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BOSTON
PUBLIC
LIBRARY

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s bulletin

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

July 1986

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
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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

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

Nuclear and Space Arms Talks

Open Round Five

(President Reagan)
MBFR Talks Resume in Vienna

(White House Statement)

East Asia

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JUL T 0i

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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)

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

\v1986 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, 19861

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, 19862

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, 19862

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, 19862

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®

mv1986 J

Secretary Shultz's
News Briefing,
May 5, 19863

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 J1

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, 19864

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
lvels 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, 19862

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.

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

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 wThen 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

Department of State Bulle

rou then treat with an incident in
,Thich 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

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.

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

3Press release 103 of May 8.

4Prime 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). ■

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, 19861

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

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, 19862

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-

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

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-

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

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.

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

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, 19863

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.

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.

2Press release 96.

3Made 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

THE SECRETARY

Unity and Dissent:

On the Community

of Free Nations

by Secretary Shultz

Address before

the American Jewish Committee

on May 15, 19861

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.

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

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,

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

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.

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

re 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

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.

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

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

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
rere 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 wre

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

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

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

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. ■

Department of State Bulleti

<\RMS CONTROL

Nuclear and Space Arms Talks
)pen Round Five

•RESIDENTS STATEMENT,
1AY 7, 19861

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, 19861

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

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, 19861

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

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, 19862

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

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-

Department of State Bulletin

EAST ASIA

angements are constitutionally is not
jmething that's given by saying the
rord 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, 19863

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

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).

2Press release 109 of May 13.

3Made 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

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

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

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

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

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

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-

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

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 Affairs1

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 new7 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.

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

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.

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

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

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

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.

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

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

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

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

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-
ber2 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

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, effort1
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.

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

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.

2Agreement 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

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

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.

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

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,

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

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.

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, 19861

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

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, 19862

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.

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, 19861

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

EUROPE

the Hanford facility, they are confined
with filtration systems. Heavy-water fa-
cilities use an isotope of the standard
H20 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, 19863

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, 19863

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 levels1
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-

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, 19864

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, 1986s

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

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.

JText from Weekly Compilation of
Presidential Documents of May 5, 1986.

2Press release 95.

3Text from Weekly Compilation of
Presidential Documents of May 12.

"Text from Weekly Compilation of
Presidential Documents of May 19.

5Press release 115.

6Dr. 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

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.

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 wrhile 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

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<

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

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. ■

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 11 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

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

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

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.

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.
re 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

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.

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

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 0
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 0

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 0

28 3

57 6

6 0

0.0

.400

Colombia

0.0

100

950

20.

Ecuador

150

22 5

0.5

38.0

8.0

0.0

.650

Peru

37.0

20.0

178

74.8

20.0

5.0

850

25.

Venezuela

0.0

.150

Caribbean

190.0

109.8

86.7

386.5

24.5

3.0

2.310

29.

The Baham

0.0

060

Dominican

Republic

500

287

31.6

1103

7.0

3.0

850

Eastern Ca

-ibbean

35.0

358

0.0

70.8

9.0

0.0

.400

Guyana

0.0

050

Haiti

5.0

22.3

25.1

52.4

0.5

0.0

.600

Jamaica

100.0

23.0

30.0

153.0

8.0

0.0

300

Surmame

0.0

050

Trinidad and Tobago

0.0

.050

Other

15.0

0.0

15.0

2.5

0.0

.800

Argentina

0.0

100

Brazil

0.0

100

Chile

0.0

100

Mexico

0.0

250

Paraguay

0.0

.125

Uruguay

15.0

0.0

15.0

2.5

0.0

.125

Latin America and

Caribbean Regional

Programs

12.0

24.1

0.0

36.1

Panama Canal

American Schools

0.0

3 000

U.S. Army School

of the Americas

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.

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

■

1983

g ECONOMIC

1984

■ military

1986

1987

(Req.)

1986

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'

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

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.

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

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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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

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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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

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

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Department of State Bulletin (ISSN
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CONTENTS

FEATURE

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 act1
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 seven2
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 declaration3
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

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

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.

JThe 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.

2Canada, Federal Republic of Germany
France, Italy, Japan, United Kingdom, and
United States.

3The 1978 Bonn declaration civil avia-
tion security. ■

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

■

$ - ,

-*■***•

'*.•**#>

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.

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

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.

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
lht 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

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?

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

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

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

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.

JPress release 130.1

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

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.

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

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

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

0 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

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.

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

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 con1
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

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

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,

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

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

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, 19861

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

ARMS CONTROL

U.S. Interim Restraint Policy:

Responding to Soviet Arms Control Violations

PRESIDENT'S STATEMENT,
MAY 27, 19861

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

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

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 SHEET2

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 2l/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

Department of State Bulletin1

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, 19861

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

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

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

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.

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,

2Text from White House press release.

Vugust 1986

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

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

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

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
rer 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 wre 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

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

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

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

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

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, 19861

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

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, 19861

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, 19862

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

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, 19863

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, 19861

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

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

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

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, 19861

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

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.
2NATO press communique M-l(86)17.
3Press 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

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

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

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

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

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

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,
re 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

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 served by a
world of sustained economic develop-
ment and general human well-being. Our
task is to help poor people to help them-
selves through enhanced opportunity.
This is a governing philosophy of the as-
sistance program that we are submitting
to you. We believe this program worthy
of your continued strong support.

•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. ■

should have beyond these basic relatioi,
ships. In particular, what should we do|
to help maintain the security and stabi|
ty of unstable regions of the developinj
world? Our most intense— and debilitat
ing— foreign policy debate of the past 4j
years has turned on just such a ques- t
tion: the security— in fact, the national
existence— of South Vietnam.

The Vietnam experience produced I
difficult reexamination of our foreign
policy. Yet Americans continue to
believe— correctly— that many of our
vital national interests can only be pro i
tected by cooperating with others. Thi: I
is not simply an altruistic belief. By
helping others in their defense, we con*
tribute to our own. By joining their
strength to ours, we move closer to ou^
common goals. By preserving an open
and growing world economy, we defen i
our own prosperity and freedoms.

Regional Security, Collective Security,
and American Security

by John M. Poindexter

Address before the 1986 Armed
Forces Day dinner sponsored by the
National Defense Committee and the
Chamber of Commerce in Indianapolis
on May 16, 1986. Admiral Poindexter is
assistant to the President for national
security affairs.

For a son of Indiana, it's a pleasure to
speak here tonight. As we commemo-
rate Armed Forces Day, I am pleased
to address this audience in particular. I
know that many of you have a keen in-
terest in the national security issues I
want to put before you.

U.S. Involvement in
International Security

America has now had a leading role on
the world stage for more than two
generations. It is a role of which we can
be proud. We have matched power with
responsibility in a way that few others
ever have. Yet, as our responsibilities
have grown in the past half-century, we
have constantly reraised those questions
that, during our entire life as a nation,
have dominated our debate on our rela-
tions with the rest of the world.

Perhaps the oldest of the questions
that we Americans have debated is this:

how— and how much— should we cooper-
ate with other nations to maintain inter-
national security? How— and how
much— should America engage in the af-
fairs of the outside world? All of you
here will recognize the long history of
this issue. It is the same question that
President Washington raised in his fare-
well address, when he warned his fellow
citizens against "entangling alliances."

After World War II, of course, our
national aversion to "entanglement" was
fundamentally altered. Within 4 years of
V-E Day, America made historic deci-
sions on aid to Greece and Turkey, the
Marshall Plan, and the North Atlantic
alliance. We had come to consider our
own security to be inseparable from that
of Western Europe.

In the same fashion, we bound our-
selves to Japan with a security treaty.
After the invasion of South Korea, we
kept armed forces of the United States
stationed there to demonstrate our con-
tinuing readiness to defend that coun-
try. And every U.S. President since the
founding of the State of Israel has
reiterated our commitment to its
security.

Commitments of this kind marked a
revolution in America's foreign policy
and in American history as a whole. Yet
there has been much more controversy
about the kind of role that America

Collective Security v.
Global Unilateralism

I have begun my remarks by discussin
"collective security" because lately tht
debate over this concept has been
reopened— overseas, in the Congress, i
the media, and elsewhere. You've prot
bly been hearing that in the future
America will— and, some say, probably
should— "go it alone." Even some of tr
most consistent supporters of our alli-
ance ties express concern, as Henry K
singer did this week when he proposec
that we move some of our longer rang
aircraft from Britain back home to the
United States.

One of the newest buzzwords de-
scribing this apparent change in outloo
is "global unilateralism." The phrase
conjures up a truculent policy of acting
now and asking questions later, of imp
tience with compromise, and of dis-
regarding established relationships if
they don't suit us as much as they one
did. As one journalist has put it, "Beir
a superpower often means not having
say either please or sorry."

Obviously, the President's firm pol:
cies toward Libya have done much to
revive this discussion. In announcing
last month's military actions against
Libyan-supported terrorism, the Presi-
dent did say that in dealing with this
problem the United States would act
"with others, if possible, and alone, if
necessary." It was a strong statement
that deserves considerable thought anc
attention.

Nevertheless, it seems to me that
much of the recent analysis and com-

Department of State Bulle'i

GENERAL

sntary on this issue has been com-
etely misplaced. "Going it alone" does
it describe either the concepts or the
nduct of the Reagan Administration.

Last week, as you know, the Presi-
mt returned from the Tokyo economic
mmit, where we discussed common
oblems, interests, and approaches
ith our key allies. The President be-
ives it was a very successful meeting,
e most successful of the six he has at-
nded. The joint statements that
suited demonstrated what he had in
ind when he wrote— in his message to
ingress of 2 months ago, entitled
freedom, Regional Security, and
obal Peace"— that "the pursuit of
merican goals has always required
operation with like-minded partners."

This is true, in part, because Ameri-
's resources are limited. But it would
■ true at any level of resources. The
DSt secure peace— the kind we seek— is
e that is protected not by a distant
perpower but by the efforts of free
oples working together on problems
iat affect them directly. To achieve
ch a goal, we need strong partners.

America wants to cooperate with
hers because that's what works-
cause that is the best way of protect-
j the regional peace and freedom that
rve both our interests and theirs,
hat President Reagan has called the
emocratic revolution" is at the heart
his commitment to collective security,
■ound the world we see that the ranks
those who share our broad interests
e growing. This gives us confidence
at together we can succeed.

The President's actions in Libya are

exception to the outlook I have
scribed. Over the long run, they will
1 seen to have given the strongest and
ost convincing possible support to the
inciple of "collective security." Far
Dm weakening the foundations of
operation between America and
hers, they have, in fact, encouraged
hers to work with us. And the Presi-
int's policies make it more credible
at we will help them in the ways that
■unt most to them.

, Decisive action by the United States
assures others that we are ready, will-
B, able, and wise enough to defend vi-
!l interests under pressure. It is a
ucial message to our friends. When
ey need help, they won't have to
brry that America will wait to see
.hich way the wind is blowing before
iciding whether or not to help.

It should be clear that the Tokyo
immit has already shown some of
ese positive effects. Publicly and pri-
ttely, we are seeing more and more

support for cooperative actions. The
President has demonstrated leadership,
and it is paying off.

The real issue, then, is not whether
the United States has abandoned collec-
tive security. It has not. It cannot. Do-
ing so would hurt our interests. But
there is an important issue here that
does need to be addressed. And that is:
how can we make collective security
work best today?

Making Collective Security Work

I want to take up this question in two
ways.

First, by looking at the elements of
the Reagan Administration's approach
to "regional security," particularly to
those security issues that lie beyond the
core commitments of our foreign policy.

Second, and equally important, I
want to suggest some of the questions
other countries should be asking as they
consider what kind of U.S. role in the
world they would like to encourage.
For, needless to say, our role is not
decided by our own actions alone. What
other countries do has a great influence
on the kind of cooperation that America
pursues with them.

Let me begin with an issue that has
been in the headlines this week and last:
the Administration's proposed delivery
of additional air-to-air missiles and other
military systems to improve Saudi
Arabia's air-defense capabilities. This
initiative reflects a goal that has been
part of our national strategy since the
late 1940s— to help friendly countries ac-
quire the means to defend themselves.

Whether a friendly country can pay
for the help or we have to provide some
resources of our own, we reap a huge
benefit from security assistance. Other
nations' dependence on America is
reduced if they are strong enough to
meet threats from hostile neighbors. At
the same time we build a firm founda-
tion on which we can, if necessary, work
with them to meet greater threats in
the future. You may know that it costs
our NATO ally, Turkey, only one-tenth
as much a year to keep a well-equipped
soldier in the field as it costs the United
States. That's one reason President
Reagan has called our investment in
security assistance a true national secu-
rity bargain.

In this light, charges that this
Administration is "going it alone" seem
especially ironic. Those who take a meat
ax to our security assistance budget are

making it far harder for us to meet com-
mon dangers through cooperation. As
Secretary Shultz said earlier this week,
there is a real, a dangerous wrorld out
there, and our capacity to conduct for-
eign policy cannot be treated as just
another domestic program. Doing so, he
said, would "threaten nothing less than
the reversal of 40 years of constructive
American leadership for peace and free-
dom." This is why national security
spending must not be made to bear a
disproportionate share of the burden of
much-needed budget cutting.

Let us also recall that Saudi
Arabia— which will, I should note, pay
cash for every penny of the equipment
it has requested— has a dangerous war
going on right on its doorstep, between
Iran and Iraq. Just two summers ago,
the Saudi Air Force had to counter Ira-
nian threats to shipping and oil facilities
in the Persian Gulf, which remain vital
to the free world's energy supply. When
Saudi planes acted, American planes did
not have to.

This war is again at a crucial stage.
Violence could spill across the Persian
Gulf again at any time. In the last
month, there have been three further
Iranian attacks on Saudi tankers in the
gulf already. The closing of the gulf
would "shock" the global economy. Oil
prices would start to rise again.

So when the Congress acts to
weaken our close cooperation with Saudi
Arabia, which every President since
F.D.R. has strongly supported, I believe
that the members of the House and
Senate ought to ask themselves some
hard questions.

• Who is promoting a sound policy
of collective security?

• Wlio is making it harder for the
United States to contribute to the peace
of the Middle East and Persian Gulf?

• Who, in short, are the real "global
unilateralists?"

Congress has also tried to push us
further toward unilateralism in refusing
to provide aid to the brave Nicaraguans
who are fighting Soviet- and Cuban-
backed communism in Central America.
When it refuses to apply the best means
we have to pressure the communist
government in Managua to negotiate,
Congress ensures that no negotiated
solution can be achieved which would
meet the concerns of Nicaragua's neigh-
bors and of the United States. That
makes 't more likely that, sometime in
the future, the United States will have
to act by itself— under far less favorable
circumstances and at a far higher cost.

ugust 1986

GENERAL

Promoting Negotiated Solutions

So the first key element of the Presi-
dent's approach to regional conflict is
security assistance— helping those who
share our interests and principles. And
the second element involves the promo-
tion of negotiated solutions, in Central
America and elsewhere. Here, too, it is
our belief that the most successful policy
has to be built on the solid foundations
of collective security.

Strong U.S. support for allies and
friends means that they can have more
confidence in pursuing any possible op-
portunities for peace. It also means that
the Soviet Union and its clients cannot
expect time to be on their side. They
cannot comfort themselves with hopes
that America will be distracted by other
concerns and eventually forget its
friends.

In other words, regional peacemak-
ing is only possible if it rests on collec-
tive effort. The United States can
hardly impose peace, and we cannot be
its only supporter. We are, after all,
generally not a direct participant in the
talks among the warring parties. What
we can do is try to contribute to an en-
vironment favorable to negotiation. We
make this contribution in many ways.

In southern Africa, for example, we
have worked to promote a regional
diplomatic settlement involving Angola,
Namibia, and South Africa. Recently,
we saw a small step foward when South
Africa, in response to an Angolan re-
quest, agreed to set a date for Namibian
independence.

This is the kind of movement, I
might add, that would be much harder
to bring about if— as some have
advocated— the U.S. policy were simply
to break off all contacts with South
Africa. Although many supporters of
such a course might not like to think of
it in this way, that would be "going it
alone." It might be a satisfying symbol
of how strongly we oppose apartheid,
but it would make it harder for us to
achieve our goals. It would make diplo-
matic progress harder to attain. It
would make regional security more
shaky.

To take another example, we believe
that consistent U.S. backing for
Pakistan is a prerequisite for progress
in the talks on Afghanistan that are now
taking place in Geneva under the aegis
of the United Nations. There has been
considerable speculation in the past
several months about a possible change
in Soviet policy leading to a withdrawal.
We hope that this is true and certainly

believe that an early withdrawal would
serve Soviet interests well.

Unfortunately, we see little evidence
that Moscow is moving in this direction.
Soviet leaders claim a sincere desire to
pull out of Afghanistan, and yet the war
continues with increased ferocity and
brutality. If the Soviets truly desire an
end to the war, let them consider three
steps that would do more to establish
their true intentions than any expres-
sions of sincerity.

First, let them announce a
timeframe for withdrawal. There is no
reason it should take more than 3-6
months.

Second, let them show that they un-
derstand the need to take the wishes of
the Afghan people into account. This is
the reason that President Reagan, in
the regional initiative that he put for-
ward at the United Nations last year,
called for talks among the warring par-
ties as the first step in resolving re-
gional conflicts.

Third, let the Soviets commit them-
selves to respect fully the neutrality of
Afghanistan in the future. There should
be no search for pretexts to allow
Soviet forces to return.

The Soviet Union, if it moves in this
direction, can be sure that the United
States will do nothing to stand in its
way.

Economic Growth and Stability

The other elements of the Administra-
tion's approach to regional security have
the same emphasis on collective meas-
ures that I have described above.

With respect to economic growth,
the United States has taken the lead in
multilateral efforts for coping with the
debt problems of the developing world.
Treasury Secretary Jim Baker's initia-
tive brings together the public and pri-
vate sectors of the world's strongest
economies to share in helping debtor
states to reignite growth. These prob-
lems are not purely economic in their
impact: if Brazil and Argentina, for ex-
ample, succeed in putting their econo-
mies back on the road to health, it will
be a powerful boost to democracy
throughout our hemisphere.

Similarly, the governments partici-
pating in the Tokyo summit have dis-
cussed the possible advantages of a
"Middle East economic development
plan." The drop in energy prices has
given a substantial boost to the econo-
mies of most of our summit partners.
Yet all retain a strong interest in the

stability of the Middle East. We want
explore ways in which the seven sumn
nations might increase the resources s-
aside for this area. Working with the
governments of the region, we would
also hope to see private sector invest-
ment increase. The key will be to crea
a productive infrastructure and mean-
ingful employment opportunities. Give
the scope of the problem, a collective
fort has much to be said for it.

Nuclear Proliferation and
International Terrorism

I have spoken of many dimensions of
collective regional security: the impor-
tance of democratic partners, the mili-
tary safety that our friends need, the
diplomatic processes that can break
through a tangle of disputes, and the
economic foundations of stable relatior
among nations.

Let me add two further dimension
which cannot be ignored in this age ol
advanced weaponry and radical ideolo
gies— nuclear proliferation and interna
tional terrorism.

Like the other elements of regions
security that I have mentioned, slowii
the spread of nuclear-weapons capabil:
ties requires an effective multilateral
effort. Because the technology and
materials needed to manufacture nuclt
weapons are widely available, we neec
agreement among all potential supplie
to regulate the flow of these items.

Similarly, we believe that only a
multilateral approach can increase the
incentives of potential nuclear powers
reject a nuclear course. To do this, oil
policy realistically addresses the inseci
rities that drive states to consider the
nuclear options in the first place. Witr
this problem in mind, we have en-
couraged a process of reconciliation
among traditional regional adversaries
and urged our friends to do likewise.
We believe that regional reconciliation
an essential element of preventing an
expansion of the "nuclear club."

As for terrorism, it continues to
know fewer and fewer boundaries,
either within or among regions. In the
past 2 years, a growing number of ter
rorist attacks have been mounted in
Latin America, often aimed at Americ
citizens. Our allies face similar
problems— for example, radical groups
Western Europe and continuing violen
in Northern Ireland threaten all the
people of the United Kingdom.

As part of our broader effort to co
bat terrorism, we and our partners
agreed at the Tokyo summit to impro\
extradition procedures. The Senate Fc
eign Relations Committee has before i

Department of State Bulle'

GENERAL

>ht now a proposed supplement to our
tradition treaty with the United
ngdom. It would remove specific vio-
it crimes from the so-called political
ense exception. The Reagan Adminis-
ition is strongly committed to ratifica-
n of this treaty amendment. Without
America would remain a safe haven
• terrorists from Northern Ireland.
We know we can't fight terrorism
•ne. We saw the value of Mrs. Thatch-
s help when we had to act against
dhafi, and we are seeking to extradite
>se involved in last year's Achille
uro hijacking and the murder of Leon
inghoffer. Strengthening the extradi-
n treaty will help us beat the ter-
ists. It will increase our collective
:urity.

e Need for

ternational Cooperation

tave spoken at length about this
ministration's approach to regional
urity, to demonstrate that it is non-
iise to think that it is unilateralist.
r approach remains multilateral be-
iise we believe this is the most
imising path. No one country has the
ources, the answers, or the power to
Iress all the issues of regional securi-
And it is also multifaceted because
single instrument of policy can cap-
e the problem of regional security in
complexity.

These are issues that we continue to
>ate. Our history suggests that the
)ate will never end, and it should not.
vertheless, I believe that there are
ments of this debate that other coun-
ts should also take very seriously.
sir own policies shape the environ-
nt in which we make our basic deci-
ns about foreign policy. What they do
ermines how effectively we can work
■ether. Because of this, our debate on
■ issues of regional security cannot be
npletely separated from theirs.
To take the most obvious recent ex-
ple, it is hard for Americans to un-
•stand the attitude of many countries
rard the problem of international ter-
ism. For all the progress the leaders
de in their consultations in Tokyo,
•re are plainly some underlying, con-
uing differences in outlook among our
ions. Our people were heartened
en Prime Minister Thatcher said that
> overcome the threat [of international
rorism] is in the vital interest of all
intries founded on freedom and the
e of law"; and when she said: "It was
onceivable to me that we should re-
e American aircraft and pilots the
ht to defend their own people."

In all frankness, however, we were
puzzled and disappointed at the number
who objected to her statements. We
were troubled by those who said that
terrorism is something we have to live
with; that opposing it will only make
matters worse; that it is, in the end,
merely a peculiar American obsession.

It is an American obsession, but
only in this sense: we believe it threat-
ens international peace and security and
the ability of free, like-minded countries
to work together.

These differences require careful
thought on both sides of the Atlantic.
American policy remains firmly mul-
tilateral, firmly committed to coopera-
tion with others who share our
interests. But cooperation and collective
security don't happen automatically.
And if allies think that the worst thing
that could happen is that American pol-
icy would become unilateralist, they are
almost certainly mistaken.

An American unilateralist policy
would, after all, be one that continued
to defend our allies' interests and be-
hind which they could hide— contributing
little but benefiting all the same. The
real alternative direction for American
policy is not unilateralism, but
isolationism— that is, increased indiffer-
ence to our friends' interests.

This Administration would deplore
such a turn. We believe that America
also would suffer from it. But we and
our friends should not expect to go too
long without resolving disagreements on
regional security issues. If we do, we
will doubtless pay the price of greater
misunderstanding of what our broad
common interests really are. This will
put us at odds on more issues than just
terrorism. Our friends who do not want
this to happen any more than we do
must begin to ask how they can prevent
it from occurring.

But it is not only our friends in
Western Europe and East Asia that
should ask what kind of American role
in the world they want to encourage.

There are other problems that we
regard as absolutely central in shaping
an international environment in which
we can pursue a policy of true collective
security. Yet sometimes others see
these differently.

Let me offer two examples. To our
way of thinking, working against
nuclear proliferation is one key to
preserving a stable international setting
in which we can cooperate with those
who share our interests. The prospect of
additional countries acquiring nuclear
weapons threatens our ability to help

them and to have mutually beneficial
relationships with them.

As is the case with terrorism, con-
cern with this problem is not an Ameri-
can obsession or something that we
can't quite shake. It is a fact of life. In
opposing the spread of nuclear weapons,
we are seeking to preserve relationships
that we value and that we consider
mutually beneficial. Nations that expect
to be our partners must reckon with
this resolve.

A second example— less obvious,
perhaps— is that of economic organiza-
tion. Before his departure for Asia, the
President spoke of the "winds of free-
dom." He believes these "winds"—
forces that strengthen free institutions-
carry a message about the prosperity
that is available to any nation that lets
loose the power of individual initiative.
He has urged others to study this mes-
sage and to adopt policies that favor
free enterprise.

This is the President's strong per-
sonal conviction; but it is much more
than that. It is a judgment about the fu-
ture. It is very possible that increasing-
ly the world will be divided into those
nations that have gained the benefits of
freedom— of economic, political, and per-
sonal freedom— and those that have not.
We will almost certainly find it far
easier to cooperate with those that
have.

Naturally, we encourage other
governments to develop a favorable cli-
mate for investment and trade because
this helps promote economic develop-
ment and growth. Yet it is also because,
over the long term, our political rela-
tions will also benefit and the regional
stability in which such relationships can
thrive will be best protected.

Conclusion

I have spoken this evening of America's
friends and of our need to cooperate in
promoting regional security. Let me
close with a comment about America's
adversaries. Nothing has taken a great-
er toll on U.S. -Soviet relations than
Soviet policies aimed at exploiting insta-
bility in the developing world. By the
same token, nothing can do more to
make our overall competition safer and
more manageable than policies— ours
and our allies'— that both reduce this
instability and counter attempts to
exploit it.

An American policy of collective
security provides our best guarantee of
safety. We believe our friends and
allies— and our Congress— will agreed. ■

gust 1986

INTERNATIONAL LAW

The War Powers Resolution
and Antiterrorist Operations

by Abraham D. Sofaer

Statement before the Subcommittee
on Arms Control, International Secu-
rity, and Science of the House Foreign
Affairs Committee on April 29, 1986.
Mr. Sofaer is the Legal Adviser of the
Department of State.1

I am pleased to have the opportunity to
appear before you today to discuss the
War Powers Resolution in the context
of recent events. I would like to begin
by setting out some general considera-
tions regarding the resolution and then
focus on the application of the resolution
to specific cases which are of particular
interest to the subcommittee.

Basic Framework

The War Powers Resolution was en-
acted in 1973 in order to ensure con-
gressional involvement in situations in
which the United States may become
engaged in hostilities with other states.
To that end, the resolution contains cer-
tain requirements concerning consulta-
tion, reporting, and termination of the
use of U.S. Armed Forces. Of course,
this and other Administrations have ex-
pressed serious doubts about the wis-
dom and constitutionality of various
parts of the resolution.

Consultation Requirement. The

consultation requirement is contained in
Section 3, which provides:

The President in every possible instance
shall consult with Congress before introduc-
ing United States Armed Forces into hostili-
ties or into situations where imminent
involvement in hostilities is clearly indicated
by the circumstances, and after every such
introduction shall consult regularly with the
Congress until United States Armed Forces
are no longer engaged in hostilities or have
been removed from such situations.

The resolution specifies only that
consultation occur "before introducing"
armed forces in the situations specified,
as well as "after" each such introduction
until the situation ends. It does not
define the nature of the consultations
required, but allows the President to de-
termine precisely how such consultations
are to be carried out. Significantly, in
making the requirement applicable only
where consultation is "possible," the
resolution expressly contemplates that

consultation in a particular case will
depend on the prevailing circumstances.

Over the years, both before and
after the resolution was adopted, the
executive branch has engaged in consul-
tations with the Congress in a variety of
circumstances involving the possible
deployment of U.S. forces abroad. Con-
sultations have occurred in cases where
the resolution might have been thought
to require them and in cases where it
clearly would not (and the executive
branch has typically been careful to
preserve its position on these matters
when consulting). The purpose of such
consultations is to keep the Congress
informed, to determine whether the
Congress approves of a particular action
or policy, and to give the Congress an
opportunity to provide the President
with its views, especially where it may
disagree with the policy. Consultations
are not intended to involve the Con-
gress in reviewing the detailed plans of
a military operation. The degree to
which the President is implementing a
policy of which the Congress is well
aware and which it has already ap-
proved in principle is one important fac-
tor to be considered in determining the
nature and timing of consultations.

In practice, the form and substance
of consultations have depended upon the
circumstances of each case. In some in-
stances, such as the introduction of U.S.
forces into Egypt to participate in
peacekeeping operations or the case of
the Vietnam evacuation, the situation
permitted detailed consultations well in
advance of the action contemplated. In
the case of the Tehran rescue mission,
prior consultation was not possible
because of extraordinary operational
needs.

Reporting Requirement. Section 4
of the resolution requires that the Presi-
dent submit, within 48 hours after the
introduction of U.S. forces, a written
report to the Congress in three circum-
stances. A report must be submitted
when U.S. forces are introduced "into
hostilities or into situations where immi-
nent involvement in hostilities is clearly
indicated by the circumstances." In
addition, a report must be submitted
when U.S. forces are introduced "into
the territory, airspace or waters of a
foreign nation, while equipped for com-
bat" (with certain specified exceptions)
or when such forces are introduced "in

numbers which substantially enlarge
United States Armed Forces equippei
for combat already located in a foreig
nation. ..."

Both Republican and Democratic
presidents have provided written
reports to the Congress with respect
U.S. deployments abroad as a means
keeping the Congress informed, while
reserving the executive branch's posi-
tion on the technical applicability and
constitutionality of the resolution.
Reports were submitted by President
Ford in connection with the Indochin;
evacuations and the Mayaguez incider
and by President Carter in connectioi
with the Tehran rescue mission. Duri
the Reagan Administration, reports
were submitted with respect to U.S.
participation in the multinational fore*
and observers in the Sinai and the
multinational force in Lebanon, the
deployment of U.S. aircraft in connec
tion with the situation in Chad, and t
introduction of U.S. forces into Grena
More recently, a report was submitte
concerning the encounter with Libyai
forces during U.S. military exercises
and near the Gulf of Sidra in late
March, and a report was submitted w
respect to the April 14 operation agai
Libya. Indeed, the executive branch 1
provided information to the Congress
many cases where no relevant statute
requirement existed.

Termination of Use of U.S. Fon

Section 5 of the resolution provides tl
within 60 days after a report is sub-
mitted or required to be submitted, t
President must terminate the use of
U.S. forces unless the Congress has
declared war or specifically authorizei'
the use of such forces, has extended 11
60-day period, or is physically unable f
meet as a result of an armed attack c
the United States. The section also pi
vides that the President must removt
U.S. forces from engagement in hosti ,
ties abroad "if the Congress so direct'
by concurrent resolution." The legisla:
tive veto provision of the resolution ci'
not stand in the face of the Supreme j
Court's 1983 decision in INS v. ChadX
The executive branch has historic!
differed with the Congress over the I
wisdom and constitutionality of the
60-day provision of Section 5. As Pres
dent Reagan made clear in signing th
multinational force in Lebanon resolu
tion on October 12, 1983, the impositi.
of such arbitrary and inflexible dead-
lines creates unwise limitations on
presidential authority to deploy U.S.
forces in the interests of U.S. nationa
security. Such deadlines can undermit

Department of State Bull'

INTERNATIONAL LAW

reign policy judgments and adversely
feet our ability safety and effectively
deploy U.S. forces in support of those
dgments.
Moreover, the President's constitu-
nal authority cannot, in any event, be
permissibly infringed by statute. Sec-
n 8(d) of the resolution itself makes
ar that the resolution was not in-
nded to alter the constitutional
thority of the President. The Presi-
jnt has constitutional power, as Com-
iander in Chief and as the nation's
"incipal authority for the conduct of
reign affairs, to direct and deploy U.S.
rces in the exercise of self-defense, in-
uding the protection of American
tizens from attacks abroad. From the
me of Jefferson to the present, presi-
;nts have exercised their authority un-
ir the Constitution to use military
rce to protect American citizens
)road.

I would also mention that serious
institutional problems exist with
•spect to Section 8(a) of the resolution,
hich purports to limit the manner in
hich the Congress may, in the future,
ithorize the use of U.S. forces. I do
it believe that one Congress by statute
ji so limit the constitutional options of
ture Congresses. Nor can Congress
ntrol the legal consequences of its own
tions. If a particular congressional ac-
m constitutes legal authority for the
•esident to undertake a specific opera-
on, I doubt that one Congress can
lange that fact for all future times by
•quiring a specific form of approval.

ecent Cases

he War Powers Resolution was en-
:ted in the shadow of U.S. involvement
the Vietnam war and of the so-called
'atergate scandals. In more recent
iars, however, issues have been raised
ider the resolution in situations that
sar no resemblance to the Vietnam
ar and, in fact, may not have been
>ntemplated at the time of its adoption.

Deployment of Antiterrorist Units.

is a regrettable reality in today's
orld that Americans abroad are
creasingly subjected to murder, kid-
ipings, and other attacks by terrorists
ho seek to further their political ends
trough such means. The hijacking last
>ar of TWA Flight 847, with the
urder of Navy diver Stethem, is a
ell-known recent example. In that
tse, we had no reason to believe that
le Government of Lebanon had encour-
jed or otherwise supported the ter-
)rists; it was simply unable to control

them. In such a situation, the President
may decide to deploy specially trained
antiterrorist units in an effort to secure
the release of the hostages or to capture
the terrorists who perpetrated the act.
Does the War Powers Resolution re-
quire consultation and reporting in this
kind of situation?

We have substantial doubt that the
resolution should, in general, be con-
strued to apply to the deployment of
such antiterrorist units, where opera-
tions of a traditional military character
are not contemplated and where no con-
frontation is expected between our units
and forces of another state. To be sure,
the language of the resolution makes no
explicit exception for activities of this
kind, but such units can reasonably be
distinguished from "forces equipped for
combat" and their actions against ter-
rorists differ greatly from the "hostili-
ties" contemplated by the resolution.

Nothing in the legislative history
indicates, moreover, that the Congress
intended the resolution to cover deploy-
ments of such antiterrorist units. These
units are not conventional military
forces. A rescue effort or an effort to
capture or otherwise deal with ter-
rorists, where the forces of a foreign na-
tion are not involved, is not a typical
military mission, and our antiterrorist
forces are not equipped to conduct sus-
tained combat with foreign armed
forces. Rather, these units operate in
secrecy to carry out precise and limited
tasks designed to liberate U.S. citizens
from captivity or to attack terrorist kid-
napers and killers. When used, these
units are not expected to confront the
military forces of a sovereign state. In a
real sense, therefore, action by an anti-
terrorist unit constitutes a use of force
that is more analogous to law enforce-
ment activity by police in the domestic
context than it is to the "hostilities" be-
tween states contemplated by the War
Powers Resolution.

I might note, in this connection, that
other types of cases involving military
deployments— such as the movement of
warships into or through foreign ter-
ritorial waters, the deployment abroad
of security personnel such as Marine
embassy guards, and transits of combat
aircraft through foreign airspace— have
generally been considered to be outside
the scope of the resolution. The ration-
ale for regarding the resolution inap-
plicable is at least as strong in the case
of limited, antiterrorist deployments as
it is in these other cases, absent the in-
volvement of the armed forces of a
foreign state.

Even assuming the resolution were
applicable to the deployment of special
antiterrorist units, the fact is that con-
sultations may not— and generally will
not— be possible in such cases. The
existence and purpose of these units is
well known to the Congress. The need
for swiftness and secrecy inherent in the
nature of those activities is so extraordi-
nary that consultations prior to deploy-
ment might well jeopardize the lives of
our units and the hostages they may
seek to liberate.

Engagement During Military Exer-
cises. Issues under the War Powers
Resolution have also been raised where
U.S. forces have engaged in a military
exercise in conformity with international
law. The incident in the Gulf of Sidra in
late March illustrates the situation.
Does the resolution require the Presi-
dent to consult and report in this kind
of case?

Some factual background will help to
put this question in perspective. The
United States is committed to the exer-
cise and preservation of navigation and
overflight rights and freedoms around
the world. That is the purpose of the
freedom of navigation program. A
deliberate decision was made during the
Carter Administration to discourage or
negate unlawful claims to extended
jurisdiction in the oceans. That policy
was affirmed in 1982 under President
Reagan, and in 1983 the essence of the
policy became public in a statement on
U.S. oceans policy. That statement
made clear that the United States would
continue to work with other countries to
develop an acceptable oceans regime. It
also made clear that the United States
would protest the unilateral acts of
other states designed to restrict the
rights and freedoms of the international
community in the use of the oceans and
that the United States would exercise
and assert those rights and freedoms on
a worldwide basis.

The exercise of our rights provides
visible and powerful evidence of our
refusal to accept unlawful claims. The
United States has accordingly protested
and exercised rights and freedoms with
respect to claims of various kinds:
unrecognized historic waters claims, ter-
ritorial sea claims greater than 12 nauti-
cal miles, and territorial sea claims that
impose impermissible restrictions on the
innocent passage of any type of vessels
(such as requiring prior notification or
permission). Since the policy was estab-
lished, the United States has exercised
its rights against the objectionable
claims of over 35 countries, including

ugust 1986

INTERNATIONAL LAW

the Soviet Union, at a rate of about
30-40 freedom of navigation exercises
per year.

The United States has followed this
policy in connection with Libya. When
Qadhafi came to power in Libya, it was
not long before private firms saw their
interests expropriated. Then, on Octo-
ber 9, 1973, Qadhafi broadened the
scope of his interest in expropriating the
rights of others and asserted his claim
to ownership of the Gulf of Sidra. The
United States vigorously protested that
assertion on February 11, 1974, and in
the years since then, we have exercised
our rights in that area on numerous
occasions.

The War Powers Resolution was not
intended to require consultation before
conducting maneuvers in international
waters or airspace in the context of this
global freedom of navigation program.
We are aware of no previous suggestion
that the resolution would require consul-
tation in such situations.

This question was carefully consid-
ered in connection with the Sidra exer-
cise in March, and the decision was
made that the conduct of those opera-
tions did not place U.S. forces into
hostilities or into a situation in which
imminent involvement in hostilities was
"clearly indicated by the circum-
stances." The United States has con-
ducted its exercises not only in Sidra
but around the world, not only in March
but for years— and, in most instances,
without hostile response. We have, in
fact, been in the Gulf of Sidra area 16
times since 1981, and we have crossed
Qadhafi's so-called line of death seven
times before the operation last March.
Only once before did Qadhafi respond
with military action, and, in that in-
stance, he was singularly unsuccessful.

While we must always be aware of
the risks and be prepared to deal with
all contingencies, we have every right to
expect that neither Libya nor any other
country will take hostile action against
U.S. forces while they are lawfully in
and over areas of the high seas. The
threat of a possible hostile response is
not sufficient to trigger the consultation
requirement of Section 3, which refers
only to actual hostilities and to situa-
tions in which imminent involvement in
hostilities is "clearly indicated" by the
circumstances.

Where a peaceful, lawful exercise
does, in fact, result in hostile action to
which U.S. forces must respond in im-
mediate self-defense, such an isolated
engagement should not normally be con-
strued as constituting the introduction

of U.S. Armed Forces into a situation of
actual or imminent hostilities for the
purpose of the reporting requirement of
Section 4 of the resolution. No report
was submitted in the case of the 1981
Sidra incident, in which two Libyan air-
craft were shot down after they fired at
U.S. aircraft. Similarly, during the
period in which U.S. peacekeeping
forces were deployed in the Beirut area
in 1983, many incidents occurred in
which hostile forces attacked and U.S.
peacekeeping forces responded in im-
mediate self-defense. Yet, no separate
war powers report was submitted for
each of these incidents. Of course, a
different situation might be presented if
U.S. forces withdrew from an area and
subsequently returned for the purpose
of undertaking further military action.

As a practical matter, however, this
question seems academic. In the case of
the March incident in the Gulf of Sidra,
for example, regardless of the applicabil-
ity of the War Powers Resolution, the
Administration provided Congress with
all the information it needed to review
the incident. As soon as hostile Libyan
actions occurred, the Administration
took steps to ensure that Congress was
informed of the situation and was kept
informed throughout the remainder of
the exercise. In particular, several calls
were made to congressional leaders to
inform them of the events; extensive
briefings were conducted for the benefit
of all interested members, at which ex-
perts from the Departments of State
and Defense provided pertinent informa-
tion and responded to all questions
asked by members; and the President
sent a written report to Congress
describing the events of March 24 and
25, the actions taken by U.S. forces, and
the legal justification for those actions.

Military Action in Self-Defense.

The third kind of situation in which war
powers considerations have been raised
recently is that in which U.S. forces
take legitimate action in self-defense
against facilities or forces of another
state because of its sponsorship of ter-
rorist attacks against Americans. In the
April 14 operation against Libya, U.S.
forces undertook military action in self-
defense against five terrorist-related tar-
gets in order to preempt and deter
Libya's unlawful aggression through ter-
rorist force against the United States
and its nationals. Does the War Powers
Resolution apply to a case of this kind?
The use of U.S. forces to conduct a
military strike against the facilities of a
hostile, sovereign state in its own terri-
tory falls within the specific terms of

the consultation requirement of Section
3 of the resolution. In this context,
however, a critical element is flexibility
As indicated earlier, Section 3 expressl
envisions the possibility that, in some i
stances, the President might have to a*
without prior consultations. In any
event, he must seek to consult in a ma
ner appropriate to the circumstances,
and the need for swiftness and secrecy
in carrying out a military operation is ;
vital factor to be weighed in determin-
ing the nature and timing of consulta-
tions that may be appropriate in a give
situation.

In the case of the April 14 opera-
tion, extensive consultations occurred
with congressional leaders. They were
advised of the President's intention
after the operational deployments had
commenced but hours before military t
tion occurred. This satisfied the resolu-
tion's requirement that consultation
occur "before" the "introduction" of
troops into hostilities or a situation of
imminent hostilities. Congressional leai
ers had ample opportunity to convey
their views to the President before an;
irrevocable actions were taken (in fact,
no one who was consulted objected to
the actions undertaken). The President
took a serious risk in conducting these
consultations. The press observed legis
lative leaders entering the White Hous
for the consultations, and speculation
about possible military action ensued.
The press also learned immediately
after the consultations that the Presi-
dent was to make an address later tha
evening, and this led to rumors of imrr
nent military action that could have
jeopardized the success of the operatio

The consultations in this case were
consistent with the provisions of the
War Powers Resolution. They were als
consistent with and, in many respects,
exceeded in scope and depth the consul
tations conducted on previous occasions
For example, President Ford's meeting
with congressional leaders to discuss tr
Mayaguez operation occurred at a point
in time much closer to the onset of mili
tary action than was the case here.
President Carter, as I noted earlier, dii
not consult at all prior to the Tehran
rescue mission.

Where a military action constitutes
the introduction of U.S. forces into
actual or imminent hostilities for the
purpose of the consultation requiremen
of Section 3 of the resolution, the actio)
also triggers the reporting requirement
of Section 4. In the case of the April 1'
operation, the President submitted a fu
report consistent with the War Powers

Department of State Bullei

MIDDLE EAST

'olution. As the President noted in
report, the actions taken were pur-
nt to his authority under the Consti-
ion, including his authority as
nmander in Chief. That authority is
st compelling in a situation such as
5, where the use of force is essential
ieter an immediate and substantial
eat to the lives of Americans.
In recent weeks, the question has
in raised publicly as to the Presi-
it's right to take military action
hout the express approval of Con-
ss. This is a question that has been
Iressed by executive branch officials
many occasions over the years, and
ir statements are well known to this
imittee. Without going into the spe-
cs of those statements, it is clear that
limited actions undertaken by Presi-
lt Reagan in response to attacks on
United States and its citizens fall
11 within the President's authority
ler the Constitution. As noted
Her, the War Powers Resolution does
confer power on the President, but
learly recognizes that the President
independent constitutional authority
;ake appropriate military action.
It is also important to note, in this
ard, that the President is not simply
ing alone, under his inherent con-
utional authority, when taking the
es of actions we are discussing today.
3 Congress has, over the years,
irned of, considered, and effectively
lorsed in principle the use of U.S.
2es for a variety of purposes through
adoption of laws and other actions.
st significantly, Congress has author-
i and appropriated money for the
ation of forces specifically designed
antiterrorist tasks.
For example, Section 1453 of the
!6 Department of Defense Authoriza-
.1 Act specifically states that it is the
.y of the government to safeguard the
ety and security of U.S. citizens
rinst a rapidly increasing terrorist
■eat and that U.S. special operations
ces provide the immediate and pri-
ry capability to respond to such ter-
ism, and the Congress has
jropriated funds for the specific pur-
se of improving U.S. capabilities to
ry out such operations. Likewise, the
ngress has appropriated considerable
ns to create the naval and air forces
it are needed to respond to and deter
te-sponsored terrorist attacks in the
nner that was done on April 14 and
carry out the exercises necessary to
intain such capabilities and to assert
i protect our rights on the high seas,
this sense, Congress has participated

Attacks on Persian Gulf Shipping

WHITE HOUSE STATEMENT,
MAY 12, 1986'

The Administration is deeply concerned
over the increase in attacks on merchant
shipping in international waters in the
lower Persian Gulf. Within the last
8 days, two Saudi tankers have been
struck by Iranian aircraft in what ap-
pears to be an intensification of strikes
on neutral ships operating peacefully in
the gulf.

We are concerned that the recent ac-
tion of Congress in rejecting an arms
sale may have created the misperception
that the U.S. commitment to freedom of
navigation in the gulf and Saudi self-
defense has diminished. Any such view
would be gravely mistaken. We strongly
support Saudi Arabian self-defense.

To avoid miscalculation, we reem-
phasize the importance we attach to the
principle of freedom of navigation and
the free flow of oil, as well as our deter-
mination to maintain open access
through the Strait of Hormuz. Our com-
mitment to this principle and its applica-
tion to the gulf remains unchanged.

The United States continues to seek
the earliest possible end to the Iran-Iraq
war. At the same time, we will support
the individual and collective self-defense
efforts of our friends in the region and
will continue to consider expansion of
the Iran-Iraq war to the Arab gulf
states to be a major threat to our in-
terests.

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

in the creation and maintenance of the
forces whose function, at least in part, is
to defend Americans from terrorism
through the measured use of force.

The President has openly discussed
and explained the need for and pro-
priety of these uses of force, which he
has correctly assumed are widely sup-
ported by Congress and the American
people. All of the actions undertaken
were clearly signaled well in advance
and, therefore, posed no threat to the
role of Congress under the Constitution
in military and foreign affairs.

Conclusion

It seems fair to say, in conclusion, that
it is not clear how the War Powers
Resolution, which was originally
designed to provide an appropriate role
for the Congress with respect to U.S.
involvement in hostilities with other
states, should apply to the use of U.S.
forces in other kinds of situations. Some
such situations— the deployment of anti-
terrorist units— would seem to fall com-
pletely outside the scope of the
resolution. Other situations— the conduct
of peaceful, lawful exercises which
result in a hostile response— do not re-
quire consultations but, some might
argue, may, in special situations, require
a report. Still other cases— the use of
U.S. forces in a legitimate, defensive
strike against another state— can clearly
be said to fall within both the consulta-
tion and the reporting provisions but

with the form of consultation neces-
sarily varying with the particular
circumstances.

A consideration of the application of
the War Powers Resolution to situations
such as these does more than raise
difficult and inevitably controverisal is-
sues of interpretation. On a broader
level, it also highlights some of the sig-
nificant negative aspects of the War
Powers Resolution, whose effects on the
Congress are perhaps even more pro-
found than on the Executive. The need
that some Members of Congress feel to
defend the resolution's viability, even in
situations well beyond those contem-
plated at the time of its adoption, causes
Congress to shift its concern, delibera-
tions, and political leverage away from
evaluting the merits of military actions
to testing their legality and to focus on
formal and institutional issues rather
than on the substance of our politics.
Our history amply demonstrates that
Congress has adequate means, through
the budgetary process and otherwise, to
provide an effective check on presiden-
tial power to employ military force. But
the War Powers Resolution often un-
wisely diverts our leaders from issues of
policy to issues of law.

'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. ■

'igust 1986

NARCOTICS

FY 1987 Assistance Requests
for Narcotics Control

by Ann B. Wrobleski

Statement before the Senate Appro-
priations Committee on April 22, 1986.
Miss Wrobleski is Acting Assistant
Secretary for International Narcotics
Matters.

The Bureau of International Narcotics
Matters offers testimony today in behalf
of its FY 1987 appropriation request of
$65,445,000. We will confine our testi-
mony to the actual request, with com-
parisons to the 1986 budget, and
appropriate comments on the progress
we believe has been made in interna-
tional narcotics control, as well as the
problems we continue to encounter.

The 1987 budget would be an in-
crease of $5.4 million over our actual
1986 budget of $60,044,000. This 1986
budget included a transfer of $5 million
from the Lebanon support fund which
we have allocated to special emphasis
narcotics enforcement programs in Latin
America, in accord with the intent
declared in the subcommittee report.

Before discussing our 1987 spending
objectives, let me briefly report to the
committee on how we absorbed the 4.3%
Gramm-Rudman-Hollings reduction in
1986.

In FY 1986, the Bureau of Interna-
tional Narcotics Matters was required to
absorb $2,485,000 in reductions from a
total of $62,529,000, resulting in a new
1986 budget level of $60,044,000. The
FY 1986 budget consists of new budget
authority of $57.5 million and the addi-
tional appropriation of $5 million. This
additional funding resulted in the
bureau having a higher base for 1986
than would have occurred normally,
given the Gramm-Rudman-Hollings
reductions. Note that cuts have been ab-
sorbed in all line item activities except
Colombia, Mexico, Latin America
regional and central program, and devel-
opment. As a result of these reductions,
the bureau will be required to delay
implementation of certain program ini-
tiatives. For example, the $460,000
reduction in Burma will require the
bureau to postpone until FY 1987 cer-
tain activities required to expand the
fixed-wing aerial eradication program.

FY 1987 Request

In 1987 we propose to allocate $55.2 mil-
lion, or 84.3% of our total budget, to in-
country programs. The balance will be
spent on interregional programs, includ-
ing our sponsorship of the successful
training programs conducted by the
Drug Enforcement Administration
(DEA) and U.S. Customs, as well as
contributions to multilateral programs
and to program development and sup-
port activities.

The country program total includes
$37.9 million for Latin America, 68.7%
of the country budget; $13.1 million for
East Asia, or 23.7%; and $4.2 million for
Southwest Asia, or 7.5% of the country
budget.

The Department assigns its highest
priority to reducing cultivation and
production of illicit narcotics, through
bans and eradication supported by inter-
diction and other enforcement programs
operating as close to the source as possi-
ble. We note that in 1981, when we be-
gan our current strategy, only two
countries were eradicating illicit narcotic
crops. In 1985, 14 countries eradicated
narcotic crops, moving us closer to our
objective of having effective eradication
campaigns operating simultaneously in
all key growing sectors. Achieving this
long-term objective is central to our goal
of reducing the availability of imported
illicit narcotics in the United States.

The proposed 1987 budget, there-
fore, includes a substantial increase in
funds for narcotic crop eradication pro-
grams, building on new or expanded
crop control efforts in key countries. In-
creased funding for enforcement efforts
are projected where such activities sup-
port crop reduction efforts and/or will
directly impact on the supply of illicit
narcotics or precursor chemicals.

Results of Previous Allocations

At the outset of 1985, we set a number
of strategic and tactical goals, and, as
we stated in our annual report to Con-
gress in February, we believe that in
most cases we not only met but ex-
ceeded those objectives. The record
shows that 1985 was a very productive
year for program expansion and interna-
tionalization. We will do even more in
1986, during which our program priori-
ties include solidifying the considerable

gains in Colombia; sustaining the in-
creasingly effective expansion of eradil
tion programs in Thailand, Burma,
Jamaica, Peru, Brazil, Ecuador, Panarl
Belize, and Pakistan; and intensifying I
our efforts to upgrade the programs i I
Mexico and Bolivia. The diplomatic
priority will be on continuing the rapi I
internationalization of the global pro-
gram, drawing heavily on such UN
activities as the deliberations on a ne^
trafficking convention and planning fo
the 1987 World Conference on Drugs
heighten awareness and participation
donor and source nations alike.

During 1986, we will launch the s{
cial emphasis Latin American regiona
enforcement program for which your
committee sought an additional ap-
propriation of $5 million. We conclude
discussions with our Embassy and the I
Government of Colombia on Tuesday I
and are agreed on creating an expand |
air wing in Colombia to upgrade regie i
al strike-force capability throughout t'.
Andean coca growing region. We will
utilize a good part of the $5 million,
which we have budgeted under "Latii
American regional programs," to pur-
chase two transport helicopters on an
immediate basis. These aircraft may I
armed and armored, drawing upon th>
special account of $1 million in militar
assistance program (MAP) funds whic
Congress made available to us. We w.
grant the aircraft to the National Poli
of Colombia, under an agreement calli
for Colombia, for a period of 2 years,
provide operational support for specia
enforcement initiatives in the region,
we have previously reported, there hi
been great progress in regional initia-
tives, thanks to the proficiency and
capability of the Colombian National
Police. The National Police supported
cross-border coca and cocaine interdic-
tion program with Peru, which led to
series of interdiction successes by Per
in 1985. Colombia also participated in
cross-border coca eradication program
with Ecuador. Peru, Ecuador, and oth
governments in the area critically nee
air mobility, and we think combining i
mobility with Colombian expertise af-
fords the best package we can provide
to the other governments in the coca
belt. The Colombian National Police w
be responsible for drawing up collabor
tive plans with other governments in

Department of State Bulle

NARCOTICS

3 region. We are also allocating a por-
m of the 1986 budget for maintenance
d operation of these aircraft. The
lance of the supplemental funding
lich your committee provided will be
ed for other regional initiatives. As
u know, our Latin American regional
id provides the resources for the
adication programs in Jamaica, Belize,
d Panama.

>untry Programs

itin America. For 1987 the continuing
ominence of Latin America and the
iribbean in the production and export
illicit narcotics to the United States
ain compels us to allocate the major
are of funding (68% of the country
dget and 59% of total budget) to that
gion. Discounting the $5 million
insfer-in from 1986 totals, we propose
increase funding for the Latin Ameri-
n region by about $6 million.

The breakthrough on aerial eradica-
n of marijuana in Colombia has not
ly resulted in a reduction of 67% in
}ss cultivation but is part of a total
itional Police effort that has resulted
a strong interdiction campaign with
bd results in seizures of contraband,
'oratories, and precursor chemicals.

portantly Colombia has been testing
rbicides that could be effective in
Tiprehensive programs to eliminate
|:a bushes. Thus we are not only pro-
ving to center our regional air-strike
pability in Colombia but to expand
Indication operations through increased
liding in 1987.

j The 1987 budget presupposes a full-
Idged aerial campaign against coca as
ill as marijuana. Indeed, our 1987
I dget projects increased funding for
sadieation in all of our program coun-
les, as well as Jamaica, Panama, and
plize which are funded from the re-
pnal account. The budget includes sup-
i rt for improvement of the Mexican
ladication campaigns against opium
ppy and marijuana. We have in-
cased 1986 funding for Ecuador and in
.81 propose to support an aerial eradi-
(tion program against coca in Ecuador.
!e plan to expand manual coca eradica-
te in Peru, including action on a sec-
id front. And we are hopeful of a sus-
uned eradication program in Bolivia.

Enforcement assistance will continue
to play a significant role in the Peruvian
and Bolivian programs, where there is a
parallel need to provide security for the
narcotics control efforts. A significant
increase in interdiction assistance is
provided under the regional account.
Modest amounts are included in most
programs to provide technical assistance
for drug abuse prevention and education
projects.

Southeast Asia. In Southeast Asia,
our 1987 budget request contemplates
continuation and expansion of the vital
Burmese aerial eradication campaign.
More than 33,000 hectares of opium
poppy have been reported destroyed by
the Burmese Government this year.
Funds are included to procure additional
fixed and rotary-wing transport aircraft
which will enable the Burmese Govern-
ment to carry out operations aimed at
narcotics trafficking groups, primarily
the Burmese Communist Party and war-
lord organizations operating on the
border with Thailand. Support will also
be provided to improve the capability of
the Burmese police to interdict narcotics
trafficking.

The Royal Thai Government has
adopted a policy of eradicating opium
poppy in areas where farmers have
benefited from development assistance
and are able to market alternative
crops, or where farmers have refused to
participate in alternative crop programs.
Our annual report projects that the Thai
could significantly reduce opium cultiva-
tion in 1986 and notes a Thai projection
that so-called commercial opium produc-
tion could be eliminated in the next 5
years. Increased funding in 1987 will as-
sist the Thai Government in providing
"bridge" assistance to farmers who
agree not to cultivate poppy or whose
crop is eradicated. Funds are also in-
cluded to continue support to Thai para-
military forces interdicting trafficking
and refining operations along the Thai-
Burma border, and to enhance the nar-
cotics investigation capabilities of Thai
police units.

Southwest Asia. In Southwest Asia,
we plan in 1987 to continue support for
the establishment of new Pakistani joint
narcotics task force units and special
drug enforcement units of Pakistani cus-
toms, while maintaining support for out-
reach activities to help farmers switch

to other crops in opium growing areas
where major development assistance
projects do not exist. We will also con-
tinue support for the enforcement ef-
forts of the Turkish National Police and
the Jandarma.

Organizations. The 1987 budget will
fund an increase of $295,000 in the U.S.
contribution to th«» UN Fund for Drug
Abuse Control (UNFDAC) which,
among other activities, funds coca
control-related projects in South Amer-
ica and coordinates donor support for
the special development and enforce-
ment plan in Pakistan. Funding will also
support Colombo Plan regional narcotics
control activities and expanded drug
education and prevention programs in
selected countries.

Finally, funding is provided to sup-
port the international narcotics enforce-
ment training administered by the Drug
Enforcement Administration and U.S.
Customs. An estimated 2,300 individuals
will be trained through 17 specialized
basic- and advance-level courses for for-
eign law enforcement personnel.

In conclusion, let me draw the com-
mittee's attention again to the progress
noted in our annual report. These are
substantive gains, and the prospects for
continued advancement in 1986 are gen-
uinely realizable. But let me also state
that the drug situation remains severe.
Production still outpaces demand. But
there is a significant change occurring
and many of our hopes ride on that
change. Drug abuse has spread to many
drug producing and trafficking coun-
tries, and narcotics trafficking organiza-
tions in some countries are so powerful
that they pose a national security threat
to the legitimate government. Narcotics-
related violence is on the increase.

Narcotics trafficking is a clear and
present danger. The change is that
these other nations now realize that the
danger is universal, that they too stand
in harm's way. With that realization, we
are finally beginning to work together
as an international community progress-
ing toward common goals.

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

■jgust 1986

PACIFIC

Visit of Australia's
Prime Minister Hawke

Prime Minister Robert J.L. Hawke
of Australia made an official working
visit to Washington, D.C., April 15-18,
1986, to meet with President Reagan
and other government officials.

Following are remarks made by
President Reagan and Prime Minister
Hawke after their meeting on April 17}

President Reagan

I'm pleased to meet with Prime Minis-
ter Bob Hawke today, although I was
somewhat disappointed he didn't bring
the America's Cup with him.

Prime Minister Hawke is a personal
friend and a valued counselor, and I
can't overstate the value America at-
taches to its relationship with Australia,
especially as that nation now approaches
a very special year. We look forward to
participating in the festivities of Austra-
lia's 1988 bicentennial.

Our countries share many historical
experiences: our love of democracy, our
frontier heritage, and our common
defense of freedom from the First and
Second World Wars through Korea and
Vietnam. All this has nurtured the
bonds of friendship between our two
peoples. Today the United States and
Australia, as much as ever, rely on each
other. Australia is a responsible
ANZUS [Australia, New Zealand, Unit-
ed States security treaty] ally, an impor-
tant trading partner, and a trusted
friend.

Our discussions in the White House
today covered a variety of issues. In the
area of trade, the United States will be
responsive to the extent we can to Aus-
tralian interests. In international agri-
culture, we have a common goal: We'll
continue to work together to keep open
international trade and export markets.
International agriculture trade problems
should be given attention in upcoming
international economic meetings, includ-
ing the next round of multilateral trade
negotiations. We seek a truly free inter-
national agricultural market.

Necessary interim measures to coun-
ter unfair subsidization, like our own ex-
port enhancement program, should take
account of the interest of friends like
Australia. Prime Minister Hawke has
been assured of this, and we will, of
course, continue our dialogue on this im-
portant subject.

On other matters, we reaffirmed the
importance of security cooperation
among Pacific states. The stabilizing
role that ANZUS plays has been essen-
tial to the phenomenal growth that the
Pacific region has enjoyed during the
last decade. It's hoped that New Zea-
land will soon return to its traditional
role as a responsible ANZUS member.
We would greatly regret it if this
valued partner declined to take the ac-
tions that would permit restoration of
our normal collaboration and preserva-
tion of our special relationship as allies.

Whatever New Zealand's decision, ho!
ever, I have told Prime Minister Hawk
that our commitment to Australia uncj
ANZUS is firm.

Our discussions today also focused
on regional issues and arms control.
Australians share with the American
people a deep concern about world
peace and a desire to reduce the num
ber of nuclear weapons threatening
mankind.

This is my third meeting with Pri
Minister Hawke. Our personal relatic
ship and the relations of our countries
remain on a very high level. Bob,
smooth sailing on the rest of your trij
and on the journey home.

Prime Minister Hawke

The warmth of your welcome and the
sentiments that you've expressed in
your statement are very much apprec
ated by me. They reflect not only the
personal friendship to which you refe:
and which I greatly value, they reflec
also the close, longstanding associatio
between the governments and the pe<
pies of our two countries.

As you are aware, the main purpi
of my visit has been and remains to t
with you, your colleagues, and Membc
of Congress about agricultural matter
Nevertheless, let me say this at the c
set. We are at one in our determinati
to see an end to the scourge of intern
tional terrorism and, therefore, conde
unequivocally Libya's role in directing
exporting, and supporting such ac-
tivities.

The Australian Government does
accept that violence— in particular,
terrorism— is a solution to the comple:
problems of the world we share. We
referred in the UN Security Council t
a number of possible courses open to
the international community to bring
about a peaceful resolution of the cur-
rent situation in the Mediterranean
region.

We meet at a time when the rural
sectors of both of our countries face
serious difficulties. For us the corrup-
tion of international markets is a matt
of very grave concern. Australia is an
efficient, nonsubsidizing agricultural e
porter. It exports 80% of its rural pro
duction. The severe difficulties that fa
Australian and U.S. farming communi
ties as a result of depressed agricultui
prices and our frustrations with a mai
ket loss that has been brought about
huge European Community agricultur
export subsidies are of critical concerr
to both our countries.

Department of State Build

REFUGEES

I have conveyed Australia's appreci-
on of the cooperation we have re-
ved so far from the United States on
jse aspects of the Farm Act impacting

Australia's agricultural interests,
istralia particularly welcomed the re-
nt amendments to the Farm Act
rich halved mandated spending under
s export enhancement program and
juced the funds allocated under the
'geted export assistance program.

Bearing in mind the importance to
istralia of its wheat markets, I was
couraged to have your reassurance
it the export enhancement program
[1 continue on a targeted basis, aimed
>entially at markets of subsidizing ex-
rters, and that you will continue to
courage export enhancement program
:ipients to maintain their normal level
imports from traditional nonsubsidiz-
; suppliers.

We also welcomed your assurance
it the implementation of the Farm
t, with regard to export of beef and
ry products, would be handled in a
y which seeks to minimize disruption
markets served by Australia. We also
ject continued access for our beef to

U.S. market, at least at the levels
isistent with the operation of the ex-

ng meat import law.

In relation to sugar imports to the
,ited States, we are assured that Aus-
.lia's traditional market share is being
intained. I appreciate that you have
;ed our concerns on the operation of
| current cotton and rice programs.

Australia has appreciated the oppor-
lities we have had to consult on the
ministration of the Farm Act and of
1 export enhancement program. We
lcome your agreement that these op-
rtunities to discuss with you will be

ended to include Australia's concerns
the implementation of the U.S. export
psidy and surplus stock disposal pro-
ams. Periodic meetings between our
kpective trade and agricultural minis-
rs will be central to that continuing

j We both share the commitment to
I effective September launch of the
R multilateral trade negotiations. We
fee on the need to have agriculture
epted as a key issue for the new unil-
ateral trade negotiations round. We
Jo agree that the negotiation of more
tective GATT [General Agreement on
Iriffs and Trade] rules for agricultural
bsidies should be a specific objective
Ithe multilateral trade negotiations
kind. The forthcoming Tokyo summit
}11 be important in carrying these mat-
t-s forward.

The closeness of the relations which
Australia and the United States enjoys
is based on common values and shared
prospectives. Our history of cooperation
in peace and in war, our shared commit-
ment to democratic values, and the fun-
damental importance of our security
relationship under the ANZUS alliance
have all served to strengthen and
broaden our bilateral relationship. The
close friendship between our countries
does not require identical views on
every international issue. A mature rela-
tionship involves mutual respect for
each other's right to determine inde-
pendent policies toward various prob-
lems, having regard to each other's
concerns.

Our alliance under the ANZUS
treaty is fundamental to Australia's for-
eign and defense policies. It also has im-
portant implications for the security and
the stability of our region. I am pleased
that in our discussions today, we reaf-
firmed the importance of our arrange-
ments under ANZUS. We accept that,
like other alliances, the ANZUS treaty
entails obligations and responsibilities as
well as mutual benefits. My government
is convinced that international security
is enhanced not only by appropriate
security arrangements which contribute
to stable deterrence but also a commit-
ment to pursue balanced and verifiable
arms control agreements.

We value very much, indeed, the
consultations and exchanges of views

that take place at the highest level be-
tween our governments on a range of
international issues, including arms con-
trol and disarmament. My discussions
today with you covered the prospects
for progress toward effective arms con-
trol and specific initiatives that have
been undertaken in Australia's own
region, including the South Pacific
Nuclear Free Zone Treaty.

Our discussions today also covered
the tragic situation in South Africa. The
efforts of the Commonwealth eminent
persons group to encourage dialogue be-
tween the government and the various
racial groups with a view to the peace-
ful establishment of a nonracial, demo-
cratic, and representative government in
South Africa are currently an important
contribution to the search for a solution.

As our bicentenary in 1988 ap-
proaches, we are planning a range of
celebrations, which we hope will involve
active participation by many countries,
including, of course, the United States.
A visit to Australia around that time by
you would be most appropriate and
most welcome, and I sincerely hope that
you will be able to take up that invita-
tion which I have extended to you.

I greatly appreciate the hospitality
that you have extended to me today. I
look forward to further valuable ex-
changes with you on the many impor-
tant issues we have addressed.

'Made in the East Room of the White
House (text from Weekly Compilation of
Presidential Documents of Apr. 21, 1986). I

FY 1987 Assistance Requests
for Migration and Refugees

by James N. Purcell, Jr.

Statement before the Subcommittee
on Foreign Operations of the Senate Ap-
propriations Committee on April 22,
1986. Mr. Purcell is Director of the
Bureau for Refugee Programs.1

I am pleased to appear before you today
to present the Department of State's
migration and refugee assistance appro-
priation request for FY 1987.

The world refugee situation today
continues to be one of great need.
Although the news media have not fo-
cused recently on any dramatic new
refugee crisis, the number of refugees
who have fled strife and persecution in

their home countries totals over 8 mil-
lion people. Many more have crossed in-
ternational boundaries fleeing famine,
drought, and disease.

The United States consistently has
maintained that refugee assistance and
the search for solutions to refugee prob-
lems are matters of international con-
cern and responsibility. Accordingly, the
United States continues to contribute to
internationally sponsored programs to
provide relief assistance and to promote
voluntary repatriation or settlement
within the region of origin.

The United States also admits for
resettlement refugees who have no
recourse other than third country reset-
tlement, especially those who have close

igust 1986

REFUGEES

ties to the United States. Our refugee
programs are dedicated to meeting hu-
manitarian objectives and are consistent
with the foreign policy goals of the
United States.

In preparing our appropriation re-
quest for FY 1987, we have been ever
mindful of the need for the Federal
government to reduce significantly its
overall spending. I believe that careful
examination of our presentation will
show that the amounts requested in
every category are modest but enough
to support our humanitarian objectives
and foreign policy goals.

The migration and refugee assist-
ance request for FY 1987 totals about
$347.5 million, an increase of $8.6 million
over the FY 1986 appropriated amount
and about $23 million over the funds
available in FY 1986 after the reduc-
tions mandated by the Balanced Budget
and Emergency Deficit Control Act of
1985. However, this level of proposed
funding compares to actual spending in
FY 1985 of about $350 million.

In addition, we are requesting a $25
million replenishment of the emergency
refugee and migration assistance ac-
count, which is permanently authorized
at $50 million but which now includes
appropriated funds of only about $18
million. This replenishment is needed if
the emergency fund is to be capable of
fulfilling its purpose— that is, providing
the President the flexibility to fund
responsive U.S. action to address urgent
and unforeseen refugee emergencies
which may arise at any time.

The migration and refugee affairs ac-
count is divided into four categories of
expenditures: (1) refugee admissions to
the United States, (2) refugee assistance
overseas, (3) other assistance activities,
and (4) administrative expenses.

My discussion of these four cate-
gories compares the amounts requested
for FY 1987 with both the appropriated
FY 1986 amounts and the funds now
available. The current distribution of
FY 1986 funds available after the
Gramm-Rudman-Hollings cuts do not
reflect the Department's final assess-
ment of priority needs. Rather, the dis-
tribution is in line with legal require-
ments regarding how the Department
could spread the overall cut. We, there-
fore, expect to seek to reprogram
FY 1986 money among the four cate-
gories in the third quarter when assess-
ments of refugee needs for the year
have been further refined.

Refugee Admissions

For refugee admissions to the United
States, we are requesting $109.1 million,
about 30% of our total request and a
decrease of $13 million from the
FY 1986 appropriated amount and of
about $5.5 million from the revised
level. These funds will cover the operat-
ing expenses at modest levels of pro-
grams administered by the Department
that support our overall admissions pro-
gram. These programs include process-
ing, transportation loans, language
training and orientation, and initial
reception and placement.

The budgeted admissions level for
FY 1987 is 63,000 including 42,000 from
East Asia. As you will recall, Secretary
Shultz last October appointed a high-
level advisory panel, headed by former
Governor Ray of Iowa, to look into the
Indochinese refugee situation and to
make recommendations for U.S. policy
in the region. We expect the panel to
complete its report in April.

Refugee Assistance

The request for refugee assistance pro-
grams overseas totals $195 million,
about 56% of the total request, and is
an increase of $8.3 million over the
FY 1986 appropriation and of $14.5 mil-
lion over the revised level. This level of
funding will provide adequate support,
based on U.S. assessment of our fair
share, to the core program costs of the
international organizations and other
agencies that carry out relief and reset-
tlement programs overseas. The in-
crease reflects increases in program
costs due to inflation and growth in
recipient populations.

Of this amount for overseas assist-
ance, $29.4 million is requested for as-
sistance to Indochinese refugees in
Southeast Asia. These funds primarily
will support the work of the UN High
Commissioner for Refugees (UNHCR),
the UN Border Relief Operation
(UNBRO), the International Committee
of the Red Cross (ICRC), and other
agencies that provide care and main-
tenance services to refugees in first asy-
lum and the 250,000 Cambodian
displaced persons (as of February 1986)
who remain in camps along the Thai-
Cambodian border. Besides these pro-
grams, $1.75 million for antipiracy pro-
grams in the Gulf of Thailand and
$600,000 for the UNHCR orderly depar-
ture program are also included.

The overseas assistance request aki
includes about $60.5 million for assist-
ance programs in Africa. This amount I
will be used to support the core pro-
grams for material assistance, medical I
and educational aid, and protection ac-
tivities of the UNHCR and the ICRC
Africa, as well as special projects such
as refugee scholarships and self-help a<
tivities. The immense need to help the
refugees in Africa is well-known to us
all.

The request for Near East and
South Asia assistance programs totals
$87.5 million. Of this, $67 million is
budgeted for the provision of basic
health and education programs to Pale
tine refugees through the U.S. contrib
tion to the UN Relief and Works
Agency for Palestine Refugees in the
Near East (UNRWA). The other $20.5
million comprises U.S. contributions tc
the core assistance programs for the
world's largest single refugee popula-
tion, the Afghans in Pakistan, adminis-
tered by the UNHCR and the ICRC.

The final part of the overseas assis
ance category includes $17.7 million fo
relief assistance programs and limited
repatriation activities in Latin Americ;
administered by the UNHCR, the
ICRC, and other agencies. This is in
response to the continued high level ol
refugee needs in this region.

Other Assistance

The third category, other assistance, is
budgeted at $34.9' million in our FY 19
request, an increase of $12.9 million
from FY 1986 appropriations and $13.<!
million from the revised level. The larj
est part of this request is a $25 millior
contribution to the United Israel Appe
for its program of assistance to refuge'
resettling in Israel, $12.5 million more
than the appropriated FY 1986 amoum
This amount is earmarked for this pur
pose in the Foreign Relations Authorii
tion Act for FY 1987. The remainder
includes funding of the administrative
and operational budgets of the Inter-
governmental Committee for Migratior
(ICM) and the U.S. contribution to the
ordinary (headquarters and nonregiona
budget of ICRC.

Administrative Expenses

And finally, we request $8.5 million fo)
the administrative expenses of the De-
partment of State Bureau for Refugee
Programs, an increase of $370,000 fron

Department of State Bull'*

ICURITY ASSISTANCE

FY 1986 appropriations and
0,000 from the revised level. Most of
3 increase is attributable to price in-
ases, although within this amount the
partment also will fund one new posi-
l, a second refugee officer in Islama-
i. This officer will oversee relief pro-
ims for approximately 2.7 million Af-
in refugees, with special emphasis on
nitoring the use of our contributions
UNHCR and voluntary agencies.
In closing I would like to express
personal appreciation and the appre-

ciation of the Department of State for
the support you and other members of
this committee have shown toward refu-
gee affairs. The needs are great, but I
am confident that by working together
we will be able to continue to provide
adequate levels of support for these
vital, humanitarian programs.

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

1 1987 Security Assistance Requests

William Schneider, Jr.

Statement before the Subcommittee
Foreign Operations of the House Ap-
vriations Committee on March 6,
6. Mr. Schneider is Under Secretary
Security Assistance, Science and
hnology.1

President's budget for the coming
ill year reflects much painstaking
lysis of the competing demands on
ted national resources. It reflects
irous sifting of priorities. And, it
ects many hard choices.
As the Congress begins its equally
istaking and thoughtful consideration
his budget, I welcome the chance to
it with you today to discuss our pro-
als for security assistance in

1987.

Within an overall budget package
t we believe is fully consistent with
.mm-Rudman-Hollings deficit reduc-
i limitations, the security assistance
gram levels and composition we are
senting for your consideration are
ponsive to the political, economic,
. military challenges we face. Our
posals are targeted to defined needs
. goals.

In this year's supporting documenta-
I we have made this linkage more
licit than in years past, and we have
[d to meet some of the expressed
ires of committees for expanded pro-
m and background data.
The proposed security assistance
gram is a comprehensive and bal-
ed effort to utilize security assistance
in effective instrument of U.S. for-
a and defense policies. Significant
uctions in the program— whether by
;ct congressional action or by the au-
latic cuts under the existing deficit

reduction legislation— will seriously crip-
ple our efforts to meet challenges to our
vital interests around the globe.

Rationale for Security Assistance

By definition "security assistance" bene-
fits other countries. It helps other coun-
tries become stronger and safer. Secu-
rity assistance is also an essential part
of the U.S. effort to guarantee its own
national security. It is an extension of
the resources we devote to our own
defense forces and derives inescapably
from our role as a superpower and the
leader of the free world. It serves our
"bottom line" national interest in the
survival, integrity, and prosperity of our
own nation and society. It is part of the
search for a world environment in which
there is respect for the rights both of
nations and of individuals.

In the 40 years since World War II,
our security assistance effort has
evolved, has expanded, and has diversi-
fied to meet changing world conditions.
This process has been a cooperative ef-
fort between succeeding Administrations
and Congresses. The executive and
legislative branches recognized that
strong U.S. action was required to help
rebuild and rearm the democracies of
the West in the immediate aftermath of
a global conflict and under the growing
shadow of communist aggression and
subversion. In the face of an increased
Soviet threat in the postwar era and the
emergence of other challenges to world
order, there has been essential agree-
ment within our government on the
need to maintain and refine mechanisms
for aid and cooperation with friendly
countries. Over the last 5 years in par-
ticular, congressional support for the
expansion of program levels and the

legislative changes to the Foreign
Assistance and Arms Export Control
Acts have provided a basis for dealing
more effectively with current and
emerging problems.

We have been able to maintain and
expand cooperative and supportive rela-
tionships with allies and friends around
the world; to meet our commitments to
the security of Israel and to the search
for peace and stability in the volatile
Middle East; to strengthen the confi-
dence and capabilities of nations facing
aggression and insurgencies waged or
supported by the Soviet Union and its
surrogates; to help deter or contain
regional conflicts; and to encourage the
development of democratic institutions,
economic growth, and policies respon-
sive to human needs.

We have made progress. But the job
is far from completed. A spectrum of
challenges and opportunities lie before
us as we look ahead to FY 1987 and
into the next decade. The Administra-
tion's budget proposals represent the
response we must make to protect our
own vital national interests. The pro-
gram elements are specifically tailored
to these interests. And we again seek
the cooperation and support of the Con-
gress in assuring that the United States
is able to do what must be done.

The FY 1987 Request

Approximately half of our total FY 1987
security assistance request is directed to
encouraging the process toward peace in
the Middle East. The proposed U.S. pro-
grams for countries of this strategic and
unsettled area will facilitate economic
development, encourage political moder-
ation, and promote regional stability. In
particular our security assistance rela-
tionships will continue to be supportive
of our diplomatic efforts to secure a just
and comprehensive peace between Israel
and its Arab neighbors. Our programs
are tangible signs of the U.S. determina-
tion to honor its commitments and are a
vital factor in efforts to curb Soviet in-
fluence in the area and to deter aggres-
sion, subversion, and state-supported
terrorism.

A total of $5.3 billion in economic
support funds (ESF), foreign military
sales (FMS) financing, and international
military education training (IMET) pro-
gram grants is proposed toward this im-
portant goal. Three billion dollars in
"forgiven" FMS credits and grant
balance-of-payments support from the
ESF will help assure Israel's continued
military preparedness and promote the
country's economic stability. A $2.1

gust 1986

SECURITY ASSISTANCE

billion total security assistance package
for Egypt will support that country's
continuing commitment to its 1979 peace
treaty with Israel. This "forgiven" FMS
and ESF grant financing is designed to
help modernize the Egyptian military
and support needed economic reforms.

For Jordan we are proposing rela-
tively modest FMS credit and ESF lev-
els focused on sustaining current
readiness levels without major force im-
provements and on supporting ongoing
development projects. Continuing U.S.
assistance is essential to Jordan's ability
to implement its commitment to the
peace process. The remaining proposals
directly supportive of Middle East peace
will finance small-scale activities-
including humanitarian and reconstruc-
tion efforts— in war-torn Lebanon, as
well as economic and social development
efforts throughout the area under the
umbrella of the Middle East regional
fund.

Strengthening coalition defense capa-
bilities and concrete cooperative security
arrangements with allies and friends in
strategic points around the world is a
cornerstone of our foreign and defense
policies. This year's budget devotes
some $2.8 billion to this essential goal.
The largest programs under this rubric
are those with partners in the North
Atlantic alliance— Spain, Portugal,
Greece, and Turkey. These strategically
important nations are formally commit-
ted to collective security under the
North Atlantic Treaty; three a>-e par-
ticipants in NATO's integrated military
structure. Our programs enhance their
ability to contribute to the alliance's
strategy of deterrence and defense
against the threat of Soviet aggression—
a strategy which has successfully served
the cause of peace for 40 years and in
which security assistance has played a
pivotal role. In more specific terms, the
programs will provide financing for the
procurement of major U.S. weapons sys-
tems, notably including the planned
acquisition by Turkey and Greece of
F-10 aircraft and Spain's ongoing pur-
chase of F-18s.

Our programs in these four NATO
nations also reflect close and specialized
arrangements for bilateral cooperation.
They are countries in which we maintain
significant U.S. military bases and other
installations. These facilities not only
contribute to U.S. ability to help defend
Western Europe but are an essential
element in our global defense posture.

In the Pacific, our proposed pro-
grams support the equally important
base arrangements we have with the

Republic of the Philippines. The Philip-
pine nation is an old friend and ally. The
strategic, historical, and human ties that
bind us together are strong. We have
just been reminded of how real these
ties are, as we have witnessed and ad-
mired the courage of the Philippine peo-
ple and their devotion to democratic
values. The new Government of the
Philippines will need our continued help
and support as it sets out to deal with
deep-seated economic and social prob-
lems and the serious threat to internal
security and democratic institutions
posed by an entrenched communist in-
surgency.

In Djibouti, Kenya, Liberia,
Morocco, Oman, Panama, Somalia,
and Sudan, our proposed programs of
security assistance are tangible evidence
of a U.S. commitment to the integrity
and security of these countries. For
their part, these countries demonstrate
that they share with us important inter-
national security goals by making availa-
ble a range of facilities to enhance the
mobility and strategic reach of U.S.
forces. The linkage between the contri-
butions on each side may not always be
explicit, but it is real and understood.

In many areas of the world, free and
friendly nations are facing external ag-
gression, the threat of such aggression,
or externally supported insurgency or
subversion. These conditions not only
put in jeopardy the security of the indi-
vidual countries but also undermine the
security of neighboring areas. They
are a challenge to fundamental U.S.
interests.

The FY 1987 program proposals we
have submitted to the Congress will
help deter North Korean aggression
against the Republic of Korea and
strengthen Thailand's ability to deter
and counter the spread of Vietnamese
aggressive activities across the Thai
border with Cambodia. The $591 million
combined ESF, FMS, and IMET pro-
gram we are proposing for Pakistan
will support that strategically located
country in its continuing opposition to
the Soviet invasion and occupation of
Afghanistan, encourage internal eco-
nomic and political development, and
help provide the self-confidence needed
to make progress in the nuclear non-
proliferation area.

Closer to home, in Central America,
our programs are essential. El Salva-
dor's efforts to deal with an externally
supported guerrilla and terrorist threat
and to press forward with political, eco-
nomic, and social reforms to meet the
underlying causes of unrest directly de-
pend on these programs. Our programs

over the past 4 years have allowed th
Salvadorans to gain the military initio
tive and make an enormously impress
start toward building permanent dem
cratic institutions. Reducing or curtai
ing this program now would mean th<
abandonment of our considerable inve
ment in resources and some blood.
Worse, it would make a mockery of t
enormous sacrifices the Salvadorans
have made to build a future in a free
ciety. Our proposals will promote sim
economic and institutional reforms in
Honduras and sustain the ability of
both Honduras and Costa Rica to me
the threat posed by the excessive anc
expanding military forces of the San-
dinista regime in Nicaragua.

U.S. assistance plays a key role h
sustaining the self-defense capabilities
Tunisia, a voice for moderation in th'
Arab world. This friendly country fac
a continuing threat from the aggressi
policies of its neighbor, Libya. Simila:
our logistics support programs for Cr
will complement the direct combat su
port efforts of France and help strenj
en the hand and the will of the Chadi
Government against the threat of re-
newed attacks by Libyan-supported r
els. Our proposed program for the
Yemen Arab Republic will improve t
defensive posture of this buffer state
tween a Marxist and newly unstable ;
radicalized South Yemen and moderal
nations of the Red Sea littoral. It will
help balance Soviet influence in that
country and region.

In a large number of recipient coi
tries, the broad goal of our security a
sistance can be categorized as "regior
stability." The program will help thes
countries to develop a credible capabi
ty for self-defense and at the same tir
encourage the implementation of broa
reforms to address the imbalances am
injustices which breed internal unrest
and international tensions.

Among our neighbors and friends
the Caribbean, for example, our pro-
posed programs will support the demi
cratic Government of the Dominican
Republic as it pursues the difficult
austerity measures of a comprehensiV'
economic adjustment program. They v
play a similar supporting role in Jams
ca's ongoing economic reform efforts
and help sustain the Jamaica Defense
Force as a major player in Caribbean
collective security efforts. In Grenada
and the six other ministates of the eas
era Caribbean, we propose a carefully
tailored package of ESF, MAP, and
IMET that will promote development
and help these islands meet minimum

Department of State Bull'

SECURITY ASSISTANCE

«nse requirements to deter internal
I external threats.

Complementing our other programs
Central America, we are proposing
h military and economic assistance to
atemala. We recognize that the mili-
\r component is controversial. How-
r, in the light of experience in other
ntries, we believe that such assist-
e, channeled through civilian authori-
i, can do much to help consolidate
pect for democratic principles and in-
utions and contribute overall to the
bility of the region.
Our FMS programs for Indonesia
I Malaysia support the military
demization of these strategically lo-
ed countries and encourages their
tinuing roles as moderate and con-
active participants in the nonaligned
vement. Our proposed assistance to
rma and the Andean countries of
ith America will strengthen the re-
'ctive governments in their efforts
h to combat insurgencies and control
cotics production and trafficking.
Our programs in many countries of
-Saharan Africa seek to encourage
ional stability primarily through eco-
nic and social development. These
ntry-specific efforts will be comple-
ted by the Africa economic policy
jrm program which addresses struc-
al economic problems by providing

disbursing ESF funds as incentives
jrowth-oriented changes in policy,

it promotes better coordination with
er donors of aid to the continent. The
them Africa regional program in-
des economic and developmental as-
,ance to those countries which
.tribute to constructive solutions to

problems of southern Africa and as-
kance in education and other areas for
ith Africans who suffer under
irtheid.

