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Department 



&££ 



If of Sim ''If If J • 

bulletin 



Official Monthly Record of United States Foreign Policy / Volume 81 / Number 2055 



October 1981 




U.N. GENERAL ASSEMBLY / 1 
Middle East / 13, 52 
East Asia / 35 
Afghanistan / 63 
El Salvador / 72 




Dvpartmvnl of Slulv 

bulletin 



Volume 81 / Number 2055 / October 1981 



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

The Bulletin's contents include major 
addresses and news conferences of the 
President and the Secretary of State; 
statements made before congressional 
committees by the Secretary and other 
senior State Department officials; 
special features and articles on 
international affairs; 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. 



ALEXANDER M.HAIG, JR. 

Secretary of State 

DEAN FISHER 

Assistant Secretary for Public Affairs 

PAULE.AUERSWALD 

Director, 

Office of Public Communication 

MARTIN JUDGE 

Chief, Editorial Division 

PHYLLIS A. YOUNG 

Editor 

JUANITA ADAMS 

Assistant Editor 



The Secretary of State has determined that 
the publication of this periodical is 
necessary in the transaction of the public 
business required by law of this 
Department. Use of funds for printing this 
periodical has been approved by the 
Director of the Office of Management and 
Budget through January 31, 1986. 



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



For sale by the Superintendent of 
Documents, U.S. Government Printing 
Office, Washington, D.C. 20402 
Pnce: 12 issues plus annual index— 
$19.00 (domestic) $23.75 (foreign) 
Single copy— $3.25 (domestic) $4.10 (foreig 
Index, single copy— $2.25 (domestic) $2.85 



CONTENTS 



FEATURE 

U.N. General Assembly: 

1 A New Era of Growth (Secretary Haig) 

2 United Nations Day, 1981 {Proclamation) 

5 U.S. -Soviet Union to Resume Arms Talks (Department Statement) 



fe Secretary 



3 U.S. Strategy in the 

Middle East 
£ Interview on "Issues and 

Answers" 
£ News Conference of August 28 
S Interview on "Good Morning, 

America" 



ica 



!* Regional Strategy for Southern 

Africa {Chester A. Crocker) 
K Libyan Interference in Chad 

(Chester A. Crocker) 
>< Internal Situation in Zimbabwe 

(President Reagan's Letter to the 

Congress) 

ns Control 

U Policy Problems of Arms Control 
(Eugene V. Rostow) 



Crtada 

fc U.S. -Canada Meeting on Hyde 



3: 



Park Agreement 
Pacific Salmon Issues (U.S., 
Canada press release) 



E st Asia 

3 U.S. Interests in Southeast Asia 

(John H. Holdridge) 
U.S. Relations With China (John 

H. Holdridge) 
North Korea Fires at U.S. Plane 

(Department Statement) 



onomics 

Approach to Foreign Economic 

Issues (Myer Rashish) 
U.S. International Economic 

Policy and Its Impact on LDCs 

(Myer Rashish) 



49 Multilateral Development Banks 

and U.S. Human Rights Policy 
(Ernest B. Johnston) 

50 Japan to Continue Imports of 

Fruits and Vegetables 

Europe 

51 Soviet Military Exercise (Depart- 

ment Statement) 

51 Third Report on Cyprus (Message 

to the Congress) 

52 10th Anniversary of the 

Quadripartite Agreement 
(Department Statement) 



Middle East 

52 U.S. Proposes Air Defense 
Package for Saudi Arabia 
(James L. Buckley. President 
Reagan's Letter to the Congress. 
Background Paper) 

57 U.S. Planes Attacked by Libyan 
Aircraft (Lt. Gen. Philip J. 
Gast, Caspar W. Weinberger. 
Department Statements) 

61 Secretary's Interview for CBS 
News (Secretary Haig) 

61 U.S. Lifts Suspension of Aircraft 

to Israel (Secretary Haig) 

62 Situation in the Middle East 

(Philip C. Habib) 

Refugees 

62 Refugee Advisory Panel Report 



South Asia 

63 Afghanistan: 18 Months of Oc- 

cupation (Eliza Van Hollen) 

64 U.S. Assistance for Afghan 

Refugees 

United Nations 

66 New World Information Order 
(Elliott Abrams, James F. 
Buckley) 

70 Namibia (Contact Group Com- 

munique) 

71 Security Council Meets on 

Lebanon-Israel Border Dispute 
(Text of Resolution) 

Western Hemisphere 

72 El Salvador: The Search for 

Peace (Background Paper) 

78 Cuban and Haitian Migration 

(Thomas 0. Enders) 

79 The Situation in Guatemala 

(Stephen W. Bosworth, Stephen 
E. Palmer) 

Treaties 

81 Current Actions 

Chronology 

84 August 1981 

Press Releases 

85 Department of State 

Publications 

86 Department of State 
86 GPO Sales 

Index 



U.N. General Assembly Hall. 




Feature: 

U.N. General Assembly 



A New Era of Growth 

by Secretary Haig 



Address before the 36th session 

of the U.N. General Assembly 

in New York on September 21, 1981. x 



a 

s 



The United Nations— this parliament of 
man— offers us a unique opportunity to 
examine the human condition. We are 
each called upon to declare our national 
purposes. And we are all obligated to 
address those problems that obstruct the 
vision of the charter. 

Let us begin with the vision. The 
Charter of the United Nations reflects 
cherished dreams of a world distin- 
guished by peaceful change and the 
resolution of international disputes 
without resort to force. The United 
States believes in these dreams. They 
offer the best chance of justice and 
progress for all mankind. They promise 
a world hospitable to the values of our 
own society including a certain idea of 
man as a creative and responsible in- 
dividual; democracy; and the rule of law. 

The ideals of the United Nations 
are, therefore, also American ideals. The 
charter embodies American principles. It 
will always be a major objective of our 
statecraft to make of the United Nations 
an instrument of peace. 

We all know that the realization of 
our dreams cannot depend on hope 
alone. Obstacles to progress must be 
overcome through united efforts. The 
threats to peace are many, suspicions 
persist, and the price for inaction is 
great. Truly we face a difficult agenda. 

As I make these comments, I am 
reminded that an observer once said of 
this annual debate: "Every year ... a 
great and sacred orator . . . preaches 
before the assembly of nations a solemn 



sermon on the text of the charter." To- 
day, however, I would like to focus in- 
stead on an issue of compelling interest: 
international development. 

International development reflects 
the worldwide search for economic prog- 
ress, social justice, and human dignity. 
Short of war itself, no other issue before 
us will affect more people, for good or 
ill, than this search. And peace itself 
cannot be truly secured if the aspira- 
tions of mankind for a better life are 
frustrated. 

Development is, therefore, an endur- 
ing issue. It has preoccupied the United 
Nations from the beginning. It will sur- 
vive the agenda of this assembly and 
every assembly far into the future. And 
although great progress has been made, 
we face today a crucial choice of 
strategy that will dramatically affect the 
prospects for future success. 

A Choice for the 1980s 

Since the Second World War, the prog- 
ress of development has been uneven 
but nonetheless widespread. Enormous 
economic growth has been registered. 
For example, in the last three decades, 
average incomes have actually doubled. 
There have also been great advances in 
health. Life expectancy has increased 
dramatically even in the poorest coun- 
tries and infant mortality has been 
reduced. 

This experience, however, has not 
been fully shared by all countries and 



United Nations Day, 1981 

A PROCLAMATION 1 

The United Nations rose from the ashes of the 
Second World War. As we observe another 
United Nations Day on October 24, 1981, we 
are thankful that the world has since been 
spared another major conflagration. 

The United Nations has assisted in bring- 
ing stability to troubled areas and will surely 
do so again. United Nations peacekeeping 
forces are on duty in the volatile Middle East 
and have contributed to maintaining the peace 
in other places. 

The problems addressed in this world 
forum are diverse, and the United Nations 
cannot resolve all matters it considers. But it 
has helped. This year it held a major confer- 
ence for the purpose of pledging assistance to 
refugees in Africa. The United States made a 
substantial pledge, consistent with our historic 
support for United Nations refugee programs. 

The United Nations is the world's meeting 
place. It brings together representatives of 
virtually all countries to discuss a multitude of 
subjects. These meetings afford opportunities 
for bilateral discussions, often at a high level, 
as an extra benefit. Today, much of the world's 
diplomacy takes place under the aegis of the 
United Nations. 

The United States will continue to play a 
prominent role and champion the values and 
ideals that originally inspired the United Na- 
tions. We will further those activities that 
strengthen the capacity of the institution to 
serve the good of mankind. 

Now, Therefore, I, Ronald Reagan, 
President of the United States of America, do 
hereby designate Saturday, October 24, 1981, 
as United Nations Day. I urge all Americans to 
use this day as an opportunity to better ac- 
quaint themselves with the activities and ac- 
complishments of the United Nations. 

I have appointed Mr. Robert Anderson to 
serve as 1981 United States National Chairman 
for United Nations Day, and welcome the role 
of the United Nations Association of the 
United States of America in working with him 
to celebrate this special day. 

In Witness Whereof, I have hereunto 
set my hand this twenty-eighth day of Sep- 
tember, in the year of our Lord nineteen 
hundred and eighty-one, and of the Independ- 
ence of the United States of America the two 
hundred and sixth. 

Ronald Reagan 



the prospect for the future is now cloud- 
ed by recent trends. The pattern of in- 
creasing economic growth, critical for 
development, has been slowed by infla- 
tion, high energy prices, severe balance- 
of-payments problems, heavy debt, and 
slower growth of markets. Political tur- 
moil and instability have diverted 
precious resources into arms and con- 
flict. The necessary synthesis between 
traditional values and modernization, 
never easy to achieve, has grown more 
difficult under the impact of accelerating 
change. 

Let us dispense with illusions. We 
must choose today between two futures: 
a future of sustainable growth, an ex- 
pansion of world trade, and a reduction 
of poverty or a future of economic 
stagnation, rising protectionism, and the 
spread of poverty. As the World Bank 
has put it: "By the end of the century, 
the difference between the two cases 
amounts to some 220 million more ab- 
solutely poor people." 

Clearly, our task is to give fresh im- 
petus to development by devising now a 
new strategy for growth. Such a 
strategy begins by recognizing the 
highly complex and difficult situation we 
face. 

• The poorest developing countries 
require long-term and generous conces- 
sional aid from developed and other 
developing countries to raise productivi- 
ty through broadly based education and 
training, improvements in health and 
nutrition, and better infrastructure. 
They also need sound economic policies, 
particularly in the agricultural sector. 
Ultimately, the objective must be to in- 
volve them in the international economic 
system, thereby strengthening oppor- 
tunities and incentives for self-sustaining 
growth. 

• The middle tier of developing 
countries have made significant prog- 
ress. Nevertheless, they still suffer from 
widespread poverty. They are also 
acutely vulnerable to any economic 
downturn— especially volatile commodity 
markets— because of their narrow range 
of exports. These countries need foreign 
capital and assistance in developing the 



'Text from White House press release of 
Sept. 29, 1981. ■ 



experience and credit worthiness to b 
row on international capital markets. 
Technical support and manpower trai 
ing are important to insure that their 
populations are productive and com- 
petitive. They also need an open intei 
tional trading system to encourage e; 
port development. 

• The more advanced of the 
developing countries are able to mair 
tain living standards and economic p< 
formance comparable to what some c 
today's industrial countries achieved 
than a generation ago. Their further 
development can be sustained best bj 



Intern ational development 

reflects the worldwide 

search for economic 

progress, social justice, and 

human dignity. Short of 

war itself, no other 

issue before us will affect 

more people, for good or ill, 

than this search. 



strong international economy with ar 
open capital and trading system. The 
must be able to pursue national polic 
that take advantage of international 
portunities and foster domestic adjus 
ment. These countries also play a kei 
role in helping poorer nations, both 
directly and as policy models. 

• The capital-surplus, oil-exportii 
countries need a stable and prosperoi 
international market for their oil exp 
and a favorable environment in whicl 
invest their financial assets and to 
develop their domestic economies. T? 
international system must continue b 
evolve to reflect the growing imports 
of these countries, as they assume in 
creasing responsibility for the manag 
ment of that system and for assisting 
poorer nations. 

• Finally, the industrial countriei 
are suffering from low rates of grow 
and high rates of inflation. They are 
ing to increase savings and investmei 
in order to create employment, imprc 
the environment, eliminate pockets o 
poverty, and adjust to the changing 
competitiveness of their exports. The 



Dfinartmfint nf Statfi Bull 



Feature: 



U.N. General Assembly 



t sell more abroad to pay for the in- 
sed cost of imported energy. 

In a slowly growing world, these 
iplex and diverse requirements would 
ime potent sources of conflict. But 
struggle for the world product can 
voided. The international economy 
help all countries to achieve their ob- 
ves through a strategy of growth 
:h creates the resources and the 
loyment needed for progress. And 
cannot be the task of any single 
3n. 

As the report of the distinguished 
mission on international develop- 
t issues, chaired by Willy Brandt, 
its out: "Above all, the achievement 
;onomic growth in one country 
mds increasingly on the performance 
thers." 

iciples for a Strategy of Growth 

on this view of a differentiated and 
■dependent world that we must build 
w strategy for growth. But our 
tegy must also be informed by the 
)ns of the past. Such lessons, ex- 
ted from hard experience, offer the 
3 for principles to guide us through 
e austere times. 

First, development is facilitated 
n open international trading 

em. Developed and developing coun- 
; together face the challenge of 
ngthening the GAIT (General 
eement on Tariffs and Trade) and 
international trading system to 
,te mutual export opportunities. 
Today the trading system is under 
"mous stress— rising protectionist 
isures, new and subtle types of im- 
; barriers, restrictive bilateral ar- 
jements, export subsidies and invest- 
it policies which distort trade. These 
especially troublesome in a period of 
i growth. Unless they are reduced or 
iinated, the international trading 
em will be seriously weakened. Such 
tback to the world economy would 
ct the most suffering on the develop- 
countries. 

The industrialized countries have a 
:ial responsibility to work for a more 
n trading system with improved 
s. We also look to the more suc- 
iful developing countries to play a 



U.S. Ambassador to the United Nations 




Jeane J. Kirkpatrick 
was born in Duncan, 
Okla. She earned 
undergraduate 
degrees from Stephens 
College (1946) and 
Barnard College 
(1948) and her M.A. 
(1950) and Ph.D. 
(1968) degrees in 
political science from 
Columbia University. Her postgraduate work 
was done at the University of Paris under a 
French Government fellowship in the In- 
stitute of Political Science. She speaks fluent 
French and Spanish. 

Prior to her appointment as U.S. Perma- 
nent Representative to the United Nations, 
Ambassador Kirkpatrick was a Leavey 
University Professor at Georgetown Univer- 
sity in Washington, D.C., where she was pro- 
fessor in the Department of Government. She 
was also Resident Scholar at the American 
Enterprise Institute for Public Policy 
Research. Throughout her professional 
career, she has held a series of positions as 
professor, lecturer, and researcher at col- 
leges, universities, and foundations. During a 
6-month period in 1970, she was a profes- 
sorial lecturer at the Institute for American 
Universities at the University of Aix- 
Marseilles, Ajx -en-Provence, France. 

A prolific writer and researcher, Am- 
bassador Kirkpatrick has authored numerous 
books, monographs, and articles on American 
political issues and foreign policy. Her most 
recent books and monographs include The 
New Presidential Elite (1976), Political 
Woman (1974), Leader and Vanguard in 
Mass Society: A Study of Peronist Argentina 
(1971), and Dismantling the Parties: Reflec- 
tions on Party Reform and Party Decomposi- 
tion (1978). Recent articles include "U.S. 



Security and Latin America," Commentary 
(January 1981); "Dictatorship and Double 
Standards," Commentary (November 1979); 
"Why Reagan?" Washington Star 
(November 2, 1980); "Public Opinion and 
Foreign Policy," The Washington Quarterly 
(Autumn 1980); and "Patterns of Partisanship 
in Post-Gaullist France: An Overview," in 
Howard Penniman's (ed.) France at the Polls 
II, published by the American Enterprise In- 
stitute (1980). Ambassador Kirkpatrick has 
also published numerous book reviews in 
Commentary, The Journal of Politics, The 
American Political Science Review, and The 
New Republic. 

Ambassador Kirkpatrick has been in- 
volved in numerous professional organiza- 
tions including member of the International 
Research Council, Center for Strategic and 
International Studies, Georgetown Universi- 
ty; Board of Trustees of the Robert A. Taft 
Institute of Government; former member of 
the Executive Council, International Political 
Science Association; and cochairman, Task 
Force on the Presidential Election Process, 
Twentieth Century Fund. 

She has been active in Democratic Party 
politics as co-Vice Chairman of the Coalition 
for a Democratic Majority and a member of 
the Democratic National Convention's Na- 
tional Commission on Party Structure and 
Presidential Nomination (the Winograd com- 
mission) in 1975-78. During the 1980 
presidential campaign, she was a member of 
Ronald Reagan's foreign policy advisory 
group. 

Ambassador Kirkpatrick was sworn in as 
U.S. Permanent Representative to the United 
Nations on Feb. 4, 1981, the first woman to 
serve as chief U.S. representative to that 
world body. In this capacity, she also serves 
as a member of the President's Cabinet. ■ 



U.S. Contributions to the United Nations 



1970 



1978 



Regular 
Budgets 


$117,114,000 


$173,728,000 


Peacekeeping 






Operations 


6,438,000 


38,031,000 


Special 






Programs 


202,880,000 


237,731,000 


Total 


326,431,000 


449,490,000 



The total U.S. contributions to the 
United Nations of over $700 million (cur- 
rent dollars) for 1978 were about 4% of 
the Federal budget, or an expenditure of 
approximately $3.20 per citizen. ■ 



:ober 1981 



fuller role in strengthening the trading 
system. It will be difficult for each of 
our countries individually to open 
markets further unless we are commit- 
ted to doing so collectively. 

For our part, the United States has 
long supported open markets. Despite 
current complications, America remains 
a strong advocate of free trade. 
Although our gross national product is 
only one-third of the Western in- 
dustrialized group's total, the United 
States imports roughly one-half of all 
manufactured goods exported by 
developing countries. Earnings of non- 
OPEC developing countries from ex- 
ports to the United States amount to 
$60 billion— more than double the 
foreign aid coming from all Western 
developed countries. 

We call upon all members of the in- 
ternational community to join in 
resisting growth in protectionism. 
Developing nations must have the 
greatest possible opportunity to sell 
their commodities and manufactured 
product. Let us also work together to 
achieve a successful conclusion of the 
multifiber agreement. 

A dynamic and successful trading 
system requires a smoothly functioning 
international financial system. We must, 
therefore, continue to work with other 
countries to encourage their support for 
the International Monetary Fund and 
their constructive participation in the 
Fund's programs to facilitate adjust- 
ment. We will continue to cooperate 
with our developing country colleagues 
to strengthen the Fund. We share the 
view that the responsibilities of develop- 
ing countries should be increased to 
keep pace with their growing economic 
importance. 

Second, foreign assistance coupl- 
ed with sound domestic policy and 
self-help can faciliate the development 
process. The United States has long be- 
lieved in assistance as an effective tool 
in helping to promote development. Over 
the last three decades the United States 
has given more than $130 billion in con- 
cessional assistance. Over the last 
decade alone, the total has exceeded $50 
billion. In 1980, the American people 
provided $7.1 billion, almost twice as 
much as any other donor. 



The United States has also been the 
major force in the creation and support 
of the multilateral development banks. 
The banks represent an important, and 
to many countries essential, feature in 
the international financial system. In the 
last 5 years, the United States has 
authorized and appropriated an average 
of $1.5 billion per year for support of 
the multilateral banks. There is no ques- 
tion about their value as development in- 
stitutions. As intermediaries they help to 
mobilize the resources of international 
capital markets to lend to developing 
countries. The banks' loans for key proj- 
ects are important catalysts for produc- 
tive domestic and foreign private invest- 
ment. 

We recognize that many of the 
poorer developing countries must con- 
tinue to rely heavily on concessional 
assistance for some time to come. 
Moreover, certain kinds of vital develop- 
ment programs will not pay the quick 
and direct financial returns needed to at- 
tract private capital. For this reason, a 
continuing bilateral assistance program 
and continuing support for the 
multilateral banks will be essential. 

Given today's economic conditions 
and the limitation on aid budgets in 
many countries, it is especially impor- 
tant that concessional assistance be 
utilized as effectively as possible; that it 
focus on countries which need it most 
and use it best; and that it be a more ef- 
fective catalyst for mobilizing other 
foreign and domestic resources. We 
must also recognize that a strategy for 
growth that depends on a massive in- 
crease in the transfer of resources from 
developed to developing countries is 
simply unrealistic. 

Third, regional cooperation and 
bilateral consultations can be effective 
in promoting development. The United 
States is working with other regional 
states to promote economic progress in 
the Caribbean area. We are convinced 
that the example of the recent multina- 
tional cooperation in the case of Jamaica 
and the broader Caribbean Basin in- 
itiative holds promise for other regions. 

We are already committed to a close 
working relationship with ASEAN 



[Association of South East Asian Na 
tions]. We have benefited considerab 
from a better understanding of 
ASEAN's views on multilateral issue 
and ways to strengthen our bilateral 
commerical ties. The U.S. -ASEAN 
Business Council is a model of how ( 
private sectors can work together fo 
mutual benefit. 

In Africa we look forward to a c 
working relationship with the Econo 
Community of West African States, 
attempts to strengthen economic tie; 
within the region. Constructive cons 
tions on trade and investment issues 
have already occurred. We believe tl 
mutually beneficial cooperation can 1 
strengthened to our common benefit 
Similar consultations with the devek 
ing countries of southern Africa are 
desirable. We have a strong interest 
the economic health and stability of 
these nations. Commerical relationsl 
along with foreign assistance will he 
us to attain that objective. 

The United States has also wort 
with the capital-surplus members of 
Organization of Petroleum Exportin 
Countries on both a bilateral and 
multilateral basis. We have been abl 
combine resources to attack develop 
ment problems of common interest, 
as food production. This cooperation 
should be continued and expanded. 

Finally, we plan to make bilater; 
consultative groups between our go^ 
ment and those of developing count] 
more effective and to give full suppc 
to similar private sector arrangemei 
The U.S. Chamber of Commerce an< 
counterparts in many developing coi 
tries have developed particularly goi 
relationships. We fully support thesi 
forts and those of the private volunt 
agencies; we are searching for mear 
work more closely with them. 

In all of these cases, the United 
States recognizes the need to be ser 
sitive to the diverse character of th< 
societies involved and to the interna 
tional circumstances in which devek 
ment must occur. 

Fourth, growth for developme 
best achieved through reliance on 
centives for individual economic p 
formance. The individual is the begi 
ning, the key element, and the ultirr 



Department of State Bu 



Feature: 

U.N. General Assembly 



eficiary of the development process. 
; greatest potential for development 
in the hard work and ingenuity of 
farmer, the worker, and the en- 
Dreneur. They need incentives to pro- 
e and the opportunity to benefit from 
ir labors. 

Suppression of economic incentives 
mately suppresses enthusiasm and in- 
tion. And the denial of personal 
idom can be as great an obstacle to 
ductivity as the denial of reward for 
ievement. History cautions against 
imes that regiment their people in 
name of ideals yet fail to achieve 
ter economic or social progress, 
ise governments that have been more 
citous of the liberties of their people 
e also been more successful in secur- 
both freedom and prosperity. 
The United States can offer what it 
ws best from its own experience. We 
e seen that policies which encourage 
r ate initiatives will promote better 
>urce allocation and more rapid 
nomie growth. Within a framework 
ically hospitable to market incentives, 
ugn private investment can supple- 
it indigenous investment and con- 
ute significantly to development. 
But our goal is not to impose either 
economic values or our judgments 
inyone. In the final analysis, each 
ntry's path to development will be 
ped by its own history, philosophy, 
interests. 

Fifth, development requires a cer- 
i measure of security and political 
t>ility. Political insecurity is a major 
rier to development. Fear and uncer- 
ity stifle the productivity of the in- 
dual. Scarce resources are 
andered in conflict. The close rela- 
lship between security and develop- 
nt cannot be ignored. We are, 
refore, committed to maintain and, 
3re possible, to increase programs 
ential to deter international aggres- 
l and to provide the domestic securi- 
lecessary to carry out sound 
nomic policies. We have no intention 
Droviding foreign assistance, moral 
afort, or the prestige of international 
itical platforms to countries that 
ter international violence. 

The United Nations has a key role to 
y in resolving conflict and promoting 




U.S.-Soviet Union to Resume Arms Talks 



DEPARTMENT STATEMENT, 
SEPT. 24, 1981 1 

At their meeting on September 23, 
1981, the U.S. Secretary of State, Alex- 
ander M. Haig, Jr., and the U.S.S.R. 
Foreign Minister, Andrei A. Gromyko, 
exchanged views regarding arms control 
involving those nuclear arms which were 
earlier discussed between the U.S. and 
the U.S.S.R. representatives in Geneva. 
They agreed on the need to hold for- 
mal negotiations on such arms and on 
behalf of their governments agreed to 
begin these negotiations on November 



30 in Geneva, Switzerland. The U.S. side 
will be represented at the negotiations 
by a delegation headed by Ambassador 
Paul Nitze, and the Soviet side will be 
represented by a delegation headed by 
Ambassador U.A. Kvitsinsky. 

Both sides believe in the importance 
of these negotiations for enhancing 
stability and international security and 
pledged to spare no effort to reach an 
appropriate agreement. 



1 Read to news correspondents in New 
York by Department spokesman Dean 
Fischer. ■ 



U.S. Delegation to the 
36th U.N. General Assembly 



Representatives 

JeaneJ. Kirkpatrick 

Kenneth L. Adelman 

Andy Ireland, U.S. Representative from 
the State of Florida 

Benjamin A. Gilman, U.S. Represent- 
ative from the State of New York 

John Sherman Cooper 



Alternate Representatives 

Charles M. Lichenstein 
Jose S. Sorzano 
William Courtney Sherman 
Bruce Caputo 
George Christopher ■ 



tober 1981 



international stability. We welcome the 
Secretary General's effort to promote in- 
tercommunal talks and a just settlement 
on Cyprus. We support a continuing role 
by the Secretary General's represent- 
ative in the Iraq-Iran conflict. And 
South Korea's attempt to initiate a 
dialogue with the north epitomizes the 
search for peaceful settlement that is 
the heart of the charter. 

One of the greatest dangers to the 
charter today and to development itself 
is the willful violation of the national in- 
tegrity of both Afghanistan and Kam- 
puchea by the Soviet Union and Viet- 
nam. Their behavior challenges the 
basic rights of all sovereign states. The 
world's hopes for peace, for security, and 
for development will be jeopardized if 
"might makes right" becomes the law 
of nations. 

The United States will continue to 
support security and stability as essen- 
tial to progress. This is the basis of our 
active and continuing efforts to 
strengthen and expand the cease-fire in 
southern Lebanon. We shall also assist 
the negotiations specified by Resolutions 
242 and 338 in order to bring a just and 
lasting peace to the Middle East. Our 
policy is to remain a credible and 
reliable party in the negotiations to 
bring independence to Namibia on the 
basis of U.N. Resolution 435 and in a 
fashion acceptable to both the nations 
concerned and the international com- 
munity. 

The United States also believes that 
efforts to control arms, either among 
regional states or between the super- 
powers, can make an important con- 
tribution to the security that facilitates 
development. But these efforts do not 
occur in a vacuum. The international 
community has tended to overestimate 
the beneficial effects of the Strategic 
Arms Limitation Talks in dampening 
regional conflict. We have also tended to 
underestimate the impact of such con- 
flict on the negotiations themselves. 

The United States is strongly com- 
mitted to balanced and verifiable arms 
control. We are equally committed to 
the peaceful resolution of regional 
disputes. Clearly, the restraint implied 
by arms control must become a more 
widespread phenomenon if such 
agreements are to survive and to make 



their proper contribution to a more 
secure environment for development. 

In Pursuit of Growth 

The United States is confident that a 
strategy for growth guided by these 
principles can succeed. We believe that 
three areas of action deserve immediate 
international attention. 

First, a global expansion of trade. 

Plans could be formulated for the 1982 
GATT ministerial with the special con- 
cerns of growth in mind. A major priori- 
ty should be to integrate more fully the 
developing countries into the interna- 
tional trading system on the basis of 
shared responsibilities and benefits. 

Second, an increase in investment. 

Our common objective should be to 
stimulate domestic and international 
private investment. We must encourage 
and support the individual investor. 

Third, stronger international 
cooperation in food and energy. The 

recent U.N. Conference on New and 
Renewable Sources of Energy recom- 
mended that the developing countries be 
assisted in assessing their energy 
resources and determining the best way 
to exploit them. The U.N. Development 
Program and the World Bank have im- 
portant followup responsibilities. And 
we must all work to engage more effec- 
tively private participation in exploration 
and production in oil-importing develop- 
ing nations. 

Domestic and international action 
must also go hand in hand to achieve 
food security. The United States con- 
tinues to be the largest donor of food aid 
and places a paramount emphasis on its 
bilateral program to help developing 
countries increase food production. 
Greater a'ttention should be given to 
scientific and technological research that 
will yield more bountiful food supplies. 

I have outlined today the broad prin- 
ciples that guide America's approach to 
new strategy for growth. In the immedi- 
ate future, and prior to the Cancun sum- 
mit, we will announce specific proposals 
to deal with this and other issues of 
development. 



Dialogue for the Future 

These broad principles reflect our vie 
that the United States can and will cc 
tinue to make an essential contributic 
to the process of development. We dc 
not claim to have all of the answers. '. 
we do believe that our collective resp< 
sibilities for the future allow no more 
time to be lost in sterile debates and 
unrealistic demands. The time has co: 
for a reasoned dialogue with promise 
the future. 

The search for economic progress 
social justice, and human dignity has 
always been supported by the Amerk 
people, themselves an example of sue 
cessful development. Our initiatives a 
resources, through bilateral program! 
the United Nations and other multi- 
lateral agencies, have made major co 
tributions to the process of moderniz; 
tion throughout the world. For the 
United States, support of developmei 
constitutes a practical imperative. 

At the Ottawa summit the Unitei 
States reaffirmed its willingness to j< 
its partners in exploring all avenues • 
consultation and cooperation with 
developing countries. In October, Pr( 
dent Reagan will go to the summit 
meeting in Cancun, Mexico. He looks 
forward to a genuine and open exchs 
of views on questions of economic 
development and international coope 
tion. The Cancun summit offers a no 
opportunity to gain fresh understand 
of the problems we face together. TI 
United States will join in a construct 
and cooperative spirit. 

Our objective is to bring about a 
era of growth. But the purpose of be 
growth and development goes beyon 
materialism. As Winston Churchill s; 
"Human beings and human societies 
not structures that are built, or 
machines that are forged. They are 
plants that grow and must be treatei 
such." 

Despite the difficulties of the mo 
ment, we should go forward in a spii 
of optimism. We have the vision be- 
queathed to us by the charter. We h; 
the potential of the peoples represen 
in this room. Let us go forward toge 
to achieve a new era of growth for a 
mankind. 



1 Press release 320. 



Department of State Bu 








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Botswana Mozambique 
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Note Belize became the 156th member of the 
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,vv»<"i 




i 

i 



IE SECRETARY 



.S. Strategy in the Middle East 



Secretary Haig 

ement before the Senate Foreign 
'.tions Committee on September 17, 



; is a welcome opportunity to review 
progress in foreign policy during the 
. 9 months of the Reagan 
linistration. I would like to focus 
icularly on the Middle East, because 
lave just met with three of our best 
ids from that critical region. And I 
| that the subject is very much on 

• minds because of the impending 
ite over arms sales to Saudi Arabia. 
That debate is also very much on my 
i because so much is at stake in 

• decision. I am deeply conscious of 
concerns that have made these pro- 
;d sales so controversial. 

For our part the President's decision 
not arrived at lightly. What is at 
e here is far more than an impor- 
improvement in the military 
ibility of a friendly nation. What is 
take is this nation's capacity to 
;lop a strategy that can move the 
:e process forward and protect our 

I interests in an unstable area ex- 
ed not only to historic Arab-Israeli 
lries but increasingly to threats from 
Soviet Union and its proxies. 

If we fail to develop such a strategy, 
consequences for the United States 
its industrialized allies could be 
itantial, but for our friends in the 
on— and for Israel in particular— the 
sequences are even more significant. 

alanced Policy 

II say more later about the specific 
ortance of the decision on the Saudi 
is sales. But first I want to make 

ie broader observations about this 
ninistration's foreign policy. That is 
purpose for which I was asked to 
ie here today. Moreover, the specific 
es of arms for Saudi Arabia cannot 
udged in isolation from the other 
ensions of American foreign policy. 
When I came before this committee 
lonths ago for confirmation hearings, 
ated that this Administration was 
:ted to office with a mandate for 
nge in U.S. foreign policy. But 
nge, even important and overdue 
nge, must be balanced by the need 
consistency. 
Balancing the need for change with 



the need for consistency has been a cen- 
tral concern of this Administration. That 
is why we have confirmed the U.S. com- 
mitment to the two-track decision, 
agreed to in December 1979 by all the 
NATO allies, as the basis for developing 
the Reagan Administration's approach to 
TNF [theater nuclear force] arms con- 
trol. That is why we have moved 
cautiously — despite our known reserva- 
tions about where the SALT process has 
brought us— while we review ways to 
put strategic arms control negotiations 
on a sounder footing. And that concern 
for the consistency of U.S. policy has 
shaped our thinking on Namibia, on 
China, on the Middle East peace pro- 
cess, and on many other issues. 

There is also another kind of balance 
that we must maintain, and that is 
balance among the different elements of 



recognizes that peaceful progress in the 
developing world will become impossible 
if we fail to impose effective restraints 
on the use of force by Cuba, Libya, and 
other Soviet proxies. 

Middle East Challenge 

Nowhere is the maintenance of balance 
among the different elements of our 
foreign policy more important than in 
the Middle East, that complex and 
unstable region in which we have so 
many important economic, political, 
strategic, and even spiritual interests. 
Let me cite just a few of the 
developments that challenge the United 
States. 

• The oil fields in the Persian Gulf, 
so vital to the United States and our 



We cannot compensate for the neglect of one essential element by overem- 
phasis on another. Single-purpose solutions to complex problems are often 
appealing but seldom correct. President Reagan's foreign policy is based on 
such a balanced and comprehensive strategy. 



our foreign policy. We cannot compen- 
sate for the neglect of one essential ele- 
ment by overemphasis on another. 
Single-purpose solutions to complex 
problems are often appealing but seldom 
correct. President Reagan's foreign 
policy is based on such a balanced and 
comprehensive strategy. The rebuilding 
of America's economic and military 
strength, the deepening of cooperation 
with our friends and allies, the promo- 
tion of peaceful progress in the devel- 
oping countries, and our insistence on 
more responsible behavior by the Soviet 
Union are mutually reinforcing elements 
of an integrated strategy. 

This Administration recognizes, for 
example, that we cannot succeed in com- 
bating Cuban subversion in this 
hemisphere or in Africa, unless we 
address the fundamental conditions that 
the Cubans seek to exploit. We are 
doing that in our Caribbean Basin 
initiative; in our economic assistance to 
such critical countries as El Salvador, 
Jamaica, and Zimbabwe; and in our 
efforts to achieve independence for 
Namibia. At the same time, our policy 



European and Japanese allies, are 
threatened by the military presence of 
the Soviet Union and its proxies in 
Afghanistan, South Yemen, Ethiopia, 
and Libya. 

• The new entente between Libya, 
Ethiopia, and South Yemen — three of 
the Soviets' closest friends in the 
area — is only the most recent of many 
threats to the security of our friends in 
the region. 

• The Arab-Israeli dispute divides 
some of our closest friends. 

• Iran, which once served as a 
buffer between the Soviet Union and the 
gulf and helped to maintain regional 
security, is torn by war and violence. 
The danger to Iran's independence and 
integrity poses a threat to U.S. security 
that would make Iran's own wanton 
assault on international order pale by 
comparison. 

• Ancient poverty and sudden 
wealth, venerable tradition and modern 
progress, coexist uneasily. 

American interests in the Middle 
East can be protected only by a strategy 



ober 1981 



13 



The Secretary 



that neglects neither regional complex- 
ities nor the threat of external interven- 
tion. As I explained in April during my 
visits to Cairo, Jerusalem, Amman, and 
Riyadh, the United States regards the 
peace process and the effort to counter 
Soviet and regional threats as mutually 
reinforcing. If our friends are more 
secure, they will be more able to take 
risks for peace. If there is progress in 
the peace process, security cooperation 
will be facilitated— cooperation that is 
essential to deter intervention by the 
Soviet Union and its proxies. 

We support Israel and Egypt, not only 
as security partners but as partners in 
the historic peace process that they 
themselves began. In his discussions 
with Prime Minister Begin last week, as 
in his earlier discussion with President 
Sadat, President Reagan made clear the 
U.S. interest in the peace process and 
our commitment to .the Camp David 
accords. The participation of U.S. troops 
in a Sinai peacekeeping force is one 
measure of our determination to see 
peace succeed. Phil Habib's efforts as 
the President's personal emissary to 
defuse the crisis in Lebanon constitute 
another. We are pleased that Egypt and 
Israel have agreed to resume the 
autonomy talks, now scheduled to start 
in Egypt on September 23-24. 

We welcome the restraint that Israel 
has shown, under difficult circumstances, 
making it possible for Ambassador Habib 
to negotiate a cessation of hostilities on 
the Israeli-Lebanon border. We welcome 
the good offices provided by Saudi 
Arabia that facilitated his task. We hope 
that violence on that front can be avoid- 
ed. We look forward to rapid movement 
in the autonomy negotiations. And we 
shall work diligently to restore stability 
to Lebanon. 

However, even the most rapid pos- 
sible progress on the Arab-Israeli 
dispute would not do away with the 
many other conflicts in the Middle East 
such as the Iran-Iraq war, the tension 
between the two Yemens, or possible 
anarchy in Iran. And we would not have 
removed the threat of intervention by 
the Soviet Union or its proxies in these 
conflicts. 

Our ability to protect our friends 
from the insecurity that these conflicts 
produce will make them bolder in the 
peace process. It is also essential to pro- 
tect vital U.S. interests. 

Although we are building up U.S. 
military capabilities so that we can 
better contribute to the security of the 



region, the use of U.S. military force 
can only be considered as a last resort. 
And to deter major Soviet threats, for 
which the U.S. role is indispensable, we 
also need the help of our friends, both in 
the region and outside it, whose 
interests are engaged by the threat to 
Middle East security. 

That is the reason why we are pur- 
suing intensified strategic cooperation 
with Israel, Egypt, Saudi Arabia, and 
many other concerned countries. The 
form and content of our cooperation is 
different in each case. We are sensitive 
to both the political and military limita- 
tion on the contributions that different 
countries can usefully make. We are not 
seeking to construct formal alliances or 
a massive structure of U.S. bases. We 
are pursuing a sophisticated strategy, 
one guided as well by a sense of 
urgency. 

Our broad strategic view of the 
Middle East recognizes the intimate con- 
nections between that region and adja- 
cent areas: Afghanistan and South Asia, 
northern Africa and the Horn, and the 
Mediterranean and the Indian Ocean. 
We recognize that instability in Iran or 
other areas in the region can influence 
the prospects for peace between Israel 
and its neighbors. 

Success will, therefore, require a 
very broad effort. We are working with 
our European allies for a strong Turkey, 
not only to strengthen the security of 
NATO's southern flank but also because 
Turkey is a strategic bridge between 
Europe and Southwest Asia. We are 
assisting Tunisia, the Sudan, and others 
that are targets of Qadhafi's expan^ 
sionism. And our renewed cooperation 
with Pakistan reflects not only our con- 
cern over turmoil in Iran and aggression 
in Afghanistan but our appreciation of 
the role a secure Pakistan can play in 
promoting regional stability. 

Saudi Security 

Our proposals to enhance the security of 
Saudi Arabia are a key element in our 
Middle East policy. The proposed arms 
sales will increase the Saudis' ability to 
defend themselves against local threats; 
they will directly assist U.S. forces 
deployed in the region, just as U.S. 
AW ACS [airborne warning and control 
system] do now; and they demonstrate 
our commitment to assist the Saudis 
against even greater dangers. Our 
friendship with Saudi Arabia is not 



based solely on its role as an oil suppli* 
Saudi Arabia is proving itself an essen 
tial partner in our broader interests. 
Saudi assistance has been important in 
the past to states that broke away froi 
the Soviet embrace. Saudi Arabia has 
provided important assistance to 
moderate states such as Sudan and 
Pakistan, and, indeed, more will be re- 
quired. It has played an essential 
diplomatic role in negotiating the recei 
cease-fire in Lebanon. It has played a 
key leadership role in the newly forme 
Gulf Cooperation Council. We expect 
Saudi cooperation in fostering peace ai 
stability to broaden as the Saudis feel 
themselves more secure. 

Security cooperation is not a com- 
modity to be sold or haggled over; it is 
process that must be based on mutual 
confidence and mutual security interes 
The question is whether the necessary 
basis of cooperation can survive if the 
seriousness of our commitment to Sau 
Arabia's security is compromised. To 
deny Saudi Arabia this basic means of 
self-defense is to deny it the sovereign 
status and respect essential to an en- 
during partnership. 

Some suggest that there can be nc 
security cooperation as long as there a 
deep divisions on other issues. There i 
no question that we have differences 
with Saudi Arabia on the peace proces 
just as we have differences with Israe 
and Egypt on other issues. But 
American diplomacy in the Middle Eas 
has long been based on the need to wc 
effectively with countries divided by 
deep differences. 

That is a difficult role to play; but 
is the reason that the United States h; 
played a uniquely positive role in the 
Middle East, a role that has not only 
served American interests but the in- 
terests of the moderate countries in tl 
region and our European and Asian 
allies as well. It is an approach that 
emphasizes common concerns and see 
remedies to common problems. 

Our approach to Saudi Arabia has 
been shaped by the profound insecurit 
caused by events of the last 5 years, 
particularly the fall of the Shah. It ha 
been influenced by discussions conduc 
by the previous Administration with t 
Saudis and by previous U.S. actions, 
including the deployment of AWACS 
aircraft to Saudi Arabia during the 
Yemen crisis of 1979 and again durinj 
the Iran-Iraq war. 



14 



Department of State Bulle 



The Secretary 



Our approach has also been shaped, 
ever, by an appreciation of Israeli 
;erns over the proposed Saudi 
cage. We are taking steps to 
riate these concerns. We are deter- 
ed to maintain the qualitative edge 
; is vital to Israel's security. A stable 
onal balance, moreover, enhances 
:rrence against Soviet moves. 
Our discussions last week with 
ne Minister Begin enhanced each 
's understanding of the other's posi- 
on this and other issues. We are 
leheartedly and permanently corn- 
ed to the security of Israel. Without 
rong Israel, our hope to improve the 
;pects for peace and security in the 
on cannot be fulfilled. A secure 
di Arabia and a strong U.S. -Saudi 
tionship are central to these same 
s. 

We must not let our friends' worries 
it one another diminish our commit- 
t to their security or hinder our 
s to extend strategic cooperation 
them. We are taking steps to 
re that Israeli concerns are met, 
as we are seeking to assure 
crate Arab nations that our devel- 
g strategic cooperation with Israel is 
:ted against Soviet intervention and 
igainst the Arabs. But unless we 
ible to work effectively with all of 
friends in the region, our security, 
security of Israel, and peace itself 
be endangered. 



Interview on "Issues and Answers" 



Press release 312. 



Secretary Haig was interviewed on 
ABC's "Issues and Answers" by ABC 
News correspondents Sander Vanocur 
and Barrie Dunsmore in Washington, 
D.C., August 23, 1981. i 

Q. You were once Chief of Staff at the 
White House. Had you been Chief of 
Staff at the White House last week, 
would you have gone and telephoned 
President Reagan and told him about 
the engagement off the Libyan coast? 

A. It's hard to say. I think each 
situation has its own unique factors. No 
one is the same as the one before. I 
think, in this instance, Ed Meese 
[Counsellor to the President] was exactly 
right. I spoke to Ed very briefly after 
we first learned of the incident. I think 
we both concluded that, until we knew 
more, it would not be worthwhile to 
notify the President. And I think Ed did 
so before the issue became a matter of 
public knowledge, and when we had the 
full facts before us — myself and Bill 
Casey [Director of Central Intelligence]. 

Q. You took some abuse at the 
time of the assassination attempt on 
President Reagan. 

A. I've taken a lot of abuse over a 
number of years. 

Q. Yes. This was the most recent 
and the most vociferous, about trying 
to establish command authority in a 
very tense situation. It is unclear to 
me, at this time, what the command 
authority structure is in the U.S. 
Government on national security mat- 
ters. Is Mr. Meese in charge of it? Is 
it yourself? Is it Cap Weinberger 
[Secretary of Defense]? Is it the Na- 
tional Security Council Director, Mr. 
Allen? 

A. I think it is very clear, that none 
of the names that you have mentioned 
are confused about it. It's the President. 
The President was aware of this situa- 
tion. He had personally approved the ex- 
ercise. He had personally approved the 
rules of the engagement, which were 
standard, but which were strongly re- 
affirmed by the President. 

Everything that the President per- 
sonally approved was followed in a very 
coherent way. I must say, the other 
evening, with two of your principals out 
of town, when the situation developed, 



we had a task force in the State Depart- 
ment working closely with the National 
Military Command Center, in constant 
contact with myself; with Cap Wein- 
berger; with Ed Meese; with Bill Casey, 
Director of CIA; and with Dick Allen. 
And, we were all in constant communi- 
cation throughout the period. So, I don't 
know how we could have had a more 
successfully managed crisis, if you will. 
And, incidentally, both Cap and I spoke 
to the Vice President, who is vacation- 
ing in Maine, as you know, and who 
followed the events minute by minute. 

Q. Isn't everything you just said 
going to give ammunition to the peo- 
ple who say this was not a surprise to 
the United States? It was anticipated? 

A. I don't think the resort to 
violence is ever anticipated. But I 
wouldn't suggest for a moment that we 
were naive about the possibility, given 
the track record of Mr. Qadhafi [Libyan 
chief of state] over a number of years. 
Surely, we anticipated that it could hap- 
pen and we were ready if it were to hap- 
pen. 

Q. Now that you have had a 
chance to analyze all of the data, do 
you believe that this was a premedi- 
tated action taken on the advice of 
Colonel Qadhafi, or was it something 
that the pilot did on the spur of the 
moment? 

A. I don't believe it was the spur-of- 
the-moment pilot accidental action, if 
you will. I think the tapes that have 
been revealed and the exchanges that 
occurred after the event would suggest 
that the pilots were on a targeted mis- 
sion. They clearly announced the fact 
that the one aircraft had released its 
missile. I'm not one who believes these 
kinds of things, in a disciplined organiza- 
tion, even one of varied nationalities 
such as may be the case in Libya, are 
not pretty carefully managed and con- 
trolled. 

Q. What would be the purpose of 
their doing that and what do you 
think the consequences are likely to 
be? If you expected that it was pre- 
meditated, you must be waiting for 
the other shoe to fall. 

A. No. I think the incident is behind 
us. I think it was a testing incident. It 



ober 1981 



15 



The Secretary 



may have been an accidental one. We 
can't discount that. But, I am inclined to 
believe it was a testing incident. We 
have had others in the past over the last 
5 years, not only in the disputed area in 
which this incident occurred but beyond 
there, where there has been harassing 
and provocative actions taken by Libyan 
aircraft. There have been what I call 
transmissions of highly provocative 
character which suggested that Libyan 
aircraft were targeted against aircraft 
of the United States which were transit- 
ing in international air space. 

We must be prepared, of course, as 
we are for some additional challenges or 
provocations, if you will. But, I am in- 
clined to believe that the action taken, 
which was cleared by the President 
beforehand, was a clear delegation of 
authority to our local commanders, will 
be an effective termination of similar 
events in the near future. And I would 
hope so. 

Q. In terms of what happened this 
past week, how is this going to affect 
what you refer to as this strategic 
consensus that is emerging in the Mid- 
dle East? You have now President 
Sadat, who has offered us the use of 
facilities at Ras Banas. You have 
Prime Minister Begin coming in 
September and the speech he made in 
the Knesset, which got very little at- 
tention. He revived what he said 
before about the possibility of a 
defense pact with the United States. 
What is emerging here? There is a 
strategic shift, somehow, is there not? 

A. Yes. And, you will recall I men- 
tioned this against some skeptical back- 
ground in May, at the time of my visit 
to the Middle East— April and May. At 
that time, I was not talking about con- 
structing a consensus but recognizing 
that one was developing as a result of 
historic events — the war between Iraq 
and Iran, the collapse of the Shah, the 
Soviet blatant interventionism in 
Afghanistan — have all alerted a number 
of Arab states not only to the historic 
frustrations of the Middle East peace 
process but also to the vulnerability of 
the area to Soviet interventionism. I 
think these are welcome historic 
developments which are going to offer 
improved opportunity for the peace pro- 
cess itself. 

Q. The key to the peace process is 
Lebanon. I believe you received— the 



State Department received— a letter 
from Prime Minister Begin Monday 
night in which he has asked you when 
is [the President's special emissary to 
the Middle East] Philip Habib coming 
back. Have you answered him yet? 

A. No. I am preparing a response to 
Mr. Begin's letter, which was a very 
detailed and welcome letter. Of course, 
we are prepared to send Phil back in as 
soon as the President feels that his 
presence there is going to make a con- 
structive contribution to the process. 
August is a difficult month, not only in 
Europe but in the Middle East as well, 
when many of the key officials are 
traveling and on vacation even though 
there is tension in the area. We are 
working now, within the United Nations, 
to strengthen the UNIFIL [U.N. Interim 
Force in Lebanon] role along the Israeli 
border with Lebanon. We are working, 
along with our European partners and 
certain Middle Eastern moderate Arab 
states, to strengthen the central govern- 
ment of Lebanon. And we are working, 
of course, within the four-party Arab 
League followup group, the group that 
Phil Habib had worked so actively with 
in the two phases of his visits. And, all 
of this is in place and moving. I think as 
soon as it is going to be beneficial for 
Phil to go back, the President will send 
him there. 

Q. Just one more question about 
Libya. It is part of State Department 
folklore that, at one time, you gave an 
off-the-record interview in which you 
described Colonel Qadhafi as a cancer 
which has to be removed. Did you ever 
say anything along those lines? 

A. If I were to have said that on 
background, and I now say it on fore- 
ground, then I would be violating the 
background rules, which some apparent- 
ly feel free to do. Let me say this. I 
have made no bones about the concern I 
have felt, and that I know President 
Reagan feels, for the lawlessness which 
has characterized Mr. Qadhafi's interna- 
tional behavior, his support for terror- 
ism, blatant invasion of neighboring 
states where today his forces occupy 
Chad, efforts to subvert and to replace 
existing governments along all of his 
borders, and activity in support of ter- 
rorism even in this hemisphere. 

I think these are unacceptable norms 
of international behavior. And it is in 
our interest and the American people's 



interest, and in the international com- I 
munity's interest, to no longer overlook 
these illegal activities whether they 
come from Libya, Cuba, or the Soviet 
Union. 

After all, one must bear in mind th 
Libya today is armed far beyond its 
defense needs, and it is the Soviet Unk 
that provides the means to permit this 
situation to develop. It isn't an exclusiv 
preoccupation of Mr. Qadhafi or [Cubai 
President] Mr. Castro, or, for that mat 
ter, the Soviet leadership, but a situa- 
tion which the time has long since 
passed, where the free world, and the 
United States as a leader in the free 
world, must stand up and be heard on 
these issues. 

Q. That takes us to the subject o 
U.S.-Soviet relations. Last week on 
this program, an adviser to Presiden 
Brezhnev, Dr. Georgiy Arbatov, said 
that he was not at all optimistic aboi 
the prospects for your meeting with 
Andrei Gromyko next month. How d 
you read that reaction, and what is 
your own assessment of that meetinj 

A. That's a disappointing commen 
tary from a Soviet official, who I woul 
be more interested in suggesting that 
perhaps there is some hope for progre 
in a dialogue which has been rather 
strained over the last 7 months. My 01 
view is that there has been no lack of 
communication between ourselves and 
the Soviet leadership— over 50 official 
contacts in 7 months, a half a dozen 
written formal communications with I 
Soviet leadership including one persor 
one from the President. I think the 
problem is not communication. The pr 
lem is that the Soviet leadership, thus 
far, has not liked what they have hear 
from this Administration. 

I have made it clear in my speech 
New Orleans 2 weeks ago, that we an 
prepared to meet the Soviet leadershi 
halfway. And, we are anxious for an i 
provement in the dialogue. But, such 
improvement can only follow some 
reigning in, some restraint, if you will 
of what has been 6 years of unaccept- 
able Soviet international behavior. 

Q. Getting back to the meeting 
with Gromyko next month, what an 
your basic objectives for that meetii 

A. I think it is important for our 
viewers to recognize that this is the fi 
ministerial-level meeting with this Ad 
ministration and Soviet leadership. 



16 



Department of State Bulle 



The Secretary 



•ly, one of the major items on the 
da is the theater nuclear force arms 
•ol negotiations, which I anticipate 
>e a large portion of our discussion 

and hopefully we will fix a date 
i location for the resumption of 
: talks which are already bracketed 
between mid-November and mid- 
mber. 

Secondly, I would expect to discuss 
nber of world crisis situations, ten- 
spots— Afghanistan, Kampuchea, 
it proxy interventionism, trade, 
der arms control aspects of our rela- 
hips, and any subject that the 
S leadership, itself, wants to raise. 
But I think these are the general 
3 that there will be an exchange of 
s on. I don't anticipate that we are 
y to have any wowing break- 
ighs in a meeting engagement of 
kind. More than likely, what we will 

is some rather stiff exchanges, one 
expressing its concerns to the other 

hopefully, that would be followed 
I by additional ministerial discus- 
;, which I would hope would 
lately lead to a summit-level 
ing between our President and 
ident Brezhnev. 

Q. Is it possible to have any mean- 
ul negotiations on the question of 
ting nuclear weapons in Europe 
n you aren't, at the same time, 
ing about limited strategic nuclear 
pons that both sides have? 

A. Clearly, I think this is a possibili- 
jst as we have been able to carry on 
:egic discussions without the involve- 
t of theater systems. We can, now, 
nto the theater area. We are talking 
it long-range systems, the SS-20 
the corresponding Western systems, 
Pershing and the ground-based 
;e and air-launched cruise. All of 
e things will be discussed, and I 
i constructively. And we certainly 
ir into these talks with a very 
)us intent of getting meaningful, 
need, verifiable, and equitable arms 
rol agreements. 

Q. Is it possible to really plan a 
j-term negotiating strategy 
lout some important decisions hav- 
been made on some weapons 
ems, bombers, and, of course, the 
missile which was discussed this 
k in California? You come down 
he side of making it a land-based 
.pon. 



A. I don't make it a habit, although 
some do, of raising in public forums the 
recommendations I will make to the 
President on issues on which he hats yet 
to make his decision. Let me say this. 
Sure, these decisions which the Presi- 
dent is about to make with respect to 
the modernization of our strategic inven- 
tories will have a profound impact on 
future SALT [Strategic Arms Limitation 
Talks] negotiations, strategic discus- 
sions. 

Let me say this, as well, because 
there has been a lot of speculation in the 
press recently about who is voting for 
what and who is being rolled and who is 
winning and who is losing. I have never 
seen, in the five Administrations that I 
have served at a fairly high level and 
have been always been involved in these 
strategic issues, a case where in a brief 
period of 7 months, the Secretary of 
Defense has pulled together so compre- 
hensive an approach and so comprehen- 
sive a package for the President to con- 
sider. I personally could do nothing but 
compliment Cap Weinberger for the way 
he has approached it. 

Now, there are a number of deci- 
sions, a number of options, that are 
available to the President to make a 
decision on. He has not done so yet, and 
I think we are all best served in this Ad- 
ministration, and frankly in the press, to 
reserve our judgments until the Presi- 
dent makes these decisions. I am one 
who has always supported a triad of 
capabilities— land-, sea-, and air-based 
systems. And I feel confident that the 
ultimate mix the President approves will 
have those fundamental characteristics 
inherently in them. 

Q. One decision the President has 
made concerning weapons is the sale 
of AWACS [airborne warning and con- 
trol system] reconnaissance planes to 
Saudi Arabia, an enhancement for the 
F-15s that were approved several 
years ago. An announcement is sup- 
posed to come out tomorrow, giving 
the legislative timetables, September 9 
informal notification, September 28 
formal notification. It is going to be 
controversial. In view of what you 
have— a sense of optimism about the 
Middle East— aren't you pushing big, 
massive chips forward on a controver- 
sial issue like this? 

A. There is no question that this a 
controversial issue. We went into it with 
our eyes wide open. We got on a fast- 
moving train in that regard. There had 



been discussions along these lines for a 
number of months and years before this 
Administration came in. But the bottom 
line in the question is this: This is a fun- 
damental improvement of the U.S. 
strategic position in the Middle East. It 
is going to be an enhancement of our 
ability to control events. And it is going 
to be a profound improvement to allies' 
ability to preserve and protect the vital 
oil resources of that region. 

We intend to proceed, and we intend 
to win. I think it is very important that 
we do so for the vital interest of this 
country. 

Q. It would be less confronta- 
tional, though, wouldn't it, if when 
Prime Minister Begin is here you can 
offer something to him, maybe not the 
defense pact he has raised now, the 
prepositioning of U.S. military 
material that would lessen Israel's op- 
position and mollify its concerns? 

A. I suppose one can suggest such 
courses of action. But my experience 
with the Government of Israel and its 
leadership is not that they are going to 
be bought off with respect to concerns 
by goodies that we might offer to 
enhance their own capability. I think 
their concerns are understandable. I 
think in the period ahead it is our 
responsibility to explain to them why 
this system is not going to be an unac- 
ceptable risk to their security interest. 
After all, we have obligations to Israel, 
and it wouldn't be in America's interest 
to provide potential aggressors with the 
capability to aggravate our own ability 
to fulfill our responsibilities. 

So, we are not going to do that. 
Now, that doesn't discount the impor- 
tance of maintaining the qualitative edge 
in Israel. And we are, indeed, prepared 
to discuss that issue and to address it in 
final terms, so it has a de facto relation- 
ship. But I think it would be wrong to 
suggest that we are indulging in 
rewards or payoffs for Israeli ac- 
quiescence in a decision which stands on 
its own merits as the right one. 

Q. We have alluded to this a cou- 
ple of times on the broadcast, but I 
would like to put the question to you 
this way. In recent weeks, a U.S. 
Senator and a senior member of the 
State Department have told me that 
there is a monumental ideological bat- 
tle going on for the soul of this Ad- 
ministration, that you are on the side 



nhor 1QR1 



17 



The Secretary 



of the moderates and they don't give 
you much chance of prevailing. How 
would you analyze that? What can you 
tell us about that? 

A. I suppose that is the most un- 
precedented label I have received yet, 
that I am on the side of the moderates. I 
have usually been accused of being 
somewhat to the right of Ghengis Kahn. 
But, that being the case, let me tell you 
nothing could be farther from the truth. 
I have never worked with an Ad- 
ministration — I have worked with 
five — in which the philosophic compati- 
bility was more uniform and more in 
tune with the views of the President of 
the United States, who, after all, is the 
elected official and whose views must be 
the deciding factor in any policy issue. 
No. I don't accept that premise at 
all. And I have seen a lot of speculation 
and scorekeeping about Cap Weinberger 
and myself. I have never seen a situa- 
tion in which a Secretary of Defense and 
a Secretary of State were in closer gee 
with respect to the broad philosophic 
and policy directions that this country 
should take. 

Now, it doesn't mean that, as a 
Secretary of State with diplomatic and 
foreign policy responsibilities, that I am 
not going to differ from time to time 
with a man who must manage the 
defense establishment of the United 
States. But, the bottom line that unites 
the both of us is the vital interest of this 
country. And I can assure you Cap and I 
are in very close gee on those subjects. 

Q. I will give you one example. On 
the subject of how we deal with the 
Europeans, you certainly seem to be 
much more concerned about taking 
European consideration into account 
on a decision. And Mr. Weinberger 
seems to think that the Europeans, 
because of the new pacifism, they real- 
ly almost don't have to be worried 
about. 

A. No. I think that would be a bum 
rap to hang on Cap, just as it would that 
I am preoccupied with their concerns. It 
is a foreign policy matter for me to be 
sensitive to European concerns and to 
be sure that, to the best of our ability, 
we meet those concerns. After all, the 
reality of the current strategic environ- 
ment is interdependence. The United 
States no longer has the luxury of pro- 
ceeding alone. We see it every day from 



Medfly today to air controllers, which 
are seemingly domestic questions, but 
which have profound international im- 
plications. Surely, we have to do this. 
And it is my responsibility to alert 
the President to concerns in this area. It 
is not Cap's. Were he to be a proponent 
for that, he would probably be out of his 
own reservation. But it doesn't mean 
that we are in fundamental difference on 
any issue. And I am not aware that we 
are. 

Q. You were fond, back when you 
took office, of quoting the Jackson 
subcommittee hearings on national 
security, when you were the vicar of 
the President on foreign policy before 
your vestments got a little ruffled. In 
that, they quote "the success of a 
Secretary in influencing his colleagues 
is directly related to the President's 
confidence in him and reliance on 
him." Do you now, after a stormy 
passage, have that? 

A. I am very, very comfortable with 
my relationship with President Reagan. 
There hasn't been an issue that I have 
been confronted with since I have been 
here that I haven't had a hearing and, in 
most cases, that I have not been sus- 
tained. Where I haven't, and I think of 
two particular cases— and that's all — I 
understood completely why the Presi- 
dent, with his broader responsibilities, 
had to go the way he did. 



'Press release 287 of Aug. 24, 1981. 



News Conferenc 
of August 28 



Secretary Haig held a news con- 
ference at the Department of State on 
August 28, 1981. 1 

Q. With respect to the proposed sal< 
of AWACS [airborne warning and 1 
trol system] aircraft to Saudi Arabii 
we've been told there will be restric 
tions on the use of those aircraft. 
Could you tell us what those restric 
tions are, including whether they 
would prevent Saudi Arabia from us 
ing the planes near Israel? 

A. First, I wouldn't like to descril 
the transfer conditions or transfer ar- 
rangements that we will work out wit 
the Government of Saudi Arabia as 
necessarily restrictions; I think that's 
the wrong term. And I would want to 
underline that there are certain ar- 
rangements which will become known 
when the consultations start on the H 
We feel we have an obligation to disci 
these matters with the members of th 
Senate and the House. Until that time 
happens, we have, of course, urged 
everyone — as I have been urging — th; 
they hold their judgments on this adm 
tedly controversial sale until they hav< 
the benefit of the full briefings that wi 
be provided, which will include transfe 
arrangements, with which I must say 
day that we in the executive branch ai 
very happy. 

Q. The Administration acted fin 
ly in pledging to protect its aircraft 
against attack, yet in this hemisphei 
El Salvador is under attack with arr 
which we say are supplied by Cuba. 
Will the Administration act firmly b; 
going to the source of those arms to 
cut off the flow? 

A. That is a good question for the 
declining hours of the summer months 
think we've made it very clear that we 
have two problems in El Salvador. Oni 
is to do all possible to assist the politic 
process in Salvador — the quest for soc 
justice, if you will — through the 
measures that will be taken developme 
tally — internal economic growth, 
political improvements — which will per 
mit a pluralistic structure to emerge. 
Secondly, we have recognized clearly 
that that process cannot proceed undei 
a set of security conditions which are 
fed from outside Salvador, led first anc 
foremost by Cuba, with a provision of 



18 



Department of State Bulleti 



The Secretary 



5 than ample funds and resources 
i the Soviet Union. We feel we must 
with this set of circumstances as 

That involves the moderate level of 
tance we have provided to El 
ador internally to provide for its 
internal security at a level which is 
;ively one-third of what we have 
providing for economic develop- 
t for Salvador. At the same time we 
onsidering a number of other 
sures involving the problematical 
ce — Cuba. It would be premature 
ne to go futher than that other than 
11 you that we are considering a 
ber of proposed actions in that area. 

4- Last March the Administration 
that you expected to have those 
tary advisers in El Salvador out of 
e by next week, September. Most 
lose men are still there and now 
re adding more, and the other day 
i [Dean Fischer, State Department 
esman | said it was an emergency 
ition. What's happened to your 
:egy there? It doesn't seem to be 
ring. 

A. It's a two-sided strategy. Clearly, 
abjective observer — and I know 
•e one — recognizes that that issue is 
;ly dependent on the activities of the 
"nal powers that continue their 
hief inside El Salvador: provision of 
iments, command and control and 
■tion, and possibly even advisers in 
lin guerrilla areas. There are some 
rts of that. 

Clearly, you cannot establish 
.teral conditions and provide for 
3 that are causing the problems a 
i blanche to continue on with their 
ity. We have, incidentally, with- 
m some of the advisers as their 
c has concluded. We continue to 
training outside El Salvador as a 
advantageous approach to this 
lem. 

^n the meantime, while we had some 
cening off following the failure of 
offensive in January, we have seen a 
dy increase. Not as dramatic as it 
prior to the offensive in January, 
we've also seen a change in tactics. 
,t we've witnessed is a guerrilla 
ement resort to straight terrorism, 
rinds of activities which reflect their 
re and frustration in major force 
ations. They've now gone into an 
•t in which the main victims of their 
aty are the innocent noncombatants, 
people of El Salvador, in food 
•ibution, in a very sophisticated ter- 
>t approach to destroying the power 
in El Salvador. 
rhe simple facts are that as long as 



this external assistance and provocation 
and instigation and direction in leader- 
ship continue, we have an obligation to 
deal with it internally along the two 
lines that I mentioned, and we must also 
deal with it externally. i 

Q. In a few days we'll mark 1 year 
since the beginning of the Solidarity 
movement in Poland. And, since that 
occurred, there have been two occa- 
sions — one in December in the past 
Administration and one the Friday you 
left for the Mideast trip — when it 
looked like an invasion was imminent. 
A two-part question: Why, in your 
estimation, have the Soviets not 
moved into Poland? Two, what is your 
judgment about what they're likely to 
do in the future? 

A. I think it's difficult to predict 
such situations with unusual precision. I 
do think that the Soviet leadership — and 
I welcome the decisions they've made — 
have concluded, for whatever reason — 
and there are a host of reasons — that it 
was not in the Soviets' interests to inter- 
vene. That could involve a number of 
merging factors. One would be the cost 
of intervention in bloodshed. One could 
be the consequential obligations of a 
post-Poland that had been suppressed 
and which would have to be sustained in 
economic and human terms. Thirdly, I 
would hope that the very unified, very 
vigorous stand of the Western world — 
especially the NATO alliance, the major 
European powers — have also con- 
tributed to the decision not to intervene. 
We would hope that situation would con- 
tinue, and today it looks somewhat bet- 
ter in that sense. 

I don't think anyone can predict in 
the period ahead what directions the in- 
ternal situation in Poland will take. 
Clearly, it is a very serious situation to- 
day economically, with shortages of food 
and hard cash. This will require gener- 
osity and care on the part of both the 
East and the West. 

We know today that there are inter- 
nal tensions which are somewhat 
different than they were in the earlier 
period of this crisis between Solidarity 
and the government itself. Our basic ob- 
jective is to do all we can to permit the 
situation to evolve and to have that 
situation evolve based on the wishes and 
the desires of the people of Poland. 

Q. This week South Africa made a 
deep military penetration into Angola 
which was denounced by a number of 
countries, and even your own depart- 
ment saw fit to deplore the action. I 



wonder if you could tell us what im- 
pact this incident will have on your 
policy of improving relations with 
South Africa, and also what effect you 
think it will have on your effort to 
solve the Namibia problem? 

A. Let me set the record straight in 
the context of the statement we made 
here on that situation. We said we 
deplore any escalation of violence in 
southern Africa regardless of its source. 
That's somewhat different from what I 
think your question suggests. Clearly, 
any such escalation of violence inhibits 
and makes more difficult the peace proc- 
ess that we are seeking to push forward 
with respect to the early independence 
of Namibia on the basis of U.N. Resolu- 
tion 435. 

But we've also said with respect to 
this particular incident that a number of 
factors have to be weighed in drawing 
value judgments — not just the act of the 
South African Government but also the 
fact that in Angola today, 6 years after 
its independence, there remains a large 
contingent of Cuban forces and Soviet 
advisers; that we have watched the ship- 
ment of quantities of Soviet armaments 
into Angola; and that these armaments 
have been used to refurbish SWAPO 
[South West Africa People's Organiza- 
tion] elements that move back and forth 
freely across that frontier and inflict 
bloodshed and terrorism upon the inno- 
cent noncombatant inhabitants of 
Namibia. 

All of these factors must be assessed 
in considering both the implications of 
this recent incident, which we view as 
deplorable in the context of its escala- 
tion of the violence and the inhibitions 
that it presents to us as we are continu- 
ing to seek that independence of 
Namibia today, with some progress I 
may add. 

Q. With respect to the aerial 
challenge with Libya and North 
Korea, is it your view that the radical 
"Communist" states are perhaps 
testing the Reagan Administration? 
Or, can it be seen the other way, that 
the Reagan Administration is testing 
the other states? Or does it just hap- 
pen to be a couple of coincidences? 

A. I wouldn't happen to view it 
from either perspective. I think the 
situation in the bay off Libya was a test 
that was made of the proper, legitimate 
exercise of the use of international 
waters and air space. As I say, in the 



>ber 1981 



19 



The Secretary 



past there have been similar near misses 
or what I call "high-risk provocations" 
taken by Libyan air forces and not ex- 
clusively against U.S. forces exercising 
their legitimate rights. It's unfortunate 
that that incident occurred, and it 
brought about the consequences we saw. 

With respect to Korea, it's impor- 
tant to bear in mind that this opera- 
tional flight, which was challenged by a 
missile firing, is one of countless such 
flights that have taken place over a 
number of years. Never before has one 
been challenged in this way. In this in- 
stance it appears— and I would say 
rather convincingly— that the North 
Koreans fired a missile while the aircraft 
was in international airspace— and the 
aircraft never departed from inter- 
national air space or the territorial air 
space of South Korea. 

Q. Why then, if this was never 
done before, do you think the North 
Koreans chose to fire this? 

A. It's not the first time that they 
have done such a thing. I recall my first 
experience in the Nixon Administration 
in February of 1969 where North Korea 
engaged an unarmed American recon- 
naissance aircraft well out over inter- 
national waters, so this is not an unusual 
incident. It's an unfortunate one, and 
one which we are prepared to deal with 
if necessary. 

Q. I think I have asked this ques- 
tion a few months ago. This week you 
have met with the Ambassadors of 
Canada and Australia on the Sinai 
force. When do you expect a positive 
commitment from Canada, Australia, 
and New Zealand on the Sinai force on 
their participation in it, and how will 
it affect their relations with the 
United States if they do not par- 
ticipate? 

A. First, let me say we have made 
it a policy not to provide day-to-day 
checklists on who is contributing forces 
and who is not, and the current state of 
the dialogue between ourselves and 
those states which we hope to see be 
donors to this force. I'm very pleased, 
incidentally, with the progress we're 
making. We have made substantial prog- 
ress in putting such a force together. It's 
not yet totally complete. I'm also very 
pleased that the Egyptian and the 
Israeli side yesterday agreed to the 
establishment of some implementing 
committees, forums, interlocking com- 
mittees, that will work to implement the 
withdrawal of Israeli forces. I think it's 



still best not to dot the "i's" or cross the 
"t's" on the dialogues that are continuing 
with potential donors. 

Q. But could you tell us if the 
United States is using a big stick, 
whether the countries— 

A. Not at all. We wouldn't conceive 
of such a thing. 

Q. Were you surprised by the an- 
nouncement that Egypt and Israel 
agreed to resume the autonomy 
negotiations, and do you expect these 
negotiations to become an issue on the 
agenda when Prime Minister Begin 
comes to Washington, September 14? 

A. To the last part of your question, 
yes, I do expect them to be on the agen- 
da. With respect to the first part of your 
question, we were pleasantly surprised. 
We very much welcome the agreement 
to sit down at an early date and to get 
on with the autonomy discussions. We 
have been behind such an outcome for a 
number of weeks now, and we've dis- 
cussed it both sides. So when I use the 
term "pleasantly surprised," that has to 
do more with the timing and the venue, 
and it's an unimportant aspect. I do 
know that we will discuss this with 
Prime Minister Begin, of course. 

Q. Does the United States have 
evidence that Libya has been sending 
major new supplies to the PLO 
[Palestine Liberation Organization] in 
southern Lebanon, and, if so, does 
this mean the PLO is violating the 
spirit of the cease-fire? 

A. I presume you are referring to 
the comments of Prime Minister Begin 
yesterday about the 18 guns. First, let 
me say that our not having the evidence 
of this does not mean that it is not so. 
Probably, it may be true. Any increased 
provision of armaments into this area at 
this time is a serious aggravation of the 
cessation-of-hostilities situation that we 
are seeking now to strengthen and 
broaden through a number of measures. 
Those measures include communication 
and efforts with those nations which 
have provided this armament to cease 
and desist from doing so. 

I also want to emphasize that I drew 
encouragement from Prime Minister 
Begin's comment that as long as these 
weapons were not fired, there would be 
no counteraction from Israel. I think 
that is a positive aspect of his state- 
ment, which we welcome. 

Q. Are you concerned that the 
need to cut back on the projected 



defense spending will make it more 
difficult for you and the Administra^ 
tion to reestablish American credibi 
ty, especially with our allies? 

A. Let me be very careful about 
your question. It assumes some sub- 
stantial cutbacks. There has been no 
decision as of this session, that I am 
aware "of, to do that. On the other hai 
I think it is also important that we 
recognize that we have taken a numb 
of very, very severe austerity measur 
on the domestic side. Clearly, the De- 
partment of Defense as well as the 
Department of State have to bear the 
share of responsibility for greater 
efficiency and belt-tightening and, if y 
will, a higher state of efficiency. 

I'm confident that Cap Weinberge 
[Secretary of Defense], who is primar 
charged with the esoterics and the 
details of this issue, recognizes, as do 
that with budgets of the high level we 
are talking about there are grounds fi 
certain adjustments. What the Presid 
decides to do on this issue remains to 
seen. I think it is very, very importan 
to answer your question, however— tl 
the underpinnings of President Reagc 
foreign policy require a rectification o 
the slackening of the American defen 
effort, which his current policies em- 
body, and which I am absolutely confi 
dent he will continue to pursue in the 
days ahead. 

Q. Going back to Korea, do you 
have any intention to change your 
basic posture toward North Korea I 
cause of the firing of this missile? I 
also wonder whether you regard th 
instance as an isolated and indepen 
ent provocation to the United State 
and, if not, why not? 

A. It would be hard to characteri 
it as an isolated and independent pro 1 
cation. We have experienced those ov 
the years, so there could be nothing 
isolated about it. One need only look 
back in the history books. I cited one 
stance. We all remember the tree- 
chopping incident and a number of ot 
very dangerous and unfortunate skin 
ishes along the demilitarized zone. So 
there is nothing unusual about this in 
terms of past North Korean perfor- 
mance. 

In the case of this instance, how- 
ever, it would be far too early to say 
whether or not it is an isolated incide 
or whether we are going to see more 
All I can say in that regard is that wi 



20 



Department of State Bulle 



The Secretary 



: going to continue to conduct our 
;hts in accordance with past pro- 
lures, and we will be prepared to take 
! necessary measures to protect our 
men and aircraft in that process. 

Q. I would like to go back to the 
tin American area for just a minute, 
i there are two parts to this. Could 
i say at what level the discussions 
jut how to handle the problem of 
reused Soviet arms shipments are 
ng conducted? Has the National 
curity Council met on this? Has the 
esident been involved in the discus- 
ns? The second part of the question 
are any of the measures that you 
erred to earlier that are under con- 
eration — military measures? 

A. Let me get the last part of your 
:stion. Are any of what military 
asures? 

Q. You referred earlier to certain 
ds of measures that the Ad- 
listration had under consideration 
deal with the increasing flow of 
is from the Soviet Union through 
oa. 

A. Let me assure you, we're look- 
at a whole array of political, econom- 
and security-related measures that 
;ht be appropriate. Let me assure you 
), with respect to the first part of 
ir question, that the President has 
n fully engaged in his concerns about 
i situation. We are fully aware, those 
is in the bureaucracy, of his con- 
ns, we hope we are being responsive 
;hem, and we are going to continue to 
.1 with this problem as it unfolds. 
Clearly, the first step in any such ex- 
ise is to be sure the communications 
ween ourselves and those who are in- 
ved in the incidents and the opera- 
is that give us concern are aware of 
t concern. Surely my meeting with 
viet] Foreign Minister Gromyko in 
jtember at the United Nations will be 
>h a venue for expressing that con- 
n, and I intend to do so. 

Q. May I continue with a question 
Salvador? The conflict over there 
s generated a fantastic amount of 
ugees, a lot of them in this country 
thout proper documents. Are we 
itemplating any changes in our 
licy about deporting them, and if so, 
lich changes? 

A. We have just, incidentally, 
:eived the report of a commission 
lich we sent to Asia to review our 



refugee policies. It has been traditional 
American policy to offer refuge for truly 
political refugees, and we intend to live 
by that obligation, which is an historic 
and fundamental aspect of the American 
way. 

There have been controversies from 
time to time about whether or not a, 
refugee is truly a political refugee, seek- 
ing a refuge, or whether he is an eco- 
nomic refugee, seeking just to better his 
personal, individual condition. This is 
always a very difficult problem that we 
will continue to be plagued with and 
which we will continue to refine our own 
thinking on. With respect to genuine 
refugees, American snores have always 
been open to them, and I know they will 
remain that way. 

Q. What about with respect to El 
Salvadorans themselves? 

A. From whatever source, that are 
legitimate refugees. 

Q. Do we consider them political 
refugees? 

A. You've asked me to dot some 
"i's" and cross some "t's" that would not 
be appropriate. 

Q. Both President Reagan and 
yourself have affirmed the U.S. inten- 
tion to implement the Taiwan Rela- 
tions Act. Can you tell us, after the 
Administration has been in office for 8 
months, what concrete steps this Ad- 
ministration has taken to implement 
the act, particularly with regard to 
such issues as better access by 
Taiwan's representatives to U.S. 
officials, additional offices for 
Taiwan's Coordination Council in this 
country, and weapons sales? 

A. Let me just answer your ques- 
tion, which is a sensitive one— and I'm 
sure you knew it — with my assurances 
to you that we have been in the process 
of implementing the Taiwan Relations 
Act with the good sense consistent with 
both the letter and the spirit of that act, 
and that includes a number of steps in 
the areas that your question touched 
upon. I won't go beyond that. 

Q. The Administration has now 
formulated plans for emergency 
resource mobilization, which will in- 
clude, in the latter stage, setting up 
an independent body for the im- 
plementation of defense production. 
What role does the Department of 
State play in this? 

A. In the first place, there is a lot 
yet to be done, and a lot of consideration 



is yet to be concluded. I think you know 
that I have had a longstanding record in 
expressing concern about the declining 
American mobilization and industrial 
base. It has had a profound impact on 
the nation's ability or lack of ability to 
implement our foreign policy effectively. 

I have held discussions in the past 
with Cap Weinberger and with the 
President on the urgent need to address 
this issue at a national level, so that ap- 
propriate remedial steps can be taken. I 
don't have to dot all the "i's" and cross 
all the "t's" on that, but sometimes it 
takes the United States 4 years to re- 
spond to an urgent security request 
from a trusted ally. The impact of that 
is devastating. 

There have been a number of in- 
terim measures taken which we have 
supported, especially in our security 
assistance program for next year where 
we have asked for a $100 million pool to 
be established that would provide cer- 
tain equipment that could be drawn 
down on in the case of emergency in- 
stead of diverting from our own force 
structure. So we are intimately and 
heavily engaged in this process, as we 
should be. 

Q. Will the plan be put into opera- 
tion relatively quickly because of the 
failure of the Reagan economic pro- 
gram? 

A. I don't accept your premise in 
any way. I'm an optimist. I would hope 
that you might become one. 

Q. In your meetings with Mr. 
Gromyko, will you be offering or en- 
couraging greater U.S.-U.S.S.R. trade 
relations or enhanced relations? 

A. With the Soviet Union? 

Q. Yes, most particularly in the 
field of agriculture. 

A. I would emphasize that this 
meeting between Mr. Gromyko and 
myself is what you might call a meeting 
engagement. This is the first ministerial- 
level meeting between the Soviet Union 
and the United States in this Ad- 
ministration. We have a very complete 
agenda which has been discussed at the 
ambassadorial level. First and foremost 
on that list, of course, is the desire to 
arrive at specific modalities to launch 
the theater nuclear arms control 
negotiations, sometime between mid- 
November and mid-December. But these 
discussions will involve some of the 



:tober 1981 



21 



The Secretary 



areas we've touched upon here, areas of 
political concern— Afghanistan; Kampu- 
chea; Third World interventionisms, 
either directly or by proxy; trade; and a 
host of other bilateral relationships. As 
you know, I addressed this with some 
specificity in my recent speech in New 
Orleans [August 11, 1981]. I refer you to 
that because it is a pretty good road 
map on what we would intend to raise. 

Q. Both the recent incidents in- 
volving shootings at American planes 
have taken place inside zones that 
those countries doing the shooting 
have claimed as their own, and which 
we have disputed. Does this Ad- 
ministration feel it is taking a harder 
line in pressing our disputing of their 
claims, or is this just a coincidence 
that it happens to have happened 
twice in the matter of a little more 
than a week? 

A. I wouldn't give you an adjectival 
description of this Administration's 
policy other than to reiterate that we in- 
tend to meet our international obliga- 
tions with respect to American rights 
abroad with respect to the provision of 
international law. 

The United States as the leader of 
the free world has an obligation to be 
strong advocate of adherence to ac- 
cepted rules of international law and in- 
ternational behavior. That is the policy 
of President Reagan, and it will be pur- 
sued. Whether you call that a hardening 
from the past, I leave to your 
judgments. 

Q. As you know, in the past week 
or so, there has been a lot of discus- 
sion about strategic concepts, whether 
the ICBM [intercontinental ballistic 
missile] force is, in fact, vulnerable to 
a Soviet first strike — there was the ar- 
ticle in Strategic Review. 

There is also sentiment expressed 
by some people in the Pentagon that 
the MX in any foreseeable mode of 
deployment would not be survivable. I 
just wonder whether you see the in- 
evitability that the ABM [antiballistic 
missile system] will have to be 
deployed to protect our missile force, 
or whether you have rethought any of 
the basic premises that you've had in 
your strategic policies. 

A. As I said last Sunday [August 
23] on "Issues and Answers," I've been 
very, very encouraged by the approach 
that Cap Weinberger and the Defense 
Department have taken to this issue of 



America's strategic weapons needs. It 
has involved the most comprehensive 
review, across the entire spectrum, of 
potential strategic needs. I must tell you 
also that in a large measure, there is a 
high level of consensus for the large ma- 
jority of the proposals that have thus far 
crystalized. 

The difficult area is, of course, 
strategic ballistic systems and their in- 
terrelationship with vulnerability. Let 
me say there is no system that America 
deploys that is invulnerable. All of our 
systems are vulnerable. The real ques- 
tion is the maintenance of a flexible, 
redundant, responsive, strategic 
American posture, one which includes 
land, sea, and air deployments; one 
which includes a mix of air-breathing 
and ballistic capability. Ballistic capabili- 
ty is extremely important, not only in 
war-fighting terms, with which we hope 
we will never have to be confronted, but 
most importantly in deterrent terms, in 
arms control terms, and also in crisis 
management terms. 

All of these questions are under 
review. The President has not made his 
decision. He will very shortly, and I'm 
confident it will be a very astute balance 
of all these conflicting needs. 

One must remember that the United 
States has been engaged in these re- 
views for over a decade; and in many in- 
stances we have deferred decision after 
decision, to the point where today we 
are facing a window of vulnerability in 
the decade of the 1980s. 

I think it is very important— and 
that is why I am so pleased and encour- 
aged by the Defense Department's ap- 
proach to this situation — that we ap- 
proach it comprehensively, as we are dq- 
ing, and hopefully that we retain the 
essential ingredients that we have to. 

Q. May I repeat one part of the 
question? Do you think we are in- 
evitably moving toward the deploy- 
ment of an ABM system that would 
require the abrogation of the ABM 
Treaty? 

A. It is too early to say. There are a 
number of complications associated with 
it. But first and foremost, we have to 
know that it will provide the enhanced 
invulnerability, or I'll say enhanced pro- 
tection. Nothing is invulnerable. But it 
will provide such kind of an enhance- 
ment. And we don't know that yet. 



Interview on "Good 
Morning, America" 



Secretary Haig was interviewed on 
ABC-TV's "Good Morning, America " bi 
David Hartman and Lynn Sherr on 
August U, 1981. l 

Q. It is reported this morning that 
Polish leaders are on their way to 
Moscow right now, and it has also 
been reported to us in the last 24 
hours that the United States is con- 
cerned about the situation in Poland, 
and perhaps it is at its most 
dangerous point ever — low point. Ho 
dangerous is the situation there, and 
what can be done about it? 

A. I think we had a situation in 
which the tensions associated with 
Polish reform have continued over an 
extended period, and I wouldn't 
necessarily say this is the most 
dangerous. I think the character of the 
tensions has changed somewhat. We 
now have some internal problems with 
the union, Solidarity, and the govern- 
ment at odds from time to time over tt 
nature of reforms. This is being com- 
plicated by severe food shortages and 1: 
distribution problems with respect to e| 
isting food commodities. 

Q. Do we for one moment believe 
that, indeed, it is a short working 
visit and these are routine talks as hi 
been reported? 

A. I think these are never routine 
talks. I think clearly the government ol 
ficials in Poland are hopeful to continui 
on in a manner in which they can detei 
mine the outcome of events without ex 
ternal advice or intervention from the 
Soviet leadership. 

Q. As former NATO commander, 
what do you make of their deci- 
sion—the Soviets— to move up these 
military maneuvers on the Polish 
border which has just been an- 
nounced? 

A. I think these are thus far nor- 
mal, and they have gone through the 
proper notification procedures under tl 
CSCE [Conference on Security and 
Cooperation in Europe] provisions. In 
other words, they have informed the 



■Press release 292. 



22 



Department of State Bullet 



The Secretary 



st that there will be maneuvers in ex- 
3 of 25,000 and this is essentially nor- 
and is not a source of increased 
■t on our part at this juncture. 

Q. You sound particularly cautious 
responding to these questions on 
land. Are you doing this purposely 
(ause the United States should not 

involved in this right now? 

A. I think that has always been the 
s. In the past we have been con- 
ned on occasion by Soviet readiness 
isures, and on those occasions, we've 

free and, in fact, obligated to corn- 
it, sometimes vigorously. On this oc- 
ion, the problems are internal, and 
hope that both the unions and the 
ernment will work out their dif- 
;nces and without further erosion of 

situation internally in Poland. 

Q. I wonder if we could turn to 
situation in the Middle East for 

t a minute. At the meeting yester- 
with the Israel Ambassador, will 
F-15s and F-16s be sent to Israel 

I when? 

A. I think the meeting yesterday 
firmed what the President had 
.self announced yesterday. That is 
t he anticipates making a decision 
ly next week, and I think that deci- 
1 will be made early next week. The 
; that it hasn't been made yet means 
t value judgments on what it will be 
aid be premature. 

Q. Mr. Brzezinski, former NSC 
.tional Security Council] head, has 
i recently — this week — that we 
jht to start talking to the PLO 
lestine Liberation Organization], 
at do you think of that comment? 

A. I think we've all been very clear, 
ecially during President Sadat's 
t — when this issue surfaced once 
.in — that we know and the PLO 
iws what the requirements are for 
ler recognition or participation in the 
.ce process and that recognition on 
ir part of Israel's right to exist and 
eptance of the provisions of U.N. 
solutions 242 and 338. And I think it'; 
)ortant that Americans understand 
t when the United States makes such 
Dmmitment, whether it be with the 
,te of Israel or with our Arab friends, 
t we not treat these commitments 
ltly, and we don't pretend to. 



Q. Turning to the decision to pro- 
duce neutron weapons, the Soviets 
this week have been criticizing the 
decision. They've suggested that it is 
provocative, that if we are really in- 
terested in arms reduction that we 
wouldn't have done this, and that they 
might now consider producing 
weapons of their own. How do you 
respond to their criticism? 

A. I respond to them simply as a 
reflection of ongoing Soviet propaganda. 
During my time in Europe as NATO 
commander when this neutron issue first 
surfaced under President Carter about 
1977 or 1978, as the President pointed 
out yesterday, the Soviets expended 
$100 million in purely propaganda pur- 
poses. I recall their awarding their Am- 
bassador in the Netherlands a very high 
award for his accomplishments in 
defeating the efforts at that time to pro- 
duce and deploy. On this occasion, as 
you know, we are not deploying the 
system, merely carrying out the man- 
date of the Congress and the FY 1981 
Department of Energy funding bill 
which will now assemble the components 
which have been under production for 
some time now. 

Q. With the neutron bomb decision 
and some other things, there has been, 
as you obviously know, talk of a crisis 
of confidence in Europe about this 



country. We have perhaps been look- 
ing like the bad guys. Are we going to 
continue to look that way? Is there 
any kind of new peace offensive that 
will be coming out of this country? 

A. I don't think it is true that we are 
facing a crisis of confidence in Europe at 
all. I think we do have a situation in 
which Europe is going through stresses 
and strains — especially economic in 
character — but beyond that, there is an 
antinuclear wave of emotion which we've 
seen in the past. I don't think this 
represents a crisis of confidence as such. 

And it's also true that some of our 
European friends have been somewhat 
disturbed by the American rhetoric 
which has been more anti-Soviet than 
they've been accustomed to. But, I've 
always said deep in their hearts, they go 
to bed at night and say, thank God, 
America is willing and ready to lead 
again to provide the kind of protection 
they have come to expect from us over 
some 35 years of association. I don't see 
this, and I don't predict a peace offen- 
sive from the United States. I think 
we've laid out clearly our requirements 
with respect to our relationships with 
the Soviet Union — that is that we ex- 
pect the Soviet Union to join with us in 
a sense of reciprocity and, above all, to 
manifest greater restraint in their inter- 
national conduct. One can only look at 
lessons of history as we see 
Afghanistans, Kampucheas, Soviet in- 
tervention in Africa through Cuban 
proxies, in Angola, Ethiopia, Southern 
Yemen. 



'Press release 279. 



tober 1981 



23 



AFRICA 



Regional Strategy for Southern Africa 






by Chester A. Crocker 

Address before the American Legion 
in Honolulu on August 29, 1981. Mr. 
Crocker is Assistant Secretary for 
African Affairs. 

I am pleased and honored to be ad- 
dressing the American Legion on a sub- 
ject of vital national and international 
significance. Africa is an integral and in- 
creasingly important part of the global 
competitive system. The United States 
did not cause this to come about, but it 
is a reality, one which many Americans 
have only recently begun to perceive. 
Africa is part of the large, interdepend- 
ent world system within which the posi- 
tion of the United States is critically im- 
portant. And thus, the quality and the 
maturity of our relationship with 
African states is a potent force for inter- 
national as well as our own national 
security and well-being. 

The Reagan Administration has 
established some tough goals for our 
country in the area of foreign affairs 
just as it has in the area of domestic 
policy. They are goals which are sup- 
ported by the American people and 
which are based upon the values which 
we as a nation have subscribed to for 
over 200 years. As Secretary of State 
Haig has said: 

• We will be consistent in the pur- 
suit of U.S. interests; 

• The United States will be reliable 
as a force for peace and stability; and 

• There will be balance in our ap- 
proach to individual issues and orches- 
tration of policy in general. 

U.S. Objectives in Africa 

We, whose job it is to help shape and 
implement this Administration's foreign 
policy, take these principles seriously, 
and I believe that progress is evident. 
Let me enumerate what this Administra- 
tion has set forth as its objectives in 
Africa. 

• America seeks to promote peace 
and regional security in Africa and to 
deny opportunities to all those who seek 
contrary objectives. 

• We will support proven friends 
and be known as a reliable partner in 
Africa as elsewhere. 



• We support open market oppor- 
tunities, access to key resources, and ex- 
panding African and American 
economies. 

• The United States actively sup- 
ports regional security and peaceful 
solutions to the problems of southern 
Africa. 

• We seek to expand and assist that 
group of nations whose development 
policies produce economic progress and 
which have working democratic institu- 
tions. 

• The United States will do its 
share in meeting Africa's humanitarian 
needs and in supporting basic human 
liberties, in keeping with both American 
principles and American interests. 

To reach those objectives, we must 
each day address a number of natural 
and manmade problems. Let me touch 
on just a few of them in the African con- 
text. 

We are concerned about the in- 
fluence of the Soviet Union and its sur- 
rogates in Africa. The Soviets seek to 
exploit for their own ends existing dif- 
ferences and actual conflict, and they 
seek to create and sustain situations of 
conflict from which they can profit. 
They are aided in these efforts by their 
client states (such as the Cubans and the 
East Germans) but also by less tradi- 



tivities and to help African states resisl 
them. 

I would like here to emphasize a 
point I have made elsewhere on this su 
ject, and that is that the United States 
has no desire nor, for that matter, any 
mandate to act as the policeman of 
Africa. But let there be no misunder- 
standing: This country will not hesitate 
to play its proper role both in fostering 
the well-being of friends in Africa and i 
resisting the efforts of those whose 
goals are the opposite. Without a 
minimum of regional political order, ou 
other regional interests — humanitarian 
economic, commerical — cannot be pur- 
sued. 

Equally important, without politica 
order, African states will fail in their 
crucial tasks of nation building, 
economic development and, in general, 
assuming Africa's rightful place in the 
community of nations. As leader of the 
West, the United States has a respon- 
sibility to help shape the strategic con- 
text that impinges on Africa. As I stat< 
at the outset, Africa is an integral part 
of the world political system. It is time 
for us Americans to recognize this real: 
ty and cease indulging in the romantic 
lusion that Africa is somehow uniquely 
buffered from the effects of destabiliza 
tion whether it is of external or region; 
origin. 



It is time for us Americans to recognize [that Africa is an integral pari 
of the world political system] and cease indulging in the romantic illu- 
sion that Africa is somehow uniquely buffered from the effects of 
destabilization. . . . 



tional partners who also pursue their 
own aims to the detriment of their 
neighbors. Under the leadership of Col- 
onel Qadhafi, Libya has been trans- 
formed into a leading Third World 
arsenal of Soviet-supplied hardware. 
Libyan arms and cash are at the center 
of a skillful and sinister campaign of 
subversion that has become a major 
source of African instability. The activi- 
ties of the Soviets and their partners 
threaten the security of Africa in every 
corner of the continent, and in accord- 
ance with our objectives the United 
States is working to frustrate these ac- 



We are also alert to the danger in- 
herent in the economic crises which an 
affecting Africa. Several factors have 
combined to produce one of the most 
serious economic situations since Afrie 
countries became independent. The 
causes are several: Policies which 
bloated government's role in the 
economy and distorted the pricing 
mechanism; severe droughts that cut 
food production; the recession in the 
Western industrialized countries which 
sharply reduced Africa's export earn- 
ings; and the higher oil prices which 
hurt the poor countries even worse tha 
the industrialized ones. 



24 



Department of State Bullet 



Africa 



|The result is that, across Africa to- 
countries which are already among 
poorest in the world are facing stag- 
economies, debt burdens which 
cannot meet, oil import bills which 
lp most of their foreign exchange 
ings, food shortages which threaten 
ne in some cases, and spiralling 
i for basic necessities that create 
social tensions. We are well aware 
others are eager to exploit these 
ions. African governments, still in 
;arly stages of institutional maturi- 
re easily shaken, often overthrown 
e face of such crises. Some of the 
rnments so threatened today are 
3 which have consistently supported 
Jnited States in such international 
.tions as Iran and Afghanistan, and 
i of those which today provide us 
access to key military facilities in 
-each to the Persian Gulf, 
rhe United States cannot be the 
icial "angel" for Africa, any more 
we intend to be Africa's policeman, 
we have no intention of allowing 
economic threat, any more than the 
at of terrorism or subversion, to 
rmine basic American interests in 
?a. This Administration aims to 
; this threat by emphasizing our 
lgths— specifically by helping bring 
>oorer African nations more into the 
istream of the free market economy 
ih is the soundest and surest way to 
'th. Strengthening our own 
omy is a vital part of this, for this 
les us to fulfill our international 
icial responsibilities, and it increases 
)otential markets for African coun- 

Dur bilateral assistance program will 
n indispensable element in Africa 
ng this period. Under the Reagan 
ministration, our bilateral aid will be 
eted on areas where our interests 
most clearly manifest and focused 
e to produce policy changes of broad 
lasting impact. These changes in- 
e giving a much greater opportunity 
le private sector, both within these 
ltries and from abroad. 
Multilateral assistance agencies, 
1 as the World Bank, provide the 
. of assistance resources to Africa, 
more than we can or need to provide 
;erally. This Administration will play 
rong role in these institutions, 
ling for combining this aid with the 
1 of basic structural and policy 
lges that are essential if Africa is 
to reel from one economic crisis to 
ther. We believe that, if helped 
iugh this crisis period with the right 
of aid, policy reform, and a strongly 
vigorated role for the private sector, 



African peoples will opt for the growth 
and the freedom — the personal, eco- 
nomic, and political freedom — that is in- 
herent in the free world's international 
economic system. 

Southern Africa 

But it is to southern Africa that I would 
like to direct the thrust of my remarks. 
The African policy of this Administra- 
tion places a very high priority on ad- 
dressing the problems and opportunities 
of this key region. We have dedicated a 
substantial effort, engaging the energy 
and attention of the highest levels of 
government, to reviewing the regional 
situation, weighing our options, and con- 
sulting in depth with all the key players 
including our allies and the governments 
of southern Africa. During the early 
months of this year, we concluded that 
U.S. and Western interests can only be 
advanced by serious and determined 
U.S. leadership aimed at strengthing the 
region's security and backing its 
development potential. We have defined 
a new regional strategy, responsive to 
our national security, economic-commer- 
cial, and political interests. That 
strategy is based on three basic realities 
of southern Africa. 

First. U.S. economic interests in 
sub-Saharan Africa are heavily concen- 
trated in the southern third of the conti- 
nent. Nearly $3 billion of direct invest- 
ment, or about 60% of the sub-Saharan 
total, is located there. Our southern 
African trade totals over $6 billion. This 
concentration of our interests reflects 
southern Africa's tremendous mineral 
wealth and the relative sophistication of 
the area's economies— especially those 
of South Africa and Zimbabwe. 
Southern Africa accounts for over 40% 
of sub-Saharan Africa's GNP, 70% of its 
industrial and 60% of its mining output, 
80% of the steel, and 85% of the elec- 
tricity consumed. The area contains im- 
mense deposits of many strategic 
minerals which are vital to industrial 
economies like ours, including: the 
platinum group (86% of world reserves), 
manganese (53%), vanadium (64%), 
chromium (95%), and colbalt (52%) as 
well as a dominant share of world gold 
and diamond output and internationally 
signficant output of coal, uranium, cop- 
per, and other minerals. Many of these 
minerals are vital to Western defense 
and high technology industries. 

There is no longer much debate 
about southern Africa's economic 



significance. With regional stability the 
area can prosper and serve as a focal 
point of African economic progress. 
Trade and private investment flows 
from the United States and other 
Western nations can reinforce this 
potential and provide a solid basis of 
mutual interest for U.S. -African re- 
lations. If there is a slide toward 
regional turmoil, however, southern 
Africa's potential economic dynamism 
becomes a mirage. This Administration 
strongly supports southern African 
economic development through en- 
couragement of trade and investment 
throughout the area and through the 
provision of timely and carefully tailored 
foreign assistance. Equally important, 
we support regional development by an 
active diplomacy aimed at addressing 
outstanding conflicts and thus discourag- 
ing the recourse to violent solutions and 
foreign intervention. 

Second. A second reality is that 
southern Africa is an increasingly con- 
tested arena in global politics. The 
worldwide significance of the region 
derives from its potential— unless na- 
tions of the area can find a basis to 
resolve outstanding conflicts and coex- 
ist—to become a cockpit of mounting 
East- West tension. Despite the ending 
of the drawn-out struggle in Rhodesia 
and the successful transition to 
independent Zimbabwe, there remains a 
combination of local and external 
pressures that could lead to expanded 
conflict and polarization. Since 
Portugal's departure from its ex-colonies 
in 1975, the U.S.S.R. and its clients 
have shown every interest in keeping 
the pot of regional conflicts boiling. Six 
years after Angola's independence, 
substantial Cuban combat forces plus 
Soviet advisers remain there, as par- 
ticipants in a still unresolved and tragic 
civil war. 

This external factor inevitably 
shapes the calculations of Angola's 
neighbors. Warsaw Pact countries have 
arms agreements with four nations of 
the area and provide the bulk of exter- 
nal military support to guerrilla groups 
aimed at Namibia and South Africa. 
Faced with large-scale foreign interven- 
tion, the pressure of African guerrilla 
groups, and strains in its relations with 
its traditional Western partners, South 
Africa has significantly expanded its 
defense potential in recent years. The 
republic, through a sustained self- 
sufficiency drive, is now an important 



ober 1981 



25 



Africa 



regional military power. It has clearly 
signaled its determination to resist guer- 
rilla encroachments and strike at coun- 
tries giving sanctuary. 

Let us make no mistake. This is an 
explosive combination. The potential 
damage to Western interests is en- 
hanced by southern Africa's geopolitical 
importance along the strategic sea 
routes around Africa and by its growing 
importance as a source of critical 
minerals. It is imperative that we play 
our proper role in fostering the region's 
security and countering the expansion of 
Soviet influence. We intend to do so by 
building the confidence necessary for 
equitable and durable solutions to con- 
flicts and by encouraging the emergence 
and survival of genuine democratic 
systems and productive economies. We 
will not lend our voice to support those 
dedicated to seizing and holding power 
through violence. If the peoples of 
southern Africa are to have the chance 
to build their own futures, it is essential 
that military force not become establish- 
ed as the arbiter of relations between 
states or the means of effecting needed 
political change. In this respect, 
southern Africa could become a crucial 
arena for defining the rules of interna- 
tional conduct in the decade ahead. 

Third. The third reality is that 
southern Africa is a highly complex 
arena which must be understood on its 
own regional merits if we are to succeed 
in our efforts. There are powerful 
linkages — transport systems, labor 
migration, electric power grids, flows of 
capital and expertise, active and vital 
trade ties — that bind together the states 
of southern Africa. Interdependence is 
reinforced by the presence in the region 
of six landlocked states. Economic 
pragmatism is strengthened by the 
many nearby examples of negative 
growth rates and falling living stand- 
ards. But there are also deep-rooted 
sources of conflict within the region 
itself. The political basis for regional 
cooperation is strikingly absent. The 
racial and ethnic pluralism of these 
societies — and the raw emotions 
generated by colonialism and white 
minority rule — make it difficult for them 
to come to terms with themselves and 
their neighbors. 

• The legally entrenched apartheid 
policies of South Africa are anathema to 
its African-ruled neighbors. They seek 
lessened dependence on South Africa 
and increased political pressures on it 
for domestic change. All parties are 



aware of the enormous price that will be 
exacted if the pressures in and around 
South Africa degenerate into destructive 
revolutionary violence. 

• Angola has been plagued since in- 
dependence by continuing ethnic and 
factional struggle, complicated by 
foreign intervention, that spills into 
neighboring countries and diverts atten- 
tion from needed development. It is 
unlikely that the struggle between the 
MPLA [Popular Movement for the 
Liberation of Angola] government and 
opposition forces— chiefly UNITA [Na- 
tional Union for the Total Independence 
of Angola], led by Jonas Savimbi— can 
be resolved militarily. Cuban troop 
withdrawal and national reconciliation 
would be supported by all Angola's 
neighbors, but these in turn are in- 
timately related to the question of 
Namibia. 

• The low-level guerrilla conflict 
over Namibia's status has gradually ex- 
panded in recent years, as Western-led 
efforts to find a negotiated basis for in- 
dependence from South African control 
continue. All parties accept the principle 
of independence, and some measure of 
agreement exists about the procedures 
for a transfer of power. But talks under 
U.N. auspices led by the Western con- 
tact group states (United States, United 
Kingdom, France, Germany, and 
Canada) had stalled by early 1981. It is 
clear that Namibia is a focal point of 
regional conflict and African diplomatic 
concern. It is also clear that the war 
could continue and expand unless the 
core concerns of all parties, including 
South Africa, are addressed in a settle- 
ment. 

Thus, it is clear that southern Africa 
contains within itself the seeds of grow- 
ing violence. To ward off this possibility 
we must have a realistic strategy, one 
that assures our credibility as a regional 
partner. We cannot and will not permit 
our hand to be forced to align ourselves 
with one side or another in these 
disputes. Our task, together with our 
key allies, is to maintain communication 
with all parties — something we in the 
West are uniquely able to do— and to 
pursue our growing interests throughout 
the region. Only if we engage construc- 
tively in southern Africa as a whole can 



we play our proper role in the search i 
negotiated solutions, peaceful change, 
and expanding economic progress. 

In South Africa, the region's domi- 
nant country, it is not our task to choo: 
between black and white. In this rich 
land of talented and diverse peoples, in 
portant Western economic, strategic, 
moral, and political interests are at 
stake. We must avoid action that ag- 
gravates the awesome challenges faciiij 
South Africans of all races. The Reagai 
Administration has no intention of 
destabilizing South Africa in order to 
curry favor elsewhere. Neither will we 
align ourselves with apartheid policies 



The Reagan Administration has no ii 
tention of destabilizing South Africa 
in order to curry favor elsewhere. 






that are abhorrent to our own multi- 
racial democracy. South Africa is an in 
tegral and important element of the 
global economic system, and it plays a 
significant economic role in its own 
region. We will not support the severii 
of those ties. It does not serve our in- 
terests to walk away from South Afric 
any more than it does to play down tin 
seriousness of domestic and regional 
problems it faces. 

The Reagan Administration 
recognizes that the future of southern 
Africa has not yet been written. It 
would be an act of political irresponsib 
ty and moral cowardice to conduct 
ourselves as though it had been. We 
need policies that sustain those who 
would resist the siren call of violence 
and the blandishments of Moscow and 
its clients. The United States enjoys 
fruitful ties with most of the African 
states in this region— Zaire, Zimbabwe 
Zambia, Botswana, Malawi, Lesotho, 
Swaziland, and Tanzania. We seek to 
strengthen and expand these relation- 
ships through diplomatic efforts on thi 
interrelated conflicts in Namibia and 
Angola, through strong programs of 
foreign assistance, and by fostering ej 
panded trade and investment. 

The United States also seeks to 
build a more constructive relationship 
with South Africa, one based on share 
interests, persuasion, and improved cc 
munication. There is much ferment in 



26 



Department of State Bulle 



Africa 



th Africa today centered on the 
stion of how all South Africans can 
•e fully share and participate in the 
nomy and political process. We 
)gnize that a measure of change is 
iady underway in South Africa. At 
h a time, when many South Africans 
ill races, in and out of government, 
seeking to move away from apart- 
1, it is our task to be supportive of 

process so that proponents of 
>rm and nonviolent change can gain 

hold the initiative. 

Namibia and Angola. Let me now 

Itch out for you briefly what we are 
mg to achieve in Namibia and 
;ola. Much has been said and written 
;his subject over the past 6 months 
ime of it has even been accurate. We 
eve that our straightforward and 
istic approach is increasingly 
erstood at home and abroad. 
On Namibia, I would emphasize that 
Administration did not inherit a 
lk slate. We inherited a longstanding 
highly contentious issue over which 
itern-led diplomatic efforts had 
:hed an apparent impasse. We im- 
liately recognized that the Namibia 
otiations formed a central part of 
developing relationship with black 
ica and South Africa, as well as an 
ortant item on the allied agenda. 
nibia, we concluded, was an issue 
;— unless resolved— could bedevil 
;e relationships and offer splendid 
ortunities to our adversaries. 
All parties shared our view that 
th Africa held the key to a settle- 
it and agreed further that the new 
erican Administration was uniquely 
tioned to explore with the South 
icans conditions under which they 
ild be prepared to turn that key. We 
)gnized that U.N. Security Council 
olution 435 represented a significant 
omatic achievement, having been 
eed to in principle by all parties. The 
e was to identify the obstacles to its 
lal implementation and develop a 
ms to address those obstacles. In ex- 
iive consultations with all parties on 
;e continents, Secretary Haig, Depu- 
iecretary Clark, and I have explored 
issue. We believe that progress has 
n achieved, and we are now working 
ely with our European and Canadian 
is in the contact group to shape con- 
e proposals to put before the parties 
outhern Africa. 



A Namibia settlement is, we believe, 
desirable and obtainable at an early 
date. To succeed, it must be interna- 
tionally acceptable— under U.N. auspices 
and in accordance with Resolution 435, 
which must form the basis of a settle- 
ment. That framework, in our view, can 
and should be supplemented by addi- 
tional measures aimed at reassuring all 
Namibian parties of fair treatment and 
at answering certain basic constitutional 
questions prior to elections that will lead 
to independence. A Namibia settlement, 
to be successful, must offer a genuine 
and equitable resolution of the conflict 
and lead the way toward an in- 
dependence that strengthens, not under- 
mines, the security of southern Africa. 

Our diplomacy recognizes openly the 
intimate relationship between the con- 
flicts in Namibia and Angola. We have 
repeatedly made clear our position that 
progress toward a Namibia settlement 
could set the stage for withdrawal of 
Cuban forces from Angola. There is lit- 
tle debate about the logic of this proposi- 
tion, which the Angolan Government 
itself accepts in part. But we do not 
share the view that there is anything 
automatic or predictable about that rela- 
tionship, as some would argue. The 
assumption that Cubans will depart— or 
that UNITA will evaporate like the 



morning dew— as South Africa 
withdraws from Namibia is pro- 
blematical. What if the civil strife in 
Angola continues after Namibia's in- 
dependence? We also wonder how a 
young government in the fragile new 
state of Namibia can be expected to sur- 
vive and prosper with a seemingly 
endless civil war on its northern border, 
with substantial Soviet-Cuban presence 
nearby and with the consequent pros- 
pect of new sequence of intervention in- 
volving perhaps both South Africa and 
Communist forces. 

Clearly, the relationship between 
Namibia and Angola cuts both ways. 
One of our first priorities has been to in- 
ject some greater logic and candor into 
this discussion and to stimulate creative 
thinking about how progress on each 
front might contribute to progress on 
the other. I would like to emphasize that 
we are not laying down preconditions to 
any party. But there is a factual rela- 
tionship on the ground that cannot be 
denied. We believe that movement on 
Namibia can reinforce movement toward 
Cuban withdrawal and vice versa. 

Furthermore, we are convinced that 
a satisfactory outcome can only be based 
on parallel movement in both arenas. In 
our dialogue with the front-line states, 
including the MPLA government in 
Angola, we have repeatedly underscored 
our sincere commitment to a process 
with benefits for all— one that need 
threaten no one. Thus, as we make clear 
our view that UNITA represents a 
significant and legitimate factor in 
Angolan politics, we have also main- 
tained our mutually fruitful commercial 
ties with Luanda as a symbol of the 
future relationship that could one day be 
possible. 

