
i vital role that host country 
play in the success or failure of 
ment. Government policies, be 
the area of interest rates, ex- 
rates, budget allocation, farm 
<T consumer subsidies, are of 
us importance to the develop- 
"fort. The absence of a sound 
nvironment can undermine the 
3SS of individual projects and 
long-term growth objectives. Ac- 
ly, we are giving particular at- 
to allocating our aid dollars so as 



to encourage recipient countries to 
change those policies which hold back 
developments by inhibiting the operation 
of free markets, discouraging private in- 
vestment, limiting: resource mobilization 
and productivity, inefficiently allocating 
public and private resources, and ex- 
cluding access by the poor to productive 
resources and employment. 

Second, we recognize the absolute 
importance of coordinating our various 
economic assistance programs. Thus, we 
are devoting considerable effort to inte- 
grating both the objectives and the 
allocations of our various aid programs 
through full consultation with the 
Department of State and the other 
foreign assistance agencies. 

We have set definite priorities in our 
budget allocations. For example, we 
have given high priority to countries 
which demonstrate commitment to their 
own development. We have focused our 
efforts on activities in those areas I 
mentioned earlier where the United 
States has a comparative advantage- 
agricultural research, voluntary family 
planning, institutional development, and 
science and technology. Our comparative 
advantage does not rest in large capital 
transfers. Instead, we are now concen- 
trating on activities which address host 
country constraints to self-sustaining 
development such as weak human and 
institutional capacity, and the lack of 
new, appropriate technologies. We are 
allocating our resources to develop 
lasting institutional systems to carry out 
the development process. By developing 
institutions, be they in primary health 
care or agricultural research, we can 
leave in place structures that will have 
ramifications far beyond the individual 
project level. And we have begun to em- 
phasize the development and transfer of 
knowledge and appropriate technologies 
rather than capital. 

We also are paying greater attention 
to efforts to mobilize other resources— 
in the private sector, both from private 
enterprise and from nonprofit organiza- 
tions such as private and voluntary 
organizations and universities, and that 
of other donors, both bilateral and multi- 
lateral — and we strive to ensure our 
assistance complements that of these 
other sources of development resources. 
Also with respect to mobilizing the 
private sector, we seek to emphasize the 
involvement of the indigenous private 
sector as a development resource. Too 
often in the past, there was a tendency 
to rely on government as the only way 
to carry out key development functions 



and thus a tendency to neglect the 
useful role that the private sector can 
play in advancing our efforts. 

These four priorities— policy 
reforms, involvement of the private sec- 
tor, institutional development, and 
transfer of science and technology- 
have become known within the agency 
as the "four pillars" of our development 
effort. It is through these four pillars 
that we can achieve the kind of foreign 
assistance program envisioned by the 
President— one which seeks to foster 
self-sustaining development by using ini- 
tiative and creativity to help people help 
themselves while at the same time 
stimulating international trade and 
aiding the truly needy. It is a program 
which fosters the political atmosphere in 
host countries wherein practical solu- 
tions can be applied to social and 
economic problems. 



PROGRAM STRATEGY 

Our effort to give greater coherence to 
our overall development strategy has 
recently been intensified. While we have 
had a country strategy programming 
system in place for several years to set 
the best strategy for tackling the prob- 
lems in each country, we have concluded 
that we should give greater coherence to 
our efforts and concentrate bilateral 
assistance on a limited set of common 
development problems. As a result, we 
have instituted an agency strategic plan- 
ning process to determine which key 
development problems we should focus 
on, what goals we should pursue with 
respect to each, and how we can best 
use our limited resources to achieve 
results. 

While this new strategy process is 
still in its early stages, we expect it will 
help us to establish specific measures of 
progress and program our resources in a 
comprehensive manner against key prob- 
lems, rather than in an isolated, project- 
by-project manner. And it ought to lead 
us to search for ways of better focusing 
our budget resources so that they can 
serve as encouragement to host coun- 
tries to engage with us in comprehensive 
policy and investment decisions directed 
to meet basic needs. We recognize that 
not all countries share our approach to 
development, nor are many prepared to 
take the difficult budget and policy steps 
required to tackle these problems. Our 
objective, though, is to be in a position 
to encourage this way of thinking about 
development, to mobilize resources in 
the international community, and to pro- 



FOREIGN AID 



vide significant support to those nations 
that are committed to dealing with key 
problems. 

A part of our new concern with 
overall strategy is the effort I cited 
earlier to fully integrate the various 
foreign assistance programs. The in- 
tegration of the foreign assistance 
budget allowed us to consider the total 
level of resources going to each nation, 
rather than allocating each program 
separately as in the past. In setting 
country program levels, we carefully 
considered both the relationship of each 
recipient to U.S. foreign policy priorities 
and the developmental, economic, and 
security needs of the country. This proc- 
ess permitted us to better tailor the pro- 
gram mix to fit both the country's needs 
and our own policy objectives within 
overall program availabilities. 

I think the Sudan is a good example 
of a program where we are combining 
all our resources — development 
assistance, ESF, and PL 480— in sup- 
port of both short-term economic 
stabilization and longer term develop- 
ment goals. Resources are being used to 
complement our efforts. ESF funds will 
provide greatly needed foreign exchange 
to finance such agricultural inputs as 
fertilizer and spare parts, as well as 
capital equipment for the indigenous 
private sector. ESF is used to encourage 
the Sudanese to implement the 
macroeconomic policy reforms estab- 
lished by the IMF which will help the 
country overcome its immediate revenue 
shortfall. Our PL 480 program has been 
successfully conditioned on such critical 
agricultural policy reforms as the 
elimination of subsidies on imported 
food commodities, maintenance of a 
realistic exchange rate, and elimination 
of export duties. The removal of these 
policy constraints is essential to provide 
an immediate incentive to increase 
agricultural production. Our develop- 
ment assistance program is establishing 
a strong institutional base in research 
and extension to increase food produc- 
tion on a sustained long-term basis. The 
local currency generated from the sale 
of PL 480 commodities is helping to 
defray some of the costs required to sup- 
port these institutions that are so 
necessary to improve the small farmer's 
production capacity. 

Bangladesh is another good example 
of a major recipient where we have put 
in place a carefully integrated program. 
Bangladesh is a large but very poor 
country. Its agricultural sector has been 
unable to match population growth, and 
it is plagued by severe landlessness and 



rural unemployment and structural pro- 
grams. The government has made major 
economic policy reforms to encourage in- 
creased food production, rationalize pric- 
ing and use of imported commodities, 
and mobilize domestic resources. Our 
development assistance, integrated with 
PL 480 resources, provides a combina- 
tion of resource transfers to enable the 
government to maximize the effective 
utilization of their development 
resources. 

For example, the combination of 
PL 480 Title III and a fertilizer distribu- 
tion project emphasize the promotion of 
an increased role of the private sector in 
food distribution and fertilizer 
marketing. Past agreements have ad- 
dressed foodgrain price supports, ra- 
tionalization of the public foodgrain 
distribution system, and acquisition and 
management of grain reserves. The cur- 
rent agreement provides greater com- 
modity flexibility and moves in new 
policy directions, including greater 
private sector participation in foodgrain 
management. Local proceeds generated 
provide funding for projects essential to 
the increase in agricultural production. 

We have also supported a major 
roads project which, combined with 
PL 480 Title II Food for Work, is help- 
ing build and maintain a significant por- 
tion of the nation's rural road network. 
Major donor programs are complement- 
ing our own efforts— this year a third of 
the commitment by the World Bank's 
concessional assistance through the In- 
ternational Development Association 
(IDA) is earmarked for the energy and 
power sectors, with major contributions 
in agriculture and program lending. 
Over 60% of the assistance from the 
Asian Development Bank (ADB) is in 
the agriculture sector. Other donor 
assistance, including that of the UN 
Development Program (UNDP) and the 
Food and Agriculture Organization 
(FAO), provides a broad mix of project, 
commodity, and food assistance. 



FY 1984 PROGRAM 

With this background, I would like to 
discuss the main points of our proposals 
for the next fiscal year and mention 
some interesting new activities which we 
will be getting into. 

We are proposing an economic 
assistance program of $7.8 billion. It is 
only 2.2% more than our requirements 
for the current fiscal year, representing 
no increase in real terms. 

In addition to our requests for FY 
1983 security assistance supplemental 



we believe are necessary for hiu'. i 
ty U.S. foreign policy objectives, oi i 
1984 request for bilateral assistant • 
sists of $1.89 billion for develupnu-i 
assistance, $2,949 billion for tlu' K'. 
$22 million for the trade and dt.\. la- 
ment program, and $1,052 billion i 
budget authority for the PL 4Si i I-"' i 
for Peace program. 

Development Assistance 

The development assistance requL';|j 
eludes $1,342 billion for the five fu 
tional accounts, $103 million for th 
Sahel development program, $7.5 
for the support of American schoo 
hospitals abroad, $25 million for tl 
ternational disaster assistance pro; 
and $378.5 million for AID operati 
penses. In addition, an appropriati 
$33.9 million is required for the F( 
Service retirement fund, for which 
authorization is already in place. 

More than three fourths of the 
allocated directly to countries in tl 
functional development assistance 
counts are directed to "low income 
countries— those with a per capitf 
come below $795. Let me discuss 
the proposed program in each of t 
accounts. 

Agriculture, Rural Developir 
and Nutrition. Our agriculture, n 
development, and nutrition progrE 
three principal objectives: (1) to he 
crease and sustain the productivit 
incomes of small farmers, (2) to as 
creation of employment opportuni 
for the rural poor, and (3) to help 
prove access to, and use of, food, 
program stresses the removal of { 
inhibiting broadly based growth; t 
development of private and public 
capacity to foster increased agrici 
production and employment expar 
the development and use of imprc 
agricultural technologies; and the 
provement of human resources, n 
frastructure, and the natural reso 
base in recipient countries. A tota 
$725.2 million is proposed for the 
agriculture account. About 21%) o 
would go to Africa, where popula) 
growth continues to outstrip food 
duction. 

An area of great promise wit! 
account is that of agricultural resi 
As President Reagan said at the ^ 
Affairs Council meeting [in Philad 
on October 15, 1981]: 

Increasing food production in develop 
countries is critically important— for s 
literally it's a matter of life and death, 
also an indispensable basis for overall 



FOREIGN AID 



opnunit. The I'nited States has always 
! food and agriculture an important em- 
s of its economic assistance programs, 
ave provided massive amoimts of food 
•ht starvation, but we have also under- 
I successful agricultural research, 
imed thousands of foreign students for 
iction and training at our finest in- 
es, and helped make discoveries of the 
gelding varieties of the Green Revolu- 
.vailable throughout the world. 

'articularly vital to the establish- 
of self-reliant, sustainable food and 
ultural systems are national institu- 
that give a country the capacity to 
'ate and apply a continuing stream 
lovations designed to increase 
ultural productivity and incomes 

evaluate and adapt technologies 
ferred from developed countries 
iternational institutions. Advances 
id and agricultural science and 
olog>' have not only increased pro- 
nty but have also facilitated the 
itution of less expensive and more 
iant resources for more expensive 
icreasingly scarce resources. 

ID supports this research, often 
ng through the Title XII land- 
institutions, through creation and 
tthening of research institutions. 
•e giving attention to adapting ex- 
research results and to promoting 
e of improved technologies. We 
ving special attention to encourag- 
ikages among researchers, exten- 
jents, and farmers. And we are 
•aging development of systems 
ptimize sustained resource use, in- 
J the capabilities of farmers on 
loldings. 

e have recently undertaken a 
gh review of our agricultural 
ch needs, and I am happy to tell 
several innovative directions we 
undertaking over the next 

1 years. We will be getting into 

;h on farm systems for fragile en- 
lents and for remote areas, which 
ninimum of purchased inputs; 
;h on better crop and animal pro- 
, including integrated pest 
ement; on livestock as part of 
farming systems; on the evalua- 
the impacts of food and 
tural policies on food security, 
m, production incentives, and the 
)or; and on the factors necessary 
Eessful dissemination of research 

Julation. The AID population 
•n addresses the critical problem 
ssive population growth in the 
Vorld, which constitutes the 
r obstacle to increasing per capita 
oduction, reducing malnutrition 



and chronic disease, and conserving 
dwindling nonrenewable resources. 
aid's population program emphasizes 
the provision of voluntary family plan- 
ning services and information, but our 
overall development program recognizes 
the links between family planning and 
progress in the areas of agriculture, 
rural development, health, and education 
programs. 

Our program is based on the prin- 
ciples of voluntarism and informed 
choice. We give preference in our fund- 
ing to programs that provide a wide 
range of choices of methods— excluding 
abortion— and strongly encourage the 
inclusion of information and services 
related to natural family planning 
methods wherever this is appropriate. 

We also believe that the United 
States has the responsibility to help 
strengthen the institutional' capacity of 
developing countries to deliver basic 
services and implement development 
programs themselves, using local in- 
frastructures and the private sector to 
the maximum extent possible. For this 
reason, we are investing heavily in the 
training of service providers and person- 
nel who manage service programs. 

A level of $212.2 million is requested 
for the population program. Well over 
80% of the funds are for voluntary fami- 
ly planning services and related ac- 
tivities in country programs. 

Health. For AID's health account, 
we have proposed a program totaling 
$100.7 million for FY 1984. While this 
represents a decrease from the level in 
the current year, it in no way reflects 
any reduction in our commitment to pro- 
viding assistance in the health area. Real 
improvements in health status are a 
necessary condition for sustained 
economic development. The reduction in 
health funding for FY 1984 is the result 
of several short-term factors unrelated 
to our long-term commitment to this 
area. 

First, as a result of our recently 
completed analysis of health pro- 
grams — which culminated in a new 
health policy paper— our health program 
will give greater emphasis to selective 
primary health care. This new emphasis 
will tend to be less costly, on a project- 
by-project basis, than previous health ac- 
tivities, such as commodities and con- 
struction, and will permit us, in the long 
run, to do more with our available 
resources. 

Second, our FY 1984 requirements 
reflect the fact that we were able to do 
some accelerated programming which 
would otherwise have had to await FY 
1984 funding. 



Third, we anticipated, and indeed 
are seeing, a short hiatus in require- 
ments for health funding while our field 
missions identify and develop projects 
consistent with the new health policy. 

In fact, we are already working to 
develop promising new health programs 
in several areas, including the following. 

• The U.S. development assistance 
program will continue to give great at- 
tention to biomedical research leading 
to the development and application of 
new technologies to alleviate the most 
pressing health problems in the develop- 
ing world. This will include support for 
basic research, such as that done on 
malaria, in which, by the way, a major 
breakthrough was made this past year 
that puts us one step closer to an anti- 
malarial vaccine. And it includes support 
for research aimed at the application of 
new technologies, including rapid 
diagnosis of diseases and field testing of 
new vaccines. 

• Another exciting new area in 
health is that of oral rehydration 
therapy (ORT). Diarrheal disease cur- 
rently kills an estimated 5 million infants 
and young children each year. It is the 
largest single cause of death among 
children in the developing world. Yet 
ORT, a simple home treatment for diar- 
rhea, could save the lives of up to 13,000 
children every day. It can be adminis- 
tered effectively at home by mothers, is 
nothing more than repeatedly feeding a 
dehydrated child a mixture of salt, 
sugar, and water. ORT is the preferred 
therapy in all but the most severe cases 
of diarrhea and dehydration. It has been 
hailed as potentially the most significant 
medical breakthrough of the century. 

We have supported ORT research, 
largely through funding the Interna- 
tional Center for Diarrheal Disease 
Research in Bangladesh, where much of 
the basic research on ORT was con- 
ducted. In FY 1984, we hope to expand 
our support for ORT research to include 
the diarrheal disease research program 
sponsored by the World Health Organi- 
zation (WHO). 