In many countries, especially those
hin the developing world, our secu-
I assistance relationship is essentially
ited to relative small-scale activities
Jer the IMET program. This very
t-effective vehicle produces immedi-

gains in enhanced military skills and
ifessionalism in friendly participating
intries. It exposes a key segment of
eign societies to U.S. strategic think-
■ and to American political and hu-
nitarian values. Most importantly, it
ges lasting personal ties that can pro-
le access to future leaders and facili-
e a range of constructive bilateral
ations through years to come.

Security Assistance Mechanisms

At this point, I would like to discuss
briefly a few of the more important
security assistance mechanisms that al-
low us to maximize the effectiveness of
our programs in a way that does not
cause long-term economic suffering to
our security partners.

As I noted earlier, the legislative
modifications of recent years have pro-
vided us with much greater flexibility to
tailor our programs to specific country
situations and to the broad policy goals
we are pursuing. Within the funded pro-
grams, we seek, where appropriate, a
prudent and effective degree of conces-
sionality in the mix of grants and loans.
Notable among the innovations that are
being used to good effect are the "for-
given" FMS credits for Israel and
Egypt and the ability to provide a cer-
tain amount of concessional rate credit
to those countries which, to one degree
or another, can pay their own way on
major defense acquisitions but cannot
undertake the credit burden represented
by U.S. Treasury rates of interest. Ex-
perience has now shown that the conces-
sional alternative meets a genuine need,
but the availability of this type of credit
fell short of that need in FY 1986. Our
projections indicate that requirements
for concessional credit will grow rather
than diminish in the coming year, and I
strongly urge the subcommittee to give
favorable consideration to our request
for an increase in the concessional ceil-
ing for FY 1987.

We share the concern of many in
Congress that our security assistance
loans not add unduly to the significant
foreign debt burden already being sus-
tained by many of our major program
participants. It is, indeed, this concern
that lies behind our request for ex-
panded authority for concessional lend-
ing and which has influenced our higher
request levels for the grant MAP. We
are monitoring the country impact of
security assistance loans on a continuing
basis, and this impact is in the forefront
of the various considerations we take
into account in formulating country pro-
gram proposals. In addition, we are un-
dertaking a more comprehensive analy-
sis of the foreign debt and possible solu-
tions. Within the coming months, we
expect to share with you some of the in-
sights and conclusions that emerge from
this effort.

It is clear both to us and our foreign
partners that the special defense acqui-
sition fund (SDAF) is becoming an effec-
tive mechanism for providing timely

support of valid defense requirements.
As SDAF items are now beginning to
come off the production line, we are
able to shorten delivery lead time and
introduce a real revolving aspect into
SDAF. To ensure that this trend con-
tinues, we need most of all a 2-year ob-
ligational authority so that we may
better synchronize SDAF procurements
with those of our military departments.
In addition we are requesting $350 mil-
lion in obligation authority for FY 1987,
a level that can be supported with the
capital and receipts from SDAF sales—
without appropriations.

At the outset of these remarks I
cited with satisfaction the constructive
interaction of the Administration and
Congress on the last 5 years' security
assistance agenda and the resulting ex-
pansion and improvements in the pro-
gram. This characterization is an accu-
rate one in terms of the overall picture
and the prevailing trend line. I must,
however, underscore with equal frank-
ness that the FY 1986 legislation pro-
duced serious shortfalls in funding for
many of our major programs.

Earmarking, ceilings, and restrictive
provisos further complicate the problem
posed by program reductions. While
each of these has its persuasive ration-
ale, and often responds to genuine con-
cerns which the Administration shares
with the Congress, the cumulative effect
is a marked increase in the legal and
systemic rigidities to be faced in making
the difficult but necessary tradeoffs of
competing demands, in responding to
unforeseen needs, and in capitalizing on
short-lived opportunities.

If we are to continue to utilize secu-
rity assistance as a highly effective tool
of U.S. foreign and defense policies— and
it is imperative that we do— we must
not only have adequate resources but a
legislative mandate that is sufficiently
flexible to allow efficient management of
these resources to meet policy imper-
atives.

Our security assistance program for
FY 1987 was developed in full recogni-
tion of the funding constraints that face
us all. But, it is a strong and assertive
U.S. response to the serious and com-
plex needs that must be addressed; we
cannot walk away from our responsibili-
ties. Like the defense budget, security
assistance is an investment in the pres-
ervation of the freedoms and well-being
of our nation and people. It encourages
and makes possible other countries' con-
tributions of human and material re-
sources to complement U.S. efforts in
the pursuit of shared goals.

igust 1986

UNITED NATIONS

The problems and threats that secu-
rity assistance addresses are real and
cannot be ignored. We must build on
past successes and be prepared to meet
upcoming challenges. Failure to move
ahead steadily means losing ground and
would have serious consequences. I
strongly urge the support of this sub-

committee, as well as that of your col-
leagues in the Congress, for our pro-
gram proposals.

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

FY 1987 Assistance Requests
for Organizations and Programs

by Alan L. Keyes

Statements before the Subcommittee
on Commerce, Justice, State, and
Judiciary of the House Appropriations
Committee on March 13, 1986, and be-
fore the Subcommittee on Foreign Oper-
ations of the Senate Appropriations
Committee on May 15, 1986. Ambas-
sador Keyes is Assistant Secretary for
International Organization Affairs.1

STATEMENTS BEFORE

SUBCOMMITTEE ON

COMMERCE, JUSTICE, STATE,

AND JUDICIARY,
MAR. 13, 1986

It is a pleasure to appear before you
today in support of our FY 1987 request
of $432,930,000 for contributions to
international organizations. As this is
my first appearance before this subcom-
mittee, I would like to discuss the goals
and objectives I will pursue regarding
U.S. participation in the multilateral
arena.

The progress we have made over
the past 4 years in halting the decline of
U.S. influence in the United Nations
gives us the opportunity to achieve
more if we take the United Nations
seriously in our foreign policy delibera-
tions. Taking the United Nations seri-
ously means asking how it can realize
its original goals and principles; how it
can be more useful to the United States
and to the peoples around the globe it
was founded to serve. One answer is
that from a U.S. perspective, I believe
the UN system offers potentially useful
fora for explaining and promoting U.S.
principles, values, and policies, both
bilateral and multilateral. We must
emphasize the essential political issues
of terrorism, regional conflicts, human
rights, and arms control, as well as
international economic policy and the

proper role of the United Nations in
development.

We must create in the United
Nations and in other international
organizations a political environment
that is conducive to the pursuit of well-
articulated and carefully defined U.S.
foreign policy goals and objectives. An
element in pursuing our objectives is
the formation of a reasonable coalition of
support in the different fora of the
United Nations and its specialized agen-
cies. This is necessary because the polit-
ical system at the United Nations
functions as a system of blocs. These
blocs control the political dynamics of
the United Nations and are key to the
diverse activities throughout the entire
system. While the United States basic-
ally finds itself outside of the UN sys-
tem of organized and informal "blocs,"
we can, nonetheless, achieve specific po-
litical and economic/social objectives
which we have defined and articulated
clearly. We must stress values and aspi-
rations shared by Americans and the
peoples of the Third World, though not
always promoted or respected by their
governments.

Our approach to the UN system
recognizes the clear and compelling need
for institutional reform since structural
and procedural changes within interna-
tional organizations shape substantive
policies and programs. Thus reforms in
administrative and decisionmaking
procedures, particularly those affecting
budgets and programs, could lead inter-
national organizations into choosing
more responsible behavior and pro-
grams. Conditions today give us a
unique opportunity for reformulating
UN system decisionmaking procedures
in significant ways.

Congressional action has helped us
in our reform efforts. We view Section
143 of PL 99-93, the Kassebaum amend-
ment, as an opportunity to achieve re-
forms to renew the efficiency and

effectiveness of the UN agencies. Sue
reform efforts have been of interest t
other member states as well. The Kas
baum amendment was enacted becaus
Congress believes the United Nations
and its specialized agencies have not
paid sufficient attention in the develo]
ment of their programs and budgets t
the views of the major financial con-
tributors to those budgets. I share
this view.

Our efforts for implementing the
Kassebaum amendment focused on th
United Nations in the General Assem
bly. We had hoped that actions taken
the last session of the General Assem
would have provided sufficient grounc
on which the Administration could jus
tify seeking from the Congress a dela
in implementation of the Kassebaum
amendment. This was not the case. T
General Assembly did call, however, 1
the establishment of a group of high-
level intergovernmental experts to id*
tify measures for improving the admi:
trative and financial functioning of th<
United Nations. Demonstrating the
seriousness of our interest in the groi
of experts, we nominated, and the Pr
dent of the General Assembly appoint
former Ambassador Jose Sorzano to
serve as the U.S. member of the groi
We are fully supporting Ambassador
Sorzano's active participation in the
group. The group includes a number <
impressive individuals and appears to
off to a good start. We expect the grc
to explore many possibilities, some of
which could result in compelling recor
mendations to the 41st General
Assembly.

As you are aware, the Gramm-
Rudman-Hollings legislation required
that we sustain an appropriation redu
tion for FY 1986 of 4.3%. We are not
able to allocate the sequestration
against each organization in the accou
since some agencies have been paid in
full and others have outstanding
balances of less than 4.3%. We have
submitted a reprogramming request t<
the Congress reflecting this fact but a
our desire to differentiate among ager
cies according to their responsiveness
U.S. interests. Therefore, our
reprogramming request provides for
reprogramming the reductions in threi
broad categories. Most organizations ii
the appropriation are subject to the fu
4.3% sequestration. However, we hav«
reduced the impact of the reductions f
those organizations most responsive tc
U.S. interests and increased the impac
for those organizations least responsiv

Department of State Bullei1

UNITED NATIONS

rhe imposed austerity of the present
)d requires tough decisions. The
ed Nations is not immune from this
erity. These decisions represent an
irtunity to achieve the important re-
is needed to renew the effectiveness
ie United Nations and its specialized
icies. We want to cooperate with the
ership of the organizations, to strive
mproved efficiency, and delivery of
Its. It would be counterproductive
.he organizations to wring their
Is and look for a bailout rather than
ig the decisions the times require,
basis exists for a leaner, more effi-
; UN system, revitalized to face the
.enges of the future. The question is
ther the United Nations will let this
irtunity slip by.

.Ve see this situation as providing
>r donors with the leverage they
1 to press forcefully for program and
fet reforms. We will seek greater
ir influence at key points in the
sionmaking process and will enlist
Assistance of other major donor na-
i to help us in this effort. We shall
insist that every stage of the pro-
1 and budget process be made more
sparent to member nations since the
ability of this information is crucial
ie exercise of donor influence. Cur-
ly in the United Nations and most
r international organizations, the im-
tions of program cost are not taken
into account since programs and
^ets are rarely considered in the
i context. If we change the program
sionmaking procedure so that costs
Laken into account in the process of
ing priorities and selecting pro-
as, we can force organizations to
■se between competing priorities,
will point out to member states that
in their self-interest that the alloca-
of limited resources satisfy priori-
ithat will produce material benefits
;hem.

I will turn now to the specifics of
FY 1987 request. As you know,
, assessed contributions may be
iped into four general categories:

;ed Nations and
"filiated Agencies
r-American

■ganizations
ional Organizations
sr International
fcganizations

Total

$298,151,000

89,106,000
37,376,000

8,297,000
$432,930,000

Our budget request of $432,930,000
FY 1987 represents a net decrease
[5%, or $30.1 million below the FY
i appropriation. The $30.1 million net

decrease results from increases totaling
$53 million, offset by decreases amount-
ing to $83.1 million.

The $298.1 million request for the
United Nations and affiliated agencies
amounts to a net decrease of $49 million
from FY 1986. This is a result of in-
creases totaling $30.9 million, offset by
$79.9 million largely attributable to the
$79.1 million reduction pursuant to Sec-
tion 143 of PL 99-93. Increases are the
product of inflation and limited program
growth in the budgets of the United
Nations and other agencies.

The 1987 request for the inter-
American organizations represents a net
increase of $21.8 million primarily at-
tributable to the fact that the FY 1986
appropriation funded only three-quarters
of our requirements for the Inter-
American Institute for Cooperation on
Agriculture, the Organization of Ameri-
can States, and the Pan American
Health Organization.

For the regional and other organiza-
tions, the FY 1987 request is $45.7 mil-
lion, which represents a net decrease of
$2.9 million from FY 1986. The decrease
is largely attributable to exchange rate
shortfalls in those organizations where
the United States pays its assessment in
a foreign currency.

I appreciate this opportunity to appear
before you in support of our request of
$6,391,000 for the international confer-
ences and contingencies appropriation.

This appropriation funds official U.S.
participation in multilateral intergovern-
mental conferences, contributions for the
U.S. share of expenses of new or provi-
sional international organizations, and
participation of U.S. congressional
groups in interparliamentary unions.
The FY 1987 request is for '$6,391,000 in
new budget authority. The program lev-
el of $7,743,000 is partially financed by
the $1,352,000 unobligated balance car-
ried forward from 1986. The program
level consists of $6,951,000 for confer-
ence participation, $552,000 for contribu-
tions, and $240,000 for the participation
of U.S. congressional groups in inter-
parliamentary unions. Included in our
request for conference participation is
$1,650,000 for continued participation in
the mutual and balanced force reduc-
tions (MBFR) negotiations.

The FY 1987 request reflects a net
increase of $391,000 over the FY 1986
appropriation. The net increase is the
result of a decrease in the amount of
money available from prior years, price
increases, and a reduction in travel costs
for FY 1987.

It is a pleasure to appear before you
today in support of our request totaling
$53,900,000 for contributions for interna-
tional peacekeeping activities.

As you know, the appropriation for
contributions for international peace-
keeping activities provides funding for
the UN peacekeeping forces on the Go-
lan Heights and in southern Lebanon.
The UN Disengagement Observer Force
(UNDOF), established in 1974, monitors
the disengagement agreement on the
Golan Heights. UNIFIL, the UN In-
terim Force in Lebanon, was established
in 1978. Its consistent objective has
been to aid, where possible, in restoring
the authority of the Lebanese Govern-
ment in southern Lebanon. Its objec-
tive, shared with others and consistent
with U.S. policy generally, is to stabilize
conditions in that troubled area. In
recognition of the collective financial
responsibility of all members for the
maintenance of peace and security, the
expenses of these forces are apportioned
by the UN General Assembly in accord-
ance with Article 17(2) of the Charter.
Our FY 1987 request of $53,900,000 will
enable us to meet our assessed contribu-
tions to support these forces.

STATEMENTS BEFORE

SUBCOMMITTEE ON

FOREIGN OPERATIONS,
MAY 15, 1986

It is a pleasure to present the Presi-
dent's FY 1987 budget request of
$186 million for the international organi-
zations and programs account. This
request will fund U.S. voluntary contri-
butions to development, humanitarian,
and scientific assistance programs of the
United Nations and the Organization of
American States.

Before addressing the specifics of
our request, I wish to comment in
general on it and some of the key differ-
ences between the FY 1987 request and
previous requests.

First, the total request level for FY
1987 is markedly below the amount ap-
propriated for FY 1986, and even less
than the amount requested for FY 1985.
This reflects both the overall budget
constraints which the Administration
and the Congress recognize must be ob-
served and, in view of these constraints,
a realistic assessment of what can be
achieved by the programs and activities
funded through this account.

At a time when the Administration
and the Congress are living with

just 1986

UNITED NATIONS

Gramm-Rudman-Hollings, we must seek
only the minimum essential require-
ments to support multilateral foreign
policy objectives. The U.S. contributions
to these organizations must be consid-
ered in relation to all other claims on
the Federal budget. When domestic pro-
grams are subject to severe and un-
avoidable budgetary stringencies, we
cannot ask to exempt multilateral for-
eign assistance programs.

The multilateral organizations cov-
ered by this account have programs of
technical assistance which are ad-
ministered through governments. While
these programs are not central to the
development effort, they can play an im-
portant catalytic role— and this is the
way they can be most effective. We
must be realistic about what the pro-
grams and activities funded through this
account can achieve.

Working within the severe budget-
ary constraints we face, and understand-
ing the important but limited roles these
programs play, forced us to make some
hard choices. No longer could we con-
tinue business as usual; with the
reduced resources available, we had to
rethink our priorities. We had to recog-
nize and tailor our request to the fact
that some programs in this account
more directly serve specific U.S.
interests than others. We have dis-
tributed the reduction in the account to
maintain funding levels for those pro-
grams directly serving specific U.S. in-
terests while still maintaining an
appropriate U.S. leadership role in the
other important programs.

Given the severe austerity we face,
this is not a time for wringing our
hands. Rather it provides us with an op-
portunity to consider programs in the
light of these resource constraints. The
result is a request that seeks to define
clearly what constitutes our interests
and to determine how well those in-
terests are served.

Having set forth our overall con-
cerns, I would now like to focus on the
individual programs within the account.

The largest item in the account is a
$102.5 million request for the UN De-
velopment Program (UNDP). Although
it remains the largest, the amount
represents the lowest request for
UNDP since FY 1977. Why is the re-
quest so low when a central and long-
standing U.S. policy has been to
strengthen the UNDP as the primary
source of funding and overall coordina-
tor for technical cooperation activities
conducted by UN system agencies and
programs? There are two reasons.

First, the requested level of support
reflects current fiscal reality and the
size of the UNDP item in the account
means it has to bear the brunt of the
cuts required. Second, in the face of fis-
cal reality, we have had to fund activi-
ties which most directly serve U.S.
interests. While UNDP continues to be
important, it tends to serve only general
U.S. interests.

The second largest item in our
request is $34.2 million for the UN
Children's Fund (UNICEF). We have
increased this item over our FY 1986
request. This increase acknowledges
that UNICEF's approaches have gener-
ally been consistent with U.S. develop-
ment assistance priorities and that
UNICEF complements and reinforces
U.S. bilateral assistance. Therefore,
we believe UNICEF is deserving of a
larger allocation.

The third largest item in our request
is $20.5 million for the International
Atomic Energy Agency (IAEA). This
request level is the same as in FY 1986
and 1985. U.S. interests in nuclear non-
proliferation are directly served by the
IAEA's worldwide safeguards program.
U.S. voluntary contributions to
safeguards will help the IAEA improve
existing safeguard techniques.
Assistance to the IAEA technical
cooperation program will be in the form
of equipment, U.S. expert services, fel-
lowships, and training courses. Our
assistance to both the safeguards and
technical cooperation programs directly
strengthens the commitment of develop-
ing countries to our nonproliferation
goals. Direct support in the form of
technical cooperation for those countries
that are signatories to the Nonprolifera-
tion Treaty is funded through this
account.

U.S. policy seeks to preserve and
strengthen the effectiveness of the
Organization of American States
(OAS) as a forum for dealing with issues
important in this hemisphere. OAS
members look to the United States for
support in what they consider to be
their primary concern— technical as-
sistance for development. Although our
request of $13.95 million represents a
10% decrease from our FY 1986 re-
quest, we believe it demonstrates the
continued U.S. commitment to the inter-
American system and will influence the
level of support which the United States
can expect from other OAS members on
issues of concern to us, including respect
for human rights and preservation of an
environment conducive to fair trade and
private investment.

Our request for $6.8 million for tl
UN Environment Program (UNEP)

more than doubles our FY 1986 requ
The increase recognizes that UNEP's
activities parallel U.S. interests and,
therefore, complement and aid U.S. t
vironmental efforts. This does not m(
that we are wholly satisified with oui
relations with UNEP. We continue to
have major problems placing Americ:
in key positions in the UNEP Secret
at, and we are working hard to impri
that situation. But we recognize that
UNEP's multilateral program promo
cooperation in regional problems, sue
as marine pollution and desertificatio
and its global mandate enables it to
address issues, such as carbon dioxid
buildup and ozone depletion. We beli
that a contribution of $6.8 million,
representing about 24% of their antic
pated income, reaffirms strong U.S. :
port for UNEP while at the same tir
clearly indicating that we believe it i
time for other nations to begin con-
tributing a greater share toward UN
programs.

The request for $2.3 million for 1 1
ternational Convention and Scienti
Organization Contributions (ICSO(
is related to the U.S. withdrawal fro
UNESCO. With the U.S. withdrawal
the United States no longer contribu
its share of costs for some specific
activities supported directly by
UNESCO which significantly benefit
U.S. domestic interests. The prograrr
proposed for funding under the rubri
International Convention and Scienti]
Organization Contributions, protect t
more important, direct benefits to
American scientific, educational,
cultural, and business communities
formerly derived through U.S. memb
ship in UNESCO. ICSOC will financ.
continued U.S. participation in critics
UNESCO activities such as the Univ
sal Copyright Convention, the Intergov
mental Oceanographic Commission, a
the Man and the Biosphere program.

The World Meteorological Orgai
zation's (WMO) voluntary cooperatic
program enhances the capacity of de-
veloping countries to participate in tl
World Weather Watch. The participa
tion of the developing countries direc
benefits the United States because it
enables the United States to obtain
otherwise unavailable data that is nei
sary for our national weather forecas
ing requirements. To assist in fundinj
this program, we are seeking $2 milli
for FY 1987.

The UN Capital Development Fi
provides seed capital, on a grant basi
for small development projects requii

Department of State Bull*

WESTERN HEMISPHERE

low- to moderate-level technology,
luse of their size, these projects
it not attract financing by multi-
al development banks. Our request
..8 million will enable the fund to
inue to assist in projects financed
ly with bilateral agencies and other
ilateral institutions,
rhe UN Educational and Training
jram for Southern Africa is
med to provide students from South
:a and Namibia with education and
ling opportunities denied them in

• own countries. The objective is to
ile these young people to play a full
in their societies as they become
pendent or as majority rule is
jved and to demonstrate our confi-
dent to the process of peaceful tran-
n in southern Africa. We are
esting $900,000 for this program.
Although it is not a new item, the
Development Fund for Women
IFEM) has a new name. Formerly
ed the UN Voluntary Fund for the
ide for Women, UNIFEM provides
icing for the activities of the decade

• its conclusion in 1985. UNIFEM is
a separate, identifiable entity in au-
mous association with the UNDP,
contribution of $450,000 will supply
;al financial support to enable
FEM to integrate itself into the
stream of development activities,
naintain its autonomous purpose
identity. We are working with the

to strengthen its budgetary prac-
and management to assure that

2 monies will be used effectively.
i)ur $300,000 request to help fund
JN Industrial Development Or-
zation (UNIDO) investment pro-
on service office in New York
psents a 50% increase over our FY

request. We have requested this
pase because promotion of private
pr development is a major U.S. pri-
l' both in international organization
rs and in development assistance,
believe this increase is essential be-
e the Congress totally eliminated
important activity from the FY

appropriation. UNIDO's invest-
t promotion service represents the
rest recognition within the UN sys-
k)f the importance of private invest-
t capital in the development
ess. The program stimulates the pri-

sector in developing countries with
-alytic impact upon their domestic
omies. The New York office pro-

3 a significant service to the U.S.
ite sector by providing information
westment opportunities in develop-
lountries, which leads to increased

markets for U.S. goods and services. It
also directly benefits the U.S. private
sector by assisting representatives from
developing countries to establish con-
tacts in U.S. industry. I note that only
the United States among the seven
countries which host similar investment
promotion offices does not fully fund
those entities. Furthermore following
UNIDO's conversion to specialized
agency status on January 1, 1986, we
are anxious to encourage opportunities
for the private sector to participate in
UNIDO activities.

In 1987 the Convention on Interna-
tional Trade in Endangered Species
(CITES) will continue its role as a
major contributor to international con-
servation and the primary international
mechanism governing international trade
in wildlife. CITES will continue work on

major projects such as the investigation
of legal and illegal trade in key species.
Our request includes $200,000 for CITES.

Although the UN Voluntary Fund
for Victims of Torture is not new to
this account, this is the first time that
the Administration has sought funding
for it. The Board of Trustees expects
1986 to be the year when the fund
comes fully of age and 1987 to be the
year when the fund expands its activi-
ties from its present purely medical con-
centration to include some social
services to victims of torture and their
families. A U.S. contribution of $100,000
is requested for this worthy project.

'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. ■

A Democratic Vision of Security

by Elliott Abrams

Address before the Inter-American
Defense College on June 13, 1986. Mr.
Abrams is Assistant Secretary for Inter-
American Affairs.

Thank you for inviting me to address
this 25th commencement of this institu-
tion, which has rendered outstanding
service in support of military profession-
alism and inter-American cooperation.

The New Era of Democracy

We live in an extraordinary period.
Democracy is on the rise in our
hemisphere. It is transforming political
and social conditions. The stereotype of
the Americas as a hemisphere of mili-
tary dictatorships is obsolete.

The democratic tide is very strong.
Ten years ago, only 30% of Latin
Americans lived in countries whose
governments were democratic; today,
90% live in countries whose govern-
ments honor democratic practices. Nor
is this change the result of exhortations
from the United States. It is the
product of a uniquely Latin American
experience. The past 40 years of eco-
nomic and political ups and downs have
given new force to aspirations for free-
dom, development, and national dignity.
Latin America finally has a real oppor-
tunity to escape the classic cycle of un-
stable alternation between civilian

governments that lack the authority to
govern and military governments that
lack the legitimacy to last.

This historic development has far-
reaching implications, and we must all
adapt to its new realities. For the
United States, we welcome the trend to
democratic government. We see in it a
basis for both greater security and
greater well-being. And we believe that
democracy can both cause improved
cooperation among our governments and
be strengthened by cooperation among
us. We are, therefore, adapting our ac-
tions and our programs to support
democratic forces and institutions
whenever we are in a position to do so.

Democracy and the Military

For those of you who will now return to
places of leadership in the military serv-
ices of Latin America, there will be ad-
justments, too. Gone are the days when
the coup d'etat was an option that could
be exercised without local or interna-
tional costs by military leaders arrogat-
ing to themselves the right to decide for
their nation.

Your generation must be a genera-
tion of pioneers. You are now the guard-
ians of the new democracies. Your
highest calling must be not to replace
failed regimes but to protect successful
democracies. You must succeed in the
task of forging a new vision of security
in which democracy is the cornerstone,

ust 1986

WESTERN HEMISPHERE

not a luxury; where free and open politi-
cal competition is an ally, not an impedi-
ment to peace and development.

Your success or your failure will
matter to all of us. No institutions are
more important to the protection of
democracy than the ones you represent
as officers from the armed forces of 16
different countries of the Americas.

Dangers

There are many dangers to security in
the hemisphere today. The emergence of
illegal drug production and trafficking
on a massive scale is rapidly becoming a
regionwide menace. The narcotrafi-
cantes threaten public order through
corruption and violence even when they
are not explicitly tied to terrorists and
other subversives with political objec-
tives. And their growing power and the

corruption it breeds endangers not only
civilian institutions but yours. You and
your fellow military officers must guard
your institution against this cancer. You
must be relentless in fighting the
traffickers: your institutions, your
honor, and the freedom of your societies
are at stake.

Another danger is the use of
democracy as a screen behind which to
protect privilege and the power of
minorities. The parading of democratic
forms without their substance can take
many guises. Elections might be held,
but, without genuine competition, the
results are a foregone conclusion. As-
semblies and legislatures might meet
but have no real power. Constitutions
might be written but never be
respected.

In 1974 the Catholic bishops of
Nicaragua gave a name to this kind of

WHITE HOUSE STATEMENT,
MAY 22, 19861

The United States has followed closely
the recent negotiations among the five
Central American governments to
resolve the conflict in that region. We
note that at the meeting in Panama on
May 16-18, the Governments of Guate-
mala and Costa Rica, with the support
of the Governments of El Salvador and
Honduras, offered constructive proposals
for resolving important security issues.
We also note that representatives of the
Government of Nicaragua stated their
strong opposition to the positions
presented by the four democratic coun-
tries of Central America.

The position of the United States
has remained constant toward the
negotiations arranged through the good
offices of the Contadora group as well
as other efforts to promote a negotiated
solution in Central America. It is an
objective of U.S. policy in Central
America to seek the resolution of
regional disputes and conflicts through
dialogue and the achievement through
negotiations of political settlements with
verifiable agreements. Philip C. Habib,
the President's special envoy for Cen-
tral America, has been working to
achieve this objective through his con-
sultations with the countries involved.

The objectives of the United States
in Nicaragua remain as follows:

(1) Implementation of the democratic
commitments made by the Sandinista
movement to the Organization of Ameri-
can States in 1979;

(2) Termination of Nicaragua's sup-
port to Marxist/Leninist subversion and
guerrilla activity in any foreign country;

(3) Removal of Soviet bloc and
Cuban military and security personnel
and an end to Nicaraguan military
cooperation with communist countries;

(4) Reduction of the Sandinista mili-
tary apparatus to a level which would
restore military equilibrium in Central
America.

These four objectives are equal in
importance. The implementation of the
21 objectives agreed to by the five Cen-
tral American countries in September
1983 would achieve these four objec-
tives. The United States would support
a treaty which would achieve all 21
points in a comprehensive settlement in
which all political and security commit-
ments are simultaneously implemented,
with concrete verification procedures to
ensure compliance by all five parties.
The United States would not consider it-
self bound to support an agreement
which failed to achieve in a verifiable
manner all the agreed objectives of the
Contadora Document of Objectives.

'Text from Weekly Compilation of
Presidential Documents of May 26, 1986.

abuse. When Anastasio Somoza mani
lated the constitution and the laws ol
Nicaragua to guarantee his reelectior
the bishops called his actions a form
"legal war." When the law is used t(
oppress, the abuse serves only the ei
mies of democracy.

In Nicaragua, the natural inherit*
are the Marxist-Leninists. Today, th<
Sandinistas cynically repeat the char
they clothe their new dictatorship in
elections, draft constitutions, and oth
ostensibly democratic trappings whili
moving steadily toward totalitarianis
But there are also major differences
with the past: their repression is wo:
and more pervasive. As communists,
Sandinistas seek not merely dictator:
power but the complete remaking of
social order. Their ideology is also e)
pansionist, and they operate as an in
strument of Soviet power. This creat
new dangers for the hemisphere.

One of these dangers is terrorisn
and subversion. The guerrillas in El j
Salvador and their Nicaraguan and
Cuban sponsors have abandoned poli I
for armed struggle. They and others I
them believe their swords will prove
mightier than the pens wielded by tl '
voters. Together, we can prove their I
wrong. We can use the pen to craft 1
and practices that will eliminate the
grounds on which they attack us. An
we must stop with the sword those \
do attack with the sword.

And as we respond, we must be
careful not to fall into the trap of nen
extremisms, whether of the left or tl |
right. Overreaction will only discredit
us. We must guard against fighting t|
enemy indiscriminately with an excesl
of zeal or an excess of force. To lose I
sight of the values we defend is to h<
our enemies.

Still other dangers to democracy
come from irresponsibility and impa-
tience. Economic growth and respons
democratic government are not easy,
takes time to produce economic grow
that will benefit the society as a who I
It takes time for democracy to establ|
its roots and for all citizens to under-1
stand the benefits that will accrue frd
supporting and participating in the
democratic system. And it takes timel
develop the solidarity necessary to ei|
sure long-term international cooperat:
and mutual assistance among democr.

So your duty is to be patient, to
help preserve public order as request
by constitutional authorities, and to al
minister your own institutions so as tl
contribute to citizen confidence in the
fairness and effectiveness of public ac
ministration. We in the United States'

Department of State Bui

WESTERN HEMISPHERE

! a similar duty: we must remind
lelves that complicated development
security problems require long-term
tions that do not come overnight,
must be persistent,
rhere is one final danger I want to
ition. It is the vulnerability created
Jistrust and even contempt among
military toward civilians and among
ians toward you. A democratic
tegy of national security requires
overcoming of traditional antimili-
and anticivilian attitudes. Too
n civilians and military travel in
irent circles and lack extensive
s-communication and awareness of
1 other's concerns. The supremacy of
ititutional authorities must be accom-
ed by mutual trust and close cooper-
ti. A stable democratic system
lires increased contact and communi-
on within the nation as well as with
| democracies.

ponding to These Challenges

United States and Latin America
e a common interest in the defense
emocracy. The Inter-American
ity of Reciprocal Assistance affirms
manifest truth that ". . .peace is
inded on . . . the international recogni-
and protection of human rights . . .
on the effectiveness of democracy
;he international realization of
ice and security."
But while we have a common pur-
!, the requirements of national secu-
differ from state to state. We in the
;ed States must, above all, meet the
at of Soviet military power to global
:e and development. You in Latin
;rica also face external enemies, but
' are often enemies who fight you
1 within, using communist subver-
I terrorism, or narcotics production
trafficking.

How you respond to the immediate
direct threats of drugs, terrorism,
subversion will determine the fu-
i of your institutions and the sur-
.1 of democracy for your generation,
act, the success of democracy, the
mse of the nation's honor, stability,
economic progress will, in large
sure, depend on your ability to deal
l these particular dimensions of secu-
. Your skill will be measured by
r contributions to saving your coun-
nen from these threats.
These are awesome challenges. They
require great professionalism. And
., in turn, will require new equip-
it, better intelligence, and the train-
and education to use both effec-
ly. Military training must be as high

a priority for you as it is for us. I hope
you will all pass on to your fellow
officers at home as much as possible of
the knowledge you have gained while
you have been in Washington.

In strengthening military institu-
tions, we must take care not to create
new threats to democratic rule. By
necessity, your role becomes a large one
when you are called upon to fight guer-
rillas, terrorists, and drug traffickers.
These tasks require sizable forces with
substantial resources. But the very en-
largement of military forces to protect
democratic institutions can threaten
those very institutions when the mili-
tary dwarfs civilian institutions and as-
sumes some of their functions.

This paradox poses a danger that we
must all guard against. It is a danger
that has been averted in Honduras and
El Salvador. In both these countries,
major threats to democracy forced an
expansion of military size, power, and
capabilities. Yet, in both cases, military
expansion has not led to an erosion of
civilian authority. In both countries, the

rule of law, respect for institutionalism,
effective civil-military coordination, and
the capacity for international coopera-
tion have been strengthened.

Events in Central America have
demonstrated that, just as democracy
must be defended, so also must dictator-
ship, injustice, or intolerance be un-
hesitatingly opposed. Abusers of human
rights cannot claim that they are acting
in the name of "democracy." Their ac-
tions only help the violent and totali-
tarian left, the true enemies of
democracy. Their values are not our
values. Their means leave us less
secure.

Political authorities have a special
obligation, too. It is to fight subversion
by attacking the conditions that give the
enemies of democracy a fertile environ-
ment in which to gain adherents. We
must not allow the communists to be
the only party that approaches poor
campesinos with a message of concern
and respect. Neglect must be replaced
with policies that extend the benefits of
democracy to all citizens.

Pan

986

PROCLAMATION 5459,
APR. 14, 19861

The peoples of the Western Hemisphere are
bound together by a shared belief in peace,
prosperity, justice, and freedom.

The Organization of American States is
the embodiment of that common commitment
to these basic principles through its Charter
and the Rio Treaty. As one of the oldest
international organizations in existence, the
OAS has worked vigorously to broaden
peaceful exchanges between the peoples it
represents and the world community; to
reduce the tensions and conflicts arising
within the Hemisphere; and to stoutly resist
aggressive threats from outside. The record
of the OAS in the peaceful settlement of dis-
putes, the promotion of democratic values,
and the protection of human rights has
earned worldwide respect and admiration.

The Charter of the OAS clearly expresses
the belief of the peoples of the region in the
effective exercise of representative democ-
racy. There are currently more democratic
states in this Hemisphere than at any other
time in history, an eloquent witness to the
solid progress in this area.

Recently, the OAS began an effort to
revitalize the inter-American system, to en-
hance its peacekeeping role, to strengthen its
dedication to human rights, and to increase
its effectiveness in improving living condi-
tions for all who dwell in this Hemisphere.

On this Pan American Day of 1986, the
people of the United States extend a warm
and friendly greeting to all our neighbors in
the Americas. We reaffirm our active support
for the Organization of American States and
the goal of Hemispheric amity and solidarity.
We renew our solemn commitment to those
principles to which the members of the OAS
wholeheartedly pledged themselves at the
December 1985 General Assembly in Car-
tagena.

Now, Therefore, I, Ronald Reagan,
President of the United States of America,
do hereby proclaim Monday, April 14, 1986,
as Pan American Day, and the week begin-
ning April 13, 1986, as Pan American Week.
I urge the Governors of the fifty States, and
the Governor of the Commonwealth of Puerto
Rico, and officials of other areas under the
flag of the United States of America to honor
these observances with appropriate activities
and ceremonies.

In Witness Whereof, I have hereunto set

my hand this fourteenth day of April, 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
Presidential Documents of Apr. 21, 1986.

ust 1986

WESTERN HEMISPHERE

In this sense, the rise of democracy
in the hemisphere satisfies the impera-
tives of a comprehensive security policy.
We will find security in the construction
of open, inclusive, and democratic politi-
cal orders.

Conclusion: A New Vocation

So, this is a historic moment, a moment
that calls for new roles, based in a new
democratic vocation. It is a moment that
you can seize by acting in the best tra-
ditions of your institutions— and, in do-
ing so, preserve your integrity, serve
the people, and protect their freedom.

Twenty-five years ago, when the
Alliance for Progress was first launched,
the entire hemisphere seemed to dis-
cover that there could be no long-term
security without economic development.
Today, we are learning a new lesson: in
addition to the nexus between security
and development, there is a second
nexus— this one between security and
democracy.

And the essence of our democratic
vision of security is this: there is no con-
tradiction between our Western values
and our strategic interests. They are es-
sential to each other. This applies
equally to makers of foreign policy and
to men in uniform; to the United States
and to any nation in Latin America. We
are only able to defend democracy, and
we are only worthy of defending it,
when we respect and honor its basic
principles: the dignity of the individual
and the protection of his God-given
rights. By joining ranks in the struggle
for democracy, we will put ourselves
and our people in a position to achieve
the hemisphere's highest aspirations. ■

Visit of Honduran President Azcona

President Jose Simon Azcona Hoyo
of the Republic of Honduras made an
official working visit to Washington,
D.C., May 26-29, 1986, to meet with
President Reagan and other government
officials.

Following are remarks made by the
two Presidents after their meeting on
May 27 and the text of a joint
communique.1

REMARKS,
MAY 27, 1986

President Reagan

It's been my honor to welcome to
Washington and to confer with Presi-
dent Azcona of Honduras. And we've
had extremely useful discussions today.
We both expressed our appreciation for
the positive and solid relationship that
our two countries enjoy. We reviewed
recent developments in Central Amer-
ica, including the summit meeting this
past weekend.

President Azcona and I are in full
agreement on the necessity of working
for greater economic growth in Central

America and the importance of
democratic institutions to the cause o
peace in the region. I reaffirmed the
commitment of the United States to
cooperate closely with Honduras, botl
in helping to build its economy and ir
bolstering its democracy. I expressed
President Azcona my personal thanks
and that of the American people for I
government's responsible stand on
regional issues.

Our two governments share a seri
ous concern over the threat to peace,
stability, and freedom posed by the c<
munist regime in Nicaragua. The
Nicaraguan communists, with extensr
Soviet and Cuban support, persist in
repressing their own population and i:
backing the subversion of their demo-
cratic neighbors. This endangers all o:
Latin America and ultimately the
United States as well.

In this regard, I underscored to ti
President our promise to stand by
Honduras in defense of its national
sovereignty and territorial integrity,
is in accordance with our reciprocal ir
ternational rights and obligations. A
joint communique will be issued todaj
reiterating this mutual commitment, .

Department of State Built

WESTERN HEMISPHERE

ident Azcona and I agree that our
(tries and the other democracies in
region must act together to end the
lict that plagues Central America,
it's not just up to us.
Securing regional peace will require
nd to communist aggression as well
ational reconciliation and democrati-
>n within Nicaragua. Honduras has
1 diligent and persistent in its pur-
of a comprehensive and verifiable
tion within the framework of the
tadora negotiations, and, Mr. Presi-
I, you have our support in these
•ts.

rhe United States continues to be-
s that a realistic and enforceable
ement, based on the full implemen-
m of the Contadora Document of
dives, is one way to bring peace to
tral America.

\nd finally, it was a great personal
Sure to meet President Azcona. I
forward to continuing our work in
same spirit of friendship and respect
was so evident in our meeting
y.

iident Azcona2

is been a great pleasure to talk
President Reagan. I believe that
e exchanges of views, held in a cli-
i of great cordiality and frankness,
always beneficial, because they lead
reater understanding and a better
.ionship between our governments
peoples.

iVith President Reagan, we have
lived the various aspects of the har-
ious bilateral relations between our
countries. I am happy to say that in
economic field he was receptive to
points I made to him. So, I am cer-
that his great country will give
d support to the measures which
government is taking to reactivate
Honduran economy and reduce our
ent high unemployment levels, as a
pliment to Honduran short- and
ram-term efforts, all without
ecting our security needs.
[ have told President Reagan about
efforts we are making in Honduras
evelop our country. In this context,
iterated the fact that our govern-
t assigns the highest priority to for-
investment, while at the same time
gnizing that at present we also re-
e the participation of government
the cooperation of friendly coun-
5, among which the United States is
of our closest.

Because of the fact that we believe
le necessity of offering the foreign

investor a climate of tranquility, en-
couraging his participation in the effort
being made by Hondurans to develop
our country, and of offering him guaran-
tees which ensure the protection of his
legitimate rights, I have authorized the
Foreign Minister to sign during this
visit the treaty on the settlement of in-
vestment disputes between states and
nationals of other states. This treaty
will provide the foreign investor in Hon-
duras with access to international legal
mechanisms of recognized impartiality
and competence, which together with
those offered by Honduran law will
guarantee to him the full enjoyment of
his rights.

In the political field, we reaffirmed
our identity as a regime governed by
rule of law and based on the effective
exercise of democracy and on respect
for human rights.

When we examined the situation in
Central America, we noted with concern
that conditions jeopardizing peace and
security still exist. We agreed that
major new efforts must be made to find
a negotiated solution to the crisis, based
on concrete actions for national reconcili-
ation, on free and honest elections, on
disarmament, and in general, on the cre-
ation of a climate in which freedom and
security for all can guarantee the eco-
nomic and social development of the
peoples of Central America. To that
end, it is necessary to conclude fully
verifiable, juridical arrangements among
the Central American States.

President Reagan reiterated to me
that, in accordance with the special
security relationship which exists be-
tween our two countries, as long as
grave threats to Honduras security and
to the stability of our institutions per-
sist, the Government of the United
States will be prepared, in the case of
armed aggression against Honduras, to
render it any necessary assistance which
the Honduran Government may request.

Finally, I would like to say how
very gratified I am that in the course of
this visit, the relations of friendship and
cooperation which exist between Hon-
duras and the United States have been
strengthened within a framework of
trust and mutual respect.

JOINT COMMUNIQUE,

MAY 27, 1986

The Presidents of the United States of
America and the Republic of Honduras, meet-
ing in Washington, D.C., on May 27, 1986,
recognizing the continuing seriousness of the
Central American crisis and the need to take

appropriate measures to protect the mutual
security of their respective countries, issue
the following communique:

The Presidents reaffirmed the joint com-
munique issued in Washington, D.C., on May
21, 1985, with particular reference to the
review of the security relationship. The two
Presidents reiterated their governments'
intention to continue to work closely together
in the face of the serious threats to the peace
and security of both countries through
mutual assistance and the development of
defensive capabilities. To this end, the
Government of the United States will con-
tinue to cooperate, as necessary and appro-
priate, in the strengthening of Honduras'
defenses and the modernization of its armed
forces.

The Government of the United States fur-
ther reiterated its firm and unwavering com-
mitment to cooperate in the defense of the
sovereignty and territorial integrity of
Honduras in accordance with the reciprocal
rights and obligations relating to legitimate
individual and collective self-defense and the
use of armed force, as expressed in the Inter-
American Treaty of Reciprocal Assistance,
the Charter of the United Nations, and the
Charter of the Organization of American
States.

In view of the close cooperation in the
two countries' political and security relation-
ships and the very serious security threats
that exist in Central America, the Govern-
ments of the United States and Honduras
reaffirmed the rights and obligations in the
three above-mentioned instruments, including
Article 3 of the Inter-American Treaty of
Reciprocal Assistance, Article 51 of the
Charter of the United Nations, and Article
21 of the Charter of the Organization of
American States.

In case of an armed attack against
Honduras, the United States will take appro-
priate measures, consistent with the rights
and obligations cited above, to consult with
and to support the Government of Honduras
in a timely and effective manner in its efforts
to defend its sovereignty and territorial
integrity against communist aggression.

The two Presidents recognizing the
importance of democratic political and eco-
nomic development to ensure peace and the
economic and social well-being of the region's
people, reaffirmed their intention to enhance
bilateral cooperation to achieve the economic
prosperity and to strengthen the democratic
social development of Honduras. In this
regard, the Government of the United States
reaffirms its intention to disperse during this
year the full $61.25 million available from
1986 United States Economic Support Funds
to assist the implementation of the economic
stabilization program recently announced by
the Government of Honduras.

The two Presidents also reaffirmed their
conviction that Central America can achieve
its full development only in a climate of peace
and complete freedom. In this sense, they
reiterated their firm support for the efforts
undertaken by the four Central American
democracies to conclude a comprehensive and

WESTERN HEMISPHERE

verifiable agreement for peace and democ-
racy in Central America through the Con-
tadora process. In particular, they noted the
need for a treaty in which all commitments
are fulfilled simultaneously and which
provides for the clearly verifiable implemen-
tation of national reconciliation, democratiza-
tion, and the limitation of armaments and

troops. Such an agreement would guarantee
the exercise of democracy in the five nations
of the region.

'Text from Weekly Compilation of
Presidential Documents of June 2, 1986.

2President Azcona spoke in Spanish, and
his remarks were translated by an inter-
preter. ■

U.S. Policy on Central America:
The Need for Consensus

by James H. Michel

Following is based on an address
for the "Great Decisions" series in
Fayetteville, North Carolina, on
April 17, 1986. Mr. Michel is Deputy
Assistant Secretary for Inter-American
Affairs.

Two propositions can help focus an anal-
ysis of the making of U.S. policy toward
Central America.

First, that the Central American
democracies are making impressive
strides toward creating free and produc-
tive societies. They need and deserve
our sustained support, and it is in our
national interest to give it. A stable
peace in Central America is important
to political, social, and economic develop-
ment of the region.

Second, that a peaceful settlement
in Central America depends on internal
reconciliation in Nicaragua. Unless the
Sandinistas realize that they cannot
crush their opposition through political
repression and force of arms, internal
reconciliation will be impossible. In
these circumstances, U.S. support for
the democratic resistance advances our
interests in a manner consistent with
our principles.

There is a broad consensus in sup-
port of the first of these two proposi-
tions. This second proposition is more
controversial. Put differently, there is
growing consensus on our objectives in
Central America, but the means of
achieving our aims remain the subject of
debate in the Congress and within the
public. Because of the inextricable links
between the situation in Nicaragua and
all other Central American issues, effec-
tive and coherent policy requires that
this ongoing debate be brought to a
conclusion.

The Progress of Democracy
in Central America

First, let's look at democracy in Central
America. On May 8, Costa Ricans will
celebrate the inauguration of a newly
elected president. This is not an excep-
tional event. Costa Ricans have gone to
the polls and elected new presidents
every 4 years for decades. Everyone ex-
pects that their elections will be con-
ducted fairly and efficiently and that the
results will be respected. These expecta-
tions have been regularly fulfilled.

More exceptional was the inaugura-
tion on January 27 of an elected presi-
dent in Honduras to succeed a president
who had himself been popularly elected.
Consecutive transitions based on such
explicitly democratic procedures had not
occurred in Honduras for 60 years.

On January 14, another exceptional
event occurred in Central America. A
popularly elected civilian president was
inaugurated in Guatemala for the first
time in 20 years.

And in El Salvador a popularly
elected president is completing his sec-
ond year with growing confidence that
he can implement his programs, com-
plete his term, and see an elected suc-
cessor take office. The success of
democracy in El Salvador is by no
means assured, but progress in the past
2 years has been impressive.

U.S. policy in Central America seeks
to support and encourage just such
progress: the consolidation of democratic
governments, responsive to their people
through regular, periodic elections-
governments that are more capable of
meeting demands for social justice, indi-
vidual freedom, equitable economic
development, and security. In the past
this had not always been the principal
focus of U.S. policy. That it is the foun-
dation of our policy today is the
product of a process involving many

participants— in the executive and leg
lative branches and outside the
government.

Perhaps most important, it is the
basis for the growing consensus that
undergirds our policy in the region.

Democracy and Consensus

We have learned some important les-
sons in our experience with Latin
America. One of the most important :
that democratic governments, becaus'
they must be responsive to their peo]
tend to be good neighbors, better abl
to achieve domestic stability, and mo
resistant to subversion. Democratic
governments are more reliable as sig
tories to agreements because their ac
tions are subject to public scrutiny.

We, as a people, are more comfor
ble dealing with democratic govern-
ments than with authoritarian re-
gimes—our common interests are bet
understood. A foreign policy that sup
ports democracy is consistent with oi
values and capable of garnering broai
enduring public and Congressional
support.

Just a few years ago, many in thi
country would have thought a scenar
of democracy sweeping Latin Americ
with the full backing of the U.S.
Government a pipedream. Even toda;
after all that has happened, skeptics :
main. It has been difficult for us, as s
nation, to discern what was taking pi
in the hemisphere. And the policy coi
sensus lagged, first in recognizing wh
was happening and second in support
initiatives aimed at reinforcing the
democratic trend.

After years of controversy, the
United States is establishing credibili
on this issue— in the hemisphere and
home. The Carter Administration
deserves credit for increased emphasi
on individual human rights. Under
President Reagan, the effort has
evolved. Active support for democrac
was the keynote of President Reagan:
address to the British Parliament in
June 1982. The record of our relations
with Argentina, Bolivia, El Salvador,
Guatemala, Honduras, Peru, Uruguay
and most recently Haiti is clear. We
seek democracy and not a return to d
tatorship anywhere in Latin America.
This policy applies with equal force tc
Nicaragua.

The trend toward democracy in
Latin America gives hope for achievii
a consensus on what to do about
Nicaragua. I think no one would quar
with the fact that a democratic

Department of State Bull

WESTERN HEMISPHERE

agua would be in the best interests
Nicaraguan people, Nicaragua's

jors, and the United States. Only
the Soviet Union, and their

aguan communist proteges would

(appointed.

leting Perceptions of Reality

te increasing agreement on the im-
lce of democracy to Nicaragua, we
re having trouble agreeing on how
, from here to there and whether
ven possible to do so. Why? I be-
lt has to do with perceptions,
^finition of the facts and of policy
lortant, because effective, consist-
reign policy requires a measure of
nsus among the public and be-
i the Congress and the Executive,
'resident is responsible for the con-
)f foreign policy, but he needs
rces. To get those resources and to
that they will be there over a
1 of years, he must have the ap-
l of a majority of both Houses of
•ess. And Members of Congress
lust vote to grant or deny that ap-
are very interested in what their
tuents think.

■rceptions of what is happening
i, of U.S. interests, and of the na-
f our policies affect the prospects
hieving the consensus needed to
le those resources. As you have
n the "Great Decisions" publica-
repared for this meeting, a range
ividuals and organizations become
ed in building the consensus,
according to its own perspective,
to assert a version of the facts
) interpret events in order to
nee policy.

cisionmakers, legislators, citizens,
ibitzers are inundated with infor-
ri and analysis. The President
es reports from resident diplomat-
sions, the intelligence community,
dvisers, and foreign leaders. Mem-
)f Congress and their staffs travel
ntly to the region and receive
rs from Central America with
frequency. The press and count-
rivate organizations and individ-
ugment these official contacts,
id through the cacophony— of alle-
is, investigative journalism, aca-
research, State Department
is, fact-finding missions, Soviet-
disinformation campaigns, expert
lony, intelligence briefings, revela-
by exiles and defectors, and views
eign diplomats and international
i— there emerges a picture of what
>pening.

Because we have a free market of
information and ideas, sometimes the
picture challenges interpretation. Some
sources of "information" wish to de-
ceive. Some are misled. Many emphasize
"facts" which support prior opinion. It
is a fundamental tenet of our free so-
ciety that no one has a monopoly on the
truth and that allowing the free flow of
ideas will improve the quality of deci-
sionmaking. However, the wide range of
interpretations given to events— and, in-
deed, the differences about what the
facts are— places a real burden on the
citizen and on those in government,
elected and appointed, who have ac-
cepted the responsibility of trying to
represent and carry out the public
interest.

How well is the marketplace of ideas
working in Central America? Does our
policy protect our interests? Does it
reflect our values? And can it be sus-
tained? Let me review the facts that are
discernible from my perspective.

Foundations for a New Consensus

The basic starting point for developing a
new consensus is the reality of Central
America's importance to the United
States. As the National Bipartisan Com-
mission on Central America succinctly
concluded: "Central America engages
our strategic and moral interests."

Central America engages our stra-
tegic interests because it is close and
because it is the object of Soviet/Cuban
strategic designs. If those designs were
to become the reality of a Soviet base,
the strategic interests of the United
States would require us to redeploy our
forces to protect our southern flank and
vital Caribbean sealanes. In addition,
the inability of the United States to
help our Central American neighbors
avoid the consolidation of a Soviet-
aligned state in their midst, so close to
our own borders, would demonstrate a
national weakness and lack of resolve
that would encourage our adversaries
and undermine the confidence of more
distant allies.

Central America engages our moral
interests because its people are our
neighbors. They have suffered a history
of political instability, social and eco-
nomic inequities, and poverty. That his-
tory includes episodes of intense U.S.
involvement interspersed with periods
of U.S. neglect. Yet, Central Americans
identify overwhelmingly with Western
values. They have demonstrated re-
peatedly in recent years with impressive
turnouts at the polls that they want

freedom and reject tyranny. It would be
tragic to abandon them to totalitar-
ians— of the right or of the left— who
would impose their will upon them.

A second reality— less widely per-
ceived but a reality, nonetheless— is that
we finally have a broad strategy to ad-
vance our interests. The Bipartisan
Commission made a significant contribu-
tion to it by articulating three major
elements:

Support for democratic self-
determination, so that governments
will be responsive to the informed and
freely expressed will of the people and
will be concerned for the protection of
their rights and for their welfare;

Support for equitable economic
and social development, so that the
human resources of the region can be
developed to their full potential and op-
portunities for a brighter future can be
sustained without permanent depend-
ence on outside assistance; and

Cooperation in meeting threats to
the region's security, so that reforms
and development efforts will not be de-
stroyed by extremist violence and so
that nations threatened by externally
supported subversion can negotiate from
strength for a secure peace and internal
reconciliation.

An important aspect of this strategy
is the recognition that the political, eco-
nomic, social, and security dimensions of
the situation are dynamic and inter-
twined. We have discarded the notion
that economic progress engenders social
progress which, in turn, fosters political
evolution. We have learned that if you
focus on only one dimension of the
problem at a time, the dynamics of the
other dimensions will undo whatever
gains you make.

It requires a sophisticated policy to
address simultaneously the range of po-
litical, economic, social, and security con-
cerns within each nation and within the
region. It means we can't deal with
diverse and complex situations with
single-issue politics. We cannot have a
policy that looks only at the military
situation, or only human rights, or only
economic development, or only the East-
West dimension. But no effective policy
can disregard any of these issues.

A consensus has begun to develop, I
believe, around these facts and around
the approach recommended by the
Bipartisan Commission. It is found in
the President's acceptance of the Com-
mission's recommendations, in the sub-
stantially increased foreign assistance
appropriations for Central America, and
in the enactment into law by the U.S.

St 1986

WESTERN HEMISPHERE

Congress of all the new authorities
needed to implement the Commission's
proposals.

The activities energized by this con-
sensus include greatly increased eco-
nomic assistance, the trade incentives of
the Caribbean Basin Initiative, security
assistance within a framework of
respect for human rights, and new in-
itiatives in cooperating to strengthen
the fundamental underpinnings of
democracy, such as improved adminis-
tration of justice.

This emerging consensus is also
reflected indirectly in the diminished at-
tention to Central America as a subject
for front-page news coverage, except for
the ongoing debate over how to respond
to a hostile regime in Nicaragua that is
aligned with Cuba and the Soviet Union.
Progress in the consolidation of democ-
racy, as exemplified by the elections and
inaugurations mentioned above, is still
newsworthy. The emergence of the new
consensus means that most people now
agree that this sort of democratic
progress is good— which ironically also
means that it now lacks the elements of
controversy and novelty that would
qualify it as headline news.

There are, of course, still some who
deny that positive, worthwhile change is
occurring in El Salvador, Honduras, or
Guatemala or who assert that the
United States is supporting repressive
oligarchies in those countries and is so
obsessed with anticommunism that it
focuses only on military solutions.

It is more widely recognized,
however, that democratic leaders in
those countries are beginning to succeed
in addressing political, social, and eco-
nomic needs and that the support and
assistance of the United States have
been instrumental to their success.
There is even tolerance within the
American public and Congress for the
notion that setbacks will occur, that
progress will not always mean a straight
line progression of successes, and that
the Central Americans are engaged in a
long-term process.

Recognition that democracy in Latin
America is not impossible is contribut-
ing to a more balanced understanding of
the nature and intentions of the com-
munist government in Nicaragua. It is
now widely recognized that the Govern-
ment of Nicaragua has fundamentally
different objectives than those we see
being pursued in the rest of Central
America. The Sandinistas have imposed
a new dictatorship, forcing many
democratic opponents of Somoza, who
had joined in the 1979 revolution, first

to leave the government, then to leave
the country, and finally to go into open,
armed opposition.

What We Ask of Nicaragua

Based upon the realities I have just
described, U.S. policy seeks to change
Nicaragua's policies and behavior in four
basic areas of concern.

• The Sandinistas have aligned
themselves to Cuba and its patron, the
Soviet Union. The several thousand
Cuban military advisers in Nicaragua
are increasingly evident in combat roles.
Daniel Ortega's ninth trip to Moscow
last May was widely noticed in the
United States, including by some who
claimed to be surprised. His two trips
to Havana this year attracted little no-
tice. We expect Ortega to visit Havana
and are no longer surprised when he
does so.

Responding to these facts, we want
Nicaragua to sever its unnecessary and
dangerous military ties to Cuba and the
Soviet Union.

• The Sandinistas support a network
of subversion and terrorism operating
against the Latin democracies. The
guerrillas in El Salvador maintain com-
mand and control and communications
operations near Managua and continue
to rely on logistics support from
Nicaragua. Communications with the
kidnapers of President Duarte's daugh-
ter were channeled through Managua.
Some of the weapons used by M-19 ter-
rorists to murder members of the
Colombian Supreme Court came from
Nicaragua.

Responding to these facts, we want
Nicaragua to desist from any further
support for such subversion and
terrorism.

• The Sandinistas have developed a
large and heavily armed military force,
wholly disproportionate to Central
American dimensions, including the
Cuban-piloted modern Soviet attack
helicopters. Nicaragua's neighbors—
especially Costa Rica, which has not had
an army since 1949— understandably
consider this threatening.

Responding to these facts, we want
Nicaragua to return to a balanced, non-
threatening level of forces.

• And the Sandinistas have engaged
in increasingly severe repression of the
voices of dissent— in the church, the
labor movement, political parties, the
business community, and the press.
They seek consolidation of a system of
party control and are determined to
crush their opposition.

Responding to these facts, we w
Nicaragua to engage in a process of
ternal reconciliation and move to
democracy.

This analysis of the problems cai
by the communist Government of
Nicaragua, for us and for Central
Americans, is not controversial. Con
gress has enacted laws and issued
reports containing findings of fact tl
track very closely with this descript
of Sandinista policies and practice ai
has voiced support for the changes
seek.

There is less agreement on how
achieve these goals in practice. The
ical argument is over how the Unit(
States should go about changing
Nicaraguan behavior. Some suggest
our policy should be defensive. That
we should concentrate only on helpi
Nicaragua's neighbors defend them-
selves against Sandinista subversior
not be concerned with Nicaragua's i
tary establishment, the Sandinistas'
Soviet-bloc ties, or their internal pr
tices. Others accept the legitimacy <
these concerns but assert that they
be mitigated by a treaty in a form t
factory to the Sandinistas, who wou
thereby be constrained in their
behavior.

This argument overlooks the fac
that the Sandinistas have shown th:
they do not want to be constrained.
They have embraced the Contadora
process when it served their tactica
terests and have rebuffed it when it
not. As the negotiations have becorr
more precise and have appeared to
moving toward assuring a comprehe
sive treaty that would place effectiv
constraints on their behavior, the
Sandinistas have consistently draggi
their heels or attempted to introduc
traneous arguments. This leads son*
argue that the departure of the
Sandinistas is necessary.

Reconciliation Among Nicaraguan:
The Key to Peace

Can we reach a consensus on remed
to match the consensus on the diagn
sis? One place to begin might be to
acknowledge the need for a vigorous
diplomatic effort to bridge the differ
ences between Nicaragua and its nei
bors on the four issues that have
become central to the debate: democ
zation and internal reconciliation, no:
intervention, outside military presen
and arms limitations. The Contadora
process covers all of these issues. Tr1

Department of State Bi»

TREATIES

adora Document of Objectives ad-
ies each of them explicitly,
rational reconciliation based on
icratic principles is one of the key
s in the original 1983 Contadora
ment of Objectives, and it was re-
lasized in the Statement of
balleda issued in Venezuela by the
adora and Contadora support group
ns on January 12, 1986. Yet the
inistas have systematically rejected
nal dialogue on this basis, whether
e form of competitive elections or
in the more face-saving forum
ed them by the Roman Catholic
ips. Sandinista intransigence on this
, evident most recently in a meet-
•f Contadora foreign ministers in

April, is a serious obstacle to
matic progress.

Without internal reconciliation in
ragua, Contadora cannot work. The
ns of Sandinista oppression will
nue their struggle, and their num-
will continue to grow. Nicaragua's
ibors will remain concerned that
i)ut a free press, fair elections, and
formed electorate in Nicaragua, the
inistas will remain free to resume
•nal subversion whenever opportuni-
irise.
/ithin the executive branch we

concluded that if Nicaragua is to
*e the policies and behavior that
iten regional security, it will do so
because it feels it has no better
native, that the pressure is just too
i The Sandinistas will realize that
ragua cannot become another Cuba
under the combined impact of diplo-
:, economic, and political pressure

the international community, and
Hitical demands of the Nicaraguan
le given force by the military pres-
of a united Nicaraguan opposition.
f this were to happen, diplomacy
d have a chance. Without the pres-

the conflict will continue without
l hope of a peaceful resolution. The
inistas may ultimately fail in ex-
ng the Cuban model to the main-

But they have a lot of help from
Soviet bloc; and, for as long as they
they will pose a constant threat to
ral America and an impediment to
stability and economic recovery that
leeded to help sustain these fragile
)cracies. If, on the other hand, the
linistas were to succeed, the Soviet
n would be in a position of major
ence in the region between Mexico
the Panama Canal.

The U.S. Role

This challenge to the safety and
prosperity of Central America and ulti-
mately of the United States can be met
without U.S. forces if we act in time to
support those Latin Americans who
support democracy.

The President has proposed further
assistance to the Nicaraguan democratic
resistance. The Senate has agreed, but
the House remains engaged in proce-
dural maneuvering. As the legislative
process has intensified, the Sandinistas
and their Soviet-bloc patrons, as should
be expected, have mounted new efforts
to refurbish their tarnished image and
to vilify their opponents. Citizens, legis-
lators, bureaucrats, and senior govern-
ment officials are all challenged to know
what is true and what is significant in
all the noise.

As we carry out this debate, we
must all be concerned with the notori-
ously short attention span of our own
political system and our preoccupation
with the need to reduce the budget
deficit. Both pose a threat to continued
progress in Central America. Our
support— and I am talking about our
moral and political support quite as
much as economic and security assist-
ance—cannot be allowed to diminish
before the fragile new democratic insti-
tutions in the region have taken firm
root.

Already, economic assistance levels
to Central America, while substantially
increased from previous years, are
several hundreds of millions of dollars
behind the levels recommended by the
Bipartisan Commission. It remains to be
seen whether the Gramm-Rudman-
Hollings Deficit Reduction Act or the
emergence of some new crisis elsewhere
in the world will undermine the consen-
sus and divert our attention pre-
maturely.

We have been making progress
toward a consensus on the importance of
supporting democracy, growth, and
justice in our immediate neighborhood,
but we have not decided whether we
will help those fighting for freedom in
Nicaragua against communist forces who
take a long view of history. I believe
that a prompt and affirmative decision
on this issue is necessary to the totality
of our objectives in Central America.

We have forged the fundamental ele-
ments of a policy based on the realities
and aspirations of the hemisphere. That
policy is coherent and comprehensive
and offers the genuine prospect of help-
ing Central America to realize the

promise of the New World. I hope that
the domestic debate over specific issues
and tactics will not cause us to lose
sight of these objectives and that the
result will be a stronger consensus that
will sustain our efforts to protect impor-
tant national interests and achieve goals
of which Americans can be justly
proud. ■

Current Actions

MULTILATERAL

International Monetary Fund

Articles of agreement of the international
monetary fund, formulated at Bretton Woods
Conference July 1-22, 1944. Entered into
force Dec. 27, 1945. TIAS 1501.
Signatures and acceptances deposited:
Kiribati, June 3, 1986; Poland, June 12, 1986.

Nuclear Weapons— Nonproliferation

Treaty on the nonproliferation of nuclear
weapons. Done at Washington, London, and
Moscow July 1, 1968. Entered into force Mar.
5, 1970. TIAS 6839.
Ratification deposited: Yemen (Sanaa), May

14, 1986.

Sugar

International sugar agreement, 1984, with an-
nexes. Done at Geneva July 5, 1984. Entered
into force provisionally Jan. 1, 1985; defini-
tively Apr. 4, 1985.1
Ratification deposited: Colombia, May 20,

1986; Egypt, May 29, 1986.

Timber

Inter-national 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.
Accession deposited: Canada, May 21, 1986
Ratification deposited: Spain, Apr. 1, 1986.

BILATERAL

African Development Bank

Cooperation agreement. Signed at New York
Mav 29, 1986. Entered into force May 29,
1986.

Argentina

Agreement regarding the consolidation and
rescheduling of certain debts owed to,
guaranteed by, or insured by the U.S.
Government and its agencies, with annexes.
Signed at Buenos Aires Apr. 8, 1986. En-
tered into force May 19, 1986.

JSt 1986

PRESS RELEASES

Canada

Agreement extending the agreement relating
to the continued operation and maintenance
of the torpedo test range in the Strait of
Georgia and to authorize the installation and
utilization of an advanced underwater acous-
tic measurement system in Jervis Inlet
(TIAS 8386). Effected by exchange of notes
at Ottawa and Washington June 3 and 17,
1986. Entered into force June 17, 1986.

Costa Rica

Agreement for the exchange of information
with respect to taxes, with exchange of
notes. Signed at San Jose May 5, 1986.
Enters into force upon an exchange of notes
confirming that both sides have met all con-
stitutional and statutory requirements neces-
sary to effectuate the agreement.

European Communities

Agreement concerning exports of steel pipes
and tubes, with appendix, exchange of let-
ters, and related letters. Effected by ex-
change of letters at Brussels and Washington
Jan. 10, 1985. Entered into force Jan. 10,
1985; effective Oct. 1, 1984.

Complementary arrangement to the arrange-
ment of Oct. 21, 1982, concerning trade in
certain steel products, with appendix. Ef-
fected by exchange of letters at Brussels and
Washington Aug. 9, 1985. Entered into force
Aug. 9, 1985.

Agreement amending and extending the
agreement of Jan. 10, 1985, concerning ex-
ports of steel pipes and tubes. Effected by
exchange of letters at Brussels and Washing-
ton Dec. 11, 1985. Entered into force Dec. 11,
1985.

Agreement amending and extending the ar-
rangement of Oct. 21, 1982, concerning trade
in certain steel products, with appendices and
agreed minutes. Effected by exchange of let-
ters at Brussels and Washington Dec. 11,

1985. Entered into force Dec. 11, 1985; effec-
tive Jan. 1, 1986.

Indonesia

Agreement amending the air transport agree-
ment of Jan. 15, 1986 (TIAS 6441). Effected
by exchange of notes at Denpasar May 2,

1986. Entered into force May 2, 1986.

Jamaica

Agreement concerning the administration of
income tax in Jamaica affecting Jamaican
citizens who are employees of the U.S.
Government and subject to Jamaican income
tax. Effected by exchange of notes at King-
ston Apr. 3 and May 1, 1986. Entered into
force May 1, 1986.

Nepal

Agreement relating to trade in cotton tex-
tiles, with annexes. Effected by exchange of
notes at Kathmandu May 30 and June 1,

1986. Entered into force June 1, 1986; effec-
tive for some categories Oct. 1, 1985; Jan. 1,
1986 for others.

Netherlands

Convention regarding consuls in the colonies

of the Netherlands. Signed at The Hague

Jan. 22, 1855. Entered into force May 25,

1855. TS 253.

Terminated: May 25, 1986; effective May 25,

1987.

Niger

Agreement regarding the consolidation and
rescheduling of certain debts owed to,
guaranteed by, or insured by the U.S.
Government and its agencies, with annexes.
Signed at Niamey Apr. 11, 1986. Entered
into force May 19, 1986.

Peru

Cooperative arrangement for the production
of topographic maps of Peru. Signed at
Washington and Lima Apr. 25 and May 22,
1986. Entered into force May 22, 1986.

Philippines

Agreement on procedures for mutual legal as-
sistance, with related letter. Signed at Manila
June 11, 1986. Entered into force June 11,
1986.

Sierra Leone

Agreement for sale of agricultural commodi-
ties. Signed at Freetown May 5, 1986. En-
tered into force May 5, 1986.

Singapore

Agreement relating to trade in cotton, wool,
and manmade fiber textiles and textile
products, with annexes. Effected by ex-
change of notes at Singapore May 30 and
June 5, 1986. Entered into force June 5, 1986;
effective Jan. 1, 1986.

Spain

Memorandum of understanding for coopera-
tion in energy research and development.
Signed at Washington June 6, 1986. Entered
into force June 6, 1986.

Memorandum of understanding for coopera-
tion in energy research and development
[coal gasification and geothermal energy tech-
nologies]. Signed at Washington June 6, 1986.
Entered into force June 6, 1986.

United Kingdom

Arrangement extending the arrangement of
May 15, 1981 (TIAS 10152), for the exchange
of technical information and cooperation in
nuclear safety matters. Signed at London
Apr. 7, 1986. Entered into force Apr. 7, 1986.

Agreement extending the agreement of July
26, 1984, as extended, concerning, the Cay-
man Islands and narcotics activities. Effected
by exchange of notes at Washington May 28,
1986. Entered into force May 28, 1986.

Department of State

Press releases may be obtained from the
Office of Press Relations, Department of
State, Washington, D.C. 20520.

No. Date

121 6/2

122 6/2

123 6/2

124 6/4

* 125 6/5

126 6/11

*127 6/11

128 6/13

*129 6/13

130 6/13

*131 6/17

*132 6/17

'In force provisionally for the U.S.I

Subject

Shultz: news conference
following NATO
ministerial meeting,
Halifax, Nova Scotia,
May 30.

Shultz: interview on
NBC-TV's "Meet the
Press," June 1.

Shultz: remarks and
question-and-answer
session, Conference
on South Africa for
American Religious
Leaders.

Shultz: address and
question-and-answer
session, Foreign Poll
cy Association.

Shultz: address and
question-and-answer
session, Atlantic In-
stitute for Interna-
tional Affairs and
Atlantic Council,
June 4.

Foreign Relations of
the United States,
1952-1954, Volume
IX, the Near and
Middle East,
released.

Shultz: address and
question-and-answer
session, Economic
Club of New York,
June 10.

Shultz: interview on
USIA's "Worldnet."

Program for the state
visit of President Ju-
lio Maria Sanguinetti
of the Oriental
Republic of Uruguay,
June 16-20.

Shultz: remarks and
question-and-answer
session, National For-'
eign Policy Confer-
ence for Young
Political Leaders.

Shultz: remarks and
question-and-answer
session, Foreign Poli-
cy Conference for Na
tional Minority and
Women's Organiza-
tions, June 16.
Shultz: remarks upon
receiving an honorary
degree of Doctor of
Law at Northwestern
University, Evanston.
Illinois, June 14.

Department of Slate Bi

PUBLICATIONS

Date Subject

6/24 Shultz: arrival state-
ment, Singapore,
June 23.

6/24 Shultz: news conference
upon departure,
Singapore.

6/24 Shultz: arrival state-
ment, Manila.

6/25 Shultz: interview on
Brunei Television,
Bandar Seri Bega-
wan, June 24.

6/25 Shultz: departure state-
ment, Bandar Seri
Begawan, June 24.

6/27 Vernon D. Penner, Jr.,
sworn in as Ambas-
sador to the Republic
of Cape Verde (bio-
graphic data).

6/30 John D. Blacken sworn
in as Ambassador to
the Republic of
Guinea-Bissau (bio-
graphic data).

6/30 Armacost: address and
question-and-answer
session before the
National Foreign
Policy Conference for
Educators, June 26.

6/30 Shultz: statement at
ASEAN open dia-
logue, Manila,
June 26.

6/30 Shultz/Lange: conclud-
ing remarks at
bilateral meeting,
Manila, June 27.

6/30 Shultz/ASEAN delega-
tion heads: joint news
conference following
the ASEAN post-
ministerial confer-
ence, Manila, June 27.

6/30 Shultz: arrival state-
ment, Babelthuap,
Palau, June 28.

6/30 Shultz: news conference,
Manila, June 25.

printed in the Bulletin. I

Department of State

Secretary Shultz

The Church as a Force for Peaceful Change
in South Africa, Conference on South Afri-
ca for American Religious Leaders, June 2,
1986 (Current Policy #841).

Reform in the Philippines and American In-
terests: The U.S. Role in Consolidating
Democracy, Foreign Policy Assoc, New
York City, June 4, 1986 (Current Policy
#842).

No Delay for Democracy, National Foreign
Policy Conference for Young Political
Leaders, June 13, 1986 (Current Policy
#846).

Africa

Misconceptions About U.S. Policy Toward
South Africa, June 1986 (Public Informa-
tion Series).

Special Working Group on South and
Southern Africa, June 1986 (Public Infor-
mation Series).

Arms Control

U.S. Policy on Arms Control: Purpose,
Prospects, and Process, Assistant Secre-
tary Holmes, Council on Foreign Relations,
New York City (Current Policy #843).

SDI, Arms Control, and Stability: Toward a
New Synthesis, Ambassador Nitze, Time
magazine conference on SDI, June 3, 1986
(Current Policy #845).

U.S. Interim Restraint Policy: Responding to
Soviet Arms Control Violations, May 27,
1986 (Special Report #147).

Environment

U.S. Policy on Acid Rain, June 1986 (Public
Information Series).

Europe

U.S.-Yugoslav Relations, Under Secretary
Armacost, U.S.-Yugoslav Economic Coun-
cil, Cavtat, Yugoslavia, June 2, 1986 (Cur-
rent Policy #848).

Northern Ireland (GIST, June 1986).

Oceans

Law of the Sea (GIST, June 1986).

Terrorism

International Terrorism (GIST, June 1986).

International Terrorism: U.S. Policy on Tak-
ing Americans Hostage, June 1986 (Public
Information Series).

United Nations

Continent at the Crossroads: An Agenda for
African Development, Secretary Shultz,
UN General Assembly Special Session on
the Critical Economic Situation in Africa,
New York City, May 28, 1986 (Current
Policy #839).

Latin America's Economic Challenge: The
Democratic Response, Assistant Secretary
Keyes, 21st plenary of the Economic Com-
mission for Latin America, Mexico City,
Apr. 23, 1986 (Current Policy #840).

UN Genocide Convention (GIST, June 1986).

Western Hemisphere

A Democratic Vision of Security, Assistant
Secretary Abrams, Inter-American
Defense College, June 13, 1986 (Current
Policy #844). ■

Foreign Relations Volume Released

The Department of State on June 11,
1986, released Foreign Relations of the
United States, 1952-1954, Volume IX,
The Near and Middle East, Parts 1 and
2. This volume contains documents on
U.S. policy toward the Middle East
during the last year of the Truman
Administration and the first years of the
Eisenhower-Dulles period.

In a policy designed to counter pos-
sible long-term Soviet aggression, the
United States in 1953 embraced a
"northern tier" strategy, including Tur-
key, Iraq, Iran, and Pakistan, which laid
the foundations for the Baghdad Pact
(later, the Central Treaty Organization).

The policy resulted from Secretary of
State John Foster Dulles' efforts at
intense personal diplomacy in the region
and from the failure to gain support for
an earlier proposal for a regional
defense organization centered on Egypt.
The United States also perceived insta-
bility and tensions arising from anti-
Western nationalism and the Arab-
Israeli dispute as threats to Western in-
terests. The United States worked ac-
tively to reduce tension between the
Arabs and the Israelis, especially by
seeking to ease disputes over borders,
water rights, and economic matters.

ust 1986

PUBLICATIONS

Elsewhere in the area, the United
States also promoted Anglo-Egyptian
negotiations for a Suez Canal Base
Agreement, concluded following the
ouster of the Egyptian monarchy, as
part of its effort to protect the Western
position in the region. The United
States pursued its developing special
relationship with Saudi Arabia, fur-
thered stable oil arrangements, and
encouraged the use of oil revenues for
economic development in both oil-
producing and transit countries.

Foreign Relations, 1952-1954,
Volume IX, which comprises over 2,600
pages of previously classified foreign
affairs records, was prepared in the
Office of the Historian, Bureau of Public
Affairs, Department of State. This
authoritative official record is based

upon the files of the White House, the
Department of State, and other govern-
ment agencies. Documents on U.S. pol-
icy toward Iran for 1951-1954 will be
released in a separate and subsequent
volume of the Foreign Relations series.

Copies of Volume IX (Department of
State Publication Nos. 9447 and 9448,
GPO Stock No. 044-000-02115-3) may
be purchased for $45.00 (domestic post-
paid) from the Superintendent of Docu-
ments, U.S. Government Printing Office,
Washington, D.C., 20402. Checks or
money orders should be made payable
to the Superintendent of Documents.

Press release 126 of June 11, 1986.

Background Notes

This series provides brief, factual summa
of the people, history, government, eci mo
and foreign relations of about 170 countri
(excluding the United States) and of selec I
international organizations. Recent revisii
are:

Oman (Jan. (1986)

Hungary (Feb. 1986)

Central African Republic (Feb. 1986)

Seychelles (Apr. 1986)

Costa Rica (May 1986)

A free single copy of one of the abov
(and an index of the entire series) may b<'
tained from the Correspondence Manager
Division, Bureau of Public Affairs, Depar
ment of State, Washington, D.C. 20520.

For about 60 Background Notes a ye
subscription is available from the
Superintendent of Documents, U.S. Gove
ment Printing Office, Washington, D.C.
20402, for $32.00 (domestic) and $40.00 (f<
eign). Cheek or money order, made payal
to the Superintendent of Documents, raua
accompany order. ■

IDEX

jgust 1986

)lume 86, No. 2113

lerican Principles

Democratic Vision of Security (Abrams) 83
3-ional Security, Collective Security, and

isaerican Security (Poindexter) 64

ns Control

\rms Control at a Dead End? (Adel-

lan) 47

Negotiations Resume (White House

tatement) 39

ws Conference of June 11 (Reagan, ex-

srpts) 17

TO Ministers Meet in Canada (Shultz,

tatements) 53

retary Shultz's Interview for "World-

et" 23

retary 's Interview on "Meet the

ress" 32

I, Arms Control, and Stability: Toward

New Synthesis (Nitze) 44

i. Interim Restraint Policy: Responding
i Soviet Arms Control Violations

leagan. White House fact sheet) 36

stralia. Visit of Australia's Prime

inister Hawke (Hawke, Reagan) 74

siness. Reform in the Philippines and
meriean Interests: The U.S. Role in

onsolidating Democracy (Shultz) 26

na. Proposed Sale of Aircraft Avionics

omponents to China (Lilley) 50

igress

1987 Assistance Requests for Migration
id Refugees (Purcell) 75

1987 Assistance Requests for Narcotics
ontrol (Wrobleski) 72

1987 Assistance Requests for Organiza-
ons and Programs (Keyes) 80

1987 Request for Foreign Assistance
rograms (McPherson) 59

1987 Security Assistance Requests
Schneider) 77

posed Sale of Aircraft Avionics Compo-

lents to China (Lilley) 50

h Report on Cyprus (message to the

ongress) 54

E War Powers Resolution and Anti-

'rrorist Operations (Sofaer) 68

jrus. 26th Report on Cyprus (message

i the Congress) 54

pnomics

1'orm in the Philippines and American

iterests: The U.S. Role in Consoli-

uting Democracy (Shultz) 26

tional Security, Collective Security, and

meriean Security (Poindexter) 64

rope

• tic Freedom Day, 1986 (proclamation) . 57

Iretarv Shultz's Interview for "World-

st" 23

ropean Communities. Imports from the

uropean Economic Community (White

ouse statement) 52

i'eign Assistance

■ 19*7 Assistance Requests for Narcotics

ontrol (Wrobleski) 72

' 1987 Assistance Requests for Organiza-

ons and Programs (Keyes) 80

' 1987 Request for Foreign Assistance

rograms (McPherson) 59

Honduras. Visit of Honduran President
Azcona (Azcona, Reagan, joint communi-
que) 86

Human Rights. The Church as a Force
for Peaceful Change in South Africa
(Shultz) 30

Intelligence Operations. Secretary's Inter-
view on "Meet the Press" 32

International Law

International Terrorism: The Taking of
U.S. Citizens Hostage 16

The War Powers Resolution and Anti-
terrorist Operations (Sofaer) 68

Libya. Intel-national Terrorism (Borg,
Oakley) 1

Maritime Affairs. Attacks on Persian Gulf
Shipping (White House statement) 71

Mexico. News Conference of June 11
(Reagan, excerpts) 17

Middle East

Attacks on Persian Gulf Shipping (White
House statement) 71

Secretary's Interview on "Meet the
Press" 32

Military Affairs

SDI, Arms Control, and Stability: Toward
a New Synthesis (Nitze) 44

The War Powers Resolution and Anti-
terrorist Operations (Sofaer) 68

Narcotics. FY 1987 Assistance Requests
for Narcotics Control (Wrobleski) 72

Nicaragua

News Conference of June 11 (Reagan,
excerpts 17

No Delay for Democracy (Shultz) 19

Secretary Shultz's Interview for "Worldnet"
(Shultz) 23

U.S. Policy on Central America: The Need
for Consensus (Michel) 88

North Atlantic Treaty Organization

NATO Defense Planning Committee
Meeting (final communique) 58

NATO Ministers Meet in Canada (Shultz,
statements) 53

Nuclear Policy. Regional Security, Collec-
tive Security, and American Security
(Poindexter) 64

Organization of American States. Pan
American Day and Week, 1986 (procla-
mation) 85

Philippines. Reform in the Philippines
and American Interests: The U.S. Role
in Consolidating Democracy (Shultz) .... 26

Presidential Documents

Baltic Freedom Day 1986 (proclamation) . . 57

News Conference of June 11 (excerpts) ... 17

Pan American Day and Week, 1986 (procla-
mation) 85

26th Report on Cyprus (message to the
Congress) 54

U.S. Interim Restraint Policy: Responding
to Soviet Arms Control Violations
(Reagan, White House fact sheet) 36

Visit of Australia's Prime Minister Hawke
(Hawke, Reagan) 74

Visit of Honduran President Azcona
(Azcona, Reagan, joint communique) .... 86

World Trade Week, 1986 (proclamation) . . 52

Publications

Background Notes 94

Department of State 93

Foreign Relations Volume Released 93

Refugees. FY 1987 Assistance Requests
for Migration and Refugees (Purcell) ... 75

Security Assistance. FY 1987 Security
Assistance Requests (Schneider) 77

South Africa

The Church as a Force for Peaceful
Change in South Africa (Shultz) 30

Secretary Shultz's Interview for "World-
net" 23

South African Military Raids (White House
statement) 35

Spain. U.S. -Spanish Council Meets (joint
communique) 55

Terrorism

International Terrorism (Borg, Oakley) ... 1

International Terrorism: The Taking of
U.S. Citizens Hostage 16

Secretary Shultz's Interview for "World-
net" 23

The War Powers Resolution and Anti-
terrorist Operations (Sofaer) 68

Trade

Imports from the European Economic
Community (White House statement) ... 52

World Trade Week, 1986 (proclamation) . . 52

Treaties. Current Actions 91

U.S.S.R.

