[Senate Hearing 105-365]
[From the U.S. Government Publishing Office]
[DOCID: f:39857.done]
S. Hrg. 105-365
FOREIGN OPERATIONS, EXPORT FINANCING, AND RELATED PROGRAMS
APPROPRIATIONS FOR FISCAL YEAR 1998
=======================================================================
HEARINGS
before a
SUBCOMMITTEE OF THE
COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE
ONE HUNDRED FIFTH CONGRESS
FIRST SESSION
on
H.R. 2159/S. 955
AN ACT MAKING APPROPRIATIONS FOR FOREIGN OPERATIONS, EXPORT FINANCING,
AND RELATED PROGRAMS FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 1998, AND
FOR OTHER PURPOSES
__________
Agency for International Development
Department of Justice
Department of State
Department of the Treasury
Nondepartmental witnesses
__________
Printed for the use of the Committee on Appropriations
Available via the World Wide Web: http://www.access.gpo.gov/congress/
senate
U.S. GOVERNMENT PRINTING OFFICE
39-857 cc WASHINGTON : 1998
_______________________________________________________________________
For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-056220-1
COMMITTEE ON APPROPRIATIONS
TED STEVENS, Alaska, Chairman
THAD COCHRAN, Mississippi ROBERT C. BYRD, West Virginia
ARLEN SPECTER, Pennsylvania DANIEL K. INOUYE, Hawaii
PETE V. DOMENICI, New Mexico ERNEST F. HOLLINGS, South Carolina
CHRISTOPHER S. BOND, Missouri PATRICK J. LEAHY, Vermont
SLADE GORTON, Washington DALE BUMPERS, Arkansas
MITCH McCONNELL, Kentucky FRANK R. LAUTENBERG, New Jersey
CONRAD BURNS, Montana TOM HARKIN, Iowa
RICHARD C. SHELBY, Alabama BARBARA A. MIKULSKI, Maryland
JUDD GREGG, New Hampshire HARRY REID, Nevada
ROBERT F. BENNETT, Utah HERB KOHL, Wisconsin
BEN NIGHTHORSE CAMPBELL, Colorado PATTY MURRAY, Washington
LARRY CRAIG, Idaho BYRON DORGAN, North Dakota
LAUCH FAIRCLOTH, North Carolina BARBARA BOXER, California
KAY BAILEY HUTCHISON, Texas
Steven J. Cortese, Staff Director
Lisa Sutherland, Deputy Staff Director
James H. English, Minority Staff Director
------
Subcommittee on Foreign Operations, Export Financing, and Related
Programs
MITCH McCONNELL, Kentucky, Chairman
ARLEN SPECTER, Pennsylvania PATRICK J. LEAHY, Vermont
JUDD GREGG, New Hampshire DANIEL K. INOUYE, Hawaii
RICHARD C. SHELBY, Alabama FRANK R. LAUTENBERG, New Jersey
ROBERT F. BENNETT, Utah TOM HARKIN, Iowa
BEN NIGHTHORSE CAMPBELL, Colorado BARBARA A. MIKULSKI, Maryland
TED STEVENS, Alaska PATTY MURRAY, Washington
ROBERT C. BYRD, West Virginia
(Ex officio)
Professional Staff
Robin Cleveland
Will Smith
Tim Rieser (Minority)
(ii)
C O N T E N T S
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Thursday, February 27, 1997
Page
Agency for International Development............................. 1
Thursday, March 20, 1997
Department of Justice: Federal Bureau of Investigation........... 55
Department of State: Bureau of International Narcotics and Law
Enforcement Affairs............................................
Thursday, April 17, 1997
Agency for International Development............................. 97
Tuesday, May 6, 1997
Department of State.............................................. 137
Agency for International Development............................. 137
Tuesday, May 20, 1997
Department of the Treasury....................................... 185
Tuesday, May 22, 1997
Department of State: Office of the Secretary..................... 215
Nondepartmental witnesses........................................ 265
(iii)
FOREIGN OPERATIONS, EXPORT FINANCING, AND RELATED PROGRAMS
APPROPRIATIONS FOR FISCAL YEAR 1998
----------
THURSDAY, FEBRUARY 27, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 10:35 a.m., in room SD-138, Dirksen
Senate Office Building, Hon. Mitch McConnell (chairman)
presiding.
Present: Senators McConnell, Bennett, Campbell, Leahy, and
Lautenberg.
AGENCY FOR INTERNATIONAL DEVELOPMENT
STATEMENT OF HON. J. BRIAN ATWOOD, ADMINISTRATOR
opening remarks of senator mitch mc connell
Senator McConnell. This hearing will come to order.
Welcome, Mr. Atwood. It is good to see you again.
Mr. Atwood. Thank you, Mr. Chairman.
Senator McConnell. I am pleased to have you open our fiscal
year 1998 hearings on the administration's budget request. I am
equally pleased with the fact that the President's request
level finally reflects a serious commitment to advancing our
international interests.
Before offering some thoughts on some specific concerns I
have about the allocation of funds within the foreign
operations account, let me point out a small irony. Last year,
$12.3 billion was provided for foreign operations. This year
your budget submission of $13.3 billion reflects a $1 billion
increase.
I consider this $1 billion the amount that Senator Leahy
and I have appealed and pressed the administration to request
for the past 3 years. I welcome the request and hope that we
have really turned the page, ending a sad chapter of neglect of
the foreign affairs account.
Having acknowledged your commitment, I should recognize
that some of my colleagues are already pointing out that this
increase exceeds other subcommittee or function requests. In
his opening hearing, Congressman Callahan expressed concern
about being able to pass a bill that includes a 9-percent
increase when other subcommittees are continuing to experience
reductions.
Frankly, 9 percent may not be enough to compensate for the
near fatal assault this account has suffered over the past
decade.
In the last 10 years, with the end of the cold war, we have
established assistance programs to help stabilize and
strengthen more than two dozen new, emerging democracies. At
the same time, the resources available for foreign operations
and export promotion have declined nearly 40 percent, from
$20.2 billion to $12.2 billion.
Measured against foreign aid's peak level in 1985, our
resources have dropped nearly 60 percent. Those numbers give
the term ``deficit'' new meaning. We are experiencing a
critical deficiency in diplomacy's funding.
While I strongly support the overall request level, I am
not as convinced that the administration has distributed funds
to best serve our interests. You have repeatedly called
attention to the problems AID has experienced because of deep
reductions in development assistance. While the administration
added $1 billion to the overall foreign operations request,
child survival programs have actually been cut. Education,
health care, agriculture, and other development assistance
priorities have either been straight-lined or reduced in this
budget.
The increase is dedicated almost entirely to down payments
on arrears at international financial institutions and a huge
increase in aid to Russia. In contrast, a majority of other NIS
states have been reduced or held at the fiscal year 1997 level.
Last year, our report recommended we graduate Russia from
most of our grant programs, sustaining modest but declining
support for a few projects which strengthen democracy and the
private sector. This request continues to reflect a bias toward
Moscow at the expense of our deep interests in the region and
fails to recognize that we cannot buy our way out of the
economic crisis which cripples opportunity in Russia.
While I may not completely support the mix of funds, let me
conclude by emphasizing once again that I am committed to
securing as strong an overall account as possible. I urge you
and Secretary Albright to make as persuasive a case as you can
to the Budget Committee very soon since their decisions will
have a significant impact on the resources allocated to our
subcommittee.
With that, let me turn to my friend and colleague, Senator
Leahy, for whatever opening observations he might wish to make.
opening remarks of senator patrick leahy
Senator Leahy. Thank you, Mr. Chairman.
I am glad that we are starting off this year with the AID
Administrator.
You have been through some rather rough times in the past
dozen years. The last 4 years have been no exception. There are
two dozen field missions being closed, 200 of AID's staff,
including some of the best, were laid off last year. There has
been a suggestion that we merge AID into the State Department.
We get a lot of requests from Senators who want us to fund
various programs in AID and I sometimes wonder how they can
find the time to ask us to fund these programs when they are so
busy giving speeches about what a waste, foreign aid is. If
they would spend a little bit less time talking more about
where we will find the money to fund the programs they want, we
might be better off.
I think it would also help if they would do as you have,
which is make the case to the American people why a lot of this
aid is in our national best interest. You have been an eloquent
spokesman on that, as have some others.
I think we are going to have questions about AID's future.
Is it going to be an autonomous agency or part of the State
Department, whether it expresses national interests on its own
or the State Department's political goals which may be more
short-term.
