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BOSTON 
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Department 



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Dfficial Monthly Record of United States Foreign Policy / Volume 87/ Number 2124 



July 1987 




Arms Control/17 
Japan/35 
Persian Gulf/58 
South Asia/75 




ONltE" 



Department of State 

bulletin 



Volume 87 / Number 2124 / July 1987 



Cover Photo: 

Japanese Prime Minister Nakasone. 

(White House photo by Pete Souzal 



The DEPARTMENT OF STATE 
BULLETIN, published by the Office of 
Public Communication in the Bureau of 
Public Affairs, is the official record of 
U.S. foreign policy. Its purpose is to pro- 
vide the public, the Congress, and 
government agencies with information 
on developments in U.S. foreign rela- 
tions and the work of the Department of 
State and the Foreign Service. The 
BULLETIN'S contents include major 
addresses and news conferences of the 
President and the Secretary of State; 
statements made before congressional 
committees by the Secretary and other 
senior State Department officials; 
selected press releases issued by the 
White House, the Department, and the 
U.S. Mission to the United Nations; and 
treaties and other agreements to which 
the United States is or may become a 
party. Special features, articles, and 
other supportive material (such as maps, 
charts, photographs, and graphs) are 
published frequently to provide addi- 
tional information on current issues but 
should not necessarily be interpreted as 
official U.S. policy statements. 



GEORGE P. SHULTZ 

Secretary of State 

CHARLES REDMAN 

Assist£int Secretary 
for Public Affairs 

PAUL E. AUERSWALD 

Director, 

Office of Public Communication 

NORMAN HOWARD 

Chief, Editorial Division 

PHYLLIS A. YOUNG 

Editor 

SHARON R. HAYNES 

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 Man- 
agement and Budget through September 30, 
1987. 



Department of state bulletin (ISS^ 

0041-7610) is published monthly (plus annul 
index) by the Department of State, 2201 C 
Street, NW., Washington, D.C. 20520. 
Second-class postage paid at Washington. 
D.C, and additional mailing offices. 
POSTMASTER: Send address changes to 
Superintendent of Documents, U.S. Govm 
ment Printing Office, Washington, D.C. 
20402. J 



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



CONTENTS 



iPresident 

I Promoting Freedom and 
Democracy in Central America 

Secretary 

Meeting the Challenges of 

Change in the Pacific 
Working for Peace and Freedom 
ASEAN: A Model for Regional 

Cooperation 
News Briefing of May 8 (Excerpt) 



East Asia 

35 Trade With Japan {President 
Reagan. Proclamation, 
Memorandum, White House 
Fact Sheet) 

37 Visit of Japanese Prime Minister 
Nakasone (Yasuhiro Nakasone, 
President Reagan, Secretary 
Shultz, Joint Statement) 

41 U.S. Policy Priorities for Rela- 
tions With China {Gaston J. 
Sigur, Jr.) 



Nuclear Policy 

67 Nonproliferation and the Peaceful 

Uses of Nuclear Energy {John 
D. Negroponte) 

68 Nonproliferation Agreement With 

Allies {White House Statement) 

Refugees 

70 Refugees and Foreign Policy: 

Immediate Needs and Durable 
Solutions {Jonathan Moore) 



African Development: An Admin- 
istration Perspective {John C. 
Whitehead) 

* Control 

Benefits of an INF Agreement 

{Secretary Shultz) 
Improving the Balance of Con- 
ventional Forces in Europe 

{John H. Hawes) 
MBFR Talks Resume {Depart- 
ment Statement) 
U.S., Soviet Union to Establish 

Nuclear Risk Reduction 

Centers {White House 

Statement) 
Effective Arms Control Demands 

a Broad Approach 

{Edward L. Rowny) 
Nuclear and Space Arms Talks 

Open Round Eight {Max M. 

Kampelman. President Reagan) 
U.S. -Soviet Nuclear and Space 

Arms Negotiations 

{President Reagan) 
U.S. Arms Control Initiatives: An 

Update 

irtment 

Challenges Facing the Foreign 
Service {Ronald I. Spie7's) 

U.S. -Soviet Agreement on 
Embassy Construction in 
Washington {Ronald I. Spiers) 



Economics 

43 OECD Council Meets in Paris 

{Final Communique) 
45 World Trade Week, 1987 

{Proclamation) 

Energy 

47 lEA Governing Board Meets in 
Paris {John S. Herrington, 
Final Communique) 

51 Energy Security {Message to the 

Congress) 

Environment 

52 The Environmental Agenda and 

Foreign Policy {Richard E. 
Benedick. John D. Negroponte) 

Europe 

56 Visit of French Prime Minister 

{Jacques Chirac, President 
Reagan) 

57 NATO Nuclear Planning Group 

Meets in Norway {Final 
Communique) 

57 31st Report on Cyprus {Message 

to the Congress) 

Middle East 

58 U.S.S. Stark Hit by Iraqi Missiles 

{Richard W. Murphy, President 
Reagan, Secretary Shultz, 
White Hov^e and Department 
Statements) 
61 U.S. Food Aid Program for 
Lebanon {Departnfient 
Statement) 

63 Meeting With Arab League 

Delegation {Secretary Shultz) 

64 The Persian Gulf: Stakes and 

Risks {Richard W. Murphy) 



Science & Technology 

74 World Radio Conference 

Concludes 

South Asia 

75 South Asia and the United States: 

An Evolving Partnership 
{Michael H. Armacost) 

Western Hemisphere 

80 The Spirit Behind the Monroe 

Doctrine {Elliott Abrams) 

81 Monroe Portrait Unveiled 

{Secretary Shultz) 
83 Central America: What Are the 
Alternatives? {Elliott Abrams) 

86 Pan American Day and Week, 

1987 {Proclamation) 

87 Proposed Sale of F-5s to 

Honduras {Elliott Abrams) 

88 Argentine Military Rebellion 

{White House Statement) 

Treaties 

89 Current Actions 

Press Releases 

91 Department of State 

Publications 

92 Department of State 

92 Background Notes 

93 Foreign Relations Volumes 

Released 

Index 




Deoartment of State Bulls 



THE PRESIDENT 



Promoting Freedom 

and Democracy 
in Central America 



President Reagan's address before 
the American Newspaper Publishers 
Association at Ellis Island, New York, 
on May 3, 1987J 

It's a great honor to be here with you on 
this, the 100th anniversary of your con- 
vention. The truth is, it's always a great 
pleasure to be addressing something 
older than I am. I'm beginning to feel 
right at home here in New York Harbor. 
Last year, of course, we celebrated 
another centenary— that of the Statue of 
Liberty— the generous lady who, for 100 
years now, has stood watch over this 
gateway to freedom. It couldn't be more 
appropriate that, a year later, we gather 
here on Ellis Island to celebrate with all 
of you, the ladies and gentlemen of the 
fourth estate, who also have stood watch 
over our freedoms and who have been 
the guardians of our liberty. 

You all know what Thomas Jefferson 
said of the press— that given the choice 
of a government without newspapers or 
newspapers without a government, he 
wouldn't hesitate for a second to choose 
the latter. Of course, Jefferson said that 
before he became President. 

You know, it reminds me of a par- 
ticular editor who just wouldn't admit to 
any mistakes ever in his paper. Every- 
thing in his paper had the weight of 
scripture. And then early one morning 
he received a call from an outraged 
subscriber who protested that his name 
was listed in that morning's obituary 
section as having died the previous day. 
And the editor said, "And where did you 
say you were calling from?" 

Well, of course, presidents aren't 
always entirely objective themselves, 
like Harry Truman when he read the 
reviews of Margaret's recital. And then 
Bill Moyers likes to tell the story of one 
day at lunch with President Johnson. Bill 
was saying grace when Johnson bel- 
lowed, "Speak up, Bill, I can't hear a 
darn thing." And Bill looked up and said, 
"I wasn't addressing you, Mr. Presi- 
dent." The fact is, if those of us in 
government and the press sometimes 



think of ourselves as antagonists, it's 
only in the context of transitory events. 
The rush of daily business can obscure 
ibr us a deeper truth— that we're two 
complementary institutions, each 
drawing life and strength from the other 
and that together we hold the sacred 
trust of democratic government and 
freedom. The life and hope of liberty in 
an all-too-often threatening world— that 
is our solemn responsibOity. 

Mr. Jefferson also wrote that the 
truth of human liberty is self-evident, 
but he knew its success was anything but 
so. It was only the courage and the will 
of free men that gave freedom a chance, 
and, once established, it was only their 
continuing dedication that kept freedom 
alive and allowed it to prosper. 

The Dream of Freedom 

That dream of freedom has a special 
meaning to us today as we gather here 
on Ellis Island, beneath the gaze of Miss 
Liberty. It would be easy to come here 
and tell once more the story of those 
who have passed through these gates, to 
simply celebrate once again the freedoms 
Americans enjoy. But my job today is 
more difficult. It's not about those who 
came to this land, but it's about the 
dream that brought them here. Today, 
another people are in search of that 
dream, and theirs, too, is an inspiring 
story— one that must speak to the heart 
of all who came to this island and cherish 
the great lady of this harbor. 

I speak of the people of Central 
America. And let me begin in 1981. 1 
wonder how many remember that when 
we first drew attention to the crisis in El 
Salvador, we were met with an almost 
fatalistic acceptance of communist vic- 
tory in that country— if not the whole 
region. Democracy, it was said, couldn't 
work in El Salvador: the people were too 
poor; they had no democratic tradition; 
they didn't want the chance for democ- 
racy that we offered; in fact, their sym- 
pathies lay with the communist guer- 
rillas, we were told. 



THE PRESIDENT 



But then one day the silent, suffer- 
ing people of El Salvador were offered a 
chance to choose for themselves— a 
national election. And despite the 
bullets, the bombs, and the death threats 
of the communists, the people of El 
Salvador turned out in record numbers, 
standing in line for hours waiting to 
vote— to vote for democracy. 

Congressional observers in that 
national election told me of a woman 
who was wounded by rifle fire on the 
way to the polls because the guerrillas 
tried to keep the people from getting 
there. She refused to leave the line and 
have her wound treated until after she 
had voted. And the wait in the line was 
hours long. One grandmother, as she 
started to the polls, had been warned by 
the guerrillas that, if she voted, she 
would be killed when she returned from 
the polls. She told them, "You can kill 
me, kill my family, kill my neighbors, but 
you can't kill us all." That was the voice 
of Central America— the testimony of a 
people determined to be free. 

The Threat to Freedom 
and Democracy 

Much has been achieved since 1981. In a 
region in which military dictatorships 
have dominated society, democracy is 
taking root. A decade ago, only Costa 
Rica was a democracy. Today, Costa 
Rica has been joined by elected civilian 
governments in El Salvador, Guatemala, 
and Honduras— only Nicaragua remains 
a dictatorship. But while the trend 
toward democracy is unmistakable, the 
threat to freedom and democracy in 
Central America remains powerful 
because of Sandinista totalitarianism in 
Nicaragua. The aspirations of millions 
for freedom still hang in the balance. 

The elected leaders of neighboring 
Central American countries understand 
this; they have personally told me this. 
They know the Nicaraguan regime 
threatens their own future and the 
stability of this hemisphere. They know 
that the establishment of a genuinely 
democratic system in Nicaragua— with 
the full, guaranteed liberties of free 
assembly, free speech, and free press- 
offers the only real hope for the long- 
term peace and security of the region. 
They know such a system provides a 
check and balance on any government, 
discourages militarism, and ensures the 
people's right to choose their own 
destiny. And that's why the views of our 
Central American friends and the aspira- 
tions of the Nicaraguan people are one 
and the same— the establishment of full, 



popularly elected, legitimate democratic 
rule in Nicaragua. So what we seek for 
Nicaragua is simple enough: self-determi- 
nation for the Nicaraguan people— the 
right to select their own leaders in free, 
fair, contested, and regularly scheduled 
elections. 

The majority of Central Americans 
have made this choice. And I have come 
here today to say to you that the free- 
dom fighters of Nicaragua are fighting 
for the same thing that the brave woman 
in El Salvador risked her life for: 
democracy— real democracy, rooted in 
sound, stable, democratic institutions 
and ensuring the full range of political 
liberties and human rights. And I have 
come here to say that the U.S. Government 
pledges to the American people what the 
freedom fighters have pledged to their 
own people: that our objective in 
Nicaragua is clear— free elections. 

On the other hand, the Soviets and 
the Sandinistas have also made a choice, 
not for democracy, not for a free press, 
and not for free elections but for control 
through force. In 1986 alone, overall 
Soviet-bloc assistance to the Sandinistas 
exceeded $1 billion. These Soviet ship- 
ments have made the small country of 
Nicaragua an aggressor nation with the 
largest military machine in Central 
America, threatening the security of the 
entire region. 

The Challenge to the United States 

Make no mistake: the Soviets are 
challenging the United States to a test 
of wills over the future of this hemi- 
sphere. The future they offer is one of 
ever-growing communist expansion and 
control. And this is the choice before 
Congress and our people— a basic choice, 
really, between democracy and com- 
munism in Nicaragua, between freedom 
and Soviet-backed tyranny. For myself, 
I'm determined to meet this Soviet 
challenge and to ensure that the future 
of this hemisphere is chosen by its peo- 
ple and not imposed by communist 
aggressors. 

Now, I could go on for hours about 
our negotiations with the Sandinistas, 
the Contadora process, and the missions 
of my regional diplomatic negotiator, 
Philip Habib. But since those first 
negotiations back in 1979, in which the 
Sandinistas promised a democratic, 
pluralistic society, we've seen that these 
Marxists-Leninists never intended to 
honor those promises; we've seen them 
use negotiations time and again simply 
to delay, to manipulate world opinion. 
And that's why the choice remains the 
same: democracy or communism, elec- 



tions or dictatorship, freedom or 
tyranny. 

The debate in this country over Ce- 
tral American policy has been direct at 
tough— and, yes, even heated at times. 
While such debate is healthy, we all 
know that a divided America cannot 
offer the leadership necessary to provi: 
support and confidence to the emergin, 
democracies in Central America. 

I do not think there's anyone in Co 
gress who wants to see another base ff 
Soviet subversion, another Cuba, estal 
lished on American shores. And yet th; 
is what is happening right now. It's no 
an issue on which all Americans must 
unite; it's simply too important to 
become a partisan firefight in the next 
election. If we cut off the freedom 
fighters, we will be giving the Soviets ^ 
free hand in Central America, handing 
them one of their greatest foreign poll 
victories since World War II. Without 
the pressure of the Central American 
democracies and the freedom fighters, 
the Soviets would soon solidify their 
base in Nicaragua, and the subversion . 
El Salvador would reignite. The 
Nicaraguans have already infiltrated 
operatives even into Costa Rica, and 
they're simply waiting for the signal. 
Soon the communists' prediction of a 
"revolutionary fire"— it's their words- 
sweeping across all of Central Americ. 
could come true. Let us not delude our 
selves about the ultimate objective of t 
Soviets' billion-dollar war in Nicaragua 

There is a line attributed to Nikola 
Lenin: "The road to America leads 
through Mexico." I do not intend to 
leave such a crisis for the next Americ; 
president. For almost 40 years, Amerii 
has maintained a bipartisan consensus 
on foreign policy. The Democratic 
Party— the party of Franklin Roosevel' 
Harry Truman, and John Kennedy— k 
stood in firm support of democracy anc 
our national security. This is no time f( 
either party to turn its back on that 
tradition or on the cause of freedom, 
especially when the threat to both is » 
close to home. 

U.S. Policy Framework 

The survival of democracy in our hemi 
sphere requires a U.S. policy consistet 
with that bipartisan tradition. So toda) 
I want to describe the framework of tt 
policy, a policy that begins with suppor 
for the stable, long-lasting democracy t 
Costa Rica and the democracies taking 
root in El Salvador, Guatemala, and 
Honduras. 



Department of Rtats BulMJI 



THE PRESIDENT 



!" > Need for Additional Economic 

Since. Many in Congress have 
1 the importance of maintaining 
nt levels of economic aid to assist 
emocracies. I couldn't agree more, 
why additional economic assist- 
ust be approved for the four 
American democracies. 

ntinuing Diplomatic Efforts. 

close cooperation with our demo- 
riends in Central America is also 
al, and our policy is to continue 
; in the past, diplomatic efforts to 
a lasting peace. Earlier this 
resident Arias of Costa Rica put 
1 a proposal aimed at achieving a 
J settlement of the conflict in 
^a. At the center of his proposal 
sistence on democracy in 
Tua. The United States welcomes 
;iative and supports its general 
'e. At the same time we have 
)ncems which need to be resolved, 
r larly on the sequence of imple- 
i ion. It's essential that any cease- 
j negotiated with the full range of 
1 osition. It is our profound hope 
i ilentral American consensus can 
I hed soon and that a process 
I toward freedom in Nicaragua 
] forward. 

'. igress has expressed its support 
I efforts of the Central American 
acies to achieve a diplomatic 
ent to the regional conflict. 
3 asked for an increased effort by 
ited States to examine ways for a 
il conclusion to the civil strife in 
jua. This Administration has 
supported regional diplomatic 
/es aimed at peace and democ- 
hether it be through Contadora, 
J T face-to-face meetings with the 
Darty in Nicaragua, or through 
; Central American initiatives, 
say right now that I will lend my 
)port to any negotiations that can 
emocracy throughout Central 
■a without further bloodshed, 
u know, I recently received a let- 
led by 111 Members of the House 
resentatives calling for a major 
atic effort "designed"— their 
-"designed to achieve peace, 
y guarantees for all Central 
mn nations, the promotion of 
ratic institutions, and the removal 
let and Cuban military personnel 
licaragua." While I do not endorse 
King in the letter, I certainly join 
Congressmen in calling for the 
ition of freedom of the press, 
m of religion, freedom to assem- 
edom of speech, and free elections— 
*fhich are now denied by the 
iment of Nicaragua. 



Our Senate passed, by a 97-1 vote, a 
resolution stating that a "durable peace 
is only possible writhin the context of 
democratic regimes committed to eradicat- 
ing extreme poverty, to establishing an 
effective means for equal opportunity for 
all elements of society, and free and 
periodic elections." 

So, while Congress gets no argument 
from me in seeking a peaceful, diplo- 
matic solution in Nicaragua, you can see 
the key is democracy and that a majority 
in Congress clearly recognized this. 
That's why I strongly believe there is a 
solid basis upon which to build a common 
effort with Congress to resolve this con- 
flict in Central America. I plan to make 
every effort to work toward these goals, 
and I hope Congress will join with me. 

Supporting Freedom Fighters. And 

that brings me to the third element in 
our policy— our commitment to, our support 
for the freedom fighters who have 
pledged their lives and honor to a free 
Nicaragua. This Administration's sup- 
port of the Nicaraguan freedom fighters, 
in their struggle for peace and demo- 
cratic government, will not change unless 
the regime in Nicaragua accedes to the 
democratic aspirations of the Nicaraguan 
people. Every day the Nicaraguan peo- 
ple are becoming more outraged by the 
repression of their communist rulers. 
The democratic Nicaraguan resistance, 
including the freedom fighters, today 
offers the only political alternative to the 
dictatorship of the past and the com- 
munism of today. That alternative is 
democracy, and it's winning increasing 
support from the people of Nicaragua. 

For as long as I'm President, I have 
no intention of withdrawing our support 
of these efforts by the Nicaraguan peo- 
ple to gain their freedom and their right 
to choose their own national future. In 
the next few months, I'll be asking Con- 
gress to renew funding for the freedom 
fighters. Again, I stress the danger of 
the course argued by some in the Con- 
gress: that the most expeditious route to 
peace in Central America is abandoning 
our commitment to the Nicaraguan free- 
dom fighters. Delays and indecision here 
at home can only cause unnecessary suf- 
fering in Nicaragua, shake the confidence 
of the emerging democracies in the 
region, and endanger our owm security. 

We've come a long way in these last 
7 years toward understanding the true 
nature of the Sandinista regime and its 
aggressive aims against its own people 
and its democratic neighbors in Central 
and South America. A new bipartisan 
consensus is forming, one that rejects all 
the old excuses. Last year, in an edito- 
rial entitled "The Road to Stalinism," 



The New York Times charged that the 
"pluralistic revolution" the Sandinistas 
promised is "hopelessly betrayed." 
Stated the Times: "Only the credulous 
can fail to see the roots of the police 
state now emerging." 

And then my old friend. Tip O'Neill, 
in the wake of one of the Sandinistas' 
most blatant acts of aggression, declared 
that Daniel Ortega was what he had 
always said he was, nothing less than a 
"Marxist-Leninist communist," intent on 
provoking a "revolution without 
borders." 

Well, now the question before the 
American people and the U.S. Congress 
is, "What do we do about it?" Well, 
despite almost universal acknowledg- 
ment of the brutal, totalitarian, and 
subversive intentions of the Sandinista 
regime, the renewal of aid to the free- 
dom fighters is still a debated question. 
But I think there's increasing recognition 
that the freedom fighters are the only 
ones who stand between the Sandinistas 
and their expansionistic aims; that they 
are the major obstacle to preventing all 
of Central America from being engulfed 
in the communists' "revolutionary fire"; 
that the freedom fighters are the only 
ones who offer the hope of freedom to 
the people of Nicaragua and a chance for 
a stable and long-lasting peace in Latin 
America. They're worthy of our support. 

So that's why the upcoming vote in 
Congress on whether to continue provid- 
ing support to the freedom fighters in 
Nicaragua may well be the most impor- 
tant vote our representatives cast in 
1987 and possibly one of the most impor- 
tant cast in their careers in public office. 

The Call to Freedom 

It's an important question for the press 
and media, as well. I can't help but note 
that in the new democracy of El Salvador, 
communist-supported guerrillas continue 
to try to bring down democratic rule. 
There's little or no media attention. Yet, 
just across a border in Nicaragua, the 
freedom fighters battle against a totalitar- 
ian communist regime and are assailed 
far and wide as lawless terrorists or 
worse. Forgive me, but the story needs 
perspective. And that perspective is pro- 
vided by the aggressive nature of 
Sandinista communism. 

Today, the people of Nicaragua know 
from experience the reality of Sandinista 
communism: the brutality, the poverty, 
the oppression. And for that reason they 
know what we too often forget— that 
freedom is worth fighting for. 

It's the same firsthand knowledge of 
oppression and yearning for liberty that 



987 



THE SECRETARY 



steels the brave Afghan resistance and 
gives them the courage to take up arms 
against the overwhelming might of the 
Soviet military machine; the same knowl- 
edge that inspires the brave Angolans 
and Cambodians, fighting long wars of 
liberation against their Soviet-backed 
oppressors; the same knowledge that 
drove the Grenadian people to embrace 
the American servicemen liberating their 
country and throw flowers in their path. 
And wasn't it something to see graffiti 
on the walls saying not "Yankee Go 
Home," but when I was there, every 
place I looked, it was saying, "God Bless 
America." 

They were all responding to the call 
to freedom— a call that has a particular 
eloquence among these buildings, on this 
island where so many of our ancestors 
greeted the sight of Liberty with tears 
of joy. We hear the call of freedom in the 
work to which you've dedicated your lives, 
sounding clearly, proudly, every morning 
and evening in the pages of a free press. 
Tragically silenced in Nicaragua by the 
closing of La Prensa, we still hear that 
call in the brave voice of its publisher, 
Violeta Chamorro, who makes it clear 
that on the subject of freedom, the press 
can never be agnostic. She said, "With- 
out liberty of the press, there is no rep- 
resentative democracy, nor individual 
liberty, nor social justice . . . only 
darkness, impunity, abuse, mediocrity, 
and repression." 

Well, that's the choice we face: 
between the light of liberty or the 
darkness of repression. When, after 
terrible voyages of sickness and hard- 
ship, our ancestors first spied Liberty's 
torch, they knew that light shone for 
them— "those huddled masses yearning 
to breathe free." For those who've 
known only the bitterness of want and 
oppression, that torch burns especially 
bright. 

Today, the light of freedom is our 
sacred keepsake, the promise of America 
to all mankind. We must forever hold its 
flame high, a light unto the world, a 
beacon of hope that extends beyond this 
harbor all the way to the jungled hills of 
Nicaragua, where young men are fighting 
and dying today for the same liberties 
we hold dear; all the way into the hearts 
of people everywhere who fight for 
freedom. 



Meeting the Challenges 
of Change in the Pacific 



'Text from Weekly Compilation of 
Presidential Documents of May 11, 1987. I 



Secretary ShuUz 's address before the 
Stanford University Cornerstone Centen- 
nial Academic Convocation in Stanford 
on May U, 1987.^ 

Our world is in the midst of dramatic 
change. International politics and the 
global economy are rapidly evolving into 
far more complex patterns of power and 
growth than any traditional East- West 
or North-South metaphor might convey. 
Familiar assumptions about economic 
development— and, by extension, 
military and political strength— are fast 
becoming outdated. We have to adapt to 
new ways of thinking about this new 
world. 

We are, for instance, witnessing a 
quiet but steady shift of political and 
economic dynamism toward the lands 
and peoples surrounding the Pacific. Too 
many Americans tend to think of the 
Pacific rim as someplace "out there"— 
separate and distinct from us. But that 
sort of thinking is wrong. Our three 
countries represented here today- 
Canada, Mexico, and the United 
States— are at the very center of this 
process of Pacific growth. 

It's not simply that our collective 
coastlines represent perhaps a quarter to 
a third of the geography of the Pacific 
rim. Our combined GNPs [gross national 
products] account for fully two-thirds of 
the total GNP of the region. The trade 
flows just between the three of us 
amount to well over $150 billion a year— 
approximately 30% of the total trade 
between members of the Pacific basin. 
And, in recent years, the United States, 
Canada, and Mexico have together 
exported roughly $75 billion annually to 
other members of the Pacific region, 
while we imported about twice as much 
from these other Pacific economies- 
over $150 billion. 

As a result of all this activity, new 
interrelationships are being formed 
between the societies and economies of 
North and Latin America, East Asia, 
Australia, and Oceania. The relative 
success— or failure— of this evolving 
Pacific community in encouraging fur- 
ther growth and stability will shape how 
our world will look and run well into the 
21st century. 

For our part, the United States is 
seeking to build upon our strong 
bilateral relations with individual coun- 
tries of the area to encourage greater 



regional cooperation. We believe that 
the countries of this Pacific region hav. 
powerful advantages working in their 
favor— although there is nothing 
automatic or inevitable about continuir 
economic success, political stability, or 
regional security. On the contrary, the 
dramatic nature of change in today's 
world makes complacency dangerous. 
Over the coming years, it will be increi 
ingly important that, together with ott 
Pacific rim nations, we seek to address 
the following challenges. 

• How do we sustain the condition 
necessary for continuing high levels of 
economic growth and for expanding ou 
prosperity among the varied states ths 
rim the Pacific? 

• How do we maintain stability 
security in the face of new political tei 
sions and military threats? 

• And how do we best support the 
further growth of democracy and 
freedom among the diverse and unique 
societies of the region? 

Prerequisites for 
Continuing Economic Growth 

Our world has already moved out of tli- 
industrial age and into an era 
characterized by new information 
technologies. Economic success is 
becoming less a function of rich nature 
resources or simple concentrations of 
labor and capital. More and more, 
growth and competitiveness will depec; 
upon: 

• The freedom with which a socier 
can use and share knowledge; 

• Its openness and receptivity to 
new ideas, goods, and services; and 

• The ability of its economy to ma) 
the best use of rapidly changing 
technologies. 

Some economies along the Pacific 
rim— beginning with Japan and now 
including Asia's "Four Tigers" of Scut 
Korea, Singapore, Taiwan, and Hong 
Kong— have achieved tremendous suc- 
cess in their own development. They 
have aggressively pursued a strategy «■ 
export-led growth, moving from the 
initial production of textiles and low 
value-added manufactures on to indus- 
trialized products of ever-increasing 
sophistication. But in doing so, they ha 
depended, to a great extent, upon theii 



Department of State Bulij 



THE SECRETARY 



) export into a vast and open 
in market. 

ly, various less developed 
are now striving to duplicate this 
of export-led growth. These new 
tors include the largest nation of 
fie rim— China, which has vig- 
smbarked on its own program of 
g economic reform and modern- 
But at the same time, the more 
economies of the countries 
ited here— as well as Europe and 
ire beginning to face their own 
)roblems of restructuring. New 
;ion-based industries and serv- 
supplanting their more tradi- 
anufacturing processes and 
; of international commerce, 
sequently, the strategy of 
ve export-led growth— which 
30 well in the recent past for 
)nomies— is becoming less effec- 
Ij iir rapidly changing environ- 
; smand has slackened for many 
1 ities upon whose export earn- 
1 ly of the less developed nations 
5 md. Competition is widening 
f nsifying in the export of 
t iral products, textiles, steel, 
id consumer electronics. And, 
! ious of all, the efforts of many 
s nations to expand overseas 
■ lile maintaining barriers to pro- 
1 r own domestic markets, are a 
: 1 stimulus to destructive protec- 
! 3verywhere. 

S Tiust acknowledge a simple 
I: 'ery export represents an import 
f !one else. But this need not be a 
1 game. As long as there is eco- 
-owth and the level of worldwide 
; increases, everyone gains. But 
itional economy cannot succeed 
or net exporter at the same time. 
re face a major problem: if 
; approaches to economic growth 
ming less appropriate and a 
f potential conflict, what should 
jvelopment strategy involve? 
eps must the members of the 
:ommunity take in order to max- 
eir chances for a high volume of 
ichnological innovation, and 
prosperity for their peoples? 
)f the Pacific rim nations have to 
difficult decisions needed to 
fundamental market-opening 
!S across the board. Ironically, 
to genuinely free trade in the 
ncreased competition are simply 
for eroding national com- 
ness and slowing down economic 
This is true for both the highly 
ed and the developing countries 
5gion. The protection of infant 



industries or traditional sectors such as 
agriculture— an argument we hear so 
frequently— too often results in high 
prices and lower standards of living and 
resistance to new ideas and investment. 

I'm happy to say that we are taking 
important steps toward greater 
economic openness among our three 
countries represented here today. At 
Prime Minister Mulroney's initiative, 
Canada and the United States have 
begun negotiation of a comprehensive 
free trade area agreement. This agree- 
ment would create the world's largest 
single market— and with it, an unprece- 
dented opportunity to improve the com- 
petitiveness of Canadian and U.S. firms. 
Similarly, under President de la 
Madrid's firm leadership, Mexico has 
entered the General Agreement on 
Tariffs and Trade, more commonly 
known as the GATT. This action has 
demonstrated his government's will- 
ingness to undertake a major commit- 
ment to liberalize trade. 

But beyond trade arrangements, the 
members of the Pacific rim also need to 
adapt their economic policies to reflect 
more accurately their own new status 
and responsibilities. In years past, a 
vigorous and open American economy 
served as the major engine of global 
growth. But in a world economy with 
increasingly diverse centers of produc- 
tive capacity, the United States cannot 
continue to perform this function alone. 

It is especially important that Japan 
move away from excessive reliance upon 
exports and to domestically led growth. 
Japan's leaders recognize this. During 
his recent visit to Washington, Prime 
Minister Nakasone clearly acknowledged 
the need to transform Japan's economic 
structure toward stronger domestic 
growth in order to put that country's 
external trade in better balance with the 
rest of the world. This is a difficult 
task— involving, among other actions, 
stimulating private consumption, 
reforming agricultural policies, 
facilitating greater housing investment, 
and building up Japan's public infra- 
structure. But these necessary steps will 
benefit not only the Japanese people but 
the Pacific community and the global 
economy as a whole. The addition of 
greater Japanese "pulling power" to 
world growth will be especially needed 
as the United States redresses its own 
trade imbalance over the next few years. 

Korea and Taiwan can help as well 
by changing their own policies of 
restricted financial markets, closed 
import regimes, and managed exchange 
rates. This would enable them to encour- 
age more vigorous domestic demand and 



to undertake long-deferred improve- 
ments in the quality of life for their own 
people. Elsewhere in the region, much 
more should be done to encourage private 
investment and individual entrepreneur- 
ship. Experience shows, again and again, 
that the most vibrant economies are 
those that rely less upon efforts at cen 
trally planned growth and more upon the 
inherent dynamism of the private sector. 

There is, of course, much that we in 
the United States have to do as well. 
Our industries need to be flexible and 
creative in meeting the future demands 
of the marketplace. We have to resist 
energetically unwise efforts within the 
Congress to impose protectionist 
measures on trade. But, most especially, 
we, as a nation, must reduce our Federal 
budget deficit and encourage greater 
domestic savings and investment. 

And, not the least, all of the Pacific 
nations have an important stake in work- 
ing together to promote early and mean- 
ingful progress in the new Uruguay 
Round of the GATT multilateral trade 
negotiations. 

And so, if we are to sustain continu- 
ing growth, if we are to reduce trade 
imbalances that are fueling pressures for 
protectionism, then the members of the 
Pacific community have to give greater 
emphasis in their policies to comprehen- 
sive macroeconomic measures and be 
determined in their efforts to open up 
domestic markets. 

Strengthening Regional 
Peace and Stability 

It will be just as important that we work 
to ensure the peace and stability within 
the Pacific that are so essential for 
economic growth. We cannot take this 
stability for granted. Despite its peaceful 
name, the Pacific is a part of the world 
with a long history of vigorous competi- 
tion and periods of conflict. 

One of the most encouraging 
developments of the postwar era has 
been the growth of constructive rela- 
tions between former Pacific adver- 
saries. This has taken place between the 
United States, Japan, China, Korea, and 
other nations. 

Unfortunately, the Soviet Union and 
its client states in the region continue to 
show a readiness to exacerbate and 
exploit local tensions for their own ends. 
The decade of the 1970s demonstrated 
that these nations are prepared to use 
force to expand their control and influ- 
ence over their neighbors. At the same 
time, there has been a massive buildup 
of Soviet nuclear and conventional forces 
in Asia. 



37 



THE SECRETARY 



More recently, we have seen 
expanded Soviet military operations out 
of their naval and air bases at Cam Ranh 
Bay and the supply of more sophisticated 
weaponry to North Korea. In light of 
North Korea's past attempts at subver- 
sion and aggression, the situation on the 
Korean Peninsula remains volatile. And 
a tragic conflict continues in Indochina 
as a result of the Vietnamese invasion of 
Cambodia and Moscow's support for 
Vietnamese regional ambitions. 

The United States has reaffirmed its 
commitment to the continuing peace and 
security of the Pacific region. Together 
with our allies and friends in the area, 
we have worked hard to strengthen 
capabilities for self-defense. We have 
supported the member states of ASEAN 
[Association of South East Asian 
Nations] in seeking a political solution to 
the conflict in Cambodia that provides 
for the early withdrawal of Vietnamese 
forces and self-determination by the 
Cambodian people. We have fully backed 
the efforts of the Republic of Korea both 
to deter the threat of North Korean 
aggression and to establish a direct 
dialogue with Pyongyang aimed at pro- 
moting greater stability on the 
peninsula. 

The global nature of the current 
Soviet SS-20 missile threat illustrates a 
vital point: these security issues, includ- 
ing arms control, cannot be considered 
as problems exclusive to any single 
region of the world— whether Europe, 
Asia, or the Americas. And, accordingly, 
we have strengthened our consultations 
with Japan, China, Australia, and other 
key members of the Pacific rim on all of 
these problems. 

But genuine peace depends upon 
more than just a lack of external con- 
flict. And so, it is important that we also 
continue to support an evolution toward 
greater democracy and the rule of law 
throughout the Pacific region. This is a 
matter for us of both principle and prac- 
ticality. Experience proves that freedom 
and representative government are a 
means of ensuring political stability, 
economic growth, and peace among 
nations. 

But democracy seldom comes easily. 
In the Philippines, for instance, Presi- 
dent Corazon Aquino's government is 
grappling courageously not only with dif- 
ficult economic and social problems but 
with a determined and vicious com- 
munist insurgency as well. Within the 
Republic of Korea, we urge that all 
parties— representing both the govern- 
ment and the opposition— pursue, with a 
common willingness to compromise, a 
serious political dialogue designed to 



create a process of free and fair 
elections. 

The diversity of the Pacific rim is a 
source of great strength, but it also 
means we will continue to see differing 
approaches to expanding political and 
economic freedom throughout the 
region. Various societies in transition 
will have to find their own paths toward 
political reforms as well as economic 
growth. In some— as in China today- 
there will be great difficulty in reconcil- 
ing desires for greater individual free- 
dom with traditions of highly centralized 
authority. In others— such as South 
Korea— there will be concern over the 
need to sustain hard-won but fragile 
peace and stability in the face of very 
real external threats. A peaceful evolu- 
tion toward increased individual freedom 
in all of these societies can only come 
about in a way consistent with each peo- 
ple's history, culture, and with the 
realities of their political and security 
situations. 

For our part, we should recognize 
the complex process of moving toward 
greater freedom and craft our policies 
accordingly. The United States believes 
that democratic rights and forms of 
government are both an incentive for 
and a guarantor of stability and growth. 
We will not be shy in saying so. We will 
not seek to meddle in the internal affairs 
of others. But, consistent with the basic 
dignities promised all individuals under 
the UN Charter, we will remain con- 
cerned about persistent violations of 
human rights, wherever and whenever 
they occur. We will encourage demo- 
cratic political forces throughout the 
region. 

Conclusion 

These are daunting challenges- 
economic, political, and strategic— that 
the Pacific community faces in the midst 
of a rapidly changing world. We have 
our work cut out for us, and yet we have 
a great deal going for us. 

First, we need to change the way in 
which we think and act about economic 
relations along the Pacific rim. For too 
long we have focused on bilateral trade 
balances. That's an inadequate, counter- 
productive approach. The Pacific nations 
need to reaffirm the shared political 
stake we all have in the expansion of an 
open and growing international 
economic order. This isn't solely an 
American responsibility or that of the 
Japanese or any other single nation. 
Every member of the Pacific community 
has an important contribution to make in 
preserving open trade and a growing 
world economy. 



Second, we must redouble our 
efforts to reinforce peace and stabilit; 
through the maintenance of a credible 
deterrent to the use or threat of forc( « 
expansionist states. In recent years, ■ 
have made important progress in doii 
so, working together with our allies a 1 
friends within the region. But our tasii 
far from over. However, some might 
wish otherwise— as, for instance, somlo 
our friends in New Zealand; declarati y 
statements of goodwill and so-called 
confidence-building measures that 
weaken strategic deterrence are not fe 
answer. They won't close off oppor- 
tunities for military aggression or rec c 
the temptations for political intimi- 
dation. We have learned from the bit r 
experience of the 1930s. It's only 
through strength and solidarity that 
democracies are able to convince exp - 
sionist powers that adventurism and 
excessive military buildups offer no e y 
rewards. 

Finally, we should continue to 
encourage the spread of freedom, 
democracy, and the rule of law 
throughout the region. Representativ 
government can't be imposed from tl 
outside; it must come from within a 
society. It requires mutual tolerance, 
commitment to peaceful change, and 
security from external threats. The 
peoples of the various Pacific societie 
now in transition have the chance bell 
them to work out their own solutions 
moving toward more representative 
political processes and institutions. \^ 
should make our position clear and fd 
support them in their efforts. 

That's a full agenda. There will b ai 
quick and easy answers. But I am buJ ih 
about our collective ability to meet th \e 
challenges— provided we act on them 
vigorously and with a sense of sharec 
purpose. 

This morning I had the opportuni j 
to discuss these issues with my friencj 
and distinguished colleagues here- 
Canada's Secretary of State for Ext 
nal Affairs, Joe Clark, and Mexico's 
Secretary of Foreign Relations, 
Bernardo Sepulveda. It was a very in r- 
mal session with none of the usual 
diplomatic trappings— just sitting aro id 
in the Stanford sunshine; just good 
friends sitting down to talk frankly ai 
seriously. I believe we all came away 
with a much clearer appreciation of tl 
problems ahead and with a commitmct 
to broaden our consultations as we se : 
to deal with these issues. 

So it was a very useful morning, ad 
I was struck by the fact that this occa 
sion of Stanford's centennial repre- 
sented a very rare opportunity for tht 



iiniH 
mcl 

H 



DeoartmRnt of StatR Rnllin 



THE SECRETARY 



3. Secretary of State and the Foreign 
;retaries of our two closest neighbors 
gei together as a threesome to discuss 
nmon concerns. As Mr. Christopher 
arren Christopher, president of the 
inford University Board of Trustees] 
;ed, "'it never happened before," and 
.t shouldn't be a rare event. The very 
nire of our changing world, with the 
)wing demands of interdependence, 
[uires that the three of us do this 
re often— but not too formally and 
hout the constraints of protocol, 
•haps we should just call ourselves 



"the Stanford Trio" and get together 
unofficially under that name. 

So that's my message for today: it's 
a time for rolling up our sleeves and get- 
ting down to work. But by tapping the 
energy and creativity of our respective 
peoples, the three nations represented 
here today have a great opportunity 
before us to build a more prosperous and 
secure Pacific community that will con- 
tinue to set an example of progress for 
the world as a whole. 



iPress release 111 of May 18, 1987. 



/orking for Peace and Freedom 



Secretary Skultz 's address before the 
•lerican Israel Public Affairs Commit- 
(AIPAC) on May 17, 1987.^ 

I hate to start on such a sober note, 
. perhaps it is the right note, because 
Ti deeply honored to be here. You said 

first to be invited back twice, or 
ybe you said the first to be invited 
1 accepted to come back twice. That's 
Lfference. But I accepted, because 
ve gotten to know each other over 

past 5 years, and I feel one of the 
rmest and best things that's happened 
ne in this job is the expansion of my 
jady, at the time, wide list of Jewish 
;nds. 

And so I've come here— and I have a 
' notes— but I'm not going to read 
lething to you. Tve come here to talk 
ifou as friends, informally but very 
iously, about two related problems. 
e involves the world we have ahead of 
and America's role in it. The other 
elves our role in the Middle East, 
lecially in the light of recent 
'elopments. Both these problems are 
Dortant to us as Americans, and they 
• both important to Israel. So let me 
ill them out for you, and I hope that 
I can help me with both of them. 

S. Role in the World 

I'st, the world ahead of us and the U.S. 
[ e in it: I think we are at a moment of 
■ al change in world affairs. There are 
^nty of problems out there, and some 
i them have to do with the fact that we 
' ve a determined and strong adversary 
Ithe U.S.S.R., an adversary with global 
|)pe. But basically, the situation is 
bst promising for our system of values 
j d for our pattern of interest. 



So we should be engaged as never 
before in a sophisticated, energetic, and 
knowledgeable way, because there are 
problems, because we have adversaries, 
and because there are great opportu- 
nities. But just at this opportune 
moment, we are, I fear, in the process of 
drawing away— of drifting, stumbling, 
perhaps unconsciously— out of phase, I 
believe, with the outward-looking 
citizens of our country and their wide- 
ranging interests. 

We have a winning hand, but we are 
not positioning ourselves to be able to 
play it. So that's problem one, and let 
me spell it out to you, and, as I say, this 
winning hand is held by us; it's held by 
Israel; it's held by the countries that 
believe in freedom, that believe in 
openness. 

It's a changing world. We're moving 
into a new age, and it can be our age if 
we're willing to engage in it, because it's 
an age based on openness and freedom, 
on knowledge, on information that's 
widely shared and moves around, a gen- 
uine information age, knowledge age. So 
here are some of the things that I think 
we have learned that are going to 
characterize the world ahead of us if we 
play our cards right. 

We have learned once again that 
freedom is the most revolutionary force 
in the world. We have learned how much 
people value democracy and the rule of 
law if only they have access to it, and we 
have seen how people all over the world 
are ready to resist totalitarianism. We 
have learned that freedom and economic 
progress are related. We see how well 
the market can work if we'll let it. Peo- 
ple all around the world see that if you 
build your economy on incentives, on the 
market, on enterprise, you're going to be 
much better off. 



The countries of East Asia have 
been a glowing example, but the 
message has been spreading to Africa. 
It's interesting to see the Chinese and 
the Soviets beginning to struggle with 
this problem because they see that a 
highly centralized, highly compart- 
mented economic system is not produc- 
ing. I have the impression that even 
Israel's getting the message— the 
market, incentives, private enterprise. 
We have learned about the power of 
information technology as we move from 
an agricultural age that's long since in 
our past, through an industrial age— the 
industrial age is over in this country— to 
an information and knowledge-based 
economy and society. 

We can see right now that this kind 
of new technology has revolutionized 
financial markets. The only way to think 
about financial markets is in world 
terms. There is a world financial market, 
and it's open 24 hours a day. We have 
seen how the meaning of raw materials 
has been changed. Processes are being 
substituted for materials. 

To take an example, in the telecom- 
munications industries now, fiber optics 
are replacing copper at a very rapid 
rate. Fiber optics, in a sense, come out 
of the mind instead of out of the ground, 
and I could cite you a lot more examples. 
We see the implications across many 
areas, including agriculture, of bio- 
technology. Malthus is being turned on 
his head. 

We also can see, as the gross 
national product of the world grows, 
that its distribution is spreading out, and 
we see that more and more countries 
around the world, or sections of coun- 
tries even, have the economic size to 
give an account of themselves in some 
particular field. And, I might say, with 
the existence of deep ethnic tensions in 
many parts of the world— look at Sri 
Lanka right now with its Tamil insur- 
gency; I use that example because it has 
nothing to do with East- West prob- 
lems—we see religious fundamentalism 
which, among other things, has a 
tendency to be intolerant. So we see 
those things combined with the exis- 
tence, very widespread, of weaponry 
that— even though it may not be the 
most sophisticated and up to date by the 
standard of our military or the Israeli 
military but was considered up to date 
10 or 15 years ago— still can be very 
lethal and is widely available. So that has 
some big implications. 



rl987 



THE SECRETARY 



i 



Facing Up to Opportunities 
and Challenges 

So what are we doing as a country to 
face up to these opportunities and these 
challenges? Well, we have before had the 
experience of swinging from involve- 
ment to a kind of isolationism. I hope 
that's not happening to us, but let me 
tick off some of the danger signs to you. 

Protectionism. A big one is protec- 
tionism, and we are riveted on various 
trade barriers which we must knock 
down. But, nevertheless, we have to 
agree, I'm sure, analytically that those 
trade barriers are not the source of our 
trade deficit. It has other sources. But 
look what protectionism will do. It is, of 
course, a threat to our economy and to 
the world economy. It also is a message 
about freedom, because if you say we 
believe in economic freedom except 
we're going to protect our markets, peo- 
ple wonder if you really do believe in it. 
And it has a strategic message, just as 
we saw before World War II when the 
world got compartmented by the 
extreme protectionism of the 1930s, and 
while this was not the cause of the war, 
it contributed. The object of political 
movement, military movement, strategic 
movement to break out of those boun- 
daries was a contribution. 

We should learn from the contrasts 
between what happened to us in the 
1930s and its outcome and what hap- 
pened to us in the post- World War II 
world, where some great statesmen, 
most of them from this country, con- 
vinced that we had to have international 
institutions that were better than what 
we had in the 1930s, put together a 
structure that opened trade, that had a 
world view, that recognized our economy 
was part of the world economy— which 
was much less so then than it is now— 
and for those efforts what we got was an 
expanding world, not just for us but 
including us and for everybody. Whereas 
we all know about the 1930s, and, of 
course, I don't have to remind this 
audience of the tragic consequences that 
flowed from a disengagement by the 
United States in the 1930s. 

Apartheid. We also see abounding in 
this country a kind of self-righteous 
moralism which also leads to withdrawal 
rather than involvement. I'll stand here 
with anybody and denounce apartheid. 
There is nothing good to be said for it, at 
all. So we know what we're against in 
South Africa, and we know what we're 
for— a different kind of governmental 
structure where everybody has a chance 
to participate. But it doesn't make any 



sense— I don't think— to say because we 
don't like it and we think there should be 
change, therefore we should disengage 
ourselves and go away. On the contrary, 
we should stay there. We should state 
our views. We should work for our 
views. We should be engaged, not throw 
up our hands in self-righteous moral 
indignation and leave, which is what is 
happening to us right now. 

The Foreign Affairs Budget. Now, 
probably you knew I'd get around to 
money sooner or later. But let me tell 
you what is happening to our foreign 
affairs budget. This is the money that we 
use to support our security, our pros- 
perity, our ideals; to fight terrorism; to 
fight drug trafficking; to represent 
ourselves around the world. Here's 
what's happened to it. 

In the fiscal year 1985, the amount 
of money allocated to all those functions- 
all the security assistance and economic 
assistance all over the world, managing 
the State Department, the Voice of 
America, Export-Import Bank, and so 
on— was $23 billion. In fiscal year 1986, it 
was $19 billion. In the fiscal year we're 
now in, it's a little above $17 billion. 

The Congress is now jockeying 
around in the budget resolution process 
with numbers approximating $16 billion. 
Now, there has been inflation here, and 
there has been a big decline in the value 
of the dollar over that period, so it 
doesn't go as far. And running through 
that is about $8 billion that doesn't get 
cut at all. I'm not saying it should get 
cut. Personally, I support those items- 
most particularly, aid to Israel and 
Egypt. 

But when you cut from $23 billion to 
$16 billion, and you have $8 billion, say, 
going through as a constant, then every- 
thing else is brutalized. And we are in 
the process of depriving ourselves of the 
eyes and the ears and the hands neces- 
sary to represent ourselves, and it 
makes no sense in the kind of world I 
described to you— no sense at all. The 
changing world favors us, and that's 
good news for us, and it's good news for 
the world in general, and it's good news 
for Israel. The larger the democratic 
community of nations, the closer Israel's 
dream of a secure and peaceful exist- 
ence. And the more influential and 
involved America is, the more effective a 
partner we can be for Israel. 

Keeping America Engaged 

So we have a winning hand, but will we 
play it? I don't want to have America turn 
inward, and I'm sure you don't want to 
see that either. You know that this is a 



dangerous world. You recognize thai he 
United States has enemies, that Israi 
has enemies, and that our adversariel 
will be quick to exploit any signs of f 
American disengagement from our iier 
national responsibility, so let's not dd. 
Now we're never going to walk aa; 
from Israel or Egypt when it comes 
the budget, but when we fail to meetnu 
obligations elsewhere, it affects ever 
thing, including Israel. So you in AlkC 
have a big stake in keeping America 
engaged. As I have come to ask for } m 
help to keep us on the right track, I 
want you to help us avoid a retreat f n 
our global responsibilities, including ir 
responsibilities in the Middle East. I 
cannot ser/e Israel's interest if Amea 
withdraws and the Soviet Union moi s 
into the vacuimi. 

Today, America's support for Isi j1 
has never been stronger or more ste - 
fast, and I promise you— I know the 
President would promise you, and it a 
bipartisan matter in the Congress— t it 
we will be working closely with Israe 
see that this strong and steadfast rei 
tionship remains. 

Last night I was in New York, at 
made a few remarks about David Be 
Gurion, and I was honored there. Ar 
looking back, we can see that he kne 
what was basic. Israel had to be truff 
its roots, its religion, its heritage. Is e 
had to be a democracy, because it h£ t 
be free. Only a democracy could giv< 
tolerance and justice to the great dii •• 
sity of the Jewish people that gather I 
in from all over the place to the new 
State of Israel. 

Israel had to be strong, unwaver 
ingly strong, because it would have t 
fight for its life— not once, but contii - 
ally— and to endure, Israel had to se: : 
and work for peace at every opportu t 
I think those were the basics that I p I 
out of my study of Ben-Gurion, and 
believe most people would identify tl ■ 
as fundamentals. 



Prospects for 
Middle East Peace 

So now there seems to be discussion 
possible new opening toward peace, 
am going to spend some time with y< 
looking at it from a U.S. point of vie' 
and saying, "Let's evaluate it," and 
ask ourselves, "What is making peac i 
about?" Well, to me it's really simpk 
It's sitting down with people who wa: 
to make peace, and who are qualifieo 
and ready to negotiate. That's how yi 
make peace. So you have to look for I 
pie who are qualified and ready, so k 
ask a few questions. 



DeDartmen^^tat^u j 



THE SECRETARY 



Is the PLO [Palestine Liberation 
rganization] qualified? 

udience response: No. 

jcretary Shultz: Hell, no! Let's try 
at on for size. PLO? 

udience response: Hell, no! 

jcretary Shultz: You got it! Look at 
hat they've just done. Their alliance 
volves the most violent and radical 
ements around, and they just put it 
gether again. They showed once again 
at they don't want peace; they want 
e destruction of Israel, so they're not 
iialified. 

Palestinians? Certainly, they have to 
I part of peacemaking. There are 
lilestinians who know that the only 
iswer is through a nonviolent and 
I sponsible approach to direct negotia- 
)ns for peace and justice. We have to 
ntinue to find them, help them, and 
pport them. 

How about the Soviet Union? 

idience response: No. No. 

(cretary Shultz: Could it be a con- 
ructive presence? 

idience response: Hell, no! 

I icretary Shultz: Yes. It could be. And 
! ere have been some interesting 

velopments recently, but are they now 

instructive presence? 

kidience response: No. 

: jcretary Shultz: No. Look what they 
■. They encourage the PLO to turn 
er more radical and rejectionist. They 
gn themselves with the worst ter- 
rists and tyrants in the region. They 
fuse to reestablish diplomatic recogni- 
)n to Israel. Their treatment of Jews 
I id the practice of the Jewish religion in 
1 e Soviet Union is not acceptable by 
ly standard, let alone the Universal 
1 sclaration on Human Rights and the 
elsinki Final Act, to which they are 
mnd by their own signature. 

We can all welcome the release of 
sroes like Natan Shcharanskiy, but as 
! is the first to say, the emigration of 
li Jviet Jews is in no way proportionate 
!■ the desire and the right of Jews to 
lave. So if the Soviets want to be a part 
' the peace process, as they say, let 
n lem step forward and qualify 
lemselves. 

King Hussein has qualified himself, 
i e is serious and committed to peace. 
' e has rejected the rejectionists. He has 
Jated his readiness to pursue— these are 
is words— "a negotiated settlement in 
n environment free of belligerent and 
ostile acts." He has dealt straight- 



forwardly with Israel. He has coura- 
geously established relations with Egypt, 
enhancing the welcome process by which 
Egypt's role in the Arab world grows 
even as Egypt solidifies its peace with 
Israel. 

He has recognized that only 
bilateral, face-to-face negotiations can do 
the job. The name of the game is direct, 
face-to-face negotiations. He has shown 
great concern and solid support for the 
Palestinian people. He is for including 
Palestinians in the Jordanian delega- 
tion—not independent, include them with 
Jordan. And he has said that the interna- 
tional conference he advocates will not 
impose any solution or veto any agree- 
ment made by the negotiating parties. 
All this undeniably represents progress. 
We welcome it, and we are for it. 

International Peace 
Conference Initiative 

Now, let me say a little more, from the 
standpoint of the United States, what 
we are for and what we make of all this. 

• First of all, we are for a strong 
Israel and for the strongest permanent 
link possible between the United States 
and Israel. We beheve, among other 
things, that the underpinning of move- 
ments toward peace is to make it crystal 
clear to everybody that there is no 
military solution as far as the enemies of 
Israel are concerned. They can't get 
there that way. 

• We are for, in the strongest 
terms, the Treaty of Peace Between 
Egypt and Israel. With the passage of 
time and serious efforts on both sides, 
that relationship, born of Camp David, 
represents the brightest hope for peace 
in the Middle East. Egypt is our friend, 
and we honor the role it has taken for 
peace and justice. I think we made a fur- 
ther step in the Taba agreement. 

• We are for the President's Sep- 
tember 1 initiative. It's not a plan; it's 
an initiative. That is our position, and we 
will take it to the table as our view; just 
as we recognize, when we get to those 
face-to-face negotiations, others will 
come with their own views and, no 
doubt, differing views. But that 
represents the view the United States 
will take unto that table. 

• We are for the effort to achieve 
real improvement in the quality of life on 
the West Bank and Gaza. This program 
has made progress in recent years. It 
draws sustenance from the diplomatic 
activity in the peace process and con- 
tributes to creating an atmosphere in 
which negotiations can take place. And 



we consistently stand for the principle 
that the only reliable way to achieve 
peace is through face-to-face negotia- 
tions between Israel and its Arab 
neighbors. 

The United States believes it is 
important to explore all possible 
approaches to this objective, to see 
whether any of these approaches, includ- 
ing an international conference, would 
lead immediately to direct negotiations. 

I might say we are also careful not 
to intervene in domestic Israeli politics. 
I have the highest regard for and the 
closest relationship with both Prime 
Minister Shamir and Foreign Minister 
Peres and, for that matter, many other 
Israeli leaders. We are working with all 
of them to reach an agreed position on 
recent developments, and I want to say 
that I know, knowing them all as I do, 
that all of them are dedicated to peace— 
all of them are. 

Now, this Administration remains 
committed to helping Israel in its quest 
for peace and security, as we always 
have. That has been a steady, constant 
commitment of the United States, and it 
has helped time after time after time. 
We are still here— the same steady 
friends, working together with Israel 
and you on the basis of the same 
principles. 

But important developments have, in 
fact, occurred that have led us, consist- 
ent with our established policies, to look 
carefully at the idea of an international 
conference. I say carefully, cautiously, 
skeptically, but, nonetheless, with open 
minds and willing spirits. The answers 
are worth working through, even if this 
idea fails, like so many others on which 
we have worked. No one should ever be 
able to claim that a failure to advance 
the cause of peace resulted from the lack 
of effort on the part of the United 
States. For any approach to warrant 
consideration, we would have to insist 
that, in addition to leading promptly and 
directly to face-to-face negotiations, it 
also would not interfere with, impose its 
will on, or veto work of the bilateral 
negotiating parties; include Palestinians 
in the negotiations, only in a Jordanian- 
Palestinian delegation; and require all of 
the negotiating participants to accept 
UNSC [UN Security Council] Resolu- 
tions 242 and 338 and to renounce 
violence and terrorism. 

Now, sometimes in our policy about 
the PLO, we use the words: "and recog- 
nize Israel's right to exist." Frankly, I 
cringe a little bit when anybody says 
that or when I say it, although it is part 
of our policy. Of course, Israel has a 



lJiJlv1987 



THE SECRETARY 



right to exist. It exists. It has a right to 
prosper. It has a right to peace. 

Now, if such a conference were ever 
to take place, only states would be 
represented and involved. They should 
have diplomatic relations with all of the 
parties that come to the table. And it 
should be clear that the right of any 
party to remove itself from the con- 
ference or the negotiations is there if 
such rules or understandings are not 
observed. Now there recently has been 
progress toward such a negotiating for- 
mat, which would offer serious prospects 
of reaching an agreement between the 
parties on peace. So as far as we are 
concerned, we have to, as I said, look 
this over carefully, skeptically, but look 
it over. It may be that there is a genuine 
opportunity to bring about direct talks. 
If so, we have all been striving for that. 

I might say, all across the spectrum 
of Israeli politics, there is a desire to 
have direct talks. Everybody is in favor 
of that. Once direct talks have been 
achieved, an important psychological 
obstacle would have been overcome, 
irrespective of the results. We have to 
insist that there is no predetermined 
result or plan, so each party can 
advocate its preferred approach, includ- 
ing the approach that is represented in 
the Camp David accords. 

As far as the Soviets are concerned, 
it's impossible to know whether they 
want to be spoilers or whether they want 
to be constructive. I must say they 
couldn't do a lot worse than they're 
doing now— encouraging the PLO and 
the radicals to reunite. So we'll have to 
see about that. 

And, of course, I think we also need 
to remind ourselves, as the statement I 
made at the outset underlines, that a 
lack of progress has its own dangers, 
including increased and deepening 
bitterness and the continued and poten- 
tially explosive tension that we know is 
there in the region. I believe that as we 
look at this— as I said, carefully and 
skeptically— we need to take out an 
insurance policy in terms of the close 
working relationship which is there 
between Israel and the United States; as 
long as we agree on that basic struc- 
ture—and we're ready to walk away 
from the idea or walk away from a con- 
ference if it fails— then we can pursue 
this road without too great a risk. But 
we can only pursue it if we are able to do 
so in partnership with the Government 
of Israel, and we will make no moves 
unless we are assured of that. 

So let me summarize the present 
initiative accurately. The President and I 
are not committed to an international 



conference, and we are not asking others 
to commit themselves now to the idea. 
We believe, however, that Jordan is 
sincere and that a real opportunity has 
been presented for progress. We are not 
interested in disrupting Israeli politics in 
the process. To the contrary, as I said, 
we will proceed only with the support of 
the Government of Israel. We have our 
own views, however, and we will state 
them in the same spirit in which we have 
worked with Israel for many years. We 
believe the present circumstances clearly 
call for a fair and thorough effort to 
develop an acceptable plan, however 
dubious we may be of the general idea. 
If no acceptable understanding emerges. 



so be it. We will try again another w; 
but let us try. Let us use our ingenuil 
and courage so that we accomplish 
whatever progress toward peace is 
achievable. 

Israel has fought many wars in it 
short history. Let us continue to do 
everything we can to avoid another 
while safeguarding forever Israel's 
security and prosperity. 



^The Secretary opened this address wl 
statement on the Iraqi missile attack on tl 
U.S.S. Stark; for text see page 58. The sti 
ment and address, plus a question-and- 
answer session with the audience are prim 
in press release 109 of May 18, 1987. r 



ASEAN: A Model 

for Regional Cooperation 



Secretary Shultz 's remarks before the 
Wilson Center's seminar on the future of 
regional cooperation in Southeast Asia 
at the Smithsonian Institution on 
May 27, 1987.^ 

I'm glad to speak under your auspices, 
because when I was at Princeton, my 
major was in what was then called the 
School of Public and International 
Affairs, later called the Woodrow Wilson 
School. So you see there is a certain 
affiliation here. 

But I also wanted to take the occa- 
sion to say something in a somewhat for- 
mal way about the Association of South 
East Asian Nations (ASEAN), because 
of the fact that it has been around now 
for quite a while and has come to play 
quite an interesting part in international 
life. So the subject, of course, is partic- 
ularly timely. I met with the ambas- 
sadors of the six ASEAN countries last 
week; I see some are here. I'm going out 
to the region, as you said, in a few 
weeks— as I have each year since I've 
been in this job; I feel it's a very impor- 
tant thing to do— and meet with the 
foreign ministers at their annual 
postministerial conference of dialogue 
partners. This time the meeting will be 
in Singapore. And, of course, I think it is 
very interesting to note that the 
ASEAN heads of government will meet 
for the first time in 10 years next 
December in Manila, a sign of the 
organization's vitality in its 20th year. 

The member nations of ASEAN are 
rich in natural resources, but even richer 
in human resources. Their governments 



support private sector entrepreneurii 
growth, domestic and foreign invest- 
ment, and an open world trading sysi t 
They take a constructive, creative 
approach to important world issues a 
the United Nations and in other foru 5. 
And as America's seventh largest trt 
ing partner, their economic policies 1 « 
a significant impact on our own 
well-being. 

Over the past 20 years, the meml r 
of ASEAN have accomplished a grea 
deal. But perhaps what is most imprc 
sive about ASEAN is its role as a pr( - 
type of pragmatic cooperation amonj^ 
nations of a given region. I think thi^ r 
a very important point, because it sei ii 
to me, as we look at developments 
around the world, the notion of regio 
organizations, to my mind, takes on 
greater and greater importance. So 
today I'd like to review with you the 
evolution and significance of this 
remarkable institution. 

As all of you know, international 
relations have traditionally been, andi 
continue to this day to be, conducted 
largely in a bilateral context. But 
bilateral international relations have 
great limitations. Competition is built 
into the system, and too often its effe 
are destructive. Small countries are 
especially vulnerable to one-on-one re 
tionships which inevitably highlight th 
strength of the larger and more powe 
ful state. Even large countries feel thi 
limitations of an exclusively bilateral 
international order, especially when 
they're drawn into the kind of local c( 
flicts which are so endemic to our woil 



10 



Departmen^^tat^Bu II 



THE SECRETARY 



Recognition of the problem inherent 
uncontrolled competition has led to 
iny attempts at multilateral interna- 
nal cooperation. The League of 
itions and the United Nations are the 
indest experiments. Both of these 
:re noble efforts at collective manage- 
imt of international problems, but each 
■3 failed to meet the expectations of its 
inders. The League couldn't prevent 
:? outbreak of World War II. The 
jiited Nations has, at least, contributed 
sthe prevention of another world war, 
't its limitations are obvious. In partic- 
,ir, despite a few local successes, the 
jiited Nations has not been able to do 
|ich to prevent regional conflicts. 
' The world has also seen efforts at 
i^ional international cooperation. One 
tably successful example has been 
jstern Europe's Economic Commu- 
y. I don't want to go through the 
ihabet soup of listing these organiza- 
ns, but they've been created in vir- 
illy every region. Instead, I would like 
discuss what I consider to be the best 
imple of the more recent efforts at 
^onal cooperation— the Association of 
ath East Asian Nations. 

lEAN's Diversity 

appreciate how successful ASEAN 
5 been, it's important to recall the 
ersity of its six member countries and 
!ir regional neighbors. Though they 
; small in size, it is hard to conceive a 
■re diverse group of people than those 
Southeast Asia. They speak hundreds 
languages, belong to all the major 
igions of the world, and draw their 
itures from many races. It is a truism 
note that, even after independence, 
i links of the individual ASEAN coun- 
es outward from Southeast Asia to 
ndon, Paris, The Hague, and Wash- 
?ton were stronger than those among 
3 regional capitals. 

The diversity of Southeast Asia has 
d adverse consequences for the people 
ing there. Traditional conflicts arising 
)m rivalries in the region were tem- 
rarily suppressed by the colonial 
wers, but they emerged after independ- 
ce in new forms. The conflict we all 
low most directly, of course, took place 
Indochina, especially Vietnam. How- 
er, we often forget how much trouble, 
me of it quite bloody, has occurred 
sewhere in the region. Indonesia 
iposed the formation of Malaysia and 
nt soldiers into battle to back its 
lallenge. Thailand and Malaysia both 
ught and defeated insurgencies which 
Jeatened to destroy their peoples' way 
life. Indonesia found itself on the 



brink of internal chaos. Singapore was 
born of political conflict with the Malay- 
sian federation, and conflict with 
Malaysia deferred the independence of 
Brunei for more than 20 years. Ter- 
ritorial claims still sustain tension 
throughout the region, on land and 
at sea. 

In this situation of active and poten- 
tial turmoil, the foreign ministers of 
ASEAN's five original members met in 
Bangkok in August 1967 and proclaimed 
the establishment of the Association of 
South East Asian Nations. Their avowed 
goals were to promote economic growth, 
social progress, and cultural develop- 
ment in the region. Although one of the 
declared aims of the association was "to 
promote regional peace and stability 
through abiding respect for justice and 
the rule of law," the emphasis was 
deliberately not on political and security 
goals. 

ASEAN's Strengths 

However, the five members made a con- 
scious effort, for the sake of ASEAN 
solidarity, to resolve, play down, or 
otherwise deal with bilateral political dif- 
ferences which plagued them at the time 
of the association's founding. In the 
course of doing this, an interesting thing 
happened. As rhetoric began to cool, 
political leaders met frequently and got 
to know one another better, and 
exchanges of people across a wide front 
accelerated. The tone of bilateral dis- 
course improved, and serious cooperation 
was initiated. The pace of interaction 
picked up and gradually encompassed a 
wide range of subjects: economic policy, 
trade, energy, food, narcotics, tourism, 
journalism, education, culture, the 
military, the United Nations, and the 
Nonaligned Movement. ASEAN itself 
became more institutionalized, with new 
agreements signed and structures 
created almost every year. A sense of 
ASEAN community came to exist, 
gradually affecting the way these coun- 
tries thought and felt about each other. 

I might just inject parenthetically, 
however, that the ASEAN countries 
have nourished a kind of abhorrence of a 
bureaucracy, and I remember our meet- 
ing in Jakarta in the ASEAN building. It 
was rather proudly pointed out that they 
hadn't occupied it fully. Something 
different. 

On the external front, the progress 
of the Vietnam war and the uncertainty 
of its outcome hindered for a time the 
development of a common ASEAN posi- 
tion on the conflict. However, the events 
of 1975 pushed ASEAN rapidly toward a 



common stance for dealing with the 
threat posed by a militant, expansionist 
Vietnam. ASEAN's first reaction was to 
seek accommodation with Hanoi after 
the United States greatly reduced its 
role in Southeast Asia. Bangkok, Kuala 
Lumpur, and Manila all recognized the 
new Socialist Republic of Vietnam, and 
some even began small aid programs. 

The 1978 Vietnamese invasion of 
Cambodia, however, rapidly changed 
ASEAN's position. Led by the Thai, who 
were now faced with a large Vietnamese 
force across a common border, ASEAN 
quickly developed a position of adamant 
opposition to Hanoi's occupation of 
Cambodia. 

Despite some inevitable differences, 
ASEAN's members have steadfastly 
maintained a common position toward 
Vietnam's occupation of Cambodia. 
While they actively pursue a formula for 
negotiation, they keep military, 
economic, and diplomatic pressures on 
Hanoi as the best way to reach a 
negotiated settlement. Although some 
claim to see cracks in the foundation of 
ASEAN solidarity on this issue, I believe 
the association remains as firm today as 
ever. Perhaps the most important point 
in all this is the fact that the ASEAN 
nations have accepted primary responsi- 
bility for their own security in their own 
region. 

Thus, the formation of ASEAN has 
been a vital force in smoothing tradi- 
tional frictions; it has given its members 
the strength to stand up to challenges 
which might have overwhelmed them 
individually. ASEAN has by no means 
solved all of the questions faced by its 
members. But the existence of ASEAN 
has meant that Southeast Asia is a more 
peaceful, more stable, more prosperous 
place than most of us would have 
imagined 15 or 20 years ago. And in this 
peaceful, stable, and prosperous 
Southeast Asia, American strategic, 
political, and economic interests have 
flourished as few would have predicted 
in that difficult and uncertain period in 
the past decade when Hanoi's army took 
over South Vietnam by force and subse- 
quently invaded Cambodia. 

Potential Role Model 

But the significance of ASEAN extends 
well beyond Southeast Asia. Hopefully, 
ASEAN's example will inspire nations in 
other parts of the world to form regional 
associations in order to solve common 
problems and exploit common oppor- 
tunities. By promoting regional develop- 
ment and security, such associations can 



UbLl987 



11 



THE SECRETARY 



serve the political, economic, and secu- 
rity interests of both the member states 
of the region and the United States. In 
this connection, the formation of the 
Southern Africa Development Coordina- 
tion Conference (SADCC) is especially 
encouraging. And I might say we have 
suggested to them, "Why don't you go 
to Southeast Asia and go around and 
talk to the ASEAN countries and ask 
them how they operate that? Maybe you 
can learn something." 

Similarities between the two 
organizations are striking. Both ASEAN 
and SADCC have a clearly identified 
security threat; they are increasingly 
turning to free market growth strat- 
egies; and they share a broad range of 
interests with the United States. The 
United States has launched an Initiative 
for Economic Progress in Southern 
Africa to assist SADCC 's efforts at 
economic reform and development. We 
believe SADCC has the potential to 
become an African ASEAN, providing 
the economic underpinning for peace and 
development in southern Africa. 

ASEAN and the United States 

During the late 1970s and early 1980s, 
the ASEAN countries realized annual 
rates of economic growth which were 
the envy of developing and developed 
countries alike, averaging around 7%. 
This remarkable record of growth 
reflected in no small measure the 
remarkable expansion of trade and 
investment links between ASEAN and 
the United States, as well as the market- 
oriented development policies pursued 
by the ASEAN governments. Taken 
together, the ASEAN countries last year 
constituted our seventh largest trading 
partner in terms of total trade, even 
though that trade has contracted 
somewhat since its 1984 peak of $26.3 
billion. 

Despite the continuing controversy 
over protectionist pressures in this coun- 
try, we remain by far the largest and 
most open market for the ASEAN coun- 
tries. Last year we took about 23% of 
ASEAN's total exports, and we buy far 
more of ASEAN's manufactured goods 
than does any other industrialized coun- 
try. U.S. imports of ASEAN manufac- 
tures amounted to nearly $9 billion in 
1985, compared with $1.8 billion in 
Japan's case. Think about that. We think 
about it. In addition to trade, U.S. firms 
became the largest source of direct 
foreign investment and technology 
transfer for ASEAN over the past 



decade, with our total stake in the states 
of the association exceeding $9 billion at 
the end of 1985. 

People now must face up to the fact 
that the United States cannot continue 
to run the large trade and current 
account deficits which have emerged in 
recent years. As a result of exchange 
rate realignments, the process of 
correcting these imbalances is now 
underway. Make no mistake about it; our 
trade deficit will shrink dramatically, 
and this will have important conse- 
quences for the ASEAN countries as 
well as our other major trading partners. 
As adjustment occurs, our collective 
challenge will be to assure that the 
rebalancing of world trade and world 
demand occurs without impairing global 
growth or reigniting inflation. All 
nations will share in this challenge. 
Others must assume greater respon- 
sibilities as open economies and engines 
of global growth. If they do not, the 
gains of the past for ASEAN and all 
trading nations will be jeopardized, and 
the vast potential for future growth will 
go unrealized. 

ASEAN's Future 

ASEAN, therefore, faces major 
challenges as it seeks new ways of ensur- 
ing continued economic prosperity. 
Unfortunately, ASEAN has not yet 
made much real progress toward 
regional economic integration. Most of 
the national economies making up the 
association are at roughly comparable 
competitive levels of development and 
lack the complementarity that con- 
tributed to the success of the European 
Economic Community. ASEAN has 
given birth to programs meant to 
encourage cooperation and integration, 
such as the preferential tariff arrange- 
ment, ASEAN industrial projects, and 
the joint industrial venture project pro- 
gram. Nevertheless, the organization 
itself has recognized that these explicit 
cooperative programs have had rela- 
tively little impact. Intra-ASEAN trade, 
for example, has been fairly static for 
many years at about 15% of the total 
trade of the individual member states. 

Such considerations have led the 
ASEAN governments to undertake some 
comprehensive soul-searching in 
preparation for the December summit in 
Manila to find ways of lending new 
momentum to ASEAN's economic 
character in its third decade. We wish 
them well in that search but recognize 
that it is for the ASEAN countries 
themselves, through their traditional 



consensual process, to determine the 
pace and modalities of cooperation thi 
best suit their needs. 

Virtually every aspect of our 
diplomacy in Southeast Asia takes as 
premise the value of ASEAN's surviv 
and growth. In this regard, the Unite 
States supports ASEAN's courageous 
stand against Vietnamese aggression 
Cambodia and recognizes ASEAN's 
leading role in developing creative 
diplomatic approaches to resolving th( 
destabilizing regional conflict. We coo 
dinate closely and often on this issue i 
are ready to lend support where we c: 
I meet with the ASEAN foreign 
ministers at least twice a year as a ms 
ter of course, once at their own annua 
meeting in Southeast Asia and once ai 
the United Nations. We routinely deai 
with ASEAN as an organized group ii 
many fora— at the United Nations, in | 
commodity negotiations, and in the ' 
General Agreement on Tariffs and Tr l( 
(GATT). Most recently, for example, i 
ASEAN countries played a key role a 
moderate developing GATT signatori ■ 
in getting the new round of multilate I 
trade negotiations underway. The U.I - 
ASEAN economic dialogue provides : 
forum for discussion and resolution o 
wide range of issues of common cone i 

We, of course, also have strong 
bilateral ties with the individual 
members of ASEAN. This is most 
obvious in the case of the Philippines 
where ties of history and culture hav( 
created a special relationship. But it i 
true of the others as well. We have a 
strong alliance with Bangkok as well 
Manila, and we maintain mutually 
beneficial military-to-military ties wit 
the nonaligned members of ASEAN. ( 
provide economic assistance to Thaila i 
Indonesia, and the Philippines. We hf ; 
launched communications satellites fc 
Indonesia. Singapore is a major port • 
call for American naval and merchant 
shipping. We are working with the 
Brunei Ministry of Education to build 
new university. We work closely with 11 
the ASEAN states, but especially 
Thailand and Malaysia, in combating e 
scourge of drug abuse. 

But our relationship with ASE A^ 3 
greater than the sum of our bilateral s 
to its member states, greater precisel 
because of ASEAN's own regional 
dynamism and international stature, 'e 
are heartened by ASEAN's commitmil 
to free economic and political systems 
that give play to the diverse talents oj 
its people. This is one of its greatest 
strengths. 



12 



npnartmpnt nf .qtatP Rn I, ii 



THE SECRETARY 



ASEAN has served its member 
ites and their people well for 20 years, 
remains an example of the positive 
lergy that can result when nations 
d people put aside their individual dif- 
•ences for the sake of regional prog- 
is and security. We deeply value our 
rtnership with ASEAN and look for- 
rd to close cooperation in the 
ure. 

'Press release 119 of May 28, 1987. ■ 



ews Briefing of 
iay 8 (Excerpt) 



Secretary Shultz held a news briefing 
the Homestead in Hot Springs, 
rginia, on May 8, 1987.^ 

Q. From your perspective, what is 
! potential for serious disruption 
tween Tokyo and Washington with 
! trade frictions that seem to have 
jn focused on in the last 2 weeks? 
A. The trade problem between the 
i ited States and Japan is a very 
i ious one for both countries. I think 
I Te is no question about the fact that 
I • deficit and their surplus must recede 
1 )t, if not turn around. 

The question is not whether that will 
I :pen. The question is, through what 
I )cess, and some processes are a lot 
I re healthy than others. So that is 
I Jly the issue. Both countries have a 
I of work to do, but there must be a 
I inge in the situation. There's no doubt 
i 3ut it. 

Q. Is one of the unhealthy proc- 
< ses a Gephardt-like amendment? 

■ A. Yes, I think that would be the 
ong thing to do. I was very glad to see 
; Senate bill and hear Chairman 

,j oyd] Bentsen talking about it just now 

• d saying that he opposed that amend- 
mt. It's not on the Senate bill. I think 

,| would be a great mistake because that 
saying that we should solve this prob- 

jn by basically restricting world trade. 
If we learn anything by comparing 

' 3 1930s with the post-World War II 
riod, it is that the road to poor 

jonomic performance in the world, 

.| nerally, if not a depression, is the road 
rough protection. What the post- World 
ar II world shows us is that as we 
inage to create a regime, sharply in 
ntrast to the 1930s of more open trade 



and more and more open trade through 
the successive rounds of negotiations, 
world trade flourished and along with 
the flourishing of world trade, all our na- 
tional economies benefited 
tremendously. 

Q. Could you give us a sense of 
prospects of some sort of major, 
substantive agreement coming out of 
the seven-nation summit next month to 
resolve the problems of coordinating 
economic policies? 

Do you see, for example, the Ger- 
mans and Japanese pledging to take 
some new steps to stimulate their 
economies and the United States 
pledging to take in some more 
substantive way than in the past to do 
something about its fiscal situation? 

A. I'm not sure just what shape the 
discussion and possible outcome on 
coordination of economic policies will 
take. But the flow of discussion in those 
meetings, and it was highlighted last 
year, was to the effect that we live in a 
world economy and, therefore, the 
economic policy actions— key ones taken 
by the different countries— have a rela- 
tionship to each other. So we ought to 
talk about them, and, to the extent pos- 
sible, have some kind of coordinated 
action. 

Just into what fields that wall go and 
nailed-down it will be is always a ques- 
tion. Obviously, countries wish to main- 
tain their own sovereign rights to con- 
trol, for example, their money supply or 
other key economic variables. 

Q. There was a perception, I 
think, in some of the financial markets 
with regard to the recent talks with 
the Japanese, of disappointment that 
the Japanese didn't announce more 
concrete steps to stimulate their 
economy. 

Did the Administration share a 
certain sense of disappointment that 
the Japanese didn't go further than 
they did in terms of what they were 
doing to try to stimulate their 
economy? 

A. I think the key will be in the 
follow-through rather than on the 
announcements. That is, what will Japan 
actually do to rearrange the structure of 
demand in Japan? That's the key ques- 
tion as well, of course, of the various 
market opening things that were 
discussed. 

They have proposed a stimulation 
measure amounting to about $35 billion 
of extra spending in their budget with 
the statement that that spending will be 
front-loaded. That's something that the 
Diet will have to deal with, and the 



Prime Minister gave us a mid-summer's, 
or August, expectation on that, so we'll 
have to see. 

They've talked about tax reform, 
including rate cuts, first, and they've 
talked about a kind of tax reform that 
changes somewhat the very large incen- 
tives to saving that exist in the Japanese 
structure. 

Well, if you put all those things 
together, and they really happen, they 
could, over a reasonable period of time, 
make a substantial difference. So we'll 
have to see what the follow-through will 
be, and I hope that there will be a follow- 
through. I'm sure that there will be. It's 
a question of how much. 

See, I think that to a certain extent 
people structure this question the wrong 
way. We tend to say, we have a big 
deficit and it's a problem, it will bring 
about protection; and, therefore, the 
Japanese, in order to avoid that kind of a 
world, ought to open their markets and 
do something about their big export 
surplus. 

It's sort of as though Japan should 
do the world a favor by taking these 
measures, and in their own, so to speak, 
enlightened self-interest. I think the 
problem is different from that. 

As I said earlier, we are going to see 
our trade deficit shrink. It wouldn't sur- 
prise me any. In fact, I think there's a 
certain logic to saying it has to turn into 
a trade surplus. And by the same line of 
reasoning, their trade surplus has to 
shrink drastically, and perhaps even turn 
into a deficit. 

Why? It is because we are now 
accumulating a situation where the 
assets held by foreigners here exceed the 
assets that Americans hold abroad. And 
with reasonable assumptions about rates 
of return, what that means is that we 
will have a debt to service, so to speak. 

How are you going to service it? You 
can service the debt for a while by add- 
ing to it. But, as people become con- 
cerned about the effective rate of 
return— that is, looking at the nominal 
rate of return and considering the 
exchange risk, and things of that kind- 
it gets more and more expensive for us 
to service that debt through adding to it. 
And so you have to service it somehow, 
and you wind up having to service it by a 
trade surplus. 

It's almost like arithmetic, but it is a 
reality that will force its way into the 
economic processes through whatever 
repricing arrangements. 

Now, when that takes place, and 
given the fact that Japan, in a sense, has 
exactly the reverse— the other side of 



13 



THE SECRETARY 



the coin— when that takes place, or in 
consideration of this— and we said this to 
the Prime Minister— what Japan has to 
reahze is that their economy is exceed- 
ingly vulnerable. It is heavily dependent 
on the willingness of the world to take a 
gigantic excess of Japanese exports over 
Japanese imports— mostly the United 
States. 

Now, when that stops, where does 
that leave the Japanese economy? Unless 
Japan does something about changing its 
savings investment ratio and its 
dependence on this export surplus, it's 
going to leave the Japanese economy in 
very serious trouble. 

So it is in Japan's interest to change 
the situation just as it is very much in 
our interest to change the situation. 
These big imbalances are very 
unhealthy. 

Q. What, in our view, would make 
the economic summit successful for 
the Administration? Would it be 
actually getting some agreement on 
the dollar or getting the economy to 
stimulate? 

A. I don't think summits work that 
way, in the sense of getting some par- 
ticular agreement. They are occasions 
where heads of state, and their relevant 
ministers— but heads of state, in par- 
ticular, because the ministers are a lot 
together in one way or another— can talk 
to each other about leading problems 
and generate a more deeply shared sense 
of what is the problem and how to go 
about solving it. So that gives something 
to build on. 

Then there are certain kinds of 
things that have been stated again and 
again. They do have an effect. The con- 
sistent opposition to protection that's 
come out of those summits— I think from 
the very first one— has been a contribu- 
tion. It has, tended to be a kind of "tak- 
ing the pledge" in public and with each 
other. It hasn't stopped the growth in 
protection but it has inhibited it a lot, 
I'm convinced. 



By the same token, the statements 
about the importance of coordination 
that have been made, and with more 
clarity in the Tokyo summit than before, 
undoubtedly helped in that process. 
There are also statements of a political 
sort that have impacted. At Williams- 
burg, there was an extremely important 
security statement. At the Tokyo sum- 
mit, there was a very important state- 
ment about terrorism that specifically 
singled out Libya, and we've seen what's 
happened since that time. 

So, I don't think you can set up a 
kind of a— five objectives and work up a 
score card. The process is more elusive 
than that, but I think, nevertheless, very 
important, and important right now 
because the world economy is threatened 
by these big imbalances. They have to be 
discussed and have a perception of 
what's to be done about them. 

Q. Are you taking that view 
because the Germans feel very much 
that the United States needs to deal 
with its budget deficit, and that 
they're saying, look, we're not going 
to stimulate our economy because you 
need to deal with the U.S. budget 
deficit? 

A. The process of getting at the 
problems of the world economy is, to a 
very considerable extent, a process of 
everybody taking a good look in the 
mirror. 

At the Bonn summit, the statement 
that came out of it was very much of 
that sort. And I think that, just as I've 
been saying here, Japan has to take a 
good look in the mirror. So do we. You 
mentioned one of the big things we see 
when we look in the mirror. We see this 
gigantic deficit in our own fiscal 
accounts, and it is having a very bad 
effect. 

Q. Do you have a view on the reap- 
pointment of Federal Reserve Board 
Chairman [Paul A.] Volcker? And have 
you talked with President Reagan 
about this? 



A. No, I wouldn't want to commi t 
on that. That's not for me to say. I d( t 
know where that stands. But 1 have 1" 1 
the privilege of working closely with r. 
Volcker. When I was Secretary of th( 
Treasury, he was Under Secretary. V 
have been good friends and colleague 
so I can only say that I have great 
admiration for him. 

Q. To what extent, given what m 
said about trade and the need to tal 
looks in mirrors, to what is the poli ' 
to reduce the value of the dollar ver is 
the yen a major part of our directioi 

A. When I was Secretary of the 
Treasury, I happened to be in Tokyo 
once and my friend Mel Laird made 
some comments about the dollar here 
said, and it caught the headlines arou I, 
"Tell Mel Laird to keep his cotton- 
pickin' hands off this subject," and I 
haven't changed my mind. So I'll kee 
my cotton-pickin' hands off. That's fo 
the Secretary of the Treasury to say. 

Q. Do you expect a summit witl 
Mr. Gorbachev this year? 

A. It's certainly a possibility. It - 
mains to be seen. There's no date set r 
anything of that kind. 

Q. Would that take place in the 
United States if it came to be? 

A. Oh, yes. Yes. 
Okay? I'm glad we had one foreig 
policy question. 



iPress release 103 of May 11, 1987. 



14 



n^^or.n.^nt..fQt=.t^R.llli 



.FRICA 



African Development: 

m Administration Perspective 



f John C. Whitehead 

Address before the Carnegie Corpora- 
m on May 7, 1987. Mr. Whitehead is 
{^piity Secretary of State. 

ippreciate the opportunity to par- 
[ipate in this retreat devoted to 
''rican development to present our 
>ws on several aspects of African 
velopment, particularly sub-Saharan 
j'rica. 

The United States has an interest in 
'strong, healthy Africa which can be an 
"ective partner strategically, politi- 
lly, and economically. Let me cite just 
'ew of our ties. 

• One in eight Americans can trace 
! or her roots to Africa. Africa is, 
?refore, important to us in cultural 

d historic terms. 

• Africa's 51 countries comprise 
nost one-third of the members of the 
lited Nations, the most cohesive vot- 
j bloc in the United Nations. These 
intries play an increasingly significant 
e in the formation of UN positions 

d policies in areas of great importance 
the United States— on terrorism, for 
ample, on human rights, on refugee 
airs, and on Middle East peace talks, 
name just a few. 

• Africa has vast hydroelectrical, 
ricultural, and mineral resources. Its 
rrent mineral production is essential 
U.S. industry and commerce; it is vir- 
lUy the only non-Soviet source of 
/eral strategic minerals. 

• We have a strong interest in fur- 
jring democracy and human rights in 
rica so that Africans can live in more 
ace and security. 

• And, lastly, we have an interest in 
eing that the countries of Africa suc- 
ed in their current efforts to move 

: /ay from statist economic policies— 
lich have proven to be failures— toward 
irket-oriented economies, which will 
ovide a better basis for economic 
owth. Our goal is to help Africa help 
self. This is one of the most important 
pects of U.S. policy toward Africa. 
)ssibly the most significant develop- 
ent in Africa in the past half-dozen 
•ars has been the growing recognition 
mong Africans that they need to come 
grips with the financial and human 
>sts of misguided economic policies. 



In countries beginning to take the 
first brave steps toward a reordered and 
reinvigorated economic process, these 
changes will not be easy to make and are 
not without political risks to the govern- 
ments involved. But without solid eco- 
nomic policies and well-managed, market- 
oriented economies, Africa's develop- 
ment aspirations will not be realized. 

Social Development 

Economic development and social 
development go hand in hand. Let me 
touch on a few of the most important 
areas where the two intersect: popula- 
tion growth, health, and education. 

Population. The current rate of 
population growth of around 3% a year 
threatens Africa with disaster. Should a 
burgeoning population outstrip economic 
growth, living standards will decline 
and the African environment will be fur- 
ther degraded as more and more people 
try to eke out a living from marginal 
land. 

African countries have become increas- 
ingly aware of the burden which high 
population growrth rates place on their 
resources. Many are beginning to develop 
national population policies. The United 
States has been supplying over $20 mil- 
lion a year in family planning assistance 
to Africa, relying heavily on nonprofit, 
private voluntary agencies to deliver 
family planning products and services. 
Africa needs continued international 
support in this area. 

Health. Africans have the lowest life 
expectancy in the world— 50 years— and 
the highest infant mortality rate. These 
and other quality-of-life indicators have 
shown improvement in the past 20 years. 
But, clearly, there is a lot of room for 
further improvement. 

Child survival clearly must have a 
very high priority. In 1986, over 2.5 
million African infants under 1 year of 
age and over 8 million under 5 died. One 
African child in five will not live to see 
his or her fifth birthday. This is a truly 
tragic situation, one we must all work to 
correct through better health services, 
better living conditions, and education. 
This is a challenge for the Africans 
themselves. But here, too, they need and 
deserve our support. 



Education. In many developing 
countries, improving educational quality 
and expanding access to education are 
among the best investments which can 
be made. In the context of health, educa- 
tion of women is especially important. 
Studies have shown that educated women 
are far more receptive to family plan- 
ning and tend to be healthier. Healthier 
mothers are more likely to have babies 
who survive and enjoy good health. 
Lower mortality, in turn, reduces the 
incentive to have more children. 

Unless Africa can accelerate its 
economic growth rate and reduce birth 
rates, education will be under tremen- 
dous pressure because the resources to 
educate the rapidly growing school-age 
population will simply not be available. 
In the 15 years between 1985 and 2000, 
the number of children in the 5-14 age 
group is projected to grow by 5% in the 
developed world; by just under 30% in 
Latin America and the Caribbean; but by 
as much as 60% in Africa. 

While the need for increased educa- 
tional resources is clear, the cost to 
these frail economies is very high. On 
average, African countries spend 20% of 
their national budgets on education. 
They would be hard pressed to spend 
more. Demand for education is already 
great and will continue to grow along 
with the size of the population. Here, as 
in the related areas of population and 
health, we need to work with African 
governments to meet growing needs. 

AIDS 

I also want to mention just briefly a 
disease which is afflicting the whole 
world— including the United States— and 
is becoming a threat to African societies: 
AIDS [acquired immune deficiency syn- 
drome]. Although information on the 
incidence of AIDS in those parts of 
Africa that are most affected is fragmen- 
tary, it is, nonetheless, highly alarming. 
Anticipating a trend that is now also 
increasingly apparent in the United 
States, men and women in Africa appear 
to be infected in equal proportions. Fur- 
thermore, in many areas of central and 
east Africa, the incidence of AIDS 
appears to be highest among young pro- 
fessionals. With Africa's younger, 
educated people threatened by this dread- 
ful disease, it is emerging as an increas- 
ing threat to African economic growth 
and development. In response, more and 
more African governments are joining 
Western governments in launching pub- 
lic information campaigns to educate 
their people in how to prevent its spread. 



15 



AFRICA 



This is a global problem and needs to 
be addressed at both the national and inter- 
national level. In the United States, we 
have formed a National Commission on 
AIDS to deal with the problem in this 
country. AIDS will be on the interna- 
tional agenda for the Venice summit in 
June. The World Health Organization has 
taken the lead in developing and coor- 
dinating international AIDS programs in 
Africa, and these efforts will undoubtedly 
grow, as long as donor countries con- 
tinue to support them. 

Economic Development 

Economic development is the key to 
combatting these social problems. Greater 
prosperity can bring better education 
and improved health services. To encour- 
age economic growth, we are emphasiz- 
ing the importance of moving to open 
economies. 

At independence, many African coun- 
tries adopted statist orientations for their 
economies which inevitably led to eco- 
nomic distortions and a misallocation of 
resources. The urban population was sub- 
sidized at the expense of the rural popu- 
lation, and consumption was encouraged 
at the expense of investment. Govern- 
ments and state-owned corporations bor- 
rowed heavily abroad, frequently to 
finance prestigious projects which could 
not be justified economically. 

The disastrous results are all too 
apparent. Economies stagnated; agricul- 
tural productivity declined; and people 
migrated to the cities in unprecedented 
numbers, thereby increasing pressures 
for social services which the productive 
sectors could not support. 

Africa took a major step forward 
last May at the UN-sponsored Special 
Session on the Critical Economic Situa- 
tion in Africa. It was the first such UN 
special session to focus on the economic 
needs of one particular region; and it 
served to highlight the change in 
Africa's economic direction. At that ses- 
sion, African leaders acknowledged 
publicly that past statist policies had 
failed to produce the economic growth 
needed to improve the living conditions 
of their peoples. 

At this UN special session, the 
Africans presented an action program 
which, among other things, included 
commitments to give priority to agricul- 
tural development and to undertake a 
variety of other economic, fiscal, and 
policy reforms. They also pledged to 
strengthen investment incentives, 
review public financing policies, improve 



economic management, and encourage 
domestic resource mobilization and the 
role of the private sector. 

Two-thirds of the sub-Saharan African 
countries have recently embarked on or are 
about to initiate major structural reform 
programs. Let me cite just a few examples. 

Senegal has substantially increased 
agricultural producer prices, reduced 
subsidies, embarked on reform of its 
parastatal sector, reduced tarrifs on 
industrial products, opened rice trading 
to the private sector, and raised utility 
rates to minimize the burden on the 
national budget. 

Kenya has mounted a major stabiliza- 
tion effort, liberalized import licensing 
and maize and fertilizer marketing, and 
adopted a flexible exchange rate policy. 

Somalia and Uganda have liberal- 
ized prices for a variety of agricultural 
products. They have been rewarded with 
large increases in agricultural production. 

Guinea closed down its entire state 
banking system and allowed the establish- 
ment of three commercial banks. 

Ghana has changed its financial 
policy so that interest rates, which used 
to be highly negative in real terms, are 
now positive. 

Mozambique has undertaken a 
tough program of economic reform, 
including a sharp devaluation of its cur- 
rency, lifting of many price controls, a 
reduction of tariffs, the privatization of 
more than 20 state enterprises, and enact- 
ment of a new liberalized investment code. 

Zaire has launched one of Africa's 
most far-reaching and sustained eco- 
nomic stabilization and reform programs, 
abolishing most price controls, deregu- 
lating interest rates, eliminating almost 
all import restrictions, and drastically 
devaluing its currency. 

Tanzania, after years of economic 
decline, reached agreement with the 
IMF [International Monetary Fund] and 
the World Bank in 1986 on a reform 
package correcting price signals to the 
economy, including a commitment to 
establish an equilibrium exchange rate, 
positive real interest rates by mid-1988, 
and liberalization of price controls. 

These reforms are just beginning to 
bear fruit. We have seen important 
changes in consumption and income dis- 
tribution patterns and rationalization of 
production patterns. Of course, there is 
much more to be done, but we are encour- 
aged that many countries are seeing the 
benefits of letting the market work. 

But this adjustment process is not 
without cost to the countries that are 
trying it. Reversing policy decisions 
made at independence in practice means 



reducing, if not eliminating, the sub- I 
sidization of the urban population at \b 
expense of rural producers. Such belt 
tightening strikes at the heart— and 
pocketbook— of urban elites; that is t( 
say, the constituencies on which polita 
power has been based— clearly a risk} 
proposition for reformist government 
This is why it is so important for the 
United States to support our African 
friends as they try to implement the 
very reforms we have been urging th n 
to adopt. 

U.S. Response 

Our government believes strongly th; i 
continuing flow of U.S. assistance to 
Africa at significant levels is necessa 
to sustain the continentwide effort tc 
abandon statist strategies, to embrac 
free market principles in their stead, k 
to attain international competitivene; 
Consolidation of these trends would ( i 
stitute a major American success anc . 
significant defeat for our adversaries 
not only in Africa but throughout the 
Third World. The economic bind in w c 
most African states find themselves ; d 
the prevalence of one-party governm t 
and military regimes tend to promoti . 
search for radical solutions while ere 
ing low-cost openings for our adver- 
saries, such as Libya and the Soviet 
Union. An African disavowal of stati i 
has the potential, over time, to trans 
form the African politico-economic la I- 
scape to the advantage of both Afric 
peoples and the United States. 

Market economies and private se^ » 
led development are now on trial in 
Africa as government after governm t 
feels the public outcry from the austt t; 
measures which, in most instances, a i 
necessary, if unpleasant, accompanin n 
of economic reform. Our goal must b x 
keep our partners headed in the righ 
direction and to demonstrate convinc 
ingly that it is the West, not the Sovi 
bloc, that is the natural and effective 
partner of African countries seeking 
develop and modernize. 

But instead of increasing support 3 
Africa in these challenging times, the 
Congress has cut the amount of mon< 
available to further African develop- 
ment. In 1985, economic support fum 
and development assistance appropri 
tions totaled $762 million. In 1986, tl 
total dropped to $575 million— a 24% 
decline in 1 year. In 1987, we sustain I 
a further 15% cut to $486 million. Th;, 
in just 2 years, our economic and devf >l 
ment assistance fell by over one-thirc 

These budget cuts have had a de\ 8- 
tating impact on our ability to respor 



,t Ot.,t„ D.,1A1 



I 



ARMS CONTROL 



', p Africa's critical needs. Let me 
■•^lustrate. 

■ , 'In 1985, we began a 5-year pro- 
ram to allocate $500 million to support 
irican economic policy reform: $100 
; 'lillion a year. In the first year, we spent 
. j75 million on the program. This was 
, educed to $48 million in the second 
, ear. This year, the third year, we have 
^ nly $27 million to spend. 

• The "front-line states" in 
Duthern Africa are trying very hard to 
educe their economic dependence on 
outh Africa. In September, the Presi- 
ent sent letters to Congress reiterating 
is intention to present a comprehensive 
lultiyear program for the area. But 
. I nless the Congress approves our appro- 
riations request, there will be no money 
;t all to support the southern Africa 
,:Conomic initiative, and our aid to the 
rea will actually fall. 

I For the fiscal year 1988, we have 
I sked Congress to appropriate $600 mil- 
on for Africa. This level would partially 
averse the precipitous decline of the 

I revious 2 years and enable us to pro- 

j ide adequate support for development 

I I many low income and financially 
;rapped countries. While the authoriza- 
on and appropriation processes are not 
et complete, it appears that the Con- 
ress is determined to slash our budget 
?ain. Unless there is a dramatic and 
ipid shift of opinion in the Congress, 

e will have to cut our economic assist- 
nce to Africa once again next year. 

Bluntly speaking, we are fast approach- 
ig a time when our foreign affairs 
udget will only pay for assistance to 
;rael, Egypt, Pakistan, and Central 
.merica, with inadequate support for 
le base rights countries and withdrawal 
verywhere else. That is not an exag- 
eration. It means, among other things, 
meaningful aid for Africa. 

Secretary Shultz's recent comments 
a the implications of insufficient fund- 
ig for the foreign assistance budget are 
orth repeating. 

The President's foreign affairs budget 
ight usefully be looked upon as a form of 
itional insurance. In asking the Congress to 
;vote only two cents out of every budget 
lilar to our foreign policy goals, the Presi- 
!nt has determined the minimum premium 
i must pay as a people to safeguard the 
ace and lead the free world. If we fail to 
ly these costs, we are gambling needlessly 
th our nation's future. 

onclusion 

summary, African countries face con- 
lerable challenges in the years ahead, 
ispite the important strides they have 



made since independence. While the 
major effort has to be made by the 
Africans themselves, we and other donor 
countries and institutions must continue 
to provide support. By its actions over 
the past few years. Congress appears to 
be saying that it is not willing to give 
this support. 

The amounts involved are not so 
large. Our total foreign assistance 
budget is only two cents out of the Federal 
budget dollar. The amounts needed to 
support African countries, while impor- 
tant to them and to us, are only a small 



percentage of this total. Our relations 
with friends and allies in Africa and else- 
where must demonstrate our commit- 
ment to a long-term partnership— a part- 
nership which will bring people closer 
together, reduce suffering, improve 
standards of living, and generally 
enhance freedom and opportunity. 

The United States stands for free- 
dom, prosperity, and leadership. But we 
have to put our money where our mouth 
is or be content to abandon our friends 
and watch our dreams of world peace 
and freedom slip away. ■ 



Benefits of an INF Agreement 



Following is Secretary Shultz 's 
response, published in Time magazine 
May 18. 1987, to comynents made by 
former President Nixon and former 
Secretary Kissinger. 

The United States and the Soviet Union 
appear to be nearing an agreement on 
intermediate-range nuclear forces (INF). 
Such an agreement is not assured— our 
negotiators still have imporant work 
before them— but if it is cpncluded, it 
would constitute the first time in 25 
years of U.S. -Soviet arms control talks 
that significant and verifiable reductions 
in any category of offensive nuclear 
weapons had taken place. Now some are 
questioning whether an agreement along 
the lines emerging would be in our 
interest. The Administration's judgment 
is that it would be decidedly so. 

In the mid-1970s Moscow began to 
deploy the SS-20, a highly accurate 
missile with three nuclear warheads that 
could reach London in 12 minutes. The 
United States had withdrawn its last 
INF missile from Europe more than a 
decade earlier. In 1979 we and our 
NATO allies agreed that our objective in 
response to the SS-20s was to get the 
Soviets to pull them out. Failing that, we 
should counter these missiles with 
NATO deployments. 

When, in 1981, President Reagan 
first proposed the zero option, a plan to 
eliminate longer range INF (LRINF) 
missiles, we had not yet deployed a 
single weapon of this type. The Soviets 
were not willing to bargain. In 1983 we 
proposed an interim agreement: equal 
U.S. and Soviet levels worldwide below 
NATO's planned deployment of 572 



LRINF warheads. The Soviets still said 
no. By last October a sizable number of 
the U.S. missiles was in place. 

At his meeting with the President in 
Reykjavik, General Secretary Gorbachev 
said he was now prepared for an interim 
agreement-a limit of 100 LRINF 
missile warheads for each side, all 
deployed outside Europe. This was con- 
sistent with the U.S. interim proposal, 
although key issues remained. Thus 
NATO's resolve may have brought us to 
the point of success. 

To reach the equal levels, the Soviet 
arsenal would be reduced by more than 
1,300 LRINF missile warheads and ours 
by some 200. For the first time since the 
1950s, no Soviet LRINF missiles would 
be deployed in Europe. In Asia, Soviet 
LRINF warheads would be reduced by 
more than 80%. 

Former President Nixon and Former 
Secretary of State Kissinger are con- 
cerned that such an outcome would 
render our overall deterrent capabilities 
more vulnerable. Others have expressed 
concern that it would lead to the 
"denuclearization" of Europe or the 
"decoupling" of the United States from 
its security commitments to the conti- 
nent. These are avowedly the objectives 
of Soviet policy. We are not going to 
accede to them. But it is not necessary 
to abandon the quest for nuclear arms 
cuts to defeat these Soviet aims. 

For two decades NATO's strategy of 
flexible response has depended on three 
elements: strong conventional forces in 
place in Europe, balanced nuclear forces 
deployed in support of allied forces on 
the continent, and U.S. strategic 
systems as the ultimate deterrent force. 
Today this doctrine is firmly established 
among Western allies, and we are deter- 
mined to sustain it. 



iMiiA 



ARMS CONTROL 



Even after an INF agreement, 
NATO would retain a robust deterrent. 
More than 4,000 U.S. nuclear weapons 
would still be in Europe, on aircraft that 
could retaliate deep into the Soviet 
Union, and on remaining missiles and 
nuclear artillery. NATO is planning or 
undertaking modernization of several of 
these systems. Also several hundred 
submarine-launched ballistic-missile 
warheads would remain available to the 
Supreme NATO Commander. Thus even 
after eliminating LRINF missiles, we 
could continue to discourage a Soviet 
attack without relying exclusively on 
strategic systems. Perhaps even more 
significant are our 40 years of shared 
political and defense goals, integrated 
command structure, technological know- 
how, and military preparedness. These 
factors, together with the continued 
deployment in Europe of more than 
300,000 U.S. troops, inexorably link the 
United States to Europe in a way that 
will continue to deter Soviet adven- 
turism on the continent. 

We and our allies are working to 
meet the threat posed by the longstand- 
ing imbalance in conventional forces in 
Europe, both by strengthening our 
defenses and by discussing with the 
Soviets new conventional arms control 
talks that would cover the whole of 
Europe. But linking an INF agreement 
to conventional force reductions would 
distort the reason for the decision to 
deploy U.S. LRINF missiles in the first 
place. The intent was to offset the 
SS-20s or, preferably, to secure their 
removal, not to provide NATO's sole 
means of compensating for the conven- 
tional imbalance. This linkage would also 
mock our negotiators' persistent efforts 
to break the Soviet linkage between INF 
and SDI [Strategic Defense Initiative] as 
well as other issues, a tactic that stalled 
progress in Geneva and Reykjavik. To 
add a new demand now that an INF' 
agreement be linked to conventional 
reductions, which will undoubtedly take 
many more years to negotiate, would be 
tantamount to introducing a "killer 
amendment." 

One must ask whether we wish to 
deny ourselves the success we have 
achieved m the negotiations and leave 
Europe in the shadow of the Soviet 
SS-20s, with far more of them facing 
our Asian friends and allies as well. 

Working with our allies, we have 
been careful to ensure that an INF 
agreement would be beneficial in its own 
right. We have insisted that it result in 
an equal outcome for the United States 
and the U.S.S.R., that it be global in 
scope and not simply shift the threat of 



missile deployments from Europe to 
Asia, and that it be verifiable. If the 
Soviets meet our terms, we should not 
forego the benefits of such an agreement, 
even as we seek the stabilizing reduc- 
tions in strategic offensive arms that are 
our highest priority and as we work to 
redress the conventional imbalance. 



We are on the right course toward 
the goal set by NATO. We should sticl- 
with it, collect our winnings, take prid' 
in the success that NATO's steadiness 
has produced, and move on to further 
building of alliance strength and 
cohesion. ■ 



Improving the Balance of 
Conventional Forces in Europe 



by John H. Hawes 

Address before a National Defense 
University (NDU) symposium entitled 
"The Future of Conventional Defense 
Improvements in NATO" on March 27, 
1987. Mr. Hawes is Deputy Assistant 
Secretary for Politico-Military Affairs. 

I am pleased to have this opportunity to 
address the NDU symposium on "The 
Future of Conventional Defense 
Improvements in NATO." The topic is 
particularly timely. Ambassador [Assist- 
ant Secretary for Politico-Military 
Affairs H. Allen] Holmes, who was to 
have addressed this session, is in 
Brussels chairing an SCG [Special Con- 
sultative Group] meeting. They say the 
price of liberty is eternal vigilance. For 
officials of NATO, it also means eternal 
membership in the Pan Am Frequent 
Flyer Club. 

You have gone into a lot of detail in 
36 hours. I could not begin to recapit- 
ulate that effort. Rather, I would like 
to sketch a perspective on NATO con- 
ventional defense improvements as we 
look at Western security in the spring 
of 1987. 

Opportunities and Pitfalls 

This is a potentially promising moment. 
The Soviet logjam in Geneva may be 
breaking. Arms agreements which 
NATO has long sought may now be 
reached. We may see major changes in 
Eastern and Western forces. At the 
same time, the new Soviet leadership 
poses a new and more dynamic 
challenge. Patterns of competition are 
shifting. There are opportunities for the 
West, but also pitfalls. 

NATO needs to exploit the oppor- 
tunities to enhance stability and secu- 
rity. NATO must also avoid the pitfalls. 
To do both requires understanding. We 
cannot rely on partial or simplistic 
images. 



This is easier said than done. Then 
was a cartoon last week which typified 
the problem. In the first scene, a U.S. 
arms control delegation proposes the 
removal of medium-range missiles fror 
Europe. In the next scene, the Soviets) 
accept. The last scene shows the U.S. 
delegates in consultation, supposedly 
shocked and at a loss for what to do 
next. 

That cartoon echoes a lot of super- 
ficial commentary. It does not, howeve 
reflect the facts. In the real world, thet 
President immediately tabled a treaty. 
Far from being embarrassed, we mova 
to nail down an LRINF [longer range 
intermediate-range nuclear forces] 
agreement at zero in Europe and 100 
globally. 

In the cartoon world, NATO minus 
LRINF is pictured as naked or 
"denuclearized" opposite heavily 
armored Soviet conventional forces. Iif 
the real world, we know better. We ar'' 
constantly concerned with the Soviet 
conventional threat and the need to 
improve NATO forces— this conferencw 
testifies to that. But we know that 
decades of effort have not been withou 
result. We know that the alliance detei 
rent triad, flexible response, and the 
U.S. commitment to Europe would 
remain unshaken. 

That's more complicated and less 
funny than the cartoons. But it is just 
such complications that are the basis fc 
understanding NATO's conventional 
defense problems. There are four facto 
we must weigh in considering the futui 
of conventional defense improvements: 

First, the nuclear/conventional inti 
action in doctrine, programs, and publi 
perceptions; 

Second, the implications of the con 
ventional debate for trans- Atlantic and! 
intra-European relations; 

Third, the resources available; andl 

Fourth, the actual improvement 
programs. 



^^iAk^^ta 



ARMS CONTROL 



he Nuclear/Conventional 
iteraction 

istorically, weaknesses in NATO's con- 
mtional posture have— perhaps 
iradoxically— helped feed a vicious cir- 
s of pubHc fixation on our nuclear 
rces. While alliance military experts 
we devoted time to conventional prob- 
ms, publics have been bored with con- 
•ntional force complexity, or convinced 
is politically or economically hopeless, 
diverted (and not a little frightened) 
' nuclear issues, which are far sexier 
r the media and the layman. 

The upshot of this paradox is that 
nventional weaknesses, rather than 
imulating public pressure for their 
medy, may actually lead publics away 
om the hard issues. 

Not all members of the public make 
is mistake. Many are aware of conven- 
)nal issues and concerned with doing 
mething about them. But often one 
ids that their concern is less motivated 
I the conventional balance itself than 
j a desire to diminish nuclear risks. 
] lis is a noble goal which no one would 
j estion. It is shared by pohcymakers on 
th sides of the Atlantic. But it some- 
nes leads proponents to favor shoddy 
uick fixes." And it has never proven 
equate to generate the impetus for 
rious conventional force improvements. 