In conclusion, I believe the objec- 
tives and strategy defined here repre- 
sent an approach responsive to regional 
realities and consistent with U.S. na- 
tional security and foreign policy in- 
terests. The time has come for us as a 
nation to erase any shadow of doubt 
about the importance of Africa to U.S. 
interests and to demonstrate by our ac- 
tions that we can conduct a serious and 
sustained diplomacy in Africa. ■ 



ober 1981 



27 



Africa 



Libyan Interference in Chad 



by Chester A. Crocker 

Statement before the Senate Foreign 
Relations Committee on July 8. 1981. 
Mr. Crocker is Assistant Secretary for 
African Affairs. 1 

I am grateful for the opportunity to ap- 
pear before this committee to discuss a 
matter of serious concern to us: the 
growing intervention of Libya in Africa 
and elsewhere. 

Under Col. [Muammer] Qadhafi, 
Libya has adopted a diplomacy of 
subversion in Africa and in the Arab 
world. It is a diplomacy of un- 
precedented obstruction to our own in- 
terests and objectives. Qadhafi has tried 
in every way he could think of to ob- 
struct our efforts to achieve peace in the 
Middle East. He has sponsored subver- 
sion from Africa to the Philippines. He 
has actively supported international ter- 
rorism, using assassinations abroad as 
an instrument of his policy. 

From the outset of this Administra- 
tion, both President Reagan and 
Secretary Haig have expressed clearly 
our serious opposition to a wide range of 
Libyan misconduct, including support 
for international terrorism and in- 
terference in the internal affairs of other 
countries. 

Qadhafi's Expansionist Goals 

Africa has increasingly become victim of 
Qadhafi's diplomacy of subversion. His 
goals seem to be farreaching, possibly to 
bring about the creation of an Arab- 
Islamic bloc including Muslims of Africa 
and the Middle East. Qadhafi sees 
himself as the spokesman of this group. 
He has no respect for existing, interna- 
tionally recognized boundaries; in fact, 
his vision of a pan-Islamic entity is ex- 
pressly intended to eliminate these 
boundaries. His first targets in the crea- 
tion of such an entity may well be the 
nations of the Sahel— Chad, Niger, Mali, 
Mauritania, Senegal— and parts of 
Algeria. Thus Libya's announcement last 
December of a merger with Chad was 
not mere hyperbole; it was a real ex- 
pression of Qadhafi's expansionist goals 
to absorb his Arab and Muslim 
neighbors in a Libyan-dominated state. 
In order to achieve his aims on the 



African Continent, Qadhafi has used a 
variety of methods. 

• He has drawn people from 
neighboring states — often under false 
pretexts — into Libyan military con- 
tingents. 

• He has funded African political 
parties. 

• He has given financial assistance 
to African opposition newspapers. 

• He has provided budgetary sup- 
port to certain African Governments. 

• He has used Libyan diplomatic 
and commercial airlines facilities to sup- 
port clandestine operations. 

• He has intervened with military 
force in the internal affairs of African 
nations. 

• He has been charged by several 
African nations with the impressment of 
their nationals for military training. 

Let me give some examples of 
Qadhafi's diplomacy of subversion in 
Africa. Presidents [Seyni] Kountche of 
Niger, [Moussa] Traore of Mali, and 
[Jaafar] Nimeiri of Sudan have charged 
the Libyans with attempts to overthrow 
their governments. The Governments of 
Senegal and The Gambia have charged 
the Libyans with imprisoning their na- 
tionals and putting them into military 
training against their wills. 

Qadhafi has long been involved in 
the civil strife of Uganda, using Libyan 
troops in support of Idi Amin. The 
civilian, democratically elected govern- 
ment of Ghana charged Libya with inter- 
nal subversion when it expelled Libyan 
diplomats. And we are now noticing an 
increased Libyan presence and financial 
investment in the Indian Ocean nations. 
Libya's military intervention in Chad is 
perhaps the most dramatic of Qadhafi's 
recent actions. 

Sub-Saharan African nations have 
not been the only victims of Libyan in- 
terventionism. Last year, apparently at 
Qadhafi's direction, a number of armed 
guerrillas sought to take over the cen- 
tral Tunisian town of Gafsa. This 
outrageous inervention in Tunisian af- 
fairs, apparently with the expectation 
that the Tunisians would rise in support 
of the infiltrators against their own 
government, has profoundly troubled the 
government of a country with which we 



have long enjoyed a very close and 
special relationship. Tunisia was thus r 
quired to prepare itself militarily for a 
possible repetition of this type of inci- 
dent. Tunisia hopes to be able to do thi 
without subtracting from the resources 
that it has devoted to its successful 
economic development program. For 
this reason the Administration has 
sought a greatly increased FMS [foreig 
military sales] program for Tunisia. 

Qadhafi has also meddled in the Mi 
die East. He has long supported Pales- 
tinian terrorist organizations' attacks o 
Israel and elsewhere. Most recently, in 
what can only be seen as an effort to ii 
terfere with a reasonable solution to th 
most recent tragedy in Lebanon, Libya 
has introduced sophisticated weapons 
and trained personnel into Lebanon du 
ing the highly volatile period of the las' 
few weeks. Whereas other Arab states 
have counseled together and with us tc 
seek a peaceful solution, Libyan efforts 
seem clearly designed to create the op- 
posite outcome in Lebanon. 

Libya has been supporting the 
POLISARIO [Popular Liberation From 
for Rio de Oro and Saguia] guerrillas ii 
the Western Sahara. These efforts hav 
been of special concern to the Govern- 
ment of Morocco. In preparation for th 
OAU [Organization of African Unity] 
summit in Nairobi last week, however, 
the Libyans seemed willing to abandon 
their public support for the POLISARI 
for tactical reasons. In fact, during the 
summit meeting the Libyan represent- 
atives said nothing in support of the 
POLISARIO and offered no interven- 
tions in favor of the admission of the 
SDAR [Saharawi Democratic Arab 
Republic]. The OAU summit concluded 
with a resolution calling for the im- 
plementation of a cease-fire and referei 
dum in the Western Sahara. We have 
seen this as a very positive outcome of 
the OAU summit and praised King 
Hassan for his initiative in leading 
toward this outcome. We will be watch 
ing very carefully to see if Libya will 
support this resolution. King Hassan 
says the referendum can be prepared 
within 3 or 4 months. President Chadli 
Bendjedid of Algeria has welcomed the 
Moroccan initiative as a helpful step. A 
the candidate to be the next President 
the OAU, we hope Libya will give full 
support to the resolution and to the 
peaceful process that it will initiate. W< 
will be watching, along with all of Afru 
and much of Europe, to see if Libya 



28 



Department of State Bulleti 



Africa 



s up to its obligation to the OAU to 
port the settlement of the Western 
lara problem. The obvious first 
ponsible step would be for Libya to 
e the POLISARIO to accept the 
se-fire. 

Perhaps the most bizarre and per- 
ous Libyan policy under Qadhafi has 
n the claim to a right to murder 
yan dissidents on foreign soil any- 
2re, a claim repeated by Qadhafi 
in this spring and one which seems 
iave led to the assassination of 
yan nationals in several countries. 
Before turning to the Libyan role in 
id, let me point out one pertinent 
ect of Libya's policies. I am referring 
;he acquisition of highly sophisticated 
ipons systems far in excess of Libya's 
itimate defense requirements. In 
'8, Libya's imports of arms totaled 
9 billion, second only to Iran. 
In the period 1974-78, Libya im- 
ted $5 billion worth of arms, of 
:ch $3.4 billion originated in the 
net Union. Libya and the Soviet 
ion share many common goals in 
•ica in what might be called a "mar- 
%e of convenience." Libya pays for 
iet arms with hard currency. These 
le arms give Libya the ability to pro- 
. its power throughout the continent, 
der Qadhafi, the instruments of 
ence have become central to Libya's 
cies. 



ad 

i Libyan intervention in Chad has 
n the most disturbing manifestation 
iate of Qadhafi's intentions in Africa, 
■yan interest in its southern neighbor 
iased on ancient religious and tribal 
; which have given rise to longstand- 
, if disputed, territorial claims. 

Under Qadhafi, Libya began its ter- 
>rial occupation of Chad by laying 
|m to the Aouzou Strip, the northern- 
st part of Chad which is reputed to 
rich in minerals. In 1973 Libyan 
ops entered the region, and by 1975 
poli officially declared its annexation 
Libya. 

Libya entered Chad in force in Oc- 
•er 1980 at the request of the nominal 
id of the Chadian Government, 
akouni Oueddei. By late 1980 there 
re 7,000 Libyan troops in Chad and, 
date, there has been no significant 
taction in the Libyan presence. At one 
nt Qadhafi announced the merger of 
ad with Libya, which outraged most 
"ican opinion. Despite his later asser- 



tion that he is ready to leave Chad any 
time upon the request of the Chadian 
Government, he has also publicly stated 
that he will not be forced out of Chad. 



African Reaction to Invasion 

Initial African reaction to the Libyan in- 
vasion of Chad and the merger an- 
nouncement was very negative, produc- 
ing considerable OAU efforts to secure 
Libyan withdrawal. In an emergency 
meeting in Lome, Togo, in January, an 
OAU ad hoc committee issued a com- 
munique condemning the proposed 
merger and calling for the immediate 
withdrawal of Libyan troops. Libya rein- 
forced its forces in Chad after the Cen- 
tral African Republic requested French 
troops to protect its border with Chad. 

In the intervening months, however, 
various African attempts to negotiate a 
Libyan withdrawal from Chad failed. At 
last month's Nairobi summit meeting, 
the OAU called for a peacekeeping 



force but did not condemn Libya's troop 
presence. We regret that the member 
states did not issue a strong, unified 
condemnation of Libyan military in- 
tervention in Chad. We know that many 
African countries are deeply concerned 
about Libyan activities in Chad and the 
dangers they pose. 

Shortly after the Chadian invasion, 
Qadhafi made a speech in which he said: 
"We consider [Niger] second in line to 
Chad," a statement which many con- 
sidered to be an implied threat to Niger. 
Several African states spoke up forceful- 
ly at the OAU summit. Yet we must also 
recognize the vulnerability of many 
African states and their economic and 
military weaknesses, making difficult 
unified opposition to Libyan aggression 
and subversion. 

Nevertheless, there has been an 
African reaction and a strong one in 
some cases. Senegal, Equatorial Guinea, 
and The Gambia broke diplomatic rela- 



Internal Situation in Zimbabwe 



LETTER TO THE CONGRESS, 
JULY 7, 1981 1 

In accordance with the provisions of Section 
720 of the International Security and 
Development Cooperation Act of 1980, I am 
submitting the following report on the inter- 
nal situation in Zimbabwe. 

In the period that has elapsed since the 
last Report to Congress on Zimbabwe, the 
country has continued to gain political and 
economic momentum in an atmosphere that 
can be characterized as both dynamic and 
stable. 

The overwhelming response from 
Western donor nations and international 
organizations at the March Donors' Con- 
ference, which resulted in $2 billion pledged 
over the next three to five years, will allow 
the government to move forward immediate- 
ly with its economic development program 
and its plans for reconstruction and land 
resettlement. The success of the conference 
vindicated Prime Minister Mugabe's decision 
to turn to the West for economic and political 
support and allows the West to play a role in 
the emerging political/economic structure. 

Recently there has been a significant in- 
crease in the volume and stridency of public 
exchanges between the governments of South 
Africa and Zimbabwe. The exchanges derive 
primarily from a concern of both countries 
that the other is giving support to anti- 
government groups. Despite this develop- 
ment, there remains a strong basis for 
cooperation, given the extensive interrela- 



tionship between the two countries in trade 
and communications. 

The disarmament process in Zimbabwe is 
now well on its way to being completed. Ap- 
proximately 18,000 former guerrillas in seven 
camps around the country have been com- 
pletely disarmed. While it is likely that arms 
caches and illegally armed men are still pres- 
ent in the country, the disarmament that has 
occurred represents one of the most signifi- 
cant achievements since independence. 

There has been some concern expressed 
by the business community lately on the 
foreign investment climate in Zimbabwe, with 
particular reference to the possibility that the 
government may decide to participate in the 
sale of Zimbabwe's minerals through a 
Minerals Marketing Board. Prime Minister 
Mugabe has publicly stated that his govern- 
ment's policy is to provide an acceptable and 
effective marketing system for all minerals 
and metals produced in Zimbabwe with a 
view to increasing sales and profits. The 
Prime Minister made a general reference to 
the Marketing Board again in his May 1 
speech but no determination has yet been 
made about the functions the Board will per- 
form. 

Sincerely, 

Ronald Reagan 



'Identical letters addressed to Charles S. 
Percy, chairman of the Senate Foreign Rela- 
tions Committee, and Clement J. Zablocki, 
chairman of the House Foreign Affairs Com- 
mittee (text from Weekly Compilation of 
Presidental Documents of July 13, 1981).B 



tober 1981 



29 



ARMS CONTROL 



tions with Libya in 1980. Mauritania, 
Mali, Nigeria, Ghana, and Niger ob- 
jected strenuously to the transformation 
of Libyan embassies into People's 
Bureaus last year and reacted by expel- 
ling the Libyan diplomats from their 
countries. Kenya and Upper Volta re- 
fused to allow the establishment of Peo- 
ple's Bureaus. Sudan has long con- 
sidered Libya responsible for a series of 
unsuccessful coup attempts, most 
recently in 1977, and has been extremely 
concerned about the presence of Libyan 
troops in Chad. On June 25, 1981, accus- 
ing the Libyans of involvement in an ex- 
plosion at the embassy of Chad in Khar- 
toum, Sudan expelled all Libyan 
diplomats. 

U.S. Policy 

The U.S. Government believes that a 
continued Libyan military presence in 
Chad, rather than bringing peace to that 
war-ravaged country, insures the con- 
tinuation of the civil war and proves a 
threat to neighboring states. Libya 
should follow through immediately on its 
announced intention and expeditiously 
withdraw its troops from Chad. 

We have stated that the Libyan 
military presence in Chad is an African 
problem requiring an African solution. 
More generally, it is up to African states 
in the first instance to stand firm 
against further Libyan efforts at subver- 
sion. Similarly, the governments of 
Africa, not our own, have the task of 
making people aware of the dangers in- 
herent in Libyan blandishments, covert 
activities, and financial promises. 

At the same time, however, we 
recognize that African nations need 
assistance against Qadhafi's diplomacy 
of subversion and support for interna- 
tional terrorism. Qadhafi's general pat- 
tern of unacceptable conduct worldwide 
convinced this Administration that the 
United States could no longer carry on 
"business as usual" with Qadhafi's Libya 
and led to the closing of their People's 
Bureau in Washington in May of this 
year. We want to help African nations 
threatened by Qadhafi's diplomacy. In 
our FY 1982 budget, this Administration 
added substantial funds for military 
assistance to Tunisia and Sudan, two 
countries directly threatened by Libya. 
We are seeking ways to help, with both 
economic and military support, others 
similarly threatened. 



Policy Problems of Arms Control 



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



by Eugene V. Rostow 

Statement before the Senate Armed 
Services Committee on July 24, 1981. 
Mr. Rostow is Director of the Arms Con- 
trol and Disarmanent Agency (ACDA). 1 

I am honored to appear before this com- 
mittee in the first of what I hope will be 
a long series of meetings and consulta- 
tions on many aspects of the respon- 
sibilities we share. I look forward to our 
collaboration. 

At this point, I shall try not simply 
to repeat the ideas of the three recent 
expositions of Administration policy in 
the field of arms control — President 
Reagan's statement of July 16 on non- 
proliferation policy; Secretary of State 
Haig's speech of July 14, 1981, at the 
Foreign Policy Association in New York; 
and the opening statement I presented 
on June 22 at my confirmation hearings 
before the Foreign Relations Committee. 
Instead, I shall open our conversation by 
commenting on some of the main policy 
problems of arms control as I am begin- 
ning to see them from my desk. 

Arms Control— An Integral Part 
of Foreign and Defense Policy 

Let me start with the principle on which 
all three of the statements to which I 
have referred are based — that arms con- 
trol agreements are an integral and 
potentially a useful part of our foreign 
and defense policy but not a substitute 
for it and by no means "the political 
centerpiece or the crucial barometer" of 
Soviet-American relations, in Secretary 
Haig's phrase. No proposition about 
arms control is more nearly self-evident. 
But I have been startled during my 
first few weeks on the job to discover 
how many people do not believe it. Both 
at home and abroad, a substantial 
number of people are convinced that 
there is magic in arms control 
agreements and, indeed, even in the 
process of negotiating with the Soviets 
about nuclear arms and that if we sign 
an agreement with the Soviet Union 
about strategic nuclear arms— any 
agreements— the risk of war, and 
especially the risk of nuclear war, will 
diminish. I cannot tell you how often I 
hear variations of this theme: "But if we 
insist on verification," people say, "or on 
reductions in the size of nuclear arsenals 



or the disclosure of data by the Soviet 
Union or whatever, the Soviets will say 
'no,' " as if that were a conclusive objec 
tion to the suggestion I had put for- 
ward. The implicit premise of these 
remarks, of course, is that it is better t 
have even a bad agreement than no 
agreement at all and that we must, in 
the end, agree to whatever terms the 
Soviet Union lays down in order to hav 
the security blanket of an arms control 
agreement. 

It is difficult to understand how su< 
views could have survived our recent e: 
perience with arms control. Manifestly, 
arms control agreements cannot and dc 
not guarantee the peace. The Versailles 
treaty and the naval arms limitation 



. . . arms control agreements 
cannot and do not guarantee the 
peace. 



agreements of the 1920s and 1930s did 
not prevent the Second World War. No 
did the SALT I agreements, or the proi 
ess of negotiating SALT II keep the 
Soviet Union from radically enlarging il 
sphere of influence through the 
systematic use of war as an instrument 
of national policy. 

The pace of Soviet expansion has 
been accelerating for the last decade; 
the state system itself is now crumbling 
before our eyes under the impact of tha 
pressure. With Soviet campaigns of ex- 
pansion activity under way in Asia, the 
Middle East, Africa, and the Caribbean; 
with Europe, Japan, China, and the 
United States itself under threat, we 
have reluctantly become conscious of th 
strategic goals and the aggressive 
nature of Soviet foreign policy and the 
menacing weight of the military buildup 
on which it rests. We have become con- 
scious as well of the fact that we are 
close to a turning point — that unless we 
and our allies act decisively now to 
restore the stability of the state system, 
and back our policy with clearly ade- 
quate deterrent force, our capacity to 
protect our vital national interests in 
peace will become problematical. 

President Reagan has said that "the 
first and foremost" objective of our 



30 



Department of State Bulletir 



Arms Control 



sign and defense policy is "the 
iblishment of lasting world peace." I 
Dhasize the word "establishment." It 
ully justified by the transformation of 
balance of power and of the political 
lation which has taken place since 
or so. 

President Reagan's thesis that the 
iblishment of peace is our most vital 
ional interest is not a simple idea; it 
ins far more than the fact that at 

given moment the guns may be 
nt. For the United States to be truly 
>eace as a free nation within a 
erally peaceful society of nations re- 
"es us to face problems of world 
.lie order we have long preferred to 
e for granted or to ignore. Peace is 
a political condition which just hap- 
s; it is not even the natural state of 
■rnational society. On the contrary, 
ce is a system, based on accepted 
;s and the essential cooperation of 
great powers in enforcing those 
!S generally and fairly. It must be 
ieved by the sustained effort of 
ernments. Peace will be restored on- 
? we and our allies actively encourage 
mrture it, and enforce it by devising 

carrying out policies of global and 
ional stability and persuading the na- 
s that in the nuclear world there can 
10 real alternative to the principle of 
,ual restraint in international affairs. 
To pursue such policies effectively, 
must create the "objective 
ditions" for peace— the articulation 
lear goals for our foreign and 
ense policies and the organization of 
>ng regional coalitions to see that 
ie goals are fulfilled. To that end, the 
ninistration has revitalized the policy 
ontainment which has been the 
irtisan cornerstone of U.S. foreign 

defense policy since 1947. The Presi- 
t and the Congress together are 
ring vigorously to rebuild our 
.tary forces, to strengthen our 
inces, and to forge new relationships 
h other nations which share our con- 
n about the threat to world public 
er posed by the Soviet Union and its 
Elites, proxies, and proteges. Our 
3S are taking important steps to 
lance their contribution to our pro- 
,.m of collective diplomacy and securi- 
As this committee knows very well, 
lomacy without force behind it is im- 
ent. With the world in disarray, 
ice can be achieved only be deterring 
stopping aggression, not by wishing it 
ay. 

Our problem is to define the role of 



arms control in the quest for peace. As 
Secretary Haig said on July 14: 
"... the search for sound arms con- 
trol agreements should be an essential 
element of our program for achieving 
and maintaining peace." That sentence, 
along with the arms control principles 
the Secretary spelled out in his Foreign 
Policy Association speech, provides a 
clear compass for our policy in 
negotiating arms control agreements 
and a standard for judging arms control 
agreements when they are reached. 

Negotiations must never be allowed 
to decouple us from our allies or to in- 
terfere with the process of restoring the 
military balance. The instructions to our 
negotiators will make it clear that agree- 
ment, however desirable, should rest on 
the bedrock of what is necessary to 
carry out the national strategic policy 
objectives. It has sometimes seemed that 
we have put the cart before the horse by 
allowing arms control considerations to 
influence our policy with regard to 
weapons procurement and even 
strategy. This is a risk we must guard 
against at all costs, particularly as the 
pressures of Soviet arms control prop- 
aganda mount. Sound strategic planning 
must not be sacrificed on the altar of 
SALT or START [strategic arms reduc- 
tion talks]. 

Policy Differences on the 
Nuclear Weapon 

At the threshold, we face the dilemma 
which has haunted arms control negotia- 
tions from the beginning— the United 
States and the Soviet Union have dif- 
ferent policies with regard to the 



in the negotiations now before us about 
long range theater nuclear weapons and 
strategic nuclear weapons. 

U.S. doctrine is that the goals of our 
nuclear forces are deterrence and stabili- 
ty. Our nuclear arsenal exists to make 
certain that neither the Soviet Union 
nor any other country could use or bran- 
dish nuclear weapons in world politics 
for aggressive purposes. Our purpose is 
to maintain a credible second-strike 
capability so that the United States, its 
allies, and its vital interests are pro- 
tected at all times against nuclear attack 
or the threat of nuclear attack. With an 
assured second-strike capability, we 
should be able to use military force in 
defense of our interests if it should 
become necessary to do so, not only in 
Europe but in many other strategically 
critical parts of the world as well. In my 
view — and here I speak for President 
Reagan — this is and must remain the 
minimal goal of our nuclear arsenal and 
our minimal goal in arms control 
negotiations. 

The Soviet Union has not yet 
adopted this position. On the contrary, 
the mission of its nuclear forces is in- 
timidation and coercion — and, if 
necessary, victory in nuclear war. The 
Soviet Union has been building one 
nuclear weapon system after another in 
an obvious effort not only to equal but 
to surpass the United States and thus to 
paralyze the U.S. nuclear arsenal. 
Achieving such a position, they believe 
and say, would permit them to expand 
their domain almost at will, using covert 
methods of subversion or conventional 
forces under the protective cover of 
what they consider to be superiority in 
nuclear arms. 



Negotiations must never be allowed to decouple us from our allies or to 
interfere with the process of restoring the militarg balance. 



nuclear weapon and different objectives 
in negotiations about possible 
agreements to limit the mad spiral of 
nuclear arms accumulation. The two na- 
tions have similiar interests in opposing 
nuclear weapons proliferation, and the 
Nonproliferation Treaty (NPT) of 1968 
was not exceptionally difficult to 
negotiate. This has not been the case 
with the SALT agreements, as we all 
know. Unless the Soviet Union comes to 
accept a different philosophy about the 
objectives of its foreign policy and the 
role of the nuclear weapon in world 
politics, we can anticipate a stormy time 



During the SALT period, the Soviet 
Union made great progress toward this 
end. I need not recite the litany of new 
weapons deployed by the Soviets in the 
last 10 years. In general terms, the most 
threatening features of this buildup have 
been the massive increase in hard- 
target-kill-capable intercontinental 
ballistic missile (ICBM) reentry-vehicles; 
the growth in the destructive potential 
of Soviet strategic forces as a whole; the 
deployment of mobile, highly-accurate, 
and MIRVed [multiple independently- 
targetable reentry vehicle] long-range 



tnhor 1QR1 



31 



Arms Control 



theater nuclear forces; and the con- 
tinued development of their already ex- 
tensive strategic air defenses. 

The United States failed to respond 
adequately to the Soviet build-up, partly 
because we placed excessive faith in 
arms control as a solution for our 
strategic problems. As a result, two legs 
of our strategic triad are now 
threatened — the survivability of Ameri- 
can ICBMs to a Soviet first-strike is in 
question and bomber penetration of the 
Soviet Union will be assured only by a 
vigorous U.S. modernization effort. In 
addition, large-scale Soviet SS-20 
deployments threaten Europe and the 
Far East and, if unanswered, would in- 
crease the hazards to NATO of 
resistance to Soviet aggression. The 
Soviets now lead the United States in 
important measures of strategic 
strength — leads which translate into 
coercive power through perceptions of 
U.S. weakness. 

The Soviet strategic buildup is aimed 
not at strategic stability but at strategic 
instability. Soviet strategic programs are 
designed to threaten the survivability of 
our strategic forces. This emphasis in 
Soviet military doctrine and action is in 
itself a repudiation of the doctrine of 
mutual assured destruction, which many 
Americans thought both sides had 
adopted in 1972. The Soviet lead in 
heavy and accurate ICBMs, capable of 
destroying a large part of our nuclear 
ICBM force in a first strike, undermines 
the basis for reciprocal restraint in a 
crisis. Such a situation is a recipe for 
nuclear blackmail. It is no accident that 
one now hears discussion of such distur- 
bing options as launch-on-warning of 
missile attack. 

What are the broader effects of this 
buildup and of the delayed U.S. response 
to it? I believe the Soviet strategic 
buildup operates on three levels. 

First, on a day-to-day basis, the 
Soviet drumbeat acts on the collective 
psyche of the United States and its 
friends and allies. There is great fear 
abroad, not only of nuclear war but of 
American inadequacies and, ultimately, 
of abandonment by the United States. 
That fear cannot be diminished if the 
Soviets run while we continue to walk. 

Second, the Soviets may feel em- 
boldened to undertake conventional ag- 
gression, like their invasion of 
Afghanistan, secure in the belief that 
their strategic forces can checkmate 
ours. Certainly Soviet behavior in recent 
years suggests that their pursuit of 



strategic instability has had its predict- 
able consequences — unprecedented risk- 
taking and aggression in conventional 
and covert conflict. Given the global 
nature of our foreign policy interests, 
and local Soviet conventional superiority 
in certain areas, strategic instability is a 
very dangerous condition. It matters lit- 
tle, after all, if the Soviets turn out to 
be wrong about the American response 
to nuclear blackmail; a devastating con- 
flict could result just the same. 

Third, the Soviets have had little in- 
centive to negotiate serious arms reduc- 
tions. They view the SALT process as 
having been enormously successful — at 
least in the short-term. 



Posture Toward Negotiations 

The situation as I have described it has 
not developed suddenly but has grown 
day by day throughout the SALT period. 
Neither the SALT II Treaty nor 



Congress together are making the deci 
sions to restore our deterrent capabilit 
both nuclear and conventional. These 
decisions are indispensable in themselv 
from the point of view of security. 
Moreover, fair and balanced arms con- 
trol agreements would be inconceivablf 
without them. 

I might add a word here on the 
much-mooted subject of "linkage." Pres 
dent Reagan has not laid down par- 
ticular criteria of Soviet behavior as a 
precondition for negotiations. He has i: 
structed us to approach arms control o 
ly as a vital problem in foreign policy 
and national security, through which % 
and the Soviet Union might jointly 
stabilize our relations and contribute t< 
the restoration of world public order. I 
his Foreign Policy Association speech, 
Secretary Haig pointed out that certaii 
forms of Soviet behavior directly affec 
the possiblity for success in arms con- 
trol. For example, in 1968, when I last 



. . . the linkage we seek between Soviet behavior and arms control 
should not be merely a transitory or isolated Soviet action . . . but ft 
restoration of world order sustained by deterrence. 



cosmetic amendments to it would have 
changed the situation. Somewhere along 
the way we lost our bearings and forgot 
what we wanted from arms control. Not 
only did we accept greater threats to 
our forces, but we agreed to ceilings and 
definitions that would permit the Soviets 
far greater capabilities against us than 
now exist. We settled for superficial 
limitations while the threat grew by 
leaps and bounds. 

In this situation, what is our posture 
toward arms control negotiations? Ob- 
viously, the profound changes in the 
strategic environment since 1972 require 
the United States to review the arms 
control policies which have failed and to 
devise new ones better adapted to the 
world as it is. That process of review is 
now going on throughout the executive 
branch, under forced draft. Some of the 
issues are complex. We are working on 
new measures of destructive power to 
replace deployed launchers as the count- 
ing unit of the new agreements, trying 
to solve the riddle of verification, and 
tackling a number of other fundamental 
problems. A review of this character 
takes time. I can assure you that I am 
doing everything I can to speed it along. 

At the same time, the President and 



was in the government, the Soviet 
Union invaded Czechoslovakia, and 
President Johnson cancelled a trip to 
Moscow to discuss strategic arms limit 
tion, among other things. Under the ci 
cumstances, it would have been un- 
thinkable for the President to go. As 
Secretary Haig remarked, this kind of 
linkage is a fact of life. That problem 
aside, the linkage we seek between 
Soviet behavior and arms control shoul 
not be merely a transitory or isolated 
Soviet action — the sight of a dove on t 
troubled waters or the visits of Russia] 
ballet companies to American cities — h 
the restoration of world order sustaine 
by deterrence. The process of seeking 
arms control agreements could and 
should play a positive part in that effoi 
No arms control agreement can coi 
tribute to the goal of a peaceful world 
unless we have confidence that the 
Soviet Union is abiding by its terms. M 
must insure that arms control limita- 
tions are verifiable. The problem of 
verification is fundamental to mean- 
ingful progress on arms control. 
Reciprocal restraints can only be in- 
duced if each party has confidence that 
the other is, indeed, reciprocating. But 
the scale and complexity of the Soviet 
nuclear arsenal and the changing 



32 



Department of State Bulleti 



Arms Control 



nology of nuclear weapons are 
ling us to the limits of national 
nical means of verification. The 
et leadership must understand that 
r secrecy about weapons production 
deployment is counterproductive, 
cat and mouse game must end. The 
iet Union is now our equal— at 
t— in military strength. If they can- 
be more forthcoming given the pres- 
"correlation of forces," it is difficult 
nagine what level of military 
priority would be required to induce 
e cooperation. We are considering 
possibility of early discussions with 
Soviets on general principles of 
ivior in arms control verification and 
pliance matters. These would not be 
atiations but talks looking to 
;ements further down the line, 
laps as part of the START 
eements. And we have undertaken a 
lamental review of the technical 
jets of verification, monitoring, and 
pliance in relation to existing and 
;pective arms control agreements. 
At this stage, I can offer two prin- 
ss which will guide our thinking on 
fi cation. 

First, we shall not confine ourselves 
egotiating only about aspects of the 
ilem which can be detected by na- 
al technical means. We shall begin 
levising substantive limitations that 
strategically significant and then 
jtruct the set of measures necessary 
lsure verifiability. These may well in- 
e procedures of cooperation between 
United States and the Soviet Union, 

I as detailed data exchanges and pro- 
>ns to enhance our confidence in 

i obtained by national technical 

.ns. 

Second, we shall seek verification 

/isions which not only insure that ac- 

threats to our security resulting 
n possible violations can be detected 

timely manner but also limit the 
lihood of ambiguous situations 
eloping. Ambiguity can never be 
linated entirely. But we shall do our 
t to keep it to a minimum. Am- 
ious provisions result in compliance 
stions and compliance questions, 
n if ultimately resolved, strain the at- 
iphere for arms control negotiations. 

Given the importance of verification 
the viability of arms control across 
board, Soviet willingness to consider 
perative measures to improve the 
! Lf lability of specific limitations may 

II litmus test of their commitment to 
ious limitations. 



ntw 1QR1 



An important element of our review 
of U.S. arms control policy will be to set 
priorities among our objectives so that 
specific approaches and goals for the 
next agreement can be devised. 

We shall be analyzing several arms 
control issues in the months ahead, us- 
ing these principles as our guideposts. 
On theater nuclear forces, the substan- 
tive position we are developing is 
consistent with our requirements. It is 
important to move ahead quickly in 
order to meet the threat of Soviet 
Backfires and SS-20s. 

In SALT— or should I say START— 
the weapons systems necessarily covered 
are more varied, the technical issues 
associated with them are more complex, 
and there is a close relationship between 
our arms control posture and weapons 
procurement decisions not yet made, 
such as the MX and a new strategic 
bomber. I continue to hope and expect 
that our preliminary discussions with the 
Soviets will culminate in negotiations by 
early next spring. 

But, in my view, there is little to be 
gained and much to be lost by haste in 
this area. We ought neither to rush to 
the table nor rush to an agreement. 
Once talks begin, we must be prepared 
to negotiate persistently and patiently 
and not raise expectations of rapid prog- 
ress. 

I should note other arms control 
areas in which study is underway within 
ACDA and the government as a whole. 

• The Threshold Test Ban Treaty 
and Peaceful Nuclear Explosions Treaty 
have been signed— but not ratified— for 
7 and 5 years, respectively. While all op- 
tions are being considered, I personally 
believe we should either request the ad- 
vice and consent of the Senate to ratify 
these agreements or return to the 
negotiating table soon if some changes 
are deemed necessary. I believe there is 
merit in these treaties and that we 
should move forward on them. 

• The Antiballistic Missile Treaty 
review is scheduled for 1982. We will be 
taking a particularly close look at the 
agreement in light of the ICBM basing 
mode decision when it is reached. I 
should urge caution, however, on those 
who favor a precipitous withdrawal from 
the agreement. 

• Antisatellite arms control is also 
under review. There were three rounds 
of negotiations in the previous Ad- 
ministration, and some progress was 



made toward an agreement. We are 
reviewing the net effects of an an- 
tisatellite arms agreement and studying 
the verification questions in this complex 
and novel field. 

Spread of Nuclear Weapons 

The underlying basis of our nonprolifera- 
tion policy cannot be different from that 
in other areas of our foreign policy. Our 
watchwords are, again, stability and 
reciprocal restraint in the peaceful pur- 
suit of world public order. The Presi- 
dent's statement on nonproliferation, 
issued on July 16, makes this clear. 

First, as the President said, we 
must attempt to address the underlying 
motivations which are driving a number 
of nations to consider acquiring nuclear 
explosives. Regional instabilities and the 
general deterioration of the international 
environment have contributed 
significantly to the insecurities that lead 
states to flirt with the nuclear explosives 
option. Unless we, our allies, and other 
nations move decisively to restore world 
public order, both generally and 
regionally, there is little or no chance 
over the long run to prevent nuclear 
proliferation on a large scale. In this 
context, we are examining the 
possibilities of encouraging the negotia- 
tion of a treaty which would make the 
Middle East a nuclear weapons free 
zone. It seems to have a great deal of 
promise, and we are giving it a high 
priority on our agenda. 

Second, there must be international 
norms and guidelines that can provide 
reasonable assurance that countries are 
not acquiring nuclear explosives and 
that nuclear programs are not being 
used for such purposes. While these 
safeguards can never be perfect and will 
always need improvement, they deter 
most nations from seriously considering 
the nuclear weapons option and give us 
early warning of developments in the 
other direction. We must move vigorous- 
ly in this area. Without such a regime, 
the possibility of proliferation will under- 
mine U.S. efforts to restore regional or 
international stability. In this regard, 
the President declared support for the 
NPT, the treaty of Tlatelolco, and 
strengthened International Atomic 
Energy Agency safeguards. In addition, 
the principal nuclear-supplier nations 
must further improve cooperation in 
restraining commercial exports — with 



33 



CANADA 



particular emphasis on regions of in- 
stability — to insure that exports of 
nuclear technologies do not contribute to 
the risk of proliferation. 

Third, the President declared that 
reestablishing the United States as a 
reliable partner for peaceful nuclear 
cooperation is essential to our non- 
proliferation goals. Our ability to gain 
support and to exercise influence in this 
critical area will diminish if we do not 
remain an active and responsible sup- 
plier of the nuclear programs of other 
countries. 

The President's statement reflects 
the continuity of our policy in its em- 
phasis on the importance of non- 
proliferation as one of the critical 
challenges facing the United States in 
international affairs. 

Arms Control and Propaganda 

The Soviet Union continues to make 
arms control an important feature of its 
unremitting worldwide propaganda and 
disinformation campaign against us. 
Countering that campaign must be an 
important aspect of ACDA's work, in 
close cooperation with the International 
Communication Agency and other agen- 
cies of the government. You will all 
recall the case of the enhanced radiation 
warhead, the so-called neutron bomb, a 
few years ago. The Soviet Union scored 
a stunning propaganda victory in that 
episode and a very damaging one. It did 
not deserve its victory. The Soviet argu- 
ment was ridiculous. But our response 
was inadequate, and they prevailed. I 
have the neutron bomb affair very much 
in mind when I read Soviet propaganda 
to the effect that we are unwilling to 
negotiate arms control agreements and 
are seeking nuclear war. We shall not be 
outdone again. 

To strengthen the prospects for suc- 
cess in establishing peace, reaching 
useful arms control agreements, and 
minimizing the spread of nuclear 
weapons, it is essential that the Con- 
gress continue its support of the military 
budget proposed by President Reagan. 
The executive and legislative branches 
should continue their partnership in 
rebuilding America's armed forces. 
Weapons systems procurement must not 
be delayed for arms control negotiations 
or vice versa. We cannot hope to achieve 
the promise of peace without the 
discipline of power and perseverance. 
We shall need both. We must be strong 



enough to convince the Soviet Union 
that its best course is to respect the fun- 
damental rules dealing with the interna- 
tional use of force and to embark on a 
cooperative effort at arms reductions. 

The Soviet Union is now engaged in 
a vicious and cynical campaign of prop- 
aganda and intimidation. It is aimed at 
separating the United States from its 
allies and derailing Western rearmament 
programs. It shall not succeed. We do 
not accept the responsibility for the cur- 
rent sorry state of U.S. -Soviet relation- 
ships. The Soviet Union bears that 
responsibility. They invaded 
Afghanistan; they continue to threaten 
intervention in Poland; they support ag- 
gressive and unacceptable actions 
through their surrogates. They have 
continued to build weapons — at every 
level — while we have exercised 
restraint. 

The Soviets must be made to see 
that their future is better and more 
secure under a regime of reciprocal 
restraint and international order. If we 
can succeed, and with your help we can, 
then we shall reverse the long history of 
disappointment with the results of arms 
control negotiations. Our goal will be to 
subordinate the international use of 
force and the arms race to the rule of 
law and to induce respect for the rules 
of reciprocal restraint in world affairs. 
The ACDA statute makes it the duty of 
the agency "to provide impetus" toward 
the goal of achieving a world political 
system in which "the use of force has 
been subordinated to the rule of law." 
The pressures of nuclear reality are in- 
exorably pressing the nations to realize 
that the rule of law is the only possible 
way they can assure their own security 
and the future of mankind. As my whole 
career attests, I find the mandate of the 
ACDA statute altogether congenial. 



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



U.S.-Canada 
Meeting on Hyde 
Park Agreement 



U.S. and Canadian officials met in 
Washington on July 21, 1981, to discus 
the proposed Hyde Park landfill settle- 
ment agreement now pending before tl 
Federal District Court in Buffalo, New 
York. The meeting was hosted by the 
Department of State in response to a 
Canadian Government request to discu 
and exchange views on the proposed st 
tlement agreement. 

The proposed agreement, if ap- 
proved by the court, would settle the 
joint Federal and State of New York 
lawsuit against Hooker Chemicals and 
Plastics Corp. concerning the migratioi 
of chemicals from Hooker's Hyde Park 
landfill site located in the town of 
Niagara, New York. Hooker disposed o 
approximately 80,000 tons of chemical 
wastes at the site from 1953 to 1974. 

U.S. officials outlined the terms of 
the proposed settlement, including 
remedial measures, and explained the 
legal procedures and mechanisms whicl 
would insure the agreement's effective 
implementation. Canadian officials 
presented their concern that measures 
under settlement would not adequately 
prevent further leakage of toxic 
substances into the Niagara River. The; 
reiterated their view that all reasonable 
and practical means must be undertake 
to prevent the release into the Great 
Lakes system of any toxic materials, 
consistent with commitments of the 
Great Lakes Water Quality Agreement. 
Canadian officials expressed satisfactioi 
with the meeting and will review the in 
formation presented. U.S. officials set 
forth their view that the settlement 
agreement will protect the public health 
and the environment. 

The wider problems of disposal of 
toxic wastes in the Niagara region and 
in the Great Lakes basin were also 
discussed, and information was ex- 
changed on other issues relating to 
water quality in the Niagara River. A 
formal arrangement was proposed for 
exchange of information on a regular 
basis and for consultations to review tfo 
general situation in the Niagara region 
and specific issues which may arise. 

There was agreement that the 
meeting represented a useful step in 
continuing and cooperative efforts to 
protect and improve the water quality o 
the Niagara River. 



34 



Department of State Bulletin 



EAST ASIA 



The Canadian delegation included 
resentatives of the Department of 
ernal Affairs, Environment Canada, 
the Province of Ontario. The U.S. 
■gation included representatives of 
Departments of State and Justice, 
Environmental Protection Agency, 
New York State Attorney General's 
:e, and the New York Department of 
'ironmental Conservation. 



U.S. Interests in Southeast Asia 



.s release 246.1 



acific Salmon 
sues 



NT PRESS RELEASE, 

G. 13, 1981 1 

. and Canadian federal officials met 
lune 19, 1981, in Washington, D.C., 
onsider recommendations made by 
r special negotiators dealing with 
teral Pacific salmon issues. The 
;ial negotiators, Dr. Dayton L. 
jrson for the United States and Dr. 
nael P. Sheppard for Canada, recom- 
ided in a progress report issued June 
hat both countries continue efforts 
each a comprehensive agreement to 
/ide for cooperative management 
enhancement of the Pacific salmon 
iurce. At the same time they recom- 
ided that both countries implement 
ain interim arrangements for the re- 
nder of 1981 and for 1982 to im- 
/e conservation of the Pacific salmon 
ks in a manner that will be of 
ual benefit. 

Participants at the June 19 meeting 
;d that support for the recommenda- 
s appears widespread in both coun- 
3. In both the United States and 
ada, federal and state fishery 
lagement agencies have expressed 
eral concurrence with the approach 
immended by the special negotiators, 
y have also indicated that they will 
k to enact the provisions of the in- 
m arrangements during 1981 and 
actively work to finalize 1982 
lagement regimes so that they are in 
formance with the recommendations. 
After reviewing the recommenda- 
,s of the special negotiators and 
ng the support they have received in 
i countries, the Governments of the 
ted States and Canada wish to reaf- 
i their support for the efforts of the 



by John H. Holdridge 

Statement before the Subcommittee 
on East Asian and Pacific Affairs of the 
Senate Foreign Relations Committee on 
July 15, 1981. Ambassador Holdridge is 
Assistant Secretary for East Asian and 
Pacific Affairs. 1 

Having recently returned from a long 
trip with Secretary Haig to East Asia 
and, just last night, from the first days 
of the U.N. conference on Kampuchea in 
New York, I am pleased to have this op- 
portunity to discuss with you this Ad- 
ministration's policy toward Southeast 
Asia. 



Objectives 

The following objectives shape our 
specific policies in that important region 
of the world. 

• We firmly support the progress 
and stability of our friends and allies in 
the Association of South East Asian Na- 
tions (ASEAN) as the heart of our policy 
toward the entire region. 

• In cooperation with ASEAN we 
seek to restrain the aggressive ambi- 
tions of Vietnam. 

• We seek to curb the growing 
Soviet military presence and influence in 
the region. 

By any yardstick — population, 
economic size and dynamism, social and 
political values, strategic location — the 
United States has great interests in the 
five nations of ASEAN. The ASEAN 



countries — Thailand, Malaysia, 
Singapore, Indonesia, and the Philip- 
pines — have a total population of over 
250 million people. Their economies, all 
spurred by the forces of the free 
market, are among the fastest growing 
in the world. Taken as a whole, ASEAN 
constitutes the fifth largest trading part- 
ner of the United States. All of the 
ASEAN nations share a basic pro- 
Western political and philosophical 
orientation, though two are our allies 
and three are members of the non- 
aligned movement. It is these strategic, 
political, and economic interests which 
dictate our support for the ASEAN 
countries, support which the Reagan Ad- 
ministration has renewed and in- 
vigorated. This positive, active support 
for ASEAN is the most effective means 
of curbing the ambitions of Vietnam and 
the Soviet Union. 

Bilateral Relations with ASEAN 
Countries 

American support for the progress and 
prosperity of ASEAN has expression in 
both our bilateral relations with each 
member and in our association with the 
organization. Since President Reagan 
has taken office we have made a special 
effort to emphasize the value we place 
on strong ties with each country. Vice 
President Bush has just attended the in- 
auguration of President Marcos of the 
Philippines. Secretary Haig decided 
within a week of taking office that he 
would travel to Manila to meet with his 
ASEAN colleagues in June. We have 



special negotiators to reach a com- 
prehensive agreement. The governments 
concur in the belief of the special 
negotiators that a long-term agreement 
for cooperative management and 
enhancement of the Pacific salmon 
resource is urgently required to insure 
adequate conservation and optimum 
utilization of the stocks and that the 
fishing communities on both sides are 
deeply committed to reaching an accord. 

In addition the governments con- 
sider that the 1981 and 1982 interim ar- 
rangements recommended by the special 
negotiators will build on the progress of 
the negotiators and materially assist 
both sides in achieving a long-term 



agreement. The governments intend to 
work during 1981 and 1982 to insure 
that all relevant fisheries are conducted 
in accordance with the recommendations 
of the special negotiators. The govern- 
ments are also studying the desirability 
of incorporating the recommendations 
into formal arrangements. 

The governments acknowledge that 
proposed research projects are impor- 
tant to the success of long-term ar- 
rangements and note that the special 
negotiators have recommended that cer- 
tain projects be conducted in 1982. Both 
governments are at present considering 
the projects recommended for next year. 



1 Press release 278 of Aug. 13, 1981.1 



ober 1981 



35 



East Asia 



renewed our defense commitments to 
Thailand and the Philippines and af- 
firmed that we will meet our treaty 
obligations in the event of aggression by 
enemies of those countries. Our air and 
naval facilities in the Philippines form a 
vital part of our worldwide forward- 
defense system. Prime Minister Lee 
Kuan Yew of Singapore visited 
Washington last month to meet with 
President Reagan, and leaders of other 
ASEAN countries, including President 
Suharto of Indonesia, will come during 
the next year or so. Senior officials of 
the Administration are planning trips to 
the ASEAN capitals in the near future, 
as, I am happy to note, are many con- 
gressional leaders. 

The ASEAN countries will benefit 
by increases in economic and military 
assistance this Administration has re- 
quested from the Congress. Although 
economic assistance to the Philippines, 
Thailand, and Indonesia is a relatively 
small percentage of the total U.S. an- 
nual appropriated for foreign aid, it 
plays a vital role in each country's own 
development program. For the first time 
under this Administration, all of the 
ASEAN nations receive some form of 
bilateral military assistance. We plan 
significant increases in foreign military 
sales credits for Thailand, Indonesia, the 
Philippines, and Malaysia in FY 1981 
and beyond. There will also be a major 
increase in the number of students 
trained from all five countries under the 
international military education and 
training program (IMET). In addition, 
the ASEAN nations themselves buy con- 
siderably more U.S. arms and training 
than we finance through aid, and we will 
be responsive to requests for future pur- 
chases as outlined in the new arms 
transfer policy. 

Our economic ties with ASEAN are 
growing tighter as they keep pace with 
the rapidly expanding economies of the 
member countries. Total trade now ex- 
ceeds $21 billion a year, with a surplus 
in ASEAN's favor of over $3 billion. 
ASEAN countries are a principal source 
for U.S. imports of tin, rubber, timber, 
sugar, palm oil, and copra; and two of 
them export crude oil to the United 
States. The dynamic ASEAN economies 
provide an attractive and important 
market for U.S. industrial and agri- 
cultural exports. U.S. investment in the 
five ASEAN states now totals over $4.5 
billion; these countries all recognize the 
access to capital and technology which 
foreign investment brings and they ac- 
tively promote American investment. 

I would like to touch on one final 



element in our bilateral relations, often 
overlooked but becoming more impor- 
tant and with great potential for our 
future ties. That is the social and 
cultural nexus formed by the tens of 
thousands of citizens of the ASEAN 
countries who receive their education in 
the United States every year. These 
educational ties profoundly influence for 
the better the way the ASEAN leaders 
and people perceive this country, and we 
encourage them. 

Relations with ASEAN as an 
Organization 

ASEAN was founded in 1967 on the 
basis of common interests. The aggres- 
sive behavior of Vietnam since 1975 has 
given great impetus to its solidarity, and 
the organization has become a signifi- 
cant force in world politics. U.S. policy 
has been and will continue to be to en- 
courage this trend. 

ASEAN's unity of purpose lies 
behind its effectiveness as a political 
organization. The member countries ap- 
proach international issues with dif- 
ferent philosophical perspectives borne 
of their diverse history. Each has its 
own view of the ideal way to achieve a 
solution in Kampuchea, put a stop to the 
refugee flow, or deal with China. Yet 
time and again, after the issues have 
been aired and the options pondered, 
ASEAN has managed to come up with a 
common approach to the problems it 
confronts. Unity has become an im- 
perative for the ASEAN countries, and 
the effectiveness of their organization is 



best seen in the search for a solution to 
the Vietnamese occupation of Kam- 
puchea. A unified stance on Kampuchea 
at the United Nations and elsewhere ha 
greatly strengthened ASEAN's hand 
against Vietnam and has preserved for 
it the diplomatic initiative. 

Because ASEAN is a cohesive, effe( 
tive organization, it is our policy to con- 
sult with it formally on all major issues 
in Southeast Asia and on some outside 
the region. I or other Administration of 
ficials meet regularly with the am- 
bassadors of the ASEAN countries, the 
ASEAN Washington committee, either 
at our initiative or theirs. We increas- 
ingly deal with ASEAN as a group at 
the United Nations and other interna- 
tional fora. The Secretary of State now 
meets regularly with the ASEAN 
foreign ministers following their annual 
meeting, as Secretary Haig did in 
Manila last month. We also have a for- 
mal annual dialogue session on economi 
issues at the subcabinet level where we 
have developed a program of multi- 
lateral aid, narcotics assistance, and 
cultural exchange. 

The past 2 years have seen the crea 
tion of a most significant instrument foi 
the ASEAN-U.S. relationship, the 
ASEAN-U.S. Business Council. The 
free-market economies of the ASEAN 
countries and the United States mean 
that the private sector plays a major 
role in bilateral economic relations be- 
tween the member countries and the 
United States. For the same reason, as 
ASEAN develops over the years into a 
vehicle for economic integration of the 




John H. Holdridge 
was born in New York 
City on August 21, 
1924. He received his 
B.A. degree from the 
U.S. Military Academy 
(1945) and then served 
overseas with the U.S. 
Army (1945-47). 
Ambassador 
Holdridge joined the 
Foreign Service in 1948. Following Chinese 
language training at the Foreign Service In- 
stitute, he went on to Chinese language-area 
studies at Cornell University; he had addi- 
tional China studies at Harvard beginning in 
September 1949. 

He went to Bangkok (1950) as an infor- 
mation officer, followed by assignments to 
Hong Kong (1953) as political officer, and 
Singapore (1956) as chief of the political sec- 
tion. He returned to the Department of State 
in 1958 as an international relations officer 



and in 1960 was made officer-in-charge of 
political affairs in the office of Chinese rela- 
tions. Ambassador Holdridge returned to 
Hong Kong (1962) as chief of the political 
section. In 1966 he was Deputy Director of 
Research and Analysis for East Asia-Pacific 
in the Department of State; in 1968 he 
became director of that office. 

Ambassador Holdridge was assigned to 
the National Security Council in April 1968. 
In April 1973, he went to Beijing as Deputy 
Chief of the U.S. Liaison Office. He was U.S 
Ambassador to Singapore from July 1975 un 
til 1978 when he served as national in- 
telligence officer for East Asia in the Na- 
tional Intelligence Council. He was sworn in 
as Assistant Secretary for East Asian and 
Pacific Affairs on May 28, 1981. 

Ambassador Holdridge is a recipient of 
the Department of State Superior Honor 
Award (1967) and the Christian Herter 
Award (1975). In 1979 he was awarded an 
honorary degree (LL.D.) by Elmira College. 



36 



Deoartment of State Bulletin 



East Asia 



nber states, cooperation and coor- 
ition among businessmen from 
lin and outside the member countries 
;t grow. The ASEAN-U.S. Business 
ncil, formed by the ASEAN 
mbers of Commerce and Industry 
the Chamber of Commerce of the 
ted States, provides a forum for such 
Deration. ASEAN-U.S. Business 
ncil activity also contributes to in- 
ising public consciousness of ASEAN 
his country. Recent council- supported 
ferences have carried the ASEAN 
le to Kansas City, San Francisco, 
Detroit. 

ochina 

)uld like now to turn to Vietnam and 
npuchea because it is the topic of 
•t intense discussion between the 
ted States and ASEAN at the mo- 
it. It was the main theme of the re- 
; ASEAN foreign ministers con- 
nce in Manila, and, of course, of the 
. conference in New York this week, 
key issue which guides the attitudes 
ard Vietnam of the ASEAN coun- 
5 and the United States is Hanoi's 
ipation of Kampuchea. It is in- 
rable to acquiesce in a situation 
.ted by an invading army and 
jetuated by a massive occupation by 
ign troops. We hold no brief for the 
Pot regime thrown out of Phnom 
'h by the invading Vietnamese. It 
abominable in its treatment of the 
ner people, and we can under no cir- 
stances favor its return to power. 
> does not mean, however, that 
er we or the ASEANs can accept 
status quo created by Hanoi in Kam- 
lea. 

MIA Problem. There are, of course, 
;r issues that bear on our relations 
\ Vietnam, including accounting for 
nany MIAs [missing-in-action] as 
Bible and the continuing flow of 
igees from Indochina. This Ad- 
istration is committed to obtaining 
fullest possible accounting for 
ericans missing in action in 
theast Asia. All reports suggesting 
presence of American prisoners in 
tnam and Laos are carefully checked. 
le of these reports has yet been 
stantiated, but all reports, from 
igee and other sources, are given 
ous, continuing, high-priority atten- 
. The Vietnamese and Lao Govern- 
lts continue to assert that no 
ericans are held captive. However, 



they have done little to substantiate that 
assertion by providing information even 
on the cases of persons known to have 
been captured alive, whose fate has 
never been disclosed. We are convinced 
that these governments do have con- 
siderably more information available to 
them, and we will continue to press 
them to provide the accounting of our 
missing people which we have so long 
sought. 

Refugees. The outflow of refugees 
from Indochina, while not as large as a 
few years ago, continues. Fortunately, 
because countries like Thailand, 
Malaysia, and Indonesia grant first 
asylum to these refugees and because 
we and other countries continue to take 
in substantial numbers for resettlement, 
the refugee problem is manageable for 
the time being. It is vital, however, that 
American hospitality toward these 
refugees continues. This is not only in 
keeping with our humanitarian tradition, 
but it contributes to the economic and 
political stability of the ASEAN coun- 
tries by helping them carry what would 
otherwise be an intolerable burden. 

Vietnamese Occupation of Kam- 
puchea. But the central issue in U.S. 
policy toward Vietnam is the occupation 
of Kampuchea, and that is why we will 
continue to keep pressure on Hanoi. In 
this we and ASEAN are in full agree- 
ment: The course of action most likely to 
result in. the removal of Vietnamese 
troops from Kampuchea is to make the 
occupation as costly as possible for 
Hanoi. We will continue a process of 
diplomatic isolation and economic 
deprivation until Hanoi is prepared to 
follow the will of the world community 
as expressed in two consecutive U.N. 
General Assembly resolutions and agree 
to troop withdrawal, free elections, and 
an end to outside interference in Kam- 
puchea. This policy of isolation and 
pressure is, of course, supplemented by 
the presence on Vietnam's northern 
border of hundreds of thousands of 
Chinese troops and the continuing guer- 
rilla activity of several resistance groups 
inside Kampuchea. 

When Hanoi is prepared to with- 
draw from Kampuchea and when it is no 
longer a source of trouble to the entire 
region, the economic and political 



pressures which now weigh heavily upon 
that country can be lifted. It is Vietnam 
which has chosen its current isolation 
and its heavy dependence on the Soviet 
Union. Only Vietnam can end that isola- 
tion. It is in no one's interest to have a 
permanently hostile Vietnam on the 
borders of ASEAN and neither ASEAN 
nor the United States seeks permanent 
hostility. But I want to make it clear 
that the United States will not consider 
normalizing relations with Vietnam until 
Vietnam changes its present policies. 

Conclusion 

This Administration is convinced that 
the overwhelming preponderance of 
U.S. interests in Southeast Asia lies in 
the ASEAN countries and that our ef- 
forts should be toward strengthening 
bilateral ties with those countries as well 
as with the organization itself. Our con- 
cern with Vietnam is a function of the 
threat which Vietnam poses to ASEAN 
through its aggression in Kampuchea 
and through its relationship with the 
Soviet Union. The latter has established 
its military presence in Vietnam and is 
clearly bent upon expanding its political 
influence in Laos and Kampuchea. 
ASEAN understands fully the nature of 
this bargain between Vietnam and the 
Soviet Union, which is costing the Rus- 
sians millions of dollars per day, and the 
threat it poses to the region's non- 
Communist states. Our policies in the 
region are supportive of ASEAN not 
only because of our concern over Viet- 
nam and the Soviet Union but, more 
positively, because ASEAN represents 
by far the best hope for continued 
stability and prosperity in Southeast 
Asia. We welcome ASEAN's success. 
We will encourage it, and we will 
strengthen it with every appropriate 
means. 



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



ober 1981 



37 



East Asia 



I.S. Relations With China 



by John H. Holdridge 

Statement before the House Foreign 
Affairs Committee on July 16, 1981. Am- 
bassador Holdridge is Assistant 
Secretary for East Asian and Pacific Af- 
fairs. l 

I am pleased to have been invited here 
today to try to answer your questions 
about U.S. policy toward the People's 
Republic of China and Taiwan. To begin, 
let me review our strategic interests in a 
sound, healthy relationship with China. 

• Our security and that of Japan, 
South Korea, and our ASEAN [Associa- 
tion of South East Asian Nations] 
friends has been demonstrably enhanced 
by the growth of close U.S. -China ties. 
We gain very positive benefits both in 
the Asian and in the global balance of 
forces. 

• In the Taiwan Strait, tensions are 
at an all-time low. 

• China is supportive of our global 
and regional efforts to strengthen our 
defense posture and alliance structure 
against expansionism by the Soviets and 
their proxies. 

• Throughout most of the Third 
World we no longer compete with the 
Chinese as rivals. Instead our policies 
are often complementary. 

• In short, the U.S. -China relation- 
ship is a major component in our global 
and regional security policies. 

• The number of bilateral agree- 
ments with China has grown rapidly in 
the past 2Vz years. Trade— including the 
provision of most-favored-nation 
status — textile, civil aviation, and 
maritime agreements have been signed. 
A consular convention has been ap- 
proved by the Senate Foreign Relations 
Committee and submitted to the full 
Senate for action. Joint economic, com- 
merce, and science committees have 
been formed and meet regularly to coor- 
dinate cooperation in their respeotive 
fields. China is eligible for Customs 
Cooperation Council and Eximbank 
credits as well as OPIC [Overseas 
Private Investment Corporation] in- 
surance in order to help support U.S. 
exports to China. An active consultative 
relationship has taken shape, through 
which our two countries seek to discuss 
and, when appropriate, coordinate our 



remarkably convergent policies over 
practically the entire spectrum of global 
and regional issues. 

Both sides have welcomed these de- 
velopments and look forward to further 
improvement in the relationship. They 
form the healthy substance necessary 
for a viable, long-term relationship. 
Without going into unnecessary detail, 
the results have been dramatic. In the 
first quarter of this year, China became 
our third leading export market in Asia, 
behind Japan and the Republic of Korea. 
It is now our third largest agricultural 
market in the world. Our ships and 
planes have begun regularly scheduled 
service to the other's shores, and 
tourism is expanding, as is educational 
exchange and cooperation in science and 
technology. All of this has been ac- 
complished without detracting from our 
continued nonofficial relationship with 
the people of Taiwan, whom we are 
treating with the dignity befitting old 
friends. 



Reagan Policy Review 

The starting point for this Administra- 
tion's policy toward China can be found 
in President Reagan's statement of last 
August 25, that our China relationship is 
global and strategic and one that we 
should develop and strengthen in the 
years ahead. In this context, we under- 
took an extensive policy review to assess 
our China relationship on the premise 
that China is not our adversary but a 
friendly, developing country with which, 
without being allied, we share important 
strategic interests. 

• We decided to liberalize further 
our export controls over dual-use 
technology sales to China and, perhaps 
more importantly, to implement the new 
procedures effectively. 

• We are considering possible legis- 
lative changes to amend U.S. laws which 
treat China as a member of the Soviet 
bloc. We intend to work closely with the 
Congress on this. 

• We concluded that we should re- 
vise the regulations on international 
traffic in arms to permit the licensing of 
commercial sales to China on a case-by- 
case basis. 



Export Controls 

Our export control policy toward China 
is designed to strengthen our economic 
involvement in China's modernization b; 
raising the level of technology that will 
be routinely approved for sale to China, 
Our interest in a successfully moderniz- 
ing China is clear. Only the interests of 
our adversaries would be served by a 
weak China that had failed to moderniz 
or a China that, in its frustration, had 
turned away from moderation and 
cooperation with the West. 

Our export controls for China shoul 
reflect its role as a friendly, nonadver- 
sary state, clearly differentiating China 
from the Soviet bloc and minimizing thi 
regulatory burden on U.S. companies. 
We want to help U.S. companies emplo 
their technology edge fully and gain 
greater opportunities in the China 
market. Participating in China's 
economic development benefits businesi 
and strengthens bilateral ties. We wanl 
to have China look to us as a trusted 
supplier. Shackling U.S. business woulc 
not only cost us money but cause us to' 
miss a unique opportunity to build a 
viable relationship with a quarter of th< 
world's population. 

Legislation 

Some statutes remain on the books 
which inhibit the expansion of our rela- 
tions with China. Some of these laws 
were enacted to protect against the dif 
Acuities arising from interaction be- 
tween market and nonmarket economic 
and should be viewed in this context. 
Nevertheless, a number of these statut 
prohibit cooperation with China by the 
U.S. Government or private industry 
due to Beijing's earlier association with 
the Soviet bloc. As Secretary Haig in- 
formed the Chinese during his recent 
trip to Beijing [June 14-17], the Reaga: 
Administration is currently reviewing 
such legislation and will seek appro- 
priate congressional action to end past 
discrimination no longer consistent witl 
our present strategic relationship. We 
will consult with the Congress closely c 
this subject. 

In particular, we are reviewing the 
Foreign Assistance Act of 1961, the 
Agricultural Trade Development and 
Assistance Act (PL 480), the Trade 
Agreements Extension Act (which pro- 
hibits imports of seven categories of fu 
from China and the Soviet Union), and 
the Trade Act of 1974. 

The restrictions excluding China 



38 



Department of State Bulleti 



East Asia 



[m development assistance, PL 480, 
i the export of furs are based 
marily on that country's previous 
ationship with the Soviet Union and 
j not consistent with the current 
ibal situation. Thus, we believe these 
/s should be amended. Ending these 
itraints would not entail any specific 
3. obligations but would bring our 
/s up to date and remove self-imposed 
;traints that are not shared by our 
npetitors from Europe or Japan. By 
.ng so we would be improving our 
xibility. Such steps as sales of PL 480 
ains or extensions of development 
iistance would still be done on a case- 
case basis, if at all. Indeed, we have 
current plans to offer such assistance 
China and would only consider such a 
p following review of its economic 
isequences and appropriate consulta- 
ns with Congress. 
On the other hand, the restrictions 
our relationship with China created 
the Trade Act of 1974— including 
•se on extension of the generalized 
tern of preferences (GSP), trade 
•eement requirements, and market 
ruption— appear to be based primarily 
the special concerns arising from the 
traction of market and nonmarket 
nomies. We see no reason to change 
tutes for China which simply 
ognize that nonmarket economies 
Tate differently than market 
nomies. This does not mean that we 
r e foreclosed extending GSP to China 
in appropriate time, but this would 
y be done in the context of China's 
ang met the conditions that the law 
uires of nonmarket economy coun- 
ts. 

nitions Control 

2 steady development of our relations 
h China over the last several years, 
well as our evolving strategic 
>peration, make it inappropriate for 
to maintain the tight controls on 
nitions exports to China that we do 
such exports to adversaries. A flat 
>hibition on sales to China, a friendly 
intry, chiefly benefits its opportunistic 
I aggressive neighbor. This decision is 
; a decision to sell any specific 
apons systems or military technology; 
vill merely enable Beijing to make re- 
2sts to purchase from U.S. commer- 
1 sources any items on the U.S. muni- 
ns list, including weapons. We are by 
means committed to approving such 



requests but only to considering them on 
a case-by-case basis just as we do for all 
other friendly nations. 

We do not expect this to lead to a 
sudden or uncontrolled surge of U.S. 
weapons sales to China. First of all, our 
own intentions are to move slowly, with 
appropriate caution and to insure that 
any weapons are only defensive in 
character. The Secretary made clear in 
Beijing that, as far as defensive exports 
are concerned, we intend to proceed in a 
gradual and careful way, bearing fully in 
mind the concerns of and, as appro- 
priate, consulting the Congress, our 
friends, and allies. Thus, we are not 
seeking to press arms on China or to 
move recklessly. 

Secondly, we do not believe the 
Chinese will come forward with massive 
requests. There are budgetary and 
foreign exchange constraints and prac- 
tical difficulties in integrating the most 
sophisticated technology into their own 
systems. 

Neither we nor the Chinese seek an 
alliance or an otherwise dramatically ex- 
panded security relationship. While they 
view our willingness to consider military 
equipment transfers as one measure of 
our intent to pursue a long-term 
strategic association with them, they 
also recognize that we still treat them in 
a different fashion from our close allies, 
particularly in the sharing of sensitive 



technology. For us, the critically impor- 
tant thing is that we are now willing, for 
the first time, to deal with China in this 
area similarly to the way we deal with 
other friendly nations— in the Middle 
East, Latin America, Africa, and Asia. 

Foreign Military Sales 

In your letter inviting me here, you have 
asked that I address the question of 
foreign military sales (FMS) for China. 
In the absence of FMS eligibility, the 
legislated $100-million ceiling on com- 
mercial exports of defense equipment 
and services would act as a barrier to 
large Chinese purchases. The time may 
come when we will need to address this 
question, but we are not seeking to 
make China eligible for FMS cash sales 
at this time. FMS credits or FMS- 
guaranteed loans to China are even 
more premature though we will be 
prepared to address such issues on their 
merits, should they arise. 

Conclusion 

We see these initiatives as natural 
developments in the positive evolution of 
our relations with China over the last 
decade. We intend to implement these 
policies in a measured, controlled man- 
ner, reflective of third-country interests. 
We do not see a closer relationship with 



North Korea Fires 
at U.S. Plane 

DEPARTMENT STATEMENT, 
AUG. 27, 1981 1 

We now have confirmation that early 
yesterday, the North Koreans fired a 
missile at a U.S. Air Force plane flying 
in South Korean and international air 
space. This flight was one of a number 
of routine flights which have been con- 
ducted over a period of years in this 
area. 

The U.S. Government expresses its 
serious concern at this act of lawlessness 
which constitutes a violation of interna- 
tional law, the Korean armistice agree- 
ment, and accepted norms of interna- 
tional behavior. 

The U.N. Command in Seoul has 
called for a Military Armistice Commis- 
sion meeting to protest directly to the 
North Koreans this violation of the 1953 
armistice agreement. The U.N. Com- 



mand side requested that the meeting be 
held this Saturday, Korea time, and the 
North Korean side has not yet re- 
sponded. 

In addition we are contacting the 
Governments of China and the Soviet 
Union to request that they convey our 
deep concern over this incident to North 
Korean authorities and that North 
Korea avoid any repetition of such 
dangerous activity. 

Both nations have treaties of friend- 
ship and cooperation with North Korea. 
China is a signatory of the military ar- 
mistice agreement and a member of the 
Armistice Commission. We believe it im- 
perative to use these channels to im- 
press upon the North Koreans the 
seriousness with which we view this inci- 
dent. 

We intend to continue to fly these 
routine flights and will take whatever 
steps are necessary to assure the future 
safety of our pilots and our planes. 



'Read to news correspondents by Depart- 
ment spokesman Dean Fischer. ■ 



itober 1981 



39 



ECONOMICS 



China as directed against the interests 
of any other country. Instead, we 
perceive an historic opportunity to build 
constructive, friendly relations with a 
country which is a future world power 
occupying a strategic position in the 
Asia-Pacific region and on the Eurasian 
landmass. Our long-term objective is to 
enhance greatly the stability of the 
region by strengthening U.S. -China ties. 

As I have indicated, this in no way 
means that we will ignore Taiwan. We 
want to continue to improve the 
substance of our unofficial relations with 
the people of Taiwan. On his trip, the 
Secretary told the Chinese that we 
would continue to manage these rela- 
tions — as we have since normaliza- 
tion — on the basis of the joint communi- 
que. As we have consistently stated, our 
own law establishes a basis for the con- 
tinuation of these unofficial relations. It 
is clear that we have certain differences 
over Taiwan, which, of course, include 
the sale of defensive arms. We listened 
to Chinese views, and we made our 
views known. I think both sides came 
away from these meetings with a 
greater awareness of the other's sen- 
sitivities over Taiwan. 

Both the Chinese and we realize that 
for the foreseeable future the political 
significance of the steps we have taken 
will far outweigh the immediate military 
and economic consequences. These are, 
however, very important gestures aimed 
at consolidating a long-term relationship 
in which we will hope to be able to con- 
tinue to engage our Chinese friends in a 
positive foreign policy dialogue — par- 
ticularly in Asia— and to build a network 
of reinforcing ties which, while leaving 
us free to pursue internal and foreign 
policy goals independently, will 
nonetheless insure cooperative and 
friendly U.S.-China relations well into 
the 21st century. 



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



Approach to Foreign Economic 
Issues 



by Myer Rashish 

Statement before the Joint Economic 
Committee of the Congress on July 14, 
1981. Mr Rashish is Under Secretary for 
Economic Affairs. 1 

I am pleased to appear before this com- 
mittee in its consideration of foreign 
economic policy. This committee and 
you, in particular, Mr. Chairman 
[Representative Henry S. Reuss], have 
played a prominent leadership role in 
making the American people aware of 
the importance of a vigorous U.S. inter- 
national economic policy to the health of 
the U.S. economy and to our foreign 
policy objectives. 

We both are concerned about many 
of the same issues. From our respective 
vantage points in the executive and 
legislative branches, we share a respon- 
sibility for establishing the crucial 
linkages between foreign economic 
policy, on the one hand, and both U.S. 
foreign policy objectives and domestic 
economic policy objectives on the other. 
It is the close connections among these 
three policy dimensions that I wish to 
emphasize in my presentation today. 



I am sure that the committee will 
agree that in today's world economic 
issues are increasingly becoming the 
very stuff of foreign policy. This is cleai 
ly illustrated by the intensive prepara- 
tions now underway for the Ottawa 
summit [July 19-21]. The economic and 
political issues which the heads of 
government will be discussing at 
Montebello, just outside of Ottawa, are 
so closely intertwined as to be in- 
separable. 

On the other hand, foreign economii 
issues are increasingly tied to the opera 
tion of the domestic economy. Trade 
now represents nearly twice as high a 
percentage of our gross national produc 
than it did 10 years ago. In 1970 U.S. 
exports constituted 4.5% and today thej 
constitute 8.4% of our GNP. U.S. 
monetary policy and its implications for 
the macroeconomic policies of our chief 
trading partners are among the chief 
concerns of the political leadership in 
Europe and Japan. Inevitably, the Ad- 
ministration's goals for the domestic 
economy will affect — and be affected 
by — developments on the international 
scene. 




Myer Rashish was 
born on November 10, 
1924, at Cambridge, 
Mass. He attended 
Boston Latin School 
(1941) and received his 
A.B. degree in 
economics from Har- 
vard (1947). Mr. 
Rashish was an in- 
structor in economics 
at M.I.T. (1946-47) and at Williams College 
(1947-49). While at Williams he also acted as 
a visiting lecturer in economics at Tufts Col- 
lege. He was assistant professor of economics 
at Bowdoin College, Brunswick, Maine 
(1949-51). 

Mr. Rashish joined the Department of 
State in 1952 as an economist with the Office 
of International Finance and Development 
Policy and the following year became the 
director of the international section for the 
Midcentury Conference on Resources for the 
Future. During 1954-56, he acted as the 
economic consultant to the Committee for 
National Trade Policy, Inc. 

From 1956 to 1960 Mr. Rashish was the 
chief economist and the staff director for the 
Subcommittee on Foreign Trade Policy of the 



House Ways and Means Committee. In addi- 
tion he served as the secretary for President 
elect Kennedy's task forces on foreign 
economic policy and the balance of payments. 
In 1961 he became special assistant to the 
Under Secretary of State for Economic Af- 
fairs, after which he went to the White 
House as assistant for international trade 
policy. 

Beginning in 1963 Mr. Rashish was a 
self-employed consulting economist. As a con 
sultant to the congressional Joint Economic 
Committee, he organized a program of U.S. 
foreign economic policy for the 1970s for the 
Subcommittee on Foreign Economic Policy. 
From 1971 to 1976, he was a consultant to 
Senator Abraham Ribicoff in connection with 
the latter's chairmanship of the Subcommit- 
tee of Foreign Trade of the Finance Commit 
tee. 

In 1976 President Ford appointed Mr. 
Rashish to the Advisory Committee for Tradi 
Negotiations, to which he was reappointed b) 
President Carter in April 1978 and June 
1980. He was elected chairman of that com- 
mittee in January 1980. 

Mr. Rashish was sworn in as Under 
Secretary for Economic Affairs on June 29, 
1981. 



40 



Department of State Bulletin 



Economics 



Ultimately, our responsibility is to 
ft and implement a U.S. foreign 
icy which takes into account all our 
er ests— our security needs, our 
ource requirements, our trade and in- 
itment concerns, our need for good 
rking relations with the many coun- 
ts a world power must deal with in 
lay's interdependent world. Of course, 
i success of such a foreign policy is 
jendent on a dynamic domestic 
momy. The President's economic 
overy program is thus central to our 
eign economic policy, and the role the 
ite Department plays in foreign policy 
its on close coordination with the 
;ncies primarily responsible for our 
-nestic economy. 

I would like to illustrate this general 
Droach to foreign economic policy by 
efly reviewing with you five principal 
;as of concern: 

• Energy supply and independence; 

• Trade; 

• International investment and 
ance; 

• Support for economic develop- 
nt; and finally 

• The very special economic ties we 
/e with our closest allies and 
ghbors. 

ergy 

rile rapid oil price rises and occasional 
)ply interruptions can cripple 
>nomic growth and increase infla- 
nary pressures in consuming coun- 
ts, it is the national security implica- 
ns of the unhealthy dependence of the 
ited States and the other major in- 
itialized countries that are most 
turbing to this Administration. It is 
possible to think about such widely 
parate issues as the Middle East 
ice process, the present condition of 
'. international monetary and commer- 
1 banking systems, or the financial 
vency of key developing countries 
;hout reaching back to the dependence 
the international system on imported 
and on a small group of oil suppliers. 
To reduce that dependence, this Ad- 
nistration is emphasizing, in the first 
,tance, market-oriented policies to 
hance supply and to restrain demand, 
key element has been the President's 
cision to implement a realistic energy 
icing policy. Oil price decontrol and 
entual deregulation of natural gas 
ices are essential steps in eliciting in- 
cased production and discouraging in- 
cident use of energy. Other important 



supply-oriented policies are now under 
development. We aim to accelerate leas- 
ing of off-shore oil, resolve regulatory 
and institutional problems inhibiting the 
use of nuclear power, and remove im- 
pediments to increased production, use, 
and export of coal. Our extensive coal 
resources need to be developed; we are 
confident that private industry will be 
able to expand output and improve in- 
frastructure for delivery of coal exports 
as long as government provides a 
reasonable regulatory climate. 

The U.S. response to market forces 
in energy has been impressive. Oil con- 
sumption in the first half of 1981 is run- 
ning at 16 million barrels per day, the 
lowest level since 1973. Oil imports for 
the half year are running just over 5 
million barrels per day, 3V2 million bar- 
rels per day below the 1977 peak. The 
decline in U.S. domestic oil production 
has, at least temporarily, been halted. 

Yet increased production and more 
efficient energy use in the United States 
addresses only part of the energy prob- 
lem. Preparedness to adjust to energy 
market disruptions is vital. Supplies can 
be disrupted, as we have seen, by 
political conflict and social upheaval and 
by sudden demand surges. The obvious 
examples of these dangers stem from 
the Middle East; less visible is prospec- 
tive West European dependence on the 
Soviet Union for substantial amounts of 
natural gas which has the potential for 
unhealthy influence. 

We must be prepared to counter 
these threats to our energy security by 
national action and international 
cooperation. Nationally, an effective 
strategic petroleum reserve is crucial. 
The reserve is the basis for crude oil 
security, to be used in response to a ma- 
jor oil supply interruption and in the 
framework of a response coordinated 
with our partners in the International 
Energy Agency (IEA). 

Purchases of crude oil for the 
strategic petroleum reserve were re- 
sumed in October of last year at a rate 
of about 100,000 barrels per day. The fill 
rate has accelerated sharply in the past 
6 months. Since the beginning of FY 
1981, 70 million barrels have been added 
to the reserve, bringing the total in 
storage as of June 30 to 163 million bar- 
rels. The current oversupply of crude oil 
in world markets and resulting lower 
prices have enabled us to achieve a 
faster than anticipated fill rate. We now 
expect to have approximately 200 



million barrels in storage by the end of 
FY 1981, taking into account contracts 
already signed and projected purchases. 
This will be an important step toward 
our currently scheduled 1989 target of 
750 million barrels. 

While a petroleum reserve is one ele- 
ment of our energy and national security 
policy, other elements, involving interna- 
tional cooperation, are also required. It 
would be a serious mistake to believe 
that U.S. energy supply or national 
security could be maintained in a world 
in which our allies were crippled and the 
world trading economy sundered by 
serious price shocks or supply disrup- 
tion. For this reason, cooperative efforts 
with other industrialized countries are 
fundamental to our energy security 
policy. The International Energy Agency 
is the prime forum for this cooperation. 
The IEA emergency oil-sharing system, 
designed to counter catastrophic short- 
falls, is the keystone of this energy 
security policy. In addition, we have 
learned also from the recent past that 
smaller, or even threatened, shortfalls 
can also lead to harmful price rises, and 
IEA consultations are underway to try 
to find appropriate contingency 
measures for these situations. 

A sound energy policy also requires 
good relations with reliable producers. 
Investment climates need to be im- 
proved; discriminatory policies, such as 
those in our neighbor to the north, 
favoring domestic investment can reduce 
optimal energy investment to everyone's 
detriment. 

We will not relax our search for 
energy security in the face of the cur- 
rent oversupply of crude oil on world 
markets. This quest for energy security 
will probably bring us into contact with 
almost every conceivable aspect of 
foreign and economic policies, and we 
are prepared to insure that our policies 
reflect that critical objective. 

Trade 

Current challenges in the trade field 
arise out of the success— in both foreign 
policy and economic terms — of the basic 
policies adopted after World War II. 
The U.S. goal then in establishing the 
General Agreement on Tariffs and 
Trade (GATT) and urging our trading 
partners to establish a more open and 
market-oriented trading system was to 
increase both world prosperity and inter- 
national interdependence through the 



:tober 1981 



41 



Economics 



expansion of trade. World trade expand- 
ed fivefold between 1970 and 1980, 
while OECD [Organization for Economic 
Cooperation and Development] exports 
as a share of GNP rose from 10.7% to 
16%. By 1979 the average tariff levels in 
the developed countries had fallen to 
10.6%. The cuts agreed to in the Tokyo 
Round of multilateral trade negotiations 
will further reduce tariff levels to 4.5%. 
We need to continue this expansion 
of trade which has contributed so much 
to our prosperity and added stability to 
the international environment. Last 
week, Ambassador Brock [William E. 
Brock, U.S. Trade Representative] 
presented to the Senate Banking and 
Finance Committees a comprehensive 
Administration policy statement outlin- 
ing our approach to trade. The approach 
emphasizes that it remains important to 
strengthen the institutions which have 
served us well in the trade field, prin- 
cipally GATT. We will be facing a 
number of new challenges, however. 

U.S. trade with the Soviet Union 
and Eastern Europe has expanded con- 
siderably during the 1970s, with these 
countries providing significant markets 
particularly for U.S. agricultural prod- 
ucts. Our exports of wheat and coarse 
grains to the U.S.S.R. in 1979-80 came 
to 15.2 million tons. While we recognize 
the important contribution these exports 
have made to the U.S. economy, we can- 
not view economic exchanges in isola- 
tion. This Administration is determined 
to insure that economic relations with 
the East are consistent with broad U.S. 
political and strategic objectives. 

On the other hand, we recognize 
that continued economic ties between 
these countries and the United States 
and the rest of the world can be in our 
interest, particularly to the extent that 
these ties serve to reinforce the East's 
stake in the orderly functioning of the 
world economy and to encourage them 
to engage in responsible international 
behavior. For both economic and 
political reasons, therefore, this Ad- 
ministration intends to maintain a pru- 
dent level of economic relations with due 
regard for security interests and for the 
differences between our market-oriented 
economy and their centrally planned 
systems. 

• We need to balance our desire to 
increase exports against our other in- 
terests, including the need to avoid hav- 
ing U.S. exports contribute to the 
military potential of the recipient coun- 
try. 



Major Developing Country 




Trading Partners of U.S., 1980 


($ billion) 








U.S. 


U.S. 




Imports 


Exports 


Brazil 


3.7 


4.3 


Hong Kong 


4.7 


2.7 


Israel 


.9 


2.0 


Korea 


4.1 


4.7 


Mexico 


12.5 


15.1 


Nigeria 


10.9 


1.1 


Saudi Arabia 


12.5 


5.8 


Singapore 


1.9 


3.0 


Taiwan 


6.9 


4.3 


Venezuela 


5.3 


4.6 


TOTAL 


63.4 


47.6 



Source: U.S. Department of Commerce, Highlights q) 
U.S. Import and Export Trade. December 1980 



• The United States cannot have an 
effective policy on trade with these 
countries unless our policy is in harmony 
with that of our major trading partners. 
We need to achieve a common percep- 
tion of the balance between security and 
commercial interests for the Western 
allies as a whole. 

• The problems of fair trade are 
peculiarly difficult to deal with in the 
case of countries which do not apply 
market pricing principles within their 
own economies. The concepts of dump- 
ing and subsidies have no place in their 
system, but the U.S. Government must 
deal with them as they impact trade in 
the United States. 

• In the trade field as in the 
political sphere, there are important dif- 
ferences among the East European 
countries. Some are more open to inter- 
national trade than others; some have 
moved toward instituting a genuine pric- 
ing system and effective tariffs; four are 
members of the GATT. In addition, they 
are at differing levels of economic 
development. This Administration will 
make every effort where possible to 
tailor our approach to the individual 
country. 

Our trade with other countries is 

less likely to raise security issues but is 
of crucial importance nonetheless. We 
are concerned that trade be conducted 
according to mutually agreed "rules of 
the game." One of the major ac- 
complishments of the Tokyo Round was 
to make a start at dealing with the non- 
tariff barriers which, in an era of 
relatively low duties, act as the major 



impediment to international trade. The 
"codes" agreed to during these negotia- 
tions are being put into effect. We need 
to make them work as effectively as 
possible and to develop greater interna- 
tional discipline and a body of case law 
in such key fields as the use of export 
subsidies, dumping, and international 
bidding for government procurement. 

In addition, a number of areas im- 
portant to U.S. trade have hitherto not 
been the subject of much international 
discipline. Trade in services and the 
potential trade distortions from the in- 
vestment performance criteria and in- 
centives adopted by a number of coun- 
tries are but two examples that come to 
mind. Trade in services is one of the 
most dynamic components in our 
economy. Our 1979 export receipts in 
this area totaled more than $76 billion. 
That is almost a fourfold increase over 
the 1971 level of $19.1 billion. Services 
account for 27% of U.S. exports and 
employ 70% of the nonagricultural U.S. 
work force. 

In both areas we need to develop an 
international consensus which will 
facilitate trade and discourage back-door 
means of protectionism. 

The emergence of China as an im- 
portant actor in the world trade arena 
poses challenges and opportunities for 
U.S. businessmen and policymakers, as 
well as for the world trading system as 
a whole. China's exports increased from 
$8 billion in 1977 to over $13.5 billion in 
1979. China's imports over the same 
period grew even more rapidly from 
$6.6 billion to $14.7 billion. 

Another challenge we must meet 
stems from the increasingly important 
role of the developing countries in world 
trade. Our trade with the developing 
countries has expanded rapidly over the 
past decade: imports by 25% per year, 
exports by 18% per year, compared with 
15% increases in trade with the 
developed countries. The less developed 
countries as a group account for 37% of 
our exports and 47% of our imports and 
they are now a more important trading 
partner for the United States than the 
European Community, Canada, or 
Japan. Within this group, a small 
number of countries often referred to as 
the "newly industrializing countries" 
(Mexico, Brazil, Singapore, Hong Kong, 
Taiwan, Korea, and Israel) accounts for 
over half of trade between the United 
States and non-oil less developed coun- 
tries (LDCs). The United States needs to 
respond to their competition in a way 



42 



Department of State Bulletin 



Economics 



ch will encourage world prosperity 
will increase the stake these coun- 
s have in an orderly world trading 
tem. Given their importance as an ex- 
t market, maintaining an open U.S. 
rket is essential to our export expan- 
I strategy as well. This Administra- 
1 will be encouraging the developing 
mtries generally and the more ad- 
iced, in particular, to take on the 
:iplines of the international trading 
tem. 

The other non-oil developing coun- 
•s urgently need to increase their ex- 
its in order to finance increasingly ex- 
isive imports. Export earnings are a 
re significant source of development 
tnce than aid, both in terms of the 
ount of money involved and by virtue 
.he economic efficiency which a suc- 
sful export industry represents, 
hough U.S. aid totaled $4.7 billion in 
9, in that year U.S. imports from 
Cs totaled $92.5 billion and nearly 
F of this— $43.7 billion— came from 
non-OPEC [Organization of 
roleum Exporting Countries] LDCs. 
?ping our market open to the exports 
developing countries and providing 
very modest degree of incentive em- 
lied in our generalized system of 
ferences scheme are integral parts of 
broader policy with respect to these 
ntries. 

Although my main theme today is 
"foreign" aspects of foreign 
nomic policy, I cannot leave the sub- 
t of trade without a word about the 
opetitiveness of U.S. industry. U.S. 
jrts to continue the progress made so 
in developing a more orderly trading 
tem and to respond to the new 
dlenge of the developing countries 
1 ultimately fail unless they are 
•ked by a vigorous U.S. ecopomy. In 
• response to the difficulties caused by 
Dort competition in sensitive sectors, 
need to insure that we encourage 
momic efficiency rather than reward 
akness. Adjustment assistance and 
'eguard measures can ease the prob- 
ns firms and workers face as our 
momy adapts to new circumstances, 
t we will be relying primarily on 
irket forces to bring about the 
cessary adjustment. 

On the export side, the overall 
alth of the economy, once again, will 
the key factor in determining how 
:11 our products do. The amount and 
,'ectiveness of investment, our ability 
control inflation, and the growth in 
oductivity are all crucial. 



The Administration is also reviewing 
various aspects of U.S. law and policy 
which have had the unintended side ef- 
fect of discouraging exports, such as the 
Foreign Corrupt Practices Act and the 
operation of our export controls. The 
Administration is also working interna- 
tionally to reduce barriers to U.S. goods. 

International Finance and Investment 

In an increasingly interdependent world, 
the smooth operation of the financial 
system is a vital prerequisite to increas- 
ing world trade, and both are equally 
essential to prosperity. The 1979-80 oil 
price increase resulted in an OPEC cur- 
rent account surplus of about $120 
billion last year, nearly double the 1979 
level. The counterpart to this enormous 
surplus was a $47 billion deficit among 
the non-oil developing countries. 
Whether OPEC's surpluses will remain a 
"sword of Damocles" hanging over the 
international financial system depends 
considerably on the future path of oil 
prices and on the ability of deficit coun- 
tries to use the current lull in rising 
energy costs to implement the structural 
reform of their economies necessary to 
right their external accounts. 

It is expected that the OPEC 
surplus and the industrialized countries' 
deficit will moderate this year to about 
$100 and $20 billion respectively. The in- 
dustrialized countries should be able to 
finance their deficits with little trouble. 
For the most part, these countries are 



U.S. Trade With Developing 
Countries, 1980 




($ billion and percent) 








U.S. 
Imports 


U.S. 
Exports 


World TOTAL 


241.2 

(100) 


220.7 

(100) 


Developing Countries 

Subtotal 


114.4 

(47) 


82.3 

(37) 


OPEC 


52.1 
(21) 


17.8 
(8) 


Non-oil 
Exporters 


62.3 
(26) 


64.5 
(29) 


Source: U.S. Department of Commerce, Highlights oj 
U.S. Import and Export Trade, December 1980 



following slow growth and anti- 
inflationary policies and thus adjusting 
to the higher relative costs of oil. 

The non-oil LDCs' combined current 
account deficit is likely to rise 
somewhat, to upward of $95 billion. We 
do not expect this to cause a generalized 
debt problem. However, those countries 
that do not move to implement sound 
economic policies will find access to ex- 
ternal finance more limited and more 
costly than previously. 

The international financial system 
can ill afford a repetition of the policies 
of the mid-1970s when many countries 
tried to finance growth through 
domestic credit expansion and external 
borrowing. Even with a lull in the rising 
price of energy and the possibility that 
OPEC's surplus will dwindle rapidly, 
1981 is quite different from 1973-75. 
Many countries already have incurred 
considerable new debt, and a larger pro- 
portion is on commercial terms. Interest 
rates are higher both in nominal and 
real terms. Thus, those countries depen- 
dent on external finance from commer- 
cial sources must run that much faster 
just to be able to service a given level of 
debt. Debt service now absorbs 20% of 
these countries' export earnings, up 
from 13% in the mid-1970s. 

The private markets are quite liquid 
and the supply of funds to creditworthy 
countries is unlikely to be a problem. 
However, many banks are reaching their 
own external limits on exposure, and 
they will be increasingly selective in add- 
ing new exposure. 

It is essential that we begin to ex- 
plore longer term solutions to the recy- 
cling problem. Private banks will un- 
doubtedly continue to play the predomi- 
nant role in the recycling process. 
However, the International Monetary 
Fund (IMF), through access to its own 
resources and its influence on the 
judgments of the private market, will 
play a more pivotal role in countries 
with balance-of-payments problems. 

To do so, the IMF has been given 
more flexibility. Resources available 
from the IMF have been increased and 
the terms of repayment extended in 
some cases in recognition of the longer 
periods required to implement effective 
adjustment programs under current in- 
ternational economic conditions. The 
guidelines for conditionality — domestic 
programs required of borrowers under 
IMF programs — have been modified to 
take more explicit account of the 



;tober 1981 



43 



Economics 



underlying causes of the financing prob- 
lems as well as the borrowing countries' 
social, political, and economic priorities. 

The Fund borrowing of $5-6 billion 
over the next several years — including 
from Saudi Arabia— will help bolster the 
IMF's ability to supply balance-of- 
payments financing and, to the extent 
that others can be involved, bring the 
surplus OPEC countries more directly 
into the recycling process. 

We are encouraging this expansion 
of the IMF's role and resources. We 
believe that a multilateral institution like 
the IMF is especially well placed to en- 
courage developing countries to adjust 
their economic policies, as we believe 
they must, to current international 
realities. The economic stakes for the 
countries concerned are very high. So 
are the foreign policy and economic 
stakes for the United States if failure to 
encourage adequate adjustment were to 
result in the economic collapse of coun- 
tries important to the United States. 

With this in mind, the Reagan Ad- 
ministration has also reviewed its ap- 
proach to international monetary policy. 
Our basic principle is that the 
marketplace should be allowed to work. 
Accordingly, we will intervene in foreign 
exchange markets only when necessary 
to counter disorderly market conditions. 
We believe that this is consistent with 
the Administration's efforts to address 
economic fundamentals rather than at- 
tempt in vain to fine-tune our approach. 
We hope that the emphasis on basics 
will reduce the likelihood of disorderly 
foreign exchange markets. 

Given the size of the U.S. economy 
and its international trade and financial 
linkages, U.S. monetary and fiscal 
policies are legitimately of major con- 
cern abroad. Right now we are going 
through a difficult transitional phase. 
The clash between our anti-inflationary 
monetary policy and deep-seated infla- 
tionary expectations has temporarily 
produced very high interest rates, caus- 
ing painful effects in our own economy 
and complicating policy choices for our 
economic partners. High U.S. rates have 
added to downward pressures on the ex- 
change value of some foreign currencies 
and have contributed to the increase in 
interest rates abroad, even though some 
policymakers abroad would have pre- 
ferred lower rates in support of invest- 
ment and economic recovery. I would 
like to underline, however, that domestic 
economic conditions and political factors 
in the United States and many of our 



key trading partners have been the prin- 
cipal cause of exchange rate and interest 
rate developments. Lower interest rates 
can be attained on a sustainable basis 
only by reducing the rate of inflation 
and the inflationary expectations which 
are built into present high nominal 
rates. 

We are sometimes charged with 
placing an undue burden on monetary 
policy in the anti-inflationary fight and 
thus aggravating the interest-rate prob- 
lem. While monetary control surely is a 
necessary condition for reducing infla- 
tion, the Administration has also pro- 
posed a restrictive fiscal package and 
expects to have the smallest deficit as a 
share of GNP among the major coun- 
tries. Over the next few years fiscal 
policy will be guided by the commitment 
to balanced budgets. 

These issues have been discussed 
with our partners in the OECD, in the 
summit preparatory meetings as well as 
bilateral meetings. Much progress has 
been made in enhancing mutual 
understanding, and, given the common 
objective of restoring vigorous, noninfla- 
tionary growth, I believe a further con- 
vergence of views is probable at the 
summit. , 

Turning briefly to investment policy, 
we believe that market forces rather 
than government fiat result in the most 
efficient distribution of investments. 
Consistent with this view, U.S. invest- 
ment policy has for many years been 
based on the principle of nonintervention 
in the private sector decisionmaking 
process. As a corollary, the U.S. 
Government has avoided actively pro- 
moting or discouraging private invest- 
ment overseas. Our policy supports a 
general principle of national treatment 
for foreign enterprises— i.e., foreign 
enterprises should be treated no less 
favorably than domestic investors in like 
situations. 

U.S. investment overseas has been 
increasing in recent years. By the end of 
1979 — on a balance-of-payments 
basis — the stock of U.S. direct invest- 
ment abroad had reached an estimated 
$192.6 billion, up 15% from the previous 
year's figure of $167.8 billion. U.S. in- 
vestment in Europe and Canada account 
for over half of U.S. investment 
abroad— about $122 billion— and invest- 
ment in developed countries comes to 
about 72% of the total. We should also 
keep in mind that receipts from those in- 
vestments totaled nearly $38 billion in 
1979. 



The United States has maintained 
an open investment climate, and we 
believe that the attractiveness of the 
U.S. investment climate has led to a 
largely beneficial increase in investmen 
in this country. As a general principle, 
foreign investors should not receive an; 
special advantages which are not 
available to domestic investors in the 
U.S. economy. 

Most OECD countries maintain a 
similar open investment climate, thougl 
we are concerned about trends in the 
other direction in Canada and have bee 
discussing this issue with the Canadian 
Government. Developing countries are 
some cases more restrictive. We want 1 
remove U.S. Government impediments 
to U.S. investment abroad, for example 
in the tax and regulatory area. We alsc 
want to insure that U.S. investors 
overseas receive fair and equitable trea 
ment. We will, for instance, seek great 
international discipline in the use of in- 
vestment incentives and performance r 
quirements. We will continue to work, 
bilaterally and multilaterally, for the 
goal of an open investment system — or 
that is based to the extent possible on ; 
common framework and understanding 
of the basic ground rules. 

Support for Economic Development 

Support for economic development in 
poorer countries has been an important 
element in U.S. foreign policy for the 
past 30 years, and given the economic 
and strategic picture of some key 
developing countries it is likely to re- 
main so for some time to come. 

This Administration has been takin 
a careful look at our economic policies 
toward developing countries, to make 
sure that U.S. policies accord closely 
with our tangible economic and security 
interests in such sensitive areas as the 
Caribbean basin, the Middle East, the 
areas bordering Afghanistan and the 
Persian Gulf, and others. Aid allocation 
will reflect these interests as well as 
humanitarian concerns. 

Historically, U.S. aid has been ex- 
tended both as direct bilateral assistanc 
and through multilateral institutions. 
The Administration is examining the 
balance between these channels, in an 
attempt to insure that our choice of aid 
tools reflects the different interests our 
aid programs should serve. We plan to 
complete by September a review of U.S 



44 



Department of State Bulleth 



Economics 



icy on participation in future 
ilenishments or expansions of 
ltilateral development banks. 

U.S. budget revisions have affected 
areas, including foreign assistance. 
r essential aid expenditures in FY 
$2 will nonetheless be about 15% 
jve the current fiscal year. 

This Administration believes it im- 
tant to emphasize, however, that 
Hiomic development includes other 
ments besides aid. One of the most 
portant steps this Administration can 
:e for development is to restore and 
intain a growing U.S. economy 
;hout inflation. This encourages the 
/elopment process through linkages 
it are often more important than ex- 
nal aid flows. The most important 
ong these are: 

• Markets open to the exports of 
^eloping countries; 

• Domestic economic policies that 
ilitate overall growth and investment 
these countries; and 

• Access to capital markets. 

Even within the broad category of 
ernal financing of development, con- 
ization on the relatively small official 

contributions sometimes leads us to 
get the much larger flows from the 
it of our economy. U.S. imports from 
/eloping countries in 1979 were nearly 
ie times our official aid flows. The 
■ne type of relationship holds for all 
> Western aid-giving nations as a 
jup. U.S. direct investment in the 
veloping countries runs at or above 
j level of aid, and LDC use of private 
Dital markets results in commercial 
nk loans and bond issues far ex- 
jding development assistance. In 1979 
me, commercial banks provided $37 
Qion to the LDCs, while flows of of- 
ial development assistance from all 
nors in the Development Assistance 
immittee of the OECD were $22 
lion. 

These factors suggest that the 
lited States should pay greater atten- 
m to the role of the private sector in 
e development process. U.S. business 
involved directly in trade, investment, 
chnology transfer, and financing in the 
•veloping world, and the private sector 
many developing countries could, with 
;e proper encouragement, play a much 
•eater role. The Administration, in con- 
ization with the business community, 
reviewing what can be done to 
icilitate private sector involvement in 
ie development process while fully 
;specting its private character. 



Relations between developing and 
developed countries have also been the 
focus of a great deal of international 
debate in recent years. The United 
States has been an active participant in 
this dialogue, as I am sure you are all 
aware. We participated in last year's ef- 
fort to work out a suitable agenda and 
procedures for global negotiations. 
Because we took this process seriously, 
we felt that it was essential to include 
provisions that would protect essential 
U.S. interests and preserve the integrity 
of existing international institutions. In 
view of the continuing disagreements 
among the countries concerned on how 
such negotiations should be set up, the 
Administration proposed to the U.N. 
General Assembly last May that the 
issue of global negotiations be deferred 
until the next General Assembly in the 
fall. 

Cancun Summit 

As an indication of the importance we 
attach to these issues, President Reagan 
has accepted an invitation from Presi- 
dent Lopez Portillo of Mexico to attend 
an international meeting on cooperation 
and development in Cancun on October 
22 and 23. We view this meeting as a 
useful opportunity for President Reagan 
to meet with heads of government from 
22 industrialized and developing coun- 
tries for an exchange of views on global 
economic problems and opportunities. 
The 11 cosponsoring nations have told 
us they plan an open and informal 
meeting with no set agenda and no com- 
munique. We expect that the discussion 
will include such vital issues as food, 
energy, trade, population growth, and 
world ecological developments. The 
heads of government may also consider 
whether global negotiations are a useful 
forum for addressing them, though we 
hope the focus at Cancun will be more 
substantive than procedural. 

We prefer to postpone any decision 
on global negotiations until the heads of 
government have had a chance to ex- 
change views at Cancun. We plan to 
work closely with the Ottawa summit 
countries and other participants to in- 
sure that the Cancun summit is as con- 
structive as possible. 

Economic Relations with Key Friends 

The Administration attaches special im- 
portance to our economic relations with 
certain key friends whose ties to the 



United States are particularly intimate 
and long standing. We have moved, 
through close cooperation at all levels of 
our governments, to strengthen our 
economic ties with our neighbors on the 
North American Continent. These rela- 
tions received a strong boost from the 
warm rapport that President Reagan 
has developed with his counterparts in 
Canada and Mexico. 

One of the duties which I have 
assumed is that of the President's per- 
sonal representative for economic sum- 
mits. The preparatory process for the 
July 19-21 Ottawa summit was launched 
in earnest in February when the per- 
sonal representatives of the seven par- 
ticipating countries plus the European 
Community met in London. Since then 
the representatives have met three 
times— in late April, early June, and 
early July. In these meetings we 
developed a work program and reviewed 
papers presented by individual personal 
representatives on relevant topics. The 
preparatory process has been very im- 
portant in crystallizing the key issues 
and improving communications among 
our governments. As a result, the im- 
portance on domestic economic recovery 
in all our countries emerged as a domi- 
nant theme. There is a general consen- 
sus that our capacity to strengthen our 
security, to expand assistance to 
developing countries, and to resist pro- 
tectionist actions all hinge upon control- 
ling domestic inflation and expanding 
output. 

In addition to domestic economic 
policies, such issues as economic rela- 
tions with the Soviet Union and Eastern 
Europe, our relations with developing 
countries, and energy and trade will be 
central issues for discussion. Obviously, 
when the heads of government meet, 
they will touch on international political 
issues of concern at that moment. The 
summit will provide President Reagan 
with an excellent opportunity to explain 
his domestic economic recovery program 
and to provide the framework within 
which he will pursue his policies on these 
various international issues. This summit 
should result in a greater understanding 
of U.S. policies, and we and our allies 
hopefully will come away with a commit- 
ment to common approaches for dealing 
with some of the issues. In our prepara- 
tory work to date, I sense that our allies 
share this view. We will, of course, 
discuss U.S. policy on these issues with 
others of our allies who are not par- 
ticipating in the summit. 

The Ottawa summit scheduled for 



;tober 1981 



45 



Economics 



July 19-21 is the seventh annual 
meeting of the heads of government. In 
comparison with previous summits, we 
expect the discussion to be more 
freewheeling and the communique less 
detailed. With this session, the first 
round of summits will have been com- 
pleted. We believe that these summits 
have been valuable thus far as a forum 
for an intimate exchange of views 
among heads of government. 2 

Conclusion 

Given the complexity of global U.S. in- 
terests, it is risky to pick out a few 
guiding themes for U.S. foreign 
economic policy. Let me conclude by try- 
ing to do so nonetheless. 

First, in all aspects of our foreign 
economic policy the United States needs 
to integrate to the fullest our economic 
and our security interests. 

Second, the Administration believes 
in the efficiency of the marketplace and 
had considerable skepticism about the 
effectiveness of government efforts to 
supplant it. This belief will affect the 
Administration's views on the policy 
tools it believes our government and 
others should use in pursuit of our 
economic and foreign policy objectives. 

Third, the Administration is per- 
suaded that a more effective integration 
of the world economy is essential to our 
well-being both economically and 
politically. Vigorous and fair trade, a 
world investment climate which en- 
courages the development of productive 
enterprises, smoothly functioning finan- 
cial markets, and the sound economic 
expansion of the developing countries — 
these are the key requirements for a 
more integrated world economy. 
Moreover, they contribute to an interna- 
tional environment in which the United 
States can more effectively pursue its 
broader foreign policy goals. 

Fourth, we are aware of' the 
economic interdependence between the 
United States and our allies and the 
ramifications U.S. economic policy has 
for political relations. We believe that 
the President's economic recovery plan 
will lay the foundation not only for a 
more vigorous U.S. economy but also for 
stronger and healthier ties with our 
allies. We have also sought more directly 
in these first months to bolster our 
general economic relationship with the 
other members of the Western alliance. 
Our initiatives to enhance energy securi- 
ty, to place East- West trade in a 



broader political context and to reduce 
tensions resulting from trade issues 
have resulted in a generally good spirit 
of mutual cooperation within the 
alliance. 

Looking toward the Ottawa summit, 
our allies generally support our desire to 
move away from a discussion of detailed 
economic issues that characterized past 
summits to a more general and free- 
wheeling discussion among heads of 
state which would seek to highlight the 
areas of shared perceptions. We are con- 
fident that this spirit will help the sum- 
mit countries — and the Western alli- 
ance — meet the challenges of the next 
decade. 

I have sought to provide the commit- 



tee with a broad brush view of the Ad- 
ministration's international economic 
policies. Nevertheless, I would like to , 
reiterate that the Administration is still 
in the process of reviewing important 
elements of that policy. As we progress 
in fleshing out our policies in these 
critical areas, I will, of course, be 
prepared to keep the committee fully in 
formed and to come back and discuss 
these vital issues with you. 



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

documentation on the economic summi 
was published in the Bulletin of August 
1981.1 



U.S. International Economic Policy 
and Its Impact on LDCs 



by Myer Rashish 

Address before the Korean-American 
Association in Seoul, Korea on June 23, 
1981. Mr. Rashish is Under Secretary 
for Economic Affairs. 

I am very pleased to be able to be with 
you this evening to speak to the Korean- 
American Association. I would like to 
use the occasion of the first U.S. -Korea 
economic consultations of this Ad- 
ministration to outline for you the inter- 
national economic policy of the Reagan 
Administration. After that, I would like 
to focus on our relations with the 
developing countries, and with Korea in 
particular, in the context of overall in- 
ternational economic policy. 

Before passing to the main topic, 
however, I would like to underline the 
major role that the United States will 
continue to play in meeting its interna- 
tional and regional security com- 
mitments. These security commitments 
are necessary for a stable economic 
growth environment throughout the 
world, and especially, here in Northeast 
Asia. Both of our nations make major 
sacrifices for the maintenance of inter- 
national security, and I want to assure 
you that Korea's contributions to the ef- 
fort are recognized in Washington. 

Having fought side by side in two 
major armed conflicts and having main- 
tained a close defense relationship for 
many years, the United States and 
Korea are both intensely aware of the 
dangers to both economic and political 



stability of armed conflict. The impor- 
tance we attach to our alliance and to 
mutual security was reaffirmed in the 
February 2 summit meeting between 
President Chun [Doo Hwan] and Presi- 
dent Reagan. It was highlighted again i 
the April security consultative meeting 
between Minister of Defense Choo 
Young Bock and Secretary of Defense 
[Caspar W.] Wienberger in San Fran- 
cisco. We continue to accord the highes 
priority to the deterrence of hostilities 
on the Korean Peninsula, a priority 
which reflects our conviction that peace 
in Northeast Asia is fundamental to ouj 
own security interests and relationships 



STRUCTURE OF U.S. 
INTERNATIONAL ECONOMIC 
POLICY 

Since January 20, the Reagan Ad- 
ministration has been conducting a 
careful and thorough examination of ou 
international economic relations. This 
review stems from the President's view 
that international economic policy is in- 
creasingly becoming the very stuff of 
foreign and security policy. While some 
elements of this examination are still 
underway, the broad outlines of the 
structure of our international economic 
policy have taken form. 



Domestic Economy 

We intend to get our own economic 
house in order. We consider a sound 



46 



Department of State Bulleti 



Economics 



economy to be a basic prerequisite 
i healthy international economy, 
momic growth and structural change 
oughout the developing world have 
dually increased the relative share of 
developing countries in world out- 
, but the United States continues to 
ount for nearly one-fourth of the 
il. This preponderance inevitably 
ans that our economic trends have 
>ortant international repercussions. 
Briefly, the Reagan Administration 
jnds to carry out economic measures 
it will: 

Sharply cut government spending 
eestablish fiscal integrity; 

Restore incentives to the private 
tor by moderating tax burdens; 

• Eliminate excessive regulation of 
U.S. economy; and 

• Control the growth of the money 

•ply- 

s is an ambitious economic program, 
il its implementation will require some 
'icult adjustments. Nevertheless, in 
y 5 months in office, the Administra- 
1 has already demonstrated that it is 
h willing and able to take the difficult 
ps that are necessary to restore the 
5. economy to a path of noninfla- 
lary economic growth. 



ergy 

! are giving highest priority to energy 
)ur international economic relations, 
e cannot look back over the past 8 
its without appreciating the over- 
ing impact of uncertain supply and 
h and rising energy prices on the 
rid economy in general and on a 
intry like Korea, in particular. The 
;rgy problem has led to slow economic 
>wth, has intensified inflation, created 
ious balance-of-payments difficulties, 
■med the development prospects of 
st developing countries, and ad- 
•sely affected the national security of 
: United States and other countries. 
To respond to this problem, this 
ministration is emphasizing, in the 
it instance, market-oriented policies 
enhance supply and restrain demand. 
iey element was the President's early 
:ision to implement full decontrol of 
nestic oil prices; this has reinforced 
• strong performance in conserving oil 
i stimulating exploratory drilling. 

stitutional and 
gulatory Problems 

i are also making increased efforts to 
olve institutional and regulatory prob- 
is inhibiting the use of alternatives to 



imported oil, particularly nuclear energy 
and coal. We are also increasing our 
ability to cope with possible supply 
disruptions in imported oil. We are in- 
creasing our own national strategic 
petroleum reserve, and we are urging 
our friends and allies to strengthen their 
ability to protect their economic systems 
from the effects of another oil supply 
disruption. In this regard, we consider 
that national inventories can play a key 
role in cushioning the impact of inter- 
ruptions and allowing alternative solu- 
tions, where appropriate, to be 
formulated. 

Trade 

We continue to support an open inter- 
national trading system. Much progress 
has been made over the past decade in 
reducing barriers to international trade. 
The Tokyo Round of tariff negotiations 
laid the basis for progress on the "rules 
of the game" regarding nontariff issues, 
such as export subsidies, dumping, and 
international bidding for government 
contracts. We need to implement the 
codes agreed at the Tokyo Round in 
these areas, in order to develop greater 
international discipline and a body of 
case law to assure fair treatment. 