Mr. Atwood's persuasiveness is reflected in the President's
request for an increase in foreign operations, but with all of
the programs in the budget, AID has fared the worst. The State
Department, the international financial institutions and the
military assistance programs got the lion's share of the
increase. That might not have been my choice. But at least it
does not occur to me that at any time has the administration
asked my opinion on what might go through this committee or
what my views might be. So I was not bothered or impressed by
their consistency in that they did not this year.
I am concerned about some of the problems in AID. I think
strategic goals for each country and more in the field staff is
good. That was long overdue and I compliment you for doing it.
But there has been a lot of money, an enormous amount of money,
spent on new management systems while, at the same time, some
of the best people have been laid off.
You are moving to a new building which, at least from the
impression I have gotten, will be more expensive but with less
space. This bothers me. Then, maybe it is the State
Department's fault, but they may have required you to do some
things you should not have. I refer to Haiti and Russia. We
have foreign interests there, of course. There have been some
successes there. But I am worried that in a lot of instances
money was sent down, was spent, so that we could say look, we
are doing something, but nothing came out of it.
There have been a number of failures in both countries
where AID has seen something that is not working, restructures
the program, asks for even more money, and then basically does
the same thing.
I applaud you, Mr. Atwood, for your eloquence in speaking
up for AID's mission and for what is needed. I would urge you
to get some good, day-by-day, nuts and bolts managers who can
handle the nitty-gritty at AID.
I know there is at least one intended. It would help, I
think, for these people to get down there.
I would not continue, Mr. Chairman, though I do have some
more comments. These are just some that occur to me now.
Senator McConnell. Thank you, Senator Leahy.
Mr. Atwood, why don't you go ahead and tell us what is on
your mind.
summary statement of hon. j. brian atwood
Mr. Atwood. Thank you very much, Mr. Chairman and Senator
Leahy. I want to thank both of you for the support you have
given us over the years for a larger 150 account. This has not
been an easy battle, and in the environment we are in all of us
are trying to find ways to balance the budget. So very serious
choices have to be made.
But I think you have seen, and I would even call your
views, those of the two of you, visionary because you do
understand that, unless we continue to make investments in the
global economy and investments in peace and stability through
the 150 account, we are not going to be able to find the
revenues necessary to balance the budget in the long run.
So I do very much appreciate the support you have given us.
Your prodding has succeeded in convincing the administration to
come forward with an increase of about $1.1 billion, as you
mentioned, this year. We keep hearing that the 40-plus percent
decrease is not a correct number because 1985 was a year when
we had a plus-up for the Middle East. The fact of the matter
is, if you look at it from 1986 on and take away that plus-up,
it is still a 34.6-percent decrease in the 150 account through
fiscal year 1997.
We are trying to bring that down to about 32 percent if we
can get what the President has asked for this year. We very,
very much appreciate your support.
Senators, as both of you have alluded, we have been through
really difficult times at USAID, and I think this budget
request will enable our Agency to reach some degree of
equilibrium, after we had to go through reductions in force.
Let me make it clear that, while the increase that we have
asked for in development assistance is only $65.5 million, the
USAID will be managing an additional $476 million of the
increase, the $1 billion increase, because we will be managing
the SEED and NIS money--much of it, anyway--in those requests.
It's $292 million, to be exact, of those additional requests;
$135 million of the ESF requested mainly for transitions in the
Middle East and Latin America.
agriculture
I want to emphasize one aspect of our request for an
increase in development assistance and that is the word
``agriculture.''
This is an extremely important aspect of development. About
80 percent of the GNP's of some of these countries we work in
are in the agriculture sector. And yet, over the years, we have
seen the amount that we have been able to provide for
agriculture programs, to increase productivity and get
countries to adopt market techniques for their agriculture
sector, diminish from 16 to 9 percent.
Just the other day, a group of agribusiness interests and
traditional farm associations and others interested in
agriculture, land grant colleges, et cetera, got together and
put out a report recommending a $2 billion increase in the
foreign aid bill in order to pursue our agricultural interests.
As you know, Mr. Chairman, coming from a farm State
yourself, 1 out of every 4 acres grown in this country is for
export. With our population stabilizing and our production
continuing to go up, it is clear that everybody now agrees that
increasing production overseas has increased our ability to
export.
Of the top 50 importers of American agricultural products,
43 of them had been aid recipients in the past.
So I think that our request for a food security plus-up,
for agriculture and for agricultural research, which also
redounds directly to the benefit of American farmers, is
warranted, and I hope that we will be able to achieve a good
deal more balance than we have had in the past in our
development approach.
changing foreign aid
Our foreign aid program has changed, Mr. Chairman, and a
lot of it is due to your prodding and that of others. I can
remember exchanges that we had a few years ago and one
television program we did together where you said, that the aid
program ought to serve American interests.
Well, today we make judgments about where we work on the
basis of the quality of the partnership we have with that
government. We don't work in countries where they do not allow
their people to participate in the process, where they don't
accept the need for a market economy, where they don't accept
the need for democratic institutions. So the quality of the
partnership is important. The need of the country is important.
The foreign policy interests of our country are important.
Finally--and this is important because the Congress did
pass the Government Performance and Results Act--performance of
our programs is important. We are measuring those as never
before, which got us a lot of acclaim from OMB. OMB said that
we had submitted the best performance-based budget that any
agency in government had submitted, which is why I think we
were treated so relatively well in the budget process this
year.
So our Foreign Aid Program is a misnomer. It serves
American interests more than it ever has in the past. It serves
American interests by helping to achieve stability, dealing
with crisis situations in terms of our humanitarian relief
programs, and dealing with transition situations which are a
crucial part today of our foreign policy in places like Bosnia,
the former Soviet Union, South Africa, Cambodia, the West Bank,
and Gaza. It serves our international economic interests by
continuing to invest in the creation of new markets. And, of
course, it most certainly serves our own humanitarian values as
well.
Our program serves American interests more now than ever
before.
former soviet union
Mr. Chairman, I do want to say a few words in particular,
because you did raise these issues, about our request for
additional funding for the former Soviet Union.
The proposal for an additional $275 million for the NIS
represents our effort to create permanent linkages between our
country's democratic institutions and our business community
and the new democratic market economies of this region. It is
part of a strategy that will assure the strongest ties between
our nations long after the technical assistance program we have
undertaken is phased out.
In this sense, the partnership for freedom proposal is a
strategic investment in a peaceful, more stable future in this
region.
We have said all along that we will phase down technical
assistance as the NIS countries continue their transformation
to democratic market economies. We have said all along that one
indication of the success of our technical assistance programs
will be the discernible flow of trade and investment into these
economies from Europe and the United States.
There are still barriers to trade and investment. We know
them well: crime, corruption, weak regulatory systems, the
absence of capital markets, weak customs and tax administration
systems and weak justice systems. Overall, these weaknesses add
up to an unpredictable business environment.
Our friends in these countries know this. This, for
example, is what we discussed in the Gore-Chernomyrdin and
Gore-Kuchma forums. These commissions are struggling to correct
these problems and they want our help. Most importantly, they
yearn for the day when trade and investment and not technical
assistance characterize our relationship.
The partnership for freedom is designed to accelerate the
process. It is designed to force the issue, if you will. It
makes explicit what we have always advised the Congress is our
goal--trade, investment, and partnership between our democratic
and market institutions and those of this vital region; $275
million is not a large additional investment to make this
happen. It is, I repeat, a strategic investment.
Now I know, Mr. Chairman, you want more detail about how
this additional money will be spent and I know that you are
going to be holding a hearing on, I believe on March 13 with
the NIS coordinator, Dick Morningstar, and our Assistant
Administrator for Europe and the NIS, Tom Dine. But I do want
to say a few words about the details here.
The partnership for freedom has two basic components.
First, the principal component is to promote trade and
investment through capital mobilization. This will result from
the combined U.S. Government effort working with private
business organizations and NIS governments and businesses to
remove the impediments to trade and investment. We are looking
at several mechanisms to ensure that when good business
projects come along, they can find the financing to move
forward.
Second, in order to have this kind of market economy, it
must be based on a strong democratic civil society. Therefore,
the second major component is to continue the development of
institutions and organizations that are fundamental to a broad-
based participatory democracy.
We are going to be continuing our technical assistance
programs, but we are going to be phasing them out; and, in
time, we are going to be using more collaborative, collegial
approaches that emphasize partnerships and linkages between
institutions.