Is Anns Control at a Dead End?
(Adelman) 47

News Conference of June 11 (Reagan,
excerpts) 17

SDI, Arms Control, and Stability: Toward
a New Synthesis (Nitze) 44

Secretary Shultz's Interview for "World-
net" . . 23

Secretary's Interview on "Meet the
Press" 32

U.S. Interim Restraint Policy: Responding
to Soviet Arms Control Violations
(Reagan, White House fact sheet) 36

United Nations. FY 1987 Assistance Re-
quests for Organizations and Programs
(Keyes) 80

Western Hemisphere

Central America Negotiations (White
House statement) 84

A Democratic Vision of Security
(Abrams) 83

No Delay for Democracy (Shultz) 19

U.S. Policy on Central America: The Need
for Consensus (Michel) 88

Name Index

Abrams, Elliott 83

Adelman, Kenneth L 47

Azcona Hoyo, Jose Simon 86

Borg, Parker W 1

Hawke, Robert J. L 74

Keyes, Alan L 80

Lilley, James R 50

McPherson, M. Peter 59

Michel, James H 88

Nitze, Paul H 44

Oakley, Robert B 1

Poindexter, John M 64

Purcell, James N. Jr 75

Reagan, President .... 17, 36, 52, 54, 57, 74,

85, 86

Schneider, William Jr 77

Shultz, Secretary 19, 23, 26, 30, 32, 53

Sofaer, Abraham D 68

Wrobleski, Ann B 72

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U.S. Government Printing Office
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iU>partmvn t

^4 bulletin

> Official Monthly Record of Unifed States Foreign Policy/Volume 86/Number 2114

September 1986

South Africa/1
Arms Control/38
China/48

UN Special Session on Africa/88

Department of State

bulletin

Volume 86/Number 21 14/September 1986

GEORGE P. SHULTZ

Secretary of State

BERNARD KALB

Assistant Secretary for Public Affair

PAUL E. AUERSWALD

Director,

Office of Public Communication

NORMAN HOWARD

Chief, Editorial Division

PHYLLIS A. YOUNG
Editor

SHARON R. LOTZ

Assistant Editor

Department of State Bulletin (ISSN
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CONTENTS

**\ %&&& ;

FEATURE

Ending Apartheid in South Africa (President Reagan)
The U.S. Approach to South Africa (Secretary Shultz)
Working Group on South and Southern Africa
Misconceptions About U.S. Policy Toward South Africa

\i President

Why Democracy Matters in
Central America
I An Essay on Peace
, International Terrorism

e Vice President

Visit to Canada

B Secretary

Visit to East Asia and the Pacific

ins Control

U.S. Policy on Arms Control:

Purpose, Prospects, and Process

(H. Allen Holmes)
CDE Negotiations Resume in

Stockholm (White House

Statement)
Status of MBFR Negotiations

(White House Statements)
Nuclear and Space Arms Talks

Conclude Round Five (President

Reagan)
West Proposes Initiative in CDE

(Western Statement)

partment

The U.S. Foreign Service in a
Year of Challenges (Ronald I.
Spiers)

st Asia

Sino-American Relations: No Time
for Complacency ( Winston Lord)

North Koreans Propose Three-
Way Military Talks (Department
Statement)

Environment

Multilateral Development Banks
and the Environment (John D.
Negroponte)

U.S. Policy on Acid Rain
(Richard E. Benedick)

Europe

58 U.S. -European Relations (Rozanne

L. Ridgway)

59 East Berlin Volkskammer

Elections (Department

Statement)
59 European Communities'

Agricultural Markets (White

House Statement)
61 U.S. -Yugoslav Relations

(Michael H. Armacost)
65 Bern Experts' Meeting on Human

Contacts (Michael Novak,

Rozanne L. Ridgway, Western

Draft Concluding Document)

International Law

73 Amending the Foreign Sovereign
Immunities Act (Elizabeth G.
Verville)

Middle East

78 Arms Sales to Saudi Arabia

(President Reagan, Message to
the Senate, White House
Statements)

79 Sale of AW ACS Aircraft to Saudi

Arabia (Letter to the Congress,
Text of Certification)

Military Affairs

81 Strategic Modernization Program
(White House Statement)

Narcotics

82 Narcotics Trafficking in
Southwest Asia (Ann B.
Wrobleski)

Oceans

84 Current Developments in the U.S.
Oceans Policy (John D.
Negroponte)

Pacific

86 U.S. -New Zealand Disagreement
on Port Access for U.S. Ships
(Department Statement)

United Nations

88 Continent at the Crossroads: An
Agenda for African Develop-
ment (Secretary Shultz)

90 UN Special Session: African

Economic Situation

Western Hemisphere

91 Central America (Letter to the

Congress)

Treaties

91 Current Actions

Press Releases

94 Department of State

Publications

94 Department of State

Index

Department of State Bn

FEATURE
South Africa

Ending Apartheid
in South Africa

President Reagan 's address before
members of the World Affairs Council
and Foreign Policy Association
in the East Room of the White House
on July 22, 1986. 1

■ more than a year now, the world's
mtion has been focused upon South
■tea— the deepening political crisis
re, the widening cycle of violence,
d, today, I'd like to outline American
cy toward that troubled republic and
7ard the region of which it is a
t— a region of vital importance to the
st.

The root cause of South Africa's dis-
er is apartheid— that rigid system of
ial segregation, wherein black people
'e been treated as third-class citizens
i nation they helped to build.
America's view of apartheid has
m, and remains, clear. Apartheid is
rally wrong and politically unaceepta-
. The United States cannot maintain
dial relations with a government
ose power rests upon the denial of
hts to a majority of its people based
race. If South Africa wishes to be-
g to the family of Western nations,
end to apartheid is a precondition.
lericans, I believe, are united in this
iviction. Second, apartheid must be
mantled. Time is running out for the
derates of all races in South Africa.
But if we Americans are agreed
)n the goal, a free and multiracial
jth Africa associated with free
ions and the West, there is deep dis-
•eement about how to reach it.
First, a little history— for a quarter
ltury now, the American Government
> been separating itself from the
ith African Government. In 1962,
jsident Kennedy imposed an embargo
military sales. Last September, I is-

sued an Executive order further re-
stricting U.S. dealings with the Pretoria
government. For the past 18 months,
the marketplace has been sending un-
mistakable signals of its own. U.S. bank
lending to South Africa has been vir-
tually halted. No significant new invest-
ment has come in. Some Western
businessmen have packed up and gone
home.

The Call for Sanctions

And now, we've reached a critical junc-
ture. Many in Congress and some in Eu-
rope are clamoring for sweeping
sanctions against South Africa. The
Prime Minister of Great Britain has
denounced punitive sanctions as "im-
moral" and "utterly repugnant." Well,
let me tell you why we believe
Mrs. Thatcher is right.

The primary victims of an economic
boycott of South Africa would be the
very people we seek to help. Most of
the workers who w^ould lose jobs be-
cause of sanctions would be black work-
ers. We do not believe the way to help
the people of South Africa is to cripple
the economy upon which they and their
families depend for survival.

Alan Paton, South Africa's great
writer, for years the conscience of his
country has declared himself emphat-
ically: "I am totally opposed to disinvest-
ment," he says. "It is primarily for a
moral reason. Those who will pay most
grievously for disinvestment will be the
black workers of South Africa. I take

very seriously the teachings of the
gospels. In particular, the parables
about giving drink to the thirsty and
food to the hungry. I will not help to
cause any such suffering to any black
person." Nor will we.

Looking at a map, southern Africa is
a single economic unit tied together by
rails and roads. Zaire and its southern
mining region depends upon South Afri-
ca for three-fourths of its food and
petroleum. More than half the electric
power that drives the capital of Mozam-
bique comes from South Africa. Over
one third of the exports from Zambia
and (>5% of the exports of Zimbabwe
leave the continent through South
African ports.

The mines of South Africa employ
13,000 workers from Swaziland, 19,000
from Botswana, 50,000 from Mozam-
bique, and 110,000 from the tiny, land-
locked country of Lesotho. Shut down
these productive mines with sanctions,
and you have forced black mine workers
out of their jobs and forced their fami-
lies back in their home countries into
destitution. I don't believe the American
people want to do something like that.
As one African leader remarked recent-
ly, "Southern Africa is like a zebra. If
the white parts are injured, the black
parts will die too."

Well, Western nations have poured
billions in foreign aid and investment
loans into southern Africa. Does it make
sense to aid these countries with one
hand and with the other to smash the
industrial engine upon which their fu-
ture depends?

Wherever blacks seek equal opportu-
nity, higher wages, and better working
conditions, their strongest allies are the
American, British, French, German, and
Dutch businessmen who bring to South
Africa ideas of social justice formed in
their own countries.

If disinvestment is mandated, these
progressive Western forces will depart
and South African proprietors will in-
herit, at fire sale prices, their farms and
factories and plants and mines. And how
would this end apartheid?

Our own experience teaches us that
racial progress comes swiftest and easi-
est not during economic depression but
in times of prosperity and growth. Our
own history teaches us that capitalism is
the natural enemy i if such feudal
institutions as apartheid.

Dtember 1986

Violence and Change

Nevertheless, we share the outrage
Americans have come to feel. Night af-
ter night, week after week, television
has brought us reports of violence by
South African security forces, bringing
injury and death to peaceful demonstra-
tors and innocent bystanders. More re-
cently, we read of violent attacks by
blacks against blacks. Then, there is the
calculated terror by elements of the
African National Congress: the mining
of roads, the bombings of public places,
designed to bring about further
repression— the imposition of martial law
and eventually creating the conditions
for racial war.

The most common method of terror
is the so-called necklace. In this barbaric
way of reprisal, a tire is filled with
kerosene or gasoline, placed around the
neck of an alleged "collaborator," and
ignited. The victim may be a black
policeman, a teacher, a soldier, a civil
servant. It makes no difference. The
atrocity is designed to terrorize blacks
into ending all racial cooperation and to
polarize South Africa as prelude to a fi-
nal, climactic struggle for power.

In defending their society and peo-
ple, the South African Government has
a right and responsibility to maintain
order in the face of terrorists. But by
its tactics, the government is only ac-
celerating the descent into bloodletting.
Moderates are being trapped between
the intimidation of radical youths and
countergangs of vigilantes.

And the government's state of emer-
gency next went beyond the law of
necessity. It, too, went outside the law
by sweeping up thousands of students,
civic leaders, church leaders, and labor
leaders, thereby contributing to further
radicalization. Such repressive measures
will bring South Africa neither peace
nor security.

It's a tragedy that most Americans
only see or read about the dead and in-
jured in South Africa— from terrorism,
violence, and repression. For behind the
terrible television pictures lies another
truth: South Africa is a complex and
diverse society in a state of transition.
More and more South Africans have
come to recognize that change is essen-
tial for survival. The realization has
come hard and late; but the realization
has finally come to Pretoria that apart-
heid belongs to the past.

In recent years, there's been a dra-
matic change. Black workers have been
permitted to unionize, bargain collec-
tively, and build the strongest free
trade union movement in all of Africa.
The infamous pass laws have been
ended, as have many of the laws denying
blacks the right to live, work, and own
property in South Africa's cities.
Citizenship, wrongly stripped away, has
been restored to nearly 6 million blacks.
Segregation in universities and public-
facilities is being set aside. Social apart-
heid laws prohibiting interracial sex and
marriage have been struck down. It is
because State President Botha has
presided over these reforms that ex-
tremists have denounced him as a
traitor.

We must remember, as the British
historian Paul Johnson reminds us, that
South Africa is an African country as
well as a Western country. And review-
ing the history of that continent in the
quarter century since independence,
historian Johnson does not see South
Africa as a failure: ". . .only in South
Africa," he writes, "have the real in-
comes of blacks risen very substantial-
ly. .. . In mining, black wages have
tripled in real terms in the last dec-
ade. . . . South Africa is the. . . only Afri-
can country to produce a large black
middle class. Almost certainly," he adds,
"there are now more black women
professionals in South Africa than in the
whole of the rest of Africa put
together."

Despite apartheid, tens of thousands
of black Africans migrate into South
Africa from neighboring countries to es-
cape poverty and take advantage of the
opportunities in an economy that pro-
duces nearly a third of the income in all
of sub-Saharan Africa.

It's tragic that in the current crisis
social and economic progress has been
arrested. And, yet, in contemporary
South Africa— before the state of
emergency— there was a broad measure
of freedom of speech, of the press, and
of religion there. Indeed, it's hard to
think of a single country in the Soviet
bloc— or many in the United Nations—
where political critics have the same
freedom to be heard as did outspoken
critics of the South African Government.

But, by Western standards, South
Africa still falls short, terribly short, on
the scales of economic and social justice.
South Africa's actions to dismantle

apartheid must not end now. The sta
of emergency must be lifted. There
must be an opening of the political
process. That the black people of Sou
Africa should have a voice in their o\
governance is an idea whose time has
come. There can be no turning back,
the multiracial society that is South
Africa, no single race can monopolize
the reins of political power.

Black churches, black unions, and
indeed, genuine black nationalists ha1
legitimate role to play in the future (
their country. But the South African
Government is under no obligation tc
negotiate the future of the country w
any organization that proclaims a gos
creating a communist state and uses
rorist tactics and violence to achieve

U.S. Ideals and Strategic Interests

Many Americans, understandably, as
given the racial violence, the hatred,
why not wash our hands and walk a\
from that tragic continent and bleedi
country? Well, the answer is: we can

In southern Africa, our national
ideals and strategic interests come
together. South Africa matters becau
we believe that all men are created
equal and are endowed by their creal
with unalienable rights. South Africa
matters because of who we are. One
eight Americans can trace his ancesti
to Africa.

Strategically, this is one of the mi
vital regions of the world. Around th>
Cape of Good Hope passes the oil of
Persian Gulf, which is indispensable t
the industrial economies of Western ]
rope. Southern Africa and South Afri
are repository of many of the vital
minerals— vanadium, manganese, chro
mium, platinum— for which the West
no other secure source of supply.

The Soviet Union is not unaware
the stakes. A decade ago, using an ar
of Cuban mercenaries provided by Fi
Castro, Moscow installed a client regi
in Angola. Today, the Soviet Union is
providing that regime with the weapc
to attack UNITA [National Union for
the Total Independence of Angola]— a
black liberation movement which seel-i
for Angolans the same right to be
represented in their government that
black South Africans seek for
themselves.

Department of State Bull

FEATURE
South Africa

South Africa— A Profile

graphy

1,233,404 sq.km. (472,359 sq. mi.),
iding the enclave of Walvis Bay; about
e the size of Texas. Capital: Adminis-
ive— Pretoria (pop. 1.0 million).
jjjutive— Cape Town (1.7 million).
'\cial— Bloemfontein (0.2 million). Other
is— Johannesburg (1.9 million), Durban
million). Terrain: plateau, mountains,
tal plains. Climate: moderate.

lx<^

|^ \ ZIMBABWE { /

*■* NAMIBIA

\ fmz\

-* BOTSWANA ^>~-~/ \

\ .-^ J Pretoria I s^^
\y SWAZILANOM

SOUTH iHotho/
AFRICA /

►pie

ionalitv: Noun and adjective— South
ican(s). Population (1984 est.): 32.6
ion. Annual growth rate: 2.5%— whites
1%; blacks*: "coloreds" 2.28%, Asians
>%, Africans 2.8%. Ethnic groups:
ite— English, Afrikaner; black— colored,
an, African. Languages: English and
ikaans (official), Zulu, Xhosa, North and
;th Sotho, Tswana, others. Religions:
dominantly Christian; also traditional Afri-
, Hindu, Muslim, and Jewish. Education:
rs compulsory— white and coloreds, ages
6; Asians, ages 7-15; Africans, being intro-
ed. Health: Infant mortality rate (1980)—
1,000 live births: whites 13.0; blacks,
>reds 61.9; Asians 20.4; Africans 90. Life
eetancy— whites 70 yrs.; blacks: coloreds
yrs., Asians 66 yrs., Africans 55 yrs. Work
ce (1 1.0 million): Agriculture— 30%.
'ustry and commerce— 29%. Services— 34%.
fling— 1%.

Government

Type: Executive— president, tricameral
Parliament with one chamber each for whites,
coloreds, and Indians, under a new constitu-
tion effective September 3, 1984. Independ-
ence: May 31, 1910, Union of South Africa
was created; became sovereign state within
British Empire in 1934; May 31. 1961 became
republic; October 1961 left the British Com-
monwealth. Constitution: Effective
September 3, 1984.

Branches: Executive— state president
(chief of state) elected to a 5-year term sub-
ject to removal by majority vote of each of
the three Houses. Legislative— tricameral
Parliament consisting of 308 members in
three chambers: House of Assembly (white)—
166 members elected directly for maximum of
5-year term. 4 members nominated by the
president, 8 indirectly elected by the
chamber; House of Representatives
(colored)— 80 directly elected members,

2 members nominated by the president, and

3 indirectly elected by the chamber; House of
Delegates (Indian)— 40 members directly
elected. 2 nominated by the president, and

3 indirectly elected by the chamber. Presi-
dent's Council— 60 members, 25 appointed by
the president, 20 elected by the House of
Assembly. 10 elected by the House of Repre-
sentatives, and 5 elected by the House of
Delegates. Members serve during term of
Parliament. Judicial— Supreme Court con-
sisting of Appellate Division in Bloemfontein
and four provincial divisions.

Administrative subdivisions: Provincial
governments of the Transvaal, Orange Free
State, Cape of Good Hope, and Natal; 10
separate "homelands" administered in areas
set aside for black Africans.

Political parties: White— National Party,
Progressive Federal Party, New Republic
Party, Conservative Party, Reconstituted
National Party. Colored— Labor Party,
Freedom Party, People's Congress Party,
Reformed Freedom Party, New Convention
People's Party. Indian— National People's
Party. Solidarity. Suffrage: adult whites,
coloreds, and Indians 18 and older.

Central government budget (FY 1985-86):
Rand 31 billion.

Defense (FY 1985-86): 15% of govern-
ment budget.

Flag: Three horizontal bands— orange,
white, and blue from top to bottom with the
Union Jack and the flags of the two former
Boer Republics (the Orange Free State and
the Transvaal Republic) reproduced in
minature and centered on a white band.

Economy

GNP: (1985) $51 billion. GDP: (1985) $49.1
billion. Annual growth rate (GDP): 12.6%
nominal-.06% real. Per capita GNP: $1,566.
Avg. inflation rate (1985): 16.2%.

Natural Resources: nearly all essential
minerals except oil.

Agriculture: (1985): 4.7% of GNP.
Products— com, wool, dairy products, wheat,
sugarcane, tobacco, citrus fruits. Cultivated
land— 12%.

Mining: 15.1% of GNP.

Manufacturing: 23% of GNP.

Industry: Types— minerals, automobiles,
fabricated material, machinery, textiles,
chemicals, fertilizers.

Trade: Exports (1985)-$15.9 billion:
gold, diamonds, corn, wool, sugar, fruit, fish
products, metals, metallic ores, metal prod-
ucts, coal. Major markets— VS. Switzerland,
Japan, UK. Imports (1985)— $10.1 billion:
machinery, electrical equipment, transporta-
tion, office machinery and data processing
equipment, metal products. Major
suppliers— US, FRG, Japan, UK.

Official exchange rate: one rand =
US $.40.

Fiscal year: April 1-March 31.

Membership in
International Organizations

UN and many of its specialized agencies,
including the General Agreement on Tariffs
and Trade (GATT), INTELSAT.

*In South Africa, the term "black"
embraces the South African racial categories
of "colored" (mixed race), Asian, and
African.

Updated from the Background Notes of May
1985, published by the Bureau of Public
Affairs. Department of State. Editor: Juanita
Adams. ■

ptember 1986

Apartheid threatens our vital in-
terests in southern Africa, because it's
drawing neighboring states into the vor-
tex of violence. Repeatedly, within the
last 18 months, South African forces
have struck into neighboring states. I
repeat our condemnation of such be-
havior. Also, the Soviet-armed guerrillas
of the African National Congress-
operating" both within South Africa and
from some neighboring countries— have
embarked upon new acts of terrorism in-
side South Africa. I also condemn that
behavior.

But South Africa cannot shift the
blame for these problems onto neighbor-
ing states, especially when those neigh-
bors take steps to stop guerrilla actions
from being mounted from their own
territory.

If this rising hostility in southern
Africa— between Pretoria and the front-
line states— explodes, the Soviet Union
will be the main beneficiary. And the
critical ocean corridor of South Africa
and the strategic minerals of the region
would be at risk. Thus, it would be a
historic act of folly for the United
States and the West— out of anguish and
frustration and anger— to write off
Smith Africa.

Key to the Future

Ultimately, however, the fate of South
Africa will be decided there, not here.
We Americans stand ready to help. But
whether South Africa emerges demo-
cratic and free or takes a course leading
to a downward spiral of poverty and
repression will finally be their choice,
not ours.

The key to the future lies with the
Smith African Government. As I urge
Western nations to maintain communica-
tion and involvement in South Africa, I
urge Mr. Botha not to retreat into the
laager, not to cut off contact with the
West. Americans and South Africans
have never been enemies, and we under-
stand the apprehension and fear and
concern of all of your people. But an
end to apartheid does not necessarily
mean an end to the social, economic, and
physical security of the white people in
this country they love and have
sacrificed so much to build.

To the black, "colored," and Asian
peoples of South Africa, too long treated
as second- and third-class subjects, I can
only say: in your hopes for freedom, so-
cial justice, and self-determination, you
have a friend and ally in the United
States. Maintain your hopes for peace
and reconciliation, and we will do our
part to keep that road open.

We understand that behind the rage
and resentment in the townships is the
memory of real injustices inflicted upon
generations of South Africans. Those to
whom evil is done, the poet wrote, often
do evil in return.

But if the people of South Africa are
to have a future in a free country where
the rights of all are respected, the
desire for retribution will have to be set
aside. Otherwise, the future will be lost
in a bloody quarrel over the past.

Components for Progress
Toward Peace

It would be an act of arrogance to insist
that uniquely American ideas and insti-
tutions, rooted in our own history and
traditions, be transplanted to South
African soil. Solutions to South Africa's
political crisis must come from South
Africans themselves. Black and white,
"colored" and Asian, they have their
own traditions. But let me outline what
we believe are necessary components of
progress toward political peace.

First, a timetable for elimination of
apartheid laws should be set.

Second, all political prisoners should
be released.

Third, Nelson Mandela should be
released— to participate in the country's
political process.

Fourth, black political movements
should be unbanned.

Fifth, both the government and its
opponents should begin a dialogue about
constructing a political system that rests
upon the consent of the governed—
where the rights of majorities and
minorities, and individuals are protected
by law. And the dialogue should be ini-
tiated by those with power and
authority— the South African Govern-
ment itself.

Sixth, if postapartheid South Africa
is to remain the economic locomotive of
southern Africa, its strong and devel-
oped economy must not be crippled.

And, therefore, I urge the Congress-
and the countries of Western Europe*
to resist this emotional clamor for pui
tive sanctions.

If Congress imposes sanctions, it
would destory America's flexibility, d
card our diplomatic leverage, and
deepen the crisis. To make a different
Americans— who are a force for deceit
and progress in the world— must rem:
involved. We must stay and work, no
cut and run.

It should be our policy to build in
South Africa, not to bring down. Too
often in the past, we Americans— acti
out of anger and frustration and
impatience— have turned our backs or
flawed regimes, only to see disaster
follow.

Those who tell us the moral thing
do is to embargo the South African
economy and write off South Africa
should tell us exactly what they belie
will rise in its place. What foreign
power would fill the vacuum if South
Africa's ties with the West are broke

The Need for Coordination

To be effective, however, our policy
must be coordinated with our key
Western allies and with the front-line
states in southern Africa. These coun
tries have the greatest concern and
potential leverage on the situation in
South Africa. I intend to pursue the
following steps.

• Secretary Shultz has already be
gun intensive consultations with our
Western allies— whose roots and pres
ence in South Africa are greater than
our own— on w'ays to encourage inten
negotiations. We want the process to
gin now, and we want open channels ■
all the principal parties. The key nati
of the West must act in concert. And
together, we can make the difference;

We fully support the current effoi
of the British Government to revive
hopes for negotiations. Foreign Secre
tary Howe's visits with South Africa'
leader this week will be of particular
significance.

• And second, I urge the leaders
the region to join us in seeking a futu
South Africa where countries live in
peace and cooperation. South Africa i:
the nation where the industrial revolt
tion first came to Africa; its economy

riflnartmflnt nf Ctoto Rnllll

FEATURE
South Africa

jajty engine that could pull southern
into a prosperous future. The
nations of southern Africa— from
asa to the Cape— are rich in nat-
esources and human resources.
Third, I have directed Secretary

and AID [Agency for Internation-
/elopment] Administrator McPher-
i undertake a study of America's
ance role in southern Africa to de-
le what needs to be done and
can be done to expand the trade.
:e investment, and transport
ects of southern Africa's land-
1 nations. In the past 5 years, we
provided almost $1 billion in as-
ce to South Africa's neighbors.
his year we hope to provide an ad-
al $45 million to black South
ms.

e're determined to remain in-
diplomatically and economically,
the states of southern Africa
vish constructive relations with the
d States.

lis Administration is not only
st broad economic sanctions and
H apartheid; we are for a new

Africa, a new nation where all
las been built up over generations

destroyed, a new society where
ipation in the social, cultural, and
;al life is open to all people— a new

Africa that comes home to the
f of free nations where it belongs,
o achieve that, we need not a
ern withdrawal but deeper involve-
by the Western business commu-
as agents of change and progress
rowth. The international business
mnity needs not only to be sup-
d in South Africa but energized.

be at work on that task. If we
to foster the process of transforma-
one of the best vehicles for change
migh the involvement of black
i Africans in business, job-related
ties, and labor unions.
ut the vision of a better life cannot
alized so long as apartheid endures
nstability reigns in South Africa. If
eoples of southern Africa are to
>er, leaders and peoples of the
n— of all races— will have to elevate

common interests above their
c divisions.

/e and our allies cannot dictate to
•overnment of a sovereign nation.
should we try. But we can offer to

help find a solution that is fair to all the
people of Smith Africa. We can volun-
teer to stand by and help bring about
dialogue between leaders of the various
factions and groups that make up the
population of South Africa. We can
counsel and advise and make it plain to
all that we are there as friends of all
the people of South Africa.

In that tormented land, the window
remains open for peaceful change. For

how long, we know not. But we in the
West, privileged and prosperous and
free, must not be the ones to slam it
shut. Now is a time for healing. The
people of South Africa, of all races,
deserve a chance to build a better fu-
ture. And we must not deny or destroy
that chance.

'Text from Weekly Compilation of
Presidential Documents of July 28, 1986.

The U.S. Approach
to South Africa

Secretary Shultz 's statement
before the Senate Foreign Relations Committee
on July 23, 1986.1

It is always a pleasure for me to appear
before this committee, and especially
today when I have an opportunity to
expand on and support the President's
ringing denunciation of apartheid
yesterday, his call to South Africans of
all races, and for all of us here who are
interested in what happens in that
troubled country, to have in our minds a
vision of what can be if apartheid can be
ended, and if and when a government
where the rights of majorities, minori-
ties, and individuals are respected by
constitutional guarantees and where full
advantage can be taken of the extra-
ordinary resources and talents that are
there. That is our vision; that is what
we are trying to achieve. And third, the
President called attention and specified
what he takes to get there, primarily
what it takes on the part of the people
of South Africa to get there. And he
talked about the role of the United
States in helping to support those
objectives. It was an important,
vigorous, and principled statement of
which we can be proud.

We Americans are witness to a
mounting tragedy in South Africa that
stirs our emotions and prompts us to
ask ourselves those very American
questions: what can we do about
apartheid? What can we do about the
violence and destruction it generates
and about the spill-over effects of South
Africa's trauma on its many neighbors?
How can we help all South Africans
build a just and prosperous society?
Those are our questions, and I recognize
them in the statements that have been
made here.

In the past few months, the situa-
tion in South Africa has taken a further,
sharp turn for the worse. Slender hopes
for peace and reconciliation have fallen
victim to a headlong rush toward
violence. Doors that need to be open
have been slammed shut. Forces of
political fragmentation and racial
polarization have been set loose. They
will be very difficult to contain.

Our policy toward any region takes
into account changing facts on the
ground. While our goals and basic
purposes remain constant, U.S. interests

and values, and hence our actions, are
directly affected by what happens. We
have reviewed the southern African
situation. We have concluded that,
despite narrowing odds, we should be
doing all we can to reverse an
impending tragedy. In my remarks to
you today, I will describe the forces at
work in South Africa and the region,
discuss tlie broad approach which
President Reagan outlined yesterday in
his speech, and make clear what actions
we think make sense in this new
situation.

What Must Be Done

But, first, I want to outline the
approach the President and I believe we
must follow.

First, it is the leaders of South and
southern Africa and their people, black
and white, who have the major responsi-
bility. The fate of southern Africa is in
their hands. This is their drama, their
dilemma, their challenge. But they are
not alone. We are prepared to talk to all
of them and to help them talk to each
other. We and our allies will engage our
influence in every way possible to help
them meet the challenge. But, most
fundamentally, it is they who must rise

to it.

Second, the nature of the challenge
the South African Government faces is
clear. Progress toward peace there
requires:

• A timetable for the elimination of
all apartheid laws;

• The release of all political

prisoners, including— especially— Nelson
Mandela:

• The unbanning of black political
movements;

• An end to repressive measures,
especially the state of emergency; and

• The urgent beginning of dialogue
among all parties, leading to a demo-
cratic system of government in which
the rights of majorities, minorities, and
individuals are protected by a bill of
rights and firm constitutional
guarantees.

Third, the choices before black
South Africans are equally clear. We
call on them:

• To avoid the easy descent into vio-
lence, terrorism, and extremism;

• To demonstrate by their actions
that they understand the need for
compromise;

• To remember that they may soon
share the responsibility for governing
and reconstructing South Africa— I
would say sooner or later, the sooner
the better, that they will share it and
they have to think that way, that
responsibility; and

• To seek out and accept realistic-
openings for dialogue and negotiation
with the government.

Fourth, our policies and those of our
allies should ensure that expanded polit-
ical liberties in a postapartheid South
Africa are accompanied by an expansion
of economic opportunities for all South
Africans. This will require an expanding
South African economy that is strong
enough to meet South Africa's pressing
social and economic needs, healthy
enough to raise black living standards
rapidly toward those of whites, and
open and vigorous enough to spur eco-
nomic development regionwide.

Finally, a free South Africa is
essential to the kind of southern Africa
we and most southern Africans seek.
Only a South Africa which preserves
Africa's strongest and most developed
industrial economy can galvanize a
dynamic and balanced regional economy,
mobilize capital and labor, spread
advanced technology and management,
and strengthen trade and transport ties.
Only a South Africa of democratic free-
doms can foster such freedoms beyond
its borders. In this connection, there is
no place in our vision for South African
forces in Namibia or Cuban forces in
Angola. Both the South Africans and
the Cubans must go home.

These are the objectives to which all
our efforts must be directed. This is our
approach. We commend it to the Ameri-
can people. We commend it to our allies.
And we commend it to African peoples
and their leaders across the continent.
Let there be no doubt— no doubt what-
soever—about what the American
Government and people stand for. I
dare say. in listening to your comments
and reading things that all of you have
said from time to time, that on these ob-
jectives and these steps, which are the
gilts of the matter, there is broad bipar-
tisan agreement.

The Current Situation
and Its Implications

Now let me review the current situs
and its implications. It is essential t
derstand the facts in southern Afric
judge wrhat the results of various
courses of action by the United Stat
might be. I have said there is a bad
uation, getting worse. Let us look n
deeply at what is going on and whai
means.

The market is speaking clearly ;
where the hardening positions of thtf
South African Government and its \
lent opponents are taking South Afr
South Africa is under siege by self-
imposed economic sanctions. Foreigi
capital, technology, and expertise ai
pulling out. Currency controls, impo \
controls, and import-substitution pol j
cannot replace them.

The index of South African busii
confidence now stands at only three
fourths of what it was in 1980. Gros
fixed capital formation fell by 40"7f ii
1985 and is continuing to decline. Gi
domestic product was down by 1% i
the first quarter of this year. There ■
net emigration among whites for the
first time since 1977. Most signifiean
an increasing number of the country
skilled professionals are leaving.

Over the past year, the book val
of American investment in South Af

has fallen bv about a third. Investmt'

from other countries is falling by con
parable orders of magnitude, and vo.
tary disinvestment is accelerating.
Nearly 200 corporations are in variol
stages of disengagement from the Sc
African economy.

The commercial rand has depre-
ciated to less than 40<F, from $1.28 in
1980. The financial rand, used for off
shore transactions, now trades arourj
20<t. Despite the government's frequ
and heavy interventions in the excha
markets, South Africa's currency shfl
no sign of recovery. Capital flight
between September 1985 and March
this year was about $1 billion, equivi
lent to more than a month of import
Sweeping exchange controls have noi
staunched the outflow, which seems
be accelerating. There is no new lend
from abroad. In the past, South Afri
foreign exchange reserves have been
sufficient to cover 5-6 months of
imports. Now they barely cover
1 month's imports. Ninety-five perce>

nenartmpnt nf Rtatfi BuL

FEATURE
South Africa

s year's debt service payments
had to be rescheduled,
he government is holding- the
t rate at an artificially low 14' i .
ion persists at 17.5';. so interest
are, in fact, negative. This should
Bate borrowing and investment— no

that's their intent. Nevertheless.
lorrowing has fallen by 5%. And
of investment are now so low that
cannot cover the depreciation of
and equipment. The wages of

workers rose by 10.5% from
984 to mid-1985," but inflation then

at lS'/r , leaving them worse off.
all in the standard of living for
IS has since accelerated. Real per
i income is declining even more
iy for blacks.

he turn toward a siege economy
ncreases the size and cost of
■nment at the expense of produc-
■conomic activity and the tax base,
'-fifths of employed Afrikaners and
fth of the English-speaking white
'one already work for the South
m Government or its agencies.
try callups under the state of emer-

are diverting additional resources
f the productive sector. The recent
ts of labor leaders have brought
i to labor-management relations,
g further to the economy's woes,
nemployment among urban blacks
stands at 259c and runs over 50%
me urban areas. And, for the first
since the National Party came to
r, white unemployment is a serious
em. From March' 1985 to March of
/ear, 40,000 whites lost their jobs,
e are over 250,000 new job seekers
uth Africa every year; the economy
3 real growth rates of 5% just to
unemployment at current levels.
no growth in prospect, the country
>t create jobs for either blacks nr
iS.

outh Africa has costly economic
iocial problems which cry out to be
issed. For example, 3-4 million new
ing units will be required over the
15 years. Public health demands
;diate attention, with only 1 doctor
very 25.000 people in the rural
;. Black education is grossly under-
id. The South African Government,
5 credit, is trying to increase the
ints of money it devotes to address-
hese problems. But the state of
'gencv is imposing additional heavy

burdens on the country's budget, as are
the government's military adventures in
the region.

Current developments are, in fact,
eroding the capacity of any future South
African Government to address the
country's problems. They are causing
South Africa's economic base to deteri-
orate. Skilled manpower is fleeing the
country. Domestically generated capital
is bleeding away. These developments
are looting South Africa of the patri-
mony on which its reconstruction in the
postapartheid era must rest. They
should be of concern to all who hope to
see a prosperous, democratic South
Africa emerge from the miseries of
apartheid. They should be of as much
concern to South African blacks as to
whites.

Only the establishment of a system
that answers the aspirations of the
South African people for justice and
equality and ends policies and actions
that put South Africa at odds with all
its neighbors can open the path to
prosperity and progress for all, not just
in South Africa but throughout the
southern African region.

With so many opponents of apart-
heid in jail under the state of emergen-
cy, leaders on both sides find it hard to
meet, much less negotiate. Politics in
South Africa is increasingly polarized
and shrill; suspicion and mistrust
abound. The youth, black and white, are
being schooled in a style of politics that
sees violent retribution, rather than
open debate, as the natural reaction to
any expression of views different from
their own. The rising violence provokes
terrorism from extremists on all sides,
which, in turn, elicits more extreme
measures by both the government and
its opponents in what is becoming a
cruel game of oneupmanship.

These trends have implications that
resound well beyond South Africa's
borders and affect all of southern Africa.
Until 1985, the regional picture showed
signs of hope. Our diplomatic efforts
were having clear success. This conflict-
ridden region was moving, albeit fitfully,
toward negotiated solutions. Tireless
American diplomatic efforts had brought
South Africa, Angola, and other parties
within range of a possible accord on
Namibia's independence under UN
Security Council Resolution 435 and on
a timetable for Cuban troop withdrawal

from Angola. After a period of confron-
tation, the Nkomati accord between
South Africa and Mozambique created a
framework for economic cooperation and
good neighborly relations. This agree-
ment contained regionwide potential Un-
leashing the dogs of war and ending
Mozambique's endless agony of poverty
and strife. Fragile, but substantive,
exchanges were occurring betwen South
Africa and other neighbors to resolve
cross-border security problems. We sup-
port continued efforts by South Africa's
neighbors to stop guerrilla operations
from their territory.

I might say that 2 days after South
Africa's raid into Botswana, the Foreign
Minister of Botswana was in my office,
and she told me that on the day before
the raid she had been exchanging telex-
es with the South African Government
about still another meeting on security-
related matters, having to do with cross-
border violence. And she stated her
view and her government's view that
they did not want to harbor any ter-
rorists, and if South Africa would tell
them where they are, they'd get after
them. And that night she was greeted
by the raid, and who was killed in the
raid? A government official who spends
his off hours teaching school, hardly a
terrorist. So it's a tragedy. Neverthe-
less, I think the efforts of South Africa's
neighbors to stop guerrilla operations
from their territory are essential, and
we support them.

These hopeful beginnings have been
dealt body blows by the events of the
past 1<S months. South African strikes
against Lesotho, Zambia, Botswana, and
Zimbabwe and Pretoria's continued rela-
tionship with the Mozambican rebel
movement have shattered the emerging
climate of regional moderation. Soviet-
armed ANC [African National Congress]
guerrillas have embarked upon
ex] landed terrorist violence inside South
Africa, dragging neighboring states
inexorably into a cauldron of conflict
with a South African Government
increasingly eager to shift the blame for
its internal woes to its neighbors. The
MPLA [Popular Movement for the
Liberation of Angola] regime in Angola,
encouraged by massive Soviet arms
shipments, has used South African
attacks and internal problems as an
excuse to suspend negotiations and pur-
sue an illusory military option against

temhfir 19ftfi

I'NITA [National Union for the Total
Independence of Angola]. Despite hints
of possible flexibility, the MPLA has
refused to respond constructively to our
1985 compromise proposals on Namibia
and Angola or to explore South Africa's
professed readiness to begin implemen-
tation of a compromise plan now.

This new shift toward political con-
frontation is paralleled by economic
trends. South Africa and its neighbors
are diverting increasingly scarce
resources to their security forces. Inter-
nal strife and socialist inefficiency in
Angola and Mozambique have severely
damaged or destroyed the region's
natural transport infrastructure, render-
ing landlocked neighbors increasingly
dependent on costly long-distance routes
through South Africa. All you have to
do is look at a map and you see how
nonsensical from a rational economic
point of view what's happening is. The
Benguela rail line— long- of importance
for the Zairian and Zambian mining
industries— is hostage to Angola's civil
war. Rail and road links to Tanzanian
and Mozambican ports— and the ports
themselves— are functioning at a mere
fraction of their potential capacity. For
eight of its neighbors, South Africa now
provides the outlet for 25%-100r/f of
their export trade; and it has 75$ of the
region's rail network; provides a major
source of electric power to four neigh-
bors; and is the source of most neigh-
bors' imported chemicals, foodstuffs,
petroleum, and machinery. It is esti-
mated that as many as 10 million people
in nearby states live on the remittances
of foreign workers in South Africa.

Appeals by African states for man-
datory economic sanctions against South
Africa represent a political message to
us. Yet those states cannot themselves
implement such sanctions and would be
the first victims of South African coun-
termeasures now being loudly bran-
dished as a threat by Pretoria. Don't
forget, we're not the only ones that
can put on sanctions. And the declining
pace of economic activity in South Afri-
ca itself will have direct and predictable
results among its neighbors as capital.
expertise, and job opportunities are vic-
tims of South Africa's downward slide.
We need to understand clearly that the
human tragedy in South Africa is occur-
ring in the economic hub of a region
that includes a dozen states with some

150 million people. The damage inflicted
on South Africa by the marketplace, by
political measures of governments,
and— above all— by the South Africans
themselves is rippling across and drag-
ging down an entire region.

The fundamental cause of all this
damage is the system of apartheid and
the mounting and inevitable reaction to
it. Apartheid must be brought to an end
and be replaced by a democratic system
of government in which the rights of
majorities, minorities, and individuals
are protected by a bill of rights anil
firm constitutional guarantees.

Now, that is a rather laborious sum-
mary of some of the trends that are tak-
ing place, and I personally believe it is
quite sobering. And I think it is quite
clear that if you are wondering if there
is a message being sent, it is being sent.
It's being sent diplomatically, it's being
sent politically, it's being sent economi-
cally, and it's being sent with violence,
unfortunately. I think there is some
merit to the argument that the message
delivered by the marketplace is a more
powerful and deeper message than a
message that might be delivered fix-
some action that would be taken here. If
you impose a political sanction, you are
in effect, saying that there is capital and
business and everything that is just dy-
ing to get in here and take advantage of
those opportunities, and you are going
to stop it from doing so. It is more
devastating to realize that without any
such interposition capital is not coming-
capital is leaving, and the economy is in
a rapid downward spiral. That is a very
powerful message being delivered, and I
think you should think twice before you
piggyback on it and to a certain extent
disturb it. Now, let me turn to the role
of the United States.

The Role of the United States

South Africa is now a society ruled by
fear. Fear on the part of whites that
their property and their values, which
they cherish, will be destroyed if blacks
attain real political power. Fear on the
part of blacks that they will be sub-
jected to even greater violence and
repression and despair that their legiti-
mate grievances will ever be redressed.
South Africa's true friends can and must
make the case that there are actions to
be taken to alter this climate of fear and
despair.

For if South Africa is now a con
in torment, it is also one of enormoi
potential. Both the South African
Government, which now seems so in
concerned about international opinio
and its black opponents, who often
to dismiss the efforts of the outside
world to help, still look to us for uni
standing and support. South African
short, continue to search for solutioi
We should help in this search.

Through several Administration;
including this one, U.S. policy has
sought the elimination of apartheid
rapid peaceful change to a democrat
system. Our voice has, of course, be
only one of many urging the South
can Government to act. South Africj
some inside, many outside the govei
ment— have expressed quiet appreci
for the role we have played in oppoi
forced removals of populations, dote
tions of individuals, and abuse of de
tainees. We believe that our suppor
an end to apartheid has made it eas
for the South African Government t
forward with the politically divisive
process of ending the pass laws, ex]
ing rights of residence and private
property ownership, and restoring
citizenship to those from whom flies
rights were stripped in an earlier er

We are proud to stand with Sou'.
Africans who feel as strongly about
what replaces apartheid as they do
about the urgent need to end it. Am
our role has gone beyond moral sua;
We and U.S. businesses have not ju;
spoken, we have acted by bringing 1
and white South Africans together it
the workplace and in our homes on 1
basis of friendship and equality. Ami
can business has spent over $200 mi
outside the workplace since 1977 to
pare black South Africans for the
postapartheid society they anticipate
The U.S. Government has allocated
$45 million in this fiscal year and tht
coming one for the same purpose. W
want to do more. I might say, I belii
that rather than excoriating Americi
businesses who are there in South A:
ca, they should be praised. They havi
performed magnificently. They have
into place in their workplaces standa
that show the way, and they have a<
as really good citizens in the commu
We can be proud of what they have
done. We don't want them to leave
there; they're a force for good, they'

FEATURE
South Africa

for progress. But, of course, they
aaving.
lie President has forcefully articu-

our strategy and the results we
from it. Getting there from here
•equire both patience and courage
ir part. We must not become part
iuth Africa's problems; we must
in part of their solution. We must
dm to impose ourselves, our solu-
■ or our favorites in South Africa;
an intrusion would be unwanted
inwise for any outside party. But
mst always be willing to help South
:ans in their search for their own
ers to their country's ills.
)ur access to various groups and
iduals gives us openings for using
macy and political and moral
jasion— the most effective tools
able to us in these dangerous times,
ontinue to urge the South African
rnment to communicate with all
es, and it makes sense for the
ed States to do the same, and we
Like our allies, we intend to raise
evel and the frequency of our con-
wit h the South African Govern-
;'s black opposition, including—
lg others— the African National
press.

Ve have serious questions about the
late objectives of the ANC, as well
jout the role in its inner circles of
Soviet-controlled South African
munist Party. We are also dis-
ed that the ANC appears to be imi-
g the South African Government's

ence for violence and intimidation
er than dialogue with its opponents,
the ANC has emerged as an impor-
part of the South African political
Hon. There is a compelling need to
re that its leaders— like other oppo-
s of apartheid— hear an authorita-
Statement of U.S. policies and
•ests and that we have equally
oritative insight into theirs. And. I
it say. with Nelson Mandela as their
ident— I have never met him, but
talked to many who have, and uni-
lly they come away from their meet-
with him, thinking very highly of
as an individual.

In our diplomacy, we are trying to
it an unhappy nation and its diverse
)les lay the basis for a better future,
moral responsibility each day must
o think through the results of our
ms. When President Reagan signed

Working Group on
South and Southern Africa

The working group was formed at the
direction of the President in the fall of
1985. It is an interagency effort led by
the Department of State to communicate
U.S. goals and objectives in South Africa
to domestic and foreign audiences. The
working group also builds cooperation
among U.S. Government agencies and
private groups that seek positive involve-
ment to promote fundamental change in
South Africa.

Apartheid, South Africa's system of
legally enshrined racism, is contrary to
the principles of liberty and equality of
opportunity on which the United States
was founded. It violates basic human
rights. The Administration is categori-
cally opposed to this practice and has
sought actively to promote a process of
peaceful and rapid change away from
apartheid toward a nonracial South
Africa.

U.S. influence in South Africa is lim-
ited, but our history, our concern for the
protection of human rights, and our role
as leader of the free world are fully con-
sistent with U.S. involvement to induce
change toward a more just society.

The central theme of U.S. policy is
one of support and pressure for con-
structive change toward a postapartheid
system in which all South Africans par-
ticipate, where the rights of both majori-
ties and minorities are respected. In this
regard, we reject the premise that it is
necessary to destroy South Africa to
change it. Consequently, U.S. policy is
firmly opposed to punitive economic
sanctions.

As a nation of builders, not destroy-
ers, a central element of the U.S. role
should include efforts to prepare South
Africans for a nonapartheid future. Such
efforts span a wide range of fields
through government, nongovernment,
and cooperative programs and activities.
The Administration does not believe that
constructive purposes will be served by
actions that could undermine or destabi-
lize the economic base of South Africa,
which remains a source of hope for the
future of its citizens and its neighbors
throughout southern Africa.

To underscore the Administration's
commitment to these goals and beliefs,
the working group conducts activities
aimed at the following objectives:

• To respond to the American
public's high level of interest about U.S.
policy toward South Africa, through an
active program of speeches, seminars,
publications, and press briefings-
ensuring that constructive suggestions
from the public are brought promptly to
the attention of U.S. policymakers;

• To encourage the private sector-
broadly defined from businesses to
religious groups— to become meaning-
fully involved in promoting the
emergence of a nonracial society in
South Africa and in helping the black
majority to overcome the legacies of
apartheid;

• To explain Administration goals to
Congress and to work intensively to
develop a consensus on U.S. policy which
furthers America's interests and enables
the United States to play a useful role in
South Africa;

• When asked, to serve as a
resource for State and local govern-
ments seeking information about U.S.
policy on divestment and positive alter-
natives to disengagement and loss of
American influence in South Africa;

• To encourage and facilitate U.S.
Government agencies— especially the
Agency for International Development
(AID).'U.S. Information Agency (USIA).
and Department of Commerce— in carry-
ing out programs totaling more than $50
million to help those disadvantaged by
apartheid; and

• To communicate U.S. policy goals
and programs to audiences beyond the
United States, particularly in Europe,
South Africa, and other parts of Africa.

For further information contact:

The Working Group on South

and Southern Africa
U.S. Department of State
SAWG, Room 3243
2201 C Street, N.W.
Washington, D.C. 20520 ■

itomhnr 1 QQC

his Executive order on South Africa last
September, he said that he wanted to
work with Congress to increase biparti-
san support for U.S. policy toward that
country. In his speech yesterday after-
noon, he added:

America's view of apartheid has been,
and remains, clear. Apartheid is morally
wrong and politically unacceptable. The
United States cannot maintain cordial rela-
tions with a government whose power rests
upon the denial of rights to a majority of its
people, based upon race.

II' South Africa wishes to belong to the
family of Western nations, an end to apart-
heid is a precondition. Americans. . . are
united in this conviction.

U.S. policy proceeds from that
] treinise. Our purpose is to underscore
our message to the South African
Government that the United States— its
Executive, its legislature, and most
importantly, its people— reject apartheid
and that we, like growing numbers of
the South African people, want it
replaced by a genuinely democratic sys-
tem in which all can participate, regard-
less of race.

Coordination With Allies

In this connection, it is vital to coor-
dinate what we do with our principal
allies. American influence in South
Africa is limited. But the influence of
the industrialized democracies of the EC
[European Communityl. Japan, and the
United States as a group is significant.
Together we constitute South Africa's
major trading and investment partners.
Together we embody the values of the
democratic world that South Africans of
all races seek to join. Together we
stand a better chance of helping them to
do so.

In the coming weeks, both the Com-
monwealth nations and the European
Community will be consulting about pos-
sible measures aimed at inducing posi-
tive change in South Africa, In those
contexts, a broad range of measures has
been put forward. These include puni-
tive actions such as commodity import
bans, further export/import and invest-
ment restrictions, curtailing air travel
and visa facilities, and various other
political sanctions. They include meas-
ures to protect our interests against the
possibility of catastrophe, such as coor-
dination of stockpiling policies for stra-

tegic minerals from South Africa. Let's
not forget that we import some very im-
portant commodities from there. Other
positive measures have also been pro-
posed, such as increased aid to apart-
heid's victims. We have our own ideas
and are prepared to join our allies in
formulating a common approach. As the
President said yesterday, however, it
cannot make sense— politically, economi-
cally, or morally— to compound the
suffering of an entire region and remove
our remaining influence as a gesture of
outrage. That is not responsible.

A special EC emissary, British For-
eign Secretary Sir Geoffrey Howe, has
also been mandated to visit the region
to pursue possibilities for negotiations.
He is now in South Africa. He will meet
today with State President Botha and
expects to meet with him again on
July 29. The President and I conferred
with Sir Geoffrey last week. He has our
full support in the difficult mission he
has undertaken. His findings and his
recommendations at the conclusion of
the trip will have a major bearing on
the decisions we shall be considering in
concert with our allies. His mission, and
our diplomacy, will aim at restoring the
hopes for dialogue first kindled by the
Eminent Persons' Group, whose negot-
iating concept made more headway than
many thought possible.

We cannot, and should not, attempt
to deal with the crisis in South Africa in
isolation from the disastrous conse-
quences it can have for the entire
southern African region. Accordingly. I
am asking AID [Agency for Interna-
tional Development] to join the Depart-
ment of State in our consultations with
our allies.

We will consider a range of positive
measures that would give substance to
the President's wish to promote eco-
nomic progress throughout the southern
African region. South Africa now
dominates an economically irrational
regional transport network that pro-
vides high-cost outlets for all of its
neighbors except Angola, and which
renders them vulnerable to retaliation
and economic penalties. These front-line
states have shorter, more economic
alternatives, but these routes have
deteriorated over the years, are ineffi-
cient, and require upgrading. We and
our allies have already begun to work
on a program of rehabilitating some

transportation links. Similarly, we
intend to pursue ways of opening th
region to more commerce, developin
transportation routes and industry a
the major alternative corridors, add!
to the locomotive and rolling stock <
the front-line states, and stimulating
more trade between South Africa's
neighbors.

For example, the Beira corridor
through Mozambique is a natural eg
to the sea for many of the landlocke
southern African states. It is an eco
nomic, if partial, alternative to depe
ence on South Africa for states as f;
away as Zaire, which now sends 439
its mineral and metal exports throuj
the South African road and railway
tern. Development of the Beira corn
could be vital to the future economii
growth of the region, lowering expo
costs, and improving terms of trade,
regardless of what happens in South
Africa. Support for this project won
lay a more balanced foundation for e
nomic relations between the front-lii
states and a postapartheid South Af

Investments in regional transpor
tion and trade development projects
not simply gestures against South
African domination of the economies
its neighbors. These are solid founda
tions for the future of the regional
economy.

These investments would also re
the extent to which we depend on S>
Africa for access to the region's mini
supplies. U.S. participation in these
positive, forward-looking programs
demonstrates to all the front-line sta
our commitment to the region's post
apartheid future. They are subjects <
vital interest to everyone concerned
about what happens in southern Afri
after apartheid has passed into histo
We intend to consult closely with Co
gress on these and other proposals t
address the problems of the region.

The Role of Congress

Here I want to point out the obligati
we all share toward Africa, the poori
continent. We all know the grim stat
tics of Africa's economic crisis. But
there is also a message of hope as
nation after nation discards discredit
statist economic development policies
African leaders have joined a growiro
chorus— heard loud and clear at the 1

Dpnartmpnt nf StatP RhI

FEATURE
South Africa

Session on Africa in May, which
?nded and found to be an inspiring
t. as you see that change in think-
hat's going on throughout that
rent— that recognizes that free mar-
orces are the key to ending the
gent's economic tailspin. Now is the

or Americans to be at Africa's
economically. This Administration
)layed a leading international role in
ng shape the new policy consensus
frica. Resource flows have
nded to enable us to back Africa's
ers and support the politically
y process of policy reform.
Jut congressional foreign assistance
s threaten this important American
ivement. We have many important
rates and responsibilities around the
i, including in Africa. To be effec-
our foreign policy and national
egy must, I repeat, must be ade-
ely funded. And, ladies and gentle-
it is not being adequately funded
e kind of budget numbers that are
I talked about. It is being cut to
>ns, and our ability to do anything
tractive in the area we're focusing
my, let alone other areas, is being
ced to a shambles. And so I wonder
i I hear of all the calls for economic
dons against South Africa whether
le have thought of the economic
: tag for southern Africa. Instead of
sing on how much damage we can
i sending a message, let's send a
sage to South Africa's neighbors of
support for their economies, their
istructures, and their independence,
it costs money, and we don't have it.
Meanwhile, I know this committee
before it several legislative
>osals designed to send messages to
South African Government. These
)osals include the House bill, which
iunts to a declaration of economic
on the people of southern Africa,
passage would end our capacity to
3 any positive influence on the strug-
for justice and human rights in
:hern Africa. Other legislation,
ough loss extreme, would similarly
ken our ability to have a positive
ct on what happens in South Africa.
The President and I share the sense
utrage at the situation in South
ica that has led you and your col-
fues in the House to consider these
ons. We are prepared to take action,
h our allies, to change the mix of our

pressures— positive and negative— to
meet the rapidly changing course of
events in South Africa and to play an
essential supporting role in advancing
South Africans toward the objective of a
decent, democratic, prosperous, and
civilized society for all who live there.

But I want forcefully to underscore
the need for us to have maximum flexi-
bility to carry out our diplomacy. This is
not a situation in which we can afford to
be locked in the straitjacket of rigid
legislation, no matter how well intended
or carefully drafted to anticipate events
that may or may not occur. There's a
lot taking place right now and over the
next month or so. and you can't foretell
it. We need the authority to act.
Presidential discretion is necessary to
introduce new measures if we conclude
that they are necessary, or— equally
important— to lift some should real
progress be made. Remember, we're not
talking about whether measures should
be taken or not. There are lots of things
in place. They go back to the early
1960s when President Kennedy joined
other countries in embargoing shipment
of arms to South Africa, and they've
continued since, including the Presi-
dent's Executive order. So there are
lots of things there. The question you
have before you is whether you're going
to pull the final pin and leave.

We feel strongly that the way to
proceed is not to take actions that
assuage our indignation but aggravate
the currently deteriorating situation in
South Africa. And, as I've said, from
the standpoint of economic sanctions
they're doing it to themselves. And it's
a very powerful message to them to
say, look, the way you're conducting
yourself, never mind what anybody else
thinks, you're ruining yourself. There's
no hope for your economy unless you
turn it around. It's not what somebody
else is doing to you; it's what you are
doing to yourself, which, of course, is
saying if you want to change, you can
change. We need to maintain our capaci-
ty to play a role in the emergence of a
new South Africa. We must not con-
demn the inhabitants of the South Afri-
ca of the future to a life of economic
stagnation. The way to proceed is not to
punish those South Africans persecuted
by apartheid hut to target pressure on
those who defend and enforce apartheid.
The way to proceed is not, in short, to

add to the misery of South Africans but
to sot about helping them solve South
Africa's problems and to build a society
of expanding liberties and economic
opportunities.

Conclusion

Let me sum up. The South African
Government has, by its policies, isolated
itself politically and diplomatically. Its
most recent actions are having the
effect of isolating it economically as
well. If current trends continue, the out-
look for South Africa is dismal. In such
a South Africa, there will be no win-
ners, only losers. We have a different
vision of South Africa's future. We want
a democratic and prosperous South Afri-
ca, where all races participate politically
and economically, at the center of a
peaceful and rapidly developing
southern African region. To achieve
this, apartheid must go. All South
Africans need to be represented in
negotiations to determine the system of
government that will replace it. Such
negotiations are urgent. We cannot
prescribe their outcome. But our policies
and actions must he calculated to
encourage the process of peaceful
change and help it along.

And to do this, we must, as I have
indicated, coordinate with our allies for
maximum effect. The international con-
sultations we have begun and our own
review process, as well as our gauging
of South African Government intentions,
will all come to a conclusion in Septem-
ber, when further exchanges with our
key allies will cap the process of coordi-
nation between us. We will be coming to
you for your support and will consult
closely with you as we examine how we
can best achieve the results we all want.

Upcoming events give State Presi-
dent Botha ample opportunities to set
out on a path that would take South
Africa out of its present stalemate. He'll
be speaking to his party convention, as
I understand it, on August 12. We urge
him to seize such opportunities. The
responsibility to save South Africa from
the violence, impoverishment, and hope-
lessness into which it is slipping rests
first and foremost with the South Afri-
can Government. It is that simple. If
courageous and far-sighted decisions are
taken. South Africans will find us ready
to join with our allies in helping them to

tember 1986

build a better future for all the people
of their country. The industrialized
democracies must be prepared to take
actions to help South Africans hasten
apartheid to an early end and to help
them replace it with a democratic socie-
ty in which the rights of all are respect-
ed and protected.

'Press release 149.

Misconceptions
About U.S. Policy
Toward South Africa

During the past year and a half,
apartheid— the system of legally
entrenched racism long practiced in
South Africa— has emerged as a highly
sensitive political issue in the United
States. Americans have been bombarded
with news about South Africa, as tele-
vised scenes of racial conflict have
entered American living rooms. But
South Africa also has captured the atten-
tion of many Americans because of the
antiapartheid actions of black South
African leaders such as Bishop Desmond
Tutu, who was awarded the Nobel Peace
Prize in 1984 for his role in the struggle.
In the United States, many citizens have
chosen to engage in nonviolent protest
against apartheid in front of the South
African Embassy and its consular offices
throughout the country. Other Ameri-
cans have demonstrated in favor of
stockholder divestment and corporate
disinvestment from South Africa. South
Africa not only has dramatically cap-
tured the attention of the media but con-
tinues to be an intensely debated issue in
( longress, in State and local govern-
ments, and on many university campuses
and elsewhere.

The purpose of this article is to put
the debate over I f.S. policy in factual
perspective. Public interest in and
debate on foreign policy issues are a cen-
tral ingredient of a healthy democracy.
As public awareness grows of the com-
plexity of the South African drama, it is
important that it be based on facts. Mis-
conceptions regarding U.S. policy, goals.

and objectives have clouded clear under-
standing of the issues and needlessly
polarized our public discourse. This
article addresses some of the common
misconceptions.

Misconception: U.S. policy props up
apartheid and the white minority gov-
ernment in South Africa at the expense
of the black majority.

Facts: U.S. officials over several Admin-
istrations repeatedly and consistently
have stated this country's strong opposi-
tion to apartheid. On September 9, 1985,
President Reagan stated the following:

The system of apartheid means
deliberate, systematic, institutionalized racial
discrimination denying the black majority
their God-given rights. America's view of
apartheid is simple and straightforward: we
believe it's wrong. We condemn it. And we're
united in hoping for the day when apartheid
will be no more.

The explicit aim of U.S. policy is to
end apartheid. The U.S. Government
uses all its influence and urges private
American citizens with influence in
South Africa to press the South African
Government to take immediate steps to
dismantle apartheid. We attempt to per-
suade the South African Government to
open talks, without preconditions, with
the full range of leaders— black and
wdiite— and to negotiate the establish-
ment of a political system that would
enable all South Africans to participate
in a government based on the consent of
the governed.

As we continue to encourage accel-
erated, peaceful change in South Africa,
we have:

• Maintained public and strong
private pressure on the South African
Government to translate into concrete
actions its statements of intent to aban-
don apartheid;

• Worked aggressively through
diplomatic and public channels to curtail
human rights abuses, obtain releases of
political prisoners, cease "forced
removals" of settled black communities,
extend civil rights to black victims of
apartheid laws and policies, and promote
the abandonment of those laws;

• Worked as closely as possible with
those inside and outside South Africa
who are actively seeking peaceful
change;

• Sent clear signals to the Soutl
African Government in the Presiden
Executive order of September 9, 198
and in private communications, that
pace of reform must be accelerated;

• Initiated an impressive range
assistance programs targeted to helf
black victims of apartheid in the licit
education, trade unionism, small
business development, human rights
and legal defense. Funding for such
ects in FY 1986 will total $20 millioi
compared to $4.2 million in FY 1982
From 1981 through 1985, the Unitec
States provided assistance amount in
$27.9 million.

Misconception: The Reagan Admini
tion has no consistent policy toward
southern Africa in general or South
Africa in particular.

Facts: Upon taking office in Januar;
1981, the Reagan Administration de
mined to focus on the many threats
stability in southern Africa and
developed a policy toward the regioi
that seeks to:

• End the unjust policy of apart'
in South Africa and promote a syste
government based on the consent of
the governed;

• Diminish regional and cross-
border violence and promote negoti-
ations as a means of settling differer

• Bring about Namibian indeper
ence based on UN Security Council
Resolution 435 and, in that context,
withdrawal of Cuban and other forei
troops from Angola; and

• Reassert U.S. influence in the
region.

These objectives have been const
ent over several past Administration
Although U.S. leverage is limited,
Americans can make and have made
difference.

In South Africa, the United Stat
has the best chance of all outside pai
to help South Africans move toward
peaceful and positive change and to
overcome the disabilities imposed by
apartheid. We maintain contact and
credibility with all parties— blacks ar
whites. Just as we engage in dialogu
with other governments whose form!
policies we disagree with, we must c
tinue to communicate our views to tit
South African Government. The Unii

Department of State Bu I1

FEATURE
South Africa

Is must continue to be a force for
ful change in South Africa and for
action of regional violence. We
to use all the influence we have to
for change. We cannot hope to
nee Smith Africa unless we remain
red there and continue to use our
ige wisely to promote reform.
[oreover, we must recognize that
i Africa is an integral part of and

• player in southern Africa. Our
nee with South Africa on ending
heid is related to the success of our
;s in the region as a whole. A

te of regional insecurity and armed
ct damages hopes for peaceful
>;e in South Africa.

onception: "Constructive engage-
" is merely engagement with the
1 minority in South Africa and a
s of allying the U.S. Government
the South African Government.

s: Constructive engagement has
maligned because it has been
iderstood or misperceived, both
n South Africa and without. The
/ has promoted continuing contact
all peoples in South Africa, black
vhite, and indeed, with the govern-
s and peoples of neighboring states.
J.S. Ambassador and his staff have
and are in touch with a wide spec-
of people from all South African
nunities, including black leaders
renting a number of political
nizations. We also have consistently
i the South African Government to

• into meaningful negotiations with
: leaders looking toward develop-

; of a government based on the con-
of all the governed,
although the policy occasionally has
criticized, no responsible entity
r within South Africa or without
'ver asked that the United States
ntinue its involvement in efforts to
lote stability and positive change in
egion. U.S. influence is limited, but
still significant, and we intend to
1 it where it may be most effective,
while, we will continue to carry on
logue with all South Africans in an
t to move forward the process of
ge now underway.

Misconception: The U.S. Government
has done nothing to demonstrate its
opposition to apartheid, and its relation-
ship with the South African Government
has always been business as usual.

Facts: The U.S. Government consist-
ently has spoken out against the apart-
heid system and repeatedly protested
specific human rights abuses in South
Africa. The U.S. Government has
adopted many restrictive measures to
dissociate itself from apartheid and to
help the black majority.

• Exports to South Africa of U.S.
arms, ammunition, and equipment for
their manufacture and maintenance
were unilaterally embargoed by the
United States in 1963. The U.S.
embargo is broader than the later 1977
UN Security Council embargo to which
the United States also subscribes.

• Since 1978 the U.S. Government
has prohibited the export of computers
to the South African military and police.
From 1978 to 1982, the United States
also banned the export of computers that
would be used to enforce apartheid.
Since 1982 the ban has precluded
exports of computers for any purpose to
all "apartheid-enforcing" entities of the
South African Government.

• Since 1978 the United States has
prohibited Export-Import Bank support
of exports to the South African Govern-
ment or its agencies. In addition the
United States has prohibited such export
assistance to private individuals or cor-
porations in South Africa, unless they
have endorsed and implemented employ-
ment practices that promote racial
equality.

• The Overseas Private Investment
Corporation (OPIC) does not provide
guarantees for South Africa, and since
1983 the U.S. representative to the
International Monetary Fund (IMF)
must "actively oppose any facility involv-
ing use of fund credit by any country
practicing apartheid" unless the
Secretary of the Treasury makes certain
certifications to Congress.

• In December 1984, the United
States joined with other UN Security
Council members in voting for an
embargo on imports of arms and ammu-
nition produced in South Africa.

• Since 1985 the United States has
prohibited the export of all items to the
South African military and police. The
only exceptions to this ban are medical
supplies and items used to prevent
unlawful interference with international
civil aviation.

• The United States rejects the
South African Government's policy of
granting "independence" to the so-called
black "homelands" of Transkei, Venda.
Ciskei, and Bophuthatswana in South
Africa; refuses to recognize their inde-
pendence or that of any other South
African "homeland" in the future: and
continues to hold the South African Gov-
ernment responsible for human rights
abuses and other developments in the
"homelands."

On September 9, 1985, the President
issued Executive Order 12532 imposing
carefully targeted sanctions against
South Africa. The President's action was
designed not to destabilize the South
African economy but to send a clear
signal to the South African Government
that official repression of protest is an
unacceptable response and that acceler-
ated change is essential. These measures
include:

• A tightening of restrictions on
computer exports to the South African
military, police, and apartheid-enforcing
entities;

• A specific prohibition on exports
of nuclear goods and technology to
South Africa, except those necessary to
implement International Atomic Energy
Agency (IAEA) nuclear proliferation
safeguards, or those exempted by the
Secretary of State for humanitarian
reasons to protect health and safety.
These 1985 restrictions tightened the
prohibitions on most nuclear trade and
exports to South Africa which had been
implemented as a function of U.S.
general nonproliferation policy since
1978;

• An express prohibition on the
import of arms, ammunition, and
military vehicles produced in South
Africa. This import ban implemented the
provisions of the voluntary arms
embargo established by the UN Security
Council in 1984;

ember 1986

• A ban on loans by U.S. financial
institutions to the South African Govern-
ment, its agencies and institutions,
except in exceptional cases when a loan
is deemed to improve economic oppor-

t unities for black South Africans, or for
educational, housing, and health facilities
that are open and accessible to South
Africans of all races;

• A ban on U.S. Government mar-
keting export assistance to any U.S.
firm employing at least 25 persons that
does not adhere to certain labor stan-
dards which promote racial equality; and

• A ban on the import of Kruger-
rands, the gold coin minted in South
Africa.

The Executive order also directs a
substantial increase in funding of
scholarships for South Africans disad-
vantaged by apartheid and for the pro-
motion of human rights activities in
South Africa, such as legal assistance to
political detainees and support for
antiapartheid organizations.

Misconception: The United States
claims it opposes apartheid in South
Africa but has virtually no programs to
aid blacks disadvantaged by that system.

Facts: An essential part of U.S. policy
toward South Africa involves programs
aimed at improving the quality of life for
black South Africans. Since 1981 the
Reagan Administration has directed the
U.S. Embassy in Pretoria and its
Agency for International Development
(AID) mission to develop and fund pro-
grams that address problems of inferior
education, unemployment, and human
rights protection for black South
Africans.

In FY 1986, the U.S. Government
will finance, through AID, projects in
South Africa amounting to about $20
million. AID works directly with private
voluntary organizations, local com-
munity based groups, and concerned
individuals in South Africa to address
needs in the fields of education, labor
relations, legal defense, private enter-
prise, community development, and
employment. These programs include:

• The external and internal scholar-
ship programs, to finance undergraduate
and professional study in the United
States and university training within
South Africa for disadvantaged black
South Africans. In FY 1986, AID will
spend about $12 million on these
programs;

• The entrepreneurial training proj-
ect, to provide training for black owners
and operators of small businesses. AID
has committed $3 million to this 3-year
project;

• A grant of $1.5 million in FY 1986
to the African-American Labor Center
of the AFL-CIO to continue funding
training programs for black South
African trade unionists in the areas of
collective bargaining and grievance
procedures;

• A human rights fund of up to $1.5
million in FY 1986 administered by the
U.S. Embassy to support antiapartheid
groups inside South Africa working to
promote economic, social, juridical, and
political change. Among the activities
supported is direct legal assistance to
victims of apartheid and their families;

• A special fund supporting self-help
projects within black townships and
rural areas to ameliorate social and
economic problems. In FY 1986,
$275,000 has been allocated to this pro-
gram which, because of its matching
character, has significant impact at the
local level; and

• Through the community outreach
and leadership development program,
AID will obligate $2.5 million for the
initial phase of a 5-year program to help
new community organizations develop
leaders and established community
organizations to expand their operations.

The U. S. Information Agency will
spend $1.7 million in FY 1986 on
exchange programs such as the interna-
tional visitors program, Fulbright
scholarships, and journalist training pro-
gram for South Africans working to
change the status of blacks, "colored,"
and Asians through university programs,
teacher training, labor unions, or black
commercial enterprise-building.

The U.S. Department of Comme
has implemented a series of progran
FY 1986 to assist black-owned busi-
nesses in South Africa, including a
"Matchmaker Fair" (held April 24-!
1986, near Johannesburg) aimed at
increasing sales of black manufactur
and service companies to U.S. and o
firms operating in South Africa; hel]
the South Africa Urban Foundation
publish a directory of black businessi
and counseling U.S. firms seeking tc
enter into business relationships wit
black-owned companies in South Afi

Misconception: U.S. policy toward
South Africa has been ineffective in
dismantling apartheid and achieving
political equality for blacks. The Sou
African Government won't make sig
cant changes until "forced" to do so
punitive economic sanctions.

Facts: Though American leverage ti
bring about change in South Africa i
limited, we strongly oppose apart hei
and are committed to its abolition ai
the right of blacks to full political,
economic, and social participation in
South African society. The South
African Government is in no doubt ai
our convictions on the matter. U.S.
policy is to urge the South African
Government to end apartheid and
negotiate a system of governance ba
on the consent of all the governed. V
are not satisfied with the current pal
change and recognize that much rerr
to be done. We do note that some im
tant changes have taken place in rec
years. We will judge the South Afric
Government by how completely it irr
plements these changes, which are
described below.

• Public acknowledgment by the
South African Government that disc
nation on racial grounds cannot be
justified and that it intends to end si
discrimination;

• Abolition of numerous "influx
trol" laws which had restricted the
employment and residence of blacks
were enforced through the "pass"
system. Their abolition will result in
greater freedom of movement for m;
blacks residing in townships outside
urban areas. This includes abolition (

Department of State Bui

FEATURE
South Africa

>ld pass book and its replacement
a uniform identity document issued
I South Africans regardless of race
since April 18, 1986, the cessation of
sts for violation of influx control
ind the release of thousands
ined or serving sentences for such
rises. We have urged the South
can Government to apply the princi-
f freedom of movement to all South
cans irrespective of race;

Limited restoration of South
can citizenship to blacks dena-
alized by the independence of the
nelands." It has been estimated that
million black township residents of
ars standing who are permanently
loyed have acquired housing and
reside with their families in urban
s. We have pressed the South
can Government to extend such
enship to all 9 million who are now
idered citizens of the so-called inde-
lent homelands, consistent with
e President Botha's earlier accep-
e of the principle of universal
enship;

Virtual abolition of job reservation
lerly restricting 26 categories of
loyment to "whites only";

Recognition of the freedom of any
/idual, regardless of race, to form
bargain in free trade unions, and the
ination of all references to race in
r legislation;

• Permission for universities to

it students on the basis of academic
ifications only, rather than race;
ate primary and secondary schools
now eligible for government sub-
is without reference to the racial
position of their student bodies;
> Opening of central business
iets to black entrepreneurs in most,
>t all, major metropolitan areas;

Acceptance of the permanence of
ks in urban areas. Black South
cans may now purchase property in
gnated black urban areas;

Elimination of the Colored
"erence Area in the Western Cape,
ignizing the claims of blacks there to
ience rights and employment;

• Repeal dl' tin- Political Inter

nee Act, which prevented different
a.1 groups from belonging to the same
tical party;

• Desegregation in national sports.
All races may now actively participate
together in such sports as cricket, soc-
cer, track and field, and boxing;

• Repeal of laws requiring segrega-
tion of hotels, restaurants, cinemas,
beaches, and public transport facilities.
The right of admission is now reserved
to the individual proprietor;

• Repeal of the Immorality and
Mixed Marriages Acts, which formerly
made interracial sex and marriage a
criminal offense.

The United States is applying
targeted pressure in a wide variety of
ways to demonstrate our dissatification
with the pace of change and to promote
the accelerated end of apartheid. The
argument that punitive economic sanc-
tions would force the South African
Government to rapidly end apartheid,
however, ignores the ability of a strong
and diversified South African economy
to withstand sanctions, to pass at least
some of their negative effects onto black
neighboring states, and even to increase
their economic misery with retaliatory
countersanctions. Additionally, we
believe that punitive sanctions would
strengthen the resistance of many white
Afrikaners and the South African
Government to change, thus risking fur-
ther violence and harming black South
Africans already victimized by apartheid.

Misconception: U.S. policy is inconsist-
ent because the Administration supports
"freedom fighters" in Nicaragua and
Afghanistan but not those in the African
National Congress (ANC) who are strug-
gling for freedom and against apartheid.

Facts: In each case the facts and cir-
cumstances are different. For that rea-
son, each must be judged on its own
merits.

In South Africa, unlike Nicaragua
and Afghanistan, there is a government
that is moving toward change and
reform. A transition has begun. We are
encouraging the government to move
rapidly toward engaging all parties in
negotiations leading to the establishment
of a political system based on the par-
ticipation and the consent of all the
governed.

The ANC is one of several organiza-
tions with substantial political support in
South Africa, primarily but not only
among blacks. Some of the ANC's pro-
claimed political objectives, such as end-
ing apartheid and establishing a non-
racial system of government, are accepted
in the United States and the West.
( Ither ANC goals, reflected in the orga-
nization's continuing close ties via the
South African Communist Party to its
Soviet counterpart, do not merit U.S.
support.

The ANC advocates violence and
revolution to bring down apartheid; it
has claimed responsibility for many acts
of violence in South Africa. The United
States cannot condone the use of vio-
lence by any party in South Africa as a
means to achieve its goals. Just as U.S.
policy opposes official violence against
unarmed demonstrators, it also opposes
guerrilla or terrorist violence as a means
of pursuing political ends.

The United States considers the
ANC one of many political organizations
that should be included as South Afri-
cans negotiate their future. We favor the
release from prison of ANC leader Nel-
son Mandela and other political pris-
oners. We have supported efforts to
negotiate understandings that would
assure an end to violence, the return of
exiled leaders, and the legalization of
political parties.

U.S. policy does not believe that it is
a morally responsible course to support
violent solutions in South Africa. Given
the enormous military power in the gov-
ernment's hands, support for violent
struggle by guerrillas and terrorists
would be tantamount to support for a
bloodbath, the principal victims of which
would be blacks. Moreover, black organi-
zations inside South Africa increasingly
have demonstrated their capacity, using
nonviolent means, to organize and to
press their demands for change. Similar
circumstances do not exist in Afghanis-
tan or Nicaragua.

Misconception: The sale of American
products, particularly U.S. arms and
computers, bolsters the system of apart-
heid in South Africa.

rDtemher 198fi

Facts: The premise of that statement is
incorrect. The United States in 1963 uni-
laterally embargoed exports to South
Africa of arms and ammunition, as well
as equipment for their manufacture and
maintenance. In 1977 the United States
joined with the United Nations in impos-
ing a mandatory embargo on arms sales
to South Africa.

Certain controlled items on the State
Department's "munitions list" have been
licensed for export to South Africa dur-
ing this Administration, as in previous
ones. These items are always of a non-
lethal nature and are strictly for com-
mercial and civil application. For exam-
ple, more than 90% of the export licenses
approved for such items in the last 5
years have been for automated bank
teller machines, which are on the muni-
tions list because technically they are
"encryption devices." We license the
export of these devices only for use by
private entities such as banks, financial
institutions, and U.S. corporate subsidi-
aries. There are no items for military
purposes approved for export.

Regarding computer sales, the Presi-
dent's 1985 Executive order toughened
the already strict controls on the sale of
these high-technology items in South
Africa. No computers can now be sold to
apartheid enforcing agencies of the
South African Government or to any
police or military entities.

< her the years, our tightening of
export controls on computer sales to
South Africa has contributed to a decline
in the value of such sales to South
Africa. U.S. computer exports to South
Africa fell from $199 million in 1984 to
$126 million in 1985; we anticipate a fur-
ther drop in 1986. All these sales are
carefully reviewed by the State and
' Commerce 1 tepartments. Our position is
that sales of U.S. computers and certain
items from our "munitions list" should
not be stopped when their uses have
nothing to do with apartheid.

Misconception: U.S. firms in South
Africa dominate the economy and prop
up apartheid for their own economic
benefits.

Facts: U.S. businesses do not dominate
the South African economy. They have
only a minor role. According to U.S.
Department of Commerce figures:

• From 1960 to 1985, 96% of direct
investment in South Africa came from
South African sources. Foreign invest-
ment in South Africa accounted for
about 4% of all new direct investment
there. Of that 4%, U.S. firms accounted
for about 20%, or slightly less than 1%
of total new direct investment in South
Africa;

• In 1985 there were over 250 U.S.
firms with operations in South Africa;
the year-end book value of direct
American investment there amounted to
about $1.3 billion; and

• Only about 8.3% of South Africa's
exports go to the United States, com-
pared with about 23% to the European
Community and 8% to Japan.

American firms in South Africa
employ 96,000 workers (of which 61,000
are black), or about 2.2% of the total
South African workforce (although the
percentage is higher in manufacturing
and high-technology industries).

American companies are not prop-
ping up apartheid; they are helping to
break it down. U.S. firms have been
among the principal forces working for
reform. They have led the way in pro-
moting an end to segregation in the
workplace. As of May 1986, there were
nearly 200 signatories to the Sullivan
principles— named after their originator.
Rev. Leon Sullivan of Philadelphia— of
fair employment practices. Close to 90%
of all black South African employees of
U.S. -affiliated private companies in
South Africa are covered by the Sullivan
principles.

U.S. firms have spent more than
$150 million outside the workplace since
1977 to build health centers, improve
schools, award scholarships, and in at
least one case even to undertake the
legal defense of individuals victimized by
apartheid. (General Motors, for example,
has promised to undertake the legal
defense of any employee who is arrested
for deliberately using a segregated beach
near one of its plants in Port Elizabeth
in protest against apartheid.) Such
efforts help improve the quality of life
for black workers disadvantaged by
apartheid and help break down racial
barriers.

Fair employment practices based
the Sullivan principles were incorpora
into the President's Executive order c
September 1985. These principles
require all companies to give equal pa]
for equal work, regardless of race; tra
nonwhites for supervisory, administra
five, clerical, and technical jobs withir
firms; promote black employees into
these positions; and desegregate all e;
ing, comfort, locker room, and work
facilities within a firm. Marketing ex|
assistance will be withheld from firms
failing to implement these principles.

In sum, American business firms
South Africa are making a vital contr
tion to peaceful change toward a mon
just society, helping to end apartheid,
and improving the quality of life for
black workers disadvantaged by tmiai
laws.

Misconception: Disinvestment (with-
drawal) by U.S. firms operating in So
Africa will be an effective weapon for
bringing about reform and is overwht
ingly favored by South African blacks

Facts: Disinvestment is disengagvmt
and would result in diminishing U.S.
influence to promote peaceful change
a more just society in South Africa.

• If American firms withdraw fri
South Africa, South African investor)
stand ready to purchase their assets j
bargain prices with nonconvertible ra
Furthermore, none of those potential
buyers could be counted upon to adop
Sullivan-type codes of fair conduct fo
black workers, and they would be
unlikely to share the American social
commitment to improve the lives of
black employees.

• A case in point is the withdraw
of Motorola, a Sullivan signatory, in
1985. Its assets were purchased by a
South African firm (Altec), which cop
tinues to produce similar products an;
faces no restrictions on sales to the
South African military and police. Th
the net effect of Motorola's withdraw
was to concentrate more capital and
influence in the hands of white South
African managers.

ripnartmont nf .Qtptp Rllli

FEATURE
South Africa

Experience has shown that once
merican company leaves a host
try, the decision is likely to be per-
mit. That is a formula for nonpartici-
n in the shaping of South Africa's
e.

If American business firms were
thdraw from the South African
amy, it would result in loss of jobs
)pportunities and also end the
ts of those American companies
;ing for change.

)espite widespread assertions by
i South African and American pro-
nts of sanctions that "blacks are
ared to suffer," recently conducted
eys cast doubt on whether the
rity of black South Africans actually
ort sanctions against South Africa,
ct. a London Sunday Times poll
sed m August 1986 indicates that
of South African blacks oppose
tions while 29% favor them. The
have never heard of, or have no opi-
about, sanctions. This poll
;sents the first effort to survey
cs living in rural areas as well as in
n areas. Support for sanctions is
among rural blacks than among
n blacks. Among rural blacks (who
arise 56% of all black South
:ans). 34% oppose sanctions and
favor them. Among urban blacks,
favor sanctions and 29% are
sed.

Another opinion survey carried out
by the Institute fur Black Research at
Natal University (spring 1986) suggests
that more than 73% of blacks are not
prepared to support disinvestment or
sanctions against South Africa if this
should lead to greater hardship among
blacks. This poll by Professor Fatima
Meer corroborates a 1984 opinion survey
conducted by Professor Lawrence
Schlemmer, also of Natal University.
Schlemmer concluded that most blacks
(76%) "fear the economic consequences
of disinvestment more than they
welcome its possible political effects." In
fact. Dr. Meer. an active supporter of
the pro sanctions United Democratic
Front, a multiracial political opposition
movement, had originally suspected the
accuracy of the Schlemmer poll which
her own survey later confirmed.

In short, claims by proponents of
sanctions that there is a consensus
among blacks in support of sanctions are
not substantiated by the data.

Misconception: Apartheid in South
Africa is no different from the racial
segregation that once existed in the
United States and must be dealt with in
the same way.

Facts: Our unique national history, with
its legacy of racial strife, is, paradoxi-
cally, both helpful and unhelpful in
understanding the current reality in
South Africa.

It is helpful because Americans
appreciate the emotional dimension of

racial politics and the polarization that
can result from that kind of debate.
Many Americans realize that, despite
our impatience, the problems of a
racially divided society are not instantly
solved. Our experience demonstrates
forcefully that a growing economy can
help break down racial and social bar-
riers. It also offers hope to nations with
distinct multiracial and multicultural pat-
terns by showing that a political struc-
ture can embrace rich diversity.

Our experience is unhelpful if it
leads us to believe that South Africa's
racial and social problems are simple and
easy to resolve or that tactics employed
in our civil rights movement are easily
transferable to South Africa.

While there are certain similarities
between the circumstances facing blacks
in South Africa today and those facing
American blacks in the 1960s and
earlier, important differences also exist.
To cite two examples:

• In the United States individual
rights of all persons are guaranteed and
protected by the Constitution; in South
Africa there is no similar Bill of Rights;
and

• Black Americans acquired suf-
frage and full citizenship and could work
through established political channels
and institutions to achieve social and
civil rights denied under segregation; in
South Africa the legal and political
rights of blacks are severely circum-
scribed. ■

tember 1986

THE PRESIDENT

Why Democracy Matters
in Central America

President Reagan's address to the
uni mn on June 24, 1986.