It may never be possible to free the 
nventional debate from the nuclear 
;ue. But we should seek a treatment of 
nventional issues that is as objective 
possible under the circumstances. A 
bate that depends on images of nuclear 
calation to generate monies for con- 
ntional defense is not likely to be pro- 
etive and has not been. Nor is a 
bate that regards the conventional 
oblem as a derivative issue likely to 
tract long-term commitment. 
Last November in Chicago, Secretary of 
ate Shultz addressed conventional 
rces and nuclear weapons cuts, such as 
.d been projected at the Reykjavik 
mmit. His remarks, however, were not 
id to a particular scheme but to the 
erall challenges of a less nuclear 
)rld. He noted the prospect of such a 
orld had provoked anxiety— ironically, 
ven the arguments nuclear weapons 
evoke. He said he was not signaling 
e end of the nuclear era, which will be 
ith us for the foreseeable future. But 
' specifically urged new thinking on 
'fense including, specifically, conven- 
mal defense improvement. Reviewing 
lATO thinking over several decades, he 
included: 



. . .our reliance for so long on nuclear 
weapons has led some to forget that these 
arms are not an inexpensive substitute- 
mostly paid for by the United States— for 
fully facing up to the challenges of conven- 
tional defense and deterrence. 

The Trans-Atlantic 
Political Context 

A second element of NATO conventional 
defense improvements is the political 
context between Europe and North 
America. The trans-Atlantic tie is both 
competitive and cooperative. 

There are two subthemes of this trans- 
Atlantic context. One is the issue of 
burdensharing, with its corollary, the 
level of U.S. forces in Europe. The other 
is the nature of intra-European coopera- 
tion. Both themes go back to the begin- 
ning of the alliance. 

The postwar withdrawal, and rein- 
troduction, of U.S. forces reflected an 
enduring debate in the United States. 
We have seen it flare up again this 
winter, with renewed calls for U.S. troop 
withdrawals. As [U.S. Ambassador to 
the Federal Republic of Germany] Rick 



Burt noted recently, such calls make no 
more sense from the right than from the 
left. We can and will rebut these sugges- 
tions. But we cannot eliminate the 
source of the tension. A recent poll 
found that a majority of Americans 
would go to war to help defend Europe. 
That is an encouraging sign of interna- 
tional responsibility. But it does not 
resolve budget problems or remove the 
burdensharing question from the agenda. 

Similarly, the issue of intra- 
European cooperation has affected 
European/North American relationships, 
from initial EDC [European Defense 
Community] debates, to arms coopera- 
tion, to the variety of national participa- 
tion in NATO activities. 

In the best of worlds, the interaction 
of trans- Atlantic and intra-European 
politics should multiply Western forces. 
That happened at the founding of NATO 
and in the fight over INF. At times, 
however, interactions have been cen- 
trifugal. To some people, the most effec- 
tive argument for European security 
cooperation is the alleged difficulty of 
working with Washington. Perhaps we 
should not quibble if NATO gets more 



MBFR Talks Resume 



DEPARTMENT STATEMENT, 
MAY 14, 1987' 

Today in Vienna the representatives of 
the North Atlantic alliance and the War- 
saw Pact convened the 42d session of 
the mutual and balanced force reduction 
(MBFR) talks. Despite the continuing 
failure to reach a verifiable accord which 
would reduce and limit conventional 
forces of the two alliances in the critical 
region of central Europe, the United 
States believes that such an agreement 
is achievable. 

Because of the NATO commitment 
to enhance stability in Europe through 
such an accord, the Western partners 
made a major compromise on December 
5, 1985, to end the deadlock between the 
sides. The West withdrew its require- 
ment that the sides agree on the number 
of forces of each side in the area prior to 
signing a treaty on reductions and 
limitations. To facilitate even further the 
possibilities of near-term progress, the 
NATO partners also consented to adopt 
the East's framework for a time-limited, 
first-phase agreement calling for initial 



U.S. and Soviet reductions. This would 
be followed by a 3-year commitment by 
the sides not to increase forces in the 
region. 

Regrettably, the Warsaw Pact has 
not reacted constructively to this major 
step by the West. The lack of respon- 
siveness on the key issue of verification 
has been especially discouraging. This 
failure has been particularly disappoint- 
ing in view of the expectations raised by 
claims of Eastern leaders since 
December 1985, including General 
Secretary Gorbachev, that they were 
willing to accept reasonable verification 
measures in the context of a conven- 
tional arms control agreement. 

President Reagan has instructed his 
representative to the negotiations. 
Ambassador Robert D. Blackwill, to con- 
tinue our effort to obtain Eastern agree- 
ment to the Western initiative of 
December 5, 1985. Such an agreement 
would serve the goal of fostering secu- 
rity and stability in Europe. 



'Made available to news correspondents 
by Department deputy spokesman Phyllis 
Oakley. ■ 



JjIv 19ft7 



19 



ARMS CONTROL 



defense, even for the wrong reason. 
However, a negative political spin has its 
own costs. 

The U.S. view of European collabo- 
ration has been ambivalent and, at 
times, counterproductive. That is not the 
intent of the present Administration. We 
support all efforts to enhance defense col- 
laboration. We support WEU [Western 
European Union] revitalization. We are 
concerned only that intra-European col- 
laboration not become stuck at the 
lowest common denominator; that it lead 
to more, not less, defense; and that it 
produce more, not less, clarity on secu- 
rity issues. 

The Need for 
Adequate Resources 

The third area to discuss is resources. In 
his November speech. Secretary of State 
Shultz underscored the West's advantages. 

In any competition ultimately 
depending upon economic and political 
dynamism and innovation, the United 
States, Japan, and Western Europe have 
tremendous inherent advantages. Our 
three-to-one superiority in GNP [gross 
national product] over the Warsaw Pact, 
our far greater population, and the 
Western lead in modern technologies— 
these are only partial measures of our 
advantages. The West's true strength 
lies in the fact that we are not an ideo- 
logical or military bloc like the Warsaw 
Pact— we are an alliance of free nations, 
able to draw upon the best of the diverse 
and creative energies of our peoples. 

Commentators immediately said that 
is all well and good, but it is politically 
naive to expect democracies to allocate 
enough of that advantage to security. 
And an advantage which is only 
theoretical does not build tanks. They 
noted that defense budgets may shrink 
in real terms. They noted demographic 
changes and political constraints which 
make it difficult to sustain large stand- 
ing armies. They noted the history of the 
burdensharing debate as an antidote to 
misplaced optimism. 

None of these objections is false. But 
in their pessimism, they themselves con- 
strict our options. It is often said we get 
the kind of defense we choose. And a 
preemptive narrowing of options leads to 
anomalies. People lament the conven- 
tional forces gap but wish to fill it only 
with nuclear weapons, then lament the 
dangers in nuclear weapons, agonize over 
imbalances in those weapons, and expect 
the Soviets to solve our problems in 
negotiations. That chain would be funny 
if it were not real. Breaking it requires a 
serious policy on conventional forces. 



Improvement Programs 

Which brings us to the fourth area: pro- 
grams. There has been remarkable con- 
tinuity in prescriptions. Despite fads, 
NATO concerns have been consistent. 

• AD-70 looked at aircraft shelters, 
antiarmor capabilities, war reserve 
stocks, and air defense. 

• The long-term defense program 
looked at readiness; rapid reinforcement; 
reserve forces and mobilization; air 
defenses; maritime forces; command, 
control, and communications; ratio- 
nalization and standardization; electronic 
warfare; and tactical nuclear forces, as 
well as NATO's long-term planning 
mechanisms. 

• The emerging technology program 
looked at systems for defense against 
first-echelon Warsaw Pact forces and 
Soviet operational maneuver groups; 
defense against follow-on forces; 
counterair operations; attacks on com- 
mand, control, communications, and 
intelligence capabilities; and 
strengthened long-term planning. 

• The conventional defense improve- 
ment program has looked at redressing 
deficiencies in munitions supplies and 
ammunition stocks; improved long-term 
planning; armaments cooperation and 
planning; infrastructure planning; better 
coordination in the areas of medium- and 
long-term force requirements, strate- 
gies, and doctrines; and the weapons 
acquisition and infrastructure programs. 

These initiatives have brought NATO 
a long way. Programmatically, NATO 
has adapted to a dynamic threat. Politi- 
cally, it has moved beyond debate over 
whether conventional forces need 
strengthening. Conventional forces are a 
central part of the agenda. 

One of the reasons for continuity in 
prescriptions is the continuity of the 
Soviet challenge. Talk of the Soviet 
challenge produces sharp reactions. 
Some people brush aside analysis as 
mere "bean counting" and tend to 
downplay the military threat. On the 
other side, some people overdraw the 
analysis and attribute superhuman 
capabilities to the Soviets. Both views 
inhibit clear thinking about what needs 
to be done. 

The task is to soberly evaluate the 
facts and the trends. On the negative 
side, the Warsaw Pact has kept and 
expanded its numerical advantage in 
almost every major weapons system. 
More ominously, the pact has reduced 
NATO's qualitative edge. 



• The reorganization of Soviet air' 
forces and the creation of theaters of 
military operations have significantly 
improved Soviet ability to conduct con 
bined operations. 

• The prepositioning of fuel, amm 
nition, and other logistics support with 
forward-deployed Soviet divisions has 
given the pact an edge in sustainabilitj 

• The introduction of operational 
maneuver groups and Spetznaz forcesi 
enhances capability for deep operation 

• The upgrading of equipment— fo 
example, deployment of the T-80, the 
MiG 29/31, and the Mi-24 combat 
helicopter— augment combat firepowe) 

At the same time, the Soviets hav 
number of weaknesses. 

• Despite trends, NATO still hold i 
qualitative edge in several weapons 
systems and in training and intelligen( 
Moreover, Western leads in underlyin 
technologies— e.g., computers, sensors 
and optics— suggest we should be able i 
keep that edge. 

• Second, Eastern Europe is a pr - 
lem. Pact equipment is falling behind 
Soviet equipment. The reliability of E; t 
European forces would be uncertain. 
And the overall political situation is 
delicate. 

• Third, the Soviets face resource 
constraints. A command economy can 
allocate resources, but it cannot abolii 
need for tradeoffs, as, for example, 
between defense and industrial modei 
ization. Demographic trends may also 
affect the armed forces and defense 
industries. 

Looking at these strengths and 
weaknesses must give the Soviets pau . 
For example, they appear to believe n / 
technologies have ushered in a revolu 
tion in warfare. From what Marshal 
Ogarkov— the former Soviet Chief of 1 3 
General Staff and apparent current 
Commander of the Western Theater r 
Military Operations— and others are s; - 
ing, the Soviets seem uncertain wheth • 
NATO's achievements in high technol y 
have undermined the pact's ability to 
win conventionally. The object of NA^ ' 
conventional defense improvement is . 
sustain and increase that Soviet I 

uncertainty. | 

A viable force improvement progr n 
must meet several tests: political cons i- 
sus, resource feasibility, cost effective 
ness, and military utility. Many propo: 
als to improve NATO's conventional 
forces are unrealistic or impractical. 
There is no quick fix to NATO's prob- 
lems; if there were, NATO would hav« 
adopted it long ago. 



20 



nonartmont nf QtatP Riill !£ 



ARMS CONTROL 



NATO, for example, is not going to 
place forward defense with heavily 
fensive or dispersed defensive strate- 
es. Nor is NATO going to radically 
lange force structure or make unprec- 
lented defense spending increases. 
Dr are members likely to subordinate 
mmercial interests sufficiently to 
hieve major defense procurement 
vings. 

NATO can, however, improve its 
nventional forces without drastic 
anges in strategy or force structure 
id with a reasonable application of 
sources. The alliance is headed in the 
jht general direction: it needs to do 
lat it is doing, only better and faster, 
lis does not mean we relax. As in many 
elds, the real profits are at the margin. 

fforts To Achieve Balance 

2 weeks, Secretary Shultz will go to 
3SC0W for talks with his Soviet 
unterpart on arms control, human 
^hts, and regional and bilateral issues, 
le meeting was set up by Soviet will- 
jness to drop their artificial linkage on 
F. We now have an opportunity to 
)ve the whole security agenda. Con- 
ntional forces are an important part of 
They have been on the agenda since 
e 1960s. But efforts have been either 
lited in scope— the CSCE [Conference 
Security and Cooperation in Europe] 
Helsinki and the CDE [Conference on 
infidence- and Security-Building 
easures and Disarmament in Europe] 
Stockholm— or more ambitious but 
adlocked, as in MBFR [mutual and 
lanced force reductions]. 

A new effort is now being explored 
Vienna. No one can have any illusions 
at this will be easy, that the Soviets 
i\ cheerfully renounce superiority in 
nks— or any other area of their conven- 
)nal preponderance. But to the degree 
at NATO can sustain its defenses, the 
)viet Union will have to recognize that 
cannot gain political or military advan- 
ge from its posture. At that point, 
ductions may become more attractive, 
id arms control can help structure 
ivelopments toward the NATO objec- 
ve of greater stability at lower levels. 

Work on specific reductions pro- 
)sals has just begun. We know what we 
) not like about the present situation— 
3viet predominance in tanks, artillery, 
id other weapons and the offensive 
JSture of forward-deployed Soviet 
irces. How, specifically, to deal with 
lese problems is a subject of intense 
ebate among the experts. 



Past approaches tried to cut overall 
manpower. That's tough to verify and of 
limited military impact. We need more 
sophisticated approaches which can limit 
and reduce pact offensive capability by 
focusing on major equipment and combat 
units. 

We also need to ensure that any 
arms control proposals are consistent 
with our conventional defense improve- 
ment effort— a type of coordination we 
have never achieved in the past. That is 
easier said than done, given long force 
planning cycles, national political proc- 
esses, negotiating dynamics, and NATO 
consultation mechanisms. But our 
chance of getting enhanced stability at 
lower levels may depend on our ability to 
draw operational consequences from the 
truism that arms control and force plan- 
ning are two sides of the security coin. 

Conventional Balance 
and Public Opinion 

The conventional balance is now on the 
public agenda. Last week I saw an opin- 
ion survey, entitled: "Europeans favor 
eliminating INF from Europe, but are 
reluctant to pay for stronger conven- 
tional forces." That's the nub of our 
issue today. Publics recognize NATO is 
on the verge of a major INF success. 
But many have trouble supporting the 
conventional corollary. The details are 
interesting. In all countries polled, peo- 
ple ranked conventional parity the most 
important element for national security. 
This outranked strategic parity or even 
INF. Publics split on whether the pact is 
ahead, equal, or behind. All countries 
had sizable minorities who would pay for 
increased conventional forces if that was 
needed to reduce nuclear weapons; but 
only one had a majority that would do so. 

That's not discouraging. Indeed, in 
the light of historic debates, it is striking 
that, today, the need to deal with the 
conventional force balance is so widely 
accepted. The alliance needs to capitalize 
on that recognition. Our ability to do so, 
despite our problems, is better than 
Soviet ability to meet their challenges. 

You know the story comparing 
generations of Soviet leaders? They are 
on a train, stuck at the end of the tracks 
in Siberia. What should they do? Stalin 
would shoot the peasants and use 
political prisoners to lay more track. 
Khrushchev would take track from 
behind the train and relay it in front. 
Brezhnev would close the curtains and 
rock slowly. Gorbachev would open the 



windows and shout, "Move!" 

Trite, perhaps. But it is good to 
know we are not alone with problems. 
We cannot belittle our difficulties- 
budgetary, political, or technical. But 
our methods of solving them, of getting 
our train moving, have typically been far 
more inventive than those in the story. 
They can be, because our societies and 
our politics encourage and make room 
for innovation. 

The alliance has come a long way in 
38 years. It has not run out of track. 
And it has not needed to open the win- 
dows and shout. Our windows have never 
been closed. NATO's deterrent reflects 
years of hard work and commitment to 
the ideal of common security. It is a 
deterrent comprised of many elements- 
some technical, some political, some 
flesh and blood. It grows, it evolves, and 
it endures. That is the context in which 
we consider the future of NATO conven- 
tional force improvements. It is a 
hopeful one and a realistic one. ■ 



U.S., Soviet Union to 
Establish Nuclear 
Risk Reduction 
Centers 



WHITE HOUSE STATEMENT, 
MAY 5, 1987' 

Yesterday representatives of the United 
States and the Soviet Union concluded 2 
days of negotiations on the establish- 
ment of Nuclear Risk Reduction 
Centers. At these meetings, the sides 
reached agreement on the establishment 
of such centers, which agreement will be 
referred for final approval to the leaders 
of both countries. 

The delegations were headed by 
Assistant Secretary of Defense Richard 
Perle and Special Assistant to the Presi- 
dent Robert Linhard for the United 
States side and Ambassador Alexsei 
Obukhov for the Soviet side. 

Agreement to explore the establish- 
ment of such centers was reached at the 
summit between the President and 
General Secretary Gorbachev in Geneva, 
November 1985. Senators Sam Nunn 
and John Warner played a particularly 
helpful role in the deliberations that led 
to the President's proposal. 



i 



21 



ARMS CONTROL 



The Administration welcomes this 
agreement as a practical measure that 
will reduce the risk of conflict between 
the United States and the Soviet Union, 
particularly nuclear conflict that might 
result from accident, misinterpretation, 
or miscalculation. This agreement com- 
plements U.S. efforts in the nuclear and 
space arms talks to reach agreement on 



broad, deep, equitable, and effectively 
verifiable reductions in nuclear arms, as 
well as other U.S. efforts to achieve a 
more stable and secure international 
environment. 



'Text from Weekly Compilation of 
Presidential Documents of May 11, 1987. 



Effective Arms Control 
Demands a Broad Approach 



by Edward L. Rowny 

Address at the U.S. Air Force 
Academy in Colorado Springs on April 
27, 1987. Ambassador Rowny is special 
adviser to the President and the 
Secretary of State on arms control 
matters. 

I would like to discuss with you some 
implications of Secretary Shultz's 
meetings in Moscow earlier this month 
with Soviet General Secretary Gor- 
bachev and Foreign Minister 
Shevardnadze. 

The Secretary traveled to the Soviet 
capital with a broad agenda in hand. 
President Reagan had asked him to 
press for improvement of relations 
between the United States and the 
Soviet Union with regard to four critical 
areas: bilateral affairs, regional conflicts, 
human rights, and arms control. On 
arms control, the United States wanted 
to discuss a wide range of topics, includ- 
ing nuclear testing, strategic and 
intermediate-range nuclear weapons, 
and conventional and chemical weapons. 
In the end, the most progress was made 
in the area of intermediate-range nuclear 
forces (INF). Even here, two formidable 
issues remain to be resolved before an 
agreement becomes possible— effective 
verification and global limits with equal 
deployment rights for shorter range INF 
(SRINF) missiles. 

Before I discuss the newest 
developments in arms control, let me 
elaborate on why we attach so much 
importance to the first three "pillars" of 
the U.S. -Soviet relationship. A single 
sentence that comes closest to sum- 
marizing these thoughts is one that 
President Reagan often has articulated: 
nations do not distrust one another 
because they have weapons; they have 
weapons because they distrust one 
another. An arms control agreement will 
not ensure that we will have better rela- 



tions. On the other hand, better relations 
will make the chances of achieving and 
keeping an arms control agreement 
much better. 

"Four Pillars" of 
U.S.-Soviet Relations 

This year marks the 70th anniversary of 
Lenin's rise to power and the establish- 
ment of the first modern totalitarian 
regime. Seven decades of devastating 
experience have taught the free world 
that there is no realistic way to seek to 
deal with any important aspect of inter- 
national relations with the Soviet state 
without taking into account the entire 
spectrum of the attitudes and behavior 
of its Leninist leadership. 

Thus, in seeking better U.S.-Soviet 
bilateral relations that would approx- 
imate the norms generally observed 
between civilized states, we must never 
lose sight of the goals and methods of 
their leadership. The Soviets' no-holds- 
barred espionage efforts against our 
Embassy is a hard but much-needed 
lesson that not much change has taken 
place in the Soviet Union. And, as was 
evident in Secretary Shultz's recent trip 
to Moscow, Soviet diplomatic style still 
displays a Leninist edge. 

As examples, the Soviet Foreign 
Minister's spokesman suggested that 
Secretary Shultz had perhaps not been 
authorized to conduct serious business in 
Moscow. The Soviets also censored a 
small portion of the Secretary's remarks 
as he was being interviewed on a live 
Soviet television broadcast. As the 
Secretary spoke of the Soviet military 
occupation of Afghanistan, the Soviet 
interpreters abruptly stopped translating 
his words into Russian. 

While the Secretary enjoyed an 
unparalleled opportunity to address 
directly the Soviet people, the partial 
censorship of his remarks about Afghan- 



istan, of course, also dramatizes the 
Soviet leadership's attitude on fun- 
damental rights and freedoms. The 
media in the Soviet Union are not indt 
pendent as they are in the United 
States; they are organs of the state. 
Dissemination of private publications c i 
be treated as a crime which carries a 
heavy prison sentence. Obviously, the 
Soviet regime cannot enhance its 
credibility with us when it suppresses 
the truth and propagates lies to its 
people. 

To put matters in perspective, I 
should acknowledge that Soviet viewei 
were allowed to hear some uncensored 
remarks by Secretary Shultz that 
departed quite dramatically from the 
usual fare in the Soviet media. The fac 
that the Secretary was allowed to talk, 
directly to the Soviet people for 30 
minutes on their television is an exami 
of General Secretary Gorbachev's 
recently launched campaign of gla^nos\ 
or openness. Since last fall, some of th 
gestures of glasnost have included the 
release of more than 100 prisoners of 
conscience from incarceration or exile 
including such courageous defenders | 
human rights as Andrey Sakharov, la 
Ratushinskaya, and Sergey KhodoroVi 
Repression of free expression in the a 
and in literature is also being somewW 
loosened. 

We can only hope that Mikhail Go: 
bachev's glasnost signals the beginninj 
of a much greater easing of repressioi 
the Soviet Union. But they have a Ion] 
long way to go. At this early stage we 
cannot with any prudence urge anyon( 
to expect far-reaching reforms. The 
actions we have seen so far, welcome !- 
they are, do not challenge the basic 
structure of the Soviet system. The lav 
regulations, and secret police practices 
that send prisoners of conscience to th» 
gulag have not been changed. Further- 
more, the religious or political prisone) 
released were pressured to sign state- 
ments admitting that their activities b 
been "illegal." Stern antireligious laws 
remain in force, abuse of psychiatry cc 
tinues, and bans on private organizatic i 
and independently published news and 
literature are still in effect. The one- 
party system and the central power of 
the KGB remain intact. 

True Openness: A Key 

to Confidence in Agreements 

I believe the most constructive stance 
that Westerners can take toward Gor- 
bachev's glasnost would be to acknowl- 
edge it but not to praise too profusely 
what is, thus far, a very modest accom 



• 



^aaatlaaai^^m^i^i 



ARMS CONTROL 



ishment. It would be premature and 
lite detrimental to Western security 
ir us to make economic or military con- 
!Ssions to the Soviet state on the sup- 
jsition that this would encourage more 
jpenness." I know from long experi- 
ice that the Soviets simply do not act 
lat way. I agree with Irina Ratushin- 
;aya who says "democratization" in the 
.S.S.R. should be judged credible only 
hen: 

• All political prisoners are freed 
id the laws through which they had 
;en punished repealed; 

• Freedom of the press and speech 
guaranteed; and 

• Soviet borders are opened to 
avel by Soviet citizens. 

I The need for the West to encourage 
ue reform of the Soviet system has 
, ore than merely moralistic implica- 
)ns. Andrey Sakharov remarked wdth 
I 'eat insight: 

I i long as a country has no civil liberty, no 
iedom of information, no independent press 

1 B wrote], then there exists no effective body 
public opinion to control the conduct of the 
vernment and its functionaries. Such a 
uation is not just a misfortune for citizens 
protected against tyranny and lawlessness; 
is a menace to international security. 

As a longtime student of the Soviet 
nion and a specialist in arms control, I 
n attest that if truly profound open- 
gs in the Soviet system were to come 
lOut, our confidence in Soviet com- 
iance with arms control agreements 
Duld become greater. The Soviets can 
rify our compliance with agreements 
■ry simply because of the openness of 
ir government, our economy, and vir- 
ally every other element of our soci- 
y. The Soviet system offers no such 
herent means for penetrating or 
•eventing strategic deception by its 
talitarian regime. 

jviet Expansionism's 
Dnventional Wars 

le third topic that must be taken into 
I -count in our relationship with the 
Dviet Union is its role in the world's 
i-called regional conflicts, where the 
jople in a number of formerly non- 
igned countries are struggling to 
!gain their freedom from communist 
ctators. These beleaguered nations 
iclude Afghanistan, Cambodia, Angola, 
id Nicaragua. In Angola and Nicara- 
ua, the Soviets and their Cuban proxies 
ave been pouring heavy amounts of 
lilitary assistance into the communist 
^gimes' efforts to crush popular 



resistance and consolidate their power. 
In Cambodia, the Soviet Union is heavily 
subsidizing Vietnam's military occupa- 
tion. But the most chilling example is 
Afghanistan, where the Soviet Army 
itself is waging a furious war against 
civilians and armed freedom fighters. 

For more than 7 years, the Red 
Army has occupied Afghanistan. Over 
115,000 Soviet troops are in the country. 
Out of the prewar Afghan population of 
some 15 million, an estimated 4 million 
have fled to neighboring lands. 
Thousands of Afghan civilians have 
perished from aerial bombings and sum- 
mary executions by Soviet forces and 
agents of the Soviets' puppet govern- 
ment in Kabul. 

The Soviet war against Afghanistan 
presents a daunting example of the 
power of Soviet conventional and 
chemical forces and the unscrupulous 
manner in which the Red Army is willing 
to use them. According to reports by 
international human rights observers 
and a special rapporteur appointed by 
the United Nations, Soviet forces in 
Afghanistan have violated the 1949 
Geneva conventions and international 
law which proscribe murder, mutilation, 
and the massive use of antipersonnel 
weapons. The Soviets have also violated 
the 1925 Geneva protocol by the use of 
chemical weapons in Afghanistan. More- 
over, according to the the annual report 
of the Assistant Secretary of State for 
Human Rights and Humanitarian 
Affairs, the Soviets have practiced tor- 
ture in violation of the International 
Covenant on Civil and Political Rights. 

Outlook for Reducing Nuclear Arms 

For 6 years now, President Reagan has 
responded to Soviet arms control prop- 
aganda with patience and strength. His 
steadfast approach now has brought us 
close to concluding an agreement for 
deep reductions in intermediate-range 
nuclear forces. Last Thursday, April 23, 
negotiators resumed work in Geneva 
that could, if the Soviets are serious, 
result in a verifiable treaty on INF. We 
have indicated we could sign a treaty, as 
an interim step, which embodies the 
Reykjavik formula of reducing U.S. and 
Soviet longer range INF (LRINF) mis- 
sile warheads to a global limit of 100 
warheads, wdth none in Europe. Those 
remaining would be deployed in the 
United States and Soviet Asia. 

Our final goal, however, remains the 
complete global elimination of all LRINF 
systems. Since weapons of this class are 
easily moved, their complete elimination 
will aid in ensuring effective verification. 



Together with our allies in Europe 
and Asia we are studying the new Soviet 
offer presented in Moscow on shorter 
range INF missiles. It may be that we 
decide it would be best to retain small, 
equal numbers of residual SRINF 
weapons. Or we may decide they should 
be eliminated altogether, both in Europe 
and in Asia. As with LRINF, the U.S. 
principles for dealing with SRINF 
include globality and equality. These 
principles are cornerstones of our 
negotiating position, and the United 
States will not deviate from them. 

While we welcome any reductions of 
intermediate-range missiles. Western 
security requires that we make progress 
in reducing other weapons as well, both 
at the strategic and conventional/ 
chemical warfare ends of the spectrum. 
Since his Eureka speech in 1982, Presi- 
dent Reagan has been repeating his call 
for deep, equitable, and verifiable reduc- 
tions of strategic offensive arms. 
Finally, in 1985, at the Geneva summit. 
General Secretary Gorbachev agreed to 
seek reductions of these weapons by 
50%. Last year at Reykjavik a formula 
was found for doing this which formed a 
basis acceptable to both sides. It, too, 
reflects the merits of the President's 
steadfast approach. What is necessary 
now is to push on toward agreement on 
other elements of an accord— partic- 
ularly sublimits on particularly 
dangerous missiles and verification 
measures— that would make the agree- 
ment truly stabilizing and verifiable. 

Earlier this month, in Prague, Gor- 
bachev said the reduction of strategic 
arms was of paramount importance and 
called it "the root problem" of arms con- 
trol. Yet, when he met a few days later 
with Secretary Shultz, he refused to 
drop his insistence that any reduction in 
offensive arms be linked to unreasonable 
restrictions on testing and development 
of strategic defenses. These constraints 
are not acceptable because they would 
cripple the U.S. Strategic Defense 
Initiative (SDI), our hope for a more 
stable deterrent which uses defensive 
systems. We need to challenge the 
Soviet leaders to get at the "root prob- 
lem," the high levels of devastating 
weapons targeted against one another. 
We also need to get the Soviets to 
deal rapidly and positively with conven- 
tional imbalances and a verifiable ban on 
chemical weapons. As we move to 
reduce nuclear weapons, we do not want 
to make the world "safe" for aggression 
or intimidation based on Soviet conven- 
tional superiority. 



ajlv 1Qfl7 



23 



ARMS CONTROL 



While we welcome reductions of 
LRINF and SRINF missiles, we should 
not be deluded into thinking that this 
precludes the need to reduce the central 
strategic and the conventional/chemical 
weapons threats as well. There is no 
objective reason why progress in these 
areas should not keep pace with progress 
in the INF area. We must press the 
Soviets to make progress across the 
board. 

Verification will be our other major 
concern. It remains the Achilles' heel of 
any arms control agreement. This is not 
for lack of talent and resources in 
verification on the U.S. side— I have the 
highest respect for the professionalism 
and effectiveness of our officials respon- 
sible for monitoring Soviet activities. 
The concern stems from a realistic look 
at 70 years of the closed nature of the 
Soviet Union. This concern also stems from 
examples of internal repression, external 
aggression, and disregard for interna- 
tional law which I detailed earlier. 

The President recognizes that the 
Soviets are masterful at llth-hour 
negotiations. If we allow them, they will 
put off agreeing to the details of 
verification until the last minute. We 
must not permit a natural desire to 
reach an agreement to tempt us to take 
unwarranted risks with our national secu- 
rity. For this reason we will continue 
to insist that verification measures be 
negotiated concurrently with other 
aspects of the agreement. 

Putting Competitive Advantage 
to Work for Western Security 

Barring a profound and unexpected 
transformation of the Soviet system. 
Western confidence in new arms control 
agreements will have to be based not on 
trusting the Soviets but on trusting our 
own strength. The freedom of the 
Western democracies gives us tremen- 
dous competitive advantages over the 
stultified societies and stagnant 
economies of the Soviet empire. If we 
muster the full strength of our 
technological prowess, our political will, 
and— not least— our moral fiber, we can 
begin to make our defenses even 
stronger with less reliance on nuclear 
weapons. I would like to focus on three 
applications for these strengths. 

• One is to complete our program of 
modernizing our arsenal. We need to 
complete the deployment of the full 100 
Peacekeeper missiles, complete our sub- 
marine Trident D-5 program, and 
develop and deploy heavy bombers and 
cruise missiles emphasizing stealth 
technology. 



• A second challenge is to proceed 
wdth President Reagan's Strategic 
Defense Initiative, toward a defense- 
dominant deterrence with less reliance 
on the threat of offensive ballistic 
missiles. The SDI program is founded on 
the moral and practical sense that while 
deterrence based on the threat of retalia- 
tion is necessary today, we can and 
should seek to move to a safer world in 
the future. Because they are fast-flying, 
nonrecallable systems, ballistic missiles 
are more destabilizing than other stra- 
tegic systems. SDI offers great promise 
toward supplanting these systems as the 
cent/al factor in the strategic balance 
between the United States and the 
U.S.S.R. By pursuing SDI, we can 
enhance U.S. and allied security by rely- 
ing increasingly on defensive rather than 
offensive deterrence. 

• Third, and analogous to SDI, I 
urge that the West apply its techno- 
logical advantage to more vigorous pur- 
suit of improved conventional defenses. 
The Warsaw Pact now holds a numerical 
advantage in a number of categories of 
conventional weapons and qualitative 
superiority in a few such categories. 
There is no reason this imbalance should 
be permanent. 

Just as the Soviets want to prevent 
the full application of Western techno- 
logical prowess to strategic defenses, 
they also have good reasons to respect 
the ability of Western scientists to 
exploit technology for conventional 
defenses. The leading military thinkers 
of the Soviet Union, including Marshal 
Ogarkov, former chief of the Soviet 
General Staff, have clearly seen that 
emerging technologies will change the 
way war may be fought in the future. 
They are uneasy in realizing that the 
free exchange of ideas and the mobility 
of capital and skilled labor found only in 
the industrialized free world make it 
extremely difficult for the Soviets to 
compete with us in the development of 
technology. 

I support completely one of Secre- 
tary Weinberger's major themes, what 
he calls "competitive strategies." This 
theme involves the will to make the com- 
ing era of rapid technological change 
work to our advantage. 

Thinking and acting confidently 
upon our competitive advantages is not 
merely a slogan. By no means is it 
simply an abstraction. After all, I see in 
front of me tonight several hundred of 
the proudest young competitors in 
uniform. The time now is very short 
before you will begin your service as 
officers in the U.S. Air Force. If you put 



your talent and courage to work to thi 
fullest, I know that the cause of peace 
and true arms control can be advancei 
with no weakening of our nation's 
defenses. 

Finally, we should do some clear 
thinking about arms control. We shou 
welcome any progress the Soviets are 
willing to make in the reduction of 
longer range and shorter range INF 
weapons. We should not assume that 
this is inevitable. Much hard negotiati ; 
remains ahead of us, especially in 
insisting that the Soviets agree in 
writing to their oral statements regar 
ing verification. But we should not be 
satified with progress in this field aloi 
We must insist that progress is made 
the reduction of strategic weapons, th 
correction of imbalances in conventioi 
weapons, and a ban on chemical 
weapons. Only then can we say we ari 
doing everything we can to create a 
more stable deterrence and a safer 
world. ■ 



Nuclear and Space 
Arms Talks Open 
Round Eight 



PRESIDENT'S STATEMENT. 
MAY 4, 1987' 

Since the early days of my Admini- 
stration, our number one arms contrc 
objective has been the achievement o: 
significant and verifiable reductions c 
offensive nuclear forces, particularly e 
most destabilizing weapons— fast-flyii 
ballistic missiles. 

I have directed our U.S. START 
[strategic arms reduction talks] 
negotiator [Ambassador Ronald F. 
Lehman II] to intensify efforts to reai 
agreement on reducing strategic offe 
sive nuclear arms by 50%. Toward th 
end, the United States will shortly tal i 
a draft START treaty text. This text D 
reflect the basic agreements on stratt ic 
arms reductions reached by General 
Secretary Gorbachev and myself in o 
meeting at Reykjavik last October. It 
will be responsible as well to Soviet c< - 
cerns expressed subsequent to Reykjj li 
and will provide ample basis for the c a 
tion of a fair and durable START 
agreement. ■ 

Tomorrow marks the opening in 
Geneva of the eighth round in our 
negotiations with the Soviet Union or 
strateg^ic arms reductions and strateg 



^ 



24 



nonartmont nf Qtoto Riill 



ARMS CONTROL 



lefense issues. With the negotiations on 
ntermediate-range nuclear forces (INF) 
laving resumed on April 23, all three 
legotiating groups of the nuclear and 
space talks will now be underway. 

We have made great progress in 
5TART. I am firmly convinced that a 
5TART agreement is within our grasp, 
'ven this year, if the Soviets are 
)repared to resolve the remaining 
lutstanding issues. And most important 
miong these issues is the need, for the 
lurpDse of ensuring strategic stability, 
, place sublimits on ballistic missile 
Warheads. 

We will likewise be making a new 
move in the defense and space area. Our 
negotiators return to Geneva ready to 
Dlace on the negotiating table the new 
U.S. proposal which Secretary Shultz 
liscussed during his Moscow meetings. 
This new proposal incorporates the 
ollowing elements. 

1 • Both the United States and the 
'■ 50viet Union would commit through 

994 not to withdraw from the Anti- 

)allistic Missile Treaty. 

• This commitment would be con- 
' ingent on implementation of agreed 

5TART reductions, i.e., 50% cuts to 
qual levels of 1,600 strategic nuclear 
lelivery vehicles and 6,000 warheads, 
vith appropriate sublimits, over 7 years 
'rem entry into force of a START 
igreement. 

• The agreement would not alter the 
lovereign rights of the parties under 
ustomary international law to withdraw 
n the event of material breach of the 
igreement or jeopardy to their supreme 
nterests. 

• After 1994 either side could 
ieploy defensive systems of its choosing, 
inless mutually agreed otherwise. 

• To build mutual confidence by fur- 
her enhancing predictability in the area 
)f strategic defense, and in response to 
stated Soviet concerns, we are also pro- 
)osing that the United States and the 
soviet Union annually exchange data on 
;heir planned strategic defense activi- 
;ies. We also seek to have the United 
States and U.S.S.R. carry out reciprocal 
Driefings on their respective strategic 
iefense efforts and visits to associated 
■•esearch facilities, as we have proposed 

,in our open laboratories initiative. In 
j addition, we have proposed establishing 
^ mutually agreed procedures for 

reciprocal observation of strategic 

defense testing. 

Since the April 23 opening of the INF 
'negotiations in Geneva, there have been 
some new developments in these talks. 



Last week, the Soviet Union presented a 
detailed draft INF treaty text which now 
joins our own draft text on the 
negotiating table. We are studying 
carefully the Soviet proposal and 
requesting the Soviets to clarify some 
important points in their text. 

The Soviet proposal appears to 
reflect the agreements General 
Secretary Gorbachev and I made at 
Reykjavik on longer range INF (LRINF) 
missile limits and to accept the principle 



of global equality between our two coun- 
tries in regard to shorter range INF 
(SRINF) missile systems. 

Nevertheless, important issues 
remain to be resolved before an INF 
agreement can be concluded, including 
verification and shorter range INF 
missiles. Verification is a particularly 
crucial issue. While the Soviet draft indi- 
cates that they will seek agreement in 
some basic areas which we require for 
effective verification, they have yet to 
provide the all-important details which 



U.S. -Soviet Nuclear 
and Space Arms Negotiations 



PRESIDENT'S STATEMENT, 

MAY 8, 1987' 

I have directed the U.S. START 
[strategic arms reduction talks] negoti- 
ator in the nuclear and space talks in 
Geneva to present to the Soviet Union at 
today's meeting of the START negotiat- 
ing group a draft treaty which provides 
for 50% reductions in U.S. and Soviet 
strategic offensive nuclear arms. The 
text of the U.S. draft treaty reflects the 
basic areas of agreement on strategic 
arms reduction General Secretary Gor- 
bachev and I reached at our meeting at 
Reykjavik last October. 

Our draft treaty provides for both 
sides to reduce to 1,600 strategic nuclear 
delivery vehicles and 6,000 warheads, 
with appropriate sublimits, over a period 
of 7 years after such a treaty enters into 
force. It provides a solid basis for the 
creation of a fair and durable agreement. 

The United States proposal, in addi- 
tion to the overall limits, provides for 
specific restrictions on the most 
destabilizing and dangerous nuclear 
systems— above all, fast-flying ballistic 
missiles. It includes detailed rules 
designed to eliminate any ambiguity as 
to what is agreed, and extensive verifica- 
tion provisions designed to ensure that 
each side can be confident that the other 
is complying fully with the agreement. 
The treaty is the result of intensive work 
by all appropriate agencies of the U.S. 
Government. I have reviewed the treaty, 
and it has my approval. 

By tabling this text, the United 
States seeks to build on the significant 
progress made in START and to provide 



a vehicle for resolving the remaining dif- 
ferences. If the Soviets are prepared to 
work with us on the remaining outstand- 
ing issues, especially the need— for the 
purpose of ensuring strategic stability— 
for sublimits on ballistic missile 
warheads, we will be able to take a 
significant step toward a safer and more 
stable world. 

While tabling this treaty is an 
important indication of our desire to 
achieve deep, equitable, and verifiable 
strategic arms reductions as soon as 
possible, I do not wish to minimize the 
difficult issues which remain to be 
resolved, particularly Soviet insistence 
on linking a START agreement to 
measures which, if accepted by the 
United States, would seriously contain 
SDI [Strategic Defense Initiative]. This 
is unacceptable. I cannot and I will not 
accept any measures which would cripple 
or kill our SDI program. In view of the 
continuing Soviet offensive buildup, com- 
bined with the longstanding Soviet ac- 
tivities in strategic defense, the SDI pro- 
gram is vital to the future security of the 
United States and our allies. 

As we begin detailed discussion of 
our proposed treaty with the Soviets, we 
are resolved to do our part to bring 
about, for the first time in history, real 
reductions in strategic offensive arms. I 
hope the Soviets will demonstrate 
similar determination and work with us 
on the basis of our draft treaty to 
translate the areas of agreement reach- 
ed at Reykjavik into concrete reductions. 



'Text from Weekly Compilation of 
Presidential Documents of May 11, 1987. 



LJnlu_1Qft7 



25 



ARMS CONTROL 



are essential to working out an effective 
verification regime. In addition, they 
have not met our requirements for 
inspection of sites suspected of violations 
of an INF agreement. 

Another major issue is that of 
shorter range INF missile systems. We 
and our allies continue to insist that an 
agreement on these systems must be 
bilateral in nature, global in scope, con- 
current with an initial INF treaty, and 
effectively verifiable. In addition, Soviet 
efforts to include the missiles of any 
country other than the United States 
and U.S.S.R. are patently unacceptable. 
We are continuing our close consulta- 
tions with our allies in Europe and Asia 
on SRINF and other INF issues. 

Our negotiators in Geneva— led by 
Ambassadors Max Kampelman, Mike 
Glitman, and Ron Lehman— have done 
an excellent job, and they continue to 
have very full agendas. We are well 
prepared for hard bargaining, and we 
are resolved to do our part to bring 
about— for the first time in history- 
actual reductions in nuclear weapons. It 
is up to the Soviets now to demonstrate 
similar determination to move ahead on 
these important issues. 

Despite all the progress that has 
been made in Geneva, there are events 
occurring right here at home which could 
destroy the groundwork which we have 
laid so carefully in bringing the Soviets 
back to the negotiating table and getting 
them to negotiate seriously for the first 
time on deep reductions in our respec- 
tive nuclear arsenals. An effort has been 
made by some members of the House of 
Representatives to attach to the Defense 
Authorization Bill amendments on arms 
control which would pull the rug out 
from under our negotiators and under- 
mine our most vital defense programs- 
such as our Strategic Defense Initiative. 
And now it seems that some Senators 
want to move in the same direction. 

Let there be no mistake about it: I 
will veto any bill which cuts back our 
ability to defend ourselves and leaves the 
Soviet Union free to continue its military 
buildup. 

The United States remains fully 
committed to achieving deep, equitable, 
verifiable, and stabilizing reductions in 
the U.S. and Soviet nuclear arsenals. 



AMBASSADOR KAMPELMAN'S 

STATEMENT, 
MAY 4, 1987^ 

Round eight of the nuclear and space 
talks begins tomorrow. The U.S. delega- 
tion comes to Geneva confident that our 
work during the past 26 months has 
been useful and important. We believe 
that significant progress toward historic 
arms reduction agreements can be made 
during this round. 

The April 13-15 meetings between 
Secretary Shultz and Foreign Minister 
Shevardnadze have given significant 
impetus to our work here, just as have 
the November 1985 and the October 
1986 meetings in Geneva and Reykjavik 
between President Reagan and General 
Secretary Gorbachev. 

The INF negotiating group has been 
meeting under an accelerated schedule. 
These talks continued in special session 
for 2 weeks following the end of round 
seven and began here again on April 23. 
We submitted a draft INF treaty at the 
end of the last round, and the Soviets 
have given us their version in recent 
days. We are pleased that these talks 
have progressed to the stage of treaty- 
drafting. Much hard and painstaking 
work remains to be done. Ambassador 
Glitman and his group are prepared for 
it. Important issues have still to be 
resolved. They should not be under- 
estimated. But we are committed to find 
solutions to these problems that are 
verifiable, deeply signifcant, and stabiliz- 
ing. Our own security and that of our 
allies and friends are very much in the 
forefront of our objectives. 

It is also appropriate here to empha- 
size an additional major goal toward 
which the American delegation will 
strive during this round. The United 
States attaches the highest importance 
to achieving a treaty providing for 
drastic 50% reductions in U.S. and 
Soviet strategic arms, a goal agreed 
upon at Reykjavik and again reaffirmed 
at the recent Moscow meeting. Such 
major reductions, carried out in a 
stabilizing manner, including appropriate 
sublimits, would significantly enhance 
the security of both sides. The strategic 
stability that would result would benefit 
the whole world. Agreeing on these 
reductions remains, therefore, a top 
priority of the United States in these 
negotiations and in this round. Note- 
worthy progress has been made in the 



last year. Ambassador Lehman is deter 
mined to press forward in these STAR'! 
talks. We see no reason to hold them 
hostage to any other results in these 
negotiations. We are, therefore, prepar 
ing and will shortly table a draft treaty 
to expedite movement in these 
negotiations. 

In the defense and space negotiatin 
area, the United States is aware that 
both we and the Soviet Union are 
actively engaged in extensive research 
and exploration to strengthen our 
respective defenses against nuclear 
missiles. The Soviet Union, as is well 
known, has always put heavy emphasis 
on defense. Our task here in Geneva is 
seek a cooperative transition from an 
offense-dominant military structure in 
the world toward a defense-dominant 
structure. A cooperative approach 
toward this task will help assure that tl 
transition is a stabilizing one. 

In sum, we have every expectation 
that this can be a fruitful round, pro- 
vided there is genuine effort on both 
sides. The United States intends to mal 
such an effort. We have every reason t( 
hope that we will be matched by the 
Soviet delegation in that effort. 



'Text from Weekly Compilation of 
Presidential Documents of May 11, 1987. 

^Max M. Kampelman is head of the U.S, 
delegation to the nuclear and space arms 
talks and U.S. negotiator at the defense and 
space talks. ■ 



26 



nonartmont ^« g»-.t^ P,,llot- 



ARMS CONTROL 



J.S. Arms Control Initiatives: An Update 



n conjunction with the ongoing nuclear 
nd space talks (NST) in Geneva between 
he United States and the Soviet Union, 
s well as other current arms control 
egotiations, the Administration 
eleased on June 1, 1987, the following 
iimmary of the most recent U.S. 
iitiatives on various arms control 
isues and a chronology of U.S. -Soviet 
rms control negotiations and expert- 
wel meetings in 1986 and to date in 
987. 

trategic Offensive Forces 

'n May 8, 1987, the United States 
ibled at the nuclear and space talks in 
eneva a draft START [strategic arms 
eduction talks] treaty text which pro- 
ides for 50% reductions in U.S. and 
oviet strategic offensive nuclear arms, 
he draft treaty, which reflects the basic 
'eas of agreement on strategic arms 
eductions reached by President Reagan 
id General Secretary Gorbachev at 
eykjavik last October, provides for 50% 
iductions by both sides to 1,600 
rategic nuclear delivery vehicles and 
000 warheads, with appropriate 
iblimits, over a period of 7 years after 
ich a treaty enters into force. 

The U.S. draft treaty, in addition to 
16 overall limits, provides for specific 
;strictions on the most destabilizing 
id dangerous nuclear systems— fast fly- 
ig ballistic missiles, particularly the 
oviet heavy intercontinental ballistic 
lissiles (ICBMs). To this end, we have 
roposed limits and sublimits on ballistic 
lissile warheads, missile throw- weights, 
nd heavy ICBMs. Our proposal also 
icludes detailed rules designed to 
liminate any ambiguity as to what is 
greed, and extensive verification 
revisions— including onsite inspec- 
;on— designed to ensure that each side 
an be confident that the other is com- 
lying fully with the agreement. 

By tabling this draft treaty, the 
Inited States seeks to build on the 
ignificant progress made in START and 
provide a vehicle for resolving the 
emaining outstanding issues, especially 
he need— for the purpose of ensuring 
trategic stability— for sublimits on 
lallistic missile warheads. Unfortu- 
lately, progress has been delayed by 
ioviet insistence on linking a START 
-greement to measures which would 
■ffectively end the Strategic Defense 
nitiative (SDI). The United States will 



not accept any measures which would 
cripple or kill the SDI program. Due to 
the promise it holds for a safer means of 
deterrence, the SDI program is vital to 
the future security of the United States 
and its allies. 

The United States believes that the 
draft START treaty provides a solid 
basis for the creation of a fair and 
durable agreement to bring about— for 
the first time in history— deep reductions 
in the strategic nuclear arsenals of the 
United States and the U.S.S.R. The 
United States is ready to do its part to 
achieve such an agreement and hopes 
the Soviets will demonstrate similar 
determination. 

Intermediate-Range 
Nuclear Forces (INF) 

Western determination to adhere to 
NATO's 1979 "dual track" decision in 
response to Soviet deployment of SS-20s 
is now paying off. NATO's resolve to 
redress the INF imbalance through 
deployment of U.S. longer range INF 
(LRINF) missiles, while seeking to 
negotiate with the Soviets to reach an 
INF balance at the lowest possible level, 
has brought us to the point where pros- 
pects for a U.S. -Soviet agreement for 
significant reductions in INF missiles 
are bright. 

On March 4, 1987, the United States 
tabled a draft INF treaty text at the 
NST talks in Geneva. The basic struc- 
ture of an INF agreement— the nature 
and level of LRINF missile reductions- 
had been agreed upon by President 
Reagan and General Secretary Gorbachev 
last October at Reykjavik and is 
reflected in the draft U.S. treaty text. 
This calls for reductions to an interim 
global ceiling of 100 warheads each on 
LRINF missiles on U.S. and Soviet ter- 
ritory, with none in Europe. The United 
States and our NATO allies continue, 
however, to prefer a zero LRINF missile 
outcome— the global elimination of this 
entire class of missiles— and will con- 
tinue to press the Soviet Union to drop 
its insistence on retaining the remaining 
LRINF missiles. 

In response, the Soviet Union tabled 
on April 27 its draft INF treaty which 
reflects the basic agreements on LRINF 
issues made at Reykjavik. A number of 
key issues remain to be resolved. The 
most important of these issues is 
verification. Any INF agreement must 



be effectively verifiable if it is to 
enhance stability and increase the secu- 
rity of the United States and its allies. 
The United States has proposed a com- 
prehensive verification regime to 
enhance compliance. The Soviets have 
noted that they will be seeking verifica- 
tion in some of the basic areas which we 
require, which Mr. Gorbachev accepted 
in principle at Reykjavik. These include, 
for example, data exchange, onsite 
observation of destruction, and effective 
monitoring of remaining LRINF inven- 
tories and associated facilities, including 
onsite inspection. However, they have 
yet to provide the needed details. 

Another major issue concerns 
shorter range INF (SRINF) missile 
systems. We and our allies continue to 
insist that an agreement on these 
systems must be bilateral in nature, con- 
current with an initial INF treaty, effec- 
tively verifiable, and provide for global 
equality. Soviet efforts to include the 
systems of any country other than the 
United States and the U.S.S.R. in an 
INF agreement are unacceptable. 

Resolution of these and other out- 
standing issues will demand considerable 
hard bargaining. The United States con- 
tinues to do its part to resolve these 
issues and move forward toward an INF 
agreement. It is up to the Soviet Union 
to show the same commitment to real 
progress. 

Defense and Space Issues 

During Secretary Shultz's April 1987 
meetings in Moscow and subsequently at 
the NST talks in Geneva, the United 
States made a new proposal on defense 
and space issues. This new proposal 
incorporates the following elements. 

• Both the United States and the 
Soviet Union would commit through 
1994 not to vidthdraw from the Anti- 
Ballistic Missile Treaty. 

• This commitment would be con- 
tingent on implementation of agreed 
START reductions, i.e., 50% cuts to 
equal levels of 1,600 strategic nuclear 
delivery vehicles and 6,000 warheads, 
with appropriate sublimits. 

• The agreement would not alter the 
sovereign rights of the parties under 
customary international law to withdraw 
in the event of material breach of the 
agreement or jeopardy to their supreme 
interests. 

• After 1994, either side could 
deploy defensive systems of its choosing, 
unless mutually agreed otherwise. 



'du_1QQ7 



27 



ARMS CONTROL 



To build mutual confidence by fur- 
ther enhancing predictability in the area 
of strategic defense, and in response to 
stated Soviet concerns, the United 
States also proposed that the United 
States and the Soviet Union annually 
exchange data on their planned strategic 
defense activities. In addition, we seek 
to have the United States and the 
U.S.S.R. carry out reciprocal briefings 
on their respective strategic defense 
efforts and visits to associated research 
facilities, as we have proposed in our 
Open Laboratories Initiative. Finally, we 
have proposed establishing mutually 
agreed procedures for reciprocal obser- 
vation of strategic defense testing. 

Chemical Weapons (CW) 

In April 1984, the United States tabled 
at the 40-nation Conference on Disarma- 
ment in Geneva a comprehensive treaty 
banning development, production, use, 
transfer, and stockpiling of chemical 
weapons to be verified by various means, 
including prompt mandatory onsite 
challenge inspection. At the November 
1985 Geneva summit. President Reagan 
and General Secretary Gorbachev 
agreed to intensify bilateral discussions 
on all aspects of a comprehensive, global 
chemical weapons ban including; verifica- 
tion. Since then, we have held five 
rounds of bilateral CW treaty talks. A 
sixth round is anticipated in the summer 
of 1987. 

Although the bilateral treaty discus- 
sions have narrowed some differences, 
and the Soviets finally admitted in 
March 1987 that they possess chemical 
weapons, important differences remain 
on a number of key issues. For example, 
on the crucial issue of verification of 
treaty compliance, the United States 
calls for mandatory "challenge inspec- 
tions" to investigate suspected viola- 
tions. The Soviets still insist that accept- 
ance of challenge inspection be 
voluntary. Although they recently 
indicated that mandatory challenge 
inspection procedures could apply to cer- 
tain limited cases, they continue to insist 
on a right of refusal that would weaken 
a CW convention and increase the 
possibility for cheating. 

In addition to treaty discussions, we 
are working with allies and other friendly 
countries and with the Soviets on pre- 
venting the proliferation of chemical 
weapons. Primarily in response to the 
continuing use of chemical weapons in 
the Iran-Iraq war, the United States and 
17 other Western industrialized coun- 
tries have been consulting since 1985 to 
harmonize export controls on CW- 
related commodities and to develop 



other mechanisms to curb the illegal use 
of chemical weapons and their dangerous 
spread to other countries. Also, in the 
two bilateral meetings with the Soviets 
in 1986, we reviewed export controls 
and political steps to limit the spread of 
chemical weapons. 

Nuclear Testing 

The United States is fully committed to 
seeking effective and verifiable 
agreements with the Soviet Union on 
nuclear testing limitations. To this end, 
the President has proposed a practical, 
step-by-step process. He has proposed 
that the United States and U.S.S.R. 
begin negotiations on nuclear testing. 
The agenda for these negotiations would 
first be to improve verification provi- 
sions of the existing Threshold Test Ban 
Treaty and Peaceful Nuclear Explosions 
Treaty. Once these verification concerns 
had been satisfied and the treaties 
ratified, the United States and U.S.S.R. 
would immediately engage in negotia- 
tions on ways to implement a step-by- 
step parallel program— in association 
with a program to reduce and ultimately 
eliminate all nuclear weapons— of 
limiting and ultimately ending nuclear 
testing. 

The United States has made con- 
crete, practical proposals to make prog- 
ress on nuclear testing limitations. In 
July 1985, the President invited Soviet 
experts to come to the U.S. test site to 
measure the yield of a U.S. test, bring- 
ing with them whatever equipment they 
deemed necessary. In December 1985, 
he proposed a meeting of official U.S. 
and Soviet technical experts to discuss 
verification. In March 1986, he invited 
Soviet experts to come to Nevada to 
examine the CORRTEX [Continuous 
Reflectrometry for Radius versus Time 
Experiment] method for yield measure- 
ment, to receive a demonstration of the 
CORRTEX system, and to measure a 
U.S. test. 

Finally, in the summer of 1986, the 
Soviets agreed to have experts from 
both sides meet to discuss without 
preconditions the broad range of nuclear 
testing issues. The experts met in 
Geneva in July, September, and 
November 1986, and January and May 
1987. Discussions have focused on 
verification techniques— CORRTEX in 
particular— as well as the agenda for for- 
mal testing negotiations. During 
Secretary Shultz's April trip to Moscow, 
he and Soviet Foreign Minister Shevard- 
nadze agreed that the experts should 
explore joint verification activities which 
might help evaluate the effectiveness of 
verification techniques. 



: 



Conference on Confidence- 
and Security-Building Measures 
and Disarmament in Europe (CDE) 

The 35-nation Stockholm CDE con- 
ference adjourned September 22, 1986, 
with the adoption of a set of concrete 
measures designed to increase opennesi 
and predictability of military activities i 
Europe. These measures, which are bui 
around NATO proposals, provide for 
prior notification of all military activitie 
above a threshold of 13,000 troops or 
300 tanks, observation of military activ 
ities above a threshold of 17,000 troops 
and annual forecasts of upcoming 
military activities. The accord also con- 
tains provisions for onsite air and 
ground inspections for verification. 
Although modest in scope, these provi- 
sions are the first time the Soviet Unio; 
has agreed to inspection on its own ter- 
ritory for verification of an internations 
security accord. 

Bilateral Confidence- 
Building Measures 

On May 4, 1987, U.S. and Soviet negot 
ators reached agreement on a draft joii 
text to establish Nuclear Risk Reductio 
Centers in their respective capitals. Th 
agreement, which is the direct result oi 
U.S. initiative, is a practical measure 
that will strengthen international secu- 
rity by reducing the risk of conflict 
between the United States and the 
Soviet Union that might result from 
accident, misinterpretation, or miscalcU 
lation. The centers would play a role ini 
exchanging information and notificatioir 
required under existing and possible 
future arms control and confidence- 
building measures agreements. 

Mutual and Balanced 
Force Reductions 

On December 5, 1985, NATO tabled a 
new initiative designed to meet Easteri" 
concerns. The proposal deferred the 
Western demand for data agreement oi 
current forces prior to treaty signature 
The Soviets had claimed that this 
Western demand was the primary 
roadblock to agreement. The proposal 
also called for a time-limited, first phaS' 
withdrawal of 5,000 U.S. and 11,500 
Soviet troops, followed by a 3-year, 
no-increase commitment by all parties 
with forces in the zone, during which 
residual force levels would be verified 
through national technical means, agret 
entry/exit points, data exchange, and 3i 
annual onsite inspections. Thus far, the 
Soviets have not responded construc- 
tively to the Western initiative. 



^^ttiMiiMliiiliil 



ARMS CONTROL 



lATO High-Level Task Force on 
lonventional Arms Control 

'his task force presented its report on 
18 direction of NATO's conventional 
rms control policy to the North Atlantic 
ouncil on December 11, 1986. At that 
leeting, NATO ministers produced the 
Brussels declaration," which states 
lATO's readiness to enter into new 
egotiations with the Warsaw Pact 
imed at establishing a "verifiable, com- 
rehensive and stable balance of conven- 
onal forces at lower levels" in the 
hole of Europe from the Atlantic to the 
rals. NATO began discussions in 
ebruary 1987 to develop a mandate for 
ew negotiations. The Brussels declara- 
on also calls for separate negotiations 
I build upon and expand the results of 
le CDE. 



Nuclear Non-Proliferation Treaty 

On December 15-18, 1986, the United 
States and the Soviet Union met in 
Washington for the eighth round in an 
ongoing series of consultations, which 
began in December 1982, on nuclear 
nonproliferation. These consultations 
covered a wide range of issues, including 
prospects for strengthening the interna- 
tional nonproliferation regime, support 
for the nuclear Non-Proliferation Treaty, 
and the mutual desire of the United 
States and the U.S.S.R. to strengthen 
the International Atomic Energy 
Agency. These consultations are not 
negotiations but, rather, discussions to 
review various issues of common con- 
cern. The United States and the Soviet 
Union share a strong interest in prevent- 
ing the dangerous spread of nuclear 
weapons and have agreed to use these 
consultations as a forum for discussion 
and exchange of views. 



hronology: January 1 , 1986-June 1 , 1987 



.S.-SOVIET ARMS 
ONTROL NEGOTIATIONS 

Wclear and Space Talks 

ound IV: January 16-March 4, 1986 

ound V: May 8-June 26, 1986 

ound VI: September 18- 

November 13, 1986 

ound VII: January 15-March 6, 1987 

(INF continued to March 26) 

ound VIII: Began on April 23 (INF) and 

May 5, 1987 (START and defense and 

space talks) 

onference on Confidence- 
id Security-Building Measures and 
isarmament in Europe (Multilateral) 

ound IX: January 28-March 15, 1986 
ound X: April 15-May 23, 1986 
ound XI: June 10-July 18, 1986 
ound XII: August 19-Septem- 
ber 19, 1986— agreement concluded 

onference on Security 
nd Cooperation in Europe 

irst Round of FoUowup Conference: 
November 4-December 20, 1986 
econd Round of Followup Conference: 
January 27- April 11, 1987 
hird Round of Follovnip Conference: 
May 4- July 23, 1987 (proposed 
ending date) 



Conference on Disarmament 
(Multilateral) 

Chemical Weapons Committee Rump 

Session: January 13-31, 1986 
Spring Session: February 4-April 25, 1986 
Summer Session: June 10-August 29, 1986 
Chemical Weapons Committee Chair- 
man's Consultations: November 24- 
December 17, 1986 
Chemical Weapons Committee Rump 

Session: January 6-30, 1987 
Spring Session: February 2-April 30, 1987 

Mutual and Balanced Force 
Reductions (Multilateral) 

Round 38: January 30-March 20, 1986 
Round 39: May 15-July 3, 1986 
Round 40: September 25-December 4, 1986 
Round 41: January 29-March 19, 1987 
Round 42: May 14-July 2, 1987 (proposed 
ending date) 

Nuclear Risk Reduction Centers 

Round I: January 13, 1987 
Round II: May 3-4, 1987— agreement 
concluded, ad referendum 



U.S.-SOVIET ARMS CONTROL 
EXPERT-LEVEL MEETINGS 

Nuclear and Space Talks 

August 11-12, 1986, in Moscow 
September 5-6, 1986, in Washington 
December 2-5, 1986, in Geneva at the 
negotiator level 

Mutual and Balanced 
Force Reductions Talks 

August 6-7, 1986, in Moscow 
September 10-11, 1986, in Washington 

Conference on Confidence- 
and Security-Building Measures 
and Disarmament in Europe 

August 14-15, 1986, in Stockholm 

Chemical Weapons Treaty Talks 

January 28-February 3, 1986, in Geneva 

April 15-25, 1986, in Geneva 

July 1-18, 1986, in Geneva 

October 28-November 18, 1986, in New 

York City 
February 16-March 5, 1987, in Geneva 

Biological and Toxin 
Weapons Convention 

Experts Meeting: March 31-April 15, 1987, 
in Geneva 

Chemical Weapons 
Nonproliferation Discussions 

March 5-6, 1986, in Bern 
September 4-5, 1986, in Bern 

Nuclear Testing 

First Session: July 25-August 1, 1986, in 

Geneva 
Second Session: September 4-18, 1986, 

in Geneva 
Third Session: November 13-25, 1986, in 

Geneva 
Fourth Session: January 22, 1987, 

recessed on February 9, resumed on 

March 16, concluded on March 20 in 

Geneva 
Fifth Session: May 18-May 29, 1987, in 

Geneva 

Nuclear Risk Reduction Centers 

May 5-6, 1986, in Geneva 
August 25, 1986, in Geneva 

Nuclear Nonproliferation Talks 

December 15-18, 1986, in Washington ■ 



.ulv 1987 



29 



DEPARTMENT 



Challenges Facing 
the Foreign Service 



by Ronald I. Spiers 

Address at the State Department's 
22nd annual Foreign Service Day on 
May 1, 1987. Ambassador Spiers is 
Under Secretary for Management. 

This is the third annual report I have 
been privileged to give on this occasion 
since I became Under Secretary of State 
for Management in November 1983. It is 
a practice I hope future Under Secre- 
taries for Management will follow. We 
have a responsibility to you. You are 
members of our extended Foreign Serv- 
ice family, bonded by your continuing 
interest in the institution you have 
served loyally and well. 

Last year, I said that 1985 had been 
a difficult year for the Department and 
for the Foreign Service. I reported then 
that the picture for 1987 was clouded 
but threatened to worsen. That, unfor- 
tunately, turned out to be an 
understatement. 

I would like to focus on three sub- 
jects today: 

• The resource situation for the 
Department of State as we look ahead to 
1988; 

• The personnel problems we face 
this year when large numbers of talented 
senior and midlevel officers will leave 
the Foreign Service involuntarily; and, 
equally important, 

• Diplomatic security at a time 
when the Department of State is under 
intense criticism in light of recent events 
in Moscow involving Marine security 
guards and our new chancery now under 
construction. 

The State Department 
Resource Crisis 

Few, even in the Department, fully 
understand the seriousness of the 
resource situation we now confront as a 
consequence of the executive-congres- 
sional impasse over how to control the 
Federal deficit. I want to give you, 
today, a somewhat more focused report 
on our resource situation than you may 
have heard on the nightly news. Unfor- 
tunately, this means citing some figures. 

The overall budget of the Depart- 
ment of State is somewhat over $3.5 
billion. About half of this, however, is 
what I call "transfer" payments. These 
funds have nothing to do with running 



the Department but pay our membership 
dues to international organizations, our 
contributions to international commis- 
sions of one kind or another, and the 
money to finance international refugees 
and narcotics programs. 

To convey the real dimensions of our 
problems, I have to telescope in on our 
salaries-and-expenses account. This is 
the money that pays all of the normal 
expenses of our over 23,000 American 
and Foreign Service national employees 
at more than 250 posts overseas and in 
the United States. This account finances 
our salaries and allowances. It pays for 
storing and transporting our household 
effects. It buys our vehicles and furnish- 
ings. It finances our communications, 
our computer systems, our security pro- 
grams, our training, our travel, and 
so on. 

For 1986, the President proposed a 
lean budget of $1.47 billion for this 
account. However, the Congress cut it 
by over $80 million, and we were forced 
to absorb the shortfall from our ongoing 
activities after the fiscal year was well 
underway. In a time of trillion-dollar 
deficits, $80 million may not seem like a 
lot of money. But for a small agency like 
State, whose annual budget is less than 
the cost of a single Trident submarine, 
an $80-million cut assumes monstrous 
proportions. We spend more than 65 
cents out of every dollar on people- 
related costs. Therefore, to absorb the 
$80 million from personnel expenses, we 
would have had to put all of our 
employees worldwide on unpaid leave for 
44 days. Obviously, this did not make 
sense. 

We tried to make up for this short- 
fall by asking for slightly more 
money-$1.84 billion-for 1987. How- 
ever, Congress again cut the Admin- 
istration's request for State, this time by 
$314 milHon, and earmarked $127 mil- 
lion of what we got for security. As a 
result, when the dust settled in 1987, we 
ended up with only $6 million more than 
last fiscal year; but bear in mind that 
last year we had to cut out a lot of our 
important activities to stay within the 
appropriated amounts. 

So this is the key figure, the bottom 
line, to keep in mind: we have $6 million 
more to spend in 1987 than in 1986. 
Six million dollars is a lot of money. 
However, let me describe what this $6 
million has to cover: 



• $76 million in overseas inflation 
and exchange rate losses (at one point 
last December, our West German post; 
were losing a half million dollars a day 
due to the drop in the dollar's value); 

• $55 million in domestic mandate 
wage and price increases, including tht 
recent American pay increase and the 
cost of managing the new retirement 
system; and 

• $20 million in new programs, sui 
as opening several new posts, estab- 
lishing a new congressionally mandatei 
Inspector General's office, implementii 
the new immigration law, and so on. 

That adds up to a minimum of $15 
million in mandatory increases in our 
expenses. Where were we going to fim 
the funds to pay for these increases? Ii i 
salaries-and-expenses agency such as 
State, the only possibility is out of cur- 
rent day-to-day operations. That is the 
genesis of the following cuts we were 
forced to make in 1987. 

• We took $114 million out of equ 
ment and furnishings programs, post- 
poning the modernization of our aging 
communications and computer system; 
Noncareer ambassadors have asked m 
repeatedly why the State Department 
personnel in their missions are so poor 
equipped compared to our colleagues 
from other agencies. This is the answe 

• We have taken about $20 millioi 
out of personnel and directly related 
support costs. As a result, we have 
significantly reduced the Department' 
nonsecurity work force. We have also 
reduced the size of incoming Foreign 
Service officer classes, creating major 
staffing gap problems. We will pay 
dearly for this several years down the 
line. We are taking similar cuts in vir- 
tually all other personnel categories. 

• We are closing seven posts in ac 
dition to the seven we closed last year 
From this, we will reap an immediate 
savings of something over $1.5 million 
this fiscal year. This small figure is 
deceptive, however, because it only 
relates to the direct costs of operating 
these posts. We will also save other 
costs, such as salaries and support cos 
in Washington. 

The main point— and it is one we 
have had a hard time getting across at 
home— is that if we have to cut people 
and save money in communications, 
travel, security, and so on, we must cu 
work stations. For us, work stations ai 
positions in Washington and posts 
overseas. There are Members of Con- 
gress who want to mandate reopening] 
the posts that we have closed; unfor- 
tunately, no one has offered to augmeii 



^0 



Dfinartmfinf of .'ifatfi Rnllf IL 



DEPARTMENT 



lur funds in order to do so. We in the 
Department have made a strategic 
■hoice to terminate our more marginal 
ictivities rather than shortchange our 
nore important ones. 

Opening and closing posts is nothing 
lew. We have shut at least 535 posts 
jince we opened our first one in 1778. 
!)ince 1945, we have closed about four 
ler year. This does not mean that our 
jmall posts are interchangeable, expend- 
able, or unimportant. Quite the opposite 
5 the case. They are the capillaries of 
,ur information-gathering systems. They 
'lug us into the important regions. They 
nhance our ability to provide services to 
American citizens abroad. They help 
tiniulate export markets. They provide 
aluable professional and managerial 
Ixperience for our junior personnel. But 
he Secretary of State must have the 
bility to allocate scarce resources to 
riorities for which he bears ultimate 
responsibility. Congressional 
licromanagement does not help. 
I Other cuts are being made in equally 
ndesirable areas: post language train- 
ig, travel, publications procurement, 
niversity training, and the like. Despite 
lese cuts, we are still having trouble 
laking ends meet. As a result, we have 
sked for a 1987 supplemental appro- 
riation of $83 million to keep us 
Dlvent. If we get it, we can avoid some 
f the worst effects of these cuts, 
[owever, the prognosis is uncertain at 
est, and we cannot delay making the 
ery tough resource decisions required 
) help us manage within our means. We 
innot spend at a rate that will get us in 
■ouble if we do not get this supplemen- 
il relief. 

Outlook for 1988 

much for 1987. The outlook for 1988 
i not just unpleasant, it is grim. 
Our bureaus requested $2.06 billion to 
leet the responsibilities levied on them 
Dr 1988. Of this total, $447 million was 
^r security. We pared the bureaus' 
equests back somewhat ourselves; the 
tffice of Management and Budget then 
ut these figures further to come up with 
final Administration request of $1.86 
illion. However, the Congress has 
/arned that we should expect— at 
■est— a funding freeze at last year's 
Jvels. 

Here is what such a freeze could 
nean to us: 

• Further post closings, perhaps as 
nany as 10-20. This would further con- 
'ey the impression that the United 
states is withdrawing from active 
nvolvement in world affairs. 



• Further personnel reductions— 
perhaps as many as 800-1,000 in 
Washington and overseas. Cuts of this 
magnitude could only be accomplished 
through large-scale reductions in force 
or furloughing. 

These are drastic steps. From Con- 
gress' standpoint, a funding freeze on 
the surface might seem a logical and, 
perhaps, convenient method of coping 
with tight budgets and the Federal 
deficit. For State, however, a freeze is 
really a cut since there are certain new 
mandatory expenses which we would 
have to carve out of this frozen figure. 
These mandatory expenses include: 

• $52 million to finance the new 
Federal Employees Retirement System; 

• $12 million to cover mandatory 
Foreign Service national wage increases; 

• About $28 million for overseas 
inflation and exchange rate losses; and 

• $8 million to pay rent increases 
for the buildings we occupy in 
Washington. 

The net increases, after deducting 
some decreases, amount to $107 million. 
In other words, a freeze actually means 
we would have over $100 million less to 
spend in 1988 than we had in 1987. 

Further complicating this picture, 
however, is the fact that there are some 
expensive but very important programs 
which we must start if we are to main- 
tain and improve our effectiveness as an 
institution. Among these are: 

• Upgrading the Department's 
diplomatic telecommunications service. 
We must begin this program now to give 
the foreign affairs community the 
capacity it needs for the future, at 
reduced annual costs. 

• Building a new, less vulnerable, 
mainframe computer center which we 
intend to collocate with our new alter- 
nate communications facility we just 
opened in Beltsville. We are the only 
major government agency without such 
backup communications facilities. With 
no such backup, the Department's entire 
data base is vulnerable. The Secretary 
has rightly said that this is a "must do" 
project. 

• Developing our new Foreign 
Affairs Information System to give us 
the information technology we need to 
do our jobs and to help us march into the 
future abreast of our colleagues in the 
intelligence and defense communities. 

• Continuing our effort to rebuild 
our vital diplomatic capabilities and to 
upgrade hard language training, as 
recommended in a recent report by 
Ambassador Stearns. This will cost us 
almost $4 million in 1988 alone. 



When we add these and other 
annualizations to the mandatory 
increases and 1987 shortfalls, we come 
up with a figure of $208 million which 
must be taken out of our day-to-day 
operations in 1988 if we receive no 
increase from the Congress. 

This situation is not the result of 
some special congressional hostility 
toward the Department of State and its 
mission. Indeed, we have encountered 
substantial sympathy toward our plight. 
We are caught in a vise; there is no 
effective consensus within the Congress 
or between the Congress and the Presi- 
dent about the relative priorities to be 
accorded to tax increases, defense 
expenditures, and social service expend- 
itures. Until there is such a consensus, 
the Department will suffer particularly 
bad times since we are essentially a 
salaries-and-expenses agency. We have 
no costly programs to string out or to 
cannibalize. It is not an exaggeration to 
say that the current budget crisis will 
force us to drastically reshape the insti- 
tution through which the United States 
conducts its diplomatic relations with the 
rest of the world. This reshaping cannot 
help but radically reduce our diplomatic 
presence overseas. Our embassies will 
become, more and more, the office space 
for other, perhaps wealthier, agencies of 
government. It is sobering to think that 
the $20 million we have cut in personnel 
alone this year is less than one-tenth the 
cost of a single B-1 bomber. 

Personnel Issues and the 
1980 Foreign Service Act 

Let me deal more briefly with our per- 
sonnel situation. As you know, the 1980 
Foreign Service Act put into place 
systems designed to produce a predict- 
able flowthrough and to ensure that only 
the best officers advance to the top. The 
others— although by any objective stand- 
ards very good officers— drop by the 
wayside in this extremely competitive 
milieu. Our entry system continues to be 
one of the most selective in the world. 
While more than 17,000 applicants take 
the annual Foreign Service written 
examination, we appoint only some 200 
new officers each year. But even after 
joining the Foreign Service, being simply 
a "very good officer" may not be good 
enough. This highly competitive system 
and its byproducts are, today, among the 
most controversial management issues in 
the Department of State. 

This year, we will lose 49 of our 
FO-ls due to the 6-year window. They 
will join 53 others who will have to leave 
because they have reached time-in-class 
limits without being promoted into the 
Senior Foreign Service. In addition. 



yiMlVl987 



31 



DEPARTMENT 



more than 130 of our Senior Foreign 
Service officers have retired after they 
were not offered the limited career 
extensions set up under the 1980 act. 
This loss of Senior Foreign Service 
officers has, however, been relatively 
less noticed since it has occurred over a 
longer period of time— i.e., since 1984. 

We have faced a great deal of 
pressure to extend the 6-year window 
during which promotion opportunities to 
the Senior Foreign Service remain open. 
(This 6-year period was set after con- 
sultation with AFSA [American Foreign 
Service Association] by Secretary Haig 
in fulfillment of the 1980 act.) We have 
resisted extending the window since, as 
I have reported to you in previous years, 
we cannot simply postpone facing dif- 
ficult management decisions. We must 
take the necessary steps now to set the 
Service on a clear and predictable 
course. 

A colleague recently put the issue we 
face better than I could, and I quote him 
here: 

A competitive system which retained its 
less competitive members would be wasteful. 
A system which did not provide for advance 
of junior officers would be wasteful. A system 
which did not continuously reoxygenate would 
be wasteful. A rigorous up-or-out philosophy 
is a practical and workable means of balanc- 
ing the needs for experience, progression and 
employee development; and the practices 
applied by Management seem to achieve the 
desired ends of that philosophy. 

In short, we cannot both retain all 
senior officers and FO-ls and still 
preserve opportunities for the most 
gifted of the next generation to move 
up. The trick is to find the right balance 
between these two legitimate concerns. 

Confronting 
Security Challenges 

I have saved my comments on security 
until last. For the last month, the story 
of the Moscow Marines and the bugging 
of our new office building in Moscow 
have occupied headlines around the 
world. From parts of the Hill and the 
media, critics variously charge incom- 
petence on the part of the Department 
or, in the words of one TV journalist, 
"criminal negligence" on the part of our 
Ambassador in Moscow. The Depart- 
ment, according to some critics, has 
ignored warnings and was naive about 
the Soviets, sloppy in its procedures, and 
indifferent about security. Behind much 
of this assault lies ignorance of facts or, 
perhaps, hidden agendas. 

If there has been laxness about 
security or misfeasance, we will uncover 
it and deal with it. However, we should 



32 



not start with the predisposition that 
someone must be pilloried. Witch-hunts 
do not, as past experience will attest, 
improve systems. 

As some of you know from firsthand 
experience, our diplomats in Moscow 
work in a difficult and unremittingly 
hostile environment. Recently, I read a 
despatch on "General Conditions in 
Russia" sent from Moscow in March 
1936 by Ambassador William Bullitt, 
who was himself quoting from des- 
patches sent in the early 1850s by his 
predecessor, Neill Brown. These 
excerpts have a familiar ring as I quote 
from them: 

The Russian mind seems naturally 
distrustful, and this is especially so with the 
Government officials .... [T]he Government 
possesses in an exquisite degree the art of 
worrying a foreign representative without 
giving him even the consolation of an insult. 
The position as an Ambassador here is far 
from being pleasant. The opinion prevails that 
no communication, at least of a public nature, 
is safe in the Post Office, but is opened and 
inspected as a matter of course .... Ministers 
are constantly subjected to a system of 
espionage, and that even their servants are 
made to disclose what passes in their 
households, their conversations, their associa- 
tions, et cetera. . . . [T]o be made to appre- 
hend such a state of things is exceedingly 
annoying. 

The living and working conditions 
which our people face in Moscow are not 
news to the Department of State. The 
campaign of Soviet attacks against our 
diplomats in Moscow is bold and 
relentless. In recent times, our people 
have been microwaved and tracked with 
spy dust. Now, the press has reported 
that our new office building in Moscow is 
honeycombed with various types of 
listening devices. I assure you, this came 
as no surprise to us. We have been 
tracking and analyzing the Soviet 
technical attack since the very 
beginning. 

Contrary to the popular impression, 
the Department of State has done a 
great deal to protect our people, our 
property, and our information over the 
past 3 years. In early 1984, then- 
Assistant Secretary for Administration 
and Security Bob Lamb and I agreed 
that we needed to launch a major new 
program to cope with contemporary 
security challenges. We did not believe 
that we could address these challenges 
with a business-as-usual approach. We 
recommended that the Secretary 
establish a panel of experienced out- 
siders to examine the entire range of 
security threats— both physical and 
counterintelligence— against our 
overseas missions. We recommended 
that Adm. Bobby Inman head this panel. 
We knew that any comprehensive secu- 
rity program 



recommended by such a panel would 
require a tremendous amount of addi- 
tional resources but felt that the time 
had come to lay out for the Congress a 1 
for the American public a security pro- 
gram that they could accept or reject. 
The Secretary approved our plan 
without hesitation. 

The Inman panel made its report ti 
the Secretary in mid-1985, and, within 
weeks, we had put together a 5-year, 
$4.4-billion program to implement mos 
of the panel's 91 recommendations. At 
the same time: 

• We established a new bureau in 
the Department devoted exclusively to 
security. 

• We set up recruitment and train 
ing programs for a new, expanded 
generation of security officers. Our 
security specialist corps has grown fro 
572 in 1985, to 675 in 1986, to 1,017 b; 
the end of this fiscal year. 

• We took steps to change the 
Foreign Service culture to increase th( 
security sensitivity of our colleagues, 
many of whom felt security contradicti 
the traditional mission of the State 
Department— i.e., to get out and make 
contacts and penetrate other cultures 
and societies. To make the point 
dramatically, the Secretary, in 
September 1984, began holding daily 
morning meetings on security. This co 
municated his priorities throughout th 
Service. 

• We collaborated effectively with 
our sister agencies in the intelligence 
community to understand and develop 
effective countermeasures to foil elec- 
tronic threats against the integrity of 
our information and communications 
systems. 

• We reorganized our Office of 
Foreign Buildings to bring it into the 
modern age, staffed and equipped to 
cope with a massive new security con- 
struction program. They are now man; - 
ing 62 construction projects, the bulk c 
which are on schedule and within 
budget. 

We had the full support of the 
Secretary of State at every step of thei 
way. The Inman report succeeded in gj 
ing a "jump start" to what I believe wi 
turn out to be an effective security pra 
gram. After a lengthy series of congrei 
sional hearings, we received congres- 
sional authorization last fall for a $2.1- 
billion security construction program. 
However, the funds appropriated so fai 
have fallen far short of the amounts 
requested. (A total of $2.7 billion was 
requested while only $622 million was 
appropriated to implement Inman pans 
recommendations.) We got the first 



Department of State Bullen 



DEPARTMENT 



JoUar on August 12, 1986— and most of 
'he initial $39 million did not materialize 
intil the end of October. 

The Department of State, in short, 
las nothing to apologize for and a lot to 
)e proud of. 

Security Problems 
it Embassy Moscow 

jet me say a few words about each of 
he current specific problems of the 
.Iosco w Marines and our Embassy 
luilding. 

First, the Marines: the United States 
las relied on the integrity of the Marine 
ecurity guard system for almost 40 
ears. The program has a proud history. 
Ve never considered we needed guards 
guard the guards. We had clear rules 
estricting fraternization in East Euro- 
pean countries because we knew that the 
ind of sexual entrapment we have 
ecently seen in Moscow is an age-old 
taple of intelligence systems. The 
larine guards in Moscow understood 
his, but some of them knowingly 
iolated the rules. When we discovered 
tiese violations, we moved swiftly to 
amove the offenders. What we failed to 
0, however, was to investigate imme- 
iately whether the fraternization viola- 
ions had led to more serious violations, 
uch as treason. When one Marine 
orned himself in for having collaborated 
nth the KGB, we then immediately 
lunched an aggressive investigation 
?hich has led to further espionage 
harges against other Marine security 
uards. 

We have discovered other violations 
f our nonfraternization policy, but these 
iolations did not lead to espionage. In 
he cases in which it allegedly did, we 
annot excuse these crimes on the 
rounds of youth, loneliness, the harsh 
loscow environment, the quality of 
upervision, or a philosophy that "boys 
/ill be boys." Treason is treason, and 
here are no grounds on which to 
xcuse it. 

What about the question of culpa- 
dlity or security laxness on the part of 
■mbassy management? 

Like the captain of a ship, the 
.mbassador is ultimately responsible for 
vhat takes place in his mission. How- 
'ver, rules of reason must also be 
applied. There is a chain of command. If 
he Marine sergeant in charge of the 
letachment was aware of fraternization 
ir espionage and did not act to stop it or 
•eport it to the RSO [regional security 
)fficer], he is culpable. The same is true 
)f the RSO and up the line to the ambas- 
sador. There is no evidence to suggest 



that any of this is the case, but investiga- 
tions are proceeding. I do not agree with 
those who charge that Ambassador 
Hartman was lax in his approach to 
security. 

However, we do not— nor will we— 
follow our personnel 24 hours a day. The 
espionage and fraternization reported in 
Moscow appears to have taken place 
clandestinely. 

We do not know all of the damage 
that was done as a result of these events 
in Moscow and Leningrad. However, we 
have to assume the worst. Accordingly, 
we will be spending substantial time and 
money to replace potentially compro- 
mised facilities in Moscow and Len- 
ingrad. We have also broadened our 
investigations to include other missions 
in Eastern Europe. 

We will be strengthening poHcies to 
prevent the recurrence of these security 
breaches in other high-technical-threat 
posts. In my view, substantially shorter 
tours of duty for Marine security guards 
would reduce their window of vulnerabil- 
ity to hostile intelligence services. We 
are working closely with the Marine 
Corps to improve the program. We had 
already planned to install alarm systems 
which record events such as intrusions 
and which cannot be bypassed. This pro- 
gram will be accelerated. We will use 
polygraphs as an investigative tool in 
cases of fraternization. We will reaffirm 
the role of the chief of mission as the 
commander in chief of the Marine secu- 
rity guard detachment. We will, no 
doubt, examine other approaches in the 
course of the investigations I have 
mentioned. 

When the problem of Moscow 
Foreign Service nationals and their KGB 
connections was raised as a policy issue 
several years ago, the Department of 
State thoroughly examined the idea of 
replacing them with Americans. There 
were strong arguments on both sides of 
the issue. The price tag for replacing the 
Soviets with Americans was high and 
required additional appropriations from 
the Congress. Ambassador Hartman and 
others in the Department also pointed 
out that this kind of a replacement pro- 
gram might solve one set of security 
problems while creating yet another set 
of security problems. Americans 
imported into Moscow's harsh environ- 
ment as mechanics, plumbers, 
carpenters, and chars would widen the 
target for Soviet espionage. 

On the other hand, Soviet-supplied 
support personnel were known quan- 
tities. They could be watched and 
isolated. We knew that some of them 
had KGB connections. We also knew 
that there were risks involved in letting 



them work at close proximity with the 
American staff. Others believe these 
considerations were outweighed by the 
fact that the Soviet support staff pro- 
vided the Soviet intelligence services 
with yet another means of evaluating 
potential viilnerabilities of the American 
staff. 

This was an issue on which 
reasonable men could disagree. After 
weighing these arguments, the 
Secretary decided to proceed with a 
phased substitution program. Ambas- 
sador Hartman himself proposed such a 
program in April 1985, and it com- 
menced the next month. Before it was 
put fully into effect, however, the 
Soviets preempted it by withdrawing all 
Soviet support staff last October. It is 
ironic, and perhaps revealing, that many 
in Washington predicted that the Soviets 
would never withdraw the support staff 
because the KGB was too dependent on 
them for intelligence entree. 

A few words are necessary about the 
building project in Moscow. You are 
aware of our discoveries over a period of 
years about the sophisticated and care- 
fully designed intelligence system the 
Soviets have built into our new chan- 
cery. State Department security officers, 
working with other agency experts, are 
leading an all-out effort to develop 
countermeasures to thwart the Soviet 
penetrations of our chancery. The 
Soviets were able to mount this attack in 
part because we allowed them, pursuant 
to an agreement concluded 15 years ago, 
to prefabricate the concrete beams for 
the structure offsite and away from U.S. 
supervision. We will cope with this 
Soviet technical attack even if it means 
dismantling the $23-million structural 
shell. (The press has incorrectly reported 
that we will lose a $190-million invest- 
ment if we tear down the chancery. In 
fact, the $190-million Moscow project 
actually consists of eight buildings, only 
one of which is the chancery, which 
would house sensitive activity. The other 
seven buildings are already occupied.) 
Furthermore, we are submitting to arbi- 
tration the costs we've incurred in iden- 
tifying and correcting the Soviet 
technical attack. 

At our recommendation. Secretary 
Shultz asked former Secretary of 
Defense and CIA Director Schlesinger to 
examine all of the information we have 
gathered on the Moscow chancery prob- 
lem in all its aspects and to make recom- 
mendations as to how to deal with it. We 
expect his report shortly. 

In the meantime, we must cope with 
the fact that our institutional cultural 
heritage in the Foreign Service can lead 



a!y 1987 



33 



DEPARTMENT 



our people abroad to attach less priority 
to security considerations in comparison 
to other aspects of our activities than we 
in Washington feel should be the case. 
Given the budget situation I described at 
the outset, we are having to tell ambas- 
sadors to cut reporting positions while, 
at the same time, we are expanding 
expenditures and personnel devoted to 
security. Questions are repeatedly raised 
about the wisdom of our priorities. These 
questions are legitimate, although 
sometimes we have to be authoritarian 
in imposing our choices. 

In the final analysis, I do not believe 
there is a contradiction between main- 
taining an adequate level of security and 
conducting diplomacy effectively. Our 
diplomats must understand the country 
and the culture in which they live and 
work. This requires getting out and 
tracking down information and develop- 
ing contacts. We as a nation also have an 
obligation to provide the resources- 
money and people— necessary to achieve 
our diplomatic objectives. However, 
unless we provide a safe and secure 
environment for our people and our 
national security information, we cannot 
conduct successful diplomacy. Constant 
vigilance and awareness is a prerequi- 
site, but this does not require that we 
immure ourselves in fortresses or 
operate on the basis that we cannot trust 
each other. 

We will continue to work to con- 
struct such a secure environment, but in 
doing so, we will avoid creating an 
atmosphere that will undermine the 
spirit and effectiveness of our diplomacy. 

Guarded Optimism 

Let me conclude on a note of guarded 
optimism. The Foreign Service has suc- 
cessfully overcome comparable dif- 
ficulties in the past. I am confident we 
can and will do so again. Institutionally, 
the challenges we face today are hardly 
worse than the crisis of the 1950s when 
the China hands were purged for being 
correct. We recovered from that episode 
and emerged a stronger Service. We can 
and will do so again. But we must not be 
complacent, and we must adapt to new 
challenges. Unless we take a realistic 
account of the world we face today, the 
Foreign Service cannot effectively carry 
out its fundamental and important role 
in furthering our national interests as 
the first point of contact with other na- 
tions and societies. ■ 



U.S. -Soviet Agreement 

on Embassy Construction in Washington 



by Ronald I. Spiers 

Statement before the Subcommittee 
on Foreign Operations of the House 
Foreign Affairs Committee on May 19. 
1987. Ambassador Spiers is Under 
Secretary for Managem,ent. ^ 

We will be examining today a set of 
issues as complex and difficult as any I 
have encountered as Under Secretary of 
State for Management. They are issues 
which were difficult when first addressed 
by the U.S. Government over 20 years 
ago. They have been made more difficult 
to deal with for having been embellished 
over the years by a good deal of anec- 
dotal misinformation and myth. Let me 
briefly summarize the basic facts. 

Backgfround 

By the late 1950s, both the U.S. and 
Soviet Governments were rapidly out- 
growing their diplomatic facilities, and 
each recognized the need for a new 
chancery and residential buildings. It 
would be over 10 years, however, before 
agreement was reached— in 1969— on an 
exchange of sites and another 3 years 
before a terms-of-construction agree- 
ment was concluded in 1972. 

Throughout this lengthy period of 
back-and-forth with the Soviets, many 
factors influenced the course of the 
discussions: concern for providing an 
adequate living and working environ- 
ment for our personnel; questions of 
reciprocity and security; local municipal 
regulations in both Washington and 
Moscow; and, of course, the overall 
tenor of U.S. -Soviet relations, to name a 
few. There were times when our nego- 
tiators were convinced we could not 
come to terms and were ready to call the 
discussions off. There were also times 
when political decisions at the highest 
levels of the U.S. Government bridged 
difficult gaps. 

Throughout the period, and particu- 
larly as we focused our discussions on 
specific sites and specific construction 
issues, we approached the process as an 
interagency effort to ensure that all our 
concerns were adequately addressed. 
Intelligence and security questions were 
carefully studied by the appropriate inter- 
agency committees representing the 



intelligence community. The State 
Department participated in interagenc 
meetings, regularly briefed the appro- 
priate committees on the progress of 
negotiations, and conferred with the p: - 
ties concerned when technical question 
arose. Concerns raised within the Intel 
gence community were thoroughly 
vetted through the interagency coor- 
dinating committee and in other agenc 
to-agency contacts and meetings. 

U.S. -Soviet Negotiations 

To give you a thumbnail sketch of the 
negotiations, in the summer of 1963, tl 
Soviets negotiated the purchase of the 
Bonnie Brae estate in the Chevy Chas< 
section of Washington, and the D.C. 
Board of Zoning approved a zoning exo ■ 
tion to permit the construction of an 
embassy in this residential area. Throu i 
a series of court actions, however, loc£ 
residents successfully overturned the 
zoning exception in January 1964, 
thereby blocking use of the property fi 
an embassy. 

To avoid such difficulties in the 
future, an effort was made to find 
Federal property suitable as an embas 
site, since U.S. Government-owned lai 
is not subject to D.C. zoning restrictio . 
The General Services Administration 
identified two locations: the Bureau of 
Standards site (now the International 
Chancery Project) and the Veteran's 
Administration Hospital site on Mt. Ai . 
The Soviets had expressed no prior 
interest in either site. 

Of the two properties, Mt. Alto we 
available earlier. Over the course of 2 
years, representatives of all relevant U . 
Government agencies examined the sit 
and agreed to the proposal to lease it t 
the Soviets in exchange for leasing a s ; 
for our new Embassy. In fact, Mt. Alt( 
was not offered to the Soviets until we Y i 
written agreement from the agencies 
most concerned, and the exchange-of-si 3 
agreement was not signed until the Hoi J 
Foreign Affairs Committee approved c r 
new Embassy site in Moscow. 

The Soviets were not enthusiastic 
about the Mt. Alto site. They complain 1 
that we had shown them only one site 
and argued that it was "not very 
favorable" because of its distance fron 
the center of the city. Indeed, the 



34 



Department of State Bullei 



EAST ASIA 



loviets expressed interest in building a 
'hancery at Tregaron in Cleveland Park, 
lUt the idea was opposed by the U.S. 
lovernment on security grounds. 

In 1969, we finally signed an 
xchange-of-sites agreement with the 
Soviets in which they received an 85-year, 
ent-free lease on 12.5 acres at Mt. Alto.' 
'he United States leased for 85 years an 
quivalent-sized lot in Moscow (10 acres 
or a chancery and residential compound 
lus 1.8 acres for the Ambassador's 
esidence), also at no cost. Congressman 
V^ayne Hays had traveled to Moscow in 
967 to examine the U.S. site and recom- 
. lended that his House Foreign Affairs 
ubcommittee support the lease. 

Many contentious issues remained to 
e worked out before a terms-of-construc- 
lon agreement was signed in 1972. 
ftmong them was the question of how tall 
ach embassy could be. It was finally 
, greed that the Soviet chancery, located 
1 an area of Washington where building 
eights are strictly controlled, could not 
xcede 136.21 meters above sea level— 

I le maximum height allowed on Mt. Alto 
y the National Capital Planning Com- 
lission. Again, as with the decision to 
ffer Mt. Alto to the Soviets, all of these 
latters were carefully vetted with the 
elevant Washington agencies. 

'onclusion 

think the pattern which emerges from 

II of this is that the Department of 
tate has, over a period of many years, 
Dught conscientiously to deal with the 
roblem of a site for a new Soviet 
imbassy in Washington, and the related 
uestion of a new U.S. Embassy in 
loscow, in a manner which serves the 
est interests of the United States, 
lome of the decisions implemented were 
ased on technical or operational judg- 
ments beyond our competence to question; 
ome were made at the highest levels of 
ur government. But in implementing 
hem, the Department has scrupulously 
ought to involve all relevant agencies at 
ach step of the way. 

'The complete transcript of the hearings 
nW be published by the committee and will be 
vailable from the Superintendent of 
'ocuments, U.S. Government Printing 
'ffice, Washington, D.C. 20402. ■ 



Trade With Japan 



PRESIDENTS STATEMENT, 
MAR. 27, 1987' 

I am today announcing my intent to 
raise tariffs on as much as $300 million 
in Japanese exports to the United 
States. I am taking these actions in 
response to Japan's inability to enforce 
our September 1986 agreement on semi- 
conductor trade. Regrettably, Japan has 
not enforced major provisions of the 
agreement aimed at preventing dumping 
of semiconductor chips in third-country 
markets and improving U.S. producers' 
access to the Japanese market. I am 
committed to the full enforcement of our 
trade agreements designed to provide 
American industry with free and fair 
trade opportunities. 

Under the agreement, which was 
negotiated to resolve a series of unfair 
trade practice cases brought by my 
Administration and American industry, 
the Government of Japan agreed to pre- 
vent Japanese semiconductor producers 
from selling below cost in markets out- 
side Japan and to provide additional 
access in Japan for foreign producers. 
Despite monthly consultations with the 
Japanese since the agreement was 
signed and repeated assurances that all 
aspects of the agreement would be fully 
implemented, the most recent evidence 
we have demonstrates that dumping has 
continued. Moreover, American firms' 
access to the Japanese market has not 
improved from last fall's levels. 

The Government of Japan has in 
recent days announced a number of 
actions aimed at improving their com- 
pliance with the agreement. I am encour- 
aged by these steps, and that is why we 
are not terminating the agreement. 
When the evidence indicates that third- 
country dumping has stopped and U.S. 
firms are enjoying improved access to 
the Japanese market, I am prepared to 
lift these sanctions. 



PRESIDENT'S STATEMENT, 
APR. 17, 1987^ 

I am today releasing the list of Japanese 
exports to the United States upon which 
tariffs are being raised, effective today, 
in response to Japan's inability to 
enforce our September 1986 agreement 
on semiconductor trade. 

I announced my intent to take these 
actions on March 27 after it became 
apparent that Japan has not enforced 



major provisions of the agreement aimed 
at preventing dumping of semiconductor 
chips in third-country markets and 
improving U.S. producers access to the 
Japanese market. The health and vitality 
of the U.S. semiconductor industry are 
essential to America's future competi- 
tiveness. We cannot allow it to be 
jeopardized by unfair trading practices. 

In my March 27 announcement, I 
said we would impose tariffs on $300 
million in Japanese exports to the United 
States to offset losses suffered by 
American semiconductor producers as a 
result of the agreement not being fully 
implemented. The products upon which 
the tariffs are being raised were chosen 
to minimize the impact on American con- 
sumers and businesses. All these prod- 
ucts are available from domestic or other 
foreign producers. 

These actions are being taken to 
enforce the principles of free and fair 
trade. I regret that these actions were 
necessary. We will eliminate them as 
soon as we have firm and continuing 
evidence that the dumping in third- 
country markets has stopped and that 
access to the Japanese market has 
improved. 

I am encouraged by recent actions 
taken by the Government of Japan to 
improve their compliance with the U.S.- 
Japan semiconductor agreement. I 
believe the agreement is in the best 
interests of both Japan and the United 
States, and I look forward to the day 
when it is working as effectively as it 
should. 



PROCLAMATION 5631, 
APR. 17, 1987^ 

1. On April 17, 1987, I determined pursuant 
to section 301 of the Trade Act of 1974, as 
amended ("the Act") (19 U.S.C. 2411), that 
the Government of Japan has not imple- 
mented or enforced major provisions of the 
Arrangement concerning Trade in Semicon- 
ductor Products, signed on September 2, 
1986, and that this is inconsistent with the 
provisions of, or otherwise denies benefits to 
the United States under, a trade agreement; 
and is unjustifiable and unreasonable and con- 
stitutes a burden or restriction on United 
States commerce. Specifically, the Govern- 
ment of Japan has not met its commitments 
to increase market access opportunities in 
Japan for foreign-based semiconductor pro- 
ducers or to prevent "dumping" through 
monitoring of costs and exports from Japan 
of semiconductor products. I have further 
determined, pursuant to section 301(b) of the 
Act (19 U.S.C. 2411(b)), that the appropriate 



mss^ 



35 



EAST ASIA 



and feasible action in response to such failure 
is to impose increased duties on certain 
imported articles that are the products of 
Japan. 

2. Section 301(a) of the Act (19 U.S.C. 
2411(a)) authorizes the President to take all 
appropriate and feasible action within his 
power to obtain the elimination of an act, 
policy, or practice of a foreign government or 
instrumentality that (1) is inconsistent with_ 
the provisions of, or otherwise denies benefits 
to the United States under, a trade agree- 
ment; or (2) is unjustifiable, unreasonable, or 
discriminatory and burdens or restricts 
United States commerce. Section 301(b) of 
the Act authorizes the President to suspend, 
withdraw, or prevent the application of 
benefits of trade agreement concessions with 
respect to, and to impose duties or other 
import restrictions on the products of, such 
foreign government or instrumentality for 
such time as he determines appropriate. Pur- 
suant to section 301(a) of the Act, such 
actions can be taken on a nondiscriminatory 
basis or solely against the products of the 
foreign government or instrumentality 
involved. Section 301(dXl) of the Act (19 
U.S.C. 2411(d)(1)) authorizes the President to 
take action on his own motion. 

3. I have decided, pursuant to section 
301(a), (b), (dXl) of the Act, to increase U.S. 
import duties on the articles provided for in 
the Annex to this Proclamation that are the 
products of Japan. 

Now. Therefore. I, Ronald Reagan. 
President of the United States of America, 
acting under the authority vested in me by 
the Constitution and the statutes of the 
United States, including but not limited to 
sections 301(a), (b), and (dXl) and section 604 
of the Act (19 U.S.C. 2483), do proclaim that; 

1. Subpart B of part 2 of the Appendix to 
the Tariff Schedules of the United States (19 
U.S.C. 1202) is modified as set forth in the 
Annex of this Proclamation. 

2. The United States Trade Represent- 
ative is authorized to suspend, modify, or 
terminate the increased duties imposed by 
this Proclamation upon publication in the 
Federal Register of his determination that 
such action is in the interest of the United 
States. 

3. This Proclamation shall be effective 
with respect to articles entered, or withdrawn 
from warehouse for consumption, on or after 
April 17, 1987, except that it shall not apply 
with respect to articles that were admitted 
into a U.S. foreign trade zone on or before 
March 31, 1987, 

In Witness Whereof. I have hereunto 
set my hand this seventeenth day of April, in 
the year of our Lord nineteen hundred and 
eighty-seven, and of the Independence of the 
United States of America the two hundred 
and eleventh. 

Ronald Reagan 



PRESIDENT'S MEMORANDUM, 
APR. 17, 1987^ 

Memorandum for the United States 
Trade Representative 

Subject: Determination Under Section 301 
of the Trade Act of 1974 

Pursuant to section 301 of the Trade Act of 
1974, as amended (19 U.S.C. 2411), I have 
determined that the Government of Japan has 
not implemented or enforced major provisions 
of the Arrangement concerning Trade in 
Semiconductor Products ("the Arrange- 
ment"), signed on September 2, 1986, and 
that this is inconsistent with the provisions of, 
or otherwise denies benefits to the United 
States under, the Arrangement; and is un- 
justifiable and unreasonable, and constitutes a 
burden or restriction on U.S. commerce. I 
also have determined, pursuant to section 301 
of the Act, to proclaim increases in customs 
duties to a level of 100 percent ad valorem on 
certain products of Japan in response. The 
tariff increases I am proclaiming shall be 
effective with respect to the covered products 
of Japan which are entered on and after April 
17, 1987. I am taking this action to enforce 
U.S. rights under a trade agreement and to 
respond to the acts, policies and practices of 
the Government of Japan with respect to the 
Arrangement. 

Reasons for Determination 

In the Arrangement, the Government of 
Japan joined the Government of the United 
States in declaring its desire to enhance free 
trade in semiconductors on the basis of 
market principles and the competitive posi- 
tions of the semiconductor industries in the 
two countries. The Government of Japan 
committed: (1) to impress upon Japanese 
semiconductor producers and users the need 
aggressively to take advantage of increased 
market access opportunities in Japan for 
foreign-based semiconductor firms; and (2) to 
provide further support for expanded sales of 
foreign-produced semiconductors in Japan 
through establishment of a sales assistance 
organization and promotion of stable long- 
term relationships between Japanese pur- 
chasers and foreign-based semiconductor pro- 
ducers. Finally, both Governments agreed 
that the expected improvement in access to 
foreign-based semiconductor producers should 
be gradual and steady over the period of the 
Arrangement. 

Although the Government of Japan has 
taken some steps toward satisfying these 
obligations, they have been inadequate; 
foreign-based semiconductor producers still 
do not have access in that market equivalent 
to that enjoyed by Japanese firms. 

In the Arrangement, the Government of 
Japan also committed: (1) to prevent "dump- 
ing" through monitoring of costs and export 
prices of semiconductor products exported 
from Japan; and (2) to encourage Japanese 
semiconductor producers to conform to anti- 
dumping principles. Again, the Government 
of Japan has taken steps toward satisfying 
these obligations, but they have been 
inadequate. 



Consultations were held with the Govern 
ment of Japan on numerous occasions 
between September 1986 and April 1987 in 
order to enforce U.S. rights under the 
Arrangement and to ensure that the Govern- 
ment of Japan undertake concerted efforts ti 
fulfill its obligations under the Arrangement 
To date these obligations have not been met. 

On March 27, 1987, I announced my 
intention to raise customs duties to a level oi 
100 percent ad valorem on as much as $300 
million in Japanese exports to the United 
States in response to the lack of implementai 
tion or enforcement by the Government of 
Japan of major provisions of the Arrange- 
ment. I also announced that the products 
against which retaliatory action would be 
taken would be selected after a comment 
period ending April 14, 1987. Finally, I 
announced that sanctions would remain in 
effect until there is firm and continuing 
evidence that indicates that the Government 
of Japan is fully implementing and enforcing 
the Arrangement. 

This determination shall be published in 
the Federal Register. 

Ronald Reaga 



WHITE HOUSE FACT SHEET, 
APR. 17, 1987 



Background 

On September 2, 1986, the United Stat* 
and Japan signed an agreement on trad 
in semiconductors designed to promote 
free trade in semiconductors on the has 
of market principles. In that agreemeni 
the Japanese Government committed tc* 
prevent sales below cost of Japanese- 
produced semiconductors in third- 
country markets and to enhance sales 
opportunities in the Japanese market fo 
foreign-based producers. Furthermore, 
the Japanese Government agreed to prr 
vent dumping in the United States. 

The part of the agreement concern- 
ing dumping in the United States 
appears to be working satisfactorily, bu 
the provisions concerning third-country 
dumping and access to Japan's market 
are not being properly implemented. 

U.S. officials met with their 
Japanese counterparts in October, 
November, and December to address 
major problems under the agreement. li 
addition, on January 28, 1987, emer- 
gency consultations were held in Japan 
to address evidence of Japanese non- 
compliance with the agreement's third- 
country dumping and market-access 
provisions. 

At the January 28 consultations, 
U.S. officials notified the Government o 
Japan that the United States would tak' 
appropriate steps to enforce the agree- 



36 



npnprtmPnt nf State BulM, 



EAST ASIA 



lent if third-country dumping did not 
nd within 30 days and if foreign semi- 
jnductor sales in Japan did not increase 
ithin 60 days. 

A comprehensive Commerce Depart- 
lent analysis of Japanese pricing activ- 
y in third-country markets conclusively 
emonstrates that significant dumping 
as still occurring as of the February 28 
^ eadline. At that time, Japanese- 
reduced DRAMS (an advanced type of 
jmiconductor) were being sold on 
verage at 59.4% of the fair value, while 
PROMS (another advanced semicon- 
iict.ir) were being sold at 63.6% of the 
lii- value. If dumping of this magnitude 
ere to continue, U.S. semiconductor 
jmpanies would have little or no chance 
) compete in overseas markets. 

The deadline to improve access in 
ipan for foreign semiconductors was 
[arch 28. The U.S. Government has 
-lalyzed the relevant data and deter- 
lined that market access has not 
nproved since the agreement was 



he President's Action 

he President has decided to impose 
inctions on certain Japanese exports to 
le United States. These sanctions will 
jmain in place until the semiconductor 
^eement is properly implemented. A 
otice was placed in the Federal Register 
(onday, March 30 listing possible prod- 
:ts on which sanctions could be 
aposed. After a public comment period 
f 14 days, and 2 days of public hearings 
1 April 13 and 14, the Administration 
elected from the list products against 
hich retaliatory action is being taken, 
ffective today, 100% ad valorem tariffs 
ill be imposed on Japanese products 
)taling approximately $300 million, off- 
Jtting the lost sales opportunities by 
.S. industry. 

These sanctions vnll not deprive 
.merican consumers of the products 
gainst which retaliatory action will be 
iken. All products on the list can be 
ipplied by domestic or other foreign 
roducers. The higher tariffs, which will 
e placed only on Japanese imports of 
lese products, will be removed when it 
as been determined that the agreement 
being fully implemented. 



Visit of Japanese 
Prime IVIinister Nakasone 



'Text from Weekly Compilation of 
residential Documents of Apr. 6, 1987. 

^Text from Weekly Compilation of 
residential Documents of Apr 20. ■ 




Prime Minister Yasuhiro Nakasone 
of Japan made an official visit to 
Washington, D.C., April 29-May 2, 1987, 
to meet with President Reagan and other 
government officials. 

Following are remarks made by the 
President and the Prime Minister at the 
arrival and departure ceremonies. 
Secretary Shultz 's luncheon remarks, 
and the text of the joint statement issued 
at the conclusion of the visits 



ARRIVAL CEREMONY, 
APR. 30. 1987^ 



President Reagan 

It's a pleasure today to welcome again 
Prime Minister Nakasone, the elected 
leader of a valued ally, which is also one 
of the world's great democracies. 
The good wall and cooperation 
between Japan and the United States 
has been a tremendous boon to both our 
peoples. Such relationships as our coun- 
tries enjoy and benefit from are a 
historical rarity. Great care has been 
taken over four decades by political 
leaders on both side of the Pacific to 



mold and create this gem of friendship 
which is of such immense value. 

This hasn't been easy; it has taken 
effort on both sides. Ours, after all, is a 
dynamic and changing friendship, filled 
with all the energy and spirit which one 
would expect between two robust 
peoples. Today our governments must 
meet the great responsibility of over- 
seeing a continued, positive evolution 
between the United States and Japan. I 
have confidence in your judgment, and 
by working together, any problem we 
face can be solved. 

Even the closest of friends have dif- 
ferences. Ours is the challenge of keep- 
ing trade and commerce— the lifeblood of 
prosperity— flowing equitably between 
our peoples. To do that, we must address 
the current unsustainable trade balance. 
It has spawned calls for protectionism 
that would undo the shining economic 
accomplishments we've achieved 
together. If history tells us anything, it 
is that great advances in the human con- 
dition occur during times of increasing 
trade. Conversely, it is also clear that 
interruptions in international commerce 
result in stagnation and decline. 



uhr 



37 



EAST ASIA 



We recognize the domestic political 
pressures that play a part in the deci- 
sionmaking processes of our respective 
countries, but we also know that it is the 
long-term well-being of our societies that 
must govern. Today the trading system 
is in need of adjustment, yet the answer 
is not in restrictions but in increased 
opportunities. So together, let us seek 
positive solutions. 