I could go into more detail, but I do have a breakout that
I would be happy to provide for the record, Mr. Chairman, of
how some of these funds will be spent and what our intentions
are. I know that you will be getting into much more detail in
your hearing on the 13th.
new management systems
Let me sum up, Mr. Chairman, and thank you for giving me so
much time. We have, indeed, overhauled the agency. We do
believe that it is managed very well. I know that there are
concerns, as Senator Leahy expressed, about the new management
system. Let me just say that you don't start receiving
complaints from your work force on a new, integrated computer
management system until you start to deploy it, until you start
to activate it. We have activated it, starting on October 1. We
have forced people to begin to adapt to the changes that we are
bringing about. We have, I certainly have, heard all of the
screams from our work force about the problems that we have
encountered. I want you to be assured that we are absolutely on
top of those problems.
They relate to two basic aspects. One is the migration of
old data from the old 11 accounting systems that we have had
which, as every inspector general report that has come up here
in recent years and GAO reports as well have indicated, is not
good, consistent data. We need to clean it up in order to make
the NMS system work. But it is not the NMS system that is at
fault. That is a single entry system that doesn't allow us to
use bad data or inconsistent data. So that has been a problem.
It has taken us time.
Communications with the worldwide network has also been a
problem. We are working out those problems. It is not true that
we have, indeed, laid off people in order to put this system in
place. If we didn't put this system in place--and this system,
by the way, in its earlier incarnation was planned by the last
administration, by the last Bush administration, I should say.
Everyone in government knows that under the requirements of the
Chief Financial Officer's Act, the GMRA, which deals with
management and financial statements, and the Government
Performance Results Act, we must have a system like this.
You don't hear complaints from other government agencies,
Mr. Chairman, because other government agencies have not made
as much progress in actually deploying their system.
agency move
Finally, regarding the move to the new building, I point
out that this building, the Ronald Reagan building, is a
government building. It is a government building that is
sitting there, waiting for government occupancy. We drew the
right straw. We've got to move into this building.
We believe it will save us money over the long run and even
in the immediate future, after the initial costs of the move.
We are in commercial space now in 11 different buildings.
In each case, we have to negotiate on an almost annual basis
for new rental fees. Commercial buildings will charge you
commercial rates based on inflation and other aspects of where
the market is. A government building over time gives us more
opportunity to see where we are going down the long run.
It is not a fancy building. As Senator Leahy pointed out,
our people will have less space than they had before, but there
are tremendous efficiencies in getting everyone from 11
buildings into one place.
I believe very strongly that this is, again, a part of our
effort to try to achieve equilibrium with respect to USAID, an
agency that has been downsized by 2,700 people, has closed 26
missions since 1993, has reduced its regulations by 55 percent,
and is one of the pioneering agencies in implementing the
Government Performance and Results Act.
u.s. leadership
So I feel very proud, Mr. Chairman, that we were able to
accomplish those things, that we have been able to maintain our
leadership in the development community. We have even been able
to do that despite the fact that we have fallen from being the
No. 1 donor in absolute levels to being No. 4, behind economies
like those of Japan, France, and Germany, which are one-half
the size of ours.
We have traditionally been near the bottom in terms of
percentage of our GNP. We are at the absolute bottom, providing
only 0.1 percent of our GNP to overseas development assistance.
But when you look at it, that comes out to about $24 per
American citizen, which is a pretty good meal for a family at
McDonald's.
It is not a lot to invest in our future in a global economy
or a lot to invest in our stability, in the stability of the
global economy, or a lot to invest in American interests.
prepared statement
I feel that we have made some progress. I think we have
done that with your help and with that of Senator Leahy and
this entire subcommittee. I, therefore, want to make sure you
understand that I am deeply grateful for that support and
assistance.
Thank you, Mr. Chairman.
[The statement follows:]
Statement of Hon. J. Brian Atwood
Chairman McConnell, Senator Leahy, and other members of the
subcommittee, it is a pleasure to appear here today to defend the
President's budget request for the U.S. Agency for International
Development's (USAID's) fiscal year 1998 economic assistance request. I
look forward to working closely with the subcommittee during the second
Clinton Administration. It is my belief that we are entering a new and
positive era in our international relations, and that our policies and
approaches will be guided by the stabilizing hand of bipartisanship.
Recently, Secretary Albright noted, ``In our democracy, we cannot
pursue policies abroad that are not understood and supported here at
home.'' I could not agree more. I look forward to sharing with you
today the reasons why USAID's programs directly advance America's
interests.
President Clinton's budget request for fiscal year 1998 includes
$19.4 billion for programs in international affairs. This is a modest
increase from the previous year, and represents just slightly over 1
percent of the federal budget. More importantly, this budget reverses
the dangerous downward trend in funding for foreign affairs. USAID will
manage $7.158 billion, or 37.5 percent, of those funds, including both
USAID programs and programs administered by USAID in cooperation with
other agencies. USAID's request for discretionary funding in the
Foreign Operations appropriations bill includes $998 million for
Development Assistance, $700 million for the Development Fund for
Africa, $190 million for International Disaster Assistance, $11 million
for credit programs, $473 million for operating expenses, $29 million
for Inspector General operating expenses, $2.498 billion for the
Economic Support Fund, $492 million for programs in Central and Eastern
Europe and $900 million for programs in the New Independent States.
USAID also requests $44.2 million for the fiscal year 1998 mandatory
contribution to the Foreign Service Retirement and Disability Fund. In
addition, USAID will administer $867 million in P.L. 480 funds,
although this funding is not under the jurisdiction of this
subcommittee.
The total request for fiscal year 1998 USAID-managed programs
represents an increase of $476 million over fiscal year 1997. This
increase includes:
--An additional $292 million for programs in Central and Eastern
Europe and the New Independent States. These transitional
programs are designed to aid Central and Eastern European
countries and the New Independent States through their
difficult passage to democracy and market economies. I know
this subcommittee understands both the importance and
challenges inherent in securing lasting change in these
nations. Helping to secure free societies in this region
remains one of America's highest foreign policy and national
security priorities. This increased funding demonstrates the
Administration's commitment to helping these nations move
through this turbulent time and reflects a realization that
such sweeping change has also been characterized by uneven
political and economic progress. In Central and Eastern Europe
support for Bosnian reconstruction and reform and efforts in
the Southern Tier countries will be given special emphasis. In
the New Independent States, the Partnership for Freedom effort
will build on our achievements to date and reorient our
assistance program--beginning with Russia and then in the other
New Independent States--toward longer-term and more cooperative
activities to spur economic growth and develop lasting links
between our peoples.
--$135 million more for the Economic Support Fund.--Economic Support
Funds (ESF) advance key economic and political foreign policy
interests of the United States by providing economic assistance
to countries in transition to democracy, supporting the Middle
East peace process and financing economic stabilization
programs. The largest share of ESF will continue to go to
supporting the Middle East peace process, including $52.5
million to be transferred to the Middle East Development Bank.
The Latin America region will receive ESF funding vital to
support the democratic transition in Haiti and the breakthrough
peace accords in Guatemala. ESF will also support programs in
``fledgling democracies'' such as Cambodia and Mongolia.
Finally, ESF will be used for assistance in sub-Saharan Africa
for elections, political party building and legislative
training for countries in transition such as Angola.
--An increase of $65.5 million in Sustainable Development
Assistance.--These funds will support USAID's development goals
by encouraging broad-based economic growth, protecting human
health, slowing population growth, encouraging environmental
protection and advancing democracy. By fostering free markets
and open political systems, USAID's development programs are
helping to shape a world that is more stable and open to U.S.
trade and leadership. Specifically, the ``Promoting Food
Security'' pilot initiative, aimed at improving food security
in Africa, will in its first year target $30 million to five
nations: Ethiopia, Uganda, Mali, Malawi and Mozambique. This
initiative will support policy reform and a range of
agricultural research that will benefit not only Africa, but
other developing nations as well. Modernizing agriculture, the
cornerstone of the economy in most developing nations,
increases incomes of rural people, lowers the cost of food for
the urban poor and conserves the environment. By furthering
agricultural and, thus, economic growth in these countries, the
initiative has the potential to both spark U.S. exports and
save this country significant emergency relief food costs.
In sum, these modest increases in spending are all vital to helping
secure a more prosperous and stable world during the next century. I
would also note that this year's request includes a decrease of over
$15 million in our agency's operating expenses. This decrease is due to
a reduction in staffing levels combined with economies achieved by
reengineering and the restructuring of our overseas operations.