My fellow citizens, the matter that
brings me before you today is a grave

one and concerns my must solemn duty
as President. It is the cause of freedom
in Central America and the national
security of the United States. Tomor-
row, the House of Representatives will
debate and vote on this issue. I had
hoped to speak directly and at this very-
hour to Members of the House of
Representatives on this subject but was
unable to do so. Because I feel so
strongly about what I have to say,
I've asked for this time to share with
you— and Members of the House— the
message I would have otherwise given.

Nearly 40 years ago a Democratic
President, Harry Truman, went before
the Congress to warn of another danger
to democracy, a civil war in a faraway
country in which many Americans could
perceive no national security interest.

Some of you can remember the
world then. Europe lay devastated. One
by one, the nations of Eastern Europe
had fallen into Stalin's grip. The
democratic Government of Czechoslo-
vakia would soon be overthrown.
Turkey was threatened, and in Greece,
the home of democracy, communist
guerrillas, backed by the Soviet Union,
battled democratic forces to decide the
nation's fate.

Most Americans did not perceive
this distant danger, so the opinion polls
reflected little of the concern that
brought Harry Truman to the well of
I he House that day. Rut go he did. And
it is worth a moment to reflect on what
lie said.

In a hushed chamber, Mr. Truman
said thai we had come to a time in his-
tory when every nation would have to
choose between two opposing ways of
life. One way was based on the will of
the majority— on free institutions and
human rights. "The second way of life,"
he said, "is based upon the will of a
minority forcibly imposed upon the
majority. It relies upon terror and
oppression, a controlled press and radio,
fixed elections and the suppression of
personal freedoms. 1 believe." President
Truman said, "that it must lie the policy
of the United States to support free
peoples who are resisting attempted

1ft

subjugation by armed minorities or by
outside pressures."

When Harry Truman spoke, Con-
gress was controlled by the Republican
Party. But that Congress put America's
interest first and supported Truman's
request for military aid to Greece and
Turkey— just as 4 years ago Congress
put America's interest first by support-
ing my request for military aid to
defend democracy in El Salvador.

The Threat to Democracy

I speak today in that same spirit of
bipartisanship. My fellow Americans and
Members of the House, I need your
help. I ask first for your help in remem-
bering—remembering our history in
Central America so we can learn from
the mistakes of the past. Too often in
the past the United States failed to
identify with the aspirations of the peo-
ple of Central America for freedom and
a better life. Too often our government
appeared indifferent when democratic
values were at risk. So we took the
path of least resistance and did nothing.

Today, however, with American sup-
port, the tide is turning in Central
America. In El Salvador, Honduras,
Costa Rica— and now in Guatemala—
freely elected governments offer their
people the chance for a better future, a
future the United States must support.

But there's one tragic, glaring
exception to that democratic tide— the
communist Sandinista government in
Nicaragua. It is tragic because the
United States extended a generous hand
of friendship to the new revolutionary
government when it came to power in
1979. Congress voted $75 million in eco-
nomic aid. The United States helped
renegotiate Nicaragua's foreign debt.
America offered teachers, doctors, and
Peace Corps volunteers to help rebuild
the country. But the Sandinistas had a
different agenda.

From the very first day. a small
clique of communists worked steadily to
consolidate power and squeeze out their
democratic allies. The democratic trade
unionists who had fought Somoza's
National Guard in the streets were now
told by the Sandinistas that the right to
strike was illegal and that their revolu-
tionary duty was to produce more for
the state.

The newspaper La Prensa, whosi
courage and determination had inspii
so much of the Nicaraguan revolutioi
found its pages censored and sup-
pressed. Violeta Chamorro, widow of
the assassinated editor, soon quit tin
revolutionary government to take up
the struggle for democracy again in I
pages of her newspaper.

The leader of the Catholic Churl
Nicaragua, Archbishop— now Carding
Obando y Bravo, who had negotiate!
the release of the Sandinista leaders
from prison during the revolution, w
now vilified as a traitor by the very
men he helped to free.

Soviet arms and bloc personnel
began arriving in Nicaragua. With
Cuban, East German, and Bulgarian
advisers at their side, the Sandinista
began to build the largest standing
army in Central American history an
to erect all the odious apparatus of t
modern police state.

Under the Somoza dictatorship, a
single facility held all political prison.
Today, there are eleven— 11 prisons i
place of one.

The Sandinistas claim to defend
Nicaraguan independence. But you ai
I know the truth. The proud people (
Nicaragua did not rise up against
Somoza— and struggle, fight, and die-
have Cubans, Russians, Bulgarians,
East Germans, and North Koreans n
ning their prisons, organizing their
army, censoring their newspapers, ar
suppressing their religious faith. One
Nicaraguan nationalist, who fought in
the revolution, says: "We are an occt
pied country today."

I could go on, but I know that el
the Administration's harshest critics
Congress hold no brief for Sandinista
repression. Indeed, the final verdict 1
already been written by Cardinal
Obando himself in the Washington A
Listen carefully to the Cardinal's woi
He says: that the Sandinista regime '
a democratic government, legitimate)]
constituted, which seeks the welfare
peace of the people and enjoys the su
port of the overwhelming majority" ij
not true. To accept this as true, the
Cardinal says, "is to ignore the mass
exodus of the Miskito Indians, the
departure of tens of thousands of
Nicaraguan men and women of every
age, profession, economic status, and
political persuasion. It is to ignore thi
most terrible violation of freedom of t
press and of speech in the history of'
country, the expulsion of priests and
mass exodus of young people eligible
military service." As for the Catholic

THE PRESIDENT

ifch in Nicaragua, we have been
feed and bound," the Cardinal says.
Hany brave Nicaraguans have
fed in their country despite mount-
repression— defying the security
[c. defying the Sandinista mobs that
fk and deface their homes. Thou-
s— peasants, Indians, devout
stians, draftees from the Sandinista
r— have concluded that they must
up arms again to fight for the free-
they thought they had won in 1979.
"he young men and women of the
jcratic resistance fight inside
ragua today in grueling mountain
jungle warfare. They confront a
Bt-equipped army, trained and lei I
!uban officers. They face murderous
opter gunships without any means
ifense. And still they volunteer,
still their numbers grow.
Vho among us would tell these
e young men and women: "Your
m is dead; your democratic revoke
is over; you will never live in the
Nicaragua you fought so hard to
1?"

lie Sandinistas call these freedom
ers contras— for "counterrevolution-
.." But the real counterrevolution-
: are the Sandinista comandantes,
betrayed the hopes of the
raguan revolution and sold out their
try to the Soviet empire.
The comandantes even betrayed the
lory of the Nicaraguan rebel leader
lino, whose legacy they falsely
1. For the real Sandino— because he
a genuine nationalist— was opposed
immunism. In fact, Sandino broke
the Salvadoran communist leader,
ibundo Marti, over this very issue.
The true Nicaraguan nationalists are
eaders of the United Nicaraguan
osition: Arturo Cruz— jailed by
oza. a former member of the
linista government; Adolfo Calero—
helped organize a strike of
nessmen to bring Somoza down; and
nso Robelo— a social democrat and
a leader of the revolutionary
anment.

These good men refused to make
accommodation with the Somoza
itorship. Who among us can doubt
:' commitment to bring democracy to

. Vital Interests

the Nicaraguan people have chosen
ght for their freedom. Now we
ericans must also choose. For you
I and every American have a stake
lis struggle.

Central America is vital to our own
national security, and the Soviet Union
knows it. The Soviets take the long
view, but their strategy is clear: to
dominate the strategic sealanes and vi-
tal chokepoints around the world.

Half of America's imports and
exports, including oil, travels through
the area today. In a crisis, over half of
NATO's supplies would pass through
this region. And Nicaragua, just 277
miles from the Panama Canal, offers the
Soviet Union ports on both the Atlantic
and Pacific Oceans.

The Soviet Union already uses Cuba
as an air and submarine base in the
Caribbean. It hopes to turn Nicaragua
into the first Soviet base on the main-
land of North America. If you doubt it,
ask yourself: why have the last four
Soviet leaders— with a mounting eco-
nomic crisis at home— already invested
over $1 billion and dispatched thousands
of Soviet-bloc advisers into a tiny coun-
try in Central America?

I know that no one in Congress
wants to see Nicaragua become a Soviet
military base. My friends, I must tell
you in all seriousness, Nicaragua is
becoming a Soviet base every day that
we debate and debate and debate— and
do nothing.

In the 3 months since 1 last asked
for the House to aid the democratic
resistance, four military cargo ships
have arrived at Nicaraguan ports, this
time directly from the Soviet Union.
Recently we have learned that Russian
pilots are flying a Soviet AN-30 recon-
naissance plane for the Sandinistas.

Now, the Sandinistas claim this is
just for making civilian maps. Well, our
intelligence services believe this could
be the first time Soviet personnel have
taken a direct role in support of military
operations on the mainland of North
America.

Think again how Cuba became a
Soviet air and naval base. You'll see
what Nicaragua will look like if we con-
tinue to do nothing. Cuba became a
Soviet base gradually over many years.
There was no single dramatic event-
once the missile crisis passed— that cap-
tured the nation's attention. And so it
will be with Nicaragua.

The Sandinistas will widen and
deepen another port while we debate: is
it for commercial vessels or Soviet sub-
marines? The Sandinistas will complete
another airstrip while we argue: is it for
707s or Backfire bombers? A Soviet
training brigade will come to Nicaragua;
half will leave and half will stay. And
we will debate: are they soldiers or
engineers?

Eventually, we Americans have to
stop arguing among ourselves. We will
have to confront the reality of a Soviet
military beachhead inside our defense
perimeters— about 500 miles from
Mexico. A future President and Con-
gress will then face nothing but bad
choices, followed by worse choices.

My friends in the House, for over
200 years the security of the United
States has depended on the safety of un-
threatened borders, north and south. Do
we want to be the first elected leaders
in U.S. history to put our borders at
risk?

Some of you may say, well, this is
fearmongering. Such a danger to our
security will never come to pass. Well,
perhaps it won't. But in making your
decisions on my request for aid tomor-
row, consider this: what are the conse-
quences for our country if you're
wrong?

The Democratic Resistance: Popular
Support and the Need for U.S. Aid

I know some Members of Congress who
share my concern about Nicaragua have
honest questions about my request for
aid to the democratic resistance. Let me
try to address them. Do the freedom
fighters have the support of the
Nicaraguan people? I urge Members of
the House to ask their colleague, the
Chairman [Les Aspin] of the House
Armed Services Committee, who
recently visited a town in Nicaragua
that was a Sandinista stronghold during
the revolution. He heard peasants, trade
unionists, farmers, workers, students,
and shopkeepers all call on the United
States to aid the armed resistance.

Or listen to the report from Time
magazine of Central American scholar
Robert Leiken, who once had hopes for
the Sandinista revolution. He says, "I
have gone to a number of towns in
Nicaragua where I have found that the
youth are simply not there. I ask the
parents where they've gone, and they
say. they've gone off to join the con-
trast' In Managua, Leiken reports 250
Nicaraguans stood on a breadline for 3
hours. "Who is responsible for this?" he
asked. "The Sandinistas are responsible.
The Sandinistas." That's what the
people said. "The Sandinistas," Leiken
concluded, "have not only lost support,
I think they are detested by the
population."

Can the democratic forces win? Con-
sider there are 20 times as many
Nicaraguans fighting the Sandinista dic-
tatorship today as there were Sandinista
fighters a year before Somoza fell. This

itember 1986

THE PRESIDENT

is the largest peasant army raised in
Latin America in more than 50 years.
And thousands more are waiting to
volunteer if American support comes
through.

Some Members of Congress— and I
know some of you— fear that military aid
to the democratic resistance will be only
the first step down the slippery slope
toward another Vietnam. Now. I know
those fears are honest. But think where
we heard them before. Just a few years
ago, some argued in Congress that U.S.
military aid to El Salvador would lead
inevitably to the involvement of U.S.
combat troops. But the opposite turned
out to be true.

Had the United States failed to pro-
vide aid then, we might well be facing
the final communist takeover of El
Salvador and mounting' pressures to
intervene. Instead, with our aid, the
Government of El Salvador is winning
the war, and there is no prospect
whatever of American military
involvement.

El Salvador still faces serious
problems that require our attention. But
democracy there is stronger, and both
the communist guerrillas and the right-
wing death squads are weaker. And
Congress shares credit for that accom-
plishment. American aid and training are
helping the Salvadoran Army become a
professional fighting force, more respect-
ful of human rights. With our aid we
can help the Nicaraguan resistance
accomplish the same goal.

I stress this point because I know
many Members of Congress and many
Americans are deeply troubled by alle-
gations of abuses by elements of the
armed resistance. I share your concerns.
Even though some of those charges are
Sandinista propaganda, I believe such
abuses have occurred in the past, and
they are intolerable.

As President. 1 repeat to you the
commitments I made to Senator Sam
Nunn. As a condition of our aid. I will
insist on civilian control over all military
forces; that no human rights abuses are
tolerated; that any financial corruption
be rooted out; that American aid go
only to those committed to democratic
principles. The United States will not
permit this democratic revolution to he
betrayed nor allow a return to the hated
repression of the Somoza dictatorship.

The leadership of the United
Nicaraguan Opposition shares these
commitments, and 1 welcome the
appointment of a bipartisan congres-
sional commission to help us see that
thev are carried out.

U.S. Polity Goals

Some ask: what are the goals of our
policy toward Niearag-ua? They are the
goals the Nicaraguan people set for
themselves in 1979: democracy, a free
economy, and national self-determi-
nation. Clearly the best way to achieve
these goals is through a negotiated set-
tlement. No humane person wants to
see suffering and war.

The leaders of the internal opposi-
tion and the Catholic Church have asked
for dialogue with the Sandinistas. The
leaders of the armed resistance have
called for a cease-fire and negotiations
at any time, in any place. We urge the
Sandinistas to heed the pleas of the
Nicaraguan people for a peaceful
settlement.

The United States will support any
negotiated settlement or Contadora
treaty that will bring real democracy to
Nicaragua. What we will not support is
a paper agreement that sells out the
Nicaraguan people's right to be free.
That kind of agreement would be
unworthy of us as a people. And it
would be a false bargain. For internal
freedom in Nicaragua and the security
of Central America are indivisible. A
free and democratic Nicaragua will pose
no threat to its neighbors or to the
United States. A communist Nicaragua,
allied with the Soviet Union, is a perma-
nent threat to us all.

President Azcona of Honduras
emphasized this point in a recent nation-
wide address:

As long- as there is a totalitarian regime
in Central America that has expansionist
ambitions and is supported by an enormous
military apparatus. . .the neighboring coun-
tries sharing common borders with the coun-
try that is the source of the problem will be
under constant threat.

If you doubt his warning, consider
this: the Sandinistas have already sent
two groups of communist guerrillas into
Honduras. Costa Rican revolutionaries
are already fighting alongside Sandinista
troops.

My friends in the Congress, with
democracy still a fragile root in Central
America— with Mexico undergoing an
economic crisis— can we responsibly
ignore the long-term danger to Ameri-
can interests posed by a communist
Nicaragua, backed by the Soviet Union,
and dedicated— in the words of its own
leaders— to a "revolution without
borders"?

Keeping Faith With a Commitmen
to Freedom

My friends, the only way to bring ti
peace and security to Central Amer
is to bring democracy to Nicaragua,
the only way to get the Sandinistas
negotiate seriously about democracy
to give them no other alternative. S
years of broken pledges, betrayals,
lies have taught us that.

And that's why the measure the*
House will consider tomorrow— offer
I know, in good faith— which prohib
military aid for at least another :i
months, and perhaps forever, would
a tragic mistake. It would not bring,
Sandinistas to the bargaining table-
the opposite.

The bill, unless amended, would
the Sandinistas and the Soviet Uniot
what they seek most— time: time to
crush the democratic resistance, tin
consolidate power. And it would serl
demoralizing message to the democ:
resistance: that the United States is
divided and paralyzed to come to tht
aid in time.

Recently, I read the words of a
leader of the internal democratic op
tion. What he said made me feel
ashamed. This man has been jailed,
property confiscated, and his life th
ened by the security police. Still he
tinues to fight. And he said:

You Americans have the strength, t
opportunity, but not the will. We want t
struggle, hut it is dangerous to have frif
like you— to be left stranded on the land
beaches of the Bay of Pigs. Either help
leave us alone.

My friends in the House of Repi
sentatives, I urge you to send a me
sage tomorrow to this brave Nicara
and thousands like him. Tell them it
not dangerous to have friends like t
Tell them America stands with thus
who stand in defense of freedom.

When the Senate voted earlier t
year for military aid. Republicans w.
joined by many Democratic leaders:
Bradley of New Jersey, Sam Nunn
Georgia, David Boren of Oklahoma,
Howell Heflin of Alabama, Lloyd
Bentsen of Texas, Bennett Johnstor
Russell Long of Louisiana, Fritz
Hollings of South Carolina, John St<
of Mississippi, and Alan Dixon of
Illinois.

Today, I ask the House for that
of bipartisan support for the amend
to be offered tomorrow by Demoera
Ike Skelton of Missouri and Richarc
Ray of Georgia and Republicans Mil
Edwards of Oklahoma and Rod

THE PRESIDENT

didler of Washington. This bipartisan
sndment will provide the freedom
ters with what they need— now.
With that amendment, you also send
ther message to Central America.

democracy there faces many ene-
poverty, illiteracy, hunger, and
pair. And the United States must

stand with the people of Central
erica against these enemies of
locracy.

And that's why—just as Harry
man followed his request for military
to Greece and Turkey with the
•shall Plan— I urge Congress to sup-
t $300 million in new economic aid to

Central American democracies.

The question before the House is not

f about the freedom of Nicaragua

the security of the United States

who we are as a people. President
inedy wrote on the day of his death
t history had called this generation of
erieans to he "watchmen on the
Is of world freedom." A Republican
■sident, Abraham Lincoln, said much

same thing on the way to his inau-
ation in 18(31. Stopping in Philadel-
a, Lincoln spoke in Independence
II, where our Declaration of Inde-
denee had been signed. He said far
•e had been achieved in that hall
n just American independence from
tain. Something permanent—
tething unalterable— had happened.

called it: "Hope to the world for all
jre time."

Hope to the world for all future
e— in some way, every man, woman,
1 child in our world is tied to those
slits at Independence Hall, to the
versal claim to dignity, to the belief
t all human beings are created equal,
t all people have a right to be free.
We Americans have not forgotten
• revolutionary heritage. But some-
les it takes others to remind us of
at we ourselves believe. Recently, I
d the words of a Nicaraguan bishop,
jlo Vega, who visited Washington a
i weeks ago. Somoza called Pablo
ga the "communist bishop." Now, the
idinistas revile him as "the contra
hop." But Pablo Vega is really a
nble man of God. "I am saddened,"

good bishop said, "that so many
rth Americans have a vision of
nocracy that has only to do with
terialism." The Sandinistas "speak of
nan rights as if they were talking of

rights of a child— the right to
:eive from the bountifulness of the
te— but even the humblest campesino
»ws what it means to have the right

to act. We are defending," Pablo Vega
said, "tin1 right of man to In1."

Well, Reverend Father, we hear
you. For we Americans believe with you
that even the humblest campesino has
the right to be free. My fellow citizens.
Members of the House, let us not take
the path of least resistance in Central
America again. Let us keep faith with
these bravo people struggling for their
freedom. Give them, give me, your sup-

An Essay on Peace

Excerptfrom President Reagan's
remarks to the graduating class of
Glassboro High School in Glassboro, New
Jersey, on June 19, 1986.i

And that brings me to the international
scene and our relations with the Soviet
Union. It's important to begin by dis-
tinguishing between the peoples inside
the Soviet Union and the government
that rules them. Certainly we have no
quarrel with the peoples, far from it. Yet
we must remember the peoples in the
Soviet Union have virtually no influence
on their government.

There's a little story that indicates
what I mean. It seems that an American
and a Soviet citizen were having a dis-
cussion about who had more freedom.
And the American said, "Look, I can
march into the White House, the Oval
Office, and I can pound the desk and say
to the President, 'Mr. President, I don't
like the way you're running our coun-
try.' " And the Soviet citizen said.
"Well, I can do that." And the American
said, "You can?" He said, "Yes, I can
walk into the Kremlin, into General
Secretary Gorbachev's office, and I can
say, 'Mr. General Secretary, I don't like
the way President Reagan's running his
country.' " [Laughter] I told that story
to General Secretary Gorbachev in
Geneva. And thank goodness he laughed,
too. [Laughter]

We must remember that the Soviet
I ;< i\ ernment is based upon and drawn
from the Soviet Communist Party— an
organization that remains formally
pledged to subjecting the world to com-
munist domination. This is not the time
to delve deeply into history, but you
should know that the emergence of the
Soviet Union is in many respects an
expression of the terrible enchantment

port; and together, let us send this mes-
sage to the world: that America is still a
beacon of hope, still a light unto the
nations. A light that casts its glow
across the land and our continent and
even back across the centuries— keeping
faith with a dream of long ago.

'Text from Weekly Compilation of
Presidential Documents of June 23, 1986.

with the power of the state that became
so prominent in the first half of our cen-
tury. In his widely acclaimed book
.l/oi/r/7/ Times, Paul Johnson has argued
just this point: that modern ideologies had
exalted the state above the individual.

This rise of state power affected my
life as it did the lives of many of your
parents and nearly all of your grand-
parents. In the late 1920s, I graduated
from high school full of hope and expec-
tation, like you today. Then just as I'd
established myself in a career, and just
as my generation had established itself,
we were at war. We fought valiantly and
well, but not without a sense of all that
might have been. In the end representa-
tive government defeated statism.
Indeed, Japan, Germany, and Italy, once
our deadly enemies, all soon became
thriving democracies themselves and are
now our staunchest allies. But not the
Soviet Union. There statism persists.

You know, there's something you
should be very proud of and aware of.
Back through the history of man there
have been revolutions many times. Ours
was unique. Ours was the only revolution
that said, we, the people, control the
government. The government is our
servant. Those other revolutions just
exchanged one set of rulers for another
set of rulers.

What then are we to make of the
Soviet Union? My own views upon the
character of the regime are well-known.
And I am convinced that we must con-
tinue to speak out for freedom, again
and again, making the crucial moral
distinctions between democracy and
totalitarianism. So, too, I am convinced
that we must take seriously the Soviet
history of expansionism and provide an
effective counter.

At the same time, we must remain
realistic about and committed to arms

THE PRESIDENT

control. It is, indeed, fitting to pay par-
i icular attention to arms negotiations in
these days, for if the Soviet Union
proves willing, this can represent a
moment of opportunity in relations
between our nations.

When I met Mr. Gorbachev last
November in Geneva, he and I agreed to
intensify our effort to reduce strategic
arms. We agreed on the next steps:
negotiating a 50% reduction in strategic
nuclear forces and an interim agreement
to cover intermediate-range missiles.
And we both spoke of the ultimate goal
of eliminating all nuclear weapons.

By November 1st, we had presented
new strategic arms reduction proposals
designed to bridge the gap between
earlier Soviet and American proposals.
Our proposal would've achieved a 50%
reduction in strategic nuclear forces in a
manner both equitable and responsible.
Then in mid-February we proposed a
detailed, phased approach for eliminat-
ing an entire class of weapons— the
so-called longer range intermediate-
range weapons, or INFs— by 1990. And
we repeated our offer of an "open
laboratories" exchange of visits to
facilities performing strategic defense
research. Until recently the Soviet
response has been disappointing in a
number of ways.

But in recent weeks, there have been
fresh developments. The Soviets have
made suggestions on a range of issues,
from nuclear powerplant safety to con-
ventional force reductions in Europe.
Perhaps most important, the Soviet
negotiators at Geneva have placed on
the table new proposals to reduce
nuclear weapons. Now, we cannot accept
these particular proposals without some
change, but it appears that the Soviets
have begun to make a serious effort. If
both sides genuinely want progress, then
this could represent a turning point in
the effort to make ours a safer and more
peaceful world. We believe that possibly
an atmosphere does exist that will allow
for serious discussion.

I have indicated to General Secre-
tary Gorbachev my willingness for our
representatives to meet to prepare for
the next summit. The location is unim-
portant. What matters is that such a
meeting take place in mutual earnest-
ness si) that we can make progress at
the next summit.

Certainly Mr. Gorbachev knows the
depth of my commitment to peace.
Indeed, when we went to Geneva my
advisers told me that if we could achieve
nothing more than an agreement to
meet again, if we could do no more than

thai , then all our work at that summit
would have been worthwhile. On the
first day of meetings, Mr. Gorbachev
and I took a little walk together alone.
He happened to mention that there was
a great deal in the Soviet Union that he
wanted me to see, and I answered that I
wished that he could visit the United
States. Next thing you knew, we have an
agreement to meet here in 1986 and in
the Soviet Union in 1987. Now. that
wasn't so hard, was it?

In this essay on peace, then, we can
assert that the time has come to move
forward. Let us leave behind efforts to
seek only limits to the increase of
nuclear arms and seek instead actual
arms reductions— the deep and verifiable
reductions that Mr. Gorbachev and I
have agreed to negotiate. The goal here
is not complicated. I am suggesting that
we agree not on how many new, bigger,
and more accurate missiles can be built,
I nit on how to reduce and ultimately
eliminate all nuclear missiles.

Let us leave behind, too, the defense
policy of mutual assured destruction, or
MAD, as it's called, and seek to put in its
place a defense that truly defends. You
know— let me interrupt right here and
say that possibly you haven't considered
much about this system. This MAD
policy, as it's called— and incidentally,
MAD stands for mutual assured destruc-
tion, but MAD is also a description of
what the policy is. It means that if we
each keep enough weapons that we can
destroy each other, then maybe we'll
both have enough sense not to shoot
those weapons off. That's not exactly the
way for the world to go on, with these
massed terribly destructive weapons
aimed at each other and the possibility
that some day a madman somewhere
may push a button and the next day the
world starts to explode. Even now we're
performing research as part of our Stra-
tegic Defense Initiative (SDI) that might
one day enable us to put in space a shield
that missiles could not penetrate, a
shield that could protect us from nuclear
missiles just as a roof protects a family
from rain.

And let us leave behind suspicion
between our peoples and replace it with
understanding. As a result of the cul-
tural exchange agreement Mr. Gorbachev
and I signed in Geneva, the Soviet Union
has already sent to our nation, just
recently, the Kirov Ballet and an exhibi-
tion of Impressionist paintings. We in
turn will send to the Soviet Union schol-
ars and musicians. Indeed, the Russian-
born American pianist Vladimir Horowitz
has already performed in Moscow. And

we hope to see a large increase in the
number of everyday citizens traveling
between both countries. Just last weel
at the White House I met with high
school students your age who will visr
the Soviet Union this summer. Surely
it's in our interest that the peoples in
Soviet Union should know the truth
about the United States. And surely
can only enrich our lives to learn mor<
about them. As a matter of fact, I
believe with all my heart that if a
generation of young people throughou
the world could get to know each othe'
they would never make war upon eacl
other.

This brings us at last to our conch
sion. If I may, then, a few final thoug
from the heart. I have tried to speak t
you today of peace and freedom. As y
President it's my duty to do so, and
because in my lifetime I have seen oui
nation at war four times. During the
Second World War, hundreds of thou-
sands of Americans died, including
friends and relatives of mine and inch
ing friends and relatives of your famil
Perhaps some of you have pictures in
your homes of great-uncles you never
knew, soldiers who fell fighting. The
Soviets suffered even more painfully
than we. As many as 20 million peopk
the Soviet Union died in World War I
and the western third of their countrj
was laid waste— parallel, if you will, t<
what would be the destruction of all tl
United States east of Chicago.

All the world has cherished the ye
of relative peace that have followed. I
the United States we have seen the
greatest economic expansion and tech
nological breakthroughs known to mat
the landing on the Moon, the develop-
ment of the microchip. But our greate
treasure has been that you, our childrj
have been able to grow up in prosperii
and freedom.

It falls to us now— as it soon shall
fall to you— to preserve and strengthe
the peace. Surely no man can have a
greater goal than that of protecting tl
next generation against the destructic
and pain of warfare that his own gene
tion has known. There can, therefore,
no more important task before us thai
that of reducing nuclear weapons. I ai
committed— utterly committed— to pu
suing every opportunity to discuss am
explore ways to achieve real and verif
able arms reductions. What our two
nations do now in arms control will
determine the kind of future that you
and, yes, your children and your chil-
dren's children will face. So, I have cc
here today to say that the Glassboro

Department of State Bui I

THE PRESIDENT

|imit was not enough, that, indeed,
Geneva summit was not enough, that

alone, in short, is not enough. I've
le here to invite Mr. Gorbachev to

me in taking action— action in the
ie of peace.

'Text from Weekly Compilation of
sidential Documents of June 30, L986.

iternational
terrorism

President Reagan's radio address to
nut me on May 31, 1986.'

tory is likely to record that 1986 was
year when the world, at long last,
ie to grips with the plague of ter-
sm. For too long, the world was
ilyzed by the argument that ter-
sm could not be stopped until the
ivances of terrorists were addressed.

complicated and heartrending issues
: perplex mankind are no excuse for
ent, inhumane attacks, nor do they
use not taking aggressive action
inst those who deliberately slaughter
jcent people.

In our world there are innumerable
ups and organizations with griev-
es, some justified, some not. Only a
' fraction has been ruthless enough to
to achieve their ends through vicious

cowardly acts of violence upon
rmed victims. Perversely, it is often
terrorists themselves who prevent
cefully negotiated solutions. So,
haps the first step in solving some of
se fundamental challenges in getting
he root cause of conflict is to declare
t terrorism is not an acceptable alter-
ive and will not be tolerated.

Effective antiterrorist action has
also been thwarted by the claim that— as
the quip goes— "One man's terrorist is
another man's freedom fighter." That's
a catchy phrase, but also misleading.
Freedom fighters do not need to terror-
ize a population into submission. Free-
dom fighters target the military forces
and the organized instruments of repres-
sion keeping dictatorial regimes in
power. Freedom fighters struggle to
liberate their citizens from oppression
and to establish a form of government
that reflects the will of the people.

Now, this is not to say that those
who are fighting for freedom are perfect
or that we should ignore problems aris-
ing from passion and conflict. Neverthe-
less, one has to be blind, ignorant, or
simply unwilling to see the truth if he or
she is unable to distinguish between
those I just desci'ibed and terrorists.

Terrorists intentionally kill or maim
unarmed civilians, often women and chil-
dren, often third parties who are not in
any way part of a dictatorial regime.
Terrorists are always the enemies of
democracy. Luckily, the world is shaking-
free from its lethargy and moving for-
ward to stop the bloodshed.

Nearly a month ago in Tokyo, the
leaders of the major Western democ-
racies hammered out an agreement on
tough measures to eradicate this evil.
Ironically the progress made in Tokyo is
now imperiled by a lack of consistent
support at home. For nearly a year now
a handful of United States Senators
have held up approval of a supplemen-
tary extradition treaty between the
United States and the United Kingdom.
This agreement, when ratified, would
prevent terrorists who have kidnapped,
killed, or maimed people in Britain from
finding refuge in our country. Today
these killers are able to do just that by
labeling their vile acts as political.

Well, in Tokyo the democracies
declared there is no political or any other
justification for terrorist acts and those
who commit them should be brought to
justice. The world is watching. If actions
by a few Senators allow terrorists to
find safe haven in the United States,
then there will lie irreparable damage.
Refusal to approve the supplementary
treaty would undermine our ability to
pressure other countries to extradite ter-
rorists who have murdered our citizens.
And rejection of this treaty would be an
affront to British Prime Minister
Margaret Thatcher, one European
leader who, at great political risk, stood
shoulder to shoulder with us during our
operations against Qadhafi's terrorism.

Some members of the Senate For-
eign Relations Committee have gone so
far as to prepare a substitute treaty per-
mitting those who have murdered Brit-
ish policemen and soldiers, for so-called
political reasons, to avoid extradition.
Well, this substitute is not a compro-
mise; it's retreat. Its passage would be a
victory for terrorism and a defeat for all
we've been trying to do to stop this evil.

One concern about the treaty is that
it may set a precedent for other treaties,
which will then be used against those
who simply oppose totalitarian regimes.
We can never permit that to happen.
Our country will always remain the bea-
con of hope and freedom to all oppressed
peoples.

I therefore urge the Senate to
promptly approve the revised treaty and
reinforce the momentum building
against terrorism. With good sense,
courage, and international cooperation,
our struggle against terrorism will be
won. And the United States will lead the
way into a freer and more peaceful
tomorrow.

'Broadcast from Camp David, Maryland
(text from Weekly Compilation of Presiden-
tial Documents of June 9, 1986). ■

ptember 1986

THE VICE PRESIDENT

Vice President Bush Visits Canada

Via President Bush was in Canada
June 10- 13, 1986.

. . .Our recent disputes have stirred
talk in both countries of a brewing trade
« ar . . . We don't want a trade war. We
want expanded trade. We don't want to
see more barriers. We want to see bar-
riers on both sides come down. We don't
want protectionism. We want a healthy,
growing trade relationship with you—
our friends from Canada. . . .

Americans, as the world's largest
exporting nation, have a tremendous
stake in free trade. We export over $200
billion annually in goods and services.
One out of every four farm acres planted
in the States is for export, and one of
every six manufacturing jobs is related
to export. Almost one-quarter of those
exports go to Canada.

Canada's stake in free and enhanced
trade is also huge. Canada is the world's
sixth largest exporter. Three-quarters of
your exports go to our country. Just in
the last decade, trade between the
United States and Canada has more than
tripled— from about $39 billion in 1974 to
over $120 billion last year. It is in both
of our interests to help that trade grow
even more.

One unfortunate result of the protec-
tionist sentiment sweeping sections of
both of our countries is that it has led
some to suggest that we should walk

away from our most recent effort to
strengthen our historic ties— the compre-
hensive freer trade negotiations which
Prime Minister Mulroney and President
Reagan agreed to undertake some
months ago. Some Americans see our
nearly $20 billion trade deficit with
Canada, and they want more protection,
not less.

Meanwhile there are some in your
country who worry that a free trade
agreement will subsume Canadian cul-
ture. I think they are wrong. The key to
strengthening our respective cultures,
the key to enhancing our respective lega-
cies, is to ensure the health of our
respective economies. And the key to a
stronger economy, for both of us, is a
freer trading system ....

Vice President Bush

Board of Trade

Vancouver, British Columbia

June 12, 1986

. . . From our earliest days, our
peoples have enjoyed the strength that
cooperation and friendship bring. From
the days when we crossed and tamed a
continent together, to the current day,
when we explore the stars together, we
have a history of working together to
solve common problems and to reach for
shared dreams. Today we are partners in
many undertakings.

Prime Minister and Mrs. Mulroney and
President and Mrs. Bush in Ottawa.

We are the world's largest tradii
partners, and despite our isolated dii
ferences and problems, we are now
joined in an effort to try to improve ;
enhance that trading relationship . . .

We are partners in the Atlantic i
ance, and we share a commitment to
a responsibility for the defense of tin
North American Continent ....

We are neighbors, sharing the lo
est land and the longest water bound
in the world. As such we have a muti
responsibility to protect and present
the natural bounty with which our co
nent has been blessed. . . .

... we share a commitment to fit
dom and democracy. As that commit
ment is tested by terrorists and tyrai
we are grateful for your cooperation
meeting these threats in the name of
freer world.

In short no relationship is as imp*
taut to the people of the United State
as our ties with Canada. Too often, p
haps, we do not fully appreciate how
intertwined our lives have become an
how valuable that relationship is for 1
of us. But I think it can safely be saic
that our example— the example of a
peaceful border across which ideas,
goods, capital, and people flow freely
a model for the rest of the world . .

Vice President B

Luncheon Rem;

Ottawa, Ont

June 13, 198

The Vice President and Canada's Minist'
of Transport Donald F. Mazankowski in
Vancouver, with Expo '86 in the
background.

lHrnnnl r^i Ctntn D

E SECRETARY

>cretary Visits East Asia and the Pacific

Secretary Shultz visited Hong Kong
te 21-28), Singapore (June 23-24),
kei (June 24), the Philippines (June
i8) to participate in the Association
ijuth Ens! Asian Nations (ASEAN)
ministerial conference, and Patau
le 28).

following are his remark* and news
erences made on various occasions
i,ng the trip, ami remarks by Secre-
i Sctntltz and New Zealand Prime
ister David Lange at the conclusion
leir meeting on Jane 27.

WS CONFERENCE,
GAPORE,

4E 24, 1986'

Can you tell us if the Soviets have
/ offered a date for a meeting
ween you and Mr. [Eduard]
verdnadze? And secondly, can you

us any indication of the discus-
i that [Soviet Ambassador Yuri)
>inin and President Reagan may
e had?

A. No, I don't have any comment
hat. I think that's basically a
hington story at this point.

Q. Despite the reduction on U.S.
liars, there are indications that
re will be some protectionist
(isures implemented. How would
r Administration handle this?

A. The President is firmly and
ply opposed to protection. He
eves in open trading and he
lauded the speech, the wonderful
Bch, outstanding speech made by
igapore] Prime Minister Lee in Wash-
xm to a joint session of our Congress

year. So he is opposed to things like
bill that passed our House recently,

he said he will veto it if it were to
r wind up on his desk.

Q. I have two questions. The first
I are you going to meet with [New
iland] Prime Minister Lange in
nila, and does the United States —

A. The answer to that is yes.

Q. Does the United States have
' indication that New Zealand is
ng to modify its antinuclear policy
^he ban on U.S. ships?

A. I don't have any indications,
wever, I look forward to my meeting
h Prime Minister Lange and I'll see
at he has on his mind.

Q. The second question is, here in
Singapore —

A. I thought that was two.

Q. In your talks here in Singapore,
did the subject of potential leakage of
U.S. technology come up, and is the
U.S. satisfied with the unilateral steps
that Singapore is taking to try to pre-
vent that sort of thing?

A. The possible agreement on the
technology transfer memorandum of
understanding is under discussion and
review. And, as a matter of fact, I think
there is a [Singapore] team in Washing-
ton right now discussing it. So we talked
about it briefly, and it's a matter under
close review. Of course, we think, and
Prime Minister Lee and Singaporeans
agree, that it's a great mistake for
technology— advanced technology— that
might be useful for military purposes, to
leak to the Soviet Union.

Q. Are the unilateral—

A. That's your quota. Next? No,
well, then you can continue if nobody
else has any questions.

Q. I was going to ask you to
follow up with the unilateral steps
Singapore is taking. Are they enough
for the United States, or is the United
States going to continue to press for a
signed agreement?

A. We think it's good to have a
clear agreement between countries. We
have them with many other countries,
but at any rate, it's a matter under
discussion.

Q. Mr. Reagan was kind enough to
take ASEAN issues to the Tokyo sum-
mit, but we are now hearing reports
that the ASEAN foreign ministers are
quite unhappy with the outcome. I
think there are probably three issues
involved: low commodity prices; the
flow of investment which is starting to
slacken; and protectionism. Would you
comment on how you view these
issues?

A. The Tokyo summit could hardly
change the level of the commodity
prices. They are basically set by market
forces; and, I might say, some of us who
had to suffer with the very high oil
prices, for example, are not unhappy to
see them where they are right now. But,
1 recognize that the level of commodity
prices is a problem for those who pro-
duce and sell and depend on the com-
modity. I think it is important to look at
what's happening to the long-term mar-
ket for some of these commodities. And,

without wanting to pick out particular
ones and talk about them, the fact is that
the nature of what's being manufactured
that has traditionally contained the com-
modities is changing. Things are lighter;
there are more plastics in them; and so
you are seeing a change in the structure
of demand for many commodities. And,
no doubt, that has something to do with
the prices, and commodity agreements
won't solve that problem, as the experi-
ence with the tin agreement shows. So,
that's a deep problem.

As far as the issues of protection are
concerned, I think it was addressed quite
squarely at the Tokyo summit and, of
course, it has been addressed squarely
by President Reagan. That isn't to say
there aren't protectionist issues all
around the world. And I think that many
of them exist in developing countries.
And, I believe myself— I noticed in the
papers this morning that some of the
ASEAN ministers and [Philippines
President] Mrs. Aquino, in particular,
called for more open markets within
ASEAN. I think that's a good point, but
we have supported— and the Tokyo sum-
mit supported— the start of a new GATT
[General Agreement on Tariffs and
Trade] round. That's a market opening
measure. The GATT rules need to be
extended to include other matters-
services and intellectual property
rights— I might say, a controversial issue
here. So I think the Tokyo summit
addressed these matters.

It also discussed the problem of agri-
cultural subsidies and the impact of some
of the agricultural programs of the
developed countries on those agricultural
markets and agreed to study that care-
fully. That's kind of a breakthrough. It's
the first time it's been done.

Q. Declining flows in investment?

A. Declining flows in investment.
Well, from the standpoint of the United
States, it continues to be strong. I think
our investments here, for example,
amount to about $5 billion and continue
to come in, but investment flows to
places where the investors feel they get
a good rate of return. So, the world is
very competitive on investments, and
here I think that there are some steps
that the ASEAN countries could take.
Actually Singapore has taken a move in
this direction that's very constructive I
think, and that is to pass legislation that
protects the intellectual property of
investors. An awful lot of what's

ntemhpr 1QAR

THE SECRETARY

invested these days— take the computer
area and the software or take phar-
ceuticals or many other kinds of
incuts— bring with them proprie-
tory rights, and if you have no protec-
tion for those proprietory rights, the

i ment hesitates to come. So there
arc things that can be done that will
improve conditions for investment and
we'd like to see those things done.

Q. As you know, Singapore is
experiencing its second year of
negative growth after a long time of
very high growth spurts. The news
from places like Japan is that their
growth rate is fairly low; the United
States, while growing, is not growing
at a very rapid rate. Does it look like
the big growth spurts of the places
like Singapore and some of the other
new industrialized countries, the era
is over and it is going to be no growth
and slow growth here from now on?

A. I think the case of Singapore is a
little different, in that it's this 2-year
period you referred to probably is asso-
ciated with the fact that costs in
Singapore got up pretty high relative to
competing places, and I see that the
Singapore authorities are taking steps to
deal with that and beginning to see some
response to it. So, if you create non-
competitive costs, you tend to feel the
effects of that fairly fast in a rapid
market. 1 think that we are going to see
good substantial growth in the years
ahead, and there is no reason why a
developing country that sets itself up
right can have rates of growth well in
excess of average growth in the world
economy generally. To deal adequately
with the problems we have in this world,
the debt problems and the general prob-
lems of poverty and the aspirations to
get ahead, we have to have conditions
that generate economic growth. And, I
think they can be found, and I think we
are in the process of doing that better
and better.

Q. What do you think of the
Indonesian idea about the establish-
ment of a free zone in this region?
[Inaudible] as you know, they will
discuss this situation in Manila.

A. 1 think people have to focus on
what the real problem is. The real prob-
lem is that there are large stockpiles of
nuclear weapons, and President Reagan
has called for radical reductions in these
stockpiles, leading eventually, if possible,
to zero. And that's what we are advocat-
ing in our negotiations with the Soviet
Union.

As long as the Soviet Union has
these nuclear weapons, then it is impor-
tant for the United States, in particular,
to maintain a deterred capability; and so
the U.S. nuclear capability is a very
important force for stability in this part
of the world as well as elsewhere. So, I
think that the thing to do is to concen-
trate on what the real problem is or
what the real objective should be,
namely to reduce nuclear weapons gen-
erally, rather than try to prohibit them
in certain areas. After all, what you
want to prohibit is the nuclear weapon
landing on you, and the best way to
avoid that is to get them reduced and
eliminated.

Q. Following up on the same ques-
tion, Moscow, in the form of a delega-
tion from the Soviet Presidium, came
down, too, last month, and they said it
in Singapore and in Malaysia that the
United States in collusion with Japan
and South Korea are using their eco-
nomic influence on ASEAN to build up
military blocks. And, one of the indica-
tions mentioned was the arms stock-
pile in Thailand and they said the big-
gest threat countering the ASEAN
perception of the Soviet threat was
that America and the new allies are
the threat to ASEAN. What is your
comment on that?

A. I can see by the sound of your
voice that you think it sounds a little hol-
low, and I agree with you. After all, here
is the Soviet Union and Cam Ranh Bay
supporting its quiet Vietnam who is
occupying Cambodia. The ASEAN coun-
tries, I think very skillfully, along with
help from China, are trying to do some-
thing about it. So, when the Soviet
Union comes to this region with that
kind of message, what they need to hear
is why don't they stop their aggression,
and allow more stability to take place
here.

Q. Will proposed spending on the
Strategic Defense Initiative (SDI)
affect conventional investments in the
U.S. Navy and Air Force, and does this
have implications for the military
balance in Southeast Asia?

A. The Strategic Defense Initiative
of President Reagan's is an important
contribution potentially to the system of
deterrence because it makes your capa-
bility of avoiding the impact of a first
strike much greater, assuming that it
works out and can be developed success-
fully. I might say, it's also quite clear
that it has got the Soviet's attention,
and it has become a centerpiece in the
negotiations at Geneva. So, to the extent
that people favor these discussions on
arms control, the existence and the

importance of SDI is a major contribu-
tion to that. So. I think that it's a very
important development.

As to its impact on conventional
force matters, in theory, there should!
be any particular impact. I think, on t\
whole. In NATO, in particular, we see
the importance of improving our convd
tional force capacility and, as the sayir
goes, "raise the nuclear threshold" by
having a greater conventional capabil
than we do. Obviously, this is expensiv
and one of the reasons why countries
have gone to the nuclear deterrent is
that it is a less expensive way than coi<
ventional arms. But, nevertheless, we'
need to look to our conventional capab
ity without a doubt. Insofar as this are
is concerned, of course, anything that
contributes to stability in the world
political system helps this area.

Q. The multifiber talks between
the United States and Hong Kong
broke down. Can you tell me what
directions in the next round of talks
will probably take place?

A. These textile talks are always
breaking down and picking up. They
broke down, but they are reconvening
and it seems to be part of what a nego
ation is about. The problem is that the
U.S. textile industry has a large emplc
ment base and is seeing its market in t
United States erode. And to a certain
extent, quite rapidly lately, as the ship
ments into the United States or coun-
tries that sent us textile goods had bee
exceeding their quotas by quite a large
amount. And, that has made the negot
tions much more sticky as they seek tc
enlarge the products covered and thin;
of that kind. So, the way the textile
industry works around the world
through the multifiber agreement, just
produces perpetual negotiations, and
they are always failing and then recon-
vening and so on. Hong Kong is going
through that process. It is not a partic
larly satisfactory system; but it is the
system that the world has fallen into,
and for reasons that I guess are
understandable.

Q. The British Government
announced today — yesterday, I think
was — that it is hoping to have talks
with Mr. Oliver Tambo of the Africai
National Congress (ANC), about way
of alleviating violence. Would the
United States also like to have such
high-level talks with the ANC?

A. We are interested in whatever
that can be done to move toward a
reduction of violence and a start of ger

Department of State Bulb

THE SECRETARY

negotiations. To that extent, we have
periodic contacts with the ANC, and
■e isn't any doubt that the ANC is a
:e in the South Africa picture. So, we
follow the British talks with great
rest, and in the general, be looking
nything that can move in the direc-
s that I outlined.

WS CONFERENCE,

NILA.

«JE 25, 19862

en I was here only 6 weeks ago, I
;ainly had the feeling that while there
■e major problems, they were soluble.
i I must say, in the discussions today,
uldn't help but feel that additional
gress was being made to solving the
blems. So, I have come away from
i experience of these discussions
ay feeling, again, very good about the
ire of the Philippines.

Q. Just before you arrived. Joker
oyo, the Executive Secretary of the
ernment and the Minister of Infor-
ion, made remarks critical of your
roach to helping the Philippines
ye its problems. One was on the
10 million being nothing particularly
jcial and why was such a fuss being
le about it when it was only rent
i the bases anyway, and the Informa-
i Minister's comments that your
In comment in New York in your
ech, that being bullish about the
lippines, was just a load of hot air.
I you discuss these problems today?
| you concerned about these kinds
L'omments?

A. I was interested that quite a
fiber of people commented to me on
L' pleased they were with the com-
fits I made in my speech in New
rk, and everybody was interested in
en the $200 million check was going
krrive. But the fact is, that when I
k here before, one of the requests
pe was that funds that were in the
feline, already appropriated funds, be
eded up. And so, responsive to that
uest, I went back to Washington and
worked on it with the help of the
nassador, with the help of [AID
ninistrator] Peter McPherson and
ers. President Reagan and we have
eded up this payment. I'm not hold-
it up as any big deal, it's only $200
'lion, but I still am a small-town boy, I
ik that's a lot of money.

Q. I understand you're also going
meet with New Zealand's Prime
bister, Mr. Lange. at some stage?

' A. Yes, we're scheduled to meet.

Q. Given that it's possibly the last
chance for a direct meeting between
the two administrations before the
antinuclear legislation becomes law, I
wonder if you could please spell out, in
your view, what it would take to settle
the differences between the two coun-
tries, restore ANZUS [Australia, New
Zealand, United States security
treaty], and allow American ships to
again visit New Zealand, or do you
believe it's too late?

A. We in the United States have
great affection for the people of New
Zealand and wish them only well. We
have had a treaty with New Zealand and
Australia, the ANZUS Treaty, that looks
to each other's mutual security.

A central undertaking on the part of
New Zealand is to provide a place where
our ships can come and they are ships-
some are nuclear powered, some are
nuclear armed. That's necessary, under
the circumstances, given the Soviet
threat that exists in this part of the
world as others, and so particularly in
the light of our unwillingness to disclose
the location of certain kinds of ships, we
have a policy of not confirming or deny-
ing the presence of nuclear weapons on
ships. That's been a long-time policy and
that is our policy.

If New Zealand says that our ships
can't come there under those circum-
stances, well, we're sorry about that and
we wish it weren't so. But under those
circumstances. New Zealand is basically
withdrawing itself from its security
arrangement, and we're sorry about
that, but that's New Zealand's decision.
That is, I hope it won't be, but that
seems to be what it is.

Q. You've frequently referred to
former President Marcos as part of the
past of the Philippines, but he con-
tinues to be part of its future by inter-
fering via long distance in the coun-
try's political process, and allegedly by
injecting money into that political
process in terms of fomenting
demonstrations. Is there nothing the
United States can do to correct that?
Have we made it clear that Marcos
mav not be welcome in the United
States?

A. We have made our views clear.
Of course, he is in the United States.
He's welcome to stay in the United
States, we've made that clear. But I was
pleased that really there wasn't very
much discussion about Mr. Marcos dur-
ing this visit; and I think it is healthy
that people are going on to focus on the
future. He is not a part of the future
here, he is a part of the past.

Q. Philippine Defense Minister
[Juan Ponce] Enrile said today that it
would take something of a miracle to
reach agreement with the communist
insurgents, and he implied that he
didn't expect such a miracle. Can you
give us your analysis of the possibility
of reconciling with the insurgents or
of the possibility of meeting them on
the battlefield?

A. I think the people here are much
better to give assessments than I am,
but I see a strategy here that's not that
different from, for example, our strategy
in meeting the communist threat in our
own hemisphere. And the strategy has
many aspects to it, as we have been
applying it, for instance, in Central
America.

We have said, first of all, part of the
problem is the need for political reforms.
So let us find our way to democracy. Let
us find our way to the rule of law. That's
exactly what President [Corazon] Aquino
is trying to do here in the Philippines.

Second is the importance of eco-
nomic development and giving attention
tn that so people can find their way to
have a job and to have some income.
Again, I think the reforms being con-
ducted are very much along those lines.

Third, there is the necessity, obvi-
ously, of providing for strength of the
security forces. And I think that the mili-
tary reform being conducted is very
much along those lines so that they are
able to confront any insurgency with the
fact that they can't succeed by armed
efforts.

And along with that, as we have
been doing— as for example President
Duarte has been doing in El Salvador—
to say there is strength, and there is con-
viction, and there is an ability to deal
with this militarily if we must. But we're
ready for dialogue— not about power
sharing, but about a return of people to
the normal stream of life and an ability
to take part in the political process if
they want to undertake it. So, I think
that's a good strategy. Obviously, in the
tactical implementation of it, there is all
sorts of room for difference of view for
exactly how to go about it, but it seems
to me that's a sensible strategy.

Q. If I read correctly, you suggest
that you would try your best to get the
donor countries to raise $2 billion for
the Philippines. If that were so, what
happened to your efforts to do so? The
second question is what will be your
input into the dialogue meeting here in
Manila?

A. Into the what?

eptember 1986

THE SECRETARY

Q. Into the dialogue together with
the ASEAN countries. Will there be
any initiative on your side, any new
ideas you will raise here?

A. On the latter, we come with the
same old ideas that we all need to give

'iition to economic development, that
that has a— is a primary responsibility of
each country individually in the first
instance; and then to have an interna-
tional arrangement that allows people to
benefit from each other, and primarily
that refers to open trade. So, I come
here carrying a very antiprotectionist
message. I say it on behalf of the United
States to the United States, and I say it
to others as well.

The other part of our old ideas is
that security is part and parcel of what it
takes to have a reasonable chance for
economic progress. So, the ASEAN
effort to look to that problem in their
attitudes toward the Vietnamese and
Soviet-sponsored occupation of Cam-
bodia is something that we support.
Beyond that, there are all sorts of issues
around the world that will be discussed
and I'll have an intervention.

Insofar as your first question is con-
cerned, a donor meeting was convened
in Tokyo about 3 weeks ago, I guess,
something like that, and the question of
assistance to the Philippines was thor-
oughly discussed. The Philippines made
a fine presentation of their plans. I think
people are looking to see the implemen-
tation of these plans. It isn't just donor
countries.

It is also the international financial
institutions— the IMF [International
Monetary Fund], the World Bank, the
Asian Bank, and also commercial
banks— that need to participate in this
effort. But, I think it's coming along
pretty well on the whole and, of course,
leading it is action in the Philippines that
people support. I was pleased, for exam-
ple, to hear— to take a broad thing in a
small thing— from the Finance Minister
that the tax reform package which is
quite important and sweeping has been
thoroughly discussed in the Cabinet and
approved by the Cabinet. So, that's
progress on a major matter.

Then, as a sort of little indicator of
things you pick up just walking around,
so to speak, I was pleased that the hotel
manager here greeted me when I came
and escorted me to my suite and we
were talking about how are things. He
said, "Well, things are pretty good. We
have 83% occupancy in the hotel, and
that's very different from what it used
to be." Well, it's an interesting little
indicator.

Q. You talked awhile ago about
open trade, the Philippines opening up
its economy to world trade, but it
seems that the United States is very
protectionist. It's one-sided when it
comes to open trade. For example, you
have that so-called war chest con-
sisting of $300 million which is in
effect a subsidy for U.S. domestic
industries against upsurge of imports.
And secondly, I would like to know
the prospects of the multifiber agree-
ment being passed next month in the
U.S. Congress, and how this would
affect the Jenkins bill which is about
to be passed in Congress also in
August.

A. I hope you're wrong about the
latter. The Jenkins bill was vetoed by
the President, and there are those who
want to override the President's veto,
and we will fight that very hard. We
expect to win. So, I hope you're wrong
about saying that it will pass Congress.
Certainly the President will be standing
firmly against it.

The multifiber agreement, of course,
is an international agreement; and it is,
by way of the international community
deciding how the flows of textile goods
around the world will be handled. It's a
departure from the system of open trad-
ing that characterizes the U.S. economy
on the whole, and it's a different system,
and whatever its merits or demerits, it
exists, and people operate under it. The
United States has the largest flow of
imports of textiles of any country in the
world, which isn't surprising since we
have the largest economy, and we have
the largest total amount of imports. So,
I think your characterization of us as a
protectionist country can't quite possibly
be true given the big trade deficit we
have and the huge amount of imports
that we have.

The export enhancement program,
the war chest program that you men-
tioned, is the result of the fact that the
European Economic Community has a
heavily subsidized program of promoting
the production of farm products, we
think, in a manner not consistent with
the principles of comparative advantage.
It makes no sense for the Europeans to
be big sugar exporters, for example,
when the Philippines are much better
able to produce sugar. But, anyway,
their program has done that, and it has
produced articles that compete with U.S.
farm products and have displaced us in a
number of markets, we think, in an
unfair way. And, so, we're fighting
back— and that's what the export
enhancement program is designed to do.

Q. Perhaps you are well aware o
the ongoing public hearings and the -
sessions at the Constitutional Com- I
mission drafting now of our new
charter. One of the basic issues then
is the abrogation of the Philippines- 1
U.S. bases. Have you — has the U.S.
Government informed the Aquino
government of what's its intention I
with regards to the earlier announce i
ment of President Aquino that the
abrogation of the Philippines-U.S.
bases will be determined by the Coni
stitutional Commission?

A. The Constitutional Commissio I
of course, is the business of the Philip- 1
pines; and the people of the Philippine I
will work that out. In the view of the
United States, and I assume in the vie
of the Government of the Philippines, |
the bases operate to the advantage of I
both governments and, for that matte I
to the security of the region as a whol i
So, they are good things. They also pr (
vide quite a flow of economic activity
the area of the bases in particular.

Insofar as their current status is o
cerned. President Aquino has said tha
the agreement under which they open
goes on until 1991, and beyond that,
she'd keep her options open, and we'r'i
perfectly content with that position.

Q. A minute ago you talked aboi
the strategy toward the insurgency
here in the Philippines. Earlier this
month, the senior representative of i
Pentagon, the Assistant Secretary o
Defense, testified in Washington th<
I quote, "this military situation is
serious and getting worse with the
communists enjoying the initiative a
assuming de facto control in areas
where government influence has bee
eroded over the years." Have you
heard anything here in the Philippin
from Mr. Enrile, General Ramos, or i
President Aquino that would shed
light on this U.S. Government assess
ment, and are you concerned in the
light of this kind of assessment that
things are going backward instead o
forward as far as the insurgency is
concerned?

A. It's not my impression, from r,
visit, that the view that you quoted is i
general view. Obviously, an insurgency
is a problem. And it's a problem that tf
government inherited, and they're stnl
gling with it with a somewhat different
strategy. I certainly hope that they su<|
ceed. My estimate of the sense of dete
initiation exhibited by the President, bl
the Defense Minister, by the Chief of I
Staff is that they will succeed.

rtmnni r\f Ct->*rt Diillci

THE SECRETARY

Q. One, did you and Mrs. Aquino
•k out a time for her visit to the
ted States; and secondly, there
e been a number of statements by
iet spokesmen in the last couple of
s including, I think, a press confer-
e by the Deputy Foreign Minister
ay, saying that the United States
> ruining the chances for the next
imit by not making any concessions
he arms talks. This has been a
iet line for some time, but do you
lk there is a possibility for some
erican give or something in the
t few weeks, or is it just a case of
Soviet Union trying to get
lething — just to have talks?
A. On the first question, we have
n discussing dates for a visit by Mrs.
lino. President Reagan is looking for-
d to having her in the United States
to welcoming her. I know that she
find a very warm welcome through-
the country and among the Ameri-
! people. I hope that it will be possible
pork out dates before Congress
mrns so that she will be able to meet
1 Members of Congress as well as
nbers of the executive branch and, of
•se, getting out around the country.
I discussed dates and I think we're
|ising in on them, but I don't have
thing to announce on that at this
it. I hope that there will be
iething shortly.

As to your second question, refer-
; particularly to the Geneva talks, the
ted States has had on the table in
ieva some very interesting positions
some time in the strategic arms area
also in the space defense area. In
INF (intermediate-range nuclear
:es) area, the Soviets responded to
proposals and we responded back.
1 so that proposal is on the table,
ently, the Soviets, just in the last
ik or two, have moved, and the Presi-
t took note of that in his comments
lassboro. He said that he regards
5e moves as serious, and so we are
lying those moves and deciding what
Donse is appropriate for us to make.
1 when we have decided that— when
President has decided that— we'll
<e it.

Q. Thailand and Asian countries
very concerned about the effect of
farm act and agricultural sub-
ies. Have you any new assurance for
fm from the Administration?
' A. Well, I think probably from
liland you are particularly concerned
lut the rice program. Am I right on
at your question is about really?

Well, we discussed this question— the
President did with [Thailand] Foreign
Minister Siddhi in Bali, and I expect I'll
be discussing it again with him and
others while I'm here. I think it's a ques-
tion of seeing how this program works
out.

The rice program is one of following
the market— that is the U.S. Department
of Agriculture, under this program, sets
prices at which U.S. rice will be sold and
changes them periodically following the
market, not leading the market. So, this
is not being administered in a way that,
so to speak, breaks the market. Now
what has been happening, as in other
areas of agriculture, is that the supplies
have been increasing and so there has
been a lot of pressure on the price. The
price has declined recently. In the last 4
or 5 weeks in taking a look at this price,
we see that it stabilized and perhaps
moved slightly upward. But at any rate,
as we have experienced with the pro-
gram, we'll know better how its effects
may play out. But the rice program is
very much one of following what market
trends are. rather than leading them.

Q. Do you believe the impasse
between the United States and New
Zealand can be resolved, and if so,
how?

A. I don't know. I think from our
standpoint, there is a very simple prop-
osition, and I tried to spell it out in con-
nection with the prior question.

We would like very much to see New
Zealand remain an ANZUS alliance part-
ner and hold up its end. And if they can
find their way to do that, we'd be really
delighted. But so far I haven't seen any
sign of that. Nevertheless, I look for-
ward to meeting with Prime Minister
Lange and hearing what his views are.
But this is really New Zealand's deci-
sion, not a U.S. decision.

Q. Do you find Mr. Lange an easy
man to deal with?

A. He's a very pleasant man, but he
doesn't seem to share our view about
nuclear power.

Q. Back to the bases for a second.
Did you have any discussions today
about the bases, about the timing for
the talks and about the possibility of
an amendment in the Constitutional
Committee that might rule out any
foreign bases in the future?

A. No. the subject didn't come up
and it is in the situation that I described
and that's satisfactory to us. There was
nothing for us to raise and nobody else
raised it.

Q. Six weeks ago when you were
here, you and President Aquino agreed
on some goals that you both might like
to work for over the intervening
months, and you went public with the
different things that she requested of
the United States or some of them.
Were there requests made today for
additional steps? Can you tell us what
thev were — of additional help from the
United States?

A. First on the things that we
talked about when I was here before that
I undertook to get done. Those all have
been followed up on and I think basically
done or [are] rolling. In the case of this
visit, a number of requests were made
for a variety of things that people
thought would be helpful and we've
listed them. And they cover a kind of a
miscellany of things of major substance,
some of less importance in terms of the
quantitative amounts. And so the
approach we're taking is to try to
develop a close working relationship so
that when things come up, little things
or big things, we can get them into the
stream of consideration and get them
worked out.

I'll give you some examples, and that
is funds. There're small amounts of
funds under our so-called IMET [inter-
national military education and training]
program for military training. A point
was made about how those might be
used in a manner that would stretch
them out a little bit and provide more
training by an additional element of flex-
ibility in thejr administration. This was
not something that I had heard about
before, but we have noted it down. To
the extent it makes sense as we study it
and is consistent with our ability to
administer it under our law, we'll cer-
tainly want to do it. There are a variety
of things like that. I don't have them all
in my head but we made a list. That's
one of the things I always do on these
trips is make a list of the things we said
we'd do. And then I asked the Assistant
Secretary involved, Gaston Sigur, to
give me that list as soon as we get back
to Washington. Then, every week or so,
I ask him how we're doing on the list. So
that causes people to follow up, and we
try to get things accomplished that way.
And if I don't ask him, the Philippines
will. So that's an additional way of get-
ting something done.

Q. The whole issue of this nuclear-
free zone in the South Pacific seems to
have become a nonissue, at least as far
as the United States is concerned. Can
you tell me why you don't seem par-
ticularly concerned or are we missing

ntomhor 1 QQfi

THE SECRETARY

it? Have you discussed the issue with
the people you've met with?

A. It's not something that we have
discussed extensively. I noticed it had
discussion in the ASEAN meeting, and I
made some comments on it the other
'l,i\ . But I think basically, what we're
trying to focus on is reducing the levels
of nuclear arms. That's what our discus-
sions in Geneva are about. That's been
the objective the President has had all
along— radical reductions in levels of
nuclear arms, hopefully getting to the
point where they're eliminated.

Now, as long as you have them,
however, and if the Soviets are going to
have them, it is essential from our
standpoint— and the standpoint of all our
allies and friends— that we have them
too, so that the deterrent effect is there.
If we lose that deterrent, we lose badly.
So the thing to focus on is getting them
reduced.

In the meantime, we have to live
with that proposition. And we don't
want to get our eye off the main ball by
seeming to eliminate them in parts of
the world. After all, they go a long ways
and the question is where do they hit?

Q. You said you feel very good
about the Philippines and you made a
convincing speech in New York about
the Philippines. But apparently your
view is not shared by the investors.
Why, in your sense, are they worried
to put in their money here?

A. The change has just started
here, but I think its effects are already
quite apparent. It does seem to me that
there is beginning to be a change in
investor attitudes. For example, the
tendency of funds to leave the Philip-
pines in the last couple of years of Mr.
Marcos' tenure here was quite marked
and that has stopped. And it's begun to
turn around. The foreign exchange posi-
tion of the government now is improved
bj quite a lot.

In the talks this afternoon with the
economic ministries, most of them had
l"'<n out around visiting the United
Slates, particularly in the last week or
so, and one of them said, "Your speech
must have done some good because I
have found people referring to it in
various places I went. And the interest
in investment here seems to have picked
up." I might say that I don't think my
speech had anything much to do with it.
It's more what the Philippines have done
that creates the confidence that inves-
tors look for.

So, I think the premise of the ques-
tion that there isn't any interest isn't
borne out by the facts. There is an

interest. As the confidence flows back
here that things are moving up and get-
ting stronger, as I feel there very much
is, then you'll see interest in investment
pick up.

So again, I'll end this news con-
ference where I started when I said in
New York, "I'm bullish on the Philip-
pines." I'm glad to be here talking with
people.

STATEMENT,

ASEAN OPEN DIALOGUE.

MANILA,

JUNE 26, 1986'

First let me join others in thanking you
for your hospitality, and also to join
others in sensing the exciting moment
here in Manila, and the opportunity we
have to talk with you not only about
ASEAN problems and world
developments, but also about the
Philippines.

This is the time for us to con-
gratulate you but also to be ready to
help you. As we have a saying in the
United States, put your money where
your mouth is. And that includes trade
and support for economic development,
support for the security reforms you're
undertaking, and the political reforms.
So I congratulate you on behalf of the
United States on what you have done
and what you are doing, and I want to
assure you that we're there and we're
trying to support you in every way that
we can.

The United States obviously places a
high value on our consultations with
ASEAN as was shown by President
Reagan's visit with the foreign ministers
not long ago in Bali; by the attention
paid to your own document as we and
others considered it at the Tokyo sum-
mit; and by our continuing attention
both in the region and various settings,
not just this one; and in Washington
through our dialogue with our ASEAN
friends. So we continue to welcome it.

I'm the sixth hitter in this lineup and
last hitter, and so I find myself in the
position where much that is written out
in my notes has already been said and I
don't want to take your time by reading
it out. But I would like to emphasize a
few of the things that have been men-
tioned already, just to underscore them.

The emphasis placed by some on the
importance of the problem of terrorism
is most welcome to me. This is a major
problem. We all do face it. It has a real
spread to it, and it's important for us to

recognize it realistically and to, of
course, talk about it, to take action so
that we put it down, and end and win
the war on terrorism.

I was also very struck and pleasec
by the emphasis many placed on the
problem of drug abuse and internatioi
drug trafficking. This, too, is a great
problem, and in all too many cases,
directly connected with terrorism. It':
way of financing the terrorists. So the
proposals to focus on this, perhaps to
have some regional discussion about i
and work on it as Mr. Clark suggeste1
think is a very welcome suggestion. \
all know how seriously we take this p
blem in the United States and, of cou
the First Lady, Nancy Reagan, visite*
this region recently to discuss that su
ject, particularly in Malaysia and
Thailand.

Everyone has spoken about our si
port for what ASEAN is doing in
fighting the aggression of Vietnam in
Cambodia. I never know whether to (
it Cambodia or Kampuchea, it seems
vary with the times. But at any rate,
aggression and it needs to be resisted
and we support what you are doing. ^
also support, of course, the effort to
bring about a peaceful resolution of tl
issues, and your own reaction and ble
ing of the eight-point program we
recognize. We support you in a gener
way. I would have to say that, as witl
Mr. Hayden, we cannot bring ourselv
to support a government that might
include Pol Pot, given the track recor
that he exhibited when he did have
access to power.

I also welcome the discussion aboi
the importance of working on the pro
lems of agriculture, the surpluses, anc
some cases surpluses promoted by sul
sidy. This subject was discussed
intensively at the Tokyo summit as M
Clark indicated, and his government 1
the way. I think it was a good discuss:
and it was noteworthy that for the fir
time, the governments involved
recognized the harm that can be done'
the subsidy programs and agreed to
work actively on it. I'm a great believ
that you can never solve a problem ur
you recognize there is a problem. Tha
the first step, and I believe it's an imp
tant step, potentially. The suggestion
that there be some sort of internation
experts group to work on this, sup-
plementing the OECD [Organization f
Economic Cooperation and Develop-
ment] efforts, that I think again Mr.
Clark suggested, seems to us to be a
good one. We need to progress on this
subject and keep the ball moving.

Department of State Bull

THE SECRETARY

I might also say that the outline of
[various things done in the Tokyo
tomic summit, I thought, was a very
p one. We agree with those who have
I that this was an outstanding summit
31 many dimensions, and one that I
jk will go down historically as having
Irning point in many respects.
I'd like to call your attention to a
iect that has not been mentioned by
pody else, just so that it gets on your
ida. On May 28, the UN Trusteeship
ncil adopted a resolution calling for
nd to the agreement under which
United States has administered the
3t Territory of the Pacific Islands.
Soviet Union alone voted against
recommendation despite the strong
;als from the Micronesian leaders,
question of termination will now be
ight before the Security Council. The
ales of Micronesia have freely exer-
d their right of self-determination in
observed plebiscites. They've called
prompt and unconditional termina-

of the trusteeship.
Members of the South Pacific
am, individually and collectively, sup-

the validity of the plebiscites—
orsed prompt termination. We look
le members of ASEAN for support
lin the United Nations of our efforts

rminate the trusteeship in accord-

with the expressed will of the
ronesian peoples.
Finally, let me just make my own
;onal comment about the problem of
ection that many have mentioned. I
•e the general view of the importance
ghting these protectionist trends-
vital to our world. The problem
ts everywhere. It exists in your
ltry, it exists in my country, and it
ts in the countries around the table,
re are various things that need to be
e to fight it, and they have been men-
ed here. The GATT round is an
ortant opportunity. The ability to
dinate economic policies better
is a real prospect for changing the
;erns. From our standpoint, we feel
te fight the protectionist trends in
Congress, that it is essential for us
e able to say that other countries
) are our trading partners open their
•kets to us, just as we open our
•kets to them. If we can't say that,
are undermined in our discussions
i our Congress.

I might note, in that connection,
le of the statistics about ASEAN's
le, just to put your own comments
i perspective. In the 4 years encom-
sing 1983 to 1986, with the 1986 sort
. reasonably accurate forecast of
it's likely, we see that ASEAN's

exports to the United States increased
from about $14 billion to a little over $16
billion— an increase of about $2.2 billion.
If you look at ASEAN's exports to the
rest of the world— that is you take your
total and you subtract the United States
from it— instead of the increase in your
exports reflected in your relation with
the United States, you see a decline of
about $3.3 billion. I think that tells you
where your problem is, and where it
isn't— not that the problems of rice, the
problems of textiles, the problems of
sugar don't get involved with some of our
difficulties in the United States, and
they need to be worked out and talked
about, but I think this reflects some of
the overall trends that need to be
thought about and dealt with as we work
on this problem of protection.

I think myself that it represents an
important economic challenge and prob-
lem to us. But beyond that, it represents
an important political challenge as we
advocate freedom. How do we do that if
we draw back from freedom in the
economic sphere? And, as we consider
the strategic situation if we indulge in a
pattern of protection and retaliation and
so on that might very well take place,
what we will wind up with is a compart-
mentalized world economically and,
therefore, a world that is changed
strategically and much more dangerous.
And so, we don't want to see that hap-
pen. I believe that we all need to join
and see what can be done, country-by-
country and collectively, to lick this
problem of protection because it is a
very severe one.

Let me conclude by saying that I
look forward to our consultations, to
candid exchanges in the six-plus-one
sessions, and the individual meetings
that all of us have with each other. You
have organized a forum that is very
useful. I welcome the chance to take part
in it again.

REMARKS AT CONCLUSION
OF BILATERAL MEETING,
MANILA,
JUNE 27, 19864

Q. Did vou make anv progress, Mr.
Shultz?

Secretary Shultz. No, we didn't.
We discussed the general ship visit prob-
lem and our policy, and New Zealand's
policy and I'm afraid that we were not
able to resolve that issue. It is essential
from the standpoint of the United States
that the policy of neither confirm nor

deny the presence— is something that the
Government of New Zealand doesn't feel
it can live with. So we part company as
friends, but we part company.

Prime Minister Lange. Please be
clear that the New Zealand Government
does not challenge the neither confirm
nor deny policy. The New Zealand
Government's policy is not to have any
nuclear weapons in New Zealand. The
United States has been quite consistent
and has been with considerable integrity
perceived all along that that is not con-
sistent with its view of New Zealand's
role as an alliance partner. In a very—
not in a passionate way or anything— we
have come to review the two policies and
the Secretary has said that the views at
this stage are not reconcilable.

REMARKS,

OPEN SESSION OF SIX-PLUS-ONE

MEETING,
MANILA,
JUNE 27, 19865

I would like to put the discussion of
trade and political cooperation between
our countries, first of all into a global
context. There are significant trends at
play in our favor— both in the current
world economy and in East- West rela-
tions. These trends bear out the wisdom
of our countries' commitment to
democratic principles and market-
oriented economies, and to policies of
firmness and realism in dealing with
aggressors.

It is fitting that we are meeting
today in Manila, a city which bears
special witness to the flowering of
democracy. In recent months, the
Filipino people have provided an exhil-
arating demonstration of what men and
women committed to democratic ideals
can achieve. Under the new government
of President Corazon Aquino, they seek
not only to revitalize democracy within
their country, but to rejuvenate their
economy as well. The Filipino people
have the strong confidence and support
of the United States in this effort. I can
assure you President Reagan is firmly
determined to help the Government of
the Philippines make the most of this
current opportunity to overcome its
political, security, and economic
problems.

Within the world today, the
members of ASEAN and their partners
have a special importance. All of us
share an important stake in preserving
peace, in protecting independence

Dtember 1986

THE SECRETARY

against aggression, and in ensuring con-
■ led growth through market-oriented
economies and liberalized international
trade.

Precisely because of the scope of our
common interests, consultations between
ASEAN and the United States have
intensified in recent months, as you
noted. President Reagan's meetings with
you in Indonesia last month, under
Secretary of State [for Economic Affairs
W. Allen] Wallis' subsequent discussions
in Singapore and Jakarta, and this ses-
sion today are all evidence of a robust
dialogue. It is a dialogue with direct and
tangible payoffs. Before going to the
Tokyo summit, the President benefited
from your presentation of ASEAN's
economic concerns and objectives. And
in turn, your arguments gave special
force to America's effort at the summit
to gain further liberalization of the world
trading system.

I might say this was an example
where, through consultation and identi-
fying your concerns, which for the most
part turned out to be rather parallel with
ours, we were able at that discussion to
say here's what we think and, further-
more, there are countries in this region
of a varying nature who have given us
this document, and you gave similar
material to others, who have the same
point of view and that tends to reinforce
what is being advocated.

Sustaining International
Economic Growth

I share President Reagan's assessment
that the Tokyo summit was the most
successful of the six economic summits
he has attended. The final communique
accurately reflected the generally
favorable situation emerging on the
international economic front.

( Consider, for example, the following
developments which are shaping the
economic policies of industrialized and
developing nations alike. I point these up
because 1 know there is a sense, as you
said, that the era of easy economic
growth is over, and there is a question-
ing sense, some sense of uncertainty in
many quarters. My own feeling is that
we are sort of on the verge or maybe
even in the midst of something that is
taking us to a new frontier and one that
will be as exciting as the ones that we
have seen before.

Just to tick off these items, there is
increasing international consensus that
the private sector, operating in a free
market and drawing upon individual
entrepreneurship, is the engine of sus-
tained, noninflationary growth. I think

the more that idea spreads around and is
put into place, the more fruitful the
interaction of those of us who follow
those policies will have.

There has been a corresponding dis-
illusionment with socialist, planned
economies. Developing nations that once
pursued state-controlled economic
development strategies are now turning
to a greater reliance on the market and
international commerce. Just last month
African nations issued an extraordinary
document at the United Nations calling
for liberalized trade and economic
policies. I think some of you were there.
I think I saw you there. Dr. Mochtar
[Indonesia's Minister of Foreign Affairs],
and if you were like me, you couldn't
help but be thrilled by this conference
because it was so fresh and different a
turn for the African nations. They have
observed a simple truth: the countries
with the greatest economic advances—
and many of them are represented in
this room— are those which have taken
the greatest advantage of the free
market.

At the same time, there is a better
understanding of what indebted develop-
ing countries must do to reorder their
economies. They must reduce the
economic burden of government, expand
trade, stimulate growth, and encourage
domestic savings and foreign equity
investments. You go from country to
country where there are big debts and
difficult budget problems, and you find
that a very high proportion of the budget
problem is due to state enterprises that
lose money. And now interesting pat-
terns of debt equity swaps are taking
shape that will— as they develop— reduce
debt, bring in equity, and move those
enterprises into private hands where
they will necessarily be managed more
efficiently or else they won't exist. Of
course, no one will buy them unless they
think they can make them work at a
profit.

The United States is ready to help in
all this. At Tokyo, the Summit Seven
endorsed measures to assist these
adjustment efforts. These included the
Baker plan on Third World debts, stress-
ing far-reaching, market-oriented policy
reform to establish the economic condi-
tions which can support sustained
growth.

For those countries trying to restart
economic growth, particularly those
struggling with high debt-service
burdens, there is good news in the form
of lower interest rates. In certain cases,
including some ASEAN countries, oil
price declines may create near-term
problems; but on the whole, the drop in

oil prices will also have a major impact
on the world economy.

There is now a better sense of hov
the major industrialized nations can
pursue mutually supportive
macroeconomic policies. At Tokyo, the
Summit Seven agreed on measures to
sustain future growth and to improve
coordination of economic policies. We
also agreed upon economic indicators
gauge our progress. Our objective is
more effective cooperation in supporti
broadly based economic growth, more
open trade and investment, and greati
exchange rate stability.

Finally, there is an emerging recon
nition that policies of domestic subsid; I
and protection for agriculture are bad
As the economic declaration put it, "\
note with concern that a situation of
global structural surplus now exists fc
some important agricultural products,
arising partly from technological
improvements, partly from changes ir
the world market situation, and partlj
from long-standing policies of domesti
subsidy and protection of agriculture i
all our countries." In other words,
everybody was saying "We're part of ]
the problem. This harms the economie
of certain developing countries, and w
talked about rice, and we talked about
sugar, so people are aware of these pr
lems and it's likely to aggravate the ri
of wider protectionist pressures. This
a problem which we all share and can
dealt with only in cooperation with eai
other."

It was something of a breakthrouj;
to get these countries together to say
are doing some things that have expla
tions that come out of our own politics
environment, but we have the courage
look at them and say there are many
adverse effects and we ought to try to
do something about it. That's not a sol
tion, but you can't solve a problem, I
don't believe, until you recognize that
problem exists and then you can start
talking about solutions in a more con-
structive way.

The recent growth of the U.S.
economy has strengthened a global
economic environment capable of sup-
porting these potentially promising
developments. The major industrialize
countries have recovered for the
1980-82 world recession at varying
rates. But in the United States, Admir
stration policies have spurred a solid
3-year recovery. Fueled largely by
strong investment demand, this recov*
has helped, in turn, to stimulate the
economies of other nations.

DeDartment of State Build

THE SECRETARY

We have, however, experienced
jsually large imbalances in our
momy during this same period— a
ivy net capital inflow; an overly
ong dollar; a massive trade deficit;
i a large deficit in the U.S. Federal
Iget. They must be corrected if the
ited States is to maintain the momen-
n of its economic success and, in turn,
,11 of us are to keep the world
momy on the path of sustained,
inflationary growth.
We are already making progress.
3 Plaza agreement of last September
ong the five major industrialized
ions has contributed to exchange rate
iditions which better reflect economic
.lities. The Tokyo summit arrange-
nts should lead to improved growth,
aller trade imbalances, and greater
bility in exchange rates among the
en major industrialized nations.
At home, we are trying to bring
cipline to Federal spending. Unfor-
lately, it even hits the foreign affairs
iget; it hits it too much, and I have to
ect to the severity of some of the cuts
t are contemplated in our own budget
the Administration and the
istance that we believe we should pro-
e in our own interests. Nevertheless,
•re is a very determined effort in the
ited States to bring spending under
ltrol.

Tax reform— we have a major tax
orm bill that is virtually certain to
s. It will encourage investors to make
:isions for sound business reasons
her than for tax purposes. And
dilatory reform frees resources for
re productive activities.
That's good, but not good enough,
industrialized and developing coun-
s alike, world economic growth
ends heavily on the continued open-
s of the world trading system. Presi-
t Reagan believes that the best way
nations to correct debt and other
blems is by fostering opportunities
growth, not by restricting trade. We
committed to promoting greater
ness and liberalization in interna-
nal commerce. The President is
spared to resist strong domestic
litical pressures to keep that commit-
nt. However, our trading partners
ist also work to reduce their own pro-
:tionist practices and demonstrate an
jal commitment to more open trade.

At Tokyo, we gained Summit Seven
idorsemert of our call for an early
tginning of the new multilateral round
Ctrade negotiations in the GATT. Here
sain we were able to cite the support of
/5EAN for a similar objective for

broadly the same reasons. We look to
the launching of this new round this
September at the ministerial meeting in
I Fruguay. A new GATT round provides
an opportunity to improve the rules of
liberalized international trade and
extend them into new areas not only
covering agriculture, but also services,
intellectual property, and investment.
I hear it sometimes said by some
countries, classified as developing
countries— of course, we classify
ourselves in the United States as a
developing country; we've been develop-
ing very rapidly in recent years, and I
think you have to look at yourself that
way— but lower income developing coun-
tries, what have they got to gain? I think
they have a great deal to gain, if for
nothing else than a willingness to impose
on themselves more open trading prac-
tices. If you look around the world,
perhaps understandably some of the
most protectionist practices are followed
by developing countries, and we could
name some of them here very easily;
without even having to look around this
room we could name them. And they
don't help matters, particularly they
don't help in the long run. So I think
there is a great deal to be gained just in
that, plus these other areas that I've
indicated.

We look forward to working closely
with members of ASEAN to that end.
As the GATT preparatory committee in
Geneva begins work for the September
ministerial, we will no doubt hear from
nations, both developed and developing,
resisting a comprehensive agenda of
liberalization. This makes cooperation
between us especially important both
before and during the September
ministerial.

We should have no illusions about
the common danger we will face if we
fail to cooperate. Increased protec-
tionism would be destructive for us all. I
can understand the short-term concerns
and political pressures moving some
groups to propose protectionist
measures as an answer to trade prob-
lems. But the remedies they seek are
wrong. Those advocating protectionism
underestimate the damage that a new
cycle of restriction and retaliation would
inevitably inflict on export-oriented sec-
tors of our respective economies. They
neglect the cost to consumers in the
form of higher prices and inflationary
pressures. And they neglect the political
and strategic value of economic freedom.

If we divide the world into water-
tight trade compartments, others will
find ways of breaking these compart-

ments, as we learned to our sorrow in
the 1930s. I might say that one of your
members, the Prime Minister of
Singapore [Lee Kuan Yew], not quite a
year ago, gave an address to a joint ses-
sion of our Congress, and he focused on
these matters. It was an outstanding
address; and it had a major impact, in
part because he raised the discussion of
the problems of protection and open
trade to a strategic level. Not that the
economic aspects aren't of vital impor-
tance, but he showed everybody, in very
clear terms, the great stakes involved
much more generally for our values and
for our strategic interests. It is required
reading in the State Department and
throughout our executive branch. We
just hope some Members of Congress
will reread it.

Long-term economic growth,
however, requires a stable and secure
peace, one in which all nations are free
from the threat of aggression. The
United States and ASEAN have a
special responsibility for creating and
maintaining the conditions necessary for
such a peace. This is a twofold task,
requiring a willingness to maintain the
strength to deter aggression and a
readiness to resolve international dif-
ferences through negotiation. It is
basically the ASEAN formula here with
respect to Cambodia.

Relations between the Soviet Union
and Western democracies have been
marked by deep differences in political
values and purposes. This is unlikely to
change. But we also know that, in Presi-
dent Reagan's words to the Japanese
Diet in the fall of 1983, "A nuclear war
can never be won and must never be
fought." Thus, the fundamental task for
the United States in dealing with the
Soviets is to manage the competition
peacefully.