As we've learned, progress will not 
happen on its own; tangible actions must 
be taken by us both. I have heard 
outlines of new measures that you are 
considering, and I'm most encouraged by 
what appears to be a commitment to 
policies of domestic growth and the 
expansion of consumer demand in 
Japan— something we strongly believe 
will have a positive effect on the trade 
balance. I look forward to exploring 
these new approaches with you in our 
meetings today. 

Americans firmly believe that the 
free flow of goods and services, accen- 
tuated with head-on and above-board 
competition, benefits everyone. We 
would like to see Japan, for example, 
open its markets more fully to trade and 
commerce. Many of our companies in 
manufacturing, agriculture, construc- 
tion, and the financial and high 
technology industries want to fully par- 
ticipate in the Japanese market. This, 
too, would also provide the benefits of 
lower prices in Japan. 

There's an unseen bridge that spans 
the vast Pacific, a bridge built by the 
hard work, commercial genius, and pro- 
ductive powers of our two peoples. We 
must strive to see that it is maintained 
in good order and is traveled with equal 
intensity in both directions, carrying the 
goods and services that improve lives 
and increase happiness. 

The bridge to which I refer rests on 
the firm bedrock of democracy. Today 
free government and free economics 
complement one another and are the 
basis of our Pacific partnership. Today 
Japan and the United States, with two 
of the world's most powerful economies, 
share heavy global responsibilities. Your 
country's skillful leadership at last year's 
Tokyo summit demonstrated the role 
Japan now plays. As we prepare for the 
upcoming summit in Venice, our two 
governments will continue working 
closely together, fully appreciating that 
our cooperation has much to do with 
prosperity enjoyed throughout the 
world. The summit is an opportunity to 
look to the future, to ensure the peace 
and prosperity of the last 40 years are 
maintained and strengthened as we 
approach the new century. 



Similarly, our mutual dedication to 
the cause of peace and security has had 
vast implications, especially on the 
Pacific rim, where the upward thrust of 
human progress is so apparent. We're 
well into the third decade of the 1960 
U.S. -Japan mutual security treaty, and 
we look forward to continuing and 
expanding upon our security 
cooperation. 

I am pleased to have this opportu- 
nity to speak directly with Prime 
Minister Nakasone on the bilateral and 
international issues. It was 120 years 
ago since Commodore Perry first arrived 
on the shores of Japan. Commodore 
Perry sent a message, explaining his 
purpose to be "a mutual interchange of 
those acts of kindness and good will 
which will serve to cement the friendship 
happily commenced and to endure, I 
trust, for many years." 

In coming to our shores, we welcome 
you in that spirit. Let us, too, cement 
the friendship happily commenced so 
that it will endure for many years. 

Prime Minister Nakasone 

Thank you very much for your warm 
words of welcome. It gives me great 
pleasure to make an official visit to the 
United States at your invitation and to 
have this opportunity, together with my 
family, to meet again with you and Mrs. 
Reagan. 

Since I assumed the Office of the 
Prime Minister of Japan, I have con- 
sistently made my utmost efforts to 
strengthen further the friendly and 
cooperative relations between our two 
countries. Today the relations are 
basically strong and sound. In addition 
to our bilateral cooperation in many 
areas, the two countries are working 
closely together to solve the political and 
economic problems facing the world. 

The United States is continuing a 
genuine effort to build upon the poten- 
tial agreements reached in Reykjavik on 
arms control, to lay a solid foundation 
for world peace. For the success of such 
efforts, it is now more important than 
ever to strengthen solidarity among the 
Western nations. 

Looking toward the upcoming 
summit meeting in Venice, I strongly 
hope that my visit will prove to be con- 
structive from this global perspective, as 
well. If our two countries are to fully 
discharge our global responsibilities, it is 
essential that our bilateral relations 
develop on an unshakable foundation. 

I am deeply concerned that serious 
frictions on the trade and economic 
issues are on the rise between our two 
countries. We should not allow such a 



situation to undermine the friendship 
and mutual trust between our two coun- 
tries. Throughout my visit, I intend to 
state clearly the policy measures Japan 
has taken so far and will take in the 
future for overcoming these problems. 
At the same time, I will listen carefully 
to the views of the Administration, the 
Congress, and the people of the United 
States. 

I have journeyed across the Pacific 
Ocean knowing that at times one must 
sail on high waves. But I hope that my 
visit, with everyone's assistance, will 
offer maximum beneficial results for ou) 
two countries. 

In your Inaugural Address in 1981, 
you said, "We have every right to drear 
historic dreams." With energetic leader 
ship, the American people have built thi 
great nation constantly moving forward 
and aspiring to seek out new frontiers. 
This pursuit of heroic dreams forms the 
driving spirit of your nation. We, the 
Japanese people, have built our present 
nation desiring to occupy an honored 
place in the international society and 
determined to contribute to world peace 
and prosperity. I am determined to exei 
all my efforts, too, so that our two 
peoples can dream heroic dreams 
together, looking towards a bright 
future for all mankind. 



SECRETARY'S LUNCHEON 

REMARKS, 
APR. 30, 1987' 

Mr. Prime Minister, Mrs. Nakasone, an- 
distinguished guests. Your visit to the 
United States and the talks you've had 
with President Reagan once again give 
expression to the warm friendship and 
constructive ties that join our two coun- 
tries. You have helped remind all 
Americans of the importance of our 
bilateral relationship and our impressive 
far-reaching cooperation. This reminder! 
could not be more timely. 

Over 130 years have now passed 
since the first American Consul, 
Townsend Harris, arrived at Shimoda in 
1854. At that time, the United States 
and Japan had almost nothing in com- 
mon. Today we enjoy a close partnershil 
founded on the fundamental congruence 
of our political, security, and economic 
interests. 

Where Consul Harris was a lonely 
representative of the United States on 
Japanese shores, today there are almost 
120,000 Americans-including 55,000 
U.S. servicemen— living and working in 
Japan. In working together toward our 
common objectives, our governments 
have continued to expand the frequency 



38 



Donartmont nf CJtato Riilletl 



EAST ASIA 



and scope of our bilateral consultations. 
•Ever-increasing nongovernmental con- 
jtacts in business, research, the arts, the 
jmedia, and sports have broadened and 
.deepened bonds between our two 
peoples. 

Through this lively and wide-ranging 
■Japanese- American dialogue, our two 
countries have been able to resolve to 
mutual satisfaction the continuing tlow 
3f problems that inevitably arise in our 
sxtensive and complex bilateral rela- 
tions. Today we face new and substantial 
challenges in the economic sphere- 
challenges that stem from the sheer 
scale and growing complexity of our 
;rading relationship and our increasing 
competition at the leading edge of 
;echnology. It is important that we con- 
■ sider our trade and competition within 
:he context of our entire economic rela- 
;ionship. We must recognize not simply 
;he vast scope of our trading ties but 
ilso their dynamic nature and the degree 
;o which the great flow of goods and 
j nvestment between us benefits both 
lountries. 

Japan is our second largest trading 
)artner after Canada, and we are 
(apan's largest export market. Our two- 
vay trade in 1986 amounted to $112 
)illion, a figure greater than the gross 
lational product of all but a few nations. 

The United States is Japan's largest 
['■"oreign investor and Japan is our third 
argest investor. Japanese companies 
low have over $25 billion in direct 
nvestment in the United States. We 
)elieve that a free flow of investment is 
n everyone's interest. Japanese inves- 
,ors in the United States contribute to 
)ur country's employment and competi- 
-iveness. Well over 200,000 Americans 
vork for Japanese firms in the United 
States. 

Like our broader security and 
oolitical ties, our economic relationship 
strengthens both countries. However, as 
i^ou yourself have recognized, our persist- 
ant trade imbalances have reached levels 
:hat cannot be sustained. Since your 
innouncement of Japan's action pro- 
gram in 1985, Japan has taken a number 
3f welcome steps to open its market. In 
recent months we have seen removal of 
ifarious barriers to foreign fish products, 
tobacco, legal services, forest products, 
medical and pharmaceutical goods, 
telecommunications equipment, and 
banking services. Our joint efforts in 
improving market access must continue, 
but we recognize that improved market 
access in itself will not resolve the U.S. 
trade deficit. 

Our global deficit is the result of 
macroeconomic factors. It does not flow 



mainly from an alleged lack of an 
American competitiveness; rather it is, 
in part, a reflection of our attractiveness 
to foreign investment resulting in a 
massive net inflow of foreign capital that 
provides needed savings otherwise con- 
sumed by our fiscal deficit— in other 
words, we have got to do something 
about our fiscal deficit— and in part a 
reflection of a formerly way-over-valued 
dollar. 

The appreciation of the yen during 
the past year-and-a-half reflects the 
underlying strength of the Japanese 
economy and the realities of Japan's new 
role in the world economy. This shift in 
exchange rates has already begun to 
affect the marketplace. As a result of 
exchange rate realignments, the process 
of correction in our trade is now under- 
way. As we look to the future, we will 
see our trade deficit shrinking as the 
surpluses of Japan and other countries 
are reduced. 

Make no mistake about it; this 
adjustment will take place. In fact, it is 
inevitable that the United States will, 
before long, run a trade surplus. The 
inevitability of it comes from the fact 
that we are now a very large debtor 
nation with the debts growing, and the 
only way in the end we are going to 
service those debts is by running a trade 
surplus. So that will happen. The only 
question is by what process it takes 
place. 

Our challenge is to assure that the 
rebalancing of world trade and world 
demand occurs without impairing global 
economic growth or intensifying infla- 
tionary pressures. This requires that we 
address the domestic imbalances which 
underlie today's trade difficulties. For 
our part. President Reagan remains 
committed to reducing the U.S. budget 
deficit, and he will energetically fight the 
forces of protectionism. 

Your special advisory council, the 
Maekawa Commission, last year issued a 
report which recommended the trans- 
formation and opening of Japan's 
economy to promote greater emphasis 
on domestic-led growth and the importa- 
tion of foreign goods. The report also 
recommended increased growth in 
domestic demand in three sectors- 
private consumption, housing invest- 
ment, and public works. 

Last week the Maekawa Commission 
reaffirmed the importance of its original 
recommendations. The commission 
stressed the need for their prompt and 
full implementation if Japan is to play a 
role in supporting a more stable and 
open international economy. These 
measures are commensurate with the 
interests of the Japanese people and the 



great benefits they have gained from an 
open world trading system in the 
postwar era. 

We welcome and applaud these 
recommendations. Can we expect to see 
them put into effect? We do understand 
that correcting these economic imbal- 
ances means hard political decision. It is 
a test for statesmanship on the part of 
both our governments. But we are not 
alone in this regard; all members of the 
international trading system bear a 
responsibility to strengthen the global 
economy through economic policies that 
expand rather than limit the open inter- 
national trading system which has served 
us both so well these past four decades. 

Our two governments are already 
cooperating effectively in helping to 
ensure peace and stability in East Asia 
by deterring aggression. We are work- 
ing together to assist strategically vital 
nations such as the Philippines that are 
seeking to rebuild democracy. 

The new Uruguay Round of multilat- 
eral trade negotiations offers yet 
another important opportunity for us to 
work closely together, this time in seek- 
ing to advance the interests of both our 
countries by extending liberalized rules 
of trade to such key areas as services 
and agriculture. Japan and the United 
States, together with our major trading 
partners, must push hard to achieve 
early and substantial success in the 
Uruguay Round so that the rules of the 
global trading system recognize the com- 
mercial realities of the 21st century. 

In sum, we have accomplished much 
together, but there remains a con- 
siderable task before us. We must strive 
to build a more balanced trading rela- 
tionship while avoiding protectionism. 
To do so requires imagination, hard 
work, and no small amount of courage in 
facing up to tough decisions. These 
qualities are not lacking in either of our 
countries, and they will be needed if we 
are to resolve our differences in a spirit 
of friendship and cooperation. 

You have shown great vision in your 
efforts to develop for Japan an inter- 
national role commensurate with its 
economic dynamism. We applaud your 
leadership and look forward to continu- 
ing to work closely and productively 
with Japan in our joint efforts to pro- 
mote peace, democracy, and prosperity 
throughout the world. There is much we 
can accomplish if we work together. 

In this spirit, I now ask all of you to 
join me in a toast to the health of Prime 
Minister and Mrs. Nakasone and to 
Japanese- American friendship and 
cooperation. 



July 1987 



39 



EAST ASIA 



DEPARTURE CEREMONY, 

MAY 1, 1987^ 

President Reagan 

I have been pleased to welcome Prime 
Minister Nakasone to Washington. He is 
a friend, a wise colleague, and the leader 
of America's most important partner 
and ally in the Pacific. Prime Minister 
Nakasone and I have worked together 
now for more than 4 years, and I've 
greatly valued his advice and 
cooperation. 

Our talks covered a wide range of 
issues. We reaffirmed our shared com- 
mitment to peace and democracy 
throughout East Asia and the Pacific. 
And Prime Minister Nakasone was 
briefed on the current status of arms 
talks with the Soviet Union, and we 
agreed on the vital importance of 
Western solidarity in this endeavor. 

He and I also discussed in detail the 
upcoming Venice summit. We agreed 
that agriculture will be an important 
topic, along with macroeconomic matters 
and debt. Many governments, including 
our own, have constructed impediments 
to agricultural trade and have market- 
distorting subsidies in place. We've 
agreed these costly and harmful policies 
should be removed. I emphasized this to 
Prime Minister Nakasone and told him 
that early improvements in access for 
U.S. agricultural products to Japan's 
markets are vital, economically and 
politically. The Prime Minister and I 
affirmed that all of the policies of our 
respective nations affecting trade and 
agriculture are subject for discussion in 
the new round of trade negotiations 
along with the agricultural policies of 
other countries. 

Trade between our two countries 
was, as expected, an area of heavy 
discussion. Both Japan and the United 
States recognize that the current trade 
imbalance is politically unsustainable and 
required urgent attention. The Prime 
Minister described to me measures his 
government intends to take, and I am 
supportive of those positive actions and 
optimistic that we will soon see the 
situation begin to improve. In this 
regard, we reaffirmed our commitment 
to cooperate closely on economic policy 
as described in our joint statement. 

Of course, the United States, too, 
must do its part, and I made clear that 
we are committed to cutting the budget 
deficit and are strengthening the com- 
petitiveness of U.S. industry. Consistent 
with the approach Prime Minister 
Nakasone and I have agreed to, protec- 
tionism will be strenuously opposed on 
both sides of the Pacific. 



The Prime Minister and I also 
discussed our two countries' shared com- 
mitment to assist the world's debtor 
nations. I welcome the Japanese Govern- 
ment's plans to make available to 
developing countries on an untied basis 
more than $20 billion in new funds over 
the next 3 years. 

On the semiconductor issue, we have 
agreed to review the data in mid-May. 
It's my hope that, with the Venice sum- 
mit coming up, our ongoing review of 
the semiconductor agreement will 
demonstrate a persuasive pattern of 
compliance, thereby allowing removal of 
the sanctions as soon as possible. 

America's relationship with Japan is 
both close and broadly based. We share a 
host of common interests in the world. 
Prime Minister Nakasone and I agreed 
that the leaders of our two great coun- 
tries should hold regular annua! 
meetings. The widespread economic and 
social contacts between our peoples will, 
of course, continue, and we will remain 
each other's close friends and trading 
partners. Of that there is no doubt. 

I look forward to seeing Prime 
Minister Nakasone again in a few weeks 
in Venice and now wish him and his wife 
Godspeed on their journey home. 

Prime Minister Nakasone 

I would like to thank you, Mr. President, 
for your warm hospitality, and I'm very 
pleased that we have had 2 days of very 
fruitful meetings. 

The President and I placed most of 
our emphasis on the future of the world 
economy, recognizing that our respective 
huge current account imbalances could 
bring about serious consequences for the 
health of the world economy. It is 
necessary to rectify this situation funda- 
mentally and as soon as possible. We 
affirmed our shared political determina- 
tion that our two countries will take 
vigorous and consistent policy measures. 
In this connection, we are determined to 
cooperate closely on microeconomic 
policy and exchange rates, as described 
in our joint statement. 

I emphasized to the President that 
between our two countries, problems 
should be solved by cooperation and joint 
endeavors and that the measures of the 
United States concerning semiconduc- 
tors should be withdrawn promptly. 

The President and I noted with satis- 
faction the progress seen on other 
specific issues. The two governments 
will continue to work to resolve remain- 
ing issues. I explained to the President 
that our government is taking the lead in 
the effort to expand the import through 



extraordinary and special budget 
measures of substantial magnitude. I 
also told him that our government 
intends to complete our 7-year target foi 
doubling our official development 
assistance 2 years in advance; to recycle 
more than $20 billion, new funds, in 
totally untied form over 3 years, mainly 
to the developing countries suffering 
from debt problems, totaling more than 
$30 billion if added from the previous 
pledge; and to extend positive assistanct 
to sub-Saharan and the other less 
developing countries. The President 
expressed his high appreciation for our 
decision. 

The President and I agreed to 
actively promote the GATT [General 
Agreement on Tariffs and Trade] 
Uruguay Round. We noted that all of 
our nations' policies affecting trade in 
agriculture are a subject for discussion 
in the Uruguay Round, along with the 
agriculture policies of other nations. Thi 
President explained that he's endeavor- 
ing to reduce the budget deficit and to 
promote measures to improve competi- 
tiveness. I stated my strong wish for th' 
success of these policy measures. More- 
over, I was encouraged by the Presi- 
dent's statement of his determination t{ 
stand firm against protectionism. 

We noted with satisfaction that the 
security relations between our two cour 
tries are excellent and agreed that Japs 
and the United States will continue our 
efforts for further strengthening the 
credibility of the Japan-U.S. security 
arrangements. I reiterated my firm 
belief that the global and total elimina- 
tion of long-range INF [intermediate- 
range nuclear forces] is the best solution 
for the security of the West and that thi 
remain the ultimate goal. 

Should an interim agreement be 
arrived at, the President concurred witt 
my statement: Japan, in close com- 
munication with the United States, willi 
expand its effort for the political and 
economic stability of the regions of the 
Middle East, Africa, the South Pacific, 
and Latin America as well as Asia. In 
particular, we reaffirmed our further 
support for the Philippines. 

We also agreed, given the present 
severe international economic situation, 
on the need for stronger political leaden 
ship in promoting policy coordination 
among the nations at the upcoming 
Venice summit. 

We should also further consolidate 
the solidarity of the West in political 
fields in light of the present state of 
East- West relations and of arms contro 
negotiations. Taking into account the 
results of our meetings, including our 



40 



Department of State Bullet 



EAST ASIA 



Tiutual agreement to hold regular, 
innual Japan-U.S. summit meetings, I 
•enew my determination to do my ut- 
nost to further consolidate U.S. -Japan 
•elations for the peace and prosperity of 
;he world. 

(OINT STATEMENT, 
itfAY 1. 1987 

i^resident Reagan and Prime Minister 
»}akasone reaffirmed their commitment 
nade at the 1986 Tokyo summit to 
trengthen international economic policy 
oordination. They welcomed the prog- 
ess that has been made toward this end, 
ncluding the commitments and actions 
•mbodied in the Louvre accord and in 
he recent statement of the G-7 in 
Vashington. They agreed that reducing 
he large trade imbalances of the United 
States and Japan— which they view as 
lolitically unsustainable— is a key objec- 
ive of their policy efforts. 

In this regard, the President empha- 
ized his determination to reduce the 
J.S. budget deficit. He also pledged to 
lursue vigorously policies designed to 
•nprove the competitiveness of 
' American industry and to resist firmly 
rotectionist pressures. Prime Minister 
lakasone outlined his plan to take 
igorous action to stimulate domestic 
Towth in Japan. This action includes the 
tep just taken by the Bank of Japan to 
egin operations to lower short-term 
iterest rates. The Ministry of Finance 
upports this action. Other short- and 
ledium-term policy actions to stimulate 



growrth will include: support for the 
governing Liberal Democratic Party's 
proposals for near-term enactment of a 
comprehensive economic package, 
including unprecedented front-loading of 
public works expenditures and fiscal 
stimulus measures amounting to more 
than 5 trillion yen; further measures to 
liberalize Japanese financial markets; 
and redoubled efforts to implement the 
recommendations for structural reform 
in the Maekawa report. 

The President and Prime Minister 
agreed that outstanding trade issues 
between the two countries need to be 
resolved expeditiously. In this connec- 
tion, they referred to the specific discus- 
sion of trade policy matters in their 
respective departure statements. 

The President and Prime Minister 
agreed that a further decline of the 
dollar could be counterproductive to 
their mutual efforts for stronger growth 
in their economies and for reduced 
imbalances. In that connection, they 
reaffirmed the commitment of their 
governments to continue to cooperate 
closely to foster stability of exchange 
rates. 



iTexts of the President's and Prime 
Minister's remarks and the joint statement 
from the Weekly Compilation of Presidential 
Documents of May 4, 1987. 

2Held at the South Portico of the White 
House where Prime Minister Nakasone was 
accorded a formal welcome with full military 
honors. 

^Held at the Department of State (press 
release 96 of May 1). 

■•Held in the Rose Garden at the White 
House. ■ 



J.S. Policy Priorities 
or Relations With China 



■y Gaston J. Sigur, Jr. 

Address before the National Issues 
\jrum on the Outlook for U.S. -China 
"rii:h' and Economic Relations at the 
Ir 1 1,, kings Institution on April 22, 1987. 
Ir. Sigur is Assistant Secretary for 
^a.st Asian and Pacific Affairs. 

t is a pleasure to appear this afternoon 
)efore the forum on "The Growing Role 
>f China in U.S. Economic Relations," 
sponsored by the Brookings Institution, 
'^s usual, Brookings has drawn together 
iistinguished representatives from 
icademic, business, government, and 
iiplomatic circles— people who are 
<nowledgeable and experienced and 



whose views on China are worthy of 
attention. Such gatherings can con- 
tribute to our appreciation of the com- 
plex realities of current relations 
between China and the United States. 

There is an ancient Chinese maxim 
which speaks to the nature of human 
interaction and, by extension, to interna- 
tional relations as well. It states: "For 
those who respect the dignity of man, 
and practice what . . . courtesy requires— 
all within the four seas are brothers." 

This maxim expresses an ideal which 
few humans and fewer nations have ever 
achieved. Certainly, I am not so dis- 
ingenuous as to suggest that it repre- 
sents an accurate description of the cur- 
rent state of relations between China 



and the United States. Nevertheless, the 
words are suggestive of the trend that 
has marked the course of our relations 
over the past 15 years as we have 
replaced hostility with friendship and 
rediscovered the wisdom of dealing with 
each other in terms of mutual respect, 
dignity, and courtesy— as behooves two 
great Pacific nations with a long history 
of positive interaction. 

Historical Perspective 

Only two decades ago, the United States 
of America and the People's Republic of 
China (P.R.C.) were separated by seem- 
ingly insurmountable differences. China 
was embroiled in the chaos of the 
Cultural Revolution and had isolated 
itself from the rest of the world. We 
were deeply involved in Vietnam as an 
outgrowth of our concerns about com- 
munist designs on Southeast Asia. The 
deep-seated mutual antagonisms bred by 
the Korean war, and the vast differences 
in our political and social systems, 
cultural and historical backgrounds, and 
foreign policy objectives, made future 
confrontation seem more likely than 
cooperation. 

Beginning in the early 1970s, 
however, courageous leaders on both 
sides began the process of transforming 
enmity into friendship. This year we are 
celebrating the 15th anniversary of the 
Shanghai communique, a declaration 
which had a profound impact on our 
bilateral relations, on the region as a 
whole, and, indeed, on the global 
strategic balance. This document, 
together with the 1979 Joint Communi- 
que on the Establishment of Diplomatic 
Relations between the United States of 
America and the People's Republic of 
China and the August 17, 1982, joint 
communique on arms sales to Taiwan, 
established the foundation for the stable 
and durable relations which we enjoy 
today and on which we hope to build in 
the future. In short, as the ancient 
Chinese sage anticipated, through 
mutual respect and courtesy, we have 
shown that countries whose histories, 
cultures, and political/economic systems 
are markedly different can work 
together in the spirit of cooperation. 

Current Status of Relations 

Our current relations with the Chinese 
can be characterized by the word 
"maturity." Since the establishment of 
diplomatic relations 8 years ago, we 
have become accustomed to dealing with 
each other in normal ways. Through 
regular exchanges of visits between 



July 1987 



41 



EAST ASIA 



high-level leaders, regional and local 
officials, academics, business people, 
scientists, cultural representatives, 
students, and ordinary citizens, we have 
learned to communicate more effectively 
with each in a broad range of areas. We 
have developed a limited military rela- 
tionship consistent with the friendly 
nonallied status of our relationship. And 
we have reached agreements in such 
areas as science and technology, nuclear 
cooperation, taxes, trade, culture, and 
education. 

Politically, the United States and 
China have found we have common 
interests on a range of regional matters 
in Asia. We agree, for example, that the 
conflicts in Cambodia and Afghanistan 
must be resolved through the withdrawal 
of foreign forces. The People's Repubhc 
also shares our desire to enhance stabil- 
ity on the Korean Peninsula and to 
reduce tensions between the North and 
the South. 

Differences in our policies do exist, 
of course. We have established a 
framework— in the form of the three 
communiques— for dealing with the prob- 
lem of Taiwan, but we still differ at 
times over how these principles are 
applied. We do not always see eye to eye 
on matters such as population control, 
human rights, and some trade issues. We 
can anticipate that such differences will 
continue to arise during the course of 
our relations. Nevertheless, it is 
indicative of the maturity of our present 
ties that we can now discuss such dif- 
ferences in a nonpolemical atmosphere, 
without permitting them to hinder the 
search for ways to improve our overall 
relationship. 

Thus, if I were to summarize the 
decade and a half of our present associa- 
tion, I would say that we have made an 
excellent start. But the time has now 
come for us to move beyond this initial 
phase in a growing relationship— a phase 
marked by the excitement of getting 
used to one another again after a pro- 
longed separation, the renewal of con- 
tacts between our governments and 
peoples, and the creation of the 
infrastructure necessary for us to con- 
duct a normal relationship. 

Where Do We Go From Here? 

As we enter this new, more mature 
phase in our relations, we will be con- 
fronted with issues no less concrete and 
complex than those we faced in the past. 
This phase will present enormous new 
opportunities, but it will also test the 
strength of the bonds which we have 



created and place new demands on our 
ability to speak and deal frankly and 
honestly with one another. This phase 
poses new questions about our future 
relationship. 

• What are our policy priorities for 
China in the next phase of our relations? 

• What are the critical elements of 
our relationship, and how would we like 
these to develop in the coming years? 

• Where do we go from here? 



Basic Priorities 

In the broadest sense, our chief priority 
is to continue building a friendly and 
cooperative relationship with China that 
will be a stabilizing factor in East Asia 
and the world. In his speech in Shanghai 
last month. Secretary Shultz recalled 
that our two governments had agreed in 
the Shanghai communique that "nor- 
malization of the relations between the 
two countries is not only in the interest 
of the Chinese and American peoples but 
also contributes to the relaxation of ten- 
sion in Asia and the world." We both 
have a major responsibility to ensure 
that this remains as true in the future as 
it has been in the past. 

Fortunately, we now have a strong 
base to build on. A broad consensus on 
China policy continues to exist in the 
United States— a consensus which had 
its roots in President Nixon's initial 
overtures to China, which has been given 
fresh impetus under President Reagan, 
and which enjoys broad congressional 
and public support. This consensus rests 
on certain central beliefs: 

• That our long-range foreign policy 
goals in East Asia require us to meet the 
Soviet strategic and geopolitical 
challenge in the area; 

• That to do so we must preserve a 
communality of interests with major 
Asian states such as China, with our 
allies, and with other key East Asian 
nations; 

• That our interests must be pur- 
sued within the context of a one China 
policy; and 

• That Taiwan's future should be 
determined by the Chinese on both sides 
of the strait; our sole interest is that the 
issue be resolved peacefully. 

A second key element in this consen- 
sus is the conviction that U.S. interests 
are served by the P.R.C.'s continued 
commitment to economic modernization, 
internal reform, and expanded relations 
with foreign countries— the so-called 
open door policy. Since China emerged 
from the chaos of the Cultural Revolu- 
tion, the nation's preoccupation has been 



to make up for lost time through speedy 
modernization. Under Deng Xiaoping' s 
leadership, the Chinese have undertaken 
major initiatives on many fronts: raising 
agricultural production; improving living 
standards; economically developing the 
less advanced interior regions; reform- 
ing industry; expanding foreign trade 
and investment; and playing a more 
active role in the global economy. 

These bold domestic policies have 
not been without difficulties. Ironically, 
these have centered on problems of too 
rapid development rather than too slow 
growth. Nevertheless, despite these 
problems, China's efforts have been 
remarkably successful. We welcome this 
since we believe cooperation on modern- 
ization can bring benefits for both of us. 
We have, therefore, noted with pleasure 
statements by Deng Xiaoping, Zhao 
Ziyang, and other Chinese leaders that 
recent internal developments in China 
will not alter the government's commit- 
ment to reform policies and keeping 
open the door to the outside world. 

Why should the United States be 
interested in China's modernization? Th| 
answer is simple. The flow of goods, pe« 
pie, and ideas not only contributes to 
China's modernization but also yields 
opportunities for American business. Itt 
enriches the cultural life of both nation^ 
and builds American and Chinese const! 
uencies supportive of the overall rela- 
tionship. We believe that a friendly, 
modernizing China will have a greater 
stake in regional stability, will be less 
vulnerable to outside pressures, and can 
better integrate itself into the world 
economy. As Secretary Shultz noted 
when he spoke before a group of 
students at the Dalian Management 
Training Center last month: 

For China, for the United States, and fo 
other nations as well, [the coming] new ... a; 
will require, above all else, that we continue 
to open our doors to one another. When sue! . 
doors are open— when people, goods, and 
ideas can flow freely between us— both ! 

Chinese and Americans can learn from each 
other. Through such openness, societies are 
better able to stimulate and to take advan- 
tage of the inherent dynamism and creativit; 
of their peoples. 

In sum, it is in our own self-interest 
to cooperate with China in its moderniz 
tion efforts. 

Specific Objectives 

Now let me turn to the critical elements 
in our relationship and how we would lil 
these to develop. Since the topic of this 
forum is economic, let me begin in that 
area. 



Department of State Bullet 



ECONOMICS 



China and the United States have 
ilready forged impressive economic ties. 
American companies have invested more 
,han $1.5 billion in China, and total 
\merican investment stands third, behind 
)nly Japan and Hong Kong. We are, in 
norn, one of China's most important 
narkets, absorbing more than 10% of all 
Chinese exports. Our two-way trade, which 
vas about $1 billion 7 years ago, has sur- 
)assed $8 billion for the past 2 years. 

There is still more to be done if we 
ire to tap the full potential of trade 
)etween our nations. Looking ahead, we 
:an single out several areas for special 
attention: 

• Support China's modernization 
irive by further liberalizing our export 
iontrols; 

• Encourage further integration 
)f China's economy into the world 
narket through bringing China into 
he GATT [General Agreement on 
tariffs and Trade]; 

• Expand opportunities for U.S. 
rade and investment in China (we hope, 
n this connection, that China will also 
eek further to improve conditions for 
oreign investors); 

• Encourage China to diversify its 
■xports to the United States and to 
lesist from protectionist measures (such 
ts higher tariffs, expanded import licens- 
ng, and limited availability of foreign 
ixchange) which might provoke a reac- 
ion in Congress; and 

• Continue efforts to reach under- 
tandings on textiles, maritime relations, 
he bilateral investment climate, and 
lirline traffic rights. 

Political Objectives 

Similarly, in our political association, we 
lope to build upon the foundation which 
ve have put in place. We are seeking to: 

• Continue regular exchanges of 
dews at authoritative levels, such as 
)ccurred during the recent trips by 
Secretaries Weinberger, Shultz, and 
Saldrige to China and during Vice 
Premier Yao Yilin's visit to the United 
States last year— we expect a high-level 
Chinese official to visit soon; 

• Develop our bilateral military rela- 
:ionship with the P.R.C. in ways that 
;ontribute to common security concerns; 

• Seek practical cooperation on 
A.sian matters, such as Cambodia and 
Afghanistan, and our shared goal of 
stability on the Korean Peninsula; 

• Explain U.S. views on Third 
World issues— the Middle East, Central 
America, South Africa— where Chinese 



and U.S. positions are often at odds, to 
provide China with a better understand- 
ing of our policies on these matters; and 

• Regarding Taiwan, facilitate an 
environment in which an evolutionary 
process toward a peaceful solution, 
worked out by the parties themselves, 
can occur. 

Conclusion 

Thus, we remain hopeful that the 
maturity and stability of our current 
relationship will allow us to address 
ongoing problems in a constructive and 
cooperative way. As Secretary Shultz 
indicated in his Dalian speech, we are 
entering a new age— an age that will 
necessitate greater cooperation between 
nations than ever before, that will 
demand stronger bonds between peoples 
of different backgrounds and cultures, 
and that will require a more cosmopol- 
itan outlook in approaching the world's 
problems. In this regard, we applaud 
China's reemergence from isolation and 
its assumption of an important role as a 
responsible world leader. 



In this cosmopolitan spirit, let me 
conclude with a story from the Latin 
poet Virgil. He tells how the Trojan 
prince Aeneas was shipwrecked in a 
country he feared was inhabited by bar- 
barians. But as he looked around and 
observed the buildings and gardens 
adorned with graceful carvings, he 
realized that these men knew the beauty 
and "pathos of life, and that mortal 
things touch their hearts." And, indeed, 
the people— the Carthaginians— proved 
friendly and hospitable when at last he 
met them. 

Similarly, China and the United 
States have viewed each other over the 
years with many apprehensions and 
misconceptions. Our success to date has 
been in overcoming such fears. As a 
result, like the ancient Trojans and Car- 
thaginians, Chinese and Americans alike 
have discovered a friendly people upon 
each other's shores. The task before us 
now is to build upon that friendship, to 
expand areas of common interest, and to 
resolve disagreements through discus- 
sion and negotiation. In so doing, 
perhaps we can contribute to bringing 
closer the day when all men truly shall 
be brothers. ■ 



OECD Council Meets in Paris 



The annual Council of the Organiza- 
tion/or Economic Cooperation and 
Development (OECD) met in Paris 
May 12-13, 1987. The U.S. delegation 
was headed by Secretary of the Treasury 
James A. Baker III. Following is the text 
of the final communique. 

The Council of the OECD met on 12 and 13 
May at Ministerial level. The meeting was 
chaired by Dr. Martin Bangemann, Federal 
Minister of Economics of the Federal 
Republic of Germany. The Vice Chairmen 
were Mr. Uffe Ellemann-Jensen, Minister for 
Foreign Affairs, and Mr. Palle Simonsen, 
Minister of Finance, of Denmark. And Mr. 
Roger Douglas, Minister of Finance, of New 
Zealand. On the 40th anniversary of his Har- 
vard speech, the Council paid tribute to the 
vision of international cooperation framed by 
General George C. Marshall. 

I. Improving Growth Prospects 

The economic strategy of the OECD countries 
has, over recent years, brought inflation 
down to its lowest level for a generation, at 



the same time maintaining positive growth 
rates. The long-term effort must be pursued, 
taking account of developments, in order to 
strengthen the prospects for stable and sus- 
tainable growth; to reduce substantially the 
levels of unemployment— unacceptably high 
almost everywhere; to correct the massive 
current account imbalances of the major 
countries; to consolidate the improvement in 
exchange rate configurations while achieving 
greater stability; and to improve the economic 
performance of developing countries. The 
first and foremost contribution that the 
OECD countries can make to world pros- 
perity is to foster vigorous economies in an 
open multilateral trading system. 

In order to achieve these objectives. 
Ministers agree upon the following wide- 
ranging and mutually reinforcing actions. 
They are based on a common will to use to 
the full the possibilities of international 
cooperation and to exploit for the best the 
interactions between macroeconomic and 
structural adjustment policies. Improved 
policies in both fields are interrelated 
elements in the strategy for stronger growth 
of output and employment. Both are essen- 
tial. Macroeconomic policies stabilize expecta- 
tions, build confidence for the medium term, 
and strengthen grovrth prospects. Micro- 



July 1987 



43 



ECONOMICS 



economic policies create a more dynamic and 
responsive environment, in which growth and 
adjustment forces are stronger, and macro- 
economic policies are more effective. 



II. Macroeconomic Policies 

Macroeconomic policies must respond 
simultaneously to three needs: maintaining 
medium-term orientations which contribute to 
the stability of expectations and building con- 
fidence; unwinding the present exceptionally 
large external imbalances of the major coun- 
tries; and exploiting to the full the potential 
for noninflationary growth and thus for 
stronger job creation. International com- 
plementary and compatibility of policies are 
essential in order that adjustment takes place 
in the perspective of growth and of exchange- 
rate stability. Each country must make its 
contribution to the collective effort. In par- 
ticular, the effective implementation of the 
commitments in the "Louvre Agreement," 
together with those in the recent communique 
of the Group of Seven countries, shall be 
achieved quickly, member countries will rein- 
force their cooperation, continue to review 
the policy requirements of the situation, and 
introduce further measures as necessary. 

Monetary policies, supported by fiscal 
policies, should remain geared toward growth 
of monetary aggregates and maintenance of 
financial market conditions consistent with 
low inflation objectives and real growth 
potential. They should also contribute to the 
orderly behavior of exchange rates. In view of 
the outlook for low inflation in many coun- 
tries, a further decline of interest rates in 
these countries— in particular a market-led 
decline of long-term rates— would be helpful. 

Since the possibilities for monetary policy, 
by itself, to improve prospects are limited, 
these need to be enhanced by further action 
on the fiscal front. 

In the United States, the process of 
reducing the Federal budget deficit— which is 
coming down from 5.2% of GNP (gross 
national product) in 1986 to less than 4% in 
1987— must and will continue in the years 
ahead. Holding firm to this course is essential 
for external and domestic reasons. The con- 
fidence of economic agents, in the United 
States and elsewhere, depends heavily upon 
it. So do, consequently, the prospects for 
moderate interest rates and stable exchange 
rates, sound economic activity with an 
adequate flow of funds into productive invest- 
ment, and resistance to protectionist tempta- 
tions. These highly beneficial effects of reduc- 
ing the Federal budget deficits should, over 
time, outweigh any short-term dumping effect 
in the United States. Exchange rate changes 
have improved the cost competitiveness of 
U.S. products and are having a positive effect 
on net exports. 

For Japan the objective is to achieve 
stronger growth with domestic demand 
increasing more rapidly than output, accom- 
panied by a rapid growth in imports, consis- 
tent with the substantial terms-of-trade gains 
which have taken place. The reaffirmation by 
the Japanese Government of its intention to 



further improve access to its domestic 
markets for foreign goods and services is also 
welcome. The Japanese authorities will take 
further substantial fiscal and other measures 
to strengthen the growth of domestic 
demand. This will not prejudice medium-term 
budgetary objectives of the central govern- 
ment. In this regard, it is to be noted that the 
recently announced Japanese initiative to 
expand domestic demand is part of the far- 
reaching longer-term effort to reorient the 
Japanese economy. 

In Germany, also, the growth of domestic 
demand, and particularly of private invest- 
ment, must exceed substantially the growth 
of potential output. In order to support 
growth and external adjustment, the German 
Government has already announced that 
some scheduled tax cuts will be accelerated to 
1 January 1988 and a broader tax reform will 
be implemented in 1990. This will have a 
favorable influence on investment. In addi- 
tion, further measures of structural adjust- 
ment, including reduction of subsidies, will be 
implemented. Taken together, these actions 
will contribute to an increase of the general 
budget deficit relative to GNP between now 
and 1990. Fiscal prudence over recent years 
permits this kind of action. Should there be a 
serious risk to the sustained expansion of 
domestic demand, especially private invest- 
ment, the medium-term strategy for growrth 
and higher employment would be adjusted as 
a consequence. 

Other countries with substantial current 
account surpluses should also take appro- 
priate action to encourage domestic demand 
growth relative to sustainable output. 

Some countries face tight constraints 
insofar as fiscal policy is concerned. For coun- 
tries which have large budget deficits, prio- 
rity must continue to be given to correcting 
them. There are a few countries in Europe, 
however, where budget deficits are not large 
but where current account considerations con- 
strain policy. Scope for fiscal action on the 
part of these countries would be increased 
and growth prospects improved if demand 
strengthened in their major trading partners. 
In this latter respect, and as an example, a 
cooperative economic strategy of the EEC 
[European Economic Community] countries 
could take advantage of their inter- 
dependence and be accompanied by other 
European countries. 

III. Structural Adjustment Policies 

Ministers welcome the report on structural 
adjustment and economic performance. 
Despite progress in recent years, OECD 
economies are still hampered by major distor- 
tions and rigidities. These compound current 
macroeconomic problems and retard growth. 
Increasing competition in product markets, 
responsiveness in factor markets, and effec- 
tiveness in the public sector will contribute 
significantly to growth potential in all coun- 
tries. Priorities in reforming structural 
policies will vary in individual countries, 
reflecting differing national situations but 
also international requirements. It is thus 
essential that concerted action be guided by 



common principles. To ensure the greatest 
gains from reform, action must be broad, 
bold, sustained, and, to the extent possibk-, 
built on international economic cooperation. 
The effects of such action will emerge mainly 
in the medium term. Implementation now. Ii\ 
expanding opportunities and bolstering con 
fidence about the future, will underpin pre- 
sent efforts to strengthen noninflationary 
growth and to reduce unemployment. Sue 
cessful structural adjustment can simultanc 
ously increase fairness and offer improving 
opportunities for all. Increasing social 
dialogue is an integral part of this process. 

Industrial subsidies, to the extent they 
are a source of domestic and international 
distortions and an impediment to structural 
adjustment, should be reduced. The work on 
industrial subsidies initiated by the organiza- 
tion is, therefore, to be encouraged and pur 
sued actively. 

The conclusions drawn by the Economic 
Policy Committee on the report on structural 
adjustment were endorsed and will guide 
action in the forthcoming years. The Secre- 
tary General is requested to report, at api)in- 
priate intervals, on the work of the organi: :i 
tion on microeconomic and structural issur,- 
at subsequent meetings of the Council at 
Ministerial level. 

Trade Policies. International trade pro- 
vides, through competition, the most powerfu 
means of promoting economic efficiency and 
growth. Measures which impede or distort th 
functioning of international markets tend to 
impair structural adjustment, preserve out 
dated economic structures, damage consumei 
interests, weaken incentives for efficient 
investment, and thus hinder economic 
growth. Therefore, it is of paramount impnr 
tance to reverse recent trends toward restric 
tive trade measures, notably of a bilateral nr 
a discriminatory nature, and to act with 
determination to strengthen and extend tin' 
open multilateral trading system. The OECIi 
will intensify its monitoring of the various 
aspects of trade policies. 

The Uruguay Round presents a unique 
opportunity to create an improved framewdr 
for trade in the 1990s and beyond. It is essfii 
tial to ensure that renewed signs of protec- 
tionism and conflict management on a 
bilateral basis should not be allowed to undir 
mine confidence in the Punta del Este decia 
ration or in the negotiating process it has 
initiated. Ministers affirmed the determina 
tion of their countries to resist these trends 
and to work for rapid, sustained, and substai 
tive progress in the negotiations toward a 
balanced global result which would be of 
benefit to all, developed and developing coun 
tries alike. OECD countries will prove this 
determination by tabling in the coming 
months comprehensive proposals covering th^ 
various fields of the negotiations, by carrying 
out the standstill and rollback commitment.^ 
they have entered into, and by opposing 
domestic protectionist pressures. In keepinu 
with the Punta del Este declaration, Ministei- 
reaffirmed that the conduct and the imple- 
mentation of the outcome of the negotiations 
shall be treated as parts of a single undertak- 
ing. However, agreements reached at an 



44 



Department of State BulletiA 



ECONOMICS 



early stage may be implemented on a provi- 
sional or a definitive basis by agreement prior 
to the formal conclusion of the negotiations. 
Early agreements shall be taken into account 
in assessing the overall balance of the 
negotiations. 

Ministers noted the welcome progress on 
trade in services in the Organization. This is 
of particular importance in the light of the 
inclusion of services in the Uruguay Round. 
Further related work will be needed to refine 
the concepts for liberalization of trade in serv- 
ices as well as continuing efforts to 
strengthen the OECD codes of liberalization 
3f invisible operations and of capital 
movements. This will be pursued actively. 

Ministers welcome the agreement 
recently reached by the participants in the 
arrangement on guidelines for officially sup- 
ported export credits in response to directives 
from the 1984 and 1985 meetings of the 
Council of the OECD at Ministerial level. The 
agreement will strengthen substantially the 
arrangement and reduce the risk of trade and 
lid distortions. Ministers also welcomed the 
recent agreement on the related DAC 
I Development Assistance Committee] guiding 
Drinciples. These are a tangible sign of 
: cooperation in a difficult period. 

Agriculture. The joint report of the 
' Trade and Agriculture Committees (X) was 
ipproved. This important work clearly 
lighlights the serious imbalances that prevail 
n the markets for the main agricultural pred- 
icts. Boosted by policies which have pre- 
sented an adequate transmission of market 
signals to farmers, supply substantially 
exceeds effective demand, and the cost of 
agricultural policies is considerable, for 
government budgets, for consumers, and for 
;he economy as a whole. Moreover, excessive 
jupport policies entail and increasing distor- 
;ion of competition on world markets and run 
counter to the principle of comparative 
advantage which is at the root of inter- 
lational trade and severely damage the situa- 
tion of many developing countries. This 
iteady deterioration, compounded by tech- 
nological change and other factors, such as 
5I0W economic growth or wide exchange rate 
changes, creates serious difficulties in inter- 
national trade, which risks going beyond the 
oounds of agricultural trade alone. 

All countries bear some responsibilities in 
the present situation. The deterioration must 
be halted and reversed. Some countries, or 
groups of countries, have begun to work in 
this direction. But, given the scope of the 
• problems and their urgency, a concerted 
I reform of agricultural policies will be imple- 
mented in a balanced manner. 

Reform will be based on the following 
principles: 

A. The long-term objective is to allow 
market signals to influence by way of a pro- 
gressive and concerted reduction of 
agricultural support, as well as by all other 
' appropriate means, the orientation of 
agricultural production. This will bring about 
a better allocation of resources which will 
benefit consumers and the economy in 
general. 



July 1987 



World Trade Week, 1987 



PROCLAMATION 5655, 
MAY 15, 1987' 

Each year. World Trade Week celebrates the 
many benefits of international trade to our 
country and all countries. This commerce 
strengthens our economy in many ways. 
Exports expand our business and employment 
opportunities: in the growing world 
marketplace, over 5 million American jobs are 
related to foreign sales. Imports also enrich 
our lives. Foreign goods increase consumer 
choice both in terms of quality and price. 
Competition from foreign producers provides 
an important stimulus to American producers 
to maintain and enhance the quality of 
American-made products. 

Americans can be proud of the role our 
country plays in international trade. We are 
the world's largest participant in interna- 
tional commerce. We have also taken a 
leading role in ensuring the expansion of 
international trade around the world. Our 
initiative has made possible successive 
monetary and trade agreements that have 
integrated world markets and offered unprec- 
edented prosperity. We have extended friend- 
ship to former adversaries and have seen 
them grow into valued trading partners. 
Through our impetus, the developing and 
newly industrialized countries become fully 
accepted into the world trading community. 

As increased trade has led to increased 
integration of world economies, the growth of 
the world economy has become more depend- 
ent on achieving better coordination of 
macroeconomic policies and continued adop- 
tion of sound microeconomic policies to 
facilitate structural adjustment. Thus, it is 
crucial that cooperative solutions be found to 
the problems faced in the international 
economy. 

For its part, the United States must work 
to regain and sustain our competitiveness in 



B. In pursuing the long-term objective of 
agricultural reform, consideration may be 
given to social and other concerns, such as 
food security, environment protection, or 
overall employment, which are not purely 
economic. The progressive correction of 
policies to achieve the long-term objective will 
require time. It is all the more necessary that 
this correction be started without delay. 

C. The most pressing need is to avoid fur- 
ther deterioration of present market imbal- 
ances. It is necessary: 

• On the demand side, to improve pro- 
spects as much as possible inside as well as 
outside the OECD area; 

• On the supply side, to implement 
measures which, by reducing guaranteed 
prices and other types of production incen- 



world markets; continue with its efforts to 
expand and improve the ground rules of 
world trade provided by the General Agree- 
ment on Tariffs and Trade; and resist 
pressures toward protectionism. The futile 
prescription of protectionism would only fuel 
inflation; lower economic growth; and invite 
retaliatory policies against our exports. 

It is also important for our trading part- 
ners to do their part— by dismantling protec- 
tive barriers around their home markets and 
allovdng more open competition; by adopting 
fiscal, monetary, and exchange rate policies 
that are in line with goals of stable growth 
with low inflation; and by helping resolve the 
problem of Third World debt. 

The challenges we face are difficult. They 
require the strong resolve of all nations. We 
can and will succeed in these ventures that 
offer much for the American people and for 
the peoples of the world. 

Now, Therefore. I, Ronald Reagan, 
President of the United States of America, by 
virtue of the authority vested in me by the 
Constitution and the laws of the United 
States, do hereby proclaim the week begin- 
ning May 17, 1987, as Worid Trade Week. I 
invite the people of the United States to join 
in appropriate observances to reaffirm the 
great promise of international trade for 
creating jobs and stimulating economic activ- 
ity in our country and for generating pros- 
perity everywhere. 

In Witness Whereof, I have hereunto set 
my hand this fifteenth day of May, in the year 
of our Lord nineteen hundred and eighty- 
seven, and of the Independence of the United 
States of America the two hundred and 
eleventh. 

Ronald Reagan 



iText from Weekly Compilation of 
Presidential Documents of May 18, 1987. 



fives, by imposing quantitative production 
restrictions, or by other means, will prevent 
an increase in excess supply. 

D. When production restrictions are 
imposed or productive farming resources 
withdrawn by administrative decision, these 
steps should be taken in such a way as to 
minimize possible economic distortions and 
should be conceived and implemented in such 
a way as to permit better functioning of 
market mechanisms. 

E. Rather than being provided through 
price guarantees or other measures linked to 
production or to factors of production, farm 
income support should, as appropriate, be 
sought through direct income support. This 
approach would be particularly well-suited to 
meeting the needs of, amongst others, low- 



45 



ECONOMICS 



income farmers, those in particularly disad- 
vantaged regions, or those affected by struc- 
tural adjustment in agriculture. 

F. The adjustment of the agricultural sec- 
tor will be facilitated if it is supported by com- 
prehensive policies for the development of 
various activities in rural areas. Farmers and 
their families will thus be helped to find sup- 
plementary or alternative income. 

G. In implementing the above principles, 
governments retain flexibility in the choice of 
the means necessary for the fulfillment of 
their commitments. 

The Uruguay Round is of decisive impor- 
tance. The ministerial declaration of Punta 
del Este and its objectives provide for the 
improvement of market access and the reduc- 
tion of trade barriers in agriculture and will 
furnish a framework for most of the measures 
necessary to give effect to the principles for 
agricultural reform agreed upon by OECD 
ministries, including a progressive reduction 
of assistance to and protection of agriculture 
on a multicountry and multicommodity basis. 
As agreed in Paragraph 16, the Uruguay 
Round negotiations will be vigorously pursued 
and comprehensive negotiating proposals 
tabled over the coming months, in this as in 
other fields. In the Uruguay Round, appro- 
priate account should be taken of actions 
made unilaterally. 

In order to permit a deescalation of pre- 
sent tensions and thereby enhance prospects 
for the earliest possible progress in the 
Uruguay Round as a whole, OECD govern- 
ments will carry out expeditiously their stand- 
still and rollback commitments and, more 
generally, refrain from actions which would 
worsen the negotiating climate. They will, 
inter alia, avoid initiating actions which 
would result in stimulating production in sur- 
plus agricultural commodities and in isolating 
the domestic market further from inter- 
national markets. Additionally, they will act 
responsibly in disposing of surplus stocks and 
refrain from confrontational and destabilizing 
trade practices. 

Agricultural reform is not solely in the 
interests of member countries. Developing 
countries which are agricultural exporters 
will benefit from a recovery on world 
markets. Developing countries which are 
importers of agricultural produce will be 
encouraged to base their economic develop- 
ment on more solid ground, by strengthening 
their own farm sector. 

Agricultural reform poses vast and dif- 
ficult problems for member countries. 
Strengthened international cooperation is 
needed to overcome these problems. The 
OECD will continue to contribute to their 
solution by deepening further its work. By 
updating and improving the analytical tools it 
has begun to develop and which will prove 
particularly valuable in many respects, by 
monitoring the implementation of the various 
actions and principles listed above. The 
Secretary General is asked to submit a pro- 
gress report to the Council at Ministerial level 
in 1988. 



46 



Financial Markets. The process of 
liberalization in financial markets and finan- 
cial institutions must continue. In order to 
secure the clear benefits deriving from this 
process and to ensure the viability and stabil- 
ity of these markets, efforts will be intensified 
in the appropriate fora with a view to increas- 
ing compatibility and convergence of policies 
regarding prudential supervision of these 
markets. 

Tax Reform. Most OECD countries have 
undertaken or are considering major tax 
reforms. Well constructed tax reform can 
considerably enhance performance at both 
macro and micro economic levels. Tax reform 
should focus on simplicity, equity, and reduc- 
ing distortions affecting incentives to work, 
save, and invest. The competent bodies of the 
Organization will actively contribute to reflec- 
tion on tax reforms in member countries and 
consider the best means of achieving them 
with due respect given to international 
aspects. 

Technological Change. The development 
and diffusion of technology is central to the 
growth of output, employment, and living 
standards. The process of technological 
change provides opportunities that must be 
grasped. Much work has already been done 
within the Organization on analyzing and 
interpreting various elements of this process. 
It now seems necessary to define an inte- 
grated and comprehensive approach to the 
different technology-related questions, to 
deepen the analysis in order to understand 
better, and make better use of, technological 
advances. The Secretary General's intention 
to develop and carry out such an approach 
was welcomed. A progress report will be 
made to Ministers at their meeting in 1988. 

Employment and Socioeconomic 
Reform. In view of the seriousness of 
unemployment problems in most countries, 
three areas of socioeconomic reform are par- 
ticularly important— all involve, in varying 
degrees, the private sector and the social 
partners as well as governments. First, there 
is a pressing need in many countries to 
improve the quality of education and training 
systems and to adapt them more to the needs 
of societies and economies undergoing rapid 
structural change. Second, more flexible labor 
markets are needed to facilitate access to the 
new jobs emerging as structural and technical 
change accelerates. Third, employment and 
social protection policies need to evolve so 
that displaced and unemployed people are 
given not only income support but also— 
especially through training— opportunities 
and incentives to get back into work or other 
useful activities such as local employment 
initiatives. OECD work in these areas will be 
intensified, a key aim being to prepare a new 
framework for labor market policies as 
agreed at the meeting of the Manpower and 
Social Affairs Committee at Ministerial level 
in November 1986. 

Environment. There is general agree- 
ment that environmental concerns have to be 
given a high priority in government policies in 
order to safeguard and improve the quality of 



life as well as to preserve the resource base 
needed for sustained global economic develop- 
ment. Member countries will develop, within 
OECD, approaches and methods for more 
systematically and effectively incorporating 
environmental considerations into the 
policymaking process. Work will be inten- 
sified on policies needed to prevent more 
effectively the release of hazardous sub- 
stances to the environment, including from 
large-scale accidents. In this connection inter 
national cooperation should be reinforced. 
The recently presented report of the World 
Commission on Environment and Develop- 
ment, "Our Common Future," will be studied 
closely in member governments and in the 
Organization. 

Energy. The past year has seen con- 
siderable falls in the prices of oil, gas, and 
coal. While lower energy prices have broad 
economic benefits, they tend to increase con- 
sumption and reduce indigenous production o) 
energy. The Chernobyl reactor accident has 
underlined the safety aspects of nuclear 
power. These developments could intensify 
the tightening of energy markets expected 
for the 1990s. The Governing Board of the 
International Energy Agency, meeting at 
Ministerial level on May 11, 1987, agreed to 
strengthen existing policies in a number of 
areas in order to advance the objectives of 
energy policy while continuing to secure the 
general benefits of lower energy and oil 
prices. These areas include indigenous energj 
production, the efficient use of energy, diver- 
sification of sources of primary energy par- 
ticularly those used in the generation of elec- 
tricity, the promotion of free and open trade 
in energy, measures to respond to an inter- 
ruption in oil supplies, and due recognition of 
environmental concerns. 



IV. Relations With Developing Countries 

In a world characterized by an increasing 
level of interdependence, the economic prob- 
lems and performance of developing countrie: 
have become increasingly diverse. While a 
number of developing countries, particularly 
in Asia, have made significant progress, man 
others have suffered economic setbacks in 
recent years. Economic cooperation with 
developing countries must respond to varyinu 
capacities and needs in the critical areas of 
development, trade, debt, and finance. 
Developed countries must strive to ensure a 
better environment for developing countries' 
growth and exports in the interest of these 
countries as well as of the international 
economy more generally. In this regard, the 
implementation of the policy directions and 
objectives set out in this communique will 
represent a significant contribution by OECD 
countries to better global prospects. 

Economic policies in developing countries 
themselves will remain a major factor in their 
own performance. Upon them depend heavily 
confidence, savings, and investment, both 
domestic and foreign. The wide range of 
developing countries presently implementing 
economic policy reforms to establish a sound 
development process must be supported and 



Department of State Bulletii 



1 



ENERGY 



encouraged by all possible means including 
improved market access and official develop- 
ment assistance. In this regard, it is impor- 
tant to maintain and as far as possible 
increase the flow of development assistance, 
as well as to improve its quality and effec- 
tiveness. Those developing countries whose 
economic strength is already significant 
should progressively play their full part in the 
rights and obligations of the multilateral 
trading system. It is important that the 
potential offered by the private sector be fully 
exploited. 

Large debt burdens remain a major 
impediment to growth in certain heavily 
indebted middle-income countries. There is no 
feasible alternative today to the cooperative 
strategy adopted for the solution of these 
problems. Only enhanced cooperative action, 
on a case-by-case basis, by all parties 
involved— debtor and creditor governments, 
the international financial institutions, and 
private banks— will permit reducing the 
strains in a growth-promoting environment. 
For some countries, notable progress has 
been made in this process. However, in some 
cases, difficulties in the adjustment and 
financing processes point to the need for 
improvements. The trend towards innovative 
and more flexible approaches on the financing 
side, both private and official, should play a 
key role in making debt burdens more 
manageable and restoring capital flows. 

Even more constraining are debt prob- 
lems among low-income countries. Proposals 
have recently been made by OECD countries 
for additional action to reduce the debt servic- 
ing burden of the poorest countries, especially 
in sub-Saharan Africa, undertaking strong 
growth-oriented adjustment programs. Early 
results from the current discussions among 
creditor governments will be urgently sought. 

For poorer developing countries, provi- 
sion of adequate concessional finance is essen- 
tial. OECD countries' record in this respect is 
already substantial but should be further 
enhanced. The volume and forms of aid must 
oe commensurate with the growing require- 
ments of policy reform programs and broader 
development efforts. The new DAC guiding 
principles for using aid to support improved 
development policies and programs and 
strengthening aid coordination with develop- 
ing countries are welcomed. 

Commodity dependent developing coun- 
tries face difficult problems in view of the 
outlook for many commodities. An accelera- 
tion in world growth would improve the pros- 
pects for these countries. New efforts should 
be made to diversify their economies and to 
address the structural and development 
dimensions of commodity dependence. Action 
to remove measures distorting trade in com- 
modities will make an important contribution 
to export prospects for commodity dependent 
developing countries. 

UNCTAD VII [the seventh meeting of the 
UN Conference on Trade and Development] 
provides an opportunity to discuss with 
developing countries the major problems and 
policy issues in the global economy with a 
view to promoting common perceptions and 
effective policies for trade and develop- 
ment. ■ 



lEA Governing Board Meets in Paris 



The International Energy Agency 
(IE A) met at the ministerial level in 
Paris May 11, 1987. The U.S. delegation 
was headed by Secretary of Energy John 
S. Herrington. 

Following are Secretary Herring- 
ton's statement at that session and the 
text of the final communique. 



SECRETARY HERRINGTON'S 
STATEMENT 

Since we last met here 2 years ago, com- 
petition in the world energy economy 
has brought about a sharp drop in oil 
prices, triggering major dislocations and 
adjustments. The United States is both 
the largest producer and the largest con- 
sumer in the lEA. Lower prices benefit 
U.S. consumers and the overall 
economy. But U.S. producers, and the 
industries that depend on them, have 
had to adjust to the new market condi- 
tions while, in many cases, coping with 
taxes and regulations imposed in a 
period of higher prices. 

At President Reagan's direction, 
my Department recently undertook an 
in-depth review of our energy security 
situation in light of lower oil prices. We 
have found that continued reliance on 
the market to set prices and allocate 
energy supplies and investments is the 
best long-term strategy for sustaining a 
strong national oil industry, assuring our 
economic prosperity, and bolstering oiu" 
energy security. We also found that the 
economic costs of an oil import fee far 
outweigh any security benefits, and, 
therefore, an import fee has been 
rejected. Instead, we have recommended 
measures to adjust the taxation, leasing, 
and regulatory regimes to current 
market conditions. 

We recognize that the world oil 
market is not perfectly competitive and 
that major suppliers at times can exer- 
cise their power in an arbitrary way. But 
experience over the past decade also 
shows that the market imposes an 
underlying discipline that cannot be 
ignored. Attempts to fix prices (by pro- 
ducers, consumers, or both acting 
jointly) will result in inefficiency and 
ultimately will exacerbate the instability 
they seek to prevent. Therefore, while 
we continue to value constructive 
bilateral contracts with producers, we 
are firmly opposed to multilateral 



producer-consumer discussions which 
would inevitably lead to discussions of oil 
prices and production levels and 
misguided efforts aimed at stabilization. 

International cooperation is critical 
to energy security. Go-it-alone 
approaches ignore the reality of increas- 
ingly independent markets. We continue 
to regard the TEA as the best mecha- 
nism for coordinating and concerting 
energy policies among the industrialized 
democracies. 

Energy supply disruptions can 
damage our economic prosperity, under- 
mine national security, and weaken our 
capability to achieve foreign policy objec- 
tives. Should a disruption occur, the 
early use of strategic stocks can mitigate 
the economic damage caused by price 
increases. Moreover, a credible strategic 
oil stockpile serves as a deterrent to 
those who might be tempted to use oil as 
a political weapon. 

Our challenge is to strengthen our 
cooperation on emergency preparedness. 
Total TEA stocks today exceed 90 days 
of last year's imports, but some cannot 
be used without disturbing the normal 
operations of the oil industry. In addi- 
tion, there are wide disparities among 
the stock levels held by member coun- 
tries. The United States maintains 
government-owned oil stocks in excess 
of 515 million barrels, about 100 days of 
net 1986 imports. President Reagan 
announced last week his support for fill- 
ing the strategic petroleum reserve by 
100,000 barrels per day in order to meet 
by 1993 his goal of a 750-million-barrel 
reserve, provided that budget offsets are 
made available to cover the costs of this 
higher fill rate. This would represent a 
tripling of the rate previously planned 
for FY 1988. 

Other lEA members maintain much 
lower total stock levels, much of which 
are not under unequivocal government 
control. Some member countries do not 
even meet the 90-day requirement of the 
international energy program. 

We recognize that oil demand 
restraint is the approach some countries 
prefer for addressing the early stages of 
a supply disruption. However, the effec- 
tiveness of demand restraint measures is 
difficult to quantify and predict, and 
their implementation will have adverse 
economic impacts. Countries relying on 
demand restraint have an obligation to 
evaluate quantitatively the effectiveness 
of their programs and to demonstrate 



July 1987 



47 



ENERGY 



their willingness and operational 
capability to implement these measures 
in a timely fashion. 

The lEA has made progress since 
our last meeting on procedures for coor- 
dinated use of oil stocks and other 
measures early in a supply disruption, 
but more needs to be done. We are not 
seeking a change in the legal require- 
ments but rather a renewed political 
commitment by net oil importers to 
increasing accessible government- 
controlled stocks to levels that will 
enable member countries to contribute 
significantly to early response measures. 
We would like to see acceptance, in prin- 
ciple, that the objective over time should 
be to ensure, at a minimum, that all 
stocks that contribute to meeting 
members' international energy program 
commitments are truly accessible. We 
must avoid complacency or the 
appearance of inaction that would send 
an erroneous signal to those who would 
manipulate the market for economic or 
political gain. Now is the time for other 
nations to do more in taking on their fair 
share of building strategic stocks. 

Lower oil prices also pose a chal- 
lenge for international cooperation on 
long-term energy security. More com- 
petitive energy markets make more 
important than ever before the economic 
exploitation of the energy resources of 
the Organization for Economic Coopera- 
tion and Development (OECD). Protec- 
tion of domestic producers by govern- 
ment-imposed barriers to energy trade 
raises costs, reduces economic efficiency, 
and violates our mutual commitment to 
collective energy security. The high level 
of subsidized coal production in a 
number of countries severely restricts 
market opportunities for more efficient 
lEA coal producers. Open access to low- 
cost coal from secure sources fosters 
economically sound structural adjust- 
ments, limits the prospects of reverting 
to oil use as a boiler fuel, and encourages 
the continued development of massive 
OECD coal resources. These are goals 
we should all support. 

Long-term energy security will be 
strengthened by a continued diversifica- 
tion of our energy sources away from oil. 
We continue to believe that nuclear 
power is a safe and economic alternative 
to oil for the foreseeable future. Nuclear 
energy has been the fastest growing 
energy source in the United States and 
is projected to expand by about 7% 
annually over the next several years. 
Successful nuclear power programs in 
OECD countries contribute significantly 
to global energy supplies. We must all 



recognize the benefits that accrue collec- 
tively from the nuclear power programs 
of our member states and act to assure 
that nuclear power remains a safe 
energy option for the future. 

Indigenous energy production in 
TEA countries has expanded signifi- 
cantly during the past decade. Further 
growth is important, but the more com- 
petitive energy marketplace will require 
increased efficiency and productivity of 
our energy-producing industries. TEA 
governments should be prepared to 
review carefully their fiscal and 
regulatory systems to assure that they 
are consistent with the new competitive 
realities. We must seek to reduce 
governmental burdens on our energy 
industries wherever possible and work to 
create favorable investment conditions. 
In the United States, we have imple- 
mented a number of regulatory reforms 
and are pressing for approval of several 
key proposals, including repeal of the 
windfall profits tax on oil, complete 
decontrol of natural gas prices, and 
increased access to geologically promis- 
ing Federal lands. These measures will 
boost domestic U.S. oil and gas produc- 
tion significantly. 

Lower oil prices in no way reduce 
the need for collaboration on energy 
research and development efforts. 
Indeed, increasingly tight national 
budgets make it imperative that we 
strengthen our collaboration efforts that 
were endorsed at our last ministerial 
meeting. We were pleased to sponsor 
the 1985 workshop on advanced research 
and development on end-use technolo- 
gies and renewable energy sources. It is 
also important to optimize the utilization 
of our financial and intellectual 
resources to develop nuclear physics and 
fusion technology. 

We are deeply committed to the goal 
of increased energy efficiency. We 
believe that a greater reliance on the 
market will promote this goal. Market- 
based economic growth engenders a 
dynamism that encourages technological 
innovation and creates the financial 
capital needed for investment in new, 
more efficient technology. The new car 
fleet in the United States continues to 
become more efficient, even with lower 
oil prices, and is now close to the effi- 
ciency of new car fleets in the rest of the 
lEA. We used no more energy in 1985 
than in 1973, but GNP has grown by 
30%, even though energy prices have 
been falling for the past 5 years. Last 
week, in his message to Congress on 
energy security. President Reagan 
reaffirmed his goal of diversification. 



The United States is deeply commit- 
ted as well to assuring that energy pro- 
duction and use are consistent with a 
clean environment. Our emission con- 
trols for automobiles have long been the 
most stringent in the world. New power 
plants have had to meet tight national 
standards since 1971. In an effort to do 
even more, the United States has under- 
taken a major research and development 
effort to reduce further the environmen- 
tal impacts of coal combustion. U.S. 
Government and industry expect to 
spend more than $5 billion in this effort 
during the next few years. International 
cooperation on environmental research 
and development must remain one of our 
top priorities. 

Reducing the environmental prob- 
lems associated with coal use is impor- 
tant for maintaining the momentum of 
fuel diversification, but protection of the 
environment must also be cost-effective 
and take account of energy security 
objectives. Our responsibility as energy 
ministers is to assure both domestically, 
and cooperatively in the lEA, that 
energy policy objectives are afforded due 
consideration in setting environmental 
protection goals. 

Recent energy market developments 
pose both opportunities and challenges 
for all of us. The opportunity is for lower 
inflation, reduced oil costs, and 
increased growth in output and employ- 
ment. While realizing these benefits, we 
must also meet the energy security 
challenge by further strengthening our 
emergency preparedness and making 
continued progress toward our long-tern 
goals of energy efficiency, fuel diver- 
sification, and development of our 
secure, indigenous energy resources on 
an economically sound basis. Agreement 
on freeing up energy trade, continued 
expansion of nuclear power, and 
strengthened oil stockpiles would, in oui 
view, be the most significant contribu- 
tion we could make at this meeting. 

FINAL COMMUNIQUE 

1. The Governing Board of the International 
Energy Agency (lEA) met at Ministerial levi 
on 11th May 1987 in Paris under the Chair- 
manship of the Hon. Marcel Masse, Minister 
of Energy, Mines and Resources of Canada. 
2. Since TEA Ministers last met in July 
1985, there have been considerable falls in th' 
prices of oil, gas and coal. The market situa- 
tion is unsettled and future developments are 
difficult to predict. While lower energy prices 
have broad economic benefits, they have 
created serious problems for certain coun- 
tries, industries and regions. Increased con- 
sumption and reduced indigenous production 



48 



Department of State Bulletin 



ENERGY 



of energy as a result of lower prices raise con- 
icerns about long-term energy security. The 
Chernobyl reactor accident has underlined the 
safety aspects of nuclear power. These 
developments could intensify the tightening 
of energy markets expected for the 1990s. 

3. The central objective of the energy 
policies of the lEA and its Member countries 
remains to maintain security of supply in both 
the short and long term in order to sustain 
economic well-being. The policies pursued by 
[EA Member countries since 1974 have been 
successful. The decisions reached at the 
meetings of the Governing Board at Minis- 
terial level on 8th May 1983 and 9th July 
1985, remain valid. There is a need for energy 
Dolicies for the 1990s which will: 

• Maintain energy security through con- 
:inued development of indigenous energy 
■esources and technologies and improvements 
n the efficiency of energy use; 

• Secure the benefits for lEA countries 
iS a whole, of lower energy and oil prices; 

• Promote free and open trade in energy; 
md 

• Further improve preparedness to deal 
vith a disruption in energy supplies. 

4. Such policies, implemented on a 
^-operative basis, will help to promote 
•quilibrium in energy markets, reduce exces- 
ive fluctuations in prices and ensure that the 
■nergy sector continues to support substan- 
ial, non-inflationary growth and reduced 
inemployment, which are essential to 
■conomic and social well-being. 

ndigenous Fuel Production 

). Continued investment in energy produc- 
ion on an internationally competitive basis, 
larticularly in exploration and development 
if resources indigenous to lEA countries, is a 
ital component in achieving adequate supply 
support energy security and economic 
Towth. 

6. Falling oil prices occasioned con- 
iderable industry-wide expenditure cuts in oil 
■xploration, development and production in 
he IE A area. Ministers noted that this has 
lad a generally depressing effect on explora- 
ion and development activities for gas and 
oal as well. A cautious attitude toward in- 
■estment by the oil, gas and coal industries 
end the financial institutions supporting them 
■emains. 

7. Governments and industry are react- 
ng to recent market developments to 
ounter, in part, the effect of lower prices. 
Tax and royalty regimes in many producing 
'ountries have been substantially adjusted to 
lew conditions, either as a result of automatic 
idjustments to lower prices, or following 
iehberate policy decisions. Ministers noted 
vith particular satisfaction the progress made 
n recent agreements concerning development 
>f indigenous gas resources of lEA countries, 
joal production in a number of countries has 
)een further rationalized. Continuing support 
)f technical advances is expected to achieve 
•eductions in finding costs for oil and gas in 
he medium and long term. 



8. Ministers agreed that flexible produc- 
tion and investment regimes will continue to 
be implemented in response to current and 
future rather than previous market condi- 
tions. Particularly, these efforts should 
address regulations which restrict trade, 
create imbalanced royalty or fiscal regimes- 
including both those for oil and for com- 
petitive fuels such as coal or gas— and inhibit 
hydrocarbon investments. Production regimes 
in lEA countries should thus encourage 
investment in and development of indigenous 
supplies to assure long-term security. Further 
legal or regulatory steps to relax or remove 
inhibitions to indigenous fuel production and 
to competition should focus, as appropriate, 
upon: cumbersome and lengthy leasing and 
licensing procedures, limitations on develop- 
ment of certain areas and transport and 
investment requirements. 

9. In addition to the contribution of fossil 
fuels discussed above, on a longer-term basis 
the development of indigenous renewable 
sources of energy will become increasingly 
important. 

Efficiency in the Use of Energy 

10. All lEA countries attach high importance 
to energy conservation through increases in 
the efficiency with which energy is used. 
Greater efficiency will limit the demand for 
energy and thus lessen the impact of any 
future tightening of the energy market. It 
will reduce the environmental consequences 
of energy production and use. In addition, 
increasing energy efficiency brings financial 
advantages to undertakings and individuals 
and thus stimulates economic activity; in 
turn, general economic growth stimulates 
improved energy efficiency through higher 
levels of investment and technological 
innovation. 

11. Since 1974, due to high energy prices 
and to conservation policies, there has been a 
significant improvement in the efficiency wath 
which energy is used in lEA countries. A 
large potential remains for further improve- 
ments on an economic basis. Ministers agreed 
to promote, in a way best suited to circum- 
stances in each of their countries, coherent 
and forceful strategies to realize this potential 
in all the main sectors of consumption, includ- 
ing the removal of market distortions which 
prejudice such a valuable objective. They will, 
together with other government and industry 
leaders, each make a major effort to publicize 
and explain the advantages of efficient 
energy use and the ways in which it can be 
achieved. They will support the strategies by 
such measures as viade-ranging information 
and education activities, fiscal incentives and 
the development of innovative methods of 
private financing of energy conservation 
investments; voluntary or mandatory energy 
efficiency standards; the systematic and 
vigorous pursuit in all public sector activities 
of efficiency in energy use on an economic 
basis; and the dissemination of new, proved 
technologies in accordance with their conclu- 
sions on research, development and demon- 
stration. The various organizations in both 
the public and private sectors concerned with 



efficient use of energy, particularly the 
energy producing and consuming industries, 
should be actively involved in these activities. 



Electricity 

12. Electricity is basic to economic growth 
and a high standard of living in lEA coun- 
tries. There is important potential for improv- 
ing the efficiency with which electricity is 
used, generated and transmitted. Neverthe- 
less, new capacity will be needed in many 
countries in the 1990s to meet increasing 
demand and to replace existing obsolete 
capacity. lEA governments and utilities need 
to take action to ensure that electricity supply 
remains adequate in the long term and that 
electricity economics continue to improve. 

13. Ministers noted that substantial prog- 
ress has been made in diversifying the 
sources of energy in electricity generation 
and reducing the use of oil. This has been 
achieved largely by increased use of coal and 
nuclear energy, which in 1986 accounted for 
43 per cent and 21 per cent respectively of 
electricity production in OECD countries, and 
thereby strongly contributed to energy supply 
security. Ministers agreed that, for the 
future, it was essential for lEA countries to 
continue to reduce dependence on oil and to 
diversify the other sources of energy used in 
this sector. Where economic, multi-fuel 
generating plants enable consumers to take 
advantage of competition between fuels. 

14. Ministers noted that: 

(a) Coal and other solid fuels will con- 
tinue to be major sources of primary energy 
for electricity in many lEA countries. Fur- 
ther work is in hand in the lEA on long-term 
trends in coal demand (both in electricity 
generation and other sectors), as well as in 
coal supply and prices. Existing technologies 
can- substantially reduce emissions from the 
burning of coal without increasing cost to a 
point which renders it uneconomic. New 
technologies are being developed and 
demonstrated which will improve both the 
competitiveness and the environmental 
impact of using coal. It is essential that no 
time be lost in making these new technologies 
commercially available to utilities. 

(b) Gas is used in electricity generation in 
some lEA countries. Substantial additional 
demand for gas would involve faster depletion 
of IE A gas reserves or require additional sup- 
plies from non-IEA countries. Such additional 
supplies would, in accordance with the Con- 
clusions adopted at the meeting of the 
Governing Board at Ministerial level on 8th 
May 1983, be obtained from as diverse 
sources as possible. 

(c) Hydropower can make an important 
contribution to additional generating capacity 
in some countries. The development of other 
renewable sources of energy can provide 
important new options in the longer term in 
relation both to electricity generation and 
energy supplies generally and should be 
actively pursued. 

(d) Nuclear energy. After the Chernobyl 
accident, which was specific to a particular 
type of plant, those Member countries for 



July 1987 



49 



ENERGY 



which nuclear energy is a relevant option 
have carefully assessed the safety of types of 
reactors used in their countries. A group of 
countries, which account for the bulk of elec- 
tricity generation in the OECD region, con- 
sider that the standards of safety in their 
reactor systems and procedures are so high 
that the risk of major accidents is too remote 
to justify a change in policy. They therefore 
intend to continue their nuclear power 
generation programmes in order to secure the 
economic and environmental advantages 
which flow from them. A few countries still 
have their programmes under review. Other 
countries have decided not to produce nuclear 
power either because they have other non-oil 
resources available or because they consider 
the long-term environmental impacts and the 
residual risks of nuclear energy production, 
even under the highest safety standards, to 
be unacceptable. One country has decided to 
discontinue its existing nuclear programme 
by early in the next century. 

15. A significant limitation of any of 
these options, in particular of coal or nuclear, 
for the IE A as a whole would increase 
demand for other energy sources and thus the 
costs of achieving energy security. The lEA 
will continue and deepen its analysis of the 
different options for electricity generation. 
However, each lEA country will have to 
decide on the mix of fuels used in generating 
stations best suited to its particular cir- 
cumstances. All will, howevei', seek to achieve 
a mix which takes into account considerations 
of energy security, environment, safety and 
the possible effects of their decisions on other 
countries. Ministers noted that, despite differ- 
ing perceptions about the appropriate 
balance, many and useful international con- 
sultations and information exchanges about 
these decisions were taking place. 

16. The safety issues associated with the 
production of electricity are of fundamental 
importance, particularly in the case of nuclear 
energy. lEA countries have already made 
important progress in this area and will con- 
tinue their efforts to ensure the highest 
standards of safety in all aspects of waste 
management and of the planning, design, con- 
struction, operation and dismantling of 
nuclear installations. They will give full 
political and technological support to arrange- 
ments for international co-operation on 
nuclear safety which exist, or are being 
developed, particularly within the Nuclear 
Energy Agency of the OECD and the Inter- 
national Atomic Energy Agency. 

Emergency Response Measures 

17. Ministers reaffirmed the high priority 
given to the lEA emergency preparedness 
system, including both international energy 
program oil sharing and the co-ordinated 
early response stipulated in the Governing 
Board Decision of Uth July 1984. Total 
stocks held in lEA countries are not 
equivalent to more than 160 days of 1986 net 
imports, which is considerably more than the 
minimum legal obligation of 90 days by each 
country. Ministers welcomed the further 



50 



progress made since they last met in July 
1985. Procedures to co-ordinate, carry out 
and monitor stockdraw and other measures 
early in an oil supply disruption are being fur- 
ther enhanced. However, a small number of 
countries is still required to continue efforts 
to achieve their individual obligations. 
Ministers emphasized the necessity of comply- 
ing with the legal obligation of the lEP con- 
cerning emergency oil stocks and demand 
restraint measures. 

18. Ministers reconfirmed that the cur- 
rent oil market situation does not offer any 
room for complacency, that it presents a 
valuable opportunity both for strengthening 
lEA emergency preparedness and for nar- 
rowing the disparities between Member coun- 
tries in this regard and that efforts should be 
continued to ensure security against a supply 
disruption. In addition to emphasizing the 
necessity of complying with the legal obliga- 
tions of the international energy program 
concerning emergency oil stocks and demand 
restraint measures. Ministers welcomed 
action by individual countries to increase 
stock levels and to improve the ability to 
bring about stockdraw by government initia- 
tive. While the international energy program 
requirements already make allowance for 
stocks not available for use, Ministers 
acknowledged the benefits of having stocks 
held against the international energy pro- 
gram requirements in excess of that 
allowance fully available for use. They noted 
that additional progress in this regard would 
further enhance emergency preparedness. 
Ministers also acknowledged that further 
enhancement of emergency response 
measures, including demand restraint, 
increased supplies of synthetic fuels as appro- 
priate and stock holding, will provide yet 
greater protection against vulnerability to oil 
supply disruptions. 

19. lEA governments will maintain 
emergency response programmes, including 
stock levels that would be available at the 
instance of governments, under clear and 
definite authority so as to assure their ability 
to implement these programmes in an oil 
supply disruption, in accordance with national 
law or policy. 

20. Net oil importing countries should 
take advantage of the present situation to 
actively increase their level of emergency 
preparedness, including stock levels. It has 
been noted with satisfaction that a significant 
improvement of emergency preparedness in 
the lEA region as a whole is taking place 
because some countries are increasing the 
level of government and public entity stocks. 
Ministers welcomed the continuation of these 
efforts and encouraged other Member coun- 
tries to make improvements to the level of 
their stocks. 

21. Net oil exporting countries should 
further contribute to the general protection of 
the IE A group against an oil supply disrup- 
tion, by such means as surge production, 
stock drawdowns, demand restraint or other 
appropriate measures. 

22. Further improvements of the overall 
contribution of effective demand restraint 



measures and stockholdings are justified, par- 
ticularly for countries whose degree of 
emergency preparedness is relatively low. 
Ministers asked the Governing Board to con- 
clude within one year whether and, if so, 
what steps should be taken within this con- 
text to further improve lEA Member coun- 
tries' capacity, both individually and collec- 
tively, to contribute effectively to early 
responses, including the level and availability 
of stocks and demand restraint. 

23. Ministers agreed on the usefulness of 
periodically training personnel and testing the 
emergency response system. Mutual 
exchange of information and experience and 
the new round of emergency response 
reviews would also identify areas for further 
improvements in the effectiveness of national 
demand restraint programmes. 



Barriers to Trade, Energy Prices 
and Taxation 

24. Energy markets can only function prop- 
erly if lEA countries avoid barriers to energy 
trade and follow sound price and taxation 
policies. Significant progress has been made 
in implementing the 1985 Ministerial Com- 
munique commitment to oil product trade on 
the basis of supply and demand without 
distortions. lEA countries will resist new pro- 
tectionist measures relating to energy 
imports, such as import fees and other trade- 
distorting measures. They will also continue 
to reduce, with a view to eliminating, remain- 
ing trade barriers, including subsidies, norms i 
or other government controls which impede 
trade, recognizing that other policy considera* 
tions, including social and regional ones, mayi 
make it necessary to deal gradually with som* 
of these barriers. 



Energy Research, Development 
and Demonstration 



25. Technology continues to have a major 
role to play in providing alternatives for a 
more balanced and diversified energy mix to 
ensure medium- and long-term energy secu- 
rity. In light of recent trends in oil prices and( 
of reductions in private and public research, 
development and demonstration expenditures 
in many countries, it is essential that those 
activities on which energy security depends 
should not be prejudiced. Ministers therefore' 
re-emphasized their commitment to pursue 
the development of economically sound and 
environmentally acceptable energy tech- 
nology options. They will also seek to improvf 
collaboration between government and indus^ 
try in research, development and demonstra- 
tion of energy supply and end-use tech- 
nologies, both at the national and at the inter 
national level. 

26. Research, development and demon- 
stration for the development of indigenous 
hydrocarbon supplies has traditionally been 
provided by the private sector. A number of 
projects may now be delayed or curtailed witl 
implications for longer-term energy security. 
Governments should be aware of these 
developments and will examine how they can 
work with industry to ensure continuity. 



Department of State Bulleti] 



ENERGY 



27. Ministers agreed to pursue the 
development of technologies for improved 
energy efficiency on a national and 
multilateral basis including through lEA 
collaboration agreements. They also stressed 
the importance of such activities as analytical 
and information programmes to facilitate a 
wide dissemination of successfully demon- 
strated end-use technologies, which deserve a 
geographically broader market penetration. 

28. Ministers agreed to seek further 
opportunities to advance the development of 
renewable energy technologies through joint 
activities, while recognizing at the same time 
that priorities in this area have to be iden- 
tified by individual countries since resource 
availability, economics and institutional bar- 
riers are in general highly dependent on local 
circumstances. 

29. The transportation sector, where 
technology has been slow to provide new 
economic options, is still essentially 
dominated by petroleum-based liquid fuels. 
Ministers agreed that more attention should 
be focused on research and development 
efforts to promote a higher degree of diver- 
sification in this sector. 

30. Based on the above considerations, 
Ministers decided to extend the active pursuit 
of enhanced international collaboration, 
through joint consultations at an early stage 
of research and development planning, to new 
fields, including end-use efficiency, new 
renewable technologies and diversification of 
transportation fuels. 

31. Finally, Ministers stressed the impor- 
tance of continued international collaboration 
to optimize the use of the very considerable 
resources still needed for the development of 
nuclear fusion technology. 

Energy and the Environment 

32. Energy production and use should be car- 
ried out in an environmentally acceptable 
manner. Ministers reaffirmed their commit- 
ment to promote actively in their energy 
policies those lines of action which advance 
the objectives of both energy and environ- 
mental policy on the lines set out in the Con- 
clusions on Energy and the Environment 
adopted at their meeting in July 1985. Solu- 
tions to the environmental problems 
associated with energy are fundamental to 
the maintenance of adequate, economic and 
secure supplies. Ministers also again empha- 
sized that just as the formulation of energy 
policy should give due weight to environmen- 
tal considerations, so should environmental 
policy give due weight to energy policy con- 
siderations. The lEA has already given much 
attention to following up these decisions. The 
decisions taken at the current meeting on 
efficiency in the use of energy, on electricity 
generation and on research, development and 
demonstration, including work on renewable 
energies and transportation, wA\ all advance 
the objectives of both energy and environ- 
mental policies. It is important that a proper 
balance be maintained between energy and 
environmental policies which at the same time 
stimulates research, development and com- 
mercialisation of new cleaner energy 
transforming and using technologies. 



33. The increase of the atmospheric con- 
tent of carbon dioxide, due to a large extent 
to the burning of fossil fuels, may have poten- 
tially serious consequences on the environ- 
ment and specifically on climate, agriculture 
and sea levels. A well co-ordinated multina- 
tional research effort is essential to assess the 
likelihood, extent and timing of such conse- 
quences. The lEA will follow progress and 
evaluate its implications on energy policy. 

Relations With Non-IEA Countries 

34. Developments and policy decisions in 
developing countries and other non-IEA coun- 
tries will have an increasingly important 
effect upon global energy balances, and thus 
upon the energy future and economic well- 
being of all countries. Continuing constructive 
contacts between parties concerned to gather 
and exchange information about energy 
developments and to promote understanding 
can contribute to sound energy policy actions 
both inside and outside the lEA. 

35. lEA countries will give increased 
attention to sound investments in exploration 
and development activities of developing 
countries with significant potential for future 
hydrocarbon supply. Ministers will support 
activities of international organisations to 
help improve investment regimes or to help 
finance investment in energy sectors of 
developing countries, as well as bilateral 
development aid projects directed toward 
energy. 

Implementation 

36. Regular monitoring of progress both by 
the IE A and its Member governments is 
essential to the successful implementation of 
these decisons. This work will be helped by 
the regular exchange of information and 
experience. Ministers instructed the Govern- 
ing Board at official level to review and 
where necessary strengthen the arrange- 
ments for such monitoring and exchanges. ■ 



Energy Security 

MESSAGE TO THE CONGRESS, 
MAY 6, 1987' 

Pursuant to Section 3102 of the Consolidated 
Omnibus Budget Reconciliation Act of 1986 
(Public Law 99-509; 100 Stat. 1889), I am 
transmitting my views and recommendations 
on the energy and national security concerns 
related to oil import levels. These views and 
recommendations take into consideration the 
findings in "Energy Security; A Report to the 
President of the United States." That report 
was prepared under the direction of 
Secretary of Energy John S. Herrington at 
my request and in satisfaction of require- 
ments of Public Law 99-509. 

My Administration has done a great deal 
to build the Nation's foundation for long-term 



energy security and to strengthen the 
domestic oil industry. Price and allocation 
controls on oil have been eliminated; the 
Strategic Petroleum Reserve (SPR) has been 
increased nearly fivefold to more than 500 
million barrels and, with our encouragement, 
our allies have built up their stockpiles by 
about 350 million barrels; several important 
energy tax incentives were retained in the 
Tax Reform Act and full-cost accounting pro- 
visions for independent producers were 
preserved; and I have recently forwarded to 
the Congress a $2.5 billion clean coal initia- 
tive. Because of these actions, the United 
States is now capable of withstanding a 
supply interruption comparable to the 1973 
and 1979 interruptions without experiencing 
the same economic distress. 

More remains to be done. Secretary Her- 
rington's recent report on energy security 
points out three major concerns: (1) our 
increasing dependence on imported oil; (2) the 
sudden decline in oil prices in 1986, which has 
harmed significant segments of the U.S. 
petroleum industry; and, (3) the serious impli- 
cations for national security raised by both of 
these events. The Department of Energy 
study concludes that by the mid-1990s we 
may be importing more than half our oil. 
Capital expenditures for oil exploration and 
development have dropped significantly, as 
has employment and U.S. oil production. 
Coupled with this production decline is 
increased consumer demand for oil, which 
together have resulted in a rise of one million 
barrels per day in oil imports. In recent 
months, while market prices have rebounded 
to some extent, the industry remains under 
pressure and the outlook is uncertain. 

We must take steps to better protect 
ourselves from potential oil supply interrup- 
tions and increase our energy and national 
security. My goals in this area are to: 

• Maintain a strong domestic oil industry; 

• Increase our domestic stockpiles, which 
we can draw down in the event of a supply 
interruption; 

• Expand the availability of domestic oil 
and gas resources; 

• Continue conservation and progress 
toward diversification of our energy 
resources; and 

• Promote among our allies the impor- 
tance of increasing their stockpiles. 

I have already proposed a number of 
significant steps on which the Congress has 
failed to act. If these policies had been in 
place, our domestic oil industry would not be 
so seriously impaired today. I again urge the 
Congress to act quickly in adopting my pro- 
posals to improve our energy security and 
strengthen the domestic oil industry, 
including: 

• Repeal of the Windfall Profit Tax; 

• Comprehensive natural gas reform, in- 
cluding wellhead price decontrol, mandatory 
contract carriage, and demand restraint 
repeal; 

• Approval of the Department of the 
Interior's five-year offshore oil and gas leas- 
ing plan; 



July 1987 



51 



ENVIRONMENT 



• Permitting environmentally sound 
energy exploration and development of the 
Arctic National Wildlife Refuge; and 

• Ensuring the future viability of nuclear 
power through nuclear licensing reform, 
reauthorization of the Price-Anderson Act, 
and progress in development of a nuclear 
waste repository. 

Secretary Herrington and I will continue 
to push hard for higher levels of oil stockpiles 
among our allies, particularly at the 
Ministerial Meeting of the International 
Energy Agency and the Venice Economic 
Summit. The Vice President is also leading 
the Task Force on Regulatory Relief to look 
at unneeded regulatory barriers to greater 
energy security, including evaluating 
regulatory changes to facilitate the use of 
alternative fuels for the transportation sector. 

In addition, today, I am urging the Con- 
gress to consider several steps that will lead 
to more exploration and development, reduce 
early well-abandonment, and stimulate addi- 
tional drilling activity. I am suggesting the 
Congress consider two tax changes of a 
relatively technical nature: increasing the net 
income limitation on the percentage depletion 
allowance from 50 percent to 100 percent per 
property; and repealing the transfer rule to 
permit use of percentage depletion for proven 
properties that have changed ownership. 
These changes will be of significant value but 
avoid reopening basic issues considered in tax 
reform. To continue our efforts to build a 
stockpile protecting us against supply inter- 
ruptions, I am prepared to support an SPR 
fill rate of 100,000 barrels per day, which will 
achieve by 1993 my goal of an SPR of 750 
million barrels, provided that budget offsets 
are made available to cover the higher costs 
of this fill rate. I am also reducing the 
minimum bid requirement for Federal off- 
shore leases from $150 per acre to $25 per 
acre, which will encourage exploration and 
development by reducing the up-front costs. 

I believe all these measures are important 
steps toward ensuring that our Nation has a 
strong domestic oil and gas industry and 
substantial protection against oil supply inter- 
ruptions. They would, taken together, 
increase production and make a significant 
contribution to our national security interests. 

I am also instructing the Secretary of 
Energy to provide, through the Domestic and 
Economic Policy Councils, periodic assess- 
ments of our energy security risks. It may be 
necessary to consider a variety of options for 
encouraging exploration and production if our 
U.S. industry continues to be diminished and 
national security risks increase. 1 will con- 
sider further actions as warranted. 

Ronald Reagan 



The Environmental Agenda 
and Foreign Policy 



'Text from Weekly Compilation of 
Presidential Documents of May 11, 1987. 



Following are addresses by John D. 
Negroponte, Assistant Secretary for 
Oceans and International Environmen- 
tal and Scientific Affairs, and by 
Richard E. Benedick, Deputy Assistant 
Secretary for Environment, Health and 
Natural Resources, before the State 
Department Symposium on the Environ- 
mental Agenda and Foreign Policy on 
April 16, 1987. 



ASSISTANT SECRETARY 
NEGROPONTE 

It is a pleasure for me to welcome you all 
here for this symposium on the environ- 
mental agenda and foreign policy. I 
would like to thank [Director of the 
Office of Public Programs] Sam Fry for 
his introduction. His suggestion that this 
gathering take place and the widespread 
interest demonstrated by your participa- 
tion tells me that environmental issues 
have truly come of age at the Depart- 
ment of State and deserve to be 
recognized as an integral element of 
American foreign policy. 

It has been especially gratifying, in 
the nearly 2 years that I have served as 
Assistant Secretary, that the Secretary 
of State has consistently expressed 
interest in the critical issues with which 
we are involved and has encouraged me 
to pursue agreements on an interna- 
tional level which serve to maintain this 
nation as a leader in the field of environ- 
mental protection. The personal interest 
of Secretary Shultz was evident earlier 
this year when he and the Mexican 
Secretary of External Affairs held a 
ceremony in this building to implement 
annexes on hazardous waste and air 
pollution as part of the U.S. -Mexico 
Border Environment Agreement. 

Responsibilities of OES 

Many of you work with us regularly on 
issues of mutual concern. To those of 
you from environmental organizations, 
the business community, and Capitol Hill 
especially, we look forward to hearing 
your views this morning. For others of 
you, this gathering may be your first 
contact with OES, the Bureau of Oceans 
and International Environmental and 
Scientific Affairs. Therefore, I would 
like to sketch for a moment the global 
range of issues we cover. 

OES is comprised of four divisions 
plus the Office of the Coordinator of 
Population Affairs and an Executive 
Directorate. 



52 



• My deputy, Richard Benedick, is 
responsible for Environment, Health, 
and Natural Resources— the areas our 
panels will cover today. 

• Oceans and Fisheries Affairs is 
another responsibility of OES, one which 
is frequently involved in conservation 
and resource management issues. This 
division supports U.S. participation in 
the Antarctic Treaty, the International 
Whaling Commission, the North Atlantic 
Salmon Conservation Organization, and 
the International Maritime Organization, 
to name a few examples. It also works 
on an entire range of issues related to 
the law of the sea, including, of course, 
protection of the marine environment. 

• Our division of Nuclear Energy 
and Energy Technology Affairs deals 
with issues of nonproliferation, nuclear 
safeguards, and nuclear energy coopera- 
tion. It was very much involved in the 
Department of State's response to the 
accident at Chernobyl and also par- 
ticipated in the International Atomic 
Energy Agency deliberations which led 
to the adoption last fall of agreements 
on notification and emergency assistance 
in case of nuclear accidents. We continm 
to be interested in the accidents. 

• Oversight and coordination of 
international scientific cooperation is th» 
principal function of our division of 
Science and Technology Affairs. There 
are dozens of government-to-govern- 
ment science cooperation agreements 
between this country and others, rein- 
forced by literally hundreds of direct 
agency-to-agency cooperative arrange- 
ments. These relationships are valuable 
not only for the science which they pro- 
mote but also for the good will they can 
create and the access they can develop 
to important segments of other societies 
Science and technology agreements hav 
proven to be particularly beneficial with 
such diverse nations as China, India, 
Yugoslavia, and Israel. At this very 
moment, an effort is underway to bolste 
our science relations with Brazil; and I 
am pleased to report that, at OES's sug-; 
gestion, the U.S. side plans to propose 
environmental science as one of the 
areas of concentration. 

Another important function of the 
science division is to provide support to 
the 42 full-time science officers at em- 
bassies abroad whose job it is, among 
other things, to serve as our eyes and 
ears on science-related developments in 
other countries. 

• The Coordinator of Population 
Affairs provides foreign policy guidance! 



Department of State Bullet! 



ENVIRONMENT 



in the formulation and implementation of 
U.S. policy on population. Clearly, there 
is a relationship between demographic 
pressure and environment which is evi- 
dent in such issues as the destruction of 
tropical forests to accommodate popula- 
tion growth or the pollution and health 
problems caused by urban overcrowding. 

Turning now to environmental 
issues, I note from the morning's pro- 
gram that you will be receiving quite 
complete exposure to the Bureau's 
environmental agenda. But let me make 
a few introductory observations. 

U.S. Environmental 
Role and Priorities 

First of all, how do we define our role 
and shape our priorities? I am sure it 
comes as no surprise to you that we have 
no greater claim to control over events 
than any other agency. So even with the 
best of motives and intentions, much of 
what we do is driven by external cir- 
cumstances. The Chernobyl reactor acci- 
dent was a case in point. Likewise, we 
have only limited influence over how and 
when our most immediate neighbors will 
raise or, for that matter, create environ- 
mental issues with which we must deal. 
Having said that, I think it is useful 
to distinguish in our work between 
environmental issues driven by bilateral 
or regional considerations, on the one 
hand, and global environmental ques- 
tions, on the other. Sometimes the 
distinctions become difficult to make, 
and, on other occasions, the local and 
global issues can become intertwined. 
But I am sure you will agree that the 
environmental impact of Tijuana's 
sewage, as destructive to the local 
environment as it may be, is a qualita- 
tively different issue from the destruc- 
tion of the planet's stratospheric ozone 
layer— unless, of course, you happen to 
live in San Diego. However, an environ- 
mental policy official disregards localized 
problems at his own peril. And, indeed, 
issues of water and air quality have been 
on our bilateral agenda with Mexico and 
Canada going back many decades. 

Bilateral and Regional Concerns. 

So I would suggest to you that the first 
and, in many respects, the most politi- 
cally sensitive set of international 
environmental concerns this country has 
is with its immediate neighbors to the 
north and south. I won't elaborate exten- 
sively on them at this point. Perhaps we 
can go into some during the question 
period. But a partial listing would serve 
to illustrate my point. 

• First, there is the issue of acid 
rain with Canada. In January 1986, two 
specially appointed envoys— one Cana- 
dian and one American— issued a report 



detailing recommendations designed to 
foster a long-term solution to this 
serious environmental and political prob- 
lem. President Reagan fully endorsed 
the envoy's recommendations shortly 
thereafter and reaffirmed this commit- 
ment at his most recent summit meeting 
with Prime Minister Mulroney in 
Ottawa. The President also agreed to 
consider Canadian proposals for an acid 
rain accord. 

• Turning south of the border, the 
U.S. -Mexico Border Environment 
Agreement of 1983 has successfully 
addressed serious problems of trans- 
boundary environmental quality between 
our two countries, such as air pollution 
from copper smelters and transboundary 
shipment of hazardous waste. It has 
been cited by both sides as a model for 
cooperation between us, which can be 
extended to other worrisome border 
issues such as re-use of waste water for 
irrigation. 

• Finally, in a completely different 
area of concern, the United States and 
Canada recently completed a successful 
negotiation on principles for the manage- 
ment of the porcupine caribou herds 
whose migratory range extends across 
both of our territories. 

I could cite numerous other 
endeavors, but the thought I wish to 
leave with you today is the commonsen- 
sical notion that these transboundary 
environmental questions are ones we 
cannot afford to neglect. What is more, 
our success in coping with the more 
immediate, and frequently more 
politically urgent, environmental matters 
affects our credibility when dealing with 
global issues. 

Global Issues and Cooperation. On 

the global scene, I would like particularly 
to cite the fine work of the UN Environ- 
ment Program (UNEP) in these types of 
issues. An outstanding example is the 
regional seas program. Most recently we 
participated in concluding a convention 
on the South Pacific environment. 
Again, the political and environmental 
sides of things meshed nicely because 
our signing of the South Pacific Regional 
Environmental Convention turned out to 
be a bright spot in our relations with the 
Pacific island states. 

Another major UNEP initiative is 
the ongoing international negotiation on 
protection of the ozone layer. This is a 
high-priority issue. In my opinion, an 
opportunity is in our grasp to achieve 
significant protection for future genera- 
tions at relatively low cost to ourselves 
today. On the related but broader matter 
of global warming, we know that exten- 
sive monitoring is needed to develop a 
scientific consensus on the extent and 
impact of the problem, and we, 



therefore, strongly support UNEP's 
Global Environmental Monitoring 
System. 

Another global environmental con- 
cern is represented by the Convention on 
International Trade in Endangered 
Species (CITES) and the well-received 
U.S. initiative to develop a strategy to 
protect and conserve the rapidly disap- 
pearing population of rhinos in Asia and 
Africa. Finally, I should mention this 
Bureau's involvement in efforts to 
influence the multilateral development 
banks to protect tropical forests and 
preserve biological diversity. 

There is clearly much that remains 
to be done in the field of international 
environmental protection. The raising of 
environmental consciousness throughout 
the world is a complex political, 
economic, and cultural challenge. Instill- 
ing environmental values in economically 
deprived societies is a task whose enorm- 
ity, I suspect, people from as fortunate 
circumstances as ourselves can only 
begin to appreciate. And yet, increased 
environmental understanding in Third 
World countries will be essential in 
addressing some of the most critical con- 
cerns of our day, such as global chmate, 
biological diversity, and tropical forests. 

Effects of Budget Cuts 

Unfortunately, in the face of these 
challenges, the funds available to the 
State Department, including those for 
international environmental efforts, 
have been reduced in the ongoing budget 
stringency. Secretary Shultz has 
testified eloquently before numerous 
congressional committees about the 
damage to our international influence if 
we are forced to continue cutting pro- 
grams to meet unrealistic budget 
targets. Support for environmental pro- 
grams makes up only a fraction of the 
foreign affairs budget, which itself is 
only a very small portion of the Federal 
budget. I want to lend my support to the 
Secretary's message and make the point 
to this audience that our ability to con- 
tribute to international environmental 
programs is directly related to the State 
Department's ability to secure adequate 
funding. 

The Role of Nongovernmental 
Organizations and Congress 

I am very gratified that so many of you 
here today represent nongovernmental 
environmental organizations. Because 
just as you have supported us in our 
environmental agenda of the past 
several years, so, too, do I believe you 
can even further promote linkages and 
networks with like-minded private 



Julv 1987 



53 



ENVIRONMENT 



organizations throughout the world, 
especially in countries which lack that 
particular type of private sector 
experience. 

Let me suggest that one especially 
ripe target for expanded nongovernmen- 
tal organization activity is right in our 
own hemisphere. With the dramatic 
opening toward democracy in Latin 
America and the corresponding accept- 
ance of a more pluralistic way of doing 
things, the opportunities for effective 
action by private organizations have 
been substantially increased. Let me 
urge that you do what you can to take 
advantage of these new opportunities. 

Despite what I believe to be signifi- 
cant progress in international environ- 
mental protection over the past 2 years, 
we must not become complacent merely 
because we can negotiate sound interna- 
tional agreements. These agreements 
must be ratified both by the U.S. Senate 
and by a sufficient number of other 
countries for them to enter into force 
internationally. I am pleased to note that 
the Senate acted quickly on the Vienna 
Convention on Protection of the Ozone 
Layer and on the Ramsar Convention on 
Conservation of Wetlands. However, 
Congress does not always act so expedi- 
tiously. Take the example of liability and 
compensation for the damaging oil spills 
from tankers that occur each year, 
resulting in millions of dollars in 
economic losses to commercial fishermen 
and beachfront property owners, as well 
as environmental damage and expensive 
cleanup costs to Federal, state, and local 
governments. 

If a spill on the order of the Amoco 
Cadiz— which marine insurers estimate 
will eventually be settled in the range of 
$180-$300 million— were to occur in the 
United States, neither existing state nor 
Federal statutes would be adequate to 
cover the cleanup costs and to fully com- 
pensate legitimate claimants. For this 
reason, in 1984 the United States took 
the lead in negotiating two protocols to 
the 1969 Civil Liability and the 1971 
Fund [The International Convention on 
the Establishment of an International 
Fund for Compensation for Oil Pollution 
Damage] Conventions. These 
agreements would provide up to $254 
million for victims who suffer pollution 
damage from 

oil tanker accidents. President Reagan 
transmitted these protocols to the 
Senate in November 1985 with a request 
for expeditious advice and consent. The 
99th Congress failed to act, and the 
Administration must continue to press 
for advice and consent in the current 
congressional session. Your support for 
such congressional action is essential if 
we are to follow through on the types of 
important international initiatives we 
are discussing here today. 



Conclusion 

So, in conclusion, let me stress that— as 
the few examples I have cited here so 
clearly illustrate— effective international 
action on the environmental front is, 
indeed, a complex process involving 
coordinated action between the public 
and private sectors both here and 
abroad. Its success requires energy and 
commitment at every level— from the 
grassroots to the capitals of the world. 
The organizations you represent are a 
dynamic part of this process. We look 
forward to continuing to work with you 
in pursuit of our common environmental 
goals. 



DEPUTY ASSISTANT 
SECRETARY BENEDICK 

Now that you've been exposed to a 
whole morning of discussion of interna- 
tional environmental issues, there seems 
little left for me to add. In pondering 
how I might close this useful inter- 
change, the thought occurred to me that 
I might talk a bit about the process by 
which we develop and implement a U.S. 
position on the international stage. I use 
the theatrical metaphor advisedly 
because the process involves many 
actors, occasionally has too many direc- 
tors, and has its moments of high drama 
(and sometimes farce). I know that it is 
not always clear to you— the audience- 
how this process works, so I will try 
today to draw the curtains apart. 

Policy and Process 

in Environmental Issues 

The State Department is, as you may 
know, the smallest U.S. Government 
department, as measured by budgetary 
size. Also, in terms of personnel, it is 
literally dwarfed by most agencies in this 
town. We do not have tens of millions of 
dollars to fund research or assistance 
programs. Especially during the recent 
hard times, it is often difficult for us 
even to find travel funds to send some- 
one to an international conference. We 
also do not have, as some of our sister 
agencies do, an array of world-class 
scientists operating at the frontiers of 
knowledge. 

What we do offer is experience with 
the world outside our borders, an under- 
standing of the nuances of negotiating in 
a foreign or multilateral context, and a 
sense of the relationships between 
domestic concerns and foreign policy. 



As Ambassador Negroponte pointed 
out earlier today, international 
environmental issues may involve either 
bilateral relationships (i.e., with one 
other country) or global subjects, 
generally discussed in a multilateral 
framework. But bilateral issues for our 
Bureau go beyond our immediate neigh- 
bors to the north and south. Last winter, 
for example, we worked together with 
the U.S. Fish and Wildlife Service on a 
ban on wildlife imports from Singapore, 
which resulted in that country joining 
the Convention on International Trade 
in Endangered Species and prohibiting 
trade in rhinoceros and its byproducts. 

Turning to multilateral relations, the 
Organization for Economic Cooperation 
and Development (OECD) is essentially 
our forum for discussions among the 
Western industrialized nations on 
environmental issues, ranging from 
safety in biotechnology to prevention 
and management of chemical accidents. 
The UN Environment Program is the 
primary North-South forum, dealing 
with such global issues as protection of 
the ozone layer and trade in toxic 
chemicals. The UN's Economic Commis- 
sion for Europe (ECE) is the place for 
East- West discussions of such issues as 
transboundary air pollution from sulfur 
dioxide or, currently in process, nitrogen 
oxides. And we also work, among othera 
with the UN Food and Agriculture 
Organization on pesticides and on 
tropical forests, with the World Health 
Organization on efforts to control the 
AIDS epidemic, and with the World 
Meteorological Organization on global 
climate change. 

Often there is a merging of the 
bilateral and multilateral contexts. Our 
differences with Canada over acid rain 
influenced the U.S. position on an ECE 
treaty on sulfur dioxide. An agreement 
with the Soviet Union for cooperative 
research on climate change and on 
stratospheric ozone has clear implica- 
tions for ongoing discussions in 
multilateral fora. 

Many of the issues we deal with 
arise from, or are influenced by, 
grassroots concerns. Private environ- 
mental organizations, for example, 
aroused congressional interest in 
multilateral development bank lending 
policies, which in turn galvanized the 
Treasury and State Departments and I 
the Agency for International Develop- I 
ment to undertake a worldwide cam- I 
paign to heighten environmental I 

awareness in these banks. Citizens' I 

groups in California played an important 
role in our negotiations with Mexico ove 



54 



Department of State Bulleli 



ENVIRONMENT 



Tijuana sewage. Similarly, in Alaska, 
state and native American groups 
iniHuenced the U.S. position with Canada 
on conservation of the porcupine caribou 
herd. Our successful negotiation of a 
South Pacific environmental convention 
had to take account of the independent 
voices of three U.S. Pacific trust ter- 
ritories and three flag territories. And 
private industry and industrial associa- 
tions find an open door at the State 
Department, as they strive to reconcile 
environmental responsibility with 
balance sheets and employment. 

In short, the domestic constituencies 
;are important actors in our drama— 
indeed, they are sometimes actually on 
stage, or at least in the wings, as observ- 
srs and counselors, for example, in cur- 
,rent international negotiations on the 
Dzone layer and on hazardous chemicals. 

Developing a 

U.S. Policy Position 

Dnce an environmental issue comes onto 
)ur agenda, the first task for us is to 
levelop a State Department position. 
This may involve consultations with the 
•egional bureaus for political guidance, 
vith the legal counselor on questions of 
nternational law and precedence, and 
vith bureaus specializing in economic 
md business affairs or international 
)rganizations. For scientific policy 
idvice, we will look to the OES Bureau's 
)wn distinguished Science Advisory 
Committee and to the research expertise 
)f such agencies as the National 
\.eronautic and Space Administration 
NASA), the National Oceanic and 
Atmospheric Administration (NOAA), 
he Food and Drug Administration 
FDA), or the Environmental Protection 
Vgency (EPA). And we may involve the 
Secretary of State or the Deputy 
Secretary on issues of high prominence, 
'.uch as acid rain, ozone, or the Mexican 

, )order agreement. Often, we will use 
)ur U.S. embassies abroad to seek views 
)f other governments as we develop our 
;houghts on an issue. 