AID also has been instrumental in 
the dissemination of ORT. One AID- 
funded ORT program in Egypt demon- 
strated that widespread use of this 
therapy could reduce deaths among 
children under the age of 6 by 40-50%. 
We plan to include ORT as a critical 
element of our primary health care pro- 
grams. We intend to provide resources 
for dissemination of ORT through 
numerous bilateral health programs and 
through a centrally funded project aimed 
at rapid implementation of selected, ef- 



FOREIGN AID 



fective health measures. We also are 
planning a major international confer- 
ence in June 1983 to call the attention of 
international donors and developing 
country leaders to this important health 
breakthrough. 

I believe that these and other new 
activities in health should lead to addi- 
tional, higher priority health programs 
for future funding. Thus I expect that 
the decrease in FY 1984 requirements 
for the health account will be seen as a 
temporary phenomenon. I am certain 
that it does not in any way reflect a 
weakening of our historically strong sup- 
port for health programs in developing 
countries. 

Of the amount we are requesting, 
about 30% would go to Africa, reflecting 
the continuing need in those countries 
for basic health services, rural water, 
and sanitation programs and immuniza- 
tion campaigns to combat diseases which 
are a major cause of death and disability 
in the region. In Asia and Latin 
America, where health care programs 
are well under way, our focus is on help- 
ing expand access to basic health serv- 
ices. We also plan to give increased at- 
tention to health planning and manage- 
ment, to operations research, and to the 
transfer of proven health technologies. 

Education and Human Resources. 

In the education program, we have pro- 
posed a modest increase for FY 1984. 
The education situation in developing 
countries remains critical despite signifi- 
cant increases in budgetary allocations 
by the developing countries themselves 
and significant gains in school enroll- 
ment over the past several decades. 
More than 30% of school-age children in 
the Third World do not enter primary 
school and less than half of those who 
do will stay long enough to complete 
their primary education. Most countries 
still confront severe shortages of trained 
manpower, particularly those needed to 
administer their own development pro- 
grams effectively. 

The education problems of the Third 
World far exceed our capacity to assist. 
Thus we have given priority to activities 
in selected areas where we have recog- 
nized expertise, such as manpower 
development and training, management 
capacities of educational institutions, im- 
provement and expansion of basic pri- 
mary education, vocational and technical 
training, and support for labor organiza- 
tions. Our FY 1984 request for educa- 
tion is $121. ,5 million. We would allocate 
about 30% to Latin America, principally 
for manpower development activities 
and for continued efforts to help reduce 



high primary school dropout rates. 
Another 30% would go to Africa to help 
reduce the acute shortage of trained ad- 
ministrators which constitutes a major 
obstacle to development. 

I might mention, too, that as a 
promising new part of our overall effort 
to assist the educational needs of 
selected countries, we are exploring ex- 
pansion of the reimbursable program, 
funded by our trust fund account, 
through which we have helped countries 
such as Nigeria gain access to institu- 
tions of higher education in this country 
for advanced training of their citizens. 

Energy, Private Voluntary 
Organizations, and Selected Develop- 
ment Activities. In the Section 106 ac- 
count, we have proposed an increase to 
fund several very high-priority activities 
aimed at a broad range of Third World 
Development problems. These include 
growing demands for energy, mounting 
environment and natural resources prob- 
lems, such as loss of agricultural land 
and water pollution, growing unemploy- 
ment, and problems associated with 
migration to the cities and rapid urban 
growth. Our FY 1984 authorization re- 
quest for Section 106 is $182.4 million, 
which includes $10 million for science 
and technology activities also authorized 
under this account. Planned activities 
place a high priority on mobilizing 
private sector involvement, including 
greater reliance on private and volun- 
tary organizations. Including all develop- 
ment accounts, our funding for private 
and voluntary organizations will exceed 
13% of our development assistance pro- 
gram in FY 1984. In addition PL 480 
Title II voluntary agency programs will 
amount to $650 million. 

We also plan to support increased 
involvement of private enterprises in 
development. As part of that effort, we 
are proposing the creation of a new 
private sector revolving fund through 
which we would provide funds to help 
promote and expand private enterprises, 
particularly small and medium enter- 
prises, develop and transfer of ap- 
propriate technology to private enter- 
prises in developing countries, and 
develop and adapt techniques and finan- 
cial intermediaries that foster private 
enterprise development. We would see 
this fund as a catalyst through which we 
would provide resources for innovative 
activities in pursuit of our basic human 
needs goal not possible under current 
funding arrangements. 

Science and Technology. For the 

$10 million requested for programs of 
scientific and technological cooperation. 



authorized as I indicated under Secti 
106, we plan to continue our emphas 
on small competitive grants to stimu 
innovative research approaches to 
development and to build indigenous 
scientific and technological capacity 
recipient countries. 

Sahel Development Program. I 

the Sahel program, we will be fundii 
the seventh year of U.S. support for 
ongoing multinational effort to assis 
development among these very low 
come, drought-ravaged countries, p£ 
ticularly to help them achieve greats 
food self-sufficiency. Our request foi 
1984 is $103 million, including resur 
tion of a program in Chad. 

I am well aware, in making this 
quest, that there have been a numbt 
questions from the Congress on pro 
lems with financial management in i 
region. We have taken several steps 
address these problems. Our primar 
area of emphasis has been host coui 
accounting practices. Our staff has 
reviewed 182 accounting systems o\ 
the past year. Where deficiencies W' 
encountered, either they have been 
rected or the activities were suspen' 
or terminated. We also have trainee 
large number of host country accou 
ants and managers to maintain accc 
ing systems acceptable to us and to 
prove their management of projects 
And we have taken steps to upgrad 
skills of our own people in project 
monitoring and management to ensi 
that our mission staff have a thorou 
understanding of their responsibiliti 
for ensuring the proper use of AID 
funds. 

As a result of these efforts over 
past year, I am convinced that the s 
tion is much improved and that the 
tions we have initiated will ensure 
significant improvement in the mans 
ment and accountability of AID funo 

American Schools and Hospital 
Abroad. This program will permit 
assistance to schools and hospitals s 
sored by private U.S. nonprofit orgj 
zations which serve as demonstratio 
centers for American ideas and prat 
in education and medicine. We plan 
give priority to institutions in develo 
countries that offer the greatest pot 
tial for developing human resources 
thering the transfer of technology, i 
maintaining and improving their ow 
financial well-being. We consider thi 
valuable program and recognize tha 
Congress also feels it is important, 1 
budgetary constraints and past prac 
have forced us to hold our proposal i 
$7.5 million. 



54 



Department of State Bu'i' 



FOREIGN AID 



ternational Disaster Assistance. 

saster assistance program, for 
we have requested $25 million for 
84, provides for emergency assist- 
3 countries struck by natural 
!rs and manmade catastrophes 
sistance in disaster prediction and 
edness. 

•crating Expenses. For AID 

ing expenses, we have requested a 
f $378.5 million. These funds pro- 
ir costs of managing AID's bilat- 
sistance program. They cover the 
s and operating costs of AID 
larters and overseas operations, 
oposed increase is necessitated by 
' rising costs overseas as well as 
ect of having had to defer some 
litures in the current year as a 
of substantial reductions from our 
ted FY 1983 funding level. 

ircotics. In addition to these 
: requests within our development 
nee program, I would like to men- 
'0 priorities which transcend the 
ual accounts. One is that of nar- 
-eduction. Income substitution ac- 
are a major component of U.S. 
to reduce illicit narcotics and re- 
|ne of aid's important objectives, 
rently have projects in Peru, 
id, and Pakistan that, in part, re- 
;o the Oilman amendment. Addi- 
rograms are being devised for 
n and Bolivia. 

will continue to take advantage 
8ts of opportunity, but we must 
iful that our ability to achieve 
cotics reduction objective is in 
ds of the host government. With- 
rong commitment to enforce ex- 
ans, there is little we can do. I 
ure this committee that we will 
e to discuss this subject at the 
levels as part of our policy 
! initiative. We will continue to 
ith host governments and design 
)lement projects that address 
ment needs in order to facilitate 
rernment enforcement. 

men in Development. A second 
r" nt priority of our overall pro- 

I that of women in development. 
i,"ncy has, for the first time since 
- lili~!inient of the Women in 
I nu'tit ( )ffice in 1974, a formal 

■ aptr which spells out how the 
' s '-;' women in the developing 

■ s arc til be integrated into AID's 
' 1. .\ primary objective of our 

ein lii'velopment policy is that it is 
alow for AID to move beyond its 
1 niviues and take an active role 
»vide leadership in ensuring that 



women have access to opportunities and 
the benefits of economic development. 
Also clearly emphasized in AID's new 
policy is the fact that, while the Office of 
Women in Development and mission of- 
ficers will continue to support the agen- 
cy's personnel in their efforts to imple- 
ment women in development activities, 
the overall responsibility for implemen- 
tation of this policy rests with all AID 
offices and bureaus and in all AID pro- 
grams and projects. 

In this regard, a new emphasis is 
underway within AID to focus on 
women without isolating them from the 
mainstream of development. The agency 
has begun to move away from doing 
women-specific projects. Experience has 
shown that a more effective strategy is 
to plan integrated projects which in- 
cludes the role of women in the initial 
project design to assure balanced eco- 
nomic development. Currently the agen- 
cy is giving priority to four kinds of 
women in development activities: (1) 
those which recognize the crucial role of 
rural women in agricultural development 
and target interventions to their needs; 
(2) those which train women in practical 
income-generating skills; (3) those which 
assess women's needs for technological 
innovations and encourage adoption of 
appropriate technologies; and (4) those 
which strengthen indigenous organiza- 
tions and groups to enable them to ini- 
tiate and undertake activities which en- 
courage women to become full partners 
in development. 

Economic Support Fund (ESF) 

Our FY 1984 budget request for the 
ESF totals $2,949 billion. We are also 
requesting a supplemental appropriation 
of $294.5 million for the current fiscal 
year to meet pressing needs for assist- 
ance in Lebanon and elsewhere. The 
ESF program provides economic 
assistance to help sustain economic and 
political stability in countries and 
regions of strategic importance to U.S. 
foreign policy objectives. 

ESF also supports our development 
goals in many countries. Peace in the 
Middle East continues to have the 
highest priority in the allocation of ESF, 
with the result that slightly more than 
one-half of the ESF program— just 
under $1.6 billion— continues to be 
allocated to countries in that troubled 
region. Most of this amount goes to 
Egypt and Israel to maintain balance-of- 
payments stability, finance essential im- 
ports, and, in the case of Egypt, to 
finance development projects which are 
increasing production, employment, and 



improving infrastructure and basic serv- 
ices for a wide spectrum of the Egyptian 
populace. 

ESF is a very flexible form of 
economic assistance. It can be par- 
ticularly effective during the current 
worldwide recession in helping develop- 
ing countries critical to U.S. foreign 
policy interests which are confronted 
with severe balance-of-payments prob- 
lems and stagnating growth rates. We 
must remember that economic stability 
and growth are mutually reinforcing. 
ESF can provide essential resources for 
stability and serve to underpin U.S. 
development assistance efforts and long- 
term growth. 

Whereas the ESF requirements for 
Egypt and Israel have remained fairly 
constant, the need for significant 
amounts of economic assistance to 
counter the effects of the current 
economic crisis have greatly increased in 
a number of strategically important 
developing countries in Africa, Latin 
America and the Caribbean, and Asia. 



Trade and Development Program 

The trade and development program has 
proven an effective mechanism for help- 
ing foster development in the Third 
World and, at the same time, assisting 
in the improvement of this country's 
competitive position in world markets 
which helps increase U.S. exports. This 
program helps U.S. firms get involved in 
the early planning stages of develop- 
ment projects in order to improve their 
position as potential participants and 
suppliers of project requirements. It 
focuses on projects involving technolo- 
gies in which we have a comparative ad- 
vantage, including high technology and 
specialized U.S. commodities and serv- 
ices. In FY 1982, the trade and develop- 
ment program financed 46 projects, 
potentially leveraging more than $412 
million in U.S. exports. Our request for 
FY 1984 is $22 million. The proposed in- 
crease is based on last year's demand for 
trade and development program 
assistance in excess of $25 million and 
will allow us to increase our support for 
development in a way that helps expand 
U.S. exports. 



PL 480 

Food security considerations have 
played an increasingly important role in 
international discussions of food and 
hunger. PL 480 food aid is a valuable 
development resource for enhancing 
food security and reducing malnutrition. 
It also serves to augment local produc- 



FOREIGN AID 



tion in the developing countries— pro- 
vided that it is made available under 
conditions that support rather than dis- 
courage domestic food and agricultural 
production. 

In emergencies or periods of dire 
food shortages, international food assist- 
ance—led by the United States as the 
world's largest food aid donor— plays a 
vital role in assuring food security. PL 
480 food commodities also augment 
domestic food sales and distribution pro- 
grams and may be used to help build na- 
tional food reserves. Local currency 
generated from these food sales pro- 
vides financial resources to assist with 
the development of food and agricultural 
institutions and infrastructure. 

We seek to improve the impact of 
both PL 480 commodities and local cur- 
rency proceeds on food and agricultural 
development, including increasing their 
integration with other U.S. bilateral 
financial and technical assistance at both 
the policy and project levels. PL 480 
resources are also programmed to sup- 
port the efforts I have mentioned to im- 
prove country policies, develop human 
and institutional capacity, and enhance 
the role of the private sector in food and 
agricultural development. 

For FY 1984, we are proposing a 
PL 480 program totaling $1,522 billion. 
This includes $872 million for Title I 
concessional sales and $650 million for 
the Title II program. Taking into ac- 
count anticipated receipts of $470 
million from the sale of commodities, 
this would require appropriation of 
$1,052 billion. Of the Title I allocations, 
about 83% would be directed to the low 
income countries. Approximately 22% of 
the $400 million available for com- 
modities in the Title II program would 
be designated as an unallocated reserve 
for refugee feeding and emergency pro- 
grams. The remaining 78% will be used 
for regular programs of U.S. voluntary 
agencies and the World Food Program, 
as well as several government-to- 
government programs. 

Multilateral Assistance 

Up to this point, I have emphasized the 
importance of our bilateral programs in 
meeting our developmental, political, 
and economic objectives but, given the 
enormity of the problems facing the 
developing nations, overcoming them 
will require the joint efforts of indus- 
trialized nations, multilateral and inter- 
national organizations, and the efforts of 
the developing countries themselves. 

Therefore, I believe that our contri- 
butions to the various multilateral 



assistance efforts in which we par- 
ticipate are every bit as important as 
are our bilateral efforts. 

International Fund for Agri- 
cultural Development (IFAD). For 
IFAD, of which I serve as the U.S. 
Governor in my capacity as Acting 
Director of IDCA, we are proposing an 
appropriation of $50 million. This 
amount would represent our second pay- 
ment against a commitment of $180 
million for the first replenishment of 
IFAD, as authorized by Congress in FY 
1982. In making this request, we have 
carefully considered the conference 
report on the FY 1983 continuing reso- 
lution concerning the appropriate source 
of funding for IFAD and have concluded 
that it should be maintained as a 
separate line item, rather than being in- 
cluded within the international organi- 
zations and programs account as it was 
this year. 

IFAD serves two critically important 
functions. It is the only funding organi- 
zation which directs its resources solely 
to the concerns of small farmers and 
seeks to increase agricultural productivi- 
ty in poorer countries. It is also the only 
international development agency in 
which OPEC and the Western in- 
dustrialized nations have come together 
to provide resources on what approaches 
a basis of equality. 

While we continue to share the con- 
gressional concerns about certain 
aspects of IFAD's operations, we believe 
that it is, in fact, focusing effectively on 
the kind of lending activities for which it 
was established. For this reason, and 
because the United States was instru- 
mental in bringing IFAD into being as a 
result of the World Food Conference of 
1974, our continued strong support is 
extremely important so that this still 
relatively new organization can con- 
solidate its progress to date. 

