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Full text of "Department of State bulletin"

BOSTON 
PUBLIC 
LIBRARY 




MPvpartmvn t 



J W 00 1 State "1 W J | j f» 

s bulletin 

e Official Monthly Record of United States Foreign Policy /Volume 86 / Number 2112 

July 1986 



i 




Jf TOKYO V 
S SUMMIT® 




Department of State 

bulletin 



Volume 86 / Number 21 12 / July 1986 



Cover: 

This Tokyo summit symbol consists of a 
ring of musubi (Japanese-style knots) 
representing the solidarity and harmony of 
the seven participating countries and the 
European Community. 



The Department of State Bulletin, 
published by the Office of Public Com- 
munication 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 govern- 
ment 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; se- 
lected 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 addi- 
tional information on current issues but 
should not necessarily be interpreted as 
official U.S. policy statements. 



GEORGE P. SHULTZ 

Secretary of State 

BERNARD KALB 

Assistant Secretary for Public Affairs 

PAUL E. AUERSWALD 

Director, 

Office of Public Communication 

NORMAN HOWARD 

Chief, Editorial Division 

PHYLLIS A. YOUNG 

Editor 

SHARON R. LOTZ 

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. 



Department of State Bulletin (ISSN 
0041-7610) is published monthly (plus annua 
index) by the Department of State, 2201 C j 
Street, NW, Washington, D.C. 20520. Secon 
class postage paid at Washington, D.C, andJ 
additional mailing offices. POSTMASTER: j 
Send address changes to Superintendent of 
Documents, U.S. Government Printing Offic 
Washington, D.C. 20402. 



NOTE: Most of the contents of this publica- 
tion are in the public domain and not 
copyrighted. Those items may be reprinted; 
citation of the Department of State 
Bulletin as the source will be appreciated. 
Permission to reproduce all copyrighted 
material (including photographs) must be ob- 
tained from the original source. The 
Bulletin is indexed in the Readers' Guide 
to Periodical Literature and in the PAIS 
(Public Affairs Information Service, Inc.) 
Bulletin. 



For sale by the Superintendent of Docu- 
ments, U.S. Government Printing Office, 
Washington, D.C. 20402. 



CONTENTS 



JT TOKYO V 

S> SUMMIT® 

Vl986 J> 



FEATURE 



Tokyo Economic Summit (President Reagan, Secretary 
Shultz, Summit Declarations and Statements) 



The President 

15 Visit to Indonesia (President 
Reagan, Secretary Shultz) 

The Secretary 

24 Unity and Dissent: On the Com- 
munity of Free Nations 



Africa 



27 



30 



South Africa: Report on the 

President's Executive Order 

(Chester A. Crocker) 
FY 1987 Assistance Requests for 

Sub-Sahara Africa 

(Chester A. Crocker) 



Arms Control 



37 



37 



Nuclear and Space Arms Talks 

Open Round Five 

(President Reagan) 
MBFR Talks Resume in Vienna 

(White House Statement) 



East Asia 



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l#^ 42 



JUL T 0i 



46 



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50 



53 



54 



Secretary's Visit to Korea and 

the Philippines 

(Secretary Shultz) 
The U.S. and East Asia: Meeting 

the Challenge of Change 

(Gaston J. Sigur, Jr.) 
Prospects for Continuing Democ- 
ratization in Korea 

(Gaston J. Sigur, Jr.) 
Aid to the Philippines (White 

House Announcement) 
U.S. Assistance to the 

Philippines 

(John C. Monjo) 
Visit of Japan's Prime Minister 

(Yasuhiro Nakasone, President 

Reagan) 
FY 1987 Assistance Requests for 

East Asia and the Pacific 

(John C. Monjo) 



Economics 

61 Economic Policy Coordination 

Among Industrialized Nations 
(James A. Baker III) 

64 The Tokyo Economic Summit 
(W. Allen Wallis) 

68 U.S. -Japan Economic Relations: 
The Tokyo Economic Summit 
and Beyond (W. Allen Wallis) 



Europe 

Soviet Nuclear Reactor Accident 
at Chernobyl (Secretary Shultz, 
Wliite House Statements) 

President Meets With Shcharan- 
skiy (Wliite House Statement) 



71 



75 



Middle East 

76 FY 1987 Assistance Requests for 
the Middle East and North 
Africa (Richard W. Murphy) 

South Asia 

81 FY 1987 Assistance Requests for 
South Asia (Robert A. Peck) 

Western Hemisphere 

86 FY 1987 Assistance Requests for 
Latin America and the Carib- 
bean (Elliott Abrams) 

Treaties 

91 Current Actions 

Press Releases 

93 Department of State 

Publications 

94 Department of State 
94 GPO Sales 

Index 




The Tokyo economic summit meetings were held at Akasaka Palace, a palace originally 
built for the Crown Prince in 1909 and which has served as the State Guesthouse since 
1974. The interior of this neobaroque building features beautiful ceiling paintings, fine 
stuccowork, ceramic tiles, cloisonne plaques, and sparkling chandeliers. 



(White House photo by Terry Arth 



Department of State Bullet 



JT TOKYO \ 

SsummitcB 

\ v 1986 J 



Tokyo 
Economic Summit 

President Reagan atte?ided the 12th economic summit of the industrialized nations 

in Tokyo May ^-6, 1986, which was hosted by 

Japanese Prime Minister Yasuhiro Nakasone. 

The other participants were Prime Minister Brian Mulroney (Canada); 

President Francois Mitterrand (France); Prime Minister Bettino Craxi (Italy); 

Chancellor Helmut Kohl (West Germany); 

Prime Minister Margaret Thatcher (United Kingdom); 

Jacques Delors, President of the European Communities Commission; 

and Ruud Lubbers, President of the European Council. 

Following are news briefings by Secretary Shultz, declarations and statements 

issued by the participants, and President Reagan's news conference. 



scretary Shultz's 
ews Briefing, 
ay 3, 1986 1 

lis summit meeting comes at a mo- 
int of real opportunity and important 
sponsibilities— opportunity because the 
ances for worldwide economic growth 
)k very good. We meet at a time 
ien there are quite a number of 
/orable developments at hand and 
lere there is a strategy becoming 
:arer and clearer for how to deal with 
So it's a great moment of oppor- 
nity. 

It is a moment of responsibility be- 
use, clearly, there are great 
oblems— problems that we have it in 
r hands to come to grips with. It's im- 
'rtant for this group of countries to 
aintain the cohesion that we have al- 
jys had and which there is every indi- 
tion we retain in addressing all of the 
sues in the East- West arena. I'm sure 
at will be a subject of discussion— an 
iportant one. 

It is of key significance in the fight 
;ainst terrorism that we examine this 
sue together and see what, in our 
spective ways, we can do about it. 



Certainly the nuclear accident in the 
Soviet Union will be discussed, and it 
highlights the responsibilities that each 
state has in the case of an event in that 
state that has clear effects on people in 
other states, adjoining and otherwise. 

There is a big array of subjects and, 
as I said, this is a special moment of 
opportunity because there are many 
positive developments, and the cohesion 
of these countries and our associated 
allies has been so significant and impor- 
tant. There are many important issues 
that put a responsibility before us to 
discuss them candidly and fully and to 
do everything we can to set out a line of 
action that can give positive results for 
our people. 

Q. What are we going to propose 
in terms of the nuclear accident? 
What can the rest of the world do? 
What kind of pressure are you going 
to put on the Soviet Union? What are 
you asking? 

A. How this will come out, I don't 
know, obviously. People will come with 
varying perceptions, no doubt. But from 
public statements, I think it is clear that 
there is kind of a two-fold set of con- 
cerns. One is immediate: to call for more 
information so that all of us can assess 
what the potential implications of the ac- 



cident are and do what is necessary to 
do to safeguard the health of citizens 
and to understand what happened and 
why, so that, to the extent that we can 
learn from that, we do so. 

And second is to focus on the ques- 
tion of whether it would be worthwhile 
at this time to try to, in a sense, firm 
up the inherent obligation that states 
have to provide information about some- 
thing going on within their borders that 
has effects on others. That I think is 
generally understood, but maybe it 
would be timely and good to kind of 
reinforce it a little bit. 

As far as we're concerned, compar- 
ing notes and seeing what others are do- 
ing and thinking and what information 
they have will help us in continuing our 
own efforts to, on the one hand, be help- 
ful, and, on the other, to help our own 
citizens, not so much here, because it 
seems that there is very little threat to 
people in the United States, but we 
have Americans scattered through the 
area, and we are trying to give them 
the right kind of advice and provide on- 
the-spot information for them. 

Q. In terms of information, it's been 7 
days or so since the accident. Have 
they been any more forthcoming in 
private to us about what the status is? 



Jly 1986 



A. They have given some informa- 
tion, but I don't think it is— I'm certain 
that it isn't anywhere near the scope of 
information that we have ourselves, 
based on our own independent sources. 
By that standard, they have not been 
very forthcoming. 

Q. And they have suggested that— 
in response to your comments of 2 
days ago— we are exaggerating the 
seriousness of this. Can you respond 
to that? 

A. The way to deal with that kind of 
question is to provide access and pro- 
vide information. And if we're exagger- 
ating, I would be delighted to— if that 
were so. And we'd like to know. We'd 
like to have the information. We'd like 
to be able to have what verification we 
can get. Of course, people measure radi- 
ation in the air then, and they can do 
that, and where it's located. And so peo- 
ple see that. 

Q. You said the strategy is becom- 
ing clear on how to deal with the op- 
portunities of worldwide economic 
growth. What is that strategy? 

A. First of all, for each country to 
run its own economy in a way that will 
be in tune, as much as possible, with 
noninflationary real growth, with strong 
savings, and investment. Second of all, 
to keep world markets open to trade, so 
that there can be mutually reenforcing 
expansion. Third, to see that in the 
Baker plan, there is a means of dealing 
with the problems of debtor countries, 
as well as others, that will help get out 
from under that very considerable 
problem. So I think those are the fun- 
damental elements here. 

I'm sure, also, there'll be some dis- 
cussion of monetary developments and 
other similar things: I think healthy 
national economic policies, openness to 
trade, and dealing with outstanding 
financial issues. And I would put the 
debt problem up at the top of the list. 

Q. What relevance, if any, do you 
believe that the nuclear accident has 
to the arms control process? 

A. I don't think it has any sort of 
one-to-one connection, but, of course, a 
reason why people are so interested in 
reducing nuclear weapons stockpiles is 
the fear that if ever there should be a 
war— a nuclear war— and the President 



has said many times that a nuclear war 
should never be fought and can never 
be won. And the reason it can never be 
won is that it has two great effects of 
the kinds that people are worrying 
about. 

As far as we're concerned— as far as 
the President is concerned, he has had 
at the top of his agenda, even long be- 
fore he was President, the importance of 
radical reductions in nuclear weapons. 
And that subject is the center of the 
agenda in Geneva, and it will be pur- 
sued energetically by us. 

Q. There are those who are saying 
that this shows we can't trust the 
Soviets and, therefore, arms control is 
probably that much more difficult. Do 
you concur? 

A. The problem of verification and 
compliance is a very important problem. 
And certainly in any agreements that 
we work out, we'll have to address 
those issues and address them very 
completely. 

In the statements that Mr. Gor- 
bachev has made, he has recognized the 
importance of this issue, and he's talked 
about various possible techniques, and 
he's used words like on-site inspection. 
So hoping that we can get to that point, 
that's all material that we should follow 
up on. 

Q. On the subject of on-site inspec- 
tions, do you see the nuclear accident 
as an opening to begin expanding the 
system of on-site inspections for 
nuclear power in the Soviet Union? 

A. Of course, the inspection of 
nuclear power plants under IAEA 
[International Atomic Energy Agency] 
safeguards is something that has been 
going on. It's part of the process, and 
it's been a long struggle to get the 
nuclear weapons states to agree to have 
their power plants inspected. The Soviet 
Union has begun to do that, and I think 
that's something that needs to be stimu- 
lated and encouraged. I would think 
that this accident would show the impor- 
tance of inspections and reviews of 
procedures. For example, just how this 
accident took place, we don't know. Peo- 
ple are speculating about it. But review 
of what the procedures were and are is 
the kind of thing that one needs to be 
doing, and so inspection has a broad 
cast to it in that light. 



Q. Do you stick to your assertion 
made in Bali that the casualties in th 
Soviet accident are considerably 
higher than they have announced, 
and, if so, can you back it up against 
Soviet insistence that they've told the 
truth? 

A. I can't give you a number, but 
the number of two dead I will bet you 
$10 is very low, and I don't know 
whether you're ready to take me up on 
that or not. 

Q. In other words, you think it's 
considerably higher— I mean, four 
would be considerably higher than 
two. I'm trying to get some range. 
What do you have in mind? 

A. I don't think this is any matter- 
didn't mean to be jocular about it, but 
think that the information they provide 
about the number of killed and others 
who are in some way incapacitated look 
very low compared with information wf 
have from a variety of sources. You 
take pictures; you see what's on the 
ground; you see the immobility of emer 
gency equipment that came there and i; 
still there; you accumulate reports of 
one kind or another that come into you* 
hands. All of it suggests that the impac 
on individual lives is much more than 
the statement that they have said. So, 
yes, I stand by that statement. 

Q. Did you tell the Japanese this 
morning what the U.S. position was 
on intervention— their intervention— tc 
support the dollar and the German in- 
tervention recently to do the same 
thing? And could you tell us what 
your position is on that? 

A. When I was Secretary of the 
Treasury, I didn't appreciate it when, 
for instance, Mel Laird, as I remember 
when I was in Tokyo, made some com- 
ments about the dollar, and I told him 
to keep his cotton-pickin' hands off eco- 
nomic policy, if you remember. And I'll 
keep my cotton-pickin' hands off the 
yen-dollar relationship. Ask Secretary 
Baker. 

Q. What does the way Mr. Gor- 
bachev has handled this suggest to 
you about his leadership? You men- 
tioned that he has seemed more in- 
terested in verification, for instance, 
in arms control. But what does this 
suggest about whether he's any differ 
ent from previous Soviet leaders? 



Department of State Bulletii 



JT TOKYO V 
SSUMMITW 

\,1986 J> 



A. He hasn't been forthcoming with 
formation about this accident, and, so 
r as we can see, knowledge about it 
ithin the Soviet Union is far, far less 
an knowledge about it right here. If 
at doesn't look like an example of 
ore openness— but that's about all I 
n say as far as that's concerned. 

Q. Could you tell us please what 
e the considerations that have led 
e United States to criticize the 
)viets publicly for a lack of informa- 
jn? Are you doing it to try to nudge 
ore information from them, to as- 
ire Americans you're on top of it? 
hy isn't this a matter of the quiet 
plomacy that you often prefer? 

A. The reason why we want more 
formation is that an event has taken 
ace that is potentially— that is spread- 
g material across areas where Ameri- 
n citizens are, and it is a 
sponsibility of the American Govern- 
ent to look after the health and wel- 
re of U.S. citizens. We want 
formation about what happened and 
hat is the extent of it and what may 
ippen further so that we can make an 
sessment and we can give proper ad- 
ce to people and send the kind of help 
at's needed. It's an operational mat- 
r. And we have called for it privately, 
id we've called for it publicly, and I 
ink we should. 

And I might say that I think every 
her country has exactly the same feel- 
g. And it comes from, on the one 
tnd, a feeling of interest and sympathy 
ith people near the event itself, but on 
ie other hand, the desire to do every- 
ing we can to see that the safety and 
;alth of American citizens are taken 
ire of. 



Summit Declaration 
on the Future, 
May 5, 1986 2 

1. We, the Heads of State or Government of 
seven major industrial nations and the 
representatives of the European Community, 
with roots deep in the civilizations of Europe 
and Asia, have seized the opportunity of our 
meeting at Tokyo to raise our sights not just 
to the rest of this century but into the next 
as well. We face the future with confidence 
and determination, sharing common principles 
and objectives and mindful of our strengths. 
2. Our shared principles and objectives, 
reaffirmed at past Summits, are bearing 
fruit. Nations surrounding the Pacific are 
thriving dynamically through free exchange, 
building on their rich and varied heritages. 
The countries of Western Europe, the Com- 
munity members in particular, are flourishing 
by raising their cooperation to new levels. 
The countries of North America, enriched by 
European and Asian cultures alike, are firm 
in their commitment to the realization in 
freedom of human potential. Throughout the 
world we see the powerful appeal of 
democracy and growing recognition that per- 
sonal initiative, individual creativity and 
social justice are main sources of progress. 
More than ever we have all to join our ener- 
gies in the search for a safer and healthier, 
more civilized and prosperous, free and 
peaceful world. We believe that close part- 



nership of Japan, North America and Europe 
will make a significant contribution toward 
this end. 

3. We reaffirm our common dedication to 
preserving and strengthening peace, and as 
part of that effort, to building a more stable 
and constructive relationship between East 
and West. Each of us is ready to engage in 
cooperation in fields of common interest. 
Within existing alliances, each of us is 
resolved to maintain a strong and credible 
defence that can protect freedom and deter 
aggression, while not threatening the secu- 
rity of others. We know the peace cannot be 
safeguarded by military strength alone. Each 
of us is committed to addressing East-West 
differences through high-level dialogue and 
negotiation. To that end, each of us supports 
balanced, substantial and verifiable reduc- 
tions in the level of arms; measures to in- 
crease confidence and reduce the risks of 
conflicts; and the peaceful resolution of dis- 
putes. Recalling the agreement between the 
United States and the Soviet Union to ac- 
celerate work at Geneva, we appreciate the 
United States' negotiating efforts and call on 
the Soviet Union also to negotiate positively. 
In addition to these efforts, we shall work for 
improved respect for the rights of individuals 
throughout the world. 

4. We proclaim our conviction that in to- 
day's world, characterized by ever increasing 
interdependence, our countries cannot enjoy 



uring a break. President Reagan, Adm. 
Dindexter, Secretary Baker, and Secretary 
liultz review their notes before the next 
>und of discussions. 




Jly 1986 



lasting stability and prosperity without stabil- 
ity and prosperity in the developing world 
and without the cooperation among us which 
'can achieve these aims. We pledge ourselves 
afresh to fight against hunger, disease and 
poverty, so that developing nations can also 
play a full part in building a common, bright 
future. 

5. We owe it to future generations to 
pass on a healthy environment and a culture 
rich in both spiritual and material values. We 
are resolved to pursue effective international 
action to eliminate the abuse of drugs. We 
proclaim our commitment to work together 
for a world which respects human beings in 
the diversity of their talents, beliefs, cultures 
and traditions. In such a world based upon 
peace, freedom and democracy, the ideals of 
social justice can be realized and employment 
opportunities can be available for all. We 
must harness wisely the potential of science 
and technology, and enhance the benefits 
through cooperation and exchange. We have 
a solemn responsibility so to educate the next 



generation as to endow them with the 
creativity befitting the twenty-first century 
and to convey to them the value of living in 
freedom and dignity. 



Summit Statement on 
the Implications of 
the Chernobyl Nuclear 
Accident, 
May 5, 1986 2 

1. We, the Heads of State or Government of 
seven major industrial nations and the 
representatives of the European Community, 
have discussed the implications of the acci- 
dent at the Chernobyl nuclear power station. 
We express our deep sympathy for those af- 
fected. We remain ready to extend as- 
sistance, in particular medical and technical, 
as and when requested. 



2. Nuclear power is and, properly 
managed, will continue to be an increasingly 
widely used source of energy. For each coun 
try the maintenance of safety and security is 
an international responsibility, and each cour 
try engaged in nuclear power generation 
bears full responsibility for the safety of the 
design, manufacture, operation and main- 
tenance of its installations. Each of our coun- 
tries meets exacting standards. Each 
country, furthermore, is responsible for 
prompt provision of detailed and complete hr 
formation on nuclear emergencies and acci- 
dents, in particular those with potential 
transboundary consequences. Each of our 
countries accepts that responsibility, and we 
urge the Government of the Soviet Union, 
which did not do so in the case of Chernobyl 
to provide urgently such information, as our 
and other countries have requested. 

3. We note with satisfaction the Soviet 
Union's willingness to undertake discussions 
this week with the Director-General of the 
International Atomic Energy Agency (IAEA 
We expect that these discussions will lead t( 




e Soviet Union's participation in the 
;sired post-accident analysis. 
4. We welcome and encourage the work 

the IAEA in seeking to improve intema- 
iinal cooperation on the safety of nuclear in- 
allations, the handling of nuclear accidents 
id their consequences and the provision of 
utual emergency assistance. Moving for- 
ard from the relevant IAEA guidelines, we 
ge the early elaboration of an international 
nvention committing the parties to report 
id exchange information in the event of 
iclear emergencies or accidents. This should 

done with the least possible delay. 



ummit Statement 
n Terrorism, 
ay 5, 1986 2 



We, the Heads of State or Government of 
ven major democracies and the representa- 
'es of the European Community, assembled 
re in Tokyo, strongly reaffirm our eondem- 
tion of international terrorism in all its 
rms, of its accomplices and of those, inelud- 
g governments, who sponsor or support it. 
e abhor the increase in the level of such 
rrorism since our last meeting, and in par- 
ular its blatant and cynical use as an in- 
rument of government policy. Terrorism 
is no justification. It spreads only by the 
e of contemptible means, ignoring the 
.lues of human life, freedom and dignity. It 
ust be fought relentlessly and without com- 
■omise. 

2. Recognizing that the continuing fight 
;ainst terrorism is a task which the interna- 
mal community as a whole has to under- 
ke, we pledge ourselves to make maximum 
forts to fight against that scourge. Ter- 
rism must be fought effectively through de- 
rmined, tenacious, discreet and patient 
tion combining national measures with in- 
rnational cooperation. Therefore, we urge 
; like-minded nations to collaborate with us, 
irticularly in such international fora as the 
nited Nations, the International Civil Avia- 
)n Organization and the International Mari- 
ne Organization, drawing on their expertise 



he heads of the summit delegations meet 
the Flowers and Birds Room at Akasaka 
alace. From left to right around the table 
•e President Reagan, Prime Minister 
akasone. President Mitterrand, President 
ubbers. President Delors, Chancellor 
ohl. Prime Minister Thatcher, Prime 
[inister Craxi, and Prime Minister 
lulroney. 



to improve and extend countermeasures 
against terrorism and those who sponsor or 
support it. 

3. We, the Heads of State or Govern- 
ment, agree to intensify the exchange of in- 
formation in relevant fora on threats and 
potential threats emanating from terrorist 
activities and those who sponsor or support 
them, and on ways to prevent them. 

4. We specify the following as measures 
open to any government concerned to deny 
to international terrorists the opportunity 
and the means to carry out their aims, and to 
identify and deter those who perpetrate such 
terrorism. We have decided to apply these 
measures within the framework of interna- 
tional law and in our own jurisdictions in 
respect of any state which is clearly involved 
in sponsoring or supporting international ter- 
rorism, and in particular of Libya, until such 
time as the state concerned abandons its 
complicity in, or support for, such terrorism. 
These measures are: 

• Refusal to export arms to states which 
sponsor or support terrorism; 

• Strict limits on the size of the diplo- 
matic and consular missions and other official 
bodies abroad of states which engage in such 
activities, control of travel of members of 
such missions and bodies, and, where ap- 
propriate, radical reductions in, or even the 
closure of, such missions and bodies; 

• Denial of entry to all persons, including 
diplomatic personnel, who have been expelled 
or excluded from one of our states on sus- 
picion of involvement in international ter- 
rorism or who have been convicted of such a 
terrorist offence; 

• Improved extradition procedures within 
due process of domestic law for bringing to 
trial those who have perpetrated such acts of 
terrorism; 

• Stricter immigration and visa require- 
ments and procedures in respect of nationals 
of states which sponsor or support terrorism; 

• The closest possible bilateral and multi- 
lateral cooperation between police and secu- 
rity organizations and other relevant 
authorities in the fight against terrorism. 

Each of us is committed to work in the 
appropriate international bodies to which we 
belong to ensure that similar measures are 
accepted and acted upon by as many other 
governments as possible. 

5. We will maintain close cooperation in 
furthering the objectives of this statement 
and in considering further measures. We 
agree to make the 1978 Bonn Declaration 
more effective in dealing with all forms of 
terrorism affecting civil aviation. We are 
ready to promote bilaterally and multilater- 
ally further actions to be taken in interna- 
tional organizations or fora competent to 
fight against international terrorism in any of 
its forms. 



S* TOKYO V 
SUMMIT® 

m v 1986 J 



Secretary Shultz's 
News Briefing, 
May 5, 1986 3 

This has been a long and very good day 
for democracy, for freedom, for the fight 
against terrorism, and for cohesion of 
the West as we work toward sensible 
relations with the East and for radical 
reductions in nuclear armaments. The 
heads of state have agreed on three 
statements so far, which you have got 
copies of, I believe. 

One entitled "A Tokyo Declaration: 
Looking Forward to a Better Future," 
generally stating the objectives and 
principles that we share, and insofar as 
the conduct of our arms negotiations are 
concerned, recalling the agreement be- 
tween the United States and the Soviet 
Union to accelerate work at Geneva, 
". . . we appreciate the United States' 
negotiating efforts and call on the Soviet 
Union also to negotiate positively." 

Beyond that, it says in addition to 
these efforts, ". . .we shall work for im- 
proved respect for the rights of in- 
dividuals throughout the world." 

A second statement on the implica- 
tions of Chernobyl's nuclear accident 
expresses deep sympathy for those af- 
fected, the continued extension of offers 
of assistance, and, of course, a call for 
information and a strong suggestion, on 
the one hand, welcoming the fact that 
the Soviet Union has undertaken discus- 
sions with the Director General of the 
IAEA and suggesting work that the 
IAEA may do that will make more sure 
and automatic the kind of sharing of in- 
formation and provision of information 
that everyone has called for in this case. 

The statement on terrorism is a 
very strong restatement of the abhor- 
rence of the increase in the level of ter- 
rorism and its blatant and cynical use as 
an instrument of government policy. It 
says, "Terrorism has no justification." 
It calls on the international community 
as a whole to undertake a maximum ef- 
fort in the fight against terrorism, com- 
bining national measures with 
international cooperation. 

It singles out Libya and talks about 
applying certain measures against any 



Jly 1986 



state which is clearly involved in spon- 
soring or supporting international ter- 
rorism, and, in particular, Libya, until 
such time as the state concerned aban- 
dons its complicity in or support for ter- 
rorism. And it lists a series of measures 
basically having to do with the diplo- 
matic and political isolation of Libya in 
the current instance, and of other states 
that may be involved in international 
terrorism. 

Speaking from the standpoint of the 
United States, and obviously since each 
head of government signed on to these 
statements fully, each shares the view 
that these are important subjects. And 
it is, I think, quite significant that in 
this summit meeting the heads of state 
have stepped up to them in such a 
strong, positive way. 

Q. Do you have any disappoint- 
ment that economic sanctions were 
not addressed, landing rights for 
Libyan planes— that there were not 
tougher measures than what had been 
previously approved by the European 
Community in many cases? 

A. This is a very good set of meas- 
ures. I think that in addition to the 
diplomatic isolation and political isolation 
of Libya that is set out here, you're 
going to see the increasing isolation of 
Libya economically. We're very well 
pleased with the way the discussions 
have gone, and it's not necessary or 
even desirable to list every last thing. 
But this is a very strong and positive 
statement. 

Q. What's the message of this 
statement to Muammer Qadhafi? 

A. The message is, "You've had it, 
pal!" [Laughter] "You are isolated! You 
are recognized as a terrorist!" And as 
far as terrorists are concerned, more 
and more the message is, "No place to 
hide." 

Q. Are all the states committed to 
taking all of these acts? 

A. This is signed by— agreed to by 
all of the states. 

Q. Do you see that as a specific 
commitment, though? 

A. The answer is, yes. If you read 
the statement, you'll see that it's a 
statement of what— "Each of us is com- 
mitted to work in the appropriate inter- 
national bodies to which we belong to 



ensure that similar measures are ac- 
cepted and acted upon by as many other 
governments as possible." And then 
preceding it, "We have decided to apply 
these measures . . . ," it says. 

Q. When you say that Libya will 
continue to face more economic isola- 
tion, what specifically do you mean- 
something sort of tentatively agreed to 
amongst the leaders, or what? 

A. I don't want to elaborate on it. 

Q. You said last week that the 
summiteers might agree on actions 
that would not be announced. Were 
such actions agreed upon? 

A. I'm not going to comment on 
that. 

Q. Isn't it, however, a weakness in 
the statement that it doesn't mention 
either an oil embargo or the U.S. air 
raid in some positive fashion? 

A. No. 

Q. Why not? Why not? [Laughter] 

A. I think it's a terrific statement. I 
can't tell you how pleased I am at how 
strong this statement is. It is very good 
to come here after all this talk and 
turmoil and discussion and find how 
strongly everybody feels about the 
problem of terrorism, how ready people 
are to work on it, how totally nonex- 
istent is any argument about Libya's 
complicity and how ready people are to 
isolate them. So I think it's wonderful. 

Q. But the summit nations also 
made a statement about terrorism in 
1984. Why are you so upbeat about 
this when you've already addressed 
the issue in the past? 

A. What we have seen over time, 
unfortunately, is an increase in the num- 
ber of terrorist acts, and so we have 
seen a recognition of the seriousness of 
the problem and the need to get after it 
in a great variety of ways. 

So I think if you look at the state- 
ments and compare the one with the 
other, you'll see that they have broad- 
ened and become more pointed, and I 
think that's desirable. But, as I think 
I've said on an earlier meeting with this 
group, while this statement is 
important— very important— the things 
that are going to count more and more 
are what people actually do, and I feel 
very good about that, too. 



Q. Following up on that question 
do you believe that this statement wi 
result in fewer incidents of terrorism 
Will there be any concrete results lib 
those you call for because of this 
statement? 

A. We in the West, in the free 
world, can win this war on terrorism. 
We're going to win this war on ter- 
rorism. And the way to do it is to be 
unified, as this statement shows we in- 
creasingly are. The way to do it is to 
recognize the nature of the problem ar 
to say flatly, terrorism has no justifica- 
tion. That's a very important sentence. 

The way to do it is to see that the 
tool of terrorists is fear. And the 
answer to fear is courage. And in this 
statement, people have the courage to 
be clear about it. So I think great 
strides are being made here, and we're 
going to win this war against the ter- 
rorists. 

Q. When will American oil compa 
nies be out of Libya? When will they 
stop doing business there? 

A. They will be out of Libya before 
long, and I don't want to give an ex- 
plicit date. The only reason they're 
there is that we wanted to do every- 
thing we could to have them withdraw 
without handing Qadhafi a windfall. Bu 
they will be out, one way or another, 
and it won't be very long. 

Q. Will there be no windfall when 
they leave? 

A. That's very hard to arrange that 

Q. How will Col. Qadhafi tangibl} 
feel the impact of this statement? 

A. He is obviously more and more 
isolated. He hasn't had anybody really 
rallying very much to his side— very 
little. So he's feeling it. And from the 
information that we have within Libya, 
all is not well. 

Q. What do you mean by that, sir' 
A. I'll just leave it right there. 

Q. I understand your reluctance t 
specify some of the economic sanc- 
tions that may be brought about. Bui 
would you explain why there's not 
even a sentence in this communique 
that says that economic isolation als<< 
is forthcoming? 

A. The subjects have been discusse- 
and, on the part of some, there is reluc 



ice to make that statement in a state- 
mt of this kind, for good and 
Ticient reasons. 
As I say, the question is, what is 
mg to take place? And you're already 
?ing fewer nationals in Libya, you're 
>ing an impact on sales of various 
ids, and in a variety of ways, you're 
eady seeing economic isolation taking 
ice, and I haven't got any doubt that 
i going to go further. 

Q. If and when American oil com- 
nies move out of Libya, who is 
ing to buy them out? 

A. I hope they will have somebody 
y them out, and in a way that is in 
aping with what we are trying to 
lieve. But it's very difficult to do it 
it right and not have them hand over 
asset. So it is a subtle matter, and I 
I't want to go into it too much for 
r of spoiling our ability to bring it 
. But it may not be possible to bring 
)ff in a proper way, in which case 
*y*U just have to abandon those 
sets. 

Q. Is there anybody on the horizon 
it you see who can take over? 

A. There are various possibilities, 
t it's a very hard problem. If it were 
>y, it would have been solved before. 

Q. We were told that over the last 
hours, there have been efforts to 
ike this statement tougher than it 
is originally drafted. Could you tell 
which are the new tougher parts of 
s statement? 

A. All of these statements as they 
ne about in these summit meetings go 
•ough a series of steps and drafts, and 
lerally they start out with something 
it the sherpas do, and then people 
k at that. And in this case, the heads 
state got hold of it, and in their meet- 
is last night and this morning, they 
proved it very sharply. 

And I think it is especially impor- 
it that it happened that way, because 
i very much the product of a discus- 
n; not of a bunch of staff people sit- 
g around but of the heads of state 
smselves and saying, "This is what 

want to sign on to." They're the 
3S who are in charge, and that makes 
much more significant. 



J TOKYO \ 
J) SUMMITW 
V 1986 J 1 




The summit participants enjoy a traditional Japanese lunch at Akasaka Palace. 



Q. What specifically was added? 

A. I don't want to go into a compari- 
son of early drafts with later drafts, but 
it has changed very sharply from the 
sherpas' draft that came in here. 



For the better? 

Absolutely. 



Q. Can you tell us which of the 
specific measures mentioned in this 
statement go beyond the ones that the 
EC ministers adopted? They appear to 
be very similar. 

A. They're similar. I think they go 
further in that there's a broader group 
here, and there are various phrases, 
such as ones that I picked out. And I 
think those are the kinds of things that 
are involved. I don't have before me 
exactly what they said and exactly this, 
so you can look that up and make a 
comparison. I'm not in the position to do 
it right here off the top of my head. 

Q. Were there ideas or plans that 
you and the President brought to the 



summit that you wanted in such a 
statement that was not included? 

A. I wouldn't bite on a question like 
that. 

Q. Some of the little countries 
which are not part of this great, 
tremendous summit do the bartering 
with Libya. What do you do with 
those little countries? 

A. We call upon them to join in this 
and invite them to. And so it's a process 
of generating a broader and broader 
consensus behind these very significant 
convictions that are expressed here. 
This is leadership, and we're going to 
spread this around. And it says that, 
"... to ensure that similar measures are 
accepted and acted upon by as many 
other governments as possible." In 
other words, the countries here 
represented have committed themselves 
to go and work at that. 

Q. Some British officials are say- 
ing that, one, the initiative for tough- 
ening this statement came from Prime 
Minister Thatcher, and that two, 



ly 1986 



they— that is, the British officials— 
don't feel that the United States gave 
her the kind of support in these meet- 
ings that she was looking for. Do you 
agree that that was the case, and was 
that a deliberate strategy to have 
another country take the hardest line? 
A. I think Mrs. Thatcher is a terrific 
leader. And I can't imagine any way 
that we could give her more support; if 
somebody could point it out, we'd do it. 
She is great. 

Q. —in the meetings today? 

A. I think that she was very impor- 
tant in it, and others were, the Presi- 
dent was, and everybody participated. 
And the point is that here is this very 
strong and positive statement, and all 
seven countries are on board. That's 
what counts. 

Q. Why do you need it? Yesterday, 
you said that the terrorists are scared 
to death. 

A. This will scai - e 'em even more. 
[Laughter] This will show them— 

Q. If they are scared to death, why 
have there been some 10 incidents 
since you bombed Libya? 

A. The terrorists are a major 
problem, and I don't believe I have 
done anything but be clear about that 
for a long time, and it remains so today. 
And unfortunately, it will continue. This 
is not going to solve the problem. 

But the way to solve the problem is 
first of all to be clear about it, and to be 
clear, among other things, that ter- 
rorism has no justification. Let's end 
this business of giving reasons why. 
That's the way to get after this. And 
more and more, I think, people are com- 
ing to that conviction, and we're going 
to win this war. 

Q. Do you consider this statement 
as to give sort of advance approval to 
the United States if it should decide to 
take another Libya-style air raid? 

A. Not in any particular way. We 
didn't seek advance approval. It does 
say in here, talking about national meas- 
ures, so it's recognized that individual 
countries act by themselves or in con- 
cert. But obviously, we want to do 
things in concert to the extent that we 
can. 



And the whole strength of this state- 
ment is the breadth of the countries 
that support it and the significant in- 
dividual pieces of the concept and 
follow-on actions that are listed. 

Q. Aren't economic sanctions, in 
fact, the ultimate test of courage, and 
this statement fails that test? 

A. No. They are not the ultimate 
test of courage. However, I think in the 
case of Libya, economic sanctions of var- 
ious kinds as they roll in are going to 
wind up being effective. There are many 
who worry about whether they are ef- 
fective, whether you do something and 
it just doesn't amount to much. 

And, of course, every time we do 
something with economic sanctions and 
I come before you, you all say it doesn't 
amount to much. It amounts to some- 
thing. And the more countries that join 
in, the more it will do. And I think we 
see a gradual rolling in of the isolation 
of Libya— diplomatically, politically, eco- 
nomically, and every other way. 

Q. On that point precisely, you 
speak of the isolation of Libya. After 
all, there are only seven countries that 
have signed this statement. The U.S. 
position is regularly and even unani- 
mously defeated, for instance in the 
Islamic Conference, even so far as 
economic sanctions are concerned. 
What do you think the prospects are 
for this type of position to spread 
beyond the small club of seven indus- 
trial democracies? 

A. I think that the world has had 
enough of terrorism and is going to be 
delighted to see the strength of this 
statement. People don't want terrorism; 
nobody does. I shouldn't say nobody; 
there are states that sponsor it. But, by 
and large, in the civilized community, 
we don't like terrorism. You don't like 
it. So you like to see, I assume, some- 
thing being done about it, and some- 
thing is being done about it. And as I've 
said, we're going to win this war 
against terrorism. 




Summit Economic 
Declaration, 
May 6, 1986 4 

1. We, the Heads of State or Government of 
seven major industrialized countries and the 
representatives of the European Community, 
meeting in Tokyo for the twelfth Economic 
Summit, have reviewed developments in the 
world economy since our meeting in Bonn a 
year ago, and have reaffirmed our continuing 
determination to work together to sustain 
and improve the prosperity and well-being of 
the peoples of our own countries, to support 
the developing countries in their efforts to 
promote their economic growth and prosper- 
ity and to improve the functioning of the 
world monetary and trading systems. 

2. Developments since our last meeting 
reflect the effectiveness of the policies to 
which we have committed ourselves at suc- 
cessive Economic Summits in recent years. 
The economies of the industrialized countries 
are now in their fourth year of expansion. In 
all our countries, the rate of inflation has 
been declining. With the continuing pursuit ( 
prudent fiscal and monetary policies, this has 
permitted a substantial lowering of interest 
rates. There has been a significant shift in 
the pattern of exchange rates which better 
reflects fundamental economic conditions. Fo 
the industrialized countries, and indeed for 



Department of State Bullet 



le world economy, the recent decline in oil 
"ices will help to sustain non-inflationary 
•owth and to increase the volume of world 
•ade, despite the difficulties which it creates 
r certain oil-producing countries. Overall, 
lese developments offer brighter prospects 
r, and enhance confidence in, the future of 
le world economy. 

3. However, the world economy still faces 
number of difficult challenges which could 
npair sustainability of growth. Among these 
•e high unemployment, large domestic and 
eternal imbalances, uncertainty about the 
iture behaviour of exchange rates, persist- 

lt protectionist pressures, continuing 
fficulties of many developing countries and 
:vere debt problems for some and uncer- 
linty about medium-term prospects for the 
l vels of energy prices. If large imbalances 
id other distortions are allowed to persist 
>r too long, they will present an increasing 
ireat to world economic growth and to the 
jen multilateral trading system. We cannot 
! ford to relax our efforts. In formulating our 
jlicies, we need to look to the medium and 
>nger term, and to have regard to the inter- 
dated and structural character of current 
roblems. 

4. We stress the need to implement effec- 
ve structural adjustment policies in all coun- 
ies across the whole range of economic 
:tivities to promote growth, employment 

rid the integration of domestic economies 
ito the world economy. Such policies include 
:chnological innovation, adaptation of indus- 
ial structure and expansion of trade and 
ireign direct investment. 

5. In each of our own countries, it re- 
tains essential to maintain a firm control of 
nblic spending within an appropriate 
ledium-term framework of fiscal and mone- 
iry policies. In some of our countries there 
mtinue to be excessive fiscal deficits which 
le governments concerned are resolved 
rogressively to reduce. 

6. Since our last meeting we have had 
)me success in the creation of new jobs to 
leet additions to the labour force, but unem- 
loyment remains excessively high in many 

F our countries. Non-inflationary growth 
;mains the biggest single contributor to the 
mitation and reduction of unemployment, 
ut it needs to be reinforced by policies 
hieh encourage job creation, particularly in 
ew and high-technology industries, and in 
nail businesses. 

7. At the same time, it is important that 
lere should be close and continuous coordi- 
ation of economic policy among the seven 
ummit countries. We welcome the recent 
samples of improved coordination among the 
roup of Five Finance Ministers and Central 
inkers, which have helped to change the 
attern of exchange rates and to lower in- 
;rest rates on an orderlv and non- 



inflationary basis. We agree, however, that 
additional measures should be taken to en- 
sure that procedures for effective coordina- 
tion of international economic policy are 
strengthened further. To this end, the Heads 
of State or Government: 

• Agree to form a new Group of Seven 
Finance Ministers, including Italy and 
Canada, which will work together more 
closely and more frequently in the periods 
between the annual Summit meetings; 

• Request the seven Finance Ministers to 
review their individual economic objectives 
and forecasts collectively at least once a year, 
using the indicators specified below, with a 
particular view to examining their mutual 
compatibility. 

With the representatives of the European 
Community: 

• State that the purposes of improved 
coordination should explicitly include promot- 
ing non-inflationary economic growth, 
strengthening market-oriented incentives for 
employment and productive investment, 
opening the international trading and invest- 
ment system and fostering greater stability 
in exchange rates; 

• Reaffirm the undertaking at the 1982 
Versailles Summit to cooperate with the IMF 
in strengthening multilateral surveillance, 
particularly among the countries whose cur- 
rencies constitute the SDR [special drawing 
rights], and request that, in conducting such 
surveillance and in conjunction with the 
Managing Director of the IMF, their in- 
dividual economic forecasts should be 
reviewed, taking into account indicators such 
as GNP growth rates, inflation rates, interest 
rates, unemployment rates, fiscal deficit 
ratios, current account and trade balances, 
monetary growth rates, reserves and ex- 
change rates; 

• Invite the Finance Ministers and Cen- 
tral Bankers in conducting multilateral sur- 
veillance to make their best efforts to reach 
an understanding on appropriate remedial 
measures whenever there are significant 
deviations from an intended course; and 
recommend that remedial efforts focus first 
and foremost on underlying policy fundamen- 
tals, while reaffirming the 1983 Williamsburg 
commitment to intervene in exchange mar- 
kets when to do so would be helpful. 

The Heads of State or Government: 

• Request the Group of Five Finance 
Ministers to include Canada and Italy in their 
meetings whenever the management or the 
improvement of the international monetary 
system and related economic policy measures 
are to be discussed and dealt with; 



J[ TOKYO V 

SsummitCB 

\,J986 Jr 



• Invite Finance Ministers to report 
progress at the next Economic Summit 
meeting. 

These improvements in coordination 
should be accompanied by similar efforts 
within the Group of Ten. 

8. The pursuit of these policies by the in- 
dustrialized countries will help the developing 
countries in so far as it strengthens the 
world economy, creates conditions for lower 
interest rates, generates the possibility of 
increased financial flows to the developing 
countries, promotes transfer of technology 
and improves access to the markets of the in- 
dustrialized countries. At the same time, de- 
veloping countries, particularly debtor 
countries, can fit themselves to play a fuller 
part in the world economy by adopting effec- 
tive structural adjustment policies, coupled 
with measures to mobilize domestic savings, 
to encourage the repatriation of capital, to 
improve the environment for foreign invest- 
ment and to promote more open trading poli- 
cies. In this connection, noting in particular 
the difficult situation facing those countries 
highly dependent on exports of primary com- 
modities, we agree to continue to support 
their efforts for further processing of their 
products and for diversifying their economies, 
and to take account of their export needs in 
formulating our own trade and domestic 
policies. 

9. Private financial flows will continue to 
play a major part in providing for their de- 
velopment needs. We reaffirm our willingness 
to maintain and, where appropriate, expand 
official financial flows, both bilateral and mul- 
tilateral, to developing countries. In this con- 
nection, we attach great importance to an 
early and substantial eighth replenishment of 
the International Development Association 
(IDA) and to a general capital increase of the 
World Bank when appropriate. We look for 
progress in activating the Multilateral Invest- 
ment Guarantee Agency. 

10. We reaffirm the continued importance 
of the case-by-case approach to international 
debt problems. We welcome the progress 
made in developing the cooperative debt 
strategy, in particular building on the United 
States initiative. The role of the international 
financial institutions, including the multi- 
lateral development banks, will continue to 
be central, and we welcome moves for closer 
cooperation among these institutions, and 
particularly between the IMF and the World 
Bank. Sound adjustment programmes will 
also need resumed commercial bank lending, 
flexibility in rescheduling debt and appropri- 
ate access to export credits. 



uly 1986 



11. We welcome the improvement which 
has occurred in the food situation in Africa. 
Nonetheless a number of African countries 
continue to need emergency aid, and we 
stand ready to assist. More generally, we 
continue to recognize the high priority to be 
given to meeting the needs of Africa. Meas- 
ures identified in the Report on Aid to Africa 
adopted and forwarded to us by our Foreign 
Ministers should be steadily implemented. 
Assistance should focus in particular on the 
medium- and long-term economic develop- 
ment of these countries. In this connection 
we attach great importance to continued 
cooperation through the Special Facility for 
Sub-Saharan African countries, early im- 
plementation of the newly established Struc- 
tural Adjustment Facility of the IMF and the 
use of the IDA. We intend to participate 
actively in the forthcoming United Nations 
Special Session on Africa to lay the founda- 
tion for the region's long-term development. 

12. The open multilateral trading system 
is one of the keys to the efficiency and 
expansion of the world economy. We reaffirm 
our commitment to halting and reversing pro- 
tectionism, and to reducing and dismantling 
trade restrictions. We support the strength- 
ening of the system and functioning of the 
GATT [General Agreement on Tariffs and 
Trade], its adaptation to new developments in 
world trade and to the international economic 
environment and the bringing of new issues 
under international discipline. The New 
Round should, inter alia, address the issues 
of trade in services and trade related aspects 
of intellectual property rights and foreign 
direct investment. Further liberalization of 
trade is, we believe, of no less importance for 
the developing countries than for ourselves, 
and we are fully committed to the prepar- 
atory process in the GATT with a view to 
the early launching of the New Round of 
multilateral trade negotiations. We shall 
work at the September Ministerial meeting 
to make decisive progress in this direction. 

13. We note with concern that a situation 
of global structural surplus now exists for 
some important agricultural products, arising 
partly from technological improvements, 
partly from changes in the world market situ- 
ation, and partly from long-standing policies 
of domestic subsidy and protection of agricul- 
ture in all our countries. This harms the 
economies of certain developing countries and 
is likely to aggravate the risk of wider pro- 
tectionist pressures. This is a problem which 
we all share and can be dealt with only in 
cooperation with each other. We all recognize 



the importance of agriculture to the well- 
being of rural communities, but we are 
agreed that, when there are surpluses, action 
is needed to redirect policies and adjust 
structure of agricultural production in the 
light of world demand. We recognize the im- 
portance of understanding these issues and 
express our determination to give full sup- 
port to the work of the OECD [Organization 
for Economic Cooperation and Development] 
in this field. 

14. Bearing in mind that the recent oil 
price decline owes much to the cooperative 
energy policies which we have pursued dur- 
ing the past decade, we recognize the need 
for continuity of policies for achieving long- 
term energy market stability and security of 
supply. We note that the current oil market 
situation enables countries which wish to do 
so to increase stock levels. 

15. We reaffirm the importance of science 
and technology for the dynamic growth of the 
world economy and take note, with apprecia- 
tion, of the final report of the Working Group 
on Technology, Growth and Employment. We 
welcome the progress made by the United 
States Manned Space Programme and the 
progress made by the autonomous work of 
the European Space Agency (ESA). We 
stress the importance for genuine partnership 
and appropriate exchange of information, ex- 
perience and technologies among the par- 
ticipating states. We also note with 
satisfaction the results of the Symposium on 
Neuroseience and Ethics, hosted by the Fed- 
eral Republic of Germany, and we appreciate 
the decision of the Canadian Government to 
host the next meeting. 

16. We reaffirm our responsibility, shared 
with other governments, to preserve the 
natural environment, and continue to attach 
importance to international cooperation in the 
effective prevention and control of pollution 
and natural resources management. In this 
regard, we take note of the work of the en- 
vironmental experts on the improvement and 
harmonization of the techniques and practices 
of environmental measurement, and ask them 
to report as soon as possible. We also recog- 
nize the need to strengthen cooperation with 
developing countries in the area of the en- 
vironment. 

17. We have agreed to meet again in 
1987 and have accepted the invitation of the 
President of the Council of the Italian 
Government to meet in Italy. 



President Reagan's 
News Conference, 
May 7, 1986 2 

It's no exaggeration to describe the 
Tokyo summit as the most successful of 
the six that I have attended. The atmos- 
phere was cordial, the talks were candic 
and constructive, and a strong measure 
of allied unity on the fundamental issue? 
of our agenda was achieved. All we 
sought to accomplish at the summit was- 
achieved. 

This triumph at Tokyo was due in 
no small measure to the leadership of 
Prime Minister Nakasone. The summit 
seven agreed upon the menace posed by 
the scourge of international terror and 
upon new political and diplomatic meas- 
ures to deal with it. We agreed that the 
Libya of Col. Qadhafi represents a 
unique threat to free peoples, a rogue 
regime that advances its goals through 
the murder and maiming of innocent 
civilians. 

We arrived at this summit as a ris- 
ing tide of prosperity in the industrial 
democracies was demonstrating to the 
world the wisdom of the free market 
policies that we've pursued. And 
together we committed ourselves in 
Tokyo to strengthen those policies wher 
we return home. For developing coun- 
tries as well, as a robust and free Asia 
demonstrates, the principles of free mar 
ket are more important to progress thai 
any level of economic aid. 

On the emerging issue of agricul- 
tural overproduction, it was agreed that 
the primary cause of the worldwide sur- 
pluses of food and fiber is domestic 
government policies that must be ad- 
dressed. 

One danger to the common prosper- 
ity we all recognize is the specter of 
protectionism— that vain search for secu 
rity behind tariff walls and inside closed 
markets. History has proved again and 
again the fallacy of that reasoning and 
the folly of protectionism. 

In Tokyo we have obtained a green 
light for the commencement of a new 
round of trade negotiations beginning in 
September. The way to resolve trade 
problems is to seek open, not closed, 
markets; to seek multilateral negotia- 
tion, not unilateral legislation. 



10 



Department of State Bulleti 



We made progress in strengthening 
onomic policy coordination with our 
mmit partners. This will help reduce 
ade imbalances by tackling their un- 
irlying causes and promote greater ex- 
ange rate stability. We also believe 
is will result in greater stability in the 
•n-dollar relationship, something both 
e United States and Japan desire. We 
so won an endorsement for the U.S. 
itiative for a joint debt strategy for 
iveloping nations. 

And, finally, as events of the past 
3ek starkly demonstrate, we need 
ore openness on nuclear accidents. A 
eakdown at a nuclear powerplant that 
nds radioactive material across na- 
>nal frontiers is not simply an internal 
•oblem. 

But let me now thank our Japanese 
ists, and in particular Prime Minister 
akasone. They put up with the incon- 
mience that thousands of summiteer- 
g politicians, bureaucrats, and press 
ust have caused them with unfailing 
urtesy and graciousness; and we are 
their debt. 



Q. You came to Tokyo saying that 
you didn't want a grandiose statement 
on terrorism, you wanted action. Now 
you have your statement, but your fel- 
low summit leaders say that nothing 
really has changed. What actions do 
you expect, if any? 

A. I find it difficult to believe that 
the people that I've been meeting with, 
the heads of state, would have indicated 
anything otherwise; because what we 
have agreed upon is that terrorism is a 
threat to all of us. It is an attack upon 
the world. The determination of ter- 
rorists who murder and maim innocent 
people in pursuit of some political goal, 
and that the way to deal with it is not 
individually or unilaterally, but to deal 
with it together. And this was the sense 
of the agreement that we arrived at; 
that we are going to act together with 
regard to opposing terrorism, to isolate 
those states that provide support for 
terrorism, to isolate them and make 
them pariahs on the world scene, and 
even, if possible, to isolate them from 
their own people. 



: the conclusion of the economic summit. Emperor Hirohito hosts a dinner at the 
iperial Palace. In the back row (left to right) are President Delors, President Lubbers, 
-ime Minister Craxi, Prime Minister Thatcher, President Reagan, Emperor Hirohito, 
-esident Mitterrand, Chancellor Kohl, Prime Minister Mulroney, Prime Minister Chirac, 
id Prime Minister Nakasone. In the front row (left to right) are Anna Maria Craxi, 
ancy Reagan, Hannelore Kohl, Mila Mulroney, and Tsutako Nakasone. 



S* TOKYO V 
SUMMIT® 
m,1986 J> 



Q. There were no sanctions or 
joint actions specified. Could you tell 
us what action you do expect? 

A. We discussed at great length 
specific actions and all. But the state- 
ment was one to simply say that we 
together will decide upon what is ap- 
propriate, depending on the acts, what 
is the most effective thing to do in the 
instance of further terror incidents. And 
we didn't think that it was, perhaps, 
useful to put all of that into a public 
statement, telling the terrorists exactly 
what it was we intended to do. 

Q. There are reports that you are 
preparing a missile attack— another 
round— against Libya with conven- 
tional warheads. Do you think that 
the summit statement on terrorism 
gives you a license to bomb any coun- 
try that you suspect is harboring 
terrorists? 

A. I have to tell you, I read that lit- 
tle item myself this morning. No one 
was more surprised to hear that I was 
planning that than I was— [laughter]— 
because I'm not planning that. As I 
said, we'll work together on these 
things. But we do feel— and this was 




Jly 1986 



11 



part of the gist of the conversation that 
we all had and the agreements that we 
came to— and that is that we can take 
whatever action is necessary to curb, to 
stop, and to punish, if they are success- 
ful in a terrorist attempt, those who 
practice terrorism and the states that 
back and support it. 

Q. Is the United States so bereft 
that it has to drop tons of bombs on a 
country to get one man? 

A. Again, you touch upon something 
where military action is deemed neces- 
sary. I'm not going to discuss that, be- 
cause I think it would be counter- 
productive to do so. 

But we weren't out, in the sense of 
getting one man— that we were drop- 
ping those tons of bombs hoping to blow 
him up. I don't think any of us would 
have shed tears if that had happened. 
But we were out to damage and destroy 
those facilities that were making it pos- 
sible for that particular state under his 
guidance to back and support terrorism. 

Q. A moment ago you talked about 
people who commit terrorist acts in 
pursuit of a political goal. Do you 
really think you're going to stop that 
kind of action until you deal with the 
root causes of terrorism? 

Your Secretary of State seems to 
suggest, or at least indicate, that it's 
just a question of people who are 
thugs. Where is the emphasis on try- 
ing to revive the Middle East peace 
process? Where is the emphasis on try- 
ing to settle the Palestinian problem? 
Has there been any? 

A. All of those things are still goals 
of ours, and we're still doing everything 
we can to arrive at solutions. 

But I think that's the same thing as 
the cliche line that is going around that, 
well, one man's terrorist is another 
man's freedom fighter. No such thing. 
The people who are customarily called 
freedom fighters are fighting against or- 
ganized military forces. Even if it is a 
civil war, it is a war. Terrorists, as I 
said before, are people who deliberately 
choose as a target to murder or maim 
innocent people who have no influence 
upon the things that they think of as 
their political goals. And, therefore, 



those people must be treated as to what 
they are, and that is they are base 
criminals. 

Q. The Soviets have now admitted 
that they miscalculated the accident 
at Chernobyl in the first few days. 
Their officials complain that your 
focus has not been on sympathy for 
that great tragedy that their country 
has suffered, but that you're more 
focused on bashing their system and 
their country and taking advantage of 
this tragedy. What's your response? 

A. My response is that our first 
response w T hen word came to us— and 
not as information directly from them, 
but that there had been such a thing 
happen there— was an offer of any kind 
and every kind of aid that might be 
helpful to them. And certainly an ex- 
pression of sympathy went with that for 
those who might have suffered in the 
accident. 

Since then, the effort— for a limited 
period at least— to cover up and confuse 
the issue, we think, was the wrong way 
to go. We're not bashing at all. We're 
simply citing the need for any one of us, 
if that happens, to let the neighbors 
know that they may be threatened as 
the outcome of this. 

But I am pleased to say that in the 
last few days there has been a change, 
and the Soviet Union has been more 
forthcoming about this with regard to 
getting information and so forth. 

Q. Have you heard from Mr. Gor- 
bachev? Have you received a message 
from him saying that he still wants to 
have a summit with you this year? 

A. No, I have not received such a 
direct message. On the other hand, I 
haven't received anything that said he 
has changed his mind and that we won't 
have a summit. 

Q. As a result of this summit 
meeting, how soon can we expect the 
$150 billion trade deficit of the United 
States to come down? 

A. I don't think that I could put a 
time on that, but I think that we did 
things at this summit that are dealing 
with that kind of problem and are going 
to do our utmost to see that markets 



are opened and trade restrictions are 
removed. That was one of the promine 
subjects here and one which will be 
treated with the forthcoming GATT 
rounds. 

Q. Do you have a deadline in min 
for U.S. companies— especially the oi 
firms— to get out of Libya? 

A. Yes, we have told those that 
have a share in oil firms in Libya— the 
are none of them, I think, a majority 
owner— that they are to dispose of the: 
holdings by June 30th. 

Q. You and Mrs. Thatcher worke 
so hard to get Libya mentioned in th 
summit declaration. Syrian Presiden 
Assad has said that there should be 
more terrorist acts against Israel. 
Why did you not work to get Syria 
mentioned as a terrorist-sponsoring 
state? 

A. Right now the one state on whi 
we all have irrefutable evidence of the 
support of terrorist acts— indeed, we 
had intelligence information that know 
in advance of 35 planned operations 
backed by them. So, we tagged them. 
What we have made plain is that if we 
have the same kind of irrefutable evi- 
dence with regard to other countries, 
they will be subjected to the same 
treatment. 

Q. I'd like to go back to the ter- 
rorism statement signed at the sum- 
mit. The leaders did agree to some 
specific actions. Most of them are 
things that they are already doing, b 
they explicitly decided not to endorse 
either economic sanctions or military 
action. Are you saying that there we 
some secret agreements and that the. 
have approved economic sanctions or 
military action? 

A. I am saying that in our discus- 
sions leading to what we really wantec 
to accomplish— and that was a recogni- 
tion that instead of each one of us trea 
ing with this alone, we are going to 
treat with it on a united front. And in 
those discussions we discussed all the 
things that could be seen as possible 
tools or weapons in this war against t€ 
rorism, but we didn't feel that this wa 
something that you put down in a plan 



12 



Department of State Bulle 



r ou then treat with an incident in 
, T hich we all come together and say, 
Now, what are the things here that we 
hink are the most effective to use?" 

Q. But, if I might, were there any 
ommitments made? The French and 
he Japanese are already saying they 
lon't view this summit statement as 
Ending. They'll decide to do whatever 
hey want to do. 

A. As far as I know, seven heads of 
tate agreed to a statement that said 
hat we believe the way to deal with 
errorism is on a unified front, that 
re're in this all together. 

Q. There are those in the Adminis- 
ration who say that a decision has 
leen made to take two Poseidon sub- 
narines out of service to observe the 
imits of the SALT Treaty-the unrati- 
ied treaty— when that deadline comes 
iround. Can you tell us if you have 
nade the decision, or if it's imminent, 
md if, when you do make it, and if 
'ou do do that, if you're going to say 
hat you're going the extra mile once 
(gain? 

A. No decision has been made. And 
vith regard to the two submarines you 
nentioned, I might tell you that no deci- 
sion was made there either. But a deci- 
sion has to be made that has nothing to 
lo with the SALT Treaty restraints. 
rhe thing is a practical question of 
vhether it is better, economically and 
or our strength, to try to refurbish two 
iging submarines or whether to put 
;hem out of action simply because they 
ire no longer and their lifespan is so 
short. And we haven't made the deci- 
sion on either one of those things yet. 

Q. But it sounds like you're not 
?oing to characterize it as going the 
extra mile to keep on observing the 
SALT Treaty if you do that. 

A. No. As I say, no decision has 
been made on either one of these two 
things. 

Q. When you were in Indonesia, 
what did you tell President Soeharto 
about the human rights situation 
there? And as a followup, what would 
you like the Secretary of State to 
carry in the way of a human rights 
message to South Korea when he goes 
there today? 



A. I have to say with regard to my 
conversations with Soeharto— and I've 
always believed this with regard to hu- 
man rights things and anyone we're 
talking with— I've found that it's far 
more productive if quiet diplomacy is 
practiced and if you simply discuss those 
things in private. So, I won't refer to 
that. I will call attention to the fact, 
though, that with all of the criticisms 
that are being made, and particularly 
since the issue of whether some report- 
ers could or could not land, the progress 
that has been made by Indonesia, the 
fact that they have become totally self- 
sufficient in providing food for their 165 
million people, a number of things of 
this kind, the economic growth. He has 
much to be proud of and the record that 
has been established by his government. 

Q. If you won't tell us what you 
discussed, can you say whether you 
brought the subject up? And again on 
South Korea, with the Secretary going 
there today, will those be discussed? 

A. I haven't had time to talk to the 
Secretary of State, or he to me, about 
what he's going to be discussing there 
in South Korea. 

Q. You say the allies have signed a 
statement pledging joint action on ter- 
rorism. Does that mean that precludes 
unilateral American military action in 
the event of a terrorist attack? And a 
followup to an earlier question. What 
exactly is the state of the solution to 
the Middle East problem, the Palestin- 
ian problem? 

A. Let me just say that with regard 
to the first question, no, there wasn't 
anything in there in which we said that 
we would try to preclude some nation 
from acting. We simply said that it 
shouldn't be dependent on a single na- 
tion to try and find an answer, that all 
of us were united, that this was an at- 
tack against all of us. 

We continue to try and have tried to 
be helpful in bringing about peace 
negotiations in the Middle East. And we 
have stated from the first and still state 
that the solution to the Palestinian 
problem must be a part of any peace 
settlement. We haven't retreated from 
that. 



JT TOKYO V 
»SUMM1T« 
\,1986 J 



Q. While you've been here, you've 
been losing ground in the Senate. The 
Senate voted against arm sales to the 
Saudis, and the Senate tax committee 
has approved a plan that abolishes 
capital gains and does quite a few 
other things that you said you're not 
for. What are you going to do about 
it? 

A. Let them just wait till the old 
man gets home— [laughter]— and see 
what happens to 'em. 

Q. Exactly, on taxes, what part of 
what the Senate committee is doing 
are you going to try to change? 

A. On the tax reform? There are a 
few things in there I've got some ques- 
tions about, but haven't had time to 
really study in depth with all that's 
been going on here. I have to tell you 
that, over all, I think the Senate 
Finance Committee's tax plan basically 
meets the four requirements that I had 
always set down for a tax reform. And I 
find that, overall, it is far superior to 
the House version. And I think that, 
very likely, I can find myself supporting 
the Senate committee's version. I hope 
it comes out to the floor. As a matter of 
fact, there's a possibility it may have, 
and they may be voting on it right now. 

Q. In your discussion with the al- 
lied leaders, did they tell you of any 
specific, new economic measures they 
plan to take shortly against Libya? 
And if they did, how soon? 

A. Again, I would be violating a con- 
fidence. All of them were talking about 
their problems, their relationship with 
Libya; and many of them were making 
suggestions as to what they thought 
they were going to do. But I don't think 
that I should be quoting them or mak- 
ing that public, because those were in 
private conversations. 



July 1986 



13 



Q. As you know, your government 
has information suggesting that the 
perpetrator of the Berlin disco bomb- 
ing got the explosives from the Syri- 
ans. Do you intend the agreement that 
you all signed here this week as a 
warning to the Syrian Government as 
well as to the Libyan Government? 

A. We think that this agreement 
that we signed, yes, is one that is say- 
ing to those other countries which 
there's reason to suspect have if not 
openly supported, certainly not dis- 
couraged terrorism coming from their 
countries. We intend this to make them 
think also and realize that they're cov- 
ered by this agreement, that they will 
have to face all of us united if we get 
evidence that they are doing this. 

Q. Do the various enforcement 
measures contained in the statement 
apply to suspected terrorists of other 
countries, other than Libya? For in- 
stance, if Washington or London were 
to expel, say, three Syrian diplomats 
for alleged terrorist activity, would 
Paris be required to deny them diplo- 
matic status as well? 

A. Here again is a decision that 
would then be made by all of us. And as 
a matter of fact, without waiting for in- 
cidents in a particular locale— whether 
to start at least reducing their personnel 
or sending them home entirely, that is a 
decision that we will all make. And that 
is one of the things that needs to be 
done. 



Q. You and Mrs. Thatcher man- 
aged in 1984 to get through a state- 
ment on terrorism that, at the time, 
you considered quite forceful. And yet 
the incidents of terrorism increased, 
and you didn't get cooperation on the 
April 15th raid. Is there any reason to 
think that this time it would be differ- 
ent, that the allies would be willing to 
do what they seemed to be unwilling 
to do the last time after passing a 
declaration like this? 

A. I think there is reason to believe 
that because we have all seen the evi- 
dence and we've all seen the fact that 
the victims of the terrorist attacks and 
the place where the attacks take place 
are such that almost any incident in- 
volves more than one country to begin 
with, that they— as I said last year, 
together with sharing intelligence with 
other countries, we were able to abort 
126 planned terrorist acts. 

Now we, as I say, have evidence 
ourselves of 35 planned attacks, but 
they're in a number of countries. And in 
many instances, however, the targets 
would be specifically Americans, but in 
other countries. The incident in 
France— and I had to congratulate Presi- 
dent Mitterrand on it— they discovered 
this incident that was to take place very 
shortly. And this was when they ex- 
pelled the members. It was for this rea- 
son. Through the Libyan organization 
that they— they don't use the word 
"embassy," but it amounts to that in 
Paris— weapons had been provided to 
terrorists who were then going to set 
up— and outside the American Embassy 



where people line up to go in and get 
visas to come to America. Those aren't 
Americans. They don't need visas if 
they're Americans. So, those innocent 
people of whatever nationality, probably 
predominantly French, were going to ba( 
mowed down with small arms fire and 
hand grenades. And that was aborted, 
and they sent the diplomats home and 
are sending additional ones home. But, 
again, it reveals that we all have come 
to an awareness that we're all targets. 

Q. You compared our relationship 
with France to a marriage that can 
have some problems. Do you think the 
next time we need French airspace 
they're going to say yes, or are we 
headed for a divorce? [Laughter] 

A. That's one of the wonderful 
things that came out of this summit. 
There may and will, I'm quite sure, be 
differences here and there between 
countries on a method or what to do. 
But I don't see a divorce in the offing. ] 
think the marriage is happier than I've 
ever seen it. As a matter of fact, people 
who have been familiar with more sum- 
mits than I have said the same thing 
that I have said. Of all the six I've 
attended, I never have attended one in 
which the sense of unity and the cordial 
ity between us in— whatever differences 
they were more of how to accomplish 
something than whether to accomplish 
something. And we are all going home 
pretty much inspired by that. 




'Press release 100 of May 3, 1986. 

2 Text from Weekly Compilation of 
Presidential Documents of May 12. 

3 Press release 103 of May 8. 

4 Prime Minister Nakasone read the decla- 
ration to news correspondents assembled in 
the Hotel New Otani in the presence of the 
other summit participants (text from Weekly 
Compilation of Presidential Documents of 
May 12). ■ 



14 



Department of State Bulleti 



THE PRESIDENT 



Visit to Indonesia 




President Reagan departed the United States 

April 28, 1986, and arrived in Bali on April 29. 

Following is the address he made 

before the ministerial meeting of 

the Association of South East Asian Nations (ASEAN), 

Secretary Shultz's news briefing, 

and the President's dinner toast. 



resident's Address 
efore ASEAN 
[inisterial Meeting, 
[ay 1, 1986 1 

appreciate this opportunity to discuss 
ith you the wide range of issues that 
e of mutual concern to our peoples. 
nee coming to the Presidency, I have 
ressed enterprise, not redistribution, 
: the best means of improving the eco- 
>mic well-being of any country. I've 
nphasized the importance of free peo- 
e cooperating together to meet the 
rious challenges that are loose in the 
orld today. Our talks, then, have par- 
:ular relevance. Since its founding in 
(67, ASEAN has been a shining exam- 
e of enterprise and cooperation. 

It was my honor earlier to have met 
id conferred with [Indonesian] Presi- 
;nt Soeharto. Our discussions were 
iendly and carried out with the mutual 
ispect one would expect between the 
aders of two great nations. I am eonfi- 
snt that our discussions will be in the 
ime spirit— I mean our discussions 
3re. And I'm looking forward to hear- 
ig your views. 

You know, there is a story back in 
le United States about two men out in 
le woods on a hike. And they saw a 
rge bear coming over the hill directly 
ward them. And one of them sat 
own, took off his knapsack, reached in, 
ot out a pair of tennis shoes, and 
;arted to put them on. And the other 
ne looked and says, "You don't think 
lat putting on those tennis shoes— 
ou're going to be able to outrun that 
ear?" He said, "I don't have to outrun 
le bear; I only have to outrun you." 
Laughter] 



If there is a bear coming over the 
hill, unlike that hiker, the American peo- 
ple can be counted on to stick with our 
friends. We won't put on running shoes. 
[Laughter] Standing together, we can 
make certain the people of this region 
remain free and secure. 

Today there is an ever-increasing 
recognition that our futures are linked 
in so many ways. Two ASEAN mem- 
bers, Thailand and the Philippines, are 
treaty allies. All of you are friends with 
whom we work closely. The United 
States sees ASEAN's unity and deci- 
siveness as an example to other free 
people. The ASEAN collective voice of 
responsible international behavior has 
been amplified throughout the world, 
and I am here to listen to you. Support 
for and cooperation with ASEAN is a 
linchpin of American Pacific policy. 

Nowhere has your leadership been 
more inspiring than in molding the 
world's response to the Vietnamese 
invasion and occupation of Cambodia. 
After the collapse of South Vietnam, 
ASEAN took a strong stand against 
Vietnam expansionism. When Vietnam 
invaded Cambodia in 1978, you recog- 
nized the threat and acted quickly. The 
strength of your commitment and the 
direction you've provided on this vital 
issue have been much admired by the 
United States. 

In 1981 ASEAN organized the In- 
ternational Conference on Kampuchea. 
We continue to support the basic princi- 
ples for the settlement of the Cambo- 
dian situation agreed upon at that 
conference: the complete withdrawal of 
Vietnamese forces under international 
supervision; the restoration of Cambo- 
dian independence, sovereignty, and ter- 
ritorial integrity; a Cambodian Govern- 
ment chosen in free elections under in- 
ternational auspices. 



ASEAN's efforts are consistent with 
American desires to bring peaceful reso- 
lution to the tragic cycle of events that 
has plagued the Cambodian people. We 
continue to believe a negotiated settle- 
ment with ASEAN is in Vietnam's in- 
terest and in the best interest of 
everyone in the region. We are pre- 
pared to participate constructively in a 
regional settlement and call upon Viet- 
nam to answer your reasonable pro- 
posals for negotiations. The contrast 
between the economic conditions prevail- 
ing in Vietnam and ASEAN is striking. 
Their continued occupation of Cambodia 
is simply widening this gap each day. 
Cambodia is, of course, something we 
will discuss further this afternoon along 
with other issues of regional and global 
importance. 

In approaching our discussions, let 
me just say the United States considers 
itself a Pacific rim country, with a 
heavy stake in the outcome of events in 
this region. The Philippines, for exam- 
ple, is a country with which the United 
States has deep and abiding ties. We 
hope that recent events there will in- 
crease the chances of unity through 
democracy and enable the Philippine 
people, to a greater degree, to join in 
the economic advances so apparent 
throughout the region. Before I left 
Washington, we announced a Philippine 
aid package to help our Filipino friends 
during this difficult period. 

This region's economic stature con- 
tinues to grow. Collectively, ASEAN is 
now the United States' fifth largest 
trading partner. Our trade with you, as 
with all of East Asia and the Pacific, is 
growing faster than with any other 
region of the world. When this organiza- 
tion was founded back in 1967, our an- 
nual trade was running at less than $2 
billion. In 1985 U.S.-ASEAN trade 
reached $23.5 billion. 



luly 1986 



15 



THE PRESIDENT 




President Reagan and Secretary Shultz give their attention to Philippine Vice President 
Laurel, chairman of the ASEAN ministerial meeting. Seated behind the President are (left 
to right) Assistant Secretary of State for East Asian and Pacific Affairs Gaston J. Sigur, 
Jr., the President's national security adviser Adm. John M. Poindexter, and the Presi- 
dent's Chief of Staff Donald Regan. 



As you are all aware, there is grow- 
ing pressure in many industrial coun- 
tries to restrict trade. I'm certain you 
agree that any substantial cut in the 
commerce between nations would be an 
unmitigated disaster. It is only right 
that we are meeting prior to the 12th 
economic summit in Tokyo. One of the 
messages I am bringing to the economic 
summit concerns the necessity of keep- 
ing open the avenues of world trade. 
This is something that the United 
States and ASEAN should work closely 
together to achieve. It is fundamental to 
the well-being of both our peoples. 

As part of my preparation for the 
economic summit, I'm also looking for- 
ward to hearing today your thoughts on 
issues that the summit conferees should 
keep in mind as concerns of the coun- 
tries of ASEAN. We are pleased, as a 
Pacific rim partner, to take your ideas 
to the meeting in Tokyo. 

Our progress has been based on 
freeing, not restricting, man's com- 
merce, energy, and creativity. A strong 
commitment to the principles of freedom 
and independence, and a fundamental 
trust in free enterprise and open mar- 
kets, have propelled ASEAN countries 
far beyond what others would have 
thought possible. The decisionmakers of 
your countries have proven their wis- 
dom and good sense. But I have a favor 



to ask. I think the leaders of the de- 
veloping world could use your advice. 
You know, give a man a fish and he 
won't be hungry today, but teach him 
how to fish and he'll never be hungry 
again. You can do a great service by 
telling others, especially those trying to 
improve their lot, how to follow the 
path of personal incentives to economic- 
progress. 

I would like to mention the humani- 
tarian issue of great personal concern to 
me, my Administration, and the Ameri- 
can people. It is about our men still 
missing in action from the Vietnam war. 
Vietnam's recent, apparent attempt to 
link this last vestige of the war to other 
issues is a great disappointment to us. 
We were pleased with the evident prog- 
ress over the past year. It indicated 
Hanoi had agreed with us that resolu- 
tion of this issue was in their national 
interest. We appreciate all that you 
have done to help us on this, and we 
hope that Vietnam will soon resume 
these important talks. 

In closing, I would like to say the 
United States is proud to be a partner 
with ASEAN in the quest for peace, 
freedom, and greater prosperity. I am 
looking forward to our meeting this af- 
ternoon and to the continuing close rela- 
tionship between our governments and 
people. 



Secretary's 
News Briefing, 
May 1, 1986 2 

The President and Mrs. Reagan are 
coming toward the end of their visit to 
Indonesia with the Indonesian Govern- 
ment and with the Foreign Ministers of 
ASEAN. 

This has been a fine occasion for the 
President and Mrs. Reagan to renew 
their friendship with President and Mrs 
Soeharto, which goes back to their visit 
to Jakarta in 1973, and, of course, Presi 
dent Soeharto was in Washington in 
1982. And so we have enjoyed that in- 
teraction. Of course, we are very im- 
pressed with the hospitality of the 
Indonesians and the beauty and the ex- 
traordinary setting that we're in here in 
Bali. 

In the course of the meetings- 
turning to the substantive side of it— 
between the President's lengthy private 
meeting with President Soeharto and 
the meetings that went on simultaneous 
ly with the Indonesian delegation and 
the U.S. delegation, earlier meetings 
with the Foreign Minister and our in- 
dividual meetings— mine with the 
ASEAN Foreign Ministers, the Presi- 
dent's meeting with [Philippine] Vice 
President Laurel and then the meeting 
he's just concluded with all of the 
ASEAN members— there was a tremen- 
dous amount of substance covered and 
let me just indicate quickly the nature 
of it. 

In the discussions with the Indo- 
nesians on the economic side, we dis- 
cussed the Tokyo summit— and I might 
just say, skipping ahead, the ASEAN 
countries submitted a memoir to the 
President giving their views about mat- 
ters to be covered in the Tokyo summit 
We discussed the problem of protec- 
tionism, and they expressed their ap- 
preciation and admiration for the 
President's strong stand on that. We 
brought up our interest and concern 
about intellectual property rights. Ther< 
was a lot of discussion of the desire for 
U.S. investment in this part of the 
world and in Indonesia, and we dis- 
cussed the conditions that we thought 
would be advantageous and help to 
bring that about. They expressed their 
concern that the communications satel- 
lite that serves Indonesia go up, and thi 
President assured them that we under- 
stand their problem and we understand 
our responsibilities, and we hope that 
we'll be able to work that out. We dis- 



16 



Department of State Bulleti 



THE PRESIDENT 



ssed the whole subject of financial 
sistance, debt problems around the 
Drld, and their great interest in the 
iker plan. 

On the political side, of course, then' 
a great preoccupation here and 
roughout the region with the prob- 
ms of Cambodia and Vietnam's occu- 
ition of Cambodia and invasion of 
imbodia. The associated issues involv- 
es refugees were explored. We ex- 
essed our appreciation for the 
donesian help in our POW/MIA is- 
es, and that's true of the other 
SEAN Foreign Ministers as well. The 
donesians were interested in talking 
iout developments in the Philippines 
id the outlook there. 

We took the occasion in all of the 
eetings with the Foreign Ministers 
id in our meeting this morning with 
e Indonesians and the President with 
•esident Soeharto to describe the 
■velopments in terrorism, the culpabil- 
r of Libya, clearcut, and the strong 
idence to show the nature of the 
oblem as we see it. 

We also made plain our view of free- 
>m of the press, which is different 
Dm the view here. And we always 
ive a continuing quiet dialogue on 
oblems in the general human rights 
ea, and we see, I think, some good de- 
ilopments with which we hope our pri- 
ite diplomacy may have some benefit. 
On the ASEAN meeting, you heard, 

course, the public statements that 
ere made in the private meeting. The 
nphasis was on four different subjects, 

the ASEAN Foreign Minister orga- 
zed the meeting. 

First, economic matters; again, the 
•oblem of protection. They're very glad 

hear the President's strongly reiter- 
ed views about the dangers to the 
orld economic system of protection and 
•s strength of his view of fighting it. 
leir interest in the Baker plan was ex- 
•essed and the importance of economic 
tpansion as the way to get at the 
•oblems of the world economy. They're 
mcerned, of course, about commodity 
•ices, which have remained at low 
vels, and particularly in the case of 
hailand, the problems created, as they 
ar them anyway, coming from our re- 
mt farm bill and having to do with 
arkets for rice. 

There was a considerable discussion 
' the Cambodia issue. And they de- 
:ribed their three-pronged approach, 
ith which we agree and which we sup- 
3rt strongly, namely to do everything 
ossible to help the opposition of the 



Cambodians, the opposition to Vietnam's 
occupation, help that opposition be cohe- 
sive and strong and represent a force 
able to create new facts on the ground 
and pressure in the situation. 

Second, to be ready for a political 
solution if a political solution consistent 
with the objectives that ASEAN has set 
out, namely that there be a removal of 
Vietnamese troops and the emergence 
of a government in Cambodia that 
reflects the will of the Cambodian peo- 
ple. If such a political solution can be 
worked out, then certainly we and they 
want to see that happen. In the mean- 
time, in addition to the opposition, the 
cohesion of that, we agree on the impor- 
tance of isolating Vietnam diplomati- 
cally—as has been done— and economi- 
cally. I might say the contrast between 
the spectacular economic developments 
which are there despite current 
problems in the ASEAN region, as con- 
trasted with the virtual no-progress- 
whatever in Vietnam is quite striking. 

And third, they wanted to talk about 
and did talk about China's role in 
Southeast Asia, and they expressed 
their sense of— on the one hand welcom- 
ing the modernization program and 
perhaps the interest in stability that 
comes with that, and on the other hand 
being conscious of the size of China and 
the indigenous populations and the 
potential problem that that might repre- 
sent for them. They expressed that to 
the President and he expressed our own 
view of the importance of working with 
China as it tries to undertake— does 
undertake its own modernization 
program. 

Finally, they talked about the Soviet 
Union's interest in the region and they, 
as they said, are not fooled in any way 
by recent developments. And they see 
the dilemma of the Soviet Union in ap- 
proaching them, namely, that on the one 
hand as long as the Soviets retain Cam- 
bodia and destabilize the region, there's 
no way they can expect to be on reason- 
able terms with the balance of the coun- 
tries in the region. On the other hand, if 
there is the kind of settlement that the 
ASEAN countries think is a proper one, 
then that may shift the Soviets' in- 
fluence in Vietnam. They have a dilem- 
ma, and they described that in some 
detail. 

Let me just say again how worth- 
while I believe the meetings here have 
been, and I know that the President 
shares that view. He's found them to be 
interesting and rewarding and looks for- 
ward to the dinner tonight and then off 
to the summit meeting in Tokyo. 



Q. Since the issue of the nuclear 
accident did come up with President 
Soeharto, can you tell us whether they 
are his— at this point, that any Soviet 
response— further information to our 
request for details and response to our 
offer of assistance? 

A. The Soviet nuclear disaster did 
not play any particular role in the con- 
versations today. Insofar as the Presi- 
dent's message to Gorbachev and offer 
of assistance is concerned, they did re- 
ply that they appreciated the offer and 
they don't sense any need for it at this 
point. So, we've had that exchange. 

Q. And have they given us any 
more information about the casual- 
ties, the damage, whether or not— 

A. They provided some information, 
but we are gathering information our- 
selves from photography, from, of 
course, the measurements in the region 
of the radioactivity and various other 
ways in which we are accumulating in- 
formation. And I think by this time, we 
have a much fuller picture than the 
Soviets are presenting to us or, for that 
matter, to their own people. 

One of the things about this kind of 
accident, with all of the cross-border im- 
plications and the existence in the air of 
the radioactive discharge, is that you 
can't hide it. And so it's become quite 
apparent to everyone around the world. 

Q. What is your view of the Soviet 
obligation to inform the rest of the 
world about this accident and about 
its obligation to seek what best help it 
could get? And, secondly, what is your 
feeling about whether the Soviets are 
living up to the obligation? 

A. I think any country has an obliga- 
tion when something happens in that 
country that has cross-border definite 
implications. It's an obligation to inform 
the other countries which will be 
affected— in this case it is, for all intents 
and purposes, a worldwide potential im- 
plication, anyway, to provide informa- 
tion and to do so promptly. And we 
don't think that they have provided as 
full and prompt information as they 
should have. They are providing some 
information. I suppose you have to allow 
for the fact that when something like 
this happens, you don't know exactly 
what has happened immediately and 
you're busy coping with the immediate 
problem. Nevertheless, by this time the 
fact is from our own sources we know 
more than the Soviet Union has told us 
or other countries, and we think they 
should be posting us fully. 



Jly 1986 



17 



THE PRESIDENT 



Q. But can you give us an idea of 
the magnitude of the disaster then, 
particularly on casualties? Have there 
been sizable casualties? 

A. I can't give you anything that I 
would feel comfortable in doing. I think 
the scope of the accident is certainly a 
major one, and our own pictures give us 
information that suggests the casualty 
rates are higher than those that have 
been announced by the Soviet Union so 
far by a good measure. But as far as be- 
ing precise and able to give numbers 
and so on, we're not in a position to do 
that. 

Q. When the Soviets told us they 
had no need of assistance at this time, 
did they continue to say they had it 
under control or simply was it that 
thev didn't want the United States to 
help? 

A. The suggestion of the response 
was that they were adequately equipped 
to deal with the problem. 

Q. Do you think they are? 

A. They have a problem on their 
hands, and I hope that they are because 
a continued evolution of the problem 
without getting it taken care of poses an 
increasing level of threat, particularly to 
their neighbors— I might say, to them- 
selves, because the prevailing winds will 
tend, eventually, to take the radioactive 
waste over the Soviet Union, rather 
than over Europe. 

Q. Earlier today we were told that 
the Soviets had expressed appreciation 
but had not responded. You are saying 
now that they have responded. Can 
you give us some indication of how 
and where this took place in the 5 
hours between that briefing and this? 

A. I don't know about what was said 
in the last briefing and I can't pin down 
the precise time, but their senior person 
in Washington, Sokolov, gave us the 
response and it was, in a sense, oral 
talking points and I read it this morning 
sometime. But I can't pin down exactly 
when I read it. When exactly what hap- 
pened, I'm not too sure. At any rate the 
response was some additional informa- 
tion and a statement that they appreci- 
ated our offer and that they felt they 
had what they needed to deal with their 
problem. 

Q. They didn't leave it open for 
possible acceptance of help later on? 
It was just a simple thanks, but no 
thanks? 

A. As I just finished saying, I think 
it was more than that. It was a state- 
ment that they felt they had the knowl- 



edge and the equipment to deal with the 
problem. Maybe they will come to a 
different conclusion. That remains to be 
seen. 

Q. There's a report, as you may 
know, of casualties being taken to 
Sweden or the Swedish Government 
being sounded out about this. Do you 
have anything on that? And do you 
have anything on a second disaster in 
another one of the nuclear units at 
that site? 

A. I don't. I've seen the reports. 
I've also seen people skeptical— I'm 
speaking of the second question- 
skeptical about that and I don't think 
that we are in a position to make any 
statement worth reporting on at this 
point. As far as the request to Sweden 
is concerned, I haven't heard that and 
presumably if those have been made, 
and the Swedish announce them, that 
will be a fact. But that's for the Swedes 
to announce. I don't know. 

Q. The on-going exchange between 
the United States and the Soviet 
Union over this accident and the 
impact on the Soviets themselves, how 
would you expect this to affect talks, 
for instance, in the arms area? Any 
at all? 

A. Of course, this is a major acci- 
dent at one of their nuclear power 
plants. I might say, first of all, that in 
our own nuclear power industry and the 
nuclear power plants that we operate on 
ships and submarines, we have— on the 
ships and submarines— never had an ac- 
cident or, in fact, in the nuclear power 
industry, an accident in which anyone 
was killed. Our safety record is extraor- 
dinary in the handling of nuclear power. 
I think we all realize that people around 
the world are afraid of nuclear war be- 
cause of its direct impact, obviously, and 
because of the kind of fallout from it. 

Let me just take the occasion to say, 
from our standpoint, that we believe 
that it is essential that we confront 
these issues of the large arsenals of 
nuclear weapons. And it's with these 
concerns in mind that the President has 
called for the total elimination of 
intermediate-range nuclear missiles— 
that he's called for a radical reduction in 
strategic nuclear arms, including those 
that are the most threatening and 
destabilizing. 

We were glad to have the agree- 
ment at the Geneva summit with Mr. 
Gorbachev that 50% reduction should be 
the intermediate goal, and obviously, we 
have to have the reductions in things 
that will be stable as we come down. 



And we also welcome the ultimate goa> 
of completely eliminating nuclear 
weapons. I think that while this accide 
has to do with nuclear power and has 
nothing to do with the nuclear arma- 
ments as such, it's that problem in the 
backs of people's minds that's gnawing. 
away at the world. We completely un- 
derstand it, and it is a reason why the 
President has been so concerned that 
our negotiations we do not seek contn 
in the sense of controlling the increase 
but reductions and really get at it. I 
hope that when our negotiators go bac 
to Geneva as they will next week, or 
middle of May, that we will have a ve:< 
active negotiating round. No reason w 
it can't go forward. 

Q. Why doesn't the President us< 
the "Hot Line" and try to talk to 
Gorbachev directly about this nude; 
accident? 

A. There's no reason to do that. 
There's no threat, no major misunder- 
standing. That would be a misuse of t 
"Hot Line." 

Q. Could you tell us a little mon 
about the President's meeting with 
Vice President Laurel and, specifi- 
cally, did Mr. Laurel ask the Presi- 
dent for reassurances that he, in fac 
recognizes and supports the Aquino 
government? And did the President 
make the point of offering those 
assurances? 

A. We, of course, recognized the 
Aquino government very quickly whei 
it assumed office, from Washington, ai 
the President wants to see the govern 
ment that the Philippine people have 
put there be successful and he has sai< 
that. And I think Mr. Laurel was glad 
to have him say that again, which 
he did. 

We discussed their concerns about 
economic development and our readint 
to help in that. I think that, as with a 
countries, economic development start 
with what you do yourself and we're 
very pleased to see the strong efforts 
being made by the Finance Minister, 
Mr. Ongpin, in that regard. We dis- 
cussed the insurgency and the difficul- 
ties with a cease-fire— that is, the 
Philippine Government has been ceasi: 
fire, but the insurgents haven't. And ; 
there's a genuine military problem. W 
discussed military reform which is 
proceeding. And, of course, the very i 
portant and increasingly, apparently, 
precise timetable for the establishmen ] 
of a new constitution, for a vote on it 
the Philippine people, and then an ele* 
tion which they hope to have held be- 



18 



Department of State Bulk' 



THE PRESIDENT 



re the middle of November. I think 
lat's very constructive. 

Q. Did he ask for the President's 
elp in the Philippine Government's 
"forts to recover Marcos' assets? 

A. The questions posed by that are 
isically matters that will be handled, 
i the President has said right from the 
itset, by Philippine law, by U.S. law, 
id international law. And that is the 
anner in which we think it should 
-oceed. 

Q. You've twice mentioned the 
ict that the ASEAN nations thanked 
resident Reagan and appreciated his 
Mtiments on protectionism. In the 
jblic statements that we were al- 
iwed to hear, we heard a reference 
y Foreign Minister Mochtar to Presi- 
;nt Reagan's professed anti- 
rotectionism policy and then a litany 
f problems on commodities and other 
ade problems. Was the President 
t>le to offer anything, any deeds, to 
lpport the words that he has offered 
»em on protectionism? 

A. The President doesn't need to 
'fer anything. The President's record is 
ght there for everybody to see— in the 
atoes, most recently, of the textile 
ill— and of his actions even during the 
ection campaign on various other 
lings. 

On the question of the farm bill, our 
irmers have deep problems, and the 
irm bill was designed to deal with 
lose. There were aspects of the farm 
ill that the President didn't like and 
hich we worked against. It is some- 
mes the case, as you know, that a 
iece of legislation comes out of the 
ongress and not every bit of it is ex- 
:tly what the President would want, 
nd so he always has a problem; should 
e sign it or not in view of the fact that 
wne of the things in it he doesn't want. 
Jid he preferred, in this case, to sign it 
nd then work against the things that 
e didn't want, including the rice pro- 
ram, and there has been some change 
1 the export enhancement program, 
'he sugar program is one that he op- 
osed and so on. So the President's 
redentials as a person fighting protec- 
ion are very strong. 

I might say we brought up the fact 
hat one of the things that developing 
ountries could do in this regard is look 
t their own protectionist practices. Just 
d take the example of Indonesia as 
hey raised with us the questions of 
lore U.S. investment, it is a problem 
ar an investor if you want to establish 
plant someplace. Some of the output 



of that plant will be exported, if you're 
required to buy from local monopolies 
commodities that you can buy more 
cheaply on the world market. So that's 
a form of protection that tends to block 
investment. We were assured that they 
recognize that problem and would like 
to do something about it. 

But as far as the President's creden- 
tials on the fight against protection, 
they're very strong. Unfortunately, 
there are a lot of people in our Con- 
gress who don't agree with him, so we 
have a big battle on our hands continu- 
ously, but the President is leading that 
fight. I think everyone recognizes that 
there's no such thing as his "pro- 
fessed"— I kind of resent that word, as 
you can see. 

Q. On the human rights question, 
at what level was that raised, and 
what was the response? Did that come 
up between the two Presidents or at 
some lower level? 

A. I'm not going to discuss it in any 
great detail because that is the approach 
that we have adopted here. The subject 
has come up, and in some respects was 
brought up by the Indonesians. There 
has been a considerable amount of prog- 
ress over the years, a lot of important 
things have taken place, although the 
situation still has things that need to be 
done. But let me just list some of the 
things that, from our standpoint, are 
positive. 

I think first of all when President 
Soeharto came into office, you had a 
great deal of starvation in Indonesia. It 
was a chaotic kind of situation. They're 
now self-sufficient in rice. And I think 
that's basically a great victory for hu- 
man rights. This is a country that's 
predominantly Muslim, but it has a 
large Catholic population. It has quite a 
wide variety of other religions, and it 
has a proud tradition and practice of re- 
ligious freedom. I think it's fair to say 
that stability in Indonesia has been a 
key to peace in this area of the world. 
It's also, I think, worth noting that the 
economic progress that's been made has 
been based, broadly speaking, on a rela- 
tively free and open economy. From the 
standpoint of work on human rights 
problems around the world, the fact that 
there has been a very large number of 
refugees processed in Indonesia— and 
that continues to be the case, where one 
of the first two asylum centers is 
located— is a very important achieve- 
ment. There are other problems, and we 
call attention to them. We've discussed 
East Timor; w-e're glad to see the em- 



phasis on development in East Timor. 
So, these discussions go on. 

Q. What about Dr. Mochtar saying 
that this was all slander? Did he raise 
that with you? The paper quotes him 
as saying that these charges of human 
rights violations are slanderous of 
Indonesia. 

A. I have said what I have to say on 
the subject. 

Q. You said the Marcos money was 
not mentioned in the meeting. Can 
you tell us if Mr. Marcos— 

A. I didn't say that. I said that the 
way that the problem is being worked 
at, and, in our view should be worked 
at, is by the application of the relevant 
laws to the problem. 

Q. Was there any discussion on 
Mr. Marcos in any other context, such 
as telling about the phone conversa- 
tion last week? And, also, can we take 
it from your listing that the American 
bases were not brought up? 

A. The bases aren't an issue, and 
they weren't brought up. But they're 
not an issue. They're there and no one 
has any question about the fact that 
they're there and properly so. The 
agreement under which we are there at 
those bases— they're Philippine bases- 
runs until 1991 and we'll work on that. 
What was your other question? 

Q. The phone conversation, was 
the— the President fill him in on— 

A. No, there wasn't— I don't think 
it's appropriate to fill in on that, other 
than to say what the President's view is 
on the importance of a successful gov- 
ernment in the Philippines. 

We do feel that it would be well if 
the Philippine Government had an atti- 
tude toward possible movement by Mr. 
Marcos that was a little different from 
what they have, and we'd like to see 
him able to move to another country if 
he wishes to do so. 

Q. Did the Vice President extend 
to the President on behalf of Presi- 
dent Aquino an invitation to visit the 
Philippines at some future date, and, 
if so, what was the President's 
response? 

A. He has extended an invitation to 
the President through the press to stop 
by on his way back from Tokyo. And 
there isn't any way the President can 
do that, so I'm the substitute and I will 
be going. He did not extend any further 
invitation to the President, but I'm sure 
that the President would be welcome in 
the Philippines. 



uly 1986 



19 



THE PRESIDENT 



Q. Yesterday Vice President 
Laurel said that he would hope that 
he'd hear it "straight from the horse's 
mouth," as he put it, something that 
would clear up the cobwebs of doubt 
over who the President— who Presi- 
dent Reagan supports and whether 
there is any question of Marcos' 
standing as a future political figure in 
the Philippines. Did the President give 
him any reason to clarify that? 

A. I've described, basically, the con- 
versation insofar as that's concerned. 
And since Vice President Laurel used 
that expression, you'll have to ask him 
if the cobwebs are still there. 

Q. From the information about the 
Soviet nuclear accident that the 
United States has gathered, does it ap- 
pear to you that the Soviets are trying 
to cover something up? 

A. There isn't any way you can 
cover up an accident like that, and so 
the world is learning rapidly about it. 

Q. They covered it up for 2 days. 

A. I'll just repeat. There is no way 
you can cover it up, because the release 
comes into the atmosphere; it's noticed, 
as it was, and as time passes, photog- 
raphy takes place, you hear from people 
in the area, and so on. And so, gradu- 
ally, more and more information is 
accumulating. 

Q. Do you think it may turn out to 
be worse? 

A. Of course, it is a great contrast 
in the way information emerges on 
something of that kind, let's say in the 
United States as compared with the 
Soviet Union because there would be a 
tremendous volume of information avail- 
able if that accident had taken place 
here. Of course, there isn't any way it 
could take place here, because our 
nuclear power plants operate safely. 

Q. Could you clarify what you said 
about Mr. Marcos being able to go 
somewhere else, to another country? 

A. Yes, that we think that if he 
wishes to go to another country, we 
think that the Government of the Philip- 
pines should not discourage that. And 
he ought to be provided with a passport 
so that he can go around. 

Q. The Spanish Government has 
said that it would only accept Mr. 
Marcos if the Philippine Government 
had asked for it. Is that what you're 
referring to? 

A. I think in general the Govern- 
ment of the Philippines has let it be 
known that they would consider it un- 




President Reagan confers with Philippine Vice President Salvador Laurel before the 
ASEAN ministerial meeting. 



friendly if another government took Mr. 
Marcos in, and that has meant that 
other governments have not wanted to 
do that; they don't particularly want to 
create a problem with another friendly 
government. I think that that's a policy 
that ought to be thought over carefully. 

Q. Did Vice President Laurel make 
any specific request for increase in 
U.S. aid or new U.S. aid for the 
Philippines in fighting the communist 
insurgency? And did President Reagan 
give him any type of promises or 
response? 

A. There is a substantial flow of 
U.S. assistance now flowing. In addition, 
the President is requesting another $150 
million from the Congress, and we have 
reason to believe that the Congress will 
likely act favorably on that. 

Vice President Laurel, I must say, 
gave the impression that his needs were 
infinite, and we don't have infinite 
capacity to provide money. I think the 
main point is that when it comes to eco- 
nomic development, solutions to the 
problems start at home with the kind of 
reforms that the Finance Minister, Mr. 
Ongpin, is instituting, and we're very 
impressed with what they're doing. We 
think that with those kinds of reforms, 
assistance not only from us but from the 
Japanese, from the international finan- 
cial institutions, from the commercial 
banks— all of these sources can be rallied 
to help in something that we would all 
like to see, namely the emergence of an 
economically and politically healthy 
Philippines. 

Q. You mentioned the Indonesian 
investment request. Did we suggest 
anything specific beyond the one item 



you mentioned that Indonesia could 
do to improve the climate for invest- 
ment here? 

A. We went through a little list of 
things that we thought could be consid- 
ered, and they indicated that they are I 
the process of putting together a pack- 
age that they felt might well satisfy th< \ 
things that we listed. So it was a good 
exchange. 

Q. Could you give us some idea of 
what that list included? 

A. I'd be glad to, and I just can't 
tell it right out of my mind, and I don't 
have my notes, but there were four or 
five items that we listed as examples. 
Things such as when you make a re- 
quest for approval for an investment, 
can we have a regulatory process that 
has relatively rapid turnaround to it. Ifl 
they can get that here, then we could 
adopt the same practice in the United 
States. Regulatory practices are slow; 
they could be speeded up. 

Other examples are, there is a 
timetable for the diminution of foreign 
equity interest in an investment over a< 
period of time, and it is fairly rapid. So 
I think if it were less rapid, it would 
probably be more encouraging to foreig. 
investment to come in, and so on. 

Many of the things that need to be 
considered, of course, have just as mucl 
to do with investment by Indonesians. 
That is, Indonesian money, as foreign 
money. So I think that if you look at thi 
statistics, you see a fall-off in Indonesia, 
investment as well as foreign invest- 
ment over the past 3 or 4 years. I thin! 
there is a clear message there, that the 
climate should be attended to, and they 
are fully aware of it and talked about it 
themselves in a very interesting way. 



20 



Department of State Bulleti 



THE PRESIDENT 



Q. Back on the Soviet nuclear 
cident for just a second. Has the 
lited States dispatched any Ameri- 
n scientists, diplomats, or other 
ik force officials to deal with the 
iropean allies and other European 
untries on a coordinated monitoring 
d perhaps response— offering of 
sistance, that sort of thing? 

A. We have not sent anything like 
it around. There has been a lot of 
)lomatic exchange. Undoubtedly the 
bject will get discussed at the summit 
>eting, although we have lots of other 
ings to discuss at the summit meeting, 
e don't want to have it dominated by 
is accident, important though the 
eident may be. 

Q. Mr. Laurel said that there is 
le thing the United States could do 
th regard to Mr. Marcos' wealth 
at is not a matter for the courts, 
id that is to help them investigate 
id locate what he called this "hidden 
?alth" in the United States. Is the 
nited States prepared to do some- 
ing to help in that regard? 

A. There are various lawsuits and 
ose are going on, and I think there is 
rite a lot of activity. I don't think this 
a matter that the U.S. Government as 
ich needs to do because it is being 
>ne by private parties and by the 
avernment of the Philippines, which 
is standing in the courts. 

Q. Did Mr. Laurel ask for it? 

A. No, he didn't. 

Q. Did you or the President make 
iy headway with either President 
9eharto or the ASEAN Foreign Min- 
ters in gaining understanding and 
lpport for the U.S. decision to bomb 
ibya when you discussed terrorism? 

A. You have to ask them that. With 
ich Foreign Minister I made a presen- 
ition about the geographic spread and 
:ope of terrorism, of the clearcut proof 
f Libyan involvement, of the accumu- 
iting proof as seen by what the Turks 
ave done, what the French have done, 
nd so on. And of course I always feel 
tiat when I make a presentation like 
bat, that I very much believe in, that 
eople must be impressed. But you have 
o ask them. 

Q. How about the President? How 
(iuch time did he devote to— 

A. I don't have sort of a time line on 
is private discussion with President 
Soeharto. Of course, I wasn't there, so I 
an't answer that question fully. I spent 
i lot of time on it myself with each 
Minister and with Mochtar, and the sub- 



ject was addressed in some detail in this 
morning's meeting by [national security 
adviser] Adm. Poindexter— did a very 
good job of presenting our views. 

Q. Did the President raise it with 
ASEAN this afternoon? 

A. I don't think that it was in his 
talk and, basically, the ASEANs or- 
ganized their meeting around these four 
subjects and we responded to those. But 
if the burden of your question is that 
we don't really care about the subject, 
let me assure you that we do, and we 
have gone to great lengths in our stay 
here in Bali to draw it forcefully to the 
attention of each interlocutor. 

Q. It appears, from your response 
to questions concerning Mr. Laurel, 
that there may have been a somewhat 
testy exchange. Is that true? 

A. I didn't think so, no. I thought it 
was a very good and friendly exchange. 
It wasn't particularly testy at all. 

Q. He expressed a lot of irritation 
with him. 

Q. You noted, for example that he 
offered an invitation to the press. You 
said Mr. Laurel's needs seem to be in- 
finite. There seems to be an edge here 
that we don't normally associate with 
your briefings. 

A. I'm sorry if there is an edge. I 
should always resist any inclination I 
might have to be slightly humorous 
because it's always taken wrong. 

Q. Mr. Laurel told us yesterday 
that he was looking to hear from the 
President. That he, the President, told 
Mr. Marcos in that telephone conver- 
sation that he stated specifically to 
Mr. Marcos that the United States 
supports the Aquino government. Did 
that occur during this meeting? Did 
the President provide— 

A. You will have to ask Mr. Laurel 
if he is satisfied. Let me remind you, 
the President is not on trial. 

Q. What precisely does that mean? 

A. It means that you keep saying "I 
want to know, did the President do this; 
did the President do that." The Presi- 
dent's not sitting before you on trial. 
And he— 

Q. We're not trying to try the 
President. We're simply trying to find 
out what happened here. 

A. All right. And I've told you. 

Q. You didn't— in fact, you did not 
tell us— 

A. I'm not going to discuss the 
President's private telephone conversa- 
tion any further than I have. 



Q. No, I'm not asking— 

A. And that is the ground rules of 
that conversation. 

Q. Vice President Laurel said that 
you discussed it with him and told 
him that the President told Marcos 
that he should forget about any future 
political plans. Is that a fair assess- 
ment of what you told Mr. Laurel? 

A. One part of the telephone conver- 
sation I thought was appropriate to re- 
late and it was referred to and that was 
by way of assuring the Philippine 
Government that the President wants to 
see the government that's there— Mrs. 
Aquino's government— bring about a 
healthy, politically stable, economically 
prosperous Philippines. And we have 
been at great pains to put substance 
behind that point of view. 

I think we were the first country to 
recognize the Aquino government. We 
were very prompt in sending teams out 
to survey the situation; Phil Habib 
immediately and then subsequently a 
combined team of AID [Agency for 
International Development] and military 
people and Treasury people and State 
people with a prompt report back. And 
then a decision to— given all of our own 
bugetary problems— add $150 million to 
our aid program. We've had Secretary 
Weinberger and Adm. Crowe go 
through there. I'm going to go and visit 
in the Philippines. So the President has 
been very forthcoming in what he has 
done and what he has had people do. 
In his own telephone conversation 
with Mrs. Aquino, he informed her 
about the aid program and also invited 
her to come and visit in Washington. 
Vice President Laurel told us today that 
she accepts and would like to do that. 
Probably, he felt, it would be after the 
process of constitutional reform and 
elections which they expect to culmi- 
nate, probably in the middle of Novem- 
ber some time. 

So I think there has been a very 
strong, positive effort on the part of the 
President and the U.S. Government 
here and it's beyond me why there 
seems to be any question about it. 

Q. Why are they in so much 
doubt? 

Q. Why, then, do you think that 
Mr. Laurel— 

Q. Because Mr. Laurel raised it 
yesterday. 

A. I don't understand it. 

Q. Really? You've shown a lot of— 

Q. Why do you think he did that? 

A. I don't have a clue. You'll have 
to ask him. 



July 1986 



21 



THE PRESIDENT 



Q. Do you think that it was totally 
unjustified for him to say that? 

A. You'll have to ask him about 
what he has had to say. 

Q. I'm asking you what your feel- 
ings are? 

A. I have responded and I reiterate 
we want to see the government succeed, 
we want to see the constitutional reform 
process go forward, and the timetable 
looks like it will culminate in November, 
it looks like a good one. The economic 
reforms that are being undertaken un- 
der the leadership of Jaime Ongpin look 
very promising to us. 

The military reform process is pro- 
ceeding well. We recognize the problems 
they have with the insurgency, and Mrs. 
Aquino is struggling with that. And so 
we want to see success in dealing with 
that effectively and, as far as I can 
make out, everything the U.S. Govern- 
ment has said and done has been a very 
supportive proposition. 

Q. Is there anything we could or 
should do to lean on Mr. Marcos to 
stop making phone calls and telephone 
speeches back in Manila? 

A. We've given him our opinion, but 
he's a free man and we have a free 
country. He can talk to the press any 
time he wants to, he can use the tele- 
phone. We don't put restrictions on peo- 
ple in their access to the press and 
access to our communication systems. 

Q. But we've told him we don't 
think it's a good idea? 
A. Certainly. 

Q. Did Laurel agree that he should 
be allowed to travel— that he should 
get- 

A. You'll have to ask him about the 
attitude of his government. He listened. 

Q. Could you give us the language 
that the President used in expressing 
his support for the Aquino govern- 
ment—his conversations? 

A. I've tried to summarize it as best 
I can. I can't get it— 

Q. It might be helpful since this 
has gone back and forth here, it might 
be helpful if you attempted to recon- 
struct his actual language. 

A. I don't have the mental capacity 
to recreate it and give it to you exactly, 
but I believe if there is anybody in the 
room that doesn't think that the flavor 
had been, from the beginning, a very 
supportive one, it's a mystery to me. 




President and Mrs. Soeharto and President and Mrs. Reagan. 



President's 
Dinner Toast, 
May 1, 1986 3 

Nancy and I are delighted to be with 
you tonight. It's a great honor to be 
visiting Indonesia again and to receive 
the warm hospitality and gracious wel- 
come for which the Indonesian people 
are justly famous. I remember how 
much I enjoyed my visit to Indonesia in 
December of 1973 when I was Governor 
of California and here representing our 
President at the time. I also recall with 
pleasure, Mr. President, your visit to 
the United States in October of 1982. I 
remember well that in your dinner toast 
you suggested, "Like it or not, we must 
consider the world as the common home- 
land of all nations." The American peo- 
ple are honored that, as citizens of the 
world, we count as our close and trusted 
friends the people of Indonesia. 

Americans see Indonesia as an impres- 
sive success story. In just over 40 years, 
this vast and beautiful nation has made 
enormous strides. We Americans appre- 
ciate that the path to national union is 
not easy for a country that spans over 
3,000 miles and is scattered across more 
than 13,600 islands. The challenges you 
face in developing your country, with its 
wide expanse and rich diversity, are not 
unlike the obstacles and hazards Ameri- 
cans faced in settling and developing our 
own country. 



Despite regional diversity, Indone- 
sia, under your leadership is a united 
country, a country that is assuming an 
increasingly significant role in the 
region and in the world. Your commit- 
ment to Indonesian resilience, drawing 
on your own resources and your own 
traditions and institutions, serves to 
enrich your people materially and 
spiritually. 

In the United States, our governing 
institutions celebrate the wisdom of a 
balance of power that works to shape 
our laws and traditions. Indonesia's 
governing philosophy of consultation an< 
consensus is different from our own, yet 
its ultimate goal is blending diversity 
into national unity. Even though our 
methods of government differ, the 
friendly and open nature of the discus- 
sions we've had here and when you 
were in Washington reflect the positive 
and constructive day-to-day, year-to-yea: 
conduct of relations between our two 
countries. 

I want to congratulate you on In- 
donesia's achievement in reaching self- 
sufficiency in rice production. This is an 
enormous accomplishment of which you 
can be justifiably proud. Having moved 
so far, so fast in providing ample food 
resources is another indication of your 
government's effective management. 



22 



Department of State Bulleti 



THE PRESIDENT 



The attainment of rice self- 
Ticiency is just one indication that 
lonesia's economic development pro- 
im has been wide-reaching and im- 
Bssive. This program of growth and 
vancement has been directed toward 
inging the benefits of development to 
levels of society. Mr. President, not 
) long ago you said, "It is impossible 
reach equity in development, impossi- 
i to wipe out poverty if there is no 
inomic growth." We applaud that em- 
asis. We have a saying in the United 
ates that rather than talk about how 
divide a smaller pie, let's work and 
ild and bake a bigger pie so everyone 
n have a bigger slice. 

We have been happy to cooperate 
th you in a number of social and eco- 
mic fields, including food production, 
'-farm employment, private sector de- 
lopment, and health care. We look for- 
ird to continuing our work together. 

this regard, we have found the grow- 
r cooperation between our two nations 
the field of science and technology to 

particularly beneficial. 

Indonesia is also to be congratulated 
r its humanitarian policy of granting 
st asylum to almost 100,000 refugees 
)m Indochina. The international com- 
inity and the American people ap- 
iud Indonesia for its generous 
sponse to the plight of these unfor- 
nate people who are seeking freedom 
d refuge. Many of these refugees have 
so resettled on our shores and have 
riched the fabric of American life. The 
ight of these friends in distress is very 
iportant to Americans. I want to ex- 
ess to you my personal appreciation 
r the sacrifice and consideration your 
ivernment has shown in this humani- 
rian endeavor. 