Recognizing the importance of our unique mission, we have
dramatically improved the management of USAID to make it the most
effective foreign assistance agency in the world. We have overhauled
the agency from top to bottom--its strategic approach, organization and
management. We have demanded that our programs produce demonstrable
results. Since 1993, we have reduced staff by over 2,700. We have cut
senior management by 38 percent. We have reduced project design time by
75 percent. We have reduced our regulations by 55 percent. We have
closed 26 overseas missions and will close six more by the end of
fiscal year 1998. Further, USAID is one of the pioneering agencies in
implementing the Government Performance and Results Act. All of these
actions are designed to ensure that every dollar appropriated to the
agency can bring taxpayers the best possible return on their
investment.
We know you have questions about our new management systems. Let me
try to give you my perspective on what we are doing. You must first
understand that our new management systems are not just designed to
replace existing financial and procurement systems. We will indeed
replace those systems but NMS is much more than computers or software.
Our new management systems are a new way of doing business. As you
know, we have redesigned our old project design system to make it
faster, simpler and more customer-oriented. We have also redesigned our
foreign missions to empower employees, to create strategic objective
teams and to make our programs more results-driven. The new computer
system will facilitate these improvements. It is a management tool
created to allow us to manage more effectively the other reforms we
have adopted.
As we implement the computer portion of NMS, we are bringing the
agency's technology to the forefront of any used in government. We are
in the process of deploying a management system that fully integrates
project planning, budgeting, a single-entry financial system, a
simplified procurement system, and our evaluation system. In the next
few years, we will add workforce planning, personnel management and a
training module to our current capabilities. All of this will be
available to every USAID office worldwide. Deploying such a system in a
worldwide operation is not easy, but we have made great progress.
Let me give you a brief status report.
As you know, we activated NMS computer system worldwide on October
1, 1996. Since then we have been using a combination of NMS and the old
legacy systems to process transactions. To date we have processed 142
contracts and grants in NMS totaling $252 million and have paid
approximately $15 million in invoices plus the $1.2 billion cash
transfer to Israel.
Since bringing the system up worldwide, we have been addressing two
major challenges. One relates to the need to migrate consistent and
accurate data from the old systems into the new. The NMS will not allow
us to process any inconsistent or inaccurate data. This forces us to
clean up and reconcile data and incorporate it into the new system. We
have found this to be a more labor-intensive process than we imagined
because the level of inaccuracy in the old systems was even greater
than anticipated. Nonetheless, we have made great progress. We have
migrated all 8,000 records from the old Financial Accounting Control
System (FACS) and the 6,500 records from the Contract Information
Management System (CIMS). We still have to reconcile this data and
reconcile it with the data from the field Mission Accounting Systems
(MACS), but we expect to finish that process by this summer.
Could we have waited until all this data was reconciled before we
activated NMS? Could we have phased in the new system one module at a
time? We considered both of these options. We rejected them because the
integration process would have taken years, and we would still be using
the old legacy systems and accumulating additional data of questionable
accuracy that would have to be migrated later in a reconciled form.
Activating NMS has forced us to migrate the data more expeditiously
and, in the long run, it will save us time and tax dollars.
The second challenge has been the need to create a worldwide, high-
speed communications system. We have encountered problems with the two
separate telecommunications systems we have been using, but we are
making real progress in overcoming these problems. The time needed for
transactions has been reduced, and we have several actions we are
taking to further reduce this timeframe.
Mr. Chairman, when I came to USAID in 1993, the need for an
integrated management system had already been identified. A plan
developed in 1992 called for a fully integrated financial management,
procurement and budget system but one that did not integrate operations
or allow us to integrate field and headquarters capabilities. This much
less ambitious system was estimated to cost approximately $100 million.
Our judgment was that that plan would not have given the Agency what it
needed in a reasonable timeframe and that the cost estimate would most
likely have been exceeded.
What we have created is the full-fledged integrated management
system I have described. We have consciously sought to deploy this
system using state-of-the-art approaches. Each step of the way we have
consulted with systems experts at OMB, GAO and the private sector, and
we have been encouraged to move forward. My own Inspector General has
offered superb advice on which we have acted to correct problems. He
has also pointed out that our systems development approach is an
unconventional one. That is his job.
I want you to know that I understand the risks, and I believe that
our approach will pay off. It reflects the latest thinking in systems
development. I also understand there are risks in adopting conventional
approaches as well. As business executive Hank Delevati of Quantum
Corporation said recently, ``The phased approach is longer--and I
contend riskier--because you won't get everyone involved and
coordinated.'' Quantum Corporation was one of many large organizations
that has successfully deployed a new integrated management system using
the ``all at once'' approach.
Last week we had our systems coordinators into Washington from
around the world. We want them to know we understand the problems they
are having and the solutions we are devising. They now have a better
appreciation of the effort we are making. They and we are confident
that we will accomplish what other government agencies have not.
Mr. Chairman, we do not seek to mask the difficulties we face in
making NMS fully operational, but we are on the right track. This
system will not only revolutionize the way we do business at USAID, it
will lead the way for the development of similar systems in the U.S.
Government. We have been pleased that so many Congressional staff have
sat through detailed briefings on NMS. We welcome your vigorous
oversight. We welcome it because we know that together we can vastly
improve our capacity to fulfill our mission.
In short, we are doing everything possible on the management side
to make America's international programs cost-effective. We want to
achieve results that serve America's interests. Let me describe how we
believe we serve those interests in today's world.
america's stake in the world
The United States has a vital interest in maintaining a leadership
role in the international community, and in seeing that the
international community cooperates on the basis of shared values.
Nowhere is this more true than in promoting development in poor nations
and countries emerging from the long shadows of communism and
totalitarianism. Why is this important to Americans?
It is important because we live in a world where trends toward
globalization and increased interdependence are powerful and
accelerating. This means international cooperation is increasingly
important--in areas as diverse as promoting trade, protecting the
environment, fostering democratic governments, reducing rapid
population growth rates, establishing market-based economies, stemming
the flow of narcotics, slowing the spread of infectious diseases,
coping with migration and protecting human rights. In all of these
areas, the benefits of fruitful cooperation are significant and
lasting, while the failure to work together will be increasingly costly
and immediate.
During the cold war, U.S. leadership was central and unmistakable
as the protector of the free world against the threat of communist
expansion. U.S. military power and economic dynamism were seen as
essential to resisting that threat. But America's leadership then, as
now, had a foundation stronger than our Army or our economy. The United
States projected a compelling, and widely shared, vision of a world
order where democracy and open systems were respected. Our vision of
political and economic freedom, of social justice and respect for the
individual was as powerful as any missile or any defense system. The
United States offered the world not only security, but a better
alternative to the Communist vision.
The Cold War is over. We still have the strongest military and the
strongest economy in the world. But strength alone is not a substitute
for leadership. America's position in the 21st century will depend more
and more on the quality of our leadership; on the perception that we
understand and appreciate the broad interests of the international
community, and that we act with these interests in mind; and on the
perception that we still have the best, most compelling vision of a
global world order. Equally important, America's domestic interests are
now, more than ever before, inexorably linked to events that take place
far from our own shores.
Our modest and well-targeted foreign assistance programs directly
advance America's interests--your constituents' interests--in three
direct ways: by helping to prevent crises; by generating dynamic
opportunities for expanded trade; and by providing protection from
specific global health and environmental threats.
a diplomacy of crisis prevention
One of the most profound areas of concern for the United States and
its allies is the growing phenomena of failed states. One need only
open a newspaper on any given day to see the perilous state in which
many nations now find themselves. Whether it is rebels fighting in
eastern Zaire, hostage-taking in Tajikistan, street protests in
Belgrade, Bulgaria and Albania or the constitutional crisis in Ecuador,
we are confronted by potentially explosive situations with the
potential to trigger conflict or economic collapse.
Since the mid-1980s, the number of man-made emergencies requiring a
U.S. Government response has doubled. The staggering human, financial
and political cost of these conflicts is reflected in the increasing
scope and complexity of peacekeeping operations, the loss of human life
and the exploding numbers of refugees around the globe. Since the Gulf
War, the United States has mounted 27 military operations as a result
of ethnic conflicts and failed states. Up to 1 million people lost
their lives through genocide in one year in Rwanda. In the former
Yugoslavia, the loss of human life in less than four years was the
greatest in Europe's post-World War II history. The number of refugees
and displaced persons in the world now numbers close to 50 million.