Multilateral Development Banks. 
With respect to our proposals for fund- 
ing commitments to the multilateral 
development banks, when this Adminis- 
tration came into office, we had a 
number of questions about the role of 
these banks. We undertook an assess- 
ment of our participation in them, on 
which we consulted with the Congress. 
That assessment concluded that the 
multilateral banks can make an impor- 
tant and cost-effective contribution to 
development which is supportive of U.S. 
interests. It also found that multilateral 
development banks' activities are com- 
plementary to bilateral assistance. For 
example. World Bank structural adjust- 
ment lending reinforces IMF programs 



in helping developing countries to « 
short-term financial crises and t < i i 
adjust economic policy to permit I'l ,- 
growth. More generally, multilai''i 
banks fund projects suited to tli.ii 
capabilities and larger scale of fm: i 
They also replicate investments v\ 'k 
have been tested on a more liniitiM m 
experimental basis through bilater p 
grams. 

The assessment did conclude, 
ever, that there are some areas in 
improvements could be made in tl 
the multilateral banks work. For t 
pie, they could serve to a greater 
as bridges to private capital mark 
expanding private cofinancing, enr 
phasizing market incentives, and ( 
couraging the indigenous private i 
We would like them to give great< 
sideration to the effectiveness of 
borrower-country economic policif 
They also should adopt more cons 
policies for maturation and gradui 
of countries receiving multilateral 
resources. 

The United States has vigoroi 
vocated that the banks adopt thes 
ciples, and the multilateral develo 
banks have responded positively i 
number of instances. Let me cite 
of these. 

The Inter-American Developn 
Bank (IDB) and the Asian Develo] 
Bank (ADB) are considering prop, 
for equity financing facilities. The 
Bank is working on a proposal foi 
facility to provide for multilateral 
surance for private investments a 
recently agreed on a new more co 
tent graduation policy to move co' 
above a certain income level gradt 
away from dependence on public 
resources and toward greater reli: 
on private capital markets. The II 
adopted an improved policy on pu 
utility tariffs to ensure more comj 
cost coverage for projects it funds 
We will continue to look to ad 
tional improvements in multilaten 
policies and lending programs, pai 
ticularly during the course of negc 
tions for replenishments. This was 
case during recent negotiation of 
African and Asian Development F 
Current negotiations to generate i 
resources for the IDB and the AD 
elude a number of policy issues of 
terest to the United States. As we 
further into IDA-VII negotiations 
interest in the reforms advocated 
assessment will loom large. 

At the same time, in order for 
United States to succeed in promc 
improved bank lending policies, w 
be seen as clearly prepared to mei 



Department of State B 



MIDDLE EAST 



commitments on a timely basis. 
iingly, the Administration is mak- 
3ry effort to meet current com- 
nts to the IDA-IV replenishment, 
isted by our request for a $245 
. FY 1983 supplemental appropria- 
hich, along with our FY 1984 re- 
rf $1,095 billion, will complete our 
tment. 

ternational Organizations and 
ims. Just as the multilateral 
play a critical role in meeting the 

needs of developing countries, 
jgrams of the international orga- 
ns, particularly the UN Develop- 
'rogram (UNDP), are important 
iting their technical assistance and 
g needs. And just as we have had 
;oncern about improving the effec- 
58 of the banks, we have also had 
ns about some of the UN pro- 
, There has been a tendency for 
a,ry increases in some of these 
,ms to outstrip donor interest and 
al support, and in some programs 
las been a resulting thinness or 
' focus. 

spite these reservations, though, 
itional organizations remain ex- 
y important to us. They provide 
ial technical and training help, 
n sensitive areas where recipients 

reluctant to depend on bilateral 
nee and often on a broader range 
>lems than can individual donors. 
Iso frequently galvanize attention 

cal development problems -such 
:CEF's [UN Children's Fund] cur- 

iphasis on the problems of child 

ty and the World Food Council's 

to help food-short poor countries 
and implement long-range food 

ies to meet the needs of their 

these reasons, the United States 

committed to supporting those 
tional organization programs 
re properly focused, which are 
essive in scale, and which remain 
d from political and ideological 
We are upgrading our capacity 

with them to improve program 
and hold down budgetary 

i. 

effectiveness of all development 
ce also depends on close under- 
js among the donor nations 
ves. New, intensified efforts to 
)ser cooperation with other donor 
—OPEC countries as well as the 
lal donors— are underway. 

t we are trying to achieve by 

)le process is better use of all 

going to development— our 



own bilateral assistance, resources pro- 
vided by multilateral and international 
organizations, financing coming from 
other bilateral donors, private capital 
flows, and the resources developing 
countries themselves invest in their own 
development programs. This objective 
requires better mutual understanding 
about critical policy issues and the best 
approaches to the range of development 
issues— from improving agricultural pro- 



duction to organizing better low-cost 
health delivery systems— and the means 
by which donors and recipients can best 
work together so that each one's efforts 
reinforce the others.' 



'The complete transcript of the hearings 
will be published by the committee and will 
be available from tne Superintendent of 
Documents, U.S. Government Printing Of- 
fice, Washington, D.C. 20402. ■ 



FY 1984 Assistance Requests 
for the Near East and South Asia 



by Nicholas A. Veliotes 

Statement before the Siihroiniinlfi- on 
Near Eastern and South .\>iiiiii Ajjairs 
of the Senate Foreign Rt'lalnuis Cottimit- 
tee on March 2, 1983. Ambassador 
Veliotes is Assistant Secretary for Near 
Eastern and South Asian Affairs.^ 



I welcome this opportunity to : 
before the committee in support of the 
Administration's 1984 foreign assistance 
request for the Near East and South 
Asia. Secretary Shultz and Under 
Secretary [for Security Assistance, 
Science, and Technology] Schneider, in 
recent testimony before congressional 
committees, have presented the overall 
policy guiding our foreign assistance 
programs for the region. 

They stated that our security and 
economic assistance programs are 
designed to maximize the benefits to the 
national interests of the United States 
by supporting a variety of foreign piolicy, 
strategic, and developmental objectives 
which are vital to our own peace, securi- 
ty, and well-being. 



U.S. OBJECTIVES 

The Administration's proposals reflect 
the realities of our foreign policy and na- 
tional security objectives in this region, 
which for the past quarter century has 
threatened to place the United States in 
potentially serious world confrontation. 
We are actively pursuing a just and 
lasting Middle East peace. Our policy 
flows from the President's initiative of 
last September which is based on U.N. 
Security Council Resolutions 242 and 
338 and the Camp David framework. 
Our immediate goal is the resumption of 
negotiations which will include a Jordan- 



ian delegation, hopefully with represen- 
tative Palestinian participation. 'Those 
negotiations should result first in the 
establishment of a transitional regime on 
the West Bank and Gaza and then in an 
agreement on the final status of those 
territories. 

We are vigorously pursuing negotia- 
tions for the withdrawal of all foreign 
forces from Lebanon. Our objective is to 
restore Lebanese sovereignty and en- 
sure Israeli security. A peaceful 
Lebanon, free from all foreign forces 
and with a stable central government, 
will make a major contribution to Israeli 
security. 

We are working with friendly coun- 
tries to safeguard our vital interests in 
Southwest Asia. 

We continue to emphasize our sup- 
port, publicly and privately, for a 
peaceful, early resolution of the 
devastating war between Iraq and Iran 
on a basis which preserves the inde- 
pendence and territorial integrity of 
both countries. Continuation of the war 
endangers the peace and security of all 
nations in the gulf region and in our 
view serves neither the interests of Iraq 
nor Iran, nor does it serve any U.S. in- 
terest or those of our allies. 

We are searching for the return of 
peace of the suffering people of 
Afghanistan, which must be achieved in 
the context of the withdrawal of Soviet 
military forces, the restoration of 
Afghanistan's independence and non- 
aligned status, the right of the Afghan 
people to form a government of their 
own choosing, and the creation of condi- 
tions which will permit the 3 million 
Afghan refugees to return to their 
homes with honor. 

In our efforts to advance the Middle 
East peace process and to promote the 



MIDDLE EAST 



resolution of conflicts elsewhere in the 
region, we recognize that the necessary 
spirit of accommodation can grow more 
easily if friendly states feel secure and 
confident of U.S. support. Important 
steps have been taken to bolster the con- 
fidence of key countries in our commit- 
ment to their security. In a time of 
budget stringencies, we have, with con- 
siderable sacrifice, increased the na- 
tional resources for our own military to 
develop their capability to deter threats 
to the region. 

We must provide the resources com- 
mensurate with the need to strengthen 
the economies and defense capabilities of 
key countries in this vital area of the 
world if we are to advance major U.S. 
national interests. 



PROPOSED ASSISTANCE 

The levels and terms of our proposed 
assistance have been carefully developed 
within the constraints of our budget 
stringencies and the President's 
economic program and are the amounts 
needed to meet the essential re- 
quirements of the countries of this 
region. 

Our FY 1984 foreign assistance re- 
quest for the Near East and South Asia 
will fund six major programs: 

• $3,625 million in foreign military 
sales (FMS) guarantees; 

• $1,095 million in grant military 
assistance programs (MAP), including 
forgiven FMS credits for Israel and 
Egypt; 

• $11.22 million in international 
military education and training (IMET); 

• $1,817 million in economic support 
funds (ESF); 

• $269.8 million in development 
assistance; and 

• $588 million in PL 480 (Food for 
Peace program). 

It is important to note here that the 
FY 1983 continuing resolution fell sub- 
stantially below the level of our request 
for the region, particularly regarding 
programs for Southwest Asian coun- 
tries. The amount received is inadequate 
to meet our minimum security require- 
ments in the area. Therefore, we are re- 
questing an FY 1983 supplemental of 
$251 million for Lebanon and $205.5 
million to make up shortfalls in the 1983 
program for other Near East and South 
Asian countries. 



Middle East 

Our highest priority continues to be fur- 
thering the Middle East peace process to 
bring a just and lasting end to the tur- 
moil that has engulfed and threatened 
this area for so many decades. As 
events of the past year demonstrated, 
there are no quick and easy solutions for 
peace in the region, and resort to armed 
conflict remains an ever present danger. 
However, the tragic conflict in Lebanon 
may provide us with new opportunities 
to expand the peace process, as stated in 
the President's Middle East peace ini- 
tiative last September. 

Israel and Egypt remain our prin- 
cipal partners in the quest for peace, 
and these two nations are the largest 
recipients of our proposed foreign 
assistance for FY 1984. This assistance 
is aimed at ensuring their security and 
economic well-being as they continue to 
take risks in pursuing the peace process 
begun at Camp David. Other states 
critical to the peace process, such as Jor- 
dan and Lebanon, require our continued 
support if they are to attain the 
necessary political and economic con- 
fidence to join the peace process. Our 
program also seeks to encourage eco- 
nomic and social cooperation in the 
region. 

In support of this critical peace ef- 
fort we are requesting: 

• $3,130 million in FMS, of which 
$1,000 million is forgiven; 

• $1,570 million in ESF; 

• $4.75 million in IMET; 

• $260.8 million in PL 480 funds; 
and 

• $6 million in development assist- 
ance. 

Israel. Support for Israel's security 
and economic well-being has been a fun- 
damental tenet of American foreign 
policy for the past 34 years. As we im- 
plement and expand the process of 
peace, Israel requires tangible evidence 
that the U.S. commitment to this proc- 
ess in no way reduces our commitment 
to Israel's continued security. 

We must ensure that Israel main- 
tains its technological edge in military 
capability in the region. At the same 
time, we recognize that a strong 
economy is an essential foundation to 
Israel's security. Hence, the proposed 
$2,485 million FY 1984 military and 
economic assistance package for Israel 
continues to be our largest bilateral aid 
program. 

The $1,700 million FMS request for 
Israel includes $550 million forgiven 
credits. As further assurance for Israel's 



security, we have increased the F' 
level by $300 million for FY 1 
1984. 

The proposed $785 million Isr 
ESF program is to be all grant. 1 
program provides funds on a cas? 
transfer basis to support Israel'i 
of payments. Thus, Israel can im} 
essential civilian goods and servic 
without overly heavy reliance on 
cost commercial borrowing or drj 
down foreign exchange reserves, 
terms of our assistance were set 
careful analysis of Israel's securit 
economic requirements. 

Egypt. Egypt remains the ke 
much of what we hope to accomp 
the Middle East. Our sustained si 
reflects our continued full partne 
with Egypt in pursuit of peace in 
region. The Mubarak governmem 
ports President Reagan's Septem 
1982, peace initiative, as well as ■ 
forts to resolve the crisis in Leba 
and has called for PLO [Palestim 
Liberation Organization] recognit 
Israel. Egypt also shares our con 
ment to security and stability in ' 
critically important Southwest A; 
region in the face of encroachme 
the Soviets and their surrogates. 

The requested FY 1984 FMS 
ing for Egypt of $1,300 million ir 
$4.50 million in forgiven credits, 
strong affirmation of our long-tei 
military supply relationship with 
FMS for FY 1984 will be devotee 
progress payments on purchases 
through 1983, follow-on support, 
some start-up costs for programs 
tiated in 1984. 

Equal attention must be paid 
maintaining the growth of Egypt 
economy and sustained expansior 
sectors of the country's infrastruc 
Economic aid will include $250 m 
PL 480 Title I and grant ESF of 
million. The ESF program consis 
to $300 million in commodity imp 
gram support and roughly $450 r 
in project and sector assistance. ] 
phasis will be on increasing agrici 
and industrial productivity and 
tation and expansion of water am 
systems in Egypt's major cities. 

Lebanon. Lebanon deserves i 
special consideration. I shall not c 
on the destruction in that countrj 
result of last year's conflict. We i 
aware of those sad events. It is c 
important for us now to demonst) 
a concrete way, the U.S. commitr 
Lebanon's reconstruction and resi 
tion as a sovereign and independf" 



Department of State Eil« 



MIDDLE EAST 



^construction of infrastructure is 

and requires immediate ESF 

; to help get projects underway 

the FY 1984 appri -iations cycle 

completed. 

■ these reasons, we have re- 

a supplemental for FY 1983 of 
illion ESF, $100 million FMS 
;ees, and $1 million IMET. The 
/el requested in the supplemental 
obligated throughout the re- 
r of FY 1983 and in FY 1984. 
ect that the FMS and IMET will 
:ated during FY 1983. Therefore, 
' is being requested for Lebanon 
1984; onlv FMS of $15 million 
iO,000 in IMET funds. 

security needs of that war-torn 

require our urgent attention. By 
g the Lebanese Armed Forces to 
; its capacity, we are helping the 
government reassert and extend 
ority throughout the country. An 
; in the effectiveness of the 
56 Armed Forces in maintaining 

security will permit the eventual 
wal of the multinational forces 

FMS program will be supported 
lightly increased IMET program 
-ill improve overall training of 
ed forces. Equipment and train- 
is of their forces, while urgent, 
id bv the availability of military 
'er. FMS and IMET funds 
n the supplemental are matched 
bility of the Lebanese Armed 
;o absorb them. Lower FMS and 
;vels are sought in FY 1984 

the major Lebanese Armed 
mildup should have been achievd 

' funds will be used primarily to 
ate and reconstruct basic in- 
ture, such as potable water 
telecommunications, and public 
jrvices, as well as for helping 
n institutions of higher learning 
t maintain their valuable, long- 
presence in the Middle East. 

Ian. The proposed FY 1984 
assistance program for Jordan 
of $115 million FMS guarantees 
million ESF. 

assistance is important to Jor- 
:urity and economic well-being, 
e essential if that country is to 
icient confidence to enter the 
ocess at this critical juncture. 
lays a role in bolstering gulf 
and helped the Habib mission in 
by receiving PLO fighters from 
. Our strong support is crucial 
n's ability to continue to take 
this kind in support of our 



shared objectives of furthering the peace 
process and enhancing regional security. 

Jordan has an urgent requirement 
for more modern armament in the face 
of the vast Soviet resupply of hostile 
Syria, especially for air defense. FMS 
financing assists Jordan to acquire those 
items more critical to its legitimate self- 
defense needs. 

ESF funds will aid the development 
of water and waste water systems, 
health programs, agricultural programs, 
and Jordan Valley irrigation projects, as 
well as to provide development training. 
IMET funds enhance the professional 
capability of Jordan's Armed Forces and 
assure that Jordan can continue its 
training and advisory assistance role in 
the region. 