I am struck by how our discussions 
ive reflected a mutuality of interests 
id a harmony of views. And I am con- 
lent the spirit that has prevailed here 
ill enable us to forge even stronger ra- 
tions in the years ahead. 

And I would ask you all to join me 
len in toasting the people of Indonesia; 
leir distinguished leader, President 
jeharto; and the friendship between 
le Indonesian and American People. 



Indonesia— A Profile 



'Text from Weekly Compilation of 
residential Documents of May 5, 1986. 

2 Press release 96. 

3 Made at a dinner hosted by President 
>eharto for President Reagan and the 
SEAN ministers (text from Weekly Compi- 
tion of Presidential Documents of May 5). I 



People 

Nationality: Noun and adjective— Indo- 
nesian(s). Population (1985): 173 million. An- 
nual growth rate: 2.1%. Ethnic groups: 

Javanese, Sundanese, Batak, Buginese, 
Minangkabau, Balinese, Chinese, Irianese. 
Religions: Muslim 90%, Christian 5% (mostly 
Roman Catholic), Hindu and Buddhist 3%. 
Languages: Indonesian (official), local 
languages, the most widely spoken of which 
is Javanese. Education: Years com- 
pulsory— 6. Enrollment— 90% of eligible 
primary school-age children. Literacy 
(1980)-67%. Health: Infant mortality 
rate— 89/1,000. Life expectancy— 55 yrs. Work 
force (67 million, 1985): Agriculture— 55%. In- 
dustry and commerce— 29%. Services— 12%. 
Civil Semce—4%. 




Indian Ocean 



Geography 

Area: 2.0 million sq. km. (736,000 sq. mi.), 
about the size of Alaska and California com- 
bined; 3.1 million sq. km. sea area. Cities: 
Capital— Jakarta (1985 est. pop. 8 million). 
Other civics— Surabaya (3 million), Bandung 
(2.2 million), Medan (1.5 million), Semarang 
(1.2 million). Terrain: More than 13,500 
islands; the larger ones consist of coastal 
plains with mountainous interiors. Climate: 
Equatorial, but cooler in highlands. 

Government 

Type: Independent republic. Independence: 
August 17, 1945. Constitution: 1945. 

Branches: Executive— president (head of 
government and chief of state). Legis- 
fo(tre-460-member Parliament (DPR), 
920-member People's Consultative Assembly 
(MPR). After the next parliamentary election 
in 1987, the DPR will be expanded by 40 ap- 
pointees and the MPR by 80 appointees. 
Judicial— Supreme Court. 



Subdivisions: 27 provinces, 281 regencies. 

Political parties: GOLKAR (functional 
groups), Indonesia Democracy Party (PDI), 
Unity Development Party (PPP). Suffrage: 
Universal over 21, except those serving in 
the armed forces. 

Central government budget (1985-86): 
$21 billion. 

Defense: 10% of 1985-86 budget. 

National holiday: Merdeka (In- 
dependence) Day, August 17. 

Flag: Divided horizontally— top red, bot- 
tom white. 

Economy 

GDP (1984): $90 billion. Annual growth rate 
(1985 World Bank/IMF est.): 3%. Per capita 
income: $566. Inflation rate (CY 1984): 
8.8%. 

Natural resources: Oil, tin, natural gas, 
nickel, timber, bauxite, copper. 

Agriculture (25% of GDP): Products- 
rubber, rice, palm oil, coffee, sugar. 
La nd—S.6% cultivated. 

Industry (12% of GDP): Types-hod and 
beverages, textiles, cement, fertilizer, light 
manufacturing, wood processing. Minerals 
and petroleum (30% of GNP). 

Trade (1984): Exports-$21.9 billion: oil, 
natural gas, plywood, rubber, tin, tea, coffee. 
Major markets— Japan, US, Singapore. 
Imports— $13.8 billion: food, chemicals, crude 
petroleum and petroleum products, capital 
goods, consumer goods. Major suppliers— 
Japan, US, Thailand. 

Official exchange rate (October 1985): 
1,120 rupiahs = US$l. 

Fiscal year: April 1-March 31. 

Membership in International 
Organizations 

UN and some of its specialized and related 
agencies, including the General Agreement 
on Tariffs and Trade (GATT), International 
Monetary Fund (IMF), World Bank; Associa- 
tion of South East Asian Nations (ASEAN); 
Non- Aligned Movement; Organization of the 
Islamic Conference (OIC); Organization of 
Petroleum Exporting Countries (OPEC); 
Asian Development Bank (ADB); 
INTELSAT; Group of 77; International 
Atomic Energy Agency (IAEA); Islamic 
Development Bank (IDB); and others. 



Taken from the Background Notes of Decem- 
ber 1985, published by the Bureau of Public 
Affairs, Department of State. Editor: Juanita 
Adams. ■ 



Uly 1986 



23 



THE SECRETARY 



Unity and Dissent: 

On the Community 

of Free Nations 



by Secretary Shultz 



Address before 

the American Jewish Committee 

on May 15, 1986 1 



I appreciate so much the warmth of 
your welcome and your beautiful state- 
ment. It is an honor to receive this 
award [the American Liberties Medal- 
lion], and I am really delighted to have 
a chance to be here and to address you. 

Two months ago, while on an official 
visit to Athens, I had the pleasure of an 
early morning tour of the Acropolis. My 
guide was a young American archaeolo- 
gist. He described in some detail the 
friezes on the Parthenon: the seemingly 
endless struggles between the ancient 
Greeks and their warlike neighbors; bat- 
tles in which a center of civilization and 
culture sought to defend itself against 
repeated assault. The Parthenon, and its 
haunting past, capture what Yeats 
called "tragedy wrought to its 
utmost"— the destruction of a civilized 
community. 

The Jewish people, like the ancient 
Greeks, have known in their long his- 
tory the kind of tragedy carved on the 
shattered friezes of the Parthenon. They 
know that no people determined to en- 
sure their own survival can hold any 
illusions about the vulnerability of a 
center of civilization in a world threat- 
ened by forces of barbarian violence. 

These stark impressions of that 
early morning tour of the Acropolis 
have been with me in recent weeks as 
our own country has dealt with 
challenges to its security by violent as- 
saults from those who would bring fear 
and chaos to our community. Tonight, I 
would like to share with you some 
thoughts about how we are winning this 
struggle— and what we still must do to 
achieve our civilization's triumph over 
totalitarianism and barbarism. 



My subject tonight goes to the heart 
of what everyone gathered in this room 
represents. The American Jewish 
Committee— like the Jewish people and, 
indeed, like Israel itself— seeks to 
safeguard a culture and a people 
through a community of effort. You 
know that a community is more than 
just a collection of individuals; more 
than the separate resources they bring 
together. A community is the vessel for 
the ideals and values a people hold in 
common. An individual of extraordinary 
character can represent and can lead a 
community. But no individual, no matter 
how strong or devoted, can secure his 
ideals alone; only a community can de- 
fend, nurture, and enable its ideals to 
flourish from one generation to another. 

But we must recognize the tremen- 
dous role that individual leadership and 
examples play. And I can't help but to 
reflect on the example and the heroism, 
the flame that has been kept burning 
there by Natan Shcharanskiy. He never 
gave up. He stuck to his guns. 

The other day he visited me in my 
office. I could hardly get him into my 
office because everybody there wanted 
to shake his hand and say hello, and we 
talked, of course, about his confinement, 
about Soviet Jewry. And after we 
talked, we got in my car together— that 
great big thing I ride around in— and we 
rode over to the White House. While we 
were riding over there, he was telling 
me about his experiences, his confine- 
ment for over a year. He sat in a cell 
with nothing in it in about half the size 
of that automobile, but he persevered. 
And from that cell he rallied people in 
every part of the world behind the 



great cause of Soviet Jewry and the 
great cause of freedom. 

Through it all somehow he kept his 
incredible sense of humor. We just can 
get enough of this guy. His spirit is 
what the love of liberty makes possible 
And, of course, when we talked about 
Soviet Jewry, he gave us his view's 
about how to handle it, from which we 
benefited, and we agreed— and I'm sun 
all of you agree— that whatever our tac 
tics of the moment may be, we must 
never compromise, we must never give 
up, we must keep the faith with this 
cause. 

I thought you might like to meet tr 
wonderful lady who managed the negot 
ations to get Shcharanskiy free for the 
President. She happens to be here 
tonight— Roz Ridgway [Rozanne L. 
Ridgway, Assistant Secretary for Euro 
pean and Canadian Affairs]. 

I was speaking about the importam 
of a community to defend its ideals so 
that they flourish from one generation 
to another. The Jewish people have 
bonie witness to this truth over the ce 
turies. It was a fact of Jewish life long 
before the cause we share today— the 
community of Western civilization— had 
emerged on the world stage. 

Indeed, the Jewish people helped tc 
bring that civilization to life, infusing it 
with their religious genius, with the 
sanctity of the individual, the impor- 
tance of tradition, and the powerful 
integrity of a community defined by cul 
ture and religious values. 

Today, as yesterday, Western civili- 
zation would be unthinkable without th< 
contributions of the Jewish community. 
As we learned from the Holocaust— the 
most barbaric assault on humanity in 
our time and, let us pray, of all time- 
the destiny of the Jewish people and th 
rest of the civilized world is joined in a 
ceaseless struggle to defend community 
against enduring assaults by forces 
hostile to our way of life. 

The Jewish community has survived 
centuries of persecution and dispersion 
because Jews throughout the world 
have kept faith with their common 
heritage. So, too, the continuity of 
modern civilization requires that all 
members of the community of nations- 
Americans and Israelis, Europeans and 
Japanese, Latin Americans, Africans, 
and others of the developing world who 
seek democracy— make common cause ir 
defending our highest values and our 
way of life. 



24 



Department of State Bulleti 



THE SECRETARY 



American Jewry's staunch support 
: Israel is an outstanding example of 
dication to our shared heritage. In the 
xlern world, our sense of community 
enriched by different histories, differ- 
t customs, different religions, and lan- 
lages. But the civilization we share 
mscends these differences and joins 
in a community that is stronger for 
e diversity each of us brings to it. 

I am speaking tonight about our 
odern community, about what is re- 
tired for its protection and propaga- 
m, not only from those of us here but 
Dm the larger collective we are part 
: the community of like-minded 
itions. 

Community of Like-Minded Nations 

le very idea of a community among 
itions is unique. From the city-states 
ancient Greece to the modem nations 
our era, communities have had to join 
rces to defend their individual in- 
rests. Economic, political, and military 
mditions have their own imperatives, 
iquiring shifting alliances and coalitions 
' expedience. But the contemporary 
immunity of nations— a free association 
ised on shared principles and an in- 
■easingly shared way of life— emerged 
ily with the evolution of the demo- 
•atic idea. Just as free peoples choose 
leir governments, so do free nations 
loose their friends and allies. We are 
lined not just by common interests but 
y ideals that transcend the dictates of 
scessity. 

This community has long been a 
dnority of humanity. In our own time, 
owever, we have seen our numbers in- 
:ease. In recent decades we have been 
)ined by like-minded nations around the 
acific Basin; by the struggling young 
emocracies of Latin America; and, of 
jurse, by Israel, whose very existence 
i a constant reminder of what may be 
equired if civilization is to be secured, 
'ogether, we stand for something that 
o other alliance in history has 
epresented: the advancement of the 
ights of the individual; the conviction 
hat governments founded on these 
ights are, in Lincoln's phrase, "the last 
est hope of men on earth." 

Our community and our heritage 
iave enemies. Over the past two centu- 
ies, whether separately or in concert, 
ree peoples have defended themselves 
.gainst marauders and tyrants, militar- 
sts and imperialists, against Nazis and 
he Leninist totalitarians of our time. 
Ve have seen our heritage shaken to its 



roots. The graves of Normandy and the 
death camps of the Third Reich bear 
permanent witness to the vulnerability 
of all we cherish. 

Today, we see other evidence of the 
determination of our adversaries. We 
see it in the Berlin Wall, a disgrace to 
humanity and a mute symbol of the fear 
our civilization and its values evoke in a 
totalitarian world. The Soviets, of 
course, have their values as well. They 
value a regime that imposes an un- 
challenged order in its own sphere and 
foments instability and division 
elsewhere. 

And our civilization has other adver- 
saries: in the terrorist networks of the 
Middle East and Europe; in the com- 
munist insurgents that threaten develop- 
ing nations; in bandits, criminals, and 
narcotics traffickers who tear at the 
fabric of society— and in all the states 
that support these varieties of bar- 
barism. Taken together, they form an 
army of anarchy marching against the 
heritage we share and would pass on— 
and that we will pass on. 

These threats draw strength from 
one another. Entire nations have disin- 
tegrated under their pressure. Only a 
few years ago I visited Beirut as a pri- 
vate citizen. Visitors in those days 
delighted in the city's gaiety, in its cul- 
ture, its sophistication and grace. Today, 
thugs and murderers comb the rubble. 
No one who has known Beirut's splen- 
did past and its tragic present can dis- 
miss the possibility of anarchy or the 
evil reality of unconstrained violence. 
And Beirut's fate now threatens 
elsewhere. We see it in Afghanistan, 
where a society has been shattered, an 
entire nation forced underground or into 
exile. We see it in Cambodia, where 
the Khmer people have been twice 
ravaged— by Pol Pot's mass slaughter 
and now by the Vietnamese occupation. 
And we see it in Latin America, where 
drug traffickers, thugs like the M-19 
group, and communist aggressors 
menace nations newly devoted to 
democracy and an open society. 

And even in the free world, with our 
well-established order, we find the 
marauders of anarchy intruding into our 
daily lives. Today, the nations of Europe 
are discovering again that accommoda- 
tion does not bring immunity to such 
threats. The vanishing tourist— and we 
should be ready to travel; let's not be 
seared out of that— is only one symptom 
of Europe's heightened vulnerability. 
Americans, too, stand exposed— both pri- 
vate civilians who are targeted as inno- 
cent travelers, and the soldiers, 



diplomats, and other official personnel 
who serve our nation abroad. 

But these threats have not gone un- 
answered. The free world has shown 
that it will not allow life to revert to the 
condition characterized by Thomas 
Hobbes three centuries ago as "contin- 
ual fear and danger of violent death; 
and the life of man, solitary, poor, 
nasty, brutish, and short." Today our 
adversaries, who have long underesti- 
mated our resolve, are beginning to 
learn some hard lessons of their own. 
Our determination is turning the tide of 
events against them. 

That is my message tonight: we 
have the winning hand. Our enemies are 
losing. We have to keep this momentum 
going. We can do it if we understand 
the challenges and work against our 
enemies, not against each other. 

Defense— Alone or in Concert? 

The first obligation of any free nation is 
its own defense. West Germany's ac- 
tions against the Baader-Meinhof gang; 
Italy's suppression of the Red Brigades; 
the Israeli rescue at Entebbe; America's 
interception of the Achille Lauro mur- 
derers; and Japan's actions against the 
Middle Road Faction: these are all ex- 
amples of the principle of national self- 
defense at work. 

But many of the threats that come 
with the modern age are not confined to 
individual states. Today, ideologues of 
violence are colluding across borders to 
undermine our very way of life. The 
IRA [Irish Republican Army], the PLO 
[Palestine Liberation Organization], the 
Japanese Red Army, M-19, and Sendero 
Luminoso: these and other groups are in 
communication; they are cooperating 
and even coordinating their murderous 
actions. And they do not operate on 
their own. Terrorism could not exist on 
its current scale without aid and 
encouragement from sovereign states 
both within the communist world and 
beyond. This collaboration represents a 
new axis of aggression against the free 
world. 

Because the challenge these forces 
pose transcends any one of us, we have 
a transcendent obligation to meet it 
together. That effort takes more than 
determination or will. We must be 
strong in body as well as in spirit. We 
must have vital economies. Economic 
growth, as the American example has 
demonstrated in recent years, generates 
the needed resources to sustain military 
strength. And our social institutions 
must remain healthy. Government can- 



July 1986 



25 



THE SECRETARY 



not make up for what family, commu- 
nity, and religious organizations fail to 
provide. We must nurture these institu- 
tions, protect them against illegitimate 
intrusion by the state, and strengthen 
them against the forces of anarchy. 

And we must be strong abroad. Our 
collective defense depends on an array 
of strategic, political, economic, and mili- 
tary tools. We are stronger today be- 
cause we have strengthened many of 
these tools over the past few years. But 
others are in disturbing disrepair. We 
need to take a hard look at these com- 
mon resources and ask ourselves what 
we can do to make them more effective. 

The Tools of Common Security 

We must enhance our mutual defense 
militarily. In the last few years we 
have made solid gains: U.S. interme- 
diate-range missiles have been success- 
fully deployed in Europe; Spain has 
reaffirmed its commitment to NATO; 
we have made progress with allies on 
SDI [Strategic Defense Initiative] 
research; and our regional partnerships 
are strong. The U.S.-Israeli Joint 
Political-Military Group is now a per- 
manent institution of increasing 
significance. 

Our collective security depends on 
the nurturing and protection of 
democracy. Central and South Ameri- 
can nations, and the Philippines, are in- 
spiring recent examples. Our community 
of nations must stand together in con- 
stant reaffirmation of the democratic 
ideals and institutions that keep our 
civilization vibrant. 

Our strategic situation requires 
economic cooperation among friends 
and allies. The importance of economic 
growth has been demonstrated by the 
worldwide, American-led recovery of the 
early 1980s; more and more state-run 
economies are getting the message. And 
economic assistance is a vital tool: 
today, Israel is a most dramatic example 
of how economic assistance can 
strengthen joint interests. "Operation 
Independence," an association dedicated 
to bringing to Israel the vitality of the 
American business community, is an in- 
spiring example of the best kind of 
economic cooperation at work. 

We are stronger today than we were 
10 or even 5 years ago. Our strategic 
and economic resources are doing their 
work on behalf of collective security and 
well-being. To build on these recent 
gains, we need to make our other assets 
work as well— for they have suffered 



from political attack at a time when the 
need for unity has been increasing. 
There are some key points that call for 
recognition. 

While always seeking to act with 
restraint, we must recognize that pas- 
sivity is sometimes the most danger- 
ous course. We are making progress, 
but there is much more to do. We 
reached a remarkable consensus in the 
proclamation against terrorism of the 
seven industrial democracies at Tokyo 
last week. We set forth critical guide- 
lines for the civilized world to follow in 
responding to its enemies. Yet we must 
recognize that the Tokyo communique 
did not come easily. It was the product 
of bitter lessons: the deaths of Robert 
Stethem, Leon Klinghoffer, Kenneth 
Ford, and so many other names from so 
many other countries. Today, as in the 
1930s, the consequence of inaction is 
never greater security for ourselves and 
our friends but the emboldening of those 
who would destroy our community. A 
vital next step after the Tokyo commu- 
nique should be passage of the U.S.- 
U.K. Extradition Treaty, now before 
the Congress. We might summarize that 
treaty in a phrase: there is no such 
thing as a good terrorist. 

And we must recognize that action 
sometimes means military action. 
There has been less public consensus 
about the success of our strike against 
Libya— very warmly supported, widely 
supported in the United States, but 
some variation elsewhere. But the 
results are convincing the skeptics. 
Qadhafi is in retreat, and Syria is 
uneasy— a reaction which may induce 
that country to think hard about in- 
volvement in murderous adventures. 

As we look for support, so must we 
support friends whose armed forces 
are responding to aggression— such as 
American help to Great Britain during 
the Falklands war, our recent aid to the 
French effort against Libya in Africa, 
and Great Britain's support for us last 
month. Those who use military force, or 
help those who do, invariably find them- 
selves immersed in controversy. But it 
is precisely at such times that solidarity 
counts. We all noticed that Israel was 
quick to support our action against 
Libyan terrorism and aggression. 

Let me inject something at this 
point that some of you may not want to 
hear. This principle also applies to 
America's need to support— under care- 
fully limited conditions— Saudi Arabia's 
effort to defend the Persian Gulf. The 
danger there is real. If Khomeini-ism ad- 



vances into that area, America's stra- 
tegic interests will be harmed— and, 
needless to say, so will Israel's. There 
are many in the Arab world who want 
peace and stability and moderation— andl 
who can be brought to accept the per- 
manent reality of the State of Israel. 
But if America cannot demonstrate that 
we are a constant, effective, strong, andt 
responsive presence in the Middle East, 
those with the best of inclinations in- 
evitably will make then - accommodations 
with those who bear the worst 
intentions toward us. 

Let me say that I well understand 
your attitudes, and I've talked with 
Jewish leaders a great deal about this 
subject, and I want to say to you that 
when votes come on the question of sus 
taining the veto of President Reagan, 
there is an added dimension. Not simplj 
a vote on Saudi arms but a vote on 
whether we want to say to our Presi- 
dent that we support him and the work 
can see that the President, in the clutch 
will have support on something that he 
feels very deeply about. 

Let me conclude by briefly noting 
some other areas where greater con- 
certed understanding and effort are 
required. 

Trade differences within our inter- 
national community have been partic- 
ularly divisive, eroding cooperation and 
weakening public confidence in the valuw 
of our common ties. We must guard es- 
pecially against protectionist policies, 
which undermine long-term growth and 
encourage longrunning divisions. 

We need to face the fact that our 
divisions at home can weaken our 
unity with friends abroad. The rela- 
tively recent constraints on executive 
action are an impediment to effective 
action and undermine our credibility 
with friends and enemies alike. As an 
example, the constraints on the use of 
force embodied in the war powers act 
practically invite an enemy to wait us 
out. And they undermine support from 
allies who might be more willing to go 
along with us if they were convinced 
that America would stay the course. 

I might say to you that the Presi- 
dent sometimes is challenged: "How is 
it that you sent those Navy planes and 
brought down that Egyptian plane with 
the terrorists on it and you didn't get 
congressional approval before you 
acted?" And he said: "What kind of 
nonsense is that?" 

And we have to get over the idea 
that "covert" is a dirty word. Free na- 
tions accustomed to open debate are 
naturally uneasy about covert measures, 



26 



Department of State Bulletii 



AFRICA 



t as they are uneasy about the am- 
uous circumstances that require us to 

in secret. Yet we must remember 
it intelligence breakthroughs and 
ret operations had a decisive in- 
ence on our victories in two world 
rs. 

Today, in our shadow war against 
rorism, the use of these instruments 
just as imperative. The United States 
1 use such measures legally, properly, 
3 with the due involvement of the 
signated legislative committees. What 
srucial is the ability to take some ini- 
tives quietly, in situations where the 
ire the measures are known, the less 
ective will be their results. 

Recent history has reaffirmed to 
ends and allies that American in- 
ence abroad is a force for liberation 
d prosperity. Our support for 
mocratic forces in the Philippines; our 
pport for national movements against 
rannical regimes; and our demon- 
•ated willingness to defend our friends 
d ourselves from attack has given 
newed confidence to our allies and to 
r own public. We are on the move. 
ie contest is going our way. 

But recent gains are vulnerable. We 
e beginning to understand that our 
emies' greatest asset is our own dis- 
hy. Let us remove all doubt that we 
d our friends have the potential to 
jbilize a rich range of capabilities to 
sure our security. 

te Need for Unity 

community of free nations will always 
e the expression of differing opinions. 
issent is the sound of freedom and 
imocracy at work. But we need to 
;ree at least on two fundamental 
tints: what we stand for and what we 
and against. As [Prime Minister] Bob 
awke, speaking for Australia, said 
ter the U.S. strike against Libya, on 
ese questions we must be, in his 
ords, "at one." 

The risks of disunity could not be 
ore profound. Dissent over fundamen- 
,1 issues encourages our adversaries 
id erodes our cooperation across the 
inge of our relations. And it under- 
ines the security and morale of those 
ho aspire to join us. 

The community of civilized nations 
is known threats since its very incep- 
on. Our way of life has survived and 
ourished despite them. It has with- 
;ood global depression and world wars, 
irviving even in the darkest corners of 
'azi-oecupied Europe and in the most 
smote Soviet gulags. But as the Jewish 



people have known throughout their his- 
tory, any community that has faith in it- 
self and its values seeks more than 
mere survival. It seeks to ensure that 
those values flourish. And above all, it 
seeks to pass them on proudly and with- 
out fear of repression to generations to 
come. 

Our course requires sacrifice- 
individual and collective, material and 
human. It requires what Ben Netanyahu 
[Israeli Ambassador to the United Na- 
tions] calls "civic valor"— a will to 
sacrifice for the common good that 
springs from faith in ourselves and our 
way of life. And it requires leadership. 
Communities of nations, like communi- 



ties within them, are not abstract 
enterprises; they are collections of 
individuals, led by men and women of 
vision and courage. They are the custo- 
dians of our aspirations and our future. 

The heroism of individuals like 
Natan Shcharanskiy teaches that no one 
struggles alone. That is a truth for na- 
tions as well as for men. The United 
States and Israel, and our friends in 
Europe and the rest of the world, are 
embarked on a common course. If we 
keep faith with one another, and with 
the heritage that binds us, we will pre- 
vail against all challenges to our commu- 
nity. And we will prevail together. 



'Press release 111 of May 19, 1986. 



South Africa: Report on 

the President's Executive Order 



by Chester A. Crocker 

Statement before the Subcommittees 
on Africa and on International Eco- 
nomic Policy and Trade of the House 
Foreign Affairs Committee on April 9, 
1986. Mr. Crocker is Assistant Secre- 
tary for African Affairs. 1 

Thank you for the opportunity to appear 
before you to continue the hearings on 
U.S. policy toward South Africa. 

When I last appeared before you on 
March 12, I reviewed events of recent 
months in South Africa and described 
the course of U.S. policy. The hearing 
today is intended to deal specifically 
with the question of further sanctions 
against South Africa, including those 
proposed in H.R. 997. It will also exam- 
ine implementation of the President's 
Executive order of September 9, 1985, 
on South Africa. I am pleased to ad- 
dress both of these matters. 

U.S. Policy 

Americans are united on the issue of 
apartheid. No responsible voice in this 
country defends that policy. All agree 
that our government and society should 
work to end apartheid and work actively 
for negotiations on the establishment of 
a system of government based on the 
consent of all South Africans. We take it 
as given that apartheid is a doomed sys- 



tem. What matters is how it ends and 
what follows it. Moreover, we believe 
South Africa— far from being frozen in a 
rigid status quo— is a society in transi- 
tion. As we Americans consider our 
role, we must avoid the temptation to 
view South Africa as a one-act morality 
play in which the curtain descends after 
the villain has been punished. Our 
responsibility is to look at consequences. 
The criterion we should put to ourselves 
is how our policy can effectively pro- 
mote conditions conducive to justice, 
democracy, peace, and welfare in south- 
ern Africa. The question we should ask 
ourselves about any action is whether it 
speeds the process away from apart- 
heid's evils and toward a full sharing of 
power by all South Africans on a non- 
racial basis. 

Our policy is designed to both react 
to and encourage the real ferment in 
South African society, to capitalize upon 
the growing realization among all sec- 
tors there of the imperative of change. 
We do this in many ways: as a govern- 
ment, working within and outside tradi- 
tional diplomatic channels, and as a 
partner with concerned Americans and 
South Africans anxious to bring about 
the type of societal and political restruc- 
turing South Africa needs. 

Our diplomacy goes well beyond the 
rhetorical. It is one of action. Our diplo- 
matic mission in South Africa is the 
most active, the most involved of any 



uly 1986 



27 



AFRICA 



nation represented there. We maintain 
contacts with all political elements, not- 
withstanding the grave difficulties of do- 
ing so in a highly polarized environment. 
We maintain a constant emphasis on 
human rights themes in our contact with 
the South African Government, express- 
ing ourselves privately and publicly on 
the critical issues of detentions, ban- 
nings, torture, unnecessary use of force, 
and other abuses. In addition, we con- 
tinually stress to all the necessity to get 
on with the pressing task of negotiations 
which will lead to a new, just, political 
dispensation in South Africa. 

We also seek to help private Ameri- 
can individuals and companies who are 
engaged in promoting change. We wel- 
come such commitments as Coca-Cola's 
pledge of $10 million for programs of 
social betterment. We encourage the 
Sullivan signatories in their efforts, both 
inside and outside the workplace. 

Our continued presence in South 
Africa is our most effective tool for 
bringing about change. By applying fair 
labor standards based on the Sullivan 
principles, U.S. firms have set a promi- 
nent example for treating workers with 
dignity. For fiscal years 1986 and 1987, 
the U.S. Government proposes allocat- 
ing $45 million in assistance programs in 
the fields of education, labor and entre- 
preneurial training, legal assistance, and 
other programs to help those disadvan- 
taged by the system of apartheid. These 
programs seek to educate and train a 
new generation of black South Africans 
who will play a major role in shaping 
their country's destiny. Our human 
rights fund and our new legal assistance 
program are also helping those South 
Africans who are working for change. 

We are a force for change and, I 
would contend, an increasingly effective 
one. We should be building on this solid 
basis, not undercutting it. 

Regrettably, last year's debate on 
South Africa emphasized the differences 
that exist among concerned Americans 
on the means we should use to effect 
change rather than the goals we all 
share regarding South Africa. By em- 
phasizing differences over punitive sanc- 
tions, many in this country, in South 
Africa, and in third countries received 
the erroneous impression that we are 
divided. This gave precisely the wrong 
signal to those in South Africa who be- 
lieve that the apartheid system can be 
maintained and who believe that there 
is sympathy for this view in the United 
States. They are wrong. 



The President's Executive order of 
September 9 was intended to make it 
clear to all concerned that this country 
speaks with one voice on South Africa. 
The Executive order sent a powerful 
message to the Government of South 
Africa that the United States unequivo- 
cally rejects apartheid and supports the 
efforts of the South African people to 
put an end to that repressive system. 

The measures taken by the Presi- 
dent last September were intended to 
serve as a positive form of pressure for 
genuine change. Their objective was not 
one of indiscriminate punishment or 
damage to the economic well-being of 
the people of South Africa. Rather, they 
were targeted at those elements of the 
South African Government that enforce 
and sustain apartheid. 

We do not believe prospects for 
change in South Africa can be enhanced 
by worsening the economic problems of 
the South African people. We conse- 
quently urge you to resist the impetus 
to focus the South African debate again 
on the divisive issue of punitive sanc- 
tions. We believe, instead, that this 
country should, at this time, focus its at- 
tention on the many positive things we 
can do and are doing to support the ef- 
forts of those in South Africa seeking 
genuine change. 

This is not the place for me to re- 
hearse the broad range of political, eco- 
nomic, and moral arguments against 
punitive sanctions directed at South 
Africa. In lieu of that, with your permis- 
sion, I would like to insert into the 
record an article on sanctions to be pub- 
lished in the spring 1986 issue of Busi- 
ness and Society Review. This article, 
by U.S. Ambassador [to South Africa] 
Herman Nickel, presents a definitive 
statement of our case. 

I would add that we are aware that 
some South Africans, notably Bishop 
Tutu, have called on Western nations to 
impose such measures. Others in South 
Africa and here have a very different 
view. Let me be very clear on this 
point. We can understand the sentiment 
that leads some to call for what may ap- 
pear to be strong measures against 
apartheid. We do not question their mo- 
tives in pressing for actions which, if 
seriously implemented, could damage 
the economy and standard of living in 
that country. But we do question their 
assumptions and their analysis about 
how to achieve real change. We have a 
duty— yes, a moral obligation— to take 
those actions we believe right, proper, 
and effective in the current circum- 
stances. 



The Executive Order 

It has been 7 months since the Presi- 
dent signed the Executive order on 
South Africa. Since that time, the 
numerous provisions in the Executive 
order have been strictly and expedi- 
tiously implemented. In addition, the 
President promulgated another Execu- 
tive order on October 1 to prohibit the 
import of Krugerrands. 

A seiies of rules and regulations ha: 
been issued by the Office of Foreign As 
sets Control [of the Treasury Depart- 
ment] on bank loans and Krugerrands; 
by [Treasury's] Bureau of Alcohol, 
Tobacco, and Firearms on arms imports 
by the International Trade Admin- 
istration of the Department of Com- 
merce on computers and other exports; 
and by the Department of State on the 
labor practices of U.S. firms in South 
Africa. 

The Secretary of State has also es- 
tablished an Advisory Committee on 
South Africa, composed of 12 distin- 
guished Americans, to provide recom- 
mendations on how U.S. policy can be 
most effective in bringing about change 
in South Africa. The advisory committe 
will offer its report to the Secretary no 
later than 12 months after its first mee I 
ing, which took place on January 29. 

Within the Department of State. wt 
have taken the steps necessary to impli 
ment fully the Executive order's provi- 
sions on the fair labor practices of U.S. 
firms in South Africa. We have also 
taken steps to ensure that our Embassy 
and consulates in South Africa comply 
with these fair labor practices and mak< 
affirmative efforts to target nonwhite 
firms for future purchases of goods and 
services, as called for by the Executive 
order. 

Our regulations on the labor prac- 
tices of U.S. firms in South Africa en- 
tered into force on January 1 of this 
year. All U.S. firms employing at least 
25 nationals in South Africa were re- 
quired to register with the Department 
of State, and the registration process 
has now been completed. We consulted 
closely with the public in the prepara- 
tion of the regulations and related im- 
plementing documents, such as the 
detailed questionnaire that companies 
will file so that we can determine 
whether they are taking good faith 
steps to implement the fair labor stan- 
dards specified in the Executive order 
We believe that the system adopted is 
simple, efficient, and without undue 
bureaucratic and regulatory 
requirements. 



28 



Department of State Bulleti 



AFRICA 



The restrictive measures adopted by 

e United States against South Africa 
e more comprehensive than any meas- 
•es adopted by any Western country, 
j make clear for the record the extent 
these measures, I would like to in- 
oduce a summary of the measures 
lopted by the United States and 
le texts of the relevant laws and 
>gulations. 

ouse Resolution 997 

r e strongly oppose lulls such as 
.R. 997 that would have the effect of 
iposing punitive sanctions on South 
frica. H.R. 997 has six principal 
,easures. 

Section 1 would prohibit any U.S. 
srson from making any investment in 
Duth Africa and would require com- 
ete disinvestment within 180 days. 

Section 2 would prohibit the import 
i the United States of any article 
rown or produced in South Africa and 
ould prohibit the export to South 
frica of all U.S. goods and information. 

Section 3 would curtail U.S. landing 
ghts (except in emergencies) for all air- 
•aft owned by the South African 
overnment and all South African 
ationals. 

Section 4 would prohibit the import 
ito the United States of any gold coin 
tinted in South Africa or offered for 
lie by the South African Government. 

Section 5 would prohibit any person 
•om receiving any credit or deduction 
nder the Internal Revenue Code for 
jrtain taxes paid or accrued to South 
frica. 

Section 6 sets forth severe penalties 
>r violating any of these measures. 

In our view, the measures proposed 
'ould be unreasonable and ineffective, 
'he broad prohibition on investments 
rould not bring reform and change from 
le South African Government. Instead, 
. would merely cause U.S. firms to 
uffer substantial economic loss as a 
esult of the immediate 6 months' sale 
equired under the bill. There is no con- 
ensus among South African blacks over 
he usefulness of disinvestment. Most 
J.S. firms operating in South Africa 
ave worked hard during the past 10 
ears to improve working, educational, 
nd living conditions for their em- 
iloyees. These companies are now lead- 
rs in the efforts of the business 
ommunity to develop a concrete pro- 
gram for political and social change. If 
hey were to leave South Africa, they 



would be replaced by domestic South 
African firms or firms from third coun- 
tries who would not be active catalysts 
in pushing for reform and who would be 
less likely to adhere to the fair labor 
practices subscribed to by their Ameri- 
can counterparts. 

The proposed ban on imports and 
exports would also be counterproduc- 
tive. The United States already has in 
place stringent controls on selected ex- 
ports to South Africa, including a com- 
prehensive embargo on exports to the 
military and police. Our purpose must 
be to target carefully the machinery of 
apartheid. What conceivable purpose 
could be served by imposing a total em- 
bargo on that society? There is no evi- 
dence to sustain a belief that U.S. 
commercial exports "support" apartheid 
or that a ban on them would help to 
bring about change in South Africa. The 
only real victim of such measures would 
be ourselves, our exporters, and out- 
workers in those export industries. 

The proposed import ban would un- 
necessarily preclude access to South 
African minerals and resources, some of 
which are significant to our national 
security and are not readily available 
from other sources. This would serve no 
national purpose. The ban would raise 
serious questions with respect to our 
commitments under the General Agree- 
ment on Tariffs and Trade. Like disin- 
vestment, pressure of this kind will not 
influence the South African Government 
to change its policy. Instead, we can 
only expect that it would result in a 
hardening of political attitudes among 
white South Africans and a slower, not 
faster, pace of change. 

We do not believe that cutting off 
landing rights for South African aircraft 
would serve our interests. Interfering 
with travel between the United States 
and South Africa could cut South Afri- 
cans off from access to Americans at a 
time when exposure to the United 
States and its people can help influence 
change. In addition, a termination of 
landing rights would contradict the 
grant of rights in the 1947 Air Trans- 
port Services Agreement between the 
United States and South Africa. South 
Africa would be entitled to demand in- 
ternational arbitration if the United 
States were to take this action because 
of H.R. 997. 

The proposed ban on tax credits is 
clearly intended to penalize U.S. firms 
by making it more expensive for them 
to operate in South Africa. The ban 
would be inconsistent with the obliga- 
tions of the United States under the 



1946 Convention for the Avoidance of 
Double Taxation between the United 
States and South Africa— a treaty which 
was ratified with the advice and consent 
of the Senate. 

Conclusion 

H.R. 997 is based on the assumption 
that isolating South Africa from the peo- 
ple, economy, and Government of the 
United States will help influence change 
in South Africa. It relies on a belief that 
indiscriminate and blunt acts of eco- 
nomic punishment inflicted on South 
Africa would produce better behavior 
or changes in basic policy by its 
government. 

We believe, on the contrary, that 
there are serious and dangerous risks in 
imposing punitive sanctions on South 
Africa. In effect, we could, perversely, 
maximize intransigence of both black 
and white. The demands of the sanc- 
tions/disinvestment movement have led 
many whites in South Africa to discount 
the need for their country to play a role 
in the world community. It has pro- 
duced a "fortress South Africa" men- 
tality in many who argue that the coun- 
try's vast wealth and important exports 
place it in a position where it can ignore 
the clamor for change. This tendency 
toward white intransigence is mirrored 
among many in the black community 
who view the international call for sanc- 
tions as obviating the need for negotia- 
tions with the white regime— that is, 
with enough international trumpets 
sounding; the walls of apartheid will 
crumble. The fact is, South Africa needs 
less intransigence, more negotiation, less 
illusions, more dialogue, less hatred, and 
more civility. 

We should also keep in mind that 
pressures are already in place in South 
Africa, put there by the international 
condemnation of apartheid, market 
forces, the President's Executive order, 
and, most importantly, by the un- 
diminished protests and actions of the 
black population of South Africa itself. 
Important initiatives are underway. The 
Commonwealth's Eminent Persons 
Group has visited South Africa and will 
probably do so again in pursuit of its 
mandate of promoting dialogue. The 
members of Secretary Shultz's Advisory 
Committee on South Africa, created by 
the President's Executive order, are 
currently working tow-ard a report on 
the subject of how the people and 
Government of the United States can 
best use our influence in South Africa. 



July 1986 



29 



AFRICA 



This is not the time to mount punitive 
sanctions against South Africa but, 
rather, to use our good offices and 
influence to move ahead the process of 
reform and negotiation in that country. 
In summary, our policy is a coher- 
ent, logical one designed to promote 
change in South Africa and to pursue 
our own national interests. We would 
welcome efforts by this body to increase 
U.S. assistance to those working to put 
an end to apartheid and to improve our 
ability to reach out effectively to com- 



munities in all parts of South Africa, 
such as we had in mind when proposing 
the creation of a consulate in Port 
Elizabeth. Such measures will ensure 
that the United States has a positive 
role to play in bringing about our goal 
of ending apartheid in South Africa. 



'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 1987 Assistance Requests 
for Sub-Sahara Africa 



by Chester A. Crocker 

Statement before the Subcommittee 
on International Operations of the 
House Foreign Affairs Committee on 
March 18, 1986. Mr. Crocker is Assist- 
ant Secretary for African Affairs. 1 

I welcome the opportunity to testify to- 
day on the 1987 foreign assistance re- 
quest for Africa. I believe it is 
important to be here because Africa is 
too often lost in the shuffle in light of 
higher profile interests elsewhere in the 
world. Yet, it is Africa, as I hope this 
committee will agree, that poses some of 
the greatest challenges and opportuni- 
ties for the United States. 

I recognize that in these days of 
budget cutting and deficit reductions we 
need to ensure that all U.S. Government 
assistance programs are based on solid 
U.S. foreign policy interests and objec- 
tives and that all programs have been 
scrutinized to consolidate and reduce 
costs wherever possible. 

My presentation is in two parts- 
first, the nature of U.S. interests and, 
second, the programs proposed to sup- 
port these interests. While these cannot 
and should not be rigidly separated, I 
would divide U.S. interests in Africa 
into the following broad categories- 
strategic and political, economic and de- 
velopmental, and humanitarian. All of 
these interests share one common fac- 
tor: the awareness that Africa is part of 
a broader global system. 

U.S. Interests 

Soviet/Libyan/Cuban adventurism oper- 
ates in Africa just as it does in Af- 
ghanistan, Nicaragua, and the Middle 



East. Africa's financial problems are 
part of a broader global framework, and 
failure to deal with them endangers the 
multilateral system crucial to our global 
interests. For example, while African 
debt is dwarfed by that of Latin Ameri- 
ca, the country with the largest arrears 
to the IMF [International Monetary 
Fund] is Sudan; and debt, in relationship 
to size and potential of economies, is far 
more serious in Africa than elsewhere. 
By the same token, Africa's level of 
socioeconomic development is much low- 
er than that of other regions. African 
countries do not have the same ability 
to adjust to changing international eco- 
nomic developments that other 
regions— such as Latin America and 
Asia— have. For this reason, I think 
Africa needs to be recognized both for 
its special characteristics and for its im- 
portance to our world interests. 

In development terms, what is oc- 
curring in Africa today, after a long 
period of stagnation and misdirection, is 
positive and encouraging. As I will 
describe in somewhat greater detail 
later, Africans have taken initiatives, 
risky initiatives, in terms of policy 
changes which deserve our support. 
Africans are not asking for a handout, 
nor do we propose to give them one. 
They are not arguing that their debt be 
repudiated. They are asking for support 
in developing institutions which will per- 
mit their economies to grow, with 
benefit to Africans and non-Africans. If 
we and our allies respond, we can head 
off far worse problems in the future. 

Our request for Africa is not ex- 
travagant in this context. Our total re- 
quest for development and security 
assistance to Africa comes to $2.50 per 
African. This is not an amount that can 



be cut substantially and still have the 
effect on poverty, disease, and disloca- 
tion that is desired. Some prominent ele- 
ments in the United States, most 
notably the recent report of the Council 
on Foreign Relations and the Overseas 
Development Council, have urged that 
we do much, much more in Africa. But 
we are very much aware of budget con- 
straints and have shaped our proposals 
in the context of what we believe is our- 
proper share of our international effort, 
both bilateral and multilateral. 

We have important security in- 
terests in Africa. Africa is relevant in 
strategic terms to the shipping lanes 
from the Middle East, the security of 
the Indian Ocean, and the transit across 
the South Atlantic. Africa is also near 
the critically important southern flank c 
Europe and vulnerable oil-producing 
areas in Saudi Arabia and the gulf. Afr 
cans are active participants in the secu- 
rity of these regions, for their own 
safety and development. 

We have an interest in seeing the 
continent free from outside subversive 
influence and aggression or its use as a 
base for anti-Western propaganda and 
activities. Most African leaders share 
our perceptions about the dangers to 
the continent offered by Soviet, Cuban, 
and Libyan involvement and our view 
that disputes should be settled by peact 
ful negotiation— not armed force. We 
have not hesitated to provide military 
assistance to our friends when threat- 
ened by external aggression, as we did 
in the case of Libyan incursions against 
Chad. Our allies in Europe have reacte< 
strongly as well. We ignore at our peril 
the intrusion of hostile external in- 
fluence and power into this fragile and 
often unstable zone. 

With about one-third of the member 
ship in the United Nations, African na- 
tions are the most cohesive voting bloc 
at the United Nations and in other in- 
ternational fora. They play a critically 
important role in determining UN posi- 
tions on political, economic, and techni- 
cal issues, such as policy in the Middle 
East, on terrorism, and on human 
rights. Just to give one example, Afri- 
can countries consistently resisted ef- 
forts to challenge Israel's right to 
participate in the United Nations. 

Africa's markets and our access to 
its rich mineral resources are important 
concerns to American industry and com 
merce. We depend heavily on Africa for 
the supply of such critical minerals as 
chrome and cobalt. 



30 



Department of State Bulleti 



AFRICA 



Africa is important to us in cultural 
ncl historical terms. About 1 1% of the 
jnerican people trace their ancestry 
ack to Africa. Afro-Americans are to- 
ay a more cohesive and activist consti- 
uency than at any time in the past, not 
nly on the emotionally charged issue of 
outh Africa but also on the range of 
jnerica's African interests and policies. 

And finally, we have a strong hu- 
lanitarian interest in helping our fellow 
lan meet basic human needs and realize 
is potential. Last year, Africa ex- 
erienced one of its worst droughts in 
lodern history, with over 30 million 
eople at risk. We can be proud of the 
J.S. role in providing unprecedented 
;vels of food and other types of emer- 
ency assistance. Millions of lives were 
aved. With the return of rains to much 
f Africa, the specter of famine is reced- 
lg but much still remains to be done to 
educe deprivation and suffering. Equal- 
! important, we must ensure that Afri- 
ans living on the narrow margins of 
ubsistence have the realistic hope that 
fe for their children tomorrow will pro- 
ide more opportunities and economic 
eeurity than there is today. 

"he Shift in the African Approach 
o Economic Development 

ifrica is at a crossroads in economic de- 
elopment. Drought, sharply changing 
erms of trade, and, perhaps above all, 
lisdirected policies have brought Africa 
o a point where it has regressed to the 
ier capita income of 1960. The serious- 
iess of this crisis, however, has 
iroduced a major shift in African think- 
ng. Indeed, among Africans and donors 
like, there is a consensus on dramatic 
teps that must be taken by African 
governments and the nature of interna- 
ional support. If these steps are not 
aken, the situation will worsen with 
errible human as well as, unquestiona- 
ily, political consequences. But the key 
s that this crisis is recognized, and Afri- 
:an leaders are taking actions of un- 
>recedented nature to meet it. 

What are African countries doing to 
lelp themselves? Much of the reform 
aking place reflects a move away from 
)ankrupt statist policies dating back to 
he early years following independence. 
U that time, many African leaders 
vere attracted by socialist solutions 
vhich held out the promise of a more 
•apid economic growth while at the 
same time promoting a more equitable 
iistribution of income. Even countries 
;hat did not profess socialism were in- 
:lined toward a large state role in 



production, marketing, distribution, and 
finance. This path clearly has been a dis- 
appointment. Rather than a high rate of 
economic growth, it has promoted rapid 
growth of government and state enter- 
prises at the expense of the fragile but 
productive private sector. Bureaucracies 
have swollen beyond the economy's abil- 
ity to support them, creating incentives 
for corruption and distortions in the allo- 
cation of benefits. Subsidies were in- 
troduced that increased deficits as well 
as dependence on imports. 

Many African countries are now 
aware of their past mistakes and are 
proceeding to pare down their govern- 
ment bureaucracies and remove controls 
which are preventing the economy from 
operating efficiently. I will give you 
briefly specific examples of important 
reform efforts by selected African 
countries. 

Zaire. Zaire's policy adjustments are 
among the most thorough in support of 
market-led development. The local cur- 
rency, the zaire, has been devalued 
sharply and allowed to float in a free 
foreign exchange market. Import licens- 
ing has been liberalized and payment 
restrictions eased. Virtually all state 
trading monopolies have been abolished 
and price controls eliminated. Question- 
able trading practices in the mineral sec- 
tor that allowed for hidden capital flight 
have been abolished under World Bank 
direction. Interest rates have been freed 
and floated to rates that are positive in 
real terms. Finally, public expenditures 
were cut back sharply. As a result of 
these measures, inflation has dropped to 
an annual rate of 20% after running at 
over 100% in 1983; exports have in- 
creased, and the trade surplus has dou- 
bled despite a continuing decline in 
copper prices. Growth has also recov- 
ered, rising to a 2.8% real rate in 1984. 
However, despite these positive results, 
debt service remains a tremendous 
problem for Zaire, consuming about half 
of the government's budget. 

Zambia. In Zambia, the government 
has recently introduced a series of fun- 
damental economic policy changes. It 
has established an auction system for 
foreign exchange; liberalized its foreign 
trade regime and ended all import 
licensing and other quantitative restric- 
tions; decontrolled interest rates; and 
established a daily auction in Treasury' 
bills to help meet its domestic credit 
needs from sources outside the banking 
system. No less significantly, the 
government has also continued to push 
ahead with sectoral reform programs, 



increasing and/or decontrolling producer 
and retail prices for agricultural 
products, restructuring tariffs, and de- 
veloping an action program for the ra- 
tionalization of the mining industry. 

Somalia. Similarly, Somalia in 1985 
embarked upon one of the more sweep- 
ing reform programs in Africa. Prices 
were entirely decontrolled; import 
licensing was abolished; all restrictions 
on internal grain marketing were elimi- 
nated; and a dual foreign exchange mar- 
ket (with a freely floating exchange rate 
for most commercial transactions) was 
developed as a first step toward a uni- 
fied free foreign exchange market. Real 
public expenditures were also cut back 
sharply. Together, these measures had 
an immediate impact on prices, produc- 
tion, and exports. Inflation settled to a 
rate less than half that of 1984— about 
30%-35%; foodgrain production rose to 
record levels; exports almost doubled; 
and overall GDP [gross domestic 
product] growth strengthened to a 4% 
real rate for the year. 

Guinea. After 26 years of economic 
mismanagement, the new Government 
of Guinea, under the leadership of Presi- 
dent Conte, launched a sweeping eco- 
nomic reform program in the fall of 1985 
aimed at implementing IMF and World 
Bank recommendations and putting the 
Guinean economy on a private sector 
footing. Guinea devalued its currency by 
1,500% and instituted a foreign exchange 
auction system as a step toward market- 
determined rates; the state banking sec- 
tor was liquidated, and its functions are 
being handled by three Franco-Guinean 
banks; the prices of basic commodities 
are being decontrolled to stimulate in- 
creased supply; the import and retailing 
of rice was privatized; state enterprises 
were dismantled or privatized; and tar- 
gets were set for deep cuts in civil serv- 
ant staffing. 

Role of the Donor Community 

What should the donor community do to 
support such important economic re- 
forms? In its recent report "Financing 
Adjustment with Growth in Sub- 
Saharan Africa 1986-1990," the World 
Bank presents a sobering view. In the 
introduction to the report, World Bank 
President Clausen notes that the "de- 
velopment strategies of many African 
countries have changed dramatically," 
that "major structural reforms are be- 
ing undertaken," and that "there has 
been marked progress by many African 
countries in redressing major macro- 



July 1986 



31 



AFRICA 



economic and sectoral distortions." He 
adds, however, that "the major struc- 
tural reforms undertaken by many Afri- 
can countries to address their long-term 
development problems have not received 
adequate donor support." 

The Bank believes that, in order to 
achieve sustained and sound growth, ap- 
proximately $2.5 billion in additional as- 
sistance is required. Some of this can 
come from an enlarged IDA VIII [Inter- 
national Development Association], but 
the remainder must come from bilateral 
support. I am not arguing for a gap- 
closing exercise for all of Africa. For 
better or for worse, this is not sustaina- 
ble in the United States or most other 
countries. What is needed is a combina- 
tion of donor concentration of assistance 
on programs to produce results in those 
countries in Africa seriously engaged in 
adjustment and to provide incentives for 
the future to other countries that must 
eventually take this path. 

Economic Assistance 

I, and my AID [Agency for Internation- 
al Development] colleagues, believe in 
this, and the proposals which are before 
you reflect this approach. U.S. bilateral 
assistance is perhaps one-eighth of total 
assistance flows to Africa. Yet our rela- 
tively small share of assistance is crucial 
to broader patterns of assistance. We 
are proud to be considered the leader 
and innovator in African development. 
This is a role we wish to maintain. 

Accepting the reality that we do not 
have the resources to do everything 
that we would like to do, we have evalu- 
ated our priorities carefully to focus our 
assistance. Our request for economic as- 
sistance for Africa in FY 1987, at about 
$1 billion, is about 10% below actual ex- 
penditures in 1985. Over half of our as- 
sistance is concentrated in nine coun- 
tries: Cameroon, Kenya, Liberia, Niger, 
Senegal, Somalia, Sudan, Zambia, and 
Zaire. In terms of programming our eco- 
nomic assistance, about 43% of our 
resources goes to assist economic stabili- 
zation and reform efforts; 35% to pro- 
mote increased agricultural productivity 
which is made possible by such reforms; 
and 22% for human resources develop- 
ment. Development assistance, economic 
support funds, and PL 480 food assist- 
ance each provide roughly a third of the 
resources for our bilateral programs. 
While some of these resources may help 
meet short-term needs, our major objec- 
tive is to increase the long-term produc- 
tivity of the countries we are helping. 



Economic and institutional reforms 
will continue to be the centerpiece of 
our development strategy. Under our 
regular assistance programs in Africa, 
we have been providing increased 
balance-of-payments assistance and con- 
ditioning it on economic structural re- 
forms (e.g. trade liberalization, 
agricultural market liberalization, civil 
service reform) to create a favorable 
framework for medium- and long-term 
growth. This is precisely in line with 
recommendations of the World Bank to 
bilateral donors. 

In FY 1985, we began implementing 
a new program, the African economic 
policy reform program, which provides 
additional, more flexible assistance to 
African countries undertaking critical 
policy reforms and for whom additional, 
timely resources would accelerate the 
pace of such reforms and ensure im- 
plementation at the sector level. The 
first year was a success. We selected 
five countries for a total program of $75 
million and negotiated reforms which in- 
cluded: reduction of fertilizer subsidies 
in Malawi; pruning of the civil service 
payroll in Mali; lowering of tariffs and 
marginal personal tax rates in Mauri- 
tius; liberalization of price controls in 
Rwanda; and elimination of subsidies on 
maize and fertilizer in Zambia. Due to 
budget restraints, funding for the pro- 
gram in 1986 was reduced to $47.9 mil- 
lion. We hope Congress will provide us 
the resources so that we bring this im- 
portant, effective program back up to 
the $75 million level in 1987. 

The African economic policy reform 
program was a precursor of and gave 
impetus to a similar program, the World 
Bank's Special African Facility— a facil- 
ity which, together with bilateral funds 
available for cofinancing, totaled about 
$1.3 billion to finance policy reform pro- 
grams in Africa. The facility has done 
useful work, and we have been coor- 
dinating our reform programs with the 
World Bank and in FY 1986, at the in- 
itiative of Congress, made a direct con- 
tribution to the special fund. 

This year, we will begin implement- 
ing "food for progress," using an initial 
allocation of 75,000 tons of food to sup- 
port several pilot programs. "Food for 
progress" is designed to support 
market-oriented reforms in the agricul- 
tural sector with a view toward increas- 
ing a country's productive capacity. 
Benefiting from the experience of the 
first programs, we plan to expand it in 
1987 and are hopeful that, like the re- 



form program, it will also make a sig- 
nificant contribution to the structural 
reform efforts of African countries. 

Lastly. I would like to mention 
briefly our efforts to mobilize additional 
multilateral support for Africa. Last Oc- 
tober, at the IMF/IBRD [IMF/Interna- 
tional Bank for Reconstruction and 
Development] annual meeting in Seoul, 
we tabled a proposal on the use of IMF 
trust fund reflows in conjunction with 
World Bank resources and possibly 
bilateral contributions. The proposal 
would promote greater consistency and 
coordination of efforts of all parties in- 
volved in the implementation of struc- 
tural adjustment programs in the 
beneficiary countries. The IMF and 
World Bank would develop a compre- 
hensive economic framework, and then 
each institution would negotiate its owm 
policy -based lending programs consisten i 
with the overall framework. 

At the February 11 meeting of the 
IMF Executive Board, the trust fund 
proposal was endorsed. The initiative 
was also considered at the March 17 
World Bank Board, but we do not yet 
know the results. Nonetheless, we are 
fairly confident that the initiative will gj 
forward and expect that it will make ar 
important contribution toward helping 
close the resource gap for Africa identi- 
fied by the World Bank. The trust fund 
part of the U.S. proposal alone would 
provide substantial increased concessior 
al assistance for the poorest countries 
with protracted balance-of-payments pr< 
blems. During the first round of distri- 
butions of the IMF trust fund, only 279 
went to African countries. This time we 
would expect more than triple that per- 
centage to go to Africa. 

This, in sum, is what we propose on 
the economic side. 

Military Assistance 

This year, as in previous years, our 
request for military assistance is based 
upon our strategic interests in Africa 
and on the philosophy that the armed 
forces of Africa are an important power 
factor in their individual countries. We 
believe that these military organization: 
can be either stabilizing or destabilizing 
forces and that we must stay involved 
in terms of providing justifiable assist- 
ance to key countries. If we do not plaj 
in the game, we will have no influence 
over the outcome. We have a stake in 
supporting moderate, friendly states an 
an interest in moving countries that 



32 



Department of State Bullet 






AFRICA 



ive been part of the Soviet order into 
more fully nonaligned position. 

In FY 1987, as in the past, our re- 
jest for economic assistance outweighs 
ir request for military assistance by a 
ictor of 5 to 1. Our request for military 
distance for FY 1987 is reduced from 
jr FY 1986 request by 9%. The re- 
uest for FY 1986 was' $220 million, but 
scause of severe budget reductions, we 
ere able to allocate only $111.5 million. 
he request for FY 1987 is $201.5 mil- 
Mi: $174.1 million, MAP; $14 million, 
MS credit; $13.4 million, IMET. 

The reductions that we were re- 
uired to take in military assistance in 
Y 1986 were very costly in terms of 
F.S. interests. In Sudan, the reductions 
r ere so severe as to give rise to ques- 
ons about our seriousness in a country 
f vital strategic importance to Egypt 
nd Kenya and which is gripped with an 
iternal insurgency fueled by Ethiopian 
rms. In Kenya, we cut back on planned 
iipport to one of our staunchest friends 
i the region— indeed, in the Third 
^orld. In Botswana— just as that eoun- 
ry faced greater tension on its borders 
nd more than ever was determined to 
efend itself from both other countries 
nd armed movements that would mis- 
se its territory— we had to cut our pro- 
ram nearly in half. In Cameroon, which 
as kept its borders clear of trouble 
rom Chad or elsewhere, we had to 
liminate the program altogether, even 
hough it is one of the best managed 
irograms in Africa. These are costly 
teps. These reductions, often drastic, 
aise the most basic questions in the 
ninds of important regional partners 
bout our readiness to help victims of 
ibyan encroachment or other cross- 
lorder raids. These countries have stood 
ip continuously in favor of positions we 
lave supported in international and 
•egional matters and expected not large, 
>ut timely and consistent help from us. 
f we continue this pattern of reductions 
n future years, we will have opened the 
loor to more trouble in Africa than is 
•eadily understood. In Sudan, Libya is 
,oday actively exploiting the uncertain- 
ties about our military relationship with 
;hat country to gain a foothold in mili- 
tary matters. And unlike our role, which 
(vas to concentrate on border defense 
ind urge strongly a negotiated settle- 
ment of the internal uprising, Libya will 
not adhere to such principles. 

Our request for military assistance 
in FY 1987 is concentrated in five coun- 
tries: Sudan, Kenya, Somalia, Chad, and 
Zaire. Kenya, Sudan, and Somalia figure 
directly and prominently in the U.S. 



Southwest Asia strategy. These coun- 
tries support U.S. political and military 
objectives in the region and provide 
U.S. forces with access to and through 
their countries. 

Chad is under siege from Libya. Lib- 
yan forces occupy the northern third of 
the country. The French have the major 
responsibility for helping Chad defend 
itself, but the United States plays an 
important supporting role as France 
cannot manage the entire burden alone. 
U.S. bilateral support for Chad also 
demonstrates our resolve to help Afri- 
can nations counter Libyan aggression 
and adventurism. 

Zaire continues to be a staunch sup- 
porter of U.S. policies in Africa, includ- 
ing the containment of Libyan aggres- 
sion, as shown by President Mobutu's 
1983 decision to send troops to Chad to 
counter earlier intervention by Libyan 
and rebel troops. Zaire has a military 
that has an enormous mission and re- 
quires outside assistance from a number 
of supporters, especially in the airlift 
and logistics areas. 

Our other major military assistance 
goes to Liberia and Botswana and to a 
regional civic action program. We are 
well aware of the congressional concerns 
about military assistance to Liberia, but 
we cannot walk away from that coun- 
try's military establishment. We re- 
duced our 1986 allocation to $5 million, 
and we are requesting $8 million less as- 
sistance in 1987 than in 1985. While we 
take very seriously the Senate and 
House resolutions concerning military 
and ESF assistance, we believe it is vi- 
tal to stay involved with the rank and 
file military in Liberia. The military did 
not impede the process of return to con- 
stitutional rule nor did it serve as an in- 
strument to interfere with the recent 
elections. This military is a prime exam- 
ple of where a properly trained force 
can be a stabilizing influence, and an un- 
trained, undisciplined force can be a 
recipe for future unrest and chaos. We 
cannot abandon our commitment com- 
pletely or precipitously. 

In Botswana we have a commitment 
to assist the defense force with training 
and equipment that will increase its 
border defense capabilities. Botswana 
must remain both economically and 
militarily stable in this critical and 
potentially unstable area of Africa. 

The Africa civic action program, 
although only in its second year, has al- 
ready paid dividends. In 1985 and 1986 
we have been able to identify small 
projects in Mali, Niger, Malawi, Sene- 
gal, Ivory Coast, and Rwanda; and w r e 



are working on coastal security pro- 
grams with Senegal, Guinea, Sierra 
Leone, and Mauritania. We are getting 
a lot of mileage out of the civic action 
program for a very small investment. 

There is one new program identified 
in the 1987 request: a $1 million MAP 
program for the Central African Repub- 
lic (C.A.R.). The C.A.R. has been very 
supportive of U.S. and French policies 
in the region and has acted quickly to 
deter Libyan adventurism in not only 
the C.A.R. but in southern Chad as 
well. The French provide the majority 
of the military assistance required by 
the Central Africans, but, as in Chad, 
they cannot supply all of the legitimate 
requirements. We intend to provide 
trucks for key mobile infantry units to 
help them increase their effectiveness in 
protecting their borders. 

In this era of reduced resources 
available for military assistance, we 
have carefully examined each of our pro- 
grams and have consolidated a number 
of projects in each country. I would like 
to point out that we have maintained a 
remarkably consistent military assist- 
ance request over the years. Since 1982, 
the total request for military assistance 
each year has been approximately $200 
million. Because of the shortfall in 1986, 
we consolidated some programs and 
projects and deferred others. We plan to 
do the same in 1987. However, there is 
a level below which we should not fall; a 
level below which our assistance would 
not make sense or be effective. There 
are those who would argue that we 
should curtail military assistance to 
African countries. We cannot and should 
not do that. We would run the risks I 
outlined above— the risks of losing the 
influence that we have and of actually 
adding to instability rather than 
stability. 

I would like to take a moment at 
this point to set the record straight on a 
commonly expressed misconception of 
U.S. military assistance to Africa. This 
Administration has been accused of try- 
ing to militarize Africa, of emphasizing 
military assistance over economic assist- 
ance. That is simply not the case. 

When we do respond to requests for 
military assistance, it is in the area of 
training, logistics, supply, communi- 
cations, engineering, and most recently 
in the area of civic action. However, 
when friends and allies are threatened 
or invaded, as in the case of Chad, we 
have responded with lethal, primarily 
defensive, equipment. We believe that 
this is the correct response, and we will 
continue to follow this pattern. 



July 1986 



33 



AFRICA 



The Congress and the public are not 
aware of the number of requests for 
military assistance that we deflect. We 
consult closely with African nations 
when they ask us for military assist- 
ance, and more often than not we con- 
clude that their situation does not 
warrant a military supply relationship 
with the United States. In these cases 
we have established training programs 
which have proven to serve better the 
needs of African militaries than expen- 
sive, hard to maintain, equipment pro- 
grams. Out of all the nations in 
sub-Saharan Africa, we have military 
equipment assistance programs in only 
14. These 14 fall into very select 
categories: they are either key actors in 
U.S. national security strategy or they 
are threatened by external aggression. 
There are a few countries which fall into 
both categories. By contrast, we have 
training programs with 44 nations. I be- 
lieve that the record demonstrates 
where we place our priorities. 

I want to emphasize the point that 
there are, indeed, African nations that 
are threatened by aggression and inter- 
nal instability, that this instability 
works directly contrary to U.S. inter- 
ests, and that the United States will 
respond to help our friends. Deteriora- 
tion in the security situations in Chad, 
in Sudan, in Somalia, and in southern 
Africa will impact seriously upon U.S. 
interests in those key regions in Africa. 
We are not requesting military as- 
sistance because we are "nice guys." 
We receive valuable benefits in return 
for our investment. We are pursuing 
objectives that are part of U.S. national 
strategic policy. 

I will now review regional high- 
lights. 

Southern Africa 

We are engaged in a major diplomatic 
effort in southern Africa to decrease the 
level of violence and establish a more 
stable basis for regional security and to 
end apartheid and establish a more just 
system based on the consent of all the 
governed. These objectives are inter- 
related. As long as the level of cross- 
border violence and the perception of 
threat remain high, it will be difficult to 
generate among white South Africans 
the political will necessary to adopt real 
reforms. On the other hand, there is no 
question that, for as long as it exists, 
apartheid will be the principal source of 
conflict and instability in the region, 
creating opportunities for outside inter- 
vention. 



We have seen some progress toward 
these objectives. Our goal of diplomatic 
resolution of conflict and of economic 
development is gaining support as 
opposed to an orientation toward armed 
conflict which favors only our adver- 
saries. The Nkomati accord between 
South Africa and Mozambique has 
decreased the level of cross-border vio- 
lence. Our effort to achieve Namibian 
independence on the basis of UN Reso- 
lution 435 has made important progress. 
We now have concrete proposals on the 
table from both Angola and South Afri- 
ca, including a date of August 1, 1986, 
for implementation of UN Resolution 
435 for Namibian independence, if there 
is a satisfactory agreement on Cuban 
troop withdrawal. 

These achievements are fragile and 
incomplete. Much more remains to be 
done. The area has vast development 
potential, but this potential can never be 
achieved as long as the problems of 
racism, war, economic disruption, and 
foreign intervention persist. Our assist- 
ance programs have been greatly ex- 
panded and are designed to achieve 
greater regional security, economic 
development, peaceful change, and fur- 
ther reform in South Africa. They are 
tangible demonstrations that we, and 
not our adversaries, have the capacity 
and willingness to help the countries in 
the region achieve peace and better the 
lives of their people. 

We strongly endorse and support 
the objectives of the Southern African 
Development Coordination Conference 
(SADCC) which seeks to coordinate 
development projects of the nine 
majority-ruled governments in southern 
Africa. AID provides direct technical 
and financial support to the SADCC 
Secretariat and works with SADCC in 
various areas, including agricultural 
research, manpower development, food 
security, and transportation. 

In Zambia, the Kaunda government, 
supported by the IMF and World Bank, 
remains committed to a difficult pro- 
gram of economic reform. Zambia has 
begun a series of fundamental changes 
in its basic economic policies which our 
aid programs are helping to sustain. 
Zambia's economy remains fragile and 
needs substantial outside assistance to 
cushion the effects of its reform 
program. 

Due principally to sensible agricul- 
tural policies, Malawi has largely been 
able to feed its population. However, 
the insurgencies in neighboring coun- 
tries, particularly Mozambique, have 
made Malawi's ability to import or 



export commodities extremely costly. 
The country remains extremely poor, 
and it warrants our support as it unde: 
takes new initiatives to diversify and 
strengthen its economy. 

Our aid is helping Zimbabwe to sta 
on a sound economic footing. Our effor 
are focused on the private sector, whei 
an invaluable commodity import pro- 
gram has alleviated foreign exchange 
limitations that otherwise would have 
stalled industrial and commercial recov 
ery. The private agricultural sector 
naturally suffered under the region's 
severe drought but, all things consid- 
ered, coped fairly well and, with im- 
proved weather this year, has had maj 
increases in production. 

Mozambique continues to make 
major desirable changes in its orienta- 
tion, and we have responded by develc 
ing diplomatic relationships and 
economic assistance programs intendec 
to show our support for the change. I 
have already mentioned the Nkomati 
accord, a key move away from armed 
confrontation. Mozambique has, since 
then, moved toward greater participa- 
tion in the Western economic system. 
It has joined the IMF and World Ban! 
adhered to the Lome convention, and 
signed an OPIC [Overseas Private 
Investment Corporation] agreement ar 
a Paris Club rescheduling. Several 
American firms are initiating importan 
investments in the country's agricul- 
tural, fishing, and minerals sectors. 
It was one of the most drought-affectei 
countries in the region, and we re- 
sponded with large-scale emergency fo 
assistance. Our assistance programs 
demonstrate tangibly our support for 
the Machel regime and the reforms it 
has undertaken; however, congressions 
restrictions on our aid to Mozambique 
have caused significant reduction in tk 
assistance. Our support is particularly 
timely, since the Mozambican Govern- 
ment's turn away from heavy reliance 
on the Soviet Union is being called 
into question by continued antigovern- 
ment violence committed by RENAMC 
[National Mozambican Resistance]— a 
movement initially created by Ian 
Smith's Rhodesia, nurtured prior to th 
Nkomati accord by the South African 
Government, and still supported by 
non-African elements such as the 
Portuguese. 

Our assistance program within Sou 
Africa is one of the pillars of our polic; 
toward that country. It is not govern- 
ment-to-government, and it demon- 
strates clearly that our policy is not 



34 



AFRICA 



imited to a narrow range of issues nor 
o dialogue with the South African 
Jovernment alone. It also encourages 
ndividuals and groups striving for 
maceful change in South Africa. 

The proposed U.S. aid program for 
south Africa in FY 1987 is $25 million, 
if which $15 million is budgeted in 
he southern Africa regional program 
development assistance and ESF), and 
>10 million would come from a special 
3SF allocation for South Africa. Work- 
ng directly with regional organizations, 
mvate voluntary organizations, local 
immunity groups, and individuals, our 
issistance program is aimed at improv- 
ng community support structures, pri- 
vate enterprise, and educational and 
.raining opportunities for disadvantaged 
south Africans. Its basic goal is to 
issure that strong and responsible 
eadership is available to assume in- 
:reasingly greater positions of responsi- 
bility and authority in both the public 
ind private sectors. We have a major 
luman rights program to assist in legal 
defense work and improving the respon- 
siveness of legal institutions in South 
Africa. 

Southern Africa is of substantial 
strategic and economic importance to 
:he United States. We are engaged 
there in a continuing major diplomatic 
sffort to bring about the independence 
af Namibia under UN Security Council 
Resolution 435. and a situation of peace 
among countries suffering from cycles of 
violence. We have seen progress toward 
these objectives and in our relationships 
with all the countries of the region, but 
we have still major efforts ahead of us. 

The area has vast development 
potential, but this potential can never be 
achieved as long as the problems of war, 
economic disruption, racism, and foreign 
intervention persist. Our policy in the 
region is designed to address these 
problems through enhanced regional 
security, economic development, peace- 
ful change, and a movement in South 
Africa away from apartheid and toward 
a system of governance based on the 
consent of all the governed. Our assist- 
ance programs are targeted at achieving 
these goals and allowing the area to 
resolve its difficulties and develop 
without outside interference, especially 
from Soviet-bloc nations. 



Central Africa 

The United States has a major policy 
stake in ensuring an independent Chad 
in the face of continuing Libyan aggres- 
sion. Libya occupies the northern 40% 
of Chad and is currently supporting 
attacks by dissident forces. Our security 
assistance support for Chad is designed 
to complement the efforts of France, 
which has the primary role in assisting 
with Chad's security. Because of its 
shattered economic base, caused by the 
ravages of war and drought, Chad needs 
fast disbursing ESF to restore basic 
civilian services and development activ- 
ity as well as MAP to strengthen its 
capabilities to resist continuing Libyan 
aggression and subversion. 

Zaire, a country of crucial strategic 
importance in Africa, has been a firm 
friend and supporter of U.S. policies. It 
contributes substantially to stability in 
central Africa. For example, it helped 
the Chadian Government by sending 
troops to Chad to permit that country 
to defend itself against the Libyan inva- 
sion in 1983, and it provides training in 
Zaire to Chadian troops. In addition, 
Zaire has pursued constructive policies 
on issues outside Africa. Zaire has close 
ties with Israel, with which it reestab- 
lished diplomatic relations in 1982. A 
neighbor of conflict-ridden Angola, Zaire 
is equally a critical country in the 
search for peaceful resolution of south- 
ern African conflicts. Zaire's military 
has long been underfunded, and our 
MAP program is designed to get Zaire 
programs back on their feet, particularly 
in the key airlift area. The importance 
of this program was demonstrated in 
November 1984 when Zairian forces 
were airlifted in a U.S.-provided C-130 
to recapture a town in eastern Zaire 
that had been seized by antigovernment 
rebels coming across the border. And 
lastly, as outlined earlier, Zaire has 
taken major steps to reform its economy 
which we need to continue to support. 

Cameroon is a country where we 
want to build on success. Cameroon's 
policies, including emphasis on the pri- 
vate sector and active encouragement of 
foreign investment, have been conducive 
to sound development programs. With 
$21.89 million in assistance proposed in 
FY 1987, our economic aid emphasis is 
on increased production in food crops 
and market participation and income of 
small farmers. Our security assistance 
seeks to improve the mobility and effi- 
ciency of its modest defense forces. 



East Africa 

A number of countries, including Kenya, 
Sudan, Somalia, Mauritius, and Mada- 
gascar have undertaken tight, much- 
needed economic adjustment programs 
to establish a stronger basis for self- 
sustaining growth. Two countries, Soma- 
lia and Madagascar, are in the process 
of correcting earlier severe economic 
distortions. Early this year, for exam- 
ple, the IMF approved a standby agree- 
ment and additional funding to compen- 
sate for lost export earnings— critical 
financial assistance in support of major 
economic reforms undertaken by the 
Somali Government. Our aid programs 
focus in several cases on quick-disburs- 
ing ESF grants which enable importa- 
tion of needed inputs to agriculture and 
commerce and provide the catalysts for 
financial assistance from other donors as 
well as assistance complementary to 
that from international organizations 
such as the IMF and World Bank. 

Our economic assistance is vitally 
important to Sudan as its government 
undertakes a return to democracy for 
the first time in 17 years, seeks con- 
structive solutions to the country's 
desperate economic problems, and main- 
tains a liberal policy toward refugees. 

The United States has, in the past, 
played a leading role in an extraordi- 
nary international effort which has 
mobilized resources to enable Sudan to 
meet recurring payments for imports 
essential to development and other obli- 
gations. Through quick disbursing com- 
modity import program funds and, when 
necessary, cash grants, we have helped 
Sudan manage its economic resources 
within an international framework. 
These programs broke down under the 
growing political instability and civil 
strife in the final months of the Nimeiri 
regime. They will be rebuilt only pains- 
takingly as the country works first to 
restore democracy through elections in 
April. We have reassured the Sudanese 
of our intent to support this process. 
We have also indicated our readiness to 
work with the newly elected govern- 
ment in addressing the most urgent eco- 
nomic problems. Meanwhile, there is 
ongoing need to restore infrastructure 
badly damaged during the drought and 
to help support economic activity in the 
agricultural sector through the election 
period. At the same time, we have be- 
gun quiet, informal consultations with 
other significant donors so that the 
donor community can move quickly and 
in a coordinated way to meet Sudan's 



July 1986 



35 



AFRICA 



urgent needs. While many basic deci- 
sions must await elections, our economic 
assistance constitutes a principal base 
for Sudanese recovery. 

I have noted earlier the importance 
of our continuing to have a military 
assistance relationship with Sudan. 
Sudan continues to be threatened by 
subversion at home and abroad. The 
security problem on two borders— Libya 
and Ethiopia— exacerbates the internal 
political tasks of Sudan. We have made 
clear that our military assistance is not 
for pursuit of a military solution to 
problems in the south. The interim gov- 
ernment has, indeed, taken several ini- 
tiatives to seek political reconciliation. 
We expect these initiatives to intensify 
after elections install a permanent gov- 
ernment this April. However, Ethiopian 
support of the southern insurgency 
appears to be a serious obstacle to 
negotiations, as Ethiopia seeks to 
exploit this situation for its own ends. 
While strongly urging a negotiated 
settlement of the southern problem, we 
are not disposed to see Ethiopia use the 
situation to help spread Soviet influence 
in the region. 

Our security assistance in 1986 is 
vital for Somalia to control its borders 
and manage its own destiny. Somalia is 
still engaged in a residual border con- 
flict with Ethiopia. Ethiopian troops still 
occupy two Somali villages. Ethiopian- 
backed insurgents in the north periodi- 
cally engage in border harassments. We 
and our allies continue, meanwhile, to 
encourage, through every diplomatic 
way possible, a lessening of tensions in 
the region and a process for overcoming 
border and other divisive issues. The 
careful balance of our assistance to 
Somalia over the past several years, giv- 
ing Somalia defensive capability but not 
supporting actions against Ethiopian ter- 
ritory, contributed to the atmosphere in 
which Ethiopia's Mengistu and Somalia's 
Siad recently met for the first time to 
find a peaceful solution to their long- 
standing disputes. 

Kenya is successfully coping with 
the economic conditions that brought so 
many other African countries down. 
Kenya has taken tough measures to 
limit its critical balance-of-payments and 
foreign exchange deficits through deval- 
uation, import reductions, and budget 
cuts. Kenya moved quickly to get food 
into the country when the drought 
struck, and its performance stands in 
sharp contrast to that of Ethiopia. 
Assistance from the IBRD, the IMF, 
and the world donor community in sup- 
port of Kenya's short- and long-term 



reform efforts has given Kenya the 
external help necessary to make its 
domestic adjustments. This is a success 
story that we must not abandon. Con- 
tinued help will now focus on a major 
opening of the private sector in agricul- 
ture, exports, and social development so 
that Kenya can keep up with the press- 
ing problems of population growth, 
unemployment, and poverty. 

West Africa 

While the American presence and aid 
levels in the 16 countries of West Africa 
generally are not large, they are, none- 
theless, significant. In drought-affected 
countries, such as Niger and Mali, our 
emergency assistance has proven cru- 
cial. Dealing with acute food deficits is 
both a short-term humanitarian problem 
and a longer term developmental objec- 
tive. 

In Senegal, our programs are de- 
signed to bolster a friendly democratic 
government and one which is a leader in 
economic restructuring. In addition to 
providing Senegal the largest amount of 
U.S. development assistance in franco- 
phone Africa, we are using ESF to 
enable the Senegalese to continue to 
pursue more rapidly significant economic 
policy reforms, such as in agricultural 
' marketing. Our assistance programs are 
being coordinated with France, Sene- 
gal's largest donor, and with the inter- 
national financial institutions. We also 
seek to continue a modest but highly 
valued $4.5 million MAP program in 
FY 1987 to augment Senegal's capability 
to resist Libyan subversion; our highly 
successful IMET program trains about 
30 officers of Senegal's apolitical, pro- 
fessional armed forces in the United 
States. We believe that this mix of pro- 
grams in FY 1987 will assist this friend 
of the United States to sustain policy 
reforms and to preserve stability in this 
key area in Africa. 

Liberia has a special historical rela- 
tionship with the United States, and it 
is the site of several vital realities. 
There are some 5,000 Americans there. 
Since 1980, it has struggled with the 
transition from 100 years of one-party 
aristocratic rule to power and control by 
elements of the previously disenfran- 
chised population. It has been a difficult 
period, marked by inexperience of the 
new rulers, human rights abuses, and 
deep economic problems. 

In Liberia, our assistance levels 
were considerably reduced in FY 1986 
from previous years. In making that 



decision, we took into account this 
year's budgetary constraints and the 
Administration's and congressional 
views about human rights. Our assist- 
ance programs in development assist- 
ance, ESF, and MAP in FY 1987 are 
carefully tailored to improve the quality 
of life of Liberians, particularly in rural 
areas, to encourage the Liberian Gov- 
ernment to take key decisions regarding 
economic reform and its international 
debt that are essential to restore inter- 
national financial confidence in that 
country and prevent economic collapse, 
and to continue, at a much reduced 
level, the supply of essentially nonlethal 
equipment and facilities and training to 
Liberia's Armed Forces, which help 
make them a more disciplined and less 
politicized force. 

Liberia held national elections in 
October 1985 and returned to civilian 
constitutional rule on schedule in Janu- 
ary 1986. But the process was marred 
by disputes over the election results anc 
by a coup attempt and its aftermath a 
month later. Steps have been taken by 
government and some opposition leaders 
to promote national reconciliation within 
the framework of the new democratic 
constitution and institutions of elected 
government. Much more needs to be 
done. Our continued assistance program 
will, in our view, contribute to the 
prospects for national reconciliation, 
political stability, and human rights in 
Liberia. We have sent strong messages 
on all these matters this year and at tht 
same time have applauded the recent 
release of prominent political detainees, 
the opening of trials to outside ob- 
servers, and removal of some of the 
press restrictions from last year. We 
shall keep those matters very much in 
mind, as well as the Liberian Govern- 
ment's actions to address seriously its 
economic problems, as we disburse 
assistance funds throughout the year. 



'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. ■ 



36 



Department of State Bulleti 



<\RMS CONTROL 



Nuclear and Space Arms Talks 
)pen Round Five 



•RESIDENTS STATEMENT, 
1AY 7, 1986 1 

tomorrow marks the opening- of round 
ive of the nuclear and space talks 
NST) in Geneva. Our overriding prior- 
ty in these negotiations is the achieve- 
nent of deep, equitable, and verifiable 
eductions in the nuclear arsenals of the 
Jnited States and U.S.S.R. and the 
trengthening of strategic stability. 
^hrough agreements on such reductions, 
ye seek to achieve a safer world and to 
vork toward our ultimate goal of 
■liminating all nuclear weapons. 

The session that begins tomorrow is 
in important one. In Geneva last 
November, General Secretary Gor- 
lachev and I agreed to accelerate the 
legotiations on nuclear and space arms, 
>articularly where we had already iden- 
ified areas of common ground. This in- 
:ludes the principle of 50% reductions in 
luclear arms, appropriately applied, as 
veil as the objective of an interim 
igreement limiting intermediate-range 
nissile systems. Unfortunately, little 
>rogress was made during the most re- 
lent round of the negotiations, largely 
hie to the failure of the Soviet Union to 
ict on the commitments it undertook in 
he November 21 joint statement. 

In January Mr. Gorbachev advanced 
jublicly a "plan" calling for the elimina- 
;ion of all nuclear weapons by the end 
)f the century. While we are pleased 
;hat the Soviet Union has embraced, in 
Drinciple, our ultimate goal of elimina- 
tion of all nuclear weapons, we believe 
;his must be accomplished through a 
progression of practical measures. Our 
immediate focus should remain the 
prompt accomplishment of the necessary 
First steps in this progress— 50% reduc- 
tion in strategic nuclear arms and an in- 
terim INF [intermediate-range nuclear 
forces] agreement, as agreed last 
November in Geneva. 

Toward this end, the United States 
has put forward fair and balanced 
proposals in all three areas of the NST 
negotiations. Our new strategic arms 
proposals adopt the concept of 50% 
reduction in the nuclear arsenals of the 
United States and U.S.S.R. and seek to 
enhance stability by reducing the capa- 
bilitv to conduct a first-strike. These 



new proposals are designed as well to 
take into account concerns expressed by 
the Soviet Union and to build on areas 
of common ground in our respective 
positions. 

In the defense and space forum, we 
want to initiate a dialogue with the 
Soviets on the vital relationship be- 
tween strategic offense and defense. 
Furthermore, as a demonstration of our 
peaceful intentions, we are proposing an 
exchange of information on our respec- 
tive strategic defense research programs 
and reciprocal visits by U.S. and Soviet 
experts to laboratories which are en- 
gaged in such research. 

Unfortunately, neither in their Janu- 
ary announcement nor in their state- 
ments at Geneva have the Soviets 
provided a constructive response to our 
proposals in either the strategic arms 
reduction talks (START) or defense and 
space area. We hope they will do so this 
round. 

On the other hand, Mr. Gorbachev's 
announcement did seem to show a 
potential for progress in the INF area. 
Taking this into account, I, therefore, 
made another new U.S. offer: a con- 
crete, phased plan for the global elimina- 
tion of this entire category of U.S. and 
Soviet missiles by the end of this dec- 
ade. This new proposal, developed in 
close consultation with our allies in Eu- 
rope and Asia, builds upon areas of com- 
mon ground— as called for in the summit 
joint statement. Our previous INF 
proposals also remain on the table. 

In INF we also are proposing very 
concrete verification measures. After 
resisting for years U.S. proposals for 
verification, the Soviet Union recently 
has professed in its public statements 
that it now shares our interest in effec- 
tive verification. We are seeking to put 
these Soviet pronouncements to the test 
at the negotiating table. In light of the 
unfortunate events of the past week, 
moreover, the need for effective verifi- 
cation measures has become clearer 
than ever. 

In sum our key objectives in the 
Geneva negotiations are: deep cuts; no 
first-strike advantage; continuing defen- 
sive research because defense is safer 
than offense; and no cheating. 



We are making a sincere and deter- 
mined effort to see the promise of the 
November summit fulfilled, and the in- 
structions I gave to Ambassadors Kam- 
pelman [defense and space arms 
negotiator], Glitman [intermediate-range 
nuclear arms negotiator], and Lehman 
[strategic nuclear arms negotiator] on 
their return to Geneva provide them 
with the flexibility they need to explore 
all promising approaches for agreement. 

It is high time now for the Soviet 
Union to get down to business by ad- 
dressing seriously with us in Geneva the 
practical implementation of the mutual 
commitments which Mr. Gorbachev and 
I made at the summit. If the Soviets 
truly join us in this vital effort, real 
progress in nuclear arms reductions is 
clearly within our reach. 

I want to emphasize in closing that 
the way to make progress is at the bar- 
gaining table in Geneva in the confiden- 
tial atmosphere provided by these 
negotiations. I, therefore, call on the 
Soviet Union to study these practical, 
yet far-reaching, U.S. proposals care- 
fully and to respond in an equally con- 
crete and constructive manner at the 
negotiating table. Only this will estab- 
lish the kind of dialogue that can lead to 
progress. 



'Text from Weekly Compilation of 
Presidential Documents of May 12, 1986. 



MBFR Talks Resume 
in Vienna 



WHITE HOUSE STATEMENT, 
MAY 15, 1986 1 

Today in Vienna, respresentatives of 
NATO and the Warsaw Pact resume 
their efforts to reach a verifiable agree- 
ment that would reduce and limit con- 
ventional forces in central Europe. 
These negotiations, known as the mu- 
tual and balanced force reduction 
(MBFR) talks, have the important goal 
of creating a more stable balance of 
forces at an equal and significantly low- 
er level in central Europe, the area of 
greatest concentration of armed forces 
in the world. 

The MBFR talks are at an impor- 
tant stage of their 13-year history. Last 
December 5, the President joined other 
allied leaders in making a new far- 



July 1986 



37 



EAST ASIA 



reaching proposal aimed at finding out if 
the Soviet Union is seriously interested 
in moving toward an accord in these 
long-running negotiations. 

The Warsaw Pact had asked for a 
time-limited, first-stage agreement call- 
ing for initial reductions by U.S. and 
Soviet ground forces, followed by a 
freeze on all forces of the two alliances 
remaining in the area. In its December 
proposal, the West agreed to this frame- 
work. The East also insisted that prog- 
ress could be made only if the West 
dropped its demand that the sides agree 
on the number of forces each currently 
has in the area before reductions begin. 
We agreed to this also, despite the fact 
that this demand had been a crucial part 
of the NATO position for over a decade. 

We hoped the East would recipro- 
cate our concessions and agree to 
Western verification proposals, a central 
remaining prerequisite to forging a via- 
ble agreement. Unfortunately, the East 
was not forthcoming during the round of 
negotiations that ended in March. 
Despite General Secretary Gorbachev's 
public declarations endorsing realistic 
verification measures for conventional 
force reductions, the Soviets did not 
respond positively in Vienna. Indeed in 
response to NATO's concessions, the 
Soviets and their Warsaw Pact allies 
actually moved backward by rejecting 
the Western proposals and recycling old, 
shopworn verification ideas the East 
had made 2 or 3 years previously. The 
Soviet leadership has now had additional 
time to give full and careful considera- 
tion to the details of NATO's Decem- 
ber 5, 1985, proposal. In East Berlin on 
April 18, General Secretary Gorbachev 
again asserted that his government is 
committed to achieving reductions in 
conventional forces and pledged that 
these reductions will be assured through 
dependable verification, including on-site 
inspections. 

The President has instructed the 
U.S. negotiator, Ambassador Robert D. 
Blackwill, working with his NATO col- 
leagues, to put these Soviet public 
claims on verification to the practical 
test at the negotiating table in Vienna. 



Secretary's Visit to Korea 
and the Philippines 



'Text from Weekly Compilation of 
Presidential Documents of May 19. 1986. 



Secretary Shultz departed Tokyo 
May 7, 1986, to visit Seoul (May 7-8) 
and Manila (May 8-9), before returning 
to the United States on May 9. 

Following are a toast, a news con- 
ference, and a statement he made dur- 
ing the trip. 

Seoul, 

Dinner Toast, 
May 7, 1986 1 

Since its founding in 1948, the Republic 
of Korea has made remarkable progress 
in all fields. U.S. -Korean relations con- 
tinue to grow deeper and broader, as 
the increasing frequency of our consulta- 
tions shows. We now have regular talks 
on economic, scientific and technological, 
political, and cultural issues, as well 
as annual sessions of the military con- 
sultative meeting and the security 
consultative meeting. 

During President Chun's visit to 
Washington in April last year, our 
Presidents agreed that the ties between 
our two countries warranted an inten- 
sification of foreign ministerial consulta- 
tions. My visit here is a consequence of 
that decision. It is also an opportunity, 
of course, to discuss with you the 
results of the economic summit in 
Tokyo. 

Over the past 30 years, our commit- 
ment to Korea's security has been the 
fundamental element in our bilateral 
relationship. This, of course, will not 
change. But the rapid emergence of 
Korea's economy brings new dimension 
to the relationship which can only 
strengthen the close ties we now enjoy. 

Your success, following the destruc- 
tion and devastation of the Korean war, 
underscores the determination and in- 
dustriousness of the Korean people and 
your commitment to market principles. 
As you said, Mr. Minister, GNP per 
capita— which amounted to less than 
$100 in 1960 but now approaches 
$2,000— is only one indication of Korea's 
success. The real GNP growth rate fore- 
cast for 1986 is 8%. The contrast be- 
tween these impressive measures and 
what North Korea turns in— per capita 
GNP half that in the South, with esti- 
mates of GNP growth this year at 
1-3%— could hardly be greater. 



An aid recipient as late as 1975, the 
Republic of Korea has become our 
seventh largest trading partner, as you 
noted, with total bilateral trade amount 
ing to over $16 billion last year. 
Sophisticated Korean exports in the 
form of high quality automobiles and 
electronic goods are contributing to 
Americans' awareness of the enormous 
potential of Korea's manufacturing 
sector. 

In recent months, the emergence of 
trade disputes has caused some concern 
but I believe these differences are a 
natural outgrowth of our expanding eco 
nomic relationship. U.S. firms are eagei 
to participate in Korea's rapidly grow- 
ing economy. 

Korea stands to gain much from the 
technical skills which the American 
services and high-tech industries have t 
offer. As an agricultural producer, the 
United States is second to none. Open 
markets and liberalized trade will im- 
prove the efficiency and competitivenes 
of Korean industry, objectives very 
much in Korea's self-interest. 

To maintain open markets, we must 
work together to resist protectionist 
pressures on both sides of the Pacific, a 
message which was repeated and re- 
peated at the Tokyo economic summit— 
a message we all need to take in. I am 
heartened by President Chun's firm 
commitment to trade liberalization. The 
progress we have made toward narrow- 
ing our differences in the ongoing 301 
cases demonstrates what can be done. 
We must not allow the momentum to 
die. Both Korea and the United States 
need to redouble our efforts to resolve 
outstanding trade issues. 

Your country's phenomenal success 
and your persistent diplomatic efforts 
have brought North Korea back to the 
negotiating table. As you know, we wel- 
come this because we share dialogue 
between the parties most directly con- 
cerned: North and South Korea. Thus, 
the simple fact that North Korea has 
entered into direct talks, after decades 
of impugning the sovereignty and legiti- 
macy of the Republic of Korea, is in it- 
self significant. 

But the course of the South-North 
talks since they resumed in 1984 raises 
questions about North Korea's motiva- 
tions and purposes. North Korea has 



38 



Department of State Bulletir 



EAST ASIA 



intinued to stall on the very practical 
eps you have proposed, including 
ade measures. The North has also sus- 
jnded the dialogue a second time, 
sing as a pretext the annual U.S.- 
epublie of Korea military exercise, 
earn Spirit, which will continue. 

If North Korea has serious purposes 
the talks— if it truly desires to reduce 
insions, improve the lives of its people, 
id foster its image abroad— it must 
!turn to the talks expeditiously and 
mduct itself in a sincere and responsi- 
e manner. You have our full support 
i your efforts to bring this point home 
i the North Korean leadership. 

We all hope that the realization is 
limmering in North Korea that it must 
jen itself to the outside world— 
?ginning with its brothers in the 
outh— if it wishes to compete peace- 
illy in this modem age. One needs only 
jntrast the progress of much of East 
sia, including the Republic of Korea, 
ith the sterile and economically be- 
laguered societies of North Korea and 
ietnam to understand why there is a 
orldwide movement toward more open 
jcieties and toward democracy. The 
ridence is clear: Open and democratic 
jcieties are the most stable and the 
lost prosperous. 

The Republic of Korea is preparing 
>r a peaceful transfer of the presidency 
1 March 1988, an important precedent 
1 the political progress that is the goal 
f all Koreans. Just a few months after 
lat, you will host the Olympics here in 
eoul, which will symbolize for you and 
>r the entire world the progress you 
ave made in all fields. 

These are times of tremendous op- 
ortunities and challenges for our coun- 
ties. Through our alliance, our 
iendship, and our pursuit of common 
alues, we are each better positioned to 
ake advantage of our opportunities. Mr. 
'oreign Minister, permit me to salute 
ou and the lasting friendship between 
ur two countries. Please join me in a 
oast to Foreign Minister and Mrs. Lee 
nd to that friendship and— let me say it 
his way— "team spirit" between our 
wo countries. 



Seoul, 

News Conference, 

May 8, 1986 2 

This is my fourth visit to Korea as 
Secretary of State. Of course, I've been 
here on other occasions. Again, I'm 
grateful for the hospitality and for the 
opportunity, even in the brief period, to 
have such an intense round of discussion 
with a range of Korean Government offi- 
cials and also an opportunity to meet 
with members of the opposition and 
others in Korea at breakfast this 
morning. 

During my discussions here, we 
covered a great deal of ground that I 
could basically group the subjects: First, 
under the heading of the importance of 
the U.S. support for firm security 
arrangements in Korea, particularly in 
view of the aggressive and military 
regime in the North. Second, my 
admiration— and we discussed the ins 
and outs of the brief progress in eco- 
nomic development that is evident here 
in Korea. Third, we discussed the 
progress in the evolution of democratic 
institutions and, particularly with Presi- 
dent Chun, his determination to see a 
smooth transition and stable transition 
and nonviolent transition as power 
changes from his hands to someone 
else's hands in 1988. Beyond that we 
also had some discussion of the problem 
of terrorism, and we found a great 
parallelism of views with ours and a 
keen appreciation of the importance of 
the statement made at the Tokyo sum- 
mit on the fight against terrorism. 

Q. This is your first stop since the 
Tokyo summit, where a declaration on 
terrorism was adopted, one that the 
United States says will make waves 
beyond the seven, that other countries 
will isolate Qadhafi. Did you ask the 
President to cut back Libyan oil pur- 
chases or to bring some of the 20,000 
Koreans home from Libya? And how 
are other countries supposed to get 
the message? 

A. I think people have the message, 
and Koreans, of course, will speak for 
themselves. But I believe, on the basis 
of my conversations here and what I've 
seen of things being done elsewhere, 
that Qadhafi is being isolated more and 
more in all respects, and nobody has a 
good word to say for Qadhafi. 

Q. In your airplane interview 
yesterday, you expressed considerable 
satisfaction with the pace and sub- 
stance of whether the government 



moves in the political field and you 
condemned, I quote, "an opposition 
which seeks to incite violence." Do 
you have any evidence that the 
Korean opposition is seeking to incite 
violence, or even credible reports? And 
are you wanting to be seen as taking 
sides in this highly charged dispute? 

A. I didn't characterize the opposi- 
tion, that is, the leaders of the opposi- 
tion that I met with this morning as 
fomenting violence. There are people 
opposed to the government and appar- 
ently opposed to what the government 
is trying to do who have fomented vio- 
lence as in the activities at Inchon the 
other day. Those were the people I was 
referring to. 

I'm not taking sides. It is not for 
the United States to take sides in the 
political internal debate of other coun- 
tries. They have to work these problems 
out themselves. However, when it 
comes to general observations on the 
democratic process, I think it is fair to 
say that one of the great virtues of 
democracy, and one of the things that 
people have to take in as part of the 
process of democratization, is that the 
democratic process is the alternative to 
violence. Violence as a means of ex- 
pressing protest is not part of the 
democratic tradition. You do that 
through argument and voting. 

Q. You said frequently you talked 
about the economic miracle here in 
Korea and the military strength in the 
North. Had you met with the opposi- 
tion leaders this morning, do you be- 
lieve that there would be any change 
[inaudible] were they in power or 
President Chun were out of power, 
would that affect economic or military 
posture? 

A. It was clear in the discussions 
this morning that everybody present 
was only too well aware of the threat 
from the North and the importance of 
the security arrangements that have 
been made by this country and the rela- 
tionship of the United States that has 
been supporting that. So I didn't see 
any differences of view about that. I 
didn't see differences of view about the 
desirability of moving at a good pace in 
the direction of democracy. And, in gen- 
eral, everyone felt that good progress 
was being made. 

There were differences of opinion 
expressed, particularly about the prob- 
lem of constitutional reform. And, again, 
this is something for the Koreans them- 
selves to work out. But we didn't have 



July 1986 



39 



EAST ASIA 



an opportunity to talk about the eco- 
nomic situation very much at that meet- 
ing that I had with the opposition. 

Q. If I may follow up, it seems 
that when you asked about [inaudible] 
human rights in South Korea. The an- 
swer seems to be first look [inaudible] 
at economic and look at [inaudible] 
your military support, and I'm won- 
dering if there— how direct a parallel 
there is between democratization and 
some other important aspects? 

A. Democratization obviously in- 
volves the rule of law, and we believe 
that that is the method by which one 
should proceed. And, when I raised that 
question, there is complete agreement 
with that. There can be problems. No 
one says the situation in human rights is 
perfect. Not here, not in the United 
States, not anywhere. But the way we 
make it better is by working at it and 
being willing to confront problems 
where they exist. I trust that that is 
the spirit that is moving forward here. 
On the handling of the most recent 
riots, of course, you have a situation 
where two policemen are killed, others 
wounded; and I think it's pretty clear 
from all the accounts I've heard that 
this was something really kind of incited 
by those who were conducting the dem- 
onstration. And certainly any govern- 
ment has to be responsible for law and 
order as well as for the security of the 
country. 

Q. What is your assessment of the 
volatile political situation in South 
Korea? 

A. It doesn't appear to me to be 
that volatile, that is, unless you say sort 
of the explosion of economic growth is 
volatility. But the security situation has 
great stability to it. The economic situa- 
tion is progressing well. The institutions 
of democracy are taking shape. Most of 
the campuses are quiet. And there are 
some problems here and there. But I 
wouldn't describe the situation as vola- 
tile by any means. 

Q. In your meeting today with the 
opposition leaders, what were their 
concerns? What concern did they ex- 
press to you about the situation [in- 
audible]? 

A. I had a meeting that went for an 
hour and a quarter, and it was conduct- 
ed in consecutive translation. Quite a 
few of the people at the meeting were 
not able to speak because of the lack of 
time; but I think both leaders of the 
opposition spoke as long as they wished 
to. But even so, I'm sure they felt 



somewhat constrained. So, I would say 
that the principal thing that they em- 
phasized, in particular the leader of the 
leading opposition party, was the ques- 
tion of constitutional reform and direct 
election of the President. That was the 
principal point that they made. 

Q. What is your assessment of the 
pace of the changes after many of the 
members of the opposition say it's just 
not fast enough; the government 
hasn't gone far enough in its moments 
of compromise? 

A. The pace of change is quite rapid 
in the economic sphere. The determina- 
tion to provide for security is 
unchanged— strong. In the political 
sphere, the National Assembly is an 
elected body. There is freedom of 
assembly. There is no lack of ability for 
people to criticize. You hear a lot of 
that, as evidenced by this press confer- 
ence. That's all that's discussed here. 
There will be a transition in power in 
early 1988 which is not very far away. 
As that happens, it will be the first time 
that it's been possible to do that in an 
orderly way in Korea in 40 years. It will 
be an achievement. And it's that kind of 
orderly, peaceful transition of power 
from one person to another in the con- 
text of democratic institutions that's the 
essence of managing this change suc- 
cessfully. I think that it deserves our 
support and gets it. 

Q. During and after the Philip- 
pines, there have been high notions 
that Korea and the Philippines were 
parallel situations. What is the U.S. 
Government's judgment on the Korean 
situation, and what is the basis of 
your judgment? 

A. Each country is different. I think 
you have to start with that proposition. 
However, in the range of similarities 
and differences, I can't imagine two 
countries more different than the Philip- 
pines and Korea. The security situation, 
the threat from the outside neighbor- 
aggressor here is different from the 
Philippines. At the same time, there is 
no really internal subversive element. 
The military here is highly professional, 
first-class, and works closely with the 
U.S. military as an important deterrent 
force. 

In the Philippines, Mrs. Aquino has 
inherited an economy that's in a sham- 
bles and which she is trying to reform, 
and we hope we can help her to do that. 
There's no reason why the Philippines 
can't be a healthy economic system. But 
the contrast between that situation and 



the strong economy here and strong eco- 
nomic performance here is quite great. 
Insofar as the political institutions 
are concerned, you see here a deliberate 
effort to nurture and develop institu- 
tions of democracy which haven't been 
present here before. And you see the in- 
cumbent President working to arrange a 
stable transition of power in which he 
leaves office and somebody else comes 
into power. I think that the contrasts 
are quite great, and the tendency to 
kind of snap at the conclusion that 
everywhere is parallel to the Philippines 
is just not warranted. 

Q. Did you discuss with President 
Chun the need to move on human 
rights and political reforms in order tc 
prevent the sort of violence that you 
obviously feel is being incited here in 
Korea? 

A. Ah, these parallels! 

Q. Parallel is apt, because that's 
the sort of urging that the United 
States did engage in in the 
Philippines. 

A. I don't want to make the same 
speech all over again that I just made, 
but the idea that the economic malaise 
of the Philippines is present here is just 
totally wrong. The idea that you don't 
have a military capable of defending the 
security of the country here as contrast- 
ed with the Philippines is all wrong. The 
idea that somehow there isn't an effort 
to bring into play democratic institu- 
tions and have an orderly transition of 
pov/er is wrong. It's right there for 
everyone to see. 

In the handling of problems accord- 
ing to the rule of law, that's obviously 
something that we emphasize, and it 
needs to be emphasized. President Chun 
has expressed himself unequivocally, 
publicly, and many times that what he 
wants to see is an orderly transition of 
power. You don't have to ask him to 
say that. He says that. 

As far as the constitution is con- 
cerned, that's a matter for the people of 
the Philippines to decide, and President 
Chun has said he's ready to listen to 
what people may want to say about 
that. Without taking sides on the issue, 
I think it is not particularly typical 
around the world that the leaders of 
democratic countries are put there by 
direct election. They aren't. The Presi- 
dent of the United States isn't. The 
Prime Minister of the United Kingdom 
isn't; she was here recently. The Prime 
Minister of Japan, who has been quoted 
because of his chairmanship of the sum- 
mit, isn't. And so just what the right ar- 



40 



Department of State Bulletin 



EAST ASIA 



angements are constitutionally is not 
jmething that's given by saying the 
r ord democracy. Each country has to 
'ork out its own democratic destiny but 
amehow have it be such that the 
overnment is basically responsive to 
le will of the people. That's the name 
f the game. 

Q. I'd just like to ask you some 
lore on ideas of transition because 
ome of us have been talking to South 
Koreans, [inaudible] none of them are 
i the room because they are afraid to 
sk you any questions about [inaudi- 
le]. You talked about the profession- 
lism of the Korean military, but do 
ou think it's wise for the Korean 
lilitary to be as involved in the 
omestic politics of a country? After 
11, the President of this country 
'asn't elected to office; he took it. He 
ays he's going to leave office in 1988. 
'ou're talking about this as a peace- 
iil transition, but do you have any 
ertainty that this would lead to a 
emocratic election or just another 
'resident put in by the military? 

A. The military have historically had 
strong position here, and I must say if 
ou are on the front lines, as South 
Lorea is— and I'm sure you've been to 
he DMZ [demilitarized zone]— you can 
se\ it. There is a front line, and it's not 
ery far away from where you're sit- 
ing. So under those circumstances, if a 
ountry doesn't have a strong military, 
hey would not be managing things very 
rell. Insofar as movement toward 
lemocracy is concerned and civilian 
government, that is exactly the process 
hat the present leadership of the 
government of Korea, by all the evi- 
lence that I can see, is trying to 
nanage. That is what it means to have 
i National Assembly that has increas- 
ngly a capacity for debate, criticism, op- 
>osition parties— and the President has 
innounced, said, many times. I don't see 
iny reason why, just because he said it, 
rou should not believe it— that he 
loesn't mean that he wants to have a 
jeaceful and orderly transition. I'm con- 
zinced that he does. 

And institutions of democracy grow; 
;hey don't come instantly into being. So 
)ne has to nurture this. They have no 
experience here, for example, with a 
ame duck President. They're worried 
ibout what does that mean. I said, 
'Well, you know President Reagan is 
supposed to be a lame duck, but he 
doesn't act that way. But he doesn't 
have much longer in office than 
President Chun." So, that's a new 
experience. 



And there are a lot of things of that 
kind that you have to get used to, and 
you have to have experience with them. 
And probably before people feel com- 
fortable, there have to be two or three 
orderly transitions of government from 
one hand to another. It's a problem that 
you have to work at continuously. You 
can't solve it with a constitution or a 
snap of the fingers. 

Q. Recent remarks by the leading 
Reagan Administration officials, in- 
cluding yours at Kansas University, 
seem to indicate that a new American 
theory has emerged linking the U.S. 
national interest to the democratiza- 
tion in its Third World allies. Based 
on this theory, how do you view the 
democratization problem in Taiwan? 
And will the United States apply the 
same logic to handling its ties with 
mainland China? 

A. It's not a new idea. Democracy is 
an old idea, and as we view it in the 
United States, it's a good idea. It's a 
good idea for us. We think it can be 
productive for other people, and we see 
that it provides a setting which is less 
aggressive militarily than other forms of 
government. We favor it; we think it's 
in our interest. And so that being the 
case, the President has said that. It 
isn't as though it's something new. It's 
something old and honored and worth- 
while. We encourage an evolution 
toward more open and free and 
democratic forms. 

In that regard, in China, the shifts 
in gears as far as the way agricultural 
policy is run is a move in what we think 
is a good direction. Not that that makes 
China a democratic country, but it 
makes it more open. The same is true of 
the economic arrangements in Taiwan. 
From our standpoint, as we see it, free- 
dom works. We like it, and we'd like to 
see other people have a chance to enjoy 
its benefits. 



Manila, 

Dinner Statement, 

May 8, 1986 3 

Vice President Laurel and distinguished 
ladies and gentlemen, I'm very flattered 
at the turnout here and pleased to have 
a chance to talk with you informally and 
look forward to meeting a great many of 
you during the course of the day 
tomorrow. 

Relations between our two countries 
have traditionally been characterized by 
unusually strong bonds of friendship 
based on a shared historical experience 



and democratic values. We have a 
shared past, including sacrifice in a 
bloody war. We also have a shared de- 
votion to democratic institutions. 

A short time ago, your devotion to 
democracy transformed your history. All 
Americans, myself included, were pro- 
foundly impressed with the courage and 
commitment to democracy displayed by 
the Filipino people in the peaceful politi- 
cal transition last February. Your ac- 
tions were a stirring triumph of the 
democratic spirit. They have earned the 
Philippines the respect and admiration 
of freedom-loving peoples everywhere. 

The Philippines has now entered a 
crucial period of transition. Your new 
government has inherited challenges in 
the economic and security areas that 
will tax your ingenuity and resolve in 
the months and years ahead. You are 
aware of the problems. You also know, 
as you knew in February, that only 
Filipinos can solve them. I might say— 
what I see of it— the problems that you 
have are soluble problems. Not that it 
doesn't take a lot of work, but you can 
see in the capabilities of your people, in 
the resources at hand, and in the 
tremendous good will you have all over 
the world, that with hard work and sen- 
sible activities it ought to be possible, 
and surely will be possible, to solve 
these problems. But as I say, they are 
basically yours to solve. 

However, because of our close ties, 
you know as well that the United States 
stands ready to work with you to help 
find solutions to these critical 
problems— such as economic develop- 
ment, rebuilding of your armed forces- 
problems whose resolution are vital to 
the well-being of the Philippines and to 
stability throughout East Asia. 

Mr. Vice President, we note that in 
addition to plans for economic and mili- 
tary reforms, your government has also 
decided to undertake a fundamental 
political renewal. The current timetable 
calls for the drafting of a new constitu- 
tion to be submitted to the people for 
ratification and elections for local offi- 
cials and members of the legislature. I 
know this because this is what you told 
me and the President in Bali. And as 
you informed President Reagan, you ex- 
pect all this to be completed by Novem- 
ber. This is an ambitious undertaking, 
but an important one. Adherence to 
your announced schedule will surely go 
a long way in returning the Philippines 
to the democratic tradition. All your 
friends in the United States anticipate 
and support an early return to fully 
functioning institutions as the key to the 



July 1986 



41 



EAST ASIA 



long-term political stability and to the 
business confidence that renewed invest- 
ment requires. 

We are impressed with the skillful, 
enlightened leadership demonstrated by 
President Aquino. We applaud her ap- 
pointment of a cabinet of experienced, 
respected professionals representing a 
broad political spectrum. We are en- 
couraged by the statements of your new 
economic team outlining sound, market- 
oriented policies which we believe offer 
real promise for the revitalization of the 
Philippine economy. We also note that 
in recent weeks confidence in the finan- 
cial community regarding Philippine eco- 
nomic policies and prospects has 
increased. 

In response to this new and promis- 
ing situation, President Reagan an- 
nounced late last month that the United 
States plans to support the efforts of 
your government to meet its pressing 
financial needs. Your government 
wants— and we agree— a multilateral ap- 
proach to your assistance needs. Our 
part will consist of bilateral programs, 
renewed trade and investment efforts, 
and support through the multilateral 
financial institutions. 