At the same time, President Reagan
is determined to build a more stable and
constructive relationship with the Soviet
Union. To that end, the United States is
ready for another summit this year, as
the President and General Secretary
Gorbachev agreed last November in
Geneva. We think both sides can benefit
from such a meeting, and we regret the
apparent reluctant attitude of the
Soviets.

In arms control, we continue to seek
deep and stabilizing reductions in offen-
sive nuclear arms. As the President indi-
cated last week in his speech to students
at Glassboro, "There can be no more
important task before us than reducing
nuclear weapons. I am committed,
utterly committed," he said, "to pursu-

sptember 1986

THE SECRETARY

ing every opportunity to discuss and
explore ways to achieve real and verifi-
able arms reductions."

I noticed in your communique that
you stated your disagreement with the
President's decision involving SALT II;
and while I recognize that you have
made up your minds, and you have
issued your communique, I would, never-
theless, like to take this opportunity to
explain why the President feels as he
does about that treaty.

First, I would call to your attention
the fact that the treaty is more and more
obsolete in its nature— that is, it derives
from an era when it was thought that
the thing that you most wanted to con-
trol was launchers of nuclear weapons.
That is its basic concept. But we all
know that what you fear is not the laun-
cher; it's the hitter; it's the warhead.
And what has happened is that as laun-
chers have been restricted in number,
both sides have learned how to put more
and more warheads on a launcher. So it
hasn't been the right unit of account.
The right unit of account is the warhead,
not the launcher.

Of course, it is a treaty that was
negotiated by President Carter and was
withdrawn from the Senate by him, par-
ticularly after the Soviet invasion of
Afghanistan. It has never been ratified,
so it doesn't have standing; that's the
second problem.

Third, the treaty has been violated
by the Soviet Union in respects that are
significant militarily. The treaty restricts
the numbers of new types of missiles
that you can develop to one. The purpose
of such a restriction is to put a curb on
the tendency for modernization of the
weaponry. So you can see that is of con-
siderable importance. The Soviet Union
now has developed and deployed two
new systems. This is a violation of the
I reaty that is important.

Furthermore, in any treaty of this
kind it is essential that you be able to
verify it, and one of the means of verifi-
cation that is important, given the
nature of the verification problem, is the
ability to read the telemetry of the mis-
siles that are fired. The Soviet Union has
heavily encrypted the telemetry, thus
denying the opportunities for verification.

So there have been very important
violations of the treaty on the part of the
Soviet Union. They have given more
attention to the numerical limits imposed
by the treaty on launchers; and the war-
head restrictions, of course, are large so
that both sides can build up their war-
heads. That, of course, is another reason
the President objects to this treaty: It is

a limitation on increases in nuclear
weapons. What he believes we should
have is decreases.

So you have a whole pattern of prob-
lems in connection with this treaty.
What the President has suggested is—
and bear in mind the Soviet Union is
now in violation of the treaty; the United
States is not currently in violation— that
we intend to shift gears and what we
need to do is judge our activities accord-
ing to what they do.

We in the United States have a
heavy responsibility, on our own behalf
and on the behalf of everybody, to main-
tain deterrent capability. We have no
offensive intentions or objectives; but we
have a defensive responsibility. Particu-
larly in a day of budget stringency, we
need to look at the things that will pro-
vide that deterrent at the least cost; and
we need to watch the behavior of the
United States and adjust ourselves so
that our deterrence remains effective.
And that is the posture that the Presi-
dent has put us in, as distinct from a
posture that says regulate yourself not
according to the deterrent needs but
according to a treaty that is unratified
and obsolete and being violated.

Now, his shift of gears is a shift in
the sense of restraint; and his message,
if you read it— I hope before you made
your statements you all read his very
careful statement personally so you
know what he had in mind here— but he
describes the pattern of restraint
involved. I'll just read some of the con-
cluding, summarizing aspects of it.

He says, "I do not anticipate any
appreciable numerical growth in the U.S.
strategic offensive forces. Assuming no
significant change in the threat we face
as we implement the strategic moderni-
zation program, the United States will
not deploy more strategic nuclear
delivery vehicles than does the Soviet
Union." That is a flat statement.
"Furthermore, the United States will
not deploy more strategic ballistic
missile warheads than does the Soviet
Union." That is a flat statement. "In
sum, we will continue to exercise the
utmost restraint, while protecting stra-
tegic deterrence, in order to help foster
the necessary atmosphere for significant
reductions in strategic arsenals of both
sides. This is the urgent task which faces
tis. I call on the Soviet Union to seize the
opportunity to join us now in establish-
ing an interim framework of truly
mutual restraint."

" . . .1 want to emphasize"— still the
President talking— "that no policy of
interim restraint is a substitute for an

agreement on deep and equitable redu.
tions in offensive nuclear arms. . . "

So that is where the priority is. Aa
say, I recognize that you have taken
your position and made up your minds
and issued your statement, but I did n>
want to bring this out to you because
you shouldn't think that the President
made this decision lightly, or without
reasons, that at least I consider to be
very powerful ones.

At any rate, as we continue to woi<
for effective control of these awesome
nuclear arsenals, it is important and
indeed essential that there be solidarit
as we approach these negotiations. Th
Soviets must understand that their
efforts to divide the United States anc
its friends and allies will not work.

Arms, however, are only one sympi
torn of East- West differences; they an
not the root cause. A more immediate
threat to peace lies in the readiness of
the Soviet Union and its surrogates to
use military force and the threat of foi
to accomplish political ends.

The Vietnamese military oceupatk
of Cambodia— with all of its dismal con
sequences for a land and a people
already scarred by tragedy almost
beyond comprehension— is only one of
the most immediate examples. We sec
comparable instances of aggression in
Afghanistan and Central America.
Although there are unique, local aspec
in each of these cases, it would be a mil
take to consider them in isolation froir
each other.

In Nicaragua, for example, we see-
opposition parties, the media and the
Church systematically harassed and
intimidated. Thousands of those who d<
agree with the Nicaraguan communist
regime have been driven to take up an
to resist this attempt to consolidate
totalitarian rule. Thanks to Moscow an
Havana, a massive military machine
without precedent or parallel in Centre
America— just as I think the Vietnam
military regime is without parallel in
Southeast Asia— has been erected in
Nicaragua. With a credo that, in the
words of Interior Minister Tomas Borg
"this revolution goes beyond our bor-
ders." In other words, they advocate a
do engage in subversion of their neigh-
bors actively; so Nicaragua actively su]
ports subversion against its Central
American neighbors.

Let me note an important parallel.
Both Cambodia and Central America a
cases of Soviet-backed expansionism;
both must be of concern to us. Viet-
namese aggression in Cambodia has ar
immediate meaning for ASEAN states

Department of State Bulle

THE SECRETARY

ch are directly affected by this threat
he peace and stability of the region.
det- and Cuban-backed actions by
aragua have a comparable impor-
ce for freedom and stability of Cen-
I American democracies.

Our objectives in Central America.
1 those of our friends and allies in the
ion. are straightforward. We want

Nicaraguan regime to reverse its
itary buildup, send its foreign advis-

home, and stop oppressing its citi-
s and subverting its neighbors. We
it it to keep the promises of the coali-
1 government that followed Somoza's
—democratic pluralism at home ami
iceful relations abroad.

Just as we fully support ASEAN's
Drts against unacceptable Vietnamese
lansionism. we seek ASEAN's sup-
t, in the United Nations and else-
ere. for efforts to resist a comparable
eat in the Western Hemisphere.

In Cambodia, the Khmer people con-
ae to resist the Vietnamese occupa-
1 of their country. We salute the
oism and sacrifice of the noncommu-
t fighters. Their actions make clear
t Vietnamese force of arms cannot
troy either the Khmer nationalist
rit or fierce desire for independence.

Armed resistance alone, however, is
ikely to resolve the Cambodian
gedy. For that reason, we welcome
EAN's diplomatic efforts to negotiate
alution to the Cambodian problem. I
ik, as you were suggesting, many of
i yesterday, that you don't have alter-
ives here; you don't have the alter-
ive of saying let's have a diplomatic
ategy but no strategy of building up

military capability, or let's have a
itary strategy with no diplomatic
ategy. The two things go together;
ver and diplomacy complement each
er. They are not alternatives, and I
i that very strongly in this situation.

Your leadership since December
f8 in putting forth reasonable pro-
sals to end the suffering of the Khmer
>ple and give them self-determination
s garnered global support. That the
I General Assembly has called for the
noval of Vietnamese troops from
mbodia is evidence of the effec-
eness of that leadership. The United
ites has consistently supported your
orts. We will continue to do so.

In March of this year [Cambodian]
ince [Norodom] Sihanouk proposed an
;ht-point peace plan for a political
;tlement of the Cambodian problem,
iiile the various members of ASEAN,
well as China and other governments,
ve welcomed this development, Viet-
lm has rejected it outright.

From the point of view of the United
States, this eight-point plan contains
some important, positive elements,
including the call for negotiations among
concerned parties a cease-fire with-
drawal of Vietnamese troops, and UN
supervision and observation of free elec-
tions. It is critical that the Cambodian
people be allowed to express their will
under internationally supervised elec-
tions. Given a free choice, the Cambo-
dian people will clearly reject the two
communist systems competing for power
in Cambodia.

Consistent with this diplomatic
effort, Vietnam must understand that its
international isolation, economic stag-
nation, and continuing hardship are the
direct results of its own policies. A
change in Vietnamese policies that leads
to serious negotiations and a peaceful
solution in Cambodia would be welcomed
by us all. The United States wishes to
play a constructive role in this effort, to
include normalization of relations with
Vietnam in the context of and after a
settlement.

Foremost among United States'
bilateral concerns with Vietnam is
resolution of the fate of American
servicemen and civilians missing and
unaccounted for during the Indochina
war. The feelings of the American
people and the Congress on this issue
are deep, and they require full Viet-
namese cooperation.

We support the efforts ASEAN has
made in urging further Vietnamese
cooperation, and we appreciate it deeply.
We have made some progress over the
past year with your help. Vietnam has
agreed that this issue is separate from
other differences between us, including
normalization. They have developed a
work plan which we have supplemented
with cooperative actions to support its
implementation. Now that the agree-
ments are in place, we hope to see an
acceleration of this process which is in
the interest of both the United States
and Vietnam.

Soviet Union

Let me return to the role of the Soviet
Union in the region. As President
Reagan indicated in his speech before
the UN General Assembly last fall, we
are prepared to work with the Soviet
Union and other nations to help resolve
specific regional tensions in such a way
that the interests of the parties most
directly involved might be satisfied.
To that end, we have raised the
question of a peaceful settlement in
Cambodia with the Soviets in our

periodic discussions of regional issues.
Unfortunately, the Soviets show no
desire to achieve this goal.

In the meantime, the Soviet Union
continues to build up military power in
Southeast Asia, now including bases
within Vietnam. This growing Soviet
military presence has serious conse-
quences for the security of the region.
For the foreseeable future, the stability
ul' peace in Southeast Asia must continue
to rest primarily on our individual and
collective determination to resist aggres-
sion. It would be folly to rely upon
declaratory measures or exclusionary
zones that have little effect of the
capabilities of the potential aggressor.

China

Turning to the subject of China, the
United States is prepared to work with
the People's Republic of China on behalf
of regional peace and stability. Chinese
policies on some international issues are
consistent with our own. On others they
are not. We believe the current Chinese
emphasis on economic modernization is
an encouraging development, providing
the Chinese leadership with an additional
stake in a more secure and cooperative
regional environment.

China's ability to defend itself
against the Soviet Union is an important
element in the regional security balance.
To that end, the United States is pre-
pared to cooperate in selected areas that
strengthen China's defensive capabil-
ities. Yet in doing so, we will continue to
consider carefully the security of our
friends and allies in the region, espe-
cially the ASEAN nations.

Some challenges to the stability of
the region and our common interests lie
outside the traditional political-military
sphere. Yet cooperation in meeting them
can bolster the confidence that under-
pins our entire relationship.

Terrorism

International terrorism is a growing
global danger. It is not an American or
European or Middle Eastern problem.
Terrorism is an indiscriminate assault
against us all. It attacks our most basic
political values. Its murderous efforts to
divide us, sow confusion and fear, and
disrupt diplomatic efforts to find
peaceful solutions to problems have
not— and will not— succeed.

But we must do more than just hold
the line. We must make tough decisions
and, when necessary, fight back. The
threat posed by terrorism can be no less

sptember 1986

THE SECRETARY

real a direct attack on the inter-

ests of our countries, than more tradi-
tional forms of aggression. For that
reason, the United States welcomes the
opportunity to work with ASEAN
nations in antiterrorism training. We
support efforts within the region to
become more actively engaged, bilat-
erallj and multilaterally, in the battle
against international terrorism.

Drugs

Trade in drugs is another great threat to
our societies. Mrs. Reagan's visit to
Thailand and Malaysia this spring
underscored the fact that the victims of
this pernicious traffic include young men
and women of both the United States
and ASEAN countries.

We applaud ASEAN's efforts to
combat this killer. With ASEAN's help,
we have, over the past 5 years,
dramatically cut the volume of heroin
entering the United States from
Southeast Asia. We must enhance our
close cooperation in this area with extra-
dition treaties, the forfeiture of assets
acquired in the narcotics trade, improved
training programs, and regular intelli-
gence exchanges.

Refugees

Close cooperation is no less important in
dealing with refugees. Over the past
decade, more than IV2 million people
have fled Indochina. This has imposed a
heavy burden on the countries of
Southeast Asia, but courageous decisions
to provide first-asylum sanctuary have
made the difference between life and
death for thousands. For our part, the
United States has accepted the greatest
number of refugees for permanent
resettlement, some 775,000. We have
contributed to international humani-
tarian organizations for their work in the
region. Despite increasing budgetary
constraints, we are determined to con-
tinue to meet our commitments.

The United States and ASEAN
share a common interest in more effec-
tive solutions, including expansion of an
orderly departure program for those
leaving Vietnam. That government's
suspension of the orderly departure pro-
gram earlier this year has caused untold
anguish and has led to an increase in
unsafe departures by boat from
Vietnam. We urge you to join us in
pressing Vietnam to resume interviews
for orderly departure.

Specific U.S.-ASEAN Issues

Today, as we consider a mature and
prospering U.S.-ASEAN relationship,
the most immediate common challenge
we face is that of preserving and
strengthening an open trading system. I
have already mentioned the special
importance of our working together in
the run-up to the new GATT negotiating
round. There is, however, much more
that needs doing.

I encourage ASEAN countries to
continue correcting local situations
where trade is restricted and initiative
stifled. Government policies which
improve the climate for investment help
ensure the flows of capital and
technology needed to expand trade and
employment opportunities.

Under its new government, the
Philippines is taking important steps to
lift monopoly restrictions, reform taxes,
streamline government financial activi-
ties, and encourage Filipino investors to
bring their capital home.

In another welcomed move, Indonesia
has recently relaxed rules on credit and
distribution as applied to joint ventures.
And Singapore has recently introduced
legislation dealing with the intellectual
property rights issue. ASEAN members
should improve the protection available
for domestic and foreign owners of intel-
lectual property. This will greatly help
attract entrepreneurs in high-technology
industries.

In our own bilateral trade, U.S.
imports from ASEAN rose 31% during
the past 3 years to $15.6 billion, some
$7.5 billion in ASEAN's favor. Under
bilateral agreements between individual
ASEAN members and the United
States, textile and apparel trade has con-
tinued to grow. For the year ending
1986, ASEAN textile shipments to the
United States increased 22% by volume
and 6.6% by value to reach $1.52 billion.
As a group, ASEAN is now the third
largest supplier, after Taiwan and China,
of textile and apparel imports to the
United States.

The lesson of the numbers is this:
ASEAN clearly benefits from access to
our market, and we benefit from the
ability to buy your goods. We have main-
tained ASEAN's access, despite strong
and growing protectionist pressures
from our own domestic industry. Now,
to moderate those pressures while
preserving the openness of our market,
we seek changes in the multifiber
arrangement. We want to continue to
work closely with the members of
ASEAN. A failure to do so could
drastically increase protectionist

pressure within the United States. It
could lead to a more severe loss of ace
to our market than a revised multifibe
arrangement might allow. This would
in no one's interest.

Conclusion

In closing, let me again stress that the
United States is proud to be a partner
with the members of ASEAN in their
quest for peace, freedom, and greater
prosperity. We welcome opportunities
like today to share ideas, air different)
and identify ways to work together
toward common objectives.

We often say that the United Stat
and its friends enjoy, as the saying go>
"close and cordial relations," but the
relationship between the United State
and ASEAN is much deeper than that
As nations with a profound stake in tr
future of the Pacific region and
Southeast Asia, we respect the respor
sibilities and opportunities we share.
Ties bind the United States and the
ASEAN countries by history, by com-
mon interests, and in some cases, by
treaties. Beyond this are the private c
tacts of individuals and enterprises
which are far more extensive than an\
government-to-government contact
could possibly be. As our trade and
economic interdependence grows, the
fabric of our partnership is strengther
ed. We look forward to continued
cooperation with ASEAN both now ar
in the years ahead.

EXCERPTS FROM JOINT
NEWS CONFERENCE,
MANILA,
JUNE 27, 1986"

Q. Mr. Lange, who's sitting thei
on your right, has just told us that
you've said that the United States w
withdraw its security guarantee froi
New Zealand because of the devel-
opments in that country. From the
U.S. standpoint, what does that mea
What is the effect of withdrawal of
security guarantee?

A." As we look at it, New Zealand
in taking the position in effect that U.
Naval ships cannot call on New Zealai
ports, has taken away one of the
essences of the military alliance that c
stitutes ANZUS. So as New Zealand I
in effect, withdrawn this essential
element of its participation, it change;
its participation; and in the light of th
the United States considers that the

Department of State BulM

THE SECRETARY

ity, as at least it has been
lerstood, doesn't apply in the sense of
responsibility of the United States to
end its security responsibilities to
8 Zealand. At least that's the pros-
t of it as this is unfolding-.

Q. If I can follow up on that,
uld the Administration veto any
islation in Congress which would
k to impose sanctions on New
iland if it continues in its policy?
A. There isn't any prospect of that
ill. and as I think Prime Minister
lge and I agreed, we part but we part
'riends. New Zealand is a country
t we in the United States like and
lire, and we've known them— they
e the same values, general system of
■eminent that we do. So we were
mce partners and the action of New
land basically takes us out of that
itionship, but that doesn't mean that
transform an ally into an enemy, if
ally is still a friend.

Q. I wonder if you could tell us, in
view of the American Administra-
te what is the status of ANZUS
ay? It is dead, inoperative, or what
he situation? And are you con-
lplating drawing up a new bilateral
laty with Australia?
. A. The ANZUS treaty is there, and
I have no plan— and Mr. Hayden
kstralian Foreign Minister] could
jak for the Australians— but we don't
te any plan, and we discussed it— I
n't think Australia does either— to
fcr it at all. And we continue to
Irate under the treaty. The problem
It's minus one member for the
Isent. We'll hope to continue discus-
ins with New Zealand, and perhaps at
he future time, it will be possible to
prange things, and then the structure
I be there. It won't be a big problem
[jnove back into it, but as of now, New
lland's actions basically takes it out of
It treaty structure. But the treaty
tucture itself won't change, at least we
I't have any plans to make any change
t.

Q. Tomorrow you will fly to Palau.
^that strategic significance, if any, do
ni see in recent moves by the Soviet
hion to gain access to Pacific Island
(ites by offering them attractive,
!crative fishing and trade
ireements?

A. First. I look forward to landing
i Palau tomorrow in a little different
^nner than I landed there quite a few
lars ago as a Marine in World War II.
lie growing Soviet presence in this part
» the world has to be recognized by

everyone as a problem. They have
established bases in Vietnam, in Cam
Ranh Bay, and elsewhere. Vietnam, as
the country they're supporting, is occu-
pying Cambodia, and they seek to
extend their reach in this part of the
world. So it's a real problem, and the
extension to the Pacific island states is
part of it. So, we think that's basically
something that should be of concern not
only to us but to others. And it has been
interesting to me in coming here to find
that my colleagues in the ASEAN coun-
tries, as well as others, have voiced con-
cern about this matter.

Q. ...In the light of the
developments regarding ANZUS, do
you fear that such an example, that the
New Zealand attitude could spread to
other alliances in other zones, and if
that could be, would the U.S. harbor
that fear? . . .

A. I'd hate to see the New Zealand
policy spread, because it would basically
cripple the ability of the United States
and our allies to defend the values that
we and New Zealand and others share.
We don't have ships with nuclear weap-
ons on them because we like it, we have
them because the United States has a
responsibility to deter aggression, and
that comes from the Soviet Union. The
Soviet Union has very large nuclear
stockpiles. And if we don't have nuclear
weapons and have the capability to deter
their aggression with them, then we sub-
ject everybody— including ourselves— to
nuclear blackmail by the Soviet Union.
So it would be a tragedy for freedom and
Western values for the policy of New
Zealand to spread. Of course, one of the
reasons why we must insist that our
vessels can call on a "no confirmation or
deny" basis and not deviate from that is
that if we deviate in one place, we
deviate all over the world instantly. And
so we have to have a policy that is
basically consistent, and
we do.

ARRIVAL STATEMENT,
BABELTHUAP, PALAU,
JUNE 28, 19867

I have been looking forward to visiting
Micronesia, and especially Palau, for
some time. As you may know, I landed
here under less happy circumstances

over 40 years ago. I am delighted to be
able to return under totally different
conditions and for considerably more
pleasant reasons.

Today we stand on the threshold of a
new era. Soon, very soon we hope, the
U.S. Congress will complete its review
of and will enact your Compact of Free
Association. We have already gone to
the UN Trusteeship Council to secure
termination of the trusteeship, and the
council took action calling for expedi-
tious termination.

Next, the Security Council will have
the opportunity to consider termination.
I am confident that we will prevail in our
mission of replacing the outdated trus-
teeship with self-government throughout
Micronesia. The free association
arrangement chosen by the people of
Palau, the Marshall Islands, and the Fed-
erated States of Micronesia, and the
commonwealth status chosen by the peo-
ples of the Northern Mariana Islands,
provide excellent frameworks for part-
nership as we seek to improve the social,
economic, and security aspects of our
lives and those of our children. The
American people share the determina-
tion of the people of Micronesia to see
this new and unique relationship grow
and prosper.

You in the western Pacific have
known more than a century of involve-
ment by outsiders in ways which did not
always represent your interests. You
suffered through a terrible war not of
your making. For the past two genera-
tions, you have dedicated your lives to
rebuilding your islands in preparation
for self-government and an era of eco-
nomic growth.

My presence here represents con-
crete affirmation of the United States'
commitment to the future of the Pacific
region. Our governments have negoti-
ated a new long-term relationship and
set it out in a Compact of Free
Association.

That compact was approved by the
people of Palau in an act of self-
determination observed by the United
Nations. My government is now taking
action in the Congress and the United
Nations so that the will of the Palauan
people can be realized. I see a future for
Palau and the United States that is char-
acterized by partnership and cooperation.

:ptember 1986

ARMS CONTROL

In the economic, security . and gov-
ernmental fields, our common interests
will enliven and sustain our
al relationship. In our free associ-
ation partnership we will together bene
tu from the dynamic growth taking
place in the Pacific region. The United
States looks forward to this future and is
determined to retain the close and fruit-
ful partnership that has always charac-
terized relations between our peoples. It
is with pride that I note the role of the
Peace ( lorps as symbolic of that partner-
ship.

So, we enter together a new era and,
in anticipation. I wanted to stop in Palau
to revisit a significant part of my and my
country's past, and to congratulate you
and express our gratitude for the
patience and dedication which you have
exhibited during the long political status
process.

So, I appreciate all of those efforts
and I appreciate very much your hospi-
tality today. The fact that the full range
of high officials of your government— all
branches of your government who came
to the airport this morning, was one sign
of that on your part. And, of course, you
and 1 persevered. We got a little advice
that we shouldn't take that boat trip
around the Rock Islands. But we decided
that we would and we did and it worked
out great. It was very interesting and a
wonderful tour. We appreciate all of that
hospitality and seeing those sights and
being here with you and we look to the
future with confidence and pride.

'Press release 134. Opening remarks
omitted here.

'Press release 145 of June 30. 1986.

3Press release 141 of June 30.

'Press release I 12 of June 30.

•'■Press release 14»i of July 8. Opening

nitted here.
Press release 143 of June MO. Excerpts
only of Secretary Shultz's remarks at a joint
news conference with heads of ASEANdele-
gations following the postministerial
conference

■Press release ill of June 30. ■

U.S. Policy on Arms Control:
Purpose, Prospects, and Process

by H. Allen Holmes

Address before the Council on
Foreign Relations in New York City on
June 2, 1986. Ambassador Holmes is
A ss istant Secretary for Polit ico-Milita ry
Affairs.

I am pleased to be at the Council today
to discuss U.S. policy on arms control. I
would like to address the subject from
three angles: purpose, prospects, and
process.

Purpose

The purpose of arms control does not
seem to be a difficult or controversial
question. International efforts to reduce
and limit weapons numbers and capabili-
ties have a long history. Cutting forces,
establishing numerical balances between
opposing forces, banning certain
weapons systems— all seem relatively
straightforward. The objective of this
Administration is to enhance security
and reduce the risk of war, to ensure
strategic stability at the lowest feasible
level, and ultimately— some day— to do
away with nuclear weapons.

In practice, of course, agreement on
objectives— between ourselves and the
Soviets, within the Western alliance,
and within our own government— is fre-
quently the central issue of debate.

Geography, politics, history, and techn
ogy conspire to complicate the issue.
Each party is likely to have a differen
assessment of the impact on its seeuri
of cuts of given dimension affecting
given weapons systems.

In such circumstances, the only Wi
to proceed to an accord is to work fro
clear principles.

• Arms control agreements are am
element of each party's national secur
policy. They do not exist in a vacuum.
We, as our allies and the Soviets, mus
therefore, consider them in the conte>
of all other elements of our respective
security policies.

• Any agreement must be balance
fair, and equitable and in the security
interests of both sides.

• In a negotiation between sover-
eign entities, neither party can demar
provisions which would give it superii
ty or advantage through an agreemen

• Any agreement should not dam;
the security interests of friends and a
lies of either party.

• Any agreement must be verifial
and the parties must have effective
recourse in case of noncompliance.

It is only on the basis of such elea
principles that it is possible to sort
through the welter of conflicting

Assistant Secretary
for Politico-Military Affairs

^^^ H. Allen Holmes was

^£: I | bom in Bucharest,

Romania, of American
parents, on January
31, 1933. He received
a bachelor's degree
from Princeton in
Mfa 1954 From 1954 to
j 1957. he was an infan-

' try officer in the Ma-
rine Corps, attaining
the rank of captain.
He won a Woodrou Wilson Fellowship in
1957 and iliil graduate work at the Iiislitiit
d'Etudes Politique^ of the University of
Paris in 195S.

Ambassador Holmes joined the Depart-
ment of State in 1958. His assignments have

included: intelligence research analyst,
Washington (1958-59); political and consul
officer, Yaounde (1959-61); foreign affairs
officer. Executive Secretariat and Operati
Center, and staff assistant to the Under
Secretary for Political Affairs (1961-63); p
ical officer, Rome (1963-67); foreign affair:
officer, Bureau of European Affairs (1968-
Counselor for Political Affairs, Paris
(1970-74): Director, Office of NATO and .-'
lantic Affairs (1975-77); Deputy Chief of H
sion, Rome (1977-79); Principal Deputy
Assistant Secretary and Acting Assistant
Secretary for European Affairs (1979-82);
Ambassador to Portugal (1982-85). He sp<
French. Italian, and Portuguese.

Ambassador Holmes was sworn in as
Assistant Secretary for Politico-Military
Affairs on .lime 13, 1985. ■

ARMS CONTROL

posals for reductions and limitations
;aeh of the fora where we are
jaged.

I would now like to take a few
mtes to review the scope and thrust
ur present engagement and the
spects for the future. Frankly, as a
ticipant, 1 find that while the
spects are potentially promising in
st areas, the Soviets have yet to
pond sufficiently to realize that
misc.

>pe and Prospects

king from north to south, the only
is we are engaged in which are
lost certain to conclude this year are

CDE [Conference on Security- and
lfidence- Building Measures and Dis-
lament in Europe] negotiations in
ickholm. That conference is set to end
September. We and our NATO allies
ie that it will end with agreement on
crete measures to improve notifica-
1, observation, and verification of
itary activities from the Atlantic to

Urals. There is general support for
se objectives also from the European
itrals. The Soviet Union and its allies
re indicated general interest in an
■eement but have not, as yet, been
ling to engage in the detailed negotia-
i needed to draft the actual provi-
is. Time is getting short, and we are
•ssing them to join us in drafting.

Further south, in Vienna, the
>FR [mutual and balanced force
luctions] talks remain stalemated,
s despite NATO's decision last De-
iber to drop insistence on prior data
•eement, to accept Soviet data for the
pose of Soviet reductions, and to ask
y for ex post facto verification. It is
•y disappointing that the Soviets are
isting serious verification measures—
•ticularly in light of General Secre-
y Gorbachev's hints that they were
re open to verification. After more
n a decade of argument over invalid
net figures, the Soviets must under-
nd that there is no prospect of an
•eement on conventional force reduc-
es and limitations in MBFR unless
•y agree to accept the verification
ided to ensure that those levels are
ng complied with. Yet, in our view,
luctions and limitations on conven-
nal forces are a key part of the arms
ltrol agenda, especially if we antici-

e achieving significant nuclear
luctions.

CDE Negotiations
Resume in Stockholm

WHITE HOUSE STATEMENT,
JUNE 9, 1986'

The penultimate round of the Confer-
ence on Confidence- and Security-
Building Measures and Disarmament in
Europe [CDE] begins in Stockholm on
June 10. The 35 signatories of the
Helsinki Final Act are charged with
adopting militarily significant, verifiable
measures designed to increase openness
about military activities in Europe, from
the Atlantic to the Urals. Implementa-
tion of such measures would enhance
stability and security by giving all partic-
ipating states greater confidence in the
accuracy of information upon which
European security decisions are based.

The President attaches great impor-
tance to the CDE, as an integral part of
our broad concept of security, encom-
passing political, economic, cultural, and
humanitarian issues as well as military
matters. He believes that success in the
CDE could contribute to improved East-
West relations and help to lower the
artificial barriers that divide East from
Wesl in Europe. He is concerned that.
with only 10 negotiating weeks remain-

ing before the conference adjourns, the
prospects for success are diminishing
rapidly and the opportunities offered by
the CDE could be lost. The previous
round, which we and our allies as well as
many neutral and nonaligned states
believed was critical, made minimal
progress because of Soviet reluctance to
engage seriously in the drafting process

Upon resumption of the talks, the
first task of the conferees must be to
decide on the level of ground force and
joint arms activities for which advance
notice must be given and the measures
necessary to verify compliance with such
provisions. Western proposals provide
extensive information on such exercises
and a reasonable verification scheme.
The last moment to resolve this impasse
has arrived.

The President has instructed Ambas-
sador Robert L. Barry, head of the U.S.
delegation in Stockholm, to press for
real progress in the conference in the
next round, which ends in July.

■Text from Weekly Compilation of Presi-
dential Documents of June 16, 1986. ■

In Geneva, we are engaged in
several sets of negotiations. The least
well known is on chemical weapons
(CW) at the Conference on Disarma-
ment. There, the primary obstacle to
agreement is not the purpose of the
negotiation. Even though CW is being
used as we speak, almost everyone will
give rhetorical support to its elimina-
tion. The obstacle is verification. Given
the relative ease of production, only on-
site inspection on demand can provide
an effective check and deterrent to
cheating. Here again, despite Soviet in-
dications of greater interest in verifica-
tion, we have seen no concrete steps on
the key question of checking potential
covert stockpiles or production facilities.

The more well-known talks in Gene-
va are, of course, the three negotiations
on START [strategic arms reduction
talks], INF [intermediate-range nuclear
forces], and defense and space. At the
summit last November, General Secre-
tary Gorbachev and President Reagan
called for a 50<7r reduction in the nuclear
arms of the United States and the
U.S.S.R., appropriately applied, and an
interim INF agreement. We are work-

ing in the START and INF talks to
make good on these goals. There have
been some positive developments since
the summit, but overall our expectations
have not yet been met.

I personally believe that sound
agreements in both areas can be
achieved. The proposals we have
made— most recently, in February on
INF and in November on START-offer
a productive basis for negotiation, deal-
ing equitably with the security interests
of both sides.

Not surprisingly, obstacles remain. I
will only touch on a few. In START, the
Soviets are still insisting on inclusion of
U.S. forward-based systems in Europe-
an old saw which they raised in SALT I
[strategic arms limitation talks] and
SALT II and then dropped from both.
They must realize that such inequitable
and extraneous demands cannot be sus-
tained in these talks any more than they
could be sustained in the 1970s.

The Soviets are also linking progress
in the START talks to our dropping
research on the Strategic Defense Initia-

-ntomhar 1QQR

ARMS CONTROL

live (SI)I). This is an artificial linkage
which, I am convinced, will be
overcome.

First, SDI is a research program,
and no one has ever developed a verifia-
ble means of constraining research. The
Soviets are pursuing vigorous research
efforts in strategic defense, and we ex-
pecl they will continue to do so.

Second, there already is a treaty
regime limiting defensive deployments,
namely, the ABM [Anti-Ballistic Missile]
Treaty. What is lacking is not constraint
on defenses but constraint on offenses,
which are still expanding rapidly.
Third, potential decisions on the
deployment of strategic defenses can
only be made on the basis of research of
necessarily uncertain duration. Actual
deployments, if they were determined to
be technologically effective, survivable,
and cost-effective at the margin, would
still take years beyond that point to be
made operational. The Soviet Union can-
not seriously contend that it is unpre-
pared to deal with the immediate issue
of reduction and limitation of existing
offensive systems because it is awaiting
hypothetical decisions about defenses
which are years away. It is no surprise
that the Soviets, while pursuing their
own SDI effort, are interested in slow-
ing the U.S. program. But that is no
reason for us to accept the logic of their
negotiating linkage.

In INF. the Soviets in January
finally dropped their artificial demand
for compensation for British and French
nuclear forces. They have, however,
sought to cap U.K. and French forces at
current levels and to block U.S. transfer
of weapons and technology to third par-
ties. We have consistently rejected such
Soviet efforts to use our bilateral negoti-
ations to affect third parties.

In addition, the Soviets are insisting
that the talks lie limited to INF
weapons in Europe. The Soviets refuse
to discuss any reduction in their
intermediate-range weapons which cur-
rently threaten Japan and China, among
others. We have continued to insist that
INF limitations be global. This reflects
reality. First, the systems are mobile.
Second, they can threaten any nation on
the periphery of the Soviet Union. We
have no interest in validating a Soviet
claim to additional nuclear missiles to
target any country or group of countries
in any region. Moreover, it seems clear
that militarily the Soviet Union has
more than enough nuclear forces, includ-
ing its strategic forces, to cover any
conceivable target base.

Our position on INF— that reduc-
tions on missiles must be global rather
than simply limited to Europe— speaks
to the real issue of security for all par-
ties. We hope the Soviets will realize
this and that there will be progress in
the INF negotiations— the area identi-
fied by President Reagan and General
Secretary Gorbachev as the most
promising for agreement in the near
term.

The Arms Control Process

Beyond the prospects for the individual
negotiations, however, I wanted to
make a few comments on the overall
process of arms control. This involves
the way negotiations are approached by
the parties, the way agreements are im-
plemented, and the way the issue is
treated publicly.

It seems to me that we have allowed
the arms control process to become ex-
cessively politicized. This is partly a
result of the major public campaigns
which the Soviet Union has waged but
is also a product of the intensity of in-
ternal Western debates. One result is
that every decision, and every negotiat-
ing move, is almost inevitably made in
public. I am not an advocate of pre-
Wilsonian Cabinet diplomacy. We and
our allies are democratic societies, we
are used to open debate, and we can do
better than the Soviets at public
diplomacy— indeed, the record of the
INF debate in Europe demonstrates
that. But it is clear that today's degree
of publicity is not a neutral element in
negotiations. It can influence the choice
of positions on both sides; it can limit
the degree of nuance which is possible;
it can hinder the ability to explore
options.

Another element of the arms control
process which we must look at is what
happens to agreements after they are
concluded. Here, the record is
unsettling. Soviet noncompliance calls
into question important security benefits
from past accords and could create new
risks. It erodes the confidence essential
to an effective arms control process.
The President has provided three
Administration reports to the Congress
on Soviet noncompliance. The most
recent— that of December 1985— reports
on 18 issues. There are nine cases of
violations, suggesting a pattern of
Soviet noncompliance. In the cases that
concern us most, the Soviet Union has
violated one— and. in some cases, more
than one— of its legal obligations under,
or political commitments to, the ABM

Treaty and the SALT II agreement.

We are not saying that the Soviet
Union is disregarding all of its treaty
obligations and commitments. The
U.S.S.R. appears to be complying witl
some arms control agreements and wit
significant provisions of the treaties it
violating. However, selective adherenc
is not enough. Parties to agreements &
required to honor all obligations and
commitments.

Soviet noncompliance is indicative
an attitude contrary to the fundament
of sound arms control agreements. It
presents special obstacles to maintaini
existing arms control agreements, un-
dermines the political confidence neces
sary for concluding new treaties, and
underscores the necessity that any ne
agreement be verifiable.

Through its noncompliance, the
Soviet Union has made military gains
the areas of strategic offensive arms.
The possible extent of the Soviet
Union's noncompliance in the area of
strategic defense also is of increasing
importance and serious concern. Sovie
noncompliance clearly has the potenti;
if left uncorrected and without a
response, of undermining the essentia
strategic balance and the credibility a
viability of our deterrent.

The Administration has been worW
ing unsuccessfully to resolve these
issues through diplomatic channels,
some for many years. We have used t
Standing Consultative Commission to
discuss SALT compliance questions or
detailed technical and legal level. We
have also communicated at high levels
with the Soviet Government on sever:
occasions.

Specifics of Soviet Violations

There are three especially flagrant an
disturbing Soviet violations which are
familiar to you but which I wish to
review briefly:

• The large, phased-array radar
under construction near Krasnoyarsk

• The mobile SS-25 ICBM now
being deployed; and

• Encryption of ballistic missile t
telemetry.

The Krasnoyarsk Radar. Under
ABM Treaty of 1972, radars for earlj
warning of strategic ballistic missile
attack must be located along the peri
ery of the parties' national territory
be oriented outward. Radars for trac
ing objects in outer space or national
technical means of verification are no
limited. Our detailed technical analys:

-.rt^t rt* Ot^V

ARMS CONTROL

Iws that the Krasnoyarsk radar is

i, as the Soviets claim, for tracking
fects in outer space or national techni-
Imeans of verification but, rather, for
iistic missile detection and tracking.
Is also not located along the periph-
t of the Soviets' national territory,
rl it is orientated inward and is, there-
t, a clear-cut violation of the 1972
[M Treaty.

I This is not just a legal discrepancy.
'I- prohibition on the construction of
be phased-array radars like the one
Krasnoyarsk was a central pillar of
j ABM Treaty. Without such radars,
ther side could rapidly deploy a ter-
Irial ABM defense. The construction
the Krasnoyarsk radar, therefore, not
,y \ iolates a key provision of the
iM Treaty, it also raises a serious
[cent that the Soviets may be
bmpting to create the infrastructure
! a sudden future move to a territorial
lense.

| The SS-25 ICBM. The second viola-
i is the Soviet SS-25 ICBM. The
-25 ICBM is a violation of the
LT II agreement, which limits each
ty to one new type of light ICBM.
i Soviet Union has offieiallv informed
that the SS-X-24 ICBM is its one
•mitted new type. The SS-25 is,
refore, a prohibited second new type,
tew type of ICBM cannot differ from
ICBM that existed at the time the
aty was signed, among other things,
more than 5% in throw-weight.
The Soviets claim that the SS-25 is
ermitted modernization of the SS-13
BM. It is not. Our detailed analysis
iws that the throw-weight of the
-25 is considerably more than 5%
ivier than that of'the SS-13. In addi-
n, under the treaty no ICBM of an
stinp type with a postboost vehicle
1 a single reentry vehicle can be
;ht tested or deployed whose reentry
licle weight is less than 50% of the
■ow-weight of that ICBM. Even if the
net argument were accepted that the
■25 is a modernization of the SS-13,
1 ratio of the reentry vehicle weight
the throw-weight is less than the
juired 50<£.

Encryption of Ballistic Missile
st Telemetry. The last violation I will
icuss is Soviet encryption of ballistic
ssile test telemetry— another unambig-
us violation of the'SALT II Treaty.

The treaty permits encryption of
emetric information during testing—
cept that which impedes verification
compliance by national technical

Status of MBFR Negotiations

WHITE HOUSE STATEMENT.
JUNE 12, 19861

The Warsaw Pact statement regarding
troop reduction was made at a Warsaw
Pact meeting in Budapest yesterday.
This has apparently been agreed to by
Warsaw Pact leaders but has not been
presented for a detailed Western review
in any of the conventional arms control
fora. That would be not yet in Vienna,
where MBFR [mutual and balanced force
reductions] is being considered, or CDE
[Conference mi Confidence- and
Security-Building Measures and Disarm-
ament in Europe] in Geneva, or the Con-
ference on Disarmament in Stockholm.

We find the ideas, as reported, of
interest and would welcome the opportu-
nity to analyze concrete proposals
embodying them. We would note, how-
ever, that the Warsaw Pact has not
responded fully to a more modest, but
more concrete, NATO proposal last
November at Vienna for a first step
toward conventional reductions. That
proposal, last November, involved initial
reductions of U.S. troops by 5,000 and
Soviet troops by 11,500 with a 3-year,
no-increase commitment on forces in the
zone. Also, it called for a development of
a verification regime over 3 years and
the development of an agreed database
on which future reductions would be
calculated.

WHITE HOUSE STATEMENT,
JULY 3, 19862

The most recent round of the MBFR
talks has just concluded in Vienna.
Regrettably, the Warsaw Pact partici-
pants continued to display a disinclina-
tion to respond constructively to the far-
reaching NATO offer of December 5,
ins:,.

In order to make headway toward
our goal of reducing conventional forces
in Europe in an equitable manner, the
Western proposal of last December
accepted the East's own framework for
a first-phase agreement of limited dura-
tion. Under such an approach, there
would be initial U.S. and Soviet reduc-
tions followed by a no-increase commit-
ment on the forces in the area of all of
the participants to the agreement. Most
significantly, in the interest of meeting
stated Eastern concerns, the West
offered to set aside its longstanding
requirement that East and West reach
prior agreement on the levels of the
forces which would be subject to an
agreement.

Unfortunately, the draft agreement
which the East introduced on Febru-
ary 20, 1986, was woefully inadequate,
particularly with respect to the vital
issue of verification. Despite the recent
assertions of Eastern leaders that their
governments were willing to agree to
reasonable verification measures, the
East fell back on old proposals which
had previously been rejected by the
West as incapable of ensuring com-
pliance with treaty obligations. Indeed,
the East even backtracked from its
earlier position on certain verification
measures.

The United States and its allies will
continue to make every effort to reach
an equitable agreement in MBFR, as
well as in other arms control areas. A
significant move by the Warsaw Pact in
the direction of the West in the Vienna
negotiations would be an excellent first
step in demonstrating whether the War-
saw Pact is, indeed, seriously interested
in strengthening European security.

■Text from Weekly Compilation of Presi-
dential Documents of June 16. 1986.

-Text fmm Weekly Compilation of Presi-
dential Documents of July 7. ■

means. Since the SALT II Treaty was
signed in 1979, the Soviets have been
heavily encrypting telemetry broadcasts
during tests of strategic ballistic mis-
siles. At this time, Soviet encryption is
virtually "total" and uncontestably
impedes U.S. verification of Soviet
compliance with the treaty.

The Soviet encryption practice is
both disturbing as a flagrant violation of
the SALT commitment and a major

potential obstacle to the verification of
future agreements. Our ongoing START
and INF negotiations in Geneva, for ex-
ample, will come to naught without a
firm Soviet commitment to facilitate, not
impede, verification of compliance. Such
a commitment can be of little standing
without a demonstration now of Soviet
commitments to existing verification
provisions.

sntpmher 19Rfi

ARMS CONTROL

The U.S. Response

Last year, on June 10, the President
made what was widely recognized as a
statesmanlike decision when he decided,
in spite of the clear cases of Soviet non-
compliance, to "go the extra mile" and
give the Soviet Union another opportu-
nity to comply with their arms control
treaty obligations and commitments and
join us in a regime of truly mutual re-
straint. This meant that the United
States would continue to carry out its
political commitment to abide by
treaties which are technically not in
force, despite the fact that the Soviet
Union had not been exercising equal
treaty restraint and, as I noted, had
demonstrated their capacity to violate
arms control agreements. This decision
was not made as an ultimatum; no dead-
line was issued. At the same time,
however, the United State made com-
pletely clear to the Soviets through
every available channel of communica-
tion that the United States could not
continue to exercise such restraint
unless the Soviets took measures to pur-
sue actively arms control agreements,
reverse their unparalleled military build-
up, and scrupulously comply with the
terms of their commitments.

A year later, we find that the situa-
tion with respect to these criteria is not
encouraging. This is why the President
has now decided that the United States
will take the appropriate and propor-
tionate responses to Soviet noncompli-
ance that he suggested last June we
might have to take. The United States
has scrupulously kept its part of the
bargain. But we cannot indefinitely and
unilaterally respect agreements that the
Soviets are violating. That is not what
arms control is about.

In light of Soviet activities, the
President has decided that from now on
we will base ><\u- force posture on the
nature and magnitude of Soviet strate-
gic forces rather than the limits imposed
by SALT. So, while the President has
again decided to exercise the utmost
restraint in the deployment of our stra-
tegic forces, he has also directed that
the United States begin to take
programmatic measures to ensure thai
the national security of the United
States and its allies is protected in the
face of noncompliant Soviet activities.
The President does not anticipate any
appreciable numerical growth in offen-
sive strategic nuclear forces.

For example, as the Soviets have
illegally deployed the SS-25 ICBM and
the Krasnoyarsk radar, we will take

measures to offset the security risks
that those deployments entail for the
United States and its allies.

For now, we'll continue to place
primary importance on our existing stra-
tegic modernization program to under-
write our deterrence today, and we will
also pursue the SDI research program
to provide better alternatives in the
future. To ensure that he has a solid
range of options in the future, the Presi-
dent has directed a new review of a
comprehensive ICBM modernization pro-

gram. This includes our B-52 bomber
upgrade program, which calls for about
190 B-52s to be equipped with ALCMs
[air-launched cruise missiles]. He has
also directed that the program of the
advanced cruise missile be accelerated.
While the President decided that tl
United States would dismantle two
Poseidon submarines when the
U.S.S. Nevada went on sea trials on
May 28, when we reach 131 ALCM cat
riers next fall, we will not dismantle

Nuclear and Space Arms Talks
Conclude Round Five

PRESIDENTS STATEMENT.
JUNE 26, 1986'

Today marks the close of round five in
the U.S. and Soviet nuclear and space
talks in Geneva (NST). The U.S. goal in
these negotiations is to obtain Soviet
agreement to deep, equitable, and effec-
tively verifiable reductions in the nuclear
arsenals of the United States and the
Soviet Union in a manner that strength-
ens strategic stability.

For the past 7 weeks, the U.S. nego-
tiating team in Geneva has worked hard
in pursuit of this goal by explaining and
elaborating on the concrete proposals
which the United States is offering in all
three areas of these negotiations. These
U.S. proposals include:

• In the strategic arms (START)
negotiating group, a formula for equita-
ble and verifiable reductions of 50% in
offensive nuclear forces;

• In the intermediate nuclear forces
[INF] negotiating group, a concrete,
phased approach for eliminating the
entire class of U.S. and Soviet land-
based INF missiles; and

• In the defense and space group, an
offer to engage in a dialogue on manag-
ing the transition to a more stable basis
for deterrence through increased reli-
ance on defensive systems, rather than
offensive nuclear arms, and an "open
laboratories" initiative to assure each
side of the defensive nature of the other
side's strategic defense research.

The American negotiators have pre
sented these proposals in the spirit of
last November's Geneva summit. At the
summit. General Secretary Gorbachev

and I promised to seek 50% reductions
in offensive nuclear arms, appropriate!
applied, as well as an interim INF agre
ment. Much to our disappointment, unl
recently the Soviets have shown no
interest in seriously following up at tin
negotiating table.

In the past 2 weeks, however, the
Soviet negotiators at Geneva have tabl
new proposals. I am hopeful that these
proposals signal the beginning of a seri
ous Soviet effort to join with us in actu
ally reducing offensive nuclear arms. I)
the Soviet Union is now genuinely seebl
ing progress, we may have reached a
turning point in our efforts to build a
safer and more peaceful world. I deepl;
hope that this is, indeed, the case.

We approach these negotiations wH
realism and determination. While we
clearly cannot accept these Soviet pro-
posals without changes, we are studyin
Soviet ideas on reductions very careful
to see how they might help to move us ■
toward our goal of deep, equitable, and'
verifiable arms cuts. At the same time!
we believe that if progress can be mad<
in one of the three NST negotiating
areas, it should not be held up— as the
Soviets are still insisting— pending
agreement in another area.

We know there is much hard bar-
gaining ahead, but for our part, the
United States is determined to do ever
thing we can to achieve these deep
reductions. If recent events indicate th
the Soviet Union is now ready to work
together with us in this urgent endeav(
we can begin now to ensure a safer am-
more stable peace for future generatioi

'Text from Weekly Compilation of Pres
dential Documents of June 30, 1986. ■

ARMS CONTROL

|er weapons systems as compensation

per the terms of SALT II.

l| So while we remain technically

LT compliant for now, it should be
lar that the Soviets must take con-
bctive steps to alter the current situ-
pn. Should they do so, the United
Ites will certainly take this into
bunt.

This does not mean that we plan a
[matic expansion of our forces. Until
1 reach our objectives in Geneva, we
p continue to exercise the utmost
itraint. But we hope by now it is
lently clear to the Soviet Union that
^compliance entails real costs.

As the President has stated:

'In order for arms control to have mean-
and credibly contribute to national securi-
ind to global or regional stability, it is

ntial that all parties to agreements fully
iply with them. Strict compliance with all
visions of arms control agreements is fun-
lental, and this Administration will not ac-
t anything less. To do so would undermine
arms control process and damage the
ices for establishing a more constructive

-Soviet relationship.

I would describe the above attitude
tough but, above all, fair and realis-

If you will excuse the unintended
1, no arms control agreement worth
"salt" can afford to duck the hard
:s. The man in the street in both
lg Island and Leningrad senses intui-
dy that there are too many nuclear
apons in the world today. The Cher-
lyl disaster has shown us the terrible
nage a slight, unintended nuclear
:take can wreak on the world. How
ch more damage would be wrought
an intentional nuclear detonation we

all too well imagine.

Whether we like it or not, one other
t is also clear: we share one Earth
h the Soviet Union. We are locked
ether in a nuclear dilemma, as is the
t of the world. I fully accept the
riet Union's contention that there can
no security for the United States
hout security for the Soviet Union
1 no security for NATO without secu-
! for the Warsaw Pact.

The U.S. proposals on the table now
Geneva are reasonable and fair and
1 in the security interests of both par-
s. We must not feel pressured to
/e agreements for agreements' sake,
: we want very much to walk down
■ path of genuine arms control with
! Soviet Union. And what the Presi-
it said with regard to interim re-
paint applies equally well to arms
ltrol: we are willing to go the extra

e.m

West Proposes Initiative in CDE

WESTERN STATEMENT,
JUNE 30, 19861

This negotiation is still spinning its
wheels on the sands of political indeci-
sion, and time is passing quickly. We are
halfway through this session which we
have all called critical in the search for
mutually acceptable solutions based on
the common ground identified so far.

We can no longer afford to repeat
old arguments, valid though some of
them may be. We need to reassess our
respective positions, taking into account
the interests and perceptions expressed
by others here.

Initiatives now seem called for, to
unblock the road ahead toward an agree-
ment which, in accordance with the man-
date, will begin a process meaningful for
building confidence and security as well
as for the confidence- and security-
building measures.

In speaking on behalf of the NATO
delegations, the 16 delegations which
together made the first initiative at this
conference, I can say that we have,
therefore, decided that we would be pre-
pared to make moves in the following
areas of the negotiation.

Notification of ground force activ-
ities has often been described as the core
of the agreement we have to adopt; the
definition of the thresholds for ground
force activities is a key element of this
measure. Three approaches to this prob-
lem have been presented: One puts the
emphasis on structures; another on man-
power; a third one on "mobility and
firepower," which in practical terms
means equipment. An attempt to com-
bine these three approaches was recently
made by the neutral and nonaligned
states. We think that this is the right
way to proceed, and we would like to
declare our readiness to draft on the
basis of the proposal tabled by the
Austrian delegation on June 13. We
hope others will take a similarly positive
view.

We must, however, make it clear
that this formula, as it stands, is far
from ideal from our point of view. The
attempt to equal out existing disparities
in force structures between participating
states— that is, to achieve an under-
standing for CDE purposes of what a
division is— is useful. Our concern, how-
ever, is to find a solution that would
include all formations of ground forces
that have a militarily significant capabil-

ity, regardless of what participating
units may be called. We believe amend-
ments will be required to this end.

The level of the threshold is an
essential issue. Our approach is to
emphasize structures, and the number of
troops is only one element in this
approach. It has been contended that our
proposal would result in an excessive
number of notifications per year. We do
not think that the figures which were
mentioned in support of this objection
are accurate. But we are ready to con-
sider raising the numerical element of
the threshold beyond the figure of 6,000
troops.

We seek increased confidence
through militarily significant and
verifiable confidence- and security-
building measures which cover the whole
of Europe. We envisage a reasonable
number of notifications which would con-
stitute a step beyond the confidence-
building measures of the Helsinki Final
Act. What we foresee is not 300 notifica-
tions per annum, not even 100. We
believe it is a common objective that the
number of notifications not be unneces-
sarily burdensome. We have to build con-
structively upon this common ground
and agree to a comprehensive threshold
which would correspond to this shared
goal without entering into a numbers
game.

Moreover, we are prepared to make
another move. Understanding of mobili-
zation practices through notification
would contribute significantly to greater
stability and confidence-building. How-
ever, we have heard concern expressed
on our proposal relating to notification
of mobilization activities. Some countries
whose defense capabilities almost exclu-
sively rely on the recall of reservists
have argued that such a measure would
affect their security interests.

We are willing to consider whether
we could meet this preoccupation, but
we would expect similar consideration of
our concern in other areas such as con-
straints where provisions have been
advocated which, in turn, would unac-
ceptably affect our security interests.

I would like to stress that all this
would constitute a significant departure
from the position established in the
Western proposal made at the Stock-
holm conference. The moves we are pre-
pared to make are presented in order to
encourage our negotiating partners to
match them, inter alia, by contributing
to solving the issue of air activities on
the basis of existing common ground.

}ntamK/^r 10QC

DEPARTMENT

On observation, we continue to
believe thai agreement to observe all
notifiable military activities from their
beginning to their end would he a sub-
it lal improvement over the provisions
contained in the Final Act. But this
ambitious aim has raised many logistical
and financial objections.

It is our view that observation
should assist participating states in
meeting the overall objectives of the
confidence-building process: It must
enable the observers to assess the scope
and nature of military activity, which, of
course, does not imply that the first man
to leave and the last to return to normal
peacetime locations should be observed.

Here again we are prepared to look
sympathetically at the above-mentioned
objections and consider a limitation on
the duration of observation both as far
as its starting and its ending are con-
cerned. We expect this move to enable
everybody both to agree to a low thresh-
old for notification and to factilitate
agreement on detailed and specific
modalities for the observation regime.

On verification, our inspection pro-
posal meets the mandate criteria and
ensures each state equal opportunity
to verify compliance with the agreed
confidence- and security-building meas-
ures. Objections have been raised, how-
ever, emphasizing the burden repre-
sented by our proposal.

While we would have preferred to
leave open this option for each partici-
pating state to conduct two inspections a
year, we believe it is essential that each
participating state should have the
option to conduct at least one inspection
a year. Central to our approach to verifi-
cation is the position that inspections
must be an essential and integral part of
the result of the conference.

However, we are prepared to reduce
the number of inspections each state is
entitled to carry out every year from
two to one as evidence of our willingness
to ensure againsl the abuse of the right
to inspect military activities of other par-
ticipating states, inspections will be used
only on those occasions when doubts
about compliance arise. Inspections are
not meant to be onerous or unduly intru-
sive. Hut it must be clear that the inspec-
tion provisions cannot be impaired by
any escape clause, defective modalities,
or other flaws that would render them
ineffective.

The mandate of the conference
requires us to enact "new. effective and
concrete actions" to increase confidence
and security in Europe and thereby
reduce the risk of military confrontation.

To fulfill this obligation, we must agree
on verifiable measures of true military
significance. The 16 sponsors will not
accept merely insignificant improve-
ments of the confidence-building meas-
ures of the Final Act. None of us can
afford to compromise on this point.

The time has now come for new
efforts to further the drafting process.
The points I have just made are intended
to serve that purpose. This is not, of
course, the first example of our deter-
mination to reach an agreement. May I
recall that on the issue of the non-use of
force, we have also made significant
steps, first in agreeing to include this
issue on the agenda of the conference,
then in tabling the most comprehensive
contribution to date, and more recently
in drafting actively on this subject. We
have done this even though work in the
field of concrete measures was stagnating.

The initiative we are taking repre-
sents careful study and sometimes diffi-
cult decisions on our part. In making

these offers— that is, in showing yet
again that we are prepared to be
flexible— we must, of course, make it
clear that we do so in the expectation
that our other negotiating partners wil
show matching movements not only on
the issues I have mentioned but also or
others, such as information, which I ha>
not raised today. Nor would we expect
negotiating partners to introduce
obstacles to real progress.

The only way to reach a substantiv
agreement is to follow a give-and-take
process. We hope that the initiative we
have taken today will create a dynamis
leading to such an agreement in the
8 weeks left to us before the conferenc
adjourns on the 19th of September. Wi
shall be prepared to do our part.

'Made to the Conference on Confidence
and Security-Building Measures and Disarn-
ment in Europe (CDE) on behalf of the NA'
nations by Canada's representative to the
CDE, Ambassador W.T. Delworth. ■

The U.S. Foreign Service
in a Year of Challenges

by Ronald I. Spiers

Address at the Department of State's
21st annual Foreign Service Day on
May 2, 1986. Ambassador Spiers is
Under Secretary for Management.

Almost precisely 1 year ago, I was
privileged to give you a "state of the
union" report on the Department of
State and the U.S. Foreign Service.
This is an account of where we stand
1 year further on.

This has been a difficult year for the
Department of State and the Foreign
Service. It has seen our introduction to
the stringencies of Gramm-Rudman-
Hollings, additional difficulties in accom-
modating our personnel structure to the
1980 Foreign Service Act, and a continu-
ation of the problems of security and
terrorism. There are also a number of
accomplishments which I can report to
vou.

Effects of the Gramm-Rudman-
Hollings Legislation

The Gramm-Rudman-Hollings legislation

sets a series of deficit ceilings which
progressively decrease until they reach
zero in 1991 and then puts in place a
spending cut procedure which becomes

automatic if the Congress and the ex-
ecutive branch cannot agree on budge
priorities.

The effect of Gramm-Rudman this
year was a 4.3% cut in our already
approved 1986 budget halfway througl
the fiscal year. This meant we had to
find $62 million in savings out of our :■
aries and expenses accounts. The
Department of State is a salaries and
expenses agency. We have no big
programs to cut into or postpone. We
are a "presence." and if we have to
save large sums of money, we have to
cut people and organizational units. Tl
year Gramm-Rudman forced us to
tighten up across the board: to reduce
hiring, to restrict travel, and to forgo
new programs and projects. We were
able to meet this target, although witl
some discomfort.

The picture for 1987 is clouded. If'
anything, the situation threatens to gt
worse. While the President has pro-
posed a budget which would give us t
resources we need to do our job and
which reflects the high priority this A
ministration attaches to the activities
the State Department, the budget's
reception on the Hill has not been goc
The President's proposal for FY [fisca
year] 1987 would provide $4.9 billion f

nonartmonl of Qtato Rl ill

DEPARTMENT

B Department of State, of which $3.4
Bion would be for our operating
Mget. This would be an increase of
£40 million over what we have re-
lested for 1986, almost all of which is
f|- security programs. However, ele-
ivnts of the Congress have implied that
E most we could expect would be a
leze at 1986 levels, post-Gramm-
Idman. Given inflation, exchange rates
Ises, and the need to finance high
lority new programs, this would mean
J- would have to carve $210 million out
I ongoing programs— in effect, a sub-
tntial cut. Others say that we should
Ipect an even deeper slice.
j With the Secretary's agreement, I
pimissioned a group of our senior col-
igues to examine what we would have
do to achieve savings of this niagni-
pe. The answer came back that the
lly way we could do so and still make
jom for the new programs to which the
Jcretary of State attaches highest
Iportance— opening a consulate in
lev, staffing new posts in Micronesia,
Hiding a sorely needed alternate data
locessing center, proceeding with the
[w Foreign Service Institute center at
rlington Hall, continuing to rebuild our
porting and analysis capabilities—
luild be closing as many as 40-50
sts.

While there is no question that some
sts should be closed while others are
ened, a retreat of this magnitude
)uld carry very adverse signals about
e U.S. position in the world. A mas-
te closing of consulates would disrupt
e capillaries of our information gather-
g and influence wielding throughout
e world. Nevertheless, we see no
;ernative to such drastic measures if
ese dire budget predictions, in fact,
aterialize. It is ironical that the State
Sjartment operating budget of $3.4
llion is only 0.4% of the overall Fed-
al budget.

Both the Secretary and I feel that it
Duld be wrong to distribute equal per-
ntage cuts among our ongoing activ-
es. We would only end up trying to do
e same number of things but doing
em less well and continuing the
sepage of our responsibilities to other
rencies of government. It is our For-
gn Service posts which, for the most
art, generate the requirements for pen
e, for buildings, for communications,
|r equipment, for allowances, for trans-
udation, and for travel. This year we
ive already had to make plans to close
■ven of our smaller consulates in
iSponse to cuts made by OMB [Office
' Management and Budget] even before

our budget was presented to Congress.
This caused us political pain in all the
locales involved. However, this is noth-
ing cpjmpared to what may lit' ahead.

Implementation of the
Foreign Service Act of 1980

Last year I spoke briefly about some of
the personnel problems resulting from
implementation of the Foreign Service
Act of 1980. These problems are transi-
tory in nature and should be seen in
historical context.

The initial recommendations for Civil
Service reform in the late 1970s in-
cluded putting the senior grades of the
Foreign Service into the Senior Execu-
tive Service. The Department resisted
this attack on the Foreign Service
strongly and successfully on the Hill,
but the price of success was a commit-
ment on our part to modify the Foreign
Service Act to keep it in line with
general U.S. Government civilian per-
sonnel policy, particularly with respect
to basing our senior Service benefits
and retention on performance rather
than seniority. The outcome was the
new Foreign Service Act.

The reason we prevailed on the Hill
and kept out of the new Civil Service
Act was simple: we argued that the
Foreign Service was different from the
Civil Service because of the obligation
for worldwide service (with all the phys-
ical and health dangers such service im-
plied) and because of its competitive
nature— the up-or-out system.

During this time, there was the
realization in the Department that the
up-or-out system was not working well.
In agreeing to work out a new Foreign
Service Act. there was also a decision to
develop one which restored a basic
premise of the Foreign Service Act of
1940 by reviving real competition in the
Service throughout the ranks. Only in
that way could the continuation of the
separate Service and its special benefits
be justified anil sustained.

Two key concepts on how to restore
competition emerged.

• First, selection of senior officers
would he made mere rigorous. This led
to the "senior threshold"— the point in a
career beyond which many officers
would not pass— and the idea of a
smaller, mere qualified Senior Foreign
Service.

• The second new concept was
"selection in" or the so-called limited
career extensions for senior officers.

The idea here was that after a period of
time in class (7 years for counselor, for
example), officers still in that grade
would be retired unless the Department
decided to offer them a 3-year extension
of their time in class. This ended what
amounted to nearly unlimited tenure for
senior officers— essentially a Civil Serv-
ice approach inconsistent with the offi-
cially competitive nature of the Service.
Under this system, 72 of our senior
officers have involuntarily retired due to
failure to receive limited career ex-
tensions.

At the threshold level, it was decided
tn retire officers who had been passed
over six times but to allow them to decide
when or if they wished to start com-
peting for promotion to the senior Serv-
ice. The thought here was to give con-
trol over this crucial decision to the
officer concerned. This is the origin of
the "6-year window ."

The effects of these parts of the new
Foreign Service Act are now being felt.
For example, about 55 FS-ls will be re-
tired in 1987 because they will have
been passed over for promotion six or
more times, and these 55 are in addition
to an almost equal number of FS-ls
who will have to retire for time in class.

It has been said that these 55
officers would have elected to open their
windows at a later date if they had
known that promotion opportunities
would shrink while they were compet-
ing. Perhaps that is true, but even if
promotion opportunities had remained
constant, we estimate that only eight of
these officers would have been pro-
moted (and we project that six will
probably be promoted this year). Fur-
thermore, many of these officers would
have been retired for regular time in
class within the next 2 or 3 years, in
any event.

It has also been said that we are
losing too many of our best officers as a
result of this return to a competitive
Foreign Service. First, I have to say
that while these officers are good (after
all, we select the very best), they have
not been judged by their peers to he as
good as those who have been promoted.
Second, we have studied the question of
skills and have concluded that these
retirements will not create any serious
problems. One has to remember that we
are always training new officers to
replace older ones, in any event, and the
retirement of these and other officers on
the basis of the regular time-in-class
basis is a part of normal personnel and
training planning.

eptember 1986

DEPARTMENT

The Foreign Service is as good as it
is because of its competitive nature.
Competition is costly. That is the price
of the kind of Foreign Service we have
and want. We have dune our best to
help those who cannot go on to the
senior ranks. First, they are retired
honorably on good pensions. Second, we
dii our best to help them find other em-
ployment if they are interested. In my
opinion and in the view of outside con-
sultants, the employment prospects of
former members of the Service are
good. Nevertheless, this is a traumatic
time foi- many of our valued colleagues.

One of the policies that has met sub-
stantial criticism during this year was
the decision to conduct a classification
review of the Senior Foreign Service.
This review resulted in the downgrading
of almost 16% of the jobs classified at
the Senior Foreign Service level, reduc-
ing them from 796 to 670. We believed
it was both untenable and illegal to
exempt the Foreign Service from the
disciplines that apply to other elements
of the public service. Jobs in the Senior
Foreign Service must include a level of
responsibility and skill that justifies
classification at the senior level.

Furthermore, we felt that there
should be a reasonable balance between
the number of positions classified at the
Senior Foreign Service level and the
number of officers in the Senior Foreign
Service. This classification review has
put us in a position to defend the size of
the Senior Foreign Service and to rebut
those who repeatedly criticized us on
I he grounds that we have an un-
conscionably greater proportion of (un-
people at the senior levels than the Civil
Service or the military services. The
Senior Foreign Service is now approxi-
mately 14'y of the total number of our
generalist officers, and I believe it will
stay this way. One byproduct of this
policy has been a somewhat lower num-
ber of promotions, but it has also done
away with the problem of "corridor
walkers." Whereas several years ago
there were 120 in this category, there
are now fewer than 30 senior officers in
overcomplement status. The bulk of
these are in processing for new assign-
ments or retirement or have medical
reasons for being in that category.

While both of these issues— reduc-
tion of the size of the Senior Foreign
Service and the decision not to recom-
mend a lengthening of the 6-year
window— have been difficult. 1 believe
that we have bitten the bullet and that
we have established the basis for a
stable and defensible Foreign Service

structure for the years ahead. Too often
in the past, we have ignored these
problems or just let them pile up in
hopes that they would go away or some-
body else would do something about
them.

Career v. Noncareer Appointments

The final personnel difficulty that 1
want to mention is a classic one— the
balance between career and noncareer
chief of mission appointments. The
career Service has done poorly in this
regard over the past year. If this trend
continues, I believe it will have a very
bad effect on the Foreign Service as a
whole. We are now at the 60-40 ratio
between career and noncareer ap-
pointees—the lowest ratio in over two
decades. A number of senior people will
be coming back in a few months with no
onward assignments in sight. All in all,
we have had a net loss of 25 presi-
dential appointment-level positions at
home and abroad since January of HIM.

This may seem an inconsiderable
number, but the Service is a relatively
small one, and shifts of this magnitude
can have a large impact on the career
outlook for our personnel at all levels.
Each time a career position at this level
is lost, seven promotion opportunities
below it are also lost. The actual impact
of a shift of 25 positions is, thus, 175
promotions and hirings. We do not pro-
mote people to fill jobs which are not
there, and we risk demoralizing some of
our best people at the most productive
point in their careers. The Secretary
and the White House have agreed that
our target should he a %-Vh ratio, but it
will only be possible to accomplish this
gradually as posts open up under the
3-year rotation rule.

Terrorism and Security Issues

Terrorism and security have been an in-
creasing preoccupation during the last
year. The Advisory Panel on Overseas
Security, which the Secretary convened
in 1984, produced a report last June
that contained over 90 far-reaching
recommendations for the Department.
Besides recommending the establish-
ment of a Bureau of Diplomatic Security
and a professional Diplomatic Security
Service, the Inman panel recommended
that significant new resources be sought
for a comprehensive worldwide security
program to protect all government em-
ployees abroad. Pursuant to this panel's
report, the Department developed a
diplomatic security program that would

involve the expenditure of $4.4 billion
spiead over 5 years: $2.7 billion of this
would be foi- construction, including
more than 00 new embassies and const
kites. The balance would be spent foi'
related operating expenses, including
security officers, residential security
improvements, and more secure comn|
nications equipment.

The Secretary of State accepted
almost all of the Inman panel recomnit
dations. Several new security stand-
ards—a 100-foot building setback to
attenuate blast effects, for example — w
guide our new building program. Mam
of our posts now front onto busy
streets. Many have extensive glass fa-
cades. Often, we share office buildings
with other organizations and businesst
All this is clearly undesirable and sini]
unacceptable in a great many situation

It is too soon to tell what the impa
of Gramm-Rudman-Hollings will be on
this proposed new security program.
The Administration and President Ret,
gan personally attach high priority to
improving security overseas and belie'
that the expenditure of these large su>i
is fully justified. We have received se-
vere criticism in Congress in the past!
for laxity in security. We in manage-
ment have put great effort into raisira
the security consciousness of our persi
nel at home and abroad. Vigilance is n
enough, however. We will need
resources as well. We have gotten hel
from the National Academy of Science
in designing an "embassy of the futurj
in which security features will be lino!
trusive but effective.

As great as is the threat of physic-
violence from terrorism, we have be-
come increasingly concerned about ele'
tronic penetrations of our embassies,
and a large part of the contemplated e
penditures is to provide protection
against this threat. We have had to cfl
vote a great deal of attention to bring
ing our Foreign Buildings Office into t
modern era, and we will have to be
drawing on resources of the private st/
tor to help construct and manage this
very large enterprise.

The new embassy buildings will be
expensive. We are not building ordina
office buildings but, rather, special pui
pose buildings designed to meet unustj
physical and security standards. Thest
standards, ranging from the size of tin
site to seismic characteristics to protej
against blast effect, increase the cost (
construction by about 50%. These bun
ings are more appropriately compared
to hospitals or secure, hardened com-
mand and control facilities than to offi
1 mill lings.

Dpnartment of State Rnllel

DEPARTMENT

[•he matter is now before the Con-

s of the United States, and it must
nnine whether congressional priori-
are the same as the Administra-
s. The Inman program has been
sorted in the House, which has
prized the moneys requested. The
re is uncertain in the Senate, which
not yet turned its full attention to
problem. If this security program is
funded adequately, the consequences
obvious: om- personnel, their fami-
and our national security informa-
will be at greater risk because the
ted States decided that their safety-
less important than some other
ns on tin1 national resources.
This proposed program will not
e all our security problems, but it
minimize them. It is comprehensive
long overdue. It addresses our most
c security concerns. It is one of our
lest priorities.

Terrorism is a low-level form of war-
. Much of it is state supported. We
t assume terrorism will increase
ler than diminish in the years ahead,
must continue to improve our intelli-
ee and our cooperative programs
i other countries and continue to
; all prudent measures of passive
■nse, deterrence, and preemption.
It is true that much terrorism has
*oots in unresolved political griev-
es, many of which are beyond the
*ent reach of diplomatic solutions,
t, however, is no moral justification
terrorism or excuse for inaction on
Bart. We must defend ourselves as
strive to resolve the problems under-
g terrorism. The fact that the roots
errorism lie in the domain of politics
grscores the critical importance of
role of the Department and Foreign
vice in this battle. In the last analy-
it is only our work which can stop
orism. We must have the people to
;he job, and they must be able to
'k in safety. We are the front line in
war.

omplishments
ring the Past Year

ue devoted a fair amount of atten-
i to these major problem areas, and I
lid like to conclude by listing a few
ast year's accomplishments.

• We have made progress in restor-
our reporting and analysis capabili-
and in stopping the erosion we have
"ered in this area. These capabilities
absolutely critical to the nation and
one of our fundamental responsi-
ties.

• We have improved internal com-
munications in the Service through a
monthly management cable and other
communications channels in a way that
has enhanced understanding anil accept-
ance of some very difficult management
policy decisions.

• We have made substantial prog-
ress in developing procedures to ensure
difficult postings do not go unfilled and
to achieve more equitable sharing of
hardship assignments.

• We have raised the pay ceiling for
senior people in hardship assignments,
thereby removing serious inequities that
also led to difficulties in staffing hard-
ship posts with the best people.

• Our best people have traditionally
avoided assignment to the Senior Semi-
nar and to training in general. Yet such
training is necessary to maintain and im-
prove basic professional skills. We have
put ureal effort into ensuring preferen-
tial assignments for seminar graduates,
and it is now becoming accepted that
selection for this seminar is a mark of
distinction.

• We got a good start in the devel-
opment of a new Foreign Service Insti-
tute at Arlington Hall. Congress has
approved the transfer of land to the
Department of State, and we are now
beginning design competition for the
building.

• We are replacing many of our
local staff in Moscow with Americans.
Although this is an expensive project, it
is responsive to substantial congres-
sional interest and will improve security
considerably.

• The Office of Foreign Missions has
made great strides in using reciprocity
to ensure more equitable treatment of
our personnel abroad.

• New financial management centers
in Bonn, London, Brussels, and Tokyo
are now in successful operation. Three
more are scheduled for this year. We
are completing installation of a world-
wide American payroll system which
will avoid many of the difficulties and
inconveniences which used to be re-
garded as inevitable.

• We are developing computerized
work force planning systems, which will
mean that we can make informed and
coherent decisions on promotion, recruit-
ment, and career extensions.

• We have launched a "short tour"
program which permits us to use some
of our nest and most senior people for
specific projects in Washington. Not
only does this accomplish important
things which otherwise would not get
done, it permits us to construct bridges

between assignments. It is an economi-
cal and effective use of great talent.

• We have established a DCM [dep-
uty chief of mission | committee which
focuses high-level attention on candi-
dates for these key management posi-
tions and ensures that all available
well-qualified candidates are consid-
ered—not just those known only to the
leaders of the geographic bureaus.

• We have been in touch with many
major American business enterprises to
see what we can learn from their man-
agement experience, particularly in the
areas of personnel, recruitment, train-
ing, evaluation, and professional de-
velopment.

The Challenges Ahead

Many challenges still lie before us. The
Department needs more effective ways
of relating resources to policy priorities.
We need to reduce the levels of U.S.
Government overseas presence in diplo-
matic missions. Department personnel
now constitute only 289S of our overseas
mission staffing, and the size of our
overseas missions has grown by 207r
during this Administration. The Secre-
tary of State, under the President's
direction, has launched a project to
reduce this expanded presence. This is
particularly important given the high
security costs of protecting our people
of all agencies overseas.

We still need to do more to achieve
a higher representation of minorities,
women, and administrative and consular
personnel in senior positions. We have
only begun to give information resource
management the kind of attention this
subject deserves. We want to accelerate
our work on a coherent foreign affairs
information system which will bring
together office automation, telecommuni-
cations, and automated data processing
systems in an integrated program.

Finally, let me say one last thing—
perhaps the most important thing I
have to say: the Department and the
Foreign Service need your support as
we move forward into deeper and more
dangerous waters. We need your help in
the form of suggestions. There are
never enough good ideas. We need your
support politically. Never has this coun-
try needed a stronger and more highly
professional Foreign Service and De-
partment than now. You are our best in-
terest group. Be active. ■

Member 1986

EAST ASIA

Sino-American Relations:
No Time for Complacency

by Winston Lord

Address before the National Council
on U.S.-Chinp. Tradt onMay28, 1986.
Mr. Lord is U.S. Ambassador to the
People's Republic of China (P.R.C.t.

Introduction

I am honored and grateful to be here for
several reasons.

First, you are one of the premier pri-
vate organizations devoted to improving
relations between _the United States and
the People's Republic of China. Much we
have accomplished could not have hap-
pened without you. Much we need to do
will require your help. As Khrushchev
once remarked to Western business
leaders, "You stay in power while the
politicians change all the time."

Second, permit me to pay personal
tributes on one change that is taking
place. Chris Phillips has long been a dis-
tinguished public servant, and for 13
years he has provided strong leadership
for this council. He leaves an impressive
legacy. This thriving organization is for-
tunate, indeed, to have Roger Sullivan
take over the helm. Both in government
and the private sector, he has labored
well on behalf of Sino-American relations.

Third, I can pause to step back from
the daily pressures as Ambassador and
reflect, with you, upon the broad con-
tours of a relationship that I firmly
believe is vital to both nations and to the
world's hopes for peace and prosperity.

Kipling argued that between East
and West the twain shall never meet.
But— as his ballad itself depicts— they do
meet sometimes when people with cour-
age seize fate. Fifteen years ago, I was
privileged to be present at the creation,
when farsighted leaders in Beijing and
Washington began opening doors and
tearing down walls, indeed, even walk-
ing on them. As one who has worked
ever since for better relations, I can
speak with the candor of commitment.

We have made great strides since
that opening. But 1 come here today not
so much to celebrate achievement as to
censure complacency. Success is a proc-
ess, not a fixed condition. Many prob-
lems remain. Many opportunities
beckon. And just as bad relations—
indeed, no relations— were not immuta-
ble in the past, so good relations are not
inevitable in the future.

My basic message is this: Let us—
China and America— use this relatively
quiet phase of sound relations not to
cheer ourselves on what we have done
but to chart a course on where we
should go.

I will first address the bilateral
dimension, the gains and the pains; then
the international context, the sweet and
the sour. In both areas, I will suggest
what each country can do to strengthen
our bonds.

The Bilateral Relationship

Whereas geopolitics brought us together
in the 1970s, economics is now a major
force driving us forward. The growth of
our bilateral links is one of the astound-
ing success stories in international rela-
tions. But this very progress has
spawned new problems, even as it holds
out vast potential.

This is hardly surprising. Time and
space divide us. We have totally dif-
ferent histories and cultures. For a gen-
eration, we peered across an ocean of
antagonism. There are sharp contrasts
in our politics, societies, and values.
China is gradually shedding a long
period of estrangement from Western
countries. We are still learning about the
real China, trying to steer between our
historical poles of romance and hostility.

Since China emerged from the hoi
caust of the Cultural Revolution, its
national preoccupation has been mode
ization. Under Chairman Deng Xiaopi
the Chinese have opened up to the res-
of the world and have unleashed a tite
wave of change.

• They have successfully boosted
agricultural production. China now fe<-
its 1 billion people, with some left ove
for export.

• They have restructured their eo
omy to lift living standards even as th
tackle severe bottlenecks in trans-
portation and communications and shi
falls in energy and management.

• They have created special eco-
nomic and development zones along t
Chinese coast to drive economic deve]
ment and relay foreign technology to
less developed interior.

• They have begun enacting legie'
tion to provide a framework for foreijj
trade investment.

• They have taken a more active
role in global economic institutions,
including the International Monetary
Fund (IMF), the World Bank, and the
Asian Development Bank, and they e;
the General Agreement on Tariffs am
Trade (GATT).

• Finally, and most ambitiously,
they have embarked on an unprece-
dented course in urban reform. The g
effectively is to transform the industr
system which China modeled on the
Soviet Union in the 1950s. They seek
replace it with one more flexible, mor
responsive to the market, more efficie

U.S. Ambassador to the
People's Republic of China

Winston Lord was

born Aug. 17, 1937. in
New York. He is a
graduate of Yale Uni-
versity (B.A., 1959)
and the Fletcher
School of Law and
Diplomacy (M.A.,
I960). He served in
the U.S. Army in
L961.

He entered government service in 1962 as
.i Foreign Service officer in the Office of Con-
gressional Relations. In 1962-64, he was in
l lie ( Iffice of Politico-Military Affairs and the
Office of International Trade. In 1965 Mr.
Lord was a member of the negotiating team
and special assistant to the chairman of the
U.S. delegation to the Kennedy Round of

tariff negotiations in Geneva. In 1967 he
became a member of the Policy Planning
Staff (International Security Affairs) at th
Department of Defense. He was a memliei
the Planning Staff of the National Securit
Council and Special Assistant to the Presi-
dent for National Security Affairs during
1969-73. From 1973 to 1977, Mr. Lord sei
as Director of the Department of State's
Policy Planning Staff and a top adviser on
China.

From 1977 until his present appointmi
he was President of the Council on Foreig
Relations in New York City. During 1983-
he was senior counsellor of the National
Bipartisan Commission on Central Americ

Mr. Lord was sworn in as U.S. Ambas
dor to the People's Republic of China on
Nov. 8, 1985. ■

4fi

nonarlmpnt nf Statp Rnllil

EAST ASIA

reduction and distribution— although,
ley say, basically socialist in character.

China's new direction is one of the
est domestic ventures in modern his-
. No wonder serious problems arise,
is not been clear sailing since 1978.
t year initial moves to abandon the
bersome, irrational system of regu-
i prices helped fuel the highest rate
lflation in 30 years. Decentralization
red excessive growth in the supply
loney and credit.

There were massive outflows of hard
■ency in late 1984 and early 1985, as
?r level organizations stocked up on
iumer goods, mostly from Japan,
in production dipped due to bad
ther and incentives to grow other

)S.

Concern has mounted over what the
lese call "unhealthy tendencies," and
,t we would describe as conflicts of
rest and white collar crime.
As a result, the Chinese are consoli-
ng. They are slowing urban reforms,
ling down prices, conserving foreign
lange, lifting grain production, and
ting corruption. The leaders stress

the reforms and the openings are
versible, that the momentum will
ime in 1987.
Where does the United States fit

China's modernization? Here again,
progress has been remarkable. Fif-
l years ago, trade was negligible.
re was no investment, no science and
inology cooperation, no military ties,
;tudents or teachers at each other's
'ersities, no tourism, no cultural rela-
s. In short, the two societies had
n sealed off from each other for over
'ears. Indeed, China had been iso-
d from most of the globe.
Contrast that landscape with today.

bilateral trade exceeded $8 billion in
5, up 25% in 1 year. American busi-

has invested roughly $1.4 billion in
na, second only to Hong Kong. About

U.S. companies now have offices in
na. We have the largest bilateral
nee and technology exchange pro-
m in the world— 2 weeks ago we
led our 27th protocol. Our military
tions are being pursued on three
its— high-level visits, working-level
hanges, and limited defensive arms

In a historic development, American
ipuses have become home to over
)00 Chinese students, almost half of
:hose abroad. More than 100 Ameri-

universities have shaped over 200
hange agreements with Chinese
nterparts. Hundreds of Chinese and

American cultural and professional
groups criss-cross the Pacific each
month. Over 200,000 American tourists
and throngs of businessmen flock annu-
ally to China. Almost 1,000 Americans
now teach there.

The Chinese people have growing
access to Western books, periodicals,
movies, radio and television programs.
China is now receiving a much more bal-
anced view of the outside world. This is
in China's interest, for a major nation in
today's complex world must have accu-
rate knowledge of global trends to make
rational decisions.

The merit of certain advances
(It 'I icnds on your point of view. Some
Chinese are trading in baggy blues and
traditional opera for skin-tight jeans and
disco. Others can sample Rambo and
A madeus, Kentucky Fried Chicken and
Elizabeth Arden, even the barbarian
Super Bowl. There will be a Holiday Inn
in Tibet.

In any event, the general flow of
goods, people, and ideas promotes
China's modernization. It yields oppor-
tunities for American business. It
enriches the cultural life of both nations.
And it builds American and Chinese con-
stituencies for the overall relationship.
In times of future stress, more people on
both sides will work to preserve ties. By-
helping China to help itself, we make it
less vulnerable to outside pressures and
more integrated with the world economy.