Then comes the challenging task of 
)rchestrating a government-wide posi- 
;ion. This may involve liaison with just 
)ne agency— e.g., the Department of 
nterior's Fish and Wildlife Service on 
;he porcupine caribou issue— or it may 
nvolve 12-18 different agencies, as in 
;he case of ozone or the question of 
3cean disposal of radioactive wastes 

jonder the London Dumping Convention. 



To illustrate the extent of the 
required interagency coordination, let 
me just quickly list some of the U.S. 
agencies we deal with on a regular basis, 
with only a partial sampling of issues 
connected with that particular agency: 

EPA— Mexican and Canadian issues, 
ozone, regional seas; 

Treasury— multilateral bank lending 
policies; 

Interior— rhinos and other 
endangered species; 

NASA— ozone; 

NOAA— climate change; 

Navy Department— ocean disposal of 
radioactive wastes; 

Department of Commerce— hazard- 
ous chemicals; 

National Science Foundation— bio- 
technology; 

FDA— pharmaceuticals; 

National Institutes of Health— AIDS; 

Department of Agriculture— tropical 
forests; 

U.S. Trade Representative— trade 
aspects of international regulations; 

Agency for International Develop- 
ment—biological diversity; 

Department of Energy— acid rain; 
and 

Various White House offices, 
including OMB [Office of Management 
and Budget], the President's Science 
Adviser, the Council of Economic 
Advisers, the Domestic Policy Council, 
the National Security Council, and so on. 

The U.S. Government position on an 
issue is usually forged through inter- 
agency meetings, personal consultations, 
and drafting groups. Differences among 
agencies' viewrpoints must be resolved at 
higher political levels, sometimes involv- 
ing the Cabinet and, occasionally, even 
the President— as was the case in the 
recent evolution of our acid rain policy. 

Building Domestic and 
International Support 

The result is a formal position, which 
must now be sold, at home and abroad. 
Now a different kind of negotiating 
strategy comes into play. We often 
return to the environmental groups, to 
the industrial associations, and to Con- 
gress. We testify; we hold workshops; 
we give press interviews to explain and 
justify a position. 

Turning the focus overseas, we again 
rely on our embassies, utilizing their con- 
tacts with governments to transmit our 
cabled instructions and to seek foreign 
allies for our point of view. Often, we 
will call in foreign representatives from 



their embassies here in Washington, 
individually or— as in the case of 
biotechnology and ozone— for group 
meetings to discuss the U.S. position. 
We may also send special teams to 
foreign capitals for bilateral consulta- 
tions at ministerial or subcabinet level, 
such as the mission I led in February- 
comprising also representatives of EPA 
and NASA— to Brussels, Paris, and Lon- 
don on the ozone issue. We may also try 
to use the media, through press con- 
ferences and interviews, to amplify our 
persuasive voice. In a recent variation of 
this theme, NASA senior scientist Bob 
Watson and I utilized the United States 
Information Agency's "Worldnet" inter- 
active video interview technology to 
reach audiences all over Europe on the 
ozone issue— a process which we will be 
repeating next week for Japan and later 
on for Latin America. 

And, as this process unfolds, the 
U.S. negotiators— your negotiators- 
venture forth to try and achieve a 
reasonable international agreement, one 
that balances our responsibility to 
safeguard human health and ecology 
with the political and economic realities 
which affect both domestic and foreign 
policy. We hope that we succeed; we 
know that we must, in any case, answer 
for our efforts. 

Conclusion 

In all of this, our motto might well be 
the words of Francis Bacon, written 
over 300 years ago: "Nature, to be com- 
manded, must be obeyed." 

I hope that this little survey may 
enable you to better understand those of 
us enmeshed in the drama of interna- 
tional environmental protection— 
perhaps to share somewhat the rare 
moments of exhilaration when we can 
see the culmination of work well planned 
and well done, as well as those moments 
of frustration when we go home to a cold 
supper after yet another inconclusive 
late-night interagency meeting. 

In conclusion, I hope that this sym- 
posium has been as useful to you as it 
has been for me and my staff. On behalf 
of OES and our panelists, let me thank 
you for your interest and attention and 
your participation this morning. We will 
continue to welcome your ideas and 
counsel. ■ 



55 



EUROPE 



Visit of French Prime IVIinister 



■a 



k 




Prime Minister Jacques Chirac of the 
French Republic made an official work- 
ing visit to the United States March 
29-April 1, 1987, to meet with President 
Reagan and other government officials. 

Following are arrival remarks made 
by President Reagan and Prime Minister 
Chirac on March 31.'- 

President Reagan 

Nancy and I offer you our warmest 
welcome to the United States, to 
Washington, and to the White House. 
And we greet you, Mr. Prime Minister, 
not only as the head of government of 
the French Republic, our nation's oldest 
ally in war and peace, but as a represen- 
tative of the people of France, for whom 
the people of the United States have 
long had a special affection. 

We only have to look around us this 
morning if we could, to look beyond the 
White House lawn to the graceful monu- 
ments of George Washington and 
Thomas Jefferson, to be reminded [of] 
the historic struggles for freedom and 
liberty which have bound our nations 
together for generations. Indeed, the 
park directly across the street from the 
north entrance of the White House bears 
the name of a brave Frenchman who, as 
a young man, became a trusted aid and 
almost a son to George Washington, 
Lafayette. 



As you know this year we Americans 
are celebrating the 200th anniversary of 
our Constitution. In doing so, we're 
rededicating ourselves to the aspirations 
of all men to live in freedom and peace, 
aspirations captured in that ageless 
document. It was written by Americans, 
of course; but today it is only right to 
point out that they were Americans- 
James Madison, Alexander Hamilton, 
and others— who had been influenced by 
the great names of the French 
Enlightenment, like Montesquieu, for 
one, and by the hopes for liberty and 
human rights so ardently expressed by 
the French people themselves. 

Some months ago our two great 
nations celebrated the 100th anniversary 
of the Statue of Liberty, a gift from the 
people of France to the people of the 
United States. Lady Liberty, now 
beautifully refurbished, her torch 
rekindled, has rightly become cherished 
throughout the world as a symbol of 
human freedom. But even Lady Liberty, 
as magnificent as she is, would be 
nothing but an empty symbol had not the 
American and the French peoples, time 
and again, joined together in moments of 
peril, joined together in common 
sacrifice to preserve and defend freedom 
itself. 

Three years ago I stood on the windy 
beaches of Normandy and, as French- 
men and Americans, recalled together 
the most perilous days of the Second 
World War. And this spring Americans 



will join in celebrating the 70th anniver- 
sary of the arrival in France of the 
American expeditionary force of World 
War I. Indeed, from Yorktown to 
Belleau Wood, from Normandy to 
Beirut, Frenchmen and Americans have 
stood together and, yes, died together in 
the name of peace and freedom. 

Today we continue to face grave 
challenges together as we seek to ensure 
a safer world and a more prosperous 
future, one in which our peoples and 
those of other nations can live in still 
greater prosperity and freedom. We 
both understand that to achieve that end 
our friendship must remain deep, our 
alliance strong and bold. And we both 
believe that today it is the forces of 
freedom that are on the march. 

You have a very busy day ahead of 
you, Mr. Prime Minister, one that I do 
not intend to delay. Nancy and I hope 
during your all too brief visit to talk of 
. our common goals, but also to deepen 
the personal friendship with you and 
Madame Chirac and with your col- 
leagues. Once again, we offer you and 
Madame Chirac our warmest welcome. 
And on behalf of all Americans, soyez lest 
bienvenus aux Etats-Unis [welcome to 
the United States]. 

Prime Minister Chirac^ 

Let me tell you how really delighted my 
wife and I are to be here with you today 
among our American friends and our 
French friends. And let me first thank 
you, Mr. President, for having invited 
me to come on an official visit to the 
United States, where I stayed and 
worked, some 30 years ago, alas, when 1 
was a young student just discovering 
this New World. And finally, let me con- 
vey to the American people the feelings 
of friendship, brotherhood, and admira- 
tion and affection that the French peopl* 
have for them and also, Mr. President, 
the affection that the French people 
have toward you yourself and Mrs. 
Reagan. Feelings of brotherhood, yes, 
because our two countries have always 
been side by side in crucial moments of 
their history. 

Three years ago, as you mentioned, 
you came to France to commemorate D- 
Day in Normandy and to honor the 
resting places of so many young 
Americans who gave their lives to free 
France and Europe. And last year you 
celebrated, as you recall, the 100th anni- 
versary of the Statue of Liberty, a gift 
of the French people, and especially a 
symbol of the American dream and of 
American reality. This year, almost 70 
years to the day after the United States^ 



non^rtmpnt nf State 



EUROPE 



ivent to war alongside France and its 
Allies of World War I, I have come to 
tell you this: France has not forgotten. 
When I go and pay tribute during my 
Drief stay in Washington to the memory 
)f General Pershing— a great man, a 
jreat soldier, and a great American— I 
shall be paying tribute to all of the 
American boys who fell on France's soil 
:o defend my country against all kinds of 
legemonies in 1917 and again in 1944. 
And now that I am here in the United 
States, there is something I want to tell 
/ou with all my heart, and that is this: 
;hank you, America. France has not 
"orgotten. France remembers. 

But I have not come solely to convey 
;his message of remembrance. I have 
■ome to tell you that we continue to 
iphold the same ideals of freedom, to be 
Iriven by the same will, to face the 
langers that confront us all together: 
errorism, war, hunger, poverty, new 
mseases, drugs, and yet other dangers. 



In the face of so many trials, so many 
threats, we are resolved, as you are 
yourselves, to go on fighting and affirm 
the importance of our ideals. We are side 
by side in all these great struggles. 

Today, as we set forth on a 
technological adventure to conquer new 
fields of intelligence— biology and 
space— we must work together in an 
ever-growing spirit of trust, cooperation, 
and true market competition. We have 
to work together to face the challenge of 
the future. With these feelings and in 
this spirit, I am entering into these 2 
days of talks that will enable us, I am 
sure, to find together with American 
leaders, common guidelines for future 
action on the scale of the ambitions we 
share. 



'Text from Weekly Compilation of 
Presidential Documents of Apr. 6, 1987. 

-Prime Minister Chirac spoke in French, 
and his remarks were translated by an inter- 
preter. ■ 



^ATO Nuclear Planning Group 
VIeets in Norway 



The Nuclear Planning Group of the 
'^orth Atlantic Treaty Organization 
NATO) met in Stavanger, Norway, 
4ay U-15, 1987. The United States was 
■epresented by Secretary of Defense 
Jaspar W. Weinberger. Following is the 
'inal communique issued on May 15. 

'he NATO Nuclear Planning Group (NPG) 
net in ministerial session at the invitation of 
he Norwegian Government in Stavanger, 
■Jorway, on 14th and 15th May 1987. We 
liscussed a wide variety of security matters, 
ncluding the status of NATO's nuclear 
orces, current arms control negotiations, the 
tatus of implementation of the December 
979 dual-track and 1983 Montebello deci- 
ions, the work of several study groups, and 
uture NPG work programs. 

Deterrence of any aggression continues to 
le the central objective of the Alliance. To 
hat end, in this the year of the 20th anniver- 
;ary of the adoption of the strategy of flexible 
•esponse, we noted that this strategy has 
itood the test of time and remains an essen- 
ial and sound basis for the future security of 
. ill Alliance members. While improving 
NATO's conventional forces, we will maintain 
ind improve the nuclear forces necessary to 
;arry out that strategy. In that context, we 
loted with concern the existiiig imbalances 
jetween Alliance and Warsaw Pact nuclear, 
;onventional, and chemical forces as well as 
;he unabated expansion of Warsaw Pact 
Tiilitary capabilities across the board. 

Efforts to secure equitable and effectively 
."erifiable reductions in military forces, both 
:onventional and nuclear, are an integral ele- 



ment of our security policy in seeking to 
achieve a more stable and secure environment 
at lower levels of armaments. It is in our 
security interests that agreements ensure 
detailed, specific arrangements providing for 
effective verification; we reject generalized 
undertakings on verification as an acceptable 
basis for sound agreements. 

During our continuing consultations 
on INF [intermediate-range nuclear 
forces] arms control, we welcomed the 
improved prospects for a longer-range 
INF (LRINF) agreement between the 
United States and the Soviet Union 
encompassing significant reductions in 
nuclear forces. We reaffirmed that 
appropriate global constraints on 
shorter-range missile systems are indis- 
pensable. We stressed the requirement 
to eliminate all United States and Soviet 
LRINF missiles and called upon the 
Soviet Union to drop its demand to 
retain a portion of its SS-20 force. A 
global zero outcome, a long-standing 
NATO objective, would further reduce 
the Soviet threat, and greatly facilitate 
verification. 

We accepted with pleasure the invi- 
tation of the U.S. Government to hold 
our next Nuclear Planning Group mini- 
sterial meeting in the United States in 
the autumn of 1987. 

Greece expressed its views in a 
statement included in the minutes. ■ 



31st Report on Cyprus 



MESSAGE TO THE CONGRESS, 
APR. 21, 1987' 

In accordance with Public Law 95-384, I am 
submitting to yoy a bimonthly report on prog- 
ress toward a negotiated settlement of the 
Cyprus question. 

During this period U.S. Secretary General 
Perez de Cuellar continued his efforts to 
restore momentum to the search for a 
peaceful Cyprus settlement. On his instruc- 
tions, U.N. Under Secretary General 
Goulding visited Cyprus February 4-7 to 
discuss with the Greek and Turkish Cypriot 
sides procedural ideas that could help move 
the negotiating process forward. Mr. 
Goulding proposed the holding of separate, 
exploratory talks in Nicosia between U.N. 
officials and representatives of the two sides. 
These discussions would be informal and non- 
binding and were intended to help the 
Secretary General carry forward his good 
offices mission. 

In mid-March, the two Cypriot sides 
reviewed the Secretary General's proposals 
with the Secretary General's Acting Special 
Representative on Cyprus. The Greek Cypriot 
side said its general position on the proposal 
was positive, although this did not imply any 
change in its view on the necessity for prior- 
ity discussion of the issues of importance to 
it, or in its support for the convening of an 
international conference. The Turkish Cypriot 
side expressed its concern that the proposed 
procedure could undercut the Secretary 
General's March 1986 draft framework agree- 
ment, which the Turkish Cypriot side had 
accepted and the Greek Cypriot side had not. 
As of this date, U.N. Secretariat officials are 
continuing their contacts with the two sides 
on the proposal advanced by Mr. Goulding. 

In both public statements and private 
discussions during this period, Administration 
officials have stressed our continuing support 
for the U.N. Secretary General's Cyprus mis- 
sion. We have also been urging those directly 
involved with the Cyprus issue to seek every 
opportunity to improve the atmosphere on the 
island so as to enhance the prospects for 
progress toward a negotiated settlement. 

Sincerely, 

Ronald Reagan 



'Identical letters addressed to Jim 
Wright, Speaker of the House of Represent- 
atives, and Claiborne Pell, chairman of the 
Senate Foreign Relations Committee (text 
from Weekly Compilation of Presidential 
Documents of Apr. 27, 1987). ■ 



57 



MIDDLE EAST 



U.S.S. stark Hit by Iraqi IVIissiles 



SECRETARY'S STATEMENT, 
MAY 17, 1987' 

At approximately 2:10 p.m., Washington 
time, the U.S. Navy frigate, the U.S.S. 
Stark, was hit by two missiles fired from 
an Iraqi F-1 Mirage aircraft. At the time 
of the attack, the Stark was located 
about 70 miles northeast of Bahrain. The 
ship, at last report, was dead in the 
water, and the entire crew was being 
taken off. There have been serious 
casualties. 

The United States regards this 
attack with grave seriousness. The 
President was informed at once, of 
course, and is following the situation 
closely. I've been in touch with 
Secretary [of Defense] Weinberger, 
White House Chief of Staff Baker, and 
national security adviser Carlucci. 



We have called in the Iraqi Ambas- 
sador here in Washington and issued the 
strongest protest and demanded a full 
accounting. Our Ambassador in Baghdad 
has been instructed to deliver our pro- 
test there, and we are in continuous con- 
tact with our Embassies in Baghdad and 
Bahrain. 

This event underscores once more 
the seriousness of the Iran-Iraq war, not 
only to the countries directly involved 
but to others. It shows how easily it 
escalates, and it underlines once more 
the seriousness of the tensions that exist 
in the Middle East and the importance of 
trying to do something about them. 

But I want to assure you that we 
take this event with the utmost seri- 
ousness. We know the source of this 
missile that hit our ship, and we demand 



a full accounting, and as we have more 
information, of course, we will be 
meeting on it and seeing what further 
action may be necessary. 



PRESIDENT'S STATEMENT, 
MAY 18, 1987^ 

I know and I share the sense of concern 
and anger that Americans feel over the 
yesterday's tragedy in the Persian Gulf. 
We have protested this attack in the 
strongest terms and are investigating 
the circumstances of the incident. When 
our investigation of the facts is com- 
pleted, I will report to the American 
people about this matter and any further 
steps that are warranted. For that 
reason, I have convened a meeting of tht 




President Reagan asks a question during a Situation Room briefing by Gen. Robert T. 
Herres, Vice Chairman of the Joint Chiefs of Staff, on the condition of the missile frigate 
U.S.S. Stark. Defense Secretary Weinberger looks on. 



? photo by Pete Souza) 



MIDDLE EAST 



national security planning group to 
review the entire situation in the Persian 
Gulf. 

In the meanwhile, I want to express 
my deepest sympathies to the families of 
the brave men killed and injured yester- 
day aboard the U.S.S. Stark. Their loss 
and suffering will not be in vain. The 
mission of the men of the U.S.S. 
S^arfr— safeguarding the interests of the 
United States and the free world in the 
gulf— remains crucial to our national 
security and to the security of our 
friends throughout the world. 

The hazards to our men and women 
I in uniform in the defense of freedom can 
I never be understated. The officers and 
crew of the U.S.S. Stark deserve our 
highest admiration and appreciation. 
And I would also like to express my 
sincere gratitude to Saudi Arabia and 
Bahrain for their prompt assistance in 
responding to the stricken U.S.S. Stark. 
j This tragic incident underscores the 
I need to bring the Iran-Iraq war to the 
' promptest possible end. We and the rest 
of the international community must 
redouble our diplomatic efforts to hasten 
the settlement that will preserve the 
sovereignty and territorial integrity for 
both Iran and Iraq. At the same time, 
we remain deeply committed to support- 
ing the self-defense of our friends in the 
gulf and to ensuring the free flow of oil 
through the Strait of Hormuz. 



WHITE HOUSE STATEMENT, 
MAY 18, 1987^ 

President Reagan met with the national 
security planning group in the Situation 
Room from 2:30 until 3:45 this afternoon 
to discuss the status of the attack on the 
U.S.S. Stark in the Persian Gulf. The 
President has ordered a higher state of 
alert for U.S. vessels in the area. The 
belligerents in the war, Iran and Iraq, 
will be formally notified today of this 
change in status. Under this status, air- 
craft of either country flying in a pattern 
which indicates hostile intent will be 
fired upon, unless they provide adequate 
notification of their intentions. 

The Administration will consult with 
Congress on these changes and related 
issues. 

We have issued a vigorous protest to 
the Government of Iraq. We have noted 
the profound regrets issued by the Iraqi 
Ambassador in the name of his Foreign 
Minister and Iraqi President Saddam 
Hussein. However, we are awaiting 
official notification of this statement. We 
expect an apology and compensation for 
the men who died in this tragic incident. 
I We also seek compensation for the ship. 



The President shares the sense of con- 
cern and anger that Americans feel at 
this time. We will monitor the situation 
on a continuing basis. 



ASSISTANT SECRETARY 

MURPHY'S STATEMENT, 
MAY 19, 1987^ 

I appreciate the opportunity to meet 
with you today to discuss the Adminis- 
tration's policy toward the continuing 
war between Iran and Iraq and toward 
problems related to international ship- 
ping in the gulf. 

Our meeting takes place against the 
background of the attack by Iraqi air- 
craft on the U.S.S. Stark Sunday, with 
tragic loss of life. We extend our deepest 
condolences to the families of those 
brave American sailors who died or were 
injured in the attack. We greatly 
appreciate the assistance provided by 
Saudi Arabia and Bahrain in the rescue 
and evacuation operation. 

Yesterday morning, the President 
expressed his concern and anger over 
Sunday's tragedy in the Persian Gulf 
and noted that we had protested the 
unprovoked attack in the strongest 
terms to the Government of Iraq. 
Yesterday afternoon, the President of 
Iraq apologized for the unintended 
attack and made clear Iraq had no 
hostile intentions whatsoever toward the 
United States. He expressed his deepest 
regrets and profound condolences. We 
have agreed to an immediate joint 
investigation of the incident to avoid any 
future mistakes. 

This tragic accident brings home 
starkly the increasing danger of the 
Iran-Iraq war and the urgency of bring- 
ing the conflict to an end. The United 
States is actively engaged in seeking this 
goal. 

This Administration, like its prede- 
cessors, regards the gulf as an area of 
major interest to the United States and 
is committed to maintaining the free 
flow of oil through the Strait of Hormuz. 
Consistent with our national heritage, it 
attaches great importance to the princi- 
ple of freedom of navigation. The Admin- 
istration is also firmly committed as a 
matter of national policy to support the 
individual and collective self-defense of 
the Arab gulf states. These longstanding 
U.S. undertakings flow from the strate- 
gic, economic, and political importance 
of the region to us. 



U.S. Policies 
Toward the Gulf War 

Over the past 3 months, the President 
has reaffirmed the direction of our long- 
term policy. Given the increasing 
dangers in the war, with its accompany- 
ing violence in the gulf, we have taken a 
series of specific decisions designed to 
ensure our strategic position in the gulf 
and reassert the fundamental U.S. 
stabilizing role. Frankly, in the light of 
the Iran-contra revelations, we had 
found that the leaders of the gulf states 
were questioning the coherence and 
seriousness of U.S. policy in the gulf 
along with our reliability and staying 
power. We wanted to be sure the coun- 
tries with which we have friendly 
relations— Iraq and GCC [Gulf Coopera- 
tion Council] states— as well as the 
Soviet Union and Iran understood the 
firmness of our commitments. On 
January 23 and again on February 25, 
President Reagan issued statements 
reiterating our commitment to the flow 
of oil through the strait and U.S. support 
for the self-defense effort of the gulf 
states. He also endorsed Operation 
Staunch, our effort to reduce the flow of 
weapons from others to Iran. 

While neutral toward the Iran-Iraq 
war, the U.S. Government views the 
continuation of this conflict, as well as 
its potential expansion, as a direct threat 
to our interests. We are working inten- 
sively for the earliest possible end to the 
conflict, with the territorial integrity and 
independence of both sides intact. As the 
President asserted in his February 25 
statement on the war, we believe that 
"the time to act on this dangerous and 
destructive war is now." He urged an 
intensified international effort to seek an 
end to the war, and we have taken a lead 
in UN Security Council (UNSC) consulta- 
tions to achieve this aim. As we 
announced May 7, the United States is 
"ready in principle to support the 
application of appropriate enforcement 
measures against either party which 
refuses to cooperate with formal UNSC 
efforts to end the war." 

While there remains much work to 
be done in New York, I believe that an 
international consensus is growing that 
this war has gone on too long— the 
suffering of the Iraqi and Iranian 
peoples has been too great— and the 
threat to international interests is so 
direct that more active measures are 
required. As you know, Iraq has long 
shown its willingness to end the fighting; 
Iran remains recalcitrant. 



59 



MIDDLE EAST 



Operation Staunch has been pursued 
in recent months with new vigor. I 
beHeve its effectiveness has not been 
seriously impaired, as many expected, by 
the Iran revelations. 



Shipping Problems 
in the Persian Gulf 

In addition to the inherent tragedy and 
suffering in Iraq and Iran, as the fighting 
drags on, with mounting casualties and 
drains on the economies of these two 
nations, so grows the threat of the war 
spilling over to nearby friendly states in 
the gulf. The fresh threats to interna- 
tional shipping are one example of such 
spillover effect. 

In the past 18 months, attacks on 
neutral shipping passing through the 
Strait of Hormuz have increased in 
intensity. A total of nearly 100 vessels 
were hit by Iran and Iraq in 1986; in the 
first 3 months of this year, some 30 
ships were attacked, including a Soviet 
merchant ship. Since the first of May, 
Iran has attacked 5 ships of nonbellig- 
erent countries, virtually all in com- 
merce with Kuwait. Attacks now occur 
at night as well as day, by sea as well as 
air, by small boats armed with light 
weapons as well as by helicopters 
launched from Iranian warships. While 
Iran has yet to sink a ship, most of those 
attacked have suffered damage, some 
seriously, and innocent lives have been 
lost. 

The May 17 attack on the U.S.S. ^ 
Stark was the first attack on a U.S. war- 
ship in the war. This tragic accident 
gives emphasis to our caution to both 
belligerents that the war in the gulf 
could lead to mistakes and miscalcula- 
tions; it must be ended. 

We have increased the state of alert 
of U.S. Navy ships in the gulf and 
warned belligerent states (i.e., Iran and 
Iraq) that our ships will fire if one of 
their aircraft should approach in a man- 
ner indicating possible hostile intent— as 
did the Iraqi F-1 which attacked the 
U.S.S. stark. 

The recent Chinese delivery to and 
testing by Iran of Chinese Silkworm 
antiship missiles at the Strait of Hormuz 
present a potentially serious threat to 
U.S. and other shipping. With their 
85-ki),ometer range and 1,100-pound 
warhead, these missiles can span the 
strait at its narrowest point and repre- 
sent, for the first time, a realistic 
Iranian capability to sink large oil 
tankers. Whatever Iran's motivation for 
procuring such threatening missiles, 
their presence gives Iran the ability both 



to intimidate the gulf states and gulf 
shippers and to cause a real or de facto 
closure of the strait. The Chinese deci- 
sion to sell such weaponry to Iran is 
most unwelcome and disturbing. We 
have made clear to both Iran and China 
the seriousness with which we consider 
the Silkworm threat. Other concerned 
governments have done the same. It is 
our hope that a sustained international 
diplomatic campaign will convince Iran 
not to use the Silkworms. 

For the past year, Iran has been 
using a combination of military action, 
attacks on gulf shipping, and terrorism, 
as well as shrewd diplomacy, to intimi- 
date the gulf states not involved in the 
war. It has tried to impress upon gulf 
states the hopelessness of their looking 
to the United States for help and to 
divide the gulf states one from the other. 

Since last summer, Kuwait has been 
a particular target of Iranian threats. 
While not a belligerent, Kuwait's size 
and location make it highly vulnerable to 
intimidation. The Iranian regime has 
inspired terrorist and sabotage incidents 
within Kuwait, fired missiles on Kuwaiti 
territory on the eve of the January 
Islamic summit, and attacked over 24 
vessels serving Kuwaiti ports since last 
September. The most recent example of 
the active intimidation efforts was the 
explosion at the TWA office in Kuwait 
city, May 11, which killed one employee. 
Over the last 3 years, Iranian-influenced 
groups have attempted a series of bomb- 
ings and attacks, including on the ruler 
of Kuwait himself, in an attempt to 
liberate terrorists being held in Kuwait 
who were convicted of bombing the U.S. 
and French Embassies. 

Several months ago, Kuwait and 
other GCC states expressed to us their 
concern about the continuing attacks by 
Iran on tankers. Kuwait asked for our 
assistance, fearing potential damage to 
its economic lifeline. Consistent with 
longstanding U.S. commitment to the 
flow of oil through the gulf and the 
importance we attach to the freedom of 
navigation in international waters, as 
well as our determination to assist our 
friends in the gulf, the President decided 
that the United States would help in the 
protection of Kuwaiti tankers. In the 
context of these developments, Kuwait 
asked to register a number of ships in its 
tanker fleet under U.S. flag. We 
informed Kuwait that if the vessels in 
question met ownership and other 
technical requirements under U.S. laws 
and regulations, they could be registered 
under the U.S. flag. This is in accord- 
ance with our established position on 
qualifications for U.S. flag registration 



of commercial vessels in general. We 
also informed the Kuwaitis that by vir 
tue of the fact that these vessels would 
fly the American flag, they would 
receive the U.S. Navy protection given 
any U.S. flag vessel transiting the gulf. 
The U.S. Navy has always had the mis- 
sion to provide appropriate protection 
for U.S. commercial shipping worldwide 
within the limits of available resources 
and consistent with international law. 

Kuwait welcomed our response, ami 
we have together proceeded with the 
registry process. "The Coast Guard has 
begun inspection of the vessels in order 
to determine their conformity with U.S. 
safety and other technical standards. 

We view the reflagging of Kuwaiti 
tankers in the United States as an 
unusual measure to meet an extraord- 
inary situation. It would not, however, 
set a precedent for the normal conduct 
of commercial shipping or affect the 
broad interests of the U.S. maritime 
industry. U.S. flagging procedures 
minimally require that only the captain 
of each vessel be a U.S. citizen. Because 
these vessels will not be calling at U.S. 
ports, there is no requirement that they 
carry U.S. seamen or other U.S. crew- 
members. These new U.S. flag vessels 
will be sailing in areas where other U.S. 
flag vessels have generally not fre- 
quented since the war began. 

To date, Iran has been careful to 
avoid confrontations with U.S. flag 
vessels when U.S. Navy vessels have 
been in the vicinity. U.S. Military Sealif* 
Command and other commercial U.S 
flag vessels have transited the gulf eachi 
month under U.S. Navy escort without 
incident. We believe that our naval 
presence will continue to have this deter 
rent effect. Iran lacks the sophisticated 
aircraft and weaponry used by Iraq in 
the mistaken attack on the U.S.S. Stark 
Moreover, we will make sure in advance 
that Iran knows which ships have been 
reflagged and are under U.S. protection 

Our response to Kuwait demon- 
strates our resolve to protect our 
interests and those of our friends in the 
region, and it has been warmly 
welcomed by those governments with 
which we have had traditionally close 
ties. Our goal is to deter, not provoke; 
we believe this is understood by the par- 
ties in the region— including Iran. We 
will pursue our program steadily and 
with determination. 

In providing this protection, our 
actions will be fully consistent with the 
applicable rules of international law, 
which clearly recognize the right of a 
neutral state to escort and protect ships 



I 



npnartmpnt nf .'^tatp Rii 



MIDDLE EAST 



flying its flag which are not carrying 
contraband. In this case, this includes 
the fact that U.S. ships will not be car- 
rying oil from Iraq. Neither party to the 
conflict will have any basis for taking 
hostile action against U.S. naval ships or 
the vessels they will protect. 

Our judgment is that, in light of all 
the surrounding circumstances, the pro- 
tection accorded by U.S. naval vessels to 
these U.S. flag tankers transiting inter- 
national waters or straits does not con- 
stitute introduction of our armed forces 
into a situation where "imminent 
involvement in hostilities is clearly 
indicated." The War Powers Resolution, 
accordingly, is not implicated by our 
actions. On the contrary, our actions are 
such as to make it clear that any pros- 
pect of hostilities is neither imminent or 
clearly indicated. I repeat that our inten- 
tion is to deter, not provoke, further 
military action. We will, however, keep 
the situation under careful review- 
particularly in light of the May 17 attack 
on the U.S.S. Stark— and keep Congress 
closely informed. 

Kuwait has also discussed with other 
maritime powers commercial charter 
arrangements in the interest of deter- 
ring further Iranian attacks on its 
vessels. We understand that Kuwait 
broached this issue with all permanent 
members of the UN Security Council and 
has entered into an agreement with the 
Soviet Union to charter three long-haul, 
Soviet flag vessels to transport some of 
its oil out of the gulf. 

A constant of U.S. policy for decades 
has been U.S. determination to prevent 
enhanced Soviet influence and presence 
in the gulf. We do not want the Soviet 
Union to obtain a strategic position from 
which it could threaten vital free- world 
interests in the region. We beheve our 
arrangement with Kuwait will limit 
Soviet advances in the region; they 
would have welcomed the opportunity to 
replace us and used this position to try 
to expand further their role in the gulf. 
We understand that their commercial 
charter arrangement for long-haul 
charters out of the gulf does not 
necessitate an increase in the Soviet 
naval presence or establishment of 
facilities in the gulf. This we would not 
welcome and have made our position 
clear. 

I want to be frank to acknowledge, 
however, that the disturbing trend in the 
war— its spread in geographic terms and 
its increasing impact on third parties 
like Kuwait— creates the circumstances 
in which the Soviets may find more 



U.S. Food Aid Program for Lebanon 



DEPARTMENT STATEMENT, 
APR. 28, 1987' 

The U.S. Agency for International 
Development (AID) recently approved an 
emergency $8.4 million grant food 
assistance program to Lebanon. 

Through this program, the United 
States will provide the Lebanese people 
with 15,683 metric tons of basic food 
commodities (rice, lentils, instant corn, 
soy milk, and vegetable oil) valued at 
$5.5 million. This food will be distributed 
to approximately 100,000 needy dis- 
placed and war-affected families in all 
parts of Lebanon, regardless of confes- 
sional affiliation. Nutritionally 
vulnerable groups such as children and 
the elderly are target beneficiaries. 
Under this grant, food rations will be 
distributed to families registered by 
Save the Children Federation during a 
period of 6 months. The food com- 



modities are scheduled to arrive in 
Lebanon in July 1987. A $1.9 million 
grant will cover ocean freight costs of 
the program. 

In consultation with the Government 
of the Republic of Lebanon, this pro- 
gram will be implemented through Save 
the Children Federation and, under its 
supervision, will also involve distribution 
through other local private voluntary 
organizations. AID is making a separate 
grant of $1 million for costs of distribu- 
tion of food and other relief aid. 

We hope this special food program, 
which augments other relief and 
rehabilitation assistance from the 
American people, will help alleviate 
hardships of those Lebanese most 
economically deprived due to prevailing 
economic and security conditions. 



'Read to news correspondents by Depart- 
ment spokesman Charles Redman. ■ 




Officials gather for the announcement approving an AID emergency grant food assistance 
program to Lebanon. Left to right are Gerald Kamens, Director of the Office of the Middle 
East, Europe, and North Africa, AID; Sulayman Rassi, Counselor of the Embassy of 
Lebanon; Neal Keny, Save the Children foundation; Ambassador Abdallah Bouhabib of 
Lebanon; and Richard W. Murphy, Assistant Secretary for Near Eastern and South Asian 

Affairs. (Department of State photo) 



61 



MIDDLE EAST 



opportunities to insert themselves. The 
U.S.S.R. plays a fundamentally different 
role in the gulf and is viewed by Iran as 
directly threatening to Tehran. Aside 
from the long northern border, Soviets 
occupy Afghanistan to Iran's east and 
are Iraq's primary source of arms. The 
unescorted Soviet ship recently attacked 
had, in the past, carried arms to Iraq. 
The Soviets sent warships into the gidf 
for the first time last fall after Iran 
boarded and searched a Soviet arms- 
carrying vessel. Iran should ponder this 
development as it maintains its intran- 
sigent war policy. We certainly believe 
the Soviet actions in the gulf and their 
attempts to enhance their presence there 
further emphasize the need to bring this 
war to an end. 



Conclusion 

In conclusion, the Administration is 
following a clear and consistent set of 
policies in support of our national 
interests in the gulf. Our policies are 
carefully conceived— and they focus on 
steps needed to end the war. They are 
calm and steady in purpose, not pro- 
vocative in intent; they should help deter 
Iranian miscalculations and actions that 
would require a strong response. By sup- 
porting the defensive efforts of the 
moderate gulf states, including the sale 
of appropriate defensive arms, we help 
to enable them to defend the interests 
we share in the gulf and to reduce the 
prospects for closer ties with the Soviet 
Union as well as any inclination to 
accommodate Iranian hegemony. 

We want the Congress to be fully 
aware of what we are doing. That is why 
we provided, in March and April, a 
number of briefings on our gulf policy 
and what we intend to do to help 
Kuwait, including briefings to the House 
Foreign Affairs Committee and Senate 
Foreign Relations Committee. That is 
why the President has, on several occa- 
sions, issued public statements explain- 
ing our policy. We have a coherent and 
effective policy in the gulf region. We 
seek your support and that of the U.S. 
public for our efforts. We believe it is 
important for the United States to work 
more actively to end the Iran-Iraq war, 
to be prepared to defend the principle of 
the free flow of oil and meet our long- 
standing commitment to assist the gulf 
Arab states in their self-defense, and to 
continue to work to constrain Soviet 
designs. We will advise Congress on the 
evolution of our discussions with Kuwait 
and the continuing security situation. 



62 



DEPARTMENT STATEMENT, 
MAY 20, 1987" 

Just prior to the Iraqi Mirage F-1 attack 
on U.S.S. Stark on Sunday, two Royal 
Air Force F-1 5s were scrambled from 
their base at Dhahran and ordered by 
Saudi authorities to fly a combat air 
patrol (CAP) mission over the Saudi 
coastline. This is a routine action based 
on prior agreement to defend our 
AWACS [airborne warning and control 
system] and Saudi facilities. 

Once it was clear that the Stark had 
been attacked, the U.S. Air Force 
AWAC8 and the Saudi controller aboard 
the E-3A asked the Saudi sector com- 
mand center at Dhahran for authority to 
commit the Saudi F-15s to intercept the 
Iraqi F-1 with the intention of forcing it 
down in Saudi territory. The Saudi chief 
controller on the ground advised that he 
did not have the authority to authorize 
such action and immediately sought 
approval from higher authority. Before 
such approval could be obtained, the 
Iraqi aircraft was well on its way back to 
its base. In addition, the Saudi F-1 5s 
were low on fuel and had to return to 
base. 

It should be noted there is no pre- 
arranged plan for the Royal Saudi Air 
Force to come to the aid of U.S. vessels 
in the gulf. There was no official U.S. 
Government request for the Saudi Air 
Force to intercept the Iraqi aircraft. 

Throughout the incident, the Saudi 
personnel aboard the AWACS and the 
F-15 crews were eager to run the inter- 
cept; the initiative originated with them 
and the U.S. personnel aboard the 
AWACS. However desirable an inter- 
cept of the attacking aircraft might have 
been, the incident does illustrate the 
discipline of the Saudi Air Force's com- 
mand and control system. 

Finally, it should also be noted that 
Saudi officials immediately launched 
helicopters to assist in the search-and- 
rescue effort and dispatched a Saudi 
naval vessel to close on Stark to lend 
assistance. The Saudi military hospital at 
Dhahran also was placed on disaster 
alert to assist with casualties if needed. 



SECRETARY'S LETTERS 

TO THE CONGRESS, 
MAY 20, 1987^ 

For nearly forty years, the United States has 
maintained a limited naval presence in the 
Persian Gulf for the purpose of providing for 
the safety of U.S. flag vessels in the area and 
for other reasons essential to our national 
security. This has been done pursuant to the 



authority of the President under the Constitu 
tion as Commander-in-Chief, and the duty tn 
provide protection for U.S. forces and U.S. 
vessels that are engaging in peaceful activi 
ties on the high seas. Congress has been fully 
and repeatedly advised of our policy. 

Our naval presence in the Gulf has been 
fully within our rights under international 
law, and we have respected all the relevant 
international rules of conduct. We have 
remained neutral in the Iran-Iraq war, and 
our vessels have taken no action that could 
provide any basis for hostile action against 
them by either country. Until this past Sun- 
day, no U.S. warship or other U.S. flag vessel 
in the Gulf had been the object of any attack 
from any source. 

Shortly after 2 pm (EDT) on May 17, an 
Iraqi Air Force F-1 Mirage launched an 
Exocet missile, which struck the USS Starl<, 
causing heavy damage. Within the hour, the 
USS Stark was stopped and listing, but 
damage control parties were able to stabilize 
its condition, and the vessel has now returin'i 
to port. At this time, a total of 37 member.^ u 
the crew are reported dead or missing, and 
two more are seriously injured. 

The United States immediately contacted 
the Iraqi Government through diplomatic 
channels, to protest in the strongest terms 
and demand an explanation of the incident 
and appropriate compensation. President 
Saddam Hussein sent a letter expressing 
deepest regret over this tragic accident and 
his condolences and sympathy to the families 
of the victims, explaining that Iraqi forces 
had in no way intended to attack U.S. vessels 
but rather had been authorized only to attack 
Iranian targets. A joint U.S. -Iraq review has 
been agreed upon to determine more pre- 
cisely the circumstances surrounding the Irai 
attack, and to ensure that there is no 
recurrence. 

Our naval forces in the area have been in 
structed to assume a higher state of alert 
readiness in carrying out the standing Rules 
of Engagement. Ship commanders continue 
to have the authority to take such steps as 
may be necessary to protect their vessels 
from attack. However, we have no reason at 
this time to believe that Iraqi forces have 
deliberately targeted U.S. vessels, and no 
reason to believe that further hostile action 
will occur. 

Our forces are not in a situation of actual 
hostilities, nor does their continued presence 
in the area place them in a situation in which 
imminent involvement in hostilities is indi- 
cated, although we are mindful of recent Ira- 
nian statements threatening U.S. and other 
ships under protection. In accordance with hi 
desire to keep the Congress fully informed, 
the President nonetheless has asked that I 
provide this account to the Congress of what 
has transpired, and has directed that the rele 
vant Committees and leadership of Congress 
be fully briefed on these events. 

Quite apart from the Iraqi attack on the 
USS Stark, Iran continues publicly and 
privately to threaten shipping in the Gulf. It 
is this basic Iranian threat to the free flow of 
oil and to the principle of freedom of naviga- 
tion which is unacceptable. The frequent and 



Department of State Bulleti; 



i 



MIDDLE EAST 



accelerating Iranian attaclts on shipping have 
spread the war geographically to the lower 
Gulf and have heightened the risk to all lit- 
toral states. The Stark incident provides no 
reason for altering the policy which we have 
adopted in the Gulf area of being prepared to 
defend U.S. vessels and U.S. interests when 
necessary. We intend to proceed with plans to 
iprovide protection for ships flying the U.S. 
flag in the Gulf, including certain Kuwaiti 
tankers which have applied for U.S. registry. 
It is not our intention to provoke military 
action, but to deter it. Sunday's incident, 
although regrettable and tragic for our 
courageous seamen aboard the USS Stark, 
ioes not suggest that either of the countries 
nvolved in the war have decided to attack 
U.S. vessels in the Gulf. 

At the same time that we are taking these 
I steps, we want to assure you that the Admini- 
;tration is actively pressing for comprehen- 
sive and effective international action, includ- 
ng at the United Nations, to bring this 
)loody, wasteful and dangerous war to an 
;nd. We will of course keep the Congress 
ully informed of any further developments in 
hese matters. 
I Sincerely yours, 

George P. Shultz 



'Opening statement to an address 
lelivered before the American Israel Public 
Vffairs Committee (see page 7). 

^Text from Weekly Compilation of 
'residential Documents of May 25, 1987. 

^Assistant Secretary Richard W. Murphy 
nade this statement before the Subcommittee 
m Europe and the Middle East of the House 
''oreign Affairs Committee. The complete 
ranscript of the hearings will be published by 
he committee and will be available from the 
Superintendent of Documents, U.S. Govem- 
nent Printing Office, Washington, D.C. 
:0402. 

■•Read to news correspondents by Depart- 
nent spokesman Charles Redman. 

^Text of identical letters addressed to 
Jeorge Bush, President of the Senate, and 
im Wright, Speaker of the House of 
lepresentatives. ■ 



Meeting With 
Arab League Delegation 




Left to right: Ambassador Mohamad Kamal (Jordan), Ministry of Foreign Affairs Under 
Secretary Wassam Zahawi (Iraq), Deputy Prime Minister and Foreign Minister Abd 
al-Karim al-Iryani (Yemen Arab Republic), Secretary Shultz, Ambassador Ghazi al-Gosaibi 
(Bahrain), Ambassador Prince Bandar bin Sultan (Saudi Arabia), and Clovis Maksoud 
(Arab League representative to the United States). (Department nf .state photo by Ann Thomas) 



SECRETARY'S REMARKS, 

MAY 7. 1987' 

As you can see, there is a very 
distinguished delegation here. And I am 
very pleased to have a chance to 
welcome them and to talk with them 
about our concerns about the Iran-Iraq 
war and our efforts to do everything we 
can to bring peace to the region. 

We are concerned, of course, first of 
all about the vast human suffering that 
is taking place because of this war. Peo- 
ple are killed, maimed, wounded— young 
people; it's a tragedy, and our hearts go 
out to all the people involved. This is a 
matter of primary concern for us. Along 
with many others, we have called again 
and again for Iran to join Iraq in 
negotiations designed to bring peace to 
the region. 

Unfortunately, so far Iran has not 
seen fit to join such negotiations. 



Therefore, we must continue our 
effort— which has been going on for 
many years— to do everything we can to 
deny arms to Iran, since it is these arms 
that they use to pursue the war. Our 
effort to do this is an intense one, and it 
will continue while we also press, in 
every way we can, the international com- 
munity to try to exert joint efforts to 
bring about negotiations. We will not 
relent in these efforts. 

As the President said earlier this 
year, "The time to act on this dangerous 
and destructive war is now." So I want 
to commend greatly the members of this 
delegation and their governments for 
their efforts, as illustrated by their visit 
here to the United States and to other 
countries in an effort to call attention to 
the urgent need to bring an end to this 
war and the importance of a concerted 
international effort to do so. 



'Press release 101. 



63 



MIDDLE EAST 



The Persian Gulf: Stakes and Risks 



by Richard W. Murphy 

Statement before the Senate Foreign 
Relations Committee on May 29, 1987. 
Ambassador Murphy is Assistant 
Secretary for Near Eastern and South 
Asian Affairs.'^ 

The U.S. Policy Interest in Brief 

The Administration welcomes this oppor- 
tunity to appear before your committee 
as part of our ongoing consultations with 
the Congress on developments in the 
gulf. The United States today has three 
overriding objectives in the Persian Gulf: 
to galvanize the international community 
to press for a just end to the Iran-Iraq 
war, to motivate the Iranian leadership 
to agree to cease their aggressive 
posture and rejoin the ranks of peaceful 
nations, and to prevent a strategic gain 
by the Soviet Union in the region. None 
of these tasks is easy, but both the stakes 
and the risks to major U.S. and free 
world interests are extremely important, 
making it equally important to pursue 
these tasks. Over the coming weeks we 
will be working intensively with both our 
allies and our friends in the gulf to 
obtain support for this critical effort. At 
the same time we will be completing our 
plans for the protection of U.S. flag 
vessels in the gulf and for keeping the 
Strait of Hormuz open to the free flow 
of oil. No action will be taken to imple- 
ment this protective regime until the 
President is satisfied that we will be able 
to do it properly and until the Congress 
has been fully consulted. 

The Context 

Until the fall of 1986, the Iran-Iraq war 
was remarkably contained. It was 
destructive, bloody, and wasteful, but 
the inherent dangers of the war's 
spillover to third countries in the Persian 
Gulf were largely unrealized. Since 1983, 
there had been a tanker war, to be sure, 
but despite the many vessels hit, crews 
killed and injured, and commerce dis- 
rupted, the international community and 
the shipping industry had lived with the 
problems. Insurance rates went up; 
crews got high-risk compensation; 
overland trade routes were expanded; 
but there seemed no imminent threat to 
the basic flow of trade into and out of 
the gulf. 



In retrospect, a series of decisions 
taken by Iran during 1986 has changed 
that false impression. The Iranians 
negotiated for and began to receive 
Chinese-origin Silkworm land-to-ship 
missiles; the first was test fired, from its 
site within the narrow Strait of Hormuz, 
in February 1987. It is important to 
remember that Iraq has no direct access 
to shipping; its oil is exported via 
pipelines through Turkey and Saudi 
Arabia. The Iranian Navy stopped, 
searched, and took a Soviet arms carrier 
to Bandar Abbas port in August. Though 
that ship was eventually released, by 
September the Soviet Navy had 
responded by introducing a frigate on 
prolonged patrol into the gulf for the 
first time. 

There are now seven Soviet ships 
present in the gulf— and just outside it in 
the Gulf of Oman. Also, during the fall, 
Iranian direct pressures and intimidation 
efforts against Kuwait increased sub- 
stantially. These efforts have con- 
tinued—with special emphasis just before 
the Islamic summit in January in Kuwait 
and again recently. 

The Iranian Dilemma 

While we cannot be sure of Iranian 
motivation for these steps, they seem to 
have been based on false assumptions. 
The Iranians may have calculated that 
both the international community and 
nonbelligerent third parties in the gulf 
would accommodate to these moves to 
expand Iranian influence and clout as it 
sought to put pressure on supporters of 
Iraq. 

Iran's war effort has not gone well 
since its success in seizing the southern- 
most tip of Iraq at al-Faw in February 
1986. It has made almost no headway 
since; even its limited advance near 
Basra in January-February 1987 cost it 
tens of thousands in lives and enormous 
materiel losses, yet yielded little. Fur- 
ther, Iran's defenselessness was 
highlighted during the July-November 
1986 period when Iraqi jets daily ham- 
mered at Iran's critical economic infra- 
structure. As a result, crude exports 
plummeted to well below 1 million bar- 
rels per day; Iran had to import substan- 
tial, and costly, amounts of petroleum 
products during the fall. National income 
was radically reduced— perhaps to an all- 
time low of $6.5 billion vice $15 billion in 



1985. Foreign exchange reser/es were 
largely depleted. Domestic unemploy- 
ment was high— despite having almost 
1 million men mobilized and under arms 
and having suffered enormous casualties 
during the war. 

Thus, despite Iran's apparent ability 
to sustain enthusiasm for the war effort 
among its population, by any objective 
standard the Iranians have not made 
significant advances on the ground in 
the past 15 months. And the ground wa 
is where Iran has its strength. It is vir- 
tually a nonplayer in the air war. This 
leaves only the shipping war— and intim 
idation against Arab governments who 
support Iraq. 

This may explain the Iranian deci- ,. 
sion to spend $700 million on the 
Silkworm missile system, for possible 
use in blocking the Strait of Hormuz, in 
a year of extraordinary belt-tightening. 
It may also explain the sustained intim- 
idation of Kuwait— most recently the 
fires this last weekend at the Kuwaiti oi 
refineries. 

But the Iranian calculations have 
been incorrect: the outside world has 
taken steps to protect its interests. We 
have; the British and the French have. 
For their part, the Soviets have moved 
both to protect their shipping and explo , 
new opportunities to advance their inte 
ests. The Kuwaitis, smarting under 
Iranian threats and intimidation, have 
turned to outside powers for demonstrs 
tions of support. Iranians have reacted 
to these developments with fresh 
threats. They are clearly unhappy with i 
the trends— no success on the battlefiel 
a growing outside naval presence in the 
gulf, growing international diplomatic i 
pressure to end the war, and, most 
importantly, no signs of weakening of 
Iraqi defenses. 

U.S. Interests: A Consensus 

As Secretary Shultz noted to this com- 
mittee in his testimony of January 27, 
"American interests in the Persian GuJ 
have long been readily defined." 

• We have a vital economic stake ii 
seeing that the region's supply of oil to 
the free world continues unimpeded. 

• We have a strategic interest in 
denying the Soviet Union either direct 
control or increased influence over the 
region or any of its states. 

• We have major political interests 
in the nonbelligerent gulf states, both ii 
their own right and because of their 
influence within the gulf and beyond. 

Let me elaborate briefly on the sub- 
ject of Persian Gulf oil. The United 



npnartmpnt nf ■'^tatP R.illel 



MIDDLE EAST 



states and, particularly, its allies are 
substantially dependent on oil imports 
oday, much of which comes from the 
rulf. This dependency will sharply 
!xpand in the future. In 1986, 46% of 
;he oil imports of OECD [Organization 
'or Economic Cooperation and Develop- 
'nent] Europe was from the gulf; the 
•omparable figure for Japan was 60%. 
ATiereas only 15% of our total imports 
)f 5.2 million barrels per day originated 
n the gulf in 1986, that level will rise 
;ignificantly in the years ahead as our 
iverall imports rise and supplies from 
ither sources decline. Most of the 
ivorld's oil resources and excess capacity 
|ire located in this area. 
' We are working closely with our 
.Hies and friends in the International 
[Inergy Agency to reduce the vulner- 
bility of our economies to oil supply 
lisruptions. And we are being suc- 
essful. But we must not forget that only 
i mall supply disruptions— or threatened 
lisruptions— can have major adverse 
irice impacts because of short-term 
isychological factors. The supply disrup- 
ions of 1973-74 and 1978-80 were less 
han 5%, but they led to a quadrupling of 
il prices in the first instance and more 
han a doubling in the second. Even a 
luch smaller price hike caused by a real 
r perceived supply threat could levy a 
ubstantial cost on our economy. 

Thus, I think those who argue that 
thers, not the United States, have the 
il problem or should be concerned about 
he gulf situation miss the point. Our 
conomic well-being is involved, par- 
icularly since our economy is the most 
il intensive of the major industrialized 
ations. That others may suffer more is 
; ,ot a persuasive argument for us to do 
1 5ss than our interests require. 

Iran is an important element of our 
onsiderations as we pursue these multi- 
ple interests. That country has been, and 
fill remain, a major factor in the region, 
loth because of its size and strength and 
lecause of its strategic location 
longside the Soviet Union and Soviet- 
'Ccupied Afghanistan. Iranian policy has 
. direct impact on our strategic, 
lolitical, and economic stakes in the gulf, 
^nd the current Iranian Government 
lirectly affects us in another way: 
hrough terrorism, which it continues to 
iUpport and export as an instrument of 
tate policy. 

Our various interests in the region 
nve the United States an obvious stake 
n better relations with Iran. The Presi- 
ient has said that the United States 
•ecognizes the Iranian revolution as "a 
:'act of history." We look to an eventual 
mprovement in U.S. -Iranian relations, 



but our interests are directly threatened 
by the Iranian Government's pursuit of 
its belHcose and terrorist policies. 
Changes in Iran's pursuit of its war with 
Iraq, its sponsorship of terrorism, and 
its collusion with terrorist forces 
elsewhere in the region will be a neces- 
sity before our bilateral relations can 
begin to improve. 

The tragic and unanticipated Iraqi 
attack on the U.S. S. Stark on May 17 
has refocused national attention on the 
question of our interests and the policies 
we have structured for pursuing them. 
What is noteworthy about the current 
reassessment and debate, in the public 
media and in Congress, as well as within 
the Administration, is that U.S. interests 
in the region and in helping to end the 
war are not challenged. The debate is 
focused on how we go about protecting 
and promoting those interests. It is 
useful to recognize this fact, and it is an 
important message this hearing will send 
to this critical region: our internal 
debates do not reflect any discord over 
our goals, which enjoy wide bipartisan 
support. 

Ending the War 

The United States is actively pursuing 
diplomatic efforts to get the war ended. 
Aside from the bloodshed and waste of 
this conflict— now in its seventh year— it 
is the continuation of the war which 
creates circumstances in which: 

• Soviet influence and presence con- 
tinue to grow; 

• Threats to nonbelligerent third 
parties, like Kuwait, increase; and 

• Threats to U.S. interests mount. 

As the President noted in his two 
key statements on the war in January 
and February, it is time now for the 
international community to become more 
active to end this conflict. We have 
repeatedly called for an immediate 
cease-fire, withdrawal to borders, and 
comprehensive negotiations. We are tak- 
ing an active role on this issue at the UN 
Security Council, and the war will be a 
subject of discussion at the upcoming 
Venice summit. 

The Soviets 

While the Soviets have said that they 
favor an early end to war, they are a 
principal supplier of arms to Iraq, and 
their friends in Eastern Europe and 
North Korea are suppliers of armaments 
to Iran. They have been able to manip- 
ulate the natural anxieties of the 
nonbelligerent states of the region to 



their benefit and are pressing actively 
for increased diplomatic, commercial, 
and miHtary relations. It is important to 
remember that the Persian Gulf has long 
been a strategic object of intense Soviet 
interest, but the Soviets have been 
largely excluded from playing a signifi- 
cant regional role because of the views 
of most of the littoral governments. 

The Soviets have steadily pursued a 
campaign of disinformation, contending 
that the United States works to further 
enflame the war in order to better 
establish our military presence in the 
gulf. This is irresponsible and out- 
rageous propaganda. But if the Soviets 
have convinced themselves that it is 
true, I have a straight-forward challenge 
for them: join us and the international 
community in concrete steps to end this 
war now. 

What would those steps be? 

Focus on Iran 

Iranian willingness to consider and 
discuss an end to the war is the missing 
link in all diplomatic strategies address- 
ing the problem. Thus, by virture of its 
own intransigence and stubborn commit- 
ment to the war, Iran invites interna- 
tional opprobrium and action. 

One key method we have revived is 
our Operation Staunch— our effort to 
inhibit military resupply to Iran from our 
friends and allies. It has been successful 
in many ways— it complicates, delays, 
and makes more expensive Iranian arms 
procurement. With the exception of 
China, Iran has not been able to gain 
access to a steady supply of high-tech- 
nology military equipment from any 
major producer, although there is a 
supply of conventional weaponry to Iran 
from North Korea and East European 
state-run arms industries as well as a 
wide variety of Western sources. 

The Soviets could do much more to 
close down and/or complicate these 
supply channels. So could some of our 
friends and allies. With concerted inter- 
national efforts, Iran's logistic ability to 
pursue the war could be further con- 
stricted. It is internationalizing this 
effort that is the new element in our 
Security Council initiative. 

Though Iran may seem impervious 
to outside pressures, its war effort is 
highly import dependent. Iran's 
domestic arms industry is unable to pro- 
duce what Iran needs to prosecute this 
war. Thus, should Iran continue to prove 
unwilling to engage in negotiations, in 
our view, it is rightly subject to an inter- 
nationally mandated arms embargo. 



.A.. 



65 



MIDDLE EAST 



Iraq 

Iraq for years has been willing to 
negotiate an end to the war. It has 
accepted virtually all reasonable interna- 
tional efforts to pursue negotiations and 
mediation of the war, including the key 
UN Security Council resolutions. We do 
not see it in our interest to have either 
belligerent gain a victory in this war, 
and we support the territorial integrity 
and independence of both countries. 
However, because of our interest in see- 
ing the Iranian revolution contained 
within Iran, the United States has an 
important stake in Iraq's continuing 
ability to sustain its defenses. 

Our bilateral relations with Iraq 
have expanded substantially since 
diplomatic relations were reestablished 
in 1984. It is because of our ability to 
communicate clearly and frankly with 
each other that a dangerous tragedy, 
like that of the attack on the U.S.S. 
Stark, has been kept in context and 
managed so as to preserve our larger 
relationship with Iraq. Iraqi willingness 
to promptly accept responsibility for the 
unprovoked attack, its agreement, in 
principle, to provide compensation, and 
its suggestion that a joint U.S. -Iraqi 
team investigate the attack all reflect a 
forward movement in a relationship 
which was severely strained in 
November when information about our 
previous approach to Iran became public. 

Without compromising the content 
of that investigation, I might add that 
the U.S. team received good cooperation 
while in Baghdad. We both are commit- 
ted to ensuring that such a mistake not 
recur. 



Kuwait 

Kuwait is the nonbelligerent gulf state 
which is receiving the brunt of Iran's 
public and private pressures. Kuwait's 
location, its proximity now to Iranian 
troops occupying al-Faw in southern 
Iraq, and its small size have made it a 
target of opportunity for the Iranians. 
Iranian efforts to sway Kuwait from its 
policy of support for Iraq run the full 
gamut of pressures: assassination 
attempts, sabotage of economic infra- 
structure, training of subversives, 
attacks on shipping, as well as public and 
private threats and ultimatums. Iran 
presumably calculates that Kuwait is the 
weakest link on the Arab side of the 
gulf. If Iran is successful in coercing a 
change in Kuwaiti policies, it will no 
doubt target other gulf states. 



The Shipping Problem 

Thus there is a very large stake involved 
in the Iranian effort to intimidate 
Kuwait— as is now most evident in the 
shipping attacks. Iran's attacks on 
nonbelligerent shipping and emplace- 
ment of the Silkworm missiles at the 
narrow Strait of Hormuz violate prin- 
ciples of freedom of navigation and 
threaten the free flow of oil through the 
Strait of Hormuz. Because Kuwait has 
turned to both the Soviet Union and the 
United States for help and support in the 
face of these attacks, the Iranian actions 
have also created circumstances in which 
both superpowers were asked by the 
beseiged Kuwaitis for protection. 

We have longstanding commitments 
to the security and stability of friendly 
regional states, including Kuwait. In 
addition, Iranian attacks threaten to 
cause the further spread of the war; 
Kuwait happens to be the first target 
after Iraq. Additionally, we know that 
the Soviets were more than willing to 
take the opportunity created by the 
Iranians to thrust their own presence 
into a previously unwelcoming gulf. 
Thus, in the view of the Administration, 
it is consonant with our policy to agree 
to engage in discussions with the 
Kuwaitis on some measures of protec- 
tion. Those have been ongoing for the 
past few months and are nearing fruition. 

Heightened Risks 

There is no doubt that the developments 
of the past 9 months in the Persian Gulf 
have heightened the risks of a spread of 
the war to third parties. Miscalculations 
on the part of Iran— and Iran's inability 
to make headway on the ground war- 
have created circumstances in which the 
previous limitations on the conflict- 
geographic, political, and strategic— are 
eroding. Despite these immediate mat- 
ters of concern, there is a bright side to 
this change— Iran's growing frustration 
at Iraq's ability to sustain its defenses. 
But that is a positive development only 
in the longer term, and we have an 
immediate need to deter Iran from mak- 
ing cheap gains through intimidation and 
blockage of shipping in the gulf. 

U.S. Purposes 

The United States first deployed a naval 
presence in the Persian Gulf in 1949. 
Over the decades this presence has 
demonstrated the continuity of U.S. 
interests in this resource-critical region. 
And, while we are determined to main- 
tain our presence in the Persian Gulf— 



and to assist our friends when they neea 
it and ask for appropriate assistance— 
our posture is defensive of legitimate 
interests in access to the region. We 
have no interest in provoking any power 
Our immediate goals are deterrence of 
attacks on shipping and bringing an end 
to the war. 

We will not carry our desire to be 
unpro vocative, however, to the extreme 
sought by Iran. The Iranians have been 
clear that their strategic goal is to keep 
us, as well as the Soviets, out of the gul) 



Jel 



The Need for Allied Support 

It is critical to Western interests that 
the complex and dangerous situation 
evolving in the Persian Gulf be resolved 
in ways which promote the long-term 
stability of that region. This requires, 
among other things, the containment of 
the Iranian revolution within Iran and 
the blocking of further Soviet strategic 
access to the area. The only way to 
accomplish these basic goals is to bring 
about an end to the Iran-Iraq war. As it 
continues— especially in its trends of the 
past year— it creates an environment 
where peaceful, moderate regimes are 
increasingly at risk, where Iranians wh( 
want to export their revolutionary mod* 
by any means gain ascendancy in 
Tehran, and where nervous and anxious 
moderate regimes invite Soviet involve- 
ment, especially when they are uncertai 
about our involvement and staying 
power. The result is an explosive and 
dangerous mix of colliding national inte 
ests, growing insecurity, tactical 
miscalculations, and cynical strategic 
manipulation. 

Since the interests of the entire 
Western world are involved in the gulf, 
the United States would welcome- 
indeed, expects— renewed expressions c 
public support and assistance from our 
allies in Western Europe and Japan. 
These allied efforts can take many and 
varied forms— diplomatic initiatives 
designed to bring about an end to the 
belligerency, agreements to further 
monitor and restrict the flow of arms to 
Iran as the recalcitrant party, and 
cooperation of naval units present in an 
near the gulf. 



iC 



66 



DeDartmerT^^tat^ulletji 



NUCLEAR POLICY 



?he Gulf Cooperation 
Council States 

Ve may well need further support from 
he GCC states. While the specifics of 
uch requirements remain under study, 
/e will actively and forthrightly seek 
uch facilitation of our efforts, which 
lave to be joint if they are to be suc- 
lessful. We are willing to assume our 
llobal responsibilities and do the job. 
lut we must be sure we have the 
ecessary means to accomplish our 
bjectives— and this includes appropriate 
nd active support from allied and 
-iendly governments whose interests 
re as heavily involved, if not more so, 
lan ours in this strategic region. 

onsultations With Confess 

.s the Secretary stated in his letters to 
ongress followdng the attack on the 
tark, the President has directed that 
le relevant committees and leadership 
1 Congress be fully briefed. As we go 
)rward with the efforts I have outlined, 
e intend to keep the Congress fully 
formed and will take no action to 
iplement the protective regime with 
uwait until the President is satisfied 
lat we will be able to do it properly, in 
)nsultation with Congress. 



Nonproliferation and the Peaceful 
Uses of Nuclear Energy 



•The complete transcript of the hearings 
ill be publisned by the committee and will be 
'ailable from the Superintendent of Docu- 
ents, U.S. Government Printing Office, 
'ashington, D.C. 20402. ■ 



by John D. Negroponte 

Address before the Orange County 
World Affairs Council in Santa Ana, 
California, on May 20, 1987. Ambas- 
sador Negroponte is Assistant Secretary 
for Oceans and International Environ- 
mental and Scientific Affairs. 

Just a few weeks ago the world marked 
the first anniversary of the nuclear 
disaster at Chernobyl. Those of us with a 
professional interest in civil nuclear 
power have devoted a good deal of our 
time during the past year to assessing 
the implications of the Chernobyl acci- 
dent for the future of civil nuclear 
energy. I am, in fact, a firm advocate of 
the peaceful uses of nuclear energy. I 
believe that reliance on nuclear power in 
a prudent mix of energy resources is 
essential if we are to have a secure 
energy future. 

But it is not my purpose this evening 
to plead the case for peaceful nuclear 
energy. I would like, rather, to discuss 
the conditions and controls under which 
civil nuclear power must operate if it is 
to retain the public's confidence. In view 
of my position as head of the State 
Department bureau responsible for most 
aspects of peaceful nuclear energy 
affairs, I will, of course, be addressing 
these conditions and controls in their 
international dimension. 

There are, it seems to me, two broad 
areas that need to be looked at. 

• One pertains to the operational 
safety of nuclear facilities. This con- 
sideration is generally uppermost in the 
minds of the public. The very notion of 
nuclear power has traditionally stirred a 
vague sense of unease in the minds of 
many people, perhaps as a legacy of the 
earliest use of atomic power for military 
purposes and the vivid and indelible 
impression such use has left in our 
imaginations. Dramatic accidents at civil 
nuclear installations, like those at 
Chernobyl and Three Mile Island, have 
also, no doubt, played a part in provok- 
ing a certain skepticism regarding the 
claims of the peaceful atom. 

• The other area of concern has to 
do with preventing the spread of nuclear 
explosives to additional countries. This is 
the realm of nuclear nonproliferation. 
The very inelegance of the term perhaps 
has something to do with its relatively 



weaker hold on the public imagination, 
as compared to questions of nuclear 
safety. To some extent it has been over- 
shadowed by the issue of nuclear 
weapons reductions or nuclear disarma- 
ment by the superpowers. And perhaps, 
too, the very success of our nonprolifera- 
tion efforts over the years has tended to 
relegate those efforts— which quite 
literally produce "non-events"— to the 
back pages of the newspapers. 

It is often forgotten that in the early 
1960s, commentators were warning of a 
world with 15 or 20 nuclear- weapon 
states by 1975. In the early 1970s, com- 
mentators were predicting as many as 
25 nuclear-weapon states by the mid- 
1980s. But consider what has actually 
happened. In the past 20 years, only one 
new country has tested a nuclear device, 
and that country— India— has gone an 
additional 13 years without testing 
another. 

Nevertheless, proliferation remains a 
very real possibility in a number of coun- 
tries. The spread of nuclear weapons 
would lead to a world that is far less 
stable and far more dangerous than the 
one we know today. It is frightening to 
contemplate the prospect of such 
weapons coming into the hands of 
aggressive and unstable leaders or of bit- 
ter regional conflicts taking on a nuclear 
dimension. The consequences for our 
own national security and that of our 
allies and friends would be enormous. 
And that is why the prevention of 
nuclear proliferation has been and must 
remain, as President Reagan has called 
it, a fundamental national security and 
foreign policy objective. 

These, then, are the two foreign 
policy issues I'd like to discuss with you 
this evening— international efforts to 
improve the safety of civil nuclear power 
and international efforts to prevent the 
spread of nuclear explosives to addi- 
tional countries under the guise of civil 
nuclear programs. 

Nuclear Safety 

Let me turn first to the question of 
safety. The months since the accident at 
Chernobyl have been a time for serious 
reflection on nuclear power safety, both 
within the United States and within the 
international community. Chernobyl 
made real what had previously been only 



NUCLEAR POLICY 



a theoretical possibility— a major acci- 
dent at a nuclear powerplant with 
significant numbers of fatalities and 
injuries, massive disruption of life in the 
surrounding area, and large-scale emis- 
sions of radioactive debris that dispersed 
across international boundaries within a 
few days, affecting the ecologies and 
economies of many different countries. 

The disaster posed a daunting 
challenge to Soviet authorities in pro- 
viding medical help for the casualties, 
entombing the shattered reactor, dispos- 
ing of radioactive contamination, and 
restoring some semblance of normality 
to life in the affected areas. It also posed 
a challenge to those responsible for the 
civil nuclear programs of other nations. 
It was imperative that information about 
the accident be acquired, that it be care- 
fully analyzed, and that appropriate con- 
clusions be drawn. 

From the very start, the United 
States played an active role in prodding 
the Soviet Union to fulfill its interna- 
tional responsibilities by following up its 
initially quite meager and delayed 
account of the accident with a full and 
complete disclosure of the facts. The 
Soviets themselves soon recognized the 



wisdom of this course, and their subse- 
quent reports, while lacking in some 
details, were generally open and 
forthcoming. 

There was general agreement that 
the International Atomic Energy 
Agency (IAEA)— a highly respected 
international body with headquarters in 
Vienna, Austria— should be the primary 
forum for receiving, analyzing, and 
disseminating available information on 
the accident. The United States con- 
tributed a great deal of expertise to this 
task and strongly supported the agency 
in its endeavors relating to the accident. 
These efforts proved to be timely, 
thorough, and effective. 

A special meeting of the agency's 
Board of Governors was convened in 
May 1986. It commissioned a postacci- 
dent assessment, directed that an expert 
working group consider ways of improv- 
ing international cooperation in nuclear 
safety, and set the agency's secretariat 
on preparation of plans and proposals 
for an enhanced IAEA nuclear safety 
and radiation protection program. Later 
in the year, the organization hosted a 
postaccident review, during which the 
Soviet Union provided a thorough brief- 



Nonproliferation Agreement 
With Allies 



WHITE HOUSE STATEMENT, 
APR. 16, 1987' 

The President is pleased to announce a 
new policy to limit the proliferation of 
missiles capable of delivering nuclear 
weapons. "The U.S. Government is adopt- 
ing this policy today in common with the 
Governments of Canada, France, the 
Federal Republic of Germany, Italy, 
Japan, and the United Kingdom. These 
nations have long been deeply concerned 
over the dangers of nuclear prolifera- 
tion. Acting on this concern, these seven 
governments have formulated guidelines 
to control the transfer of equipment and 
technology that could contribute to 
nuclear-capable missiles. 

This initiative was completed only 
recently, following several years of 
diplomatic discussions among these 
governments. The fact that all seven 
governments have agreed to common 
guidelines and to a common annex of 



items to be controlled serves to prevent 
commercial advantage or disadvantage 
for any of the countries. Both the 
guidelines and its annex vidll be made 
available to the public. 

The President wishes to stress that 
it is the continuing aim of the U.S. 
Government to encourage international 
cooperation in the peaceful use of 
modern technology, including in the field 
of space. The guidelines are not intended 
to impede this objective. However, such 
encouragement must be given in ways 
that are fully consistent with the non- 
proliferation policies of the U.S. 
Government. 

The United States, and its partners 
in this important initiative, would 
welcome the adherence of all states to 
these guidelines in the interest of inter- 
national peace and security. 



'Text from Weekly Compilation of 
Presidential Documents of Apr. 20, 1987. 



ing on the causes of the accident and 
allowed its representatives to be ques- 
tioned by international nuclear safety i 
experts. |^ 

U.S. Government agencies, using 
independently available data as well as 
data supplied by the Soviets, have, of ^ 
course, also examined the causes and 
consequences of the accident. Now, a 
year later, it is possible to draw some 
conclusions regarding the lessons of 
Chernobyl for the safety of other civil 
nuclear power programs. 

• The accident happened in the wa^ 
it did both because of serious operator 
errors and because of certain peculiar- 
ities in the design of the Soviet reactor, 
which— unlike most Western power reai 
tors— lacked a true containment vessel 
and also had a propensity to surge in 
power as coolant was lost. A reactor of 
this type could not have been licensed t 
operate in the United States or, prob- 
ably, any other Western country. It is 
clear, at this point, that the technical 
lessons of Chernobyl have little rele- 
vance to civil nuclear powerplants in th 
West. 

• The proximate cause of the acci- 
dent was, no doubt, as the Soviets have 
maintained, a series of human errors. 
Human error is possible in anyone's 
nuclear power program, and the examj 
of Chernobyl thus stands as a cautionai 
tale for all of us. 

• The physical consequences of 
Chernobyl, while stark enough, will 
clearly not approach the level originalb) 
feared by many. The economic and 
psychological consequences, however, 
have been profound. Opposition to civil 
nuclear power has increased significam 
in some countries, particularly in 
Western Europe, and doubts about the 
safety of civil nuclear energy productioi 
in general have emerged in numerous 
quarters. 

In view of the widespread concern, 
let me note the steps that are being 
taken, or have been taken, to ensure th 
safety of peaceful nuclear energy. 

• The IAEA has undertaken a pro< 
gram of expanded cooperative activitie 
in nuclear safety. The agency's plans c: 
for increased visits by its Operational 
Safety and Review Teams, composed o 
technical experts from a number of 
member states to countries requesting 
safety assistance. Both recipient gover 
ments and participating experts find 
these to be very valuable in ferreting o , 
what we call "possible precursors" of 
accidents. Plans also call for improved 
incident reporting and analysis and 



68 



npnartmpnt nf qtato Riillpi_ 



NUCLEAR POLICY 



reviews of nuclear safety standards as 
they apply to severe accidents. 

• Two international conventions, on 
nuclear accident notification and on 
emergency assistance, have been negoti- 
ated and have been signed by more than 
50 nations, including the United States 
and the Soviet Union. The entire process, 
from initial proposals by the agency's 
Board of Governors to opening of the 
documents for signature, took less than 

5 months— a near-record pace by the 
usual standards for activities in inter- 
national bodies. The two conventions 
have entered into force for signatories 
that have ratified them. For our part, 
the President has submitted them to the 
Senate with a request for their early 
approval. 

• While the current generation of 
nuclear power reactors in the West is 
extremely safe, a major challenge for the 
longer term will be the design of a new 
generation of nuclear reactors, relying 
on immutable physical principles rather 
than on engineered safety devices to 
ensure that they come to safe shutdown 
automatically in the event of a serious 
malfunction. The United States and 
other nations are studying a number of 
reactor concepts along these lines. 

Events such as those at Chernobyl 
and Three Mile Island are, fortunately, 
the rare exception, not the rule. The 
safety record of nuclear power is, on the 
whole, extremely good. But accidents at 
nuclear powerplants, rare though they 
are, have a potential for inflicting 
damage far beyond that which might be 
caused by a conventional generating 
plant. The standards must, therefore, be 
stricter; the concern for safety more pro- 
nounced. A tragedy such as Chernobyl 
can be salutary in one respect, if it 
prompts all of us to renew our commit- 
ment to ensuring that nuclear power 
reactors will be designed and operated 
with the utmost dedication to safety. In 
my estimation, the disaster at Chernobyl 
has had this positive effect in the months 
since it occurred. 

Nonproliferation 

ill The second topic I would like to address 
this evening is nonproliferation. Like all 
U.S. administrations since the very 
beginning of the nuclear age, the present 
Administration regards the prevention 
of the spread of nuclear explosives to 
additional countries as vital to U.S. 
national security. We have made and 
continue to make a very vigorous effort 
to strengthen and improve the interna- 
tional nonproliferation regime, which 



i.Ji]lv1QR7 



stands as a bulwark against the pro- 
liferation danger. 

We have made every effort to encour- 
age wider adherence to the Treaty on 
the Non-Proliferation of Nuclear 
Weapons, or NPT, and the Treaty for 
the Prohibition of Nuclear Weapons in 
Latin America, known as the Treaty of 
Tlatelolco. The NPT, with 135 parties, is 
the most widely adhered-to arms control 
agreement in history. It is an excep- 
tionally important instrument for ensur- 
ing peace and stability in the world 
community. Under the NPT, non-nuclear- 
weapon states are bound not to manufac- 
ture or acquire nuclear explosives and to 
accept international safeguards on all 
their civil nuclear activities. Nuclear- 
weapon states are bound not to transfer 
nuclear explosives to any other state and 
not to assist non-nuclear-weapon states 
to manufacture or acquire nuclear 
explosives. All parties also undertake, as 
part of the basic bargain, to facilitate 
nuclear commerce for peaceful purposes 
and to cooperate, where possible, in con- 
tributing to the further development of 
peaceful nuclear energy. 

We have worked hard to strengthen 
the International Atomic Energy 
Agency and, in particular, to improve its 
indispensable system of international 
safeguards. This system entails the use 
of materials accounting, containment, 
and surveillance to detect and, by 
creating the risk of detection, to deter 
the diversion of nuclear material in 
peaceful activities to nonpeaceful 
purposes. 

We have tightened up our own con- 
trols over exports of nuclear material, 
equipment, and technology, and we have 
worked together with other nuclear sup- 
plier countries to strengthen and more 
closely coordinate our common non- 
proliferation export policies and prac- 
tices. Coordination is achieved through 
two multilateral supplier groups. The 
Non-Proliferation Treaty Exporters 
Committee, often referred to as the 
"Zangger Committee," has established 
common procedures to ensure that 
specified nuclear exports will be covered 
by IAEA safeguards in accordance with 
obligations arising under the NPT. The 
other group, the Nuclear Suppliers 
Group, including supplier countries not 
party to the NPT, has established 
guidelines for nuclear exports that go 
beyond NPT obligations, including a 
common policy to exercise restraint in 
the transfer of sensitive nuclear technol- 
ogies. Each group has developed a 
detailed list of controlled items, or "trig- 
ger list," so called because the export of 
a listed item triggers the application of 



international safeguards. The United 
States is a founding member of both 
groups and has consistently supported 
efforts to preserve and enhance the 
effectiveness of their guidelines. 

Export controls make a major con- 
tribution to the overall nonproliferation 
effort by multiplying the technical 
obstacles a potential proliferant country 
must overcome to establish and maintain 
a nuclear explosives program. In the 
end, however, they must be supported 
by broader approaches aimed at elim- 
inating the root causes of proliferation. 
In this connection, the United States has 
sought, through comprehensive diplo- 
matic efforts, to reduce the regional and 
global tensions that can motivate states 
to consider acquiring nuclear explosives. 

And we have worked to restore U.S. 
credibility as a consistently reliable 
cooperating partner in the peaceful uses 
of nuclear energy under adequate safe- 
guards and controls, thereby enhancing 
our ability to exercise our influence, 
through consultation and persuasion, 
over the peaceful nuclear programs of 
other countries. 

Cooperation With Other Nations 

Perhaps I might dwell for a moment on 
the U.S. role as a nuclear suppher to 
other countries and the way this role 
supports our overall nonproliferation 
efforts. Under U.S. law, a formal agree- 
ment for cooperation in the peaceful 
uses of nuclear energy is required if we 
are to engage in significant nuclear 
trade with another nation. "Significant" 
items for which an agreement is 
required include nuclear reactors, major 
reactor components, and reactor fuel. 
The agreement sets forth the terms and 
conditions for such cooperation. Such 
agreements, therefore, do more than 
merely facilitate nuclear commerce; they 
impose conditions on such commerce, 
and most especially nonproliferation 
conditions. 

When the U.S. Nuclear Non-Prolifer- 
ation Act, or NNPA, became law in 
1978, it established new, more stringent 
nonproliferation conditions for inclusion 
in new agreements for cooperation and 
required the President to initiate a pro- 
gram to seek to update existing agree- 
ments to include the new standards. 

Since 1978 we have negotiated or 
renegotiated 13 agreements meeting all 
requirements of the NNPA. Just 
recently, in January, we reached ten- 
tative agreement with Japan on the text 
of a new agreement which is now under- 
going internal review in the U.S. and 
Japanese Governments. This proposed 
new agreement would contain all the 



69 



consent rights and guarantees required 
by U.S. law. At the same time, it would 
provide Japan with certain advance, 
long-term U.S. consents regarding the 
use and storage of nuclear material sub- 
ject to the agreement, thus affording 
Japan a more predictable basis for plan- 
ning its long-range energy program. 

We expect that, when brought into 
force, this agreement will strengthen the 
international nonproliferation regime by 
setting a new standard for rigorous non- 
proliferation conditions and controls in 
agreements for peaceful nuclear coop- 
eration. It will provide a basis for the 
United States to work closely with Japan 
in ensuring application of state-of-the-art 
safeguards concepts and physical protec- 
tion measures, thus affording us an 
important measure of influence over the 
future of one of the world's fastest 
growing civil nuclear programs. And it 
will reaffirm the U.S. intention to be a 
reliable nuclear trading partner, thi>3 
helping to ensure the continuation and 
growth of our nuclear exports to Japan. 
These exports include uranium enrich- 
ment services with an average annual 
value of close to $250 million and compo- 
nent exports whose value is also very 
substantial. 

Conclusion 

Civil nuclear power today is increasingly 
relied upon by many countries as an 
important energy resource. Properly 
managed from a safety and nonprolifera- 
tion point of view, it has the potential to 
play a critical role in satisfying world 
energy needs until well into the next 
century. The key, of course, is proper 
management. Civil nuclear energy is 
safe, but it must be made even safer. It 
is safeguarded against the possibility 
that it will be turned to nonpeaceful pur- 
poses, but the safeguards must be fur- 
ther improved. This is the challenge 
ahead of us. I believe that good progress 
has been made in meeting this challenge, 
and we are determined to persevere in 
our efforts. ■ 



REFUGEES 

Refugees and Foreign Policy: 
Immediate Needs and Durable Solutions 



by Jonathan Moore 

Address at the John F. Kennedy 
School of Government at Harvard in 
Cambridge on April 6, 1987. Ambassador 
Moore is U.S. Coordinator for Refugee 
Affairs and Director of the Bureau for 
Refugee Programs. 

For a long time it has bothered me to 
hear people talking about how important 
it is to keep their favorite cause out of 
politics— currently, as in: "We can't let 
humanitarian assistance to refugees be 
dominated by foreign policy interests." 
And both in my political experience 
before coming to the Institute of Politics 
and the Kennedy School and in my 
reflection while here, I have come to be 
extremely wary of single issue, special 
interest groups— but what do I do now 
that I'm involved with one? Even though 
I know what is meant about politics cor- 
rupting goodness and the value of con- 
centrated advocacy, I have tended to 
view politics as a necessary way of get- 
ting from here to there and to be more 
comfortable approaching public policy as 
the reconciliation of a variety of contend- 
ing needs. 

I've been trying to work out in my 
own mind what refugee policy should be, 
if there is such a thing, and, more par- 
ticularly, what role it plays within larger 
international contexts; what the relation- 
ship is, reciprocally, between refugees 
and foreign policy. Perhaps we can start 
to test two principles which I have in 
mind at the outset: 

First, that the commitments we 
engage and the insights we gain from 
attending to some of the urgent needs of 
refugees and enriching our society by 
bringing some of them here can help 
enlighten our foreign policy as a whole; 
and 

Second, that there can be found 
more affinity and mutual reinforcement 
than conflict or contradiction among the 
various components constituting a com- 
prehensive U.S. approach to the world's 
challenges. 

So I will take a brief look at the 
causes, characteristics, programs, and 
trends of refugee problems; then con- 
sider the efforts undertaken to address 
the immediate needs of refugees in place 
and the three so-called durable solutions 
to deal with refugee populations over the 
longer run; and, finally, examine what 



needs to be done to get at the root 
causes which generate and perpetuate 
refugees— where the refugee-foreign 
policy relationship is fully revealed and 
challenged. 

Defining the Refugee Problem 

It has been said that refugees are 
"human rights violations made visible." 
They live in dislocated, deprived, 
marginal, ambiguous circumstances with 
bleak futures. Most remain victims of 
violence— in the countries they have fled 
and the wars they sometimes bring with 
them, from hostile local populations and 
their own incipient factionalism. They 
usually go to countries which are 
extremely impoverished themselves— the 
average per capita GNP [gross national 
product] for the primary nations of first 
asylum is $822. 

An ambitious international system o: 
multilateral and bilateral programs, 
utilizing a huge, far-flung array of col- 
laborators, administers crucial assistanc" 
to refugees. These services include life- 
sustaining support, food, water, shelter, 
medical supplies and health aid, educa- 
tion, protection and security, develop- 
ment and impact assistance, representa- 
tion and negotiation to improve 
immediate and future treatment of 
refugees, and resettlement. The partner 
in the effort include multilateral agen- 
cies led by the UN High Commissioner 
for Refugees (UNHCR); international 
organizations such as the International 
Committee of the Red Cross and the 
Intergovernmental Committee for 
Migration; a multitude of nonprofit, 
nongovernmental, voluntary agencies 
with enormous commitment and skill; 
and nation states that receive refugees 
in first asylum, donate money, resettle 
refugees, and even, in some instances, 
facilitate their return. The United Statei 
has sustained its leadership in providing 
humanitarian assistance across the globe 
through a traditional, bipartisan commit 
ment as a major donor and resettlement 
state, having welcomed well over a 
million refugees since 1975. This interna 
tional enterprise has saved and con- 
tinues to save millions of lives and sup- 
ports the continued provision of first 
asylum. It is heroic, absolutely essential, 
and inadequate. 



70 



Department of State Buljetij 



REFUGEES 



Trends in refugee affairs include: 

• A "tightening up" of formerly 
pen and generous policies by many 
irst-asylum countries; 

• Increasing pressure on states 
osting large numbers of refugees for 
carce resources and services; 

• A tailing off of admissions and 
anding by resettlement and donor coun- 
"ies, including the United States; 

• A proportional increase of 
conomic migrants and illegal 
nmigrants— aided by better communica- 
ons and transportation technology 
•ossing increasingly distant 
oundaries— as distinct from victims of 
ersecution per se; 

• A downward yet continuing flow 

f refugees from Vietnam, Afghanistan, 
ad Ethiopia; 

» A shift of emphasis from reliance 
oon resettlement to pressing for 
;patriation of refugees; 

• Increased arrivals of Third World 
sylum-seekers into Western Europe 
nd North America; and 

• A continuation of population 
icreases outstripping development. 

We can expect a rise in international 
migration, during the balance of this 
fentury and beyond, of people seeking 
rnployment and physical safety. 

When a flood of humanity surges 
zross a border, it matters little whether 
pe persons arriving are legally eligible 
() be considered refugees, or displaced 
arsons, or persons of concern under the 
igh Commissioner for Refugees' 
rtended mandate, or just plain hungry, 
ck, fearful people. The response is to 
ire for them; provide them the 
scessities of life itself; and sort out 
[entities, priorities, and criteria later, 
ut the question of how to define a 
jfugee is a major concern, as it has 
nplications for a country's immigration 
nd asylum policies as well as for its atti- 
ide toward refugee assistance. Defini- 
ons are subject to the political interest 
f various parties, and people of similar 
rigins and in similar conditions may be 

t baled differently. Definitions tend, 
timately, to be more prescriptive than 
■escriptive. 

The most commonly held definition 
f a refugee is that found in the 1951 
reneva convention and its accompanying 
967 protocol, which define a refugee as 
person outside his or her country of 
abitual residence who cannot or will not 
aturn "because of a well-founded fear 
f persecution on account of race, reli- 
ion, nationality, membership in a 
articular social group, or political 
pinion." This is the definition that the 



United States adheres to when consider- 
ing an individual for admission to the 
United States as a refugee. Other defini- 
tions are considerably more inclusive. 
For example, the Organization of African 
Unity extends beyond the "well-founded 
fear of persecution" criterion to include 
"every person who, owing to external 
aggression, occupation, foreign domina- 
tion or events seriously disturbing public 
order in either part or the whole of his 
country of origin or nationality, is com- 
pelled to seek refuge in another place 
outside his country or nationality." 

This broader definition is important, 
given the need to provide immediate 
assistance and to continue to provide 
care and protection for an extended 
period of time. Our own laws facilitate 
this definition, allowing international 
assistance funds from the United States 
to flow flexibly. Our Migration and 
Refugee Assistance Act of 1962 provides 
the authority for assistance in place, as 
opposed to resettlement, without defin- 
ing refugees specifically but allowing, for 



instance, contributions to the UNHCR 
for assistance to "refugees under his 
mandate or persons on behalf of whom 
he is exercising his good offices" and for 
"meeting unexpected urgent refugee 
and migration needs." 

Addressing Refugee Needs 

The international refugee community 
concentrates its efforts— not exclusively, 
but primarily— on immediate assistance 
to refugees in place, in first asylum, 
where the need for help occurs first and 
is the most acute. The capacity to pro- 
vide this help effectively has improved in 
recent years and can be the difference 
between life and death, although, in 
some instances, access to the suffering 
populations can't be achieved, and in 
others, the help provided is very meager. 
What are the barriers and the limits to 
such assistance? What are the pressures 
and dangers of refugee life in camps and 
settlements, and how permanent are 
these "temporary" sanctuaries? Most 
refugees want, above all, to return to 



U.S. Coordinator for Refugee Affairs, 
Director, Bureau for Refugee Programs 




Jonathan Moore was 

born in New York on 
Sept. 10, 1932. He 
received a bachelor's 
degree from Dart- 
mouth (1954) and a 
master's degree in 
public administration 
from Harvard (1957). 
He began his govern- 
ment service in 1957 
as a public affairs 
assistant with the U.S. Information Agency 
in Bombay and later Monrovia. He served in 
the Office of International Security Affairs 
(Department of Defense), 1961-64, for a time 
as special assistant to the Assistant Secretary 
of Defense. He was special assistant to the 
Assistant Secretary of State for Far Eastern 
Affairs 1964-66. He was executive assistant 
to the Under Secretary of State in early 1969. 

Ambassador Moore was assistant to the 
minority leadership, U.S. Senate, in 1959; 
Legislative Assistant to Sen. Leverett 
Soltonstall (R.Mass.) 1959-61; and chief 
foreign affairs adviser on the national cam- 
paign staff of Gov. George Romney 1967-68. 
He was also foreign policy adviser on the 
national campaign staff of Gov. Nelson 
Rockefeller (1968). 

Mr. Moore has held assignments as 
Deputy Assistant Secretary of State for East 
Asian and Pacific Affairs (1969-70); 



Counselor to the Department of Health, 
Education and Welfare (1970-72); and special 
assistant to the Secretary and Deputy 
Secretary of Defense (1973). From June to 
November 1973, he was Associate Attorney 
General, Department of Justice. 

Previous to his current position, Mr. 
Moore was Director of the Institute of Politics 
and lecturer in public policy at Harvard's 
John F. Kennedy School of Government for 
12 years. 

In addition Mr. Moore has served on the 
advisory committee, National Institute of 
Law Enforcement and Criminal Justice 
(1974-76); consultant. President's committee 
on the accident at Three-Mile Island (1979); 
member of the Secretary of Health, Educa- 
tion and Welfare's ad hoc group on the future 
strategy of the Department of Health and 
Human Services (1980); member of the Cape 
Cod National Seashore Advisory Commission 
(1982-85); and member of the Secretary of 
State's panel on Indochinese refugees 
(1985-86). In Oct. 1984, he was a consultant 
to the Agency for International Development 
in a field assessment of the U.S. economic 
assistance program for the Philippines. 

Mr. Moore was sworn in as U.S. Coordi- 
nator and Ambassador at Large for Refugee 
Affairs on Sept. 12, 1986, and was appointed 
Director of the State Department's Bureau 
for Refugee Programs on Mar. 5, 1987. ■ 



REFUGEES 



their homes, yet conditions of safety and 
stability enabUng them to do so remain 
elusive. 

The behavior of the receiving coun- 
try is the most significant variable. The 
response of the international commu- 
nity—advanced by the UNHCR— is next, 
but usually is available and reliable. 
Receiving countries have security, politi- 
cal, economic, and cultural interests and 
values which, together, will determine 
what their response will be Often it is 
most generous and patient. Naturally, 
internal political stability, conflicts with 
neighboring states, the relationship of 
the given refugee population to insur- 
gency ambitions or apprehensions, old 
ethnic rivalries, contrasts in standard of 
living, and consideration of foreign 
alliances and assistance will play a role 
in determining the refugee policies of 
the host nation. 

The whole experience of refugees is 
an intense mix of dedication and exploi- 
tation, and this is where it begins. Per- 
ceptions of first asylum are sometimes 
determined by distance— what looks like 
a politically persecuted refugee from far 
away may appear more like an illegal 
immigrant up close, or, as a hard-boiled 
American politician of local reknown 
once put it: "It's easier to be liberal fur- 
ther away from home." 

The negative economic and political 
impact on local goods, services, and 
populations, despite substantial imports 
of outside assistance— the burden on the 
host country of large refugee influxes 
staying for long periods— is intensive, 
divisive, and destabilizing. Consider the 
effect of having well over 2 million 
needy Afghans settle "temporarily" in 
Pakistan for over 6 years, where, even 
before their arrival, the per capita GNP 
was less than $400. 

To try to soften the impact of mas- 
sive refugee influxes, the United States 
and the international community have 
developed a variety of programs aimed 
at encouraging self-sufficiency among 
refugee populations and providing assist- 
ance to local populations disrupted by 
the refugees' arrival. These programs 
range from reforestation, irrigation, and 
road-building projects with the World 
Bank in Pakistan to water projects and 
direct food supplements to affected 
villages in Thailand. In El Salvador and 
Uganda, U.S. aid programs help repatri- 
ated refugees and returned displaced 
persons in resettlement and agricultural 
self-sufficiency projects. In Lebanon, UN 
agencies offer food and medical supplies 
to needy local communities, in addition 
to those suffering within the refugee 
camps. 



What are the conditions of the 
refugees who stay in camps or set- 
tlements for protracted periods of time? 
Their situation can differ widely. For 
some, refugee camps are closed— that is, 
the refugees are not allowed to leave the 
camps and are densely concentrated. For 
others, they may be distributed in more 
open settlements and permitted to have 
some access to the markets and jobs of 
the host country. The psyche shrivels 
and the morale wanes faster, of course, 
in the former instance. The fabric of life 
generally in refugee camps is character- 
ized by all sorts of pathology, despite the 
courage, will, and resilience of their 
inhabitants: disruption and disorienta- 
tion, dependency, apathy, powerlessness, 
loss of self-esteem, claustrophobia, 
pressure on the family, deterioration of 
authority structures, and the random 
violence which follows. The longer 
refugees remain refugees, the more 
these characteristics are intensified, 
moral strength is sapped, frustration 
sets in. Anger and hate can grow and 
multiply, and the potential for "Pal- 
estinization"— a profoundly tragic term, 
even if the phenomenon was never 
repeated— increases, as, perhaps, in the 
case of the 260,000 Khmer displaced per- 
sons along the Thai border, the 2.8 
million Afghans in Pakistan, or even the 
400,000 Oromo and ethnic Somalis from 
Ethiopia in Somalia since 1979. 

So immediate "emergency and tem- 
porary" assistance is critical. We can 
never fail to provide it, and for as long 
as it takes, but it cannot become perma- 
nent; it's a wasting option, and its 
unrelieved, unliberated continuance is 
both unacceptable and probable. 

Promoting Durable Solutions 

What happens next? Are there effective 
possibilities which lie between taking 
care of the emergency and attacking the 
root causes of refugee problems? This 
brings us to the three classical "durable 
solutions" which the international com- 
munity relies on as long-run alternatives 
to immediate assistance in place: 

Repatriation— the voluntary return 
to the country from which the refugees 
fled; 

Local integration— establishing new 
homes in the country of first asylum; and 

Third-country resettlement— trans- 
porting and transplanting refugees to a 
distant country where there is the oppor- 
tunity to begin a new life. 

How dynamic, how viable, how extensive 
are they? 



Resettlement to a third country, 
ideally, should be the last option to be 
considered. This is difficult for the 
strongest among us— extremely so for 
refugees who often lack the resources, 
education, or adaptability for a new 
environment. To make such a transition 
a success requires a tremendous effort 
both on the part of the refugees and 
those taking them in. The process is dif- 
ficult, it is expensive, and many cannot 
meet the restrictive eligibility require- 
ments necessary to qualify for perma- 
nent admission to third countries. There 
is also the risk that resettlement itself 
will be seen as a route for migration, a 
"magnet effect" which attracts further 
refugee flows. 

This is not to say that resettlement 
does not remain a viable option for a 
limited few, a necessary component in 
the mix of solutions needed to cope with 
problems as we seek other solutions. It is 
not to say that many refugees do not 
make the transition successfully and 
flourish in their new homes. The United 
States has been the world's leader in 
resettling refugees from distant lands— 
particularly Indochina, from where over 
800,000 refugees have arrived in the 
past 1 1 years, adding rich new thread to 
the fabric of the American tapestry. 

But as a solution with broad appli- 
cability, resettlement has reached a 
plateau and will fall off. We will continU' 
to resettle refugees, as will other coun- 
tries who have generously opened their 
doors to those in need. About one-third 
of the U.S. refugee assistance budget of 
$340 million for fiscal year 1987 goes foi 
resettlement of roughly 65,000 refugees 
in this country— and about two-thirds fo; 
international assistance for roughly 10 
million refugees in place. Resettlement 
can be a solution for only about 1% of 
the world's refugees. 

First-asylum countries around the 
world are currently among the poorest 
in their own right and are often strug- 
gling under the burden of newly arrived 
populations in need of assistance. 
Although their response has been 
remarkable, in the long run they are 
unlikely to be able to provide significant 
opportunities for the second durable 
solution— permanent local integration- 
of large numbers of refugees. Excep- 
tions where hospitality has been warm 
and in-country integration has worked 
well can be found, especially in Africa 
where hundreds of thousands of refugee 
have found new homes in Burundi, 
Rwanda, Sudan, Tanzania, Uganda, 
Zaire, and Zambia. But even in Africa, 
things are beginning to constrict, coun- 
tries are becoming less willing or their 



^>f^r^ortrr■^r.^ r^l Ct^t^ n..ll^ti 



REFUGEES 



agile economies less able to bear the 
eight of new populations. In Southeast 
sia, where first-asylum countries, sup- 
Drted by efforts of the UNHCR and the 
settlement countries, have granted 
;fugees asylum for more than a decade 
ith no end in sight, there are accumu- 
ting pressures, and early prospects for 
fugees settling in the region are not 
•ight. 

Voluntary repatriation, the most 
jsirable traditional durable solution, is 
BO often the most difficult to achieve. 
or a person to be willing to return 
)me, the conditions which forced him or 
jr to become a refugee in the first place 
ust be resolved. All too frequently, the 
luses of refugee flight are intractable 
id unlikely to disappear soon. 

Some repatriation is taking place, 
id the UNHCR is taking the lead with 
tempts at cooperation by certain 
embers of the international commu- 
ity. As a goal, we believe that more 
Ituations where repatriation is possible 
lUst be encouraged and will develop. In 
frica, again, voluntary repatriation is a 
itural and active phenomenon. Over a 
9zen different repatriations there are 
(curring now or have recently, either 

Kontaneously or assisted by the 
(JHCR or other organizations. Large 
limbers of refugees have repatriated to 
Ithiopia from Sudan, Somalia, and 
iibouti; to Chad from the Central 
(frican Republic, Sudan, and Cameroon; 
«d to Uganda from Rwanda, Sudan, 
lid Zaire. So there are ebbs as well as 
)ws— although they are not symmetri- 
.1, given the stubborn disruptions 
ross major portions of the continent, 
id Africa is an exception in this respect 
begin with. 

What is key to recognize is that the 
ree classical durable solutions, while 
iportant and valuable options in 
anaging refugee situations, are, today, 
nited and insufficient in and of them- 
Ives. If we are really serious about 
ding people who have reached such a 
ate of fear and discouragement that 
fey are willing to abandon everything, 
e must not only "manage" refugees 
ice they arrive in first asylum and 
ress all three durable solutions but also 
^d ways to achieve conditions which 
flow them to stop being refugees and to 
fevent them from becoming refugees in 
16 first place. 

hterrelationship of Foreign 
blicy and Refugee Problems 

'^e have come to the final and funda- 
lental two questions. Do nation states. 



individually and in concert, have the 
imagination and the political will to 
address effectively the root causes of the 
refugee problem? Can refugee issues be 
reconciled with other forces and inter- 
ests in the formulation of U.S. foreign 
policy? "Wouldn't it be pretty to think 
so?" said Jake to Lady Brett in response 
to her excessively romantic characteriza- 
tion of life in the last line of The Sun 
Also Rises. 

We have already confronted and 
accommodated many juxtapositions of 
refugee issues and foreign policy needs 
in getting to this stage of our discussion, 
but in addressing root causes, the inter- 
relationship—which is a complex, 
dynamic, inevitable, and critical one— is 
most tested. Refugee consequences tend 
to be the result, rather than the aim, of 
foreign policy thrusts. Refugees tend to 
become a foreign policy issue when they 
happen; they are not deliberately pro- 
voked. They tend not, as an original mat- 
ter, to be a significant factor in policy- 
making— the fact that they can become a 
horrendous byproduct may suggest this 
should change. 

Foreign policy strategies affect 
refugee interests, and refugee realities 
infect foreign policy in a variety of ways; 
refugees tend to be highly impactful in 
international relations. The decision to 
be a refugee is a political statement dif- 
ferentiating between countries, and the 
decision to grant asylum, aside from 
humanitarian motivation, can be seen as 
a hostile act by a neighbor. The same 
nation-states which are providing signifi- 
cant humanitarian assistance to refugees 
may, at the same time, be pursuing 
policies that have the effect of 
generating refugees. 

Refugees are volatile, sometimes 
prone to destabilizing activity; they are 
vulnerable, sometimes subject to 
destructive exploitation. They are 
burdensome and intrusive in terms of 
economic and social progress, affecting 
international resource competition and 
allocation. They often participate in 
insurgencies which are international by 
the fact of their location on the other 
side of an international border and by 
the support they may receive from 
foreign sources, posing crucial foreign 
policy decisions. The fact that they are 
freedom fighters does not mean that 
they aren't also refugees— the definitions 
are frequently combined or blurred; and 
the relatives and camp followers are 
even harder to type— are they co-con- 
spirators, hapless pawns, or innocents, 
and what should be done with them? 



External aggression creates refu- 
gees which then have to be dealt with, as 
in Afghanistan and Cambodia. Refugee 
populations may themselves become 
powerful factors in regional struggles, 
such as the Palestinian refugees. Inter- 
ested countries have to decide what 
weight to give aid to refugees or to 
refugee-affected states; whether to try 
to change or prevent change in govern- 
ments tied up with refugee problems, to 
support or oppose refugee insurgencies, 
to press for first asylum or repatriation 
at the cost of other interests. Trade 
policies, security needs, deficit-fighting 
initiatives— all can influence or be 
influenced by refugees. 

Addressing the Root Causes 
of the Refugee Problem 

So much for the interdependence; what 
are the root causes which our foreign 
policy would have to address in order 
that refugee phenomena be radically 
alleviated? It is an intimidating list, par- 
ticularly if you even pause to consider 
what might actually be done about its 
entries, which essentially divide into 
three clusters, each threatening, con- 
stant, and widespread: 

• War and violence— a huge number 
of continuing armed conflicts in various 
areas of the world; 

• The brutal violation and abuse of 
human rights, systematic and particular, 
in most of the countries of this planet; 
and 

• The ruthless disparity of rich and 
poor or, more precisely, grinding pov- 
erty brought on by various natural and 
manmade causes, again suffered by most 
of the world's peoples. 

As a hypothetical exercise— calcu- 
latingly if not redemptively indulgent of 
refugee needs— if foreign policy could 
work magic, what would it effect? What 
if those of us seized with refugee issues 
could have our druthers and behave as if 
they were the only problems we had to 
worry about? What if we did not have to 
contend with conflicting policy interests, 
if foreign policy was, in fact, refugee 
policy— which, of course, is not so. What 
other interests might be served and 
problems lessened if it were so? 

We would try to bring to an end 
insurgencies and military occupations— 
in Afghanistan and Cambodia, in 
Mozambique and Angola, in Nicaragua 
and El Salvador. We would try to ter- 
minate the traffic in arms around the 
world. We would press closed societies 
harder for legal emigration accords 
eliminating the need for dangerous flight 



73 



SCIENCE & TECHNOLOGY 



and for agreements providing safe volun- 
tary repatriation. We would greatly 
increase our economic development aid 
to help remove the seeds both of eco- 
nomic migration and the kinds of dis- 
equilibriums that bloom into refugee- 
generating situations. Radical efforts 
would focus on aiding those countries 
wallowing in economic morass to build 
viable economies capable of providing 
opportunities for their people, staving 
off both the specter of true hunger and 
the hunger for a better life elsewhere. If 
this, our Panglossian mission, were suc- 
cessful, citizens in all countries would be 
provided access to the political institu- 
tions which influence their destiny; fear 
of persecution and repression would 
have no place in the human condition; 
and true democracy, religious tolerance, 
and economic freedom would reign. 

So much for dreaming— although it 
does reveal the profoundness of our 
problems, the near-daunting challenge 
even of how to begin to address them, 
the commonality of refugee and other 
less esoteric aspirations, and how 
improbable it is that all this will come 
about. In order to advance refugee 
policy, not at the expense of but within 
the pluralism of foreign policy, what is 
required is elevation and integration. 

Refugee values should play a more 
influential role at the higher levels of 
macro-policymaking and in the competi- 
tion of forces which determines its 
shape. Refugees are just one facet in the 
multifaceted competition among legiti- 
mate interests which must be coordi- 
nated and reconciled in the molding of 
foreign policy. To move toward affecting 
those conditions so as to bring relief to 
the world refugee situation, refugee 
interests should become more— not less- 
political, more relevant and less isolated, 
if they are to influence the scale of 
foreign policy decisionmaking in their 
favor. 

Specifically, this must be achieved in 
deliberations with those officials respon- 
sible for regional and bilateral relation- 
ships in the State Department and with 
the National Security Council staff; in 
representations with nations abroad and 
with multilateral agencies; in program 
design and budget planning across the 
executive branch; in intensive consulta- 
tions with Congress; in public education; 
and, finally, in relations with voluntary 
agencies, churches, state governments, 
resettlement communities, and ethnic 
organizations. Accepting the narrow 
view or the narrow management of 
refugee interests is self-defeating in two 
ways: it denies reality and falsely 
inflates expectations, and it locks into a 



74 



parochialism where you are constantly 
chasing your tail and losing ground. 

To come back from where we started 
tonight, we must seek affinity and 
mutual benefit— this is both idealistic 
and sophisticated, and it had better be 
both. The task is extremely arduous, 
almost futile, requiring affirmation and 
resoluteness, rejecting complacency and 
cynicism. First, by actively inserting 
refugees into the fray of competing 
interests with influential actors, there is 



a higher possibility of arriving at a polic 
that will be less likely to generate or 
exacerbate refugees. Second, if a policy 
is decided upon which has refugee const 
quences, it will be with foreknowledge, 
and responsible officials will be better 
prepared to deal with the results. Third 
engagement with these humanitarian 
concerns will serve to enlighten policy- 
makers generally at a level where criti- 
cal decisions are made, presumably to 
the benefit of other interests as well. ■ 



World Radio Conference Concludes 



U.S. Ambassador Leonard H. Marks has 
expressed "satisfaction" over the out- 
come of the second session of an interna- 
tional conference on planning procedures 
for high-frequency (shortwave) radio 
broadcasting. 

Speaking to reporters in Geneva 
March 7, as the 5-week World Admin- 
istrative Radio Conference (WARC) on 
the allocation of the high-frequency (HF) 
bands for broadcasting came to a close, 
the head of the U.S. delegation said a 
"compromise" had been reached at the 
conference which met U.S. goals. 

"The compromise reached here 
should enable the Voice of America, 
Radio Free Europe/Radio Liberty, and 
private shortwave broadcasters licensed 
by the Federal Communications Commis- 
sion (FCC) to continue modernizing their 
facilities and to begin preparing for new 
transmission techniques that could, in 
the next century, dramatically increase 
their already substantial audiences 
around the world," he said. 

The conference is held under the 
auspices of the International Telecom- 
munication Union (ITU), the Geneva- 
based UN agency specializing in the 
most effective use worldwide of 
telecommunications. 

It follows on from a high-frequency 
WARC, held in 1984 to try to solve the 
problem of congestion and poor quality 
shortwave broadcasts resulting from 
increasing use of the HF band. 

Marks said "the essential fact 
remains that there are too few frequen- 
cies to meet the demand" of shortwave 
users. 

He summed up the results of the 
second session of the conference as 
follows. 

• It called for a new conference, 
probably in 1992, to consider increasing 
the number of channels available for 



I 



broadcasting on the shortwave band, 
particularly in the popular six and sevei 
megaherz (49- and 41-meter) bands. He 
said the next conference might considei 
freeing up more space for broadcasting 
on the shortwave band by moving non- 
broadcasting uses— such as aeronautica- 
and maritime mobile, safety services, 
military, etc.— to other locations. 

• It called on the manufacturers ot. 
shortwave radio transmitters and 
receivers to begin developing equipmer 
by the end of 1990, suitable for single- 
side band (SSB) broadcasting as well as 
by the current double-side band (DSB) 
techniques. (SSB takes up about one-hj 
the band space of DSB.) "Worldwide 
conversion to the SSB mode of transm 
sion could potentially double the numb<* 
of channels available for broadcasting,' 
Marks said. He added that the con- 
ference has set a tentative target date 
2015 for such conversion, but this wou] 
be subject to the pace of introduction o 
the new SSB equipment around the 
world during the 1990s. 

• It agreed to carry out a further 
round of computer tests on a new 
automated procedure for planning shoii 
wave broadcasting. Since 1959 the ITl 
has used a U.S. -sponsored voluntary 
coordination procedure to find the 
optimal broadcasting frequencies for 
countries within the limited amount of 
frequency space available for shortwav 
broadcasting. At the first session of th| 
conference in 1984. a computer-auto- 
mated international frequency assign- 
ment planning system was developed. ' 
found to be successful, it would eventui 
ally replace the voluntary coordination' 
procedures. However, Marks said that 
computer tests of the new system 
showed that 25% of the broadcast 
requirements of countries were not 
satisfied, and 25% of the countries wei 
provided a signal of minimum quality 
and not really usable for broadcast pur 
poses. Therefore, the current conferen 



Deoartment of State Bulle, 



L 



50UTH ASIA 



ladi' "very substantial changes" to the 
oni| niter plan, which— after 3 years of 
iiftw are development and testing— will 
e i\ viewed at a future conference, 
roliablyin 1992. 