We plan to increase our bilateral as- 
sistance in both quantitative and qualita- 
tive terms. A key component of our aid 
package is a request to Congress for 
$100 million of grant assistance in 
economic support funds. We also are 
seeking authority to accelerate the dis- 
bursement of funds already appropri- 
ated, and better terms under which 
funds are made available. (You dis- 
cussed it with the President in Bali.) 
This funding, which totals about $500 
million, will be on a grant basis, except 
for $50 million in food aid which will be 
provided on a highly concessionary loan 
basis. Thus, our assistance will provide 
economic support without adding ap- 
preciably to the large external debt bur- 
den inherited by the Aquino 
government. 

With respect to trade and invest- 
ment, the United States will undertake 
a variety of measures in support of your 
new government's economic program. 
These include looking for ways to ex- 
pand and improve your government's 
use of the generalized system of prefer- 
ences for exports to the United States, 
seeking to assure continuing reasonable 
growth of Philippine textiles to the U.S. 
market, and increasing Export-Import 
Bank funding for U.S. suppliers of key 
Philippine imports. We also will be dis- 
cussing with your government the possi- 
bilities for Overseas Private Investment 



Corporation and Department of Com- 
merce investment and trade missions to 
the Philippines this year. 

Concerning multilateral aid, we have 
welcomed your government's interest in 
the "program for sustained growth," 
the initiative taken last fall by Secretary 
of the Treasury Baker to strengthen the 
international debt strategy and support 
sustained growth in middle-income 
debtor countries. The broad policy direc- 
tions outlined by your economic spokes- 
men thus far have positioned you well 
to take advantage of the opportunities 
provided in the Baker plan to achieve 
sustained economic growth. We have 
also agreed to assist your government in 
arranging for an early meeting with 
multilateral, as well as bilateral, donors 
in order to mobilize their support for 
Philippine economic recovery. 

Our two countries also have had a 
longstanding, close, and effective secu- 
rity relationship. Through our defense 
cooperation, the Philippines and the 
United States make an important contri- 
bution to the growth and stability of the 
East Asia region. We believe it is the 
will of most Filipinos and Americans 
that this relationship continue and be 
strengthened even further. 

We welcome the plans of your gov- 
ernment to restore professional capabili- 
ties to your military forces. A strong, 
competent, and apolitical military is 
essential to uphold a democratic system. 
As a concrete manifestation of our sup- 
port for the rebuilding of the new 



Armed Forces of the Philippines, our 
President has also announced our inten- 
tion to obtain an additional $50 million 
in military grant aid for the fiscal year. 
Also, we will seek to convert $29 million 
of prior unused military sales loans re- 
quested for next fiscal year to grants. 
All of this assistance will be targeted on 
basic requirements— logistics, communi- 
cations, transportation, and troop 
support— and to help promote military 
reforms. 

All these issues are Philippine issues 
that Filipinos will have to resolve. U.S. 
policy is based on our desire to assist 
you in all appropriate ways to meet 
these challenges. Our primary objective 
is to build on the strong foundations of 
our historical relationship to forge a 
close, productive partnership with the 
Philippine Government that will serve 
effectively the interests of our two coun- 
tries and peoples. 

Vice President Laurel and honored 
Filipino guests, permit me to salute 
your recent triumph and to wish Presi- 
dent Aquino and her new government 
well in forging a new, democratic, 
prosperous, and stable Philippines. 
Mabuhay. 



'Made at a dinner hosted by Foreign 
Minister Lee (press release 104 of Mav 8, 
1986). 

2 Press release 109 of May 13. 

3 Made at a dinner hosted by U.S. Ambas- 
sador to the Philippines Stephen W. 
Bosworth (press release 106 of May 9.) ■ 



The U.S. and East Asia: 
Meeting the Challenge of Change 



by Gaston J. Sigur, Jr. 

Address before the Council on World 
Affairs in Cincinnati on April 18, 1986. 
Mr. Sigur is Assistant Secretary for 
East Asian and Pacific Affairs. 

I'm delighted to be with you this even- 
ing at this annual conference on interna- 
tional affairs sponsored by the Council 
on World Affairs. I promised the presi- 
dent of this distinguished council— my 
old friend Bill Messner— some time ago 
that I would be here tonight. Neither he 
nor I knew that I would be here in my 
present capacity with the Department of 
State, but such are the vagaries of 



Washington careers. It gives me great 
pleasure to be able to offer you some 
perspectives from this vantage point. 

I can tell you that, with the excep- 
tion of Libya, no other single part of the 
world has claimed so much of the sched- 
ule of the President and the Secretary 
of State this past week as the East 
Asian and Pacific region. The Prime 
Ministers of two leading nations of the 
free world, Yasuhiro Nakasone and 
Robert Hawke, have made separate offi- 
cial visits to Washington this week. 
Japan and Australia are, of course, two 
of our closest allies; and we place the 
greatest importance on close and regu- 
lar consultations with them on matters 



42 



Department of State Bulletin 



EAST ASIA 



ross the board. Our series of discus- 
ms this week have affirmed our 
operation in a variety of important 
eas, and the United States is, indeed, 
rtunate to have such resolute and 
liable partners in the region. 

Increasingly. East Asia and the 
icific, as a whole, consumes a greater 
trtion of our policy attention in 
'ashington, fortunately for positive 
,ther than negative reasons. These 
brant nations demonstrate time and 
me again their integral role in the 
obal economy and in the stable evolu- 
mi of a more secure and democratic en- 
rollment for us all. There has been a 
iyival and growth of broad popular in- 
vest within our country regarding 
sia and the Pacific, and our ties to this 
ist neighborhood are undergirded by a 
ear and firm national consensus, 
herefore, we are, indeed, prepared to 
leet whatever challenges change may 
ring, with confidence and clarity of 
impose. 

oherent Objectives 

he successful application of our policy 
ver time requires that we have a clear- 
eaded understanding of our fundamen- 
i\ objectives and interests in the area, 
'urthermore, we must pursue those 
oals with visible coherence, consist- 
ncy, and a respect for our partners 
hat breeds respect and cooperation in 
eturn. It simply will not do for regional 
ovemments, either friendly or advers- 
arial, to misconstrue the nature or pur- 
iose of our role in political and economic 
levelopments. Nor, for that matter, can 
ve afford to send the wrong signals to 
lolitical opposition groups that may 
;eek, accurately or not, to exploit the 
•ole of the United States in the area for 
heir own purposes. 

President Reagan has plotted a sure 
and steady policy course toward the 
region which, time and again, has 
benefited the constructive interests and 
objectives of both the United States and 
its regional partners. I believe we are 
on the right track and that the people of 
East Asia and the Pacific fully appreci- 
ate our policy role and support in the 
area. The challenges and opportunities 
ahead call for a patient nurturing of 
those policy directions already so well 
defined by this Administration. 

Let there be no mistake about our 
fundamental commitment to the preser- 
vation of a stable environment in East 
Asia conducive to its continuing eco- 
nomic, political, and social progress. Of 



course, we support the evolution of po- 
litical processes that bolster popular 
participation and representative govern- 
ment. Of course, we support the loosen- 
ing of economic strictures that hamper 
the benefits of an open market. Of 
course, we support the right of individ- 
ual states to register their concerns 
about nuclear proliferation and to par- 
ticipate fully in consultations over 
regional security measures. But we do 
not, and cannot, acquiesce in misguided 
notions of political anarchy, trade pro- 
tectionism, or the disregard of impor- 
tant alliance commitments, which could 
jeopardize the prosperity and safety of 
all peoples in the area. 

Our policy is to defend the expan- 
sion of individual and economic liberty 
just as we support respect for stable 
democratic institutions and processes. 
We will strive to nurture closer security 
cooperation and stronger alliances just 
as we encourage frequent consultations 
with our partners on matters of mutual 
interest and concern. We will protect 
and promote the activity of an open 
market system so necessary to the eco- 
nomic well-being of the free world. We 
believe these objectives to be thought- 
ful, responsible approaches to issues 
that affect not just our own interests 
but, indeed, the interlinking interests of 
all in the Asian-Pacific neighborhood. In 
pursuing these objectives, we must re- 
main vigilant, for always there are those 
in the backwaters of progress who 
would readily intervene to exploit any 
discord among us. 

Should there be any doubt about it 
here at home, our own national interests 



in Asia and the Pacific are tangible and 
significant. Our vital basing rights and 
port access are critical to maintaining 
overall strategic balance and peace in 
the region, by ensuring U.S. operational 
ability, manueverability, and accessibil- 
ity in the event of crisis. Our alliance 
partners benefit significantly from the 
umbrella of our protection. Our invest- 
ments and trading patterns in the area 
are important to us, just as they are 
critical to the growth and prosperity of 
the developing nations. The preservation 
of Asian freedom in face of totalitarian 
threats is vital to our global political 
posture, yet even more vital to the aspi- 
rations and great potential of the Asian 
people themselves. 

Our Asian friends increasingly are 
shouldering the responsibilities of free 
world partnership in responding to 
global threats and deprivations. They 
provide important leverage to interna- 
tional sanctions against terrorism and 
aggression. 

We certainly cannot pretend that 
these factors are unimportant to us as a 
nation any more so than our regional 
partners can honestly denigrate the im- 
portance to their own goals and in- 
terests. In a true partnership, all benefit 
equitably, and clearly that is the situa- 
tion we enjoy with our Asian friends 
and allies. 

Regional Trade 

Trade is of central importance to our 
economic, political, and security in- 
terests in East Asia and the Pacific 
region. Our own trade expansion policies 



Assistant Secretary for 

East Asian 

and Pacific Affairs 



,-H 



Gaston J. Sigur, Jr., 

was bom in Franklin, 
Louisiana, on Novem- 
ber 13, 1924. He 
received his Ph.D. 
-*•• degree in Asian his- 

|V V tory from the Univer- 

|^^^^^ sity of Michigan 

Ma M 

^k ■ ^k Dr. Sigur served 

the Asia Foundation in 
Kabul, Afghanistan (1962-66); in Japan 
(1966-68); and in Washington, D.C. (1969-72). 
In 1972 he became Director of the Institute 
for Sino-Soviet Studies and is currently on 
leave as professor of international affairs at 



George Washington University. In June 1982, 
he was appointed as Special Assistant to the 
President for National Security Affairs and 
Senior Director of Asian Affairs. 

Dr. Sigur has written numerous articles 
and monographs on international relations, in- 
cluding his most recent book, Japanese and 
U.S. Policy in Asia (1982). He serves on the 
editorial boards of several professional jour- 
nals and is a member of the Association of 
Asian Studies, the Intel-national House of 
Japan, and the Japan-American Society of 
Washington. 

Dr. Sigur was sworn in as Assistant 
Secretary for East Asian and Pacific Affairs 
on March 12, 1986. ■ 



July 1986 



43 



EAST ASIA 



with the area have remained remarka- 
bly consistent over the past 50 years 
and have benefited immensely both the 
United States and its trading partners. 
Between 1970 and 1985, our two-way ex- 
changes with the region increased more 
than tenfold, and there is every reason 
to expect commerce of this magnitude to 
continue and to prosper in the years 
ahead. 

The broad application of export-led 
growth in East Asia has resulted, in the 
1970s and 1980s, in prosperity and sta- 
bility that is the envy of most of the de- 
veloping world. Over the past decade, 
this region has surpassed all others in 
terms of basic economic development, 
GNP [gross national product] growth, 
and overall increases in international 
trade. Not surprisingly, the dramatic 
success of the market economies of East 
Asia has helped to encourage some non- 
market economies, such as China, to 
enact economic reforms. And best of all, 
by achieving rapid economic growth and 
rising standards of living, the region 
largely has managed to avoid the unrest 
that plagues much of the developing 
world. Only where economic mismanage- 
ment has stifled economic growth— and 
here the Philippines becomes a case in 
point— has widespread domestic instabil- 
ity taken hold. 

It is no accident that those nations 
which have enjoyed the greatest 
prosperity are close economic partners 
of ours. The United States has provided 
lucrative markets for both labor- 
intensive and high-technology products 
of the region, and the Asian commercial 
dynamism continues to rely heavily on 
healthy Western economies such as our 
own. Our investment there now exceeds 
$33 billion and is still growing. 

At the same time, of course, we 
benefit in many ways from this bond of 
interdependence. The 14% of our total 
overseas investment which goes to this 
region produces over 23% of our total 
income from all direct investment 
abroad. East Asia and the Pacific has 
been our primary regional trading part- 
ner since 1980, accounting for almost 
one-third of our global trade; and 7 of 
our 20 largest export markets are in the 
area. Not at all coincidentally, those 
with which we share this large and 
beneficial trading relationship are the 
same societies with which we have a 
broad range of cultural, scientific, and 
other ties as well. Japan, Korea, Singa- 
pore, and Taiwan are examples of long 
standing. 



Therefore, we understand well the 
critical role that open markets and free 
trade play in supporting the overall 
structure of our own interests, as well 
as those of our closest friends and allies. 
We are the world's largest trading na- 
tion, taking 17% of all imports the world 
over, and we recognize that our own 
prosperity is increasingly tied to the 
health of the world trading system. 
Free and fair trade is in our own best 
interest, while the specter of protec- 
tionism threatens our prosperity and 
that of our free world partners. 

Shortsighted individuals with short 
memories may be tempted to believe 
that closing our markets in this sector 
or that one would relieve the burdens of 
our mounting trade deficits with Asia 
and the world in general. But we tried 
that remedy in the 1930s, and all 
suffered from the global depression that 
resulted. If we were to erect protec- 
tionist barriers now to Asian-origin ex- 
ports, not only would the economic 
health of those nations be endangered 
but their fundamental stability would be 
undermined, thereby jeopardizing our 
own security and economic well-being 
also. Protectionist barriers would drasti- 
cally reduce the growth upon which the 
notable success of the Asian economies 
has been built. Now that the economic 
growth of most Asian-Pacific nations is 
slowing from the surge of recent years, 
any exacerbation of that slowdown could 
pose serious political and security 
problems. 

An open trading system is vital to 
us all, but the United States cannot 
carry this burden alone. We tradi- 
tionally have been at the forefront of ef- 
forts to sustain free trade, but politically 
this role is difficult to sustain as a lone 
crusade. Our trading partners must do 
their share to lower trade barriers and 
eliminate subsidies and other market- 
restricting trade practices to help 
redress unrealistic advantages. We are 
not afraid to compete, but we want to 
compete on a "level playing field." 
Toward that end, Japan's new 
"Maekawa Report" outlines some very 
significant changes that country intends 
to make to align its economic future 
more harmoniously with the needs of 
the global economy. 

I firmly believe that economic inter- 
dependence has bolstered traditionally 
close political and security ties with our 
Asian friends. When we sit down at the 
negotiating table to hammer out solu- 
tions to trade disputes, all parties 
understand the consequences of failure. 



Truly, the fundamental basis of our 
relationship with East Asia and the Pa- 
cific has been and will continue to be 
the flowering of our economic, cultural, 
political, and security cooperation. Thes 
strong links of friendship and inter- 
dependence are grounded solidly in 
mutual interest and genuine common 
benefit. 

Democratic Reform 

Not infrequently, the United States 
finds itself in touch with situations 
where, superficially, there may seem to 
be a contradiction between our moral 
commitment to democracy and political 
modernization and our immediate secu- 
rity interests. In fact, however, there is 
a direct link between these interests of 
ours, for political stability and regional 
security are mutually supportive condi- 
tions. The one cannot function reliably 
without the presence of the other. And 
both rely as well on a healthy economic 
system to provide the confidence and 
the wherewithal to underwrite security 
and democracy. 

The United States does support, as 
a matter of principle, peaceful demo- 
cratic evolution and the rule of law 
throughout the world. We support this 
both on moral grounds and on the clear 
understanding that popularly supported 
political institutions and processes are 
the best guarantee of stability and 
peace. We obviously have no less an 
interest— in fact, quite the contrary— in 
seeing peaceful progress toward more 
responsive government and democratic 
reforms in friendly countries in Asia. 

At the same time. Secretary of Stat 
George Shultz has pointed out that sue! 
transitions are ". . .often complex and 
delicate and . . . can only come about in a 
way consistent with a country's history, 
culture, and political realities." In order 
to succeed in working with our friends 
toward political maturity, we must also 
give credit for positive change when it 
does occur; and we must give appropri- 
ate cognizance to even greater threats 
to freedom which arise from external oi 
internal forces of totalitarianism. 

Equally significant is the observatio 
by Secretary Shultz that ". . .our in- 
fluence with friendly governments is a 
precious resource; we use it for con- 
structive ends . . . [and] therefore, we 
stay engaged." This was the case in tht 
Philippines, where our policy toward th 
Marcos government was to encourage 
its peaceful resolution of the serious po- 
litical, economic, and security problems 



44 



Department of State Bulleti 






EAST ASIA 



icing the country by revitalizing 
lemocratic institutions and restoring a 
ree market economy and military 
irofessionalism. Ultimately, dramatic p<>- 
tical change did occur in a nonviolent, 
iopular reaffirmation of democratic 
irocesses; and all credit for that transi- 
ion belongs to the people of the Philip- 
lines. Yet, it demonstrated once again 
hat it serves no purpose for the United 
itates simply to turn its back on the 
ritical internal problems of our friends. 

In such situations, we remain en- 
:aged in a constructive way; and we 
upport the concept of peaceful institu- 
ional and procedural reform by staying 
n contact with all democratic political 
orces, in the opposition as well as in 
government. This does not entail med- 
lling in others' affairs. Given the time, 
hese nations will work out solutions on 
heir own, according to their own unique 
ircumstances. 

Uliance Responsibilities 

Certainly, one of the more unfortunate 
ncidents we've had to deal with re- 
:ently has been the isolated challenge to 
he integrity of our alliance system. It 
las brought to the fore some of the 
nost fundamental issues concerning the 
>urposes and nature of modern alliances 
imong democratic states. In the Asian- 
pacific region, we have formal treaty al- 
iances with Japan, South Korea, the 
Philippines, Thailand, Australia, and 
Mew Zealand, established by mutual 
:onsent to deter aggression and 
preserve peace, particularly against 
;hreats from the Soviet Union and its 
proxies. Over the past 2 years, New 
Zealand attached certain conditions to 
)ur access to its naval ports, in response 
;o antinuclear sentiment among its elec- 
;orate, which made impossible our prac- 
ical alliance cooperation. Allies occa- 
sionally differ, of course, on political 
.ssues; but fundamental cooperation and 
preservation of mutual confidence re- 
quire an appreciation for the concerns 
md risks involved for all when one ally 
decides to set its own arbitrary rules for 
Dthers to follow. 

Modern alliances among democracies 
differ from the alliances of antiquity in 
that they are agreements not just be- 
tween rulers or governing officials but 
between peoples with shared values and 
perspectives. Bonds between people who 
share fundamental interests can— and 
must— survive periodic changes of 
leadership. Indeed, we and our demo- 
cratic allies are united not only by long- 
range strategic interests but also by 



moral and philosophical bonds which run 
deep. Alliances of this nature present 
special problems and greater demands 
on all partners. 

Perhaps paradoxically, but not sur- 
prisingly, a nation at peace today must 
be prepared for war if it is to deter 
war. This is an especially difficult 
responsibility for democracies to shoul- 
der, yet shoulder it we must. Among 
democratic allies, it is a delusion to 
think that sacrifices can be safely 
deferred. For whenever partners do 
not reinforce one another, the safety 
and unity of the entire alliance is 
jeopardized. All democratic allies face 
similar domestic pressures. All would 
prefer to use their resources in other 
ways to serve more immediate social 
purposes. But if one partner is unwilling 
to bear the burdens of defense, why 
should other partners make sacrifices? 

In fact, each ally must help maintain 
the strength of the alliance, according to 
its own capabilities and what it has to 
offer. Not all need to possess their own 
nuclear deterrent, of course; but if they 
undermine our ability to maintain any 
naval presence— by adopting practices 
that undercut our policy of neither con- 
firming nor denying whether our naval 
vessels are nuclear armed or by banning 
ships that are nuclear propelled— then 
they weaken their own national security 
in the process. 

Of course, the shared responsibilities 
in a democratic alliance go beyond just 
the deterrence of a military threat. Our 
partnership depends on deeper and 
broader bonds of mutual cooperation 
that span the entire range of our 
relations— political and economic, as well 
as security ties. Our overall unity, 
across the board, is essential to the suc- 
cess of East-West negotiations. And so 
our mutual support on the smaller is- 
sues is so very important to the larger 
picture. Fortunately for all concerned, 
our alliances are working; they are 
preserving the deterrent strength of 
unity and purpose upon which our secu- 
rity and our freedoms depend. Let there 
be no misconceptions about the false 
security of isolationism or unilateralism, 
which was discredited long ago. It is the 
responsibility of governments them- 
selves to lead and educate their people, 
to prevent the erosion of the basic spirit 
and consensus underlying unity. Ex- 
perience certainly shows that we can 
overcome our occasional differences if 
we make an effort to do so. 



Looking Ahead: Challenges 
and Opportunities 

East Asia and the Pacific is a dynamic 
region with vast potential, not just for 
its own developmental success but for 
the benefit of global stability and 
prosperity more generally. The nations 
of the region will remain active players 
in worldwide commerce, politics, and 
security in the decades ahead. They will 
provide an example for other developing 
nations in terms of economic and techno- 
logical development, political reform and 
social progress, and in their earnest ap- 
proach to preserving peace. And the 
Asian-Pacific nations will be increasingly 
intertwined with our own destiny, with 
America's own goals and interests. We 
are a Pacific nation, just as we are an 
Atlantic nation, and we are prepared to 
share the responsibilities ahead. 

There will, of course, be many 
challenges down the road, both for the 
region as a whole and for U.S. interests 
and policy there. We want to be realis- 
tic about them— to anticipate and plan 
ahead in full consultation with our 
regional partners. To the extent that we 
overcome the pitfalls together, all of us 
will benefit. 

Economic fortunes will ebb and flow, 
although there is every reason to be- 
lieve this region's prosperity will match 
and surpass that of any other in the 
years ahead. Asian dynamism will con- 
tinue to stimulate global prosperity but 
will depend on healthy Western econo- 
mies in turn. While the U.S. trade 
deficit may shrink with the dollar's fall, 
protectionist pressures likely will per- 
sist. We must all guard against the 
temptation to seek simple, shortsighted 
solutions to complex trade problems. 

Up to this point, political stability in 
East Asia and the Pacific has been 
based as much on traditional leadership 
continuity as on economic well-being. 
However, historical transitions are 
underway or imminent in several coun- 
tries, and inevitable challenges regard- 
ing leadership succession lie ahead. 
Rapid socioeconomic modernization jux- 
taposed with these forthcoming occa- 
sions for political succession may fuel 
popular pressures for political reform 
from within. I anticipate increasing 
popular support for democratization at 
the expense of authoritarianism and 
potential instability wherever resistance 
to political pluralism and popular partici- 
pation persists. Let us hope that 
benevolent leaders maintain channels of 
communication and cooperation with 



July 1986 



45 



EAST ASIA 



those who call for orderly democratic re- 
form and that those who challenge exist- 
ing political systems maintain their 
democratic integrity and refrain from 
violence or unrealistic, destabilizing de- 
mands. The United States will never in- 
terfere in these domestic processes, but 
we will maintain our prerogative to 
work with both governing officials and 
reformers to preserve democratic insti- 
tutions and processes. 

Alliance stresses will test and 
repeatedly prove the resilience of our 
mutual treaty commitments. Sources of 
disagreement may be periodic and 
varied, but we are prepared to adopt an 
orderly approach to any problems that 
arise through regular consultations with 
our allies. It is incumbent on both us 
and our allies to remain cognizant of the 
threats to our common interests and of 
the potential ripple effects of any dis- 
putes that defy ready reconciliation. I 
believe all of us share a responsibility to 
discuss and reconcile our differences 
harmoniously and to continually nurture 
attitudes of resilience based upon com- 
mon recognition of both threats and 
benefits. 

Soviet political and military chal- 
lenges to East Asia and the Pacific have 
grown, and Moscow most likely will con- 
tinue to probe the vulnerabilities of the 
region. There is no reason for undue 
alarm in this regard— Soviet success to 
date has been negligible— but we and 
our allies must remain alert and resolute 
in resisting new incursions. Other 



challenges, of course, lurk on the 
horizon, and the United States always 
will try to stay ahead of events to pro- 
tect peace and defend its interests and 
objectives. 

Conclusion 

Teamwork has been the hallmark of 
America's phenomenal achievements 
through history, and I believe it will 
spell success for our relations with the 
Asian-Pacific states as well. If we are 
able to W'Ork together— to consult, to 
cooperate, to combine our resources 
efficiently— there is no goal too high and 
no threat too powerful to blunt the aspi- 
rations of our peoples. This fundamental 
theme of regional partnership will 
propel our nations forward together into 
the 21st century. 

The Asian-Pacific region is changing, 
and with change come new and different 
challenges for us all. The United States 
does not resist change; nor does it 
shrink from challenge. We propose to 
anticipate change and to help channel it 
where possible in constructive direc- 
tions. But we also intend to protect and 
preserve those interests essential to 
security and stability. As Americans, we 
will stand by our allies and friends, as- 
sist where requested, advise as neces- 
sary, and accept advice and support in 
return. Surely our own interests, objec- 
tives, and values, and global stability in 
general will benefit by it. ■ 



Prospects for Continuing 
Democratization in Korea 



by Gaston J. Sigur, Jr. 

Statement before the Subcommittee 
on Asian and Pacific Affairs of the 
House Foreign Affairs Committee on 
April 16, 1986. Dr. Sigur is Assistant 
Secretary for East Asian and Pacific 
Affairs. 1 

I appreciate this opportunity to testify 
before the subcommittee in connection 
with the Administration's policy toward 
the Republic of Korea. 

A natural focus of attention, both in 
Korea and abroad, is the drama of 
Korea's sometimes heated partisan poli- 
tics. Accordingly, I will address current 
Korean domestic developments in some 



detail today, and I look forward to your 
questions. Current Korean developments 
need to be seen in a broader perspective 
to enable us to make balanced judg- 
ments about the meaning of partisan 
competition there and about the role the 
United States can or should play. 
Whether we look at South Korean poli- 
tics historically or in comparison with 
North Korea, there are strong grounds 
for optimism. 

Korea has been surrounded by 
larger and more powerful states through 
much of its history but successfully sur- 
vived as a strong and culturally unique 
nation. A traditional agricultural society 
just a few decades ago and devastated 
by the Korean war, South Korea has 



progressed economically at a rate virtu- 
ally unmatched in the world. 

Politically, Korea was a monarchy 
for most of its history. In the 20th cen- 
tury, Korea was subjected to Japanese 
colonial rule from 1910 to 1945. The un- 
settled period after liberation was fol- 
lowed by the Korean war and the need 
for massive reconstruction in the 1950s. 
In the few years of relative stability 
since then, South Korea has clearly es- 
tablished itself as a member of the free 
world with an increasingly open and in- 
ternationally oriented society and econo- 
my. The values of democracy and humar 
rights which we hold dear are gradually 
asserting themselves in spite of the 
authoritarian elements in the neo- 
Confucianism that permeates all sectors 
of traditional Korean political culture. 

In contrast, North Korea has chosen 
communism, isolation from the world, 
and xenophobia. The cult of personality 
is so intense that Kim Il-Song is pre- 
sented to the people as virtually a god, 
and his son is apparently being groomed 
for the first dynastic succession in the 
communist world. Military expenditures 
eat up perhaps a fourth of its gross na- 
tional product, while standard consumer 
goods are rare luxuries of the vast 
majority of North Korea's people. The 
North Korean economy is stagnant and 
beset with the shortages, dislocations, 
and inefficiencies that characterize com- 
mand economies. The vast majority of 
North Koreans have no opportunity to 
exercise basic human rights nor partici- 
pate in the decisions which shape their 
lives. The government takes such care 
to limit, control, and "purify" all infor- 
mation reaching its population that the 
people have no way to compare their 
situation to that in other countries. 

South Korea's Basic Consensus 

Given Korea's history and the quite 
different course taken by North Korea, 
how has the Republic of Korea been 
able to make such remarkable progress? 
Many reasons could be put forward, and 
any answer is necessarily complex. I be- 
lieve that a major factor is that South 
Korea has enjoyed a remarkable consen- 
sus ever since the North Korean inva- 
sion of 1950— a fundamental consensus 
often obscured by soaring political 
rhetoric. 

From the experience of the Korean 
war, the people of South Korea 
became— and remain— virtually unani- 
mous in their concern over the threat 



46 



Department of State Bulletin 



EAST ASIA 



sed by the North. Thus, no major 
luth Korean figure, either in the 
ivernment or in the opposition, calls 
r the withdrawal of American forces 
a reduction in U.S. foreign military 
les credits or any attenuation of the 
eadfast American security commitment 
at has successfully deterred North 
area these past decades. Both govern- 
ent and opposition parties support dia- 
jue with North Korea but are 
icompromising in the belief that the 
mth must remain part of the free 
orld. 

There is also fundamental agreement 
at the market economy plays a key 
]e in economic progress. Korea's 
storical poverty and the economic 
•privations and dislocations of the 
orean war made the Korean people 
;sperate for economic progress, 
orea's economic successes, based on an 
itward-looking and market economy 
nee that war, have transformed a 
talistic people into one of the world's 
ost ambitious and optimistic. 

olitical Development 

here is also a consensus in South 
orea on the need for progress toward 
reater democracy— a goal espoused by 
irtually all political parties there since 
le Korean war. Yet the realization of 
lis goal remains one of Korea's most 
B.xing problems. 

Political power in Korea has histori- 
illy been concentrated in the ruling 
arty. Government and opposition forces 
>ught bitter factional disputes to wrest 
r maintain all the apparatus of state, 
larely was there the kind of dialogue 
nd compromise Americans take for 
ranted which nurtures mutual trust 
nd transforms politics into something 
lore than a zero-sum game. Surrounded 
y major powers. Korean factions be- 
anie adept at seeking foreign allies to 
ive them advantage in their domestic 
truggles. 

Modern analogues of these tradi- 
ional attitudes continue to create 
iroblems in South Korean politics and, 
ncidentally, our efforts to encourage 
urther democratization and greater 
espect for human rights. Nonetheless, 
ve believe that South Korea is on the 
oad to a more democratic system. In 
his regard, we have welcomed as a step 
if great importance President Chun Doo 
iwan's pledge to step down at the end 
>f a single 7-year term in March 1988. 
/irtually unprecedented in Korea, his 
voluntary action should set the stage for 
urther progress toward democracy. 



Constitutional Revision Campaign 

There appears to be general agreement 
in Korea that President Chun will step 
down in 1988, and so the political focus 
has shifted to the mechanism by which 
the next president will be elected. The 
opposition is demanding constitutional 
revision so that the next presidential 
election will be determined by direct 
popular vote rather than through the 
current electoral college system. While 
the electoral college itself is popularly 
elected, the opposition maintains that 
the Korean Government can more easily 
manipulate the approximately 5,000 elec- 
tors than an electorate of over 20 mil- 
lion. Opposition efforts in the National 
Assembly last year to persuade the rul- 
ing party to agree to the formation of a 
committee for constitutional revision 
resulted in a ruling party offer to set up 
a committee to "study" the constitution. 
This proposal was rejected by the 
opposition. 

With a minority in the National A- 
ssembly, the main opposition party, the 
New Korea Democratic Party (NKDP), 
decided to take its case to the public 
through a nationwide petition campaign. 
President Chun and the ruling Demo- 
cratic Justice Party (DJP) strongly 
opposed the petition campaign, declaring 
it illegal and arguing that it threatened 
the political stability necessary to stage 
a successful Olympic games in Seoul in 
1988. In his state of the nation address 
in mid-January, President Chun said 
that South Korea had formerly tried 
both direct and indirect electoral sys- 
tems, but neither system had been suffi- 
cient in itself to bring about the political 
progress all Koreans desired. 

The NKDP, along with the Council 
for the Promotion of Democracy (CPD) 
led by Kim Young Sam and Kim Dae 
Jung, launched a nationwide petition 
campaign for direct elections on Febru- 
ary 12. The Korean Government initially 
tried to prevent activities on behalf of 
the campaign. Government measures in- 
cluded police cordons around the NKDP 
and CPD offices, intermittent house ar- 
rests of political figures, and arrests of 
students demonstrating in favor of con- 
stitutional revision. 

After about 2 weeks of confronta- 
tion, President Chun suddenly met with 
ruling and opposition party heads. He 
indicated that the measures taken by 
Korean police had been "excessive" and, 
henceforth, the government would be 
more tolerant of NKDP petition efforts. 
However, he reaffirmed his view that 
constitutional revision could be 



considered only after he left office and 
following the Olympics. He said a presi- 
dential commission would be established 
and that he would support the formation 
of a multipartisan National Assembly 
committee to study post- 1988 constitu- 
tional revision. After the meeting, the 
NKDP repeated that constitutional re- 
form must come before the next presi- 
dential election. 

Following the meeting, the NKDP 
launched a series of rallies in majo- 
rities to support the petition campaign. 
The first rally, which took place in Seoul 
on March 11, attracted several thousand 
people. Among the speakers was opposi- 
tion leader Kim Young Sam who, for 
the first time since 1980, delivered a 
major public address. His colleague Kim 
Dae Jung, however, was prevented by 
police from attending this and subse- 
quent rallies on the grounds that such 
activity was ipso facto "political" and 
would, therefore, subject him to reim- 
prisonment under the terms of his sus- 
pended sentence. The rally also featured 
a peaceful march through downtown 
Seoul. The police did not intervene and 
assisted with traffic control. 

On succeeding weekends, similar ral- 
lies in Pusan and Kwangju drew crowds 
in the tens of thousands, while a rally in 
Taegu was somewhat smaller. The ral- 
lies themselves were peaceful, but 
groups of several hundred persons, 
mostly students, violently confronted 
police after the rallies had ended. Some 
of these demonstrators were detained 
by the police, who were given high 
marks by most observers for their re- 
straint and professionalism. Several 
dozen demonstrators have been indicted, 
as have a number of students who en- 
gaged in petition activities on campus 
since the start of the spring semester. 

Immediate Background to the 
Government-Opposition Debate 

The current intensified government- 
opposition debate came after President 
Chun decided in late 1983 to pursue a 
more relaxed domestic policy. Virtually 
all prisoners in politically related cases 
were released. The ban was gradually 
lifted from Koreans who had been 
barred from political activity. Students 
were permitted to demonstrate on cam- 
pus for the first time in years. Perhaps 
most significantly, last year's February 
National Assembly election was one of 
the most open in South Korea's history, 
and the newly created NKDP beat the 
less outspoken, former main opposition 



luly 1986 



47 



EAST ASIA 



party. The result was a generally more 
open political climate. 

Not unexpectedly, greater opportu- 
nity to exercise freedom of expression 
resulted in increased public criticism of 
the government. In the National Assem- 
bly, the opposition raised such pre- 
viously taboo issues as the 1980 
Kwangju incident and personal criticism 
of President Chun and his family. On 
campus, student activists engaged in 
nonstop debate and increasingly at- 
tempted to take to the streets, despite 
the government's continued ban on 
street protests. Student tactics became 
more violent: Molotov cocktails were 
thrown at police attempting to block 
student demonstrations from leaving the 
campuses. There was increasingly van- 
dalism by small groups of students 
against government offices, and some 
government offices were occupied as a 
means of protest. 

Not all student occupations were 
aimed at government offices. On May 23, 
1985, 73 Korean college students oc- 
cupied the American Cultural Center 
Library in Seoul. They demanded, 
among other things, an apology for the 
alleged U.S. Government role in the 
1980 Kwangju incident. For 3 long days, 
U.S. Embassy officials talked with the 
students, who were finally persuaded to 
leave the library peacefully. 

As senior Embassy officials said at a 
press conference following the student's 
departure, we do not feel that these or 
most other students are anti-American 
or procommunist. They acted on the 
basis of a limited and often inaccurate 
understanding of U.S. policy in Korea. 
We continue our efforts to explain our 
role in Korea. We do not anticipate that 
anti-American sentiment among students 
or other Koreans will emerge as a 
significant issue. 

In reaction to occasionally violent 
student protests and increasing criticism 
within the National Assembly, in June 
1985 the Korean Government began 
again to arrest demonstration leaders. 
Legal action was taken against dissident 
and youth activist groups believed to 
support the students. During the fall 
semester of 1985, police began to pre- 
vent demonstrations on campus. With 
the beginning of the spring semester 
this year, the head of the Korean police 
declared that no politically motivated 
demonstrations would be permitted on 
Korean campuses. 

Though we heard very few reports 
in the previous 2 years about the old 
problem in Korea of police abuse of 
prisoners, reports that prisoners had 



been tortured increased in the fall of 
1985. In one case, we confirmed that a 
student activist was tortured; in another 
instance, three journalists were beaten 
by security personnel. We stated pub- 
licly at the time that we regard such 
charges with the utmost seriousness, 
and we continue to make our views 
known to the Korean Government. 

Prospects for Human Rights 
and Political Progress 

While there have been setbacks, we be- 
lieve Korea is still a freer place than it 
was a few years ago. The government- 
opposition debate is vigorous, as shown 
by last year's National Assembly elec- 
tion campaign, subsequent National As- 
sembly proceedings, and the opposition's 
recent series of rallies. President Chun 
has reassured the nation that he will 
step down in 1988, and he has offered 
some proposals about reform that could 
contribute to the dialogue. Although 
constrained by government guidelines, 
the Korean press does engage in some 
direct criticisms of the government, and 
it publishes considerably more indirect 
critical commentary. 

The U.S. Role 

In such a setting, what should be the 
American role? I believe we should con- 
tinue to encourage both the government 
and the opposition to practice modera- 
tion, to engage in dialogue, and to be 
willing to compromise, as these are 
values inherent in our democratic socie- 
ties. Similarly, we should condemn viola- 
tions of human rights and restrictions on 
political participation. It is important, I 
believe, that our efforts be on behalf of 
basic principles and practices rather 
than support of particular individuals or 
specific partisan points of view, which 
are matters which should rightly be left 
to the Koreans themselves. 

We must be aware that our influ- 
ence on the Korean political situation, 
while greater than that of other foreign 
countries, is, nevertheless, limited. We 
have no right to interfere directly in 
domestic matters. We should also ap- 
preciate that many Koreans, perhaps for 
historical reasons, have an exaggerated 
notion of our ability to influence events 
in Korea and have partisan reasons for 
urging us to do so. Because of these 
considerations, we need to be cautious 
in our public pronouncements so as not 
to raise expectations that we may not 
be able to meet. 



Finally, as I noted at the beginning 
of my testimony, Korea is a unique 
place, and we need to deal with it as 
such. There has been public speculation, 
both here and in Korea, about so-called 
parallels between Korea and the Philip- 
pines and prognostications about the 
implications of recent developments in 
the Philippines for our policies toward 
Korea. 

We believe the differences between 
Korea and the Philippines are more sig- 
nificant. In Korea, President Chun has 
promised to step down in less than 2 
years, and the economy is booming. 
Korea does not face a domestic com- 
munist insurgency but a real and im- 
mediate external threat, and the Korear 
military's professionalism is at a high 
level. We have, of course, encouraged 
continued democratization in Korea in 
the past, and we will continue to do so 
in the future. We believe that some suc- 
cess has been achieved. However, we 
should remember that ultimately it will 
be Korean efforts that nurture and 
achieve the open and more consensual 
political system that all Koreans desire. 



'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. ■ 



Aid to the 
Philippines 



WHITE HOUSE ANNOUNCEMENT, 
APR. 23, 1986' 

The President announced today a major 
program of economic and military sup- 
port for the Philippines. This program is 
based on an assessment of Philippine 
economic and military needs by a U.S. 
assistance team headed by Agency for 
International Development (AID) Ad- 
ministrator M. Peter McPherson and in- 
cluding senior Treasury, State, and 
Defense Department officials, which has 
recently concluded a visit to the 
Philippines. 

During their stay in Manila, the 
delegation members met with President 
Aquino and conducted extensive discus- 
sions with senior economic and military 
officials of the Aquino government. The 
purpose of these discussions was to as- 
sess how the U.S. Government might be 
helpful in supporting the new govern- 



48 



Department of State Bulletir 



EAST ASIA 



snt in its efforts to address Philippine 
onomic and military problems. 

The Philippine economy faces a num- 
r of severe problems which, if they 
e to be resolved, will require a sus- 
ined effort by the Philippine people 
id Government and the support of the 
ternational financial community. This 
fort will involve both people-to-people 
■ograms designed to meet the immedi- 
e needs of the poorest segments of the 
ipulation and policy changes that will 
y the basis for lasting job creation and 
■owth. 

With respect to policy changes, the 
tiilinpine economic officials outlined the 
lund, market-oriented economic poli- 
es, both macroeconomic and structural, 
hich the government intends to pursue 

order to restore sustainable, job 
•eating, and non-inflationary growth in 
le Philippine economy. The U.S. team 
elcomed these policy directions and 
3ted that in recent weeks confidence in 
le financial community regarding 
hilippine economic policies and 
rospects had increased. The U.S. team 
lared that increased confidence. 

In response to this new and prom- 
ing economic situation, the U.S. 
■overnment intends to support the ef- 
)rts of the Philippine Government to 
leet its pressing financial needs 
nrough bilateral assistance programs, 
rade and investment policies, and par- 
icipation in the multilateral financial in- 
titutions. 

Jilateral Economic Assistance 

'he United States plans to increase its 
lilateral economic assistance to the 
•hilippines in both quantitative and 
[ualitative terms. The elements of the 
oreign assistance package include a 
ligher level of funding, acceleration in 
he disbursement of funds already ap- 
iropriated, and better terms under 
vhich funds are made available: 

• A request to Congress in FY 1986 
or authorization and appropriation of an 
idditional $100 million in economic sup- 
>ort funds (ESF); 

• Acceleration of disbursement, as 
easible, of the currently authorized 
pipeline of about $200 million in ESF 
iinds; 

• Conversion of $100 million of de- 
velopment assistance funding from loan 
;o grant, thus providing a total of $140 
million of grant development assistance; 
and 



• An expansion of food imports un- 
der PL 480, Title 1, and the President's 
sugar compensation program, as author- 
ized by Section 416 of the Agricultural 
Act of 1949 (as amended), from $35 to 
$50 million. 

This funding, which totals about 
$500 million, will all be on a grant basis 
except the PL 480, Title I, which is on a 
highly concessionary loan basis. Thus 
our assistance will provide economic 
support without adding appreciably to 
the large external debt burden inherited 
by the Aquino government. 

In addition the United States is de- 
veloping, on an urgent basis, a substan- 
tial increase in people-to-people 
assistance, such as school and child feed- 
ing, food for work, and health programs 
to reduce infant and child mortality. 
These programs are generally ad- 
ministered by private voluntary and 
church organizations. We also expect to 
work closely with the Peace Corps pro- 
gram in the Philippines. One target for 
this expanded effort is the severely 
depressed sugar producing region on 
Negros Island. The increased funding 
for these programs will come from PL 
480, Title II, and Section 416, and will 
approximately double the currently pro- 
grammed level of $7.7 million. 

Finally, the U.S. assistance program 
will seek, to the extent feasible, to give 
direct support to private sector develop- 
ment, utilizing various funding sources 
including new authorities for the PL 480 
title program contained in Provision 
1111 of the Food Security Act of 1985. 

Trade and Investment 

The United States will take the follow- 
ing measures in the area of trade and 
investment policy in support of the 
Aquino government's economic program. 

GSP-$219 million of Philippine ex- 
ports benefited from the U.S. general- 
ized system of preferences in 1985, and 
the Philippines was the 12th largest 
user of the program. We will be work- 
ing with the Philippine Government on 
ways to expand and improve their use 
of this program. 

Textiles— Philippine textiles exports 
totaled $431 million in 1985 under the 
existing bilateral agreement that ex- 
pired at the end of this year. We will 
approach the forthcoming negotiations 
for a new agreement with a view to as- 
suring continuing reasonable growth of 
textile exports during the critical period 
of Philippine economic recovery ahead. 



Eximbank— All Eximbank programs 
are available to support Philippine im- 
ports from U.S. suppliers. Short-term 
financing for recent shipments amounts 
to $90 million. Support for $230 million 
remains available, and this is expected 
to meet current Philippine needs. 

OPIC— The Overseas Private Invest- 
ment Corporation is prepared to expand 
its insurance and guarantee programs in 
the Philippines as new investment 
projects develop. It also has available 
direct lending resources, particularly for 
joint ventures engaged in by small- and 
medium-size companies. We will be dis- 
cussing with the Philippine Government 
and the U.S. private sector the possibili- 
ty of an OPIC investment mission be- 
fore the end of the year. 

DOC-The U.S. Department of Com- 
merce is in touch with the Philippine 
Government regarding resumption on 
trade and investment missions to the 
Philippines and a series of Philippine 
trade/investment seminars to be held in 
the United States. 

The Multilateral Economic 
Framework 

The Philippine Government has ex- 
pressed strong interest in exploring the 
possibilities of taking advantage of the 
program for sustained growth, the ini- 
tiative taken last fall by Secretary of 
the Treasury Baker to strengthen the 
international debt strategy and support 
sustained growth in middle-income 
debtor countries. 

The U.S. economic team welcomed 
the Philippine Government's interest in 
the Baker plan and expressed the view- 
that the broad policy directions of the 
Philippine authorities should position it 
well to take advantage of the opportuni- 
ties provided in the Baker plan to 
achieve sustained economic growth. 

In this connection, the Philippine 
Government stated it was engaging in 
early discussions with the following in 
order to develop support for its macro- 
economic policies and structural reforms: 
the International Monetary Fund (IMF), 
the World Bank (IBRD), the Interna- 
tional Finance Corporation (IFC), the 
Asian Development Bank (ADB), and 
commercial banks. 

The Philippine Government has also 
expressed its interest in an early meet- 
ing with other bilateral, as well as mul- 
tilateral, donors in order to mobilize 
their support for Philippine economic 
recovery. The United States agrees to 
participate in such a meeting and will 



July 1986 



49 



EAST ASIA 



work actively to assist the Government 
of the Philippines in arranging an early 
meeting. 

Military Assistance 

Additional military assistance is urgent- 
ly needed for basic requirements- 
logistics, communications, transporta- 
tion, and troop support— and to help pro- 
mote military reforms. Our support 
package contains: 

• A request to Congress in FY 1986 
for authorization and appropriation of an 
additional $50 million in the military as- 
sistance program (MAP); and 

• Conversion of approximately $24 
million of prior year, unused foreign 
military sales (FMS) credits to MAP 
grants and replacement, of $50 million 
FMS credits with MAP grants in the 
1987 budget request. 

The Aquino government has clearly 
demonstrated the intention to carry out 
needed economic and military reforms. 
President Aquino has also promised that 
a constitutional commission will draft a 
new constitution to be submitted to the 
people for ratification and that there 
will be elections for local officials and 
members of the legislature under the 
new constitution. 

The economic and military assistance 
contained in their package will serve as 
an important manifestation of support 
from the American people to the Philip- 
pine people as they face the very 
difficult challenges ahead. 

Budget Impact 

The President's request includes provi- 
sion for offsets for the additional 
$100 million in ESF and $50 million in 
MAP funds to remain within overall 
budget totals. 



U.S. Assistance to the Philippines 



'Text from Weekly Compilation of 
Presidential Documents of Apr. 28, 1986.1 



by John C. Monjo 

Statement before the Subcommittee 
on Asian and Pacific Affairs of the 
House Foreign Affairs Committee on 
May 15, 1986. Mr. Monjo is Deputy As- 
sistant Secretary for East Asian and 
Pacific Affairs 1 

I welcome this opportunity to continue 
the long-established dialogue with the 
subcommittee on the situation in the 
Philippines and U.S. relations with that 
key allied nation. 

The formulation and implemention of 
our Philippine policy objectives over the 
last several years has been the result of 
close consultations between the execu- 
tive and legislative branches. We have 
worked hard to build a consensus on our 
Philippine policy. The effectiveness of 
our foreign policy is invariably enhanced 
when the U.S. Government speaks with 
one voice. We look forward to a sus- 
tained, productive dialogue with you and 
the members of your subcommittee 
regarding all aspects of our relations 
with the Philippines. 

In my testimony today, I intend to 
look briefly at the accomplishments of 
the new Philippine Government and 
examine the challenges that remain to 
be faced and then turn to our policy ob- 
jectives in the Philippines. I will 
describe the ways in which the United 
States is prepared to assist the Philip- 
pines to address longstanding economic 
and security problems. The President 
announced last month our proposal for 
additional assistance to the Philippines, 
which we believe strongly is required 
during the current fiscal year. Secretary 
Shultz has just returned from a visit to 
the Philippines where he discussed the 
thrust of our proposed assistance pro- 
gram with President Aquino and the 
senior members of her government. I 
will outline the nature of our proposed 
enhanced bilateral aid package and its 
justification. 

The Accomplishments 
and Challenges 

Political. President Aquino enjoys 
broad popular support. Filipinos per- 
ceive her government as honest and 
committed to justice for the common 
man. Nevertheless, her government 
faces new political challenges that stem 
from the unique nature of politics in the 
Philippines. 



The first challenge facing President 
Aquino has been the creation of a new 
political order. President Aquino's earli- 
est success in this regard was the ap- 
pointment of a cabinet including 
experienced, respected professionals 
representing a broad political spectrum. 
The economic team in particular has 
demonstrated a pragmatic, free- 
enterprise orientation. 

Her next step was to proclaim on 
March 25 a provisional constitution 
based on the 1973 "Marcos" constitution 
but without the legislative elements. 
She abolished the National Assembly 
and temporarily assumed broad legisla- 
tive powers. She also assumed authority 
for 1 year to replace all local officials 
and government employees. The provi- 
sional constitution, significantly, protects 
civil rights and makes all presidential 
legislation subject to judicial review. In 
this regard, a new 7 Supreme Court- 
composed of members that Filipinos con- 
sider to be of highest integrity— is in 
place. 

At the same time, she announced 
her plan and, most importantly, a 
timetable to return the country to fully 
constitutional government. The first ele- 
ment is the selection by late May of an 
appointed commission to write a new 
constitution. The commission has 90 
days to complete a draft, after which it 
will be submitted to the people in a 
plebiscite. Following ratification of the 
constitution, elections for local officials 
and a new legislature are to be held. 
Current speculation is that these elec- 
tions will be held toward the end of the 
year. 

President Aquino faces several for- 
midable political tasks that will put her 
government to the test. These tasks 
include: 

• Working effectively with the 
sometimes competing political forces 
within her government; 

• Retaining the momentum she has 
developed to reform or replace existing 
political institutions; 

• Dealing constructively with sup- 
porters of the former government in the 
positive spirit of reconciliation that 
marked her political victory; and 

• Installing, where necessary, capa- 
ble, reformist local government officials 
responsive to the needs of the local 
populace until local government elec- 
tions take place. 



50 



Department of State Bulletiril 



EAST ASIA 



All these issues are Philippine issues 
,t Filipinos will resolve. However, vir- 
lly all observers in the United States 
1 the Philippines— with the exception 
the Communist Party of the Philip- 
es (CPP) and its military and political 
nt organizations— anticipate and sup- 
•t an early return through elections to 
ly functioning democratic institutions. 
mocratic institutions— including a new 
tstitution ratified by plebiscite, a new 
cted legislature, and elected local 
.•ernments— are the key to the long- 
m political stability of the country. 

Economic. The economy presents 
:-haps the most complex problem but 
o one with great potential for a rela- 
ely quick turnaround. The Philippine 
)nomy has been contracting since 
33. The new government faces a 
avy foreign debt burden, massive 
employment, extensive urban and 
ral poverty, and a severely depressed 
'estment environment. The major sec- 
•s of the economy— agriculture, min- 
r, manufacturing— have all been stifled 

a statist approach, ill-conceived regu- 
ion, and the encouragement by the 
evious government of public and pri- 
te monopolies. 

Unwise policies and excessive 
vernment intervention, in addition to 
Ecult world markets for the Philip- 
ies' key exports, left an economic 
ructure deficient compared to other 
SEAN [Association of South East 
sian Nations] countries. Traditional 
antation agriculture is in trouble, 
ibor-intensive and light industries are 
iderdeveloped, and heavy industry is 
rgely based on products for which the 
lilippines does not enjoy a compara- 
;e advantage. 

The market-oriented economic team 
ithin the Aquino government is al- 
|ady seeking to promote deregulation 
nd liberalization of the economy in 
rder to spur positive growth in ex- 
orts, imports, production, and invest- 
lent. There is a new spirit and 
dllingness by the government to con- 
ult with business, labor, and consumer 
roups on the choice of economic 
olicies. 

The new economic leadership has 
ientified critical reforms which can go a 
sng way toward restarting the engines 
f economic growth. These include: 

• Allowing the peso to respond to 
breign exchange market forces; 

• Canceling decrees setting up 
nonopolies in such sectors as sugar, 
:oconuts, chemicals, etc.; 



• Dismantling public sector financial 
entities and privatizing numerous public 
corporations; 

• Liberalizing import restrictions, 
including removal of bureaucratic re- 
straints on trade; and 

• Eliminating price controls on cer- 
tain agricultural products and establish- 
ing an efficient stabilization program for 
basic food commodities. 

The basic objectives of these re- 
forms are to restore free-market forces 
to the economy, increase the return to 
small agriculturalists, and bring about 
the growth of new and dynamic sectors 
of the economy. The Philippines has the 
trained labor force and the entrepre- 
neurial talent to transform its economy. 
If the new government implements 
these reforms and is successful in 
restoring business and investor 
confidence— and early indications based 
on stock prices and the peso exchange 
rate are that it will be— the future looks 
promising. Of course, the United States 
and other donors will have a role to 
play, which I will address later. 

Security. A serious, long-term 
threat facing the Philippines is the com- 
munist insurgency. The Communist 
Party of the Philippines— through its 
military arm, the New People's Army 
(NPA), and its overt front organization, 
the National Democratic Front (NDF)— 
is pursuing a classic military and politi- 
cal strategy intended to lead progres- 
sively, first to a military stalemate, then 
to a communist takeover of the central 
government. Their goals have not 
changed. 

The NPA is a traditionally orga- 
nized, rural-based communist insur- 
gency. The leadership is generally well 
educated, disciplined, and determined. 
They should not be underestimated. 
Their strategy is to work politically 
among the rural population and 
dominate the countryside, gather 
strength militarily through attacks on 
government troops, while simultaneously 
attempting to penetrate the social, eco- 
nomic, and political systems of the coun- 
try through united front activities. 

The NPA has not ceased its activi- 
ties since the accession of President 
Aquino. In fact, the number of victims 
of the NPA has jumped markedly in the 
past month. Over 600 people have been 
killed as a result of NPA activity since 
the end of February. 

Nevertheless, the coming to power 
of the Aquino government constitutes a 
setback for the insurgency because: 



• The new government, in contrast 
to the previous government, enjoys 
widespread popular support; 

• The principal propaganda target of 
the communists, the Marcos regime, is 
gone; and 

• The communist election boycott 
was repudiated by the majority of Fili- 
pino people by an even greater margin 
than during the 1984 National Assembly 
election. 

The government is now considering 
a cease-fire and amnesty program in 
response to the insurgency. The 
CPP/NPA has, thus far, avoided discus- 
sion of a nationwide cease-fire and has 
stated that it will not surrender its 
arms as a precondition. Should there be 
a cease-fire followed by a reasonable am- 
nesty program, nonideological NPA 
members will probably surrender. Some 
already have. But the hardcore elements 
will fight on. To believe otherwise is to 
underestimate the discipline and indoc- 
trination of the communists. 

The challenge for the government is 
clear. A comprehensive counterinsur- 
gency strategy under joint civilian- 
military leadership, as well as an 
amnesty component, is needed. Most 
importantly, the strategy has to address 
the root causes of the insurgency: 
poverty, ineffective and unresponsive 
local government, and military abuses. 
Military reforms aimed at restoring dis- 
cipline and respect for human lights 
must be part of the effort. Restoration 
of competent and dedicated leadership 
at the senior levels of the armed forces, 
as recently initiated by the new govern- 
ment, is also essential to a reinvigo- 
rated, professional military. The 
installation of reformist local govern- 
ments with close ties to the local 
populace is another element. 

Meanwhile, political groups and 
other entities will have to continue to be 
vigilant to CPP/NDF attempts to pene- 
trate and. dominate their institutions. 

U.S. Policy Objective and Goals 

U.S. policy is founded on our desire to 
help the Philippines in all appropriate 
ways to meet the challenges I have just 
outlined and to help resolve the myriad 
problems left by the Marcos regime. 

Our primary objective is to promote 
a close, productive bilateral relationship 
with the Aquino government and sup- 
port its efforts to restore fully function- 
ing democratic institutions in the 
Philippines. Such a relationship will 
build on shared national interests, 



uly 1986 



51 



EAST ASIA 



historically close institutional and per- 
sonal ties, and on mutual recognition of 
and respect for each nation's indepen- 
dent concerns. 

In support of that objective we have 
set several policy goals: 

First, to forge stronger links with 
the new generation of Filipino leaders; 

Second, to assist as appropriate in 
Filipino efforts to restore economic 
prosperity to the country; 

Third, to enhance the effectiveness 
and professionalism of the Philippine 
Armed Forces; and 

Fourth, to maintain a continued, 
close defense relationship with the 
Philippines. 

To accomplish the economic and 
security goals, which are priorities of 
both the Aquino government and the 
United States, we have proposed a pro- 
gram of enhanced economic and security 
assistance which I will describe below. 

The strength of the Philippine- 
American relationship has always been 
in the close links forged between the 
Filipino and American peoples. These 
links were hardened in the fires of 
World War II. But the World War II 
generation is being replaced by another 
generation, and we need to renew our 
links. For this reason, we look forward 
to a much more active program of ex- 
changes, both governmental and pri- 
vately sponsored. We are working to 
create new linkages between U.S. and 
Philippine universities through student 
and faculty exchanges. The details re- 
main to be worked out, but the goal is 
clear. 

Our security interests are longstand- 
ing and well understood. The U.S. facili- 
ties in the Philippines serve vital 
security interests of both Washington 
and Manila. They contribute signifi- 
cantly to the security and stability of 
the region as a whole. This important 
role is recognized by the Philippines' 
ASEAN partners and other friends in 
the region. President Aquino's position 
with regard to the U.S. facilities at 
Subic and Clark is clear. She has 
pledged to respect the existing military 
bases agreement and to keep her op- 
tions open. 

We look forward to a strong, effec- 
tive defense relationship with the Aqui- 
no government. The preservation of our 
important security interests in the 
Philippines and our vigorous support for 
democratic reforms in that country are 
mutually reinforcing elements of the 



same policy. We believe that our secu- 
rity relationship will be strongest with 
an independent, democratic, and stable 
Philippines. 

Program of Enhanced Economic 
and Security Assistance 

The President has sent to the Congress 
a proposal for a substantially increased 
economic and security assistance pack- 
age for FY 1986 targeted to support 
President Aquino's program for eco- 
nomic recovery and reform in the Philip- 
pines. The support package for the 
Philippines, in addition to a request for 
a $150 million supplemental appropria- 
tion in the current fiscal year, contains 
several other significant provisions to 
accelerate fund disbursements and ease 
the tertns of ongoing assistance pro- 
grams. In total, about $500 million of 
economic assistance and over $100 mil- 
lion of military assistance would be 
available to the Philippine Government 
in FY 1986, more than 90% on a grant 
basis so as not to aggravate that coun- 
try's already heavy external debt 
problem. 

We are also taking measures in the 
trade and investment fields to help in- 
vigorate the Philippine private sector, in 
keeping with economic reform policies 
being implemented by the Philippine 
Government. These include new agree- 
ments with the Philippines on the gener- 
alized system of preferences and on 
textile quotas as well as expanded in- 
volvement by the U.S. Export-Import 
Bank and the Overseas Private Invest- 
ment Corporation. 

The United States is not alone in 
supporting the Philippine Government. 
We are one part of a multilateral effort, 
which includes the International Mone- 
tary Fund (IMF), the World Bank, the 
International Finance Corporation, the 
Asian Development Bank, and Japan 
and other donor countries. In late May, 
the United States will participate with 
other major bilateral and multilateral 
donors in a World Bank-sponsored con- 
sultative meeting to be held in Tokyo. 
The purpose will be to coordinate donor 
efforts and to discuss with Philippine 
Government representatives their coun- 
try's economic problems and prospects 
for recovery. The private banking sector 
also has a very significant role to play. 
This multilateral approach is, in fact, 
fully in keeping with proposals made 
last year by [Treasury] Secretary Baker 
at the World Bank/IMF meetings in 
Seoul. Our proposed new aid program is 
based on an assessment of Philippine 



economic and military needs by a U.S. 
assistance team headed by AID Ad- 
ministrator M. Peter McPherson and in- 
cluding senior Treasury, State, and 
Defense Department officials, which 
visited the Philippines in mid-March. 
The delegation members met with Presi 
dent Aquino and conducted extensive 
discussions about the new government's- 
needs and priorities with senior econom- 
ic and military officials. 

The Philippine Government has out- 
lined sound, market-oriented economic 
policies, which it intends to pursue in 
order to restore sustainable, job- 
creating, and noninflationary growth in 
the Philippine economy. We applaud 
these policy directions and note that in 
recent weeks confidence in the financial 
community regarding Philippine eco- 
nomic policies and prospects has been 
increasing. 

Additional military assistance is also 
urgently required for basic require- 
ments—logistics, communications, trans- 
portation, and troop support— and to 
help promote military reforms. Philip- 
pine Government representatives made 
clear the need for increased military aic 
in discussions with the McPherson team 
and with [Defense] Secretary Wein- 
berger earlier this month. The Aquino 
government has also clearly demonstra- 
ted the intention to carry out needed 
provements to restore professionalism 
and capabilities to the armed forces. 

Conclusion 

Let me conclude with two thoughts. 
First, the assistance we are proposing 
will serve as an important manifestation 
of support from the American people to 
the Philippine people as they face the 
very difficult challenges ahead. Given 
our long association with the Philippines 
and our continuing important interests 
there, we ought to do all that we can in 
the way of appropriate assistance at thi 
critical juncture in their history. 

Second, the challenges faced by the 
Philippines will not be resolved simply 
through the application of external 
financial resources. They will be 
resolved only as a result of the sus- 
tained efforts of the Filipino people 
working within a sound policy frame- 
work to rebuild their political and eco- 
nomic institutions and bringing to bear 
the energy, dedication, moral strength, 
and skills which they employed to 
resolve their political problems in 
February. 



52 



Department of State Bulletii 



EAST ASIA 



Secretary Shultz summed this up in 
inila upon his departure on May 9 as 
lows: 

. . .the keen recognition of the problems 
tl the readiness to go to work on them 
!an that these problems, while severe, are 
sk-ally problems that can be solved. And I 
;1 certain that they're on the way to being 
ved. 

The U.S. role, and that of the inter 
tional financial and donor community, 
to provide those resources and pro- 



grams the Filipinos themselves identify 
as essential to support their efforts. We 
believe the assistance package we have 
developed is responsive to Philippine 

needs and priorities, and we solicit your 
support for it. 



'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. ■ 



isit of Japan's Prime Minister 



Prime Minister Yasuhiro Nakasone 
Japan made an official working visit 
Washington, D.C, April 12-U, 1986, 
meet with President Reagan and 
her government officials. 

Following are remarks by the Presi- 
nt and the Prime Minister after their 
eeting on April U. 1 

resident Reagan 

•ime Minister Nakasone and I have 
st completed 2 days of discussions on 
lateral and global issues. And I'm 
ippy to report that the relationship be- 
/een our two countries remains strong 
id vital. Our meeting has reaffirmed 
y conviction that the close relationship 
;tween us is of immense importance 
r our two peoples and for the rest of 
le world. The friendship between our 
vo nations is mirrored in the personal 
;spect and affection that the Prime 
inister and I have for each other, an 
'fection that is held also by the 
ipanese and American peoples. 

Yesterday at Camp David and this 
oming here at the White House we 
id, as always, much to talk about. In 
iscussing relations between the United 
tates and the Soviet Union, including 
rms control, the Prime Minister ex- 
ressed his support for efforts toward 
le convening of a summit meeting with 
le Soviet Union. We agreed on the 
eed for the democratic nations to re- 
tain united. We also reviewed our 
efense relationship and reaffirmed that 
le U.S.-Japan treaty of mutual coopera- 
on and security is the foundation of 
eace and stability in the Far East and 
he defense of Japan. 

As you can imagine, the state of 
J.S.-Japan trade relations was a major 
spic during our meeting. But I told the 
'rime Minister that this issue is one of 




President Reagan and Prime Minister 
Nakasone at Camp David on April 13. 



vital concern to all Americans, as re- 
flected in the strong views of many in 
Congress. We agreed on the necessity 
to continue to intensify efforts to 
expand trade through better market 
access. The Prime Minister informed me 
that he is dedicated to fulfilling Japan's 
responsibility as the free world's second 
largest economic power to strengthen 
the international trading system. He 
and his government are committed to a 
national goal of reducing Japan's trade 
surpluses. 

The Prime Minister also informed 
me of an important, recent report which 
outlines some very significant changes 
that Japan intends to make. He is deter- 
mined to implement fundamental policy 
changes, and I applauded the Prime 
Minister's commitment to leading his 
nation toward an economic future more 
in harmony with the needs of global 
economy. 

The Prime Minister and I agieed on 
the vital importance that this plan in- 
volve a significant increase in Japanese 
imports, particularly of manufactured 
and other high, value-added goods. In a 
" similar spirit, I committed my Adminis- 



tration to launch a strengthened pro- 
gram to promote exports to Japan. The 
trade imbalance between the United 
States and Japan results from complex 
factors that will take time, vigorous 
efforts, and patience to correct. There 
are no quick or easy fixes, but we do 
know protectionism is not the answer. 
We've already made substantial 
progress and are convinced that work- 
ing together, with urgency and commit- 
ment, we'll find ways to solve our 
problems through a trading relationship 
that is both balanced and extraordinary. 

As part of this common effort, I've 
asked Secretaries Shultz and Baker, and 
the Prime Minister is instructing his 
relevant ministers, to pull together a 
broad group of high-level officials to dis- 
cuss structural economic issues of 
mutual concern. We will continue work 
on better market access. We discussed 
the Tokyo summit. Its preparations are 
going well, and the Prime Minister and 
I are looking forward to continuing our 
discussion next month in Tokyo with the 
expectation that the summit will reg- 
ister a message of bright hope for the 
future. We discussed a number of other 
regional topics, focusing on Asia, and 
shared in particular our thoughts on 
the progress being made by the new 
government in the Philippines and on 
the importance of assisting that govern- 
ment in dealing with its national 
problems. 

I note that Japan has become the 
second largest donor of economic as- 
sistance worldwide. Our governments 
will continue close consultations to in- 
crease the effectiveness of our individual 
contributions. The Prime Minister and I 
agree that we both have complex prob- 
lems and immense opportunities before 
us. The key to realizing the full poten- 
tial of this unique bilateral relationship 
is mutual understanding and close coop- 
eration. Together, there is nothing we 
cannot accomplish, and I might add that 
that was the spirit of our discussion dur- 
ing these past 2 days. 

Prime Minister Nakasone 

President Reagan and I met in a 
relaxed atmosphere over the weekend. 
The President and I share the views 
that we should work together to send 
throughout the Tokyo summit a mes- 
sage of a bright prospect for and confi- 
dence in the future to the peoples of the 
world— the developed and developing 
alike. 



July 1986 



53 



EAST ASIA 



We reaffirmed the importance of 
promoting world peace and disarma- 
ment, and of the U.S.-Soviet summit in 
this regard, and the necessity of promot- 
ing the new round of multilateral trade 
negotiations for the furtherance of the 
free trading system. The President and 
I had a frank exchange of views on eco- 
nomic issues between our two countries. 

Upon hearing once again the Presi- 
dent's strong determination to continue 
his resolute fight against protectionism, 
I expressed my firm support to him. I 
also discussed with him the role to be 
played by Japan to the same end. Japan 
upholds the principle of free trade. I 
talked with the President about these 
steps we have taken to improve Japan's 
market access in the past years and told 
him that Japan will continue its efforts 
to this end. The President and I share 
the recognition that a change which has 
taken place in the yen-dollar exchange 
rates will contribute to the adjustment 
of the trade relations between Japan 
and the United States. 

I told the President that Japan is 
determined to work at its national policy 
goal toward steadily reducing the cur- 
rent account imbalance to one consistent 
with international harmony. To this end, 
I believe that Japan must tackle the 
epoch-making task of structural adjust- 
ment and transform its economic struc- 
ture into one dependent on domestic 
demand, rather than exports leading to 
a significant increase in imports, partic- 
ularly of manufactured products. Re- 
cently, my private advisory group 
produced a report containing many vari- 
able recommendations in this regard. In 
order to translate the recommendations 
into policies, the government will set up 
a promotion headquarters which will for- 
mulate a work schedule very shortly. 

Structural adjustment is no easy 
task in any country. But Japan must ef- 
fect an historic turn, and I am deter- 
mined to accept that challenge. The 
President wholeheartedly welcomed this 
approach. 

At the same time, I hope that other 
countries will also deal with their own 
difficult problems through structural 
adjustment. Better convergence on poli- 
cies among the nations concerned will be 
a key to revitalization of the world econ- 
omy. The President and I welcomed the 
agreement reached yesterday to hold 
the bilateral dialogue of higher shelves 
on structural problems. 

I pay my respect to the President 
for his strong determination to work 
toward more stable East- West relations 
and substantial reduction of nuclear 



weapons and strongly hope that the 
momentum for U.S.-Soviet dialogue 
spurred by a summit meeting between 
the two leaders last November will 
move forward steadily. The President 
and I reaffirm the importance of main- 
taining close communication and coordi- 
nation among the countries of the free 
world. In this connection, I told the 
President that I highly value his efforts 
toward the total elimination of INF 
[intermediate-range nuclear forces] on a 
global basis with adequate consideration 
to the Asian region. 

In our discussions on regional issues, 
the President and I reaffirmed the need 
for Japan and the United States to fur- 
ther cooperate for the development and 
stability of the Philippines and their 
President Aquino and for us each to 
contribute to the stability of Central 
America and other countries, and to the 
improvement of economic situations and 
easing of the debt burden of the Euro- 
pean countries. 

I expressed to the President my ap- 
preciation for the fact that the defense 



relationship between Japan and the 
United States is now better than ever 
before and told him that Japan intends 
to proceed further with its efforts on it 
own initiative to improve its defense 
capabilities, together with further 
strengthening the credibility of the 
Japan-U.S. security arrangements. 

I am very happy to have been able, 
at your kind invitation to come to meet 
you in spring green of Camp David, to 
reaffirm my unshakable friendship with 
you. Today the cooperative relationship 
between Japan and the United States i 
expanding its truly global dimensions 
and is ever growing in importance. I ar 
convinced that we can overcome what- 
ever obstacles may stand in our way 
and make great contributions to peace 
and prosperity of all the peoples of the 
world if our two peoples trust each 
other and make the best possible use o: 
the vigor of each. 



'Made in the White House Rose Garden 
(text from Weekly Compilation of Presiden- 
tial Documents of Apr. 21, 1986. ■ 



FY 1987 Assistance Requests 
for East Asia and the Pacific 



by John C. Monjo 

Statement before the Subcommittee 
on Foreign Operations of the House 
Appropriations Committee on March 12, 
1986. Mr. Monjo is Acting Assistant 
Secretary for East Asian and Pacific 
Affairs. 1 

I appreciate this opportunity to present 
our fiscal year 1987 foreign assistance 
proposal for East Asia and the Pacific. 

U.S. interests are well served in the 
economic and military assistance we 
have given our allies and friends in 
Asia. By and large, the developing coun- 
tries in Asia have healthier economies 
and are moving forward faster than in 
any other area of the world. While this 
is due in large part to their own efforts, 
our assistance has been an important 
catalyst. In the field of security, we 
have contributed importantly to the sta- 
bility of the Korean Peninsula and to 
the ability of Thailand to resist Viet- 
namese incursions on its border with 
Cambodia. The Philippines faces a 
domestic communist insurgency, and I 
will be addressing this question. 



Our foreign assistance programs an 
a key element in our policy in the 
region which today faces a new and ac- 
tive Soviet diplomatic offensive. Soviet 
Foreign Minister Shevardnadze's visit 1 
Japan symbolizes this renewed activity 
which also witnessed a trip by a depub 
premier to Southeast Asia and commer 
cial offers in Southeast Asia and the 
Pacific. Moreover, the Soviet military 
buildup in the region is undiminished as 
are Moscow's ties to the aggressive 
Socialist Republic of Vietnam (S.R.V.) 
and the Democratic People's Republic c 
Korea (D.P.R.K.) regimes. 

At the same time, the nations of th> 
region are facing increasingly serious 
economic challenges. In addition to the 
economic problems of the Philippines 
with which we are all familiar, other ns 
tions in the region face major difficul- 
ties. Indonesia, which depends on oil fo 
80% of its export revenues and which 
relies on oil for 20% of its economic out 
put, faces the same economic problems 
as other high-population, low-income oil 
exporting nations. Given these prob- 
lems, the government has adopted an 
austerity budget with average cuts of 
22% for each department. Malaysia alsc 



54 



Department of State Bulletii 



EAST ASIA 



iticipates the worst downturn in its 
immodity-export based economy in 
er a decade. Thailand's friendly and 
?lpful government is having trade 
•oblems, and its debt service burden is 
)W very heavy. These economic diffi- 
ilties offer new opportunities for the 
Dviet diplomatic offensive and under- 
le the need for strong economic and 
scurity assistance programs to support 
lr interests. 

Overall our proposed assistance re- 
vests are in line with prior year pro- 
rams and our 1986 request. The 
icreases above 1986 appropriations 
^present an attempt to keep programs 
; the previously requested levels. In 
Y 1987 our total economic assistance 
jquest for the economic assistance pro- 
ram is $250 million and military as- 
stance is $492 million. 

Our assistance programs concentrate 
i the region's more threatened or vul- 
srable nations: the Philippines, the 
epublic of Korea, and Thailand. 

The assistance program for the 
hilippines was prepared before the re- 
;nt tumultuous events there, and we 
■e carefully reviewing the elements of 
jr future program. The fundamental 
Djectives of seeking structural reforms 
jeded to put its economy back on the 
ith of growth and military assistance 
i help promote reform and develop- 
lent of a professional military capable 
' meeting the challenge posed by the 
tmmunist insurgency will remain the 
ime. We must also fulfill the Presi- 
snt's "best-effort" commitment in the 
)ntext of the last 5-year review of the 
dlitary bases agreement. 

In Korea tensions remain high 
espite the beginnings of a welcome dia- 
igue between Pyongyang and Seoul. 
he threat of North Korean aggression 
;mains serious and immediate. We and 
or South Korean ally must remain es- 
ecially vigilant during the period lead- 
ig up to the 1988 Seoul Olympics which 
yongyang bitterly opposes. As our 
Korean ally is already devoting a large 
ortion of its GNP to defense, continued 
>reign military sales (FMS) credits are 
eeded if Korea is to meet the key 
bjectives of its force improvement plan. 

Thailand needs our assistance to 
chieve its development goals so that it 
in maintain a healthy economy in the 
ice of economic problems and effec- 
vely carry its share of our mutual 
scurity burden. Like Korea, Thailand is 
n ally allocating substantial resources 
d badly needed military modernization 
nd the creation of a credible deterrent 
3 Vietnamese aggression. 



The Soviet challenge dramatizes 
again the importance of the ASEAN 
nations [Association of South East Asian 
Nations] which sit astride the vital sea- 
lanes joining Asia with the Middle East 
and Europe. The United States and the 
free world have a critical interest in this 
important part of the world. Our security 
assistance programs in Malaysia, Singa- 
pore, and Indonesia and our economic 
assistance program in Indonesia help en- 
sure this stability. Just as our assistance 
to Thailand is part of our commitment 
to these ASEAN states, so is our back- 
ing of the noncommunist Cambodian 
resistance. We and the ASEAN nations 
are committed to assisting these non- 
communist forces. 

Finally, in the Pacific itself, we see 
the most active Soviet interest in an 
area of strategic importance to the 
United States. The regional fisheries 
agreement we are negotiating, as well 
as our continuing small assistance 
programs, are a small price to pay to 
protect our interests. 

As you can see our programs in 
East Asia and the Pacific, which make 
up only a modest portion of our world- 
wide foreign assistance requests for FY 
1987, are an important part of our policy 
in this key area of United States 
interest. 

The Philippines 

Our security assistance request for the 
Philippines is designed to address the 
critical needs of a key allied nation 
which has just undergone a historic and 
peaceful change in leadership and which 
continues to face a combination of politi- 
cal, economic, and security problems. In 
addition, the program is designed to 
support a vital defense relationship, 
including key support facilities for 
U.S. forces which are located in the 
Philippines. 

The basic framework for our request 
is a Presidential "best-effort" commit- 
ment made in connection with the 5-year 
review of our Military Bases Agreement 
in 1983. By letter to the Philippine head 
of state, former President Marcos, the 
President indicated his intention to seek 
a total of $900 million in security as- 
sistance ($125 million MAP— military as- 
sistance program, $300 million 
FMS— foreign military sales, $475 mil- 
lion ESF— economic support funds) for 
the Philippines during the 5-year period 
FY 1985-1989. Continuation of our as- 
sistance under this commitment would 
now serve to underscore the importance 
which we attach to this commitment 



which was made to the legitimate 
government and people of the Philip- 
pines, not just to the Marcos regime. 

Our security assistance thus relates 
closely to our ability to maintain unham- 
pered use of Clark Air Base, Subic 
Naval Base, and related installations, 
facilities that are crucial to our capa- 
bility to protect the sea- and airlanes of 
East Asia and much of the Pacific 
region and to provide logistical support 
for U.S. forces in the Indian Ocean and 
Persian Gulf. It also signals U.S. in- 
terest in helping the Philippines over- 
come its economic problems. 

Developments since the Presidential 
commitment was made have rendered 
the need for assistance all the more 
acute. As you are aware, we have just 
witnessed one of the most stirring ex- 
amples of the democratic process in 
modern history. In extending recogni- 
tion to President Aquino's government. 
Secretary Shultz stated: "We honor the 
Filipino people and stand ready to assist 
the Philippines as the government of 
President Aquino engages the problems 
of economic development and national 
security." 

The Philippines has been plunged 
into its most critical economic crisis 
since World War II, and the economic 
outlook remains bleak in the short-to- 
medium term. The country registered 
negative real GNP growth of around 
5.5% in 1984 and a further drop of about 
4% in 1985. Positive real GNP growth 
may not resume until 1987, and then 
only at a modest rate. The need to re- 
strict government expenditures, curtail 
imports, and service a large external 
debt will weigh heavily on the Philip- 
pines for the remainder of this decade. 

As it seeks to cope with economic 
crisis, the new Government of the 
Philippines also faces the challenge of a 
growing communist insurgency. The 
communist New People's Army (NPA) 
now numbers some 20,000 armed guer- 
rillas, with about as many part-time 
guerrillas, a very dramatic increase over 
the numbers we reported to you last 
year at this hearing. The NPA has ex- 
panded its operations to the rural areas 
in almost all provinces in the country. 
Assassination squads, called Sparrow 
Units, and NPA cells are also active in 
Philippine cities. The root causes of the 
insurgency are political and socio- 
economic, and must, of course, be 
addressed as such. 

We believe that the new govern- 
ment is well aware of this fact and will 
try to combine a program of overall 
economic growth for the country with 



July 1986 



55 



EAST ASIA 



an amnesty/reconciliation/jobs-training- 
program to provide an incentive for 
nonideologically committed guerrillas— 
which hopefully will be the majority— 
to reenter the mainstream and begin 
new lives. 

However, there are communist guer- 
rillas and party members who are com- 
mitted Marxists and seek to establish a 
Marxist-style totalitarian state in the 
Philippines by both political and military 
means. This dimension of the insurgency 
poses a challenge in the Aquino govern- 
ment which requires an effective, coordi- 
nated civil/military response from the 
new Government and the Armed Forces 
of the Philippines. 

Exchange shortages and budgetary 
restraints— Philippine defense expendi- 
tures have declined by more than 20% 
in real terms since 1978— have severely 
restricted resources available to the 
Armed Forces of the Philippines to play 
its role in a comprehensive approach to 
the insurgency. The current economic 
crisis, deepened by the extravagant 
election spending of the Marcos govern- 
ment, will make it even more difficult 
over the short- and medium-term for the 
armed forces to receive the resources 
necessary to implement the necessary 
reforms and effectively meet the mili- 
tary challenge presented by the com- 
munist guerrillas. 

On the economic front, President 
Aquino has put together a highly quali- 
fied team to deal with the serious 
economic problems confronting the 
Philippines and the reforms necessary to 
deal with them. Initial discussions with 
members of the new government's team 
indicate that they want to pursue an 
economic program which emphasizes 
deregulation, breaking monopolistic 
practices, and greater reliance on the 
market to lead economic recovery. We 
hope the new government will commit 
itself to implement the economic re- 
forms which many Filipino business- 
people, bankers, and academicians have 
been advocating for some time. We view 
these commitments as necessary to re- 
store growth and vitality to the 
economy. 

In the military area, we are en- 
couraged by signs over the past few 
days that the new Philippine Govern- 
ment and the new leadership of the 
armed forces accept the necessity of far- 
reaching military reform and are taking 
steps to make the armed forces a non- 
political, professional institution and to 
restore it to combat-effectiveness. One 
factor which previously inhibited a seri- 



ous response to the issues of military re- 
form and the insurgency was the 
politicization of the military by former 
President Marcos. The Marcos Adminis- 
tration and the senior ranks of the 
armed forces did not provide the requi- 
site civilian/military leadership for a 
comprehensive civil/military program to 
counter the insurgency. 

With the retirement of 23 overstay- 
ing generals, announced by President 
Aquino last week, and the appointment 
of competent, reform-minded officers to 
leadership positions, the Armed Forces 
of the Philippines is getting back on the 
right track. It is important that we 
support this process of reform which 
we have been encouraging for the past 
2 years. 

When Gen. Ramos was Acting Chief 
of Staff last year, although he was held 
in check by the Marcos/Ver loyalists, he 
was able to institute a modest program 
of military reforms. This program 
included: a new system to deal with 
military abuse cases; some reorganiza- 
tion to deal with insurgency; and a more 
realistic set of military procurement 
priorities. 

Our military assistance proposal is 
made in the expectation that now that 
Gen. Ramos and other professional 
officers have a mandate from President 
Aquino to conduct overdue reforms, the 
positive trends already apparent will 
continue and strengthen and a new 
Armed Forces of the Philippines will 
emerge. 

Our proposed assistance package for 
FY 1987 is designed both to ensure ful- 
fillment of the Presidential "best-effort" 
commitment and to address the serious- 
ness of the problems now facing the 
Philippines. The levels requested for 
FY 1987 still represent the Administra- 
tion's request at this time. Including de- 
velopment assistance and PL 480, we 
have requested a total of $228.43 million 
in aid to the Philippines, $125.68 million 
of which is economic. The full amount is 
certainly required. The new government 
is still evaluating the country's economic 
condition and does not yet have a clear 
picture of what it may require in foreign 
assistance. 

We are now consulting with the new 
government in an effort to assess needs 
and determine how we can be helpful. 
Ambassador Habib began the process 
during his most recent visit to Manila. 
We will also be examining with other 
countries and multilateral institu- 
tions the programs they plan in the 
Philippines. 



Our request for a total of $100 mil- 
lion in military assistance ($50 million 
MAP/$50 million FMS) aims at making 
up some of the shortfall in military as- 
sistance resulting from the last 2 years 
congressional action. In FY 1985, $45 
million in proposed FMS was shifted tc 
ESF. In FY 1986 approximately $24.63 
million of our request for $100 million i 
FMS and MAP was shifted to ESF, an 
the overall request was pared down to 
$52.64 million. 

The Presidential "best-effort" lette 
specifies that a total of $425 million in 
military assistance ($125 million 
MAP/$300 million FMS) will be sought 
during the 5-year period. With military 
assistance reduced to $40 million in FY 

1985, and $52.64 million in FY 1986, w< 
need to begin to increase military as- 
sistance over the base-line level of $85 
million if we are to fulfill the President 
commitment during the 5-year period. 

Equally important in determining 
the level of military aid for FY 1987 is 
the Armed Forces of the Philippines' 
concrete need for such assistance if it i 
to mount an effective military response 
to the insurgency challenge. The 
reduced level of FY 1986 military as- 
sistance will be almost totally absorbec 
by operations and maintenance costs ir 
support of existing inventory. Serious 
armed forces shortcomings in main- 
tenance, logistics, transportation, com- 
munications, and training that can only 
be overcome through adequate levels o 
foreign assistance. Over the next few 
years military assistance levels at least 
equal to those embodied in the 5-year 
Presidential commitment are essential. 
Our international military education an 
training (IMET) request 'of $2.75 millio: 
aimed at improving the leadership and 
performance, also addresses an impor- 
tant armed forces need. 

Our proposal that military assistam 
consist of equal portions of MAP and 
concessional FMS credits flows from 
current and projected international paj 
ments calculations. In FY 1984 repay- 
ments of $50.5 million on previous 
market rate FMS credits exceeded nev 
credits of $50 million. In the absence ol 
Paris Club debt rescheduling, repay- 
ment obligations resulting from FMS 
credits would have again exceeded new 
inflows of military grants and credits ii 
FY 1985, and projected repayments ar< 
expected to reach $48 million in FY 

1986. This increased debt burden come: 
at an extremely difficult time for the 
Philippine economy, with its overall 
ratio of debt service to exports at 
around 50% prior to debt rescheduling. 



56 



Department of State Bullet 



EAST ASIA 



The severity of the economic situa- 
m also makes it imperative that ESF 

maintained at the base-line level of 
5 million. Given the Philippines' eco- 
mic prospects for the next few years, 
is difficult to provide anything less in 
;w of the urgent need to assist eco- 
mic recovery. In programming ESF, 
> recognize that providing government 
rvices to address the economic and so- 
il conditions in rural areas which allow 
surgencies to prosper is at least as im- 
rtant as military operations. ESF 
ogramming will continue to be linked 
th the overall development assistance 
rategy in the Philippines. 

In addition to security assistance 
lated to our bases arrangements, we 
opose that development assistance be 
t at $23 million. We have also requested 
.628 million in PL 480 Title II to con- 
me feeding programs that have been 
ndered even more important by the 
teriorated economic situation. 

Our policy toward the Philippines 
sts on the premise that fundamental 
ilitical, economic, and military reforms 
e needed if stability is to be preserved 
d economic health restored. The new 
ivemment appears committed to put- 
lg together a program to address 
ese reforms. A central objective of our 
sistance is to contribute to the new 
ivernment's ability to address the crit- 
il problems facing the Philippines and 

help the government carry out the 
*ded reforms. 
We are reviewing our aid program, 

the context of other bilateral and 
unilateral donor plans, to see how it 
n be structured to respond to the 
;eds and initiatives of the new Philip- 
ne Government. Agency for Interna- 
jnal Development (AID) Administrator 
cPherson is leading a joint State-AID- 
reasury-Defense team that is now in 
anila for that purpose. If our review 
lows that the aid requirements of 
resident Aquino's government exceed 
le amounts we have requested, we 
lall have to consider our options. If it 
;comes necessary, after considering 
ich options, to change the level of our 

Y 1987 request, or to make changes in 

Y 1986, that would be communicated 
i the Congress as quickly as possible 
trough our established process. We will 
:rtainly need the support of the Con- 
fess as the new government engages 

le urgent economic and security prob- 
ms it has inherited. 

A lot has happened in the Philip- 
ines in recent years, and especially in 
jcent weeks. A key allied nation, under 
ew, popularly elected leadership, faces 



significant challenges on a variety of 
fronts. It is incumbent upon us to do 
what we can to help the new govern- 
ment and the Filipino people get 
through this crucial period and establish 
a foundation to lay the basis for future 
stability and prosperity. 

Korea 

Renewed hostilities on the Korean 
Peninsula would directly affect the secu- 
rity interests of the United States, the 
U.S.S.R., China, and Japan, and could 
have global as well as regional conse- 
quences. Deterrence of North Korean 
aggression against the Republic of 
Korea (R.O.K.) is, therefore, an essential 
component of peace in the region. For 
over 30 years, the U.S. -R.O.K. alliance 
has been successful in deterring a North 
Korean attack. Nonetheless, the cessa- 
tion of hostilities brought about by the 
armistice agreement has been marred 
over the years by such incidents as the 
1968 raid on the Blue House by North 
Korean commandoes, the seizure 2 days 
later of the U.S.S. Pueblo, and North 
Korean tunneling under the demilita- 
rized zone (DMZ). In 1983 in an attempt 
to assassinate R.O.K. President Chun, 
17 senior South Korean officials [visiting 
Rangoon] were killed by a bomb which a 
Burmese court determined was planted 
by North Korean commandoes. Yet war 
has been prevented, and this has 
allowed great economic and social 
progress in South Korea. 

In spite of the Republic of Korea's 
impressive economic development, its 
need for continued U.S. security as- 
sistance is strong. In the past decade, 
North Korea, which spends over 20% of 
its GNP for military outlays, has carried 
out a major force buildup. The military 
balance continues to favor the North. 
North Korea has about 750,000 men 
under arms, compared with 620,000 in 
the South. However, even these num- 
bers substantially understate North 
Korea's superiority, because nonmilitary 
units carry out extensive support func- 
tions for the offensively oriented North 
Korea ground forces. 

North Korean forces are well 
equipped and have a substantial numeri- 
cal advantage (at least 2-to-l) in several 
key categories of offensive weapons: 
tanks, long-range artillery, and armored 
personnel carriers. They also have more 
than twice as many combat aircraft as 
the South, although R.O.K.-U.S. forces 
have the qualitative edge. In 1985 the 
U.S.S. R. began to supply North Korea 



with MiG-23s. North Korean exercises 
have revealed impressive sophistication 
in joint and combined maneuvers. 

In addition to the size and capabili- 
ties of North Korean forces, the chal- 
lenge they pose is compounded by 
factors of time and distance. The bulk of 
North Korean forces are deployed well 
forward, along the DMZ, about 25 miles 
from Seoul, and North Korea has re- 
cently begun to construct additional un- 
derground fortifications near the DMZ. 
The North also has perhaps the world's 
second largest commando force (after 
the U.S.S. R.) designed for insertion be- 
hind the lines in the event of war. Thus, 
warning time for R.O.K. and U.S. forces 
is very limited, and a high state of read- 
iness is a constant requirement. 

To counter this threat, the R.O.K., 
which spends about 6% of its GNP on 
defense, is engaged in a major force im- 
provement program designed to aug- 
ment its effective firepower and enhance 
its air defense capability. 

To assist the defense efforts of this 
front-line ally, with whose troops Ameri- 
can soldiers would fight side-by-side in 
the event of North Korean aggression, 
we will provide $162.7 million in FMS 
credits in FY 1986 and are requesting 
$230 million in FY 1987. For the last 2 
years, FMS credits have been provided 
to Korea on terms of 10 years' grace on 
repayment of principle and 20 years' 
repayment. This allows Korea to devote 
a larger proportion of each year's alloca- 
tion to actual purchases, thereby permit- 
ting the force improvement program to 
proceed on schedule. In 1987 we are 
also requesting $2.2 million in IMET 
funds for professional and technical mili- 
tary training. 

Our Korean ally is doing its utmost 
for its own security. In the past it has 
spent some 3 to 4 times the amount of 
its FMS credit level for military pur- 
chases in the United States. It is clearly 
in our interest to help Korea meet its 
force improvement goals and mutual 
security objectives. I believe that help- 
ing Korea maintain a strong defense 
with adequate FMS credits is very 
much in our own interest. 

Thailand 

Thailand is a close friend and ally to 
whose defense and security we are com- 
mitted under the Manila pact. The im- 
portant relationship we have developed 
over the years is based on a shared 
commitment to the values of freedom 
and independence. Since 1978 Thailand 



Jly 1986 



57 



EAST ASIA 



has been the front-line ASEAN [Associ- 
ation of South East Asian Nations] state 
confronting Soviet-supported Vietnam- 
ese aggression against Cambodia. In ad- 
dition to our bilateral responsibilities, 
our assistance is also viewed as a gauge 
of the reliability of our commitment to 
Thailand and our support for ASEAN 
generally. To maintain our interests in 
the region, we should help to sustain 
our friends. 

On its eastern border, Thailand faces 
a strong, active military threat from a 
combat-hardened Vietnamese Army. 
Vietnamese attacks on the Cambodian 
resistance groups have escalated since 
Vietnam invaded Cambodia in 1978, and 
incursions into Thailand and clashes 
with Thai troops have increased in num- 
ber and severity. This threat has 
prompted an overdue modernization of 
Thailand's military forces. We support 
this modernization program which, in 
conjunction with other efforts, aims to 
provide a deterrent to further Viet- 
namese aggression. It will enable 
Thailand to become more self-reliant in 
an emergency and able to shoulder 
effectively its portion of our shared 
security responsibilities. 

Our assistance package is important 
to Thailand's economic management. 
Although the Thai economy grew 
strongly for two decades up to 1982, the 
international recession has hurt tradi- 
tional exports and slowed growth. For- 
eign debt and the trade deficit have 
mounted. The Royal Thai Government 
has taken courageous steps to address 
these problems but faces a period of 
painful adjustments. Thailand tradition- 
ally has managed to balance its alloca- 
tion of resources, giving social and 
economic development a high priority 
while also providing for necessary mili- 
tary expenditures. Our security as- 
sistance has helped the Royal Thai 
Government maintain this balance in the 
face of growing demands on limited 
resources. Our economic assistance, 
while not large in terms of total 
resources, has been directed to help 
Thailand address the problems of rural 
growth and employment and strengthen- 
ing its ability to join the ranks of middle 
income countries. 

Our development assistance request 
of $19 million shows a small decrease 
from last year. However, it represents 
an important contribution toward 
achieving Thailand's development goals 
in the face of increasing security re- 
quirements. Working closely with the 
Thai Government, we have shifted the 
emphasis of our program as the Thai 



economy has changed. Our program will 
now emphasize two new areas— the crea- 
tion of jobs in rural areas through the 
promotion of small industrial enterprises 
and assistance in the field of science and 
technology. 

Our request for $5 million in ESF, 
straight-lined from last fiscal year, is 
directed to the Thai need for assistance 
in helping the war-torn rural communi- 
ties along the Cambodian border. The 
spill-over of fighting into their homes 
and their livelihoods make the people in 
these communities deserving of special 
help and compassion. The ESF funds 
also contribute directly to upholding 
Thailand's humane policy offering 
asylum to refugees and other displaced 
persons by assisting the Thai border 
villages affected by the refugee influx. 

For FY 1987 we are requesting 
$103.5 million in FMS funding for 
Thailand. In the face of the strains on 
the Thai economy caused by limited 
trade prospects and the need to estab- 
lish a credible deterrent to Vietnamese 
aggression, however, we recommend a 
significant concessional element in our 
assistance package. We have requested 
that $61 million in FMS be provided at 
concessional rates while the balance of 
$42.5 million would be extended on 
terms providing 10 years' grace and 20 
years repayment of principle. These 
funds will help finance a long overdue 
upgrading of equipment by all the serv- 
ices as well as purchases of necessary 
expendable items which will enhance 
sustainability. 

Our MAP request is again for $5 
million and is intended to ease the 
cost to the Thai of necessary equipment 
purchases. 

In 1987 we are requesting $2.5 mil- 
lion in IMET funds. These training 
funds have become all the more impor- 
tant as the Thai military absorbs more 
sophisticated systems with attendant 
challenges to technical competence and 
logistics support. The Thai consistently 
put this training to effective use to up- 
grade their capabilities in technical and 
command subjects. 

Indonesia 

Indonesia, the world's fifth most 
populous country, plays a key leadership 
role in both Southeast Asia and in the 
broader Pacific Basin. Its geostrategic 
importance and hence its importance to 
the United States cannot be overrated. 
Indonesia is also an important leader in 
the Nonaligned Movement and its role 



as a moderate in that forum is a valui 
one. Indonesia also ranks among the 
moderates in the Islamic movement a 
has played constructive roles in many 
international organizations. Developm 
and security assistance to Indonesia a 
part of our strong support for the 
ASEAN which, in our view, represen 
the best hope for peace, stability, and 
economic and social development in 
Southeast Asia. A consistent develop- 
ment assistance program for Indonesi 
is necessary to increase manpower an 
management skills and to promote th< 
private sector's role in economic 
development. 

Uncertainties regarding oil and 
natural gas revenues, which account 1 
more than 60% of the Indonesian 
budget, are expected to continue for 
several years, and the Indonesian 
Government is expected to be hard- 
pressed. At the same time, the Indo- 
nesian Government has responded to 
the recession and declining oil revenu 
in a most responsible way by underta 
ing self-imposed austerity and reform 
programs. In addition, the governmer 
undertook a sweeping reform of the 
financial sector by removing interest 
rates and lending controls, increasing 
tax revenues and broadening the tax 
base, and reviewing regulations inhibi 
ing the growth of the private sector. 

Development assistance of $55.4 n 
lion is being requested for FY 1987. 
Budgetary constraints have dictated i 
$15 million reduction in PL 480, Title 
assistance to $15 million. PL 480 as- 
sistance to Indonesia continues to be ; 
high priority because food stocks neec 
to be maintained at acceptable levels 
order to forestall hardship and public 
unrest, as well as provide for adequat 
emergency shipments of food to im- 
poverished or disaster-struck areas. A 
PL 480, Title II request of $4 million 
supports voluntary agency programs 
and World Food Program operations. 

Although Indonesia has wisely 
slowed the pace of its military force 
modernization in the face of recent an 
continuing economic problems, U.S. 
security assistance has helped to sust; 
a number of important programs, inch 
ing aircraft maintenance and spare 
parts, ship overhaul and spare parts, 
improvements in air and sea defense 
systems, the purchase of war reserve 
munitions, and, most importantly, 
advanced and specialized training for 
commanders and management personr 
in the Indonesian Army, Navy, and A 



58 



EAST ASIA 



orce. Added emphasis this year is 
cpeeted to be given to "train-the- 
ainers" programs which would 
easurably improve indigenous training 
ipabilities. 

Indonesia's military forces remain 
■itically short of qualified technicians 
id program managers. U.S. training 
-imarily will be in technical fields and 
le level of IMET funding requested 
wuld permit approximately 250 mili- 
ary officers to attend our armed forces 
:hools in FY 1987. IMET deserves the 
ghest priority support because of the 
iportant role played by the profes- 
onal military in the Indonesian society, 
le utility of the program in furthering 
ir foreign relations objectives, and the 
jsirability of improving mutually 
jneficial service-to-service contacts. 

The requested FY 1987 security as- 
stance program for Indonesia consists 
: $2.8 million in IMET funding, plus 
55 million FMS direct loans at conces- 
onal interest rates. Concessional rates 
*e considered necessary to assist In- 
Dnesia in recovering from the effects of 
le global recession in the early 1980s 
id to overcome serious budgetary 
lortfalls due to declining oil and non-oil 
sport revenues. 

lalaysia 

trategically located on the Malacca 
trait, Malaysia's continued political 
tability and economic development are 
ssential to U.S. interests in the 
.SEAN region. Confronted with the 
ietnamese occupation of Cambodia and 
le consequent threat to regional peace 
nd stability, Malaysia has been in the 
>refront of ASEAN's strategy to bring 
bout a withdrawal of Vietnamese 
jrces from Cambodia and a negotiated 
ettlement ensuring the rights of the 
[hmer people. Beyond Southeast Asia, 
lalaysia is a responsible member of the 
slamic Conference and Nonaligned 
lovement and has played a constructive 
ole in international affairs generally. 

U.S.-Malaysian relations, founded on 
lutual respect and common interests, 
re very good and were enhanced fur- 
her by the visit to Washington in early 
984 by Prime Minister Mahathir bin 
lohamad. There have been subsequent 
xchanges of high-level visitors, includ- 
ng Secretary of State Shultz in July of 
985. The Malaysians are interested in 
ontinued defense cooperation with the 
Jnited States, taking into account 
Malaysia's nonaligned status, and U.S. 
iecurity assistance is designed to aug- 



ment their legitimate self-defense capa- 
bilities, thus contributing to the security 
of all of the ASEAN countries. 

The $5 million FMS request level for 
Malaysia in FY 1987 is designed to pro- 
vide continuity in the program as Malay- 
sian military planners consider force 
restructuring away from counterinsur- 
gency to a more conventional force 
posture which will create new equip- 
ment needs. Although Malaysia has not 
in the past made extensive use of FMS 
credits, additional purchases are likely 
as its economy improves. Possible pur- 
chases include surveillance equipment, 
antiship weapons, and Sidewinder and 
Maverick missiles. 

The IMET request of $1.23 million is 
a slight increase from last year and is, 
to some extent, based on the increased 
cost of training. The IMET program 
provides an important means for the 
Malaysian Armed Forces to meet their 
training needs as they adjust to a more 
conventional force structure and acquire 
more sophisticated weapon systems. The 
Malaysian Government considers ex- 
posure to U.S. defense management, 
operational doctrine, and support con- 
cepts critically important to the modern- 
ization of its armed forces. 

Singapore 

Singapore plays an important role 
within ASEAN and occupies a pivotal 
strategic position in Southeast Asia by 
virtue of its location at the juncture of 
the Pacific and Indian Oceans. Singa- 
pore is a valuable port of call for U.S. 
ships transiting the Malacca Strait and 
offers important ship and aircraft sup- 
port facilities. A nonaligned nation, 
Singapore plays a significant moderating 
role with the Nonaligned Movement and 
in the United Nations and other interna- 
tional fora. Singapore has stood up 
forthrightly in opposition to Soviet 
actions in South and Southeast Asia, 
and Singaporean leaders have publicly 
called for the United States to maintain 
a continuing regional security role as a 
deterrent to Soviet expansionism. Addi- 
tionally, Singapore has strongly support- 
ed ASEAN's strategy for achieving a 
political settlement of the Cambodian 
problem and an end to Vietnamese occu- 
pation of that country. 

In FY 1987, we are requesting a 
modest $75,000 for training under IMET 
for Singapore. 



Cambodia 

Last year the six ASEAN countries is- 
sued an appeal for the world community 
to "assist the Cambodian people in their 
political and military struggle" to free 
their country from Vietnamese occupa- 
tion. Representative Stephen Solarz 
proposed a program of assistance to sup- 
plement the ongoing U.S. Government 
diplomatic effort to provide political and 
moral support for the noncommunist 
Cambodian resistance groups. The Ad- 
ministration welcomed this initiative as 
a concrete demonstration of the support 
of the American people for the Khmer 
resistance cause; and Congress author- 
ized up to $5 million for the noncom- 
munist resistance forces in either ESF 
or MAP for both FY 1986 and FY 1987. 
The FY 1986 appropriation placed a 
floor of $1.5 million on this account, and 
the Administration decided to allocate 
$3.5 million in ESF of the $5 million 
authorized (reduced to $3.35 million af- 
ter Gramm-Rudman-Hollings sequestra- 
tion). The Administration also decided 
that because other countries are supply- 
ing sufficient arms and ammunition to 
the noncommunist resistance, the U.S. 
Government should provide only non- 
lethal training and equipment under 
ESF, foregoing MAP. 

This small grant of assistance is a 
key element in demonstrating our sup- 
port for ASEAN's effort to persuade 
Vietnam to accept a negotiated settle- 
ment in Cambodia and to return that 
unfortunate country to the control of its 
own people. ASEAN's united approach 
in dealing with Vietnamese aggression 
has been a major factor in preserving 
the security of Thailand and political 
and economic stability in all of 
Southeast Asia. The Administration is 
planning to implement the program in 
cooperation with the Thai Government. 

For FY 1987, we are requesting that 
the full $5 million authorized be funded 
in ESF. A modest increase over the FY 
1986 level in this very small program 
would be a powerful signal of our con- 
tinuing support for the ASEAN cause. 

Burma 

We are pleased with the continuing up- 
ward trend in our relations with Burma. 
The Burmese Government, while firmly 
committed to nonalignment, pursues a 
foreign policy that is not incompatible 
with our own strategic interests in 
South and Southeast Asia. Moreover, 
the Burmese leadership's gradual move- 



luly 1986 



59 



EAST ASIA 



ment away from strict isolationism has 
led to increased contacts between our 
governments and to expanded bilateral 
cooperation in areas of mutual concern, 
such as narcotics control. 

The Burmese Government faces an 
array of domestic insurgent and warlord 
groups, including the Burma Communist 
Party, that control large areas of the 
hinterland and finance themselves 
through narcotics trafficking and other 
illegal activities. The effectiveness of the 
Burmese military is the key to Burma's 
efforts to control these groups and their 
narcotics activities and, over time, to 
achieve stability and economic progress 
in the country. 

In December 1985 the government 
with our assistance launched a program 
for the aerial eradication of opium 
poppies. This is the first such program 
in Southeast Asia and gives the govern- 
ment the capability to destroy poppy 
cultivation in previously inaccessible 
areas. 

Despite substantial natural resources, 
Burma ranks among the world's poorest 
countries. It has a per capita income of 
less than $190, estimated foreign cur- 
rency reserves of less than $50 million, 
and a debt-service ratio that is ap- 
proaching 45%. 

The $10 million in development as- 
sistance proposed for FY 1987 will 
enable AID to continue its support of 
Burmese efforts to improve rural 
primary health care, to increase agricul- 
tural research, and to improve the 
production and processing of secondary 
food crops to reduce Burma's depend- 
ence on rice exports to earn badly 
needed foreign exchange. The AID 
projects, tightly focused on specific and 
achievable goals, have been well- 
received by the leadership and people of 
Burma and have contributed measurably 
to a strengthening of our bilateral 
relationship. 

The $1 million MAP grant proposed 
for FY 1987 will enable the mea- 
gerly equipped Burmese military to 
strengthen its position against the insur- 
gents and contribute to the effectiveness 
of our bilateral narcotics control efforts. 
The proposed $350,000 for IMET will 
assist the government to develop its 
own training capability while providing 
Burmese military officers direct ex- 
posure to American society and values. 
Because of the military's critical role in 
Burma, this could have a favorable long- 
term effect on our bilateral relations. 



Pacific Islands 

For the first time since World War II, 
we are faced with a hostile power 
attempting to expand its influence in the 
South Pacific. This threatens a primary 
goal of U.S. policy in the region, the 
strategic denial of the area to outside 
hostile forces, as it does the political 
environment in which we operate in the 
region. 

This Administration has accepted, 
and I would like to think improved 
upon, the South Pacific policy followed 
by every Administration since the war. 
That policy recognizes that the United 
States has an undisputable national 
security interest in assisting and 
promoting the economic growth of the 
island governments of the South Pacific, 
a region remarkable in the developing 
world for its effective and vigorous 
democratic institutions. This policy has 
paid dividends by keeping the ports and 
aii-fields of the region open to U.S. war- 
ships and aircraft and in a consistent 
history of island support of the United 
States in international fora on matters 
of vital national security interest. 

In FY 1987 we are seeking $4.5 mil- 
lion in development assistance to sup- 
port our regional program in the South 
Pacific, aimed primarily at private 
sector growth, agriculture, health, and 
education in 10 of the region's 11 in- 
dependent or self-governing nations. 

CCOP/SOPAC. This is perhaps the 
single best example of how our as- 
sistance has prevented Soviet inroads 
into the region. The Committee for the 
Coordination of Offshore Prospecting, 
South Pacific (CCOP/SOPAC), a 
research project funded jointly by the 
United States, Australia, and New 
Zealand, was put together as a response 
to a 1980 Soviet offer of a similar pro- 
gram. The island states unanimously re- 
jected the Soviet offer and accepted 
ours. The program has attracted favora- 
ble comment from island leaders, en- 
hancing our position in the region. 
Private sector interest in potential 
seabed mining and drilling has also fo- 
cused on the region as a result of this 
project. The requested level of funding 
($1.5 million in ESF) is needed to meet 
our commitments to the other sponsors 
and the island states. 

Regional Fisheries Development. 

The $1.5 million ESF regional fisheries 
development program is, like CCOP/ 
SOPAC, a counter to Soviet moves in 
the region. Island states whose major or 



only resource is their fishery are unde: 
severe budgetary pressure to accept 
Soviet offers to pay for fishing rights. 
While the amount requested is approxi 
mately what the Soviet Union is payin 
annually for fishing rights in one coun- 
try (Kiribati), our program is attractive 
to the island governments because it 
helps them develop their own resource 
rather than simply license them to 
others. We hope to involve the U.S. pi 
vate sector in this initiative. 

Fiji. Fiji has been one of our 
staunchest supporters in the region. 
When the United States has needed a 
friend, or when an especially egregious 
act by the Soviet Union demanded pul 
lie condemnation, Fiji always has been 
ready to speak out. It has opened its 
ports to our warships at a time when 
powerful political forces in the region 
opposed such a move, and it has playe 
a constructive and useful role in our 
ongoing negotiation of a regional fishe: 
ies agreement. Fiji continues to partic 
pate in the UN Interim Force in 
Lebanon (UNIFIL) and in the Sinai 
multinational force and observers 
(MFO). We hope to begin a bilateral 
program this year with $1.5 million in 
ESF and $400,000 in development as- 
sistance. Our small IMET program 
($125,000) is intended to provide neede 
professional and technical training to t 
Royal Fiji Military Forces and therebj 
assist it in carrying out its peacekeepii 
duties in the Middle East. The MAP 
program ($300,000) is designed to 
standardize Royal Fiji Military Forces 
small arms on the M-16. 

Papua New Guinea. Despite a 
democratic change of government at tl 
beginning of this calendar year, the 
Government of Papua New Guinea con 
tinues to remain friendly to the Unitec 
States and an outspoken supporter of ; 
strong U.S. presence in the region. Th 
largest and potentially richest of the 
South Pacific island nations has been e 
pecially supportive of our efforts to 
negotiate a regional fisheries agreemer 
The modest $85,000 IMET program pr 
posed for FY 1987 is designed to pro- 
vide the Papua New Guinea Defense 
Force with needed skills to assist it in 
managing its scarce resources. 

Tonga. Tonga has never hesitated 
its open, public support of a U.S. mili- 
tary presence in the region and has we 
corned U.S. ship visits when no other 
island state seemed prepared to do so. 
Our FY 1987 IMET program for Tong.v 
($60,000) is intended to provide greater 



60 



Department of State Bullei 



30NOMICS 



mnical skills to the Tongan Defense 
rce and strengthen the professional- 
n of its officer and petty officer corps. 

Solomon Islands. The Solomon 
ands exercises considerable influence 
the region on fishery and nuclear 
ues. It has generally supported U.S. 
erests in international fora, and our 
lations in areas where we have differ- 
ces are characterized by a political 
11 to resolve problems and reach 
lommodations. The Solomon Islands 
sfense Force is small and in need of 
lining. Our small $60,000 IMET pro- 



gram for FY 1987 is designed to provide 
basic management and technical skills to 
the officer and petty officer corps. 

We believe in the current austere 
budget environment that our programs 
for East Asia and the Pacific represent 
a lean and realistic approach to meeting 
U.S. needs in this vital region. 