As a nation, we know that we ignore the warning signs of crises
only at our own peril. When potential crises erupt into genuine
emergencies, it is the U.S. military most likely to be put in harm's
way, it is U.S. economic interests that suffer and it is this nation
that ends up providing the lion's share of humanitarian assistance to
the victims of war and social collapse. It is abundantly clear: The
United States has a compelling national interest in preventing and
averting crises before they occur. Practicing a diplomacy of crisis
prevention is one of our greatest challenges in this new era, and
development programs have a lead role to play in these efforts.
As we know from our own daily experience, every country is subject
to the internal pressures to some degree of stress from ethnic,
religious, economic and other deep-seated conflicts among their own
citizens. What distinguishes a country that can endure these internal
tensions from one that cannot is the relative strength of its domestic
institutions. By institutions, I mean not just government and political
organizations, but also tradition, culture, social practices, religion
and the depth of human capital. In many cases, conflict is a result of
a failure to give people a stake in their own society.
The reality is that most nations in conflict simply lacked the
institutional capacity to avoid escalating violence. We see prime
examples of this in the former communist world. When communist
institutions collapsed, and no strong institutions replaced them,
conflict became commonplace. We obviously do not wish to see a return
to totalitarian methods, so it is essential that we help these
countries put democratic institutions and social conditions in place.
A second category of countries that fall into crisis include
nations such as Rwanda, Somalia, Sudan, Zaire, Afghanistan and Liberia.
What these countries have in common is that they are among the least
developed countries in the world. And, by ``least developed'' we mean
they have the weakest institutions and least developed human resources.
The findings of a recent CIA study of failed states confirm the
role of underdevelopment in crises. The study attempted to find the
indicators most commonly associated with a vulnerability to crisis. The
three leading factors shared among nations that have succumbed to
crisis were high infant mortality rates, a lack of openness to trade,
and weak democratic institutions. Does this mean that if we simply
promote trade, strengthen democracy and provide child health programs
that crises would disappear? The study doesn't say that. What it does
say is that these variables are reasonable proxies for a nation's
relative level of overall development, including a country's
willingness to invest in its own people, to concern itself with lower
consumer prices and to create institutions to enable the people to
participate in the development of their own society.
The implications of this analysis for our foreign policy are
profound. Development programs are aimed at enriching human resources,
strengthening open institutions, and supporting political and economic
reform. By fostering stronger institutions, a richer human resource
base and economic and social progress, countries are better able to
manage conflict and avoid the dangerous descent into war. Development
programs give us the tools we need to deal with the uncertain world
around us. I am not here today to say that development programs are an
ironclad guarantee against crisis and collapse. But it is entirely fair
to say that successful development and transitions out of closed
systems vastly improve the capabilities of a country to manage division
and conflict. This is clearly in the best interests of the United
States.
The challenge of crisis prevention is, in many respects, the
logical successor to the paradigm of the Cold War. Through our
democracy and governance programs, USAID seeks to strengthen the
political, social and economic institutions on which management of
conflict directly depends. Our efforts at promoting economic growth
also encourage economic freedom. Our efforts at human resource
development--in education and health--ensure that an increasing
percentage of the population can take advantage of economic
opportunity, social progress and political freedom. Our efforts to
protect the environment and to give families the capacity to space
their children help ensure that development progress is sustainable.
And there is strong evidence that U.S. foreign assistance programs
have successfully helped develop functioning stable democracies.
Political freedoms have increased significantly in the countries where
development activities have been most focused. Between 1982 and 1996,
Freedom House data demonstrates that political freedom improved in 48
countries and grew worse in 30. Of the 29 countries showing the most
dramatic improvements in political freedoms, most were significant
recipients of U.S. aid over the period. U.S. efforts helped nations
such as the Philippines, South Africa, Jordan, Haiti, Bangladesh,
Guatemala, Mozambique, Nicaragua, Uruguay and Malawi realize the dream
of more open societies.
We have also adopted the policy that nations that do not embrace
democracy, and that turn their backs on their citizens, will not
receive U.S. assistance. We cannot achieve development results if we
have poor partners. We will not work with governments that exclude
their people from the development process.
International development cooperation works. In developing
countries during the past 35 years, infant mortality has fallen from
162 to 69 per thousand; life expectancy has risen from 50 to 65 years;
and literacy has climbed from 35 to 67 percent.
We cannot prevent every crisis, but we can avert many. Investing in
these efforts is a small price to pay for a foreign policy that
advances our interests in a more stable world.
advancing u.s. economic interests
Let me turn now to the role development programs play in directly
supporting U.S. economic interests. For both trade and investment,
developing countries provide the most dynamic and rapidly expanding
markets for U.S. goods and services. U.S. exports to developing
countries in the 1990s have expanded at 12 percent annually, more than
double the export growth to industrial countries. This is not just a
short-term phenomenon, but reflects a trend that began emerging in the
mid-1980s.
U.S. exports to countries that receive U.S. assistance have
boomed--rising by 76 percent in the last five years alone. Between 1990
and 1995, American exports to transition and developing countries
increased by $98.7 billion. This growth supported roughly 1.9 million
jobs in the United States. Work in agriculture has a particularly high
return. Forty-three of the 50 largest importers of American
agricultural goods formerly received food aid from the United States--
that's over $40 billion a year of U.S. agricultural exports. A recent
study by the International Food Policy Research Institute found that
for every dollar invested in agricultural research for developing
countries, the export market available for donor countries expands by
more than four dollars, of which more than one dollar is for
agricultural commodities.
The bottom line is that by the year 2000--three short years from
now--four out of five consumers will live in the developing world.
USAID's programs are helping these people become America's next
generation of customers.
As Latin American economies have prospered, so have U.S. exports
and jobs. The region is the fastest-growing market for U.S. exports of
goods and services, and also one of the largest. In 1995, the Latin
American and Caribbean region accounted for more than 70 percent of all
U.S. exports to USAID-assisted countries. Exports of goods to all
countries in the region reached $95 billion in 1995, more than three
times the level 10 years ago.
Creating the enabling environment for markets is a principal focus
of USAID's programs. The connection with development programs, and
USAID in particular, is quite significant. U.S. exports are growing
much more rapidly to some developing countries than to others. What
accounts for these differences? The major portion of the variation is
explained by progress in terms of improved policies and institutions--
i.e., the enabling environment for markets.
USAID-assisted countries have been among those that have made the
greatest progress in policy and institutional reform over the past
decade, including Thailand, Jamaica, Bolivia, El Salvador, Guatemala,
Peru, Ghana, Costa Rica, the Philippines, Morocco, Sri Lanka, Belize,
Panama, Tanzania, Tunisia, Indonesia, Mali, Botswana, and Uganda.
Because of our field presence, technical expertise and experience,
USAID can have significant influence in encouraging economic policy
reform.
The international financial institutions have also played a vital
role in supporting economic reform and restructuring weak economies,
especially in countries in transition from authoritarian regimes or
from conflict. In response to effective U.S. leadership within the
donor community, they have increasingly put their weight behind
governance reform, investment in social capital, and environmental
sustainability--significantly complementing U.S. bilateral efforts.
U.S. investments in both bilateral and multilateral assistance programs
are fundamental to maintaining U.S. leadership within the donor
community and to strengthening this complementarity.
There are some who have argued that private capital flows can
simply replace the need for foreign assistance programs. However, it is
important to remember that foreign assistance and private investments
are complements--not alternatives. By and large, private investment is
flowing today into the emerged markets of the developing world, not
into countries where there is no rule of law, no financial
institutions, no private sector and no predictability. It is only when
the enabling environment for markets has been well established--by
recipient self-help efforts often supported by foreign aid--that
private flows begin to accelerate. Eventually private investment and
trade will replace foreign aid, and this is what a development program
should strive to achieve. But the issue for most of the developing
world countries is not best captured by the phrase ``trade, not aid.''
The phrase ``aid, then trade'' is closer to their reality.
Our development efforts have contributed to economic freedom
worldwide. Of the 27 countries with large improvements in economic
freedom between 1975 and 1995 (as measured by an index from the Fraser
Institute), 22 have been major recipients of U.S. foreign aid.
Continued Clinton Administration efforts to promote U.S. job creation
through trade and investment abroad must focus on emerging markets in
Asia, Latin America, Eastern Europe, the New Independent States and
Africa. Hastening the fuller emergence of these dynamic new markets is
an essential element of a long-term U.S. economic and foreign policy
strategy for the United States. Private capital will play the largest
role in bringing the markets of developing nations into the mainstream
of trade and investment, but some of the most promising developing
markets are still hampered by trade barriers, other policy distortions
and human capacity constraints that discourage trade and private
capital flows.