Under the supplemental request for 
FY 1983, Jordan would receive an addi- 
tional $35 million in FMS, for a total of 
$75 million FMS guarantees. 

Regional. The regional program re- 
quest for FY 1984 consists of $6 million 
in development assistance. $15 million in 
grant ESF, and $1.9 million for PL 480 
title II. 

The ESF furthers the Middle East 
peace process by addressing objectives 
that cannot be met through conventional 
bilateral programs. Much of the pro- 
gram is focused on efforts to develop 
mutual understanding through collabo- 
rative research projects between Israel 
and Egypt and to sustain our develop- 
ment efforts in the West Bank and 
Gaza, areas of importance to the peace 
process. Development assistance pro- 
vides continuation of a scholarship pro- 
gram at the American University in 
Beirut and the development of Near 
East assistance projects. 

Under the FY 1983 supplemental re- 
quest, this program would receive an ad- 
ditional $2.5 million in ESF, for a total 
of $15 million. 

Southwest Asia and the Persian Gulf 

The Southwest Asian-Persian Gulf 
region, a critical source of energy to the 
free world, is simultaneously threatened 
by the Soviets through Afghanistan and 
radical forces from within. Our program 
is directed at supporting our efforts to 
bolster the security of countries both in 
the region and enroute, which are 
crucial for U.S. access to and presence 
in the region in times of crisis. Almost 
all of the countries, from Pakistan in the 
east to Oman and Yemen and Tunisia 
and Morocco in the West, face serious 
economic problems and potential subver- 
sion or regional threats from Soviet 



proxies. All are important, not only to 
our strategy' for the security of 
Southwest Asia but potentially to the 
prospects for peace in the Middle East 
as well. Many also face severe economic 
problems which must be addressed if 
they are to remain stable. Through our 
assistance, we must provide tangible 
evidence of the concern we share about 
the threat to the security of this region. 

For those Near East and South 
Asian countries that are part of this 
crucial region we are requesting: 

• $495 million in FMS guarantees; 

• $95 million in MAP; 

• $47 million in development 
assistance; 

• $247 million in ESF; 

• $98.6 million in PL 480; and 

• $5.8 million in IMET funds. 

Pakistan. The security and stability 
of Pakistan is a key element in maintain- 
ing stability within South and Southwest 
Asia. Our renewed security relationship 
with Pakistan derives from that 
country's position as a front-line state 
facing Soviet aggression in Afghanistan. 
In addition to the direct threat this ag- 
gression poses to Pakistan's security, it 
has created the largest single refugee 
problem in the world with over 2.8 
million Afghan refugees flooding into 
Pakistan over the past 3 years. Pakistan 
has been extremely generous and forth- 
coming in granting long-term first 
aslyum to these refugees and providing 
a major share of the resources to care 
for them. 

We are proposing for Pakistan $225 
million in ESF ($75 million in loans and 
$150 million as grants), $300 million in 
FMS guarantees, $50 million in PL 480, 
and $800,000 in IMET for FY 1984. 
These amounts reflect the continuing im- 
plementation of our 1981 agreement to 
provide Pakistan with $3.2 billion in 
economic and military assistance over a 
6-year period, subject, of course, to con- 
gressional appropriation. This agree- 
ment was reached after extensive con- 
sultations with the Congress. 

Our economic assistance to Pakistan 
is designed to strengthen that country's 
capacity to sustain self-generating inter- 
nal development over the near and 
longer term, meet the country's short 
and medium-term foreign exchange 
needs through quick disbursing ac- 
tivities, and encourage and support 
economic adjustments that will help 
restore long-term stability to Pakistan's 
balance of payments. Where feasible, we 
are using program resources to develop 
economic alternatives to opium produc- 
tion and to induce the Government of 



MIDDLE EAST 



Pakistan to tighten enforcement of the 
ban on poppy cultivation. Our develop- 
ment projects focus on agriculture, rural 
development, energy, private sector 
development, water management, 
population and health, and programs for 
the underdeveloped areas of Baluchistan 
and the Northwest Frontier Province. 

The FMS and IMET components are 
designed to assist Pakistan to achieve a 
minimum level of military modernization 
necessary to meet its legitimate defense 
requirements, specifically those arising 
from the changed strategic situation in 
the region resulting from the Soviet in- 
vasion of Afghanistan. The moderniza- 
tion of Pakistan's Armed Forces to be 
supported by FMS financing will be 
relatively modest, consisting primarily of 
replacement of obsolete equipment. 

The economic and military com- 
ponents of our security assistance pro- 
gram—by promoting economic growth 
and stability and helping to meet 
minimum defense requirements — com- 
bine to strengthen Pakistan in its stand 
against Soviet expansionism in the 
region. We believe that strengthening 
Pakistan's conventional military capacity 
will enhance its security and may help 
remove the underlying incentive for the 
acquisition of a nuclear weapons capa- 
bility. 

Under the supplemental FY 1983 re- 
quest, Pakistan would receive an addi- 
tional $75 million in FMS guarantees, 
for a total of $275 million FMS. The Ad- 
ministration believes every effort must 
be made to provide the $75 million and 
thus bring FMS up to proposed levels 
for FY 1983. Based on our 1981 
understanding, the Pakistanis have 
made obligations to U.S. defense con- 
tractors which for FY 1983 alone exceed 
$550 million. If targeted levels are not 
reached, the Pakistanis will be hard 
pressed to meet their obligations. More- 
over, we are at an early, sensitive stage 
of our renewed relationship with 
Pakistan. A significant shortfall at this 
time would severely complicate efforts 
to build a credible relationship with the 
Government of Pakistan which is essen- 
tial to accomplishing our strategic objec- 
tives. 

Morocco. For Morocco we propose 
$19 million in development assistance, 
$34.5 million in PL 480, $7 million in 
ESF, $30 million in MAP, $60 million in 
FMS credits, and $1.7 million in IMET. 
This continuing level of support reflects 
the serious economic difficulties that 
Morocco faces, as well as our support 
for that country's military modernization 
program. 



Strategically located, Morocco has a 
long record of cooperation with the 
United States. The government has con- 
sistently taken modern pro- Western 
positions on issues of mutual concern, 
and its modernization also extends to its 
internal policies. Our relations with 
Morocco have been strengthened over 
the past year, with several exchanges of 
high-level visits and the agreement by 
Morocco to provide transit access. 

The development assistance program 
contains a significant allocation for ex- 
panded efforts in rainfed agriculture, as 
well as programs for family planning, 
nutrition, and resource development. 
After agreement with King Hassan in 
May 1982, we are proposing the begin- 
ning of an ESF program for Morocco in 
FY 1984. To augment the development 
assistance program, $7 million ESF is 
being requested. 

As a key country in North Africa, it 
is in our interest to see Morocco main- 
tain a suitable level of military prepared- 
ness. The FMS credits will help finance 
completion of more sophisticated 
defense systems, including air surveil- 
lance equipment, antiarmor weapons, 
and will purchase spare parts and serv- 
ices for previously supplied U.S. equip- 
ment. IMET funding will provide in- 
creased training opportunities for 
Moroccan military personnel directly 
related to the ongoing modernization 
program of the Moroccan Armed 
Forces. 

Tunisia. Tunisia, a friend of the 
United States and a force for moderniza- 
tion in the Arab world, is vulnerable to 
Qadhafi's adventures and looks to us for 
tangible support against Libya and other 
radical influences in the region. For this 
moderate, strategic country, we are re- 
questing $90 million in FMS, $50 million 
in MAP, $1.7 million in IMET, and a 
total of $11.1 million in PL 480. 

Although we do not intend to obli- 
gate any new development assistance 
funds or ESF to Tunisia, programs 
funded earlier will continue to operate 
for several years. We will also support 
Tunisian development through a PL 480 
program aimed at improving the stag- 
nant agricultural sector. 

The security assistance, substantially 
the same level requested last year, will 
permit funding of a minimal needed 
defense capability in the form of F-5 in- 
terceptor aircraft, M-60 tanks, Chapar- 
ral missiles, and perhaps lesser equip- 
ment. IMET funds will provide accom- 
panying technical and professional train- 
ing for members of the Tunisian 
military. The $50 million MAP in FY 



1984 will enable the Tunisian Gov 
ment to make essential improvem 
its military without adversely affi 
the country's economic developmt 

Under the FY 1983 suppleme 
request, Tunisia would receive an 
tional $43 million in FMS and $3( 
lion in MAP, for a total of $105 r 
in FMS guarantees and $35 millic 
MAP. 

Oman. For Oman we are req 
$45 million in FMS guarantees, $ 
in IMET, and $15 million in ESF 

By providing modest military 
economic assistance, we demonst 
that we are prepared to support 
very real security needs of this si 
country which shares a common ' 
with Soviet-backed South Yemen 
which has granted the U.S. acces 
military facilities. 

Our military facilities in Oma 
crucial to any effort to halt aggr< 
in the gulf area. Our FMS progr; 
vides funds to assist the moderni 
of Oman's Armed Forces so that 
would have the means to help de: 
these facilities. 

In an effort to broaden our r 
ship with Oman beyond its securi 
aspects, the U.S. -Oman joint con- 
was established in 1980 in conjur 
with the facilities access agreeme 
provide $5 million a year in ESF 
to fund the operation of the joint 
mission, feasibility and design sti, 
technical assistance, and training 
million ESF loan program has th 
concentrated on water resources ^ 
programmed in FY 1984 for scho ) 
struction. 

Under the FY 1983 suppleme! 
quest, Oman would receive an adj 
$10 million in FMS, for a total of j 
million FMS guarantees. J 

Yemen. For the Yemen Arab^ 
Republic, we propose $28 million i 
development assistance, $15 milli'ii 
MAP, $1.5 million in IMET, and : 
million PL 480 title I. 

Yemen concluded a cease-fire ' 
Marxist-led guerrillas last suninie > 
the threat of outside militar\- ;igg ■ 
persists. In addition, Yemen, one ' 
poorest nations in the region, exp" 
enced a destructive earthquake iri 
December and is facing a reductiif 
remittance from Yemen's worker I 
oil-producing gulf states. It requiii' 
stantial assistance to cope with it, 
economic problems. I 

Development assistance will ef 
a series of programs designed to f 
basic human needs. MAP assistari 
required because Yemen is increa ! 



Department of State E) 



MIDDLE EAST 



mt to utilize funds which would 
its medium-term debt burden, 
ider the FY 1983 supplemental re- 
Yemen would receive an addi- 
?6 million in FMS credits, for a 
f $10 million FMS, and $4 million 
P, for a total of $5 million MAP. 

Asia 

th Asia, there is a clear 
itarian need for assistance to 
es which have low levels of per 
income, high population growth 
ind low levels of literacy. Bangla- 
ndia, Nepal, and Sri Lanka all 
lade commendable progress in 
lie development, an investment in 
lire which we should protect with 
ling assistance. Viable economies 
,ble political institutions are 
il if South Asia is to continue to 
) as a system of independent 
:apable of playing a constructive 
world affairs and in regard to the 
ireas of conflict on each flank. In- 
ich is a signficant trading part- 
j other countries in this region 
irly important to broader U.S. 
c interests. 

propose in FY 1984 for South 
ountries: 

217 million in development 
i.ce; 

229 million in PL 480; and 
370,000 in IMET. This program 
essentially at the same levels as 
i, both on a regional and a coun- 

3. 

ia. For India in FY 1984, we are 

$86 million in development 
ce, $105.4 million in PL 480 title 
5200,000 in IMET. Though small 

of India's requirement, our aid 
ngible and valuable way in 
e demonstrate the U.S. desire to 
1 constructive ties with this 
)werful, and democratic nation. 
a key nation in a region of the 
iportant to U.S. strategic in- 
Its influential role as spokesman 

velopiing nations will be en- 
vhen it takes over the chairman- 
he Nonaligned Movement this 

aid program directly and in- 
supports the joint efforts to im- 
ateral relations through a vari- 
lys, including the initiatives 
enhancing commercial, scien- 
1 technological cooperation an- 
at the time of Prime Minister 
visit last July. The strength of 
era] relationship can help 
16 impact of differences be- 



tween us and the Indians on regional 
and international issues. 

Bangladesh. For Bangladesh we are 
proposing $77 million in development 
assistance, $65 million in PL 480 Titles I 
and III, $28 million in PL 480 Title II, 
and $225,000 in IMET. Economic devel- 
opment and political stability are inex- 
tricably linked in Bangladesh, a nation 
born in turmoil and struggling with 
severe political and economic difficulties. 
Bangladesh is seen as a moderating in- 
fluence in the Third World and is often 
in agreement with us on international 
issues of importance. Our assistance pro- 
gram has evolved from emergency relief 
to long-term development, which we 
hope can foster stability and encourage 
civilian representative rule. 

Sri Lanka. For Sri Lanka we are 
proposing $40.3 million in development 
assistance, $30.7 million in PL 480, and 
$150,000 in IMET. Sri Lanka is strate- 
gically located astride the major trade 
routes of the Indian Ocean and offers 
access for U.S. Navy vessels. Our 
economic development program serves 
to demonstrate strong U.S. support for 
this nonaligned and democratic nation. 
The recently reelected government 
favors a market-oriented, free enterprise 
economic philosophy. Sri Lanka plays an 
important and constructive role in inter- 
national fora and the Nonaligned Move- 
ment. Our assistance contributes to the 
stability of the country, its continuing 
adherence to democratic values and 
human rights, and the success of a prag- 
matic path to economic development. 



Nepal. For Nepal we are proposing 
$13.5 million in development assistance 
and $95,000 in IMET. Nepal forms an 
important buffer between India and 
China. U.S. interests center on its 
strategic location and on our resultant 
interest in economic progress in this 
least developed among nations and the 
evolution of orderly political institutions. 
We value our relations with this 
moderate nonaligned country, which has 
made important contributions to U.N. 
peacekeeping efforts in the Middle East. 



CONCLUSION 

To conclude we believe that all of the 
proposed levels are necessary and direct- 
ly relevant to our major interests in this 
critical part of the world. Through our 
foreign assistance program, we seek to 
assist friendly strategic countries in pro- 
moting the peaceful solution of conflicts, 
strengthening their security, and pro- 
viding a better life for their people. In 
the process, we protect and promote 
vital American national interests 
throughout the region. We remain com- 
mitted to these objectives as crucial to 
U.S. national interests, and the Adminis- 
tration is convinced that the budget 
figures which we are proposing for FY 
1984 are the minimum required for 
achieving these policy goals. 



'The complete transcript of the hearings 
will be published by the committee and will 
be available from the Superintendent of 
Documents, U.S. Government Printing Of- 
fice, Washington, D.C. 20402. ■ 



FY 1984 Assistance Requests for Israel 



by Nicholas A. Veliotes 

Statemerit before the Subcommittee 
on Europe and the Middle East of the 
House Foreign Affairs Committee on 
February 28, 1983. Ambassador Veliotes 
is Assistant Secretary for Near Eastern 
and South Asian Affairs. ' 

I am very pleased to be here today to 
testify in support of our military and 
economic assistance programs for Israel 
for FY 1984. The Administration is pro- 
posing a funding level of $1.7 billion in 
foreign military sales (FMS) financing 
and $785 million in economic support 
funds (ESF). The overall level of $2,485 
billion in combined military and 
economic assistance for Israel would be 



the largest U.S. bilateral assistance pro- 
gram. 

I am particularly pleased to be here 
on this occasion because I sense a need 
not just to discuss the level and terms of 
our assistance proposals but to place this 
program in the perspective of U.S. 
foreign policy objectives. In one sense, 
much of what we have to say will not be 
new to this subcommittee. A year ago at 
about this time, this subcommittee was 
told the following: 

We are . . . in the midst of an extremely 
tense period, affecting not only Israel but the 
entire region. 