We need also to move beyond the 
Tokyo Round in the next few years to 
other trade areas that have hitherto not 
been the subject of much international 
discipline. Trade in services and poten- 
tial trade distortions from the invest- 
ment performance criteria and 
incentives adopted by a number of coun- 
tries are but two examples that come to 
mind. In both areas we need to develop 
an international consensus that will 
facilitate trade and discourage backdoor 
protectionism. 

While the United States, like all 
other countries, occasionally finds itself 
in situations where it is forced to make 
difficult decisions in the trade field, I 
would like to point out that the United 
States continues to be the most open 
market in the world for imports. This 
access has been particularly important 
to the development of low-income coun- 
tries and is most apparent in trade in 
manufactured goods. 

In 1979, the U.S. market absorbed 
nearly half of all OECD [Organization 
for Economic Cooperation and Develop- 
ment] country imports of manufactures 
from the developing world — a share 
much larger than our share of the 
aggregate GNP of the OECD countries. 
Altogether, non-OPEC [Organization of 
Petroleum Exporting Countries] 



developing countries provided 23% of all 
U.S. imports of manufactured goods in 
1979. 

Korea has been one of the countries 
that has particularly benefitted from this 
openness. Our imports from Korea rose 
from $370 million in 1970 to $4.4 billion 
in 1980, thus making an important con- 
tribution to the structural transforma- 
tion of the Korean economy. 

Developing Countries 

The fourth element of our international 
economic policy is a continued strong 
commitment to the economic develop- 
ment efforts of developing countries. We 
are continuing to maintain a large 
foreign aid program. Despite the 
widespread cuts in our overall budget, 
which I mentioned earlier, the Reagan 
revision of the FY 1982 budget proposes 
an 18% increase in foreign aid 
appropriations over the previous year. 
We have also reaffirmed our intention of 
fulfilling the commitments made by the 
previous Administration to the 
multilateral development banks. 

I would like to note, however, two 
important changes in the direction of 
our aid policies. 

First, we intend to tie our foreign 
aid policies more closely to our overall 
economic, political, and security 
interests. This is one element of our ef- 
fort to restore coherence to our foreign 
policy and to reassure our friends and 
allies of our continued support for their 
efforts. 

Second, we intend to increase our 
support for private sector participation 
in the LDC [less developed countries] 
development effort. Quite often, the 
private sector can accomplish what the 
public sector cannot do efficiently. The 
Administration will be looking for new 
ways of making it attractive for 
American business to be involved in the 
economic development of lower income 
countries. 

As a signal of his concern about the 
problems of developing countries and his 
willingness to search for solutions to 
these problems, President Reagan 
recently accepted a personal invitation 
from Mexican President Lopez Portillo 
to attend a North-South summit meeting 
later this year in Cancun, Mexico, to be 
hosted by Mexico and Austria. We hope 
that the Cancun meeting will provide an 
opportunity for constructive interchange 
on the important policy problems facing 
developed and developing coun- 
tries—such as energy issues and the 



tober 1981 



47 



Economics 



recycling process. Economic relations 
with the developing countries in the con- 
text of the world economy will also be a 
topic for discussion at the summit 
meeting of leaders of the major in- 
dustrial countries, scheduled for next 
month in Ottawa. 1 

Effects of U.S. Policy on LDCs 

As I have just outlined, our international 
economic policy has four major 
elements: sound domestic economic 
policy, action on energy, liberal inter- 
national trading arrangements, and 
financial support for the efforts of the 
developing countries. Let me now 
suggest for you how these four policy 
elements are likely to affect the devel- 
oping countries. 

I would first note that the fourth 
element— financial support for LDC 
development efforts— may well be less 
important than the other three for the 
future growth of the developing coun- 
tries. The development process is one in 
which the efforts of the country itself 
are paramount, as demonstrated by 
Korea's own successful experience, and 
one in which foreign aid can play only a 
supporting role. 

There is significant evidence, for 
example, that those LDCs which have 
invested heavily in human as well as 
physical capital and have pursued 
export-oriented development strategies 
have been the most successful. It is also 
clear that those countries that have pur- 
sued a rational pricing strategy have 
allocated resources most efficiently. And 
those that have striven to see a broad 
spectrum of the population share in the 
benefits of real development have seen 
their policies amply rewarded. In most 
cases, development strategies involving 
these three approaches have involved 
the emergence of vigorous business sec- 
tors. These policy choices have to be 
made by the developing countries 
themselves. 

Even within the broad category of 
external financing of development, con- 
centration on the relatively small official 
aid contributions sometimes leads us to 
forget the much larger flows from the 
rest of our economy. U.S. imports from 
nonoil developing countries in 1979 were 
$58.6 billion, more than 10 times our of- 
ficial aid flows. The same type of rela- 
tionship holds for all the Western aid- 
giving nations as a group. U.S. direct 
investment in the developing countries 
runs at or above the level of aid, and 
LDC use of private capital markets 
results in commercial bank loans and 



bond issues far exceeding development 
assistance. In 1979 alone, commercial 
banks provided $37 billion to LDCs, 
while total flows of official development 
assistance from all OECD countries 
were $22 billion. 

The phenomenal gains in trade 
experienced by many LDCs over the 
course of the last 3 decades have been, 
in good measure, a result of the sus- 
tained growth in the OECD countries 
and a determination, especially in the 
United States, to keep markets as open 
as possible. The growth slowdown in the 
United States and worldwide during the 
last few years has hurt LDC growth 
prospects directly. The sooner we and 
other industrialized countries can 
achieve an equilibrium of higher growth 
and lower inflation, the better will it be 
for LDC growth prospects and the more 
LDCs will be able to see positive results 
from export-oriented development 
strategies. 

Let me digress for just a moment on 
the issue of trade to make two points: 

First, it has always struck me as a 
bit disingenuous to advise developing 
countries to pursue export strategies if 
developed countries are unwilling to 
accept increases in manufactured im- 
ports. In this regard, I am heartened by 
the fact that in the United States we 
have let the free market operate with a 
minimum of restraints so that $1 out of 
every $5 of manufactured imports 
originates in the Third World. 

Second, it is also unrealistic to 
expect many developing countries to 
follow the Asian export example unless 
currently successful LDC exporters are 
willing to import from the other devel- 
oping countries. 



KOREA 

As a corollary to these observations, we 
intend to attempt to inject a more 
realistic attitude into consultations and 
discussions in international forums. Over 
the past few years the debates in such 
forums have often tended toward 
rhetorical posturing. Some would claim 
that we live in a bipolar world — of 
North and South or of developed and 
less developed— when casual observation 
would suggest just the opposite conclu- 
sion: that there is a continuum of coun- 
tries, ranging from very poor to very 
rich. 

Korea is proof that a country's posi- 
tion on this continuum is not fixed. In 
only two decades Korea has risen from a 
country with one of the lowest per 
capita incomes in the world to a position 



of considerable industrial strength and 
economic maturity. This is convincing 
evidence that a country's real economic 
interests lie in the promotion of a 
healthy international market economy. 
We believe that greater prosperity 
for the countries of the world will not b 
the result of agreements between 
negotiating teams disputing the meanin 
of abstract texts in some international 
forum but, rather, of difficult decisions 
by individual governments and hard 
work by their citizens, combined with a 
open international system that provides 
a framework for international coopera- 
tion on concrete problems. 

Oil Price Increases 

If oil price increases have created havo 
for the Korean economy, the effect has 
been so much the worse for countries 
where the economy is not as developed 
as yours. The two successive OPEC 
price shocks of 1973-74 and 1979-80 
have forced all developing countries to 
allocate more and more of their meage 
financial resources to pay for their oil 
imports and to service their increasing 
debt burden. 

If the maturities on which the oil 
revenues of OPEC producers are lent I 
developing countries are too short to 
allow them to play a useful supporting 
role in development investment, we 
must find a way to lengthen these 
maturities. It is in devising cooperativ< 
and creative solutions to such real prol 
lems that we achieve real progress. 

GNP Growth 

Korea stands out as one of the world's 
economic miracles of the past 2 decad< 
GNP growth has averaged more than 
9% per year— a fivefold increase in to 
output in 20 years. The fruits of this 
growth have been widespread 
throughout the economy and accom- 
panied by substantial improvements ir 
income, housing, education, and healtl 
in both urban and rural areas. 

The growth of Korean participatic 
in the world economy, evidenced by tr 
annual growth rate in the volume of il 
exports of 25% between 1960 and 198 
played a central role in this process. 
Total exports have grown from $40 
million in 1960 to above $17.5 billion i 
1980. 

There has been a tremendous 
change in Korea's industrial capabilitii 
over the period. As its comparative 
advantage has shifted from low-skill, 



48 



Department of State Bulle 



Economics 



Hior-intensive products to increasingly 
mhisticated manufactured goods and 
ftchinery, the international economy 
Ds been sufficiently open and flexible to 
Ike room for these products. 



)NCLUSION 

should be clear that our policies seek 
maintain the kind of international 
stem that has been important in sup- 
rting Korean self-help efforts over the 
st 2 decades. In this regard, Korea 
ould stand as an example to other 
veloping countries of what can be 
rieved by initiative, broad-based 
man resource strategies, and sound 
onomic policies. We hope that the 
veloping world will produce more 
>reas over the next decade. 

But Korea will need to assume 
sater responsibilities in the inter- 
tional economic system commensurate 
th its growing capabilities by liberal- 
rig its trade regime, maintaining a 
spitable and nondiscriminatory 
siness and investment climate, and by 
changing technical knowhow with 
ler, less-advanced, developing coun- 
es. This will contribute to closer 
momic relations between the United 
ates and Korea in the future. The 
owth of the U.S. economy, together 
;th the openness of our economy to 
ernational trade and service, should 
ovide Korea with export markets for 
products, just as the growth of the 
>rean market should provide oppor- 
aities for U.S. producers and in- 
stors. 

Closer economic relations increase 
2 need for periodic consultation, 
deed, the breadth and complexity of 
2se relations are the reason for my 
esence in Korea. I expect to have 
ink discussions with our delegation's 
irean counterparts, which will reflect 

I close economic relationship. 
The February 2 meeting of the 

esidents of Korea and the United 
ates was an opportunity to reaffirm 
i spirit of cooperation and friendship 
lien bind our two countries. That spirit 

II permeate my meetings here. I 
lieve that both sides have made every 
'ort to assure that the framework of 

r economic relations is such that it 
II sustain increasing prosperity for 
th our peoples. 



Multilateral Development Banks 
and U.S. Human Rights Policy 



'Ottawa economic summit was held July 
21, 1981 (see August 1981 Bulletin).* 



by Ernest B. Johnston, Jr. 

Statement before the Subcommittee 
on International. Development Insti- 
tutions of the House Committee on 
Banking, Finance, and Urban Affairs on 
July 21, 1981. Mr. Johnston is Deputy 
Assistant Secretary for Economic and 
Business Affairs. ' 

The International Financial Institutions 
Act of 1977 (Public Law 95-118) 
requires the U.S. executive directors of 
the World Bank and the regional banks 
to oppose loans to any country whose 
government engages in a consistent pat- 
tern of gross violations of internationally 
recognized human rights, unless the 
assistance is directed specifically to pro- 
grams which serve the basic human 
needs of the citizens of that country. 
This provision is also applicable to coun- 
tries which provide refuge to individuals 
committing acts of international 
terrorism by hijacking aircraft. 

The previous Administration's votes 
in the multilateral development banks 
(MDBs) were guided by a number of 
policy considerations, among which 
human rights figured prominently. In 
recent years the United States has voted 
negatively or abstained on 118 loans to 
15 countries because of human rights 
concerns. On no occasion have we 
received sufficient support from other 
countries to prevent approval of a loan. 

When this Administration took 
office, the United States had op- 
posed — on human rights grounds — by a 
"no" vote or an abstention, the most 
recent loans for nonbasic human needs 
purposes to 11 countries — Chile, 
Vietnam, Afghanistan, Laos, People's 
Democratic Republic of Yemen, 
Argentina, Guatemala, Republic of 
Korea, Paraguay, Philippines, and 
Uruguay. 

After a review of the current human 
rights situations, the Department recom- 
mended that the Treasury instruct U.S. 
executive directors not to oppose on 
human rights grounds loans to five of 
those countries — Korea, Argentina, 
Chile, Paraguay, and Uruguay. Before 
discussing the reasoning behind these 
decisions, I would like to present the 
Administration's human rights policy in 
more general terms. 



Human Rights Policy 

Last week Mr. [Walter J.] Stoessel, 
Under Secretary of State for Political 
Affairs, described to the Subcommittee 
on Human Rights and International 
Organizations how we view the issue of 
human rights in the context of our 
general foreign relations. I would like to 
describe the main themes of policy on 
this issue and submit that statement for 
the record. 

The American people have been 
deeply committed to human rights. 
Indeed, such values lie at the very core 
of our institutions. The protection and 
promotion of human rights under this 
Administration will continue as impor- 
tant goals of our foreign policy, right- 
fully reflecting the broad consensus of 
all Americans. 

Another quality valued by the 
American people is effectiveness. In pur- 
suing our human rights goals, we should 
use the instruments we feel are most 
likely to gain real improvements in 
human rights conditions. In selecting 
these instruments we must also consider 
the heritage and institutions of the coun- 
tries we are seeking to influence. 

Our success in improving the human 
rights conditions in other countries will, 
of course, be affected by the example we 
set for the world. We must maintain our 
record of constant improvement in the 
protection of the rights of our own 
citizens. We must pursue our commit- 
ment to these principles with consist- 
ency and strength in order to gain the 
trust of our friends and allies and the 
respect of our adversaries. This 
Administration intends to provide such 
an example. 

Our approaches to other govern- 
ments on human rights will be both 
public and private and will use normal 
diplomatic channels as well as other 
opportunities. Greater emphasis will be 
given to private approaches, however, 
because we feel they have greater poten- 
tial for results. Public condemnation can 
often lead to increased resistance to 
change as a face-saving reaction. Never- 
theless, there are occasions when public 
expressions of concern are useful, and 
the Administration will use this 
approach whenever it is needed, as well 
as when it is required under statutory 
human rights provisions. 



:tober 1981 



49 



Economics 



Interagency Group on Human Rights 
and Foreign Assistance 

This subcommittee has expressed con- 
cern over the recent Administration 
decision not to oppose, on human rights 
grounds, several multilateral develop- 
ment bank loans currently proposed for 
Paraguay, Uruguay, Chile, and 
Argentina. 

In 1977 the interagency group on 
human rights and foreign assistance was 
established to provide guidance re- 
garding specific decisions on bilateral 
and multilateral loans. A staff level 
interagency working group was also 
formed to prepare recommendations to 
this policy level committee. As operating 
procedures improved and decisions had 
established precedents, more issues 
came to be resolved at the working 
level. The full committee met 13 times in 
its first year, nine times in 1978, five 
times in 1979, and only twice in 1980. 
The working group met approximately 
once a month. 

Under this Administration, the inter- 
agency working group has continued to 
meet on a regular basis and review all 
proposed loans and projects of the 
MDBs, assessing information about 
human rights from a wide range of 
sources. It carefully considers reports of 
international human rights organizations 
and from American embassies and 
recommends, in accordance with section 
701, whether the United States should 
vote against or abstain on a loan. 

In arriving at its decisions, the 
working group examines the human 
rights climate and trends in the country 
seeking the loan, the nature of the loan 
under review — with particular attention 
as to whether the loan is directed 
specifically to basic human needs — 
bilateral U.S. assistance, and the effec- 
tiveness of our vote in the context of our 
other efforts to promote human rights in 
that country. The legislative 
requirements that affect the eventual 
recommendation have to be our first 
consideration. In cases where the 
working group is unable to decide or 
where there are issues of particular 
importance — which there almost always 
are when there is a change in our voting 
pattern — the matter goes to the top 
levels of the Department for resolution 
and subsequent recommendation to the 
Secretary of the Treasury. 

On April 17, the Treasury Depart- 
ment informed Congress, in accordance 
with the International Financial Institu- 
tions Act of 1977, of the Admin- 



Japan To Continue Imports 
of Fruits and Vegetables 



Following discussions between U.S. and 
Japanese officials in Washington and 
Tokyo, the Government of Japan will 
continue to accept for import into Japan 
fruits and vegetables covered by 
phytosanitary certificates. In practice, 
this means that import prohibitions will 
apply only to those fruits and vegetables 
which come from areas in California 
federally regulated for the Mediterra- 
nean fruit fly (Medfly). This is consonant 
with procedures governing movement of 
these same fruits and vegetables in 
interstate commerce within the United 
States. 

The United States is sending a 
technical team to Japan August 19, 
1981, to meet with Japanese officials for 
the purpose of consultations on the 
regulated areas and plant procedures, as 
well as the list of fruits and vegetables 
host to the Medfly, and other related 
matters. 

As we have previously stated, the 
U.S. Government recognizes the 
legitimate concerns of the Japanese 
Government in this matter, and we 
intend to continue to work cooperatively 
with the Government of Japan to deal 
effectively with those concerns. We are 
very appreciative of the positive and 
constructive manner in which the 
Government of Japan has worked with 
both the Department of Agriculture and 
the Department of State on this matter. 
Secretary [of Agriculture John R.] Block 
and Deputy Secretary [of State William 
P.] Clark in particular express their per- 
sonal appreciation for this cooperation. 



Press release 284 of Aug. 19, 1981. 



istration's intention to vote in favor of a 
nonbasic human needs loan to Korea. 
During the period from June to 
December 1980, the United States had 
abstained on seven loans to Korea- 
valued at a total of $374 million— from 
the World Bank and the Asian Develop- 
ment Bank. This decision was reached 
by consensus at the working group level 
and reviewed at the policy level. Begin- 
ning with a vote on April 21, we have 
approved four loans to Korea with a 
total value of $213 million. 

On July 1 , we informed Congress of 



our intention not to oppose on human 
rights grounds certain MDB loans for 
nonbasic human needs projects in 
Argentina, Chile, Paraguay, and 
Uruguay. As we explained when we 
announced our intention, we decided to 
vote for the loans in view of the prog- 
ress that has been made in the area of 
human rights in each of these countries 
We do not believe that the present situ; 
tion in any of them currently requires i 
to oppose loans under the statute. It is 
our view that, in this way, we could bes 
encourage further progress on human 
rights. 

In the case of Paraguay, the numbt 
of people with claim to political prisone 
status is down from 600 5 years ago to 
about a half dozen at the present time. 
The last reported disappearance was in 
1979, and the U.N. Human Rights Corr 
mission dropped Paraguay from the 
countries under active review in its 
February session. In Uruguay there 
have been very few new arrests and co 
victions in recent years and the numbei 
of prisoners is declining. The situation ; 
Chile began to improve significantly in 
late 1976, but concern about the 
Letelier-Moffitt case kept the United 
States from acknowledging that 
progress. Concern over that case was 
right, but we feel it is now important ti 
give a positive signal to Chile to 
encourage continuing improvement. 

The level of violence in Argentina, 
to which terrorist activity was a major 
contributing factor, peaked in the years 
1976-78. Thousands of persons disap- 
peared during that period, but in 1979 
there were 44 confirmed cases, last yea 
only 12, and there have been no con- 
firmed disappearances in many months 
The number of prisoners held under 
executive powers has dropped from 
8,000 to about 900, and releases con- 
tinue. 

Conclusion 

Human rights problems clearly remain 
in these countries. But if we are to hav 
a human rights policy that encourages 
further progress, we should recognize 
the improvements that have occurred. 
The fight for human rights in any 
country involves domestic political 
struggles. If we do not recognize prog- 
ress we weaken those factions in any 
particular country who are arguing tha 
progress has some beneficial inter- 
national results. We must work for fur- 
ther human rights progress and use oui 
most effective tools to attain it. 



50 



Derjartment of State Bulleti 



EJROPE 

, 

Soviet Military Exercise 



IPAKTMENT STATEMENT, 
PT. 4, 1981 1 

August 14 the Soviet Union notified 
CE [Conference on Security and 
operation in Europe] signatories of an 
jrcise to take place September 4-12 in 

Byelorussian and Baltic military 
tricts and on the Baltic Sea. The 
viet notification did not include the 
mber of troops taking part in the 
jrcise. This information is required 
der the Helsinki Final Act confidence- 
lding measure on prior notification of 
jor military maneuvers. 

In the past the Soviet Union has 
/ays given information on the number 
participating troops in its notifica- 
ns. Thus the Soviet notification of the 
•rent exercise is inconsistent with its 
n past practice. We have inquired 
jut the omission of this information in 
s case but have received no troop 
are or explanation from the Soviet 
ion. 

The failure of the Soviet Union to 
ivide the number of participating 
ces is inconsistent with the Final Act 
jor maneuver confidence-building 
asure. 

This matter should be of concern to 



These decisions are not unprec- 
ented. The previous administration 
o changed from opposing to 
proving loans in a number of coun- 
es. Those changes were based on an 
sessment of the human rights situa- 
ns in the countries at the time the 
ms were presented and the fact that 
;re had been improvements. 

In casting our future votes in the 
iltilateral development banks on loans 
all countries, we will observe 
itutory requirements of the Inter- 
tional Financial Institutions Act. We 
II also take into account financial and 
momic factors that are of importance. 
i will continue to give special atten- 
n to which kind of vote is most likely 
encourage improvement in human 
hts conditions. Our guiding goal must 
to have the United States make effec- 
e contributions to the progress of 
man rights wherever we can. 



all those participating in the Madrid 
CSCE followup meeting. It raises a 
question of Soviet willingness to imple- 
ment fully the provisions of the Final 
Act confidence-building measures, and it 
underscores the necessity that any con- 
ference on disarmament in Europe man- 
date embody the proposed Western 
criteria (i.e., confidence-building 
measures must be militarily significant, 
verifiable, politically binding, and 
applicable to the whole Continent of 
Europe, including all of the European 
territory of the Soviet Union). 



DEPARTMENT STATEMENT, 
SEPT. 8, 1981 1 

Subsequent to my statement on 
September 4 regarding the notification 
of the Soviet exercise now taking place 
in the Baltic and Byelorussian military 
districts, TASS has advised that the 
number of Soviet forces participating in 
that exercise is 100,000. 

In view of this announcement of the 
size of the Soviet exercise, it is now 
clear that the Soviet Union has failed to 
observe the Helsinki Final Act provision 
on prior notification of major military 
maneuvers. That provision calls upon 
the notifying party to include in its 
notification the numerical strength of 
the forces taking part in the maneuver. 
A major military maneuver is defined in 
the Final Act as one involving more 
than 25,000 men. 

We deeply regret that the Soviet 
Union did not provide this information 
in its original notification and that it has 
not yet officially replied to our inquiries 
on this question. 

The signatories to the Final Act can 
only view with concern the failure of the 
Soviet Union to comply with the provi- 
sion on prior notification of major 
military maneuvers. It raises serious 
questions about the Soviets' professed 
interest in measures designed to build 
confidence and to enhance stability in 
Europe. As I said on Friday, this 
underscores the necessity that any man- 
date for a conference on disarmament in 
Europe embody the proposed Western 
criteria for confidence-building 
measures. 

We also note the continuing failure 



of the Soviet Union to implement the 
humanitarian provisions of the Final Act 
as evidenced by the lack of progress on 
reunification of divided families and by 
the arrest of numerous individuals 
seeking to exercise rights recognized by 
the Soviet Government when it signed 
the Final Act. The overall Soviet record 
raises deep concern about the 
seriousness of the Soviet Union's com- 
mitment to fully implement the Final 
Act. 



'The complete transcript of the hearings 
I be published by the committee and will 
available from the Superintendent of 
:uments, U.S. Government Printing 
ice, Washington, D.C. 20402.B 



'Read to news correspondents by Depart- 
ment spokesman Dean Fischer. ■ 



Third Report 
on Cyprus 



MESSAGE TO THE CONGRESS, 
JULY 23, 1981 1 

In accordance with the provision of Public 
Law 95-384, I am submitting the following 
report on progress made during the past 
sixty days toward reaching a negotiated set- 
tlement of the Cyprus problem. 

The intercommunal negotiations between 
Greek Cypriot and Turkish Cypriot represen- 
tatives are continuing under the chairman- 
ship of the United Nations Secretary 
General's Special Representative on Cyprus, 
Ambassador Hugo Gobbi. During the period 
since my last report, the Greek and Turkish 
Cypriote prepared for and held elections, and 
the pace in intercommunal negotiations 
slowed with one negotiating session held on 
June 2. Elections having been completed, 
regular intercommunal sessions resumed on 
July 8 and we anticipate the parties will con- 
tinue meetings on a regular basis. Both sides 
have continued to negotiate in a congenial 
atmosphere. 

We also note with pleasure that the Com- 
mittee on Missing Persons held its inaugural 
meeting on July 14. Although procedural 
questions delayed the initial session, these 
now appear largely to have been overcome. 
As I noted in my report of May 19, although 
the problem of missing persons in Cyprus is 
not officially an issue for the intercommunal 
negotiations, it is an important humanitarian 
concern for both communities. Consequently, 
progess on this issue could be conducive to 
facilitating a positive negotiating atmosphere 
and we hope the Committee will be able to 
proceed with its substantive mandate in the 
near term. 

More importantly we hope that during 
the coming months the parties, under the 
aegis of United Nations Secretary General 
Waldheim, will seek to move vigorously on 
the issues dividing them. During almost a 
year of steady negotiating, the parties have 
examined in detail the complex issues 
separating them. We hope they can now 



tober 1981 



51 



MIDDLE EAST 



begin to attack the problems and advance 
toward a just, fair and lasting resolution of 
the Cyprus question. 
Sincerely, 

Ronald k 



U.S. Proposes Air Defense 
Package for Saudi Arabia 



■Identical letters addressed to Thomas P. 
O'Neill, Jr., Speaker of the House of 
Representatives, and Charles H. Percy, chair- 
man of the Senate Foreign Relations Com- 
mittee (text from Weekly Compilation of 
Presidential Documents of July 27, 1981. ■ 



10th Anniversary of 
the Quadripartite 
Agreement 



DEPARTMENT STATEMENT, 
SEPT. 3. 1981 1 

We wish to draw your attention to the 
fact that today is the 10th anniversary 
of the signing of the Quadripartite 
Agreement on Berlin of September 3, 
1971. It is with satisfaction that we note 
the beneficial effects which this agree- 
ment has had for stabilizing the situation 
in and around Berlin. 

The Quadripartite Agreement 
recognized and reaffirmed Four Power 
rights and responsibilities for the city 
and, in particular, confirmed the impor- 
tant legal basis for defense by the 
Western allies of the freedom of the 
Western sectors of Berlin; it agreed to 
the maintenance and development of ties 
between Berlin and the Federal Republic 
of Germany; it brought about 10 years 
of stability and relative peace to Berlin; 
and it made possible the alleviation of 
many of the human divisions which have 
resulted from the unusual situation in 
Berlin, the Federal Republic of Ger- 
many, and the German Democratic 
Republic, particularly through its provi- 
sions on the facilitation of travel, visits, 
and communications. On .this point we 
would note that there is ample room for 
further progress. We were especially 
disappointed by last year's increase in 
the minimum exchange requirements 
affecting visitors traveling to both East 
Berlin and the German Democratic 
Republic. 

The United States is fully committed 
to the strict observance and full 
implementation of the Quadripartite 
Agreement and will continue to make its 
contribution to the maintenance of peace 
and calm in Berlin. 



Following are President Reagan's 
letter to the Congress of August 5, 1981, 
a statement by Under Secretary for 
Security Assistance, Science, and 
Technology James L. Buckley of August 
21f, and a background paper on the 
defense enhancement package made 
available to the press by the Department 
of State on August 2h- 



LETTER TO THE CONGRESS, 
AUG. 5, 1981 1 

One of the essential elements of the 
Administration's Southwest Asia strategy will 
come before Congress for review in the near 
future. It is to provide Saudi Arabia with a 
package of equipment and training to 
improve its air defense capabilities. The 
package will include five E3A AWACS air- 
craft as well as enhancements for the F-15 
aircraft which we have agreed to provide. 

I am convinced that providing Saudi 
Arabia with this equipment will improve the 
security of our friends, strengthen our own 
posture in the region, and make it clear both 
to local governments and to the Soviet 
leadership that the United States is deter- 
mined to assist in preserving security and 
stability in Southwest Asia. 

We have not previously submitted this 
package to the Congress, although it was 
decided upon in principle some time ago, for 
two reasons: the priority we needed to place 
on securing passage of our economic pro- 
gram, and the necessity of working out a set 
of understandings with the Saudi leadership 
which will ensure that the equipment pro- 
vided will be employed to our mutual benefit 
and that the U.S. technology and systems in- 
volved will be fully protected. 

I am aware that information from a 
variety of sources has been circulating on 
Capitol Hill regarding this sale and that 
many Members have been under some 
pressure to take an early position against it. I 
hope that no one will prejudge our proposal 
before it is presented. We will make a strong 
case to the Congress that it is in the interest 
of our country, the Western Alliance and 
stability in the Middle East. Meanwhile, as 
the Congress prepares for its August recess, 
I would appreciate your support and 
assistance in urging that Members do not 
prejudge this important issue until they have 
had the opportunity to hear the Administra- 
tion's views. 
Sincerely, 

Ronald Reagan 



UNDER SECRETARY BUCKLEY, 
AUG. 24, 1981 

Today we advised the Congress of our 
decision to sell certain air defense equi] 
ment to Saudi Arabia. This proposed 
sale is a cornerstone of the President's 
policy to strengthen the strategic 
environment of the Middle East. As 
such it is an earnest of our commitmen 
and determination to defend the area. 

We confront a very dangerous situ; 
tion in the Persian Gulf today. The 
Soviet invasion of Afghanistan, the 
Iranian revolution, the Iraq-Iran war, 
and an increased Soviet influence in 
Ethiopia and South Yemen are all in- 
dicative of the growing threat to U.S. 
and Western interests that is posed by 
the Soviet Union and its proxies. The 
President and this Administration are 
determined to reverse this dangerous 
trend, to protect interests vital to the 
United States and its friends, and to 
work with countries in the area to 
enhance regional security. 

We are convinced that providing 
Saudi Arabia with the proposed equip- 
ment will not only help it meet its own 
legitimate needs but will strengthen oi 
own posture in the region and make it 
clear to both local governments and to 
the Soviet leadership that the United 
States is committed to assist in pre- 
serving security and stability in 
Southwest Asia. 

We recognize that the Israeli 
Government has expressed concern 
about Saudi acquisition of this equip- 
ment. Let me reaffirm that this 
Administration remains committed to 
the security of Israel and will insure tl 
Israel maintains its substantial militan 
advantage over potential adversaries. 
short we will not allow the regional 
balance of forces to be affected by the 
sale. 

By the same token, the restoration 
of U.S. strength and credibility in the 
region and progress in resolving 
regional disputes offer the best long- 
term guarantee of security to Israel as 
well as to other states in the area 
wishing to remain free of Soviet 
pressure. The items we propose to sell 
to Saudi Arabia will significantly 



'Read to news correspondents by Depart- 
ment spokesman Dean Fischer. ■ 



52 



Department of State Bullet 



Middle East 



US MR FORCE 




w 



A aircraft with airborne warning and control system (AWACS) rotating rotodome. 



)rove its defense capabilities and con- 
fute significantly to the pursuit of 
■5. strategic goals. 

The President believes that this sale 
•ssential to the protection of vital 
!. interests. The arrangements under 
ich it will be made will enhance the 
urity of all friendly states without 
Dardizing the interests of any one of 
m. 

For your information, although we 
[e today provided the Hill with infor- 
tion about the proposed sale, the 
day informal notification period will 

begin running until the Congress' 
jrn on September 9. We expect to 

formal notification on September 30, 
ich means that congressional action 
st be taken by October 30. 



CKGROUND PAPER, 
G. 24, 1981 

i proposed Royal Saudi Air Force 
>AF) enhancement package consists 
101 ship-sets of F-15 conformal fuel 
ks (CFTs), 1,177 AIM-9L Sidewinder 
isiles, 6 KC-707 aerial refueling air- 
£t (with an option for two more), and 
I-3A airborne warning and control 
■tern (AWACS) aircraft, all with 
ociated spares, support and training, 
I related ground equipment. The total 
ft of the package is $8.5 billion. 
The proposed sale to Saudi Arabia 
Droves Saudi early warning and air 
'ense against attacks on Saudi Arabia, 
-ticularly on Saudi oil facilities critical 
the United States and its Western 
es, as well as to the future prosperity 
Saudi Arabia itself. Thus, the sale 
;ponds to the legitimate security 
luirements of a country that is central 
the success of our regional security 
ategy. The sale will also serve our 



broader strategic interests, enhancing 
gulf security by laying the groundwork 
for greater overall U.S. -Saudi defense 
cooperation and for a more effective 
gulf air defense network. Finally, it will 
demonstrate our reliability as a security 
partner, help rebuild confidence in the 
United States as an arbiter of regional 
tensions, and increase Saudi willingness 
to work with us to achieve a durable 
Middle East peace. 

The proposed package must be 
measured against four primary U.S. 
objectives for the region: 

• Continuation of stable and secure 
access to regional oil; 

• Prevention of the spread of Soviet 
influence; 

• Security of friendly states in the 
region, including Israel; and 

• Demonstration of our constancy 
and resolve in supporting overall 
regional security. 

U.S. policy must respond to events 
of the past several years which have 
adversely affected America's interests. 
These events include: 

• The fall of the Shah and the 
resulting instability in Iran; 

• The Iran-Iraq war, which 
demonstrated the willingness of regional 
adversaries to attack each other's oil 
facilities; 

• The upgrading of Soviet power 
projection capabilities, a growing Soviet 
naval presence in the Indian Ocean, and 
increased Soviet military presence in the 
region (e.g., Afghanistan, South Yemen, 
Ethiopia, Syria, and Libya); 

• The availability and the active use 
of Soviet proxies in local conflicts and in 
support of Soviet clients; and 

• The Soviet willingness to use their 
own forces directly, as they have done in 
Afghanistan. 



In this environment, Saudi Arabia 
finds itself threatened from a variety of 
sources. These threats are worsened by 
the Saudi recognition of its own limited 
military capability to defend its vast and 
coveted petroleum resources. As the 
anti-Communist leader of the conserva- 
tive gulf states and as the largest oil 
producer in the Persian Gulf, Saudi 
Arabia is vulnerable to military threats 
arising out of the Iran-Iraq conflict, 
from radical states in the area, and 
especially from Soviet or Soviet-inspired 
direct and indirect military action. 

In response to these threats, the 
proposed air defense package makes a 
major contribution to Saudi security and 
to our vital regional security objectives. 



AIM-9L Missile 

The AIM-9L is a short range, air-to-air 
infrared (heat-seeking) missile. It incor- 
porates an all-aspect guidance and con- 
trol system which allows head-on attack. 
The major improvements of the AIM-9L 
over the AIM-9P, currently possessed 
by the Saudis, include improved seeker, 
providing all aspect and better look- 
down capabilities; increased 
maneuverabilty; and improved warhead 
lethality. 

Availability. Currently in production. 

• U.S. deployment date: currently in 
active inventory. 

• U.S. initial operational capability 
date: both U.S. Air Force and U.S. 
Navy have current capability. 

• U.S. quantity on hand: approx- 
imately 4,000 (U.S. Air Force and U.S. 
Navy inventories). 

• Production availability: 30 months. 

• Estimated unit cost: $98,000 (does 
not include spares, support, training, 
etc.). 

• Other purchasers: Israel, U.K., 
Germany, Norway, Italy, Japan, 
Australia, and Greece. 

Anticipated Deployment Locations. 

Dhahran, Taif, and Khamis Mushayt. 

Quantity Required. 1,177. 

Estimated Additional Manpower 
Requirements. Nine contractor per- 
sonnel based on increased stockpile 
requirements. 

Estimated Additional Training 
Requirements. Minimal aircrew and 
ground handling/load crew training 
procedural changes from AIM-9P-3. 

Estimated Program Cost. $200 million. 



tobfir 1981 



53 



Middle East 



Security of the Flow of Oil 

The Persian Gulf is the major source of 
the world's oil exports. Saudi Arabia is 
by far the largest oil producer in the 
gulf, accounting for some 63% of the 
total gulf production. Loss of Saudi oil 
for a prolonged period of time would 
have a disastrous impact on the 
economy of the West. Control or denial 
of access to Saudi oil by the Soviet 
Union or other hostile powers would 
undermine our security worldwide and 
risk splintering the NATO alliance. 

At the same time, these oil facilities 
are highly vulnerable to air attack. They 
are even now within range of Iranian 
and other potentially hostile forces. 
Nearly all of the Saudi oil-pumping sta- 
tions, crude oil-processing facilities, 
refineries, storage facilities, and loading 
terminals are located within 40 miles of 
the Persian Gulf coast in the Dhahran- 
Ras Tanura areas. Destruction of certain 
of these facilities could cut off com- 
pletely the flow of oil for more than a 
year. Clearly, it is imperative for the 
economic security of the West that these 
oil facilities be protected. 

The problem of defending the oil 
fields is greatly complicated by the 
demographic and geographic realities of 
Saudi Arabia. Saudi Arabia is a country 
equal in size to all of the United States 
east of the Mississippi River. At the 
same time, it has a small population of 
under 6 million with which to defend 
itself. Thus, Saudi Arabia must max- 
imize the efficiency of its limited armed 
forces through the use of high 
technology. 

The chances of success of an air 
attack against Saudi Arabia are in- 
creased because the Saudi terrain is flat, 
particularly in the area of the oil fields. 
It presents no features which would 
enhance the employment of ground- 
based radars. Moreover, the oil fields 
are on the Persian Gulf coast, so that an 
enemy air force would not have to cross 
any portion of Saudi Arabia to attack 
critical targets. 

With current Saudi capabilities, an 
attack of low-flying aircraft would not 
be detected by ground-based radar until 
it was within 2-4 minutes of the oil 
fields. Even under the best conditions of 
training and readiness, no air force in 
the world could respond to this threat in 
time to prevent a successful attack on 
the oil facilities. It does not serve U.S. 
national interests, let alone those of 



Conformal Fuel Tanks 
(CFTS)for the F-15 

CFTs are streamlined fuel tanks 
attached to the sides of the F-15 
fuselage, with an empty weight of about 
2,000 pounds and a total fuel capacity of 
approximately 9,750 pounds per set. 

The CFTs attach to the aircraft in a 
manner that enables rapid installation 
and removal (about 90 minutes are 
required to install and check out CFTs). 

The CFTs retain the capability to 
mount and fire four AIM-7 Sparrow air- 
to-air missiles, similar to the fuselage 
installation. In addition, the CFTs have 
been designed with an optional capa- 
bility to carry air-to-surface munitions. 

Changes to the U.S. Air Force and 
Saudi F-15s are required to allow the 
CFT to carry air-to-surface munitions. 
The Saudis could not perform these 
modifications without U.S. approval and 
assistance. 

Availability. U.S. Air Force production 
contract is expected to be awarded in 
January 1981 for initial quantity of 75 
ship sets pending congressional ap- 
proval. The U.S. Air Force plans to 
fund additional CFTs in FY 1983-87. 

• U.S. first delivery date: June 
1983. 

• Production availability: 27 months 
after contract award. 

• Commercial availability: Yes. 

• Estimated unit cost: $900,000 
(does not include spares, support equip- 
ment, technical data, or training). 

• Other purchasers: Israel. 

Anticipated Deployment Locations. 

RSAF F-15 operation locations: 
Dhahran, Taif, and Khamis Mushayt. 

Quantity Required. 101 ship sets. 

Additional Manpower and Training 
Requirements. None. 

Estimated Program Cost. $110 million. 



Saudi Arabia, for the RSAF to be able 
only to engage an enemy after it has 
destroyed one of our most essential 
energy sources. 

Proposed Package 

Given the nature of our interest in the 
continued flow of oil, the threat to that 
interest, and the inadequacies of the cur- 
rent Saudi air defense capability, it is 
vital to help Saudi Arabia improve its 



V- 



H 



air defense by approving the four item fl 
in the proposed air defense enhanceme 
package. 

AIM-9L Sidewinder Missies. The 

RSAF must be able to defend the oil 
facilities against a numerically superiot 
attacking force. With the AIM-9P 
Sidewinder missile currently in the 
Saudi inventory, Saudi aircraft must 
maneuver to a position behind the targ 
in order to launch their missiles. AIM- 
missiles will allow the RSAF to 
intercept an attacking enemy from all 
directions, including head-on. This 
capability will greatly improve the 
chances of shooting down attacking air 
craft before they are able to bomb the 
oil facilities or other Saudi targets. 
(Quantity to be sold: 1,177. Total cost: 
$200 million.) 

Conformal Fuel Tanks (CFT) and 
KC-707 Tankers. Saudi F-15s must be 
based so that they are not vulnerable t 
a surprise enemy attack and so that th< 
can sustain combat even if bases in 
eastern Saudi Arabia are put out of ac- 
tion. This requires that the RSAF sta- 
tion some of its F-15s at Taif and 
Khamis Mushayt air bases in the 
western part of the country. In order 
for these western-based aircraft to pro- 
vide extended air cover for the oil field 
in the east, they must have increased 
range and an aerial refueling capability 
CFTs add substantially to the range of 
each F-15, while KC-707 tankers allov> 
F-15s to remain on-station for extende 
periods of time. Extended range and e. 
durance of F-15 aircraft will make op- 
timal use of the limited Saudi defensive 
resources. (Quantity to be sold: 101 set 1 
of CFTs, 6-8 KC-707s. Total cost: $11' 
million for CFTs; $2.4 billion for 8 
KC-707s.) 

Airborne Warning and Control 
System. AW ACS is the most crucial 
part of the package because it provides 
the early warning without which there 
could be no successful defense of the oi 
facilities. AWACS will allow the RSAF 
to detect attacking enemy air- 
craft — depending on the altitude— 150 
miles or more from the oil fields, a 
sevenfold improvement over ground- 
based radars. The RSAF will then have 
enough time to scramble interceptor air- 
craft which can, with AIM-9L missiles, 
engage the enemy head-on, preventing i 
from reaching the oil fields. AWACS 
will also provide enough warning time t 



54 



Department of State Bulletii 



Middle East 



t surface-to-air missile batteries and 
,llow them to shoot down attacking 
raft that might penetrate the screen 
■•-15 interceptors. Without AWACS, 
early-warning capability will not 
it, no matter how many ground 
irs might be employed. AWACS will 
in important part of the Saudi air 
;nse system, which will include 
und-based radars, command and 
rations centers, and communications 
lities. (Quantity to be sold: 5. Total 
;: $5.8 billion.) 

vention of Soviet Expansion 

Ir the past decade, the Soviet Union 
I relentlessly sought to improve its 
c tii m in the region. Basic Soviet goals 
Ihe Southwest Asia region during the 
ter half of the 1980s will remain 
I'ntially the same as they are today. 
1 se are to: 

I • Increase Soviet influence in the 
| on and to decrease that of the West; 
I • Destabilize an ti- Soviet govern- 
lits in the region and replace them 
;i governments that are pro-Soviet; 
. • Improve Soviet military 
i abilities to threaten Western sea and 
b inks from the Persian Gulf in order 
] ain concessions from countries in the 
a on and to destabilize Western 
!i ope; 

• Assist allies with Soviet military 
|»es to preserve pro-Soviet govern- 
lits; and 

• Maintain a credible military 

< ;ure in and near the region, thereby 
l ring a Soviet stake in regional 
< tical alignments and events. 

Although it has experienced set- 
i <s in Egypt, Sudan, and Somalia, the 
I .S.R. has increased its influence in 
gia, retains influence in Iraq, has 
E roved its strategic position in the 
I n of Africa and on the Arabian 
I insula, and has moved in force into 
U hanistan. The turmoil in Iran and 
* anon offers additional opportunities 
B the spread of Soviet influence. In 
n environment, the need for a 
l)rous U.S. security policy for 
I thwest Asia and the Persian Gulf is 
lious. 

I An important part of this effort is 
I perception by regional states that 
I United States is prepared to help 
Im meet their legitimate defense 
Huirements. Failure to allow the 



Saudis to buy the equipment both we 
and they agree they need will be seen as 
a lack of a serious commitment by the 
United States. Such an impression will 
make it far less likely that Saudi Arabia 
and others will agree to the kinds of 
security cooperation, joint planning, 
combined exercises, and advance 
preparations needed if the United States 
is to defend shared interests in the Per- 
sian Gulf region. Saudi Arabia has iden- 
tified the air defense package as an 
indicator of American concern for Saudi 
security and of our "special 
relationship." This perception is rein- 
forced by the strong military contribu- 
tion which we agree this sale makes to 
our collective interests in the region. 



KC-707 Tankers 



The KC-707 is an aerial tanker version 
of the Boeing 707 jet transport. The 
KC-707 provides in-flight refueling for 
Saudi F-5 and F-15 aircraft, with both 
boom and probes and drouge refueling 
capabilities. The KC-707 will be pro- 
duced on the same production line as the 
E-3A AWACS and will share airframe, 
engines, and maximum commonality of 
aircraft systems. 

Availability. KC-707 aircraft will be 
available through foreign military 
sales beginning in 40-44 months, at a 
rate of approximately one aircraft per 
month. Total program includes: 

• Eight new production KC-707 air- 
craft; 

• 3 years of initial spare parts; 

• Common and peculiar support 
equipment; 

• Continental U.S. training; and 

• 3 years of contractor aircraft 
maintenance and aircrew and 
maintenance training. 

Anticipated Deployment Location. 

Initially at Riyadh (approximately 1 
year) with later move to Al Kharj 
which will be the permanent main 
operation base. 

Quantity Required. Saudi Arabia has 
requested six KC-707s with an option 
to buy two additional aircraft. 

Additional Manpower and Training 
Requirements. Aircrew: 96, two 
crews for each of eight aircraft. Per- 
sonnel can be converted from C-130 
program plus new pilot training 
assets. 

Estimated Program Cost: $2.4 billion. 



In addition, Saudi acquisition of 
AWACS and associated ground equip- 
ment will provide the basis for a 
comprehensive military command, con- 
trol and communications, and logistics 
infrastructure which could be compatible 
with U.S. tactical forces capabilities and 
requirements and could become the 
nucleus of support for U.S. forces if we 
are asked by regional states to respond 
in a crisis. The sale also serves our 
broader strategic interests in the gulf 
region by establishing a foundation for 
stronger U.S. -Saudi defense cooperation 
and for a more effective, cooperative air 
defense network in the area, with 
AWACS as the keystone element. Both 
of these advances will help deter Soviet 
aggression in the gulf. 

Failure of the United States to 
respond to what we and the Saudis 
agree are legitimate security re- 
quirements will impel Saudi Arabia to 
look elsewhere for support; European 
suppliers are eager to meet Saudi air 
defense needs. (The Saudis have shown 
interest in the British Nimrod and the 
French Mirage 2000/2000.) Failure of 
the United States to complete the sale 
would result in a weaker U.S. -Saudi 
security relationship or, worse, could 
incline Saudi Arabia to seek an accom- 
modation, over the long term, with 
radical regional forces that are inimical 
to U.S. interests. 

Threat to Israel 

The security of the State of Israel has 
been and will continue to be a para- 
mount interest of the United States. The 
air defense package has been designed 
to meet Saudi defense requirements 
while minimizing the impact on the 
Arab-Israeli balance. 

We recognize that the proposed air 
defense enhancement package for Saudi 
Arabia is of concern to Israel. However, 
the effect of the sale on Israeli security 
will be limited by several important fac- 
tors. 

Superiority of the Israeli Air 
Force. Israel has increased its margin of 
military superiority over its Arab adver- 
saries since the 1973 war. With or 
without the enhancement items, the 
RSAF realistically poses no significant 
threat to the security of Israel. This 
assessment is true even in the context of 
a general regional conflict. The air 
defense package helps Saudi Arabia to 
defend itself against regional threats but 



tober 1981 



55 



Middle East 



- 



E-3A Aircraft 

The E-3A is a modified Boeing 707 air- 
craft with added surveillance radar, 
computer, and communications equip- 
ment. It provides an overall air 
surveillance capability with command, 
control, and communication functions 
and can detect and track aircraft at high 
and low altitudes, over both land and 
water. The E-3A airborne warning and 
control system provides real time and 
longer-range target detection, identifica- 
tion, and tracking. 

The most prominent feature of the 
E-3A is the large rotating rotodome 
that houses radar antennas. The E-3A 
has been fitted with an air refueling 
receptacle that allows extended time on 
station. 

Radar Range. Radar detection ranges 
for low-flying (200-ft. altitude) small 
fighter aircraft is 175 nautical miles 
from normal AWACS mission altitude 
(29,000 ft.). Medium-size targets can 
be seen at 240 nautical miles if they 
are above the radar horizon. Detection 
range for high-altitude bomber-size 
target aircraft is 360 nautical miles. 
Ground targets (tanks, trucks) cannot 
be detected or tracked. Only airborne 
targets moving at speeds greater than 



80 mph are seen. Small maritime 
targets can be detected and tracked in 
low-moderate seas; medium-large 
maritime targets can be detected and 
tracked in moderate-high seas. 

Crew Size. Normal crew is 17: 4 in- 
flight crew and 13 in-mission crew 
(controllers and technicians). 

Availability 

• Through foreign military sales 
beginning 48 months after approval. 

• Aircraft cost is estimated to be 
$1.7 billion, including spares, technical 
data, support equipment, and training. 

• Other purchasers: NATO. 

Anticipated Deployment Location. 

Riyadh for approximately 1 year and 
then Al Kharj. 

Quantity Required. RSAF has re- 
quested five E-3A aircraft. 

Estimated Additional Manpower 
Requirements. 

• Aircrew: 170, two cockpit and 
mission crews for each aircraft. 

• Five E-3A aircraft require 
approximately 360 maintenance per- 
sonnel. This would allow Saudi Arabia 
to maintain one 24-hour AWACS orbit 
for 1 week during periods of high 
tension. 

Estimated Program Cost. $5.8 billion. 



will not measurably increase Saudi of- 
fensive potential. The Israeli Air Force 
is far more capable than other, more 
likely, Saudi adversaries, such as Iran or 
South Yemen. 

Saudi Arabia fully recognizes that 
Israeli's air defense system (including 
pilots, aircraft, surface-to-air systems, 
and crews) is exceptionally capable and 
that undertaking Saudi missions into 
Israeli airspace, either to engage Israeli 
aircraft or strike Israeli targets, would 
be prohibitively costly. Moreover, Saudi 
aircraft are already theoretically capable 
of reaching Israeli targets from existing 
Saudi airbases, with or without CFTs or 
tanker aircraft. 

Topography of the Region. As 

mentioned, AWACS deployed near the 
oil fields will greatly increase Saudi 
warning of an air attack. To provide 
coverage of Israel, however, the 
AWACS would have to be deployed 
along Saudi Arabia's northernmost 
border or over Jordan or Syria. Even 



then, because Israeli and Jordanian ter- 
rain is very rugged, AWACS radar 
coverage would be masked in some 
areas. Consequently, Saudi deployment 
of AWACS near Israel would provide 
little improvement in Saudi warning 
time but would dramatically increase the 
vulnerability of AWACS to Israeli attack 
and destruction. 

Five AWACS aircraft would provide 
the Saudis with the capability to main- 
tain one continuous (24-hour) AWACS 
orbit, and that for a limited period. This 
fact means that any AWACS 
deployments to other parts of Saudi 
Arabia would necessarily come at the 
expense of full coverage of the eastern 
province. 

Limitations of AWACS. Saudi 
AWACS will be an overwhelmingly 
defensive system; it is essentially a 



!: 



flying air defense radar. AWACS cam 
detect ground targets nor can it collec 
electronic, signal, or photographic 
intelligence. 

If the Saudis chose to expose their 
AWACS by operating close to Israel, 
the aircraft could collect data on Israe 
air activities. However, this informatic 
would be highly perishable, most of it 
being valuable only for a few minutes 
following its collection. Therefore, 
without a sophisticated computerized 
communications network in other Aral 
countries— which only the United Stat 
could provide— little, if any, of this 
information could help in a collective 
Arab attack on Israel. Information 
derived from AWACS could be sent in 
the clear to other Arab forces, but sue 
communications could be easily jamme 
by Israel. 

Data on advancing Israeli aircraft 
could not be supplied in a timely manr 
or with enough accuracy to enable oth 
Arab forces to react effectively. 
Although AWACS-derived informatioi 
could provide some warning of preemi 
tive Israeli airstrikes, such warning 
would not alter the overall Israeli 
military superiority or the likely out- 
come of a war between Israel and the 
Arab states. 

U.S. Personnel. The nature of th« 
AWACS is so complex that U.S. con- 
tractor personnel will be required to 
maintain key elements of the system f 
its entire life. It is, therefore, extreme 
unlikely that any unauthorized use of 
AWACS could go undetected. The 
withdrawal of U.S. support for the 
Saudi AWACS would quickly result in 
the system becoming nonoperational. 

Thus, the proposed air defense 
package has the unique qualities of be; 
most effective against hostile aircraft 
over the oil fields, while being of 
marginal value in any hypothetical wai 
against Israel. 

Conclusion 

The proposed sale of the air defense 
enhancement package to Saudi Arabia 
serves our national security interests i 
five ways. 

First, the sale clearly helps the 
Saudis defend themselves. The AWAC 
and other elements will bolster Saudi 
early warning and air defense 
capabilities and enable them to defend 
their oil facilities from air attack. 



56 



Department of State Bullet 



Middle East 



Second, the sale will help restore 
credibility as a reliable security part- 
in the region, something that is 
■ntial if local countries are to believe 
; the benefits of embracing our 
,tegy outweigh the costs. 
Third, it helps meet some of our 
military needs in the gulf. To be 
to respond to air threats to gulf oil 
lities if called upon, we must have 
lable an early warning air defense 
vork. The Saudi AW ACS could be 
foundation of such a network. 
Fourth, with AWACS and the other 
ancements, we will be providing an 
msive logistics base and support 
astructure, including spare parts, 
lities, trained personnel, and 
;ialized test and maintenance equip- 
lt which is fully compatible with 
ipment which would be deployed with 
. forces. Having such access in Saudi 
bia would, therefore, facilitate 
loyment of U.S. tactical air forces to 
region in time of need, if so re- 
sted. 

Fifth, insofar as the sale highlights 
commitment to Saudi security and is 
specifically tied to our broader 
tegy of countering Soviet and 
iet-proxy threats in the region, it 



also provides a positive foundation for 
more extensive U.S.-Saudi security 
cooperation over time. 

We cannot force our regional friends 
to cooperate directly with us. But we 
can and must take steps with each that 
demonstrate our seriousness and our 
commitment to regional security. This 
package not only will improve the defen- 
sive capabilities of key regional states to 
protect our mutual vital interests, it will 
also contribute to restoring the image of 
U.S. power and the value of U.S. friend- 
ship in the area. In the long run, it is 
the restoration of U.S. power and 
credibility that offers the best guarantee 
against Soviet threats to the region and 
radical efforts to undermine the peace 
process. Selling AWACS and other 
enhancement items to Saudi Arabia con- 
stitutes a necessary step in the process 
of working toward these broader goals. 



'Identical letters addressed to Senate 
Majority Leader Howard H. Baker, Jr., 
Senate Minority Leader Robert C. Byrd, 
Speaker of the House of Representatives 
Thomas P. O'Neill, Jr., and House Minority 
Leader Robert H. Michel (text from Weekly 
Compilation of Presidential Documents of 
Aug. 10, 1981). ■ 



MACS and Saudi 
lound Environment 

di Arabia plans to upgrade the 
,ting ground environment portion of 
air defense system, which was 
aired in the late 1960s. The ground 
ironment improvements package 
ompassing modernization of the 
*\F command, control, and com- 
lication system will be included in 
1 full RSAF enhancement package 
It to Congress. 
I These ground environment 
lancements are necessary, in com- 
1 it ion with the five E-3A AWACS 
I -raft, to provide the RSAF with an 
irtive, fully integrated air defense 
Iveillance and command, control, and 
limunication system. 

I The planned improvements in the 
luli ground environment system are 
led on a 2-year command, control, 

II communication master plan study 

I ducted by the U.S. Air Force for the 
AF. The planned upgrade includes 



new hardened command and control 
facilities, new data processing and 
display equipment for those facilities, 
and improvements to the ground radar 
surveillance network through replace- 
ment of existing radars and addition of 
new sites to extend coverage. 

The AWACS would significantly 
augment ground environment 
surveillance capability and provide com- 
mand and control flexibility through its 
interface with ground environment by 
means of ground entry stations. The sta- 
tions, located at command and control 
facilities and other selected locations for 
optimum radio coverage, provide com- 
munications and processing equipment 
for data exchange compatibility between 
AWACS and ground environment data 
processing systems. 

The ground environment improve- 
ments will take about 6 years to com- 
plete. The total cost of this program to 
the Saudis is estimated to be $1.5 billion. 
The Saudis plan for the radars to be 
jointly acquired and operated by the 
RSAF (10 systems) and the Presidency 
for Civil Aviation (12 systems). 



U.S. Planes Attacked 
by Libyan Aircraft 

Following are a news briefing by 
Secretary of Defense Casper W. 
II rinliergcr mid I.I. Gen. Philip •/. Gast, 
USAF. Director <>f Operations of the 
Joi ill Chiifs if Staff held August 19. 
1981, anil I h m> State Department 
statements of August 19. 



NEWS BRIEFING, 
AUG. 19, 1981 

Secretary Weinberger. Two U.S. Navy 
F-14 aircraft, involved in a previously 
announced routine exercise in inter- 
national airspace over international 
waters in the south central Mediterra- 
nean, were attacked early this morning 
by two Libyan SU-22 fighter aircraft. 

After being fired upon, the F-14s, 
based on the U.S. aircraft carrier 
Nimitz, took action in response and shot 
down both Libyan aircraft at 1:20 a.m., 
EDT, this morning. The U.S. Govern- 
ment is protesting, through diplomatic 
channels, this unprovoked attack which 
occurred in international airspace over 
60 nautical miles from the nearest land. 
The exercise is continuing as planned. 

The President was notified this 
morning and approved the actions taken 
and the continuance of the exercise. The 
entire National Security Council net- 
work was alerted in connection with this 
event immediately after it happened, in- 
cluding the Vice President and the other 
members of the National Security Coun- 
cil. The congressional leadership was 
notified, and, of course, we regret very 
much that the Libyans took this 
action and brought about these conse- 
quences. 

Q. You said in international 
waters. The Libyans, of course, are 
claiming those waters as their own. 
Was our being there in any way a 
provocation to them? 

Secretary Weinberger. No, I 

couldn't consider it a provocation 
because they are international waters; 
there's no basis for any claim in the area 
where this incident took place that they 
were national waters or anything other 
than international waters. 

Q. Were there any casualties? 



tober 1981 



57 



Middle East 



Secretary Weinberger. A Libyan 
pilot of one of the planes was seen to go 
down by parachute, and the American 
pilots have returned to the Nimitz and 
had no injuries and, of course, no 
damage to the planes. 

Q. Were the American pilots 
involved in this exercise told if fired 
upon to fire back? 

Secretary Weinberger. They were 
following the international rules of 
engagement that would govern this kind 
of situation, and they carried out their 
instructions and carried them out 
extremely well. 

Q. You said the President was 
notified and approved of the action. 
He didn't have to approve of their 
returning the fire, did he? 

Secretary Weinberger. No, no, that 
was within the discretion of the com- 
mander. Gen. Philip Gast is here with 
me this morning — Director for Opera- 
tions of the Joint Chiefs of Staff — and 
would be glad to take specific questions. 

Q. When you say within the 
discretion of the commander, do you 
mean the flight commander or the on- 
scene pilots or — 

Secretary Weinberger. Initially, 
the commander of the operation, Gen. 
Gast. 

Q. Was an attack unanticipated? 

Secretary Weinberger. I think so. 
Yes, there's no reason to suppose that 
we would be attacked in international 
waters in an unprovoked way when an 
exercise had been commenced, had 
been formally notified with a formal 
notice to airmen and to mariners, as re- 
quired, and in an area where we have 
exercised many times before. I think we 
ought to have an answer to this question 
by the general. 

Gen. Gast. Under these conditions 
of operations such as this, that if an 
enemy aircraft conducts a hostile 
act — in this case did take on fire of our 
two aircraft — the aircraft flight com- 
mander has the authority to defend 
himself. In this case, that's exactly what 
he did. 

Q. Are you saying that he was 
adhering to the rules that U.S. air- 
craft would be adhering to anywhere 
in the world with no specific instruc- 
tions? 

Gen. Gast. That's right, those are 
normal procedures. 



58 



DEPARTMENT STATEMENT, 
AUG. 19, 1981 1 

Two U.S. Navy F-14 aircraft involved in 
a previously announced routine exercise 
in international airspace over interna- 
tional waters in the south central 
Mediterranean were attacked by two 
Libyan SU-22 fighter aircraft. After be- 
ing fired upon, the F-14s from the air- 
craft carrier U.S.S. Nimitz took action 
in response and shot down both Libyan 
aircraft at 1:20 a.m. EDT, August 19, 
1981. The U.S. Government is pro- 
testing, through diplomatic channels, 
this unprovoked attack which occurred 
in international airspace approximately 
60 nautical miles from the nearest land. 



Q. What was the nature of the 
Libyan attack? 

Secretary Weinberger. Two Libyan 
fighter planes came out and fired at the 
American planes. 

Q. With rockets? 

Secretary Weinberger. Rockets, 
yes, I guess they were rockets — 

Gen. Gast. Yes, they were missiles, 
Atoll missiles. 

Q. How many aircraft total were 
involved in this? 

Secretary Weinberger. Two 

Libyan, two American. 

Q. Were the Libyan planes 
threatening the Nimitz! 

Secretary Weinberger. No, they 
were not near the Nimitz. They were 
attacking these aircraft. 

Q. How far was the Nimitz from 
the scene? 

Secretary Weinberger. I don't 
know precisely. 

Q. Was there any effort or was 
this exercise viewed in any way as an 
attempt to challenge the Libyan asser- 
tions with respect to their territorial 
waters that they claim? There was 
some publicity, some press accounts, 
suggesting that the Administration 
was going to present some kind of a 
challenge to the Libyans on this 
matter and then we have this event. 

Secretary Weinberger. I wouldn't 
describe it that way. We regard these as 
international waters. We've had naval 



and air exercises there before. This on 
was scheduled for some time, and the 
notification went out in the perfectly 
normal fashion — notice to airmen, not] 
to mariners — and the exercise took 
place as scheduled and is continuing a; 
scheduled. 

Q. Has there been any followup i 
tion by either side and is any content 
plated by the United States in furthe n 
retaliation? 

Secretary Weinberger. No, we're 
continuing with the exercise. We have 
no plans to do any followup. I think 
there's been some continuation of 
patroling in the area by other aircraft 
but nothing like this incident. 

Q. I gather that at the same time 
as these exercises are going on, the 
Egyptian military is also conducting 
exercises near Libya? 

Secretary Weinberger. Not to ou i 
knowledge. 

Q. When you say the exercise coi 
tinues, does that mean that America 
planes will continue to fly within th» 
airspace that Libya claims? 

Secretary Weinberger. Within th 
space we contend is international 
waters, yes, they will. The exercise is 
supposed to conclude, I believe, about 
1:00 p.m. EDT. 

Q. Normally we understand the 
3-mile limit as the acceptable limit. 1 
that the case the United States so 
regards in the case of Libya — the 
3-mile limit as international waters? 

Secretary Weinberger. Without 
answering specifically that particular 
question, we certainly regard air space 
60 miles from the nearest land as beinj 
international waters. 

Q. Are other Libyan aircraft now 
patroling in the region? 

Secretary Weinberger. I think 
there are some, yes. 

Q. Since Libya obviously disagree 
with the United States and the Unite 
States disagrees on the extent of in- 
ternational waters, wouldn't it be a 
prudent course — the exercise would 
end at 1:00 p.m. anyway— to suggest 
to stop them to avoid the possibility < 
another confrontation? 

Secretary Weinberger. No, I thin! 
it would be very imprudent to do that. 
There would be an acknowledgment, a 
claim, that has no foundation, had some 



Middle East 



iring or some influence on the situa- 
a. The exercise has been planned for 
)ng time and will continue and will be 
npleted about 1:00 p.m. our time. 

Q. Was the general the all-night 
ty officer? 

Gen. Gast. I was on duty last night. 

Q. Could you tell us how far in 
|?ance of the incident you had any 

son to think something might be 
|»ut to happen? 

| Gen. Gast. Nothing in advance, nor 
the pilots. 

Q. You didn't know until it was 
!r? 

Gen. Gast. No, shortly thereafter, 
did the pilots have advance informa- 

Q. What was shortly thereafter? 
hid you tell us what time it 
mpened, and what time you knew? 

1 Gen. Gast. About 1:20 a.m. EDT, 
I I knew about 1:26 a.m. EDT. 

Q. How far from the F-14s did the 
i yans come before they were picked 

L 

Gen. Gast. They were within visual 
j.ge — about 5 or 6 miles, but they 
i -e seen on radar shortly before. 

Q. How long did the encounter 

le? 

Gen. Gast. About 1 minute. 

Q. What did they fire? Do you have 
i; idea? 

Gen. Gast. Our AIM-9s. 

Q. I mean what did the Libyans 

'i ■? 

Gen. Gast. Atoll missiles. 

Q. Both planes fired and both 
> nes were shot down? 

Gen. Gast. One aircraft fired. 

Q. What do you call the SU-22s? 

I Gen. Gast. Fitter 

Q. One Libyan plane fired? 

i Gen. Gast. One Libyan aircraft 
I'd a missile; then the other one was 
paging. That was why defensive 

■ ion was taken. 

i Q. Is there any information on the 
■uonality of the pilots of the Libyan 

■ craft? 



Gen. Gast. We believe they are 
Libyan. 

Q. You say the United States is 
protesting. Where is that protest 
going? 

Secretary Weinberger. The protest 
is going to Libya; that goes through 
diplomatic channels, which in this case is 
Belgium. 

Q. Are you aware of any reply? 

Secretary Weinberger. No reply 
yet. I don't believe that it's been actually 
delivered. But the protest was filed by 
the State Department within an hour 
after the incident and essentially recites 
the text of this statement and goes into 
additional detail about the formal notice 
to mariners and matters of that kind 
and lodges a strong protest against the 
unprovoked attack. 

Q. Are there any further exercises 
planned in that area after 1:00 p.m. 
today? 

Secretary Weinberger. Not as part 
of this particular exercise. 

Q. Tomorrow or the next day? 

Secretary Weinberger. Not that 
soon. But that, again, is normal. You 
don't do these every day or every week. 
There aren't any others specifically 
planned in the immediate future. 

Q. What weapons were used by the 
U.S. F-14s? 

Gen. Gast. The AIM-9 missile, 
which is a heat-seeking missile. 

Q. How did American pilots first 
know that the Libyans were in the air 
and that they were under attack? 

Gen. Gast. They picked them up by 
radar as they were coming toward them. 

Q. The planes' radar or the ship's 
radar? 

Gen. Gast. No, the aircraft radar. 

Q. About 5 or 6 miles? 

Gen. Gast. No, they saw them out 
30, 40 miles on radar as they were clos- 
ing and then they got a visual range on 
them. 

Q. Do you recall some of the other 
incidents— I believe there were 
challenges by Libya [inaudible] and 
there were at least some allegations 



that some missiles may have been 
fired previously at American planes? 

Gen. Gast. We have no evidence 
that missiles were fired. 

Q. Were there things that were 
regarded as challenging actions by the 
Libyans previously? 

Gen. Gast. No, not to my knowl- 
edge. There was some indication that 
there were, but we have not been able to 
confirm that there was, in fact, hostile 
intent. 

Q. Were the American planes fly- 
ing toward the Libyan coast or in 
what direction? 

Gen. Gast. At this position, at this 
time, they happened to be because the 
Libyans were flying directly north, and 
our aircraft were on a cap. As they were 
turning south, they picked the Libyans 
up coming toward them. 

Q. What was the nature of what 
the two F-14s were doing? I realize it 
was part of the exercise, but what 
was their particular configuration? 

Gen. Gast. They were up to fly 
patrols. The purpose of the aircraft are 
to clear the area, to assure that no other 
aircraft enter into the missile firing 
range area, and that is the purpose for 



DEPARTMENT STATEMENT, 
AUG. 19, 1981 2 

The United States considers 3 nautical 
miles (4.8 kilometers) as the legally per- 
missible maximum extent of the ter- 
ritorial sea under international law. 
Although many countries claim more 
than 3 miles, some as many as 200 (320 
kilometers), the position of the United 
States is that we are not bound by inter- 
national law to recognize claims in ex- 
cess of 3 miles. 

The oceans beyond the territorial 
seas are high seas on which all nations 
enjoy freedom of navigation and 
overflight, including the right to engage 
in naval maneuvers such as those recent- 
ly concluded in the Mediterranean. 

While we have indicated in the past 
that we would accept a 12-mile ter- 
ritorial sea as part of a comprehensive 
Law of the Sea treaty, this would only 
be in the context of a treaty protecting 
U.S. navigation and other oceans' in- 
terests. At this time our entire law of 
the sea policy remains under review. 



Itober 1981 



59 



Middle East 



DEPARTMENT STATEMENT, 
AUG. 19, 1981 2 

The U.S. Government protests to the 
Government of Libya the unprovoked at- 
tack against American naval aircraft 
operating in international airspace ap- 
proximately 60 miles from the coast of 
Libya. The attack occurred at 0520 GMT 
on August 19, 1981. The American air- 
craft were participating in a routine 
naval exercise by U.S. Navy forces in in- 
ternational waters. In accordance with 
standard international practice, this ex- 
ercise had been announced on August 12 
and 14 through notices to airmen and 
to mariners. Prior notification of air 
operations within the Tripoli flight infor- 
mation region has also been given in ac- 
cordance with these notifications. The 
exercise, which began on August 18, will 
conclude at 1700 GMT August 19. 
The Government of the United 
States views this unprovoked attack 
with grave concern. Any further attacks 
against U.S. forces operating in interna- 
tional waters and airspace will also be 
resisted with force if necessary. 



which they were there. If they are in- 
bound, as we practice always, we in- 
tercept them and attempt to dissuade 
them from proceeding into the area 
where the missile firings may be occur- 
ring. 

Q. But that intercept did not take 
place because as soon as the Lib- 
yans — 

Gen. Gast. The intercept was about 
to begin when the MiGs pulled in and 
fired a missile at our aircraft — the Fit- 
ters did, rather. 

Q. Is the Nimitz on any kind of 
alert status now because of this? 

Secretary Weinberger. All ships on 
a naval exercise of this kind are always 
on high alert. 

Q. But anything additional because 
of the incident? 

Secretary Weinbeger. No. 

Q. Any reaction from the Russian 
fleet? 

Secretary Weinberger. No reaction 
from anybody at this time. 

Q. What would you say would be 



the consequence for U.S. -Libyan rela- 
tions of this even if there is not a 
followup military action? 

Secretary Weinberger. Libyan-U.S. 
relations were certainly not any way I 
could describe of the best in the im- 
mediate past, and I think that this will 
not do anything to improve them. If a 
country makes an unprovoked attack on 
your forces or on your citizens in inter- 
national waters, it certainly is not a 
good way to restore good relations. 

Q. You said that they carried out 
their mission extremely well. It 
seemed as though you are almost 
proud of the way- 
Secretary Weinberger. I don't 
think it's necessary to try to do any 
amateur psychoanalysis at this time. It 
seems to me that the mission of the 
planes was to fly patrol and, if attacked, 
if fired upon, to respond. That's exactly 
what they did, and I would say again 
without leaving myself open to any 
other interpretations that I think they 
carried out their mission extremely well. 

Q. If American planes fly within 
the claimed airspace of other na- 
tions—friendly nations— is it a prac- 
tice to notify them in advance? 

Secretary Weinberger. If there is 
going to be any kind of area of the 
ocean — of the international waters — 
that would be affected by naval exercise 
that involves firing or anything that 
would make it in any way dangerous for 
mariners or for airmen to be within that 
space, a customary notice is sent out, 
which was done in this case. That was 
the practice that would be followed 
wherever naval exercises of this kind 
are carried out. Just as if we fired a 
missile from Vandenberg, for example, 



we would notify around the impact 
zone — 5, 7 days notice I believe it 
is — and that was the practice that was If' 
followed here. 

Q. Who precisely notified whom? 
Were you the receiving end of the 
message, and from whom did it come' 
What did you then do? 



% 



■ 



Gen. Gast. We followed the chain < 
command. A fleet net— a radio net, a 
communications net— is provided. They 
informed their headquarters in London, 
in turn in Europe, the U.S. command, 
which informed me, and then I informe 
the Chairman of the Joint Chiefs of 
Staff and the Secretary immediately. 

Q. Who informed London? Was it - 
commander of the 6th Fleet or was it 
the skipper of the carrier? 

Gen. Gast. It was the commander 
of the task force. 

Q. And then to Stuttgart and ther 
to Washington? 

Gen. Gast. Yes. 

Q. And then who did you tell? 

Gen. Gast. I told the Chairman an< 
the Secretary of Defense. 

Q. Are you hoping this is the end ^ 
of this? 

Secretary Weinberger. Yes. 

Q. You still say, despite the earlu ' 
protests of the Libyan Government, 
that we were flying in their airspace, 
that this was an unanticipated inci- 
dent? 

Secretary Weinberger. We had 

given the notification that we were go- 
ing to do naval exercises in waters that 
we claim, we believe, and, in fact, are 
under all of the laws that we 
know— international waters, the high 
seas. We followed the rules that are re- 
quired under those circumstances, 
served the proper notices, and had no 
reason to suppose that anybody would 
fire on any of our planes or ships. 



'Read to news correspondents by acting 
Department spokesman Alan Romberg. 

2 Made available to news correspondents 
by acting Department spokesman Alan 
Romberg. ■ 



60 



Department of State Bulletin, 



Middle East 



cretary's Interview 
CBS News 



'•ecretary Haig was interviewed by 
News correspondent Richard Roth 
ontecito, California, on August 19, 



I. What have we told the Libyans? 

\. We, shortly after the incident, 
a very strong protest to the Libyan 
rnment through the intermediate 
mentation we have in Libya, and 
was delivered in the early hours of 
norning. It was a strong protest 
iise of the aggressive actions taken 
ibya. I think it is important we 
jnize that for a number of years, 
ig such routine air and naval exer- 
, the Libyans have been engaged 
rassing actions designed to 
mstrate even beyond the disputed 
nile zone, well out into the Mediter- 
\ in, they've been engaged in harass- 
Jctions. 

U. In that context, the U.S. 
ii rnment has said that is was 
3 Hiding to an unprovoked attack, 
i t was not a complete surprise, 
d inly, that the Libyans might 
c se to do something to respond to 
a J.S. naval maneuvers. 

V. That's correct due to past history 
; lumber of years. These are routine 
ii exercises of the kind we've con- 
• 'd all during the latter part of the 
ft 5 up through the last year — 

I —where we had two, and in each 
ii nee the Libyans have reacted in a 
■ provocative way. We regret very 

I I that in this instance they went so 
Is to launch an unprovoked attack. 

J. What do you see as the reason 
r heir decision to escalate? 

\. I think it's always the case when 
El (vocation occurs and it's not 
S mded to perhaps as vigorously as it 
1 1, that it elicits additional risk- 
Lg. I think President Reagan has 
1 1 it clear that we are going to insist 
a international law is upheld and our 
I s to abide within that law are going 
1 upheld. 

I. Do you mean, in the past have 
J forces been fired on by the 
Sans? 

I A. There have been a number of in- 
puts extremely dangerous in the past, 
Isay, not only within international 



waters and airspace but into the con- 
tested zone — the 200-mile zone uni- 
laterally claimed by Libya — but even 
beyond that into the Mediterranean 
where there isn't even a contested ques- 
tion. 

Q. Have we been fired on in the 
past and not responded? 

A. I would prefer not to charac- 
terize specifically the nature of the prov- 
ocations but to make clear they have not 
been exclusively involved with just 
American units; there have been other 
free nations' activities similarly pro- 
voked. 

Q. Wasn't the existence of our 
naval exercises there, at a time when 
Libya has been publicly making 
known — once again restating — its 
claim to the 200-mile limit, wasn't our 
existence there a challenge of a sort to 
the Libyans? 

A. You might characterize it any 
way you want. I would say it's a 
challenge to the United States and our 
rights under international law to con- 
duct our maritime affairs accordingly. 

Q. Were we then challenging the 
Libyans' claim to the 200-mile limit? 

A. It's not a question of challenging 
anything. It's a question of living by 
recognized international law. Admittedly 
there's been controversy between 3-mile, 
12-mile, and even 200-mile claims, all of 



which are unilaterally proclaimed. But 
the basic international law was initially 3 
miles. It's now been generally accepted 
as 12 and anything beyond that is not 
accepted. 

Q. What is the reason, then, for 
holding exercises in that particular 
area when there is a dispute between 
Liyba and — 

A. It's a traditional area for exer- 
cises, and this exercise is routine and 
normally scheduled and, of course, 
cleared through the National Security 
Council process, as we always do with 
exercises of this character. We were 
totally within our rights to conduct these 
exercises. 

Q. During that clearance process, 
you and your aids must have raised 
the issue of whether or not Libya 
would respond as it has in the past. 

A. There's no question that past ex- 
perience with the Libyan Government 
has suggested that we were keenly 
aware of the possibility. We hoped that 
such a thing would not happen, but, un- 
fortunately it did. 

Q. What happens now? What's the 
next step diplomatically? Have we 
heard, for example, back from the Lib- 
yans through the Belgians? 

A. No, we have not heard yet from 
the Libyan Government. We have, of 



U.S. Lifts Suspension of Aircraft to Israel 



SECRETARY'S ANNOUNCEMENT, 
AUG. 17, 1981 1 

On June 7, 1981, Israel conducted an at- 
tack on Iraq's nuclear reactor. On June 
10, 1981, we reported to the Congress 
about the Israeli attack and informed 
the Congress that the scheduled delivery 
of four F-16 aircraft to Israel was being 
suspended. That suspension has con- 
tinued in force, and now fourteen F-16 
aircraft as well as two F-15 aircraft are 
affected by it. 

The Administration conducted an in- 
tensive review of the implications of the 
Israeli action for the agreement which 
governs Israeli use of U.S.-supplied 
military equipment. The review included 
candid discussions with Prime Minister 
Begin and Israeli Ambassador Evron. 

The Administration, in its review, 



has also taken account of events and 
trends in the Middle East, particularly 
the events in Lebanon leading to a 
cease-fire there. The cease-fire is a very 
positive new element in the region, one 
which the Administration hopes will con- 
tinue and which perhaps will make possi- 
ble other steps toward peace in that 
troubled area. 

Following our discussions with the 
Government of Israel, consultations with 
the Congress, and completion of the Ad- 
ministration's review, the President has 
lifted the suspension of military aircraft 
deliveries to Israel. 



'Made at the Century Plaza Hotel in Los 
Angeles (text from White House press 
release which also includes the Secretary's 
question-and-answer session with reporters 
following this announcement.) ■ 



ober 1981 



61 



course, registered protests with the 
United Nations, with the Secretary 
General, Mr. Waldheim, with the Presi- 
dent of the Security Council. We've 
notified all of our stations abroad on 
precisely the character of this incident 
and its outcome. We have, early this 
morning— at 4:00 a.m. or shortly 
thereafter— given our picture of the 
situation to the Soviet Union so that 
they would be aware. Some of their 
naval vessels have been in the area in a 
characteristic trailing mode which has 
become sort of routine in maritime exer- 
cises of this kind. We are hopeful that 
the incident will remain just that, and 
it's a very unfortunate one, but one in 
which we intend in the future — and I 
know it's the President's view— to exer- 
cise our legal rights and obligations. 

Q. But when we informed the 
Soviets afterwards, this was done 
through Washington. 

A. Yes. We called in their Deputy 
Chief of Mission. Mr. Walter Stoessel, 
our Under Secretary for Political Af- 
fairs, laid out precisely the character of 
the incident, the actions we had taken 
thus far, and our hopes that restraint 
and moderation would be displayed on 
all sides. 

Q. Was there any response from 
the Soviet diplomat? 

A. No. I wouldn't normally divulge 
such exchanges if there were. 

Q. There apparently hasn't been 
anything yet from Moscow by way of 
any rhetorical reaction, at least. 

A. No. But I would anticipate one 
and it would be uncharacteristic if they 
did not have one. 

Q. What happens next in terms of 
U.S. relations with Libya? 

A. This remains to be seen, of 
course. We make no bones about our 
concern with respect to Libyan interna- 
tional activity: their invasion and con- 
tinued occupation of Chad, the threaten- 
ing actions being taken with respect to 
other neighboring states in Northern 
Africa, their support for international 
terrorism — all of this requires, we 
believe, a new level of moderation and 
restraint which has thus far not been 
evidenced. 

Q. Is there a signal in this 
American action — carrying out of the 
exercises and the response to the Lib- 
yan actions — is there a signal to other 



countries that's involved here? You say 
you express it as some kind of foreign 
policy statement as well as just an in- 
cident. 

A. I don't want it portrayed that 
way. It's a clear manifestation that this 
Administration — President Reagan's in- 
tentions to insist that our rights and our 
obligations in the international communi- 
ty be met in the period ahead. In that 
sense I suppose you could describe it as 
a signal, but more importantly it is a 
routine matter in which imprudence on 
the part of the other side brought about 
an unfortunate act. 



'Press release 286 of Aug. 24, 1981. I 

Situation in 
the Middle East 



The following statement was made by 
Philip C. Habib, the President's special 
emissary to the Middle East, to reporters 
at the White House on July 27, 1981, 
following his report to the President on 
the cessation of hostilities between 
Lebanese and Israeli territory. 1 

I have just reported to the President on 
the mission which he directed me to 
undertake not long ago. This is a satisfy- 
ing moment. An end to hostile military 
actions and the consequent bloodshed in 
the Israeli-Lebanon area has now taken 
place. The situation, however, remains 
fragile and sensitive. That is normal and 
in the nature of such things. The prog- 
ress achieved so far must not be lost. 
Everyone involved must exercise the 
greatest care and caution. 

The end of armed attacks, which has 
been achieved, could be a first important 
step on the road to greater calm and 
security in the area. This will be in- 
dispensable if future progress is to be 
made toward a broad and lasting peace 
in the Middle East. What has been ac- 
complished could not have been done 
without the help and understanding of 
many people. The final result, I believe, 
is the interest of all the parties involved. 



'Text from Weekly Compilation of 
Presidential Documents of Aug. 3, 1981. 



REFUGEES 

Refugee Advisor 
Panel Report 



■■ 



A special refugee advisory panel 
established by Secretary Alexander M, 
Haig, Jr., concluded that a substantial 
flow of Vietnam boat refugees must b< 
anticipated, and planned for, for the 
foreseeable future. 

In a report to Secretary Haig on t 
Indochinese refugee situation, the blue 
ribbon panel, headed by former Assist- 
ant Secretary of State Ambassador M; 
shall Green, concluded after a 25-day 
trip to Asia that by and large the U.S. 
repatriation and resettlement policies 
and programs are correct and are beir. 
implemented effectively and humanely 
It found that the exodus of lowland hi 
refugees and Hmong hill tribesmen is 
substantially down and that the numbs 
of Khmer now entering the resettleme 
stream from Kampuchea is negligible. 
The Vietnamese boat people are still a 
riving on Southeast Asian shores at a 
rate of over 8,000 per month, howevei 
and the future prospect is for a contin 
ing, possibly increased, flow. The pane 
concluded that resettlement of substar 
tial numbers of Vietnamese boat and 
other Indochinese refugees would be 
necessary for some time to come. 

Under these circumstances, the 
panel expressed the hope that the 
Association of South East Asian Natk 
(ASEAN) would take the lead in inser 
ing the Indochinese refugee issue on til 
agenda of the forthcoming session of (' 
U.N. General Assembly, with a view to 
obtaining Vietnam's acceptance of ord> 
ly departure programs for those 
qualified for resettlement in other com 
tries. Such a step was urged on the 
grounds of helping to reduce loss of lif 
and dangers to the stability and peace 
the area. 

The panel also suggested in anothe 
section of its report that a second inte: 
national conference on Indochinese 
refugees might be held, similar to the 
one convened by the U.N. Secretary 
General in July 1979. 

The panel noted that while there is 
continuing widespread domestic suppoi 
for the U.S. refugee program for In- 
dochinese as well as appreciation of thi 
foreign policy interests the program 
serves, there have been criticisms over 
the past few years and some worrisom> 
aspects have been identified — perhaps 



;■ 



62 



Department of State Bulled i 



SOUTH ASIA 



t notably the charge that an increas- 
aroportion of Indochinese refugees 
motivated to leave their homeland 
e by "pull factors," such as economic 
erment, than "push factors," such as 
ecution. The panel recognized that 
vations must, nevertheless, be 
ng to induce people to flee in small 
s at great peril and with con- 
-able loss of life. The panel conclud- 
lat the integrity of the definition 
status of "refugee" must be pre- 
ed in accord with international in- 
•nents and the Refugee Act of 1980. 
en declared that the people fleeing 
i Vietnam are unwilling to return 
would undoubtedly face persecution 
■ they to do so; moreover, Vietnam 
not accept them back; they are, 
;fore, entitled to refugee status. The 
1 came to the same conclusion 
rding the Hmong but called for 
■w of the situation regarding the 
ind Lao and many Khmer fleeing 
re economic conditions in Kam- 
ea. 

"he panel's overall conclusion 
i -ding domestic, resettlement in the 
3d States was that problems, par- 
irly in the areas of welfare and 
idary migration, necessitate an im- 
(jate and comprehensive study. 

n other recommendations the panel 
|i: 

Improved international consulta- 
1 , continued support for interna- 
n 1 organization efforts, and greater 
its to encourage third country reset- 
bnt; 

Continued attention to Kam- 
i ea food relief requirements; 

Support for the efforts of the 
3 High Commissioner for Refugees 
1 1CR) to arrange voluntary repatria- 
i] if Khmer and Lao and local reset- 

I ;nt in ASEAN countries where 
iole; 

Balanced reporting by interna- 

I I broadcasters; and 

UNHCR monitoring of austere 
I r ,ee camps set up by the Thai 
ii rnment. 



Afghanistan: 18 Months of 
Occupation 



Jj n addition to Ambassador Green, 
I • members of the panel were James 
Ine, former deputy director of the 
ligration and Naturalization Service; 
Hauser, a New York attorney and 
ier U.S. delegate to the U.N. 
an Rights Commission; and Richard 
eler, senior vice president of 
orp. The panel began its trip at 
1CR headquarters in Geneva July 7; 
it traveled to the ASEAN nations, 



The following paper was written by 
Eliza Van Hollen of the Bureau of In- 
telligence and Research in August 1981. 
It is a sequel to "Afghanistan: A Year of 
Occupation, " published in the March 
1981 issue of the Bulletin. 

After IV2 years of Soviet occupation, the 
Soviets and the Democratic Republic of 
Afghanistan (DRA) have not been able 
to make headway in establishing the 
authority of the Babrak regime. Indeed, 
they appear to be losing ground to the 
guerrilla freedom fighters (mujahidin), 
who are maintaining impressive momen- 
tum. 

On the other hand, the Soviets show 
no signs of abandoning their long-term 
objective of legitimizing a pro-Soviet 
government in Afghanistan and sup- 
pressing the resistance. They acknowl- 
edge that it will take longer than 
originally anticipated but seem to believe 
time is on their side. 

Political Developments 

Events of recents months underline 
Soviet and DRA awareness of the over- 
riding importance of the political aspects 
of the struggle. The decision to broaden 
the leadership by divesting Babrak Kar- 
mal of the prime minister's job, the ef- 
fort devoted to convening a National 
Fatherland Front assembly, and the 
special attention being paid to nationali- 
ty and tribal sensitivities all reflect ma- 
jor political objectives of the regime and 
its Soviet sponsors. Nevertheless, these 
actions even taken together do not have 
the potential to turn the tide against the 
mujahidin. 

Reorganization of the Government. 

The initial purpose behind relieving 
Babrak of the prime ministership (while 
he remains President of the Revolu- 
tionary Council and Secretary General 
of the party) seems to have been to 
broaden the Parcham-dominated leader- 
ship by naming a Khalq prime minister 



and so to reconcile the increasingly 
alienated Khalq faction of the People's 
Democratic Party of Afghanistan 
(PDPA). The Soviets have long tried to 
heal this factional split. They have 
reason to be concerned about losing 
Khalq support because of the Khalq 
strength in Afghanistan's Armed 
Forces. 

But the bitter political struggle over 
the prime minister's job and other atten- 
dant changes in government and party 
bodies has exacerbated the longstanding 
feud. This friction forced the authorities 
to postpone the sixth plenum of the par- 
ty from May 13 to June 11. In the end, 
the crisis apparently was resolved only 
by widely reported secret visits to 
Moscow by Babrak and other leaders. 

The outcome— naming another Par- 
chami, Sultan Ali Keshtmand, as prime 
minister— indicated that the Khalq- 
Parcham feud continues and that the 
Soviets were not prepared to shift their 
support from Babrak and his faction to 
the Khalqis. The Parchamis picked up 
more strength in other areas of the 
reorganization as they increased their 
representation in important party and 
government bodies. Key Khalqis, 
however, also improved their political 
standing, and it is clear that the Soviets 
are still blocking a wholesale purge of 
the Khalq leadership by the Parchamis. 
The naming of Keshtmand as prime 
minister may portend further splintering 
of the political leadership because Kesht- 
mand could pose a serious political 
threat to Babrak. The two are said to be 
rivals within the Parcham wing and not 
friendly. 

Other factors presage further weak- 
ening of the political fabric. Resistance 
successes against Afghan and Soviet 
military units and the mujahidin's 
enhanced capability to endanger regime 
sympathizers in towns and cities, most 
notably in Kabul, will cool the en- 
thusiasm of opportunists and probably 
even of ideological loyalists. Many 
former party members have already 



Hong Kong, and Japan. In the course of 
its trip, the panel met with top officials 
and representatives of international 
organization and voluntary agencies and 
visited numerous refugee camps. 
Members of the panel also visited 



Philadelphia and Orange County, 
California, to look into U.S. reset- 
tlements problems. 



Press release 277 of Aug. 13, 1981. 



ber 1981 



63 



South Asia 



been driven into the opposition; their na- 
tionalist sensitivities, offended by Soviet 
domination of Afghanistan's civil and 
military administrations, proved 
stronger than Marxist doctrine. This has 
been particularly true of Khalq military 
personnel, but Parchamis have also been 
affected. In mid-July, for example, a 
considerable number of Parcham 
families lost their sons when military 
school cadets were sent into a major bat- 
tle against the mujahidin. This could 
seriously damage Parcham loyalty, par- 
ticularly as many in Kabul believe that 
Soviet soldiers killed many of the 
Afghan cadets to keep them from 
retreating or defecting. 

National Fatherland Front. As 

party loyalists lose heart, the failure of 
plans to demonstrate popular support 
for the Babrak regime by forming the 
National Fatherland Front (NFF) is not 
surprising. The NFF's constituent 
assembly— originally scheduled for 
March 21, the Afghan new year's day— 
was envisioned by DRA officials as a 
conclave of representatives of all 
elements of the Afghan population with 
emphasis on the tribes. It was to be in 
the tradition of Afghanistan's Loya 
Jirgas (assemblies of tribal chiefs) which 
have been convened at historic turning 
points in Afghanistan's political develop- 
ment. The purpose of the envisioned 
NFF Jirga was to endorse, and thus 
legitimize, the Babrak regime. 

The NFF organizing committee, 
however, was stymied from the first. 
Despite its efforts in the provinces and 
tribal areas to persuade or coerce promi- 
nent figures to cooperate, lack of enough 
nonparty participants to make a credible 
showing prevented the committee from 
scheduling a meeting in March. The 
assembly was postponed until April, 
then May, and once again put off until 
June. 

When the NFF assembly convened 
on June 15, with much official fanfare, it 
lasted only 1 day instead of the original- 
ly scheduled 4-day propaganda spectacu- 
lar. Many of the participants who were 
described as tribal representatives were 
actually party and government func- 
tionaries. Those prominent nonparty 
persons who collaborated with the NFF 
now regret it; they have become prime 
targets for assassination by the 
resistance. The assassinations of a 
religious leader from Ghazni and a 
prominent retired general have received 
much publicity, and resistance spokes- 
men have announced a target list of 30 
NFF participants. These assassinations 



starkly underline the dangers of 
associating with the regime. 

Nationality and Tribal Policy. The 

reorganization of the former Ministry of 
Tribes and Border Affairs into the new 
Ministry of Tribes and Nationalities 
highlights a key element of Babrak's 
policy under Moscow's guidance. The ob- 
jective is to discourage a unified na- 
tionalist opposition to Kabul by em- 
phasizing the separate cultural and 
political aspirations of ethnic minorities 
and tribal groups. 

Setting the tribes against one 
another has been a traditional means of 
maintaining the government's control, 
but in the current crisis this tactic has 
had little success. Instances of tribal col- 
laboration with the Babrak regime ap- 
pear to have been of limited duration; 
weapons and bribe money have been ac- 
cepted from the government but then 
used to bolster the resistance. Indeed, 
the presence of a common foreign 
enemy has led tribes to bury their tradi- 
tional rivalries and to join in a united 
effort as they did in the 19th century. 

The Soviets, consistent with their 
nationalities policy in Soviet Central 
Asia, probably believe that Kabul's tribal 



and ethnic strategy will eventually 
prevail. In view of the resistance movi 8> 
ment's successes, however, the many 
tribes and ethnic groups engaged in tr 
ing to drive the Soviets out of Afghan 
stan are unlikely to abandon their effo 
in the foreseeable future. 



Military Situation 

A combination of political restraints ai 
operational realities is the principal 
obstacle to the success of Moscow's 
military policy in Afghanistan. The fac 
that the Soviets have not increased tb 
troop strength beyond 85,000, in spite 
the continuing military standoff, may 
reflect concern about the political cost id 
both in the international arena and in le 
the effort to enhance Babrak's image it 
with the Afghan populace. A massive al 
military effort would doom the politica p 
strategy and undercut the Soviets' 
primary military goal of maintaining 
adequate stability while building up tb 
Afghan forces to fight the mujahidin. 

This policy has failed badly. The 
situation has become progressively mo 
unstable, and the Afghan forces are in 1 
creasingly unreliable. Aggressive 
resistance tactics have forced the 



U.S. Assistance for 
Afghan Refugees 



The State Department announced July 
9, 1981, that the United States has 
responded to appeals from international 
relief organizations and the Government 
of Pakistan with an additional commit- 
ment of $21 million for humanitarian 
assistance to Afghan refugees in 
Pakistan. 

The Government and people of 
Pakistan have generously received and 
assisted the Afghans. An ongoing inter- 
national relief program supports 
Pakistan's effort in aiding the world's 
fastest growing refugee population, now 
estimated to number about 2 million 
Afghans. 

Total U.S. Government contributions 
for Afghan relief in FY1981 are ex- 
pected to reach $93 million. In FY 1980 
the U.S. Government gave $44 million to 
assist Afghan refugees. 

This new pledge consists of $12 
million for the programs of the U.N. 
High Commissioner for Refugees 
(UNHCR), $1 million for the medical 
programs of the International Commit- 



tee of the Red Cross (ICRC), and $8 
million to the Government of Pakistan 
for the transportation of food and otb 
relief supplies to refugees in Pakistan' 
Northwest Frontier and Baluchistan 
Provinces. 

Hundreds of thousands of Afghan 
refugees fled their homeland shortly 
after the Soviet invasion of Afghanist; 
in December 1979. Continued persecu- 
tion and fighting in Afghanistan since 
the invasion have forced additional ter 
of thousands of Afghans to seek refug 
in Pakistan each month. Most of the 
refugees arrive destitute and in poor 
physical condition, after long flights oi 
foot through mountainous terrain. The 
are almost completely dependent on tr. 
Government of Pakistan and interna- 
tional assistance for the essentials of 
survival— food, shelter, clothing, and 
medical care. 

The U.S. contribution reflects our 
historic tradition of assistance to victir 
of persecution and aggression and our 
concern for the strains that refugee 
populations place on the societies and 
economies of developing countries like 
Pakistan. 



Press release 221 of July 9, 1981. 



64 



Department of State Bullet | 



South Asia 



ifcqets to involve themselves in military 
^rations throughout the country on a 
Bly basis. Suffering from excessive 
^cern with bureaucratic procedures 
hi from a lack of zeal, Soviet forces 
|/e not been able to deal decisively 
ji.h guerrilla ambush operations along 
(major roads and with expanded guer- 
la operations against military and 
jj/ernment targets. 

I Soviet offensives to take important 
jistance strongholds and to penetrate 
Id territory held by the resistance have 
led repeatedly. The most striking re- 
lit example is the mid-July effort to 
\ve resistance guerrillas out of the 
Sjhman Mountains, only 12 miles 
j-thwest of Kabul. Heavy casualties 
ire sustained by both sides, including 
ndreds of villagers in the area, but the 
Uibined Soviet- Afghan force was 
iced to retreat. It was impossible for 
) authorities to cover up this defeat so 
foe to Kabul, particularly as the dead 
I uded at least 70 military school 
jets. 
Other instances of the failure of 

■ net offensives include repeated at- 

i lpts to penetrate the Panjshir Valley, 
I important resistance stronghold that 
p 3S access to the main north-south 
'( d in the strategic Salang Pass area, 
f 1 an unsuccessful attempt in June to 
; e a key guerrilla redoubt in the 
v >tern province of Nangarhar. Fur- 

■ rmore, most of the central uplands of 
\ fhanistan, the area known as the 

I iarajat, remain inaccessible to Soviet 
fcps. 

Even though Soviet forces have not 
> n very effective against the in- 
;i gents, Soviet casualties probably are 
1 heavy enough by themselves to in- 
l e the Soviets to seek a negotiated 
t hdrawal of their forces. Soviet 
I ualty figures are not known, but it is 
c ient that they have lost a con- 
:j arable number of men and many 
i ks and helicopters. 
I That the Soviets are aware of the 
rd to improve their performance is 
i ected in the measures they have 
i en to reorganize and tailor their 
sices to guerrilla warfare. It is unlikely, 
I vever, that they will be able to deal 
» isfactorily with sagging morale. The 
I net soldier whose father fought 



heroically at Stalingrad does not have a 
cause in Afghanistan, but his opponent 
is fighting a holy war. 

Efforts to build up the Afghan 
forces have had even less success. Defec- 
tions continue, and the morale of those 
who remain is extremely low. The 
government's refusal to release soldiers 
who have completed their extended 
tours of duty is causing particular 
unhappiness. The seriousness of the 
military manpower shortage has been 
made abundantly clear in many ways; 
party members have been ordered to the 
"hot" fronts, forced conscription con- 
tinues throughout the country, and 
militia and regular units are suffering 
unnecessarily heavy casualties because 
of inadequate training. 

Resistance 

The mujahidin forces are active every- 
where in Afghanistan. Drawn from all 
tribes and ethnic groups, most of them 
follow local leaders and fight in their 
own areas. Others, however, are 
affiliated with the political groups in 
Peshawar. Rivalries between organiza- 
tions have led to some major clashes in 
recent months between mujahidin bands 
over territorial rights, but there have 
also been many instances of joint opera- 
tions and sharing of equipment and 
resources. When word spreads that a 
mujahidin unit is threatened, many 
others will converge on the area to 
render assistance. 

The resistance fighters recently have 
been particularly active in the areas 
north of Kabul and even in the Kabul 
suburbs. The most dramatic operation 
occurred in early June when large quan- 
tities of ammunition and petroleum 
stores were blown up at Bagram airbase 



near Kabul. There have been many 
other instances of mujahidin aggressive- 
ness in recent months along major sup- 
ply and convoy routes and against 
government-held provincial and district 
centers. During the spring and early 
summer, the government has been 
forced to abandon additional districts to 
resistance control. Although the mu- 
jahidin still cannot take and hold a ma- 
jor city or provincial capital, they have 
made life increasingly dangerous for 
government sympathizers in all urban 
centers. 

Mujahidin mobility generally serves 
to protect them from heavy casualties, 
although occasionally they are trapped 
and must stand and fight. There con- 
tinue to be reports that the Soviets are 
using potent chemical agents to flush out 
guerrillas and make them targets for 
helicopter gunships. More often it is the 
noncombatant villager sympathizers who 
bear the full brunt of Soviet retaliation. 
The continuing heavy flow of refugees to 
Pakistan, totaling over 2.2 million as of 
late June 1981, is a constant reminder of 
the daily destruction, suffering, and 
upheaval produced by Soviet military 
operations. 

Efforts continue to unite exile 
resistance groups. Representatives of 
the six major groups signed an agree- 
ment in Peshawar in late June to set up 
a coordinating council. There are already 
signs, however, that the council is 
destined to be short lived. 

The guerrilla fighters inside Afghan- 
istan, however, seem to flourish despite 
the competition among exile groups. 
Babrak and his Soviet sponsors may be 
counting on traditional tribal and ethnic 
rivalries to undermine the mujahidin. 
But nationalist reaction to foreign oc- 
cupation and the religious fervor of a 
holy war have proved to be powerful 
forces in motivating the resistance 
movement. ■ 



ober 1981 



65 



UNITED NATIONS 



New World Information Order 



Following are statements by Elliott 
Abrams, Assistant Secretary of Interna- 
tional Organization Affairs, on July 9, 
1981, and James F. Buckley, Under 
Secretary for Science, Technology, and 
Security Assistance, on July 13. Mr. 
Abrams testified before the Subcommit- 
tees on International Operations and 
Human Rights and International 
Organizations and Mr. Buckley testified 
before the Subcommittees on Interna- 
tional Operations and International 
Economic Policy and Trade, all subcom- 
mittees of the House Foreign Affairs 
Committee. 1 

ASSISTANT SECRETARY ABRAMS, 
JULY 9, 1981 

UNESCO [United Nations Educational, 
Scientific and Cultural Organization] is 
one of the principal centers in the U.N. 
system for the increasingly important in- 
ternational communications debate. This 
debate is driven by the aspirations of 
developing contries to increase their 
communications capacity, as well as by 
the vast technological changes in the 
communications field which are imposing 
problems and opportunities on developed 
and developing countries alike. It in- 
volves important interests of the 
member states and generates high emo- 
tion — on our part because basic 
freedoms are threatened, on the part of 
the developing countries because they 
see the developed world perpetuating its 
technological superiority and turning 
this to political advantage. 

UNESCO is deeply infected by inter- 
national partisan politics. On many 
issues, the actions of the member states 
and the Secretariat have recklessly 
pushed the organization into activities 
clearly outside its field of competence. 
In a speech on June 2, I told the 
Chicago Council on Foreign Relations 
that this trend had seriously undermined 
the credibility and effectiveness of the 
organization. 



A QUESTION OF UNESCO's ROLE 

The international communications 
debate is a prime example of UNESCO's 
ill-considered and misplaced activities. 
This is a debate which should properly 
be focused on the legitimate communica- 
tions needs of the developing countries 
and the ramifications of the technologi- 



66 



cal choices we all face in the communica- 
tions field. Instead, the debate has been 
sidetracked into an ideological assault on 
the very free press values which 
UNESCO is mandated to defend. 

There is no doubt that the debate, as 
it is now skewed, jeopardizes U.S. First 
Amendment interests. The Administra- 
tion takes a very serious view of this 
danger. 

Responsibility of the Secretariat 

While UNESCO cannot be blamed 
for ideas and activities proposed by the 
member states, the Secretariat of the 
organization has actively promoted com- 
munications activities which are both 
questionable and highly controversial. It 
has catered to intellectual fashions on 
communication issues, particularly when 
any rationale has been advanced to 
justify restrictions on press freedoms. It 
is ironic that, at the very moment when 
technology is increasing the access of all 
peoples to information, UNESCO is 
cooperating with efforts to limit access. 
This is a serious indictment of the 
organization and its Secretariat and is 
completely contrary to UNESCO's true 
purposes. 

Thus, the Secretariat must accept 
some responsibility for the polarization 
of the organization and the increasing 
skepticism with which UNESCO is 
viewed. It ought to re-examine its role 
in this sector. Above all, it should not 
plunge blindly ahead into divisive and 
questionable activities but should focus 
the work of the organization on ac- 
tivities which do enjoy true consensus 
support among the member states. This 
is the way to prepare the ground for 
steady, broadly agreed advances. 

The UNESCO Secretariat is familiar 
with the criticisms I have made about its 
role. I hope it also understands that the 
United States does not wish to limit 
itself to criticism alone. We are 
prepared to play a positive role on inter- 
national communication issues in 
UNESCO whenever the work of the 
organization is based on a true consen- 
sus. 

Countering Soviet Propaganda 

Another serious complicating factor for 
us in UNESCO is the Soviet attempt to 



exploit developing country frustrations^ 
with existing world communication pat i 
terns. We know — and so do the great 
majority of developing countries — that 
Soviet intentions have nothing to do 
with communications development. The 
have everything to do with the Soviets' a 
comprehensive attack on U.S. interests 

We must be ready to combat in- 
sidious Soviet propagandizing against 
multinational corporations, including tr 
news agencies, and against other U.S. 
interests. The Soviet big lie can still be 
effective if we let it go unanswered. 



U.S. POLICY 

The policy of the Administration is clea 
We will not abandon the field to our 
adversaries or compromise our fun- 
damental First Amendment interests. 
We will remain in UNESCO and provic 
aggressive leadership on communieatio 
issues as long as there is any hope of j 
returning UNESCO to its mandated 
responsibility to defend the free flow ol 
ideas. 

In April of this year, I reorganized 
the Bureau of International Organizatii 
Affairs to improve the way it handles i 
formation issues arising in UNESCO 
and the U.N. General Assembly. We 
have centralized all bureau resources 
devoted to these issues in a new, en- 
larged Office of Communications and 
UNESCO Affairs. On the instructions 
Under Secretary James Buckley, the 
Department of State is reorganizing ar 
reprograming resources to provide effe 
tive interagency coordination and direc 
tion. However, reorganization and ra- 
tionalization will not do the whole job. 
We cannot go on the offensive if we do 
not have additional resources. We need 
congressional support to upgrade the ir. 
ternational communications function. 
Your subcommittees can play an impor 
tant role in providing that support. 






First Amendment Freedoms 

U.S. policy is devoted to vigilant protec 
tion of our First Amendment freedoms. 
In the 1981-83 program and budget of 
UNESCO, we have identified a series o) 
activities which threaten these, includin; 
licensing of journalists and journalistic 
codes of ethics. We are firmly opposed 
to both as a matter of principle. The 
program also includes activities with a 
built-in bias against commercial advertis 
ing. We reject this bias. In the Ad- 
ministration's view, commercial advertis 
ing is an essential ingredient of a free 
market and a free press, providing the 



Department of State Bulletir 






United Nations 



ns to support an independent role 
he press. 

We have repeatedly and strenuously 
ested antifree press activities within 
UNESCO system. Most recently, I 
with UNESCO Director General 
adou-Mahtar] M'Bow on May 29 to 
Tate the seriousness with which the 

Government views them. U.S. In- 
ational Communication Agency 
ctor Charles Wick met with the 
ctor General in June to make the 

point. 

Private Media 

1 private media, too, have given a 
ling answer to persistent attacks on 
rree flow of information. Organized 
lly by the Fletcher School of Law 
I Diplomacy of Tufts University and 
iiVorld Press Freedom Committee, a 
rerence of Independent News Media 
I held May 15-17, 1981, at Talloires, 
(ice. The participants, approximately 
leople from 20 developed and 
i loping countries, adopted a declara- 
) which describes press freedom as a 
u : human right. We strongly endorse 
i ieclaration of Talloires. We will pur- 
[i t in the U.N. system as a basic 
a >ment of U.S. values. 

tVe intend to work as closely as 
I ible with the media as we develop 
. policy in this area. In meetings 
u as the one organized by the Inter- 
L >nal Organizations Bureau on June 
5 ittended by over 50 media and in- 
I ry representatives, we hope to draw 
i| larly on the experience and advice 
: ie people who are in the front lines 
' ie battle for freedom of the press, 
I in the government and in the 



i Congress 

i attitude of Congress forms a vital 
jedient of the U.S. approach toward 
i -mation issues. Let me comment on 
I 'mpact of congressional resolutions 

I and 142. 

• H. Con. Res. 137 expresses the 
le of the Congress that the establish- 

I I of a new world information order 
br the aegis of UNESCO would 
jrict the freedom of the press. 

]• H.Res. 142 expresses the sense of 
I House that UNESCO should cease 
Irts to attempt to regulate the flow 
lews and information around the 
Id. 

Although mindful of U.S. treaty 
Rations and the legal and practical 



problems which could arise through our 
unilateral reduction or cessation of 
assessed payments to UNESCO, we sup- 
port the resolutions because they give 
voice to convictions which are deeply felt 
in U.S. society. They lend credibility to 
our diplomatic representatives both in 
UNESCO and in our bilateral relations. 
There can be no doubt now that defense 
of our First Amendment values is one of 
the most important thrusts of U.S. 
foreign policy and one on which all 
elements of the U.S. Government and 
society are united. 

No restrictive practices have as yet 
been enacted under UNESCO auspices, 
and I see no reason at this time for 
reduction of payments or other action 
against the organization. The U.S. per- 
manent delegation to UNESCO in Paris 
and the International Organizations 
Bureau are closely monitoring UNESCO 
communications activities with these 
resolutions in mind. I will keep the Con- 
gress fully informed of any movement 
toward implementation of restrictions on 
press freedoms. 

Communications Development 
Program 

In addition to strong defense of our 
First Amendment freedoms, the U.S. 
policy has a positive side. Developing 
countries need better technology and 
training in the communications field. Ac- 
cordingly, the United States has taken a 
leading role to bring UNESCO's new 
communications development program, 
the International Program for the 
Development of Communications 
(IPDC), into being. The IPDC is the first 



headed by William G. Harley, was large- 
ly successful in achieving this objective. 
We insured that the procedures for the 
IPDC give precedence to consensus, 
thereby protecting minority interests. 
We avoided the establishment of a cen- 
tralized international voluntary fund for 
communications development and the 
calling for a pledging conference. We 
elected the Norwegian representative as 
council chairman and placed one other 
Western member (France) on the bureau 
of the council. The United States will 
take France's place on the bureau next 
year. There were few extraneous 
political detours. 

Still, the IPDC is in its infancy. It is 
too early to tell whether the program 
will live up to our expectations. We have 
made the point in UNESCO that this is 
a testing time for the IPDC. If it evolves 
along the intended lines, the IPDC 
should be able to win the confidence of 
Western public and private sector aid 
donors who are the crucial elements in 
the international communication 
development effort. If the IPDC is 
sidetracked into the political arena, it 
will fail. A major opportunity will have 
been lost, not only by the developing 
countries but also by UNESCO. 

U.S. Opposition 

I am frequently asked what I think 
about the new world information order. 
We oppose interpretations of a new 
world information order which seek to 
make governments the arbiters of media 
content. We oppose interpretations 
which seek to place blame for current 
communications imbalances on the 



We oppose interpretations of a new world information order which seek to make 
governments the arbiters of media content. 



systematic effort to coordinate 
fragmented international development 
assistance activities, with no additional 
costs to donor nations. This is a proper 
area for U.S. leadership. 