• It adopted a U.S. resolution— 
upported by Canada, Western Europe, 
nd other nations— to continue the ITU's 
HHiitdring of "harnxful interference," or 
imining, by countries of other nations' 



international radio broadcasts. "No 
automated planning system can effec- 
tively be implemented as long as jam- 
ming continues," Marks said, noting that 
the ITU's monitoring had identified the 
Soviet Union, Poland, and Czechoslo- 
vakia as the worst offenders when it 
comes to jamming foreign radio broad- 
casts. ■ 



>outh Asia and the United States: 
Vn Evolving Partnership 



If Michael H. Armacost 

Address before the Asia Society on 
pril 29, 1987. Ambassador Armacost is 
nder Secretary for Political Affairs. 

. is a particular pleasure to address the 
sia Society of Washington tonight. I 
ive had a long and happy association 
ith this organization, for the most part 
connection with previous duties in 
ast Asia. This is a welcome and timely 
jportunity to share with you some 
loughts on our relationship with South 
sia— that quarter of the world that lies 
itween Iran on the west and Burma on 
le east. 

One measure of the growing impor- 
.nce of South Asia to the United States 
the time and attention which senior 
dministration officials— myself 
eluded— devote to the policy challenges 
id opportunities in this important 
•oup of countries. By that standard- 
deed, by any standard— the region is 
;ry important, indeed. 



.S. Interest in South Asia 

Tiat happens in South Asia is a matter 
:' consequence to Americans. Our stake 
. the subcontinent was first expressed 
our support for the independence of 
outh Asia from British rule. We saw 
lat states free from outside domination 
ould be the best guarantors of regional 
;curity. We appreciated the size and 
versity of the populations of the region 
id its potential for rapid and equitable 
'Gnomic growth. We especially 
^cognized the democratic aspirations 
nd achievements of the peoples of 
outh Asia, the vitality of their intellec- 
lal and cultural traditions, and— more 
scently— the key roles these countries 
ave come to play in international and 



Third World fora and their significance 
in East- West and North-South 
relationships. 

This interest has been articulated by 
every American Administration since 
World War II. Yet the scope of our 
involvement, the relative emphasis given 
to security versus economic concerns, 
and the priority accorded to particular 
countries within the region have varied 
with changes in international circum- 
stances and in the rhythm of American 
politics. Continuity has not always been 
our strongest suit as we have sought to 
balance our regional interests in South 
and Southwest Asia with our global con- 
cerns about the expansion of Soviet 
power. 

Some Administrations have pursued 
close ties with Pakistan, to the detri- 
ment of relations with India; others 
have sought to augment our ties with 
India at the expense of relations with 
Pakistan. The Reagan Administration 
has attempted to forge closer relations 
simultaneously with both nations. We 
recognize, of course, the importance of 
the other countries of the region, and we 
have also sought to develop further our 
bilateral ties with them. 

Our goals in the area are to: 

• Restore Afghanistan's 
independence; 

• Avert a nuclear arms race in the 
subcontinent; 

• Encourage a reduction of tensions 
between Pakistan and India; 

• Stem the drug trade and forge 
closer international cooperation against 
terrorism; 

• Preserve national integrity in the 
face of separatist demands; and 

• Support moves toward democracy 
and regional and economic cooperation, 
including the impressive strides made by 
the South Asian Association for 
Regional Cooperation (SAARC). 



Recent Developments 

Let me comment briefly on recent 
developments in some of these areas, 
and then outline for you the policy prin- 
ciples that mark the Administration's 
approach to each. 

Afghanistan. The essentials of the 
Afghan conflict have not changed in 
recent months. The Soviets have been 
unable to translate their massive 
military involvement into stable political 
arrangements in Kabul. Resistance to 
the Soviet presence and its client 
government continues to grow; and 
international support for the resistance 
has never been stronger. 

While the Soviets have not taken 
decisive actions to end their military 
involvement in Afghanistan, there have, 
nonetheless, been some significant 
developments in recent months, some of 
which enhance the possibilities for a 
political settlement. 

• While the tempo of military action 
in Afghanistan remains very high, Soviet 
efforts to shift the burden of combat to 
Afghan units have largely foundered on 
the inefficiency and uncertain loyalty of 
the Afghan military. 

• Despite wishful claims to the con- 
trary, attempts to broaden the political 
base of the Najibullah regime, to coopt 
or coerce the mujahidin into giving up 
their struggle, and to disrupt the infra- 
structure of the resistance have failed. 

• The Soviets have, more and more 
emphatically, declared their intention to 
withdraw from Afghanistan. They claim 
that the Soviet Army has completed its 
mission there and that a schedule for its 
withdrawal has been set. Yet the minor 
withdrawals implemented to date have 
been of no military consequence, and the 
cease-fire proposed by Kabul last 
January was understandably spurned by 
the resistance because it did not address 
the underlying cause of the conflict- 
namely, the occupation of the country by 
some 120,000 Soviet troops. 

• The Geneva proximity talks con- 
tinue, the last having taken place in 
March. Differences on the central ques- 
tion of a timetable for withdrawal of 
Soviet troops have narrowed somewhat. 
In the most recent round, the Kabul 
regime proposed an 18-month timetable; 
Pakistan responded by indicating its will- 
ingness to accept a 7-month withdrawal 
period. 

• The Soviets have belatedly 
acknowledged that a serious process of 
national reconciliation must include 
those who have taken up arms against 
the regime, the refugees who have been 



SOUTH ASIA 



driven from their country, and promi- 
nent individuals associated with previous 
Afghan governments. But Moscow's cur- 
rent approach appears to envisage a 
coalition government built around and 
led by the Communist Party of Afghani- 
stan, while including elements of the 
resistance— a political arrangement that 
the resistance rejects because it will not 
work. 

• Political consultations among 
resistance parties have intensified in 
recent months. The resistance alliance 
has maintained a common front in reject- 
ing the legitimacy of the Najibullah 
government. However, differences 
evidently persist among the alliance par- 
ties with respect to who should lead an 
interim government and how it can best 
be created. 

• While Pakistan continues, with 
courage and magnanimity, to open its 
doors to nearly 3 million Afghan 
refugees, this burden has become much 
more onerous politically in the face of 
Soviet efforts to harass and intimidate 
Pakistan by bombarding border villages, 
sowing disinformation, and engaging in 
sabotage designed to fan ethnic and com- 
munal rivalries. 

• In our conversations with Moscow, 
we have reminded Soviet leaders 
repeatedly of the heavy burden their 
presence in Afghanistan imposes on 
U.S. -Soviet relations and the salutary 
impact an early political solution would 
have on our ability to move forward on 
other aspects of the East-West agenda. 
Yet we remain uncertain of Soviet inten- 
tions. On the one hand, they have per- 
mitted a more open public and media 
discussion of their policy in Afghanistan, 
with General Secretary Gorbachev 
having taken the lead in declaring before 
the 27th Party Congress that the war 
has been a "bleeding wound." On the 
other hand, they have dramatically 
increased their attacks against innocent 
Pakistanis and Afghans. 

We do hope that when all is said and 
done, the Soviet leadership recognizes 
the rising cost of their present involve- 
ment in Afghanistan. They do now 
appear to see that their original aims are 
unattainable through military force and 
that continuing to pursue an inconclusive 
struggle could seriously jeopardize Mr. 
Gorbachev's domestic agenda as well as 
his efforts to create a more flexible 
Soviet foreign policy. What remains is 
for them to take the tough decisions that 
will facilitate an early resolution of the 
conflict. We will certainly be ready to 
respond positively if they do. 



Indo-Pakistani Nuclear Tensions. 

Nuclear proliferation in the subcontinent 
is a matter of both regional and interna- 
tional significance. Both India and 
Pakistan possess impressive scientific 
and technical capabilities in the field of 
nuclear technology. Both have strong 
economic incentives to develop civil 
nuclear power programs. Neither has 
signed the Nuclear Nonproliferation 
Treaty, and both have unsafeguarded 
facilities. 

The Reagan Administration certified 
to the Congress last October its judg- 
ment that Pakistan did not possess a 
nuclear device. Despite recent press 
stories, we have not changed this assess- 
ment. Yet concerns about a drift toward 
the competitive acquisition of nuclear 
weapons in South Asia are growing— 
both here and in the region. 

• There is some public support for 
"going nuclear" in both India and 
Pakistan— a support based on what we 
believe to be a lack of appreciation of the 
costs, risks, and dangers associated with 
nuclear proliferation and a regional 
nuclear arms race. Some public figures 
in both countries now openly advocate 
nuclear weapons programs. 

• The strains of distrust in the 
overall political relationship between 
New Delhi and Islamabad have inter- 
rupted a nascent dialogue about nuclear 
issues, delaying the consummation of a 
promising agreement not to attack one 
another's nuclear installations and stall- 
ing consideration of other confidence- 
building measures in this field. 

• Increased congressional concerns 
about these developments have been 
registered by committee action in both 
the House and the Senate to reduce the 
Symington amendment waiver provi- 
sions from 6 years to 2 for the next 
assistance program proposed for 
Pakistan and to acknowledge explicitly 
in the law the need for regional coopera- 
tion to prevent nuclear proliferation. 

As technical limitations on the 
capacity of Pakistan and India to acquire 
nuclear weapons diminish, the impor- 
tance of developing more effective 
political constraints against crossing the 
nuclear threshold increases. Fortunately, 
the leaders of both countries recognize 
the great dangers and costs they would 
suffer if India and Pakistan were pro- 
pelled into a nuclear arms race. We are 
working to help them build upon this 
understanding. 

Indo-Pakistani Relations. Since 
independence, tensions between India 
and Pakistan have complicated our own 
relations with both countries. While our 



assistance has been substantial (more 
than $20 billion), help to one has fre- 
quently been seen as a source of dangei 
to the other. 

In recent years. New Delhi and 
Islamabad have established mechanism: 
for normalizing and managing their 
bilateral relationship. During the last 
year, however, this process has been 
subject to great strain and again has 
stalled. Troop movements and exercise 
along the Indo-Pakistani border in 
January led to an upsurge in mutual 
suspicions. And, while the immediate 
crisis was resolved, the incident served 
further to complicate the efforts of the 
two nations to expand bilateral trade 
and other exchanges, to resolve the 
Siachin Glacier dispute, and to bridge 
differences between Pakistan's propos< 
no-war pact and India's proposed peac< 
and friendship treaty. 

The ability of India and Pakistan t<' 
forge stronger bilateral ties is fundame- 
tally hampered by mutual suspicions. 
Each fears that its neighbor is fanning 
ethnic rivalries. Each is wary of the 
external defense relationships of the 
other with outside powers. While 
legitimate security concerns are at 
stake, such perceptions are often exag 
gerated and inflamed by hyperbolic 
rhetoric. 

Despite these problems, the leader 
of both India and Pakistan appear det< 
mined to prevent a deterioration in re; 
tions. Their periodic meetings have be' 
marked by cordiality and candor. Inde 
summits of the South Asian Associatic 
for Regional Cooperation, to which bo 
are dedicated, now provide additional 
opportunities where they— and the oth 
leaders of the subcontinent— can discu 
bilateral issues. 



« 



National Integrity. Since the for 
mation of independent states in Southi 
Asia 40 years ago, ethnic, subregional 
linguistic, and other separatist 
movements have threatened the nation 
integrity of the new polities. These 
movements are dangerous in principle 
and dangerous in practice. For examp 
the formation of an independent state 
Khalistan, as demanded by some Indie "^i 
and foreig^n Sikhs, would not only viol; e 
the principle of national integrity but 
would also create a vulnerable and ind 
fensible entity lacking international si • 
port and strategic depth. This is true : 
well of other separatist movements. F •- 
thermore, the multiethnic nature of m .t 
South Asian states sustains suspicions 
that neighboring countries are seekinj 
to exploit unrest among competitive 
ethnic groups for the purpose of weak i- 



SOUTH ASIA 



ng regional rivals. India, for example, 
las charged Pakistan with helping Sikh 
nilitants. Pakistan has made similar 
Jlegations about Indian assistance to 
he Sindhis. We oppose disruptive 
novements of this kind. 

Most disturbingly, violence in Sri 
janka has escalated tragically in recent 
reeks, as militants calling for a Tamil 
lomeland have initiated a series of 
»rutal bombings and other armed 
ncidents— thus precipitating renewed 
nilitary confrontation in both the north 
,nd the east. The Jayewardene govern- 
nent has responded forcefully. Some 
ivilians have been caught in the 
rossfire, exacerbating the conflict. 

This upsurge of violence has further 
lardened the polarization of political 
orces in Sri Lanka, strengthened the 
lands of those within the insurgent 
aovement and government camps who 
.dvocate a military solution, and may 
ave reduced the leverage of India over 
'amil militants. We certainly support 
he efforts of India to bring the insur- 
ents to the bargaining table so that 
Dng-delayed political negotiations can be 
lesumed. 

Regional Cooperation. It is 

pparent to any observer that the region 
aces a daunting agenda of political and 
ecurity challenges, but the states of 
South Asia are determined to confront 
hem and have been looking for ways to 
luild bridges to their neighbors. We 
lave recently witnessed the development 
if an innovative instrument to encour- 
.ge communication and cooperation in 
he area— the South Asian Association 
or Regional Cooperation, established in 
985. SAARC is a living memorial to the 
' idsdom and vision of its advocate, the 
ate President Ziaur Rahman of 
Bangladesh. 

This regional association has quickly 
established impressive, firm roots by 
;oncentrating pragmatically on eco- 
jiomic, cultural, and environmental 
cooperation that brings tangible benefits 
the peoples of the region. The estab- 
:,ishment of a meteorological research 
;enter, the opening of an agricultural 
i nformation center, and collaboration in 
j'ields such as telecommunications all 
•epresent excellent beginnings. SAARC 
; summit meetings have served as fora for 
, liscussing arrangements for regional 
;:ooperation, and they have also provided 
opportunities for bilateral meetings 
inicing leaders. 

Elements of U.S. Policy 

jIn sum, the current scene in South Asia 
reflects elements both of hope and of 



SOUTH ASIA 




danger. Our task is to nurture the 
possibilities of an Afghan settlement, 
encourage Indo-Pakistani reconciliation, 
and lend support to the growth of 
democratic institutions and regional 
cooperation on such matters as drug con- 
trol and coping with terrorism, while 
seeking to diminish the risks of nuclear 
competition and ethnic violence in the 
subcontinent. With these broad aims in 
mind, let me comment briefly on the 
policy efforts we have undertaken in 
recent months. 

Supporting the Cause of Afghan 
Independence. With respect to 
Afghanistan, there are those who say 
that we seek to keep the Soviets in 
Afghanistan in order to "bleed" them; that 
we covet the use of Afghan territory for 



strategic purposes; or that our aim is to 
achieve "historic revenge" for Vietnam. 
These self-serving misreadings of our 
objectives could not be further from the 
truth. Rather, our objectives in Afghani- 
stan are to get Soviet forces out, to per- 
mit the Afghan refugees to return home, 
to allow the Afghans to determine their 
own political future, and to restore the 
country to its traditional status as a 
neutral, nonaligned buffer. There are 
two key elements to a political 
settlement: 

First, a timetable providing for the 
rapid and complete withdrawal of all 
Soviet forces; and 

Second, political arrangements 
inspiring sufficient confidence among 
the Afghan refugees to induce them 
voluntarily to return home. 



-J"i"-'°°"7 



77 



SOUTH ASIA 



The first issue— that of a timetable 
for Soviet withdrawal— is the only 
unresolved issue remaining in the "prox- 
imity talks" conducted in Geneva under 
the auspices of Diego Cordovez, the UN 
Secretary General's special represent- 
ative. He has displayed admirable 
dedication in moving these negotiations 
along, and some progress has been 
achieved. More is needed. A lengthy 
withdrawal period would serve only as a 
device to demoralize and undermine the 
resistance while the Soviet Union for- 
tifies its client regime in Kabul. It is for 
this reason that we support Pakistan's 
call for a timetable that is framed in 
months rather than years. 

As for the second issue (which is 
essentially not part of the agenda at 
Geneva)— that of political arrange- 
ments—the Soviets maintain that the 
process of national reconciliation has 
been launched. They claim that it is mak- 
ing dramatic progress— that, at the 
grassroots, they are gaining the coopera- 
tion of resistance leaders who are giving 
up the struggle to become local govern- 
mental authorities, and that, at the 
national level, they are attracting 
resistance leaders and other Afghans 
into a coalition arrangement. 

In fact, the mujahidin have 
exhibited little interest in a government 
of national reconciliation constructed by 
the Soviets around the current Kabul 
regime. No significant resistance com- 
mander has defected to the regime; no 
prominent Afghan exile has joined the 
government; and no significant element 
of the Afghan refugee community has 
responded to Najib's entreaties to 
return. The resistance insists— and 
appropriately so— that priority should be 
given to removing foreign troops from 
Afghan territory. It dismisses the idea 
that Najib can serve as a credible agent 
of reconciliation. It prefers interim 
governmental arrangements led by those 
with well-established nationalist 
credentials. 

If the Soviets are as confident as 
they profess of Najib's capacity to forge 
local accommodations, they should 
promptly withdraw. If they harbor 
doubts about his staying power, let them 
work for the establishment of an interim 
government headed by Afghans enjoying 
broader support among their own 
people. 

The Soviets express concern that a 
rapid withdrawal could result in a 
"bloodbath" directed against their 
friends in Afghanistan. Although the 
Russians have exhibited little 
squeamishness about the more than 1 
million Afghans who have died during 



more than 7 years of war, their concerns 
in this regard should not be dismissed 
out of hand. No one wishes to see fur- 
ther bloodletting. The most reliable 
guarantee against the settling of old 
scores, however, is the prompt establish- 
ment of political arrangements enjoying 
broad popular support in Afghanistan. 
We call upon Moscow to move beyond 
vain efforts to broaden the base of the 
existing government and to support a 
genuine process of national reconcilia- 
tion. The Pakistanis are prepared to sup- 
port such a process. So, too, are we. 

Pending the achievement of a settle- 
ment, of course, we will continue to sup- 
port our friends. To the freedom fighters, 
we pledge our humanitarian assistance 
and other support. To the Pakistanis, we 
pledge our continuing aid to the 
refugees, our help in modernizing con- 
ventional defenses (particularly air 
defense), our political support for their 
territorial integrity, and our diplomatic 
support in promoting a settlement that 
takes into account the legitimate inter- 
ests of all the parties. In so doing, we 
are not alone. Scores of other govern- 
ments stand behind the resistance. 

Promoting Nuclear Nonprolifera- 
tion. Nuclear proliferation issues touch 
fundamental questions of national 
strategy and prestige; efforts to pursue 
them perforce are difficult and sensitive. 
Nonetheless, we have made nonprolifera- 
tion a central feature of our policy 
concerns worldwide ever since World 
War II. 

In the South Asian context, we have 
for many years encouraged both India 
and Pakistan to sign the Nonprolifera- 
tion Treaty, to accept IAEA [Interna- 
tional Atomic Energy Agency] full-scope 
safeguards, or to enter into binding 
regional nonproliferation arrangements. 
All these remain valid objectives. Our 
proximate aims also include, however, 
fortifying current constraints against the 
acquisition and testing of nuclear devices 
and obtaining reliable assurances that 
weapons-grade nuclear materials are not 
produced. 

Some believe these goals can best be 
accomplished by adding new certification 
requirements to existing legislation on 
U.S. assistance to Pakistan and 
threatening a reduction or elimination of 
economic or security assistance if such 
conditions are not met. The Administra- 
tion has resisted such an approach for 
the following reasons. 

First, we believe that efforts to alter 
the conduct of proud and powerful 
nations through legislative ultimata that 



are seen as discriminatory in character 
will be ineffective, if not counterproduc 
tive; we know from experience. 

Second, reducing U.S. economic 
assistance and security support and con 
pounding existing uncertainties about it 
continuity would only strengthen the 
hands of those who argue that reliance 
upon foreign support is inherently risky 
This, in turn, could lend credence to the 
view that only an indigenous nuclear 
capability will assure an adequate deter 
rent over the long haul. 

Thus, the Administration has 
opposed additional certification 
requirements. It has, however, accepte< 
a 2-year waiver of the Symington 
amendment in lieu of the 6-year waiver 
passed in 1981 and a provision in the 
House and Senate bills that would set 
this waiver aside in the event India 
applies safeguards to its nuclear pro- 
gram and Pakistan does not. 

This should not imply that we are 
complacent about the nuclear issue. Thi 
debate in Washington is not over objec- 
tives but means. The acid test of policy 
is in the results. The United States can 
claim some genuine successes in non- 
proliferation policies over the years. Av 
we must continue to devote an all-out 
effort to the task. This subject will 
remain a central feature of our policy 
agenda with both Pakistan and India. 
We make no secret of our concerns. 
Indeed, our Ambassador in Islamabad, 
Deane Hinton, has underlined these co: 
cerns with a candor uncommon for a 
diplomat. We believe Pakistani leaders 
fully comprehend the seriousness with 
which we would regard illegal procure 
ment of sensitive nuclear materials in 
our country, the testing of nuclear trig 
gering devices, or the stockpiling of 
nuclear materials that could be readily 
converted to weapons. I need hardly ac 
that they also understand that existing 
laws would compel a termination of U.l 
assistance if they were to acquire or te 
a nuclear device. 

While we have a facilitative role to 
play on this issue, the burden of a solu- 
tion must rest on the countries in the 
region itself. They must work on a brof. 
front to develop a pattern of reciprocal 
restraints and confidence-building 
measures; for, if a nuclear weapons cor 
petition develops, it is their security th; 
will be diminished. 

We have encouraged a regional 
dialogue on the nuclear issue, and we 
have seen some tentative steps in this 
direction. Pakistan has announced its 
willingness to sign the Nonproliferatioi 
Treaty, to accept full-scope safeguards! 
to permit reciprocal inspections of its 



I 



78 



ripnartmpnt nf .Citato Riilloi- 



SOUTH ASIA 



luclear facilities, to join a South Asian 
luclear-free-zone agreement, and to con- 
emplate other confidence-building 
neasures if India is willing to follow suit 
imultaneousiy. These are welcome 
nitiatives whose seriousness would be 
einforced by Pakistan's ratification of 
he Limited Test Ban Treaty— a step 
/hich India has already taken. The 
ndian authorities have tended to dismiss 
hese Pakistani proposals as tactical 
loys. Yet the ideas have merit, and if 
Jew Delhi is not prepared to embrace 
hese initiatives, we would hope they 
?ould put forward alternative ideas of 
tieir own. 

It is vital that the two countries 
fork together in high-level discussions 
D develop an understanding of the 
lutual dangers that would result from a 
uclear arms race. We thus urge 
slamabad and New Delhi to complete a 
romising bilateral agreement not to 
ttack one another's nuclear installations 
nd to consider, as a step toward 
roader cooperation, an agreement not 
) acquire or test nuclear weapons. This, 
1 short, is a time for measures that will 
isure mutual restraint and generate 
lutual confidence. 

Bolstering Relations With India 
nd Pakistan. The United States has, of 
jurse, limited influence on relations 
etween Pakistan and India— and prop- 
rly so. We have important but quite 
ifferent interests in India and Pakistan. 
le do not equate the two; we value our 
plationship with each; and we resist any 
lation that our ties with India and 
laMstan are a zero-sum game. The 
kagan Administration's efforts to 
liprove relations simultaneously with 
3th Islamabad and New Delhi have 
emonstrated results; and they shall 
)ntinue. 

Since the unusually successful visit 
f Rajiv Gandhi to the United States in 
p85, Indo- American relations have— to 
Mote the Prime Minister— improved 
[tremendously." Our trade with India 
las flourished; joint ventures have pro- 
ferated; and high-technology transfers 
ave been promoted by streamlined 
iixport control procedures. We have 
Durred cooperation in the defense sec- 
)r as well as in preventing Sikh ter- 
- wrists from operating in the United 
.8 tates. Cultural ties have been solidified 
nrough the Festival of India, and the 
'.S. -India Fund has been estabhshed to 
apljort joint research and exchange 
rograms. Our official dialogue on inter- 
ational political issues continues to 
lature. 'These developments reflect our 
hared determination to build a very 
trong relationship. 



With Pakistan as well, our coopera- 
tion has grown, and U.S.-Pakistani rela- 
tions, as illustrated by Prime Minister 
Junejo's visit here last year, are strong, 
productive, and increasingly diverse. We 
have completed our initial long-term 
assistance effort and have negotiated 
another agreement that foresees the pro- 
vision of roughly $670 million annually 
for the next 6 years. We are continuing 
to supply substantial support to the 
Afghan refugees in Pakistan; we are 
working closely with Pakistan to cope 
with a growing narcotics problem; and 
we have supplied consistent support to 
Pakistan's efforts to promote a political 
resolution of the Afghan conflict. 

The challenge of our policy is to 
improve ties with both countries in a 
way that will help New Delhi and Islama- 
bad reduce tensions between themselves. 
Without intruding into their affairs, we 
have consistently encouraged them to 
address strains in their bilateral rela- 
tions in a constructive way. 

India continues to be concerned that 
Pakistan intends to use U.S. arms to 
strengthen its position against India. 
Our defense cooperation with Pakistan is 
designed to modernize its conventional 
defense capabilities in the light of Soviet 
pressures in Afghanistan. Our interest is 
for Pakistan to possess plausible conven- 
tional defense forces as an alternative to 
the nuclear option. It would serve 
neither our interest nor, I believe, 
Pakistan's to provide defense capabilities 
that could threaten India. But we are 
aware of Indian concerns. Without 
yielding a veto to anyone over our 
defense cooperation with Pakistan, our 
equipment sales will continue to focus on 
capabilities that respond to the 
immediate dangers to which Pakistan is 
exposed on its Afghan border and other 
modest and reasonable self-defense 
requirements. The immediate priority is 
upon augmented air defense capabilities 
in the light of stepped-up air attacks. We 
are urgently addressing recent requests 
for an airborne early warning platform. 

Preserving National Integrity. 

America's ability to reduce communal 
tensions in South Asia is extremely 
limited, yet we have worked closely with 
the states of the region on issues that 
affect their national integrity. On the 
question of Sikh violence, for example, 
the Federal Bureau of Investigation and 
other government agencies have joined 
with Indian officials to detect and appre- 
hend terrorists before they act. This 
cooperation is necessarily quiet and 
unpublicized, but it is producing results. 



Furthermore, we must continue to 
remind the Sri Lankan authorities that 
military solutions to the Tamil problem 
are unlikely to work— even as we urge 
the Tamil militants to recognize that ter- 
rorist tactics will only harden opposition 
to their political aspirations. We reiter- 
ate our call to all parties— particularly 
the Tamil militants— to come together to 
achieve a political solution within the 
framework of a united Sri Lanka. 
Thanks to the statesmanship of Presi- 
dent Jayewardene and the constructive 
efforts of the Indian Government, con- 
siderable progress was made prior to the 
recent violent attacks. We hope that pro- 
gress can be resumed, and we are pre- 
pared to help Sri Lanka rebuild after the 
violence subsides. 

Advancing South Asian Regional 
Cooperation. The South Asian Associa- 
tion for Regional Cooperation is, in our 
judgment, a flourishing concern. Its 
members have already identified 10 
areas of cooperation, and the ground- 
work has been laid for specific projects. 
The long-range value of such ventures is 
that they build working relations. Over 
time, these will help reduce the distrust 
among countries of the region. 

We offer our encouragement and our 
support. The President, in his message 
to the inaugural SAARC summit in 
Dhaka in 1985, applauded the foresight 
and initiative of its leaders and stated 
that the United States "stands ready to 
provide appropriate assistance at your 
request in launching programs of 
regional cooperation." Secretary Shultz, 
in hosting a luncheon for the SAARC 
Foreign Ministers in New York in 1986, 
repeated the President's offer. We par- 
ticularly value the potential for coopera- 
tion on narcotics eradication, combating 
terrorism, and improving weather 
forecasting during the monsoon cycle. 
Although we do not want to push 
ourselves on the organization, we do 
stand ready to help if the countries of 
the region so desire. That is the stand 
we propose to take. 

Conclusion 

As this brief survey shows, the nations 
of South Asia face daunting problems. 
However, they possess considerable 
human and material resources, and we 
are pleased that— with the tragic excep- 
tion of Afghanistan— they have made 
major strides in achieving stable and 
secure societies, able to meet the urgent 
needs of their people and to play respon- 
sible roles in the world community. We 
are proud to have assisted the states of 
South Asia in these efforts from their 



WESTERN HEMISPHERE 



earliest days as independent countries. It 
is, and has been, a cause worthy of our 
own heritage and our own interests. 
If there is one thought I want to 
leave with you tonight, it is that we have 
tried— and will continue trying— to con- 
struct a durable and a balanced policy 
toward South Asia, one that reflects 
rather complex interests: the strategic 
independence of the subcontinent; nas- 
cent cooperation within the region; 
recognition of the great importance of 
India, as well as the legitimate needs of 
Pakistan and others for support and con- 
fidence in their security; recognition of 
the democratic legacy we share with 
most South Asian states; our deep con- 
cern about nuclear nonproliferation; the 
bright prospects for expanded trade and 
growth through more market-oriented 



economies; and our determination to rid 
ourselves of the scourge of drugs. 

While we inevitably have our dif- 
ferences with South Asian countries on 
one issue or another, we believe that the 
fundamental interests of this country are 
in harmony with the aspirations of the 
South Asian nations. We seek no favored 
or dominant position for ourselves or 
bases for our forces; but we resist the 
efforts of others outside the region to 
threaten the lives and hopes of the more 
than 1 billion people who live there. It is 
for these reasons that I am optimistic 
about the future. I believe that the evolu- 
tion of cooperation between the United 
States and the nations of South Asia wall be 
recognized as one of the major accomplish- 
ments of the Reagan Administration. ■ 



The Spirit Behind the IVIonroe Doctrine 



by Elliott Abrams 

Prepared address before the James 
Monroe Freedom Award dinner at the 
Department of State on April 28, 1987. 
Mr. Abrams is Assistant Secretary for 
Inter-American Affairs. 

I would like to thank the James Monroe 
Memorial Foundation on behalf of Presi- 
dent and Mrs. Reagan, who regret that 
they could not be here tonight. I also 
thank you on behalf of the Department 
of State for your gracious loan of the 
portrait of President Monroe. It is fit- 
ting that the first public display of this 
historic work of art be in the State 
Department's Diplomatic Reception 
Rooms. For Monroe himself was not only 
a great president but a military hero 
during the Revolution and a diplomat 
who worked abroad to further the 
national interest of our new democracy. 

Monroe the Revolutionary 

When President Monroe enunciated 
what later became known as the Monroe 
Doctrine, Austria's Metternich called it 
"a new act of revolt . . . fully as audacious, 
no less dangerous than the former." The 
"former" Metternich was referring to 
was the American Revolution of 1776. 
Metternich was right. The Monroe Doc- 
trine—like the Revolution— was danger- 
ous. It was dangerous to the despotic 
European powers of that time who 
sought to expand their empire into the 
Western Hemisphere. 



The doctrine was also audacious. 
Compared to the European superpowers 
of the time, the United States was 
weak— both economically and militarily. 
But we had a strength that Metternich 
and the rest of the continental elites— 
with rare exceptions— did not under- 
stand. That is the strength all free peo- 
ple have when they defend their nation 
and their ideals against the impositions 
of a foreign power. 

This point is sometimes overlooked 
by those who focus on the importance of 
the British Navy to the doctrine's enforce- 
ment. Effective diplomacy does require 
power. And though nowadays some peo- 
ple seem to forget that more often than I 
would wish, the point I wish to stress 
here is that diplomacy also requires 
ideas. And the idea behind the Monroe 
Doctrine is not one to be overlooked. 

Monroe's vision was not rooted in 
the European tradition of power politics. 
The Monroe Doctrine was not an attempt 
to substitute one form of colonialism for 
another. The new, emerging United States 
was opposed to colonialism in principle, 
not just to European colonialism. The 
year 1776 had given political life to the 
ideal of human rights and democracy. 
This uniquely powerful ideal was as 
natural as the fundamental aspiration 
for the rugged but unshaped societies of 
the New World. Just a few years ago, in 
a famous phrase in its charter, the 
Organization of American States cap- 
tured the essence of this ideal, without 
which the Monroe Doctrine could never 
have existed: "The mission of America is 
to offer man a land of liberty." 



The reference here is to all America- 
to the entire New World, not just to the 
United States. So strong was the appeal 
of freedom that, by the time Monroe 
spoke in 1823, the rest of the Western 
Hemisphere was already caught up in 
the struggle for freedom. Inspired by tht 
democratic doctrines projected by the 
American and French Revolutions, Latir 
American patriots had risen up to throw 
off the shackles of European colonialism 

But colonialism was not dying easily 
Tupac Amaru had rebelled in Peru in 
1780. By 1823, the battle of Ayacucho 
that was to mark the end of Spanish nil* 
in South America was still a year away; 
full-fledged wars of independence had 
been underway throughout Spanish 
America for more than a decade. The 
struggle was proving long and costly. 
And there were fears tl'St the European 
powers would seek to reimpose colonial 
rule even if they lost. 

The new United States was militaril 
and economically weak, but the emerg- 
ing states to its south were even weaker 
Colonialism had created a social and 
economic order dependent on Europe. 
War had drained their resources. The 
Latin American states would have been 
unable to defend themselves against a 
concerted effort on the part of outside 
powers to again carve up the region. 
Once Great Britain accepted it, there 
fore, the Monroe Doctrine gave the new 
Latin American states both the moral 
support and the time they needed to cor 
solidate their paths to independence 

Is the Monroe Doctrine Still Relevant 

As the 19th century progressed, fears 
that the Eui'opean powers would look f( 
opportunities to reimpose colonialism 
turned out to be real enough. The Britis 
took advantage of their naval power to 
preserve their Caribbean colonies and b 
reassert their claims to the Falklands. I 
the 1860s, when civil war caused the 
United States to turn its attention and 
military resources inward, France brief 
imposed a colonial government in Mexic 
and Spain tried to reassert its claim to 
Peru. 

With the new century, however, a 
new question began to be posed. In the 
minds of many, the United States had 
replaced Europe as a potential colonial 
threat. The Roosevelt corollary sought ' 
justify the use of U.S. military force. 
Had the Monroe Doctrine simply becom 
a pretext for the imposition of U.S. 
hegemony in the Western Hemisphere? 

Historians differ about the economi 
and political motivations for the use of 
U.S. Marines to intervene in Latin 



80 



nQnartmont nf Qtato RiillotI 



WESTERN HEMISPHERE 



merica in the early part of this cen- 
iry. At least in some countries, 
jwever— and it is hard to keep from 
linking of Nicaragua or Haiti— the long- 
irm prospects for democracy were cer- 
linly not enhanced. And this, in turn, 
eakened the legitimacy of the doctrine. 

And so it has been commonplace for 
;ars to hear that the Monroe Doctrine 
an anachronism. And, of course, it is 
ue that the geopolitical context has 
langed entirely. 

Latin America has changed. The 
)untries of Latin America are no longer 
I weak. Some, like Brazil, are world 
;onomic powers. All have strong 
ipirations. 

Western Europe has changed. Its 
wernments are democratic, not 
spotic, and their interests in Latin 
merica are similar to ours. They want 
play a positive, constructive role in 
itin America: to build trade and com- 
ercial relations with Latin American 
ates and to help the Latin Americans 
tablish and strengthen democratic 
ilitical and free market economic 
stitutions. 

In fact, the United States has changed, 
0. The current political and ethical 
imate in the United States makes it dif- 



ficult for a president to use U.S. troops 
in a foreign country without being able 
to demonstrate a clear and direct threat to 
the United States or its vital interests. 
Additionally, there is a growing recogni- 
tion that the best first line of defense 
against outside threats is not an outside 
protector like the United States but the 
existence of strong, viable democracies 
in Latin America. 

The Soviet Challenge 

Does this mean that the Monroe Doctrine 
is now irrelevant and anachronistic? No, for 
there is still one European power whose 
intentions toward Latin America are not 
benign, indeed, a power that seeks to 
implant its alien system in the Americas. 
The czars are gone, but their despot- 
ism and coloniahst impulses live on in 
the Soviet Government today. Czarist 
despotism was overthrown only to be 
replaced by the much more thorough 
tyranny of the Soviets, who unhappily 
have vastly more resources than their 
predecessors— and vastly more interest 
now in Latin America. 



In the last decade, the Soviet Union 
has developed a diplomatic, cultural, 
media, or military presence in every 
South American country except Chile 
and Paraguay. They have invested heavily 
in bringing young Latin Americans to 
the Soviet Union. In 1979, less than 
3,000 Latin American and Caribbean 
students were studying in the U.S.S.R.; 
by 1985, that figure had increased to 
over 9,000. The Soviets have sold 
modern military jet fighter-bombers, 
tanks, and missiles to Peru, whose 
armed forces have become increasingly 
dependent on Soviet technology. And 
the Soviet Union has expanded its com- 
mercial activities. Soviet purchases of 
grain from Argentina made it that coun- 
try's largest export customer during 
1980-85. 

Not all of the Soviet Union's activities 
have been as subtle and in keeping with 
the accepted norms of international rela- 
tions. We know, and we believe most Latin 
Americans also realize, that one must 
deal with the Soviets with both eyes open. 
That the Soviets are using orthodox 
diplomacy in some of their dealings with 
Latin American countries does not mean 
they have abandoned their support of ter- 
rorism or subversion when it suits them. 



Monroe Portrait Unveiled 



ti Secretary Shultz 

Excevpts from remarks made on the 
casion of the unveiling of the Monroe 
rrtrait at the James Monroe Memorial 
oundation birthday reception and anni- 
Tsary dinner at the Department of 
'.ate on April 28, 1987.^ 

. Since the American Revolution, this 
;misphere has stood for something— for 
jportunity, for the chance to start over, 
ir tolerance, for freedom to choose 
le's own leaders and way of life, 
ealities have often fallen tragically 
lort of these ideals, but the vision and 
■inciples contained in the Monroe Doc- 
ine remain the standard for U.S. pohcy 

this hemisphere. 

Over the years, the United States 
is defended that standard against alien 
5wers which sought a foothold in the 
mericas. In President Monroe's day, 
lis country responded to the threat that 
le Holy Alliance would reestablish 
lonarchies in countries that had 



declared their independence of Spain 
and Portugal. Later Presidents, too, 
would deter aggressors seeking 
weaknesses here, from the imperialists 
of the 1800s to the Nazis and com- 
munists of our own century. 

. . . Since 1824 we have refused to 
leave our neighbors at the mercy of alien 
powers and would-be tyrants. To aban- 
don them now would violate our prin- 
ciples and do violence to our own inter- 
ests. Instead we must hold fast to the 
policy that bears Monroe's name, a 
policy that is particularly responsible for 
the security and relative freedom that 
most of the peoples of this hemisphere 
enjoy today. May this portrait of Monroe 
continue to remind us of the role he 
envisaged for our country and of our 
obligations to confront the strategic and 
moral challenges of our own day. 




'For full text, see press release 94 of Apr. 
29, 1987. ■ 



This portrait of .James Monroe, by Rem- 
brandt Peale, is on loan to the Department 
of State from Mary Washington College. 

(Dept. of state photo by Ann Thomas) 



81 



WESTERN HEMISPHERE 



In August of 1986, Chilean authorities 
uncovered huge hidden arms stockpiles- 
guns and grenades sufficient to support 
a guerrilla force of at least 3,000. The 
type and quantities of weapons found 
could only have been provided by the 
Soviet bloc. Because South America is 
now overwhelmingly democratic, the 
Soviets probably decided they could 
afford to support violence against the 
Pinochet government without harming 
diplomatic efforts elsewhere. In fact, of 
course, the Soviets strengthened General 
Pinochet. By making it clear that the 
communist threat was real, the Soviets 
weakened Chile's democrats and created 
additional difficulties for the efforts of 
the Latin American, European, and U.S. 
democratic communities to encourage a 
peaceful transition to democracy in Chile. 

The fact is that Soviet interests in 
this hemisphere are as antithetical to 
democracy as were those of the czars in 
the times of James Monroe. For over a 
quarter of this century, the most tangi- 
ble example of the Soviet presence in 
our hemisphere has been in Cuba. The 
Soviets have helped Castro turn that 
unhappy land into a bankrupt but heavily 
militarized island fortress. 

Is Castro, with his repressive political 
system and dependence on an outside 
power for economic subsidies and military 
protection, any less a functionary of a 
foreign power than the viceroys of Spanish 
colonial days? 

Cuba is a good example of the aggres- 
sive nature of the new colonialism. 
Cuban troops have lost their lives fight- 
ing in Africa for causes that are of 
benefit to the Soviet Union, not to Cuba 
or Latin America. Castro has been an 
apologist for the Soviets in many inter- 
national fora. From Castro's earliest 
days, Cuba has been a conduit for sup- 
port for Latin American insurgents. 

Now, another country, Nicaragua, is 
on the way to being turned over to the 
Soviet Union by its rulers. A people who 
sacrificed so much to attain liberty in 
1979 saw their revolution betrayed and 
now see a communist group using Soviet 
arms and advisers to impose communism 
in their country. Small wonder Nicaraguans 
are fighting back, and small wonder our 
President has said, "Yes, we will help 
their fight." 

In Nicaragua the Soviet presence 
already is quite visible in the form of 
Soviet-made tanks, helicopter gunships, 
and other weapons. The U.S.S.R. poured 
in half-a-billion dollars in military aid last 
year alone. We do not believe they are 
bolstering the Sandinistas out of some 
sudden benevolent impulse. 



82 



Much of the threat to U.S. interests 
posed by the presence of Soviet client 
states in the hemisphere is obvious. The 
more the United States is forced to con- 
centrate its attention and resources on 
Latin America, the more the Soviets 
would benefit in having greater freedom 
of action in other parts of the world. 
Already, Cuba's proximity to vital sea- 
lanes in the Gulf of Mexico and the 
Caribbean means that U.S. defense plan- 
ning in the event of hostilities has been 
seriously complicated. 

The more immediate threat, however, 
is not to the United States but to Latin 
America's democracies. Cuba and Nicara- 
gua both support insurgent groups in 
democratic countries. This support goes 
far beyond rhetorical expressions of revo- 
lutionary solidarity to include providing 
the insurgents with arms and ammuni- 
tion, training, safe haven, and propaganda. 
The Soviets' claim that they have nothing 
to do with the actions of their client 
states is supreme cynicism. It certainly 
did not prevent Soviet Army Chief of Staff 
Ogarkov from boasting 4 years ago that 
"... over two decades ago, there was only 
Cuba in Latin America, today there are 
Nicaragua, Grenada, and a serious battle 
is going on in El Salvador." 

Of course, Grenada no longer counts 
itself among this group. On October 23, 
1983, less than 8 months after Ogarkov's 
statement, Grenada's leadership had 
brought on such a bloody state of anar- 
chy that the Organization of Eastern 
Caribbean States felt compelled to 
request formally that the TJnited States 
and other Caribbean states help them 
restore order there. Two days later, a 
combined U.S. -Caribbean force landed 
on the island— to the great relief of the 
vast majority of Grenadians. All U.S. 
combat troops were withdrawn by 
December 15, 1983. And, on Decem- 
ber 3, 1984, 84% of the voters turned 
out to vote in Grenada's first parliamen- 
tary elections since 1976. 

The United States does not seek to 
prevent the nations of this hemisphere 
from dealing with the Soviet Union. 
There are many risks inherent in such 
relations, but it would violate the very 
intent of the Monroe Doctrine to believe 
that the Latin American nations are not 
free to carry on diplomatic and commer- 
cial relations with whomever they please. 
The Monroe Doctrine affirms the free- 
dom and the right of sovereign states to 
make their own choices without outside 
interference. If General Secretary Gor- 
bachev is invited to visit the Americas, 
so be it. He will learn something from 
Latin America. He will have the chance 
to see the thirst for liberty that charac- 



terizes Latin America today. And he wil 
see that the Soviet economic model and 
the Soviet political model have been 
thrown on the dustbin of history by free 
peoples seeking to maintain democracy 
and economic growth. 

The Democratic Response 

There are still areas of the world— some 
of them in Latin America— where the 
possibilities for economic and social 
improvement through honest work so 
taken for granted here do not exist. 
Insurgents, terrorists, and dogmatic 
Marxist politicians have sought to 
exploit the legitimate grievances of pec 
pie cut off from hope. They have playec 
on the justifiable outrage against inflex 
ble and repressive social, political, and 
economic systems to build support for 
their revolutions, which in the end will 
produce a system more repressive than 
the one replaced. 

The emergence of guerrilla groups 
supported by an outside power represen 
a diJEferent type of threat to the hemi- 
sphere than that faced in the 1820s. In t: 
19th century, the threat to Latin Amer 
ica's nascent states was from the reim- 
position of colonialist rule through dire 
military intervention by a European powi 
That threat was easily recognized and 
could be dealt with using established 
military or diplomatic methods. 

The threat from subversion, especia 
subversion supported by an outside pow 
for its own political ends, is less easily 
recognizable. The long history of revoli 
tionary violence in many Latin Americ 
countries makes the presence of exterr 
support for political violence less notict 
able, especially in its early stages. Subv 
sives often try to hide their foreign tie: 
and legitimize themselves by claiming t 
mantle of a nationalist hero; that is wh 
the communists in Nicaragua call them 
selves Sandinistas. Whenever dominan 
power groups equate reform movemen 
with communist plots, they also make i 
easier to disregard evidence of the invol 
ment of the Soviets or their clients. 

Guerrilla wars and other violent 
threats cannot be countered without th 
use of some force, but they are also no 
likely to be ended by military means 
alone. Without a change in the social, 
political, and economic conditions that 
spawned the insurgencies, any purely 
military solution would prove temporal 
That is why the objective of U.S. foreif 
policy is to eliminate the social and eco 
nomic conditions that contribute to violer 
and social protest. While public attenti 
has focused on the shooting, the Unitei 



Dfinarlment nf .cttatP Riillf 



WESTERN HEMISPHERE 



tates has quietly spent three times 
lore resources on health, education, and 
conomic survival and development in 
'entral America than on military assist- 
nce. In fact, thanks to our help, the 
uerrilla-plagued democracies have made 
ir more progress toward meeting the 
;onomic, political, and social needs of 
leir people than either Nicaragua or Cuba. 
But if the reigning intellectual ortho- 
Dxies that promote stagnation and 
[justice persist unaltered, then even 
nprovements in material conditions will 
3t be enough. And U.S. efforts alone 
-e surely not enough. There has to be a 
)mmitment by the Latin American 
ates which are fighting insurgents both 
1 prosecute the war effectively without 
olating the rights of civilians and 
stitute the economic and institutional 
^forms necessary to allow the integra- 
on of disaffected members of the 
)pulation fully into the society. 

Those who wish to protect their privi- 
ged position in a social and economic 
der that is no longer viable are also 
lemies of democracy. To people caught 
such situations, all change— social, 
ilitical, or economic— becomes a threat. 
)metimes calling themselves democrats, 
id invariably wrapping themselves in 
e mantle of anticommunism, they seek 
impose a despotism that is more indig- 
lous than Marxism but is no less at odds 
ith the spirit of the Monroe Doctrine. 

The Monroe Doctrine rejects despot- 
m and repression, whether it be justified 
the name of communism or in the name 
anticommunism. Monroe and his revolu- 
jnary compatriots realized that democ- 
cy and individual liberty were unique 
omises of the New World. Our Found- 
g Fathers' ideals may have had their 
ots in the philosophies of the ancient 
reeks and Enlightenment thinkers, but 
e establishment of strong lasting 
imocracy was a New World phenom- 
lon— really a phenomenon of all 
mericans in the broadest sense. 

Today democracy and the ideal of 
oerty are again on the march. Democ- 
.cy has traveled from America to the 
Id World and back again. Western 
• urope has adopted and adapted democ- 
cy, which in recent decades has over- 
ime the last military governments: 
3ain, Portugal, Greece, and Turkey, 
emocracy is taking hold in varied socie- 
3s in Asia, just as it did decades ago in 
i(ipan. And in this hemisphere about 90% 
ti all Latin Americans now live in demo- 
atic countries, more than ever before. 



Conclusion 

I would like to leave you with one final 
thought. When James Monroe formu- 
lated his doctrine, the United States was 
weak economically and weak militarily. 
But it made up for those weaknesses 
with the power of ideas. Today the 
United States is strong economically and 
strong militarily. But still today our 
greatest strength lies in the fact that we 
are the homeland of liberty. This is what 
Monroe understood and what he asked 



our nation to protect by trying to protect 
the Americas from the old, alien 
despotism of other continents. 

Today, as in his day, we are called 
upon to face up to the threat, to protect 
our own freedom, and to help our neigh- 
bors protect theirs. If we understand 
what Monroe saw a century and a half 
ago, if we are true to our ideals and our 
history, we will meet this test as he met 
those of his day. And the Americas will 
remain free. ■ 



Central America: 

What Are the Alternatives 



by Elliott Abrams 

Address before the University of Kan- 
sas in Lawrence on April 21, 1987. Mr. 
Abrams is Assistant Secretary for Inter- 
American Affairs. 

Whether you date it from the spring 
1977 assassination of El Salvador's 
moderate Foreign Minister by leftist 
thugs or from the January 1978 
assassination of Nicaragua's greatest 
journalist by rightist thugs, the Central 
American crisis is now about a decade 
old. 

So it should be possible to step back 
for a moment from the headlines and 
look at the fundamentals of our policy— 
the history, the people, our interests, 
and what we expect to achieve. As you 
will see, my fundamental prescription 
has implications that reach even beyond 
this hemisphere. But I would like to 
start by focusing on Nicaragua. 

The History 

In 1979, the dictator Somoza fled into 
exile to the rejoicing of an overwhelming 
majority of Nicaraguans and of free men 
and women everywhere. 

The people of Nicaragua are not the 
first in our time to overthrow an unpop- 
ular tyrant in the name of freedom. 

The people of Nicaragua are also 
not the first to see their hopes for 
freedom— hopes they had entrusted to a 
coalition government— dashed by a 
minority relying on armed force to 
impose a partisan agenda. Similar 
tragedies took place throughout Eastern 
Europe after World War II. In just a 
few years after the Allied victory over 
Hitler, coalition governments which 
were to bring democracy were subverted 
by communist minorities. 



The recipe for the takeovers was 
simple and efficient. The communist 
minorities started by gaining control 
over the interior ministries and the 
secret police. Using "salami tactics" to 
slice off the opposition bit by bit, they 
were then in a position to censor 
newspapers and radio stations, harass 
the church, arrest democratic political 
activists, and rig elections. Before long 
the coalition governments were replaced 
by dictatorships loyal to Moscow. The 
tragic result is the division of Europe 
that still exists today— a split that denies 
freedom to millions of Europeans and 
threatens the security of our allies. 

The imposition of communist rule in 
Eastern Europe did not take place 
without a reaction. In Hungary in 1956, 
a strong popular uprising threatened to 
replace the pro-Soviet government with 
an independent one, but the people were 
brutally suppressed by the Red Army. 
Hungary's spirit of freedom could not be 
killed, but it had to yield to the power of 
Soviet tanks. 

In 1957, a young Nicarag^an com- 
munist named Carlos Fonseca went to 
Moscow. He was so enraptured that he 
returned to Nicaragua and wrote a book 
about his experience: A Nicaraguan in 
Moscow. Fonseca's book did not dwell on 
the Stalinist past or on Soviet brutality 
in Hungary just months before his visit. 
Instead, Fonseca wrote a gushing 
appraisal of the Soviet economic system. 
"Now," he wrote, "the answer is the 
state." 

In 1959, a young Cuban, Fidel 
Castro, took power in his country. He 
did not take power as a communist. His 
revolution against tyranny was adver- 
tised to Cuba and the world as demo- 
cratic. And it seemed democratic; it 



LuhzJ.Qfi? 



83 



WESTERN HEMISPHERE 



included many democrats in leadership 
positions, and Fidel's rhetoric was mild. 
The revolution only succeeded because it 
attracted broad middle class support. 
But Castro's actions in power were 
brutal; he jailed and executed his oppo- 
nents in large numbers. Even veterans 
of his guerrilla war were jailed when 
they spoke up against the emerging dic- 
tatorship. "All criticism is opposition; all 
opposition is counterrevolutionary," 
Castro explained. 

The Cuban people saw their hopes 
for freedom dashed by a new tyrant who 
elevated repression to new heights. But 
for Tomas Borge, a second young 
Nicaraguan communist, it was "a flash 
of light that shone beyond the simple 
and boring dogmas of the time." Today 
Borge is in charge of the secret police in 
communist Nicaragua. 

In 1961, with Castro's help, Tomas 
Borge and Carlos Fonseca joined to 
found the National Liberation Front— 
the party that runs Nicaragua today. At 
the last minute, worried that calling 
themselves a pure and simple "liberation 
front" would give away their communist 
allegiances, they added the word "San- 
dinista" to make themselves sound 
nationalist. Borge, Fonseca, and their 
comrades robbed banks and businesses 
to fund their movement, they argued 
endlessly over strategy, and they har- 
assed the National Guard's forces in 
sporadic shootouts in the countryside. 
Fonseca was killed in one such battle in 
1976. Lacking popular support, their 
revolution was stuck in the mud, even 
against an unpopular dictator. 

This changed one morning in 
January 1978. A national hero who had 
fought against the Somoza dictatorship 
with both pen and sword, the newspaper 
editor Pedro Joaquin Chamorro, was 
murdered in Managua while on his way 
to work. Chamorro' s newspaper. La 
Prensa, was the main outlet for opposi- 
tion to Somoza. Chamorro' s death 
galvanized the Nicaraguan people; it 
transformed scattered unrest into 
powerful national sentiment against 
Somoza. 

The Sandinistas saw their chance. 
They played down and then concealed 
their communist beliefs. They forged 
alliances with Nicaraguan businessmen, 
unionists, and democrats generally. By 
July of 1979, the Somoza dictatorship 
dissolved under the combined pressure 
of Nicaraguan revulsion and interna- 
tional condemnation. A broad coalition 
government came to power, promising 
democracy, a mixed economy, and an 
independent policy of nonalignment in 



world affairs. Well-known democrats like 
Alfonso Robelo and Arturo Cruz and 
Violeta Chamorro, Pedro Joaquin's 
widow, were in the new government. 
This was a period of hope. 

But Nicaragua was about to play out 
the same sad drama that occurred in 
Cuba, Hungary, and Czechoslovakia. 
Over the next 2 years, the democrats 
were forced out by communists who con- 
trolled the secret police, the armed 
forces, and the propaganda apparatus. 

Nicaraguans had fought for freedom, 
but they got a new dictatorship; they 
had fought for independence but instead 
found themselves depending on the 
Soviet Union, with so-called advisers 
from Cuba and East Germany in charge. 
As for the Sandinistas, they were soon 
standing shoulder to shoulder with com- 
munists the world over, from Cuba to 
Bulgaria, opposing the Solidarity labor 
movement in Poland and supporting 
Soviet crimes in Afghanistan. 

Today the Sandinistas are hard at 
work cementing their dictatorship. The 
Sandinista police are silencing voices of 
opposition throughout the country. 
So-called Sandinista Defense Commit- 
tees operate in every neighborhood, 
watching the movements of citizens and 
enforcing politically correct behavior. 
These block committees can punish dis- 
sent by turning people in to the police or 
by taking away the ration cards people 
need to obtain the staples of daily life. 
The Sandinistas draft Nicaraguan 
youth into the largest army in Central 
America. But it is not the Nicaraguan 
national army, it is the Sandinista party 
army. There is no such thing as conscien- 
tious objection. There is no such thing as 
free expression, either: La Prensa, is 
closed. The Catholic Church radio station 
is closed. Were it not for radio and 
television from outside the country, 
Nicaraguans would get their only news 
from the Sandinista press, Sandinista 
radio, and Sandinista television. 
Farmers and businesses cannot set 
prices, move capital, or buy equipment 
without the state's permission. The 
"salami tactics" that brought dictator- 
ship to Eastern Europe in the 1940s are 
being put to work in Managua today. 

Nicaragua, in short, is beginning to 
look less and less like a part of Latin 
America and more and more like the 
Soviet Union which Carlos Fonseca so 
admired three decades ago. And as in 
Eastern Europe, communist repression 
has given rise to a powerful reaction. 
Denied self-determination, 20,000 
Nicaraguans have taken up arms to fight 
for the freedom they thought they had 
won in 1979 when they got rid of the old 
dictatorship. 



I 



Why Central America Matters 
to the United States 

Why should their fight matter to the 
United States? Why should we care whs 
happens in Central America? 

Let us start with doing what is righ 
The thousands of Nicaraguans who 
resist the Sandinistas, whether in the 
civic opposition or in armed rebellion, 
are defending the sacred rights of the 
individual that we Americans have 
fought and died for ever since we won 
our own independence. They are fightin 
for our values, for democracy and inde- 
pendence. We have every moral right t( 
help people free themselves from 
repressive rule. 

But there is a second case to be 
made; it concerns our security. The 
Nicaraguan resistance is fighting for 
Nicaragua's freedom and Nicaragua's 
independence, but their success will 
serve our security interest as well. We 
owe it to ourselves, and to future 
generations of Americans, to help them 
succeed. 

The challenge to American security 
in Nicaragua is not yet a direct one. 
Rather, it is indirect and building only 
gradually. But it is, nonetheless, a 
serious challenge with many dimension 
The first part of the threat is San- 
dinista subversion of our friends and 
allies in this hemisphere. The Sandi- 
nistas have said openly that their revol 
tion reaches beyond Nicaragua's bor- 
ders. Just as Cuba became a base for U 
ror and subversion, the Sandinistas ha\ 
helped other violent radicals throughou 
Central America and even in South 
America and the Caribbean. The head- 
quarters of the Salvadoran communist 
guerrillas remains in Managua. San- 
dinista aid to South American guerrilla 
continues. Communist subversion of 
Latin America's new democracies is a 
fact. 

The second part of the threat is the 
the Sandinistas will permit their ter- 
ritory to become a base for the projec- 
tion of Soviet military power. Again, 
Cuba is an example. Castro's military 
relations with the Soviets were slow to 
develop, but they have developed stead 
ily. And they have developed in spite o' 
the Kennedy-Khrushchev agreements 
that ended the missile crisis. Today Cu 
is an important base for the Soviet 
military. Soviet aircraft patrol our 
Atlantic coast from Cuban bases. Sovie 
submarines call regularly at Cuban 
ports. A huge Soviet espionage facility 
Cuba, the largest in the world outside 
the U.S.S.R., intercepts U.S. military 
and civilian communications. The Sovie 



ent of 



c^tatP R^l 



WESTERN HEMISPHERE 



ise tens of thousands of Cuban troops to 
ight their battles in Africa. Cuban 
oldiers are fighting and dying in 
lefense of the communist dictatorship in 
■Jicaragua. 

Will Nicaragua follow this Cuban 
attern? The Soviets are certainly 
nvesting in Nicarag^ua's future. They 
upply all of Nicaragua's oil, and they 
hipped more military supplies to 
Nicaragua during 1986 than in any 
irevious year-23,000 tons, worth $500 
lillion. The Sandinistas have built an 
irbase with a runway longer than 
ecessary for any plane in their air force 
qventory but which can serve any air- 
raft in the Soviet inventory. From this 
ase, the Soviets could patrol our west 
oast— a new capability Cuba does not 
ive them. 

From a geostrategic perspective, the 
ottom line is simple: the Sandinistas 
ffer the Soviets an opportunity to pro- 
:ct Soviet power on the American main- 
md and in the Caribbean basin. The 
oviets know that if they can bring new 
lilitary bases or political instability to 
lis area, they can divert our attention 
pd our defense resources from other 
irts of the globe. This would directly 
iduce our capacity to defend NATO or 
Ither Western interests, and it would 
^present a major Soviet strategic 
uccess. 

To defend our interests against this 
(ew challenge, we are moving to support 
|ie development of democratic govern- 
(lents in Central America and through- 

Kit the hemisphere. Democracies do not 
rce their citizens to revolt against 
^lem. Democracies do not attack or 
libvert their neighbors. And there is 
till another, even more critical fact: the 
ictator Castro was preceded by the dic- 
itor Batista. The dictator Ortega was 
freceded by the dictator Somoza. The 
kying of the pendulum to the antidemo- 
ratic right sets up the swing to the anti- 
jemocratic left. The time has come to do 
bmething to stop the swing of the 
■endulum before it begins. The time has 
ome to strengthen democratic political 

Iorces against all extremes, of the right 
s well as the left. 

And that is what the United States 
,as been doing, often without much 
redit, for two administrations. Under 
"'resident Carter, support for human 
ights was the guiding principle. Under 
'resident Reagan, the emphasis has 
iroadened to support for democratic 
)rinciples and procedures in general, 
"iut one common thread has held 
Vmerican policy together over the last 
,0 years: throughout Latin America, 



military governments and dictatorships 
know that they cannot claim the support 
of the United States. 

When Argentine military officers 
mutinied against President Alfonsin last 
week, the one charge no one made was 
that they had U.S. support. In fact, the 
U.S. Embassy, the Department of State, 
and the White House all publicly sup- 
ported President Alfonsin and the con- 
stitution from the very start. And 
Argentina today is the rule, not the 
exception. Argentine generals who once 
thought they were above the law have 
been replaced by an elected civilian; so 
have the Salvadoran generals— and the 
Uruguayan, the Brazilian, and the Boliv- 
ian. Even Haiti is taking the first steps 
toward democracy after Duvalier. The 
only survivors of the once militant 
authoritarianism of the right are the 
Governments of Chile and Paraguay. 
And U.S. policy seeks a transition to 
democracy in both countries. 

In Central America 10 years ago, 
Costa Rica was the only democracy. 
Today, new civilian-led democracies have 
emerged in Guatemala, El Salvador, and 
Honduras. Nicaragua's communist dic- 
tatorship is the exception, the only coun- 
try in the region where the president 
wears a military uniform. 

A secure future for Central 
America— a future of freedom, peace, 
and development— depends on bringing 
democracy to Nicaragua. As long as the 
Sandinista dictatorship lasts, it will con- 
tinue to produce repression and conflict 
at home and subversion abroad. And 
that's what Nicaragua's civil war is all 
about: democratic political change. The 
change could take many forms. It could 
take the form of overthrow. It could take 
the form of internal collapse. It could 
take the form of power-sharing by 
negotiated formula. It could take the 
form of restored political rights and 
freedoms accompanied by an end to the 
Sandinista monopoly over the security 
forces. It could combine elements of all 
the above. But one thing is certain: it 
must be the product of Nicaraguans 
agreeing among themselves to create the 
democracy they glimpsed in 1979. 

The Nicaraguan church, the civic 
opposition, the armed resistance, the 
Contadora nations, and the Central 
American democracies have all called for 
a dialogue among Nicaraguans to bring 
peace and freedom to Nicaragua. But 
the Sandinistas refuse to negotiate. 
Democracy need not be brought by war; 
a negotiated settlement could work if the 
Sandinistas would open the political 
system to the many different groups of 
Nicaraguans they have driven into 



opposition. But until the Sandinistas 
keep those promises, there will be no 
peace because the Nicaraguan people 
will keep on fighting. Their cause is just. 
And as long as they fight for that cause, 
the policy of the United States must be 
to support them. 

Containment as an Alternative 

Some propose that the United States 
reverse course in Central Am.erica and 
end support for the Nicaraguan 
democratic resistance. The basic idea is 
this: 

• Stop supporting the resistance 
fighters, disband them, and treat them 
as refugees; 

• In return, try to get an agreement 
with the Sandinistas in which they agree 
to stop subverting other countries and 
break their ties to the Soviet bloc; 

• Increase aid to the Central 
American democracies; 

• Deal with the political question- 
how to get freedom in Nicaragua— later, 
if at all. 

Some of those who call for this 
change in course expect that if the 
pressure is removed from the San- 
dinistas, then the Sandinistas will ease 
their repression at home and stop their 
subversion of neighboring democracies. I 
believe this is a complete misreading of 
history. 

Others are simply resigned to the 
inevitability of an unfree Nicaragua 
throughout our lifetimes and beyond. 
This is short-sighted defeatism that 
poses serious long-term dangers. 

If we end our support for the 
resistance, three important results 
would follow immediately. 

First, the U.S. policy which won 
bipartisan congressional support in the 
fall of 1986 would be reversed less than 
1 year later. The policy would be 
reversed, not on the merits, not because 
the policy itself failed, but because of a 
scandal in the United States. People in 
Central America would not count on us 
to sustain any policy for more than 6 
months at a time. They would be right. 

Second, our policy to promote 
freedom in Nicaragua would be to hope 
for the best. This is a retreat even from 
the Contadora objectives, which call for 
settlements reached through internal 
dialogue and establishing democracy. 

Third, refugees would flee an 
assured communist future— droves of 
refugees. Salvadoran and Guatemalan 
refugees have begun to return to their 



sJulv 1987 



85 



WESTERN HEMISPHERE 



countries. But about a quarter million 
Nicaraguans have left their country 
since the Sandinistas took over. These 
would abandon all hope of return. We 
can only guess at the dimensions of the 
new wave that would surely join them. 
But remember that a million refugees 
have fled communist Cuba— an island. 
Nicaragua is not an island. 

So that sets the context. Central 
America would be shaken by the realiza- 
tion that communism was in Nicaragua 
to stay. And our own next moves would 
be made as a nation whose reliability is 
doubted and whose spirit is depleted. 
Consider the following chain of events. 



• With the contras cut off, the San- 
dinistas would be free to devote their 
resources and attention to the task of 
subversion. 

• The top priority issue for the 
Governments of Honduras, Costa Rica, 
El Salvador, and Guatemala would shift 
from democratic development to 
renewed fear for security. 

• As the moderates lose U.S. sup- 
port, the extreme right would reassert 
itself in preparation for a strengthened 
communist left. 

• Communist guerrillas would get a 
shot in the arm: psychologically, because 
of our retreat and materially, from the 
Soviet bloc, including Cuba and 
Nicaragua. 



Pan American Day and Week, 1987 



PROCLAMATION 5629, 
APR. 9, 1987' 

The nations of the Americas enjoy a rich 
cultural and historical diversity, yet are bound 
together by a common dedication to the prin- 
ciples of democracy; to respect for the rights 
of the individual; and to the opportunity to 
enjoy creative, productive, and prosperous 
lives. Pan American Day each year has served 
to remind us of these mutual goals. 

The Organization of American States is 
the forum in which our governments labor to 
make these ideals and aspirations a reality in 
our daily lives. For decades, the Inter- 
American System has been utilized across a 
broad range of common concerns: to maintain 
the peace throughout this Hemisphere: to 
encourage both political and economic 
freedom for every citizen; to promote 
development and provide opportunity for both 
men and women, of all races and all creeds; 
and to defend the human rights of all against 
repression and threats to their dignity. 

The Organization has a truly remarkable 
record as a defender, and a beacon, for all 
peoples whose rights have been trampled 
upon and denied, especially for the peoples of 
this Hemisphere. It has now taken up the 
challenge against yet another menace— drug 
abuse and trafficking— that threatens the 
future of our children, the well-being of our 
peoples, and even the stability of our govern- 
ments. The newly created Drug Abuse Con- 
trol Commission offers a common meeting 
place where all of us can join forces to defeat 
this latest enemy to freedom and democracy. 

On September 2 of this year, the nations 
of the Americas will celebrate the fortieth 
anniversary of the signing of the Inter- 
American Treaty of Reciprocal Assistance, in 
which they pledged to preserve their security. 



This Rio Treaty, born of the totalitarian 
threat to the region before and during World 
War II, has been strengthened ever since by 
resolute defense, against repeated attacks, of 
our common determination that this 
Hemisphere shall be a land of liberty. 

This is a time when the vision of 
democracy and freedom in all our countries, 
to which we are committed in the Charter of 
our Organization, shines forth as never 
before. So Pan American Day of 1987 is an 
especially welcome occasion for the people of 
the United States of America to extend a 
warm and fraternal hand to our neighbors in 
the Americas. We renew our commitment to 
the spirit of hemispheric solidarity, to the pur- 
poses of the Inter-American States as the 
embodiment of our high aspirations for this 
Hemisphere. 

Now. Therefore, I, Ronald Reagan. 
President of the United States of America, by 
virtue of the authority vested in me by the 
Constitution and laws of the United States, 
do hereby proclaim Tuesday, April 14, 1987, 
as Pan American Day, and the week of April 
12 through April 18, 1987, as Pan American 
Week. I urge the Governors of the fifty 
States, and the Governor of the Common- 
wealth 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 ninth day of April, in the year of 
our Lord nineteen hundred and eighty-seven, 
and of the Independence of the United States 
of America the two hundred and eleventh. 

Ronald Reacan 



'Text from Weekly Compilation of 
Presidential Documents of Apr. 20, 1987. 



• The result of this renewed 
polarization between extremes of left 
and right would be increased violence. A 
resurgence of the military would be 
inevitable; coups might follow. 

• Faced with military governments 
and a reversal of the democratic prog- 
ress so painfully earned in these recent 
years of cooperation with Central 
America, the U.S. Congress would 
withdraw its support and cut aid to Cen 
tral America. 

This scenario suggests that to aban- 
don the resistance is to follow a recipe 
for certain disaster in the region within 
2 years. It is to hand the Sandinistas 
their principal strategic objective 
without further effort on their part and 
to make it impossible to sustain the 
progress achieved in the rest of the 
region. 

Some say this scenario is too 
extreme. They agree that without 
political change in Managua, the only 
alternative becomes containment in 
some form. But they argue that we 
should support an agreement with the 
Sandinistas limited to security matters 
and that we should at the same time 
increase measures to protect 
Nicaragua's neighbors. Militarized 
borders, garrison states, and increas- 
ingly militarized countries would becom 
the norm in a region where we are try- 
ing to build democracy and reduce the 
relative weight of the military in 
national affairs. It would cost a great 
deal of money. But, its proponents say, 
it would save lives and bring peace. 

The problem with this approach is 
that this would probably not even pro- 
duce stalemate. Containment in Centra 
American conditions would be an extrac 
dinarily expensive way of solving 
nothing. 

An agreement calling for political 
change— elections, free press, freedom 
assembly— would be easy to verify. But 
how would we verify an agreement on 
security issues only? Consider that the 
immediate threat is not a massive cross 
border invasion, nor is it the sudden 
emplacement of Soviet strategic forces- 
both of which could be observed. Rathe 
it is in actions that are unobservable 
even by thousands of border guards— a 
few dozen guerrillas trained in Nica- 
ragua, a few dozen infiltrated into othei 
countries; vehicles and boats carrying 
hidden weapons and explosives; Cubans 
remaining behind in military, political, 
and intelligence roles; a gradual buildu] 
of conventional forces helping to screei 
and defend the export of violence to 
neighboring countries. 



86 



WESTERN HEMISPHERE 



If one observes a violation, how will 
re respond? First we will argue about it; 
1 the event we decide to act, the choice 
5 between direct action on our part or 
reaction at all. The Nicaraguans who 
ad been fighting to free Nicaragua 
rom the Soviet bloc will have long since 
een disbanded. 

Nor would containment lead to 
reedom inside Nicaragua. Quite the con- 
rary: for the Sandinistas there would be 
more use for the pretense of freedom, 

more use for even a weakened inter- 
al opposition. Comandante Bayardo 
jce says these vestiges of the old order 
re needed "for display purposes." The 
eed for display would be gone. All hope 
)r human rights in Nicaragua would be 

)St. 

We do not have to face a choice 
etween direct U.S. intervention and 
jntainment. An alternative is available. 
i is to follow our current policy, to con- 
nue to help the thousands of Nicara- 
uans who are fighting to bring democ- 
icy to their nation. Freedom may not 
Dme in a few months; it may not come 
lis year, but it will come. One day the 
ficaraguan democratic resistance will be 
p strong that the Sandinistas will face a 
hoice: to live up to their democractic 
iromises or yield to a movement that 
tII end their dictatorship and put more 
spresentative leaders in charge. 

>fhy Our Policy Will Work 

et me explain why we should be confi- 

1 ent our policy will work— why we need 
ot retreat to the illusions and defeatism 
f containment. 

First is the power of ideas and 
alues. Ideas still matter in this world, 
'reedom, nation, land, church, and 
imily— these are powerful ideas in Cen- 
tal America, and they are all on the side 
f the Nicaraguan resistance. The San- 
inistas win no loyalty when they close 
a Prensa, when they push communist 
octrine, confiscate farms, persecute the 
hurch, or mortgage the nation's future 
3 the Soviet bloc. 

Second, the resistance is a political 
Iternative that embodies Nicaragua's 
ational values and is worthy of support, 
'ime and again its various groups have 
jsued political programs that explain 
he terms under which they are prepared 
negotiate, the way a transition to 
emocracy can be made, and the rights 
hat will be guaranteed in a democratic 
■licaragua. The strong debate now 
ccurring in the resistance is a sign of 
trength, not weakness. It is precisely 
he debate that would be happening in 
Managua right now— if the Sandinistas 



would allow it. Only the dictators and 
the would-be dictators are absent from 
the discussion. 

Third, the resistance has a powerful 
new means to tell its story to the 
Nicaraguan people. In January, Radio 
Liberacion began broadcasting to 
Nicaragua. It is a new and welcome 
source of information for a people weary 
of government propaganda. In an atmos- 
phere of repression, it calls for 
democracy. Amid the tensions of war, it 
carries a message of hope and reconcilia- 
tion. The Sandinistas are so insecure in 
their own political position that they are 
doing all they can, including jamming, to 
stop people from listening to Radio 
Liberacion. As happens elsewhere in the 
Soviet bloc, the more the government 
complains, the more people will listen. 

Fourth, renewed American military 
aid has helped the resistance to counter 
the Sandinistas' Soviet guns. We are 
training troops, and supplies are flowing. 
The resistance has more than doubled 
the number of fighters inside Nicaragua 
since late last year. These fighters are 
throughout the country, increasing the 
pressure on the Sandinistas and showing 
the people that the current dictatorship, 
like the previous one, is not invincible. 

Fifth, our support is steady. Some 
assume that because of the Iran con- 
troversy Congress is about to cut off aid 
to the resistance. As someone who talks 
to Congress day in and day out, I 
suspect this is wrong. Members of Con- 
gress know that our country has impor- 
tant interests at stake in Central 
America. I believe that when they con- 
sider the alternatives, they will realize 
that in the absence of a decent settle- 
ment that brings democracy to Nica- 
ragua, a policy that abandons the 
resistance would amount to a sellout that 
leaves the future of Central America in 
Soviet hands. 

Sixth, the resistance benefits from 
increasing international disillusionment 
with the Sandinistas. More and more, 
the world is understanding the true 
nature of the Sandinista dictatorship. 
The Sandinistas' political fortunes can- 
not long survive the stark contrast 
between Central American democracy 
and Sandinista dictatorship. 

Lastly, the Nicaraguan democratic 
resistance has an important ally in 
geography. Cuban military advisers are 
critical to the effectiveness of the San- 
dinista army. But unlike Eastern 
Europe, when the Sandinista coman- 
dantes reach the breaking point, there 
will be no Soviet tanks and no Soviet 
troops there to save them. 



MBMu 



At that moment, the people of 
Nicaragua will end a long, sad chapter in 
their history and begin a period of peace 
and national reconciliation— at home, as 
the Nicaraguan family is united and 
healed, and in their neighborhood, as 
Nicaragua leaves the Soviet bloc to take 
its place in a solidly democratic Central 
America. When that happens. Central 
America as a whole will be delivered 
from a period of danger and deep 
uncertainty. 

Today thousands of brave 
Nicaraguan men and women are fighting 
to reach that moment. Some are in the 
mountains with arms; others are caring 
for the wounded; many remain in the 
cities, working in every way they can to 
keep the flame of civic resistance alive. 
They have one thing in common— they 
are risking all they have for their coun- 
try, for their children's future. As 
Americans we should be proud to have 
friends such as these. When peace and 
democracy come to Nicaragua, we will 
be proud that we made the right deci- 
sions at the right time to help friends in 
their hour of greatest need. ■ 



Proposed Sale of 
F-5s to Honduras 



by Elliott Abrams 

Statement before the Subcommittees 
on Western Hemisphere Affairs and on 
Ainns Control, International Security, 
and Science of the House Foreign Affairs 
Committee on May 19, 1987. Mr. Abrams 
is Assistant Secretary for Inter- 
American Affairs. ' 

I am pleased to have this opportunity to 
appear before you to discuss the Admin- 
istration's proposal to sell 12 F-5 air- 
craft to Honduras. Since many of you 
have undoubtedly visited Honduras over 
the last 2 or 3 years, you are probably 
aware of several important facts about 
this key U.S. ally. The first is that Hon- 
duras is currently faced with the 
greatest threat to its national security in 
its history as an independent nation. The 
second is that the Honduran Armed 
Forces are miniscule by comparison with 
those of its neighbors. Third, as the 
poorest nation in Central America, Hon- 
duras cannot afford to engage in a costly 
arms race; instead it must seek a cost- 
effective means of defense. To provide 
that defensive capability, the Hon- 
durans, for several decades now, have 
depended on air superiority. 



87 



WESTERN HEMISPHERE 



The threat I refer to emanates from 
Nicaragua whose Sandinista regime has 
conducted a mihtary buildup unprece- 
dented in Central America. Sandinista 
armed forces now number 75,000 men, 
plus unmobilized reserves and militia for 
a potential of close to 120,000 men; the 
entire Honduran Armed Forces consist 
of a mere 16,750 troops. In addition to 
numerical superiority of troops, 
Nicaragua has received from the Soviet 
bloc a substantial quantity of sophisti- 
cated weaponry. A sampling includes 10 
MI-24 attack helicopters, 110 T-55 
tanks, and at least 350 SA-7 ground-to- 
air missiles. It is critical to note that 
much of this buildup is of conventional 
forces and weapons— not those needed to 
combat an insurgency but those such as 
the T-55 tanks which directly threaten 
Nicaragua's neighbors. To deter the 
threat posed by this aggressive military 
buildup, Honduras relies almost exclu- 
sively on its air force whose mainstay is 
a fleet of 1950s-vintage Super Mystere 
aircraft. 

There can be no doubt that the San- 
dinista arsenal threatens Honduras; 
there is ample proof of the Sandinistas' 
hostile intentions toward Honduras. 
Throughout this decade, the Sandinistas 
have repeatedly attempted to create an 
insurgency in Honduras. In 1981 and 
1982, the Sandinistas and the Cubans 
provided military training to Hondurans 
who attempted to infiltrate and establish 
insurgencies in Olancho Province in 1983 
and El Paraiso Province in 1984. In both 
instances, the Honduran security forces 
contained the threat. The Sandinistas 



have also supported and instigated 
countless acts of terrorism. While these 
attempts have failed to destabilize Hon- 
duras, it has not been for want of trying 
but rather because the Honduran people 
far prefer their present democratic 
system of government. 

Subversion is only one of the Sandi- 
nistas' methods of attack. They have 
themselves committed literally hundreds 
of acts of aggression against Honduras 
in the form of border violations and 
cross-border artillery shelling. The scale 
of the border incursions escalated 
dramatically in March 1986 when at 
least 1,500 Sandinista troops penetrated 
several miles inside Honduras. Another 
large-scale attack occurred in December 
1986, confirming that Sandinista aggres- 
sion against Honduras is not accidental 
or inadvertent but a deliberate campaign 
to intimidate a weaker neighbor. 

The Hondurans have demonstrated 
that the Super Mysteres currently in use 
are an effective deterrent to Sandinista 
aggression. In September 1985, in 
response to sustained shelling of Hon- 
duran territory by Sandinista artillery, 
the Honduran Air Force launched an 
attack on Nicaraguan targets. In one 
sortie. Super Mysteres and A-371s hit 
an artillery emplacement and a 
helicopter near Wiwili, Nicaragua. San- 
dinista forces immediately suspended the 
sheOing. In December of 1986, San- 
dinista ground forces overran Honduran 
border outposts in the Las Vegas salient. 
After warning the regime in Managua to 
remove its forces from Honduras, at 



Argentine Military Rebellion 



WHITE HOUSE STATEMENT, 
APR. 19, 1987' 

One of the pillars of President Reagan's 
foreign policy is to support democratic 
institutions in Latin America. The 
United States is deeply disturbed by any 
development which threatens civilian 
constitutional and democratic rule in 
Argentina. We strongly urge that these 
officers desist in their defiant attitude 
and abide by the law. 

The return of Argentina in 1983 to a 
system of representative government 
was applauded by democrats 
everywhere. Since 1983, and throughout 
the current incident, the Argentine 



people have repeatedly manifested their 
firm commitment to democracy through 
free elections and the full exercise of 
their constitutional rights. Under the 
leadership of President [Raul] Alfonsin, 
impressive gains have been made in the 
consolidation of democracy and the 
economic development of Argentina. We 
have supported Argentine democracy 
from its restoration in 1983, and we 
strongly reaffirm our support of Presi- 
dent Alfonsin and the continued rule of 
law in Argentina. 



I 



'Text from Weekly Compilation of 
Presidential Documents of Apr. 27, 1987. 



least two sorties were made by the 
Super Mysteres and other aircraft 
against Nicaraguan positions inside Hon 
duras. This action helped prompt 
withdrawal of Sandinista forces. 

Faced with this security challenge, 
the Honduran desire to maintain and 
modernize the backbone of its defensive 
capability seems eminently reasonable. 
We have worked with the Honduran 
Armed Forces over a period of several 
years to analyze their needs and 
capabilities with respect to a replace- 
ment aircraft. We are convinced that th 
F-5 is the appropriate plane. 

Since the mid-1970s, Honduras has 
had uncontested air superiority in Cen- 
tral America. Given the small size of its 
armed forces, Honduran air superiority 
has provided balance to a regional 
military power equation which would 
otherwise be weighed heavily against 
that nation. The Hondurans currently 
rely on 13 Super Mystere aircraft for 
this defense. The planes are increasingl 
difficult to maintain, and spare parts ar 
virtually nonexistent— they are no longc 
available on the world market. Through 
our military assistance program (MAP), 
we have refurbished eight of the planes 
and acquired a limited stock of spare 
parts. Despite these efforts, the aircraf 
will lose their operational capability in 
approximately 4 years— barely enough 
time to acquire and put into service a 
new aircraft. 

The proposed sale of ten F-5E and 
two F-5F aircraft is designed to replac 
the Super Mystere with a comparably 
modern follow-on plane. The F-5 is the 
most logical choice for Honduras becau 
it is inexpensive and easy to maintain 
and provides the necessary interceptor 
and ground attack capabilities. The sale 
is valued at $75 million and would be 
funded by MAP. In addition to the 
planes, the package includes pilot and 
technician training and some spare 
parts. 

The objection most frequently raise 
to this sale is the spectra of an arms ra» 
or military imbalance in Central 
America. Let me address that concern. 
The F-5 does not represent a new 
capability for Honduras; rather it is an 
incremental improvement of an existinj 
one. Maintaining that capability is 
especially important given the Soviet- 
sponsored military escalation in 
Nicaragua. Careful analysis went into 
our decision to propose the sale of F-5s 
and it is based on Honduran needs and 
capabilities. Honduras cannot afford to 
consider matching Nicaragua man-for- 
man or gun-for-gun. Instead it must op 
for the most cost-efficient means of 



I 



88 



Department of State Bulle<^:; 



TREATIES 



fending its sovereignty. For Honduras 
it means air superiority that deters 
en bolder Sandinista attacks than the 
es we've witnessed to date. 

The possibility of Nicaraguan acqui- 
ion from the Soviet Union or Eastern 
ic of MiGs or other high performance 
craft is also presented as an objection 
the sale. As I have emphasized, the 
5 is a replacement for the Super 
rstere and as such provides no 
tification for introduction of high per- 
mance aircraft into Nicaragua. It is 
t the Honduran Air Force that poses a 
■eat to Central American stability; the 
ssive Sandinista military buildup is 
: real threat to regional peace. The 
ministration has made clear to the 
vnet Union and Nicaragua that it 
uld find acquisition of advanced jet 
hters by Nicaragua unacceptable. 

The other Central American 
nocracies are aware of the proposed 
5 sale. Neither Guatemala nor Costa 
;a has expressed to us any objections 
;he sale nor do we expect that they 
1 do so. As a result of a traditional 
airy, latent fears about the Honduran 

Force's capability are still a factor in 
vadoran thinking. At present, how- 
;r, the Salvadorans are more con- 
ned with the consequences of the 
ional balance shifting in Nicaragua's 
or. While we cannot rule out the 
.sibility of El Salvador requesting F-5 
Dther similar aircraft, we are 
pared to say that the Salvadoran Air 
-ce does not, under current cir- 
nstances, require such aircraft. 

In closing, I want to reiterate that it 
lOt the intention of the Administra- 
1 to destabilize Central America or to 
alate tensions there. To the contrary, 

have carefully avoided any action 
ich might do so. In this case, the Hon- 

an defensive capability and the 
ional balance of power will seriously 
eriorate if Honduran air superiority is 

maintained. The United States has 
de a commitment to assist Honduras 
iefending its national sovereignty; 
5 sale contributes to fulfillment of that 
■mise. I strongly urge the members of 

subcommittees to support the provi- 
1 of F-5 aircraft to the Honduran Air 
t *ce. 



'The complete transcript of the hearings 
be published by the committee and will be 
ilahle from the Superintendent of 
unu-nts, U.S. Government Printing 
ice, Washington, D.C. 20402. ■ 



Current Actions 



MULTILATERAL 



Antarctica 

Recommendations relating to the furtherance 
of the principles and objectives of the Antarc- 
tic Treaty (TIAS 4780). Adopted at Tokyo 
Oct. 30, 1970. Entered into force Oct. 10, 
1973, for VI 1-7 and VI 11-15; Nov. 1, 1982, 
for VI-9. TIAS 7796. 

Notification of approval: U.K., Apr. 8, 1987 
for VI-10. 
Entered into Force: Apr. 8, 1987 for VI-10. 

Recommendations relating to the furtherance 
of the principles and objectives of the Antarc- 
tic Treaty (TIAS 4780). Adopted at 
Washington Oct. 5, 1979. 
Notification of approval: U.K., Apr. 8, 1987. 
Entered into force: Apr. 8, 1987, except for 
X-1 and X-9. 

Recommendations relating to the furtherance 
of the principles and objectives of the Antarc- 
tic Treaty (TIAS 4780). Adopted at Buenos 
Aires July 7, 1981.' 

Notification of approval: U.K., Apr. 8, 1987, 
for X-1 through XI-3. 

Recommendations relating to the furtherance 
of the principles and objectives of the Antarc- 
tic Treaty (TIAS 4780). Adopted at Canberra 
Sept. 27, 1983.' 
Notification of approval: U.K., Apr. 8, 1987. 

Recommendations relating to the furtherance 
of the principles and objectives of the Antarc- 
tic Treaty (TIAS 4780). Adopted at Brussels 
Oct. 18, 1985.' 

Notification of approval: New Zealand, 
Apr. 7, 1987; Fed. Rep. Germany, Apr. 14, 
1987.2 

Atomic Energy 

Agreement extending the agreement of Feb. 
11, 1977 (TIAS 9046), and addendum of Sept. 
30, 1977 (TIAS 9047), in the field of gas- 
cooled reactor concepts and technology. 
Effected by exchange of letters at 
Washington and Bonn Jan. 20 and Apr. 7, 
1987. Entered into force Apr. 7, 1987; effec- 
tive Feb. 11. 1987. 

Parties: France; Fed. Rep. of Germany; 
Switzerland; U.S. 

Containers 

International convention for safe containers, 
1972, as amended. Done at Geneva Dec. 2, 
1972. Entered into force Sept. 6, 1977; for 
the U.S. Jan. 3, 1979. TIAS 9037, 10220. 
Ratification deposited: Austria, Aug. 28, 
1986; effective Aug. 28, 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: Burkina Faso, May 4, 

1987. 



[1987 



Fisheries 

Eastern Pacific ocean tuna fishing agreement 
with protocol. Done at San Jose Mar. 15, 
1983.' [Senate] Treaty Doc. 98-3. 
Ratifications deposited: Costa Rica, Jan. 15, 
1987; Honduras, June 4, 1985. 

Marine Pollution 

International convention on civil liability for 
oil pollution damage. Done at Brussels Nov. 
29, 1969. Entered into force June 19, 1975.^ 
Accession deposited: India, May 1, 1987. 

1984 Amendments to the annex of the pro- 
tocol of 1978 relating to the international con- 
vention for the prevention of pollution from 
ships, 1973. Adopted at London Sept. 7, 1984. 
Entered into force: Jan. 7, 1986. 

Narcotic Drugs 

Single convention on narcotic drugs. Done at 
New York Mar. 30, 1961. Entered into force 
Dec. 13, 1964; for the U.S. June 24, 1967. 
TIAS 6298. 
Ratification deposited: Liberia, Apr. 13, 1987. 

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. 
Accession deposited: Qatar, Dec. 18, 1986. 

Pollution 

Convention for the protection of the ozone 
layer, with annexes. Done at Vienna Mar. 22, 
1985.' [Senate] Treaty Doc. 99-9. 
Ratification deposited: U.K., May 15, 1987. 

Property — Intellectual 

Convention establishing the World Intellec- 
tual Property Organization. Done at 
Stockholm July 14, 1967. Entered into force 
Apr. 26, 1970; for the U.S. Aug. 25, 1970. 
TIAS 6932. 

Accession deposited: Paraguay, Mar. 20, 
1987. 

Refugees 

Protocol relating to the status of refugees. 

Done at New York Jan. 31, 1967; for the U.S. 

Nov. 1, 1968. TIAS 6577. 

Accession deposited: Maurit.ania, May 5, 

1987. 

Satellite Communications System 

Agreement relating to INTELSAT, with 
annexes. Done at Washington Aug. 20, 1971. 
Entered into force Feb. 12, 1973. TIAS 7532. 
Accession deposited: Benin, May 12, 1987. 

Operating agreement relating to INTELSAT, 
with annex. Done at Washington Aug. 20, 
1971. Entered into force Feb. 12, 1973. TIAS 
7532. 

Signature: Office des Postes et Telecom- 
munications de la Republic Populaire du 
Benin, May 12, 1987. 

Telecommunication 

Inter- American radio agreement, with annex, 
appendices, declaration, resolution, and 
recommendations. Done at Washington July 
9, 1949. Entered into force Apr. 13, 1952. 
TIAS 2489. 

Notification of revocation: Mexico, Apr. 28, 
1987; effective Apr. 28, 1988. 



89 



TREATIES 



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. 
[Senate] Treaty Doc. 99-6. 
Ratification deposited: Yemen (Sanaa), 
Mar. 11, 1987. 

Terrorism 

International convention against the taking of 
hostages. Adopted at New York Dec. 17, 
1979. Entered into force Jan. 6, 1985. 
Accession deposited: Mexico, Apr. 28, 1987. 

Trade— Textiles 

Protocol extending arrangement of Dec. 20, 
1973, regarding international trade in textiles 
(TIAS 7840). Done at Geneva July 31, 1986. 
Entered into force Aug. 1, 1986. 
Acceptances deposited: Jamaica, Feb. 26, 
1987; Poland, Mar. 3, 1986. 

Treaties 

Vienna convention on the law of treaties, 
with annex. Done at Vienna May 23, 1969. 
Entered into force Jan. 27, 1980.3 
Accession deposited: Bulgaria, Apr. 21, 1987. 

Wheat 

Wheat trade convention, 1986. Done at Lon- 
don Mar. 14, 1986. Entered into force July 1, 
1986.'' [Senate] Treaty Doc. 100-1. 
Ratification deposited: Tunisia, May 15, 1987. 

Women 

Convention on the elimination of all forms of 
discrimination against women. Adopted at 
New York Dec. 18, 1979. Entered into force 
Sept. 3, 1981.3 
Accession deposited: Paraguay, Apr. 6, 1987. 



BILATERAL 



Australia 

Agreement concerning fishing by U.S. vessels 
in waters surrounding Christmas Island and 
Cocos/Keeling Islands pursuant to the South 
Pacific fisheries treaty. Effected by exchange 
of notes at Port Moresby Apr. 2, 1987. 
Entered into force Apr. 2, 1987. 

Bahrain 

Investment incentive agreement. Signed at 
Manama Apr. 25, 1987. Entered into force 
Apr. 25, 1987. 

Belgium 

Extradition treaty. Signed at Brussels 
Apr. 27, 1987. Enters into force on the first 
day of the second month after the exchange 
of instruments of ratification. 

Botswana 

Grant agreement for workforce and skills 
training project. Signed at Gaborone May 13, 
1986. Entered into force May 13, 1986. 



Canada 

Memorandum of understanding on the 
reciprocal training of reserve officers 
between the Canadian Land Forces Command 
and Staff College and the U.S. Marine Corps 
Command and Staff College. Signed Nov. 4, 
1985. Entered into force Nov. 4, 1985. 

Memorandum of understanding on aviation 
cooperation. Signed at Washington and 
Ottawa Mar. 20 and Apr. 9, 1987. Entered 
into force Apr. 9, 1987. 

China 

Agreement amending agreement of Aug. 19, 
1983, as amended, relating to trade in cotton, 
wool, and manmade fiber textiles and textile 
products. Effected by exchange of notes at 
Washington Mar. 16 and 18, 1987. Entered 
into force Mar. 18, 1987. 

Cyprus 

Memorandum of understanding concerning 
the operation of the INTELPOST service, 
with details of implementation. Signed at 
Nicosia and Washington Mar. 12 and Apr. 3, 
1987. Entered into force May 6, 1987. 

Czechoslovakia 

Agreement on cooperation in culture, educa- 
tion, science, technology, and other fields, 
with annex. Signed at Prague April. 15, 1986. 
Entered into force Apr. 15, 1986. 

Program of cooperation and exchanges in 
culture, education, science, technology, and 
other fields for 1986 and 1987, with annex. 
Signed at Prague Apr. 15, 1986. Entered into 
force Apr. 15, 1986. 

El Salvador 

Agreement regarding trade in cotton textiles. 
Effected by exchange of notes at San 
Salvador Mar. 2 and Apr. 30, 1987. Entered 
into force Apr. 30, 1987. 

France 

Memorandum of understanding for joint 
development of the TOPEX/POSEIDON 
(oceanographic satellite) project. Signed at 
Washington Mar. 23, 1987. Entered into 
force Mar. 23, 1987. 

Germany, Dem. Rep. 

Agreement relating to trade in cotton textile 
products, with annexes. Effected by exchange 
of notes at Berlin Dec. 10, 1986, and Feb. 27, 
1987. Entered into force Feb. 27, 1987; effec- 
tive Jan. 1, 1987. 

Greece 

Agreement extending the memorandum of 
understanding of Apr. 28, 1986 on air serv- 
ices. Effected by exchange of notes at Athens 
Apr. 23-24, 1987. Entered into force Apr. 24, 
1987; effective Apr. 25, 1987. 

Guatemala 

Grant agreement for balance of payments 
assistance. Signed at Guatemala City Apr. 13, 
1987, with amended deposit account agree- 
ment. Entered into force Apr. 13, 1987. 



Iceland 

Memorandum of understanding concerning 
the operation of the INTELPOST service, 
with details of implementation. Signed at 
Reykjavik and Washington Mar. 5 and Apr. 
1987. Entered into force May 6, 1987. 

Italy 

Mapping, charting and geodesy exchange, 
and cooperative agreement, with annexes. 
Signed at Rome Apr. 30, 1987. Entered intc 
force Apr. 30, 1987. 

Japan 

Agreement extending the agreement of 
May 1, 1980 (TIAS 9760), as extended on 
cooperation in research and development in 
science and technology. Effected by exchan 
of notes at Tokyo Apr. 28, 1987. Entered ir 
force Apr. 28, 1987; effective May 1, 1987. 

Korea 

Memorandum of understanding concerning 
operation of U.S. Air Force aircraft at Taej 
Signed at Osan Mar. 26 and Apr. 9, 1987. 
Entered into force Apr. 9, 1987. 

Macao 

Agreement amending and extending agree- 
ment of Dec. 28, 1983, and Jan. 9, 1984, 
relating to trade in textiles and textile proc 
ucts. Effected by exchange of letters at Ho 
Kong and Macao Apr. 14 and 28, 1987. 
Entered into force Apr. 28, 1987. 

Mauritius 

Agreement amending agreement of June 3 
and 4, 1985, as amended, concerning trade 
cotton, wool, and manmade fiber textiles a 
apparel. Effected by exchange of notes at 
Port Louis Mar. 31 and Apr. 13, 1985. 
Entered into force Apr. 13, 1987. 

Mexico 

Agreements amending agreement of Feb. ' 
1979 (TIAS 9419), as amended, relating to 
trade in cotton, wool, and manmade fiber t 
tiles and textile products. Effected by 
exchanges of notes at Washington Mar. 18 
and 24 and Apr. 15 and 17, 1987. Entered 
into force Mar. 24 and Apr. 17, 1987. 

Agreement regarding the consolidation am- 
rescheduling of certain debts owed to, 
guaranteed by, or insured by the U.S. 
Government and its agencies, with annexe: 
Signed at Washington Apr. 9, 1987. Enter' 
into force May 21, 1987. 

Pakistan 

International express mail agreement, witl 
detailed regulations. Signed at Islamabad J 
Washington May 11 and 30, 1987. Entered 
into force May 1, 1987. 

Papua New Guinea 

Agreement concerning fishing by U.S. vesils, 
in Papua New Guinea's archipelagic water; 
pursuant to the South Pacific fisheries tre; '. 
Effected by exchange of notes at Waigani A 
Port Moresby Mar. 4, 5, and 25, 1987. 
Entered into force Mar. 25, 1987. 



90 



Iment of State 



LBullibi 



PRESS RELEASES 



freement amending agreement of Jan. 3, 
85, relating to trade in cotton, wool, and 
inmade fiber textiles and textile products, 
fected by exchange of notes at Lima 
ir. 19 and Apr. 8, 1987. Entered into force 
)r. 8. 1987. 

negal 

^eement regarding the consolidation and 
icheduling of certain debts owed to, 
aranteed by, or insured by the U.S. 
vernment and its agencies, with annexes, 
rned at Washington Apr. 10, 1987. Entered 
o force May 18, 1987. 

nzania 

Teement regarding the consolidation and 
!cheduling of certain debts owed to, 
aranteed by, or insured by the U.S. 
vernment, and its agencies, with annexes, 
^ed at Dar es Salaam Mar. 18, 1987. 
tered into force Apr. 27, 1987. 

rkey 

reement amending agreement of Oct. 18, 
!5, as amended, concerning trade in certain 
tile products. Effected by exchange of 
•es at Washington Jan. 22 and Mar. 25, 
VI. Entered into force Mar. 25, 1987. 



reement regarding the consolidation and 
cheduling of certain debts owed to, 
iranteed by, or insured by the U.S. 
i^ernment and its agencies, with annexes. 
Tied at Kinshasa Apr. 9, 1987. Entered 
5 force May 18, 1987. 



o. 


Date 


96 


5/1 


97 


5/5 



•Not in force. 

^Except for XIII-10 through 13. 

'Not in force for the U.S. 

*In force provisionally for the U.S. 



Department of State 



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

Subject 

Shultz: luncheon toast in honor 
of Japanese Prime Minister 
Nakasone, Apr. 30. 

Foreign Relations of the United 
States, 1955-1957, Vol. VI, 
American Republics: 
Multilateral, Mexico, Carib- 
bean, released. 

Shultz: remarks before the 
Bureau of International Nar- 
cotics Matters Coordinators' 
Conference, May 4. 

Shultz: remarks at dedication of 
the memorial plaque. Foreign 
Service Day, May 1. 

Statement on behalf of Secretary 
Shultz on death of former CIA 
Director William Casey. 

Shultz: remarks after his 
meeting with Arab League 
delegation. 

Program for the official working 
visit of Guatemalan President 
Vinicio Cerezo Arevalo, May 
12-15. 

Shultz: news briefing, the 
Homestead, Hot Springs, Va., 
May 8. 

Shultz: remarks before the Coun- 
cil of the Americas conference. 

Shultz: remarks to the study 
commission on global perspec- 
tives in education. 

Shultz: remarks before the India- 
U.S. Business Council, U.S. 
Chamber of Commerce. 

Special program to provide tem- 
porary resident status for indi- 
viduals who have worked in 
seasonal agriculture in the U.S. 

Frank Crigler sworn in as 
Ambassador to Somalia 
(biographic data). 



98 5/5 



*99 5/5 



101 5/7 



102 


5/11 


103 


5/11 


104 


5/11 


105 


5/11 


106 


5/12 


107 


5/14 


108 


5/15 



109 5/18 Shultz: address and question-and- 
answer session before the 
American Israel Public Affairs 
Committee (AIPAC), May 17. 
*110 5/18 Shultz: remarks upon receiving 
the David Ben-Gurion Peace 
Prize from the David Ben- 
Gurion Centennial Committee, 
New York City, May 17. 

Shultz: address at the Stanford 
University cornerstone centen- 
nial, Stanford, May 14. 

Shultz; dinner toast in honor of 
Chinese Vice Chairman Yang 
Shangkun, May 18. 

Shultz: luncheon remarks in 
honor of Austrian Chancellor 
Franz Vranitzky. 

Festival of Indonesia, 1990-91. 

Shultz: remarks before the Anti- 
Defamation League of B'nai 
B'rith on the occasion of the 
presentation of an Elijah Cup, 
May 20. 

116 5/27 Foreign Relations of the United 

States, 1955-1957, Vol. VII, 
American Republics: Central 
and South America, released. 

117 5/27 Shultz: remarks on the occasion 

of the 40th anniversary of the 
Marshall Plan, May 26. 
'118 5/27 Commemoration of 25th anniver- 
sary of AID and 40th anniver- 
sary of the Marshall Plan- 
special philatelic cancellation 
service. 
119 5/28 Shultz: remarks before Wilson 

Center's seminar on Southeast 
Asia, May 27. 



Ill 


5/18 


112 


5/19 


113 


5/20 


114 


5/21 


115 


5/21 



• Not printed in the Bulletin. 



,ilv 1 Pfi7 



91 



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. 

President Reagan 

Promoting Freedom and Democracy in Cen- 
tral America, American Newspaper 
Publishers Asso., EUis Island, N.Y., May 3, 
1987 (Current Policy #952). 

Secretary Shultz 

Meeting the Challenges of Change in the 
Pacific, Stanford University Cornerstone 
Centennial Academic Convocation, Stan- 
ford, May 14, 1987 (Current Policy #956). 

Working for Peace and Freedom, American 
Israel Public Affairs Committee (AIPAC), 
May 17, 1987 (Current Policy #957). 

Africa 

African Development: An Administration 
Perspective, Deputy Secretary Whitehead, 
Carnegie Corporation, May 7, 1987 (Cur- 
rent Policy #960). 

Initiative to End Hunger in Africa (GIST, 
May 1987). 

Arms Control 

Improving the Balance of Conventional 
Forces in Europe, Deputy Assistant 
Secretary Hawes, National Defense Univer- 
sity symposium, Mar. 27, 1987 (Current 
Policy #939). 

Effective Arms Control Demands a Broad 
Approach, Ambassador Rowney, U.S. Air 
Force Academy, Colorado Springs, Apr. 27, 
1987 (Current Policy #955). 

Department 

Challenges Facing the Foreign Service, 
Under Secretary Spiers, Foreign Service 
Day, May 1, 1987 (Current Policy #951). 

Economics 

U.S. Agriculture and the Global Context: A 
Time for Action, Under Secretary Wallis, 
National Association of Wheat Growers, 
Mar. 18, 1987 (Current Policy #950). 

U.S. Trade Policy (GIST, May 1987). 

European Community (GIST, May 1987). 

Environment 

The Environmental Agenda and Foreign 
Policy, Assistant Secretary Negroponte and 
Deputy Assistant Secretary Benedick, State 
Department symposium, Apr. 16, 1987 
(Current Policy #943). 



Europe 

Moscow and the Peace Movement: The Soviet 
Committee for the Defense of Peace, May 
1987 (Foreign Affairs Note). 

U.S. -Soviet Agreement on Embassy Con- 
struction in Washington, May 1987 (Public 
Information Series). 

Soviet Military Withdrawals (GIST, May 
1987). 

General 

Foreign Relations Machinery, Apr. 1987 
(Atlas of U.S. Foreign Relations). 

Budgetary Resources and Foreign Policy, 
Under Secretary Derwinski, Subcommittee 
on Foreign Operations, House Appropria- 
tions Committee, Mar. 19, 1987 (Current 
Policy #933). 

America's First Line of Defense: An Effec- 
tive Foreign Policy, Assistant Secretary 
Keyes, World Affairs Council of Reading 
and Berks County, Wyomissing, Pa., 
Mar. 31, 1987 (Current Policy #938). 

The Foreign Affairs Budget Crisis: Questions 
and Answers, May 1987 (Public Information 
Series). 

Conducting Our Foreign Relations: An 
Investment in America's Future, May 1987 
(Public Information Series). 

Narcotics 

The Drug Problem: Americans Arrested 

Abroad (GIST, May 1987). 
International Narcotics Control (GIST, May 

1987). 
Narcotics in Latin America (GIST, May 1987). 

Refugees 

Refugees and Foreign Policy: Immediate 
Needs and Durable Solutions, Ambassador 
Moore, John F. Kennedy School of Govern- 
ment, Harvard, Cambridge, Apr. 6, 1987 
(Current Policy #945). 

South Asia 

South Asia and the United States: An Evolv- 
ing Partnership, Under Secretary Ar- 
macost, Asia Society, Apr. 29, 1987 (Cur- 
rent Policy #953). 

Terrorism 

International Terrorism (GIST, May 1987). 

Western Hemisphere 

The Spirit Behind the Monroe Doctrine, 
Assistant Secretary Abrams, James Monroe 
Freedom Award Dinner, Apr. 28, 1987 
(Current Policy #949). ■ 



Background Notes 



This series provides brief, factual summarie 
of the people, history, government, econom; 
and foreign relations of about 170 countries 
(excluding the United States) and of selectei 
international organizations. Recent revision 
are: 

Canada (Mar. 1987) 
Haiti (Apr. 1987) 
Honduras (Feb. 1987) 
The Holy See (Mar. 1987) 
Italy (Apr. 1987) 
Japan (Feb. 1987) 
Korea, South (Apr. 1987) 
Maldives (Apr. 1987) 
New Zealand (Mar. 1987) 
Norway (Mar. 1987) 
Pakistan (Mar. 1987) 
Singapore (Feb. 1987) 
Sweden (Feb. 1987) 
Tunisia (Feb. 1987) 
United Kingdom (Jan. 1987) 
Venezuela (Apr. 1987) 

A free copy of the index only may be 
obtained from the Correspondence Manage 
ment Division, Bureau of Public Affairs, 
Department of State, Washington, D.C. 
20520. 

For about 60 Background Notes a year, 
subscription is available from the Superinte 
ent of Documents, U.S. Government Printi 
Office, Washington, D.C. 20402, for $14.00 
(domestic) and $17.50 (foreign). Check or 
money order, made payable to the Superin 
tendent of Documents, must accompany 
order. ■ 






npnartmfint ni .qtatP RiilliQ. 



PUBLICATIONS 



■oreign Relations Volumes Released 



OLUME VI, 

MERICAN REPUBLICS' 

he Department of State on May 5, 
)87, released Foreign Relations of the 
nited States. 1955-1957, Volume VI, 
merican Republics: Multilateral; Mex- 
o; Caribbean. This volume presents 
)cuments on U.S. overall policy toward 
itin America, regional policy toward 
e Caribbean, and bilateral relations 
ith Mexico, Cuba, the Dominican 
spublic, and Haiti. 

The Eisenhower Administration's 
tention was increasingly focused on 
itin America and the Caribbean during 
ese years. On one occasion, President 
senhower remarked to Secretary of 
ate Dulles that he had probably writ- 
n Dulles "more often on the subject of 
exico than any other single matter." 

A recurring theme was the question 
U.S. aid and support to strongly anti- 
immunist authoritarian regimes. "In 
e long run," said President 
senhower, "the United States must 
ck democracies." The President was 
io keenly aware of the problem of 
pendence created by excessive 
ipments of U.S. arms to the countries 
the region. 

An especially acute concern was the 
owing political instability in the Carib- 
an. Beginning in late 1956, Haiti 
derwent a series of governmental 
heavals, culminating in the disputed 
'Ction in September 1957 of Francois 
ivalier as President. In Cuba the 
Ltista government contended with 
med opposition from a variety of 
oups, particularly the 26th of July 
)vement led by Fidel Castro, the stu- 
nt revolutionary movement in Havana 
d other urban centers, and a third 
oup based in the United States and 
aded by former President Prio Socar- 
s. By the end of 1957, the Department 
State and the Embassy in Havana had 
emulated a multiphase plan designed 
pressure Batista and the opposition 
oups into ending the civil strife and 
'Iding free elections. 

Foreign Relations, 1955-1957, 
)lume VI, which comprises 997 pages 
previously classified foreign affairs 
cords, was prepared in the Office of 
e Historian, Bureau of Public Affairs, 
epartment of State. This authoritative 
ficial record is based upon the files of 
e White House, the Department of 



State, and other government agencies. 
Documentation on U.S. policy toward 
Central and South America will be 
published soon in Foreign Relations, 
1955-1957, Volume VII. 

Copies of Volume VI (Department of 
State Publication No. 9503, GPO Stock 
No. 044-000-02147-1) may be pur- 
chased for $28.00 (domestic paid) from 
the Superintendent of Documents, U.S. 
Government Printing Office, 
Washington, D.C., 20402. Checks or 
money orders should be made payable to 
the Superintendent of Documents. 



VOLUME VII, 
AMERICAN REPUBLICS^ 

The Department of State on May 27, 
1987, released Foreign Relations of the 
United States, 1955-1957, Volume VII, 
American Republics: Central and South 
America. Although American foreign 
policy was oriented toward peace- 
threatening crises elsewhere in the 
world, U.S. policymakers were aware of 
the mounting economic problems and 
political unrest in Central and South 
America. The demands of Latin peoples 
for social improvements and material 
progress were matters of concern to 
American diplomats. 

The Eisenhower Administration's 
main attention in Central and South 
America in the period 1955-1957 
focused on developments in Argentina, 
Brazil, Guatemala, and Panama. Faced 
with a new government in Argentina 
after the overthrow of President Juan 
Peron in September 1955, the United 
States quickly recognized the successor 
military governments. The National 
Security Council was advised that 
Argentina would probably look to the 
United States for aid. Indeed, the 
diplomatic exchanges in 1956 and 1957 
chronicle a series of requests by Argen- 
tina for financial assistance and U.S. 
efforts to deal positively with them. 

Similar concerns dominated U.S. 
relations with Guatemala and Brazil. 
While President Castillo Armas brought 
relative stability to Guatemala after the 
ouster of leftist President Arbenz in 
1954, the need for U.S. assistance to 
help maintain an equilibrium in the coun- 
try continued unabated. In Brazil contin- 
uing inflation, large deficits, and a 
chronic dollar shortage all contributed to 



a precarious situation. The United States 
provided some assistance, but urged a 
program of economic reform to stabilize 
the country. 

In Panama the relationship revolved 
around the canal question. Egyptian 
nationalization of the Suez Canal evoked 
a sympathetic response in Panama which 
presented a memorandum on the prob- 
lems associated with the canal and the 
canal zone. Without surrendering 
sovereignty over the canal, the United 
States did address some of the basic 
Panamanian complaints. 