'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. ■ 



Iconomic Policy Coordination 
mnong Industrialized Nations 



James A. Baker III 

Statement before the Subcommittee 
International Trade of the Senate 
nance Committee and the Subcommit- 
s on International Financial and 
onetary Policy of the Senate Banking 
rmmittee on May 13, 1986. Mr. Baker 
Secretary of the Treasury. 1 

welcome this opportunity to discuss 
e Administration's approach in dealing 
th large U.S. trade deficits, partieu- 
•ly as they reflect problems relating to 
e exchange rate system and the debt 
;uation in the developing countries. 
ifore I begin, let me offer my con- 
atulations to the Finance Committee 
r successfully completing work on a 
ajor bill of fundamental tax reform. 

The Administration recognizes and 
lares congressional concerns about the 
lpact of exchange rate volatility and 
ss developed countries (LDC) financial 
fficulties on the international competi- 
ve position of American industry, agri- 
ilture, and labor. We have been, and 
■e, actively pursuing a comprehensive 
rategy to address this problem. I am 
eased to be here today to describe our 
>proach and to encourage your support 
Tit. 

Last September, the President pre- 
mted a comprehensive trade policy ae- 
on plan. Our approach includes four 
•itical elements: 

• Strengthening the functioning of 
le international monetary system 
irough closer economic cooperation; 



• Promoting stronger and more 
balanced growth among the major indus- 
trial nations; 

• Improving growth in developing 
nations with a heavy debt burden; and 

• Ensuring that trade is not only 
free but also fair and promoting open 
markets worldwide. 

It is our belief that this is the 
preferred path to reducing the U.S. 
trade deficit and will have long-range 
positive effects on the U.S. economy and 
world stability. 

Today, my remarks will focus on the 
progress we have made in implementing 
the President's trade strategy and re- 
storing this country's competitive posi- 
tion. In this context, I will offer some 
perspective on the agreements reached 
at the Tokyo summit last week. 

Progress and Opportunities 

We are making significant progress in 
establishing the fundamental conditions 
necessary to achieve and maintain a 
sound and growing world economy, 
more balanced trade positions, and 
greater exchange rate stability. 

• The Plaza agreement last Septem- 
ber 2 has resulted in exchange rate rela- 
tionships that better reflect underlying 
economic conditions. The Japanese yen 
and German mark have now appreciated 
more than 60% from their recent lows in 
February 1985. The dollar has more 
than fully offset its earlier appreciation 
against the yen; and it has reversed 
three-quarters of its appreciation against 
the mark. 



• The Plaza agreement also contrib- 
uted to movement toward stronger, 
more balanced growth among the major 
industrial countries, including policy 
commitments to that end. Efforts to ful- 
fill those undertakings are ongoing. The 
favorable economic convergence which 
was the focus of the Plaza agreement is 
being realized, with consequent narrow- 
ing of the "growth gap" between the 
United States and its major trading 
partners. 

• Inflation has been cut sharply and 
is expected to stay low, in part reflect- 
ing the effects of the sharp reduction in 
oil prices. This has facilitated a substan- 
tial reduction in interest rates and en- 
hances prospects for further declines. 

• We now expect the deterioration 
in our trade position to halt this year, 
and we look forward to substantial im- 
provement next year. Exchange rate 
changes take time to work their way 
through our economic system, as busi- 
nesses and consumers gradually adjust 
their plans. Next year, as the impact of 
these changes is more fully felt, with as- 
sistance from the decline in oil prices, 
our trade and current account deficits 
should drop below $100,000 million, or 
nearly one-third below our projections 
as recently as last autumn. 

• The United States has launched a 
major initiative to strengthen the inter- 
national debt strategy. Our proposals 
for growth-oriented reforms in the 
debtor countries have gained wide sup- 
port and have begun to be implemented. 

• Preparations are well advanced for 
launching the new round of multilateral 
trade negotiations, with a ministerial to 
be held this September. Our summit 
partners agreed in Tokyo to the U.S. 
proposal that the new round should in- 
clude services and trade related aspects 
of intellectual property rights and for- 
eign direct investment. 

Still, problems remain. The scars of 
a decade of economic turmoil are deep, 
and they cannot be easily or quickly 
erased. The distortions to our economies 
from the oil shocks, rapid inflation, and 
the recessions of the 1970s and early 
1980s have required us increasingly to 
address structural problems that de- 
mand time to correct. Unemployment 
remains high in many countries, and 
large domestic and external imbalances 
persist. 

Uncertainties about the future be- 
havior of exchange rates have also been 
prevalent, reflecting deficiencies in the 



uly 1986 



61 



ECONOMICS 



international monetary system that 
gradually intensified over the years. We 
know also that the debt problems of the 
developing world, accumulated over a 
decade or more, cannot be resolved in a 
few short months. 

And we know protectionist pres- 
sures remain strong. We recognize the 
need to address related problems— in 
our monetary system, in our arrange- 
ments for international economic cooper- 
ation, in the developing countries— if we 
are to contain those pressures and work 
toward more open and fair markets. 

The progress that has been achieved 
in the general economic environment, 
however, provides a golden opportunity 
to resolve these remaining problems. 
Success inspires confidence that we can 
go further. At the Tokyo summit, Presi- 
dent Reagan and the heads of the other 
major free world democracies mani- 
fested the political will and leadership to 
confront the tasks that remain. 

Strengthening International Economic 
Policy Coordination 

The Plaza agreement and subsequent 
coordinated interest rate reductions evi- 
denced the willingness and ability of the 
major industrial countries to cooperate 
more closely on their economic policies. 
At the same time, experience of the 
past year demonstrated that exchange 
rate changes alone could not be relied 
upon to achieve the full magnitude of 
adjustments required in external posi- 
tions. It had become increasingly more 
apparent that closer coordination of eco- 
nomic policies will be required to 
achieve the stronger, more balanced 
growth and compatible policies neces- 
sary to reduce the large trade imbal- 
ances that remain and foster greater 
exchange rate stability. For this pur- 
pose, we went to Tokyo seeking to build 
upon the framework embodied in the 
Plaza agreement and to establish an im- 
proved process for achieving closer coor- 
dination of economic policies on an 
ongoing basis. I believe we succeeded. 

The international monetary arrange- 
ments that have been in place since the 
early 1970s contain a number of positive 
elements, particularly a necessary flexi- 
bility to respond to economic shocks. 
However, this flexibility went too far, 
allowing problems to cumulate and coun- 
tries to pursue policies without ade- 
quately considering the international 
dimensions of their decisions. The agree- 
ment reached at the Tokyo summit 
seeks to combine needed flexibility with 



a greater likelihood that remedial action 
will be taken to deal with problems be- 
fore they reach disruptive proportions. 

The arrangements that were adopted 
involve a significant strengthening of in- 
ternational economic policy coordination 
aimed at promoting noninflationary 
growth, adoption of market-oriented in- 
centives for employment and invest- 
ment, opening the trade and investment 
system, and fostering greater exchange 
rate stability. Details of the new proce- 
dures will, of course, have to be worked 
out in subsequent discussions. However, 
I see the enhanced surveillance process 
working as follows: 

First, the measures for use in as- 
sessing country goals and performance 
will be agreed upon by the countries 
participating in the enhanced surveil- 
lance process. As stated in the Tokyo 
communique, a broad range of indicators 
would be utilized in order to achieve the 
comprehensive policy coverage neces- 
sary to insure that the underlying prob- 
lems, not just the symptoms, are 
addressed. These indicators would in- 
clude growth rates, inflation rates, un- 
employment rates, fiscal deficits, current 
account and trade balances, interest 
rates, monetary growth rates, reserves, 
and exchange rates. 

Second, each country will set forth 
its economic forecasts and objectives 
taking into account these indicators. 

Third, the group would review, with 
the managing director of the Interna- 
tional Monetary Fund (IMF), each coun- 
try's forecasts to assess consistency, 
both internally and among countries. In 
this connection, exchange rates and cur- 
rent account and trade balances would 
be particularly important in evaluating 
the mutual consistency of individual 
country forecasts. Modifications would 
be considered as necessary to promote 
consistency. 

Fourth, in the event of significant 
deviations in economic performance from 
an intended course, the group will use 
best efforts to reach understandings on 
appropriate remedial measures, focusing 
first and foremost on underlying policy 
fundamentals. Intervention in exchange 
markets could also occur when to do so 
would be helpful. 

As you know, countries have been 
developing individual economic forecasts 
for years. Moreover, the IMF consults 
with individual countries on a regular 
basis regarding their economic policies 
and performance. What is new in the ar- 
rangements adopted in Tokyo is that the 
major industrial countries have agreed 



that their economic forecasts and objec 
tives will be specified taking into ac- 
count a broad range of indicators, and 
their internal consistency and external 
compatibility will be assessed. More- 
over, if there are inconsistencies, effort 1 
will be made to achieve necessary ad- 
justments so that the forecasts and ob- 
jectives of the key currency countries 
will mesh. Finally, if economic perform 
ance falls short of the intended course, 
it is explicitly agreed that countries wi 
use their best efforts to reach under- 
standings regarding appropriate correc 
tive action. 

The procedures for coordination of 
economic policy were further strength- 
ened at the summit. A new Group of 
Seven (G-7) finance ministers, includin; 
Canada and Italy, was formed in recog 
nition of the importance of their econo- 
mies. At the same time, the Group of 
Five has agreed to enhance its multi- 
lateral surveillance activities. 

In sum, we have agreed on a more 
systematic approach to international e< 
nomic policy coordination that incor- 
porates a strengthened commitment to 
adjust economic policies. I am hopeful 
that the spirit of cooperation that mad 
this agreement possible will carry ovew 
to its implementation. If so, we can loc 
forward to greater exchange rate stabi 
ty, enhanced prospects for growth, anc 
more sustainable patterns of interna- 
tional trade. 

Improving Growth in Debtor Nations 

Successful economic policy coordinatior 
among the industrial nations comple- 
ments our efforts to deal with LDC 
debt problems by strengthening the 
world economy, creating the conditions 
for lower interest rates, and helping to 
improve access to markets. 

Recent improvements in the global 
economy are already making a signifi- 
cant contribution to developing nations 
growth prospects and will substantially 
ease their debt service obligations. 
Stronger industrial country growth an( 
lower inflation, for example, will add 
nearly $5,000 million to developing na- 
tions' non-oil exports and reduce their 
import costs by approximately $4,000 
million this year. The sharp decline in 
interest rates since early 1985 will 
reduce their annual debt service pay- 
ments by about $12,000 million. The 
decline in oil prices will also save oil- 
importing developing nations an addi- 
tional $14,000 million annually. 



62 



Department of State Bulle 



ECONOMICS 



At the same time, however, develop- 
countries, particularly debtor na- 
s, must position themselves to take 
antage of these improvements by 
ing in place policies to assure 
inger, sustained growth for their 
-lomies over the medium and longer 
n. As you know, the "program for 
rained growth" for the major debtor 
ons proposed by the United States 
Seoul was premised on credible, 
wth-oriented economic reform by the 
tor nations, supported by increased 
srnal financing. 

In Tokyo the summit leaders wel- 
led the progress made in developing 

cooperative debt strategy, in partic- 
- building on the U.S. initiative. They 
Dhasized that the role of the interna- 
lal financial institutions will continue 
)e central and welcomed moves fal- 
ser cooperation between the IMF and 

World Bank, in particular. The debt 
iative has also received strong sup- 
t from the international financial in- 
utions, national banking groups in all 
jor countries, and the OECD [Organi- 
ion for Economic Cooperation and 
velopment] ministers, as well as the 
t IMF and World Bank committees 
iresenting both debtor and creditor 
intries. 

The adoption of growth-oriented 
croeconomic and structural policies 
the debtor nations is at the heart of 
' strengthened debt strategy and cru- 
I to sustained growth over the longer 
m. Special emphasis needs to be 
ced on measures to increase savings 
i investment, improve economic effi- 
ncy, and encourage a return of flight 
>ital. A more favorable climate for 
ect foreign investment can be an im- 
rtant element of such an approach, 
[ping to reverse recent declines in net 
■ect investment flows. Such inflows 
3 nondebt creating, provide greater 
atection against changes in the cost of 
rrowing, and can help improve tech- 
logy and managerial expertise. 

Similarly, a rationalization and liber- 
zation of debtors' trade regimes can 
ntribute to improved efficiency and 
oductivity for the economy as a whole, 
igether with other growth-oriented 
sasures to assure more market-related 
change rates and interest rates, to 
duce fiscal deficits, to improve the ef- 
iency of capital markets, and to ra- 
malize the public sector, such 
easures can help improve growth pros- 
icts, restore confidence in debtor econ- 
nies, and encourage the return of 
ght capital. 



Such policy changes will take time to 
put in place and can't be expected to oc- 
cur overnight. The process of imple- 
menting these reforms will also be much 
less public than the series of announce- 
ments to date supporting the debt initia- 
tive. Implementation will take place 
through individual debtors' negotiations 
with the IMF, the World Bank, and the 
commercial banks. We expect these 
negotiations to place greater emphasis 
on dealing with current debt problems 
through a medium-term, growth-oriented 
policy framework. This process is al- 
ready underway. The IMF, for example, 
has existing or pending arrangements 
with 11 of the 15 major debtor nations, 
while the World Bank has structural or 
sector loan negotiations underway with 
13 of these nations and has recently ex- 
tended loans to Ecuador, Argentina, and 
Colombia to support adjustment efforts 
in some of their key sectors. 

As the summit communique noted, 
sound adjustment programs will need to 
be supported by resumed commercial 
bank lending, flexibility in rescheduling 
debt, and appropriate access to export 
credits. Once debtor nations have 
designed economic reform programs to 
improve their growth prospects that 
have IMF and World Bank support, it 
will be critical for the commercial banks 
to fulfill their pledges of financial sup- 
port for these programs. The industrial 
nations must also cooperate regarding 
resumption of export credit cover to 
countries implementing appropriate ad- 
justment policies. 

We believe prompt enactment of 
legislation enabling U.S. participation in 
the Multilateral Investment Guarantee 
Agency (MIGA) would also make an im- 
portant contribution to international ef- 
forts to improve the LDC investment 
climate and to facilitate new flows of 
foreign direct investment. 

In addition to the strong global sup- 
port for our initiative with respect to 
the major debtors, we are also very 
pleased with the recent action of both 
the IMF and the World Bank on the 
trust fund initiative to assist low-income 
developing nations, including sub- 
Saharan Africa. This constitutes a major 
step forward in Fund/Bank cooperation 
and a positive context for current nego- 
tiations on IDA VIII. We look forward 
to its implementation so that a sound 
basis of growth can be established in 
these countries as well. 

The program for sustained growth is 
important because it touches on a wide 
range of U.S. interests but paramount 
among these is its importance for U.S. 



trade. As you know, the debt crisis has 
had a direct impact on U.S. exports. 
U.S. exports to the 15 major debtor na- 
tions peaked at $40,000 million in 1981. 
However, this reflected an international 
economic environment which was clearly 
not sustainable. Our exports to these 
countries fell sharply to $23,000 million 
in 1983, as the debtor nations were un- 
able to maintain previous import levels 
in the face of financial constraints and 
slower export growth. 

The international debt strategy 
adopted in the wake of the debt crisis 
has helped to place the debtors' econo- 
mies on a sounder footing and to permit 
a resumption of import growth at a 
more sustainable pace. U.S. exports to 
the major debtor nations have increased 
by 18%, or $4,000 million, during the 
past 2 years and can be expected to im- 
prove further in response to both recent 
exchange rate changes and stronger 
growth in the debtor economies. The 
adoption of growth-oriented economic re- 
forms, supported by increased financing 
from the international community, as en- 
visaged by the debt initiative, will help 
to enhance both growth prospects and 
imports. 

It will also be important, however, 
for the United States and other indus- 
trial nations to maintain open markets 
for LDC exports to permit them to earn 
the foreign exchange necessary to in- 
crease imports. The process of increas- 
ing growth and trade is an interactive 
one. We cannot expect to reap the bene- 
fits of stronger growth and increased 
trade abroad if we close our markets at 
home. 

Promoting More Fair and Free Trade 

Open makets are essential to our overall 
international strategy of economic ad- 
justment and policy coordination. At the 
Tokyo summit last week, the leaders of 
the free world's major industrialized na- 
tions recommitted themselves to main- 
taining an open multilateral trading 
system, recognizing that: 

• Open markets promote economic 
growth worldwide. We have only to 
review the Depression years to see the 
effects of closed markets; 

• They provide debtor nations with 
markets for their exports that are es- 
sential if they are to service their debt 
and, in turn, serve as markets for U.S. 
goods and products; and 

• Open markets facilitate our efforts 
to adjust large, unsustainable external 
imbalances among the industrial nations. 



ily 1986 



63 



ECONOMICS 



The Administration is committed to 
maintaining an open U.S. market and 
ensuring a free but fair international 
trading system. To implement our trade 
policy, we are supporting the new 
GATT [General Agreement on Tariffs 
and Trade] round of trade negotiations 
to reduce barriers abroad. As men- 
tioned, in the new round we will notably 
be seeking new GATT rules covering 
services, intellectual property protec- 
tion, and international investment. 

President Reagan and the others at 
the Tokyo economic summit pledged to 
work at the September GATT ministe- 
rial meeting in Geneva to make decisive 
progress in launching the new round. 
We are also starting negotiations to re- 
move barriers to trade and investment 
between the United States and Canada. 

We are pursuing an aggressive pro- 
gram against unfair trade practices. 
President Reagan is the first president 
to self-initiate action under his retalia- 
tory authority against such practices, in- 
cluding cases involving Japan, Brazil, 
Korea, and Taiwan. The President has 
also announced that, unless we are able 
to resolve our dispute with the Euro- 
pean Communities (EC) over its new 
restrictions affecting our farm exports 
to Spain and Portugal, we will respond 
in kind. 

Our aggressive policy against unfair 
trading practices has already met with 
considerable success. We have settled 
disputes involving the EC's subsidies 
for canned fruit, Japan's footwear and 
leather import quotas, Taiwan's import 
monopoly for liquor and tobacco, and 
Korea's restrictions on foreign motion 
pictures. 

In sum, I strongly believe that our 
policy of free but fair trade is working 
and is in our overall economic interest. 

Legislation 

At this point, I would like to address 
the question of proposed international 
finance and trade legislation, such as 
S. 1860. I can well understand your frus- 
tration over our trade deficit. And I can 
sympathize with a desire to respond to 
constituent requests for action by pass- 
ing legislation. However, certain modifi- 
cations in our trade law will not elimi- 
nate the trade deficit and may actually 
make it worse. 

The answer to our trading problems 
is a comprehensive international eco- 
nomic policy strategy that addresses in- 
ternational trade, monetary, and debt 
issues in a coordinated fashion and in- 



volves the cooperation of other nations. 
We have developed such a strategy, as I 
have discussed here today, and we are 
implementing it. 

The exchange rate and policy coordi- 
nation sections of S. 1860 raise the right 
issues and point in the right direction, 
but they are now out of date in light of 
the agreement reached at the Tokyo 
summit. 

We are, of course, prepared to en- 
gage in thorough and meaningful discus- 
sion with the Congress on all pending 
legislation. And, as previously indicated, 
the Administration already supports 
legislation to: 

• Provide additional protection to 
the intellectual property rights of U.S. 
firms and individuals; 

• Alter our antitrust laws to help 
both our export and import sensitive in- 
dustries; and 

• Provide a war chest to improve 
U.S. export opportunities by negotiating 
an end to tied aid credit abuses. 

Legislation of this nature is not as 
glamorous as some of the bills that have 
been introduced, but it will provide 
needed support for our policies without 
undermining them. 

We must avoid passage of protec- 
tionist trade legislation that would alien- 
ate our trading partners, encourage 
them to enact similar protectionist poli- 



cies, and undermine the Administra- 
tion's international economic policy. 
Closed markets and an atmosphere of 
confrontation would doom our efforts 
solve our international economic prob- 
lems in a responsible and constructive 
manner. The greatest threat today to 
economic well-being worldwide is the 
danger of protectionism and a trade 
war. We need your help to avoid thes' 
dangers. I urge you to give the Admii 
istration's policies a chance to work. 

Conclusion 

In conclusion, I believe we have a via 
strategy to address the trade and fina 
cial problems that confront us. We art 
working to implement it and have mai 
significant progress, most recently at 
the Tokyo summit. But we need your 
help to avoid measures that would un- 
dercut our efforts. 



■The complete transcript of the hearing 
will be published by the committees and w 
be available from the Superintendent of 
Documents, U.S. Government Printing Offi 
Washington, D.C. 20402. 

2 Agreement reached among the finance 
ministers and central bankers from the U.'' 
U.K., West Germany, France, and Japan t< 
promote more balanced growth and exchan 
rates that more fully reflect economic fund, 
mentals. For the final announcement on thi 
agreement, see Bulletin of Nov. 1985. I 



The Tokyo Economic Summit 



by W. Allen Wallis 

Address before the Conference Board 
in San Francisco on April 10, 1986. Mr. 
Wallis is Under Secretary for Economic 
Affairs. 

During the past year, the international 
economy has seen important changes. 
Many of the changes are welcome— for 
example, the depreciation of the dollar 
and the decline of oil prices. Other 
changes, however, are unwelcome— for 
example, the size of the U.S. trade 
deficit, friction in international trade, 
unemployment in Europe and Canada, 
and the debt problems of some under- 
developed countries. 

In just a few weeks, on May 4, 
President Reagan will sit down at a 
small round table, specially built for the 
occasion, in the ornate Akasaka 
detached palace, Tokyo's version of 



Versailles. Joining him will be Prime 
Ministers Craxi of Italy, Mulroney of 
Canada, Nakasone of Japan, and 
Thatcher of the United Kingdom; Char 
cellor Kohl of the Federal Republic of 
Germany; and President Mitterrand of 
France. In addition, the leaders of the 
European Communities (EC) will be 
there— Prime Minister Lubbers of the 
Netherlands [President of the Council i 
Ministers of the EC] and President 
Delors of the Commission of the EC. 
Some of the time, those nine will 
abandon their small, cozy table for a 
large table, where each will be flanked 
by his Secretary of State and his Secr€ 
tary of Treasury. At both the small 
meetings of heads alone and the large 
plenary sessions, each head will have h 
personal representative, who will com- 
municate continuously with a small stal 
in another building, using electronic 
transmission of handwriting, facsimile 



64 



Department of State Bullet 



ECONOMICS 



ipment for documents, and a tele- 
ine. These leaders of the seven larg- 

industrial democracies will consider 
^s to reinforce the welcome develop- 
nts of the past year and to alleviate 

unwelcome developments. 

sparing for the Summit 

>parations for the Tokyo economic 
nmit meeting began last September 
Kyoto under the direction of the per- 
al representatives, of whom I am 
■. We had two more meetings, in 
nolulu in early February and near 
idon in mid-March, and 10 days from 
v, we will have our final preparatory 
eting near Paris. The final task of the 
■sonal representatives— usually called 
lerpas"— will be at an all-night ses- 
i on May 5-6 drafting the final eom- 
nique and, perhaps, other statements 
be issued by the heads of government 
they adjourn and attend a banquet 
en by the Emperor of Japan. 

In the preparatory meetings for the 
iyo economic summit, I have been 
uck by the degree of agreement 
ong us. That is not the way it has 
■ays been. In fact, the Versailles sum- 
. of 1982 ended in public quarrels, 
itradictions, and recriminations, 
ginning with the Williamsburg sum- 
; of 1983, however, there has been a 
nd toward consensus that is impres- 
e and gratifying. Not that there are 
differences; indeed, if there were 
ie, it would scarcely be worth meet- 
■. The consensus is about fundamen- 
3, the disagreements about appli- 
ions of the fundamentals. 

All agree on the fundamental role of 
edom in our societies, both economic 
edom and political freedom. During 
! 1980s, all the major democracies 
re moved toward greater reliance on 
rkets— as, indeed, has much of the 
it of the world. 

Another heartening trend among the 
nmit governments is a growing will- 
^ness and ability to cooperate. Recent 
momic summits have sponsored a 
ie range of objectives. Some of these 
ve been relatively concrete and 
jcialized— for example, the projects in 
di technology which began after the 
32 Versailles summit and the Working 
oup of Experts on Famine in Africa 
rich was convened by last year's sum- 
t at Bonn. Others deal with broader 
als— for example, improving the inter- 
tional trade and monetary systems. 

International cooperation depends, 
st and foremost, on sound domestic 



policies. Just as a healthy nation is one 
which maximizes pursuit of individual 
interests within a rule of law, so, too, a 
healthy world economy is one which 
facilitates the pursuit of national in- 
terests within a framework of treaties, 
agreements, understandings, and 
institutions. 

Two corollaries are implicit in that 
statement. First, a requirement for ef- 
fective international cooperation is 
agreement on an international legal and 
institutional framework. An effective 
framework for international cooperation 
is, in many ways, more complex than a 
framework for an individual country. It 
must be flexible enough to accommodate 
the different practices, laws, and institu- 
tions that inevitably arise among na- 
tions, and it lacks the enforcement 
authority of a sovereign government. 

The second corollary is that interna- 
tional cooperation will succeed only to 
the degree that countries share certain 
purposes and goals. There will be a 
large measure of such sharing of pur- 
poses and goals among countries with a 
large measure of freedom in political, 
personal, and economic life. Even with 
the closest cooperation, however, some 
objectives are unattainable, and others 
are inherently inconsistent. Cooperative 
efforts must be translated by individual 
nations into concrete actions which are 
judged by those nations to be in their 
own interests. 

As our own government prepares 
for the Tokyo economic summit— or, for 
that matter, for any other international 
conference— we view international 
cooperation from that perspective, 
namely, that realistic cooperation must 
take account of the interests of each of 
the countries involved. We are working 
in appropriate organizations to find 
realistic ways to strengthen joint ef- 
forts, not only in economics but also in 
combating international terrorism and 
narcotics trafficking and in enhancing 
the prospects for world peace. 

Four economic goals that will be 
shared by all the summit countries at 
Tokyo are: 

First, to strengthen and sustain eco- 
nomic growth in the summit countries; 

Second, to spread growth more 
broadly to the rest of the world, includ- 
ing heavily indebted developing 
countries; 

Third, to strengthen and extend 
freedom of international trade; and 

Fourth, to improve the functioning 
of the international monetary system. 



Economic Growth 

in the Summit Countries 

The summit countries have already 
achieved a great deal in their efforts In 
strengthen their own economies. They 
are controlling monetary growth and, 
thereby, subduing inflation. Some have 
begun to reduce the size and intrusive- 
ness of government, reducing unneces- 
sary expenditures and regulations. Many 
are trying to improve their tax systems 
to reduce disincentives to work, save, 
and invest. Those efforts are paying off: 
the summit countries as a group are 
now in the fourth consecutive year of 
economic expansion without rekindling 
inflation. Consumer prices rose at an 
average rate below 4% in the summit 
countries during 1985— too high, but the 
best performance since the 1960s. 

There is still a lot of unfinished busi- 
ness. During the first 3 years of the cur- 
rent upturn, the U.S. unemployment 
rate has fallen dramatically, despite a 
large increase in the work force, and 
employment has risen even more dra- 
matically, with over 9 million new jobs. 
Our inflation rate has been 4% or less 
each year of the expansion, and interest 
rates, both short term and long term, 
have declined substantially. Our eco- 
nomic growth has made a major contri- 
bution to growth in the rest of the 
world. 

Nevertheless, we have made too lit- 
tle progress in some areas. Controlling 
government expenditures is one. Presi- 
dent Reagan has made a commitment to 
reduce tax and regulatory disincentives 
and to keep inflation under control. 

We have become increasingly con- 
cerned about the weak economic per- 
formance of other summit countries. The 
most serious structural barriers to 
vigorous economic growth are in 
Europe. The clearest sign of this is in 
the disparity between recent growth 
and employment in Europe and in the 
other major industrial countries. Japan 
and Canada both grew at rates averag- 
ing over 4% per year during the past 3 
years, and they expanded employment. 

In contrast, growth in the four Eu- 
ropean summit countries has averaged 
only about 2%. Unemployment rates in 
Europe, historically much lower than 
ours, have continued rising and are well 
into double digits. Little or no improve- 
ment is in sight. 

Unemployment, thus, has become a 
major social issue in Europe. The num- 
ber of jobs in Europe has grown scarce- 
ly at all and is about the same now as 
15 years ago, a period during which the 



ly 1986 



65 



ECONOMICS 



United States has added 30 million jobs. 
This long-term stagnation of employ- 
ment in Europe is a cause for concern 
not only to Europeans but to their 
friends, allies, and trading partners. 

The essential problem in Europe is 
deeply rooted resistance to change. 
Structural barriers are especially 
troublesome in the labor market, where 
they distort both the supply of, and the 
demand for, workers. Labor market 
rigidities include high minimum wages, 
limitations on rights to hire and fire, 
and subsidized housing programs. In 
some countries, excessive unemployment 
and welfare benefits reduce economic in- 
centives to work. 

These labor market rigidities not 
only have depressed the rate of eco- 
nomic growth but also have distorted its 
pattern. A study by the European Com- 
munity Commission in 1984 found that 
high labor costs had led to a significant 
shift toward investments that save labor 
rather than create employment. 

Our summit partners also face other 
structural problems— for example, taxes 
that discourage initiative and invest- 
ment, controls on financial markets, na- 
tionalized industries run on uneconomic 
terms, subsidies, and restrictions on im- 
ports that protect uneconomic industries 
and agriculture. 

While these rigidities are most seri- 
ous in Europe, Japan, too, is saddled 
with barriers to more rapid growth. One 
of the major reasons Japan has such a 
large trade surplus is that there are so 
few good opportunities for investment in 
Japan (aside from a few export sectors) 
that much of Japan's domestic savings— 
which are large— are invested in other 
countries, especially the United States. 
While we have benefited from the inflow 
of Japanese capital, it would be health- 
ier if Japan's economy were more effi- 
cient. Then more of Japan's capital 
would be invested at home, its trade 
surplus with us would be less, and trade 
between Japan and the United States 
would benefit both countries more. 

The recent decline in oil prices will 
boost real growth in the major indus- 
trial countries, perhaps by as much as a 
full percentage point in 1986, and it may 
reduce inflation by as much as two per- 
centage points (unless it is offset by 
monetary policy). We are urging our 
summit partners to take advantage of 
this unique opportunity to accelerate the 
pace of structural change and pave the 
way for higher, sustained noninflation- 
ary growth in future years. Permitting 
the benefits of low oil prices to pass 
fully to consumers will increase output 



and investment and, thereby, strengthen 
growth and employment. Displaced 
workers will be better able to find alter- 
native employment, and that will reduce 
resistance to change. 

Strengthening Growth Prospects 
in the Rest of the World 

The most important contribution the 
summit countries can make to growth in 
nonsummit countries is to improve their 
own economic performance. The seven 
summit countries account for roughly 
half of world GNP [gross national 
product] and half of world trade; so 
when the summit countries sneeze, the 
rest of the world catches pneumonia. 

The summit countries have, in fact, 
made major contributions to growth in 
the rest of the world during the past 3 
years. The smaller industrial countries 
and the developing nations, which must 
export if they are to meet their debt 
payments and to grow, have benefited 
from increased exports, especially to the 
United States. 

The second major contribution the 
summit countries can make to growth 
elsewhere is to keep their markets open; 
without that, their growth does not 
benefit others, and its benefit to them- 
selves is vitiated. 

Fundamentally, however, sound 
domestic policies are the sine qua non 
of prosperity for any nation, including 
the underdeveloped countries. 

The strategy for dealing with inter- 
national debt problems, originally 
adopted at the Williamsburg economic 
summit in 1983, is to encourage sounder 
economic policies in debtor countries 
and to provide financing to support or- 
derly adjustment. Although that strat- 
egy has been generally successful in 
overcoming balance-of-payments crises, 
the sad fact is that few of the affected 
countries have made much improvement 
in their economic policies. Not only have 
their rates of inflation and fiscal deficits 
remained high but, even more dis- 
couraging, their economies remain ham- 
strung by government interference, 
regulations, price controls— and, too 
often, corruption. 

To tackle this problem, [Treasury] 
Secretary Baker advanced a proposal 
for a Program for Sustained Growth last 
October at the annual meeting of the 
IMF [International Monetary Fund] and 
the World Bank in Seoul. This U.S. ini- 
tiative is designed to improve growth 
for heavily indebted, middle-income 
debtor countries through economic re- 
forms, supported both by more effective 



lending by the multilateral development! 
banks and by additional lending from 
commercial banks. 

The initiative envisions that the 
World Bank, in close coordination with 
the IMF, will make more structural am< 
sectoral loans, rather than project loans 
to help debtor nations adopt market- 
oriented policies. 

The IMF, however, is still central t 
our strategy. While we expect prograir 
supported by the two institutions to be 
consistent and mutually supportive, ea« 
has a distinctive role and technical ex- 
pertness. The Fund is a monetary insti 
tution, not a development bank, so its 
lending is limited to programs of rela- 
tively short duration. The World Bank, 
on the other hand, lends at long matur 
ties directly in support of economic de- 
velopment. Its particular challenge will 
be to ensure that its programs and pol: 
cies help to promote the structural re- 
forms without which the money will be 
mostly wasted. 

While the U.S. initiative envisions 
an important increase in lending by bo' 
the World Bank and commercial banks 
that lending will be provided only in 
support of strong economic adjustment 
programs. Without such reforms as th€ 
development of more efficient capital 
and equity markets, rationalization and 
privatization of public enterprises, liber 
alization of foreign trade and investmei 
policy, and reduction of subsidies, price 
controls, and corruption, no amount of 
external financing can sustain growth. 
The clearest example of why this is so 
is the phenomenon of capital flight. 

From 1982 to 1985, capital expatri- 
ated by the citizens of the major LDC 
[less developed country] debtors is esti- 
mated to equal the inflow of new pri- 
vate and official financing. These 
countries' citizens send their money 
abroad for a variety of reasons: fear of 
exchange controls, low real returns, fet 
of expropriation Gegal or illegal), or tax 
evasion. Most of the motives for capita., 
flight can be eliminated only by provid- 
ing better incentives and safeguards fo 
domestic savers and investors; and 
those are the very changes needed to 
attract foreign capital. Without such 
changes, external financing is simply 
siphoned into foreign accounts and 
has no effect on a country's economic 
prospects. 



66 



ECONOMICS 



serving the Open Trading System 

srnational trade and investment are 
■litial to global prosperity, but 
nts of recent years threaten the in- 
lational trading system. It has be- 
e increasingly difficult for the 
ted States— for half a century the 
ling champion of free trade— to keep 
)wn markets open in the face of a 
iving trade deficit and a perception 
; others are taking advantage of our 
nness but not reciprocating. 
Last September, President Reagan 
ounced a comprehensive U.S. strat- 
for strengthening the open trading 
;em. That strategy has five elements: 

First, vigorous pursuit of U.S. 
its and interests in international 
imerce under U.S. law and in the 
leral Agreement on Tariffs and 
de (GATT)-for the first time, the 
ernment itself has initiated unfair 
le proceedings, instead of leaving 
t up to private parties; 
Second, a new round of multilateral 
ie negotiations in the GATT; 
Third, bilateral negotiations to in- 
ise market access for competitive 
!. exports; 

Fourth, cooperative international ef- 
;s to promote stronger and more 
meed growth in the major economies 
I to strengthen the exchange value of 
er currencies; and 
Fifth, support for funds to combat 
sign export subsidies and for 
anger protection of intellectual 
perty (copyrights, patents, trade- 
rks, etc.). 

We have made progress in each part 
;hat program. The Administration- 
iated unfair trade cases have sent an 
jortant message to our trading part- 
's; indeed, some cases we were plan- 
g were not filed because the mere 
ispect prompted other nations to 
nedy unfair trading practices. Under 
me Minister Nakasone's leadership, 
>an is making an unprecedented 
art to open its trade and financial 
rkets— an effort which has yielded 
nificant new opportunities for U.S. 
lis. The so-called MOSS talks 
arket-oriented, sector-selective), 
spite frequent assertions to the con- 
iry, have achieved significant suc- 
ises in opening Japan's market for 
ecommunications, pharmaceuticals, 
sdical equipment, and forest products, 
e depreciation of the dollar during the 
it 13 months has been dramatic. 

Discussions of trade at the Tokyo 
limit will focus on a new GATT round 
multilateral negotiations. That is the 



most promising way to achieve fairer 
trade, to increase access for exports, to 
provide more effective resolution of dis- 
putes, and to strengthen the fabric of 
the international trading system. All 
trading countries have an important 
stake in developing a comprehensive 
agenda to reform the GATT, to make it 
relevant to today's trade, and to en- 
hance its capacity to deal with new 
problems as they arise. 

The United States has six major ob- 
jectives in the new round: 

First, strengthening the GATT's 
procedures for settling disputes; 

Second, improving discipline over 
so-called safeguards, the emergency ac- 
tions taken by governments to protect 
domestic industries from surges in 
imports; 

Third, ending the chaos in trade in 
agriculture— both we and the rest of the 
world would benefit greatly by putting 
agriculture on a more market-oriented 
basis, by eliminating export subsidies, 
and by reducing barriers to imports; 

Fourth, improving discipline over 
nontariff barriers to trade, including is- 
sues in government procurement, air- 
craft trade, and subsidies; 

Fifth, improving market access in 
traditional areas of trade in merchan- 
dise, through lower tariffs and less re- 
strictive quotas; and 

Sixth, extending the GATT to new 
areas, especially services, investment, 
and intellectual property. 

Negotiations this comprehensive will 
create many individual winners and 
losers within each country. This will 
create difficulties, for the screaming of a 
few losers will drown out the purring of 
many winners. Comprehensiveness, 
however, is also the greatest strength of 
the proposed new round. It means that 
what a country loses in one area can be 
more than made up for by the ag- 
gregate of its gains in other areas. 

We hope and expect that the negoti- 
ations will begin in September. 

The International Monetary System 

President Reagan, in his State of the 
Union address in early February, called 
for greater coordination of economic 
policies among the major industrial 
countries to improve exchange rate sta- 
bility. For this purpose, he asked Secre- 
tary Baker to determine if the nations 
of the world should convene to discuss 
the role and relationship of our curren- 
cies. The President's statement has ex- 
cited a great deal of speculation and has 
given a new sense of urgency to discus- 



sions in the International Monetary 
Fund and other institutions. 

Exchange rates are the principal 
links between economies, and the ex- 
change rate of a country's currency is 
perhaps the most important price in its 
entire economy. As we consider interna- 
tional action to improve the stability of 
exchange rates, we must be clear about 
the functions of changes in rates and 
what cooperation can and cannot do. 

The international monetary system 
consists of a framework of national laws 
and international agreements which 
govern economic and financial transac- 
tions among nations in a way that per- 
mits each nation to pursue its own 
economic objectives with due respect for 
the rights of others. At the center of 
the system is the International Mone- 
tary Fund. 

The IMF was conceived at the 
Bretton Woods conference in 1944 and 
came into existence the following year. 
Through it, nations which had just 
suffered through a devastating war 
sought to avoid a recurrence of the 
Great Depression of the 1930s, which 
had been deepened and prolonged by 
widespread competitive devaluations and 
restrictions on trade and finance. The 
IMF's member nations pledged to pro- 
mote exchange-rate stability and the 
free convertibility of currencies, to avoid 
competitive devaluations, and to limit 
government interference with financial 
transactions related to trade. 

Originally, the "Bretton Woods sys- 
tem," which was established in 1945, re- 
lied on fixed exchange rates. In time, 
however, expanding trade flows and 
sophisticated financial markets made 
fixed exchange rates untenable. World 
economic events and diverging economic 
policies among the major trading nations 
required that exchange rates respond to 
market forces. Thus, the system of flexi- 
ble exchange rates evolved in the early 
1970s. It has permitted the continuation 
of orderly international trade and finan- 
cial transactions, even though world eco- 
nomic conditions often have been 
chaotic. In that way, flexible exchange 
rates have served us very' well. Many 
observers are worried, however, about 
their levels and their effects on trade. 

There is little serious disagreement 
about the reasons for changes in ex- 
change rates during the past decade. No 
matter what institutional arrangements 
governments contrive, the fact is that 
markets will determine exchange rates 
on the basis of assessments of underly- 
ing economic conditions and prospects. 



ly 1986 



67 



ECONOMICS 



Most observers welcome the ex- 
change rate movements which have 
taken place over the past 13 months, as 
well as the spirit of cooperation among 
monetary authorities that was reflected 
in the so-called Plaza agreement of last 
September. These developments, 
however, would not have been possible 
without the growing convergence of un- 
derlying economic performance in the 
summit countries that has been achieved 
through several years of intensive con- 
sultations and cooperation. 

We need to explore whether this 
tendency can be strengthened through 
changes in institutional arrangements. If 
so, it would be beneficial, but we must 
not lose sight of the fact that, in the 
final analysis, better exchange market 
performance can come only from better 
economic performance and more consist- 
ent policies among the major economies. 



Conclusion 

We expect the Tokyo summit to con- 
tinue the recent trend toward closer and 
more effective cooperation on a wide 
range of economic and political issues. 
Indeed, this trend has not been limited 
to the summit countries. Both democ- 
racy and free markets are spreading 
throughout the world. Both developed 
and developing nations share our desire 
to find solutions to problems of growth 
and trade, of peace and security. Free 
nations, pursuing sound economic poli- 
cies, have accomplished a great deal al- 
ready. The United States can be proud 
of its contribution— indeed, its leader- 
ship—in these accomplishments. At the 
summit, President Reagan will make it 
clear that we stand ready to help lead 
the world to a still better future. ■ 



U.S. -Japan Economic Relations: 
The Tokyo Summit and Beyond 



by W. Allen Wallis 

Address before the U.S. -Japan Eco- 
nomic Agenda Meeting on April 23, 
1986. Mr. Wallis is Under Secretary for 
Economic Affairs. 

Our Bilateral Trade Deficit 

Many of you may know that I spent the 
early part of my career as a statistician. 
Statistics can aid in our understanding 
of a problem and help us make wise de- 
cisions. But they also can cause mischief 
when they are misused or when people 
think that they explain more than they 
do. Disraeli said that there are three 
kinds of lies: lies, damn lies, and statis- 
tics. Too many people use statistics the 
way a drunk uses a lamppost: for sup- 
port rather than for light. Unless statis- 
tics are handled with care and objec- 
tivity, they may seem to prove things 
which are not at all true. 

Probably the most cited statistic in 
U.S. -Japan economic relations is the size 
of our bilateral trade deficit: $49.7 bil- 
lion in 1985. To many people, that 
statistic— the size of our trade deficit 
with Japan— says a lot. When it in- 
creases, anger with Japan increases— 
and also emotional charges that the 
Administration's trade policy has failed. 



What the Trade Deficit 
Does Not Tell Us 

But, because it is a statistic, we need to 
remember just what it is and what it 
explains, and what it is not and what it 
does not explain. That number— the size 
of our trade deficit with Japan— simply 
represents the difference between how 
much merchandise we sold to Japan, and 
how much we bought from them— 
nothing more and nothing less. 

• It does not show how open the 
Japanese market is. The deficit rose by 
$13 billion in 1985, but Japan did not 
erect $13 billion worth of new barriers 
against our products. 

• It does not show how successful 
we have been in opening Japanese mar- 
kets. Indeed, we had a number of suc- 
cesses last year in gaining greater 
access to Japan, especially through the 
so-called MOSS (market-oriented, sector- 
selective) process, even while the deficit 
rose. 

• It is not an indicator of how com- 
petitive American and Japanese indus- 
tries are against each other. The United 
States— not Japan— is still the world's 
largest exporting nation and the world's 
technological leader. 



• It is not a way of measuring hov 
well Japan is assuming its mternationj 
responsibilities. In fact, Japan is pursn 
ing an increasingly active international 
role, in partnership with the United 
States. It is now the world's second 
largest aid donor and a leader with us 
in pursuing a new international trade 
round. 

• Finally, it does not explain why 
there is a deficit or why it changes. It 
says nothing about the influence of for 
eign exchange rates, economic growth 
business cycles, and different economii 
structures. 

The Totality of Our 
Economic Relationship 

Our trade balance with Japan reflects 
only one part of our economic relation 
ship with Japan— a relationship which 
size and importance is exceeded only 1 
our economic links to Canada. In deck 
ing whether his patient is healthy or 
sick, a doctor does not just take the 
patient's temperature; he examines th 
whole body. Singling out our merchan 
dise trade balance means that we are 
not looking at the whole "body" of ou 
economic relationship with Japan. 

To many people, the size of our 
trade deficit with Japan says a lot abc 
the state of our economic relations wit 
Japan. What impresses me is what it 
does not tell us. 

• It does not tell us that we sell 
more American products to Japan thai 
to any other country in the world ex- 
cept Canada or that about 625,000 
Americans owe their jobs to those 
exports. 

• It does not tell us that we sold s 
much to Japan last year as we sold to 
France, West Germany, and Italy 
combined. 

• It does not tell us that Japan is 
the best market in the world for Ame; 
can farmers or that only Canada buys 
more manufactured products from us 
than Japan does. 

• It does not tell us that Japan ha 
become one of the leading investors in 
the United States or that Japanese 
manufacture in 40 states and employ 
about 80,000 workers. 

• It does not tell us that last year 
Japanese net flows of capital to the 
United States were about $75 billion 
and that this money increased the poo 
of capital available in our financial mai 
kets, made U.S. interest rates lower 
than they otherwise would have been, 



68 



Department of State Bullel 



ECONOMICS 



>ed make our companies more pro- 
tive, and helped finance our Federal 
emment deficit. 

• It does not tell us how many serv- 
we sold to Japan, how much money 

made from selling airplane tickets, 
rising American products, and show- 
American films. 

• It does not tell us how much 

ley American banks and corporations 
ie in Japan and sent back to the 
ted States. 

It does not tell us that over 1.5 
ion Japanese tourists visit our nation 
ry year, spending $1.4 billion and 
porting 35,000 jobs. 

• It does not tell us how Japanese 
iorts are enriching our lives and sup- 
ng critical parts and components 

t help make our companies more 
ipetitive. 

We must remember that U.S. -Japan 
ie does not take place in an economic 
uum. A bilateral trade deficit is not 

1 the final score in a baseball game, 
ause economic activity never ends. 

; of the basic principles of economics 
hat both sides gain from an ex- 
nge. When we buy from Japan, 
lerica's consumers, operating in a 

2 market, get what they want— 
anese cars, cameras, computers, and 
an. But the Japanese are not giving 
se things away. They take our dol- 

>, but they do not hide them under 
ir mattresses. They use them— to buy 
ducts and services from us and also 
m other countries, which in return 
n have dollars to buy products and 
vices from us. The Japanese use 
se dollars also to provide capital to 
and to other countries, to help 
imote economic growth in our coun- 
ts and make our economies more 
iductive. Every dollar that we spend 
Japanese products will be used to 
f American goods, services, Di- 
ets—though perhaps not by Japanese 
; by third countries who have sold 
ngs to Japan. 

st and Future U.S. Trade Policies 

number of years ago, I wrote in a 
:tbook that "Statistics is a body of 
thods for making wise decisions. . . ." 
r this, a statistic must be understood 
)perly. If we base our trade policy 
vard Japan— and, indeed, our attitude 
vard that country and its people— on 
s number, we will have bad policy 
rj provoke results that are not in our 
erest. 



The focus of U.S. trade policy 
toward Japan for two decades has al- 
ways been on market access. By resist- 
ing calls for protection in the United 
States while working for open markets 
in Japan, our policy has been consistent, 
promoting free trade at home and 
abroad. Our concern has not been with 
the bilateral deficit per se, because 
there is nothing inherently good or bad 
about a bilateral trade surplus or deficit. 

But during the 1960s and 1970s, we 
were able to "kill two birds with one 
stone." Pursuing market access did deal 
de facto with the bilateral imbalance. 
This was because from 1965 to 1975, our 
trade deficit with Japan averaged only 
$1.5 billion annually, and Japanese re- 
strictions on our access to their market 
probably did account for all of that 
amount. It may have been logical, there- 
fore, to conclude then that our trade 
deficit with Japan did, in fact, indicate 
how open the Japanese market was and 
the degree to which Japan was assum- 
ing its international responsibility to 
maintain the international trading 
system. 

But restrictions on Japan's market 
today account for only part of our 
bilateral deficit. Guesstimates vary from 
$5 to $15 billion. But no matter which 
figure is chosen, they all agree that 
market access is the smaller part of the 
problem. We also need to remember 
that even if all Japanese market restric- 
tions were removed, our global trade 
deficit will not change as long as total 
investment in the United States exceeds 
our domestic savings. In that case, open- 
ing access in Japan will simply redis- 
tribute our global trade deficit among 
other countries and other products. 

Nevertheless, to many Ameiicans 
the continued growth of the deficit is 
seen as further "proof" of Japanese 
market restrictions and an indication 
that U.S. trade policy has failed. Even 
though fair-minded people know that the 
deficit is the result in large part of 
broader macroeconomic and structural 
factors, there is a clamor for more ac- 
tion and increased calls to "get tough" 
with Japan. We then search out and 
publicize more and more Japanese mar- 
ket restrictions. We probably have more 
trade specialists in the U.S. Govern- 
ment, and more lobbyists and lawyers, 
focusing on Japan than on any other 
country. As a result, we probably know- 
more about Japanese market barriers 
than those of any other country. Even 
the most technical issues are raised to a 
political level and put in the public spot- 
light. Meanwhile, the trade restrictions 



of other countries, many of which are 
far more egregious, receive less public 
attention. 

I ! y focusing public attention on that 
part of Japan's market which is still 
closed to American goods, we reinforce 
the perception, left over from the 1960s 
and 1970s, that Japan's doors are 
slammed shut to U.S. products and 
services. We contribute to the mistaken 
belief that Japan's market restrictions 
are the primary cause of the bilateral 
trade deficit. And when Japan does take 
steps to ease these restrictions, they are 
seen as unlikely to make much of a dent 
in the trade deficit. That is something 
that we knew when we started, but, 
nevertheless, there is frustration all 
around— in the Congress, in the 
Administration, and in Japan. 

In my present position, I know as 
well as anyone the restrictions that 
Japan imposes on our ability to sell 
American goods and services. Those re- 
strictions are, indeed, multifarious and 
exasperating, and they are harmful— to 
Japan, in fact, as much as to us. We 
hear from many American companies 
that face obstacles to doing business in 
Japan, and we are committed to helping 
them remove those barriers. But 
Washington is a place that people come 
to when they have a problem. We do 
not hear very often from those com- 
panies that do well in Japan and that 
have made Japan the second largest 
export market in the w'orld for our 
farmers and businessmen. 

Trends in the Japanese Economy 

It would be both costly and dangerous 
for us to base our current and future 
trade policies with Japan on our 
memories of the past 25 years of 
Japanese policies and practices. What 
we should be looking at are current 
Japanese policies and practices, how 
they are changing, and what influence 
we can expect to have on them. 

• We would like to see broad- 
gauged changes in Japan that remove 
the policies, practices, and attitudes that 
discriminate against foreign companies, 
products, and services. 

• We would like to see Japan be- 
come an importing superpower, not just 
an exporting superpower. 

• We would like to see greater in- 
ternationalization, deregulation, free- 
dom, and openness throughout the 
Japanese economy. 



y 1986 



69 



ECONOMICS 



• We would like to see Japan re- 
move those inefficiencies that character- 
ize much of its economy and which 
contribute to the trade imbalance. 

The fact is, there are more and more 
Japanese who agree with us, from 
Prime Minister Nakasone on down. 
There are internal pressures and trends 
already at work in Japan, pointing its 
economy in these new directions. Our 
policy should be to encourage Japan fur- 
ther in these directions, to help rein- 
force and accelerate trends that already 
are underway. All of those changes 
would be beneficial to Japan, even more 
than to us. 

You all are familial- with shoji, slid- 
ing Japanese doors. Rather than having 
to pound on doors to open Japan's mar- 
kets, we now have allies on the other 
side helping us slide Japan's doors open. 
Japanese banks and securities firms 
were just as interested in capital market 
liberalization and yen internationaliza- 
tion as we were. Japanese shipping com- 
panies also wanted to see restrictions 
eased on the movement of trucks carry- 
ing containers of high capacity. Japanese 
electronics firms outside the NTT 
[Nippon Telephone and Telegraph] 
"family" of suppliers also wanted to see 
deregulation of the telecommunications 
industry, as well as greater openness in 
NTT procurement. Japanese as well as 
American pharmaceutical companies 
wanted regulations eased. In contrast to 
years past, today when we work to open 
Japanese markets, we have many 
friends in Japan who work with us, be- 
cause they know that greater market 
freedom is in their interest. 

Changing Course in Japan 

After he met with President Reagan at 
the White House on April 14, Prime 
Minister Nakasone said that Japan must 
transform its economy to rely more on 
domestic demand and imports, especially 
manufactured products. 

One week before he met the Presi- 
dent, the Prime Minister accepted the 
report of an advisory group he estab- 
lished on economic structural adjust- 
ment, the Maekawa commission. 
Nakasone said that Japan now is at a 
historic turning point in its relations 
with the international economic commu- 
nity. He said that Japan must change its 
traditional way of thinking and establish 
a "national goal" to reduce its current 
account imbalance to a level "consistent 
with international harmony." 



The Maekawa commission was a 
private group, but its report is a 
watershed in Japan's postwar economic 
history. Some of its major recommenda- 
tions are: 

First, to expand domestic demand 
by: 

• Promoting housing construction by 
easing building restrictions and expand- 
ing tax deductions; 

• Stimulating private consumption 
by boosting wages, cutting taxes, and 
reducing working hours; and 

• Increasing the role of local govern- 
ments in funding public works. 

Second, to transform Japan's indus- 
trial structure by: 

• Encouraging investment in manu- 
facturing abroad; 

• Rationalizing Japan's many 
depressed industries; and 

• Erasing restrictions on agricul- 
tural imports. 

Third, to continue to improve mar- 
ket access by: 

• Implementing last summer's trade 
action plan, which said that Japan's mar- 
ket should be free in principle, with re- 
strictions only as exceptions; and 

• Promoting greater imports of 
manufactures and streamlining Japan's 
distribution system. 

Fourth, to further liberalize Japan's 
capital and financial markets. 

Fifth, to expand Japan's interna- 
tional economic cooperation by: 

• Expanding imports from the less 
developed countries; 

• Increasing its overseas economic 
development assistance; and 

• Promoting a new GATT [General 
Agreement on Tariffs and Trade] round. 

And finally, to strengthen the 
management of its fiscal and monetary 
policies, including the abolition of the 
tax-free interest break on small savers' 
accounts. 

Prime Minister Nakasone and the 
Maekawa commission are not the only 
people calling for change in Japan. The 
Keidanren, Japan's most prestigious 
business organization, recently issued its 
own policy proposals, stating that transi- 
tion to a totally free trade system must 
become a Japanese national goal. It said 
that Japan should remove all import re- 
strictions, abolish all tariffs on manufac- 
tured goods, undertake thorough 
deregulation of its economy, and achieve 
openness in its administrative systems 
and operations. The Ministry of Interna- 



tional Trade and Industry, in its report- 
on the future of Japanese industry, sail 
that Japan must open up its market fu 
ther to foreign products and "positiveb 
increase" imports of manufactured 
goods by promoting a horizontal divisi 
of labor, so that imported manufacture 
goods will be woven into Japan's pro- 
duction and consumption structures. 
Finally, a national commission in Japai 
is now considering what changes need 
be made in Japan's tax structure. 
Japan's present tax structure provides- 
number of incentives to save and disin 
centives to consume and invest which 
crease the imbalance between savings 
and investment, so we will be interest: 
in the report of this commission as we 

A Comprehensive U.S. 
Trade Policy for Japan 

I said earlier that if we base our polic 
on the statistical measurement of just 
one part of a broad and diverse eco- 
nomic relationship, we will have bad 
policy. Likewise, if we base our trade 
policy on the memories of past Japane 
policies and practices and our own out 
dated perceptions, the results will be 
costly and dangerous. 

U.S. trade policy toward Japan mi 
keep its eye on the future, and it mus 
be comprehensive in its scope. Our 
policy does that. We do not seek mark* 
access to Japan because we have a trai 
deficit. Free trade and open markets 
goals in themselves, because they are 
the interest of both countries. Even if 
we had a trade surplus, it would be 
important to reduce barriers and open 
markets. 

• We will continue to seek the 
removal of individual trade barriers 
which affect a wide variety of Americs 
goods and services. 

• We will continue to seek open at 
liberalized markets for entire industrk 
sectors through the so-called MOSS 
process. 

• We will continue to deal with th 
financial issues that lie behind our trai 
balance, by encouraging further libera 
zation of Japan's domestic capital 
markets and by cooperating in the 
International Monetary Fund and 
related organizations. 

• As necessary, we will take uni- 
lateral action under our own trade law 
to remove unfair trade practices. 



70 



EUROPE 



• We will continue to cooperate with 
an at the international level to 
ngthen the world trading system 

pi'omote the success of a new GATT 
id. 

• And finally, as a result of the 
sident's meeting; last week with 
ne Minister Nakasone, we have 
jed to discuss structural economic 
es in both our countries. Our goal is 
ictural change in both countries 

ch will affect the trade balance and 
iove the strains in our relationship. 

iclusion 

ing their meeting last week, the 
ne Minister told the President that 
kind of fundamental policy change 
an is now poised to make occurs only 
s in a century. A hundred years ago 
apan, an intellectual debate raged 
A'een the free traders and the protec- 
ists. The leading spokesman for the 
' traders was a man named Taguchi, 
) had read deeply in Adam Smith 

English commercial history. He 
ned against state protection of indus- 
because it would give favorable 
itment to the samurai class and en- 
rage them in their traditional lazy 
its. But Taguchi and his supporters 

the argument. The samurai class 

a lot of political "clout" during the 
ji Restoration, and they were en- 
raged in their views by advocates 

practitioners of protection in the 
ited States and Europe. 
Today, Japan has another chance. I 
eve that by the end of this century, 
an will have the freest trade in the 
•Id, after the United States, because 
t is where Japan's interests lie. It 
3t be our task to encourage Japan in 
; direction and to help it make the 
it decision. To be sure, the principal 
leficiaries will be the people of Japan, 

we and the rest of the world will 
lefit, too. ■ 



Soviet Nuclear Reactor 
Accident at Chernobyl 



WHITE HOUSE STATEMENT, 
APR. 30, 1986 1 

The President yesterday, aboard Air 
Force One, ordered the establishment of 
an interagency task force within the 
U.S. Government that would coordinate 
the government's response to the 
nuclear reactor accident at Chernobyl. 
The task force is under the direction of 
Lee Thomas, who is the Administrator 
of the Environmental Protection Agency 
(EPA), with representatives from EPA, 
the Department of Energy, the Depart- 
ment of the Air Force, National Oceanic 
and Atmospheric Administration 
(NOAA), the Federal Aviation Adminis- 
tration (FAA), the Food and Drug Ad- 
ministration (FDA), the Nuclear Regula- 
tory Commission (NRC), the Depart- 
ment of State, and the Central Intelli- 
gence Agency (CIA). 

The group met yesterday, last eve- 
ning, in Washington and will be meeting 
on a regular basis for the foreseeable fu- 
ture. The group is charged with provid- 
ing continuous monitoring of any health 
and environmental implications resulting 
from the accident. EPA will provide 
daily press briefings based on informa- 
tion gathered by this task force in order 
to keep the public informed. 

Based on the latest data that has 
been gathered since we learned of the 
accident, it appears that the radioactive 
air mass from the Chernobyl nuclear 
reactor accident in the Soviet Union is 
currently moving over the Soviet Union. 
During the next few days, it is expected 
that the air mass will be dispersed by 
normal atmospheric activity. It is too 
early to determine whether any portion 
of the radioactive air mass will reach 
the continental United States. However, 
from the latest information we now 
have, should any radiation reach the 
United States, it is highly unlikely that 
it would be a level that would pose any 
threat to public health. This is because 
of the dispersion which would take place 
in the atmosphere. 

The Environmental Protection 
Agency, which maintains the nation's 
radiation monitoring network, has in- 
creased its sampling frequency to a 
daily basis for airborne radioactivity. 



Information available to us indicates 
that the Soviet reactor accident oc- 
curred in the fourth and newest reactor 
at the Chernobyl power station. This 
reactor is a graphite-moderated, 
pressure-tube reactor of a type called 
RBMK by the Soviets. The'reactor suf- 
fered a major accident which included a 
fire at the graphite core. Given the 
amount and extent of the radiation 
released, the fire has destroyed most of 
the reactor's core. The reactor core con- 
tains approximately 200 tons of uranium 
interspersed with 1,700 tons of graphite. 
If the fire is not extinguished, it would 
probably continue to burn for days or 
weeks. The fire will continue to spread 
radiation from the core as long as it 
burns, although the Soviets have indi- 
cated that the rate of release is decreas- 
ing. Fighting the fire will be very diffi- 
cult due to the extremely high levels of 
radiation near the reactor. The Soviets 
have asked some West European coun- 
tries for assistance in fighting the 
graphite fire, although no one in the 
world has experience in dealing with a 
situation like this. The British had a 
graphite fire in their reactor in the 
1950s, but the radioactive contamination 
was much less. 

On the diplomatic front, this morn- 
ing Assistant Secretary of State for Eu- 
ropean and Canadian Affairs [Rozanne 
L. Ridgway] met the Soviet Charge, 
[Oleg M.] Sokolov— that took place yes- 
terday, Eastern time. She expressed, on 
behalf of the President, the U.S. deep 
regret over the accident. We hope that 
the casualties and material damage will 
be minimal. The United States is pre- 
pared to make available to the Soviet 
Union humanitarian and technical as- 
sistance dealing with this accident. We 
are seeking additional information on 
the accident and request the closest pos- 
sible coordinated effort among all con- 
cerned countries. To minimize the 
danger, we hope the Soviet Union will 
fulfill its international obligations to pro- 
vide information on the accident in a 
timely manner. In order to state pub- 
licly the U.S. position and understand- 
ing of the situation, a briefing will be 
held in Washington on Wednesday at 11 
a.m. at the State Department. Those 
briefers will include the Environmental 
Protection Agency, State Department, 
and Energy Department, as well as the 
Nuclear Regulatory Commission. 



y 1986 



71 



EUROPE 




While in Bali, President Reagan receives a briefing on the Chernobyl nuclear accident 
from his national security adviser Adm. Poindexter. Chief of Staff Regan is left and 
Secretary Shultz is on the right. 



The State Department has told us 
that we do not have a count of all 
Americans in the Kiev area, since 
tourists are not under an obligation to 
inform the Department or the U.S. Em- 
bassy of their whereabouts. Embassy 
officers in the U.S.S.R. are in contact 
with Intourist and other Soviet authori- 
ties, but in order to trace an individual 
they need the Intourist group number 
or name or location and phone number, 
if possible, of the hotel in which the 
American citizen is thought to be 
staying. 

Embassy Moscow has no reports of 
Americans affected by the accident. 
There have been no requests for medical 
assistance, evacuation, or other assist- 
ance by Americans. 

We have been informed that there 
are several American students who are 
traveling in the Soviet Union and are 
now in Kiev. The Soviet Government, of 
course, is responsible for ensuring that 
they are safely evacuated should it be 
required. Unfortunately, the Soviet 
Union has not told us what precautions 
that they are offering to protect our 
citizens that may be in the Soviet 
Union. 



SECRETARY SHULTZ'S 
INTERVIEW ON 
"THE TODAY SHOW," 
APR. 30, 1986 2 

Q. We have had the news of the 
Soviets' refusal of our assistance. How 
are you interpreting that refusal this 
morning? 



A. I wouldn't call it a refusal. They 
gave us some information. They ex- 
pressed appreciation for our offer and 
they said that they felt that they had 
the material and expertise to deal with 
the problem, so they wouldn't need our 
help. 

Q. Are you inclined at this time to 
accept what information they are giv- 
ing you as fact? 

A. We are gathering information 
ourselves, as is everybody, and pooling 
it. We get information from pictures, we 
get information from things that we 
hear from the region, and it seems to us 
very clearly to be a much larger event 
than their reports would suggest. 

Q. At this point, how do you ex- 
plain that discrepancy between what 
our information is telling us and what 
they are telling you? 

A. It is possible to suppress news, I 
guess, in the Soviet Union, but when it 
comes to radioactivity, you can't sup- 
press it and you can't avoid having pic- 
tures taken. So we are getting informa- 
tion independently of what they say. 

Q. Have we officially, in any man- 
ner, expressed our displeasure at their 
failure to be more forthcoming? 

A. We feel that any country where 
something happens that affects things 
across their borders— other countries, in 
other words— has basically, an obligation 
to keep people informed. And, we feel 
that they should be providing more in- 
formation and more promptly. And 
we've said that. We've let them know 
that. 



Q. At this point, do you view thei 
behavior as irresponsible? 

A. I think that's a little hard to saj 
They have a major calamity on their 
hands and, no doubt, they're struggling 
with it, and one doesn't know immedi- 
ately what has happened and what its 
implications are. So I'm inclined to giv- 
the benefit of the doubt on the early 
hours, but it seems to me that by now 
they could be providing a lot more infc 
mation than they are. 

Q. If this accident is as serious a 
this preliminary information you're 
getting would seem to suggest it is, 
can you at this time ascertain what 
the long-term consequences might bf>< 
on Soviet policies and priorities? 

A. They have to examine their own 
way of constructing and developing 
nuclear power, if they can have a dis- 
aster of this scope obviously. From ou 
standpoint, we have been operating 
nuclear power plants on submarines aii 
on ships, we've never had an accident, 
We have had a huge amount of time ii 
nuclear power plants— civilian nuclear 
power plants in the United States. 
We've never had a person killed. So o i 
safety record is a very strong one, bur 
of course, we constantly examine the 
processes of managing these plants. 

I think perhaps there's another im 
plication here. People worry about 
nuclear matters, particularly they wor 
about nuclear weapons. There's alwayi 
this transposition in people's minds, ai 
this is a time when we want to empha 
size the importance of cutting drastica 
down on nuclear stockpiles. The Presi- 
dent has proposed eliminating entirely 
intermediate-range nuclear weapons, a 
he and Mr. Gorbachev have agreed th; 
there should be radical reductions in t 
strategic nuclear arsenals of each side. 
We'd like to see progress on that in 
Geneva, and we have been working at 
that. We haven't had a response from 
the Soviet Union to our longstanding 
START proposals, but we hope when 
the new round starts in the middle of 
May that it will be active and we can 
satisfy ourselves and the rest of the 
world in getting nuclear weapons dow 

Q. Might this accident force the 
Soviets into some difficult guns vers 
butter decisions? 

A. I don't want to speculate about 
that. They have a major problem on 
their hands. They obviously will have 
sharp reduction in the electric power 
available to industry, particularly in tl 
Kiev sector. But since they have a gri 
like we do, it affects their whole enerj 
industry. 



72 



EUROPE 



J. How concerned are you that 
accident might spark a new round 
ntinuclear protests which would 
ctly affect NATO missiles in 
ope? 

\. The protesters are always there, 
ink it's very important, as far as 
ear power is concerned, to keep 
ting to the extraordinary safety 
rd in the United States and in other 
itries and our continued vigilance on 
matter. 

\s far as nuclear weapons are con- 
ed, we think that they should be 
iced— that's been the President's 
;ram all along— and eliminated. The 
t is how do you do that? How do 
come down on an equitable basis so 
you have stability as you are reduc- 
That's what the negotiations should 
bout and are about, and that's what 
President keeps emphasizing, so 
1 call for little help on that score, 
we don't want to have the United 
es reduce without the Soviet Union 
icing. That's the point. 



ITE HOUSE STATEMENT, 
Y 1, 1986 1 

et authorities are continuing to 
itain a close hold on information on 
nuclear accident and its conse- 
ices. We know that a major accident 
ilted in explosion and major damage 
nit four of the Chernobyl nuclear 
ity. A fire occurred, and we have 
nations of a continuing fire at that 
ity. We cannot confirm press 
>rts of a second nuclear reactor melt- 
n. Some diplomatic and counselor es- 
ishments are advising their citizens 
;ave the area of Kiev. We have no 
1 official information on casualties, on 
iuation of population. 
On Tuesday afternoon, Washington 
I Minister Counselor Isakov of the 
iet Union conveyed a message to the 
. Government regarding the 
rnobyl nuclear accident. The 
ister Counselor characterized the 
isage as being from General Secre- 
r Gorbachev to the President. This is 
ddition to the meeting which Secre- 
f Ridgway had with Mr. Sokolov 
ier in the day in which she pre- 
ted our offer. This message was not 
racterized by the Soviets as a direct 
jonse to our earlier request for infor- 
;ion, nor have we received a response 
>ur offer of assistance. We have 
erated to the Soviets that our offer 
issistance still stands. We also 



repeated hope for more detailed infor- 
mation on the scale and nature of the 
accident. 

The Soviets have confirmed to us 
that an accident occurred on April 
25th— you will note that is Friday— in 
one of the power block rooms at Cher- 
nobyl, an atomic power station near 
Kiev. They say that a leak of radioac- 
tive material has required the partial 
evacuation of the populations in regions 
immediately adjacent to the accident. 
They indicate that the radiation situa- 
tion has been stabilized, and, finally, 
they note that the dissemination of 
radioactive contamination in the 
western, northern, and southern sec- 
tions has been detected. The message 
further states that these levels of con- 
tamination are somewhat above permis- 
sible norms but are not in the extent 
which would require special measures to 
protect the population. 

The latest available information from 
the President's interagency special task 
force on the Soviet reactor incident indi- 
cates very little change from yesterday. 
We do not have any different assess- 
ments of casualties from the Soviet 
Union. You have seen their public 
announcements. The movement of the 
radioactive substance in the atmosphere 
is still unsettled. Releases immediately 
following the incident moved toward the 
northwest, toward the Scandinavian 
countries, then shifted to the south, and 
the latest day or so have moved to the 
east. There have been reportings of 
radioactive fallout in a number of Euro- 
pean countries, most specifically and re- 
cently the Austrians. The coverage of 
the cloud is quite large. Estimates from 
the National Oceanic and Atmospheric 
Administration lead us to think that it is 
covering a good part of eastern and 
northern Europe, possibly the north- 
western part of the Soviet Union, and 
may well be extending into the Arctic 
Basin. 

As far as the background levels 
found in Sweden, we have only limited 
information at this point. But it would 
appear that the background level has 
been exceeded by only about 1 millirem 
over the last several days, and they're 
continuing to take measurements. To 
put it in context, the average back- 
ground level due to all sources on a con- 
tinuing basis, natural and otherwise, is 
about 90 to 100 millirem per year, and 
they have received 1 millirem over the 
last several days. 

We still do not know if the plume 
might reach the United States. But 
based on data that we do have at this 



time, we do not expect any significant 
health effects if, indeed, it does reach 
the United States. 

In the meantime, we're waiting and 
assessing the situation. The EPA's na- 
tional environmental radiation monitor- 
ing system is in its usual monitoring 
mode and, in the case of any detection 
of increased levels, will speed up the 
rate at which we take measurements of 
all types: air, ground, and water. 

We're continuing to ask for more in- 
formation from the Soviets so that we 
can learn exactly what happened. It is 
still impossible to learn if there was ac- 
tually a meltdown at the fourth Cher- 
nobyl reactor, but there are indications 
of it. 

There was obviously a fire of 
graphite material surrounding the fuel 
rods, and there's been a release of vari- 
ous radioactive elements. So far as we 
know the fire is still burning. There has 
been some speculation in public circles 
regarding a similar incident or fire at 
the third Chernobyl reactor, but we 
have no evidence to confirm that. We 
know from Landsat satellite photos that 
there is a second heat source; but that 
can indicate several things, such as 
buildings or other things burning in the 
area, but not necessarily the problem 
with another reactor. 

Yesterday we said there were two 
graphite reactors in the United States. 
One is the N reactor at Hanford, 
Washington; the other is a private, elec- 
trical power generating, commercial 
reactor at Fort St. Vrain, Colorado. It 
is graphite-based, gas-cooled, and like all 
commercial U.S. reactors, has a contain- 
ment system around the reactor. The 
Hanford N is graphite-moderated, liquid- 
cooled. That is the only similarity with 
the Chernobyl reactors. 

At Hanford, if there were a loss of 
coolant, we would have a separate cool- 
ing system to keep it from overheating. 
That reactor has been operating for 23 
years. It produces power and plutonium 
for weapons programs. It does not have 
a containment dome, but does have a 
filtered confinement system. The con- 
finement system would filter out 99.9% 
of all particulate emissions. The reactor 
is also in a heavily reinforced concrete 
building, whereas the Soviet reactor 
was in a less secure industrial building. 

Yesterday we were asked about the 
Department of Energy reactors that do 
not have containment facilities. There 
are four such reactors at Savannah 
River, South Carolina, which is south of 
Aiken. They are all production facilities, 
heavy-water moderated and cooled. Like 



Iv 1986 



73 



EUROPE 



the Hanford facility, they are confined 
with filtration systems. Heavy-water fa- 
cilities use an isotope of the standard 
H 2 molecule that results from the 
presence of deuterium oxide, an isotope 
of hydrogen with an extra neutron in 
the nucleus. It tends to moderate the 
actual fission process created by the 
U-235 fuel activation. That moderating 
loop is closed and separate from the 
cooling loop. It is also worth pointing 
out that, unlike conventional, commer- 
cial light-water reactors, these heavy- 
water reactors operate at only 5 pounds 
per square inch over normal atmos- 
pheric pressure and at temperatures 
only slightly above 212° F. Commercial 
reactors operate at very high tempera- 
tures and normally in excess of 2,000 
pounds per square inch. 



WHITE HOUSE STATEMENT, 
MAY 3, 1986 3 

The United States continues its effort in 
dealing with the Soviet nuclear accident, 
both on the diplomatic and domestic 
fronts. The Vice President in Washing- 
ton assembled a special situation group 
on Friday and has since reported to the 
President his findings. Attending that 
meeting, besides the Vice President, 
were Don Fortier of the National Secu- 
rity Council; Secretary Weinberger of 
the Defense Department; D. Lowell 
Jensen, the Deputy Attorney General; 
John C. Whitehead, the Deputy Secre- 
tary of State; John Herrington, the 
Cabinet Secretary at the Energy 
Department; William Casey, the Direc- 
tor of Central Intelligence; Gen. John 
Wickham, the Chairman of the Joint 
Chiefs of Staff; and Nunzio J. Palladino, 
Nuclear Regulatory Commission— 
Nunzio Palladino and Harold Denton; 
and Environmental Protection Agency, 
Lee Thomas. There were additional staff 
members from each of these agencies 
present, but those are the major ones 
who attended. 

The President has received the 
report of the Vice President in written 
format as a result of the meeting. The 
President and Vice President both ex- 
pressed serious concern with the lack of 
information that the Soviet Government 
is providing to the public and to the 
world and to its own citizens. Environ- 
mental accidents whose fallout ignores 
national boundaries are concerns for all. 
We will continue to press for full and 
accurate information. 

While it's true that the Soviets are 
reporting that they have smothered the 



fire at the four Chernobyl reactor, we 
cannot confirm that. We have every rea- 
son to think that the fire has 
diminished, but there is evidence that 
the reactor or associated equipment 
with the reactor continues to smolder. 
We do know that the second hotspot, as 
reported from the Landsat photos, was 
not a reactor. 

Weather patterns are shifting from 
day to day, but airborne radioactivity 
now covers much of Europe and a large 
part of the Soviet Union. In the last 48 
hours there has been movement of radi- 
oactivity to the south, and there's ap- 
parently elevated levels detected as far 
south as Italy. 

Air containing radioactivity by air- 
craft was measured at 5,000 feet about 
400 miles west of northern Norway and 
is believed to have turned south and 
southeastward. It is beginning, perhaps, 
to return over Europe. While there's 
been speculation about the movement of 
the plume eastward across the Soviet 
Union, we cannot at this moment con- 
firm any movement across the Soviet 
Union. 

There has been no detection of any 
elevated levels of radiation above the 
normal background either in the United 
States or Canada. EPA's radiation moni- 
toring network is now sampling all me- 
dia on a daily basis, but there is no 
reason to expect any risk to human 
health in the United States. 

With the limited data on hand, the 
Departments of State and Health and 
Human Services have issued an ad- 
visory against travel to Kiev and adja- 
cent areas. Due to reports from the 
Polish Government of increased levels of 
radiation in certain lake districts, we're 
recommending that women of childbear- 
ing age and children should not travel to 
Poland until after this situation is clari- 
fied. Milk and other dairy products in 
Eastern Europe also should be avoided. 

Other actions taken by the task 
force include: radiation monitoring 
teams have now been sent from the 
United States and are in place in sever- 
al European countries; EPA medical 
teams have been sent to our Embassy 
personnel in Warsaw and Moscow. An 
EPA technician and State Department 
medical expert will leave today for War- 
saw, Krakow, Moscow, and Leningrad 
to help determine the radiological status 
of our missions there. An expert in bone 
marrow transplants, Dr. [Robert] Peter 
Gale, has gone to the Soviet Union to 
offer his expertise and assistance. 



WHITE HOUSE STATEMENT, 
MAY 4, 1986 3 

The President's task force on the Sowi 
nuclear accident is continuing to mod 
the situation and to report on the ef- 
fects of the accident to the President j 
a regular basis. No increases of radios- 
tivity above normal background levels 1 
have been reported by the radiation 
monitoring networks in the United 
States or Canada. The airmass contaii 
ing the radioactivity continues in its 
present location over much of Europe 
and a large part of the Soviet Union. 
The airmass containing radioactivity i 
not expected to enter any part of the 
United States for several days and is 
not expected to pose any threat to hu 
man health or environment of the 
country. 

The cause of the accident leading 
the explosion at the Chernobyl site is 
still unknown. The Soviets have clairr 
that they've used helicopters to drop 
sand, lead shot, and boron on the fire 
unit four in order to reduce the activi 
level. Apparent damage to the buildir 
and detective radioactivity levels in 
nearby countries suggest that massiv' 
core damage must have occurred. We 
are unable to confirm the Soviet ciain 
that the fire in unit four has been ext 
guished. There is still no evidence thl 
unit three was involved in the accidei 

The Soviets have reported that thl 
evacuated the three towns closest to 
Chemobyl reactors. This and other 
reports of evacuation up to 30 kilome 
ters from the site are consistent with 
accident of this magnitude. The Nuck 
Regulatory Commission has notified i 
licensed facilities in the United State; 
provide monitoring data to the task 
force to augment EPA's nationwide 
radiation monitoring system, which is 
gathering data on an accelerated basi 
The U.S. Government is also making 
forts to gather data from several com 
tries surrounding the Soviet Union tl 
could prove essential to evaluating th 
accident in the absence of informatioi 
from the Soviet Government. 

In addition, we have sent a team 
U.S. technicians to Moscow. They ar- 
rived in Moscow to begin evaluating 
health and environment at our missio 
in the Soviet Union. First results fro: 
our monitoring in Warsaw indicates 
background radiation levels of rough! 
twice the normal background levels. 
This is not to be judged particularly 
serious. For example, normal levels i 
Denver are about three times back- 



74 



Department of State Bui 



EUROPE 



unci due primarily to rock and soil 
teup. 

There is a report on the wires that a 
)inet-level meeting is taking place— 
ianese Government in Tokyo regard- 
increased radiation levels over een- 
[ Japan from rainfall. We do not have 
r specific information. We've been in 
ch with the Japanese Government to 
firm these reports and have not yet 
eived any information that we can go 
We do not have any specific moni- 
ing information either. 

HTE HOUSE STATEMENT. 
lY 14, 1986 4 

are comforted by Mr. Gorbachev's 
urances that "the worst is behind 
1 in dealing with the Chernobyl reac- 
tragedy. Our immediate concern, 
m the time we learned of the acci- 
it, was primarily for the well-being of 
people in the area. This is why we 
:red our assistance. Our offer stands. 
We have noted Mr. Gorbachev's sug- 
tions regarding further international 
)rts to enhance the safety of nuclear 
ver plants. We believe that they 
:erve the most serious consideration. 
i strongly support additional interna- 
lal efforts to ensure nuclear plant 
ety and prompt reporting on ac- 
ents. 

We are distressed, however, that 
. Gorbachev used the occasion of his 
erwise reassuring presentation to 
ke unfounded charges against the 
ited States and other Western gov- 
iments. On this score, he has obvi- 
;ly been misinformed. There has been 
effort by this government, or its 
■tners at the Tokyo economic summit, 
make political capital out of the Cher- 
)yl tragedy. 

The U.S. Government at no point 
couraged inaccurate reporting on the 
:ident. If some reports carried in the 
iss media were, in fact, inaccurate, 
is was an inevitable result of the ex- 
;me secrecy with which the Soviet 
thorities dealt with the accident in the 
ys immediately following it. Citizens 
foreign countries and their govern- 
snts had a legitimate interest in know- 
y the facts, since their own health 
uld be affected. In the absence of 
tailed, official information, the media 
ported what they could learn on their 
m. Any attempt to attribute legiti- 
me foreign interest in a major castas- 
Dphe to devious political motives is as 
iplorable as it is without basis. Un- 



founded accusations against others must 
not be used in an attempt to exonerate 
national officials from their obligation to 
inform the public promptly of accidents 
which may affect their health. 

Mr. Gorbachev also seems to be mis- 
informed regarding the position of the 
United States and its allies on nuclear 
arms reduction. As the leaders who met 
at the Tokyo economic summit states, 
"each of us supports balanced, substan- 
tial, and verifiable reductions in the lev- 
el of arms" and in regard to the 
U.S. -Soviet agreement to accelerate 
work at Geneva, "we appreciate the 
United States' negotiating efforts and 
call on the Soviet Union also to negoti- 
ate positively." The United States is 
eager to speed up negotiations to 
achieve a 50% reduction of strategic 
nuclear weapons as soon as possible. 
The United States has made concrete 
proposals and is waiting for a construc- 
tive Soviet reply. 

Regarding a meeting between the 
President and General Secretary Gorba- 
chev, the President has invited Mr. Gor- 
bachev to visit the United States in late 
June to discuss the entire range of is- 
sues between the two countries. Mr. 
Gorbachev has not yet responded to this 



invitation. Nevertheless it is clear that a 
meeting between the two leaders is pos- 
sible this year if Mr. Gorbachev desires. 

So far as the question of nuclear 
testing is concerned, the United States 
has proposed that U.S. and Soviet ex- 
perts meet to initiate a dialogue. We 
have as yet no Soviet response to this 
suggestion. It is difficult to understand 
the rationale for a meeting of our lead- 
ers confined to the nuclear testing issue, 
when the Soviet Union has up to now 
been unwilling to authorize a discussion 
at the expert level. 



SECRETARY'S STATEMENT, 
MAY 22, 1986 s 

I was pleased to visit with Dr. Hammer 
and Dr. Gale and their colleagues Dr. 
Terasaki and Dr. Champlin and to hear 
their impressions of the situation in the 
Soviet Union following the Chernobyl 
accident. 6 

I was impressed and inspired by Dr. 
Gale's descriptions of the courage and 
sacrifice with which his Soviet col- 
leagues, and the Soviet people as a 
whole, have sought to cope with the ef- 
fects of the accident. As the President 



President Meets With Shcharanskiy 



v-V 'V' 



fit » 




WHITE HOUSE STATEMENT, 
MAY 13, 1986' 

The President met privately with Natan 
(Anatoliy) Shcharanskiy for 30 minutes 
today in the Oval Office. Vice President 



Bush, Secretary Shultz, Donald Regan, 
and John Poindexter were also present. 

Mr. Shcharanskiy thanked the Presi- 
dent for his unflagging support for hu- 
man rights in the Soviet Union and his 
role in securing his release from a 
Soviet prison camp. He gave the Presi- 
dent his assessment of the situation of 
Soviet Jewry, particularly the plight of 
400,000 Soviet Jews who have expressed 
a desire to emigrate from the Soviet 
Union. He urged the President to con- 
tinue his efforts on their behalf. 

The President expressed his admira- 
tion for Mr. Shcharanskiy's courage and 
fortitude and reaffirmed his determina- 
tion to do everything possible to help 
those who have been denied the right to 
emigrate, practice their religion, or 
maintain their Jewish identity. The 
American people and the world will not 
forget them. 



■Text from Weekly Compilation of 
Presidential Documents of May 19, 1986. I 



ly 1986 



75 



MIDDLE EAST 



conveyed to Mr. Gorbachev the day af- 
ter learning of the accident, the United 
States stands ready to lend a hand in 
any way we can in helping the Soviet 
Union recover from this tragedy. 

General Secretary Gorbachev has 
proposed some specific steps which 
could be taken to prevent a recurrence 
of what happened at Chernobyl. We are 
already discussing the specifics of such 
cooperation in the IAEA following up on 
the idea developed at the Tokyo sum- 
mit. We would welcome the opportunity 
to join with the Soviet Union in cooper- 
ative activity to this end. 



J Text from Weekly Compilation of 
Presidential Documents of May 5, 1986. 

2 Press release 95. 

3 Text from Weekly Compilation of 
Presidential Documents of May 12. 

"Text from Weekly Compilation of 
Presidential Documents of May 19. 

5 Press release 115. 

6 Dr. Armand Hammer, chairman of Occi- 
dental Petroleum and long-time friend of 
Soviet leaders, offered to organize and 
finance a mission to assist victims of radioac- 
tive fallout. His offer was accepted by the 
Soviet Government. Dr. Robert Gale, an 
authority on bone-marrow transplants and 
President of the International Bone Marrow 
Transplant Registry, led the team, which in- 
cluded two of his UCLA associates, Drs. Paal 
Terasaki and Richard Champlin. ■ 



FY 1987 Assistance Requests 

for the Middle East and North Africa 



by Richard W. Murphy 

Statement before the Subcommittee on 
Foreign Operations of the House 
Appropriations Committee on April 16, 
1986. Ambassador Murphy is Assistant 
Secretary for Near Eastern and South 
Asian Affairs. 1 

I welcome this opportunity to testify in 
support of the Administration's 
proposals for FY 1987 economic and 
security assistance for the Middle East 
and North Africa. 

This year, more than any year since 
I have served as Assistant Secretary, 
the Congress and Administration feel 
the budget squeeze. Like you, we in the 
Near East and South Asia Bureau un- 
derstand that when we add money to 
one account, it must come out of 
another. Cuts are painful. Reductions 
have costs, whether they come from 
agriculture, education, health, or the for- 
eign assistance budget. I am not here 
today to plead that security assistance 
must be regarded as a higher priority 
than farmers or the elderly— or to push 
for large increases during this tough 
period. Instead, I would like to review 
the benefits we as a nation do receive 
from security assistance. 

The primary goal of our foreign as- 
sistance program is the support of 
friendly states with common interests in 
promoting economic and political stabil- 
ity. Compared to international trade and 
other financial flows, our programs are 
not large, but they provide critical rein- 
forcement to policies and institutions 
that we are committed to support in 



principle as a global power exerting in- 
fluence to protect legitimate interests 
and not merely reacting to events. The 
reciprocal benefit to us and our friends 
is the basis of our foreign assistance 
proposals. 

The request for the Middle East and 
North Africa is $5,823 billion, or 36% of 
the Administration's global request for 
FY 1987. 

Much of our assistance is proposed 
for Israel. Our commitment to Israel's 
security and economic requirements is 
rock solid. 

We support the security needs of 
Egypt, Israel, and Jordan which have 
taken risks for peace and for stability in 
that strategic region. 

We are protecting the free world's 
access to oil resources in the strategic 
gulf region in cooperation with friendly 
Arab states in the gulf. Our assistance 
to Oman contributes to this effort. 

Our programs parallel our interest 
in maintaining military access in Moroc- 
co and the security of long-time friends 
in North Africa— Morocco and Tunisia. 

The recent instability in South Ye- 
men, exacerbated by Soviet interfer- 
ence, makes our assistance to the 
Yemen Arab Republic particularly sig- 
nificant at this time. 

Our FY 1987 request will fund seven 
major programs in the Middle East and 
North Africa: 

• $3,295 billion in foreign military 
sales (FMS) credit, including $3.1 billion 
for Israel and Egypt; 

• $105 million in grant military as- 
sistance programs (MAP); 



• $10.4 million in international mill 
tary education and training (IMET); 

• $2,015 billion in economic suppon 
funds (ESF) for Israel and Egypt; 

• $104 million in ESF for six tithe 
Middle Eastern countries and the Wei 
Bank and Gaza territories; 

• $48.3 million in development as- 
sistance; and 

• $254.9 million in PL 480 food aid 

Middle East Peace 

The security of Israel remains the corn 
nerstone of our Middle East policy. O* 
assistance assures Israel's defensive 
capabilities— its qualitative edge in the 
region. In addition, efforts to nurture 
the spirit of accommodation between 
rael and its Arab neighbors will succe 
more readily if Arab states feel confi- 
dent they can provide for their own 
defense vis-a-vis increased instability 
caused by the Iran-Iraq war, Libyan 
aggression, and Soviet expansion. Oui 
friends need help as they work to 
manage economic and social issues. 
Defensive capabilities and economic d< 
velopment are keys to stability and in 
proved relations among our friends in 
the Middle East. 

We are seeking a total of $5.3 billi 
in military and economic assistance fo: 
Israel and Egypt. Meeting their legiti 
mate defensive requirements is critica 
important to maintaining our security 
role throughout the region and to pre- 
serving our role as mediator in the 
search for peace. 

Since the President's Middle East 
peace initiative of September 1, 1982, 
foreign assistance, in concert with an 
tive diplomacy, has played an essentia 
role in sustaining the peace process. A 
resolution of the Arab-Israeli conflict i 
quires both a commitment to the secu 
rity and economic well-being of Israel 
well as continued close ties with those 
Arab states which have traditionally 
been friendly to the United States. 
Resolution of these problems, aspects 
which are deep seated and complex, w 
never be easy. Notwithstanding the 
risks and the costs, this Administratio 
will continue to seek opportunities 
through all of our friends in the regior 
to move forward with a policy that is 
the national interest of the United 
States and its partners. 

Progress initiated at Camp David 
and the Egyptian-Israeli Peace Treaty 
are the foundation of our Middle East 
peace policy. In our foreign assistance 
proposal, Egypt and Israel together 
would receive about 34% of worldwide 



76 



Department of State Bulle 



MIDDLE EAST 



ing in FY 1987. These levels reflect 
mportance we give to the economic 
security prerequisites of accepting 
•isks and taking the necessary steps 
rd a lasting peace. 
)ur long-term assistance commut- 
es in Jordan, Lebanon, the West 
[ and Gaza, though modest in com- 
ion to the assistance levels for Is- 
and Egypt, are essential to sustain- 
iut overall Middle East peace ef- 
. Our assistance to Jordan is tangi- 
'vidence of our concern for the 
Dmy and security of this small coun- 
vhich has worked hard to find a for- 

for direct talks with Israel. In 
inon our request will assist moder- 
ilements in reconstruction efforts in 
ravaged parts of the country. Part 
ir Middle East regional program ad- 
ses the quality of Palestinian life in 
)ccupied West Bank and Gaza. Our 
unitarian concern for these people is 
cted in development projects car- 
out by private voluntary organi- 
ns. 

Ve are deeply concerned about eco- 
c deterioration in the Middle East 
the adverse effect this could have 
?gional stability and the prospects 
leace. Many of our friends in the 
m are facing serious economic elisio- 
ns. Reduced worker remittance 
3, lower revenues from oil exports, 
declining tourism income as a result 
rrorist threats are all taking their 
In view of the present constraints 
ie foreign assistance budget, as well 
le existing development needs of 
'egion, we are encouraging in- 
sed bilateral assistance to the Mid- 
east by other donors in addition to 

multilateral approaches. We are en- 
id in ongoing discussions with our 
ids and allies to find ways together 
lore up the ailing economies of the 
lie East. 

i would like to turn now to specific 
itries and the way in which our for- 

assistance programs are working 
rably to manage our interests. I will 
n with Israel. 



el 

assistance programs in Israel will 
'ide generous support for Israel's 
;ary preparedness and economic sta- 
y. The $1.8 billion FMS request for 
1987 will enable Israel to finance 
rity security requirements. This in- 
es high performance aircraft, hell- 
ers, artillery missiles, and ammuni- 
. Israel's military preparedness is 
i that it can defend itself against any 



possible combination of adversaries in 
the region. The all-grant terms of the 
FMS program for Israel lessens the eco- 
nomic impact of defense expenditures by 
facilitating Israel's efforts to reduce its 
balance-of-payments deficit, control its 
foreign debt, and correct economic im- 
balances. 

Our request for $1.2 billion in ESF 
directly addresses Israel's economic 
problems through cash transfers to meet 
short-term balance-of-payments require- 
ments, maintain budgeted foreign ex- 
change expenditures, and import the 
goods and services it needs without 
massive borrowing at market rates. The 
ESF program makes us partners with 
Israel in encouraging economic reform 
to assure long-term growth of the Is- 
raeli economy. We have established a di- 
alogue with the Israeli Government 
through the Joint Economic Develop- 
ment Group (JEDG) that meets regu- 
larly so that together we can assess how- 
to provide maximum support for Israel's 
stabilization and growth agenda. 

Prime Minister Peres announced on 
July 1 a comprehensive set of measures 
to deal with the twin problems of infla- 
tion and balance-of-payments deficits. 
The basic elements include sharp cuts in 
government spending on subsidies on 
consumer goods and services, reductions 
in real wages, a 19% devaluation of the 
shekel, and a price freeze. The govern- 
ment is making a concerted effort to im- 
plement this program, and considerable 
progress has been made. The budget 
deficit is dowTi, and there has been a 
sharp decline in inflation. 

The program's impact on the balance 
of payments has also been impressive. 
Israel's foreign debt also stabilized. 
Moreover, the Israeli program has 
achieved these objectives without a 
sharp escalation in unemployment, 
which appears to have peaked during 
the third quarter of 1985 at 7.8% and 
has since dropped to 6.8% or lower. 

Notwithstanding the considerable 
progress made so far, the stabilization 
program remains fragile. The govern- 
ment will have to continue to maintain 
control over spending and work out a 
new agreement with labor Histradut on 
income policy w r hile resisting political 
pressures to reflate. The political pres- 
sure for pump priming has increased in 
view of the recent successes of the sta- 
bilization program and the impact of the 
recession on the financial viability of key 
firms and sectors. Growth is now a top 
priority of the Peres government— to 
provide what the Prime Minister called 



a "ray of hope" for the Israeli public in 
a more prosperous future. 

With these developments in mind, 
the focus of the U.S.-Israeli dialogue in 
the JEDG has shifted increasingly to 
finding ways to promote growth and de- 
velopment while not endangering the 
stabilization program. In this forum, we 
have discussed Israeli tax reform and 
revitalization of private capital markets. 
We also looked closely at Israel's invest- 
ment regime. Domestic investment in 
Israel has been declining as a per- 
centage of GNP while foreign invest- 
ment remains small. Israel must reverse 
these trends if it is to maintain its com- 
petitive edge in such areas as the high 
technology sector and earn its way 
without continued dependence on U.S. 
economic assistance. 

We have, over the past 6 months, in- 
creased our coordination with Operation 
Independence, a group of highly dedi- 
cated U.S. and Israeli businessmen un- 
der the leadership of Max Fisher whose 
objective is to expand bilateral trade 
and investment ties between our two 
countries. Operation Independence has 
already achieved concrete results in that 
regard, and we believe it holds great 
promise of expanding Israel's private 
sector and generating more economic 
growth. 

Egypt 

A strong and stable Egypt is crucial to 
virtually all of our interests in the Mid- 
dle East and North Africa. In addition 
to being a Camp David partner, Egypt 
is a counterweight to Libyan meddling 
in the Sudan, Chad, and Tunisia. Our 
security assistance to Egypt promotes 
readiness and military self-sufficiency 
necessary for defense against Soviet - 
armed states in the region. 

The request for $1.3 billion in for- 
given FMS credits for FY 1987 is part 
of an ongoing effort to modernize the 
Egyptian military and replace obsolete 
Soviet equipment. Our FMS program 
addresses the regional balance of forces 
and helps our friends counter the arms 
build-up in Soviet supplied states. For 
FY 1987, in addition to progress pay- 
ments for previous purchases of U.S. 
equipment, we propose upgrades for 
Egypt's air defense systems and equip- 
ment maintenance. 

Our security interests go hand-in- 
hand with Egypt's economic health and 
stability. ESF of $815 million will 
finance economic development projects 
as well as provide valuable balance-of- 
payments support. 



! 1986 



77 



MIDDLE EAST 



Although Egypt's economic growth 
rate was 4-5% last year, the economy is 
beset by severe structural problems. 
The overall balance of payments moved 
into deficit in 1985, signalling the need 
for increased borrowing. In recent 
months, events largely beyond Egypt's 
control have compounded these 
problems, and no improvement is fore- 
seen in the near term. Egypt's petro- 
leum revenues are down sharply with 
the precipitous fall in oil prices, and 
tourism has been crippled by terrorist 
incidents and the February disturb- 
ances. Remittances from overseas 
workers— another key source of foreign 
exchange— have fallen with the slow- 
down in the gulf economies. 

Our economic assistance is part of a 
dialogue that we have established with 
Egypt to support its economic reform 
program. One target for reform is a 
lower budget deficit. However, Egypt's 
deficit is about 20% of GDP, and politi- 
cally sensitive food subsidies account for 
almost one-third of the deficit. 

Over the past year, Egypt has taken 
some important steps to reform its 
economy: 

• Food subsidies have been reduced; 
for example, wheat prices now approach 
U.S. levels; 

• Energy subsidies have been cut 
by such measures as a 37% increase in 
electricity rates and a 25% increase in 
gasoline prices; and 

• Foreign currency expenditures of 
the government have been reduced. 

More recently, despite the February 
disturbances, President Mubarak af- 
firmed his government's commitment to 
accelerate economic reform. New 
measures— including tax increases, cus- 
toms reform, and reduction of govern- 
ment operating expenses— are being 
implemented. These initiatives represent 
a solid beginning to the comprehensive 
reform program that is necessary to ad- 
dress Egypt's immediate problems and 
achieve stable, long-term economic 
growth. Priority areas for further action 
include boosting foreign exchange earn- 
ings, reducing the government budget 
deficit, improving the management of 
foreign debt, and expanding the role of 
the private sector. 

Egypt imports about 6 million tons 
of wheat and wheat flour each year, 
around 20% of which is part of our 
PL 480 food aid program. With per 
capita GNP at about $650 and political 
stability heavily dependent on the price 
of bread, Egypt must spend much of its 
foreign exchange earnings on imported 



grain. With foreign exchange earnings 
in decline, our PL 480 program becomes 
an important means of minimizing the 
outflow of foreign exchange while the 
Egyptian Government tackles the im- 
mediate problem of managing its eco- 
nomic reform measures and its debt 
repayments. 

Jordan 

Jordan is important to us as a moderate, 
pro-western state that plays a key role 
in the search for a negotiated settlement 
to the Arab-Israeli conflict. King 
Hussein has publicly recognized Israel's 
right to exist and has sought scrupulous- 
ly to maintain the security of Jordan's 
border with Israel. By reestablishing 
full diplomatic relations with Egypt in 
November 1984— the first Arab state to 
do so— and by trying to find credible 
Palestinians to seek a negotiated peace 
with Israel, Jordan has repeatedly 
demonstrated its willingness to under- 
take courageous initiatives toward a 
negotiated resolution. Jordan's ability to 
sustain its record as an active par- 
ticipant in the peace process is contin- 
gent on our willingness to assist in 
meeting its legitimate defense needs. A 
chorus of rejectionist voices in the 
region now advise Jordan to cease its 
reliance on U.S. assistance and abandon 
its role in the peace process. Most as- 
suredly, King Hussein has not aban- 
doned his commitment to peace. 

For our part, we intend to continue 
our assistance to countries such as 
Jordan, where our security and eco- 
nomic assistance provides both a tangi- 
ble as well as psychological buffer 
against rejectionism. We must prevent 
Jordan from being distracted while it 
confronts the difficult political choices 
ahead. The Jordanian Government is 
grateful for the $250 million economic 
supplemental package which Congress 
passed for Jordan last summer to assist 
in preserving Jordan's economic 
stability. 

Foreign worker remittances from 
the gulf states and exports to the gulf 
are declining with the soft market in oil; 
Arab assistance is also likely to decline. 
The Iran-Iraq war contributes to trre 
continued economic slowdown and unem- 
ployment in Jordan that began in 1981. 
Soviet arms transfers to neighboring 
Syria represent a direct potential threat 
to Jordan. 

Despite these difficulties, Jordan 
continues to pursue responsible regional 
policies. In a September 1985 address to 



the UN General Assembly, King 
Hussein reaffirmed Jordan's commit- 
ment to a negotiated peace with 
Israel— a commitment that Jordan anc 
its leaders have affirmed yet again mi 
recently with the King's February 19i» 
speech to the Jordanian people. 

Jordan has had a military supply 
relationship with the United States fc 
30 years. The proposed military as- 
sistance program for FY 1987 consist: 
of $115 million in FMS credits and $2 
million for IMET. To provide a degre 
of relief for Jordan's balance-of- 
payments problems, our FMS prograi 
will include $65 million in concessiona 
FMS credits and $50 million in Treas> 
rate FMS. The proposed military as- 
sistance will sustain Jordan's ability t 
purchase spare parts and follow-on sui 
port for U.S. equipment already in 
Jordan's inventory. The FMS prograi 
will support Jordan's defense needs t 
the fullest extent possible. The milita 
training programs under IMET will r 
vide Jordanian officers with a U.S. 
orientation and enhance Jordanian 
understanding of U.S. goals and oper 
tions in the Middle East. 

Jordan is poor in natural resource 
the lack of water limits the amount o 
arable land. The FY 1987 ESF reque 
for $18 million will fund highlands 
agriculture projects and water resoui 
development in addition to ongoing 
projects in the areas of water, sewer; 
services, agricultural productivity, 
health, and technical training. 

Middle East Regional Program 

The Middle East regional program 
request for FY 1987 consists of $25 r 
ion in ESF, $4 million in developmen 
assistance, and $1.8 million in PL 48C 
(Title II) grant food aid. The regional 
program includes projects designed fc 
further U.S. objectives of peace, eco- 
nomic development, and social progre 
in the West Bank and Gaza, Israel, 
Egypt, and the region. This grant wi 
finance three major activities. 

• $18 million in ESF will fund d« 
opment projects in the West Bank a. 
Gaza. Our involvement reflects comn 
ment to the welfare of Palestinians 1 
ing in the occupied territories. 
Mandated by Congress in 1975, thesi 
development projects are carried out 
private voluntary organizations and 
designed to meet local needs in healt 
sanitation, agricultural development, 
water supply, vocational training, an 
education. The projects support dev< 



78 



Department of State Bu) 



MIDDLE EAST 



of an indigenous economic struc- 
ind other aspects of the 
tary's quality-of-life effort, which is 
)le evidence of our long-term com- 
snt. Our PL 480 food aid program 
!se territories supports the same 
We are fully aware that these 
ams are no substitute for a 
iated settlement that can ensure 
:'s security while giving expression 
& legitimate rights of the Palestin- 
n these territories— nor are they 
ded to do so. We are prepared to 
ss the political dimension of the 
tinian issue whenever the parties 
selves are ready. In the meantime, 
e actively addressing the human 
ision. These programs have the full 
>rt of the highest levels of the U.S. 
rnment and, as circumstances and 
3t realities allow, we are prepared 
even more. 

$5.8 million in ESF will fund the 
nal cooperation program, which 
ts of scientific and technical 
cts in which Israeli, Egyptian, and 
•ican universities participate, along 
their respective governments and 
institutions. Mandated by Con- 
in 1979 after the signing of the 
it-Israel Peace Treaty, these coun- 
rt projects in Egypt and Israel 
ote cooperation between profession- 
technical and scientific fields. The 
•am comprises projects in arid 
agriculture, agricultural technol- 
«change, marine sciences, and in- 
>us disease research. We note that 
Y 1986, the 50% reduction in fund- 
jr this program will not translate 
i comparable reduction in ongoing 
cts. Rather it means that no funds 
>e available this year for new 
cts and only minor reductions in 
ng activities. 

The remaining $1.2 million in ESF 
und regional population programs, 
training projects, and project de- 
and evaluation. 

an Gulf/Southwest Asia/ 
Africa 

major oil reserves in the Persian 
continue to be essential to U.S. 
ry security, and we cannot allow 
'igilance to lapse no matter what 
oil prices reach. Approximately 
of the oil entering world trade 
nates in the Persian Gulf. This area 
nues to be threatened by the Iran- 
war, now in its sixth year. The re- 
coup in South Yemen has left that 
try with an even more radical re- 



gime and under continued heavy Soviet 
influence. Soviet aggression in Afghan- 
istan has not diminished, and this situa- 
tion, too, threatens to encroach on the 
Persian gulf region. Our assistance pro- 
grams to countries in this part of the 
world support essential access to mili- 
tary facilities and transit into the region 
should they ever be required by U.S. 
forces in times of crisis. 

Oman 

Our FY 1987 request for Oman includes 
$40 million in FMS credits, $18.8 million 
in ESF, and $205,000 in IMET. 

Our 1980 access agreement with 
Oman is key to U.S. strategy for the 
protection of the Persian Gulf. This 
agreement allows U.S. military access to 
certain facilities under agreed condi- 
tions. In connection with the facilities 
agreement, the United States and Oman 
added an economic dimension to the ex- 
panded relationship by creating a Joint 
Commission on Economic and Technical 
Cooperation and several development 
projects to be supported by ESF. Be- 
cause of the relationship between ESF 
and the access agreement, the Omani 
Government is concerned by the reduc- 
tion in our FY 1986 program which 
resulted from this particularly difficult 
budget year. We believe it is especially 
important to return this program to the 
past level. Our economic programs, 
aimed at accelerating the pace of Omani 
diversification away from oil-related in- 
dustries, have become more critical for 
Oman as oil prices decline. Oman does 
not have the ability to replace our 
assistance from its own sources. Oman 
remains a moderate, pro- Western force 
in the gulf and one of the few states in 
the region that has been consistently 
supportive of Egypt and particularly re- 
mains so from the time Egypt signed 
the Camp David accords. 

Our ESF programs focus on critical 
requirements for development: water 
projects, education, technology, and eco- 
nomic diversification. These activities 
are programmed by the Agency for 
International Development (AID) and 
the Omani-American Joint Commission 
based in Muscat. The United Kingdom 
is Oman's main military supplier though 
Oman has shown interest in using FMS 
financing in FY 1987 to purchase C-130 
aircraft, air defense items, and antitank 
weaponry. Omani defense must guard 
against threats from Iran as well as 
South Yemen— the latter possibility 
underscored by the recent coup which 
brought hard line ideologues to power. 



Continued modernization of Oman's 
defense thus remains a high priority. 
FMS will also support previously pur- 
chased U.S. equipment. The modest 
IMET program will provide advanced 
training for the Sultan's armed forces, 
improved military management, and bet- 
ter understanding of our security rela- 
tionship on an operational level. 

North Yemen (Yemen Arab Republic) 

North Yemen occupies a strategic area 
between the Marxist Peoples Demo- 
cratic Republic of Yemen (P.D.R.Y.) and 
Saudi Arabia. North Yemen has been 
threatened by both direct attacks from 
and insurgency supported by South 
Yemen in the past. The recent coup in 
South Yemen raises anew the specter of 
such threats because it brought to 
power particularly doctrinaire com- 
munists who have frequently advocated 
insurgency. Supporting a stable govern- 
ment in North Yemen, which can resist 
outside threats and meet the needs of 
its people for economic development, is 
in our interest and directly supports re- 
gional stability and peace in this corner 
of the Arabian Peninsula. Yemen re- 
mains a desperately poor country. Its 
per capita GNP is only about $550. Life 
expectancy is about 45 years; adult liter- 
acy is 5%; the infant mortality rate is 
173 per 1,000; and only 14% of Yemen's 
6 million people have access to safe 
water. A drought in recent years has se- 
verely reduced grain production and in- 
creased the need for agricultural 
imports. Declines in worker remittances 
and Arab aid, both related to the 
decline in the world market, have placed 
serious, further strains on the Yemeni 
economy. Although an American com- 
pany discovered oil in commercial quan- 
tities in Yemen, the country will receive 
no oil income until at least late 1988. 

For North Yemen, our FY 1987 re- 
quest consists of $26 million in develop- 
ment assistance, $5 million in PL 480, $3 
million in concessional rate FMS, $5 mil- 
lion in MAP, and $1.55 million in IMET. 

Economic assistance programs are in 
agriculture, education, and health. Some 
funds continue to be used for earth- 
quake reconstruction in the aftermath of 
the 1982 disaster that left up to 400,000 
Yemenis homeless. Yemen will use 
MAP funds to maintain U.S. -origin 
equipment and to support training for 
its armed forces. Because worldwide 
MAP funds are not sufficient to meet all 
support and training needs for U.S.- 
origin equipment, we are also offering 



1986 



79 



MIDDLE EAST 



concessional FMS to Yemen for the first 
time in FY 1987. We believe Treasury 
Rate FMS would place an unacceptable 
debt burden on the Y.A.R. The IMET 
program finances training in the United 
States and an effective English-language 
program in Yemen. Overall our security 
assistance program fosters closer 
cooperation between our two military 
establishments, creates the skills needed 
for operation and maintenance of U.S. 
equipment, and maintains an alternative 
to total dependence on Soviet military 
equipment. 

Morocco 

U.S. relations with Morocco are based 
on a long record of cooperation and 
mutual respect. We value our strategic 
relationship with Morocco, which re- 
mains critical and has not been 
diminished by the Treaty of Union be- 
tween Morocco and Libya. Despite our 
opposition to this union, the economic, 
political, and military rationales for U.S. 
assistance programs have not changed. 
Cooperation between the United States 
and Morocco continues to be of mutual 
benefit. In fact U.S. forces held more 
joint maneuvers with Morocco in 1985 
than with any other nonallied state. 
These military cooperation arrange- 
ments are of key importance for U.S. 
forces in Europe and the Mediterranean 
and provide logistical support for central 
command contingencies, including access 
to the Persian Gulf and Africa. Our total 
FY 1987 request for Morocco is $154 
million. If duplicate facilities were avail- 
able elsewhere and with similar stra- 
tegic importance, the cost would be far 
in excess of our assistance program. 

Our request for military assistance 
consists of $10 million in concessional 
FMS, $60 million in MAP, and $1.85 mil- 
lion in IMET. This funding level will not 
allow for any new systems and is less 
than that required for support of U.S.- 
origin equipment already purchased. 

Morocco faces particularly severe 
economic problems because of declines 
in the world price of phosphate, its 
major export, and reductions in worker 
remittances. Though it is dependent on 
imported energy, lower oil prices will 
probably have a net negative effect for 
that country as remittances and Arab 
aid are likely to decline with the price 
of oil. Chronic unemployment and under- 
employment, along with rapid population 
growth, further burden the economy. 



Our assistance to Morocco is coordi- 
nated with a major IBRD/IMF [Interna- 
tional Bank for Reconstruction and 
Development/International Monetary 
Fund] restructuring program to increase 
free market incentives in the economy. 
Our FY 1987 request for economic as- 
sistance includes $18 million in develop- 
ment assistance, $44.2 million in PL 480 
food aid, and $20 million in ESF. Devel- 
opment assistance will fund ongoing 
projects in agriculture, population, 
energy, and technical training— all of 
critical importance to Morocco as it un- 
dertakes economic adjustments under 
IMF guidance. In response to Morocco's 
balance-of-payments problems, ESF will 
finance private sector development and 
export population programs to boost 
critical foreign exchange reserves that 
now allow for less than 1 month of 
imports. 

Algeria 

Algeria is a recognized leader in Arab 
and Third World affairs. Algeria's mili- 
tary capacity to counterbalance Libya 
works in our interest. We have an im- 
portant commercial relationship with 
Algeria where U.S. firms have built 
modern gas liquefication facilities to ex- 
ploit the world's fourth largest natural 
gas reserves. 