The intergovernmental council of the 
IPDC met for the first time June 15-22, 
1981 in Paris. We saw the meeting as an 
opportunity to translate previous 
agreements on the nonpolitical nature of 
the IPDC into the rules of procedure of 
the new body. The IPDC would be a 
fresh start for UNESCO, with emphasis 
on technology transfer and deemphasis 
on ideology and politics. Our delegation, 



policies of Western governments and 
media. We oppose interpretations which 
seek to translate biases against the free 
market and free press into restrictions 
on Western news agencies, advertisers, 
and journalists. Attempts to justify such 
restrictions as a necessary adjunct of the 
development process are spurious. 

The fullest development of individual 
human and national potential can be 
achieved only with freedom of choice in 
the information field. We reject any 
linkage of a new world information 
order with the new international 



:i>ber 1981 



67 



United Nations 



economic order and the radical restruc- 
turing of the international economic 
system which it includes. 

We are asked why the U.S. opposes 
efforts to codify the new world informa- 
tion order. Promoters of a charter of the 
new order claim that defining objectives 
can help to advance the international 
communications debate. We think this is 
a mistake. An attempt to negotiate a 
charter of the new world information 
order will only plunge UNESCO into 
years, perhaps decades, of divisive 
political arguments and is unlikely to ob- 
tain general agreement. The effort will 
reinforce differences among the member 
states. We think it is far better to avoid 
such futile ideological efforts and to con- 
centrate, instead, on practical work 
which enjoys general support. 



CURRENT STATUS OF THE ISSUE 

Let me now turn to developments in 
UNESCO since the February hearing of 
the Subcommittee on International 
Operations. It is too early to draw any 
firm conclusions, but there is some 
reason to believe that a more 
understanding attitude could be evolving 
with respect to U.S. concerns. 

Director General M'Bow assured me 
that he was fully aware of these con- 
cerns. We have noted a possibly related 
slowdown in the tempo of UNESCO 
communication activities. The IPDC 
meeting was the only important 
UNESCO meeting in the communica- 
tions sector since February. At least one 
potentially controversial meeting, to be 
held in Eastern Europe, was cancelled. 

Only one other UNESCO-related 
communications meeting is listed for this 
year. This is a nongovernmental round- 
table discussion of communications 
issues being organized jointly by the 
organization and the Swedish National 
Commission for UNESCO. It is to be 
held in Stockholm in September. I find it 
interesting that the agenda of the 
Stockholm meeting has been revised 
several times and that the meeting may 
yet be postponed, perhaps to the spring 
of 1982. The preparations for this 
meeting are another indication of a more 
thoughtful approach by the Secretariat. 
I understand that representatives of 
several U.S. nongovernmental organiza- 
tions, including the World Press 
Freedom Committee, will be represented 
at the Stockholm meeting. 



We hope this reduced pace of activi- 
ty will continue. A pause in currently 
mandated activities and a reassessment 
of priorities are both particularly ap- 
propriate at a time when the organiza- 
tion is preparing its medium-term plan 
for the period 1984-89. We have the op- 
portunity now, which we and other 
member states will be pursuing, to make 
more substantial changes in the scope 
and direction of UNESCO's communica- 
tions activities. 



CONCLUSION 

I think it fair to say that the uncom- 
promising position of the Adminstration 
in matters of principle, including the 
First Amendment, the supportive at- 
titude of the Congress as demonstrated 
by these resolutions, and systematic 
representations by the government and 
private media are having their effect on 
UNESCO. We are far from having 
returned the organization to its proper 
role in the communications sector, but 
there is evidence now that UNESCO is 
pausing in its pursuit of trouble. I have 
made it clear that, in the Administra- 
tion's view, it is not so much the future 
of press freedom that is at stake as the 
future of UNESCO. We must work 
closely together — the executive and 
legislative branches and, while respect- 
ing the independence of the press, the 
private media in order to consolidate our 
defense of press freedom. Speaking for 
myself and the Adminstration, I pledge 
my full cooperation in this task. 



UNDER SECRETARY BUCKLEY 
JULY 13, 1981 

International communications and infor- 
mation policy is of great importance to 
the United States. This area involves 
issues which touch the basic foundation 
of our way of life, our economic well- 
being, our political relations around the 
world, and our national security. 

The issues are growing in impor- 
tance at an explosive rate, pushed by 
technological advancements, particularly 
those applied to satellites and computers 
and supported by American ingenuity in 
finding practical, marketplace uses for 
these new capabilities. Our commitments 
to the free flow of information, the free 
transfer of data across national bound- 
aries, and a market free of artificial 
restraints are at the heart of these 
policy issues. 



UNESCO 



b 



s 



<1 



Our system of government is based on 
these commitments. Yet in UNESC0 \ 
are challenged on the free flow of new 
on the free access of reporters to the 
sources of news, and by the threat of ] 
quiring special licenses for reporters. I 
the OECD [Organization for Economic 
Cooperation and Development] we are 
working to minimize restrictions on tb 
transborder flow of data and informa- 
tion so important to the conduct of dai 
business in the Western World. In the 
United Nations we are attempting to 
negotiate principles regarding direct 
television broadcasts from satellites an 
remote sensing by satellites to permit 
these new technologies to serve the 
needs of mankind. In the International 
Telecommunication Union (ITU) we ar- 
working on the practical management 
the electromagnetic frequency spectra 
to meet the continually growing needs 
the people of the United States and of 
peoples all over the world. Bilaterally, 
we engage with other governments to 
insure access to foreign markets for 
American providers of information anc 
communications goods and services an 
to minimize interference from foreign fi 
radio operations. 

International Challenges 

Our people and our system of govern- 
ment have much to gain from these m 
technologies and services. However, 
other governments which regulate the 
flow of information feel threatened by 
such vast increases in the availability c 
data and information, the global natur 
of data development and information t 
change, and the instantaneous transmi 
sion or "real time" availability of data 
and information. The American ability 
develop the next generation of 
technologies and to market new prod- 
ucts rapidly is envied by most other 
countries in the world. Where this con- 
cern or envy leads to fair competition, 
we cannot complain. Where the result 
the imposition of new barriers to com- 
merce, we have no alternative but to 
seek to eliminate them. 

It is hardly enough merely to con- 
clude that international communication 
and information policy issues are an in- 
tegral part of U.S. foreign policy. The 
point that should be recognized is that 
our basic policies in these areas are 
under attack and that these issues will 
be of increasing importance to U.S. in- 
ternational interests in the years ahead 



68 



Department of State Bulleti> 



United Nations 



Fronting the Challenge 

ignition of this situation did not oc- 
ust recently or just in the past 2 
s. In UNESCO we began in the 
is to confront the challenge to the 
;iple of the free flow of information 

though UNESCO's charter en- 
ages such open exchange among 
iles. In the United Nations in the 
Is, we began negotiations on prin- 
S concerning direct broadcasting 
remote sensing from satellites. The 
ntial implication of vastly expanded 

border data flows, a result of the 



understanding of the international trade 
consequences of national restriction on 
the transborder flows of data and infor- 
mation. The work of the Subcommittee 
on International Operations has focused 
attention on the importance of the ITU 
conferences, particularly the 1979 World 
Radio Administrative Conference and, 
recently, the region two medium fre- 
quency broadcasting conference, and, on 
the issues in UNESCO relating to the 
new world information order. This ac- 
tivity has greatly assisted in advancing 
the interests of this government and the 
American people in these issues. 



in UNESCO we are challenged on the free flow of news, on the free access 
^porters to the sources of news, and by the threat of requiring special 
ises for reporters. 



png of telecommunication and corn- 
technologies, were addressed by 

)ECD beginning in 1974, and 
||rts of that work and of the future 
i] rtance of their development were 
Jrted to Congress in 1976. For many 
Is we have been heavily involved in 
Irork of the ITU; the 1979 World 
] inistrative Radio Conference re- 
i d special attention because it dealt 
i an extensive list of issues. 

)ur trade in communications and 
1 >uter hardware and software is a 
a r positive contributor to our balance 

ivments. Actions by foreign govern- 
E ;s to follow restrictive procurement 
i ies or to seek protection for their 
f it computer industries, to establish 
I rary valuation procedures or to 
E ict investments by U.S. data service 
It Dther firms would have significant 
I ct on this trade. 

, )ur exports of information services, 
n >r than hardware possibly by a fac- 
[ f four, is very sensitive to foreign 
H ssive communications tariffs, 
persome technical interface re- 
d'ments, and by requirements for 
ii cate facilities in market countries. 
i e we recognize the right of 
I reign states to regulate telecom- 
Jications within their borders, we 
ligly favor international norms which 
I'Ort open trade on a worldwide 

I Through its Subcommittee on 
j.'rnment Information and Individual 
■its, the House of Representatives 
I mittee on Government Operations 
I contributed significantly to an 



Role of the Department of State 

The nature of international affairs is 
such that we are continually required to 
integrate new issues into the overall 
fabric of our foreign policy. The 
emergence of new technologies, such as 
those bearing on international com- 
munications and information activities, 
are almost always out in front of 
diplomacy. It is a continuing process to 
develop our foreign policy in ways which 
will take into account the national in- 
terest in new technologies as they prove 
their social and economic value and 
become accepted in our 
society. 

I have reported to the Congress on 
the activities and intentions of the 
Department of State in the area of inter- 
national communications and informa- 
tion policy issues. On March 26, 1981, I 
testified before the Subcommittee on In- 
ternational Operations that the Depart- 
ment was reviewing its internal 
organization to deal with activities in 
this subject area. I reported that the 
Department would continue its role in 
interagency coordination with the objec- 
tive of insuring more effective develop- 
ment and implementation of U.S. policy. 

Since that time the Department has 
taken several steps which I believe con- 
stitute substantial progress in this area. 

• Secretary Haig has designated me 
as the senior officer in the State Depart- 
ment responsible for the coordination of 
U.S. policy in this area. In recognition of 
the importance we attach to insuring 
that policy responsibilities will be 
suitably vested in a senior level official, 
we have initiated action to amend the 
Department's Foreign Affairs Manual to 



provide explicitly that the Under 
Secretary for Security Assistance, 
Science, and Technology will be charged 
with supervising this functional area. 
Specifically, the responsibilties assigned 
to my office include: 

— Direction of the formulation and 
coordination of the Department's policy 
on international communications and in- 
formation issues; 

— Oversight and coordination of the 
functions of all bureaus and offices con- 
cerned with international communica- 
tions and information policy; 

— Exercise on behalf of the 
Secretary of State of the authority with 
respect to telecommunications assigned 
to the Secretary by E.O. 12046 (March 
27, 1978), the determination of U.S. 
positions, and the conduct of U.S. par- 
ticipation in negotiations with foreign 
governments and in international bodies 
and coordination with other agencies as 
appropriate, including the Federal Com- 
munications Commission (FCC); 

— Chairman of an interagency senior 
group on international communications 
and information policy which can insure 
coordinated development of policy by the 
interested departments and agencies of 
the executive branch and which includes 
participation of the FCC; and 

—Adviser to the Secretary and 
Deputy Secretary on the conduct of 
foreign policy in the area of interna- 
tional communications and information, 
coordinating as appropriate with the 
other Under Secretaries on matters 
relating to the responsibilities of those 
officers. 

• With the encouragement and sup- 
port of other agencies concerned with 
international communications and infor- 
mation policy issues, I have convened an 
interagency committee under the Na- 
tional Security Council committee struc- 
ture established by President Reagan. 
This group consists of senior-level of- 
ficials and serves as the forum for 
discussion and coordination of our policy 
objectives. We held a meeting of that 
group today. Its membership is broad 
and, I believe, fully representative of the 
concerns which must be included in a 
coordinated policy. 

The agenda for our meeting includ- 
ed, for example, consideration of 
challenges to the free flow of informa- 
tion in recent UNESCO forums and at 
meetings of the Intergovernmental 
Bureau of Informatics; the progress 
OECD has made, following its successful 
negotiation and approval of voluntary 
personal privacy guidelines, in examin- 
ing issues arising out of nonpersonal 



n.ber 1981 



69 



United Nations 



data flows; issues related to our par- 
ticipation in the ITU's regional con- 
ference on AM broadcasting which I 
discussed with the committee last 
month; preparatory work for other ITU 
conferences to be convened over the 
next several years; and possible 
legislative proposals to enhance the op- 
portunities for more competitive 
markets in equipment and services in in- 
ternational commerce. 

We are, of course, not starting de 
novo on these particular areas. Various 
interagency committees have been work- 
ing, many of them for several years, to 
develop policy initiatives in conjunction 
with private sector advisory groups. The 
next few meetings of the senior-level in- 
teragency group will give me a firsthand 
opportunity to insure that we are, in- 
deed, drawing the strands together and, 
if not, to develop a more effective ap- 
proach. 

The departments, agencies, and of- 
fices regularly included in the interagen- 
cy committee are: the Departments of 
Commerce, Defense, and State, the 
Agency for International Development, 
the International Communication Agen- 
cy, the Board for International Broad- 
casting, the National Aeronautics and 
Space Administration, the Federal Com- 
munications Commission, the Office of 
Management and Budget, the Office of 
Science and Technology Policy, the Of- 
fice of the U.S. Trade Representative, 
the National Security Council staff and 
the White House Domestic Policy staff. 
Other departments, agencies, and offices 
will be included in the work of the com- 
mittee and its subgroups as appropriate 
to the issues at hand. 

• To improve the performance of 
the department in dealing with these 
new issues, we are establishing a coor- 
dinator for international communications 
and information policy who will report 
directly to me. The coordinator will be 
responsible for assisting in the duties 
that I have outlined and, in addition, will 
have the following duties: 

— Maintaining continuing liaison 
with the bureaus and offices of the 
Department concerned with interna- 
tional information and communications 
policy, with a view to insuring that 
policy issues requiring consideration by 
the Under Secretary are presented on a 
timely basis and that implementing ac- 
tions are promptly undertaken; and in 
this connection, also maintaining liaison 
with the offices of the other Under 
Secretaries; 

— Chairing a departmental steering 



Namibia 



CONTACT GROUP COMMUNIQUE, 
JULY 22, 1981 1 

The Foreign Ministers of the Western 
five contact group— Canada, France, the 
Federal Republic of Germany, the 
United Kingdom, and the United 
States— took advantage of their 
presence in Ottawa on July 20 and 21 to 
discuss the question of Namibia. They 
agreed upon the urgent need to continue 
the effort to bring about the in- 
dependence of Namibia in accordance 
with Security Council Resolution 435 in 
a manner that will command interna- 
tional approval. The U.S. Secretary of 
State Alexander Haig discussed with his 
colleagues the results of Deputy 
Secretary [William P.] Clark's mission to 
South Africa, Namibia, and Zimbabwe 
June 10-13. 

The ministers considered measures 
which would complement and strengthen 
the existing U.N. plan and provide the 
confidence necessary for all parties to 
proceed. The ministers decided to con- 
vene a followup meeting of senior of- 
ficials next week in Paris to formulate 
proposals to carry forward the settle- 
ment process in consultation with all 
parties concerned. They decided to meet 
again in New York during the U.N. 
General Assembly session in September 
to review further how the process can 
best be pursued. 



'Made available to news correspondents 
by Department spokesman Dean Fischer. ■ 



group comprised of representatives of 
bureaus and offices having responsibility 
for international communications and in- 
formation policy and chairing such in- 
teragency meetings as may be necessary 
to insure proper policy coordination; 
— Arranging meetings of the in- 
teragency senior-level group on interna- 
tional communications and information 
policy with the responsibilities for 
preparing the agenda for such meetings 
in consultation with participating depart- 
ments and agencies as well as with in- 
terested bureaus, offices, and principals 
of the department, insuring that conclu- 
sions reached at such meetings are 
provided to those concerned with policy 
implementation, and monitoring subse- 
quent actions; 



[I 



— Coordinating the activities and | 
assisting as appropriate interagency 
working level task forces and commit- f 
tees concerned with specific aspects of 
international communications and infoi 
mation policy and maintaining a currer 
register and schedule of meetings of 
such groups; 

— Maintaining liaison with the prin 
cipals and staffs of other interested 
departments and agencies, including th 
relevant offices of the Executive Office 
of the President; 

— As appropriate, maintaining 
liaison with the members and staffs of 
committees of the Congress concerned 
with international communications and 
information policy and providing 
testimony before such committees; 

— Maintaining appropriate liaison 
with representatives of the private sec- 
tor to keep informed of their interests 
and problems, meeting with them and 
providing such assistance as may be 
needed to insure that matters of conce 
to the private sector are promptly con- 
sidered by the appropriate bureaus or 
offices of the Department or, where 
appropriate, assisting in securing con- 
sideration of such matters by other 
executive branch departments and age 
cies; 

—Assisting in arranging meetings 
such private sector advisory groups as 
may be established to provide advice a 
insuring that the Under Secretary is iA 
formed of the views of advisory group 
which may assist the Bureaus and of- 
fices of the Department in connection 
with international communications anc 
information policy issues; and 

— Insuring timely preparations for 
meetings with representatives of other 
governments and meetings of interna- 
tional organizations. 

• I have asked the Under Secretar. 
for Management [Richard T. Kennedy] 
to review the delegation of internation; 
communications and information respo 
sibilities to Department bureaus, and tl 
workload and resources given to meet 
those responsibilities. My preference is 
not to centralize those responsibilities i 
a single functional area. I believe the e 
isting multibureau distribution assures 
that our policy in this area is consonarr 
with and supportive of our broad foreif 
policy objectives. Centralization runs th. 
risk of a more parochial vision and a lo: 
of contact with the totality of our in- 
terests. Nonetheless, there may be roor 
for some improvement in our internal 
structure and some need to realign or 
augment resources. I expect that the 
Under Secretary for Management's 
study will identify such opportunities. 



70 



Department of State Bulleti , 



United Nations 



1957 

1957 proposes, inter alia, to 
)lish a cabinet committee, chaired 
le U.S. Trade Representative with 
authority for coordination and the 
ulation of policy and with extensive 
sight responsibilities. The commit- 
authority would include determina- 
of positions and policies in interna- 
,1 communications and information, 
jntly within the purview of the 
irtments of State and Commerce. 
Apparently, some believe that the 
Ration of authorities in Executive 
r 12046 is insufficiently precise to 
■e the coordinated development of 
y and effective implementation. We 
ve that, in practice, the Executive 
- is proving effective for integrating 
nterests of the several agencies into 
lerent overall approach, 
""he report of the House Committee 
overnment Operations argues that 
ommittee proposed in H.R. 1957 
d be comparable to that of other 
tet-level committees and councils, 
ever, this is apparently based on a 
nderstanding of the function of 
■ groups. In no case have the 
(risibilities of the interested depart- 
B b and agencies been transferred to 
Imittees or councils. On the contrary, 
b ommittees and councils operate in a 
i ler similar to that of the Interagen- 
mimittee on International Com- 

I cations and Information Policy 

I I has begun meeting under my 
I manship. 

Moreover, that report reflects a fur- 
E misunderstanding of how the policy 
r ulation process works in the ex- 
it ve branch. It appears to assume 
b decisions are made by voting. In 
I what is needed is either a "meeting 
le minds" supporting a proposed 
i y or a presentation of differing 
Is to the President for resolution. To 
1 ive certain of the interested Depart- 
I £ and agencies of their respon- 
Ities and to seek to substitute the 
I of a committee represents an essen- 
| unworkable proposition. 

lie report of the Committee on 
Irnment Operations maintains that 
liroposed committee would not be 
lamed with day-to-day management 
I e Federal establishment. However, 
legislation explicitly contemplates 
I the proposed committee would coor- 
l;e policies and activities of all 
■■ral agencies involving international 
■nunications and information ac- 
les and that it would also be directed 
I'commend, whenever appropriate, 



disapproval or modification of any agen- 
cy policy determination. I have serious 
questions about what responsibility is in- 
tended to be left to the heads of the in- 
terested departments and agencies. 

The potential magnitude of the con- 
fusion becomes more clear when it is 
recognized that the proposed committee 
would be composed of seven individuals, 
one of whom is not a member of the ex- 
ecutive branch. This would mean a 
number of departments and agencies in- 
volved with these issues would not be 
represented at all; for example, NASA 
and USICA, whose role is seriously 
underestimated by the report of the 
committee on government operations. 
The problem is not helped by the bill's 
provision that responsibilities previously 
assigned to the Secretaries of State and 
Commerce and the Director of ICA — as 
well as other responsibilities of the pro- 
posed committee — might be reassigned 
by the committee to its own staff. 

A major question regarding H.R. 
1957 is whether the committee is 
necessary and whether it would offer a 
useful and practical approach to the 
problem. The Administration's view is 
that this committee structure would not 
be helpful in dealing with the range of 
issues here under consideration. 

The question of interagency leader- 
ship is treated differently in H.R. 1957 
than in Title II of S. 821. Although 
there are differing views on perform- 
ance, the fact is that the Department of 
State is the only agency positioned to 
knit together the interactions among 
these issues and to insure their proper 
reflection in our overall foreign policy. 



CONCLUSION 

This Administration believes it is on the 
right road in meeting the needs of the 
United States in the important area of 
international activity. We have taken 
steps that are fully within our 
authorities. We believe enactment of 
legislation along the lines of H.R. 1957 
and its companion piece, Title III of S. 
821, is unnecessary. In fact, such enact- 
ment could deprive the executive branch 
of the flexibility required to insure the 
most effective development and coor- 
dination of U.S. policy on the basis of 
actual experience. 

I think it is fair to say that all of the 
concerned agencies without reservation 
share a commitment to insure that the 
United States is well positioned to meet 



Security Council Meets 
on Lebanon-Israel 
Border Dispute 



The Security Council met on July 17, 
1981, to vote on the Lebanon-Israel 
border dispute. Following is the text of 
the resolution unanimously adopted by 
the Council on July 21, 1981. 



SECURITY COUNCIL 
RESOLUTION 490 

The Security Council, 

Reaffirming the urgent appeal made by 
the President and the members of the Secu- 
rity Council on 17 July 1981 (S/14599) which 
reads as follows: 

"The President of the Security Council 
and the members of the Council, after hear- 
ing the report of the Secretary-General, ex- 
press their deep concern at the extent of the 
loss of life and the scale of the destruction 
caused by the deplorable events that have 
been taking place for several days in 
Lebanon. 

"They launch an urgent appeal for an im- 
mediate end to all armed attacks and for the 
greatest restraint so that peace and quiet 
may be established in Lebanon and a just and 
lasting peace in the Middle East as a whole." 

Taking note of the report of the 
Secretary-General in this respect, 

1. Calls for an immediate cessation of all 
armed attacks; 

2. Reaffirms its commitment to the 
sovereignty, territorial integrity and in- 
dependence of Lebanon, within its interna- 
tionally recognized boundaries; 

3. Requests the Secretary-General to 
report back to the Council on the implemen- 
tation of this resolution as soon as possible 
and not later than 48 hours from its adoption. 



the challenges to the free flow of infor- 
mation, to secure and protect radio fre- 
quency spectrum needs, and to par- 
ticipate fully in the expanding global 
market for telecommunications and in- 
formation goods and services. I can 
pledge to you that I will personally work 
to insure that these objectives are met. 



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



lber 1981 



71 



WESTERN HEMISPHERE 



El Salvador: The Search for Peace 



The tragedy of El Salvador has deep 
roots in both Salvadoran history and the 
contemporary international scene. This 
study summarizes some of the facts, 
analyses, and rationales about the many 
internal and external forces involved in 
El Salvador that underlie U.S. Govern- 
ment efforts in support of a peaceful out- 
come. The following background paper 
was released by the Department of State 
in September 1981. 

Summary 

During the late 1970s, traditional 
authority structures in El Salvador, 
already eroded by social changes and 
development problems, began to 
disintegrate under pressure from left- 
and rightwing terrorism. 

In an effort to stimulate a more 
democratic process, middle-grade army 
officers overthrew the existing 
authoritarian regime in October 1979. In 
January 1980, the Christian Democratic 
Party entered the government and 
helped launch far-reaching reforms. 
Although most Salvadorans welcomed 
socioeconomic reforms as long overdue, 
extremist groups reacted by intensifying 
violence. Thousands died in conditions 
sometimes bordering on anarchy. 

In late 1979 and early 1980, Fidel 
Castro brought the leaders of El 
Salvador's fragmented violent left to 
Havana and helped them to unite into a 
single guerrilla directorate. In January 
1981, using arms obtained clandestinely 
through Cuba and Nicaragua, the guer- 
rilla command launched an all-out offen- 
sive. But the population ignored guer- 
rilla appeals. Government forces re- 
mained united and fought well. The of- 
fensive failed. 

Today, although most guerrilla fac- 
tions and some small rightwing groups 
continue to attempt to impose their 
views by force, the overwhelming ma- 
jority of Salvadorans seek an end to 
violence. The Salvadoran Government 
has outlawed paramilitary forces and is 
attempting to develop a peaceful 
political process. In March 1981, Presi- 
dent Duarte appointed an independent 
Central Elections Commission to 
prepare elections for a Constituent 
Assembly in 1982. In July, legislation 
was approved under which all parties 



that accept democratic procedures will 
be eligible to participate. 

The United States supports self- 
determination for the people of El 
Salvador. As a concerned neighbor com- 
mitted to representative democracy, the 
United States favors an end to violence 
and seeks to facilitate a process leading 
to free and open national elections. 

The Politics of Violence 

In 1980, about 12,000 Salvadorans died 
violently — most of them victims of con- 
flicts among absolutist factions with 
deep roots in Salvadoran history. 

A Tragic Precedent. On Jan- 
uary 22, 1932, a peasant uprising touch- 
ed off by Augustin Farabundo Marti and 
his embryonic Communist Party turned 
into a ghastly massacre. Thousands died 
in a few days in a bloody confrontation 
in which no quarter was asked or given. 1 

The savagery of 1932 was inter- 
preted by the authorities to mean that 
only strong governments could maintain 
order. The president at the time of the 
uprising, Gen. Maximiliano Hernandez 
Martinez, remained in power until 1944. 
The army became El Salvador's 
strongest institution; military com- 
manders dominated succeeding govern- 
ments in concert with the landed 
wealthy. 

Signs of Progress. During the 
1950s and 1960s, political violence was 
rare. Economic growth averaged more 
than 5% a year, outstripping population 
growth, which averaged about 3% a 
year. Export-oriented agribusinesses 
and small manufacturing enterprises 
boomed. But there were no new lands to 
be developed — and most of the popula- 
tion still lived at subsistence levels. 

Urban growth stimulated the rise of 
reformist political parties. The most suc- 
cessful was the Christian Democratic 
Party (PDC). In 1964, Jose Napoleon 
Duarte, one of the party's founders, was 
elected mayor of San Salvador. In 1968, 
the PDC captured 19 of the 52 seats in 
the unicameral National Assembly and 
won majorities in 78 of the nation's 261 
municipalities, including the three 
largest cities. 

Elections Frustrated. In 1972, 
Duarte ran for the presidency, with 
Guillermo Manuel Ungo of the small 



72 



social-democratic National Revolution 
Movement (MNR) as his running mat 
Duarte's charismatic campaign receiv 
strong support from peasants and 
workers as well as the new middle 
classes. On election day, Duarte ap- 
peared to have won a plurality in the 
popular vote. Five days later, howevc 
the candidate of the governing Natioi 
Conciliation Party (PCN), Col. Arturc 
Armando Molina, was proclaimed pre 
dent. After an attempted opposition 
coup within the army failed, Duarte \ 
arrested, tortured, and sent into exil< 

Tensions Mount. Molina increas* 
public services and promoted some la 
reforms but was hamstrung by conse 
vative resistance to change. Underlyi 
problems of unemployment and incon 
maldistribution were exacerbated by ■] 
rising energy costs, unstable coffee 
prices, and a severe drought that re- 
duced growth. 

The Roman Catholic Church, whil 
after Vatican Council II had become ; 
creasingly committed to work among 
underprivileged, began to call for 
greater social justice. The election of 
Col. Carlos Humberto Romero to the 
presidency in 1977 was disputed. Opj 
tion parties boycotted the 1978 Natic 
Assembly elections. Archbishop Osca 
Arnulfo Romero regularly detailed 
abuses against the poor in statement 
during Sunday mass. 

Terrorism. In the spring of 1977 
Foreign Minister Mauricio Borgonov( 
an M. I. T. -trained moderate, was kid- 
napped, then murdered by leftists; 
Father Rutilio Grande, a Jesuit parisl 
priest known for his support of work: 
class causes, was assassinated by 
rightists. 

Violence and counterviolence 
escalated steadily thereafter. Leftist 
radicals, often students, and rightist 
members of ORDEN, a conservative 
organization with thousands of peasai 
members and close ties to local securi 
forces, seemed to take turns in attem 
ing to prove that violence was 
cleansing. A clandestine group of far 
rightists calling themselves the White 
Warriors Union (UGB) claimed credit 
the assassination of many teachers an 
priests. And on the extreme left, terj 
rorism became a deliberate weapon in 
the hands of a new breed of specialist 
in violence. 



Department of State Bullet 



i 



I 



Western Hemisphere 



The Violent Left. Twice during the 
y 1970s, groups of radical activists 
junced the electoral approach 
lused by the Moscow-line Communist 
y of El Salvador (PCES) and broke 
y to seek an armed path to power. 
The largest of these was the 
.bundo Marti Popular Liberation 
:es (FPL), named after the in- 
itor of the bloody 1932 rebellion. It 
founded in 1970 by Salvador 
etano Carpio, a Cuban-trained 
ier Communist Party Secretary 
eral. 

While the FPL advocated violence as 
of "prolonged war" tactics, the 
Die's Revolutionary Army (ERP), a 
ip of young Maoists and Castroites 
led by Joaquin Villalobos, was united 
larily by the view that attacks on 
ic officials could spark an immediate 
ilar revolution. Still a third tactical 
pective was embodied in the Armed 
es of National Resistance (FARN), 
9 h splintered from the ERP in 1975. 

n the late 1970s, these organiza- 
j; carried out several spectacular 
Bissy seizures and kidnapped or 
ulered several Salvadoran, U.S., 
U >pean, and Japanese businessmen, 
H ell as the Swiss charge d'affaires 
ii the Ambassador of South Africa. 

The "Popular Forces." The use of 

i >rism enabled the violent left to ob- 
ii large sums of money — perhaps 
ii 100 million — in ransom and protec- 
) payments. Part of these funds were 
i to subsidize demonstrations and 
i. ical agitation to broaden their own 
u and further intimidate advocates of 
I eful reform. 

The FPL helped to organize a broad 
ii tion of worker, student, and teacher 
I ps into the Popular Revolutionary 
[» (BPR). The FARN attracted 
i ral peasant organizations and unions 
: the United Popular Action Front 
jJ-'U). The more impatient ERP was 
9 successful in broadening its reach: 
S 8 February Popular League (LP-28) 
1 lined largely student based. 

The Nicaraguan Example. El 

lador's violent left received a major 
jhological boost in July 1979 when 
i Nicaraguan National Guard dis- 
1 ;d under pressure. 
131 Salvador's professional army was 
ji praetorian force like Somoza's 
|-d. Nonetheless, what before only a 
I fanatics had believed possible — that 
ISalvadoran Army could be openly 
l:ked and defeated — could suddenly 
Kortrayed as an historic inevitability, 
leover, having backed the San- 
Istas with men and money, the FPL 



and the ERP felt that they had earned 
Nicaraguan support for an escalated 
armed struggle. 

The growing militancy of the violent 
left moved Archbishop Romero to warn 
in August 1979: "When I returned from 
Rome in April, I found their bombs in 
the cathedral. Our popular groups have 
been taken over by the far left. They 
want the church to support everything, 
not only justice but all their strategies." 

As traditional political and social 
relationships disintegrated, El Salvador 
began to fragment into a series of 
armed camps. The economic elite was 
split between advocates of harsh repres- 
sion and moderate reform. Gen. Romero 
had neither the will to impose draconian 
measures nor the credibility to under- 
take reforms. Except for scattered in- 
dividuals like the exiled Duarte, there 
was an acute absence of credible or will- 
ing alternative leadership. 

Actual armed gangs, whether of left 
or right, were still small. But thousands 
of Salvadorans associated with the 
"popular forces" on the left were now 
juxtaposed against the thousands of 
Salvadorans associated with ORDEN 
and similar groupings on the right. 3 

The 1979 Revolution 

On October 15, 1979, an informal 
grouping of young and middle-grade 
army officers overthrew Gen. Romero. 
In a shakeup that led to the exile, retire- 
ment, or reassignment of some 10% of 
the officer corps, Cols. Jaime Abdul 
Gutierrez, Adolfo Arnoldo Majano, Jose 
Guillermo Garcia, and Eugenio Vides 
Casanova emerged as the new leaders of 
the military high command. 

The army manifesto of October 15 
denounced abuses of power by govern- 
ment officials, proclaimed a commitment 
to fundamental social reform, and called 
for a transition to elections and a 
democratic political system. Three 
civilians joined Gutierrez and Majano in 
a new governing junta. They were 
Roman Mayorga from the Jesuit univer- 
sity, Mario Andino from the business 
community, and Guillermo Ungo from 
an opposition coalition known as the 
"Popular Forum." 

Public response was immediate and 
positive. Archbishop Romero, in his 
October 21 homily, called upon all 
Salvadorans to give the new government 
a chance and warned against further 
violence. The junta outlawed ORDEN, 
released political prisoners, and formed 
a widely representative cabinet. Duarte 
returned from his Venezuelan exile. 



Peaceful change, however, suited 
neither those who believed one more 
push would destroy the army nor those 
opposed to all reforms. Calling for the 
immediate dissolution of the security 
forces, the ERP and the FPL staged 
violent disturbances. At the opposite ex- 
treme, rightists conspired to mount a 
countercoup to prevent the October 15 
manifesto from being carried out. 
Lacking unity or experience, the junta 
gradually disintegrated, unable to con- 
trol the violence or establish its author- 
ity. 

In January 1980, the Christian 
Democratic Party announced it would 
help form a new government on the 
basis of an open political process and 
socioeconomic reform. An overwhelming 
majority of officers, loyal to their new 
leaders and the October manifesto and 
aware of the dangers of civil war, ac- 
cepted the Christian Democratic pro- 
gram, including land reform. 4 

Land Reform. For generations, a 
few hundred families had owned about 
60% of all farm lands. Decree 153 of 
March 6, 1980, "The Basic Law of Land 
Reform," was the first step in trans- 
ferring ownership of about half of that 
property to peasant cooperatives and in- 
dividual tenant farmers. 

The basic provision of Decree 153, 
known as Phase I, provided for the con- 
version of large estates — more than 
1,235 acres — into peasant cooperatives. 
Another provision, known as Phase II, 
was designed to distribute medium-sized 
estates. A "land-to-the-tiller" program 
(Decree 207), known as Phase III, was 
approved in April 1980 to benefit 
landless peasants by enabling each fam- 
ily of renters or sharecroppers to ac- 
quire as many as 17.3 acres of lands 
they themselves were cultivating. 

To strengthen small business and 
broaden the availability of credit in sup- 
port of land reform, all banks were put 
under partial government ownership. A 
previous measure had created a govern- 
ment board to market coffee and sugar 
for export; cotton, the third major cash 
crop, remains in the hands of a private 
cooperative. 

Within a month of the March 6 
decree, 278 estates had been trans- 
formed into producer cooperatives 
owned by the farmers working them. 
The army's break with the landowners 
became evident as troops protected 
government technicians and peasant 
beneficiaries. 

This ambitious reform program, 



MDer 1981 



73 



Western Hemisphere 



though greatly hampered by right- and 
leftwing violence, is significantly 
broadening participation in the 
Salvadoran economy. Production of ex- 
port crops has declined; the production 
of basic grains and other items for local 
consumption has remained steady or in- 
creased. Both titling and compensation 
under Phases I and III have been slow 
and have severely strained El Salvador's 
technical, administrative, credit, and 
security resources. Accordingly, Phase 
II apparently will be postponed at least 
until after elections in 1982. 

Many aspects of the reforms remain 
controversial. But thousands of El 
Salvador's poorest citizens who never 
before had an opportunity to work their 
way out of a subsistence existence now 
have a chance to do so. 

The Far Right Reacts 

Having lost control of the government, 
opponents of change resorted to private 
death squads and vigilante bands in a 
running but losing battle against the 
reforms. 

In early 1980, Maj. Roberto 
D'Aubuisson, a National Guard officer 
forced into retirement in October 1979, 
began to denounce the Christian 
Democratic- military coalition as a 
"Communist" movement bent on 
destroying the traditional fabric of 
Salvadoran society. D'Aubuisson's 
demagogy did not shake the new high 
command's commitment to reform. But 
it proved a rallying point for those land- 
owners, local bosses, and security force 
members hostile to the reforms. 

Christian Democrats and Catholic 
activists became prominent targets of a 
variety of rightist operations, many of 
which were coordinated by a clandestine 
"Maximiliano Hernandez Brigade" 
named for the man who crushed the 
1932 revolt. On March 24, 1980— shortly 
after the land reforms were decreed — 
Archbishop Romero was shot and killed 
while saying mass. Since then, several 
priests and foreign missionaries and 
more than 60 Christian Democratic 
mayors and local officials have been 
assassinated, as well as several hundred 
trade unionists and thousands of ordi- 
nary Salvadorans — often in conditions 
made all the more appalling by the im- 
possibility of knowing which of the pro- 
liferating groups on the extremes of the 
right and left were responsible. 

The violent right had a natural 
recruitment base in former members of 
the White Warriors Union and ORDEN. 



Retired and active duty police and 
military personnel linked to individual 
landowners or personally opposed to the 
government were another source of sup- 
port. At the same time, guerrilla attacks 
against individual uniformed personnel 
provoked strong reactions. Retired and 
technical military personnel have been 
assassinated while going about civilian 
pursuits. In October 1980, guerrillas at- 
tacked an officer's home, burning it to 
the ground. Trapped inside, the officer 
and his wife and three children burned 
alive. In the first half of 1981, some 
1,300 uniformed men were wounded or 
killed by guerrillas, sometimes by execu- 
tion. 

The resulting dynamic has led some 
security force personnel to commit 
abuses that play into the hands of the 
guerrillas. In some instances, this has 
meant tolerance of clandestine death 
squads financed by the extreme right. In 
others, it has meant shooting first and 
asking questions later. Abuses of 
authority are apparently most common 
in the Treasury Police and the National 
Guard, whose men are scattered in small 
local units vulnerable to rightwing blan- 
dishments and guerrilla provocations. 

On December 2, 1980, four 
American Catholic women— three nuns 
and a lay social worker— were abducted 
and murdered. In January, two 
American labor specialists from the 
A.F.L.-C.I.O. were assassinated 
together with the head of El Salvador's 
land reform institute. 

While the January murders were 
apparently the work of private killers, 
the U.S. presidential mission that 
studied the murders of the four church- 
women reported circumstantial evidence 
of security force "complicity, either in 
the murder or afterwards." 5 On May 9, 
1981, the Ministry of Defense announced 
the detention of six security force 
members in connection with the murder 
of the churchwomen. Both investigations 
continue. 

The control of rightist violence and 
the administration of justice are severely 
hampered by the disruption of the 
judicial system and the guerrilla war. 
Judges and investigators are in personal 
jeopardy. Jails are inadequate to handle 
normal criminal cases let alone the 
perpetrators of political violence. 

The Salvadoran Government has 
taken a variety of measures in an effort 
to assure that the legitimate forces of 
order do not conduct themselves 



■ 



according to traditions rooted in the 
authoritarian past or the even crueler ,, 
standards established by their new opf| 
nents on both extremes. 

• In October 1979, ORDEN, the 
paramilitary organization previously 
used against government critics, was 
outlawed. 

• In October 1980, a military code 
conduct was adopted explicitly pro- 
hibiting abuses against noncombatants 

• In December 1980, Duarte becan 
president of the junta, with a mandate 
to consolidate the reform process and 
strengthen institutional procedures to 
resolve conflicts peacefully. 

• The high command is working to 
enforce discipline within the security 
forces and strengthen military judicial rr 
procedures. A number of officers symj. r 
thetic to the violent right have been 
removed from command positions or 
sent out of the country. 

These and other measures are 
gradually reducing institutional violenc 
But the cycle of violence and counter- 
violence will be broken only when a 
democratic solution thwarts those who 
seek a solution by killing. 

The Communists Interfere 

While the Christian Democrats and tb 
new military high command were 
launching the reforms, Cuba and sevei 
other Communist countries were be- 
ginning a concerted effort to impose a 
Marxist-Leninist dictatorship by force. 
In meetings in Havana in Decembi 
1979 and May 1980, Fidel Castro help 
the FPL, ERP, and FARN to unite I 
the Moscow-line Salvadoran Communi 
into a guerrilla alliance (the DRU or 
United Revolutionary Directorate). 
From then on, with Communist Party 
Secretary General Jorge Shafik Hands 
as the emissary, Cuba worked with thi 
DRU to obtain arms from Vietnam, 
Ethiopia, the Palestine Liberation 
Organization, and Eastern Europe. 6 



Cuba's Strategy. Creating a unifia 
military command and supplying mode 
armaments were only part of a broad 
political-military strategy. This strateg 
also included training an ideologically 
committed military cadre in Cuba and 
developing a concerted international 
propaganda campaign to discredit non- 
violent solutions. 

Only the external elements of this 
Cuban strategy proved successful. Tho 
elements that depended on conditions i 
side El Salvador failed. 



74 



Department of State Bullet | 



Western Hemisphere 



Propaganda. The effort to discredit 
:rate solutions is led by the 
ocratic Revolutionary Front (FDR), 
nized in April 1980 as an umbrella 
tion including some small non- 
dst-Leninist parties, the FDR is in 
tice controlled by the DRU, which 
-ols the guns and reviews all FDR 
ions, organizational arrangements, 
oersonnel appointments. Given an 
of legitimacy by some prominent 
idorans in exile, the FDR carries 
xtensive propaganda activities in 
Jnited States and Europe with the 
tive of hindering or preventing any 
gn support not benefiting the guer- 

Infounded claims and accusations 
eplayed to regional and world audi- 
by Cuba's Radio Havana or Prensa 
ia, the official Soviet press agency 
S), Radio Moscow, and East Euro- 
i media. For example, a false 1980 
|-t of a U.S. soldier killed in El 
k.dor that echoed widely in Cuban- 
V 't propaganda was traced finally to 
i alvadoran Communist Party. This 
1 r was used to breathe life into an 
3 bigger lie: that hundreds of U.S. 
i >rs were in El Salvador, building 
• bases, destroying villages, and 
n ng peasants into Vietnam-style 
3 jgic hamlets. (Then as now there 
I no U.S. combatants, bases, or 
j ;gic hamlets in El Salvador.) 

rms. In December 1980, the guer- 
i began to employ U.S. -made M-16 
M-14 rifles, M-79 grenade launch- 
I .nd Chinese-made rocket-propelled 
side launchers. In January 1981, 
I doran authorities destroyed air- 
i flying arms from Nicaragua to El 
L dor and captured a pilot involved 
t s traffic; Honduran authorities cap- 
B a truck carrying weapons and am- 
U tion destined for the guerrillas. 

I of the M-16s on the truck were 

II dually traced directly to Vietnam, 
li e they had been left behind when 

5 units withdrew. 

I 'he Guerrillas Falter. After the 
j h 1980 reforms, the guerrillas 

I I themselves unable to build the 
liar army" their strategy and pro- 
nda called for. Occasionally paying 
•oercing recruits, they began to use 
t military measures and terrorism 
ist the general public. 

n the summer of 1980, the 
/DRU called for general strikes 
i times— in June, July, and August, 
irst was inconclusive, the second 
;o be postponed, and the third was a 



total failure despite all-out efforts, in- 
cluding bombing places of work and 
burning buses and assassinating their 
drivers in an effort to prevent people 
from going to work. 

The guerrillas responded to their 
repeated failures to enlist popular 
support by falling back on Augustin 
Farabundo Marti's 1932 instructions to 
apply "merciless terror." 7 A 1980 guer- 
rilla document entitled On Armed Insur- 
rection noted that "the people use dif- 
ferent forms and methods of struggle 
but the combat, armed, and violent 
forms are those that play the funda- 
mental role, the determining role . . . ." 8 

On October 29, 1980, however, a let- 
ter to the DRU coordinator in Managua 
complained that the people were "be- 
coming progressively confused and are 
being affected by the defeatist attitude 
Duarte and his lackeys are trying to in- 
still among the people." 

The guerrillas — and their Cuban and 
Soviet sponsors — stuck to their original 
plan. On January 10, 1981, broadcasting 
from a clandestine radio station in 
Nicaragua, the guerrillas proclaimed 
that "the decisive hour has come to in- 
itiate the decisive military and insurrec- 
tional battles for the seizure of power." 9 
Using the modern weapons smuggled to 
them from Vietnam and other distant 
countries, guerrilla units struck at 40-50 
locations, downed two helicopters, over- 
ran one isolated National Guard post, 
and forced the army to draw heavily on 
its ammunition reserves. 

But El Salvador's people again ig- 
nored the guerrilla appeals. The army 
remained united and fought well. At 
great cost to both sides, the offensive 
was contained. 

A Democratic Outcome? 

The pattern inside El Salvador since 
early 1981 suggests that the foundations 
for an improved future are present. 

• Many of the weaknesses of El 
Salvador's institutions derive from tradi- 
tional power groups and patterns now 
on their way out. 

• The centrist coalition between the 
Christian Democratic Party and the new 
military leadership — formed in the midst 
of predictions that it could not last — is 
now almost 2 years old, demonstrating 
that change can come about by institu- 
tional means. 

• Excesses and failures have pricked 



the bubble of guerrilla claims of invin- 
cibility and popular support. On 
March 8, Apostolic Administrator Rivera 
y Damas spoke for millions of ordinary 
Salvadorans when he said: "The groups 
on the left have made violence an abso- 
lute end in itself and magnified their 
adherence to Marxism. That is why most 
of the public has turned its back on 
them. . . . Terrorism is not liberation." 

• After years of fruitless bloodshed, 
the resilience of Salvadorans is evident 
in an emerging national consensus 
against violence. The church, the trade 
unions, agrarian organizations, profes- 
sional bodies, and modern businessmen 
are now all increasingly engaged in 
seeking a peaceful solution to the con- 
flict. 

The Government. The December 
1980 reorganization improved govern- 
ment efficiency. Gutierrez is Vice Presi- 
dent and military commander. Jose 
Antonio Morales Ehrlich, a former 
Christian Democratic mayor of San 
Salvador, has special responsibilities for 
implementing the land reform. Jose 
Ramon Avalos Navarrete, a politically 
independent physician, is responsible for 
public health and social welfare. Foreign 
Minister Fidel Chavez Mena was largely 
responsible for the peace treaty that 
ended the 1969 war with Honduras. 
Defense Minister Col. Jose Guillermo 
Garcia has played a key role in main- 
taining military unity behind the reform 
program of the October 1979 manifesto. 
And the charismatic Duarte has 
emerged as a national leader of courage 
and skill. 

Business. As the conflict escalated, 
and particularly after they had lost con- 
trol of the government, many of El 
Salvador's traditional wealthy fled the 
country. Most modern and middle-class 
businessmen, however, stayed behind. 
Many of them are now organized in the 
"Productive Alliance." 

Important differences still divide 
most businessmen from the reformist 
Christian Democrats and the nationalist 
army. A private sector symposium held 
in San Salvador July 24-26, 1981, 
opposed further reforms and called for 
greater business representation in 
government. For the first time, 
however, the symposium resolution also 
"recognized" the need to be "construc- 
tive" about existing reforms. 

The Catholic Church. On Jan- 
uary 18, 1981, Apostolic Administrator 
Rivera y Damas criticized the govern- 
ment for still not bringing institutional 



ber 1981 



75 



Western Hemisphere 



violence under control. He also criticized 
the guerrilla offensive, saying that all 
peaceful means had not been exhausted, 
that the people were not convinced that 
the guerrillas would be an improvement, 
and that the guerrillas had no chance of 
success. Asked in a May interview why 
some priests apparently still supported 
the guerrillas, Rivera y Damas said that 
few did so— three were with guerrillas 
inside El Salvador, and a dozen were 
conducting propaganda activities abroad. 

The Guerrillas. Anticipating at least 
some gains from their planned January 
offensive, the guerrillas late in 1980 
created a new "vanguard" organization, 
the Farabundo Marti National Libera- 
tion Front (FMLN). The FMLN amounts 
in practice to the DRU plus the tiny 
"Revolutionary Party of Central 
American Workers" but still excluding 
the non-Marxist-Leninist groups in the 
FDR, with which the FMLN maintains 
relations it terms "direct." 

The failure of the January offensive 
made it necessary to down play the 
guerrillas' military image. Accordingly, 
on February 3, 1981, the Political- 
Diplomatic Commission of the FMLN/ 
FDR prepared a "Proposal for Interna- 
tional Mediation." The objectives of this 
"negotiating maneuver" were explicitly 
stated: to "gain time in order to improve 
our internal military situation." 

After the documents setting forth 
this maneuver became public, FDR 
leaders in exile acknowledged their 
authenticity but asserted a readiness to 
undertake a "comprehensive process of 
political negotiations." Nonetheless, 
guerrilla forces continue to receive 
military supplies from abroad, and their 
chief strategists spurn the government's 
efforts to seek a democratic political 
solution. 

The loss of any hope of the quick 
victory promised by their leaders in 
January has forced the guerrillas to fall 
back on a destructive strategy of pro- 
longed war through economic attrition. 
Guerrilla forces are exacting a heavy 
toll, particularly through sabotage, and 
remain entrenched in certain isolated 
parts of Morazan and Chalatenango Pro- 
vinces near the Honduran border, where 
they can maintain external supply lines. 

Electoral Preparations. On 

March 5, 1981, President Duarte ap- 
pointed an independent three-man Cen- 
tral Elections Commission to prepare an 
electoral law and oversee procedures for 
the election of a Constitutent Assembly 



in 1982 that would set the stage for a 
general presidential election, presumably 
in 1983. 

The following Sunday, Bishop 
Rivera y Damas called for a dialogue 
between the opposition and the govern- 
ment in support of free elections. "The 
church," he continued, "looks very 
favorably on the political willingness of 
the junta to discover a political solution 
to the problem .... We are sure that if 
the elections are as they have been 
promised — authentically free and 
democratic — the Salvadoran people will 
demonstrate that it is a modern people 
who desire changes, but with respect for 
human values." 

On July 10, the Salvadoran Govern- 
ment approved a provisional electoral 
law providing for the automatic re- 
registration of previous political parties 
upon receipt by the Central Elections 
Commission of a list of their current 
bylaws and board of directors. Two FDR 
affiliates — the social-democratic MNR 
and the Communist-front National 
Democratic Union (UDN)— could thus 
automatically validate their legal status 
for the Constituent Assembly elections. 
The law also provides that parties must 
abide by Salvadoran law and permits 
any group of 25 citizens to gather 3,000 
signatures and register as a new 
political party. 

The Central Elections Commission 
announced on July 8 that it had already 
sent invitations to the Organization of 
American States, the United Nations, 
the International Committee of the Red 
Cross, the European Parliament, 
Amnesty International, and other 
organizations to send observers "not on- 
ly for the day of the elections, but also 
in anticipation of them, observing the 
entire process." 

Political Life. Sensing that elec- 
tions may prove a viable solution to the 
crisis, pre-1979 parties are stirring 
again, and new ones are beginning to 
emerge. In addition to the Christian 
Democrats, these include the old offi- 
cialist Party of National Conciliation 
(PCN) and new groups such as the 
Popular Democratic Unity (UPD) and 
Democratic Action. 

The Salvadoran Peasant Union 
(UCS) held a national congress April 9. 
Thousands of agricultural workers and 
leaders throughout El Salvador traveled 
to San Salvador to participate. At the 
end of May, 2,500 delegates, including a 
sizable number of women, came to San 
Salvador from all parts of the country to 
participate in the Christian Democratic 
Party's fourth national congress. 



Public opinion in San Salvador 
shows a dramatic drop in support for 
political groups associated with the gi 
rillas. In fact, on May 1, 1981, the sar 
day that a clandestine guerrilla radio 
near the Honduran border called on 
workers and peasants to destroy the 
"oppressors and establish their own 
government," the MNR published a 
statement in San Salvador calling for 
"halt to the violence" and "an end to t 
civil war." 

The savage events of recent years 
have created enmities that will not be 
forgotten soon. Salvadoran society is 
deeply fragmented and widely armed. 
The healing process, once begun, will 
long and difficult. But the best indica- 
tion that El Salvador's people will yet 
have the last word is that both the gu 
rillas and the far right seem afraid of 
the results of the Salvadoran people's 
expressing their preferences. 









76 



The U.S. Role 

The position of the United States is 
Salvadorans should be allowed to resc 
their own problems without coercion 
dictation from any source. 

During the 1970s, reflecting gene I 
policy trends, U.S. economic and 
military assistance to El Salvador de- 1 
clined sharply from a peak during the I' 
Alliance for Progress. Military 
assistance was terminated in 1977. U 
economic assistance increased modest 
after the 1980 reforms created a 
framework for cooperation insuring t 
aid would reach the needy and the po f 
Although military trucks and radios 
were also sold on credit, no transfers I 
arms or ammunition were authorized. I 

On January 16, 1981, in response 
the Communist-armed guerrilla often- p 
sive, the Carter Administration resun |jl 
arms sales for the first time in 3 year i 
Helicopters and some military trainer I 
were also sent. Subsequently, the 
Reagan Administration authorized ad> 1 
tional military supplies and services t< 
total of $35 million and doubled 
economic assistance to more than $10 
million. In mid-1981, 55 U.S. military 
trainers were in El Salvador under 
orders to perform no duties of a com! 
nature or any training that could eng; 
them in combat. 

Current Policy. On July 16, 1981 
Assistant Secretary of State for Inter 
America Affairs Thomas O. Enders 
noted that U.S. assistance was prever 
ing the guerrillas from turning their 
foreign arms supplies to new advanta; 
but that El Salvador remained a divid 



Department of State Bulleit: 



Western Hemisphere 



ltry. The U.S. Government, Enders, 
inued, believes that: 
'Only Salvadorans can resolve these 
;ions. Neither we nor any other 
ign country can do so. It is, 
efore, critical that the Salvadoran 
rnment itself is attempting to over- 
e these divisions by establishing a 
5 democratic system. 
'We wholeheartedly support this 
tive. Not out of blind sentiment, 
Dut of a desire to reproduce 
ywhere a political system that has 
ed Americans so extraordinarily 

and certainly not because we 
trestimate the difficulties involved. 
'Rather we believe that the solution 
; be democratic because only a genu- 

pluralistic approach can enable a 
nundly divided society to live with 
! without violent convulsions, 
ually overcoming its differences. 
How can a country beset by so 
/ troubles get from here to there? 
first thing to say is that promises 
; be kept. One can debate endlessly 
t El Salvador's land reform. . . . 

. . the issue is no longer whether 
reform is advisable or not. The 

now is how to consolidate and 
?ct what has been done. . . . 
Second, there must be 
I mstrable progress in controlling 

• ;liminating violence from all 
lees. . . . Cuban and Nicaraguan 

I lies to the guerrillas must stop . . . 
| Salvadoran Army leadership is 
e 2d, both to fight rightist death 
u Is and to control security force 
lice. . . . 

Third, all parties that renounce 
a nee should be encouraged to 
i cipate in the design of new 
il ical institutions and the 
s ;ss of choosing representatives 
them. . . . 

I It is only realistic to recognize that 
I'mists on both left and right still op- 
I elections. . . . We should recognize 
a El Salvador's leaders will not — and 

d not — grant the insurgents 

Jigh negotiations the share of power 

• ebels have not been able to win on 
Battlefield. But they should be— and 
a -willing to compete with the insur- 
|; at the polls. 

■ Elections are quintessential^ mat- 
Ijf internal policy. But there may be 

1 other nations can assist. If re- 
l;ed by the government of El 



Salvador — and desired by those in- 
volved — other countries might be invited 
to facilitate such contacts and discus- 
sions or negotiations on electoral issues 
among eligible political parties. The 
United States is prepared, if asked, to 
join others in providing good offices to 
assist the Salvadorans in this task, 
which could prove critical to the search 
for a political solution to the conflict. 

"We have no preconceived formulas. 
We know that elections have failed in 
the past. We have no illusions that 
the task now will be anything but dif- 
ficult. But we believe that elections open 
to all who are willing to renounce 
violence and abide by the procedures of 
democracy can help end El Salvador's 
long agony .... 

"[Finally,] . . . the search for a 
political solution will not succeed 
unless the United States sustains its 
assistance to El Salvador. . . . 

"Should members of the guerrilla 
command believe that they can make 
gains by military means, no participation 
in elections, no meaningful negotiations, 
no political solutions are likely to be 
forthcoming. The point is not that sus- 
tained U.S. assistance might lead to a 
government military victory. It is that a 
political solution can only be achieved if 
the guerrillas realize they cannot win by 
force of arms. . . . 

"Our help for El Salvador is really 
very small, but it is vital. . . . We can 
help by: 

• Extending economic and military 
assistance to counter the disaster visited 
upon El Salvador by enemies of 
democracy; 



• Standing by our friends while they 
work out a democratic solution; and 

• Identifying and seizing oppor- 
tunities to help such a solution actually 
take shape." 



1 Thomas P. Anderson, Matanza: 
El Salvador's Communist Revolt of 1932 
(Lincoln, University of Nebraska Press, 1971) 
puts the death toll at 10,000 — mainly 
peasants in the western provinces where the 
revolt achieved some initial successes. 

2 cf. Stephen Webre, Jose Napoleon 
Duarte and the Christian Democratic Party 
in Salvadoran Politics, 1960-1972 (Baton 
Rouge, Louisiana State University Press, 
1979). 

3 Although estimates are necessarily im- 
precise, ORDEN's membership was usually 
put at 30,000-60,000, while the BPR and 
FAPU each claimed some 40,000 members or 
sympathizers. 

4 Arguing that the failure of the October 
junta proved that the military would never 
accept reforms, one of that junta's five 
members, Guillermo Ungo, threw in with the 
violent opposition. 

6 See Report to the President of Special 
Mission to El Salvador (December 12, 1980, 
released December 23, 1980). 

6 This arms flow was documented in 
Communist Interference in El Salvador 
(Department of State Special Report No. 80, 
February 23, 1981). West German Socialist 
Party Vice Chairman Hans Jurgen 
Wischnewsky told a June 19 press conference 
in Bonn that Fidel Castro had personally ad- 
mitted Cuban deliveries of arms to El 
Salvador. 

7 Anderson, op. cit, p. 92. 

8 This document and the letter quoted in 
the next paragraph were among the battle 
plans, records of DRU meetings, and reports 
of arms shipments found in caches recovered 
from the PCES in November 1980 and from 
the ERP in January 1981. 

9 See "A Call by the General Command 
of the FMLN to Initiate the General Offen- 
sive," reproduced as Appendix 11, pp. 82-83, 
of the FMLN-FDR booklet El Salvador on 
the Threshold of a Democratic Revolutionary 
Victory, distributed in the United States in 
English during February-March 1981. ■ 



Der 1981 



77 



Western Hemisphere 



Cuban and Haitian Migration 



by Thomas 0. Enders 

Statement before the Subcommittee 
on Immigration and Refugee Policy of 
the Senate Judiciary Committee on 
July 31, 1981. Ambassador Enders is 
Assistant Secretary for Inter-American 
Affairs. l 

I am pleased to appear this morning to 
discuss the international and foreign 
policy aspects of Cuban and Haitian 
migration, in the light of the new im- 
migration policy announced by the Presi- 
dent, and to support the legislative 
changes he is requesting. I would like at 
the outset to make clear that, although 
the domestic impact of migration from 
either country is much the same, the 
foreign policy significance is quite 
different. 

Your committee asked us to discuss 
the possibility of future mass migrations 
to the United States. Emigration of a 
few dozen or a few hundred people may 
occur from a number of foreign coun- 
tries. A sudden, massive outflow of tens 
of thousands in a short period of time is 
likely only from a totalitarian state. 

In other words, in one case we are 
dealing with a friendly government — the 
Government of Haiti — interested in en- 
forcing its laws and respectful of the 
laws of its neighbors and desirous of 
cooperating with the United States in 
bringing illegal migration under control. 
Migration occurs as the result of 
separate decisions by private individuals 
without the support or sanction of their 
government. 

In the other case— in the Mariel 
boatlift of last year— we were faced by a 
deliberate decision of the Cuban Govern- 
ment to permit and, indeed, in many in- 
stances to force the departure of large 
numbers of its citizens for the United 
States. The offers of several countries to 
receive these Cubans and the efforts of 
international agencies to arrange a safe 
and orderly system of departures were 
rejected or ignored. 

The steps we take to halt illegal 
migration to the United States and to 
arrange the return of citizens of these 
countries who are not eligible for admis- 
sion will obviously be different in these 
two very different circumstances. 



The Case of Haiti 

In the case of Haiti, we face a con- 
tinuing problem. Illegal migrants from 
Haiti constitute a significant social and 
economic problem for the United States, 
particularly in the State of Florida. Over 
20,000 Haitians entered the United 
States illegally in the last year, many of 
them from dangerous sea voyages in un- 
seaworthy craft. However, the Govern- 
ment of Haiti has assured us of its 
determination to enforce its own laws 
against illegal migration and of its inten- 
tion to cooperate with the United States, 
to the maximum extent of its ability, in 
joint efforts to halt the flow. We are ac- 
tively engaged in both diplomatic and 
technical discussions with the Govern- 
ment of Haiti to determine how we may 
improve the cooperation of our two 
governments. 

One thing that has become clear is 
that Haiti will not be able to do the job 
alone, without U.S. assistance. The 
economic and security assistance re- 
quests for FY 1982 that are now before 
the Congress will be essential to enable 
the Haitian Government to deal with a 
severely strained economy and to im- 
prove the capability of its Coast Guard 
to prevent the departure of small boats 
with illegal migrants. 

In addition the U.S. Coast Guard 
will be assisting foreign governments 
that request such assistance to interdict 
on the high seas their flag vessels 
suspected of attemping to violate U.S. 
immigration laws. Arrangements will be 
made for expeditious screening and 
processing of any asylum requests at sea 
so that aliens who are not legitimate 
candidates for asylum can be returned 
promptly to their country aboard inter- 
dicted vessels. We envision that such in- 
terdiction would be done selectively and 
given maximum publicity in Haiti, with 
the cooperation of the Haitian Govern- 
ment, in order to have maximum impact 
on intending migrants without entailing 
excessive expenditure or enforcement 
effort. 

Legislation to facilitate seizure and 
forfeiture of vessels bringing aliens to 
the United States in violation of U.S. 
laws would also assist greatly in dealing 
with Haitian migration. Indeed, the U.S. 
Government technical team which visit- 
ed Haiti last week observed that the 
traffic in migrants is now highly orga- 
nized, using sizable ships. Confiscation 



of these ships, once they have been 
seized, would be a powerful deterren 
against those who are cynically profi 1 
from the traffic in Haitian migrants. 

The Case of Cuba 

Some 125,000 Cubans entered the 
United States between April 21 and ! 
tember 26, 1980. This was an un- 
precedented event — the deliberate us 
of innocent human beings to impose 
political and economic costs on a 
neighboring country. By the end of tl 
fiscal year, it is estimated that the 
Mariel boatlift will have cost the Unit 
States over $700 million. Such politic 
inspired exoduses have little in comir 
with legitimate immigration and refu 
issues; rather they are the ultimate ii 
manipulation — exploiting the sufferir 
of an oppressed people to commit an I 
friendly act against another country. 

Federal, state, and local govern- 
ments were unprepared to deal with 
Mariel boatlift of 1980. Although we 
estimate that between 1 and 2 millioi 
Cubans would like to leave the island 
approximately 200,000 Cubans have 
been approved by Cuban authorities : 
emigration. We must and we will be 
prepared to respond to any attempt 1 
Castro to repeat last year's sudden 
exodus. 

Let me make clear that we propc 
no change in this country's traditiona 
policy of welcoming individual refuge 
from persecution and tyranny, whetl 
from Cuba or other repressive regim 
But our experience of last year ampl 
proved that we simply cannot respon 
the same way when we are faced wit 
sudden influx of tens of thousands, ii 
eluding the inmates of jails and asylu 

Key Planning Elements 

There are four key elements in our p 
ning for any contingency of this kind 

First, Castro and the Cuban peof 
must be in no doubt or uncertainty 
about the nature of our response to a 
new Mariel. If they believe we are un 
prepared to handle an illegal immigra 
tion emergency, if they believe we wi 
vaccilate between attempting to stop 
migration and welcoming it, and if th< 
believe we will in the end welcome th> 
arrivals and resettle them in America 
communities, then the temptation to 
deal us another blow will be very gre; 
The President, by asking Congress fo 



I 



78 



Western Hemisphere 



uthority to declare an immigration 
gency and to take the actions 
ssary to respond to it, has clearly 
led his determination that there be 
istaking of our intentions. It is im- 
int that the Congress send the same 
1 in its action on the President's 
ative proposals. 

econd, it is vitally important to 
Castro the one means of transpor- 
a by which a massive flood of illegal 
ants can be brought to this coun- 
boats. The 1980 experience was 
possible by the U.S. citizens and 
ents who took thousands of 
registered boats to Cuba. Cuba has 
toats it could spare for a new 
ift. If U.S. residents do not take 
to Cuba, there can be no migration 
Cuba on the scale of Mariel. I am 
lent they will not do so if the U.S. 
rnment is clear that it disapproves, 
3 clear that such action is illegal, 
f it is clear that boatowners will 
heir boats and be subject to pros- 
m and heavy fines if they attempt 
ilp a foreign government create an 
^ration emergency. Again, adoption 

President's legislative proposals 
H have a major impact. 

hird, there are some boats in 
I , and some may reach there from 
s nited States despite out best 
Is. The Coast Guard, with support 
1 the Navy if necessary, would be 
Lble to interdict on the high seas 
I vessels that we have reasonable 
| to believe may be engaged in 
| porting illegal aliens to the United 
| s in violation of our laws. Cuba has 
B n the past made use of third coun- 
| ag vessels to carry migrants. In the 
ji if third country vessels, interdic- 
r rould, of course, take place only 
B the prior consent of the flag state. 

■ iroposed legislation would facilitate 
r arning these vessels away from the 
n (1 States before they have been 

■ .o unload their passengers on our 
lory and turning them back toward 
I port of departure or another point 
lie of the United States. 

ourth, for those Cubans and Hai- 
I who do, by one means or another, 
r> i in the United States, our policy 
I be one of immediate detention and 
I pt exclusion of those found to be 
Inissable to this country. To do 
I wise is to encourage others to 

r 

'hese are the four elements of a 
l-ssful policy to prevent new massive 
l<es of illegal aliens — a clear 



Administration and congressional rejec- 
tion of illegal immigration, seizure and 
forfeiture of vessels used for illegal 
boatlifts, interdiction of illegal boatlifts 
on the high seas, and detention and ex- 
clusion of those who arrive by that 
means. 

These are not, of course, cost-free 
policies. Effective interdiction, whether 
of the continuing Haitian boatlift or a 
potential Cuban one, means additional 
operating costs for the Coast Guard. Ex- 
pedited exclusion proceedings require 
additional manpower. Detention of the 
continuing flow of illegal migrants, plus 
prudent preparation for any sudden in- 
crease, requires, as the Attorney 
General said yesterday, "additional 
resources for the construction of perma- 
nent facilities." The Administration will 
ask your approval of the resources need- 
ed, and I hope that your committee will 
support our request. 

I do not wish to convey the impres- 
sion that discouraging Cuba from the 
temptation of unleashing a new human 
wave against this country or stopping it 
once it is started will be easy tasks for 
which we have found a simple formula. 
On the contrary, they will require dif- 
ficult and delicate balances of diplomatic 
pressures, effective law enforcement ac- 
tions, and well-coordinated Federal, 
state, and local policies. A clear consen- 
sus of congressional and public opinion 
in support of this approach will be in- 
dispensable if it is to succeed. 

President Reagan, in his statement, 
quoted the report of the bipartisan 
select commission that Mariel brought 
home to most Americans the fact that 
U.S. immigration policy was out of con- 
trol. The Administration's proposals are 
designed to bring coherence and control 
back into our policy and to insure 
respect for our laws both at home and 
abroad. We will well serve our foreign 
policy objectives by doing so. 



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



The Situation in 
Guatemala 



Statement submitted by Stephen W. 
Bosworth, Deputy Assistant Secretary 
for Inter-American Affairs, and Stephen 
E. Palmer, Acting Assistant Secretary 
for Human Rights and Humanitarian 
Affairs, to the Subcommittees on Human 
Rights and International Organizations 
and on Inter-American Affairs of the 
House Foreign Affairs Committee on 
July 30, 1981 1 

We are pleased to have the opportunity 
to discuss with you the situation in 
Guatemala, the Administration's policies 
toward that country, and the serious 
issue of human rights. 

Guatemala stands out in Central 
America because of its size — the most 
populous of the Central American 
republics — its economic potential — a 
GNP of over $7 billion with substantial 
industrial development and mineral 
resources — and its importance for 
regional stability. 

Guatemala has serious social, 
economic, and political problems. The 
country's economy, though growing, 
faces declining prices for primary prod- 
uct exports, investor uncertainty ag- 
gravated by the insurgency, and great 
disparities in income and opportunity 
between Guatemala's richest and poorest 
citizens. 



Political Problems 

Political problems complicate economic 
and social difficulties. Although govern- 
ments have been relatively stable, there 
is little consensus over the society's 
goals, the role of government or the 
limits of dissent. In the past several 
years, insurgency and increasing 
violence have blocked the peaceful 
resolution of such issues. 

Guatemalan guerrilla groups are led 
by self-proclaimed Marxist-Leninists. 
They support neither democracy nor 
human rights and have engaged in a 
campaign of violence and terror. 
Guatemalan insurgents— over 2,000 
strong — are heavily supported and in- 
fluenced by our adversaries. As in El 
Salvador, Cuba has systematically en- 
couraged and sponsored the unification 
of Guatemalan Marxist guerrilla groups 
and has provided increased assistance 



ler 1981 



79 



Western Hemisphere 



and guerrilla training in return. Many of 
the insurgents active in Guatemala have 
received some training in Cuba, in- 
cluding training in the use of heavy 
weapons. Cuba's international propa- 
ganda broadcasts support Guatemalan 
guerrillas and claimed on June 6, 1981, 
that the guerrillas had inflicted over 
1,000 casualties on the Guatemalan 
troops. Guatemalan insurgents have also 
received weapons from Nicaragua and 
collaborate closely with Salvadoran guer- 
rillas. 

Human rights violations in 
Guatemala are inextricably linked to the 
problem of violence in that society. 
Guatemala's violence stems from both 
endemic social and economic factors and 
from the willful efforts by both right 
and left to polarize the country. The 
most recent cycle of violence began in 
October 1978, when the leftist opposi- 
tion exploited an economic issue to lead 
street riots in which 30 people were 
killed. The country's rightist elements 
reacted in turn to this disruption of 
public order. Since then political violence 
in Guatemala has left more than 100 
killed each month. Centrist groups, in- 
cluding Christian Democrats, have been 
victims of the violence, and extremist 
views have come to dominate reactions 
from both sides. Many of these 
casualties are caused by the right. But 
the left pursues a calculated policy of in- 
creasing armed violence, which has in- 
cluded atrocities such as kidnapping of 
children, murdering business managers, 
and plundering property, intended to 
provoke government and rightist reac- 
tions. 

In response to escalating violence 
over the past 3 years, the United States 
systematically distanced itself from the 
Guatemalan Government— publicly and, 
at times, confrontationally. 

These policies did not, however, im- 
prove the status of human rights in 
Guatemala. On the contrary violence 
escalated, polarization intensified, and 
the insurgency grew. The cycle of prov- 
ocation from the left and overreaction 
from the right has become well- 
established. Both left and right have 
engaged in excesses and violations of 
commonly accepted human rights. The 
United States is deeply concerned over 
this violence. We were most saddened to 
learn that in the past several days, 
violence claimed the life of an American, 
Father Stanley Rother. 



New U.S. Policy Approach 

The Administration is convinced of the 
need to try a new, constructive policy 
approach to Guatemala; the policies of 
the past clearly failed. They have neither 
advanced our security interests nor 
prevented a deterioration in the human 
rights situation. We believe we must try 
to play a positive role in advancing both 
these concerns. 

As Under Secretary [for Political Af- 
fairs Walter J.] Stoessel testified before 
the Subcommittee on Human Rights and 
International Organizations on July 14, 
human rights is a principal goal of our 
foreign policy. The Administration's ob- 
jective is to make our security interests 
and our human rights concerns mutually 
reinforcing so that they can be pursued 
in tandem. Guatemala is a case in which 
we have both security and human rights 
concerns and where we are seeking to 
make these two concepts mutually rein- 
forcing. 

In Guatemala improved human rights 
will not be possible unless the overall 
level of violence and provocations by the 
insurgents are reduced. At the same 
time, improvement will require greater 
self-confidence on the part of the 
government, essential to assert its con- 
trol over the right and its own security 
forces. 

Therefore, we believe traditional 
diplomatic means are more appropriate 
in Guatemala today than public threat or 
censure. Traditional diplomacy and 
dialogue can bring about positive 
change, while censure often accentuates 
the tensions that contribute to viola- 
tions. 

In late May, after Ambassador at 
Large Vernon Walters' trip to 
Guatemala, we informed the House Sub- 
committee on Inter-American Affairs 
that we intended to go ahead with the 
sale of trucks and jeeps to Guatemala. 
He promised to consult with the Con- 
gress before any major changes in policy 
with regard to Guatemala. Guatemala 
has asked to purchase helicopter and air- 
craft spare parts. As Ambassador 
Walters told the subcommittee in late 
May, the Department is considering this 
request. No final decision has yet been 
reached. We should note that the 
Guatemalan Air Force uses helicopters 
as a means to maintain communication 
in large areas which are not well served 
by roads or landing strips and for both 
transporting troops and mercy missions. 



• 



It would be naive to expect 
dramatic, immediate results from ouil*- 
new policy approach, given the existi 
climate of violence and the insurgent 
efforts to increase violence. But we a 
convinced that dialogue is the only a] 
proach which can be effective in 
diminishing overreaction by governm 
forces and toleration of illicit rightist 
tivity. There have been some positive 
developments in the past several wee 
The Guatemalan security forces have 
made inroads in guerrilla operations 
And they have done it while taking c 
to protect innocent bystanders. 

We are concerned about human 
rights violations in Guatemala and th 
need to restore due process. While tl 
problem can only be solved in the em 
Guatemalans, we must seek to prom< 
the conditions which will contribute t 
their ability to solve the problem. 

We would now like to respond to 
those specific questions you have rais 
which we have not already answered 
this statement. 

We are familar with the Amnest 
International report on Guatemala ai 
have taken it into account. The Depa 
ment policy is and has been not to cc 
ment publicly on reports of private 
groups. We do, of course, recognize 
contributions private organizations c 
make in the field of human rights. 

The Department has not made a 
termination in this Administration on 
previous one that any government, i i 
eluding the Guatemalan Government 
engaged in a pattern of gross and cc 
sistent violation of human rights. W< 
have taken the legal requirements oi 
Section 502B of the Foreign Assistai 
Act into account and have applied th 
in good faith. 

Regarding the sale of trucks and. 
jeeps to Guatemala, the Administrati 
assessed foreign policy export contro 
to insure that such controls do not in 
pair U.S. trade without providing coi 
responding advantages to our foreigi 
policy. In April, after review of this 
issue and with applications pending f 
U.S. companies for the export of tru< 
jeeps, and other products to Guatem; 
we recommended that the Commerce 
Department drop cargo trucks, jeeps 
and several other items from its list < 
crime control and detection equipmer 
subject to special licensing procedure 



80 



Department of State Bulle 



TREATIES 



ur opinion, the removal of these 
is from the crime control list and 
ement instead under regional stabili- 
ontrols is not inconsistent with con- 
sional intent and does not under- 
e the provisions of the Foreign 
istance Act or of the Export Ad- 
istration Act, 

Although the executive branch has 
requested any foreign military sales 
S) credits for Guatemala since 1977, 
lave provided physiological testing 
in FMS cash basis to help select stu- 
t pilots for the Guatemalan Air 
:e. Such agreements for the sale of 
ing services were signed in April 
) and again in July 1981. This 
ing helps determine whether the stu- 
can physically stand rapid changes 
tmospheric pressure and helps him 
n how to deal with these changes. 
. sort of testing, which helps to pre- 
; serious air crashes, has been pro- 
d to the Guatemalans and to most 
n American air forces. 
Presidential elections are scheduled 
uatemala for March 7, 1982. These 
;ions will determine which of the 
lidates nominated in the next several 
ths will serve as president for the 
ar term beginning in 1982. We 
I 've strongly in the importance of 

I and open elections as a way to 

II erate the problems which face 

, :emalan society and hope that the 
u paign will evolve in a climate that 
i contribute to the resolution of 
I :emala's serious problems. 



■ The complete transcript of the hearings 
ii )e published by the committee and will 
t 'ailable from the Superintendent of 
c ments, U.S. Government Printing 
E e, Washington, D.C. 20402. ■ 



Current Actions 



MULTILATERAL 

Agriculture 

Convention on the Inter-American In- 
stitute for Cooperation on Agriculture. 
Done at Washington Mar. 6, 1979. Entered 
into force Dec. 8, 1980. TIAS 9919. 
Ratification deposited: Venezuela, 
July 31, 1981. 

Antarctica 

Recommendations relating to the fur- 
therance of principles and objectives of the 
Antarctic treaty (TIAS 4780). Adopted at 
London Oct. 7, 1977. 1 
Notifications of approval: ( .K . 
U.S.S.R., June 28, 1979. 

Recommendations relating to the fur- 
therance of principles and objectives of the 
Antarctic treaty (TIAS 4780). Adopted at 
Washington Oct. 5, 1979. 1 
Notification of approval: Argentina, 
June 23, 1981. 

Atomic Energy 

Agreement amending the agreement of 
Sept. 22, 1980 (TIAS 9863), concerning the 
transfer of a research reactor and enriched 
uranium to Malaysia. Signed at Vienna 
June 12 and July 22, 1981. Entered into 
force July 22, 1981. 

Commodities 

Agreement establishing the Common 
Fund for Commodities, with schedules. 
Done at Geneva June 27, 1980. ' 
Signatures: Costa Rica, July 29, 1981; 
Greece, July 21, 1981; Nigeria, July 20, 
1981. 

Ratification deposited: Haiti, July 20, 
1981. 

Conservation 

Convention on the conservation of Ant- 
arctic marine living resources, with annex 
for an arbitral tribunal. Done at Canberra 
May 20, 1980. 1 
Ratification deposited: South Africa, 

July 23, 1981. 

Consular 

Vienna convention on consular re- 
lations. Done at Vienna Apr. 24, 1963. 
Entered into force Mar. 19, 1967; for the 
U.S. Dec. 24, 1969. TIAS 6820. 
Accession deposited: Bhutan, July 28, 

1981. 

Cultural Property 

Convention on the means of prohibiting 
and preventing the illicit import, export, 
and transfer of ownership of cultural prop- 
erty. Adopted at Paris Nov. 14, 1970, at 



the Kith session of the UNESCO general 

conference. Entered into force Apr. 24, 

1972. ; ' 

Rati fication d eposited : Pakistan, 

Apr. 30, 1981. 

Customs 

Convention establishing a Customs Coopera- 
tion Council, with annex. Done at Brussels 
Dec. IB. 1950. Entered into force Nov. 4, 
1952; for the U.S. Nov. 5, 1970. TIAS 
7063. 
Accession deposited : Niger, July 1, 1981. 

Customs convention on the international 
transportation of goods under cover of TIR 
carnets, with annexes. Done at Geneva 
Nov. 14, 1975. Entered into force Mar. 20, 
1980. 2 

Senate advice and consent to accession: 
U.S. July 30, 1981. 

Education— UNESCO 

Convention on the recognition of studies, 
diplomas, and degrees concerning higher 
education in the states belonging to the 
Europe Region. Done at Paris, Dec. 21, 
1979. ' 
Ratification deposited : Yugoslavia, May 22, 

1981 

Energy 

Agreement on an international energy pro- 
gram. Done at Paris Nov. 18, 1974. 
Entered into force provisionally Nov. 18, 
1974; definitively, Jan. 19, 1976. TIAS 
8278. 

Definitive accession deposited : Portugal, 
June 29, 1981. 

Finance 

Agreement establishing the International 
Fund for Agricultural Development. Done 
at Rome June 13, 1976. Entered into force 
Nov. 30, 1977. TIAS 8765. 
Accession deposited : Equatorial Guinea. 

Fisheries 

International convention for the conservation 
of Atlantic tunas. Done at Rio de Janeiro 
May 14, 1966. Entered into force Mar. 21, 
1969. TIAS 6767. 

Adherences deposited : Angola, July 29, 
1976; Cape Verde, Oct. 11, 1979. 

Maritime Matters 

Amendments to the convention of Mar. 6, 
1948, as amended, on the Intergovernmen- 
tal Maritime Consultative Organization 
(TIAS 4044, 6285, 6490, 8606). Adopted at 
London Nov. 17, 1977. ' 
Acceptance deposited : Greece, July 28, 

1981. 

Amendments to the convention of Mar. 6, 
1948, as amended, on the Intergovernmen- 
tal Maritime Consultative Organization 
(TIAS 4044, 6285, 6490, 8606). Adopted at 
London Nov. 15, 1979. • 



ober1981 



81 



Treaties 



Acceptances deposited: China, July 29, 
1981; Greece, Norway, July 28, 1981. 
Senate advice and consent to ratification: 

July 30, 1981. 

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. HAS 6298. 
Accession deposited : Rwanda, July 15, 

1981. 

Convention on psychotropic substances. Done 
at Vienna Feb. 21, 1971. Entered into force 
Aug. 16, 1976; for the U.S. July 15, 1980. 
TIAS 9725. 
Ratification deposited : Rwanda, July 15, 

1981. 

Nuclear Material— Physical Protection 

Convention on the physical protection of 
nuclear material, with annexes. Done at 
Vienna Oct. 26, 1979. 1 
Senate advice and consent to ratification: 

U.S., July 30, 1981. 

Signatures : Bulgaria, June 23 1981 ; 3 Fin- 
land, June 25, 1981. 

Patents— Microorganisms 

Budapest treaty on the international recog- 
nition of the deposit of microorganisms for 
the purpose of patent procedure, with 
regulations. Done at Budapest Apr. 28, 
1977. Entered into force Aug. 19, 1980. 
TIAS 9768. 

Accession deposited : Philippines, July 21, 
1981. 

Plants— Plant Varieties 

International convention for the protection of 
new varieties of plants of Dec. 2, 1961, as 
revised. Done at Geneva Oct. 23, 1978. ' 
Ratification deposited : South Africa, 
July 21, 1981. 

Pollution 

Protocol relating to intervention on the high 
seas in cases of pollution by substances 
other than oil. Done at London Nov. 2, 
1973. 1 
Ratification deposited : Poland, July 10, 

1981. 

Postal 

Constitution of the Universal Postal Union 
with final protocol. Done at Vienna July 10, 
1964. Entered into force Jan. 1, 1966. 
TIAS 5881. 
Accession deposited : South Africa, June 11, 

1981. 

Additional protocol to the constitution of the 
Universal Postal Union with final protocol 
signed at Vienna July 10, 1964. Done at 
Tokyo Nov. 14, 1969. Entered into force 
July 1, 1971, except for article V of the 



additional protocol which entered into force 

Jan. 1, 1971. TIAS 7150. 

Accession deposited: South Africa, June 11, 

1981. 

Second additional protocol to the constitution 
of the Universal Postal Union of July 10, 
1964, general regulations with final pro- 
tocol and detailed regulations. Done at 
Lausanne July 5, 1974. Entered into force 
Jan. 1, 1976. TIAS 8231. 
Accession deposited : South Africa, June 11, 

1981. 

Money orders and postal travellers' checks 
agreement with detailed regulations with 
final protocol. Done at Lausanne July 5, 
1974. Entered into force Jan. 1, 1976. 
TIAS 8232. 
Accession deposited : Guyana, June 19, 

1981. 

Property — Industrial Designs 

Locarno agreement establishing an interna- 
tional classification for industrial designs, 
with annex. Done at Locarno Oct. 8, 1976. 
Entered into force Apr. 27, 1971; for the 
U.S. May 25, 1972. 

Notification of denunciation deposited: 
U.S. July 21, 1981; effective July 21, 1982. 

Refugees 

Protocol relating to the status of refugees. 
Done at New York Jan. 31, 1967. Entered 
into force Oct. 4, 1967; for the U.S. Nov. 1, 
1968. TIAS 6577. 
Accession deposited : Philippines, July 22, 

1981. 

Rubber 

International natural rubber agreement, 

1979. Done at Geneva Oct. 6, 1979. 
Entered into force provisionally Oct. 23, 
1980. 

Accession deposited : Iraq, July 1, 1981. 

Safety at Sea 

International convention for the safety of life 
at sea, 1974, with annex. Done at London 
Nov. 1, 1974. Entered into force May 25, 

1980. TIAS 9700. 

Accessions deposited: Nigeria, May 7, 
1981; Libya July 2, 1981. 

Terrorism 

International convention against the taking 
of hostages. Adopted at New York Dec. 17, 
1979. ' 

Senate advice and consent to ratification: 
July 30, 1981. 

UNIDO 

Constitution of the United Nations Industrial 
Development Organization, with annexes. 
Adopted at Vienna Apr. 8, 1979. ' 
Ratification deposited : Mali, July 24, 1981. 
Signature: Democratic People's Republic 
of Korea Aug. 10, 1981. 



Whaling 

International whaling convention and schp 
ule of whaling regulations, as amended t 
the protocol of Nov. 19, 1956. Done at 
Washington Dec. 2, 1946. Entered into 
force Nov. 10, 1948. TIAS 1849, 4228. 1 
Adherence deposited: Philippines, Aug. 

1981. 

Wheat 

1981 protocol for the first extension of th( 
food aid convention, 1980. Done at 
Washington Mar. 24, 1981. Entered ink 
force July 1, 1981. 

Ratifications deposited: Federal Republi 
of Germany, 4 July 30, 1981; Luxembour 
July 29, 1981. 

1981 protocol for the sixth extension of th 
wheat trade convention, 1971. Done at 
Washington Mar. 24, 1981. Entered intx 
force July 1, 1981. 
Accession deposited : El Salvador, July 2 

1981. 

Ratifications deposited: Federal Republi 

Germany," July 30, 1981; Peru, Aug. 1» 
1981. 

Women 

Convention on the elimination of all forms 
discrimination against women. Adopted 
New York Dec. 18, 1979. Entered into 
force Sept. 3, 1981. 2 
Accession deposited: Saint Vincent and 

Grenadines, Aug. 4, 1981. 
Ratifications deposited: Haiti, Mongolia! 

July 20, 1981; Philippines, Aug. 5, 1981 
Signatur es: U.K., July 22, 1981; Peru, 

July 23, 1981. 

World Heritage 

Convention concerning the protection of 1 
world cultural and natural heritage. Do 
at Paris Nov. 23, 1972. Entered into fo 
Dec. 17, 1975. TIAS 8226. 
Ratification deposited : Cuba, Mar. 23, 

1981. 



BILATERAL 

Anguilla 

Agreement relating to the establishment i 
Peace Corps program in Anguilla. Effec 
by exchange of letters at Washington F 
19 and June 24, 1981. Entered into fore 
June 24, 1981; effective May 1, 1981. 

Australia 

Agreed record of conclusions reached in 
bilateral negotiations in the GATT 
multilateral trade negotiations, Tokyo 
Round, exchange of letters clarifying co 
elusions, and related letters of Feb. 4 ai 
Mar. 26, 1980. Done at Washington 
Mar. 29, Oct. 22 and 26, 1979. Entered 
force Mar. 31, 1980. TIAS 9975. 

Austria 

Arrangement within the context of the mi 
lateral trade negotiations concerning 



82 



Department of State Bulle 



Treaties 



icultural products, and related letters of 
30 and Apr. 14, 1980. Done Apr. 12 
Oct. 17, 1979. Entered into force 
1, 1980. TIAS 9977. 

;d record of discussions and memoran- 
l of understanding within the context of 
multilateral trade negotiations concern- 
the Austrian motor vehicle tax, and 
ted letters of Jan. 30 and Apr. 14, 

0. Done at Geneva Apr. 11, 1979. 
ered into force Jan. 1, 1980. TIAS 
4. 

la 

y on Pacific Coast albacore tuna vessels 
port privileges, with annexes. Signed 
Vashington May 26, 1981. 
ruments of ratification exchanged: 
wa, July 29, 1981. 
ered into force : July 29, 1981. 

randum of understanding within the 
:ext of the multilateral trade negotia- 
s regarding the staging of certain tariff 
ictions. Signed at Washington Sept. 17 

21, 1979. Entered into force Sept. 21, 
9. TIAS 9978. 

randum of understanding within the 
■ext of the multilateral trade negotia- 
5 relating to the agreement of Sept. 17 
21, 1979, regarding the staging of cer- 
tariff reductions. Signed at 
hington Oct. 9, 1979. Entered into 
k Oct. 9, 1979. TIAS 9978. 

n j*ena Commission 

« agreement within the context of the 
l ilateral trade negotiations, and related 
t of Apr. 14, 1980. Signed at Lima 
j 14, 1979. Entered into force Jan. 1, 
S ). TIAS 9979. 

Ii ibia 

!i i concerning the status of Quita Sueno, 
V cador, and Serrana, with exchange of 
I s. Signed at Bogota Sept. 8, 1972. 
I Ate advice and consent to ratification: 

I 31, 1981. 5 

i lican Republic 

t ment relating to the multilateral trade 
H jtiations. Effected by exchange of let- 

■ at Santo Domingo Dec. 21, 1979, and 
I 2, 1980. Entered into force Jan. 2, 

.« I. TIAS 9981. 

il jean Communities 

■ 'ment relating to certain chemicals in 

1. schedule XX to the GATT. Signed 
I. 21, 1979. Entered into force Dec. 21, 
B 9. TIAS 9985. 

■ -ment relating to staging of a chemical 
I:ession in U.S. schedule XX to the 

j IT. Signed at Brussels Dec. 27, 1979. 
I ered into force Dec. 27, 1979. TIAS 

■ >ment relating to modification of U.S. 
|;dule XX to the GATT, pursuant to arti- 

■ XXVIII. Signed Jan. 2, 1980. Entered 
I. force Jan. 2, 1980. TIAS 9987. 



Agreement within the context of the multi- 
lateral trade negotiations regarding trade 
in certain agricultural products, and related 
letter of Oct. 28, 1980. Done at Geneva 
Apr. 12, 1979. Entered into force Jan. 1, 
1980. TIAS 9982. 

Agreement within the context of the multi- 
lateral trade negotiations concerning tariff 
concessions for table grapes, and related 
letter of Oct. 28, 1980. Effected by letter 
signed at Brussels July 27, 1979. Entered 
into force Jan. 1, 1980. TIAS 9983. 

Agreement within the context of the multi- 
lateral trade negotiations concerning beer 
containers and beer, and related letter of 
Oct. 28, 1980. Signed Oct. 31, 1979. 
Entered into force Jan. 1, 1980. TIAS 
9984. 

Finland 

Letter and arrangement within the context of 
the multilateral trade negotiations concern- 
ing cheeses, and related letter of Jan. 30, 
1980. Done at Geneva Apr. 12, 1979. 
Entered into force Jan. 1, 1980. TIAS 
9988. 

Agreement relating to article XII of the 
General Agreement on Tariffs and Trade, 
and related letter of Jan. 30, 1980. Ef- 
fected by letter signed at Geneva Apr. 12, 
1979. Entered into force Mar. 13, 1980. 
TIAS 9989. 

Agreement within the context of the multi- 
lateral trade negotiations regarding 
alcoholic beverages, and related letter of 
Jan. 30, 1980. Effected by letters at 
Geneva and Washington Apr. 12 and Dec. 
4, 1979. Entered into force Mar. 13, 1980. 
TIAS 9990. 

Project agreement for cooperation in the 
field of icebreaking technology. Signed at 
Washington July 23, 1981. Entered into 
force July 23, 1981. 

Memorandum of understanding concerning 
cooperation in the field of transportation. 
Signed at Washington July 23, 1981. 
Entered into force July 23, 1981. 

Hungary 

Agreement within the context of the multi- 
lateral trade negotiations on nontariff mat- 
ters, and related letters of May 30, 1980. 
Effected by letters done at Geneva Aug. 31 
and Dec. 27, 1978, and Jan. 10, 1979. 
Entered into force Jan. 1, 1980. TIAS 
9991. 

Agreement amending the Nov. 18, 1978, 
agreement (TIAS 9992) on tariff matters. 
Effected by exchange of letters at 
Budapest Sept. 4 and 18, 1980. Entered in- 
to force Sept. 18, 1980. TIAS 9992. 

Agreement relating to revision of provision 
in the tariff schedules of the U.S. Done at 
Budapest June 13, 1979, and May 30, 1980. 
Entered into force May 30, 1980. TIAS 
9992. 



Iceland 

Agreement within the context of the 
multilateral trade negotiations concerning 
cheese and other agricultural products, and 
related letter of Jan. 30, 1980. Effected by 
exchanges of letters at Washington May 10 
and 25, June 12, [undated], Sept. 18 and 
Oct. 15, 1979. Entered into force Jan. 1, 
1980. TIAS 9993. 

India 

Memorandum of understanding setting forth 
mutual trade concessions and contributions 
to the multilateral trade negotiations, and 
related letters of Sept. 4 and Oct. 30, 1980. 
Signed at Geneva Mar. 24, 1979. Entered 
into force Apr. 24, 1980. TIAS 9994. 

Japan 

Agreement within the context of the 
multilateral trade negotiations concerning 
Japanese importation of peas and beans. 
Effected by exchange of letters at Geneva 
July 11, 1979. Entered into force Apr. 25, 
1980. TIAS 9995. 

Agreement within the context of the multi- 
lateral trade negotiations relating to 
agricultural and wood products, with an- 
nex. Effected by exchange of letters at 
Geneva July 11, 1979. Entered into force 
Apr. 25, 1980. TIAS 9996. 

Malawi 

Agreement between the U.S. and Malawi 
amending the agreement for sales of 
agricultural commodities of Dec. 30, 1980. 
Effected by exchange of notes at Lilongwe 
May 22, 1981. Entered into force May 22, 
1981. 

Morocco 

Agreement amending the agreement of Sept. 
24, 1980, establishing a Provisional Com- 
mission on Educational and Cultural Ex- 
change. Effected by exchange of notes at 
Rabat June 19, 1981. Entered into force 
June 19, 1981. 

Norway 

Arrangement within the context of the multi- 
lateral trade negotiations concerning 
cheeses, and related letter of Jan. 30, 1980. 
Signed at Geneva May 17, 1979. Entered 
into force Jan. 1, 1980. TIAS 9997. 

Agreement within the context of the multi- 
lateral trade negotiations regarding an in- 
crease in Norway's global quota for turkey 
rolls, and related letter of Jan. 30, 1980. 
Effected by letter done at Geneva June 28, 
1979. Entered into force Jan. 1, 1980. 
TIAS 9998. 

Pakistan 

Memorandum of understanding relating to 
concessions and contributions to be made to 
the multilateral trade negotiations, with 
related letters, and related letter of Jan. 
28, 1980. Done at Geneva Apr. 2 and 11, 
and Aug. 2 and 30, 1979. Entered into 
force Aug. 30, 1979. TIAS 9999. 



*>ber1981 



83 



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CHRONOLOGY 



- 



Poland 

Agreement relating to tariff and nontariff 
matters within the framework of the 
multilateral trade negotiations, and related 
letters of June 27 and Oct. 20, 1980. Ef- 
fected by exchange of letters at Geneva 
Feb. 28, 1979. Entered into force Jan. 1, 
1980. TIAS 10001. 

Portugal 

Agreement relating to beef and cheese within 
the context of the multilateral trade 
negotiations, and related letters of Feb. 4 
and 12, 1980. Effected by exchanges of let- 
ters at Washington June 12 and 18 and 
Nov. 5 and 7, 1979. Entered into force Jan. 
1, 1980. TIAS 10002. 

Romania 

Agreement relating to tariff and nontariff 
matters within the framework of the multi- 
lateral trade negotiations, and related let- 
ters of Sept. 30. 1980. Effected by letters 
done at Bucharest and Washington Mar. 2 
and Nov. 8, 1979. Entered into force 
Jan. 1, 1980. TIAS 10000. 

Agreement amending the agreements of 
Jan. 6 and 25, 1978, as amended (TIAS 
9166, 9211, 9212, 9570), relating to trade 
in cotton textiles, and Sept. 3 and Nov. 3, 
1980, (TIAS 9911) relating to trade in wool 
and man-made fiber textiles and textile 
products. Effected by exchange of letters 
at Bucharest July 13 and 20, 1981. Entered 
into force July 20, 1981. 

St. Vincent and the Grenadines 

Agreement relating to the establishment of 
a Peace Corps program in St. Vincent. 
Effected by exchange of letters at 
Bridgetown and St. Vincent May and June 
26, 1980. Entered into force June 26, 1980. 

Somalia 

Agreement concerning the provision of train- 
ing related to defense articles under the 
U.S. international military education and 
training (IMET) program. Effected by ex- 
change of notes at Mogadishu Apr. 5 and 
June 6, 1981. Entered into force June 6, 
1981. 

South Africa 

International express mail agreement, with 
detailed regulations. Signed at Pretoria and 
Washington May 25 and June 29, 1981. 
Entered into force July 1, 1981. 

Sweden 

Agreement within the context of the multi- 
lateral trade negotiations concerning cheese 
and other agricultural products, and related 
letters of Jan. 30 and Feb. 19, 1980. Done 
at Geneva June 13, July 5 and 10, 1979. 
Entered into force January 1, 1980. TIAS 
10003. 

Switzerland 

Agreement within the context of the multi- 
lateral trade negotiations regarding motor 
vehicles, and related letter of Nov. 19, 



1980. Effected by letter done at Bern Apr. 
11, 1979. Entered into force Jan. 1, 1980. 
TIAS 10004. 

Arrangement within the context of the multi- 
lateral trade negotiations concerning 
cheeses, with exchange of letters, and 
related letter of Nov. 19, 1980. Done at 
Geneva and Bern Apr. 12, 1979. Entered 
into force Jan. 1, 1980. TIAS 10005. 

Commitment of Switzerland within the con- 
text of the multilateral trade negotiations 
concerning access to its market for beef, 
and related letter of Nov. 19, 1980. Done at 
Geneva and Bern Apr. 12 and July 10, 
1979. Entered into force Jan. 1, 1980. 
TIAS 10006. 

Agreement within the context of the multi- 
lateral trade negotiations concerning the 
treatment of certain chemicals. Effected by 
exchange of letters at Geneva and 
Washington Dec. 18 and 21, 1979. Entered 
into force Dec. 21, 1979. TIAS 10007. 

U.S.S.R. 

Memorandum of understanding to extend the 
agreement of Oct. 20, 1975, (TIAS 8206) on 
the supply of grain by the U.S. to the 
U.S.S.R. Signed at Vienna Aug. 5, 1981. 
Entered into force Aug. 5, 1981. 

Uruguay 

Memorandum of agreement relating to pro- 
vision of Federal Aviation Administration 
services to the Government of Uruguay. 
Signed at Washington and Montevideo 
Mar. 19 and 20, 1981. Entered into force 
Mar. 20, 1981. 

Zambia 

Agreement for sales of agricultural com- 
modities, relating to the agreement of 
Aug. 4, 1978, with minutes of negotiation. 
Signed at Lusaka July 22, 1981. Entered 
into force July 22, 1981. 



1 Not in force. 

2 Not in force for the U.S. 

3 With reservation. 

4 Applicable to Berlin (West). 

5 With understanding. ■ 



August 1981 



nit 1 
'■ 



i! 



August 1 

Secretary Haig and Foreign Ministers of 8 
industrialized and 14 developing countries 
tend a preliminary meeting on cooperation 
and development in Cancun, Mexico, Aug. 
1-2. 

Gen. Omar Torrijos Herrara of Panam 
killed in a plane crash in western Panama. 
Torrijos had ruled Panama since 1968. 

Iran's Ayatollah Khomeini confirms 
Mohammed Ali Rajai as the new President 

August 3 

Israel and Egypt sign an agreement 
establishing the 2,500-member multination 
force and observers in the Sinai; Secretarj 
Haig on behalf of the U.S. as a witness. 

First meeting of the new session of th 
Law of the Sea Conference reconvenes. 
James L. Malone, Assistant Secretary of 
Oceans and International Environmental a 
Scientific Affairs, heads the U.S. delegatic 

August 5 

Egyptian President Sadat makes official v 
to Washington, D.C., Aug. 5-6. 

A three-man military junta assumes co 
trol of the Government of Bolivia, making 
this the 190th government Bolivia has had 
its 156-year history. 

August 10 

U.N. Conference on New and Renewable 
Sources of Energy is held in Nairobi, Ken; 
Aug. 10-21. U.S. delegation is headed by 
Ambassador James Stromayer. 

August 11 

Two F-15 jet fighter aircraft scheduled foi 
delivery to Israel are placed under the san 
suspension as 10 F-16s which were to haw 
been shipped earlier. 

August 13 

20th anniversary of the construction of thi 
Berlin Wall. 

August 17 

President Reagan announces completion ol 
review regarding Israeli use of U.S.-supplt 
military equipment and lifts 10-week suspe 
sion on the shipment of F-15 and F-16 jet: 
craft to Israel. 

August 18 

U.S. completes its obligations under the 
agreement that won freedom for U.S. 
hostages in Iran. A transfer of $2 million ii 
Iranian assets will go to the Iranian Goven 
ment and the remainder to an internationa 
tribunal in the Netherlands which will rule 
claims against Iran by U.S. companies. 



August 19 

Two U.S. Navy F-14s shoot down two Sovi 
built Libyan jets after being fired on by on* 
of the Libyan planes. The incident occurs 
over international waters 60 nautical miles 
off the Libyan coast. 



84 



Department of State Bullel| 



PRESS RELEASES 



st 21 

[nd Mexico announce an agreement that 
lited States will purchase 110 million 
of oil from Mexico for its strategic 
mm reserve. 

hniversary of 1968 Soviet invasion of 

pslovakia. 

it 24 

eagan Administration notifies Congress 
decision to sell five airborne warning 
■ntrol systems (AWACS) planes and 
air defense equipment to Saudi Arabia. 

it 25 

ian President Sadat and Israeli Prime 
er Begin meet in Alexandria, Egypt, 

11th round of summit talks for discus- 
>out normalization of relations and 
'or resumption of Palestinian autonomy 

e State Department and HIAS, a 
refugee aid organization, state they 
• Israel's plan to refuse aid to Soviet 
wishing to emigrate to countries other 
srael. Israel contends that the refusal 

jiiet Jews to settle in Israel jeopardizes 

■ permission for others to emigrate. 

)i overnment pays most resettlement 

S or emigrating Soviet Jews. 

Lt26 

Japan agreement prohibits U.S. export 
'i an of produce coming from parts of 
- nia quarantined because of Medflies. 

:e from other States may pass through 
i. 'nia en route to Japan if snipped in 

i containers. Produce from noninfested 

1 }f California must be treated before 
) 'nt. 

' e office of William Wilson, U.S. envoy 
\ Vatican, asks the Italian Government 
t :e appropriate action" in protest to an 
f by Soviet writer Vladimir Katin which 
f 'ates by innuendo" the U.S. Govern- 
l ind its envoy in the May 13 attack on 
n ohn Paul II. 

1 ntagon officials report that North 
» fired a surface-to-air missile at an 
• can SR-71 reconnaissance aircraft near 
] militarized Zone: the U.S. plane, which 
lot hit, was flying in South Korean and 
l itional airspace. 

It 28 

ji int declaration, Mexico and France 
>iize El Salvador's guerrilla-led opposi- 
I ; a "representative political force." 
ij -all for free elections and a restruc- 
i of the military forces. 

jit 29 

I ant Secretary for African Affairs 
l?r states that the United States will not 
I ides between blacks and whites in 
I Africa or try to undermine the South 
I n Government "in order to curry favor 
liere." 



August 30 

Iranian President Mohammed Ali Rajai and 
Prime Minister Mohammed Javad Bahonar 
are killed by a bomb planted in the Prime 
Minister's offices. 

August 31 

Hajatolislam Hashemi Refsanjani, speaker of 
parliament, and Ayatollah Abdulkarim 
Mussavi Ardabeli, Chief Justice of Iran, are 
named to run Iran until new presidential elec- 
tions can be held. 

U.S. vetoes a U.N. Security Council 
resolution condemning South Africa for its 
incursions into Angola. The resolution 
demanded immediate withdrawal of South 
African forces, but made no reference to the 
Cuban military presence in Angola, Soviet 
supplied materiel for SWAPO, or SWAPO 
raids into Namibia from Angola. 

An explosion damages European head- 
quarters of the U.S. Air Force at Ramstein, 
West Germany, injuring 20 people. 

A series of bombings in Lima, Peru, 
damages the U.S. Embassy, the U.S. Am- 
bassador's residence, and four companies 
with U.S. connections: There were no in- 
juries. ■ 



Department of State 



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



Subject 

Program for the state of Egyp- 
tian President Sadat, Aug. 
4-9. 

Haig: remarks en route to 
Cancun, July 31. 

Haig: interview on the "Today" 
Show. 

Haig: departure statement, 
Cancun, Aug. 2. 

Davis R. Robinson sworn in as 
the Legal Adviser (bio. data). 

Parker W. Borg sworn in as 
Ambassador to Mali (bio. 
data). 

Frederic L. Chapin sworn in as 
Ambassador to Guatemala 
(bio. data). 

Haig: press briefing on the visit 
of President Sadat. 

Robert Carl McFarlane sworn in 
as Counselor of the Depart- 
ment of State (bio. data). 

U.S., Romania amend textile 
agreements, July 13 and 20. 

U.S., Malaysia establish admin- 
istrative arrangement to 
textile agreement, July 17 
and 20. 

Haig: address before the Amer- 
ican Bar Assoc, New 
Orleans, Aug. 11. 



No. 


Date 


*260 


8/3 


261 


8/4 


262 


8/5 


263 


8/5 


*264 


7/31 


*265 


8/6 


*266 


8/6 


267 


8/6 


*268 


8/11 


*269 


8/11 


*270 


8/11 


271 


8/12 



271A8/12 Haig: question-and-answer 
session following address 
before ABA, Aug. 11. 

*272 8/12 U.S. Organization for the Inter- 
national Radio Consultative 
Committee (CCIR), study 
group CMTT, Sept. 2. 

*273 8/12 U.S. Organization for the 

International Telegraph and 
Telephone Consultative Com- 
mittee (CCITT), study group 
A, Sept. 3. 

"274 8/12 Arthur W. Hummel, Jr., sworn 
in as Ambassador to China 
(bio. data). 

*275 8/12 Shipping Coordinating Com- 
mittee (SCC), Subcommittee 
on Safety of Life at Sea 
(SOLAS), working group on 
ship design 
and equipment, Aug. 27. 

276 8/12 Anniversary of the Berlin Wall. 

277 8/13 Refugee advisory panel reports 

to Secretary Haig. 

278 8/13 U.S., Canada press release on 

Pacific salmon issues. 

279 8/14 Haig: remarks on "Good 

Morning, America." 

*280 8/17 SCC, SOLAS, panel on bulk 
cargoes, Sept. 2. 

*281 8/17 SCC, SOLAS, working groups 
on subdivision, stability, and 
load lines and safety of 
fishing vessels, Sept. 10. 

*282 8/17 SCC, SOLAS, working group on 
standards of training and 
watchkeeping, Sept. 16. 

*283 8/19 Julius Walker sworn in as 

Ambassador to Upper Volta 
(bio. data). 
284 8/19 Japanese imports of fruits and 
vegetables from California. 

*285 8/24 SCC, SOLAS and tonnage sub- 
committee, Sept. 9. 

286 8/24 Haig: interview on CBS News, 

Aug. 19. 

287 8/24 Haig: interview on "Issues and 

Answers," Aug. 23. 
*288 9/3 SCC, SOLAS, working group on 

radio communications, 

Sept. 24. 
*289 8/28 U.S., Macau establish textile 

visa system, Aug. 21. 
*290 8/28 U.S., Singapore amend textile 

agreement, Aug. 7 and 13. 
"291 8/28 U.S., Singapore amend textile 

agreement, Aug. 7 and 13. 
292 8/28 Haig: news conference. 

*Not printed in the Bulletin. ■ 



ber1981 



85 



PUBLICATIONS 



Department of State GPO Sales 



Free, single copies of the following Depart- 
ment of State publications are available from 
the Public Information Service, Bureau of 
Public Affairs, Department of State, 
Washington, D.C. 20520. 

Secretary Haig 

A Strategic Approach to American Foreign 
Policy, address before the American Bar 
Association, New Orleans, Aug. 11, 1981 
(Current Policy #305). 

News conference, Aug. 6, 1981 (Current 
Policy #304). 

Relationship of Foreign and Defense Policies, 
statement before the Senate Armed Serv- 
ices Committee, July 30, 1981 (Current 
Policy #302). 

Africa 

Background Notes on Mali (Aug. 1981). 

East Asia 

U.S. Relations with China, Assistant 
Secretary Holdridge before the House 
Foreign Affairs Committee, July 16, 1981 
(Current Policy #297). 

U.S. Interests in Southeast Asia, Secretary 
Haig before the international conference 
on Kampuchea in New York, July 13, 
1981, and Assistant Secretary Holdridge 
before the Senate Subcommittee on East 
Asian and Pacific Affairs, July 15, 1981 
(Current Policy #295). 

Economics 

U.S. Trade with the European Community, 
1958-80, report by the Bureau of In- 
telligence and Research, June 28, 1981 
(Special Report #84). 

International Commodity Agreements: New 
Wave or Ebb Tide?, report by the Bureau 
of Intelligence and Research, June 1981 
(Special Report #83). 

Europe 

Implementation of the Helsinki Final 
Act — 10th Semiannual Report, Decem- 
ber 1, 1980-May 31, 1981 (Special Report 
#85). Background Notes on Iceland (July 
1981). 

Food 

World Hunger, Deputy Assistant Secretary 
Michael Calingaert before the House 
Agriculture Committee, July 22, l'.iSl 
(Current Policy #299 1. 

Security Assistance 

Conventional Arms Transfers, Under 
Secretary Buckley before the Senate 
Foreign Relations Committee, July 28, 
1981 (Current Policy #301). ■ 



Publications may be ordered by catalog or 
stock number from, the Superintendent of 
Documents, U.S. Government Printing Office, 
Washington, DC 201,02. A 25% discount is 
made on orders for 100 or more copies of any 
one publication mailed to the same address. 
Remittances, payable to the Superintendent of 
Documents, must accompany orders. Prices 
shown below, which include domestic postage 
are subject to change. 