The presentation and examination of our 
foreign assistance proposals are taking place 
at a particularly sensitive juncture in Israel 
itself 



MIDDLE EAST 



These same observations could be 
made today, but the specific events and 
immediate problems have changed. The 
events of the last year— as momentous 
and even tragic as they may have 
been— have not changed some funda- 
mental realities of the region with which 
we deal. Among these realities are the 
urgency of the need for peace; the need 
to support the sovereignty, territorial in- 
tegrity, and unity of Lebanon; the prime 
importance of assuring for Israel the 
security it requires; and the necessity of 
addressing the legitimate aspirations of 
the Palestinian people. This is, there- 
fore, an appropriate time to discuss the 
role of our assistance programs in Israel 
and how they fit into our larger strategy 
in the region. 

Purpose of Our Assistance 

Support for Israel's security and 
economic well-being is a basic, firm prin- 
ciple of American foreign policy. Our 
support for Israel grows out of a long- 
standing commitment to a free nation 
which has been a haven for immigrants 
from all over the world and which 
shares many of our own social and 
democratic traditions. 

Our security assistance programs 
are designed to assist Israel in continu- 
ing to maintain its qualitative and 
technological superiority over any poten- 
tial combination of regional forces. Our 
economic assistance helps Israel to 
finance balance-of-payments deficits. 
Taken in combination, our programs are 
the material manifestation of our tradi- 
tional commitment to Israel. 

While it should be clear that the 
security of Israel occupies a central role 
in our concern, our objectives in the 
Middle East continue to be focused on 
two mutually reinforcing goals: first, the 
search for a just and lasting peace for 
the region and, second, the assurance 
that our friends in the area will be able 
to maintain their security against both 
outside threats as well as threats from 
radical forces closer to home. Our pur- 
suit of this overall objective requires 
that we maintain and strengthen our 
relations with other friendly moderate 
states in the region as well. The rela- 
tions which we maintain with the states 
of the Middle East are obviously critical 
to our ability to achieve those objectives 
which we believe are shared by Israel. 

The President and Secretary Shultz 
have made crystal clear on many occa- 
sions in the past few months (a) our firm 
determination to continue the search for 
peace begun at Camp David and re- 



newed in the President's September 1 
initiative, (b) our commitment to achieve 
complete withdrawal of foreign troops 
from Lebanon which will help to return 
stability to that strife-torn country and 
will also help to ensure the security of 
Israel's northern border, and (c) our 
fundamental perception that a lasting 
peace achieved through direct negoti- 
ations is the best guarantee of long-term 
security for Israel and its neighbors. 

The Administration has highlighted 
that its basic policies toward the Arab- 
Israeli problem are based on the positive 
benefits accruing to all parties, including 
to the interests of the United States, 
from the resolution of these issues. We 
have, through many difficult months, 
continued a pattern of constant move- 
ment forward and meaningful consulta- 
tions toward the objectives we all share 
both in Lebanon and with respect to a 
broader Middle East peace. These basic 
tenets guide our approach, and the 
assistance programs you will be con- 
sidering in the coming weeks are a part 
of this effort. 

With these general objectives in 
mind let me turn to the specifics of our 
for Israel. 



Military Assistance 

We have proposed that a total of $1.7 
billion in military assistance be provided 
for Israel. The bulk of this funding 
would be used for progress payments on 
prior year purchases and to initiate pur- 
chases of artillery, missiles, armored 
personnel carriers, and aircraft from the 
United States. Our proposal includes an 
increase in the grant portion of that 
assistance from $500 million— our pro- 
posal last year— to $550 million with the 
remaining $1.15 billion to be provided in 
the form of a 30-year loan carrying a 
slightly concessional rate of interest. 
The modest increase in grant funding 
we propose is motivated by our under- 
standing of Israeli concerns over their 
debt burden coupled with our own 
analysis of that situation and our own 
budgetary constraints. 

Economic Assistance 

We are proposing a level of $785 mUlion 
in ESF, identical to the level of the past 
several years. The program is a cash 
transfer, and we propose this year that 
the entire sum be provided as a grant. 
Our decision to improve the terms of our 
proposal for ESF from the 1-3 loan, 2-3 
grant ratio we have proposed in the past 
was motivated both by the reality of the 
fact that ESF assistance has been pro- 



vided to Israel on a grant basis for 
last four fiscal years and by the slig 
downturn in Israel's export perforn 
during the past year. This decline i 
function of both the continued econ 
problems from which we and West< 
Europe are suffering, as well as the 
Government of Israel's domestic 
economic policies. 

Despite some difficulties, howe- 
preliminary indications are that caj 
inflows to Israel during 1982 contii 
to exceed requirements as official 
foreign exchange reserves exceeded 
their levels for 1981. We continue jj 
have strong confidence in Israel's ' 
economic potential. The levels and i 
we have proposed for our assistam 
Israel for FY 1984 should be more 
sufficient to meet the objectives of 
program. 

Israel's Debt Burden 

Israel's growing debt repayments ' 
United States have been a major s 
of concern to many Israeli officials 
to members of this committee. A c 
examination of the situation, howe 
reveals that Israeli debt— and pari 
larly the debt-service burden assoc- 
with that debt— will be manageaW 
given Israeli policies and an expect 
modest return to growth in the wc 
economy. 

Our review of our proposals ol 
ously had to take into account our 
budget stringencies. In reaching ( 
elusions, we weigh all factors to i 
a balance. In the real world of bud 
ceilings, increases in assistance, pi 
ticularly grant assistance, for one^ 
try mean that funds will be unavai 
to" achieve other objectives. Under 
proposals Israel will continue to re 
funds— both grant and credit— wh 
are ample to meet our policy objec 
in support of the State of Israel. 

Regional Programs 

In addition, we would call attentio 
our request for $15 million in ESF 
FY 1984; $7 million of these monii 
go toward sustaining our developrS 
efforts in the West Bank and ( laz: 
These programs are implement .-il 
through American voluntary ai;en' 
and address needs in such areas a ^_ 
tional and higher education, conin't 
development, improved water stoi« 
and agricultural cooperative mark }: 
The program has proved useful as| 
indication of our humanitarian cor 
for the peoples of these regions, a" 



Department of State B ? 



MIDDLE EAST 



I urge its funding at the level pro- 

n additional $7 million of the 
ml funds would finance cooperative 
ific, technical, and other activities 
tual interest to Israel and its Arab 
Dors. The remaining $1 million is 
3ted for project development and 



support activities relating to the 
development of ESF country programs. 



'The complete transcript of the hearing 
will be published by the committee and will 
be available from the Superintendent of 
Documents, U.S. Government Printing Of- 
fice, Washington, D.C. 'ZOMYZ. ■ 



1984 Assistance Requests for Egypt 



jholas A. Veliotes 

itemmt before the Subcommittee 
rope and the Middle Eaftt of the 

FnrrniN AlTnn-sCnwwIttnot, 
.:. !'.is.:. ,\,„h„ss,ulnr \'rlintrs is 

mth Asiiui AijairsA 

sciate this opportunity to discuss 
ou the Administration's security 
nee proposals for Egypt. Before 
your questions, I would like to 
I short statement. 

igyptian Relations 

■ begin by briefly restating the 
tions of U.S. policy toward 

U.S. -Egyptian relations are 
i)n a shared strategic interest in 
bility of the Middle East and the 
iding region. The Egyptians, who 
lid the heavy human and eco- 
)rice of conflict, fully understand 
ibility is best achieved through 
As a result, they share with us a 
ic commitment to the peaceful 
1 of the Arab-Israeli conflict, 
3 the fundamental problem facing 
ion. This commitment, first made 
ed on by the late President 
las been reiterated by President 
k and remains a firm tenet of 
m foreign policy, 
ijle a strong advocate of peace, 
like the United States, under- 
;he need to be able to deter those 
uld seek to destabilize the region 
ipt to subvert friendly states in 
I. The Mubarak government 
vith us a concern about the 
to regional stability posed by the 
or their radical surrogates 
he region. Our military- coopera- 
Tis from this shared concern and 
1 element in maintaining regional 

and in deterring aggression 
thin or outside the region. 



The past year has seen a number of 
examples of the importance of close 
U.S. -Egyptian relations. We worked 
closely with Egypt and Israel to secure 
final Israeli withdrawal from the Sinai in 
implementation of the Egyptian-Israeli 
Peace Treaty. This successful exchange 
of land for peace between Egypt and 
Israel is the very basis for our broader 
peace efforts in the region. These efforts 
continue to have the full support of 
Egypt. President Mubarak has been a 
vocal supporter of the President's 
September 1 peace initiative, and his 
backing has complemented our efforts to 
generate broader Arab support for an 
expanded peace process. 

Egyptian-Israeli Relations 

I would like briefly to review the status 
of Egypt's relations with Israel, since I 
know this is a subject of interest to the 
committee. I note from your report on 
your very useful trip to the region last 
fall that you discussed this subject with 
President Mubarak. I know that other 
congressional visitors to Egypt have 
done so as well. I would point out that 
President Mubarak's statements to the 
Congress, to this Administration, and, 
indeed, to the public are strikingly con- 
sistent on the subject of peace with 
Israel. President Mubarak's government 
is committed to a peaceful relationship 
with Israel in accordance with the treaty 
between them and to the pursuit of a 
broader peace in the Middle East. 

Despite Egypt's commitment to 
peace with Israel, it is fair to say that 
relations between the two countries have 
been strained by events in Lebanon. 
Egypt has recalled its ambassador and 
has told the Israelis he will not return 
until there is an announced plan for 
Israeli withdrawal from Lebanon. Israel, 
in turn, has complained to Egypt about 
media treatment of Israel and various 
trade problems. As you know, both 
states have circulated memoranda out- 
lining complaints against the other. 



We have discussed our concerns 
about these strains with both govern- 
ments. We have urged both to consider 
the importance of their relationship to 
the broader goal of regional peace and 
to be flexible in their dealings with one 
another. There is some evidence that 
these efforts, plus the desire of each 
state to maintain a positive relationship, 
may have begun to have some effect. 
Delegations from the two countries met 
March 2 to resume discussions on the 
Taba issue, which is the major outstand- 
ing issue remaining from the Sinai with- 
drawal. Talks on other issues of impor- 
tance to the bilateral relationship will 
also be held in the near future. 

While progress on Lebanon is criti- 
cal to the revitalization of Egyptian- 
Israeli relations, these direct bilateral 
talks are an important step in rebuilding 
a spirit of trust and confidence between 
the two states. The resumption of ex- 
panded peace negotiations, as foreseen 
in the President's September 1 initiative, 
would, of course, be the strongest 
stimulus to improved Egyptian-Israeli 
relations. 



Administration's Budget Request 

I would like to turn now to the Adminis- 
tration's request for the FY 1984 securi- 
ty assistance request for Egypt. The 
President's request for Egypt has three 
components— a PL 480 title I program 
of $250 million, an economic support 
fund (ESF) program of $750 mOlion, and 
a foreign military sales (FMS) program 
of $1.3 bilHon, of which $450 million 
would be in forgiven credits. This re- 
quest is an essential part of the Presi- 
dent's efforts to promote peace and 
stability in the Middle East and reflects 
the special relationship between Egypt 
and the United States. The individual 
parts of our budget request support 
Egyptian Government efforts to 
revitalize its economy and modernize its 
military. 

As your report on your recent visit 
to Egypt clearly noted, Egypt faces 
serious economic problems. While the 
economy is still growing, its rate of 
growth has slowed measurably, and the 
indications are that this will continue. At 
the same time, foreign exchange earn- 
ings from tourism, the Suez Canal, oil 
exports, and remittances from Egyp- 
tians working overseas are all down. 
The rapidly decreasing price of oil may 
contribute to further declines in three of 
these four areas. 

The Mubarak government recognizes 
Egypt's economic problems. President 



MIDDLE EAST 



Mubarak has graphically outlined these 
problems for the Egyptian people, 
speaking more frankly than any modern 
Egyptian head of state. President 
Mubarak understands that change is 
needed if Egypt is successfully to rebuild 
its economy and achieve a better life for 
its people. Change, of course, means 
economic reform. The Mubarak govern- 
ment is implementing reforms, although 
not always at the pace that we and 
others might think best. But unlike the 
past, the issue is no longer whether 
reforms are needed but rather the pace 
at which they are to be implemented. 

Our military assistance program for 
Egypt is designed to help the Mubarak 
government modernize its military 
establishment, which is still largely 
equipped with aging Soviet equipment. 
Egypt needs a credible military force to 
deter the direct threats to itself from 
radical states in the region and to help 
support others from aggression. Our 
military assistance and training pro- 
grams are critical parts of the Mubarak 
government's efforts to maintain a credi- 
ble military force. Given Egypt's 
economic problems, however, we have 



sought to package this assistance so it 
will have the lowest possible cost for 
Egypt. 

In closing, let me reiterate the 
special nature of our relationship with 
Egypt, which has its roots in shared 
strategic interests and a common dedica- 
tion to the pursuit of regional peace. 
Both the economic and military com- 
ponents of our security assistance pro- 
gram are designed to strengthen that 
relationship and serve thereby vital U.S. 
interests in the Middle East. The 
Mubarak government sees this 
assistance as a tangible demonstration 
of U.S. support and as a key component 
of its own efforts to deal with its 
economic problems and to rebuild its 
military strength. In short, this 
assistance is an investment in support of 
not only a key Middle Eastern ally but 
regional peace and stability as well. 



'The complete transcript of the hearings 
will be published by the committee and will 
be available from t'ne Superintendent of 
Documents, U.S. Government Printing Of- 
fice. Washington, D.C. 20402. ■ 



FY 1983 Supplemental 
Request for Lebanon 



by Nicholas A. Veliotes 

Statement before the Subcommittee 
on Foreign Operations of the House Ap- 
propriations Committee on March 10, 
1983. Ambassador Veliotes is Assistant 
Secretary for Near Eastern and South 
Asian Affairs.^ 

I welcome this opportunity to appear 
before the subcommittee in support of 
the Administration's supplemental 
foreign assistance request for Lebanon 
in FY 1983. 

We are requesting $150 million in 
economic support funds (ESF), $100 
million in foreign military sales (FMS) 
guarantees, and $1 million in interna- 
tional military education and training 
(IMET) funds. These funds are needed 
now, to begin urgent projects which can- 
not await the normal FY 1984 appro- 
priation cycle. 

The ESF funds will be used primari- 
ly to rehabilitate and reconstruct basic 
infrastructure, such as potable water 
systems, telecommunications, and public 
health services. 



The funds we are requesting will 
finance programs in Lebanon designed 
to help rebuild the economic and securi- 
ty infrastructure of that war-ravaged 
country by providing the government 
with the resources necessary to reestab- 
lish its sovereign authority throughout 
the country. 

Urgency of Reconstruction 

Reconstruction of infrastructure is 
urgent. The economy remains a 
shambles, basic infrastructure is 
destroyed or deteriorated, the govern- 
ment cannot provide much in the way of 
basic services outside Beirut, and en- 
trepreneurs are afraid to invest in 
reconstruction until they see some 
positive signs of improvement. The 
Government of Lebanon will need a 
great deal of assistance to accomplish 
the tasks before it, U.S. assistance alone 
will not suffice. Multinational agencies 
and other nations must also help and, in- 
deed, have already indicated to us their 
willingness to do so. They all are 
waiting, however, for the political and 



security situation to improve and, c 
course, for the longer term stabilit; 
would be provided by the complete 
drawal of foreign forces. Their ver; 
waiting, however, is contributing t( 
fact that, other than the very signi 
restoration of security in Beirut, pi 
ress is limited. 

Thus, to an extent, Lebanon is 
caught in a vicious cycle of inactior 
United States is taking steps to he 
break this vicious cycle. As a resul' 
technical assistance and infusions c 
modest but critical amounts of mal 
assistance from the United States, 
Government of Lebanon is beginni 
improve its organization, throw ofl 
torpor induced by years of civil coi 
and gear up to rehabilitate and 
reconstruct basic infrastructure in 
to get the economy moving. In Lei 
as anywhere, perceptions are impc 
As other donor organizations, such 
the World Bank, and other donor i 
tries perceive that some progress i 
ing made, there will be a bandwag 
feet. Some other donors have aire; 
agreed to participate in the recons 
tion effort but much more will be 
ed. The funds which the United St 
contributes to this reconstruction 
effort— small in terms of total nee 
will allow vital reconstruction to g 
started now, at a time when other 
watching and waiting. Once this i 
begins, we fully expect it will attrj 
funds from other donors; funds wl 
will carry the rehabilitation throug 
completion. 