U.S. development assistance is useful in removing these structural
and policy barriers. By reducing barriers that keep out foreign trade,
by fostering fair and transparent regulatory and legal regimes, and by
building capital markets, USAID has been at the cutting-edge of the
continued steady growth of America's economy.
protecting america against global threats
Foreign assistance programs are also vital in protecting the United
States against dangers that are global in scope. By treating infectious
diseases like AIDS, polio, and emerging viruses like Ebola before they
reach our shores, USAID lowers health costs here at home. Our
environmental programs help protect the air and water that Americans
share with the rest of the world. Our family planning programs help
slow rapid population growth and make for healthier and better-cared-
for families around the globe, ultimately reducing instability,
migration and refugee flows.
Let me give you several specific examples of how all Americans can
benefit from our development efforts abroad. USAID has long been the
leader in the battle to eradicate polio around the globe. Working with
our neighbors, the Pan American Health Organization, American
organizations like Rotary International and many others, we
successfully wiped out polio in the Americas. But did you know that
U.S. taxpayers still spend $230 million a year to immunize our children
against the threat of polio reoccurring on this continent?
USAID, working with a rich variety of partners, is helping to lead
the effort to eradicate polio globally by the year 2000. This is an
ambitious goal, but an achievable one. So by making modest resources
available for foreign assistance, the United States stands to save $230
million a year in domestic immunization costs. This is clearly a case
where foreign assistance is an investment in our own self-interest.
Or consider that USAID has reached more than 3.2 million people
with HIV prevention education and trained more than 58,000 people to
serve as counselors and health providers in the developing world.
Recent computer modeling shows that USAID helped Kenya avert over
110,000 HIV infections in just three years. Ultimately, our HIV/AIDS
programs result in fewer Americans exposed to the virus, and lower
health care costs for American families.
By preventing crises, by boosting America's economy, and by
protecting the United States from truly global threats, we are working
abroad to keep America strong at home and abroad.
building the institutions that serve us well
In closing, I would say to this subcommittee that today we have the
chance to shape the international institutions and programs that will
protect America's prosperity, security and stability for years to come.
This includes not only bilateral institutions such as USAID, but
equally vital multilateral mechanisms such as the United Nations, the
World Bank and other international financial institutions.
It is fitting that this year we will celebrate the 50th anniversary
of the commencement of the Marshall Plan. All now agree that the
Marshall Plan was a stunning, unprecedented example of enlightened
leadership. The United States understood the benefits to the United
States of economic recovery in Europe and Japan, and the threats in
terms of crisis and instability that would result from economic
stagnation in these regions.
During the Marshall Plan, foreign economic aid amounted to more
than 1.5 percent of U.S. gross national product. Now, foreign aid is
about one-tenth of 1 percent of our gross national product, and well
below one-half of 1 percent of federal expenditures. Fortunately, and
precisely because the Marshall Plan was such a success, there are many
other nations to help us carry the mutual burden of international
leadership. But we should still do better if we want to maintain our
leadership role and defend our interests.
Development cooperation, including support for countries making the
transition from communism, and humanitarian assistance for countries in
crisis, remains an essential part of a credible and compelling vision
of how the international community should function. A lead role for the
United States in development cooperation is a vital part of American
leadership in the post-Cold War era, arguably more important now than
ever.
I urge your support for the President's budget request, and I look
forward to working with you to strengthen our nation's foreign policy
capacity.
Thank you.
______
U.S. Agency for International Development
fiscal year 1998 congressional presentation
summary
``Every dollar we devote to preventing conflicts, to promoting
democracy, to stopping the spread of disease and starvation brings a
sure return in security and savings.'' --President William Jefferson
Clinton State of the Union Address February 4, 1997
The president's Budget Request for fiscal year 1998 includes $19.4
billion for programs in international affairs. The U.S. Agency for
International Development will manage $7.2 billion (37.5 percent) of
those funds, which includes both USAID programs and programs
administered by USAID in cooperation with other agencies. USAID works
with developing nations and countries in transition to support viable
democracies and market economies. America's fastest growing export
markets are in developing countries--U.S. exports to countries
receiving USAID assistance grew by $98.7 billion from 1990 to 1995,
supporting roughly 1.9 million jobs in the U.S. By the year 2000, four
out of five consumers in the world will live in developing nations.
Fiscal year 1998 budget request
Percent
All other Federal spending........................................ 99.58
USAID............................................................. .42
USAID's programs advance both our foreign policy goals and the
well-being of some of the world's neediest people. The fiscal year 1998
funds will:
--Help eradicate polio globally by the year 2000, saving American
taxpayers $230 million a year in domestic immunization costs;
--Save more than 3 million lives through immunization programs;
--Help developing nations build their capacity to open their markets
and tear down barriers to U.S. trade;
--Extend family planning services to more than 19 million couples
around the world who could not otherwise afford them, thus
averting thousands of needless deaths of mothers and children;
--Provide assistance to millions of victims of flood, famine,
conflict and other crises around the globe.
--Combat worldwide environmental degradation, including global
climate change, biodiversity loss and natural resource
depletion; and,
--Provide credit to hundreds of thousands women
``microentrepreneurs'' starting small businesses.
The request for fiscal year 1998 USAID managed programs represents
an increase of $476 million over fiscal year 1997--including,
principally:
--An additional $292 million for programs in Central and Eastern
Europe and the NIS;
--$135 million more for the Economic Support Fund; and
--An increase of $65.5 million in USAID's Sustainable Development
Assistance.
--The fiscal year 1998 request also includes economic growth
activities aimed at improving food security in Africa to help
feed the hungry and support for agricultural research through
the agency's central Global Bureau.
The request also includes a decrease of $15.3 million in the
agency's operating expenses.
The fiscal year 1998 USAID request reverses the agency's downward
budget trend of the last several years, and represents the minimum
level necessary to implement a balanced program of sustainable
development and humanitarian assistance that will significantly
contribute to achieving the administration's foreign policy objectives
in the post-Cold War era. USAID is now at a point where after four
years of implementing a comprehensive set of management reforms, the
Agency's program quality has greatly improved; is increasingly
concentrated on results, improved efficiencies and more effective
programming; and is more focused in defining its goals and objectives.
[Discretionary budget authority--in millions]
----------------------------------------------------------------------------------------------------------------
Fiscal year--
--------------------------------
1996 1997 1998 request
appropriated appropriated
----------------------------------------------------------------------------------------------------------------
Development assistance (DA)..................................... 1,619 1,132 998
Child Survival and Disease Program \1\.......................... .............. 500 ..............
Development Fund for Africa (DFA)............................... (\2\) (\2\) 700
International disaster assistance............................... 181 190 190
Credit programs:
Micro and small enterprise development...................... 2 2 2
Urban and environmental credit.............................. 11 10 9
Operating expenses--USAID \3\................................... 494 489 473
Operating expenses--USAID IG.................................... 30 30 30
-----------------------------------------------
Subtotal--development assistance.......................... 2,337 2,352 2,401
Economic support fund........................................... 2,360 \4\ 2,363 2,498
Eastern Europe.................................................. 522 475 492
New Independent States.......................................... 641 625 900
-----------------------------------------------
Subtotal--USAID appropriated.............................. 5,854 5,815 6,291
Public Law 480 through USDA Title II............................ 821 837 837
Title III....................................................... 50 30 30
-----------------------------------------------
Total USAID administered.................................. 6,725 6,682 7,158
----------------------------------------------------------------------------------------------------------------
\1\ These programs are funded under Da in fiscal year 1996 and DA/DFA in fiscal year 1998.
\2\ Africa program funding included in DA in 1996-97.
\3\ Operating Expenses includes use of DA funds in 1996-97.
\4\ ESF includes $52.5 million requested for the Middle East Development Bank in fiscal year 1998.
usaid development and humanitarian programs ($2.445b)
This request includes funding for bilateral Sustainable Development
which is funded out of the Agency's Development Assistance (DA) and the
Development Fund for Africa (DFA). In addition, USAID requests funding
for the International Disaster Assistance account; USAID's credit,
guaranty subsidy and administration programs; food assistance under
Titles II and III of Public Law 480; USAID's and the Inspector
General's Operating Expenses; and a mandatory payment to the Foreign
Service Retirement and Disability Fund.