Background Notes: These short factual sum- 
maries describe the people, history, govern- 
ment, economy, and foreign relations of each 
country. Each contains a map, a list of prin- 
cipal government officials and U.S. 
diplomatic and consular officers, a reading 
list, and information for tourists. (A complete 
set of all Background Notes in stock— $31 
domestic; $37 foreign. A 1-year subscription 
service for about 60 updated or new 
Notes— $16; $20 foreign; plastic binder— $2.) 
Single copies vary in price. To order use the 
country name and date. Notes issued before 
April 1981 cost $1; $1.90 for foreign. The 
following Notes were published in June 1981. 

China June 20pp. 

Pakistan May 8pp. 

University Collaboration for 

Economic, Technical and Social 
Development. Agreement with Egypt. 
TIAS 9875. 26pp. $1.75. (Cat. No. 
S9.10:9875.) 

Economic Assistance— Administrative 
Decentralization. Agreement with 
Egypt. TIAS 9876. 23pp. $1.75. (Cat. 
No. S9.10:9876.) 

Atomic Energy— Technical Information 
Exchange and Cooperation in Nuclear 
Safety Matters. Agreement with Den- 
mark. TIAS 9877. 13pp. $1.25. (Cat. No. 
S9.10:9877.) 

Defense— Trident I Missile System. Agree- 
ment with the United Kingdom of Great 
Britain and Northern Ireland. TIAS 
9879. 6pp. $1. (Cat. No. S9.10:9879.) 

Technical Cooperation in Statistics and 
Data Processing. Agreement with Saudi 
Arabia. TIAS 9880. 3pp. $1. (Cat. No. 
S9. 10:9880.) 

Aviation— Research and Development Ac- 
tivities. Agreement with France. TIAS 
9881. 11pp. $1.25 (Cat. No. S9. 10:9881.) 

Peace Corps. Agreement with Papua New 
Guinea. TIAS 9882. 9pp. $1.25. (Cat. No. 
S9.10:9882.) 

Saint Lawrence Seaway — Tariff or 

Tolls. Agreement with Canada. TIAS 
9883. 8pp. $1.75. (Cat. No. S9. 10:9883.) 

Narcotic Drugs — Salary Supplements. 
Agreement with Mexico. TIAS 9884. 
5pp. $1.50. (Cat. No. S9.10:9884.) 

Shipping— Jurisdiction Over Vessels in 
United States Deepwater Ports. Agree- 
ment with Panama. TIAS 9885. 7pp. 
$1.75. (Cat. No. S9.10:9885.) 



t 



Atomic Energy— Research Participation) 
and Technical Exchange in Loss o<* 
Fluid Test (LOFT). Agreement witbfl, 
France. TIAS 9888. 21pp. $2. (Cat. 1 
S9. 10:9888.) 
Maritime Boundary. Agreement with 
Venezuela. TIAS 9890. 11pp. $2.25. 
No. S9. 10:9890.) 

Extradition and Mutual Assistance in 
Criminal Matters. Agreement with 
Turkey. TIAS 9891. 76pp. (Cat. No. 
S9.10:9891.) 

Prisoner Transfer. Agreement with Tur! 
TIAS 9892. 40pp. $2.75. (Cat. No. 
S9. 10:9892.) 

Atomic Energy— Peaceful Uses of Nucl 
Energy. Agreement with Australia. 
TIAS 9893. 29pp. $2.25. (Cat. No. 
S9.10:9893.) 

Agricultural Commodities. Agreement l 
Honduras. TIAS 9894. 9pp. $1.75. (0 
No. S9.10:9894.) 

Trade Matters. Agreement with Brazil. 
TIAS 9895. 4pp. $1.50. (Cat. No. 
S9.10:9895.) 

Colorado River Waters— Emergency Dt" 
liveries to Tijuana. Agreement with fc 
Mexico. TIAS 9896. 9pp. $1.75. (Cat \ 
S9.10:9896.) 

Plant Protection— Mediterranean Fruit ' 
Fly. Agreement with Mexico. TIAS f 
9898. 9pp. $1.75. (Cat. No. S9.10:98<| 

Atomic Energy— Application of Safegu t 
Pursuant to the Non-Proliferation " 
Treaty and the US-IAEA Safeguan I 
Agreement of November 18, 1977. 1 
tocol with Portugal and the Internal t 
Atomic Energy Agency. TIAS 9899. I 
$1.50. (Cat. No. S9. 10:9899.) 

Atomic Energy— Application of Safegu ! ; 
Pursuant to the Non-Proliferation 
Treaty and the US-IAEA Safeguan 
Agreement of November 18, 1977. 
tocol with Switzerland and the Inter: 
tional Atomic Energy Agency. TIAS 
9900. 6pp. $1.50. (Cat. No. S9.10:99(' 

Air Transport Services. Agreement witl 
Belgium. TIAS 9903. 48pp. $3.00 (C: 
No. S9. 10:9903.) 

Provisional Commission on Educationa 
and Cultural Exchange. Agreement 
with Morocco. TIAS 9904. 5pp. $1.50 
(Cat. No. S9. 10:9904.) 

Atomic Energy— Transfer of Uranium. 
Agreement with Mexico and the Inte li 
tional Atomic Energy Agency. TIAS 
9906. 23pp. $2.25. (Cat. No. S9.10:9SP 

Finance — Consolidation and Reschedul:' 
of Certain Debts. Agreement with 
Zaire. TIAS 9907. 36pp. $2.50. (Cat. I 
S9.10:9907.) 

Oil Supply Arrangement. Contingency It P 
plementing Arrangements with Israe I 
TIAS 9908. 7pp. $1.75. (Cat. No. 
S9.10:9908.) 

Finance — Consolidation and Reschedulh 
of Certain Debts. Agreement with 
Turkey. TIAS 9909. 21pp. $2. (Cat. M 
S9.10:9909.)« 



.S. GOVERNMENT PRINTING OFFICE: 1981 — 36>l 



86 



Department of State Bulle 



UEX 



tober 1981 
«l. 81, No. 2055 



nistan 

nistan: is Months of Occupation (Van 

Men) 63 

distance for Afghan Refugees H4 

i. Regional Strategy for Southern 

'nru (Crocker) 2-1 

jlture. Japan to Continue Imports of 

uits and Vegetables 50 

Control 

Problems of Arms Control (Rostow) .30 

ary Haig Interviewed on "Issues and 

iswers" 15 

ary Haig's News Conference i if 

igusl 28 18 

3o\ if! Union to Resume Arms Talks 
epartment statement) 5 

x Advisory Panel Report 62 

nterests in Southeast Asia (Holdridge) 35 
a. 

■ Salmon Issues (U.S., Canada 

sss release) 35 

anada Meeting on Hyde Park Agree- 

ait ' .34 

Libyan Interference in Chad 

;bcker) 28 

ary Haig's News Conference of Au- 

st28 18 

.elations With China (Holdridge) ... .38 
unications. New World Information 

vder (Abrams, Buckley) 66 

<ess 

lach to Foreign Economic Issues 

ashish) 4U 

and Haitian Migration (Enders) ... .78 
al Situation in Zimbabwe (letter to the 

•ngress) 29 

i Interference in Chad (Crocker) . . . .28 
iteral Development Banks and U.S. 

tman Rights Policy (Johnston) 49 

Vorld Information Order (Abrams, 

ickley) 66 

Problems of Arms Control (Rostow) .30 
■ tuation in Guatemala (Bosworth, 

liner) 79 

Report on Cyprus (message to the 

mgress) 51 

oterests in Southeast Asia (Holdridge) 35 
"roposes Air Defense Package for Saudi 
■aliia (Buckley, letter to the Congress, 

ckground paper) 52 

delations With China (Holdridge) ... .38 
Cuban and Haitian Migration 

inders) 78 

is. Third Report on Cyprus (message to 

e Congress) 51 

oping Countries 

v Era of Growth (Haig) 1 

nternational Economic Policy and Its 

tpact on LDCs (Rashish) 46 

>mics 

pach to Foreign Economic Issues 

.ashish) 40 

interests in Southeast Asia (Holdridge) 35 
nternational Economic Policy and Its 

ipact on LDCs (Rashish) 46 

lvador 

Ivador: The Search for Peace (back- 

•ound paper) 72 



Secretarj Haig's Nous Conference of Au- 
gust 28 18 

Energy. Approach to Foreign Economic 

Issues ( Rashish) 40 

Foreign Aid 

Approach to Foreign Economic Issues 

(Rashish) 40 

U.S. International Economic Policy and Its 
Impact on LDCs (Rashish) 46 

Germany. 10th Anniversary of the 

Quadripartite Agreement (Department 
statement) 52 

Guatemala. The Situation in Guatemala 

(Bosworth, Palmer) 79 

Haiti. Cuban and Haitian Migration 
(Enders) 78 

Human Rights 

Multilateral Development Banks and U.S. 
Human Rights Policy (Johnston) 49 

The Situation in Guatemala (Bosworth. 

Palmer) 79 

Immigration. Cuban and Haitian 

Migration (Enders) 78 

Information Policy. New World Informa- 
tion Order (Abrams, Buckley) 66 

Israel 

Security Council Meets on Lebanon-Israel 
Border Dispute (text of resolu- 
tion) 71 

Situation in the Middle East(Habib) 62 

U.S. Lifts Suspension of Aircraft to Israel 
(Haig) 61 

Japan. Japan to Continue Imports of Fruits 
and Vegetables 50 

Korea 

North Korea Fires at U.S. Plane (Department, 
statement) 39 

Secretary Haig's News Conference of Au- 
gust 28 18 

Lebanon 

Security Council Meets on Lebanon-Israel 
Border Dispute (text of resolution) .... 71 

Situation in the Middle East(Habib) 62 

Libya 

Libyan Interference in Chad (Crocker) ... .28 

Secretary's Interview for CBS News 61 

U.S. Planes Attacked by Libyan Aircraft 
(Gast. Weinberger, Department state- 
ments) 57 

Middle East 

Secretary Haig Interviewed on "Good 

Morning, America" 22 

Secretary Haig Interviewed on "Issues and 
Answers" 15 

Secretary Haig's News Conference of Au- 
gust 28 18 

U.S. Strategy in the Middle East (Haig) ... 13 

Military Affairs 

North Korea Fires at U.S. Plane (Department 
statement) 39 

Secretary Haig Interviewed on "Good 

Morning, America" 22 

U.S. Planes Attacked by Libyan Aircraft 

(Gast, Weinberger, Department state- 
ments) 57 

Multilateral Development Banks and U.S. 
Human Rights Policy (Johnston) 49 

Namibia. Namibia (contact group 

communique) 70 

Poland 

Secretary Haig Interviewed on "Good 

Morning, America" 22 



Secretary Haig's News Conference of Au- 
gustus 18 

Presidential Documents 

Internal Situation in Zimbabwe (letter to the 

( \ ingress) 29 

Third Report on Cyprus (message to the 

( 'ongress) 51 

United Nations Day, 1981 (proclamation) . . .2 
U.S. Proposes Air Defense Package for Saudi 

Arabia (Buckley, letter to the Congress. 

background paper) 52 

Publications 

Department of State 86 

GPO Sales 86 

Refugees 

Refugee Advisory Panel Report 62 

U.S. Assistance for Afghan Refugees 64 

U.S. Interests in Southeast Asia 

(Holdridge) 35 

Saudi Arabia 

U.S. Proposes Air Defense Package for Saudi 

Arabia (Buckley, letter to the Congress, 

background paper) 52 

Security Assistance 

Secretary Haig Interviewed on "Issues and 

Answers" 15 

Secretary Haig's News Conference of 

August 28 18 

U.S. Interests in Southeast Asia (Holdridge) 35 
U.S. Lifts Suspension of Aircraft to Israel 

(Haig) 61 

U.S. Proposes Air Defense Package for Saudi 

Arabia (Buckley, letter to the Congress, 

background paper) 52 

South Africa. Secretary Haig's News 

Conference of August 28 18 

Treaties. Current Actions 81 

U.S.S.R. 

Policy Problems of Arms Control 

(Rostow) 30 

Secretary Haig Interviewed on "Issues and 

Answers" 15 

Soviet Military Exercise (Department 

statements) 51 

U.S.- Soviet Union to Resume Arms Talks 

(Department statement) 5 

United Nations 

Namibia (contact group communique) 70 

A New Era of Growth (Haig) 1 

New World Information Order (Abrams, 

Buckley) 66 

Security Council Meets on Lebanon-Israel 

Border Dispute (text of resolution) .... 71 
United Nations Day, 1981 (proclamation) . . .2 
Zimbabwe. Internal Situation in Zimbabwe 

(letter to the Congress) 29 

Name Index 

Abrams, Elliott 66 

Bosworth, Stephen W 79 

Buckley, James L 52, 66 

Crocker, Chester A 24, 28 

Enders, Thomas 78 

Gast, Philip J., Lt. Gen 57 

Habib, Philip C 62 

Haig. Secretary 1, 13, 15, 18, 22, 61 

Holdridge, John H 35, 38 

Johnston, Ernest B 49 

Palmer, Stephen E 79 

Rashish, Myer 40, 46 

Reagan, President 29, 35, 51. 52 

Rostow, Eugene V 30 

Van Hollen, Eliza 63 

Weinberger, Caspar W 57 



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uvpartmvnt 



bulletin 



)fficial Monthly Record of United States Foreign Policy / Volume 81 / Number 2056 



November 1981 




Department of State 

bulletin 



Volume 81 / Number 2056 / November 1981 



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

The Bulletin's contents include major 
addresses and news conferences of the 
President and the Secretary of State; 
statements made before congressional 
committees by the Secretary and other 
senior State Department officials; 
special features and articles on 
international affairs; 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. 



ALEXANDER M. HAIG, JR. 

Secretary of State 

DEAN FISCHER 

Assistant Secretary for Public Affairs 

PAUL E. AUERSWALD 

Director, 

Office of Public Communication 

MARTIN JUDGE 

Chief, Editorial Division 

PHYLLIS A. YOUNG 

Editor 

JUANITA ADAMS 

Assistant Editor 



The Secretary of State has determined that 
the publication of this periodical is 
necessary in the transaction of the public 
business required by law of this 
Department. Use of funds for printing this 
periodical has been approved by the 
Director of the Office of Management and 
Budget through January 31, 1986. 



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



For sale by the Superintendent of 
Documents, U.S. Government Printi 
Office, Washington, D.C. 20402 

Price: 12 issues plus annual index — 
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Single copy— $3.25 (domestic) $4.10 (for 
Index, single copy— $2.25 (domestic) $2. 



CONTENTS 



FEATURE 

1 U.S. Recognition of Serbian Independence (Ronald D. Landa) 



The President 

Challenges of World Development 



14 
16 



News Conference of October 1 
(Excerpts) 



The Secretary 

17 Interview on "Issues and 
Answers" 

Economics 

20 East- West Trade Relations (Myer 
Rashish) 

24 North American Economic Re- 
lations (Myer Rashish) 

28 New Challenges in International 
Investment (Robert D. Hormats) 

34 International Commodity Agree- 
ments (Dennis T. Avery) 

Europe 

44 Secretary Haig Visits Europe 

(U.S. -Yugoslav Press Statement, 
Address. Question-and-Answer 
Session, News Conference) 

51 President's Letter to President 

Brezhnev (Department State- 
ment) 

52 Forgery, Disinformation, and 

Political Operations 
56 NATO and Nuclear Deterrence 
(Richard Burt) 



Middle East 



60 



63 



66 



67 



71 



74 



77 



Saudi Security, Middle East 
Peace, and U.S. Interests 
(Secretary Haig) 

Saudi Arabia and U.S. Security 
Policy (Joseph W. Twinam) 

Secretary's News Conference of 
October 7 

Death of Egyptian President 
Sadat (Secretary Haig, Presi- 
dent Reagan) 

Visit of Israeli Prime Minister 
Begin (Menahem Begin, 
President Reagan) 

Secretary Haig's News Con- 
ference on Prime Minister 
Begin's Visit 

Secretary Interviewed for "Good 
Morning, America" 



Military Affairs 

79 Reported Use of Chemical 

Weapons (Walter J. Stoessel, 
Jr.) 

Nuclear Policy 

79 Nuclear Cooperation Agreement 
with Egypt (Harry R. Marshall, 
Jr.) 

South Asia 

82 Economic and Security Cooper- 
ation with Pakistan: A Critical 
Partnership (James L. Buckley, 
M. Peter McPherson) 

United Nations 

86 Namibia (Western Five Statement) 

Western Hemisphere 

87 Brazil and the United States 

Today (Thomas 0. Enders) 

Treaties 

90 Current Actions 

Chronology 

92 September 1981 

Press Releases 

94 Department of State 

Index 



7 ' 










^f-e 






Iheyi^VrHy. 






/) 



m 







FEATURE 






•j^ 




U.S. 

Recognition 

of 

Serbian 

Independence 



One hundred years ago representatives 
of the U.S. and Serbian Governments 
met in Belgrade to sign consular and 
commercial treaties whereby the United 
States extended formal recognition to 
the newly independent state of Serbia. 
While Serbia had attained autonomy 
within the Ottoman Empire in 1830 and 
Turkish troops had withdrawn from the 
country in 1867, it was not until 1878 
following the treaties of San Stefano ' 
and Berlin ending the war between the 
Ottoman Empire and Russia, that 
Serbia, as well as Romania and 
Montenegro, became fully independent. 
The United States had little direct 
interest in the Balkans at this time and 
delayed extending recognition until the 
major European powers had done so. 
American interests were essentially com- 
mercial—to secure markets for 
American machinery, pork products, and 
armaments and to help counteract any 
tendency for Serbia to become too 
closely bound in its commercial relation- 
ships to Austria-Hungary. 

The Americans responsible for 
negotiating the treaties were of strik- 
ingly different backgrounds. One was 
John A. Kasson, Assistant Postmaster 
General in the Lincoln Administration 
and Congressman from Iowa, with little 
diplomatic experience. The other was 
Eugene Schuyler, one of the first 
American experts on Russia and eastern 
Europe who had spent 9 years at 
various consular and diplomatic posts in 
Russia and who had played a prominent 
role in the Bulgarian independence 
movement in 1876. ' 

To commemorate the signing of 



Eugene Schuyler 
(1840-1890) 



Born in Ithaca, New York. 
Graduated from Yale University (1859). 
Thereafter studied languages and 
philosophy at Yale and was among the 
first group of Yale students to receive a 
Ph.D. degree from that institution 
(1861). Appointed consul at Moscow in 
1867. Appointed consul at Revel in 1869 
and later that year became secretary of 



legation at St. Petersburg, where ht 
served until 1876. From 1876 to 187 
was consul general and secretary of 
legation at Constantinople, and was 
sul at Birmingham (1878-79) and co 
general at Rome (1879-80). From 1! 
to 1882 Schuyler was diplomatic agt 
(later charge d'affairs) and consul 
general at Bucharest. From 1882 to 
1884 he was consul general and min 
resident to Romania, Serbia, and 
Greece. Served as diplomatic agent 
consul general at Cairo (1889-90). 



/ 



have the honour to present to Your Ma- 
jesty the letter of the President of the 
United States of America accrediting me 
as their Minister Resident and Consul 
General near the Government of Your 
Majesty. The President has instructed 
me to express to Your Majesty his friend- 
ly feelings and his wishes for the welfare 
and happiness of Your Majesty and of 
the Serbian people. 

He believes that in establishing a 
Legation at Belgrade, he will do much for 
the increase of the commercial and 
friendly relations between the two coun- 
tries. 

I have the honour at the same time to 
present to Your Majesty a letter from the 
President (which the delays of my 
journey have prevented me from present- 
ing sooner) in which, on the part of the 
American people, he congratulates Your 
Majesty on the assumption of the dignity 
and title of King of Serbia, and in which 
he begs Your Majesty to believe in the 
sincere wishes of the American people for 
the peace and welfare of the Serbian na- 
tion, whose longings for independence, 
after centuries of struggle, have at last 
been realized. 

The President has also instructed me 
to express to Your Majesty his sen- 
timents of horror at the attempt recently 
directed against your person, his con- 
gratulations for your happy preserva- 
tion, and his wishes for your good health 
and long life. 



Eugene Schuyler Upon 
Presentation of Credentials 
to King Milan of Serbia, 
November 10, 1882 




(Phot, 
Eugene Schuyler: Selected , 
by Evelyn Schuyler Sch 



Department of State Bu 



;e two treaties, the following article 
written by Ronald D. Landa, Office 
he Historian, Bureau of Public 
lirs. 

ly Contacts 

in Ottoman troops were withdrawn 
n Serbia in 1867, the U.S. consul at 
harest, Romania, Ludwig J. 
pkay, suggested that the United 
,es appoint a "consular agent" at 
jade. He acknowledged that the 
;ed States might have "no direct in- 
st to watch over there," but he 
ened to point out that all the major 
opean powers had appointed consuls 
;ral at Belgrade. 2 

The Department of State authorized 
okay to nominate a "suitable person" 
;his position. 3 He asked the Serbian 
)matic representative in Bucharest, 
j& Magazinovic, to recommend some- 
possibly an American citizen. U.S. 
ular agents served without pay, and 
azinovic's inquiries revealed that 
e was no one willing to assume the 
tion. Magazinovic informed Czapkay 
the Serbian Government instead 
erred that Czapkay himself be 
ed consul at Belgrade, since Serbia 
the same relationship with Turkey 
id Romania. 

[n reporting this information to the 
irtment of State, Czapkay went so 
is to suggest that if he were 
)inted consul at Belgrade, he should 
iltaneously be named consul at the 
garian capital of Pest, which had no 
consular representation. Czapkay 
suggested that he be allowed to 
e his residence to Pest, claiming 
the climate in Bucharest and 
jade was very unhealthy. Moreover, 
:ost of living in those two cities was 
, and there were no consular fees to 
btained. 4 Czapkay did not mention 
, although he was an American citi- 
living in California at the time of his 
)intment to Bucharest, he had been 
i in Hungary. 5 The Department of 
e rejected Czapkay 's request to 
sfer his consular office to Pest and 
red his comments regarding the ap- 
tment at Belgrade. 6 



In the spring of 1868 Czapkay 
applied for and received a leave of 
absence from his post at Bucharest to 
visit various spas in Austria-Hungary. 
Just before departing, he learned of the 
assassination on June 10 of the Serbian 
Prince, Michael Obrenovic. In a note of 
sympathy which he gave to Magazinovic, 
Czapkay recalled that only 3 years 
before, President Lincoln had met a 
similar fate. He expressed assurances 
that Prince Michael's death "will excite 
the most profound sympathy on the part 
of the Government and people of the 
United States of America." The property 
and archives of the consulate were left 
in the hands of Magazinovic. 7 The 
curious situation thereby developed 
where a Serbian official, with whose 
government the United States had no 
official relations, served informally as 
charge d'affaires for the United States. 

Czapkay eventually returned to the 
United States to attend to personal 
business. In 1869, when the Department 
of State failed to respond to a request 
for an extension of his leave of absence 
and ignored a plea from his wife to the 
Secretary of State that he be given the 
consular post at Pest, Czapkay resigned 
his position at Bucharest. It was later 
learned that Magazinovic, apparently in 
1869, had left Bucharest without trans- 
ferring the consular powers to another 
agent. 8 Thus the initial U.S. -Serbian of- 
ficial contacts came to an end. 

Response to Serbian Independence 

Between 1875 and 1877 the inhabitants 
of Bosnia-Herzegovina staged an insur- 
rection against the Ottoman Empire and 
were aided by Serbia and Montenegro. 
On the eve of Serbia's declaration of war 
against Turkey in June 1876, the U.S. 
consul general and secretary of legation 
at Constantinople, Eugene Schuyler, 
visited Belgrade and was greatly moved 
by the war fervor. Schuyler noted that 
he could hardly control his own emotion 
when he thought "of the ruin that might 
come upon the country, the bombard- 
ment of this pretty town, and the ter- 



Feature 

U.S. 

Recognition 

of 

Serbian 

Independence 



rible cruelties that would be perpetrated 
in consquence of this popular enthu- 
siasm." The American diplomat was able 
to talk with the 22-year-old Prince 
Milan, who had become Prince following 
a brief regency in the wake of Michael's 
death in 1868. The Prince was "hand- 
some and well-built and singularly in- 
telligent and well-informed," said 
Schuyler, who found Milan better 
acquainted with events in America than 
many Americans in Paris. 9 By 1877 
Turkey managed to defeat Serbia and 
Montenegro, who were forced to sue for 
peace. 

In 1877 Russia declared war on 
Turkey on behalf of the Balkan Slavs. 
Following a 9-month campaign, from 
which Russia emerged victorious, the 
other major European powers, meeting 
at Berlin in the summer of 1878, 
negotiated a settlement which, among 
other things, acknowledged the complete 
independence of Romania, Montenegro, 
and Serbia. 

The breakdown of communication in 
the Ottoman Empire during the war 
prompted the U.S. minister in Vienna, 
John A. Kasson, to assume responsi- 
bility for the interests of U.S. citizens in 
Romania and Serbia. Kasson, a 56-year- 
old lawyer from Iowa, had helped draft 
the Republican Party platform in 1860 
and had been named Assistant Post- 
master General in Lincoln's Administra- 
tion. He had represented Iowa in the 
U.S. House of Representatives (1863-67 
and 1873-77). In the interim he had 
served in the Iowa State legislature and 
briefly as U.S. commissioner to nego- 
tiate postal conventions with various 
European powers. 

Kasson closely followed the pro- 
ceedings at Berlin. Based on his analysis 
of the provisions of the treaty of Berlin 
as they applied to Romania and Serbia, 
he strongly urged the Department of 
State in August 1878 to establish con- 
sular relations with these two princi- 
palities. 10 A consul had earlier been 
appointed at the Romanian port of 
Galatz, 11 but no appointments to Serbia 
were made. In November 1878 Kasson 
reported that Italy and Austria-Hungary 
had already appointed ministers pleni- 
potentiary at Bucharest, that Germany 
was intending to do the same, and that 
Russia had appointed a minister resi- 



>mber1981 




(Photo from TheMmmn w a Balkan Diplomatist bj 
Chedomille Mijatovich) 

Queen Natalija 
(1859-1941) 

Married Prince Milan in 1875. They 
had one son, Alexander. Became Queen 
in 1882 when the Kingdom of Serbia 
was proclaimed. Differed with her 
Austrophile husband because of her sym- 
pathies for Russia. They had a terrible 
fight on Easter of 1887, which led to a 
divorce the following year. The divorce 
caused great political controversy. She 
left Serbia in 1891 and returned only as 
a guest of her son. She later broke with 
Alexander, converted to Roman 
Catholicism, and spent her remaining 
years in a convent on the French 
Riviera. 



dent. Kasson noted further his 
understanding that only ministers resi- 
dent would be appointed to Belgrade. 12 

What he did not understand was the 
story in the Vienna newspapers that the 
United States, through a special envoy, 
had acknowledged the independence of 
either Romania or Serbia or both. 
Although he doubted the authenticity of 
the account, he asked the Department of 
State to clarify its policy toward the two 
countries. Kasson stated his reluctance 
to continue informal representation of 
American interests there without ex- 
plicit approval. Whereas several months 
before, he had recommended the estab- 
lishment of consular representation at 
Bucharest and Belgrade, he said the 
time had come "to annex those now 
independent principalities to some 
jurisdiction for United States diplomatic 
purposes, and to adjust the right of 
intervention for the interests of 
American citizens when necessary." 13 

But Secretary of State William M. 
Evarts replied that the United States 
did not intend, at least for the present, 
to open diplomatic relations with the 
Danubian principalities. It would con- 
tinue to appoint consuls at places "where 
it may be found such officers are 
needed," as it had recently done at 
Galatz. Evarts avoided answering 
Kasson's request for instructions as to 
whether he should continue to look after 
the interests of Americans in Romania 
and Serbia, expressing the hope that no 
such cases would arise while the Depart- 
ment of State was considering the ques- 
tion of representation. 14 

Despite Evarts' reluctance to estab- 
lish diplomatic relations, Kasson con- 
tinued to report on developments in the 
Danubian area. In March 1879 he sent 
to Washington two lengthy despatches 
on the government, finances, military 
organization, and commerce of the two 
countries. He noted that Great Britain 
had recently signed a commercial treaty 
with Serbia by which it secured the 
privileges of "most-favored-nation" treat- 



ment. The Austro-Hungarian Govei 
ment was opposed to this treaty, as 
as to other commercial treaties Ser 
might enter into, because of its des 
keep Serbia within its special spher 
influence. Because of Vienna's effoi 
improve transportation into and thi 
Serbia, Kasson thought that in the 
few years there would be "marked 
ress" in Serbia's financial and comn 
cial resources and a "largely increai 
demand for certain classes of manu 
tures." 16 

That summer Kasson returned 
Washington for consultations 16 and 
apparently argued strongly for the 
establishment of diplomatic relatioi 
with the two Danubian principalitie 
When he returned to Vienna in Au, 
1879, an instruction from Secretar 
Evarts awaited him indicating that 
recent changes in the map of easte 
Europe seemed "to open an era of 
political and material development 
cannot but react beneficially upon t 
countries which have now, or may 
hereafter, have close relations of o 
merce and friendship with the com 
now entering the family of nations 
Kasson was instructed to visit Beh; 
and Bucharest to determine what i 
of diplomatic intercourse was desir 
the Serbian and Romanian Govern 
ments, what grade of diplomatic aj 
would be acceptable to them, and " 
far these governments are prepare 
enter upon reciprocal action towar 
us." In discussing the possibility of 
tiating treaties with these two coui 
Kasson was told to use as models i 
1871 treaty between the United St 
and Italy on commerce and naviga 
an 1878 consular treaty with Italy, 
an 1871 trademarks convention wii 
Austria-Hungary. 17 

Kasson journeyed to Belgrade 
October 1879 to confer with Serbia 
Foreign Minister Jovan Ristic. He 
drafted a commercial treaty to pre; 
to Ristic but found that the foreign 
minister had prepared one of his o' 
calling for a 2-year provisional com 
cial arrangement while negotiation: 
tinued toward a final treaty. Kasso 



Department of State Bulk 



Feature 

U.S. 

Recognition 

Serbian 
Independence 



/ 







• -a, 



£ is wit/i heartfelt pleasure that I receive 
the letters of the President of the United 
States of America which accredit you in 
Serbia as Minister Resident and Consul 
General. I am delighted to see friendly 
relations inaugurated between our two 
countries, and I can assure you that I 
and my Government will heartily 
endeavor to consolidate and combine 
them. 

The sentiments of friendship which 
the illustrious President of the United 
States of America expresses and the 
wishes which he attests for me and my 
people are particularly dear to me and 
entirely respond to the feelings which we 
bear to your country. 

Nor am I less moved, Mr. Minister, 
by the congratulations which you bring 
me on the occasion of the proclamation of 
royalty in Serbia, and I beg you to inter- 
pret my feelings of sincere gratitude to 
the illustrious President of the United 
States of America. You will please also 
convey to him, Mr. Minister, the 
assurances that I was deeply touched by 
the sentiments which he caused to be ex- 
pressed to me by your amiable agency on 
the occasion of the attempt which was 
directed against my person. 

I congratulate myself, Mr. Minister, 
that the choice of the Government of the 
United States has fallen upon you whom 
I have already long had the opportunity 
of knowing and appreciating, and you 
may be sure that it will be a real 
pleasure to me and my government to 
facilitate the mission which has been con- 
fided to you. 

King Milan's Response 
to Eugene Schuyler, 
November 10, 1882 



King Milan Obrenovic 
(1854-1901) 

Educated in France. Following the 
assassination of Prince Michael in 1868 
and the establishment of a regency, he 
became Prince of Serbia in 1872. In 
1882 he was proclaimed King of Serbia. 
He abdicated the throne on March 6, 
1889. 



bmher 1981 




Cedomilj Mijatovic 
(1842-1932) 



Politician, author, historian. Studied 
at Leipzig and Zurich and in 1866 
became a university professor in 
Belgrade. Served as Minister of Finance 
in 1873 and on several subsequent occa- 
sions. Was Minister of Foreign Affairs 
(1880-81 and 1888-89). An intimate 
friend of Milan Obrenovic. After King 
Milan's abdication in 1889, Mijatovic was 
Serbia's minister in London and Con- 
stantinople. He wrote romantic short 
stories for youth and was the first to 
study systematically Serbian economic 
history. He also translated English 
historical works. 



hst by Chedomille Mijatovich) 



objected that such a treaty "could h 
be put into execution before it woul 
expire by its own limitations" and sj 
that the United States desired a 
"durable treaty, which should regul 
fully the principles of the relations t 
established between the two countri 
and the international rights to be 
accorded to their respective citizens 
Ristic seemed inclined to accept 
Kasson's point of view, although he 
alluded to the heavy commercial pn 
sure which Austria-Hungary, throuj 
which all Serbian commerce had to 
was exerting on Serbia. Minister of 
Finance Vladimir Jovanovic present 
Kasson another draft document wh 
more closely resembled the one thai 
American minister had prepared. 
Kasson deleted from Jovanovic's dr 
the provision for the adjustment of 
international tariff and added articl 
relating to consular affairs and the 
safeguarding of the religious rights 
Americans in Serbia. This revised c 
a combined commercial and consuls 
agreement, was submitted to the S<- 
bian Government for its considerati 
While in Belgrade Kasson was 
ceived with "great cordiality" by Pr 
Milan. Kasson, like Schuyler 3 year 
before, reported that the Prince, di 
their 30-minute meeting, struck hin 
very knowledgeable, so much so thu 
Kasson overestimated Milan's age I 
years. 

He inquired of the character of the 
merce which might be developed betwei 
two countries, and declared with a smile 
already American 'graisse' (probably m« 
lard) was imported into Serbia, althougl 
was an abundant article of their own pr 
tion. We also spoke of agricultural macl 
and tools for the soil, of American arms I 
etc. He left me with the impression of t li 
wish that my negotiations with his Mini 
might be successful. He is a young man 
perhaps thirty five years, with a handsc 
and intelligent face, and I believe persu; 
political sagacity, which is much needed 
relation to his neighbors. 19 

In Belgrade Kasson met an 
American attempting to negotiate i 
arms contract to equip the Serbian 
army; he expressed an earnest wis! 
a consulate be established there to ; 
and advise American businessmen. 2 
Kasson also obtained statistics on S 
bian exports and imports, which he 



ed were not completely accurate 
English and other foreign goods 
duced into Serbia were credited to 
ria-Hungary, the last country 
igh which they were transported, 
nt these statistics to the Depart- 
of State, along with a list of 
rn diplomatic and consular 
sentatives in Serbia and Serbian 
matic representatives abroad. 21 
n a separate despatch he trans- 
d a report on conditions in Serbia 
thered from his notes and observa- 
during his visit. This report 
ibed the organization of the 
•nment, the financial condition of 
a, industry, agriculture, ways of 
lunication, and the education and 
:gence of the people. Kasson said 
le had formed "a most favorable 
)n of the natural mental vigor of 
aople," but the Serbs were almost 
iever. Their faults "were not those 
ipidity, but rather those of 'smart- 
" and he attributed this to the in- 
:e of Turkish rule. Direct contact 
Western civilization and manners, 
>n hoped, would lead to improve- 
in this regard. 22 

efore leaving the city Kasson was 
iy Jovanovic that the Serbian 
•nment had accepted the commer- 
rticles of the draft treaty, but that 
msular articles would have to be 
ted further with Foreign Minister 
, who was ill but who had to leave 
ade on business as soon as he recu- 
ed. Kasson agreed to Jovanovic's 
:stion that the negotiations be con- 
d in Vienna with the Serbian 
■e d'affaires. Although Ristic was 
e to meet with Kasson, he did 
mit a note to Kasson listing his ob- 
ns to the consular provisions, most 
iich, Kasson believed, were based 
lisapprehensions, and were easily 
ved, in the judgment of the 
tary who brought them." 23 
n the American side, the only 
as question regarding a treaty with 
r Serbia or Romania was an accusa- 
)y an American Jewish organization 
the Romanian Government was 
i of violating the rights of Jews 
te a provision in the treaty of 
n guaranteeing religious liberty in 
ewly independent states. Secretary 
ts informed Kasson of these objec- 



Feature 

U.S. 

Recognition 

of 

Serbian 

Independence 




Map by Bill Hezlep, 

Bureau of Intelligence and Research, 

Department of State 



. . . the value of Serbian plums sent 
to the United States is not far from, a 
million dollars annually. Mr. 
Milanovitch, one of the large plum 
dealers in Belgrade, assures me that he 
has himself sent to America in one year 
as many as two and a quarter million 
pounds, worth on the average about 
$80,000. Generally, the prunes are 
roughly dried and packed in casks or 
mats, but two or three dealers have lately 
undertaken to dry the plums by artificial 
heat, as in France, and export them in 



neat boxes, so that while being superior 
in quality they present a better ap- 
pearance and bring a higher price. The 
plums in Serbia are of excellent quality, 
and if orders could be sent directly to 
Belgrade, not only could a better class of 
prunes be obtained, but they could be put 
upon the market in New York more 
cheaply than at present. 

Despatch from Eugene Schuyler 
to the Department of State, 
March 29, 1883 



member 1981 



tions and of the fact that the U.S. 
Government "has ever felt a deep in- 
terest in the welfare of the Hebrew race 
in foreign countries, and has viewed 
with abhorrence the wrongs to which 
they have, at various periods, been sub- 
jected by the followers of other creeds in 
the East." The Secretary was not in- 
clined to make the establishment of rela- 
tions conditional upon the government's 
protection of the rights of Jews, but he 
told Kasson that "any terms favorable to 
the interest of this much-injured people 
which you may be able to secure in the 
negotiations now pending with the 
Government of Roumania would be 
agreeable and gratifying to this Depart- 
ment." 24 

Kasson responded to Evarts by ex- 
plaining the principles behind his in- 
cluding an article on religious liberty in 
the draft treaty which he had just 
presented to the Serbian Government. 
He admitted that it had been his first in- 
clination to incorporate in the treaty, by 
explicit reference, the provisions of the 
treaty of Berlin on the question of 
religious liberties. Further reflection, 
however, led him to deal with this ques- 
tion in a separate and independent pro- 
vision. He thought that it was "more 
becoming to the national dignity that 
our stipulations should be direct, and 
that no reference should be made to a 
foreign international contract, which 
might even in a remote degree, involve 
my government in the constructions to 
be given to that instrument by its 
signers, or in the principles upon which 
that act of foreign intervention existed." 
Kasson pointed out that the treaty of 
Berlin was not an agreement with the 
Danubian principalities "but a treaty be- 
tween aliens imposing conditions of inte- 
rior legislation upon the independence of 
a weaker neighbor." More importantly, 
Kasson thought it unwise "to associate 
the United States Government with the 
European Powers in that system of 
foreign intervention and control of other 
countries, which from the time of the 
partition of Poland, has been the occa- 
sion of so much oppression against the 
rights of independence and liberty." 



Kasson was convinced that "with the 
exception of always possible isolated in- 
stances of injustice" in the principalities, 
the only cause for concern was "the ex- 
tent and the mode of granting to the 
Hebrews the rights of citizenship," 
which was a question "so peculiarly per- 
taining to interior administration as to 
render foreign judgment upon it inad- 
missible." The provisions on religious 
liberty in the Serbian draft treaty, the 
text of which Kasson enclosed with his 
despatch, were designed "to secure to 
American citizens of all faiths, protec- 
tion of person and property, equally 
with that given to natives, full rights of 
trade, and full liberty for the exercise by 
them of the rights of religious faith and 
of public worship." 25 

Throughout 1880 Kasson's negotia- 
tions with the Serbian envoy in Vienna 
proved unproductive, as Serbia, out of 
deference to Austria-Hungary, delayed 
commercial negotiations with other 
countries until it had concluded a com- 
mercial treaty with Austria-Hungary. 26 
For much of the summer and fall 
Kasson was back in the United States 
successfully campaigning for reelection 
to the House of Representatives. In 
October 1880 the Ristic ministry fell and 
was replaced by a new ministry in which 
Cedomilj Mijatovic was Foreign Minister 
and Finance Minister. The change was 
welcomed by Kasson, who said that the 
new government was considered liberal 
in foreign relations and inclined to the 
most-favored-nation system of treaties. 
It was even reported that Mijatovic's 
wife, who was close to Princess Natalija, 
had relatives in the United States. 27 

In December 1880 the Serbian envoy 
at Vienna notified Kasson that the new 
government would welcome a U.S. diplo- 
matic representative at Belgrade. 
Evarts instructed Kasson to reply that 
the United States would be happy to 
appoint a representative at Belgrade 




(Department of Stah 



William M. Evarts 
(1818-1901) 

Born in Boston. He graduated 1 
Yale (1837) and attended Harvard 1 
School (1838-39). Was admitted to 
bar and practiced in New York. Ev 
was chief counsel for President Joh 
in the impeachment trial of 1868 an 
torney General in President Johnso 
Cabinet (1868-69). He served as 
Secretary of State from March 187' 
til March 1881, and as such defined 
American policy with regard to an i 
mian canal, took a strong stand tow 
Mexico in defense of American lives 
property, and directed the negotiati 
treaties with China relating to com- 
merce and immigration. Evarts was 
delegate to the International Monet 
Conference at Paris in 1881 and ser 
one term as Senator from New Yor 
beginning in 1885. 



Department of State Bull 



Feature 

U.S. 

Recognition 

of 

Serbian 

Independence 



inquire as to the rank of the Ser- 
presentative to be sent to the 

States. 28 But the Serbian envoy, 
ructions, told Kasson that his 
ment sincerely regretted that "the 

condition of our finances does 
iw it to nominate its representa- 
ar the United States of America; 
ndulges the hope that the great 
althy Republic will not for that 
be less disposed to nominate its 
■ntative at Belgrade." Kasson 
Cvarts' attention to this "dignified 
ching appeal" and urged that the 
States lend its moral support to 
'ernment of Serbia by appointing 
sentative at Belgrade. 

>ia is struggling to establish its in- 
nce with the civilization of Western 
under many difficulties arising from 
1 intervening neighbors, and from the 
imposed on it by the provisions of 
in Congress. It would seem to have a 
jht to the generous consideration of 
•, richer, and more disinterested 
5 of the family of nations. 29 

the same time Serbia indicated 
iness to resume the treaty 
tions with the United States. In 
BO Eugene Schuyler had been 
diplomatic agent and consul 
I to Romania and empowered to 
E te commercial and consular 
with that government. Kasson 
it, in view of his own imminent 
to the United States to resume 
; in the House of Representatives 
similarity of the questions under 
on in the treaties proposed with 
i countries, Schuyler should also 
usted with the Serbian negotia- 



lition of Serbian Independence 

ion on the Serbian request for a 
tion of treaty negotiations and 
iointment of a U.S. diplomatic 
ntative fell to the new U.S. 
•nt, James A. Garfield, and his 
try of State, James G. Blaine. In 
881, a month after taking office, 
sent Schuyler a copy of the draft 
areviously submitted to the 

Government, a copy of Kasson's 
nts on the draft that he had left 
e Department of State during his 
Washington in the fall of 1880, 



and a copy of a recent act of Congress 
regarding trademarks. Schuyler was 
asked to give his views as to the expe- 
diency of concluding a commercial treaty 
with Serbia and what form it might 
take. 31 

Schuyler answered that the United 
States should negotiate separate com- 
mercial and consular treaties, so that 
one could be denounced, if necessary, 
without affecting the other. His initial 
impression was that Serbian-American 
trade was very limited, involving only 
the export to the United States of Ser- 
bian dried plums and the importation of 
various articles of American origin by 
way of Germany and Austria-Hungary. 
Moreover, he felt the chances for a 
marked increase in trade were not 
bright. Despite the construction of a 
new railroad by Serbia to connect with 
the line running from the Greek port of 
Salonica, which would permit articles to 
be sent directly to Serbia without pass- 
ing through Austria-Hungary, Schuyler 
believed that Austria-Hungary would 
continue to exert great commercial in- 
fluence over Serbia and might even, in 
time, annex it. 

As for Kasson's draft treaty, 
Schuyler proposed a number of revi- 
sions. The most prominent was the ex- 
clusion altogether of the article 
guaranteeing religious liberty, which 
would be needed, said Schuyler, only if 
there was reason to think that this right 
would be infringed. Quoting pertinent 
passages from the Serbian Constitution 
that protected the free exercise of 
religion, except for the right of non- 
Orthodox faiths to educate and prose- 
lytize, Schuyler argued further that Ser- 
bia could not be expected by treaty to 
grant rights that were forbidden by its 
constitution. 32 Secretary Blaine 
approved all of Schuyler's suggested 
changes and authorized him to negotiate 
separate consular and commercial 
treaties with Serbia and to insert an 
article regarding trademarks in the con- 
sular treaty. Schuyler was advised not 
to sign any treaty without first sub- 
mitting the text to the Department of 
State for approval. 33 




(Department of State photo) 



James G. Blaine 

(1830-1893) 

Born in West Brownsville, Pa. 
Graduated from Washington College 
(1847) and taught school in Kentucky 
and Philadelphia, where he also studied 
law. One of the founders of the 
Republican Party. Served in the Maine 
legislature (1859-62) and was speaker 
1861-62. He was elected to the U.S. 
House of Representatives (1863-76) and 
was Speaker of the House (1869-75). He 
was Senator from Maine 1876-81. An 
unsuccessful candidate for the 
Republican presidential nomination in 
1876 and again in 1880. Blaine was 
Secretary of State from March to 
December 1881. Was the Republican 
presidential candidate in 1884. He was 
again Secretary of State from March 
1889 until June 1892. As Secretary, he 
convened and presided over the first 
Pan American Conference in 1889. 



jmber 1981 



' here are no large proprietors placed in 
Servia. The people of the country are 
generally poor, and cultivate only so 
much soil as their own family can 
manage with their rude implements, as 
simple in the workshop as they are on 
the farm. The rudeness extends to their 
wagons and to all their draft apparatus. 
Notwithstanding this, I saw at Belgrade 
great activity in the wagon and iron 



John A. Kasson 
(1822-1910) 




shops, extending late into the night; and 
I was told that the iron smiths worked 
double sets of hands, covering night and 
day. In agriculture, and all the indus- 
tries connected with it, there is in Servit 
a new and almost raw but fertile world, 
which western enterprise must soon 
enter and develope by persistently urgim 
upon the people the advantages of new 
methods of culture. 

Despatch from John A. Kasson 
to Secretary of State Evarts, 
November 20, 1879 



Born in Vermont, graduated from 
the University of Vermont (1842). Was 
admitted to the bar and moved to 
Missouri in 1850 and to Des Moines, 
Iowa, in 1857. Was a delegate to the 
Republican National Convention in 1860 
and helped draft the platform. Became 
first Assistant Postmaster General in 
the Lincoln Administration. At his sug- 
gestion, Lincoln called a postal con- 
ference which met in Paris in 1863 and 
to which Kasson was a delegate. This 
conference eventually led to the 
establishment of the International Post? 
Union. In 1867 Kasson acted as U.S. 
commissioner in the negotiation of six 
postal conventions. Served in the U.S. 
House of Representatives (1863-67), tht 
Iowa State legislature (1868-72), and 
again in the U.S. House of Represen- 
tatives (1873-77 and 1881-84). He was 
minister to Austria-Hungary (1877-81), 
and in 1884 he was appointed minister 
to Germany, where he served as the 
American representative at the interna- 
tional conference to regulate the status 
of the Congo. In 1889 Kasson was one 
of the American representatives at the 
Berlin conference to regulate the status 
of Samoa. He also was a member of the 
British-American joint commission whicl 
made an unsuccessful effort to solve the 
Alaskan boundary dispute. 



(Library of Congress Photo) 



10 



Department of State Bullel 



Feature 

U.S. 

Recognition 

of 

Serbian 

Independence 



n June 1881 Schuyler went to 
rade to resume the negotiations, 
n Prince Milan returned to the 
a\ from a trip abroad, the Council 
inisters convened on June 28 to 
iss the draft treaties that Schuyler 
^iven to Foreign Minister Mijatovic. 
r that day, Schuyler and Mijatovic 
;ly reached agreement and initialed 
Iraft treaties on behalf of their 
rnments. Mijatovic wanted to sign 
reaties immediately, but Schuyler 
med him that the texts had to be 
oved in Washington. 34 Thus the 
y negotiations that had sputtered 
lore than a year and a half under 
on and the previous Serbian 
rnment were concluded with 
rkable ease. 

Sefore returning to Bucharest, 
yler had an audience with Prince 
l, who asked him to thank Presi- 
Garfield for resuming the negotia- 
. During his stay, Schuyler revised 
stimate of the potential for Serbian- 
rican trade as a result of statistics 
showed the United States already 
mporting Serbian dried plums in 
mount of nearly $1 million annual- 
e now became convinced that there 
other openings for American trade 
Serbia. 35 

laving submitted copies of the ini- 
1 treaties to the Department of 
• for approval, Schuyler spent most 
e summer in Bucharest awaiting a 
. Washington, though, was preoc- 
d with the shooting on July 2 of 
dent Garfield and his death 11 
s later. On September 23, shortly 
the President died and after 
yler had sent several anxious 
rams to the Department of State 
srning the fate of the agreements, 
ceived a cable approving the texts 
e treaties. 36 He set out for Belgrade 
ctober 9, and on October 14 he and 
;ovic signed the consular and com- 
ial treaties. By this act the United 
:s formally recognized the inde- 
ence of Serbia. 37 That day Prince 

conveyed to Schuyler his con- 
ices on the death of President Gar- 



field, and the Prince and Mijatovic ex- 
pressed their great desire that the 
United States have "a regular if not per- 
manent representative at Belgrade." 
Schuyler was certain that such an 
appointment was warranted by 
American interests, which he said were 
greater in Belgrade than in Bucharest. 
From one-half to two-thirds of the Ser- 
bian plum crop, he said, was being ex- 
ported to the United States by way of 
Budapest and Trieste. He also said that 
on the basis of the treaties just signed, a 
fast-working American, whom he did not 
identify, had obtained "an exclusive con- 
cession for a pork-packing establishment 
on the American plan and with 
American machinery and processes," 
which would probably pave the way for 
other American enterprises being 
started in Belgrade. 38 

Establishment of Diplomatic Relations 

Shortly thereafter, Schuyler returned to 
the United States to await Senate advice 
and consent to the treaties. Secretary of 
State Frelinghuysen had asked that he 
prolong his stay in the event his exper- 
tise was required by the Senate. The 
Senate finally ratified the treaties on 
July 5, 1882. 39 Schuyler also received a 
new commission as minister resident 
and consul general to Romania, Serbia, 
and Greece. He was to reside at Athens 
and was to visit Bucharest and Belgrade 
at least once a year. 40 

The presentation of his credentials 
as the first U.S. diplomatic represent- 
ative to Serbia and the formal exchange 
of the ratified treaties was delayed by 
an assassination attempt October 25, 
1882, on Milan, who had been pro- 
claimed king earlier that year. The for- 
mal presentation did not take place until 
November 10, 1882. 

Accompanied by one of the king's 
aides and escorted by a troop of cavalry, 
Schuyler was driven from his hotel to 
the palace in a court carriage. Upon 
arrival at the palace, the guard pre- 
sented arms and a band played "Hail 
Columbia." Schuyler was received in a 
solemn ceremony by King Milan, to 
whom he gave his letter of credence and 
a letter from President Arthur con- 
gratulating him on the assumption of 
the title and dignity of King of Serbia, 



and with whom he briefly exchanged 
formal remarks. Following the audience, 
Schuyler had a private talk with the 
king and was subsequently presented to 
Queen Natalija. He was then returned to 
his hotel in the same manner that he 
had arrived. 

On November 15 a dinner was given 
by the king in Schuyler's honor, at which 
several Serbian ministers and foreign 
diplomats were present. The king pro- 
posed a toast to President Arthur, and 
Schuyler responded with a toast to the 
king and the royal family. That evening 
Schuyler also exchanged with the Ser- 
bian foreign minister the official ratifica- 
tions of the treaties. 41 Schuyler reported 
that the Serbian-American treaties were 
being used as models by Serbia in nego- 
tiating similar treaties with other coun- 
tries. 42 

Formal relations between the United 
States and Serbia, one of the six 
republics of present-day Yugoslavia, 
were thereby inaugurated. 43 In 1883 
Edward Maxwell Grant, whom Schuyler 
said was the only American he could 
find residing in Belgrade, was appointed 
vice consul there. 44 Schuyler was re- 
called to Washington in 1884, and his 
successors at Athens repeatedly com- 
plained of difficulties in properly cover- 
ing events in Serbia and Romania while 
residing in Athens. 45 In 1883 a Serbian 
consulate general was established at 
New York, 46 but it was not until 1917 
that Serbia sent a minister to the United 
States. 47 

Even after leaving Serbia, Schuyler 
maintained an active interest in the 
affairs of the country. In an 1889 article 
surveying Serbian history, Schuyler 
commented with much favor on the 
recently-promulgated Serbian Constitu- 
tion. 

On comparing the new constitution, the 
definitive text of which lies before me as I 
write, with the old one and with other con- 
stitutions of Europe, what strikes one is the 
great advantage it has over the old, and then 
that it is one of the most liberal constitutions 
in Europe. One might have perhaps a hesita- 
tion in accepting all its good qualities, were it 
not that the Serbians are an honest, 
straightforward, conservative and law-abiding 



11 



A Minnesotan in Search of Serbian Treasure 



On one of my visits to Belgrade I hap- 
pened to hear some vague rumors about 
an unfortunate American who had been 
seeking for treasure in several of the old 
ruined castles of Serbia. I heard enough 
to interest me deeply, and seized the 
first occasion for obtaining accurate in- 
formation. What I am now about to tell 
was chiefly derived from Mr. 
Miyatovitch, afterwards Minister of 
Foreign Affairs, but at that time 
Minister of Finance. . . . 

In July, 1875, a man, evidently a 
foreigner, came to the Ministry of 
Finance at Belgrade. When he obtained 
an interview with the Minister, and was 
asked why he came to Serbia, and why 
especially he wished to see the Minister 
of Finance, he said — in a strange 
German-English dialect — that he was a 
citizen of the United States and owned a 
farm in Minnesota which he worked 
with his children; but that he was unfit 
for hard work, as he had served in the 
war as a private, had been wounded, 
and was then receiving a pension of six 
dollars a month. . . . 

He then said that he was of Serbian 
origin; that his name was August Boyne 
de Lazar; that he was born in Chemnitz 
in Saxony in 1818; and that after the 
revolution in 1848, in which he was im- 
plicated, he had emigrated to the United 
States. He claimed to be descended from 
a family closely related to that of Prince 
Lazar; which was once so rich and 
powerful that it owned Sokol, Shabatz, 
and other towns in the Shumadia — that 
wonderful forest-country, even the name 
of which is derived from a word expres- 
sing the rustling of the leaves. When he 
said this, the Minister, who is well- 
versed in history, remembered an old 
tradition that the Obolitch family had 
owned property in this region; and he 
advised the American, if he searched at 
all, to confine himself to the delta be- 
tween the Sava and the Drina, where 
these towns are situated. . . . 

Boyne spent a whole year in that 
part of the country, and then began to 
explore the districts of Morava and 
Kraguyevatz. He occasionally returned 
to Belgrade; and the Minister, who had 
become more and more interested in him 



and had been greatly impressed by his 
straightforwardness, his earnestness, 
and his simple piety, assisted him from 
time to time with food, linen, clothes, 
and even money. Boyne had gradually 
learned a little Serbian, and wherever he 
went tried to do good to the people 
about him; leaving a most favourable 
opinion of him on all with whom he had 
to do. What particularly struck my 
friend the Minister was that he general- 
ly prayed aloud, and that his prayers 
were extemporized, and suited to par- 
ticular circumstances. "I was deeply 
touched," the Minister said, "when he 
prayed for Serbia, the Prince, the whole 
Serbian nation; and especially for the 
children of this nation who frequent the 
schools, upon whom he implored the 
Almighty's blessing. ..." 

In May, 1876, Boyne was full of 
hope, and said that he had found certain 
signs of an old ruined castle not far 
from Kraguyevatz. He came again to 
Belgrade in June during a period of 
great heat, on foot and utterly destitute; 
and was almost immediately taken ill. 
The Minister was absent at the time; but 
a lady went to see him in the wretched 
cottage where he had found a lodging, 
and provided him with linen and other 
necessaries. This friend on a later visit 
found that everything had been stolen 
from him in the weak state in which he 
was; and therefore had him transferred 
to the hospital. . . . When the Minister 
returned to Belgrade he went to see 
poor Boyne, and found him dying. He 
expired on the morning of August 3, 
1876, and was buried among the poor in 
the highest spot of the cemetery of 
Belgrade, whence there is a lovely view 
over the Danube. The body of this 
unknown and friendless American, the 
possible descendent — and the last — of 
the hero King Lazar, was followed to 
the grave by one mourner only — the 
Serbian Prime Minister. . . . 

Eugene Schulyer, "The Minnesota Heir 
of the Serbian King: A Consular Ex- 
perience," in Evelyn Schuyler Schaeffer, 
Eugene Schuyler: Selected Essays (New 
York: Charles Scribner's Sons, 1901), 
pp. 303-320. 



I 



people, who have done so well under an i 
perfect constitution that they may be fai 
trusted to work this one rightly. The Stan 
ment of rights of Serbian citizens is vera 
clearly expressed, and they are fully equs 
those of Americans or Englishmen. 48 

While an American and a Yugos 
scholar, looking back on the period 
U.S. recognition of Serbian inde- 
pendence, agreed that Kasson was 
sentimental in his dealings with Serl 
than was Schuyler, whom they con- 
sidered a Slavophile, 49 one must crec 
each with great determination, ener^ 
and vision in helping to establish 
Serbian-American relations. 



J 



12 



'See Edward Younger, "The Early 
Diplomatic Career of John A. Kasson," u 
published Ph.D. dissertation, George 
Washington University, 1942, and Younj 
John A. Kasson: Politics and Diplomacy! 
Lincoln to McKinley (Iowa City: State 
Historical Society of Iowa, 1955). Regarc 
Schuyler's career, see Marion Moore 
Coleman, "Eugene Schuyler: Diplomat E> 
ordinary from the United States to Russi 
1867-1876," Russian Review, VII (Autui 
1947), pp. 33-48; and Ronald J. Jensen, 
"Eugene Schuyler and the Balkan CrisisA 
Diplomatic History, V (Winter 1981), 
pp. 23-37. A biographical sketch by 
Schuyler's sister, with extracts from his 
and letters to his family and friends, is i i 
Evelyn Schuyler Schaeffer, Eugene. SchU 
Selected Essays (New York: Charles 
Scribner's Sons, 1901). Professor Jenseni 
George Mason University is currently atl 
work on a biography of Schuyler. 

2 Despatch 21 from Bucharest, May 1 
1867. (National Archives, Record Group 
Despatches from U.S. Consuls at Buchan 
vol. 1) 

'Instruction 13 to Bucharest, June I 

1867. (Ibid., Instructions to U.S. Consuls* 
46) 

4 Despatch 39 from Bucharest, Decent 
10, 1867. (Ibid., Despatches from U.S. <| 
suls at Bucharest, vol. 1) 

5 A copy of Czapkay's certificate of 
naturalization, dated August 7, 1866, at , 
Francisco, and a long letter to Secretary. 
State Seward from the Hungarian patrio 
Louis Kossuth, dated January 20, 1866, 
recommending Czapkay for the consular 
at Bucharest, are ibid., Letters of Applic 
tion and Recommendation During the 
Administrations of A. Lincoln and A. 
Johnson. 

instruction 35 to Bucharest, June 2f 

1868. (Ibid., Instructions to U.S. Consulal 
49) 

'Despatch 52 from Bucharest, June 1 
1868, and despatch 55 from Bucharest, J. 
1, 1868. (Ibid., Despatches from U.S. Cd 
at Bucharest, vol. 1) 

8 Despatch 71 from Czapkay at San I 



Department of State Bullet 



:■ 



i 



Feature 

U.S. 

Recognition 

of 

Serbian 

Independence 



icisco, April 9, 1869, and despatch 73 

San Francisco, June 30, 1869, (ibid.); 
er from Mrs. L. J. Czapkay to Secretary 
ate Seward, December 15, 1868 (ibid. , 
ers of Application and Recommendation 
ng the Administrations of A. Lincoln and 
jhnson); letter from Adolph Buchner, 
larest, December 26, 1869, to Secretary 
ate Hamilton Fish (ibid., Despatches 

U.S. Consuls at Bucharest, vol. 1). 
Schuyler's letter to Miss King, Belgrade, 

28, 1876, quoted in Schaeffer, Eugene 
yler: Selected Essays, pp. 57-59. 
"Despatch 105 from Vienna, August 3, 
. (Foreign Relations of the United States, 

(Washington: Government Printing 
e, 1878), pp. 50-51) 

'Timothy C. Smith was appointed consul 
alatz on May 23, 1878. (Register of the 

rtment of State (Washington: Govern- 

Printing Office, 1879), p. 30) 
2 Despatch 126 from Vienna, November 

878. (Foreign Relations of the United 

s, 1879 (Washington: Government Print- 

)ffice, 1879), p. 38) 

Hbid. 

'Instruction 67 to Vienna, December 2, 

(National Archives, Record Group 59, 
matic Instructions of the Department of 
!, Austria, vol. 1). 

5 Despatches 180 and 181 from Vienna, 
h 31, 1879. (Foreign Relations of the 
id States, 1879, pp. 58-61). 
'Kasson left Vienna on May 15 and 
rently met in June with Secretary of 
• Evarts. In a letter written in the 
;d States on July 5, Kasson said he 
led to return to Washington later in the 
h to receive "instructions touching the 
al business of which the Secretary spoke 
i." (National Archives, Despatches from 
;d States Ministers to Austria, vol. 27) 
on arrived back in Vienna on August 28. 
'Instruction 121 to Vienna, July 30, 
. (Foreign Relations of the United States, 

pp. 79-80) In this instruction, Evarts 
commented on Kasson's "lively apprecia- 

of the importance of beginning an "in- 
;e intercourse" with Romania and Serbia. 
'Despatch 255 from Kasson at Belgrade, 
oer 29, 1879. (National Archives, Record 
p 59, Despatches from United States 
iters to Austria, vol. 27) 
mid. 
Hbid. 
'Despatch 258 from Vienna, November 

879. (Ibid.) 

2 Despatch 261 from Vienna, November 

879. (Ibid.) 

3 Despatch 258 from Vienna, November 

879. (Ibid.) 

■•Instruction 138 to Vienna, November 

879, with enclosed letter of October 30, 

, from Myer S. Isaacs and others to 

stary of State Evarts. (Foreign Relations 

e United States. 1880 (Washington: 

■rnment Printing Office, 1880), pp. 

6. 

5 Despatch 271 from Vienna, December 

879. (National Archives, Record Group 

)espatches from United States Ministers 

ustria, vol. 27) 



;mber 1981 



26 Regarding the negotiation of the com- 
mercial treaty between Serbia and Austria- 
Hungary, which was ratified by Serbia in 
June 1881, as well as the "secret convention" 
of June 28, 1881, by which Serbia in effect 
signed away its right to determine its own 
foreign policy, see Michael Boro Petrovich, A 
History of Modern Serbia, 1804-1918, vol. II 
(New York: Harcourt Brace Jovanovitch, 
1976), pp. 411-415. 

"Despatch 395 from Vienna, December 
17, 1880 (National Archives, Record Group 
59, Despatches from United States Ministers 
to Austria, vol. 28); unofficial letter from 
Eugene Schuyler at Bucharest to Secretary 
of State Evarts, December 6, 1880. (Ibid., 
Despatches from United States Ministers to 
Romania, vol. 1) 

2S Note from Filip Hristic, Serbian 
Minister in Vienna, to Kasson, December 23, 

1880, transmitted to the Department of State 
as an enclosure to despatch 401 from Vienna, 
December 25, 1880. (Ibid., Despatches from 
United States Ministers to Austria, vol. 28); 
Instruction 209 to Vienna, January 13, 1881. 
(Ibid., Diplomatic Instructions of the Depart- 
ment of State, Austria, vol. 3) 

"Despatch 426 from Vienna, February 
23, 1881, with which was enclosed Hristic s 
note of February 13 to Kasson. (Ibid., 
Despatches from United States Ministers to 
Austria, vol. 28) 

30 Despatch 414 from Vienna, January 19, 

1881. (Ibid.) 

"Instruction 33 to Bucharest, April 12, 
1881. (National Archives, Record Group 59, 
Diplomatic Instructions of the Department of 
State, Romania, vol. 1) 

32 Despatch 66 from Bucharest, April 30, 
1881. (Ibid., Despatches from United States 
Ministers to Romania, vol. 1) 

"Instruction 39 to Bucharest, May 23, 
1881. (Ibid., Diplomatic Instructions of the 
Department of State, Romania, vol. 1) 

34 Despatch 77 from Schuyler at Belgrade, 
June 30, 1881. (National Archives, Record 
Group 59, Despatches from United States 
Ministers to Romania, vol. 2) 

3 Hbid. 

"Despatch 92 from Bucharest, October 8, 
1881. (Ibid., Despatches from United States 
Ministers to Romania, vol. 1) 

37 John Bassett Moore, A Digest of Inter- 
national Law, vol. I (Washington: Govern- 
ment Printing Office, 1906), pp. 115-116. For 
the texts of the treaties, see Charles I. 
Bevans, Treaties and Other International 
Agreements of the United States of America, 
1776-1949, vol. 12 (Washington: U.S. Govern- 
ment Printing Office, 1974), pp. 1227-1237. 

"Despatch 94 from Schuyler at Belgrade, 
October 16, 1881. (National Archives, Record 
Group 59, Despatches from United States 
Ministers to Romania, vol. 1) 

"Letter from Frelinghuysen to Schuyler, 
February 25, 1882. (Ibid., Diplomatic Instruc- 
tions of the Department of State, Romania, 
vol. 1) 

40 Instruction 1 to Athens, July 5, 1882. 
(Ibid., Diplomatic Instructions of the Depart- 
ment of State, Greece, vol. 1) 



■"Despatches 1 and 2 (Serbian Series) 
from Schuyler at Belgrade, October 28 and 
November 16, 1882. (National Archives, 
Record Group 59, Despatches from United 
States Ministers to Romania, vol. 2) 

42 Despatch 5 (Serbian Series) from 
Schuyler at Belgrade, November 17, 1882. 
(Ibid.) 

43 Dr. Milan Bulajic, former Yugloslav 
Consul General in New York, marks the 
beginning of diplomatic relations as the ex- 
change of notes between Kasson and Hristic 
in Vienna in February 1881. (Milan Bulajic, 
"Establishment of Yugoslav-American 
Diplomatic Relations,' The Diplomatic Corps 
of Belgrade, 1971/2, pp. 21-22. 

"Despatches 1 and 5 (Serbian Consular 
Series) from Schuyler at Athens, March 13 
and August 20, 1883. (National Archives, 
Record Group 59, Despatches from United 
States Consuls at Belgrade, vol. 1). 

45 Charles Jelavich, "American Percep- 
tions of Serbia in the 1870's and 1880's, 
unpublished paper in the author's possession, 
p. 14. 

46 Gerhard Janssen was recognized as 
Serbian consul general at New York on 
February 12, 1883. (Register of the Depart- 
ment of State (Washington: Government 
Printing Office, 1883), p. 49) National 
Archives, Record Group 59, Certificates of 
Consular Recognition, vol. 1) According to 
one source, Janssen had been previously 
recognized as Serbian consul general at New 
York on August 8, 1879. (Register of the 
Department of State (Washington: Govern- 
ment Printing Office, 1879), p. 44) No other 
documentation regarding this earlier appoint- 
ment has been found in Department of State 
files. 

"Ljubomir Mihajlovic presented his 
credentials as Envoy Extraordinary and 
Minister Plenipotentiary of Serbia on January 
26, 1917. (Register of the Department of 
State, (Washington: Government Printing 
Office, 1918), p. 192) 

ie The Nation, vol. 48 (1889), p. 91. 

49 These were the conclusions reached by 
Kasson's biographer, Edward Younger, and 
Dr. Bozidar Sane, Secretary of the Yugoslav 
legation during World War II, who was 
preparing a study of Yugoslav-American rela- 
tions, during a conversation on March 2, 
1942. (Younger, "The Early Diplomatic 
Career of Jonn A. Kasson, ' p. 93)B 

For their assistance in the prepara- 
tion of this article, the author wishes to 
thank Professors Charles Jelavich of 
Indiana University and Ronald Jensen 
of George Mason University; Ruzica 
Popovitch and Robert V. Allen of the 
Library of Congress; Frances C. Rowsell, 
who helped with the picture research; 
Vincent J. Hovanec of the U.S. Embassy, 
Belgrade; the staff of the Exhibits Serv- 
ice, International Communication Agen- 
cy; and Milan Bulajic, Director, Office 
for International Legal Services, 
Yugoslav Federal Secretariat for 
Foreign Affairs. 

13 



THE PRESIDENT 



Challenges of World Development 



President Reagan's address before the 
annual meeting of the Board of Govt r- 
nors of the International Monetary Fund 
(IMF), International Bank for 
Reconstruction and Development (World 
Bank), International Development 
Association (IDA), and International 
Finance Corporation (IFC) in 
Washington. D.C., on September 29, 
1981J 

I believe your meeting can strengthen 
the national resolve and international 
cooperation required for the global 
economic recovery and growth that 
we're all striving to achieve, and I'm 
very grateful for this opportunity to ad- 
dress your distinguished group. 

It's customary to begin a speech 
before this annual meeting with a por- 
trait of the serious problems and 
challenges we face in the world 
economy. Those problems and challenges 
are certainly there in force, and I will 
get back to them in a minute and review 
them. But first, let me just take a mo- 
ment to salute the institutions that you 
represent. The IMF and the World Bank 
group have contributed enormously to 
the spread of hope of a better life 
throughout the world community. In the 
process, they have proved themselves 
capable of change, of adapting to new 
circumstances and the needs of new 
members. 

Your institutions have worked tire- 
lessly to preserve the framework for in- 
ternational economic cooperation and to 
generate confidence and competition in 
the world economy. They have been in- 
spired by the ideal of a far better world 
in which economic growth and develop- 
ment would spread to all parts of the 
globe. For more than three decades, 
they have worked toward these goals 
and contributed to results that are now 
clearly visible to all. 

This past decade in particular has 
tested the mettle and demonstrated the 
strength and merit of the World Bank 
and IMF. As the development report of 
the World Bank itself notes: 

The 1970s witnessed international 
economic convulsions at least as serious as 
any that may be thought highly probable in 
the next 10 years. The world's economy, its 
capacity to withstand shocks, has been 



severely tested and the tests were not passed 
with entire success. But parts of the develop- 
ing world have come through remarkably 
well. 

We need to recognize our progress 
and talk about it more in our conversa- 
tions with one another. This in no way 
denies the immense problems that we 
face. But without some sense of what 
we've achieved, without some encourage- 
ment to believe in our mission, we will 
succumb to defeatism or surrender to ill- 
advised solutions to problems that can 
never yield to grandiose schemes. 

To look at the challenges before us, 
let us recall that vision we originally set 
out to reach through international 
cooperation. The Second World War had 
left us with the realization, born out of 
the suffering and the sacrifices of those 
years, that never again must human in- 
itiative and individual liberties be denied 
or suppressed. The international political 
and economic institutions created after 
1945 rested upon a belief that the key to 
national development and human pro- 
gress is individual freedom (both political 
and economic. The Bretton Woods in- 
stitutions and the General Agreement on 
Tariffs and Trade established generaliz- 
ed rules and procedures to facilitate in- 
dividual enterprise and an open interna- 
tional trading and financial system. They 
recognized that economic incentives and 
increasing commercial opportunities 
would be essential to economic recovery 
and growth. 

We who live in free market societies 
believe that growth, prosperity, and, 
ultimately, human fulfillment are created 
from the bottom up, not the government 
down. Only when the human spirit is 
allowed to invent and create, only when 
individuals are given a personal stake in 
deciding economic policies and benefiting 
from their success (only then can 
societies remain economically alive, 
dynamic, prosperous, progressive, and 
free. 

Trust the people. This is the one ir- 
refutable lesson of the entire postwar 
period, contradicting the notion that 
rigid government controls are essential 
to economic development. The societies 
which have achieved the most spectacu- 
lar broad-based economic progress in the 
shortest period of time are not the most 
tightly controlled, not necessarily the 
biggest in size, or the wealthiest in 
natural resources. No, what unites them 



all is their willingness to believe in the 
magic of the marketplace. Everyday 1 
confirms the fundamentally human an 
democratic ideal that individual effort 
deserves economic reward. 

Nothing is more crushing to the 
spirit of working people and to the 
vision of development itself than the 
absence of reward for honest toil and 
legitimate risk. So let me speak plain! 
We cannot have prosperity and succe: 
ful development without economic fre 
dom; nor can we preserve our person; 
and political freedoms without econon 
freedom. Governments that set out tc 
regiment their people with the stated 
jective of providing security and liber 
have ended up losing both. Those whi 
put freedom as the first priority find 
they have also provided security and 
economic progress. 

The United States is proud of its 
contributions to the goals and institu- 
tions of postwar development. You ca 
count on us to continue to shoulder oi 
responsibilities in the challenges that 
face today. We see two of overriding 
portance: restoring the growth and 
vitality of the world economy and ass 
ing that all countries, especially the 
poorest ones, participate fully in the j 
cess of growth and development. But 
us remember, the most important cor 
tribution any country can make to wci 
development is to pursue sound eco- 
nomic policies at home. 

Regrettably, many industrial coui 
tries, including my own, have not ma< 
this contribution in the recent past. 
We've overspent, overtaxed, and over 
regulated, with the result being slow 
growth and soaring inflation. This "st 
flation," as the IMF annual report not 
is one of the two basic problems we 
must quickly overcome. The United 
States has set its course to economic 
recovery. Our program is comprehen- 
sive, and as I reminded the American 
people last Thursday evening, it will r 
quire effort and patience, but the rew; 
is worth working for. 

By reducing the rate of governme 
spending, honoring our commitment t 
balance the budget, reducing tax rate; 
to encourage productive investment a. 
personal savings, eliminating excessiv 
government regulation, and maintaini 
a stable monetary policy, we are con- 



14 



Department of State Bulle I 



The President 



:ed that we will enter a new era of 
;ained, noninflationary growth and 
sperity, the likes of which we haven't 
i for many years. And as the world's 
;est single market, a prosperous, 
wing U.S. economy will mean in- 
ised trading opportunities for other 
ons. 

America now receives half of all 
-OPEC developing-country exports 
manufactured goods to all the in- 
trialized countries, even though we 
Hint for only one-third of the total 
3S national product of those in- 
trialized countries. Lower U.S. infla- 
and interest rates will translate into 
eased availability of financial 
>urces at affordable rates. Already, 
tal markets in the United States are 
e accessible to the developing coun- 
3 than capital markets anywhere else 
ie world. No American contribution 
do more for development than a 
ving, prosperous U.S. economy. 
The domestic policies of developing 
ltries are likewise the most critical 
ribution they can make to develop- 
t. Unless a nation puts its own 
icial and economic house in order, 
mount of aid will produce progress, 
y countries are recognizing this fact 
taking dramatic steps to get their 
lomies back on a sound footing. And 
ow it's not easy — I have a few scars 
rove that fact — but it must be done. 
Only with a foundation of sound 
•estic policies can the international 
iomic system continue to expand and 
-ove. My own government is corn- 
ed to policies of free trade, 
■stricted investment, and open 
tal markets. The financial flows 
>rated by trade investment and 
ate lending far exceed official 
:lopment assistance funds provided 
eveloping countries. At the same 
, we're sensitive to the needs of the 
income countries. They can benefit 
international trade and growth in 
industrial countries because they ex- 
many raw materials and primary 
lucts the industrial world needs. But 
also depend upon our aid to 
ngthen their economies, diversify 
r exports, and work toward self- 
ciency. 

The United States recognizes this, 
r three decades we've provided more 

$130 billion in concessional 
stance. The American people have 
/en themselves to be as compas- 
ate and caring as any on Earth, and 
will remain so. 



We strongly support the World 
Bank. And because of our strong sup- 
port, we feel a special responsibility to 
provide constructive suggestions to 
make it more effective. We believe these 
suggestions will permit it to generate in- 
creased funds for development and to 
support the efforts developing countries 
are making to strengthen their econo- 
mies. 

Taking into account our budgetary 
constraints, we're committed to pro- 
viding the Bank and IDA resources for 
them to continue and improve their con- 
tributions to development. We know 
that stimulating private investment is 
also critically important. The Interna- 
tional Finance Corporation plays the 
leading role in the Bank family in sup- 



. . . the most important con- 
tribution any country can 
make to world development 
is to pursue sound economic 
policies at home. 



port of such investment. Given the im- 
portance of this role, we hope it can be 
enhanced. We believe all facets of the 
Bank can play a more active role in 
generating private resources and 
stimulating individual initiative in the 
development effort. 

The IMF also plays a critical role in 
establishing conditions to encourage 
private capital flows to deficit countries. 
By reaching agreements with the IMF 
on a sound, comprehensive stabilization 
program and by demonstrating its deter- 
mination to implement that program, a 
borrowing country signals private 
markets of its intent to solve its own 
economic problems. 

We're committed to a pragmatic 
search for solutions to produce lasting 
results. Let us put an end to the divisive 
rhetoric of "us versus them," "north ver- 
sus south." Instead, let us decide what 
all of us, both developed and developing 
countries, can accomplish together. 



Our plans for the Caribbean Basin 
are one example of how we would like to 
harness economic energies within a 
region to promote stronger growth. The 
design and success of this undertaking 
depends upon the cooperation of many 
developed and developing countries. My 
colleagues and I also look forward to the 
upcoming summit meeting at Cancun, 
Mexico. That occasion will provide us 
with fresh opportunities to address the 
serious problems we face and encourage 
each other in our common mission. 

In conclusion, each of our societies 
has a destiny to pursue. We've chosen 
ours in light of our experience, our 
strength, and our faith. We each are 
ultimately responsible for our actions 
and the successes and failures that they 
bring. But while individually responsible, 
we're also mutually interdependent. By 
working together through such institu- 
tions as the IMF and World Bank, we 
can all seek to collaborate on joint prob- 
lems, share our insights, and encourage 
the common good. 

These institutions have reflected a 
shared vision of growth and develop- 
ment through political freedom and eco- 
nomic opportunity. A liberal and open 
trade and payment system would 
reconstruct a shattered world and lay 
the basis for prosperity to help avoid 
future conflicts. This vision has become 
reality for many of us. Let us pledge to 
continue working together to insure that 
it becomes reality for all. 



'Text from White House press release. 



mber1981 



15 



The President 



News Conference of October 1 
(Excerpts) 



This morning Congress was notified of 
our intention to sell AWACS [airborne 
warning and control] aircraft and F-15 
enhancement items to Saudi Arabia. I 
have proposed this sale because it 
significantly enhances our own vital na- 
tional security interests in the Middle 
East. By building confidence in the 
United States as a reliable security part- 
ner, the sale will greatly improve the 
chances of our working constructively 
with Saudi Arabia and other states of 
the Middle East toward our common 
goal— a just and lasting peace. It poses 
no threat to Israel now or in the future. 
Indeed, by contributing to the security 
and stability of a region, it serves 
Israel's long-range interests. 

Further, this sale will significantly 
improve the capability of Saudi Arabia 
and the United States to defend the oil 
fields on which the security of the free 
world depends. 

As President, it's my duty to define 
and defend our broad national security 
objectives. The Congress, of course, 
plays an important role in this process. 
And, while we must always take into ac- 
count the vital interests of our allies, 
American security interests must remain 
our internal responsibility. It is not the 
business of other nations to make 
American foreign policy. An objective 
assessment of U.S. national interests 
must favor the proposed sale, and I say 
this as one who holds strongly the view 
that both a secure State of Israel and a 
stable Mideast peace are essential to our 
national interests. 

Q. Since Saudi Arabia has agreed 
to an American presence on AWACS, 
what do you think is the possibility 
now of Senate acceptance of the sale? 
And you seem to have been telling us 
right now that Israel should keep its 
hands off what we consider American 
national security matters in the Mid- 
dle East. 

A. No, and let me hasten to add, I 
don't mean that in any deprecating way 
because, in my meeting with President 
Sadat and Prime Minister Begin, both of 
them were fine meetings. I think we've 
arrived at a very great understanding, 



and we're going forward with strategic 
discussions of our relations with Israel. 
But I don't think that anyone — I sup- 
pose what really is the most serious 
thing is the perception that other coun- 
tries must not get a perception that we 
are being unduly influenced one way or 
the other with regard to foreign policy 
and I — 

Q. What about the chance of the 
sale going through in the Senate? 

A. I believe that the chance is good. 
I think that many of the things that 
we've had to report now on the terms of 
that sale meet most of the objections 
that some of those have had. 

Q. Will you be willing to accept 
larger cuts in your 1982 defense 
budget if Congress prepares it to total 
along those lines? 

A. I would hesitate to say that I 
would or that they should do this 
because these cuts were not just made 
on the basis of saying, "Oh, let's take a 
percentage of the money away from 
them." 

We went into what in the planned 
military buildup that we believe is essen- 
tial to our national security. What does 
each cut mean? What must we 
eliminate? 

I would like to call to your attention 
that before the program even went into 
effect, or before this $2 billion cut for 
1982, Caspar Weinberger, the Secretary 
there, had already come up himself with 
$3V2 billion in cuts in defense spending. 

Q. Why didn't you go for that? 

A. We found because he was able to 
find where he believed he could make 
the additional cuts trying to be helpful 
without any important setback to our 
military buildup. 

Q. Are you aware that the same 
people at the Pentagon and the State 
Department who now want you to sell 
AWACS planes to Saudi Arabia [in- 
audible] wanted that very same 
weapons system sold to the Shah of 
Iran just before the Shah fell? Given 
the fact that when the Shah fell, the 
United States launched top secret 
military equipment in Iran in its in- 



itial F-16 fighters, can you now 
guarantee the Congress and the pe: 
of the United States that the AW A' 
system, if it's sold to the Saudis, w 
not compromise American security 
would not fall into the wrong hand 

A. I can make that guarantee th. 
it will not compromise our security. I 
don't believe that it will fall into ener 
hands, but it would not compromise ( 
security even if it did. 

With regard to 4 l k years ago, I 
wasn't here then and Iran — I have tc 
say Saudi Arabia, we will not permit 
be an Iran. 

Q. There's been talk about limi 
nuclear war. Do you believe that 
either the Soviet Union or the Unit 
States could win a nuclear war? Is 
there a winnable nuclear war? 

A. It's very difficult for me to th 
that there is a winnable nuclear war, 
where our great risk falls is that the 
Soviet Union has made it very plain 
among themselves that they believe i 
winnable. And believing that, that 
makes them constitute a threat and 
which is one of the reasons why I'm 
dedicated to getting them at a table, 
for arms limitation talks but for arm 
reduction talks. 

Q. Can you be sure our Europe 
allies and anyone else in Europe ar 
not seeking military superiority ov 
the Soviet Union or, in fact, is thai 
the policy? 

A. We are seeking whatever is 
necessary to insure that that "windo 1 
vulnerability" I've spoken of has beer 
closed and that the risk has been re- 
duced of there being a war at all. An' 
think our allies, largely in Europe, d< 
know that. I also do think that there 
groups among our allies, as there arc 
here in America, who are increasing! 
vocal in carrying their own message 
it is one there of pacifism and neutra 
and so forth. I think they're very 
unrealistic, and if we listen to them, 
think we'd all be in trouble. 

Q. You said a few minutes ago 
that you would not allow, you woui 
not permit what happened in Iran 
several years ago to happen in Sau< 
Arabia. How would you prevent th; 
Would you take military interventii 
if that was necessary to prevent it? 



i 



16 



Department of State Bullejl 



THE SECRETARY 



A. I'm not going to talk about the 
fics of how we would do it, except 
,y in Iran I think the United States 
;o take some responsibility for what 
ened there — with some very short- 
I policies and let a situation come to 
ling point; there was no need to do 

But in Saudi Arabia, I just would 
;o your attention that it's not only 
Jnited States, it's the whole 
iern world. There is no way, as long 
ludi Arabia and the OPEC nations 

in the east — and Saudi Arabia's 
nost important, it provides the bulk 
e energy that is needed to turn the 
Is of industry in the Western 
i — there's no way that we could 
1 by and see that taken over by 
ne that would shut off that oil. 

^. I'd like to take you pretty far 
Wall Street to the People's 
lblic of China. There is a standing 
ation here for you, as the 
rican President, to go to China, 
eijing they are talking about that 
ibility. In Cancun at that summit 
;rence later this month you will 
iere and the head of government 
e People's Republic of China will 
iere. What is your thinking now 
t traveling to Beijing? 

Ia. That's something that I look for- 
I to with interest, but I don't think 
I while yet. 

I. They think in the spring of 
i year. Is that possible? 

\\. That may be a little earlier than 

I luld happen. And then I remember 
I all of you say that Presidents only 
i when they're in trouble and I 
want to be in trouble next spring. 
;hter] 



Secretary Interviewed on 
"Issues and Answers" 



from White House press release. 



Secretary Haig was interviewed on 
ABC's "Issues and Answers" by ABC 
Neuts correspondents Sander Vanocur 
and Barrie Dunsmore in Washington, 
D.C., September 20. 1981.' 

Q. The Administration's $8.5 billion 
arms proposal to sell weapons to the 
Saudi Arabians is in deep difficulty on 
the Hill. Now, as someone who was 
reported last winter to have urged 
caution, at times delay notification, 
while the Defense Department was 
practically negotiating the agreement 
with the Saudis, aren't you now, as 
the point man for the Administration 
on the Hill, rather in the position of 
the good soldier fighting with a battle 
plan that is not yours? 

A. Not at all. This is an issue that 
has been analyzed, studied, negotiated 
by two Administrations, not by one. And 
we have concluded that now is the time 
to proceed on this very important issue, 
to do so in the interests of the peace- 
keeping process in the Middle East, 
where we are going to require the co- 
operation and the help of all of the par- 
ties. And that's the essence of this issue. 

Q. Is there not a double standard 
here when you urge the Senators, as 
you did on Thursday before the Senate 
Foreign Relations Committee, to vote 
for this package because the President 
has to have the authority to go before 
other governments and they can be 
convinced that he can negotiate a trea- 
ty? And this, from you, for a presi- 
dent, who as a candidate opposed the 
Panama Canal Treaty and opposed the 
SALT II Treaty, both negotiated by 
his predecessor. Is there not only a 
double standard but hypocrisy in this? 

A. No. And, as a matter of fact, 
there is not a double standard issue at 
all. The issue is, does this sale meet the 
vital interests of the American people. 
And the facts are that it does in a very 
profound way. It does not mean that 
there are not risks for Israel in this sale. 
We recognize that. But the greater 
risks, at this juncture in the Middle East 
peacekeeping process, would be not to 
proceed with this sale. It's not a ques- 
tion of double standard. It's a question 
of whether this is the right step to take 
in the interests of the American people, 
and we believe that it is. 



Tiber 1981 



Q. On Thursday, Senator Glenn, to 
whom you paid respectful attention, 
said, if you modified the pro- 
posal — gave the AWACS [airborne 
warning and control system] recon- 
naissance planes to the Saudis at half 
price but you shared a joint command 
with the United States — he said that 
would go through the Senate in 20 
minutes. And he said afterward, after 
you had testified, that he'd help the 
Administration in any way. Now, if 
passage is desired, and if passage is 
dependent, as Senators say it is, on 
some modification like the Glenn pro- 
posal, is the Administration thinking 
about asking Senator Glenn to perhaps 
talk to the Saudis? He's respected by 
them. And see if he can put the deal 
together? 

A. Not at all. It is very easy for a 
Senator — and a very respectable and 
very competent Senator like Senator 
Glenn — to sit off on the side. He has not 
been involved in the months and months 
of discussions associated with this sale. 
To offer perhaps what is in his view a 
more desirable package — that's very 
understandable, and we welcome his 
suggestions. 

On the other hand, we've been 
through this process, and two Admini- 
strations have been through this proc- 
ess. We are convinced that the Govern- 
ment of Saudi Arabia, the people of 
Saudi Arabia, could not enter into an ar- 
rangement of the kind described by 
Senator Glenn without a serious blow to 
their sovereignty and national pride. 

After all, Saudi Arabia is a country 
that has experienced the vicissitudes of 
colonialism, and like so many other 
areas in the region, or countries in the 
region, including Egypt, they are very, 
very opposed to the establishment of 
American bases or pervasive American 
influence in their country. And I under- 
stand that, and I think we Americans 
have learned that lesson. 

Q. This past week, a couple of 
times you made the point that U.S. 
policy should not be subject to a 
foreign veto. To what extent do you 
feel that [Israeli] Prime Minister 
Begin's lobbying here, his charts and 
his graphs which he took to the key 
committees of Congress, may be a fac- 
tor in the ultimate defeat of this 
issue? 



17 



The Secretary 



A. Now, first, let's be sure we 
understand what I said and what I 
meant by external vetoes. In the first 
place, it is true that the leadership of 
Israel is concerned about this sale. And 
we understand that. And they have a 
perfect right, in fact they have an 
obligation, to express those concerns 
and to do it at home and to do it here. 
American citizens have a right to object 
to this sale if they feel on substantive 
grounds it is incorrect. 

The basic issue here is, the Ameri- 
can Administration— and I must add, 
two Administrations, essentially — have 
concluded that the overall, broad Ameri- 
can interests in the Middle East, the 
continuation of a peace process that is 
going to require, in fact demand, risk 
taking on all parts— my golly, Camp 
David, itself, was an assumption of risks 
by both Israel and Egypt that brought 
about the breakthrough— and there are 
risks involved in this particular sale, and 
there will be, indeed, risks in the peace- 
making process. 

The issue is, the United States must 
make these judgments. It bears the 
responsibility for a broader set of con- 
siderations, than does the Government 
of Israel. We must follow through. 

Q. On the flight home from 
Europe, you indicated that if this deal 
were defeated it would have serious 
implications on future U.S. Mideast 
policy. Does that mean that if the 
United States cannot establish a mili- 
tary presence in Saudi Arabia through 
this deal, which seems to be at least 
part of the reason for it, that it might 
render moot the whole idea of closer 
strategic ties with Israel? 

A. No. That's not the issue. The 
issue here is the participation, the good 
will of Saudi Arabia in the peacekeeping 
process from this point on is an absolute 
essential for success. We've seen what 
Saudi Arabia has contributed in the re- 
cent Lebanon crisis, not once, but in 
both crises that we witnessed this past 
spring and summer. And we need that 
kind of cooperation and those resources, 
that leadership, that diplomacy, that the 
Saudi Government has provided. If this 
sale were to fall through, certainly that 
kind of cooperation and confidence 
would be jeopardized. 

Q. One more question on the Mid- 
dle East. Do you have any indication 
as to who was behind the recent 
bombings in Lebanon which seem to 
be taking a terrible toll at this point? 



A. No, we do not. We have watched 
this very carefully. There are splinter 
groups in the Palestinian movement, the 
PLO [Palestine Liberation Organization]. 
There are some who are responsive to 
Libya, to Syria, and to the Soviet Union. 
And it has been basically a Libyan role 
in this whole peacekeeping process to be 
a spoiler. So one must take that into 
consideration. On the other hand, there 
are Christian elements that are equally 
concerned about the internal situation. 

Q. I want to take you back to the 
AWACS, not because of itself, but it 
tells you a lot about how this Ad- 
ministration has been conducting its 
foreign policy. The Carter Administra- 
tion looked with favor— those were 
the words that Secretary Brown used 
in his letter to Prince Sultan, the 
Defense Minister of Saudi Arabia. 

Earlier this year, you were having 
your battles with Senator Helms and 
other jurisdictional battles, the De- 
fense Department, the Secretary of 
Defense, and the Joint Chiefs of Staff 
Chairman, General Jones, were run- 
ning away with this while the State 
Department wasn't even out of the 
box. And now you have come to a 
point where the President risks a 
grave defeat and a blow to his 
prestige. Now, how did this happen? 
Where was the State Department 
throughout all this? 

A. I don't think that is correct. We 
certainly were out of the box. This is an 
issue which the previous Administration 
had been wrestling with and not too 
differently than we have. As a matter of 
fact, in December, before the new Ad- 
ministration inauguration, the previous 
Administration had suggested to us that 
they were prepared to move forward 
with the package. Now, not in the same 
context that we had. They were going to 
go forward with the augmentation of the 
F-15 capabilities and commit to addi- 
tional studies to develop an aerial 
surveillance capability. 

A lot of that had already, as you 
pointed out, at military levels brought 
forward a growing consensus that 
AWACS was the right system. Now, we 
asked the previous Administration not 
to go forward. We felt that if we were 
going to have to see this controversial 
issue through — and it had been con- 
troversial earlier — then we had the 
responsibility, and I think the obligation, 
to take the onus for putting it forward. 

And it was in that context that we 
recommended going slowly on the 
AWACS portion of it. And we have 



i 



18 



done that. We've been involved in ex> 
sive discussions with Saudi Arabia, a 
we have concluded them, and we feel 
that the conditions that they have 
agreed to — the transfer arrangemenl 
if you will — meet the objective, balan 
concerns of so many of the critics. Ai 
it is our hope that they will listen to 
these arrangements. And I think thei 
concerns will be satisfactorily met. 

Q. You must admit that after 
Thursday, and the introduction of t 
Packwood resolution with 50 signa 
tures, and Senator Packwood says 
has six more, and with Senator Gle 
who says he approves the F-15 par 
but not the AWACS sale, that's 57, 
you are between the rock and the h 
place. Is there no compromise? 

A. I know that gives a certain tr 
to this from the standpoint of Washi) 
ton press analyses, and to that degre 
is so. But let me tell you, that list th; 
Senator Packwood has put forward i 
also replete with soft spots. I could 
name for you today a dozen Senator; 

Q. Please do it today. 

A. — who have already conveyec 
that their assent to that letter is soft 
and they are ready to reconsider and 
objectively look at what we have to 
offer. I'm not going to put the names 
forward at this point. 

Q. Once men and women put tl 
names to a document of this gravit 
is not it very difficult to get them t 
remove their names? And what is 3 
pressure going to be? 

A. It's not a question of pressur 
It's a question of objective analysis b 
honest men who want to do what is 
right for their country, for the Amei 
people, and for our foreign policy. A 
it is our view that when they hear th 
Administration's case, and only some 
of them have now done so, we'll hav< 
completed by the end of this month. 
Why I am very, very confident that ; 
number of these men, who put their 
name on an expression of concern — 
a vote — will reconsider and join the 
President in this important initiative 

Q. Do you want a vote before t 
President meets Prince Fahd, [Dep 
Prime Minister] of the Saudi Govei 
ment in Cancun in October, on Oc- 
tober 22d? 

A. This vote could come forwarc 
after that time, with the 20-, 30-day 
notification provision, or it could be 
taken well before that, if that's the w 



Department of State Bulli j 






Al 



The Secretary 



;he Senate and the House. We would 
>e to get this behind us as soon as 
sible, just as a matter of principle. 

Q. This past week American 
lysts were saying that the latest 
iet message to Poland was omi- 

is, that it seemed to be designed to 
Pole against Pole, perhaps as a 

text for getting the Soviets to go 

;o restore order. What is your view 

that particular analysis? 

A. I think, clearly, and we made our 

n rather sharply 2 days ago, is that 
re are interventionist implications in 
Soviet note, and we don't welcome 
)n the other hand, it is also not a bla- 
t threat of the kind some might be 
n more fearful of. 

It is true that the situation in Poland 
ay has now pitted the political 
horities against the Solidarity move- 
it. In that sense, the tensions have 
nged somewhat, from Solidarity to 
iet pressure, externally. Now, all of 
je things are in a state of transition. 
1 we continue to insist — as I will 
m I meet [Soviet] Foreign Minister 
myko this coming week in New 
k — that we anticipate and expect 
insist that there not be any Soviet 
rventionism in Poland, that the 
sh people have a right to work out 

Rr differences. We think they can do 
the government versus the union 
/ement, Solidarity. 

Q. There are reports that follow- 
the recent Soviet maneuvers in the 
tic that many of the soldiers and 
i ipment remain. Just how ready are 
B Russians to invade if they decided 
hlo so? 

I A. We don't see signs of intense 
1 taxations as we have on two previous 
I isions. On the other hand, the exer- 
, which included some 100,000 in the 
lorussian area of Russia adjacent to 
Polish border and along the sea 
s, coastal areas — the troops have 
e back to garrison, essentially, but 
ly of the communications and the 
imand and control facilities for that 
rase remain in place and it will be 
lewhat later before they go back, 
i I suppose there are some political 
notations to that. 

Q. In December of 1980, the 
TO countries agreed on a number 
neasures they would take if Poland 
re to be invaded. Are those still in 
ce and are we still ready to react 
y strongly in the event of an inva- 
n? 



A. Absolutely. And I wanl to em- 
phasize that the coordination and co- 
operation within the NATO framework 
and in other related frameworks has 

been consistent and steady and it has 
followed each upturn and downturn of 
tension very, very closely. And it has 
this past week. 

Q. Would you negotiate, for exam- 
ple, the reduction of weapons in 
Europe if the Russians were to in- 
vade? 

A. We have made it clear that 
Soviet interventionism in Poland would 
have a profound impact on any pros- 
pects for arms control negotiations with 
the Soviets. 

Q. Following up on arms control, 
you and Foreign Minister Gromyko are 
going to be playing in New York this 
week to principally one audience. 
Western Europe. The Soviets are try- 
ing to continue to portray the idea 
they want to negotiate. And the 
United States is trying to portray, not 
just to domestic critics at home but to 
its European allies, it wants to 
negotiate while it goes ahead with 
plans to install this new generation of 
Pershing and cruise missiles in 
Western Europe. The Carter Ad- 
ministration came up with this plan. 
The Europeans bought it. And there 
weren't the outcries, political outcries, 
then that there are now. Is this occa- 
sioned by the fact that this Admini- 
stration seems, rightly or wrongly, to 
give the impression it is not willing to 
negotiate with the Soviet Union? 

A. No. I don't think that's the case. 
I would say that there has been a grow- 
ing concern in Western Europe about all 
matters nuclear, and that's a change, if 
you will, in the atmosphere in Western 
Europe itself. 

Secondly, it goes without saying that 
this Administration has taken a far 
more rigorous stance against Soviet in- 
terventionism worldwide then did its 
predecessor. We have also taken a 
stronger stance with respect to 
American defense needs. It is under- 
standable that our Western European 
partners, who have been hearing 10 
years of one set of American rhetoric, 
are affected by our new posture. 

But I can assure you, my discussions 
with European leaders — and I mean 
each and every one of these leaders that 
I have had the opportunity to meet 
with — are very, very encouraging with 
respect to what we are doing and the 
way we are doing it. They are, at the 



same time, nervous about the lack of 
progress on arms control, per se, and 
they hope to see some progress in the 
period ahead. We hope for the same 
thing. 

Q. What is the bait you are going 
to offer the Soviet Union? After all, 
this comes at a time when their 
economy is under terrible stress, even 
worse than in the past, though they 
have admitted that, if they have to, 
they will keep up with the arms race. 
But what is the U.S. bait to them on 
the placement of this new generation 
of missiles, vis-a-vis the placement 
already in place of the SS-20s that the 
Soviet Union has aimed at Western 
Europe? What's the offer? What's the 
quid pro quo? 

A. I wouldn't presume to go into 
the details of the American and, indeed, 
Western negotiating position because we 
have coordinated our positions very, 
very carefully with our European part- 
ners and will continue to do so. We 
haven't completed, incidentally, putting 
our final opening position together in 
that respect. 

But it isn't a question of a bait or a 
deal. It's a question of mutual interest 
on the part of both sides, the Soviet 
Union and the American side, to arrive 
at just, verifiable, equitable arrange- 
ments which will take the burden of 
armaments off the shoulders of our 
peoples. 

Now, this remains the basic ap- 
proach to sound arms control. And the 
enhancement of the American people's 
security must be the fundamental prem- 
ise of the American approach. That 
means we must not, as frequently as has 
been the case in the past, arrive at 
agreements that open up channels for 
future growth in armaments but rather 
to seek genuine reductions, as President 
Reagan has so repeatedly stated as his 
objective. 

Q. A week ago today you were in 
West Berlin, and many thousands of 
people were on the streets demon- 
strating against U.S. policy. The 
Europeans generally do not seem to 
feel that this Administration is actual- 
ly serious about arms control reduc- 
tions. And among other things, they 
point to the men who have been ap- 
pointed to negotiate these reduc- 
tions — General [Edward] Rownev for 
SALT, Mr. [Paul] Nitze for the theater 
negotiations. How can you reassure 
the Europeans that this Administra- 
tion is really serious? 



ember 1981 



19 



ECONOMICS 



A. First, I am not aware that Mr. 
Nitze has formally accepted what is ap- 
parently an offer to take on the TNF 
[theater nuclear force] negotiating job. 
But let me tell you also about General 
Rowney. He has been involved in three 
American Administrations, in every 
aspect of our arms control negotiations 
with the Soviet Union. He is well known 
to the Soviet leaders and, I think, highly 
respected as a man who knows his stuff. 

Now, arms control is not controlled 
by the demeanor of a particular 
negotiator. After all, our negotiators are 
responsive to the views and the direc- 
tions of an American president. I think 
too often in the past we have had a 
negotiator or another who was perhaps 
overly enamoured with a Nobel Peace 
Prize rather than genuine progress in 
the interests of the security of the 
American people and world peace. This 
remains to be seen. We hear a lot of 
positive rhetoric from the Soviets. Thus 
far we suspect that a great deal of that 
is propaganda designed to do precisely 
what you mentioned, split our European 
partners out from ourselves. Now, we 
don't want that to happen. We aren't go- 
ing to let it happen. But we are ready to 
talk seriously. 

Q. You have said that we 
shouldn't expect too much out of that 
meeting with Mr. Gromyko. What 
might be the best thing that could 
happen and the worst thing? 

A. I wouldn't draw alternative best 
outcomes, worst outcomes. I think this 
is the first time that at the ministerial 
level we are meeting, and there are a 
host of important issues on our agenda, 
not the least of which is the TNF discus- 
sions themselves. And I hope if we can 
establish a new base of communica- 
tion — if we can convince the Soviet side 
that we are serious about a dialogue. 
But that dialogue is going to be depend- 
ent on corresponding Soviet inter- 
national behavior and reciprocity be- 
tween the Soviets and ourselves. If we 
have accomplished that, we com- 
municate that fact, it will have been a 
successful session. 

Q. As you begin this dialogue 
with Foreign Minister Gromyko, 
would you wish that the budget proc- 
ess had been completed and that you 
would not be facing the Soviet Union 
with talk of reductions in the U.S. 
defense budget? 

A. Oh, absolutely. And let rue say 
this. I think it is vitally important that 
the American people and that the Amer- 



20 



East-West Trade Relations 



by Myer Rashish 

Statement before the Subcommittee 

on International Economic Policy of the 
Senate Foreign Relations Committee on 
September 16. 1981. Mr. Rashish is 
Under Secretary for Economic Affairs. 1 

The Administration's trade policy 
toward the Eastern bloc— indeed our 
overall economic relationship with the 
East— cannot be divorced from our 
broad political-security objectives vis-a- 
vis these countries. As a result, our 
trade policy contains some basic and sig- 
nificant aspects which do not charac- 
terize our trade policies toward other 
countries. Essentially this is due to the 
political-military situation in which we 
find ourselves today. 

In the first instance and most impor- 
tantly, the Soviet Union and its Warsaw 
Pact allies remain the principal threat to 
Western security. This prevents us from 
being able to deal with the Soviet Union 
and Eastern Europe as we can deal with 
most other countries in the world. Our 
economic policies must support our key 
objectives of deterring Soviet adven- 
turism, redressing the military balance 
between the West and the Warsaw Pact, 



and strengthening the Western allianc 
Economic relations must reflect and 
reinforce our political goals of influ- 
encing the behavior of Communist 
governments in ways which serve the 
vital interests of the United States ano 
its allies. 

In formulating our economic polici 
we must also keep in mind that trade 
may enhance Soviet military capabiliti 
directly and transfer technology not 
otherwise available which may make a 
significant contribution to the military 
East-West trade also contributes more 
broadly to Soviet ability to support 
military programs at levels that West< 
countries find increasingly difficult to 
match. Furthermore, certain economic 
relations with the East may lead to 
levels of dependence which increase 
Western vulnerability to political 
influence and coercion by the Soviet 
Union. 

On the other hand, our trade ties 
offer certain opportunities. There are, 
course, the obvious benefits to our 
economy from increased exports. In 
addition, we must always keep in min- 
that our economic relations may offer 
opportunity to influence future Soviet 
and Eastern European economic and 



ican Congress understand that any sub- 
stantial reduction in America's defense 
spending will have a fundamental dele- 
terious impact on our ability to deal 
effectively with the Soviet Union, whose 
own growth in armaments has been un- 
paralled in modern history and whose in- 
ternational aggressiveness has become a 
matter of increasing concern to all of us. 
I think we have to negotiate from 
strength. Any other course would be 
sterile and futile. 

Q. Am I to assume, then, you and 
Secretary of Defense Weinberger are 
for once together on an issue and will 
this issue come out the way you two 
want it or will budget director 
Stockman get the cuts he is seeking in 
the defense budget? 

A. I think the President has already 
made his position rather clear on this. It 
has resulted in some belt tightening in 
the Pentagon, as it should. But the basic 
reductions are modest in character and 
it keeps the momentum of the continu- 
ing growth of American military power 



high on the agenda. It is up now to th 
Congress, and I would hope that we \ 
continue to have the unified support c 
both parties on this vital matter. 

Q. There's been a report that th 
head of the American Interests Sec- 
tion in Havana has been recalled, ar 
there is a lot of speculation that the 
United States is on the verge of tot; 
ly breaking relations with Cuba. Is 
that something that is likely to hap- 
pen? 

A. No. The return of our repre- 
sentative from Havana is merely a 
periodic consultation call. 

Q. He will be going back? 

A. Yes. 

Q. When you talked about peopl 
courting Nobel prizes in negotiation 
you weren't referring to your forme 
colleague, Henry Kissinger? 

A. Not at all. Not at all. 



'Press release 318 of Sept. 21. 1981. 



Department of State Bulle j 






Economics 



tical behavior. Keeping these con- 
rations in mind, it is very important 
, the United States systematically 
ew our policies regarding economic 
tions with the Soviet Union and 
tern Europe. 

We will work closely with our allies 
isure, in the words of the Ottawa 
mit declaration, that "... in the field 
last- West relations, our economic 
lies continue to be compatible with 
political and security objectives." It 
•ctremely difficult to carry out an 
ctive East- West trade policy uni- 
rally. We cannot allow East-West 
ie to become a source of dissension 
division in the alliance. 
In undertaking our review, we are 
;ing to develop a prudent and careful 
"oach which would, at the same time, 
rove our ability to deny the Soviet 
m equipment and technology to fur- 
its military objectives while allow- 
us to broaden certain economic ties 
will permit us to exercise greater 
rage and influence on Soviet 
ivior. 

.S.R. 

sviewing East- West trade policy, the 
linistration has given priority atten- 
to our relations with the Soviet 
>n. One of our major goals has been 
liminate the transfer of Western 
pment and technology which con- 
ites significantly to Soviet military 
labilities. There is a need to 
3 ngthen multilateral controls on the 
I sfer of technology. At the July 
I .wa summit meeting we agreed to 
h a special high-level meeting of the 
li rdinating Committee for East- West 
I ie Policy (COCOM) to discuss how to 
I we the effectiveness of controls on 
N e with the East. We are now devel- 
■ g our position for this important 
lion. 

I An additional area of concern has 
B i the increasing importance of Soviet 
I materials— particularly energy— for 
I economies of many allied countries. 
\ continue to have serious reserva- 
s about the west Siberian pipeline 
iect which, if completed, would 
stantially increase the share of Soviet 
as a proportion of Western Europe's 
consumption and has the potential 
significantly increased Soviet polit- 
leverage as a result. We plan to 
■t with European leaders in the 
dng months to discuss alternatives 
ways to reduce vulnerability to 
sible Soviet pressure. 



U.S. Trade with China, COMECON, and 
Others, 1970, 1980 







1970 


1 


980 




Exports 


Imports 


Exports 


Imports 


China 


None 


Neg. 


$4 billion 


$1 billion 


COMECON 


$4 million 


$2 million 


$4 billion 


$1 billion 


(European 










members: 










Bulgaria, 










Czechslovakia, 










East Germany, 










Hungary, Romania, 










U.S.S.R.) 










Japan 


$5 billion 


$6 billion 


$21 billion 


$31 billion 


Western 










Europe 


$14 billion 


$11 billion 


$68 billion 


$46 billion 


(incl. 










Yugoslavia) 











Sources: Department of Commerce, General Imports: World Area by Commodity Groupings 
(Dee. 1970); Exports: World Area by Commodity Groupings (Dec. 1970); EM 450/455, Dec. 1980; 
IM 150/IM 155, Dec. 1980. 



If the Soviets act responsibly and 
with restraint in the international arena, 
we are prepared to continue and expand 
our trade in nonstrategic areas on the 
basis of mutual advantage. The removal 
of the partial grains embargo and the 
1-year extension of the U.S. -Soviet 
grains agreement is a clear indication of 
our readiness in this respect. However, 
even in the area of nonstrategic trade 
we cannot divorce our policies from 
overall Soviet behavior. While it is the 
Reagan Administration's goal to reduce 
foreign policy trade controls, we are not 
prepared to forswear the use of these 
controls as part of an overall response 
to future Soviet aggressive action. 

Eastern Europe 

In developing U.S. policy toward the 
countries of Eastern Europe we must 
take into account the distinctive 
character of each country in the area 
and the fact that each of these nations 
has its own internal dynamic. Our goal 
is to encourage evolutionary change, 
increased assertion of national self- 
interest, and greater respect for the 
rights of individual citizens by East 
European governments. Throughout 



Eastern Europe our economic and trade 
ties constitute a key component of our 
bilateral relationship. However, we must 
continue to deny equipment and tech- 
nology that would contribute signifi- 
cantly to the Warsaw Pact's warmaking 
capabilities or could otherwise be 
diverted to the Soviet military. 

The state of our bilateral relations 
varies from country to country. 
Yugoslavia, Poland, Romania, and 
Hungary receive nondiscriminatory or 
most-favored-nation (MFN) tariff treat- 
ment and are eligible for government- 
supported credits from the Export- 
Import Bank and the Commodity Credit 
Corporation. This summer the Admin- 
istration renewed bilateral trade 
agreements with Hungary and Romania 
and proposed to the Congress that MFN 
for these countries be extended for 
1 additional year in accordance with the 
provisions of Section 402 of the 1974 
Trade Act. (No such extensions are re- 
quired in the case of Poland and 
Yugoslavia, to which MFN treatment 
had been extended before enactment of 
the 1974 act.) 

In each instance the granting of 
MFN has been an important stimulus to 
an improved bilateral relationship. In 
the case of Poland, Yugoslavia, and 



ember 1981 



21 



Economics 



Romania our relationship has grown to 
the point that our bilateral trade 
exceeds $1 billion per year and the 
exchange of presidential visits has 
become a frequent phenomenon. We 
have consulted particularly closely with 
Poland during its current economic dif- 
ficulties and have granted debt relief 
and emergency credits for the purchase 
of agricultural commodities. 