Our only assistance to Algeria is 
IMET, for which we are requesting 
$150,000 in FY 1987. This program pro- 
motes contact between U.S. and Alge- 
rian military officers and clarifies our 
legitimate interests in North Africa to 
key members of the Algerian military. 
Through IMET we can more readily 
identify common goals in the region. As 
an outgrowth of its struggle for inde- 
pendence, the military remains an im- 
portant institution of the Algerian 
Republic. 

Tunisia 

Tunisia remains a long-time friend and 
an Arab moderate that looks to the 
United States both for security as- 
sistance in meeting Libyan threats to its 
security and for continued support for 
Tunisian economic development. Since 
the 1980 Libyan-backed insurrection at 
the Gafsa military garrison in Tunisia, 
we have engaged in a program to help 
modernize the Tunisian military capabili- 
ties to provide limited deterrent to 
potential Libyan aggression. Libyan 
threats in September 1985 and most re- 



cently March 1986 to use military fori 
against Tunisia indicate that Tunisia': 
security needs have not diminished. 

Tunisia has requested new and 
replacement military equipment in th 
face of Libyan threats. Our FY 1987 
quest includes $27 million in concessii 
al rate FMS, $40 million in MAP, am 
$1.8 million in IMET. FMS and MAF 
will fund equipment purchases as we 
as maintenance and support for exist 
inventories in air defense and other < 
tingencies. The IMET program provj 
training in the use of U.S. equipmen' 

The expulsion of over 30,000 Tun- 
sian workers from Libya last year, 
drought, lower prices for Tunisian 
petroleum, and lower demand for pbi 
phates and other Tunisian exports d 
ate economic imbalances felt by all 
Tunisians. Presistently high unemplo 
ment rates show no indication of dec 
in the next several years. 

On the economic side, we are re- 
questing $20 million in ESF and $5 l 
lion in PL 480. This assistance will f 
programs for private sector develop- 
ment, agriculture, and population. W 
are making special attempts to foste 
higher productivity in agriculture 
through technology transfer as Tuniij 
this year may be forced to import uj 
$100 million of additional food becaui 
crop losses due to severe drought. O 
PL 480 program will alleviate this 
difficult situation by providing food a 
minimal adverse effect on Tunisia's 
balance of payments. 



'The complete transcript of the hearii 
will be published by the committee and v 
be available from the Superintendent of 
Documents, U.S. Government Printing O 
Washington, D.C. 20402. ■ 



80 



UTH ASIA 

1987 Assistance Requests 
South Asia 



obert A. Peck 

tatement before the Subcommittee 
yreign Operations of the House 
opriations Committee on March 12, 
Mr. Peck is Deputy Assistant 
tary for Near Eastern and South 
I Affairs.' 1 

reciate this opportunity to testify 
e the subcommittee on the Admin- 
ion's proposed foreign assistance 
am for South Asia in FY 1987. I 
k> my best to address your con- 
and to answer any questions you 
have. I propose to begin my state- 
by presenting the levels that we 
equesting, then to explain how the 
ints, mix, and design of our pro- 
1 programs serve U.S. interests 
)bjectives in South Asia. 

ram Levels 

table [p. 83] details the Administra- 
B FY 1987 appropriations request 
■outh Asia. The levels of the previ- 
! years are included for purposes of 
>arison. Let me attempt to put 
> figures in perspective. The re- 
t of $1,045 billion for the nations of 
h Asia represents about 6.4% of the 
inistration's total worldwide FY 
budget request, down slightly from 
south Asia region's 6.7% share in 
1986 postsequester totals, 
"aking account of all countries 
pt Pakistan, which I will discuss 
rately below, we are proposing a 
budget allocation of $379.3 million, 
4.1% decrease from the FY 1986 
s. This decrease reflects worldwide 
in our economic assistance; the bulk 
is moderate decrease is in PL 480 
and commodity aid and/or develop- 
: assistance for Bangladesh, Sri 
ca, and India. Of the projected 
h Asia total, again excluding 
stan, $181.4 million is earmarked for 
lopment assistance, $181.8 million 
>L 480 food and commodity aid, and 
I million for international military 
ation and training (IMET). An addi- 
il $15 million of economic support 
(ESF) assistance is earmarked for 
anitarian assistance to war-impacted 
lans. 

rhe Pakistan program involves cer- 
special considerations which I will 



cover in some detail later in this testi- 
mony. For Pakistan we are requesting 
$340 million in FMS credits and $325 
million in a mix of economic assistance 
programs. These totals, which reflect a 
6.5% increase over the FY 1986 esti- 
mates, are in accordance with the multi- 
year Pakistan assistance program 
agreed to with the Pakistan Govern- 
ment in 1981 and involving, as you will 
recall, close consultation with Congress. 
We are also requesting $1.4 million in 
IMET assistance, compared to $885,000 
in FY 1986. 

It is relevant to ask what impact our 
proposed economic assistance will have 
on the debt service burden of the 
recipient nations. This burden remains 
at manageable levels throughout South 
Asia, although the trend is rising in the 
case of several countries, notably 
Bangladesh where the debt service ratio 
is estimated at 21.5%. Debt service, as a 
percent of goods and services plus 
remittances from expatriate workers, is 
under 20% in all of the other countries. 
Recognizing this concern, our economic 
aid throughout South Asia contains a 
large grant element; in the two poorest 
countries of the region— Bangladesh and 
Nepal— our assistance is entirely on a 
grant basis. Thus, in those two coun- 
tries, and more generally, our aid pro- 
vides an important boost to the 
development process without adding 
dangerously to future repayment 
difficulties. 

U.S. Interests and Objectives 

Our interests in South Asia reflect the 
importance of the region both because of 
its size, military, economic, technologi- 
cal, and diplomatic strength and because 
of its location. 

Together its countries account for 
about 1 billion people, or more than 21 1 1 i 
of the global total. Military forces there 
include India's as the 4th and Pakistan's 
as the 12th largest in the world. South 
Asia has the largest pool of scientific 
and technological manpower outside 
North America, Western Europe, and 
the Soviet Union and has been a source 
of such manpower for other nations of 
neighboring countries, notably the gulf. 
Its nations are consistent leaders in 
multilateral organizations, and it has 
been long a seedbed and a success story 



for the modern tools and techniques of 
economic and social development. South 
Asia has some of the world's poorest 
nations as well as some of the most 
remarkably developing. 

The area, moreover, is strategically 
located close to the energy resources of 
Southwest Asia and the gulf and im- 
mediately south of both China and the 
Soviet Union. It is the dominant geo- 
graphic feature in the Indian Ocean 
region and, in India, has the largest 
naval force in the Indian Ocean/ Arabian 
Sea area. Our objectives in this region 
include: 

• Deterring Soviet expansionism; 

• Supporting economic growth and 
development; 

• Preventing nuclear proliferation; 

• Supporting the development and 
strengthening of democratic institutions; 

• Reducing production, transit, and 
export of narcotics; 

• Encouraging independence and 
noninterference while promoting peace- 
ful resolution of regional differences and 
expansion of regional cooperation; and 

• Expanding mutually beneficial eco- 
nomic and commercial ties. 

Pursuit of these goals requires that 
we seek relations of trust and confi- 
dence with all nations of the region. Our 
interests are best served by stable and 
independent South Asian nations, grow- 
ing stronger in a peaceful environment 
and capable of deterring interference 
from outside the region. Our role is to 
support South Asia's own security and 
developmental efforts. We seek no mili- 
tary bases in the region. We do not 
want to expand relations with one of the 
nations in the region at the expense of 
others. We have no desire to upset the 
security balances now existing among 
states in the region. 

How Programs Serve 

U.S. Interests and Objectives 

Our South Asia assistance programs 
reflect the differing economic and stra- 
tegic conditions in the region. Programs 
are designed to meet the unique circum- 
stance and opportunity in each country 
within ever tightening budget con- 
straints. While emphases vary, each, we 



/ 1986 



81 



SOUTH ASIA 



believe, fulfills key U.S. objectives in 
the region and on a bilateral basis. Secu- 
rity forms the main thrust of the 
Pakistan program, for example, in light 
of the Soviet threat in neighboring 
Afghanistan. 

The program in India has evolved 
over the years into a joint effort which 
builds on an impressive institutional and 
technological infrastructure. In every 
South Asian country with a U.S. pro- 
gram, development assistance forms a 
sizeable if not decisive portion of our 
aid. Particularly in Bangladesh, Sri 
Lanka, and Nepal, U.S. assistance is 
aimed at ensuring an adequate food sup- 
ply and furthering basic humanitarian 
and developmental objectives. 

In all of the larger countries, IMET 
programs help to construct durable ties 
between the U.S. armed services and 
their South Asian counterparts while 
our IMET program in the Maldives pro- 
vides a tangible and mutually beneficial 
linkage between our two nations. It has 
been our experience over more than 30 
years of involvement in South Asian de- 
velopment that U.S. assistance pro- 
grams are an important element of our 
bilateral relationships, serving key U.S. 
regional interests while fulfilling impor- 
tant economic and security needs of 
South Asian nations. 

Before I begin my country-by- 
country review of our programs, I 
would like to make special note of an 
important regional development since I 
last appeared before this committee. 
This is the formal establishment last 
December of the South Asian Associa- 
tion of Regional Cooperation (SAARC). 
We see this new organization as a 
natural outgrowth of the traditionally 
interwoven ties of the nations of this 
region as well as a reflection of the 
shared interests of the governments and 
peoples of South Asia in peace, stability, 
and cooperation for economic and social 
development. The United States seeks 
to be a constructive partner in promot- 
ing these interests and stands ready to 
support, as appropriate, the activities of 
this new organization. 

Let me now begin a brief country- 
by-country review of U.S. assistance 
programs in light of our basic interests 
and objectives. 



Pakistan 

As I noted earlier, the Pakistan pro- 
gram involves a number of special con- 
siderations. Let me now review those 
considerations in some detail. 

Our goal of a securely independent 
and prosperous Pakistan serves both 
our own interests and the interests of 
all South Asia. This is even more the 
case now that Pakistan has restored 
constitutional government. Well before 
this welcome development, we had con- 
cluded that Pakistan faced unique cir- 
cumstances which had significant 
implications for U.S. regional and global 
interests; in 1981 the Administration, 
with the advice and counsel of the Con- 
gress, committed itself to seeking a $3.2 
billion 6-year economic and 5-year mili- 
tary assistance program, split evenly 
between economic and military as- 
sistance. That program, which will enter 
its final year in FY 1987, has been no- 
tably successful in meeting its multiyear 
objectives. With the support of the Con- 
gress, we have carried out our current 
economic and security assistance pro- 
gram at near full funding, except for 
cuts mandated by Gramm-Rudman- 
Hollings in FY 1986. We hope to con- 
tinue this achievement in FY 1987. We 
are now discussing a follow-on multiyear 
program with the Pakistani 
Government. 

The pressures facing Pakistan in 
1981 which warranted the initiation of a 
major U.S. assistance program have not 
abated. In fact during 1985, these pres- 
sures increased perceptibly. Soviet 
efforts at intimidation were stepped up; 
cross-border subversion and attacks 
from Afghanistan into Pakistan left 
several hundred civilians inside Pakistan 
dead or wounded. Harsh Soviet threats 
aimed at undermining Pakistan's sense 
of security continued throughout the 
year as well. Confident of our support, 
Pakistan has remained steadfast despite 
these threats, refusing to recognize the 
Soviet-controlled regime in Kabul or to 
acquiesce in the continuing Soviet 
efforts to subjugate the Afghan people. 

Soviet pressure on Pakistan has in- 
creased as a consequence of Soviet frus- 
tration over its continued inability to 
secure the conquest of Afghanistan. 
Despite heightened Soviet efforts, the 
situation at the end of 1985 finds the 
Soviets no closer to defeating the 
Afghan resistance than they were in 
1980. 



Both the United States and Pakist 
remain committed to seeking a negoti 
ated settlement for Afghanistan. Our 
support for the UN-sponsored negotia 
tions is on record, as is our consistent 
stated willingness to serve as a gnara 
tor of a comprehensive and balanced 
agreement which provides for the 
prompt withdrawal of Soviet troops. I 
should also encompass the other ele- , 
ments in the seven resolutions which 
the UN General Assembly has strong 
supported by overwhelming majoritie 
each year since the December 1979 
invasion. 

Despite recent statements, the 
Soviets give no sign of a real desire 1 
a settlement. To date no withdrawal 
timetable has been tabled in the cont 
of the UN negotiations, and we are t 
aware of any new Soviet thinking on 
this score. 

The extraordinary generosity andil 
sense of humanitarian responsibility 
with which the Pakistani Governmen 
and people have shouldered the ever- 
increasing burden of millions of Afgh 
refugees deserves special note. The 
United States through the UN High 
Commissioner for Refugees (UNHCE 
and the World Food Program helps a 
leviate the serious drain on Pakistani 
resources of providing for refugee ne 
We are pleased that the Congress ha 
given strong support to this program 

In view of the situation Pakistan 
faces, we must continue to address 
Pakistan's urgent need for moderniza 
tion of its defense forces. Our progra 
will enable Pakistan to continue its 
steady opposition to Soviet aggressio 
in Afghanistan, retain its leadership i 
in the international community on th< 
Afghan issue, and continue to host m 
than 2.5 million Afghan refugees whil 
pursuing essential economic develop- 
ment programs. Our proposed econor 
assistance package will work directly 
toward assisting Pakistan's long-term 
development efforts in the important 
fields of health, population, energy, a 
agriculture as well and will provide 
short-term balance-of-payments suppc 

Equally important our assistance 
helps to provide the self-confidence 
necessary for Pakistan to play its pal 
in bringing about the better relations 
between India and Pakistan both cou 
tries seek. We strongly endorse their 



82 



SOUTH ASIA 



toward an improved relationship 
ise it is essential to South Asian 
! and stability and in particular for 
ing a nuclear arms race in South 

With lessened suspicion between 

and Pakistan, a major incentive 
lishes for the development of 
ar weapons. 

he Pakistani economy has shown 
1 results during the past year. 
3er agricultural harvests have con- 
ted to a return to substantial real 
■stic economic growth rates and 

alleviated somewhat the pressures 
ikistan's balance of payments. Un- 
inties about continuing workers' 
lances, depressed international 
lodity prices, and a mounting debt 
sn, however, have kept Pakistan's 
jn payments outlook clouded. We 
nue to urge economic policy re- 
3, particularly greater mobilization 
mestic resources, which will im- 
? Pakistan's longer term balance-of- 
lents outlook and lay the foundation 
ustained high rates of economic 
th. 

ye are hopeful and heartened by 
;tan's return to elected, constitu- 
1 government. We believe that the 
•ance of our continued economic and 
•ity assistance over a period of 
3 helps create the domestic condi- 

necessary for continued political 
ition and stability. This is one rea- 
vhy a multiyear follow-on program 
jcial. It helps ensure that despite 
it subversion and cross-border 
its, democracy will flourish in 
3tan, and durable political institu- 

will develop. 

^.n important U.S. concern also 
ed by our economic assistance is 
otics control. Over one-half of all 
in on the U.S. market is South and 
hwest Asian in origin. While 
stani opium-growing acreage has 

reduced, significant amounts of 
in are produced in and transit 
ugh Pakistan. We have a well- 
Dlished program in Pakistan to help 
icate opium production and shut 
(l heroin labs, but the task is far 
i complete. Our FY 1987 narcotics 
ram combined economic assistance 
ing for integrated rural develop- 
t, along with U.S. -Pakistani law en- 
iment cooperation and funding for 
cultural outreach programs to 
m-growing regions. It is an exten- 



sive undertaking, but the challenge of 
drug abuse in our country warrants a 
program of this magnitude. 

As we mentioned above, another 
critical U.S. interest served by our as- 
sistance program is nonproliferation. 
While President Zia and Prime Minister 
Junejo have publicly made assurances 
regarding the peaceful nature of the 
Pakistani nuclear program, we have con- 
tinued to convey to the Pakistan 
Government on numerous occasions and 



at t he highest levels our concerns about 
unsafeguarded nuclear facilities in that 
country. We are confident that our mes- 
sage that Pakistani nuclear restraint is 
essential to our ability to provide secu- 
rity assistance has been clearly under- 
stood. As the President certified to the 
Congress last Fall, we do not believe 
that Pakistan possesses a nuclear 
device. We are convinced, as well, that 
our program of security assistance has 



U.S. Assistance Levels 
(Millions U.S.S) 





FY 1985 
(Actual) 


FY 1986 

(Est.) 


FY 1987 
(Req.) 


Afghan Humanitarian 

ESF 





14.355 


15.0 


Bangladesh 

Development Assistance 
PL 480, Title I/III 
PL 480, Title IP 
IMET 


85.070 
94.5 
18.968 
0.336 

198.874 


75.0 
70.0 
16.799 
0.263 


75.0 
64.0 
16.323 
0.370 


Total 


162.062 


155.693 


India 

Development Assistance 
PL 480, Title II* 
IMET 


85.0 
93.54 

0.282 


75.0 
80.377 
0.311 


72.0 
80.459 
0.400 


Total 


178.822 


155.688 


152.859 


Nepal 

Development Assistance 
IMET 


17.6 

0.125 


14.400 
0.096 


14.400 
0.125 


Total 


17.725 


14.496 


14.525 


Pakistan 

ESF 

Development Assistance 

PL 480, Title I 

FMS 

IMET 


200.0 

50.0 

59.0 
325.0 
0.970 


239.25 

24.0 

50.0 
311.025 

0.885 

625.16(1 


250.0 
25.0 
50.0 

340.0 
1.4 


Total 


634.970 


666.4 


Sri Lanka 

Development Assistance 
PL 480, Title I 
PL 480, Title II* 
IMET 


34.662 

26.0 
3.855 
0.148 


20.0 

26.0 
2.746 
0.144 


20.0 
19.0 
2.029 

0.185 


Total 


64.665 


48.890 


41.214 


Maldives 

PL 480, Title I 
IMET 


1.5 
0.022 

1.522 


0.024 


0.055 


Total 


0.024 


0.055 


Grand Total 


1096.578 


1020.675 


1045.746 



*These figures do not include PL 480, Title II, food assistance provided through the World 
Food Program for Bangladesh, Bhutan, India, Nepal, Pakistan, and Sri Lanka, nor $7 million 
in ESF mixed credits to be extended to India in FY 1986. 



1986 



83 



SOUTH ASIA 



contributed and will continue to con- 
tribute significantly to reducing the risk 
that it will. 

While we will continue to do all we 
can to restrain the Pakistani program, 
and our ability to provide security as- 
sistance is essential in this regard, we 
also recognize that the nuclear issue in 
South Asia is regional in nature. India, 
which exploded what it called a peaceful 
nuclear device in 1974, operates a sig- 
nificant number of unsafeguarded 
nuclear facilities. Deep-seated mutual 
distrust characterizes the relationship 
between India and Pakistan. Accord- 
ingly the best prospect for a lasting 
solution to the South Asia nuclear issue 
lies in a dialogue between India and 
Pakistan that leads to significant non- 
proliferation steps by both and in an 
overall reduction of Indo-Pakistani ten- 
sions. Last December 17, President Zia 
and Prime Minister Gandhi agreed in 
principle to a mutual pledge not to 
attack each other's nuclear facilities. 
This agreement is a welcome first step 
that we urge both sides to follow up 
with additional measures. President Zia 
has stated that his government is pre- 
pared to undertake, jointly with India, 
accession to the Nuclear Nonprolifera- 
tion Treaty or acceptance of full-scope 
International Atomic Energy Agency 
(IAEA) safeguards, mutual inspection of 
each other's nuclear facilities, a joint 
declaration renouncing acquisition or de- 
velopment of nuclear weapons, or estab- 
lishment of a nuclear-weapons-free zone. 
He has also stated that he is ready to 
discuss any proposals the Government 
of India might tender. Pakistani (as well 
as Indian) restraint in the nuclear area, 
and Pakistani confidence in the security 
assistance relationship with the United 
States, are essential elements in creat- 
ing a context conducive for a nuclear 
dialogue that leads to major concrete 
nonproliferation steps. 

Afghanistan Cross Border Assistance 

The cross border humanitarian as- 
sistance program administered by the 
Agency for International Development 
(AID) assists war-affected Afghan 
civilians living inside Afghanistan to 
meet urgent health and other needs 
while encouraging them to remain in Af- 
ghanistan, thereby strengthening the 
popular base of the resistance. This pro- 



gram will also increase the likelihood 
that refugees now living in Pakistan will 
eventually return home. To underwrite 
the delivery of health and educational 
services, promote agricultural produc- 
tion (including livestock management 
and veterinary services), and commodity 
support, AID intends to provide $14,355 
million of ESF earmarked for this pur- 
pose by Congress in the FY 1986 For- 
eign Assistance Act, and the 
Administration is requesting $15 million 
for FY 1987. The Office of the AID 
Representative for Afghanistan Affairs 
in the U.S. Embassy in Islamabad is 
overseeing the preparation of detailed 
plans for implementation projects in 
these priority areas; program implemen- 
tation begins in the spring. Such 
projects will not supplant our continuing 
support for many projects run by pri- 
vate voluntary organizations; the exact 
means of administering these programs 
remains to be worked out, although our 
intention is to work closely with the Af- 
ghan resistance alliance. 

India 

India is the dominant regional power in 
South Asia and plays a pivotal role in 
regional peace and stability. Over the 
years, our relationship has evolved from 
one in which bilateral economic as- 
sistance played a major role to one 
which places greater emphasis on joint 
collaboration between our two open, 
democratic societies. That collaboration 
is epitomized by the Indo-U.S. Joint 
Commission, which met last month 
when the Foreign Minister visited 
Washington, and by the subcommissions 
on economic and commercial relations, 
agriculture, science and technology, and 
education and culture. 

Our AID program in India is now 
small in comparison to India's total de- 
velopment needs and focuses on areas 
which both we and the Government of 
India consider crucial: agriculture, in- 
cluding irrigation and forestry; health 
and family planning; alternative energy 
resources; and private sector develop- 
ment. The major target of the program 
is the estimated 300 million Indians, or 
40% of the population which falls below 
that country's poverty line. Most of 
these are rural poor. In seeking to 
reduce this grinding poverty, the AID 
program emphasizes application of rele- 
vant science and technology to key de- 
velopment problems in such areas as 
agricultural research and vaccine de- 
velopment. 



In this respect, the AID program! 
mirrors the broader Indo-U.S. relatior 
ship, where high technology has beco? 
a key element of both scientific collabi 
ration and trade. Traditionally strong 
ties between our scientific community 
have been enhanced through the scier 
and technology initiative, begun in 191 
and extended during Prime Minister | 
Rajiv Gandhi's visit to Washington la 
June. The purpose of this initiative, 
which is supported in part by AID, ia 
concentrate on a few areas of researc 
of great potential benefit to both ci m 
tries. Indo-U.S. trade in high technoli 
items has been stimulated by negotia 
tion of a memorandum of understandi 
to protect that technology. This shoul 
help preserve our position as India's 
leading partner in both trade and bus i 
ness collaborations. AID will play ani 
portant role through its commitment 
provide a $7 million ESF grant to heJ 
meet European concessional financing 
terms in a stiff competition for a conij 
tract to manufacture small main-fram | 
computers in India. An American fin i 
won the contract, which should resul' 
$500 million in direct sales and a poti 
tial of even more indirect sales. 

India has undertaken an ambitioui 
economic liberalization program whic 
seeks to begin the arduous task of di 
mantling the stifling mass of regulati 
which constrain the potential dynami 
of the Indian economy. We have littl 
direct role in this process but have 
authorized one $11 million grant to 
finance subprojects for Indo-U.S. ind 
trial research and development desig 
to help modernize India's private seei 
so it can respond more effectively to i 
liberalization measures. We applaud 
intent of liberalization and are both e 
couraging American companies to loO' 
again at this stable democratic count: 
and seeking additional ways of en- 
couraging the private sector through 
our development assistance program/ 

Bangladesh 

Our assistance serves a twofold ecoH 
ic purpose in Bangladesh: to insure t 
in this nation of 100 million, basic hu 
man needs are met, especially the pr 
sion of an adequate food supply, and 
help establish conditions which wouli 
provide for sustainable economic 
growth. We concurrently seek to en- 
courage long-term political stability I 
der representative institutions. 



84 



Department of State Bull 



SOUTH ASIA 



.ven Bangladesh's extremely low 
tpita income and enormous needs, 
ssistance is entirely grant. Our 
igy is aimed at reducing fertility, 
tsing agricultural production, and 
ating rural employment. This basic 
igy is accompanied by an active 
dialogue in concert with other 
s. Particular emphasis has been 

1 on strengthening the role of mar- 
md increasing the private sector 
ipation in the economy. The broad 
:t of AID's programs in Ban- 

sh can be measured best by these 
•tant policy changes. 
r e have been encouraged that Ban- 
sh has taken important steps to in- 

2 the role of private enterprise in 
:onomy. An excellent example of 

3 the rapidly growing garment in- 
y, which barely existed 5 years 
Entirely in the hands of the private 
r, the garment industry has be- 

a key source of foreign exchange 
angladesh and has introduced more 
100,000 new workers, mostly wom- 
ito the labor force. The agricultural 
r has also surged ahead in this at- 
here of economic liberalization; last 
s foodgrain harvest was easily the 
st on record, despite widespread 
jht and flooding, 
angladesh continues its helpful 
rating role in foreign policy. Its 
g record in the United Nations is 
g the most supportive of the Unit- 
ates of Islamic countries; we also 
Bangladesh's constructive ap- 
h in the Nonaligned Movement and 
Irganization of the Islamic Confer- 
Bangladesh has similarly been ac- 
n promoting better relations among 
ations of the subcontinent. This 
fall, President Ershad hosted the 
summit meeting of the South Asian 
Nation of Regional Cooperation, 
jriginal impetus for the SAARC 
from former President Zia in 1978 
vas energetically followed up by 
dent Ershad. 

Ve welcome the recent announce- 
by the Bangladesh Government 
parliamentary elections will be held 
pril 2(3. It is at this moment uncer- 
whether the government and oppo- 
l parties will be able to agree on a 
ula which would enable the latter to 
cipate. It is our strong desire that 
jolitical process in Bangladesh be as 
d-based as possible and that elec- 
reflect the popular will. We know- 



that establishing a durable democratic 
tradition has not been easy in Ban- 
gladesh; we wish the nation well in its 
current efforts. 

The United States can play a useful 
role in helping Bangladesh pursue its 
twin goals of economic and political de- 
velopment; we know that in the long 
run one is not possible without the 
other. Our assistance program is our 
chief tool in this process, and it 
deserves your continued support. 

Sri Lanka 

We have a long and close relationship 
with democratic Sri Lanka, a tie which 
has been strengthened since 1977 by our 
support for that nation's ambitious pro- 
gram of economic liberalization. 

Our program of development as- 
sistance to Sri Lanka is reduced this 
year because of cuts in the global AID 
budget and the gradual completion of 
the most significant development project 
in the country— the harnessing of the 
Mahaweli River for power and irriga- 
tion. Our program will now address 
other pressing development needs in Sri 
Lanka— such areas as irrigation systems 
management, agricultural planning, and 
rural enterprise development. 

We have watched with concern as 
severe communal problems have increas- 
ingly threatened the social and political 
fabric of Sri Lanka. Militant elements 
from the minority Tamil community 
have, in the past year, broadened their 
attacks on security forces to include Sin- 
halese and Tamil civilians. The response 
of the security forces, while fully justi- 
fied in principle, has frequently entailed 
excessive loss of life among Tamil 
civilians. A negotiated solution to the in- 
surgency is essential if peace is to be re- 
stored iii the country. We do not believe 
a purely military solution is possible. 
We support the unity and integrity of 
Sri Lanka and oppose establishment of a 
separate Tamil state. 

Efforts at a negotiated solution over 
the past year have had several ups and 
downs, with India playing an important 
facilitative role. Unfortunately violence 
has continued. While it has been con- 
fined primarily to the north and east 
and everyday life is normal elsewhere, 
the communal conflict has had an ad- 
verse effect on the economy. Increasing 
defense spending has intensified the 
government's budget deficit. The uncer- 
tainties inherent in the conflict have 
harmed the tourist industry and have 
discouraged foreign investment. 



Although not directly relevant to the 
armed struggle being waged by Tamil 
separatists, a related development in Sri 
Lanka is worthy of note. In January of 
this year, the government announced its 
intention to grant citizenship to all re- 
maining stateless persons in Sri Lanka. 
Since those persons are overwhelmingly 
Tamil, the descendants of south Indians 
brought to Sri Lanka by the British to 
work on the tea plantations, the govern- 
ment's decision in this matter reflects a 
desire to work with all elements of the 
society in solving Sri Lanka's problems. 

Nepal 

Although the United States has no vital 
economic or political interests there, 
Nepal's location between India and Chi- 
na makes the maintenance of its domes- 
tic stability a matter of particular 
importance in a regional context. Nepal 
is also one of the poorest countries in 
the world. Our economic assistance to 
Nepal is entirely on a grant basis and is 
essentially humanitarian in nature. Thus 
the primary objective of U.S. assistance 
is to contribute to Nepal's continued sta- 
bility, and thereby regional stability, 
through the promotion of economic and 
political development and through pro- 
grams designed to improve the quality 
of life for the Nepalese people. 

Nepal is a constitutional monarchy 
in which the King, the National Parlia- 
ment, a vigorous press, and an increas- 
ingly active and informed electorate 
play important roles. National elections 
scheduled for May will be a key indica- 
tor of whether the process of constitu- 
tional reform and limited 
democratization begun in 1980 remains a 
viable and vital force. 

The Nepalese Government has also 
recently enacted a series of important 
economic reforms and is working closely 
with the United States and other aid 
donors to revitalize and prioritize eco- 
nomic development in Nepal. Nepal 
faces severe difficulties related to 
poverty, overpopulation, and environ- 
mental degradation. U.S. assistance to 
Nepal focuses on these problems with 
programs for resource conservation, 
health and family planning, rural de- 
velopment, and the rehabilitation of irri- 
gation resources. 



■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.B 



1986 



85 



WESTERN HEMISPHERE 



FY 1987 Assistance Requests 

for Latin America and the Caribbean 



by Elliott Abrams 

Statement before the Subcommittee 
on Foreign Operations of the House 
Appropriations Committee on March 18, 
1986. Mr. Abrams is Assistant Secre- 
tary for Inter-American Affairs. 1 

Our relationships with our neighbors in 
Central and South America and in the 
Caribbean demonstrate that foreign as- 
sistance directly enhances U.S. national 
interests. For the hemisphere as a 
w hole, the success of economic coopera- 
tion obviates the need for greater 
security assistance: our request for eco- 
nomic assistance is nearly five times the 
request for military assistance. 

For FY 1987 we are requesting 
$2,020 billion for economic and military 
assistance for the Western Hemisphere. 
Economic assistance— consisting of eco- 
nomic support funds (ESF), development 
assistance (DA), and food aid— totals 
$1,664 billion. The military request con- 
sists of $357 million for loans and 
grants— military assistance program 
(MAP), foreign" military sales (FMS), and 
international military education and 
training (IMET) program. 

These levels of assistance are 
necessary even at this time of budget 
stringency in the United States. The 
needs the programs we are proposing 
are designed to meet involve important 
domestic concerns and constituencies. At 
the same time, much of the assistance 
we are requesting contributes either 
directly or indirectly to our long-term 
national security. Finally, the resources 
we have requested are at the minimum 
levels at which it is possible to protect 
our interests even under the favorable 
circumstances that have developed in re- 
cent years. 

The most favorable of the circum- 
stances improving the effectiveness of 
our assistance is that there has been a 
fundamental change in the types of 
governments now heading the countries 
in Latin America and the Caribbean. 
The movement toward democracy, in 
terms of the number of countries in- 
volved and the pace with which the 
change has occurred, is unprecedented. 

One result is that our policy of eco- 
nomic, political, and military support to 



prodemocratic forces meshes with the 
expanding movement toward democracy. 
Progress toward democracy means that 
we can work with governments that are 
in touch with the needs and aspirations 
of their people; with governments that 
must, and have begun to, think and plan 
for long-term economic improvement. 
Democratic development, and the rejec- 
tion of the extremes of right and left, is 
contributing to strengthening peace and 
improving living standards for all. 

A second result is that we are wit- 
nessing in several countries a slow but 
steady move away from misplaced trust 
in statist solutions to economic growth 
and toward more open systems that rely 
on private investment and market- 
oriented policies. 

While the Administration and the 
Congress may occasionally differ on the 
means, I think we are in broad agree- 
ment on what we want to accomplish in 
Latin America. Our goals in Latin 
America and the Caribbean are biparti- 
san. We all want to further democracy, 
establish the groundwork for renewed 
prosperity, and defeat antidemocratic in- 
surgents and narcotics traffickers. 

The Ongoing Challenges 

Although many trends in the region in- 
dicate progress, there is an ongoing 
need for assistance. We must continue 
to work together if we are to play a 
meaningful role in helping democratic 
governments to meet and overcome the 
obstacles to political and economic de- 
velopment. 

In addition to the traditional social 
inequities and powerful vested interests 
which hinder progress, we now see 
newer scourges from narcotics and ter- 
rorism. Narcotics traffickers have the 
resources and influence to undercut the 
stability and integrity of these govern- 
ments. Terrorists, often in league with 
narcotics traffickers, prey on the 
poverty of the region with promises that 
their Marxist ideologies have never 
been able to deliver. And if these 
problems were not enough to undermine 
the social and economic fabric of those 
countries, large external debts and low 
commodity prices have exacerbated the 
forces abetting disintegration. 



The process of deepening the rol 
of democracy will take time. The bas- 
underlying institutions common to 
democratic nations— independent coun 
systems, viable political party struc- 
tures, police and military forces subj 
to nonpartisan civilian control, for 
example— will have to be strengthen 
even as we deal with the other 
challenges that I have just mentions 

Finally, the trend toward democn 
is in itself a challenge. For if our nei 
bors, with our help, cannot successfu 
overcome their economic and social 
problems under democratic leadershj 
this period of democratic resurgence 
could ultimately prove short lived. A 
that would have devastating conse- 
quences for U.S. interests. 

Let me now turn to the subregioi 
of Latin America and the Caribbean 
describe for you recent development, 
there and what our proposals for FY 
1987 are and mean. 

Central America 

In Central America, we are carrying ; 
the recommendations of the Nationa 
Bipartisan Commission on Central 
America, which the Congress confirri 
last year when it added a new Chapl 
6 of Part I of the Foreign Assist a net 
Act of 1961. In this act it is stated t 
"the building of democracy, the restj 
tion of peace, the improvement of liv 
conditions, and the application of equ 
justice under law in Central America 
are important to the interests of the 
United States." 

We have made significant progre 
toward those goals in Central Amen 
In El Salvador, democracy has con- 
tinued to be consolidated under Pres 
dent Duarte. In Guatemala, an elecU 
civilian president has taken power fo 
the first time in 20 years. In Hondur 
democratic presidential elections re- 
sulted in the first transfer of power 
from one elected civilian politician to 
another in 60 years. In Costa Rica, 
honest, fair elections earlier this yea] 
continued a long tradition. At the sai 
time, as political developments take : 
positive course, the serious economic 
problems stemming from world eco- 
nomic conditions, the need for furthe 
institutional development, and 
Nicaraguan subversion and aggressio 
are being met. The economies of the 
democratic republics are turning up- 
ward. Most importantly, sound adjus 
ment measures are being taken to 
establish the basis for self-sustaining 
growth. 



86 



Department of State Bull' 



WESTERN HEMISPHERE 



io situation in Nicaragua is in 
contrast to that of the Central 
ican democracies. There have been 
ie and fair elections there under 
mdinistas. A group of Marxist- 
ists is imposing communist rule on 
ireasingly repressed population. 
>mic decline has followed mis- 
jement and loss of public eonfi- 
. The government has fallen 
d in payments to most internation- 
incial institutions. Its arrears to 
forld Bank go back more than 
rs. Similar repayment problems 
with other creditors, some of 
i are its immediate Central Ameri- 
eighbors. On the other hand, the 
democratic countries of Central 
ica have generally improved their 
mic performance, although serious 
ems remain. Our assistance has 
an important factor in this im- 
>d policy framework and will be 
sary to ensure continued progress. 

1 El Salvador our economic and 
cry assistance has played a major 
n fostering our objectives. At the 
ning of this decade, El Salvador 
ired enmeshed in a never-ending 
jetween leftwing, externally sup- 
d guerrillas and rightwing death 
Is. While our military assistance 

d the Salvadoran Government corn- 
he insurgents, our economic as- 
lce supported the reform programs 

2 elected government of President 
Napoleon Duarte. With this sup- 
President Duarte demonstrated 

electoral democracy and political di- 
le formed a practical basis for at- 
ng El Salvador's political, economic, 
I, and security problems. As Presi- 
Duarte has consolidated his 
rnment, the prospects for greater 
;ct for human rights and for a bet- 
uality of life for the Salvadoran 
le have improved. 
Ve are particularly encouraged by 
ident Duarte's new economic stabili- 
n program, which should bring 
t an acceleration in economic recov- 
Our pi-oposed ESF program for FY 
, totaling $240 million, is designed 
ipport President Duarte's efforts, 
military assistance— which at $135 
on MAP and $1.6 million IMET is 
ir the largest in Latin America— will 
sed for training, equipment, ammu- 
n, and spare parts to sustain the 
■t against Marxist guerrillas. Pro- 
ment of major equipment will be 
(d largely at offsetting attrition, and 
hasis will be on improving mobility 
small unit operations and develop- 
2ounterterrorism capabilities. 



Guatemala is another country 
where the winds of change have blown 
strongly in the last 2. years. Once 
categorized as the country with the 
"least chance of democratic develop- 
ment," since early 1984 Guatemala has 
surprised many of its critics with its 
strong movement toward representative 
government. Honest and open Constit- 
uent Assembly elections in July 1984 
were followed in October and December 
1985 by nationwide elections for presi- 
dent, vice president, Congress, and local 
offices, offering a broad spectrum of 
choice to the Guatemalan people. This is 
a uniquely Guatemalan achievement— all 
the credit belongs to the Guatemalan 
people. Our assistance in the coming 
years will help ensure the consolidation 
of democratic, civilian government. That 
is why we believe it is important to sup- 
port the new government of President 
Vinicio Cerezo. 

Economic assistance is of primary 
importance, but military assistance will 
also have a crucial role to play. By help- 
ing to control the continuing guerrilla in- 
surgency in that land, our military aid 
will provide President Cerezo with some 
breathing room to confront the social 
and economic problems of his country. 
Our aid request for Guatemala consists 
of $10.5 million in military assistance 



and $134 million in economic assistance, 
of which $70 million is in ESF, $40 mil- 
lion is in development assistance, and 
the remainder is in PL 480 food aid. 
The economic assistance will help the 
new government achieve its goals of 
economic stabilization and equitable 
growth. 

As in Guatemala, elections in Hon- 
duras last October and the democratic- 
succession of one elected president by 
another there this past January attest 
to the continuing trend toward 
democratization in the region. While the 
transition from authoritarian rule to 
elected civilian government is one of the 
first steps toward democracy, the peace- 
ful transfer of power from one govern- 
ment to the next is also an important 
sign that democratic institutions are de- 
veloping. This is the message that 
comes from Honduras. 

We are now engaged in comprehen- 
sive economic policy discussions with 
the newly inaugurated government, with 
the objective of defining a policy mix 
which will reinforce the already positive 
trends in the Honduran economy. At the 
same time, Honduran concern at the 
Cuban- and Soviet-supported military 
buildup in Nicaragua has led to U.S. as- 
sistance in the modernization and 
modest expansion of the Honduran 



U.S. Bilateral Assistance 

TO CENTRAL AMERICA: 1983—1987 



U.S.$(Billions) 




1983 

| ECONOMIC 



1984 1985 

■ military 



1986 



1987 

(Req.) 



1986 



87 



WESTERN HEMISPHERE 



Latin America and the Caribbean: 
FY 1987 Foreign Assistance Request 

($ millions) 



Central America 



Economic Assistance 

DA PL 480 



656.0 



287.6 



112.2 



TOTAL 



1055.8 



246.05 



Military Assistance 

FMS I MET 



4.0 



4.500 



Belize 

Costa Rica 

El Salvador 

Guatemala 

Honduras 

Panama 

Regional Programs 



30 
150.0 
240.0 
70 
900 
280 
75.0 



75 
160 
85.0 
400 
51.0 
18.1 
700 



0.0 

180 
52.7 
237 
178 
00 
0.0 



105 
1840 
377.7 
133.7 

158.8 
46.1 

145.0 



1 

3.1 

134.65 

100 

87.5 

9.8 

NA* 



0.0 

0.0 
0.0 
0.0 
00 
4.0 
NA 



.100 
250 

1.600 
500 

1.300 
750 
NA 



Andean 


72.0 


51.8 


46.6 


170.4 


44.0 


15.0 


3.000 


62. 


Bolivia 


20 


93 


28 3 


57 6 


6 


0.0 


.400 


6. 


Colombia 


0.0 


0.0 


0.0 


0.0 


100 


100 


950 


20. 


Ecuador 


150 


22 5 


0.5 


38.0 


8.0 


0.0 


.650 


8. 


Peru 


37.0 


20.0 


178 


74.8 


20.0 


5.0 


850 


25. 


Venezuela 


00 


0.0 


0.0 


0.0 


00 


00 


.150 





Caribbean 




190.0 


109.8 


86.7 


386.5 


24.5 


3.0 


2.310 


29. 


The Baham 


as 


00 


0.0 


00 


00 


00 


0.0 


060 




Dominican 


Republic 


500 


287 


31.6 


1103 


7.0 


3.0 


850 


10 


Eastern Ca 


-ibbean 


35.0 


358 


0.0 


70.8 


9.0 


0.0 


.400 


9 


Guyana 




0.0 


0.0 


0.0 


00 


0.0 


0.0 


050 




Haiti 




5.0 


22.3 


25.1 


52.4 


0.5 


0.0 


.600 


1 


Jamaica 




100.0 


23.0 


30.0 


153.0 


8.0 


0.0 


300 


8 


Surmame 




0.0 


0.0 


0.0 


0.0 


0.0 


0.0 


050 




Trinidad and Tobago 


00 


0.0 


0.0 


0.0 


0.0 


0.0 


.050 





Other 



15.0 



0.0 



0.0 



15.0 



2.5 



0.0 



.800 



Argentina 


0.0 


0.0 


0.0 


00 


0.0 


0.0 


100 


Brazil 


0.0 


00 


0.0 


0.0 


0.0 


0.0 


100 


Chile 


0.0 


00 


0.0 


0.0 


0.0 


0.0 


100 


Mexico 


0.0 


00 


0.0 


0.0 


0.0 


0.0 


250 


Paraguay 


0.0 


0.0 


0.0 


0.0 


0.0 


0.0 


.125 


Uruguay 


15.0 


0.0 


0.0 


15.0 


2.5 


0.0 


.125 


Latin America and 
















Caribbean Regional 
















Programs 


12.0 


24.1 


0.0 


36.1 


NA 


NA 


NA 


Panama Canal 
















American Schools 


NA 


NA 


NA 


NA 


0.0 


0.0 


3 000 


U.S. Army School 
















of the Americas 


NA 


NA 


NA 


NA 


0.0 


0.0 


4.000 



TOTAL: 
Latin America 
and the Caribbean 


945.0 


473.3 


245.5 


1663.8 


317.05 


22.0 17.610 356.I 
















'NA = not applicable. 


88 












Department of State Bull' 



WESTERN HEMISPHERE 



d Forces. Our aid request of $159 
i economic asistance and $89 mil- 
lilitary assistance will be used for 
purposes. 

Costa Rica, our military us- 
ee request of $3.4 million is part of 
jram designed to maintain equip- 
previously provided as we assist 
icurity forces to develop a minimal 
ity to counter terrorist activity, 
conomic assistance will continue to 
rt Costa Rica's stabilization and 
ural adjustment efforts already 
way. We are requesting a total of 
million in economic assistance for 

Rica. 

ir Panama, our proposed military 
mce of $14.5 million and economic 
mce of $46 million, respectively, 
I be viewed in the framework of 
mama Canal Treaty agreements, 
ulitary assistance is to meet the 
,o prepare the Panama Defense 

in its future role of defending the 

while the economic assistance will 
neet the basic needs of the 
lanian population and contribute 
itical stability beneficial to the con- 
g security of the canal. 
lly Nicaragua presents a blot on 
herwise promising horizon in Cen- 
merica. While we were promoting 
iratic reform throughout Central 
ica in recent years, the Sandinistas 
:aragua were moving quickly— as 
:ontinue to do— to consolidate their 
irty power. Even now we see the 
nistas attempting, with Soviet and 
l assistance, to undermine the 
ooring governments in the name of 
so-called revolutionary, but in real- 
talitarian, principles. During 1985 
andinista objective of imposing a 
;arian state in Nicaragua became 
more clear through the intensifiea- 
f repressive measures in that coun- 
ust as our assistance to the 
:ratic governments in Central 
ica shields them from Nicaraguan 
irsion and export of revolution, our 
irt of the armed democratic 
ance in Nicaragua is designed to 
Bit the consolidation of Sandinista 
r that would crush forever freedom 
he hopes of democracy for the peo- 

Nicaragua. 

i America 

\mdean nations of Bolivia, Colom- 
Ccuador, and Peru have serious eco- 
c problems, compounded by leftist 
gencies and narcotics trafficking. 
e democracies deserve our support 
;ey struggle to deal with this situa- 
pi a responsible manner. 



Bolivia's democratic government un- 
der President Paz has embarked on a 
courageous adjustment program de- 
signed to bring order to the economic 
chaos that has long plagued this moun- 
tainous nation. Bolivia realizes that sus- 
tained growth depends on tapping the 
energies of its people, not relying on 
government as the repository of eco- 
nomic wisdom. The result has been 
some progress toward economic stabil- 
ity, including a dramatic lowering of in- 
flation from an annual rate of over 
20,000% in August 1985 to an annual 
rate below 100% in February 1986. 

The road to democratic consolidation 
and sustained economic growth will be 
long and difficult, but at least, after 
years of false starts, we see that Bolivia 
is on that road and the journey has be- 
gun. That is a measurable success for 
the policies we have been following in 
Bolivia. I would be remiss if I didn't 
also warn you that to travel that road 
we must sustain and increase our as- 
sistance. For FY 1987, our request for 
economic aid to Bolivia is $57.6 million, 
while the request for military aid is $6.4 
million. 

Colombia, one of the oldest 
democracies in the hemisphere, has long 
had governments that have conserva- 
tively managed a relatively diverse 



economy. While Colombia, through good 
management, has avoided the more seri- 
ous economic crises experienced by 
some of its neighbors, narcotics traffick- 
ing and terrorism threaten to undermine 
years of slow but steady economic and 
political progress. Evidence of coopera- 
tion between traffickers and terrorists 
has added a new and ominous dimension 
to the problems facing the government. 
Drugs give the terrorists access to 
potentially unlimited resources, while 
the terrorists in turn help support the 
narcotics trade. 

Our interests parallel Colombia's in 
meeting this dual security threat. Our 
policies are designed to increase the 
ability of Colombia's security forces to 
meet the challenges they face. To do the 
job, we will need a modest increase in 
the amount of our small security as- 
sistance program. In view of the close 
identification of U.S. and Colombian in- 
terests in strengthening local forces to 
combat narcotics traffickers, a portion of 
that program should be grant MAP 
funds. 

In Ecuador, our assistance is being 
put to very good use in cooperation with 
the administration of President Febres- 
Cordero, a staunch friend who is dealing 
with growing insurgency and narcotics 
problems. We see eye-to-eye with 



U.S. Bilateral Assistance 

TO ANDEAN COUNTRIES: 1983—1987 



U.S. $ (Millions) 



260 

220- 




















180- 

140- 
mn - 




















i i i i 

5 CD CM 






1 




■ 




■ 




1 



1983 

g ECONOMIC 



1984 

■ military 



1986 



1987 

(Req.) 



1986 



89 



WESTERN HEMISPHERE 



Febres-Cordero on these twin scourges, 
and we are offering assistance appropri- 
ate to the need. Febres-Cordero is a 
pacesetter in Latin America in institut- 
ing measures to liberate the economy of 
the country from stifling state controls. 
Because Ecuador's government believes 
in the efficiency of the marketplace and 
the importance of the private sector, our 
assistance is also being employed to 
cushion the transition to an economy 
with a less intrusive public sector. In 
Ecuador we are on the right track, but 
we must sustain our assistance in order 
to make maximum efficient use of it. 

The Peru of President Alan Garcia 
has used harsh rhetoric toward the 
United States in some areas of our rela- 
tions. Nevertheless, Garcia is Peru's 
elected leader, one who on taking office 
last July inherited a large foreign debt, 
a ruthless terrorist threat, and a well- 
entrenehed illicit narcotics industry. 
This, combined with extreme rural 
poverty, threatens Peru's stability. Our 
assistance policies are designed to help 
President Garcia in his commitment to 
stamp out narcotics trafficking and in 
his determination to end terrorism with- 
in the context of democracy and respect 
for' human rights. 

The pursuit of U.S. interests in 
Peru, however, will require greater 
cooperation and understanding from the 
Peruvian Government and a larger com- 
mitment of resources than we have 
budgeted for 1986. I am afraid that 
without both of these elements, our in- 
terests will not be satisfactorily 
addressed. 

In Uruguay, another South Ameri- 
can democracy, the year-old government 
of President Sanguinetti is consolidating 
that country's return to democratic rule 
and attempting to revive the economy 
after years of decline. The Administra- 
tion shares Congress' desire to be help- 
ful and is requesting $15 million in ESF 
to extend the assistance being provided 
this fiscal year. We are also requesting 
a small amount of military assistance 
($2.5 million) to help the Uruguayan 
defense forces purchase some replace- 
ment equipment and parts. 

The Caribbean Region 

The enthusiastic greeting given to Presi- 
dent Reagan in Grenada on February 20 
demonstrates the attachment of our 
Caribbean neighbors to democracy and 
their identification with U.S. democratic 
ideals. There have been over 15 free, 
fair elections in the Caribbean in the 
past 6 years. We and these countries 



U.S. Bilateral Assistance 

TO CARIBBEAN COUNTRIES: 1983—1987 



U.S. $ (Millions 



400- 




1983 



1984 



1985 



1986 



~j ECONOMIC 



MILITARY 



1987 

(Req.) 



- 



share a purpose and point of view that 
have created strong, close relations. In 
February we welcomed the change in 
Haiti from a president-for-life regime to 
a transition government which has 
pledged to restore elected government. 
U.S. support for the transitional Haitian 
Government will be necessary in order 
to help ensure that the promise of 
representative government is realized. 
Challenges still remain in promoting the 
necessary institutional development 
necessary to consolidate these favorable 
trends in the Caribbean. However, the 
countries there are making substantial 
progress. 

While we take note of a favorable 
political trend, the economic situation in 
the Caribbean remains critical, in large 
part because of adverse developments in 
markets for the region's principal ex- 
ports. Jamaica has suffered from falling 
demand for bauxite. The Dominican 
Republic and other sugar producers 
have been sorely affected by sharply 
lower U.S. sugar quotas. Haiti, the 
poorest country in the hemisphere, is 
caught in a vicious cycle of poverty, 
hunger, overpopulation, and environmen- 
tal degradation. A heavy debt burden in 
many countries exacerbates these 
problems. In the face of these difficult 



circumstances, our economic assistant 
has played a key role in helping most 
these countries sustain badly needed 
justment programs. 

In the eastern Caribbean, progres 
is being made in building the infrastr 
ture which is a requisite for sustainei 
economic viability. Our assistance is 
directed largely at building the base | 
which is essential for these islands to 
take full advantage of the trade and i 
vestment provisions of the Caribbean 
Basin Initiative. This aid is critical to 
their continued economic well-being. ] 
aims to secure the basis for sound, su 
tained economic development. 

Our small military assistance pro-?' 
grams in Jamaica, the Dominican 
Republic, and Haiti are aimed at redv 
ing illegal migration and narcotics 
trafficking. In the eastern Caribbean, 
we are assisting Grenada and the oth 
small island nations in a limited prog] 
to assure their security, including 
cooperative efforts on a regional basis 
These countries are currently conside 
ing entering into a more formal regio 
security system which will enhance tl 
ability to deal with security problems 
narcotics smugglers, and rescues at s' 



90 



Department of State Bull 



TREATIES 



for Continuing 
'ommitment 

and economic development in the 
)here require that we continue to 
istrate our long-term commitment 
survival and the strengthening of 
ratic institutions in the region and 
equire confidence that this com- 
tit will continue to be tied to 
, reform, and freedom. Continuing 
isan support is essential if the 
:1 States is to address— in a 
tently predictable way— a balanced 
iiitually reinforcing mix of econom- 
itical, diplomatic, and security sup- 
in 1 assistance. 

lere has been important progress 
d the goal of peace, democracy, 
:onomic growth. We continue to 
upon the advances of recent years, 
fforts to strengthen the adminis- 
n of justice have moved forward in 
al America and are beginning in 
aribbean and South America. This 
mg-term process that will require 
ained commitment. Our antinarcot- 
ograms in the hemisphere, in addi- 
3 combating the supply of illicit 
into our country, will also have a 
.rial effect in support of democra- 
alting the flow of drugs will dry up 
ist amounts of illegal funds that 
3 used to foster corruption in the 
phere. 

ii' assistance programs must be 
emented by policies which will 
)te private sector investment and 
t-led growth. The Caribbean Basin 
the. for example, is succeeding in 
ening and diversifying the produc- 
nd export base of the region. It is 
ning to have significant impact in 
lishing the basis for long-term 
ery. 

lusion 

essential to American interests to 
irt the democracies of Latin Ameri- 
d the Caribbean, including those 
is in transition toward democracy, 
o bolster the efforts of our neigh- 
to revitalize their economies. We 
it turn our backs just when the 
toward democracy is accelerating 
ur neighbors are beginning to take 
dvice with regard to freeing up 
economies. They need our help to 
lem through this difficult period 
o strengthen the foundation for fu- 
sconomic expansion. The reduction 
ids available in FY 1986 has put 
rograms in jeopardy and has cast 



doubt on our credibility and commit- 
ment. 1 urge approval of the full Ad- 
ministration requests for FY 1987 to 
defend American interests in our own 
hemisphere. 



'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. ■ 



Current Actions 



MULTILATERAL 



Agriculture 

International plant protection convention. 
Done at Rome Dec. 6, 1951. Entered into 
force Apr. 3, 1952; for the U.S. Aug. 18, 
1972. TIAS 7465. 
Adherence deposited: Togo, Apr. 2, 1986. 

Antarctica 

Recommendations relating to the furtherance 
of the principles and objectives of the Antarc- 
tic Treaty (TIAS 4780). Adopted at Canberra 
Sept. 27, 1983. 1 
Notification of approval: South Africa, 

Apr. 18, 1986. 

Arbitration 

Convention on the recognition and enforce- 
ment of foreign arbitral awards. Done at 
New York June 10, 1958. Entered into force 
June 7, 1959; for the U.S. Dec. 29, 1970. 
TIAS 6997. 
Accession deposited: Canada, May 12, 1986. 

Aviation 

International ah- services transit agreement. 
Signed at Chicago Dec. 7, 1944. Entered into 
force Jan. 20, 1945; for the U.S. Feb. 8, 1945. 
59 Stat. 1693; EAS 487. 
Acceptance deposited: Guyana, Apr. 28, 1986. 

Convention for the suppression of unlawful 
seizure of aircraft. Done at The Hague Dec. 
16, 1970. Entered into force Oct. 14, 1971. 
TIAS 7192. 
Accession deposited: Brunei, May 13, 1986. 

Convention for the suppression of unlawful 
acts against the safety of civil aviation. Done 
at Montreal Sept. 23, 1971. Entered into 
force Jan. 26, 1973. TIAS 7570. 
Accession deposited: Brunei, May 13, 1986. 

Consular Relations 

Vienna convention on consular relations. En- 
tered into force Mar. 19, 1967; for the U.S. 
Dec. 24, 1969. TIAS 6820. 
Accession deposited: Yemen (Sanaa), 

Apr. 10, 1986. 



Containers 

International convention for safe containers, 
1972. Done at Geneva Dec. 2, 1972. Entered 
into force Sept. 6, 1977; for the U.S. Jan. 3, 
1979. TIAS 9037, 10220. 
Territorial application: Extended to Bermuda 

by U.K., with effect from Mar. 27, 1987. 

Diplomatic Relations 

Vienna convention on diplomatic relations. 
Done at Vienna Apr. 18, 1961. Entered into 
force Apr. 24, 1964; for the U.S. Dec. 13. 
1972. TIAS 7502. 
Accession deposited: Yemen, (Sanaa), Apr. 10, 

1986. 

Fisheries 

Protocol to amend the international conven- 
tion of May 14, 1966, for conservation of 
Atlantic tunas (TIAS 6767). Done at Paris 
July 10, 1984. 1 
Acceptance deposited: < 'ape Verde, 

Mar. 13. 1986. 



Law, Private International 

Statute of The Hague conference on private 
international law. Done at The Hague Oct. 
9-31, 1951. Entered into force July 15, 1955; 
for the U.S. Oct. 15, 1964. TIAS 5710. 
Acceptance deposited: Chile, Apr. 25, 1986. 

Marine Pollution 

International convention for the prevention of 
pollution from ships, 1973, with protocols and 
annexes. Done at London Nov. 2, 1973. 

Protocol of 1978 relating to the international 
convention for the prevention of pollution 
from ships, 1973. Done at London Feb. 17. 
1978. Entered into force Oct. 2, 1983. 
Territorial application: Extended to Isle of 

Man by U.K., with effect from July 1, 1986. 

Maritime Matters 

Convention on the International Maritime 
Organization. Signed at Geneva Mar. 6, 1948. 
Entered into force Mar. 17, 1958. TIAS 4044. 
Acceptance deposited: Democratic People's 

Republic of Korea, Apr. 16, 1986. 

International convention on maritime search 
and rescue, 1979, with annex. Done at Ham- 
burg Apr. 27, 1979. Entered into force June 
22, 1985. 
Accession deposited: Mexico, Mar. 26, 1986. 

Protocol of 1978 relating to the international 
convention for the safety of life at sea, 1974 
(TIAS 9700). Done at London Feb. 17, 1978. 
Entered into force May 1, 1981. TIAS 10009. 
Accession deposited: India, Apr. 3, 1986. 

Narcotic Drugs 

Convention on psychotropic substances. Done 
at Vienna Feb. 21, 1971. Entered into force 
Aug. 16, 1976; for the U.S. July 15, 1980. 
TIAS 9725. 
Ratification deposited: U.K.. Mar. 24, 1986. 



1986 



91 



TREATIES 



Patents— Plant Varieties 

International convention for the protection of 
new varieties of plants of Dec. 2, 1961, as re- 
vised. Done at Geneva Oct. 23, 1978. Entered 
into force Nov. 8, 1981. TIAS 10199. 
Ratification deposited : Italy, Apr. 28, 1986. 

Pollution 

Protocol to the convention on long-range 
transboundary air pollution of Nov. 13, 1979 
(TIAS 10541), concerning monitoring and 
evaluation of the long-range transmission of 
air pollutants in Europe (EMEP), with annex. 
Done at Geneva Sept. 28, 1984. ' 
Ratification deposited: Denmark, Apr. 29, 

1986. 

Red Cross 

Geneva convention for the amelioration of the 
condition of the wounded and sick in armed 
forces in the field. Done at Geneva Aug. 12, 
1949. Entered into force Oct. 21, 1950; for the 
U.S. Feb. 2, 1956. TIAS 3362. 

Geneva convention for the amelioration of the 
condition of the wounded, sick, and ship- 
wrecked members of armed forces at sea. 
Done at Geneva Aug. 12, 1949. Entered into 
force Oct. 21, 1950; for the U.S. Feb. 2, 1956. 
TIAS 3363. 

Geneva convention relative to the treatment 
of prisoners of war. Done at Geneva Aug. 12, 
1949. Entered into force Oct. 21, 1950; for the 
U.S. Feb. 2, 1956. TIAS 3364. 

Geneva convention relative to the protection 
of civilian persons in time of war. Done at 
Geneva Aug. 12, 1949. Entered into force 
Oct. 21, 1950; for the U.S. Feb. 2, 1956. 
TIAS 3365. 
Notifications of succession deposited: Saint 

Christopher and Nevis, Feb. 14, 1986; with 
effect from Sept. 19, 1983. 

Protocol additional to the Geneva conventions 
of Aug. 12, 1949, and relating to the protec- 
tion of victims of international armed con- 
flicts (Protocol I), with annexes. Done at 
Geneva June 8, 1977. Entered into force Dec. 
7, 1978. 2 

Protocol additional to the Geneva conventions 
of Aug. 12, 1949, and relating to the protec- 
tion of victims of noninternational armed con- 
flicts (Protocol II). Done at Geneva June 8, 
1977. Entered into force Dec. 7, 1978. 2 
Accession deposited: Saint Christopher and 

Nevis, Feb. 14, 1986. 

Ratification deposited : Italy, Feb. 27, 1986. 3 

Telecommunication 

International telecommunication convention, 
with annexes and protocols. Done at Nairobi 
Nov. 6, 1982. Entered into force Jan. 1, 1984; 
definitively for the U.S. Jan. 10, 1986. 
Ratifications deposited: Lebanon, Feb. 13, 

1986; Mongolia, Togo, Mar. 17, 1986; Norway, 
Pakistan, Mar. 6, 1986; Peru, Mar. 19, 1986; 
Poland, Mar. 25, 1986; Turkey, Mar. 10, 1986. 

Timber 

International tropical timber agreement, 
1983, with annexes. Done at Geneva Nov. 18, 



1983. Entered into force provisionally Apr. 1, 
1985; for the U.S. Apr. 26, 1985. 
Ratification deposited: Trinidad and Tobago, 

May 9, 1986. 

Treaties 

Vienna convention on the law of treaties, 
with annex. Done at Vienna May 23, 1969. 
Entered into force Jan. 27, 1980. 2 
Accessions deposited: U.S.S.R., Apr. 29, 

1986; Byelorussian S.S.R., May 1, 1986; 
Ukrainian S.S.R., May 14, 1986. 



BILATERAL 



Bolivia 

Agreement for the sale of agricultural com- 
modities, with annexes. Signed at La Paz 
Apr. 9, 1986. Entered into force Apr. 9, 1986. 

Cooperative arrangement for the production 
of topographic maps of Bolivia, with annexes. 
Signed at Washington and La Paz Apr. 21 
and 30, 1986. Entered into force Apr. 30, 
1986. 

Brazil 

Memorandum of understanding concerning 
the development, installation, and operation 
of a seismic data acquisition system. Signed 
at Reston and Brasilia Apr. 8 and May 5, 
1986. Entered into force May 5, 1986." 

Agreement relating to cooperation in science 

and technology. Signed at Brasilia Feb. 6, 

1984. 

Entered into force: May 15, 1986. 

Canada 

Agreement on cooperation in comprehensive 
civil emergency planning and management, 
with annex. Signed at Ottawa Apr. 28, 1986. 
Entered into force Apr. 28, 1986. 

Agreement amending and supplementing the 
agreement of Mar. 9, 1959, as amended and 
supplemented, governing tolls on the St. 
Lawrence Seaway (TIAS 4192, 5117, 5608, 
6236, 7408, 9003, 9883, 10363), with memoran- 
dum of agreement. Effected by exchange of 
notes at Washington Apr. 9 and 11, 1986. 
Entered into force Apr. 11, 1986. 

Colombia 

Cooperative arrangement for the production 
of topographic maps of Colombia, with 
annexes. Signed at Washington and Bogota 
Apr. 21 and 28, 1986. Entered into force Apr. 
28, 1986. 

Ecuador 

Memorandum of agreement concerning assist- 
ance in developing and modernizing 
Ecuador's civil aviation system. Signed at 
Washington and Quito Oct. 9 and Nov. 6, 
1985. Entered into force Nov. 6, 1985. 

Egypt 

Agreement amending and extending agree- 
ment of Dec. 7 and 28, 1977 (TIAS 8973), as 
amended, relating to trade in textiles and 
textile products. Effected by exchange of 



notes at Cairo Dec. 30, 1985, and Feb. 61 
1986. Entered into force Feb. 6, 1986. 

Second amendment to the grant agreem* 
Sept. 24, 1985, for cash transfer. Signed! 
Cairo Mar. 31, 1986. Entered into force 1 
31, 1986. 

First amendment to the grant agreement 
April 12, 1982 (TIAS 10377). for rehabilit 
and modernization of the Aswan High Di 
Hydroelectric Power Station. Signed at A 
Mar. 31, 1986. Entered into force Mar. 3K 
1986. 

Project agreement for the science and taj 
nology development project. Signed at Cf 
Mar. 31, 1986. Entered into force Mar. 31 
1986. 

France 

Memorandum of agreement concerning tl 
use of Diane Range, Solenzara, Corsica, h 
Signed at Paris Mar. 27, 1986. Entered irl 
force Mar. 27, 1986. 

Federal Republic of Germany 

Agreement amending the memorandum < 
understanding of Apr. 27, 1983, for the d | 
production and sale of the stinger weapol 
system. Signed at Washington and Bonn 
20 and 26, 1986. Entered into force Marl 
1986. 

Greece 

Memorandum of understanding on air sel 
ices, with schedules. Signed at Athens M 
28, 1986. Entered into force Apr. 28, 191 

Grenada 

Treaty concerning the reciprocal encourai 
ment and protection of investment with 1 
nex. Signed at Washington May 2, 198611 
Enters into force 30 days after the date* 
exchange of instruments of ratification. J 

Hungary 

Agreement extending the memorandum ( 
understanding of Jan. 6 and 20, 1984, foaj 
scientific and technical cooperation in the 
earth sciences. Signed at Reston and 
Budapest Mar. 17 and Apr. 21, 1986. Enti 
into force Apr. 21, 1986; effective Jan. 1, 
1986. 

Indonesia 

Agreement modifying the agreement of 1 
28, 1985, relating to subsidization of expc 
in the context of the agreement of Apr.l 
1979, on interpretation and application of 
cles VI, XVI, and XXIII of the GATT (s 
dies code) (TIAS 9619). Effected by exchi 
of letters at Washington Apr. 10, 1986. 
Entered into force Apr. 10, 1986. 

Liberia 

Agreement relating to the agreement for 
sale of agricultural commodities of July 2 
1985. Signed at Monrovia Apr. 28, 1986J 
tered into force Apr. 28, 1986. 



92 



Department of State Bui 



PRESS RELEASES 



ent amending agreement of July 1 
1985, as amended, relating to trade in 
wool, and manmade fiber textiles and 
jroducts. Effected by exchange of 

Kuala Lumpur May 6 and 7, 1986. 
1 into force Mav 7, 1986. 



lent amending the agreement of June 
(TIAS 8952) relating to additional 
tive arrangements to curb the illegal 
n narcotics. Effected by exchange of 
it Mexico Mar. 13 and Apr. 7, 1986. 
1 into force Apr. 7, 1986. 

tent concerning trade in certain steel 
s, with understanding and related let- 
ected by exchange of letters at 
and Washington Feb. 27, 1985; effec- 
;. 1, 1984. 

bique 

lent relating to the agreement for the 
agricultural commodities of Jan. 11, 
i amended. Signed at Maputo Apr. 11, 
ntered into force Apr. 11, 1986. 



lent extending the memorandum of 
anding of Sept. 22, 1980, on environ- 
protection (TIAS 9864). Effected by 
je of notes at Lagos Oct. 4, 1985, and 
1986. Entered into force Apr. 1, 1986; 
e Sept. 22, 1985. 



lent concerning the provision of train- 
ited to defense articles under the U.S. 
tional military education and training 
program. Effected by exchange of 
t Muscat Jan. 4 and Apr. 28, 1986. 
d into force Apr. 28, 1986. 
sdes agreement of Apr. 4 and May 14, 



Department of State 



Press releases may be obtained from the 
Office of Press Relations, Department of 
State, Washington, D.C. 20520. 

No. Date Subject 

*95 5/1 Shultz: interview on "The To- 
day Show," Bali. 
96 5/1 Shultz: news briefing, Bali. 

*97 5/5 Whitehead; remarks at the 

memorial service on Foreign 
Service Day, May 2. 

*98 5/5 Shultz: interview on "This 

Week With David Brinkley," 
Tokyo, May 4. 

*99 5/5 Shultz: interview on CBS-TV's 
"Morning News," Tokyo. 

100 5/6 Shultz: news briefing, Tokyo, 

May 3. 

101 5/6 International terrorism: the 

taking of U.S. citizens 
hostage. 
*102 5/8 Shultz: arrival statement, Seoul, 
May 7. 

103 5/8 Shultz: news briefing, Tokyo, 

May 5. 

104 5/8 Shultz: dinner toast, Seoul, 

May 7. 
*105 5/9 Shultz: arrival statement, 

Manila, May 8. 
106 5/9 Shultz: statement at dinner, 

Manila, May 8. 
*107 5/12 Shultz: luncheon remarks, 

Manila, May 9. 
*108 5/13 Shultz: interview on "The 

Today Show." 
109 5/13 Shultz: news conference, Seoul, 

May 8. 
*110 5/14 Shultz: address before the 

Overseas Writers Club. 



Ill 5/19 Shultz: address before the 

American Jewish Committee, 
May 15. 

*112 5/21 Shultz: news conference, Manila, 
May 9. 

*113 5/21 Shultz: remarks and question- 
and-answer session before 
Congressman Silvio O. Co- 
nie's business-government 
leadership symposium. 

*114 5/22 Program for the official working 
visit of Honduran President 
Jose Simon Azcona Hoyo, 
May 26-29. 
115 5/22 Shultz: remarks after meeting 
with Dr. Robert Gale. 

*116 5/27 American drug arrests abroad. 

*117 5/28 Shultz: remarks at DACOR 
Bacon House dedication, 
May 23. 
118 5/29 Shultz: address before UN 
General Assembly special 
session on the Critical 
Economic Situation in Africa, 
New York, May 28. 

*119 5/30 CSCE public forums: Union, 
New Jersey (June 4), New 
York City (June 5), Detroit 
(June 10), Chicago (June 11). 
*120A 5/29 Shultz: remarks at reception for 
the delegation to UN special 
session, May 28. 
*120B 5/29 Shultz: remarks at reception for 
the delegation to UN special 
session, Mav 28. 



*Not printed in the Bulletin. 



nent concerning trade in certain steel 
ts, with arrangement. Effected by ex- 

of letters at Washington June 3, 1985. 
d into force June 3, 1985; effective 

1984. 

ristopher-Nevis 

1 agreement for economic, technical, 
ated assistance. Signed at Basseterre 
I, 1986. Entered into force Apr. 24, 



lela 

nent extending the implementing 
lent of Oct. 29 and Nov. 9, 1982, as ex- 
, regarding air transport services. Ef- 
by exchange of notes at Caracas Mar. 
6! Entered into force Mar. 25, 1986; 
'e May 1, 1986. 



)t in force. 

jt in force for the U.S. 

ith declaration(s). ■ 



986 



93 



PUBLICATIONS 



Department of State 



Free single copies of the following Depart- 
ment of State publications are available from 
the Correspondence Management Division, 
Bureau of Public Affairs, Department of 
State, Washington, D.C. 20520. 

Secretary Shultz 

Unity and Dissent: On the Communitj of 
Free Nations, American Jewish Commit- 
tee, May 15, 1986 (Current Policy #835). 

U.S. Foreign Policy: Assessing Budget Pri- 
orities, Overseas Writers Club, May 14, 
1986 (Current Policy #836). 

Africa 

South Africa: Report on the President's Ex- 
ecutive Order, Assistant Secretary 
< 'locker, Subcommittees on Africa and on 
International Economic Policy and Trade, 
House Foreign Affairs Committee, Apr. 9, 
1986 (Current Policy #817). 

Arms Control 

Is Arms Control at a Dead End?, ACDA 
Director Adelman, Commonwealth Club, 
San Francisco, May 16, 1986 (Current 
Policy #837). 

The Impact of SDI on U.S.-Soviet Relations, 
Ambassador Nitze, American Enterprise 
Institute— National Defense University 
seminar on "The Security Implications of 
SDI," Apr. 29, 1986 (Current Policy #830). 

Arms Control: Mutual and Balanced Force 
Reductions (GIST, May 1986). U.S. 
Nuclear Testing Policy (GIST, May 1986). 

Department and Foreign Service 

The U.S. Foreign Service in a Year of 
Challenges, Under Secretary Spiers, State 
Department's 21st annual Foreign Service 
Day, May 2, 1986 (Current Policy #831). 

East Asia 

U.S. Assistance to the Philippines, Deputy- 
Assistant Secretary Monjo, Subcommittee 
on Asian and Pacific Affairs, House For- 
eign Affairs Committee, May 15, 1986 
(Current Policy #834). 

Prospects for Continuing Democratization in 
Korea, Assistant Secretary Sigur, Subcom- 
mittee on Asian and Pacific Affairs, House 
Foreign Affairs Committee, Apr. 16, 1986 
(Current Policy #829). 



Economics 

U.S. -Japan Economic Relations: The Tokyo 
Summit and Beyond, Under Secretary 
Wallis, U.S. -Japan Economic Agenda Meet- 
ing, Apr. 23, 1986 (Current Policy #826). 

Promoting Economic Growth in the Develop- 
ing World, Deputy Secretary Whitehead, 
ministerial meeting of the Organization for 
Economic Cooperation and Development, 
Paris, Apr. 17. 1986 (Current Policy #827). 

Multilateral Development Banks (GIST, May 
1986). 

Europe 

U.S.-U.S.S.R. Cultural and Educational 

Exchanges (GIST, May 1986). 
U.S.-U.S.S.R. Science and Technology 

Exchanges (GIST, May 1986). 

General 

Regional Security, Collective Security, and 
American Security, Admiral Poindexter, 
1986 Armed Forces Day dinner sponsored 
by the National Defense Committee and 
the Indianapolis Chamber of Commerce, 
Indianapolis, May 16, 1986 (Current Policy 
#838). 

National Security: In Defense of Something 
of Value, Deputy Secretary Whitehead, 
Business Council, Hot Springs, Virginia, 
May 9, 1986 (Current Policy #833). 

GIST Index (April 1986). 

International Law 

The War Powers Resolution and Antiter- 
rorist Operations, Legal Adviser Sofaer, 
Subcommittee on Arms Control, Interna- 
tional Security and Science, House Foreign 
Affairs Committee, Apr. 29, 1986 (Current 
Policy #832). 

Oceans 

Current Developments in U.S. Oceans Policy, 
Ambassador Negroponte, 10th annual semi- 
nar sponsored by the Center for Oceans 
Law and Policy, Southhampton, Bermuda, 
Mar. 14, 1986 (Current Policy #819). 

Western Hemisphere 

U.S. Policy on Central America: The Need 
for Consensus, Deputy Assistant Secretary 
Michel, "Great Decisions" series, Fayette- 
ville, North Carolina, Apr. 17, 1986 (Cur- 
rent Policy #828). ■ 



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94 



Department of State Bui 



1986 

ne 86, No. 2112 



FY 1987 Assistance Requests for 

ahara Africa (Crocker) 30 

in Principles. Unity and Dissent: 
3 Community of Free Nations 

i) * 24 

ontrol 

Talks Resume in Vienna (White 

: statement) 37 

and Space Arms Talks Open 
1 Five (Reagan) 37 

5S 

ie Policy Coordination Among 

trialized Nations (Baker) <il 

7 Assistance Requests for East 

md the Pacific (Monjo) 54 

7 Assistance Requests for Latin 
ica and the Caribbean (Abrams) . . 86 
7 Assistance Requests for the Mid 
ast and North Africa (Murphy) . . . 76 
7 Assistance Requests for South 

Peck) 81 

7 Assistance Requests for Sub- 

a Africa (Crocker) 30 

:ts for Continuing Democratization 

rea (Sigur) 46 

Africa: Report on the President's 

itive Order (Crocker) 27 

;sistance to the Philippines 

o) 50 

sia 

7 Assistance Requests for East 

and the Pacific (Monjo) 54 

nt's Visit to Indonesia (Reagan, 

z) 15 

S. and East Asia: Meeting the 

enge of Change (Sigur) 42 

nics 

Africa: Report on the President's 

utive Order (Crocker) 27 

Economic Summit (Reagan, Shultz, 

rations, statements) 1 

ikyo Economic Summit (Wallis) ... 64 
S. and East Asia: Meeting the 

enge of Change (Sigur) 42 

ipan Economic Relations: The Tokyo 

nit and Beyond (Wallis) 68 

i. MBFR Talks Resume in Vienna 

Le House statement) 37 

n Assistance 

the Philippines (White House 

uncement) 48 

¥1 Assistance Requests for East 

and the Pacific (Monjo) 54 

37 Assistance Requests for Latin 
rica and the Caribbean (Abrams) . . 86 
37 Assistance Requests for the Mid- 
Cast and North Africa (Murphy) ... 76 
87 Assistance Requests for South 

(Peck) 81 

87 Assistance Requests for Sub- 

ra Africa (Crocker) 30 

issistance to the Philippines 

ijo) 50 



Human Rights. President Meets With 
Shcharanskiy (White House state- 
ment) 75 

Indonesia. President's Visit to Indonesia 

(Reagan, Shultz) 15 

Industrialized Democracies 
Economic Policy Coordination Among 

Industrialized Nations (Baker) 61 

Tokyo Economic Summit (Reagan, Shultz, 

declarations, statements) 1 

The Tokyo Economic Summit (Wallis) ... 64 

Japan 

The Tokyo Economic Summit (Wallis) ... 64 

U.S. -Japan Economic Relations: The Tokyo 

Summit and Beyond (Wallis) 68 

Visit of Japan's Prime Minister (Nakasone, 

Reagan) 53 

Korea 

Prospects for Continuing Democratization 

in Korea (Sigur) 46 

Secretary's Visit to Korea and the Philip- 
pines (Shultz) 38 

Middle East. FY 1987 Assistance Requests 
for the Middle East and North Africa 

(Murphy) 76 

Monetary Affairs. Economic Policy Co- 
ordination Among Industrialized Nations 

(Baker) 61 

Nuclear Policy. Soviet Nuclear Reactor 
Accident at Chernobyl (Shultz, White 

House statements) 71 

Pacific. FY 1987 Assistance Requests for 

East Asia and the Pacific (Monjo) 54 

Philippines 

Aid to the Philippines (White House 

announcement) 48 

Secretary's Visit to Korea and the Philip- 
pines (Shultz) 38 

U.S. Assistance to the Philippines 

(Monjo) 50 

Presidential Documents 

Nuclear and Space Arms Talks Open 

Round Five 37 

President's Visit to Indonesia (Reagan, 

Shultz) 15 

Tokyo Economic Summit (Reagan, Shultz, 

declarations, statements) 1 

Visit of Japan's Prime Minister 

(Nakasone, Reagan) 53 

Publications 

Department of State 94 

GPO Sales 94 

Security Assistance 

Aid to the Philippines (White House 

announcement) 48 

FY 1987 Assistance Requests for East 

Asia and the Pacific (Monjo) 54 

FY 1987 Assistance Requests for Latin 

America and the Caribbean (Abrams) . . 86 
FY 1987 Assistance Requests for the Mid- 
dle East and North Africa (Murphy) ... 76 
FY 1987 Assistance Requests for South 

Asia (Peck) 81 

FY 1987 Assistance Requests for Sub- 
Sahara Africa (Crocker) 30 

U.S. Assistance to the Philippines 
(Monjo) 50 



South Africa. South Africa: Report on the 
President's Executive order (Crocker) . 27 

South Asia. FY 1987 Assistance Requests 
for South Asia (Peck) 81 

Terrorism. Unity and Dissent: On the 
Community of Free Nations (Shultz) ... 24 

Trade 

Economic Policy Coordination Among 
Industrialized Nations (Baker) 61 

The Tokyo Economic Summit (Wallis) ... 64 

The U.S. and East Asia: Meeting the 
Challenge of Change (Sigur) 42 

U.S.-Japan Economic Relations: The Tokyo 
Summit and Beyond (Wallis) 68 

Treaties. Current Actions 91 

U.S.S.R. 

MBFR Talks Resume in Vienna (White 
House statement) 37 

Nuclear and Space Arms Talks Open 
Round Five (Reagan) 37 

President Meets With Shcharanskiy (White 
House statement) 75 

Soviet Nuclear Reactor Accident at Cher- 
nobyl (Shultz, White House statements) 71 

Western Hemisphere. FY 1987 Assistance 
Requests for Latin America and the Carib- 
bean (Abrams) 86 

Name Index 

Abrams, Elliott 86 

Baker, James A. Ill 61 

Crocker, Chester A 27, 30 

Monjo, John C 50, 54 

Murphy, Richard W 76 

Nakasone, Yasuhiro 53 

Peck, Robert A 81 

Reagan, President 1, 15, 37, 53 

Shultz, Secretary 1, 15, 24, 38, 71 

Sigur, Gaston J., Jr 42, 46 

Wallis, W. Allen 64, 68 



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2.113) 



bulletin 



)fficial Monthly Record of United States Foreign Policy /Volume 86/Number 2113 



August 1986 




Department of State 

bulletin 



Volume 86 / Number 21 13 / August 1986 



The Department of State Bulletin, 
published by the Office of Public Com- 
munication 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 govern- 
ment 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 
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lected press releases issued by the 
White House, the Department, and the 
U.S. Mission to the United Nations; and 
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charts, photographs, and graphs) are 
published frequently to provide addi- 
tional information on current issues but 
should not necessarily be interpreted as 
official U.S. policy statements. 



GEORGE P. SHULTZ 

Secretary of State 

BERNARD KALB 

Assistant Secretary for Public Affairs 

PAUL E. AUERSWALD 

Director, 

Office of Public Communication 

NORMAN HOWARD 

Chief, Editorial Division 

PHYLLIS A. YOUNG 

Editor 

SHARON R. LOTZ 

Assistant Editor 



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funds for printing this periodical has been 
approved by the Director of the Office of 
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1987. 



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CONTENTS 



FEATURE 

1 

16 



International Terrorism (Parker W. Borg, 

Robert B. Oakley) 
International Terrorism: The Taking of U.S. Citizens 

Hostage 



e President 

News Conference of June 11 
(Excerpts) 



Europe 



e Secretary 



No Delay for Democracy 
I Interview for "Worldnet" 
Reform in the Philippines and 
American Interests: The U.S. 
Role in Consolidating 
Democracy 
I The Church as a Force for Peace- 
ful Change in South Africa 
! Interview on "Meet the Press" 

ica 

South African Military Raids 
(White House Statement) 

ns Control 

U.S. Interim Restraint Policy: 
Responding to Soviet Arms 
Control Violations (President 
Reagan, Wfiite House Fact 
Sheet) 

CD Negotiations Resume (White 
House Statement) 

SDI, Arms Control, and Stability: 
Toward a New Synthesis 
(Paul H. Nitze) 

Is Arms Control at a Dead End? 
(Kenneth L. Adelman) 

lit Asia 

Proposed Sale of Aircraft Avion- 
ics Components to China 
I James R. Lilley) 

onomics 

Imports from the European 
Economic Community 
(White House Statement) 

World Trade Week, 1986 
(Proclamation) 



53 
54 
55 
57 
58 



NATO Ministers Meet in Canada 

(Secretary Shultz, Statements) 
26th Report on Cyprus (Message 

to the Congress) 
U.S.-Spanish Council Meets 

(Joint Communique) 
Baltic Freedom Day, 1986 

(Proclamation) 
NATO Defense Planning 

Committee Meeting 

(Final Communique) 



Foreign Assistance 

59 FY 1987 Request for Foreign 
Assistance Programs 
(M. Peter McPherson) 

General 

64 Regional Security, Collective 

Security, and American Secu- 
rity (John M. Poindexter) 

International Law 

68 The War Powers Resolution and 
Antiterrorist Operations 
(Abraham D. Sofaer) 

Middle East 

71 Attacks on Persian Gulf Shipping 

(White House Statement) 

Narcotics 

72 FY 1987 Assistance Requests for 

Narcotics Control 
(Ann B. Wrobleski) 

Pacific 

74 Visit of Australia's Prime 

Minister Hawke (Robert J. 
Hawke, Pi 



Refugees 

75 FY 1987 Assistance Requests for 
Migration and Refugees 
(James N. Purcell, Jr.) 

Security Assistance 

77 FY 1987 Security Assistance Re- 
quests (William Schneider, Jr.) 

United Nations 

80 FY 1987 Assistance Requests for 
Organizations and Programs 
(Alan L. Keyes) 

Western Hemisphere 

83 A Democratic Vision of Security 

(Elliott Abrams) 

84 Central America Negotiations 

(White House Statement) 

85 Pan American Day and Week, 

1986 (Proclamation) 

86 Visit of Honduran President 

Azcona (Jose Simon Azcona 
Hoyo, President Reagan) 
88 U.S. Policy on Central America: 
The Need for Consensus 
(James H. Michel) 

Treaties 

91 Current Actions 

Press Releases 

92 Department of State 

Publications 

93 Department of State 

93 Foreign Relations Volume 

Released 

94 Background Notes 




gte* 



BOSTON PUBLIC LIBRARY 

, GOVERNMENT DOCUMENTS DEPARtMW 




A section of Air India 747— that crashed off the coast of Ireland— being unloaded from 
salvage on June 25, 1985. 




FEATURE 
Terrorism 



International Terrorism 

Following are statements by Ambassadors 

Robert B. Oakley, Acting Ambassador at Large 

for Counter-Terrorism, and Parker W. Borg, 

Deputy, Office of the Ambassador at Large 

for Counter-Terrorism. 



KBASSADOR OAKLEY 

WE 16, 1986 

Address before the U.S. Conference 
Mayors in San Juan, Puerto Rico. 

is a pleasure to be with you today 
lovely Puerto Rico. My subject 
ttter— terrorism— is not a pleasant 
b, but it is obviously one of considera- 
! concern to all our citizens. It proba- 
' has been the top story on TV and in 
! newspapers and magazines since the 
^A 847 hijacking a year ago Saturday. 
My job and that of my office at the 
ite Department is to deal with inter- 
Jonal terrorism. The State Depart - 
nt is the lead agency in dealing with 
; international threat, while the FBI 
ideral Bureau of Investigation] is the 
i Federal agency in dealing with ter- 
ist threats within the United States. 
.' work closely together, however, 
h on a day-to-day basis and in two in- 
agency committees on counterter- 
jism established by the President. 
e of these I chair, and one is chaired 
[the National Security Council. In 
ling with international terrorism— 
Us, terrorism involving persons or 
lities of more than one country— all 
|>. Government agencies work closely 
ether in the recognition that the first 
i of defense for the United States is 
rseas. This illustrates a point made 
Mayor Corrada of San Juan about 
interrelationships between our coun- 
and the rest of the world. 
We are at an interesting and impor- 
t stage in the ebb and flow of inter- 
ional terrorism and efforts to combat 



it. As President Reagan said in his 
May 31 weekly radio address: "History 
may well record that 1986 was the year 
when the world came to grips with the 
plague of international terrorism." 

Over the past 2 years, there has 
been a major surge in terrorism, both 
internal (within Lebanon, India, Sri Lan- 
ka, Peru, and Chile) and international 
(especially in the Middle East, Europe, 
and Latin America). The number of in- 
ternational incidents rose from the 500 
per year average for 1979-83 to 600 in 
1984 and 800+ in 1985. This upward 
trend continued during the first several 
months this year. Preliminary tallies in- 
dicate there were about 346 internation- 
al terrorist incidents for January-May of 
1986, compared with 285 for 1985, 
although there seems to be some slow- 
ing up in recent weeks. 

The number of casualties from inter- 
national incidents also leapt upward, go- 
ing from 1,279 (312 dead) in 1984 to 
2,177 (877 dead) in 1985. So far in 1986, 
from January through May, there have 
been 1,081 casualties (318 dead). In 1983, 
while the worldwide statistics were not 
as bad, the bombings in Beirut caused 
over 250 U.S. marines and civilians 
killed and over 100 wounded. For the 
past decade U.S. citizens and installa- 
tions have been far and away the num- 
ber one target for terrorists abroad. 
Despite the impression made by recent 
highly publicized incidents, the percen- 
tage of attacks directed against the 
United States has actually decreased 
over the past 3 years from 40% to 25%. 



Domestic Situation 

Inside the United States, the trend has 
been just the reverse. Aggressive inves- 
tigation of terrorist acts and the suc- 
cessful prosecution of those responsible 
has helped prevent future crimes by 
domestic terrorists and reduce their 
threat to society. During the past 3 
years, the FBI has obtained substantial 
success against domestic terrorist or- 
ganizations. The results achieved in in- 
vestigating the Fuerzas Armadas de 
Liberacion, United Freedom Front, 
May 19 Communist Organization (M19C), 
the Aryan Nations, and others are in- 
dicative of these positive accomplish- 
ments by the FBI. In 1985 the number 
of domestic terrorist incidents declined 
for the fourth straight year from a high 
of 51 in 1982 to a total of only 7, with 
12 casualties, last year. None of them 
involved international connections, 
although there were several attempted 
incidents with international connections 
(involving Sikhs, Libyans, etc.) among 
the 23 prevented. So far this year, there 
has been only one domestic terrorist 
incident, that involving a former Puerto 
Rican policeman and his family. 

Let us speculate on the reasons for 
these strikingly opposite trends. I hope 
my ideas stimulate your own thinking, 
which will be based upon direct local ex- 
perience rather than deductive reason- 
ing. First, this country has a reputation 
abroad for pretty effective controls upon 
the issuance of visas, which many others 
do not require, and careful checking of 
proposed points of entry. For some rea- 
son terrorists seem to prefer normal en- 
try points into the United States, even 
with false papers, to trying to sneak 
across the relatively unguarded areas of 
our borders. 

Second, we also have a reputation 
for good intelligence on terrorists trying 
to enter or operating inside the country, 
due to the combined good work of the 
CIA [Central Intelligence Agency], FBI, 
friendly governments, and state and lo- 
cal law enforcement agencies. The ab- 
sence of terrorism from the Los Angeles 
Olympics is a good example of these 
first two points. (I would note that we 
are trying to also keep incident-free 
next year's pan-American games in 
Indianapolis.) The arrest earlier this 
month of five Sikh terrorists in 
Montreal before they could even get to 



just 198R 



New York City and put a bomb aboard 
an Air India flight is another example of 
the second point on the role of good 
intelligence, as well as good cooperation 
with other governments. 

Third, by and large, the systematic, 
organized commission of violent acts for 
political purposes against innocent per- 
sons is not a part of our culture. In Eu- 
rope and the Middle East, it has been 
present generation after generation 
after generation. Violence in America 
tends to be either spontaneous or for 
criminal, not political, purposes. Ter- 
rorist groups do spring up from time to 
time in the United States, particularly 
during periods of high sociopolitical ten- 
sion as in the 1970s. They usually 
wither away rapidly— with help from the 
FBI— rather than renew themselves as 
in the Middle East and Europe. It 
seems to me that this is, in good part, 
due to the deep-rooted belief by Ameri- 
cans that there are peaceful means of 
political change and for improving one's 
economic situation, that our system is 
ultimately responsive. Thus the continu- 
ation of low levels of terrorism will de- 
pend, in good part, upon the continued 
responsiveness of our system of the 
Federal, state, and city government. In 
the present Gramm-Rudman era this 
will not be easy. You mayors will have 
a big role to play. 

One might think that ethnic or na- 
tionality groups would be more prone to 
terrorism— particularly when it is ram- 
pant in their country or has been used 
by extremists of similar origin such as 
Armenians, Palestinians, and Iranians. 
However, the record shows this is not 
so. Unlike Europe, for example, where 
those of Middle East ethnic or national 
origin often feel and act as alienated 
strangers and so are more prone to pro- 
vide help for terrorist activities by their 
brethren, in this country even those 
who have entered illegally tend to feel 
and act as Americans concerned with 
the well-being of this country and with 
what they see as their rightful place in 
it. Again, it is important to continue this 
state of affairs, despite pressures build- 
ing against it for reasons of our own 
self-interest. 

Finally, I want to highlight the im- 
portant role played by the FBI and 
other law enforcement agencies. In the 
United States combating terrorism is 
not the sole responsibility of the FBI 
but, rather, the joint responsibility of 
Federal, state, and local law enforce- 



ment authorities. While the FBI has 
been designated the "lead" Federal 
agency to counter terrorism within the 
United States, state and local agencies 
are charged with law enforcement and 
public safety responsibilities in their 
jurisdictions. In order effectively to 
achieve our mutual counterterrorism 
objectives, therefore, the FBI has 
entered into joint operations with local 
agencies in several field divisions where 
specific and persistent terrorist-related 
activities have been present. The signifi- 
cant successes achieved against domestic 
terrorist groups are attributable, in 
part, to a pooling of these personnel and 
resources. 

The FBI first experimented with the 
task force concept in 1979, when the 
bank robbery problem in New York 
City had grown to epidemic proportions. 
It became clear to the leadership of the 
New York City Police Department and 
the FBI that an innovative solution was 
required to address an increasingly dan- 
gerous situation. Accordingly, a formal- 
ized agreement, sealed by a signed 
Memorandum of Understanding, was en- 
tered into by both agencies. Detectives 
and FBI agents were detailed to a new- 
ly created task force jointly supervised 
by the FBI and New York City Police 
Department personnel. The idea was to 
eliminate duplication of effort, share 
resources, and foster cooperation. 

The experiment worked. In a very 
real way, the task force became more 
than a sum of its parts. The skills and 
knowledge possessed by the police 
officers complemented those possessed 
by the agents, and a spirit of coopera- 
tion replaced counterproductive competi- 
tiveness. The number of bank robberies 
soon declined dramatically, and the solu- 
tion rate soared. 

With this precedent having been es- 
tablished, a Joint Terrorist Task Force 
was established in New York in 1980. 
This task force, in its 6 years of exis- 
tence, has been successful in the investi- 
gation of numerous domestic and 
international terrorist groups operating 
in the United States. Its success was 
instrumental in the establishment of the 
much bigger task force for the Los An- 
geles Olympics and encouraged the crea- 
tion of similar task forces in Chicago, 
New Haven, Newark, San Francisco, 
Los Angeles, Boston, and Washington, 
D.C., to address specific terrorism 
problems in those areas. 



Overseas Terrorism 

Let us shift back to terrorism overseas- 
and look at why it has gotten worse. Ii 
trying to get a broad picture of the in- 
ternational terrorism scene, it might bf 
useful to start with the regional pieces 
First, Middle East-related terrorisr 
which has been the major factor in the 
recent increase of internationl terrorisi 
the number of incidents in the region 
rose from 109 in 1983 to 378 in 1985. 
Also, in 1985 there were another 60 in j 
dents by Middle East groups which to^ 
place in Europe or elsewhere, meaning 
that Mideast terrorism accounts for ov 
50% of the worldwide total for 1985. & 
far in 1986, there have been 214 inci 
dents of Middle East origin with a 
dozen conducted by Middle East grouj 
in Europe. 

There are a variety of factors and 
actors behind this situation, of which 
Israeli-Palestinian dispute is only one 
component. This category includes ten 
rorism conducted by radical Arab 
governments and Palestinian groups t 
ing to disrupt the peace process, desti 
moderate Arab governments, carry or 
intra-Arab power struggles, or seize a 
place in the world power structure as 
well as vent their anger at Israel and 
the United States. 

State support is a major reason fo 
increased Middle East terrorism. Mua 
mer Qadhafi of Libya has used and su 
ported terrorism around the world m( 
for purposes of personal pride and na- 
tional power than for any real concen 
for Palestinians or the Arab-Israeli di 
pute. Syria has also used terrorism sj 
tematically to enhance its power in tr 
region. Iranian terrorism is inspired I 
Khomeini's brand of politicoreligious 
fanaticism, linked both to the Iran-Irc 
war and the desire to "purify" the Is 
lamic world by removing pro-Westerr 
Arab governments and the Western ( 
tural presence, starting with the Unil 
States and France. 

In Latin America and the Carib- 
bean, Cuba and Nicaragua are active 
state supporters of terrorism, in son* 
cases sharing support for terrorist 
groups with Iran or Libya. The tradi 
tional politicoeconomic stimulus for g 
rilla warfare and terrorism in this pa 
of the world has recently been raised 
narcotics trafficking— with traffickers 
using terrorists to protect processing 
centers and as hit men, and the ter- 
rorists obtaining money and arms frc 



nonartmpnt nf Statfi Bull 




FEATURE 
Terrorism 



cotics traffickers. Colombia is a par- 
ilarly flagrant case in point. There is 
> increased cooperation and coordina- 
1 among terrorist groups, especially 

M-19 of Colombia and Alfaro Lives 
Ecuador. Peruvian and Chilean ter- 
ism, very much on the increase, is 
~e indigenous than dependent upon 
side support. Puerto Rico is astride 
le of the routes used by these 
•orists— including Cuba, which has 
vely tried to fish in troubled 
ers— and the narcotics traffickers. It 

serious challenge. 

In Western Europe there has been a 
vdown over the past year of tradi- 
al indigenous, ideological terrorism 
n while the spillover of Middle East 
•orism has increased. This slowdown 
ilts primarily from increased security 
ireness and counterterrorist meas- 
3, which make operations more 
icult; Belgian successes in capturing 

terrorists and crippling the CCC 
mmunist Combatant Cells]; France 
;uring Andre Olivier, leader of the 
onal faction of Action Directe, thus 
acing the capability of this group; 

Italian authorities last month in 
lies convicting 62 Red Brigades ter- 
sts and continuing to dismantle that 
i intimidating organization. 

. Program 

king back, a key turning point for 
United States in the fight against 
rnational terrorism was 1983, when 
bombings took so many lives at the 
srican Marine barracks and Embassy 
dings in Beirut. This prompted the 
gan Administration to undertake in 

1983 a special presidential study 
issue specific new policy guidance. 
Phis new presidential guidance led 

comprehensive counterterrorism 
rram with higher priorities, which is 
;d upon a combination of unilateral, 
tilateral, and international actions. It 
i a variety of diplomatic, economic, 
1, intelligence, and military means, 
;d upon the premise that the 
lary legal, political, moral, and prac- 

responsibility for dealing with ter- 
3m abroad is that of foreign 
Brnments. If they do not have the 
;ical will or the ability to act against 
orism, the problem will get worse 
er than better. What we can do 
e in other countries is obviously 



limited, although we are strengthening 
our capabilities to do so. Many of our 
programs are aimed at getting others to 
do more. 

Actions Taken Over the Past 2 
Years. The pace of our unilateral and 
cooperative international programs and 
other activities aimed at terrorism 
abroad has been quickening. 

• We have intensified our bilateral 
relationships with friends around the 
world. We already work closely with 
such friends as Canada, Britain, and 
Israel. Meanwhile we are discussing 
common counterterrorism efforts with 
countries where we have previously not 
had such close ties, such as Italy, the 
Netherlands, Turkey, and Egypt. In one 
form or another, we have significant 
cooperation efforts underway with some 
50 governments. 

• We have dedicated more resources 
and given a still higher priority to col- 
lecting, analyzing, and disseminating 
intelligence on terrorist groups and 
activities abroad, as well as sharing it 
with other key governments. 

• We have improved the security of 
our Embassies and consulates and 
heightened the security awareness of 
our personnel; major improvements 
have been made in the physical security 
of over 100 U.S. diplomatic missions 
over the past 2 years. 

• Improved intelligence collection, 
better security, and closer international 
cooperation helped us deter or preempt 
more than 180 international terrorist 
actions over the past 18 months. 

• We have used a wide range of our 
unilateral sanctions against such coun- 
tries as Syria, Libya, Iran, Cuba, and 
Nicaragua: banning all weapons sales, 
imposing limitations on financial deal- 
ings, maintaining close surveillance of 
any of their government officials who 
wish to come to the United States, and 
imposing controls on exports of key 
spare parts and equipment. 

• Our covert action and military 
capabilities for action against terrorists 
have been strengthened. I cannot go 
into details, for obvious reasons, but the 
success in apprehending the terrorists 
who hijacked the Achille Lauro is one 
example of what they can do. Another, 
and even more dramatic, example was 
the military operation against Libya in 
April. We will be judicious in the use of 



these capabilities but shall not hesitate 
to act when the circumstances are right. 

• We have begun to cooperate more 
closely with the private sector in shar- 
ing information on threats abroad and 
how to counter them. The Overseas 
Security Advisory Panel has been active 
in systematically exchanging information 
on techniques and technology to counter 
terrorism as well as threat information. 
A regular but informal relationship has 
recently been established with the 
tourist industry. 

• We have worked hard and suc- 
cessfully in international organizations 
such as the UN General Assembly and 
Security Council in establishing the 
principle that terrorism is a threat to all 
nations and should be considered as a 
crime. In the specialized UN agencies, 
new standards for aviation and maritime 
security have been established. 

• We have made effective use of 
recent legislative tools, such as the 
rewards programs, the Crime Act of 
1984, and the Foreign Assistance Act. 
We believe it is useful to have more 
legal tools for the antiterrorism effort. 
We support, for example, S. 1429, which 
recently passed the Senate, making it a 
Federal crime to kill or conduct other 
terrorist acts against Americans 
overseas. 

• In 2 years over 2,000 civilian offi- 
cials from 32 friendly foreign govern- 
ments have participated in our 
antiterrorism assistance (ATA) program 
managed by the State Department; this 
not only improves their abilities to pro- 
tect their own governments and U.S. 
and other citizens in their countries 
from terrorist attack, it also means 
closer cooperation with the United 
States in combating terrorism. 

The ATA program is a very good 
example of a cooperative effort against 
terrorism which involves local govern- 
ments such as yours. A number of 
metropolitan police departments around 
the country— ranging from New York 
City to Charleston, South Carolina, and 
Miami, Florida, to San Diego, 
California— have helped train their coun- 
terparts from overseas. This has been a 
very successful program. The State 
Department helps organize the sessions; 
local U.S. city and county authorities, 
such as police departments, and the 
FBI, the FAA [Federal Aviation Admin- 
istration], and others provide the facili- 
ties and skilled manpower on a 



ust 1986 



reimbursable basis. We also provide 
some limited equipment, such as airport 
x rays and bomb disposal equipment. If 
your police or other experts are invited 
to take part in the program, I hope you 
can participate. Fighting terrorism has 
to be a cooperative effort. 

The Past Year 

In June 1985, a year ago, we suffered 
through the hijacking, hostage-taking, 
and murder aboard TWA 847. This dra- 
matically televised 17-day event was fol- 
lowed by the Achille Lauro hijacking 
and murder plus the deliberate killing of 
unarmed U.S. marines and civilians in 
San Salvador, terrorist attacks in 
Colombia, bombings of military bases in 
Germany, and the December 27 bloody 
attacks upon the Rome and Vienna air- 
ports. These underlined the importance 
of the new action study completed at 
year's end by Vice President Bush's 
task force and its recommendations for a 
still more active unilateral and mul- 
tilateral effort to counter terrorism. The 
task force report found the system in 
place to be sound but in need of fine- 
tuning and higher priority with a more 
action-oriented urgent approach. 

The first tangible reaction was the 
President's January 8 decision to stop 
all U.S. business activities in Libya, 
seize its assets in this country, and call 
for our allies to join in a campaign of 
collective, nonmilitary pressure strong 
enough to convince Qadhafi to stop his 
support for terrorism. The President 
made clear that the United States 
reserved the right to take unilateral ac- 
tion if collective action failed to deter 
Qadhafi. Unfortunately, there was virtu- 
ally no response by our allies, and 
Libyan-supported terrorism directed 
against the United States became more 
blatant, widespread, and deadly. This 
included orders in late March from 
Tripoli to Libyan embassies to conduct 
attacks on U.S.-related targets in dozens 
of countries aimed at inflicting large- 
scale, indiscriminate casualties. 

One result of Qadhafi's orders was 
the bombing of Berlin's La Belle Disco- 
theque where there were 200 casualties, 
including two American sergeants killed. 
Similar, but abortive, attempts took 
place elsewhere. For example, French 
and Turkish security forces working 
with the United States discovered, 



prevented, and publicly exposed actions 
by Libyan officials to conduct very 
lethal attacks against U.S. Government 
installations. In other countries, the 
Libyans never got that far, probably 
recognizing their inadequacies in the 
face of close controls. 

President Reagan's response was to 
invoke the right of any country to self- 
defense when attacked by another coun- 
try. This led to the carefully calibrated 
April 15 raids upon terrorist-related tar- 
gets in Tripoli and Benghazi, a tremen- 
dous shock to Qadhafi who apparently 
believed he could insult and even kill 
Americans with impunity. 

What has been the result ot the 
limited use of force in self-defense 
against Libya? 

First, a marked reduction in 
Qadhafi-supported terrorism, apparently 
due to internal Libyan disarray, the 
compromise of Libya's external terror 
network, and the tighter controls placed 
upon Libyan activities all around the 
world by governments more determined 
than before to avoid terrorism in their 
countries. 

Second, absence of strong negative 
reaction, which some had feared (and 



Qadhafi had expected) from other Arab 
governments or the U.S.S.R. The 
former have showed little sympathy and 
no tangible support for Qadhafi, to his 
evident anger. The latter's words have 
been strongly supportive, but their mili- 
tary support has been zero— another - 
shock to Qadhafi's flawed perception of 
the world. 

Third, a sudden recognition by 
European and other governments of thw 
serious dangers posed by international 
terrorism and a new willingness to worli 
together to deter and prevent it. 

For example, the Foreign Ministers 
of the 12 European Community (EC) 
countries on April 21 agreed to reduce 
the size of the Libyan People's Bureaus 
and increase cooperation among law 
enforcement and intelligence agencies. 
They also agreed to impose tight con- 
trols upon the entry and movement of 
all Libyans, including diplomats and 
other government officials. On May 5 ii« 
Tokyo, the leaders of the seven govern 
ments of the economic summit countrie 
agreed to a series of actions to be take 
against international terrorism and 
states who support it, again identifying 
Libya. In addition to reiterating and 
strengthening the actions agreed to by 




April 1986. La Belle discotheque in West Berlin was destroyed by a bomb while it was 
crowded with some 500 patrons, mostly U.S. servicemen. More than 200 people were 
injured, and a Turkish woman and a U.S. soldier were killed. Another U.S. soldier died 
a result of his wounds in June 1986. 



Department of State Bull f 




FEATURE 
Terrorism 



EC, the Tokyo statement called for 
jroved extradition procedures, 
engthening the Bonn declaration on 
il aviation security, and greater inter- 
ional cooperation generally, including 
■ of the United Nations. 
; The Europeans also agreed to cut off 
itary sales to Libya and not to fill in 
aind the departing American skilled 
fsonnel. Italy— which has longstanding 
jor historic, cultural, and economic 
i with Libya— nevertheless has 
uced its presence from about 17,000 
ess than 2,000 since the beginning of 
s year and is beginning to cut its im- 
ts of Libyan oil. 

Actions to make Qadhafi understand 
must pay an increasing price for sup- 
ting terrorism have now been taken 
14 of the 15 governments who par- 
jated in these two meetings, Greece 
lg the only exception. Some 100 Lib- 
s, most of them so-called diplomats, 
e been expelled; economic and com- 
•cial ties have dwindled rapidly. The 
:ific actions vary from country to 
itry, but we can draw two conclu- 
s about them. First, they are un- 
stionably having a significant direct 
tical and economic impact upon 
ya and seem to be having an indirect 
also appreciable impact on other 
srnments which support terrorism; 
md, they represent an unprece- 
ted collective effort to combat 
orism, which has important future 
lications for international 
rcement. 

We must keep the momentum going, 
i unilaterally and multilaterally. At 
same time, we must not exaggerate 
threat or allow ourselves to be 
nidated by it. Nothing encourages 
terrorist more than seeing that they 
i succeeded in panicking public or 
ical opinion, which is a paramount 
ctive. 

iVhile losses of tourist dollars help 
I some countries, such as Greece, to 
ten up their security and the 
ged vacation plans have benefited 
i U.S. cities and the Caribbean, 
e seems to have been an excessive 
ccupation with terrorism by the 
ia and public in recent months. Let 
emember that only 28 Americans 
of international terrorism last year, 
do many but still not a large number 




An honor guard carries the flag-draped coffin of Robert Stethem, a U.S. Navy diver killed 
by the hijackers of TWA Flight #847. 



compared to the millions who went 
abroad. A number of friendly countries 
are suffering important economic losses 
as a result of U.S. public reaction. This 
may cause the terrorists to feel that 
they are succeeding in creating tensions 
within the Western alliance and to be- 
lieve that they can be successful over 
time in creating an isolationist mentality 
in this country, which will erode our 
important economic, strategic, and politi- 
cal interests abroad. Such a feeling 
would only encourage more attacks upon 
Americans as well as damaging our 
broader interests. 

In summation, we must take a cool, 
calm, and cooperative as well as deter- 
mined approach in fighting terrorism. 
The terrorists must not be allowed to 
get the best of us. Progress has been 
made and more will be, but fighting ter- 
rorism is a long-term effort which will 
draw on the best within us. 



AMBASSADOR OAKLEY, 
FEB. 19, 1986 

Excerpts from a statement before the 
Subcommittee on Security and Ter- 
rorism of the Senate Judiciary Com- 
mittee. 1 

I appreciate the opportunity to testify 
today on our topic of mutual concern: in- 
ternational terrorism. 

It seems that almost every day some 
new terrorist horror jumps at us from 
the screens of our televisions, the front 
pages of our newspapers, and the covers 
of our magazines. 

• In Paris earlier this month, bombs 
were placed in popular shops and tourist 
centers, even in the Eiffel Tower. 
Middle East terrorists claimed responsi- 
bility for the bombs and the casualties. 
In Rome and Vienna on December 27, 
Abu Nidal's group of terrorists mas- 
sacred 19 innocent people waiting at El 



ust 1986 



Al and TWA ticket lines-including 5 
Americans— and over 80 people were in- 
jured. Four terrorists are dead; three 
are being questioned. 

• A month earlier, the Abu Nidal 
group, again supported by Libya, 
hijacked an Egyptian airliner and began 
shooting passengers one by one, starting 
with all the Israeli and American 
citizens. By the end of the incident, 60 
people, including an American, had died, 
and 20 more were wounded; one ter- 
rorist survived and is being tried by 
Maltese officials. 

• In October, terrorists acting under 
orders from Abu Abbas hijacked the 
Italian cruise ship Achille Lauro and 
murdered an elderly crippled American, 
Leon Klinghoffer. The four perpetrators 
were captured by the United States and 
await trial in Italy. Abu Abbas is at 
large, with a $250,000 reward out for his 
arrest and punishment. 

• Last June, there was the dramatic 
hijacking of TWA 847 in Athens and the 
tragic killing of American sailor Robert 
Stethem when the aircraft was on the 
ground in Beirut. Also in Lebanon, 
there is the prolonged agony of the 
Americans held captive there. A 
representative of the Archbishop of 
Canterbury, Mr. Terry Waite, has been 
shuttling to Beirut, meeting with the 
captors, but they remain hostages of the 
Iranian-influenced Hizballah organi- 
zation. . . . 

Libyan Support for Terrorism 

It was the pattern of rapidly growing 
Middle East terrorism, with greatly in- 
creased casualties, more frequent target- 
ing of U.S. citizens and interests, and 
stronger state support, which caused 
the Reagan Administration to draw the 
line for Qadhafi and Libya's direct in- 
volvement in terrorism. Libya is not the 
only state in the Middle East supporting 
and using terrorism: Syria and Iran re- 
main very much involved. But over the 
past 6 months, Libya has become by far 
the most active, especially against 
American and European travelers. If it 
cannot be stopped, others can be ex- 
pected to follow its lead. 