In today's international environ-
ment, China has many potential foreign
partners. If it can maintain political
stability, China will become stronger
with or without U.S. assistance. It is
more apt to be receptive to American
ideas if we have thickened our coopera-
tion. It is more apt to be responsible in
the region and the world if it is an active
participant in the global economy.

Today China's doors are open again,
voluntarily and wider than at any time in
our memory. If they remain open, the
viewpoints of the leadership and people
over the coming decades will undergo
important changes. We should be part of
this process.

In sum it is in America's hard-
headed self-interest to help China mod-
ernize and relate to the world.

The course will not be easy. Two
completely different societies are inter-
acting after a long period of mutual iso-
lation. For Americans many practices in
China clash with our concepts of human
rights. For Chinese the growing web of
foreign contacts resurrects a riddle faced
by earlier reformers: how to capture the
magic of Western technology without
forfeiting China's essence.

There are, moreover, many misper-
ceptions on both sides. In my experience,
even educated Chinese still do not com-
prehend the American system. As for
Americans, our understanding of China
is still cramped by the formal, restricted
nature of our access, whether it be our
journalists, academics, or government
officials.

Beyond politics and culture, disputes
and just plain tough bargaining are
inevitable, especially in economics. Some
cases in point:

• Sino-American trade has grown.
But we disagree about the balance, and
we both face domestic, protectionist
pressures. It is difficult to identify
potential exports for China beyond sen-
sitive light-consumer items. Looming
ahead are possible further U.S. limits on
textiles and antidumping cases. Prices
for petroleum and other Chinese com-
modity exports have plummeted.

• China has wisely decided to bor-
row foreign funds to spur its develop-
ment. But it is wary about foreign
exchange and a growing trade gap. It
remains conservative about incurring
foreign debt.

• American investment continues.
But many business people are frustrated
by high costs, price gouging, tight for-
eign exchange controls, limited access to
the Chinese market, bureaucratic foot-
dragging, lack of qualified local person-
nel, and unpredictability. And we are
still far apart on a bilateral investment
treaty.

• We and our allies have substan-
tially liberalized export controls. But
the pace of technology and the volume
of cases will always cause delays and
frustrations.

• We strove to bring the nuclear
agreement into force, and we have
explored participation in the gigantic
Three Gorges project. But it now
appears that Chinese resource con-
straints and other factors may delay
large undertakings for many years.

• The flow of goods and people
increases. But it has been difficult to
make progress on civil aviation and
maritime issues.

None of this detracts from the posi-
tive momentum in our ties. The process
is exciting, diverse, and far beyond what
was predicted just a few years ago. But
hard work lies ahead— both to solve
prickly issues and to insulate them from
the overall relationship.

Let me suggest how Americans and
Chinese might address some of these
issues. First on our side. Protectionism
must be resisted. Access to foreign

btember 1986

EAST ASIA

markets and technology is crucial to
China's development and reform. The
President devotes enormous effort to
blunting domestic pressures. As a late
entrant, especially in textiles, China is
clearly at a disadvantage, which we have
sought to recognize. The Administration,
congressional leaders, and American
business must lead public opinion. If
China cannot sell to America, America
will not sell to China.

We must continuously monitor our
performance on technology transfer. In
recent years, the Administration has
worked hard to ease exports in the U.S.
and in COCOM member countries [Coor-
dinating Committee for Multilateral
Security Export Controls]. There are
limits set by national security concerns
and some sensitive technology even we
and our allies do not share. Within this
context, we must ensure that what we
said would happen happens. This, too,
boosts American exports as well as
overall relations.

American business should carefully
prepare for China. Neither U.S. inter-
ests nor U.S. -China ties are served by
encouraging ill-prepared firms to jump
into the Chinese market. It takes a great
deal of knowledge, skill, patience, and—
let's face it— money to be able to com-
pete effectively there. And it takes
precise written agreements to prevent
subsequent disputes. We should encour-
age American investment in China. But
both government and private consultants
should tell prospective entrants about
the pitfalls as well as the promise.

In turn, there is much China can do.

The Chinese have pushed hard to
attract foreign business. But they are
hobbled by inexperience, misunderstand-
ing of foreign needs, and the tension
I iet ween foreign and domestic regula-

Thanks to the efforts of both the
I LS. Government and business, there is
a growing awareness among concerned
< Chinese officials that they have a long
way to go. They are beginning to recog-
nize that China must compete with
scores of countries to entice foreign
investment.

The Chinese often ask what they can
do to improve the commercial environ-
ment. It reminds me of the visit Alex-
ander the Great made to Diogenes, who
lived in a barrel. Standing before the
entrance the young king boomed, "I am
Alexander, conqueror of the largest
empire on Earth. Name your gift ami it
shall be yours." The philosopher replied
simply, "Get out of the light." Getting
out of the light would be a good first
step. While the choices are for the

Chinese to make, they will have to
improve the overall climate. Several
areas need priority attention.

China must bridle those bureaucratic
elements who seek to get rich quickly by
charging foreigners exorbitant prices for
housing, services, and office space. It
must resist the urge to tax heavily the
imported equipment needed by foreign
businessmen.

China needs greater clarity in the
design and implementation of its eco-
nomic legislation.

China should improve its statistics, a
maze that even the initiated have trouble
deciphering. The Chinese operate with
several different trade statistics, all of
them "authoritative" to their various
bureaucracies, none of them matching
ours.

China needs to diversify its exports
to the United States. Now they are con-
centrated heavily in a few narrow cate-
gories, several of which, such as textiles,
generate protectionist pressures.

China must open its domestic market
more for both goods and services. This is
essential for mutual trade. It is also
important if China wants to join the
GATT and become integrated in the
world economy.

In many areas both sides need to
make efforts. Two of the most important
are in the negotiations for a bilateral
investment treaty and for a maritime
accord.

That progress can be made was
shown earlier this month when a break-
through during Treasury Secretary
Baker's visit to China greatly brightened
hopes for Senate ratification this year of
the U.S. -China tax treaty. This would be
of immense benefit to both American
businessmen and the Chinese economy.

The National Council can have a
major, constructive impact on such
issues. I urge you to keep them on the
agenda. With mutual effort and skill,
most of them can be managed. But there
are still far too many which must be
treated at high levels because they are
not resolved at lower ones. A truly nor-
mal relationship should mean truly nor-
mal problemsolving.

One problem between us which is not
easily managed, even with good inten-
tions, is Taiwan. You are aware of the
background of this and the need to han-
dle it sensitively.

The United States is not at the cen-
ter of differences between the P.R.C.
and Taiwan. The core of the problem is
historical mistrust between Chinese on
both sides of the strait. We are deter-
mined to make new friends, but we can-

not abandon old ones. We will adhere
fully to the three communiques signed
with the People's Republic of China
while meeting our obligations under tl
Taiwan Relations Act. We will seek
neither to mediate nor to obstruct reo
ciliation between China and Taiwan. T
United States believes this question
should be solved by the parties them-
selves. We have only one interest— thf;
the process be peaceful.

The International Context

Fifteen years ago, the international
scene first drove our two countries
together. Now the global elements of
relationship are more muted, but no 1*
important. They need nurturing, beca
our relationship cannot thrive on eco-
nomics alone.

In the early 1970s, China broke ou
of the isolation of the Cultural Revolu-
tion to counter the threat of Soviet
encroachment. We in turn sought a ne
flexibility in our diplomacy, to help
achieve global balance and Asian stabi
ity. Economic and cultural benefits we1
long-term aims rather than immediate
prospects.

After a dramatic start, our relatiot
ship with China leveled off in the
mid-1970s. We were frozen in the post
Vietnam and Watergate environment.
The Chinese were buffeted by the wine
of dynastic change and a succession
struggle.

In the late 1970s, Soviet and proxj
advances spurred the process of norm*
ization between Beijing and Washingtc
Since then, with some pauses, the bilat
eral results have been truly impressive
on many fronts— visits and agreements
trade and investment, science and
technology, culture and education.

Meanwhile, the Asian region has
shown dramatic progress, thanks in
large part to the easing, then growth, i
Sino-American relations. As we carved
out a new relationship with Beijing, we
removed the elements of instability
inherent in U.S. -Chinese antagonism.
The fall of Vietnam in 1975 had sowed
major doubts in the United States, and
even more in Southeast Asia, about
America's staying power. Yet now, 11
years later, the Asian scene is generall
one of achievement and hope. With the
tragic exception of Indochina, the
dominos did not drop. Asia boasts the
world's most dynamic economies. It is
America's largest regional trading pari
ner. Our influence and stakes have nev
been greater. Our interests and those c
our ASEAN [Association of South Eas
Asian Nations], Japanese, and Chinese

riflnartmflnt nf Ct^atd Rill I

EAST ASIA

ids are more clearly than ever on
k, as evidenced by the President's
nt trip to Tokyo and Bali.
Today, therefore, the base for our
;ions with China is much broader
parallel concerns about security,
is healthy. The Asian context has
loped positively as we and China
moved from confrontation to con-
ence. This is encouraging.
\.t the same time, however, the over-
lobal consensus between our nations
larrowed. This needs to be addressed.
\s one moves away from China's
jhery, our positions often diverge.
Chinese have largely taken the ini-
ve in this regard. China now follows—
icularly outside Asia— an "independ-
'oreign policy," aligning itself with
ne, attuning itself to the Third
Id. It states that the root cause of
d tensions is the rivalry between the
superpowers for international domi-
)n. This rhetoric sometimes suggests
the United States and the Soviet
>n are a morally equivalent, com-
,ble threat to world peace. This is a
ry from the late 1970s when the
ese were urging us to take firm
>n against the "polar bear."
Indeed, Beijing has sought to
ove relations with its northern
hbor. There are several reasons, and
"tain logic, for this. Whatever their
term calculations, the Chinese feel
threatened by the Russians in the
term. The Soviet Union— with its
re economic squeeze, technological
border problems, and internal con-
ictions— looks decidedly less formida-
.0 Beijing. Conversely, the United
es in the 1980s has strengthened its
nses, its economy, and its morale,
eby providing a sturdier global bal-
i. China, with its emphasis on mod-
zation, does not have the resources
sister its own defenses in the short
-so it seeks to lower tensions with
Jcow while playing for time. The Rus-
ts have their own incentives to make
rress with the Chinese.
The results have been more high-
ll visits, trade and exchanges, and
J name-calling between Beijing and
Ico w .

What does this mean for the so-
ed strategic triangle?
■This is a catchy phrase, but not par-
Jlarly illuminating. All large powers,
tading China, must keep an eye on
It other ones are doing and how their
pests are affected. In this sense, the
l-Soviet-American strategic triangle
lit one of many intersecting patterns
jt comprise a complex balance of

North Koreans Propose
Three-Way Military Talks

DEPARTMENT STATEMENT,
JUNE 19, 1986'

On June 17, North Korean liaison
officers at the Military Armistice Com-
mission (MAC) at Panmunjom passed a
letter signed by the North Korean
Defense Minister and addressed to the
Commander in Chief of the UN Command.

In this letter, and in a companion let-
ter to Republic of Korea Minister of
National Defense Lee Ki Baek, the
North Korean Government states that it
desires to reduce tensions. It proposes
three-way talks on ways of reducing ten-
sions that would involve the North
Korean Defense Minister, the Minister
of National Defense of the Republic of
Korea, and the Commander in Chief of
the UN Command. The letter is being
studied by the UN Command, which will
provide a response in due course.

The U.S. Government welcomes all
efforts to reduce tensions on the Korean
Peninsula. We hope these letters are a
sign that North Korea shares this inter-
est and will work toward that goal.

It has long been our view that con-
tact between the two parties concerned-
North and South Korea— remains key to
reducing tensions. Accordingly we have
supported and encouraged the North-
South dialogue which began in 1984.

Aside from supporting such direct
efforts to reduce tensions, the UN Com-
mand has put forward a number of pro-
posals to reduce tensions at the MAC in
Panmunjom, including proposals for
advance notification of significant
military exercises and exchanges of
observers. The MAC is the forum that is
charged with overseeing the armistice.
The MAC represents all parties that
were involved in hostilities during the
Korean conflict.

We note that North Korea has studi-
ously ignored our longstanding proposals
in this forum. We are not convinced that
it is constructive to propose a new forum
when a perfectly adequate mechanism to
address reduction of tensions, with all
the necessary players, has been in exist-
ence for more than 30 years.

We call on North Korea to avail
itself of these mechanisms and proposals
for reducing tension. We would regard
as a positive development any North
Korean move to resume the dialogue it
suspended with the Republic of Korea
last January and to address seriously the
important proposals on the table at
Panmunjom.

'Read to news correspondents by Depart-
ment deputy spokesman Charles Redman. ■

power. Other significant actors include
Western Europe, Japan, ASEAN, India,
and Pakistan.

No more useful is the phrase "China
card"— or any other card. To be sure,
there is some inherent geopolitical lever-
age and balancing in the play of relations
between major powers. To be sure, the
fact we no longer need to target our
forces on China makes much easier our
task of containing the Soviet Union. But
we do not seek an alliance with China
any more than China seeks one with us.
We wish neither to provoke Moscow nor
perturb our friends. Nor do we wish to
block the improvement of relations
between Moscow and Beijing. Conflict
between the two giants would be danger-
ous. Cooperation between them will be
limited because of profound historical,
geographical, cultural, and strategic bar-
riers. China needs no coaching on how to
define its security concerns.

For our part we would like to ease
relations with the Soviet Union. We can-
not do so without Soviet reciprocity. We
will not do so at the expense of allies or
friends. But if we do so, it would serve
not only global stability but our dealings
with China itself.

So let us be clear on this point: We
are strengthening the relationship with
China for its own sake, not to play trian-
gles or to play cards. Our policies toward
Beijing and Moscow clearly are inter-
related, but they are pursued on differ-
ent tracks.

What, then, is the state of our inter-
national dialogue with the Chinese? I
believe there are grounds neither for
alarm nor complacency. There remain
many factors which suggest that we can
have close, expanding, friendly— but also
nonallied— relations.

First, China depends on a stable
balance of power. The Chinese realize

Itpmhor 1QRR

EAST ASIA

thai a strong United States is essential
own security.

Second, China knows we pose no
threat to it. We, in turn, have demon-
strated in both word and deed that we
are willing to contribute to its historic-
drive to modernize.

Third, we and China converge on
many specific issues.

• We agree that Vietnam should get
out of Cambodia.

• We agree that the Soviet Union
should get out of Afghanistan.

• We agree that there must be
global limits on intermediate-range mis-
siles in Europe and Asia.

• We agree that conflict on the
Korean Peninsula would be a disaster
and that peace should be maintained.

• We agree that good relations with
Japan are beneficial all around.

• We agree— quietly— that a sub-
stantial U.S. presence in Asia serves the
cause of regional peace.

These elements for good relations
are strong. But let us not assume that
over the long run they are sufficient.
There is potential for selective strengthen-
ing of our ties. Both sides need to make
further efforts to enrich our dialogue on
international issues so as to erase mis-
perceptions, lessen tensions, and enlarge
areas of cooperation.

Here is what America should bring
to this dialogue.

• We should not expect China to line
up solidly with us across the board on
international questions. Not even our
treaty partners do that. Different his-
tories, cultures, geography, and national
interests will produce some divergence.

• China is a friend, not an ally. At
times, it serves both our purposes to
have daylight between us. China needs
tn show some independence. So do we.

• Not every rhetorical jab by Beijing
is gratuitous. On some issues, China
genuinely disagrees with our tactics,
even where we share common geo-
political purposes. We should listen with
respect when there are sincere disagree-
ments, as opposed to cheap shots.

• We should distinguish between
words and actions. On Asian issues
where we largely agree, China devotes
concrete resources. Elsewhere their
moves are largely rhetorical. Sticks and
stones hurt more than names.

To my Chinese friends I offer the
following.

• Friends should treat each other as
such. Public diplomacy is an important
foreign policy tool. China's principal
audience may often be the Third World,
but the American people and Congress
listen carefully. It undermines domestic
support for the relationship when we say
China is a friendly country, while China
says that "the source of the world's ills
is the fierce contention of the two super-
powers for hegemonism." We do not
appreciate being confused with the
Soviet Union.

• Just as China has security inter-
ests, so does the United States. Attacks
on issues of major importance or emo-
tion for us undercut the base of the rela-
tionship. When friendly countries sign
onto outrageous resolutions in the
United Nations, we notice.

• China needs to appreciate more
the link between global balance and
Asian balance. It is not in its interest
that American resources be diverted
away from Asia by other security
threats, for example in Central America.

• There is bound to be some correla-
tion between China's sharing of geopolit-
ical perspectives and our sharing of
advanced technology, especially military.

To avoid complacency about the con-
text of our relations with China, there-
fore, we must broaden and deepen our
discussions on international questions.
We agree on much. But there is inade-
quate consensus to bind us together.
And we must not allow our disputes to
pull us apart.

The quality— and results— of our dia-
logue will depend largely on the atti-
tudes we each bring to it. Let us under-
stand each other's perspectives and
purposes. Where we disagree, let us
debate each other's methods, not
motives. Let us strengthen cooperation
where it already exists. And let us seek
fresh areas of collaboration.

In this way we can, over time, shore
up the international foundations for out-
growing bilateral links.

Conclusion

An American lawyer now teaching at
Beijing University was sharing some
Western publications with one of his
prize students. First he showed him a
recent cover of The New York Times
Magazine which read: "China on the
Move."

"Is it true?" asked the American.

"Yes," agreed the Chinese studen

The lawyer then pulled out a New»
week cover headlined: "Putting on the
Brakes— China Slows Its Rush to
Reform."

"How about this one?" he asked.

"Yes," the student answered, "ah
true."

"But," the American lawyer per-
sisted, "the headlines contradict one
another."

The Chinese student thought for ai
moment. "That is also correct," he
concluded.

I would agree with that Chinese s*
dent. Both headlines are correct. As sk
often in China, contradictions reflect
reality.

China is on the move. But the vert
speed of its pace and rigors of its com
will require it to apply the brakes ofte'

Also on the move is our bilateral n
tionship. But we should not be lulled t
relatively smooth stretches. We shoulj
keep both hands on the wheel, for the
will be twists and turns. Indeed, we n>i
to widen the road. The general direct!
however, is clear. Abiding mutual intt
ests drive us ahead. I believe that
together we can and we will go forwa.
toward new horizons of hope. ■

iilVIRONMENT

Multilateral Development Banks
nd the Environment

$ohn D. Xegroponte

Statement before the Subcommittee
Von ign Operations of the Senate
wropriations Committee on May l.
to. Ambassador Negroponte is Assist-
^Secretary for Oceans and Interna-
lal Environmental and Scientific

li pleased to have this opportunity to
lgnt views on behalf of the Depart -
pt of State regarding the environ-
htal responsibilities and activities of
[multilateral development banks
bBs).

At the outset, I would like to stress
; the Department fully supports the
1 of the subcommittee in this area,
ged, the Department believes that in
zr to be sustainable, development
it be based on sound ecological prin-
es and that these principles must be
ely and carefully integrated into the
elopment process. Given the major
■ the multilateral development banks
i in influencing the nature and pace
he development process, their capac-
ind commitment to address the envi-
mental dimension is of critical
ortance.

The Department of State has for
ry years carried out an active inter-
ional environmental program. A sub-
itial part of this effort has been
oted to issues related to rational
lagement of the world's scarce natural
Durces. Our leadership role in interna-
lal efforts to address the tropical
orestation problem is just one exam-
ine are pleased, therefore, to have
n explicitly recognized by the Con-
ss as a key participant in a broad
3rt to improve the environmental per-
mance of the MDBs. Over the past
.r, the Bureau of Oceans and Interna-
lal Environmental and Scientific
'airs (OES), which I am privileged to
id, has assigned a top priority to the
)B-environment issue area.
I would like to emphasize at the out-
that, in our view, significant prog-
s has been made in a relatively short
•iod of time in elevacing and address-
; this issue. We have enjoyed, in this
pect, excellent cooperation from the
partment of the Treasury, as well as
'■ Agency for International Develop-
nt (AID), in collaborative efforts to
'sue the mandate that Congress has
en the Administration in this area.

In addition, we have been working
closely with the principal U.S. non-
governmental environmental organiza-
tions which were instrumental in focusing
public attention on the MDB-environment
interrelationship. We have frequent and
candid contact with representatives of
these organizations. While we may have
differences of views from time to time
regarding the specific strategy to follow,
and priorities, there is solid agreement
among the spectrum of involved U.S.
Federal and non-Federal institutions as
to overall goals and objectives.

A Collective Goal

for the Administration

It is important I believe to describe the
organizational framework of the Depart-
ment of State as it relates to the subject
before us.

The OES bureau is the primary
action component in our Department.
Mr. Richard Benedick is my deputy
assistant secretary directly responsible
for environmental matters. He, in turn,
directs the activities of two offices: the
Office of Environment and Health and
the Office of Food and Natural Resources.
It is the responsibility of the latter office
to deal with the question of the environ-
mental implications of MDB activities on
a day-to-day basis.

OES, of course, does not work in a
vacuum. The Department of State, as
does Treasury, must grapple with a
myriad of "nonenvironmental" issues
every day, covering a wide range of poli-
tical, economic, and assorted other
issues around the globe. OES must thus
interact and cooperate with the various
regional geographical bureaus in the
Department, which oversee the conduct
of the United States' bilateral relations
with other countries. We must, in addi-
tion, coordinate particularly close with
the Bureau of Economic and Business
Affairs. Our "EB" bureau deals with the
gamut of economic, trade, and financial
issues affecting our relations with the
rest of the world; and it has the principal
responsibility in the Department for
working with Treasury on overall U.S.
policy toward the MDBs. This working
relationship is sound and productive.

I would stress that our efforts to
strengthen MDB performance in the
environmental field are receiving sup-
port at the highest levels of the State
Department. Just a few months ago, the

Acting Secretary of State and AID
Administrator Peter McPherson sent a
cable to all ambassadors and AID mis-
sion directors expressing their personal
interest in the subject of sustainable
development. They stressed the impor-
tance they attach to having U.S.
Embassy and Mission officials doing all
they can to encourage the MDBs, as well
as other donors and borrowing coun-
tries, to move toward more environmen-
tally sound development projects.

More recently, Secretary Shultz
wrote Treasury Secretary Baker to
underline the State Department's strong
interest in promoting sustainable devel-
opment in the Third World. Secretary
Shultz noted that while the goal of bet-
ter integration of environmental consid-
erations into MDB project planning and
implementation is complex, and some-
times sensitive, "the effort is worth-
while." He committed the State Depart-
ment to continue to work closely with
Treasury toward that goal.

A skeptic might ask why the State
Department and the Treasury Depart-
ment are spending time and resources
on this subject. The short answer is that
careful attention to environmental con-
siderations and sound resource manage-
ment makes for good development eco-
nomics. That is, it is economically more
advantageous to undertake development
projects in an environmentally responsi-
ble and sound manner in the first place
than to have to repair, abort, or abandon
them at some later date. Examples of
the costs of poor environmental planning
include: premature siltation of dams due
to poor watershed management; loss of
tropical forest resources and/or reforest-
ation costs from slash-and-burn activities
of unanticipated settlers using new
access roads; and health care outlays
resulting from poorly planned or imple-
mented irrigation projects, which lead to
the spread of waterborne diseases.

It sounds so simple and unexcep-
tionable; but. of course, it is not. While
there are grounds for optimism about
improved environmental performance by
the MDBs over the long run, there is still
much to be done. The efforts of the Con-
gress, the Administration, and.the non-
governmental organizations and the
many citizens they represent must not
slacken if we are to assure ultimate
achievement of our collective goal.

Pursuing Environmental
Achievements

How can this goal be pursued?

The Administration is taking a multi-
faceted approach, and the State Depart -

ptember 1986

ENVIRONMENT

ment is involved to one degree or
another in most of the activities.

For example, the OES bureau has,
through the Office of Food and Natural
Resources, been participating in the
interagency MDB project review process
"WGMA" [working group for multi-
lateral aid] and in other, more informal
efforts to evaluate specific MDB projects
from an environmental and resource
management point of view. The short-
coming of the WGMA review process is
that it basically intercepts projects when
they are well advanced in the decision-
making process, and ready for presenta-
tion to MDB Boards of Directors for
approval. At this point, only the most
egregiously ill-prepared or poorly tar-
geted projects can be sent back to the
drawing board. And that can happen
only if other countries join the United
States in insisting on it. What is really
needed is a more basic attempt to affect
the process by which the banks develop
and prepare projects. Our long-term goal
is to ensure that all MDB projects are
fully responsive to environmental con-
cerns when they come before the Execu-
tive Directors for final approval.

In this regard, I should mention that
AID maintains a so-called early project
notification system which seeks to obtain
views of AID Missions abroad on a range
of MDB projects while they are still in
the early developmental stage. Environ-
mental considerations are one of a series
of issues which are to be addressed by
our posts. The objective is to use what-
ever information can be developed in
this fashion to influence project design,
should that be in the U.S. interest. OES
participates in this effort when appropri-
ate. As the subcommittee is aware, this
system is not foolproof. However, it does
provide a degree of "early warning" on
some MDB projects in some countries
and, as such, plays a useful role in the
total U.S. Government effort to move
the activities of the MDBs in the direc-
tions we all desire.

OES staff have recently participated
with Treasury officials in a series of
meetings arranged with the Committee
on the Environment of the Inter-
American Development Bank (IDB). This
is another example of the broader
approach which we are pursuing to influ-
ence the process of project preparation
at an early stage. The general conclusion
we drew was that the committee is serv-
ing a very useful role within the IDB,
but that its involvement in the project
design process could be more systematic
and comprehensive. In view of its impor-
tance and evolving role, we plan to con-
tinue to monitor the activities of the
committee in the months ahead.

New Approaches

One area in which State has been taking
the lead role involves so-called beneficial
projects. At the outset, I must admit
that we have not progressed as far and
as fast as we would have liked in this
important area. However, we are, I
believe, moving in what should be useful
and productive ways.

First, we are engaging staff of the
World Bank in a dialogue on issues
related to the design and management of
irrigation projects. The importance of
increasing agricultural production in
many parts of the developing world, and
the key role irrigation will play in this
process, lead to the choice of this sub-
ject. We hope this dialogue will lead to
the identification of specific constraints
to environmentally sound irrigation proj-
ects. This, in turn, should provide useful
insights into ways to overcome these
constraints and also identify well-
designed projects or project components
which can serve as examples to others
on how irrigation schemes can be
designed and operated in a manner that
will reduce, to a minimum, any adverse
environmental impacts.

The second specialized development
sector we have chosen to explore with
the banks is tropical forests. You are
certainly aware of the World Resources
Institute's recent report, "Tropical
Forests: A Call for Action." This is a
landmark in helping identify priority
areas for international action. It has
already stimulated the Food and Agricul-
ture Organization to produce a global
"tropical forestry action plan" which is
now receiving serious attention around
the world. We believe that the global
action plan, which integrates the World
Resources Institute's investment strat-
egy, represents our best current hope
for mobilizing an expanded international
approach to tropical forest management.
We plan to explore shortly, with the
World Bank, specific aspects of the
action plan to identify investment priori-
ties and opportunities.

We are also considering energy con-
servation as a possible third develop-
ment sector in which to engage the
MDBs on focused discussions of
development-environment relationships.
Because of our staffing limitations, we
cannot undertake all of these— and/or
other— themes concurrently. However,
we hope that with continuing attention
to the general subject, and patience, we
will soon be able to report positive
results from these efforts.

It goes without saying that these
issues are not unique to the World Ba
We will thus be engaging the other
MDBs on the three themes in the t'titi
as well.

In addition, we are seeking and ui
lizing "targets of opportunity" for op
ing a dialogue on a range of issues wi
those MDBs not based in Washington
For example, OES staff met with the
new U.S. Executive Director to the A
can Development Bank (AFDB) prior
his transfer to Abidjan, and also had
useful meetings with the Swedish-fun
environmental officer currently sta-
tioned at the AFDB.

We have also been examining the
programs of the World Bank's Econo
Development Institute (EDI). State a
Treasury Department officials have
recently held a series of very useful
meetings with a range of professional
from the EDI. Our conclusion is that
what is probably most desirable is a
carefully thought-out program to inte
grate environmental and resource ma
agement issues into a variety of the
existing and planned courses and serr
nars of the EDI. We and Treasury wi
continue to pursue this concept with
World Bank, via the U.S. Executive
Director's office.

Raising International Awareness

One last area on which I would like tc
report relates directly to Section 540(
of PL 99-190. This section urges the
Departments of State and Treasury fc
seek to engage other donor countries
the effort to move the MDBs toward
more environmentally sound develop-
ment projects.

This is an absolutely critical comp
nent of our overall strategy. We are
thoroughly convinced that it is in the
interest of all MDB member countries
donors and borrowers alike— to seek
improved environmental performance
the MDBs, particularly in these days i
heightened concern about maximizing
the impact of limited developmental
resources. It is also clear that, no mat
how hard the U.S. Government pressi
it is not realistic to expect that, acting
alone, we can effect necessary change
We must have the support of other bs
members.

We have been working very close
with our colleagues at Treasury to en
other donors in this initiative. The
groundwork was laid in the cable to a
U.S. overseas posts to which I referrt
earlier. We have followed up on this \
a second communication to our Embai

nonartmont nf RtatP Ri ill J

ENVIRONMENT

is in selected donor countries, asking
em to inform appropriate governmen-
agencies in their host countries of
S. intentions to seek broad interna-
mal support for efforts to strengthen
e environmental component of MDB
oject lending.
Last month, we transmitted another
ssage to key multilateral hank donor
vernments, this time seeking support
• specific U.S. positions at the just-
ncluded April 30 meeting of the World
nk's Board of Directors on the FY
87 budget. In advance of this meeting,
! and Treasury officials had informal
scussions with representatives of the
(ecutive Directors' offices of other
ambers. We sensed considerable sym-
thy for our overall goal, and varying
grees of support for our specific objec-
ts. We are also receiving some quite
sitive signals from abroad. For exam-
?, our Embassy in Copenhagen
cently reported that the Nordic
tions are very supportive of our MDB
tiatives and have instructed their
cecutive Director to support the U.S.
sitions.

At the same time that the State
'partment is approaching other donors
i our diplomatic posts abroad, Treas-
y is raising the same themes in the
veral international fora in which it
lys the lead role, such as replenish-

i;nt meetings.

It is quite evident that we cannot

I pect unanimity among even donor
.tions concerning all the details of the
ajor proposals in your legislation. Yet,
liink we will be receiving important
neral support from a sizable number
them. In the longer run, however, it
ill be critical to engage key borrower

J embers of the MDBs as well. In the
lal analysis, even the most environ-
entally conscientious multilateral bank
uld be thwarted in its objectives if bor-
wing countries are not convinced that
und resource management and
ivironmental protection makes good
jvelopmental sense.
Fortunately, we are sensing an

! creasing awareness and interest in

, ich issues in the developing world. We

jie this not just in the discussions with
her Executive Directors' offices; it
acks also with what we are expen-
ding in other international fora,
Jtably the UN Environment Program,
here, one of our primary goals has for
ars been, simply put. consciousness

jiising. There is no question that
jveloping nations are slowly moving
•ward an understanding of the integral
lationship between sound resource

management and environmental protec-
tion and sustainable development.
Despite this trend, though, it will take a
major, long-term effort going well
beyond the confines of our present
dialogue with the multilateral banks to
effect the type of permanent change in
attitude and priorities which we all can
agree is necessary.

Conclusion

I would like to reiterate in conclusion
that the Department of State is fully
supportive of the goal of promoting truly
sustainable development. In support of
this, we are desirous of, and committed
to, encouraging the multilateral develop-
ment banks to become even more
valuable partners in the process than
they are already.

Progress is definitely being made.
This is quite apparent if one compares
the level of public awareness, govern-
ment attention, and MDB sensitivity and
policy dialogue which is present today, in
relation to the situation which existed

just 2 years ago. We are keenly aware,
however, that achieving the goals that
the Congress has set for us will be not be
easy. We must all be prepared to remain
engaged in the pursuit of these goals
over the long term. There are many
obstacles, not the least of which are the
independence and closely guarded
sovereignty of the developing countries
and their not uncommon view that
environmental considerations are lux-
uries which often cannot be "afforded."

This notwithstanding, we are con-
vinced that sound environmental plan-
ning is an essential part of a sound
development process. The effort to inte-
grate environmental and natural
resource management considerations
into development lending is important,
worthwhile, and should pay increasing
dividends.

'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. ■

U.S. Policy on Acid Rain

by Richard E. Benedick

Address before the International

Conference on Acidification und Its
Policy Implications in Amsterdam, The
Netherlands, on May S, 1986. Ambas-
sador Benedick is Deputy Assistant
Secretary for Environment, Health, and
Natural Resources.

Acid rain has proven in the United
States to lie a divisive domestic political
issue, a serious concern with our north-
ern neighbor, Canada, and a complex
ecological problem with considerable
scientific uncertainty. All of these fac-
tors have contributed to the evolution of
U.S. policy on acid rain.

Past Actions and Progress

The United States enacted major legis-
lation to protect air quality over 15
years ago. The Clean Air Act of 197(1.
together with major amendments added
in 1977, resulted in an air pollution con-
trol effort that has served as a model
for many other industrialized nations.
The>' have also led to significant, meas
urable improvements in air quality in
the United States.

Probably the single most important
feature of the Clean Air Act is the es-
tablishment of national ambient air
quality standards (NAAQS) for air pollu-
tants. These standards require that
ambient concentrations of those pollut-
ants be limited to levels that safeguard
public health and welfare. NAAQS for
sulfur dioxide (SIM, nitrogen oxides
(N()x), and volatile organic compounds
(VOCs)— all of which contribute to acid
rain— have been in effect for over in
years.

Within the United States, it is the
individual States which are responsible
for ensuring that the NAAQS are met
within their own borders. In order to at-
tain the Federal standards locally, the
States set emissions limits on existing
facilities.

The Clean Air Act also sets emis-
sions limits for various classes of new
stationary sources. The theory behind
this was that emissions from new
sources could be controlled at much
lower cost than emissions from existing
sources ami that the requirement to con-
trol new sources would encourage the
development of more efficient and cost-
effective control technologies. Further-
more, thi' control of now sources could

=eDtemher 19Rfi

ENVIRONMENT

lead to cleaner air as old facilities were
eventually replaced. To date, the United
States has set new source performance
standards to control emissions of S02
and/or NOx from all new oil- and coal-
fired powerplants, large industrial boil-
ers, smelters, nitric acid plants, sulfuric
acid plants, stationary gas turbines, and
petroleum refineries. Standards for
VOCs have also been set for several
new source categories.

Besides controlling several kinds of
stationary sources, the Clean Air Act
also limits air emissions from new mo-
bile sources. Standards to limit N0X and
VOCs from new cars and light-duty
trucks were first implemented in 1973,
and they have been tightened since
then.

These Federal and State actions
have undoubtedly helped to improve air
quality in the United States— a remark-
able accomplishment considering the
strong growth of U.S. industrial produc-
tion in recent years. At this time, about
98% of counties in the United States are
in compliance with the national stand-
ards for S02 and NOx. Sulfur dioxide
emissions fell from a peak of 28 million
metric tons in 1972 to about 21 million
metric tons in 1984, despite a 35%
growth in coal use. Volatile organic com-
pounds followed a similar path, while a
precipitous rise in NOx emissions was
halted and turned to a level trend.

Despite this progress, there is some
cause for concern. Approximately 4% of
lakes recently surveyed in the north-
eastern United States were found to be
acidic. There is evidence of reduced crop
growth from ambient ozone levels.
Although unexplained visible damage to
high altitude spruce fir trees amounts to
;i fraction of 1% of the eastern U.S.
forest area, we are, nevertheless, con-
cerned about possible future trends.
Growth rate changes have been re-
corded for several other tree species,
which may be linked to atmospheric pol-
lution. It is also believed that buildings
and materials in some areas are ex-
periencing accelerated deterioration.

Future Uncertainties and
Policy Considerations

Looking to the future, N()x emissions
are projected to increase slightly by
1995, despite the continuing turnover of
the national vehicle fleet and the
progressively more stringent controls
placed on automobile and truck emis-
sions. Sulfur dioxide emissions are much
more difficult to project, because eco-
nomic growth, existing regulatory pro-

grams, changing fuel use patterns, and
the extended life of U.S. powerplants all
will affect emissions in different and un-
certain ways. We are currently unsure
whether they will increase or decrease
over the next decade.

Against this background, evolving
U.S. acid rain policy must address three
primary questions.

First, to what extent must emis-
sions of acid rain precursors be reduced
in order to adequately protect the
resources at risk in North America?

Second, where should emissions
reductions take place?

And third, when should those reduc-
tions be made?

Over the longer term, existing
regulatory programs should reduce
emissions. But will this reduction be
adequate, and will our lakes and forests
be threatened in the meantime? Do we
need to embark on a major program of
retrofit controls on existing sources? If
so, in what parts of the country should
sources be retrofitted?

In the United States, acid rain has
been as politically divisive as any en-
vironmental issue the country has faced.
Various proposed solutions have op-
posed one region against another; they
have threatened the livelihood of high-
sulfur coal miners and have raised the
possibility of significant increases in
electric rates in precisely those indus-
trial areas hardest hit by economic
dislocations.

The acid rain issue has been espe-
cially difficult to resolve because pro-
posed solutions must choose from a
limited array of options. Most S02 emis-
sions in the United States are from elec-
tric utility and industrial boilers. At this
time, only three emissions control tech-
niques are proven and available for
reducing S02 emissions from coal-fired
boilers: coal washing, coal switching,
and flue gas scrubbing. However, coal
washing cannot be used to achieve sub-
stantial S02 reductions, and the other
two methods impose high socioeconomic
costs on particular regions— for example,
unemployment or higher electricity
rates. The availability of a broader
range of efficient and cost-effective con-
trol technologies could help to reduce
these political and economic difficulties.

A further complication is the un-
availability of a solid basis to determine
the extent and magnitude of current or
potential future acid rain damage. No
one can say with confidence what level
of environmental benefits would result
from any specific control program. We

are limited in our ability to predict hoii
much acid deposition would be reducec
in any particular geographic area by at|
given control program. Although the
costs of control, and the people who
would pay those costs, are rather well
understood, the extent of environment
improvement that would result remain
highly uncertain. In such a situation, p
litical consensus is difficult to achieve.

Recent Developments

In 1983, the U.S. Government carried
out a thorough review of the state of
acid rain knowledge and the options
available for its management. Followh
that review, it was concluded that,
although acid rain was clearly a serioi
concern, there was insufficient inform;
tion to embark upon a new emissions
control program. This was not a decis:
either for or against further controls
but, rather, to defer such a decision u
til a more adequate scientific and tech
cal base was established.

In the meantime, it should be reca
nized that the United States has take:1
notable steps in recent years to addre
the acid rain problem.

First, it is using existing legal
authority to expand control over emis
sions of acid rain precursors.

Second, an ambitious research pre
gram is addressing the scientific
uncertainties.

Third, the development and demo:
stration of innovative control technolo
is being strongly promoted.

And fourth, a new chapter in coof
eration with our Canadian neighbors 1
been opened.

New Regulations. The United

States recently implemented new regi
lations to control future emissions of
S02, NOx, and VOCs. In March 1985,
new standards were established for cc
trolling emissions of particulates and
NOx from light-duty and heavy-duty
trucks, as well as from urban buses.
After becoming effective with the 198
model year, these standards are ex-
pected to reduce N0X emissions by
about 2 million metric tons per year.

Regulations were also recently
passed limiting the amount of pollution
control credit that can be claimed by
plant that builds a tall smokestack. Tt
stacks help such plants achieve ambiei
air quality standards locally by disper;
ing emissions over broader areas, but
they do not reduce the total amount o
S02 emitted. By eliminating this incer
live to build tall smokestacks, the U.S1

ri£»r»ortm£int nf Qtoto Riillc

ENVIRONMENT

jernment aims to encourage pollution
Irols that will actually limit total
fcsdons.

Dther regulations are being devel-
k! that should further reduce future
I and NOx emissions, including stand-
1 to control omissions from new in-
Irial boilers, which should be in
bt by the end of the decade.

Expanded Research. In addition to
klatory actions, the U.S. Government
funded a 10-year research program
eted specifically at causes and ef-
p of acid rain— the National Acid
apitation Assessment Program,
e 1982, steadily rising annual budg-
fiave totaled $225 million, plus an ad-
>nal $85 million in the coming fiscal

Research funds are divided among
ects studying atmospheric processes,
estrial effects, deposition monitoring,
aquatic effects.

Among other things, the 1985 pro-
n funded projects that:

1 Increased the quality of manmade

sions inventories;

1 Accelerated the development of

ospheric models;

! Fully implemented the nationwide

deposition monitoring network;

1 Commenced dry deposition

itoring;

Completed the first phase of a
ional Surface Water Survey;
• Conducted soil surveys of
esentative watersheds;
» Developed methodologies for a na-
si] survey of forest effects; and

Analyzed control technologies.

Innovative Technology. The move-
it of acidic substances and oxidants
iss the U.S. -Canadian border is
living particular attention by both
srnments. In March 1985, President
gan and Canadian Prime Minister
roney appointed two distinguished
rial envoys, Drew Lewis of the
ted States and Bill Davis of Canada,
tudy the transboundary acid rain is-
and report back with recommenda-
s on ways to resolve it.

The special envoys presented their
report in January 1986. A major ele-
ment of their recommendations for the
United States is a 5-year, $5 billion con-
trol technology commercial demonstra-
tion program, cofunded by the Federal
Government and private industry. By
demonstrating in exisiting plants the
commercial feasibility of innovative con-
trol technologies that promise lower
costs and/or greater efficiencies, this
program could expand the list of control
options available to U.S. industry, facili-
tate a domestic consensus on acid rain,
and achieve some near-term reductions
in transboundary flows.

The U.S. Government has stated
that it will seek to provide the future
funding recommended by the special en-
voys. In this connection, I would note
that the United States has already ex-
pended $2.2 billion in research funds be-
tween fiscal years 1981 and 1985 to
develop technologies for cleaner use of
coal. In this year's budget, $700 million
is earmarked for clean coal research up
to 1991. In addition, an $800 million
joint industry/government program to
demonstrate new clean ways to use coal
is being implemented.

Cooperation With Canada. The en-
voys also recommended that the two
governments put in place mechanisms to
encourage cooperation on this issue.
Exisiting legislation in both countries
will be reviewed to identify opportuni-
ties to control transboundary air pollu-
tion; acid rain will remain high on the
agenda of meetings between the Presi-
dent and the Prime Minister; and the
two governments will establish a bilater-
al advisory and consultative group on
transboundary air pollution.

The special envoys also recom-
mended enhanced cooperative research
efforts to study dry deposition monitor-
ing; rates of aquatic change; impacts on
aquatic biology, forests, and materials;
and potential damage from heavy
metals.

Conclusion

Let me conclude by observing that the
President of the United States this year
fully endorsed the report of the special
envoys, and planning is now underway
to implement all of its recommendations.
As the report stressed, in order for
progress on acid rain to be possible, the
recommendations must be realistic:
"they must not ask either country to
make a sudden, revolutionary change in
its position" or "call for immediate
abandonment of major policy stands."

I should emphasize here that it is
not U.S. policy to wait for definitive an-
swers on all acid rain uncertainties be-
fore acting. Decisions on acid rain, like
other environmental decisions, will al-
ways have to occur in the face of some
scientific uncertainty. The United States
will act when it is reasonably certain
that such action will achieve its intended
results and that those results will justify
the social and economic costs involved.

Thus, while the United States has
deferred new mandatory controls for
acid rain, we are moving ahead
vigorously with the programs outlined
above. The U.S. Government is fully
committed to finding appropriate solu-
tions to the problem of acid rain as
expeditiously as possible. ■

Itemhpr 1QSR

EUROPE

U.S. -European Relations

by Rozanne L. Ridgway

Statement befon tfa Subcommittee
on Europe and the Middle East of the
Ha use Foreign Affairs ' 'ommittee on

.l,i,i, V.i, I'tSli. Ambassador Ridgway is
Assistant Secretary for European and
Canadian Affairs.1

I'm pleased to accept your invitation to
appear today to discuss recent develop-
ments in U.S. -European relations, in
particular the President's May 27 deci-
sion on interim restraint, and the pros-
pects for strategic nuclear arms control.
I will begin with a review of that deci-
sion, but I want also to take this oppor-
tunity to review the totality of our
agenda— arms control, bilateral rela-
tions, human rights, regional issues—
with the Soviet Union.

Interim Restraint

First, the interim restraint decision of
May 27, as the President himself
described it, follows an undertaking by
the President in June 1985:

. . .to go the extra mile, dismantling a
Poseidon submarine. . .to give the Soviet
t'ninn adequate time to take the steps
necessary to join us in establishing an interim
framework of truly mutual restraint.
However, I made it clear that, as subsequent
U.S. deployment milestones were reached, I
would assess the overall situation and deter-
mine future U.S. actions on a case-by-case
basis in light of Soviet behavior in exercising
restraint comparable to our own, correcting
their noncompliance, reversing their unwar-
ranted military buildup, and seriously pursu-
ng equitable and verifiable arms reduction
agreements.

Bj this May. the President said, in
announcing his decision, that he found
"no real progress toward meeting U.S.
concerns with respect to the general pat-
tern of noncompliance . . . "; "no abate-
ment of the Soviet strategic force
buildup"; and that "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. ..."

At the same time, the President
went on to say, he has found himself
faced with ongoing decisions on U.S.
military plans and programs, and deter-
mined that,

. . . the most essential near-term response
to Soviet noncompliance remains the imple-
mentation of our full strategic modernization
program, to underwrite deterrence today, and
the continued pursuit of the Strategic
Defense Initiative (SDI) research program, to
see if it is possible to provide a safer and
more stable basis for our future security and
that of our allies.

As one step in implementing the
U.S. strategic modernization program,
the President said he had directed accel-
eration of the advanced cruise missile
program. Although he announced that
for economic reasons the United States
will retire and dismantle two Poseidon
submarines this summer, and thus
remain technically in observance of
SALT II [strategic arms limitation talks]
limitations, he also stated his intention
not to dismantle U.S. strategic systems
to compensate for the 131st B-52 bomber
equipped for cruise missile carriage,
when late this year we again run up
against a theoretical SALT II limitation.
As the President explained on May 27:

. . .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 standards contained in the SALT
structure, which has been undermined by
Soviet noncompliance, and especially in a
flawed SALT II treaty, which was never
ratified, would have expired if it had been
ratified, and has been violated by the Soviet
Union.

In addressing the President's May
27 decision a few days later for our
European allies and for the U.S. press at
the NATO ministerial in Halifax,
Secretary Shultz outlined the underlying
rationale in these terms:

• The very strong allied view of the
need to maintain a credible deterrent;
and

• A "shift of gears from a form of
restraint under a treaty that was never
ratified and was being violated, and, for
that matter, has become increasingly
obsolete ... to a form of restraint that
looks at behavior by the Soviet Union
and looks at responsibilities that the
United States has, and the alliance has,
for the maintenance of our defensive
deterrent capability."

The Secretary described the
elements of the decision as enhancing

• Mutual restraint, not interim
restraint;

• The goal of the Geneva negotia
tions— significant nuclear weapons
reductions— not the continuing increa
allowed under SALT II;

• The relevance of warheads and
throw weight as measures of delivers
nuclear power, not launchers, the pri-
mary unit of account of SALT II; and

• A responsible U.S. response to
unresolved Soviet arms control agree
ment violations.

The Secretary pointed to flat stat
ments of the President in his May 27
statement about what we would not c

I do not anticipate any appreciable
numerical growth in U.S. strategic offens
forces. Assuming no significant change in
threat we face as we implement the strati
modernization program, the United Staes
not deploy more strategic nuclear deliver;
vehicles than does the Soviet Union. Furt
more, the United States will not deploy rr
strategic ballistic missile warheads than d
the Soviet Union.

The consequence of the Presidem
decision is to shift gears away from a
increasingly obsolete standard of
limiting increases to a policy which p>
mits us to defend ourselves, deter So
aggression, and offer the prospect of
real mutual restraint at the lowest pc
ble level of forces. The President's
message is one of restraint and
reductions.

In addition, we face very serious
budgetary constraints, and it makes i
economic sense for us to tear down
effective deterrent systems while the
Soviet nuclear buildup continues. For
example, the Soviets have gone from
about 5,000 to about 9,000 warheads
under SALT II.

From now on, U.S. restraint wil
based on the nature and magnitude o
the Soviet threat. If the Soviets take
constructive steps in arms control by
end of the year, the President will tai
that into account. No decisions have
been made on the retention of indivic
U.S. systems. If the Soviets exercise
restraint, the President will exercise
restraint when we reach the next
modernization milestone. But, if the
President should decide to dismantle
strategic systems, it will be a result c
his assessment of U.S. national secur
in the light of what the Soviets do an
not because of an obsolete limit.

■^t ^f Ctofo R, ll

EUROPE

Whether SALT is dead or alive is a
i game that misses the real issue. I
assure you that, for our part,
:-aint is alive. We continue to encour-
the Soviets also to exercise restraint
take constructive arms control
s.

s Control Negotiations

uld like to take this occasion to see
re we are across the range of arms
rol negotiations with the Soviets,
since the beginning of the year, the
ets have made a number of arms
rol proposals. By and large, these
losals have done little to resolve the
rete obstacles that have impeded
;ress at the Geneva negotiations,
ntly, however, the Soviets have
e several proposals responding to
moves of last November and
"uary.

We are studying these proposals
>usly and weighing them carefully to
rmine whether they build on areas
mvergence and help to move the
itiations forward. Until our analysis
mplete, I do not want to character-
he proposals in any way, either neg-
:ly or positively. It is also important
we preserve the confidentiality that
cessary if we are to move forward.
We will want to determine whether
Soviet moves lead toward an agree-
t that meets our standards— one that
fectively verifiable, that provides for
) reductions, and which promotes
ter strategic stability.
In START [strategic arms reduction

, we seek deep and stabilizing
ictions, particularly in ballistic
lie warheads and throw weight.
In the INF [intermediate-range
ear forces] framework, our goal
ains the total elimination of all U.S.
Soviet LRINF [longer range inter-
iate-range nuclear forces] missiles,
we are also ready to negotiate on the
s of our November proposal, which
Id provide for an interim agreement
itly reducing these missiles on a
al basis. An INF agreement must
i account of the threat that we and
allies face from SS-20s deployed in
iet Asia. A U.S. -Soviet agreement
lot contain constraints on British
French nuclear forces, and an agree-
it must restrict short-range INF so it
lot 1 >e increased to substitute for
NF.

In the defense and space negotiating
xp, we continue to press for serious
ussion of ways that greater reliance
strategic defense can enhance
lility.

East Berlin Volkskammer Elections

DEPARTMENT STATEMENT,
JUNE 9, 1986'

( In .lime S, 1986, the authorities of the
German Democratic Republic (G.D.R.)
held elections in which deputies from the
Eastern sector of Berlin were directly
elected to the G.D.R. Volkskammer. The
Governments of France, the United
Kingdom of Great Britain and Northern
Ireland, and the United States of
America will present, in Moscow, a for-
mal diplomatic protest to the Soviet
Government concerning this action.
The procedure under which the
Eastern sector of Berlin directly elects
representatives to the Volkskammer,
and thereby treats this sector as if it
were part of the territory of the G.D.R..
is in contradiction with the wartime
status of the special Berlin area, and
accordingly, also in contradiction with
the Quadripartite Agreement of Septem-

ber :■'., 1981, which applies to the whole
of Berlin.

The Governments of France, the
United Kingdom, and the United States
have publicly stated on many previous
occasions that the status of the special
Berlin area cannot be modified
unilaterally and that they will continue
to reject all attempts to put in question
the rights and responsibilities which
France, the United Kingdom, and the
United States retain relating to Ger-
many as a whole and to all four sectors
of Berlin. The three allied governments
reaffirm that no unilateral decision
taken by G.D.R. authorities can alter the
legal situation of Greater Berlin. The
three governments will continue to exer-
cise their full rights and responsibilities
in Berlin.

'Made available to news correspondents
by Department spokesman Bernard Kail). ■

European Communities'
Agricultural Markets

WHITE HOUSE STATEMENT.
JULY 2, 1986'

The President announced today that a
provisional agreement has been reached
to keep European Community (EC)
agricultural markets open to I'.S.
exports. The agreement was reached
after the United States threatened
retaliation in the face of proposed EC
tariffs in connection with the expansion
of the EC to include Spain and Portugal.
This agreement is important for
American farmers in that it will allow
U.S. exports of corn and sorghum to
Spain to continue while further negoti-
ations arc conducted under the General
Agreement on Tariffs and Trade.

The ['resident applauds the EC's
flexibility in helping to avert a con-
frontation on this issue. He also con-

gratulates U.S. Trade Representative
Clayton Veutter and Agriculture
Secretary Richard Lyng for skillfully
negotiating this interim solution. He
believes this arrangement will enhance
the Administration's policy of expanding
trade through reduced protectionist bar-
riers and increased fairness for U.S.
exporters.

The dispute arose over new EC
measures which took effect March 1 .
which had the potential of restricting
over $t'.l)(i million in U.S. farm exports to
Spain. On March 31 the President
announced his intention to take action
against the new restrictions absent prog-
ress with the EC in resolving the
dispute.

'Text from Weekly Compilation of
Presidential Documents of Julj 7. 1986.1

In MBFR [mutual and balanced force
reductions], NATO's December move
made several major concessions in order
to break the 13-year deadlock in the
Vienna talks. It adopted the basic
framework for agreement proposed by
the East last year; so we are now
negotiating from the same script. It also

dropped the longstanding requirement
for data agreement on Eastern force
levels prior to reductions, which the
Soviets have long claimed to be the main
barrier to agreement.

We are thus disappointed that, in
disregard of these important steps, the
Eastern response merely resurfaced old,

llomhor 1 QAfi

EUROPE

unacceptable pro\ i ion from previous
proposals, with no progress on key
verification issues. Despite [Soviet
General Secretary] Gorbachev's Janu-
ary 15 commitment to accept reasonable
monitoring in MBFR, the Soviets con-
t mued to insist on purely voluntary
on-site inspection, and even backtracked
on some verification measures.

The purpose of the CDE [Conference
on Confidence- and Security-Building
Measures and Disarmament in Europe]
talks in Stockholm is to negotiate
verifiable confidence-building and secu-
rity measures. These won't control arms
or limit their use. The U.S. -NATO goal
is to establish a regime to increase
transparency in European military activ-
ities. We want to require all states with
European military activities to notify
other states that they will be having
exercises and to invite observers. We are
also asking for an exchange of calendars
of planned activities 1 year in advance.
But the crux of the matter is verifi-
cation, especially of questions raised by
unannounced military activities. It would
be worse to have an unverifiable set of
confidence- and security-building meas-
ures from Stockholm than no concluding
document. Today, it is difficult to tell
what Stockholm's prospects are. The
conference adjourns September 19.

In a more sweeping approach to con-
ventional arms control in Europe, on
April 18 Gorbachev called for substantial
reductions in ground and air forces of
European states, and relevant U.S. and
Canadian forces, from the Atlantic to
the Urals. Reduced units would be
disbanded, and armaments would be
destroyed or returned to national terri-
tory. June 11 Warsaw Pact elaboration
called for alliance-to-alliance cuts of
100,000-150,000 on each side within a
year or two, followed by further cuts in
"'"in id and tactical air forces to about
I 'clow current levels by the early
1990s.

At last month's NATO meeting in
Halifax, alliance foreign ministers
reaffirmed their goal of strengthening
stability and security in the whole of
Europe from the Atlantic to the Urals
through increased openness and the
establishment of a verifiable, comprehen-
sive, and stable balance of conventional
forces at lower levels. To work urgently
toward the achievement of this goal,
NATO ministers set up a high-level task
force on conventional arms control. The
work of that group will address the
recent Warsaw Pact proposal.

In the chemical weapons ban
negotiations in the Geneva Conference

on Disarmament (CD) we are pressing
for a substantive Soviet response to our
proposals on key verification issues, par-
ticularly challenge inspection. Moscow's
purely voluntary approach on challenge
inspection contrasts with the majority of
CD members' views on the need for a
stringent obligation to accept inspection.
On April 22, the Soviets fleshed out
Gorbachev's earlier remarks on chemical
weapons production facilities, including
the systematic on-site inspection of their
destruction. We welcomed this elabora-
tion, but details need to be ironed out
and other key verification issues
addressed.

Broader U.S. -Soviet Agenda

The President commented upon his
return from Geneva last November that
U.S. -Soviet relations seemed to be
headed in the right direction, but that
there would be hard work ahead.

Since the summit, there has been
some progress in the bilateral area. The
Soviets have taken several welcome
steps on humanitarian cases, although in
highly selected areas of their very
deficient overall record on human rights.
Our exchanges on regional issues have
continued, although we still see no sign
of Soviet readiness to seek negotiated
solutions to regional conflicts that con-
tinue to damage East- West relations.
Progress on arms control as I have
outlined has been disappointing,
especially in light of the agreement at
the summit to accelerate the work of the
nuclear and space talks in Geneva.

Prospects for Summit

The Soviets have reaffirmed their inte-
rest in a 1986 summit, to which they
agreed at Geneva, but have yet to pro-
vide the date. Moreover, the Soviets
have so far declined to hold a meeting
between Secretary Shultz and Foreign
Minister Shevardnadze, despite their
commitment at the Geneva summit to a
regular dialogue between the foreign
ministers.

We continue to believe that a
summit in the United States this year,
and meetings between the foreign
ministers to prepare for it, could foster
progress on the whole spectrum of the
U.S. -Soviet agenda: arms control,
regional questions, human rights, and
bilateral issues. We are proceeding on
the assumption that the 1986 summit
will be held as the Soviet Union and we
agreed at Geneva.

Romanian Most Favored Nation
Decision

The President, under the terms of the
1974 Trade Act, submitted a determi-
nation to Congress on June 3 that MF
[most favored nation] trade status be-
renewed for Romania, Hungary, and t
People's Republic of China.

As the President stated in his meg
sage to Congress, and as Counselor
[Edward] Derwinski testified on June
to the House Ways and Means Sub-
committee on International Trade, th<
decision to renew MFN for Romania \
a difficult one but, on balance, our int
ests are served by renewal. The
President determined that there was
substantial emigration from Romania-
the criterion established by the
Jackson-Vanik amendment— and that,
a relationship which includes MFN, w»
can have some modest influence
generally over Romanian human right
performance. Recent releases of polit
and religious activists from prison, am
announcement of a general amnesty 1
political prisoners, are examples of th
influence.

We are concerned about keeping
faith with the several thousand
Romanian citizens who have declared
desire to emigrate to the United Stat(
and are qualified, under U.S. law, to
come here. We also are determined tc
exert whatever influence we can to
moderate Romanian abuses of human
rights in other areas, particularly in t.
area of religious expression. As had a
the Romanian record in this area is, w
judge that it would become even wors
we abandon the one tool that has pro-
vided us with some leverage.

Controls at Berlin Sector
Crossing Points

On May 26 the G.D.R. [German
Democratic Republic] attempted to
impose new controls at the sector line
which divides Berlin. What the G.D.R
wanted to do was to control the pass-
ports of diplomats who live in East
Berlin as they cross into the West, an:
to demand visas of diplomats who live
West Berlin as they cross into the Ea:
on day trips. In both cases, this would
have constituted a change in the exist
situation in Berlin and was a clear
attempt to erode further the principle
free circulation in Greater Berlin.

We regard Berlin as one city unde
four power administration. We take tl
view that the G.D.R. has no competen
for matters affecting Berlin, and we
have never recognized G.D.R. efforts

DeDartment of State Bull!

EUROPE

iform the sector line in Berlin into
ternational border. We maintain the
:iple of freedom of circulation within
ter Berlin, and we adhere to the
:iple contained in the Quadripartite
:ement that changes in the existing
tion in the city can only be made
the agreement of the four
>rs— the United States, the United
dom, France, and the Soviet Union,
slow, the key to dealing successfully
this kind of thing is united action by
Vestern countries. I am happy to

t that Western solidarity in
ting the G.D.R. attempt has been
good. Western diplomats in East
n have refused to surrender their
sorts to the G.D.R. guards at sector
ing points, and they and their
ies have put up with considerable
ivenience in temporarily losing easy

s to West Berlin. They have had to
| a very long circuitous trip around
ity to a recognized international
ing point, which is particularly dif-

for individuals who work in the

and for children who go to school

it the NATO ministerial meeting in
ax the British, French, and
rican foreign ministers agreed on a
se "t action which resulted in
saches to the Soviets, both in Berlin
n Moscow. A number of other
;ern governments also voiced objec-

to the G.D.R. and the Soviets.

he result of our efforts was that the
R. very quickly rescinded its new
inds for British, French, and
rican diplomats in East Berlin. We
nued our efforts on behalf of those
tries which were maintaining
arity with us. So, the G.D.R. then

unced that the measures it had
red earlier had been "temporary,"
hat new tamper-proof diplomatic
ification cards would be issued to
mats in East Berlin for use in cross-
rto the West. These new cards are
issued this week, and we will
i very carefully to ensure that they
;itute a return to the status quo

Ve are not completely out of the
s yet. There remains the question
I G.D.R. attempt to demand visas
diplomats in West Berlin going on
rips into the East. As necessary we
ontinue our approaches to the
■ts in conjunction with our allies.

Spanish Security Negotiations

Secretary Shultz and Spanish Foreign
Minister Fernandez Ordonez cochaired
the annual meeting of the U.S. -Spanish
Council in Washington on May 27. They
had friendly, productive private discus-
sions over lunch and during a private
meeting. The main outcome of the
meeting was agreement to begin
negotiations for renewing our bilateral
basing rights agreement in Madrid on
July 10. In accordance with a joint state-
ment issued in Madrid last December,
the negotiations will also address 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
currently undertaken by U.S. forces in
Spain, while maintaining the overall
defensive capabilities and level of
security for both countries and their
allies."

■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. ■

U.S. -Yugoslav Relations

by Michael H. Armacost

Address before the U.S. -Yugoslav
Economic Council in Cavtat, Yugoslavia,
on June .'. WSti Ambassador Armacost
is Under Secretary for Political Affairs.

I am pleased to join your annual
meeting. The council has done much to
promote expanded trade between our
two countries. Cavtat richly deserves its
reputation as an exquisite location in a
beautiful country. I am sure I speak for
all the American guests present in
thanking our Yugoslav hosts for your
warm hospitality.

This council naturally devotes itself
to the further development of trade.
Your work also symbolizes a broader
shared purpose: the efforts that two
countries with different economic and
social systems are making to strengthen
their relationship and learn more about
each other. The success of our efforts is
closely connected to the vitality of our
respective economies as well as to our
responses to the global economic and
political challenges we face.

Let me comment briefly on:

• U.S. -Yugoslav relations:

• The U.S. economic situation,
global economic issues, and expanding
U.S. -Yugoslav trade; and

• Our approach to broader issues
bearing on our bilateral relationship.

Historical Perspectives

Less than a month ago, on the
anniversary of V-E Day, Yugoslavia's
dead of two world wars were honored in
wreath-laying ceremonies at the tomb of
Yugoslavia's unknown soldier. Designed

by the great Croatian sculptor, Ivan
Mestrovic, this dramatic mausoleum on
top of Avala Mountain, near Belgrade, is
flanked on all sides by huge marble
statues of the various ethnic peoples of
Yugoslavia. Silhouetted tall anil defiant
against the sky, these statues symbolize
Yugoslavia's firm determination to
defend its hard-won independence
against any attacker.

Few countries have suffered as
greatly at the hands of foreign invaders
as has Yugoslavia. No country has
resisted more heroically. And Yugo-
slavia has always been liberated by
Yugoslav patriots themselves.

As Americans, we are proud to have
been allied with Yugoslavia in both
world wars. We are proud to have had a
role in the creation of the modern nation
of Yugoslavia after World War I. And
we are pleased that, since the end of
World War II, we have steadfastly
supported Yugoslavia's independence,
unity, and territorial integrity.

Our bilateral relationship has moved
through a number of phases in the past
40 years. It is, today, comprehensive
and fruitful. It has been marked by the
exchange of high-level visits. During the
Reagan Administration, Vice President
Bush, Secretaries [of State and of
Defense] Shultz and Weinberger, and
the former Chairman of the Joint Chiefs
of Staff, General Vessey, have visited
this country. President of the Presi-
dency Spiljak and Prime Minister
Planinc have come to the United States.

We have very strong cultural,
educational, and scientific exchanges.
These have been bolstered by the
Fulbright agreement we signed in 1004
and by our cooperative scientific

Etember 1986

EUROPE

research program, jointly funded at
almost $1 million annually. These
exchange programs with Yugoslavia are
among the largest we have with any
country in the w oriel.

Our peoples also have longstanding
tics. Some 2 million Americans in all
regions and all walks of life trace their
ethnic roots to Yugoslavia. The second
largest Slovenian city in the world is
Cleveland, Ohio; the current Governor
lit' Minnesota, Rudi Perpich, is of
Croatian descent. And increasing
numbers of American tourists— more
than 50,000 in 1985— are enjoying their
holidays in your beautiful and
interesting country, particularly your
glorious Adriatic coast.

And. of course, our economic
relations continue to grow. During 1985,
our total bilateral trade reached $1.2
billion. Before dwelling at greater
length on U.S.-Yugoslav trade ties,
however, let me say a few words about
the U.S. economic situation and about
our global economic policies.

A Market-Oriented Approach

In today's interdependent world, where
economic success depends upon rapid
communications and highly motivated
and productive labor forces, market-
oriented economic policies are the key to
sustained economic growth. The
countries that have prospered in the last
decade have shared a reliance on such
policies. Their peoples work; they save;
they invest; they export. Above all,
these countries unleash the creative
energies of their people.

These successful countries have
relied primarily on markets to set
interest rates and prices and have
maintained appropriate exchange rates.
They have encouraged private initiative,
avoided excessive governmental regula-
tion, and provided adequate incentives
for productive investment. They have
also avoided excessive government
consumption.

Our own recent experience is well-
known. In the late lilTOs. our economy
was plagued by "stagflation"— a
combination of low overall economic
growth and high inflation. High
government consumption required high
taxes, which reduced savings, removed
incentives for productive investment,
and produced a high rate of unemploy-
ment. President Reagan came to office
convinced that a new approach was
needed, and he proceeded quite quickly
to reduce government expenditures,
taxes, and governmental regulations.

The results of that approach are now
evident.

• The American economy is in its
fourth consecutive year of expansion.

• About 10 million new jobs have
been created.

• Inflation is running at less than
A'/i '■ , and interest rates are at their
lowest levels in almost a decade.

• Prospects for continuing, buoyant
growth this year and next are good.

In some areas, we clearly need to
make more progress. Our Federal
budget deficit is one area in which
progress is particularly required.
Interest rates are another. Though
falling, they are still too high. Our trade
deficit is a third. Last year, it reached
$148 billion— more than enough to raise
intense protectionist pressures in our
( '(ingress.

A number of hopeful global economic
trends should help reduce this deficit,
among them reduced oil prices.
depreciation of the dollar, and strong
economic growth in other industrialized
countries. Nonetheless, we recognize
the need to act vigorously to eliminate
these weak spots in our economic
performance.

We are encouraged by the fact that
other countries— including Yugoslavia,
with its unique brand of socialism— have
also placed greater reliance on market-
oriented policies. Following the passage
and implementation of its long-term
program of economic stabilization,
Yugoslavia has made great strides
toward rationalizing investment
decisions, adjusting domestic interest
rates sufficiently to take inflation into
account, realigning the dinar realisti-
cally, and, above all, promoting an
export-oriented policy.

As a result of these policies,
significant progress in economic
stabilization has occurred, although
continued high inflation and unemploy-
ment still require some degree of
austerity. At the beginning of HIS:;,
Yugoslavia was running huge balance-of-
payments deficits; it was on the brink of
being unable to pay its foreign loans.
Through strenuous efforts and a
measure of economic hardship, you have
managed to turn a 1982 hard currency,
current account deficit of $1.6 billion
into 3 years of successive surpluses.

This reversal of Yugoslavia's trade
deficit has had a positive impact on your
debt position. You have been able not
only to remain current on your foreign
debts but also to begin reducing your
debt. You are one of the very few major

debtor countries to do so. The recent I
signing of both commercial bank and
official rescheduling agreements reflec
increased confidence in Yugoslavia's
economic performance. These agree-
ments set the framework for
Yugoslavia's debt rescheduling throud
1988. In addition, for the first time si
1979, Yugoslavia will not have an IMd
[International Monetary Fundi standb
program but, rather, an enhanced
surveillance arrangement. The Unite!
States, together with many other
countries, is pleased to have helped
provide appropriate financial assistani
to Yugoslavia during this difficult
adjustment period.

The recent Tokyo summit put
support for developing country
adjustment policies high on its agendj
Measures endorsed by the summit
included Treasury Secretary Baker's
"Program for Sustained Growth," an
early and substantial eighth IDA
I International Development Associate
replenishment, and implementation or
the IMF's new structural adjustment
facility. All these efforts recognize th<
need for both developed and develop!
nations to implement effective
adjustment policies. Without reforms-
such as the development of more
efficient capital and equity markets;
rationalization and privatization of pu
enterprises; liberalization of foreign
trade and investment policy; anil
reduction of subsidies, price controls,
and corruption— no amount of externa
financing can sustain growth.

An Open World Trading System

Beyond sound domestic economic
policies, we believe economic growth
depends on the maintenance of a freei
and open world trading system. HisU
shows that periods of trade liberaliza-
tion lead to increased economic growl
Unhampered trade promotes a mutua
profitable international division of lab
enhances the potential real national
product of all countries, and makes
possible higher standards of living all
around the world.

The international community has
made enormous progress in reducing
traditional trade barriers during the
past 40 years. The Kennedy Round
reduced tariffs in nonagricultural
products by about 35%, and the 1979
Tokyo Round reduced tariffs, on the
average, by 33%. These cuts contribu
to the substantial increase in world
trade that occurred during this same

fi2

Yugoslavia— A Profile

EUROPE

(graph y

i: 255,804 sq. km. (99,000 sq. mi.); about
<ize of the State of Wyoming. Cities:
itaJ-Belgrade (pop. 1,300,000). Oth, <r

s-Zagreb (700, I, Skopje (440,001)),

|evo (400.000), Ljubljana (300,000). Ter-
: One-third lowland hills and plains, with
linder mostly mountainous. Climate:
st. hot in summer, rainy and mild in
er; inland, warm in summer, cold in
er.

"V-^^N

V. CZECH V-s^,

_/ S0WET 1

IHfON

-\*™/ HUNfiARY

r \A Belgrade

ROMANIA

S%.. YUG0SIA

\ N — -\ & SI

1 BULGARIA

^s VN> AIB4»!A\

j-^"^ ^rT—L-s

SflEECE ° U

■*

pie

tonality: Noun and adjective—
nslav(s). Population (July 1985 est.):
B?,000. Annual growth rate: 0.7%
nic groups (clearly defined. 1981 census):
Hi 36.2%, Croats 19.7%, Bosnian Muslims
), Slovenes 7.8%, Albanians 7.7%,
pdonians 5.9%, Yugoslavs 5.4%, Montene-
k 2.5%. Hungarians 1.9%, Gypsies .7%,
ks .."/;, Slovaks .4%, Romanians .2%,
penians/Ukrainians .2%, Other 2%.
jgions: Eastern Orthodox (Serbian and
Edonian) 41%, Roman Catholic 32%,
lim 12%, other 3%, none 12%.

Languages: Serbo-Croatian, Slovenian,
Macedonian (official); Albanian, Hungarian,
Italian. Education: Attendance— 99%
(primary school, 1979). Literacy— 90%.
Health: Infant mortality rate
(1983)-31.7/1,000. Life expectancy-men 68
yrs., women 73 yrs. Work force (19,s4): 9.7
million. Nonagricultural— 6.4 million.
Agricultural— 2.3 million. Unemployed— 1.0
million.

Government

Type: Federal Republic. Independence:
December 1, 1918. Constitution: February
1974.

Branches: Executive— president of the

Presidency (chief of state) rotated annually
from among the collective body. Premier
(head of government and president of the
Federal Executive Council, 4-yr. term).
Legislative— bicameral Federal Assembly
(308 delegates) : Federal Chamber, Chamber
of Republics and Provinces; Federal Execu-
tive Council (Cabinet; Assembly's executive
arm). Judicial— Constitutional Court, Federal
Supreme Court.

Administrative subdivisions: 6 republics,
2 autonomous provinces.

Political party: League of Communists of
Yugoslavia. Suffrage: Universal over 18.

Defense (1983 est.): 5.2% of GNP.

National holidays: New Year's Day,
May Day (May 1-2), Fighter's Day (July 4),
Day of the Republic (Nov. 29-30).

Flag: Blue, white, and red horizontal
stripes with a centered five-pointed red star
edged in gold.

Economy

GNP (1984): $46.3 billion. Annual growth
rate (1983-84): 1.7%. Per capita GNP (1984):
$2,017. Avg. inflation rate (1984): 57%.

Natural resources: Coal, copper, bauxite,
timber, iron, antimony, chromium, lead, zinc,
asbestos, mercury.

Agriculture ( 10'i of GDP): Products-
corn, wheat, tobacco, sugar beets, livestock.
Land— 6995 arable, 339i of which is plowland.

Industry U7', of GDP): Types-wood,
processed food, nonferrous metals.
machinery, textiles, leather goods,
construction.

Trade (1984): Exports- $10.2 billion:
agricultural products (including processed

•re. leather goods and
shoes, textiles, ships, mineral ores, metal
products, tobacco. Major markets— USSR,
Italy, FR(i, Czechoslovakia, US.
Imports— $12 billion: machinery and metal
products, chemicals, iron, petroleum, coking
coal, steel, agricultural products. Major
sowrces-USSR, FRG, Iraq, Italy.

Official exchange rate (July 1985): 285
dinars = US$1.

Economic aid received: Total
(1945-76)-$5 billion. t7S aid (1949-65)-$2.9
billion, including $700 million in grant
military assistance (1951-59). US economic
aid ceased on January 1, 1967.

Membership in International
Organizations

LIN and its specialized and related agencies,
including the International Monetary Fund
(IMF), the World Bank, the International
Atomic EnergJ,' Agency (IAEA), and the
General Agreement on Tariffs and Trade
(GATT); Council for Mutual Economic
Assistance (CEMA, observer status);
Organization for Economic Cooperation and
Development (OECD); Nonaligned Movement.

Taken from the Barkijninml Notes of October
1985. published by the Bureau of Public
Affairs. Department of State. Editor: Juanita

Vlams. ■

Milt

All

it. 'ii
line.
uiii

•Hid

vh.

u -
.•h

Between 1961 and 1984, world
rew by H'i each year; world
by V r each year.
nal ions share a stake in
ning and strengthening this
system. We in the United States
ly do. In recent years, however,
ionist pressures have increased
the world. The strongly
ionist trade bill recently passed
U.S. Umise of Representatives
that even the American market,
we regard as the most open in

the world, is not immune. Huge trade
deficits and a perception that trade is
not free and fair have fueled popular
outcries I'm- a legislative remedy.

The Reagan Administration does not
believe protectionist measures are the
answer to trade problems. Indeed, the
President has pledged he will veto such
legislation. Internationally, protection-
ism in one country risks fueling protec-
tionism in other countries— to the
eventual disadvantage of all. Domesti-
cally, trade restrictions will only raise

the cost of production and the cost of
living. In the end. such measures will
not save jobs.

Major efforts are required to
strengthen and preserve the world
trading system. All countries will need
to join in effective negotiations to
dismantle unfair trade barriers,
eliminate subsidies and other unfair
trade practices, open markets even
further, and strengthen the General
Agreement on Tariffs and Trade
(GATT).

R"X

EUROPE

The Tokyo summit agreed on a
number of measures to safeguard the
open trading system and prospects for
t'ui ure world growth. To address the
underlying causes of trade imbalances, it
agreed on measures to improve coordi-
nation of economic policies among the
seven summit nations and to promote
stronger and more balanced growth and
greater exchange rate stability.

To preserve the trading system, the
summit strongly supported the early
launching of a comprehensive new round
of multilateral trade negotiations in the
GATT. Comprehensive negotiations are
needed to resolve traditional issues of
market access of agriculture as well as
to address new issues such as services,
intellectual property rights, and
investment.

Such negotiations can provide
substantial benefits to countries like
Yugoslavia. Yugoslavia has a very
important service sector— namely,
tourism— a keen interest in attracting
new foreign investment in joint
ventures, and a formidable ability to
incorporate Western technology into
Yugoslav enterprises.

We look forward to regular
consultations as preparations for the
new GATT round proceed.

Expanding U.S. -Yugoslav
Bilateral Trade

Bilateral trade is an important
component of our bilateral relationship.
To facilitate this trade and to
strengthen the Yugoslav economy, the
United States has taken an active role
in financial support for Yugoslavia since
1983. A $1 billion Eximbank [Export-
import Bank] program in Yugoslavia
supports U.S. exports of passenger
aircraft, nuclear power technology, and
many other kinds of equipment.
Likewise, the Commodity Credit
Corporation has announced $1(111 million
in fiscal year 1986 credit guarantees for
Yugoslav purchase of U.S. agricultural
products.

President Reagan reaffirmed our

support for increased trade during the
visit of your Prime Minister to
Washington in May 1985, as did
Secretary Shultz when lie visited
Belgrade last December. Though the
general trend has been positive, exports
in both directions can still increase
significantly.

The U.S. market n\'\'rv* Yugoslavia
great potential. Expansion into this
market requires skillful marketing, high
quality control, and effective servicing.

These are all skills we have encouraged
our Yugoslav trading partners to
develop over the years. And the
prospects are encouraging— for example,
the strategy for marketing Yugoslav
automobiles in the United States
combines Yugoslavia's comparative
economic advantage in labor and
industrial production with U.S.
marketing know-In iw.

The presence today of many Ameri-
can businessmen and hankers indicates
the significant potential for expanding
U.S. exports to Yugoslavia. Joint
ventures offer good potential for
increasing exports in both directions and
to third markets. We are delighted that,
since the 1984 Yugoslav joint venture
law was enacted, 11 U.S. firms have
signed joint venture agreements with
Yugoslav enterprises. We hope the
Yugoslav Government will seriously
consider additional changes in the law,
as suggested by this council, to
stimulate still further agreements.

Energy is a potentially promising
sector. U.S. industry is a world leader
in the development and transfer of
peaceful nuclear technology. Our govern-
ment fully supports U.S. industry's
further involvement in the Yugoslav
nuclear power program, including its
proposed second nuclear power project
at Prevlaka. Under the government-to-
government umbrella for peaceful
nuclear cooperation, U.S. industry is
willing to transfer technology and know-
how to improve Yugoslav industrial
capabilities.

We also welcome opportunities to
improve consultation about nuclear
safety. The Chernobyl nuclear accident
underscored both the importance of
nuclear power and the responsibility of
user nations to adopt adequate safety
precautions and provide prompt and
detailed information on accidents. The
United States and other countries have
called on all nations to improve their
cooperation in the International Atomic
Energy Agency.

Our opportunities for expanded
trade relations should stimulate our
mutual resolve to overcome any trade
frictions that exist between us. We have
worked together in the past; we will
work together now. In 1985, we
confronted a number of bilateral trade
disputes. Through constructive negotia-
tion, we worked in a spirit of mutual
compromise to extend and enlarge the
bilateral textile and apparel agreement
and establish a 5-year voluntary
restraint agreement on steel.

American concerns for intellectual
property rights and market access an;
Yugoslav desire to maintain beneficia
status under the U.S. generalized
system of preferences (GSP) are curn
issues between us. As with other
countries, U.S. industry has made
formal complaints about certain
Yugoslav laws and practices relating
market access and the protection of
intellectual property. As required by
U.S. 19K4 Trade Act, President Reag
is now reviewing relevant practices o
all GSP beneficiary countries. As thei
ninth largest GSP user, Yugoslavia h
argued that continued GSP beneficial |
status is important to its ability to
expand exports to the United States^
We have recently held consultations ■
these difficult issues and are confider
further progress can be made in furt
talks.

Scourge of
International Terrorism

A common element of the economic
policies I have discussed is openness*
openness in our system of trade,
openness in discussion of growth and
debt issues, and openness in individu
transactions between trade partners.

The institutional harriers to
openness in our economic relations—
whether national, social, or cultural i:
nature— are formidable, but they are
surmountable. In recent years, we hi
discovered a new barrier to openness
refer to the scourge of international
terrorism. Neither the United States
nor Yugoslavia has been a stranger c
this evil. Indeed, nationals of both ou
countries have been victims of it.

The frequency, variety, and
geographic scope of terrorist activity
are growing. Our European and
Mediterranean friends and allies are
increasingly bearing the brunt of
terrorist attack. More vulnerable tarji
are being selected. And the heavy
economic costs of deterring terrorism
are becoming more and more apparel
The high cancellation rates on some
airline routes is a vivid sign that
tourism and tourist-related industries
have been dealt a severe economic bl
We trust it is a transitory blow.

The support that some states ndj
brazenly lend terrorists is a new
phenomenon. When states offer
terrorists financial, rhetorical,
intelligence, and logistical support, tl
encourage the violation of every rule
civilized behavior. When states perm:
terrorists to strike innocent citizens

» «* o*^

EUROPE

hiding behind the diplomatic
etions of the Vienna convention,
permit those privileges and
inities to be used for acts in
mnental contradiction to their
t.

fe are determined to fight terror-
nth all the means at our disposal,
hink other nations increasingly
1 that resolve.

he Tokyo summit statement on
national terrorism codified
i'ment on specific measures aimed
rrorists and states that support

and identified Libya as one such
. Our government condemns the
is of any state that supports
national terrorists directly or
>ctly. We call on all states to join
iisinu terrorists transit and in
ng them safe haven or access to
iry training with terrorist
Rations. Our governments have held
1 discussions on ways to improve
ilateral cooperation against
rism; we look forward to further
ictive consultations.

lusion

ne conclude where I be^'an— with
servation on the new global
cal and economic challenges we
Political and social changes,
ed by the onrush of scientific and
raogical developments, are shifting
alance of wealth and power among
is. We live in an "information
We think this favors market-
ted societies which provide the
tives and flexibility necessary to
sh the creative productivity of
people. It offers great
•Utilities for societies to engage in a
ally beneficial flow of goods,
:es, and ideas. It puts societies,
to each other and open to the
I, in a position to choose the course
iath best suited to their interests
ircumstances.

re recognize the unique position
slavia holds by virtue of its
aphy and history. Yugoslavia's
endence and nonalignment
vely shape our bilateral
onship. Independence has been
slavia's tradition; it will also be
future. However, that independ-
also depends, in large measure, on
laintenance of the strategic balance
en East and West. As a key
igned country, Yugoslavia has an
•tant role to play in helping to
ain the integrity of the Nonaligned
ment. Such a role contributes to
West stability and to world peace.

We have been heartened by the
expansion of our bilateral relations over
the past 4 years. We look forward with
confidence to building on this sound
basis as we work closely with the new
Yugoslav Government headed by Presi-
dent of the Federal Executive Council
Branko Mikulic.

Your presence today testifies to the
breadth and benefits of the relationship

between our two countries. We trust
the LT.S.-Yugoslav Economic Council and
the Yugoslav Chamber of the Economy
will continue to complement the efforts
of our two governments. We wish you
well in identifying and realizing new
economic ventures. Speaking for the
I'.S. Government, I can assure you that
we will do all in our power to facilitate
them. ■

Bern Experts' Meeting on Human Contacts

Delegations from the 35 participating
stulrs of the Conference on Security and
( 'impcration (< 'S( 'El convened in Bern
April 15-May 27, 1986, as a meeting of
experts on human contacts. Th is was one
of sen nil subsidiary meetings mandated
by the 1980-83 Madrid CSCE followup
conference to review implementation of
the 1975 Helsinki Final Act.

Following are statements by Ambas-
sador Michael Novak, head of the U.S.
delegation, before the meeting of experts
on April 17 and May 27 and before the
Commission on Security and Coopera-
tion in Europe on June 18, by Assistant
Secretary for European and Canadian
Affairs Rozanne L. Ridgway before the
Commission on Security and Coopera-
tion in Europe on June 18, and the text
of the draft concluding document pro-
posed by the Western, delegations (the
NATO allies and Ireland).

AMBASSADOR NOVAK,
APRIL 17, 1986

The people of the United States, through
our delegation, would like to thank the
people of Switzerland, and with them the
Executive Secretary, and his every staff
person, for the generosity, the open-
heartedness, and the perfection of the
arrangements with which they have
welcomed us.

In this city, at every turn, the vir-
tues of the Swiss people are apparent:
dignity; a striving for excellence; a love
for intellect and the works thereof; an
instinct for the beauty of God's moun-
tains; and the creativity of humankind.
In this way, the ordinary people of
Switzerland— their laws, their traditions,
their habits of the heart— shed light upon
our mandate: "to discuss the develop-
ment of contacts among persons, institu-
tions and organizations."

In which country of the world are
contacts among persons, institutions,
and organizations developed to a higher

art? In which are human contacts so
international, open, orderly, and warm?
If all the world were Switzerland, the
burden of our mandate would be light.