While Czechoslovakia, Bulgaria, and 
the German Democratic Republic do not 
receive MFN tariff treatment and are 
not eligible for U.S. Government- 
supported credits, our trade relations 
with each of these countries have con- 
tinued to expand in recent years. These 
countries are becoming more important 
markets for U.S. exports and partic- 
ularly for agricultural commodities. We 
are currently involved in intensive 
negotiations with Czechoslovakia to 
settle outstanding claims of American 
citizens against that country. We are 
encouraged by the constructive attitude 
which the Czechs have shown in these 
negotiations and are hopeful that a final 
agreement can be reached in the near 
future. 

China 

The 1979 trade agreement with the 
People's Republic of China, extension of 
MFN, and the granting of government- 
supported credits have helped to fuel an 
expansion of our economic relations 
which has made China our most impor- 
tant trading partner among the centrally 
planned economy countries. Our total 
trade with China reached $4.8 billion in 
1980. U.S. exports to China were $3.7 
billion or approximately half the total of 
all U.S. exports to Communist countries. 

We have a strategic interest in a 
secure, stable, and friendly China which 
is able to resist Soviet pressures. To 
advance this interest, we have 
eased— but not eliminated— restrictions 
on the sale of advanced equipment and 
high technology to China. Nevertheless, 
we will continue to operate on a case-by- 
case basis taking into account our secu- 
rity interests. We will also consult with 
Congress and will seek appropriate con- 
gressional action to end economic 
discrimination against China no longer 
consistent with our relationship. In this 
connection we are considering recom- 
mending amendments to the Foreign 
Assistance Act of 1961, the Agricultural 
Trade Development and Assistance Act 
(PL 480), and the Trade Agreements 
Extension Act (which prohibits imports 



22 



Major Items in U.S.-Soviet Trade, 1980 



U.S. Export 


> 


Total 


$1,500 million 


Corn 


662 


Wheat 


336 


Special industrial 
machinery 


105 


Articles of rubber 
and plastic 


64 


Road vehicles and 
parts 


58 


Inedible crude 
material 
(except fuel) 


56 


Agricultural and 
construction 
tractors 


52 


Industrial machinery 


49 


Soybeans 


45 



U.S. Imports 



Total 



Special inorganic com- 
pounds and aluminum 
oxide abrasives 

Silver, platinum, 
platinum group metals 

Nonmonetary gold 

Uranium and thorium 

Nickel and nickel 
alloys 

Artworks 

Petroleum and products 

Distilled alcoholic 
beverages 

Base metals and alloys 

Ores and concentrates 
of base metals 



$453 mil 

95 



90 

88 
44 
35 

28 

17 

9 

7 
7 






Source: Department of Commerce, EM 450/455, Dec. 1980; IM 150/IM 155, Dec. 1980. 



Major Items in U.S.-Chinese Trade, 1980 



U.S. Exports 




U.S. Imports 




Total 


$4 billion 


Total 


$1 billi 


Wheat 


1. 


Wearing apparel and 


.249 


Cotton 


.7 


accessories 




Corn 


.2 


Textiles yarns, fabric, 


.143 


Manmade fibers 


.2 


articles 




Aircraft 


.15 


Petroleum and products 


.134 


Soybeans 


.15 


Inedible crude materials 


.126 


Fertilizers 


.15 


Chemicals and related 


.107 


Textile yarn, fabric, articles 


.13 


products 




Paper, paperboard 


.13 


Artworks 


.038" 


Synthetic resins, rubber, 


.12 


Brooms, brushes, 


.03& 


plastic materials 




basketwork 




Source: Department of Commerce 


, EM 450/455 


Dec. 1980; IM 150/IM 155, Dec. 


1980. 



Department of State Bulk 



Economics 



even categories of furs from China 
. the U.S.S.R.). We have also pro- 
ed to the Chinese the establishment 
i new joint commission on commerce 
. trade. 

ja, Vietnam, North Korea, and 
npuchea 

■y tight controls remain on trade with 
>a, Vietnam, North Korea, and 
npuchea. Export licenses for these 
ntries are issued only in exceptional 
:umstances, particularly when 
nanitarian concerns are involved. We 
be reviewing these controls in the 
r future as part of a general review 
ill foreign policy trade controls. Given 
>a's increasingly adventuristic mili- 
/ activities in support of Soviet 
ansionism, Vietnam's continued mili- 
/ occupation of Kampuchea, and ex- 
ne North Korean truculence, any 
ralization of these controls is un- 

ly. 

Iiefits for U.S. Economy 

live previously noted the important 
I economic benefits which accrue to us 
li result of our trade relations with 
liy Communist countries. However, 
Imust not lose sight of the fact that 
I principal returns on our East-West 
lie relationships are those which 
|-ue to the U.S. economy. Our exports 
| he centrally planned economies 
I 'hiding Yugoslavia) totaled $7.6 
Jon in 1980 or roughly 3.4% of total 
lorts. For the American farmer this 
Ide was especially significant; 
{ icultural sales were $5.05 billion or 
11% of our total agricultural exports. 
1 $5.1 billion surplus we enjoyed in 
I trade with the Communist world last 
Ir made a significant contribution 
I arc! improving the overall U.S. 
Lnce of payments. Exports to the 
jtrally planned economies generate 
|roximately 300,000 American jobs. 
Most of the U.S. restrictions on 
ie with the Communist world are 
osed for reasons of national security. 
Mi't believe that I need to elaborate 
the need to have national security 
trols on trade with these countries, 
•eign policy controls imposed in the 
it-West trade area are relatively few. 
i most important of these are the 
trols pertaining to the sale of oil and 
exploration and production tech- 
agy and equipment to the U.S.S.R. 
ler foreign policy controls include 
trictions on the sale of crime control 



ember 1981 



equipment (controlled for export to all 
countries other than NATO members, 
Japan, Australia, and New Zealand) and 
our very tight controls on trade with 
Cuba, Vietnam, North Korea, and Kam- 
puchea. If all these controls were to be 
suddenly eliminated, the effect on U.S. 
exporters and our economy would be 
modest. 

We maintain foreign policy controls 
to make clear to Communist govern- 
ments that we will not completely 
insulate our economic relations from 
their behavior in other areas. When 
Communist governments take actions 
that are particularly repugnant to us, it 
is important that we react, preferably 
with the cooperation of our allies, in an 
area which will hurt them. While 
economic actions of this sort will invar- 
iably have costs, to us as well as to 
them, failure to take action when pro- 
voked may have a far higher price tag in 
the long run. Our readiness to take 
strong retaliatory action, including 
measures in the economic sphere, has 
helped to discourage inclinations to try 
to resolve the current situation in 
Poland by the use of outside military 
intervention. 

It is critical that our export control 
policies be consistent and predictable. 
We are very much aware of how impor- 
tant these factors are for our exporters 
and for foreign customers of U.S. prod- 
ucts. There have been difficulties in this 
regard in the past which this Admini- 
stration will try very hard to remedy. 
Our objectives are to make export con- 
trols less burdensome to the busi- 
nessman by speeding up the processing 
of export license applications and loosen- 
ing controls of equipment not critical to 
defense-related industries. 

Attitudes of U.S. Allies 

Let me now turn to the attitudes of our 
major allies. Our NATO allies and Japan 
share our general political objectives in 
dealing with the Soviet Union, the other 
Warsaw Pact countries in Eastern 
Europe, and China. However, we do not 
always see eye-to-eye with our allies on 
the use of restrictive trade policies to 
promote these political objectives. There 
are several reasons for these dif- 
ferences. Geographic proximity, the 
need for raw materials, and marketing 
possibilities have turned Western 
Europe and Japan naturally toward 
trading with the COMECON [Council of 
Mutual Economic Assistance] countries 
and China. Many of our NATO allies 
have more extensive commercial links 



with the Soviet Union and Eastern 
Europe than does the United States, 
partly because of the belief that strong 
economic ties can moderate political 
attitudes and behavior among the 
Communist states. Unfortunately, in the 
case of the U.S.S.R., such moderation 
has not occurred and the era of detente 
has been a period of unprecedented 
growth of the Soviet military coupled 
with increased adventurism worldwide. 

The Japanese and the West Euro- 
peans provide extensive government- 
supported export credits and/or 
insurance to promote their exports 
worldwide including to Communist coun- 
tries. The Federal Republic of Germany 
has a special trading relationship with 
the German Democratic Republic. Our 
allies, in general, extend non- 
discriminatory (most-favored-nation) 
tariff treatment to exports of Com- 
munist countries. For purely commercial 
reasons the European Community main- 
tains quantitative restrictions against a 
fairly narrow range of Communist coun- 
try products. 

Our NATO allies have cooperated 
with the United States to control the 
export of strategic equipment and 
technologies to the Communist countries 
in Europe and Asia for over 30 years. 
Agreed controls are negotiated in the 
informal multilateral organization, 
COCOM. The COCOM embargo does not 
extend to oil and gas equipment and 
associated technology for the U.S.S.R. 
except to the extent that items 
embargoed for other reasons might also 
have oil and gas applications, for ex- 
ample, computers to process seismic 
data. 

Our experience has demonstrated 
that export controls are more effective if 
supported by collective action. This was 
illustrated clearly by the U.S. economic 
sanctions imposed on the Soviet Union 
following that country's invasion of 
Afghanistan. Our major allies supported 
some, but by no means all, of those 
measures. It seems clear that those 
actions would have been more effective 
had the support for the U.S. efforts 
been greater. Because of that experience 
the United States, as well as our allies, 
are convinced of the need for contin- 
gency planning for future Soviet aggres- 
sion. We have already worked with our 
allies on contingency planning in NATO 
and bilaterally. The Ottawa summit 
underscored the determination to con- 
tinue such consultations. 



23 



Economics 



There are relatively few areas where 
unilateral action by the United States 
without similar actions by other impor- 
tant suppliers can seriously limit the 
Communist countries' access to major 
products or technologies. This is true 
even with regard to many advanced 
products and technologies, where a U.S. 
monopoly or supremacy has diminished 
over the years. For this reason we will 
continue in our effort to coordinate our 
own export controls with those of our 
major allies in COCOM and in other 
fora. 

I have stressed the need to consult 
with our allies on coordinating our 
export controls. I should add, however, 
that the Administration is prepared, if 
necessary, to consider unilateral controls 
either to protect our national security or 
to further overriding national objectives. 
I do not believe that either Congress or 
the American public would want us to 
adopt any other policy. 

Application of U.S. Export 
Controls Abroad 

Let me say just a few remarks about the 
problems caused by the application of 
U.S. export control regulations and law 
outside the United States. Our export 
control regulations apply not only to 
direct export from the United States but 
also to reexports from third countries of 
U.S. -origin items, exports of the prod- 
ucts of U.S.-origin technologies, and ex- 
ports of non-U. S. -origin items by U.S. 
subsidiaries. But we must approach the 
extraterritorial application of U.S. 
export control regulations in foreign 
jurisdictions with considerable caution. 
Many of our closest allies have shown 
that they are extremely sensitive to our 
attempts to apply U.S. laws to conduct 
of persons within their territories, 
though in many instances they do coop- 
erate with us. For example, the British 
alert their firms to the possible need for 
U.S. reexport licenses for certain types 
of embargoed equipment. Overzealous 
efforts on our part to apply our regula- 
tions abroad, forcing a showdown over 
conflicting interpretations of inter- 
national law and sovereign rights, could 
end this kind of cooperation. It would 
certainly cause friction in our bilateral 
relations, with detrimental effects on the 
operations of U.S. firms overseas. 



Conclusion 

Thank you for giving me and my col- 
leagues from the other agencies the 
opportunity to appear before you today 
and provide an overview of our current 
thinking on East- West economic policy. 
Our economic policies are and will likely 
remain an important factor in our rela- 
tionships with Communist governments. 
Where trade is pursued on the basis of 
mutual advantage with appropriate 
national security precautions, it can 
bring important benefits to our domestic 
economy as well as serve our overall 
foreign policy goals. We must not forget 






that the effectiveness of our East-Wes 
economic policies will be greatly en 
hanced by close consultation and 
cooperation with our allies. The deveh 
ment of mutually compatible policies wf 
be one of our major goals as we procee ■ 
in the months ahead. 



■lo; 
w 



'The complete transcript of the hearing, 
will be published by the committee and wiH 
be available from the Superintendent of 
Documents, U.S. Government Printing Of- l> 
fice, Washington, D.C. 20402. ■ 



North American Economic Relation 



by Myer Rashish 

Address before the Center for Inter- 
American Relations in New York on 
September 22, 1981. Mr. Rashish is 
Under Secretary for Economic Relations. 

It is a pleasure for me to be here this 
afternoon and speak to you on the topic 
which gives its name to your organiza- 
tion: that is, inter-American relations. I 
also feel a sense of challenge — a 
challenge drawn from concern that I 
adequately convey both the priority this 
Administration places on good relations 
with its closest neighbors and also the 
perception, virtually rampant in 
Washington, that, on a number of 
fronts, the relationships are sliding 
dangerously toward crisis. 

The North American Community 

Let me begin with the obvious, perhaps, 
and try to characterize the importance 
President Reagan assigns to the 
development of a strong North 
American community. You may recall 
that in Ronald Reagan's statement when 
he announced for the presidency, he 
devoted one-fourth of the text to rela- 
tions with Canada and Mexico. He refer- 
red to a North American accord, a sort 
of neighborhood in which we could all 
prosper. Even before his inauguration, 
President Reagan began to activate the 
words in that statement by meeting with 
President Lopez Portillo on the bridge 
between El Paso and Ciudad Juarez. His 
first trip outside the United States was 
to Ottawa to meet with Prime Minister 
Trudeau. 



24 



The influence of inter-American co 
cerns is not limited to trips and bilater 
meetings. Next month, President 
Reagan will travel to Cancun, Mexico, 
participate in an historic meeting of 
heads of state and government from 
around the world to discuss one of the 
most difficult and unyielding issues we 
face: the development of the poorer ns 
tions on this globe. It is in no small 
measure due to President Lopez 
Portillo's role as co-host and Prime 
Minister Trudeau's heartfelt champion 
ing of a process of dialogue with the 
developing countries that President 
Reagan will be in Cancun. Perhaps it i 
symbolic of this Administration's prior 
on inter-American relations that the 
President will have attended two majo 
summit meetings in North America du 
ing his first year — the economic sumrr 
in Ottawa in July and the developmenl 
summit in Cancun in October. 

I have devoted some time to the A 
ministration's priority to inter-Ameria 
relations; nevertheless, I must hasten 
get to the substance of the relationship 
lest you begin to recall the old saying: 
"The road to hell is paved with good in 
tentions." 

I am frequently asked by the 
bureaucracy of the State Department 1 
decide if I will head the U.S. delegatioi 
to a meeting of the joint commission 
with one country or another. We have, 
in may cases, established these joint 
commissions to highlight, and on occa- 
sion draw attention to, the bilateral rel 
tions between the other country and th 
United States. No such decision or con 
mission or other formal institution of 
statehood is required to highlight the ii 
escapable fact that Canada, Mexico, an 



Department of State Bulletin 






Economics 



United States are bound into an in- 
iate relationship. We have a basic in- 
dependence dictated by geography 
1 history — a relationship so extensive 
t intergovernmental affairs are only 
tip of the iceberg. In formulating 
icy, in examining the North American 
(imunity through the optic of govern- 
nt, we must not lose sight of this 
lity. 

In any intimate relationship, friction 
latural. My speciality is not physics, 
I think I am correct if I say that the 
feet lubricant, the key to perpetual 
tion, has not yet been discovered. 
r do we seek to live in a vacuum. Ac- 
nulated over time, this means that 
re are and will be problems in the 
;r-American relationship. The origin 
! nature of those problems between 
United States and Canada are dif- 
jnt from those between the United 
tes and Mexico — and will require dif- 
;nt approaches, different solutions. 
With Canada, the United States has 
in an overwhelming economic and 
ural force— drawn in part from the 
imon cultural heritage between the 
ted States and a large segment of 
lada. Among the developed countries, 
lada is a relatively recent entrant to 
family of sovereign nations; it is still 
bang its separate identity— not ours, 
n British, not French. The strains of 
I process are evident in domestic 
|t iggles, such as the constitutional 
[ e, as well as in the international 
ina. Canada is a proud member of the 
[ iily of industrialized nations, host of 
[ most recent summit of the world's 
V it powerful economies; it cannot be 
E tent if it sees itself in the role of 
I er bearer for the United States. 
f With Mexico the relationship suffers 
f-e from a legacy of suspicion— 
I orically rooted and deep-seated 
I'trust of the motives of the United 
I tes. Mistrust, combined with a cer- 

■ i neglect of the importance to our 
r i interests of a strong and eco- 

» nically healthy neighbor to the south, 

■ produce hostility and alienation, 
larly, such a state of affairs cries out 
I repair. This Administration will heed 
Ise cries. 

■ plications for Policy 

w? What policy measures can begin 
correct the misperceptions, to 
ablish new attitudes toward the 
_ited States, to create a climate in the 
lited States which will support a 
aningful "community" approach to 



Canada and Mexico in U.S. Merchandise 
Trade, 1980 



U.S. 


Exports 








U.S. Imports 


Total 


$220.7 billion 






Total $240.8 billion 


CANADA 

Japan 
MEXICO 

United Kingdom 
West Germany 


35.3 
20.79 
15.1 
12.6 

10.it 








CANADA 41.4 
Japan 30.7 
MEXICO 12.5 

West Germany 11.68 
United Kingdom 9.75 


Source: Department of Commerce 


Sur 


>ey 


ofCv 


rrent Business, June 1981. 



inter-American relations? In the few 
minutes I have here today I can do little 
more than scratch the surface. I will 
naturally concentrate on economic policy 
issues, although the one lesson driven 
home to me most forcefully these past 
several months is that economic and 
political issues are not separable in the 
context of public policy. Let me, then, 
touch on four points: our policy at home, 
policy issues with Canada, policy issues 
with Mexico, and cooperation among the 
three— the United States, Canada, and 
Mexico. 

U.S. Domestic Policy 

I turn first to elements of U.S. domestic 
policy, which will have profound effects 
on international economic relations in 
general, and the outlook for inter- 
American relations more particularly. 
Parenthetically, I might note that it is 
appropriate to start with domestic 
policy— since in the final analysis the 
course of the relationship will depend on 
policies each nation will follow to meet 
its own goals and objectives. President 
Reagan's top priority upon taking office 
was to act forcefully to get the U.S. 
economic house in order. To master 
inflation, restore incentives for dynamic 
private sector investment, spur produc- 
tivity—to create an economic environ- 
ment in which the American people can 
once again look to the future with 
confidence and enthusiasm. The fruits of 
success will be manifest in varied ways. 
But perhaps most significantly the 
United States will be able to promote 
more actively the open global trade and 
investment system upon which economic 
development is predicated. 



Canada 

I now turn to Canada. The ties between 
the people of the United States and 
Canada are probably as extensive as in 
any bilateral relationship in the world. 
Our mutual involvement cuts across vir- 
tually all facets of both our societies. A 
few facts might serve to illustrate this 
closeness. 

• Two-way trade in 1980 exceeded 
$77 billion. This is by far the largest 
bilateral trading relationship in the 
world. 

• The countless lakes and streams 
that cross the border are but one part of 
the common environment we share. 

• There is a vast exchange of people 
(70 million persons each year) and goods 
across the border, a rich cultural and 
economic interplay, and a host of 
transportation ties. 

• Some of the world's most valuable 
fishing grounds extend across our ocean 
boundaries. 

• There is a tremendous two-way 
movement of capital and foreign direct 
investment: the fundamental economic 
statistics such as inflation, interest 
rates, and unemployment of the two 
economies are closely interrelated. 

Let me concentrate on the explora- 
tion and development of energy 
resources and their delivery to our 
respective markets, one of the most im- 
portant parts of the U.S. -Canada rela- 
tionship. By yearend 1980, U.S. direct 
investment in Canada's petroleum sector 
amounted to some $10.5 billion. 
Canada's national energy program, an- 
nounced last October, is of utmost im- 
portance and concern. The program calls 
for a substantial increase in Canadian 
ownership and control of energy produc- 



|/ember1981 



25 



Economics 



tion and exploration, traditionally 
dominated largely by U.S. companies. 
Through tax incentives and other 
policies which discriminate in favor of 
Canadian firms over foreign companies, 
the Canadian Government seeks to in- 
crease Canadian ownership of the 
energy industry to 50% by 1990. The na- 
tional energy program also imposes 
restrictions on the price of oil and gas in 
Canada, holding Canadian prices below 
world levels. 

We cannot and do not challenge 
Canada's basic right as a sovereign na- 
tion to formulate its own social and 
economic objectives. However, we have 
an obligation to help protect the 
legitimate rights of U.S. investors in 
Canada. We believe that Canadian in- 
vestment policies unjustly discriminate 
against U.S. and other foreign investors. 
These policies clearly represent a major 
departure from the principle of "national 
treatment" for all enterprises established 
in a country, regardless of their nation- 
ality. 

For many years, the United States 
has made efforts in many fora to sup- 
port an open international investment 
system and to minimize government in- 
tervention in the decisionmaking process 
related to individual investments. We 
believe that Canadians have benefited 
significantly from the open climate that 
has traditionally existed between our 
two countries. However, Canada's 



policies since the mid-1970s have been 
moving in an increasingly restrictive 
direction. The Foreign Investment 
Review Agency has made entry, expan- 
sion, and diversification of U.S. com- 
panies in Canada problematic. The 
national energy program in all its facets, 
including the energy security act an- 
nounced in June in draft form and the 
Alberta-Ottawa accord of September 1, 
contains elements which are highly 
discriminatory toward U.S. investors. 
Extension of the program to take in 
energy companies' downstream opera- 
tions would give us additional cause for 
alarm. 

I hasten also to point out that these 
policies appear to be counterproductive 
and even contrary to Canada's summit 
commitments. As of late spring, the 
number of oil rigs operating in Canada 
had decreased almost 50%. Total spend- 
ing on oil and gas exploration had drop- 
ped by almost 25% from year-earlier 
figures. Yet the major industrialized 
countries have pledged to work toward 
energy self-sufficiency. Canada's policies 
have, if anything, retarded exploration 
and development of Canadian energy 
resources. In particular, Canada's 
policies have caused American com- 
panies to walk away from potentially 
productive resources because of 
politicoeconomic barriers. Numerous 
companies are disturbed by the trend in 
Canada's energy policies and have gone 



Major Items in U.S.-Canadian Trade, 1980 



U.S. Exports 




U.S. Imports 




Total 


$34 billion 


Total 


$41 billion 


Road vehicles and parts 


7.6 


Natural and manufactured 
gas 


4.1 


Special industrial 


2.55 


Passenger motor vehicles 


3.8 


machinery 








Chemical and related 


2.1 


Paper and paper board 


3 


products 








Industrial machinery 


1.98 


Petroleum and products 


2.8 


Power generating 


1.8 


Standard newspaper print 


2.6 


machinery and 








equipment 








Electrical equipment and 


1.3 


Wood, lumber, cork 


2.1 


parts 








Petroleum and products 


.95 


Motor vehicles and 
handling equipment 
parts 


1.7 


Coal, coke, briquettes 


.88 


Pulp and waste paper 


1.6 


Civil engineering and 


.75 


Metalliferous ore 




contractor equipment 




and scrap 


1.0 


Aircraft 


.7 


Fertilizer and fertilizer 
materials 


.9 


Source: Department of Commerce, EM 450/455 


Dec. 1980; IM150/IM155, Dec 


. 1980. 



; 



26 



elsewhere to explore for and develop 
energy resources. 

We have systematically raised our 
concerns in numerous consultations witi 
our Canadian friends — at all levels froro 
the President's meetings with Prime 
Minister Trudeau on down. I have par- 
ticipated in several meetings between j 
senior U.S. and Canadian delegations 
where the Canadian national energy pre 
gram and related investment issues 
were at the center of the discussion. I 
Members of Congress are hearing with 
increasing frequency from their constit- 
uents on these questions. Our concern i 
clear, and we fervently hope we have i 
been able to communicate it clearly. 

Let me step back for a moment to 
the process of formulating U.S. policy 
on these issues. We must evidently star) 
with the nature of the U.S.-Canadian 
relationship as I discussed it a moment 
ago. Canada is a full partner in the 
leadership of the free world; it has 
assumed responsibilities to and for the 
global economic system. That is the 
essence, the "spirit" of the economic 
summits; their raison d'etre if you will. 
We look to Canada to formulate its 
policy consonant with those respon- 
sibilities; for our part, we accept in- 
evitable difference in approach, and we 
must respect Canadian values. On 
several tough issues, we are in the mid- 
dle of a solution. For both sides, flexibil 
ty and communication must be the 
watchwords if we are to avoid ir- 
reparable damage to the relationship. 

Mexico 

I will now turn to our relations with 
Mexico. Not surprisingly, most of the 
issues important in our relations with 
Canada — trade, energy, investment, 
fishing — are equally important to our | 
relations with Mexico. U.S. trade with 
Mexico is smaller than with Canada, 
which historically has been our number 
one trade partner. But in the last few 
years trade with Mexico has grown so 
rapidly that in 1980 Mexico became oufl 
third largest trading partner, eclipsed 
only by Canada and Japan. 

In the last 2 years, trade has risen 
more than 50% a year. Naturally much' 
of the increase has been due to in- 
creased Mexican production and export 
of oil and gas, but it has not been a on| 
sided increase. As Mexico has used o 
sales to develop its economy, its appetit 
for imports has grown. U.S. exports to> 
Mexico have expanded even more rapid- 
ly than our imports. Consequently, Me* 
ico's trade deficit with us has been 



Department of State Bulletin s 



'l 



il i 



Economics 



pning, to nearly $3 billion in 1980. 
|iough a part of the increase in the 
le deficit was attributable to in- 

!sed grain imports by Mexico 
lting from poor weather, the fact re- 
is that Mexico has been buying 
tal equipment and other industrial 
ts in expanding quantities in order 
Deed its economic development. This 
;ates that Mexico is seeking to use 
il revenue to increase its industrial 
so that the fruits of exploitation of 
atural resources can contribute to 
■run development and, at the same 
, avoid economic dislocations such 
anaway inflation brought about by 
I nues that the Mexican economy can- 
(ibsorb. 

It should also be a signal to us of the 
^rgence of a Mexican industrial base 
I will become more competitive and 
l to make further inroads into the 
J'rican market. As a consequence, 
je relations with Mexico are likely to 
1 even larger in the future. Mexico 
lit begin now to look beyond its oil 

* nues and plan for an economy based 
rade in a wide range of manufac- 

li goods and raw materials. It will be 
lig on, progressively, the obligations 
ii responsibilities for the free flow of 
k s and capital throughout the world 
« omy, which we already expect from 
Ida. 

n this vein, we welcome Mexico's in- 
e ;ed participation in world affairs 
I especially Mexico's concern for 
i lopments in the hemisphere. Presi- 
i Lopez Portillo in his 1979 address 

e General Assembly called for a 
D il approach to solve the world's 

• ?y problems. Mexico last year joined 
il Venezuela in an effort to help the 

I iporting countries of Central 
n rica and the Caribbean not only to 
1 with the problem of payment for oil 
(! irts but also to pay for energy 
! ; lopment strategies to reduce their 
!] ndence on imported oil. 

To be candid, however, I must also 
gil that some aspects of Mexico's ex- 
t: g trade and investment policies pose 
1 lems for us. For example, Mexico 
I >ses performance requirements in 
Isectors. The 1977 Mexican auto- 
ti ve decree requires producers to ob- 
ti the foreign exchange requirements 
J led for their operations (e.g., for im- 
Jed components and indirect foreign 

Siange costs such as interest and divi- 
1 payments made abroad) through 
export of completed vehicles and 
a s and allocates foreign exchange 
Ing the producers on the basis of, in- 
wMa, the percentage of domestic 



Major Items in U.S. -Mexican Trade, 1980 



U.S. Export 


s 


U.S. Import 


i 


Total 


$14.8 billion 


Total 


$12.5 billion 


Chemical and related 


1.4 


Petroleum and products 


6 


products 








Road vehicles 


1.3 


Electrical machinery 


.55 


Cereals and cereal 


1.2 


Telecommunications and 


.7 


preparations 




sound reproduction 
equipment 




Special industrial 


1.1 


Natural and manufactured 


.55 


machinery 




gas 




Electrical equipment 


.9 


Vegetables and fruits 


.49 


Industrial machinery 


.9 


Fish 


.35 


Transport equipment 


.6 


Coffee, cocoa, tea, spices 


.3 


Aircraft 


.4 


Nonferrous metals 


.3 






Wearing apparel 


.2 


Source: Department of Commerce, EM 450/455 


Dec. 1980; IM150/IM155, Dec. 1980. 



materials incorporated in their products. 
Such requirements generate effects 
similar to import quotas on components 
and other inputs, and they are distorting 
U.S. -Mexican trade patterns in this 
area. We have held, and will continue to 
hold, extensive consultations on this 
issue. 

The issue of migration is also a ma- 
jor concern to the United States and to 
Mexico. What had been a steady flow of 
immigrants across our southern border 
has turned into a torrent, especially 
after the end in 1964 of the temporary 
worker agreement known as the bracero 
program. Mexico is, of course, the 
source of the largest number of illegal 
immigrants. There are many reasons for 
this flow, including historic migration 
patterns, wage differentials, and 
Mexico's rapid population growth in re- 
cent years. 

Over the long run the best solution 
is the development of the Mexican 
economy so that all who seek work in 
Mexico can find it. The Mexican Govern- 
ment has set forth a development pro- 
gram that would eliminate the high 
unemployment and even higher 
underemployment. As I have pointed 
out, the development of the Mexican 
economy will depend in part on its abili- 
ty to sell its products. Barriers to entry 
to the U.S. market will reduce Mexico's 
ability to cooperate with us to solve the 
immigration problem, and a solution will 
be that much more difficult to find. 
President Reagan's Camp David 
meeting with President Lopez Portillo 
enabled both leaders to consult and 
discuss these bilateral issues at length. 



The two presidents established a joint 
trade commission which is meeting for- 
mally today in Mexico City. We hope it 
will provide the structure within which 
our trade relations with Mexico can 
flourish. By yearend, Secretary Haig 
and Foreign Secretary Castaneda will 
recommend to the presidents other ways 
in which the management of our rela- 
tions could be improved. 

The United States is earnestly seek- 
ing mechanisms that would permit us to 
assure special treatment of the needs of 
Mexico. Mexico, on the other hand, is 
exemplary of the newly industrializing 
countries which must progressively take 
on broader global commitments, moving 
away from the preferential treatment 
granted to the poorer developing coun- 
tries. It should not be many years before 
we look to the north and to the south 
with the expectation of finding 
neighbors of equal stature in the world 
economy. 

Cooperation in the Caribbean Basin 

Let me now turn to an issue which in- 
volves the three of us— Canada, Mexico, 
and the United States— working 
together for the broader community of 
the Western Hemisphere. I refer, of 
course, to our recent Caribbean Basin 
initiative. We have become increasingly 
concerned over the serious political, 
social, and economic problems faced by 
many countries in Central America and 
the Caribbean. We are currently seeking 
to cooperate with the states of the 
Caribbean Basin in a practical way to 
develop programs to stimulate more 
rapid growth in the region. 



(Bimber1981 



27 



Economics 



The U.S. portion of this initiative 
will focus in large part on enhancing the 
role of the private sector in these 
economies. Growth of a modern, efficient 
private sector is imperative to create 
productive employment in the region 
and to generate exports which earn 
foreign exchange. We have no precon- 
ceived blueprint for determining the ac- 
tions, joint and separate, which should 
be taken to increase regional productive 
capacity and achieve needed economic 
revitalization. 

We are now engaged in a series of 
consultations with basin countries and 
other potential participants, especially 
Mexico and Canada, to determine those 
trade, aid, and investment measures 
which will help to reach our long-term 
goal of increased economic prosperity 
for the region. We intend to take these 
measures, in combination with the ef- 
forts of the regional governments 
themselves, to reduce internal con- 
straints to economic growth. 

Conclusion 

To conclude, I would make four quick 
points. 

First, we do not have the luxury of 
rewriting history or rearranging 
geography. The United States, Canada, 
and Mexico have an inescapable and in- 
timate relationship in which govern- 
ments are only the tip of the iceberg. 

Second, we are three vibrant, vital 
democracies pursuing individual iden- 
tities, goals, and objectives. We must 
recognize the basic interdependence of 
the North American community. And we 
must handle the inevitable problems 
with mutual respect for each other and 
for international rules. 

Third, in our dealing with one 
another,, we cannot escape the fact that 
rigidity is a prime factor in breakage. A 
giant bridge appears from a distance to 
be fixed and motionless, while in fact it 
sways ever so slightly in the wind, ac- 
commodating the pressures of changing 
directions while accomplishing its task. 
So we must be flexible in our dealings 
with our neighbors— never sacrificing 
our own obligation, while respecting the 
values and goals of the other. 



Fourth, I feel obliged to note that 
small irritants can become serious prob- 
lems. And serious problems can fun- 
damentally threaten our common objec- 
tives in this North American community. 
At the moment, sentiment is strong in 
favor of countermeasures against Cana- 
dian energy and investment policies. The 



dangers are real. As I outlined at the f: 
beginning of my remarks, President 
Reagan is committed to a U.S. posturj 11 
which attaches a high priority to good 
relations with both Canada and Mexic 
To succeed, that commitment must be 
three-way street. ■ 



I 



New Challenges in 
International Investment 



by Robert D. Hormats 

Address before the plenary session of 
the Economic Policy Council of the U.N. 
Association on September 18, 1981. Mr. 
Hormats is Assistant Secretary for 
Economic and Business Affairs. 

This evening I would like to discuss, in 
general, international investment issues 
and describe, in particular, two major 
challenges before us in the 1980s. The 
first challenge relates to the need to 
establish new international under- 
standings to avoid short-term nation- 
alistic approaches to investment. We 
risk today in the international invest- 
ment area a deterioration in the climate 
similar to that experienced in the world 
trading arena in the 1930s. During that 
period, countries adopted nationalistic 
trading policies based on short-term 
economic perspectives. The economic 
and political costs have been well- 
documented in history. Following World 
War II, nations have made a major 
effort to avoid narrowly nationalistic 
trade policies. We have made consider- 
able progress in developing an inter- 
national framework for trade matters. 
Although we still have some distance to 
go, the direction and emphasis of our 
effort is correct. 

In the investment area, however, no 
comparable framework has emerged, 
and there is a tendency on the part of 
developed and developing nations alike 
to move in the wrong direction — to in- 
crease intervention in the investment 
area to accomplish short-term objectives. 
This can only come at the expense of 
broader long-term interests. A major 
goal of the 1980s must be to reverse this 
trend through international understand- 
ings and rules leading to a more open 
and less interventionist investment 
climate. 

The second challenge is to create, 
through cooperation among developed 



28 



and developing nations, an internatioi 
environment in which investment can 
make a greater contribution to the 
development process. Investment can 
a powerful impetus to development ai 
is particularly important at a time of 
tight aid budgets. The developing cou 
tries themselves have a major respon 
sibility to improve their investment 
climates through respect for interna- 
tional laws and norms. And the inten 
tional community can play a helpful r 
in facilitating investment to those cou 
tries which offer an attractive invest- 
ment climate. The overall world 
economy can benefit as a result. 

International Investment Climate 

International investment capital was 
readily available until the mid-1970s, 
foreign direct investment activi- 
ties—except for several major exproi 
tion cases early in the decade— procei 
ed at a healthy pace. Since the 
mid-1970s, there have been importan 
changes in international trends and 
forms of investment. The pace of inte 
national direct investment flows has 
slowed, particularly to many developi 
countries, and the 1980s are likely to 
a time of capital scarcity and com- 
petition for foreign investment. It als 
appears that what capital is available 
will be more expensive than we were 
customed to in the 1970s. Increasing! 
many countries are turning to invest- 
ment incentives to attract foreign inv 
ment in specific industries. A number 
are also utilizing performance re- 
quirements to boost exports or increa 
local content. In addition, the recent i 
crease in foreign investment in the 
United States, coupled with instances 
discrimination against U.S. investmen 
abroad, is generating concerns which 
increasing pressures for more restrict 
U.S. policies on inward investment. W 



Department of State Bullel 



Economics 



Id to deal with these issues in ways 
Jch maintain and expand the fun- 
fientally open international invest- 
lit system so necessary for global 
momic efficiency. 

estment Flows 

rief review of international invest- 
lt trends will help to put these issues 
lerspective. Although foreign invest- 
it has played an important role in the 
irnational economy since the last half 
he 19th century, most was in fixed- 
rest portfolio investments until the 
Os. After World War II, the global 
nomic climate improved dramatically 
generated an upsurge in private 
ct investment. U.S. private invest- 
lt in Europe increased markedly and 

a key element in Europe's recovery. 

investment in some developing 
ntries also expanded and played a 
lificant role in the economic growth 
nany of those countries. The benefits 
ncreased direct investment flows 
e and continue to be: additional 
>loyment, additional capital to ex- 
d plant capacity or create new 
lities, transfers of new and improved 
inology and management skills, in- 
sed production, and greater com- 
ition. 

The period from the early 1960s to 
mid-1970s witnessed a rapid develop- 
it of international direct investment 
1 in absolute terms and relative to 
growth of other economic aggre- 
ss such as trade, domestic invest- 
lt, and gross national product (GNP). 

United States remained the prin- 
.1 country of origin, although some 
•opean countries began to be more 
ve as direct foreign investors. 
International direct investment was 
vily oriented toward developing 
aral resources at the outset of this 
iod. However, direct investment in 
lufacturing sectors developed con- 
■rably as the period progressed. Over 
1960-73 period, the average annual 
wth rate of total outward inter- 
ional direct investment flows from 
13 largest OECD [Organization for 
momic Cooperation and Develop- 
it] countries was over 12% a year, 
s figure was approximately IV2 times 
average growth of OECD gross 
riestic product and practically the 
ne as the growth of international 
ie (14%). 

This period also witnessed the rapid 
wth of multinational enterprises with 
ensive international operations, 
se enterprises have developed highly 



sophisticated production techniques and 
investor-supplier arrangements. Often, 
each subsidiary or subcontractor 
specializes in the production of a par- 
ticular product or component. Product 
lines in the so-called world industries, 
such as the "world cars," often result 
from coordinated production activities in 
a number of countries. 

U.S. direct investment abroad grew 
from $11.8 billion at year-end 1950 to 
some $140 billion by the mid-1970s, and 
$213 billion by year-end 1980. Most of 
this increase was channeled to the 
developed countries which, by the 
mid-1970s, accounted for some 70% of 
the total, compared with less than 50% 
in 1950. There are two primary reasons 
for this trend. Investors were attracted 
by the relatively stable, hospitable in- 
vestment climates in the developed coun- 
tries, particularly the virtual absence of 
risk to investment due to political tur- 
moil. In addition, the generally booming 
economies of the developed countries 
offered the prospect of higher profita- 
bility for investments in those countries 
than in the developing countries. 

The period since the mid-1970s 
stands in quite sharp contrast with the 
period which preceded it in a number of 
important aspects. 

A slowdown in the real growth of 
direct investment flows has occurred. 

Using only capital flows as a measure, 
the average annual growth rate of out- 
ward direct investment from the 13 
largest OECD countries in the period 
1974-79 was slightly less than the 
1960-73 period (11.9% versus 12.6%). 
Considering the markedly higher rates 
of inflation during the most recent 
period, there has been a sharp decelera- 
tion in real terms. It is noteworthy, 
however, that international direct invest- 
ment has remained more buoyant than 
domestic investment, thus suggesting 
that multinational enterprises may have 
been better able to adapt to new and 
less favorable economic circumstances. 
This could be due to wider ranging 
operations and product lines of the 
multinational enterprises, which may 
enable them more easily to redirect their 
activities away from unprofitable ven- 
tures to more profitable activities. In ad- 
dition, they probably have better access 
to the financial and research and 
development resources needed to remain 
competitive during periods of economic 
turbulence. 



There has been an increase in the 
foreign share of international direct 
investment. While U.S. direct invest- 
ment abroad still predominates, its share 
of total investment flows from OECD 
countries has fallen. As a percentage of 
outward direct investment of the 13 
largest OECD countries, the U.S. share 
has decreased from a peak of approxi- 
mately 60% in the mid-1960s to about 
35% in the late 1970s. 

Particularly noteworthy is the 
change in U.S. -Economic Community 
(EC) investment patterns. During the 
1950s and 1960s, European integration 
and an inceasingly overvalued dollar 
toward the latter part of the period in- 
duced considerable U.S. investment in 
Europe. At the end of the 1970s, the in- 
ducement effect of European integration 
wore off, and a decline in the value of 
the dollar caused a reversal of the trend. 

More broadly, both Europe and 
Japan gradually shifted from postwar 
reconstruction to a more active role in 
the international economy. With this 
came increased foreign investment. 
Overall, West Germany's share of OECD 
direct investment flows grew from 7.2% 
during the 1961-67 period to 17% dur- 
ing the 1974-79 period. Japan's share 
grew from 2.4% to 13.0%, including ex- 
tensive manufacturing investments in 
the Pacific basin, and France's share ex- 
panded from 6.9% to 7.8%. 

There recently has been a sharpen- 
ing of differences in the ability of 
developing nations to attract invest- 
ment. Taken together, the average an- 
nual growth rate of international direct 
investment flows from the 14 major 
members of the OECD's Development 
Assistance Committee to developing 
countries has increased over the last few 
years in current and real terms. Fur- 
thermore, the total share of developing 
countries as host countries for the 
foreign direct investment of almost all 
major investing countries has increased 
since 1974, thus reversing the generally 
declining trend of earlier periods. But 
this investment has been concentrated 
heavily in a few economies — in par- 
ticular, in the Republic of Korea, 
Taiwan, Singapore, Hong Kong, and 
Brazil, which have emphasized export- 
ed growth. Such investment has played 
a major role in the rapid growth of 
manufacturing in these economies. 

In contrast to the experience of 
these countries, international direct in- 
vestment has tended to stagnate in 
other developing countries, with the ex- 
ception of the oil-producing countries. It 



ember 1981 



29 



Economics 



is of particular concern that U.S. and 
European direct investment in minerals 
has stagnated in recent years. The 
primary reasons for this are the slack 
demand for metals and minerals, due to 
the economic downturn in the developed 
countries, and increased investor percep- 
tion of the political risk of investing in 
some mineral-rich developing countries. 
In view of the long lead times involved 
in developing new minerals resources, a 
global shortfall in exploration and new 
mine and smelter capacity could result 
in future shortages and/or sharply rising 
metals and minerals prices when the 
developed country economies turn up- 
ward again and world demand for these 
items increases. Such shortages and 
price increases could, in turn, constrain 
future global economic growth. 

While there are sectoral reasons for 
low foreign investment in many develop- 
ing countries (the temporary fall in de- 
mand for metals and minerals is a good 
example), there are other "investment 
climate" factors, such as questionable 
national economic policies, fear of 
political instability, and negative policies 
toward foreign investment. Increased 
perception of political risk among poten- 
tial investors is a key factor. Unclear 
and restrictive investment laws and 
regulations, and the unpredictability of 
their application, are other important 
elements, as are the increased use of 
performance requirements and restric- 
tions on equity holdings. 

New Forms of Investment 

There have also been important changes 
in the characteristics of international 
direct investment. Recent OECD studies 
indicate that borrowed funds — essential- 
ly local currency borrowing — now repre- 
sent a key source of financing for many 
firms, especially U.S. enterprises. In ad- 
dition, an increasing number of medium- 
sized and sometimes even small-sized 
firms have begun to invest abroad in re- 
cent years. The development and inter- 
nationalization of firms engaged in pro- 
viding services necessary to direct in- 
vestment, such as banks, has grown at a 
rapid pace since the beginning of the 
1970s. 

Enterprises are also diversifying 
their forms of investment. European 
state-owned enterprises have become in- 
creasingly significant investors in the 
OECD countries and in many less 
developed countries (LDCs). In addition, 
the "traditional" wholly owned subsidiary 
form of operation is being increasingly 
replaced by nonequity forms of foreign 



30 



direct investment, such as management 
contracts, licensing arrangements, etc. 
The emerging trend seems to be a 
tendency toward flexible and pragmatic 
forms of ownership, management, and 
control. These increasingly complex ar- 
rangements often involve several forms 
of control, cross control, or joint ac- 
tivities. The emergence of new and more 
flexible forms of interfirm relations is 
particularly noticeable in developing 
countries that are now endowed with 
substantial financial resources of their 
own or which can borrow abroad on 
their own account. A country in this 
position may put less emphasis on at- 
tracting foreign capital than on attract- 
ing foreign technology and management 
capacities. 

Private Sector Role in 
Developing Countries 

Slower rates of global economic growth 
since the mid-1970s have hit most 
developing countries extremely hard. 
Adjustments to the soaring costs of 
energy and other resources, high in- 
terest rates, the decrease in the rate of 
growth of foreign investment in most 
developing countries, and sluggish world 
demand for many developing country ex- 
ports have caused major problems for 
developing countries in addition to the 
traditional ones many already faced. 

The United States has a strong in- 
terest in the economic development of 
developing countries. Taken together 
they are a larger market for U.S. ex- 
ports than Europe and Japan combined. 
Foreign private direct investment flows 
can be a major — and increasingly impor- 
tant — supplement to other forms of 
resource transfers, principally official 
development assistance, in stimulating 
growth in developing nations. 

There appears to be an increasing 
perception by many developing nations 
that increasing foreign direct investment 
will be vital to their prosperity in the 
1980s, particularly as aid prospects ap- 
pear less promising. Many developing 
nations are seeking actively to attract 
foreign investors. Their success will de- 
pend largely on their investment 
climates. Clear and consistent 
investment-related laws and regulations, 
in conformity with the principles of 
international law, and according most- 
favored-nation and nondiscriminatory 
treatment of investment, along with 
other steps in the direction of a more 
open investment environment, will be 
determining factors in the decisions of 
many investors. 



; 



■ 



The U.S. Government is also seekiii 
ways to facilitate U.S. private sector ir» 
volvement in LDCs. Steps we have 
taken or proposed include improved 
treatment of foreign-sourced personal 
income; amendment of our Foreign Coi 
rupt Practices Act so as to define bette 
the proscribed conduct; support for ex- 
port trading company legislation; and 
renewal of OPIC's [Overseas Private Ir 
vestment Corporation] legislation with 
broadening of the scope of its activities 
in developing nations. We are also con- 
sidering proposals for the expansion of! 
trade and development program grants 
for project feasibility studies and projei 
design. 

Another important step involves th 
negotiation of bilateral investment 
treaties with developing countries 
desirous of attracting U.S. investors. 
Such treaties would enhance the attrac 
iveness of investing in those countries 
establishing a common frame of 
reference and legal base to deal with tl 
entry and duration of investment, com- 
pensation, and arbitration in the event 
of expropriation; treatment of establisl 
ed investment; repatriation and other 
transfer of assets; and dispute settle- 
ment. 

We are also seeking to give new 
vitality to and broaden the internationi 
effort to enhance private sector invest- 
ment in those developing countries 
where the environment is conducive to 
private sector growth. We believe the 
World Bank can play a highly effective 
role as a catalyst for increasing intern; 
tional flows of direct investment to 
developing countries through cofinanci 
with the private sector. Even if the 
Bank finances only a part of a project, 
its participation improves the climate ( 
confidence between foreign investors 
and the country in which the investme 
is taking place. Within the Bank, the I 
ternational Finance Corporation (IFC) 
has a particularly important role to pta 
For the last 25 years, the IFC has bee: 
working to encourage the growth of pi' 
ductive private investment in developii 
countries. Its equity participation in a 
small portion of an investment can at- 
tract private participation in the larget 
portion of that investment. The IFC 
should receive greater support from 
developed and developing nations alike 

Domestically, the new legislative 
authority for OPIC will permit it great 
freedom to support private investment 
in middle-income developing countries. 
At the same time, we should consider 
the possibility of working with other 



Department of State Bulleti 



Economics 



eloped and developing countries to 
iblish a multilateral insurance agen- 
This could help to facilitate invest- 
it in developing countries and give 
ater confidence to new investors 
n countries which do not have their 
1 national insurance agencies. Similar 
is have been considered before, but 
haps the timing now is more pro- 
ous because the desire among poten- 
investors and potential recipients is 
ater. We also welcome the increased 
:rest shown by private firms in issu- 
political risk insurance in developing 
ntries and are exploring ways in 
ich we can cooperate more closely 
h them in this field. 
We have become increasingly con- 
ned over the serious political, social, 
I economic problems faced by many 
ntries in Central America and the 
ibbean. We are currently seeking to 
perate with the Caribbean Basin 
tes in a practical way to develop pro- 
ms to stimulate more rapid economic 
wth in the region. The U.S. portion 
his initiative will focus in large part 
enhancing the role of the private see- 
in these economies. Growth of a 
Biern efficient private sector is im- 
ijative to promote productive employ- 
lit in the region and to generate 
a hange-earning exports. We have no 
■ conceived blueprint for determining 
I actions, joint and separate, which 
1 uld be taken to increase regional pro- 
I live capacity and achieve needed 
a nomic revitalization. We are now 
8;aged in a series of consultations with 
I in countries and other potential par- 
i pants to determine those trade, aid, 
li investment measures which, when 
( en in combination with the efforts of 
I regional governments themselves to 
1 uce internal constraints to economic 
I >wth, will help to reach our long-term 
|tl of increased economic prosperity 
I the region. 

jjier Current Issues 

ipital Shortage. As I mentioned at 
| beginning of this discussion, we ex- 
;t the 1980s to be a time of capital 
rcity and, therefore, competition for 
eign investment. As the global 
>nomy expands, increasing amounts of 
>ital will be needed to sustain this 
wth. Particularly for developing 
intries, which, other things being 
aal, normally should expect the 
;hest growth rates, capital scarcity 
iy well become an even more im- 
rtant constraint on growth than 
retofore. This constraint is due to in- 



creased investor perception of the risks 
attached to investments in some 
developing countries and to the real 
limits on the global amounts of capital 
available for both domestic and foreign 
investment. 

Performance Requirements and 
Investment Incentives. A central issue 
in the 1980s is the increasing interven- 
tion by host governments in the 
decisionmaking process of potential 
foreign investors. More and more often 
governments are attempting to 
manipulate foreign investment to sup- 
port their national economic goals. 
These forms of intervention, practiced 
by both developed and developing coun- 
tries, take two broad forms. 

• Incentives. Some countries offer 
significant tax, credit, and other incen- 
tives to attract foreign investors. When 
such incentives distort decisions of 
foreign investors, there is a shift of pro- 
duction as well as jobs, technology, ex- 
ports, etc., to the host country providing 
the incentives. Other countries com- 
peting for the investment on closer to 
economic terms lose out. 

• Performance requirements. These 
include various performance commit- 
ments: minimum employment and ex- 
port levels, local value-added and con- 
tent requirements, technology specifica- 
tions, buy-back and marketing arrange- 
ments, etc. Most result in a shift of pro- 
duction to the host country on a 
noneconomic basis. Increasingly, host 
countries are combining the use of in- 
vestment incentives and performance re- 
quirements. This is leading to the 
development of unique bargaining situa- 
tions in which the economic interests of 
the capital-exporting countries may be 
ignored and trade and investment flows 
are distorted. 

Performance requirements are not 
instituted solely by developing countries. 
For example, Canada's Foreign Invest- 
ment Review Agency has leveled certain 
requirements on U.S. and other foreign 
firms. As a condition of entry into 
Canada, one company was recently re- 
quired to promise to bank with Canadian 
banks and utilize exclusively Canadian 
advertising agencies and public account- 
ants. Another firm was required to 
promise it would purchase a specific 
percentage of its input requirements 
from Canadian suppliers. Pressure was 
put on a third enterprise to move certain 
manufacturing operations from the 
United States to Canada. Unfortunately, 
there are many other examples. 



I am frankly surprised that a major 
developed country, provider, and host 
for so much international investment 
would adopt such nationalistic and short- 
sighted policies. Furthermore, such 
policies, if unchallenged, are likely to en- 
courage other countries to adopt, or in- 
creasingly resort to, similar measures. 
Canadian firms will not be immune to 
the countereffects of such measures. It 
is puzzling to me how Canada can ex- 
pect to have it both ways — seeking 
benefits from participating in the 
Western industrial club, while claiming 
special rights to promote indigenous 
development by curtailing the foreign 
economic activity of its close trading and 
investment partners. 

Our neighbor to the south, Mexico, 
also imposes performance requirements 
in key sectors. The 1977 Mexican 
automotive decree requires producers to 
obtain the foreign exchange require- 
ments needed for their operations (e.g., 
for imported components and indirect 
foreign exchange costs such as interest 
and dividend payments made abroad) 
through the export of completed vehicles 
and parts and allocates foreign exchange 
among the producers on the basis of, in- 
ter alia, the percentage of domestic 
materials incorporated in their products. 

Performance requirements directly 
related to trade are of particular con- 
cern since valued-added requirements 
can generate effects similar to import 
quotas on components and other inputs. 
While such quotas would generally be 
prohibited under the GATT [General 
Agreement on Tariffs and Trade] 
trading rules, there are no applicable in- 
ternational rules when countries use 
their investment policies to achieve the 
same purpose. 

Other requirements, such as 
minimum export requirements, are in- 
consistent with both the GATT and the 
subsidy code, but because they are tied 
to investment agreements they may be 
very difficult to sort out. The net effect 
of these investment policies is to skew 
foreign investment in order to attain 
short-term industrial policy goals and to 
distort international trade patterns. 
Governments which do these things 
undermine international trading rules. 

We believe it is time to strengthen 
multilateral discipline and restraint over 
such government actions which distort 
international investment and thus inter- 
national trade and production decisions. 
In the short-run, narrowly nationalistic 
actions are indeed tempting to us all. In 
the long run, we all benefit from an 



ivember 1981 



31 



Economics 



open, well-functioning international 
economy. If, however, the system has to 
cope with too many short-term 
pressures, its long-run viability cannot 
be assured. That is the risk we face to- 
day. It is, therefore, clearly in the in- 
terest of all concerned to improve the in- 
ternational investment system by pro- 
moting its efficiency and openness and 
reducing various nationalistic actions. 

There are a number of fora where 
these issues can be addressed. Specific 
situations can be dealt with bilaterally. 
For example, we have held, and will con- 
tinue to hold, high-level consultations 
with Canadian and Mexican officials. In 
this regard, the U.S.-Mexico Joint. 
Bilateral Trade Commission, which will 
next meet September 21, provides an 
excellent framework in which to discuss 
such issues. 

In the GATT, we have proposed ac- 
tion on trade-related performance re- 
quirements such as value-added/local 
content rules and minimum export 
quotas. The 1982 GATT ministerial 
represents an excellent opportunity to 
establish the political momentum needed 
to address seriously such problems. The 
GATT's past attention to this subject 
has not been commensurate with its im- 
plications for the trading system. 

In addition, the Development Com- 
mittee of the International Monetary 
Fund and World Bank has completed an 
initial review of investment incentives, 
and the World Bank staff now proposes 
a major study on the matter. We are 
also seeking to strengthen and expand 
OECD work in these areas. Based on 
their 1976 investment understandings, 
the OECD countries could also seek to 
build a broader and deeper commitment 
to eliminating performance requirements 
and investment incentives. Certainly the 
developing countries, particularly the 
newly industrializing countries, should 
be brought into such a consensus via 
subsequent or parallel work. 

The ultimate goal would be the 
development of an international invest- 
ment framework consisting of meaning- 
ful understandings, and perhaps commit- 
ments, on these issues in various fora. 
We recognize that this will not be an 
easy task. A key factor is that the 
plethora of incentives and performance 
requirements and other restrictions dif- 
fer qualitatively, thereby making more 
complex the problems involved in 
negotiating their elimination. 

Services. As I noted in my discus- 
sion of investment trends, international 
investment in the services sector — bank- 
ing, insurance, etc.— is increasing at a 



rapid rate. The growth of the services 
sector can play an important role in 
facilitating other types of investment. 
For example, international banks and in- 
surance companies may be the only 
enterprises in their sectors with suffi- 
cient resources and expertise to finance 
and insure some foreign direct in- 
vestments, particularly in developing 
countries. However, many countries do 
not accord these forms of investment 
the same treatment they accord to cor- 
responding domestic enterprises. In- 
stead, they provide special protection to 
their domestic banks and insurance 
firms. We believe that international 
direct investment, including investment 
in the services sector, should receive 
fair, equitable, and nondiscriminatory 
treatment. 

Treatment of Investment. The 

United States believes in two basic 
tenets for treatment of investment: the 
national treatment principle and the 
most-favored-nation treatment principle. 
The national treatment principle holds 
that foreign investors should be treated 
no less favorably than domestic in- 
vestors in like situations. The most- 
favored-nation treatment principle holds 
that the investors of one foreign country 
should be treated no less favorably than 
the investors of other foreign countries. 
The two principles have the common 
characteristics of reducing instances of 
discrimination directed at foreign invest- 
ment. 

We have worked bilaterally and 
multilaterally to achieve the widest 
possible acceptance of these principles 
and to extend the application of such 
treatment to a wider range of enter- 
prises. A particularly important step in 
this process took place in 1976 when the 
United States joined other OECD 
member governments in participating in 
the consensus adopting a declaration 
and related decision on national treat- 
ment. The declaration and decision were 
reviewed and reaffirmed in 1979 by a 
consensus of OECD countries in which 
the United States also participated. The 
declaration states, in part: 

. . . that member countries should, consis- 
tent with their needs to maintain public 
order, to protect their essential security in- 
terests, and to fulfill commitments relating to 
international peace and security, accord to 
enterprises operating in their territories and 
owned or controlled directly or indirectly by 
nationals of another member country . . . 
treatment under their laws, regulations and 
administrative practices consistent with inter- 
national law and no less favorable than that 
accorded in like situations to domestic enter- 
prises . . . 



Since the declaration and related 
decision on national treatment were 
adopted in 1976, progress has been 
made toward refining the concept, in- 
cluding a listing of those exceptions 
which now exist and their rationales. 
Continuing work is in progress with a 
stated goal of extending the applicatioi 
of national treatment over time. We 
strongly support a more active OECD 
effort in this area. The very existence < 
the declaration and related decision on 
national treatment has probably had 
some effect in discouraging member 
countries from implementing measures 
which would constitute new derogatior 
from the principle. Moreover, at the re 
quest of the United States, joined by 
several other OECD member countries 
the consultation procedures of the 
OECD instruments were used for the 
first time in March 1981, to hold forme 
OECD consultations on the discrim- 
inatory policies of Canada's national 
energy program. National treatment is 
clearly in the interests of all concerned 
as it is a critical element in fostering a 
attractive climate for foreign invest- 
ment. 

In addition, we believe strongly th; 
investors should be accorded treatmen 
consistent with international law, in- 
cluding nondiscriminatory treatment a 
prompt, adequate, and effective compe 
sation in the event of expropriation. Ir 
vestor confidence that host countries 
would adhere to international law and 
norms would significantly facilitate in- 
vestment flows. 

It is, in my judgment, the respon- 
sibility of the U.S. Government to pro- 
vide full support for American investoi 
who desire it in order to insure that th 
principles of national and most-favorec 
nation treatment and their rights unde 
international law are adhered to by ho: 
governments. American investments 
abroad make a positive contribution to 
our own economy and to that of host 
nations. The U.S. Government cannot 
remain neutral while its citizens, who i 
vest in other countries relying on their 
good faith to adhere to international 
principles and laws, find their interests 
threatened by derogations from such 
principles and laws. We believe in the 
concept of fair play. We practice it, an« 
our investors abroad should expect no 
less. 

Codes of Conduct. Over the last 
half decade, the United States has bee) 
participating in the development of in- 
ternational codes of conduct relating tc 
multinational enterprises. The OECD 
and the International Labor Organiza- 



32 



Department of State Bullet 



Economics 



have developed general codes for 
tinational enterprises. The U.N. Con- 
nce on Trade and Development 
(CTAD) has promulgated a more nar- 
ly focused code on restrictive 
ness practices. In addition, a U.N. 
king group has completed draft pro- 
ms on about two-thirds of an overall 
I. code relating to the activities and 
>onsibilities of transnational corpora- 
s and governments. However, hard 
es remain to be resolved, such as 
le on nationalization and compensa- 
, and it is not certain whether the 
otiations will be successful. Negotia- 
s on a code of conduct relating to 
transfer of technology are presently 
led and the matter has been referred 
he U.N. General Assembly for fur- 
• consideration. 

In the U.S. view, guidelines which 
■m standards of good practice for 
1 enterprises and governments can 
:ribute to improved relations be- 
en firms and governments and may 
t the tendency for unilateral govern- 
it intervention in investment mat- 
. Through appropriate provisions on 
onalization and compensation, 
?diction, and dispute settlement they 
' also be able to reduce conflicts be- 
en governments over investment 
■es, thereby facilitating the liberal 
.ate for international investment 
pj;h we seek. However, the United 
l;es can support only guidelines or 
Bes that are voluntary; do not 
i riminate against multinational enter- 
% es in favor of purely national enter- 
I es; are balanced to include 
E rences to the responsibilities of 
K ernments as well as of multinational 
.- irprises; and apply to all enterprises 
- irdless of ownership — whether 
I ate, government, or mixed. 
1 It appears that international interest 
(1 eveloping codes of conduct may well 
( liminishing as other investment 
les, such as capital scarcity, have 
|3me more urgent. The principal in- 
Itment issue is no longer controlling 
n tinational enterprises but attracting 
n?stment by them. 

Foreign Investment in the United 
Ites. The value of foreign direct in- 
Itment in the United States has in- 
lased in recent years— 28% in 1978 
l>.5 billion), 23% in 1979 ($54.5 
I on), 20% in 1980 ($65.5 billion). (U.S. 
|>ct investment abroad, by contrast, is 
■ 3 billion.) Roughly one-third of the 
Isign direct investment in the United 
Ites is in manufacturing ($24 billion), 
lolesale and retail trade account for 



about 20%, and petroleum 19%. Real 
estate holdings by foreigners, while 
often publicized, amount to only about 
$2.5 billion. The largest single sources of 
foreign investment have been the 
Netherlands ($16 billion), the United 
Kingdom ($11 billion), and Canada ($9 
billion). Less than $1 billion comes from 
the Middle East. 

This investment has had a positive 
effect on many sections of our economy. 
It has helped to create jobs, added plant 
capacity and created new facilities, and 
brought in advanced technology and 
management skills. Moreover, additional 
inward investment flows will assist our 
economic revitalization efforts. 

However, the recent rapid growth in 
this investment coupled with restrictions 
on and discrimination against U.S. in- 
vestment in other countries are tending 
to generate pressures in the United 
States to control inward investment 
and/or regulate it on a more reciprocal 
basis. The reaction to Canada's restric- 
tions against foreign investors, par- 
ticularly in the energy sector, and the 
spate of new investments sought by 
Canadian firms in the U.S. minerals sec- 
tor feed such pressures. There have 
been calls for prohibition on investment 
in specific sectors, greater screening of 
foreign investment, and the establish- 
ment of a reciprocity principle in U.S. 
treatment of investment. 

Clearly, for the many reasons men- 
tioned earlier, I believe that we should 
react strongly to unfair treatment of 
U.S. investment abroad. However, for a 
number of reasons, it is necessary to 
react in ways which genuinely serve our 
interests. Policies which would restrict 
inward investment, or retaliatory 
countermeasures, should be used only 
after all of their implications are 
weighed. 

First, the ultimate results might 
adversely affect the United States as 
much as, or more than, other countries. 
We need to be cautious about limiting 
foreign investment because of the 
benefits from such investment. A secure 
and stable investment climate is one of 
the major strengths of our economy and 
a major source of our prosperity. Short- 
sighted or arbitrary actions which raise 
doubts among potential foreign investors 
would be harmful to our domestic 
economic interests. In the long run we 
might be the losers, not the country that 
we retaliated against. 

Second, we must take into account 
the fact that the United States is also a 
large investor abroad and has been a 



major force in international trade. U.S. 
policies concerning foreign investment in 
the United States have a significant im- 
pact on the policies of other countries, 
and U.S. restrictions could invite 
retaliatory actions by others. 

I, therefore, believe that while 
counterreactions of the type mentioned 
might in extreme cases be useful, we are 
clearly better served by policies that aim 
at the elimination of foreign practices 
that deviate from international norms 
than by policies of retaliation that could 
weaken these norms. With this principle 
in mind, we intend to take steps 
necessary to protect our rights and in- 
terests. 

Conclusion 

Many of the issues I have discussed to- 
day were nonexistent or only nascent 
just a decade ago. They have come to 
the fore over the last few years as a 
result of real economic forces, which are 
reflected in the investment trends I have 
outlined. The issues, such as investment 
incentives and performance require- 
ments, must be addressed if we are to 
maintain and strengthen the open inter- 
national investment system essential to 
global economic efficiency. 

By their very nature, many of these 
problems will not lend themselves to 
easy solutions. In particular, urgent 
short-term national economic goals vary 
widely, thereby making more difficult 
the achievement of an international con- 
sensus on some of the issues. However, 
all countries have a stake in the long- 
term economic implications involved, 
and I believe that this common stake in 
the international economic system pro- 
vides a good basis upon which to pro- 
ceed in addressing these problems in 
earnest. 

International fora, such as the 
OECD, the GATT, and specialized U.N. 
agencies will provide important arenas 
in which to tackle the problems involved. 
We must move soon from the discussion 
phase to a serious effort to develop and 
implement multilateral understandings 
and rules which reduce distortions of in- 
vestment and move toward a more open 
global investment climate. This must be 
a major goal for the decade of the 
1980s. ■ 



Iember1981 



33 



Economics 



International Commodity Agreements 



The following report was prepared 
by Dennis T. Avery, senior agricultural 
analyst, Office of Economics, Bureau of 
Intelligence and Research, in May 1981. 

SUMMARY 

In 1976, the less-developed countries 
(LDCs) undertook a major effort spon- 
sored by the U.N. Conference on Trade 
and Development (UNCTAD IV) to 
organize international agreements for 
their important commodity exports. 
They hoped that such agreements would 
help stabilize and/or enhance their earn- 
ings. 

The resulting UNCTAD integrated 
program for commodities has not suc- 
ceeded significantly in altering the terms 
of trade for commodity producers, and 
little prospect remains that it will suc- 
ceed in doing so. Theoretically, such 
agreements could produce modest 
benefits by facilitating the commitment 
of a more appropriate level of resources 
to production over time. It has proven 
extremely difficult to realize these 
benefits in practice, however, due to the 
continuing vagaries of supply and de- 
mand and continuing competition for 
market shares. 

Raising commodity prices to ar- 
tificially high levels attracts added pro- 
duction, both from agreement members 
and from nonmembers. It also 
discourages consumption and encourages 
substitution. These powerful reactions 
all work toward creating surpluses of 
targeted commodities and explain why 
commodity agreements have been unable 
to sustain higher price levels. In fact, 
price stabilization efforts can themselves 
stimulate output if producers believe 
that their risk of low prices has been 
decreased. 

Recent commodity agreements have 
tried several means for dealing with 
market competition problems: keeping 
price goals modest, signing up all major 
producers, and enrolling importer na- 
tions, which agree not to increase their 
purchases from nonmembers. It has 
been a practical impossibility to include 
all producers and potential producers of 
major commodities, however. It has also 
been difficult to get importers to agree 
with producers on appropriate stabiliza- 
tion mechanisms and price levels for the 
agreements. 



Competition from synthetics and 
substitutes has been an even more in- 
tractable problem. Modern technology 
has produced major competitors for 
nearly every commodity, from synthetic 
rubber and plastics to high-fructose corn 
sweetener and glass-fiber telephone 
cable. Only the beverages — coffee, tea, 
and cocoa — have so far escaped serious 
inroads from synthetics and substitutes. 

Commodity agreements have also 
exhibited some serious limitations as an 
aid mechanism. Their benefits are 
distributed on the basis of commodity 
production, rather than need, so they 
assist only indirectly in reaching 
economic, political, or social goals within 
the recipient country. They also en- 
courage added production, which either 
boosts donor costs or dilutes benefits. 

There is little prospect that interna- 
tional commodity agreements can over- 
come their inherent limitations and pro- 
vide greater benefits for commodity ex- 
porters in the future. Prices can be ex- 
pected to continue to fluctuate widely 
around the trends dictated by demand, 
competition, and long-term production 
costs. 



HISTORY OF AGREEMENTS 
IN CORE COMMODITIES 

The 10 core commodities listed by UNC- 
TAD IV (cocoa, coffee, copper, cotton, 
hard fibers — sisal, abaca, and coir — jute, 
rubber, sugar, tea, and tin) share some 
important characteristics: all have 
volatile prices, and all are produced 
mainly in the LDCs. Each, however, has 
distinctive characteristics. 



Coffee 

Coffee is widely produced in Latin 
America and Africa. The major causes 
of coffee price volatility are on the sup- 
ply side — primarily weather and a rather 
erratic expansion of production to match 
slowly rising demand. At any given 
time, demand is quite inelastic. Like all 
tree crops, coffee's supply responses are 
lagged. It takes 4-5 years to bring new 
trees into production and more than 20 
years for trees to pass out of produc- 
tion. 

The world coffee market has been 
characterized by brief periods of short 
supply (and high prices) followed by 
often lengthy periods of oversupply (and 



low prices). The boom periods have 
typically lasted only a couple of years, 
but periods of depressed prices have } 
lasted far longer. 

The most recent coffee price boom 
was triggered in 1975 by a severe free 
in Brazil, the largest coffee producer. 
The freeze not only ruined the 1975 en 
but damaged many trees, thus cutting 
back Brazilian coffee production for 
several years. World coffee production 
dropped from 77 million bags in 1975 t 
less than 71 million in 1977. The short 
supply sent coffee prices zooming, fron 
66« per pound in 1974 to $2.40 in 197? 

High coffee prices stimulated inves 
ment in coffee production, mostly the 
replacement of older trees. By 1978, iri 
consequence, world coffee production 
was back to its prefreeze level and still 
climbing. The World Bank expects this 
oversupply to be relatively short lived. 
There are no longer any large tracts o: 
virgin land suitable for new coffee pro 
duction, and fewer smallholders are in- 
terested in growing coffee. With norm 
weather, the Bank expects prices to 
decline in real terms by perhaps 15-20 
through the 1980s, recovering to near 
their current levels by 1990. 

Coffee producers have long sought 
to stabilize their prices at relatively hij 
levels. Brazil made a number of solo e! 
forts to cut back surplus coffee produc 
tion in the years before World War II. 
The first international coffee agreeme: 
dates from the war years when the 
European market (10 million bags a 
year) had suddenly been lost and pro- 
ducers feared a price slump. The Inter 
American Coffee Agreement successfi; 
ly froze prices at 13.4C per pound. 

After the war, output and stocks 
were down, demand recovered, and co 
fee experienced 9 consecutive years of 
rising prices from 1946 to 1954. Coffei 
prices of more than 90C per pound 
stimulated considerable new planting i 
Brazil, Central America, and Africa. B 
1955, 15 countries had joined the Latii 
American Coffee Agreement, which se 
up a buffer stock in an effort to raise 
prices in the face of a rising tide of coi 
fee. Nonetheless, by 1961 coffee stocks 
equaled 1 l k years of normal world con- 
sumption, and prices were down to 384 
under severe pressure. In 1964, consur 
ing nations (including the United State 
were brought into a new International 
Coffee Agreement. Export quotas held 
the enormous stocks off the market foi 



34 



Department of State Bulletin 



Economics 



rie, and prices immediately jumped 
early 50C a pound. Production re- 
ided, however, and with heavy 
ks overhanging the market, prices 
>ped steadily for several years. 
:ks peaked in 1968. Then diversifica- 
to other crops, some stock spoilage, 
3 years of light crops helped to 
;e the oversupply. 
The agreement transfered an 
mated $600 million per year from 
ee consumers (mainly in the United 
tes) to producers during the late 
Os and early 1970s. U.S. support for 
agreement ended after prices 
ped in 1970 and again in 1972. The 
iucers claimed the price boosts were 
to frost damage, but at least in 1972 
e were substantial stocks available 
ch might have been sold to dampen 
e increases. When the exporters 
sequently demanded still-greater 
e boosts to compensate them for the 
aluation which balance-of-payments 
olems had forced on the U.S. dollar, 
Burning nations decided the agree- 
■ it was not serving their interests. 
i The current coffee agreement dates 
■ n 1976. It relies exclusively on ex- 
p t quotas, which initially protected a 
I e range of 63-770 a pound. Because 
b price of coffee remained well above 
jj ; range as a result of the 1975 
I; zilian freeze, quotas were never put 
) effect. Economic provisions of the 
I aement were renegotiated, and ex- 
p t quotas became effective in October 
5 0. Quotas remain in effect within a 
115-1.55 price range. The agreement 
a i not be able to defend $1.15 in the 
a i of projected increases in coffee pro- 
) tion in the 1980s. 



I oa has had one of the most volatile 
k -e patterns of any commodity, due to 
B astic demand, weather-induced pro- 
j tion variability, and the lagged sup- 
j response to price changes typical of 
U crops. In the 1970s, the annual 
k rage of cocoa prices ranged from 54<f 
I pound to $3.79 per pound. 
I Favorable growing conditions pro- 
:ed a crop of 1.6 million tons in 1972. 
)r weather in 1973 and 1977 cut pro- 
:tion below 1.4 million tons. That pro- 
•tion variation and its impact on 
cks was enough, when combined with 
inelastic demand for cocoa, to pro- 
;e wide swings in cocoa prices. Only 
•y high prices seem to produce Con- 
ner resistance and increase use of 
:oa substitutes and extenders. 



Attempts at international coopera- 
tion in cocoa pricing date from the 
1960s. Production had been growing 
somewhat more rapidly than demand 
throughout much of the period following 
World War II. In 1962, when an associa- 
tion of the five largest producers was 
founded to control supply, some 
nonmembers were continuing to 
stimulate cocoa production. Export 
quotas were added to the producer 
agreement, but they were overwhelmed 
by a record crop in 1964-65. After three 
huge, successive crops between 1970 and 
1972 produced very low prices, a U.N. 
cocoa conference adopted a broader In- 
ternational Cocoa Agreement. Quotas 
and a buffer stock were set to defend a 
price range of 23-32$. Before any buffer 
stock was accumulated, however, bad 
weather cut production. Prices jumped 
to 86<t and stayed above the target 
range from 1973 through 1979. The 
relatively high prices reflected low 
stocks, a 3% annual growth in con- 
sumption, the delayed effect of limited 
plantings during the 1960s, and some 
bad weather. 

The International Cocoa Agreement 
was renewed first in 1977 (with a new 
price range of 65-81C) and again in 
1980. The 1980 renewal was achieved 
only after prolonged negotiation in 
which the producers agreed to lower 
their minimum price goal from $1.20 to 
$1.02 per pound (both well above 
prevailing market prices). The agree- 
ment's prospects are clouded by the 
abstention of the largest producer (Ivory 
Coast) and the largest consumer (the 
United States). 

The World Bank projects growth of 
cocoa production during the 1980s at 
3.1% a year. Recent high prices have 
stimulated replanting of older cocoa 
groves in such traditional areas as the 
Ivory Coast and Ghana. New com- 
petitors, including Brazil and Malaysia, 
are expanding their cocoa plantings. The 
World Bank expects cocoa demand to 
grow marginally more slowly than pro- 
duction. In these circumstances con- 
tinued downward pressure on prices 
may be expected. It appears doubtful 
that the buffer stock of the cocoa agree- 
ment and its financing arrangements 
will be sufficient to sustain prices at the 
target levels during this period. 

Sugar 

Several factors contribute to the volatile 
price pattern in the world sugar 
markets. 



• Production varies unpredictably 
with weather and periodic outbreaks of 
crop disease. 

• The supply response to price in- 
creases has lagged and may overshoot 
because it takes several years to bring 
on efficient new production and the 
associated large-scale refining capacity. 

• Demand for sugar is inelastic, 
magnifying the price impact of supply 
problems. 

• Much of the world's sugar produc- 
tion and consumption is insulated from 
price changes by subsidies, leaving the 
remaining sugar to trade in a relatively 
thin market where price responses are 
amplified. 

The developed non-Communist coun- 
tries currently produce about 30% of the 
world's sugar (mostly from subsidized 
sugar beets). Developing countries pro- 
duce about 40%, and the Communist 
countries produce about 30%. 

Sugar consumption is no longer in- 
creasing in many of the developed non- 
Communist economies, because con- 
sumption levels are already high and 
substitute sweeteners are becoming 
more important. High-fructose corn 
sweetener is displacing millions of tons 
of sugar in the United States, Japan, 
and Canada. Furthermore the European 
Community's (EC) common agricultural 
policy has stimulated production of 
millions of tons of European beet sugar, 
which is being exported under subsidy. 1 

Markets in the U.S.S.R. and 
Eastern Europe are approaching satura- 
tion. Sugar consumption is already high 
in the developing countries which export 
sugar. Only among the developing-nation 
importers is per capita sugar consump- 
tion still increasing in line with con- 
sumer incomes. 

Sugar was one of the first com- 
modities for which control via interna- 
tional agreement was tried. Under the 
Chadbourne plan of 1931, the chief 
world exporters agreed to restrict ex- 
ports and gradually reduce stocks over a 
5-year period. However, heavy stocks 
and declining consumption depressed 
prices, while nonmember production 
more than offset the members' export 
cutbacks. 

A broader International Sugar 
Agreement, signed in 1937, included the 
United States, the United Kingdom, and 
much of Europe and set quotas for their 
domestic production. The agreement 
was never tested because World War II 
intervened. It was not until well after 
the war that low sugar prices again 
became a serious concern. 



member 1981 



35 



Economics 



The 1954 edition of the International 
Sugar Agreement included most of the 
major exporters and importers. It had a 
price range of 3.25-4.35C per pound, 
protected by export quotas. The Suez 
crisis in 1956 sent prices above 6<t, but a 
large 1957-58 world sugar crop pushed 
prices to the floor level. The agreement 
was renewed in 1958, and Brazil and 
Peru, the two major exporters that had 
remained outside the agreement, were 
brought in. Production increased again 
in 1959, consumption faltered, and 
stocks continued to rise. In 1961, after 
the United States stopped imports of 
Cuban sugar in an anti-Castro move, 
Cuba demanded a huge increase in its 
export quota. The agreement broke 
down when the other exporters refused 
the demand. 

The International Sugar Agreement 
was revised in 1969 and reactivated for 
a 5-year period until it was finally ter- 
minated in 1973. The agreement was 
undercut by the need to offer attractive 
quotas to attract new members, by sub- 
sidized sugar production in the 
developed countries, and by an uncertain 
mechanism for limiting Cuban sugar 
reexported through Communist coun- 
tries. Prices varied from 3.2C in 1969 to 
9.5« in 1973. 

After termination of the agreement, 
prices peaked again in 1974, averaging 
30<t a pound, and then fell back to about 
8<t for several years. These low prices 
led to the current agreement, which 
went into effect in 1978. 

The current International Sugar 
Agreement comprises 59 producing and 
consuming nations including the United 
States. The agreement has been commit- 
ted to keeping sugar prices within a 
specified range, currently 13-23C per 
pound. Producer nations agree to apply 
export quotas when prices are low, and 
consuming nations agree to limit im- 
ports of nonmember sugar. When prices 
are high, exporting member stocks total- 
ing 2.5 million tons are released accord- 
ing to a prearranged price schedule. The 
agreement cut export quotas by 
12V2% — or 2.2 million metric tons — for 
both 1978 and 1979, when sugar prices 
averaged 7.8<C and 9.9C per pound, 
respectively. In 1980, with the national 
stocks drawn down, sugar prices rose 
well above 40<t per pound. 

Despite broad producer and con- 
sumer membership, the International 
Sugar Agreement faces serious prob- 
lems. Expanded production of high- 
fructose corn sweetener and its lineal 
descendents will displace millions of tons 



of sugar from key markets in the years 
ahead. The EC is likely to continue ma- 
jor exports of subsidized beet sugar in 
the world markets, because it will be 
reluctant to join the agreement without 
a quota that recognizes those exports. In 
addition, the World Bank projects that 
sugar production will increase more 
rapidly than consumption in the develop- 
ing countries over the next decade. The 
general outlook for sugar stability is 
poor. 

Tea 

Tea prices have been notable in the com- 
modity world for their relative stability. 
This is due in no small part to produc- 
tion factors: tea is a leaf crop and thus 
is less subject to variations in weather 
than such fruit crops as coffee and 
cocoa. Tea growers also have more 
latitude to vary production with prices: 
When prices are good, growers can in- 
crease production both by applying more 
fertilizer and by harvesting more leaves 
per bud. New tea plantings reach bear- 
ing age faster than most trees. Oddly, 
the fact that tea does not store well for 
long periods may also work in favor of 
price stability. Other crops have gotten 
into major difficulties because they have 
built up carryover stocks to high levels 
in the annual hope that the next year 
would offer better markets. The tea in- 
dustry tends to sell this year's tea this 
year without relying on such uncertain- 
ties. 

Tea demand is relatively stable and 
inelastic in the short run. The World 
Bank projects that world tea demand 
will grow by about 3.5% per year to 
1990, with production growing slightly 
faster than that. Developed-country 
markets are already saturated, and the 
rapidly growing consumption in the 
U.S.S.R. and China is expected to taper 
off in the years ahead. Tea demand in 
the developing countries has been grow- 
ing at about 4.4% per year. 

Tea prices were somewhat more er- 
ratic in the 1970s than earlier, reflect- 
ing, in part, increases in energy prices 
affecting tea growers' fuel, fertilizer, 
and marketing costs. Sri Lanka has also 
suffered some poor tea crops, decreasing 
supply, and tea demand shot up tem- 
porarily after the Brazilian freeze drove 
coffee prices up in 1976-77. 

India and Sri Lanka are the two 
largest tea exporters, but Bangladesh, 
Indonesia, Africa, and Latin America 
have all been increasing their exports 
recently. 



Tea producers had a long-lived In-fll, 
ternational Tea Agreement from 1933 -L. 
1955. In its early years it featured ex-jl 
port quotas and a virtual prohibition oil 
new plantings. Despite the agreement, I 
there was little change in tea prices unit 
the threat of World War II in 1939. IX 
agreement continued after the war, 
without restrictions on production or 
marketing. In 1950 export quotas were 
issued, but no attempt was made to ' 
restrict supplies significantly. The agreL 
ment was permitted to expire after 
1955. It had virtually no impact on the ,, 
tea market in its last 15 years of ex- 
istence. 



Natural Rubber 

Rubber price fluctations arise primarily 
from the demand side, in sharp contras 
to most other crops. The major use of 
rubber has been in automotive products 
and prices have been very sensitive to 
changes in general economic activity. 
Natural rubber demand has also been 
dramatically affected by the relative 
price and availability of synthetic rub- , 
ber. 

Sales of elastomers have been grofl| 
ing at roughly 6.5% per year since the 
early 1950s. Until recently, however, 
synthetic rubber gained most of the 
market growth, expanding at more thai 
9% a year. Natural rubber production 
grew at less than 3% annually. Recentl 
the demand for natural rubber has bee: 
stimulated by the demand for radial 
tires, which require a high proportion ( 
natural rubber, and by higher oil prices < 
which increase the cost of synthetic ruli 
ber. The impact of high energy prices < 
autos and driving is expected to hold 
back elastomer demand during the coir 
ing decade. Even so, natural rubber pr 
duction may not keep up with demand 
unless additional investments are made 
in the next few years. 

Rubber production is centered in 
Southeast Asia, with 80% coming from 
Malaysia, Indonesia, and Thailand. Sri 
Lanka, India, Liberia, and Nigeria haw 
accounted for another 12%. Most rubbe 
is now produced on small farms rather 
than on large plantations. 

Rubber has a long history of interro 
tional market control efforts. The 
Stevenson plan was inaugurated in 192! 
restricting rubber exports from Ceylon, 
Malaya, and the Straits Settlement (all 
British dependencies). Rubber prices in- 
creased sharply at first. However, 
growers in other areas stepped up plani 
ings sharply. By 1927, when the plan 



i 



36 



Department of State Bulletii 



" 



Economics 



dropped, the British dependencies' 
e of the rubber market had declined 

about 70% to 54%, with no long- 
i increase in price. But temporarily 
er prices had stimulated the 
ilopment of synthetic rubber and the 
er reclaiming industry. 
The Depression and larger world 
tings kept rubber prices low through 
and produced the International 
ber Regulation Agreement. This 
ement at first raised prices, at the 
of building producer stocks. Rubber 
and increased significantly in the 
few years, carrying prices up with 
id permitting the liquidation of those 
■cs. The agreement continued in 
3 until the Japanese conquest of 
■er-producing areas catalyzed an ex- 
ve increase in the synthetic rubber 
stry. 

Perhaps because of the direct com- 
(j:ion from synthetic rubber, there 
a; no further rubber agreements until 
B), when negotiations for the Interna- 
Dil Natural Rubber Agreement were 
I hided. It entered into force previ- 
ew ally in late 1980 and will enter into 
i] e definitively when full financing of 
I large 550,000-metric ton buffer stock 

;sured. This could occur as early as 
a 1981; then, if warranted by market 
»! litions, the buffer stock could begin 
, ket operations to defend a price 
ti je of 150-270 Malaysian/Singapore 
> s per kilo (approximately 32-58 U.S. 
f s per pound). The World Bank ex- 
I s natural rubber prices to flucutate 
r ind a level of 52« per pound (in 1977 
I irs) through 1990. 



3 ■ is employed principally in sacking, 
li istrial cloth, and carpet backing. It 
i i tough competition in these markets 
I a synthetics — polypropylene and 
c ethylene. As a result, world jute de- 
u id has been essentially stagnant for 
5 'ears. Large variations in jute pro- 
ution have, however, triggered big 
I -t-term swings in jute fiber prices. 
i ply disruptions and high prices due 
I ivil disturbances in Bangladesh in 
i early 1970s gave added momentum 
] ynthetics by curtailing jute supplies 
j raising prices for a time. Jute pro- 
Ition is concentrated in India, 
lgladesh, and China; because China is 
it importer, the world market is left 
ndia and Bangladesh. 
Jute market efforts have been 
:ussed for years under the Food and 
-iculture Organization (FAO) In- 



tergovernmental Group on Jute, Kenaf, 
and Allied Fibers. In recent years 
UNCTAD discussions have also focused 
on jute, and a non-price-stabilizing 
cooperative arrangement, the Interna- 
tional Jute Organization, is currently be- 
ing negotiated. The organization would 
promote jute in world markets and 
foster research and development related 
to the raising and processing of the 
fiber. 

While producers still hope for addi- 
tional international measures to stabilize 
jute prices, a recent World Bank study, 



sion in the U.S.S.R. and China has 
raised the Communist countries' share of 
the world production 12 percentage 
points to 39%. The industrialized non- 
Communist countries' share of the 
market has dropped from 32% in 1961 
to about 18% now. The developing coun- 
tries are expected to continue expanding 
cotton production: some potential cotton 
land now is in less-valuable crops, their 
technology is improving, and many of 
them have expanding textile manufac- 
turing industries. For the next decade, 
cotton is projected to capture nearly half 



Table 1 

Primary Commodity 

Rubber 
Cotton 
Tin 

Jute 
Sugar 

Copper 



Bauxite 



Cocoa 
Coffee 
Tea 



Competitors 

Synthetic rubber, plastics. 

Other natural and synthetic textile fibers. 

New technology that permits thinner tin plating; plastic can lin- 
ings; aluminum, paper, and plastic containers. 

Polypropylene and polyethylene fibers and sheets. 

Corn sweeteners (especially the recently developed high-fructose 
corn sweetener), and noncaloric sweeteners. 

Microwave communications; steel-reinforced aluminum and glass- 
fiber cables; plastic plumbing pipe; electronic replacements for 
electric devices. 

Other metals and plastics that offer some of aluminum's 
lightweight and weather-resistent properties; aluminum re- 
cycling efforts. 

Cocoa flavorings; vegetable oils used as extenders. 

Other beverages. 

Other beverages. 



(A Dynamic Simulation Model of the 
World Jute Economy. Staff Working 
Paper No. 391. May 1980) suggests that 
there may be little benefit to exporters 
from jute price stabilization. The study 
found that increased price stability 
would be enough in itself to induce ex- 
pansion in jute production, which would 
push prices down and leave returns to 
the producing nations approximately 
where they had been. The study also 
suggested that higher jute prices would 
encourage synthetic fibers to take over 
more of the market. 

The rising cost of competing 
petroleum- and gas-based synthetics will 
support some increase in jute prices dur- 
ing the 1980s. 

Cotton 

Cotton is an annual crop produced in 
more than 75 countries and exported by 
more than 60 nations. Over recent 
decades, cotton production has been 
shifting from the developed to the 
developing countries, which now produce 
44% of the world's cotton. Rapid expan- 



of the increase in textile fiber demand, 
with production growing at an annual 
rate of about 2%. 

The International Cotton Advisory 
Committee has reached no consensus on 
ways to raise or stabilize cotton prices 
without encouraging the substitution of 
synthetic fibers. (During the 1960s the 
United States used price supports to 
maintain artificially high prices for cot- 
ton producers, resulting in a sharp 
decline in cotton's share of the textile 
fiber market.) 

Hard Fibers 

The hard fibers include sisal, abaca 
(Manila hemp), and coir (coconut husk 
fiber). Sisal is produced primarily in 
Kenya, Tanzania, and Brazil and is used 
importantly in twine. Abaca has pro- 
duced the finest natural hemp cordage 
because of its strength (especially when 
wet), durability, and flexibility. It is pro- 
duced primarily in the Philippines (84%) 
and in Ecuador (15%) from a plant close- 
ly related to the banana. There are two 
types of coir: brown coir, produced 



ember 1981 



37 



Economics 



mainly in Sri Lanka by beating the 
husks of ripe coconuts, and white coir, 
produced mainly in India from the husks 
of green coconuts allowed to ret (soak) 
in salt water. All of the hard fibers are 
relatively labor-intensive, and working 
conditions in these industries are 
disagreeable (especially for coir). 
However, hard fiber production is often 
politically important in producing coun- 
tries, because it typically provides a ma- 
jor source of employment in otherwise 
barren regions. 

The producers of the hard fibers 
probably were included in the UNCTAD 
IV list on the basis of their generally 
low position on the world economic lad- 
der. The hard fibers face stiff competi- 
tion from synthetics, however, and there 
is little likelihood that real prices could 
be significantly increased without 
substantial losses in sales volume. Re- 
cent UNCTAD efforts have focused on 
finding new uses for hard fibers. 

Tin 

Almost half of the world's mine output 
of tin comes from Southeast Asia (main- 
ly Malaysia, Thailand, and Indonesia), 
with Bolivia, the U.S.S.R., China, 
Australia, and Brazil accounting for 
most of the remainder. The United 
States is the largest consumer (about 
25% of the world's total consumption), 
followed by Japan, West Germany, and 
the United Kingdom. The main end uses 
for tin are in tin plate (primarily for 
food and beverage containers), solders, 
and bronze. 

World tin consumption in the post- 
World War II period has grown more 
slowly than use of most other metals 
(i.e., at 1.7% per annum from 1955 to 
1974, compared with 4.8% for copper, 
8.3% for aluminum, and 4.6% for zinc). 
The main reason for this slow growth 
has been the increasing substitution of 
tin-free steel and aluminum in can 
manufacturing and the growing use of 
nonmetal containers. Technical innova- 
tions have also produced thinner tin 
coatings, reducing the quantity of tin 
needed per can. 

Tin consumption usually responds 
quickly to changes in income or 
economic activity, but adjustments in 
mine output are costly and time consum- 
ing. Efforts to stabilize the resulting 
price fluctuations date back to 1921, 
when the colonial governments of the 
Federated Malay States and the Dutch 
East Indies agreed to voluntary produc- 
tion controls. 



The first International Tin Agree- 
ment, which included both producer and 
consumer nations, was ratified in 1956 
and was subsequently renewed in 1961, 
1966, 1971, and 1976. The present 
agreement was scheduled to expire in 
June 1981 but was recently extended 
through June 1982 to allow more time 
for negotiating a sixth agreement. The 
agreement uses both a buffer stock and 
export controls in its efforts to stabilize 
prices between preset ceiling and floor 
levels. 

Although the International Tin 
Agreement is frequently cited as the 
most successful example of an interna- 
tional commodity agreement, its record 
is a mixed one. Because of the small size 
of the tin buffer stock (25,000 metric 
tons under the first agreement, 20,000 
under the following three agreements, 
and up to 40,000 under the present one) 
relative to world tin consumption of 
about 200,000 tons annually, the Inter- 
national Tin Council which administers 
the agreement has been considerably 
more successful in defending floor prices 
than ceiling prices. The International 
Tin Council imposed export controls in 
1958-60,1968-69, 1973, and 1975-76. 
Market prices fell below the council floor 
only once (for 2 weeks in 1958), but they 
broke through the ceiling in 1961, 
1964-65, 1966, 1973-74, and 1976. 
Prices remained above the ceiling from 
January 1977 to October 1980. (The buf- 
fer stock has been depleted since 
January 1977.) 

The United States did not join the 
International Tin Agreement until 1976, 
but sales of tin from the U.S. stockpile 
had a moderating effect on prices after 
they rose especially far above the Inter- 
national Tin Council ceiling during 
1963-66 and 1973-74. The U.S. 
stockpile currently totals about 200,000 
tons, which is well above the official 
stockpile requirements of 42,000 tons. 
The United States joined the fifth Inter- 
national Tin Agreement in 1976 primari- 
ly for foreign policy reasons. 

Copper 

Copper is one of the major commodities 
in world trade, with more than $6 billion 
worth traded in 1978. The United States 
is the largest producer (18% of the 
world's total in 1978), followed by Chile 
(14%), the U.S.S.R. (12%), Canada (9%), 
Zambia (9%), Zaire (6%), and Peru (5%). 
The United States is also the world's 
largest consumer. 



Because of its superior electrical 
conductivity, malleability, and anticor* 
sion properties, copper is used in elec- 
trical wires and cables, plumbing tubes 
and radiators. Copper is almost ir- 
replaceable is some uses, but in others 
faces competition from aluminum, 
plastics, steel, and glass fibers. 

Four major copper-exporting coun 
tries — Chile, Zambia, Zaire, and 
Peru — created the Intergovernmental 
Council of Copper Exporting Countrie 
in 1967 to prop up copper prices. In- 
donesia and Mauritania have since join 
as full members, and Australia, Papua 
New Guinea, and Yugoslavia have 
become nonvoting associate members, 
The council's influence on the world co 
per market has been minor. Lack of si 
cess in sustaining a minimum price lev 
has been due primarily to its limited a 
trol over world copper supplies and to 
the dependence of the member countri 
on copper revenues, which inhibits the 
from cutting back production significa; 
ly for extended periods. 

Copper is, nevertheless, frequent]} 
cited as a candidate for international 
price stabilization, because it meets 
several basic requirements for a buffe) 
stock arrangement: organized termina 
markets which facilitate gaging price 
movements, a fairly standard and 
homogeneous product, the absence of 
storage problems, and a high value-to- 
volume ratio. The major copper- 
producing and consuming nations, in- 
cluding the United States, have held 
more than a dozen meetings since 197 
under UNCTAD auspices to consider 
possible ways to deal with instability i 
the copper market. The world copper 
market is so big that the cost of an ef- 
fective buffer stock is estimated at 
almost $2 billion. 

The United States is about 80% s& 
sufficient in copper, and U.S. economii 
interest in a copper agreement is low t 
negative. For foreign policy reasons, 
however, the United States has main- 
tained a willingness to consider pro- 
blems of the copper market in a 
multilateral, consumer/producer settinj 



UNCTAD IV's REMAINING 
TARGET COMMODITIES 

Bananas 

Bananas earn more foreign exchange 
per acre than any other major crop. 
They are, however, highly perishable. 
Marketing requires careful coordination 
of production, shipping, and distribu- 



38 



Economics 



h — which explains the strong position 
Irge, integrated fruit companies in 
wrorld banana economy. Bananas can 
Brown in virtually any high-rainfall 
u of the tropics. Yields are so high 
1 only 200,000 hectares are needed to 
fit world import requirements. As a 
■It, most of the world's bananas 
le to market under preferential quota 
iems. About 80% of world banana ex- 
Is come from Latin America and the 
Ibbean. Most of the rest move from 
■Philippines to Japan in a trade flow 
I has developed within the last 15 
I's. World exports are expected to 
I during the 1980s, especially for 
Italian and Asian producers favorably 
Ited for the booming Middle Eastern 
Ikets. Central American exports will 
Iv slowly. Integrated marketing re- 
lements make it difficult to set broad 
Ima-pricing arrangements. 

It 

me mid-1970s beef production cycles 
faced simultaneously in all major pro- 
long regions, bringing on a sharp drop 
International prices. Developing coun- 

I exports were hard hit by new trade 

II iers in Japan and the European 

c ununity (the Community was actual- 
■ net exporter in 1974-75). Since that 
D ■, production cycles have moved into 
: rebuilding phase with world supplies 
n h smaller. Increases in domestic 
ii t processing and consumption have 
s iced developing countries' 
i jndence on exports of fresh meat. 
I Food and Agricultural Organization 
i issued guidelines for international 
> )eration in the livestock and meat 
i or, which call for nondiscriminatory 
c art regulations under normal condi- 
( s and for preferential treatment of 
1 Z exports when temporary trade 
! rictions are necessary. The world 
i ket for meat is strong enough that 
! ■ommodity agreement seems likely. 
I inclusion of meat on the UNCTAD 
was probably a response to the 
rt-term problem which coincided with 
UNCTAD thrust. 

pical Hardwoods 

pical hardwood timber ranks third 
)ng the non-oil foreign exchange 
ners for the LDCs. It is expected to 
n short supply during the 1980s, 
h prices rising 30-40% and produc- 
i extending to hitherto-untouched 
3sts in Brazil, Papua New Guinea, 
I the central African interior. Recent- 



ly, groups of exporting countries have 
moved to coordinate their policies and 
ship more of their exports in the form of 
sawed wood, veneers, and plywood. Pro- 
ducers and consumers have agreed that 
such measures as buffer stocks and sup- 
ply management mechanisms are inap- 
propriate and technically infeasible for 
directly stabilizing tropical timber 
markets and prices. Additional meetings 
have been scheduled to work toward an 
arrangement based on other measures, 
but the rapid rate of market growth ap- 
pears to rule out a commodity agree- 
ment. 

Vegetable Oils 

Demand for fats and oils has been grow- 
ing steadily with world population and 
per capita income. The supply of 
vegetable oils, produced from a wide 
variety of field and tree crops, varies 
widely from year to year. Vegetable oils 
compete directly with animal fats and 
oils. Production is relatively unrespon- 
sive to price stimuli, because such tree 
crops as coconuts and olives are 
harvested virtually regardless of price 
and because fats and oils from soybeans 
and livestock products are really 
byproducts. Fats and oils markets are so 
broadly competitive that a commodity 
agreement would be unlikely. 



EVALUATION 

Despite Third World countries' rapid 
growth in manufactured exports, com- 
modity exports still account for more 
than half of the export earnings for the 
Third World countries which do not ex- 
port oil. For some, returns from one to 
two commodities weigh heavily in the 
country's foreign-exchange receipts or 
budget. The prices for most of these 
commodities are historically volatile. In 
addition, commodity-exporting countries 
have perceived themselves at an increas- 
ing disadvantage in trading with 
manufacturing nations. 

The LDCs at the UNCTAD IV ses- 
sion in 1976 put forward international 
commodity agreements as a means of 
stabilizing prices and LDC earnings 
from commodity exports. Implicit in the 
strategy, at least for some, was the idea 
that such agreements would also raise 
real returns for commodity exports, in 
effect transferring resources from rich 
commodity-importing nations to poor 
commodity-exporting nations. The 
UNCTAD resolution euphemistically ex- 



pressed this as securing prices 
"remunerative and just to producers and 
equitable to consumers." 

A weighted 30-year index of non-fuel 
commodity prices would indicate that, if 
there has been a discernible trend in 
volatile commodity prices, it has been 
downward. Moreover, the World Bank's 
projections indicate only a slight upward 
trend in real commodity prices over the 
next decade. 

Price Volatility in Major Commodities 

The prices of primary commodities 
typically are volatile, on occasion rising 
as much as 750% in a few months or 
falling precipitously. For a variety of 
reasons, commodity prices are far more 
variable than prices of most manufac- 
tures or other classes of goods or serv- 
ices. 

Demand for most primary com- 
modities is not very responsive to short- 
term price changes. People usually buy 
about the same amounts of food and 
beverages unless prices rise very high or 
fall very low. Some substitution natural- 
ly takes place, but such items as grain, 
potatoes, and sugar are regarded as 
basic necessities. Tea and coffee take on- 
ly a small portion of consumer budgets 
and are objects of strong preference pat- 
terns. Purchasers of raw materials tend 
to be unresponsive to price changes, 
because the price of an individual 
material is likely to be a minor factor in 
the cost of the finished product. For ex- 
ample, the price of tin has little effect on 
the cost of a can of tomatoes, and the 
price of copper for electrical wiring has 
little influence on the cost of a new 
house. Unlike price changes, business 
cycles can have a strong effect on de- 
mand for raw materials. 

The supply of most major com- 
modities responds poorly in the short 
term to price changes. In most cases, 
primary commodity producers cannot 
readily change their production 
schedules. Increases in production re- 
quire planning, investments, and time. 
Developing a new copper mine, for ex- 
ample, takes several years. Tree crops 
probably have the most lagged response 
to a price increase, because the trees 
take up to 12 years to reach bearing 
age. Conversely, production is slow to 
decline when prices fall. Many of the 
resources used in commodity production 
cannot be shifted quickly to alternative 
uses. 

Production of some commodities 
varies with extraneous factors. The out- 
put of commodities produced as 



ember 1981 



39 



Economics 



byproducts may be more responsive to 
changes in the prices of associated prod- 
ucts than to changes in their own prices. 
Vegetable oil, for example, is produced 
as a byproduct of soybean meal; cobalt 
as a byproduct of copper. The supply of 
practically all primary commodities pro- 
duced in agriculture is subject to un- 
predictable and sometimes sharp varia- 
tions resulting from the vagaries of 
nature. Droughts, severe winters, and 
wet harvest seasons can slash yields. A 
freeze in a coffee-growing area may af- 
fect harvests for several seasons. Crop 
diseases and insect infestations can 
develop quickly. 

Competition from new producing 
areas and competition from synthetics 
and substitutes tend to put a ceiling on 
commodity prices over the long term. 
Most agricultural commodities and some 
minerals can be produced fairly widely, 
although costs vary from place to place. 
Potential competitors could begin pro- 
duction if the long-run outlook 
strengthened. For example, Africa has 
long been the leading cocoa producer, 
but recently Brazil and Malaysia have 
been increasing their cocoa plantings. 
Most raw materials must compete with 
synthetic substitutes: synthetic rubber 
versus natural rubber, synthetic fibers 
versus cotton and jute, glass fibers and 
microwave relays versus copper cables, 
and plastic coatings versus tin plating. 

Commodity Agreement Goals 

One view of commodity agreements is 
that they should mute short-term fluc- 
tuations in the market, following instead 
the long-term trends in supply and de- 
mand. Such agreements: 

• Would preserve the price 
mechanism for adjusting to changes in 
supply and demand fundamentals while 
narrowing the range of short-term fluc- 
tuations around the trend line; 

• Would help forestall overreactions 
to short-term price variations; 

• Would facilitate financial planning 
in developing countries dependent on the 
revenues from commodities; 

• Could lead to a greater and more 
reliable supply because of an improved 
investment climate; and 

• Might marginally improve the 
competitive position of the commodity 
by reducing the volatility of consumer 
prices. 

A second view of commodity 
agreements concedes value to stabiliza- 
tion but adopts a long-term goal of rais- 



ing producer prices. The industrialized 
countries tend to be importers, and the 
LDCs exporters, of the commodities 
identified by UNCTAD for special atten- 
tion. Sustaining prices of these com- 
modities above market-clearing levels 
thus would result in a transfer of 
resources from developed to developing 
nations. 

A stabilizing-type agreement, which 
is theoretically self-financing, would 
have to deal alternately with surpluses 
and shortages. An agreement designed 
to raise prices above market levels 
would have to deal with the tendency of 
higher prices to increase production and 
depress consumption. Efforts to cope 
with or somehow avert persistent 
surpluses would have to be financed by 
industrialized-country consumers or 
governments or a combination of both. 

Commodity Agreement Mechanisms 

International commodity agreements 
have been used since the 1920s in a wide 
variety of situations. By using one of 
two mechanisms — buffer stocks and ex- 
port quotas — most agreements have at- 
tempted to control the amount of a com- 
modity reaching the market. The buffer 
stock mechanism requires a fund that 
can be used to buy up stocks of the com- 
modity when prices slump; the stocks 
are sold when prices rise above agree- 
ment objectives. Export quotas defend a 
price floor, reducing total supply by 
limiting the amount of the commodity 
that each member nation is permitted to 
market. Export controls generally re- 
quire producing nations to stockpile or 
limit production individually, but 
stockpiling can be costly and limiting 
production can be politically painful. 
Some producers may elect to remain 
outside an agreement. The cooperation 
of consuming-country members may 
strengthen a commodity agreement; con- 
sumers can be asked to agree not to im- 
port commodities marketed in violation 
of the agreement. Some commodity 
agreements contain consultative provi- 
sions intended to facilitate planning and 
minimize price fluctuation due to faulty 
assessment of demand. Market- 
development measures sometimes are in- 
cluded. 

Not all commodities lend themselves 
equally well to the commodity agree- 
ment concept. The most fundamental 
success factor is relative inelasticity of 
demand: the less elastic the demand, the 
more producer revenues can be raised 
by withholding supply. Otherwise, falling 



sales volume can offset price gains. 
Other success factors include perishg 
ty, transportation costs, industry cor 
centration, the range of production 
costs, and the existence of a 
homogeneous product and organized 
ternational market. Low storage anc 
transportation costs generally enhan 
an agreement's chances for success 
(bananas and fresh meat would be pc 
candidates for a buffer stock 
agreement). Success also depends on 
proportion of a product's production 
reaches the market; so an industry vi 
fewer and more concentrated produc 
likely would have a greater market 
share than one with widely dispersec 
production. It also helps if producers 
costs are generally equal, so that no 
group of producers feels it can affon 
expand its market share through prii 
competition. 

The Integrated Program for 
Commodities 

The integrated program for commod 
had an immediate goal of establishinj 
ternational agreements covering the 
"core" commodities of special import! 
to the Third World. The integrated p 
gram for commodities also planned e 
tual development of measures for eig 
additional commodities: bananas, bau 
ite, iron ore, manganese, meat, 
phosphates, tropical timber, and 
vegetable oils. Integrated program f( 
commodities operations were to be 
financed by a common fund, projecte 
$6 billion, to be contributed by both i 
porter and exporter governments. Al 
$4.5 billion of the fund was earmarks 
for buffer stock operations. The re- 
mainder was to be used for lending 
operations in support of other com- 
modities for which buffer stocks wen 
not considered suitable. 

After 4 years, the integrated pro 
gram for commodities has made little 
progress. Only one new agreement h; 
been signed since the UNCTAD IV c< 
ference — the International Natural R 
ber Agreement. It entered into force 
1980, and its buffer stock will probab 
become operational in 1981. The suga 
and coffee agreements, already in eff 
at the time of the UNCTAD conferen 
have been renewed but face market c 
ditions that make their long-term 
economic effectiveness questionable. r 
International Cocoa Agreement has b 
renewed but without the largest pro- 
ducer (Ivory Coast) and the largest cc 
sumer (the United States). Negotiatio 



40 



Department of State Bulle 



Economics 



>> underway to replace the fifth Inter- 
's ional Tin Agreement, which is due to 
« ire in June 1982. The International 
1 eat Agreement remains in effect, but 
psa consultative mechanism, 
hout economic provisions. Prices for 
10 core commodities have continued 
fluctuate widely. 

Enthusiasm for the common fund 
p| waned among the LDCs, because 
fund's size is much smaller than 
finally envisioned ($750 million in- 
id of $6 billion). The fund has been 
led down drastically because only a 
i ■ commodity agreements now seem 

ly to associate with it and because at- 
i tion has shifted from stabilization of 
imodity prices to stabilization of com- 
dity export earnings. The latter goal 
uires less intervention, because lower 
:es often are associated with in- 
ased supply rather than reduced de- 
nd. 

Has the integrated program for 
imodities failed? Or will it merely re- 
re more time to develop than 
CTAD IV envisioned? Does recent 
ierience with commodity agreements 
icate eventual success? Have flaws 
srged in commodity agreement 
igns? Is intransigence on the part of 
sumers or producers to blame for the 
jgrated program for commodities' 
n progress? Should the Third World 
ouble its efforts on the integrated 
gram for commodities or turn to 
er means of increasing its income? 
These questions bear importantly on 
development strategies and potential 
many Third World nations and on the 
srests of developed ones as well, 
imately, these questions will be 
essed in the broadest possible 
nomic, political, and sociological 
ms. However, the primary focus of 
s paper is economic constraints shap- 
the potential of commodity 
-eements to affect international 
rkets and producer incomes. 

abilization Success of Commodity 
:reements 

en a quick reading of commodity 
reements history suggests that inters 
tional commodity agreements have 
oduced little price stability. Economic 
idies strongly support this conclusion, 
ton D. Law in International Com- 
•>dity Agreements (Toronto, 1975.) 
termined that the average coffee price 
tctuation was at least 50% greater 
ring the agreement years of 1965-72 
an in the preceding nonagreement 
riod of 1950-63. For sugar, he found 



the fluctuation at least 75% greater for 
12 recent years of control than for 11 
noncontrol years, even eliminating the 
years when the U.S-Cuban confrontation 
disrupted the sugar market. Only in 
wheat and tea did Law find more stable 
prices during the tenure of international 
agreements — and the wheat stability 
resulted primarily from national 
stockpiling by the United States and 
Canada. Gordon W. Smith and George 
R. Schink, writing on "The International 
Tin Agreement: A Reassessment" in The 
Economic Journal of December 1976, 
concluded that the U.S. tin stockpile has 
lent far more stability to the tin market 
than has the International Tin Agree- 
ment, in large part because it is many 
times larger than the agreement's tin 
buffer stock. 

Those commodities with the most 
volatile market fundamentals — least 
elastic demand, longest supply response 
lags, greatest vulnerability to business 
cycles, etc. — have had volatile price pat- 
terns even when commodity agreements 
have been in effect. Tea, on the other 
hand, has had a relatively stable and 
uneventful price history both with and 
without a commodity agreement. 

Limitations of Stabilization Schemes 

The potential gains to be had from 
stabilization are relatively modest and 
enormously difficult to achieve. 

In the first place, stabilization gains 
depend importantly on committing a 
more appropriate level of resources to 
production over time. It is extremely 
difficult, however, to determine the cor- 
rect level at any given moment. Demand 
for many commodities swings in pro- 
nounced and erratic cycles. With other 
commodities, supply is the more impor- 
tant variable. For most, the overall 
market is growing, slowly — and 
judgments of when to add new produc- 
tion are extremely important. Produc- 
tion of most commodities must be 
developed in sizable units to achieve 
economies of scale, and this, too, com- 
plicates stabilization. Once such 
resources as ore deposits, groves of 
trees, and specialized processing 
machinery have been committed, they 
have little alterative use in the short or 
even medium term. Even with an inter- 
national agreement, it is difficult to im- 
prove resource efficiency. 