Strengthening Lebanese Military 
Forces 

We are strengthening the military 
of the Government of Lebanon by 
viding equipment and training. Air 
this assistance has had a notable i 
Lebanon endured nearly 8 yeai 
brutal civil war followed by the Isr 
invasion. During the period, the : 
of Lebanon and its residents— as 
measured in human as well as phy; 
terms— has been enormous. Althoi 
the major hostilities are over, the i 
of the constant bloodletting and ph 
destruction are very vivid, and tod 
agony goes on in the form of the c 
tinued military occupation of most 
Lebanon by the Israeli defense for 
the Syrian Army, armed PLO [Pal 
Liberation Organization] elements, 
other armed foreigners. The Lebai 
Armed Forces, the legitimate milit 
arm of the Lebanese Government, 
trol only the capital city of Beirut. 



Department of State B e 



MILITARY AFFAIRS 



le FMS program will be supported 
I slightly increased IMET program 
will improve overall training of 
;banese Armed Forces. Equipment 
■aining needs of the armed forces, 
urgent, are paced by the availabili- 
Tiilitary manpower. FMS and 
funds sought in the supplemental 
atched to the ability of the 
ese Armed Forces to absorb them. 
■ FMS and IMET levels of $15 
1 and $750,000, respectively, are 
: in FY 1984 because all of the 
nent for the armed forces buildup 
have been ordered by then, 
e are talking about a Lebanese 
i Forces structure of some 20,000 
inel which require a great deal of 
nent to provide for national securi- 
I have nearly completed a program 
ce four brigades capable of per- 
ig this mission. In the next phase, 
n to equip another brigade and 
r enhance the effectiveness of one 
original four brigades. This sup- 
ital funds additional equipment 
lining for two more brigades. 
I'ould, in effect, give Lebanon 
quipped brigades, urgently re- 
for Lebanon's security. But the 
3e Armed Forces are ready now 
on new missions and put to use 
V equipment and training they are 
ig- 
i United States fully supports the 

' integrity, unity, and 
gnty of Lebanon which we 

consistent with, indeed, the 
lisite for, the long-term security 
"s northern border. Lebanon has 
e victim over the years of the 
cycle of action and reaction- 
tacks against Israel and Israeli 
ion. There can be no repeat of 
lappy history. It is necessary for 
anese Armed Forces to be the 
Tied force in Lebanon. It must be 
itly strong to control effectively 
ers and prevent outside armed 
from reentering the country. It 
equipped and trained to ensure 
Danon never again becomes the 
ound for outside contending 

ability of the Lebanese Govern- 
ider President Gemayel to 
essential government services 
ntain security is crucial to 

a national consensus, which will 
len the government's ability to 
;e the departure from Lebanon 
reign forces. The departure of 
roes is of vital importance to our 
s both in Lebanon and with 
;o the Middle East peace proc- 



ess. A sUible, reconstructed Lebanon, 
free from all foreign forces and with a 
strengthened central government, exer- 
cising sovereign control over all of its 
territories, is a most worthy goal on its 
own merits. Such a Lebanon will also 
make a major contribution to the securi- 
ty of Israel's northern border. 

Finally, this Lebanon, enjoying good 
relations with its neighbors, will give a 
stimulus to the broader peace process. 
For these reasons, it is critically impor- 
tant for us now to demonstrate, in a 
concrete way, the U.S. commitment to 
Lebanon's reconstruction and restora- 
tion as a sovereign and independent 
nation. 

Lebanon and Israel are currently 
conducting direct, intense negotiations. 
Many exceedingly difficult problems re- 
main, but the United States is working 
closely with both sides to help them 
reach a compromise which will satisfy 
the major issues of sovereignty and 
security. When this occurs, and when all 
foreign forces withdraw from Lebanon, 
we fully expect a resurgence of con- 
fidence among both Lebanese and 
foreign private investors who will then 
start to play a major role in the recon- 
struction of Lebanon. 

Current Situation 

The Lebanese Armed Forces are now in 
full control of Beirut, a city which con- 
tains over one-third of the population of 
Lebanon. No longer are armed militia- 
men or PLO fighters seen in the streets. 
This provided a highly visible political 
signal of the expanding ability of the 
Government of Lebanon to exercise 
sovereignty and to provide security. In 
recent days, the government has also 
taken over a portion of the Port of 
Beirut which had long been illegally 
operated by a private militia. Govern- 
ment forces are now in control of the 
administration of the entire port. Cur- 
rently, the entire capital city of Beirut is 
enjoying peace for the first time in 
years. That is only the beginning, but 
the restoration of central institutions in 
Beirut is a model which we want to see 
expanded countrywide. 

However, these are only initial ef- 
forts and the overall security needs of 
that war-torn country require our 
urgent attention. By assisting the 
Lebanese Armed Forces to increase its 
capability, we are helping the central 
government reassert and extend its 
authority throughout the country. The 



expected increase in the size and effec- 
tiveness of the Lebanese Armed Forces 
in maintaining security will permit the 
withdrawal of the multinational force 
(MNF). 

We know that the members of the 
subcommittee are interested in knowing 
how long the MNF will have to remain 
in Lebanon to bolster the security role 
of the Lebanese Armed Forces. I can- 
not, today, give you an exact date. But 
it is our intention to phase out the 
multinational presence just as soon as 
the evacuation of Syrian, Israeli, and 
Palestinian forces is complete and the 
Lebanese Army is able to do its job 
countrywide. The success of the military 
assistance program we are describing to- 
day will directly contribute to that goal. 

To conclude, even while the United 
States is currently working with the 
Government of Lebanon in an effort to 
obtain the departure of all foreign 
forces, critical projects for reconstruc- 
tion and reequipping the armed forces 
have begun. This is not lost upon the 
Lebanese Government or the people of 
Lebanon, who look to the United States 
as their principal friend during this most 
difficult time. The actions which the 
United States takes in Lebanon this 
year and next will benefit not only 
Lebanon but the entire Middle East for 
years to come. We cannot overempha- 
size the impact that our programs in 
Lebanon will have upon our efforts to 
obtain a just and lasting peace for all 
countries in this important region. 



'The complete transcript of the hearings 
will be published by the committee and will 
be available from t'he Superintendent of 
Documents, U.S. Government Printing Of- 
fice, Washington, D.C. 20402. ■ 



U.S. Defense Policy 



PRESIDENT'S STATEMENT, 
MAR. 9, 1983' 

Our defense policy is based on a very 
simple premise: The United States will 
not start fights. We will not seek to oc- 
cupy other lands or control other 
peoples. Our strategy is defensive; our 
aim is to protect the peace by ensuring 
that no adversaries ever conclude they 
could best us in a war of their own 
choosing. 

What this means is that we design 
our defense program not to further am- 
bitions but to counter threats. Today, 



NUCLEAR POLICY 



and for the foreseeable future, the 
neatest of these threats comes from the 
Soviet Union, the only nation with the 
military power to inflict mortal damage 
directly on the United States. 

This also means that if the American 
people are asked to support our defense 
program, they must get the straight 
facts about this threat. The Defense 
Department's first edition of Soviet 
Military Power gave them those facts; 
this revised edition will keep them up to 
date and will give them a new oppor- 
tunity to compare Soviet forces with 
our own. 

The facts in this book are straight- 
forward. The Soviets have not slowed 
the pace of their enormous military 
buildup. In little over a year, they have 
begun testing new models in almost 
every class of nuclear weapons. They 
are dramatically expanding their navy 
and air force, are training and equipping 
their ground forces for preemptive at- 
tack, and are using their military power 
to extend their influence and enforce 
their will in every corner of the globe. 

We must continue to demonstrate 
our resolve not to allow the military 
balance to tip against the United States. 
By demonstrating that resolve, we will 
not only deter aggression but we will 
also offer the Soviets a real incentive to 
accept genuine, mutual arms reduction. 

Let me quote a statement Winston 
Churchill made to the House of Com- 
mons in late 1934, as he urged the 
British to stop dismantling their 
defenses. 

To urge the preparation of defense is not 
to assert the imminence of war. I do not 
believe that war is imminent or that war is 
inevitable, but . . . that if we do not begin 
forthwith to put ourselves in a position of 
security, it will soon be beyond our power to 
do so. 

A strong, credible American defense 
is indispensable to protecting the peace 
and preserving the free way of life our 
people cherish. 



U.S. Nuclear Policy 
Toward South Africa 



'Text from Weekly Compilation of 
Presidential Documents of Mar. 14, 1983. 



by Harry R. Marshall, Jr. 

Statement before the Subcommittees 
on Africa and on International 
Economic Policy ami Tnulr oflhc House 
Foreign Affairs ('nininitlrr mi l)n-nii- 
ber 2. 1982. Mr. Marshall is Ihpiitii As- 
sistant Secretary for Oceans and Inter- 
national Environmental and Scientific 
Affairs. ' 

I appreciate the opportunity to discuss 
with your subcommittees the nuclear 
policy aspects of this country's relations 
with South Africa. Princeton Lyman, 
Deputy Assistant Secretary in the 
Bureau of African Affairs, has 
presented an overview of U.S. policy 
toward that country and has reviewed 
several nonnuclear matters on which you 
requested the Department's views [see 
p. 25]. 

Let me begin my testimony by 
describing for you current U.S. nuclear 
export policy regarding South Africa 
and the role of the Department of State 
in the review and approval of nuclear 
exports. As you are aware, this Ad- 
ministration announced a strong nuclear 
nonproliferation policy in 1981— one 
that is supported by a foundation of ef- 
fective export controls. As part of that 
policy, we are committed to continuing 
efforts to persuade South Africa, and 
other nations which have not ratified the 
Nonproliferation Treaty, to do so and to 
accept International Atomic Energy 
Agency (IAEA) safeguards on all their 
nuclear activities (full-scope safeguards). 
We have told the South African Govern- 
ment on several occasions that this is 
our position for the basis on which U.S. 
supply of uranium fuel to South Africa 
could take place. 

I want to make clear that until 
South Africa accepts full-scope 
safeguards and takes other steps to 
meet the requirements of U.S. law, no 
export from the United States will be 
made of uranium fuel or any nuclear 
equipment licensed by the Nuclear 
Regulatory Commission (NRC). I find 
this, contrary to what has been said 
already, to be a rather significant policy 
of denial. 

It is, however, this Administration's 
view that export approval of a few 
carefully selectd nonsensitive, nuclear- 
related commodities or dual use items. 



can make a contribution to U.S. nc 
proliferation efforts. 

Approval of such a narrow ran 
nonsensitive exports is subject to c 
case-by-case interagency review. S' 
nuclear-related commodities have 1: 
exported for use in safeguarded fa» 
for health and safety applications, 
provals of dual-use commodities hsi 
been conditioned upon the receipt 
written South African Governmen' 
surances of no nuclear explosive u: 
no retransfer for another use with i 
prior consent of the U.S. Governm 
One example of such exports is a 
hydrogen recombiner for the Koeb" 
nuclear power plant. It was appro' 
because it could be used only at tli 
facility to meet health and safety i 
fives identified in the Three-Mile 1 i 
reactor accident investigation. i 

We believe that these few expi i 
provals for the South African iiticl 
program can assist the United Sta n 
maintaining a dialogue with Sotith 
Africa regarding nonproliferation • 
and objectives. Our ability to influt t 
other nations to act in accordance (i 
our nonproliferation objectives req i 
that we continue to talk to them ai 
that they listen to what we say. Wv 
believe that a willingness to appro' '■ 
small, carefully selected number of 
nonsensitive exports to South Afrini 
its nuclear energy program can hel(i 
persuade South Africa to be more fi 
coming on nonproliferation issues. ; 

Export Review Process 

With respect to the role of the Depr 
ment of State in the export review f 
ess, we are responsible, urn 'er the i 
Atomic Energy Act, for the preparf 
coordination, and transmittal to thii 
NRC of executive branch views on r 
plications for NRC export licenses. ^ 
under the Atomic Energy Act, the i 
currence of the Department of Statf 
required for approval of so-called s:*' 
quent arrangements authorized by i 
Department of Energy (DOE). This i 
applies to transactions such as retrf 
fers abroad of U.S. -origin spent nu'^ 
fuel for reprocessing or the conclus' 
a DOE enrichment contract with a 
foreign entity. Department of Statt' 
currence is also needed for nuclear i 
technology transfers approved by t; 
Secretary of Energy pursuant to Si ' 



Department of State Bui 



NUCLEAR POLICY 



if the Atomic Energy Act (Part 
Title 10 Code of Federal Regula- 
and for approvals of Department 
merce licenses for export of com- 
es, including nuclear-related and 
se items, which require interagen- 



oup on Nuclear Export 
ination 

art of this export approval activi- 
und in the work of the subgroup 
lear export coordination — more 
nly known as the SNEC. The 
ons of the SNEC were described 
ne in testimony before Con- 
len Zablocki's and Bingham's sub- 
tees by the current SNEC chair- 
Carlton Stoiber, Director of the 
of Nuclear Export Control in the 
ment of State's Bureau of Oceans 
ternational Environmental and 
|fic Affairs. 

i SNEC was established in the 
r of 1977 as a subgroup to the 
il Security Council (NSC) ad hoc 
)n nonproliferation to meet the 
r a "working level" (i.e., office 
-) forum within the Administra- 
ere controversial or sensitive ex- 

Iitters and issues could be re- 
and discussed, 
ticipants in the SNEC are: 1) the 
iinent of State, which chairs; 
; department of Energy; 3) the 
rnent of Commerce; 4) the 
rnent of Defense (DOD); 5) the 
> ontrol and Disarmament Agency 
•i ; and 6) the Nuclear Regulatory 
rsioii. Information from the U.S. 
isnce ciimmunity has always been 
il? to the SNEC, and recently 
sitatives of intelligence agencies 
h:ome regular participants in 
Ilneetings. If circumstances war- 
cier agencies are invited to par- 
t There are no restrictions on the 
cof participants from each agen- 
itin reason, provided all have ap- 
i'-e security clearances. There is 
Oim, although the SNEC normal- 
Jites on a consensus basis with 
Murrence of all participating 
ii needed for export approvals, 
h Nuclear Nonproliferation Act of 
vich amended the Atomic Energy 
t^r)A. provided in Sections 
I md r)7b a statutory basis for an 
^f ncy (■( lordinating body to 
: ■ nuclear exports licensed by the 
c authorized by DOE. The role of 
11,3 a body to resolve interagency 
'e:'es on nuclear exports was set 
uier Section 5 of the Procedures 



Established Pursuant to the Nuclear 
Non-Proliferation Act of 1978. 

The SNEC acts on an advisory basis 
only, and its recommendations are not 
formally binding upon any agency. 
Subgroup agendas, minutes, and discus- 
sions during meetings are classified and 
are exempt from release under the 
Freedom of Information Act to protect 
predecisional interagency views which 
are an integral and necessary part of the 
review process, quite apart from the 
specific national security classification of 
a matter under discussion. Final recom- 
mendations on specific applications in- 
cluding reasons for denials and condi- 
tions, if any, for approvals, are 
unclassified. 

The SNEC meets at intervals of ap- 
proximately 3 weeks to review proposed 
nuclear-related exports which could con- 
ceivably pose proliferation risk. The 
SNEC, as noted, serves as a forum for 
review and discussion of nuclear export 
policy issues and specific case applica- 
tions. The SNEC can review NRC 
license applications, DOE subsequent 
arrangements and 10 CFR 810 applica- 
tions, and Department of Commerce ex- 
port license applications, since Com- 
merce controls a far wider range of 
commodities and technology then either 
DOE or NRC. 