Foreign Relations, 1955-1957, 
Volume VII, which comprises 1,171 
pages of previously classified foreign 
affairs records, was prepared in the Of- 
fice of the Historian, Bureau of Public 
Affairs, Department of State. This 
authoritative official record is based on 
the files of the White House, the Depart- 
ment of State, and other government 
agencies. Documentation on U.S. policy 
toward Mexico, the Caribbean area, and 
on multilateral relations was published in 
Foreign Relations, 1955-195'?, 
Volume VI. 

Copies of Volume VII (Department 
of State Publication No. 9513, GPO 
Stock No. 044-000-02149-1) may be 
purchased for $29.00 (domestic postpaid) 
from the Superintendent of Documents, 
U.S. Government Printing Office, 
Washington, D.C. 20402. Checks or 
money orders should be made payable to 
the Superintendent of Documents. 



'Press release 97. 

2Press release 116 of May 27, 1987. 



93 



Atlas of United States 
Foreign Relations 

The Atlas of United States Foreign Relations, 
December 1985, provides basic information 
about U.S. foreign relations for easy refer- 
ence and as a educational tool. This is the 
second, revised edition of the atlas (first 
published in 1983). For this edition, most of 
the displays have been revised or updated, 
and some have been expanded or recast to 
reflect recent developments. Comprising 100 
pages with 90 maps and charts, it is divided 
into six sections dealing with: 

■ Foreign relations machinery; 

■ International organizations; 

■ Elements of the world economy; 

■ Trade and investment; 

■ Development assistance; and 

■ U.S. national security. 




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vJDEX 



uly 1987 
olume 87, 



No. 2124 



fghanistan. South Asia and the United 
States: An Evolving Partnership 

(Armacost) 75 

Tica. African Development: An 
Administration Perspective (Whitehead) . 15 
nerican Principles 

mr"^■ Portrait Unveiled (Shultz) 81 

^ ill 11 'ting Freedom and Democracy in Cen- 
tral America (Reagan) 1 

f Spirit Behind the Monroe Doctrine 

Abrams) 80 

jrking for Peace and Freedom (Shultz) ... 7 
gentina. Argentine Military Rebellion 

Wliite House statement) 88 

ms Control 

iiefits of an INF Agreement (Shultz) 17 

fective Arms Control Demands a Broad 

Approach (Rowny) 22 

proving the Balance of Conventional 

i^orces in Europe (Hawes) 18 

^FR Talks Resume (Department 

■-tatement) 19 

]i|ir(iliferation Agreement With Allies 

Wliite House statement) 68 

clear and Space Arms Talks Open Round 

i)ight (Kampelman, Reagan) 24 

5. Arms Control Initiatives: An Update .27 
■;. Soviet Nuclear and Space Arms 

s'tt;iitiations (Reagan) 25 

^.. Soviet Union to Establish Nuclear 
ii.-^k Reduction Centers (White House 

taiement) 21 

ina. U.S. Policy Priorities for Relations 

Vith China (Sigur) 41 

mmunications. World Radio Conference 

Concludes 74 

ngress 

ergy Security (message to the Congress) 51 

3 Persian Gulf: Stakes and Risks 

Murphy) 64 

; •'i\ Sale of F-5s to Honduras 

Ills) 87 

piirt on Cyprus (message to the 

oll^l•ess) 57 

V Soviet Agreement on Embassy Con- 

iriiction in Washington (Spiers) 34 

vS Stark Hit by Iraqi Missiles (Murphy, 
veayan, Shultz, White House and Depart- 

iient statements) 58 

prus. 31st Report on Cyprus (message to 

he Congress) 57 

partment & Foreign Service 
allenges Facing the Foreign Service 

Spiers) 30 

5. -Soviet Agreement on Embassy Con- 
struction in Washington (Spiers) 34 

St Asia. ASEAN: A Model for Regional 

Cooperation (Shultz) 10 

onomics 

iEAN: A Model for Regional Cooperation 

Shultz) 10 

■eting the Challenges of Change in the 

Pacific (Shultz) 4 

;CD Council Meets in Paris (final 

-ommunique) 43 

lergy 

lergy Security (message to the Congress) 51 
A Governing Board Meets in Paris 
Herrington, final communique) 47 



Environment. The Environmental Agenda 
and Foreign Policy (Benedick, 

Negroponte) 52 

France. Visit of French Prime Minister 

(Chirac, Reagan) 56 

Honduras. Proposed Sale of F-5s to Hon- 
duras (Abrams) 87 

Industrialized Democracies. OECD Council 

Meets in Paris (final communique) 43 

Japan 

Secretary's News Briefing of May 8 

(excerpt) " 13 

Trade With Japan (Reagan, proclamation, 

memorandum, White House fact sheet) . . 35 
Visit of Japanese Prime Minister Nakasone 
(Nakasone, Reagan, Shultz, joint 

statemerlt) 37 

Lebanon. U.S. Food Aid Program for 

Lebanon (Department statement) 61 

Middle East 

Meeting With Arab League Delegation 

(Shultz) 63 

The Persian Gulf: Stakes and Risks 

(Murphy) 64 

Working for Peace and Freedom (Shultz) ... 7 
U.S.S. Stark Hit by Iraqi Missiles (Murphy, 
Reagan, Shultz, White House and Depart- 
ment statements) 58 

Military Affairs 

Improving the Balance of Conventional 

Forces in Europe (Hawes) 18 

U.S.S. Stark Hit by Iraqi Missiles (Murphy, 
Reagan, Shultz, White House and Depart- 
ment statements) 58 

Monetary Affairs. OECD Council Meets in 

Paris (final communique) 43 

Nicaragua 

Central America: What Are the Alternatives? 

(Abrams) 83 

Promoting Freedom and Democracy in 

Central America (Reagan) 1 

North Atlantic Treaty Organization 
Improving the Balance of Conventional 

Forces in Europe (Hawes) 18 

NATO Nuclear Planning Group Meets in 

Norway (final communique) 57 

Nuclear Policy 

Nonproliferation Agreement With Allies 

(White House statement) 68 

Nonproliferation and the Peaceful Uses of 

Nuclear Energy (Negroponte) 67 

Pacific. Meeting the Challenges of Change 

in the Pacific (Shultz) 4 

Pakistan. South Asia and the United States: 

An Evolving Partnership (Armacost) .... 75 
Presidential Documents 
Energy Security (message to the Congress) 51 
Nuclear and Space Arms Talks Open Round 

Eight (Kampelman, Reagan) 24 

Pan American Day and Week, 1987 

(proclamation) 86 

31st Report on Cyprus (message to the 

Congress) 57 

Trade With Japan (Reagan, proclamation, 

memorandum, White House fact sheet) . .35 
U.S. -Soviet Nuclear and Space Arms 

Negotiations 25 

Visit of French Prime Minister (Chirac, 

Reagan) 56 

Visit of Japanese Prime Minister Nakasone 
(Nakasone, Reagan, Shultz, joint 

statement) 37 

World Trade Week, 1987 (proclamation) ... 45 



Publications 

Background Notes 92 

Department of State 92 

Foreign Relations Volumes Released 93 

Refugees. Refugees and Foreign Policy: 

Immediate Needs and Durable Solutions 

(Moore) 70 

Security Assistance. Proposed Sales of 

F-5s to Honduras (Abrams) 87 

South Africa. Working for Peace and 

Freedom (Shultz) 7 

Trade 

Meeting the Challenges of Change in the 

Pacific (Shultz) 4 

OECD Council Meets in Paris (final 

communique) 43 

Secretary's News Briefing of May 8 

(excerpt) 13 

Trade With Japan (Reagan, proclamation, 

memorandum, White House fact sheet) . . 35 
World Trade Week, 1987 (proclamation) . . .45 

Treaties. Current Actions 89 

U.S.S.R. 

Benefits of an INF Agreement (Shultz) .... 17 

Effective Arms Control Demands a Broad 

Approach (Rowny) 22 

MBFR Talks Resume (Department 

statement) 19 

Nonproliferation and the Peaceful Uses of 

Nuclear Energy (Negroponte) 67 

Nuclear and Space Arms 'Talks Open Round 

Eight (Kampelman, Reagan) 24 

The Spirit Behind the Monroe Doctrine 

(Abrams) 80 

U.S. Arms Control Initiatives: An Update .27 
U.S. -Soviet Nuclear and Space Arms 

Negotiations (Reagan) 25 

U.S., Soviet Union to Establish Nuclear Risk 

Reduction Centers (White House 

statement) 21 

Western Hemisphere 

Central America: What Are the Alternatives? 

(Abrams) 83 

Monroe Portrait Unveiled (Shultz) 81 

Pan American Day and Week, 1987 

(proclamation) 86 

Promoting Freedom and Democracy in Cen- 
tral America (Reagan) 1 

The Spirit Behind the Monroe Doctrine 

(Abrams) 80 

Name Index 

Abrams, Elliott 80, 83, 87 

Armacost, Michael H 75 

Benedick, Richard E 52 

Chirac, Jacques 56 

Hawes, John H 18 

Herrington, John S 47 

Kampelman, Max M 24 

Moore, Jonathan 70 

Murphy, Richard W 58, 64 

Nakasone, Yasuhiro 37 

Negroponte, John D 52, 67 

Reagan, President 1, 24, 25, 35, 37, 45, 

51, 56, 57, 58, 86 

Rowny, Edward L 22 

Shultz, Secretary 4, 7, 10, 13, 17, 37, 

58, 63, 81 

Sigur, Gaston J., Jr 41 

Spiers, Ronald I 30, 34 

Whitehead, John C 15 



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^ huUeUn 

le Official Monthly Record of United States Foreign Policy / Volume 87 / Number 2125 

August 1987 



Economic Summit 
Venice 1987 



Department of State 

bulletin 



Volume 87 / Number 2125 / August 1987 



The DEPARTMENT OF STATE 
BULLETIN, published by the Office of 
Public Communication in the Bureau of 
Public Affairs, is the official record of 
U.S. foreign policy. Its purpose is to pro- 
vide the public, the Congress, and 
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official U.S. policy statements. 



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Secretary of State 

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Assistant SecretJiry 
for Public Affairs 

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Director, 

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PHYLLIS A. YOUNG 

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Bulletin. 



CONTENTS 



FEATURE 



^fP^/,9P, 



1 Venice Economic Summit 

(President Reagan, Secretary Shultz, Statements, 
Declaration) 



!ie President 

Visit to Vatican City and West 
Germany 

fie Vice President 

NATO: The Best Investment in 
Peace 

ne Secretary 

Visit to Asia and the Pacific 
Interview on "Meet the Press" 
News Briefing of June 2 
U.S. Business and the World 

Economy 
Narcotics: A Global Threat 

Irica 

The U.S. and Southern Africa: 
A Current Appraisal 
(Michael H. Armacost) 

i rms Control 

Germany's Decision on Proposed 
INF Reductions 
(President Reagan) 

I ast Asia 

! The U.S., Japan, and Asian 

Pacific Security in Perspective 
(Michael H. Armacost) 

Japan— A Profile 

U.S. -Japan Semiconductor Trade 
(President Reagan) 



Economics 



56 



57 



Competitiveness in America: 

Is Protectionism the Answer? 

(Douglas W. McMinn) 
Trade With Romania, Hungary, 

and China (White House 

Statement) 



Europe 

59 North Atlantic Council Meets in 
Iceland (Secretary Shultz, 
Final Communique) 

63 NATO Defense Planning 

Committee Meets in Brussels 
(Final Communique) 

64 Visit of Austrian Chancellor 

(President Reagan) 

65 Recent Developments in Europe 

(Rozanne L. Ridgway) 
67 40th Anniversary of the Marshall 

Plan (President Reagan, 

Secretary Shultz) 
72 40th Anniversary of the Truman 

Doctrine (President Reagan) 



Human Rights 

U.S. Human Rights Policy: 

Origins and Implementation 

(George Lister) 
Human Rights and U.S. Foreign 

Policy (Richard Schifter) 
The Human Rights Issue in Korea 

(Richard Schifter) 



73 



75 



77 



l\/liddle East 

78 U.S. Policy in the Persian Gulf 
and Kuwaiti Reflagging 
(Michael H. Armacost) 

80 Arms Sale to Saudi Arabia 

(President Reagan) 

81 Persian Gulf 

(President Reagan) 

Military Affairs 



82 



SDI Report to Congress 
(White House Statement) 



Terrorism 



83 



85 



Terrorism and the Rule of Law 

(L. Paul Bremer. HI) 
West Germany to Prosecute 

Terrorist (White House 

Statement) 



Western Hemisphere 

86 President Meets With Costa 

Rican President 
(White House Statement) 

87 Visit of Guatemalan President 

(Vinicio Cerezo Arevalo, 
President Reagan) 

Treaties 

87 Current Actions 

Press Releases 

89 Department of State 

Publications 

90 Department of State 



Index 



_ 




President Reagan in Venice. 



Department of State Bui tin 



ECONOMIC SUMMIT 
VENICE 1987 



Venice Economic Summit 

^resident Reagan attended the 13th economic summit of the industrialized nations 

in Venice June 8-10, 1987, which was hosted by 

Italian Prime Minister Amintore Fanfani. 

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

President Francois Mitterrand (France); 

Chancellor Helmut Kohl (West Germany); 

Prime Minister Yasuhiro Nakasone (Japan); 

Prime Minister Margaret Thatcher (United Kingdom); 

Jacques Delors, President of the European Communities; and 

Belgian Prime Minister Wilfried Martens representing 

the Presidency of the European Communities. 



esident's 

Departure Remarks, 
ijne 3, 19871 



you know, Nancy and I are leaving 
lay for the economic summit in 
nice. Many of you have helped me 
jpare for this meeting, and I'm most 
ateful. Others of you will, in the 
)nths ahead, join with me in helping to 
art the course, not only for our 
onomy but, in large measure, for the 
tire world's economy. Of course, I'm 
)king forward to continuing our com- 
Dn work. 

But for a moment, rather than 
dress you, the men and women who 
e my partners in shaping our nation's 
licies for the future, I would like to 
rect my words to some very special 
lests, to those of you here today who 
e the future, you graduates of James 
adison High School. 

The man your school was named for, 
imes Madison, has been called the 
itiier of our Constitution, and he was 
so our fourth President. And, no, I was 
|)t one of his staff or advisers, 
laughter] But in his first inaugural 
Idress, Madison said these simple and 



profound words: "It has been the true 
glory of the United States," he said "to 
cultivate peace by observing justice." 
This is a particularly good moment for 
remembering that wisdom. 

On this trip, I will commemorate the 
40th anniversary of the Marshall Plan. 
Yes, 40 years ago the United States said 
that if Europe were ever to see an end 
to the specter of war that had haunted 
that great continent for over two cen- 
turies, all of its people would have to 
know freedom, democracy, and justice. 
And so we extended both to allies and 
former enemies a helping hand, a hand 
of compassion, and a hand of hope. 

The Soviet Union declined to take 
part in the Marshall Plan, as did the 
countries under its control, but to the 
rest of Europe, we gave help. What we 
know now as Western Europe was 
rebuilt. And today, in part as a result of 
the Marshall Plan, those countries and 
the United States as well as Japan have 
known the longest period of general 
peace in this century and the greatest 
prosperity in the history of man. 

At this economic summit, I will look 
around the table and see, thanks in part 
to the generosity and wisdom of our 
nation over the past 40 years, not the 
leaders of broken, desperate and 



despotic nations but the leaders of 
strong and stable democracies, countries 
that today are our partners for peace on 
the world stage. Next week each leader 
at that table will be asking the same 
questions. How can we help make the 
next 40 years as prosperous as the last 
40? How can we help our peoples live in 
a world of even greater opportunities in 
the next decade and the next century? 

Some of the answers to these ques- 
tions are clear. Our countries should 
move forward to end unsustainable trade 
imbalances, to reform agricultural 
policies, and restore stability to the 
interational currency markets. The 
major economic powers of the world 
must also work to eliminate inequities in 
the international trade environment 
to keep markets open and to keep com- 
merce flowing. Economic growth and 
free markets are everybody's business. 

At Venice we'll talk about how to 
improve East- West relations. We will 
discuss arms reductions, human rights 
problems, regional conflicts, and 
bilateral cooperation. Our discussion in 
Venice will help strengthen Western 
solidarity, which is indispensable to 
progress on issues of contention between 
the East and West. We will also address 



lugust 1987 



various regional issues and other prob- 
lems, such as international terrorism, 
where we can point to stepped-up and 
increasingly effective Western efforts, 
especially after last year's summit in 
Tokyo. 

Despite this long agenda, we won't 
find all the answers to those questions 
about our future at this summit— not by 
a long shot. In fact, many of the answers 
will come from where mankind's great- 
est energy and vision have always come: 
from you, from those like you through- 
out the world, from the hope that lives in 
the hearts of free people everywhere. 
But we will take steps; we will continue 
the work of, as Madison said, cultivating 
peace by observing justice. And as I sit 
at that table and remember Madison's 
words, I will see not just the faces of 
those other leaders but your faces as 
well. 



President's 

Radio Address, 
Venice, 
Junes, 19872 



I'm speaking to you from one of the 
most beautiful cities in the world, 
Venice, Italy, where I'll be meeting soon 
with the other leaders of the seven 
largest industrialized countries of the 
free world. It's time for our yearly sum- 
mit conference on international eco- 
nomic issues. 

Now, all of this— foreign leaders 
talking economics in the city of canals 
and gondolas— may sound a bit distant 
from your daily concerns, but take it 
from me, the issues we'll be discussing 
next week directly affect your lives and 
your future. That's because continued 
economic expansion and growth 
throughout the world are crucial to our 
prosperity at home. 

When I attended my first summit 
back in Ottawa in 1981, the global 
economy was in grave danger. We had 
inflation running at 10% in industrialized 
countries, not to mention high interest 
rates, excessive tax burdens, and too 
much government everywhere. Worse 




than all of this, there was no clear con- 
sensus among world leaders about how 
to set ourselves back on the road to 
recovery. 

In the 6 years since that conference, 
the United States has made tremendous 
progress. With the American economy 
leading the way, we showed what can be 
achieved with economic policies based on 
less government and more personal 
freedom. As we reduced the taxes, cut 
inflation, and brought down interest 
rates, we demonstrated that economic 
growth can be vigorous and sustained. 

So, too, the world leaders in Venice 
next week can look back on a solid 
record of accomplishment. Today infla- 
tion remains low, while interest rates 
are moderate, and prospects are 
favorable for growth to continue for a 
fifth year. So, you see, we did find that 
consensus for economic renewal and 



growth, a consensus that relied not or 
government but the dynamism of free 
peoples. 

But there are challenges ahead, ai 
what we do next week to meet those 
challenges will have a direct impact oi 
all Americans. Those of you who listei 
these broadcasts will know, for examp 
how often I've stressed the threat tha 
high tariffs and other trade barriers p 
to economic progress. Some of us whc 
lived through the hard times of the 
1930s can tell you about that danger. 
When one nation decides to erect thes 
barriers, it leads inevitably to retaliati 
by other nations. Soon the trade war i 
underway. Markets shrink all over the 
world, and the result is economic 
slowdown and the loss of millions of jc 

That's why a summit conference 
with our major trading partners can b 
helpful. It's a chance to reaffirm our 



Department of State Bull m 



ECONOMIC SUMMIT 
VENICE 1987 



lief in free and fair trade, talk over the 
oblems of protectionist legislation, and 
Ip provide a climate for the free flow 
goods and commerce. It also gives us 
■hance to talk over other issues, like 
r goal of extending prosperity to the 
veloping nations of the world. Right 
w the international community is help- 
r these developing nations deal with 

serious problem of heavy debt 
rdens. And just as this summit is 
Ipful in coordinating our trade policies 
d our efforts to help spread prosperity 
the rest of the world, our discussions 
Venice will permit us to address such 
/erse topics as agricultural problems, 
Torism, drug abuse, and the AIDS 
:quired immune deficiency syndrome] 
idemic. 

So, too, the relationship between the 
!e nations of the world and the Soviet 
)C will be much on our minds. You 
Dbably know, for example, some very 
rious negotiations on arms reductions 
8 reaching a critical stage. These 
gotiations affect our allies, so it's 
sential that we maintain our commit- 
mt to their security as well as our 
'n. We also need to reaffirm our 
jdge to a strong defense while exert- 
r pressure on the Soviets for progress 
such areas as regional conflicts, like 
■ghanistan, and human rights. 

The agenda next week is a full one. 
it certainly one source of encourage- 
ent is our record of accomplishment 
)t only for the past few years but dur- 
g the past four decades. Forty years 
;o this week, then Secretary of State 
!orge Marshall announced an economic 
covery plan for the European nations 
ivastated by World War II. The plan 
as not a giveaway program; it was, 
stead, an incentive-oriented effort to 
it European nations to work together 
id build a new prosperity, a prosperity 
lilt on self-help and mutual love of 
eedom. It's this same idea of freedom 
hich has kept much of the world at 
iace for four decades and brought ris- 
ig standards of living to the average 
srson. That's what we'll be seeking to 
dvance further in Venice. Our goal now 
., together, to build on this record of 
rowth and opportunity for the future, 
s we've done in the past. 



Statement on 

East-West Relations, 
Junes, 19873 



1. We, the Heads of State or Government of 
seven major industrial nations and the 
Representatives of the European Community, 
have discussed East-West relations. We reaf- 
firm our shared principles and objectives and 
our common dedication to preserving and 
strengthening peace. 

2. We recognize with pride that our 
shared values of freedom, democracy and 
respect for human rights are the source of the 
dynamism and prosperity of our societies. We 
renew our commitment to the search for a 
freer, more democratic and more humane 
world. 

3. Within existing alliances, each of us is 
resolved to maintain a strong and credible 
defense which threatens the security of no 
one, protects freedom, deters aggression and 
maintains peace. We shall continue to consult 
closely on all matters affecting our common 
interest. We will not be separated from the 
principles that guide us all. 

4. Since we last met, new opportunities 
have opened for progress in East-West rela- 
tions. We are encouraged by these develop- 
ments. They confirm the soundness of the 
policies we have each pursued in our deter- 
mination to achieve a freer and safer world. 

5. We are following with close interest 
recent developments in the internal and 
external policies of the Soviet Union. It is our 
hope that they will prove to be of great 
significance for the improvement of political, 
economic and security relations between the 
countries of East and West. At the same 
time, profound differences persist; each of us 
must remain vigilantly alert in responding to 
all aspects of Soviet policy. 

6. We reaffirm our commitment to peace 
and increased security at lower levels of 
arms. We seek a comprehensive effort to 
lower tensions and to achieve verifiable arms 
reductions. While reaffirming the continuing 
importance of nuclear deterrence in preserv- 
ing peace, we note with satisfaction that 
dialogue on arms control has intensified and 
that more favourable prospects have emerged 
for the reduction of nuclear forces. We 
appreciate US efforts to negotiate balanced, 
substantial and verifiable reductions in 
nuclear weapons. We emphasize our deter- 
mination to enhance conventional stability at 
a lower level of forces and achieve the total 
elimination of chemical weapons. We believe 
that these goals should be actively pursued 
and translated into concrete agreements. We 
urge the Soviet Union to negotiate in a 
positive and constructive manner. An effec- 
tive resolution of these issues is an essential 



requirement for real and enduring stability in 
the world. 

7. We will be paying close attention not 
only to Soviet statements but also to Soviet 
actions on issues of common concern to us. In 
particular: 

• We call for significant and lasting prog- 
ress to human rights, which is essential to 
building trust between our societies. Much 
still remains to be done to meet the principles 
agreed and commitments undertaken in the 
Helsinki Final Act and confirmed since. 

• We look for an early and peaceful 
resolution of regional conflicts, and especially 
for a rapid and total withdrawal of Soviet 
forces from Afghanistan so that the people of 
Afghanistan may freely determine their own 
future. 

• We encourage greater contacts, freer 
interchange of ideas and more extensive 
dialogue between our people and the people of 
the Soviet Union and Eastern Europe. 

8. Thus, we each seek to stabilize military 
competition between East and West at lower 
levels of arms; to encourage stable political 
solutions to regional conflicts; to secure 
lasting improvements in human rights; and to 
build contacts, confidence and trust between 
governments and peoples in a more humane 
world. Progress across the board is necessary 
to establish a durable foundation for stable 
and constructive relationships between the 
countries of East and West. 



Statement on Terrorism, 
June 9, 19873 



We, the Heads of State or Government of 
seven major democracies and the Represen- 
tatives of the European Community assem- 
bled here in Venice, profoundly aware of our 
peoples' concern at the threat posed by 
terrorism; 

• Reaffirm our commitment to the 
statements on terrorism made at previous 
Summits, in Bonn, Venice, Ottawa, London 
and Tokyo; 

• Resolutely condemn all forms of ter- 
rorism, including aircraft hijackings and 
hostage-taking, and reiterate our belief that 
whatever its motives, terrorism has no 
justification; 

• Confirm the commitment of each of us 
to the principle of making no concessions to 
terrorists or their sponsors; 

• Remain resolved to apply, in respect of 
any State clearly involved in sponsoring or 
supporting international terrorism, effective 



measures within the framework of interna- 
tional law and in our own jurisdictions; 

• Welcome the progress made in inter- 
national cooperation against terrorism since 
we last met in Tokyo in May 1986, and in par- 
ticular the initiative taken by France and Ger- 
many to convene in May in Paris a meeting of 
Ministers of nine countries, who are responsi- 
ble for counter-terrorism; 

• Reaffirm our determination to combat 
terrorism both through national measures and 
through international cooperation among 
ourselves and with others, when appropriate, 
and therefore renew our appeal to all like- 
minded countries to consolidate and extend 
international cooperation in all appropriate 
fora; 

• Will continue our efforts to improve the 
safety of travellers. We welcome improve- 
ments in airport and maritime security, and 
encourage the work of ICAO [International 
Civil Aviation Organization] and IMO [Inter- 
national Maritime Organization] in this 
regard. Each of us will continue to monitor 
closely the activities of airlines which raise 
security problems. The Heads of State or 
Government have decided on measures, 
annexed to this statement, to make the 1978 
Bonn Declaration more effective in dealing 
with all forms of terrorism affecting civil 
aviation; 

• Commit ourselves to support the rule of 
law in bringing terrorists to justice. Each of 
us pledges increased cooperation in the rele- 
vant fora and within the framework of 
domestic and international law on the investi- 
gation, apprehension and prosecution of ter- 
rorists. In particular we reaffirm the principle 
established by relevant international conven- 
tions of trying or extraditing, according to 
national laws and those international conven- 
tions, those who have perpetrated acts of 
terrorism. 

Annex 

The Heads of State or Government recall that 
in their Tokyo Statement on international ter- 
rorism they agreed to make the 1978 Bonn 
Declaration more effective in dealing with all 
forms of terrorism affecting civil aviation. To 
these ends, in cases where a country refuses 
extradition or prosecution of those who have 
committed offences described in the Montreal 
Convention for the Suppression of Unlawful 
Acts against the Safety of Civil Aviation 
and/or does not return the aircraft involved, 
the Heads of State or Government are jointly 
resolved that their Governments shall take 
immediate action to cease flights to that coun- 
try as stated in the Bonn Declaration. 

At the same time, their Governments will 
initiate action to halt incoming flights from 



that country or from any country by the 
airlines of the country concerned as stated in 
the Bonn Declaration. 

The Heads of State or Government intend 
also to extend the Bonn Declaration in due 
time to cover any future relevant amendment 
to the above Convention or any other aviation 
conventions relating to the extradition or pros- 
ecution of the offenders. 

The Heads of State or Government urge 
other governments to join them in this 
commitment. 



Statement on Iraq-Iran War 
and Freedom of 
Navigation In the Gulf, 

June 9, 19873 



We agree that new and concerted interna- 
tional efforts are urgently required to help 
bring the Iraq-Iran war to an end. We favour 
the earliest possible negotiated end to the 
war with the territorial integrity and 
independence of both Iraq and Iran intact. 
Both countries have suffered grievously from 
this long and tragic war. Neighbouring coun- 
tries are threatened with the possible spread 
of the conflict. We call once more upon both 
parties to negotiate an immediate end of the 
war. We strongly support the mediation 
efforts of the United Nations Secretary- 
General and urge the adoption of just and 
effective measures by the UN Security Coun- 
cil. With these objectives in mind, we reaffirm 
that the principle of freedom of navigation in 
the gulf is of paramount importance for us 
and for others and must be upheld. The free 
flow of oil and other traffic through the Strait 
of Hormuz must continue unimpeded. 

We pledge to continue to consult on ways 
to pursue these important goals effectively. 



Secretary's News Briefing, 
June 9, 19874 



We're in the midst of a summit meeting 
with the usual wide range of subjects 
under review, and I think a genuine 
sense of continuity as we go from one 
year to the next with an evolving pat- 
tern of effectiveness. Let me outline 
where we are and where we are going. 
First of all in East-West relations, 
we've had a strategy of strength, of 



realistic assessment of the Soviets and 
their allies, and a readiness to negotiati 
We see in our hands now with increasir 
firmness a pattern of agreements emer 
ing. There is greater and greater conse 
sus now coming forward on INF [inter- 
mediate-range nuclear forces]. And I 
expect, as we reflect on what was said 
here and have the full foreign ministers 
meeting in Reykjavik, that such a con- 
sensus on how we respond to the latest 
moves— important moves— will be 
established. 

Beyond that, there is a clear recogi 
tion of where the next steps lie. They li 
in conventional weapons, they lie in 
chemical weapons, and in following up 
on the broadly agreed changes in 
strategic arms. 

The participants in the summit aga 
emphasized something of profound 
importance in East- West relations, 
namely the underlying importance of 
human rights as necessary in itself and 
as a gauge to the quality of a relation- 
ship that's possible. We note that some 
moves have been made. They are encoi 
aging. There is a great deal more to be 
done. There was considerable discussio 
of this among the heads of state and 
others reflecting on what is going on. 

And, of course, regional issues 
remain a problem, and at the top of the 
list in the discussions here, Afghanistai 
So, the heads call upon the Soviet Unio 
to do better in these areas. But in 
general, we see a working strategy 
before us gradually getting someplace. 

Next, terrorism; that subject has 
been around for awhile in these summit 
meetings, and, imfortunately, the prob- 
lem is all too much around. However, w 
have seen increasing coherence, increas 
ingly operational methods of cooperatic 
between countries involved, the exten- 
sion of various ways of dealing with ter 
rorism once again illustrated in the con 
munique this time, and we see more am 
more emphasis of no concessions, no 
place to hide. States sponsoring ter- 
rorism can expect trouble from us. We 
see some success. We see worldwide tei 
rorism incidents down by about 6%, as 
compared with last year. We see them 
down about 33% in Europe. We see the 
emergence of the rule of law more and 
more— a very important development 
noted in the statement. There were two 



Department of State Bullet 



ECONOMIC SUMMIT 
VENICE 1987 




Summit participants from left to right: Prime Minister Martens, President Delors, Prime Minister Nakasone. Prime 
Minister Thatcher, President Reagan, Prime Minister Fanfani, President Mitterrand, Chancellor Kohl, and Prime 
Minister Mulroney. 



ackings in 1986. That's the lowest 
el since 1968, when this was being 
icked, to begin with. 

Let me mention two cases handled 
the rule of law which have a special 
:nificance— interesting significance, 
le is the Hindawi case involving the 
-ercepted effort to plant a bomb in an 
Al plane— successfully prosecuted, 
id the other is the case of two Sikhs 
Dsecuted in Canada for an effort to 
)w up an airplane. 

Now the application of the rule of 
V is one aspect of this. A second 
pect is that in both cases, through 
/estigative work involving more than 
e country interacting, the intent of the 
rrorist was found before the damage 



was done. The people were caught— 
caught with the goods— prosecuted and 
put in the slammer where they belong. 
That's the kind of thing we want to see. 
There's a communique; those are words, 
they mean something. And this is an 
illustration of what they mean. 

As far as the Persian Gulf is con- 
cerned, as it turned out, people came 
here with pretty much the same view- 
recognizing the great importance of the 
gulf and recognizing the importance of 
deterring any threat to the principle of 
freedom of navigation. 

We, of course, have taken steps 
ourselves. We feel that our force can do 
the job set out for it very well, but I 
want to emphasize— and it was certainly 
manifest here that we are not alone in 



this by a long shot. For example, the 
British so far this year have escorted 
104 vessels in the gulf— British vessels 
as they come in and out. We recognize 
that the heart of the problem, of course, 
is the war— the continuing Iran-Iraq 
war. And so the countries here joined in 
supporting the Secretary General's 
initiative and join in calling on the 
Security Council— and three of the per- 
manent members are represented here- 
to call for a cease-fire at international 
borders and to call for it to be done in an 
effective way— effective meaning that 
we and other countries here advocate 
mandatory sanctions on sales of military 
goods to either country if there is one 
that declines to go along with the 
cease-fire. 



We will go to the Security Council, 
and we will put it to the Soviets and put 
it to the Chinese, as the other two per- 
manent members, to join in this action 
designed to get at the root of the prob- 
lem, namely the war in the gulf— the war 
between Iran and Iraq, which has a 
spillover in the gulf. 

Finally just a comment on overall 
atmospherics. As people come to know 
each other as individuals better and bet- 
ter through this process, the discussion 
flows very easily, takes on its own 
momentum. Sometimes it's a little hard 
to predict what people are going to talk 
about, but they have a capacity to dig 
into the subjects that are on the top of 
their minds and out of it comes a 
sharpened perception of what is going on 
and a better and more operational way 
of dealing with outstanding problems. 

This is an economic summit. I, of 
course, have emphasized the security 
and political aspects. The whole after- 
noon and much of the morning today 
was spent on economic matters by the 
heads, and they'll be doing that again 
tomorrow as they work on the communi- 
que, which was worked over consider- 
ably this afternoon, and that will be 
issued tomorrow and interpreted 
tomorrow. 

Q. In the statement on the gulf, 
the seven leaders urged the adoption 
of what they called "just and effective 
measures" by the Security Council. Is 
an arms embargo what you mean, and 
if it is what you mean, why don't the 
seven specifically say they support the 
British and the Americans in wanting 
to deny arms to Iran? 

A. It says "effective measures," and 
I told you what effective means. That 
was clear in our discussions. It means 
that we call for a cease-fire, and if 
either country declines, then we will 
follow that up in our view— the view of 
the countries represented here— with a 
call for mandatory sanctions on the sale 
of arms. Now whether the Soviets will 
join in that or whether the Chinese will 
join in that, we don't know yet. But 
that's what we're going to take into our 
discussions in the Security Council. 

Q. But what do you do now with 
an embargo on arms sales to Iran? 
Why do you have to wait to muddle 
through a very — 



6 



A. We don't. We don't. As far as 
we're concerned, we have an embargo 
on, and so do the other countries. But in 
order to make the maximum impact in 
trying to bring this war to an end, the 
broader that embargo can be, the more 
meaning it will have. And that is why we 
have said beyond what the countries may 
do individually, there is the intent to go 
to the United Nations, broaden it to the 
permanent members of the Security 
Council, and then hopefully broaden it to 
all other countries. 

Q. Are you going to try to get 
stronger language in this statement, 
like "enforceable"? We've been hear- 
ing from the other delegations that we 
wanted it to be tougher, and that we 
really — 

A. All sorts of words were talked 
about, and the word "enforceable" was 
talked about. The point was made that 
it's redundant, that's what "effective" 
means, and so we spelled it out, what 
"effective" means as we see it. Every- 
body agreed on that, so we got what we 
think is necessary here. 

Q. A lot of people on Capitol Hill 
have said our allies have got to do 
more to help us physically in the gulf, 
that American boys ought not to be 
there at risk for oil for other people. 
Did you ask for, and if so, did you get, 
any promise or commitment t)f more 
physical help in the gulf? 

A. The states that are capable of 
providing it are doing it. We are, and 
we'll do a little more as necessary. We'll 
be able to take care of ourselves well. 
The British are, and I've told you the 
number of escorts they've already pro- 
vided this year. I didn't realize they'd 
done that much already. It's interesting. 
The French are; they have two ships per 
week in the gulf and they have others 
around. Two of the major states are not 
in the position to use military power in 
the gulf, so there are limitations. 

The principal thing here is to sup- 
port the diplomatic moves which are 
stronger in terms of what we will seek in 
the Security Council, and we have put 
forward before. Although we have been 
seeking mandatory sanctions, I think we 
have a real potential push here in that 
direction. So I think that we have done 
basically what we want. 



k 



Now, as far as the Persian Gulf pn 
viding oil to other people is concerned, 
think, myself, that the figures are a lit 
deceptive. The fact of the matter is the 
oil is a commodity that flows around ai 
is easily exchanged. It's not that dif- 
ferent from one place to another. So y( 
have to think in terms of a pool of oil. 

The largest consumer of oil in the 
world is the United States. The largest 
importer of oil in the world is the Unit 
States. We have a stake in the flows oJ 
oil from wherever it comes, even thou| 
it may be that oil from a particular pla. 
doesn't flow directly to us. If it were 
interrupted, then the whole pattern 
would rearrange itself very rapidly. 

Q. What about Italy? What did 
they say about providing some physi* 
help or support? 

A. I told you the countries that ar 
in a position to provide the help are 
doing so. It isn't help, it's the things 
they were doing and we are doing, anc 
those things will suffice. This has beer 
successful enterprise, and it will con- 
tinue to be so. 

Q. On the terrorism statement, 
you talked about how the rule of law 
has come to bear in certain cases. Ai' 
I'd like to ask you about one case 
where it currently has not so far con- 
to bear with the Hamadei case in Wt 
Germany. You mention in the state- 
ment about trying or extraditing tho" 
who have perpetrated acts of ter- 
rorism. How does that relate to the 
Hamadei^ case? And in your discus- 
sions with the Germans at this sum- 
mit, was there any discussion of 
what's going to happen? 

A. As far as the Hamadei case is 
concerned, I don't have the slightest 
doubt— and I think I'm reasonably wel 
informed— that the Germans will hand 
this in a correct and stiff way. 

Q. What does that mean? 

A. We'll see what it means. I'm ju 
telling you how they're going to do it, 

Q. How does that relate to the 
statement? Was that language — 

A. Doesn't have any particular rel 
tion to the statement. Germany is a 
country that has experienced terrorisn 
understands the menace of it, has deal 
with it in a very, very tough way. So 



i 



!« 



ECONOMIC SUMMIT 
VENICE 1987 



hey don't need any lessons on the ques- 
ion of handling terrorism. They're good 
t it, they're determined about it, and 
'm sure they'll handle this case 
■roperly. 

Q. The Tokyo statement on ter- 
orism had a specific passage about 
(Ot selling or exporting arms to ter- 
orist nations. It's not repeated in that 
anguage in this statement. Could you 
ell us why? 

A. No particular reason. That is our 
olicy, and that was particularly geared 
3 Libya. And that happened, and the 
ituation with Libya, I might note, is 
lery different today than it was a year 
go. 

Q. Was this related to the Iran 
irms sale? The omission of this — 

A. No, no. No particular rationale. 

Q. Similarly, there are words in 
ere that were not in the Tokyo state- 
lent, particularly when it refers to 
he principle of no concessions to ter- 
orists or their sponsors. Some 
bservers here are saying that this is 
T reference to what the Administra- 
ion did with regard to arms and 
ostages. Was it inserted over your 
bjections? 

A. No. I think that subject has been 
problem. That problem is behind us. 
Avi this represents our long-held policy 
nd it's stated here in a very crisp, 
njiortant way— no concessions. 

Q. Shouldn't the Russians be 
raised rather than condemned for 
elping Kuwait and others maintain 
reedom of navigation in the gulf? 
Ve're hearing two different answers 
n that. 

A. As far as we're concerned, the 
•ulf is the place from which a very large 
iroportion of the energy to the free 
/orld comes. That is so today, it has 
leen so for some decades, and it cer- 
ainly is going to be so in the future, 
'hat oil flows to the West. We do not 
vant to have that lifeline, in any way, 
inder the hand of a country that is not 
lecessarily friendly to us. 

Q. Aren't they doing this for 
lefarious purposes while we're doing 
t for freedom of navigation? 



A. I'm not going to speculate on 
what they're doing or why they're doing 
it. Obviously, they want to play a role in 
the gulf. But as far as we're concerned, 
this oil flows to the West, and we are 
perfectly capable of keeping these inter- 
national waterways open. And we will 
defend that principle as it says in the 
statement. 

Q. On the subject of the East- West 
statement, why is there no specific 
endorsement — or mention even — of the 
U.S. position on INF? The subject is 
completely glossed over. Is this a 
lukewarm statement? 

A. No, the statement welcomes the 
U.S. positions in Geneva. And as far as 
INF is concerned, of course, that's 
basically something handled in our con- 
sultations with our NATO allies, but we 
talked about it a great deal with all the 
countries, including Japan. And I think 
by and large as far as the LRINF, the 
SRINF, the effort we're making in 
verification and so on, everybody is 
basically on board. But we'll want to go 
through that carefully in Reykjavik. And 
the President will make his decision on 
what our position will be in Geneva. But 
it actually— as I said in my opening 
statement— it's going very well. And 
this, I think we have to put down as an 
example of a very important success. 

Starting back in 1979—1 might say a 
bipartisan success and a multinational 
success— starting in 1979, with a dual- 
track decision which said to the Soviet 
Union: Take out your SS-20s, and we're 
ready to bargain with you about that. 
And if you don't, we will deploy. 

And we did bargain. And we did 
deploy. And they bullied and tried hard 
to prevent that deployment, but the 
alliance went ahead and deployed. They 
walked out of the bargaining. They said 
they wouldn't come back until we took 
the missiles out. We kept on with our 
deployment schedule. The cohesion, the 
strength of the alliance was evident. So 
they came back to the bargaining table, 
and now an agreement hasn't been 
reached yet, but it is very clearly possi- 
ble that it is completely in line with our 
objectives, both in the long-range and 
short-range INF missiles. So this is a 
stunning success for a strategy of 
strength, realism, and readiness to 
negotiate— it works. You can see it. 



Q. How are you going to resolve 
the issue of conventional forces as 
they relate to the INF response, as 
was brought out — the difficulties, as 
they were brought out at the dinner 
last night between Britain and 
Germany? 

A. There are lots of different prob- 
lems in the strategy that is referred to in 
this statement of seeking to maintain 
our strength and our capacity to deter 
aggression in.sofar as it is possible at 
lower and lower levels of armaments. So 
you take it a piece at a time, but you 
have in your mind the way the pieces 
relate to each other. One piece is INF. 
It's an important piece, but it's only a 
piece. There is nothing about conven- 
tional arms in INF. That is about certain 
classes of missiles. 

As you imagine, a world with a 
somewhat lesser— not much less, but a 
little less as a result of the INF— nuclear 
missilery, it obviously highlights not only 
the importance of doing something about 
the conventional arms asymmetry but 
also about chemical weapons. And that is 
said explicitly in here. Of course, it also 
highlights the importance of getting the 
strategic arms, which are much more 
numerous and very threatening. We 
want to work on START [strategic arms 
reduction talks]. 

There is an integrated set here. It's 
very much in people's minds, and we 
deal with one problem, we recognize the 
others. The importance of conventional 
arms has been highlighted in NATO 
discussions, and I expect that it will be 
again, and it's highlighted in the 
communique. 

Q. With all due respect, the com- 
munique does not endorse the U.S. 
positions in Geneva. It doesn't even 
make mention of Geneva, and it only 
talks about U.S. efforts to negotiate 
and, in fact, praises the dialogue that 
is continuing. It seems to me that after 
the discussion last night, the people 
here in Venice were more concerned 
with Gorbachev's changes in policy 
and so on — a lot of discussion of 
that— and not so interested in specific 
U.S. position on medium-range 
missiles and short-range missiles. 

A. We have talked about the INF 
problem endlessly. We see this process 



\ugust 1987 



working; there's nothing to argue about 
with respect to INF as such. There are 
the other aspects of the arms control pic- 
ture which are referred to in the state- 
ment, and I thinl< it's very strong and 
supportive and clear. The fact that the 
heads spent a lot of time among them- 
selves talking about what is going on in 
a direct, realistic, informed way is the 
kind of thing, if it can happen in a 
meeting like this, that I think is very 
good. 

It's just the kind of thing you hope 
will happen. That these people who have 
the responsibility for leadership in the 
free world sit down and they talk to each 
other candidly as human beings about 
what's going on over there. And they 
are realistic enough to say, "Yes, there 
are problems. Yes, there are changes. 
We're interested in those changes." 
And, "What do you think about them?" 
and so on— that kind of sharing of infor- 
mation. It's exactly what these kind of 
meetings are for, and it's working very 
well. 

Q. Following up on the European 
concerns about conventional and tac- 
tical nuclear weapons, were you able 
to give the Europeans any assurances 
or tell us of any plans to seek any kind 
of commitment from the Soviet tJnion 
about a date, for instance, for new 
kinds of talks? I understand it won't 
be related to the INF agreement, but 
what are your plans for these next 
steps that you're describing? 

A. The subject of conventional arms 
is one that we've been discussing in 
NATO, and the concept of an Atlantic- 
to-the-Urals scope which was proposed 
by us has been accepted as "the scope 
concept." And we are working to find 
the right kind of procedure to use in pro- 
ceeding. I expect that we'll continue the 
discussion of that in Reykjavik. But I'm 
sure that a forum will be produced that 
will discuss conventional arms, given 
that concept, probably out of the Vienna 
CSCE [Conference on Security and 
Cooperation in Europe] meeting. There 
will also be a continuing effort in what is 
called "CDE" [Conference on Security- 
and Confidence-Building Measures and 
Disarmament in Europe], that is the sort 
of thing discussed in Stockholm, as well 
as, of course, within CSCE, the major 



emphasis on human rights. And it's very 
important to keep that subject on the 
front burner. These subjects work them- 
selves along, and we struggle, and we 
want to get it done right, and that's 
what we're in the process of doing. 

Q. Given what happened to the 
U.S.S. Stark not too long ago, one 
wonders why there wasn't from the 
allies an expression of support for the 
American policies that the American 
military held in the Persian Gulf. 

A. With respect to the Stark, of 
course, the President has received, and I 
have received from my counterparts, 
very strong support of— letters and let- 
ters of condolence. And I think the fact 
that the President asserted our deter- 
mination to continue doing what we're 
doing there was very much welcomed 
and all of that has been said. It's very 
personal and, of course, these tragedies 
touch everybody. We feel it and so do 
our friends and they are very 
sympathetic. 

Q. Why was there no recognition 
of American policies in the gulf, given 
what we are doing there in expanding 
our participation— 

A. I think that the statement is a 
recognition of exactly what we've been 
saying. It's a recognition of the fact, this 
is important. It's got to be done. There's 
a principle here. There's the basic oil 
here. The United States is there. So are 
other countries. We need to work at it 
through looking hard at the Iran-Iraq 
war. All of those things are there, and I 
think it's exactly what you would want 
to have. 

Q. Was there any discussion or 
any mention of U.S. arms sales to 
Iran? And can you tell us if any of the 
countries here now sell arms to Iran? 

A. There was no mention that I 
heard— or have heard of— of our arms 
sales to Iran and the problems that 
we're having. People didn't bring that 
up and, as far as our friends around the 
world are concerned, they hope we get 
that problem out of the way, and they're 
interested in where we go from here as 
illustrated by these statements. That's 
where their focuses of attention are. 



Q. Are any of the countries which 
have been involved in this summit now 
selling arms to Iran? 

A. Not that I know of. 

Q. Could you explain why the 
leaders did not discuss the Persian 
Gulf at all at dinner last night, given 
the statement that was put out today 
and the extent to which it has been a 
topical issue? 

A. It was discussed in the various 
bilaterals, and it was discussed in other 
meetings and discussed by the heads thi 
morning. Why they didn't talk about it 
last night? I don't know; I wasn't pres- 
ent. But as I have had the meeting 
described to me by the President, they 
got going on the subject of comparing 
notes on what's going on in the Soviet 
Union and Mr. Gorbachev and so on. It' 
a very interesting subject and it sort of 
carried through. There were various 
other things that they talked about, and 
that's the sort of thing that happens 
sometimes at a meeting. It isn't as 
though somebody's got an agenda at a 
dinner and says, "Wait a minute, one, 
two, three, four, five." These are heads 
of state. They come together periodicall 
and they want to talk to each other 
about these things and they did. It's 
working fine. 

Q. Why do you think there's some 
prospect of success with the UN 
Security Council of resolution when 
the nation that provides the Silkworn; 
is a member of the Security Council 
and has the veto power there? 

A. Whether we will be successful, I 
don't know, but we are going to work a 
it, try at it, and call the strategy 
involved to everyone's attention, all the 
countries involved. Maybe there comes ; 
time when people say we've got to pitch 
in and do this. I can't speak for the oth€ 
countries, but I think we're in a very 
strong position, coming out of this 
meeting, to go to the United Nations in 
very powerful way— and it isn't only the 
permanent members of the Security 
Council which are talking here, it's also 
other countries that count for a lot in tb 
world and the European Community 
represented here, and so on. 

I think that we just have more push 
on the subject. That doesn't mean that 
we'll necessarily succeed because there 



Department of State Bullet! 



ECONOMIC SUMMIT 
VENICE 1987 




President Reagan with Prime Minister Fanfani at the welcoming ceremony. 



IS been a reluctance. But you never 
low when you break through things, 
's important to keep working at it 
icause this Iran-Iraq war has been 
)ing on for some 6 or 7 years now. The 
imber of people who have been killed 
id injured is way over a million. It's a 
■ry bloody, disheartening thing to have 
)ing on on this planet. You can't help 
It want to see it end. 

It does have its spillover effect which 
e're contending with. But I think that, 
some point, somebody needs to blow 
le whistle on this thing and that's what 
e're trying to do. 

Q. Will you just tell us about 
lliott Abrams [Assistant Secretary 



for Inter-American Affairs]? How can 
you keep him on? How you can keep 
him on after he misled Congress? 

A. For this reason. Elliott Abrams 
has been doing and is now doing an 
extraordinarily difficult job with great 
energy, with great skill, and with great 
dedication. It's a hard job, that job of 
Assistant Secretary, and he drives him- 
self, and he has accomplished a great 
deal. So he's done well. 

He made a mistake. He failed to dis- 
close a solicitation he knew about and 
had made in a setting where he very 
quickly realized afterward that he should 
have. And he went back and corrected 
that mistake long before these hearings 
took place. So I think that that mistake 



doesn't change the quality of the work 
that he's done. It doesn't change the 
importance— at least as I judge it and he 
judges it and the President judges it, as 
a majority of the Senate and House 
judged it last year when they voted. 

To support people who are willing to 
fight for freedom and independence in 
Nicaragua and to work hard through 
that route, through the negotiating 
route, through other means that we can 
find to try to find our way to a more 
stable situation in Central America— 
that's what Elliott Abrams has dedicated 
himself to. And that's what we're trying 
to achieve. 



ugust 1987 



It is very apparent that as long as 
you have a totalitarian, Soviet- 
dominated regime in Nicaragua, you're 
not going to have peace and stability in 
Central America. Elliott has dedicated 
himself to that job. He's been doing it 
with great skill and energy. It is that 
effort and the determination involved in 
it, that is why I support Elliott Abrams. 
He's doing very well. 

Q. If they don't trust him, how can 
he be effective? 

Q. You didn't mention that among 
his mistakes and he's acknowledged it. 

A. I can't even hear your question. 
He is effective at doing what he's doing. 
He made a mistake. He said he made a 
mistake. And I think people can reflect 
on that a little bit and let a little time 
pass and reflect also on the things that 
he's done that are the hard, energetic 
efforts of a very patriotic American and 
a tremendous public servant. This is a 
good man. 

Q. Are you the only one in the 
Administration who supports him? 

A. The Administration supports him 
from top to bottom. And that's been 
made clear. 

Q. Is he going to obey the law 
from now on? 

A. Elliott Abrams has violated no 
laws. He made a mistake in his response 
or lack of response to a question which 
he corrected. He has not violated any 
laws. 



Statement on 

Political Issues, 
June 10, 1987 



The Venice summit has provided us with the 
opportunity for a useful exchange of views on 
the main international political issues of the 
moment. Our discussions took place in the 
same spirit of constructive cooperation which 
inspired yesterday's statements on East- West 
relations, the gulf conflict and terrorism and 
confirmed a significant unity of approaches. 
In the field of East- West relations, par- 
ticular attention was paid to a number of 
regional issues. 



On the subject of Afghanistan, emphasis 
was placed once again on the need to keep up 
pressure so that the Afghan people can very 
soon determine their own future in a country 
no longer subject to external military 
occupation. 

It was noted that the presence in Kam- 
puchea of foreign troops continues to be an 
obstacle to the peace and tranquillity of 
South-East Asia. 

In the Pacific, newly independent island 
states are faced with difficult economic situa- 
tions. We have stressed the need to support 
their development process in conditions of 
complete freedom from outside political 
interference. 

In Asia, we agreed that particular atten- 
tion should be paid to the efforts for economic 
reform undertaken by China. We reviewed 
the situation in the Korean Peninsula, in the 
belief that the next Olympic Games may 
create a climate favourable to the develop- 
ment of a more open dialogue between North 
and South. In the Philippines, the democratic 
government is involved in a courageous 
attempt at economic and social renewal which 
deserves our support. 

As regards Africa— a continent with enor- 
mous potentialities but facing extremely 
serious economic, social and poHtical 
problems— we viewed the situation in South 
Africa with particular concern. We agreed 
that a peaceful and lasting solution can only 
be found to the present crisis if the apartheid 
regime is dismantled and replaced by a new 
form of democratic, non-racial government. 
There is an urgent need, therefore, to begin a 
genuine dialogue with the representatives of 
all the components of South African society. 
At the same time, we noted the importance of 
humanitarian assistance initiatives for the vic- 
tims of apartheid and of supporting the 
efforts by SADCC [Southern African 
Development Coordination Conference] 
member states to develop and strengthen 
their own economies. 

Serious concern was expressed at the con- 
tinuing dangerous tensions and conflicts in 
the Near and Middle East and at the absence 
of concrete progress toward a solution to the 
Arab-Israeli dispute. The need for action to 
create conditions for a just, global and lasting 
peace was reaffirmed. 

Concern was also expressed at the situa- 
tion in the occupied territories. 

The situation in Lebanon, with its serious 
internal tensions and the persisting problem 
of the Palestinian camps, continues to give 
cause for concern. In this connection, we reaf- 
firmed our hope that genuine efforts be made 
towards national reconciliation. 



With regard to Latin America, the discu jiJ 
sion highlighted the need to promote appro- H 
priate initiatives aimed at supporting 
democratic governments and encouraging tl 
return to democracy and its consolidation 
throughout the continent. There was also 
agreement that efforts toward regional inte 
gration will help open up a fruitful and con- 
structive dialogue with the West: they, ther 
fore, deserve support. 

With regard to developments in Central 
America, it is hoped that the forthcoming 
summit to be held in Guatemala can play a 
positive role in paving the way to peace and) 
stability. 

Finally, we turned to the problems of tlf 
LInited Nations Organizations and, in par- 
ticular to its current financial difficulties an 
considered possible ways of overcoming the 



Statement on AIDS, 
June 10, 1987 



On the basis of the concern already shown : 
the past for health problems (London chair- 
man's oral statement on cancer and Bonn 
chairman's oral statement on drugs), the 
Heads of State or Government and the 
representatives of the European Communil 
affirm that AIDS [acquired immune defi- 
ciency syndrome] is one of the biggest pote 
tial health problems in the world. National 
efforts need to be intensified and made mo 
effective by international cooperation and 
concerted campaigns to prevent AIDS fron 
spreading further and will have to ensure t 
the measures taken are in accordance with 
the principles of human rights. In this conn 
tion, they agree that: 

• International cooperation will not be 
improved by duplication of effort. Priority 
will have to be given to strengthening exist 
ing organizations by giving them full politic 
support and by providing them with the 
necessary financial, personnel and adminis 
trative resources. The World Health Organ 
zation (WHO) is the best forum for drawing 
together international efforts on a worldwi 
level to combat AIDS, and all countries 
should be encouraged fully to cooperate wil 
the WHO and support its special program < 
AIDS-related activities. 

• In the absence of a vaccine or cure, t 
best hope for the combat and prevention of 
AIDS rests on a strategy based on educatir 
the public about the seriousness of the AID 



10 



ECONOMIC SUMMIT 
VENICE 1987 



i()ideniic, the ways the AIDS virus is trans- 
.'itted and the practical steps each person 
I in take to avoid acquiring or spreading it. 
ippropriate opportunities should be used for 
I'xhanging information about national educa- 
m campaigns and domestic policies. The 
;ieads of State or Government and the 
■presentatives of the European Community 
■elcome the proposal by the U.K. govern- 
ent to co-sponsor, with the WHO, an inter- 
itinnal conference at ministerial level on 
iblic education about AIDS. 

• Further cooperation should be pro- 
ottd for basic and clinical studies on preven- 
'11. treatment and the exchange of informa- 
on (as in the case of the EC program). The 
eads of State or Government and the 
■presentatives of the European Community 
I elcome and support joint action by 
■searchers in the seven countries (as in the 
ise of the joint program of French and 
merican researchers, which is being 
ilarged, and similar programs) and all over 
le world for the cure of the disease, clinical 
•sting on components of the virus and the 
^velopment of a successful vaccine. The 
eads of State or Government and the 
■presentatives of the European Community 
elcome the proposal by the president of the 
rench Republic aiming at the creation of an 
iternational committee on the ethical issues 
lised by AIDS. 



Jtatement on Drugs, 
lune 10, 1987 



'he Heads of State or Government have 
xamined the drug abuse problem, which 
auses a tragic loss of human life and now af- 
ects people all over the world, especially the 
oung and their families. They emphasize the 
mportance of undertaking a strategy in sup- 
lort of national, regional and multilateral 
ampaigns in order to overcome this problem, 
"hey intend to continue their fight against 
llegal production and distribution of drugs 
ind to create all necessary conditions for 
nore effective international cooperation, 
'hey will also work for the eradication of 
llegal cultivation of natural drugs and for its 
eplacement with other types of production 
I'hich will further the aims of social and 
conomic development. The leaders welcome 
he agreements already reached on bilateral 
nd multilateral bases, and look forward with 
onfidence to a successful International Con- 
erence on Drug Abuse and Illicit Trafficking, 
'hich the United Nations is convening next 
^eek in Vienna. 



Economic Declaration, 
June 10, 1987 



Introduction 

1. We, the Heads of State or Government of 
the seven major industrialized countries and 
the representatives of the European Com- 
munity, have met in Venice from 8 to 10 June 
1987, to review the progress that our coun- 
tries have made, individually and collectively, 
in carrying out the policies to which we com-' 
mitted ourselves at earlier summits. We 
remain determined to pursue these policies 
for growth, stability, employment and pros- 
perity for our own countries and for the world 
economy. 

2. We can look back on a number of 
positive developments since we met a year 
ago. Growth is continuing into its fifth con- 
secutive year, albeit at lower rates. Average 
inflation rates have come down. Interest 
rates have generally declined. Changes have 
occurred in relationships among leading cur- 
rencies which over time will contribute to a 
more sustainable pattern of current account 
positions and have brought exchange rates 
within ranges broadly consistent with 
economic fundamentals. In volume terms, the 
adjustment of trade flows is under way, 
although in nominal terms imbalances so far 
remain too large. 



Macroeconomic Policies and 
Exchange Rates 

3. Since Tokyo, the summit countries have 
intensified their economic policy coordination 
with a view to ensuring internal consistency 
of domestic policies and their international 
compatibility. This is essential to achieving 
stronger and sustained global growth, 
reduced external imbalances and more stable 
exchange rate relationships. Given the policy 
agreements reached at the Louvre and in 
Washington, further substantial shifts in 
exchange rates could prove counterproductive 
to efforts to increase growth and facilitate 
adjustment. We reaffirm our commitment to 
the swift and full implementation of those 
agreements. 

4. We now need to overcome the prob- 
lems that nevertheless remain in some of our 
countries: external imbalances that are still 
large; persistently high unemployment; large 
public sector deficits; and high levels of real 
interest rates. There are also continuing 
trade restrictions and increased protectionist 
pressures, persistent weakness of many 



primary commodity markets and reduced 
prospects for developing countries to grow, 
find the markets they need and service their 
foreign debt. 

5. The correction of external imbalances 
will be a long and difficult process. Exchange 
rate changes alone will not solve the problem 
of correcting these imbalances while sustain- 
ing growth. Surplus countries will design 
their policies to strengthen domestic demand 
and reduce external surpluses while maintain- 
ing price stability. Deficit countries, while 
following policies designed to encourage 
steady low-inflation growth, will reduce their 
fiscal and external imbalances. 

6. We call on other industrial countries to 
participate in the effort to sustain economic 
activity worldwide. We also call on newly 
industrialized economies with rapid growth 
and large external surpluses to assume 
greater responsibility for preserving an open 
world trading system by reducing trade bar- 
riers and pursuing policies that allow their 
currencies more fully to reflect underlying 
fundamentals. 

7. Among the summit countries, budgetary 
discipline remains an important medium-term 
objective and the reduction of existing public 
sector imbalances a necessity for a number of 
them. Those summit countries which have 
made significant progress in fiscal consolida- 
tion and have large external surpluses remain 
committed to following fiscal and monetary 
policies designed to strengthen domestic 
growth, within a framework of medium-term 
fiscal objectives. Monetary policy should also 
support non-inflationary growth and foster 
stability of exchange rates. In view of the 
outlook for low inflation in many countries, a 
further market-led decline of interest rates 
would be helpful. 

Structural Policies 

We also agree on the need for effective struc- 
tural policies especially for creating jobs. To 
this end we shall: 

• Promote competition in order to speed 
up industrial adjustment; 

• Reduce major imbalances between 
agricultural supply and demand; 

• Facilitate job creating investment; 

• Improve the functioning of labor 
markets; 

• Promote the further opening of internal 
markets; 

• Encourage the elimination of capital 
market imperfections and restrictions and the 
improvement of the functioning of interna- 
tional financial markets. 



ugust 1987 



11 



Multilateral Surveillance and Policy 
Coordination 

9. We warmly welcome the progress achieved 
by the Group of Seven finance ministers in 
developing and implementing strengthened 
arrangements for multilateral surveillance 
and economic coordination as called for in 
Tokyo last year. The new process of coordina- 
tion, involving the use of economic indicators, 
will enhance efforts to achieve more consist- 
ent and mutually compatible policies by our 
countries. 

10. The Heads of State or Government 
reaffirm the important policy commitments 
and undertakings adopted at the Louvre and 
Washington meetings of the Group of Seven, 
including those relating to exchange rates. 
They agree that, if in the future world 
economic growth is insufficient, additional 
actions will be required to achieve their com- 
mon objectives. Accordingly, they call on 
their finance ministers to develop, if 
necessary, additional appropriate policy 
measures for this purpose and to continue to 
cooperate closely to foster stability of 
exchange rates. 

11. The coordination of economic policies 
is an ongoing process which will evolve and 
become more effective over time. The Heads 
of State or Government endorse the under- 
standings reached by the Group of Seven 
finance ministers to strengthen, with the 
assistance of the International Monetary 
Fund (IMF), the surveillance of their 
economies using economic indicators includ- 
ing exchange rates, in particular by: 

• The commitment by each country to 
develop medium-term objectives and projec- 
tions for its economy, and for the group to 
develop objectives and projections, that are 
mutually consistent both individually and col- 
lectively; and 

• The use of performance indicators to 
review and assess current economic trends 
and to determine whether there are signifi- 
cant deviations from an intended course that 
require consideration of remedial actions. 

12. The Heads of State or Government 
consider these measures important steps 
towards promoting sustained non-inflationary 
global growth and greater currency stability. 
They call upon the Group of Seven finance 
ministers and Central Bank governors to: 

• Intensify their coordination efforts with 
a view to achieving prompt and effective 
implementation of the agreed policy under- 
takings and commitments; 

• Monitor economic developments closely 
in cooperation with the managing director of 
the IMF; and 

• Consider further improvements as 
appropriate to make the coordination process 
more effective. 




■t 



ff 



ifri 



President Reagan with Treasury Secretary James A. Baker, III, and 
Secretary Shultz during the summit. 



Iict 



Trade 

13. We note rising protectionist pressures 
with grave concern. The Uruguay Round can 
play an important role in maintaining and 
strengthening the multilateral trading 
system, and achieving increased liberalization 
of trade for the Isenefit of all countries. 
Recognizing the interrelationship among 
growth, trade and development, it is essential 
to improve the multilateral system based on 
the principles and rules of the General Agree- 
ment on Tariffs and principles and rules of 
the General Agreement on Tariffs and Trade 
(GATT) and bring about a wider coverage of 
world trade under agreed, effective and en- 
forceable multilateral discipline. Protectionist 
actions would be counterproductive, would in- 
crease the risk of further exchange rate in- 
stability and would exacerbate the problems 
of development and indebtedness. 

14. We endorse fully the commitment to 
adopt appropriate measures in compliance 
with the principles of stand-still and rollback 
which have been reaffirmed in the ministerial 
declaration on the Uruguay Round. It is 
important to establish in the GATT a multi- 
lateral framework of principles and rules for 
trade in services, trade-related investment 
measures and intellectual property rights. 



This extension of the multilateral trading 
system would also be beneficial to developing 
countries in fostering growth and enhancing 
trade, investment and technology transfers. 

15. Basing ourselves on the ministerial 
declaration on the Uruguay Round and on the 
principles of the GATT, we call on all con- 
tracting parties to negotiate comprehensively, 
in good faith and with all due dispatch, with a 
view to ensuring mutual advantage and 
increased benefits to all participants. Canada, 
Japan, the United States and the European 
Community will table a wide range of sub- 
stantive proposals in Geneva over the coming 
months. Progress in the Uruguay Round will 
be kept under close political review. In this 
context the launching, the conduct and the 
implementation of the outcome of the negotia- 
tions should be treated as parts of a single 
undertaking; however, agreements reached at 
an early stage might be implemented on a 
provisional or definitive basis by agreement 
prior to the formal conclusion of the negotia- 
tions, and should be taken into account in 
assessing the overall balance of the 
negotiations. 

16. A strong, credible, working GATT is 
essential to the well-being of all trading coun- 
tries and is the best bulwark against mount- 
ing bilateral protectionist pressures. The 



12 



Department of State BulletiJ 



ECONOMIC SUMMIT 
VENICE 1987 



inctioning of the GATT should be improved 
iinuijh enhancing its role in maintaining an 
lull multilateral system and its ability to 
lanajie disputes; and through ensuring bet- 
?r coordination between the GATT and the 
■MF and the World Bank. We consider that it 
■ould be useful to have, as appropriate, in the 
lurse of the negotiations, a meeting of the 
radt' Negotiating Committee at the 
linisterial level. 

.griculture 

7. At Tokyo we recognized the serious 
ature of the agricultural problem. We 
greed that the structure of agricultural pro- 
uction needed to be adjusted in the light of 
'orld demand and expressed our determina- 
1111 to give full support to the work of the 
'ECU [Organization for Economic Coopera- 
on and Development] in this field. In doing 
1, we all recognized the importance of 
griculture to the well-being of our rural com- 
I lunities. In the past year, we have actively 
ursued the approach outlined at Tokyo, and 
•e take satisfaction from the agreement in 
le ministerial declaration adopted in Punta 
el Este on the objectives for the negotiations 
n agriculture in the Uruguay Round. 

18. We reaffirm our commitment to the 
nportant agreement on agriculture set out in 
ie OECD ministerial communique of May 13, 
987; in particular, the statement of the scope 

! nd urgency of the problem which require 
lat a concerted reform of agricultural 

' olicies be implemented in a balanced and 
exible manner; the assessment of the grave 
nplications, for developed and developing 
ountries alike, of the growing imbalances in 
upply of and demand for the main agricul- 
ural products; the acknowledgment of shared 

' esponsibility for the problems as well as for 
heir equitable, effective and durable resolu- 
ion; the principles of reform and the action 
equired. The long-term objective is to allow 
larket signals to influence the orientation of 
gricultural production, by way of a progres- 
ive and concerted reduction of agricultural 
upport, as well as by all other appropriate 
neans, giving consideration to social and 
'ther concerns, such as food security, envi- 
on mental protection and overall 
■mployment. 

19. We underscore our commitment to 
vork in concert to achieve the necessary ad- 
ustments of agricultural policies, both at 
lome and through comprehensive negotia- 

« ions in the Uruguay Round. In this as in 
ither fields, we will table comprehensive pro- 
losals for negotiations in the coming months 
hf conducted in accordance with the man- 

'iate in the ministerial declaration, and we 
ntend to review at our next meeting the 
iriiyi-ess achieved and the tasks that remain. 



20. In the meantime, in order to create a 
climate of greater confidence which would 
enhance the prospect for rapid progress in 
the Uruguay Round as a whole and as a step 
towards the long-term result to be expected 
from those negotiations, we have agreed, and 
call upon other countries to agree, to refrain 
from actions which, by further stimulating 
production of agricultural commodities in 
surplus, increasing protection or destabilizing 
world markets, would worsen the negotiating 
climate and, more generally, damage trade 
relations. 

Developing Countries and Debt 

21. We attach particular importance to 
fostering stable economic progress in develop- 
ing countries, with all their diverse situations 
and needs. The problems of many heavily 
indebted developing countries are a cause of 
economic and political concern and can be a 
threat to political stability in countries with 
democratic regimes. We salute the coura- 
geous efforts of many of these countries to 
achieve economic growth and stability. 

22. We underline the continuing impor- 
tance of official development assistance and 
welcome the increased efforts of some of our 
countries in this respect. We recall the target 
already established by international organiza- 
tions (0.7 percent) for the future level of 
official development assistance and we take 
note that overall financial flows are important 
to development. We strongly support the 
activities of international financial institu- 
tions, including those regional development 
banks which foster policy reforms by bor- 
rowers and finance their programs of struc- 
tural adjustment. In particular: 

• We support the central role of the IMF 
through its advice and financing and encour- 
age closer cooperation between the IMF and 
the World Bank, especially in their structural 
adjustment lending. 

• We note with satisfaction the contribu- 
tion made by the eighth replenishment of the 
International Development Association (IDA). 

• We support a general capital increase 
of the World Bank when justified by 
increased demand for quality lending, by its 
expanded role in the debt strategy and by the 
necessity to maintain the financial stability of 
the institution; 

• In the light of the difference of contribu- 
tions of our countries to official development 
assistance, we welcome the recent initiative 
of the Japanese Government in bringing for- 
ward a new scheme which will increase the 
provision of resources from Japan to develop- 
ing countries. 

23. For the major middle-income debtors, 
we continue to support the present growth- 
oriented case-by-case strategy. Three 



elements are needed to strengthen the 
growth prospects of debtor countries: the 
adoption of comprehensive macroeconomic 
and structural reforms by debtor countries 
themselves; the enhancement of lending by 
international financial institutions, in par- 
ticular the World Bank; and adequate com- 
mercial bank lending in support of debtor 
country reforms. We shall play our part by 
helping to sustain growth and expand trade. 
A number of debt agreements have allowed 
some resumption of growth, correction of 
imbalances, and significant progress in restor- 
ing the creditworthiness of some countries. 
But some still lack adequate policies for struc- 
tural adjustment and growth designed to 
encourage the efficient use of domestic sav- 
ings, the repatriation of flight capital, 
increased flows of foreign direct investment 
and, in particular, reforms of financial 
markets. 

24. There is equally a need for timely and 
effective mobilization of lending by commer- 
cial banks. In this context, we support efforts 
by commercial banks and debtor countries to 
develop a "menu" of alternative negotiating 
procedures and financing techniques for pro- 
viding continuing support to debtor countries. 

25. Measures should be taken, particu- 
larly by debtor countries, to facilitate non- 
debt-creating capital flows, especially direct 
investment. In this connection, the 
Multilateral Investment Guarantee Agency 
(MIGA) should begin to serve its objectives as 
soon as possible. It is important to maintain 
flexibility on the part of export credit agen- 
cies in promptly resuming or increasing cover 
for countries that are implementing com- 
prehensive adjustment programs. 

26. We recognize the problems of 
developing countries whose economies are 
solely or predominantly dependent on exports 
of primary commodities, the prices of which 
are persistently depressed. It is important 
that the functioning of commodity markets 
should be improved, for example through bet- 
ter information and greater transparency. 
Further diversification of these economies 
should be encouraged, with the help of the in- 
ternational financial institutions, through 
policies to support their efforts for improved 
processing of their products, to expand oppor- 
tunities through market access liberalization 
and to strengthen the international environ- 
ment for structural change. 

27. We recognize that the problems of 
some of the poorest countries, primarily in 
sub-Saharan Africa, are uniquely difficult and 
need special treatment. These countries are 
characterized by such features as acute 
poverty, limited resources to invest in their 
own development, unmanageable debt 
burdens, heavy reliance on one or two com- 
modities and the fact that their debt is owed 



August 1987 



13 



for the most part to governments of indus- 
trialized countries themselves or to interna- 
tional financial institutions. For those of the 
poorest countries that are undertaking adjust- 
ment effort, consideration should be given to 
the possibility of applying lower interest rates 
to their existing delit, and agreement should 
be reached, especially in the Paris Club, on 
longer repayment and grace periods to ease 
the debt service burden. We welcome the 
various proposals made in this area by some 
of us and also the proposal by the managing 
director of the IMF for a significant increase 
in the resources of the Structural Adjustment 
Facility over the three years from January 1, 
1988. We urge a conclusion on discussions on 
these proposals within this year. 

28. We note that UNCTAD VII [UN Con- 
ference on Trade and Development] provides 
an opportunity for a discussion with develop- 
ing countries with a view to arriving at a 
common perception of the major problems 
and policy issues in the world economy. 

Environment 

29. Further to our previous commitment to 
preserve a healthy environment and to pass it 
on to future generations, we welcome the 
report by the environment experts on the 
improvement and harmonization of tech- 
niques and practices of environmental 
measurement. Accordingly, we encourage the 
United Nations Environment Program 
(UNEP) to institute a forum for information 
exchange and consultation in cooperation 
with the International Organization for Stand- 
ardization (ISO) and the International Council 
of Scientific Union (ICSU), assisted by other 
interested international organizations and 
countries, so that continuing progress in this 
important field can be ensured. The experts 
in their report should receive full attention. 

30. We underline our own responsibility 
to encourage efforts to tackle effectively 
environmental problems of worldwide impact 
such as stratospheric ozone depletion, climate 
change, acid rains, endangered species, hazard- 
ous substances, air and water pollution and 
destruction of tropical forests. We also intend 
to examine further environmental issues such 
as stringent environmental standards as an 
incentive for innovation and for the develop- 
ment of clean, cost-effective and low-resource 
technology as well as promotion of interna- 
tional trade in low-pollution products, low- 
polluting Industrial plants and other environ- 
mental protection technologies. 

31. We welcome the important progress 
achieved since Tokyo, particularly in the 



14 



International Atomic Energy Agency, in 
enhancing effective international cooperation, 
with regard to safety in the management of 
nuclear energy. 

Other Issues 

32. We welcome the initiative of the Human 
Frontier Science Program presented by 
Japan, which is aimed at promoting, through 
international cooperation, basic research on 
biological functions. We are grateful for the 
informal opportunities our scientists have had 
to take part in some of the discussions of the 
feasibility study undertaken by Japan. We 
note that this study will be continued, and we 
would be pleased to be kept informed about 
its progress. 

33. We welcome the positive contribution 
made by the Conference of High Level 
Experts on the future role of education in our 
society, held in Kyoto in January 1987. 

34. We shall continue to review the 
ethical implications of developments in the 
life sciences. Following the conferences spon- 
sored by summit governments— by Japan in 
1984, by France in 198.5, by the Federal 
Republic of Germany in 1986 and by Canada 
in 1987— we welcome the Italian Govern- 
ment's offer to host the next bioethics con- 
ference in Italy in April, 1988. 

Next Economic Summit 

35. We have agreed to meet again next year 
and have accepted the invitation of the Cana- 
dian Prime Minister to meet in Canada. 



President's 

News Conference, 
June 11, 19876 



I have an opening statement first. I'd 
like to begin by serving as a sort of unof- 
ficial spokesman for all of us who've 
been here this week. I'm sure we all 
agree our stay in Venice has been com- 
fortable and productive, and I want to 
express our thanks to the Italian 
Government and especially the people of 
this lovely and historic city. 

Although this may come as a partial 
surprise to some, this has been a summit 
on economic issues. For all the attention 
certain international developments have 
received, I think important steps were 
taken in the economic sphere. "The sum- 
mit seven have put the capstone on a 



new process for enhanced cooperation 
and coordination and have agreed jointly 
to take the policy steps necessary to 
assure sufficient world growth. 

Implicit in all of this is our common 
commitment to principles that mark a 
turning point in public policy. I refer 
here to our growing desire to seek 
economic growth and opportunity 
through less government and more per- 
sonal freedom. And we've seen two 
direct applications of these principles at 
this summit. First, our resolve to work 
together against protectionism by cor- 
recting the imbalances which are the 
real cause of our trade deficit— trade 
barriers and protectionism can only 
bring about contraction of international 
markets and a slowing of economic 
growth. And second, we've taken fur- 
ther steps toward reducing government 
subsidization of agriculture and moving 
toward a day when market signals deter- 
mine the supply and demand. 

I said last year that the Tokyo sum- 
mit was one of the most successful I'd 
attended, because we had launched new 
initiatives in the areas of trade, 
agriculture, and economic policy coor- 
dination. If that's the case, then Venice 
must be seen as going one better, 
because it put form, substance, and 
institutional framework on those ini- 
tiatives and locked in a process which 
will better enable us to navigate the 
dynamic new world of international 
economics. 

Let me add that, in addition to these 
economic matters, we also had an 
opportunity to deal with two other press- 
ing international issues. First, I'm 
pleased with the support our allies have 
shown for a united position in the Per- 
sian Gulf. Actually, a commitment to 
keeping the sealanes open in that area is 
a vital strategic objective. As many of 
you know, America's allies have a very 
sizeable presence in the gulf. Great Brit- 
ain, for example, has nearly 18% of its 
naval vessels committed there and has 
escorted more than a hundred ships 
since the beginning of this year through 
the strait. France, too, has a strong 
naval commitment there. And all of our 
allies have reaffirmed their support for 
keeping the trade routes open, the oil 
flowing, and moving toward a negotiated 
resolution of the Iran-Iraq war. 



Department of State Bulletin 



if: 



ECONOMIC SUMMIT 
VENICE 1987 



As most of you also know, we're cur- 
'itly engaged in a highly sensitive 
^ciission with the Soviets that could 
mI ti) a historic arms reduction treaty 
; I'.S. and Soviet intermediate-range 
' ssilfs. Progress has been made here in 
\ nil c. And today and tomorrow Secre- 

v Shultz will be meeting with the 
HT( ) Foreign Ministers in Reykjavik, 
i 1)0 anxious to have his report about 
c ' views and recommendations of our 
3 es. I'm particularly grateful I had this 
: jortunity in Venice, not only to dis- 

;s these arms reduction efforts with 
; allies but to agree again on the 
I portance of reminding the Soviet 
I ion of the progress that needs to be 
r de in other arms negotiations, 
t lecially the reduction of strategic 

ei'continental nuclear forces. 
S(i, too, it's absolutely essential that 
■ iiiiUinue to seek progress from the 
; v'iets in the human rights area as well 
£ regional conflicts, especially 
J jhanistan. As we said in our state- 
I nt. the new expressions of openness 
1 m the Soviets are welcomed, but it's 
t le to see if their actions are as 
f thcoming. 

Q. Not to be a downer, but back 
I me in recent congressional hearings, 
i o key witnesses. General Secord and 
i bert Hakim, testified that they were 
I der the firm belief that Colonel 
I rth and the NSC [National Security 
( uneil] acted with your blessing and 
I der the full authority of you. Did 
1 ;y dream this up? 

A. However they got that 
i pression— and I've heard some of the 
t itimony, also, and so much of it was 
I irsay— one person saying about the 
c ler that I thought they had. I told you 
i the truth the first day after 
( srything hit the fan: that how we had 
( ened the negotiations that led to the 
t ngs that were going on there, having 
1 thing to do with the contras or the 
;' 'edom fighters in Nicaragua, and that 
• )rd had come to me that I had not been 
.,pt informed. So, evidently, maybe 
ne people were giving the impression 
It they were acting on orders from 
'. 1 wasn't giving those orders, 
cause no one had asked or had told me 
lat was truly happening there. 



Q. You took the oath twice to 
faithfully execute the laws of the 
United States. Do you think that the 
law barring direct or indirect military 
aid to the contras applied to you? 

A. I not only think it didn't, but I 
don't think that the law was broken. 
We're talking about a case of people 
who, on their own— individuals and 
groups in our country— sought to send 
aid to the freedom fighters. And this has 
gone on for quite a long time in other 
areas; we can go clear back to the Lin- 
coln Brigade in the Spanish Civil War. I 
did not solicit anyone ever to do that. I 
was aware that it must be going on, of 
course, but never solicited either coun- 
tries or the other, and would point to the 
law that is being cited— one of the five 
versions of the Boland amendment— that 
specifically suggested that the Secretary 
of State should solicit help from our 
friendly neighbors. 

Q. You knew nothing about 
Colonel North's involvement in send- 
ing these arms and all of these airlifts 
and the airstrip and so forth? 

A. No. 

Q. Has this summit and the 
expected arms endorsement by NATO 
ministers in Reykjavik increased pros- 
pects for a superpower summit this 
year? 

A. You trapped me a little bit there, 
because my long years in sports and 
sports announcing and all made me very 
superstitious about calling the pitcher as 
doing a no-hitter before the game was 
over. I hesitate to make optimistic 
statements— always have— but at the 
same time, I can't deny that I believe 
there is an increased opportunity for a 
summit conference and an increased 
opportunity for actual reductions of 
armaments, particularly of the nuclear 
kind. 

Q. We understand that prelim- 
inary talks are already underway to fix 
a date for a summit this year with Mr. 
Gorbachev. Can you tell us— would 
September be a good guess for that? 

A. I can't give you a guess. All I 
know is that we have made it plain that 
they have the invitation, and we're 
waiting for them. We believe that they 



should state what would be the most 
appropriate or easiest time for them. 

Q. Assistant Secretary of State 
Elliott Abrams repeatedly misled Con- 
gress, and yet Secretary of State 
Shultz says that he's a good man and 
he can keep his job. Is Shultz right? 
Can Elliott Abrams keep that job as 
long as he wants? 

A. I know the statement that was 
made by the Secretary of State, and that 
is the Administration's position. And I 
know the reference that you're making 
to the particular point in which he 
himself volunteered that he had made a 
misstatement, but I accept the 
Secretary's statement on this. 

Q. I'm not sure I understand. I 
mean, you're the President, and in the 
end, Mr. Abrams works for you. A cou- 
ple of specifics: He specifically misled 
Congress about whether or not he had 
solicited money from Brunei. He told 
Congress that that downed flyer. Gene 
Hasenfus,' had no tie to the U.S. 
Government. He did. I mean, you're 
the boss; are you comfortable with him 
working for you? 

A. I have told you that is the Admin- 
istration's position. 

Q. Before you came here, many 
people on Capitol Hill said that they 
wanted you to ask our allies to help 
with more physical help in the Persian 
Gulf, and many of your officials said 
that you would do that. Did you 
specifically ask any of the leaders to 
give us more help in the way of ships 
or money to keep the sealanes open in 
the Persian Gulf? 

A. We spoke of the need for having 
a kind of single approach to maintaining 
the international waters and so forth, 
and we're gratified completely by the 
response. I think it has been excellent 
that there was no criticism from any of 
our allies about this. And as I've said 
here in my opening statement, England 
and France which have forces there- 
two of the allies, it is true, are bound by 
their constitutions and could not do 
anything of that kind. But there was 
complete support for what we're trying 
to do, because they understood we're not 
trying to provoke any kind of hostility. 
We are trying to maintain peace, and 



jgust 1987 



15 



we're all solidly together in our desire to 
bring about an end to the Iran-Iraq war. 

Q. But if I may, I take it, then, the 
answer to my question is no. You did 
not specifically ask the allies for more 
physical help in the gulf. 

A. No, we were very satisfied with 
what they're prepared to do. 

Q. I'd like to turn to economics, 
since we are at an economic summit. 
Vd like to ask you if you discussed 
with Alan Greenspan, the next Chair- 
man of the Federal Reserve, the future 



course of interest rates. And in that 
discussion, or at anytime, have you 
agreed that you think they should 
remain low, or do you think perhaps 
they should rise in order to combat 
inflation and the fall of the dollar? 

A. Frankly, most of us believe that 
the dollar should remain stable. It could 
be within reason that there could still be 
some lowering of the value in relation to 
other currencies. But we do want to con- 
trol inflation, continue to control it. 
We've had a miraculous 50-odd months 
of bringing inflation down. Now there is 



something of a little surge again, in 
large part, precipitated by energy price; 
But I have perfect confidence in Alan 
Greenspan and his philosophy and that 
what he would do would be used to curb 
that and not let inflation get out of ham 
again. 

Q. Also at this summit, in a com- 
munique, there are three different 
references to the countries that have 
big federal deficits, that they should 
do more in order to reduce those 
deficits. What new initiative, new 




President Reagan takes questions from news correspondents during his news conference 
of June 11. 



16 



Department of State Bulle jji; 



ECONOMIC SUMMIT 
VENICE 1987 



pproaches, will you take to reduce 
le U.S. Federal budget deficit? 

A. I would like to continue and be 
lore successful with the old methods 
Kit we've been trying, and that is to 
)nvince the Congress of the United 
tates that our government is over- 
jending. Our total tax burden is 19% of 
ross national product, and our total 
sending is 24% of gross national prod- 
:t. Now, if you go back through history, 
3U will find that even in prosperous 
mes, and when deficits weren't large, 
)% was the tax burden. It is the spend- 
g that has gotten out of line. 

But I would also say that when this 
atter was mentioned in our discus- 
ons, and with regard to our very great 
1 ?ficit, our allies weren't aware that in 
)83 our deficit was 6.3% of gross 
^ itional product. Today it is only 3.9% 
' gross national product— that we have 
ade an 18% cut in that deficit this 
ear— $40 billion or more. Very likely 
e'll make something of the same size 
>xt year. But also they were interested 
learn that our deficit was much lower 
; a percentage if we used their method 
' counting. In the other countries, they 
,ke total government spending, and 
■ceipts; in our country, our deficit is 
st the Federal Government. But if we 
,ke into account Federal, State, and 
cal spending and taxing, our deficit is 
ily 2V2% of gross national product. 

Q. Since we've been in Venice, 
)ur Chief of Staff has identified the 
oviet Union, along with the United 
tates, as cotrustees for peace in the 
ersian Gulf. Do you share that view, 
id if so, what is the role the Soviet 
nion can play, in your view, in the 
•ea? 

A. The Soviet Union has some 
?ssels there and has made it plain 
ley 're going to escort their own 
lips— mainly carrying oil. And 
lerefore, they have a stake, too, in 
jaceful shipping and the openness of 
le international waters. 

Q. Then how do they serve as co- 
ustees for peace, and also do you 
jtivision any sort of coordinated role 
ietween the United States and the 
oviet Union in escorting ships 
irough the region? 



A. We would like to ask them, 
because we have appealed to the UN 
committee in which they are a member. 
We have appealed to the United Nations, 
to ask for, or demand, a peaceful settle- 
ment of this war that's been going on 
too many years, and that if there is not a 
peaceful settlement, that all of us will 
take action such as sanctions and so 
forth against them. 

Q. Does that mean that you are 
endorsing a role for the Soviets in the 
Persian Gulf as coguarantors with the 
United States? 

A. No, I've never thought of them 
that way at all. But I think it should be 
pointed out that they are also there, 
because they have ships transiting that 
in commercial shipping. And this is what 
we're talking about. 

Q. Mikhail Gorbachev seems to 
have had an enhanced image here 
among some of the other summit 
leaders who've met with him. And in 
late European polls, people seem to 
outrank him as a man of peace — out- 
ranking you, in their opinion, as a man 
of peace. Why do you think that he has 
that very positive public image in 
Europe and you don't? 

A. Maybe all of you could have 
helped change that— [laughter]— if you 
worked a little harder at it. 

Q. Looking at the record, why do 
you think that — 

A. Maybe because it's so unusual. 
This is the first Soviet leader, in my 
memory, who has ever advocated 
actually eliminating weapons already 
built and in place. And I shouldn't 
perhaps go out of the way to say that the 
thing that he himself has proposed, the 
zero-zero of intermediate-range missiles, 
that I proposed that 4 years ago and got 
in trouble with my then Secretary of 
State— not the present one- for saying 
such a foolish thing. But maybe most 
people have forgotten that we've been 
trying to get this for years. And I'm glad 
that he has suggested this. And we're 
going to continue, and we believe, as I 
said before, that we have a good chance 
of bringing about the beginning of reduc- 
ing and eliminating nuclear weapons. 



Q. Do you trust this opinion of 
Gorbachev? Do you think he is a man 
of peace and that he does want to 
sincerely reduce weapons and that a 
verifiable treaty can be reached? 

A. As you know, I've had meetings 
with him. And I do believe that he is 
faced with an economic problem in his 
own country that has been aggravated 
by the military buildup and all. And I 
believe that he has some pretty practical 
reasons for why he would like to see a 
successful outcome. 

Q. Do you trust him? 

A. Do I trust him? He's a personable 
gentleman, but I cited to him a Russian 
proverb— I'm not a linguist, but I at least 
learned that much Russian— and I said to 
him, Dovorey no provorey. It means 
trust, but verify. 

Q. Have you found that the 
disclosures of the Iran affair and your 
efforts to get the American hostages 
out of Lebanon have harmed you here 
in Europe in efforts to extradite Mr. 
Hamadei from Germany and, in 
general, in trying to get the Europeans 
to take strong action against 
terrorists? 

A. No, as a matter of fact, we have 
all been united, and we've even 
strengthened our purpose since we've 
been here with regard to terrorism. But 
with regard to Hamadei in West 
Germany— who has been arrested there, 
as you know, for carrying some 
ammunition— [Chancellor] Helmut Kohl 
and I have had some talks about this. 
And I think it's interesting to note that 
the only question that remains is: Will 
Hamadei be tried for murder and hijack- 
ing in the United States or will he be 
tried for murder and hijacking in Ger- 
many? Because that is what they intend 
to do. There's been no decision made yet 
as to whether there would be extradition 
or not. But whichever way, he is going 
to be tried for the crime of killing our 
young Navy man in that hijacking. 

Q. Your spokesman told me yester- 
day that Mr. Kohl had, in fact, 
rejected the plea for extradition and 
that Mr. Hamadei would be tried for 
murder, but in West Germany. Was he 
incorrect in saying that? 



.ugust 1987 



17 



A. I do not know whether there's 
been a decision. He has never said 
outright to me, "No extradition." He 
said this is what remains to be deter- 
mined: just where is he going to be tried. 
But I have not attempted to put any 
pressure on him, either. 

Q. You said there was no criticism 
of the other summit leaders of your 
Persian Gulf policy, but a French 
Government spokesman said that your 
policy was so confusing they didn't 
know what you are asking them to 
support. Can you tell us what your 
military policy in the g^ulf is, and does 
it include the possibility of a preemp- 
tive strike if Iran does deploy the 
Silkworm missiles? 

A. I don't thinlc they feel that way 
after they've had a chance to talk to me 
and hear what I'm saying about it. Why, 
I'm saying that all of us have a stake in 
maintaining that body of international 
water open to trade. It is of vital impor- 
tance to a number of countries, more so 
than to us, because of their needs in the 
energy field. But also I think they are 
assured now that we're not there to, as I 
say, provoke some kind of increased 
hostility. We're there to deter that very 
thing. 

Q. What about the deployment of 
the missiles? Would that make you 
consider the possibility of a preemp- 
tive strike? 

A. When you get down to actual tac- 
tics and things that might be done, 
you're in a field that I can't answer, nor 
do I think I should answer. This is like 
talking about tactics before— 

Q. Your Chief of Staff said it 
would be considered a hostile act and 
would run the risk of reprisal. 

A. As I say, I'm just not going to 
answer questions on that. 

Q. Robert McFarlane, your former 
national security adviser, testified that 
the plan to bribe — in the words of the 
White House, to rescue the American 
hostages in Beirut that involved the 
DBA [Drug Enforcement Administra- 
tion] — had not been the subject of an 
intelligence finding. My question then, 
is why do you feel, if you approved it, 
that operation did not require a find- 
ing or notification of Congress? 



18 



A. All I knew about that particular 
thing was that I was told that there was 
something going on in which it might be 
possible to free one or more hostages of 
ours and they would be delivered to the 
beach north of Beirut if we were able to 
take them off that beach. And I said, of 
course, with the Mediterranean fleet 
there, you bet we can take them off. And 
it wasn't until all of this exposure that 
then I heard that what it was about was 
supposedly some money for bribing some 
people that they thought could effect the 
rescue of one or more of our hostages 
and that had to be the thing. But it 
never happened, and no one ever arrived 
on the beach north of Beirut. 

Q. Something else you also may 
not have heard, during the testimony it 
became clear that Colonel North, in 
addition to spending money that had 
been raised, presumably, for the con- 
tras, also, apparently, was about to 
receive — or arrangements had been 
made for him to receive $200,000 from 
the Secord-Hakim operation. Do you 
believe that North was on the take? 
Whether or not you do, do you believe 
he's still an American hero? 

A. One cannot quarrel with his 
military record, and it established him as 
such with the awards that he received 
for his heroism in combat. But I'm going 
to wait until he's had his day in court, 
also, and I'm not going to prejudge on 
the basis of all that has been going on 
for these countless hours. 

Q. Did you find it uncomfortable 
or difficult to talk to your summit 
partners about not selling weapons to 
Iran and Iraq when everyone at the 
table knew that the Administration 
had done just that in the case of Iran? 

A. We were not dealing with the 
Government of Iran. And again, I want 
to point out that I did not believe— I still 
feel as I always have— you do not ran- 
som hostages and thus create a market 
for more hostages. We had been 
approached by individuals, some in the 
Government of Iran, but who said that 
they were trying to establish a relation- 
ship with the United States that could go 
into effect when and if there was a suc- 
ceeding government to Khomeini. And 
as a matter of fact, we were given to 
believe that they thought that might be 



sooner rather than later. And they asked 
for— it was almost, in comparison to the 
normal sales of weapons, a token— first 
of all, that would prove our sincerity in 
this but also, they frankly admitted, 
would enhance their ability to have the 
help of the military if and when this timeL 
came. And this was how we settled upon 
the $12 million worth of arms. 

But never— and this has been, I'm 
afraid, misportrayed to many— we were 
not doing business with Khomeini's 
government. As a matter of fact, the 
operation was covert, because we 
believed that the people who were tryingfej 
to contact us— their lives would be in 
danger if it was ever found out in their 
home country what they were doing. 

Q. But nonetheless, there was the 
distinct possibility — or is the distinct 
possibility that those weapons did end! || 
up as part of the war effort against 
Iraq. So, again, the question is how 
can the United States come to a 
meeting like this and ask other people) Ik 
not to do what it actually did? 

A. And because we won't do this 
anymore— but as I say, we were— that 
amount of arms— as nearly as we can 
determine, in the last few years, coun- 
tries involving the communist bloc, othe- ^ 
countries in Europe and Asia, have prob jg 
ably provided $10 billion worth of arms 
to Iran and some $34 or $35 billion 
worth to Iraq. And we have been all of 
this time trying to bring the war to an 
end. And we're going to continue to try, 
and as I've said, this thing that did not 
come to fruition— a new government ano 
so forth. No, we will not engage in arms 
sales, nor do we think anyone else 
should. And we believe that if the UN 
Security Council should take the action 
that we're all asking them to take— but 
then there should be sanctions against 
any nation that does sell arms to either 
of the combatants. 



[oi 



ii 



ly 



Q. You challenged the summit 
partners the other day to try to 
eliminate agriculture subsidies from 
the world by the year 2000. And I 
wondered if you are going to continue 
to press them to do that, and how are 
you going to convince them to do that; 



ECONOMIC SUMMIT 
VENICE 1987 



A. We're all very much agreed in 
his meeting on the fact that 
omething— as we decided a year ago in 
'okyo— something must be done 
worldwide with regard to agriculture, 
hat governments, all of us, are subsidiz- 
lu overproduction. There is no market 
or much of what is being produced. And 
he total subsidies— our allies and 
urselves right here in the summit— total 
-round $140 billion a year to bring this 
bout. We are determined to go forward, 
.nd this, we have all agreed, will be con- 
inued at the Uruguay round of talks, 
he GATT talks that are going on. And 
his will be a major subject as to how we 
an bring back the marketplace as the 
eterminer of production and price in 
arming. 

Q. But how do you rate the chance 
if accomplishing the end of subsidies 
<y the year 2000—13 years from now? 

A. The only reason we set a figure 
lown the road was because all of us 
ecognized that having for several 
lecades now accustomed agriculture to 
:overnment subsidies of various kinds 
•nu can't just suddenly pull the rug out 
rom under them. It wouldn't be fair, 
lUd we're not going to do that. But we 
i.re going to move toward— and with 
)lenty of warning to them— that the day 
s coming when the marketplace will 
letermine the price and what is needed. 

Q. As you know, the joint state- 
nent on the Persian Gulf did not men- 
ion the possibility of imposing sane- 
ions on countries that violated the 
jroposed Security Council resolution, 
i'our Secretary of State told us that it 
ivas a common understanding among 
.he seven heads of state that in fact 
v'ou were talking about mandatory 
sanctions, but other spokesmen for 
Dther governments say that's not the 
ease. What is your understanding, and 
if you all did mean to endorse man- 
datory sanctions, why didn't the com- 
munique or the statement say so? 

A. A discussion came up between 
the choice of the words "enforceable" 
and "effective." And it was decided— a 
case in semantics here— it was decided 
that "effective" meant the other, and we 
didn't need the other word. So, it was 
agreed that we would use "effective" 
measures. 

August 1987 



Q. But would you say that you still 
have some persuading to do with the 
other countries before you get them to 
agree to this idea of sanctions? 

A. Not among the seven who are 
here. We're pretty united on it. 



President's Address 

to the Nation (Excerpt), 
June 15, 19873 



I've just returned from Venice, Italy, 
where I met with the leaders of the 
other six industrialized democracies of 
our yearly economic summit. You've 
been hearing and reading reports that 
nothing was really accomplished at the 
summit and the United States, in par- 
ticular, came home empty-handed. Well, 
this was my seventh summit and the 
seventh time I've heard that same 
chorus. 

You know— it might be 
appropriate— a noted bullfighter wrote a 
poem, a few lines of which do seem 
appropriate: "The bullfight critics 
ranked in rows fill the enormous plaza 
full. But only one is there who really 
knows, and he's the one who fights the 
bull." 

The truth is we came home from this 
summit with everything we'd hoped to 
accomplish. And tonight I want to report 
to you on decisions made there that 
directly affect you and your children's 
economic future. I also have a special 
message, one that's about our own 
economy, about actions that could 
jeopardize the kind of progress we made 
toward economic health last week in 
Venice as well as the prosperity that, 
during the last 6 years, all of us here in 
America have worked so hard to achieve. 

But before beginning, I must make a 
personal note about something we saw 
on the last day of our journey when we 
stopped in Berlin to help celebrate the 
750th anniversary of that noble city. I 
know that over the years many of you've 
seen the pictures and news clips of the 
wall that divides Berlin. But believe me, 
no American who sees firsthand the con- 
crete and mortar, the guardposts and 
machinegun towers, the dog runs and 



the barbed wire can ever again take for 
granted his or her freedom or the 
precious gift that is America. That gift 
of freedom is actually the birthright of 
all humanity; and that's why, as I stood 
there, I urged the Soviet leader, Mr. 
Gorbachev, to send a new signal of open- 
ness to the world by tearing down that 
wall. 

I can tell you tonight that this year's 
economic summit in Venice was not only 
successful on a number of specific issues 
but that the spirit of consensus shown by 
world leaders there was particularly 
strong. I'm sure you remember that 
back in 1981, the year I attended my 
first summit, our own economy, as well 
as the global economy, was then in grave 
danger. We had inflation running at 10% 
or more in industrialized countries, not 
to mention high interest rates, excessive 
tax burdens, and too much government 
regulation and interference. Worse than 
all of this, there was virtually no agree- 
ment among world leaders on how to 
deal with this looming crisis. 

In the intervening years, we've 
made progress. With the American 
economy leading the way, we started an 
international movement toward more 
economic growth and greater individual 
opportunity by lowering taxes and cut- 
ting government regulation. We brought 
down interest rates, cut inflation, 
reduced unemployment, and confounded 
the experts by showing that economic 
growth could be sustained not just for 1 
or 2 years but steadily for more than 4 
years. 

And last week in Venice, I saw over- 
whelming evidence that this consensus 
for less government and more personal 
freedom continues to grow throughout 
the world. Indeed, part of our official 
discussions were about how to encourage 
economic development in the less- 
affluent nations of the world and help 
the millions of people in developing 
nations achieve higher standards of liv- 
ing and more productive economics. 

And let's remember that this inter- 
national movement toward economic 
freedom has made a very real difference 
in the daily lives of each of us here in 
America. AH of us can remember only a 
few years ago when government taxa- 
tion was consuming more and more of 
the take-home pay of American workers 



19 




Chancellor Kohl joins President Reagan aboard Air Force One for the trip back to Bonn. 



at the very moment that double-digit 
inflation was eating up savings and 
becoming a special burden on the poor 
and the elderly. Today, in contrast, we 
are now in our 54th month of economic 
growth. Real family income is growing 
while poverty's been declining. And 
we've been creating an astonishing 
250,000 new jobs a month in this nation; 
that adds up to over 13 million jobs in a 
little over 4 years. 

Obviously, keeping this kind of prog- 
ress going on at home was very much on 
my mind in Venice, and that's why I was 
pleased with many of the decisions we 
made there. In addition to reaffirming 
the broad consensus for economic 



growth, we agreed to continue working 
against trade barriers, like high tariffs, 
that over the long run shrink world 
markets, stop growth, and reduce the 
number of new jobs. 

In the area of agricultural subsidies 
as well, we made significant progress. 
I've been saying for some while now it's 
time to get speculators who merely want 
to take advantage of government sub- 
sidies out of the agricultural business 
and give farming back to the farmers. I 
think it's notable that so many American 
farmers today would like to see agricul- 
ture in the United States and abroad 
return to the free market basis. They 
know government subsidies in other 
countries are causing a worldwide glut 



of farm products and a shrinking market 
for American goods. Our aim should be 
to eliminate farm subsidies by the year 
2000, and I will continue to press for this 
commitment. 

But it was a real step forward to get 
this issue on the summit agenda, and I 
think the fact our urgings were heeded 
indicates the kind of responsiveness our 
summit partners showed toward Ameri- 
can concern. They know how much we 
rely on each other; and they're aware of 
how much their own future depends on 
what we do here in the United States, 
how important keeping America eco- 
nomically sound and strong is to them. 
They know, too, that the economic prog- 
ress we've made together has enabled 



20 



Department of State Bulletin 



ECONOMIC SUMMIT 
VENICE 1987 



e democracies to rebuild their 
jfenses, keep peace in the world, and 
rengthen our alliances. 
I was particularly gratified, for 

ample, for the support our allies gave 

our Persian Gulf policy; it was 

tended without hesitation. Our allies 
low the strategic value of this area and 

e hard at work there for the same pur- 
)ses as our own. In fact, Great Britain 
is committed a higher proportion of its 

et to the gulf than we have and since 
inuary has provided protection to over 
1)0 U.K. flag vessels. France, too, has 

mmitted naval strength to the gulf, 
ermany and Japan, while they can't 
institutionally deploy military forces, 
ce also working actively to seek other 
ays to be helpful. 
Our own role in the gulf is vital; it is 

protect our interests and to help our 
iends in the region protect theirs. Our 
^mediate task in the gulf is clear and 
lould not be exaggerated. It is to escort 

S. flag vessels, a traditional role of the 
avy and one which it has carried out in 
le gulf as well as in other areas. 

Most recently there's been some con- 
oversy about 11 new U.S. flag vessels 
jat've been added to our merchant 
pet. Let there be no misunderstanding: 
If e will accept our responsibility for 
"lese vessels in the face of threats by 
•an or anyone else. If we fail to do so 
mply because these ships previously 
ew the flag of another country, Kuwait, 
e would abdicate our role as a naval 
Dwer, and we would open opportunities 
)r the Soviets to move into this choke- 
3int of the free world's oil flow. In a 
ord: If we don't do the job, the Soviets 
ill. And that will jeopardize our own 
ational security as well as our allies. 



Our current dealings with the Soviet 
Union were also discussed in Venice, and 
I think every American can be gratified 
by the sense of unity and support our 
allies expressed. As most of you know, 
we're currently engaged in highly sen- 
sitive negotiations with the Soviets that 
could lead to a historic arms reduction 
treaty on intermediate-range missiles, or 
as we say, INF. This matter was also 
discussed last week with the NATO 
Foreign Ministers in Iceland. I have 
received Secretary Shultz's report on his 
NATO meeting, and I'm pleased to tell 
you that we and our allies have reached 
full consensus on our negotiating 
position. 

Six years ago the United States pro- 
posed a step called the zero option, the 
complete elimination of U.S. and Soviet 
land-based, longer range INF missiles. 
At the time, many labeled it ridiculous 
and suggested the Soviets would never 
accept it. We remained determined, and 
this year the Soviets adopted a similar 
position. So, tonight I can tell you that, 
with the support of our allies, the United 
States will also formally propose to the 
Soviet Union the global elimination of all 
U.S. and Soviet land-based, shorter 
range INF missiles, along with the deep 
reductions in— and we hope the ultimate 
elimination of— longer ranger INF 
missiles. I am now directing our INF 
negotiator to present this new proposal 
to the Soviet IJnion as an integral ele- 
ment of the INF treaty, which the 
United States has already put forward in 
Geneva. 



And as we and our allies pursue this 
historic opportunity, let's keep in mind 
the favorite word of a great lawmaker 
and great member of the Democratic 
Party, the late Senator "Scoop" 
Jackson: that word is "bipartisanship." 
For it's only with the support of Con- 
gress, as well as the help of our allies, 
that we will be able to accomplish those 
historic arms reductions. 

There was also strong agreement in 
Venice on the importance of pressing the 
Soviet Union for progress on other 
important arms negotiations, such as our 
effort to cut 50% in strategic forces. So, 
too, we were agreed on the need for 
Soviet progress in the human rights area 
as well as regional oonflicts, especially 
Afghanistan. And while we welcomed 
the new expressions of openness from 
the Soviets, we said it's time to see if 
their actions are as forthcoming. 



'Text from Weekly Compilation of 
Presidential Documents of June 8, 1987. 

^Recorded on June 5 at the Villa Con- 
dulmer in Veneto, Italy (text from Weekly 
Compilation of Presidential Documents of 
June 15). 

'Text from Weekly Compilation of 
Presidential Documents of June 22. 

"Press release 125 of June 11. 

^Mohammed Ali Hamadei is a Lebanese 
Shi'ite Moslem accused of perpetrating the 
1985 hijacking of TWA flight #847 and the 
murder of Rooert D. Stethem. 

^Held on the grounds of the Hotel 
Cipriani in Venice (text from Weekly Com- 
pilation of Presidential Documents of June 
22). 

'Eugene Hasenfus was a crewmember on 
a plane that was shot down in Nicaragua. He 
was charged by the Nicaraguan Government 
with supplying the Nicaraguan democratic 
resistance with military supplies. ■ 



21 



THE PRESIDENT 



Visit to the Holy See 
and West Germany 

President Reagan had a private audience with 
His Holiness Pope John Paul H on June 6, 1987. 
He visited Berlin and Bonn on June 12 before 
returning to the United States. 




President's Remarks 

After Meeting With 

His Holiness, 
The Vatican, 
June 6, 1987» 

Your Holiness, I am truly grateful for 
the opportunity to visit with you again in 
this place of peace. You've always said 
that the power of love for our fellow 
man is stronger than the evils that befall 
humankind. And one feels the power of 
that strong moral force here in this holy 
city of St. Peter, just as we see it in your 
courageous and compassionate 
leadership. 

Your Holiness, on my last visit here, 
I urged you to carry your ministry to the 
southern and western sections of the 



(White House photo by Bill Fitz-Patrick) 



United States, and you graciously 
agreed, and I know that all America 
looks forward to your arrival in 
September. You will find in our country 
a deeply religious people, a people 
devoted to the same ideals and values 
you so eloquently champion: a striving 
for peace and justice, human rights, and, 
above all, our duty as fellow creatures of 
God to love one another. 

Not long ago, Your Holiness, you 
visited Canada where you spoke pas- 
sionately of the moral obligation of the 
wealthier nations to share with those 
less fortunate. Recently, I also traveled 
to Canada and said it's time that we take 
up the challenge, to share our prosperity 
with the underdeveloped nations, with 
generous aid, yes, but also in the most 
effective way we know: by sharing the 
conditions that promote prosperity. 



You have spoken eloquently of "the 
moral causes of prosperity," among 
them hard work, honesty, initiative, 
thrift, spirit of service, and daring. In 
many countries today, we see economic 
revolutions founded on this basic tenet: 
that the sources of prosperity are moral 
ones, that the spirit and imagination of 
man freed of statist shackles is a revolu- 
tionary force for growth and human 
betterment. 

In your travels, you've inspired 
millions, people of all races and all 
faiths, who have felt the intensity of 
your desire for peace and brotherhood 
among men. As you embark on a pas- 
toral visit to the land of your birth, 
Poland, be assured that the hearts of the 
American people are with you. Our 
prayers will go with you in profound 
hope that soon the hand of God will 
lighten the terrible burden of brave peo- 
ple everywhere you yearn for freedom, 
even as all men and women yearn for th< 
freedom that God gave us all when he 
gave us a free will. 

We see the power of the spiritual 
force in that troubled land, uniting a 
people in hope, just as we see the power- 
ful stirrings to the East of a belief that 
will not die despite generations of 
oppression. Perhaps it's not too much to 
hope that true change will come to all 
countries that now deny or hinder the 
freedom to worship God. And perhaps 
we'll see that change comes through the 
reemergence of faith, through the irre- 
sistible power of a religious renewal. Fo 
despite all the attempts to extinguish it, 
the people's faith burns with a pas- 
sionate heat; once allowed to breathe 
free, that faith will burn so brightly it 
will light the world. 

Your Holiness, when I last visited 
you, our representative in Vatican City 
was a personal envoy. Now, I'm happy 
to say, America is represented here by a 
full-fledged diplomatic mission at the 
ambassadorial level. The consequence of 
our efforts deserves nothing less, for we 
join with the Holy See in our concern fo) 
a world of peace, where armaments are 
reduced and human rights respected, a 
world of justice and hope, where each of 
God's creatures has the means and 
opportunity to develop to his or her full 
potential. 

Your Holiness, I'm reminded of the 
passage from the Bible of St. Peter 
walking out on the water after Christ. 
We know that as long as he kept his eye 
on our Savior, as long as his faith was 
strong, he was held up, but as soon as 
his faith faltered, he began to sink. Your 
Holiness, with gentle chidings and 
powerful exhortations you have con- 



22 



Department of State Bullet! 



THE PRESIDENT 



inually directed our thoughts to the 
spiritual source of all true goodness and 
happiness. 

At the opening of the Second 
Vatican Council, in which you played 
such an important role, Pope John XXIII 
spoke of the duty of every Christian to 
"tend always toward heaven." In your 
^eat courage and compassion, in your 
piety and the boundless energy with 
which you carry out your mission, you 
have set an example for the world. It's 
an example that challenges us all to live 
a life of charity, to live a life of prayer, 
to work for peace, and, in that beautiful 
phrase of John XXIII, to "tend always 
toward heaven." 