Qadhafi's general support for ter- 
rorism is not new. He long has used 
terrorism as one of the primary instru- 
ments of his foreign policy. He has 
given support to a variety of groups 
around the world, from the IRA [Irish 



Republican Army] in Northern Ireland 
to the Moro National Liberation Front 
in the Philippines. A more detailed 
description of Libya's activities is in 
State Department Special Report 
No. 138, January 1986. 

In summary, the most significant 
Palestinian groups Libya has backed are 
Abu Nidal; the Popular Front for the 
Liberation of Palestine-General Com- 
mand, the PFLP; and Fatah dissidents. 
Abu Nidal's beneficiaries in Europe 
include— in addition to the IRA— the 
FP-25 in Portugal and anti-Turkish 
Armenian terrorist groups. Asian 
groups, aside from those in the Philip- 
pines, include Pakistan's Al-Zulfiqar 
group, the Kanak Socialist National 
Liberation Front in New Caledonia, and 
Muslim insurgents in Thailand. In Cen- 
tral and South America, Qadhafi has 
provided training and funding to a va- 
riety of groups, including Colombia's 
M-19, Chile's Movement of the Revolu- 
tionary Left and Manuel Rodrigues 
Patriotic Front, and insurgent groups in 
Guatemala and El Salvador. More Liby- 
ans arrived just last week in Nicaragua, 
via Cuba, to assist the regime there and 
other terrorist/revolutionary groups 
such as those just mentioned. 

Closer to home, Qadhafi has tried to 
undermine the governments in neighbor- 
ing Egypt, Tunisia, and Sudan and has 
invaded Chad. In Egypt, Abu Nidal 
operatives were caught last year trying 
to blow up the U.S. Embassy in Cairo. 
Indeed, Qadhafi's own terrorist activ- 
ities have been more wishful thinking 
and big talk, or largely aimed at Libyan 
dissidents, until he joined forces with 
Abu Nidal toward the middle of last 
year. Until that time, the group in re- 
cent years had been the beneficiary of 
almost exclusive Syrian support. The 
pattern of attack during that period 
focused upon mainline PLO [Palestine 
Liberation Organization] and Jordanian 
officials and Jordanian Air Lines offices. 

There is still a connection with 
Syria, but for the major activities since 
mid-1985-Rome, Vienna, and Malta— the 
primary and more significant support 
has been Libyan. Some of the terrorists 
involved in the Rome and Vienna at- 
tacks may have been "trained" in the 
Bekka Valley of Lebanon controlled by 
Syria. But it doesn't take much training 
to fire submachine guns and throw hand 
grenades against civilian passengers in a 
crowded airliner terminal. Even in this, 



Abu Nidal shows his cynicism and 
cruelty. His group recruits young men, 
some of them still teenagers, for suicidf 
attacks. They are the cannon fodder, 1 
while Abu Nidal and his lieutenants re- 
main safely in the shadows. 

During the last half of 1985, we 
know of Libyan money in the millions < 
dollars going to Abu Nidal, of Libya 
providing and buying arms for Abu 
Nidal, of Abu Nidal and his top lieu- 
tenants living in Libya, of his killers 
being trained there, and of travel docu 
ments and other facilitative assistance 
being provided by Libya for their trav< 
to commit terrorist attacks abroad. 
Some of this evidence, such as the use j 
of confiscated Tunisian passports by ta 
rorists in the December 27 attack, is ii 
the public domain. Some of it is highly 
classified intelligence, and to reveal it 
would help the terrorists beat our 
defenses. But there is no question abo 
the Libyan-Abu Nidal connection or 
what Qadhafi hoped to accomplish. By 
this new terrorist resource, the fanatin 
Libyan leader believed his limitless aiW 
bitions and wild dreams could become 
true— that the West as well as the Arv 
world would be so intimidated that tin- 
would accept him as a major power on 
the regional and world scene. 

U.S. Actions Against Libya 

That is the basic reason for the stronj 
reaction by the Reagan Administrate 
to the massacres at Rome and Vienna 
Against the background of the un- 
mistakable imprint of Col. Qadhafi am 
the Abu Nidal organization on a dozei 
attacks around the rim of the Meditei 
nean in the last half of 1985, and the 
previous unwillingness of most of thos 
governments to join in collective mea: 
ures to stop the threat, the airport ab 
tacks were seen as a clear call for act 1 
and leadership by the United States. 
After careful deliberation, the Pre 
dent decided to take unilateral action 
against Libyan support for terrorism. 
He moved to terminate the remaining 
U.S. -Libyan commercial and financial 
lations and called upon other count™ 
to join us in sending Qadhafi and othi 
governments the signal. The decision 
quired still further economic sacrifice 
for the United States, which has aire* 
given up a multibillion-dollar annual 1 
iness with Libya to make clear our 



Deoartment of State Bull 




FEATURE 
Terrorism 



md against terrorism, but if we had 
t taken the lead, no one else would 
ve done so. Moreover, the moral issue 
is such that any Administration in this 
mtry would be bound to act. 
There are a number of reasons why 
ler governments in Europe and else- 
ere have been reluctant to act, both 
earlier years when we previously 
id to exert pressure on Qadhafi to 
1 his support for terrorism and in the 
nediate wake of the Rome and 
mna airport attacks. These reasons 
lude: concern for the safety of their 
zens in Libya or elsewhere if they 
re to join the United States in strong 
ion; skepticism over the effectiveness 
jconomic sanctions; and other foreign 
icy interests. 

In the Middle East, the initial reac- 
1 of the Islamic countries to Presi- 
it Reagan's decision to oppose Libyan 
rorism shows just how dangerous the 
lation has become. A number of 
derate governments, among them 
se who have been directly threatened 
Libyan subversion and terrorism, 
sented to a resolution by the Organi- 
on of the Islamic Conference sup- 
ting that country and opposing the 
ited States. This was more than an 
ression of solidarity toward a fellow 
.mic country which the media had 
icted as about to be attacked militar- 
by the United States, although such 
mtiment has strong popular appeal. 
,lso reflected the concern of a num- 
of governments at the potential po- 
al power exercised upon parts of 
1 population by Qadhafi's brand of 
tant political ultranationalism— 
ticularly at a time when moderate 
b regimes are also worried by the 
Hit religious-military-political power 
ran and agitation of the Palestinian 
pie, present in substantial numbers 
lany Middle East countries. . . . 
Our overall policy is to seek to ob- 
long-term cooperation of the world 
munity against the use of terrorism 
political ends, no matter how worthy 
may consider those ends. We have 
concluded that while increased 
irity— an essentially defensive 
3n— is important and must be ener- 
cally pursued, there is also a need 
more offensive, active measures if 
spread of terrorism is to be stopped. 



European Efforts Against Terrorism 

Although it is, of course, too soon to tell 
what the ultimate effect will be on 
Libya, there is no question in my mind 
but that the other governments in 
Europe and elsewhere share a growing 
recognition of the extreme gravity of 
the threat and the need to take action. 
Although some of them were reluctant 
to announce what they had done, there 
was a positive response, in public or pri- 
vate, by almost all the governments 
which Deputy Secretary Whitehead and 
I visited last month. Following the visit, 
the EC [European Communities] foreign 
ministers discussed terrorism at length 
and issued a positive statement. They 
announced a decision not to export arms 
or other military equipment to countries 
which support terrorism, a pledge not to 
undercut steps other states have taken 
to deal with terrorism, and the forma- 
tion of a permanent working group to 
make future recommendations. 

Some individual governments have 
gone further. For example, Italy has im- 
posed a visa requirement for all visitors 
from North Africa, in view of the grow- 
ing number of terrorist incidents involv- 
ing falsified North African travel 
documents. Italy also has stopped all 
arms supply— including deliveries on ex- 
isting contracts— despite the financial 
losses. Italy also is reviewing its overall 
relationship with Libya and has intensi- 
fied still further the very good work be- 
ing done by its police and magistrates to 
fight domestic terrorism. Canada had al- 
ready reduced the level of diplomatic 
ties with Libya, as had the United King- 
dom. Canada also further agreed to stop 
shipping sophisticated oilfield equipment 
to Libya, despite the loss of sales, and 
to discourage any Canadian business 
activity there. All governments with 
which we spoke said they would con- 
sider additional measures, and we in- 
tend to continue our consultations with 
them on how best to confront the com- 
mon threat posed by Libyan-sponsored 
terrorism. 

Those who say that this type of non- 
military action will not work against 
Libya should suspend their judgment 
until our efforts have had time to be 
tested, for it is a long-term effort rather 
than a one-shot affair. The private sig- 
nals reaching the Libyan leadership 
from Europe and elsewhere are mostly 
negative, even if Qadhafi had an initial 



upsurge in public support. Despite their 
rhetoric, the other Arab governments 
do not appear willing to bail out Libya's 
badly faltering economy, nor have they 
taken any substantive economic or polit- 
ical actions against the United States. 
The Soviet Union has been stridently 
supportive in its rhetoric and has con- 
tinued its very dangerous policy of sup- 
plying weaponry to a regime known for 
its erratic, reckless behavior. (We all 
recall the strong evidence that Soviet- 
supplied mines were used by Libyan 
ships in the Red Sea in 1984. Soviet- 
supplied aircraft additionally were used 
in bombings in Sudan in 1984 and this 
week in Chad.) Yet there are also signs 
of unease and caution by the Soviets, 
and they appear no more eager to bail 
out Libya economically than the Arab 
governments. (It is our guess that, if 
spot oil prices stay under $20 per bar- 
rel, by the end of this year Libya's an- 
nual revenues will be in the range of 
$6-7 billion, whereas 5 years ago they 
exceeded $20 billion dollars, and 2 years 
ago they were over $10 billion.) 

. . . There are signs that these ef- 
forts by the United States and the 
Europeans are getting to Qadhafi. This 
is indicated by his frantic efforts to 
reach out to both the international 
media and several European and Middle 
East governments to try to persuade 
people that he isn't really such a bad 
guy at the same time that he strikes 
militaristic poses and threatens the U.S. 
Sixth Fleet. I don't think anyone is 
really being fooled— unless they want to 
be. 

Should Qadhafi not heed the voices 
of reality and again unleash his agents 
to commit terrorist acts, or should other 
governments not understand the 
broader message warning against state 
support of terrorism, President Reagan 
has made it clear to all that he is pre- 
pared to continue exercising the respon- 
sible leadership role of the United 
States. Consideration of the careful use 
of force in such circumstances has not 
been ruled out, in accordance with our 
right of self-defense. 

The Need for 
Congressional Support 

The antiterrorism effort is a long and 
complicated one, to be pursued by a 
combination of unilateral, bilateral, and 



ust 1986 



multilateral measures. However, there 
are no magic weapons— most terrorism 
takes place abroad where our power is 
fettered; the enemy is determined and 
clever and ready to die. Qadhafi is only 
a part of the problem, and we are not 
losing sight of that. As Secretary Shultz 
and others have noted, terrorism is a 
form of a low-intensity warfare. Never- 
theless, we have achieved the national 
consensus called for 2 years ago by 
Secretary Shultz; we have completed a 
thorough review of security, chaired by 
Adm. Bobby Inman, and are implement- 
ing the recommendations; the Vice 
President's task force on more active 
counterterrorist measures has finished 
its work and implementation is begin- 
ning; and other governments seem to be 
awakening. I would like to assure you 
that, with your support and continued 
help, we will continue to be in this 
effort for the duration. 

We welcome the support and inter- 
est of this commmittee and its members, 
for the effort to counter terrorism can 
only succeed if it is a partnership. Previ- 
ous legislation passed by this committee 
is being used vigorously, such as the 
rewards legislation. We support new 
legislation which is being considered to 
extend and strengthen the protection 
afforded U.S. citizens abroad from 
terrorist acts. We would like to work 
with you on other measures— including 
passage of the revised U.S.-U.K. extra- 
dition treaty, which will send a strong 
signal to other governments in the 
important area of extraditing terrorists 
rather than allowing them to escape 
proper punishment. 



AMBASSADOR BORG, 
FEB. 19, 1986 

Excerpts from a statement before the 
Subcommittees on Arms Control, Inter- 
national Security and Science and on 
International Operations of the House 
Foreign Affairs Committee. 1 



I am very pleased to have this oppor- 
tunity to review with you today our 
progress in improving security for inter- 
national air travelers and to give you an 
overview of recent actions undertaken 
to combat terrorism. . . . 



U.S. Cooperative Efforts 
to Combat Terrorism 

Bilateral Efforts. Our bilateral efforts 
to combat terrorism are becoming more 
complex, with better exchanges of intel- 
ligence, more frequent high-level com- 
munications, cooperative efforts in coun- 
terterrorism technology, and better 
judicial and military cooperation. More 
countries are establishing centralized 
counterterrorism offices able to coor- 
dinate the various parts of their 
bureaucracy, both on a routine opera- 
tional basis and during a terrorist inci- 
dent. Our bilateral cooperation to com- 
bat terrorism is already good and 
steadily improving. 

Counterterrorism cooperation is on 
the agenda for every high-level visit to 
the United States; other countries can 
have no doubt as to the commitment of 
the United States to combat terrorism 
by every means. Ambassador Oakley 
has led numerous interagency delega- 
tions to many nations for specific discus- 
sions of counterterrorism cooperation. 

We have found the antiterrorism as- 
sistance program to be a very effective 
policy tool for stimulating general 
interest in other countries in general 
cooperation and in stimulating support 
for specific U.S. policy concerns. It has 
helped us strengthen our policy dialogue 
with such states as Turkey, Greece, 
Egypt, the gulf states, Israel, and 
Colombia. To date, 32 countries have 
participated in some aspect of the ATA 
program, with a total of over 1,800 
participants. The Office of Counter- 
Terrorism and the Bureau of Diplomatic 
Security have cooperated closely in the 
administration of this program. There is 
no doubt that there is a higher level of 
awareness in many countries of the 
dangers of international terrorism and a 
greater willingness to take effective 
actions against it because of the ATA 
program. . . . 

Efforts in International Organiza- 
tions. The United States has had suc- 
cess in international organizations in 
obtaining more effective agreements and 
stronger resolutions against inter- 
national terrorism. The UN Security 
Council has issued several statements 
condemning international terrorism and 
unanimously approved a U.S. resolution 
in December against hostage-taking. 
Also in December, the UN General 



Assembly adopted a strong resolution 
.which unequivocally condemned as crim 
inal "all acts, methods and practices of 
terrorism wherever and by whomever 
committed " The resolution specifi- 
cally called on all states to take appro- 
priate measures as recommended by thci 
International Civil Aviation Organizatio 
(ICAO) and as set forth in relevant 
international conventions to prevent 
terrorist attacks. 

The International Maritime Organi- 
zation (IMO) acted upon a U.S. resolu- 
tion, introduced at the IMO's 14th 
assembly in November 1985, to instruc 
the Maritime Safety Committee (MSC) 
to develop measures for the prevention 
of terrorist attacks against passengers 
and crews on board ships. A detailed 
U.S. proposal was favorably received I] 
the MSC at its meeting which ended 
February 5, and we expect adoption oi'l 
final text at the next MSC meeting in 

September Although the mandates 

of ICAO and IMO are significantly 
different, we are grateful to ICAO for 
making available to IMO its years of 
experience with security measures so 
that IMO could accomplish in a matter 
of months in the maritime area what 
took years to accomplish in internatior 
civil aviation affairs. 

As a separate matter, we have for 
some time been engaged in an effort t 
encourage more states to become par- 
ties to the Tokyo, The Hague, and Mo 
treal conventions, which relate to air- 
craft safety, hijacking, and sabotage. 
This effort has been going on for sevei 
years and has achieved such a degree 
success that these conventions are noi 
among the most widely accepted inter 
nationally. The Tokyo convention has 
121 parties; The Hague, 126; and Mon 
treal, 127. 

These activities by the United 
States in international organizations 
represent a good deal of recent succes 
U.S. policy in multilateral organizatio; 
for combatting terrorism is directed 
toward: 

• Increasing public understanding 
and awareness of the nature of ter- 
rorism; 

• Encouraging the development o 
internationally accepted standards of 
behavior and responsibility for indi- 
vidual states in preventing, deterring 
and punishing terrorism; and 



Department of State Bu 



■ 




FEATURE 
Terrorism 



• Encouraging effective inter- 
tional cooperation to combat terror- 
n, including adherence to existing 
;emational counterterrorism conven- 
es. 

The above cited actions make clear 
it progress is possible and that the 
stem recently has been responding 
rorably and with a sense of urgency 
our calls, and those of others, for 
ion. 

Multilateral Efforts. In contrast to 
;se impressive developments in our 
ateral relationships and with inter- 
zonal organizations, multilateral 
iperation to combat terrorism among 
3-minded nations has gone more 
wly, but there has been some prog- 
;s. For example, European states, 
"tly as a result of our pressing them 
do more to stop Qadhafi's support for 
rorism, have organized a high-level 
! committee to coordinate actions on 
i problem. We welcome this effort by 
ropean states to address collectively 
! problem of international terrorism, 
1 we are seeking ways to cooperate, 
titutionally or informally, with this 
lup. 

The Council of Europe's committee 
combatting terrorism has proposed in 
ent days to expand the European 
ivention on the Suppression of 
Torism to additional states. We 
[come the initiative and look forward 
:ontacts with the Council of Europe 
explore how we might move forward 
h a broader convention. 
Cooperation in the summit seven 2 
text has been, frankly, less reward- 

during the past year. We have 
ght as a first step with this group, 
ich represents some of our closest 
B, to revitalize the Bonn declaration 3 
1978 and obtain agreement to cooper- 
in specific other areas outlined in 
vious summit statements at Venice, 
awa, and London, but the political 
late has not permitted the sort of 
Itilateral cooperation which we 
eve is essential. . . . 

Delusion 

se examples illustrate that some 
jress has been achieved but also 
itxate the broader problems in ob- 
ing joint international actions 



against terrorism along the lines fore- 
seen in Title V of the 1985 Foreign 
Assistance Act. We are keeping our 
objectives firmly in mind and pressing 
them at every opportunity where ac- 
ceptance by other countries provides a 
reasonable prospect for success. . . . 



AMBASSADOR OAKLEY, 
FEB. 13, 1986 

Excerpts from an address before the 
Conference on Terrorism, Tourism and 
Traveler Security. 

. . . Every day, it seems we are con- 
fronted with a new terrorist incident. 
But let's take a longer view tonight 
and look at terrorist trends and how 
the U.S. Government is combatting 
terrorism. 

Trends and Developments 

In looking at trends and developments, 
we note: 

First, terrorism is likely to be a 
prominent factor on the international 
political landscape for the rest of this 
century. 

• There were around 500 inter- 
national terroiist incidents per year in 
late 1970s and early 1980s, 600 incidents 
in 1984, and 812 for 1985-a 60% 
increase in the last 2 years. 

• Continued political unrest, dis- 
putes between nations, and socioeco- 
nomic problems create conditions of 
frustration and hatred which can easily 
be transferred into terrorism. 

• Mass global communications 
assure instantaneous publicity for 
terrorist acts. 

• Frustrated splinter groups increas- 
ingly recognize they can make then- 
mark more easily through acts of vio- 
lence than through normal political 
opposition. 

• Travel has become much easier 
between different countries, and border 
controls have been reduced, particularly 
in Europe. 

• A worldwide system of competi- 
tive arms sales makes weapons available 
more easily to terrorist groups. 

• Weapons of mass destruction as 
well as increasingly lethal conventional 
armaments have made regular warfare 



potentially too costly, particularly 
against stronger adversaries, causing 
some governments to see terrorism as a 
cheap way to strike a blow at their 
enemies. 

Second, we tend to think of terror- 
ism as an American problem, but it is 
an international problem. Of a total of 
some 800 international terrorists inci- 
dents in 1985, none occurred in the 
United States, where our security and 
intelligence agencies have full authority 
and maximum capability to act. 

In 1985, there were 177 incidents 
which involved American individuals or 
facilities overseas, compared with 131 
for all of 1984. For both years this was 
slightly less than one-fifth of total inci- 
dents and less than 10% of total casual- 
ties. Twenty-three Americans were 
killed and 139 injured by terrorists 
abroad in 1985 (compared to 20,000 
killed in traffic accidents in this coun- 
try). In recent events, the TWA and 
Egypt Air hijackings, the Achille 
Lauro, and, to some extent, at the 
Rome airport attack, Americans were 
singled out as targets. 

Why does it appear that the United 
States is being singled out? 

• Because of our position as the 
world's number one power and the per- 
ception abroad that our policies and 
actions somehow are responsible for sit- 
uations, policies, and actions in other 
countries. This makes it popular for 
terrorists to attack U.S. targets and for 
the media to play up attacks on the 
United States more than others. And, 
naturally, the U.S. media focused on 
attacks affecting Americans— the 
"hometown angle" spread over into the 
national networks. 

• Because the United States is so 
present abroad: military, diplomats, 
foreign assistance personnel, business- 
men, and tourists. There are more than 
a million Americans overseas for one 
reason or another. 

• Because Americans are on the 
move more than other nationalities; 
Americans make up the majority of 
cruise ship passengers and a substantial 
plurality of airline passengers. 

In terms of combatting terrorism, 
this means that the U.S. Government 
and American citizens overseas are very 
dependent upon the protection and coop- 
eration of other governments. 



just 1986 



Third, terrorist attacks are increas- 
ingly violent. Trends over recent years 
have shown a steady increase in the 
number of dead and wounded— an even 
more rapid increase than in the number 
of incidents. 

Fourth, state sponsorship has 
become an increasingly dominant factor 
in global terrorism. There has been an 
unmistakable rise in the past few years, 
with Iran, Libya, Syria, Cuba, and Nica- 
ragua as the most active, determined, 
systematic supporters of terrorist 
groups. Direct government assistance in 
arms and explosives, communications, 
travel documents, money, and training 
combined with fanatic individuals or 
groups exploited by governments for 
political ends make state-supported 
terrorist groups more deadly. They have 
the means and desire to shift tactics 
toward bombing and armed attacks 
which make maximum political impact. 
The state support enables them to oper- 
ate without worrying about financing or 
arms. 

Fifth, the Middle East has become 
the primary source of international 
terrorism (378 incidents in 1985), in past 
years accounting for about 35% of the 
incidents. In 1985 this rose to 45%. 
Middle East terrorist activities are 
taking place not only in the region but 
also in Europe. 

There are two main categories of 
Middle Eastern terrorists: 

• Fanatical Palestinians, most of 
whom have split off from— and often act 
in direct opposition to— the mainline 
PLO led by Arafat. They often have the 
direct support of Libya, Syria, or Iran; 
and 

• Shia zealots from various Arab 
countries, especially Lebanon, who are 
inspired and trained, often armed and 
financed, and, to varying degrees, 
guided by Iran. 

The targets of Middle East terror- 
ism fall principally into four groups: 
Israel; Western governments and citi- 
zens, particularly the United States; 
moderate Arab governments and offi- 
cials, including the mainline PLO as well 
as Jordan, Egypt, Kuwait, and Saudi 
Arabia; and critics of radical regimes, 
particularly Libyans. 



Other regions where terrorism is at 
a high level are Western Europe (208 
incidents), where there are a number of 
indigenous groups motivated by ideologi- 
cal or ethnic/separatist beliefs, and 
Latin America (132 incidents), where the 
roots from which terrorists spring are a 
combination of ideology, politics, eco- 
nomic and social grievances, and— 
recently— narcoterrorism. Indigenous 
European terrorism decreased some- 
what last year, thanks to outraged pub- 
lic opinion and better police work in 
countries such as Italy, the Federal 
Republic of Germany, the United King- 
dom, and Belgium. In Latin America, 
the trend is up, and so are attacks 
against the United States. 

As you in the industry know better 
than we in government, the upsurge of 
Middle East terrorism is having a nega- 
tive effect on tourism, and especially 
upon tourism emanating from the 
United States. Three major incidents 
seem to have had the greatest impact, 
due to a combination of the acts them- 
selves and the wide publicity they were 
given: 

• The hijacking of TWA Flight 847 
from Athens; 

• The hijacking of the Italian cruise 
ship Achille Lauro; and 

• The massacres at Vienna and 
Rome airports. 

Although we have no precise 
figures, the best guess of the State 
Department is that the European and 
Middle Eastern countries of the Medi- 
terranean rim lost upwards of $1 billion 
in anticipated revenue from tourism last 
year, and it will probably be worse this 
year. This is a blow to the tourist indus- 
try but an even greater blow to coun- 
tries counting heavily upon revenue for 
their economies: Italy, Greece, Egypt, 
Tunisia, and others. Even Amsterdam is 
affected. 

Dealing with Terrorism 

What has been and is being done to deal 
with international terrorism? There are 
several real problems in dealing with 
terrorist incidents which occur outside 
the United States. 

First, let us recall that the U.S. 
Government has only limited ability to 
influence the situation when it occurs 



abroad, particularly since some govern- 
ments tend to shy away from coopera- 
tion with us. Some erroneously believe 
that because the U.S. Government is a 
principal target of terrorists, working 
with us could bring more trouble; or 
they have nationalistic reasons for keep* 
ing a distance. 

Second, most European states have 
closer economic links than we do with 
the Middle East and, particularly, with 
the oil-rich states that are prime spon- 
sors of terrorism— notably Libya and 
Iran. 

Third, some governments believe 
that they can have a sort of gentleman' 
understanding with Middle East ter- 
rorists and those states who support 
them: in exchange for a pro-Arab for- 
eign policy and virtually free entry and 
passage for persons from Middle East 
countries (even suspected terrorists), mi 
terrorist activities will take place on 
their territory. (Unfortunately for the 
governments in question, terrorists are* 
not gentlemen.) They also tend to be- 
lieve that it will "not happen here" and 
therefore, avoid the troublesome, expe* 
sive actions necessary to deter terrorisi 
attack. 

Recognizing the problems— and 
they're not easy ones— let's look at sons 
of the actions we have been taking thaj 
have an effect on tourism. 

Actions Affecting Tourism 

Improved civil aviation security has 
been one of the highest priorities. It is 
an area where we can see some results 
We had actually anticipated the dangei 
of an increase in aircraft hijacking and 
airport attacks stemming from Mid-Ea; 
terrorism. Over a year ago, the State 
Department and the FAA began a 
major effort with friendly governmentf 
and with the airline industry and the 
ICAO to draw attention to the threat 
and to propose measures to deal with 
it. . . . 

Unfortunately, there was not enouj 
concern by most other governments 
until after the TWA 847 hijacking in 
June 1985, and the State Department 
issued a travel advisory for Athens 
airport. At that time, behind the leadef 
ship of Transportation Secretary 
Elizabeth Dole and her Canadian col- 
league, the ICAO Council expeditiousl 



m 




FEATURE 
Terrorism 



lopted a number of additional mini- 
um security measures; Greece im- 
smented rapidly the improvements for 
;hens airport which had been in limbo 
ice agreed upon with a U.S. team in 
ibruary; and several other govern- 
jnts took rapid advantage of offers by 
e State Department and FAA for 
jhnical assistance and training in civil 
iation security. 
Today, the FAA is sending officials 
aii-ports around the world in order to 
iasure their safety. If there are 
oblems and they are not corrected, a 
ivel advisory will be issued— as it was 
• Athens airport. Better intelligence 
s also enabled the FAA and other 
S. Government agencies to issue more 
iquent, timely threat alerts for 
lines and airport authorities abroad, 
jackings declined sharply in the se- 
id half of 1985. However, these tight- 
security measures did not apply to 
blic access areas, where both interna- 
nal and U.S. airports are vulnerable, 
•st airports were designed to facili- 
e, not inhibit, public access. Since 
i attacks at Rome and Vienna, addi- 
nal armed guards are in place at 
>st major airports in Europe, and 
ilance is up. 

Maritime security is a new subject. 
; did not anticipate passenger hijack- 
s because there had not been any in 
re than 20 years— and never previ- 
ily in the Middle East. Some lines es- 
•lished their own security measures, 
i these added to the cost of the tours 
I were not regarded universally as 
:essary. The tragic Achille Lauro in- 
ent jolted the U.S. and other govern- 
nts into a much more active policy of 
ety standards for ships and ports, 
using upon a reinforced role for IMO 
1 national actions. A special inter- 
mcy working group has been set up 
hin the U.S. Government with the 
ist Guard, the Departments of Trans- 
lation and State, and other agencies 
ieal with this problem more effective- 
New international safety standards 
ich the United States proposed are 
ag considered by the International 
ritime Organization, which met in 
iuary and should approve them later 
5 year— a breakthrough for interna- 
lal ship travel. 




Two masked hijackers sit in the cockpit with the Captain aboard TWA Flight #847. 



We recently have held informal 
meetings between representatives of the 
U.S. travel industry and the Depart- 
ments of State and Commerce to de- 
velop a more effective common approach 
to the terrorism problem. We need to 
work more closely on exchanging our as- 
sessment of the terrorism situation with 
you for information on the impact of 
terrorism on tourism. Using the clout 
of the loss of tourism dollars, we have 
an added weapon to use with other 
governments. 

Improving U.S. Ability 
To Act Against Terrorism 

The Administration has been hard at 
work unilaterally to improve its ability 
to act against international terrorism. 
The antiterrorism legislation passed by 
Congress in late 1984 has put into prac- 
tice, with arrest warrants and extradi- 
tion requests issued and rewards posted 
for the hijackers and killers of TWA 
Flight 847 and the Achille Lauro cruise 
ship. The Department of Justice and the 
FBI have, thus, become more directly 
involved in investigating and preparing 
to prosecute terrorist crimes against 



Americans abroad. This also has the ef- 
fect of emphasizing that terrorists are 
not some kind of romantic "freedom 
fighters" but are vicious criminals. Ad- 
ditional legislation along these lines is 
pending, as is a new U.S.-U.K. extradi- 
tion treaty which would treat terrorists 
as criminals. 

There has been a significant increase 
in intelligence resources being applied to 
the terrorist problem, and further im- 
provements have been made in our abili- 
ty to respond militarily to a terrorist 
attack should this situation arise. The 
successful interception of the Ach Me 
Lauro hijackers is the most spectacular 
manifestation of both these improve- 
ments, combining excellent intelligence 
with timely military action in a precise, 
restrained way. Less publicized is the 
fact that over 100 terrorist attacks 
planned against the United States 
abroad were preempted in 1985 due to 
better intelligence or better security. 

We have beefed up substantially the 
protection accorded U.S. Government 
officials stationed abroad, both military 
and civilian, and improved cooperation 
with private American business over- 
seas, including the creation of an 



gust 1986 



11 



Overseas Advisory Security Council 
composed of State Department and 
private business representatives. 

The Diplomatic Security Bureau and 
the Bureau of Consular Affairs of the 
State Department have also increased 
their programs for providing information 
to travelers and prospective travelers, 
as well as businessmen. When a call 
comes in on whether or not it is safe to 
travel to a particular country, they can 
provide the latest evaluation based upon 
the view of our diplomatic posts abroad 
and the intelligence community here in 
Washington. As a general rule, the 
State Department and its posts abroad 
do not discourage foreign travel because 
there are terrorist incidents. If there 
are problems in a particular country 
which warrant attention but not, in our 
judgement, cancellation of the trip, we 
point this out. If the problems are very 
serious— as in Lebanon or Libya or, for 
a time last year, at Athens airport— we 
will issue a public travel advisory. 

The Need for 
International Cooperation 

The measures which the United States 
can take unilaterally to combat ter- 
rorism are limited by a variety of fac- 
tors. We cannot, for example, arbitrarily 
land assault troops at the airport of a 
friendly country to storm a hijacked 
plane without working out arrangements 
with the host country. Nor can we real- 
ly track suggested terrorists ourselves 
in the slums of Beirut, the deserts of 
Libya, or the jungles of Central Ameri- 
ca. The problem is an international one, 
and effective responses require interna- 
tional cooperation. 

As Secretary Shultz said in a 
June 24, 1984, speech, terrorism is an 
international problem that requires the 
concerted efforts of all free nations, and 
". . .the time has come for the nations 
that truly seek an end to terrorism to 
join together, in whatever forums, to 
take the necessary steps." 

Obtaining agreement on specific in- 
ternational steps is a difficult and long 
process— going back to even before the 
1984 speech. Indeed, the efforts go back 
to the terrorist outbreaks in the 1970s. 



It has not been easy, for the reasons I 
mentioned earlier and because there is a 
strong sentiment of independence, if not 
resentment, amongst these governments 
vis-a-vis leadership from the United 
States. 

Progress is being made, however. 
Italy recently has been the most cooper- 
ative European country, perhaps be- 
cause of the jolt of the Achille Lauro 
hijacking, perhaps because its remarka- 
ble success in reducing domestic ter- 
rorism convinced its government of the 
need to act sooner rather than later. 
The United Kingdom and West Germa- 
ny also deserve special recognition for 
the vigorous efforts they have been 
making to combat terrorism in their 
countries and to promote greater multi- 
lateral cooperation against the common 
threat. 

Other governments have been less 
vigorous and less cooperative, adhering 
to a practice of accommodation and 
outdated policies of liberal refuge and 
asylum for those who claim political 
motivation for what are really heinous 
criminal acts. The U.S. Government dis- 
agrees strongly with such an approach 
and has made its views known. 

On balance, discreet but effective 
bilateral cooperation between the Unit- 
ed States and most of its allies has im- 
proved substantially over the past year, 
just as we have been able to focus 
greater world attention on the issue by 
pushing hard for resolutions condemning 
terrorism in the United Nations. The 
General Assembly and Security Council 
have both approved resolutions in re- 
cent months. Effective multilateral ac- 
tion on specific problems or countries, 
however, is still not in sight. 

Unfortunately, these measures, 
unilateral and international, have not 
been enough. . . . There has simply not 
been enough action by other govern- 
ments to act against terrorists before 
they can strike or to arrest and punish 
them once a crime has been com- 
mitted. . . . 

There is the beginning of an awaken- 
ing in Europe. Although still somewhat 
embarrassed politically by U.S. leader- 
ship, there was a positive response be- 
hind the scenes by most of the nine 



governments which Deputy Secretary 
Whitehead and I visited last month. 
Cessation of arms supply to Libya, in- 
cluding existing contracts; an end to 
government credits for exports; tighter 
controls on Libyan entry and movement 
and a promise not to substitute for 
departing American companies and 
technicians— these have been agreed to 
by almost all governments. Some have 
gone further— notably Italy, which has 
imposed a visa requirement for all visi- 
tors from North Africa and is reviewing 
its overall relationship with Libya. Col- 
lectively, the EC has decided to estab- 
lish a high-level committee to study thei 
terrorist problem and make recommen- 
dations. We hope this will be a forum 
for vigorous action. 

One of the motivating factors behin 
this sudden activity in Western Europ* 
has probably been the loss of tourist 
revenues, particularly from the United 
States. Europeans who in the past hav. 
been reluctant to take vigorous antiter 
rorist actions because of commercial in 
terest are beginning to understand 
there is another side of the financial j 
ledger. Terrorism is costing them 
hundreds of millions of dollars in lost 
tourism, increased security costs, and 
apprehensive investors. Another is tha 
pressure of public opinion, which in 
most European countries is demanding] 
firmer action by governments and is 
angry at what seems- to be an inade- 
quate response. In both these areas, 
groups such as those represented here 
tonight can use your potential pressur 
to good effect, making clear through 
your own channels which governments 
you believe are taking seriously their 
responsibilities to fight terrorism and 
protect all persons in their countries. 
Combined with the efforts of the U.S.i 
Government, this can have an importa 
positive impact. 



J The complete transcript of the hearing 
will be published by the committee and wi" 
be available from the Superintendent of 
Documents, U.S. Government Printing Off: 
Washington, D.C. 20402. 

2 Canada, Federal Republic of Germany 
France, Italy, Japan, United Kingdom, and 
United States. 

3 The 1978 Bonn declaration civil avia- 
tion security. ■ 



12 



Department of State Bull 




FEATURE 
Terrorism 



hronology of Major American-Related Terrorist Incidents, 1985 



cember 27 

Rome, Italy; Vienna, Austria: Ter- 
ists simultaneously attacked pas- 
igers at airports in Rome and Vienna 
;h grenades and automatic weapons 
i. Five Americans were among those 
ed in attacks on El Al and TWA pas- 
igers in Rome. Two El Al passengers 
re killed in Vienna. Airport guards 
ed three terrorists and captured 
)ther in Rome. In Vienna, one ter- 
ist was killed and two were captured. 
3 Abu Nidal group claimed credit for 

attacks. 

vember 24 
Frankfurt, West Germany: A car 

ab exploded at a U.S. military post 
hange (PX) injuring 36, including 18 
I. military personnel and 15 U.S. 
lians. The bomb was contained in a 
er BMW. No group claimed credit. 

member 23 

Malta: An Egyptair flight carrying 
Deople, including three Americans, 
. hijacked en route from Athens to 
ro and diverted to Malta by three 
ibic-speaking gunmen. When de- 
ids for refueling were not met, two 
teli women and three Americans 
e shot in the head with a small- 
er weapon. One Israeli and one 
erican died. An Egyptian commando 
stormed the plane using explosives 
nter a cargo hold. A fire and gun- 
-le ensued. In all, 59 passengers 
e killed. Three groups claimed 
lonsibility: Egypt's Revolution, the 
ptian Liberation Organization, and 
Arab Revolutionary Brigades (a.k.a. 
Abu Nidal group). 

ember 6 

San Juan, Puerto Rico: Two 

lentified assailants on a motorcycle 
. and wounded Maj. Michael Snyder, 
.S. Army recruiting officer, as he 
riding a moped to his office in San 
| A passerby was also wounded. 
Organization of Volunteers for the 
rto Rican Revolution claimed credit. 

Jber 28 

Santiago, Chile: Four people were 

nded as bombs exploded at the 



offices of two U.S. companies and a 
Chilean-Arab exporting firm. The first 
bomb exploded at the headquarters of 
International Telephone and Telegraph 
(ITT), wounding two Chilean security 
guards. Shortly afterward, an explosion 
damaged the offices of the United Trad- 
ing Company, a Chilean-Kuwaiti fruit 
exporter, and severely injured two em- 
ployees. The third bomb went off at the 
offices of Freeport Chilean Exploration, 
a New Orleans-based mining company 
and subsidiary of Freeport McMoran* 
Inc. of New York. Damage was 
extensive. 

October 23 

Concepcion, Chile: A bomb ex- 
ploded at the U.S.-Chilean Binational 
Center, causing extensive damage and 
one injury. The explosive detonated out- 
side the center's front door where it 
seriously wounded a young girl who 
happened to be passing by. The Manuel 
Rodriguez Patriotic Front claimed 
responsibility for the attack through an 
anonymous telephone call to a radio 
station. 

October 7 

Port Said, Egypt: Four gunmen 
seized the Italian cruise ship Achille 
Lauro off Port Said, Egypt, and took 
some 400 people on board hostage. 
Among the hostages, representing many 
different nationalities, were 12 Ameri- 
cans. The hijackers demanded the 
release of 50 Palestinians held in Israel. 
The hijackers killed Leon Klinghoffer, 
an elderly American confined to a 
wheelchair, and threw his body over- 
board. The ship returned to Egypt 
where the hijackers surrendered to PLO 
and Egyptian officials. Egypt released 
the hijackers. The U.S. Navy inter- 
cepted the hijackers' plane and forced it 
down in Italy where they were taken 
into custody. 

September 16 

Rome, Italy: Two Soviet-made Fl 
grenades were thrown into the Cafe de 
Paris, a popular tourist spot located 100 
yards from the U.S. Embassy. One 
grenade exploded and injured 40 people, 



among them several Britons and Ameri- 
cans. The Revolutionary Organization of 
Socialist Muslims (a.k.a. the Abu Nidal 
group) claimed credit. Police arrested a 
Lebanese-born Palestinian. 

September 9 

Madrid, Spain: A car bomb ex- 
ploded in central Madrid during a morn- 
ing rush hour and wounded 16 civil 
guards in a van and two passersby. One 
of the wounded, U.S. businessman 
Eugene Ken Brown of Johnson and 
Johnson, died 2 days later. Brown was 
hit in the chest and neck by shrapnel 
while jogging in the area. ETA, a 
Basque separatist group, claimed 
responsibility in telephone calls. 

September 3 

Cali, Colombia: A large bomb ex- 
ploded in the library of the U.S.- 
Colombian Binational Center (BNC) and 
three bombs were placed in front of the 
Coca-Cola bottling plant. Hours earlier, 
the U.S. Embassy had passed on to the 
American community advance warning 
that terrorist activity would be directed 
at U.S. interests in Colombia that even- 
ing. Two injuries and considerable 
damage were reported from the BNC 
explosion. Both the M-19 and the 
Ricardo Franco Front claimed responsi- 
bility for the bombings. 

August 8 

Frankfurt, West Germany: A car 

bomb exploded in a parking lot at the 
U.S. Rhein-Main Air Force Base, killing 
one U.S. airman and the wife of 
another. The 20 injured included 18 U.S. 
citizens. The bomb vehicle was a metal- 
lic green Volkswagen with forged U.S. 
Armed Forces license plates. The Red 
Army Faction (RAF) and Action Directe 
jointly claimed credit for the attack 
under the name of the "Commando 
George Jackson," an American member 
of the Black Panthers who was killed 
attempting to escape from a California 
prison in 1971. 

August 7 

Wiesbaden, West Germany: A U.S. 
serviceman, Edward Pimental, was shot, 



ust 1986 



13 






■ 



$ - , 




-*■***• 

'*.•**#> 



e 




August 1985. Investigators look for clues at Frankfurt's Rhein-Main Air Force Base after 
a car bomb exploded in the parking lot of the U.S. facility. 



killed, and robbed of his military I.D. 
card after leaving a nightclub in the 
company of a man and a woman just be- 
fore midnight. Police speculated that the 
stolen I.D. card might have been used 
by the Red Army Faction to gain entry 
to the U.S. Air Force base at Rhein- 
Main, where a car bomb exploded the 
day after the murder. On August 13, a 
copy of an RAF communique and the 
I.D. card were sent to a news agency. 

July 22 

Copenhagen, Denmark: Two bomb 
blasts wrecked the offices of Northwest 
Orient and damaged a Jewish synagogue 
and old people's home. At least 14 peo- 
ple were injured, but no deaths were 
reported. One bomb was thrown 
through the window of the airline office; 
it injured 10 people inside and one pas- 
serby. The other bomb exploded be- 
tween the synagogue and the old 
people's home, injuring three or four 
people. An anonymous caller in Beirut 



claimed credit for the Islamic Jihad, say- 
ing the bombings were in retaliation for 
an Israeli raid on the southern Lebanon 
town of Kabrikha the day before. 

July 19 

Santiago, Chile: A powerful car 
bomb exploded in front of the U.S. Con- 
sulate. A Chilean passerby was killed, 
and four other Chileans were injured. 
Two of the wounded were police guards 
posted at the consulate. Damage to the 
consulate consisted of broken windows. 
The Manuel Rodriguez Patriotic Front 
claimed credit. 

July 14 

Karachi, Pakistan: A bomb ex- 
ploded near the main entrance to the 
Pan Am office. A man was seen placing 
a bag on the stairs of the office, but a 
passerby moved the bag away before it 
exploded. The blast injured the passer- 
by and two others. No group claimed 
credit. On August 17, 1985, a Pakistani 



male who was described as strongly 
anti- American was arrested. He is be- 
lieved to have acted alone. 

July 1 

Andori, Colombia: Attackers, be- 
lieved to be with the leftist National 
Liberation Army, shot and severely 
wounded Douglas Brannen, a former 
Florida State senator, near Brannen's | 
gold mine north of Bogota. 

Madrid, Spain: Terrorists attacks 
a building shared by TWA and British 
Airways. A man ran into the British 
Airways ticket office below the TWA 
office and threw a box onto the counti 
The box exploded and gutted the offic 
The TWA office was also damaged. 0) 
Spanish woman was killed, and at leas 
28 people were wounded, among then- 
two American tourists. "The Organizs 
tion of the Oppressed" and the Revol 
tionary Organization of Socialist 
Muslims (a.k.a. the Abu Nidal group) 
claimed credit. 



14 



Department of State Bulhj 




FEATURE 
Terrorism 



me 23 

Air India Flight 182, flying from 
)ronto and Montreal to India, crashed 
sea off southwest Ireland, probably 
a result of a bomb blast. All 329 pas- 
ngers, including four Americans, were 
lied. A caller to The New York Times 
limed credit on behalf of a Sikh group, 
le crash appeared to be related to 
other incident the same day at 
ikyo's Narita Airport where a bag be- 
* transferred from a Canadian airline 
an Air India flight exploded and 
led two airport workers. 

ne 19 

San Salvador, El Salvador: Gunmen 
ot and killed 13 people, including four 
irine security guards and two U.S. 
sinessmen, at an outdoor cafe. The 
in marines were identified as Cpl. 
trick Kwiatkowski, Sgt. Bobby Dick- 
l, Cpl. Gregory Webber, and Sgt. 
omas Handwork. George Viney and 
■bert Alvidrez, two businessmen from 
mg Laboratories, were also killed, 
tnesses said a pickup truck stopped 
the curb, and 6-10 men dressed in 
litary-type uniforms and armed with 
:omatic weapons jumped out and fired 
cafe patrons. The gunmen seemed to 
gle out the Marines, who were in 
ilian dress. The Revolutionary Party 
Central American Workers claimed 
[dit. 

ne 13 

Beirut, Lebanon: TWA Flight 847 
m Athens to Beirut was hijacked 
h 153 passengers on board. Two 
Danese hijackers took the plane from 
rut to Algiers, back to Beirut, to 
;iers again, and finally back to Beirut. 
;y demanded the release of 700 
janese Shi'ites held in Israel. During 

second stop in Beirut, the hijackers 
ted passenger Robert Stethem, a U.S. 
ty diver, and a number of Americans 
•e taken off the plane when about 12 
>anese Amal members boarded. Pas- 
gers were released until 39 American 
l remained. All but the three crew 
libers were taken from the plane on 
e 17 and held by Amal and Hizballah 
13 days until Syria obtained their 
:ase. Beirut Radio has identified the 

original hijackers and has an- 
nced that they will be prosecuted. 



May 15 

Lima, Peru: Simultaneous bombings 
occurred at a number of targets in the 
city, including the residence of the U.S. 
Ambassador, where an explosive device, 
which was thrown over a wall, deto- 
nated near the swimming pool. The 
blast broke windows in the residence, 
which was occupied by the Ambassador 
at the time, but there were no casual- 
ties. Police blamed Sendero Luminoso 
for the attacks, which came on the eve 
of the fifth anniversary of their war 
with the Peruvian Government. 

April 12 

Madrid, Spain: A bomb exploded in 
the El Descanso restaurant, which is 
frequented by U.S. military personnel 
from a nearby airbase. Eighteen 
Spaniards were killed, and 15 Americans 
were wounded. The blast was caused by 
a 12-pound homemade bomb. Several 
groups claimed responsibility, including 
the Islamic Jihad organization. 

April 9 

Santiago, Chile: Two explosive 
devices were almost simultaneously 
detonated in a small pedestrian shop- 
ping arcade where six banks, a few 
restaurants, and several businesses 
were located. The blasts caused only 
minor damages but wounded eight pa- 
trons of a restaurant and passersby. The 
Chase Manhattan Bank and the First 
National City Bank have branch offices 
at this location. On this same night, five 
other bombs exploded in four other 
cities in Chile. The targets included the 
U.S. Bank Moran Finance in La Serna, 
a supermarket, a tourist office, and a 
telephone booth. 

February 21 

Barranquilla, Colombia: A bomb 
exploded outside the Binational Center, 
killing the night watchman and causing 
extensive damage to the administrative 
offices. The bomb apparently was placed 
against a side wall of the center, just 
minutes before the explosion, by two 
men on a white motorcycle. The explo- 
sive, believed to have been dynamite in 
a metal container, blew a large hole in 
the exterior wall adjacent to the office 
of the center's director. The watchman 
was some distance from the blast and 
was killed by shrapnel. The explosion 
also broke windows in the surrounding 
neighborhood. 



February 7 

Medellin, Colombia: Terrorists 
simultaneously bombed seven establish- 
ments, most of which were U.S. firms. 
One policeman was killed, and another 
was wounded. Explosions occurred at or 
near the offices of Union Carbide, 
Xerox, IBM, GTE, Tradition Family and 
Property, and a Hare Krishna temple. 
Extensive damage was reported at some 
of the establishments. The Che Guevara 
Faction of the National Liberation 
Army and the Ricardo Franco Front, a 
dissident group of the Revolutionary 
Armed Forces of Colombia, claimed 
responsibility for the multiple bombings. 

Guadalajara, Mexico: Enrique 
Camarena Salazar, a DEA agent work- 
ing in Mexico, was abducted by four 
gunmen just after leaving the U.S. Con- 
sulate. He was brutally killed, and his 
body was found a few weeks later. 
Three hours after Salazar's abduction, 
Alfredo Zavala Avelar, a Mexican pilot 
for the DEA, was also kidnaped and 
later killed. Among those arrested were 
two major Mexican drug traffickers, 
Rafael Caro Quintero and Ernesto 
Fonseca. 

February 2 

Glyfada, Greece: A bomb exploded 
in a nightclub frequented by U.S. mili- 
tary personnel. Sixty-nine Americans 
were injured. A group called the "Na- 
tional Front" claimed the bombing was 
in protest of U.S. support for Turkey 
over the Cyprus issue. 

January 30 

Guadalajara, Mexico: American 
John Walker and Cuban companion 
Alberto Radelat disappeared after being 
seen at a Guadalajara restaurant fre- 
quented by members of Mexico's drug 
underworld. On June 19, police found 
their bodies in a well north of the city. 
The bodies were wrapped in tablecloths 
and carpeting and riddled with bullets. 
Before the bodies were found, two drug 
kingpins, Rafael Caro Quintero and Er- 
nesto Fonseca were arraigned based on 
the testimony of a witness. Both have 
admitted killing Walker and Radelat, 
whom they may have mistaken for DEA 
agents. ■ 



just 1986 



15 



International Terrorism: 

The Taking of U.S. Citizens Hostage 



U.S. Government Policy 

The policy of the U.S. Government 
toward terrorists holding official or pri- 
vate U.S. citizens hostage [Hostage- 
taking is defined under international law 
(International Convention Against the 
Taking of Hostages, adopted Decem- 
ber 17, 1979) as the seizing or detaining 
and threatening to kill, to injure, or to 
continue to detain a person in order to 
compel a third party to do or abstain 
from doing any act as an explicit or im- 
plicit condition for the release of the 
seized or detained person.] is as follows: 
The U.S. Government will make no con- 
cessions to terrorists. It will not pay 
ransoms, release prisoners, change its 
policies, or agree to other acts that 
might encourage additional terrorism. 
At the same time, the United States 
will use every available resource to gain 
the safe return of American citizens who 
are held hostage by terrorists. 

Basic Premises 

It is internationally accepted that 
governments are responsible for the 
safety and welfare of persons within the 
borders of their nations. Being fully cog- 
nizant of both the terrorist threat and 
public security shortcomings in many 
parts of the world, we have developed 
enhanced physical and personal security 
programs for U.S. personnel and estab- 
lished cooperative arrangements with 
the U.S. private sector. We have also 
developed bilateral counterterrorism as- 
sistance programs and close intelligence 
and law enforcement relationships with 
many nations, in order to increase the 
possibilities that terrorist incidents will 
be prevented or competently handled 
and resolved in a manner that will deny 
the perpetrators benefits from their ac- 
tions. The U.S. Government also seeks 
effective judicial prosecution and punish- 
ment for terrorists and criminals and is 
willing to employ all legal methods to 
accomplish these ends, including possible 
extradition, when the United States or 
its citizens have been victims. Our pol- 
icy and the goals we seek are clear, and 
the U.S. Government is becoming even 
more active in pursuing them alone and 
in cooperation with other governments. 



U.S. Government Responsibilities 
When Private U.S. Citizens are 
Taken Hostage 

Based upon a careful study of past ex- 
perience, the U.S. Government has con- 
cluded that payment of ransom or other 
concessions to terrorists in exchange for 
the release of hostages increases the 
danger that others will be taken 
hostage. The policy of the U.S. Govern- 
ment is, therefore, to reject categor- 
ically demands for ransom, prisoner 
exchanges, and deals with terrorists in 
exchange for hostage release. At the 
same time, the U.S. Government will 
make every effort, including contact 
with representatives of the captors, in 
an effort to bring about the release of 
the hostages without paying ransom, 
exchanging prisoners, et cetera. 

For the same reason, the U.S. 
Government strongly urges U.S. compa- 
nies and private citizens not to pay ter- 
rorist ransom demands. We believe good 
security practices, relatively modest 
security expenditures, and close cooper- 
ation, in advance, with embassy and 
local authorities can lower the risk to 
Americans living in high threat 
environments. 

The U.S. Government is concerned 
for the welfare of its citizens, but it 
cannot support requests that host 
governments violate their own laws or 
abdicate their normal law enforcement 
responsibilities. 

On the other hand, if the employing 
organization or company is working 
closely with local authorities and is fol- 
lowing U.S. policies, U.S. Foreign Serv- 
ice posts can be actively involved in 
trying to bring the incident to a safe 
conclusion. This includes providing 
reasonable administrative services and, 
if desired by the local authorities and 
the American organization, full partici- 
pation in strategy sessions. Requests for 
U.S. Government technical assistance or 



expertise will be considered on a case- 
by-case basis. The full extent of U.S. 
Government participation must, of 
necessity, await an analysis of each 
specific set of circumstances. 

When the goal of a U.S. private 
organization or company is to gain 
release by paying ransom, or pressuring 
the host government for political conces 
sions, U.S. Foreign Service posts will b 
limited in their participation to initial 
administrative services such as assisting 
in making contacts with host govern- 
ment officials. 

The host government and the U.S. 
private organization or citizen must 
understand that if they wish to follow i 
hostage resolution path different from 
that of the U.S. Government policy, 
they do so without U.S. Government a] 
proval or cooperation. The U.S. Goverr 
ment cannot participate in the 
development and implementation of a 
ransom strategy. However, U.S. For- 
eign Service posts may maintain a dis- 
creet contact with the parties to keep 
abreast of developments. 

Legal Caution 

Under current U.S. law, 18 USC 1203, 
(Act for the Prevention and Punishmen 
of the Crime of Hostage-Taking, enact« 
October 1984 in implementation of the 
United Nations convention on hostage- 
taking), seizure of a U.S. national as a. 
hostage anywhere in the world is a 
crime, as is any hostage-taking action il 
which the U.S. Government is a targetj 
of the hostage-taker's demands or in 
which the hostage-taker is a U.S. 
national. Such acts are, therefore, sub- 
ject to investigation by the Federal 
Bureau of Investigation and prosecutic 
by U.S. authorities. Actions by private 
persons or entities which have the effe 
of aiding and abetting the hostage- 
taking, concealing knowledge of it fror 
the authorities or obstructing its inves 
gation, may themselves be in violation 
of U.S. law. 



Press release 101 of May 6, 1986. 



16 



Department of State Bullei 



HE PRESIDENT 



lews Conference of June 11 
Excerpts) 



Excerpts from President Reagan 's 
ws conference of June ll. 1 



Finally, there is the upcoming vote 

aid to the Nicaraguan freedom fight- 
6. Congress must understand the ur- 
ficy of the situation in Central 
nerica. Delay is deadly and plays 
l ht along with the communist game 
in. Because while we may have tied 
t own hands, the Soviets, Cubans, and 
Dyans haven't tied theirs. With over 
billion of support and some of the 
ist fearsome weapons in the Soviet ar- 
lal, the communist strategy is simple: 
d off American aid as long as possible 
the hope they can destroy all opposi- 
i before help arrives. 

It's time for an up-and-down vote on 
sdom in Nicaragua, an up-or-down 
e on whether the United States is 
ng to stop Soviet expansionism on 

American mainland while the price 
ktill not too high and the risks are 
1 not too great. We must act now in 
ipartisan way to do the right thing: 
"escue freedom in Nicaragua and pro- 
t the national security of the United 
tes. 

Q. Your decision to tear up the 
LT [strategic arms limitation talks] 
^ty by the end of the year has 
sed great consternation among the 
es, among Members of Congress on 
h sides of the aisle, among others 

fear that you are creating a more 
gerous world. My question is: Is 

decision irrevocable? And I'd like 
followup. 

A. I have to say that I can under- 
ld why they would be distressed 
b the way the news has been carried, 
let me go back to what the situa- 
i really is. 

First of all, this treaty, which was 
led 7 years ago, was never ratified— 
I, it was more than 7 years ago, I 
ss. But for 7 years there is supposed 
lave been this restraint or observ- 
3 of the treaty's terms. And for 
iars this country has been doing 
;. The Soviet regime, for 7 years, has 
n violating the restraints of the 

We found it necessary to— or advisa- 
to do away with two Poseidon sub- 
lines as we launched the last Trident, 
that, I had to make plain, while it 
keep us within the constraints of the 



SALT agreement, that wasn't the rea- 
son. Had there been no SALT agree- 
ment, we would have done away with 
those two submarines because— or dis- 
mantled them because of the cost and 
the military value of them, or lack of it. 

But then what I said was that be- 
fore we reached another point where 
this might be an issue at all, several 
months away, which has to do with the 
arming of the 131st B-52 with a new 
air-launch cruise missile; and in the in- 
terim period I said that we could not go 
on unilaterally observing the constraints 
while the Soviet Union violated them 
and gained even greater superiority 
over us; and that we were going to be 
bound from now on by the necessity of 
maintaining a deterrent. We're not seek- 
ing to achieve superiority over them, 
but we're certainly not going to let 
them go on increasing their superiority 
over us. But I said— because we have 
these several months before that mo- 
ment comes up— that we were going to 
do our utmost— since they themselves 
have talked of arms reductions— that we 
were going to do our utmost to see if 
we couldn't involve them in replacing 
this SALT treaty, which, first of all, 
was never ratified, as I said, but, second 
of all, would no longer be in power if it 
had been ratified, because it was stated 
for a limited period of time— that, if we 
could replace that with a realistic pro- 
gram of arms reduction, which has been 
my goal ever since I've been here. Now 
we have the first Soviet leader, to my 
knowledge, that has ever voluntarily 
spoken of reducing nuclear weapons. 
And we want to followup on that. 

Q. It sounds like you are going to 
tear it up, Mr. President. Do you 
agree with Richard Perle [Assistant 
Secretary of Defense for International 
Security Policy], who branded as 
Soviet supporters Members of Con- 
gress who want to keep you within the 
limits of this treaty? 

A. I'm not going to make any com- 
ment on anyone who wants to keep this. 
But I did find it rather strange that 
some of the Senators who spoke very 
criticallly of me, without really under- 
standing what it is that I've tried to ex- 
plain about this— some of them were 
Members of the Senate when they re- 
fused to ratify the treaty to begin with. 



The treaty was really nothing but 
the legitimizing of an arms race. It 
didn't do anything to reduce nuclear 
weapons or the nuclear threat. All it did 
was regulate how fast and how much we 
could continue increasing the number of 
weapons. So, I was always hostile to 
that particular treaty because it did not 
reduce weapons, and that's what we're 
going to do. But again, as I say, the 
Soviets have an opportunity to meet us 
now with regard to some of the very 
things they've been proposing— arms 
reduction. And we will observe the con- 
straints to the same extent that the 
Soviet Union does. But we can't go on 
unilaterally observing this while they 
take off on their own with the violations 
that they've already made, and probably 
more to come. 



Q. I have a two-part question. 
You've left no doubt, through your 
public statements, of your determina- 
tion not to permit Nicaragua to be- 
come another communist Cuba or a 
Libya. What means are left to the 
United States if the contras are de- 
feated by any means whatever? Is a 
naval quarantine possible? 

A. I couldn't and wouldn't comment 
on anything that might be further ac- 
tions for us, because I don't think you 
could do that without informing them of 
anything we're thinking. And right now 
we have not planned for any contingen- 
cy beyond aiding the contras, because 
we think that— I've got to stop using 
that word. That was the Sandinistas 
title for them, and I don't like to do 
anything they're doing. So, the freedom 
fighters, we believe, with all the infor- 
mation that we have, that they are 
capable of, at the very least, applying 
sufficient leverage that they could bring 
the Sandinista government to a 
negotiating table for a settlement. We 
would prefer that over a military settle- 
ment, if that can be done. 

We know that there are thousands 
of recruits that are waiting to join the 
freedom fighers, and they need the 
weapons and ammunition and so forth 
for them. 

Q. And the other part of the ques- 
tion is: This week in a speech you 
likened Mr. Gorbachev to Castro, 
Arafat, and Qadhafi. And I'd like to 
ask what effect you think this state- 
ment would have on future relations 
with the Soviet Union and a possible 
summit. I'm talking about the George- 
town speech, [address before the 



]ust 1986 



17 



THE PRESIDENT 



Center for Strategic and International 
Studies on June 9. 1986]. 

A. Yes, but I didn't think I lumped 
him in with them. 

Q. It was in the speech. 

A. I certainly— then it was a bad 
choice of words, because I didn't mean 
to do that. As I've said, he is the first 
Russian leader, to my knowledge, that 
has ever voiced the idea of reducing, 
and even eliminating, nuclear weapons. 
So, I must have goofed some place, be- 
cause, believe me, I don't put him in the 
same category. 

Q. If I could pursue the questions 
on your decision on the SALT treaty: 
On one hand, you're saying that the 
Soviets have continued to increase 
their superiority over us. On the other 
hand, you said that the treaty did not 
constrain either side in terms of the 
arms race and was one of the reasons 
you were not for it. It really can't be 
both ways. 

At the same time, we've had a 
massive defense buildup, the Reagan 
defense buildup. Which way is it? 
Have the Soviets been able to increase 
superiority over this period of time, or 
has the treaty not been able to stop 
them? 

A. No, it hasn't been able to. The 
treaty actually set limits, as for exam- 
ple, that you could only have one new 
type of weapon now that you could de- 
velop that didn't exist. And they have 
developed two instead of one. And this 
was a violation. It also set numbers and 
figures so that it was a restraint to the 
extent of just not an all-out arms race 
with no limit on the way you cojuld 
progress. 

But when you say about achieving, 
remember, we're still playing catchup. 
They were building when we were dis- 
mantling. And we feel that, as I've said 
before, there's no way that we can allow 
them to reach for and get a superiority. 
And we don't want a superiority over 
them. But also we simply want to main- 
tain enough of a deterrent that even 
with whatever superiority they have it 
won't be enough for them to take the 
chance on the followup action that could 
happen. 

Q. If I could just follow that up: 
At the same time, your own arms con- 
trol director, Mr. [Kenneth] Adelman, 
has said that the Soviet violations 
have not had any great military sig- 
nificance. What is the possibility, 
since the violations themselves— which 



have been disputed by some as to their 
significance— what is the possibility 
that by abandoning the treaty now, 
which is, as you just admitted, has 
some limited significance in providing 
some degree of predictability, that we 
won't go into a complete arms race 
now? What's to replace SALT at this 
point? And why make this decision 
now? 

A. Didn't make it now. I said we've 
got several months here in which we're 
going to try to involve them in the 
things they, themselves, have been talk- 
ing about— and that is a definite arms 
reduction program. This is the only 
thing that makes sense in the world, 
and I've been talking about this since 
1980. And I said I was sick and tired of 
agreements that just said, "Well, we'll 
only go at this pace in our increasing 
the number of weapons." Let's get 
around to getting rid of them as much 
as we can. 

Q. You've just said that you really 
haven't made the SALT decision yet. 
And I think there's a lot of confusion 
as to exactly where we stand on the 
SALT decision. Are you going to go 
over the limits of the SALT decision, 
or are you going to dismantle another 
submarine and stay within the limits? 
Exactly what are you going to do on 
SALT? 

A. You're asking something— yes, we 
will have a plane coming up to be armed 
with a cruise missile that would put us, 
to that extent, beyond the constraints of 
the limitation. Now, we've got several 
months before we reach that point. 
We've got several months in which to 
see if the Soviet Union-we have taxed 
them over and over again with regard 
to their violating the constraints. Now, 
on that basis we're going to see if we 
cannot persuade them to join in the 
things they're talking about: arms 
reduction. And if nothing is done, then 
we'll make the decision with regard to 
that plane. 

Q. There are reports that today in 
Geneva the Soviets made a new 
proposal on reducing long-range stra- 
tegic missiles. Is this the kind of 
proposal you've been looking for, and 
has it changed your opinion of what 
you're going to do on SALT? 

A. I can't comment on it because of 
the confidentiality of the situation there 
in Geneva. But, yes, as of today we 
have received this proposal. And now 



we're going to study that and see what! 
they have in it. 

Q. Immediately after the U.S. at- 
tack on Libya, you were particularly 
grateful to Prime Minister Thatcher 
for her help in allowing the United 
States to let airplanes take off from 
the United Kingdom. Since then 
American tourists have been staying 
away from England and Europe in 
droves, and Mrs. Thatcher has made a 
personal plea for Americans and their i 
dollars to come back to the continent. 
Do you think that it's safe in Europe 
for Americans to return? And will youi 
tell Americans whether they ought to 
go overseas this summmer? 

A. You've asked me a very tough I 
one in my position with what we know 
about the dangers throughout the worll 
I certainly don't want to be quoted as J 
advocating a tourist rush in the face of 1 
the world the way it is. I'm going to bfl 
rather bold and just tell you that our 
Ambassador has recently had a little 
talk, or something, that was carried in 
the Los Angeles Times. And it was to H 
the effect that he belived that London 
was probably one of the safest cities iia 
the world and that he saw no reason ft* 
anyone to be fearful of that. Well, I 
have not argued with him on his makinil 
that point. 

Q. We also read about the extraor 
dinary security precautions that are 
going to be taken for the Statue of 
Liberty festivities July 4th. Are you 
concerned that perhaps that's a prett;i 
delectable domestic target? 

A. Yes. But I also have a great dea 
of confidence in our security people. 
And I can see where they would thinks 
that that would be a very inviting tar- j 
get for those who hate us in the ter- 
rorist ranks and think that they might 
be able to embarrass us that way. 

Q. The Warsaw Pact is said to be 
offering to withdraw a million of thel 
troops that face us in the West. For | 
those of us with families in Europe I 
that sounds like a lot. I know that 
you always like to deal with these 
offers in the confidentiality of Gene- 1 
va. But isn't it perhaps time, bearingl 
in mind that nothing seems to have I 
come out of Geneva for over a year, I 
go with an offer like this, run with i 
and see what happens? 

A. You mean the offer that has jusj 
been given in Geneva? 



18 



Department of State Bulle 



THE SECRETARY 



Q. Correct. 

A. As I say, there have been offers, 
i we have made counteroffers; much 
the same thing and with pretty much 
i same end result as to numbers of 
apons. And where the difficulties 
m to come in is the Soviet Union and 
United States have somewhat differ- 
mixes of weapons that we believe 
essential to— well, for theirs, we he- 
re theirs is based more of an offen- 
e nature. We believe ours is based 
re on a deterrent idea. And so, some- 
es we run into difficulties then in 
onciling some of the means of getting 
;he same number of warheads being 
ninated. 

This has kept us from having an 
eement so far. Now this last agree- 
nt has come in, and we don't yet 
iw until we see it carefully— is it a 
ponse to one of our counteroffers? 
js it in some way change some of 
ir proposals and bring us closer to a 
•otiated position? And this is what we 
it more than anything. So, you can 
iend on it that we're going to make 
ry effort. But it must be fair and 
inced. It must not be an agreement 
vhich one side is trying to maintain 
ncrease an advantage over the other. 

Q. Doesn't this make it all the 
re important to see Mr. Gorbachev 
soon as possible this year? 

A. That's what I'd like. In fact, 
re waiting to hear when this can 
1 place. We suggested a date, and 
lently it was too early for them. 
y didn't suggest, but they spoke 
licly about a possible date, and that 

wrong for us because of the coming 
tical campaign. But we still, and I 
, believe that he wants a summit 

I want a summit, and I believe it's 
ig to take place. 

Q. The Pollard spy case has 
:ipitated some confusion within 
r Administration over the matter 
low much Israeli spying there is in 

country and if it goes beyond the 
lards. The Justice Department offi- 
s are telling us that it goes beyond 
Pollards, and they're continuing 
r investigation. The State Depart- 
it officials have told us that there's 
nore Israeli spying here, and 
''re satisfied, and they seem to 
it to put an end to it. I wonder if 

could clear up this confusion. 
\.. The only thing I know is that the 
eli Government has assured us, as 
h as they can, that they have never 
any program of trying to get intelli- 



gence information from our country or 
doing any spying on us. And so far, as I 
say, the Justice Department has said 
they will look to see if there is anything 
that they can find out. But so far 
there's been no evidence presented to 
us from anyone. 

Q. What if they do come up with 
some evidence? What would you do? 

A. I think we'll have to deal with 
that then and find out whether it's a 
su.-prise to the Israeli Government, 
whether someone was off playing their 
own game or not. 

Q. Federal Reserve Chairman 
[Paul] Volcker made an unannounced 
trip to Mexico this week to discuss 
that country's financial problems. Are 
you worried that Mexico might 



unilaterally default on payments or 
totally default on its foreign debt? 

A. I think this is a possibility with 
not only Mexico but a number of other 
countries that are having these debt 
problems— and based on the high in- 
terest rates of the past before we 
reduced inflation. And obviously, we'd 
like to be of help to them within the 
framework of the agreements that were 
reached in Korea by Secretary [of the 
Treasury James A.] Baker. And we 
want to be of help as much as we can. 
Mexico is a next-door neighbor; our for- 
tunes are linked on many fronts. And 
so, we want to be of as much help as we 
can. And that was the reason for his 
trip. 



1 Text from Weekly Compilation of 
Presidential Document's of June 16, 1986.1 



No Delay for Democracy 

Secretary Shultz's address before the 
National Foreign Policy Conference for 
Young Political Leaders on June 13, 
1986. 1 



I appreciate the chance to talk to you, 
and I appreciate the fact that you are 
here listening to us, and let me assure 
you that we listen to you. So with that, 
let me launch into the things that I 
have to say, and I'm going to talk about 
Central America— a matter of great 
concern to us here and, I think, of 
importance and concern throughout our 
country. 

Throughout its history the United 
States has been blessed with a society 
remarkable for its freedoms and its 
openness. Our liberty has given us a 
unique approach to the woiid: outgoing, 
optimistic, self-confident. As young 
political leaders, you have a special 
interest in preserving this legacy. 

Our unique geographic position- 
bordered as we are by vast protective 
oceans to the east and west and friendly 
neighbors on the north and south— is 
essential to our world. We now seek to 
secure our way of life with forward 
defenses and far-flung alliances based on 
the confidence that our immediate 
frontiers are secure and that our 
freedoms can flourish behind them. 

But we are taking our secure 
frontiers for granted. 

We must remember that our south- 
ern flank, the Caribbean, has been— and 
is— an area of vulnerability. During the 
Second World War, U-boats took a 



heavy toll of our shipping in the region. 
In 1962, the world came close to nuclear 
holocaust when the Soviet Union 
attempted to install missiles in Cuba. 
Today, the Soviets have a combat 
brigade in Cuba and use the island as a 
base for conducting intelligence patrols 
along our eastern coast and in the 
Caribbean. 

The presence of hostile submarine 
bases, extensive airfields, and Soviet 
aircraft vastly complicates our defense 
planning. Cuba's attempts to launch 
revolutions throughout the hemisphere, 
and its sending of tens of thousands of 
its troops into Africa, have made this 
small communist state a threat to 
democracy everywhere. So we cannot 
view with indifference Moscow's 
attempt— using Cuban, East European, 
Libyan, and North Korean surrogates. 
among others— to establish itself in 
a similar fashion on the American 
mainland. 

The other side of this concern is our 
great interest for its own sake in the 
political, social, and economic 
development of our democratic neigh- 
bors to the south— not just because their 
development is consistent with U.S. 
values but also because our national 
security is intimately linked to their 
security. 



lust 1986 



19 



THE SECRETARY 



Most of Central America is now 
emerging from a long and dismal period 
of government by dictatorship. During 
the last 6 years, El Salvador, Guate- 
mala, and Honduras have joined Costa 
Rica in establishing truly democratic 
governments. The elected presidents of 
these four Central American democ- 
racies share common ideals based on 
their dedication to freedom. They each 
have a mandate from their people to 
bring about economic and social justice. 
These leaders are scheduled to serve 
together through the completion of 
President Duarte's term in May 1989. 
U.S. policy explicitly and firmly 
supports them and their cooperative 
efforts to create a better life for their 
people. That support is the cornerstone 
of our policy for Central America. 

One of the first challenges to our 
goals for Central America is to restore 
economic vitality to the region. The 
early 1980s saw a heavy strain on the 
economies of Central America. Today, 
there are important signs of hope. 
They're getting a few good breaks: 
interest rates have come down, and the 
price of oil has come down. And the 
price of coffee, a principal export, has 
risen in price. There are renewed 
stirrings of the regional commerce that 
was an engine for strong growth during 
the 1960s. 



Nicaragua: Obstacle to 
Progress in Central America 

But there is one major obstacle to 
progress in Central America. It is the 
same obstacle which gives us pause as 
we assess our own national interests in 
the region. It is Nicaragua, a Marxist- 
Leninist odd man out, a spoiler of the 
dream of democracy and of regional 
cooperation. 

Since 1979, when the comandantes 
took power from the Somoza regime, 
Nicaragua has armed itself to the teeth 
with Soviet assistance. It has served as 
the headquarters, communications 
center, and logistical base for communist 
guerrillas in El Salvador. And it has 
supported terrorist plots against its 
other neighbors. 

The Nicaraguan revolution did not 
have to turn out this way. After the fall 
of Somoza, the United States and 
Nicaragua's neighbors quickly extended 
diplomatic recognition to the broadly 
based revolutionary government in 
Managua. We in the United States 
provided $118 million in economic 
assistance during the first year and a 
half after the revolution. I might say 
that was the highest per capita rate of 
economic assistance going anywhere at 
that time. What was the response of 
the comandantes'! They drove their 



/ am confident that no one in this country will 
support a policy which, wittingly or unwittingly, 
crushes the hopes of an entire nation for freedom 
and democracy. 



The United States has been able to 
lay the foundation for regional economic 
growth through the Caribbean Basin 
Initiative and President Reagan's 
response to the recommendations of the 
National Bipartisan Commission [on 
Central America]— the so-called 
Kissinger report. Despite our extreme 
budget stringencies, we hope to sustain 
economic assistance to the region at the 
level of about a billion dollars— an 
amount nearly four times greater than 
our military assistance. In other words, 
that's where our priorities are. The goal 
of long-term, real per capita growth in 
the region now seems within reach. 



partners in the revolution from the 
government; and they moved to 
consolidate their power by trying to 
crush the church, the independent labor 
unions, and the private business sector. 
In early 1980— within months of taking 
power— the Nicaraguan communists 
concluded their first pacts with Cuba 
and the Soviet Union. By 1981, Soviet 
military supplies and thousands of 
E astern-bloc advisers— so-called— were 
moving into the country. 

Soviet-bloc military assistance totals 
over $500 million since 1980. Some 
8,000-10,000 foreign communists now 
play key roles in all aspects of Nicara- 
guan life. Nicaraguans themselves have 
fled their country by the hundreds of 



thousands, and some 20,000 have taken 
up arms in a desperate struggle to 
regain their revolution. 

A stable solution to the threat of 
Nicaragua lies in a process of national 
reconciliation— both within Nicaragua 
and through a regional peace process 
with its neighbors. In 1979, Nicaraguan 
revolutionaries pledged to the 
Organization of American States their 
support for political pluralism and 
regional peace. In September 1983 the 
Nicaraguan Government joined with all 
the other Contadora countries in 
support of 21 objectives designed to 
bring peace to the region. The political 
and economic inducements for the 
comandantes to implement such a polic; 
were there from the beginning; but the; 
have spurned every effort to reconcile 
the real differences with their neighbor 
and with their own people. 

President Duarte, with the support 
of the Central American democracies, is 
engaged in an effort toward recon- 
ciliation with the opposition to his 
elected government. Why cannot the 
comandantes do likewise? In Nicaragua. 
as in El Salvador, those in power shouli 
be seeking a reconciliation with all 
elements of society through a peaceful 
political process. But once again we sea 
that Marxist-Leninists cannot afford 
democratization. Their policies of 
repression and mismanagement at homi 
and conflicts with their neighbors make 
them poor prospects for success in free* 
elections. 

If the inducements we offered 
Managua in the early 1980s failed to 
encourage domestic democracy and 
regional peace, how then is a compre- 
hensive regional settlement to be 
achieved? We can only conclude that 
unrelenting pressure is required if the 
Nicaraguan communists are to make tto 
fundamental changes required for suchl 
settlement. 

Such pressure must come from man| 
directions: popular dissatisfaction with 
the regime's dismal economic perform- 
ance; growing alienation of the 
revolution's foreign friends; the 
consolidation of democracy elsewhere in 
Central America; and an internal 
political opposition that refuses to be 1 
silenced. 

Serious economic dislocations- 
growing primarily from the communistsi 
mismanagement of the economy and 
reinforced by the U.S. economic 
embargo— are bringing about a dramatij 
reduction in the gross national product | 
of Nicaragua. Food and other staples 
are vanishing from Nicaragua's 



20 



Department of State Bulleti 



THE SECRETARY 



arketplace. Even in the worst years 
1 the Somoza tyranny, Nicaraguans 
d not have to wait in line for rice, 
;ans, or oil. 

The people of Nicaragua don't blame 
e United States for these shortages, 
ley correctly blame their own govern- 
ent for destroying the nation's ability 

produce basic foodstuffs— commodities 
at in years past never had to be 
iported. 

Internationally, Nicaragua's noncom- 
unist supporters are showing increas- 
% concern about the character of the 
vemment in Managua. The foreign 
litical support and economic assistance 

which Nicaragua increasingly 
pends are declining. 

The people of Nicaragua look 
sewhere in their region and see 
;edom and its benefits continuing in 
ista Rica and taking hold in El 
lvador, Guatemala, and Honduras, 
ley ask themselves, why are we being 
t behind? Rather than enjoying the 
;edom they struggled for in 1979, the 
ople of Nicaragua face the pervasive 
d ever-tightening repression of a 
nmunist dictatorship. They now see 
it their revolution was stolen from 
im by political opportunists; and they 
i straggling to regain their fading 
pes. They remember that in 1979 the 
ernational community, including the 
lited States, supported their straggle 
■ freedom. But who supports them 
w, in their time of greatest need? 

e Nicaraguan Opposition 

spite the efforts of the coman- 
ntes to suppress their opposition, 
lependent organizations still survive 
Nicaragua. The church, labor unions, 
lians, and the private sector continue 
straggle for rights they are denied, 
though the press is censored, critical 
ces continue to be heard. Political 
"ties carry on their work amidst ever- 
htening restrictions on the freedom to 
:anize. And Cardinal Obando y Bravo 
:heered by his flock— yet, his words 
i silenced. 

The Nicaraguan communists prob- 
y could use their power to crash 
ernal opposition once and for all, but 
y have not yet taken that final step. 

Why? It is because communist 
iression has created another 
rosition— the armed resistance of 
000 Nicaraguans. And as long as the 
il war continues, the Nicaraguan 
nmunists need to keep some internal 
wsition alive— just barely alive— as a 
nonstration to the world that 



Nicaragua is not a totally closed society. 
Were it not for the freedom fighters, 
the brave Nicaraguans who voice 
internal dissent would serve no purpose 
for the comandantes. 

And what of these 20,000 freedom 
fighters? Who are they? The freedom 
fighters in Nicaragua today are young 
people who were barely teenagers when 
Somoza was overthrown. The majority 
of the military leaders either had no 
prior military service before entering 
the resistance or were drafted to serve 
with the Nicaraguan communists and 
then left them. Their ranks have swelled 
during the past 2 years, even while the 
United States has been prohibited from 
providing them with military assistance. 



the Administration has been urging 
authorization of $70 million in military 
aid and $30 million in humanitarian aid 
to these fighters for democracy. 

Gradually, I believe, Congress and 
the American people are coming to 
realize that we face a grave threat in 
Central America— a threat to our 
strategic interests and to the cause of 
democracy. 

Supporting Democracy in Nicaragua 

We all know the divisions in our 
domestic debate on the seriousness of 
this threat. But there is one overriding 
goal about which I firmly believe there 
is no division in the Congress or in the 



There are lots of problems around the world and 
as a world power, we're engaged in them. But we 
better pay attention to our neighbors . . . 



The top leadership of the movement 
through which we channel all U.S. 
assistance to the freedom fighters is 
comprised of three civilians— each of 
whom distinguished himself in the 
resistance to Somoza. One by one, they 
left the Nicaragua of the communists to 
resume their struggle for democratic 
government. 

The numbers of their troops— despite 
their growth over the last 2 years— are 
no match for the Soviet-armed and 
-equipped Army of Nicaragua. This 
army of some 60,000— with an additional 
60,000 reservists who engage in active 
combat— is far larger than any other 
military force in Central America; but it 
is not able to contain the freedom 
fighters on its own. The Soviets supply 
the Nicaraguan communists with 
advanced attack helicopters. They ship 
military supplies directly to Nicaraguan 
ports. Cubans fly the attack helicopters. 
East Germans train the internal 
security forces. And we have confirmed 
that a Soviet AN-30 intelligence aircraft 
has been flying reconnaissance in 
Nicaragua since May of this year. 

The freedom fighters need our help 
to confront the Nicaraguan communist 
troops equipped with these Soviet arms, 
training, and advice. We have seen in El 
Salvador that, with proper leadership, 
training, and American equipment, 
democratic forces can prevail. Therefore, 



minds of the American people. That is 
the goal of supporting democracy— is 
anybody here against that?— in 
Nicaragua and in all of Central America. 
I don't believe there is a single Member 
of Congress who wants to see the 
communists consolidate their tyranny 
over the people of Nicaragua— does 
anybody here want that? Nor is there a 
single Member of Congress who wants 
to turn a deaf ear to the pleas of the 
Nicaraguan church, to the appeals of 
Nicaragua's democratic political 
opposition, to the campesinos— or 
even to the fighters of the democratic 
resistance. 

Their struggle is, after all, our 
struggle. What the Nicaraguans want is 
only what we in the United States have 
always cherished: freedom— the freedom 
to vote, to think, to speak out, to 
worship as one chooses, without the 
threat of intimidation, or torture, or 
death. That is what the people of 
Nicaragua fought for in their revolution 
of 1979, and that is what they are 
fighting for today. I am confident that 
no one in this country will support a 
policy which, wittingly or unwittingly, 
crashes the hopes of an entire nation for 
freedom and democracy. 

Congress has shown its resolve to 
support democracy in the rest of 
Central America. It is supporting the 



gust 1986 



21 



THE SECRETARY 



reestablishment of democracy in the 
Philippines. It is supporting distant 
struggles against communist tyrannies 
in Afghanistan and Cambodia. I believe 
that, sooner or later, Congress will 
commit itself with equal determination 
to support the struggle for democracy 
on our own mainland. The crucial 
question is when that support will 
come— sooner or later. 

As the end of June approaches, we 
are still awaiting a definitive answer 
from the Congress on support for our 
policy toward Nicaragua. Our proposal 
to aid the Nicaraguan freedom fighters 
was passed by the Senate over 2 
months ago. The problem is in the 
House of Representatives, where delay 
continues. This delay makes it difficult 
to plan and conduct foreign policy in a 
region where events bear directly on 
our vital national security interests. It 
sends confusing signals to the Central 
American democracies and other Latin 
and Caribbean states. 

How long can we ask the Nicaraguan 
freedom fighters to struggle against 
their oppressors without the prospect of 
sustained and real support: weapons, 
boots and uniforms, food, medical 
supplies? Shall we wait another month, 
or two months, or three to give them 
the help they need in their struggle for 
freedom? 

I say we cannot afford to wait, that 
history will judge us severely if we 
delay any longer. 

Our indecision only plays into the 
hands of the communists. It gives them 
time to advance their suppression of the 
church, the free trade unions, the press, 
and political parties; time to continue 
killing freedom fighters; and time to 
continue their campaign against the 
Miskito Indians. 

Our delay has given the communists 
every reason to continue to spurn a 
political settlement. Since January, six 
of Nicaragua's opposition parties have 
proposed a national dialogue of reconcili- 
ation. The freedom fighters have sought 
this same dialogue; and they offer a 
cease-fire if it takes place. But there are 
no takers on the communist side. 

Let us not delude ourselves that the 
communists need another 90 days to 
reconsider their policies. Delay is what 
the Nicaraguan communists need to win 
an outright, permanent victory. 

Just a few years ago. Central 
America received scant attention in the 
American press. In fact, one of my 
predecessors told me, somewhat conde- 
scendingly, "You know, when I was 
Secretary of State, I don't think I spent 



3 minutes on Central America." I just 
said, "You just defined the problem." 
We have to pay attention to our 
neighborhood. That's where it starts. 
There are lots of problems around the 
world, and as a world power, we're 
engaged in them. But we better pay 
attention to our neighbors and our 
neighborhood. 

Now, however, reports of conflict 
and faltering peace processes frequently 
dominate the news. Yet, there is still 
hope that stories from the region will 
tell of a promising future. But the hour 
is late. If the resistance collapses for 
lack of our support, if the Sandinistas 
complete their consolidation of power, 
then the rest of Central America must 
be forever vigilant against the nearby 
threat of a communist Nicaragua. 
Economic resources will be diverted to 
defense, and we will incur the enormous 
costs of containing the threat. 

Now is the time to get on with the 
task of rebuilding all of Central 
America, including Nicaragua. The 
United States is committed to assisting 
in that effort. But first, we need to 
make a commitment to the democratic 
resistance in Nicaragua that will lead 
the communists and their sponsors to 
reconsider their policies. They need to 
weigh the many costs of continuing 
conflict. They must be made to 
understand that now is the time to 
conclude a meaningful regional peace 
process. 

The accord which emerges from this 
process must be comprehensive and 
verifiable, and all of its provisions must 
be implemented simultaneously. Essen- 
tial to this process is genuine national 
reconciliation with those fighting for 
freedom. Nicaragua's neighbors are 
committed to such an agreement. We 
would support it. All that is needed is 
the realization of the comandantes that 
they have no alternative. Our assistance 
to the freedom fighters is essential to 
that realization. 

Clear Choices 

The choices for us are clear. Timely ac- 
tion on our part will give Central 
America the opportunity to enter into a 
period of peace, democracy, and eco- 
nomic progress led by democratically 
elected leaders cooperating with one 
another. Inaction will see democracy 
imperiled. It will bring continuing con- 
flict, the diversion of scarce resources 
into arms buildups, bloodshed, and 
repression. It will bring a heightened 
communist threat to American security. 



What do we seek from all the par- 
ties who have a stake in the Nicaraguan i 
conflict? 

From the communist regime, we 

seek a commitment to democracy and 
national reconciliation. They must enter 
into a dialogue as proposed by the six 
political opposition parties inside 
Nicaragua and the United Nicaraguan 
Opposition, leading to the opposition's 
full participation in the political life of 
the nation. And they must consent to a 
binding agreement with Nicaragua's 
neighbors to end interference in their 
affairs, reduce regional arms levels, andl| 
eliminate outside military involvement. 

From the Contadora group, we 
seek a serious effort to address the key. 
outstanding issues in the peace process 
through specific procedures for ensuring 
democracy, and verifiable military arms^ 
reductions. Any such agreement which 
obscures and confuses those essential 
points of contention or postpones their 
resolution is no agreement at all. 

From the U.S. Congress, we seek : 
positive commitment to continue to funn 
the action plan of the National Biparti- 
san Commission— the Kissinger commis- 
sion—at levels sufficient to further- 
peace, democracy, and development in 
Central America and to serve as a posid 
tive incentive for change in Nicaragua. 
And we urge immediate approval of th« 
funding for the freedom fighters as a 
critical element for bringing Nicaragua 
into a meaningful peace process. 

For our part, the Administration 
will not diminish its commitment to sup 
port democracy, development, defense, 
and dialogue in Central America. All 
four remain pillars of our policy. 
Nicaragua has excluded itself from our 
assistance to the region by the choices 
has made. 

At the same time, we will take 
whatever actions are necessary to pro- 
tect our national security interests. We 
will not relent from our efforts to sup- 
port the freedom fighters so long as th 
government in Nicaragua oppresses its! 
citizens, so long as it serves as a base i 
our hemisphere for the Soviets and the 
surrogates, and so long as it subverts 
its neighbors. 

The choice is now up to Nicaragua. 
We count on the Congress to help the 
Nicaraguan communists make the right 
decision. 



J Press release 130.1 



22 



Department of State Bulled 



THE SECRETARY 



Secretary Shultz's 
nterview for "Worldnet" 



Secretary Shtiltz was interviewed on 
,ne 13, 1986, by news correspondents 
Brussels, Paris, Bonn, and London. 
;e interview was broadcast live on 
Vorldnet, " a satellite TV program of 
"i U.S. Information Service. 1 

On June 11 in Geneva the Soviets 
ade a proposal calling for significant 
ductions in long-range strategic mis- 
jes. Do you see that as an encourag- 
g development? 

\ A. The fact that such a proposal has 
jen made has been widely reported. 
|om our standpoint, I think it's equally 
iportant almost that this proposal was 
|lde privately, in Geneva, and that's 
»ere we'd like to leave the discussion 
hit. I think if we're going to get some- 
lere, the way to do it is to work at it 
(that manner. So I'm not going to 
lament on it. 

Q. I know we're here to talk about 
ILT (strategic arms limitation 
Sks), but in view of the new crisis in 
fcuth Africa, about which you too 
1st be greatly concerned, can I ask 
kat the United States is going to do 
i)ut the South African declaration of 
hew state of emergency? 
| A. We've made our views about it 
bwn. We don't think it's the right 
trig for them to do, and we continue to 
neve that there needs to be a 
rotiated change in the system. There 
Ids to be an end to apartheid, and the 
ly to do it is not through massive vio- 
Ice but through negotiation. 
I We thought the Eminent Persons 
pup work was constructive and impor- 
St. We're disappointed that they don't 
Im to have gotten a response that 
ly deserved, but we continue to think 
It's the way to go. That's the only 
Illy worthwhile alternative. So what's 
fcpening in South Africa is just a con- 
Ling unraveling tragedy. 

Q. As the Commonwealth and Eu- 
le start to move toward the notion 
Sanctions, can the United States opt 
| of that sort of coordinated 
Astern approach? 
•A. We think that sanctions— the 
psident believes that the all-out sanc- 
ms approach is not the right approach; 
ft we do have some influence, and we 
luld stay there and exert that in- 
limce. 



The recommendation that in a sense 
we sort of strike a pose of being horri- 
fied and leave, we just don't see where 
that takes you. It takes you away from 
the situation, and then you are not 
there any more. So then what influence 
do you have? It's much more important 
to stay there and be part of the scene 
and to be working at it. And also, I 
think, mainly when you talk about sanc- 
tions, you're talking about business and 
financial institutions, and, of course, 
they're all examining their situation. 
Look what happened to the South Afri- 
can rand yesterday on the financial mar- 
kets. It's an indication. 

But basically I think— I'll speak 
about the American businesses— they 
have been a very constructive force 
there. They have arranged employment 
conditions that are consistent with get- 
ting away from apartheid. They have 
been financing education. They have 
been doing some very constructive 
things, and why take that away? 

Q. Does there come a point where 
the sort of measures being adopted by 
the South African Government require 
the showing of greater displeasure by 
the United States? 

A. We've shown a lot of displeasure 
rhetorically, in what we've said, in the 
things that we have done, and we have 
restricted our interrelationship. But 
what you seem to be saying is that we 
should just declare horror and leave. I 
don't see that that's constructive. I 
think you have to stay there, be part of 
the scene, and be working toward con- 
structive ends. If you're not there any 
more, I don't see how that does you all 
that much good, and we have to remem- 
ber it's a very difficult situation. So you 
need to be part of the scene, really, to 
understand it well. 

Q. Another point is which the 
United States Government decides that 
the South African Government has 
gone too far. 

A. I think they have gone too far in 
many respects. I think the whole system 
of apartheid— it's gone too far is not 
quite the word for it. It's just wrong, 
and it needs to change. 

Q. In view of the hopelessness ex- 
pressed by the Eminent Persons 
Group about what's happening there, 
how exactly do you intend to pursue 



your policy of constructive en- 
gagement? 

A. We pursue it by making our 
views known, by taking steps. We have 
taken quite a number of steps, including 
those consequent to the President's ex- 
ecutive order of last September, includ- 
ing the actions we took after the South 
African raids into three neighboring 
countries. So that's the pattern that we 
take. But I think the recommendation 
that we just pick up and leave seems to 
me to be a vote for despair. Maybe it 
makes you feel morally good to have 
done that, but when you wake up the 
next morning and say: What are we go- 
ing to do next?— you don't have any- 
thing left to do next. So I think you've 
been stripped bare. And, at the same 
time, as I said earlier, it is a difficult 
and complex situation, and you've got to 
stay there and be part of the scene. 
There's all sorts of bad violence going 
on. 

Q. Can I now move the discussion 
onto the SALT treaty. I notice the 
White House spokesman quoted as 
saying that treaty, the SALT treaty, is 
now dead. Could you amplify that 
statement? 

A. He didn't say that, he didn't use 
that word. However, I think the point is 
that the President has sought to shift 
gears and to substitute one form of re- 
straint for another. 

The SALT II treaty provided a form 
of restraint that in our view had been 
becoming increasingly obsolete in the 
sense that it focused primarily on 
launchers. Whereas in a world of 
MIRVed [multiple independently - 
targetable reentry vehicle] launchers, 
the right unit of account clearly is what 
would hit you, namely, warheads. 

Beyond that, of course, the 
Soviets— and I think everybody more or 
less agrees with this— have violated that 
treaty in respects that are significant 
militarily. And you can't have something 
that is violated by one side and then ob- 
served scrupulously by the other, and 
you can't have a situation where one 
side decides I'm going to live by this 
aspect of a treaty, but not by that 
aspect of a treaty. 

So what the President has said is 
that restraint is important. He wants it 
to be mutual restraint. And if you read 
his statement— and I brought it along 
here, the statement that he made— you'll 
see that, particularly as he summarized 
at the end, it is the language of re- 
straint plus the call for a regime that 
emphasizes reductions in nuclear 
weapons, drastic reductions in nuclear 



4gust 1986 



23 



THE SECRETARY 



weapons. That's really what we should 
be after, not maintaining a regime that 
in its terms can foresee large increases 
in these weapons. 

So that's what the President is seek- 
ing. He's seeking a regime of mutual 
restraint and then progress in negotiat- 
ing reductions in these nuclear weapons. 

Q. German Social Democrat politi- 
cian Hans-Juergen Wisniewski has 
told the German public two things: 
First, he accused the U.S.A. of sup- 
porting kidnappers in Nicaragua with 
government money; and, secondly, he 
charged you to be misinformed when 
you stated those eight Germans would 
have had the status of combatants 
when they were captured in 
Nicaragua. 

Now, on what source does your in- 
formation rely? Is it contra, is it CIA 
[Central Intelligence Agency], or is it 
any other source? 

A. First of all, the Germans that 
were captured briefly by the people 
fighting for freedom and independence 
in Nicaragua were armed, and they 
seemed to be associating themselves in 
various ways with the Nicaraguan com- 
munist armed forces. So that presuma- 
bly is what led to their being taken. 

Now, the freedom fighters shortly 
saw that it was better for them to 
release those Germans, and they tried 
to do so over a period of time. But the 
Nicaraguan communist government 
didn't want that to happen, and every 
time a rendezvous was arranged, where- 
by the eight would be at a certain place 
and the helicopter that was arranged by 
a German intermediary was to land 
there, the Nicaraguan communists 
would create a firefight around the area 
so that the release couldn't take place. 
In other words, they didn't want to al- 
low the release because they saw that it 
might give them some propaganda value 
in your country. 

That's what you can say about the 
German hostage situation, and I'm very 
glad to be able to say that they were 
released, and they were unharmed. And, 
of course, the way they performed in 
Managua after their release in their at- 
tacks on the United States really shows 
why they're there, and what their sym- 
pathies are. 

As far as Nicaragua is concerned, as 
any German spokesman considers sup- 
porting that country, I think you should 
remember certain things about which 
there is no question. There is no ques- 
tion that the Nicaraguan communists 



are trying to put into place a totalitari- 
an state. That's the model for which 
they're driving. 

Second, there is no question that 
they receive large-scale support, openly 
acknowledged, from the Soviet Union 
and Cuba. 

Third, there is no question but what 
as part of the totalitarian apparatus 
they suppress the press, they persecute 
the church. All you have to do is read 
the statements that were sent in to The 
Washington Post by the Cardinal down 
there to see what his opinion is. There 
is no question about the fact that the 
government is involved in drug running; 
and, there's no question about the fact 
that they provide safehaven for ter- 
rorists. They were part of support for 
the M-19 that performed so horribly at 
the Palace of Justice in Bogota, Colom- 
bia, some months ago. 

So when you express sympathy for 
the Nicaraguan communists, that's what 
you're expressing sympathy for. We 
think that you ought to be expressing 
sympathy for people in Nicaragua who 
are fighting for freedom and independ- 
ence in their country, which is only by 
way of saying that in our hemisphere, 
we see a great move to democracy, in- 
cluding in Central America. There are 
now four civilian elected democratic 
presidents where there was only one 
2 or 3 years ago. Remember all of your 
opposition to us on El Salvador. Well— 
and Guatemala— now there are civilian 
elected presidents there; they're 
democracies. The whole thing is work- 
ing; except for Nicaragua. So Nicaragua 
should change and join the parade 
toward freedom and democracy. That's 
what we want. 

Q. I was misunderstood. My ques- 
tion was, on what source does your in- 
formation rely that these Germans 
have borne weapons and that they are 
combatants? 

A. It relies on reports that we have 
from our contacts with those who are 
directly involved. This is their observa- 
tion. I perhaps misspoke when I used 
the word "combatants." I tried to be 
descriptive this morning in saying that 
they were armed and they seemed to be 
associating themselves with the 
Nicaraguan communist armed forces. 

Q. What is President Reagan's im- 
mediate purpose, his immediate aim, 
when he cancels the SALT treaty. 
Does it not frighten, more or less, the 
allies, that's what we all read in the 
American papers, and frighten the 
Soviets as well, or is there another 
purpose? 



A. The President's responsibility 
here, as with all of our allies, is to see 
to it that the quality of our deterrent 
capability is maintained so that the 
record that deterrent capability has in 
NATO [North Atlantic Treaty Organiza- 
tion] for keeping the peace in Europe all 
this time can be maintained. 

To that end, what the President is 
after is agreements with the Soviet Un- 
ion not about how much you can in- 
crease your nuclear weapons stockpile, 
as in SALT II, but an agreement that 
calls for reductions on a mutual basis. 
And, in the meantime, he wants to have - 
people focus on what the true nature of 
restraint ought to be, and it ought to l>e 
mutual. We're quite prepared for a re- 
gime of mutual restraint, and the Presi- 
dent said so. 

He says, in his statement— this is 
the statement that he issued. It's 
stamped "Secret." That's only because I 
happened to get it some time before it 
was actually issued. It's no longer 
secret, so this is not a leak. [Laughter] 

He says, "I continue to hope that 
the Soviet Union will use this time"— 
that's the time between now and when 
at the end of the year, or whenever, 
there would be a possibility of some in- 
crease in numbers on the U.S. side— 
"use this time to take the constructive 
steps necessary to alter the current situ 
ation. Should they do so, we will cer- 
tainly take this into account." 

Then he goes on to say, "I do not 
anticipate any appreciable, numerical 
growth in U.S. strategic offensive 
forces." And then he says, "Assuming 
no significant change in the threat we 
face, the United States will not deploy 
more strategic nuclear delivery vehicles I 
than does the Soviet Union. Further- 
more, the United States will not deploy j 
more strategic ballistic missile warheads 
than does the Soviet Union." 

So those are flat statements. And 
what the President is saying is, we, 
jointly, have a responsibility, and the j 
United States bears a big proportion of J ( 
it, to maintain our deterrent capability. 
What he is saying is, we're defensive; 
we're not offensive. 

But in order to have a respectable 
defense, we have to look to our deter- 
rent capability and these are flat state- 
ments saying we won't have more than 
the Soviet Union has. But then he goes 
on to say that the real point here is to 
get mutual agreement on major reduc- 
tions, as the President and General 
Secretary Gorbachev agreed on in Gene 
va. We continue to work and continue t 
hope that such an agreement may be 
possible to bring forward. 



24 



Department of State Bulleti 



THE SECRETARY 



Q. Since there has been a discus- 
)n on other topics, I would like to 
k you a question on another item, 
ne of the main international prob- 
ms— one of the most serious, 
rhaps— is terrorism, and the threat 
represents. Recently too the Euro- 
an Community countries agreed to 
ordinate their actions and to have a 
jser, better cooperation with the 
lited States in order to fight 
gether against terrorism. 

Despite this fact, some weeks ago 
e United States Government at- 
cked strongly the Greek Government 
r its attitude on this matter. Does 
e United States Administration have 
y facts on which it based this verbal 
tack. Can you explain why the Ad- 
inistration has adopted this attitude 
ward a friendly country? 

A. We regard Greece, obviously, as 

ally and a friend, and I had a very 
irthwhile and productive visit in 
eece myself recently. 

Our problem with terrorism, and 
eece, is that while it is exactly right, 
i European moves you've cited, it is 
t only what European nations have 
d but what they've done. We think 
5 terrific what Europe is doing. 

But Greece has more or less disas- 
:iated itself from that, and that puz- 
s us. Being puzzled, we said so, and 
! wish that Greece would take another 
ik. It's not any attack on Greece. It's 
lesire to see a coordinated effort to 
De adequately with terrorism. 

I think it's interesting to note that 
recent times, since these strong 
inds were taken and since the United 
ites let Qadhafi have it, there has 
en some diminution in terrorism ac- 
ities, and I think we can take some 
art from that. 

Q. I would like to ask you a ques- 
m about the proposals made 2 days 
50] in Budapest by the Warsaw Pact 
untries. Do you believe that there is 
ily anything new in those proposals 
is it still an offering for a mutual 
t still not balanced reduction of 
nventional forces in Europe? 

A. It's new in the sense that it's a 
uposal that hasn't been made before. 
3 heard, of course, Mr. Gorbachev on 
earlier occasion talk about possible 
Dposals involving actions as it was put 
>m the Atlantic to the Urals. 

This conception of the geographical 
ace in which conventional arms should 
considered has long been one that 
i Western allies have been interested 

And so at our meeting in Halifax a 
aple of weeks ago, of the NATO for- 
m ministers, we agreed that we 



should undertake a special and careful 
evaluation of what might be possible un- 
der that concept, and that's now going 
on under the leadership of Peter Car- 
rington in NATO. 

If there are some new ideas and 
new willingness on the part of the 
Soviet Union, the NATO allies will be 
there with strong proposals of our own. 

Q. My question is connected with 
the previous one. I would like to know 
what is your view on the reasons 
which have pushed the Soviet Union 
and its allies to put forward, prac- 
tically at the same time, three differ- 
ent proposals in various fields of 
armaments, conventional and 
nonconventional? 

A. It's hard for me to know the an- 
swer to that since I'm not privy to their 
internal discussions, and it's hard to ex- 
plain why they do what they do. 

We have to look and see what they 
do, and the fact that they have made 
proposals. They have a propagandistic 
value, of course, but there's also sub- 
stance in them. In some cases, impor- 
tant proposals have been made privately 
rather than through the press. 

I personally think that that's a good 
sign. In any case, from the standpoint of 
the United States, and I'm sure all of 
our allies, we are very much interested 
in any potential agreement that will 
reduce tensions and reduce the levels of 
armaments, particularly nuclear arma- 
ments. That's what we've been after all 
along. So we will engage and work at it 
and try to bring something constructive 
forward. 

Q. May I ask you if it is possible 
for the United States to agree with 
this idea to have this two-step reduc- 
tion of conventional forces in Europe? 
Still in a first step is the reduction of 
1,000 or 150,000 people and only then 
in the second stage 25%, according to 
the proposal of the Warsaw Pact. 

Is this first step still acceptable to 
you, or is it not dangerous to get in- 
volved in this kind of equal but still 
not balanced reduction of forces? 

A. I don't want to make comments 
on the details of proposals because 
they're being studied, and we'll have a 
careful response. 

We have held, and the Soviets have 
agreed, in past negotiations on mutual 
and balanced force reductions (MBFR), 
that if there were some initial sort of 
symbolic move, it should reduce their 
forces by more than ours because their 
forces are larger. In order to get to a 
balanced situation, you have to have 
some asymmetry there. 



Second, obviously, if you foresee 
major levels of reductions, it's going to 
happen according to some steps. It 
doesn't all happen like that. However, 
the main thing here is that there need 
to be strong measures to be sure that 
the things agreed on are actually carried 
out. And so what could be agreed as to 
verification is very important. Here, I 
think the news is not too encouraging. 

In the MBFR negotiations in Gene- 
va during the last round, the allies ta- 
bled a proposal for reductions that was 
coupled with a good, strong verification 
regime. We did that, hopefully, because 
there had been so much talk from the 
Soviet side of their willingness to look 
at verification and to look at their on- 
site inspection and other things of that 
kind. I'm sorry to say that what they 
came back with on verification was quite 
disappointing to everybody. 

So these are the kind of things that 
have to be looked at carefully, and 
we're studying their proposal. When we 
have evaluated it carefully, of course, 
then we'll be prepared to make a careful 
response. 

Q. May I come back to the ques- 
tion of SALT II? President Reagan 
has declared that the treaty is dead. 

A. You keep— 

Q. Since the Europeans are afraid 
of a new nuclear arms race which 
might be caused by this decision— is 
your Administration aware of the 
grave concern among your allies, espe- 
cially in Bonn? 

A. People asking questions like your- 
self keep trying to insert that word 
"dead" into other peoples' mouths and 
you haven't succeeded. I don't want you 
to succeed this morning. 

What the President is seeking is a 
regime of mutual restraint that looks at 
what they do and then paces what we 
do alongside of it. So that's the kind of 
regime that we're talking about. We're 
definitely not talking about an escalation 
or arms race; quite to the contrary. 

A few minutes ago I read on this 
program some of the actual language 
that the President used, and the flat 
statements contained in this language 
and the very powerful desire to see suc- 
cess in the negotiations that call for 
radical reductions in nuclear arms. 
That's what we really should be in- 
terested in, and that's what the Presi- 
dent is striving so hard to get. 



'Press release 128. 



gust 1986 



25 



THE SECRETARY 



Reform in the Philippines and American Interests: 
The U.S. Role in Consolidating Democracy 



Secretary Shultz's address before the 
Foreign Policy Association in New 
York City on June 4, 1986. 1 

I want to talk to you today about the 
Philippines and to urge support for the 
new and comprehensive reforms being 
undertaken by the Aquino government. 

I visited Manila 4 weeks ago, follow- 
ing the Tokyo economic summit. I had 
extensive discussions with President 
Aquino and other Philippine leaders and 
came away deeply impressed by what I 
heard and saw. President Corazon 
Aquino is an individual of courage, intel- 
ligence, dedication, and good sense. 
These qualities were the trademark of 
her presidential campaign; and they are 
evident in her current efforts to bring 
democracy and economic reform to a 
country that is a key ally of the United 
States. 

Let me begin with a recent presi- 
dential statement on the question of 
government's proper role in the 
economy. 

We have set specific objectives. The first, 
which is a promise I made repeatedly during 
my campaign, is to have less government in 
the economy .... I believe that the restora- 
tion of a genuine private enterprise economy 
will foster competition, productivity, and effi- 
ciency Corollary to the attainment of this 

objective is the fulfillment of another promise 
I made during my campaign ... to trim the 
government to an efficient and responsive 
size. 

Those are free market sentiments 
which I heartily endorse. But the quota- 
tion was not, as you might have imag- 
ined, from a speech by President 
Reagan. Rather, it was President 
Aquino, speaking before the Asian 
Development Bank on April 30. 

The new Philippine Finance 
Minister, Jaime Ongpin, recently 
described before the same group his 
policy priorities. Once again, I'll just 
read what he said. 

The principal thrust of our recovery ef- 
forts will be to motivate the private sector to 
resume its traditional role as the prime 
mover of the economy .... Once we can re- 
store a uniform set of rules and [an] even 
playing field for all those who wish to com- 
pete in the business arena, that spirit of en- 
terprise will not only reawaken but should 
return with a vengeance. 

As a Chicago economist, I could not 
have said it better. 



These words— which the new Philip- 
pine Government is working energeti- 
cally to translate into substantive 
deeds— serve as an appropriate prelude 
to my basic message to you today: now 
is the critical time for the United States 
to support the efforts of the Filipino 
people to achieve not only a revitaliza- 
tion of their democracy but a rejuvena- 
tion of their economy as well. President 
Reagan and I are enthusiastic about the 
initiatives of the Philippine Government, 
and we are determined to help it be 
successful. 

In pursuing its ambitious objectives, 
the Philippines must surmount formida- 
ble obstacles, but they have already 
made an impressive start. We intend to 
support the Philippines— in part, by en- 
couraging the American business and 
financial communities to play an active 
role in this endeavor. In doing so, you 
will serve your own interests, those of 
the Filipino people, and the national in- 
terest of the United States as well. 

The Importance of 

U.S. -Philippine Relations 

The history of the Filipino people has 
been intimately intertwined with our 
own for nearly a century. The Philip- 
pines was our only colony, yet we 
sought to promote self-government and 
ceded independence freely. We fought 
together as allies in World War II— and, 
ever since, have maintained alliance re- 
lations. Broad ties of family and friend- 
ship link individuals and institutions in 
each country. In short, the Philippines is 
a nation in whose future Americans 
have a substantial stake. 

What happens in the Philippines 
makes a difference for Americans. Our 
mutual defense arrangements are of 
critical strategic importance, not only 
for U.S. and Philippine security but for 
peace and stability in the Asia-Pacific 
region as a whole. We are the leading 
trade partner and investor in the Philip- 
pines, a country blessed by a rich 
growth potential within a Pacific region 
already distinguished by dynamic eco- 
nomic advances. The Republic of the 
Philippines is a key member of ASEAN 
[Association of South East Asian Na- 
tions], a regional association of nations 
of growing consequence for the United 
States. 

But, above all else, our two peoples 
have come to share fundamental values, 



including a strong commitment to demo- 
cratic self-government. Americans can I 
never be indifferent to the fate of a peo- 
ple whose values and aspirations so 
closely mirror our own. 

This is why Americans were so in- 
spired by the dramatic events in Manila 
last February. We witnessed a deter- 
mined people bravely taking their des- 
tiny into their own hands. We saw themi 
resolve a grave political crisis swiftly, 
peacefully, and democratically. 

By returning democracy to their 
own country, the Filipino people also 
reclaimed their self-respect. In a world 
scarred by political repression and vio- 
lence, Filipinos set an extraordinary ex- \ 
ample through their steadfast devotion 
to freedom, their commitment to self- 
reliance, and their desire for national 
reconciliation. As President Reagan 
noted at the time: 

We've just seen a stirring demonstration 
of what men and women committed to demo- 
cratic ideas can achieve. The remarkable peo 
pie of those 7,000 islands joined together 
with faith in the same principles on which 
America was founded: that men and women 
have the right to freely choose their own 
destiny. Despite a flawed election, the 
Filipino people were understood. They car- ■; 
ried their message peacefully, and they were 
heard across their country and across the 
world. 

Those were President Reagan's 
comments. 