Any benefits achieved from stabiliza- 
tion must also be balanced against the 
costs involved. To the extent that they 
rely on export controls, commodity 



agreements may raise production costs 
by locking in the production patterns 
that exist at the time of negotiation. In 
order to maintain peak efficiency, these 
patterns normally would tend to change 
with new technology, new opportunities 
for resources, new entrants into the in- 
dustry, and other factors. The recent 
shift of cotton production from the 
developed to the developing countries is 
such a change, which might well have 
been hindered by a strong commodity 
agreement. If the agreements encourage 
less efficient use of a nation's resources, 
that loss of efficiency must be balanced 
against the gains in stability. 

Finally, of course, producer pro- 
ponents of commodity agreements need 
to bear in mind that the benefits of 
stability in a commodity are shared be- 
tween producers and consumers. Ezriel 
Brook and Enzo Grilli indicate in an arti- 
cle, "Commodity Price Stabilization and 
the Developing World," in Finance and 
Development, March 1977, that the 
source of market instability is a key fac- 
tor in the distribution of these benefits, 
with producers gaining the principal 
benefits only when instability results 
from production factors. 

On a more pragmatic level, stabiliza- 
tion itself can affect resource commit- 
ment and lead to increased — and 
sometimes surplus — production. Effec- 
tive stabilization in the short run 
reduces producers' risks — and thus en- 
courages them to expand output to the 
point where their variable costs are 
covered by the minimum price. This 
phenomenon has been frequently 
documented in connection with 
agricultural price-support policies in the 
developed nations (notably the United 
States). It is also noted in a World Bank 
study of the international jute market. 
This tendency toward increased produc- 
tion undermines even the most limited 
goal that has been outlined for commodi- 
ty agreements — protecting exporters 
with a floor price. 

Because agreements require a 
political consensus, the economic founda- 
tion of some agreements is shaky from 
the start. Export quotas are often the 
first area of compromise, because pro- 
ducing nations threaten not to join 
unless they receive attractive quotas. 
The second area of compromise, of 
course, is price objectives. Producers 
argue for higher prices; consumers for 
lower. For example, the recently re- 
newed cocoa agreement has not been 
signed by Ivory Coast, the largest pro- 
ducer, because the price range is too 



vember 1981 



41 



Economics 



low, while the United States, as the 
largest consumer, refuses to join 
because it believes the price is too high 
and that consequently the agreement, will 
be overwhelmed by surplus cocoa. Some 
may have believed the price range was 
unrealistic but signed the agreement 
anyway to avoid seeming obstructionist. 
They may have assumed the costs to 
them would be small, because such 
agreements have a history of breaking 
down. 

Competition among producers has 
probably been the most important factor 
in the collapse of stabilization efforts. 
Producer incomes, of course, are deter- 
mined not only by prices but also by 
sales volume. So even when the agree- 
ment sets a price range, producers con- 
tinue to compete for market shares. 
Often producing nations are under 
balance-of-payments pressure. 
Sometimes they attempt to market some 
of their production by subterfuge outside 
the agreement. Market pressure almost 
always comes from producers who are 
not party to the agreement. 

Have Commodity Agreements 
Enhanced Producer Prices? 

Economic theory holds that raising com- 
modity prices to artificially high levels 
will attract additional production, en- 
courage substitution, and cut back quan- 
tities demanded. These reactions create 
surpluses, and they basically explain 
why the price increases achieved by in- 
ternational commodity agreements have 
been limited to the short run. In fact, 
many of the short-term gains have turn- 
ed into long-term losses. 

Historically, price enhancement was 
tried first by individual companies, 
which found they lacked the market 
power to maintain high prices. It has 
been tried by cartels of companies, 
which found their prices undercut by 



producers outside the cartels. It has 
been tried by governments, which found 
themselves undercut by producers in 
other nations. It has been tried by 
groups of producer nations, which found 
their markets invaded by nonmember 
nations. Finally, it has been tried by 
broad alliances of producer and con- 
sumer nations, which have not yet 
discovered mutual interests strong 
enough to survive long-term pressures. 
Jere R. Behrman, writing "Stabiliz- 
ing Prices Through International Buffer 
Stock Commodity Agreements" in Na- 
tional Development, May 1980, found 
that most of the organized international 
arrangements that have attempted to 
raise prices have been unsuccessful. He 
documented 51 attempts, which lasted a 
median 2V2 years each. Even those 
which have been successful in the short 
run have not lasted long; 4 years has 
been their median duration. These 
relatively successful efforts have been 
associated with "higher concentrations 
of production and foreign trade"; more 
inelastic demand; fewer possibilities of 
short-term substitution; small cost dif- 
ferences among producers; and less 
government involvement. 

The Problem of Increased Production 

Increased production has plagued nearly 
every commodity agreement. No matter 
how high the proportion of existing pro- 
duction included in the agreement, out- 
put by producers both inside and outside 
the agreement tended to increase with 
the expectation of price enhancement 
and/or stability. Behrman concluded that 
organizations that had succeeded for a 
time broke down most often due to com- 
petition among the members, with com- 
petition from nonmembers the second 
most frequent cause. 

The international commodity 
agreements have tried to deal with the 



nonmember competition problem in tw< | 
ways: by signing up nonmembers and I 
including importing nations in the 
agreements. Neither approach has 
worked very well. Frequently 
nonmembers can only be enticed into tl 
agreement through attractive quotas oi 
other inducements that dilute the 
benefits available for the existing 
members. When importers are includec 
in the agreements, it is often difficult t 
agree on price objectives (the recent 
cocoa and coffee negotiations illustrate 
this). 



Competition From Synthetics and 
Substitutes 



The problem of synthetics and 
substitutes may be even more intract- 
able in the long run. Modern technolog 
has produced major competitors for 
nearly every primary commodity (see 
Table 1). Sugar is the most recent com 
modity to come under heavy attack fro 1 
a synthetic product (the new high- 
fructose corn sweeteners), and copper 
probably under the most varied attack, 
from a whole host of technological in- 
novations. 

For some commodities, the syn- 
thetics and substitutes have essentially 
set the long-term market prices for the 
primary commodities — as in rubber am 
jute. In most markets, the substitutes 
are an important price factor, as in tin 
sugar, and copper. The beverages — col 
fee, cocoa, and tea — are the only majo 
commodity group whose markets have 
not been seriously constrained by out- 
side competitors, although cocoa has ft 
the impact of extenders. 

International Commodity Agreements 
as Aid Mechanisms 

One of the arguments made for interna 
tional commodity agreements is that 



Table 2 

Past and Projected Rates of Export Growth by Broad Product Groups 

(in constant 1975 prices) 



Fuel and Energy 
Agricultural Products 
Non-fuel Minerals 
Manufactures 

Total Merchandise 











Percent of LDC Exports 


Percent Share 


World 


LDCs 


World 


LDCs 








of Increase 


1960-75 


1960-75 


1975-85 


1975-85 


1960 


1975 


1985 


1960-75 1975-8! 


6.3 


6.2 


3.6 


3.4 


39 


40 


30 


42 18 


4.2 


2.6 


4.4 


3.1 


43 


27 


20 


16 12 


3.9 


4.8 


4.2 


5.8 


7 


7 


7 


6 6 


8.9 


12.3 


7.8 


12.2 


11 


26 


43 


36 64 


7.1 


5.9 


6.4 


6.4 


100 


100 


100 


100 100 



Source: World Bank, World Development Report, 1978, Tables 13 and 25, and unpublished projections for future WDR issues. 



42 



Department of State Bulletii k 



Economics 



y can transfer income from wealthy 
;ions to poor ones. However, com- 
dity agreements have some serious 
itations as aid mechanisms. 

• Price benefits are distributed 
ong recipient nations on the basis of 
ir production rather than their need. 

• A commodity agreement price 
icy fails to target any economic, 
itical, or social goals within a reci- 

nt country. Coffee price supports, for 
imple, may benefit the plantation 
ners more than the coffee workers. A 

Agency for International Develop- 
nt grant, on the other hand, can be 
geted more selectively. 

Producing nations will be en- 
iraged to increase production, increas- 

the costs of the aid and/or diluting 

benefits. 

The International Coffee Agreement 
;he late 1960s and early 1970s came 
sest to the idea of transferring 
(ources from wealthy importing states 
developing exporters. It probably 
nsferred $500-600 million per year. 

n in this agreement, however, the 
ducer-consumer compromise broke 
vn rather quickly. Coffee drinkers 
elled when they felt prices had risen 
c high. 

'. iclusions and Policy Implications 

I j prices of primary commodities prob- 
li / will continue to fluctuate widely in 



response to demand, competition, and 
long-term production costs. Recent in- 
ternational commodity agreements have 
not succeeded beyond the limited goal of 
protecting modest price floors for 
relatively short time periods, and there 
is little prospect that future commodity 
agreements will be more effective. Even 
if an agreement got full government 
financing, competition among producers 
for increased market shares and exter- 
nal competition from substitutes might 
drive costs to politically untenable levels. 
Moreover, the benefits of true stabiliza- 
tion are seldom sufficient to overcome 
the diversity of interests among affected 
nations. 

There is virtually no evidence to in- 
dicate that primary commodities can be 
utilized to generate much larger 
amounts of development capital for 
LDCs. The International Tin Agreement 
is often pointed to as the most suc- 
cessful of the agreements. It has effec- 
tively defended its floor price over a 
long period (aided by Malaysia's ability 
to shut down its gravel-pump tin produc- 
tion when prices are unattractive). The 
real price of tin has also trended up- 
ward, albeit erratically. However, tin 
producers have often been squeezed be- 
tween rising labor costs and the prices 
of competing materials. If tin is, indeed, 
the outstanding success story among re- 
cent international commodity 



agreements, then such agreements hard- 
ly seem to offer LDCs a powerful force 
for economic growth. 

Based on analysis of supply and de- 
mand projections for primary com- 
modities and on the lack of success in 
UNCTAD's integrated program for com- 
modities, expansion of manufacturing 
appears to be a far more promising 
development strategy than reliance on 
exports of primary products under the 
aegis of international commodity 
agreements. In "The Changing Composi- 
tion of Developing Country Exports," 
staff working paper 314 of January 
1979, the World Bank notes that LDC 
exports have shifted dramatically 
toward manufactured goods in the last 
15 years. Manufactures now account for 
nearly half of LDCs' non-oil exports. If 
the expansion of manufacturing con- 
tinues over the next few years, the 
World Bank projects it will lead to an 
export growth rate for LDCs roughly 
equal to that of the rest of the World. 
The Bank notes that the greatest suc- 
cess to date has been achieved by the 
most advanced LDCs, but that this 
situation is changing rapidly as increas- 
ing numbers of LDCs move toward 
manufacturing (see Table 2). 

'Although a major exporter of subsidized 
beet sugar, the EC is not a member of the 
agreement. Discussions over EC entry into 
the International Sugar Agreement are cur- 
rently stalled, because agreement controls 
would require substantial modification of EC 
policy concerning sugar subsidies and ex- 
ports. ■ 



ivember 1981 



43 



EUROPE 



Secretary Haig Visits Europe 



Secretary Haig departed 
Washington, D.C., on September 11, 
1981, to visit Marbella, Spain (September 
12) where he met with Saudi Crown 
Prince Fahd; Belgrade (September 
12-13); West Berlin (September IS); Bonn 
(September 13-1 U); and returned to 
Washington on September H. 

Following are texts of the joint 
U.S. -Yugoslav press statement, the 
Secretary's address before the Berlin 
Press Association, the question-and- 
answer session held after that address, 
and his news conference in Bonn. 1 



U.S.-YUGOSLAV 
PRESS STATEMENT, 
BELGRADE, 
SEPT. 15. 1981 2 

At the invitation of Josip Vrhovec, 
Federal Secretary for Foreign Affairs of 
the Socialist Federal Republic of 
Yugoslavia, Alexander M. Haig, Jr., 
Secretary of State of the United States 
of America, paid an official visit to 
Yugoslavia from 12 to 13 September 
1981. 

The President of the Presidency of 
the S.F.R. of Yugoslavia, Sergej 
Kraigher, received Secretary of State 
Haig, who conveyed President Reagan's 
greetings to the Presidency of the 
S.F.R. of Yugoslavia. 

Secretary of State Alexander Haig 
laid flowers on the grave of President 
Tito. 

The talks were held in the friendly, 
open, and constructive manner which 
characterizes relations between the two 
governments. The two sides exchanged 
views on the further promotion of 
bilateral relations between the two coun- 
tries and on current international issues. 

The two Secretaries expressed their 
satisfaction at the development of rela- 
tions and the expansion of cooperation 
between the two countries on the bases 
established during numerous meetings at 
the highest level and in joint statements 
of 1971, 1975, 1978, and 1980. The prin- 
ciples of independence, sovereignty, 
equality, and noninterference formulated 
in these meetings and tested in everyday 
practice of mutual relations were reaf- 
firmed again as a lasting foundation for 
long-term cooperation between the two 
countries. 



Current questions of interest for the 
further development of bilateral 
cooperation were also covered during 
the talks. Special attention was devoted 
to how economic cooperation could be 
strengthened, a more balanced trade 
achieved, and financial and industrial 
cooperation promoted. 

Attention was also devoted to the 
need of exerting additional efforts to 
eliminate the danger of terrorism in in- 
ternational relations, a problem figuring 
on the agenda of the United Nations and 
other international fora. The Yugoslav 
side expressed its satisfaction at the 
steps which are being taken by the 
Government of the United States of 
America to prevent anti-Yugoslav ter- 
rorism on American soil. Secretary of 
State Haig stressed his government's 
determination to continue this course. 

The two sides stated their view- 
points on the current international situa- 
tion; they concluded that the interests of 
peace, security, and development require 
greater efforts by all countries. They 
agreed on the need to settle disputes by 
peaceful means and to surmount major 
problems of the contemporary world. 
They devoted special attention to the 
problems of development and to North- 
South relations. In this connection, they 
also exchanged views on the forthcom- 
ing summit at Cancun. 

The two sides stressed the impor- 
tance of a continuing dialogue for the 
further advancement of the relations 
between the two countries on the basis 
of equality and mutual respect. 

In this context, Secretary of State 
Haig expressed respect for the inde- 
pendent nonaligned position and policy 
of the S.F.R. of Yugoslavia on the inter- 
national scene. 

Secretary Haig thanked President 
Kraigher and his host, Federal 
Secretary Vrhovec, and the other 
Yugoslav officials he met for the warm 
hospitality extended to him and to his 
party. Secretary of State Alexander 
Haig extended an invitation to Federal 
Secretary Josip Vrhovec to pay an of- 
ficial visit to the United States of 
America. The invitation was accepted 
with pleasure. 



i! 



ADDRESS BEFORE THE 
BERLIN PRESS ASSO., 
WEST BERLIN, 
SEPT. 13, 1981 3 

A European philosopher once wrote th 
"all politics imply a certain idea of man 
Twenty years ago, the construction of 
the Berlin Wall gave the world dramat 
evidence of one view of the human con 
dition. This year, as we mark the 20th 
anniversary of that wall, I want to 
discuss another concept of man, the on 
we cherish — the one we are pledged tc 
defend. 

Our idea of man begins with, is 
founded upon, and could not exist 
without a deep respect for the rights o 
the individual — rights such as freedom 
of expression, freedom of religion, andi 
the freedom to choose. 

A free man is a creative man. 
Civilization flourishes when artists and 
scientists, philosophers and poets, 
scholars and workers can develop their 
talents undisturbed. The ability of free 
men to work together, whether in 
political parties, press associations, fre 
enterprises, or labor unions, is essentia 
to the creativity of a free society. It is 
also the best basis for sustained 
economic growth. 

But history has taught that there i i 
a fine line between the liberty to creatl 
and the license to destroy. The 
democracies of the West are, therefore 
constantly searching for the proper 
balance between liberty and license, be 
tween responsibility and recklessness. 
This creative tension keeps our legal a: 
political institutions alive and vigorous. 

A pluralistic society with a balance 
between individual freedom and the 
common good is in itself a revolutionar 
idea. Democracy has enabled us to 
create unprecedented opportunities for 
our citizens. But democracy is also the 
heritage of all men. The idea of man as 
a creative and responsible individual ha 
given a distinctive shape to modern 
history. Repeated attempts at repressk 
have left it stronger and more appealin 
than ever. I believe that the democratic 
revolution, with its proof in the perforr 
ance of our own societies, is the best 
hope for human progress. The 
democracies of the West have a unique 
privilege — and a compelling obliga- 
tion — to promulgate their own revolu- 
tionary doctrine throughout the world. 



44 



Department of State Bulletir 



Europe 



What is the condition of the 
mocratie revolution today? What is its 
ture? Let us face reality. We are besel 
a multiple challenge to our idea of 
an: 

First, the danger of a loss of faith in 
e capabilities of democratic societies to 
al with the challenges of the 1980s; 

Second, the danger of adopting a 
iuble standard toward international 
havior; and 

Third, the danger of posing a false 
diotomy between the desire for con- 
med social progress and the need to 
pend resources in defense of the 
est. 

le Loss of Faith 

iday, throughout our alliance, both the 
ality of our societies and the future of 
r transatlantic relationship are being 
tly debated. This is neither unusual 
r unhealthy. Democracies have never 
en short of critics, and the Atlantic 
iance, a free association of nations, 
s always been distinguished by the ex- 
ange of opinions. 

Nonetheless, both the substance and 
ne of our debates of late have begun 
take a disturbing turn. 

' Too many are prophesying a 
ture devoid of hope. 

• Too many are denigrating 
mocracy as weak and indecisive, 
•able to cope with the challenge of the 
-80s. 

> The ever-present critics of NATO 
■e once again acting as though the 
iance was about to crumble. 

Every healthy society goes through 
riods of the most arduous soul 
arching. But when this becomes com- 
Jsive, an end in itself, dire consc- 
iences inevitably follow. Excessive 
Lrospection, as the American people 
.ve sadly learned, paralyzes the will 
,d thereby threatens the peace. On 
>ch occasions, we must remind 
irselves of our values. We must work 
restore the balance in society that 
akes for creativity. And we must be 
reful not to cross the fine line between 
■>erty and license. That betrays the 
omise of freedom. 

• Democracy and the rule of law 
knnot survive if we are not prepared to 
?fend them. 

• Pluralism cannot work if the 
terests of one group are advanced at 
ie expense of the common good. 



• Society cannot advance if violence' 
and sabotage come to be regarded as 
legitimate methods of achieving personal 
and political goals. 

Excessive introspection and 
pessimism offer no solution to our prob- 
lems. We must adopt, instead, a more 
tolerant and optimistic attitude. Despite 
its difficulties, democracy alone, of all 
the world's political systems, honors the 
diversity of man. Democracy alone, 



The Soviet Union has occupied 
Afghanistan. . . . 



despite its defects, nurtures the crea- 
tivity of man. And democracy alone 
safeguards those rights that enable the 
individual and his society to grow in 
peace. That is why our alliance has 
always been able to surmount its prob- 
lems. We believe in the genius of the in- 
dividual. 

Berlin is a good place to strengthen 
faith in democratic pluralism. This 
thriving city is a superb example of the 
success of the West. But there is an 
alternative on the other side of the 
Berlin Wall. It is a sad spectacle: a 
revolution that has lost its appeal. 
Slogans that once moved men now bore 
them. Institutions that purportedly 
offered hope for millions instead oppress 
them. Cynicism and pessimism are per- 
vasive; writers, artists, poets, 
philosophers— the creative spirits of 
society— have fled westward in un- 
precedented numbers, unable to be 
heard in their own countries. The people 
of Poland today are engaged in a 
danger-fraught effort to extend the 
boundaries of freedom so long denied 
them. 

Armed with this perspective, what 
have we in the West to apologize for? 
There is concrete evidence throughout 
Europe today that offers hope for the 
democratic revolution. The people of 
Greece, Spain, and Portugal have, over 
the past decade, affirmed before the 
world that individual rights and 
democracy are the keys to the future. 
Their optimism and defense of diversity 
are widely admired and deserving of 
support. 

The Double Standard 

There is a second danger to the 
democratic revolution today that must 
be confronted. I detect a growing double 
standard in the West toward 



appropriate norms of international 
behavior: One is a supercritical standard 
applied to those who cherish diversity, 
tolerate dissent, and seek peaceful 
change. Another is a more tolerant 
standard applied to those who abhor 
diversity, suppress dissent, and promote 
violent change. 

• The Soviet Union has occupied 
Afghanistan since 1979. The Afghans' 
religion, culture, and national life are in 
danger of destruction. One-fifth of the 
entire nation has been exiled. The people 
of Afghanistan cherish their freedom. 
They are not going to give up their 
struggle. But why are the voices of cons- 
cience among us which cry out against 
this aggression so muted? 

• Vietnam, which inspired such 
widespread concern in the West not long 
ago, has enslaved its southern popula- 
tions, has seized Kampuchea, and now 
threatens the peace of Southeast Asia. 

• Libya, a country which finances 
terror and assassinations in countries 
far from its borders, has invaded and 
occupied its neighbor Chad and calls it 
"unification." 

Where are the demonstrations 
against these outrages? The phrase 
"national liberation" has been used to 
justify international terror and violence. 



Vietnam . . . has enslaved its 
southern population, has seized 
Kampuchea, and now threatens 
the peace of Southeast Asia. 



Can a nation be liberated when its 
people are deprived of liberty? Can a 
nation be free when its independence is 
subordinate to the will of a foreign 
power? Can a people be uplifted when 
innocent civilians are the targets of 
terror? 

Despite its professions of peace and 
good will, the Soviet Union has engaged 
in an enormous military buildup beyond 
all requirements of self-defense. It has, 
as well, armed and encouraged its 
proxies to promote violent change that 
serves its strategic objectives. All of this 
has occurred despite continuing efforts 
by the West for arms control and a 
relaxation of tensions. Where are the 
protests against such Soviet actions? 

Democracies invariably expect more 
of themselves than of their adversaries. 
Our openness, our free press, our 
democratic institutions subject our 
actions to a relentless criticism that they 
do not experience. 



Dvember 1981 



45 



Europe 



This is a source of strength and 
health for democracies. But when it 
paralyzes essential efforts to defend 
freedom, as it did in the 1930s, not only 
freedom, but peace too, is endangered. 
It is Soviet tanks, not NATO's defense 
against those tanks, that threaten the 
peace of Europe. It is the rapid expan- 
sion of Soviet nuclear weaponry in the 
European theater that has forced NATO 
to respond. We have made clear that we 
are equally prepared to respond in a 
positive way to Soviet restraint. We 
would welcome the reduction of 
armaments on both sides. But the hopes 
for such reductions will be doomed if our 
people succumb to a double standard 



Libya . . . has invaded and oc- 
cupied its neighbor Chad. . . . 



that falsely blames the troubled state of 
the world not on aggression but on the 
effort to defend against it. 

When democracies become too feeble 
or too fearful to resist aggressive dic- 
tatorships, then who is there to defend 
democracy? To us here today, children 
of the 20th century, this is more than a 
rhetorical question. Are we going to be 
blind again? 

Once more, terror and intimidation 
are being used to silence those who 
speak out; once more attacks on 
synagogues and churches have become 
the instrument of perverted political 
causes; once more a totalitarian regime 
is invoking the slogans of self- 
determination to advance its imperial 
ambitions. And at the very time when 
the United States is being accused of 
delay on arms control, others appear to 
be violating one of the oldest arms con- 
trol agreements— that prohibiting the 
use of toxins. 

For some time now, the inter- 
national community has been alarmed by 
continuing reports that the Soviet Union 
and its allies have been using lethal 
chemical weapons in Laos, Kampuchea, 
and Afghanistan. As a result of this 
deep international concern, last fall the 
United Nations established an impartial 
group of medical and technical experts 
to investigate the matter. In spite of this 
international attention and action, 
however, reports of this unlawful and in- 
human activity have continued. 
Moreover, we now have physical 
evidence from Southeast Asia which has 
been analyzed and found to contain 



abnormally high levels of three potent 
mycotoxins — poisonous substances not 
indigenous to the region and which are 
highly toxic to man and animals. 

The use in war of such toxins is pro- 
hibited by the 1925 Geneva protocol and 
related rules of customary international 
law; their very manufacture for such 
purposes is strictly forbidden by the 
1975 Biological Weapons Convention. 
We are, therefore, taking steps to insure 
that this evidence is called to the atten- 
tion of states and that it is provided to 
both the Secretary General of the 
United Nations and to the group of ex- 
perts investigating this problem under 
his auspices. Tomorrow, in my capital, 
the United States will have more to say 
on this subject. 

Once again, the double standard 
threatens to impose blinders on our view 
of the world. The democratic revolution 
is impugned and criticized. A forgiving 
and accepting eye is turned toward 
adversaries. But this assault is not 
without cost. The Western alliance 
either shares the vision of a world of 
peaceful change where international 
disputes are settled without resort to 
force, or it is no alliance. If we become 
divided on the basic question of our pur- 
poses, if we come to distrust our own 
motivations, then the future is indeed 
bleak. As Abraham Lincoln once said: 

( )ur defense is in the preservation of the 
spirit which prizes liberty as the heritage of 
all men in all lands everywhere. Destroy this 
spirit and you have implanted the seeds of 
despotism around your own doors. 

Social Progress Versus Defense 

There is a third danger to democracy. 
We are debating today how to prevent 
the Soviet military buildup from up- 
setting the balance of power. It is 



Where are the demonstrations 
against these outrages? 



agreed by all knowledgeable students 
that our margin of safety has narrowed. 
But the democracies are torn by the 
argument that our security will actually 
be compromised by greater defense 
efforts. We are told that the resources 
required for defense will come at the ex- 
pense of social peace. A dollar more for 
the military, so goes the argument in my 
own country as well as here in Europe, 
is a dollar less for welfare, for health, 
and for other necessary social benefits. 



p 
.: 



We have heard this reasoning 
before. Its premise is a lack of con- 
fidence that a democratic society can 
provide for both social progress and an 
adequate defense. Yet the democracies 
have proven time and time again since 
the Second World War that they can 
achieve these objectives. The West has 
been able to defend itself. And behind 
that shield, we have registered extra- 
ordinary social progress. Clearly, the 
two are complementary. If we are not 
prepared to defend ourselves, then we 
shall lose the chance to reform our 
societies, and if we are not prepared to 
seek social justice, then we shall lose th 
will — and the reason — to defend 
ourselves. Austere economic conditions 
will make our task unusually difficult 
over the next few years. Nevertheless, 
we dare not cast aside the lessons of 
history. 

I cannot, here today, ignore the 
question of a realistic approach to arms- 
control. I have said elsewhere that the 
purpose of arms control must be to 
reduce the risks of war. But arms con- 
trol does not proceed in a vacuum. It is 
part and parcel of a coherent allied 
security policy. That policy stresses the 
essential role of balance in the military 
field as the very basis for successful 
arms control. NATO's 1979 two- track 
decision on theater nuclear forces 
reflects this philosophy. The Soviet 
SS-20s, as [West German] Chancellor 
Schmidt has pointed out, were a Soviet 
initiative. They are being deployed 
steadily. They cannot be wished away. 
Nor can a reduction in the threat be 
negotiated if we lack the determination 
to deny Soviet supremacy. The com- 
mencement of formal talks on this issu« 
will be high on the agenda of my 
meeting with Soviet Foreign Minister 
Gromyko later this month. These talks 
can succeed only if NATO proceeds witj 
its plans to modernize its theater 
nuclear forces. 

The willingness to defend our value 
remains their essential guarantee. 
Surely these are things worth fighting 
for. The idea of a man as a creative anc 
free individual is worth a fight. 

Future of the Democratic Revolution 

We have recently observed the 20th 
anniversary of the Berlin Wall and the 
10th anniversary of the signing of the 
Quadripartite Agreement on Berlin. Tb 
progress achieved in the decade betwee 
these two events was made possible by 
Western determination to maintain the 
security and the freedom of the city, 



46 



Department of State Bulletii 



Europe 



iik' at the same time seeking practical 
provements in the lives of its in- 
bitants. 

The Quadripartite Agreement is a 
minder of what East and West can 
hieve by negotiation. And it is a 
minder to us that such success can 
ly be achieved by Western persever- 
ce and unity. The unity of the 
estern allies, the Federal Republic of 
rmany, and the Berliners themselves, 
s been one of the major reasons for 
i continued freedom and prosperity of 
rlin over the past 35 years, 
nericans are proud of their role in 
lintaining the freedom of Berlin and in 
otecting stability in and around the 
y. Our commitment in Berlin remains 
e of the cornerstones of American 
gagement in Europe. 

It has been said before that free 
rlin is an island of liberty in a sea of 
alitarianism. Here there is a free 
ess; on the other side of that hideous 
ill there is none. Here there is 
■edom of speech; a few kilometers 
ay there is none. In free Berlin, you 
■ct those who are to govern; in East 
rlin elections are a mockery. And 
re Berliners are free to assemble and 
demonstrate on behalf of their beliefs; 
.st Berliners could not conceive of 
;h liberty. 

It has not escaped my notice that 
' presence here today has brought into 
i streets West Berliners who think 
s well of me and my country than I 
mid wish. In one sense I obviously 
Ijret those demonstrations. But in a 
I- more important sense, we should all 
< iw deep satisfaction from what they 
ll us about the strength of democracy 
I d the commitment to democratic 
I ititutions in this part of Berlin. All the 
sguish, all the struggle, and all the 
I termination that the allies, the 
Ideral Republic of Germany, and West 
I rliners have expended over the years 
I keep this city free have been worth 
I? price. 

Many years ago Voltaire, in 
leaking of another revolution, said, 
J disagree with what you say, but I wiH 
J fend to the death your right to say it." 
It behalf of my country— and on behalf 
I the several hundreds of thousands of 
ly countrymen serving in our armed 
Irces in Europe— let me close by saying 
I at even when we disagree with what 
|»u say, we are prepared to defend to 
e death your right to say it. 



QUESTION-AND-ANSWER SESSION, 
WEST BERLIN, 
SEPT. 13, 1981 4 

Q. Egon Bahr, one of the leading 
social democratic figures, of the 
leading government party, has stated 
in connection with the production of 
nuclear neutron warheads, that the 
United States is treating the Federal 
Republic as a nuclear protectorate. I 
wonder how the President and you are 
reacting to such statements? 

A. I don't make it a habit of visiting 
West Germany or West Berlin or any 
other of our allied countries and becom- 
ing engaged in a dialogue which would 
smack of criticism of internal political 
affairs. But I think it is important that I 
answer your question, at least to this 
degree: memories are short about the 
ERW [enhanced radiation weapon] an- 
titank system. It is 40,000 Soviet tanks 
threatening West European partners, 
decided not to deploy the system and to 
produce its components. 

After President Reagan assumed of- 
fice, this production activity had reached 
a maturation point where it then became 
either fundamentally not cost-effective 
and thus, perhaps at great cost, to 
either keep the separated system or to 
bring them together with greater effi- 
ciency in the production schedule. Presi- 
dent Reagan made that decision — a 
courageous one — and that decision was 
to proceed with the joining in the pro- 
duction process of the components which 
have been under production for a 
number of years. He has decided to 
stockpile those unified components in 
the United States. There has been no 
decision to make deployment, and, 
should there be such a decision, ap- 
propriate consultation will follow. I hope 
that the underpinnings of your question 
have been adequately answered while 
avoiding the pitfalls that your premises 
might have engendered. 

Q. I have a question which refers 
to your skeptical description of our 
society as licentious and irrational 
and, perhaps after you saw the 
demonstration, as underestimating 
Communist aggression. My question 
is: Is it in your opinion licentious and 
irrational for a nation which during 
this century was frightfully drained in 
two wars, and which is still being 
penalized by the division of the coun- 
try, to be very actively and seriously 
for peace and for the prevention of 
fratricide? 



jvember 1981 



A. Thank you very much for a very 
thoughtful question. Be assured that I 
do not come here to West Berlin as a 
pedantic articulate of a single American 
view but, rather I hope, as an objective 
observer of a number of trends. The ob- 
jective that you and I share in common, 
I think, is a universal objective to all 
Western nations which participated in 
the great Holocaust and the tragedy 
that your question describes, which 
sacrificed and which have sacrificed 
repeatedly even since the conflict to pro- 
tect the right, the privileges, and the in- 
dividual liberties of our people, 
sometimes with prudence and vision, 
sometimes perhaps with something less. 

The real question at hand here is are 
we pursuing policies which are going to 
effectively prevent the tragic outcome 
that you describe, or can we mislead 
ourselves, as we have in the past, by 
registering misleading signals to those 
who would breach the peace? Here is 
perhaps where you and I part ways. It's 
my view that the best prevention of 
miscalculations on the part of Eastern 
leaders in Moscow is their assessment of 
our firm determination and our credible 
abilities to defend the rights which you 
and I so cherish, and that when we 
mislead them, either by our own internal 
rhetoric or disunity or confusion, we are 
most likely, not less, to bring about the 
very outcome you and I seek to prevent. 

Q. In light of the discrepancies 
which have come to light during the 
last few months between the Federal 
Republic and the United States of 
America, what are the main themes of 
your discussions you will have in 
Bonn? 

A. As an individual who has served 
here in Europe as a NATO commander 
and, therefore, with ecumenical at- 
tributes, I could think back over the last 
5 years, and I suppose there is nothing 
unusual about the level of disagreement. 
I made the comment early last year, this 
year, that if I were to make a prediction 
as to what would be the greatest area of 
potential difficulty in the Western world 
at large and in the transatlantic sense in 
particular, it would have been the grow- 
ing consequences of our economic dilem- 
mas, and clearly, that has proven to be 
the case. And it should be no surprise. 

I don't think it's unusual that in 
times of economic difficulty, we would 
be looking one to the other for relief and 
there is no question that the U.S. 
behemoth — the economic behemoth — its 
policies and its travails — are immediate- 
ly transmitted in this global area of in- 



47 



Europe 



terdependence to our friends and allies 
abroad, and incidentally, in a global 
sense as well. I think it was the 
Chancellor yesterday who attributed two 
problems as he saw it: escalating oil 
costs and we all know that to be the 
case, it has been the case for some time; 
the other, an American policy of high 
American interest rates. 

I beg to differ with the Chancellor, 
and I seldom do that, that that is the 
policy of the U.S. Government; it is not, 
because we are plagued with it to the 
same degree that you are here in 
Western Europe. 

The question really before us in that 
area is whether we are going to ar- 
tificially manipulate that issue, thereby 
extending and perhaps deepening and 
broadening the very factors that have 
brought us to this dilemma today: 
runaway inflation, declining productivi- 
ty, and, perhaps in some respects, over 
management. I must say that the 
mainstream of relationships — bilateral 
between West Germany and 
Washington — could never be better and 
have not, in my recent memory, been on 
a higher plane. We have a number of 
very important issues facing us, not just 
the economic. These consultations that I 
will conduct tonight and tomorrow 
morning will focus clearly on the upcom- 
ing U.N. General Assembly meeting that 
we will jointly, although in separate 
fora, have with Foreign Minister 
Gromyko and it's important that we 
speak as a united Western world; discus- 
sions of the very important Cancun sum- 
mit coming up in Mexico in October, 
where for the first time Western in- 
dustrialized states will sit down at the 
table with the so-called developing 
world. It is an extremely important in- 
itial meeting. 

We will discuss arms control and the 
formal initiation of the TNF [theater 
nuclear forces] talks with the Soviet 
Union before the end of this year. And 
in that regard for the first time, 
American negotiators are going to have 
to be very carefully constrained by 
European considerations because we're 
dealing with systems which have a direct 
effect on European security. That means 
there are going to be intense, intimate, 
and continuous consultations between 
American negotiators and our West 
European partners, and we will discuss 
that at some length. 

Q. Could you clarify for us a por- 
tion of your speech in which you are 
talking about the chemical and 
biological weapons? Are you saying 



48 



that the physical evidence from 
Southeast Asia seems to suggest il- 
legal biological weapons? Are you say- 
ing that it looks as though these were 
supplied by the Soviet Union? 

A. What I am saying is just exactly 
what I said: that we now have firm 
evidence of the utilization of such 
weapons in Southeast Asia. I am not go- 
ing to jump ahead of a formally sched- 
uled presentation in Washington tomor- 
row which will provide for you far 
greater detail on the subject. I was us- 
ing it in my text today to underline the 
dangers of the double standard. I'm 
sorry, I will not go further. 

Q. In your speech, you mentioned 
Poland briefly. Poland lies only 80 
kilometers, as you know, to the east 
of us. Could you possibly give us your 
opinion as to why the Soviet Union ap- 
pears until now to have shown some 
restraint in their policy toward Poland 
and has not intervened militarily as 
was, of course, and still is, an immi- 
nent possibility? And the second part 
of my question would be: Do you see 
any danger to the situation of Berlin 
should the Soviet Union abandon this 
reticence? 

A. That's a very interesting ques- 
tion. I think it would be hard for 
anyone, short of the Kremlin leaders 
themselves, to finitely offer a value 
judgment on why thus far — and I 
welcome that fact — the Soviet leader- 
ship has stayed detached, certainly in a 
direct degree to the events in Poland to- 
day. One could surmise and speculate on 
a number of motivations for that 
restrained policy, which, again I 
underline, we welcome. It could be a 
recognition of the consequences of such 
an intervention in military, political, and 
economic terms, and in all of those 
categories the cost would be horrendous. 

We have made, in the West, very 
clear our position on this issue, and that 
is what we feel, and we have been 
unified from the first moments of this 
developing crisis, that the Polish people 
have the right and must be able to work 
out their internal arrangements in 
accordance with their own desires and 
procedures. Perhaps that, too, and that 
unity of Western articulation has made a 
contribution to the welcomed Soviet at- 
titude. One can only register once again 
how strongly Western leadership feels 
about that and the great consequences 
and lasting consequences that would 
follow some change in the current Soviet 
policy. 






Q. We have all welcomed the an- 
nouncement that there will be a 
presentation tomorrow on the Soviet 
Union using chemical weapons. I 
remember when you were at NATO 
not so long — 

A. I used the term mycotoxins. 

Q. — when you were at NATO no 
so long ago after Chancellor Schmidt 
broached the subject of the SS-20 foij 
the first time in 1977 in London, som 
of my colleagues would have liked to 
see a picture of an SS-20. They still 
want to. Do you think we'll see one i 
the coming few weeks? 

A. I've seen them, and I can attest 
to the fact that they are there. Now yo 
will see some information that is about 
to be furnished on this subject and a 
number of other military-related threat 
topics in the very near future. 

Q. But there are certain bits in 
this about the lack of protest, about 
the lack of demonstrations. But do 
you think that public opinion in 
Europe is being given proper evident 
on topics like [inaudible] internation; 
terrorism or chemical warfare? I can 
see any hardcore, if I may say, infor- 
mation on these subjects. 

A. I get your message, and I thint 
it's clear that some of the misinforma- 
tion or, more importantly, disinforma- 
tion running rampant not only here in 
Western Europe but in my own countr 
and throughout the free world suggest 
that the time has come for us to do a 
somewhat better job of laying out pre- 
cisely what we are faced with so that 
our people can make objective judg- 
ments instead of having to rely on mis. 
formation for their source of judgment 

Q. The President called it the wii 
dow of vulnerability; the Secretary o 
Defense says we are facing a dan- 
gerous decade. The question is the 
nuclear supremacy, the nuclear deter 
rence. One gets the impression in 
Washington that leading personalitie 
in the Administration have the feelin 
that the Soviet Union has nuclear 
superiority and could strike against 
the United States and wipe out your 
land-based system. I just wonder 
whether that is so or whether the 
United States does still hold the 
nuclear deterrence in a very effective 
way. 

A. I just hope that, when you use 
that term "leading officials in the 
American Government" that I was in- 
cluded in that elite group. I suppose 



Department of State Bulleti 



Europe 



fere's an old saying: "It ain't what you 
1 but the way that you do it." It was a 
feg. Frequently, rhetoric can be the 
feree of perception as well as reality. 
Let me say a word about the stra- 
|ric nuclear balances which your ques- 
bn focused upon. It is very important 
r the American people, who have to 
Jtit the bills, if you will, for the 
rategie improvements we are seeking 
(understand that there is a reason for 
I? sacrifices that President Reagan is 
Icing them to make — to rearm — and 
I substantial. You will note that the 
Icision was announced last evening 
lit the President is going to maintain 
Id retain an extremely high level of 
mense spending despite all the eco- 
Imic anguish that we are jointly ex- 
Iriencing. 

I Foremost in that allocation of funds 
111 be modernization decisions with 
fcpeet to America's strategic nuclear 
fever. What we have been pointing out 
i Washington — those in that 
J.tinguished elite you referred to — is 
lit we have not lost the strategic 
llance that exists between the Soviet 
liion and ourselves. I like to think we 
111 have a nodule of edge there, 
I >ecially in terms of reliability, 
I'hnical quality of systems. What we 
me been dramatically pointing atten- 
t n to is the fact that the trends, if they 
e i not reversed or had they been 
Imbedded in the so-called SALT II Trea- 
I which has been rejected — and I am 
Iry thankful for that — would have 
red us and will in the future, if we 

I n't take remedial steps, with im- 

6 lances which will become increasingly 
cngerous during the period 1982 
| chaps to the later 1980s and beyond 
jit if we don't take appropriate steps. 
We pointed out also that because of 
lomalies in heavy ballistic 19s — high- 
j'ld ballistic systems, land-based — and 

I I limitations of American land-based 
litems — we all know the number, 
lout a thousand Minutemen, 

l:ans — that if we don't take moderniza- 
I n steps we are going to be at a severe 
l;advantage in that particular category. 
}> particular category is very impor- 
lit, because (a) it's instantaneous in its 
fcponse character and (b) it is capable 
| growth, and the Soviet Union had the 
Isdom to foresee that many years ago 
lien they went with huge systems. 
I >w that they have fractionalization at 
leir disposal they have a potential for 
Ipid expansion of warhead capacity. 
le have to deal with this, and I don't 
fent our views or I don't want the audi- 
Ice to believe that we, in our rhetoric 



today, are suggesting that we are not up 
to today's threat. We are, 1ml we've got 
to take additional steps if we are to be 
up to tomorrow's threat. 



NEWS CONFERENCE, 

BONN, 

SEPT. 14, 1981 5 

First, I want to express my great 
pleasure at this opportunity to meet 
with our West German and European 
allies and my traveling press corps from 
the United States. This has been an ex- 
tremely valuable visit for me although a 
very short one. It's a visit which is 
designed to continue with the very, very 
close level of consultation that has been 
initiated with Foreign Minister 
Genscher. From the outset of the 
Reagan Administration, I have met the 
Foreign Minister on frequent occasions 
in Washington, Cancun, Rome, and else- 
where. And we have spoken regularly 
over the telephone, and we exchange 
messages consistently. The reason for 
this is the conviction of President 
Reagan that the German-American rela- 
tionship is a fundamental aspect of the 
entire American relationship here in 
Europe, the NATO alliance, and the 
framework of the Atlantic Community 
as well. 

I've used this visit as an opportunity 
to exchange views on a very busy and a 
very important upcoming diplomatic 
season. First, the General Assembly of 
the United Nations session which will 
commence this month in New York. And 
this visit provided an opportunity for me 
to exchange views with my old friend 
and colleague and the dean of our 
Western diplomatic corps, Foreign 
Minister Genscher, on the discussions 
that will take place in New York — and 
most particular those that will take 
place with Foreign Minister Gromyko of 
the Soviet Union — to be sure that our 
views were both coordinated and com- 
patible. And as always, they are pre- 
cisely that. 

Secondly, this was an opportunity to 
exchange views on the very important 
and highly dynamic process of medium- 
range missile discussions and the two- 
track decision arrived at in December of 
1979 and reaffirmed this past spring in 
Rome. 

Third, we had an opportunity to ex- 
change views on the very, very impor- 
tant and significant meeting — and really 
perhaps the first such meeting — in Can- 
cun between the leaders of the de- 
veloped world and the developing world. 



And I benefited immeasurably from 
Foreign Minister Genscher's insight into 
this important conference. As you know, 
this visit also afforded me an opportu- 
nity yesterday in West Berlin to 
underline unequivocally the unswerving 
and continuing support of the United 
States of America and of President 
Reagan's Administration for the con- 
tinued freedom, vitality, and well-being 
of the free city of West Berlin. 

I think that describes the purposes 
of our discussions well enough. 

Q. [Inaudible; concerned enhanced 
radiation weapon consultation process 
between U.S. and European partners.] 

A. Let me assure you that any 
criticism we receive directly or indirectly 
from our friends and allies here in 
Western Europe is a matter of impor- 
tant concern to President Reagan and to 
myself. Your question involves the 
recently announced American decision to 
continue on with the procedures ap- 
proved some years ago by President 
Carter to produce the components of the 
neutron antitank system. At that time, 
you'll recall, there was also controversy. 
Many at that time felt here in Western 
Europe that we should have proceeded 
with both the production and deploy- 
ment. Subsequently, we decided to con- 
struct the components. 

That production process, if you will, 
had become mature this past spring, and 
it required a decision to continue on with 
it with the efficient merger of the two 
components and the stockpiling of the 
system in the United States, or cost- 
effective considerations would have been 
thrown out the window. And it was in 
the light of that that President Reagan 
decided to continue on with the process 
initiated by President Carter to merge 
the components of the system, to 
stockpile them in the United States, and 
not to make a decision to deploy this 
system to Europe. Since this was a 
unilateral U.S. decision which did not af- 
fect our European partners, we notified, 
prior to the announcement, our Euro- 
pean partners of this decision. Beyond 
that I think it is very important that 
everyone in Western Europe understand 
that should at some point it become 
desirable to deploy such systems, such 
deployments will only follow the most 
careful consultation with those nations 
upon whose soil the system would be 
deployed. And that is especially true 
here in West Germany. I hope I've 
answered your question, and I apologize 
for going into such great detail. 



Member 1981 



49 



Europe 



Q. You didn't answer my question 
completely. 

A. I think I've just done so by 
outlining for you specifically how we got 
from where we were to where we are 
today. I also made it very clear that we 
are always concerned by criticism, either 
guarded or direct, from our European 
partners, and we respond to that 
criticism. I certainly have explained 
while here precisely what I just ex- 
plained to you when this subject was dis- 
cussed in our consultative meeting. I 
don't know what more you want in 
answer to your question. 

Q. Under what circumstances 
could it be desirable to deploy neutron 
warheads in Western Europe and how 
much of a veto West Germans and 
allies have, and also [inaudible] report 
today deployment of the TNF beyond 
December 1983 in West Germany? 

A. With respect to your first ques- 
tion, I think it's very premature to 
speculate when, under what condition 
the deployment of the American systems 
now being stockpiled would be made. I 
think it is sufficient to say that should, 
in the future, conditions suggest that it 
would be in our mutual benefit to do so, 
that there will be complete and total 
consultation with respect to it with those 
nations upon whose soil such deployment 
was contemplated. 

With respect to the second part of 
your question, I read that story with 
some interest and, I must say, with 
some surprise this morning and believe 
it was a Washington or Rome byline 
from a Washington correspondent, 
which confuses me as to where it came 
from. But be that as it may, there is ab- 
solutely no truth to the story. The TNF 
two-track procedure is precisely on 
schedule. We are proceeding along the 
two lines agreed to in December 1979 
and reaffirmed this past spring in Rome 
which called for plans to deploy cruise 
and improved Pershings and the early 
initiation of medium-range arms control 
talks with the Soviet Union. That would 
be a topic, incidentally, which will surely 
come up in my meeting with Mr. 
Gromyko at the United Nations this 
month, in which I anticipate both the 
time — the specific time for the initiation 
of these talks — and the location of these 
talks will be agreed upon. And that 
visualizes, as you know, a commence- 
ment — a formal commencement — of the 
negotiations before the end of this year. 
I am very confident that that will re- 
main on track. 



Q. Is the so-called zero option ac- 
ceptable to the United States? 

A. I think that it is premature to 
get too definitive on this subject, 
because sometimes the terminology itself 
means different things to different peo- 
ple on either side of the demarcation 
line. But I think I can affirm that we 
have not rejected this zero-option pro- 
posal, and under ideal conditions such a 
proposal might be very worthy of ex- 
ploration and consideration. 

Q. [Inaudible; concerned 
F.R.G.-U.S. coordination on arms to 
Saudi Arabia.] 

A. I'll fill in my half of the answer 
by reaffirming once again that both the 
Carter Administration and President 
Reagan's current Administration have 
been continuing with a process of a pro- 
vision of certain aircraft to the Govern- 
ment of Saudi Arabia and that we are 
now contemplating a continuation of 
that process with the enhancement of 
the aircraft already agreed to and a cer- 
tain aerial reconnaissance known as 
AW ACS [airborne warning and control 
system aircraft] capability which will 
also be provided to Saudi Arabia. 

As you know, this is a somewhat 
controversial issue in my own country. 
President Reagan is committed to pro- 
viding — to making this sale with Saudi 
Arabia. We feel it is a vitally important 
step to be taken in the broadening of 
our regional interests and activities in 
the Middle East, that it will contribute 
to peace and stability in the area which 
has been threatened by external or 
proxy activity increasingly in recent 
months and years. And I would include 
in such activity the activity we're 
witnessing today in Afghanistan; the 
changing circumstances in Iran; Soviet 
proxy activity through Cuban forces in 
Ethiopia; the Southern Yemen situation; 
and the efforts made recently to over- 
throw Northern Yemen. All of these 
represent and constitute serious threats 
to overall Western interests. It is the 
President's view that the provision of 
this additional capability to Saudi Arabia 
will strengthen Western interests. And 
we would include in that ultimately the 
interests of the State and people of 
Israel as well. 

Q. [Inaudible; concerned the Haig- 
Gromyko talks and how many SS-20 
missiles are they going to discuss.] 

A. I haven't done my latest 
arithmetic, but I believe the statistics 
are in the neighborhood of over a thou- 
sand warheads, and I think it was some 
750-800 SS-20 warheads. 



Q. [Inaudible; concerned NATO 
two-track decision and what comes 
first, deployment or talks.] 

A. Let me emphasize that what we 
are talking about was precisely what 
was agreed upon in December 1979 anc 
reaffirmed in Rome on the dual track. 
And the answer to your question is not 
preconceived notion on the part of the 
United States but rather a direct 
measure of the progress we make with 
the Soviet Union and their willingness 1 
arrive at some point as soon as these 
discussions begin, at some arrangement 
which have the effect of influencing the 
track of the two-track decision you are 
asking about. And I think my answer Ui 
the zero-option question is clearly 
related. 

Q. [Inaudible; concerned Saudi 
Arabian eight-point program for a 
Middle East solution and other Midd! 
East questions.] 

A. I think we had three questions 
there. One was the American comment 
on Crown Prince Fahd's recent eight- 
point peace proposal for the Middle 
East. The second question, I think, I in 
terpret to be as whether or not the Mic 
die East remains an exclusive realm foi 
the Soviet Union or the United States, 
assume you mean by that a con- 
dominium arrangement? And the last 
question was the neutrality of Malta. 
With respect to the eight points, we, oil 
course, welcome any proposals from 
whatever source that would offer a pro 
pect for a lasting peace in the Middle 
East. 

I discussed the eight-point proposal 
with His Royal Highness the Crown 
Prince in Spain on Saturday morning a 
some length. I think we have a shared 
prospective on these eight points. We, 
on our side, as a result of the meetings 
in Washington between President Sada 
and Prime Minister Begin, rededicated 
to continuing within the Camp David 
framework with the autonomy talks 
which will commence under, I think, an 
increased impetus and momentum this 
September 21 and 22 in Cairo where thj 
United States will be a full partner and' 
will be represented. And I am hopeful 
there will be progress along those lines 
With respect to the exclusive realm 
or condominium question, it would be 
presumptuous and incorrect to suggest 
that the Middle Eastern area or region 
is the exclusive purview of two super 
powers that you mentioned. Review the 
Middle East as an area of responsibility 
for the people of that region, first and 
foremost. But we are also concerned 



50 



Department of State Bulleti | 



Europe 



ien external threats develop to the in- 
pendence and sovereignty and 
:edom of the peoples of that region, 
>m whatever source. 

Third, with respect to Malta, the 
iltese orientation is a measure of the 
cision of the people of Malta to make 
d not for some outside visitor from 
ishington. 

Q. Yesterday in your speech you 
ggested strongly that the Soviets 
e using chemical weapons in 
utheast Asia. Can you offer us 
ything more in the way of proof? 
lid how do you react to the Soviet 
nials? 

A. As I pointed out yesterday, a 
;her detailed statement is being made 
Washington today with respect to this 
uation. I happen to have gone over 
! text of that statement this morning, 
m very comfortable with it, but that 
;he venue, that is the location where 
s issue will be discussed further. And 
I emphasized yesterday, all the 
dence now held by the United States 
)eing transmitted to the United Na- 
ns for introduction into the special in- 
itigating committee that has been 
med. And I would like to leave it 
ht there. 

Q. Regarding the peace move- 
nt, is it a dangerous tendency? 

A. No, I think I commented on that 
a vject at some length yesterday in my 
i?ech in West Berlin. Clearly, very 
ious and knowledgeable people are 
remely concerned today as they 
i tch the level of armaments grow, and 
v at could be described as a mindless 

I y between East and West. We are all 
a -iously concerned about these trends. 
^ lere we sometimes have dif- 

t ences — and they are genuinely held 
d ferences — is how best to prevent the 
U lization of these armaments; it's not 
| armaments themselves. They are not 

I I in their own rights. It's the use to 
liich they may be put. And these are 
• ferences between serious people. 

It has always been my view that 
iiflict emerges when imbalances, real 
I perceived, develop between people 
lth genuine differences. And one can 
lly say that we are in a competitive 
jige with the Soviet Union today — and 
J '11 remain so for an extended 
Iriod — and, therefore, if the West 
lilaterally refrains from maintaining its 
l;ention to necessary military balances, 
I' may be, indeed, inviting the use or 
lb weaponry which concerns us so 
Iich today. History is replete with 



stark examples of such self-decision. So 
I don't view this as anything more than 
an objective assessment by honest peo- 
ple how best to achieve the same out- 
come. It is the obligation of those in 
government and those who hold other 
views to reiterate those views as 
thoroughly and convincingly as they can. 
I attempted to do that to some degree in 
West Berlin yesterday. 

Q. Has there been anything in the 
talks with Chancellor Schmidt and 
Foreign Minister Genscher which 
could alter the way in which America 
approaches the upcoming talks with 
Mr. Gromyko? 

A. I think we always benefit from 
the kinds of consultations that we have 
been conducting here in Bonn and with 
our other European partners. They 
always have an impact on our judgments 
with respect to positions we take in 
East- West relations and alliance-related 
matters, and, indeed, with Third World 
relationships as well. The answer to 
your question is, "of course." And that's 
the way it should be if consultation is to 
be true consultation. 

Q. There is nothing you could 
specify? 

A. I would not give you a check list. 
I would also be less than frank if I were 
to suggest to you that, fundamentally, 
our basic views do not converge. There 
are nuancial differences, differences in 
concern about one issue or another and I 
think you know some of them — some 
are in the economic area, some are in 
the rhetorical area. But I think, basical- 
ly, there is a fundamental convergence. 
And from that I draw nothing but great 



encouragement as a result of my visit 
here. 

Q. [Inaudible; concerned the 
United States having global interests, 
with Europe being only one of several 
areas Washington has to deal with.] 

A. Who were you quoting, please? 
Mr. Allen [Richard V. Allen, Assistant 
to the President for National Security 
Affairs). Then it goes without question, I 
agree. Let me not leave you with a dum- 
dum response. It is true that America is 
a global power. It is true that the United 
States has responsibilities in Asia, in 
Latin America, in the Middle East, and 
that in the pursuit of those respon- 
sibilities it involves sacrifice and 
resources from the United States. And I 
think what Mr. Allen was pointing out 
to a European audience was that 
America's sacrifices and burdens in the 
security area are not exclusively here in 
the NATO context. That's always been 
so, and I think all of us here in 
Europe — and I use that word "us" think- 
ing in my former position — benefit im- 
measurably from that, very importantly. 
And especially as the world becomes in- 
creasingly independent, there is no con- 
flict between that reality and the part- 
nership concept which must underlie not 
only the NATO alliance but the Atlantic 
community of nations as well — those of 
us who share common values. 



1 Press releases related to this trip and 
not printed here are Nos. 306, 308, 309, and 
310 of Sept. 15, 1981, and 313 of Sept. 17. 

-Press release 307 of Sept. 15. 

^Press release 300 of Sept. 12. 

4 Press release 300A of Sept. 15. 

5 Press release 314 of Sept. 17. ■ 



President's Letter 

to President Brezhnev 



DEPARTMENT STATEMENT, 
SEPT. 22, 1981 1 

On September 22, President Reagan 
sent a letter to Soviet President 
Brezhnev outlining his views on the 
future of U.S. -Soviet relations and 
describing his desire for a constructive 
relationship with the Soviet Union that 
will lead to a free and more peaceful 
world community. 

I cannot give you a copy of the let- 
ter. What I can do is give you a sense of 
its contents and perhaps put it in the 



general themes in which the President 
addressed President Brezhnev. The 
general thrust of it is as follows. 

The United States is vitally in- 
terested in the peaceful resolution of in- 
ternational tensions and in a stable and 
constructive relationship with the Soviet 
Union. To achieve better U.S.-Soviet 
relations, the United States is fully 
prepared to discuss with the Soviet 
Union the entire range of issues dividing 
the countries; to seek significant, 
verifiable reductions in nuclear weapons; 
to expand trade; and to increase con- 



live m be r 1981 



51 



Europe 



tacts at all levels of our societies. 
However, the United States is more in- 
terested in actions than in words which 
further the cause of peace. 

It is necessary to emphasize that a 
truly stable and constructive relationship 
must be built upon restraint and 
reciprocity, quite frankly, we believe, 
elements which have been missing from 
many Soviet actions in recent years. 
These are two aspects of such Soviet ac- 
tions which have been of particular con- 
cern to the United States: 

• The U.S.S.R.'s unremitting and 
comprehensive military buildup over the 
past 15 years, a buildup far exceeding 
Soviet defensive needs and one which 
carries disturbing implications of a 
search on the part of the Soviet Union 
for military superiority and 

• The Soviet Union's pursuit of 
unilateral advantage in various parts of 
the world through direct and indirect 
use of force in regional conflicts — the 
role of Cuba in Africa and Latin 
America is particularly destabilizing. 

Needless to say, the United States is 
also highly concerned about the situation 
in Poland. It is our strongly held view 
that this situation can only be dealt with 
by the Polish people themselves. Any 
other approach would have serious con- 
sequences for all of us. 

Despite these disturbing trends, the 
United States is committed to a dialogue 
with the U.S.S.R. on critical, geopolitical 
issues and to negotiations that would 
lead to genuine arms reduction. 

We are looking forward to the com- 
ing meeting in New York between 
Secretary of State Haig and Foreign 
Minister Gromyko, as we are hopeful 
that these meetings will start just such a 
process. Specifically, we hope the 
meeting will produce agreement on the 
time and place for negotiations between 
our two countries on theater nuclear 
forces. The United States is strongly 
committed to achieving a military 
balance in this area — a balance which 
has been upset by the unprecedented 
buildup of Soviet SS-20 missiles. 

We, our allies, and other nations 
have proposed negotiated solutions to 
significant problems that threaten world 
peace, such as the presence of occupa- 
tion forces in Afghanistan and Kam- 
puchea. As we have stated at the CSCE 
[Conference on Security and Coopera- 
tion in Europe] meeting in Madrid, we 
also are prepared to participate in 
negotiations to fashion a coherent 
system of commitments on European 
security that are both verifiable and 



militarily significant. We have made or 
we support concrete proposals for prog- 
ress in all three of these areas, but the 
Soviet Union has turned its back on all 
of these proposals for negotiations. 

While committed to a stable and 
peaceful world, the United States is not 
willing to accept a position of strategic 
disadvantage which will endanger our 
free society. The United States does not 
want to tax our citizens and economy 
with a costly, burdensome arms race, 
but we will invest whatever is necessary 
to maintain a secure strategic posture. 
The United States is fully prepared to 



take into account legitimate Soviet in- Ii 
terests, if the Soviets are willing to do 
the same with ours. 

In sum, the United States is hopefu 
that we can succeed in establishing a 
framework of mutual respect for each 
other's interest and a mutual restraint 
the resolution of international crises, a 
framework that will create a more solic 
and enduring basis for U.S. -Soviet rela- 
tions than we have ever had before. 



'Made available to news correspondents 
in New York by Department spokesman 
Dean Fischer. ■ 



Forgery, Disinformation, 
and Political Operations 



The following paper was prepared in Oc- 
tober 1981 by the Department of State in 
response to requests for information 
from a number of individuals, private 
groups, and foreign governments. 

In late 1979, agents of the Soviet Union 
spread a false rumor that the United 
States was responsible for the seizure of 
the Grand Mosque of Mecca. 

In 1980, a French journalist was con- 
victed by a French court of law for acting 
as a Soviet agent of influence since 1959. 

In August 1981, the Soviet news 
agency TASS alleged that the United 
States was behind the death of Panama- 
nian leader Omar Torrijos. 

These are three examples of a stream 
of Soviet "active measures" that seek to 
discredit and weaken the United States 
and other nations. The Soviets use the 
bland term "active measures" (aktivuyye 
meropriyatiya) to refer to operations in- 
tended to affect other nations' policies, as 
distinct from espionage and counterintel- 
ligence. Soviet "active measures" include: 

• Written or spoken disinformation; 

• Efforts to control media in foreign 
countries; 

• Use of Communist parties and 
front organizations; 

• Clandestine radio broadcasting; 

• Blackmail, personal and eco- 
nomic; and 

• Political influence operations. 

None of this is to be mistaken for the 
open, accepted public diplomacy in which 
virtually all nations engage extensively. 
Public diplomacy includes providing press 
releases and other information to jour- 
nalists, open public broadcasting, and a 



wide variety of official, academic, and 
cultural exchange programs. By contra 
Soviet "active measures" are frequently 
undertaken secretly, sometimes violate 
the laws of other nations, and often in- 
volve threats, blackmail, bribes, and ex 
ploitation of individuals and groups. 

Soviet "active measures" do not al- 
ways achieve Moscow's objectives. In 
some cases, Soviet operations have faile 
because of ineptitude or because target* 
individuals or governments have re- 
sponded effectively. However, Soviet "a 
tive measures" have had some success, 
and they remain a major, if little under- 
stood, element of Soviet foreign policy. 

The approaches used by Moscow in 
elude control of the press in foreign couh 
tries; outright and partial forgery of 
documents; use of rumors, insinuation, . 
tered facts, and lies; use of internationa 
and local front organizations; clandestine 
operation of radio stations; exploitation 
a nation's academic, political, economic, 
and media figures as collaborators to in- 
fluence policies of the nation. 

Specific cases of Soviet "active 
measures" included here are: the Soviet 
anti-theater nuclear force (TNF) cam- 
paign in Europe; the Soviet anti-"neutrc 
bomb" campaign; Soviet activities in suj 
port of the leftists in El Salvador; the 
Soviet campaign against the U.S.-Egyp 
relationship and the Camp David proces 

"Active measures" are closely inte- 
grated with legitimate activities and 
Soviet foreign policy. Decisions on "activ 
measures" in foreign countries are made 
at the highest level of authority in the 
U.S.S.R.— in the Politburo of the Com- 
munist Party Central Committee — as ai 



52 



Department of State Bulle 



' 



Europe 



1 other important decisions of Soviet 
reign policy. 

The activities are designed and exe- 
ited by a large and complex bureaucracy 
which the KGB and the International 
epartment of the Communist Party of 
le Soviet Union (CPSU) Central Com- 
ittee are major elements. The Interna- 
jnal Information Department of the 
PSU Central Committee is also deeply 
lgaged in such activities. Actual opera- 
)ns abroad are carried out by official 
id quasi-official Soviet representatives, 
eluding scholars, students, and jour- 
lists, whose official Soviet links are not 
ways apparent. The highly centralized 
ructure of the Soviet state and the 
ate's pervasive control and direction of 
II elements of society give Soviet leaders 
lipressive free use of party, government, 
Sid private citizens in orchestrating "ac- 
we measures." 

The open societies of the industrial 
rmocracies and many developing na- 
|>ns, and the ease of access to their news 
ledia, often give Soviets open season for 
Ictive measures." Many Western and 
I veloping countries ignore or downplay 
(iviet "active measures" until Soviet 
1 cinders lead to well-publicized expul- 
nns of diplomats, journalists, or others 
i solved in these activities. The Soviets 
le adept at making their policies appear 
1 be compatible or parallel with the 
1 ;erests of peace, environmental, and 
< ner groups active in Western and de- 
■ loping societies. 

By contrast, the Soviet Union denies 
i cess to its mass media for foreigners 
1 10 might criticize Soviet society or the 
i*eign policies of the U.S.S.R. 

While the United States remains the 
) imary target, Moscow is devoting in- 
^ easing resources to "active measures" 
! ainst the governments of other indus- 
1 alized countries and countries in the 
i veloping world. Moscow seeks to dis- 
ipt relations between states, discredit 
I ponents of the U.S.S.R., and under- 
lie foreign leaders, institutions, and 
j lues. Soviet tactics adjust to changes in 
Lernational situations but continue, and 
j some cases intensify, during periods of 
iduced tensions. 

jlctive Measures" Techniques 

lie tactics and emphasis of Soviet "ac- 
J'e measures" change to meet changed 
l.uations. For instance, Soviet use of 
larxist-Leninist ideology to appeal to 
f reign groups often turns out to be an 
Lstacle to the promotion of Soviet goals 
I some areas; it is now being deem- 
Hiasized though not completely aban- 
Lined. At the same time, some religious 



themes — notably the Soviet assertion 
that the Islamic religion occupies a favor- 
able position in the U.S.S.R. — have as- 
sumed greater significance, as Moscow 
courts Islamic countries in Africa and the 
Middle East. 

Similarly, while Soviet-dominated in- 
ternational front groups still are impor- 
tant in Soviet "active measures" abroad, 
Moscow is broadening its base of support 
by using more single-interest groups and 
fronts formed for particular purposes to 
promote its goals. 

Soviet "active measures" involve a 
mix of ingenious and crude techniques. A 
brief sample of types of activities includes 
the following. 

Efforts to Manipulate the Press in 
Foreign Countries. Soviet agents fre- 
quently insert falsely attributed press 
material into the media of foreign coun- 
tries. In one developing country, Soviets 
used more than two dozen local jour- 
nalists to plant media items favorable to 
the U.S.S.R. Soviets have also used the 
Indian news weekly Blitz to publish 
forgeries, falsely accuse Americans of 
being CIA personnel or agents, and dis- 
seminate Soviet-inspired documents. In 
another country, the Soviets used local 
journalists to exercise substantial control 
over the contents of two major daily 
newspapers. 

Forgeries. Soviet forgeries — com- 
pletely fabricated or altered versions of 
actual documents — are produced and cir- 
culated to mislead foreign governments, 
media, and public opinion. Recent Soviet 
forgeries are better and appear more fre- 
quently than in the past. Among 
forgeries that Soviet agents have pro- 
duced and distributed are bogus U.S. 
military manuals and fabricated war 
plans designed to create tensions be- 
tween the United States and other coun- 
tries. In some cases, the Soviets used ac- 
tual documents passed to the KGB by 
U.S. Army Sergeant Robert Lee Johnson 
(who was eventually arrested and con- 
victed as a Soviet agent) as models for 
style and format in Soviet forgeries. In 
one case, Soviet agents, seeking to dis- 
rupt NATO theater nuclear force modern- 
ization, circulated a forged "top secret" 
letter from Secretary of State Cyrus 
Vance to another Western foreign 
minister. 

Disinformation. Soviet agents use 
rumor, insinuation, and distortion of facts 
to discredit foreign governments and 
leaders. In late 1979, Soviet agents 
spread a false rumor that the United 
States was behind the seizure of the 
Grand Mosque of Mecca. In another case, 



Soviet officials "warned" officials of a 
West European country that the CIA had 
increased its activities in the country and 
that a coup was being planned. Some- 
times these disinformation campaigns ap- 
pear in foreign media suborned by the 
Soviets, enabling Moscow to cite foreign 
sources for some of the distortions and 
misstatements that often appear in the 
Soviet media. A recent and particularly 
egregious example was the August 1981 
TASS allegation that the United States 
was behind the death of Panamanian 
General Omar Torrijos. 

Control of International and Local 
Front Organizations. Moscow controls 
pro-Soviet international front organiza- 
tions through the International Organi- 
zations Section of the International 
Department of the CPSU Central Com- 
mittee. Front organizations are more 
effective than openly pro-Soviet groups 
because they can attract members from a 
broad political spectrum. Prominent 
among these fronts are the World Peace 
Council, the World Federation of Trade 
Unions, the World Federation of Demo- 
cratic Youth, and the Women's Interna- 
tional Democratic Federation. Moscow's 
agents use Soviet "friendship" and cul- 
tural societies in many countries to con- 
tact people who would not participate in 
avowedly pro-Soviet or Communist or- 
ganizations. The function of front, 
"friendship," and cultural groups is to 
support Soviet goals and to oppose 
policies and leaders whose activities do 
not serve Soviet interests. 

To complement organizations known 
for pro-Soviet bias, the Soviets some- 
times help establish and fund ad hoc front 
groups that do not have histories of close 
association with the Soviet Union and can 
attract members from a wide political 
spectrum. 

Clandestine Radio Stations. The 

Soviet Union operates two clandestine 
radio stations: the National Voice of Iran 
(NVOI) and Radio Ba Yi, which broad- 
cast regularly from the Soviet Union to 
Iran and China. Moscow has never pub- 
licly acknowledged that it sponsors the 
stations, which represent themselves as 
organs of authentic local "progressive" 
forces. The broadcasts of both of these 
Soviet stations illustrate the use of "ac- 
tive measures" in support of Soviet for- 
eign policy goals. For instance, NVOI 
broadcasts to Iran in 1979-80 consistently 
urged that the American diplomatic 
hostages not be released, while Soviet of- 
ficial statements supported the hostages' 
claim to diplomatic immunity. 



svember 1981 



53 



Europe 



Economic Manipulation. The 

Soviet Union also uses a variety of covert 
economic maneuvers in "active measures" 
operations. For example, a Soviet am- 
bassador in a West European country 
warned a local businessman that his sales 
to the U.S.S.R. would suffer if he went 
ahead with plans to provide technical as- 
sistance to China. In another industrial- 
ized country, Soviet agents sought to in- 
crease local concern over the stability of 
the dollar by driving up the price of gold. 
This was to be accomplished by manipu- 
lating a flow of both true and false infor- 
mation to local businessmen and govern- 
ment leaders. The gambit failed because 
the Soviet officials who attempted to 
carry it out did not fully understand the 
financial aspects of the operation. 

Political Influence Operations. 

Political influence operations are the most 
important but least understood aspect of 
Soviet "active measures" activities. 
These operations seek to exploit contacts 
with political, economic, and media fig- 
ures in target countries to secure active 
collaboration with Moscow. In return for 
this collaboration, Soviet officials offer 
inducements tailored to the specific re- 
quirements or vulnerabilities of the in- 
dividual involved. In 1980, Pierre-Charles 
Pathe, a French journalist, was convicted 
for acting as a Soviet agent of influence 
since 1959. His articles — all subtly push- 
ing the Soviet line on a wide range of in- 
ternational issues — were published in a 
number of important newspapers and 
journals, sometimes under the 
pseudonym of Charles Morand. The jour- 
nalist also published a private newsletter 
which was regularly sent to many news- 
papers, members of parliament, and a 
number of foreign embassies. The Soviets 
used Pathe over a number of years to try 
to influence the attitudes of the promi- 
nent subscribers to his newsletter and to 
exploit his broad personal contacts. 

In other cases, Soviet officials estab- 
lish close relationships with political fig- 
ures in foreign countries and seek to use 
these contacts in "active measures" oper- 
ations. Capitalizing on the host govern- 
ment official's ambition, his Soviet con- 
tact claims to be a private channel to the 
Soviet leadership. To play upon his sense 
of self-importance and to enhance his 
credibility within his own government, 
the host government official may be in- 
vited to meetings with high-level Soviet 
leaders. The Soviets then exploit the 
local official to pass a mixture of true, 
distorted, and false information — all cal- 
culated to serve Soviet objectives — to 
the host government. 



Use of Academicians and Jour- 
nalists. Soviet academicians, who often 
are accepted abroad as legitimate coun- 
terparts of their non-Soviet colleagues, 
frequently engage in "active measures." 
Unlike their free world counterparts, 
they must play two roles— their legiti- 
mate academic pursuit of knowledge for 
its own sake and their political activities 
on behalf of the Kremlin. Soviet aca- 
demicians are obliged to obey instructions 
from bodies which plan and control Soviet 
"active measures" activities. Similarly, 
Soviet journalists often engage in "active 
measures" operations in addition to serv- 
ing as representatives of Soviet news 
agencies. One KGB officer in an industri- 
alized country used his journalistic cover 
to pass forgeries, as well as to publish 
numerous propaganda articles aimed at 
influencing the media of the host country. 

Case Studies 

The Soviet Anti-TNF Modernization 
Campaign in Europe. The Soviet cam- 
paign in Europe against NATO TNF 
modernization is a good illustration of 
Soviet use of "active measures." After a 
long and unprecedented buildup of Soviet 
military strength in Europe, including the 
deployment of new SS-20 nuclear mis- 
siles targeted on Western Europe, the 
NATO ministers in December 1979 de- 
cided to modernize NATO's TNF capabili- 
ties. The Soviets immediately began an 
ongoing, intensive campaign to develop 
an environment of public opinion opposed 
to the NATO decision. (Of course, not all 
opposition to the TNF modernization de- 
cision is inspired by the Soviet Union or 
its "active measures" activities.) 

In this campaign, Soviet diplomats in 
European countries pressured their host 
governments in many ways. In one 
European country, the Soviet ambassador 
met privately with the Minister of Com- 
merce to discuss the supply and price of 
oil sold by the Soviet Union to that coun- 
try. During the discussion, the ambas- 
sador gave the minister a copy of Leonid 
Brezhnev's Berlin speech dealing with 
TNF. He suggested that if the host gov- 
ernment would oppose TNF moderniza- 
tion, the Soviet Ministry of Foreign Af- 
fairs might persuade the Soviet Ministry 
of Foreign Trade to grant more favorable 
oil prices. 

Moscow has spurred many front 
groups to oppose the TNF decision 
through well-publicized conferences and 
public demonstrations. To broaden the 
base of the anti-TNF campaign, front 
groups have lobbied non-Communist par- 
ticipants, including antinuclear groups, 
pacifists, environmentalists, and others. 



■: 



In some cases, the activities of these 
broad front groups have been directed b\, 
local Communist parties. Soviets have 
predictably devoted the greatest re- 
sources to these activities in NATO coun- 
tries where opposition to the TNF mod- 
ernization decision is strongest. 

In the Netherlands, for example, th( 
Communist Party of the Netherlands 
(CPN) has set up its own front group — 
Dutch Christians for Socialism. In 
November 1980, the Dutch "Joint Com- 
mittee — Stop the Neutron Bomb— Stop 
the Nuclear Armament Race," which has 
ties to the CPN, sponsored an interna- 
tional forum against nuclear arms in 
Amsterdam. The forum succeeded in at 
tracting support from a variety of quar- 
ters, which the CPN is exploiting in its 
campaign to prevent final parliamentary 
approval of the TNF decision. 

The Soviet Campaign Against En- 
hanced Radiation Weapons (ERW). Th< 

Soviets, throughout 1977 and early 1978, 
carried out one of their largest, most ex- 
pensive, and best orchestrated "active 
measures" campaigns against enhanced 
radiation (neutron) weapons. (Again, not! 
all opposition to the U.S. decision to pro- 
duce the enhanced radiation weapon is 
Soviet inspired.) 

This Soviet campaign has had two 
objectives: first, to halt deployment of 
ERW by NATO; second, to divide NATO 
encourage criticism of the United States 
and divert Western attention from the 
growing Soviet military buildup and its 
threat to Western Europe and the world. 

• Phase one occurred throughout th 
summer of 1977. The Soviets staged an 
intense propaganda blitz against ERW 
and the United States, involving numer- 
ous demonstrations and protests by vari< 
ous "peace councils" and other groups. 
This phase culminated in a Soviet- 
proclaimed international "Week of 
Action." 

• Phase two began in January 1978 
with Soviet propaganda exploitation of a 
letter from Leonid Brezhnev to Western 
heads of government warning that pro- 
duction and deployment of ERW consti- 
tuted a serious threat to detente. A bar- 
rage of similar letters from members of 
the Supreme Soviet went to Western par 
liamentarians. Soviet trade union official 
forwarded parallel messages to Western 
labor counterparts. 

• Phase three came in early 1978 
with a series of Soviet-planned confer- 
ences, under different names and covers 
designed to build up the momentum of 
anti-ERW pressure for the U.N. Special 
Session on Disarmament of May-June 



\ 



54 



Department of State Bulletinl 



Europe 



1)78. These meetings and conferences, 
kid throughout February and March, 
lere organized either by the World Peace 
lounci] or jointly sponsored with estab- 
phed and recognized independent inter- 
ptional groups. 

The Soviet campaign succeeded in 
implicating allied defense planning and 
cusing criticism on the United States, 
top Hungarian Communist Party offi- 
al wrote that "the political campaign 
gainst the neutron bomb was one of the 
ost significant and successful since 
forld War Two." The propaganda cam- 
lign did not end in 1978; it was incorpo- 
.ted into the anti-TNF effort. With the 
cent U.S. decision to proceed with 
RW production, the Soviets have begun 
new barrage of propaganda and related 
ctive measures." 

Soviet "Active Measures" Toward 
1 Salvador. Complementing their overt 
iblic support for the leftist insurgency 
El Salvador, the Soviets have also en- 
iged in a global "active measures" cam- 
lign to sway public opinion. These ac- 
idities include a broad range of standard 
ichniques, including forgeries, disinfor- 
iation, attempted manipulation of the 
ress, and use of front groups. The obvi- 
i is dual purpose has been to increase 
. pport for the insurgency while trying 
i discredit U.S. efforts to assist the 
I jvernment of El Salvador. 

In 1980, Salvadoran leftists met in 
avana and formed the United Revolu- 
mary Directorate (DRU), the central 
ilitical and military planning organiza- 
m for the insurgents. During the same 
hriod, the Salvadoran Revolutionary 
jmocratic Front (FDR) was estab- 
l.hed, with Soviet and Cuban support, to 
: present the leftist insurgency abroad. 
'ie FDR and DRU work closely with 
' ibans and Soviets, but their collabora- 
Im is often covert. 

The FDR also supported the estab- 
i ;hment of Salvadoran solidarity commit- 
les in Western Europe, Latin America, 
lanada, Australia, and New Zealand, 
laese solidarity committees have dis- 
Iminated propaganda and organized 
jeetings and demonstrations in support 
j the insurgents. Such committees, in 
1'operation with local Communist parties 
lid leftist groups, organized some 70 
pmonstrations and protests between 
lid-January and mid-March 1981 in West- 
jn Europe, Latin America, Australia, 
|id New Zealand. 

The FDR and DRU are careful to 
mceal the Soviet and Cuban hand in 
fanning and supporting their activities 
id seek to pass themselves off as a fully 
[dependent, indigenous Salvadoran 



movement. These organizations have had 
some success in influencing public opinion 
throughout Latin America and in West- 
ern Europe. The effort of the insurgents 
to gain legitimacy has been buttressed by 
intense diplomatic activity on their be- 
half. For example, at the February 1981 
nonaligned movement meeting in New 
Delhi, a 30-man Cuban contingent, coop- 
erating closely with six Soviet diplomats, 
pressed the conference to condemn U.S. 
policy in El Salvador. 

At another level, the Soviet media 
have published numerous distortions to 
erode support for U.S. policy. For exam- 
ple, an article in the December 30, 1980 
Pravda falsely stated that U.S. military 
advisers in El Salvador were involved in 
punitive actions against noncombatants, 
including use of napalm and herbicides. 
In another particularly outrageous dis- 
tortion, a January 1, 1981, article in the 
Soviet weekly Literaturnaya Gazeta 
falsely stated that the United States was 
preparing to implement the so-called 
centaur plan for "elimination" of thou- 
sands of Salvadorans. 

Campaign Against the U.S.- 
Egyptian Relationship and the Camp 
David Process. In the Middle East, 
Moscow has waged an "active measures" 
campaign to weaken the U.S. -Egyptian 
relationship, undermine the Camp David 
peace process, and generally exacerbate 
tensions. A special feature of Middle East 
"active measures" activities has been the 
use of forgeries, including: 

• A purported speech by a member 
of the U.S. Administration which insulted 
Egyptians and called for "a total change 
of the government and the governmental 
system in Egypt." This forgery, which 
surfaced in 1976, was the first of a series 
of bogus documents produced by the 
Soviets to complicate U.S. -Egyptian 
relations. 

• A forged document, allegedly pre- 
pared by the Secretary of State, or one of 
his close associates, for the President, 
which used language insulting and offen- 
sive to President Sadat and other Egyp- 
tians and also to other Arab leaders, in- 
cluding King Khalid of Saudi Arabia. This 
forgery was delivered anonymously to the 
Egyptian Embassy in Rome in April 
1977. 

• A series of forged letters and U. S. 
Government documents, which criticized 
Sadat's "lack of leadership" and called for 
a "change of government" in Egypt. 
These forgeries surfaced in various loca- 
tions during 1977. 



• A forged dispatch, allegedly pre- 
pared by the U.S. Embassy in Tehran, 
which suggested that the United States 
had acquiesced in plans by Iran and Saudi 
Arabia to overthrow Sadat. This forgery 
was sent by mail to the Egyptian Em- 
bassy in Belgrade in August 1977. 

• A forged CIA report which 
criticized Islamic groups as a barrier to 
U.S. goals in the Middle East and sug- 
gested tactics to suppress, divide, and 
eliminate these groups. This forgery sur- 
faced in the January 1979 issue of the 
Cairo-based magazine Al-Dawa. 

• A forged letter from U.S. Ambas- 
sador to Egypt Herman F. Eilts, which 
declared that, because Sadat was not 
prepared to serve U.S. interests, "we 
must repudiate him and get rid of him 
without hesitation." This forgery surfaced 
in the October 1, 1979 issue of the Syrian 
newspaper Al-Ba'th . 

Conclusion 

The Soviet Union continues to make ex- 
tensive use of "active measures" to 
achieve its foreign policy objectives, to 
frustrate those of other countries, and to 
undermine leadership in many nations. 
On the basis of the historical record, 
there is every reason to believe that the 
Soviet leadership will continue to make 
heavy investments of money and man- 
power in meddlesome and disruptive op- 
erations around the world. 

While Soviet "active measures" can 
be exposed, as they have often been in 
the past, the Soviets are becoming more 
sophisticated, especially in forgeries and 
political influence operations. Unless the 
targets of Soviet "active measures" take 
effective action to counter them, these 
activities will continue to trouble both in- 
dustrialized and developing countries. ■ 



ovember 1981 



55 



Europe 

NATO and Nuclear Deterrence 



by Richard Burt 

Address before the Arms Control 
Association Conference in Brussels on 
September 23, 1981. Mr. Burt is Director 
of the Bureau of Politico-Military 
Affairs. 

NATO's decision of December 1979 to 
deploy long-range cruise and ballistic 
missiles in Europe and to pursue an 
arms control negotiation with the 
U.S.S.R. concerning theater nuclear 
forces (TNF) have stimulated a debate 
which now transcends the military and 
political rationale upon which that deci- 
sion was based. At issue are not com- 
parative range, accuracy, and mobility of 
U.S. and Soviet systems; the proper 
components of a Eurostrategic balance; 
or the comparative advantage of sea-, 
air-, or land-based systems. Today many 
who challenge the decision of December 
1979 do so not on the grounds that 
there are better means of linking the 
U.S. strategic deterrent to Europe, but 
because they believe that Europe's 
security should not depend upon nuclear 
deterrence of any type. To such fun- 
damental objections, it avails little to 
argue the merits of ground-launched 
cruise missiles over sea- and air- 
launched cruise missiles or to explain 
why it makes sense to replace the Persh- 
ing I with the Pershing II. To counter 
such objections, one must begin with a 
vision of Europe and of Europe's place 
in the world. 



The View from Moscow 

The Soviet Union sees Western Europe 
as an appendage of the two super- 
powers. Europe is relegated to a second- 
class status, its security a dependent 
function of the Soviet Union's. East 
Europeans may be forced to accept such 
discrimination, but certainly we in the 
West are not. 

This anti-European vision of Europe 
is expressed in myraid ways. Soviet 
commentators tell us that the new U.S. 
Pershing missile represents an unaccept- 
able threat to the Soviet Union because 
it would provide the Soviet Union only a 
5-minute warning of an attack. Yet what 
warning time of a comparable Soviet 
nuclear attack does Western Europe 
have? Thirty seconds, perhaps. 

The same sort of patronizing atti- 
tude is inherent in the Soviet concept of 



56 



"forward-based systems." Somehow this 
term, even in Western parlance, refers 
only to American forces. It is never 
taken to mean Soviet missile and air 
forces massed in East Germany, Poland, 
Hungary, or Czechoslovakia, which 
threaten Western Europe. In other 
words, the American military presence 
in Western Europe is depicted as an un- 
natural, historical aberration while the 
Soviet military hegemony over Eastern 
Europe and its preoccupation with West 
European security policies is viewed as a 
natural Soviet right. 

The Soviet Union thus presumes 
that Western Europe should have more 
sympathy for problems of Soviet securi- 
ty than the Soviet Union does for that of 
Western Europe. And, remarkably, 
often we do on this side of the Atlantic 
and on mine, for frequently we do not 
dismiss these self-serving Soviet proposi- 
tions with the derision they deserve. On 
the contrary, we elevate them to the 
status of intellectually respectable 
arguments and give them serious con- 
sideration in our domestic debates. 

That the Soviet Union should put 
forward such propositions is evidence of 
how the Soviet Union treats its allies, 
and how it thinks about Western 
Europe. That anyone in the West finds 
merit in them is evidence that the 
Soviets have begun to affect how we 
think of ourselves. 

Nothing more graphically illustrates 
the Soviet Union's vision of Europe than 
their position on theater nuclear arms 
control. For a decade the Soviet Union 
insisted that U.S. forces in Western 
Europe should be counted in SALT 
[Strategic Arms Limitation Talks], but 
not Soviet forces in Eastern Europe. 
Only when confronted by the alliance's 
LRTNF [long-range theater nuclear 
forces] decision of 1979 were the Soviets 
forced by NATO's cohesion and resolve 
to fall back from this position, simply to 
adopt a new series of equally patronizing 
proposals. 

In 1979 the Soviets claimed a 
nuclear balance existed in Europe. But 
they kept deploying SS-20 missiles 
targeted against Western Europe. In 
1980 the Soviets again said a balance ex- 
isted and offered a moratorium on new 
missiles. But they kept deploying 
SS-20s. In 1981 the Soviets once again 
claim a balance exists. They again offer 
a moratorium. But they still keep 
deploying SS-20s. 



If any one of these Soviet 
statements regarding an existing 
balance were correct, the other two 
would, by definition, have to be wrong, 
for the West has deployed no new 
missiles since 1979, while the Soviets 
have during this same period deployed 
over 500 SS-20 warheads, not to speak 
of significant numbers of other new 
missile and nuclear-capable aircraft now 
targeted on Europe. 

In fact, none of the three Soviet 
claims was true. Few in the West have 
ever thought they were. The Soviet 
technique in this instance is, however, 
more subtle than just their traditional 
resort to disinformation and deception, 
for in offering a moratorium at widely 
disparate levels, the Soviet Union is 
really asserting that it has a right to 
nuclear as well as conventional 
superiority in Europe. The Soviet Union 
is insisting that Western Europe does 
not have a right to call upon American 
strength to counterbalance Soviet power 
and geographical advantage. This is the 
message behind the moratorium. Like 
other forms of subliminal advertising, it 
takes root slowly and imperceptibly. 

More remarkably yet, the Soviet 
Union has attempted to attribute to the 
United States a view of Europe which is 
its own. The Soviet Union, in training, 
in doctrine, and in the structure of its 
forces, is prepared to fight a nuclear 
war in Europe. I am not suggesting tha 
the Soviets intend to provoke a war. Bu 
if a war comes, the Soviets are ready to 
escalate rapidly to the nuclear level. 
They have trained and equipped their 
forces to prevail in such an environment 
And they have structured and positionec 
their forces to limit the conflict to ter- 
ritory outside the U.S.S.R. 

The United States, on the other 
hand, has for 30 years linked its fate 
with that of its European allies. In 1979 
the United States responded positively 
to the desire of those allies to have 
deployed in Europe new systems, which 
could reach deep into the Soviet Union, 
to demonstrate that it could not 
devastate Europe from a Russian sanc- 
tuary — that any war in Europe would 
result in unacceptable damage to the 
U.S.S.R. 

The United States took this step in 
the full knowledge that the Soviet Union 
would most likely respond to an attack 
on its homeland by U.S. systems in 
Europe with an attack on the United 



Department of State Bulletin fc, 






Europe 



ites. Thus the emplacement of long- 
lge U.S. cruise and ballistic missiles in 
irope makes escalation of any nuclear 
,r in Europe to involve an intercon- 
ental exchange more likely, not less, 
is is why our allies asked for such a 
ployment. This is why the United 
ites accepted. This is why the deploy- 
:nt strengthens deterrence. 

Nevertheless, the LRTNF decision is 
e of the most controversial security 
ues to have gripped the nations of the 
iance. On reflection, this should not be 
"prising: Nuclear weapons raise pro- 
ind moral, political, and strategic 
)blems that must concern thoughtful 
jple in healthy democracies. But in 

view the LRTNF debate also clearly 
nonstrates that we in the West are in 
nger of losing sight of our vision — the 
jstern vision — of European security, 
vernments on both sides of the Atlan- 
have not sufficiently explained to new 
nerations of Americans and Euro- 
ins how the Atlantic alliance con- 
ues to offer a vision of Europe consis- 
it with its security needs and its 
itical values. 

e Atlantic Vision 

Iroughout modern history, Europe has 
Ibn the battleground where mankind's 
list intense, extended, and destructive 
Inflicts have been waged. Twice in this 
D ltury, war has devastated the contin- 
tl it, leaving 50 million Europeans dead. 
St since 1945, despite the proximity of 
Bieavily armed hostile power, Europe 

I i enjoyed a period of peace and pros- 
p -ity unparalleled in the experience of 

II .nkind. How was peace secured? How 
n 5 it been maintained? 

By the middle of the 20th century 
t' ever-quickening pace of European 
rt rfare was brought to a halt by two in- 
ii/ations in Western strategic thought — 
■ lective defense and nuclear deter- 
I ice. In those early postwar years, the 
■ions of Western Europe, along with 
ti' United States and Canada, formed 
I alliance based upon the principle that 
I hreat to one was a threat to all. The 
lective of their alliance was purely 
Jrensive. Their strategy was one of 
l;errence. These nations sought to 
Irk together to minimize the risk of 
r by maximizing the risk to any 
tential aggressor of engaging in war. 
particular, the United States, the 
ongest member of the new alliance, 
claimed that it would regard an at- 
ik on its European allies as an attack 
itself and committed its full military 



power to deter such an attack. This com- 
mitment remains today the foundation 
of American defense and foreign policy 
and the cornerstone of European 
security. 

NATO's Three Pillars 

NATO is an alliance of nations 
separated by 3,000 miles of ocean. The 
geopolitical situation of each ally is in 
some way unique; the threat it faces in 
some way different. Adversary forces 
are deployed throughout an area border- 
ing directly on NATO's most populous, 
developed, and vulnerable regions. 
Geography thus provides the Warsaw 
Pact significant advantages. The Soviet 
Union can project military force in cen- 
tral Europe more easily and more quick- 
ly than can the United States. In conse- 
quence, it has been difficult for NATO — 
throughout its history — to provide a ma- 
jor conventional force sufficient in itself 
to insure its defense. 

In order to defend this wide expanse 
of territory and to deter aggression 
against it at any point, NATO has come 
to rely on strategy based upon three in- 
terrelated types of forces. At one end of 
the spectrum are NATO's conventional 
forces. The role of these forces is to 
meet any aggression at the level it oc- 
curs, and, if possible, to force the enemy 
to cease his aggression and withdraw. 
At the other end of the spectrum are 
America's intercontinental-range nuclear 
forces, which represent the ultimate 
guarantee of Western security. Between 
the two are the alliance's nuclear 
weapons deployed in Europe, which link 
NATO's conventional forces and 
intercontinental-range systems based on 
U.S. soil. The presence of these nuclear 
systems in Europe insures that the 
deterrent value of America's strategic 
forces fully underwrite the defense of 
Europe. They underscore to a potential 
aggressor that there are no cir- 
cumstances in which it could gain a vic- 
tory over NATO's conventional forces 
without running the risk of nuclear 
escalation. 

The development of this strategy 
was not without difficulty for the 
alliance. In the 1950s, with the 
nightmare of the 1939-45 war fresh in 
people's minds, there was less concern 
about lowering the nuclear threshold 
and a greater willingness to accept the 
risk of a nuclear exchange in order to 
keep the conventional threshold as high 
as possible. Thus early attempts to 
bolster conventional defense in Europe 
met with resistance from those who 



feared that those efforts meant that the 
United States no longer wished to 
shoulder the responsibilities of the 
nuclear umbrella. As Soviet nuclear 
capabilities grew, however, concern 
shifted to also encompass the now more 
familiar worry that moves to strengthen 
NATO's theater nuclear capabilities 
have, as their ulterior motive, the 
confinement of any nuclear weapon to 
European territory. 

These conflicting concerns led to the 
development in the early 1960s of 
NATO's strategy of flexible response. 
This strategy tied U.S. strategic forces 
firmly into a "seamless web" of conven- 
tional, theater nuclear, and strategic 
nuclear forces. The concept which 
underlies the strategy of flexible 
response is that neither Western Europe 
nor the United States must bear all the 
burdens or run all the risks of deterring 
war — everyone must do their part. The 
purpose of building up conventional and 
nuclear forces in Europe in the 1960s 
was not to supplant the deterrent role of 
U.S. strategic forces but to make their 
use in major conflict appear more credi- 
ble, thus enhancing overall deterrence. 

But NATO's flexible response 
strategy was challenged, at its inception, 
when the Soviet Union in the early 
1960s began to deploy large numbers of 
intermediate-range ballistic missiles 
(IRBMs)— SS-4s and SS-5s— as well as 
a formidable force of frontal aviation, all 
of which was designed to target 
Western Europe. The motivation for this 
Soviet buildup was almost certaintly 
political as well as military. Just as 
NATO theater nuclear systems were 
designed to link Europe more closely 
with America's strategic arsenal, so 
Soviet systems targeted upon Europe 
were meant to break that link, to isolate 
Europe, to threaten it from a Russian 
sanctuary which Europe could not in 
turn put at risk, and so to hold Europe a 
nuclear hostage. 

The expansion of the Soviet IRBM 
force, coupled with Moscow's advantage 
in conventional forces, brought to reality 
a prospect which Europe had long 
faced — the possibility that a nuclear 
conflict might be limited to Europe. For 
over a decade, however, this threat was 
successfully met, not by an expansion of 
U.S. nuclear forces in Europe, but by an 
increase in the U.S. strategic arsenal in 
the 1960s along with the development of 
British and French nuclear systems. 
During this period, and into the 1970s, 
American strategic superiority provided 
the margin of security which permitted 
shortfalls in other areas of NATO's force 
structure. 



vember 1981 



57 



Europe 



Changing Strategic Environment 

The Soviet buildup has now continued 
for more than a decade beyond the end 
of the U.S. strategic buildup of the 
1960s. It has continued through a period 
when the West persued policies of 
detente, when the United States cut its 
military budgets, and when NATO 
undertook virtually no nuclear force 
modernization. These Soviet actions 
have had a direct impact on the 
alliance's ability to implement its deter- 
rent strategy of flexible response. 

Soviet force improvements have oc- 
curred at all levels and in all areas. Ma- 
jor improvements have occurred in the 
conventional forces facing Europe, the 
Far East, and the oil-rich regions of 
Southwest Asia. Major improvements 
have occurred in Soviet airborne and 
seaborne forces capable of projecting 
Soviet power into regions further afield. 
Major improvements have also occurred 
in Soviet intercontinental nuclear forces 
and nuclear forces targeted on Europe. 
In this latter area, the Soviets have 
developed and are rapidly deploying new 
generations of short-range, medium- 
range, and long-range nuclear missiles, 
as well as several new types of nuclear- 
capable aircraft. 

Thus, at the conventional level, the 
Soviet Union threatens Europe directly 
through its local superiority in numbers 
and increasingly modernized forces, as 
well as indirectly through its ability to 
project force into other regions of vital 
interest to Europe, such as the Persian 
Gulf. The growth in the Soviet conven- 
tional threat places a heavier burden on 
NATO's nuclear deterrent to keep the 
peace. Yet, at the same time the Soviet 
Union has achieved parity in intercon- 
tinental-range nuclear forces, it has 
moved into position of clear superiority 
in those nuclear forces deployed in or 
targeted on Europe. In consequence, 
NATO's deterrent is being eroded at a 
time when the need for it is being 
heightened. 

Although the Soviets over the last 
decade have enhanced their military 
capabilities across the board, they have 
given a high priority to the buildup of 
their theater nuclear forces threatening 
Europe. The deployment of the MIRVed 
[multiple independently-targetable re- 
entry vehicle] mobile SS-20 gives the 
Soviet Union a capability to hit, ac- 
curately and in great number, targets 
located anywhere in Western Europe 
from locations deep within the Soviet 
Union, far beyond the range of any of 
NATO's European-based systems. In the 



58 



spring of this year [West German] 
Chancellor Schmidt wrote that the in- 
troduction of the SS-20 "has upset the 
military balance in Europe and created 
for itself an instrument of political 
pressure on the countries within the 
range of the SS-20, for which the West 
so far has no counterbalance." 

Today, SS-20 missiles are still being 
deployed in ever-increasing numbers. 
There are currently 250 SS-20 missiles 
deployed, carrying 750 warheads, along 
with 350 SS-4 and -5 missiles, for a 
total of 1,100 long-range missile 
warheads. At the same time, the Soviets 
have undertaken a comprehensive pro- 
gram of improvement and modernization 
of short- and medium-range missile 
forces threatening Europe, including the 
SS-21, -22, and -23, and of new air- 
craft with nuclear capability and mis- 
sions, such as the Backfire, Fencer, 
Flogger, and Fitter. 

NATO's Response 

The comprehensive nature of the grow- 
ing Soviet threat requires a comparably 
comprehensive NATO response in order 
to sustain NATO's deterrent strategy 
and so maintain a stable peace. NATO 
must improve its capability to meet and 
defeat aggression at the conventional 
level. To do so, NATO must maintain 
and, where possible, increase current 
force levels while regaining its tradi- 
tional superiority in the quality of its 
military equipment, training, and morale 
of its force * with which the West has 
hitherto compensated for Warsaw Pact 
conventional advantages. The nuclear 
threshold will not be raised by degrading 
the capability of nuclear forces. Unfor- 
tunately those who seem to worry most 
about lowering the nuclear threshold 
seem among those least inclined to sup- 
port the conventional modernization 
needed to raise it. 

Yet improving NATO's conventional 
posture is not enough. For NATO to 
maintain the credibility of its deterrent 
strategy, it must shore up the link be- 
tween the intercontinental and 
European-based nuclear systems. The 
Soviet Union must never be allowed to 
assume that there exists any level of 
conflict at which it could conclude 
hostilities victoriously, or that it can 
limit a conflict to Europe. In particular, 
the Soviet Union must never be permit- 
ted to believe that under any cir- 
cumstances Soviet territory could serve 
as a sanctuary from which nuclear 
strikes in Europe could be launched 
without fear of retaliation in kind. To 



allow even the perception of such a gap 1 
in the deterrent to emerge would offer 
fresh opportunities for Soviet political 
coercion. 

The steps NATO has taken to sus- 
tain its deterrent strategy include U.S. 
and allied conventional force improve- 
ment, now underway, and a deploymen 
in the United States of a more sur- 
vivable intercontinental missile system 
designed to reduce the growing 
vulnerability of the existing U.S. land- 
based missile force. An equally critical 
step in sustaining deterrence was the 
alliance's decision of December 1979 to 
modernize its long-range nuclear forces 
by deployment of 464 ground-launched 
cruise missiles and the replacement of 
108 Pershing ballistic missiles with a 
model of greater range. 

This decision to modernize NATO's 
long-range nuclear forces was a par- 
ticularly important part of the overall 
NATO response to the Soviet buildup. 
The new systems will be mobile, and 
they will disperse in times of crisis, thu 
enhancing the survivability of NATO 
nuclear forces and reducing the danger 
of a Soviet preemptive attack. The ver 
existence of NATO's nuclear forces cor 
pel any aggressor to disperse its forces 
more widely and adopt less efficient 
modes of conventional attack even at 1 
early stages of any conflict. These new 
systems can also reach into the Soviet 
Union. Thus their deployment to Euro) 
will reinforce the Soviet leadership's 
realization that Soviet territory cannot 
be a sanctuary in wars from which Ion; , 
range missiles like the SS-20, or aircn 
like the Backfire, could threaten 
Western Europe with nuclear destruc- 
tion. Finally, these systems, like other 
NATO nuclear systems, will be based i 
a number of member countries. They 
thus demonstrate the concept of sharec 
risk, shared effort, and shared security 
upon which the Western alliance is 
based. 

When TNF modernization is seen i > 
this broader context of Western deter- 
rence strategy, the myths which have 
come to surround alliance decision of 
December 1979 melt away. 

• The deployment of long-range 
cruise and ballistic missiles to Europe 
does not move NATO away from its e> 
isting strategy of flexible response 
Rather, the LRTNF decision is essentii 
to sustaining NATO strategy. In par- 
ticular, this deployment will link more 
firmly the alliance's existing nuclear 
forces in Europe to the U.S. strategic 

deterrent. 

Pi 



Department of State Bullet :.« 






.. 



Europe 



j • This deployment was not thrust 
I the United States upon the Euro- 
pns. Rather it represents a considered 
Jieriean response to a widely felt 
iropean need for an evolutionary ad- 
Jtment of NATO's capabilities to take 
tount of the onset of strategic parity 
p the massive and continuing buildup 
[Soviet theater forces, such as the 
1-20. 

i • The deployment does not give the 
lance a qualitatively new capability. 
e United States has had systems in 
rope capable of striking the Soviet 
ion since 1952. This new deployment 
1 permit NATO to retain that capabili- 
and retain that element of our deter- 
lt strategy despite improvements in 
viet air defense, the aging of our own 
items, an increasing need to commit 
iTO's aircraft resources to conven- 
nal roles, and large-scale new 
loyments of Soviet TNF. 

• This deployment does not increase 
alliance's reliance upon nuclear 

napons. Rather, in providing NATO a 
1 re balanced theater nuclear force, 
lis planned deployment has already 
emitted a significant net reduction in 
] er and more vulnerable nuclear 
piapons located in Europe. 

• This deployment does not repre- 

b it a step toward the development of a 
I .TO nuclear war-fighting capability. It 
B .he Soviet Union which is developing 
t! • capability to fight and win a nuclear 
in r in Europe. This deployment will 
I ce upon them the realization that 
h iTO will not fight a war on their 
I ms, will not permit them to 
r ;ionalize a conflict to exclude their 
b ritory, and will not permit them to 
b d Europe a nuclear hostage. 

I eater Nuclear Arms Control 

Be 1979 LRTNF decision not only 
p imises enhanced prospects for deter- 

■ ice of war in Europe, it also holds out 
1 ■ prospect of a serious effort to 
irotiate reductions in U.S. and Soviet 

i; ^ater nuclear forces. As a result of 
fiiTO demonstrating the resolve to 
ndernize its TNF, the Soviet Union 
Us been persuaded to put on the 
ajotiating table, for the first time, 
J dear forces that threaten the allies. 
1 thout modernization there would be 

■ prospect of limiting the Soviet 
■clear threat to Europe. 

I I take no credit for noting that 
jbrence Nightingale's injunction regard- 
|j hospitals— that their first task was 
I avoid spreading disease — applied 
tmally to arms control. An arms con- 



troller's first imperative is to limit arms 
in ways which do not make wars more 
likely. The Reagan Administration 
believes that if arms control is to rein- 
force the prospects for peace, it must be 
closely integrated with defense and 
foreign policies of its practitioners. 

The United States is committed to 
making arms control a coherent, sup- 
portive part of its total national security 
program. We recognize that arms con- 
trol, properly pursued, helps to reduce 
the threat we face and contributes to 
stability and peace. 

Last July, Secretary of State Haig 
outlined the principles which will guide 
the United States as it enters into 
theater nuclear arms control as well as 
other arms control talks. 

• Arms control will be an instru- 
ment of, not a replacement for, a 
coherent alliance security policy. 

• We will seek balanced arms con- 
trol agreements. 

• Arms control must include effec- 
tive means of verification and 
mechanisms for security compliance. 

• Our strategy must consider the 
totalilty of various arms control pro- 
cesses, not only those that are being 
specifically negotiated. 

• We will demonstrate our 
seriousness by insisting that whatever 
the scope of negotiations, we are 
prepared to accept reductions to the 
lowest possible level based on equal, 
balanced limits on comparable systems. 

This very day Secretary Haig is 
meeting with Soviet Foreign Minister 
Andrei Gromyko. They will discuss, and 
I hope agree, to begin theater nuclear 
arms control negotiations in the next 2 
months or so. Consistent with the prin- 
ciples Secretary Haig outlined in July, 
the United States will press in those 
negotiations with all the strength, skill, 
and pursuasion it can summon for 
equitable, verifiable, and global limits in 
theater nuclear forces at the lowest 
possible levels. The burden will be on the 
Soviet Union to move from propaganda 
to real arms control, to abandon its one- 
sided proposals, to reduce the number of 
these weapons in Europe, and to reach 
an agreement which will enhance the 
security of East and West alike. 

The U.S. position in these negotia- 
tions is being worked out in closest con- 
sultations with our NATO allies. 
Throughout the spring and summer of 
this year, NATO's special consultative 
group and high level group have been 
meeting regularly to establish a common 
alliance view on the threat we face, 



NATO's needs in the nuclear area, and 
our arms control objectives. These 
alliance consultations, of unparalleled in- 
tensity, will continue once U.S. -Soviet 
negotiations begin later this year, in 
order to insure that we pursue an agree- 
ment which is fully supported by the 
alliance and which enhances the security 
of all its members. 

A Choice of Visions 

Today I have tried to explain how, over 
30 years, a viable alternative to 
Moscow's view of Europe as a second- 
class hostage to Soviet power has been 
fashioned. This Atlantic alternative is 
built upon ties of history, culture, and 
commerce. It shares a concept of man's 
place in society and of the manner in 
which intercourse between societies 
should be conducted. To survive, 
however, this alternative has had to 
create an alliance structure which can 
bridge the ocean which provides its 
name. 

The Atlantic has been spanned by 
the commitment to strategic unity, 
through which each member accepts the 
risk of war in order to protect its allies 
and to secure its allies' protection. It has 
been spanned by the integration of con- 
ventional, theater nuclear, and strategic 
forces in a single spectrum of deterrent 
power. It has been spanned by a 
strategy of flexible response, which com- 
mits the alliance to escalate a conflict as 
high as is needed to defeat any aggres- 
sion, but permits it to confine a conflict 
to as low a level as possible consistent 
with that objective. And it has been 
spanned by a common commitment to 
seek meaningful and effective arms con- 
trol. 

The nuclear debate in Europe today 
has become a battle for the soul of 
Europe. The alternatives are clear. The 
West can reaffirm its faith in collective 
defense, deterrence, and serious arms 
control and thus remain free. Or 
America can turn in upon itself, and 
Europe can rest its hopes for security 
and its prospects for freedom upon 
Soviet goodwill. For 30 years America 
has rejected isolationism. For 30 years 
Europe has rejected Soviet patronage. 
For 30 years the West has instead 
chosen unity, strength, and freedom. 
There is no other choice. ■ 



Member 1981 



59 



MIDDLE EAST 



Saudi Security, Middle 
and U.S. Interests 






by Secretary Haig 

Statements before the Senate Foreign 
Relations Committee. ' 

OCT. 1, 1981 2 

For several months we have been work- 
ing with the Saudis to develop ar- 
rangements that will meet the concerns 
that the Congress has expressed about 
the proposed arms sales to Saudi Arabia. 
These discussions have now been con- 
cluded. We believe that the resulting 
understandings which will come into ef- 
fect after consummation of the sale will 
insure the security of the airborne warn- 
ing and control system (AWACS) and the 
degree of continuing U.S. participation in 
Saudi AWACS operations that respond to 
the fundamental concerns about the sale 
that have been raised during the course 
of our consultations with the Congress. 

Understandings on AWACS 

The Saudis have agreed to insure an im- 
portant U.S. role in the development of 
the Saudi air defense system and to move 
forward in other ways to deepen the 
longstanding security cooperation be- 
tween our two countries in which we 
have played a key role in training the 
Saudi Air Force. Within this framework, 
we have reached understandings on a 
number of specific provisions governing 
the AWACS aircraft that provide impor- 
tant benefits for U.S. security interests. 
These arrangements have been reached 
in the context of firm Saudi agreement on 
information sharing, security of equip- 
ment, no unauthorized transfer of data or 
equipment, and use of the AWACS only in 
a defensive mission within Saudi borders. 
This means: 

• There will be complete data shar- 
ing with the United States on a continu- 
ous basis. 

• There will be no sharing of 
AWACS data with any other parties 
without U.S. consent. 

• Only carefully screened Saudi and 
U.S. nationals will be permitted to be in- 
volved with these aircraft. Given the 
shortage of Saudi aircrews and techni- 
cians, this means that there will be an 
American presence in the aircraft and on 
the ground well into the 1990s. 



60 



• There will be no operation of Saudi 
AWACS outside Saudi airspace. 

• There will be extensive and elabo- 
rate security measures for safeguarding 
equipment and technology, including U.S. 
inspection teams which will monitor the 
performance of all equipment associated 
with the AWACS sale and special facili- 
ties which will be constructed to provide 
round-the-clock security protection 
against unauthorized entry. 

• All of the agreed arrangements for 
protecting the security of AWACS must 
be approved by the United States at least 
1 year before any AWACS are delivered 
to the Saudis. 

Taken together, this package of safe- 
guards and agreements addresses the 
fundamental concerns that have been 
voiced about the sale and also reflects a 
Saudi willingness to work with us and 
engage our mutual concerns. 

American Strategy 

Far more is involved in the proposed 
arms sales to Saudi Arabia than the tech- 
nical capabilities of five aircraft. At stake 
is whether the United States will be able 
to pursue a coherent policy in a region 
where the Arab-Israeli dispute divides 
our closest friends and where the Soviets 
and their proxies threaten our vital inter- 
ests. 