I know that today marks the begin- 
ning of a very important time for you 
personally and for the people of your 
faith, for it's this day that you begin the 
Dbservance of a year of prayer and devo- 
tion to the Virgin Mary with a world- 
wide prayer for peace. I wish you great 
joy, happiness, and fulfillment in the com- 
ing months. 

And I thank you. Your Holiness, and 
may God bless you. 



President's Address, 
Brandenburg Gate, 
West Berlin, 
June 12, 1987^ 



Twenty-four years ago President John 
F. Kennedy visited Berlin, speaking to 
the people of this city and the world at 
the City Hall. Well, since then two other 
presidents have come, each in his turn, 
to Berlin. And today I, myself, make my 
second visit to your city. 

We come to Berlin, we American 
presidents, because it's our duty to 
speak, in this place, of freedom. But I 
must confess, we're drawn here by other 
things as well: by the feeling of history 
in this city, more than 500 years older 
than our own nation; by the beauty of 
the Grunewald and the Tiergarten; most 
of all, by your courage and determination. 

Perhaps the composer, Paul Lincke, 
understood something about American 
presidents. You see, like so many 
presidents before me, I come here today 
because wherever I go, whatever I do: 



Ich hab noch einen Koffer in Berlin. [I 
still have a suitcase in Berlin.] 

Our gathering today is being broad- 
cast throughout Western Europe and 
North America. I understand that it is 
being seen and heard as well in the East. 
To those listening throughout Eastern 
Europe, I extend my warmest greetings 
and the good will of the American peo- 
ple. To those listening in East Berlin, a 
special word: although I cannot be with 
you, I address my remarks to you just as 
surely as to those standing here before 
me. For I join you, as I join your fellow 
countrymen in the West, in this firm, 
this unalterable belief: Es gibt nur ein 
Berlin. [There is only one Berlin.] 

Berlin and Freedom 

Behind me stands a wall that encircles 
the free sectors of this city, part of a 
vast system of barriers that divides the 
entire Continent of Europe. From the 
Baltic south, those barriers cut across 
Germany in a gash of barbed wire, con- 
crete, dog runs, and guard towers. Far- 
ther south, there may be no visible, no 




President Reagan at Brandenburg Gate, West Berlin. 
August 1987 



23 



THE PRESIDENT 



obvious wall. But there remain armed 
guards and checkpoints all the same- 
still a restriction on the right to travel, 
still an instrument to impose upon ordi- 
nary men and women the will of a totali- 
tarian state. 

Yet it is here in Berlin where the 
wall emerges most clearly; here, cutting 
across your city, where the newsphoto 
and the television screen have imprinted 
this brutal division of a continent upon 
the mind of the world. Standing before 
the Brandenburg Gate, every man is a 
German, separated from his fellow men. 
Every man is a Berliner, forced to look 
upon a scar. 

President von Weizsaecker has said: 
the German question is open as long as 
the Brandenburg Gate is closed. Today I 
say: as long as this gate is closed, as long 
as this scar of a wall is permitted to 
stand, it is not the German question 
alone that remains open but the question 
of freedom for all mankind. Yet I do not 
come here to lament. For I find in Berlin 
a message of hope— even in the shadow 
of this wall, a message of triumph. 

In this season of spring in 1945, the 
people of Berlin emerged from their 
air-raid shelters to find devastation. 
Thousands of miles away, the people of 
the United States reached out to help. 
And in 1947, Secretary of State— as 
you've been told— George Marshall 
announced the creation of what would 
become known as the Marshall Plan. 
Speaking precisely 40 years ago this 
month, he said: "Our policy is directed 
not against any country or doctrine but 
against hunger, poverty, desperation, 
and chaos." 

In the Reichstag, a few moments 
ago, I saw a display commemorating this 
40th anniversary of the Marshall Plan. I 
was struck by the sign on a burnt-out, 
gutted structure that was being rebuilt. I 
understand that Berliners of my own 
generation can remember seeing signs 
like it dotted throughout the western 
sectors of the city. The sign read simply: 
"The Marshall Plan is helping here to 
strengthen the Free World." 

A strong, free world in the West, 
that dream became real. Japan rose 
from ruin to become an economic giant. 
Italy, France, Belgium— virtually every 
nation in Western Europe saw political 
and economic rebirth. The European 
Community was founded. 

In West Germany and here in Berlin, 
there took place an economic miracle, 
the "Wirtschafiswunder. " Adenauer, 
Erhard, Reuter, and other leaders 
understood the practical importance of 
liberty— that just as truth can flourish 



24 



only when the journalist is given 
freedom of speech, so prosperity can 
come about only when the farmer and 
businessman enjoy economic freedom. 
The German leaders reduced tariffs, 
expanded free trade, lowered taxes. 
From 1950 to 1960 alone, the standard 
of living in West Germany and Berlin 
doubled. 

Where four decades ago there was 
rubble, today in West Berlin there is the 
greatest industrial output of any city in 
Germany— busy office blocks, fine homes 
and apartments, proud avenues, and the 
spreading lawns of parkland. Where a 
city's culture seemed to have been 
destroyed, today there are two great 
universities, orchestras and an opera, 
countless theaters and museums. Where 
there was want, today there's abun- 
dance—food, clothing, automobiles— the 
wonderful goods of the Ku'damm. 

From devastation, from utter ruin, 
you Berliners have, in freedom, rebuilt a 
city that once again ranks as one of the 
greatest on Earth. The Soviets may have 
had other plans. But, my friends, there 
were a few things the Soviets didn't 
count on— Berliner Herz, Berliner 
Humor, Ja, und Berliner Schnauze. 
[Berliner heart, Berliner humor, yes, and 
Berliner cheek.] 

In the 1950s, Khrushchev predicted: 
"We will bury you." But in the West 
today, we see a free world that has 
achieved a level of prosperity and well- 
being unprecedented in all human his- 
tory. In the communist world, we see 
failure, technological backwardness, 
declining standards of health, even want 
of the most basic kind— too little food. 
Even today, the Soviet Union still can- 
not feed itself. After these four decades, 
then, there stands before the entire 
world one great and inescapable conclu- 
sion. Freedom leads to prosperity. 
Freedom replaces the ancient hatreds 
among the nations with comity and 
peace. Freedom is the victor. 

And now the Soviets themselves 
may, in a limited way, be coming to 
understand the importance of freedom. 
We hear much from Moscow about a 
new policy of reform and openness. 
Some political prisoners have been 
released. Certain foreign news broad- 
casts are no longer being jammed. Some 
economic enterprises have been permit- 
ted to operate with greater freedom 
from state control. 

Are these the beginnings of pro- 
found changes in the Soviet state? Or 
are they token gestures, intended to 
raise false hopes in the West or to 
strengthen the Soviet system without 
changing it? We welcome change and 



openness. For we believe freedom and 
security go together— that the advance 
of human liberty can only strengthen the 
cause of world peace. There is one sign 
the Soviets can make that would be 
unmistakable, that would advance 
dramatically the cause of freedom and 
peace. 

General Secretary Gorbachev, if you 
seek peace, if you seek prosperity for the 
Soviet Union and Eastern Europe, if you 
seek liberalization: come here, to this 
gate. Mr. Gorbachev, open this gate. Mr. 
Gorbachev, tear down this wall. 

Efforts To Reduce Arms 

I understand the fear of war and 
the pain of division that afflict this 
continent— and I pledge to you my coun- 
try's efforts to help overcome these 
burdens. To be sure, we in the West 
must resist Soviet expansion. So we 
must maintain defenses of unassailable 
strength. Yet we seek peace. So we must 
strive to reduce arms on both sides. 

Beginning 10 years ago, the Soviets 
challenged the Western alliance with a 
grave new threat— hundreds of new and 
more deadly SS-20 nuclear missiles, 
capable of striking every capital in 
Europe. The Western alliance responded 
by committing itself to a counterdeploy- 
ment unless the Soviets agreed to nego- 
tiate a better solution— namely, the 
elimination of such weapons on both 
sides. For many months, the Soviets 
refused to bargain in earnestness. As the 
alliance, in turn, prepared to go forward 
with its counterdeployment, there were 
difficult days— days of protests like those 
during my 1982 visit to this city— and 
the Soviets later walked away from the 
table. 

But through it all, the alliance held 
firm. And I invite those who protested 
then— I invite those who protest today— 
to mark this fact: because we remained 
strong, the Soviets came back to the 
table. And because we remained strong, 
today we have within reach the possibil- 
ity, not merely of limiting the growth of 
arms, but of eliminating, for the first 
time, an entire class of nuclear weapons 
from the face of the Earth. 

As I speak, NATO ministers are 
meeting in Iceland to review the prog- 
ress of our proposals for eliminating 
these weapons. At the talks in Geneva, 
we have also proposed deep cuts in 
strategic offensive weapons. And the 
Western allies have, likewise, made far- 
reaching proposals to reduce the danger 
of conventional war and to place a total 
ban on chemical weapons. While we pur- 
sue these arms reductions, I pledge to 



THE PRESIDENT 



lyou that we will maintain the capacity to 
deter Soviet aggression at any level at 
which it might occur. And in cooperation 
with many of our allies, the United 
States is pursuing the Strategic Defense 
Initiative— research to base deterrence 
not on the threat of offensive retaliation 
but on defenses that truly defend; on 
systems, in short, that will not target 
populations but shield them. 

Promoting Liberty and Openness 

By these means, we seek to increase the 
safety of Europe and all the world. But 
we must remember a crucial fact: East 
and West do not mistrust each other 
because we are armed. We are armed 
because we mistrust each other. And our 
differences are not about weapons but 
about liberty. When President Kennedy 
spoke at the City Hall those 24 years 
ago, freedom was encircled, Berlin was 
under siege. And today, despite all the 
pressures upon this city, Berlin stands 
secure in its liberty. And freedom itself 
is transforming the globe. 

In the Philippines, in South and 
Central America, democracy has been 
given a rebirth. Throughout the Pacific, 
free markets are working miracle after 
miracle of economic growth. In the 
industrialized nations, a technological 
revolution is taking place— a revolution 
marked by rapid, dramatic advances in 
computers and telecommunications. 

In Europe, only one nation and those 
it controls refuse to join the community 
of freedom. Yet in this age of redoubled 
economic growth, of information and 
innovation, the Soviet Union faces a 
choice. It must make fundamental 
changes, or it will become obsolete. 

Today thus represents a moment of 
hope. We in the West stand ready to 
cooperate with the East to promote true 
openness— to break down barriers that 
separate people, to create a safer, freer 
world. And surely there is no better 
place than Berlin, the meeting place of 
East and West, to make a start. 

Free people of Berlin: today, as in 
the past, the United States stands for 
the strict observance and full implemen- 
tation of all parts of the Four-Power 
Agreement of 1971. Let us use this occa- 
sion, the 750th anniversary of this city, 
to usher in a new era— to seek a still 
fuller, richer life for the Berlin of the 
'i future. Together, let us maintain and 
develop the ties between the Federal 
Republic and the Western sectors of 
Berlin, which is permitted by the 1971 
agreement. 



750th Anniversary of Berlin 



PROCLAMATION 5665, 
JUNE 8, 1987^ 

Berlin, one of the world's gi-eat cities and the 
largest German city, this year observes its 
750th anniversary. This is cause for celebra- 
tion for Berliners and for all Germans, and 
also for the people of the United States and 
the rest of the world. 

The history and character of Berlin and 
its people give powerful testimony about 
human nature and its capabilities. After 
three-quarters of a millennium and many 
shocks and reversals through the ages, Berlin 
is yet a young city— young with all the capac- 
ity of the human spirit to renew itself, to 
strive and to seek, to build anew and create, 
and, most of all, to hope. Time and again, 
Berlin has overcome desolation and isolation 
with will, energy, and courage. Even now, its 
spirit towers over the wall that presently 
divides the city. 

Today Berlin remains close to the 
spiritual center of the Western world. 
Americans have a special affinity for Berlin 
that goes beyond formal political or economic 
ties, because we feel a kinship with its spirit 
of strength and creativity and because we see 
our own hopes and ideals mirrored in the 
deep attachment of its people to freedom and 
its blessings. Thousands of Americans- 



scholars, service men and women and their 
families, business people, diplomatic person- 
nel, and so on— live in Berlin and make vital 
contributions to the life of the city. We have 
helped Berlin grow, and we have shared its 
spirit. 

As we near the end of the 20th century, 
we see that Berlin, though ancient, is a city of 
the future. We know that the courageous and 
freedom-loving spirit that has guided so much 
of Berlin's past will help ensure a future of 
freedom for all mankind in the years to come. 
"Berlin bleibt dock Berlin— BerWn is still 
Berlin." 

Now, Therefore. I, Ronald Reagan. 
President of the United States of America, by 
virtue of the authority vested in me by the 
Constitution and laws of the United States, 
do hereby recognize Berlin's 750th Anni- 
versary, 1987. 1 call upon the people of the 
United States to join in celebrating and 
honoring Berlin's 750th anniversary with 
appropriate ceremonies and activities. 

In Witness Whereof. I have hereunto 
set my hand this eighth day of June, in the 
year of our Lord nineteen hundred and 
eighty-seven, and of the Independence of the 
United States of America the two hundred 
and eleventh. 

Ronald Reagan 



And I invite Mr. Gorbachev: let us 
work to bring the Eastern and Western 
parts of the city closer together so that 
all the inhabitants of all Berlin can enjoy 
the benefits that come with life in one of 
the great cities of the world. 

To open Berlin still further to all 
Europe, East and West, let us expand 
the vital air access to this city, finding 
ways of making commercial air service 
to Berlin more convenient, more comfort- 
able, and more economical. We look to 
the day when West Berlin can become 
one of the chief aviation hubs in all Cen- 
tral Europe. 

With our French and British part- 
ners, the United States is prepared to 
help bring international meetings to 
Berlin. It would be only fitting for Berlin 
to serve as the site of UN meetings, or 
world conferences on human rights and 
arms control, or other issues that call for 
international cooperation. 



There is no better way to establish 
hope for the future than to enlighten 
young minds, and we would be honored 
to sponsor summer youth exchanges, 
cultural events, and other programs for 
young Berliners from the East. Our 
French and British friends, I'm certain, 
will do the same. And it's my hope that 
an authority can be found in East Berlin 
to sponsor visits from young people of 
the Western sectors. 

One final proposal— one close to my 
heart. Sport represents a source of 
enjoyment and ennoblement, and you 
may have noted that the Republic of 
Korea— South Korea— has offered to per- 
mit certain events of the 1988 Olympics 
to take place in the North. International 
sports competitions of all kinds could 
take place in both parts of this city. And 
what better way to demonstrate to the 
world the openness of this city than to 
offer in some future year to hold the 
Olympic games here in Berlin, East and 
West? 



August 1987 



25 



THE PRESIDENT 



Berlin's Voice of Affirmation 

In these four decades, as I have said, you 
Berliners have rebuilt a great city. 
You've done so in spite of threats— the 
Soviet attempts to impose the East- 
mark, the blockade. Today the city 
thrives in spite of the challenges implicit 
in the very presence of this wall. What 
keeps you here? 

Certainly there's a great deal to be 
said for your fortitude, for your defiant 
courage. But I believe there's something 
deeper, something that involves Berlin's 
whole look and feel and way of life. Not 
mere sentiment— no one could live long 
in Berlin without being completely dis- 
abused of illusions— something, instead, 
that has seen the difficulties of life in 
Berlin but chose to accept them, that 
continues to build this good and proud 
city in contrast to a surrounding 
totalitarian presence that refuses to 
release human energies or aspirations. 
Something that speaks with a powerful 
voice of affirmation, that says yes to this 
city, yes to the future, yes to freedom. 
In a word, I would submit that what 
keeps you in Berlin is love— love both 
profound and abiding. 

Perhaps this gets to the root of the 
matter, to the most fundamental distinc- 
tion of all between East and West. The 
totalitarian world produces backward- 
ness because it does such violence to the 
spirit, thwarting the human impulse to 
create, to enjoy, to worship. 

The totalitarian world finds even 
symbols of love and of worship an 
affront. Years ago, before the East Ger- 
mans began rebuilding their churches, 
they erected a secular structure— the 
television tower at Alexander Platz. 
Virtually ever since, the authorities have 
been working to correct what they view 
as the tower's one major flaw, treating 
the glass sphere at the top with paints 
and chemicals of every kind. Yet even 
today when the sun strikes that 
sphere— that sphere that towers over all 
Berlin— the light makes the sign of the 
cross. There in Berlin, like the city itself, 
symbols of love, symbols of worship, can- 
not be suppressed. 

As I looked out a moment ago from 
the Reichstag, that embodiment of Ger- 
man unity, I noticed words crudely 
spray-painted upon the wall— perhaps by 
a young Berliner— "This wall will fall. 



Beliefs become reality." Yes, across 
Europe, this wall will fall. For it cannot 
withstand faith. It cannot withstand 
truth. The wall cannot withstand 
freedom. 

And I would like, before I close, to 
say one word. I have read, and I have 
been questioned since I've been here, 
about certain demonstrations against my 
coming. And I would like to say just one 
thing, and to those who demonstrate so. 
I wonder if they have ever asked 
themselves that if they should have the 
kind of government they apparently 
seek, no one would ever be able to do 
what they're doing again. 



President's Departure 

Remarks, 
Bonn, 
June 12, 19873 



My talks with Chancellor Kohl and his 
colleagues have fulfilled all my expecta- 
tions. They confirm, as his words here 
have confirmed today, that relations 
between the United States and the 
Federal Republic are those of close allies 
and friends. 

Chancellor Kohl and I, together with 
other allies and partners, have already 
had the opportunity in Venice to address 
many of the major issues confronting the 
world today. There, important steps 
were taken to ensure the continued 
economic progress and freedom for our 
nations. 

Here in Bonn, we talked, in par- 
ticular, about progress in arms reduc- 
tions and East- West relations. 
Chancellor Kohl and I agree fully on the 
necessity of continuing our close con- 
sultations as we pursue our common 
goals of reducing the danger to Europe 
posed by the threatening policies and 
military might of the Warsaw Pact. We 



share deep satisfaction with NATO's 
1979 double-track decision on inter- 
mediate nuclear forces— INF. 

It was controversial when the 
alliance first agreed upon it, yet time is 
proving it an unequivocal success. We 
hope to reach agreement with the Soviet 
Union before the end of 1987, which 
would drastically reduce and possibly 
eliminate a class of nuclear weapons that 
poses a particular threat to our friends 
and allies in Europe and Asia. 

As we proceed in our quest for a 
safer and more stable peace, I look for- 
ward to continuing close cooperation and 
consultation with Chancellor Kohl and 
his government. 

And I would like to add something 
here also. Much is said each year about 
these economic summits wdth the heads 
of state of seven countries and our 
meetings and whether they accomplish 
much or whether they don't. I have to 
tell you, they would accomplish much if 
we did nothing but meet and just talk to 
each other— because we have become 
close friends. We use our titles in public 
as protocol requires. But when we meet 
together we're on a first-name basis, and 
we're not meeting as much as heads of 
states, as we're meeting as close, per- 
sonal friends who look forward to renew- 
ing our friendship with these meetings 
and with others in between when we can 
manage it. 

So this has been a wonderful several 
days for us to be here, to be in Venice, 
then to be in Berlin earlier today and to 
be here, and to know that we're with 
dear friends. And so, we say goodbye to 
all of you, and we say a very personal 
goodbye to our dear friends. Chancellor 
Kohl and Mrs. Kohl, and the others whom 
we've met. . 

And God bless all of you, and may 
we all soon meet again. 'Thank you. 



'Made in the Papal Library at the Pon- 
tifical Palace (text from Weekly Compilation 
of Presidential Documents of June 22, 1987). 

^Text from Weekly Compilation of 
Presidential Documents of June 22. 

'Made at Koln-Bonn Airport (text from 
Weekly Compilation of Presidential 
Documents of June 22). ■ 



26 



Department of State Bulletin 



THE VICE PRESIDENT 



NATO: The Best Investment in Peace 



ExcBTTpts from an address by Vice 
President Bush at the University of New 
Hampshire commencement in Durham 
on May 23, 1987. 

Whether you're going on to graduate 
school, on to a career, or still considering 
your next step, today is your day. It's 
for you to reflect back on what you've 
done, or maybe what you haven't done. 
And it's a day for you to think ahead to 
the challenges that each of you will face 
once you leave Durham. 

The 1990s will bring a dramatically 
new set of challenges from the ones we 
faced in the 1970s and 1980s. You're 
moving into a society based on informa- 
tion and knowledge, an economy fully 
integrated into the global market, and a 
world where change is the rule, not the 
exception. 

Yet through all of this, some things 
should never change. Just north of here 
lies the Canadian border, the longest 
unguarded border in the world between 
two countries, symbolizing the long friend- 
ship between our two countries. To me, 
it's a reminder of a broader point: 
America's role in the world. We are part 
of a great worldwide coalition of democ- 
racies. This is a tremendous achievement 
because this alliance of free nations has 
maintained world peace and security for 
four decades. It's something all of us— we 
and our allies— are enormously proud of. 

Our strong alliance is a blessing all 
of you should appreciate. The alliance 
has been fundamental to ensuring that 
the United States remains a land of 
opportunity— your opportunity. And as 
you go forward into the world, it will be 
your generation's responsibility to main- 
tain and strengthen the alliance. 

When the Atlantic alliance was 
formed nearly 40 years ago, its purpose 
was to protect freedom and prevent a 
war in Europe between the West and 
the Soviet Union. It has succeeded. The 
past four decades represent the longest 
period of peace Europe has enjoyed in 
this century. 

Arms Control Negotiations 

And if the democracies maintain their 
strength and their solidarity, there are 
more successes ahead. We're engaged 
now with the Soviet Union in important 
negotiations on arms control. Previous 
negotiations tried to put a cap on the 
arms race or tried to slow it down, but 
they didn't even succeed at that very 



well. Today we may be on the verge of a 
truly historic agreement that mutually 
and verifiably reduces a whole category 
of nuclear weapons. 

In our current arms control negotia- 
tions with the Soviets, our objective is 
carefully defined: we seek the best possi- 
ble agreement, consistent with the secu- 
rity of the free nations. An agreement 
that leaves the democratic nations less 
secure is no triumph; in fact, it's against 
America's interest. 

We should never make a deal simply 
for the sake of making a deal. And we 
will never sign an agreement that puts 
at risk the interests or security of our 
allies— and that includes our allies in 
Asia in addition to our allies in Europe. 

The Soviets say they want to reduce 
nuclear weapons. Well, that was our goal 
before it was theirs. The United States 
will certainly meet halfway on any treaty 
that calls for equitable, verifiable, and 
stabilizing reductions. But in Europe, 
the Soviets clearly have unstated 
political objectives. 

First, they want to decouple 
Western Europe from the United States. 

Second, they want to weaken NATO 
defenses. 

America's response is clear: NATO 
is the cornerstone of our national secu- 
rity policy, our strategy for peace. We 
will not allow the Soviets to split or 
weaken the alliance. 

For 20 years, the defense strategy of 
the Atlantic alliance has been based on 
the principle of flexible response— having 
the capability to deter a Soviet challenge 
at any level of force. That's the right 
strategy, and we must maintain it. 

American troops will continue to be 
committed, alongside allied forces, on 
West European soil— backed up by the 
American nuclear guarantee. The 
alliance needs to enhance its conven- 
tional strength. And the United States 
needs to continue its modernization of 
strategic forces and other nuclear forces 
that are the backbone of the NATO 
deterrent. 

Right now, the focus of the negotia- 
tions is on INF— American and Soviet 
intermediate-range nuclear forces. When 
the Soviets, 10 years ago, started 
deploying their SS-20 missiles, with 
multiple warheads aimed at our allies in 
Europe and Asia, NATO decided to 
deploy a counterweapon— and to offer 
negotiations to eliminate or reduce those 
weapons on both sides. In February 
1983, 1 traveled to five countries in 



Western Europe to consult our allied 
leaders and to tell the people of Europe 
about our willingness to ban all INF 
weapons or, failing that, our willingness 
to help them by deploying our own INF 
missiles. The Soviets said "no" to get- 
ting rid of the weapons— so the NATO 
countries began deployment. 

Our allies showed enormous political 
courage in doing so, facing down emo- 
tional protests from the radicals. Some- 
times the protests got violent. When I 
returned to West Germany in July 1983, 
demonstrators stoned the motorcade and 
literally attacked the car that Chancellor 
Kohl and I and our wives were riding in. 
It was an ugly incident. And it brought 
home to me just how steadfast our allies 
had been to persevere. 

Those were tense times. The Soviets 
boycotted all nuclear arms talks for a 
year and a half, trying to magnify the 
domestic pressures on Western govern- 
ments. But in the end, the West showed 
its determination to maintain the vital 
military balance that has kept the peace. 
The Soviets had tried to get NATO to 
disarm unilaterally. But when they saw a 
unified Atlantic alliance, they came back, 
in 1985, to serious negotiations on 
mutual reductions. 

NATO Strength and Solidarity 

There's an important lesson in all this. 
Strength and solidarity are the keys to 
success. Strength and solidarity are 
what brought the Soviets back to the 
bargaining table to negotiate arms 
reduction seriously. 

And that's where we are today. We 
are close to an agreement that will result 
in both the United States and the Soviet 
Union reducing their stockpiles of INF 
weaponry. Just how much we can achieve 
remains to be seen. 

But, agreement or not, the Soviets 
have not abandoned their political 
strategy. The Soviets enjoy a vast 
superiority in conventional arms in 
Europe. The Warsaw Pact has 50% 
more combat divisions than NATO. Get- 
ting rid of all nuclear weapons makes 
moral sense, as our President has said, 
but only if we also correct the conven- 
tional arms imbalance and strengthen 
deterrence in other ways. 

Today we're consulting closely with 
our allies on all the issues of the INF 
negotiation. It's a real consultation; we're 
not pushing our own preference. After 
all, the weapons being negotiated are on 
European soil and involve their defense. 



AuQUSt 1987 



27 



THE VICE PRESIDENT 



Whatever consensus we arrive at, I 
can assure our allies that America has no 
intention of "decoupling" or weakening 
our commitment to the European defense. 
NATO is the best investment in peace 
we have ever made. 



Strategic Defense Initiative 

Today we are making a new investment 
in peace for tomorrow's world. I am 
referring to our Strategic Defense Initi- 
ative (SDI). For a generation, nuclear 
deterrence has been based on the threat 
of offensive retaliation. This offensive- 
based strategy has been referred to as 
"mutual assured destruction," or 
"MAD" for short. Wouldn't it be better 
to base deterrence on systems that pro- 
tect human lives instead of threatening 
them— on mutual assured survival. 

Successful research on SDI can lead 
to an effective defensive shield, one that 
lifts from the shoulders of mankind the 
fear of nuclear annihilation. It is both 
moral and logical to look for a solution 
that is better than mutually assured 
destruction. The Strategic Defense Initi- 
ative has strong moral underpinnings. 

The whole idea behind SDI is to put 
weapons at risk, not people. A deterrent 
strategy based on strategic defenses- 
coupled with deep reductions in offen- 
sive forces— could offer us the most 
stable and secure environment of all. 



Preserving Freedom and Peace 

A few moments ago, I mentioned my 
trip to West Germany in 1983. While I 
was in Germany, I also visited a small 
village called Moedelreuth on the eastern 
border. 

I'll never forget that town. Down 
the main street ran a high concrete wall 
topped with densely packed barbed wire. 



On one side of that wall, the communist 
side, everything was done with a cold, 
military precision. Machinegun-toting 
soldiers patrolled the streets, and attack 
dogs ran on chains along the wall. On 
our side of the wall, the villagers were 
peacefully going about the ordinary 
business of their daily lives— women at 
the market shopping for their families; 
children ran in the streets and played 
ball in a grassy meadow; men went 
about their chores with a robust energy. 

Our side of the wall was alive. And 
their side of the wall was lifeless, gray- 
hopeless. The guns were trained on their 
own side to keep their own people from 
running to freedom. The contrast was 
absolutely chilling. And that experience 
brought home to me the importance of 
what John Kennedy called the "long 
twilight struggle." 

The challenge before us in the future 
is to continue to defend freedom and 
champion democracy around the world. 
We must keep the peace. That's what 
it's all about. 

In the future— if we don't turn our 
backs on the world, but remain engaged; 
if we resist the temptations of isola- 
tionism and protectionism; if we remain 
true to our values and ideals and resist 
paralyzing self-doubt— then I believe we 
can look at the years ahead with con- 
fidence and hope. We can set foreign 
policy goals that include resolving some 
of the major conflicts of world affairs— 
not simply managing them but actually 
resolving them. 



The future can find the United 
States and the Soviet Union, although 
still adversaries, nevertheless having 
found a path toward deep reductions in 
nuclear arms, as well as having banned 
those insidious chemical and biological 
weapons from the face of the earth. We 
can make the world a safer place. 

Now, you may be wondering what all 
of this talk about alliances and missiles, 
walls, and angry demonstrators has to 
do with your being here in this lovely 
setting. In the broadest sense, what I've 
been talking about has everything to do 
with you and the tremendous opportuni- 
ties that lie open to you. 

When your fathers and uncles gradu- 
ated from high school or college, they 
faced the draft. You don't have that 
obligation. You have the opportunity to 
serve proudly in our armed forces, but 
only if you choose to. Your range of 
choices is so wide open, in large part, 
because our alliance has kept the peace 
and helped bring an unprecedented 
period of global prosperity. 

I sincerely hope some of you will 
choose careers in public service. But 
whatever path you choose, dwell for a 
moment on the fact that where we are 
today and the blessings that we enjoy 
have not just happened. 

The democratic nations have pre- 
served and protected freedom and peace. 
This is a process which must continue if 
your children, when they graduate from 
college, will take part in an America that 
is every bit as proud and as prosperous 
as we are today. ■ 



28 



niE SECRETARY 



Secretary's Visit to Asia and the Pacific 



Si'cretaT^ Shultz visited the Philip- 
mux (June 13-17), Singapore 
I II III' 17-20) to participate in the 
[ss.iriation of South East Asian Nations 
ASl-'AN) postministerial conference, 
1 iistralia (June 20-23), and Western 
'(uiioa (June 22). 

Following are his statements and 
■Ill's conferences made on various occa- 
Iniis during the trip. 



IRRIVAL STATEMENT, 
MANILA, 

UNE 13, 1987' 

am very pleased to be back again in the 
'hilippines. Much has happened since 
:iv last visit almost 1 year ago. In that 
hort time, Filipinos have made 
emarkable progress in the process of 
.emocratic renewal. A new constitution, 
/hich provides the framework for 
emocratic government and protects 
idividual freedoms, is now in place. A 
lew congress, chosen in perhaps the 
reest and fairest election in modern 
'hilippine history, will convene in July, 
onipleting the reestablishment of fully 
lemocratic government institutions at 
he national level. I understand that the 
inal step in the process will be elections 
or local government to take place later 
his year. Filipinos continue to set an 
xample for the world by their deep com- 
nitment to democratic elections. The 
oter turnout in both last February's 
ilebiscite on the constitution and in last 
nonth's congressional elections was 
emarkable. It surpassed by far the 
;tandards of most Western democracies. 
Ne in the United States continue to 
Iraw inspiration from the vitality of 
Philippine democracy. 

Progress in the Philippines in the 
ast year has not been limited to the 
tolitical sphere. There has also been 
ajiiii progress on the economic front. 
^'icim all indications, the market- 
)riented economic reforms now in place 
ire resulting in the best economic per- 
ormance for the Philippines since 1982. 

The United States remains con- 
/in<-ed that our interests— as well as 
hiise of the Philippines— can best be 
iil\ anced by continuing to act as a 
reliable partner of our Philippine ally. As 
President Reagan told President Aquino 
during her justly acclaimed visit to the 
United States last September, the 



United States is committed to support- 
ing our relationship by encouraging U.S. 
investment, strengthening our trade 
ties, and providing significant levels of 
economic and military aid. 

I look forward to my discussions 
with President Aquino and members of 
her government. I see my visit as an 
opportunity to build on the close and 
productive relations which already exist 
between the United States and the 
Philippines. 



SIGNING CEREMONY 

STATEMENT, 
MANILA, 
JUNE 16, 1987^ 

I take great pleasure in signing today a 
$175 million economic assistance 
package for the Philippines. This latest 
element in the expanded American 
economic assistance program is designed 
to enhance government revenues and 
contribute significantly to development 
in the countryside. 

The assistance is part of the overall 
American economic assistance program 
for this year of $368 million in grant aid. 
Several weeks ago, our governments 
signed an agreement covering another 
major element of that program— $150 
million in budget support to help 
advance the Philippine Government's 
economic reform program. 

The package that we have signed 
today has four important components: 

• $33 million for continuation of two 
projects to design and implement the 
highly successful small-scale rural 
development program which funds proj- 
ects focusing on increasing rural income 
and productivity; 

• $15 million for the purchase of 
heavy engineering equipment to 
facilitate road grading and other essen- 
tial services in rural areas; 

• $51 million program for larger 
scale development projects which will 
respond to needs in transportation, 
telecommunications, and rural elec- 
trification; and 

• Two grant food assistance 
agreements totaling $76 million in wheat 
which will strengthen both the balance 
of payments and government revenues 
in this critical first year of vigorous 
economic growth. 



I am pleased to note that last week, 
we were able to increase this food 
assistance by $13 million to provide the 
appropriate quantity and type of wheat, 
despite recent price increases. 

We have also been able to provide 
significant increases in military equip- 
ment and supplies in the past few weeks. 
The U.S. forces have delivered 10 utility 
helicopters to the Armed Forces of the 
Philippines to assist in the priorities of 
medical evacuation and ground mobility 
in the countryside. Moreover, I can 
announce that we have completed 
delivery of the final segment of the $10 
million in emergency medical equipment 
and supplies which President Reagan 
pledged to President Aquino during her 
visit to the United States. 

We are pleased to be able to provide 
assistance for the innovative and 
ambitious economic reform program now 
underway. Emerging growth in trade 
and investment, in combination with 
these enlightened economic policies and 
expanding economic assistance, should 
assure recovery and strong growth in 
the years ahead. 

It's a great privilege for me to par- 
ticipate in this ceremony and again to 
have a chance to shake hands with you in 
the spirit of looking to the future. 



NEWS CONFERENCE, 

MANILA, 

JUNE 16, 1987' 

First, I'd like to express my appreciation 
to President Aquino and other members 
of the Philippine Government and the 
Philippine business community who have 
treated me with great cordiality here. 
It's a pleasure to come again and to see 
first-hand and hear first-hand about the 
great accomplishments that have taken 
place since I last visited the Philippines. 
And, of course, they're making an 
honest prophet out of me when I said 
over a year ago I was bullish on the 
Philippines. Here they have produced a 
5V2% real growth rate, important con- 
stitutional changes, the election of a new 
legislative body, and a great variety of 
good things. There are many problems 
ahead, we all know. But it is a most 
impressive performance. So I'd like to 
say again: I'm still bullish on the 
Philippines. 



August 1987 



29 



THE SECRETARY 



Q. At the palace today in your 
toast, you said something about the 
Phlippines having the responsibility to 
solve their insurgency problem, but in 
a way acceptable to all of the Filipino 
people. Do I detect in that a note of 
caution from the United States that its 
help will be a contingent on the Philip- 
pine Government observing basic 
human rights and a cautionary word, 
in particular, about the vigilantes? 

A. That wasn't intended as a cau- 
tionary word in any sense. But I think 
one of the outstanding things about the 
way President Aquino has gone about 
the effort to get at the insurgency is the 
process of inviting them, in the context 
of a new environment and a new govern- 
ment and a new attitude, to come out of 
the hills and join in the society— and her 
effort at reconciliation, her effort at 
negotiation. All of these things represent 
a hand out to the people in the insur- 
gency. At the same time, unfortunately, 
there are too many in the insurgency 
who use methods of violence. It is clear 
enough, and President Aquino has put it \ 
very well, that the government must use 
its capacity, by its strength, to enforce 
law and order. 

As far as the citizens groups are con- 
cerned, as I understand it, these are 
being organized within the framework of 
governmental authority. They aren't 
sort of free-floating vigilante groups. 
President Aquino has supported that 
approach, and we support what she's 
standing for there. 

Q. Is this the $176 million part of 
the $900 million pledged by Ronald 
Reagan in connection with the revised 
Military Bases Agreement? 

A. I couldn't hear the question, 
although I think I— you are asking 
whether the $175 million for which I 
signed today is part of the already 
announced program, is that the 
question? 

Q. Is this part of the 1983 pledge 
of Ronald Reagan regarding — in con- 
nection wdth the Military Bases Agree- 
ment? The $900 million? 

A. There was a pledge of best 
efforts for the period from 1985 through 
1989 for a total of security and 
associated economic assistance of $900 
million. And I think when the date 
arrives, it will turn out that the amount 
will be over a billion dollars. So the 
United States will meet fully the com- 
mitment to use our best efforts to get 
that sum of money. 

Q. So the $176 million is not part 
of the $900 million? 



A. No, those are part of— those are 
economic support funds and they are 
part of it. 

Q. The economic support fund is 
part of the $900. Is— 

A. I'm sorry, I just can't understand 
what— 

Q. The $176 million, you said, is 
part of the economic support fund 
which, from my studies, it is part of 
the $900 million pledged by Ronald 
Reagan in 1983. So then the $176 
million is part of the $900 million. 

A. The way it \Vorks is that there 
was a commitment on the part of the 
United States to use its best efforts to 
support, to the tune of $900 million, for 
the period of time I identified. That's a 
general pledge. As time goes along, pro- 
posals are made by the President as part 
of our budget to Congress. The Congress 
considers our requests and it's actually 
the Congress that appropriates funds; 
and they do that from year to year. And 
as funds are appropriated, then pro- 
grams are put together jointly between 
the Philippines and the United States as 
to exactly what it is that's going to be 
supported. Then the particular projects 
that are identified, or in some cases it's 
general support, are then funded. So 
what I signed today was part of that 
process. 

Q. Some members of the Philip- 
pine congress have expressed a 
preference for an arrangement on the 
bases that would be a pure rental 
agreement. What is your approach to 
that proposal? 

A. First, as I have said, the best- 
efforts pledge of the United States will 
certainly be fulfilled— more than fulfilled. 
But as far as the idea is concerned, the 
concept— that the concept should be one 
of rent; that is, the Philippines makes 
certain bases available to the United 
States and the United States pays rent 
for its use of them. I don't think that's a 
good concept. The idea that we have 
been working from all over the world is 
that the presence of U.S. forces in a par- 
ticular area is viewed by both the United 
States and the country involved— in this 
case the Philippines— as a contribution to 
stability in that country and in that part 
of the world. 

We have forces, for example, in 
many countries of Europe as part of our 
joint effort with our European friends to 
deter aggression and maintain peace in 
Europe. And it's a joint enterprise. In 
some cases, there are economic and 
security assistance payments in connec- 
tion with that, and in the case of a few 
countries, mostly the countries involved, 



pay for the maintenance of the bases, as 
is also true in Japan. It's also true, in 
certain respects, in Korea. 

That is the basic concept, that we 
should be doing something that's 
mutually beneficial. And I think in the 
case of the bases at Clark Field and 
Subic Bay, the presence of the United 
States there is something that con- 
tributes to stability here and stability 
throughout the region. 

I'm going from here to a meeting of 
the ASEAN countries, and I know each 
year, as I talk with the foreign ministers 
of those countries— conscious as they are 
of the increased Russian presence in 
Vietnam, Cambodia, Cam Ranh Bay, and 
the strength of the Chinese— they're in- 
terested in having the U.S. presence 
because they feel that it contributes to 
stability. 

That is the concept, not a rental con- 
cept. It's something that's viewed as 
mutually beneficial, but which, in the 
light of the capabilities of the United 
States, is accompanied by funds to sup- 
port the security assistance and the 
economic development of the country. 

Q. Do I take it then that the U.S. 
Government is not amenable to a 
nuclear-free zone for the region? 

A. Our view is that the nuclear-free 
zones are basically not a good idea at 
this point. And the reason is this: Peace 
in the world depends upon our ability, 
along with others but primarily our abil- 
ity as a major nuclear power, to deter 
aggression, and it's the deterrent 
capability that maintains the peace. 

When you place restrictions and 
declare more and more ideas around the 
world nuclear-free zones— I might say, 
restrictions which, if we sign, the United 
States would observe, although others 
that have nuclear capability might not 
observe. But when you declare more and 
more places nuclear-free zones, you 
erode the ability to deter aggression and 
deter war. Since we all have a stake in 
peace and stability, anything that 
weakens the deterrent capability is 
destructive of peace and stability. That's 
why we oppose the nuclear-free zones. 

Q. I'd like to find out about the 
military aid. There was $50 million 
that was approved during the visit of 
President Aquino in the United States. 
And then there was another talk about 
$50 million under consideration in the 
House of Congress. Can you give us 
the latest on this? Is it approved? 

A. We are seeking to add to our 
security assistance for the fiscal year 
1987— that's the year we're now in— by ^.| 
$50 million. The President proposed that || 



30 



Department of State Bulletirl 



THE SECRETARY 



as part of a supplement to the FY 1987 
budget. We persuaded the House of 
Representatives in committee to put it 
into that budget, but in the action on the 
floor of the House of Representatives, it 
got knocked out— not because of any lack 
of support for the Philippines but 
because of various legislative 
maneuverings. 

In the Senate, in effect, this money 
has been put into their bill— it's struc- 
tured in a little different way, but 
basically it's there. And so, now, when 
the Senate bill goes to conference with 
the House bill, it is our hope— and we are 
working to try to help bring it about— 
that the House will accept the Senate 
version, and in which case, basically the 
money would be forthcoming. But it's 
part of a general bill the Philippine part 
of which is not controversial, but there 
are other aspects of the bill that are 
controversial. 

You don't know just how all of this is 
going to come out. But the main point is, 
there is broad support in the Congress 
for help to the Philippines as well as, of 
course, the President's own proposal. 
That being the case, I hope that in one 
way or another, we can bring it forward, 
but the legislative situation is com- 
plicated enough so that I can't stand 
here and say for sure that that will 
happen. 

Q. This is a followup question to 
your point about the anti-nuke zone in 
the region. We were able to get a 
secret document which quoted several 
American officials as saying that they 
would be against the ASEAN Foreign 
Ministers coming up with a strong 
statement on the nuke provision in the 
postministerial meeting in Singapore, 
and that should they decide to do so. 
to implement, to establish such a zone, 
ASEAN access to this American 
market would be affected. Any reac- 
tion to this? 

A. I don't know about secret 
documents, so I can't comment on 
whatever it is that you've obtained. I 
doubt that there is such a document, and 
that's not the approach that we would 
take. You don't have to have a secret 
document to know the position that we 
have. I've just said it here, on-the- 
record. And as far as our relationship 
with the ASEAN countries is concerned, 
it's strong with each country. We have 
supported the ASEAN organization, and 
we will continue to do that. We'll work 
out our problems. As a matter of fact, 
I'm a little surprised that all the 
emphasis on this here, because quite a 
few of the ASEAN Foreign Ministers 
have told me that they are opposed to 
this proposal. 



Q. With regard to the bases: Your 
meeting this morning with the 
congressmen-elect, they mentioned 
that you were insistent on using the 
term "aid" rather than "rental." If 
the Philippines insists on using the 
term "rental," is there any possibility 
or will there be any moves on the part 
of your government to pull out from 
the bases? 

A. I've tried to explain why it is 
that I think an idea other than rental is 
more appropriate. After all, we're talk- 
ing here about two independent, large, 
important, sovereign countries. And we 
have a working arrangement between us 
that is mutually satisfactory. The pres- 
ent arrangement runs until 1992, and 
there will be a time before long when 
discussions will start about what to do 
when that date arrives. What positions 
people will take is something that 
remains to be seen, and I don't want to 
make unequivocal statements of one kind 
or another here. 

But I do want to make it clear that I 
think the statement, the concept, of 
doing something that is mutually benefi- 
cial is the right concept— not one in 
which one party rents something from 
another party, implying that the party 
that does the renting is really not too 
happy about it, that it's just a matter of 
finance. It isn't a matter of finance; it's 
a matter of security and mutual benefits, 
and that's the way I think it should be 
looked at. 



STATEMENT, 

ASEAN POSTMINISTERIAL 

CONFERENCE, 
SINGAPORE, 
JUNE 18, 1987" 

This year's meeting between ASEAN 
and its dialogue partners has special 
meaning. You will celebrate ASEAN's 
20th anniversary when your heads of 
government gather in Manila in 
December. These 20 years have seen a 
remarkable transformation in the land- 
scape of Southeast Asia, and ASEAN 
has been largely responsible for making 
that transformation one of peace and 
growing prosperity. 

We have a long and, what looks to 
be, a productive agenda, reflecting the 
wide range of interests our countries 
share. Before we begin our discussion, 
however, I would like to focus on several 
of the issues before us. 

The tragic conflict in Cambodia con- 
tinues, threatening regional security and 
prolonging the agony of the Khmer peo- 
ple. Your steadfast stand against Viet- 
namese aggression has been a bulwark 



in preserving stability in this region, and 
it has offered hope to the Cambodian 
people. We all agree it is imperative to 
keep pressure on the Vietnamese to end 
their occupation. Essential to this effort 
is continued support to the noncom- 
munist resistance. Also essential is the 
continued isolation of Vietnam. That 
isolation is a result of its own policies. 
Without a change in those policies, its 
people will continue to pay a heavy price. 

Our position on diplomatic and 
economic ties with Hanoi remains 
unchanged: We will not move toward 
normalizing relations with Hanoi until a 
settlement has been reached, acceptable 
to ASEAN, which involves the with- 
drawal of Vietnamese forces from 
Cambodia. 

In recent months, we have all 
noticed signs of what we hope suggest 
movement toward a settlement. Those 
signs are fitful, vague, and sometimes 
mutually contradictory. Perhaps no one 
knows what really lies behind them. By 
all rational standards, Hanoi's own inter- 
est should lead it to begin withdrawing 
its forces from Cambodia, but to date 
the Vietnamese appear to have taken no 
concrete steps in that direction. The 
next move is up to Hanoi. Nevertheless, 
we need to consider what we can do to 
move things toward a settlement. We all 
want to see a just settlement which pro- 
vides for Khmer self-determination and 
ensures that Pol Pot and the Khmer 
Rouge do not return to power. 

I'd like to turn to an issue of intense 
concern to the United States— the 
POW/MIA issue. The hopeful process of 
cooperation with Vietnam on the 
POW/MIA issue was halted by the Viet- 
namese last year. President Reagan has 
named Gen. Vessey [retired Chairman, 
Joint Chiefs of Staff] as his special 
emissary, in an effort to resolve this 
tragic legacy of the war. We are 
prepared to move forward when we have 
established a firm foundation that will 
assure progress without linkage to other 
differences between us. We appreciate 
ASEAN's efforts urging them to 
cooperate, recognizing, as we do, that it 
is in Vietnam's best interests as well. 
Delay will bring them no advantage. It 
can only separate our peoples further. 

Refugees 

In the years since 1975, the ASEAN 
countries have been generous and 
humane in providing asylum to those 
fleeing oppression in Indochina. At the 
same time, the United States and others 
represented here have responded by 
opening their doors and their pocket- 
books to resettle the vast majority of 



Auaust 1987 



31 



THE SECRETARY 



those who originally arrived in first 
asylum. In spite of our respective 
responses, the problem remains: People 
are still forced from their homelands by 
repressive policies and cruel occupation. 
There is growing concern in some first- 
asylum countries that the resolve of the 
resettlement countries is beginning to 
wane. There is growing concern in the 
United States and other resettlement 
countries that the principle of first 
asylum may be in danger. 

I want first to reassure you that the 
commitment of the United States to 
resolving the Indochinese refugee prob- 
lem is as strong today as it has ever 
been; and second, to urge all of you to 
reaffirm your own commitment to that 
same goal. It has become clear to all of 
us that the refugee problem in this part 
of the world is an enduring one, and we 
must realize that solving it will be a 
long-term process for all of us. 

For our part, we will continue to 
resettle refugees in substantial numbers. 
We will continue our financial and moral 
support of those organizations which 
provide protection and assistance to 
refugees and displaced persons in the 
region. We will encourage other coun- 
tries to maintain their share of the reset- 
tlement effort as we work to find lasting 
solutions which will make resettlement 
itself less necessary. But just as donor 
nations must reconfirm their commit- 
ment to humanitarian aid to refugees, 
first-asylum states must reconfirm their 
commitment to humanitarian treatment 
of all seeking asylum. Those countries 
which have screening and repatriation 
agreements already in place should make 
every effort to make them function ef- 
fectively and humanely, with the con- 
tinued involvement of the UN High 
Commissioner for Refugees (UNHCR). 

While the countries of asylum and 
the countries of resettlement have our 
roles to play, we should never lose sight 
of the fact that the cause of this problem 
we are all forced to deal with does not lie 
with any of us. Rather it lies squarely 
inside Indochina, and it will not be 
resolved until the Vietnamese play a con- 
structive role in resolving it. I would 
urge every one of you here today, 
especially our ASEAN colleagues, to 
engage Hanoi actively in this problem. 
In particular, you can be helpful in mak- 
ing clear to the Vietnamese that allow- 
ing broader access to smoothly function- 
ing orderly departure programs would 
be welcomed by ASEAN as a gesture of 
good faith. This is in the interest of the 
refugees, the settlement countries, 
ASEAN, the Vietnamese themselves, 
and stability and progress in the region. 



32 



I might say parenthetically that, as I 
came here from Manila, a fact well- 
known in our Congress, I received a let- 
ter from two Republican and two Demo- 
cratic Senators welcoming the fact that 
the refugee problem was clearly on the 
agenda and stating their support for the 
points that I have just made to you. I 
make the point that I speak not only for 
the Adminstration but for the broad 
bipartisan consensus that has stood 
behind this program and made it so 
strong in the United States. 

Economic Issues 

Several of us at this table have just come 
from the Venice summit, and economic 
issues are very much on our minds. We 
want to brief you on the results of the 
summit, but we also need to get your 
views on other economic matters. In par- 
ticular, I would like to discuss what we 
can do to bring about a more open 
trading environment. 

All of us depend, to a greater or 
lesser extent, on foreign trade for our 
economic health, and we are faced with 
protectionist pressures from many direc- 
tions. Let me just say, in that connec- 
tion, that people refer to protectionist 
pressures in the United States. There is 
a difference between pressures for pro- 
tection and protection itself. We in the 
United States resist the pressures, we 
hope will be able to do so successfully, 
and we call upon those who already have 
excessive protection to bring it down. 
An outstanding way to do that is 
through the Uruguay Round, and we 
have worked together to begin the 
Uruguay Round, and we must continue 
to cooperate to help the GATT [General 
Agreement on Tarrifs and Trade] talks 
bear fruit. 

I know the ASEAN countries are 
worried about the adverse effects on 
proposed protectionist legislation in my 
country and in the other dialogue part- 
ner countries. It is important that you 
keep the pressure on all of us. It is also 
important, however, to recognize the 
drastic changes afoot in the international 
economy. Export-led growth has worked 
well for many nations, including those in 
ASEAN. But the mature economies of 
the world are beginning to face painful 
problems of restructuring. New infor- 
mation-based industries and services are 
supplanting more traditional manufac- 
turing processes and products of inter- 
national commerce. Moreover, the U.S. 
economy will, inevitably, make the 
adjustments necessary to move from a 
deficit to a surplus trade balance in 
order to service our growing foreign 



debt. In my view, this will happen more 
rapidly than many observers now 
predict. 

I'd like to just take note of the fact 
that the huge U.S. trade deficit has 
emerged not because of a flaw in U.S. 
exports but because of soaring U.S. 
imports. So the market, so to speak, in 
which the United States has to compete 
effectively, is the U.S. market. And we 
do speak that language. At any rate, I 
think the consequences, the strategy— 
the universal strategy of aggressive 
export-led growth— is becoming less 
effective. It is not arithmetically possible 
for every country in the world to be a 
net exporter at the same time. And the 
huge U.S. deficit which we all decry has 
been, in a sense, the place into which 
everyone's export-led strategy for 
growth has gone. The huge surpluses of 
Japan and Germany have fed on this 
deficit. So something will have to give 
here, and it will be, possibly, a traumatic 
experience. 

Beyond that, demand has slackened 
for many commodities, and competition 
is widening and intensifying in the 
export of agricultural products, textiles, 
steel, autos, and consumer electronics. 
And, most serious of all, the efforts of 
many nations to expand exports, while 
maintaining barriers to protect their 
own domestic markets, are a powerful 
stimulus to destructive protectionism 
everywhere. 

'Thus, while you must keep up 
pressure on us to eschew protectionist 
policies, you must act, too. I can do a 
better job of convincing the Congress to 
leave our door open to imports if more ol 
our trading partners open their doors 
wider. This year, we have seen real 
progress in this regard. For example, I 
am especially gratified at the forward 
movement some of you have made in 
extending intellectual property rights 
protection since we last met in New 
York in October. I hope that this 
momentum, built up so rapidly in the last 
year, will continue and that you can take 
other steps needed to compete in today's 
emerging international economy. 



STATEMENT. 
ASEAN-U.S. DIALOGUE, 
SINGAPORE, 
JUNE 19, 1987' 

There are many things which Americans 
admire about the ASEAN countries and 
the organization you have so successfully 
nurtured and strengthened. Perhaps the 
most attractive attribute to us is your 
sense of pragmatism. ASEAN was born 
with high hopes; the ideals which you 



Department of State Bulletin 



THE SECRETARY 



espouse are far-reaching. This is good, 
for all human endeavor needs a noble 
vision to strive for. But your successes 
have come in areas where you have 
measured your capabilities realistically, 
decided your priorities wisely, and 
expended your efforts to the fullest 
within those priorities. 

The best example is your resonse to 
the Vietnamese invasion of Cambodia. 
You saw your security— your very 
existence— threatened when overwhelm- 
ing Soviet-supported force was used to 
bring about political change in your own 
backyard. You knew that aggression 
could not go unchallenged. But you were 
faced with an army of over a million 
men, flush with victory within Vietnam 
and then in Cambodia. Clearly, you were 
not able to repel the invaders yourselves. 

So what did you do? Each of you 
had, and still has, different perspectives 
on Vietnam and its eventual place in the 
region. Yet you have managed, in the 
face of the clear threat posed by invasion 
and occupation of a close neighbor, to 
come together and forge a common posi- 
tion. You undertook practical action at 
the United Nations, in other interna- 
tional organizations, and with other 
interested parties, designed to show 
Hanoi that the world does not and will 
not accept aggression. At the same time, 
you have been tireless in pursuit of a set- 
tlement which will protect the interests 
of all parties involved and reflect the will 
of the Cambodian people. You have sus- 
tained this position now for 8 years, flex- 
ible in your approach, but adamant in 
resisting efforts to weaken your resolve. 
The Cambodian issue is not over yet, 
but, as we discussed yesterday, there are 
signs things might be moving in the 
right direction. When a peaceful settle- 
ment does come to Cambodia, it will be 
due, in no small measure, to the clear- 
headed, consistent, and practical ap- 
proach which you in the ASEAN coun- 
tries have taken. 

In the economic field, while your 
achievements so far have been more 
limited, you have also shown a prag- 
matism which has allowed your efforts 
to continue and build momentum toward 
a time when greater cooperation will 
benefit all and, therefore, be possible. 
Your economies, for reasons of geog- 
raphy, history, and plain chance, are 
largely competitive. This limits the scope 
for common action like investment 
exchange or freer trade. 

And so you have focused your efforts 
in areas where cooperation is more feas- 
ible, for example, adopting a common 
front in dealing with the rest of the 
world. You have worked closely together 



in commodity negotiations, as we in the 
United States have discovered to our 
chagrin at times. By combining together, 
you have multiplied your impact in the 
GATT, becoming a strong, positive force 
in the Uruguay Round. You work 
together effectively to influence the 
policies of the dialogue partners. By con- 
centrating your efforts on doing the 
do-able and avoiding extravagant 
schemes with no chance of success, you 
have enhanced your credibility and 
drawn the admiration, and sometimes 
envy, of the rest of the world. You have 
also built a base for doing more in the 
future. 

Your flexibility and pragmatism will 
be challenged, perhaps, as never before, 
as your opening statement suggested, 
over the next few years as the world 
economic system adjusts to the inev- 
itable, and in my view, possibly rapid 
decline in the U.S. trade deficit. Given 
the importance of exports, particularly 
exports in manufactures, to all of your 
countries, you are going to have to work 
hard to diversify your markets. While 
you may be able to maintain your cur- 
rent market share in the United States, 
you clearly will not be able to look to the 
United States to take major increases in 
your exports— not necessarily because of 
U.S. protectionism but simply because of 
the adjustments the U.S. economy will 
have made in order to service our large 
and growing external debt. 

ASEAN's achievements have been 
remarkable. Other countries in other 
parts of the world have tried what you 
are doing and have foundered. It may be 
that differences among them are too 
great to overcome or they have been 
held back by too ideological an approach. 
Of course, the countries of ASEAN have 
also not been able to do everything you 
have wanted. Poverty and hunger still 
exist in the region. War continues in 
Cambodia, and a large and hostile army 
remains on Thailand's border. But you 
have succeeded where others have failed. 
You know where you are going, and you 
know what it takes to get you there. You 
know the magnitude of the obstacles you 
face, and you know what you can and 
must do to overcome them. The spirit of 
pragmatism permeates your work; it is 
what makes ASEAN the unique 
organization it is today. 

We are always happy to come to 
these annual dialogue partner meetings 
and, perhaps of more significance, happy 
throughout the year, day-to-day, month- 
to-month, to work with each country 
here, as well as with the ASEAN group 
as a group. 



NEWS CONFERENCE, 
SINGAPORE. 
JUNE 19. 1987' 

First, I want to express my appreciation 
to my host, the Foreign Minister of 
Singapore, Mr. Dhanabalan, and to all of 
the people of Singapore for their very 
cordial and hospitable reception. I am 
very pleased to have had a chance to 
participate in this 20th postministerial 
dialogue partners meeting. This is my 
fifth go-around on these meetings. They 
are always interesting, and they are 
always productive, businesslike, worth- 
while discussions. We have had 
exchanges on many subjects, most par- 
ticularly the questions of Cambodia, of 
Indochinese refugees, and various 
aspects of the international economic 
scene. I expressed firm support of the 
United States for ASEAN's efforts to 
keep the pressure on Vietnam to end its 
occupation of Cambodia and support for 
ASEAN's efforts to bolster the noncom- 
munist resistance and to bring about 
self-determination for the Cambodian 
people. 

As far as refugees are concerned, I 
expressed the continuing readiness on 
the part of the United States to help 
resolve this human tragedy, no matter 
how long it takes. Of course, we must 
remind ourselves that the reason for 
these refugees is the nature of the 
Government of Vietnam. That is what is 
producing the problem. 

I reaffirmed our commitment to an 
open international trading system. We 
worked together very effectively with 
the ASEAN countries in the Uruguay 
Round, in getting it started, and now 
that it is going on. Of course they are 
concerned, as I am and everyone is, 
about the problems of protection around 
the world, including in the United 
States. We will, of course, be fighting 
against that. All-in-all, these discussions 
have been very productive and I am 
pleased to have had a chance to take 
part in them. 

Q. On the airplane the other day 
you said something which we would 
like you to follow up on. You said on 
Cambodia that the Soviets have been 
developing their presence in Cam- 
bodia. Can you tell us more about that? 
Can you put any numbers on it? 

A. I can't put any numbers or preci- 
sion on it, but it is a general impression 
having to do with port facilities, but I am 
not able to pin it down more than that. 

Q. Can you say what kind of a 
presence it is? Is it military advisers? 



33 



THE SECRETARY 



A. No, it is more, I believe, a ques- 
tion of having access to facilities which 
can be very useful to them. It is 
something that we just see like a cloud 
on the horizon. 

Q. The South Korean Government 
is reported to be contemplating mar- 
tial law to deal with the demonstra- 
tions there. Do you think that is a 
good idea? 

A. We have, of course, been con- 
cerned about the difficult problems that 
we now see in Korea, and we have been 
in close touch with the Korean Govern- 
ment. Our advice is to somehow resume 
the process of dialogue between the 
government and the opposition so that a 
method of establishing a democratic 
tradition can be worked out in a 
mutually agreeable way. It is a difficult 
but extremely important matter for the 
people of Korea to see accompanying 
their marvelous economic performance a 
continuation of the transition to a more 
democratic form of government. It is a 
tricky, difficult problem, and we want to 
help in every way we can to see them do 
it. The resumption of dialogue, I think, is 
a key. 

Q. You have heard a presentation 
from the ASEAN on the concept of a 
nuclear-free zone— nuclear-weapon- 
free zone in Southeast Asia. Did they 
make you understand better why they 
want to have this treaty? 

A. I think the reasons are reasons 
that we all share. We are all concerned 
about nuclear weaons. President Reagan 
has said that his dream is to see the day 
when we can get rid of them. The Presi- 
dent has been conducting a process of 
arms control different from any process 
of nuclear arms control that has ever 
gone on before, namely, a process 
designed to reduce the level of nuclear 
arms. We share those concerns and 
share that outlook. 

However, it is also the case that the 
basic peace in the world, not that there 
haven't been important conflicts, but the 
basic peace in the world has been kept 
through nuclear deterrence. As long as 
the Soviet Union has massive nuclear 
weapons, it is essential that the United 
States be able to have the weapons 
needed to deter aggression. Therefore, 
we are very reluctant to see the spread 
of so-called nuclear-free zones, because 
they tend to lessen the ability to keep 
the peace through our deterrent capabil- 
ity. That is the main point. 

Q. You seem to have emphasized 
the U.S. support for noncommunist 
factions in Cambodia. Is there an 



international effort to eliminate the 
Khmer Rouge, and if there is one. 
would the United States support a 
joint effort to get rid of Khmer Rouge? 

A. The problem with Pol Pot and his 
supporters is that they have a track 
record in government that is a very 
reprehensible one. We can never support 
a return to power by that group. We 
support the noncommunist resistance, 
joining ASEAN in that effort. 

Q. Did you discuss about the U.S. 
bases and insurgency problems in the 
Philippines? 

A. When I was in the Philippines, 
we discussed the economic growth that 
has returned to the Philippines following 
their economic reforms. They have got 
their economy now growing. For the 
first time in several years, it is estimated 
at a little over a .5% rate. 

We discussed the fact that through 
an arduous process of 16 months, the 
Philippine Government has put into 
place a new constitution and people 
elected to a legislative, as well as, of 
course. President Aquino, clearly 
legitimated by virtue of the consent of 
the Philippine people. I think it is by now 
quite clear to everyone that the com- 
munist insurgency, however desirable it 
may be to entice people out of the hills to 
join in the new situation on a nonviolent 
and democratic basis, the communist 
insurgency, nevertheless, is strong and 
completely ready to use violent means to 
overthrow or otherwise affect this very 
legitimate and strong governmental 
process that the people of the Philippines 
have put there. 

We certainly discussed that, and, of 
course, the United States has supported 
the efforts of President Aquino and her 
government to improve the professional- 
ization and the general capabilities of the 
Philippine Armed Forces and to put it in 
a position to take this insurgency on and 
put it down. 

Q. How about U.S. bases? 

A. The U.S. base question really 
hasn't come up in any strong way. They 
are there. We have an agreement that 
continues until 1992. It will be reviewed 
next year, and that's something for the 
future. 

The only question that has come up 
is a conceptual one. And that is, what to 
call the flow of funds from the United 
States to the Philippines, in the light of 
the fact that we have the privilege of 
using the bases. Some argue that it 
would be good to call that flow of money 
"rent." We, in the United States, are 
reluctant to use that term and that con- 
cept, and we don't use it anywhere in 



the world. We believe that it is more in 
keeping with the dignity of two sover- 
eign states and more in keeping with the 
genuine nature of what the bases are 
about; to regard our presence there with 
the Philippine Government as being 
something that works to the mutual 
advantage of both governments. It helps 
the United States to be there, and it 
helps the people of the Philippines in 
their security, as well as the people of 
the ASEAN region of which the Philip- 
pines are a part, to have the U.S. 
presence there. It's a matter of mutual 
advantage. 

At the same time, in the light of the 
circumstances of the two countries, the 
United States has pledged its best 
efforts to see that a certain specified 
flow of funds goes forward. And I think 
that when the period from 1985 to 
1989— during which the United States 
pledged to use its best efforts to have a 
flow of about $900 million-when 1989 is 
through with, and you look back on that 
period, I feel quite confident that the 
flow will exceed a billion dollars. We will 
have more than met the best efforts 
pledged. But that's the only question 
that's come up, and is strictly a concep- 
tual one, but one that's important to the 
sense of purpose and sovereign dignity 
of both countries. 

Q. There have been some renewed 
calls on Capitol Hill for sanctions in 
South Korea, in light of all the prob- 
lems they are having there. How do 
you feel about that, and I'd like to ask 
if you could assess what impact these 
demonstrations are having on the abil- 
ity of this dialogue to be started? 

A. There are difficulties in South 
Korea, but I think it is entirely inap- 
propriate every time there are dif- 
ficulties somewhere for people to start 
screaming about sanctions. The problem 
is quite the reverse: to work with the 
people of South Korea and the various 
leaders of South Korea, to help them 
find their way back to the dialogue that 
can produce the constructive result that 
we want and that they want, recognizing 
that it's not easy, that they're trying to 
do something that they've never done 
before. We need to exercise a strong 
sense of purpose and go about it that 
way. That's what we're doing. They are 
in no doubt about our views and our 
readiness to help in this process. 

Q. And on the assessment of the 
demonstrations? 

A. I've said, I think, that they are 
obviously having a difficult time. Just 
how to assess the breadth of the 
demonstrations is a little— apparently 



narwjmc 



Ryllalm 



THE SECRETARY 



there is quite a lot of uncertainty about 
how widespread they are, but at any rate 
it's clear that they are in difficult times. 

Q. Can you assess the impact of 
what the United States is trying to do 
in South Korea and on the prospects 
for resuming the dialog^ue if the South 
Korean Government was to declare 
martial law? 

A. There are various gradations of 
actions that the South Korean Govern- 
ment can take to deal with the problem 
of potential violence. Just what they're 
going to do, I'm not sure. We see 
various rumors and of course, we, 
through our Ambassador, Mr. Lilley, are 
in very close touch with their authorities. 
But what we think is necessary is a set 
of processes that contain the potential of 
violence and are consistent with restart- 
ing the dialogue that we think is a 
desirable component of this process. 

Q. What's your response to Mr. 
Dhanabalan's remarks this morning on 
the ASEAN-U.S. initiative? 

A. This is an initiative involving or 
proposing a discussion between ASEAN 
and the United States about economic 
matters, the kind of structured and 
systematic examination of the way we 
interact, the nature of problems and how 
to deal with them, and to examine 
whether or not there aren't some addi- 
tional things that we could do that would 
operate to our mutual advantage. Our 
reaction to that is a very positive one. 
We will work at this. We do have a lot of 
continuing contact between the United 
States and ASEAN throughout the year, 
and it's highlighted each year by this 
dialogue partner meeting. But we have 
meetings in Washington and New York 
and various other places, so it's a contin- 
uing dialogue. But I have designated the 
Under Secretary of State for Economic 
and Agricultural Affairs, Mr. Wallis, 
who is here, as a person ready to lay out 
the works, so-to-speak, on this initiative 
and I invited Mr. Dhanabalan to desig- 
nate somebody, and I'm sure that he'll 
do so, and we'll get to work on this. It's 
a constructive idea. 

Q. Can you tell us, in your discus- 
sions with Mr. Dhanabalan, did you 
touch on either the topic of press 
freedom in Singapore and the action 
that Singapore has taken against Time 
magazine and the Asian Wall Street 
Journal, or on the subject of the 16 
detentions made recently in Singapore 
on allegations of a Marxist conspiracy? 

A. We— to use your phrase— touched 
on both of those. In fact, we discussed 
those issues rather extensively, and we 
have expressed our views involving 



freedom of the press. The other matter 
of the 16 people you mentioned is 
something that is taking place within the 
framework of the laws of Singapore and 
the courts, and I am not going to make 
any comment on it. 

Q. I was wondering if you could 
discuss just briefly what you will be 
raising in your forthcoming Australian 
visit by yourself and Mr. Weinberger 
[U.S. Secretary of Defense] and also 
perhaps the current concerns of the 
United States in the South Pacific 
region, particularly in regard to New 
Zealand and its withdrawal from the 
ANZUS alliance? 

A. This meeting that we will be hav- 
ing in Sydney this year is something we 
do annually. At one time, we did it with 
Australia, New Zealand, and the United 
States. Since New Zealand has basically 
opted out of ANZUS, the United States 
and Australia do it together. Last year 
we did it in San Francisco and this year 
in Sydney. And we have a useful and 
traditional agenda. We look at security 
matters and developments in this part of 
the world carefully together. The Aus- 
tralians have put out a new defense pro- 
gram. We talked about that last year, 
and we will talk about that again. We 
share views about economic devel- 
opments in this part of the world and, 
more generally, throughout the world. 
That is the general nature of the 
discussion. 

It has been a very useful kind of 
exchange and, as I say, been scheduled a 
long time. I always look forward to it, 
particularly when I come to Australia, a 
country that I know rather well. 

Q. Given the coup in Fiji and the 
type of Soviet and Libyan activity in 
the region, will there be more empha- 
sis on security issues, or do you expect 
some new element in the talks? 

A. Of course when we talk about 
security issues, we talk about the South 
Pacific area. And we have done that. 
The United States, as you know, has had 
a long process of negotiations going on 
for several years, finally culminating 
successfully in negotiating a tuna fishing 
agreement with the island states. We 
are very pleased to have that completed, 
and we share views about what is taking 
place. I make a point each year as I 
come here to stop at one of the island 
states to let people see our interest and 
concern and readiness to be helpful. Our 
naval ships call, as do Australian ships. 
This is an exchange that helps us as to 
the information base that we are both 
working from and allows us to coordi- 
nate our efforts to a degree, as we do 
with other countries. For example, I 



have discussed this whole subject 
carefully with Mr. Kuranari, the Foreign 
Minister of Japan, and followed with 
great interest his trip through the South 
Pacific several months ago. That is a 
very useful thing to do. I am sure that 
the problems in Fiji will come out, and 
we will want to explore them. 

Q. Does the United States support 
continued French nuclear testing in 
the South Pacific and the French 
Government's proposals for a self- 
determination referendum in New 
Caledonia? Is the United States con- 
cerned at the widespread hostility 
which these French actions have 
aroused in and around the South 
Pacific? 

A. We are concerned about the 
hostility. At the same time, the French 
nuclear capability is part of the deter- 
rent force that I spoke of earlier. If you 
are going to have operative nuclear 
weaons, you have to have a place to test 
them. Now, we are, of course, very 
interested to see and hear assurances 
from France that its testing program is 
totally safe and is completely consistent 
with undertakings that there be no possi- 
ble venting or anything that is 
dangerous as a result of its test. 

From the standpoint of the United 
States, we do not test in this region; we 
test in our own country. As far as the 
other main concern that I have heard 
expressed— namely, the question of 
waste— neither we nor France nor Brit- 
ain make any waste disposals in the 
Pacific at all. 

As far as the French handling of 
New Caledonia is concerned and the 
questions around it, that is something 
for the parties concerned to work out. 
Obviously, there is a great appeal to the 
idea of self-determination, let people 
vote and decide what they wish. At any 
rate, we will see how this process 
proceeds. 

Q. Does the United States accept 
that the French tests are safe? 
A. Yes. 

Q. The Government of Vietnam 
has changed and put some new 
people — or rather, some old people in 
charge. Are you more or less opti- 
mistic or pessimistic at this change? 

A. As far as we can see, the nature 
of the people who have now emerged 
seems to snuff out what seemed like 
possible, potential flexibility in the situa- 
tion. It does not seem to be consistent 
with their known postures. So it is a 
rather discouraging matter. 



August 1987 



35 



THE SECRETARY 



Nevertheless, the strategy that we 
and ASEAN have, I think, remains 
absolutely the correct strategy. That 
strategy is: number one, to support the 
noncommunist resistance; number two, 
to do everything we can to isolate the 
aggressor, Vietnam, economically and 
diplomatically. That is being done suc- 
cessfully; and number three, if there 
comes a time and when there comes a 
time that Vietnam is ready to talk 
sense— and sense meaning to get their 
troops out of Cambodia and participate 
in arrangements whereby the people of 
that country can establish their own 
government— if it gets to the point 
where it is ready to talk about that, be 
ready to do so. That is the strategy. It is 
a good strategy. Sooner or later, it will 
work. 

I cannot help but believe that in the 
recent travel of the Soviet Foreign 
Minister through this part of the world, 
as he went to Bangkok and he went to 
Jakarta and went to Hanoi, that the 
price the people of Vietnam are paying 
for what they are doing is extraordinar- 
ily high. You just have to visit the cities 
and see for yourself. And of course, the 
message of the refugees, people voting 
with their feet, is a message about the 
nature of the regime and the undesirabil- 
ity of what it is doing. 

Q. You mentioned the economic 
isolation of Vietnam. To what extent 
are you concerned that some countries 
in the West, notably Japan, and some 
ASEAN countries, notably Singapore, 
are doing big trade with Vietnam and 
perhaps eroding this isolation policy? 

A. I don't think that it is taking 
place on any particular scale. And to the 
extent that it takes place at all, it is not 
sanctioned by the policies of the govern- 
ments concerned. They are opposed to it. 
I think there is a consistent support for 
the policy of economic and diplomatic 
isolation on the part of these govern- 
ments. Of course, the votes in the United 
Nations each year are stunning affirma- 
tions of the world's view that Vietnam 
has no business occupying Cambodia and 
should get out. 



STATEMENT, 
U.S.-AUSTRALIA 

BILATERAL TALKS, 
SYDNEY, 
JUNE 22, 1987' 

Thank you very much for your welcom- 
ing remarks. I am very pleased to join 
Secretary Weinberger in bringing you 
the greetings of President Reagan and 
the warm good wishes of the American 



36 



people. We always look forward to 
visiting Australia, and particularly this 
beautiful city, and I must say. Bill 
[Foreign Minister Hayden], you've 
turned the weather on this morning, and 
I can only fault you for having this 
meeting indoors, rather than looking out 
over this wonderful harbor. 

ANZUS continues to be a key link in 
the global network of alliances that has 
kept the peace for over four decades. 
Important as these alliances are in deter- 
ring aggression, their strength, in the 
final analaysis, derives from a common 
recognition that peace is indivisible and 
that collective efforts are necessary to 
ensure the common good. 

I have just come from meeting with 
our NATO allies halfway around the 
world. The cohesion and strength of that 
alliance has been a critical factor in 
achieving progress toward what we hope 
will be the first major reduction in the 
nuclear arsenals of the superpowers, 
leading to a safer and more secure 
world. As I pointed out in a press con- 
ference in Reykjavik, that cohesion is 
based on the fact that we have had a 
strong pattern of consultation, and we 
take each other's concerns into account. 

Just as the NATO alliance— one of 
the most successful the world has ever 
seen— emerged from the lessons of 
World War II, the ANZUS alliance grew 
out of cooperative defense links forged 
in a common struggle to ensure the 
security of this region. Thirty-five years 
later, our commitment to security here 
in the South Pacific remains as strong as 
in Europe. 

Despite the severe test that ANZUS 
has faced over the years, it remains an 
effective security structure reflecting 
our pattern of close consultations and 
our mutual respect for each other's 
concerns. 

We continue to regret New Zea- 
land's absence from these councils and 
await the time when its policies will per- 
mit restoration of a full role in ANZIJS. 
To this end, we have sought to keep the 
ANZUS framework intact to facilitate a 
return to trilateral defense cooperation 
when circumstances permit. 

Fortunately, the South Pacific has 
been a region of relative tranquility in a 
turbulent world. This has provided an 
environment within which the newly 
emerging states have been able to foster 
democratic institutions free from the 
threat of outside interference. 

However, this is not a time for com- 
placency. Recent developments in Fiji 
have demonstrated that we cannot take 
the stability of local governments for 
granted. 



We also share your rejection of 
political opportunism and destructive 
interference by outside forces in the 
South Pacific. As your government has 
been so effective in pointing out, the 
efforts by Libya to sow discord and 
subversion within the region should be a 
cause of concern to regional govern- 
ments. Your recognition of the unwel- 
come role Libya has begun to play in the 
region was demonstrated by your firm 
action in closing the Libyan People's 
Bureau and expelling Libyan diplomats. 

Nor can we forget that the Soviet 
Union, which has used its support for 
Vietnamese armed intervention in Cam- 
bodia to establish in Cam Ranh Bay the 
largest Soviet military base outside the 
Soviet Union, is engaged in a fishing 
expedition in the South Pacific aimed at 
increasing its regional presence. What 
are they fishing for? We can assume that 
the Soviet Union will go on taking 
diplomatic, commercial, intelligence, and 
other initiatives in the region, aimed in 
part at undercutting vital alliance inter- 
ests in the Pacific. 

In short, the demand for clear- 
sightedness in recognizing potential 
sources of instability in the region are 
greater than ever before. Moreover, the 
efforts by outside powers to influence 
regional developments provide a con- 
stant reminder that the peace of this 
region cannot be separated from the 
quest for peace elsewhere in the world. 
Thus the significance of ANZUS for both 
our countries, and for gobal security, is 
as great as it ever has been. 

Your recently completed defense 
review testifies to your clear vision in 
recognizing the security challenges we 
face. We noted, in particular, the high 
value the defense white paper attaches 
to our alliance partnership and your 
clear recognition that regional defense is 
part of global defense. We share that 
assessment. Our cooperation retains its 
larger significance. Our joint facilities 
enhance the deterrence of nuclear war 
through providing for strategic early 
warning. These same facilities allow us 
to verify arms control agreements, thus 
making arms control possible. By keep- 
ing the peace in this region, we can only 
strengthen world peace. 

We also work together in military 
exercises, improving the capability of 
our forces to operate separately or 
jointly in the event of a threat to peace. 
We particularly value our ship and air 
access to Australia, which enables us to 
play a stabilizing role in the Western 
Pacific and the Indian Ocean, far beyond 
Australia's shores. We note, with 
satisfaction, the warm hospitality you 



THE SECRETARY 



extended during the recent Midway bat- 
tle group visit and the mutual benefits 
accruing from such a deployment. 

Australia's thoughtful role in arms 
control efforts lends added weight to 
your views on these issues. We value the 
frank exchanges we have on such issues 
as the NST talks [nuclear and space 
arms talks]. We appreciate your support 
on the START [strategic arms reduction 
talks] treaty and the excellent work you 
are doing in the negotiations on a com- 
prehensive chemical weapons stand. 
While we disagree on occasion, you are 
aware from our close contact how 
seriously we value your views. 

Since we last met, we've made prog- 
ress on resolving some impediments to 
our good relations in the South Pacific. 
The signing of the fisheries agreement 
was a positive step in which you played a 
constructive role. 

We also applaud Australia's con- 
tribution to achieving consensus in the 
South Pacific Forum. Your active role in 
seeking a resolution to the crisis in Fiji, 
in offering to share intelligence on 
regional security threats, and in securing 
full forum membership for the Marshall 
Islands and the Federated States of 
Micronesia attests to the interest we 
share in regional stability. 

Australia's economic and trade con- 
cerns continue to hold our attention as 
we grapple with our own budgetary and 
trade difficulties. We will continue to 
work with you in international fora to 
resolve these issues equitably, especially 
on the agricultural trade issue where our 
objectives are congruent. There are 
some hopeful signs of progress in the 
Uruguay Round that should help ease 
the current friction in worldwide 
agricultural trade. As you know. Presi- 
dent Reagan reiterated our shared view 
on the urgent need for world 
agricultural reform at the Venice 
summit. 

Bill, Kim [Australian Defense 
Minister Beazley], Cap and I are pleased 
to be with you again. Our consultations 
are always useful in strengthening 
mutual suport and frankly facing up to 
problems when they arise. We look for- 
ward to continuing this process in 
today's talks. 

On the eve of your bicentennial 
celebration, we can take satisfaction 
from our close cooperation in the past. 
We look to the future with certainty that 
our ties will grow even stronger based 
on the willingness of democratic peoples 
to make common cause in defense of our 
principles and way of life. 



]ust 1987 



ARRIVAL STATEMENT. 

APIA. 

JUNE 22, 1987« 

It is a great pleasure for me to be back 
in Apia after 44 years. I have many fond 
memories of Western Samoa and its peo- 
ple, and I have for years wanted to 
revisit a place where people made me 
welcome in the midst of World War II. I 
cannot think of a better time to do so 
than right now, as you celebrate you 
25th anniversary of independence. 

The United States and Samoa have 
been friends since the early days of our 
Republic. This friendship has been 
recognized formally since 1878, when 
our country signed a treaty of friendship 
with the Great Chiefs of Samoa. In the 
Second World War, America and Samoa 
joined hands in the common effort to 
preserve freedom in the Pacific. 

Since that terrible time, the Pacific 
has been at peace. This remarkable 
record is proof that the Pacific way has 
lessons in it for the whole world. You 
deserve the highest respect for having 
developed a set of regional institutions 
that work according to your own tradi- 
tions to preserve peace and harmony. 

My visit is a sign of the importance 
the United States places on its friend- 
ship with the independent nations of the 
South Pacific. Shortly, I will call on your 
head of state to express the friendship 
that President Reagan and the American 
people feel for the people of Western 
Samoa. Then I will meet with your 



Prime Minister, who will be acting not 
only in his capacity as Prime Minister 
but as chairman of the South Pacific 
Forum. We place high value on our con- 
tinuing dialogue with the Pacific nations, 
and we listen carefully to the views of 
their distringuished leaders. 

Today the nations of the Pacific face 
new challenges. In addition to pursuing 
the traditional goals of economic and 
social development, the region must 
determine its response to efforts by 
countries not traditionally part of the 
Pacific scene to carve out a role for 
themselves. In addressing this issue, the 
leaders of Western Samoa have 
understood a basic fact— that one must 
consider carefully the motives of nations 
that do not share our traditions of 
democracy and consensus. The United 
States appreciates Western Samoa's 
support for our efforts to keep great 
power rivalries from affecting the 
stability of the Pacific. 

To the Samoan people, I offer my 
warmest congratulations on achieving 
years of peace, freedom, and respect for 
human dignity. The American people will 
do what we can to help you as you seek 
to preserve those values and develop 
your nation. 



iPress release 131 of June 16, 1987. 
^Press release 133 of June 17. 
'Press release 134 of June 18. 
^Press release 141 of June 22. 
^Press release 142 of June 22. 
•"Press release 143 of June 22. 
'Press release 146 of June 24. 
'Press release 150 of July 6. ■ 



Secretary's Interview on "Meet the Press' 



Secretary Shultz was interviewed on 
NBC-TV's "Meet the Press" on June 28, 
1987, by Chris Wallace, NBC News; 
David Gergen, U.S. News & World 
Report; and Robert Kaiser, The 
Washington Post.' 

Q. The story coming out of Seoul 
today is that the government is going 
to propose a series of new concessions 
to try to end the violence there. Is it 
your sense that one of those conces- 
sions will be constitutional reform 
before the next presidential election? 

A. I don't want to try to comment 
on particular details. The important 
thing to notice is the fact that the 
dialogue has resumed between the Chun 
government and the opposition. That is a 
very encouraging development; 
something that we have worked for for a 
long time. 



Q. You say the dialogue has 
resumed. In fact, the opposition says it 
is not sure whether or not it is willing 
to hold negotiations, because they're 
concerned it will just be more talk and 
nothing specific. Isn't that a 
legitimate fear on their part? 

A. All fears are legitimate, tac- 
tically. The fact is that there have been 
meetings, the government has shifted its 
ground on some important matters, and 
they are engaging. This all is part of a 
very long-term effort on our part and, 
more importantly, on the part of the 
Korean people. 

President Reagan addressed the 
Korean National Assembly in 1983. He 
set out very clearly there our objectives, 
and presumably their objectives, to find 
their way to a peaceful change of power 
through democratic means. That's 
something they had never been able to 

37 



THE SECRETARY 



do. I think just as the Koreans have per- 
formed an economic miracle, at least 
there is a fair chance that they'll be able 
to perform this really political miracle. 
We want to help them do it. 

Q. You seem optimistic then that 
the situation is getting better. 

A. There are problems, as you have 
pointed out. I think there are bound to 
be problems when you see the process of 
changing power, of dispersing power, in 
a situation that's been accustomed for 
many, many years to having it all held in 
one place. So it's a traumatic time; it's a 
difficult time. It's also a very promising 
time if the Korean people can bring this 
off. 

Q. Let me move this a little to the 
west, in the Persian Gulf. On this pro- 
gram 2 weeks ago, we had unusual 
bipartisan agreement. Sam Nunn and 
Henry Kissinger both said that reflag- 
ging Kuwaiti tankers is a bad idea. 
They said you didn't really have a 
policy there. Would you answer them 
and also tell us what's going to happen 
if one of these Kuwaiti tankers under 
an American flag gets attacked by 
Iran? What are we going to do? 

A. The policy that we have in the 
Persian Gulf is longstanding and solid. 
It's based on the fact that area has the 
basic reserve of oil that the West uses. 
The United States is the biggest user of 
oil. The United States, today, is the big- 
gest importer of oil. Oil flows basically 
into a pool, and all of the users take 
from that pool. So we have had, do have, 
and will have in the future a gigantic 
stake. 

In the Persian Gulf area, there is a 
war going on between Iran and Iraq. It's 
been going on a long time. Iran has suc- 
cessfully stopped Iraq from shipping 
directly through the gulf, although their 
oil flows in other ways. Iran ships a lot 
out of the gulf. That's its main way of 
shipping oil out from its country. 

We think that assurance of the flow 
of nonbelligerent oil out of the gulf is 
something important to us. So when the 
Kuwaitis early in the year asked us to 
help them and proposed the idea of 
reflagging their ships, we responded 
favorably. I might say, at the time we 
couldn't even get Members of Congress 
to listen as we tried to brief them. But I 
think it's a sensible thing to do. 

We will have adequate naval forces 
there to protect themselves and protect 
ships. And I think this is the point being 
overlooked— to provide a deterrent 
force. It's basically deterrence— that is, 
the capacity to do something that has 
kept the peace. I think we'll do the job in 
the Persian Gulf. 



Q. Isn't Kuwait, though, an active 
ally of Iraq, and by doing this aren't 
we sidling up to Iraq in that war and 
losing our neutrality? 

A. Kuwait is not a belligerent 
power. 

Q. But it is an ally, isn't it, of 
Iraq? 

A. It has its relationships with Iraq. 
There are lots of countries that have 
relationships with Iraq. There are lots of 
countries that have relationships with 
Iran. But they're not belligerents. The 
belligerents are Iran and Iraq, and we 
are neutral insofar as that war is 
concerned. 

Let me say also that there has been 
going on for quite a while— and it's very 
active right now— a strong diplomatic 
effort which, I think, taking a little issue 
with your opening comment, does have a 
large support. The President made a lot 
of headway in Venice in consolidating 
that. 

On the diplomatic track, in the 
United Nations, we now have agreement 
of the five permanent members of the 
Security Council for a strong cease-fire 
resolution. We are working on the 
followup to that should either party not 
go along with t'ne cease-fire. So there's a 
strong diplomatic effort going along 
with the effort on our part and of our 
friends and allies to see that the oil con- 
tinues to flow from the Persian Gulf. 

Q. On this program 2 weeks ago, 
it was demonstrated that there was 
sharp disagreement in this country on 
both sides of the aisle. Secretary Kiss- 
inger opposed the policy; Senator 
Nunn opposed the policy. There's now 
mounting pressure in Congress, as you 
know, to delay the reflagging, to look 
for alternatives to settle the land war 
through the United Nations. Are you 
opposed to delaying the reflagging and 
supporting an alternative? 

A. Absolutely. I think it would be a 
very bad thing to do from the standpoint 
of the United States. A very bad thing to 
do. I think you're not stating correctly 
the situation in Congress. The situation 
in Congress is that they're in betwixt 
and between. 

Q. They can't make up their own 
minds. 

A. They can't make up their minds. 
But that's what you need a President 
for. The President has to decide 
something, and he has. He has shown 
the leadership and the positive thrust 
here that's needed. 

Q. The President also said that it's 
very important to keep the Soviets out 



of the gulf. Senator Moynihan wrote 
recently in The New York Times that it 
was the Administration's arms sales to 
Iran that sent the Kuwaiti a-scurrying 
to the Soviets, looking for help on the 
reflagging and that, in effect, the 
Administration's arms sales to Iran 
brought the Soviets into the gulf. Do 
you accept that view? 

A. I don't accept that, although it is 
the case that the Kuwaitis did approach 
the Soviets not long after the arms sales 
were revealed. On the other hand, what 
the Soviets had been asked to do and are 
doing is nowhere near as extensive as 
what we're doing and what our historic 
role in the gulf has been. I think it is 
important, as Senator Moynihan said— I 
read that article; it was a good article— it 
is important for us to maintain ourselves 
there. The worst thing in the world that 
could happen, or one of the bad things, 
would be to find the Soviet Union astride 
the supplies of oil to the free world. That 
doesn't make any sense at all. 

Q. You say it would be a bad idea 
to delay the reflagging and the escort- 
ing. Do you have any idea at this point 
when the U.S. escorting of those 
Kuwaiti ships is going to begin? 

A. I'm not sure precisely, but it will 
be some time in the next month. Maybe 
in the first half of the next month. I 
don't think there is any particular date 
set. We want to do it when we have the 
presence there that is considered by our 
naval officers to be adequate to do the 
job. We're assembling that, and we'll do 
it properly and in good time. 

Q. And despite these calls for a 
delay, it's full-speed ahead? 

A. I think that the worst thing in 
the world that can happen to the United 
States is to be pushed out of the Persian 
Gulf. That's a bad thing. 

Q. Let me switch, if I may, to 
arms control. We keep hearing that 
you and Soviet Foreign Minister 
Shevardnadze are going to hold a 
meeting in the next week or so to try 
to speed up completion of an arms deal 
on medium-range missiles, and yet we 
still don't get an official announce- 
ment. Where does that stand? 

A. The reason you don't get an^ 
official announcement is there hasn't 
been any date set. On the other hand, 
Mr. Shevardnadze and I have agreed 
that as soon as it's useful to have a 
meeting, we'll have one. It basically isn't 
a big problem to arrange people's dates. 
We accommodate each other easily that 
way. There has been discussion of a 
meeting some time in the near future, 
but there hasn't been anything set yet. 



38 



Department of State Bulletin^ 



THE SECRETARY 



As soon as there is something set, it will 
be announced. 

Q. The biggest remaining 
difference — or certainly one of the big- 
gest remaining differences — seems to 
be this question of whether or not Ger- 
many should keep its Pershing I#A 
short-range missiles, for which the 
United States keeps the nuclear 
warheads. Is that a potential deal 
buster? 

A. The German missiles, which are 
part of a cooperative program that we 
have with them, are not on the 
intermediate-range missile negotiating 
table. The things that are on that table 
are exclusively Soviet systems and U.S. 
systems. No third-country systems, no 
cooperative systems, are on that table. 

Q. And what if the Soviets say, 
"No deal unless we get rid of those 
systems"? 

A. They're not on the table, so 
we're not discussing them in that 
framework. 

Q. Let me move to the Iran-confra 
affair. Judging by a lot of the com- 
ments of the members of these con- 
gressional committees, there's at least 
a danger now that your era as the 
presider over American foreign policy 
is going to be remembered for decep- 
tion of Congress, for avoiding con- 
stitutional requirements, for privatiz- 
ing diplomacy. What's your response 
to those charges? Is that fair, and are 
you embarrassed at all about this por- 
trait of American diplomacy in this 
period that's coming out in those 
hearings? 

A. This is not a portrait of 
American diplomacy. It's a portrait of 
what happened in a particular instance. 
Some of the things that have been 
revealed I find sickening. However, from 
the standpoint of our broad diplomacy 
worldwide. President Reagan's leader- 
ship and efforts and initiatives have 
yielded great benefits for the interests of 
America. I think that those things will 
be focused on. 

I am a great believer, myself, that 
you must behave yourself in a constitu- 
tional and proper way. To the extent of 
my ability, I've always upheld those 
principles. 

Q. Didn't some members of your 
Administration avoid those principles, 
though, and negate them? 

A. I think that the basic picture is 
one of respect for law, respect for the 
Constitution, and respect for the notions 
of doing things through properly 
accountable methods. 



August 1987 



Q. What did you find sickening 
then, specifically? 

A. I'm going to be testifying myself 
on this pretty soon, but I found, for 
example, the idea that people who were 
representing themselves as in some way 
speaking for America would talk about 
the Dawa prisoners in Kuwait as 
something we would be willing to 
discuss. That is totally wrong, totally 
against the President's policy, and I 
found that just a terrible thing for them 
to do. 

Q. What about the cover-ups? 
What about all the top officials in your 
Administration, some of your col- 
leagues, lying to Congress, lying to 
each other? 

A. From my standpoint I have taken 
my stand within the Administration and 
publicly. I have made information that I 
happen to have available to all investi- 
gating committees from the beginning 
and have asserted myself. I have been 
called to testify and asked to allow 2 
days to do so. I'll save myself for that 
testimony. 

Q. Do you have further reflections 
on how this policy on Iran in regard to 
the contras slipped out of control, 
away from the State Department? 

A. I have some reflections on that, 
but, again, I'll save them for my con- 
gressional testimony. 

Q. There was a startling observa- 
tion by an Assistant Attorney General 
this last week that he would now, 
after questioning Oliver North earlier, 
he would not believe Oliver North's 
testimony under oath. Would you? 

A. This is for the committee to deal 
with. It's a problem. 

Q. Let me ask you a credibility 
question. Everybody involved in this 
seems to have gotten a little mud on 
their fingers. You said on October 8 
that the Eugene Hasenfus airplane 
was hired by private people who "had 
no connection with the U.S. Govern- 
ment at all." Do you regret that state- 
ment now? 

A. That statement was made as a 
result of assurances to me that that was 
the case. 

Q. So you were lied to? 

A. So I was lied to. 

Q- By? 

A. [Assistant Secretary for Inter- 
American Affairs] Elliott Abrams was 
lied to. I remember— I can't specify the 
date, but I have a record of it— when 
Elliott came into my office in a state of 
great distress and said, "We have been 



lied to, and what we have been saying is 
wrong." We then sought to get that 
corrected. 

Q. I want to talk, if I may, about 
Elliott Abrams, because he's under 
tremendous fire in Congress. You sent 
a letter to Congress this week defend- 
ing him and saying, "Well, if he mis- 
led Congress about soliciting funds 
from Brunei, it was because he had 
made a pledge of confidentiality to 
Brunei." Is it really more important 
that he — 

A. That's not what I said. I said that 
Elliott Abrams made a mistake in that 
case. He realized that he made a 
mistake. 

Q. Two questions, if I may. One, is 
it more important to keep faith with 
Brunei than it is to tell the truth to 
Congress? 

A. You don't have to make that 
choice. There are all kinds of things that 
could have been said under those cir- 
cumstances: that there was a solicitation 
from a third country. It was perfectly 
proper, legally authorized by the Con- 
gress, and, Mr. Chairman— or whoever 
you're talking to— we have made this 
solicitation with a pledge of confidential- 
ity. I don't want to say the name of the 
country— or something like that. But 
nobody should lie. He didn't lie. He just 
didn't come forward with the 
information. 

Q. All the President will say at 
this point is that he accepts your 
support — "accepts" your support for 
Abrams. That sounds awfully 
lukewarm. 

A. I've talked to the President 
about it. He is a great supporter of 
Elliott Abrams. People hear different 
things. I happened to be sitting next to 
the President at the Venice summit, and 
somebody shouted a question at him 
about Elliott Abrams. He gave a very 
strong statement, but I've never seen it 
printed any place. 

Q. And Elliott Abrams can stay on 
the job as long as he wants? 

A. Elliott Abrams is doing a very 
good job, and he's done an extraordinary 
job. He's a very capable person, not only 
in the present job but in his previous job 
as Assistant Secretary for Human 
Rights, and, from all indications I have, 
in his previous jobs as a staff member 
for senators. 



iPress release 148 of June 29, 1987. 



39 



THE SECRETARY 



News Briefing of June 2 



Secretary Shultz held a news briefing 
at the Old Executive Office Building on 
June 2, 1987.'' 

It might be useful to start, as we look to 
Venice, at some of the things that have 
happened in the past year related to 
statements made in Tokyo. Each year, 
there is, of course, discussion of security 
issues and East-West issues. I think it 
has been a very important thing that 
each year the countries involved express 
their firmness and cohesion and strength 
and readiness to negotiate. 

Between Tokyo and Venice, we will 
see that a great deal of headway has 
been made in the intermediate-range 
missile discussions. That is beginning to 
take shape in the form of a possible 
agreement— still a lot left to be done— 
but nevertheless, a great deal of head- 
way there. Also, the respective positions 
in the strategic arms talks have moved 
quite substantially, although we are not 
anywhere near as close to an agreement 
in that area. 

At the Tokyo summit, for the first 
time, the leaders focused on the prob- 
lems in agriculture, and a strong state- 
ment was made. Similarly, as in past 
summits, the problem of protection was 
highlighted and the importance was 
pointed to of the Uruguay Round or what 
became the Uruguay Round. So since 
that time, that round has gotten started. 
There is a considerable emphasis on 
agriculture. An OECD [Organization for 
Economic Cooperation and Develop- 
ment] statement just about a month ago 
moved that ball forward some more, and 
I'm sure it will come in for worthwhile 
discussion at Venice. So in that area 
you've seen progress. 

In the field of terrorism there was a 
very strong statement in Tokyo. It 
singled out Libya. Since that time, Libya 
has taken quite a beating, justifiably, 
and there have been interesting develop- 
ments in the field of terrorism. This 
most recent year, as compared with the 
year past, has seen a decrease by 33% in 
international acts of terrorism in 
Europe. And we've seen the emergence 
of the rule of law as one useful tool, an 
important tool in combatting terrorism. 
Just to give a sample of cases: in Britain 
in November, we had the Hindawi trial; 
45 years was the sentence. Hindawi's 
brother was tried in Berlin also in 
November, with a 14-year sentence. In 
Canada in January, two Sikh terrorists 
were apprehended as a result of a very 



40 



fine piece of cooperation between the 
FBI [Federal Bureau of Investigation] 
and the Royal Canadian Force, and they 
were given life sentences. In Paris in 
March, we had the Abdullah trial out of 
which came a life sentence. 

In Japan in April, the Supreme 
Court upheld a verdict of some years 
ago. It was a life verdict involving ter- 
rorists. In Italy in May, the court upheld 
the sentences involved in the Achille 
Lauro case. So we see the rule of law 
emerging here in the field of terrorism. 
No doubt that subject— it's all too true 
that the problem still is present and that 
subject will be discussed further. 

I'm sure Secretary Baker will 
develop the sense in which we have 
increased intensity of economic coordina- 
tion, and we see the emergence of the 
G-7 [Group of Seven finance ministers 
from U.S., U.K., Canada, Italy, Japan, 
France, and West Germany]. Tradi- 
tionally at these meetings there has been 
a review of regional issues. It's been 
useful, and no doubt at the Venice sum- 
mit that will take place again, and there 
will be some special emphasis and inter- 
est in the Iran-Iraq war and some of the 
implications of it. 

So I just thought in previewing what 
might be discussed in Venice, it's worth- 
while to take a look back at the last year 
and see where we've come as a way of 
looking ahead to where we may be 
going. 

Q. What do we want the allies to 
do in terms of supporting us in the 
gulf? 

A. Of course, we want to have peo- 
ple recognize the importance of the prin- 
ciple of freedom of navigation, the 
importance of keeping the strait open, 
the stake that we all have in it, and 
insofar as particular countries are con- 
cerned, we are trying to think out what 
in particular individual countries might 
do. No doubt they are thinking them- 
selves about that, and we'll have to be in 
touch with them as we have some 
specific things to talk about. 

Q. Are they supportive — generally 
supportive, or do they seem to be 
reluctant to be engaged? 

A. I think everyone is supportive of 
the notion that we want to keep the 
strait open. Nobody has any difference 
of opinion about that. Some countries 
are quite active. The British, for exam- 
ple, have two frigates and a destroyer in 
the gulf; the French have ships in the 



vicinity; and other countries are simi- 
larly concerned. But those are the ones 
that have military forces there. There is 
a major role to be played by diplomacy. 
We are working in the United Nations. 
We have some progress there, some dis- 
appointments there, but nevertheless, 
we are working to do everything we can 
to bring an end to the war. That's the 
basic solution. 

Q. What do we want from the 
allies in terms of arms control, and 
how do you assess the coalition 
statement — I mean, the West German 
Government statement on Thursday in 
terms of the INF [intermediate-range 
nuclear forces]? 

A. After the Soviets made their 
most recent proposals on so-called short- 
range INF systems, which were made to 
me in Moscow, we have had a very broad 
and careful process of consultation with 
our allies. There's been a great deal of 
discussion back and forth, and various 
governments have been expressing 
themselves. The German Government 
expressed itself after a lot of thought 
and consultation yesterday, and no doubt 
this will be discussed in Venice and at 
Reykjavik. 

I think what we see here now is the 
alliance, a free alliance, through a proc- 
ess of genuine and open consultation and 
consideration, reaching a consensus 
which the President will consider, and 
which no doubt will be the basis for our 
position in the INF talks. And I think 
what we see is progress toward having 
that picture gel, and progress toward a 
potential agreement. 

Q. But do the Germans have reser- 
vations that might be troublesome? 

A. No, I don't think so. They have 
certain problems, others have little bit 
different problems, and the way you deal 
with these things is you talk about them 
and have the patience to consult with 
free governments and come to a consen- 
sus, which we seem to be in the process 
of doing. 

Q. You talked about the year since 
Tokyo, but one of the things that hap- 
pened in Tokyo was while you were 
talking and the United States was 
pushing for a strong position on ter- 
rorism, it also turned out that behind 
the backs of the allies, you were sell- 
ing arms to the Iranians, and, of 
course, it has also been revealed that 
you were lied to or misled by some 
other of your colleagues at the Tokyo 
summit about that. What is the residue 
of these surreptitious selling of arms 
to the Iranians? What kind of residue 



Department of Stale Bulletin 



THE SECRETARY 



does that have in terms of our 
credibility of making this argument 
with our allies? 

A. I think we have gotten over that 
hump. It has been a problem, but I think 
the merits of the case of not selling arms 
to Iran, given the fact that Iran is the 
intransigent party, are evident on their 
face. So I think that's what carries the 
argument. Not that we have been totally 
successful at the United Nations; we 
haven't been. We seek mandatory sanc- 
tions on whichever country refuses a 
cease-fire at international borders; that 
is basically what we're seeking. Coun- 
tries have agreed to call for the cease- 
fire, and we're having difficulty with the 
sanctions as we have before. But I think 
what countries around the world want is 
not to see a United States kind of dead 
in the water over this issue. They seek a 
United States that's continuing to show 
leadership, and we are. 

Q. Does the United States— do you 
and the President have any problems 
at all, or feel any embarrassment about 
going in and making this argument to 
the allies, given the fact that this 
country was selling arms to Iran a 
year ago? 

A. No. 

Q. Going back to the gulf for a 
moment, as far as allied cooperation is 
concerned, have you any ideas for a 
joint command, a multilateral control 
of some kind, better liaison, coordina- 
tion? How would this work? What are 
you actually looking for? In the 
specific, what are you looking for? 

A. You look for different things 
with different countries. Let's take Iraq. 
It's important that we have an improved 
method of communication so that they 
don't misidentify ships— just to take an 
example. And, no doubt, discussions 
with Saudi Arabia about the use of the 
AW ACS [airborne warning and control 
system]— their flight patterns and the 
cover for them and so on— those are the 
types of things to be discussed. What 
coordination is needed insofar as, for 
example, British ships in the gulf and 
ours, I'm not so sure that any special 
thing needs to be done, but this is 
something the military people are 
reviewing. 

Q. Do you see any merit in the 
notion of escort fees that was sug- 
gested here at the White House by 
several Senators— Senator [Pete] 
Domenici and others? 

A. Exactly what the right way to 
share the burden is is something to work 
through. That is an idea. There are a 



number of others and there hasn't been 
any conclusion about that. But, certain- 
ly, this is a responsibility that we have 
had in front of us for many years. We've 
been in the gulf a long time. It is a vital 
area. It's where a big proportion of the 
world's oil is. I might say that oil is an 
internationally traded commodity, and 
without regard to who gets what par- 
ticular oil, it in a sense flows in to a 
world oil pool and we are the biggest 
consumer of oil in the world, and we are 
the biggest importer of oil in the world. 
So we have a big stake in all of this. 

Q. On the INF point that was men- 
tioned before, do you expect a state- 
ment from this meeting to be issued 
that could— from the allies — that could 
provide the basis for a reply to the 
Soviet offer? 

A. I don't think the summit group is 
the appropriate one to try to reply on 
INF. This is a negotiation formally 
between the United States and the 
Soviet Union. We do not discuss third- 
country systems, only our own systems. 
And, of course, in INF— since it inti- 
mately involves the Europeans in par- 
ticular and also our friends in Asia— we 
have an intense pattern of consultation. 
But in the end, you come back to NATO. 
So I think the Reykjavik meeting has the 
breadth of NATO participation and, no 
doubt, we'll be discussing it there, and 
then in the end it is up to the President 
to make a decision about the U.S. posi- 
tion in Geneva. 

Q. On the gulf what argument is 
the President going to make that the 
allies haven't already thought of 
themselves? I mean, what new 
[inaudible], 

A. I think the arguments are pretty 
well-known. They are fundamental. That 
is, this is a source of energy for the free 
world that is of vital importance now. I 
think it is reasonably clear that the oil 
pool that comes from the gulf is likely to 
be more important in the future rather 
than less important, and, therefore, the 
free world has a major stake in maintain- 
ing its ability to see that nobody else can 
dominate that oil pool. That is the basis 
for this position. 

Q. Is there concern with the West 
Germans and reports that they are try- 
ing to deal on Hamadei, the terrorist, 
and how do we approach them on that 
subject given the strong summit 
statements on terrorism? 

A. We have been dealing with the 
Government of Germany all along on 
that case, and we, of course, would like 
to see extradition to the United States. 
Germany has to consider whether it 



wishes to do that or wishes to try him in 
their own courts for crimes committed 
under their law, and that process of con- 
sideration is very much underway. 

Q. Can you confirms news reports 
that they are trying to make a deal 
where they would give him a token 
sentence? 

A. No, I can't confirm that. I don't 
know that that is so at all. You see 
things printed around, but as far as we 
know, the problem is being addressed in 
a serious and proper way. 

Q. I wasn't quite clear on one 
thing about your remarks regarding 
the Persian Gulf. Do you foresee the 
need for a greater military presence by 
the allies? 

A. What we are— not necessarily, 
particularly so. We had a very thorough 
discussion of what we plan to do with 
the President and the Joint Chiefs. 
Admiral Crowe [Adm. William J. Crowe, 
Jr., USN] presented, in a very com- 
prehensive way, the military thinking on 
that. What is needed, as is always the 
case when you have a threat that you 
have to contend with— what is needed is 
an adequate force to deter— to deter the 
use of force against us. When people see 
that there is a capacity to deal with the 
threat, that has a deterrent value. And 
that is what we need to put there. It's 
defensive and it's deterrent, and prob- 
ably you have to look at the size of the 
number of ships you have to be sure that 
you have an adequate number. 

Q. But from a political standpoint, 
wouldn't it be helpful to you, par- 
ticularly here with questions about 
U.S. policy, to have a greater allied 
military presence and more com- 
munications with the United States? 

A. Of course, there is a British 
presence already. But I suppose if you 
computed it in terms of their presence as 
related to their GNP [gross national 
product] or their population or their 
navy or something, you'd have to say is 
more than ours proportionately. It's 
been an area of traditional concern to 
the British, and they are there. As I say, 
I don't stand here as a military expert 
and ready to declaim on exactly what are 
the right patterns of coordination 
between the parties. The French are also 
in and around the area, and they're 
always effective. They always have their 
own way and their own ideas in this as 
in other areas. But in the end, in the 
clutch, the French always come through 
on these matters. So we know that; 
we've had that experience. 



August 1987 



41 



THE SECRETARY 



As to what other military forces of 
the allies might be there, I think that's a 
question because the capacities 
elsewhere are not so great. But we need 
to look at things that others might do, 
and one or two ideas have already been 
expressed here, and we'll have to see 
where we go. 

Q. The Germans insist on keeping 
the Pershings 1-A. Do you support 
this position? 

A. Our position has been from the 
outset and remains in Geneva that the 
negotiations are between the United 
States and the U.S.S.R. and concern, 
exclusively, systems that are the 
systems of those respective countries. 
Third-country systems are not on the 
table— not British systems, not French 
systems, and not the Pershings. 

Q. But the warheads are under 
American control. 

A. That's true. At the same time, 
the reason why they're under American 
control is not that the Germans don't 
have the money to own them them- 
selves, but because of the kind of a tradi- 
tional reluctance to put nuclear war- 
heads into their hands without some sort 
of dual key arrangement. So I think that 
the rationale for that has perhaps a 
broad appeal. 

Q. In what way can the Japanese 
contribute to the effort to keep the oil 
flowing and the sealanes open? 

A. They can contribute diplomat- 
ically as they do and work at. They can 
probably make contributions of a 
displacement sort, and perhaps 
indirectly of an economic sort. And that 
is a matter that we are trying to think 
out, and I assume the Japanese are as 
well. What specifics there may be, we'll 
take up with Prime Minister Nakasone. 

Q. The hearings on Capitol Hill 
will be going on while the President is 
in Venice. Now, that hasn't originally 
been the case. How much is that going 
to be a distraction for the President 
and for yourself while you're over 
there? 

A. I don't suppose it's any more of 
a distraction than when we're there. The 
hearings are going on and they are deal- 
ing with matters of concern, and we 
keep track of them. 

Q. Is it a distraction to you now, 
then? 

A. It's some distraction. I don't 
watch the hearings. I don't have time; 
I'm too busy. But it's a— 



42 



Q. But I'm thinking in terms of 
substance — 

A. But it's something that's going 
on and you try to keep track of it, 
certainly. 

Q. Today you won't watch? 

Q. For example, today, your 
assistant, Mr. Abrams [Assistant 
Secretary for Inter-American Affairs 
Elliott Abrams], is going to be up 
there. Are you concerned that he's 
much more involved than you initially 
might have thought? 

A. I have complete confidence in 
Assistant Secretary Abrams, and he will 
be testifying and we will all see his 
testimony. But he's a person of tremen- 
dous energy, integrity and I'm sure that 
he will appear in that light. 

Q. Can a multilateral effort to 
ensure the freedom of navigation in 
the gulf succeed without some sort of 
coordination with the Soviet Union? I 
mean, after all, they are in the gulf 
now and they are helping the Kuwaitis 
to ship their oil. Is it possible — can 
you envisage some sort of at least 
tacit, or open coordination with the 
Soviets? 

A. I don't know that there's any 
particular coordination of a special sort 
necessary. We do have, and have had for 
some time, talks with the Soviets 
about— I think they're called the 
"incidents at sea" talks that basically set 
out understandings about how our ships 
will relate to each other and presumably 
that can govern. I don't know that 
there's any need for anything special 
beyond that. 