All Commerce export license applica- 
tions that have any actual or potential 
nuclear-related use are reviewed by 
DOE. In this review process, DOE 
follows policy guidance from the State 
Department,' the SNEC, and other 
sources. DOE refers most of the cases it 
reviews back to Commerce for licensing 
action because the country, end use, or 
the nature of the items in question make 
clear the lack of any proliferation 
significance. For some cases where it is 
clear that an item would present a pro- 
liferation concern, or where export 
would be contrary to U.S. policy, denial 
is recommended. The remaining cases 
which raise some questions of prolifera- 
tion significance are referred by DOE to 
the SNEC for consideration. DOE 
reviews about 8,000 cases a year. Of 
that number, only about 200-300 are 
referred to the SNEC. Other agencies 
may also refer cases to the subgroup for 
review. 

In reviewing license applications for 
exports of possible proliferation concern, 
the SNEC takes into account a range of 
factors, including: 

• Past practice concerning supply of 
the commodity in question to the in- 
tended recipient country and end-user; 



• Equivalent commodities already in 
the recipient country and available to 
the end-user; 

• Foreign availability; 

• Intelligence information regarding 
activities of proliferation concern on the 
part of the recipient country and the end 
user; 

• Technical capabilities and signifi- 
cance of the commodity to be exported; 

• Foreign policy considerations; and 

• Applicable statutory criteria. 

If, on the basis of its review of the 
factors described in the preceding 
paragraph and any other relevant con- 
siderations, the SNEC determines that 
the proposed export involves significant 
proliferation risk, a recommendation for 
denial of the export will be made to the 
licensing agency. 

If participating agencies are unable 
to reach agreement regarding the 
disposition of a particular export ap- 
plication to the SNEC, the Procedures 
Established Pursuant to the Nuclear 
Non-Proliferation Act of 1978 provide a 
series of steps which can be taken to 
resolve the disagreement. The matter 
can be referred to the successor to the 
NSC ad hoc group on nonproliferation, a 
body comprised of assistant and deputy 
assistant secretaries charged with over- 
sight of nuclear proliferation and export 
control responsibilities in each of the 
concerned agencies. If resolution of the 
disagreement proves impossible at that 
level, the matter can be referred to the 
Cabinent level and even to the Presi- 
dent. 



State Department Study 

The subcommittees have asked about the 
status of an "intensive study" focusing 
on South African nonproliferation 
issues. Although it is not possible to say 
now that the study will be completed 
when originally anticipated, progress has 
been made in clarifying many of the con- 
cerns involved. The issues under con- 
sideration in the study are those which 
we have been addressing for some time, 
such as the question of supply to South 
Africa of Commerce-licensed, nuclear- 
related items needed for the safe or en- 
vironmentally sound operation of the 
Koeberg nuclear power plant. An overall 
objective of the study is to develop fur- 
ther our policy goals vis-a-vis South 
Africa. 

Fuel for Koeberg Reactors 

I would like now to turn to the subcom- 
mittees' question about the acquisition 



NUCLEAR POLICY 



by South Africa of fuel to start up the 
Koeberg nuclear power station. The 
Electricity Supply Commission of South 
Africa (ESCOM), which is to operate the 
two French-built reactors sited near 
Cape Town, concluded contracts with 
the predecessor to DOE on August 16, 
1974, for the enrichment of South 
African uranium at U.S. facilities. 
ESCOM thus became obligated to 
deliver natural uranium, and DOE was 
obligated to enrich it to approximately 
3% or less for delivery to ESCOM at the 
DOE enrichment facifity. ESCOM was 
obligated to obtain the necessary export 
licenses for shipment from the Cnited 
States. However, as is well known, 
because of unsafeguarded nuclear ac- 
tivities in South Africa, export criteria 
in U.S. law are not now met by South 
Africa to permit the NRC to issue ex- 
port licenses for nuclear fuel. 

Numerous meetings on this issue 
have taken place between the two 
governments; however, the U.S. position 
has remained firm— the executive 
branch would not recommend NRC is- 
suance of any export license until all 
South African nuclear activities were 
subjected to IAEA safeguards and 
South Africa adhered to the Non- 
proliferation Treaty. 

ESCOM and the South African Gov- 
ernment have continued efforts to obtain 
the necessary NRC export licenses. In 
fact, ESCOM has carefully complied 
with the enrichment contracts and has 
delivered feed material to DOE which 
has been enriched and stored at a DOE 
enrichment facility. 

French Arrangements To Supply 
Koeberg Reactors 

The French firm FRAMATOME built 
the reactors for ESCOM at Koeberg. In 
addition, ESCOM concluded a contract 
in the mid-1970s with a French- 
controlled company for the fabrication of 
low enriched uranium into fuel elements 
for the reactors. The United States has 
been aware of this contract and has held 
discussions with French Government of- 
ficials about our position on supply of 
nuclear fuel to South Africa. The 
Government of France told us that it 
would not at this time enter into any 
new supply obligations with South 
Africa. Their contract for fabrication 
was a pre-existing obligation. 

In 1981 ESCOM acquired, in a 
private transaction, previously enriched 
uranium located in Europe. ESCOM 
then delivered this material to the 
French fabrication facility for production 



of fuel elements for the initial core of 
one of the two reactors. The Depart- 
ment of State and other concerned U.S. 
agencies have carefully examined the ac- 
tivities of Edlow International, Inc., a 
Washington-based firm, in connection 
with the acquisition by ESCOM of this 
low enriched uranium. We concluded 
that there was no violation of U.S. law 
or regulations. These services provided 
by Edlow are readily available from non- 
U.S. companies, could have been per- 
formed by ESCOM itself, and, to our 
knowledge, are not controlled by any 
other government. Officers of Edlow ap- 
prised us that they had been in contact 
with ESCOM officials and had arranged 
for the purchase by ESCOM in Europe 
of non-U. S., previously enriched 
uranium. We were not advised by them 
of additional details of this arrangement. 

We were aware, of course, that 
South Africa desired to find another 
source of fuel for the Koeberg reactors. 
We told the South African officials that 
as a matter of policy, we were asking all 
supplier governments not to enter into 
new commitments for significant nuclear 
supply with any non-nuclear-weapons 
state which engaged in unsafeguarded 
nuclear activities. We had such discus- 
sions with France and, as I have 
testified, France did not conclude any 
new commitment. We do not believe 
that the actions of Edlow have 
significantly undermined the influence or 
nonproliferation policies of this Ad- 
ministration. 

You may ask why the United States 
did not try to prevent this arrangement 
from going forward. In answering this 
question, let me first emphasize again 
that no nuclear material subject to U.S. 
control was involved in this transaction, 
and, therefore, the United States 
possessed no jurisdiction over it. At the 
end of the previous Administration, our 
nonproliferation discussions with South 
Africa were at an impasse. By contrast, 
however, this Administration sought to 
develop and carry on a dialogue with 
South Africa in order to foster our non- 
proliferation and other objectives in that 
country. To that end, we are willing to 
consider, on a case-by-case basis, the ex- 
port of nonsensitive. Commerce-licensed 
commodities— but not, as I have men- 
tioned, nuclear fuel in the absence of 
full-scope safeguards. And this policy 
has had some tangible benefits. We have 
had very useful technical discussions 
with South African officials on the ap- 
plication of safeguards to enrichment 
facilities. In addition. South Africa is 
moving toward development and use of 



reduced enriched fuels for its Safa 
research reactor. | ' 

Outlook in South Africa 

The subcommittees have also askel 
an assessment of the likelihood of 
Africa adopting full-scope safegiia 
and adhering to the Nonproliferat 
Treaty. Frankly, we do not expect 
favorable action by South Africa ti 
ratification of this treaty or accep 
of full-scope safeguards in the nea i 
term. However, we continue to raj 
issue with officials in Pretoria in ; 
fort to persuade the government 
that it would be in its own self-int 
to adhere to the treaty and to ace 
ternational safeguards on all its n 
activities. While we have not rece 
any indication that they are inclin 
take such action in the near term, 
assessment will not lead us to aba 
our effort or to view it with less i 
cy. Nuclear nonproliferation is no 
undertaking for the short run. It 
fundamental, long-term policy obj 
and we will continue to use our bf- 
forts to persuade other nations, ii 
eluding South Africa, to take actii 
prevent the spread of nuclear w( 

Current NRC Export Applicatio 

The subcommittees have asked fo 
position on the April 1982 applica 
Transnuclear, Inc. to the NRC foi 
authorization to export low-enrich 
uranium to South Africa. The app 
tion was referred to the executive 
branch by the NRC but is not und 
five consideration as the export ci 
in the law are not met. No export 
this nuclear fuel from the United 
to South Africa would be authoriz 
this Administration until the crite: 
satisfied. 

While the law does provide foi 
Presidential waiver of licensing cr 
to permit exports under Executiv( 
in cases of overriding national intf 
such actions must be submitted to; 
Congress for review. No considers 
being given to proposing such a P 
dential waiver. 



Status of DOE Enrichment Cent 

The subcommittees' question regal 
the current status of the DOE-ES 
contract will be answered in detai' 
the Department of Energy. In sun 
situation is that ESCOM, the Scut 
African utility, and DOE are still 
obligated to comply with the term' 



Department of State B e' 



NUCLEAR POLICY 



nrichment services contract, but for 
ins already explained, ESCOM is 
le to obtain an export license for 
fer of any of the enriched uranium 
the United States to South Africa. 
)u can imagine, this rather peculiar 
actual situation raises a number of 
and policy difficulties which we 
5 to resolve. A solution to the con- 
ial impasse, which would not in- 
export to South Africa of any U.S. 
ar fuel except on the basis I have 
ioned. is under review as part of 
;udy I referred to earlier, 
he subcommittees have asked if the 
nistration foresees a time when the 
•t of enriched uranium to South 
1 would be approved short of our 
nt stated requirements of full-scope 
uards and ratification of the Non- 
eration Treaty. This is our position 
1 we have communicated to South 
1, and I do not see any likelihood 
ve would change this view in the 
future. 



rgo On All Nuclear Exports 

jbcommittees have asked for the 
tment of State's views on H.R. 
which would prohibit the export or 
ler to the Republic of South Africa 
lear material, equipment, and 
)logy. While we deplore apartheid 
•e vigorously seeking more univer- 
lerence to the Nonproliferation 
', the Administration strongly op- 
this bill, because its enactment 
significantly undermine important 
onproliferation objectives. 
preface to my comments on the 
sffects with respect to South 
, let me express our broader con- 
bout the impression that passage 
1 legislation would give to other 
ies, in particular those which 
ate with the United States both in 
r commerce and in attempting to 
s shared nonproliferation goals, 
option of the Nonproliferation 
IS viewed by many abroad as a 
criminatory, unilateral, and 
)ective changing of U.S. export 
ons. Rightly or wrongly, this 
tion caused problems for us with 
ies and other suppliers abroad. To 
ith this situation, this Administra- 
t as a high priority the 
)lishment of the U.S. reputation 
liable nuclear partner. We believe 
. deal has been accomplished in 
"ing the impression of unreliabili- 
more importantly, in developing 
i lity in furthering international 
*sus on supplier restraint. 



Passage of H.R. 7220, however, 
would reawaken those earlier concerns 
abroad. We would be seen by many as 
remaining prepared to unilaterally 
modify our conditions for nuclear 
cooperation— even when no substantive 
impact can be anticipated. The resulting 
damage to our reliability and credibility 
would, we fear, be severe. Enactment 
would also seriously undercut achieve- 
ment of our nonproliferation objectives 
in South Africa. Despite its apparent 
aim of forcing South Africa to sign the 
Nonproliferation Treaty and to accept 
full-scope safeguards, passage of this bill 
would eliminate the possibility of any 
meaningful nuclear dialogue with South 
Africa and, in fact, effectively destroy 
any change of our influencing them to 
accept full-scope safeguards and to 
ratify the treaty. 

It must be appreciated that signifi- 
cant nuclear commerce with South 
Africa was effectively precluded by the 
Atomic Energy Act. Therefore, the only 
effect of H.R. 7220 would be to preclude 
export of dual-use or nuclear-related 
items or nonsensitive nuclear technology 
which are widely available from 
non-U. S. suppliers. Almost no leverage 
would, therefore, result from such a 



step, particularly in view of the negative 
political reaction to such a law which can 
be expected from South Africa. Since 
other nations are quite able and very 
willing to supply such commodities, the 
only practical effect of the bill would be 
to transfer trade and work from U.S. 
companies and American workers to 
foreign firms. 

It is also important to note that U.S. 
dual-use exports to South Africa to 
nuclear and other government end-users 
have been carefully conditioned upon 
receipt of assurances regarding end-use, 
no retransfer, and, when appropriate, 
inspection rights. If U.S. exports are 
embargoed, there is every likelihood that 
non-U. S. suppliers will provide these 
commodities to South Africa without 
such conditions. An embargo of all ex- 
ports and other forms of nonsensitive 
nuclear cooperation with South Africa 
would eliminate U.S. access to and in- 
fluence upon South Africa's nuclear 
program. 



'The complete transcript of the hearings 
will be published by the committee and will 
be available from tlie Superintendent of 
Documents, U.S. Government Printing Of- 
fice, Washington, D.C. 20402. ■ 



Nuclear Cooperation With EURATOIVI 



LETTER TO THE CONGRESS, 
MAR. 7, 19831 

The United States has been engaged in 
nuclear cooperation with the European Com- 
munity for many years. This cooperation was 
initiated under agreements concluded over 
two decades ago between the United States 
and the European Atomic Energy Communi- 
ty (EURATOM) which extend until 
December 31, 1995. Since the inception of 
this cooperation, the Community has adhered 
to all its obligations under those agreements. 

The Nuclear Non-Proliferation Act of 
1978 amended the Atomic Energy Act to 
establish new nuclear export criteria, in- 
cluding a requirement that the United States 
have a right to consent to the reprocessing of 
fuel exported from the United States. Our 
present agreements for cooperation with 
EURATOM do not contain such a right. To 
avoid disrupting cooperation with 
EURATOM, a proviso was included in the 
law to enable continued cooperation until 
March 10, 1980, and provide for negotiations 
concerning our cooperation agreements. 

The law also provides that nuclear 
cooperation with EURATOM can be extended 



on an annual basis after March 10, 1980, 
upon determination by the President that 
failure to cooperate would seriously prejudice 
the achievement of United States non- 
proliferation objectives or otherwise jeopard- 
ize the common defense and security and 
after notification to the Congress. President 
Carter made such a determination three 
years ago and signed Executive Order 12193, 
permitting continued nuclear cooperation 
with EURATOM until March 10, 1981. I 
made such determinations in 1981 and 1982 
and signed Executive Orders 12295 and 
12351, permitting continued nuclear coopera- 
tion through March 10, 1983. 

The United States has engaged in four 
rounds of talks with EURATOM regarding 
the renegotiation of the US-EURATOM 
agreements for cooperation. These were con- 
ducted in November 1978, September 1979, 
April 1980 and January 1982. We also con- 
sulted with EURATOM on a number of 
issues related to these agreements last sum- 
mer. We expect to continue the talks in 1983. 

I believe that it is essential that coopera- 
tion between the United States and the Com- 
munity continue and likewise that we work 
closely with our Allies to counter the threat 
of nuclear explosives proliferation. A disrup- 



REFUGEES 



tion of nuclear cooperation would also cause 
serious problems in our overall relationships. 
Accordingly, I have determined that failure 
to continue peaceful nuclear cooperation with 
EURATOM would be seriously prejudicial to 
the achievement of the United States non- 
proliferation objectives and would jeopardize 
the common defense and security of the 
United States. I intend to sigTi an Executive 
Order [12409] to extend the waiver of the ap- 
plication of the relevant export criterion of 



the Nuclear Non-Proliferation Act for an ad- 
ditional twelve months from March 10, 1983. 
Sincerely, 



^Identical letters addressed to Thomas P. 
O'Neill, Jr., Speaker of the House of 
Representatives, and George Bush, President 
of the Senate (text from Weeklv Compilation 
of Presidential Documents of Mar. 14, 
1983). ■ 



FY 1984 Requests for 

Migration and Refugee Assistance 



by James R. Purcell, Jr. 