Next Steps in the Philippines 

Despite the peaceful transfer of power, 
the current government has inherited a 
legacy of daunting problems: 

• A communist insurgency of seriou 
dimensions; 

• An economy distorted by inequi 
ties, declining growth rates, and irra- 
tional government interference; and 

• A political system that was under 
mined by centralized control and corrup 
practices. 

The advent of President Aquino's 
government could not, in and of itself, 
eliminate or quickly resolve these 
problems. But her government com- 
mands the domestic mandate and the ir 
ternational support that can enable her 1 1 
to find solutions. Today in Manila, the 
popular enthusiasm apparent last Febn 
ary is still evident, and there is wide 



26 



Department of State Bulleti 



THE SECRETARY 



ecognition that the time for hard and 
ustained work has also begun. 

I was struck during my recent visit 
a Manila by the determination and com- 
etence evident among members of the 
ew administration. They comprehend 
he seriousness of the problems they 
|ave inherited. They have displayed a 
eadiness to get down to work. They 
ecognize that, while the United States 
nd others can do much to help, the is- 
ues they face are fundamentally Philip- 
ine problems requiring Philippine 
plutions. 

Politically, President Aquino's 
dministration confronts the problem of 
^vitalizing institutions and restoring 
ublic confidence in government. 

They inherited a legislature, a court 
pstem, a civil service, and an electoral 
^stem bound more to the political 
ladership than to the people. The 
pvemment is implementing, step by 
tep, a program to rebuild these institu- 
pns. They are struggling to organize 
pd staff a new administration which 
lime to power suddenly, without benefit 
[ the leisurely transition we are ac- 
ustomed to in the United States. 
; Just think about it. There is a lot of 
nphasis today on 100 days— I think you 
latured that last night on your pro- 
am, Dan [Rather]— and everybody, of 
urse, harkens back to F.D.R.'s first 

days. That's the record. He was 
cted on November 4th, he took office 

1 March 20th. For over 100 days, he 
lought about it. He organized his 
dministration; he got himself together. 
le took off just like that. The 100 days 
ie has had so far wouldn't even have 
D.R. in office yet. So it was a tough 
•oblem with all of these difficulties I 
ive been outlining. 

Militarily, the new government in- 
irited a serious and growing com- 
unist insurgency. This cruel conflict 
lined substantial momentum in recent 
iars. It was fueled by declining respect 
r government, ineffectual local 

[ministration, pervasive corruption, un- 
ofessional military leadership, and a 
pressed rural economy. I might say 
j've contributed to that depressed 
ral economy by our sugar program, 
rich suddenly has denied U.S. markets 

sugar that formally came here over a 
lg period. 

The leaders of this insurgency are 
t rural reformers or developmental 
mocrats; they are dedicated com- 
unists with a track record of appalling 
totality. They are resolved to change 
le basic character of Philippine society 
(rough armed struggle. 



Even since Mr. Marcos' departure, 
the communist New People's Army has 
continued its violent attacks in the coun- 
tryside and its efforts in the cities to 
gain political control through front 
groups. This should make clear to any 
doubters that the communists will press 
their campaign for total power through 
violence no matter what progress is 
made in political and economic reforms. 

Economically, the new government 
assumed power facing a huge budget 
deficit, a network of inefficient private 
monopolies and public corporations, a 
private sector demoralized by political 
uncertainties and arbitrary government 
decisions, and an agricultural sector in 
deep recession. The growth rate was 
negative. The Philippines' per capita in- 
come declined in real terms at a time 
when that of other ASEAN countries 
was rising. There was low productivity, 
domestic capital flight, and little new in- 
vestment. Interest alone on the Philip- 
pine foreign debt of $26 billion 
amounted to over 50% of annual export 
earnings. And all this despite the Philip- 
pine's historic economic record of high 
growth potential. 

The eventual success of President 
Aquino's government will depend on its 
ability to address these issues. And the 
success or failure of the Filipinos in sur- 
mounting these problems will, in turn, 
have a profound effect on their neigh- 
bors and, ultimately, on the United 
States. 

The Aquino Government: 
On the Right Track 

I have recounted a formidable agenda of 
challenges for the new government in 
Manila. Yet it must be emphasized that 
the problems of the Philippines, 
however daunting, are soluble. They can 
be managed if three conditions are met: 

• If the Aquino government adopts 
sound politices; 

• If the United States and other na- 
tions and multilateral institutions supply 
strong and sustained support; and 

• If the Philippine and international 
business communities respond positively. 

The key factor, of course, will be the 
actions of President Aquino and her ad- 
visors. It's still early in her tenure, but 
already she has dispelled many initial 
uncertainties. Her government is off and 
running hard, and it is headed in the 
right direction. Considering the situation 
inherited last February, they have done 
remarkably well. There are many rea- 
sons to be bullish. 



First, President Aquino has moved 
with alacrity to rebuild the democratic- 
institutions of government. Her adminis- 
tration has taken important steps to 
crack down on corruption and protect 
individual rights. 

President Aquino enjoys enormous 
popular support. Filipinos perceive her 
government as honest, frugal, and hard- 
working. Since February, the Philippine 
Government has begun to restore popu- 
lar confidence in the central 
government: 

• It has set in place a provisional 
constitution protecting basic rights. 

• It has reestablished an independ- 
ent Supreme Court now composed of 
men and women of recognized integrity. 
All presidential legislation will be sub- 
ject to judicial review. 

• It has restored the right of habeas 
corpus. 

• It has removed constraints on the 
media and encouraged what has now be- 
come one of the liveliest free presses in 
Southeast Asia. 

• It has appointed a Constitutional 
Drafting Commission with broad politi- 
cal representation that is already hard 
at work. 

• It has announced a plan and— most 
importantly— a timetable to return the 
country to fully constitutional govern- 
ment, with local and legislative elections 
projected for late in the vear or earlv in 
1987. 

Second, the new Philippine Govern- 
ment has begun to build an effective 
capability for dealing with the insur- 
gency. The departure of former Presi- 
dent Marcos has deprived the insur- 
gency of its principal propaganda target. 
Just as important, however, military re- 
form promises to deal a significant blow 
to the effectiveness of the insurgents. 
The Philippine military— now called the 
New Armed Forces of the Philippines- 
is in the process of revitalization. I met 
with a group of the top officers for a 
couple of hours when I was in Manila; 
they're very impressive. They are 
returning to their traditional role as an 
apolitical professional force. 

There is much to be done to enhance 
the security situation, but improvements 
are already apparent. New commanders 
with strong professional credentials are 
in place. The troops are being retrained 
and moved from the Manila area back to 
the countryside where they belong. 
There is renewed popular support for 
the military, who are seen as heroes be- 
cause of their support for the choice of 
the people during the critical days of 



igust 1986 



27 



THE SECRETARY 



late February. General Ramos, Chief of 
Staff of the Armed Forces and a highly 
respected military professional— got his 
military education at West Point, 
incidentally— has established a distin- 
guished panel to look into military 
wrongdoing. And conflicts between the 
military and the civilian population have 
apparently begun to subside. 

The Aquino government is consid- 
ering a cease-fire and amnesty plan to 
draw support away from the hard-core 
insurgents. This program is now being 
tested. At the same time, President 
Aquino has also made clear her readi- 
ness to use military force should the in- 
surgency persist after the amnesty 
window has closed. Last month, when 
she visited the countryside in Mindanao, 
she stressed— and, again, these are her 
words: 

Should the cease-fire be grossly violated 
by the insurgents, the government will em- 
bark on the contrary course of war from 
which there will be no return but victory. 

The new government's economic 
policy is headed in the right direction. 
Despite its current problems, the Philip- 
pines has extraordinary economic poten- 
tial and is abundantly endowed with 
natural and human resources. The basis 
for growth is there. 

It has a strong business community, 
ready to adapt to proper incentives. The 
work force is well educated. The eco- 
nomic infrastructure is in place. The 
savings rate is high. Annual inflation is 
less than 5%. Interest rates have fallen 
by some 4%— 400 basis points in the 
lingo of New York— over the past 2 
months. The peso is stable, with interna- 
tional reserves up from $1 billion to 
$1.6 billion since President Aquino took 
office. Internationally, the combination 
of lower oil prices and lower interest 
rates promise to benefit the Philippine 
economy significantly over coming 
months. Some estimates suggest that 
the net gain for the Philippines of these 
declines could be on the order of magni- 
tude of some $800 million this year. 
That ain't hay. 

I had the benefit of meeting with 
some of President Aquino's new finan- 
cial team in Manila last month, including 
Finance Minister Jaime Ongpin; Jose 
Fernandez, the Governor of the Central 
Bank; and Jose Concepcion, the Minister 
of Trade and Industry. They are all suc- 
cessful businessmen and pragmatic be- 
lievers in free enterprise and market 
forces. They believe a sense of balance 
is needed between short-term economic 
stimulus to overcome 3 years of steady 



contraction and the equally pressing re- 
quirement to unravel the mix of govern- 
ment and crony interventions, which 
had come to throttle the growth 
process. 

Their timetable for economic recov- 
ery was laid out in the last week of May 
at a meeting in Tokyo of the Philippine 
Consultative Group, chaired by the 
World Bank. Finance Minister Ongpin 
took the initiative to explain President 
Aquino's growth-oriented economic 
strategy. In July, the Philippine Govern- 
ment will present the details of IMF 
[International Monetary Fund]-related 
measures. By October, they will have 
specific proposals ready for comprehen- 
sive reforms in the context of a medium- 
term growth strategy. Minister Ongpin 
accorded top priority to: 

• Tax reform, including efforts to 
improve collections; 

• Business deregulation; 

• Trade liberalization; 

• Reducing and streamlining the ac- 
tivities of government financial insti- 
tutions; 

• Selling off a major portion of pub- 
lic sector corporate assets; and 

• Dismantling the notorious crony 
monopolies in sugar, coconut, and other 
basic commodities. 

The multilateral assistance approach 
which the Aquino government is now 
seeking is very much in keeping with 
the proposals made by Treasury Secre- 
tary Baker on the Third World debt cri- 
sis at the World Bank/IMF meetings in 
Seoul last September. When we put for- 
ward that American initiative, I did not 
regard the Philippines as a leading can- 
didate for such a program. The previous 
regime seemed unwilling or unable to 
implement serious economic reform. 

Today, we see a government in 
Manila that is committed to a market- 
oriented reform program— and one that 
possesses the political support necessary 
to implement it. We anticipate that the 
groundwork will be laid by the end of 
this year for a new growth-oriented 
financial program for the Philippines. 
This should encompass new resources 
from the World Bank, the Asian De- 
velopment Bank, and bilateral donors, 
as well as more forthcoming approaches 
to financing the very large foreign debt 
inherited by the new government. 

At times, we hear differing views 
among some members of the Philippine 
Government about economic issues. We 
usually do hear debate, and occasionally 
dissonance, in democratic governments; 
the sound you hear is the sound of 



democracy at work. Ever been to a 
Republican convention? The evolution of ' 
these policies under debate— particularly 
those involving labor— will continue to 
be of special concern to us, as well as to 
other potential foreign investors. But 
what has impressed me thus far has 
been the degree to which President 
Aquino has spoken out in support of 
policies of free enterprise. She has made 
clear that future articulation of labor 
policy will be done through the office of 
the President. Putting an end to specu- 
lation about selective debt repudiation, 
she stated— again, I'll read what she 
said referring to debt repudiation: "If 
we did that, nobody would be willing to 

help us anymore We have a word o! i 

honor, and we still have to borrow." It 
sums it all up in a very simple, direct 
statement. This statement and the 
government's actions are promising 
signs for the future. 

The Role of U.S. Policy 

American support is going to play a crd 
cial role in helping the Filipino people 
overcome their current problems. We 
have an important stake in seeing that 
President Aquino's government suc- 
ceeds. Our commitment to democracy, 
our friendship for the Filipino people, 
and our strategic interests warrant a 
special effort at this time. 

To that end, we have set for our- 
selves several immediate policy goals: 

• To forge stronger links with the 
new generation of Philippine leaders; 

• To maintain a continuing and 
close defense relationship with the 
Philippines; 

• To support Philippine initiatives 
designed to enhance the effectiveness 
and professionalism of the Philippine 
Armed Forces; and 

• To assist Philippine public and pri 
vate sector efforts to restore economic 
prosperity to the country. 

I will be holding further discussions 
on these objectives with President 
Aquino and other Philippine leaders 
when I return to Manila later this 
month to meet with my ASEAN col- 
leagues. 

As part of our efforts to broaden 
and reinforce our dialogue with the 
Philippines, we intend to initiate a muc. 
more active program of governmental 
and privately sponsored exchanges. In 
particular, we will be working to create 
new linkages between U.S. and Philip- 
pine universities through expanded stu- 
dent and faculty exchanges. 



28 



Department of State Bullet 



THE SECRETARY 



On the defense side, our base agree- 
ents remain firm— contrary to some 
irlier speculation and predictions and 
•ess speculation. The importance of the 
.S. facilities at Subic Bay and Clark 
ield for the security interests of both 
iuntries is clearly recognized by the 
sw government. President Aquino has 
edged to respect the existing military 
ises agreement and to keep open her 
itions for the future. 

On the questions of military and eco- 
imic assistance, we have sought to 
spond promptly to the critical short- 
rm needs of the new Philippine 
jvernment. In late April, President 
eagan sent to the Congress a proposal 
r a substantially increased economic 
id security assistance package for fis- 
1 year 1986. This was specifically tar- 
ited to support President Aquino's 
ograms for recovery and reform. This 
ickage, which includes a request for a 
50 million supplemental appropriation 
the current fiscal year, would acceler- 
e fund disbursements and ease the 
rms of ongoing assistance programs. I 
ink it says a lot about President 
pagan's priorities— and in this very 
ugh budget situation, where if you add 
mething over here you've got to take 
from over there— that he decided to 
ike this request. And I believe the 
mgress will go along with us. 

In total, we are seeking to make 
ailable about $500 million in economic 
sistance and over $100 million in mili- 
ry assistance. More than 90% of this 
)uld be on a grant basis so as not to 
gravate the country's debt problem. 
id in doing so, we will seek to give 
rect and vigorous support to private 
ctor development. 

However substantial any American 
fort, both the Philippine Government 
d we are convinced that it will have 
be supplemented by broader assist- 
ce within a multilateral framework. 
hen I was in Manila last month, I 
ide a personal commitment to Presi- 
nt Aquino that the Government of the 
lited States will play a leading role in 
tting together a major package of 
lancial assistance from free world 
sources. 

At the same time, we recognize that 
the export potential to the United 
ates is shut off for countries such as 
e Philippines by protectionist pres- 
res here at home, the benefits of this 
lancial assistance will be sharply 
duced. Today, I want to assure you 
ce again of the President's resolve to 
sist such protectionism and keep the 
lited States open to increased trade. 

All of this is a measure of the trust 
lich President Reagan and I have in 



the new administration in Manila. It 
reflects our confidence that the govern- 
ment of President Aquino has the talent 
and determination to deal with the 
tough problems now facing the Philip- 
pines. In the economic field, it is based 
on our assessment that the prospects for 
self-sustaining, market-oriented growth 
over the medium term are promising. 
Let there be no mistake about the 
strength of our commitment to support 
and assist the Philippines during this 
crucial period. The President and I are 
determined to help the new government 
make the most of this opportunity to 
overcome the nation's problems. As the 
President said last February: "Our 
hearts and hands are with President 
Aquino and her new government as 
they set out to meet the challenges 
ahead." 



The Response of the 
American Private Sector 

This leads me to the third element 
necessary for a Philippine recovery— 
that of private sector initiative and the 
infusion of equity capital, both from 
within the Philippines and from over- 
seas. The representatives of the Ameri- 
can business and financial communities 
in our audience this afternoon have the 
potential to play an important role in 
this process. 

Much of the initiative must come 
first from the Philippines' own private 
sector, including the large number of 
Filipinos with financial assets currently 
held abroad. I strongly agree with 
Finance Minister Ongpin— Philippine 
Finance Minister— and he said: 

As a Filipino, I must tell you that if we 
ourselves are unwilling to put our money 
where our mouths are, we have no right to 
ask foreign governments and foreign inves- 
tors to risk their money in developing our 
own economy. 

Laid it right on the line— for foreign 
companies considering investments in 
the Philippines, this issue— the confi- 
dence of Filipinos as shown by the 
return of their assets— is crucial. The 
Aquino government should develop 
plans and programs to lure such capital 
back home, and they are very well 
aware of it. 

We are beginning to see the first 
signs that the confidence of domestic in- 
vestors in the Philippines is firming up. 
Capital flight— which had become such a 
major problem during the last 2 years of 
President Marcos' administration- 
appears to have ended. There is a sense 



that the Philippine economy has bot- 
tomed out from the recession that began 
in 1983; and projections are for a 
resumption of positive growth in the 
second half of this year. 

An important element in the Philip- 
pine recovery is dealing with the mas- 
sive foreign debt. The U.S. Government 
is actively involved, through our Agency 
for International Development, in 
searching for creative solutions to this 
problem, including Philippine plans to 
support privatization of major companies 
and ways to convert some of the Philip- 
pine debt into equity— the so-called debt 
equity slot, which is an idea that is be- 
ginning to catch on, be helpful in many 
places. 

Thus far, the international business 
community— while welcoming the change 
of government in Manila— has adopted a 
cautious, wait-and-see attitude toward 
investment decisions. If stability and de- 
velopment in the Philippines are to be 
attained, however, the American private 
sector must get off the dime and look 
aggressively at investment opportuni- 
ties. Real money and attractive rates of 
return are involved. 

As a former businessman, I know 
the calculus of potential risk and benefit 
that businessmen apply in making in- 
vestment decisions. In the case of the 
Philippines, we have a country that 
traditionally has been one of our closest 
friends. It is a country in which Ameri- 
can investment has done exceptionally 
well in the past. For the first time in a 
number of years, there is an administra- 
tion in the Philippines with both the 
sound policies and the popular mandate 
necessary to attack the country's most 
substantial problems. That administra- 
tion enjoys our strong confidence and 
support. It has positively impressed the 
international donor community. 

In light of the Philippines' abundant 
human and natural resources, there is 
no reason why the Filipinos cannot now 
enjoy the same economic success 
achieved by many of their Asian neigh- 
bors. I believe that the American inves- 
tors who come in early and for the long 
haul will reap large benefits. 

Conclusion 

So now it should be very clear where I 
stand: I am bullish on the Philippines. 
That would have seemed an especially 
rash statement to make only a year ago. 
But the manner in which the Filipino 
people and their new leaders have over- 
come nearly impossible odds to restore 
democracy within their country gives 
me good cause for optimism. 



igust 1986 



29 



THE SECRETARY 



Americans were exhilarated last 
February over what the Filipino people 
had accomplished politically. I believe 
we should be equally excited about what 
the Filipinos are now trying to achieve 
in terms of stability and development: to 
restore a greater sense of democratic 
legitimacy to the governmental process; 
to bring an end to insurgent violence in 
the countryside; and to improve econom- 
ic conditions for all Filipinos through 
steady, market-oriented growth. 



For reasons of history, of friendship, 
and of our own self-interest, this is a 
time for Americans to get off the fence. 
We must give the Filipino people and 
their new government the support they 
need and deserve. 



'Press release 124. The question-and- 
answer session following the address is not 
printed here. ■ 



The Church as a Force 

for Peaceful Change in South Africa 



Secretary Shultz's address before the 
Conference on South Africa for Ameri- 
can Religious Leaders on June 2, 1986. 1 

Welcome to the State Department. I 
want to extend my personal thanks to 
each of you for attending today's confer- 
ence on "The Church as a Force for 
Peaceful Change in South Africa." This 
is a matter we take with great serious- 
ness, and I know you do too. So I want 
to go through, rather carefully, some 
views about this subject for your con- 
sideration. 

Moral leaders on both sides of the 
Atlantic are playing an important role in 
promoting the peaceful change that is 
essential to South Africa. We welcome 
your participation in today's conference 
because peaceful transition requires ac- 
tive participation by men and women of 
high moral principle. 

I think we can take a leaf out of our 
own book, and I think, to me, the tran- 
sition that we have made— not complete, 
but, nevertheless, very strong— 
particularly in the period immediately 
following World War II, was tremen- 
dously affected by the people of religion, 
by the spiritual leadership, by the liter- 
ary community, as our own civil rights 
movement took place and gave force to 
the change that we have had and must 
continue to have in this country. So I 
put great store by the importance of 
looking at these issues as matters of 
morality. 

All Americans condemn South Afri- 
ca's policy of apartheid— institutionalized 
racial discrimination. Apartheid is 
wrong. It robs the blacks of South Afri- 
ca of their fundamental human rights; it 
drains the country of its human poten- 
tial; and it threatens the security and 
economic prospects of an entire subcon- 
tinent. 



Our people and government have 
demonstrated that we oppose apartheid. 
Apartheid must go— and it must yield to 
a nonracial system based on the consent 
of all the governed. It must go soon. 
Let me be categorical on this point. 
Western interests— moral, strategic, eco- 
nomic, and political— will suffer if the 
process of constructive, peaceful change 
fails to deliver the goods in South Afri- 
ca. Stated another way: an immoral sys- 
tem does not serve our interests; it 
offends our moral principles; and we 
must continue to seek to end it. 



The Tragedy of Violence 

The situation in South Africa today is a 
continuing tragedy. The death toll from 
official and factional violence continues 
to mount. Political polarization, fear, and 
hatred within South Africa's communi- 
ties raise ominous prospects for all who 
care about humanitarian values. As nor- 
mally decent people resort to barbaric 
methods, they make a mockery of the 
very moral and political principles they 
claim to support. I am speaking of all 
those guilty of these outrages: police- 
men and prison interrogators who abuse 
children and torture detainees; the com- 
rades, so-called, with their obscene 
"necklace" burnings; vigilantes and 
hooded hit-men who kill political rivals 
and destroy their houses; guerrillas who 
use the terrorist tools of mines and plas- 
tic explosives against civilians. 

Americans witnessing this tragic 
brutality are appalled. Our hearts go out 
to those millions of South Africans- 
black, white, and brown— who are 
caught in the middle. They are the over- 
whelming majority. 

Just as immoral violence must be re- 
jected by all those committed to a just 
society, so also must we question the 



political and moral' vision of those who 
advocate economic destruction as the 
road to South Africa's salvation. Some 
would have us believe that the true foe: 
of apartheid are the advocates of puni- 
tive economic sanctions and disinvest- 
ment. They have failed to make a 
convincing case. 

In saying this, I fully recognize that 
there are few things as irresistible as 
the urge to do good deeds in support oM 
a just cause. It is a powerful impulse fc 
Americans, and we all share it, and we 
should be proud of it. But we have a 
moral responsibility to consider the con 1 
sequences of our actions, for others anoi 
for ourselves. South Africa's Catholic 
bishops recognized this when they re- 
cently declared: 

. . . intensified [economic] pressure can 
only be justified if applied in such a way as 
not to destroy the country's economy and tc 
reduce as far as possible any additional 
suffering to the oppressed through job loss. 

In saying this, I fully recognize tha 
the growing internal pressures for 
change and negotiation are, in importaii 
part, economic. Very high unemploy- 
ment and inflation rates, the sharp dro 
in value of South Africa's rand currenc 
and the loss of confidence by foreign ir 
vestors and bankers are all part of a 
downward economic climate that create 
hardship and discontent among South 
Africans. In selected areas, black organ 
zations have used consumer boycotts to 
bring pressure upon local authorities tc 
meet their grievances. 



The Reality of Change 

This leads to my second point. Change 
is taking place in South Africa. It is oc 
curring unevenly, slowly, sometimes 
reluctantly or by stealth. But it is sim- 
ply inaccurate to view apartheid in 
South Africa as a static system. It is 
not monolithic. Our policy is based on 
the premise that South Africa is a soci 
ty in transition. 

The limited changes which have oc- 
curred in the basic structure of apart- 
heid point logically and inexorably 
toward more fundamental change. This 
prospect is exciting violent minorities i 
both ends of the political spectrum, am 
among other things, we saw those pic- 
tures of a violent white minority with 
their swastika-like insigfnia that turned 
us all off, I'm sure. The vast majority 
South Africans are caught in the middl 
where their fears and anxieties are ex-< 
ploited. Violence has escalated. None o 
us can permit ultimate victory— in the 
form of a democratic society for all 



30 



THE SECRETARY 



>uth Africans— to be wrenched from us 
' extremes of the left or right. 

In my view, change in South Africa 
occurring for many reasons: many 
iuth Africans of good will seek justice; 
e foes of apartheid have powerful ar- 
iments; the previous structure of soci- 
y is no longer accepted or viable, 
ternal pressures are the principal fac- 
r. Basic social and economic pressures 
ward modernization of labor relations 
d rational urbanization are severely 
dermining apartheid. 

Most recently, in the past 21 months 
unrest and violence, we are witness- 
% a new level of domestic political 
essure. The black community is mak- 
l clear its unwillingness to passively 
cept continuing exclusion from the 
nefits of citizenship. They demand 
ual political and economic participa- 
in in their own land. 

What about outside pressures? I be- 
ve they have a complementary role to 
ly. Though U.S. influence is limited, it 
ists, and we are using it. Carefully 
fgeted actions, statements, and signals 
>m overseas can make a difference— 
th in encouraging change and channel- 

1 change so that it leads to something 
tter, not something worse or equally 
d. 

There is a myth that U.S. policy 
.vard South Africa consists of "quiet 
)lomacy" or "persuasion, not pres- 
re." Those descriptions are simply 
•ong. We use both public and private 
annels for communicating our views to 

2 South African Government and peo- 
;. By the same token, we consider 

it pressures, appropriately designed, 
5 an integral part of our diplomacy 
,vard South Africa. 

Let me give you just one example, 
hen South African forces recently 
ide cross-border raids into three 
ighboring countries, we strongly and 
omptly condemned this action. We ex- 
iled the senior South African military 
;ache in this country and withdrew 
r own from Pretoria to protest these 
ong-headed and self-destructive raids. 
e have taken other steps to leave no 
ubt in the minds of South Africa's 
iders that their actions were unaccept- 
le, unjustified, and will not assist the 
ernal negotiations and regional 
)lomacy we believe are indispensable 
■ all of southern Africa. They must 
ow that such activity completely iso- 
es them in the world community. 
At the same time, we must recog- 
;e that in the past year the South 
rican Government has begun meaning- 
reform. It has abolished laws against 
xed marriages; it has expanded some 



forms of property rights for blacks; and 
it has reformed the pass laws, the tools 
of day-to-day control over the black 
population. But more— much more- 
remains to be done. Apartheid must be 
dismantled. Even the South African 
Government now acknowledges that the 
system is doomed. The question we now 
face is not whether apartheid will end 
but how and when it will go and what 
will replace it. 

The Role of American Influence 

American policy has consistently 
pressed for change in South Africa over 
several decades— and under both Repub- 
lican and Democratic administrations. 
President Kennedy's 1962 embargo on 
military exports to South Africa has 
been followed by other steps as Ameri- 
cans of both parties have created the 
building blocks of a morally and strateg- 
ically responsible policy. 



in the direction of peaceful and construc- 
tive change. 

So let me emphasize that the 
premise of President Reagan's policy is 
that we dare not ignore South Africa or 
merely strike a pose. We cannot play 
the part of a Pontius Pilate, washing 
our hands of a gross injustice that de- 
mands solution. But we must tailor our 
approach to those things that will really 
help end apartheid and promote a post- 
apartheid society that protects the in- 
dividual liberties of all South Africans. 

And there are other ways we can 
make our influence felt: 

• We can, and we do, help stricken 
communities to rebuild themselves. 

• Both public and nongovernmental 
U.S. groups can bring resources and 
counsel to bear to help build a post- 
apartheid society. Our rapidly growing 
assistance programs and grants are a 
start. 



Apartheid must go— and it must yield to a 
nonracial system based on the consent of all the 
governed. 



Most recently, President Reagan's 
Executive Order of September 9, 1985, 
laid out our view of the careful applica- 
tion of pressures. In that decision, 
designed to send a clear signal that 
Americans are united about apartheid, 
we made every effort to distinguish 
clearly between constructive and de- 
structive pressures. 

At this time of renewed American 
attention to South Africa, let us remem- 
ber our goal: we seek the end of apart- 
heid, racism, and repression. Hence, our 
actions should target apartheid policies 
and institutions and dissociate us from 
them. Our aim is not— I repeat, not— to 
inflict random, indiscriminate damage on 
the South African people and their econ- 
omy from abroad. 

Americans must not be at all com- 
placent or satisfied with the pace or con- 
tent of such change to date. And we are 
not. Our moral abhorrence of racism and 
repression, to be effective, however, 
must be informed about the basic dy- 
namics of the South African situation. 
We have a moral responsibility to un- 
derstand how we can most effectively 
influence developments in South Africa 



• South Africa's churches, many of 
them affiliated with U.S. counterparts, 
represent a major asset to help all those 
who wish to build rather than destroy 
their country. They represent voices of 
conciliation, decency, dialogue, and com- 
munity service in the interest of the 
common humanity of all South Africans. 
They need your help. They need more— 
not less— American involvement. 

A Time for Negotiations 

The Bible tells us that there is a season 
for every change. There is a time to 
deliberate and a time to decide. In 
South Africa, now is the time to decide; 
now is the time for negotiation. Negotia- 
tion alone offers the prospect of peaceful 
change. Negotiation alone involves the 
black community in a process designed 
to make that country whole. 

All of the people of South Africa 
must rise to the moral challenge that 
peaceful change demands. A week ago, 
at the UN Special Session on the Criti- 
cal Economic Crisis in Africa, I saw 
delegates from virtually all countries of 
the continent rise to a different chal- 
lenge: the challenge of discarding old 



gust 1986 



31 



THE SECRETARY 






orthodoxies about development in favor 
of policies that work. 

Turning to the broader African 
scene, we are so accustomed to bad 
news that we have a tendency to over- 
look major positive developments. One 
of the positive developments of the spe- 
cial session was its publication of a 
"Program of Action for African Eco- 
nomic Recovery and Development." 
This remarkable document recognizes 
the need for partnership between Afri- 
cans and non-Africans. Africans recog- 
nize that they must set their houses in 
order— a difficult and often painful 
process. We need to support such Afri- 
can efforts by timely and appropriate as- 
sistance. As I mentioned in my speech 
to the special session, we are going to 
have to concentrate our foreign as- 
sistance in those countries which them- 
selves are undertaking to establish the 
right policy framework. We are confi- 
dent that concerned Americans like 
yourselves will want to lend their voice 
to strengthen chances for a sustained 
American compact with Africa. 

Africa today is a continent searching 
for a better future; and South Africans 
now have it in their power to join that 
movement. But they will be left out if 
political instability continues and negoti- 
ations founder. That course would be a 
tragedy— not only for the people of 
South Africa itself but for the rest of 
the subcontinent which stands to benefit 
enormously and lose greatly without it; 
it stands to benefit enormously from a 
stable and just South Africa. 

To be effective in our actions, we 
have to understand: our influence in 
South Africa is finite. We want to retain 
it, use it carefully, tailor it to evolving 
circumstances. Our investment is less 
than 1% of all fixed investment in South 
Africa, and our trade less than 15% of 
its foreign trade. Limited though our 
economic presence is, we are a force for 
decency and change. 

Thus, the American private sector 
must remain involved. American compa- 
nies in South Africa are the building 
blocks of our influence. That is why we 
oppose disinvestment. If American com- 
panies withdraw, we and the black 
majority of South Africa will be 
deprived of a major source of influence. 
American capitalism is an engine of 
peaceful change, integrating the work- 
place and giving black South Africans a 
greater stake in their country's future. 
Disinvestment undermines both these 
processes. It deprives employees of 
these companies of their daily wage; and 



it deprives them of institutions that play 
a vital role in integrating South African 
society. 

Conclusion 

You are moral leaders in America. 
Americans require your leadership to 
demonstrate that we do not need to be- 
come destroyers in order to fight 
against apartheid. There are construc- 
tive ways to exert pressure in support 
of our common goal of a democratic 
South Africa. Americans— by staying 
and building, not cutting and running- 
can help build a freer South Africa. 

South Africa today is a wounded na- 
tion, but it is also a nation of great 
strengths. Its people are diverse, hard 



Secretary's Interview 
on "Meet the Press 



J 5 



working, and talented; its economy is 
the most modern on the continent; and 
it is rich in aspirations for a better fu- 
ture. The vast majority of South Afri- 
cans do not want violence, and they do 
not want to choose between a black or a 
white dictatorship. They want a 
democracy that knows no color and 
gives equal protection to both the 
majority and to minorities. That is what 
the South Africans want; that is what 
the American people want— especially 
those of you gathered here today. 
Together, we have a chance to help 
bring that future to life. 



Secretary Shultz was interviewed on 
NBC -TV's "Meet the Press" on June 1, 
1986, by Marvin Kalb, NBC News; John 
Wallach, foreign editor of the Hearst 
newspapers; and Strobe Talbott, Time 
magazine. 1 

Q. It is just a little over 6 months 
since President Reagan met with 
Soviet leader Mikhail Gorbachev in 
Geneva. They agreed to meet again 
this year in the United States and 
next year in the Soviet Union. Expec- 
tations for an overall improvement in 
relations were high. Now they are 
again seen as low. 

What has happened that explains 
this change? The expectations were 
high. We were at Geneva with you. 
They are now low. What accounts for 
the change? 

A. I don't know what accounts for 
the change. From our standpoint, our 
approach has been quite consistent and 
steady. We feel that it is very important 
to have this meeting. We think that im- 
portant things can be done there that 
will be beneficial to us and the Soviet 
Union, and we are prepared to do the 
hard work necessary to make it a 
worthwhile meeting. That has been our 
approach all along, and that is where we 
are right now. 

Q. By implication, are you sug- 
gesting that possibly Soviet leader 
Gorbachev might not be as interested 
in the meeting this year as he was? 



'Press relase 123. The question-and 
answer session following the address is not 
printed here. ■ 






A. I have no capacity to speak for 
him or speculate— don't care to specu- 
late about it. All I can say is that Presi | 
dent Reagan is ready to have the 
meeting and ready to have the really 
great preparatory work that must be 
done to make such a meeting a success 
go forward. 

Q. Coming to this question of im- 
pending scrapping of the SALT II ac- 
cords that dominated much of the 
news this week and dominated many 
of your discussions in Halifax, you 
have made a couple of statements dui 
ing the week to the effect that the 
SALT II Treaty is obsolete. You have 
strongly implied that there is no rela- 
tive military advantage for the United 
States to have the Soviets constrained 
in their strategic forces by the 
SALT II Treaty. 

The Soviets have now threatened 
that if we break out of the numerical 
limits of the SALT II Treaty at the 
end of the year, they will do likewise. 
Is this a hollow threat? Is there reall; 
no additional military threat to the 
United States if the Soviets break oul 
of SALT II? 

A. The Soviets have broken out of 
SALT II— that's the point— and for son 
time. 

Q. The numerical ceilings in 
SALT II? 

A. They have deployed a second sy 
tern which is prohibited by the treaty, 



32 



Department of State Bullet 



THE SECRETARY 



id they heavily encrypt their teleme- 
y which impairs verification under the 
eaty. So to imply, as your question 
)es, that somehow or other they are in 
informance with it and we may not be 
not correct. You have to take a treaty 
all of its dimensions and not allow 
ther side to decide selectively what it 
ants to conform to and what it doesn't. 

I want to change the phraseology 
lat you have all used. The President's 
atement was a very thoughtful state- 
ent, and it talked essentially about 
lifting gears in what represents appro- 
iate restraint on the part of the Unit- 
i States. 

What we have to remember is that 
e are responsible for the deterrence 
lat keeps the peace, and so we have to 
ok at Soviet behavior, at our own 
idget constraints and other con- 
raints, and basically see what is neces- 
iry to maintain that deterrent posture, 
id that is what the President is doing. 

Q. You spoke of the introduction 
F a second new type of ICBM [inter- 
mtinental ballistic missile]. The 
-actical consequences of scrapping 
ALT II would mean, according to 
jur own Pentagon— the Joint Chiefs' 
sport, the Soviet military power 
sport-that the 70-plus SS-11 silos 
lat the Soviets have destroyed to 
lake room for the new SS-25, that 
ley would be able to go ahead with 
lose; they wouldn't have to scrap 
lem; that as many as 9,000 new war- 
eads, new Soviet nuclear warheads, 
light be added to their arsenal 
ithout the restraint of SALT II. 
oesn't that concern you? 

A. One of the problems with 
ALT II, and a reason why I think it is 
creasingly obsolete— and here I'm only 
>peating what was said, for example, in 
le Scowcroft commission report— the 
■oblem with SALT II is that it is a 
eaty about limiting increases. And the 
arhead ceiling is something that the 
jviets can add warheads to their ar- 
:nal by a considerable amount, basical- 
double the amount that was there at 
le beginning and still be in conformity 
ith it. So that is a problem about the 
eaty, and it only emphasizes the point 
le President has consistently made: 
imely, that what we need to do is get 
radical reduction in the levels of these 
rategic forces. 

Q. I'm not quite sure I understand 
hat you were saying a moment ago 
hen you took objection to the way 
e phrased the President's decision on 



SALT II. He has scrapped the con- 
straints of SALT II, has he not? 

A. I thought you might be asking 
me about this subject, and I brought 
along the language the President used. 
Perhaps I could read it to you. I don't 
want to paraphrase it. I think it is im- 
portant to say what the President said, 
so I brought myself a prop. 

"... I continue to hope that the 
Soviet Union will use this time"— that 
is, the time between now and around 
the end of the year— "to take the con- 
structive steps necessary to alter the 
current situation. Should they do so, we 
will certainly take this into account. . . . 

"I do not anticipate any appreciable 
numerical growth in U.S. strategic 
offensive forces. Assuming no significant 
change in the threat we face as we im- 
plement the strategic modernization pro- 
gram, the United States will not deploy 
more strategic nuclear delivery vehicles 
than does the Soviet Union. Further- 
more, the United States will not deploy 
more strategic ballistic missile warheads 
than does the Soviet Union. 

"In sum, we will continue to exer- 
cise the utmost restraint, while protect- 
ing strategic deterrence, in order to 
help foster the necessary atmosphere 
for significant reductions in the strategic 
arsenals of both sides. This is the ur- 
gent task which faces us. I call on the 
Soviet Union to seize the opportunity to 
join us now in establishing an interim 
framework of truly mutual restraint." 

And then he goes on to call for the 
radical reductions that we all seek. 

So that is essentially saying there 
has been a regime of restraint based on 
a treaty that has been violated, that has 
run out of its terms, and has an increas- 
ingly obsolete concept in it; namely, that 
the launchers should be the unit of ac- 
count. And he is moving to a different 
kind of restraint based on looking at 
what they can do to us, and what we 
can do to them in deterrence. 

Q. You have twice used the term 
"increasingly obsolete." I have heard 
from Secretary Weinberger and other 
senior officials in this Administration 
that it's obsolete, it's over, it's dead, 
it's finished. It's a thing of the past, 
according to Mr. Adelman [Director, 
Arms Control and Disarmament 
Agency]. Are they all wrong? 

A. I am describing why the Presi- 
dent decided what he decided— that 
more and more, as we see a system 



based on launchers rather than war- 
heads, what we encourage is putting on 
these launchers more and more war- 
heads, and it is essentially destabilizing. 
The Scowcroft commission report made 
that point, I thought, very powerfully 
and correctly. That is what I mean by 
the word "obsolete." 

Q. But no question that I asked 
earlier or either of my colleagues 
asked earlier implied that there are 
not dubious activities that the Soviets 
have been involved in under the name 
of arms control. 

The fact of the matter is, though, 
no statement that the Administration 
has made implies that the Soviets have 
yet exceeded the numerical limits of 
SALT II. Those numerical limits pre- 
vent the Soviets from having more 
than 820 MIRVed [multiple, independ- 
ently-targetable reentry vehicle] 
ICBMs. They prevent the Soviet Union 
from putting more than 10 warheads 
on their largest and most threatening 
rocket, the SS-18. 

The statement that you just read 
by the President suggests that at the 
end of the year, we will, for the first 
time, go over the numerical limits of 
SALT-namely, the 1,320 ceiling-and 
the Soviets are saying that, if we do 
that, they will go over the numerical 
limits on their side. 

My question to you originally, and 
I'd like to come back to it again, is: 
Will the United States be faced with a 
larger threat from the Soviet Union if 
they follow through on that promise? 

A. You have to balance things here, 
and let me just come back to the point 
that you can't have a treaty that has a 
number of provisions in it and have one 
party to the treaty decide, "Well, I'll 
violate this, and I'll violate that, but I'll 
keep this, and by keeping this, I insist 
that the other side keep everything 
about the treaty." That is not an equita- 
ble way to go about it. 

I think that the emergence of the 
new mobile second system, in violation 
of the treaty, is a militarily very signifi- 
cant violation, and we have to worry 
about it. 

Q. The system that's a counterpart 
to Midgetman. 

A. Midgetman is an idea, and it is 
not even settled down as a concept yet 
within the military circles that are 
working on it. The second system of the 
Soviet Union is a deployed system. I 
think they have around 70 deployed 
now. 



jgust 1986 



33 



THE SECRETARY 



Q. What would the Soviet Union 
have to do for the President to rescind 
his order, in effect, and not to go 
above the 1,320 ceiling at the end of 
the year? 

A. I don't think there is any particu- 
lar thing that should be pointed to. But, 
of course, what we would all like to see, 
I think— I know the President would, I 
would, and I think in general people all 
over the world would— is an agreement 
that would genuinely bring down drasti- 
cally these huge arsenals of strategic 
nuclear weapons. They are a menace. 

Q. For the course of this Adminis- 
tration we've pursued the interim re- 
straint policy, the policy that we 
would not undercut SALT II if the 
Soviets didn't undercut it. Is that now 
over? 

A. That is over. 

Q. That is over. So we have, in a 
sense, abandoned the moral high posi- 
tion, have we not? 

A. The President has decided that 
we will continue to follow a policy of 
thoughtful restraint, but rather than 
have that restraint be a derivative of a 
treaty that is increasingly obsolete in its 
concept, has been violated by the Soviet 
Union, has never been ratified by the 
U.S. Senate, and would have expired if 
it had been ratified, we will be guided 
by our observations of what the Soviet 
Union does. 

Q. My point is, there is nothing 
the Soviets can do today or in the 
next 6 months that would breathe new 
life into the SALT II agreement itself, 
is that correct? 

A. I think what we are looking for is 
a regime of restraint— that's the real 
point— and more than that, real progress 
in the reduction of these nuclear 
armaments. 

Q. I was in Moscow last week, and 
I asked a Soviet Deputy Foreign 
Minister what he wanted out of a 
summit if a summit takes place. Num- 
ber one on his list was strengthening 
the regimes of existing agreements, 
and he mentioned both SALT II and 
ABM [Anti-Ballistic Missile Treaty]. 
We have now, I guess, abandoned 
SALT I and SALT II. Is there any rea- 
son why the Soviets shouldn't think 
we're also going to abandon the ABM 
Treaty? 

A. We have repeatedly stated our 
intent to observe the ABM Treaty 
terms, and we have called upon the 
Soviet Union to do so. They are in viola- 
tion of that treaty by virtue of the 
building of the Krasnoyarsk radar. 



Q. Would we begin talks with the 
Soviets on strengthening the regimes 
of, as they put it, "existing 
agreements?" 

A. We have been trying to engage 
them in just that in Geneva, particularly 
as regards the ABM Treaty, and to say 
to them, "Here was this ABM Treaty, 
negotiated back in 1972. Let us create 
the conditions envisioned in that treaty 
which do not include the Krasnoyarsk 
radar." 

Q. It is not clear to me, on the 
basis of your answer to John Wallach, 
whether the United States, in your 
view at this time as best you can fore- 
cast, intends to continue to abide by 
the ABM Treaty next year when it 
comes up for review. 

A. We certainly intend to abide by 
the treaty. That is what we have said 
continuously. 

Q. Do you feel that it is in the in- 
terest of this country, then, to public- 
ly pledge that the United States will 
abide by the treaty for another 15 to 
20 years, as seems to be at the heart 
of a new Soviet proposal in Geneva? 

A. The ABM Treaty is a document, 
and it has certain terms in it, and that 
is what we are pledged to observe. As I 
said a minute ago, the fact that the 
Soviet Union is building a large phased- 
array radar pointed inward, in direct 
contravention of the treaty, constitutes 
a problem. And I think we have to face 
that problem. 

Q. You've said in the past, when 
the terms of the SALT II Treaty were 
not going to be undercut by the Ad- 
ministration, that the Soviet Union 
was violating the terms of SALT II. 
Now the President comes in with a 
decision saying we won't be bound by 
the terms any longer. If you are say- 
ing that the Russians are violating, in 
a critical way, the ABM, why don't 
you simply come out and say that the 
United States won't be bound by the 
ABM? 

A. We think it is important to keep 
calling attention to these violations and 
to keep working to curb them and to 
try to keep as much of this treaty struc- 
ture in place as is appropriate to the cir- 
cumstances. 

In Geneva, in the space defense 
group where Max Kampelman is our 
negotiator, we have been consistently 
trying to engage the Soviets in a discus- 
sion of the ABM Treaty regime and to 
try to get it back where it ought to be. 
That's one step that we want to take. 



Q. Haven't they come in with a 
proposal, and can you give us your 
response to it? 

A. As far as I'm concerned, I don't 
have any comment on the reports of any 
proposal. 

Q. But there has been some am- 
biguity on the American side over 
what we here in the United States 
mean by the ABM Treaty. Robert 
McFarlane, the former national secu- 
rity adviser, created quite a flap and 
made quite a bit of news on this pro- 
gram, "Meet the Press," last year 
when he promulgated what is called 
the "permissive interpretation" of the' 
ABM Treaty under which the United 
States would be allowed to proceed 
with more or less an unfettered Stra- 
tegic Defense Initiative. 

You played an important part in 
working out a kind of Solomonic conv 
promise within the Administration on 
that. Could you clarify as of today 
what the Administration policy is? 
When we say we're going to stay with 
the ABM Treaty, does that mean as 
restrictively interpreted? 

A. I spoke on that subject authorits 
tively in the sense that what I said wa^ 
carefully worked out and approved by 
the President, and there hasn't been 
any change in the President's view. 

It is the case that when you study 
the treaty itself and all of the back- 
ground material, and so on— which has 
been done carefully, including by my I 
Legal Adviser, Judge Abe Sofaer— that 
you can make out a very good case that 
a much broader interpretation than has 
been adopted by the Strategic Defense 
Initiative office, and announced, could 
be made. But we have a policy, and tha 
is our policy. 

Q. I don't think there is any dis 
agreement even among doves about 
Krasnoyarsk and the fact that the 
Soviets have built a radar that is 
countrywide, faces inward, and is 
designed to knock down incoming 
American missiles. You are saying im 
effect today, are you not, that unless 
they do something about that, the 
duration of the ABM Treaty itself wii 
come into question within the not-to0( 
distant future? Is that correct? 

A. I don't want to step into that I 
hole. I think what we need to do is co»j 
tinue to work to have that treaty be I 
fully observed in all of its elements, am 
that is what we are doing, not only in 
the group where violations are discusse 
but in the direct negotiations in Genevf 
So we are talking not only about that 



34 



Department of State Bullet 



AFRICA 



t about their ballistic missile defense 
stem about Moscow and some of its 
aracteristics that give you pause. 

Q. But in those very Geneva 
gotiations, the Soviets have report- 
ly said they want to strengthen the 
1M Treaty, and in return they might 
t some of their strategic forces. The 
JM Treaty permits some research, 
velopment, and testing of a strategic 
fense, or "star wars," system. Isn't 
at a hopeful sign? 

A. A hopeful sign will be when it is 
ssible for the United States and the 
viet Union to negotiate carefully, offi- 
lly, and privately about some of these 
Ficult things. And to the extent that 
i happen in Geneva, that will be a big 
is. 

Q. Are you planning to go to the 
ddle East this month? 

A. I am practically always ready to 
to the Middle East if there is some- 
ng worthwhile that has at least some 
mce of being accomplished. I don't 
i that I have to go out with a cold 
:k, and I'm willing to fail— and try. 
t if there is something to try at, we 
; always ready to go. But it is a 
estion. 

Judge Abe Sofaer has been out 
;re for the last 2 weeks trying to see 
le can't put together something on 
ba, and it hasn't been possible to do 
and he is pretty good. 

Q. Yet if it hasn't been possible to 
Taba, does that mean you are wip- 
f out the possibility of going to the 
ddle East this month? 

A. I work on that problem of the 
ddle East practically continuously, 
d I don't intend to let up on work on 
it because if there is something con- 
■uctive— if you can just move the ball 
mg an inch— why, I think it is 
irthwhile. 

King Hussein will be here a week 
im tomorrow. We will have a chance 
meet with him, and we are continu- 
sly appraising the situation. 

Q. People in our line of work— 
jrnalists— have been having a bit of 
iust-off in the last few weeks with 
ople in your line of work— that is, 
ficials charged with keeping the 
crets of the U.S. Government. I 
low this has been of concern to you; 
u have fired at least one member of 
e State Department for leaking. 



South African Military Raids 



WHITE HOUSE STATEMENT, 
MAY 19, 1986 1 

On the occasion of South African mili- 
tary strikes into Zambia, Zimbabwe, 
and Botswana, the United States stands 
with the governments and peoples of 
those countries in expressing our sense 
of outrage at these events and our con- 
dolences to the families of the victims. 

We vigorously condemn these at- 
tacks by South Africa. Our diplomacy in 
South Africa has been aimed at stopping 
cross-border violence. Such efforts have 
had results. We would note that senior 
officials of South Africa and its neigh- 
bors have held regular and productive 
consultations on issues of security and 
respect for international borders. 

We believe these military actions to 
be particularly inexplicable in the light 
of ongoing efforts among those neigh- 



bors to maintain good working relations 
and communication on security 
problems. The ongoing process had 
clearly not exhausted all possibilities for 
peaceful remedy of the issues. 

We find the South African raids are 
all the more difficult to fathom, given 
current efforts of the Commonwealth's 
Eminent Persons Group, which is cur- 
rently in the region, engaged in highly 
sensitive discussions to promote dia- 
logue between blacks and whites in 
South Africa. 

The United States has made clear 
for many years its strong opposition to, 
and condemnation of, violent means by 
any party as a method of resolving 
South Africa's problems. And we stand 
by the principle that political avenues 
should be given every opportunity. 



'Text from Weekly Compilation of 
Presidential Documents of May 26, 1986. 



The Director of Central Intelli- 
gence and others have talked about 
sending journalists to jail if they pub- 
lish information which the Adminis- 
tration considers to be classified. 
What's your own view on the use of 
legal sanctions and the threat of jail 
against publications and journalists in 
this ongoing struggle. 

A. I'm not going to pose here as a 
lawyer, but I think the law, whatever 
the law is, ought to be enforced, includ- 
ing when somebody in the U.S. Govern- 
ment puts out information that is 
classified and sensitive. That person is 
violating the oath of office that you 
solemnly take, and should be fired at a 
minimum, and anytime I can get my 
hands on people who do this, let me tell 
you if I have anything to do with it, 
they are going to be fired. 



Q. What about the journalist and 
the publisher who receive the informa- 
tion and publish it? 

A. As I say, I don't want to pose as 
a lawyer to know what the legal situa- 
tion is. But if they violate a law— a 
legitimate, constitutional, proper law— 
they ought to be prosecuted. If they 
haven't, they shouldn't. 

Q. And at this particular point, 
what does it look like? Do you think— 

A. I think they can properly be 
talked to, and journalists are talked to 
regularly. And I think there is a tradi- 
tion of responsibility in the journalistic 
community, and it still exists, and it 
should be encouraged. Nobody wants to 
undermine national security. Nobody 
does. 



•Press release 122 of June 2, 1986. 



gust 1986 



35 



ARMS CONTROL 



U.S. Interim Restraint Policy: 

Responding to Soviet Arms Control Violations 



PRESIDENT'S STATEMENT, 
MAY 27, 1986 1 

On the eve of the strategic arms reduc- 
tion talks (START) in 1982, I decided 
that the United States would not under- 
cut the expired SALT I [strategic arms 
limitation talks] interim offensive agree- 
ment or the unratified SALT II agree- 
ment as long as the Soviet Union 
exercised equal restraint. I took this ac- 
tion, despite my concerns about the 
flaws inherent in those agreements, to 
foster an atmosphere of mutual restraint 
conducive to serious negotiations on 
arms reductions. I made clear that our 
policy required reciprocity and that it 
must not adversely affect our national 
security interests in the face of the con- 
tinuing Soviet military buildup. 

Last June, I reviewed the status of 
U.S. interim restraint policy. I found 
that the United States had fully kept its 
part of the bargain. As I have docu- 
mented in three detailed reports to the 
Congress, most recently in December 
1985, the Soviet Union, regrettably, has 
not. I noted last June that the pattern 
of Soviet noncompliance with their exist- 
ing arms control commitments increas- 
ingly affected our national security. This 
pattern also raised fundamental con- 
cerns about the integrity of the arms 
control process itself. A country simply 
cannot be serious about effective arms 
control unless it is equally serious about 
compliance. 

In spite of the regrettable Soviet 
record, I concluded last June that it re- 
mained in the interest of the United 
States and its allies to try, once more, 
to establish an interim framework of 
truly mutual restraint on strategic offen- 
sive arms as we pursued, with renewed 
vigor, our objective of deep reductions 
in existing U.S. and Soviet nuclear ar- 
senals through the Geneva negotiations. 
Therefore, I undertook to go the extra 
mile, dismantling a Poseidon submarine, 
U.S.S. 5am Rayburn, to give the Soviet 
Union adequate time to take the steps 
necessary to join us in establishing an 
interim framework of truly mutual re- 
straint. However, I made it clear that, 
as subsequent U.S. deployment mile- 
stones were reached, I would assess the 
overall situation and determine future 
U.S. actions on a case-by-case basis in 
light of Soviet behavior in exercising 



restraint comparable to our own, cor- 
recting their noncompliance, reversing 
their unwarranted military buildup, and 
seriously pursuing equitable and verifia- 
ble arms reduction agreements. 

Later this month, the eighth Trident 
submarine, U.S.S. Nevada, begins sea 
trials. In accordance with our announced 
policy, I have assessed our options with 
respect to that milestone. I have consid- 
ered Soviet actions since my June 1985 
decision and U.S. and allied security in- 
terests in light of both those actions and 
our programmatic options. The situation 
is not encouraging. 

While we have seen some modest in- 
dications of improvement in one or two 
areas, there has been no real progress 
toward meeting U.S. concerns with 
respect to the general pattern of Soviet 
noncompliance with major arms control 
commitments, particularly in those areas 
of most obvious and direct Soviet non- 
compliance with the SALT and ABM 
[antiballistic missile] agreements. The 
deployment of the SS-25, a forbidden 
second new intercontinental ballistic 
missile (ICBM) type, continues apace. 
The Soviet Union continues to encrypt 
telemetry associated with its ballistic 
missile testing in a manner which im- 
pedes verification. The Krasnoyarsk 
radar remains a clear violation. We see 
no abatement of the Soviet strategic 
force buildup. Finally, since the Novem- 
ber summit, we have yet to see the 
Soviets follow up constructively on the 
commitment made by General Secretary 
Gorbachev and myself to achieve early 
progress in the Geneva negotiations, in 
particular in areas where there is com- 
mon ground, including the principle of 
50% reductions in the strategic nuclear 
arms of both countries, appropriately 
applied, as well as an interim agreement 
on intermediate-range nuclear forces 
(INF). 

Based on Soviet conduct since my 
June 1985 decision, I can only conclude 
that the Soviet Union has not, as yet, 
taken those actions that would indicate 
its readiness to join us in an interim 
framework of truly mutual restraint. At 
the same time, I have also considered 
the programmatic options available to 
the United States in terms of their 
overall net impact on U.S. and allied 
security. 



When I issued guidance on U.S. pol- 
icy on June 10, 1985, the military plans 
and programs for fiscal year 1986 were 
about to be implemented. The amount of 
flexibility that any nation has in the 
near term for altering its planning is 
modest at best. Our military planning 
will take more time to move out from 
under the shadow of previous assump- 
tions, especially in the budgetary condi- 
tions which we now face. These 
budgetary conditions make it essential 
that we make the very best possible use 
of our resources. 

The United States had long planned 
to retire and dismantle two of the oldest 
Poseidon submarines when their reactor 
cores were exhausted. Had I been per- 
suaded that refueling and retaining 
these two Poseidon submarines would 
have contributed significantly and cost- 
effectively to the national security, I 
would have directed that these two 
Poseidon submarines not be dismantled 
but be overhauled and retained. 
However, in view of present circum- 
stances, including current military and 
economic realities, I have directed their 
retirement and dismantlement as 
planned. 

As part of the same decision last 
June, I also announced that we would 
take appropriate and proportionate 
responses when needed to protect our 1 
own security in the face of continuing 
Soviet noncompliance. It is my view 
that certain steps are now required by 
continued Soviet disregard of their 
obligations. 

Needless to say, the most essential 
near-term response to Soviet noncompli-, 
ance remains the implementation of our| 
full strategic modernization program, to] 
underwrite deterrence today, and the I 
continued pursuit of the Strategic 
Defense Initiative (SDI) research pro- 
gram, to see if it is possible to provide i 
safer and more stable basis for our fu- 
ture security and that of our allies. The! 
strategic modernization program, includ- 
ing the deployment of the second 50 
Peacekeeper missiles, is the foundation 
for all future U.S. offensive force op- 
tions. It provides a solid basis which caB< 
and will be adjusted over time to 
respond most efficiently to continued 
Soviet noncompliance. The SDI program 
represents our best hope for a future in 



36 



Department of State Bulleti ' 



ARMS CONTROL 



hieh our security can rest on the in- 
easing contribution of defensive sys- 
ms that threaten no one. 

It is absolutely essential that we 
aintain full support for these pro- 
■ams. To fail to do so would be the 
orst response to Soviet noncompliance, 
would immediately and seriously 
idercut our negotiators in Geneva by 
moving the leverage that they must 
tve to negotiate equitable reductions in 
)th U.S. and Soviet forces. It would 
nd precisely the wrong signal to the 
adership of the Soviet Union about the 
riousness of our resolve concerning 
eir noncompliance. And it would sig- 
ficantly increase the risk to our secu- 
:y for years to come. Therefore, our 
ghest priority must remain the full im- 
ementation of these programs. 

Secondly, the development by the 
wiet Union of its massive ICBM 
rces continues to challenge seriously 
le essential balance which has deterred 
th conflict and coercion. Last June, I 
ed the Soviet Union's SS-25 missile, a 
cond new type of ICBM prohibited 
der SALT II, as a clear and irreversi- 
e violation. With the number of 
ployed SS-25 mobile ICBMs growing, 
iiow call upon the Congress to restore 
^artisan support for a balanced, cost- 
! "ective, long-term program to restore 
th the survivability and effectiveness 
the U.S. ICBM program. This pro- 
|am should include the full deployment 
i the 100 Peacekeeper ICBMs. But it 
list also look beyond the Peacekeeper 
id toward additional U.S. ICBM re- 
tirements in the future, including the 
iiall ICBM to complement Peace- 
leper. Therefore, I have directed the 
|?partment of Defense to provide to me 
| November 1986 an assessment of the 
st options for carrying out such a 
pprehensive ICBM program. This as- 
Bsment will address the basing of the 
bond 50 Peacekeeper missiles and 
lecific alternative configurations foi- 
ls small ICBM in terms of size, num- 
p- of warheads, and production rates. 
j Finally, I have also directed that the 
jvanced cruise missile program be ac- 
terated. This would not direct any in- 
base in the total program procurement 
f this time but rather would establish a 
tire efficient program that both saves 
pney and accelerates the availability of 
Iditional options for the future. 
' This brings us to the question of the 
[iLT agreements. SALT II was a fun- 
jmentally flawed and unratified treaty. 
ren if ratified, it would have expired 
I December 31, 1985. When presented 



to the U.S. Senate in 1979, it was con- 
sidered by a broad range of critics, in- 
cluding the Senate Armed Services 
Committee, to be unequal and unverifia- 
ble in important provisions. It was, 
therefore, judged by many to be inimical 
to genuine arms control, to the security 
interests of the United States and its al- 
lies, and to global stability. The pro- 
posed treaty was clearly headed for 
defeat before my predecessor asked the 
Senate not to act on it. 

The most basic problem with 
SALT II was that it codified major 
arms buildups rather than reductions. 
For example, even though at the time 
the treaty was signed in 1979, the 
United States had, and only planned for, 
550 MIRVed [multiple independently- 
targetable reentry vehicle] ICBM 
launchers, and the Soviet Union pos- 
sessed only about 600, SALT II per- 
mitted each side to increase the number 
of such launchers to 820. It also per- 
mitted a buildup to 1,200 MIRVed bal- 
listic launchers (both ICBMs and 
submarine-launched ballistic missiles) 
even though the United States had only 
about 1,050 and the Soviet Union had 
only about 750 when the treaty was 
signed. It permitted the Soviet Union to 
retain all of its heavy ballistic missiles. 
Finally, it limited ballistic missile 
launchers, not the missiles or the war- 
heads carried by the ballistic missiles. 
Since the signing of SALT II, Soviet 
ballistic missile forces have grown to 
within a few launchers of each of the 
820 and 1,200 MIRVed limits and from 
about 5,000 to over 9,000 warheads 
today. What is worse, given the failure 
of SALT II to constrain ballistic missile 
warheads, the number of warheads on 
Soviet ballistic missiles will continue to 
grow very significantly, even under the 
treaty's limits, in the continued absence 
of Soviet restraint. 

In 1982, on the eve of the START 
negotiations, I undertook not to under- 
cut existing arms control agreements to 
the extent that the Soviet Union demon- 
strated comparable restraint. Unfor- 
tunately, the Soviet Union did not 
exercise comparable restraint, and un- 
corrected Soviet violations have seri- 
ously undermined the SALT structure. 
Last June, I once again laid out our 
legitimate concerns but decided to go 
the extra mile, dismantling a Poseidon 
submarine, not to comply with or abide 
by a flawed and unratified treaty but 
rather to give the Soviet Union one 
more chance and adequate time to take 
the steps necessary to join us in estab- 
lishing an interim framework of truly 



mutual restraint. The Soviet Union has 
not used the past year for this purpose. 

Given this situation, I have deter- 
mined that, in the future, the United 
States must base decisions regarding its 
strategic force structure on the nature 
and magnitude of the threat posed by 
Soviet strategic forces and not on stan- 
dards contained in the SALT structure 
which has been undermined by Soviet 
noncompliance and especially in a flawed 
SALT II treaty which was never rati- 
fied, would have expired if it had been 
ratified, and has been violated by the 
Soviet Union. 

Since the United States will retire 
and dismantle two Poseidon submarines 
this summer, we will remain technically 
in observance of the terms of the 
SALT II Treaty until the United States 
equips its 131st heavy bomber for cruise 
missile carriage near the end of this 
year. However, given the decision that I 
have been forced to make, I intend at 
that time to continue deployment of 
U.S. B-52 heavy bombers with cruise 
missiles beyond the 131st aircraft as an 
appropriate response without dis- 
mantling additional U.S. systems as 
compensation under the terms of the 
SALT II Treaty. Of course, since we 
will remain in technical compliance with 
the terms of the expired SALT II 
Treaty for some months, I continue to 
hope that the Soviet Union will use this 
time to take the constructive steps 
necessary to alter the current situation. 
Should they do so, we will certainly 
take this into account. 

The United States seeks to meet its 
strategic needs, given the Soviet build- 
up, by means that minimize incentives 
for continuing Soviet offensive force 
growth. In the longer term, this is one 
of the major motives in our pursuit of 
the Strategic Defense Initiative. As we 
modernize, we will continue to retire 
older forces as our national security re- 
quirements permit. I do not anticipate 
any appreciable numerical growth in 
U.S. strategic offensive forces. Assum- 
ing no significant change in the threat 
we face, as we implement the strategic 
modernization program, the United 
States will not deploy more strategic 
nuclear delivery vehicles than does the 
Soviet Union. Furthermore, the United 
States will not deploy more strategic 
ballistic missile warheads than does the 
Soviet Union. 

In sum, we will continue to exercise 
the utmost restraint, while protecting 
strategic deterrence, in order to help 
foster the necessary atmosphere for sig- 
nificant reductions in the strategic ar- 
senals of both sides. This is the urgent 



bust 1986 



37 



ARMS CONTROL 



task which faces us. I call on the Soviet 
Union to seize the opportunity to join us 
now in establishing an interim frame- 
work of truly mutual restraint. 

Finally, I want to emphasize that no 
policy of interim restraint is a substitute 
for an agreement on deep and equitable 
reductions in offensive nuclear arms, 
provided that we can be confident of 
Soviet compliance with it. Achieving 
such reductions has received, and con- 
tinues to receive, my highest priority. I 
hope the Soviet Union will act to give 
substance to the agreement I reached 
with General Secretary Gorbachev in 
Geneva to achieve early progress, in 
particular in areas where there is com- 
mon ground, including the principle of 
50% reductions in the strategic nuclear 
arms of both countries, appropriately 
applied, as well as an interim INF 
agreement. If the Soviet Union carries 
out this agreement, we can move now to 
achieve greater stability and a safer 
world. 



WHITE HOUSE 
FACT SHEET 2 

Summary 

The United States has completed a com- 
prehensive review of its interim re- 
straint policy and of the required 
response to the continuing pattern of 
Soviet noncompliance with arms control 
agreements. Based on this review, and 
following consultations with the Con- 
gress and key allies, we have been 
forced to the conclusion that the Soviet 
Union has not, as yet, taken those ac- 
tions that would indicate a readiness to 
join us in an interim framework of truly 
mutual restraint. 

Given the lack of Soviet reciprocity, 
the President has decided that in the fu- 
ture the United States must base deci- 
sions regarding its strategic force 
structure on the nature and magnitude 
of the threat posed by Soviet strategic 
forces and not on standards contained in 
the SALT II agreement of 1979 or the 
SALT I interim offensive agreement of 
1972. SALT II was a flawed agreement 
which was never ratified, which would 
have expired if it had been ratified, and 
which continues to be seriously violated 
by the Soviet Union. The SALT I in- 
terim offensive agreement of 1972 was 
unequal, has expired, and is also being 
violated by the Soviet Union. 

After reviewing the programmatic 
options available to the United States, 
the President has decided to retire and 



dismantle two older Poseidon subma- 
rines this summer. The United States 
will thus remain technically in observ- 
ance of the terms of the SALT II agree- 
ment until we equip our 131st heavy 
bomber for cruise missile carriage near 
the end of this year. The President has 
determined that, given the decision that 
he has been forced to make by lack of 
Soviet reciprocity, the United States 
will later this year continue deployment 
of B-52 heavy bombers with cruise mis- 
siles beyond the 131st aircraft, without 
dismantling additional U.S. systems as 
compensation under the terms of the 
SALT II agreement. 

The President has also called for: 
renewed bipartisan support for the Ad- 
ministration's full strategic moderniza- 
tion program including all 100 
Peacekeeper ICBMs; full funding of our 
research under the Strategic Defense 
Initiative; an assessment of options on 
future ICBM programs, including Peace- 
keeper basing and the small ICBM; and 
acceleration of the advanced cruise mis- 
sile (ACM) program. 

The President has determined that, 
in carrying out this policy, the United 
States will continue to exercise utmost 
restraint. We will seek to meet our stra- 
tegic needs by means that minimize in- 
centives for continuing Soviet offensive 
force growth. As we modernize, we will 
continue to retire older forces as our na- 
tional security requirements permit. We 
do not anticipate any appreciable numer- 
ical growth in the number of U.S. stra- 
tegic offensive forces. Furthermore, the 
President has emphasized that, assum- 
ing no significant change in the threat 
we face, as we implement the needed 
strategic modernization program, the 
United States will not deploy more stra- 
tegic nuclear delivery vehicles or more , 
strategic ballistic missile warheads than 
does the Soviet Union. 

The President indicated that since 
the United States will remain in techni- 
cal observance with the terms of the ex- 
pired SALT II agreement for some 
months, the Soviet Union will have even 
more time to change the conditions that 
now exist. The President hopes that the 
Soviet Union will use this time construc- 
tively; if they do, the United States will 
certainly take this into account. (Con- 
cerning the SALT I agreement, even 
without any U.S. retirement of older 
systems, the United States could remain 
in technical observance of its terms for 
several years until the 10th Trident sub- 
marine begins sea trials in mid-1989.) 

Finally, the President has reiterated 
that his highest priority in the nuclear 



arms control area is to obtain Soviet 
agreement to a new and more durable 
arms control framework— one built upon 
deep, equitable, and verifiable reduc- 
tions in the offensive nuclear forces of 
the United States and the Soviet Union. 
He, therefore, calls upon the Soviet 
Union to carry out in the ongoing Gene- 
va negotiations the agreement which he 
and General Secretary Gorbachev 
reached at the November summit, call- 
ing for 50% reductions, appropriately 
applied, in U.S. and Soviet strategic 
nuclear forces, and an interim agree- 
ment on intermediate nuclear forces. If 
Moscow instructs its negotiators to ap- 
ply themselves seriously and flexibly 
toward these goals, as the U.S. negotia- 
tors are prepared to do, we can move 
together now to build a safer and more 
stable world. 

Introduction 

Over the past 2 l /2 years, the President 
has sent three reports to the Congress 
detailing the serious realities of Soviet 
noncompliance with arms control agree- 
ments, including major agreements on 
strategic arms. The United States has 
unsuccessfully pressed the Soviet Union 
in the U.S. -Soviet Standing Consultative 
Commission (SCO and through other 
diplomatic channels to resolve our 
concerns. 

In spite of this pattern of Soviet 
noncompliance, the President decided 
last June to go the extra mile in dis- 
mantling a U.S. Poseidon submarine, 
U.S.S. Sam Ray burn, to give the Soviet 
Union adequate time to take the oppor- 
tunity to join the United States in an 
interim framew'ork of truly mutual 
restraint on strategic offensive arms. Ha 
stated that such a framework required 
that the Soviets correct their noncompli- 
ance, reverse their unwarranted military 
buildup, and make progress at the Gene- 
va negotiations. In addition, he indicated' 
that the United States, which has 
scrupulously complied with its arms con-< 
trol obligations and commitments, would 
be required to develop appropriate and 
proportionate responses to assure U.S. 
and allied security in the face of uncor- 
rected Soviet noncompliance. He di- 
rected that all programmatic responses : 
be kept open, and he requested specific 
programmatic recommendations of the j 
Secretary of Defense and the Joint 
Chiefs of Staff. 

In recent months, the President has 
reviewed these issues in great detail 
with his senior advisers and has con- 
sulted extensively with Members of 



38 



Department of State Bulletin 1 



ARMS CONTROL 



ongress and allied leaders. He an- 
nmced his decision in the statement is- 
led today. This fact sheet reports on 
le President's decision. 

ackground 

182 Decision. In 1982, on the eve of 
ie strategic arms reduction talks, the 
resident decided that the United 
;ates would not undercut the expired 
\LT I agreement or the unratified 
\LT II agreement as long as the 
wiet Union exercised equal restraint, 
espite his serious reservations about 
e inequities of the SALT I agreement 
id the serious flaws of the SALT II 
rreement, he took this action in order 

foster an atmosphere of mutual re- 
raint on force deployments conducive 

serious negotiation as we entered 
rART. He made clear that our policy 
quired reciprocity and that it must not 
Iversely affect our national security in- 
rests in the face of the continuing 
>viet military buildup. The Soviet 
nion also made a policy commitment 
>t to undercut these agreements. 

1985 Decision. In a decision re- 
nted to the Congress on June 10, 
85, the President reviewed the status 
U.S. interim restraint policy concern- 
y strategic agreements in light of the 
ntinuing pattern of the Soviet Union's 
ncompliance with its arms control ob- 
;ations and commitments. He found 
at the United States had fully kept its 
rt of the bargain and had scrupulously 
mplied with the terms of its obliga- 
>ns and commitments. 

By contrast, he noted with regret 
at the Soviet Union had repeatedly 
slated several of its major arms con- 
al obligations and commitments. His 
free reports to the Congress on Soviet 
incompliance in January 1984, Febru- 
w 1985, and December 1985 enumerate 
|d document in detail the serious facts 
d U.S. concerns about Soviet viola- 
Mis. The overall judgment reached by 
|e President in his June 1985 decision 
^s that while the Soviets had observed 
me provisions of existing arms control 
reements, they had violated important 
rnients of those agreements and asso- 
rted legal obligations and political com- 
tments. 

The President noted that these are 
ry crucial issues, for to be serious 
out effective arms control is to be 
rious about compliance. The pattern of 
viet violations increasingly affects our 
tional security. But, perhaps even 
)re significant than the near-term mili- 
ry consequences of the violations 



CD Negotiations Resume 



WHITE HOUSE STATEMENT, 
JUNE 5, 1986 1 

The President met today with Ambas- 
sador Donald S. Lowitz, United States 
Representative to the 40-nation Confer- 
ence on Disarmament in Geneva, which 
resumes its 1986 session on June 9. He 
expressed to Ambassador Lowitz the 
importance that he attaches to effective 
multilateral arms control measures as a 
means of strengthening United States 
security as well as enhancing the secu- 
rity of other nations. 

The President stressed, in particu- 
lar, that at his November meeting in 
Geneva with General Secretary Gor- 
bachev of the Soviet Union the two 
leaders had reaffirmed their support for 
a global ban on chemical weapons, which 
the United States is seeking at the Con- 
ference on Disarmament, and that they 
had agreed to accelerate efforts to con- 
clude an effective and verifiable agree- 
ment. The President attaches great 
importance to this commitment and has, 
therefore, instructed the United States 
delegation to continue to seek mutually 
acceptable solutions to the outstanding 
issues in the negotiations on a chemical 
weapons ban, both in the Conference on 
Disarmament and in the accompanying 
bilateral talks with the Soviet Union. 

At the President's request, Vice 
President Bush addressed the Confer- 
ence on Disarmament in 1983 and 1984. 



On both occasions he introduced U.S. 
initiatives in the chemical weapons 
negotiations. The Vice President 
continues to take great interest in our 
efforts to successfully complete the 
negotiations on a treaty at an 
early date. 

The President asked Ambassador 
Lowitz, in their meeting today, to con- 
tinue to keep him fully informed on the 
progress of these negotiations as well as 
on other important issues under consid- 
eration in the Conference on Disarma- 
ment. He also requested that Ambassa- 
dor Lowitz convey to the representa- 
tives of the other member states of the 
conference his sincere hope that a spirit 
of dedication and vigorous work would 
result in a successful agreement on a 
comprehensive chemical weapons ban 
and his conviction that the conference is 
fully capable of achieving such an agree- 
ment, which the peace-loving nations of 
the world greatly desire. He stated that, 
for its part, the United States again 
stands ready to intensify even further 
these negotiations when the conference 
reconvenes and called upon the other 
members of this unique body— the sole 
arms control negotiating forum in which 
all regions of the world participate— to 
do likewise. 



'Text from Weekly Compilation of 
Presidential Documents of June 9, 1986. 



themselves, they raise fundamental con- 
cerns about the integrity of the arms 
control process, concerns that, if uncor- 
rected, undercut the integrity and via- 
bility of arms control as an instrument 
to assist in ensuring a secure and stable 
future world. 

The President also noted that the 
United States had repeatedly raised our 
serious concerns with the Soviet Union 
in diplomatic channels, including the 
U.S. -Soviet Standing Consultative Com- 
mission. His assessment was that, 
despite long and repeated U.S. efforts 
to resolve these issues, the Soviet Union 
had neither provided satisfactory expla- 
nations nor undertaken corrective ac- 
tion. Instead, Soviet violations had 
expanded as the Soviets continued to 
modernize their strategic forces. U.S. in- 
terim restraint policy has always been 
conditioned on Soviet reciprocity. In his 



June assessment, the President was con- 
sequently forced to conclude that the 
Soviet Union was not exercising the 
equal restraint upon which U.S. interim 
restraint policy had been conditioned, 
that we could not accept a double stan- 
dard of unilateral U.S. compliance cou- 
pled with Soviet noncompliance, and 
that such Soviet behavior was fun- 
damentally inimical to the future of 
arms control and to the security of our 
country and that of our allies. 

At the same time, given the goal of 
reducing the size of Soviet and U.S. 
nuclear arsenals, the President made 
the judgment that it remained in the 
interest of the United States to go the 
extra mile in seeking to persuade the 
Soviet Union to join us in establishing 
an interim framework of truly mutual 
restraint on strategic offensive arms, as 
we pursued with renewed vigor. 



jgust 1986 



39 



ARMS CONTROL 



through the negotiations in Geneva, our 
goal of deep, equitable, and verifiable 
reductions in existing U.S. and Soviet 
nuclear arsenals. 

The President made clear, however, 
that the United States could not estab- 
lish such a framework alone. Movement 
toward an acceptable framework re- 
quired the Soviet Union to take the 
positive, concrete steps to correct its 
noncompliance, resolve our other compli- 
ance concerns, and reverse or substan- 
tially reduce its unparalleled and 
unwarranted military buildup. Although 
the Soviet Union had not demonstrated 
a willingness to move in this direction, 
the President announced that in the in- 
terest of ensuring that every opportuni- 
ty to establish the secure, stable future 
we seek is fully explored, he was pre- 
pared to go the extra mile. 

The President thus decided last June 
that to provide the Soviets a further op- 
portunity to join us in establishing an 
interim framework of truly mutual re- 
straint which could support ongoing 
negotiations, the United States would 
continue to refrain from undercutting 
existing strategic arms agreements to 
the extent that the Soviet Union exer- 
cised comparable restraint and provided 
that the Soviet Union actively pursued 
arms reductions agreements in the 
nuclear and space talks in Geneva. Fur- 
ther, he stated that the United States 
would constantly review the implications 
of this interim policy on the long-term 
security interests of the United States 
and its allies. He indicated that, in doing 
so, the United States would consider 
Soviet actions to resolve our concerns 
with the pattern of Soviet noncompli- 
ance, continued growth in the strategic 
force structure of the Soviet Union, and 
Soviet seriousness in the ongoing negoti- 
ations. 

As an integral part of the implemen- 
tation of this policy, the President an- 
nounced that the United States would 
take those steps made necessary by 
Soviet noncompliance to assure U.S. na- 
tional security and that of our allies. He 
noted that appropriate and proportion- 
ate responses to Soviet noncompliance 
are called for to make it perfectly clear 
to Moscow that violations of arms con- 
trol arrangements entail real costs. He 
stated clearly that the United States 
would, therefore, develop appropriate 
and proportionate responses and would 
take those actions necessary in response 
to, and as a hedge against, the military 
consequences of uncorrected Soviet 
violations of existing arms control 
agreements. 



The President decided last June that 
to provide still more time for the Soviet 
Union to demonstrate by its action a 
commitment to join us in an interim 
framework of truly mutual restraint, the 
United States would deactivate and dis- 
mantle, according to agreed procedures, 
an existing older Poseidon submarine as 
the seventh U.S. Ohio-class Trident sub- 
marine put to sea in August 1985. 
However, the President also directed 
that the United States keep open all fu- 
ture programmatic options for handling 
such strategic deployment milestones as 
they occurred in the future. He made it 
clear that, as these later milestones 
were reached, he would assess the over- 
all situation and make a final determina- 
tion of the U.S. course of action on a 
case-by-case basis in light of Soviet ac- 
tions in meeting the criteria which he 
cited. 

U.S. Compliance 

In accordance with U.S. interim re- 
straint policy and our efforts to build an 
interim framework of truly mutual re- 
straint, the United States has not taken 
any actions which would undercut exist- 
ing agreements. We have continued 
scrupulously to live within all arms con- 
trol agreements, including the SALT I 
and II agreements. For example, we 
have fully dismantled one Poseidon and 
eight Polaris missile-carrying subma- 
rines and 27 Titan II ICBM launchers 
as new Trident missile-carrying subma- 
rines have been deployed. Unfortunate- 
ly, while the United States has been 
attempting to hold to the structure of 
SALT through our policy of interim re- 
straint, the Soviet Union, through its 
continued noncompliance, has under- 
mined the very foundation of that 
structure. 

Soviet Noncompliance 

In the most recent of his three reports 
to the Congress on Soviet noncompli- 
ance with arms control agreements, 
issued on December 23, 1985, the Presi- 
dent confirmed that the Administra- 
tion's continuing studies supported the 
conclusion that the pattern of Soviet 
noncompliance continues largely uncor- 
rected. As documented in the Presi- 
dent's reports, particularly the detailed 
classified versions, the Soviet Union has 
violated its legal obligations under, or 
political commitments to, the SALT II 
agreement of 1979, the SALT I interim 
offensive agreement of 1972, the Anti- 
Ballistic Missile Treaty of 1972, the 
Limited Test Ban Treaty of 1963, the 



Biological Weapons Convention of 1972, 
the Geneva Protocol on chemical 
weapons of 1925, and the Helsinki Final 
Act of 1975. In addition, the U.S.S.R. 
has likely violated the Threshold Test 
Ban Treaty of 1974. 

In his December 1985 report to the 
Congress, the President noted that 
through its noncompliance with arms 
control agreements, the Soviet Union 
has made military gains in the areas of 
strategic offensive arms as well as 
chemical, biological, and toxin weapons. 
The President added that in the area of 
strategic defense, the possible extent of 
the Soviet Union's military gains by vir- 
tue of its noncompliance with the ABM 
Treaty is also of increasing importance 
and serious concern to the United 
States. 

The President noted in his Decem- 
ber report that in a fundamental sense 
all deliberate Soviet violations are equal- 
ly important. He made clear that as vio- 
lations of legal obligations or political 
commitments, they cause grave concern 
regarding Soviet commitment to arms 
control and darken the atmosphere in 
which current negotiations are being 
conducted in Geneva and elsewhere. 

In another sense, the President 
noted, Soviet violations are not of equal 
importance. Some Soviet violations are 
of significant military importance— like 
the illegal second type of new ICBM, 
telemetry encryption, and the Kras- 
noyarsk radar. While other violations 
are of little apparent military sig- 
nificance in their own right, such viola- 
tions can acquire importance if, left 
unaddressed, they are permitted to be- 
come precedents for future, more 
threatening violations. Moreover, some 
Soviet actions that individually have lit- 
tle military significance could conceiva- 
bly become significant when taken in 
their aggregate. Finally, even if a spe- 
cific violation does not contain an inher- 
ent military threat, it still undermines 
the viability and integrity of the arms 
control process. 

Specific Soviet Violations 

Concerning SALT II, the President's 
December report, in addition to citing 
the Soviets' SS-25 ICBM development 
and extensive encryption of telemetry 
on ICBM missile flight tests as viola- 
tions, also enumerated additional clear 
Soviet violations of SALT II, including 
exceeding the numerical limit of stra- 
tegic nuclear delivery vehicles and con- 
cealment of the association between the 
SS-25 missile and its launcher. In addi- 
tion, the President's report cited three 



40 



Department of State Bulletin 



ARMS CONTROL 



reas of ambiguous Soviet behavior as 
lvolving possible violations or incon- 
istencies with regard to SALT II— 
S-16 ICBM activity, the Backfire 
omber's intercontinental operating 
ipability, and the Backfire bomber's 
roduction rate. 

Concerning the SALT I interim 
ffensive agreement of 1972, the Presi- 
ent's December 1985 report cited a vio- 
ition in Soviet use of former SS-7 
^BM facilities in support of the deploy- 
lent and operation of the SS-25 mobile 
3BMs. 

Concerning the ABM Treaty of 
972, the President's December 1985 
jport indicated that in addition to ille- 
al construction of the ballistic missile 
etection and tracking radar at 
j-asnoyarsk, the combination of other 
oviet ABM-related activities involving 
lobility of ABM system components, 
mcurrent testing, rapid reload, etc., 
!so suggested that the Soviets might be 
reparing an ABM defense of their na- 
onal territory, which is prohibited by 
le ABM Treaty. Such an action, if left 
ithout a U.S. response, would have 
irious adverse consequences for the 
ast-West balance that has kept the 
sace. 

Three key Soviet violations of stra- 
■gic arms agreements enumerated be- 
w are particularly disturbing— the 
3-25 ICBM, encryption of telemetry, 
id the Krasnoyarsk radar. 

• SALT II: SS-25 ICBM. The Presi- 
fent stated in his December 1985 report 
lat the SS-25 mobile ICBM is a clear 
id irreversible violation of the Soviet 
nion's SALT II commitment and has 
iportant political and military implica- 
ions. Testing and deployment of this 
issile violates a central provision of 

le SALT II agreement, which was in- 
mded to limit the number of new 
JBMs. The agreement permits only 
le new type of ICBM for each party. 
he Soviets have informed us that their 
le new ICBM type will be the 
S-X-24, which is now undergoing test- 
ig, and have falsely asserted that the 
S— 25 is a permitted modernization of 
keir old silo-based SS-13 ICBM. The 
president also concluded that the techni- 
nl argument by which the Soviets 
.night to justify the SS-25, calling it 
bermitted modernization," is also 
loublesome as a potential precedent, as 
te Soviets might seek to apply it to ad- 
itional prohibited new types of ICBMs 
I the future. 

• SALT II: Telemetry Encryption. 
'ae President stated in his December 



report that Soviet use of encryption im- 
pedes U.S. verification of Soviet compli- 
ance and thus contravenes the provision 
of the SALT II Treaty which prohibits 
use of deliberate concealment measures, 
including encryption, which impede 
verification of compliance by national 
technical means. This deliberate Soviet 
concealment activity, he explained, im- 
pedes our ability to know whether a 
type of missile is in compliance with 
SALT II requirements. It could also 
make it more difficult for the United 
States to assess accurately the critical 
parameters of any future missile. 

Since the SALT I agreement of 
1972, the President reported, Soviet en- 
cryption practices have become more ex- 
tensive and disturbing. The President 
noted that these Soviet practices, Soviet 
responses on this issue, and Soviet 
failure to take corrective actions which 
the United States has repeatedly re- 
quested, demonstrate a Soviet attitude 
contrary to the fundamentals of sound 
arms control agreements, undermine the 
political confidence necessary for con- 
cluding new agreements, and underscore 
the necessity that any new agreement 
be effectively verifiable. 

• ABM Treaty: Krasnoyarsk Radar. 
The President stated in his December 
1985 report that the radar under con- 
struction near Krasnoyarsk in Siberia is 
disturbing for both political and military 
reasons. First, it violates the 1972 ABM 
Treaty, which prohibits the siting of an 
ABM radar, or the siting and orienting 
of a ballistic missile detection and track- 
ing radar, in the way the Krasnoyarsk 
radar is sited and oriented. Politically, 
he said, the radar demonstrates that the 
Soviets are capable of violating arms 
control obligations and commitments 
even when they are negotiating with the 
United States or when they know we 
will detect a violation. 

Militarily, he noted, the Krasnoyarsk 
radar violation goes to the heart of the 
ABM Treaty. Large phased-array radars 
(LPARs), like that under construction 
near Krasnoyarsk, were recognized dur- 
ing the ABM Treaty negotiations as the 
critical, long lead-time element of a na- 
tionwide ABM defense. 

When considered as a part of a 
Soviet network of new LPARs, the 
President concluded, the Krasnoyarsk 
radar has the inherent potential to con- 
tribute to ABM radar coverage of a sig- 
nificant portion of the central U.S.S.R. 
Moreover, the Krasnoyarsk radar closes 
the remaining gap in Soviet ballistic 
missile detection and tracking coverage. 
Together with other Soviet ABM-related 



activities, it suggests, as noted above, 
that the Soviets might be preparing an 
ABM defense of its national territory, 
which is prohibited by the treaty and 
would have serious adverse conse- 
quences for the East- West balance that 
has kept the peace. 

The Current U.S. 
Deployment Milestone 

On May 28, the eighth U.S. Trident sub- 
marine, U.S.S. Nevada, begins its sea 
trials. As called for by the U.S. interim 
restraint policy announced last June, the 
President has carefully assessed our op- 
tions with respect to that milestone. He 
has considered Soviet behavior since his 
June 1985 decision to go the extra mile, 
and he has considered U.S. and allied 
security interests in light of that Soviet 
behavior and our own programmatic 
options. 

Since the President made his deci- 
sion in June 1985 to dismantle a 
Poseidon, U.S.S. Sam Rayburn, in 
order to give the Soviets adequate time 
to join us in establishing a truly mutual 
framework of interim restraint, the situ- 
ation has not been encouraging with 
respect to the three criteria that the 
President established for gauging con- 
structive Soviet action— i.e., 1) correc- 
tion of Soviet noncompliance, 2) reversal 
of the Soviet military buildup, and 
3) promoting progress in the Geneva 
negotiations. 

While we have seen some modest in- 
dications of improvement in one or two 
areas of U.S. concern— for example, with 
respect to the production rate of Back- 
fire bombers— there has been no real 
progress by the Soviets in meeting the 
most serious U.S. concerns. The deploy- 
ment of the SS-25, a second new ICBM 
type forbidden by SALT II, continues. 
The Soviet Union continues to encrypt 
telemetry associated with its ballistic 
missile testing and impedes SALT II 
verification. The Krasnoyarsk radar re- 
mains a clear violation. We see no 
abatement of the Soviet strategic force 
buildup. Finally, after a hopeful meeting 
in Geneva last November between the 
President and General Secretary 
Gorbachev, we have yet to see the 
Soviet Union follow up in negotiations 
on the commitment made in the joint 
statement issued by the two leaders to 
seek common ground, especially through 
the principle of 50% strategic arms 
reductions, appropriately applied, and 
through an agreement on intermediate 
nuclear forces. In light of these circum- 
stances, it is the President's judgment 
that the Soviet Union has not, as yet, 



august 1986 



41 



ARMS CONTROL 



taken those actions that would indicate 
by deed its readiness to join us in a 
framework of truly mutual interim 
restraint. 

As the President has considered op- 
tions associated with the current deploy- 
ment milestone with the sea trials of the 
eighth Trident, he has also carefully 
reviewed the military programmatic op- 
tions available to the United States in 
terms of their overall net impact on 
U.S. and allied security. It should be 
noted in this context that when the 
President issued guidance on U.S. policy 
in June of last year, the military plans 
and programs for fiscal year 1986 were 
about to be implemented. The amount of 
flexibility that any nation has in the 
near term for altering its planning is 
modest at best, and our military plan- 
ning will take more time to move out 
from under the shadow of previous as- 
sumptions. This shadow lengthens and 
darkens with each reduction made in the 
funds available for our defense. Operat- 
ing under such a shadow, especially in 
the budgetary conditions which we now 
face, makes it essential that we make 
the very best possible use of our 
resources. 

It had long been planned to retire 
and dismantle two of the oldest 
Poseidon submarines. The President 
indicated in the decision announced to- 
day that had he been persuaded that 
refueling and retaining these particular 
two Poseidon submarines would have 
contributed significantly and cost- 
effectively to the national security, he 
would have directed their overhaul and 
retention. However, in view of present 
circumstances, including current military 
and economic realities, it is the Presi- 
dent's judgment that, at this particular 
juncture, the proper course with respect 
to these two older Poseidon submarines 
is to retire and dismantle them, accord- 
ing to agreed procedures. 

Proportionate U.S. Responses 

In announcing his decision last June, the 
President made clear at the same time 
that the United States would take ap- 
propriate and proportionate actions 
when needed to assure U.S. and allied 
security in the face of Soviet noncompli- 
ance. It is the President's view that, 
while two Poseidon submarines should 
be dismantled for military and economic 
reasons, certain new programmatic U.S. 
steps focused on the Administration's 
strategic modernization program are 
now necessitated by the continued lack 



of Soviet action up to this point in meet- 
ing the criteria established by the Presi- 
dent's interim restraint policy decision 
last June. 

Strategic Modernization Program. 

The Administration's highest priority in 
the strategic programs area remains the 
full implementation of the U.S. strategic 
modernization program to underwrite 
deterrence today and the full pursuit of 
the Strategic Defense Initiative research 
program to seek to provide better alter- 
natives in the future. The President's 
decision to retire the two older Poseidon 
submarines at this point is fully in ac- 
cordance with that program. Under any 
set of assumptions, our modernization 
program is, and will always be, designed 
to guarantee that our nation always has 
modern forces in sufficient quantities to 
underwrite our security and that of our 
allies— nothing more and nothing less. 
This goal ensures that the appropriate, 
best, and proper use is made of our na- 
tional resources. 

The U.S. strategic modernization 
program, including the deployment of 
the second 50 Peacekeeper missiles to 
the full program of 100 missiles, which 
was called for in 1983 by the Scowcroft 
commission, is fully supported by our 
military leadership. The Administra- 
tion's full strategic modernization pro- 
gram has been very carefully crafted by 
our best defense planners. It is the 
foundation for all future U.S. strategic 
program options and provides a solid ba- 
sis which can and will be adjusted over 
time to respond most efficiently to con- 
tinued Soviet noncompliance. The Presi- 
dent believes it is absolutely critical that 
this program not be permitted to erode. 
That would be the worst way to 
respond to the continuing pattern of 
Soviet noncompliance, would increase 
the risk to our security and that of our 
allies, and would undercut our ability to 
negotiate the reductions in existing ar- 
senals that we seek. It, therefore, would 
send precisely the wrong signal to the 
Soviet leadership. 

• Bipartisan Support for the U.S. 
ICBM Program. Soviet actions to con- 
tinue the accelerated development of 
their ICBM force are of great concern. 
Last June, the President cited the 
Soviet Union's flight-testing of the 
SS-25 missile, a second new type of 
ICBM prohibited under the SALT II 
agreement, as a clear and irreversible 
violation and noted that deployment 
would constitute a further violation. He 
noted that since the noncompliance as- 
sociated with the development of this 



missile cannot, at this point, be cor- 
rected by the Soviet Union, the United 
States reserved the right to respond 
proportionately and appropriately. At 
that time, he also noted that the U.S. 
small ICBM program was particularly 
relevant in this regard. Given the 
events that have occurred since last 
June, including the Soviet Union's 
deployment of over 70 SS-25 mobile 
ICBMs, the President calls upon the 
Congress to join with him in restoring 
bipartisan support for a balanced, cost- 
effective, long-term program to restore 
both the survivability and effectiveness 
of our own ICBM program. 

• Peacekeeper (MX). The program 
we require should include the full 
100-missile deployment of the Peace- 
keeper ICBM. It is sometimes forgotten 
by critics of the Administration's 100- 
missile Peacekeeper program that this 
represents a number only one-half that 
requested by the previous Administra- 
tion. The Peacekeeper missile has just 
completed another flawless flight test. It 
makes both good military and economic 
sense fully to exploit the great technical 
success that we have had with this 
missile. 

• Small ICBM. The President be- 
lieves that our ICBM program must also 
look beyond the Peacekeeper and 
toward additional U.S. ICBM require- 
ments in the future. Our small ICBM 
program makes a significant contribu- 
tion not only in this regard but also as 
an appropriate and proportionate U.S. 
response to the irreversible Soviet viola- 
tion associated with their SS-25 mobile | 
ICBM. 

• A Comprehensive Program. To en- 
sure that he has a more robust range of 
options as he approaches future mile- 
stones, the President has, in the deci- 
sion announced today, directed the 
Department of Defense to provide to 
him by November 1986 an assessment of 
the best options for carrying out a com- I 
prehensive ICBM program. 

• Advanced Cruise Missile. Finally, 
the President has also directed the 
Secretary of Defense to take the steps 
necessary, working with the Congress, 
to accelerate the production of the ad- 
vanced cruise missile (ACM) program. 
The President is not, at this time, 
directing any increase in the total ACM 
program procurement but rather is es- 
tablishing a more efficient program that 
both saves money and accelerates the 
availability of additional options for the 
future. 



42 



Department of State Bulletin 



ARMS CONTROL 



Phe U.S. and SALT 

-laving completed a comprehensive 
•eview of U.S. interim restraint policy 
md of the required response to the con- 
inuing pattern of Soviet noncompliance 
vith arms control agreements, and fol- 
owing consultations with the Congress 
ind key allies, the President has been 
orced to conclude that the Soviet Union 
las not, as yet, taken those actions that 
vould indicate a readiness to join us in 
n interim framework of truly mutual 
estraint. 

Given the lack of Soviet reciprocity, 
he President has decided that in the fu- 
ure the United States must base deci- 
ions regarding its strategic force 
tructure on the nature and magnitude 
f the threat posed by Soviet strategic 
orces and not on standards contained in 
he SALT II agreement of 1979 or the 
SALT I interim offensive agreement of 
972. SALT II was a flawed agreement 
irhich was never ratified, which would 
lave expired if it had been ratified, and 
riiich continues to be seriously violated 
>y the Soviet Union. The SALT I in- 
erim offensive agreement of 1972 was 
inequal, has expired, and is also being 
iolated by the Soviet Union. 

After reviewing the programmatic 
ptions available to the United States, 
he President has decided to retire and 
lismantle two older Poseidon subma- 
ines this summer. The United States 
rill thus remain technically in observ- 
nce of the terms of the SALT II agree- 
nent until we equip our 131st heavy 
iomber for cruise missile carriage near 
he end of this year. The President has 
letermined that, given the decision that 
ie has been forced to make by lack of 
ioviet reciprocity, the United States 
rill later this year continue deployment 
f B-52 heavy bombers with cruise mis- 
iles beyond the 131st aircraft, without 
lismantling additional U.S. systems as 
ompensation under the terms of the 
IALT II agreement. 

"ontinued U.S. Restraint 

'he President emphasized that the 
Jnited States will continue to seek to 
neet its strategic needs, in response to 
he Soviet buildup, by means that 
ninimize incentives for continuing 
Soviet offensive force growth. In the 
jnger term, this is one of the major 
notives in our pursuit of the Strategic 
)efense Initiative. The President 
lointed out that, as the United States 
nodernizes, it will continue to retire 
>lder forces as our national security re- 
tirements permit. Therefore, he does 



not anticipate any appreciable numerical 
growth in U.S. strategic offensive 
forces. The President also emphasized 
that, assuming no significant change in 
the threat that we face, as we imple- 
ment the needed strategic modernization 
program, the United States will not 
deploy more strategic nuclear delivery 
vehicles or more strategic ballistic mis- 
sile warheads than does the Soviet 
Union. 

Since the United States will retire 
and dismantle two Poseidon submarines 
this summer, we will remain technically 
in observance of the terms of the 
SALT II agreement until the United 
States equips its 131st heavy bomber 
for cruise missile carriage near the end 
of this year. However, given the deci- 
sion that the President has been forced 
to make, he announced today that, at 
that time, he intends to continue deploy- 
ment of U.S. B-52 heavy bombers with 
cruise missiles beyond the 131st aircraft 
without dismantling additional U.S. sys- 
tems as compensation under the terms 
of the SALT II agreement. Of course, 
since the United States will remain in 
technical observance of the terms of the 
expired SALT II agreement for some 
months, the President continues to hope 
that the Soviet Union will use this time 
to take the constructive steps necessary 
to alter the current situation. Should 
they do so, the President noted that the 
United States will certainly take this 
into account. 

Our attempt to use the structure of 
SALT as the basis for interim restraint 
until a START agreement can be 
achieved has always been based on the 
assumption of Soviet reciprocity. It 
makes no sense for the United States to 
continue to hold up the SALT structure 
while the Soviet Union undermines the 
foundation of SALT by its continued, 
uncorrected noncompliance. Therefore, 
the President believes we must now 
look to the future, not to the past. The 
primary task we now face is to build a 
new structure, one based on significant, 
equitable, and verifiable reductions in 
the size of existing U.S. and Soviet 
nuclear arsenals. This is what we are 
proposing in the ongoing Geneva 
negotiations. 

Until this is achieved, the United 
States will continue to exercise the ut- 
most restraint. Assuming no significant 
change in the threat we face, as we im- 
plement the strategic modernization pro- 
gram, the United States will not deploy 
more strategic nuclear delivery vehicles 
or strategic ballistic missile warheads 
than the Soviet Union. 



It is high time that the Soviets 
honor their obligations, match U.S. re- 
straint, and get down to negotiating 
seriously in Geneva. If they do, we can 
move together now to build a safer and 
more secure world. 

In sum, the United States will 
continue to exercise the utmost re- 
straint, while ensuring the credibility of 
our strategic deterrent, in order to help 
foster the necessary atmosphere for sig- 
nificant reductions in the offensive 
nuclear arsenals of both sides. This is 
the urgent task that faces us. 

The ABM Treaty 

Our obligations under the ABM Treaty 
remain unchanged. The President has 
made it clear that U.S. programs are, 
and will continue to be, in compliance 
with our obligations under the ABM 
Treaty. The President's statement today 
also makes it clear that we remain 
deeply concerned over Soviet violation 
of the ABM Treaty. In contrast with 
SALT I and SALT II, however, the 
ABM Treaty is not an expired or unrati- 
fied agreement. One of our priority ob- 
jectives remains to have the Soviet 
Union return to compliance with their 
obligations under this treaty. 

Hope for Progress in 
Geneva Negotiations 

Time has not altered the basic truth 
that a policy of interim restraint is not a 
substitute for an agreement on deep, 
equitable, and verifiable reductions in 
offensive nuclear arms. Achieving such 
reductions has received, and continues 
to receive, our highest priority. 

It, therefore, remains our hope that 
the Soviet Union will take the necessary 
steps to give substance to the agree- 
ment which President Reagan reached 
with General Secretary Gorbachev in 
Geneva to negotiate 50% reductions in 
strategic nuclear arms, appropriately ap- 
plied, and an interim agreement on 
intermediate-range nuclear arms. If the 
Soviets agree to take those steps with 
us, we can together achieve greater sta- 
bility and a safer world. 



l'.IMi. 



'Text from Weekly Compilation of June 2, 



2 Text from White House press release. 



Vugust 1986 



43 



ARMS CONTROL 



SDI, Arms Control, and Stability: 
Toward a New Synthesis 



by Paul H. Nitze 

Address before the Time magazine 
conference on the Strategic Defense 
Initiative (SDI) in Washington, D.C., on 
June 3, 1986. Ambassador Nitze is spe- 
cial adviser to the President and the 
Secretary of State on arms control 
matters. 

The primary security objective of the 
United States is to reduce the risk of 
war while preserving our liberty and 
democratic political system. Over the 
past 25 years, the United States has 
pursued this objective through two 
related means. We have sought to deter 
war by maintaining a force structure 
adequate to convince potential adver- 
saries that the risks and costs of aggres- 
sion would far outweigh any possible 
gains. Simultaneously, we have sought 
to limit the nature and extent of the 
threat to the United States and to stabi- 
lize the strategic relationship with our 
principal adversary, the Soviet Union, 
through arms control agreements. 

The United States is now engaged in 
research to find out if new technologies 
could provide a more stable basis to 
deter war in the future by a shift to a 
greater reliance on strategic defenses. 
Arms control could also play an impor- 
tant role in designing a more stable 
strategic regime in the future. Tonight, 
I propose to examine the relationship 
among SDI, arms control, and stability. 
I hope to show that our SDI research 
and arms control policies, as currently 
defined, provide a cohesive and firm 
basis for enhancing strategic stability in 
the future and ultimately for reducing 
the risk of war. 

Arms Control and Stability 

Two important corollaries to the objec- 
tive of reducing the risk of war are the 
objectives of assuring overall functional 
equality between the capabilities of the 
two sides and of assuring crisis stability. 
Crisis stability implies a situation in 
which no nation has an incentive to 
execute a first strike in a serious crisis 
or, in peacetime, to provoke a crisis that 
might lead to a military confrontation. 
This situation obtains if no significant 
advantage can be achieved by initiating 
conflict. Equivalently, crisis stability 
also implies that a potential aggressor 



perceives that he could end up in no 
better a military position after expend- 
ing a major portion of his forces in 
executing the attack and then absorbing 
a retaliation than would the defender 
after absorbing the attack and retaliat- 
ing. These two goals— assuring overall 
functional equality and crisis stability- 
are closely interrelated. The United 
States cannot tolerate either significant 
inequality or substantial crisis 
instability. 

Trends in the strategic balance over 
the past 15 years lend new meaning and 
importance to these classical goals. The 
growth of Soviet capability to destroy 
hardened targets— such as ICBM [inter- 
continental ballistic missile] silos in an 
initial strike, with their large, land- 
based, MIRVed [multiple independently- 
targetable reentry vehicle] ballistic 
missiles— has created a serious force 
structure asymmetry and a growing 
danger of instability in a crisis. Soviet 
strategic defense activities, coupled with 
a military doctrine that stresses the im- 
portance of offensive and defensive force 
interactions to achieve Soviet aims in 
any conflict, have likewise been 
threatening. 

Both the United States and the 
Soviet Union recognize that it is the 
balance between the offense-defense 
mixes of both sides that determines the 
strategic nuclear relationship. The 
Soviet Union must realize that a suc- 
cessful "creepout" or "breakout" in its 
strategic defense capabilities, or con- 
versely, unilateral restraint by the 
United States in this area, would 
further shift the strategic nuclear 
balance in its favor and potentially 
undermine the value to the United 
States and its allies of U.S. deterrent 
forces. Through its ongoing overt and 
covert defense activities and its arms 
control policies, the Soviet Union has 
been attempting to foster such a shift. 
Currently, in the arms control arena, 
the Soviet Union seeks to protect the 
gains that it has achieved in the stra- 
tegic nuclear balance by limiting and 
delaying U.S. defense programs, espe- 
cially SDI. This focus on SDI reflects 
Soviet concern over the fact that they 
are no longer alone in their exploration 
of the defensive potential of advanced 
technologies and over the prospect of 
having to divert resources from proven 



ballistic missile programs to high- 
technology programs in fields where we 
are likely to have a competitive 
advantage. 

U.S. arms control efforts are 
oriented toward achieving strategically 
significant and stabilizing reductions. 
For example, we seek to lower the ratio 
of accurate warheads to strategic aim- 
points and reduce a potential attacker's 
confidence in his ability to eliminate 
effective retaliation. I should note that 
while the role of arms control in enhanc- 
ing U.S. security and in bringing about 
a more stable strategic relationship is 
important, it is secondary to what we 
are able and willing to do for ourselves. 
U.S. strategic modernization programs 
provide the necessary foundation on 
which our deterrence and arms control 
policies must rest. SDI should be under- 
stood in the context of the goals of our 
modernization and arms control policies 
and the dangers inherent in the future 
possibility of having deterrent forces 
inadequate to respond to, and thus 
deter, the threat. 

We should make no mistake about 
the fact that Soviet offensive and defen- 
sive capabilities pose real threats to the 
security of the West. Our work in SDI 
is, in part, a reaction to the unabated 
growth of this threat, especially during 
the last 15 years. Through SDI, we seek 
both new capabilities and a new 
approach to rectify the deteriorating 
strategic balance. 

The ABM Treaty and 
the Origins of SDI 

The President's March 1983 speech 
expressed his strongly held belief that 
we should reexamine the basis of our 
deterrent posture to see if we could 
deter aggression through a greater reli- 
ance on defense rather than relying so 
heavily on the threat of devastating 
nuclear retaliation. This belief reflects ' 
both our disappointment in the deterio- 
. ration of the strategic balance since the 
signing of the SALT I [strategic arms 
limitation talks] agreements and our 
hope that new defensive technologies 
can mitigate adverse developments in 
the area of strategic offensive 
weaponry. 

The United States in the early 1970s 
had proceeded from the assumption that 
the strict limitation of defenses in the 
ABM [Anti-Ballistic Missile] Treaty 
would provide the basis for significant 
reductions in offensive weaponry. The 
theory was simple: if both sides had sur- 
vivable retaliatory nuclear forces at 



44 



Department of State Bulletin 



ARMS CONTROL 



ibout the same level of capability and 
>oth sides were otherwise effectively 
lefenseless against the nuclear capabili- 
ty of the other, then neither side would 
lave an incentive to strike first, regard- 
ess of the circumstances. Therefore, sig- 
lificant reductions to equal levels of 
:apability, tailored so as to enhance 
lecurity, would improve the security of 
>oth sides. 

However, the Soviets showed little 
■eadiness during the SALT negotiations 
o agree to measures which would result 
n meaningful limits or cuts in offensive 
mclear forces. Within the framework of 
he SALT I interim agreement and 
!ALT II, the Soviets deployed large 
lumbers of MIRVed ballistic missiles of 
ufficient throw-weight and accuracy to 
lose an evident threat to the survivabil- 
ty of the entire land-based portion of 
J.S. retaliatory forces. This violated a 
lasic premise of the SALT process. The 
frowth in Soviet nuclear capabilities, in 
;eneral, and in the asymmetry in coun- 
erforce capabilities, in particular, is fun- 
amentally inimical to the security of 
he United States and its allies. 

Despite erosion of the value of the 
iBM Treaty through Soviet noncom- 
liance and through the absence of corn- 
arable Soviet restraints on offensive 
ystems, the United States is and will 
ontinue to remain in full compliance 
.ith its ABM Treaty obligations. A 
rincipal factor leading to that accord 
/as the conclusion reached in the 
Jnited States during the ABM debate 
f the late 1960s that defenses, at the 
hen-existing level of technology, could 
e overwhelmed at less cost by addi- 
ional offensive systems than would be 
equired to add balancing defenses, 
'herefore, we were concerned that the 
eployment of a relatively ineffective 
erritorial ABM system on either side 
ould prompt a proliferation of offensive 
uclear forces and cheap but effective 
ountermeasures. An ABM system 
ased on then-current technology would 
ot have been militarily effective, sur- 
ivable, or cost-effective at the margin. 

By contrast, our interest in SDI 
esearch is premised on the judgment 
hat new technologies may now be avail- 
ble that could reverse our judgments of 
he late 1960s about the military ineffec- 
iveness, vulnerability, and cost- 
leffectiveness of strategic defenses. It 
5 important to keep in mind that these 
hree requirements are as relevant 
oday as they were 16 years ago; it is 
he capabilities of the technologies that 
lay have changed. 



The SDI Decision Criteria: 
A Path to Stability 

The President's Strategic Defense 
Initiative, published in January 1985 as 
the most authoritative description of the 
President's vision, discussed these 
requirements for an effective defense. 
These criteria are posited as necessary 
for maintaining stability. 

To achieve the benefits which 
advanced technologies may be able to 
offer, defenses must be militarily effec- 
tive. Defenses must be able, at a mini- 
mum, to destroy a sufficient portion of 
an aggressor's attacking forces to deny 
him confidence in the attack's outcome, 
in general, and, in particular, to deny 
him the ability to destroy a significant 
portion of the military target sets he 
would need to destroy. 

The exact level of defense system 
capability required to achieve these 
ends cannot be determined at this time, 
since it depends on the size, composi- 
tion, effectiveness, and inherent surviva- 
bility of U.S. forces relative to those of 
the Soviet Union at the time that 
defenses are introduced. However, in 
addition to the requirement of military 
effectiveness, two other necessary 
characteristics of an effective defense 
have been identified and constitute cur- 
rent presidential policy as put forth in a 
recent National Security Decision Direc- 
tive. They are survivability and cost- 
effectiveness at the margin. 

Survivability is defined not in terms 
of system invulnerability but the ability 
of a system "to maintain a sufficient 
degree of effectiveness to fulfill its mis- 
sion, even in the face of determined 
attacks against it." The President's 
analysis characterizes survivability as 
"essential not only to maintain the effec- 
tiveness of a defense system, but to 
maintain stability." Vulnerable defenses 
could, in a crisis, provide the offense 
with incentives to initiate defense sup- 
pression attacks to gain a favorable shift 
in the offense-defense balance as a 
prelude to a first strike. 