Q. Given the great deal of head- 
way in the INF negotiations, has the 
United States and the Soviet Union 
begun discussing the broader agenda 
for the next summit meeting and have 
you begun discussing dates for that 
summit meeting? 

A. We haven't had any really 
definitive discussions about dates and a 
next summit meeting and so on. But we 
have had a lot of discussion about the 
possible content. And I think both the 
President and General Secretary Gor- 
bachev agree that we want a meeting to 
be reflective of genuine substance. So we 
look at various possible things that could 
constitute that substance. INF is clearly 
a candidate. The Nuclear Risk Reduction 
Centers that have been basically agreed 
on are a definite item that could be 
included. The movement in START 
[strategic arms reduction talks] that was 
accomplished basically in Reykjavik and 
followed up on since in Geneva— we've 
tabled, as you know, a full draft treaty in 



Geneva— those discussions are going on 
strongly. 

To what extent progress in those 
negotiations and in the space talks can 
be reflected by some sort of a statement 
remains to be seen. But that, of course, 
needs to await where we are as we 
approach a summit, if we do have one. 
We believe, of course, that there is a 
broad agenda that needs to be reflected 
in any summit. We need to have things 
to say about human rights. We need to 
have things to say about regional issues. 
The President pushes on those on occa- 
sions, as do I. So there are a broad set of 
things that we all work at, and we'd like 
to see as much as possible reflected in 
substance by the time, whatever time it 
turns out to be, that there may be 
another summit meeting. 

Q. To what extent is the new 
policy in the gulf, and the escorts and 
the shipping protection also, an effort 
by the Administration, or seen by the 
Administration as a need to blunt 
Soviet influence there? Do you see a 
growing Soviet threat in the Persian 
Gulf, and is this one of the reasons for 
your policy? 

A. Certainly we don't want to see 
the Persian Gulf become a place where 
the Soviet Union has any major role. 
That oil flows to the West. Maintaining 
the ability of that oil to flow is some- 
thing that we need to step up to. I think 
it's very important to recognize that and 
not to have it in any sense fall under the 
umbrella in any way of the Soviet Union. 
That's a very important point. 

Q. But do you think the allies will 
accept making this sort of an East- 
West issue rather than a regional 
Mideast issue? 

A. It's not primarily an East- West 
issue, but there is an East- West dimen- 
sion, and so let's recognize that. 

On the other hand, we've had 
numerous discussions about the Iran- 
Iraq war with the Soviet Union. I've had 
quite a few with Foreign Minister 
Shevardnadze myself, and there are 
many aspects of work on that particular 
conflict where we see things in a rather 
parallel way. It isn't a kind of classic 
East- West proposition, rather to the 
contrary. We have at least in major 
respects parallel objectives there. We 
want to try to work at it as much as we 
can in tandem. That's the way we 
approached it in the Security Council at 
the United Nations in asking for a joint 
call for a cease-fire, and in asking for 
mandatory sanctions on whichever coun- 
try, if either does refuse to engage in the 
cease-fire. 



Department of State Bulletin 



THE SECRETARY 



Q. We seem to be getting a 
somewhat different message from you 
than from the President as to whether 
this government wants more allied 
military support in the gulf. The Presi- 
dent yesterday made a very forceful 
statement that he did not want the 
United States to be alone, as he put it, 
in the gulf, and he urged the Euro- 
peans to be brave and come on in. You 
just said that not necessarily do we 
need allied military backup in the gulf. 
Which is it? 

A. There is no difference. We aren't 
alone; we don't want to be alone. We 
think it's important that the West 
generally, including Japan— if I can use 
that word with respect to Japan, and I 
think it fits in this case— have a unified 
view about this matter, and that people 
do the things that they can do. Countries 
are positioned in different ways in terms 
of their capabilities, and we have to 
recognize that and what it is expected 
that different countries do. The fact of 
the matter is that we are not alone in 
the gulf right now. The British are 
there, we have a collaborative pattern 
with Saudi Arabia involved and so on. I 
think that needs to get enhanced 
somewhat, and we'll be working on that 
in Venice. There isn't any daylight to be 
found between me and the President. 

Q. You said that there was coor- 
dination on incidents at sea with the 



Soviets, since they're going to be fly- 
ing a flag over their vessels and — for 
the Kuwaitis — and we're going to be 
doing it, why don't we — wouldn't it be 
possible for us to get together with 
them on a method of operation so that 
we — they would have a strong enough 
force there and a strong enough 
method of operation whereby that 
would deter people from attacking 
both countries' vessels? 

A. They have to decide what they're 
going to do with respect to any under- 
takings they've made. We're doing the 
same. As I said, the discussions of inci- 
dents at sea provide a forum and have 
set out rules and perhaps that is as far 
as it needs to go. I don't want to— again, 
I'm not appearing here as a naval expert 
in declaiming on that subject, but that's 
the way it would appear to me. 

Q. But don't you think you might 
save some lives and prevent attacks if 
the two of you got together real — 
much on — 

A. I think the presence of our 
forces, let alone theirs, will be a very 
impressive deterrent force. And I expect 
that that will be looked at and looked at 
with a lot of respect by anybody who 
might think of attacking ships we're 
convoying. 



'Press release 123 on June 3, 1987. 



U.S. Business 

and the World Economy 



Secretary Shultz 's address before the 
Council of the Americas 18th Washington 
Conference for Corporate Executives on 
May 11. 1987.'^ 

I think your discussions about the 
various aspects of business opportunities 
and problems in Latin America needs to 
be set in the context of what I regard as 
a world economy just bursting with 
opportunities and changes where advan- 
tage will go to the people who have a 
sense of what they are and what they 
mean, but, at the same time, a world 
that is beset by problems that have to be 
grappled with well, or otherwise the 
problems will cause us to miss these 
opportunities. I am very fearful right 
now that the mood in the United States 
is such that it may cause us to drop balls 
that we don't need to drop. So that's a 
summary of my remarks. 



August 1987 



Technology Changes and the 
Information Age 

But, now, as to what is taking place in 
the world, I think it is a moment of 
tremendous change. The change is 
driven primarily by the emergence of 
new technology that is rearranging the 
meaning and use of information, causing 
the way we do things— whether it is 
managing a business, handling a produc- 
tion enterprise, understanding the func- 
tion of selling, handling diplomacy, or 
whatever it is— it has moved us into an 
age where the key ingredient is 
knowledge and ability to handle it. 

That is accompanied in the informa- 
tion technology area by all sorts of other 
changes, some of them quite relevant to 
Latin America. I'll give a couple of 
examples. 



I think we're seeing a shift in the 
meaning of raw materials, because we 
see in area after area how the 
knowledge about processes is changing 
the meaning of what you need by way of 
raw materials to do a certain task. 

1 understand now, for example, in 
the area of telecommunications, that we, 
in this country— and that's a big tonnage 
user of copper— we, in this country, use 
about half the amount that we did 4 or 5 
years ago, and probably the use is declin- 
ing. Why? Because we're substituting 
fiberoptics which has a negligible raw 
material base, so to speak, for copper. 
That has a lot of bearing on the kind of 
ore body— copper ore body— that you 
might consider exploiting. Or, to put it 
another way, unless it is an exceptionally 
rich ore body, it isn't going to pay out. 

But more generally, I think, we have 
to ask, what is happening to the meaning 
of raw materials as a result of changes 
in the processes by which we achieve our 
end results— copper, nickel, iron ore, et 
cetera? 

A second point has to do with 
agriculture— feeding ourselves. It's clear 
enough that Malthus by now has been 
stood on his head. We don't have too lit- 
tle food. We have an abundant capacity 
to produce it, and that capacity has been 
enhanced by two good things and by one 
bad thing. 

The good things are huge changes in 
biotechnology which led us into much 
more productivity per whatever it is that 
you want to measure, and a recognition 
in governments who used to think that 
the right way to handle the price of food 
was to be sure it was kept below the cost 
of producing it. And somewhat to their 
chagrin, they discovered that that 
doesn't encourage production, and so 
they see that you have to let the price of 
food reach a level— perhaps even a 
world-market level— that will encourage 
production. And as soon as they do, the 
results are practically instantaneous. 

Look what has happened in China. 
Look what is happening in Africa. Africa 
last year could feed itself. It wasn't 
distributed right, so there are still big 
problems, but that's a result of, you 
might say, the managerial awakening- 
government managerial awakening to 
commonsense and the inevitability of 
how a market operates. These things are 
leading to the production of more food 
all around the world. 

And the third thing, which is bad, is 
that the big industrial economies have 
loaded onto them— here I'm talking 
about Europe, the biggest original sin- 
ner, but also the United States and 
Japan— have loaded onto our systems 
subsidy programs that put very high 



43 



THE SECRETARY 



prices, way more than is necessary to 
encourage the necessary production, and 
so those prices are bringing forth very 
heavy surpluses which are being placed 
on the world markets below the price 
that brought them forth to begin with. 

And so it was that in Tokyo last year 
in the declaration that the summit heads 
made, they identified this problem as a 
very severe one that had to be tackled, 
and it is being worked on, and I hope 
we'll get somewhere with it. 

But, anyway, my point is not to 
argue that, but just to say there are big 
changes coming around. There are 
changes in the structure of the world 
economy as to the relative importance of 
countries. Wliile the global GNP [gross 
national product] grows, its distribution 
is changing. 

I think that you operate in an 
environment that is already drastically 
changed and is going to change more. I 
have said, and I believe it, that just as 
we in the United States long ago left the 
agricultural age, although we produce 
plenty of food, we also have left the 
industrial age, although we do plenty of 
manufacturing. But nobody around says 
that the symbol of our industrial might is 
the blast furnace and the assembly line 
any more. 

We are in a different age, a knowl- 
edge age, an information age, or 
whatever you want to call it, and I think 
a person doing business in Latin 
America or anywhere else has to bear 
this in mind. 

That's an area, I think, of great 
opportunity for American businessmen, 
because American businessmen tend to 
be relatively quick and creative and 
ready to do things in different ways, sub- 
ject to competition. If you're a little slow 
on your feet, there's a new competitor 
out there who isn't that jazzes you up. 
That's our system, and it has worked 
very well, and I think it will continue to 
work, and this will work well for us. 

Managing the Debt Problem 

Now, what about the problems? Of 
course, the environment that we all 
want, and that is absolutely necessary if 
we're to continue to manage the debt 
problem at all adequately, is an environ- 
ment of economic growth. And we have 
to say, as we look at what's been going 
on for the last 3 or 4 years or so at least, 
that the engine of growth has been the 
U.S. economy, and particularly so 
because we have run an extremely large 
and unprecedented trade deficit. That 
trade deficit has provided, you might 
say, the effective demand on which a lot 



of the rest of the world— particularly 
Latin America, if you look at the 
statistics— managed to put together a 
program of growth. 

Now, there are two things that 
threaten it aside from the normal 
business cycle kinds of problems that 
you tend to encounter. First of all— and I 
think this is inevitable, myself— the U.S. 
trade deficit will decline, I think, fairly 
rapidly, although I don't spend my time 
as much as I used to in the good old days 
when I was a businessman like you, 
thinking about these things. But I think 
it's inevitable that this trade deficit will 
decline, perhaps rapidly. 

The reason is quite simple. The 
reason is that the almost arithmetic, you 
might say, counterpart of the big trade 
deficit is a big inflow of funds to the 
United States. Those funds flow in here, 
seeking a risk averse rate of return, and 
it's because people are willing to spend 
money here that we are able to consume 
more than we produce. That's what 
we're doing as a country. And as we now 
are a net debtor at a very large level, we 
are financing that debt by borrowing 
more. 

There comes a time when you can't 
finance your debt by borrowing more, 
or, to put it another way— more like 
David [Rockefeller] might put it— there 
comes a time when peoples' concerns 
about the relative nominal rate of return 
is adjusted by the risk— the exchange 
rate risk makes them need a rate of 
return that causes you to say, "That's 
too high. The burden is too great." Or, 
to put it another way, the burden 
reflects itself into the kind of interest 
rates that have to emerge in this coun- 
try, and those interest rates may not be 
in tune with where we want to go in 
terms of our own economic growth. But 
there is an inevitable market reaction 
that's bound to set in. And so what is the 
alternative to borrowing in order to 
service your debt? 

How many people know the answer 
to that question? Nobody? The answer is 
pretty obvious. The answer is that you 
have to run a trade surplus to service 
your debt. When the United States goes 
from $150 to $160 billion or so of deficit 
that everybody is feeding off. to a large 
surplus, or even a vastly diminished 
deficit, then the need for other places in 
the world, Latin American places, to 
have a more self-sustaining pattern of 
internally generated growth is very big. 

Now, there are differing ways in 
which this change can come about— and 
some of them are desirable, in my opin- 
ion anyway, and some are very unde- 
sirable. But the path of least resistance 



around in our Congress seems to be that 
you do it by protecting our markets, by 
shutting off the capacity of other coun- 
tries to send stuff here that people want 
to buy. And people observe the fact that 
our big trade deficit is not the result of a 
sudden decline in our exports; we are the 
biggest exporter in the world. The big 
trade deficit results from a huge surge of 
imports into the United States. 

People are always saying, "You 
know, the U.S. businessman has to learn 
how to export if you're going to solve 
the trade deficit." That is an incorrect 
statement. The U.S. businessman has to 
learn how to compete in the United 
States in order to solve the trade deficit, 
in the sense of addressing yourself to 
what it is that caused it to emerge. And 
I think that's probably an easier prob- 
lem, given what's already happened to 
the relative exchange rates. 

But the answer of solving it by pro- 
tecting the markets will lead the world 
to a catastrophe. We saw what happened 
in the 1930s, and we see the contrast of 
what happened in the post- World War II 
period emerging after the work of some 
really terrific statesmen on our part and 
on the part of some other countries put 
together a world economic system based 
on the idea that we were going to have 
growth and openness in trade. The open- 
ness in trade sustained the growth and 
vice versa, and it worked— it worked to 
our benefit and everybody else's benefit. 
The approach of protecting markets in 
the 1930s didn't work. It didn't work for 
us, and it didn't work for anybody else. 
So why it is so insistently sought in Con- 
gress to go back to that world is beyond 
me, but that is where they are trying to 



Protectionism 

Beyond that, I have a real concern that 
the United States is drawing back from 
the world just at its moment of greatest 
opportunity, the greatest thrust of 
freedom politically, the greatest thrust 
of freedom economically. In the light of 
all of these advances, what are we 
doing? I mentioned protectionism. 

We are very self-righteous about 
what happens in any place in the world 
and so we tend to want nothing to do 
with things we don't like. But more than 
that, we are cutting brutally the amount 
that we budget to support our efforts in 
foreign affairs— and I mean brutally, to 
the point where we have to literally haul 
down the flag around the world, because 
there just isn't the money to support the 
consulates and embassy work that we 
need to do, let alone provide the security 



44 



Department of State Bulletin 



THE SECRETARY 



and economic assistance to countries 
that need it and to which it is in our inter- 
est, our security interest, to provide it. 

Right now, the United States is 
reacting to the opportunities that I sug- 
gested to you at the beginning in a very 
perverse way, and I believe that we 
should turn that around. I have been 
making this same speech to absolutely 
no avail, I'm afraid; but I think it is 
extremely important that the United 
States continue to be a positive force in 
the world and be engaged. 

We saw what happened before 
World War I when the United Stated 
climbed into its shell. We saw what hap- 
pened from the 1930s when the United 
States climbed into its shell; and we have 
seen what has happened since World 
War II when the United States recog- 
nized that it must be not only a respon- 
sible partner but a leader and take on 



the responsibilities of being the leader— 
we shouldn't get tired, we shouldn't get 
frustrated. We should recognize how 
much in our interest it is to assume that 
role. 

And as businessmen who are out 
around, I think that you all are terrific 
ambassadors for us. You go out around 
the world and into Latin America, and 
you do things that are so good that peo- 
ple are willing to pay for them and leave 
you a little profit in addition. So, that's a 
great recommendation for the quality of 
service that's rendered. And so I pay my 
respects to you and welcome your 
presence here, and your willingness to 
listen to my plea that you help this coun- 
try to maintain its responsible and 
leadership role in the world, as we 
should and we must. 



'Press release 104. 



Narcotics: A Global Threat 



Secretary Shultz's address before the 
INM [Bureau of International Narcotic 
Matters] Narcotics Coordinators Con- 
ference on May 4, 1987.^ 

I'm delighted to be able to speak to you 
this morning. This is an issue of impor- 
tance. It's one that I've been struggling 
with as a government official since I was 
Director of the Budget, and I remember 
way back in those days. I do feel that 
somehow we are finally beginning to get 
somewhere. I feel that more now than I 
did way back then, and there are many 
reasons for that. 

I'd have to say one of the reasons is 
the very effective work that our First 
Lady Nancy Reagan has been doing, 
because whOe I'm going to focus here in 
my remarks on the overseas elements of 
our program, we all know that it has to 
be a two-way proposition— we have to be 
getting at the use of drugs. Nancy has 
really led the way with her efforts, and 
the "Just Say No" is catching on. I feel 
as though this battle can be won, so that's 
very encouraging for all of us, I think. 

I have the opportunity to speak today 
to our Foreign Service community about 
an international issue which has so much 
impact on our everyday lives. Narcotics 
control is a special job, performed by 
special people. It benefits all of us, and it 
makes our world a better, safer place to 
live. Drug abuse is both a moral insult 
and a national security threat. 



August 1987 



In my meetings with leaders of 
democratic nations, I hear that drug 
trafficking and abuse are undermining 
democracy and social institutions. Elected 
leaders fear that drug traffickers can 
and will buy elections. Democracy is at 
stake. 

In the United States, drugs are kill- 
ing our athletes, corrupting our values, 
and threatening our society. Front page 
news photos of stockbrokers being led 
away in handcuffs, charged with trading 
cocaine for insider information on 
stocks, drives home the point— drugs are 
a threat to every sector of our society. 
No one is safe. 

From the boardroom to the locker 
room, from the classroom to the 
operating room, someone you may not 
know, but who could make a difference 
in your life, may be on drugs. He invests 
your money. He pilots an airplane. He 
teaches your children. He performs 
surgery. He is your child's best friend. 
He is your son. 

In the crucial narcotics control jobs 
you hold overseas, fighting the business 
of drugs is something you do every day. 
Many of you go into opium or coca fields 
and see the acres and acres of crops that 
will be processed into the heroin or 
cocaine that end up on our streets. Many 
of you work with officials whose motives 
are not beyond reproach. (See how diplo- 
matic I'm being.) Many of you see, day 
after day, the toll that drug production, 
trafficking, and abuse take on develop- 
ing societies. 



We see it at home, too. Drug avail- 
ability is unacceptably high. Drugs are 
our number one foreign import. Narcotic 
profits fuel a huge criminal network 
reaching into our country from the 
jungles of Bolivia and Colombia, Laos 
and Burma. The network involves 
peasants from Peru, hill tribe farmers 
from Thailand, chemists from Hong 
Kong, shipowners from Panama. It has 
ensnared students on our campuses, job- 
less young people, Hollywood stars, 
housewives and halfbacks, rich and poor 
alike. 

Even the producing countries are 
seeing their citizens fall victim to addic- 
tion, just like Americans and Europeans. 
Lima and Bangkok and Karachi have as 
many victims now as New York and 
London, Rome and Detroit. Many of the 
victims are only children. 

Just the other day, I read a news 
story about a 9-year-old Nigerian boy 
who was being used as a mule by heroin 
smugglers. When he was arrested, no 
one came forward to claim him. He was 
carrying $3-million worth of heroin. Like 
so many other children enmeshed in the 
narcotics network, he has become a 
victim. 

Someone told a story the other day 
about a school teacher in The Bahamas 
who asked the children in her class what 
they wanted to be when they grew up. 
Twenty percent said drug traffickers. 
This isn't a chapter from a Dickens 
novel. It's real life, 1987. 

I've said on many occasions that nar- 
cotics trafficking is the modern-day ver- 
sion of piracy. And it's getting worse, 
when lawless, greedy drug traffickers try 
to hold entire countries hostage. They 
are joining forces with terrorists and 
guerrillas to pillage and plunder whole 
societies, destroying the values and insti- 
tutions of decent people. They have 
killed scores of judges in Colombia. They 
tracked down Ambassador Parejo, 
Colombia's former Justice Minister, in 
Budapest but failed to silence his elo- 
quence in defense of human values. Traf- 
fickers have killed one of our drug 
agents, murdered journalists, threatened 
the wives and children of courageous 
officials. 

But the traffickers have discovered 
that they can no longer get away with 
murder. The countries under assault are 
fighting back. International law is being 
rewritten to arrest the traffickers, 
separate them from their wealth, and 
put them in prison. Colombia's extradi- 
tion of Carlos Lehder to the United 
States proved to Latin American traf- 
fickers that no one— not even a kingpin 
of the Medellin cocaine cartel— can 



45 



THE SECRETARY 



escape justice when nations work 
together in defending their people. 

We have no illusions. The real war 
against drugs, an international struggle, 
is just beginning. The stakes are high, 
and the challenges are great. This terri- 
ble threat is not insurmountable. Right is 
on our side, and also realistic effort is on 
our side. 

The worldwide supply of drugs is 
vast. The toll of addicts grows daily. 
Drug dealing is too profitable. Many 
officials have been corrupted, but 
millions of good people everywhere have 
had enough. Today 20 countries are 
eradicating narcotics crops. The United 
States actively assists 14 of them with 
funding, equipment, and personnel chan- 
neled through State's INM Bureau. 

More countries are looking to their 
neighbors for help, and joint vigilance is 
the watchword. Regional cooperation is 
beginning to bear fruit. 

The United Nations, the Organiza- 
tion of American States (OAS), ASEAN 
[Association of South East Asian 
Nations], SAARC [South Asian Associa- 
tion of Regional Cooperation], and the 
EEC [European Economic Community] 
have all taken on drug control as a grave 
international issue. The newly organized 
OAS antinarcotics commission just met 
here in Washington. We look to the OAS 
to organize concrete actions to reduce 
both the supply and demand for drugs in 
our hemisphere. 

Next month, the UN International 
Conference on Drug Abuse and Illicit 
Trafficking will be held in Vienna. This 
will be a historical gathering of 
ministerial-level officials from all over 
the world to study concrete actions for 
dealing with a worsening global problem. 
The United Nations is also drafting a 
new convention against narcotics traf- 
ficking that will strengthen international 
efforts to halt this corrupting trade. 
Both the conference and the convention 
are examples of the fine work the United 
Nations can do and proof that mutual 
interests can be secured by international 
cooperation. Both projects are based on 
the growing realization that no single 
country can defend itself against nar- 
cotics alone. 

Regional defense is another area of 
progress in drug control. The Andean 
nations of Colombia, Peru, Ecuador, 
Bolivia, and Venezuela signed the Lara 



Bonilla treaty last year, pledging to 
work together against trafficking and to 
adopt more effective antinarcotics 
legislation. 

In Asia, countries like Burma and 
Thailand, India and Pakistan have joined 
the United States and Mexico in frankly 
discussing the narcotics problem as a 
serious bilateral issue which affects 
nations sharing common borders. Let me 
assure you that as we look overseas for 
international cooperation against drugs, 
we're looking for it at home, too. We 
must put our own house in order. Last 
November, President Reagan called 21 
of our ambassadors home to tell them 
how the United States is dealing with 
our drug problem. The national strategy 
incorporates law enforcement, treatment 
and rehabilitation, research, prevention, 
and international cooperation— in other 
words, a comprehensive program. 

The United States has set ambitious 
goals to get rid of drugs in our schools, 
our workplaces, our transportation sys- 
tem, our public housing— in other words, 
to get rid of drugs in our country. 

Last fall, the President signed the 
Anti-Drug Abuse Act of 1986, the most 
comprehensive antidrug legislation on 
the books. Title IV of the act expands 
the Department's international narcotics 
cooperation program, and the Bureau of 
International Narcotic Matters received 
a budget of $118 million for its work this 
year, nearly double what it received in 
1985. 

And I must say, when you attract 
some money, Ann [Ann Wrobleski, Assist- 
ant Secretary for International Narcotic 
Matters], you attract a lot of attention. 
And all the other bureaus are coming 
around saying, we're working on drugs, 
and we can use a little of your money, 
but you don't give a dime out unless you 
get your money's worth, do you? 

As diplomats, we have a special role 
to play as part of the national and inter- 
national strategy. When I met with our 
ambassadors at the White House a few 
months ago, I made specific recommen- 
dations for action. I asked them: 

First, to stress the U.S. commitment 
to fighting narcotics in their meetings 
with foreign officials, and I do that, too; 

Second, to use the range of available 
tools, such as extradition treaties, 
mutual legal assistance treaties to com- 
bat narcotics trafficking; 

Third, to support the work in the 
United Nations, particularly the upcom- 
ing world conference and draft convention; 



Fourth, to encourage other nations 
to support the UN Fund for Drug Abuse 
Control; 

Fifth, to establish a dialogue among 
ambassadors to explore regional 
cooperation on the narcotics issue, shar- 
ing information and expertise; 

Sixth, to encourage other countries 
to learn from the American drug experi- 
ence. I told them that we learned the 
hard way, but we can help other coun- 
tries to avoid the same mistakes we 
made; and 

Seventh, I urge all of them to raise 
the issue of congressional budget cuts in 
their appearances before American 
audiences. I asked our ambassadors to 
make the point repeatedly that false 
economizing undermines our campaign 
against drugs. 

Without essential MAP [military 
assistance program] and IMET [inter- 
national military education and train- 
ing] funding, adequate development 
assistance and ESF [economic support 
fund] funding, our efforts to control 
narcotics production and trafficking can 
be rendered meaningless. U.S. foreign 
assistance helps strengthen democracies. 
Strong countries can better resist drug 
traffickers and offer alternatives to their 
citizens. In the long run, America bene- 
fits, as does the rest of the world, from 
our foreign assistance programs. 

In his speech on September 14, 
President Reagan said: 

When we all come together united, striv- 
ing for this cause, then those who are killing 
America and terrorizing it with slow but sure 
chemical destruction will see that they are up 
against the mightiest force for good that we 
know. Then they will have no dark alleys to 
hide in. 

You are a part of this "mightiest 
force for good." It's hard work. You're 
on the front lines, day after day, facing 
discouragement and fighting an uphill 
battle. But your work is deeply appreci- 
ated by the Department of State and by 
the entire U.S. Government. You are 
helping to build a climate of outspoken 
intolerance, as Mrs. Reagan urged in her 
September speech, against those who 
live outside the law. We're all depending 
on you and your work, because you are 
making the world a better place to raise 
our children and the generations to 
follow. 



iPress release 98 of May 5, 1987. 



46 



Department of State Bulletir 



AFRICA 



The U.S. and Southern Africa: 
A Current Appraisal 



by Michael H. Armacost 

Address prepared for delivery before 
the World Affairs Council in Cleveland 
on June 15, 1987. Ambassador Armacost 
is Und£r Secretary for Political Affairs. 

We live in a dangerous world— a world 
of conflicts among nations and values; a 
world in which we and a few other 
nations possess frightening destructive 
power, yet often find it impossible to 
order events. It is a world that is subject 
to radical shifts in technology and com- 
munication, to bewildering movements 
of peoples, currencies, and markets; and, 
while the interdependence among coun- 
tries is growing, nationalism still 
triumphs over all competing ideologies. 
Terrorism may be a weapon of the weak, 
but it is a potent weapon, and it is too 
often employed. The need for interna- 
tional cooperation has never been 
greater; yet the United Nations seems 
stymied by events, confined to a spec- 
tator's role with respect to most of the 
world's trouble spots. 

In such a world, our ideals and our 
interests are plainly at risk. Our 
strength, our consistency, and our for- 
titude remain crucial to the global 
balance of power, to the independence of 
our allies, and to the future prospects of 
democratic politics and market econom- 
ics throughout the world. We cannot 
defend our interests if we retreat from 
the world. 

Hans Morgenthau used to say that 
the trouble with the Americans was that 
they refused to accept the world on the 
world's terms. That, in fact, is both a 
blessing and a curse. Our involvement in 
the world has been directed toward the 
improvement of its conditions. Yet in 
foreign affairs, our influence is limited. 
And failure to have our way or to 
achieve our aims has had a way of 
prompting Americans to throw up their 
hands in frustration and to disengage. 

We see both these tendencies at 
work in America's approach to southern 
Africa— the impulse to play a reformist 
role, to stand at the side of those 
struggling for freedom; yet also, the 
frustration that change comes slowly 
and the temptation to walk away from 
an area plagued by intractable problems. 

There is much in southern Africa 
that we might like to turn away from. 
One sees racism, poverty, violence. 



August 1987 



Marxism and Soviet meddling, disturb- 
ing demographic trends, and chronic 
underdevelopment. But this does not 
mean that there are many threats and 
no opportunities in southern Africa. 
"The United States has important 
interests in southern Africa, interests 
that can be promoted as we defend 
historic American values. Let me discuss 
southern Africa then in these terms: 

• It is an area where we seek to pro- 
mote human rights; 

• It is an area where we are encour- 
aging economic development; and 

• It is an area where American 
diplomatic leadership and problem- 
solving techniques can have a special 
relevance. 



Promoting Human Rights 
in Southern Africa 

In the past, it may have seemed suffi- 
cient to put our name to international 
documents that spoke loftily of human 
rights. That is not enough. We want to 
work, beside other people and govern- 
ments, to protect and enhance the dig- 
nity of the individual. 

In pursuing a human rights policy, 
we must, of course, always keep in mind 
the limits of our power and of our 
wisdom. We must be realistic in our 
strategy even as we are idealistic in our 
goals. Our country can only achieve our 
objectives if we shape what we do to the 
case at hand. 

Broad human rights concerns 
animate U.S. policy toward South 
Africa. 

First, our country is united on the 
goal of ending apartheid and playing an 
active role in helping bring about a new. 
democratic South Africa that respects 
the rights and promotes the oppor- 
tunities of all its people. 

Second, this process of change and 
negotiation cannot be accomplished by 
outsiders. It must be built by South 
Africans themselves— even as we offer 
our encouragement and support. The 
new South Africa we hope to see must 
be based on a process of reconciliation 
founded on a genuine accommodation of 
interests— not upon a reaction to one 
injustice with another. 

Third, our diplomacy must encour- 
age dialogue and communication— 
despite the difficulties posed by distrust 



and polarization across racial lines. We 
have a unique interest in communicating 
with all parties. We should urge them to 
create new openings for reconciliation 
and constructive change. 

Fourth, working with our allies, we 
will continue to assert a Western vision 
of what we favor as the outcome in 
South Africa. It is not enough to cam- 
paign "against" apartheid. South 
Africans must know what the West 
stands for as that country redefines 
itself politically. Above all, we are for a 
solution that has the consent of the 
governed; that includes all those who 
consider themselves South African as 
citizens of the state; that accords equal 
rights, privileges, and protections to 
those citizens; and that has a constitu- 
tional structure that permits the exercise 
of democratic liberties. 

Apartheid presents one of the most 
difficult challenges facing U.S. diplo- 
macy today. All Americans reject it. It 
must go. The questions are: How? And 
what shall replace it? 

This question of how apartheid ends 
preoccupies us because we know from 
our own history that the process of 
change can determine the substance of 
change. If violence is the steward of 
change, there will be one outcome in 
South Africa; if change comes about 
largely through peaceful means, there 
will be another, presumably happier 
outcome. How can we use our limited 
influence to enhance the prospects for 
peaceful change? Can additional sanc- 
tions impose the kind of shock therapy 
that will produce results? Will they 
merely exacerbate racial polarization, 
hardening the resistance of those in con- 
trol while deepening the economic 
distress of the black community? 

Such questions animated last year's 
debate over sanctions against South 
Africa. The Reagan Administration 
opposed sanctions because it felt such 
sanctions would complicate rather than 
expedite the dismantling of apartheid. 
The debate was about means, not ends. 
It was a debate worth having. It ended 
when Congress passed the Comprehen- 
sive Anti-Apartheid Act. 

Economic sanctions directed against 
South Africa are now the law of our 
land. The Administration is rigorously 
implementing that law. In so doing, we 
have found ourselves hoping that this 
shock treatment would produce results. 



47 



AFRICA 



The verdict is not yet in, but the 
evidence to date, while not conclusive, is 
not particularly encouraging. 

What have been the results? The 
government of P.W. Botha has used the 
intervening months to devise means of 
circumventing the sanctions, shifting the 
economic burdens they have wrought 
onto weaker neighbors, mobilizing the 
defiance of the white community against 
sanctions, and refining the tools of 
repression against blacks. Meanwhile, 
the American corporate presence has 
shrunk appreciably. Our relationship 
with the South African Government has 
been prickly; our contacts with elements 
of the black community have been 
expanding. But we are not a "major 
player" on the internal scene. 

Some in the United States now pro- 
pose still further sanctions— indeed, a 
total trade embargo— and some are 
recommending total disinvestment from 
South Africa. This is a formula for total 
American withdrawal. 

Unfortunately, apartheid will not go 
away just because we do. The course 
more consistent with American prin- 
ciples is to stay involved as a force for 
peaceful change. The alternative to an 
eventual radical and violent end to apart- 
heid is a negotiated political accommoda- 
tion now, before it is too late. The 
moral— and the practical— course is to 
use our influence, whatever its limits, to 
encourage a peaceful transition to a just, 
postapartheid society. Cheering from the 
sidelines as a race war erupts in South 
Africa is not a role worthy of Americans. 

Nor is a race war inevitable. Black 
resistance to the white minority govern- 
ment in South Africa has claimed some 
2,500 lives over the last 3 years. This is 
a terrible toll; unchecked it could become 
much more. Tragic examples abound; we 
should not forget that up to 1 million 
died in the Algerian war. And growing 
violence is not inevitable. The only 
responsible course is to bend every 
effort to hasten the end of apartheid 
without a bloodletting. 

This worrying tendency to disengage 
from South Africa is matched elsewhere 
in the region. There are voices in this 
country who would like us to punish or 
turn away from other governments in 
southern Africa. While some Americans 
want us to have no contact with South 
Africa, others want us to isolate our- 
selves from governments in Mozam- 
bique, Zimbabwe, or other front-line 
states. They see evidence of Soviet 
involvement, internal conflict, economic 
difficulties, and human rights problems, 
and they ask why we should lend any 
support to these governments. We see 
these problems, to be sure, but we also 



48 



see governments trying to move away 
from reliance on Moscow; of govern- 
ments turning away from collectivist 
economic policies to those favoring a 
freer market; of governments attempt- 
ing to cope with serious political and 
economic problems not exclusively of 
their own making. 

Two cases deserve mention here. 
Some see a contradiction between our 
application of the Reagan doctrine— a 
doctrine that seeks to promote self- 
determination and freedom from com- 
munist rule around the world— in Angola 
and Mozambique. There is no contradic- 
tion. Our purpose is the same: to oppose 
efforts by the Soviet Union to undermine 
the independence of these countries or to 
use them for strategic advantage and to 
create circumstances in which they can 
move peacefully toward a future of true 
independence, liberty, and prosperity. 

The Governments of Angola and 
Mozambique have responded to our 
initiatives in southern Africa in different 
ways, and the opposition movements in 
these countries are, likewise, a study in 
contrasts. This explains our differing 
approaches in these two cases. 

In Mozambique, the government 

has steadily improved its relations with 
the West. President Chissano recently 
made highly successful visits to Great 
Britain and Italy; Mrs. Thatcher 
increased aid to Mozambique by $75 
million and enlarged the scope of the 
existing military training program. 
Mozambique has joined the IMF [Inter- 
national IVIonetary Fund] and moved 
away from Marxist-inspired economic 
policies. It has played a constructive role 
in southern Africa negotiations, denied 
the Soviets base rights, broken with the 
Soviet line on Afghanistan and Cam- 
bodia, sought peace with South Africa, 
and— as a consequence of its policies- 
seen a decline in Soviet military aid. We 
recognize the Government of Mozam- 
bique and enjoy constructive relations 
with it. 

The insurgent movement in Mozam- 
bique, RENAMO (Mozambique National 
Resistance Movement], was created by 
the former government of Ian Smith in 
Rhodesia and has, in recent years, 
received arms and training from South 
Africa. It is politically fragmented and 
lacks a political program. It has demon- 
strated its ability to destroy and disrupt 
but not to build or to pursue constructive 
solutions to the country's conflicts. It 
walked away from cease-fire negotia- 
tions with the government in 1984 and 
pursues a military strategy that appears 
more responsive to South African than 
Mozambican interests. 



In Angola, by contrast, the MPLA 
[Popular Movement for the Liberation of 
Angola] regime has deepened its close 
relationship with the Soviet Union and 
its allies, joined the Council for Mutual 
Economic Assistance, become ever more 
dependent for its survival on the Cuban 
forces that installed it, received increas- 
ing supplies of Soviet weaponry, sup- 
ported SWAPO [South West Africa Peo- 
ple's Organization] violence in Namibia, 
and granted the Soviet Union base 
rights. For these reasons, we, like the 
Ford and Carter Administrations, do not 
recognize the MPLA regime. UNITA 
[National Union for the Total Independ- 
ence of Namibia], in contrast to 
RENAMO, has decades-old, anticolo- 
nialist and nationalist credentials; 
charismatic, cohesive leadership; a credi- 
ble political program; a functioning 
system of authority in areas it controls; 
a clearly articulated and realistic objec- 
tive of a negotiated settlement with the 
MPLA; and longstanding, widespread 
popular support within Angola. 

These distinctions in the circumstan- 
ces are important. They account for the 
different approaches we have pursued in 
Mozambique and Angola. 

Economic Development 
in Southern Africa 

Over the past several years, we have 
responded as more governments in the 
region have made courageous decisions 
to turn from collectivist solutions to the 
free market. Here again, our values havt 
found appeal where they were once 
rejected. This positive trend traces to 
our willingness to engage with— and not 
isolate— those who disagree with us. 
Since 1981, we have contributed roughly 
$175-$200 million annually in food and 
economic assistance to the states of 
southern Africa. 

Our goals have been audacious; we 
want to help build a southern Africa: 

• That is free of apartheid, a system 
whose economic implications display all 
the evils of socialism and protectionism 
even as it rests on an economic base that 
can be described as feudal; 

• That spreads the virtues and 
benefits of a market economy to South 
Africa's blacks; 

• That receives greater value added 
from its mineral and agricultural 
production; 

• That is self-reliant in food; 

• That manufactures more of its 
own capital goods and generates some 
internal capital from locally owned 
companies; 



Department of State Bulletii 



pr 



iof 



• That is able to offer new employ- 
ment and increased incomes to a skilled 
workforce, a workforce that can move 
across borders in search of employment; 
and 

• That has diverse economies, yet is 
interlinked through efficient transporta- 
tion and communication systems, with 
substantial and balanced regional trade. 

This kind of vision is not Utopian. It 
could be realized in our lifetimes. Yet it 
faces formidable challenges, challenges 
that led President Reagan last year to 
propose a new multiyear Initiative for 
Economic Progress in Southern Africa. 
We asked Congress for $93 million in 
additional assistance to southern Africa, 
to be committed over the next 18 
months. Congress is on record support- 
ing assistance to the front-line states in 
the Comprehensive Anti-Apartheid Act 
3f 1986. 

A substantial portion of the initiative 
ivas to be channeled to South Africa's 
disadvantaged majority. In the Anti- 
'^.partheid Act, Congress authorized $40 
Tiillion over 2 years for the South Africa 
Drogram. When the Reagan Administra- 
;ion took office in 1981, no U.S. 
economic assistance was aimed at South 
yrica's blacks. Today we provide 
•oughly $25 million each year for educa- 
,ion and training of South African blacks 
n such fields as labor, higher education, 
entrepreneur ship, medicine, community 
ievelopment, and social work. Twenty- 
"ive million dollars injected each year 
nto South Africa's $80-billion economy 
nay not seem like much, but over the 
'ears it can support the training of 
.housands of black South Africans, 
equipping them with skills they can use 
omorrow, when they can take their 
•ightful place in a multiracial society. 

Our official assistance complements 
he much more substantial efforts of 
\merican businesses, which have con- 
.ributed several hundred million dollars 
'or humanitarian projects since the 
nception of the Sullivan code more than 
LO years ago. Reverend Sullivan has 
earned the respect of all Americans 
through his impressive record of achieve- 
Tient in South Africa. Yet his recent 
decision to call for total disinvestment by 
J.S. companies and a generalized trade 
Doycott is regrettable. Reverend Sullivan— 
1 man of great integrity and moral 
weight— recently described the Sullivan 
Drinciples as: 

I. . . a tremendous force for change in 
South Africa. When the Sullivan Principles 
.vere introduced ten years ago, a black man 
lid not even have the legal status as a worker 
n South Africa. The Principles broke new 
jjround for black rights in South Africa that 



had not existed for 300 years. They have 
caused a revolution in industrial race rela- 
tions for black workers in that country. 

I would hope the substantial and 
tangible gains Reverend Sullivan prop- 
erly cites would not now be rejected— or, 
worse yet, reversed— because the effort 
of U.S. firms has not brought apart- 
heid's complete demise. 

The impulse to retreat shows up also 
in proposals to reduce oui- assistance to 
the other nations of southern Africa. I 
referred earlier to the many economic 
problems confronting southern Africa's 
black-ruled states. Some of these have 
been of their own making, mainly the 
result of poor national economic policies 
based on misguided socialist philoso- 
phies. Some of them reflect such factors 
as drought and low export prices. All of 
them have inhibited growth and oppor- 
tunity. 

Many southern African governments 
are turning away from collectivist prac- 
tices to the free market. We want to 
encourage this by providing help in mak- 
ing this welcome transition. This is why 
the President proposed new multiyear 
funding for southern Africa to Congress 
last year. 

Congress' response to the Presi- 
dent's assistance proposal, however, has 
not been encouraging. The level of funds 
requested will, at best, be greatly 
reduced; at worst, it could be completely 
eliminated. This bad news has been 
compounded, however, by tacking on 
political amendments that set impossible 
and irrelevant criteria for the intended 
recipients of our assistance. Some of the 
amendments added in the House and 
Senate are intended to bar aid to all the 
countries of the Southern Africa 
Development Coordination Conference— 
a result that is perverse and unjustifiable 
in terms of our national interests. 



Resolving Disputes Through 
Negotiation 

Many observers in and outside southern 
Africa regard present trends in the 
region with despair. In South Africa, 
they see an inevitably bloody resolution 
as positions harden over the central 
question of political power. This is a 
grimly deterministic scenario that sees a 
racial civil war as the only solution. In 
southern Africa, they see continuing 
cross-border raids, civil wars, Soviet and 
South African interventions, and eco- 
nomic decline as reasons for steering 
clear of catastrophe. 

Southern Africa is surely at a 
dangerous and delicate stage, and 



AFRICA 



moderate voices must struggle to be 
heard. It would be irresponsible for us to 
conclude, however, that we have nothing 
to offer southern Africa or that the best 
way for us to help is to pick up our 
marbles and come home. I have already 
indicated ways in which we can help in 
the important areas of human rights and 
economic development. Let me turn now 
to another way we can help, namely, by 
encouraging the resolution of conflict 
through negotiation. 

There is an alternative to civil war in 
South Africa and to violence in the 
region, the alternative presented by 
peaceful transition through negotiations. 
This is not an unrealistic alternative. 
There is harsh resistance to change on 
the right in South Africa, but there are 
other voices also. The recent elections 
for the white parliament can be read 
several ways. We do not have to accept 
the South African Government's defini- 
tion of change to say— as we do— that we 
see continuing movement. There is a 
dynamism that the government does not 
control completely and that could pro- 
duce openings for negotiations. 

It is misleading to talk about a status 
quo in South Africa. No party in the 
recent white elections accepts the status 
quo. Roughly 30% of whites voted for 
the Conservative Party on the right. 
This was a vote for change in the direc- 
tion of further racial separation and 
geographical partition. In contrast, rul- 
ing National Party voters generally 
accept or actively favor a new constitu- 
tion, less separation, and black-white 
negotiations. For National Party voters, 
change is coupled with tough security 
measures, but it is change, nevertheless. 
Further left on the spectrum, the white 
voters had a number of choices, includ- 
ing boycotting the election altogether. 
However fragmented their voices, all 
want faster movement toward the dis- 
mantling of apartheid and negotiating 
constitutional change. There is a com- 
parable diversity of views, one suspects, 
among blacks, though their opportunities 
to express their views are sharply 
circumscribed. 

In short, change is everyone's expec- 
tation. The question is whether key 
elements on the political spectrum are 
prepared to negotiate it. 

At present in South Africa, no party 
seems ready for broad political negotia- 
tions; nor has any side asked the United 
States to mediate. And yet, we and 
other Western nations have good access 
to all contenders to the dispute in South 
Africa. We are in a position to encour- 
age all parties to move closer together 
on the central questions of political 



[August 1987 



49 



ARMS CONTROL 



power and constitutional guarantees and 
to accommodate contending points of 
view. Demonstrating that the West 
intends to remain involved can itself help 
to create conditions and attitudes among 
all contenders that will make our 
diplomacy more powerful. 

In other words, making clear what 
we are for an expressing our willingness 
to help can, over time, affect the 
balance of forces to the benefit of those 
who favor negotiation and moderation. 
By underscoring the necessity for com- 
promise and our interest in results, as 
distinguished from mere postures, we 
can let all South Africans know that only 
they can make the decisions that will 
shape their future and that the failure to 
decide will also shape that future. It was 
for these reasons that Secretary Shultz 
met with ANC [African National Con- 
gress] leader Oliver Tambo in January. 
The Secretary encouraged Mr. Tambo to 
discuss his vision for South Africa con- 
cretely and to recognize that violence 
will not produce a solution. We think the 
exchange between Mr. Shultz and Mr. 
Tambo will produce a greater realism 
both on the part of the ANC and on the 
part of the South African Government. 

This is the message being carried to 
all South Africans by our very able 
ambassador, Ed Perkins, and his staff. 
You can be proud of the activism and 
commitment of your country's diplomats 
stationed in South Africa. They face a 
formidable challenge in what may be the 
most difficult diplomatic post abroad, 
but they know the stakes are high and 
their mission is an honorable one. 

In the region, meanwhile, negotia- 
tions over Cuban and South African 
troop withdrawal, leading to an end to 
the civil war in Angola and Namibian 
independence, have recently resumed. A 
successful outcome would confer benefits 
regionwide. Desirable in their own right, 
solutions to these two related problems 
will reduce Soviet influence and regional 
violence. A spirit of accommodation and 
compromise will also again be vindi- 
cated, an essential attitude if a climate 
of moderation and stability is to prevail 
in southern and South Africa. 

A Final Word on Consensus 

The United States has had a consistent 
commitment to peace with justice in 
southern Africa. This is demonstrated 
by: 

• Our positive emphasis on what we 
are for, as well as what we are against, 
in southern Africa; 



50 



Germany's Decision on 
Proposed INF Reductions 



PRESIDENT'S STATEMENT, 
JUNE 4. 1987' 

I welcome the statement today by the 
Government of the Federal Republic of 
Germany to the Bundestag supporting 
deep reductions in an entire class of 
nuclear weapons. This decision sets the 
stage for establishing a common NATO 
position at the coming foreign ministers' 
meeting in Reykjavik. 

The position which our country takes 
with the Soviet Union on SRINF [short- 
range intermediate-range nuclear forces] 
affects both the security of the NATO 
alliance and the entire West. I am confi- 
dent that based on discussions within 
NATO and those that will occur here in 
Venice, a foundation will be laid for 
equal and verifiable global constraints on 
U.S. and Soviet SRINF missiles in the 
near future. Once that is established, I 
will instruct our negotiators in Geneva 
to incorporate this into the U.S. position. 

NATO actions on INF represent a 
major success story. The alliance has 
been resolute in responding to the 
deadly new threat to the West sparked 



by the Soviet deployment of new triple- 
warhead SS-20 missiles targeted against 
our allies. NATO has steadfastly imple- 
mented its 1979 double-track decision 
which countered this threat. It is the fact 
that NATO was willing to deploy its own 
INF missiles, while simultaneously seek- 
ing a balanced and verifiable arms reduc- 
tion agreement, that brought the Soviets 
back to the negotiating table in 1985 and 
gave us the opportunity to achieve— for 
the first time in history— deep reductions 
in, and possibly the elimination of, an 
entire class of nuclear weapons. 

Our actions on INF have always 
been characterized by close consultations 
with our friends and allies in both 
Europe and Asia. Chancellor Kohl's 
announcement today should be seen in 
that context. I commend the Chancellor 
on the leadership he has shown on this 
issue. I am determined to continue work- 
ing closely with our allies on these issues 
and to sustain the strength of our 
alliance. 



'Text from Weekly Compilation of 
Presidential Documents of June 22, 1987. 



• Forthright Insistence that an 
effective American policy must be based 
on a diplomatic effort; sanctions by 
themselves do not represent a policy; 

• Strong conviction that American 
business and investment can play a con- 
structive role in South Africa and the 
region; 

• Substantial U.S. regional 
assistance, including the President's new 
southern Africa aid initiative; and 

• A clear challenge to all the leaders 
of southern Africa to build a better 
future rather than destroy the region 
through a self-defeating descent into 
violence. 

Africa's leaders know— as do you 
and I— that the United States and the 
West are uniquely relevant to the prob- 
lems of southern Africa. For us to have 
the greatest positive impact in southern 
Africa, however, we must build a 



national consensus behind policy toward 
the region— a consensus that assures 
continuity and purpose in our diplomacy 

Consensus does not happen spon- 
taneously. It must be nurtured; it grows 
from knowledge and experience. We 
need to decide what we are for and know 
what means are available to achieve our 
goals. And we will achieve neither con- 
sensus nor results if our public discourse 
is divorced from facts and from a 
realistic understanding of the problems 
at hand. 

I see no reason why a consensus 
behind our southern African policy 
should elude us. The themes I have 
described tonight— those of human 
rights, economic development, and the 
resolution of conflict through 
negotiation— derive from American 
experience and American values. We 
should pursue them proudly as we help 
southern Africa come to terms with its 
problems. ■ 



EAST ASIA 

The U.S., Japan, and Asian Pacific 
Security in Perspective 



by Michael H. Armacost 

Address before the 1987 Mansfield 
Conference in Missoula. Montana, on 
May 29, 1987. Ambassador Armacost is 
Under Secretary for Political Affairs. 

It is a great honor to speak at the 
Mansfield Center and to address a sub- 
ject close to Mike Mansfield's heart. 
Montanans, like all Americans, are justly 
proud of Mike. To his distinguished 
careers as a teacher and a legislator, he 
has added the luster of exemplary serv- 
ice as a diplomat. 

In Washington, Mike has long been a 
legendary figure. And for good reason. 
During lengthy service in a profession 
noted for hyperbole and circumlocution, 
he was famous for his spare, cogent, and 
straightforward remarks. In a city full of 
grandstanders, he acquired authority 
while shunning the limelight; he concen- 
trated on results and achieved them. 
During a time when many obtained 
notoriety by cutting corners, Mike 
established a reputation for rectitude 
and integrity which all admired and few 
could match. In a political environment 
dominated by the daily headlines, he 
brought a historian's feel for long-term 
trends, and he insisted that we remain 
true to our values and our unique destiny 
as a nation. 

As an ambassador, Mike has become 
a legend in Japan as well. This is not 
because of his rhetoric, though he can 
speak with great eloquence when he 
warms to a subject. It is not a tribute to 
his durability, though the Japanese 
rt's|iect age, and Mike recently sur- 
passed Joseph Crew's record as our 
longest sitting ambassador in Tokyo. 
The Japanese refer to Mike as "Otaishi" 
or ' 'Sensei ' ' because they recognize in 
him those qualities required by great 
diplomats. Americans sometimes regard 
diplomacy as synonymous with duplicity, 
double-dealing, and deceit. Mike has 
reminded people— here and in Japan- 
that the consummate diplomatist 
requires honesty, precision of language, 
mastery of substance, fidelity to the 
objectives of his own nation, and sen- 
sitivity to the interests of others. Mike 
faithfully represents what is best of 
America to Japan. He also represents 
Japan with empathy and understanding 
to Americans. He is an invaluable asset 



i Auc 



to both countries. A biologist who 
crossed a leopard with a parakeet said of 
the result of his experiment: "When it 
talks, I listen." I would say the same of 
Mike Mansfield. 

The U.S. -Japan Relationship 

If Mike were here today, I am sure he 
would affirm several propositions which 
have been central to his own apprecia- 
tion of the U.S. -Japan relationship. 

• The 21st century will be the age of 
the Pacific. 

• The U.S. -Japan relationship is our 
most important bilateral relationship and 
is taking on added significance with each 
passing day. 

• The value of that relationship is 
measured not merely by the benefits it 
brings to our two nations but in the 
capacity we possess jointly to ameliorate 
and resolve regional and international 
problems. 

These are important truths. It is 
useful to remember them at a time when 
trade disputes dominate virtually all 
discussions of our relationship. The air 
seems filled with accusations, threats, 
and recriminations. In this country. Con- 
gress is contemplating a plethora of pro- 
tectionist bills aimed at Japan, most con- 
taining threats of sanctions. Organized 
labor and many businessmen speak of 
Japanese competition with awe, irrita- 
tion, anger, a sense of grievance, a con- 
viction that Americans do not enjoy 
"fair" access to Japan's market, and 
fear of a rising tide of imports not only 
in the manufacturing sectors but in high- 
technology products where America has 
long enjoyed a comparative advantage. 
In Japan, meanwhile, impatience with 
what is perceived to be the inconsistency 
of American policy is increasing. And 
frustration with what are considered as 
high-handed American pressure tactics is 
growing— even among those Japanese 
who reluctantly concede that without 
pressure, change comes too slowly. 

Yet our relations with Japan go well 
beyond the current trade frictions. The 
political and economic interdependence 
between our countries has grown dra- 
matically in recent years. Concerns 
about the equitable sharing of the 
burdens as well as the benefits of this 
relationship are natural and inevitable. 
But a fair judgment of those equities is 
possible only if we consider the wider 



August 1987 



dimensions of our interaction with 
Japan. It is that bigger picture to which 
I should like to devote my remarks this 
afternoon. 

Japan's Growing 
Weight in the World 

Historians of the future are likely to 
regard Prime Minister Nakasone as a 
towering figure. He has guided Japan 
through a series of administrative and 
economic reforms designed to prepare 
his nation for the next century while 
assuming a wider range of international 
responsibilities now. Japan's industrial 
and commercial prowess is universally 
respected. Less than 20 years ago, 
Japan's per capita GNP [gross national 
product] was twentieth in the world; 
today it matches our own. Japan alone 
produces fully one-tenth of the world's 
GNP. 

As a trading nation, Japan has few 
peers. In 1986, it ran a current account 
surplus of $86 billion. The Japanese are 
not only America's major overseas 
trading partner, they also surpass all 
others in their bilateral trade with vir- 
tually every Asian country. Japanese 
companies are increasingly transna- 
tional. In 1985, Japan's nine top trading 
companies achieved over $80 billion in 
offshore sales; that is to say, more than 
the total of their exports from Japan 
itself. Japanese industries are building 
much of their new manufacturing capac- 
ity outside Japan in order to capitalize 
on locally available raw materials and 
lower wage rates. In the process, they 
are spurring the export-led growth of 
many neighbors and are becoming a pro- 
vider as well as a beneficiary of 
technology transfers. 

Japan has also become a major 
source of overseas investment, the yen 
a major international currency, and 
Tokyo a key financial center in the 
world economy. Yen-denominated 
Eurobonds now account for 15% of all 
the Eurobonds issued. Twelve percent of 
international bank loans last year were 
denominated in yen— a threefold 
increase over 1982. Seven of the 10 
largest commercial banks in the world 
are Japanese. It is the world's leading 
creditor nation, holding roughly $500 
billion in overseas assets. More than one- 
fifth of that total may currently be 
invested in U.S. Government securities, 
thereby helping to finance the U.S. fiscal 
deficit. Total capitalization of the Tokyo 
Stock Exchange exceeds that of the New 
York Stock Exchange. Nomura Secu- 
rities, Ltd. is now the largest securities 



51 



EAST ASIA 



broker in the world. The lure of Japa- 
nese funds has proven so attractive that 
last month the Chicago Commodities 
Exchange initiated night trading several 
times a week to improve access for 
Japanese investors to U.S. commodities 
markets. Predictably, as Japan's finan- 
cial power has increased, its stake in the 
economic stability and prosperity of 
other nations has grown. 

So has Japan's influence on inter- 
national economic policy deliberations. 

Tokyo launched the GATT [General 
Agreement on Tariffs and Trade] round 
of tariff reductions in the 1970s, is a key 
participant in the summit meetings of 
the industrial democracies, and has been 
a prime mover in organizing the upcom- 
ing Uruguay Round of multilateral trade 
talks. It is a central player in the G-5 
financial club and has established a 
prominent presence wherever central 
bankers gather. 

Japan has become a major provider 
of assistance to developing countries. 

Its foreign aid budget has steadily 
expanded. Over the last 5 years, apart 
from the United States, Japan has been 
the largest aid donor in the OECD 
[Organization for Economic Cooperation 
and Development]. Last year, the 
Japanese Government announced its 
intention to double foreign aid by 1992. 
Recently, it revised that target to 1990. 
At this pace, if budgetary constraints on 
our own programs persist, Japan could 
overtake the United States as the 
largest provider of development 
assistance by the early 1990s. In the 
past, Japan's aid effort was character- 
ized by critics— with some justification— 
as an export subsidy program. Increas- 
ingly, its assistance efforts are directed 
toward humanitarian and political aims, 
as well as commercial objectives and the 
improvement of the global economic 
environment in which Japan— along with 
the rest of us— must live and work. 

Japan, finally, is also gradually 
assuming larger security responsibili- 
ties. To the relief of its neighbors, it 
continues to forswear the role of a great 
military power. Yet, stimulated by 
awareness of its growing economic 
status, buoyed by a sense of national 
pride, sensitive to U.S. pressures for a 
more equitable sharing of mutual 
defense burdens, and aroused by the 
continuing Soviet military buildup in 
Asia, Japan has steadily increased its 
defensive military capabilities to assume 
responsibility for the conventional 
defense of its homeland. 

Today Japan's defense expenditures 
rank seventh in the world. In January, 



52 



the Japanese abandoned their traditional 
1% of GNP ceiling on defense spending. 
While its Self-Defense Forces remain 
short on readiness and sustainability, 
they possess state-of-the-art equipment 
for command and control and maritime 
and air defense systems. The Japanese 
deploy more tactical fighter aircraft than 
do U.S. forces in Asia; their navy fields 
more destroyers than does the U.S. 
Seventh Fleet; they are developing a 
new frontline fighter aircraft. 

The Japanese have broadened their 
self-defense missions to include defense 
of sealanes up to a thousand nautical 
miles south of Tokyo. They have 
embarked on a cautious but steady 
defense buildup aimed at acquiring the 
capabilities necessary to fulfill somewhat 
more ambitious roles and missions. Most 
importantly. Prime Minister Nakasone 
has clearly placed Japan within the 
Western camp. In 1981, inclusion of the 
word "alliance" in a communique issued 
at the end of a visit by Prime Minister 
Suzuki to Washington nearly brought 
about the downfall of his government. 
At the Williamsburg summit meeting in 
1983, Prime Minister Nakasone asserted 
that "Japan is now firmly a member of 
the West." 

There are other indicators of the 
growing impact of Japan upon the world 
and the world upon Japan. Twice as 
many Japanese travel abroad now as did 
so a decade ago. The number of bus- 
inessmen working overseas has more 
than tripled, as has the number of 
Japanese scientists serving abroad. The 
numbers of foreign businessmen, stu- 
dents, and teachers residing in Japan 
have, likewise, increased in a comparably 
dramatic fashion. 

What is clear, I believe, is this: 
Japan is no longer merely reacting to the 
vicissitudes of the external environment. 
It has become a powerful player on the 
international political and economic 
scene. It has identified itself with the 
Western industrial democracies. It is 
becoming "internationalized" in the 
sense that it recognizes not only that it 
has responsibilities to the international 
community but also that its self-interest 
requires it to meet those responsibilities. 

Impact on U.S. -Japan Relations 

This transformation of Japan's interna- 
tional role is welcome, though some 
Americans appear to believe it is "a day 
late and a dollar short." I will not 
attempt a comprehensive analysis of the 
implications of these changes on our 
bilateral relationship. A few comments 
must suffice. 



The biggest changes have come in 
the economic area, where the relative 
balance of power has shifted most 
dramatically. Even there, the impact has 
been mixed. For one thing, there is 
universal admiration for the quality of 
Japanese products. Consumers vote with 
their pocketbooks, and Japanese 
manufacturers have won a resounding 
endorsement. Then, too, an infrastruc- 
ture for supporting imports from Japan 
has emerged involving those in market- 
ing distribution, service and mainten- 
ance, and financial institutions. They 
have an active and tangible interest in 
keeping the U.S. market doors open. 
The strength of Japan's trading position 
and the size of its bilateral trade surplus 
with the United States has provoked 
strong reactions, stimulated a searching 
look at Japanese trading practices at 
home and abroad, and fueled protec- 
tionism—particularly in the unions, in 
the business community, in the Demo- 
cratic Party, and in Congress. Hypoth- 
eses regarding the root causes of the 
trade imbalance abound. They range 
from crude shibboleths to sophisticated 
theories. The former frequently domi- 
nate public discussions. The Administra- 
tion has shunned both simplistic explana- 
tions and simple-minded remedies. It has 
been guided by the foUowdng general 
premises. 

• Trade deficits of the magnitude 
we have run in recent years are neither 
politically nor economically sustainable; 
adjustments must and will be achieved. 

• In promoting a more balanced 
trade, we should rely on measures which 
expand rather than contract commercial 
exchanges. 

• We should preserve open markets 
and shun the regulation or cartelization 
of trade. 

In keeping with this approach, the 
Reagan Administration has undertaken 
a variety of efforts to redress the 
bilateral trade deficit. 

• Voluntary export restraints were 
instituted to cope with the rapid expan- 
sion of Japanese car imports in the early 
1980s. Voluntary restraints have also 
been utilized to protect critical industries 
like machine tools and steel. 

• In 1985, we initiated a series of 
sectoral negotiations— the so-called 
MOSS [market-oriented, sector-selective] 
talks— designed to open up the Japanese 
market in fields such as telecommunica- 
tions, forest products, electronics, phar- 
maceuticals, and medical equipment- 
products in which the United States is 
competitive if the playing field is level. 



Department of State Bulletin 



EAST ASIA 



Last year, exports in these sectors were 
up by 12%. 

• Major efforts have also been 
devoted to achieving greater market 
access in Japan for leather and tobacco 
products and semiconductors. Sanctions 
have been invoked to induce compliance 
with an agreement on semiconductors. 

• Of greater significance, the United 
States has worked to encourage adjust- 
ments in the relationship between the 
dollar and the yen— a factor which 
affects our trade competitiveness across 
the board. Since 1985, the yen has 
appreciated by 60% against the dollar. 
While the expected impact on our trade 
deficit has been slow in appearing, major 
adjustments are inevitable, and recent 
statistics suggest they have begun to 
occur. 

• As concern about the trade imbal- 
ance has grown, the Administration's 
attention has tui-ned increasingly to 
structural imbalances in our respective 
economies which affect our trading rela- 
tions. Of paramount importance in Japan 
is the imbalance between the rate of 
domestic savings, which remains very 
high, and domestic investment, which is 
relatively low. This persistent imbalance 
reinforces Japan's time-honored reliance 
upon the export sector to sustain high 
growth. Japanese economists and offi- 
cials have belatedly acknowledged this 
imbalance. The highly regarded 
Maekawa report concludes that the 
•lapanese Government should shift to a 
Ljicater reliance on domestic demand for 
L;i'o\vth. While the report occasioned 
lauilatory editorials, its conclusions are 
only now beginning to be implemented 
by policymakers. 

During Prime Minister Nakasone's 
recent visit, he foreshadowed a 
$35-billion supplemental budget request 
to stimulate domestic demand. News 
reports this morning indicate Cabinet 
approval of a slightly higher fiscal 
stimulus package, to the tune of $42 
billion in increased public works spend- 
ing and a tax cut. 

• We know, of course, that our own 
fiscal deficit has an impact on our com- 
petitiveness in international markets. 
The Gramm-Rudman-Hollings legislation 
reflects congressional awareness of this 
problem, as well as their selection of a 
blunt instrument for coping with it. The 
Administration certainly recognizes that 
the fiscal deficit must be brought under 
control. And it has begun to address 
systematically how adjustments of public 
policy in other areas (e.g., education, 
research and development policy) can 
help restore American competitiveness. 



Japan— A Profile 



Geography 

Area: 377,765 sq. km. (145,856 sq. mi.); 
slightly smaller than California. Cities: 
Capital— Tokyo. Other major cities- 
Yokohama.. Nagoya, Sapporo, Osaka, Kyoto. 
Terrain: Rugged, mountainous islands. 
Climate: Varies from subtropical to 
temperate. 

People 

Nationality: Noun and adjective— Japanese. 
Population (Dec. 1985 est.); 121,180,000. 
Annual growth rate (1985); 0.6%. Ethnic 
groups: Japanese; Korean 0.6%. Religions: 
Shintoism and Buddhism; Christian 0.8%. 
Language: Japanese. Education: 
Literacy— 100%. Life expectancy (1983)— 
males 74.2 yrs., females 79.8 yrs. Work force 
(58.0 million, 1985); Agriculture-d.5%. 
Trade, manufacturing, mining, and 
construction— Si .1%. Services— 'iS.l % . 
Government— 5.9%. 



Government 

Type: Parliamentary democracy. Constitu- 
tion: May 3, 1947. 

Branches: Executive— prime minister 
(head of government). Legislative— hicamera\ 
Diet (House of Representatives and House of 
Councillors). Judicial— CivW law system with 
Anglo-American influence. 

Subdivisions: 47 prefectures. 

Political parties: Liberal Democratic 
Party (LDP), Japan Socialist Party (JSP), 
Democratic Socialist Party (DSP), Komeito 
(Clean Government Party), Japan Communist 
Party (JCP). Suffrage: Universal over 20. 

Flag: Red sun on white field. 



Economy 

GNP (1985): $1,322 trillion. Real growth 
rate: 4.5% 1985; 4.3% 1975-85. Per capita 
GNP (1985): $10,922. 



• Finally, we have joined with Japan 
and others to promote the Uruguay 
Round of GATT trade negotiations. And 
we have seen to it that the issues of 
greatest concern to us— i.e., services 
trade, high-technology goods, and 
agriculture— are high on the agenda of 
those negotiations. 

These efforts have not yet succeeded 
in restoring a balanced trade with Japan. 
The underlying problems are being 
addressed, however, and the steps taken 
are beginning to produce results. 



Natural resources: Negligible mineral 
resources, fish. 

Agriculture: Products— rice, vegetables, 
fruits, milk, meat, silk. 

Industry: Tj/pes- machinery and equip- 
ment, metals and metal products, textiles, 
autos, chemicals, electrical and electronic 
equipment. 

Trade (1985): £a;por«s-$175.6 billion; 
motor vehicles, machinery and equipment, 
electrical and electronic products, metals and 
metal products. Major markets— \]S 37.1%, 
EC 11.4%, Southeast Asia 18.9%, communist 
countries 9.2%. Imports— $129. b billion; fossil 
fuels, metal ore, raw materials, foodstuffs, 
machinery and equipment. Major suppliers— 
US 19.9%, EC 6.9%, Middle East 23.1%, 
Southeast Asia 23.4%, communist countries 
6.5%. 

Fiscal year: April 1-March 31. 

Exchange rate (Sept. 1986); About 
155 yen = US$1. 

Total net official development 
assistance: $3.8 billion (1985 disbursements 
0.29% of GNP). 

Membership in 
International Organizations 

UN and several of its specialized and related 
agencies, including the International 
Monetary Fund (IMF), International Court of 
Justice (ICJ), General Agreement on Tariffs 
and Trade (GATT), International Labor 
Organization (ILO); International Energy 
Agency (lEA); Organization for Economic 
Cooperation and Development (OECD); 
INTELSAT. 



Taken from the Background Notes of Feb. 
1987, published by the Bureau of Public Af- 
fairs, Department of State. Editor; Juanita 
Adams. ■ 



A second major adjustment in our 
economic relations is occurring as a 
result of the growing volume of cross- 
border investment. Japanese investment 
in production facilities in the United 
States is growing rapidly; American 
investment in Japan is also increasing, 
albeit at a slower clip. This two-way flow 
of investment funds creates jobs, blunts 
protectionist pressures, familiarizes the 
peoples in each country with the man- 
agement practices and labor relations 
traditions of the other. It is breaking 



August 1987 



53 



EAST ASIA 



down economic barriers and should, in 
time, dampen some of the tensions 
stimulated by trade frictions. 

Japan's status as a major aid donor 
is a third development affecting our 
bilateral relationship. Japan's aug- 
mented assistance efforts increasingly 
compensate for recent shortfalls in our 
own foreign aid budget. The Japanese, 
who recognize the constraints on their 
ability to assume a major military role, 
regard their economic assistance as a 
contribution to Western security, since it 
enhances the stability of critically impor- 
tant Third World countries. Japanese 
assistance to important Asian nations 
like Korea, the Philippines, Indonesia, 
and Thailand, as well as nations farther 
afield (e.g., Pakistan, Turkey, Egypt, 
Zambia, Zaire, Kenya, Jamaica, and 
Honduras) represents evidence of this 
"comprehensive security" policy 
approach in action. The drastic congres- 
sional cuts in U.S. foreign assistance 
have made Japan's rapidly expanding 
economic assistance all the more critical 
to developing countries facing crushing 
debt burdens. 

Finally, as Japan's defensive 
capabilities grow, our mutual security 
arrangements with Japan have become a 
more operationally relevant feature of 
the balance of power in East Asia. U.S.- 
Japan defense cooperation has grown 
impressively in recent years. Host nation 
support for U.S. forces in Japan has 
increased dramatically. Japan provides 
homeporting for the only U.S. carrier 
battle group based abroad. Joint 
planning— virtually unthinkable in the 
early 1970s— has become routine. Joint 
exercises have increased in number and 
scope. Technology-sharing agreements 
have been negotiated which assure a 
two-way street in defense research and 
development efforts. Professional rela- 
tions between our military establish- 
ments have been placed on a firm 
footing. 

WTiile Japan has assumed more 
ambitious self-defense roles and mis- 
sions, the broad contours of our strategic 
division of labor remain intact. The 
United States supports Japan by extend- 
ing a nuclear umbrella, by protecting 
long-distance sealanes of communication 
and trade, and by maintaining a military 
presence in the western Pacific to assure 
an adequate regional deterrent. Japan, 
meanwhile, has assumed responsibility 
for its own conventional defense, is pro- 
viding growing financial and other sup- 
port for our residual military presence— 
thereby facilitating the efficient and 



cost-effective projection of American 
power into East Asia and the western 
Pacific and Indian Oceans— and is con- 
tributing to mutual security interests by 
extending generous aid to other 
American allies (e.g., South Korea, the 
Philippines, and Thailand) and front-lme 
states (e.g., Pakistan and Turkey). 
Defense and international political 
cooperation has grown, despite the 
accumulation of frictions. 

Our Present Dilemma 

The United States and Japan have 
increasingly interdependent economies. 
Our strategic dependence on one another 
has grown. Our mutual commitments are 
so extensive that we have virtually no 
alternative but to muddle through any 
present difficulties. But clearly, we are 
going through a rough patch. Mainly, 
this reflects the fact that American 
expectations of a new pattern of interna- 
tional burdensharing have outpaced the 
rate at which Japan has taken on new 
international responsibilities. The result 
is frustration, a preoccupation with ques- 
tions of fairness, and a harder look at 
who is getting a "free ride." 

Within the U.S. -Japan alliance, we 
have constantly had to reconfigure the 
distribution of the political burdens of 
our relationship. In the past, Americans 
shouldered a disproportionate share of 
those burdens. We were willing to do so. 
But the bilateral balance of economic 
strength has changed. A growing trade 
deficit, the political pressures stimulated 
by intense Japanese competition, and the 
stringencies of our Federal budget have 
all increased pressures for more rapid 
adjustments in the redistribution of 
international burdens than the Japanese 
political system has produced. 

In Japan, meanwhile, growing eco- 
nomic strength encourages a more ambi- 
tious vision of Japan's international 
role, yet also fuels resistance to criticism 
and advice from abroad— particularly 
when such advice is offered publicly. The 
Japanese have also begun to offer more 
forthright expressions of their own 
assessments of our economic perform- 
ance and our international strategy. The 
potential for friction grows as our inter- 
dependence expands. This is natural, but 
the adjustments are no less difficult. 
Japan has achieved remarkable 
stability through reliance on consensus- 
building techniques of policymaking. 
Opposition to new initiatives is worn 
down, coopted, encircled, and enveloped. 
The results have been impressive. But it 
is a time-consuming process, and we are 
an impatient people. The heaviest 



burdens of adjustment tend to fall to the 
strong. With its growing strength, it is 
natural to expect some acceleration in 
the pace at which it takes on broader 
responsibilities. 

The Future Agenda 

Over the past several decades, we have 
created an elaborate superstructure for 
consultations with the Japanese. We talk 
a great deal with each other. Contacts 
have proliferated between our respective 
bureaucracies. At the highest level, our 
political leaders not only know each 
other, they like each other. Given the 
importance of our relationship to both 
countries and to the worid, it is essential 
that we reach some broad understand- 
ings on key issues through mutual give 
and take. 

Bilateral Trade. The deficit will be 
reduced. The only question is whether 
the reduction is accomplished in a man- 
ner which strengthens or weakens our 
broader relationship. On the U.S. side, it 
is important that we resist the tempta- 
tion to legislate ill-considered protec- 
tionist measures. While protectionism 
may offer temporary relief to some pro- 
ducers, it will also reduce opportunities 
for American consumers to buy high- 
quality products at reasonable prices; 
remove the spur of competition from our 
industry; encourage inflation; invite 
retaliation; introduce rigidities into the 
international trading system; and exac- 
erbate tensions among the Western 
democracies at a time when unity and 
cooperation are needed. 

We must deal forthrightly with our 
huge buget deficit. Market-opening 
efforts with Japan and others will not 
bring benefits to the United States 
unless our businesses do their homework 
and aggressively work to sell their prod- 
ucts in one of the most sophisticated 
markets in the world. And we need to 
restore the sources of our competitive- 
ness in the field of trade. 

On Japan's side, it is essential that 
wider access to its market be promptly 
extended. It always takes time to 
translate professions of intent into 
results. But now is the time for action, 
particulariy with respect to Prime 
Minister Nakasone's proposed $42-bilhor 
fiscal package to stimulate domestic 
demand and spur higher growth. The 
sooner it is enacted, the better. Its 
prompt implementation will provide an 
acid test of Japan's commitment to 
diminish reliance upon export-led 
growth. 



54 



Department of State Bulletir^ 



Aid and the Debt Problem. As our 

budget deficit has grown, congressional 
support for our foreign aid has dimin- 
ished. Over the past 3 years, Congress 
has cut our international affairs budget 
by more than 25%. These cuts are 
unwise and imprudent. They are penny 
wise and pound foolish. They offer little 
immediate budgetary relief while 
jeopardizing long-term interests. This is 
our problem. We must deal with it. We 
will, but it may take time. 

In the meantime, Japan's aid efforts 
become all the more critical. We wel- 
come the large prospective increases in 
Japan's foreign assistance budget in 
Japan. We hope to see the concessional- 
ity of loan terms improved even further, 
along with increase in the grant compo- 
nent of Japanese aid. Anticipating a 
doubling of overall assistance levels 
within the next few years, we hope that 
a disproportionate share of the increases 
will be devoted to areas other than Asia, 
which currently absorbs 70% of all 
Japanese aid. Asia is important. Japan's 
assistance programs have contributed to 
the remarkable growth and stability of 
that area. But the vitality and resilience 
of the Pacific basin permits increased 
attention to other, less fortunate 
regions. In particular, we believe that 
expanded efforts are warranted in: 

Central America, where fledgling 
democracies are struggling to con- 
solidate recent political and economic 
reforms; 

Southern Africa, where the "front- 
line countries" are vulnerable to 
economic sanctions from Pretoria; and 

The Middle East, where declining 
economic fortunes in countries like 
Egypt and Jordan pose challenges to 
regional stability. 

Japan, moreover, is well-positioned 
to take a larger leadership role in deal- 
ing with Third World debt problems. 
Indebtedness of developing countries is 
growing. Efforts to reduce our own 
trade deficit may impinge on their 
export earnings. Reductions in our aid 
budget reduce our ability to encourage 
needed policy reforms. Austerity has 
eroded the political framework that 
enabled Third World leaders to accord 
priority to debt servicing over domestic 
growth. Japan's role in augmenting its 
own growth, opening its markets, and 
expanding capital transfers to the less 
developed is crucial. 

Japan's recently announced plan to 
make $20 billion of foreign exchange 
earning available to debtor nations 
through a combination of untied export 



credits, increased contributions to 
multilateral development banks, and 
loans jointly financed by government 
and private institutions is particularly 
timely. We shall await details with inter- 
est and, I might add, a certain amount of 
envy. 

Mutual Security. We must continue 
to deepen our defense cooperation. In 
this area, Americans remain deeply 
ambivalent. Some apparently wish to see 
a Japan with sufficient military power to 
counter the Russians yet without so 
much as to reawaken the fears of 
neighbors like the Chinese and Koreans. 
This is a difficult trick to pull off. 
Undoubtedly, there is more Japan can do 
to improve its defenses. One percent of 
GNP was a very modest ceiling for 
defense spending. We need have no fear 
that breaching it will revive Japanese 
militarism. We devote 7% of our own 
GNP to defense. The accelerated fulfill- 
ment of Japan's midrange plans for 
augmented self-defense capabilities is 



EAST ASIA 



fully justified. It poses no threat to 
Japan's neighbors. 

Yet Asian nations do have their own 
concerns about the magnitude of Japan's 
defense effort. And the Japanese are 
appropriately sensitive to those con- 
cerns, as we should be. That means, 
above all, that we should continue to sus- 
tain a strong alliance with Japan. We 
should not encourage Japan to assume 
overseas military responsibilities; neither 
Tokyo nor its neighbors desire this. We 
should remain attentive to Japanese 
interests as we pursue our own arms 
control negotiations with the Soviet 
Union. We should continue to support 
Japan's historic experiment in attaining 
economic superpower status while main- 
taining relatively modest military 
capabilities. Since Japanese defense 
expenditures are limited, and inter- 
operability of equipment is critical to 
close U.S. -Japan defense coordination, 
we shall continue to encourage cost- 
effective decisions on major defense pro- 
curement items such as the FX fighter. 



U.S. -Japan Semiconductor Trade 



PRESIDENT'S STATEMENT, 
JUNE 8, 1987' 

As we open this economic summit, one 
of our primary concerns must be the 
removal of barriers that seek to maintain 
trade imbalances and lead to protec- 
tionism. Our pledge should be to free 
competition in a fair market 
environment. 

Almost 6 weeks ago, I signed an 
order placing sanctions on Japanese 
products resulting from their failure to 
comply with our antidumping and 
market-access agreement on semicon- 
ductors. The clear message was that we 
intend to be serious about fair trade; 
equally clear was our desire to lift these 
sanctions just as soon as the data 
showed "clear and continuing evidence" 
of compliance. Japan is a major 
economic partner as well as a staunch 
friend and ally, and we want to make 
every effort to resolve our differences as 
rapidly as possible. 

Unfortunately the initial review of 
the data relating to the semiconductors 
is not sufficient for me to remove the full 
range of sanctions which were imposed. 



However, in one area, there are strong 
indications that third-country dumping 
of DRAMS [an advanced type of semi- 
conductor] has declined. Clearly there 
has been marked improvement in this 
one area. 

I am aware of congressional concern 
that there be consistent, positive move- 
ment toward compliance. Therefore, I 
have today ordered a proportional 
response. DRAMS account for 60% of 
the $135 million in sanctions related to 
dumping. The data for DRAMS show an 
increase from 59% to 85% compliance 
with fair market value, or more than 
halfway to an acceptable goal. I am 
directing a sanction release of $51 
million, a 17% reduction in the total 
value. This release is strictly propor- 
tional to progress to date. 

The Japanese Government has given 
me assurances that this positive pattern 
with respect to third country dumping 
will continue. If this does not prove to be 
the case, I will not hesitate to reimpose 
the partial sanctions that have been 
lifted. 



'Text from Weekly Compilation of 
Presidential Documents of June 22, 1987. 



55 



ECONOMICS 



International Political Issues. 

Finally, we should broaden further our 
consultations with Japan on interna- 
tional political issues. In areas like the 
Persian Gulf, we are stepping up to our 
responsibilities because we are a global 
superpower with an enduring interest in 
protecting an extremely valuable inter- 
national waterway free from encroach- 
ment by the Soviet Union. This will 
entail some added costs and risks for the 
United States. Others will benefit. 
Indeed, Japan has large interests in the 
gulf. Japan's Constitution and its politics 
deprive it of any military role in the gulf. 
But its political influence can be brought 
to bear along with other Western 
nations to encourage restraint and to 
promote a resolution of the Iran- 
Iraq war while perhaps making nonmili- 
tary contributions to Western efforts to 
protect free navigation in the gulf. 

Conclusion 

I have spoken long enough. I have sug- 
gested that an ambitious agenda awaits 
Americans and Japanese who are inter- 
ested in preserving and deepening the 
cooperation which has served both our 
nations so well for more than a genera- 
tion. I am confident that our friendship 
and cooperation will be sustained. The 
best means of assuring this will be to 
take to heart Jean Monnet's wise dictum 
that, instead of sitting across the table 
from each other arguing and complain- 
ing, we should sit beside one another, 
place the problem on the other side of 
the table, and work together to find a 
mutually acceptable solution. That would 
be in keeping with the spirit in which 
Mike Mansfield has approached the 
relationship. ■ 



Competitiveness in America: 
Is Protectionism the Answer? 



by Douglas W. McMinn 

Address before the National Associa- 

tliiii <if M(t nnfrteturers' Crmqress of 
Aitiirii-iiii h'lihistrii >•„ Mail J7. 1987. Mr. 
McMuin t$ Assistanl Si'minry for 
Economic and Business Affairs. 

I need not tell you . . . that the world situation 
is very serious. That must be apparent to all 
intelligent people. I think one difficulty is that 
the problem is one of such enormous complex- 
ity that the very mass of facts presented to 
the public by press and radio make it exceed- 
ingly difficult for the man in the street to 
reach a clear appraisement of the situation. 

With these words, 40 years ago next 
week. Secretary of State George C. Mar- 
shall launched a great endeavor. We 
undertook to "assist in the return of nor- 
mal economic health in the world, 
without which there can be no political 
stability and no assured peace." The 
Marshall Plan made available $13 billion 
of bilateral assistance to Europe. Simul- 
taneously, the United States led the way 
in dismantling the restrictive trade and 
monetary systems that nearly destroyed 
international commerce and ravaged the 
world economy in the 1930s. 

Forty years ago, our policies and our 
actions sprung from generosity, a firm 
sense of purpose, and, above all, an 
unshakable self-confidence. Consider the 
postwar world— of the major countries 
only the United States emerged from the 
war with its economy intact. We had 
fully half of the world's productive 
capacity in industry and agriculture, the 
bulk of the world's treasure, the 
reference currency; in short, our 
economic power was unchallenged. How 
did we use that power? We undertook to 
reestablish Western Europe's prewar 
strength and to foster in Japan an 
economy that would make her a strong, 
stable, and friendly force in the Pacific. 
In the best tradition of the American 
frontier spirit, we did not shy away from 
the fact that restoring "normal economic 
health in the world" would eventually 
make strong competitors of countries 
that shared our political and economic 
values. 

Today Marshall's vision is reality. 
Europe, Japan, and many of the develop- 
ing countries took full advantage of 
America's self-confident policy. We no 
longer dominate the international 
economic scene— Europe reconstructed, 



reorganized, and prospered; Japan 
experienced amazing economic growth 
and developed a formidable array of 
export-oriented industries; and many 
poor countries are rapidly industrializ- 
ing. In essence, we have real com- 
petitors out there. 

The United States is reassessing its 
role in this new world economy in which 
the impoverished of 40 years ago are 
becoming the wealthy of today and the 
economic environment has changed. The 
emergence of large trade deficits is 
unnerving. The notion that the United 
States of America could be a debtor 
country seems an affront to our national 
pride. Our political process has handed 
us budget deficits so large that we can- 
not comprehend their meaning or 
magnitude. 

The stakes are high; no doubt about 
it. But we're still the leader, the role 
model for the world. Others find 
inspiration— good and bad— in our 
actions. All we need do is look around- 
global financial market deregulation; 
competition among airlines, even in 
Europe; tax reform in Germany, Japan, 
Canada, the developing world; new 
prominence for markets and private 
enterprise. All of these developments 
happened first in the United States. 

We really have no reason to practice 
self-doubt. In the 1980s, the U.S. 
economy has demonstrated its strength 
and capacity for growth. This perfor- 
mance is a credit to the economy's flex- 
ibility, openness, and our entrepreneur- 
ship. Our success has been based to a 
large degree on a spirit— a spirit of 
America. It's the spirit of drive, deter- 
mination, and self-confidence that tamed 
America's frontiers. It's the spirit which 
all of you here have. 

The New Competitive Frontier 

What is our new competitive frontier? It 
is the tough, globally competitive market 
that promises big rewards for firms and 
workers that determine how to deal witb 
it successfully and penalties for those 
who do not. It is a changed economic 
environment characterized by greater 
economic parity among the major 
players, rapid advances in technology 
and communication, and enormously 
complex market interdependence. 

The international business world is 
far more interrelated now than many 



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ECONOMICS 



people, especially in government, realize. 
Joint ventures, global financial markets, 
instantaneous communications, tech- 
nology-sharing, and international inte- 
gration increasingly characterize the 
business environment. We have passed 
the time when we can think strictly in 
terms of national competition. Imposing 
barriers to imports often forces produc- 
tion offshore where inputs are cheaper; 
restricting our firms' abilities to sell 
technology simultaneously threatens the 
ability of other firms to buy foreign 
technology. 

I would like to turn to the question 
you have asked me to address: "Com- 
petitiveness in America: Is Protec- 
tionism the Answer?" This question can 
help us formulate our response to the 
competitive challenges of today's world 
economy. But first, we need to clear 
away the cobwebs that have been spun 
around two perfectly good words: com- 
petitiveness and protectionism. 

Competitiveness 

"Competitiveness" is burdened with con- 
flicting meanings. It is so broadly used 
that virtually any policy stance— from 
down-with-government libertarianism to 
thoroughgoing, statist industrial 
policy— can be hailed as contributing to 
American competitiveness. 

Simply put, an economy is competi- 
tive when it uses its resources fully and 
effectively to raise the living standards 
of its people. This definition does not 
refer to anything about what other coun- 
tries are doing. Various measures of 
relative efficiency may be instructive 
and may serve to spur us on to greater 
efforts. However, the key to enhancing 
competitiveness, and the responsibility 
for doing so, lies in our own hands. 

The foundation of competitiveness is 
productivity. Productivity is determined 
by the skills and motivation of the 
workforce, the size and newness of the 
capital stock, the pace of technical 
innovation, and the expertise of manage- 
ment. Productivity also is enhanced by 
concentrating our efforts on the produc- 
tion of goods and services which we pro- 
duce relatively more efficiently, while 
acquiring, through trade, goods others 
can produce relatively more efficiently. 
In more concrete terms, this prescription 
means that exporting firms can produce 
relatively low-cost, high-quality items 
while import-competing firms must 
adjust to lower foreign costs. 

Advancements in production pat- 
terns, whether caused by technological 



Trade With Romania, 
Hungary, and China 



WHITE HOUSE STATEMENT, 
JUNE 2, 1987' 

The President is forwarding to the Con- 
gress his determination to continue 
most-favored-nation (MFM) tariff status 
for Romania, Hungary, and the People's 
Republic of China. MFN is a basic ele- 
ment in the development of bilateral 
trade relations with each of these coun- 
tries and is an important aspect of our 
political relationships as well. The Presi- 
dent concluded that extension of MFN 
status to these countries for another 
year, in accordance with the Jackson- 
Vanik amendment, would serve the 
economic and foreign policy interests of 
the United States. 

The decision to continue Romania's 
MFN status was exceptionally difficult. 
The issue was addressed at the highest 
levels of the Administration. All options 
were seriously considered. The President 
carefully weighed the strong criticisms 
that have been made of Romania's 
human rights record. He shares the con- 
cerns expressed in the Congress and by 
private citizens about violations of basic 
human rights in Romania, despite the 
Romanian Government's freely under- 
taken commitments under the Helsinki 
Final Act and other international instru- 
ments. He found reports concerning 
limitations on religious freedom and 
discriminatory treatment of national 
minorities particularly distressing. He is 
sympathetic to the plight of the Roman- 



progress or international trade, are the 
engine that keeps productivity increas- 
ing and maintains our competitiveness. 
Changes in production and trade pat- 
terns keep the economy growing. 

A commitment to competitiveness 
requires a receptivity to change, a 
readiness to redeploy resources, and an 
acceptance of open markets. Viewed in 
this light, some of the fallacies and 
misperceptions concerning "com- 
petitiveness" can be exposed. One of 
them is particularly troublesome to 
me-that trade deficits are evidence of 
declining competitiveness. 



ian people who endure a very harsh 
economic and political reality. The Presi- 
sent also has been disappointed by the 
Romanian Government's very limited 
response to our numerous expressions of 
concern. 

However, after weighing all the fac- 
tors, the President decided that we 
should continue the MFN relationship 
with Romania as long as it enables us to 
help substantial numbers of people. Over 
the years, MFN has stimulated increased 
Romanian emigration and made possible 
the reunification of thousands of divided 
families. MFN has also enabled us to 
have an impact on Romania's human 
rights practices and to help strengthen 
the conditions for religious observance 
there. We are not prepared to place at 
risk these benefits. They are more 
modest than we would like but, 
nonetheless, important in human terms. 

For the President, the humanitarian 
considerations were most compelling in 
deciding to renew Romania's MFN 
status. He has taken the position that it 
is better to direct our efforts to improv- 
ing conditions that arouse our concern 
than to abandon the principal means of 
influence we now have and walk away. 
As noted in his report to the Congress, 
the President has instructed Secretary 
Shultz to pursue our human rights 
dialogue with Romania with renewed 
vigor. 



'Text from Weekly Compilation of 
Presidential Documents of June 8, 1987. 



Competitiveness and the Trade Deficit 

Is our trade deficit the result of a fun- 
damental lack of competitiveness? In the 
first place, I don't believe it is credible to 
argue that the underlying determinants 
of U.S. competitiveness— technology, 
research and development, investment, 
management skills, and the like— could 
have deteriorated so much in the 1980s 
as to bring about the extraordinary 
trade deficits of the past 4 years. 

Indeed, these recent deficits have 
other causes. The essence of the matter 
is that consumption by government. 



57 



ECONOMICS 



industry, and private citizens has con- 
sistently outpaced production in recent 
years, and thus the large trade deficits. 
In our case, investors in slower growing 
foreign countries recognized the advan- 
tages of investing here— supplementing 
our pool of savings. Borrowing abroad is 
not a problem if it finances productive 
investment and creates the means to ser- 
vice the loans. 

As members of this audience under- 
stand as well as anyone, the adjustments 
associated with trade deficits are pain- 
ful. In the early 1980s and until quite 
recently, manufactured exports did not 
grow while manufactured imports 
boomed. Now our manufacturers are 
beginning to benefit from a competitive 
exchange rate that reflects diminished 
borrowing. By all accounts, American 
industry is well-positioned to meet the 
growing demand for U.S. products. 

But I won't stand here and tell you 
that there is no trade problem. There is 
a problem. We are experiencing the 
largest trade deficits in our history. 
These massive trade deficits, and the 
even larger Federal budget deficits, are 
serious and must not be ignored. 

To reduce the trade deficit, we must 
continue to work to restore a better 
balance between the demand for capital— 
our public and private investment— 
and the domestic supply of capital— the 
savings generated by households, 
businesses, and government. We can 
invest less or save more. 

We must take action to deal with our 
deficits and the concerns they generate. 
We must rebuild that important but 
eroding coalition of farmers, consumers, 
businessmen, politicians, and academics 
that has helped shape our trade policy. 
At the same time, we must guard 
against false solutions that will make 
matters worse. 

Protectionism 

That brings me to the question of protec- 
tionism. While we have loaded up "com- 
petitiveness" with too many concepts 
and ideas, we risk stripping "protec- 
tionism" of any meaning. We all want to 
be competitive, but few advocate protec- 
tionism anymore. Instead, some seem to 
be engaged in an effort to convince 
themselves that taking away the Presi- 
dent's discretion in trade, making 
retaliation mandatory, subsidizing 



exports, and the like are not protec- 
tionist in and of themselves but, rather, 
will help us move to "fair trade" or 
"level the playing field." 

I would argue that, if these kinds of 
policies were implemented on a larger 
scale, the result would be a reduction in 
world trade. Sure, we want fair trade. 
Yes, we want a level playing field. But 
the critical question is what is it we need 
to be doing that will contribute to, not 
detract from, an improvement in our 
nation's competitiveness; to an improve- 
ment in our nation's well-being. 

There is another aspect of fairness 
that I think deserves attention. Too 
often, the unspoken definition of fairness 
is "our industry always wins." Loss of 
market share abroad automatically 
translates into an unfair practice by a 
competitor. The trade deficit is seen as 
proof that American business is facing 
unfair competition. Fairness does not 
mean that every U.S. industry always 
prospers. Fairness means we all play by 
the same rules. We don't want guaran- 
teed success; but we do insist on the 
opportunity to succeed. 

But where unfairness exists, how 
should we deal with it? Retaliation- 
restricting access to the U.S. market- 
comes quickly to mind. There are two 
problems with retaliation. 

First, it hurts our own economy. 
Second, it invites an escalating and 
dangerous spiral of counterrestrictions. 

Now, despite the risks, retaliation 
may be necessary in some cases. When it 
is, you have to act, and we have done so. 
What we shouldn't do, though, is base 
our policy on the concept of retaliation. 

Protection, whether it is wrapped in 
neoprotectionist or traditional protec- 
tionist rhetoric, is not about improving 
national competitiveness. It is not about 
the nation's welfare. It is about 
Americans taking income and wealth 
away from other Americans. In the proc- 
ess it lowers economic growth and effi- 
ciency. Protection diminishes com- 
petitiveness, because it taxes efficient 
businesses and subsidizes inefficient 
ones. 

All governments, including our own, 
have been very good at erecting trade 
barriers for any number of "nonprotec- 
tionist" reasons, but the effect has been 
to restrain trade and restrict competi- 
tion. We need authority to negotiate 



these barriers out of existence. The 
world needs updated and expanded trade 
rules. We need to be vigorous and firm 
in getting greater market access for our 
manufacturers and in getting ever- 
expanding world trade. We are working 
toward this in shaping new trade legisla- 
tion and in pursuing negotiations in the 
Uruguay Round. What we do not need 
are politically motivated solutions that 
would impede that progress and invite 
retaliation at a time of increasing U.S. 
export growth. 

Policies To Stay on the Frontier 

What should the United States— its 
government, businesses, and workers- 
be doing to stay on the competitive fron- 
tier and keep pushing it out? 

First, we must bring down our fiscal 
deficit. I should repeat that: we must 
bring down our fiscal deficit. 

Second, we must work to eliminate 
the damaging rigidities that we have 
built into the economy. We must resist 
calls for increasing regulations once 
again— for example, on airlines, banking, 
and securities markets. The benefits to 
society of any new regulations must 
clearly exceed the potential harm to our 
long-term competitiveness. We should 
also continue to remove impediments to 
labor mobility, and we should make sure 
that the restrictions we maintain on 
high-technology exports to protect our 
national security take adequate and 
increasing account of today's economic 
realities and our own industrial 
competitiveness. 

Third, we must restore the quality 
of our primary and secondary educa- 
tional systems. In a world in which 
technical skills— and the willingness to 
upgi-ade them periodically— will be para- 
mount, we are in danger of releasing 
into the labor force millions of young 
people who cannot function with even a 
minimal mathematical capability and 
cannot write at a level sufficient to com- 
pete for well-paying jobs. 

Fourth, too many of our firms and 
workers still refuse to recognize that 
they are in the middle of a tough, glo- 
bally competitive market. We simply 
cannot turn back the clock to the days of 



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EUROPE 



adversarial labor and management rela- 
tions and single-product firms using a 
mature and static technology. In fact, 
market pressures are inducing important 
changes in the way we organize our 
business, through risk-taking, joint 
ventures, technology-sharing, and 
improved labor-management relations, 
learned in no small part from our foreign 
competitors. Indeed, these may be the 
most valuable imports we have ever had. 
Still, we need m.ore creativity in manage- 
ment, manufacturing, and marketing. 
Future competitive strength will demand 
flexibility and cooperation, not new bar- 
riers to adaptation and learning. 

Since 1945, America has contributed 
enormously to the construction of a safe 
and prosperous world. I think that we 
should be proud of that achievement. 
The industrial country allies are all 
friendly, democratic countries— an out- 
come for which our postwar leaders 
could only dream and hardly expect to 
accomplish. We should welcome that 
world. We should ask the allies forth- 
rightly if we or they really want to turn 
the clock back. In that spirit, it seems to 
me we can bargain better, compete more 
aggressively, and ultimately share 
responsibilities more equally. ■ 



North Atlantic Council 
Meets in Iceland 



Secretwr-y Shultz attended the regular 
semiannual session of the North Atlantic 
Council ministerial meeting in 
Reykjavik June 11-12, 1987. Following 
are the texts of the final communique and 
the Secretary's news conference. 



FINAL COMMUNIQUE, 
JUNE 12, 1987 

1. Our meeting has taken place at a time 
when developments in East- West relations 
suggest that real progress may be possible, 
particularly in the field of arms control. We 
welcome these developments and will work to 
ensure that they result in improved security 
and stability. We note some encouraging 
signs in Soviet internal and external policies. 
In assessing Soviet intentions, we agree that 
the final test will be Soviet conduct across the 
spectrum from human rights to arms control. 

We reaffirm the validity of the com- 
plementary principles enunciated in the 
Harmel report of 1967. The maintenance of 
adequate military strength and Alliance cohe- 
sion and solidarity remains an essential basis 
for our policy of dialogue and co-operation— a 
policy which aims to achieve a progressively 
more stable and constructive East- West 
relationship. 

2. Serious imbalances in the conven- 
tional, chemical and nuclear field, and the 
persisting build-up of Soviet military power, 
continue to preoccupy us. We reaffirm that 
there is no alternative, as far as we can 
foresee, to the Alliance concept for the 
prevention of war— the strategy of deter- 
rence, based on an appropriate mix of ade- 
quate and effective nuclear and conventional 
forces, each element being indispensable. This 
strategy will continue to rest on the linkage 
of free Europe's security to that of North 
America, since their destinies are inextricably 
coupled. Thus the US nuclear commitment, 
the presence of United States nuclear forces 
in Europe' and the deployment of Canadian 
and United States forces there remain 
essential. 

3. Arms control and disarmament are 
integral parts of our security policy; we seek 
effectively verifiable arms control agreements 
which can lead to a more stable and secure 
balance of forces at lower levels. 

4. We reiterate the prime importance we 
attach to rapid progress towards reductions 
in the field of strategic nuclear weapons. We 
thus welcome the fact that the US and the 
Soviet Union now share the objective of 
achieving 50 percent reductions in their 
strategic arsenals. We strongly endorse the 
presentation of a US proposal in Geneva to 
that effect and urge the Soviet Union to 
respond positively. 



August 1987 



We reviewed the current phase of the US- 
Soviet negotiations in Geneva on defence and 
space systems which aim to prevent an arms 
race in space and to strengthen strategic 
stability. We continue to endorse these 
efforts. 

5. We note the recent progress achieved 
at the Geneva Conference on Disarmament 
towards a total ban on chemical weapons. We 
remain committed to achieving an early 
agreement on a comprehensive, worldwide 
and effectively verifiable treaty embracing 
the total destruction of existing stockpiles 
within an agreed timeframe and preventing 
the future production of such weapons. 

6. Recognising the increasing importance 
of conventional stability, particularly at a 
time when significant nuclear reductions 
appear possible, we reaffirm the initiatives 
taken in our Halifax statement and Brussels 
declaration aimed at achieving a comprehen- 
sive, stable and verifiable balance of conven- 
tional forces at lower levels. We recall that 
negotiations on conventional stability should 
be accompanied by negotiations between the 
35 countries participating in the CSCE [Con- 
ference on Security and Cooperation in 
Europe], building upon and expanding the 
confidence- and security-building measures 
contained in the Helsinki Final Act and the 
Stockholm agreement. We agreed that the 
two future security negotiations should take 
place within the framework of the CSCE 
process, with the conventional stability 
negotiations retaining autonomy as regards 
subject matter, participation and procedures. 
Building on these agreements, we took the 
decisions necessary to enable the high-level 
task force on conventional arms control, 
which we established at the Halifax minis- 
terial, to press ahead with its work on the 
draft mandates to be tabled in the CSCE 
meeting and in the conventional stability 
mandate talks currently taking place in 
Vienna. 

7. Having reviewed progress in the 
negotiations between the United States and 
the Soviet Union on an INF [intermediate- 
range nuclear forces] agreement, the Allies 
concerned call on the Soviet Union to drop its 
demand to retain a portion of its SS-20 
capability and reiterate their wish to see all 
long-range land-based missiles eliminated in 
accordance with NATO's long-standing objec- 
tive. They support the global and effectively 
verifiable elimination of all US and Soviet 
land-based SRINF [short-range INF] missiles 
with a range between 500 and 1,000 km as an 
integral part of an INF agreement. They con- 
sider that an INF agreement on this basis 
would be an important element in a coherent 
and comprehensive concept of arms control 
and disarmanent which, while consistent with 



59 



EUROPE 



NATO's doctrine of flexible response, would 
include: 

• A 50 percent reduction in the strategic 
offensive nuclear weapons of the US and the 
Soviet Union, to be achieved during current 
Geneva negotiations; 

• The global elimination of chemical 
weapons; 

• The establishment of a stable and 
secure level of conventional forces, by the 
elimination of disparities, in the whole of 
Europe; and 

• In conjunction with the establishment 
of a conventional balance and the global 
elimination of chemical weapons, tangible and 
verifiable reductions of American and Soviet 
land-based nuclear missile systems of shorter 
range, leading to equal ceilings. 

8. We^ have directed the North Atlantic 
Council in permanent session, working in con- 
junction with the appropriate military 
authorities, to consider the future develop- 
ment of a comprehensive concept of arms 
control and disarmament. The arms control 
problems faced by the Alliance raise complex 
and interrelated issues which must be 
evaluated together, bearing in mind overall 
progress in the arms control negotiations 
enumerated above as well as the require- 
ments of Alliance security and of its strategy 
of deterrence. 

9. In our endeavor to explore all oppor- 
tunities for an increasingly broad and con- 
structive dialogue which addresses the con- 
cerns of people in both East and West, and in 
the firm conviction that a stable order of 
peace and security in Europe cannot be built 
by military means alone, we attach particular 
importance to the CSCE process. We are, 
therefore, determined to make full use of the 
CSCE follow-up meeting in Vienna. 

The full implementation of all provisions 
agreed in the CSCE process by the 35 par- 
ticipating states, in particular in the field of 
human rights and contacts, remains the fun- 
damental objective of the Alliance and is 
essential for the fruitful development of East- 
West relations in all fields. Recalling our con- 
structive proposals, we shall persist in our 
efforts to persuade the Eastern countries to 
live up to their commitments. We will con- 
tinue to work for a substantive and timely 
result of the conference. 

10. Those of us participating in the 
MBFR [mutual and balanced force reductions] 
talks reiterate our desire to achieve a mean- 
ingful agreement which provides for reduc- 
tions, limitations and effective verification, 
and call upon the Warsaw Pact participants in 
these talks to respond positively to the very 
important proposals made by the West in 
December 1985 and to adopt a more construc- 
tive posture in the negotiations. 

11. In Berlin's 750th anniversary year, we 
stress our solidarity with the city, which con- 
tinues to be an important element in East- 
West relations. Practical improvements in 
inner-German relations should in particular be 
of benefit to Berliners. 

12. It is just 40 years since US Secretary 
of State Marshall delivered his far-sighted 



speech at Harvard. The fundamental values 
he expressed, which we all share, and which 
were subsequently embodied in the Marshall 
Plan, remain as vital today as they were then. 

13. We reiterate our condemnation of ter- 
rorism in all its forms. Reaffirming our deter- 
mination to combat it, we believe that close 
international co-operation is an essential 
means of eradicating this scourge. 

14. Alliance cohesion is substantially 
enhanced by the support of freely elected 
parliamentary representatives and ultimately 
our publics. We, therefore, underline the 
great value of free debate on issues facing the 
Alliance and welcome the exchanges of views 
on these issues among the parliamentarians 
of our countries, including those in the North 
Atlantic Assembly. 

15. We express our gratitude to the 
Government of Iceland, which makes such a 
vital contribution to the security of the 
Alliance's northern maritime approaches, for 
their warm hospitality. 

16. The spring 1988 meeting of the North 
Atlantic Council in ministerial session will be 
held in Spain in June. 



SECRETARY'S NEWS 

CONFERENCE, 
JUNE 12, 1987' 

We have just concluded an especially 
productive and forward-looking 
ministerial meeting. I think it is quite 
significant now that, having had a very 
wide and thorough process of consulta- 
tion—including many personal contacts 
between President Reagan and his 
counterparts, direct consultations with 
foreign ministers and governments one 
by one, now had the meeting here in 
Reykjavik considering the range of INF 
issues, and we have been able to hear 
from all of the governments, from their 
foreign ministers— we see a very clear 
consensus which I can now report to 
President Reagan and on the basis of 
which he will be able to move forward. 

Second, we have resolved a pro- 
cedural problem that was an important 
procedural problem in a generally 
acceptable way to all sides, and so we're 
able to move ahead now with the discus- 
sions on conventional arms and continue 
the work, of coiu-se, in Vienna in the 
CSCE process. 

Both of these matters are matters of 
very considerable significance, and we 
have been working at them hard for 
some time. So it was a great pleasure to 
be able to find a consensus and a com- 
monality of views here in Reykjavik. 

Q. [NATO Secretary General] Lord 
Carrington seemed to indicate there 
was concern that the new Soviet 
leadership was very active, bringing 
out new proposals, and that the 



alliance had to do something to 
respond to this. Can you describe how 
you think you can go about this and 
what this concern is? 

A. It isn't concern especially. It is 
an observable fact that the pattern of 
behavior and the number of suggestions 
per month that come forward from the 
present Soviet leadership is considerably 
greater than what preceded it. From our 
standpoint, that has meant that the 
discussions, in effect, have become more 
productive. From the standpoint of the 
United States and from the standpoint 
of NATO, that clearly means that we 
have more to work with. I think it also 
means that we need to be ready to 
respond in our own way, in our good 
time, but respond in good time to things 
that are suggested and put forward pro- 
posals of our own. 

Now I think it is worth pointing out, 
in case anyone has missed it, that the 
way in which the INF negotiations seem 
to be coming out now is very much in 
line with proposals that President 
Reagan made back in 1981 and which we 
have been advocating consistently 
throughout this period. Of course the 
focus was on the long-range inter- 
mediate systems, and as those came into 
focus, we had to focus on the short 
range. Here again this was something 
that we had insisted from the beginning 
be part of any INF deal. The Soviets 
have accepted that idea and, when I was 
in Moscow, put forward a proposal that 
was a very interesting one and which we 
considered carefully and which, as an 
alliance now, we have a consensus in 
support of oiu- response. 

I think that we have to gear 
ourselves up to be active, as Lord Car- 
rington said, but basically I think it 
opens the prospect of somewhat more 
fruitful negotiations, as is shown 
already. 

Q. Now that you have this, do you 
see any sticking points ahead in wrap- 
ping up this INF agreement — specif- 
ically, do you suppose the 72 Pershing 
1-A missiles would be an obstacle, and 
do you think it would be a good idea, 
regarding verification, for the United 
States to exclude certain areas for 
intelligence reasons from broad 
verification by both sides? 

A. As far as the German systems 
are concerned, they are part of a 
cooperative U.S. -German weapons 
system. As such, they are not part of the 
INF negotiation. The INF negotiation 
concerns weapons systems that are 
either Soviet on the one hand or U.S. on 
the other don't include anything else, 



60 



Department of State Bulletir 



EUROPE 



and so they are not on the table. I might 
say that they have never been mentioned 
in connection with this negotiation, 
either in the 1981-83 set of discussions 
or in those now going on in Geneva, not 
in the Geneva meeting between the 
President and General Secretary Gor- 
bachev, not in the Reykjavik meeting 
between those two, or in my discussions 
in Moscow. It has come up very recently. 
That is not on the table in these 
negotiations. 

I think the negotiations are by no 
means over, because the problems of 
verification are very complex ones, and 
in these negotiations we are genuinely 
breaking new ground in the concept of a 
verification regime. Both sides are going 
about it carefully, but we are both into 
discussing things that have not been 
done before. It is complicated, and it 
hasn't been resolved. 

I might say that we continue to 
believe that all sides will be better off if 
the remaining 100 long-range INF 
missiles are eliminated. We have come a 
long way down to get to 100, and at the 
same time we think that we should go 
the rest of the way for various reasons, 
not least for making the problem of 
verification a considerably easier prob- 
lem to handle. 

Q. Is one of those complications 
the United States wanting to put cer- 
tain areas off limits for intelligence 
i reasons? I am referring to the same 
story we have been after for a week 
now, whether there is a decision on 
that. 

A. Yes, I know you have been after 
some story on that, and I can't help you 
with that quest. I can only say that the 
problem is a complicated problem, and 
we are going about it aggressively but 
carefully and so are they. We will have 
to see how we come out on it. 

Q. Can you go through the 
mechanical process? Now that we do 
have a consensus here in the alliance, 
what happens next? How long will it 
take before this revised Western 
package will be put on the table at 
Geneva? How much will it change the 
draft which is already in process at 
Geneva? 

A. As far as the draft in Geneva is 
concerned, we have a blank space which 
can now be filled in on short-range INF 
systems if the President decides that is 
what he wants to do. 

The literal process involved here is 
that, having observed the consensus 
here, I let the President know about 
that— and that has been done— and the 
President now takes all this material 



under advisement as soon as he is back 
in the United States and will decide 
what he wants to do insofar as our posi- 
tion in the Geneva negotiations is 
concerned. 

I might say that the proposition put 
to me by General Secretary Gorbachev 
and then refined somewhat by Foreign 
Minister Shevardnadze has not appeared 
on the table in Geneva. So no doubt I 
will want to respond to the higher 
authorities who made the proposition, 
and we will proceed on that basis in 
Geneva, I am sure. 

Q. Could I take you to the bottom 
of paragraph seven [of the final com- 
munique] and the problem which 
arouses very much interest by your 
German colleag^ue? Is your understand- 
ing of the phrasing "in conjunction" 
and so on that this means that only 
after achieving conventional balance 
and the elimination of chemical 
weapons, the United States will have 
to think about a reduction on the 
missiles below the 500-kilometer 
range? Is that a link? 

A. I think what we have here i