Statement before the Senate Foreign 
Relations Committee on March 9, 1983. 
Mr. Purcell is Director of the Bureau for 
Refugee Programs.'^ 

It is a pleasure to appear before you to- 
day to present the Department of 
State's request for authorization of the 
migration and refugee assistance ap- 
propriation for FY 1984 and 1985. 

Our budget request for FY 1984 is 
$344.5 million and for $326.4 million for 
FY 1985. The FY 1984 request is a 
decrease of $50.5 million from the 
FY 1983 continuing resolution level of 
funding. Half of this decrease has been 
made possible by the success of our ef- 
forts to reduce refugee admissions to 
the United States, while continuing to 
respond to humanitarian needs and U.S. 
foreign policy interests and respon- 
sibilities. 

The other half we credit to the 
absence of such large-scale refugee 
crises as were experienced in past years, 
such as the surge of Vietnamese boat 
people and the Somalia crisis, as well as 
policy and management initiatives that 
are containing or reducing the costs of 
responding to ongoing refugee relief 
problems. Furthermore, we are pleased 
with the progress in our efforts to "in- 
ternationalize" the world's response to 
refugee problems — that is, to encourage 
broader participation by other nations in 
supporting refugee programs, especially 
other developed countries which are able 
to carry a bigger share of the burden. 
We remain aware that the decrease in 
refugee program needs can be reversed 
overnight should major conflicts in any 
of the troubled areas of our world 
generate new refugee problems. 



Refugee Admissions 

Our budget request for FY 1984 is 
presented in four major subdivisions. 
The first area is refugee admissions, 
with a request of $117 million. This 
figure is about 34% of our total request 
and a decrease of about $25 million from 
the FY 1983 funding level. The request 
is based on the admission of 72,000 
refugees to the United States in FY 
1984, representing a reduction of 18,000 
from the FY 1983 consultations level 
and one-third the 217,000 consultations 
level of FY 1981. The 72,000 projected 
admissions are divided among 46,000 
East Asians, 15,000 from the Soviet 
Union and Eastern Europe, 6,000 from 
the Near East and South Asia, 2,000 
from the Western Hemisphere, and 
3,000 from Africa. Activities required to 
admit refugees include four areas. 

First, we request $20.5 million for 
processing of refugees prior to entry. 
This includes funding the joint voluntary 
agency representatives for processing 
services in Southeast Asia, Pakistan, 
and Africa, as well as funding for the 
voluntary agencies in Europe. Also in- 
cluded are funding of some necessary 
management services by the voluntary 
agencies in the United States, such as a 
data information system on refugee ad- 
missions and American Red Cross trac- 
ing activities. 

Second, we are requesting about 
$46.6 million for capitalization of trans- 
portation loans through the Intergovern- 
mental Committee for Migration for 
refugees admitted to the United States. 
This takes into account a projected $8 
million in loan repayments in FY 1984. 

Third is reception and placement 
grants to voluntary agencies which pro- 
vide initial reception and placement 
services to newly admitted refugees. 



with a request of about $39.5 millia 
This level provides for a small inew 
over the per capita amounts budge^ 
FY 1983 in order to cover the effec 
inflation. 

Finally, we are requesting ; 
$10.4 million for the training and c 
tation of refugees admitted to the 
United States. We have already in 
a sound program of English langus 
and cultural orientation training fo 
dochinese refugee awaiting admiss 
the refugees processing centers. Vv 
requesting funding of program im- 
provements to address the additior 
training needs of Indochinese refuji 
least likely to succeed in the Unite* 
States — those who are preliterate 
who have very low levels of learniii 
addition, we propose extending qui 
training programs to some other f 
of refugees where economically fe 
It is our conclusion, after careful i 
vestigation, that the very small pr 
increases in this area will result in 
significant savings in domestic wel 
costs because refugees enter muclj 
ter prepared for life in the Unitedl 
States, especially to take entry-lev 
jobs. 

Relief Assistance 

Funding requested for relief assist 
to refugees overseas in FY 1984 is 
$197.5 million, about 57% of our t 
request and a decrease of $25.8 m 
from the FY 1983 funding level. T 
years ago, the composition of our 
quest was about two-thirds for adi 
sion and one-third for relief assists 
We have now reversed these percf 
ages reflecting the determination i 
Administration to seek solutions _ti 
refugee crises other than admissio 
the United States. We have sough- 
address refugee needs through as- 
sistance in the countries of first i 
and through pursuit of repatriatioi 
resettlement in countries of asylur 
resettlement in third countries oth 
than the United States. We are pli'f 
that we have succeeded in doing s^ 
while continuing to meet our 
humanitarian responsibilities thnu i 
the admission to the United States 1 
those who need this solution and a 
eligible under our laws. 

The relief assistance categor\' 
compasses a number of programs, 'i 
ticularly relief programs identifiet* ■ 
geographic area. In addition, we p >^ 
maintain a small fund to foster rest* 
ment opportunities other than resi 1^ 
ment in the United States, includi: 



Department of State Bel 



SECURITY ASSISTANCE 



tary repatriation and resettlement 
ice. 

outheast Asia. Relief for Indo- 
se refugees in Southeast Asia is 
antially reduced over previous 
at our request level of $21.7 
n, but remains crucial to support 
fforts of the U.N. High Commis- 
r for Refugees (UNHCR) and other 
;ies to address the needs of about 
00 refugees in UNHCR camps and 
aarter of a million Kampuchean 
ees who remain in a precarious 
ion on the Thai-Kampuchean 



frica. African relief assistance is 
educed from our FY 1983 request 
equest of $52.8 million for FY 

This reflects not a reduced com- 
3nt to the problems of African 
ees but rather the fortunate cir- 
ances which have decreased the 

in some key areas, such as 
lia. Furthermore, a shift in em- 
5 of relief programs in Africa 
d encouraging an early return to 
mic independence of refugees in 
hies of asylum is expected to yield 
j.ntial benefits for refugee well- 
I host country economic and 
lal stability, besides the dollar sav- 
li the reduced U.S. fair share 
li those programs. 

liar East. The Near East continues 
jin area of key concern. In support 
President's peace initiatives in the 
ilast, continued support for 
ine refugees through the work of 
N. Relief and Works Agency 
NA) for Palestine refugees in the 
5ast is crucial. In our relief 
mce request, we have included $72 
for this purpose. We also intend 
inue to fund programs of the 
R, the International Committee of 
Cross (ICRC), and some volun- 
ncies for almost 2.8 million 
refugees in Pakistan. The sum 
million is included for this 



Uin America. Consistent with the 
ws of the Administration in Latin 
ii'a and the growing refugee needs 

area, we are increasing our re- 
'Vir funding of programs for Latin 
'■an refugees to $13 million, $8 
t more than our FY 1983 request. 
hf this amount would go toward 
^R programs, although some will 
m be contributed to the ICRC, 
ijy to voluntary agencies. 



Resettlement. Finally, under relief 
assistance, we have requested $7 million 
for resettlement assistance programs. In 
accordance with the U.S. policy of en- 
couraging solutions to refugee problems 
which minimize the need to resettle 
refugees in the United States, we intend 
to pursue the development of other 
resettlement options, including voluntary 
repatriation, resettlement in countries of 
first asylum, and resettlement in non- 
traditional resettlement countries. 

Other Activities 

Also included in our request is $22.4 
million for "other activities." This item 
includes the U.S. contribution of $2 
million to the so-called ordinary program 
of the ICRC for its administrative ex- 
penses, as well as a $1.75 million con- 
tribution to their special program for 
visitation of political detainees. The In- 
tergovernmental Committee for Migra- 
tion is funded at about $3.15 million for 
its assessed administrative budget and 
about $2 million for its voluntary pro- 
grams—the same level as for FY 1983. 
Also in this category is the program 
of assistance to refugees settling in 



Israel at a level of $12.5 million, the 
same funding level requested for FY 
1983. In accordance with the action of 
the Congress in the authorization act 
last year, this program now covers not 
only Soviet and Eastern Europe 
refugees immigrating to Israel but also 
refugees from other areas. 

Administrative Expenses 

For FY 1984, we request $7.6 million 
for administrative expenses, an increase 
of only $38,000 from FY 1983. This 
assumes maintaining our current 
worldwide staff level of 98 positions. 

With respect to FY 1985, we request 
an authorization of $326.4 million. Of 
this total, we are requesting $89.4 
million for admission, $205.7 million for 
refugee assistance overseas, $23.4 
million for other, and $7.9 million for ad- 
ministrative funds. 



'The complete transcript of the hearings 
will be published by the committee and will 
be available from the Superintendent of 
Documents, U.S. Government Printing Of- 
fice, Washington, D.C. 20402. ■ 



FY 1984 Security Assistance Requests 



by William Schneider, Jr. 

Statement before the Subcommittee 
nil InterxiitiiDial Security and Scientific 
Affiiirs nf III,' House Foreign Affairs 
Co mm I It, r ,ni March 3, 1983. Mr. 
Schneider is Under Secretary for Securi- 
ty Assistance, Science, and Tech- 
nology.'^ 

U.S. foreign assistance programs con- 
stitute an integral part of this nation's 
response to international political and 
economic developments throughout the 
world. Resources provide us with the 
means to exercise leadership interna- 
tionally and enable us to help developing 
countries address their most pressing 
problems. 

Secretary Shultz testified before the 
full committee on foreign assistance in 
general. I am here today to discuss U.S. 
security assistance programs and arms 
transfer policy. 



SECURITY ASSISTANCE 
PROGRAMS 

We have developed an integrated 
foreign assistance program in which 
development and security assistance 
combine to meet our economic and na- 
tional security objectives, as well as 
those of other countries which share 
these objectives. Security assistance is 
but one apsect of the whole. It is impor- 
tant to keep in mind that assistance to 
promote economic growth and develop- 
ment and security assistance are mutual- 
ly reinforcing programs that cannot 
function independently. 

The United States has multiple in- 
terests involving the developing world. 
On the economic level, about 40% of 
total U.S. exports are to less developed 
countries (LDCs). U.S. industry depends 
on imports of primary commodities, 
minerals, and petroleum. Open trading 
and financial systems are important to 
the economic health of developed and 
developing countries alike. Economic 
progress in the developing countries and 
recovery in the industrialized nations 



SECURITY ASSISTANCE 



cannot occur independent of regional 
security and stability. A sense of securi- 
ty from external threat and internal 
upheaval is a necessary precondition of 
development, and our own self-interest 
requires that we pay close attention to 
events in the sometimes seemingly 
remote countries that are commonly 
referred to as the Third World. It is 
only at our own peril that we ignore or 
fail" to respond wisely to their security 
and development needs. 

As it is integral to our foreign 
policy, so too is security assistance an 
inseparable ingredient of our own 
defense planning. This Administration 
has sought to enhance the security of 
the United States and to strengthen its 
ability to protect its interests in various 
regions of the world. This requires in- 
creasing our own defense capabilities 
and conducting effective diplomacy. In 
part, however, it also requires a realistic 
increase in security assistance to allies 
and friends around the world. 

The link between U.S. defense plan- 
ning and security assistance is direct 
and occurs at several levels. The United 
States alone does not and cannot main- 
tain a force structure and capabilities 
sufficient to defend the free world. We 
must depend upon allies to deter local 
threats to our common interests. We 
factor their capabilities into our plan- 
ning, and the security assistance pro- 
gram is the vehicle for providing them 
the necessary equipment and training. It 
would cost $60,000 to equip and main- 
tain one U.S. soldier in Turkey, should 
that be necessary; it costs only $9,000 
for one Turkish soldier. Thus, security 
assistance is cost-effective. 

Second, security assistance enables 
us to maintain cooperative relationships 
necessary for our strategic planning. 
For example, the rapid deployment force 
cannot perform its mission in a 
Southwest Asian contingency unless it 
can move to the area promptly, equipped 
to fight as necessary. This requires 
enroute access and transit rights, as well 
as prepositioned equipment and supplies 
in the region. We cannot expect other 
nations to cooperate with us unless we 
are equally responsive to their legitimate 
needs. We must be a reliable friend if 
we are to have reliable friends. 

Third, the military security 
assistance programs are managed by the 
Department of Defense in conjunction 
with U.S. procurement so that both the 
United States and the foreign buyer 
reap the benefits of consolidated plan- 
ning and economies of scale. This entails 
both integrated procurement of weapons 



systems and tying foreign buyers direct- 
ly into our supply systems to ensure 
timely, effective logistical support. Cut- 
ting back on foreign sales by the United 
States will only serve to channel these 
sales to others and raise the costs of our 
own purchases. 

Fourth, security assistance helps to 
maintain a strong defense industrial 
base in the United States. Virtually all 
security assistance resources are spent 
in the United States on U.S. equipment 
and services. 

Finally, allies and friends who are 
able to deter and defend against local 
threats provide the President time and 
choices in a crisis situation. Specifically, 
the President is not faced with the sud- 
den choice of intervening directly with 
U.S. forces at the request of an ally or 
acquiescing to aggression. A security 
assistance recipient with a strong defen- 
sive capability provides valuable time for 
the United States to consider its own ap- 
propriate response. 

In sum, adequately funded, efficient- 
ly administered security assistance pro- 
grams are essential to U.S. defense 
planning. Without them, our own 
defense effort would be both far more 
costly and, in times of crisis, even 
dangerously crippled. 

One aspect of security assistance 
that bears special mention is the 
economic support fund (ESF). ESF is 
not simply another form of credits for 
military purchases. We do program a 
major percentage of ESF to countries 
where we also have a significant military 
assistance program. But we use ESF to 
address economic problems in a way 
that both complements and enhances the 
military assistance we provide. 

Many LDCs today are reeling from 
the multiple shock of high energy costs, 
decreased demand for their exports, and 
their own economic mismanagement. 
Political stability and the ability to fend 
off external threats are simply impossi- 
ble objectives if a country cannot achieve 
economic growth sufficient to enable it 
to meet the aspirations of its people. 
ESF helps the United States assert a 
leadership role in fostering economic 
recovery in nations of high strategic im- 
portance to us. In some instances, such 
as Israel, ESF provides needed budget 
support. In others, such as Pakistan, 
Jamaica, and the Sudan, ESF helps us 
to support countries that are making ef- 
forts to restructure their economies and 
to become more self-reliant in the 
future. In still others, such as Kenya 
and Botswana, ESF meets basic human 



needs as do development assistance 
grams. Flexibility is the most impo 
attribute of ESF, and it is an impo 
complement to other trade, financt 
aid policies and programs. Befoir i 
ting into specifics, let me review In 
the five security assistance pr<i.ur.i! 
Although well known to you, tin \ 
evolved to meet changing needs ir 
the world. 

• Foreign military sales (IM 

financing facilitates the purch:isi •' 
military equipment, spares, or trai 
There are two types of EMS fin.iii. 
ing— direct credits, which invoKr ; 
propriated funds, and guarantees I 
which do not. While direct credit c 
under the law, be provided with \ ; 
degrees of concessionality, the Cui 
in recent years, has limited its use 
few recipients, for which it has wa 
in advance of the requirement to r 
U.S. Government guaranteed loan: 
provided to a wide range of counti 
but 85% of the program is directec 
seven key countries — Spain, Turk( 
Greece, Pakistan, Israel, Egypt, ai 
Korea. Such loans are made by th< 
Federal financing bank and bear a 
terest rate reflecting the cost of m 
to the Treasury. 

• The economic support fund 
(ESF), of which I have already sp(« 
provides loans or grants to promot 
political and economic stability in ( 
tries of special economic, political, 
security interest to the United Sta 
This assistance may be in the forn: 
cash transfers for balance of paym 
or budget support, commodity imp, 
programs, or project assistance. 

• The military assistance proi 
(MAP) provides grant funding for i 
defense articles and services. Whe) 
in the past MAP was used to provi 
specific military items, it currently 
recipient countries pay for equipme 
purchased under the FMS program 
often provide a degree of concessio 
in financing military purchases thr< 
a combination of EMS guaranteed : 
and grant MAP funds. While the p 
centage rise over our FY 1983 req> 
significant, the dollar change