Our strategy must vigorously pursue 
both peace and security. Progress toward 
each of these twin goals supports prog- 
ress toward the other. If our friends are 
more secure, they will be more able to 
take risks for peace. If there is progress 
toward peace, the cooperation that is 
vital for security will be easier. 

The "consensus of strategic concern" 
among our friends in the Middle East is 
not a figment of the imagination. The 
fragile cease-fire along the Israeli- 
Lebanese border demonstrates a wide- 
spread understanding of the need for 
peace and a recognition that only the 
Soviet Union and its proxies benefit from 
violence. Israeli restraint and Saudi 
cooperation have brought about a result 
crucial to progress toward a wider peace 
in the region. There are many people who 
are alive in the Middle East today be- 
cause of those efforts. We will continue, 
through the efforts of Ambassador Habib 
[Philip C. Habib, President Reagan's spe- 



cial emissary to the Middle East] and thi 
good offices of Saudi Arabia, to seek 
progress toward peace in Lebanon. 

The most important cooperation in 
the Middle East today is the cooperatior 
between Israel and Egypt in the peace 
process. President Reagan has affirmed 
his personal commitment to the Camp 
David agreements and the process they 
have set in motion. We welcome en- 
thusiastically the decision by Egypt and 
Israel to resume the autonomy negoti- 
ations, and we look forward to the fruits 
of those negotiations. 

In the wake of the shocks of the las' 
few years, countries in the region also 
recognize the need for greater coopera- 
tion to rebuild regional security. Develo] 
ing Egyptian and Israeli security coopei 
ation with the United States, the Gulf 
Cooperation Council that has been newl 
created under Saudi leadership, and 
Saudi security assistance to a number o 
threatened states, are all signs of this 
growing recognition. 

Our policy is to pursue enhanced se- 
curity cooperation with all of our friend 
in the region. We do not seek a massive 
structure of bases, a pervasive presenci 
and dependent client states. We respect 
the sovereignty of our friends and want 
to help them preserve their independ- 
ence. 

Vital U.S. Interests 

Our regional strategy consists of the fol 
lowing elements: 

• Improving our own military post j, 
tion in and near the region; 

• Strengthening the defense capab 
ities of our friends; 

• Restoring confidence in the Unit 
States as a reliable partner; and 

• Pursuing a permanent peace in t 
region. 

The proposed sale contributes impc 
tantly to each of these elements. 

First, the information-sharing ar- 
rangements will also provide U.S. force 
early warning of hostile activities in the 
gulf. Moreover, the associated infrastru 
ture to support U.S. deployment, shoul 
our assistance be requested in times of 
crisis, would be in place. 

Second, the package will bolster 
Saudi capabilities to defend their counti 
and their crucial oil facilities. 



Department of State Bullet 



Middle East 



Third, it will also demonstrate that 
;ake Saudi security needs seriously 
can be counted on to help. 
Fourth, a secure Saudi Arabia confi- 
; of U.S. support will be better able 
roceed with its policy of encouraging 
iarties to move toward peace in the 
on. 

We must not underestimate the 
;e and severity of the unpredictable 
ats that arise in this turbulent re- 

Twice in less than 2 years the 
ted States has had to deploy AWACS 
audi Arabia in response to unex- 
ed threats — first during the Yemen 
s in 1979 and then during the Iraq- 
war. Qadhafi has threatened to de- 
y Saudi oil facilities if the Saudis con- 
e to maintain production levels that 
arcut Libya's high oil prices. This 
ning's Iranian air raid on Kuwait is 
natic evidence of the continued threat 
le region's stability. 
For all these reasons, we believe the 
»osed sales serve vital U.S. interests. 
•ecognize that the sales raise ques- 
5 about Israeli security and about the 
promise of advanced U.S. technology, 
oth cases, however, we believe that 
e concerns have been effectively ac- 
modated by the arrangements I have 
described and by our security and in- 
jence assistance to Israel. 
The United States is fundamentally 
E unalterably committed to the secu- 
I of Israel. A strong Israel is required 
\ lur interests and our hopes for peace 
I security in the Middle East. For our 
s we are determined to take steps to 
c imize any adverse impact of the sale 
I to maintain the qualitative edge upon 
I _'h Israel depends. 
' President Reagan would not have 
] lorized this sale if he believed it 
■ Id jeopardize Israel's security. On the 
I rary, we believe that the risks for Is- 
I are greater if U.S. -Saudi cooperation 
i srupted and Saudi Arabia is left inse- 
I ■ or forced to turn elsewhere for 
iipment. 
Consider the risks of not making the 
. A veto would deal a serious setback 
ur efforts to counter Soviet and 
iet-proxy threats in the region and to 
r e forward in the peace process. 
A veto would erode both U.S. and 
di credibility. It is urgent to convince 
1 countries that the United States has 
military means to protect them and 
will to do so. Strength and the capac- 
for decisive action are universally ad- 
pd and perhaps nowhere more than in 
Middle East. Yet increasingly over 
last few years, the states of this re- 



gion have come to view us as vacillating 
and irresolute. Unless we change that 
perception, the costs of withstanding 
Soviet and radical pressures will out- 
weigh the benefits of cooperating with 
us. 

We have begun to reverse the trend 
of rising doubts about the United States. 
Our determination to rebuild our military 
strength; our strategic discussions with 
our regional friends; our commitment to 
the Camp David peace process, including 
our participation in the Sinai multilateral 
peacekeeping force; our increased secu- 
rity assistance to threatened states have 
all begun to restore our reputation as a 
reliable partner. 

These positive trends will be dam- 
aged if the sale is turned down. Saudi 
confidence in the ability of the United 
States to conduct a coherent and effective 
foreign policy will be diminished. The 
painstaking task of restoring confidence 
and hope will, of necessity, have to begin 
again. 

The United States and Saudi Arabia 
will remain bound together by common 
desires to avoid regional conflict and to 
counter Soviet threats. But if the Saudis 
question our reliability, will they feel 
more able to withstand pressure against 
closer cooperation with us in regional de- 
fense efforts? Will they feel more able to 
run risks and join the peace process? 
More willing to continue to help other 
threatened states? As President Sadat of 
Egypt himself said yesterday: "A refusal 
to give the AWACS will raise a huge 
question mark because Saudi Arabia is 
one of the closest American friends in the 
region." 

The Saudis have shown sensitivity to 
our concerns far more than other 
suppliers would ask of them. We, for our 
part, must also show sensitivity for 
legitimate Saudi concerns about their 
sovereignty and independence. Let me 
emphasize that this is not simply a matter 
of national pride on their part. It is a 
matter of sustaining credible and con- 
structive Saudi leadership as a moderat- 
ing influence in the Arab world. 

We must not lose the opportunity we 
now have to work with a strengthened, 
confident Saudi Arabia that enjoys in- 
creasing influence in the Arab and Is- 
lamic world. The large and continuing 
U.S. role in the Saudi air defense pro- 
gram, and the measures I have described 
today, can and must be the foundation for 
further cooperation to protect our com- 
mon interests in the vital Persian Gulf 
region. 



Now it is for you to promote that 
prospect by your favorable decision on 
this crucial sale. Protecting our vital 
interests against the Soviets and their 
proxies demands no less. Building a last- 
ing peace demands no less. In the end, 
your approval will make the United 
States and all of our friends in the area 
more secure. 



OCT. 5, 1981 3 

I want to say a few words about two key 
points of difference between those who 
support the President's decision on arms 
sales to Saudi Arabia and those who ap- 
parently oppose it. 

Given all the controversy, there is a 
surprising amount of agreement. We are 
united in our desires to strengthen peace 
and security in the Middle East. We are 
united in our commitment to preserving a 
strong and secure Israel. We agree about 
the need to improve our capability to deal 
with the greatly increased military 
threats to this vital region. 

We agree about many specifics as 
well. We all agree that having AWACS 
(airborne warning and control system) in- 
formation available to U.S. forces in the 
Persian Gulf region is in our interests 
now and will remain so in the future. We 
all agree that it might be militarily desir- 
able if we could have the degree of as- 
sured joint control that would permit us 
to put the most advanced technology 
available on board these aircraft. We all 
agree, as Senator Biden put it, that there 
will be damage done if this proposed sale 
is disapproved. 

Why, then, is there so much dis- 
agreement about what we should do, 
when there is so much agreement not just 
on broad objectives but on specific de- 
tails? Obviously, when difficult consid- 
erations must be balanced, there is plenty 
of room for honest disagreement. How- 
ever, it seems to me that some who op- 
pose this sale may be in danger of com- 
forting themselves with two dangerous 
illusions. 

First is the illusion that instead of 
the proposed sale we could have some 
kind of joint command arrangement that 
would permit the sale of AWACS with all 
of the most advanced and sensitive gear 
on board. 

Second is the illusion that, even if 
this sale is not approved, the damage to 
U.S. -Saudi relations can be easily re- 
paired because we will still have so many 
common interests. 



member 1981 



61 



Middle East 



I share Senator Glenn's desire to see 
the best air defense capability possible, 
one that can most readily assist our own 
military operations in the event of a 
major crisis in the Persian Gulf. But let 
me say that we are in great danger of let- 
ting the best become the enemy of the 
good. The kind of joint command that he 
is talking about is simply not possible 
now. Therefore, there is absolutely no 
point whatsoever in comparing the pres- 
ent proposal with some imaginary, even if 
highly desirable, joint command 
arrangement. 

The arrangements that would govern 
these proposed sales are the product of 
long and detailed discussions between the 
United States and Saudi Arabia. At- 
tached to my statement is a chart that 
compares the arrangements for this sale 
with the terms of a standard letter of 
offer and acceptance that governs most 
U.S. arms sales. As you can see, very 
clearly, these arrangements go far be- 
yond anything that is normally contained 
in a military sales agreement. 

The choice before you is not between 
these agreed arrangements and some still 
more favorable ones. The issue is 
whether U.S. interests are better served 
by the kind of surveillance system we are 
proposing or by the kind of system that 
would be supplied by Britain or by some 
other third country. 

• Is it better to have assured access 
to the radar information of this system or 
to have no assurance of access what- 
soever? 

• Is it better to have the assurance 
that no information from this system will 
be passed to third parties without our 
consent or to have a system with no such 
control at all? 

• Is it better to have a system in 
which Americans play a critical role and 
from which third-country nationals are 
excluded or to have a system in which our 
place is taken by British or French — or, 
for that matter, by any other third- 
country nationals who might be brought 
in to operate a non-U. S. system? 

• Is it better to have AWACS early 
warning information available to U.S. 
forces in the region, from now into the 
indefinite future, or to lose this early 
warning when we withdraw the U.S. 
AWACS that, at Saudi request, are cur- 
rently deployed because of the Iran-Iraq 
conflict? 

• Is it better to have a system that 
can be rapidly upgraded in an emergency 
and which provides the infrastructure to 
deploy additional AWACS aircraft of our 
own if needed or to have none of those 



62 



Proposed Saudi AWACS Sale 
Terms and Conditions 



Use of AWACS 



Security of 
Technology 



Standard Agreement 



Defensive use only 



Protect classified 
equipment with 
procedures similar 
to U.S. procedures 



Third-country 
Transfers 



No transfer of 

equipment without 
U.S. Government 
approval 



Information Sharing None 



Saudi Additions to Standard 
Agreement 

1. No flights outside borders 
(without U.S. prior consent) 

1. U.S. Government approval of 
security plan 

2. U.S. Government inspections 

3. High technology security 
facilities 

4. Only U.S. and Saudi personne 
have access to equipment and 
documentation 

5. New information security 
agreement 

6. Computer software (machine 
language) remains U.S. Gov- 
ernment property 

1. Third-country modifications tc 
equipment forbidden 

2. Third-country personnel forbii 
den to perform maintenance 

1. AWACS data exchanged be- 
tween United States and Sauc 
Arabia at all times 

2. No AWACS data to other eoui 
tries without prior and mutua 
consent of United States and 
Saudi Arabia 



advantages and to create a political ob- 
stacle to the deployment of our own 
AWACS, both now' and in the future? 

It seems to me that the answers to 
all of these questions are simple and 
obvious. 

More advantageous arrangements 
can be imagined, but they are just not 
possible. At least not now. And they will 
not be made more possible by defeating 
the present proposal. 

If the President receives your sup- 
port on this proposal, I am optimistic that 
our security cooperation with Saudi 
Arabia will grow still closer in the future. 
But the prospects for such cooperation 
will be set back badly if this sale is de- 
feated. Be under no illusions about that. 

I urge you also not to comfort your- 
selves with the illusion that the Saudis 
have no place else to go; or with the 
thought that damage to U.S.-Saudi rela- 
tions can be repaired over time. 

Without question, we will continue to 
have far-reaching common interests with 



Saudi Arabia even if this sale is defeats 
It would be irresponsible for me to uttt 
prophesies of doom, prophesies that coi 
all too easily become self-fulfilling. But 
make no mistake, it would be irrespons 
ble in the extreme to succumb to illusio 
about the real alternatives facing us. 

The question is not whether Saudi 
Arabia will join the ranks of our enemi( 
The Saudis have been far ahead of us ii 
recognizing and warning against the 
Soviet threat to the Persian Gulf. The 
question is whether Saudi Arabia will 
withdraw from a moderating leadershij 
role in Arab and Islamic councils and se 
instead the protection that a lower prof 
affords. 

Over the last year, Saudi Arabia hi 
increasingly emerged as a constructive 
and moderating influence in the Arab 
world. They have shown this in their di 
plomacy in Lebanon, in their leadershif 
in creating the Gulf Cooperation Counc: 
and in their bilateral security and eco- 
nomic relations with moderate states 
throughout the region. That role entails 



Department of State Bulle 



Middle East 



s — and may well entail still greater 
i in the future — and it will not be 

r for Saudi Arabia to run these risks 
:y are publicly rebuffed by their 
;st friend in the West. 
The question is not whether damage 

S.-Saudi relations can be repaired, 
n time and the extent of our common 
•ests. Should the Congress decide to 
rule the President, you will find me 
ring as hard as anyone to repair the 
age to U.S. -Saudi relations. The 
tion is whether we will have enough 

For time is not necessarily on our 
in the Middle East. We have made 
irkable progress in the peace process 
in building closer relations with our 
ds in the region. We hope to continue 
progress. 
I But our enemies and the enemies of 
le have not been idle. Just last week, 
lian planes bombed oil facilities in 
I ait, and the turmoil in Iran itself 
is even larger dangers to U.S. inter- 
land to world peace. Libya, Ethiopia, 
■ South Yemen have recently joined 
fcher in an unholy alliance aimed 
£ lgh the Sudan at Egypt and through 

h Yemen at Saudi Arabia. Qadhafi 

t hreatened to destroy the oil facilities 
H udi Arabia, and his planes have 
iped the Sudan. The fragile cease-fire 
J 'banon is the target of all those who 
| se the Middle East peace process, 
j! ley recognize that war in Lebanon 
u 1 well make peace impossible. 
: We need to work closely with our 

1 ds, and we need to work quickly. Our 
) fin for error and delay is dangerously 
I This is not a time to impose severe 

I n on our relations with one of our 
I st friends in the region. I urge you 
:. ep that in mind as you consider the 
I ident's request for your support on 
i ssue. 



Saudi Arabia and 
U.S. Security Policy 



The complete transcript of the hearings 
■e published by the committee and will 
aifable from the Superintendent of 
ments, U.S. Government Printing Of- 
Washington, D.C. 20402. 
Press release 327. 
Press release 329. ■ 



Following is an address delivered by 
Joseph W. Twinam; Deputy Assistant 
Secretary for Near Eastern and South 
Asian Affairs, on behalf of James L. 
Buckley, Under Secretary for Security 
Assistance, Science, and Technology, 
before the National Conference of 
Editorial Writers in Providence, Rhode 
Island, on September 25, 1981. 

I am very pleased to be with you and 
thank you for graciously receiving me as 
a literally last minute substitute for Jim 
Buckley. Jim had wanted very much to 
be with you and truly regrets that 
responsibilities, not unrelated to the sub- 
ject he wished to discuss with you, 
prevent his being here. That subject, 
consistent with your program chairman's 
injunction that our topic be timely and 
important, is the current household 
acronym AW ACS [airborne warning and 
control system], specifically, the Reagan 
Administration proposal to provide 
Saudi Arabia with AW ACS and other 
air defense enhancement equipment. 

First let me try to place this aircraft 
and the other items of military equip- 
ment we propose to sell to Saudi Arabia 
in their proper perspective. Only in this 
way can the importance of these sales, 
and the reasons for the Reagan 
Administration's commitment to them, 
be fully understood. 

The main goal of this Administration 
in international affairs is to help achieve 
a world in which nations are free to pur- 
sue their own peaceful ends without the 
threat of external aggression or 
intimidation. We are confident that in 
such a world our own interests will be 
best protected, and the values and prin- 
ciples we cherish will find more fertile 
soil. We do not delude ourselves that the 
path to these objectives is always easy 
or obvious. 

What is absolutely clear, however, is 
that the free world has lost dangerous 
ground these last few years. All nations 
of the free world face, around the globe, 
challenges which are of such scale that 
they can be mastered only if the 
strength and engagement of the United 
States is brought to bear. Yet we cannot 
do the job alone. We can only do it if we 
are able to work in close cooperation 
with other strategically important 
nations throughout the free world. 



The experience of the last few years 
speaks for itself. Given the aims and 
growing capabilities of our principal 
adversaries, further retrenchment in 
U.S. power and influence can only 
guarantee greater global instability and 
graver threats to our most vital 
interests. The policies being pursued by 
the Reagan Administration are intended, 
first, to rebuild our ability to project 
credible American power to distant 
places, should the need arise, and 
second, to work with other friendly 
nations to restore or strengthen stability 
in regions of critical importance to the 
West. Our task is difficult, but it is a 
manageable one, if we have the fore- 
sight and determination to pursue it. 

Regional Security 

The Indian Ocean and Persian Gulf are 
very far from our borders. But we have 
a clear and substantial stake in the con- 
tinued sovereignty and security of 
nations there and in their continued 
good relations with us and with the 
West. We have the most direct interest 
in helping them acquire the capability to 
better defend themselves and, in the 
process, to deter aggression. They need 
our help for their own security, and we 
benefit from cooperation with them. 

We were painfully reminded during 
the oil embargo of 1973 and 1974 that 
the Persian Gulf is the source of much 
of the energy on which the industrial 
democracies will be critically dependent 
until well into the next century. Until 
the British withdrew their forces from 
the area in 1971, the free world de- 
pended primarily on Britain to maintain 
stability in the gulf and to assure 
Western access to its oil. But for long 
before 1971, we had pursued an impor- 
tant security assistance relationship with 
Saudi Arabia. In the 1970s, we looked 
primarily to Iran, in cooperation with 
other gulf states, to pick up the burden 
which the British had so ably carried. 

This arrangement in turn lasted less 
than a single decade. The fall of the 
Shah in 1978 coincided with two other 
ominous developments. The first was the 
dramatic increase in Soviet military 
capabilities during the 1970s. While the 
United States was spending more than 
$200 billion in Vietnam and deferring 
basic modernization of its military 



mber 1981 



63 



Middle East 



forces, the Soviet Union was engaged in 
the most massive buildup of military 
hardware and infrastructure that the 
world has seen. 

The Soviet Union's invasion of 
Afghanistan was the starkest possible 
demonstration that the Soviets not only 
now possess the military capability to 
conduct major operations on their 
southern flank without detracting from 
their military posture on their eastern 
and western fronts, but that they are 
prepared to use that capability to sup- 
port their political objectives— at least so 
long as they can do so with relative 
impunity. 

The second development is the 
growing capability of radical regional 
states to attack and destroy critical oil 
facilities in Saudi Arabia and other gulf 
nations and to attempt to block Western 
access to the gulf itself. I speak, of 
course, of Ethiopia, South Yemen, and 
Iran. The first two are now well-armed 
Soviet proxies who last month joined 
with Libya in a tripartite alliance 
specifically aimed at Saudi Arabia and 
Egypt. At the outbreak of the Iraq-Iran 
war, Iran threatened to close the 
Hormuz Strait— through which two- 
thirds of the world's oil exports pass. It 
also sent combat aircraft across the gulf, 
underscoring Iran's capacity to threaten 
neighboring oil-producing states. It was 
in this context that the Saudis requested 
that we deploy U.S. AWACS to Saudi 
Arabia, and that we rapidly responded. 

In short, in less than half a decade, 
the Persian Gulf has been transformed. 
From a secure source of the petroleum 



degree to which we have been able to 
work out cooperative security arrange- 
ments with the front-line states of the 
region. 

Since the fall of the Shah, we have 
worked to develop a new set of relation- 
ships in the Persian Gulf and the Middle 
East that can reestablish a reasonable 
degree of stability, protect our friends in 
the area, insure the security of the 
West's principal sources of imported oil, 
and establish an infrastructure consist- 
ent with our rapid deployment forces 
should a major emergency lead the 
nations of the area to request our direct 
support. 

While insuring the security of Saudi 
Arabia is obviously not the only element 
in this effort, it is clearly a key one. 
Saudi Arabia is the center of the 
conservative forces in Islam. Its pro- 
Western, anti-Communist positions offer 
a nonradical approach to modernization. 
Because of its special position as custo- 
dian of the holy places of Islam, it has 
an influence that reaches far beyond the 
Arab world to a community of nations 
encompassing 750 million Muslims. It 
currently dedicates more than 5% of its 
national income to aid a large group of 
poorer countries, including nations such 
as Sudan, Somalia, North Yemen, 
Turkey, Pakistan, and Morocco, where 
the United States has important stra- 
tegic interests as well. 

Thus, the success of U.S. policy in 
the region depends on our ability to 
develop a close working relationship 
with Saudi Arabia. This in turn depends 
on our own willingness to help the 



. . . the addition of AWACS to the Saudi inventory would greatly 
improve Saudi Arabia's ability to protect its eastern oilfields; but 
it would not significantly improve Saudi ability to conduct at- 
tacks against Israel. Nor would it improve Saudi ability to assist 
other Arab nations to do so. 



essential to Western economies, it has 
become an area which is extremely 
vulnerable to attack by regional forces, 
as well as to a major offensive by newly 
deployed forces of the Soviet Union. 

It is against the former threat that 
we seek to arm Saudi Arabia while we 
modernize our own forces so as to better 
cope with the latter threat should the 
need arise. These two efforts, I might 
add, are closely interrelated, because our 
ability to project our forces in the event 
of a major emergency in the Persian 
Gulf will depend in large part on the 



Saudis acquire, in their own right, the 
capability to defend their own most 
important asset. This we can do— and 
the Saudis know it as well as 
we— without in any way detracting from 
our unshakable commitment to Israel's 
security or lessening Israel's ability to 
defeat an attack from any combination 
of hostile forces in the region. 



The Need to Improve Saudi Air 
Defenses 

The military threats against which th^ 
Saudis seek to improve their defenses,' 
are real. An attack could plausibly corf' 
from several regional sources: for 
instance, from a spillover of the Iran- 
Iraq war or from South Yemen or 
Ethiopia, where a significant Soviet I 
military presence underscores the 
region's instability and the dangers ofi' 
Soviet penetration. It is important to 
understand in this context that an 
indirect military thrust from South 
Yemen, for example, could be as seriq 
for the Saudis as a direct oilfield attai 
because it could trigger a range of otl 
threats— Saudi Arabia is very large ire 
territory and small in population. Its J 
military forces are relatively small and 
widely dispersed. 

Both we and the Saudis fully real 
that the air defense enhancement pacl 
age we have submitted to the Congres 
will not enable the Saudis to defend 
themselves against a direct Soviet 
attack. Only we can do that. The pro4 
posed sale, however, will vastly enhan 
our ability to do so. It will, for exampl 
insure the existence of an extensive 
logistics base and support infrastructu 
in Saudi Arabia— including spare 
parts— facilitating U.S. reinforcement 
would also greatly expand opportuniti 
for close cooperation between Saudi, 
U.S., and other regional forces in a 
manner that could greatly upgrade th 
air defenses of the entire area. But 
equally important, the relationship be- 
tween the United States and Saudi 
Arabia that would be evidenced by thtj 
sale could, in itself, represent a signify 
cant deterrent to Soviet adventurism. 
In the meantime, present Saudi aU 
defenses are inadequate. Saudi oil 
facilities, which lie on very flat land 
adjacent to the Persian Gulf, are highi 
vulnerable to surprise attack by low- 
flying aircraft. Early warning is critiffl 
With current Saudi ground radars, 
except for the presence of the U.S. 
AWACS, little warning is possible, an 
severe damage could be inflicted on tU 
facilities before Saudi interceptors col 
respond. 

The four elements of the currently 
proposed sale— AWACS, air refueling 
tankers, conformal fuel tanks for the 
F-15s, and air-to-air missiles— would 
significantly improve Saudi capability 
defend against regional air attacks. ] 

The AWACS aircraft, which 
operates at around 30,000 feet, would] 
provide sufficient warning of an air 



64 



Department of State Bull 



• 



Middle East 



ck to enable Saudi fighters to 
mble and intercept the enemy before 
can carry out their attack. 
The conformal fuel tanks and the air 
eling tanker aircraft— equipment to 
nd the range of Saudi F-15s— would 
)le F-15s to defend east coast 
oleum facilities while operating out 
ases to the south and west that are 
int and, therefore, safer. 
Sidewinder air-to-air missiles, with 
apability for head-on attack against 
ile aircraft, are the only weapons 
will permit Saudi interceptors to 
ige and destroy attacking aircraft 
•e they can destroy the oil facil- 

even with the advance warning 
ided by the AWACS. 
In addition, of course, this sale 
Id bring with it a very high degree 
ng-term military and technical 
boration between the United States 
Saudi Arabia by insuring the sub- 
tial presence of U.S. maintenance 
support personnel in Saudi Arabia 
ughout the life of the systems, that 
ir many years. 

lications for Israeli Security 

lly, the Administration has carefully 
ied the implications of this sale, and 
ie larger relationship which it 
jolizes, for Israeli security. We 
gnize that any enhancement of 
li military capabilities might in 
ry complicate the task faced by 
3li defense planners. Yet Israel en- 
today— and will continue to enjoy 
• our proposed sales are corn- 
el— so decisive a superiority over 
combination of regional forces that 
jractical impact of our proposals on 
all security would be small. By con- 
, the longer run benefits which we 
with our policy toward Saudi 
)ia and other gulf states will im- 
e Israel's security by reducing the 
of conflict in the region and en- 
:ing our ability to bring moderate 
) states into the Middle East peace 
ess. 

The mythology that has grown up 
.nd the AWACS is extraordinary. 
trary to claims, the AWACS cannot 
tct photographic intelligence. Nor 
it collect any intelligence at all on 
ind targets. The only information it 
ids is the most perishable kind— air- 
t tracks which become useless in a 
ter of minutes if they cannot be 
d upon. Neither do they have an 
nsive capacity that could jeopardize 
eli security, nor does the equipment 
would be providing the Saudis repre- 



sent the kind of highly advanced tech 
nology whose capture by the Soviets 
would jeopardize significant U.S. secu- 
rity interests. In brief, the addition of 
AWACS to the Saudi inventory would 
greatly improve Saudi Arabia's ability to 
protect its eastern oilfields; but it would 
not significantly improve Saudi ability to 
conduct attacks against Israel, nor 
would it improve Saudi ability to assist 
other Arab nations to do so. 

With or without AWACS and the 
other equipment in the Saudi air defense 
package, Israel's highly effective air 
defense systems, coupled with Saudi 
vulnerability to retaliation from Israel, 
provides the strongest possible deterrent 
to any potential Saudi attack. The 
Saudis, moreover, recognize that Israel's 
air defense system— including pilots, air- 
craft, surface-to-air systems, and 
crews— is extraordinarily capable, and 
that Saudi missions near or into Israeli 
airspace could be suicidal. 

Key Questions 

The problem of safeguarding Israel's 
security interests is not, of course, the 
only one which has been raised in con- 
nection with these sales. It is clear from 
conversations with Members of Con- 
gress and the public that at least three 
other key questions must be addressed. 

• What is there in the U.S.-Saudi 
political relationship to justify this sale? 

• If Saudi security is so important 
to us, why don't we do the job 
ourselves? 

• Why is Saudi Arabia any more 
dependable an anchor for our regional 
strategy than Iran proved to be? 

Let me address these questions 
together, for they are closely inter- 
related. 

The Saudi leadership believes that 
their country's national interest is best 
served by the kind of security relation- 
ship that we have proposed. The point to 
keep in mind, however, is that this judg- 
ment is made in the face of considerable 
pressure, in large part Soviet and 
radical Arab in origin. The Saudis' 
capacity to resist such pressure is very 
largely dependent upon their confidence 
in the United States and in their own 
military capability to deal with local 
threats. These two are inseparable. 

For compelling reasons, political and 
nationalistic, the Saudis cannot move to 
an explicit dependence upon the United 
States for their defense in those areas; 
they are clearly potentially capable of 
looking after themselves. Such a policy 



would severely undermine their leader- 
ship and influence in the Arab world, an 
influence which clearly serves our own 
national interests. 

What has to be understood, in short, 
is that the only viable relationship today 
is one that is built on the solid rock of 
mutual respect for each other's sover- 
eignty and of confidence in mutuality of 
interests and is perceived as such. The 
stationing of significant U.S. combat 
forces on Saudi soil is simply not a fea- 
sible alternative to strengthening their 
capacity to look after their own defenses 
to the best of their ability. No proud 
sovereign nation should be expected to 
delegate such responsibilities to another 
and distant nation. We would not do so 
in their shoes, and we cannot realis- 
tically expect them to do more — espe- 
cially as they have alternative sources 
for entirely adequate substitutes, namely 
the British Nimrod (similar to our 
AWACS) and French fighter aircraft. 

Finally, let me briefly turn to the 
question of what the consequences 
would be if Congress does not approve 
the sale — consequences for the United 
States, for Israel, for an enduring peace 
in the Middle East. The downside risks 
are large. 

Although some complementarity of 
Saudi and U.S. interests would remain, 
their doubts about the value of U.S. 
commitments would surely grow. 
Almost certainly the Saudi ability to 
accept the risks of embracing our 
regional strategy and of supporting the 
peace process would decline. Similarly, 
Saudi willingness and capacity to exer- 
cise a moderating political influence in 
Arab councils would also inevitably suf- 
fer. While we might succeed in muddling 
through, failure to complete this present 
transaction would be so large and so 
important a signal that our adversaries 
would be sorely tempted to take advan- 
tage. 

The result, inevitably, will be that 
our regional security strategy will be 
undermined. The chances of Soviet 
political coercion and military intimida- 
tion will grow as the prospects for con- 
tinued Western access to oil will 
diminish. With the damage done to the 
credibility of presidential commitments 
and his reputation for foreign policy 
leadership, one can reasonably wonder 
whether the damage — itself substan- 
tial — would be confined to our national 
security objectives in the Persian Gulf 
and Middle East. 

Ironically, Israel may pay as large a 
price as we if this sale is defeated. It 
almost surely will face a Saudi Arabia 



)mber1981 



65 



Middle East 



■" 



which buys from the Europeans the 
same military capabilities as we propose 
to sell, but a Saudi Arabia which is less 
responsive to U.S. influence, less willing 
to work with us in the search for a 
lasting peace, and less able to resist the 
pressure of radical forces from inside 
and outside the region. Indeed, if the 
sale is defeated the only winners will be 
those who would benefit from regional 
turmoil and curtailed Western influences 
and curtailed Western access to oil. 



I have tried to outline the broad con- 
text within which the President decided 
to go ahead with this sale and its 
political and strategic rationale. I have 
touched more briefly on the specific 
systems involved and on several other 
important topics, which I am prepared 
to discuss with you further in response 
to your interests. ■ 



Secretary's News Conference 
of October 7 



Secretary Haig held a news con- 
ference at the Department of State on Oc- 
tober?, 198 1. 1 

Let me begin first by repeating our 
shock and dismay at the tragic assassi- 
nation of President Sadat yesterday. 
President Sadat understood the quest 
for peace and security demanded perse- 
verence and courage. We must take 
from this terrible event a fresh deter- 
mination to complete his work. 

Our pursuit of peace in the Middle 
East must continue to be guided by the 
Camp David accords. The Treaty of 
Peace Between Egypt and Israel is a 
lasting achievement in the interests of 
both parties and of the entire region. 
The autonomy negotiations, an equal 
part of the accords, will receive our con- 
tinuing and active participation in the 
days ahead. We are full partners in this 
process. 

Efforts to achieve peace must not ig- 
nore the threats from forces inside and 
outside the region, forces whose in- 
terests are antagonistic to the inde- 
pendence of every country in the area. 
Accordingly, the United States is 
pledged to work with Egypt and with 
our other friends in the region to build a 
structure of relationships which will pro- 
tect and advance our mutual interests in 
the Middle East. 

We have been greatly heartened to 
hear from Vice President of Egypt 
Mubarak and the Egyptian Government 
that Egypt shares our views about the 
importance of continuing the work 
begun by President Sadat. The United 
States looks forward to further coopera- 
tion with Egypt as we strive to achieve 
the peace and security in that area. 



I think a brief reflection on Presi- 
dent Sadat is in order, and perhaps the 
statement made by him in 1975 to Peter 
Jennings of ABC News would be bene- 
ficial to reflect on. He said at that time 
that he would like his tombstone to read: 
"He has lived for peace, and he has died 
for principles." 

I think the essence of what I have 
just touched upon in the formal state- 
ment should be emphasized in several 
key areas as we face the period ahead 
without this gigantic personality at our 
side. 

First, it is clear that the successor 
government in Egypt will be one 
marked by continuity, and we were 
greatly assured yesterday by a reitera- 
tion of the Vice President that Egypt's 
domestic and foreign policy will be one 
of a continuation of the Sadat legacy. 

Second, we are encouraged that the 
constitutional process in Egypt is now 
underway in strict accordance with that 
constitution. I understand that shortly 
the People's Assembly will select Vice 
President Mubarak as the nominee to 
succeed President Sadat. On Monday 
there will be a referendum designed to 
approve this selection, and by Wednes- 
day the People's Assembly will deal with 
it. 

I think one of the questions that is 
on everyone's mind is whether or not 
this tragic event was the consequence of 
a broadly based coup d'etat or rather the 
actions of a more narrowly based fanati- 
cal group within Egypt proper. Thus far 
the intelligence that we have available to 
this government, confirmed by that 
available to our friends in Egypt, sug- 
gests that it was an assassination, not a 
coup d'etat, and that the base of this 



assassination was a group of fundamejl 
talists, religious fanatics, centered not | 
exclusively but primarily in certain 
military units. 

I think it's important to emphasize : 
at the outset the determination of this 
government, of President Reagan 
especially, to continue to build on the 
friendship and the cordial relationships 
between ourselves and the Governmenl 
and the people of Egypt, the most 
populous nation in the Arab world. In 
this regard, I think I can commit this 
government, with the approval of Presi 
dent Reagan this morning, to a firm 
dedication of continued American sup- 
port to the Government and the people 1 
of Egypt. We would view with great j 
concern at this juncture any efforts by 
external powers to manipulate the trag 
events of the last 24 hours. 

I think it's also important to bear ii 
mind that, while there is a backdrop of 
propaganda from certain capitals in tht 
region and elsewhere, that it is the U.S 
view that the period ahead is one whicl 
must be a reflection, an elucidation of 
the reflection, of the desires of the 
people of Egypt, and we intend to be a 
strong partner with Egypt in insisting 
on that reality. 

Q. Opponents of the AW ACS [air 
borne warning and control system] 
sale to Saudi Arabia are saying the 
assassination of Sadat underscores tl 
instability in the Middle East and thi 
danger that the AWACS could fall in 
to unfriendly hands if we go ahead 
with the sale. How do you respond tt 
this? 

A. First, I think in the context of i 
what I've already just said, such events 
such tragedies, are not unique to Egyp 
or to the states of the Middle East. Ora 
would only think back in our own histoi 
here in the United States where an 
American President has been assassi- 
nated, American officials have been 
assassinated, President Ford experi- 
enced two attempts on his life, and moi 
recently President Reagan has experi- 
enced a similar attempt. 

I think it is more important that wi 
as Americans reflect on the growing 
lawlessness and terrorism which is 
characterizing the international environ 
ment today. As I have said in the past 
and would repeat again today, while 
there is no direct link thus far that 
would suggest external orchestration of 
yesterday's tragic events, nations which 
foster historic change by force, blood- 
shed, and terrorism contribute to an en- 
vironment of increasing lawlessness in- 



66 



Department of State Bull 



- 



Middle East 



ionally in all of our countries. I 
it would be a tragic distortion to 
3t that what occurred in Egypt 
day is a unique aspect of the Arab 

Iith respect to your specific ques- 
ld the sale of the AWACS, I think 
know that President Sadat has 
n out vigorously as recently as a 
ago on the urgency and desira- 
Df proceeding with this sale as a 
^station that the United States 
bove all, the American President 
induct a coherent foreign policy, 
ere we to draw back in the wake 
terday's tragedy from proceeding 
program which we have very 
lly considered to be in the best in- 
3 of the U.S. Government and fun- 
ltal to the successful conduct of 
reign policy in the region, we 
make a mockery of what all Presi- 
iadat stood for. It would suggest 
iy who will be measuring our at- 
5 and policies in the days ahead 
quivocation and uncertainty have 
>e a characteristic American style 
conduct of its foreign policy, and 
3 not going to do that. We believe 
intinuing with this project is more 
tant than ever. 

Beyond showing the verbal 
g rt which you have just given, 
I is the United States prepared to 
tl protect the present Egyptian 
B tutional government if it 
( les threatened? 

I.. I don't think the climate today— 
I a matter of fact, any climate— is 
Bred by indulging in belligerent or 
I ening language. Let me just em- 
I e again that we feel that the 
I ahead in Egypt should be shaped 
I desires of the Egyptian Govern- 
I ind the Egyptian people. 

I . You suggest that one tribute 
1 he United States could pay 
4 1 be to continue the work of 
jient Sadat. One of his last unful- 
I projects was to set up a direct 
Irue between the Palestinians and 
k her parties to the peace process. 
.1 United States considering 
ling such a dialogue? 

{.. 1 think the longstanding U.S. 
Dn on that question needs no fur- 
laboration. All the parties con- 
i understand thoroughly that long- 
ing policy, and I see no change in it 
period ahead. 

do want to emphasize, however, 
vhat President Sadat was par- 
rly concerned with was the 
ssful completion of the Camp David 



accords in which the return of the Sinai, 
scheduled for next April, and the suc- 
cessful completion of the autonomy 
talks — the new rounds of which have 
already begun with some encouraging 
progress — become the focal point of 
American diplomacy in the Middle East 
in the near term; and the successful 
completion of these would be, in my 
view, the greatest testimony to the 
historic contributions toward peace and 
stability made by President Sadat. 

Q. One of President Sadat's last 
actions was sending Mr. Mubarak here 



last weekend, as I understand it, to 
urge greater U.S. support to countries 
like the Sudan which he felt were 
threatened by Libyan forces operating 
out of Chad. In your opening state- 
ment you seemed to elude to other 
countries. Could you give us some 
feeling of your estimate of the situa- 
tion facing the Sudan or what the 
United States is prepared to do about 
helping out that country? 

A. First, let me emphasize that the 
visit here last weekend of Vice President 
Mubarak, at the instructions of Presi- 



Death of Egyptian President Sadat 



President Anwar al-Sadat of Egypt- 
was assassinated in Egypt on October 6, 
1981, while reviewing a military parade. 

Following are statements by Presi- 
dent Reagan and Secretary Haig on Oc- 
tober 6. 



PRESIDENT REAGAN 1 

Today, the people of the United States 
join with the people of Egypt and all 
those who long for a better world in 
mourning the death of Anwar Sadat. 
President Sadat was a courageous man 
whose vision and wisdom brought na- 
tions and people together. 

In a world filled with hatred, he was 
a man of hope. In a world trapped in the 
animosities of the past, he was a man of 
foresight, a man who sought to improve 
a world tormented by malice and pet- 
tiness. 

As an Egyptian patriot, he helped 
create the revolutionary movement that 
freed his nation. As a political leader, he 
sought to free his people from hatred 
and war. And as a soldier, he was 
unafraid to fight. But most important, 
he was a humanitarian, unafraid to 
make peace. His courage and skill 
reaped a harvest of life for his nation 
and for the world. 

Anwar Sadat was admired and loved 
by the people of America. His death 
today — an act of infamy, cowardly in- 
famy — fills us with horror. 

America has lost a close friend; the 
world has lost a great statesman, and 
mankind has lost a champion of peace. 

Nancy and I feel that we have lost a 
close and dear friend and we send our 
heartfelt sympathy to Mrs. Sadat, to his 
children, who were here such a short 
time ago. 



SECRETARY HAIG- 

The death of President Anwar Sadat of 
Egypt grieves me deeply, as it does all 
Americans. His assassination closes a 
unique career, marked by a blend of 
courage and vision. At this tragic mo- 
ment, let us remember the principles for 
which he gave his life. 

Anwar Sadat's vision was rooted in 
a profound sense of reality. He saw that 
the security and progress of both Egypt 
and the Middle East depended on peace. 
He believed that it was possible, in the 
context of peace, to add a new and con- 
structive chapter to Egypt's long history 
and civilization. It was this sense of 
civilization that guided his historic visit 
to Jerusalem and the achievement of the 
Camp David accords. 

The quest for a comprehensive 
peace, along with the modernization of 
Egypt, became the cornerstones of his 
policy. His tenacious pursuit of peace, so 
much in the interest of Egypt and the 
entire area, won him the support and 
admiration of much of the world. Anwar 
Sadat stood for creative, dynamic, 
peaceful change. His actions were 
dedicated to a world in which nations 
could settle their disputes without war. 

During this difficult transition 
period, the United States will stand 
firmly by Egypt. We are confident that 
the Egyptian people and their constitu- 
tional process will prevail. But this terri- 
ble event must not disrupt the promise 
of Anwar Sadat's historic achievements. 
The best monument to his memory will 
be the completion of his noble work. Let 
us dedicate ourselves anew to the task 
of peace. 



'White House press release. 
2 Press release 338. ■ 



nber1981 



67 



Middle East 



dent Sadat, touched upon a wide range 
of current Middle Eastern problems. 
They involved further emphasis on the 
AWACS sale which we just talked about 
and the significance and importance of 
that. They involved a discussion of the 
sense of urgency felt in Egypt for prog- 
ress in the peace process within the 
Camp David framework and a reitera- 
tion of adherence to that framework. 
They involved also expressions of con- 
cern about the area you mentioned, but 
they were not the exclusive preoccupa- 
tion of our discussions over the week- 
end. 

It is clear that recent events suggest 
that the Libyan proclivity for engaging 
itself outside of its border to effect 
historic change — invasion of Chad, some 
indications of buildup along the border 
of Sudan, and some clear evidence of ac- 
tivities within Sudan are all matters of 
great concern not only to the Govern- 
ment of Egypt but to this government 
as well. We are reviewing the situation 
intensely in the light of our discussions 
this past weekend and making our own 
assessment of the dangers associated 
with this kind of Libyan activity. But I 
have nothing concrete to add to that up- 
date. 

Q. There are reports in this 
building that you are not only going to 
Cairo for the funeral of President 
Sadat but that also you personally are 
going on to several other countries in 
the Mideast. Could you tell us where 
you plan to go and what you plan to 
do while you're there? 

A. First, let me say with respect to 
the delegation for President Sadat's 
funeral, almost simultaneously with the 
beginning of this press conference the 
White House announced the composition 
of that delegation, and it is true that I 
will go with that delegation and head it 
up as the senior representative from the 
executive branch. 

We will also include the appropriate 
highest level representation from both 
houses of the Congress, both sides of the 
aisle. An unusually distinguished repre- 
sentation from former Presidents Mr. 
Carter, Mr. Ford — and 1 understand 
that he has some scheduling problems to 
deal with — and former President Nixon; 
Henry Kissinger; and Mr. Sol Linowitz; 
all of whom over past history have been 
intimately involved with and wen 
close associates and collaborators with 
President Sadat, 

With respect to any add-on ac- 
tivities, it's too early to say. We're look- 
ing at such possibilities to include my 
staying on in Egypt for a brief period to 



conduct discussions with what will clear- 
ly be the new government and to re- 
assure that government of our continu- 
ing support and our full partnership in 
the peace process. It may include some 
additional stops as well, but I would 
prefer to hold up on that. 

Q. I wonder if you could address 
yourself to an observation made by 
one of your predecessors. Dr. Kissin- 
ger, who you just said would be one of 
the members going on the trip. He 
said in an interview, and I'm quoting: 
"Had the United States supported 
moves against radicals in the area, 
were it known in the area that radi- 
cals get punished and moderates get 
rewarded, then Anwar Sadat would be 
alive tonight," and for whatever impli- 
cations you read into that insofar as 
the foreign policy of the United States 
is concerned? 

A. I think this goes right to the 
heart of some of the statements I have 
made, starting with the inauguration 
period about the dreadful plague of in- 
ternational terrorism and what has thus 
far been the inability of the international 
community to deal effectively with this 
scourge. And to the degree that we have 
been ineffective, to that degree we en- 
courage those forces in the world who 
seek what will be inevitable and even 
desirable historic change by rule of 
force, by bloodshed, by terrorism, in- 
stead of by rule of law. 

At the recent summit of the seven in 
Ottawa, the United States actively 
sought and succeeded in achieving a 
series of findings with respect to inter- 
national terrorism. We are now actively 
engaged in implementing the commit- 
ments made by those governments to 
deal with international terrorism, hijack- 
ing, and the like. I would say it behooves 
all serious, civilized participants in the 
international community to work collec- 
tively together, more effectively than we 
have in the past. 

Q. Can you offer anything under 
the headline of U.S. supporting moves 
against radicals in the area? 

A. I think without dotting a lot of 
"i's" and crossing a lot of "t's," it could 
be troublesome diplomatically and less 
than prudent in the conduct of sound 
diplomacy. One could reflect back on a 
number of recent historic instances in 
which it appeared that our failure to 
react effectively could make a contribu- 
tion to a process of encouraging radical 
tactics and policies. 



i, 



I think it's very important that v 
strip American foreign policy of thatju 
proclivity, whether it be a result of a 
lack of unity within the executive an 
the legislative branches to formulate 
conduct effective foreign policy whicl 
mains the primary responsibility of t 
President of the United States in cor 
sulfation with the American Congres 

Q. Considering the Palestine 
Liberation Organization's (PLO) sti 
ment in Beirut yesterday that "We 
salute the hand that fired the bulle 
as well as the long record of PLO t 
rorism, why is the Reagan Admini- 
stration allowing the PLO to conti! 
maintaining an office at 1326 18th 
Street here in Washington? 

A. I think, in the first place, we 
know the term PLO encompasses a 
number of very varied attitudes with 
respect to the peace process and inte 
national civility, and we have never 
treated that movement as a united, 
totally synchronized operation. 

Secondly, there were equally dist 
ing protestations from Tripoli yesten 
In fact, if one would go through the 
news clippings, the drum beat was 
astonishingly active and prolific and I 
tentious and outrageous and escalate 
in character. 

Q. We have no embassy from 
Libya. We have no office from Li by 

A. No, and, as a matter of fact, 
recently took action to close it, 

Q. Why is the PLO considered 
better than Libya? 

A. I think I answered the questin 
You have to know who you encompa 
in PLO. 

Q. A number of your predecess 
and commentators have said that 
unless the United States now takes 
much more visible and active role i 
the negotiating process that Egypt 
will come under pressure from its 
Arab neighbors to rejoin the fold, s 
to speak — to rejoin the more radica 
Arab camp — and that Israel will fe» 
far more reticent about making any 
concessions to a new government. ' 
said that Camp David negotiations 
will receive our continuing and acti 
participation. 

A. Yes. 

Q. But will the United States, ]j 
personally, in the next several monl 
take a much more visible, more acti 
more aggressive role in seeing that 
those negotiations come to a conclu 






68 



Department of State Bulk I 



Middle East 



j A. I don't like to characterize our 
Inership and our role as more active, 
■ressive, or whatever. I think the 
racterization of whatever our role 
Bbe and should be would be a direct 
[sure of our assessment as to 
Bther, whatever that role is, it is go- 
Ito make a more positive contribution 
lie process. 

■For example, let me assure you that 
liave taken a very active role in the 
lext of the recent resumption of the 
Inomy talks, in the context of the 
Iblishment of an agenda with work 
|llines within that framework. With 
ect to what our public profile should 
i the period ahead, that will be a 
t outgrowth of the assessment I 
tioned. After all, we don't just 
me a public posture for posturing 
but rather to make a positive con- 
ition to the process, and that will be 
ultimate criteria. 

Q. The relationship that the 
ited States has had with President 

at has sometimes been based on 
ciing more than a handshake; not 
iything that has happened between 
itwo countries has been actually 
r.ten down. To what extent do you 
I k that his departure might make it 
it e difficult for you to establish the 
;i tegic consensus that you have been 
»uing in the Middle East? I'm think- 
% particularly of the American use 
Eases and facilities at Ras Banas 
? other places. 

. A. Please, again, let me emphasize 
uilmost the 130th time that we're not 
s ing a strategic consensus. We are 
s ing to recognize that such a consen- 
1 has developed in recent years as a 
>: .equence of Soviet direct or indirect 
: -ity in the region. If you want me to 
t those events, I can do it. The litany 
lear: Angola, Ethiopia, Southern 
I len, Northern Yemen, Afghanistan 
ifghanistan II. All of these activities 
1 ? heightened the concern of the 
j ers of the Arab world as they see a 
I phase of what one might character- 
its Soviet imperialism. 
I It is vitally important that American 
|.'y not ignore that reality, but at- 
pt to shape our own policies in view 
I and that is the effort we're about 
i respect to the strategic consensus, 
sorry I have to do that, but I con- 
itly find some confusion about that. 

Q. The other part of the question. 

A. The other part of the question is 
I think whenever an event with the 
sequences and impact of the event 



we have just witnessed occurs, doubts, 
uncertainties, unsettlements result. That 
underlies the fundamental importance of 
reiterating, reverifying by actions and 
words, America's objectives and 
America's policies in the region. 

That is not unrelated, as I pointed 
out a few moments ago, to this current 
AWACS sale. It is not unrelated to our 
commitment to continue on with the 
Camp David accords and whatever is 
best suited to bring a successful comple- 
tion of those accords in the days ahead, 
and we intend to do so. 

Q. In your opening statement, you 
expressed great concern, said the 
United States would have great con- 
cern about any efforts by any external 
powers to manipulate the situation in 
Egypt. Do you see any indication that 
there are such efforts underway, or 
about to be underway? It sounds like a 
message to Moscow. Have you com- 
municated this to Moscow? 

A. No, I don't want you to read 
anything untoward into what I said. I 
think we have taken similar stances in 
the past in other locations and regions. 
We have no evidence of external manip- 
ulation of events. There is considerable 
evidence, historically, of activities spon- 
sored by Libya in Egypt, but not in this 
particular instance. We have as yet un- 
covered no evidence of their involve- 
ment. But I think the level of their 
rhetoric, as witnessed yesterday, and 
the character of that rhetoric would give 
one pause. And we would hope that they 
would not be tempted; they certainly are 
in external propaganda terms. They've 
already succumbed to that temptation. 

Q. You mentioned "external" 
powers. I presume you would not con- 
sider Libya an external power to the 
region. Are you talking about the Rus- 
sians— 

A. I'm talking about external to 
Egypt. I think the Soviet Union knows 
our position, our friendship, and our 
relationship with Egypt. They know we 
consider that relationship absolutely 
vital to our interests in the region, and 
that we would treat it accordingly. 

Q. You didn't mention that any 
women were going on this funeral 
delegation. 

A. Oh, golly. 

Q. Women are very interested in 
peace, and also Mrs. Sadat has been a 
world leader for human rights and 
peace. 



A. I agree with that. I think our 
problem will be simply how much space 
we have, and whether you make an ex- 
ception — 

Q. Oh, come on, sir, you have 
enough space for the women. 

A. In my heart, yes, always. 
[Laughter] 

Q. I mean about the delegation. 

Q. To follow up [the] question on 
the AWACS, Senator Baker has sug- 
gested that there be a moratorium on 
consideration of the AWACS for a 
time. 

A. No, not at all. 

Q. Do you intend to let the clock 
run to October— 

A. You've misquoted Senator 
Baker, and the record should be clear 
here. What he was talking about was 
the pending vote in the Senate Foreign 
Relations Committee scheduled for 
Wednesday of this week and the 
desirability of slipping that a few days. 
It is in no way a suggestion by Senator 
Baker that some of the other sugges- 
tions made by opponents to the AWACS 
sale that it be withdrawn or suspended 
for 60 days or taken off the agenda of 
congressional action. I spoke to Senator 
Baker about that a very few moments 
ago, so I know of what I speak. 

Incidentally, I'm sorry to have been 
so flippant about the question on 
women. I really haven't got the answer 
on it yet. I will have to assess it in the 
period ahead and see if we can, in fact, 
do it. I know my own wife has become 
close to Mrs. Sadat in every sense of the 
word, and I know that is also true of 
Senator Percy's wife, for example, who 
has been very close to Mrs. Sadat. 

Q. You would agree that we have 
some qualified women who should go? 

A. We have qualified women. 
Period. [Laughter] 

Q. Did the U.S. Government have 
any kind of advance intelligence infor- 
mation that Mr. Sadat's life might be 
in jeopardy, and did the U.S. Govern- 
ment provide any intelligence informa- 
tion of that sort to the Egyptian 
Government? 

A. I would never make it a habit of 
disclosing publicly those kinds of com- 
munications, had there been any. But I 
don't have to tell you that President 
Sadat was on the "radical hit list" and 
has been ever since the initial days of 
Camp David — and perhaps even before 
then. 



ember 1981 



69 



Middle East 



Q. Did we have any kind of con- 
crete information, though, to impart 
to the Egyptians — 

A. I think that clearly the Egyptian 
Government did. I can't speak for them, 
but they took a number of actions in re- 
cent weeks which confirmed that, surely, 
they had some alarming information in 
that regard and perhaps more than that. 

Q. As you know, Colonel Qadhafi 
was in Aden recently, and they signed 
an agreement. They also set up this 
so-called democratic front in North 
Yemen and reportedly are agitating 
about a half million Yemenis in Saudi 
Arabia. How seriously do you consider 
this Yemeni threat to the royal family 
in Saudi Arabia? 

A. We don't look at it exclusively as 
a threat to the royal family; we look at 
it as a threat to the Government of 
Saudi Arabia and the people of Saudi 
Arabia. We have had recent experience 
which certainly gives us cause for con- 
cern, and that was the earlier effort — I 
think 2 years ago — to overthrow the 
government in Northern Yemen by the 
use of Southern Yemen forces and proxy 
forces shipped over from Ethiopia — 
Cubans and perhaps Ethiopians as well. 

We saw a very heavy hand of Soviet 
activity in the original overthrow of the 
Southern Yemen regime before that 
time, and so we watch with great care, 
both bilaterally in our dealings with 
Northern Yemen and multilaterally in 
our dealings with Saudi Arabia, day-to- 
day or hour-by-hour events in Northern 
Yemen, and we view them with consid- 
erable concern. 

Q. How important is it now for 
the April 1982 withdrawal of Israel 
from the Sinai to come off on time? 
And might it now be more important, 
in some ways, for this new Egyptian 
leadership to try to improve its rela- 
tionship with its Arab neighbors, 
which might mean a delay in the Camp 
David peace process? 

A. I think the answer to your ques- 
tion is that yesterday's tragedy makes a 
successful completion on schedule of the 
Camp David accords more, not less, im- 
portant. That is not to say that we 
would not favor, or would be opposed to, 
a strengthening and broadening of 
Egyptian relationships with the other 
Arab states. We think this will be a con- 
sequence of the successful conclusion of 
Camp David. 



Q. The only movement in the en- 
tire Middle East that is tied to Muslim 
fundamentalism — there has been trou- 
ble recently in Tunisia, Algeria, and 
we know that played a part in what 
happened to President Sadat yester- 
day—simply by stating that the United 
States is going to be firm against ter- 
rorism and line up with the regimes in 
the Middle East. How do you feel that 
will, in any way, deal with the funda- 
mental question of what's going on in 
the Muslim world, and don't you think 
that it might be counterproductive? 

A. There are always, in such com- 
plex situations, a host of contradictions. 
That's the unfortunate burden of those 
of us who have to conduct foreign 
affairs: They are replete with contradic- 
tions. The achievement of one more 
desirable goal frequently clashes im- 
mediately against a perhaps somewhat 
less desirable goal, and it's the assess- 
ment of foreign policy to try to deter- 
mine which is the more important. 

I think the overall trend of inter- 
national terrorism, the danger it poses 
for all free nations, demands a more 
concerted, collective international effort 
with effective safeguards and meaning- 
ful sanctionary teeth to deal with it. 
That means that when an aircraft is hi- 
jacked or an assassination attempt oc- 
curs, the perpetrators be dealt with in a 
more effective way than heretofore. 

Q. Could I try once more one 
question that was asked before? It 
seems one of the most dangerous 
aspects of what is taking place in that 
part of the world today is the possi- 
bility of a Libyan invasion of the 
Sudan. Once more, could you give us 
your estimate of what that danger is 
and what our reaction would be if it 
takes place? 

A. Again, I don't make it a habit of 
laying out the contingencies which will 
always be decided by the President at 
the time, based on his assessment of all 
the factors associated with it. I also 
don't want to hype the suggestion that a 
Libyan invasion of Sudan is imminent. I 
would be more concerned about internal 
mischiefmaking by Libya in Sudan prop- 
er as the most imminent danger, and 
there has been some activity assessed 
already in that direction. 

Q. Could I come back again to 
[the] question about the April target 
date for Israeli withdrawal from the 
Sinai and its linkage, if any— or to 
what extent — to the autonomy talks. 
It seems to me that there is a political 



\m 



relationship between these two. An* 
wonder if it is practical for the new 
Egyptian Government, in the contes 
of all the burdens that are going to 
on it, to move substantially on the 
autonomy talks in a timeframe in 
which the Israelis will find it accepl 
able to withdraw from the Sinai. 

How do you see the linkage? Is 
there a linkage? Can the one occur 
without the other? More importantl; 
can the withdrawal from the Sinai o 
cur without jiggling progress on the 
autonomy talks? 

A. Of course, there is a linkage; i' 
goes without question. I don't mean th 
it is a rigid linkage in which simultane 
is rigidly bound. That is our objective, 
would hope that the successor goverm 
ment in Egypt would, for the very 
reasons I've already touched upon hen 
this morning, join our assessment thai 
puts a greater urgency for simultaneoi 
completion of autonomy talks by the j 
time of the withdrawal scenario in Ap 

I think it would be very foolish am 
self-defeating to put preconditions wit 
respect to the two, and we have avoid 
that always, and we would continue t( 
But I was very encouraged, and rema 
encouraged, that the Egyptian Vice 
President committed the successor 
government in his speech yesterday oi 
Egyptian television to a continuation ij 
the domestic and foreign policies of 
President Sadat and especially the roi 
toward peace. 

Q. Given the needs of the Unite 
States to reassure its allies in this 
region, can you tell us why neither i 
President nor the Vice President is 
going to attend President Sadat's 
funeral? 

A. I don't presume to speak for tlJ 
President on that. I think he's perfect 
capable of doing so himself, but there 
are a host of reasons which shouldn't i 
quire unusual elaboration here. We celt 
tainly have an extremely and unusua 
high-level delegation going to go. 1 thi 
recent events in this country and in 
Egypt make a contribution to the Pres 
dent's decision on this. I can't speak fO' 
him. 

I think there's also the matter of I 
having to do some business which will 
require a longer period at a time when 
our own plate here at home is very, vj 
full with AW ACS and other legislative 
matters, so I think that's enough said| 
the subject. 

Now, I again remain just appalled! 
that I was so lethargic and so overawe 
by your question that I forgot to point 



70 



Department of State Bull 



• 



Middle East 



lo you that our U.N. Ambassador 
|e Kirkpatrick will be on the dele- 
m to Egypt. [Laughter.] 

Q. You said earlier on here that 
e was no direct involvement or 
Libyan participation in this plot, 
he Egyptians share that view, and 
ou believe the analysis by some 
»le in town yesterday who said 
, if there is any Libyan involve- 
t, they suspect that there could be 
e sort of Egyptian retaliation 
nst Qadhafi? 

A. It would be highly inappropriate 
ne to make prognostications about 
reign Egypt's scenarios for dealing 

certain contingencies. I think 
yone knows — and the Egyptians 

reiterated in recent weeks very 
•ly that they have certain obligations 
immittal terms to the Government 
idan and that they intend to meet 
s obligations. 

Q. I'm not talking about Sudan. 

:alking about the possibility that 
Itnafi is behind this in some way 
Mthat Egypt might be compelled to 
lliate. 

! A. We have no evidence that he is, 
i would be folly to the height for me 
jneculate about what they will do if 
lere. 

Q. Do the Egyptians share that 
i • that there is no evidence? 

A. I think as of the latest reading I 
I that they are pretty close to our 
fi assessment of the situation. It 
n n't mean it won't change in the 
I k1 ahead. As you know, some of the 
n etrators have been incarcerated and 
livailable for interrogation, which is 
|i rway. 

Q. Looking ahead, given that Mr. 
[lit is no longer with us, do you 
||k this fact will make the Saudi 
l.ionship more important to the 

!ed States in the years ahead? Has 
been given any thought? 

I A. Absolutely. A great deal of 
Ight. There's no question about it. 
dtally important that the United 
es is able to deal effectively with the 
erate Arab regimes in an atmo- 
•re of confidence and mutual trust, 
/itally important for the peace proc- 
for the stability of the region, and 
le long-term interest of Israel. 

Q. Has it made the Saudi relation- 
more important in your view? 

A. Of course. 



Q. To follow up on a question 
earlier, you said you thought that 
there was some alarming information 
gathered by Egyptian intelligence in 
recent weeks concerning Mr. Sadat's 
comings and goings. Can you 
elaborate on that? 

A. Mr. Sadat's comings and goings? 

Q. Yes. You said in the followup 
to a question over here on the side 
that you had — you thought the Egyp- 
tians had some alarming information 
about some internal affairs. 

A. I think they had evidence of plot- 
ting by religious fanatic groups. Perhaps 
that was a contributor to the roundup 
that President Sadat instituted some 
weeks ago. Perhaps yesterday's events 
were further intensified as a result of 
that roundup, which itself was an effort 



by President Sadat, as 1 understand it, 
to minimize sectarian divisions within 
Egypt. 

Q. Did President Sadat in his re- 
cent visit or Vice President Mubarak 
in his recent visit raise with you the 
prospect of Egyptian military action in 
Libya? And if they did what was your 
response? 

A. The answer to your question is 
that I wouldn't tell you if they had. I 
think that would be a terrible breach of 
the kind of relationship we must have 
with our friends. But because I haven't 
answered, it should not heighten your 
sense of alarm about that subject. 



'Press release 339. 



Visit of Israeli Prime Minister Begin 



Israeli Prime Minister Menahem 
Begin made an official visit to the 
United States September 9-15, 1981. 
While in Washington, D.C. (Sept. 9-11), 
he met with President Reagan and other 
government officials. Following are 
remarks made at the welcoming 
ceremony on September 9 and remarks 
made on Prime Minister Begins depar- 
ture from the White House on September 
10. 1 ' 



WELCOMING CEREMONY, 
SEPT. 9, 198P 

President Reagan 

On behalf of the American people, 
Nancy and I are honored and delighted 
to welcome you and all those accompa- 
nying you. 

We're proud to stand beside you this 
morning, joining a tradition of hospitali- 
ty for Israel observed by our Presidents 
for more than three decades. Your visit 
is testimony to the warm friendships, 
mutual respect, and shared values that 
bind our people. Today and tomorrow, 
we'll have an opportunity to meet, to 
come to know each other, and to discuss 
in detail the vital issues of peace and 
security that concern both our countries. 

I welcome this chance to further 
strengthen the unbreakable ties between 
the United States and Israel and to 
assure you of our commitment to Israel's 
security and well-being. 



Israel and America may be 
thousands of miles apart, but we are 
philosophical neighbors sharing a strong 
commitment to democracy and the rule 
of law. What we hold in common are the 
bonds of trust and friendship — qualities 
that in our eyes make Israel a great na- 
tion. No people have fought longer, 
struggled harder, or sacrificed more 
than yours in order to survive, to grow, 
and to live in freedom. 

The United States and Israel share 
similar beginnings as nations of im- 
migrants, yearning to live in freedom 
and to fulfill the dreams of our 
forefathers. We have both sought to 
establish societies of law, to live in 
peace, and to develop the full potential 
of our lands. We share a devotion to 
democratic institutions, responsible to 
the wills of our citizens. Our peoples em- 
brace common ideals of self- 
improvement through hard work and in- 
dividual initiative. Together, we seek 
peace for all people. In partnership, 
we're determined to defend liberty and 
safeguard the security of our citizens. 
We know Israelis live in constant peril. 
But Israel will have our help. It will re- 
main strong and secure, and its special 
character of spirit, genius, and faith will 
prevail. 

The prophet Ezekiel spoke of a new 
age — when land that was desolate has 
become like the Garden of Eden and 
waste and ruined cities are now in- 
habited. We saw how miraculously you 
transformed and made the desert bloom. 



!mber1981 



71 



Middle East 




We see how, despite dangers everyday, 
your families continue working together 
to build a better place to live and to 
prosper in peace and freedom. 

Our dream, our challenge, and, yes, 
our mission is to make the golden age of 
peace, prosperity, and brotherhood a liv- 
ing reality in all countries of the Middle 
East. Let us remember that whether we 
be Christian or Jew or Moslem, we are 
all children of Abraham, we are all 
children of the same God. 

You come at a time of testing and of 
hope. The challenges we face are great 
with the forces of aggression, 
lawlessness, and tyranny intent on ex- 
ploiting weakness. They seek to undo 
the work of generations of our people, 
to put out a light that we've been tend- 
ing for these past 6,000 years. But we 
understand their designs, and we're 
determined to oppose them. Working 
with all our friends in the Middle East, 
we seek to reinforce the security of the 
entire region. As we consult about these 
problems, rest assured that the security 
of Israel is a principal objective of this 
Administration and that we regard 
Israel as an ally in our search for 
regional stability. 

Equally important in our discussions 
is the commitment of our two countries 
to advance the cause of peace. Your 
strong leadership, great imagination, 
and skilled statesmanship have been in- 
dispensable in reaching the milestones of 



the past few years on the road toward a 
just and durable peace in the Middle 
East. 

You and the members of your coali- 
tion have earned our respect and ad- 
miration. Many cynics said Israel would 
never make peace with Egypt, but you 
did. Then they said you would not honor 
your commitment to return the Sinai to 
Egypt, but you have. Now they say you 
cannot go forward to work out a just 
and durable peace with all your 
neighbors; we know you will. 

I look forward to receiving the 
benefit of your views and advice on the 
great tasks that remain before us. I'm 
confident that the United States and 
Israel will continue their close partner- 
ship as difficult negotiations toward 
peace are pursued. Let me also thank 
you for helping our special Ambassador 
Philip Habib, to arrange a cessation of 
hostilities across your border with 
Lebanon — still another considered step 
for peace and one well taken. 

I know your entire life has been 
dedicated to security and the well-being 
of your people. It wasn't always easy. 
From your earliest days you were ac- 
quainted with hunger and sorrow, but as 
you've written, you rarely wept. On one 
occasion, you did — the night when your 
beloved State of Israel was proclaimed. 
You cried that night, you said, because 
"truly there are tears of salvation as 
well as tears of grief." 

With the help of God, and us work- 
ing together, perhaps one day for all the 



people in the Middle East, there will be 
no more tears of grief, only tears of I 
salvation. 

Shalom, shalom: to him that is fan 
off and to him that is near. And again.' 
Mr. Prime Minister, welcome to 
America. 

Prime Minister Begin 

My colleagues and I are grateful to you 
and to Mrs. Reagan for your kind inviti 
tion, for having given us the opportunil 
to discuss with you and your advisers ii 
ternational problems, bilateral issues, 
the danger to freedom resulting from 
Soviet expansionist policy in our region 
and its periphery and elsewhere, and tl 
defense of human liberty, which is the 
essence of our lives, demotive of our e# 
forts, the reason of our labors. 

Our generation lived through two 
World Wars, with all the sacrifices, the 
casualties, the misery involved. But the 
two wars also created and left after f 
them, regrettably, two illusions. In the 
early 1920s, the saying went around th 
world, "that was the war to end all the 
wars." It was not so to be. Only 25 yea 
later another World War broke out, thr 
most horrifying of all in the annals of 
mankind, not only with the sacrifices ir 
tens of millions of human beings but all 
with atrocities unheard of in history. 
Ultimately, mankind crushed the darke 
tyranny which ever arose to enslave th 
human soul, and then people believed 
that it was the end of tyranny of man 
over man. It was not to be. 

After May 1945, there were 56 so- 
called local wars in a period of 36 year 
alone. In other words, blood-letting am 
enslavement are going on. Country aft 
country is being taken over by totali- 
tarianism. In nearly 8 years, eight com 
tries were so taken over, either by pro: 
or directly. So it is obvious that liberty 
is in danger, and all free women and 
men should stand together to defend it 
and to assure its future for all genera- 
tions to come. 

Israel is a small country, but a free 
one. Its democracy was proved time an 
time again — true democracy. It is an ir 
tegral part of the free world. It is a 
faithful and, through each democratic 
regime, a stable ally of the United 
States. We shall stand together, and 
Israel will give its share in defending 
human liberty. 

Out of those 56 local wars, five wer 
thrust upon little Israel since its incep- 
tion. We waged them out of necessity t> 
defend our people and to save its ex- 
istence and to sustain our independence 



E| 



72 



Middle East 



is the simple reason why we not on- 
nt peace, but we yearn for peace. 
therefore, as you rightly said, at a 
of great sacrifices and admittedly 
taken — those are very serious 
—we made peace. We signed a 

treaty on this very lawn with our 
em neighbor, but we strive to sign 

treaties and make peace forever 

our borders with all our neigh- 
And with God's help, this noble 
vill be achieved, too. 
hank you for your heartwarming 
rks about my people and my coun- 
id touching words about my life, 
i is only one of the uncountable 
ands and milllions who have suf- 

and fought and resisted and saw, 
a long night, the rise of the Sun, 
ay. I am one of them because this 

generation. But your appreciation 
r motives, our efforts, our 
'ices is very dear to all of us 
ise we see in you not only the 
dent of the United States but also 
efender of freedom throughout the 
I. 

Kay I extend to you on behalf of the 
e and Government of Israel, our in- 
on to come and visit our country 
;s capital, Jerusalem. Then we hope 
•ve shall be able to reciprocate the 
erful hospitality, indeed, in the 

of all Abraham, whom you men- 
d, which was accorded to my col- 
<es and to myself. Be assured the 
<e of Israel will receive you not only 
utmost respect but with deep cor- 



I \RTURE REMARKS, 

IT. 10, 1981 2 

I dent Reagan 

i Mme Minister and I have had 2 
I of friendly and useful and produc- 
I alks. I'm greatly encouraged by the 
lion purpose that I have sensed 
l.ghout our discussions and especial- 
I 'ased by the friendship and com- 
1 candor that have developed be- 
ta us from the very outset of our 

fing- 
'our views, Mr. Prime Minister, 
been invaluable, and your grasp of 
s that concern us is truly im- 
;ive. We've made progress in chart- 
course that we'll be following in 
eace process in the months ahead, 
work together to maintain the 
3 that was concluded between Israel 
3gypt and to build on that peace 
Droaden it. 



The United States stands ready to 
help advance the peace process in any 
way that is useful to the parties con- 
cerned. In our discussions about the 
strategic situation in the Middle East, 
it's only natural that we've found much 
common ground. As friends and as part- 
ners in peace, we share a determination 
to oppose all forces that threaten the 
freedom, integrity, and peace of our na- 
tions. 

The United States will remain com- 
mitted to Israel's security and well- 
being. We work together with you and 
with our friends in the region to counter 
Soviet aggression and to strengthen 
security of all the countries in the area. 

This is the first of what I know will 
be many warm and productive meetings 
between us. I'm delighted to have had 
this opportunity to come to know you 
and to discuss the partnership between 
our two countries. Through our conver- 
sations, I believe we've created new 
bonds of understanding between the 
United States and Israel, renewed and 
strengthened our very special friendship. 

While I know that you are going to 
continue a few days longer, and while 
we part, but you will be here longer, I 
wish you a very pleasant, continued stay 
in the United States and, above all, a 
very safe return to Israel. 

Prime Minister Begin 

I subscribe without any qualification to 
the appreciation of the talks we held in 
Washington with the President and his 
advisers. The American delegation and 
the Israeli delegation spoke with candor, 
in detail. 

All of us made our work well- 
prepared and, therefore, the results can 
really be considered unanimously by 
both the President and his advisers and 
my colleagues and myself as very fruit- 
ful. We draw a distinction — a clear 
distinction— between problems of 
defending our country when it becomes 
necessary and the community of moral 
values and of direct interests between 
the United States and Israel, as far as 
the threat to freedom of many nations in 
the Middle East and elsewhere is con- 
cerned. 

As far as defense of Israel is con- 
cerned, it is our problem. We will never 
ask any nation to send its soldiers to de- 
fend us. Our army will do its duty. We 
hate war. We hate bloodshed. We want 
peace. We gave great sacrifices for the 
sake of peace. We hope to achieve that 
peace with the other neighbors. But if it 
should come at any moment when we 



will have to defend our independence 
and our liberty ami our land, then our 
young people will do so as they did in 
the past, in the spirit of self-sacrifice 
and, I don't hesitate to say, in heroism. 

But, there is another problem in out- 
time: a clear community of interests vis- 
a-vis a clear and present danger to every 
free nation by a totalitarian and an ex- 
pansionist regime. On this issue, we 
work together, we will plan together, we 
will execute those plans together, in 
agreement, for the benefit both of the 
United States and Israel and the free 
world at large. 

We are all grateful to you for the 
wonderful hospitality you accorded to 
us. To you and to your gracious lady, 
Mrs. Reagan, I can only repeat again: 
"We will be awaiting your visit to our 
country and to Jerusalem." With God's 
help you will come. And we shall give 
you the heartiest reception by a people 
who have got so great a respect for you 
as anybody who came to see you, to 
listen to you, to feel your warmth, your 
friendship, your readiness to give 
brotherhood to human beings, can feel. 

I do not say goodbye. I say next 
time, au revoir, in Jerusalem. 



■Texts from Weekly Compilation of 
Presidential Documents of Sept. 14, 1981, 
which also includes toasts made at the state 
dinner on Sept. 9. 

-Made on the South Lawn of the White 
House. ■ 



tmber1981 



73 



Middle East 



Secretary Haig's News Conference 
on Prime Minister Begin's Visit 



Secretary Haig held a news con- 
ference on September 10, 1981, to brief 
news correspondents on President 
Reagan's meetings with Israeli Prime 
Minister Begin. i 

I think as this visit draws to a conclu- 
sion — at least the Washington phases of 
Prime Minister Begin's visit — it would 
serve a useful purpose to summarize 
where we stand as of this afternoon. 
There have been a number of 
discussions — one-on-one between the 
President and the Prime Minister, 
confined-group discussions and larger 
group discussions, discussions with State 
Department officials here yesterday and 
the Prime Minister and his delegation, a 
very private session this morning with 
the President, a larger plenary session 
this morning, discussions with the 
Secretary of the Treasury, discussions 
with the Secretary of Defense. 

All of these discussions, of course, 
are eclipsed by the importance of the 
personal discussions between Prime 
Minister Begin and President Reagan, 
bearing in mind that this is the first 
meeting between the two leaders, both 
of whom are at the early edges of ex- 
tended periods of future responsibility 
for the governing of their two countries 
and peoples. 

In that sense, the personal rapport 
that was established between the two 
leaders, the frankness and cordiality of 
the exchanges between them, the com- 
monality of threat assessment to both 
the United States and Israel certainly 
would have to lead to a value judgment 
that this was an exceptionally successful 
visit in every sense of the word. I think 
both of the leaders have so described it 
in their frequent appearances before the 
press in both toasts and formal state- 
ments. 

In the area of bilateral relationships 
between Israel and the United States, 
this was an important visit. It has been 
a very difficult few months — the situa- 
tion in Lebanon and other events in the 
Middle East — and it has provided a very 
good opportunity for President Reagan 
to reassure Prime Minister Begin of the 
longstanding relationships between our 
two governments which will continue in 
the period ahead to reaffirm unequiv- 
ocally America's continuing support for 
the security and well-being of Israel. 
Associated with that are a number of 
other vexing doubts and questions of 
historic character which were touched 
upon and dispensed with clarity and 
precision. 



74 



One of the very important aspects of 
the meeting involved what I call "re- 
gional discussions of strategic dialogue," 
if you will. This is something which has 
been ongoing to a degree with certain 
interruptions since the outset of this Ad- 
ministration, starting with my visit to 
Israel last spring, at which time we 
discussed the importance of this 
strategic relationship. 

During this visit both leaders had an 
opportunity and their responsible 
Cabinet counterparts also had an oppor- 
tunity to, as what I've described earlier, 
"put some meat on the bones" of this 
strategic relationship. We agreed during 
this visit to launch a series of discus- 
sions immediately which would be de- 
signed to do precisely that and to deal 
with a number of possible areas of col- 
laborative strategic endeavor between 
the two governments. 

We've talked about having Cabinet- 
level groups, primarily under the aegis 
of the Secretary of Defense and [Israeli] 
Minister of Defense Sharon, and the 
respective military authorities, to con- 
sider such things as some limited initial 
prestocking, perhaps in the medical 
area; some discussions of joint exercises 
which would be appropriate in the 
region; and some ongoing strategic plan- 
ning which would focus on external 
threats to the Middle East region, either 
direct threats from the Soviet Union, 
from Soviet proxies, or threats of the in- 
direct kind — terrorism and the like. 
These talks will commence immediately, 
as I've pointed out, with a view toward 
arrriving at some joint conclusions and 
arrangements. 

We also had an opportunity during 
the visit to focus precisely — and this 
focus will continue in the morning when 
we will have a working breakfast with 
the Prime Minister at which I will repre- 
sent the U.S. side — to discuss the peace 
process itself, the autonomy talks. In 
this regard, the visit gave President 
Reagan an opportunity to thank Prime 
Minister Begin for the prompt agree- 
ment that has been arrived at between 
Egypt and Israel to get on with the 
autonomy talks, scheduled now to be 
held in Egypt on September 23-24. 

It also gave President Reagan an op- 
portunity to express his gratitude to 
Prime Minister Begin for the restraint 
under difficult circumstances, evidenced 
by Israeli policy, which has permitted, in 
contribution with other participants, the 



cessation of hostilities along the nort 
ern border of Israel and Lebanon 

It gave us an opportunity to ex- * 
change views on how we should proo 
in the period ahead to strengthen the 
arrangements and to jointly conclude 
that the best interests of both Israel 
the United States and peace and stat 
ty in the region would be a political c 
come. 

Finally, of course — and I know 
you're not interested in this subject- 
there were exchanges of views which 
were both frank and open, extensive, 
serious, and above all cordial with 
respect to the controversial question 
the provision of AWACS [airborne 
warning and control system] or air 
capabilities to Saudi Arabia. In this 
regard, that exchange which took pig 
yesterday — of which much has alreac 
been reported on and discussed — ga\ 
the Israeli delegation and the Prime 
Minister himself an opportunity to e> 
press their concerns about the provis 
of this or any other sophisticated arn 
ment to neighboring Arab states wit] 
which Israel's relationship is uncertai 
and a source of some concern. It gav 
also an opportunity on the U.S. side 
lay out with precision the reasons wl 
we felt that in the long run provision 
these armaments to Saudi Arabia ws 
the best interests of regional stability 
and the objective we have for achievi 
a peace process of longstanding and 
meaningful outcome. 

In that context, it was very clear 
that Prime Minister Begin recognize 
that while he has both the right and 
obligation to express his concerns, tl 
this is a U.S. decision to make. It is ; 
decision to be made in the context oi 
President's obligation for the conduc 
American foreign policy and our owr 
perception of the broader aspects of 
vital interests in the Middle East anc 
do so in collaboration with the Ameri 
Congress. During this visit it was cle 
that the Prime Minister did not inter 
pose himself in this process, and I do 
not believe he intends to do so. Althc 
I can't speak for him, he's been rathe 
explicit on that himself. 

In sum, I want to emphasize agai 
that perhaps the successful character 
this meeting is best underlined by thi 
circumstantial events which have pre 
ed it. The fact that the two leaders h: 
had an opportunity to establish an 
unusual degree of rapport and mutua 
respect and cordiality and convergent 
of thinking augers very, very well for 
the difficult and important period ahe 
with respect to the achievement of on 



: 



il 






Middle East 



ually held ultimate goals in which 
ne Minister Begin has already made 
substantial contributions. I'm talk- 
about an acceptable lasting peace in 
Middle East. 

Q. Is there room for a strategic 
■sensus in the Middle East between 
lUnited States, Israel, and Saudi 
Ibia after you heard Israel's expres- 
ms of concern especially toward 

di Arabia? 

1 A. Again, I think it's awfully impor- 
I when you ask this question to 
»gnize that there is already a 
Itegic consensus in the context of the 
I I tried to describe it, perhaps not as 
I as I might have last spring. I'm 
^ing about a growing recognition 
|ng all the states in the Middle East 
Ion of their increasing vulnerability 
ioviet aggression, whether it be 
let of the kind we see in Afghanistan 
indirect of the kind we've seen in the 
liens, Ethiopia, and other regional 

I think, and I have said, that it is 
m clear that the very fact of this con- 
suls has already made a contribution 
pjhe Lebanon situation where there 
83 been unusual contributions from 
nsual sources which have, after all, 
I =rht us, if nothing else, a period of 
e :e and stability when the prospects 
ft conflict were very, very urgent and 
r linent. One must not look a gift 
c ie in the mouth in that respect. 

With respect to the longer term 
ft icts of your question, this remains to 
E een. I think it's very clear in the 
i ussions we've held with the Israeli 
e gation that they would welcome a 
c nalizaion of relationships with Saudi 
I bia. That does not exist today but 
ti ' the future will tell. 

Q. We understand that Prime 
liister Begin suggested that the 
geement regarding the military 
b itegic cooperation would be in the 
Dn of written agreements or a 
■ norandum of understanding. What 
(he Administration position regard- 
1 such a formal agreement with 
Lei? 

A. We're not opposed to such a 
norandum. In fact, I think the two 
ss will attempt to draft one which 
ild be no more than a launching pad 
the kinds of discussions we are talk- 
about. I would be less than frank 
•e I not to suggest to you that there 

real political and practical limitations 
the degree of such collaborative ac- 
1 in the near term. The political will 
without saying. The practical are that 



we are considering a number of things 
today associated with a stepped-up 
American defense budget associated 
with our power projection capabilities 
into the region, the rapid deployment 
force, prestockage associated with that, 
contingency planning associated with it. 

All of those things require more 
careful thinking in the light of budgetary 
uncertainties which we are faced with 
today, and the fleshing out of the 5-year 
defense program that [Defense] 
Secretary Weinberger has laid out for 
the President. 

So we have sort of focused on some 
narrower things, and I would be less 
than frank were I not to suggest to you 
that our Israeli friends have had a 
rather more fulsome assessment of 
things that they would see as potential 
collaboration in the period ahead, and 
that's why these discussions will serve a 
very useful purpose. 

We must bear in mind, however, 
that limitations exist which will be the 
final governor of what will be achieved 
in the near term, but the process we are 
determined to start immediately and to 
achieve what can be achieved in the light 
of the limitations I outlined. 

Q. What do you foresee here as 
being possible in this strategic consen- 
sus? Do you not anticipate any dif- 
ficulty in your growing relations with 
the moderate Arab governments such 
as Saudi Arabia — Egypt more remote- 
ly — but what effect do you expect 
this to have in your relations with 
them? 

A. I wouldn't anticipate it would 
have any effect because we have been in 
the process of conducting discussions 
with Egypt along these lines. We have 
not looked for bases in Saudi Arabia. 
Our relationships with them are 
somewhat different as a sovereign na- 
tion. 

Clearly, we are talking about joint 
planning in some respects, collaborative 
studies and efforts which focus on the 
external threats to the region, which all 
of the nations of the region could be vic- 
timized by and have in some instances 
had a very direct exposure in the recent 
past. So I do not see these as mutually 
contradictory and, perhaps in a historic 
sense, ultimately dependent on progress 
which we hope to achieve in the peace 
process, a converging set of interests. 

Q. Perhaps you can clear up one 
apparent contradiction. Today Prime 
Minister Begin said he does not want 
American troops. He wants American 
tools that Israel can defend itself. 
What, then, would the purpose and 



what would be the focus and scope of 
these joint military exercises? 

A. I think, again, we're talking 
about — and it is true, inciden- 
tally — Prime Minister Begin has made 
very clear in discussions I had in Israel 
last spring and in his discussions with 
the President this week that Israel is 
dedicated to the proposition that it will 
defend itself. It has been prepared, as it 
has historically been prepared, to make 
the necessary sacrifices to do precisely 
that. 

On the other hand, I think we all 
know that potentially there is always a 
great danger of major interventionism 
by outside powers into the region where 
it would be necessary for collaborative, 
cooperative work by the nations of the 
region that are threatened and by cer- 
tainly the United States which has such 
a vital stake in the outcome. 

Q. And do joint military exercises 
suggest that, in the event of outside 
interference, Israeli and American 
troops then would be prepared to fight 
alongside each other against this ex- 
ternal — 

A. I wouldn't go beyond what I 
have already said because perhaps 
already from what I've said you're going 
to be inclined to inflate this beyond its 
more practical aspects. I think, clearly, 
that as strategic partners we have a 
common interest in defending our vital 
interests. I won't put any more ominous 
overtone on that other than to state it 
as a simple fact, and it has always been. 

Q. Is there at this point any con- 
sensus between the United States and 
Israel on strategy for proceeding in 
the autonomy talks? 

A. Is there a consensus? I think 
there is certainly a consensus to get on 
with the task immediately to maintain 
that effort within the framework of the 
Camp David accords. I don't have to tell 
you that the work done earlier in the 
previous Administration by Ambassador 
Linowitz has been extensive, and in 
some cases very explicit, and achieve- 
ments have been made. 

There was a quietus period, where 
everything stalled out. I would hope we 
would pick up from that, building on 
what has already been established so 
competently in that previous effort. It 
remains to be seen very early on 
because I think after this meeting on the 
23d and 24th we will have an easier 
grasp. But we would hope that meeting 



'ember 1981 



75 



Middle East 



would set an agenda for specific ac- 
complishments, benchmarks, and a fixed 
time schedule in which to achieve them. 

Q. How will the United States be 
represented at that meeting? 

A. We feel it's best to be repre- 
sented by those who have the most in- 
timate feel for what has preceded and 
the situation in the area. So it would be 
our two local ambassadors, our Am- 
bassador to Israel and our Ambassador 
to Egypt, with a representative from the 
State Department here, of course. 
Following that meeting, we will then 
make a decision as to what level would 
be most appropriate for future meetings. 

Q. You've made a reference before 
to the phrase you have used about 
"meat on the bones" of the rhetoric of 
the strategic cooperation; and in the 
course of some of your remarks today 
you alluded to a few examples. 

Now, given [the earlier] question 
and your own anxiety about everybody 
running with a different kind of 
headline, so to speak, I wonder if 
you'd be good enough to run down 
some of that "meat" right now so we 
could get it as clearly as possible. 

A. I suppose the most self-defeating 
thing you can do is to get out ahead of 
the discussions which we are now pro- 
gramed to take place. That is already 
a constraint that I don't think serves 
any purpose to violate today. It could be 
any number of things, and it can be an 
elaboration and an expansion of the 
things I talked about already; it could be 
some entirely different things. But all 
these things are going to have to be 
governed by the practical constraints of 
American capabilities in the near term 
and political considerations. 

Q. Were there any Israeli requests 
or agreements on additional military 
and economic aid or new weapon 
systems to help you flesh out these 
bugs? 

A. It goes without saying that 
Israel, just like the United States and all 
Western industrialized states today, is 
suffering the consequences of runaway 
inflation and declining productivity and 
a general economic malaise which justify 
some mention of additional Israeli needs 
in the period ahead. There were ex- 
changes, both with Secretary Regan — 
our Secretary of Treasury — and the 
Prime Minister and with the President 
and the Prime Minister. During these 
exchanges we made it very clear that 
we, too, were faced with some very 



serious constraints and that these con- 
straints will have an effect on our flex- 
ibility to deal with additional levels of 
assistance in the period ahead. I would 
say that it was nothing more than a 
broad exchange of that kind. 

Q. Is one of the issues that you're 
discussing the passing on of in- 
telligence information from American 
spy satellites to the Israelis? 

A. The answer to that is no, there 
has been no such specific request. I 
would be disingenuous if I were not to 
suggest to you that the Prime Minister 
is meeting with the Director of Central 
Intelligence, and increased intelligence 
assistance to Israel will clearly be one of 
the topics. But we don't ever, in an 
public venue, go into detail on that. 

Q. This morning Prime Minister 
Begin defended in great detail 
President Sadat's recent crackdown 
in Egypt in order to prevent a 
Khomeini — in quoting him — "fanatic 
to destabilize the stability in Egypt." 
Do you agree with the President's 
view that Sadat should — 

A. I never make it the habit to be 
presumptive enough to make value 
judgments on the view of a head of state 
of a friendly government, and I'm not 
going to do that today, and I think 
enough is said on that subject. 

Q. Did you or any other American 
officials at any time ask the Prime 
Minister to show greater restraint in 
his military operations toward other 
countries in the Middle East? And, in 
particular, did the Israeli air strikes 
against Baghdad and Beirut come up? 
What was his response to that? 

A. No, they did not come up; and, 
frankly, we viewed those circumstances 
as circumstances that are now behind 
us. Those circumstances themselves, 
those events, generated actions and 
counteractions which are also behind us. 
We did focus, as I pointed out earlier, 
on the strategic relationship — if you 
will, the strategic partnership, the 
alliance, in that sense of the word — bet- 
ween Israel and the United States and 
the mutuality of obligations incurred on 
both sides in such a relationship. And I 
think that's understood on both sides. 

Q. Even though there is no link — 
as you've said several times — between 
the AW ACS and the new strategic 
relationship, was the discussion — or 
no direct link — was the discussion 
about the strategic relationship at 
least partly intended to assuage the 



B 



Israelis or make them feel that they i 
are protected against any threat that <- 
they perceive from the AWACS? 

A. No. I think it would be really 
spurious to suggest such a thing. I 
discussed the strategic relationship dur 
ing my visit to Israel last spring. Pc's a 
dialogue, incidentally, that's been going 
on for some 4 years; but usually it has 
been confined to rhetoric. 

Secondly, I want to make the point 
very, very clearly that on this occasion 
the Israeli side came to Washington wr 
this high on their agenda of objectives, 
So the connotation you've put on it in 
your question would not be correct. 

Q. So that I, at least for one, 
don't go out of here reporting arms ti 
China — arms sales that caused you 
some concern — 

A. All right. I'd be very upset if yffl 
were to do that. [Laughter.] 

Q. — about the way we all report* 
ed it. I don't understand whether this 
is some new breakthrough — 



A. Not at all. 

Q. — in strategic cooperation be- 
tween Israel and the United States. 
Have you agreed on these examples 
that you used or have we simply 
agreed to talk about it as a result of 
this meeting? Can you put it in some 
perspective? 

A. Let me put it in a greater 
perspective. As I say, there has been a 
strategic dialogue under way between 
the United States and Israel for at leas' 
3-4 years. When I went to Israel in 
May, I talked about expanding this and 
giving it a greater sense of urgency an 
specificity. In the intervening period I 
think both sides thought about how tha 
would do it. 

In our case, we focused on the thre 
areas of potential collaboration I spoke 
to: some limited prepositioning, some 
joint exercises — especially, perhaps, in 
the naval area — and some planning 
which could lead to further collabora- I 
tion. The Israeli side did the same, and 
they came with a somewhat fuller list. 

Now, the question is: Did we agree 
to anything in this visit? The answer tea 
that is yes. We agreed to start an im- I 
mediate dialogue and joint efforts whid 
will include not only the three areas I j 
spoke to but also any other proposals 
that the Government of Israel may carl 
to put forward. 

Now, the only thing I'd want to cal 
tion you on is that I wouldn't view this! 
as some historic event of unusual 



1 



76 



Department of State Bulletin 



Middle East 



ficance but, rather, as an important 
nsus of view to get on with an im- 
int task of mutual interest to both 
rnments and that it will be conduct- 
lder the constraints and restraints 
I spoke to. That means it's going to 
long-term evolutionary process. 

Q. Does that mean, when you 
;d about political constraints, 
estic or political constraints in the 
lie East such as one thinks of? 

L I think both — in the broader 
■ here at home. Anything that gets 
to commitments and obligations in- 
s coordination and consultation 
the Congress. In the region, it's 
important also that the objectives 
ese things be viewed by neighboring 
s, moderate Arab states, as being 
llel to those kinds of things that are 
itially available to them at some 

In some instances there have been 
ssions. But, of course, our relation- 
with Israel is rather advanced in 
regard. 

^. Could I ask you a kind of a 
% 's advocate question? Some people 

I would have said that because of 

B- 

\. I'm trying to find out who is the 

II now. [Laughter.] 

^. This is an imaginary devil — or, 
i ast, some editorial writers who 
* said that because of the Israeli 
ii ; on Baghdad and Beirut, and ob- 
> dy the lack of consultation, that 
e Jnited States should have used 
e isit of Mr. Begin as an opportuni- 
■ really be rather firm and tough 
1 unrewarding. 

[n fact, as you've said, those two 
I sets apparently did not come up. 
1 from talking to the Israelis, 
I re rather pleased because they 
i that they are on a very positive 
K with the United States. Can you 
i discuss the psychology of 
jimacy dealing with the Israelis — 
I it's more the carrot than, say, the 

,-> 

A. I wouldn't want to characterize 
liscussions as being either carrots or 
s. I would characterize your ques- 
as being a very neat devil's ad- 
te question. 

think my answer to the earlier 
tion with respect to our strategic 
nership, mutuality of obligations, the 
that these subjects have been 
issed in detail well before this visit 
Id put to rest any advocacy for one. 
nk the fact that there were exten- 



sive exchanges on mutual interests, 
mutual responsibilities and obligations — 
and I can tell you in the case of the 
AW ACS, for example, the expositions 
were rather clear and concise and 
unbending on both sides. So I would 
hope that your "devil" will go back to the 
prayer table [laughter] and look for 
something else. 

Q. As you know, the Saudi Ara- 
bians, in particular, have taken a very 
keen interest in the AWACS sale and 
also in the progress of the autonomy 
talks. If you should be in a position at 
any time in the near future to discuss 
these matters with anyone in authority 
in Saudi Arabia, do you feel now that 
you're in a position [laughter] — 

A. That's a hypothetical. 

Q. Just a hypothetical. 

A. All right. 

Q. I'm trying to be helpful. 
[Laughter.] Do you feel that you're in 
a position to reassure them on both 
those counts: 1) that the AWACS sale 
is on track; and, 2) that the govern- 
ment of Prime Minister Begin is 
serious about pursuing a settlement to 
the autonomy problem? 

A. In the hypothetical case I would 
be speaking to any other interested par- 
ty in the region. In the near future or 
distant future, I think there is no ques- 
tion about this Administration's clear 
dedication to the proposition that the 
successful transfer of the AWACS to 
Saudi Arabia is in the vital interest of 
this country. It will be a contributor to 
regional stability. There will be suffi- 
cient transfer arrangements associated 
with this sale that will obviate the lesson 
and diminish the concerns — legitimate 
concerns — that anyone might have with 
respect to its character. I will put that 
aside. 

With respect to the peace process, I 
think it is very clear that both Prime 
Minister Begin and President Sadat in 
the recent meeting in Alexandria clearly 
committed themselves to an autonomy 
process, to the resumption of that proc- 
ess, with a sense of urgency that has 
been lacking in the recent past for a 
host of reasons — perhaps, over which 
neither side had control over — and that 
we in the United States are going to be 
an active partner in this process. We 
seek the earliest possible achievement of 
an autonomy agreement and that for 
whatever reason, both Egypt and 
Israel — and they may be differing 



reasons — feel a similar sense of urgency 
on the need to do this. I hope that it will 
be done by April of this coming year. 

Q. Could you clarify one phrase 
you've used twice now before you 
leave us? You talked about mutual re- 
sponsibilities and obligations. Are you 
talking in a legal, formal sense? Have 
we incurred some new obligations and 
responsibilities toward Israel, and 
have they promised some obligations 
toward us? 

A. No, not in the sense of your 
question; I think in the sense of the 
understanding in a broader sense — the 
spirit of partnership — and that is that 
one side takes very careful consideration 
of the interests of the other side in 
whatever they do. And that is not a 
legalistic obligation. 



'Press release 298. I 



Secretary 
Interviewed for 
"Good Morning, 
America" 



Secretary Haig was interviewed by 
David Hartman and Steve Bell for 
ABC-TV's "Good Morning, America" on 
September 11, 1981. l 

Q. Yesterday President Reagan and 
Prime Minister Menahem Begin of 
Israel concluded 2 days of talks in 
Washington and in these talks, the 
United States and Israel, it is being 
reported this morning, agreed to what 
is called a new "strategic collabora- 
tion," including perhaps joint naval 
maneuvers, the stockpiling of some 
American supplies in Israel, and joint 
planning to counter the Soviets. 

We understand that this 
"strategic collaboration," if you will, 
is something that Israel has always 
wanted, but perhaps other Administra- 
tions have shied away from because 
they were concerned about Arab reac- 
tion. What do you say to the Arabs to 
reassure them about this new report 
this morning? 



ember 1981 



77 



Middle East 



' 



A. I wouldn't describe previous Ad- 
ministrations' attitudes quite so sharply. 
There has been a dialogue underway 
with Israel for almost 4 years on this 
topic. I think there has been some 
frustration on both sides that nothing 
specific has been arrived at. We are 
also, as you know, engaging in similar 
discussions with some of the moderate 
Arab regimes, and I won't be specific 
but we do not see these as threatening 
steps against moderate Arab coun- 
tries — precisely the opposite. These are 
coordinating actions which are designed 
to deal with the external threats from 
the Soviet Union or from Soviet proxies 
perhaps, and there has been a rash of 
that in the area as you know. 

Q. Have you already had some 
reaction from the Arabs that would in- 
dicate that they are already reassured 
about what we're reading and hearing 
this morning? 

A. No, nor have we sought any 
because we've been engaged in similar 
discussions with them. You'll recall when 
the President sent me to the Middle 
East this past spring, we talked about 
strategic consensus to deal with external 
threats. 

That's a consensus which is already 
in place. It is a consensus which, in- 
cidently, has sustained us well in the 
Lebanon crisis. So this doesn't require 
any new spectacular approaches and is, 
indeed, not that. It'll be limited and 
moderated by practical realities and 
political considerations. 

Q. Another key element of your 
strategic plan is the AW ACS [airborne 
warning and control system] radar 
planes for Saudi Arabia and other 
sophisticated military equipment. And 
while you were holding a news con- 
ference yesterday reaffirming recom- 
mitment, Prime Minister Begin was 
on Capitol Hill arguing against the 
sale of AW ACS. If Congress stops 
AWACS or weapons deliveries to the 
Saudis, would we still go ahead with 
the Israeli strategic cooperation? 

A. Let me tell you while I was 
discussing it in a news conference, 
Prime Minister Begin was asked ques- 
tions with respect to the Israeli view on 
the Hill. He's not here in this country 
lobbying against the AWACS, not in any 
sense of the word. He has stated that 
himself repeatedly during his visit. He 
feels that it is not Israel's role to in- 
tervene in an issue which involves coor- 
dination between the executive and 
legislative branches which is underway. 



That would be unacceptable interven- 
tion. I know the Prime Minister feels 
very strongly about that because I've 
discussed it with him personally. Now he 
does feel that he, when asked, must 
answer from his own perspective. But 
I'll add also that he has heard our 
perspective in great detail, and we feel 
that the logic underpinning this action is 
compelling and will, indeed, in the long 
run meet the vital interests of Israel. 

Let me say also that this is not an 
issue that just was created with the 
Reagan Administration. There's been a 
dialogue on this subject for a number of 
years. We are not engaged in carrots or 
sticks or threats or blackmail with 
respect to the success or failure of this 
issue. It stands on its own merits. The 
relationship with Israel, on the other 
hand, is historic. It is not going to be 
derailed by particular differences or par- 
ticular issues. It must not be. And now 
that doesn't mean that we do not con- 
sider this AWACS proposition an ex- 
tremely important one. This is part of 
the President's foreign policy. It is the 
President of the United States who must 
be responsible for American foreign 
policy. And, indeed, we are both best 
served— both governments — if that prin- 
ciple is preserved. 

Q. Last week on this program, 
Senator Gary Hart said that we should 
not give the Saudis strategic weapons 
because they are an unstable regime 
and also that they wouldn't be able to 
protect against Soviet espionage. 

A. I wouldn't describe the Saudi 
regime as unstable in any sense of the 
word. And it is precisely in the interests 
of the Western world to continue to 
work in collaboration with that regime 
and that Saudi Arabia remains, as it 
has, a sovereign nation, essentially 
oriented toward Western interests. Cer- 
tainly not only past and historic 
performances by that government but 
most recent performance, especially in 
the Lebanon crisis, especially in the vital 
area of Western oil needs, has under- 
lined, as perhaps nothing else has here 
before, the importance of that 
American-Saudi Arabian relationship. 

Q. There are a lot of concerns, as 
you know, here about the Israeli at- 
tacks on the nuclear reactor in Iraq 
and also the bombing in Beirut recent- 
ly. Did you get any assurances from 
Prime Minister Begin that this kind of 
attack is not going to happen again? 



•' 



A. We neither sought any nor pi 
received any. These issues have been I 
discussed in detail between our two IW 
governments, and the events associati 
with them are now behind us. Some c|6 
those events were not particularly coi | 
fortable for one side or the other. No 1 
we have talked about a strategic rela- 
tionship — a new one, a reinvigorated 
one, if you will — and that relationship 
incurs automatically mutual obligatior 
on both parties — a true partnership, i 
you will — and that means that actions 
taken by one side must always considc 
the vital interests of the other, and I 
think that understanding is very, verj 
clear. 

Q. The new agreement with 
Israel, could it possibly lead to a foi 
mal defense agreement? 

A. I don't visualize that at all. 
That's not the intent of these coor 
dinating steps that we are talking abc 
They are modest in character, and th( 
are very finitely limited by both politii 
and practical considerations. 

Q. In the last week, as we all 
know, President Sadat in Egypt has 
put in jail some 1,500 people — politi 
and/or religious critics. How concei 
ed is our government about these 
events right now in Cairo? 

A. Our government's position on J 
freedom of the press is well-known. V J 
of course, regret this incident, and w< 
have made our position on it clear in 
Cairo. 

Q. Is there any concern that the 
Egyptian Government might have a 
stability problem? 

A. We don't anticipate anything c 
that kind. There's nothing to suggest 
that. 



Q. What's the next step as far a I 
the autonomy talks, the Camp David ! 
talks? When are you next going to s 
down personally and get involved? 

A. Personally, that remains to be 
seen. I've been very actively involved 1 
a number of weeks now — months — bu 
we are very, very pleased that both 
Egypt and Israel have agreed to con- 
vene and resume these talks on the 23 
and the 24th of this month in Egypt. 
We'll see shortly thereafter at what le' 
the United States will participate. We 
are going to participate in those. 



■Press release 299. 



78 



Department of State Bullet 



.ITARY AFFAIRS 



NUCLEAR POLICY 



-ported Use of 

lemical 

capons 

L 

'he following statement was made to 
ress by Walter J. Stoessel, Jr., 
r Secretary for Political Affairs, on 
mber U, 1981. 

;rday in Berlin, Secretary Haig 
led that the United States, along 
many other members of the world 
iimity, has been for some time con- 
;d over reports of use of lethal 
ical weapons in Afghanistan and 
least Asia. He announced that the 
Government now had physical 
nee from Southeast Asia found to 
.in three potent toxic agents. 
lS Secretary Haig promised, we are 
g steps to provide this information 
3 world community through the 
■d Nations, its member govern- 
s, and through the representatives 
i national and international press 
today, 
l.eports of the use of chemical war- 
ligents in Southeast Asia date back 
176. The United States has publicly 
3'ssed its concern about these events 
limerous occasions over these years. 
j ave privately and formally ex- 
i ed our concern to the Soviet, Viet- 
n se, and Laotian Governments, only 
I told that our concerns are un- 
cled. 

l June 1980, we prepared a 
5 age compendium of reports of 
; ical weapons use, and we used that 
i endium as a basis for supporting 
5 December 1980 U.N. resolution to 
; lish an impartial international in- 
j Ration into reports of chemical 
jons use. We followed that with an 
d:e to the compendium in March 

l.fter earlier unsuccessful attempts 

■ tain physical evidence of chemical 

■ ons use, we have recently un- 
j-ed significant, though preliminary, 
|mation to demonstrate clearly that 
loncerns were entirely justified. 
Specifically, we believe we have ob- 
Id good evidence that rather than a 
Itional lethal chemical agent, three 
lit and lethal mycotoxins of the 
lathecene group have been used. A 
Itoxin is a poison typically produced 
Iture by living organisms. Analysis 
leaf and stem sample from Kam- 
lea has revealed high levels of lethal 
|)toxins of the trichothecene group. 



The levels detected were up to 20 times 
greater than any recorded natural out- 
break. 

Since normal background levels of 
these toxins are essentially undetectable, 
the high levels found are considered to 
be abnormal, and it is highly unlikely 
that such levels could have occurred in a 
natural intoxication. In point of fact, 
these mycotoxins do not occur naturally 
in Southeast Asia. 

The possession and use of toxins is a 
violation of both the 1925 Geneva pro- 
tocol and the 1972 Biological Weapons 
Convention, as well as the rules of 
customary international law of armed 
conflict. 

Over the past several years, a 
number of medical doctors working on 
this problem have visited Southeast 
Asia. They visited the borders in ques- 
tion, interviewed and examined 
refugees, reviewed medical records in- 
cluding public health data, and spoke 
directly with eyewitnesses to events in 
both Laos and Kampuchea. 

Detailed analyses of this and other 
information leads us to conclude that 
mycotoxins, not traditional chemical 
warfare agents, produced the bizarre ef- 
fects which caused the reported deaths. 
The test results we have recently ob- 
tained, together with the information 
provided by the physicians who have 
visited Southeast Asia, represent strong 
and compelling, but nonetheless 



preliminary, evidence that the lethal 
agents used are mycotoxins. 

I want to caution you that there are 
certainly other agents being used that 
we have not yet identified. In- 
capacitating and riot control agents, as 
well as other possible lethal agents, may 
be involved. 

We are attempting to obtain addi- 
tional information from Laos and Kam- 
puchea in an effort to obtain cor- 
roborative evidence. We are sharing this 
information with the U.N. group of ex- 
perts investigating chemical weapons 
use, as well as our friends and allies 
throughout the world. 

The United States believes that in 
the light of this new information, in- 
creased efforts must be made to visit 
the regions where chemical attacks are 
being reported. We have, therefore, 
urged the Secretary General's group of 
experts to take steps immediately to 
visit refugee camps and the areas of 
reported attacks in Kampuchea and the 
other regions in question to obtain 
testimony firsthand from eyewitnesses 
and victims of attacks, medical person- 
nel, officials of refugee organizations, 
and any other evidence available. 

We have also urged that the utmost 
effort be made to contact and obtain 
testimony from the many victims and 
eyewitnesses who have departed the 
refugee camps and started new lives 
elsewhere. ■ 



Nuclear Cooperation Agreement 
With Egypt 



by Harry R. Marshall, Jr. 

Statement prepared for submission 
to the Subcommittees on Europe and the 
Middle East and International Security 
and Scientific Affairs of the House 
Foreign Affairs Committee on September 
10, 1981. Mr. Marshall is Deputy Assist- 
ant Secretary for Oceans and Interna- 
tional Environmental and Scientific Af- 
fairs. 1 

I am pleased to be able to appear before 
these subcommittees today to discuss 
the agreement for nuclear cooperation 
between the United States and Egypt. 
On June 29, during the visit here of the 
Egyptian Minister of Energy and Elec- 
tricity, this agreement was signed by 
Secretary Haig and Minister Abaza. We 



consider this agreement important to 
our interests in the vital and sensitive 
Middle East region and supportive of 
our nonproliferation policies. The agree- 
ment will be potentially significant to 
both countries in Egypt's development 
of nuclear power. 

Background to the Agreement 

The concept of nuclear cooperation has 
been discussed with both Egypt and 
Israel since 1974. Our consideration of 
this subject has, thus, spanned four Ad- 
ministrations. In 1976 tentative agree- 
ment was reached with both Egypt and 
Israel regarding such cooperation, but 
neither agreement was ever signed. 

After the 1977-78 review of U.S. 
nonproliferation policy by the previous 
Administration, identical draft 



lumber 1981 



79 



Nuclear Policy 



agreements were provided to both these 
countries, which incorporated all of the 
provisions required by the Atomic 
Energy Act, as amended, together with 
special provisions which were considered 
appropriate in view of the situation in 
the Middle East. At that time, Israel in- 
dicated that it did not wish to pursue an 
agreement. Our discussions with Egypt 
continued and resulted in the agreement 
which is now under consideration. A 
very significant event occurred over the 
course of these discussions — Egypt 
ratified the Nonproliferation Treaty 
(NPT). 

In December 1980, Egypt announced 
that it intended to undertake a prompt, 
major effort to establish a significant 
program to meet its future energy 
needs. This was to be accomplished, in 
part, by acquiring several nuclear power 
reactors for the generation of electricity. 
At the same time, Egypt announced its 
intention to ratify the NPT, which it had 
signed in 1968, and to conclude a 
safeguards agreement with the Interna- 
tional Atomic Energy Agency (IAEA) 
covering all of its peaceful nuclear ac- 
tivities, as required by the treaty. 

In February 1981, Egypt joined 
what now numbers 112 non-nuclear- 
weapon states which have renounced the 
manufacture or acquisition of nuclear 
explosives and agreed to accept IAEA 
safeguards on all their peaceful nuclear 
activities. The United States warmly 
welcomed this step, and I cannot 
overstate the importance we attach to it. 
This far-sighted step of extraordinary 
statesmanship reflects the wisdom and 
commitment of President Sadat and his 
government to the cause of lasting peace 
and regional stability in the Middle East. 
NPT adherence by a state of Egypt's 
significance is a major advance in the 
development of the international non- 
proliferation regime of which the NPT is 
the linchpin. 

In taking this step, Egypt also an- 
nounced that it intended to commit up 
to $500 million annually from its oil 
revenues for the development of alter- 
native sources of energy, including 
nuclear power. Egypt also expressed its 
hope that, as envisioned by Article IV of 
the NPT, its adherence would facilitate 
support of this development by the 
United States and other advanced 
nuclear power states. A joint Egyptian- 
U.S. assessment of Egypt's long-term 
energy situation concluded in 1979 that 
nuclear power was a feasible option to 
help to meet Egypt's future energy re- 
quirements. Egypt's intention to pur