Nearly 11 years ago, the dis-
tinguished Foreign Secretary of the
United Kingdom, then Sir Alec Douglas-
Home, threw down a challenge: "If we
do not improve the life of ordinary peo-
ple at this conference," he said of
Helsinki, "we shall be asked— and with
justice— what all our fine words and
diplomatic phrases have achieved." Ordi-
nary people. If we do not improve the
life of ordinary people, words are empty.
There remains a darkness in which many
millions cry.

Ordinary people are our subject
here. Ordinary people in their
ordinariness— with their spouses, their
children, their parents, their grand-
parents, and multiple relatives; the
cemeteries where the bones of their
ancestors lie and the shaded rooms in
which their sick languish; their sports
and travels; their friends and relatives
blown abroad upon the winds of war and
chance and choice; their professions; and
the deepest convictions of their hearts.

Ordinary people are our theme. Our
mandate is: to improve their lives. "To
discuss the development of contacts"—
that is, to seek improvement in their
contacts with other human beings and to
discern the impediments, obstacles, and
barbed wire walls; the tangles of law and
administrative breakdowns which inter-
rupt such contacts.

We act in the name of peace,
security, and cooperation in Europe and
these four go together: peace, security,
cooperation, and ordinary people in their
ordinary human contacts.

What do ordinary people want? It is
not so very much: ordinary liberty to do
ordinary human things, without any
state standing in their way. This is a
universal dream of all ordinary people
everywhere. It is a dream embodied.

ihnr 1 OQC

EUROPE

codified, set down in clear words, and
certified by 35 heads of state on the first

of August 1975, in Helsinki, Finland:
( (rdinary liberties for ordinary people.

In Moscow last February 25, General
Secretary Mikhail Gorbachev expressed
a portion of this dream in a few brief
"fundamental principles."
"In the humanitarian sphere:

" . . broader contact between
peoples for the purpose of learning about
one another; reinforcement of the spirit
of mutual understanding and concord in
relations between them ..."

"decision in a humane and positive
spirit of questions related to the
reunification of families, marriage and
the promotion of contacts between peo-
ple and between organizations. . . ."

This is one nation's view of the
universal dream. The dream is more
powerful than the views of any nation,
or of all nations. This dream does not
originate in states. It cannot be con-
tained by states. It is endowed in ordi-
nary people everywhere, by the deepest
and most powerful endowment.

This is the dream that haunts our
ever ancient, ever new European
civilization. For Marxists as well as
democratic capitalists, for believers and
nonbelievers, for all who speak the
languages of Europe, think the thoughts
of Europe, and give evidence in their
lives of the habits of Europe— for all
these, the roots of European culture lie
buried deep in these three convictions of
Judaism and Christianity.

• It is the vocation of Europeans (as
of all humans) to change history, not
merely to be passive before it.

• To meet this vocation, every
single human being has been created
fiee and responsible and is endowed with
unalienable rights to pursue the vocation
of human development to its fullest.

• To protect these rights, govern-
ments are formed among men to
improve the life of ordinary people,
through the consent of ordinary people.

General Secretary Gorbachev speaks
of a dialogue among "leaders of coun-
tries." It is also, far more deeply, a
dialogue among the world's ordinary
people. Everywhere, Europeans today
seek the intellectual roots of our com-
mon humanity, our common roots, at the
core of every European spirit.

This CSCE, this conference— this
institution of no fixed abode and no per-
manent staff and no permanent
budget— is fashioning a new Europe, and
persons of middling age (that is, most of

us in this room) have in our care the
nuturing of this Europe, during the next
14 years, until the year 2000, and into
the next, 21st century, hopefully to be
the most creative of all human centuries.

Indeed, a new era in human contacts
is already forming through technology,
which no government will be able to con-
trol. This technology is personal and
designed to obey individual will: personal
computers, word processors, video
cassettes, portable hand-held telephones,
and television communicators. It is now
possible to control carbon paper through
serial numbers. It is now possible to put
padlocks on copiers. But it would not be
possible for central authorities to control
the new personal media. Those who try
will enter obsolescence.

As we enter this new age, the test
for every nation will be: Does it improve
the life of ordinary people? Or does it
enter slow decline?

I have tried to sketch the dream that
unites all delegations in this room. Now I
must face the other way, toward reality.
The reality, alas, is not like the dream.

Let me put the matter as gently as I
can. About one American in ten has at
least one family root in Central and
Eastern Europe— some 23 million
Americans. One part of their growing
family tree spreads branches in America;
part grows still in Europe. Along such
family networks, through such human
contacts— by letter and by telephone, by
memory and sympathy, in ways both
straight and indirect— come jolting
shocks of reality.

Of all American citizens, those of
central and East European heritage find
it most difficult to exercise freely the
rights of human contact with their
families abroad. Our fellow citizens who
spring from Swiss or French, Italian or
Spanish, Irish or Norwegian— indeed,
from Latin American or African or
Asian— stock find almost no difficulties
in exercising free and open contact with
their families in their rodina (homeland)
of origin. Not so with us of Eastern or
central European stock.

We hear pleas from relatives of ours
in the Baltic states and Ukraine, among
others; pleas from relatives of ours in
countries in Eastern Europe; pleas from
relatives of ours among Jews in several
lands. We hear realities from thousands
upon thousands who seek to visit or to
move abroad, according to the choices of
their heart. To hear from such as these
is to pass from dream to reality.

Let me say a word about how our
delegation will proceed. The people of
the United States are a biblical people.
Like the Bible itself, we think naturally

in stories, in terms of individual cases.i
which are the foundation of the Comrri
Law. From time to time, our delegatic
will, quite naturally, mention the indi- 1
vidual cases of those whose dreams ha i
not yet been realized.

In this context, my delegation
honors the citizen monitors in so man;
countries who took the words of the
Helsinki Final Act with dreadful
seriousness. These brave men and
women— heros to the entire human
race— have bravely endured so much 1
more than any of us to make the drea (
of the Final Act the dramatic materia |
a new beginning. They have begun th<
task of making words of law deeds of (
flesh, of making dreams realities, of
turning solemn international commit-
ments into actual "decisions in a hum
and positive spirit."

The people of the United States a
also a family people. Families are dea
us, as is the multiplicity of freely chos
associations in which we live our daily
lives. Our hearts are especially drawn
the divided spouses, separated from e
other's arms for so many years. We a
touched by family members seeking ti
join that portion of their family tree t
freely choose.

This is not the occasion for details
Suffice it to say that many letters anc
calls make us aware of greater pain tl
words will express. Perhaps the realit
to which I speak is best expressed in 1
image President Reagan evoked in
dispatching me to Bern— an image of
great wall through the heart of Eurof
dividing Europe, symbolizing the rudt
interruption of normal human contact

In the 21st century, will that wall
stand? Will it be necessary? Will it
remain, as an affront to dignity, to
liberty, and to the ordinary human cot
tacts of ordinary human beings?

It is said at times that Europe is
today divided by two philosophies, twi
different social systems, two different
images of how human contacts should
exercised. On one side, it is said, are
those who believe that human contact
ought to be steered, ought to be con-»
trolled by the state for the interests o
the state. On the other side, it is said,
are those who believe that human con
tacts ought to spring from the soul of
every individual person, from choice,
from will, from self-determination:
human contacts of ordinary people, b\
ordinary people, for ordinary people.

Two different social systems, two<
different philosophies: suppose this
description true. What is never
addressed is why? How are these two
systems justified? In the night, in the

EUROPE

!s of Chekhov, one hears the sobbing
ahild. "Why?" the child asks.
)ur mandate is to "discuss the
lopment of contacts among persons,
;utions and organizations." We will,
:fore. discuss laws, regulations,
;s, and ways of acting. We will
iss these— both in dream and in
ty. We must discuss them with hope
oncrete improvements in the lives of
lary citizens— in the words of
iral Secretary Gorbachev: new
isions in a humane and positive
;." And we must discuss them face-
ce with reality. Many ordinary peo-
uffer in the dark.

)ur delegation intends to hear, and
ice, their pain. Above all, we look to
ter Europe soon— an open Europe,
rope without a wall, Europe free
fear: acting out in reality the
e, security, and cooperation to
h the Helsinki Final Act and the
"id concluding document committed
' us. We look to the scrupulous appli-
n of those commitments. All our
■ns have publicly affixed their names
em.

Ve thank every delegation for
ning this dream with us, facing
ty with us, so that all cooperating
:her, Europe may experience
ler. morally fuller, renaissance.

JASSADOR NOVAK,

'27, 1986

IOV2 years now, the Helsinki process
»ught to improve the lives of ordi-
people. In many respects, it has
?eded; human contacts are in several
is freer and more open than they
10 years ago. This is a precious
Alas, in other states, human con-
are in some respects worse,
beginning 8 weeks ago, all of us
nbled here pledged that we would
line those matters unblinkingly and
sut illusions. And so we did.
it Bern, my delegation discerns
i significant achievements,
^irst, there were the individual p.er-
helped, if not always precisely
use of Bern, nonetheless occasioned
ir meeting here. We do not have a
se count of the persons— but do
1 that they number nearly a
sand— earlier not permitted to be
ited with their spouses or children,
because Bern took place, have the
lise to be in the company of their
1 ones.

t was worth it, during these hard
:s in Bern, to play a small role in a

process that actually helped so many
persons. Would that there had been
thousands more!

Second, we had at Bern a
penetrating review of compliance and
performance. Anyone who reads the
Helsinki Final Act and the Madrid con-
cluding document feels immediately in
the presence of truly noble documents.
They have a visionary power. Yet the
real need at this point in history is not so
much for new documents as for com-
pliance with existing documents. The
test for the Helsinki process is not the
producing of new documents; the test is
compliance and performance.

Our debates here were honest; the
spirit was candid. We argued mightily
with one another. We showed clearly,
over and over, those places, those prac-
tices, and those methods by which the
noble ideals of Helsinki and Madrid,
affirmed on paper, are frustrated in
daily reality. Our implementation review
was one of the best, veterans of past
meetings have said, in CSCE history.

We heard countless sufferings
described. We heard how millions are
separated from human contacts, else-
where considered normal. We heard
many voices of pain. Our mail bags
brought us new materials every day.
There are fewer excuses for illusions
than there were 8 weeks ago.

The third great success of the Bern
meeting lay in an incremental growth of
a common European language, the
ancient language of our hearts and intel-
lects, our ideals and hopes. More and
more, the debates of CSCE create a
common body of thought for all of
Europe, a European conscience.

These are three great gains: indi-
vidual persons helped; a clear-eyed
examination of reality, without illusions;
and the slow raising of international
standards, according to a new common
moral language.

All these gains depend on words.
Words inspire them. Words guide them.
But in the end, only those words have
weight that embed themselves in reality:
that are complied with and put into
performance.

The words of this Helsinki process
are especially precious but also especially
fragile. They have highest value when
they are complied with. They gain their
wright from performance.

In recent years, many delegations
among us repeated that free and open
contacts among persons have
deteriorated in certain vivid ways:
divided spouses, disunited families. Com-

pliance has declined. In such cir-
cumstances, precious words lose
meaning.

The strength of the founding
documents of this process depends upon
the credibility of words. That is why, to
match the demonstrated decline in com-
pliance in recent years, my government
knew that a Bern document would have
to set a high standard. Otherwise the
public would lose confidence, and
confidence-building is the essence of the
Helsinki process.

Every delegation here knows the
brilliant and careful work of the coordi-
nators from the neutral and nonaligned
delegations. They fairly reflected the
long, slow course of our negotiations.
They performed at the highest human
level.

But our CSCE process works,
rightly, through consensus. Each step in
our negotiations, rightly, demanded com-
promise. In order to achieve com-
promise, as is normal, loopholes creep
into the text. To the right to travel, for
example, was added the loophole "when
personal and professional circumstances
permit." Honest authorities will under-
stand this one way, but cynical
authorities will use it to alter such cir-
cumstances at will. Loopholes are
sometimes necessary. But, cumulatively,
they eat like moths into our founding
documents.

Inevitably, too, robust proposals lost
weight. Until the end, it was impossible
to add up the weight of all together.
When at last, my government could
weigh them, it found the document too
thin, containing loopholes damaging to
compliance.

My government takes words seri-
ously. In our country, there is uneasiness
about the growing gap in the Helsinki
process between words and compliance.
A document reduced in weight by many
compromises, it judged, would injure the
process all of us cherish and must
protect.

My delegation deeply respects all our
colleagues in this room, with whom we
worked so hard and long. We are deeply
grateful to our Swiss hosts. We believe
that the CSCE process gains in strength
from paying strict attention to the con-
nection between words and compliance.
Our government looks forward eagerly
to resuming the long, patient, and
crucial work of this process in Vienna.

The debates at Bern have paved the
way for Vienna. In compliance and per-
formance, work to improve human con-
tacts will speed up. Bern has given an
undeniable impetus to basic issues of
human contacts. Bern has launched a

EUROPE

new .seriousness about compliance— and
it has underlined the extreme
seriousness of fundamental words.

ASSISTANT SECRETARY RIDGWAY,
JUNE 18, 1986

The meeting that concluded last month
in Bern on human contacts was the last
Madrid-mandated CSCE experts' meet-
ing to take place prior to the Vienna
followup meeting. Ambassador Novak
will report on the Bern meeting in detail.
I would like to make some general obser-
vations about Bern and also about such
experts' meetings.

Several acknowledgments are due at
the outset. The first is to Ambassador
Michael Novak, who led the U.S. delega-
tion at Bern with great energy and skill.
He eloquently articulated the
humanitarian values enshrined in the
Helsinki process. He reaffirmed these
values in stirring terms, forcefully
presenting both the moral and practical
arguments for the Soviet Union and its
Eastern European allies to live up to the
promises they freely made at Helsinki
and Madrid. I hope he will continue to
lend his voice to those others who see
CSCE as a process of fulfilling hopes
that demand and deserve to become
reality.

Second, I wish to thank this commis-
sion for contributing its expertise and
personnel to preparations for Bern and
to the work of our delegation for 8
weeks there. In this regard, I believe a
special debt is due to Senator D'Amato
and Representative Hoyer for the
welcome support and advice they gave to
Ambassador Novak, through cor-
respondence in the course of the meeting
and through Representative Hoyer's
presence at the conclusion of the
meeting.

Third, our work at Bern was sub-
stantially aided by support from the
public that came in a variety of hearten-
ing ways. Mr. William Korey of B'nai
B'rith served on the U.S. delegation and
provided many valuable insights as pro-
posals were introduced and considered.
Nongovernmental organizations from
the United States were a substantial
presence at a number of points during
the meeting, calling attention to crucial
human contacts issues— and giving them
names and faces. Many organizations
and individuals not able to come
physically to Bern nonetheless made
their views known. They wrote and
called the U.S. delegation before and

i luring the meeting. The details they pro-
vided about human contacts problems
effectively armed Ambassador Novak
with the facts.

Our decision to withhold consensus
from a draft concluding document pro-
posed by the neutral and nonaligned
states has naturally drawn substantial
attention. The decision was not taken
lightly. It represented the considered
judgment of both our delegation and the
State Department. With the hindsight
afforded by the few weeks since the end
of Bern, I can say we would make the
same decision again. The proposed docu-
ment had qualifications and loopholes
which, taken together, might have been
used by some governments to justify
noncompliance with existing com-
mitments. Our agreement to it would
have raised further questions about the
credibility of the CSCE process itself.

We understand the disappointment
and concerns expressed by some of our
allies over the outcome of Bern. We will
work to ensure Western unity at the
Vienna followup meeting and are
engaged, as you know, in a program of
close and intensive consultations in
preparation for it.

A number of our alliance partners
supporting the neutral and nonaligned
states' draft believed that it would give
an impetus to the CSCE process, viewed
as a series of small, incremental steps
that over time can improve the lives of
people in East and West. This view
stresses the creation of new
incentives— new commitments on
paper— to raise performance standards
in the future.

We have sympathy for this view. We
do not oppose new documents or new
commitments per se. Our position
depends to a great extent on the rela-
tionship between reality and words on
paper. New documents must meet
rigorous standards if they are not to be
considered whitewash for failures to
uphold past pledges. We believe there
are other governments in the West
which are happy that the document pro-
posed by the neutral and nonaligned
states was not adopted at Bern. No
Western government has defended the
document as more than a potentially
modest step forward. If the countries of
Eastern Europe are serious about prog-
ress in CSCE, they will demonstrate so
by their actions— which speak louder
than words.

I do not mean to dwell on the ques-
tion of the Bern document. To us the
principal point was how seriously the
United States takes the CSCE process
and the words proposed to carry it
forward.

Ambassador Novak intends to
review the specific accomplishments <
the Bern meeting. Let me make a fev
broader points. Our experience at Be;
reflects the wisdom of having fought
Madrid for the series of experts'
meetings in the humanitarian field th
has just concluded— the Ottawa huma
rights experts' meeting, the Budapes
Cultural Forum, and the Bern human
contacts experts' meeting. The foresi
of this commission is part of the reasj
that these meetings took place.

Ottawa, Budapest, and Bern all hi
their share of frustrations, but they h
and continue to have value. Each pro
vided the West with a platform— agn
by the East as legitimate— from whic
review problems in different areas of
humanitarian concern. Without such |
meetings, it would be difficult to call j
East to task face-to-face for its failur
to abide by its CSCE promises. We
believe that such meetings, by concer
trating the attention of both govern-
ments and publics on particular aspec
of the CSCE process, can promote pr
ress over time. This relatively new to
of diplomacy in the humanitarian fief
must be exploited patiently and per-
sistently. These experts' meetings ar
not a perfect tool, but they are one w«
hope the Vienna followup meeting lat
this year will agree to continue.

The three meetings produced
detailed Western agendas for the
followup meeting in Vienna, where al
the "baskets" of CSCE will be under
consideration and where it may prove
easier to achieve real progress on
humanitarian issues. The West
reaffirmed its commitment to shared
humanitarian values at Ottawa,
Budapest, and Bern. The West articu
lated in detail its views on human rig)
cultural freedom, and human contacts
respectively, in draft concluding
documents tabled at these meetings.
These documents are blueprints for
steps the West has agreed it wants tc
see taken in these areas and a basis f<
our joint approach to Vienna.

Another key aspect of the expert!
meetings was the occasion they provi
for discussions of cases of humanitari
concern. This has become an acceptec
feature of such meetings, though som
countries of the East still resist the p
tice. I should note, of course, that sor
East European governments have m(
constructive practices than others on
humanitarian issues. Discussion of ca
does not necessarily imply their resol
tion, but at Bern there were sufficien
incentives created— within the contex'
the meeting and outside it— for some

EUROPE

rnments to make progress on cases,
progress benefits not only the indi-
ils directly involved but also pro-
; evidence of a government's willing-
to fulfill commitments undertaken
e Helsinki Final Act and Madrid
hiding document.

Ve are not satisfied with this state
fairs, since the numbers of cases
ved during Bern were small in eom-
ion with those who still suffer,
iown and uncounted. It is also dis-
hful that human beings should be at
nercy of calculated political deci-
> taken by governments without
assion. Still our fundamental inter-
n the CSCE process is to improve
ives of individuals. To the extent
experts' meetings provide fora
•e individuals' problems can be
issed and— on occasion— resolved,
opportunities should be seized.
The experts' meetings on humani-
,n issues have also demonstrated the
amental unity of European values—
anistie, compassionate, and rooted
e concept of freedom— and the corn-
interest of all Western govern-
;s in upholding them. At Ottawa,
ipest, and Bern, members of the
'0 alliance and the neutral and
.ligned states made common cause in
ing the East to account for its
?gard for such values and its viola-
; of the provisions of Helsinki and
rid that embody them. These values
! most of Europe. Their dominance
>s the East to face the fact of its
il isolation and stimulates the East
spond— even if cynically— in the
I humanitarian vocabulary. This is
t makes the Helsinki process a useful
hopeful one.

BASSADOR NOVAK.

JJE 18, 19861

|w me to express my deep appreci-
ri to the Helsinki commission for the
v welcome support it provided to the
L delegation at Bern. From Michael
jhaway, your excellent executive
Ictor, to Deborah Burns and Barbara
1/ards, who did outstanding adminis-
pve work under difficult conditions
often worked very late hours, and
iding all the tremendous research
liaison work performed by Sam
e, Orest Deyehakiwsky, John
;rty, and Robert Hand, the staff of
commission provided indispensable
ice to our delegation. I thank the
mission— and each of them— pro-
idly.

1 was especially grateful that Con-
gressmen Hoyer, Ackerman, and
Bustamante and other members of the
delegation were able to be with us dur-
ing the last 72 hours of the meeting.
Their advice and counsel, and the tact
and reserve they exercised in dealing
with the entire delegation, are deeply
appreciated.

When I last reported to this commis-
sion [on March 18], I said that our goals
in Bern would be "practical results." On
March 18, I defined our first three goals
in these exact words.

We define "practical results" precisely. We
mean movement in specific individual cases.
And we mean an improvement in the general
conditions for cross-border human contacts by
individuals and associations. In addition, a
successful meeting entails a careful review of
the record of how CSCE commitments have
so fur been implemented.

Only later, in fourth place did I men-
tion that our delegation would make a
good-faith effort to achieve a strong
final document, if a strong one was
achievable. I spoke of the realism of the
allies, neutral, and nonaligned in
advance of the meeting, and reported to
you as follows.

[We] do not, for instance, put a premium on
producing a new document. Good language on
human contacts already exists in the Helsinki
and Madrid documents. We do not suffer
from a shortage of texts. What the world suf-
fers from is inadequate implementation of
already existing texts.

It seems important to reread this
testimony of mine on March 18, because
it outlines quite clearly what our inten-
tions were when we began. The subse-
quent record shows that we more than
fulfilled these intentions. Consider the
first of our goals, movement on concrete
cases.

Back in mid-March, it seemed— not
only to me but to others on our delega-
tion and to some staff members of this
commission— that we would be lucky to
see the Soviet Union resolve even as
many cases as had been resolved on the
occasion of the summit talks between
President Reagan and General Secretary
Gorbachev in Geneva last November;
namely, 33 cases, of which 25 had been
fully acted upon by mid-March.

Actually in Bern there were some
practical results. On May 20, the Soviet
delegation informed us that their
government was resolving two new
cases and that resolutions could shortly
he expected in many more. On May 26,
the last scheduled day of the Bern
meeting, the Soviet authorities in

Moscow gave us the names of 36 families
whose cases were to be resolved. They
told U.S. Embassy officials that another
list of names would soon be forthcoming,
and, indeed, within 10 days we were
given the names of an additional 29
families. About 200 persons in all will be
affected by these decisions when they
come to fruition.

In this fashion, the U.S.S.R. did use
the Bern meeting as an occasion for tak-
ing action on concrete cases. It is deeply
regrettable that action was not taken on
these cases in the normal process of
fulfilling Helsinki commitments. It is
regrettable that such decisions are only
made upon political occasions.
Nonetheless our delegation made the
argument, in Moscow and in Bern, that
the road to confidence-building lies
through the treatment regimes extend to
their own citizens and that we are work-
ing for the day when the U.S.S.R. and
its allies will deal with their own citizens
according to the internationally recog-
nized standards they themselves have
signed. In this context, I choose to inter-
pret Soviet movement on cases as a
helpful movement. The more of this the
better— until all Soviet citizens share in
the free exercise of those rights
recognized in the international
agreements their government has freely
signed.

Further, the Romanian delegation
resolved about half the list of 27 specific
cases presented to it in the course of the
Bern meeting. Outside of Bern, between
April 11 and June 1, Romania approved
for emigration nearly 1,200 people from
our representation list. These actions
clearly reflected the current state of
U.S. -Romanian relations with respect to
Romania's most-favored-nation status.

The Bulgarians resolved 12 of 18
U.S. representation list cases the week
before the Bern meeting opened.

Secondly, we aimed at movement in
"general conditions." Here our review of
compliance showed that there had been
positive movement in several East
European countries. The borders of
several East European countries are
much more open today than in 1975. On
the other hand, there are many areas in
which the situation of human contacts—
in the U.S.S.R., Bulgaria, and Romania
in particular— has deteriorated. Admini-
strative practices were shown to be in
many respects worse than they had been
in 1975.

On the other hand, the delegation
from the U.S.S.R. was driven to say on
several occasions that, under the new
General Secretary, there would be a new
"spirit," new "practices," and a reform

ItPmhor 1 QAfi

EUROPE

of legislation and administrative pro-
cedures in the area of human contacts.
This was in the nature of a promise, not
in the nature of evidence cited. Before
granting- credence, it is proper to insist
on evidence. Still, the delegation from
the U.S.S.R. did at least promise reform,
in accordance with the promises General
Secretary Gorbachev made to President
Reagan in Geneva and at the XXVII
Party Congress. Until evidence is forth-
coming, skepticism is in order.
Nonetheless the invitation has now been
issued to hold the U.S.S.R. to fresh
promises.

Our third goal was an intensive
review of compliance. Such a review did
go on for nearly 5 weeks, since the
NATO nations had agreed to use their
time in presenting new proposals to
explain from the past record why such
proposals are now needed. On one day,
e.g., 16 of 19 speeches presented
evidence of abusive, noncompliant prac-
tices in the U.S.S.R., East Germany,
Bulgaria, and other Eastern nations.
This drumbeat— often low-key, factual,
and nonpolemical— continued day after
day. Many veterans of the CSCE process
said that the Bern review of compliance
was the most thorough, objective, and
calm of any in the history of the CSCE.

In part this was because the main
points about compliance had already
been established at Madrid, Ottawa, and
Budapest. Thus the Soviet delegation in
Bern only tentatively argued that the
effort by an assembly of nations to
monitor compliance in the field of human
contacts represented "interference in
the internal affairs" of the U.S.S.R.
That line was dropped almost instantly.
Instead the Soviet delegation and some
others chose, when criticized, to attack
the critic. They did so typically with
wild, loose, and passion-inflamed
rhetoric, careless of accuracy and
evidence, usually based upon criticisms
of the West made by Westerners, and on
the whole rather more damaging to the
attacker than to the attacked. In
responding to specific charges, we chose
to welcome even such attacks, poor as
they were, as a way of urging the
U.S.S.R. and its allies to open
themselves further to the legitimacy of
mutual criticism from abroad, as well as
to internal criticism. Open criticism is
the way scientific inquiry proceeds. Open
criticism is also the way political reform
advances.

As in Ottawa and in Budapest, we
realized from the beginning in Bern that
achieving an acceptable final document
would not be likely. On the other hand,

halfway through the conference, and
after Chernobyl, it became obvious that
the U.S.S.R. and its allies might wish to
achieve a final document in Bern. The
question remained whether this would be
substantive progress or propagandistic
progress. We had promised to make a
good-faith effort to work for a strong
final document if a strong document
were achievable. From the beginning,
we had ruled out a weak one.

Suffice it to say that at 4 a.m. on
Monday morning, May 26, the day the
conference was scheduled to end, the
Soviets broke off all-night negotiations.
As at Ottawa and Budapest, at that
point we had no document. Up until
then, the Eastern bloc had refused to
agree to the original Western proposals
even in their modest strength and had
instead introduced damaging loopholes
and qualifications. They were not willing
to go very far. All that had been left on
the table was a pale imitation of the
strong proposals the Western nations
had agreed to and tabled as BME 47
[Western draft concluding document,
printed below].

Of course, it could be argued that
some of the compromise proposals
offered "marginal" or "modest" steps
forward. But some of them also took
steps backward from Helsinki. This
typically happened in one of three ways:

(1) in some cases, the compromise
language was weaker than Helsinki;

(2) in some cases, new loopholes were
introduced into the Helsinki process;

(3) in some cases, the point of view of
the compromise proposals subtly slipped
away from the general obligations
already agreed to under Helsinki and
began to treat those obligations, given
existing violations, as goals we need to
make progress toward.

This last point deserves comment.
Helsinki represents obligations agreed to
by participating states; it does not repre-
sent goals to be striven for. To treat
Helsinki obligations as goals toward
which progress must be made is to alter
the character of the Helsinki accords in a
potentially fatal way. They are not goals
but general obligations.

Three or four of the compromise pro-
posals may at first glance appear to
represent the largest among the
"modest" steps forward. Among these,
for example, are the proposals on postal
and telephonic communication and on
religion. Under close analysis, the com-
promise resolution on postal and
telephone service has one good quality
and one weakness. The good point is
that it would bring documented abuses

in this area under the compliance revi
of the Helsinki process. The weakness
that the proposal basically reminds th
participating states of obligations whi
they already bear under existing intei
tional conventions and which are,
nonetheless, being flagrantly abused.

As for the proposal on religion, th|
compromise formulation is not only fa
weaker than the modest original
Western proposal; it is in virtually the
same form that the Western nations r
rejected during the negotiating proces
The West had rejected this form for
three reasons: (1) no less than other
citizens, religious citizens have univer
sally recognized rights to travel and t
receive publications through the mail;
(2) the restriction of the proposal to
official "representatives" of religious
organizations— but not to "individual
believers"— is an intolerable infringe-
ment of universal rights; and (3) the
right to receive and to carry with the
religious publications and religious
objects is confined to the extremely n
row limit of "for their own use"— i.e.
not even for the use of their congregj
tions or fellow believers. This is an
intolerably narrow reading of basic
human rights.

I said in Bern that the compromis
document did make some marginal
advances. But when one looks at the :
total, one must add up the minuses as
well as the pluses. No one asserted th
the pluses are more than "modest";
some said "marginal." But when you
count in the minuses, even these mod
gains are reduced.

Moreover, the judgment one mus'-
make is whether the demonstrated
record of noncompliance on large and
basic issues, amply documented durin
our debates, truly gives hope that eve
"modest" or "marginal" improvemer
in new language will be taken serious
when already existing large obligatioi
are not. Judgment must be focused oi
the probabilities of future compliance

First, then, it is essential to compi
the last-minute compromise proposal;
with the corresponding texts of Helsi
and Madrid. One must do this critical
with an eye hardened by experiences
violations since then. Second, one mu
compare them as well as with the
original Western proposals on the sai
subjects. What are the pluses and the
minuses? How does the whole add up
Our judgment was and is that the
negatives either outweigh, or come ci
to outweighing, the positives.

irtmant r\f Qtato Rl

EUROPE

Next, one musl factor in the
Bnstrated record of noncompliance
patters large and small. In that con-

our judgment is that the negatives
ly outweighed the positives. To
Dt the Bern compromise would have

to accept a document that could
rately be characterized in this way:
! of its proposals merely repeat
inki provisions already being
ted; some of its provisions are
;er than or more flawed than
inki; some— such as the one on
ion— would have established possibly
iging precedents; and a few, at best,
, modestly beyond Helsinki. Even
; last, alas, sometimes advance more
fie language, but in a way that
icts from general obligations that
,dy cover such specifics,
n terms of policy, the most impor-
point in the Helsinki process is its
ability. Solid words must not be
ted to become empty words.

ements entered into merely to have
ements cannot be allowed to
lish public trust. Above all
ements cannot be allowed to weaken
rust of those who suffer today
use of large-scale and systematic
ompliance. In such circumstances,
iter into certain kinds of agreements
d be a fraud.

told this commission last March 18
the goals of my delegation would
L) movement on concrete cases;
'forts to bring about greater com-

ce in specific types of cases; and

thorough review of violations of the
inki accords. I leave it to this corn-
ion to judge how well we achieved
hree goals we set out to achieve.

also told this commission that our
ration would not accept a weak
ment. I said then that the integrity
le Helsinki process depends first of
ton credible compliance, rather than
le addition of more words. I again
e it to this commission to judge
Iher, in difficult circumstances, we
lour word and showed proper judg-
t on the specific document at hand.
finally, I am more convinced than
li I undertook this assignment that
r'S( JE process is worth every ounce
tiergy that this nation can put into it.
I process depends on taking words
I utmost seriousness, words signed
feads of government of 35 partici-
Ig states. The CSCE process has
le great fruits in some countries in
lern Europe and has heightened
pards of international behavior.
c& than that, a newcomer to the
3E process notices immediately the

extent to which the language of Western
ideals permeates not only the Helsinki
accords and the Madrid concluding docu-
ment, but also the daily debates in
plenary discussions and working groups.
Even the Marxist countries rarely speak
a Marxist language; even they are often
obliged to use the language— even
though not following the practice— of
open societies. In the context of human
rights, the importance of words is very
great.

Looking forward to Vienna, when
the whole range of the Helsinki accords
will be under discussion, the allies have a
much better opportunity to make real
progress in the areas of human rights
and human contacts— for three reasons.

First, the range of subjects on the
table will be larger, greatly expanding
the scope for meaningful negotiations.

Second, the process will be open-
ended; in order to achieve meaningful
progress, it will allow a time period
much longer than 6 weeks.

Third, in Ottawa, Budapest, and
Bern, the allies have taken great pains
to arrive at common, strong proposals.
These proposals, carefully hammered
out, already at hand, form a magnificent
platform for real progress under the
"third basket." In addition, a thorough
and documented review of non-
compliance is now part of the full record
from which Vienna can proceed.

The work of the Helsinki process is
extremely important for millions of
human beings. The work of this commis-
sion in furthering that process is vital.
Permit me once again to thank this com-
mission for the support it gave my
delegation, before, during, and now
again after the Bern meeting.

WESTERN DRAFT
CONCLUDING DOCUMENT

1. In accordance with the relevant provisions
of the Concluding Document of the Madrid
Meeting of the Conference on Security and
Co-operation in Europe, a meeting of experts
representing the participating States took
place in Bern, at the invitation of the Govern-
ment of Switzerland, from 15 April to 26 May
1986 to discuss the development of contacts
among persons, institutions and
organizations.

2. The Meeting was preceded by Prepara-
tory Consultations which started in Bern on 2
April 1986.

3. At the opening session the participants
were addressed by Federal Councillor Pierre
Auhert, Head of the Federal Department of
Foreign Affairs, on behalf of the Government
of Switzerland.

I- The opening session on 15 April and
the closing session on 26 May 1986 were held
in open plenary meetings. During the closing
session, statements were made by those dele-
gations who wished to do so.

5. Under agenda item 2 (a), a general
debate on the development of human contacts
took place. Under agenda item 2 (1>), forty-six
proposals for recommendations were sub-
mitted and considered by the participants.
Under agenda item 2 (c), they drew up conclu-
sions and recommendations. Two subsidiary
working bodies under the guidance of the
plenary dealt with the following questions as
listed in section 1 (Human Contacts) of the
Chapter of the Final Act entitled "Co-opera-
tion in Humanitarian and Other Fields":

Subsidiary Working Body I:

• contacts and regular meetings on the
basis of family ties;

• reunification of families;

• marriage between citizens of different
States.

Subsidiary Working Body II:

• travel for personal or professional
reasons;

• improvement of conditions for tourism
on an individual or collective basis;

• meetings among young people.

• sport;

• expansion of contacts.

6. The participants recalled the aims of
the States participating in the CSCE to facili-
tate freer movement and contacts, individ-
ually and collectively, whether privately or
officially, among persons, institutions and
organizations of the participating States, and
to contribute to the solution of humanitarian
problems that arise in that connection.

7. The participants affirmed that unim-
peded human contacts strengthen mutual
understanding, friendly relations and trust
among peoples.

8. During the discussion, different and, at
times, contradictory opinions were expressed
concerning respect lor an implementation of
the provisions of the Final Act and the
Madrid Concluding Document relating to
human contacts by the participating States.
While certain progress was noted, grave con-
cern was expressed about the failure to
resolve a great number of humanitarian
cases, including some raised in the context of
this Meeting, about barriers to human con-
tacts that continue to exist and about add-
tional barriers that have been created in some
participating States, in disregard of com-
mitments undertaken in the Final Act and the
Madrid Concluding Document.

9. The participants expressed concern
that failure to comply with the human con-
tacts provisions of the Final Act and the
Madrid Concluding Document jeopardizes the
credibility of the ( "S< 'E process as a whole.

2!ember 1986

EUROPE

10. The participants emphasized the criti-
eed for efforts to achieve lasting and

tangibl in the implementation of

the human contacts provisions of the Final
An and the Madrid Concluding Document.
They recalled the responsibility of each par-
ticipating State, irrespective of its political,
economic and social system, to bring its laws,
practices and procedures into conformity with
these provisions and with other international
undertakings and agreements by which it may
be bound.

1 1 . Regarding the basic concepts under-
lying human contacts, the participants noted,
in particular, the relevance of the right of an
individual to leave any country, including his
own, and to return to his country, as
expressed in the Universal Declaration of
Human Rights.

12. The participants confirmed that their
thorough and frank exchange of views on the
development of contacts among persons,
institutions and organizations constituted a
valuable contribution to the CSCE process.

13. Convinced that in order to fulfill their
commitments to facilitate freer movements
and contacts further efforts are required, the
participants recommend that the participat-
ing States:

Familv Matters

• pay immediate attention to cases of an
urgent humanitarian character, including,
inter alia: travel to visit a seriously ill or
dying family member; travel of the aged and
I hose with urgent medical needs: travel to
attend the funeral or visit the grave of a fam-
ily member; travel for visits in cases of impor-
tant family matters such as births, marriages,
religious or civil ceremonies and other impor-
tant family occasions; and travel for impor-
tant public and religious holidays;

• in fulfilment of their commitments to
facilitate freer movements and contacts,
remove, inter alia, obstacles to the ability of
members of a family, who so desire, to travel
together for the purpose of contacts and reg-
ular meetings on the basis of family ties;

• give special attention to and deal
favourably with applications from their citi-
zens or nationals who are also recognized as
citizens or nationals by another State to leave
in order to visit that State or to settle there;

• give special attention to requests for
exit documents and facilities submitted in
ordei to reunite minor children with their
parents;

• give primary importance to the wishes
of the parties desiring to be reunited, in par-
ticular their wishes in regard to the country
of settlement, in facilitating the exit of per-
sons for the purpose of family reunification;

• in order to simplify the application pro-
cedures for family reunification, prolong the
validity of the application forms and other
related documents so that these documents
remain valid throughout the application pro-
cedure; and provide that any document
necessary for an application procedure be
easily accessible to the applicant, also in case
of renewed application;

• ensure that, an application for travel for
the purposes of family contact or family
reunification with an individual family
member who has permanently left his country
of origin, will not be prejudiced by the cir-
cumstances in which this family member left
his country of origin;

• should carefully review all outstanding
applications for travel for the purpose of
family reunification and for other purposes
related to the aims of the part of the Helsinki
Final Act and the Madrid Concluding Docu-
ment dealing with human contacts with a
view to ensuring that these applications are
being dealt with in a manner consistent with
the relevant provisions of those documents.
Such reviews should be repeated at regular
intervals;

Travel Practices

• recognize the right of their nationals to
be issued with a passport, or with any other
document allowing travel abroad, without
delay and without any other conditions than
those specifically laid down by the law in con-
formity with international commitments. Rea-
sons should be given for any refusal to issue a
passport or travel document and means of
appeal should be available:

• abolish, for their nationals, the require-
ment to obtain an exit visa in order to leave
their country; and issue exit visas to for-
eigners residing on their territory as expedi-
tiously as possible and without any conditions
other than those that may arise as a result of
legal proceedings still in progress;

• publish within one year all laws, regula-
tions and procedures— including criteria for
refusal— concerning decisions to permit their

citizens to leave their country, on a perm;
nent or temporary basis; and take steps U
help make the laws that are in force acces
ble to all strata of the population of the
country;

• remove legal and other obstacles
restricting or inhibiting contacts on their
territory between their citizens and residi
or visiting citizens of other States;

Other Matters

• promote the possibilities for individ
religious believers and communities of
believers to establish and maintain persoi
contacts and communication with fellow-
believers and communities of believers in
other countries, including travel, pilgrim;
assemblies and postal communications; ai
respect the ability of believers and com-
munities of believers to acquire, receive a
carry with them religious publications am
related materials;

• bearing in mind the legitimate desi
persons belonging to national minorities ;
regional cultures on their territories to h;
contacts with persons in other States wit
whom they have close affinities, refrain ft
placing obstacles in the way of members
such minorities and regional cultures seel
to maintain contacts of this kind, includir
contacts through travel and communicati

• remove existing impediments whicl
vent individuals and the institutions and
organizations which they have freely esta
lished and joined from maintaining contai
communication and organizational ties wi
similar organizations in other participatir
States without need of official sponsorshi
approval; and permit individuals invited t
such groups to travel to other participath
States so that they are not replaced by
another individual without the consent of
inviting organization;

• remove existing impediments which
vent freely established trade unions, theii
members and their representatives from
maintaining contact, communications and
organizational ties with similar organizati
in other participating States without neec
official sponsorship or approval;

• encourage direct sporting exchangt
between them at local and regional level,
well as at national and international level
take steps to remove existing obstacles tc
such exchanges;

• encourage the setting-up and facilit
the unimpeded implementation of town-
twinning arrangements between authorit
most directly concerned in order to develi
direct contacts between their citizens;

Denartment nf State Ru

INTERNATIONAL LAW

recognize that the freedom to establish
laintain communication is essential for
ive human contacts; guarantee the free
if transit of postal communications in
dance with the Universal Postal Conven-
;hus ensuring the rapid and unhindered
ry of personal mail; ensure all the condi-
hecessary to carry on rapid and uninter-
d telephone calls in accordance with the
lational Telecommunications Conven-
ncluding the use and development of
, dialing systems wherever it is possible;
aspect the privacy and integrity of all
?ommunications; and
give favourable consideration to the
ce of periodically holding bilateral
ngs and round tables between delega-
whnst1 composition is to be determined
_-h participating State, to deal with the
ions concerning the promotion of con-
among their citizens, institutions and
overnmental organizations. The aim of
meetings and round tables will be to
ive and develop co-operation in the
nitarian field among the participating
s, to implement more fully the relevant
dons set forth in the Final Act and in
adrid Concluding Document and to
about as promptly as possible a satisfac-
olution to outstanding humanitarian

11 particular, on the occasion of such
ngs and round tables, the participating
at ions should also proceed to a mutual
nge of exhaustive information and full
s, and to their updating in the event of
;es, on the laws, procedures and prac-
n force in the respective countries with
d to applications for travel abroad sub-
I by citizens with a view to contacts and
ir meetings on the basis of family ties.
Station of families and marriages
■en citizens of different States.

4. The results of the meeting will be
into account, as appropriate, at the
1a follow-up meeting.
3. The participants expressed their deep
ude to the Government of Switzerland
e excellent organization of the meeting
5 the people of Switzerland for the warm
tality extended to them during their

Amending the Foreign
Sovereign Immunities Act

?he complete transcript of the hearings
e published by the commission and will
ailable from the Superintendent of Docu-
3, U.S. Government Printing Office.
tjigton, D.C. 20402. ■

bi/ Elizabeth G. Verville

Statement before the Subcommittee
on Administrative Law of the House
i Committee on the Judiciary on May 20,
1986. Ms. Verville is the acting Legal
AdviserJ

I appreciate this opportunity to testify
on behalf of the Administration concern-
ing H.K. [House Resolution] 3137 and
4592, which would amend the Foreign
Sovereign Immunities Act (FSIA), and
H.R. 3106 and 4342, which would amend
the Arbitration Act.

At the outset, 1 want to commend
the American Bar Association (ABA)
and the sponsors of the present bills for
a valuable initiative. As I will outline,
there are some amendments to the
FSIA we believe are ready to be
adopted, subject to working out word-
ing. A bill limited to those improve-
ments might proceed expeditiously. This
would not preclude additional amend-
ments if they seem warranted after fur-
ther study, although some of the
additional proposed amendments raise
more complex and difficult questions
than others. Finally, there are some
problems that these bills do not address.
Although the Administration does not
have proposals to make at this time, I
want to identify the issues and possible
solutions.

While others testifying today will
naturally focus on the difficulties of
plaintiffs, my perspective will be some-
what broader.

Sovereign Immunity and the FSIA

Historical perspective is important.
Before the FSIA, suits against foreign
governments and their instrumentalities
were difficult to bring. .Jurisdiction was
obtained by actions quasi in rem
through attachments of foreign govern-
ment property. There was no execution
of judgments against foreign govern
ment property. The State Department
decided whether or not there was immu-
nity in individual cases, and the courts
were bound by our determinations.
The United States adopted the
FSIA in 1976, among other reasons, to
codify the restrictive theory of sover-
eign immunity and provide workable,
simplified procedures for service of
process so that our courts could provide
judicial remedies against foreign sover-

eigns and their instrumentalities in ap-
propriate cases. We also wanted to
terminate the disruptive practice of
relying on prejudgment attachment to
secure jurisdiction over foreign states,
remove immunity decisions from the ex-
ecutive to the judicial branch, and draw
some of the lines by statute.

The FSIA deals with foreign policy
as well as complex legal issues. It con-
cerns fundamental principles of
sovereignty of foreign states and the ex-
tent to which they should be responsible
directly in the courts of other countries
to private persons for their commercial
and other activities. In light of this, we
are carefully reviewing our experience
under the FSIA in the 10 years since it
was adopted. In this review, we are
guided by certain principles and
considerations.

First, the United States moved to
codify the restrictive theory out of a
sense that fairness and justice required
it. When states enter the marketplace
or otherwise act nongovernmentally, pri-
vate parties with claims against them
ought to have judicial remedies.

This remains important. States
should be responsible for their commer-
cial activities. They should keep their
bargains. If states engage in commercial
activities through instrumentalities or
other entities, those instrumentalities or
entities should be treated like commer-
cial entities for such activities to the
maximum extent consistent with overall
U.S. interests. We think this is fair.
Moreover, we do not want to give ad-
vantage to socialist countries that deal
through government-owned entities over
free market countries that deal through
private entities. There should be ap-
propriate remedies and means of en-
forcement on these matters. As I will
discuss further, a number of factors may
be brought to bear. Judicial remedies
may be appropriate in some cases and
not others. The marketplace also works
to provide its own remedies.

Second, the restrictive theory also
recognizes the rights and needs of
sovereigns and the important foreign re-
lations interests of the nation as a
whole. The law should continue to pro-
vide appropriate safeguards for those
needs and interests, including our in-
terest in protecting U.S. activities
abroad. Some problems must be handled
without submitting the foreign sover-
eign or its property fully to the jurisdic-

i ember 1986

INTERNATIONAL LAW

tion and judgment of our domestic
courts and the remedies that a court
would normally apply at the behest of
an aggrieved private party.

Accordingly, the FS1A was drafted
so that a foreign state might nut be
sued in U.S. court in certain kinds of
cases. Also, the act protected the
property of the state from legal process
even in some cases in which the state
could lie sued. The act provided that a
state and its separate agencies and in-
strumentalities would be immune from
prejudgment attachment. We also re-
quired a nexus between a claim and the
commercial property of the state taken
to satisfy a judgment against a state
which refuses to honor it. We recog-
nized that these lines might not prove
to be entirely satisfactory, but the ex-
ecutive branch and Congress, after long
deliberation, decided that they repre-
sented a fair balance of interests.

We must bear in mind that, while
we disagree, some states still believe
that they are entitled under inter-
national law to absolute immunity from
suits in foreign courts brought directly
against them, as opposed to their com-
mercial entities. Default judgments have
ensued, resulting in some cases in
problems in bilateral relations and dubi-
ous court decisions. Even states that ac-
cept the restrictive theory of sovereign
immunity have objected to suits they
consider inappropriate or harrassing.

Some other states have followed our
lead and adopted modern sovereign im-
munity statutes of their own. However,
while we should consider those statutes,
we should recognize that reductions in
immunity may be more problematic in
the United States than the identical
changes in other countries, given the
litigious nature of our society, the inven-
tiveness of our attorneys and courts in
developing novel theories of liability, the
size of U.S. judgments, and the burdens
of discovery and other aspects of U.S.
litigation, finally, reductions in immu-
nity potentially affect the extensive U.S.
Government presence abroad, since
man)' foreign states will apply our
standards against us as a matter of
reciprocity. These considerations should
lead this committee to approach amend-
ment of the FSIA carefully and to re-
quire either a real showing of need or
clear anil substantial improvement be-
fore making changes with uncertain or
adverse effects. We do not want to
create new problems or exacerbate
existing ones.

We need to review our II) years of
practice under the FSIA to determine
whether there are serious flaws in the
balance struck a decade ago and, if so.

how best to fix them. We look forward
to learning from this hearing the specific
problems others have found. I want to
assure the committee that we approach
this effort with an open mind, and that
our reactions are necessarily tentative
until we have had an opportunity for
further consideration of the information
being gathered through these hearings
and otherwise on the problems encoun-
tered under the present act.

The Proposed Amendments

With these considerations in mind, let
me now address the proposals in the
present bills and suggest some addi-
tional areas for consideration. Regarding
the present bills, we are prepared in
principle to:

• Provide expressly for enforcement
of arbitral agreements and awards;

• Amend the Arbitration Act, 9
USC §207, to rule out the act of state
doctrine as a bar to enforcement of an
arbitral award;

• Allow execution of arbitral awards
against any commercial assets of the
state party;

• Allow prejudgment attachment
against state-owned commercial enter-
prises to the same extent as against
their privately owned counterparts; and

• Remove some current problems in
admiralty cases.

Other issues raised by the proposed
amendments are more difficult and need
further consideration. Let me explain
our position in more detail.

Enforcement of Arbitral
Agreements and Awards

The proposals in H.R. 3137 on the
enforceability of arbitral agreements and
awai'ds raise no fundamental problems
and we support them. They will advance
our longstanding policy favoring arbitra-
tion in international commerce and par-
ticularly in business and investment
relationships between private entities
and foreign governments. Such private
party and foreign government arbitra-
tion is a key feature of our bilateral
investment treaty program. We are
party to the New York Convention on
the Recognition and Enforcement of
Arbitral Awards.

Although the courts are coming out
right in finding implied waivers in ap-
propriate circumstances, such as those
listed in the proposal, the amendment
would clarify the law that is emerging
from a body of cases on implicit waiver
and to give more explicit guidance to
judges in dealing with these issues.

We think two pitfalls of the pres
proposal should be avoided. First, tb
three proposed circumstances should
become an exclusive list of condition
which courts may enforce arbitral aj
merits and awards. We believe the
amendment should be drafted to lea'
open the possibility of courts finding
implicit waiver in other appropriate
cumstances, should they arise. Secoi
the circumstances enumerated shoul
not create irrebuttable presumptions
waiver in all cases. In some cases, a
government may expressly negotiati
agreement with limitations as to wh
and how an award can be enforced,
eluding execution against state assei
Along the lines of the recently enacl
Australian statute, we would sugges
that the amendment provide for jur
tion to enforce an arbitral award "si
ject to any inconsistent provision in i
agreement."

As my comment on H.R. 3137 m
plies, we also support the concept oi
short bills, H.R. 310(5 and 4342. that
arbitral awards rendered under the
New York convention shall be enfor
able notwithstanding sovereign imm
ty. However, we are prepared to de
with enforcement of agreements am
awards more extensively along the
of H.R. 3137, as I indicated. We wo
have technical suggestions to make
the drafting of the shorter bills if it
were decided to proceed with them,
particular, we believe that all aspeel
sovereign immunity should be codifi
in the FSIA, although a reference ii
Arbitration Act would be approprial

Act of State Doctrine

H.R. 3137 proposes legislative annul
ment of the act of state doctrine in
three categories of cases against sov
eigns: expropriation, breach of contr
and enforcement of arbitral awards.
We support the proposal in H.R
3137, 310li and 4342, to exclude the
sibility that the act of state doctrine
could bar the enforcement of an arb
award. Enforcement of an arbitral
award ought not be denied on groin
that the act of state doctrine would
have barred a U.S. court from entei
a decision on the merits of the claiir
While we doubt that any such court
cision would withstand the scrutiny
an appellate court, this issue is stra
forward and we would consider it ui
jectionable for this to be made clear
appropriate statutory provision. As
technical matter, we believe this shi
be done through amendment of the
Arbitration Act, rather than mix ac
state provisions into the FSIA.

Department of State Bui

INTERNATIONAL LAW

Fhe questions posed by the other
iit-t of state proposals are more com-
The Department of State has con-
tltly articulated a very skeptical
of applications or potential applica-
of the act of state doctrine by U.S.
;s. The phrase "act of state" is
invoked on the basis of alleged for-
relations concerns with which the
irtment of State does not agree,
'times it is invoked, improperly, in
if sound consideration of the choice
w, defenses such as force majeure,
e appropriate jurisdictional reach to
a U.S. regulatory scheme in light
ternational comity considerations.
lave addressed ourselves to the is-
by intervention amicus curiae in a
Her of cases, generally in the
jpriation area.

Lccordingly, we belive that the
's proposals have merit. However,
el the need for further study, not
by the government, but by scholars
jrivate practitioners. We under-
1 that the ABA Section of Interna-

Law and Practice, while having
nmended the elimination of the doc-
in expropriation, breach of con-
and arbitration cases against the
jn state which fall within the
i's exceptions to immunity, cur-
y has a committee engaging in a
lei' study of the doctrine. We are
ired to look carefully at the possi-
of legislation limiting the use of
loctrine by broadly adopting the
;rse Bernstein" approach.
Ve need to examine more closely
lotential implications of such a legis-
1 limitation. For example, how
d it affect court application of
;y considerations which often under-
so-called act of state decision? How
d or should it affect the applicabili-
a foreign act alleged to violate the
jn state's own constitution or the
lical provisions of an international
Spent, but not important norms of
mary international law. How would
ould it affect a contract case when
inge in a foreign slate's law is al-
1 to excuse a failure by that state,
|ency or instrumentality to perform
itract according to its terms? How
d or should it affect an antitrust
i against a foreign state agency or
umentality where it is carrying out
policy, for example in marketing
'al resources? How would or should
ect the use of U.S. domestic courts
xpropriation claims directly against
eign state itself, where this is not a
terclaim and not an action directed
•operty in the United States?
Ve should also consider changing
ct of state presumption more

generally, not simply in the case of ac-
tions brought against sovereigns or
their agencies and instrumentalities, but
in cases against private parties as well.
Given the foreign relations underpin-
nings of the act of state doctrine, it may
seem anomalous to remove or limit it in
the FS1A context for cases brought
against foreign governments themselves,
Imt to leave it in place for cases brought
against private defendants. As sensitive
as it is for a US. court to sit in judg-
ment on a foreign governmental act
relevant to private party litigation, it is
substantially more sensitive for a U.S.
court do so in the exercise of jurisdic-
tion over the sovereign itself.

A key factor in determining our
position will be whether, after a period
of further study, we are able to satisfy
ourselves that a new statutory limita-
tion can be adopted without undermin-
ing the appropriate use by the courts of
related doctrines such as comity and the
distinction between governmental and
commercial actions of states.

Execution of Judgments and Awards
Against Any Commercial Assets

The proposals to reduce the immunity of
state commercial assets from execution
of judgments and awards raise the most
complex and difficult issues for us.

Under the FSIA, if an agency or
instrumentality of a foreign state en-
gages in commercial activity in the
United States, all of its property is sub-
ject to execution in satisfaction of a
judgment. The property of the state
itself, however, is subject to execution
only when one of five narrowly drawn
exceptions set out in §1610(a) applies.
Under the current exception for com-
mercial property, state property used
for commercial activities is generally
Subject to execution only if it "is or was
used for the commercial activity upon
which the claim is based." This means
that there must lie a nexus between the
cause of action and the property.

The proposed amendments would
eliminate this nexus requirement and
subject to execution for any valid judg-
ment any property of the foreign state
which is "used or intended to be used
for a commercial activity in the United
States."

We are sympathetic to the concern
that the present nexus requirement
might be interpreted in too rigid a
fashion. For example, a judgment credi-
tor should not necessarily have to find
the precise property used in the events
underlying the case. However, H.R.
3137 would remove this nexus entirely
for all cases. We are not aware of any

pattern of cases in which judgments
have been obtained and gone unsatisfied
because of overly narrow interpretation
or application of this provision.

Let me discuss the potential difficul-
ties we see with this proposed
amendment.

First, the total removal of a nexus
requirement for commercial activities
and execution would increase the poten-
tial for default judgment problems. In
the commercial area, we are not per-
suaded that there is a sufficient actual
problem to warrant this.

In the area of international finance,
trade, and commerce, few if any actual
problem cases have been cited arising
from the immunity from execution of
state assets not related to the cause of
action. The absence of any substantial
body of practical problems appears to
reflect several factors. Most states and
state agencies or instrumentalities value
their commercial reputation and will
honor their commercial debts. Much of
state trading, the state activity which is
commercial in purpose, is carried out
not directly by the states themselves
but by state agencies and instrumentali-
ties. Under current law, all property of
such entities is already subject to execu-
tion to satisfy any judgment against the
entity, whether or not the claim relates
to the particular property. In commer-
cial or financial dealings between pri-
vate parties and the state itself, many
difficulties are avoided by negotiating
the basic issues of dispute settlement,
security guarantees, and waivers of im-
munity. While private parties do not al-
ways have tin' bargaining power to get
the agreement they want, the market-
place adjusts for these risks to a sub-
stantial degree. Further, there is
growing use of arbitration to settle dis-
putes between private business and the
foreign sovereigns with whom they deal,
a trend we are promoting actively. In
short, we are not convinced of a need
outweighing potential disadvantages in
the commercial area.

Even in the commercial tort area,
the State Department has no substantial
experience of judgments unpaid and un-
satisfied because unrelated commercial
property in the United States was im-
mune from execution for that judgment.
Commercial torts generally are not po-
litically sensitive since the foreign state
essentially is acting like a private
person.

Second, the total removal of a nexus
requirement would open state commer-
cial property to execution for noncom-
mercial tort judgmi nts. This is a fat-
more sensitive area than the commercial

INTERNATIONAL LAW

tori area. The United States has pro-
vided court jurisdiction over states
themselves for their commercial torts in
our territory and commercial torts
abroad with sufficient connection to the
United States. However, in the noncom-
mercial tort area, we have been more
circumspect. The FSIA provides no
jurisdiction for noncommercial torts
abroad of states or their agencies and
instrumentalities, and limits categories
of noncommercial torts in the United
States over which courts may take juris-
diction. For example, the FSIA excludes
jurisdiction over torts arising out of dis-
cretionary acts, and over a number of
specific kinds of tort actions, as is done
under the Tort Claims Act for the U.S.
Government itself, that are considered
potentially difficult vis-a-vis foreign
states and their agencies and instrumen-
talities, such as slander, misrepresenta-
tion, and interference with contract
rights. Moreover, the FSIA provides for
execution against the assets only of
state agencies and instrumentalities that
lose noncommercial tort cases; through
the nexus requirement, property is
generally not available for execution to
satisfy such judgments against a state
itself.

There is good reason for the caution
we have shown in affording less tort
jurisdictions over state-owned enter-
prises than over their privately owned
counterparts. These go beyond the al-
ready noted considerations such as novel
theories of liability and large judgments
encountered in the United States. The
statutory language as drafted might be
interpreted to go beyond the kind of
garden variety negligence cases which
appear to have been the problem in
mind at the time the FSIA was drafted.
It might, for example, be applied, or
perhaps misapplied, to deliberate
government wrongdoing. Where deliber-
ate policies of one state are alleged to
cause injury in another, domestic judi-
cial proceedings and remedies in the
victim's .--tale against the alleged perpe-
trator state itself would have political
significance and consequences. This is
particular])- true when the allegations
involve violation of important rules of
international or domestic law. States, in-
cluding the I'mied States, are generally
reluctant to enter into the domestic
courts of another -tale to defend them-
selves against charges of serious viola
tions of law, making the noncommercial
tort area one with particularly high
potential for default judgments.

We have proceeded cautiously in the
past even with regard to ordinary torts.
The serious problem we had with auto-
mobile accidents is an example. Where

individuals without diplomatic or other
immunity from legal process were
responsible, they could be pursued in
private court actions, but where diplo-
mats or cars on official diplomatic
business were involved, there were
difficulties. We provided for compulsory
insurance rather than subject diplomats
to suit or governments generally to exe-
cution against all their commercial
property.

In other kinds of tort cases, we may
have an even greater need to maintain
some political branch control of the ac-
tions taken in response to foreign state
wrongdoing, even in our own territory.
Where the act is criminal, we may elect
to pursue the individual perpetrators for
prosecution and demand their extradi-
tion from the offending state. Against
the state itself, we can attempt to ob-
tain redress of private injury through
diplomatic pressures. However, the deci-
sion on sanctions against the economic
interests of the state or seizure of state
property in such cases, with its con-
comitant potential for retaliation and
disruption of broader relations between
the United States and that country,
might not always be best left solely a
matter of judicial response to private
petition.

Our third concern is that the pro-
posed amendment would increase the
opportunities to execute against bank
accounts used to maintain and operate a
governmental mission in the United
States. In partial response to this con-
cern, the bill incorporates an exception
recognizing the immunity of diplomatic
and consular property, but removes that
immunity from diplomatic and consular
bank accounts if they are used to any
extent for purposes unrelated to diplo-
matic or consular functions. However, if
bank accounts of diplomatic or consular
missions are used for purposes outside
the scope of the mission's diplomatic or
consular functions, the State Depart-
ment would want to deal with this
improper use on a government-to-
government basis. It could unduly inter-
fere with the functioning of diplomatic
or consular missions to strip automati-
cally the entire operating account of
such a mission of diplomatic and consu-
lar immunity from execution— to which
it may be entitled under international
law.

Fourth, the suggestion that courts
examine not only the uses being made
of property but the intended future use
invites speculation and intrusive inquiry,
perhaps supported by discovery, about
the intentions of governments. We
would oppose that language and the
uncertainty and unnecessary offense it
could create.

Fifth, removal of the nexus reqfl
ment would increase the potential for
execution against property held by an
entity juridically separate from the 01
substantively liable for the underlyinj
claim. It has been argued that this
would be precisely the right result an
that a judgment against a governmen
should be executable, for example,
against aircraft of the state-owned
airline. In the somewhat analogous pi
vate setting, however, a judgment
against a parent corporation can be o
cuted against the parent's property it
terest in the subsidiary, but it norma
cannot be executed against individual
assets of the subsidiary. While states j
have immunities private corporations
don't enjoy, international practice ap-
pears nevertheless to respect the dis«j
tinction between the property of a st
and that of its individual separate jui
cal entities. Subject, of course, to sue*
exceptions as the normal equitable ri'
for piercing corporate veils in limited
circumstances, overriding those distil
tions would create difficulties. Wheth
or not the nexus requirement is rela;i
the act should continue to respect thfl
distinction between juridically separa
entities.

Weighing all these concerns, we 1
lieve that we should remove the nexu
requirements at present only for coif
mercial property seized to satisfy an
bitral award which the losing state |
refuses to pay. This would lie a parti
larly important development in suppc
of our investment protection policy. 1
strongly encourage arbitration betwe
investors and foreign governments, fi
example through our bilateral investil
ment treaty program, and it is impor
tant that remedies are provided so tl
arbitral agreements are meaningful. '
these cases, the foreign sovereign
agreed to the third party dispute set
ment and had the opportunity to sha)
the composition of the forum, its rule
and the choices of law involved. Fxec
tion against property is less likely to
cause political difficulties where the
award results from such a consensual
process than where the judgment wa
rendered by the domestic courts of
another state under a compulsory pre
ess to which the defendant objects.

For the time being, we believe a
nexus should still be required for eou
judgments other than those confirmir
arbitral awards. Arbitral awards forn
class of cases which has substantially
less potential for troublesome judgme
than the tort area. We recognize that
the nexus requirement can be burder
some to a successful litigant. Howeve
from our initial review, we have not !

INTERNATIONAL LAW

Vidence of a significant pattern of
in which a successful claimant was
ited by the nexus requirement,
ver, there is potential for difficult
t situations even in the area of
srcial activities, as in the
mg bonds case. While some other
live immunity states do not ap-
o have a nexus requirement,
continue to require. We believe
ould gain some experience with its
al from arbitral award enforce-
uinl survey actual case experience
er jurisdictions before going
r.

(dgment Attachment

jroposed amendment would retain
jimunity presently provided, absent
ps waiver, for property of the for-

itate itself, but would remove it for
:'ty of a state's agencies or in-
entalities "engaged in commercial
lies" in the United States. This
|affect not only state-owned com-
Ll enterprises, but also more
It to characterize mixed entities,
/en entities like cultural missions

functions may be governmental
hieh, like entities, must engage in
ercial acts or activities, such as
b.sing supplies and services, to
pin that mission here,
lere would seem to be little for-
mations problem in removing im-
y from prejudgment attachment
e essentially commercial enter-

which some governments own.

do not appear to be treated by
countries as part of the state for
;ign immunity purposes. They do
snerally engage in governmental
7or this reason, we are prepared
port a change which would place
ate-owned essentially commercial
(pise in the same position regard-
ejudgment attachment as its pri-
' owned counterpart, except to the

of its governmental activities, if

Syond this, however, the proposed
iment regarding prejudgment at-

ent raises serious difficulties. The
sed amendment contains some tra-
al safeguards, including provision
bond. Nevertheless, applied to
. government entities or instru-
ilities beyond the essentially com-
al ones which happen to be govern-
owned, prejudgment attachment
s with it a potential for harass-
and pressure on sovereigns which
SIA, wisely in our view, decided
(innate from U.S. law.
is sometimes said that the Iran
i demonstrates the need to have

prejudgment attachment. However, that
extraordinary crisis created problems
we addressed through crisis-oriented
measures, including an assets freeze,
Treasury licensing of prejudgment at-
tachments, and the ultimate dissolution
of those attachments by the executive
branch in order to implement the
Algiers accord which established an
arbitral tribunal to settle the claims.
The Iran crisis does not lead us to con-
clude that the property of all foreign
state agencies and instrumentalities en-
gaged in commercial activity ought to be
made subject to prejudgment attach-
ment, absent waiver, in normal times.
Rather, we believe it suggests that,
especially in a crisis, there may be a
need for political branch control over
such attachments. Before concluding
that a change were called for regarding
the agencies or instrumentalities which
are partly or wholly governmental in
activities, we would want to learn the
extent to which the present law has
frustrated parties who have won U.S.
judgments, but have been unable to col-
lect because the state agency or instru-
mentality removed commercial assets
that had been in the United States at
the time the suit was instituted. We
would also want to look at the extent to
which these suits involved commercial
or financial deals in which the security
guarantees and waivers or immunity or
the absence thereof are part of the bar-
gaining. Parties may enter into badly
safeguarded deals with foreign states.
but this may not call for legislative
correction.

In sum, we believe that state-owned
commercial enterprises should be placed
in the same position as their private
counterparts. However, prejudgment at-
tachment can be particularly disruptive
when applied to agencies or instrumen-
talities which are engaged in both
governmental and commercial activities.
We see no demonstrated need for per-
mitting prejudgment attachment for
such agencies and instrumentalities of
mixed function. Such treatment could
also produce problems for the United
States abroad, which the Department of
Justice will address.

Foreign Government
Loan Transactions

The proposal to specify that "commer-
cial activity" includes "any promise to
pay made by a foreign state" and the is-
suance of debt securities or loan guaran-
tees appear to us a solution in search of
a problem. There appear to have been
no difficulties encountered by the courts
or financial community in this regard

under the present statute. It has been
suggested that the failure of the U.S.
statute to be as specific about financial
transactions as the United Kingdom's
statute is undesirable. We have seen no
evidence that this has noticeably im-
paired the competitiveness of U.S. finan-
cial markets or deprived any lender of
its claim.

In this respect, as well as others dis-
cussed above, we are tempted to invoke
the old saw: "If it ain't broke, don't fix
it." If specific examples can be shown
where our law has put us at a competi-
tive disadvantage or otherwise harmed
U.S. interests, we are prepared to con-
sider fixes. But we are reluctant to run
the risk of fixes for hypothetical gain.

Maritime

The Department of Justice will address
the proposed amendments to the FSIA
maritime provisions. We accept their
evaluation and concur in the adoption of
the proposed amendments which would,
inter alia, reduce the penalties for im-
proper arrest of a state-owned vessel
and bring our practice regarding securi-
ty interests more closely into line with
international practice.

Additional Issues for Consideration

I noted at the outset that there are
problems which the proposed amend-
ments do not address. Some relate to
default judgments. Others relate to the
exclusivity of the FSIA and to discovery
against foreign states.

Let me stress that the Administra-
tion does not have proposals at this time
and is still considering these issues.
However, it may be useful to describe
the issues and possible solutions.

Default Judgments

To deal with the default problem, the
antidefault provisions of §1608(e) might
be clarified and strengthened, the bur-
den of production and persuasion might
more clearly be put on the plaintiff, and
the act might expressly provide that a
state may make a special appearance on
jurisdiction without thereby subjecting
itself to personal or subject matter
jurisdiction.

Section 1608(e) provides that there
shall be no judgment by default against
a foreign state or state agency or in-
strumentality unless that claimant estab-
lishes his claim "by evidence
satisfactory to the court." Under this
standard some courts have not only
declined to consider available defenses if
the sovereign state defendant does not

>mhar -1QQC

MIDDLE EAST

ir bul also have declined even to
make inquiries into the basis for plain-
tiffs assertion of jurisdiction.

In addition, some states still sub-
scribing to the absolute theory of sover-
eign immunity are extremely sensitive
about submitting to the jurisdiction of a
foreign court in apparent contravention
of their principles. A provision expressly
permitting a special appearance for the
purpose nf contesting the court's juris-
diction without waiving any immunity
they may enjoy could assist in persuad-
ing; them to resolve cases against them
within the framework of our judicial
system.

Most importantly, it must be a seri-
ous matter to file lawsuits against for-
eign states in U.S. courts. Now, suits
can be filed with little or no risk of cost
to the plaintiff, even if he loses. In some
cases, there may be a political motiva-
tion for the suit and a well founded ex-
pectation that the foreign sovereign will
not appear, resulting in a default judg-
ment that can be used for harassing ac-
tions against assets. One step we are
considering is to provide for the award
of fees to the winning' defendant and re-
quire posting of a bond for reasonably
anticipated defendant attorneys' fees.
Adopting a type of English rule on at-
torneys fees for cases against foreign
states would not guarantee against
harassing litigation. But it may avoid
some and encourage some states to de-
fend such cases, either in the first in-
stance or in a subsequent action to set
the judgment aside.

Exclusivity

Exclusivity of the FSIA should not be
the problem it is. The FSIA and its
legislative history clearly reflect Con-
gress' view that the FSIA is the exclu-
sive basis under U.S. law for
jurisdiction over a foreign state. Yet
some courts have concluded otherwise.
The Alien Tort Claims Act, 28 USC
[United States Code] 1350, has been a
source of confusion. This law, provides
that federal courts shall have jurisdic-
tion for any civil action by an alien for a
toil '•committed in violation of the law
of nations or a treaty of the United
States." Although §1350 raises a num-
ber of questions, one point should be
clear: no statute predating the FSIA
such as §1350, and no later statute
which does not expressly override the
FSIA, provides a basis for suing- a for-
eign state where personal and subject
matter jurisdiction does not lie under
the FSIA. We are considering whether,
to reduce the risk of future error by the
courts, this point should be more
expressly stated in the FSIA.

Discovery

The FSIA has no special provisions for
discovery against foreign states. The
potential breadth of discovery and the
threat of sanctions for contempt can
present serious difficulties, particularly
before the state's claim to immunity has
been decided. While the courts have the
power to manage discovery against for-
eign states with restraint, there could
be some benefit in legislative safeguards
such as restricting discovery to the
jurisdictional issue until jurisdiction is
established and limiting contempt sanc-
tions. A number of other states have
limited such sanctions in their sovereign
immunity legislation.

State-Owned Commercial
Enterprises

In discussing H.R. 3137, I stated our
support for allowing prejudgment at-
tachment against state-owned commer-
cial enterprises. We are also considering
whether there is any reason that state-
owned commercial enterprises have spe-
cial immunity from tort suits to which
private counterparts would be subject.
We are also examining whether it might
be desirable to remove truly commercial
enterprises, such as state-owned air-
lines, from the FSIA in other respects.

Conclusion

H.R. 3137 and related bills represent a
fine initiative to improve our law in an
important area. They contain some pro-
posals on which we believe useful

amendments can go forward now. Wi
have suggested additional areas in
which proposals for amendments mig
be forthcoming. We are prepared to
work with the sponsors and the intei
ested groups to draw up a revised Sf|
proposals which we could support foi
prompt enactment.

Regarding the more difficult pro]
als for change, we are seeking furtht
information on the reactions of other
tions and their current practice. We
have put some questions to a numbe
other governments. We have only be«
to receive responses. We hope to be-
able to share the results of this inqu
with the committee in due course. W
also expect that these hearings will
duce useful information regarding th
nature, degree, and significance of tl
problems actually encountered by pr
vate litigants in these other areas. V
quite frankly, have been apprised nv
the years of very few cases indicatir
need for the more potentially troubld
some statutory changes being propod

With that information and the re*
suits of this hearing, we may have a
better basis for the formulation of at
tional proposals to enhance fairness
the handling of claims against foreign
sovereigns without creating offsettin
problems for our foreign relations in
ests and U.S. interests in other
countries.

■The complete transcript of the heafl
will be published by the committee and v
he available from the Superintendent of
Documents, U.S. Government Printing 0
Washington. D.C. 20402. ■

Arms Sales to Saudi Arabia

WHITE HOUSE STATEMENT,
MAY 6, 1986'

This week Congress will turn to consid-
eration of a missile sale to Saudi Arabia.
On April 8 President Reagan notified the
Congress of his intent to sell these air
and sea defense missiles to the Saudis.
These weapons are not new to Saudi
Arabia; all have been sold previously and
are already in the Saudi inventory.

The United States has vital interests
in the Persian Gulf. They include
supporting the security of friendly
moderate states, countering radical
forces, preventing Soviet expansion, and
maintaining the free flow of oil. The sale
will protect and advance our own inter-
ests in the following specific ways.

• It supports Saudi air defense i
the 1990s.

• It continues a bilateral securit;
relationship which has been supporte
every President since Franklin D.
Roosevelt and which remains the kej
gulf defense, to cooperation throughi
the region, and to the search for peat

• Completing the sale now, even
though the missiles will not be delive
for several years, makes clear that w
support Saudi self-defense.

The missile numbers have been
calculated by the U.S. Air Force as
necessary to meet realistic threat pn
tions in the period when they will be
delivered. They present no threat toi
Israel and in no way undercut the abl
lute determination of the United Sta.

rionarlmpnt nf .Qtatp Rll

MIDDLE EAST

iserve Israel's qualitative military
in the region. These missiles are
;t to stringent security safeguards,
audis have an outstanding record
; regard and have never allowed
f.S. weapon to fall into unauthor-
ands. Moreover, if the United
3 fails to help the Saudis in this
■tant area, they are certain to get
eapons they need from other
es who are unlikely to share
ica's concern for Israel's security.
he United States and Saudi Arabia
many similar interests beyond the
and our actions are often mutually
irtive. They have helped in U.S.
s to support moderate govern-
3 in Egypt. Jordan, and Sudan and
worked quietly in the search for
in Lebanon, in the Arab-Israeli
ct, and in the Iran-Iraq war.
Je are engaged in a critical struggle
st Libyan-supported, state ter-
n. Saudi Arabia has consistently
'd behind the scenes to discourage
ism from any source,
audi Arabia is a firm friend of the
d States. Our own interests require
help Saudi Arabia meet its legiti-
security needs in the face of grow-
jgional threats. Therefore, the
dent strongly urges the Congress
)port this important sale.

(TE HOUSE STATEMENT,

7, 1986'

L the House joined the Senate in
b to disapprove the proposed sale of
[sive missiles to Saudi Arabia. By
iiction, the Congress has endangered
jmgstanding security ties to Saudi
la, called into question the validity
B. commitments to its friends, and
rmined U.S. interests and policy
jghiiut the Middle East, in partic-
lur ability to act as a balanced
fcr in the search for a peaceful reso-
h to the Arab-Israeli conflict. The
[dent will not allow this to happen.
1st be clearly understood that this
If defensive arms is not proposed as
i"i- tu the Saudis, but because it is in
rica's interest to help our friends
Id themselves against the forces of
lalism and terror. Therefore, it is
■resident's intention to veto this
Ltion and to work actively with
bers of both Houses of Congress to
ilin that veto.

MESSAGE TO THE SENATE,
MAY 21, 1986;

I am returning herewith without my approval
S.J. Res. 316, ;i resolution that would halt the
proposed sale of defensive missiles to Saudi
Arabia.

The U.S. defense relationship with Saudi
Arabia was started by President Roosevelt in
1943 and endorsed by every President since. I
cannot permit the Congress to dismantle this
long-standing policy, damage our vital strate-
gic, political and economic interests in the
Middle East and undermine our balanced
policy in that region.

The American people and their represen-
tatives should understand that this sale is in
our interests. It is not just a favor to our
friends in Saudi Arabia. Moreover, it is not
being done at anyone's expense.

The security of Israel remains a top
priority of this Administration. This sale will
not endanger Israel's defenses, a fact that is
underscored by Israel's decision not to oppose
the sale.

Stability of the oil-rich Persian Gulf is
another goal of great importance. In a region
living in the shadow of the tragic and grue-
some Iran-Iraq war, and threatened by
religious fanaticism at its worst, we cannot
afford to take stability for granted. Saudi
willingness to stand up to Iranian threats has
been key in preventing the spread of chaos. It
has been Saudi Arabia's confidence in our
commitment to its security that has allowed it
to stand firm.

But Saudi Arabia produces no weapons of
its own and we have not sold the Saudis new
arms in almost 2 years. If we suddenly shut
off that supply, it will weaken our own
credibility, as well as the Saudis' ability to
defend themselves. It would send the worst
possible message as to America's dependa-
bility and courage.

Behind the scenes, the Saudis have aided
the effort to combat terrorism, which is as
much, if not more, of a threat to them as it is
to us. Recently, they refused Qadhafi's
requests for aid. Several times in recent
months, they have been instrumental in off-
setting unjust criticism of the United States
and preventing radical states from undertak-
ing joint action against our country.

The Saudis have proven their friendship
and good will. They have assisted our efforts
to support responsible governments in Egypt,
Jordan and Sudan. They have worked quietly
in the search for peace in Lebanon, in the
Arab-Israeli conflict and in the Iran-Iraq war.
They also provide impressive assistance to the
government of Pakistan and to Afghan
refugees.

In the long run this sale will be good for
America, good for Israel, good for Saudi
Arabia and good for the cause of peace.

1 ask members of both parties to sustain
this veto and to join me in protecting our
country's vital interest.

RONALD REAGAN

PRESIDENTS STATEMENT,
JUNE 5, 19861

Today's vote in the Senate on the Saudi
arms sale confirms America's commit-
ment to a security relationship that has
served both the United States and Saudi
Arabia well over the past 40 years.

The United States continues to con-
sider the security and well-being of
Saudi Arabia and the stability of the
Persian Gulf to be a matter of vital
interest. Similarly, our commitment to
freedom of navigation in the gulf
remains firm.

We are determined to work with the
Saudis and other friendly states to
achieve our shared goal of peace and
stability in the region.

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

2Text from Weekly Compilation of
Presidential Documents of May 26.

3Text from Weekly Compilation of
Presidential Documents of June 9. ■

Sale of AWACS
Aircraft to Saudi
Arabia

LETTER TO THE CONGRESS,
JUNE 18, 19861

By letter dated October 28, 1981, I assured
then-Senate Majority Leader Baker that the
proposed transfer to Saudi Arabia of AWACS
[airborne warning and control system] air-
craft would not occur until I had certified to
the Congress that specified conditions had
been met. Subsequently, Section 131 of the
International Security and Development
Cooperation Act of 1985 ("ISDCA") incor-
porated the text of that letter, with its condi-
tions for certification, into legislation.

I am pleased to inform you that all condi-
tions set forth in my October 28 letter and
repeated in Section 131 of the ISDCA have
now been met and that I herewith forward to
you my certification to that effect. Through
the extensive efforts of the Defense and State
Departments, agreements and other actions
necessary to fulfill these requirements have
been concluded.

fsmber 1986

MIDDLE EAST

I now wish to draw particular attention to
ixth condition thai I have certified I

. inced that, as I stated in 1981,
tie of these AW At IS aircraft to Saudi
Arabia will contribute directly to the stability
and security of the area and enhance the
atmosphere and prospects for progress
toward peace. I also believe that significant
progress toward peaceful resolution of
disputes in the region has been accomplished
with the substantial assistance of Saudi
Arabia. These perceptions are strengthened
by a review of events of the last five years.

The current deployment of U.S. AWACS
aircraft to Saudi Arabia has contributed
significantly to the stability and security of
Saudi Arabia and the region as a whole. The
Royal Saudi Air Force's (RSAF) gradual
assumption of the role now performed by the
I I.S. AWACS aircraft will continue this con-
tribution. Over the past five years the U.S.
AWACS aircraft have demonstrated their
ability to detect approaching Iranian aircraft
well before they would be detected by ground-
based radar. This early detection, coupled
with the demonstrated resolve of the RSAF
to deploy its F-ISs and engage aggressor air-
craft, has deterred Iran from escalating
attacks against targets on land and in Gulf
waters under the Saudi protective umbrella.
The Saudi commitment to a strong defense as
evidenced by such measures as the AWACS
acquisition, past defensive military action,
and efforts to organize collective security
among the member states of the Gulf
( looperation Council (GCC), taken together
with the Kingdom's obvious lack of aggres-
sive intent, have contributed and will continue
to contribute to the stability and security of
the area. Our continued success in helping to
support regional stability will diminish
prospects that U.S. forces might be called
upon to protect the governments, shipping-
lanes, or vital petroleum resources of the
region.

Saudi Arabia has firmly supported every
i' mi fii-ant diplomatic effort to end the Iran-
Iraq war. Mediation missions under the
auspices of the United Nations, the Organiza-
tion of the Islamic Conference, and third
counl ries acting independently have received
Saudi diplomatic and facilitative assistance.
In encouraging a negotiated settlement of the
conflict, the Saudis have made clear their
i" eference that the war end without conces-
sions of sovereignty by either side.

Saudi efforts to advance the Arab-Israeli
peace process have been substantial. The
Fahd I'eace Plan and the Arab endorsement
of i he plan embodied in the 1982 Fez Com-
munique significantly and irreversibly
modified tile Aral, consensus of the three

"no's" enunciated a1 the 1968 Khartoum
Summit, i.e.. no recognition, no negotiation,

and no conciliation with Israel. The Fez Com
munique moved the formal Arab position
from rejection of peace to consideration of
linir to achieve peace with Israel. The plan's
statement that all states in the region should
be able to live in peace was an implicit accept
ance of the right of Israel to a secure
existence. The concept of land for peace was
a direct reflection of I'.N. Resolution 242.

While various elements of the Fez Plan differ
from our views, the Plan remains the single
largest step toward peace on which the Arab
world has been able to agree. The existence of
I Ins consensus provided a base from which
King Hussein felt he could launch his initia-
tive to bring Israel, Jordan, and the Palestin-
ians to the negotiating table in 1984-85.

Saudi Arabia has signaled its tacit sup-
port for King Hussein's moves to lay the
foundation for peace negotiations by continu-
ing substantial financial assistance payments
to Jordan following critical steps in the proc-
ess, i.e., after Jordan resumed diplomatic
relations with Egypt and again after the
February 1985 agreement between Hussein
and PLO [Palestine Liberation Organization!
Chairman Arafat. Despite vocal Syrian oppo-
sition, the Saudis sent official observers to
the Amman Palestine National Council
meeting in late 1984 where moderate
Palestinians made a decision to break with
the radicals thereby opening the way for King
Hussein to begin his peace initiative.

During the subsequent and continuing
debate over how to make peace with Israel,
the Saudis have consistently lent support to
moderate Arab governments. Egypt's
readmission to the Organization of the Islamic
Conference was significantly assisted by
crucial Saudi support for a procedural motion
calling for a secret ballot on the readmission
vote. Following the police riots in Cairo in
February of this year, the Saudi Council of
Ministers issued a statement supporting
President Mubarak.

Although its efforts, like our own, met
with limited success, Saudi Arabia played a
major and highly visible role in attempts to
arrange a lasting cease-fire in Lebanon. In
the August 1983 efforts of Crown Prince
Abdullah and Prince Bandar to bring an end
to fighting in the Shuf mountains, and again
through observers at the Geneva and
Lausanne Lebanese national reconciliation
talks, Saudi Arabia sought to bring peace to a
moderate Arab nation and establish the
framework for stable government. The Saudis
also proved supportive of Lebanese efforts to
negotiate directly with Israel conditions for
Israeli withdrawal from southern Lebanon. In
this regard, the Saudis supported Lebanese
efforts to win Syrian consent to compromises
necessary to reach agreement.

Saudi Arabia has provided crucial support
for Sudan during that country's transition to
a democratic form of government. Further-
more, it has established a significant record in
working for regional stability and settlement
of regional disputes in countries beyond its
immediate neighborhood. Saudi aid has been
crucial to the Afghan cause and significant to
Pakistan. Morocco, and Tunisia. Despite
limitations imposed by concern for its own
security, the depth of regional animosities,
and the need to establish and work within an
Arab consensus, Saudi Arabia has assisted
substantially the significant progress that has
been made in the peaceful resolution of
disputes in the region.

Saudi Arabia has publicly condemned ter-
rorism and terrorist actions, having itself
been a victim of terrorism. More important, it

has taken practical actions to oppose ter-
rorism regardless of its origins.