Sustainable Development ($1.698B):
This request, which compares to an fiscal year 1997 level of
$1,632B (after transfers to UNICEF, the IAF, ADF and USAID's OE
account), is the core of USAID's program. It is funded from the DA
($998M) and DFA ($700M) accounts.
Sustainable Development is based on four integrated, interrelated
and mutually reinforcing goals that are aimed at addressing the long-
term economic interests of the United States. (The fifth goal,
Humanitarian Assistance, is part of the programs described under
USAID's request for the International Disaster Assistance and Food for
Peace accounts.)
--Encouraging Broad Based Economic Growth ($507.5M): This goal is
centered around improving market efficiency and performance,
expanding access and opportunity for the poor including food
security, and ensuring that young women and men enter adulthood
with basic education skills. Within the overall allocation for
this goal $90.7M will support basic education for children. (FY
1997 funding is $517.7M for this goal).
--Stabilizing world population and protecting human health ($765M):
This goal is centered around four objectives: reducing
unintended pregnancies through increased use of family planning
($400M), reducing child mortality (220.5M), reducing the spread
of HIV/AIDS ($117.5M) and for a variety of other activities to
help reduce maternal mortality and the effects of other
infectious diseases ($27M.) (FY 1997 funding is $764.6M for
this goal)
--Protection of the environment ($290M): This goal centers on
reducing threats to the global environment, particularly
conservation of biodiversity, reduction of threats to global
climate change, reduction of pollution and promotion of
sustainable urbanization, provision of environmentally sound
energy activities and sustainable natural resource management.
(FY 1997 funding is $227.6M for this goal).
--The increase in environment funding in fiscal year 1998 reflects
support of important activities in Africa, Latin America and
the Asia and Near East (ANE) Bureaus.
--Funds will be provided to Guinea's Fouta Djallon Highlands program
to support environmental aspects of the Greater Horn of Africa
work on related food security issues; assist community-based
wildlife management initiatives in Southern Africa;
biodiversity conservation in Madagascar, and provide additional
funds to better service existing activities in countries
serviced by REDSO/WCA.
--In Latin America additional monies will be used to make up for
deferred environmental funding in El Salvador, Jamaica and Peru
as well as for a program expansion in Guatemala into the Maya
forest areas; the result of the peace accords.
--In ANE the increase in environmental funding will be used to make
up for deferred funding in fiscal year 1997.
--Supporting democratic participation ($135.5M): This goal is
achieved through strengthening rule of law and respect for
human rights, fostering more genuine and competitive political
processes, increasing the development of politically active
civil society, and supporting the establishment of more
transparent and accountable government institutions. (FY 1997
funding is $122.5M for this goal)
other development assistance programs
Credit programs
USAID believes that there are significant instances in which U.S.
development priorities can be best funded through credit, especially in
emerging market countries and in countries moving toward graduation
status.
Credit resources permit the leveraging of important amounts of
private sector resources to support sustainable development. Credit
programs also enable USAID to reach large populations that it would not
otherwise be able to reach.
Important beneficiaries of credit programs are the ``poorest of the
poor'' in both urban and rural areas.
--Urban and Environment program: USAID requests a total of $9M for
this program. This includes $3M for subsidies and $6M for
program administration. (This compares to the fiscal year 1997
appropriated level of $9.5M.)
--The subsidies will leverage approximately $45M in loan guaranties
to help credit worthy borrowers to address pressing urban and
environmental problems.
--Emphasis is placed on addressing urban and environmental problems
that impair human health, decrease child survival rates and
prevent economic progress.
--Micro and Small Enterprise Credit program: USAID requests a total
of $2M for this program including $1.5M for credit subsidies
and $500,000 for program administration. (The same amount was
appropriated in fiscal year 1997.)
--The program uses loans and guarantees to encourage financial
institutions to extend and expand credit to microentrepreneurs
and small businesses.
--The primary financial instrument is the Micro and Small Business
Loan Portfolio Guarantee (LPG).
Enhanced Credit Authority: As part of USAID's fiscal year 1998
request, the Agency seeks the use of up-to $10M in Sustainable
Development funds (including up to $1.5M for administrative expenses).
--The ECA will provide USAID with an important tool to leverage its
limited resources more effectively to pursue its global
development priorities.
International Disaster Assistance (IDA)
--USAID requests $190M for this program including $165M for disaster
relief managed by the U.S. Office of Foreign Disaster
Assistance and $25M for programs managed by the Agency's Office
of Transition Initiatives. (The IDA request is the same as the
fiscal year 1997 level.)
--OFDA funds support emergency relief for natural and man-made
disasters, and disaster preparedness, mitigation and
prevention.
--OTI activities address the head-line grabbing crises of failed
states as they attempt to reconstitute social and political
structures.
USAID Operating Expenses (OE)
USAID requests $473M to cover the salaries and other support costs
of USAID operations in Washington and at overseas locations. This
compares to an fiscal year 1997 level of $488.5M (including $17.5M
transferred from the DA account), or a reduction of $15.5M.
--This decrease is due to a reduction in overall OE funded staffing
levels combined with the completion of the move of the Agency
headquarters, with associated one-time cost savings.
--The savings are offset, in part, by increases associated with
worldwide inflation and the impact of pay raises for both U.S.
and foreign national staff.
Inspector General (IG) Operating Expenses
USAID requests $29.047M for the IG operating expenses to cover the
costs of domestic and overseas operations of the Agency's Inspector
General. This compares to an fiscal year 1997 level of $30M.
Foreign Service Retirement and Disability Fund (FSRDF)
These funds are not included in USAID's tables on discretionary
funding because it is a mandatory appropriation (required as a result
of the inclusion in fiscal year 1974 of USAID career foreign service
employees in this fund), and it is set at $44.208M for fiscal year 1998
to cover associated costs of that fund. This compares to the fiscal
year 1997 level of $43.826M.
other usaid-managed programs ($4,756.5b)
Economic Support Fund (ESF) ($2,497.6B)
The ESF account addresses economic and political foreign policy
interests of the United States by providing economic assistance to
allies and countries in transition to democracy, supporting the Middle
East peace process and financing economic stabilization programs,
frequently in a multi-donor context.
The largest share of these funds will go to supporting the Middle
East Peace Process ($1.2B for Israel, $815M for Egypt, $75M for the
West Bank Gaza, $25M for Jordan, $12M for Lebanon and $52M for transfer
to the Middle East Development Bank) and $17M to assist other non-peace
process countries and programs in that region.
The Latin America region will receive $116M, with the largest share
of those funds going to Haiti ($70M), Guatemala ($20M), and $10M for
the ICITAP program that funds administration of Justice and police
training programs in that region.
ESF will be used to fund continued support of programs for
``fledgling democracies'' in Cambodia ($37M) and Mongolia ($7M) as well
as provide on-going assistance to the International Fund for Ireland
(19.6M). $25M of ESF will be used for assistance in Sub-Saharan Africa
for elections, political party building and legislative training for
countries in transition such as Angola, the Congo and Sierra Leone, as
well as support for U.S. NGOs to provide assistance in training local
human rights and civil society networks in Cameroon, Rwanda and the
Seychelles.
(The ESF request compares an fiscal year 1997 level of $2.363B.)
Assistance for East Europe (SEED): ($492M):
This is a transitional program designed to aid Central and Eastern
European countries through their difficult passage to democracy and
market economies. As countries consolidate their political and economic
transitions they will be graduated from the assistance category and
funding for bilateral SEED programs will be phased out. However, the
program will remain flexible to accommodate uneven political and
economic progress.
The broad objectives of this program are to build market economies
and strong private sectors, consolidate democracy, and improve the
basic quality of life throughout the region.
--Of the amount requested, $225M will be allocated for Bosnia
reconstruction and reform programs including activities
associated with the Dayton Peace Accords.
--Of the non-Bosnian resources, 45 percent will go to Southern
Tiercountries, which have gotten off to a slower start then
countries in the Northern Tier, and which up to now received a
much smaller share of resources.
(This request compares to an fiscal year 1997 level of $475M).
Assistance for the New Independent States of the Former Soviet
Union ($900M):
--Funds under this request will be used to support these countries as
they make the transition to market economies and democracies as
responsible members of the international community.
--In fiscal year 1998 a new initiative will be undertaken,
Partnership for Freedom, that will build on achievements to date,
reorient our assistance program, first to Russia and then for the other
NIS countries, towards longer-term and more cooperative activities to
spur economic growth and develop lasting links between our peoples.
(This compares to an fiscal year 1997 level of $625M.)