Similarly, in the interest of dis- 
couraging the proliferation of ballistic 
missile forces, the defensive system 
must be able to maintain its effective- 
ness against the offense at less cost 
than it would take to develop offensive 
countermeasures and proliferate the 
ballistic missiles necessary to overcome 
it. This is the concept of cost- 
effectiveness at the margin. It describes 
the stability of the competitive relation- 
ship between one side's defensive forces 
and the other side's offensive forces— 



that is, whether one side has major 
incentives to add additional offensive 
forces in an effort to overcome the other 
side's defenses. 

The term cost-effectiveness is 
expressed in economic terms. While this 
concept has valid application not only 
for strategic defenses but for other mili- 
tary systems as well, the United States 
understands the criterion of cost- 
effectiveness at the margin to be more 
than an economic concept. 

In particular, we need to be con- 
cerned, in our evaluation of options 
generated by SDI research, with the 
degree to which certain types of defen- 
sive systems encourage or discourage an 
adversary to attempt to overwhelm 
them with additional offensive systems 
and countermeasures. We seek defen- 
sive options which provide clear disin- 
centives to attempts to counter them 
with additional offensive forces. 

Our continued adherence to these 
criteria indicates the deep interest that 
the United States has in maintaining 
and enhancing stability. The United 
States is demonstrating this interest in 
other ways as well. In particular, our 
goals related to a possible transition to 
greater reliance on defenses, together 
with our view of SDI as a means of 
enhancing deterrence and stabilizing the 
U.S. -Soviet balance and not as a means 
of achieving superiority, underscore our 
concern for stability. 

Assuring Confidence 
in Our SDI Research 

President Reagan personally assured 
General Secretary Gorbachev at last 
November's summit that the United 
States seeks to enhance peace and that 
we are pursuing SDI as part of our 
effort to enhance deterrence and global 
stability. In this regard, as we have 
repeatedly made clear, the United 
States is conducting research only on 
defensive systems, with primary empha- 
sis on non-nuclear technologies. While it 
is difficult to be certain of capabilities of 
potential systems based on technologies 
not yet developed, defenses based on 
the new technologies we are investigat- 
ing would not have the role of striking 
targets on the ground. 

Despite Soviet unwillingness during 
the first four rounds of the nuclear and 
space talks to engage in meaningful 
dialogue in the defense and space 
negotiating group, the United States 
has consistently demonstrated in our 
statements and actions that we do not 
seek to gain a unilateral advantage from 



ugust 1986 



45 



ARMS CONTROL 



strategic defense. This openness stands 
in marked contrast to the closed nature 
of Soviet strategic defensive activities, 
the intentions of which we must extrap- 
olate from an operationally offensive 
Soviet military doctrine with heavy 
emphasis on strategic defense and from 
the unabated growth in Soviet nuclear 
weapons capabilities. 

Consistent with our traditional 
emphasis on verification, the United 
States does not expect the Soviet Union 
to accept our assurances on faith alone. 
On the contrary, in Geneva we have 
made concrete proposals which would 
enable the United States and the Soviet 
Union to assess the defensive nature of 
the research being conducted by each 
side. 

If and when our research criteria 
are met, and following close consultation 
with our allies, we intend to consult and 
negotiate, as appropriate, with the 
Soviets pursuant to the terms of the 
ABM Treaty, which provide for such 
consultations on how deterrence could 
be enhanced through a greater reliance 
by both sides on new defensive systems. 
It is our intention and our hope that, if 
new defensive technologies prove feasi- 
ble, we— in close and continuing consul- 
tation with our allies— and the Soviets 
will jointly manage a transition to a 
more defense-reliant balance. A jointly 
managed transition would be designed 
to maintain, at all times, control over 
the mix of offensive and defensive sys- 
tems, thereby assuring both sides of the 
stability of the evolving strategic 
balance. An implicit goal of a jointly 
managed transition would be to identify 
in advance potential problems in, for ex- 
ample, the stability of the mix of offense 
and defense and to act to resolve such 
problems. 

Of course, arms control would play 
an important role in such a transition. 
Properly structured cuts in offensive 
arms are not only worthwhile in their 
own right but they could also facilitate 
the shift to a more defense-reliant 
posture. Unilateral modernization meas- 
ures can enhance transition stability. 
Improving the survivability of our offen- 
sive forces, for example, would espe- 
cially contribute to stability in an early 
transition phase. 

Our interest in pursuing a coopera- 
tive transition with the Soviets should 
not be seen, however, as granting them 
veto power over U.S. decisionmaking. 
Any U.S. decision to develop and deploy 
defenses would still reflect the same 
goals of peace and enhanced deterrence 
through a stable transition, even if our 



good faith efforts to engage the Soviets 
in a cooperative transition were to fail. I 
am convinced, however, that a success- 
ful SDI research phase proving the 
feasibility of survivable and cost- 
effective defenses would provide compel- 
ling incentives for the Soviets to con- 
sider seriously the advantages of a 
jointly managed transition. In Geneva, 
we seek to provide a forum for such 
consideration. 



Balancing Offense and 
Defense in Geneva 

The Soviet approach in Geneva has been 
to advance the self-serving and un- 
acceptable concepts of "a ban on space- 
strike arms" and "a ban on purposeful 
research," both impossible to define in 
meaningful and verifiable terms. They 
would like to limit U.S. capabilities and 
stop U.S. research while avoiding con- 
straints on their own weapon systems 
and research through definitional ploys. 

The United States is committed to 
the SDI research program, which is 
being carried out in full compliance with 
all of our treaty obligations, including 
the ABM Treaty. Indeed, the United 
States seeks to reverse the erosion of 
existing agreements, including the ABM 
Treaty, caused by Soviet violations. In 
seeking to stop or delay SDI, the Soviet 
Union also talks about strengthening 
the ABM Treaty. However, their 
approach for doing so has so far been 
based on artificial distinctions such as 
that between "purposeful" and "fun- 
damental" research. 

The Soviets maintain that deep cuts 
are only possible, and that stability can 
only be preserved, if the United States 
agrees to halt substantive work on SDI. 
The United States cannot accept this 
thesis. We propose, instead, a serious 
discussion on the offense-defense rela- 
tionship and the outlines of the future 
offense-defense balance. Were the 
Soviets to work with us in a meaningful 
exploration of significant reductions in 
START [strategic arms reduction talks] 
and INF [intermediate-range nuclear 
forces], we could examine how the level 
of defense would logically be affected by 
the level and nature of offensive arms. 



The ABM Treaty marked the begin- 
ning of an arms control process which, 
in retrospect, has been profoundly disap- 
pointing. The offensive reductions which 
were supposed to accompany it have not 
materialized, and the Soviets are in fun- 
damental violation of one or more of the 
treaty's key provisions. Consequently, 
we are working to halt the treaty's ero- 
sion by the Soviet Union and persuade 
them that full compliance with its terms 
by both sides is in our mutual interest. 

The United States does not believe 
that there is reason now to change the 
ABM Treaty. Through our SDI 
research, we wish to determine whether 
or not there is a better way to ensure 
long-term stability than to rely on the 
ever more dangerous threat of devastat- 
ing nuclear retaliation to deter war and 
assure peace. If we find there is, and if 
at some future time the United States, 
in close consultation with its allies, 
decides to proceed with deployment of 
defensive systems, we intend to utilize 
mechanisms for U.S. -Soviet consulta- 
tions provided for in the ABM Treaty. 
Through such mechanisms, and taking 
full account of the Soviet Union's own 
expansive defensive systems research 
program, we will seek to proceed in a 
stable fashion with the Soviet Union. In 
this context, we must remember that 
the ABM Treaty is a living document. 

Articles XIII and XIV provide for 
consultation with the aim of appropriate 
amendment of the treaty to take ac- 
count of future considerations, such as 
the possibility of a new— and more 
stable— strategic balance. 

Toward A New Synthesis 

Current U.S. SDI research activities 
and arms control policies are designed 
to provide a basis for securing stability 
in a future strategic regime. The goal of 
stability can be guaranteed only if we 
maintain our commitment to the stand- 
ards and criteria consistent with it. 

The United States is committed to 
achieving strategic stability and, there- 
fore, to a predictable and stable arms 
control process to complement our stra- 
tegic programs to assure our primary 
security objective of reducing the risk of 



46 



Department of State Bulletin 



ARMS CONTROL 



s Arms Control at a Dead End? 



/ Kenneth L. Adelman 

Address before the Commonwealth 
lub in San Francisco on May 16, 
186. Mr. Adelman is Director of the 
\S. Arms Control and Disarmament 
gency. 

or some time now, people on both 
des of the arms control debate have 
;en wondering whether arms control 
is somehow hit a dead end. The rea- 
ms people feel this way vary, but if 
>u read the foreign policy and arms 
mtrol journals, you will often run 
toss articles suggesting that arms con- 
ol is in a funk. The idea crops up 
fain and again. 

This evening I would like to do 
ree things. 

First, I want to suggest the reasons 
hy some people now imagine that arms 
ntrol has hit a dead end. 

Second, I want to show you how the 
Trent pessimism about arms control 
ems mainly from the fact that our 
■finition of arms control has become 
rribly narrow and inadequate. A lot of 
nventional thinking about arms control 
afflicted, I would argue, by a kind of 
nnel vision. 

Finally, I want to suggest to you 
is evening that we need to broaden 
ir definition of arms control to take 
to account all the factors that affect 
ability and security. When we look at 
e world through the lens of this 
■oader— and, it seems to me, much 
ore accurate— definition of arms con- 
ol, we will find that the outlook for 
ability and peace is not at all pessimis- 
: but, indeed, extremely hopeful. 

easons for Pessimism 

Tst, why the pessimism about arms 
ntrol? Several reasons. 

In the first place, there has been a 
■owing acknowledgment that the 
>viet Union is violating agreements. It 
important to recognize how our think- 
g about these matters has changed 
r er the years. At the beginning of the 
VLT [strategic arms limitation talks] 
igotiations 16 years ago, there was a 
idespread expectation that the first 
rategic arms agreements would build 
nfidence for successive talks. There 
as hope that each step in the process 
ould lead to more ambitious steps, that 



agreements on specific issues would lead 
to generalized mutual restraint. This 
hasn't happened. 

I think history will show very plain- 
ly that the United States kept its side 
of the bargain; after we signed SALT I, 
our rate of force modernization slowed 
down— at least partly because we be- 
lieved in the future of arms control. It 
is not that we did nothing. But we did 
considerably less than we had done be- 
fore and considerably less than we could 
do. We MIRVed [multiple independ- 
ently-targetable reentry vehicle] our 
missiles. But we fielded no new ICBM 
[intercontinental ballistic missile] after 
we began to deploy the Minuteman III 
in 1970; we built no new SSBMs [stra- 
tegic submarine ballistic missile] be- 
tween 1966 and 1981; we built no new 
strategic bombers after 1962. In addi- 
tion, the Carter Administration canceled 
the B-l bomber, canceled the enhanced 
radiation weapon, and stretched out 
a number of other key strategic pro- 
grams— e.g.. Trident SSBMs. 

Now, suppose that back in 1972, at 
the time the SALT I Treaty was signed, 
you had been a U.S. Senator, and some- 
body had told you, as you considered 
whether to ratify the agreement, that 
under the terms of the SALT I Treaty 
the Soviets during the next decade were 
going to deploy four new types of 
ICBM, five new classes of ballistic mis- 
sile submarines, two new bombers, and 
that they were going to add 5,000 new 
ballistic missile warheads to their ar- 
senal. My guess is that if somebody had 
told you that, you might have had some 
doubts and questions about such an 
arms control agreement. You might 
have been less eager to ratify the treaty 
than you otherwise had been. The point 
is that at the time of SALT I, nobody 
really expected this kind of outcome. 

In short, while we did considerably 
less in the way of modernizing and ex- 
panding our forces than the arms agree- 
ments permitted— partly out of our 
hopes for arms control— the Soviets, on 
the contrary, built to the very limits of 
the agreements. And now, on certain 
important provisions of the treaties, 
they are actually in violation. These vio- 
lations have cast a pall over the arms 
control process; they have undermined 
the confidence in arms control of people 
on both sides of the political spectrum, 
both here and in Europe. 



A second reason for gloom is that 
since the Geneva summit we have not 
seen from Soviet negotiators the kind of 
followthrough in confidential negotia- 
tions that the summit led us to expect. 
The summit meeting raised expectations 
about the possibility of a fresh start in 
U.S. -Soviet relations and about reaching 
an arms agreement— especially in the 
area of intermediate-range nuclear 
forces (INF). Because of a lack of follow- 
through on the Soviet side, these expec- 
tations haven't been fulfilled. We have 
seen a lot of Soviet activity in the press 
room, but behind the closed doors of the 
negotiating room, I can assure you, we 
have seen virtually nothing of the en- 
gagement on the issues, virtually noth- 
ing of the narrowing of gaps or serious 
negotiation on verification problems that 
Gorbachev pledged at Geneva. Again, I 
think there has been a growing aware- 
ness among most serious participants in 
the arms control debate here in the 
United States that the Soviets, for 
whatever reason, are more preoccupied 
at the moment with the propaganda op- 
portunities presented by arms control 
negotiations and projected summits than 
with prospects for genuine arms control. 

Third— and this is very troubling— 
the Soviet Union has been willing to 
sacrifice progress in our dialogue to 
make what amounts to a gesture of sup- 
port for state-sponsored terrorism, post- 
poning the scheduled meeting between 
our foreign ministers to signal its sup- 
port for the indefensible policies of 
Libya. This has thrown another quite 
unnecessary obstacle in the way of our 
already halting progress on arms control 
and other issues. 

Fourth, even assuming that we get 
down to serious negotiations, the fact 
remains that there are large substantive 
differences between the two sides. The 
differences over SDI [Strategic Defense 
Initiative] are well known. But beyond 
that, there are fundamental disagree- 
ments on how to reduce both strategic 
and intermediate-range systems, on the 
role of our allies, on the very definition 
of strategic systems. 

Even on INF, where we have felt 
an agreement might be possible, there 
are crucial differences. The Soviets still 
insist, very unreasonably, that w r e end 
our 40-year nuclear cooperation with 
Great Britain as the price for an agree- 
ment covering Soviet SS-20s. They still 
insist that Britain and France cease add- 
ing to their nuclear forces, in exchange 
for an agreement that would cover 
only one class of Soviet missiles that 



ugust 1986 



47 



ARMS CONTROL 



threaten them. There is still no ade- 
quate provision in Soviet proposals for 
the SS-20s in Asia, nor is there ap- 
propriate coverage for short-range INF 
forces. These positions are all unaccepta- 
ble on their face and, while we continue 
to hope for movement in these and the 
START [strategic arms reduction talks] 
and space systems negotiations, we have 
not seen such movement yet. 

Fifth, arms control continues to be 
limited, in the long run, by our capac- 
ities for verification— a problem made 
more acute by the problem of Soviet 
noncompliance. Let's not forget that we 
are dealing in arms negotiations with a 
closed society obsessed with secrecy— 
especially with regard to nuclear issues. 
National technical means go only so far; 
unless the Soviets are willing both to 
respond seriously to the current non- 
compliance problem and eventually, in 
the long run, to allow more intrusive 
verification procedures, there are real 
limits on how far the writ of arms con- 
trol may extend. While the Soviet Union 
has offered public hints from time to 
time about the possibility of genuine on- 
site inspection— such hints, which are 
apparently made for propaganda pur- 
poses, go back as far as 1946 and have 
recurred throughout the years— there is 
no serious indication so far that such ar- 
rangements are going to be forthcoming. 
We hope the Soviets will back up their 
public initiatives with real movement. 

Finally, most experts now recognize 
that technology itself is moving in di- 
rections that will make traditional 
arms control increasingly difficult to 
achieve— though not necessarily in direc- 
tions that will make the strategic 
balance less stable or the world more 
dangerous. The move toward smaller 
and more mobile systems like the air- 
launched cruise missile and small mobile 
ICBMs will make the traditional tallying 
and tracking of launchers— the basic 
verification process that has been at the 
center of arms control treaties— harder 
and harder to implement. 

A Broader Definition of Arms Control 

All these reasons are cited by various 
people to suggest that arms control is at 
an impasse. And I think there is some- 
thing to this perception, at least when 
one is speaking about arms control as it 
has traditionally been defined: that is, 
agreements involving the totals of deliv- 
ery systems on each side— what we 
sometimes call "bean counting"— along 
with negotiations leading to a summit 
meeting where an agreement is signed. 



This is pretty much how we came to un- 
derstand the arms control process in the 
1970s. 

But— and here is my second point- 
while such agreements and negotiations, 
handled well, can be beneficial, this is a 
rather narrow definition of arms control. 
Arms control ought to mean more than 
this, and, in fact, it always has. Arms 
control in the true sense means 
working— by the whole range of means 
at our disposal— for a safer, more stable 
world; it means working to reduce the 
risk of war in general as well as work- 
ing to reduce the risks inherent in the 
kinds of weapons deployed on each side. 

Now let me rephrase the question: is 
arms control in this larger sense at a 
dead end? The answer to this question, 
it seems to me, is clearly "no." 

Why not? Because despite all the 
problems I just mentioned, despite all 
the barriers to agreement, from the 
standpoint of U.S.-Soviet conflict, the 
world has become a safer place and is 
on the way to becoming a still safer 
place. Despite all the problems we face, 
stability has, in fact, been strengthened 
over the past 5 years. Step by step, we 
are moving toward a safer, more stable 
world. And that, in the largest perspec- 
tive, is precisely the goal that arms con- 
trol is trying to achieve. 

Look around you, and think back to 
1979. From the standpoint of arms con- 
trol in the narrow sense, 1979 ought to 
have been a banner year. President 
Carter met Brezhnev at a summit meet- 
ing in Vienna in June. The SALT II 
Treaty was signed. A major arms agree- 
ment was concluded. But was there a 
feeling of stability in 1979? Was there a 
widespread sense that the world situa- 
tion was moving in the direction of 
greater safety and greater stability? 
Hardly. Throughout the late 1970s, 
regional conflicts were multiplying 
everywhere around the globe. In 
Southeast Asia, the world witnessed 
some of the worst horrors humanity had 
seen since the Stalinist purges or the 
Nazi depredations in Germany and 
Eastern Europe— the horrifying flight of 
the boat people from Vietnam; the sys- 
tematic, genocidal slaughter of millions 
of the Cambodian people by their own 
fanatical Marxist government. 

At the same time, the Soviet Union 
was beginning to make its presence felt 
where it had never been before. In the 
1970s Cuban troops appeared for the 
first time on the Continent of Africa— in 
Ethiopia and Angola; Vietnam, a Soviet 
client, invaded Cambodia. Between 1975 



and 1980, virtually a nation a year fell 
to invasion by communist forces— South 
Vietnam in 1975, Angola in 1975-76, 
Ethiopia in 1977, Cambodia in 1978. 

By the end of 1979, in fact, things 
were looking very bleak. In November, 
Iranian militants poured into the Ameri- 
can Embassy in Tehran; and in Decem- 
ber and January, 85,000 Soviet troops 
rolled into Afghanistan. 

Six months after signing SALT II, 
in other words, the United States faced 
a major setback in its relations with the- 
Soviet Union and an international crisis 
of serious proportions. 

Now at that time, in January 1980, 
the National Security Adviser to the 
President, Zbigniew Brzezinski, jotted 
in his diary a short remark that I think 
is worth reading today: 

Had we been tougher sooner, had we 
drawn the line more clearly, had we engaged ] 
in the kind of consultations that I had so 
many times advocated, maybe the Soviets 
would have not engaged in this act of miseal- 1 
culation [i.e., the invasion of Afghanistan]. As 
it is, American-Soviet relations will have 
been set back for a long time to come. What l 
was done had to be done [i.e., U.S. sanctions^ 
but it would have been better if the Soviets 
had been deterred first through a better un- , 
derstanding of our determination. 

This, you will remember, was the 
situation we inherited in 1980. In ap- 
proaching arms control and all our 
problems around the world since then— 
at bottom, the same problems faced by 
every American administration from 
Truman to Kennedy to Reagan— we 
have done many of the things that 
Brzezinski said ought to have been done 
before 1979 and 1980. 

For example, we have made discus- 
sion of regional issues a priority in our 
dialogue with the Soviet Union along- 
side nuclear arms negotiations. This is 
not something we have done out of 
perversity. On the contrary, as the ex- 
perience of the late 1970s showed, such 
dialogue on regional issues is essential 
to East-West relations, the work of 
peacekeeping, and even to successful 
arms negotiations. Although SALT II 
was in trouble in the Senate before 
December 1979, you will recall, it was 
the Soviet invasion of Afghanistan that 
led the Carter Administration to with- 
draw the treaty from Senate considera-' 
tion. So regional conflict and arms 
control are directly related at a very 
practical level. 

At the same time that we have 
made clear to the Soviets our interests 
around the world and our resolve to 



48 



Department of State Bullets 



ARMS CONTROL 



Id the line against the advance of 
ranny, chaos, and terrorism, we have 
built our military strength. And in do- 
g so, we have— I think this should be 
vious— introduced and element of sta- 
lity into our relations with the Soviets 
at was conspicuously missing in 1979. 
jgional conflict has been scaled down 
the point where it does not appear 
ese days, as it sometimes did in the 
;e 1970s, to threaten to erupt in a 
rger U.S. -Soviet confrontation. And, in 
rt, what we see around the world are 
e efforts of freedom-loving people to 
sist tyrannical Marxist- Leninist 
ivernments. 

Here is the crux of what I am say- 
g: in working on a broad front to 
vance the cause of stability and free- 
m, it seems to me we have simulta- 
ously advanced the cause of arms 
ntrol and war prevention in the large 
nse. 



le Technological Trend 
>ward Stability 

lere is another hopeful development to 
i seen, if we take this larger per spec- 
re on arms control. At present, we are 
tnessing a technological movement on 
ith sides toward weapons that may 
ove inherently more stabilizing. 

Stability is served when each side 
issesses secure retaliatory forces— 
tien neither side's retaliatory force is 
reatened by a preemptive first strike. 
the 1970s, the technological trend 
as clearly toward instability— 
irticularly on the Soviet side. The 
»viets moved deliberately toward the 
cumulation of heavy land-based rins- 
es with accurate warheads, capable of 
riking preemptively at hard targets in 
e United States. They moved, in other 
3rds, in the direction of accumulating 
fficient numbers of such weapons to 
ive a first-strike arsenal that threatens 
ir retaliatory force. 

But at present, the technological 
end seems to be in a different direc- 
)n. Systems like the air-launched 
uise missile are effective mainly as 
cond-strike systems. These missiles fly 
Dwer; they are easy to disperse and 
nceal; they are useful largely for 
taliation. 

There is a third hopeful develop- 
ent, and that is the Strategic Defense 
dtiative. Here is another field where 
chnology holds out great hope for a 
ore stable world. The fact is that in 
ie 10 years or so since we last debated 
e subject of defensive systems in this 



country, we have witnessed a technolog- 
ical revolution whose consequences and 
implications we simply cannot ignore. 
No one in this city needs to be re- 
minded of the astonishing transforma- 
tion in our lives that has been sparked 
by circuits etched on chips of silicon. It 
seems to me that it is only reasonable 
to ask— as the President asked in his 
speech of March 23, 1983— whether, in 
the wake of this technological revolu- 
tion, we are condemned to live in a per- 
mament state of vulnerability to nuclear 
destruction. It seems to me we are 
obliged to ask whether the same discov- 
eries which have allowed us, even in the 
past 10 years, to shrink room-size com- 
puters down to laptop scale may not 
make it possible one day to erect a sys- 
tem of defenses capable of shielding us 
from preemptive attack. Ten years ago, 
such an idea seemed implausible; but 
anyone who takes an honest view of the 
new technologies we have at our dis- 
posal has to wonder whether such an 
idea is so implausible today. 

We do not yet have a definitive an- 
swer to these questions, but the outlook 
is optimistic— and it is imperative that 
we continue investigating. 

SDI's Contribution to Arms Control 

Now I'm aware, of course, that some 
people argue that the interests of SDI 
and arms control are opposed. This 
argument seems to me to rest on a fun- 
damental misunderstanding both of the 
Strategic Defense Initiative and of arms 
control. Once again, people are afflicted 
by a kind of tunnel vision. 

We don't yet know exactly how ef- 
fective a defensive system we may be 
able to deploy. But if you return to the 
broad, basic concepts of arms control 
and to the precise definition of "stabil- 
ity," you will see very quickly that a 
survivable, cost-effective system— even 
an imperfect one— will enhance stability. 
How? By making preemptive attack 
more complicated, more difficult to exe- 
cute. That, remember, is the essence of 
technical "stability"— to reduce the in- 
centives for surprise attack. An attacker 
bent on preempting has to have confi- 
dence in his ability to destroy a large 
percentage of the defender's retaliatory 
force and other military assets. Planning 
of this kind is vastly complicated and 
confused when reasonably effective 
defenses are in place. Survivable 
defenses would enhance stability by 
making a preemptive attack a lot more 
difficult to execute. In fact, if you think 
about it, you will realize that it would 



be difficult to design such defenses that 
failed to enhance stability in this 
fashion. 

But what about the argument that 
SDI will accelerate the arms race? This 
argument, too, is based on some ques- 
tionable premises. In the first place, 
let's be clear about something. In 40 
years of arms control negotiations, the 
Soviet Union has yet to reduce its offen- 
sive arsenal. In 40 years of arms control 
negotiations, the Soviet offensive ar- 
senal has continued to grow. Why? Part 
of the reason may be that the Soviets 
have never had a real incentive to 
reduce their offensive weapons; they 
have always calculated that they would 
gain more by building offensive weapons 
than by not building them. So even 
when we conspicuously slowed down our 
modernization program in the 1970s, 
hoping the Soviets would do the same, 
implicitly inviting the Soviets to do the 
same, the Soviet program continued to 
increase— indeed, for a while it speeded 
up. 

Now, it seems to me that defensive 
systems, if they prove survivable and 
cost-effective in this way, may provide 
just the incentive that has been missing, 
just the incentive that is necessary to 
bring about reductions in offensive ar- 
senals. Why? Because in the presence of 
effective defenses, offensive weapons be- 
come considerably less valuable. If 
defenses prove technologically feasible 
and both sides were to move to a mix- 
ture of defensive and offensive systems, 
both sides would be faced with a choice: 
they could invest in expanding their 
offenses, or they could invest in expand- 
ing their defenses. Both sides will be 
faced with the same question: they will 
have to ask themselves which contrib- 
utes more to their security— a better 
offense or a better defense? 

The point is that if defensive tech- 
nologies are comparatively effective, 
there will be a sti-ong incentive to shift 
resources into defensive systems, since 
that is where security would lie. If 
resources are shifted into defenses and 
out of offenses, it follows that the world 
is going to become a safer place. The 
cause of arms control— of stability in the 
broad sense— will be served. With effec- 
tive defenses in place, it may become 
possible— we hope it would become 
possible— finally to convince the Soviets 
to make the real reductions in arsenals 
we have wanted all along. 

There's another problem that we 
have tried to solve with arms control 
negotiations that SDI may alleviate, and 
that is the problem of accidental launch. 



jgust 1986 



49 



EAST ASIA 



We have done a great deal by means of 
technology and negotiation to attempt to 
minimize the chances of a purely ac- 
cidental launch. But it seems to me we 
all would feel a bit safer if there were a 
system capable of intercepting a missile 
accidentally launched at one of our 
cities. 

Broadening Our Arms Control 
Dialogue and Understanding 

There is a fourth and final development 
that bodes well for arms control in the 
larger sense. Under this Administration, 
there has been a deliberate broadening 
of our arms control dialogue with the 
Soviet Union. In addition to the tradi- 
tional discussion of the bean count of 
weapons on both sides, we have tried to 
explore with the Soviets some of the un- 
derlying concepts of our strategic 
relationship— the relation between 
offense and defense, the concept of sta- 
bility, the kinds of circumstances that 
could contribute to war, and the spread 
and use of chemical weapons. These are 
all important issues. In recent years 
there has been an unhealthy, almost 
monomaniacal focus on the significance 
of weapons totals, on the numbers. The 
broader areas I mention must remain a 
part of the arms control picture. 

None of this is to suggest that we 
should be any less serious in our efforts 
to negotiate specific agreements with 
the Soviets to reduce weapons and 
stabilize the nuclear balance. But let's 
not forget that an agreement requires 
serious bargaining by both sides. To 
achieve progress at this point, the 
Soviets need to reorient themselves 
away from the press room toward the 
confidential negotiations. We need to 
see some serious bargaining on the is- 
sues; we need to see from the Soviets 
new positions that take the security 
needs of both sides into account instead 
of the one-sided positions they have put 
forward so far. Diligence and flexibility 
on the part of our negotiators will avail 
nothing until the Soviets engage in seri- 
ous negotiation where the action is— and 
that is in the conference room, behind 
closed doors. The ball is in their court; 
and frankly, it would be nice if, instead 
of giving press conferences and making 
announcements all the time, they would 
play a little more tennis. 

But while the success of arms con- 
trol may be advanced by new agree- 
ments, it obviously depends upon more 
than agreements. We Americans need to 
broaden our understanding of arms con- 
trol. That is the message I would like to 



leave you with today. We need to take 
into account all the factors that affect 
stability and the preservation of 
peace— not only the agreements we con- 
clude with the Soviets but the level of 
regional conflict, the overall strength of 
deterrence, the cohesion and confidence 
of our alliances, the promise of tech- 
nology itself. 

Viewed in this broad light, the 
prospects of arms control, of long-run 
stability, are not at all dark but, indeed, 
quite optimistic. Look around you. The 
tide of history is turning in favor of 
peace, of global stability, and of the 
prosperity of free peoples. Most of the 
insurgencies in the world today are not, 
as was true a decade ago, communist in- 
surgencies that are the seedbeds of 
tyranny and persecution but democratic 
uprisings that are the fountainheads of 
freedom. The economies setting the pace 



of world growth and development today, 
are free economies. Freedom is on the 
march— not on the run. In every corner 
of the globe, new democracies are 
flowering. In the West, where formerly 
there was Spenglerian doom, there is a 
renewal of confidence and of hope. 

History is with us. If we are pru- 
dent about the requirements of stability 
about arms control in both the narrow 
and the largest senses, there is no doutr 
that we can control the nuclear menace; 
if we are ingenious enough technologi- 
cally, perhaps some day we can radical! 
reduce it. But we must keep our eyes 
attuned to the broad vision— not simply 
parchment security, but real security. Ill 
is in these broad terms that we must 
evaluate the future, for it is in these 
broad terms that the foreign policy 
legacy of this Administration will be 
judged. ■ 



Proposed Sale of Aircraft 
Avionics Components to China 



by James R. Lilley 

Statement before the Senate Foreign 
Relations Committee on April 29, 1986. 
Mr. Lilley is Deputy Assistant Secre- 
tary for East Asian and Pacific 

Affairs. 1 

I am pleased to be here today to discuss 
the proposed sale of aircraft avionics 
components to the People's Republic of 
China (P.R.C.) for use in the moderniza- 
tion of the F-8 high altitude air defense 
interceptor. 

This proposed sale has focused at- 
tention on our military cooperation with 
China. Much has been said about this 
cooperation. As the Congress considers 
this issue, it is important to maintain 
our perspective as to what our coopera- 
tion is and what it is not and to base 
our discussion on how this issue fits into 
both our broader policy toward China 
and developments in the region. 

The last four Administrations have 
worked to develop stronger relations 
with the People's Republic of China. 
Since the establishment of diplomatic re- 
lations in 1979, U.S.-China ties have 
broadened significantly. The strengthen- 
ing of our bilateral relationship has 
resulted in manv benefits to the United 



States, including increased trade, extend 
sive contact between the peoples of ouiil 
nations, cooperation in educational and 
cultural spheres, and a wide-ranging ex> 
change of views on regional and global 
issues during high-level visits. Althougl 
we do not always agree on international 
issues, our dialogue has increased undei 
standing of our respective positions anci 
we believe, reduced potential areas of 
disagreement between us. Moreover, 
friendly relations between the United 
States and China have contributed to ai 
reduction of tensions in the Asia-Pacific 
region. 

U.S. Military Cooperation 

A part of our growing relationship is 
the increased cooperation in the militar 
sphere, including sales of some defen- 
sive arms to China. This limited militai 
cooperation is based on the assessment 
that the United States and China sharf 
certain important parallel interests. 
Foremost among these is a common 
security concern— the threat posed to 
both of our countries and the entire 
Asia-Pacific region by the Soviet Unior 
The willingness of the United States tc 
sell specific defensive weapons or tech- 
nologies to the P.R.C. is based on a 
thorough analysis of each item's utility 
for enhancing Chinese defensive capabi 



50 



Department of State Bullet' 



EAST ASIA 



35, taking into full consideration the 
litical-military environment and the in- 
vests and concerns of our other friends 
d allies in the region. 

The proposed program for an up- 
ade of 50 F-8 air defense interceptor 
craft, to be completed about 1995 or 

36, will contribute to China's ability to 
fend its airspace against the threat 

im the Soviet Union. The program 
is very carefully reviewed to insure 
it the upgrade would not provide an 
ensive capability that could be threat- 
ing to allies and friends, including Tai- 
.n, in the region. 

Our military cooperation with China 
proceeding cautiously and deliber- 
;ly. We believe that the proposed pro- 
im to assist with the upgrade of the 
8 defensive interceptor aircraft is an 
:a where cooperation to strengthen 
ina's defensive capabilities will not 
icomitantly jeopardize the security of 
ler Asian friends and allies. We be- 
ve strongly that our interests are bet- 
• served by developing cooperative 
momic, trade, political, and military 
s with the P.R.C. than by refusing to 
;ist them in their modernization ef- 
ts in all appropriate areas of activity. 
e current trend in U.S. -China rela- 
ns is a positive trend which is aimed 
contributing to the security not only 
China and the United States but our 
ler friends and allies as well. 

For nearly a decade, China has 
ight to modernize four key sectors— 
lustry, agriculture, science and tech- 
ogy, and military. A key element in 
:se modernizations is the acquisition 
foreign technology. The military ele- 
int is the fourth priority and has been 
rerely constrained by budget limita- 
ns despite having to face 49 Soviet di- 
ions comprising half a million men on 
■ Sino-Soviet border as well as up to 
Vietnamese divisions in the south. 
ijor efforts are underway to reduce 
s number of soldiers by 1 million men 
well as to reform leadership, organi- 
ion, training, and military doctrine. 
e goal is a leaner, better equipped, 
:ter trained and organized, and better 
! armed force so as to meet China's 
in security threats. The budget con- 
aints. however, have delayed procure- 
nt and production of new equipment, 
i China's defense industries have in- 
:asingly been civilianized to produce 
^military consumer goods. The hope 
to obtain needed defensive equipment 
m abroad, although such procurement 
il continue to be limited by the in- 
:asing lack of foreign exchange. 



Regional Considerations 

As we consider our military cooperation 
with China, we have carefully con- 
sidered the opinions of our friends and 
allies in East and Southeast Asia. We 
have made it clear that our cooperation 
is limited to defensive equipment. We 
believe these countries understand our 
rationale and appreciate our caution. 
While some of them still are concerned 
that we will move beyond our well- 
defined limitations, their reactions have 
been muted. 

There has been concern expressed 
about the impact of this sale on Taiwan. 
It is, indeed, true that Taiwan is dis- 
tressed about U.S. military assistance to 
the P.R.C. and support for the F-8 in 
particular. However, we believe that if 
this single program of assistance to a 
small number of aircraft is put into the 
proper perspective it will be difficult to 
claim that it potentially constitutes a 
significantly increased threat to Taiwan. 
Taiwan is a dynamic, vigorous society. 
It has a rapidly growing economy and a 
stable political system, and these two 
factors are key deterrents to efforts by 
anyone seeking to alter the course of de- 
velopments there by force. I need cite 
only a few statistics. 

Taiwan's per capita gross national 
product is currently over $3,000 a year 
and there is every reason to believe 
that by the end of the century it will 
rise to $12,000. In addition, every in- 
crease in prosperity is equitably dis- 
tributed, further encouraging economic 
development and reducing social ten- 
sions. Taiwan's total trade was $50.8 bil- 
lion in 1985, putting it into the top 15 
trading entities in the world. Taiwan is 
the fifth largest trading partner of the 
United States with a total trade in 1985 
of $22.8 billion. Taiwan's foreign ex- 
change holdings are $28 billion. 

By many other yardsticks also, Tai- 
wan is a significant actor on the Asian 
scene. Taiwan's economy is now gradu- 
ating into the high technology manufac- 
turers which should permit its export 
economy to grow. Although understand- 
ably concerned by the military situation, 
Taiwan remains confident in maintaining 
the growth of its economy and in con- 
tinuing its political progress with sta- 
bility. Foreign as well as domestic in- 
vestors give the practical vote of confi- 
dence on which Taiwan's prosperity and 
stability rest. We, therefore, think that 
there are good grounds for Taiwan to 
continue to act with confidence. 

Even though the situation has occa- 
sionally been tense in the Taiwan Strait, 



it has been basically peaceful for nearly 
30 years. This can only be explained by 
a complex of factors— political, economic, 
and psychological, as well as military. 
We believe that this realistic appraisal 
is shared by the government in Beijing. 
It has authoritatively stated that its fun- 
damental and consistent policy is peace- 
ful reunification. That policy was at the 
center of the negotiations which led to 
the August 17, 1982, joint communique. 
In that document, the United States ac- 
knowledged this fundamental Chinese 
policy. As stated in then Assistant 
Secretary [of East Asian and Pacific Af- 
fairs John H.] Holdridge's August 18, 
1982, statement before the House For- 
eign Affairs Committee, our willingness 
to make "adjustments in our arms sales 
to Taiwan had to be premised on a con- 
tinuation of China's peaceful policy." He 
went on to say that "while we have no 
reason to believe that China's policy will 
change, an inescapable corollary to these 
mutually interdependent policies is that 
should that happen, we will reassess 
ours." 

Although there have been occasional, 
troubling remarks suggesting possible 
future military actions and Beijing 
declines to renounce formally the use of 
force to resolve what it considers to be 
an internal matter, we believe that Bei- 
jing shares our view that the use or 
threat of force could complicate this is- 
sue rather than facilitate its settlement. 

Taipei has responded negatively to 
Beijing's overtures for formal talks 
about reunification, beginning with polit- 
ical talks about three areas of interim 
contacts (trade, visits, and communica- 
tions) on the grounds that Beijing's 
proposals are not sincere. However, the 
substance about which Beijing wishes 
interim talks has been developing. 
Trade over the years has been increas- 
ing, and 1985 trade nearly doubled over 
the previous year to a level of $1.1 bil- 
lion in two-way trade, much of it Taiwan 
exports. There are increasing contacts 
between individuals and private organi- 
zations in key areas such as science, 
technology, and culture. While direct 
communications are opposed by Taiwan, 
indirect communications assure that the 
positions of each side is understood by 
the other. There may eventually be an 
interest in greater contacts provided 
they are to their mutual advantage. 

A key aspect of Taiwan's confidence 
is the U.S. commitment. The Taiwan 
Relations Act is a fundamental affirma- 
tion of the strong support which the 
United States gives to Taiwan and of 
the interest which the United States has 



gust 1986 



51 



ECONOMICS 



in having any resolution of the future of 
Taiwan by the Chinese themselves be 
peaceful. Lest this support be seen 
merely as verbal and moral, the Taiwan 
Relations Act specifies that "the United 
States will make available to Taiwan 
such defense articles and services in 
such quantity as may be necessary to 
enable Taiwan to maintain a sufficient 
self-defense capability." This has been a 
consistent policy since the enactment of 
that legislation in 1979, and we see no 
sentiment for changing that policy. In 
1982 at the signing of the joint commu- 
nique, the United States realized that 
this complicated statement, arrived at 
after extensive negotiations, gave 
grounds for concerns on Taiwan, and six 
reassurances were given to Taiwan. In 
addition to stating that the United 
States "had no intention whatsoever to 
revise the Taiwan Relations Act" and 
"had not agreed to hold prior consulta- 
tions with the People's Republic of 
China on arms sales and military items 
to be sold to Taiwan," there were assur- 
ances that the United States would "not 
exert pressure on Taiwan to enter into 
negotiations with the People's Republic 
of China." We believe that Taipei and 
Beijing both understand the firmness of 
the United States in implementing the 
Taiwan Relations Act. Our arms sales 
have been significant. Although decreas- 
ing gradually as agreed to in the August 
17, 1982, communique, they have re- 
mained adequate given the current situ- 
ation in the Taiwan Strait. In addition, 
Taiwan is increasing its reliance on in- 
digenous efforts for reasons of national 
pride as well as sound economic 
grounds. We have, for many years, sup- 
ported this Taiwan policy, and we will 
continue to do so. 

This Administration seeks the con- 
tinuation of our growing ties with China 
while maintaining our firm commitment 
under the Taiwan Relations Act to the 
security of the people on Taiwan. We 
remain optimistic about the future and 
believe our willingness to cooperate 
with China in its modernization 
efforts— including cautious and prudent 
cooperation in the field of military 
modernization— will provide stability and 
peace in the East Asia region in the 
years ahead. 



Imports from the 

European Economic Community 



WHITE HOUSE STATEMENT, 
MAY 15, 1986 1 

The President today proclaimed quotas 
on agricultural imports from the Euro- 
pean Community (EC) in response to 
the EC's quotas on U.S. agricultural 
exports to Portugal. 2 

We have been assured by the EC 
that their quotas will have no immediate 
impact on our trade. As long as that re- 
mains the case, our quotas will be simi- 
larly nonrestrictive. However, should 
the EC's quantitative restrictions begin 
to restrict U.S. exports, the U.S. quotas 
will be adjusted to have a comparable 
effect, or the President may substitute 
tariff increases for the quotas. 

This action follows the President's 
announcement on March 31 that the 
United States would respond in kind to 
the EC's import restrictions on grains 
and oilseeds imposed in Portugal follow- 
ing that country's accession to the EC. 

The U.S. quotas will be effective 
May 19 on EC white wine with a value 
of more than $4.00 per gallon, chocolate, 
candy, apple or pear juice, and beer. 



The President indicated his willingness 
to suspend these measures and refer the 
matter to the General Agreement on 
Tariffs and Trade (GATT) if the EC willl 
agree to do the same. 

The President has also decided to 
suspend certain tariff concessions, effec- 
tive in 30 days. The action will not in- 
crease tariffs, however, and the decision 
on any duty increases will be deferred 
until July to allow time for negotiation 
of compensation for EC tariff action af- 
fecting U.S. exports of feedgrains to 
Spain. 

This is a dispute the United States 
sought to avoid. But we cannot overlook 
the EC's unilateral actions which clearly 
violate GATT rules and affect some of 
our most sensitive exports. Our 
response is fair and measured. We hope 
the EC will respond in a way that will 
help us settle this disagreement without 
further damaging our trading rela- 
tionship. 



•Text from Weekly Compilation of 
Presidential Documents of May 19, 1986. 
"Proclamation 5478.H 



World Trade Week, 1986 



■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. ■ 



PROCLAMATION 5482, 
MAY 19, 1986" 

Each year, World Trade Week provides an 
opportunity to celebrate the importance of in- 
ternational trade to our present prosperity 
and our future prospects. Indeed, it benefits 
us and all the nations with whom we do 
business. 

American business initiative and ingenui- 
ty have never stopped at our borders. Since 
the birth of our Nation, we have been a dy- 
namic force in international trade. That trade 
has helped us build the most productive econ- 
omy in the history of mankind. 

Today, America's prosperity depends as 
never before on our ability to compete in in- 
ternational markets. Our exports make a 
major contribution to domestic growth and 
employment. The United States is today the 
world's leading exporter. We export nearly 
16 percent more goods to the world than our 
nearest competitor, yet we export far less of 
our total production than many other trading 
nations. We need to increase our exports to 
further strengthen our economy. 



American companies need the same free 
and fair access to foreign markets that the 
United States offers to its trading partners. 
My Administration has stepped up its efforts 
to counter unfair trade practices and to open 
foreign markets that have raised barriers to 
American products. We will continue to do 
so. 

Today, we are preparing for a new rounc 
of multilateral trade negotiations. Through 
those negotiations we will continue to press 
for open markets for the products of our 
manufacturing firms. We will also press for 
greater market access for the products of 
America's farms and the products of our fast 
growing service industries. 

In multilateral negotiations, and at home 
we will continue to resist proposals for pro- 
tectionist measures for the simple reason, 
proved by history and bitter experience, tha 
they just do not work. 

Export expansion also requires a sound, 
stable dollar and reliable exchange rates 
around the world. We have already achieved 
a great deal through our efforts to coordinat 



52 



Department of State Bulleti 



EUROPE 



■onomie and monetary policies with our 
ajor trading partners. Upward revaluations 
foreign currencies against the dollar are 
aking American products more competitive 
■ound the world. We are continuing our poli- 
' discussions with America's major trading 
irtners to enhance America's trading 
>portunities. 

Government can only set the stage for in- 
eased trading. It is the job of American pri- 
ite enterprise to make trade grow. Over 
le past year, government actions have vast- 
improved the climate for trade. Aggressive 
cporters in our business community are call- 
g today's trading climate an opportunity for 
"renaissance in American competitiveness." 
ranslating that golden opportunity into a 
>ality depends upon all of America's 
asinesses. 

Given fair competitive conditions, Ameri- 
in industry and labor can and will meet this 
lallenge with renewed determination— 
■aching out to fulfill our potential as a great 
tporting nation. 

Now. Therefore, I, Ronald Reagan, 
resident of the United States of America, 
/ virtue of the authority vested in me by 
ie Constitution and the laws of the United 
,ates, do hereby proclaim the week begin- 
ng May 18, 1986, as World Trade Week. I 
vite the people of the United States to join 
appropriate observances to reaffirm the 
lormous potential of international trade for 
eating jobs and stimulating economic activi- 
here while it helps to generate prosperity 
rail. 

In Witness Whereof, I have hereunto 
;t my hand this nineteenth day of May, in 
ie year of our Lord nineteen hundred and 
ghty-six, and of the Independence of the 
nited States of America the two hundred 
id tenth. 

Ronald Reagan 



NATO Ministers Meet in Canada 



'Text from Weekly Compilation of 
'residential Documents of May 26, 1986. 



Secretary Shultz attended the regu- 
lar semiannual session of the North At- 
lantic Council ministerial meeting in 
Halifax, Nova Scotia, on May 29-30, 
1986. Following are the texts of the two 
statements issued by the ministers and 
the Secretary's news conference. 



NORTH ATLANTIC COUNCIL 
STATEMENT, 

MAY 30, 1986 1 

At Halifax, we have reviewed all aspects of 
East-West relations. We conclude that obsta- 
cles to agreement, however serious, should 
not prevent both sides from building on areas 
of common interest. We remain ready to co- 
operate where common ground exists. We 
will continue our efforts to narrow 
differences elsewhere. 

We remain united in our resolve to main- 
tain adequate forces and to seek a more con- 
structive relationship with the countries of 
the East. However, the conventional im- 
balance in Europe and the sustained build-up 
and modernization of all categories of Soviet 
military power continue to be of concern. In 
order to preserve peace and to prevent any 
kind of war, we will maintain the Alliance's 
strategy of deterrence. 

We are determined to pursue our efforts 
for progress in arms control and disarma- 
ment. We aim at a lower and more balanced 
level of armaments. We support US efforts 
to achieve deep reductions in Soviet and US 
nuclear forces. We seek a treaty totally 
eliminating chemical weapons. Reductions in 
conventional forces are also crucial in order 
to correct the present conventional imbalance 
between the Alliance and the Warsaw Pact. 
Beyond this, we aim at conventional stability 
throughout Europe. We have today made a 
separate statement on conventional arms 
control. 

In all negotiating fora in which they are 
engaged, the participating Allies have 
presented detailed proposals directed at en- 
hancing stability and security. We now await 
an equally constructive response at the 
negotiating table from the Soviet Union and 
the other members of the Warsaw Pact. 
Public statements alone are not enough. 

Adequate verification measures are the 
key to progress in all the present negotia- 
tions and essential for building trust and 
openness. Any agreement should enhance 
confidence of compliance and strengthen the 
existing treaty regime. We are prepared to 
accept comprehensive verification measures, 
on a fully reciprocal basis, including 
systematic on-site inspections. 

But the development of peaceful and 
realistic East-West relations requires more 
than arms control. The human dimension re- 
mains crucial: this embraces respect for hu- 
man rights and encouragement of individual 
contacts. Moreover, a more co-operative 



East- West relationship, including political dia- 
logue, trade, and cultural exchanges, in which 
all states participate on equal terms, is 
needed. 

We reaffirm the importance each of us at- 
taches to the CSCE [Conference on Security 
and Cooperation in Europe] process in all its 
aspects. At Stockholm we are pressing for 
agreement on a substantial set of confidence 
and security building measures by September 
1986. We are determined to further the 
CSCE process at the Vienna CSCE Follow- 
up meeting in November, which should be 
opened at a political level. 

We underline the importance of the con- 
tinued observance of the Quadripartite 
Agreement on Berlin and, particularly in 
view of the current situation, of maintaining 
freedom of circulation in the city. 

Terrorism is a serious concern to us all. 
It poses an intolerable threat to our citizens 
and to the conduct of normal international re- 
lations. We are resolved to work together to 
eradicate this scourge. We urge closer inter- 
national co-operation in this effort. 

The purpose of our Alliance is to enable 
our peoples to live in peace and freedom, free 
from any threat to their security. We seek a 
productive East-West dialogue. This will en- 
hance stability in our relations with the mem- 
bers of the Warsaw Pact. We call upon the 
Soviet Union and the other Eastern 
European countries to join us in this 
endeavour. 



NORTH ATLANTIC COUNCIL 

STATEMENT ON 

CONVENTIONAL ARMS 

CONTROL, 
MAY 30, 1986 2 

Within the Alliance, we cherish the ideal that 
all the peoples of Europe, from the Atlantic 
to the Urals, should live in peace, freedom 
and security. To achieve that ideal, bold new 
steps are required in the field of conventional 
arms control. 

Our objective is the strengthening of sta- 
bility and security in the whole of Europe, 
through increased openness and the establish- 
ment of a verifiable, comprehensive and sta- 
ble balance of conventional forces at lower 
levels. 

To work urgently towards the achieve- 
ment of this objective, we have decided to 
set up a high level task force on conventional 
arms control. 

It will build on the Western proposals at 
the CDE [Conference on Confidence- and 
Security-Building Measures and Disarmament 
in Europe] conference in Stockholm and at 
the MBFR [mutual and balanced force reduc- 
tions] negotiations in Vienna, in both of 
which participating Allied countries are 
determined to achieve early agreement. 

It will take account of Mr. Gorbachev's 
statement of 18th April expressing, in partic- 
ular, Soviet readiness to pursue conventional 



August 1986 



53 



EUROPE 



force reductions from the Atlantic to the 
Urals. 

An interim report will be presented to 
the Council in October, and a final report will 
be discussed at our next meeting in De- 
cember. 

Our aim is a radical improvement in East- 
West relations in w-hich more confidence, 
greater openness and increased security will 
benefit all. 



SECRETARY SHULTZ'S 
NEWS CONFERENCE, 
MAY 30, 1986 3 

Q. Is there any truth to the reports in 
the U.S. press today suggesting a rift 
in the alliance following the decision 
of the President announced Tuesday 
concerning SALT II? Are those head- 
lines accurate? 
A. No. 

Q. Could you say whether any of 
the allies supported the idea of a U.S. 
breakout from SALT II? 

A. It's not so much a question of a 
breakout. I don't think it is being 
described properly. What we are talking 



about here is a shift of gears from a 
form of restraint under a treaty that 
was never ratified and was being violat- 
ed, and, for that matter, has become in- 
creasingly obsolete, since its most 
fundamental unit of account, 
launchers— not exclusive unit of account, 
but fundamental unit of account— is not 
the right one. The right units of account 
are warheads and the capacity to deliver 
that power. You have a form of re- 
straint that has been becoming more 
and more obsolete, that is unratified, 
that is being violated. 

The President is saying, let us shift 
away from that to a form of restraint 
that looks at behavior by the Soviet 
Union and looks at the responsibilities 
that the United States has, and the alli- 
ance has, for the maintenance of our 
defensive deterrent capability. That's 
what we have to keep our eye on. And 
[he] says that, broadly speaking, what 
we need for deterrence is a reflection of 
what the Soviet Union has aimed at us. 

We will have to take into account, in 
our own behavior, what they do. And 
beyond that, in a period of budgetary 



26th Report on Cyprus 



MESSAGE TO THE CONGRESS, 
APR. 14, 1986 1 

h Public L 

i^hinjr 
withdrawal 



While the Secretary General's document 
I commit the two Cypriot sides to a 
imed at achieving an overall settle- 
hin an accepted framework, it is our 

ling that, under his "integrated- 
pproach, the positions taken by the 
ii the course of negotia- 
final until all issues were 
• their mutual satisfaction. 
Duriii'. if, trip to Turkey and 

Ihultz expressed the 
the United States for the 
'the UN Secretary General 
and encour: . governments to do 

ame. 

General's initiative pre- 
ers of the two Cypriot commu- 
iric opportunity to begin a 

pei and reconciliation. The 

- the parties will embark 
nd that their leaders will work 

eneral in this effort to 
and lasting Cyprus settlement. 

Ronald Reagan 



addressed to Thomas P. 
of the House of 
Richard G. Lugar, 
Foreign Relations 
fron SVei kly Compilation of 
\[>r. 21, 1986). ■ 



constraints, we have to look at our own 
resources and use them most effectively. 

The fact of the matter is that, in 
terms of the limits of SALT II, the 
United States is within those limits, and 
the Soviet Union is the country that is 
not. However, we put that all behind us 
and look at the future and say there can 
be a de facto form of mutual restraint. 
We hope so; the President flatly calls 
for it. However, the most important 
thing is that we have to get on with the 
business of what was called for in the 
basic SALT and ABM agreements to be 
gin with, namely, let's get the levels of 
these nuclear weapons down. That is 
what the President has been proposing 
all along, and that is what the President 
and Mr. Gorbachev agreed in Geneva to 
try to do. And there is an important 
forum in Geneva where we have major 
positions on the table calling for radical 
reductions— not limits on the increases 
but radical reductions— in these nuclear 
arsenals. And that's what we need 
to do. 

Q. Can you comment on the appar- 
ent illogic of suggesting substitute 
restraints while promising to abandon 
the restraint that we already have at i 
time when new restraints are obvious- 
ly very difficult to negotiate? 

A. The so-called restraints that we 
already have are obsolete, unratified, 
and being violated. The fact that they 
are increasingly obsolete shows that you 
need to point your attention to different 
things, and that is what, in effect, we 
are doing. But obviously, just to restate> 
it, the United States has a responsibility 
to itself and to its allies to maintain the 
effectiveness of our deterrent capability i 
and not have it erode; and that is what 
the President intends to do. 

Q. Did the allied opposition you 
ran into here make any differences 
whatsoever in vour decision to move 
on from SALT? 

A. There have been extensive dis- 
cussions with the allies, going back over 
a period of years, very formally about aJ 
year ago in Portugal, and in connection 
with this decision. Their views are 
knowTi and have been taken into 
account. I think that the very strong 
allied view that we have to maintain de- 
terrence, that we should be watching 
Soviet behavior, and that we need to 
negotiate radical reductions in nuclear 
weapons comes through loud and clear, 
and we are all on the same wavelength ! 
there. We have a disagreement with 
some countries, not necessarily all, on 
the President's most recent decision. To 



54 



Department of State Bulleti 



certain extent, at least in listening to 
e discussion, there was more argu- 
ent about the imagery than the eon- 
Tit. And I think we have to be careful 
all of this propaganda war, so to 
>eak, that we do the right thing; that 
e don't do wrong things because we 
ink it will sound better. 

Q. [NATO Secretary General] Mr. 
arrington just said that the ministers 
ho emerged from this meeting are a 
ttle bit wiser. How wiser are you, 
nd how would you define that? 

A. I don't know, you'll have to ask 
[r. Carrington about that. [Laughter] 

Q. I am asking you if you feel you 
re wiser today than Monday? 

A. I haven't really thought about it 
lat way. I would say this, that in diplo- 
atic lingo, frankness is a synonym for 
■iticism, and at the opening of this ses- 
on the President, Mr. Carrington, 
illed for frank discussion, and we had a 
t of it. But it was good. At one point 
>mebody reflected, "I wonder if they 
Ik like this in the Warsaw Pact," and 
(ere was a great round of laughter, 
ut I think that differences and shades 
differences on a great variety of sub- 
lets, out-of-area as well as directly 
ATO-related subjects, were talked 
>out, and that's the purpose of this 
nd of meeting. It is also important to 
*e the broad nature of our agreements 
id the positive and cohesive and uni- 
id feel there is to the alliance. I don't 
low whether that's wise or not. 

Q. Did you seek some show of sup- 
jrt from NATO here, a public show 
F support, for the U.S. position on 
ALT? And the fact that you do not 
ave one, or there is not one, is that a 
;tback in the propaganda war, do you 
link? 

A. We had extensive consultations 
efore we got here, so we were quite 
ware of the positions of governments 
ecause they sent them to us, and we 
ad discussions in other fora. I think it 
ras an opportunity— at least I welcomed 
as an opportunity— to explain carefully 
id thoroughly the President's ration- 
le, why he decided what he did. I was 
)ld by quite a number of people that 
le explanation was very helpful. And 
'e didn't take a poll, obviously; many— 
me have expressed their differences 
ith the decision. That's their privilege 
) do. On the other hand, the main point 
! that on the key and important mat- 
ers here, there is a continued, strong, 
nified, and vigorous position. 



Q. When you and the President 
say you will take Soviet behavior into 
account by the end of the year, does 
this mean that you will postpone mov- 
ing above the SALT II limits in some 
way, or is there some other taking 
into account? 

A. I think the term is a broad one. 
And we want to get away from the sort 
of technicalities, so to speak, of what 
this unratified and increasingly obsolete 
treaty may or may not have called for 
and into the realities of what is the 
Soviet posture, and what does it take 
for the United States to have a strong 
and secure deterrent. And so, taking it 
into account means we have to look 
broadly across the board, their board 
and our board. 

The President has made a number of 
flat statements in his statement about 
things that we would not do. Just to 
give examples, I will read them off to 



EUROPE 



you. Have you read this statement? I 
asked that question and then offered to 
distribute copies to those who hadn't, 
and nobody picked up a copy. He says, 
"I do not anticipate any appreciable 
numerical growtii in U.S. strategic 
offensive forces. The United States will 
not deploy more strategic nuclear deliv- 
ery vehicles, than does the Soviet 
Union. 

Those are flat, unqualified state- 
ments that represent statements of re- 
straint in ways that we think are 
relevant to our responsibility, along 
with our allies, to maintain the quality 
of our deterrent capability. 

Q. In your meeting with the 
Icelandic Foreign Minister, you told 
him you would explore new avenues in 
the so-called rainbow navigation 
affair. Could you be a little more 
detailed in this respect? More simply, 



U.S. -Spanish Council Meets 



JOINT COMMUNIQUE, 
MAY 27, 1986 

The U.S.-Spanish Council held its fifteenth 
meeting in Washington on Tuesday, May 27, 
1986, under the co-chairmanship of the 
Minister of Foreign Affairs of Spain and the 
Secretary of State of the United States. The 
previous meeting was held in Madrid on 
May 7, 1985. 

In accordance with Complementary 
Agreement 1 of the Agreement on Friend- 
ship, Defense, and Cooperation between 
Spain and the United States, the Council 
reviewed the activities of the six joint com- 
mittees which were constituted as specialized 
management bodies under the Agreement. 

In the military field the plans for exer- 
cises and maneuvers and the status of and 
prospects for FMS [foreign military sales] 
and IMET [international military education 
and training] funds were examined, and em- 
phasis was placed on the usefulness of meet- 
ings between the general staffs of both 
countries. 

The report of the Committee on Politico- 
Military Administrative Affairs made refer- 
ence to agreements reached in many areas, 
particularly in the solution to the problem of 
the Territorial Command Network. 

In its report, the Committee for Defense 
Industrial Cooperation reaffirmed the com- 
mitment of the United States and Spain to 
reaching the goals set forth in Complemen- 
tary Agreement 4, and expressed its hope 
that existing differences will be resolved in 
accordance with the principles stated in the 
Preamble of the Agreement, in a manner 
which will reduce the existing imbalance. 



Similarly, the activities of the Joint Eco- 
nomic Committee were reviewed, and empha- 
sis was placed on each side's desire to 
continue working together to fulfill the objec- 
tives described in Complementary Agreement 
7, thereby making possible an improvement 
in the trade balance. 

The reports of the Joint Committees on 
Science and Technology and Cultural and 
Educational Affairs also showed significant 
success in their respective fields. 

At the end of the meeting, the Spanish 
Minister of Foreign Affairs and the United 
States Secretary of State, as co-chairmen, ex- 
pressed their satisfaction with the work car- 
rier! out and, underlining the cooperative 
nature of the achievements, agreed that each 
side would work to prepare for the negotia- 
tion of a legal framework to replace the 1982 
Agreement in 1988, to open a new process 
that reflects the realities arising from Spain's 
membership in the European Community and 
the Atlantic Alliance. 

In a separate meeting the Minister and 
the Secretary of State discussed security 
matters, including the opening of negotiations 
aimed at the phased reduction of the U.S. 
military presence in Spain, based on the 
assumption by the Spanish armed forces of 
specific responsibilities and missions cur- 
rently undertaken by U.S. forces in Spain, 
while maintaining the overall defensive capa- 
bilities and level of security for both coun- 
tries and their allies, in accordance with the 
agreement reached on December 10, 1985. 

During the meeting they also dealt with 
current international affairs, including the sit- 
uation in Central America, the fight against 
ism, East-West relations, etc. ■ 



Uigust 1986 



55 



EUROPE 



beyond asking [Defense Secretary] 
Weinberger to look at the issue, am I 
correct in understanding that you are 
not offering any details at this point? 

A. We have some thoughts about 
how to get at it. It's quite an unsatisfac- 
tory situation, we believe, and so does 
the Government of Iceland. We have 
been working on it for about 2 years. 
We made one effort which failed in the 
courts. I have discussed it extensively 
with Secretary Weinberger. We share 
exactly the same concerns, and we think 
we have some new ways of getting at 
this that may or may not work. We will 
proceed with them. I have assigned Ed 
Derwinski, Counselor to the Depart- 
ment, and one of our outstanding people 
and a great problemsolver, to be work- 
ing on this, and he will be doing some 
more meeting about it. We hope we will 
find our way to a satisfactory resolution. 
I don't know precisely what that will 
be, and I consider the situation as it 
stands to be quite unsatisfactory, and 
we are trying to do something about it. 

Q. Earlier in talking about the 
SALT II situation, you spoke about 
the difference between imagery and 
content, and obviously you came out 
on the side of content from your 
answer. 

A. We think that the imagery is 
right, that is, the imagery of a responsi- 
ble ally holding up our end of the 
responsibility for deterrence and calling 
attention to the problems presented by 
the obsolescence, the unratified nature, 
and the violations of an existing ar- 
rangement that is increasingly unwork- 
able, and pointing to a different way to 
go about it and pointing to the impor- 
tance of keeping our eye on the main 
point, namely, let us agree on the radi- 
cal reductions that the two leaders said 
we should agree on in Geneva. That's 
the right imagery, and that's the right 
content. I am a believer that the two 
tend to go together, myself. 

Q. But if this is apparently not 
well understood among public opinion 
in Europe, do you think you can get 
that message across over there? 

A. That is what we have to try to 
do. I think the job of political leadership 
is to put across what that leadership be- 
lieves is right, and it's sometimes 
difficult. But one of the things I have 
noticed in the European elections is that 
the people who seem to stand up to 
these issues manage to get the most 
votes. So that's been an interesting 
thing to observe. 



Q. Given the difficulty of making 
progress in Geneva and also given 
your statement on the necessity to 
really have a more sophisticated view 
of matching Soviet power with Ameri- 
can power where necessary, do you 
think there really has been too much 
emphasis perhaps in the East-West 
dialogue on the arms control talks as 
such, and is perhaps the concept of 
having a stabler relationship through 
arms control agreements obsolescent? 

A. I think it is of great importance 
to do everything we can to reduce these 
nuclear arsenals— drastically reduce 
them. And the most promising way of 
doing so that I know of is arms control 
negotiations. So we do have a forum in 
Geneva that has the stated objective, 
agreed to by both sides, of doing just 
that. So I would, under no circum- 
stances, underestimate the importance 
of that, and we give full effort behind it. 

However, the President has also 
always had the view that we have to 
look at the East-West relationship and 
at the U.S.-Soviet relationship across a 
broad spectrum, because there are many 
things that are important in it. We place 
great importance on the problems in the 
human rights area. We place great 
importance on the problems caused by 
aggressive behavior around the world, 
such as in Afghanistan, in Nicaragua, in 
Cambodia, and elsewhere. Regional 
issues which can be affected in vary- 
ing degrees by the two countries are 
important. 

And then there are a variety of 
bilateral matters that we are working 
on that also have real significance, 
among other reasons because they cause 
an interaction between the people of the 
Soviet Union and the people of the 
United States, and we think that that 
basically is something that is positive. 

But the history of all of this is that 
regional eruptions in particular, and 
human rights problems, have been the 
greatest causes of problems. But that 
isn't to, in any way, derogate the impor- 
tance of arms control, and we place that 
as a very important element in the pic- 
ture and have an extraordinarily capable 
negotiating group in Geneva and intend 
to continue to give it full thrust. 

Q. There have been a number of 
reports recently being very specific 
about your travel plans for the Middle 
East. Could we get, in your words, an 
unqualified, flat statement on whether 
you will go to the Middle East be- 
tween now and, let's say, the middle 
of August? 

A. No, you can't get a flat statement 
out of me. 



Q. But what are your travel plans i 
with regard to the Middle East? 

A. I don't have any explicit travel 
plan. I have the desire, always, to con- 
tribute in every measure that I can 
toward even the tiniest increments of 
progress toward peace in the Middle 
East. It's very important to us and to 
the people of the Middle East, and if 
there's any opportunity to do that, I'll 
want to do it. But that's something that 
is being evaluated— it continuously is, 
particularly intensively right now. But I 
don't have any plan to announce. 

Q. Can I just follow that and just 
ask whether you would consider a 
resolution of the Taba issue to be 
among those issues that you just 
specified that would cause you to go 
to- 

A. It's a very important issue and, 
of course, what is involved is Taba, but 
also it's the Israeli-Egyptian relationshij 
and the quality of the peace and the 
warmth of the peace that is of great 
importance. 

Q. One of your colleagues, a cou- 
ple of minutes ago, called the declara- 
tion the signal of Halifax. The 
question is, would you consider it the 
same way, and if so, would you ex- 
plain a bit what it means? 

A. I don't know what my colleague 
said, but I think it's a signal of con- 
tinued basic cohesion, continued deter- 
mination to maintain the deterrent 
capability of the alliance, continued 
readiness to have a more constructive 
dialogue with the Soviet Union and its 
allies and a readiness to engage, and an | 
assertion that in all of the important 
fields of interaction with the East, we 
have very good proposals on the table. 
And we'd like to see them responded to, 
and we'd like to see agreements come 
about that would be good agreements 
that would help everybody. 

Beyond the overall declaration that 
states these propositions, the special 
statement on conventional arms control 
shows the continued readiness of the 
alliance to examine what we're doing 
and in particular, if there is an opportu- 
nity to conceive of conventional arms 
control as going from the Atlantic to the 
Urals, that is, over a broader geo- 
graphic scope than has been envisaged ! 
before, then we want to take advantage 
of it. And so we're going to study it 
very carefully, and that's what Peter 
Carrington will be setting up here 
shortly. 

Q. Could you explain why the 
President has slapped a 35% tariff on 



56 



Department of State Bulletii 



EUROPE 



ome Canadian cedar goods at a time 
then the two countries are sitting 
lown to talk free trade? 

A. Because the American industry 
hat produces shakes and shingles has 
een injured, according to the finding of 
he International Trade Commission, 
tnd the evidence of that is in the 
olume of the total market that Cana- 
ian firms now have— it's most of it— 
nd what's happened to employment 
nd so forth in the U.S. industry. And 
nder our law, GATT— consistent law, in 
ases of injury, when you make such a 
[etermination, then a tariff level can be 
et, and so that's what's been done. 

Q. But does it not fly in the face 
if what those leaders say they are try- 
ng to achieve? 

A. I believe both leaders are trying 
o achieve a freer trade regime, and I 
ertainly support that, and I think they 
ioth do. The path to getting there is 
ull of twists and turns, and this is one 
f them. 

Q. On this free trade thing, since 
he Quebec summit, when the Presi- 
ent and the Prime Minister of Cana- 
a decided that they would enter into 
iscussions for free trade, three times 
anada has been hit with countervail- 
ing duties on some kind of fish, some 
ind of meat, and some kind of wood, 
low serious are the States in wanting 
o discuss free trade with Canada? 

A. The United States is absolutely 
erious, and we feel that it will be in 
ur interest and your interest and, of 
ourse, if it isn't in our mutual interest, 
: won't happen. But we think it's very 
nuch in our interest to beat down all 
he barriers to trade and have as open a 
narket between us as possible. 

In the meantime, there are laws on 
he books, and you have to enforce 
jhose laws. Countervailing duty law is 
me of them, and so when there are 
jases that come up, under which people 
|iave rights, those will be gone through, 
n the meantime, these talks which 
hould result in something to our mutual 
advantage go on. 

I might say that the United States 
|jets its belief in this by an observation 
•f what's happened to us. We have a 
igantic internal open market that's 
ieen that way for centuries and has 
»een very much to the profit of the 
.tandard of living and quality of life in 
[he United States, and we think it will 
lelp us further to broaden it, and we 
hink it helps Canada as well. So it's an 
ibjective that we intend to work for 
'ery hard. We have a first-class negoti- 
itor who's been named, and it has 



started. Trade negotiations are extreme- 
ly difficult and contentious at every step 
of the way, and you don't undertake 
them without knowing that, and we're 
seeing some of that contention. But I 
believe, knowing both leaders, that their 
basic perspective is to see those impedi- 
ments, but basically keep a strong eye 
on the main objective, which is to con- 
tinue to free up trade between the two 
countries. 

Q. On the shakes and shingles 
issues, I believe that you will be meet- 
ing [Canadian Foreign Secretary] Mr. 
Clark later, and one of the things that 
you will discuss will be the shakes and 
shingles issue, I think. 

A. Can you assure me of that? I 
don't intend to bring it up. 

Q. It's a pretty safe bet. In the 
U.S. view on this issue, is there any- 



thing that you can give on it, or in 
your view, is this a closed issue? 

A. It is in the nature of the case 
that got submitted some time ago— I 
don't have the dates all in my mind— but 
it's been working along in the system 
for quite a period of time. So it was 
well-known that it was there, and it 
came about as a result of a determina- 
tion by the International Trade Commis- 
sion which was allowed to go into effect, 
and so there it is. It's a determination. 

Q. A senior Soviet official today 
said that he does not believe that 
there will be a summit by the end of 
the year because of the President's 
stand on SALT II. What is your com- 
ment on the Soviet response? 

A. I don't have any particular com- 
ment on it. The reason why the Presi- 
dent felt it was important to take the 



Baltic Freedom Day, 1986 



PROCLAMATION 5501, 
JUNE 12, 1986 1 

The United States was born in a War of 
Independence against an oppressive rule. We 
stood up for inalienable rights given by God 
and declared that governments that syste- 
matically violate these rights lose their claim 
to legitimacy. 

It is a tragedy of our time that many peo- 
ples continue to live under the brutal 
totalitarian rule of the Soviet empire. We will 
expose the inhumanity of the oppressors and 
speak out on behalf of the oppressed. We will 
denounce tyranny and champion the cause of 
its victims. 

Baltic Freedom Day provides these op- 
portunities. On this day, we observe the an- 
niversary of the callous and treacherous 
subjugation of three independent and 
freedom-loving states. Forty-six years ago, 
invading Soviet armies, in collusion with the 
Nazi regime, overran and occupied the 
Republics of Estonia, Latvia, and Lithuania. 
Through police-state tactics, the occupation 
and subjugation continue. Soviet outrages 
against these peoples have included massive 
deportations from their native soil to concen- 
tration camps in Siberia and elsewhere. At 
the same time masses of Russians have been 
uprooted from their homes and relocated in 
the Baltic nations in an effort to eradicate 
the cultural and ethnic heritage of the Baltic- 
peoples. Against all recognized principles of 
international law, justice, and humanity, the 
Soviets have continued their domination over 
Lithuania, Latvia, and Estonia. The United 
States has never recognized their forced in- 

ration into the U.S.S.R. It is illegal, 
indefensible, and iniquitous. 



We are engaged in a very real struggle to 
focus the world's attention on one of the 
gravest wrongs of our age— the heroic Baltic 
nations we honor today. To do less is to 
acquiesce in injustice and to betray our 
heritage as champions of human freedom. 

As a Nation, we are the standard-bearers 
of freedom and a beacon of hope to the 
oppressed. Ours is the mission of the prophet 
Isaiah, "to bind up the brokenhearted, 
proclaim liberty to the captives, and the 
opening of the prison to them that are 
bound." , 

The Congress of the United States, by 
Senate Joint Resolution 271, has designated 
June 14, 1986, as "Baltic Freedom Day" and 
authorized and requested the President to 
issue a proclamation in observance of this 
event. 

Now, Therefore, I, Ronald Reagan, 
President of the United States of America, 
do hereby proclaim June 14, 1986, as Baltic 
Freedom Day. I call upon the people of the 
United States to observe this day with ap- 
propriate remembrances and ceremonies and 
to reaffirm their commitment to the princi- 
ples of liberty and self-determination for all 
peoples. 

In Witness Whereof. I have hereunto 
set my hand this twelfth day of June, in the 
year of our Lord nineteen hundred and 
eighty-six, and of the Independence of the 
United States of America the two hundred 
and tenth. 

Ronald Reagan 



'Text from Weekly Compilation of Presiden- 
tial Documents of June 16, 1986. ■ 



August 1986 



57 



EUROPE 



decision he took, I've explained. I think 
it's a very strong rationale, and so you 
have to do the things that must be 
done. 

As far as the summit meeting is con- 
cerned, we continue to think, and have 
all along, that it's important to have it 
because there are issues of great impor- 
tance that can be discussed. Potentially, 
there are matters that can be agreed 
upon that will be worthwhile. And we 
need to get busy with all of the home- 
work involved in having this kind of 
meeting and see it come off successfully. 
That's our view. We hope that the 
Soviet Union shares that view, but we 
can't control what they do. I don't want 
to try to make predictions about what 
the Soviets will do. I can only tell you, 
from the standpoint of the United 
States, we think that it is potentially a 
very significant meeting, and we hope it 
takes place. We're ready to work on it. 

Q. There are critics who say that 
the Soviets really stand to gain if the 
U.S. decides to break out of SALT, 
that they will no longer be con- 
strained at all and are financially and 
militarily better prepared to build up 
their armaments than we are. What 
do you say to them? 

A. I just have to go back to what I 
said. We have to maintain the capability 
for deterrence, and the fact that we 
have been successful in doing that is one 
of the reasons why the Soviet Union is 
interested in talking about arms control. 
Just as their capability of maintaining a 
very impressive strategic nuclear ballis- 
tic missile arsenal is one of the reasons 
why we want to talk to them about 
reducing it. If they didn't have it, there 
wouldn't be any need to talk about it. 
So, that's what we have to do. The 
United States, with all of our budgetary 
problems, is a very capable country. 
And we can do what we must do to 
maintain our security, and I'm sure 
we will. 

Q. The U.S. Ambassador to Cana- 
da described Canada's reaction as 
overreacting [inaudible]. Do you 
agree with that? 

A. Oh, I always agree with my 
ambassadors. 



NATO Defense Planning 
Committee Meeting 



■NATO press communique M-l(86)16. 
2 NATO press communique M-l(86)17. 
3 Press release 121 of June 2, 1986. ■ 



The Defense Ministers of the North 
Atlantic Treaty Organization (NATO) 
met in Brussels May 22, 1986. The 
United States was represented by Secre- 
tary of Defense Caspar W. Weinberger. 
Folloiving is the text of the final com- 
munique. 

The Defense Planning Committee of 

the North Atlantic Treaty Organization met 

in ministerial session in Brussels 

on 22nd May 1986, and agreed to the 

following: 

2. A strong and united Alliance is 
essential for the maintenance of peace and 
freedom in face of the continuous build-up of 
Warsaw Pact conventional and nuclear forces. 
Our strategy of flexible response and forward 
defense continues to provide the most effec- 
tive formula for ensuring security and stabil- 
ity at the lowest possible level of forces. 
Nuclear weapons are an essential component 
of this strategy. But we are determined to 
avoid an undue reliance on the early use of 
nuclear weapons by making a special effort to 
improve our conventional capabilities. 

3. We are already moving ahead. The 
action plan for conventional defense improve- 
ments (CDI) we agreed last May was an im- 
portant first step. It set in motion several 
positive developments. The most significant 
are the 1987-1992 force goals which reflect 
the priorities we have identified for improv- 
ing conventional defense. This is where our 
resources are most needed. We are deter- 
mined to make a special effort to fulfil the 
force goals, particularly those singled out as 
most relevant to improving our conventional 
posture. We recognize that sustained commit- 
ment will be required. 

4. Progress has been made already; for 
example, improvements in plans which would 
further increase stocks of selected priority 
ammunition. We are confident that substan- 
tial conventional defense improvements are 
now firmly in national plans and will materi- 
alize in the mid-term. We have also laid the 
groundwork for real improvements in long- 
term planning. We have made a good start 
and laid the foundation for achieving more 
credible conventional forces; we must build 
on it. 

5. We are taking other actions which will 
contribute to strengthening our conventional 
forces. These include: 

• Improvements in the sustainability of 
our forces; 

• Consideration of ways of enhancing 
NATO's integrated air defense to enable it to 
deal with the full spectrum of the Warsaw 
Pact air threat including tactical missiles; 

• The accelerated implementation of in- 
frastructure projects, particularly reinforce- 
ment support facilities including hardened 
aircraft shelters; roughly 90 percent of the in- 
creased budget for 1985-1990 is being spent 
on projects related to CDI; 



• The continued and cost-effective exploi- 
tation of emerging technologies; 

• A fresh emphasis on the need to provtt 
more assistance, and by more nations, to 
Greece, Portugal and Turkey in order to hel 
them overcome known deficiencies in their 
forces and carry out their missions more 
effectively to the advantage of the Alliance. 

6. We have also agreed to improvements 
in the Alliance planning procedures. These 
are more effective co-ordination between thi 
various planning areas of the Alliance and 
the provision of more effective long-term 
planning guidance on our military require- 
ments through regular updating of the 
conceptual military framework and the 
development of long-term planning guideline 
by our military authorities. 

7. Achieving the objective of better con- 
ventional forces will not be easy. The provi- 
sion of adequate resources in accordance wi'i 
the 1985 Ministerial guidance, which 
reaffirmed the aim of a 3 percent real in- 
crease as a general guide, will continue to b 
a serious challenge for all nations. Improvin 
conventional forces will also require an ever 
greater emphasis on making better use of 
resources and on improved co-operation and 
sharing of technology between the Europea 
and North American and the developed and 
developing members of the Alliance are via 
parts of this process, as is the continued pn 
tection of militarily relevant technology. 

8. We emphasized the major contributioi 
which co-operation in the research, develop- 
ment and production of armaments can mak 
to the strengthening of conventional defense 
in the context of the current CDI effort. 
Several promising initiatives are underway 
on both sides of the Atlantic. We underlinec 
the importance of fully implementing NATC 
armaments co-operation improvement strate 
gy, agreed by Ministers in December 1985 
and in this respect we welcomed the useful 
impetus provided by the Nunn amendment, 
which has already resulted in agreement on> 
statements of intent for seven collaborative 
projects. 

9. Recalling the documents in the 1982 
Bonn Summit we reaffirm the position 
adopted in previous communiques concerns 
developments outside the NATO Treaty are 
that might threaten the vital interests of 
members of the Alliance. Against the back- 
ground of United States planning for its 
rapidly deployable forces, measures necessa 
to maintain deterrence and defense within 
the NATO area have been included in the 
new force goals. We will ensure that NATO 
defense planning continues to take account < 
the need for compensatory measures. 

10. As part of Alliance security policy, v 
confirmed our objective of seeking balanced 
equitable and effectively verifiable arms con 
trol agreements involving United States anc 
Soviet nuclear forces. We welcomed the conj 
mitment by the United States and the Sovii 



58 



Department of State Bulle 



: OREIGN ASSISTANCE 



Inion to seek early progress in Geneva in 
reas of common ground, including 50 percent 
eductions in offensive nuclear arms, ap- 
ropriately applied, and the idea of a 
eparate INF [intermediate-range nuclear 
jrcesl agreement. In this context, we ex- 
ressed strong support for the United States 
tance concerning intermediate-range, stra- 
sgic and defense and space systems. We 
welcomed the willingness of the United 
tates to consult with its allies on these is- 
ues. Alliance solidarity and cohesion have 
layed an important role in bringing these 
evelopments about and will remain equally 
ital for future progress. 

11. We stressed the need for progress in 
ne various multilateral conventional arms 
Bntrol negotiations. We noted that in face of 
le imbalances which exist with regard to 
unventional forces throughout Europe 
rogress towards balanced and verifiable 
aductions of these forces would contribute to 
lengthening of peace and security in Eu- 



rope. We expressed the hope that recent 
Soviet statements on this subject will be 
transformed into deeds at the negotiating ta- 
ble. We also confirmed our resolve to seek an 
early conclusion of a worldwide ban on chemi- 
cal weapons. In this context we called upon 
the Soviet Union to take a more constructive 
attitude towards effective verification 
provisions. 

12. Terrorism is a serious concern to all 
our governments. We are not prepared to 
tolerate this threat to our citizens and to the 
conduct of normal international relations. Our 
governments are resolved to work together 
to eradicate this scourge and urge closer 
international co-operation in this effort. 

Greece reserves its position on the INF 
and space system issues. 

Norway reserves its position on the 
defense and space systems. 

Denmark reserves its position on INF 
and the defense and space system issues. ■ 



: Y 1987 Request for 

: oreign Assistance Programs 



/ M. Peter MePherson 

Statement before the Subcommittee 
i Foreign Operations of the Senate 
ppropriations Committee on April 15, 
>86. Mr. MePherson is Administrator 
the Agency for International Develop- 
■ent (AID). 1 

am very pleased to appear again he- 
re the Senate Appropriations Commit- 
e to discuss the Administration's FY 
•87 proposed program in foreign eco- 
)mic assistance. We welcome this op- 
>rtunity to present the program of 
rvelopment and economic aid to this 
immittee which has taken such a keen 
terest in our assistance efforts 
iroughout the world. 

The budget that we are submitting 
is year has been prepared within the 
ptext of the Gramm-Rudman-Hollings 
jgislation and the effort by the Con- 
fess and the Administration to address 
fectively the deficit problems which 
Ice this country. A strong U.S. econ- 
ny is essential to economic progress 
.roughout the developing world. Our 
quest, as part of the President's budg- 
I, is consistent with the plan that the 
pderal deficit shall not exceed $144 bil- 
m in FY 1987. The development assist- 
ice part of our request, at $2.1 billion, 
a 4% increase over the FY 1986 post- 
questration level under Gramm- 
idman-Hollings, but 1% below the FY 
'86 request level, and approximately 



13% below the FY 1985 level. For 
PL 480, an important part of the de- 
velopment effort, levels in the Presi- 
dent's budget are below those in FY 
1986, but we expect to be able to ship 
approximately the same amount of food 
as contained in our FY 1986 request. 
The economic support funds (ESF) level 
of $4.1 billion represents an increase 
over FY 1986 postsequestration levels 
to help provide needed assistance to 
countries in Central America and Africa 
which were reduced as a consequence of 
reduced appropriations, earmarks for 
other countries and Gramm-Rudman- 
Hollings sequestration in FY 1986. 

The economic assistance proposal we 
have submitted is carefully structured. 
It was developed with full recognition of 
the important and difficult challenges 
which this country faces in getting its 
economic house in order. We believe the 
program we are submitting is consistent 
with our best national interests— in 
political, economic, and humanitarian 
terms. 

We have brought about changes in 
the AID program through a greater em- 
phasis upon the use of market forces 
and the private sector, through a strong 
dedication to policy reform, through in- 
creased attention to technology transfer, 
and through a heightened awareness of 
institutional development— four pillars of 
change— which have improved America's 
effort in the task of helping countries 
meet basic human needs and achieve 



growth that is self-sustaining and 
equitable. In addition, during the past 
year, we finalized and published our 
first strategic plan which focuses the 
agency's attention on the following 
development problems: inadequate in- 
come growth; hunger; health deficien- 
cies, especially infant and child 
mortality; illiteracy and lack of educa- 
tion; and unmanageable population pres- 
sures. This country can be proud of its 
important role in development efforts. It 
is something unparalleled in history. 
The assistance we are providing is 
affecting millions of lives throughout 
the world. 

A strong justification is required for 
a substantial foreign assistance program 
this year, particularly in the face of cut- 
backs that will take place in other areas. 
We are fully prepared to make that 
justification. We believe that what we 
are submitting is a minimum program. 
The United States continues to be faced 
with difficult challenges throughout the 
world, and the economic assistance pro- 
gram is a critical part of America's 
response to those challenges. 

The program levels that we are 
proposing were carefully developed as 
part of an integrated budget process 
working with the State Department and 
other agencies. We have cut back and 
streamlined. In fact one of the major 
themes I have emphasized during my 
tenure as Administrator of this agency 
is the need to find ways of carrying out 
our business more efficiently. We have 
emphasized important contributions that 
can be made in technical areas to bring 
about fundamental change in the econo- 
mies and institutions of many of the de- 
veloping countries. In many countries, 
however, the economic situation is such 
that balance-of-payments assistance 
through commodity import programs 
and other nonproject assistance pro- 
grams is essential to help stabilize econ- 
omies while structural reforms are 
taking place. A lasting impact on basic 
human needs of poor people in develop- 
ing countries cannot be achieved if their 
economies retrogress. 

We have emphasized in our request 
the major foreign policy priorities of this 
Administration. The Middle East peace 
process continues to be an essential and 
critical part of our government's foreign 
policy, and a substantial amount of the 
economic aid request is directed toward 
that objective. We are providing strong 
support to efforts in Central America to 
strengthen democracy and establish 
healthy economies and peaceful socie- 
ties. We are supporting the emerging 



ugust 1986 



59 



FOREIGN ASSISTANCE 



democracies of South America. As- 
sistance is also directed to countries of 
strategic importance to the United 
States in the Persian Gulf and Southeast 
Asia. And we continue to provide strong 
support to those portions of the globe 
where basic human needs are greatest— 
in Africa and South Asia. 

Private Sector Involvement 

This Administration has given greatly 
increased attention to market forces and 
the private sector. We have established 
a Private Enterprise Bureau, and in our 
request we have increased funds for 
that bureau. We are requesting funding 
for the revolving loan fund to bring it to 
the full authorized level. But, of course, 
our private sector initiative is more than 
just financing the programs of one spe- 
cialized bureau, it involves a strong 
emphasis upon private enterprise in our 
total program. 

In many countries, we have seen 
progress toward greater privatization 
with increased emphasis upon the mar- 
ketplace. In fact, privatization of 
government services is a growing theme 
in the developing world. Last year the 
Asian Development Bank (ADB) held a 
conference on privatization. In May the 
African Development Bank (AFDB) will 
do the same. And earlier this month, 
AID sponsored its own International 
Conference on Privatization where over 
500 participants discussed many tech- 
niques of transferring economic power 
from the state to the people, while im- 
proving economic productivity at the 
same time. AID currently is helping 
recipient countries design privatization 
programs and will increase our as- 
sistance in this area during 1986 and 
1987. 

In Bangladesh the efforts that we 
have made have led to a much greater 
involvement of private enterprise in the 
agriculture area. A key element has 
been the increased reliance upon the pri- 
vate sector in distribution of fertilizer to 
the farmers. 

We also have made a concerted 
effort to encourage private enterprise 
development in Egypt through projects 
providing credit to businesses for start- 
up and improvement of facilities. The 
first use of fund resources was a $5 mil- 
lion loan to General Motors Egypt for 
construction, equipment, and technical 
services needed to manufacture light- 
and medium-duty trucks and buses. Lo- 
cal banks cofinanced a local currency 
loan of $30 million. When the plant 
reaches full production capacity, it will 



produce 18,000 vehicles per year and 
employ 1,400 Egyptians in management, 
technical, and blue-collar jobs. 

As part of our privatization efforts, 
we have given a great deal of attention 
to encouraging recipient country govern- 
ments to move away from reliance on 
parastatals and to give a greater role to 
the private sector. 

One such example is in Costa Rica, 
where AID is assisting the government 
to divest the assets of CODESA, the 
Costa Rica parastatal holding company. 
The holding company, with 18 subsidi- 
aries running huge losses with the Cen- 
tral Bank, reached a point where it was 
draining one-third of Costa Rica's public 
sector credit, while generating less than 
\Vi% of GNP, and less than one-half of 
the country's employment. The privati- 
zation process of CODESA was begun 
under President Monge, complete with 
legislation and a Bipartisan National 
Commission established to put the 
CODESA companies up for public bid. 
The process is fully underway, with a 
group of private buyers now being iden- 
tified to purchase the largest company, 
the aluminum company, within approxi- 
mately 90 days. We are confident that 
this is merely the beginning of the en- 
tire divestiture, and we expect the bulk 
of CODESA's assets to be privatized or 
liquidated by the end of this year. 

Policy Reform 

The emphasis on the private sector is 
closely related to the question of policy 
reform. This Administration has 
stressed the importance of policies 
which are consistent with economic 
progress. The policy climate must be 
such that market forces can effectively 
interact— that there is an increasing reli- 
ance on the indigenous private sector 
and on foreign investment. Great strides 
have been made in this area. We, of 
course, work with other donors and with 
the multilateral institutions as appropri- 
ate. The concept of policy reform has 
grown through the past few years so 
that it is fully accepted within the 
international development community, 
whereas in the past, it was a much 
more isolated phenomenon. I think this 
is real progress that we can report to 
this committee and to the American 
people. 

As a part of our emphasis on policy 
reform, we have in our ESF request $75 
million for a continuation of the econom- 
ic policy reform program in Africa, 
which is designed to help bring about 
policy changes. Some specific examples 



i^ 



are our program in support of agricul- 
tural marketing liberalization in Zambia 
which is allowing private traders to par- 
ticipate in maize marketing on a broad 
scale and which, coupled with recent in- 
creases in producer prices, will help 
move Zambia from being a maize im- 
porter to self-sufficiency. Another exam; 
pie is in Malawi, where as part of a 
multidonor effort in structural adjust- 
ment, we are supporting the removal of 
fertilizer subsidies while simultaneously 
shifting to more cost-efficient, concen- 
trated fertilizers so that agricultural 
production does not decline. And in 
Costa Rica, our policy dialogue has sup- 
ported a major turnaround in that coun 
try's economic policies. The government 
budget deficit has been reduced from 
14% of GDP to 1.5%, while a more 
favorable exchange rate system has 
sharply increased incentives for exports 
As a result, exports to the United 
States of nontraditional products in- 
creased from $114 million in 1983 to an 
estimated $172 million in 1985. 

We are also using our PL 480 
resources to provide leverage for our 
policy dialogue efforts. In Tunisia the 
mission has encouraged the distributio 
of fertilizers by private agricultural in- 
put dealers. Traditionally, fertilizer was 
sold by inefficient parastatals, with littl 
private sector involvement due to the 
narrow margin on sales. As a result of 
successful dialogue in conjunction with 
PL 480 Title I, self-help agreement, the . 
Tunisian Government increased the 
sales margin on fertilizers so that by 
1984 there were some 168 private enteilj 
prises involved. Recent increases in 
agriculture production, including the 
1984-85 record cereals harvests, can be' 
directly traced to farmers now having 
fertilizer on time. 

Technological Transfer 

Technological transfer is also an area 
which this Administration has strongly 
emphasized. I am personally committedj 
to emphasizing biomedical research to 
bring about scientific breakthroughs in 
the field of health. Simple techniques 
such as oral rehydration therapy (ORT) 
can have a tremendous impact on child 
survival. We are making breakthrough! 
in the development of a malaria vaccine 
and in the development of other new 
and improved vaccines and technologies' 
for delivering immunizations. 

We continue strong support for 
agriculture research efforts through th< 
international research institutions. The) 
are particularly pressing needs in 
Africa, where food production must be 



60 



Department of State Bullet 



FOREIGN ASSISTANCE 



•lcreased to prevent the type of disas- 
rous and tragic famine conditions that 
re witnessed over the past 2 years. 
AID continues to support opera- 
ional research to test alternative means 
f delivering proven, effective child 
urvival interventions such as ORT, im- 
nunization, child spacing, and breast- 
eeding promotion. We have documented 
Iramatic changes in health practices and 
lutcomes as a result of effective applica- 
ion of familiar advertising techniques 
;nd other modern communication 
iractices. 

nstitutional Development 

Anally, we are providing strong support 
o institutional development. In one 
ense this is not new, because develop- 
nent of institutions has been a key part 
if the AID program since its beginning. 
American universities have played a 
ritical role as have the private volun- 
ary organizations. We have many ex- 
mples of institutions developed by 
unerican assistance through the joint 
fforts of host countries and American 
ounterparts, for example, the Indian 
nstitutes of Technology. In recent 
ears, we can point to the development 
f more effective national agriculture 
esearch efforts in such African coun- 
tries as Cameroon, Kenya, and Malawi. 

We can point to many other cases of 
iuccessful institutional development ef- 
3rts in which we have played a key 
ole. For example, in El Salvador, we 
ave supported FUSADES— a nonprofit 
evelopment organization providing non- 
partisan solutions to El Salvador's eco- 
omic and social problems. FUSADES 
.<as been instrumental in supporting 
rade and investment promotion through 
trade and investment service that pro- 
motes private investment in production 
'if nontraditional exports, supplying 
echnical assistance and market access 
nformation; an agricultural diversifica- 
ion program; a program aimed at en- 
lancing private sector organizations' 
ffectiveness; and small business de- 
velopment program supplying credit, 
raining, and technical assistance. 

'rogram Administration 

Uong with these basic means, or pillars, 
if assistance which this Administration 
las emphasized, we have strived for 
nore effective administration of the pro- 
iram through: 

• Greater decentralization to the 
ield coupled with more effective 
nanagement oversight procedures to 



monitor performance. The Deputy 
Administrator has been charged with an 
effort to bring about much greater dele- 
gation of authority to the field missions. 
This process is continuing; 

• Trimming down of missions where 
possible and in some cases transforming 
programs from comprehensive ap- 
proaches to a single focus, such as par- 
ticipant training, which makes for 
greater ease in administration; and 

• Streamlining of the agency's plan- 
ning process. 

These are some of the means by 
which we have attempted to bring about 
fundamental changes in our aid pro- 
gram, and I think we have had a con- 
siderable measure of success. 

The need for this proposed FY 1987 
economic assistance program is 
evident— both in terms of basic elements 
of self-interest and U.S. foreign policy 
objectives and also in terms of the con- 
ditions of poverty and the need for 
change in so many countries. The World 
Bank has estimated that there are 1 bil- 
lion people living in absolute poverty, "a 
condition of life so characterized by mal- 
nutrition, illiteracy and disease to be 
beneath any reasonable definition of 
human decency." This is fundamentally 
at the core of what this country is at- 
tempting to attack through our econom- 
ic assistance efforts. 

Key Areas for Assistance 

Some of the key functional areas that 
we have emphasized are those that this 
committee has given particular atten- 
tion to. 

One is health and child survival, 
which is a very high priority within this 
agency. In FY 1986 we received $50 
million from the Congress, and we have 
made a tentative allocation of those 
funds to various countries and central 
programs. Many of our previous ini- 
tiated health programs also include 
child survival components, and we ex- 
pect that there will be considerably 
more funding for child survival activities 
in FY 1987. We have a specific request 
for $25 million in the budget, but that 
will only be a portion of our total 
response. Child survival activities will 
be funded from the health, child sur- 
vival, and Sahel accounts and from PL 
480 local currency and ESF funds. 

ORT and immunization are the two 
most important interventions for child 
survival. They are the twin engines that 
can save lives and help build a delivery 
system for other health efforts. A great 
deal has been said about immunization 



lately and appropriately so. However, 
we should keep in mind that ORT can 
save as many if not more lives. These 
"twin engines," as Jim Grant [Executive 
Director of UNICEF] and I have been 
calling them, should indeed go together. 
At the International Conference on Oral 
Rehydration Therapy in December, I 
proposed that by 1990, 2 million children 
could be saved from death from de- 
hydration by the use of ORT. AID is 
also pledged to collaborate in an interna- 
tional effort to provide immunizations 
for all the world's children, with specific 
coverage goals to be defined at the 
country levels. The dimensions of the 
task are monumental— 15 million chil- 
dren die each year in AID-assisted 
countries, and about half of these deaths 
are preventable through ORT and im- 
munization. Through careful coordination 
among donors to conserve available 
resources for child survival, and through 
effective programming of these funds, 
we expect to be able to achieve these 
ambitious goals. We are currently de- 
veloping a long-term child survival 
strategy for the agency to guide allo- 
cation and programming decisions in 
this area. 

Another very important priority is 
the area of agriculture. Increased food 
production continues to be a critical pri- 
ority. It is essential to continue agricul- 
ture research. It is important to carry 
out policy changes and to provide tech- 
nical assistance in agriculture which will 
bring about fundamental change. The 
needs in Africa for increased food 
production are paramount, but agricul- 
tural productivity and distribution must 
be improved throughout most of the de- 
veloping world in order to improve 
nutrition and ensure the availability of 
essential foods for a still rapidly grow- 
ing population. We have included in our 
budget additional funds in agriculture 
beyond what we received in FY 1986. 
Africa will receive approximately 20% of 
the proposed FY 1987 agriculture 
budget request. 

We plan to continue to emphasize 
technical assistance in agriculture, one 
of our areas of comparative advantage 
in development assistance where we 
have had particular success in the past. 
For example, as a result of our as- 
sistance, the national cereals research 
and extension project in Cameroon is 
developing an institutional capacity that 
will provide high-quality research on 
maize, rice, sorghum, and millet for use 
by small farmers. Another example is 
the regional Strengthening African 
agricultural research project, through 



August 1986 



61 



FOREIGN ASSISTANCE 



which we are participating with other 
donor nations in major initiatives to re- 
orient and strengthen national and 
regional research institutions which 
have the potential to help increase 
smallholder productivity. This long-term 
program, in collaboration with Interna- 
tional Agricultural Reseach Centers, is 
supporting farming systems research, 
strengthening research linkages to ex- 
tension, providing technical and adminis- 
trative training, and helping establish 
regional networks of scientists to spread 
research results among sub-Saharan 
African countries. 

Family planning is also an area of 
high priority area in our assistance pro- 
gram. Support for voluntary family plan- 
ning efforts continues to receive 
considerable attention in AID. The de- 
mand for family planning services has 
increased as modernization has made 
smaller families more desirable for a 
great many couples in most developing 
countries. An increasing number of 
countries have become concerned about 
their ability to feed, educate, and 
productively employ growing numbers 
of people as a result of high population 
growth rates, in some areas as high as 
4%. The rationale of AID population as- 
sistance is not to reduce population 
growth rates per se, but because family 
planning services allow choices which 
directly benefit individual families in a 
number of ways. 

One important reason for our con- 
tinued commitment to family | banning is 
that it allows couples to achieve their 
own family decisions about the number 
and spacing of their children. Fewer 
children are an option which American 
families take for granted. It is not an 
option for millions of families in the 
Third World where family planning 
services are not available. Today im- 
provements in health services, urban 
lifestyles, and better educated mothers 
mean that families everywhere want 
fewer children. These families deserve 
the freedom to achieve their own family 
decisions. 

Maternal and child health is a second 
important reason for family planning. A 
child born within 2 years of an earlier 
birth is twice as likely to die as a child 
born after an interval of 2 or more 
years. Family planning saves lives and 
is one of the four primary interventions 
in the agency's child survival strategy. 
The Administration is strongly op- 
posed to the practice of abortion as a 
method of family planning, and AID has 
taken steps to enforce the policy of dis- 
sociation of U.S. funds from abortion- 
related activities. I believe that we must 



not only oppose abortion but also pro- 
vide the means by which to reduce the 
incidence of abortion. We know that 
family planning is an alternative to abor- 
tion, and as such it is important to in- 
crease its accessibility throughout the 
developing world as a means of prevent- 
ing abortion. 

Details of FY 1987 Request 

Our request for the functional develop- 
ment assistance accounts, including the 
Sahel, is $1,627 billion. It compares to 
$1,554 billion appropriated in FY 1986 
after sequestration. The request, in 
total, is below the $1,754 billion au- 
thorized by this committee. 

• In agriculture we are requesting 
$709 million, less than the authorization 
level of $760 million but an increase 
from the considerably reduced appropri- 
ation of $670 million 'in FY 1986. 
Agriculture remains a key element of 
AID's development efforts worldwide, 
and any major reduction seriously af- 
fects our ability to maintain effective 
agriculture research efforts and to pro- 
vide policy and technical assistance to a 
host of countries where food production 
increases are mandatory. 

• For population we are requesting 
$250 million, the amount authorized and 
a straightline of FY 1986 levels pre- 
sequestration. The request reflects our 
continued commitment to the provision 
of voluntary family planning services. 

• In health we are requesting $151 
million, compared to an authorized level 
of $205 million. In addition, as part of 
the general health effort, we are specifi- 
cally requesting $25 million for child sur- 
vival. The combined health and child 
survival request represents an increase 
of $30 million from the FY 1986 request, 
reflecting the priority we have accorded 
to this area. At the same time, the AID 
budget is clearly going to get only so 
much money and other accounts, per- 
haps less emotionally appealing than 
health, must be addressed for real im- 
provement of lives. For example, we 
must provide money to agriculture in 
order to produce food, the only perma- 
nent means to achieve health. 

• Our request for education and 
human resources is $179 million, which 
is within the authorized level of $180 
million, to maintain our emphasis on 
education and training. As part of that 
continuing emphasis, I am pleased to be 
able to report that we are making excel- 
lent strides in participant training— 
which is funded out of several of the 
functional accounts. We began giving 



greater emphasis to participant trainin 
in 1982. Since then, the number of All 
participants in training in this country 
has grown dramatically. In FY 1982, v 
trained about 8,000 participants. By F' 
1985 the number had risen to more th: 
12,500— a 56% increase— and I expect 
that trend to continue. 

• Selected development activities, 
$231 million including $14 million for tl 
Office of the Science Adviser, is the or 
area in the functional accounts where 
our request exceeds the authorized le\ 
($207 million) because of our increasing 
reliance upon development of market 
force institutions. The reduction to $1( 
million in FY 1986 has sharply curtail* 
many private sector emphases within 
the agency. Furthermore, since roughl 
half of the selected development activi 
ties account is spent in Latin America 
and the Caribbean, the 1986 reduction 
meant we had to substantially alter ov 
emphases in these regions. Yet the 
specific needs in Central America mea 
that the availability of funds for select 
development activities is especially im 
portant. 

• For the Sahel development pro- 
gram, we are requesting $80 million, a 
sentially the same as the FY 1986 
appropriation. We are proposing that 
this program be funded under the fun> 
tional development assistance prograrr 

• We have requested $10 million f 
the American schools and hospitals pr 
gram, the same as our FY 1986 reque 

• We have requested $10 million t 
replenish the housing guaranty reserv 
depleted as a result of increased 
rescheduling of outstanding loans. The 
Administration proposes to terminate 
the housing guaranty program in FY 
1987 because market rate loans with a 
AID guarantee have not proven to be 
appropriate for all poor countries and 
because housing guaranties are not coi 
sistent with Federal credit policy. 

• Our request also includes $389 n 
lion in AID operating expenses, plus $ 
million for the Inspector General. The 
AID request is the minimum amount 
necessary to adequately manage the 
agency's planned program for FY 198' 
This level will provide for an AID stai 
ing level of 4,825— which will represen 
a reduction of 1,000 positions during ti 
6 years since I took office in 1981. In 
addition to reducing staff and carefulh 
managing the use of our remaining pe 
sonnel, we have introduced a number 
other management improvements to ci 
costs and increase efficiency. These in- 
clude greater use of automation, in- 
troduction of a standardized overseas 



62 



Department of State Bulle 



FOREIGN ASSISTANCE 



punting system, improved work space 
lanagement, better training for project 
nplementers, better cash management, 
nd introduction of productivity review 
;udies. 

• For the economic support fund, 
r e are requesting just over $4 billion— 
ssentially the same as our request last 
ear. The FY 1986 ESF appropriation 
as reduced after sequestration to $3.5 
illion, of which $2.3 billion was ear- 
larked. As a result, we had to cut back 
jnsiderably in many countries in Cen- 
tal America and in Africa. Our request 
lis year helps to regain some of the 
ist momentum. 

From a geographic standpoint, the 
llocation of development assistance and 
!SF represents some shifts among 
juntries and regions compared to the 
mounts we currently have budgeted for 
'Y 1986. 

In Africa, the request for develop- 
lent assistance and ESF totals $750 
lillion, up a total of $125 million over 
irrent FY 1986 levels, principally in 
SF. The increase is distributed among 
;veral countries including Somalia, 
udan, Liberia, and Kenya. The request 
so includes funding for the third year 
? the African economic policy reform 
rogram at a level of $75 million, the 
ime as the request for the prior 
years, although it is an increase over 
le amount we allocated in FY 1986 fol- 
wing reductions in the ESF ap- 
ropriation. 

For the Asia and Near East region, 
e are requesting a total of $3.1 billion 
i development assistance and ESF, 
ompared to the $4.1 billion we expect 
i) obligate in FY 1986. Development as- 
istance levels are essentially the same 
p in FY 1986, at about a 2% decrease, 
nd shifts in country levels are mostly 
pminal. The ESF request represents 
i^ss than a Vic increase over the 
[Y 1986 request levels and is about 
[l billion less than ESF obligations in 

Y 1986— which includes funds from the 

Y 1985 Middle East supplemental. The 
fSF request contains increases over 

Y 1986 levels for Jordan, Morocco, 
'man, Turkey, and the regional pro- 
ram but these increases in almost all 
fises would only return ESF assistance 
b about pre-FY 1986 levels. ESF alloca- 
lons for Israel and Egypt reflect no 
hange from the FY 1986 earmarks of 
U.2 billion and $815 million, respec- 
jvely. For humanitarian assistance to 

he Afghan freedom fighters, $15 million 
! requested. This mirrors the FY 1986 
armark. 



In Latin America, the total develop- 
ment assistance and ESF request is $1.4 
billion, compared to $1.1 billion in 
FY 1986. The increase is primarily due 
to increased ESF funding principally for 
Central America but also for South 
America and the Caribbean countries. 
We must underscore the priority we are 
attributing to the Central America Ini- 
tiative this year in view of the over- 
whelming progress toward democra- 
tization in the region and the tremen- 
dous need for acceleration of economic 
recovery in order to sustain those young 
democracies and stabilize their econo- 
mies. This assistance is even more cru- 
cial since armed struggle in the region 
continues. The requested levels come 
close to those which were recommended 
by the National Bipartisan Commission 
on Central America, however, we have 
fallen far short of those recommenda- 
tions in prior years, and unless we begin 
to devote the level of resources which 
we are proposing to the economic and 
social problems there, we have little 
hope of achieving our objectives. 

In the case of South America, we 
are supplying ESF funds for balance-of- 
payments support in Ecuador, Bolivia, 
Peru, and Uruguay. New, democra- 
tically elected governments have in- 
stituted significant economic policy 
reforms in Ecuador, Bolivia, and 
Uruguay, and U.S. Government support 
is essential if these countries are to be 
able to import the necessary inputs for 
increased production and stimulation of 
private sector growth. 

Increases in funding for Latin 
America also are important if we are to 
continue assisting governments to move 
toward implementing enlightened poli- 
cies on narcotics control which is a 
major U.S. concern. In addition, ad- 
ministration of justice and judicial re- 
form efforts are new areas in which we 
must do everything possible so that the 
democratization process will not falter. 

Another key element of our program 
in Latin America is our support for nar- 
cotics education programs. A critical ele- 
ment of the Administration's strategy 
for dealing with the international narcot- 
ics problem is to make governments, 
opinion leaders, and the general public 
of key producing and transiting coun- 
tries better informed as to the hazards 
that narcotics production and trafficking 
pose to their own societies. AID plans 
to commit a total of $5 million in de- 
velopment assistance funds to such nar- 
cotics awareness activities in five Latin 
American countries— Bolivia, Ecuador, 
Peru, Belize, and Jamaica. Our as- 



sistance will serve to complement or ex- 
pand narcotics awareness and education 
initiatives being funded by the U.S. In- 
formation Agency and the State Depart- 
ment's international narcotics programs 
and will support activities of both pri- 
vate and public indigenous institutions 
concerned with narcotics abuse. 

Centrally funded development as- 
sistance programs total $467 million, a 
$4.3 million reduction from the FY 1986 
level. These funds support a wide vari- 
ety of activities with a worldwide focus, 
including basic and applied research, de- 
velopment and testing of appropriate 
technology, private enterprise activities, 
grants to private voluntary organiza- 
tions, support for International Agricul- 
tural Research Centers, women-in- 
development activities, and support for 
cooperative activities with the Peace 
Corps. These programs are funded cen- 
trally because of their global focus and 
because of efficiencies possible from con- 
solidated central management. The pro- 
grams do have an impact on those living 
in the developing countries. As our con- 
gressional presentation reflects for the 
first time, $183 million of these funds 
are directly attributable to programs in 
recipient countries. The centrally funded 
portion of our request also includes $25 
million for the international disaster 
assistance program in which we are ac- 
tively participating with dozens of de- 
veloping countries in mitigating the 
effects of disasters which tragically took 
so many lives through famine, earth- 
quakes, and cyclones last year. 

• For PL 480 the total budget 
authority request is $1,164 billion. The 
Title I request of $564 million in budget 
authority will support a program level 
of $944 million, sufficient to provide 5.3 
million metric tons to 31 countries. For 
Title II we are requesting $600 million, 
which we project will enable us to pro- 
vide just over 1.9 million metric tons 
(grain equivalent) of food. We intend to 
continue the expansion of private volun- 
tary organizations' programs in Africa 
that began in FY 1986 to assist the 
recovery from the effects of the Africa 
drought. Portions of some private volun- 
tary organizations' programs will be 
monetized in order to provide necessary 
resources for successful program im- 
plementation. 

• For the trade and development 
program, we are requesting $18 million, 
essentially the same as the FY 1986 
level after sequestration. 



\ugust 1986 



63 



GENERAL 



• Under multilateral assistance, 

the Administration is requesting a total 
of $1.39 billion for existing commitments 
to the multilateral development banks 
and for funding of the new Multilateral 
Investment Guaranty Agency (MIGA). 
This new organization can have a very 
useful impact on developing country 
policies toward foreign investment and 
on encouraging increases in investment. 

• For international organizations 
and programs, we are requesting $186 
million. 

• The Administration is also re- 
questing $126 million for the Peace 
Corps. May I note that over the past 
few years, the extent of cooperation 
between AID and the Peace Corps has 
increased greatly, leading to a much bet- 
ter joint effort by the two agencies in 
carrying out American foreign policy ob- 



jectives and in helping to meet basic de- 
velopment needs. 

AID's ultimate goal is a world in 
which economic growth and develop- 
ment are self-sustaining and extremes of 
poverty have been eliminated. The long- 
range foreign policy objectives of the 
United States are best serve