I am convinced that the assurances I
made in my letter to Senator Baker havaj
been amply fulfilled. A firm foundation h:
been laid for close and continued U.S.-Sa
cooperation in operating the Saudi AWAl
and in building an air defense system foil
Saudi Arabia and the GCC. By contribute
the self-defense of these countries, we ar
diminishing the likelihood of direct interv
tion by U.S. forces in defense of vital
Western interests. At the same time, we|
encouraging forces of moderation which,
they prevail, will bring lasting peace to m
bulent region.

Sincerely.

RONALD RE/>

Certification of Conditions

Requisite To Transfer of AWAC1 1

Aircraft to Saudi Arabia

J
In accordance with Section 131 of the hnj

national Security and Development Coon
tion Act of 1985", P.L. 99-83. I hereby cei
that the conditions set forth in my com-
munication of October 28, 1981, to the SI
with respect to the transfer to Saudi Ars
of five E-3A airborne warning and conta
system (AWACS) aircraft have been met|
specifically:

1. Security of Technology

A. That a detailed plan for the security <
equipment, technology, information, anffl
porting documentation has been agreed!
the United States and Saudi Arabia andl
place; and

B. The security provisions for Saudi I
AWACS aircraft are no less stringent tha
measures employed by the United States)
protection and control of its equipment o
kind outside the continental United State
and

C. The United States has the right o
continual on-site inspection and surveilla'
by U.S. personnel of security arrangeme:
for all operations during the useful life ol
AWACS. It is further provided that sec*
arrangements will be supplemented by at
tional U.S. personnel if it is deemed
necessary by the two parties; and

D. Saudi Arabia will not permit citiffl
of third nations either to perform
maintenance on the AWACS or to modi!
such equipment without prior, explicit mv
consent of the two governments; and

E. Computer software, as designate'
the United States Government, will rem*
the property of the United States
Government.

2. Access to Information

That Saudi Arabia has agreed to share W
the United States continuously and com-
pletely the information that it acquires ft
use of the AWACS.

Dpnartmfint of State Bl

MILITARY AFFAIRS

itrol Over Third-Country
ipation

it Saudi Arabia has agreed not to share
to AW ACS equipment, technology,
entation, or any information developed
ueh equipment or technology with any
other than the United States without
or, explicit mutual consent of both
oments; and

I There are in place adequate and effec-
ocedures requiring the screening and
;y clearance of citizens of Saudi Arabia
ly cleared Saudi citizens and cleared
ationals will have access to AWACS
lent, technology, or documentation, or
ation derived therefrom, without the
Bxplicit mutual consent of the two
iments.

j'ACS Flight Operations

e Saudi AWACS will be operated
ithin the boundaries of Saudi Arabia,

with the prior, explicit mutual consent
two governments, and solely for defen-
irposes as defined by the United States,

r to maintain security and regional

■y-

nmand Structure

greements as they concern organiza-
rommand and control structure for the
ion of AWACS are of such a nature to
tee that the commitments above will
ored.

rional Peace and Security

le sale contributes directly to the
y and security of the area and
:es the atmosphere and prospects for
ss toward peace. Significant progress
1 the peaceful resolution of disputes in
rion has been accomplished with the
ntial assistance of Saudi Arabia.
nil provide separately to the Congress,
appropriate procedures, those con-
and agreements pertinent to this sale
rtification, including those whose con-
ality must be preserved.

Strategic Modernization Program

entical letters addressed to Thomas P.
I, Jr., Speaker of the House of
sentatives, and George Bush. President
Senate (text from Weekly Compilation
;idential Documents of June 23. 1986). ■

WHITE HOUSE STATEMENT.
JUNE 3, 1986'

The President sent a message2 to Con-
gress today that called upon the Con-
gress to fully support his budget request
for strategic modernization and the
Strategic Defense Initiative. The Presi-
dent views this message as a companion
piece to his recent statement on interim
restraint with respect to the SALT
treaty limitation on strategic weapons.

The President noted that over the
past 5 years, with the support, and
cooperation of the Congress, we have
made substantial progress in rebuilding
our deterrent capabilities. We can be
justifiably proud of what we have accom-
plished by working together, but much
more remains to be done. While
recognizing the progress we have made,
we must be clear that the advanced
systems which have been proceeding
through intensive development pro-
grams during the past 5 years are only
now beginning to be deployed. Those
unfamiliar with the sequence of
research, development, and deployment
all too often assume that our commit-
ment to build a new system results in its
immediate deployment. This error may
explain the view held by some that we
have now accomplished enough in restor-
ing our strategic capabilities and that we
can begin to cut those programs signifi-
cantly. In fact, the real benefits of our
strategic modernization efforts will be
realized only if we complete the tasks
that we have begun with the research
and development phase.

We recognized in 1981, when we
began to modernize our defenses in
response to the Soviet buildup, that we
had to make strategic modernization our
first priority. We have done so, and it
has paid clear dividends. Our strategic
programs have been models of manage-
ment efficiency where we have kept
them stable and on track. Interna-
tionally, our progress has paved the way
to negotiations now in progress, where
for the first time the prospect of deep
nuclear arms reductions is before us.

As our negotiators in Geneva seek
equitable and verifiable agreements,
they are mindful that we have no more
urgent task in preserving peace and
freedom than the prevention of nuclear
war. The strategic programs now before
the Congress represent a vital founda-
tion to this search for a stable peace.
They are designed to restore and

strengthen our traditional approach to
deterrence while we explore through our
Strategic Defense Initiative the feasibil-
ity of harnessing advanced technologies
in order to usher in a safer world.

We must also always remember that
maintaining a strong nuclear deterrent
does more than prevent nuclear war.
Strong U.S. deterrent forces also con-
tribute significantly to preventing major
conventional aggression. In calculating
what they call "the correlation of
forces," the Soviet political and military
leadership are mindful of the state of the
nuclear balance between the United
States and the Soviet Union. As a result.
a strong U.S. strategic deterrent
decreases the threat of any Soviet
aggression and serves as the vital
background which discourages Soviet
conventional attack upon our allies or
our interests abroad. A weak nuclear
deterrent leaving the Soviet Union with
superior nuclear forces could have the
opposite effect. It could invite the Soviet
Union to rely on such an advantage and
to use conflict or coercion to achieve
their objectives. Our strategic programs
provide, therefore, a beneficial effect
which far outweighs the less than 15% of
the defense budget they consume. They
are affordable, they are vital, and they
respond to an increasing threat.

In considering our proposed funding
for strategic programs, the President
asks each and every Member of Con-
gress to consider the stakes involved.
The Congress can proceed along the
path of strategic modernization we
charted 5 years ago and strengthen
thereby our ability to deter both conven-
tional and nuclear coercion or aggres-
sion. It can permit us to proceed as
quickly and efficiently as possible
through the Strategic Defense Initiative
to determine how we can create a safer
world and ensure peace and stability for
the long term. Alternatively, by cutting
here and trimming there, Congress can
stretch programs, thereby delaying
scientific results; postponing the deploy-
ment of capabilities, which we all agree
are necessary; and as a further penalty,
increasing programmatic costs. The
President knows which choice the
American people would make.

Thus, we come to one of those
unique crossroads of history where
nations decide their fate. Our choices are
clear: We can hold firm to our policies of
modernizing to maintain our deterrent
strength that has preserved the peace

)mber 1986

NARCOTICS

for 40 years, or we can shrink from the
challenge by offering a host of excuses.
We can strengthen the hand of our nego-
tiators in Geneva in their efforts to
achieve deep, equitable, and verifiable
reductions; or, by unilaterally reducing
our forces, we can make a mockery of
the only process that leads us toward
meaningful arms control.

The President is confident that the
Congress will therefore join with him to
protect the strategic modernization pro-
grams that make these negotiations
possible. The Soviets are well informed
regarding congressional support for our
modernization programs. If they detect a
collapse of American resolve, we will see
no movement in the negotiations because
the Soviets will know they are better off
by letting the Congress reduce our pro-
grams unilaterally rather than by engag-

ing in meaningful negotiations which
would result in both U.S. and Soviet
systems being reduced on an equitable
and verifiable basis.

By standing together to protect
these few programs that form the foun-
dation of our national security, we will
send a clearly different message. The
world knows that there is no more
powerful force than an America united
and determined to protect its freedom.
That is the message we must send forth
to pave the way for peace in the years
ahead.

'Read to news correspondents by Edward
P. Djerejian, deputy press secretary to the
President for foreign affairs, in the Briefing
Room of the White House during the daily
press briefing (text from Weekly Compilation
of Presidential Documents of June 9, 1986).

2Text of message is in Weekly Compila-
tion of Presidential Documents of June 9,
1986. ■

Narcotics Trafficking in Southwest Asia

by Ann B. Wrobleski

Statement before the Task Force on
International Narcotics Control of the
House Foreign Affair* Committee on
May hi, 1986. Miss Wrobleski is Acting
Assistant Secretary for International
Narcotics Matters.1

The Department of State is offering tes-
timony this afternoon concerning the
narcotics production, trafficking, and
control situations in Southwest Asia,
focusing upon Pakistan, Afghanistan, In-
dia, Iran, Nepal, and Turkey.

There are four basic interrelated
points we want to establish in this hear-
ing, including new concerns about ex-
panded opium production in the region
and the capability of governments in the
region to contain this expansion.

The first and most fundamental
point to make about the narcotics situa-
tion in Southwest Asia is that, although
Southwest Asia continues to supply ap-
proximately half of the heroin consumed
in the United States (1984 Drug En-
forcement Administration estimate),
opium poppy production and even canna-
bis and hashish production in Southwest
Asia are heavily influenced by consump-
tion within that region and the Middle
East. In this respect, the situation is
not unlike that in Southeast Asia, but is
markedly different from that in Latin
America, where much of the illicit nar-

cotics production is specifically targeted
for the U.S. market.

The second point is that the produc-
tion dynamic changed dramatically in
the 1985-86 crop season, especially in
Pakistan, where we estimate that the
1985-8(5 opium crop increased to a range
of 100-150 metric tons, compared to an
estimate of 40-70 metric tons in 1985.
We believe much of the increase in
Pakistani opium production was a result
of three factors: (1) increasing prices for
raw opium which led to cultivation of
additional acreage; (2) highly favorable
weather conditions which sharply in-
creased yield; and (3) accelerating de-
mand within the region for opium and
heroin. While there is some possibility
that the estimated increase in Pakistani
opium production in 1986 could result in
increased exports of opium products to
the United States and Europe, the avail-
able information indicates that the in-
creased production is being absorbed
within the region. Moreover there was a
change in the political system which
resulted inadvertently in a period of
governmental inaction.

The third point is that the higher
levels of production needed to respond
to this increasing indigenous demand in-
crease the threat of expanded heroin ex-
ports to the United States. This height-
ens our concerns about the effectiveness
of control and demand reduction pro-
grams within the region.

We are especially concerned aboi
shortcomings in the Pakistani narcot
enforcement program. Moreover we
concerned about shifts in the trade
routes and trafficking practices of tl
myriad drug cartels and organizatioi
which ply this trade, especially the
shifts through India and also throug
the Middle East, notably Lebanon.

But. the fourth point we want ti
make is that the recent unsatisfacto
enforcement of the opium poppy bar
the Gadoon area of Pakistan does nc«
represent a lasting breakdown in
U.S. -Pakistani cooperation on eradic
tion and control of narcotics traffick
The top leadership of the governme
remains firm in its resolve to comba
the drug problem; there has been
progress on enforcement; and recen
cussions at high levels of both govei
ments persuades us that the problei
encountered recently are temporary
will be overcome.

With that statement as backgroi
let me proceed with a discussion of
dividual countries, beginning with
Pakistan.

Pakistan

The narcotics situation in Pakistan
changed several times in the last d(
ade. We are all familiar with the dr
matic change in the late 1970s, whei
Pakistan emerged from a country w
largely produced opium for its inter
consumption to a major factor on tlr
ternational market. In 1979, an esti-
mated 800 tons of opium were prodi
and the amounts intended for the in-
national market were largely refiner
Turkey, Sicily, and elsewhere for th1
the U.S. and European heroin mark
In the early 1980s, the dynamic cha:
again, and heroin laboratories emerj
in Pakistan; they are a principal fac
in the subsequent outbreak of heroii
diction in Pakistan.

In recent years, opium productk
Pakistan had sharply declined, and
country's prominence in internation;
narcotics was that of a principal refi
of Southwest Asian opium into hero
and the principal conduit for Southv
Asian heroin intended for the U.S. :
European markets.

Those roles continue, but now P
stan has re-emerged, at least in the
1985-86 season, as a major opium
producer.

A number of factors converged j
create the changed production situa
in Pakistan. The best information ai
ble to us suggests that opium produi
yield would have increased from 70
100 metric tons in 1986 because of i
dant rainfall. Increased planting in

rionartmont nf RtatP R (

NARCOTICS

jnse to higher prices for opium gum
imated to have led to an expansion
i number of hectares under cultiva-
ivvith a further push upward on
: to as much as 150 metric tons.
1 considering the continuing via-
i of the U.S.- and UN-assisted pro-
is, it is important to note that the
ontinued to be effectively enforced
ig- the 1985-86 growing season in
[alakand, Buner, and Dir/Adinzai
, where attempts were made to
ivate opium poppy and the crops

destroyed. As noted above, much
■ expansion took place in the Ga-

Dir, and tribal areas, the latter
)vered by development agree-
-;. In Gadoon, or Gadoon/Amazai,

had been progress in response to
Dpment assistance provided by the
Agency for International Develop-

(AID)' through the 1984 and 1985
ns. When enforcement was at-
,ed in March of this year under the
■ivil government, physical opposi-
ras encountered, and in the subse-

encounter, 13 people were killed,
rous injuries were sustained, and
100 persons were arrested. The
I cities eliminated about 500-600
I of opium poppy of the targeted
-2,900 acres.

ikistani authorities concede that
; op should have been eliminated in
■geted areas in late December or
ry and that the delays in enforee-

which took place when the crop
lature and ready for harvest, corn-
ed the situation which resulted in
tooting incidents. At the same
j Pakistani officials acknowledge
it the time when action should
I Deen taken, Pakistan was undergo-
ehange from martial law to civilian
inment, and the enforcement effort
med during this transition.
prior Pakistani officials, beginning
President Zia and Prime Minister
i), have been adamant in insisting
Enforcement of the ban on opium
action will be pursued with vigor
b the fall and winter months of
5>vhen the next crop will be culti-
i. They will pursue the prior pro-
le, under which there is first a
ng, followed by eradication of the
vhere necessary in early stages of

h, and finally eradication if needed
' crops in latter stages of growth
nay have escaped early detection.

st be noted that, as in the past,
;ement of the ban is directly linked
I'elopment assistance by the United
5 and United Nations. Much of the
86 season increase in opium culti-
l took place in Gadoon, Dir, and
ibal areas; the Dir and tribal areas

are not yet covered by an enforcement
agreement because development proj-
ects for those areas have not yet begun.
Moreover, as indicated below, the in-
creased price for a kilogram of opium,
which jumped to 2,500 rupees, also stim-
ulated increased planting.

While there was serious slippage
this year in Pakistan's eradication pro-
gram, particularly in Gadoon, the overall
Pakistani Government record since 1979
remains impressive. The enforcement
program, begun in 1983, has made
steady progress. In 1985, for example,
more than 6 metric tons of heroin were
seized, as well as 55 metric tons of
hashish. Drug Enforcement Administra-
tion (DEA) estimates that procedures
implemented by Pakistani Customs at
airports have resulted in a decrease in
quantities of heroin shipped by air. A
total of 90 heroin laboratories have been
seized, including 29 in the past year.

Much remains to be done, however,
on both the eradication and enforcement
fronts. Availability of drugs has not
been reduced, and investigations against
major traffickers are inadequate. Treat-
ment and prevention programs are em-
bryonic. Public awareness of both
trafficking and drug abuse-related prob-
lems need to be stimulated. More data
are needed on causes and patterns of
addiction. We will encourage action on
all these fronts and also encourage in-
creased regional cooperation, bilaterally
as well as cooperation through the
South Asian Association for Regional
( looperation.

But the new leadership under Prime
Minister Junejo has demonstrated its
commitment to our mutual goals. Over
the past 4 months, the various narcotics
issues have been fully discussed in meet-
ings with the President, Prime Minister,
the Minister of Interior, and others,
meetings that have involved Attorney
General Meese, Under Secretary [of
State for Political Affairs] Armacost,
former Assistant Secretary [of State for
International Narcotics Matters |
Thomas, and myself, as well as the U.S.
Ambassador, who continues to apply
strong leadership in constant dialogue
with the government. We believe a
strong, serious, cooperative relationship
exists with respect to the narcotics is-
sue. We intend to build on that relation-
ship by cooperating with the
Government of Pakistan in reviewing
what went wrong in late 1985 and set-
ting enforcement objectives well in ad-
vance of the 1986-87 growing season.

Afghanistan and Iran

The National Narcotics Intelligence Con-
sumers Committee's Subcommittee on
Production, which generates the data
used in our annual report, estimated
1985 opium production in Afghanistan in
a range of 300-400 metric tons and Iran
in a range of 200-400 metric tons.
Preliminary estimates for 1986 suggest
that both ranges remain viable, with
Afghan production possibly in the lower
end of that range and Iranian produc-
tion in the middle of the range.

These countries present special
problems in our global narcotics strat-
egy because they are inaccessible politi-
cally and, despite protestations from
their governments, do not control illicit
opium production.

Afghan opium continues to be re-
fined on both sides of the border with
Pakistan and to be routed through
Pakistan for internal consumption and
export to other countries in the region
as well as to the West. The indication is
that the number of heroin laboratories
in eastern Afghanistan is increasing.
There are ample indications of a
problem of consumption of opium prod-
ucts among Soviet military personnel
but no reliable data.

There is evidence that, while Iran
has a huge heroin addict population and
could be a net importer of opium from
Afghanistan and Pakistan, some Iran
opium production, nevertheless, is ex-
ported from its northwestern areas for
consumption on the international mar-
ket. Opiates produced in Afghanistan
are also transhipped through Iran to the
West.

Middle East

Like eastern Turkey, Lebanon and
Syria have become not only conduits for
heroin transversing Asia to Europe and
the United States but sites for heroin
conversion labs as well. Lebanon con-
tinues to be a major source of hashish,
especially for export to Egypt, but
Lebanese opium poppy is believed to be
only marginally cultivated and re-
portedly has a low morphine content
and is, therefore, not attractive to
heroin producers.

There are indications of increasing
trafficking in drugs throughout the Mid-
dle East, both for consumption in Arab
states and for onward smuggling. Kur-
dish and Armenian traffickers with
transborder ties in Turkey and Iran are
apparently linked to the increased
trafficking through Syria. The unstable
situation in Lebanon and the fact that
the northern Bekka Vallev is controlled

OCEANS

by Syrian military forces reportedly con-
tribute to transborder trafficking in the
region.

Cocaine and cocaine base are now-
entering Lebanon from Colombia,
Bolivia, Peru, and Brazil for conversion
and forward shipment; there are reports
of cocaine processing in Syria.

Cooperation among these countries
and among law enforcement agencies
within their respective governments on
narcotics control is considered poo)-.

Nepal

A relatively new trouble spot, Nepal in
recent years has become a transit point
for international heroin trafficking, as
well as a money'-iaundering site. There
is now evidence of a serious domestic
heroin consumption problem. These ac-
tivities are having profound social and
economic effects and have prompted the
government to seek U.S. assistance on
training narcotics enforcement person-
nel. Government recognition of the
problem has led to these requests for
assistance, to Nepal hosting a major
international conference last September
of nongovernmental organizations con-
cerned about drug abuse, and to hosting
a conference this fall of senior narcotics
coordinators from U.S. Embassies in
Southwest Asia.

significant increase in its addict popula-
tion, which was one factor in prompting
the Government of India to toughen its
existing narcotics control laws last year.
Principal changes in those laws included
increased penalties for possession, sale,
and manufacture of narcotic drugs, and
new controls on shipment of precursor
chemicals. Arrests have increased as a
result of the new legislation.

The United States and India have
engaged in active discussions regarding
its growth as a drug trafficking center
and, in January 1986, established a joint
narcotics working group as a mechanism
to facilitate cooperation on narcotics
matters. The Attorney General partici-
pated in comprehensive discussions with
the Indian Government during his
March visit to New Delhi.

India is the world's largest producer
of licit opium. We have indicated to the
Indians our concern that its stockpile of
licit opium is and will continue to be a
target for diversion into licit channels,
particularly in view of increased demand
for opium products throughout South-

west Asia. By some estimates, as mi
as 20-30% of India's licit opium prod
tion, which has not been closely con-
trolled in the past, is being diverted
the illicit market.

India's ability to check illicit druj
traffic across its borders and domest
cally will depend on its ability to
strengthen enforcement. To this end
the Government of India is preparin
establish a narcotics control board. I
December the South Asian Associati
for Regional Cooperation agreed to
elude narcotics cooperation among tl
group's major cooperative objectives
Ultimately, given India's position as
transit country and major consumer
illicit narcotics, its success in contro
narcotics will depend in part on the
effectiveness of regional cooperative
forts and in part on its internal conl
mechanisms.

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

Current Developments in
the U.S. Oceans Policy

Turkey

The situation remains unchanged since
our report in February. The govern-
ment continues its effective suppression
of illicit opium cultivation, but heroin
laboratories continue to operate in the
underdeveloped eastern provinces, and
Turkey continues to serve as a land-
bridge for opium products from South-
west Asia entering Europe to satisfy
that market and for onward shipment to
the United States. Cooperation with
Turkish authorities remains good, and
U.S. officials are discussing revised
strategies tor dealing with the
"(■astern" problem.

India

Located between the "Golden Triangle"
and the "Golden Crescent," India has
emerged in recent years as a major
transit country for illicit narcotics.
Smugglers ship opium products through
India both from Burma in the Golden
Triangle and Pakistan in the Golden
Crescent. Precursor chemicals manufac-
tured in India are shipped into
Southeast Asia through Burma. Accord-
ing to the Indian press, India's role as a
drug trafficking center has resulted in a

by John I). Negroponte

Address before the 10th annual
seminar sponsored by the Center for
Oceans Law and Policy in Southhamp-
ton. Bermuda, on March U, 1986. Am-
bassador Negroponte is Assistant
Secretary for Oceans and International
Environmental and Scientific Affairs.

I am most gratified to be here tonight
to share my thoughts with you on the
direction of U.S. law of the sea (LOS)
policy. In that the kaleidoscope of inter-
national legal debate has now changed
in such a way as no longer to accord law
of the sea the pride of place it so long
enjoyed, I find it reassuring that so
many renowned individuals as those of
you here tonight still devote much time
and energy to oceans issues. The United
States, not least of all the Department
of State, benefits from that continued in-
terest, and I appreciate it.

I find myself treading familiar foot-
falls in my present role as Assistant
Secretary for Oceans and International
Environmental and Scientific Affairs at
State. From my early years I remember
with much warmth John Moore [Direc-

tor of the Center for Oceans Law a:
Policy], with whom I first collaborat
when I was a member of the Natiot
Security Council staff. Shortly there
after, I served as political counselor
Quito and subsequently as Deputy i
sistant Secretary for Oceans Affairs
time when the Third UN Conferenc
the Law of the Sea (UNCLOS III)
the focus of the international legal
world. Through my work at that tir
came to recognize his remarkable cc
but ions to UNCLOS III and to the c
vention text, from which we contim
benefit today. While that conferenc*
concluded, the United States reman
tensely involved in working with ot
countries to shape the evolution of :
national oceans law and practice.

At the outset I wish to emphasi
that the policy of the United States
established in the President's Marc)
1983, oceans policy statement. We i
prepared to cooperate with other n;i
tions on oceans matters of mutual c
cern. Although the 1982 Convention
the Law of the Sea was unacceptab
because of the deep seabed mining
gime, the United States accepts ami
acts in accordance with the balance

OCEANS

sts relating to traditional uses of
eans and recognizes rights of
coastal states in the waters off
roasts provided those states recog-
or rights and those of other states

international law; the United
I exercises and asserts its naviga-
nd overflight rights and freedoms
wide, consistent with the rules

ed in the LOS Convention; and
nited States does not acquiesce in
aral acts of ether states, inconsis-
,-ith that customary law, which are
led to restrict the freedoms and

of the international community
lg to high seas uses. This is a

policy based upon established
;iles of international law and an as-
ent of U.S. interests,
le United States remains as coin-
new as was the case before and
the LOS Conference to a LOS
e which provides uniformity and
|ty of expectation for the com-
ily of nations. This Administration
Ian effort to try to amend the sea-
prtion of the convention in such a
Is to enable the United States to
le a party to it. That we did not
J'd in getting those changes was
kable. But that does not detract
pur support for the sound rules
led in other parts of the
mtion.

"ie United States is now engaged in
berate, methodical process of
Iting the universal application of
lof international law reflected in
Inseabed parts of the convention,
stage, while not as visible or excit-
I the conference, is every bit as
leant and in many ways more mi-
nt than the negotiations. Although
Ir recognized by the public nor
(many times by the informed practi-
H of oceans law, the reality is that
kited States has a busy law of the
rogram.

would like to turn now to describe
brent programs to achieve the ob-
its of our law of the sea policy.

imation of
National Freedoms

Irvation and promotion of tradi-
I international navigational free-
Iwas the must significant
Ipment of UNCLOS III. Much
r LOS program is devoted to
aiarding this objective.
Its a first step, we endeavor to en-
|hat the United States legally pro-
t what it considers to be excessive
e of other governments to preserve

our juridical position. This is no small
undertaking. Since December 1982, the
Department of State has issued well
over 4(1 LOS protest notes to other
governments. Further, such notes them-
selves often give rise to replies, which
the Department must evaluate to ascer-
tain whether a rejoinder or other fol-
lowup is required.

Second, to illustrate clearly our na-
tional resolve, we have not been bashful
about exercising the rights we claim. In
this regard, the Department of State
and the Navy have established an
exercise-of-rights program. Subject to
definite guidelines and review, the pro-
gram challenges illicit coastal state mari-
time claims which exceed what is
permitted by international law. A well-
known example of such a challenge is
the Navy's role in Libya. At issue is not
only a prior permission requirement to
exercise the right of innocent passage in
the territorial sea but also a claim by
Libya that the Gulf of Sidra constitutes
a historic bay the waters of which are
internal within a 300-mile straight line
closing the gulf.

Third, to guide the development of
state practice toward acceptance of in-
ternational law of the sea as reflected in
the 1982 convention, we have and will
continue to conduct numerous bilateral
discussions with many countries. Be-
cause it is far easier to influence favora-
bly state legislation prospectively than
retrospectively, we try to work with
key states to discuss in advance their
legislation implementing the conven-
tion's provisions. For example, Fiji's
archipelagic legislation conforms in all
significant aspects to the archipelagic ar-
ticles in the convention, reflecting the
signal role that nation played in
UNCLOS III. We hope that it will serve
as a prototype for other potential archi-
pelagic states to emulate.

EEZ Implementation

Not only is it vital to work with other
countries to encourage conformity with
the law of the sea but also we must
work to ensure that our own house is in
order. From a broad domestic policy
vantage, the Administration— pursuant
to the President's EEZ [exclusive eco-
nomic zone] proclamation and accom-
panying oceans policy statement of
March 10, 1983— decided that, in lieu of
enacting comprehensive EEZ legislation
reflecting- the jurisdiction accorded
coastal states in the EEZ, it was prefer-
able to amend individually the numerous
Federal statutory provisions regulating

activities in the EEZ. This decision was
taken for numerous reasons. Not least
among them was the desire to avoid,
wherever possible, the consideration of
such omnibus legislation by the myriad
of congressional committees which
would have cognizance over such
proposals. We also wished to avoid en-
gaging in possible State/Federal de-
bates. Consequently, the executive
branch, at the request of the National
Advisory Committee on the Oceans and
Atmosphere, undertook a comprehensive
analysis of present statutory authorities.
The review is well along and will ulti-
mately be filed with the committee. It
should be noted, however, that the
review does not, in the main, recom-
mend any particular course of action,
concentrating primarily on identifying
jurisdictional shortfalls.

Fisheries

We have also pressed forward on other
fisheries matters. In March 1985, after
14 years of negotiation, the United
States and Canada brought into force a
new west coast salmon treaty that
places the U.S. and Canadian salmon
fisheries from California to Alaska on a
cooperative agreed footing for the first
time ever.

We have also embarked on new dis-
cussions with Japan to seek further
reductions in its interception of U.S.-
origin salmon in Japan's high seas
fisheries.

With respect to the allocation of sur-
plus fishery resources within the U.S.
200-mile zone, we are rapidly moving
toward the day in which U.S. fishermen
will be able to utilize fully the available
fishery resources off our coast. Our
present policy fosters the growth of the
U.S fishing industry by basing our allo-
cations of fish to those countries which
cooperate with us on fisheries trade and
joint venture operations to the benefit
of the U.S. industry.

With regard to marine mammals, a
notable achievement occurred in the lat-
ter part of 1984 when we reached agree-
ment with Japan that it would cease
commercial whaling operations by 1988.
On the basis of this, we promised not to
certify Japan under the Pelly-Packwood
amendments, which would have required
a minimum 50% reduction in fisheries al-
locations. As you may know, some en-
vironmental groups have legally
challenged the government's action, and
the case is now before the Supreme
Court.

OCEANS

Ongoing negotiations with Southwest
Pacific island stales, as well as Australia
and New Zealand, hopefully will result
in an agreement setting forth agreed
terms and conditions of access for U.S.
tuna boats in the area, pursuant to issu-
ance of a regional license. Such an
agreement would preserve the U.S. ju-
ridical position on highly migratory
species while respecting the views of
the island states, which continue to
treat tuna as they do coastal species. A
similar agreement concluded, but not
yet in force, is the Eastern Pacific Trop-
ical Tuna Convention concluded in April
1983. Already ratified by the United
States, Honduras, and Panama, it will
come into force upon ratification by two
additional signatories.

Deep Seabed Mining

A discussion of U.S. law of the sea
policy would not be complete without
some reference to deep seabed mining.
Our position on Part XI of the 1982 UN
Law of the Sea Convention is well
known. The objections we have raised
with respect to part XI are strongly
held. Suffice it to say, we do not believe
that the international political climate
exists which would be conducive to ad-
dressing our objections adequately at
this time. This does not mean that the
United States has despaired of achiev-
ing a regime wdth broad support in the
international community. We believe
that it will take time for many to grasp
fully the changing realities. Due to
recent economic trends, significant de-
velopment of deep seabed resources is
not likely to occur until well into the
next century at the earliest. One cannot
help but wonder whether the interests
of the international community are well
served by developing a detailed mining
code and bringing into being an elabo-
rate bureaucracy to administer it when
no industry exists and when the basic
economic, technical, and environmental
conditions affecting this new activity are
largely unknown and unknowable at this
time. It is not inconceivable to me that
some day those responsible for LOS
policy in other capitals around the world
will increasingly come to appreciate the
implications of these realities and seek
to accommodate our interests and con-
cerns. At this juncture, patience is prob-
ably our most effective tool to achieve a
broadly based regime.

Claims of rights to explore specific
areas of the deep seabed have been
made by a number of enterprises based
on significant exploration activities.

Most overlaps arising from competing
claims among these pioneers have been
resolved by the pioneers themselves;
some remain. Given the potential for
conflict arising from competing claims,
we believe it desirable from the stand-
point of all members of the international
community that these overlapping
claims be resolved. We continue to be
willing to play a constructive role in en-
couraging the resolution of overlapping
claims in a manner that gives appropri-
ate recognition to the activities con-
ducted by the respective claimants. A
solution to this problem in a way that
fairly reflects the interests of all in-
volved would demonstrate the ability of
the international community to cooper-
ate effectively in this area.

Domestically, the United States has
issued exploration licenses to the four
consortia headquartered in the United
States pursuant to the 1980 Deep
Seabed Hard Mineral Resources Act.
The Administration is now in the
process of promulgating- regulations for
commercial recovery.

Environment

The United States continues to promote
the preservation and enhancement of
the marine environment. Internationally,
this occurs on the broad multinational
level through international organizations
such as the International Maritime Or-
ganization, long renowned as the leader
in vessel safety and pollution issues. In
order to promote efficiency and effec-
tiveness in international negotiations, a
trend has recently developed to treat
marine environmental issues on a
regional scale as well. This approach— in
which the UN Environmental Program
and its Regional Seas Program have
played a major role— has led to active
U.S. participation in formulating the
successfully concluded Cartagena con-
vention for the Caribbean and, more re-
cently, a draft environmental convention
for the South Pacific under the auspices
of the South Pacific Regional Environ-
mental Program. Domestically, we work
to further the passage of domestic im-
plementing legislation to complement
their international counterparts, such as
title IV of the so-called superfund bill
(H.R. 2005) currently before Congress.

Boundaries

The United States is attempting to
resolve its overlapping EEZ and con-
tinental shelf claims with several neigh-
boring states. We have established our
maritime boundaries with Venezuela,

the Cook Islands, Tokelau, Cuba, an
Mexico. Boundaries with the latter t
are established by executive agree-
ments, pending advice and consent (
the Senate to treaties establishing t
same. We have asked the Canadians
begin talks on our outstanding maril
boundary issues, which include area;
the Beaufort Sea, Dixon Entrance,
Strait of Juan de Fuca, and the exts
sion of the Gulf of Maine boundary.
They have not yet responded to our
quest for negotiations. We sought ti
resolve our maritime boundary with
Dominican Republic, but no agreem*
has yet been reached. Finally, the
United States has held several roun
discussions with the Soviets on inte
tation and application of the 1807 ci
vention line, which the United Stat<
regards as the maritime boundary i
Bering and Chukchi Seas.

Marine Scientific Research

The President's 1983 policy stateme^
resolved one major marine scientific
research (MSR) problem which had
plagued marine scientists, who oftet
found it difficult to operate within 2
miles of many coasts because of Ui
nonreeognition of foreign MSR juris
tion. Since the President's decision
recognize MSR jurisdiction, as refle
in the LOS text, U.S. research in fc
eign waters has tripled. Most impor
tantly, the President maintained oui
basic policy by not asserting MSR j
diction in our own EEZ. Our experi
demonstrates that we do not need s
jurisdiction to maintain our economi
terests there and can benefit from
foreign research.

The exact nature of MSR jurisd
tion is still evolving, and the negoti;
tions being conducted by our marifl
science office for research vessel cle
ances are having a significant impac
the often vague LOS text on marind
scientific research. We are helping t
build a concrete record of state prao
in establishing more favorable stand
than a strict reading of that text mi
suggest.

We are continuing to work on s(
eral serious problems, such as a few
states trying to exclude research ve
from broad coastal zones. We are W
ing with such nations to persuade tl
that such restrictions are both conto
to international law and their own ii1
terests in gaining ocean knowledge
through cooperative endeavors. We
also working to maintain the freedom
hydrographic surveying in the EEZI

PACIFIC

tial to ship safety, interdependent
commerce, and prevention of pol-
from ship accidents— subjects of
concern to all nations,
'e can also see the probability of
er use of international organiza-
such as the Intergovernmental
©graphic Commission, as umbrellas
operative marine scientific
rch, including that within national

rig Remarks

m can appreciate, our govern-
s LOS program is a replete and
; one whether it is in the area of
ational freedoms, EEZ implementa-
fisheries, deep seabed mining, the
le environment, maritime bound-
or marine scientific research. The
of activity address every major
if the LOS Convention. So when
ears the cliche that the law of the
dead, I think it is well to reflect
the multiplicity of issues of oceans
nd oceans law which arise and
be dealt with on a continuing,
basis. The trend, if anything, is
drying.

3 be sure, there are those who will
that an LOS system can only be
ingful if the United States is party
agreed deep seabed minerals re-
And I can understand this point
w, while at the same time (Us-
ing with it. There are too many
aspects of oceans use and law
i we must press forward. That is
:ely what we have done and in an
rationally coordinated fashion. We
continue to work cooperatively and
ntly with other countries, especial-
istal states, to ensure that the posi-
'esults of the LOS Convention are
tuated and that extensions of
d jurisdiction are carried out in
rmity with international law. I
my remarks this evening have suc-
d, at least in part, in conveying
the flavor and the detail of how
overnment is going about this
inging and fascinating task in this
•tant period in the evolution of
s law. ■

U.S. -New Zealand Disagreement
on Port Access for U.S. Ships

DEPARTMENT STATEMENT,
JULY 2, 1986'

In Manila Prime Minister Lange and
Secretary of State Shultz discussed the
ship visit problem between our two coun-
tries. The meeting concluded with a
recognition that the Government of New
Zealand does not feel that it can live
with U.S. policy on this issue, but that
we would part company as friends. We
regret that the position of the United
States, both with reference to that
meeting and with respect to our efforts
to find a satisfactory resolution, has
been misconstrued.

The United States maintains a
worldwide policy of neither confirming
nor denying the presence or absence of
nuclear weapons. Implicit in this policy is
a requirement for ambiguity about the
nature of the armaments of our ships.
Our other allies recognize the need for
this ambiguity, and none feel con-
strained to make judgments about indi-
vidual ships. It is on this point that the
policy of the Government of New Zea-
land differs significantly from that of all
our other allies.

If New Zealand maintains its inten-
tion to say no to ships operating under
the ambiguity of neither confirming nor
denying, or to nuclear-powered ships,
then it is not possible for us to send
Navy vessels into New Zealand's ports.
This vitiates the principal contribution
that New Zealand makes to the alliance.

Suggestions that the United States
has refused to engage in negotiation or

consultation on this issue are at variance
with the facts. The United States has
made a considerable effort to work with
New Zealand over the past 2 years to
resolve the port ban issue and to restore
normal port access. We have maintained
intensive contacts and understand fully
the New Zealand Government's position.
Unfortunately, the New Zealand Govern-
ment has as yet not put forward any
proposal to restore normal port access
compatible with our global neither con-
firming nor denying requirements.

It has been alleged that the ANZUS
[Australia, New Zealand, United States
security pact] treaty contains only an
obligation to consult. Article IV of the
treaty clearly states that an armed at-
tack on any of the parties in the Pacific
area would be a danger to the other par-
ties and that all would act to meet the
common danger. The U.S. Government
has consistently confirmed that it would
fully and promptly fulfill its security
commitments under ANZUS, by both
military and nonmilitary means, as best
would meet the threat.

New Zealand's withdrawal of an
essential element of its ANZUS par-
ticipation inevitably must alter the
obligations of the United States with
respect to its security responsibilities to
New Zealand. We continue to hope that
New Zealand will eventually restore nor-
mal port access on a basis comparable to
other alliance partners.

'Read to news correspondents by Depart-
ment deputy spokesman Charles Redman. ■

rimhflr IQflfi

UNITED NATIONS

Continent at the Crossroads:

An Agenda for

African Development

by Secretary Shultz

Address before the UN General Assembly

Special Session on the

Critical Economic Situation in Africa

on May 28, 1986.1

This special UN session could— and we
hope will— mark a historic turning point
for the African Continent. We meet in a
year when the world is still anguished
with the terrible images of famine and
starvation that scarred so much of Afri-
ca during the last 2 years. With an ex-
traordinary outpouring of support,
people from across the globe rallied to
Africa's side and saved millions of lives.

Today, we are gathered here to ad-
dress a more fundamental and enduring
task: the requirements of long-term de-
velopment for Africa. The United States
comes to this special session with hope.
We salute the work of the Organization
of African Unity (OAU) at its heads of
state meeting in 1985 for the new direc-
tions which the African nations have
pledged for themselves. And we wel-
come this session of the General Assem-
bly as a way of translating their pledge
into action.

Our search for solutions to the
problems of development is one of the
forces that brings us together today; but
it is not the only force. We are united,
too, by respect and admiration for the
dignity of the African peoples in the
face of shared hardships. Thirty years
ago, the United Nations joined in sup-
port as Africans fought for freedom
from colonial rule. Today, we come
together to seek Africa's liberation from
other ills: disease, chronic poverty, and
hunger.

The United Stales has consistently
sought a constructive role in Africa's
struggles. We have provided unprece-
dented levels of foreign assistance. Dur-
ing this Administration, aid to Africa
has increased by over 50%. Current lev-
els of aid are four times those of the

early 1970s. In the last 3 years alone,
we have provided $2.4 billion in food
and emergency assistance.

Learning from the Past

Effective partnership requires a shared
understanding of past mistakes and
present goals. This special session holds
unique promise because we seem to be
closer than ever to reaching such under-
standing. We have learned a great deal
together about what does and doesn't
work. We have seen how now-
discredited orthodoxies about state-
directed development gave rise to
misguided policies that stifled individual
initiative— policies that in practice have
given inadequate incentives to African
farmers and created a long-term decline
in food production.

Today, as a result, millions of
Africa's people depend on food imports
for their very survival. The burden of
foreign debt, which in sub-Saharan
Africa rose by an annual average of 21%
throughout the 1970s, has reached crisis
proportions. Measures of standard eco-
nomic performance reveal that economic
conditions on the continent as a whole
are no better, and perhaps worse, than
they were some 25 years ago— all this
despite massive injections of foreign aid.

The purpose of this special session is
to chart a course that will reverse these
trends. In the words of the OAU pre-
paratory document for this session, out-
task requires "that the African coun-
tries should adopt fundamental changes
in their development priorities and poli-
cies," you said. And I think we can
agree that successful development in
any nation— in Africa as anywhere

else— lies, most fundamentally, in th
pansion of individual human opportu-

Even modest advances in mater
well-being can accelerate developme
With rising income, a farmer is able
save and provide some economic in&
ance to his family against natural ml
fortunes such as drought. With risin
income, a small businessman may be
able to send another child to school!
creasing the promise of his family's
ture. In any walk of life, people fre>
from dire deprivation are better abi
seize the opportunities before them:

The United States firmly believ j
that our own development experiem
a useful guide to productive econom
policies. What is the most fundamei
lesson of that experience? That the
ents of individual human beings m
greatest resource a society can brin
the tasks of national development.
America has seen this truth at won
its agricultural era, in its industrial
phase, and in its postindustrial dev>
ment. And we have seen our dedic;
to that truth translated throughout
society into better opportunities fos
ceeding generations.

And our experience is hardly tl
only example of this truth. Today,
countries are reawakening to the fi
damental connection between indivi
initiative and economic progress. Ir
East Asia, the liberation of the indi
al talent from state-imposed econom
direction has produced in recent yen
nothing less than an economic mira*
among developing nations. Their ex
perience confirms that there is notB
culture-bound about the creation of
material well-being. Even communi
tions are awakening to the fact tha*
dividual initiative, not state directk
the source of growth. China's un-
precedented experiment with unlea
individual incentives has been rema
bly successful in recent years; and
note that the Soviet Union, in its 2
Party Congress, called for less emp
on central planning and more on in
dividual initiative.

Many African nations, too, have
undertaken bold reforms in econom
policy. Across the continent, major
grams are under way to stimulate
growth. In Senegal, Zambia, Guine;
Zaire, Somalia, the Central African
Republic, Mali, Rwanda, Togo, and
Madagascar, exciting changes are t
place as leaders seek to stimulate e
nomic growth. These leaders are re
nizing, as the OAU declared last Ji
that "the primacy accorded the sta;i
has hindered rather than furthered

■*< Ci™i» c,

UNITED NATIONS

evelopment." Agricultural pric-
eing reformed to give farmers a
profitable return on their out-
vate marketing channels are
»vived to bring food to the cities
sumer goods to the countryside.
£e systems are being revamped
;t market value and to permit al-
of scarce resources to the most
ive sectors.

se are historic changes, and they
a new generation of African
s. The United States is support-
trend through bilateral and mul-
programs. This special session
s an opportunity for all of Africa
n what is a worldwide move-
r rejecting failed orthodoxies and
greater scope to individual in-

quirements of Partnership

•eement on the simple truth of
ical role of the individual in de-
■nt is the cornerstone of the new
ship emphasized by this special
But the tasks of economic liber-
li not fall to individual Africans,
vernments, or to foreign donor
s alone. We must search
r for policies that will work
he full range of our partnership,
ollowing examples suggest.

or countries must design as-
i programs that increase self-
: and discourage dependency.

j our assistance has been coun-
uctive, contributing to stagnating
ectors rather than to vital pri-
terprise. As a result, we are

to shift more assistance from
o private entities. Two years
ough the economic policy reform
we began using our foreign aid
2S to give incentives and support
:ries that had undertaken such

reforms. In 1985, under this
1, we gave $75 million to five

countries— Malawi, Mali,
as, Rwanda, and Zambia. This
■ are engaged in discussions with
ler African countries which may

program. We can do more for
s who are trying to reform their
es, and we will.

can and donor nations alike
ork together to create condi-
vorable to investment. The con-
natural resources offer great
s Africa has some 220 million
s of arable land. Only half of
ave ever been cultivated. Only
s hydroelectric power has been
ed. And the continent is rich in

the vast amounts of fresh water needed
to bring growth to barren fields.

But these resources cannot be put to
work without investment; and invest-
ment requires confidence. Political
stability creates the conditions for eco-
nomic advance, not vice versa. If coun-
tries want to attract foreign and
domestic capital, they must begin by
recognizing the imperative of creating
an environment of confidence. Here, too,
the United States can help, through
diplomatic and other assistance aimed at
securing individual rights, social justice,
and political stability. And I might say
that a system of apartheid, and the
cross-border violence that seems to go
with it. destroys confidence and is an-
tithetical to the kind of investment cli-
mate we are seeking to set up, let alone
unacceptable in its own right.

We must keep trade opportunities
open. The United States has taken a
series of steps to maintain free and fair
trade. In the new GATT [General
Agreement on Tariffs and Trade] round
of multilateral trade negotiations, we
will be seeking to liberalize trade for
the benefit of all countries. African
countries should note that our general-
ized system of preferences program
emphasizes benefits for the less ad-
vantaged nations. For their pail, Afri-
cans must guard against protectionist
policies that discourage broader trade
on the continent and elsewhere.

Assistance must come not only
from individual donor states but also
from the multilateral arena and, I
might say, from nongovernmental or-
ganizations (NGOs) as well. NGOs, so-
called, have made, and continue to
make, important contributions to the
multilateralization of private resources
and to the development of essential
human resources. Africa remains the
neediest continent. The United States,
with its own budgetary concerns, cannot
meet all the African requests for as-
sistance. So we are exploring creative
alternatives.

Last fall, we proposed a plan to the
IMF [International Monetary Fund] and
the World Bank which would substan-
tially increase the flow of concessional
resources to Africa and other least de-
veloped areas of the world. The IMF
has adopted the Structural Adjustment
Facility which should result in an in-
crease of $1.5 billion in low interest
loans for Africa in the next 5 years. We
are currently engaged in negotiations
with other donors on the eighth
replenishment of the World Bank's In-
ternational Development Association—

IDA. The final decision on IDA VIII re-
mains open. But the United States does
want to secure a substantial, increased
share of IDA for Africa. Together with
the new IMF Structural Adjustment
Facility, IDA VIII will provide a major
source of support for the steps that
African nations have agreed to in recent
OAU documents and here at the special
session.

Finally, we must develop produc-
tion technologies appropriate to the
African environment— especially in the
critical area of agriculture. Agricultur-
al production, the continent's onetime
mainstay, has regressed drastically in
the last 20 years. It is now 15 years
since Dr. Norman Borlaug received the
Nobel Peace Prize for his pioneering
research that helped launch the green
revolutions that started India and Mex-
ico down the road to self-sufficiency in
food grains. For years, many have tried
to bring the same revolution to Africa—
although, thus far, without success.

The good news is that this may be
changing. We seem to be standing at
the threshold of an agricultural revolu-
tion adapted to African conditions. Last
year, an African geneticist by the name
of Gebisa Ejeta— trained at Purdue
University in the United States-
spearheaded the successful effort to
develop a new hybrid sorghum strain
which is pest and drought resistant.
This new strain has doubled the yield
derived from local strains under normal
weather conditions. These varieties con-
tributed to Sudan's surplus this year.
Improved maize varieties, combined
with improved agricultural policies, con-
tributed to grain surpluses in Kenya,
Zimbabwe, and Malawi.

The United States is committed to
supporting the development of agricul-
tural technologies suited to Africa. We
plan to give some $1 billion for agricul-
tural research over the next 15 years.
With our support, international agricul-
tural research centers and a new um-
brella organization, the Program for
African Agricultural Research, are also
leading an international effort to bring
an agricultural explosion to the con-
tinent.

Toward a New Vision of Africa

As is demonstrated by the example of
Gebisa Ejeta, the resolution of Africa's
economic crisis lies in the liberation of
its peoples from policies that have sti-
fled innovation and led the nations of
the continent into their present
difficulties.

Cihar 1 OQG

UNITED NATIONS

In the years since independence,
African and donor nations alike have
learned a great deal about our respec-
tive roles in promoting development.
Africans have learned that responsibility
for their economic well-being rests
squarely with themselves. The United
States and other donor countries have
had to learn another hard truth: that
well-intentioned programs can produce
dependency rather than self-sufficiency,
economic stagnation rather than self-
sustaining growth.

And we have all learned another
sobering truth: flawed governmental
policies can hurt economies just as sure-
ly as the natural calamities that have af-
flicted Africa. No amount of foreign
assistance, and no measure of good in-
tentions, can alleviate the hardship
caused by a government bent on mis-
guided policies.

But we know, too, that if inappropri-
ate policies have created many of Afri-
ca's problems, then appropriate new-
policies will help to ameliorate them.
This special session confirms our part-
nership in the search for workable ap-
proaches to long-term development on
the continent. As our work unfolds in
the coming days, we can take heart not
only from our converging views but also
from the fact that some global economic
trends are now turning in Africa's favor.

The economic recovery of the indus-
trialized nations over the past few years
is giving a much-needed expansion to
markets for exports from the developing
world. Africa, located close to the major
markets of Europe, is well-positioned to
profit from this growth. Meanwhile, the
decline in world oil prices— the equiva-
lent of a tax cut for most of the world-
should stimulate economic activity
through much of the continent. Most
African nations should also benefit from
the drop in interest rates and the re-
adjustment of other currencies against
the U.S. dollar- the currency in which
most African debts are denominated.

African leaders and donor nations
alike face many obstacles in our work to
brighten the continent's future. But we
are engaged in that struggle together.
Today, as leaders throughout the conti-
nent reexamine the foundations of eco-
nomic growth and seek new promise for
Africa, we must all ensure that our ef-
forts will fulfill the needs of coming gen-
erations. The peoples iif Africa, and
their many friends throughout the
world, await with hope our actions at
this historic conference. Let our efforts
be worthy of their aspirations.

!Press release IIS of May 2!t. 1986. ■

UN Special Session:
African Economic Situation

Background

The causes of Africa's economic crisis
extend back many years. Since the
1960s, when most African countries
became independent, the standard of liv-
ing of the average African has declined,
and the gap is growing between popula-
tion and internal production, particularly
food. Per capita GNP in about half of the
countries is less than $400 a year.

Some of the Africans' economic diffi-
culties resulted from external factors
beyond their control— weather, inter-
national prices for their commodity
exports, and interest rate fluctuations—
but others have been self-imposed. Many
African countries neglected their agri-
cultural sectors, which employ most of
their population: borrowed heavily for
investments with low productivity; and
adopted government controls that dis-
torted market activity at a high cost.

African leaders have learned from
experience and are now making eco-
nomic policy changes that should lay the
basis for sustained economic growth. As
part of the rebuilding process, the heads
of African states met in Addis Ababa in
July 1985 to approve a program of
action called Africa's Priority Program
for Economic Recovery 1986-90 (APPER).
In this document, African leaders
pledged to strengthen incentive
schemes; review public investment poli-
cies; improve economic management,
with greater discipline and more effi-
cient use of resources; and encourage
domestic resource mobilization and the
role of the private sector.

Special Session Called

While the African states followed up on
this program at home, they also pursued
their efforts in the international arena.
In December 1985, at their request, the
UN General Assembly called for a Spec-
ial Session on the Critical Economic Sit-
uation in Africa. Following 3 months of
intermittent meetings of its preparatory
committee, the UN special session met
May 27-,Iune 1, 1986. It was the first
special session on a regional economic
problem in the 40-year history of the
United Nations.

The discussions were constructive.
The Africans reaffirmed their commit-
ment to economic restructuring, hoping
that donor countries would respond to
making specific commitments on debt
relief and increased concessional assist-

ance levels. They also wanted the <H
to endorse APPER. The donors. m?j
them faced with budgetary pressun
home, were either unwilling or unai
make specific commitments. The U
States took the strongest position (
debt by pointing out that the curre:
case-by-case approach, coupled witf
adjustment measures, was still the
way to proceed. The donors gave
APPER high praise but could not
endorse it entirely.

Commitment to Action

After a series of compromises, the
can states and the international cot i
nity committed themselves in a "sf
genuine and equal partnership" to
Program of Action for African Ecc
Recovery Development 1986-90. H
framework of this understanding,
took key sections from APPER, rei
the African states to:

• Undertake necessary econon
reform and structural adjustment;

• Rehabilitate and develop
agriculture;

• Address the problems of dro<
and desertification; and

• Ensure the productive use ol
scarce resources.

For its part, the international <
munity recognized that "the Africa'
countries need additional external
resources" and committed itself to
improve the quality of its external
ance and to try to provide sufficien
resources to support and suppleme
African development efforts. The i:
national community agreed to:

• Shift the emphasis from prol
program support;

• Increase the concessionality
development assistance;

• Improve donor coordination
methods; and

• Urge the speedy replenishrm
the World Bank's International De
ment Association (IDA).

The language of the final decla
was consistent with U.S. positions i
debt, commodities, and protection!
Soviet-proposed polemic language
rejected by the Africans. The oppo
of many non-African developing co
tries of the Group of 77 to the linkt
between economic restructuring ar
eign assistance and to the language i

l~\ nrvM-J m i~\ n

t ^f Ctata ll

5TERN HEMISPHERE

TREATIES

i protectionism also was over-
lost important, however, was the
iment of a tie between economic
ind international assistance,
inied by the reaffirmation by
nd the international community
together to solve African eco-
roblems.

licy

iteil States views the special ses-
Dart of a continuing effort to
African economic problems,
h many African states began to
ure their economies several
ro, others are just beginning. The
States expects that the special
will give momentum to these

In recent years, the United States
and other donors have increased their
support for economic policy change in
Africa. Some tangible examples of U.S.
efforts include the African Economic
Policy Reform Program, U.S. participa-
tion in the World Bank's Special Facility
for Africa, and the U.S. -inspired Inter-
national Monetary Fund's Structural
Adjustment Facility. The special session
confirmed that the international commu-
nity and African countries share the
same objectives. Joint forceful action is
now required to attain them.

Taken from the GIST series of July 1986, pub-
lished by the Bureau of Public Affairs, Depart-
ment of State. Editor: Harriet Culley. ■

Central America

R TO THE CONGRESS.
10, 1986'

losed report is transmitted in compli-
jh the requirements of Section 722(j)
Iternational Security and Develop-
operation Act of 1985 (P.L. 99-83)
ion 104 of Chapter V of the Supple-
ippropriations Act, 1985 (P.L.

report, with appropriate background.
; efforts by the United States and
lcluding developments in the Con-
rocess, to promote a negotiated set-
in Nicaragua; alleged human rights
s by the democratic resistance and
rnment of Nicaragua; and disburse-
humanitarian assistance to the demo-
sistance (with a classified annex),
rig the period covered by the report
inistas continued to obstruct the
ra process, maintaining their refusal
ate a comprehensive, verifiable
nt. The Contadora mediators set
s a deadline for signing a final agree-
le United States has reiterated its
for a comprehensive, verifiable agree-
alemented in a simultaneous fashion
respected by all parties,
ng the 90 days covered by the
report the Sandinistas continued
;ression against other countries in
in. In late March the Sandinistas

launched the largest border incursion to date
into Honduras, when at least 1,500 Sandinista
troops attacked up to 25 kilometers into Hon-
duran territory. At the same time, Sandinista
attacks against Indian villages caused some
11,000 refugees to flee to Honduras. As
detailed in the enclosed report, the San-
dinistas accelerated efforts to eliminate
domestic dissent. They increased pressure on
the Church and continued to violently harass
members of the opposition political parties.

The need for sustaining U.S. support for
the Nicaraguan democratic resistance forces
is clear. Only in this way can the necessary
pressure be applied effectively on the San-
dinista leadership to: 1) move it toward seri-
ous internal and regional negotiations, 2) pre-
vent its consolidating a Marxist-Leninist
totalitarian state allied with Cuba and the
Soviet bloc, and 3) cease its continuing
aggression against the democracies of Central
America.

Since re I \ ,

Ronald Reagan

'Identical letters addressed to Thomas P.
O'Neill. Jr., Speaker of the House of Repre-
sentatives; Vice President George Bush,
President of the Senate; David Durenberger,
chairman of the Senate Select Committee on
Intelligence; and Lee H. Hamilton, chairman
of the House Permanent Select Committee on
Intelligence (text from Weekly Compilation of
Presidential Documents of June 16, 1986). ■

Current Actions

MULTILATERAL

Conservation

Convention on international trade in

endangered species of wild fauna and flora,

with appendices. Done at Washington Mar. 3,

1973. Entered into force July 1. 1985. TIAS

8249.

Accession deposited: Spain, May 30, 1986.'

Vmendment to the convention of Mar. 3,
1973, on international trade in endangered

pecies of wild fauna and flora. Adopted at
Bonn June 22. 1979.2
Acceptance deposited: Australia. July 1. 1986.

Convention on wetlands of international
importance especially as waterfowl habitat.
Concluded at Ramsar Feb. 2. 1971. with pro-
tocol concluded at Paris Dec. 3, 1982.
Submitted to Senate for ad\ ice and consent:
June 23, 1986 (Treaty Doc. 99-28).

Bern convention for the protection of literary
and artistic works of Sept. 9, 1986, as revised
at Paris July 24, 1971, and amended.
Submitted to Senate for advice and consent:
June 20. 1986 (Treaty Doc. 99-2 7 ) .

Environmental Modification

Convention on the prohibition of military or

any other hostile use of environmental

modification techniques, with annex. Done at

Geneva May 18. 1977. Entered into force Oct.

5. 1978; for the U.S. Jan. 17. 1980. TIAS

9614.

Ratification deposited: Benin, June 30, 1986.

Financial Institutions

Articles of agreement of the International
Bank for Reconstruction and Development
formulated at Bretton Woods Conference
July 1-22. 1944. Entered into force Dec. 27,
1945. TIAS 1502. 60 Stat. 1440.
Signature and acceptance deposited: Poland,
June 27, 19867-

Judicial Assistance

Convention on the service abroad of judicial
and extrajudicial documents in civil or com-
mercial matters. Done at The Hague Nov. 15,
1965. Entered into force Feb. 10, 1969. TIAS
6638.

( oiivention on the taking of evidence abroad

in civil or commercial matters. Done at The

Hague Mar. 18, 1970. Entered into force Oct.

7, 1972. TIAS 7444.

Extended by Netherlands to: Aruba, May 28,

1986.

Marine Pollution

Convention on the prevention of marine pollu-
tion by dumping of wastes and other matter,
with annexes. Done at London, Mexico City,
Moscow, mimI Washington Dec. 29, 1972.
Entered into force Aug. 30, 1975. TIAS 8165.
Ratification deposited: Costa Rica, June 16,
1986.

Eiber 1986

TREATIES

Protocol of 1978 relating to the international
convention for the prevention of pollution
from ships, 1973. Done at London Fell. 17,
1978. Entered into force Oct. 2, 1983.
Ratification deposited: Poland, Apr. 1. 1986.

Maritime Matters

Convention on facilitation of international
maritime traffic, with annex, as amended.
Done at London Apr. 9, 1965. Entered into
force Mar. 5, 1967; for the U.S. May 16, 1967.
TIAS 6251.
V cession deposited: Australia, Apr. 28, 1986.

International convention on load lines, 1966.
Done at London Apr. 5, 1966. Entered into
force July 21, 1968. TIAS 6331, 6629, 6720.
Accessions deposited: < 'ongo, June 6, L986;
St. Vincent & Grenadines, Apr. 29, 1986.

International convention on tonnage measure-
ment of ships, 1969, with annexes. Done at
London June 23, 1969. Entered into force
July 18, 1982; for the U.S. Feb. 10, 1983.
TIAS 10490.

Accessions deposited: Cyprus, May 9, 1986;
Qatar, Feb. 3, 1986.

Pollution

Convention for the protection of the ozone

layer, with annexes. Done at Vienna Mar. 22,

1985 (Treaty Doc. 99-9).2

Senate advice and consent to ratification;

July 24, 1986.

Ratifications deposited: Byelorussian Soviet

Socialist Rep., June 20, 1986; Canada, June 4.

1986; Ukrainian Soviet Socialist Rep.,

U.S.S.R., June 18, 1986.

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). Done at
Geneva Sept. 28, 1984.2
Ratification deposited: Finland, June 24,
1986.

Postal

Third additional protocol to the constitution
of the Universal Postal Union of July 10,
1964, general regulations with annex, and the
universal postal convention with final protocol
and detailed regulations. Done at Hamburg
July 27. 1984. Entered into force Jan. 1.
1986; for the U.S. June 6, 1986.
Ratifications deposited: Belgium. Dec. 20,
1985; Botswana, Fob 3, 1986; Bulgaria, Jan.
14. 1986; Finland, June 19, 1986; Iceland.
July 1, 19X0; Japan, July 30, 1985; Jordan,
Mar. 12, 1986; Liechtenstein, Nov. 18, 1985;
Luxembourg. Mar. 1, 1986; Singapore, May
21. 1986; Swaziland. June 12. 1986; Sweden,
Feb. 4. 1986; Switzerland, Dec. 5, 1985;
Tunisia, May 22. 1986; U.S., June 6, 1986.

Money orders and postal travelers' checks
agreement, with detailed regulations with
final protocol. Done at Hamburg July 27,
1984. Entered into force Jan. 1. 1986; for the
U.S. June 6, 1986.

Ratifications deposited: Belgium, Dec. 20,
1985; Bulgaria, Jan. 14, 1986; Iceland. July 1.
1986; Japan, July 30, 1985; Jordan, Mar. 12,
1986; Liechtenstein. Nov. 18, 1985: Luxem-

bourg, Mar. 4, 1986; Sweden, Feb. 4. 1986;
Switzerland, Dec. 5, 1985; Tunisia, May 22.
1986; U.S., June 6, 1986.
Approval deposited: Finland, June 19. 1986.

Postal parcels agreement with final protocol
and detailed regulations. Done at Hamburg
July 27, 1984. Entered into force Jan. 1,
1986; for the U.S. June 6, 1986.
Ratifications deposited: Belgium, I lee 20.
1985; Botswana, Feb. 3, 1986; Bulgaria, Jan.
14, 1986; Iceland, July 1, 1986; Japan. July
30, 1985; Jordan, Mar. 12, 1986; Liechten-
stein, Nov. 18, 1985; Luxembourg, Mar. 4,
1986; Sweden, Feb. 4, 1986; Switzerland,
Dec. 5, 1985; Tunisia, May 22, 1986; U.S.,
June 6, 1986.

Refugees

Protocol relating to the status of refugees.
Done at New York Jan. 31, 1967. Entered
into force Oct. 4, 1967; for the U.S. Nov. 1,
1968. TIAS 6577.

Accession deposited: Papua New Guinea, July
17, 1986.

Satellite Communications Systems

Convention on the International Maritime
Satellite Organization (INMARSAT), with
annex. Done at London Sept. 3. 1976.
Entered into force July 16, 1979. TIAS 9605.
Accession deposited: Malaysia, June 12, 1986.

Operating agreement on the International
Maritime Satellite Organization (INMAR-
SAT), with annex. Done at London Sept. 3,
1976. Entered into force July 16, 1979. TIAS
9605.
Signature: Malaysia, June 12, 1986.

Seabed Disarmament

Treaty on the prohibition of the emplacement
of nuclear weapons and other weapons of
mass destruction on the seabed and the ocean
floor and in the subsoil thereof. Done at
Washington, London, and Moscow Feb. 11.
1971. Entered into force May 18, 1972. TIAS
7337.

Ratifications deposited: Benin, July 7. 1986;
Jamaica, July 30, 1986.

Slave Trade

Convention to suppress the slave trade and
slavery. Done at Geneva Sept. 25, 1926.
Entered into force Mar. 9. 1927; for the U.S.
Mar. 21, 1929. TS 778.

Protocol amending the slavery convention
signed at Geneva Sept. 25, 1926, and annex.
Done at New York Dec. 7, 1953. Entered into
force Dec. 7, 1953, for the protocol; July 7,
1955, for annex to protocol; for the U.S. Mar.
7, 1956. TIAS 3532.

Notification of succession deposited: Cyprus.
Apr. 21, 1986.

Space

Treaty on principles governing the activities
of states in the exploration and use of outer
space, including the moon and other celestial
bodies. Done at Washington, London, and
Moscow Jan. 27, 1967. Entered into force
Oct. 10, 1967. TIAS 6347.
Accession deposited: Benin. July 7, 1986.

Sugar

International sugar agreement, 1984, w

annexes. Done at Geneva July 5, 1984

Entered into force provisionally Jan. 1,

definitively Apr. 4, 1985. 3

Ratification deposited: Ecuador, June

1986.

Terrorism

Convention on the prevention and puni
ment of crimes against internationally
tected persons, including diplomatic agi
Done at New York Dec. 14, 1973. Ente
into force Feb. 20, 1977. TIAS 8532.
Accessions deposited: Bahamas, July 2
1986; Egypt, June 25, 1986.

Timber

International tropical timber agreemer
1983. Entered into force provisionally
1985; for the U.S. Apr. 26, 1985.
Accession deposited; China, July 2, 19H

Trade

United Nations convention on contract i
the international sale of goods. Done a.<
Vienna Apr. 11, 1980. 2
Accession deposited: Zambia, June 6, 1

Agreement on trade in civil aircraft. D
Geneva Apr. 12, 1979. Entered into f o i
Jan. 1, 1980. TIAS 9620.
Acceptance deposited: Portugal, June
1986. ~

Agreement on implementation of Artie
of the General Agreement on Tariffs ai
Trade (customs valuation code). Done ;
Geneva Apr. 12, 1979. Entered into i'o
Jan. 1, 1981. TIAS 10402.
Acceptance deposited: Lesotho, June 3
1986.'

Notification of withdrawal: Portugal, Ji
1986/'

UN Industrial Development Organiza

Constitution of the United Nations Ind

Development Organization, with annex

Adopted at Vienna Apr. 8, 1979. Enter

force June 21, 1985.

Accession deposited: The Gambia, Junei

1986.

Wheat

Wheat trade convention, 1986. Done at
don Mar. 14, 1986. Open for signature
York May 1 through June 30, 1986.
Entered into force: July 1, 1986. 3
Signatures: Ecuador, Finland, May 1.
Tunisia, May 14, 1986; Egypt. May 29,
Morocco, June 3, 1986; Brazil, June 12
U.S.S.R., June 18, 1986; Canada. June
1986; Japan, South Africa, June 24. 19
Argentina, Sweden, June 25, 1986; Bat
Belgium, Denmark, EEC. France, F.R
Greece, Ireland, Italy, Luxembourg,
Netherlands, Portugal, Spain. Switzerl
U.K., U.S., June 26, 1986; Yemen (San
June 27, 1986; Cuba, Norway, June 30,'

Notifications of provisional application
deposited: Ecuador, May 1, 1986; Tunii
May~14,T986; Morocco, June 3. 1986; 1
June 12, 1986; Finland. June 18, 1986;

nrtnii-tm/^nl /-\f Otr

TREATIES

ine 26. 1986; Belgium, EEC, France.
Greece. Italy, Netherlands, Spain,
•land. U.K.. U.S., June 26, 1986; India,
,, 1986; Bolivia, Cuba, Japan, Rep. of
Luxembourg, Pakistan, Portugal,
, June 30, 1986; Egypt, July 2. 1986.
mce deposited: U.S.S.R., June 30.

al deposited: Norway. June 30, 1986.
itions deposited: < 'anada, June 23,
outh Africa, June 24. 1986; Sweden,
i, 1986; Denmark, Ireland, June 26,

ons deposited: Vatican City. June 23.
.ustralia. June 27. 1986.

id convention. 1986. Done at London

I, 1986. Open for signature at New

[av 1 through June 30, 1986.

d into force: July 1. 198(1. :!

ires: Finland, May 1. 1986: Canada,

1986; Japan, June 24. 1986; Argen-
veden, June 25, 1986; Belgium, Den-
5EC, France, F.R.G.. Greece. Ireland,
luxembourg, Netherlands, Portugal,
Switzerland, U.K., U.S., June 26,
lUstria. June 27, 1986; Norway, June
6.
itions of provisional application:

JuneTB. 1986; Argentina, June 25,
ielgium, EEC, France, F.R.G.. Greece,
Jetherlands, Spain, U.K.. U.S., June
6; Japan, Luxembourg, Portugal, June
6.

■al deposited: Norway, June 30, 1986.
itions deposited: I 'anada. Juno -'.'..
Denmark.
lost:

Sweden, June 25, 1986
Switzerland, June 26

fERAL

gidesh

I concerning the reciprocal

flagement and protection of investment,

Iinex, protocol, and exchange of letters.

jJ at Washington Mar. 12, 1986.

Ited to the Senate for advice and con-

tne2, 1986 (Treaty Doc. 99-23).

noon

D concerning the reciprocal

■agement and protection of investment.

i mev Signed at Washington Feb. 26.

mted to the Senate for advice and con-
pni 2, 1986 (Treaty Doc. 99-22).

Inent amending and supplementing the
lient of Mar. 9, 1959, as amended and
■nented, governing tolls on the St.
rtnce Seaway (TIAS 4192, 5117, 5608,
|408, 9003, 9883, 10363). with
Irandum of agreement. Effected by
Ige of notes at Washington May, 3,
Entered into force May 3, 1985.

^ment amending the treaty concerning
ll' salmon of Jan. 28. 1985* Effected by
iige of notes at Ottawa Apr. 29 and
|2, 1985. Entered into force June 12.

timber 1986

Costa Rica

( "operative arrangement for the production
of topographic maps of Costa Rica, with
annexes. Signed at San Jose and Washington
June 4 and IS. 1!IS6. Entered into force June
18, 1986.

Ecuador

Cooperative arrangement for the production
of topographic maps of Ecuador, with
annexes. Signed at Washington and Quito
Apr. 21 and June 12, 1986. Entered into force
June 12. 1986.

Agreement relating to the agreement for
sales of agricultural commodities of May 17.

1985. with memorandum of understanding.
Signed at Quito June 20. 1986. Entered into
force June 20, 1986.

Egypt

Treaty concerning the reciprocal
encouragement and protection of investment,
with annex, signed at Washington Sept. 29,
1982; with a related exchange of letters
signed Mar. 11, 1985; and a supplementary
protocol signed Mar. 11, 1986.
Submitted to the Senate for advice and con-
sent: June 2, 1986 (Treaty Doc. 99-24).

European Atomic Energy Community
(Euratom)

Memorandum of understanding concerning
research on the health and environmental
effects of radiation, with annex. Signed at
Brussels July 7, 1986. Entered into force July
7. 1986.

Fiji

Agreement concerning the provision of train-
ing related to defense articles under the U.S.
International Military Education and Training
(IMET) Program. Effected by exchange of
notes at Suva Nov. 18, 1985 and Feb. 14,

1986. Entered into force Feb. 14. 1986.

Germany, Federal Republic of

Convention for the avoidance of double taxa-
tion with respect to taxes on estates. Signed
at Bonn Dec. 3, 1980.
Ratifications exchanged: June 27, 1986
Entered into force: June 27, 1986.6

Ghana

Agreement concerning the provision of train-
ing related to defense articles under the U.S.
International Military Education and Training
1 1 MET) Program. Effected by exchange of
notes at Accra Dec. 4, 1985 and Feb. 28,
1986. Entered into force Feb. 28, 1986.

Grenada

Treaty concerning the reciprocal
encouragement and protection of investment,
with annex. Signed at Washington May 2,
1986.

Submitted to the Senate for advice and con-
sent: June 3, 1986 (Treaty Doc. 99-25).

Haiti

Agreement amending the agreement for the
sale of agricultural commodities of May 30.
1985. Effected by exchange of letters at Port-
au-Prince June 2 and 5, 1986. Entered into
force June 5, 1986.

Indonesia

Agreement amending and relating to the
agreement for the sale of agricultural com-
modities of Dec. 2, 1980 (TIAS 10063). Signed
at Jakarta June 2, 1986. Entered into force
June 2. 1986.

Ireland

Agreement on preinspection in Ireland of
passengers and aircraft crew. Signed at
Dublin June 25, 1986. Entered into force June

25. 1986.

Japan

Agreement concerning Japan's financial con-
tribution for U.S. administrative and related
expenses for 1986 (JFY) pursuant to the
mutual defense assistance agreement of Mar.
8. 1954 (TIAS 2957). Effected by exchange of
notes at Tokyo June 17, 1986. Entered into
force June 17. 1986.

Mauritania

26, 1984. Entered into force Aug. 26. 1984.

Mexico

Agreement amending and extending agree-
ment of Feb. 26, 1979 (TIAS 9419), as
amended, relating to trade in cotton, wool,
and manmade fiber textiles and textile prod-
ucts. Effected by exchange of notes at Mexico
June 9 and 18. 1986. Entered into force June
18, 1986, effective Jan. 1, 1986.

Morocco

Agreement relating to the agreement for the
sale of agricultural commodities of Feb. 19,
1985, with memorandum of understanding.
Signed at Rabat May 27, 1986. Entered into
force May 27, 1986.

Netherlands

Agreement relating to the employment of
dependents of official government employees.
Effected by exchange of notes at The Hague
June 23. 1986. Enters into force on the date
on which the Netherlands notifies the U.S.
that constitutional requirements have been
fulfilled.

Protocol to amend the protocol of Mar. 31.
1978 (TIAS 8998). relating to the air
transport agreement of 1957 (TIAS 4782).
Signed at Washington June 11, 1986. Enters
into force on the date on which the
Netherlands notifies the U.S. in writing that
its constitutional procedures have been com-
plied with.

Pakistan

Agreement amending and relating to the
agreement for the sale of agricultural com-
modities of Apr. 28, 1985. Signed at
Islamabad May 19, 1986. Entered into force
May 19, 1986.

PRESS RELEASES

PUBLICATIONS

Philippines

Agreement for sales of agricultural com
moditK's. Signed at Manila June 20, 1986.
Entered into force June 20, 1986.

Agreement amending agreement of Nov. 24,
1982 |TI \S 10612). :1S amended, relating to
trade in cotton, wool, and manmade filler tex-
tiles and textile products. Effected by
exchange of notes at Washington June 11 and
1 . 1 986. Entered into force June 17, 1986.

Sierra Leone

Agreement relating to radio communications
between amateur stations on behalf of third
parties. Effected by exchange of notes at
Freetown Oct. 23, 1985 and June IS. 1986.
Entered into force July 18, 1986.

Tonga

United Kingdom

Memorandum of understanding concerning
cooperation in the field of environmental
affairs. Signed at Washington June 2, 1986.
Entered into force June 2, 1986.

Supplementary treaty to the extradition
treaty of June 8, 1972 (TIAS 8468), with an-
nex. Signed at Washington June 25, 1985
(Treaty Doc. 99-8).

Senate advice and consent in ratification:
July 17, 1986.7

Treaty concerning the Cayman Islands
relating to mutual legal assistance in criminal
matters, with attachments, protocol, and
exchange of notes. Signed at Grand Cayman
July 3, 1986. Enters into force upon exchange
of instruments of ratification.

Zambia

Agreement relating to the agreement for the
sale of agricultural commodities of July 9,
1985. Signed at Lusaka May 23, 1986.
Entered into force May 23, 1986.

Department of State

Press releases may be obtained from the
Office of Press Relations, Department of
State, Washington, D.C. 20520.

No. Date Subject

146 7/8 Shultz: remarks at the

ASEAN open session of Six
plus One Meeting, Manila,
June 27.

* 147 7/9 Shultz: remarks and question-

and-answer session before

Foreign Press Center

seminar on state-supported

terrorism.
*148 7/11 Program for the official visit

to the U.S. of Pakistan's

Prime Minister Mohammad

Khan Junejo, July 15-22.
149 7/23 Shultz: statement before

Senate Foreign Relations

Committee.
*150 7/25 Shultz: interview with David

Molpus, National Public

Radio, July 24.
*151 7/29 Shultz: interview on

"Newsmaker Saturday,"

CNN, July 25.

* 152 7/26 Statement on behalf of

Secretary Shultz on the
death of W. Averell
Harriman.
*153 7/29 Shultz: interview on USIA's
"Worldnet," July 24.

*Not printed in the Bi'lletin. ■

'With reservation.

2Not in force.

3In force provisionally for the U.S.

<With declaration.

Consequent to Portugal's membership in
the European Economic Community which is
a partj to the agreement.

'"•With understanding.

'With amendments. ■

Department of State

Free single copies of the following Depar
ment of State publications are available fi
the Correspondence Management Divisioi
Bureau of Public Affairs, Department of
State, Washington, D.C. 20520.

President Reagan

Why Democracy Matters in Central Amei
TV address to the nation, June 24. 198t
(Current Policy #850).

Ending Apartheid in South Africa, World
Affairs Council and Foreign Policy Assi
the White House, July 22, 1986 (Currei
Policy #853).

Secretary Shultz

The U.S. Approach to South Africa, Sena
Foreign Relations Committee, July 23,
(Current Policy #854).

Arms Control

Arms Control: Chemical and Biological
Weapons (GIST, July 1986).

Department & Foreign Service

Foreign Policy and the Budget Challenge
Deputy Secretary Whitehead, Council o
Foreign Relations, June 23, 1986 (Currn
Policy #849).

East Asia

U.S. -Japan Relations: A Global Partners!)
for the Future. Under Secretary Armac
Japan Society of Northern California. S
Francisco, July 21, 1986 (Current Polio
#856).

U.S. Export Controls and China (GIST. J>
1986).

Economics

Trade Policy: Where Will America Lead?
Assistant Secretary McGinn. Council on
Foreign Affairs, Baltimore, July 2, 1986
(Current Policy #852).

Refugees

Refugee Resettlement in the Heartland of
America, Deputy Assistant Secretary
Funseth, multistate refugee conference,?
Louis, June 4, 1986 (Current Policy #84'

I'.S. Refugee Policies and Programs at
Midyear 1986, Refugee Programs Direct
Purcell, Senate Judiciary Committee,
June 20, 1986 (Current Policy #851).

United Nations

UN Special Session: African Economic Sit
tion (GIST, July 1986). ■

Dpnartmpnt nf Statp Rn I

(ember 1986
ime86, No. 2114

lent at the Crossroads: An Agenda

Ifrican Development (Shultz) 88

fecial Session: African Economic

)ition 90

lture. European Communities'
ultural Markets (White House

ment 59

ontrol

egotiations Resume in Stockholm

te House statement) 39

lay on Peace (Reagan) 21

r and Space Arms Talks Conclude

d Five (Reagan) . . .42

ry Visits East Asia and the Pacific

Itz) 25

of MBFR Negotiations (White House

ments) -11

jic Modernization Program (White

;e statement) 81

uropean Relations (Ridgway) 58

olicy on Arms Control: Purpose,

pects, and Process (Holmes) 38

Proposes Initiative in CDE (Western

ment) 43

olicy on Acid Rain (Benedick) 55

resident Bush Visits Canada (Bush) .24

ary Visits East Asia and the Pacific

Itz) 25

merican Relations: No Time for

placency (Lord) 48

ess

ling the Foreign Sovereign

unities Act (Verville) 73

Sales to Saudi Arabia (Reagan.
;age to the Senate. White House

^rnents) 78

il America (letter to the Congress) . .91
iteral Development Banks and the

ronment (Negroponte) 53

:ics Trafficking in Southwest Asia

ibleski) 83

I AWACS Aircraft to Saudi Arabia
er to the Congress, text of

fication) 79

European Relations (Ridgway) 58

tment & Foreign Service
I .S. Foreign Service in a Year of

i lenges (Spiers) 44

i ng Group on South and Southern

&a 9

Mimics

fcteral Development Banks and the

lAronment (Negroponte) 53

arj Visits East Asia and the Pacific

lite) 25

vonment

jateral Development Banks and the

flironment (Negroponte) 53

I 'olicy mi Acid Rain (Benedick) 55

i >e

Experts' Meeting on Human

I<tacts (Novak. Ridgway, Western draft

d.'luding document) 65

■Negotiations Resume in Stockholm

V;ite House statement) 39

:4 Proposes Initiative in CDE (Western
itement) 43

European Communities. European

Communities' Agricultural Markets (White

House statement) 59

Foreign Assistance. Continent at the
Crossroads: An Agenda for African

Development (Shultz) 88

Germany

East Berlin Volkskammer Elections

(Department statement) 59

U.S. -European Relations (Ridgway) 58

Human Rights

Bern Experts' Meeting on Human
Contacts (Novak, Ridgway, Western draft

concluding document) 65

Ending Apartheid in South Africa

(Reagan) 1

The U.S. Approach to South Africa

(Shultz) 5

International Law. Amending the Foreign

Sovereign Immunities Act (Verville) ... .73
Korea. North Koreans Propose Three-Way

Military Talks (Department statement) . .51
Law of the Sea. Current Developments in the

U.S. Oceans Policy (Negroponte) 84

Maritime Affairs. Current Developments in

the U.S. Oceans Policy (Negroponte) ... .84
Military Affairs
North Koreans Propose Three-Way Military

Talks (Department statement) 51

Strategic Modernization Program (White

House statement) 81

U.S. -New Zealand Disagreement on Port
Access for U.S. Ships (Department

statement) 86

Narcotics

Narcotics Trafficking in Southwest Asia

(Wrobleski) 82

Secretary Visits East Asia and the Pacific

(Shultz) 25

New Zealand

Secretary Visits East Asia and the Pacific

(Shultz) 25

U.S. -New Zealand Disagreement on Port
Access for U.S. Ships (Department

statement) 86

Nicaragua. Central America (letter to the

Congress) 91

Oceans. Current Developments in the U.S.

Oceans Policy (Negroponte) 84

Palau. Secretary Visits East Asia and the

Pacific (Shultz) 25

Philippines. Secretary Visits East Asia and

the Pacific (Shultz) '. 25

Presidential Documents

Arms Sales to Saudi Arabia (message to the

Senate, White House statements) 78

Central America (letter to the Congress) . .91

Ending Apartheid in Smith Africa 1

An Essay on Peace 21

International Terrorism 23

Nuclear and Space Arms Talks Conclude

Round Five 42

Sales of AWACS Aircraft to Saudi Arabia
(letter to the Congress, text

of certification) 79

Why Democracy Matters in Central

America 18

Publications. Department of State 94

Refugees. Secretary Visits East Asia and

the Pacific (Shultz) 25

Romania. U.S.-European Relations
(Ridgway) 58

Saudi Arabia

Arms Sales to Saudi Arabia (Reagan,

message to the Senate, White House

statements) <s

Sale of AWACS Aircraft to Saudi Arabia

(letter to the Congress, text of

certification) '9

Security Assistance

Arms Sales to Saudi Arabia (Reagan,

message to the Senate, White House

statements) "s

Sale of AWACS Aircraft to Saudi Arabia

(letter to the Congress, text of

certification) 79

Singapore. Secretary Visits East Asia and

the Pacific (Shultz) 25

South Africa

Ending Apartheid in South Africa

(Reagan) 1

Misconceptions About U.S. Policy Toward

South Africa 12

The U.S. Approach to South Africa

(Shultz) 5

Working Group on South and Southern

Africa 9

South Asia

Narcotics Trafficking in Southwest Asia

(Wrobleski) 82

Sovereign Immunities. Amending the

Foreign Sovereign Immunities Act

(Verville) 73

Spain. U.S.-European Relations (Ridgway) 58
Terrorism

International Terrorism (Reagan) 23

Secretary Visits East Asia and the Pacific

(Shultz) 25

Treaties. Current Actions 91

U.S.S.R.

An Essay on Peace (Reagan) 21

Nuclear and Space Arms Talks Conclude

Round Five (Reagan) 42

Secretary Visits East Asia and the Pacific

(Shultz) 25

Status of MBFR Negotiations (White House

statements) 41

U.S.-European Relations (Ridgway) 58

U.S. Policy on Arms Control: Purpose.

Prospects, and Process i Holmes) 38

I'nited Nations
Continent at the Crossroads: An Agenda for

African Development (Shultz) 88

UN Special Session: African Economic

Situation 90

Western Hemisphere. Why Democracy
Matters in Central America (Reagan). ... is

Yugoslavia. U.S. -Yugoslav Relations
(Armacost) 61

Name Index

Armacost. Michael H 61

Benedick, Richard E 55

Bush. Vice President 24

Holmes. H. Allen 38

Lord. Winston 48

Negroponte, John I) 53, 84

Novak, Michael 65

Reagan, President I. 18,21,23, 12, 78,

79, 91

Ridgway, Rozanne L 58, 65

Shultz, Secretary 5, 25, 88

Spiers, Ronald I 44

Verville, Elizabeth G 73

Wrobleski. Ann B 82

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