Public Law 480 Food for Peace Titles II and III ($867M):
--Title II: USAID requests $837M (the same as the fiscal year 1997
level) to address food insecurity through emergency response,
increased agricultural productivity and increased household
nutrition activities.
--Title III: USAID requests $30M (compared to $29.5M in fiscal year
1997) to fund food aid to low-income, food-deficit counties to
encourage policy reforms aimed at achieving long-term food
security.
Country level detail for all USAID administered programs will be
presented in USAID's fiscal year 1998 Congressional Presentation to be
submitted to the Congress in late February/early March.
iri rapid response request
Senator McConnell. Thank you, Mr. Atwood.
What I am going to do, since we have several Senators here,
is to limit the first round to 5 minutes each so that everybody
can get a fairly early opportunity to question Mr. Atwood. And
for those who want to stay, they will get more time on
subsequent rounds.
In your testimony, you identified Cambodia and Mongolia as
examples of our support to fledgling democracies. In Cambodia,
IRI struggled with the AID office for more than 1 year and
eventually terminated the relationship when the program officer
tried to steer subgrants to personal friends.
After Mongolia's June elections, the Asia Foundation and
IRI submitted requests for support from AID's rapid response
fund. After extensive negotiation over plans, I am told the
request sat in one office for further review from October until
February.
We finally received the notification just this week, which
means that no funds will actually be released until March.
Do you have any idea why it took nearly 10 months for a
rapid response mechanism to release crucial funds for Mongolia?
Mr. Atwood. Mr. Chairman, I have looked into this question
because I knew that you were concerned about it. There were,
indeed, two offices involved here. But let me make clear that
IRI did use core funds to begin moving very quickly. They did
have $110,000 available.
There is no reason why it should have taken so much time to
get the request, the notification, up to you, I can assure you.
Having been the head of an NGO that was the partner of IRI at
one point, I can understand their deep frustration. I can also
understand the problems they have in trying to make ends meet.
So I am pleased that at least we are able to get the
notification up to you. I assume that within the next few
weeks, when that notification clears, we will be able to make
them whole again.
I want to make clear that they were not restricted from
moving. They did move, in fact, using their own funds and also
the core funding that was made available under the umbrella
contract for democracy.
Senator McConnell. So it was a reimbursement issue?
Mr. Atwood. That's right.
suspension of aid
Senator McConnell. You also said in your testimony that
nations that do not embrace democracy will not receive U.S.
aid. Can you give me some examples of where we have suspended
aid because of that policy?
Mr. Atwood. Yes; I will.
Given the fact that we suspended a lot of these programs
when we announced our first list of 21 countries back in 1993
and that, indeed, some of those countries have improved their
situation since that time, although because of budget
considerations we have not resumed our aid programs, I think
every time I mention countries I get messages, telegrams from
Ambassadors, saying you know, the situation has improved here
so you don't need to keep blasting this country.
But I think one of the countries that I do not have any
hesitancy in talking about, because the country is falling
apart and we are trying desperately to put it back together
again, is Zaire. There is an example of a country where abuse
of human rights, corruption, and everything else brought the
per capita income down from about $2,000 to less than $200,
despite the fact that we put $2.2 billion worth of aid into
Zaire over the years.
Now a lot of it was because we wanted Mr. Mobutu to vote
right in the United Nations and be on our side in the East-West
struggle. But we do not have to politicize our aid any longer.
We don't have to work with governments that abuse human rights.
In some cases we have the option of working only with NGO's
in countries where we think we are making progress. That is
true in a place like Kenya, where we are not exactly happy with
their pursuit of democratic practices. But we are making a lot
of progress in a lot of areas, working with nongovernmental
organizations, and we expect that our contribution there will
help change the situation over time.
So I would say that I would be happy to share these
countries with you privately, if you wish. But for me to now go
over decisions that we took 3 years ago, when I know that in
some cases the situation has improved, I think might be
counterproductive from a foreign policy point of view.
Senator McConnell. I'm curious as to what the criteria are.
For example, would you consider forcible repatriation of
refugees consistent with democratic practices?
Mr. Atwood. Forcible repatriation of refugees?
Senator McConnell. Yes.
Mr. Atwood. Generally speaking, I would not. I mean, it
depends on the situation you want to cite. Then we can argue
whether or not it was forcible.
Senator McConnell. The reason I raised that is a government
that clearly has been a friend of ours most of the time, the
Thai Government, is forcing Burmese women and children across
the border into SLORC gunfire. That has happened just in the
last 3 days. That is the sort of thing, it seems to me, that
ought to get our attention and cause a review of our assistance
policy, including Thailand's IMET program.
I wonder if you have any reaction to that.
Mr. Atwood. My only reaction is that we have had the
celebration of the graduation of Thailand from our aid program
because they have achieved a sustainable economic system and
political system.
Senator McConnell. I understand that. But I just cite that
as an example of the kind of thing that, I gather from what you
say, would meet the criteria.
Mr. Atwood. I don't want to talk about Thailand
specifically because it is a closeout post. But the fact of the
matter is when those kinds of things happen, I think it is
important for us to take those issues up with the government
because forced repatriation into a state such as Burma is not
something that we approve of. We are trying our best to be
supportive of those refugees on the Thai border, as a matter of
fact, through humanitarian and other assistance that we
provide.
Senator McConnell. I am out of time on the first round.
Senator Leahy.
Senator Leahy. Thank you, Mr. Chairman.
I have a number of questions that I will submit for the
record.
fledgling democracies
Mr. Atwood, you spoke about the use of ESF funds to support
fledgling democracies. What is democratic about Cambodia? They
had an election a few years ago, but Prime Minister Hun Sen
lost the election and forced his way into a coalition
government, probably one of the most corrupt anywhere.
Do we send aid to the government itself of Cambodia? I know
we use the Leahy war victims fund for land mine victims. But do
we give aid to the government itself?
Mr. Atwood. We do aid that transition, as does the entire
international community. I think that we understand exactly
what you are saying about the state of democracy in Cambodia.
We worry about it a great deal. We believe that the intent
continues to be that they are going to pursue democracy and
democratic institutions, and it is an important transition
given the history of that country and the devastating civil war
with the reign of the Khmer Rouge that we have experienced.
So we are not happy with all things that are going on
there. We did help sponsor an election which then resulted in a
compromise and coalition government. They are preparing for
another election.
We feel we have to engage to make that situation better.
Senator Leahy. Does that mean any pressure is being
brought? I mean, we send aid. Do we have any strings tied to
that aid?
Mr. Atwood. There are clear conditions in our aid program.
Most of them are in the law. If a country does absolutely turn
its back on democracy, for example, by stealing an election--we
have had that situation in Niger--under the law, we have to
close our AID mission and only pursue humanitarian goals in the
country.
I just had a meeting with our mission director the other
day. There are clear standards for our involvement. But I think
even the law, which was passed by both branches of government--
obviously, in every case--tends to lean toward engagement
versus absolute decisionmaking. There is still a good deal of
flexibility on the part of the administration to work a
situation to improve it.
usaid budget request
Senator Leahy. I'm looking at the increase over last year's
appropriation, the budget request. I hope we can find the money
because our foreign policy programs are underfunded. But it
seems AID is still on the short end of the stick. The request
is about a $1 billion increase above last year's level. But
only $65 million of that $1 billion is for AID's Development
Assistance programs, to protect the environment, to stabilize
population growth, to stop the spread of infectious diseases.
These are not glamorous programs. All they do is help the
people.
Why do they always end up in last place?
Mr. Atwood. There are all sorts of pressures, Senator
Leahy, as you know well. The most dramatic pressure that we are
all under nowadays is to balance the budget. But within the 150
account, there are also tremendous pressures.
I certainly understand the need to pay our arrearages to
the World Bank, for example, and have had meetings with
Secretary Rubin. We both understand the importance of the
overall system, the multilateral and the bilateral.
We need to pay our arrearages at the United Nations, too,
although there is a supplemental being considered, or at least
being discussed with the Congress on that score. But the 150
account is squeezed, even at $19.4 billion.
child survival and ngo's
Senator Leahy. We appropriated $500 million for AID's Child
Survival and Disease programs last year, and another $100
million for UNICEF. This year that is being cut to $455
million.
I think we are only sending about 4 percent of it to NGO's.
A great deal of it goes to for-profit contractors.
Are we getting the biggest bang for the buck?
Mr. Atwood. We have increased the amount that we provide
through NGO's, NGO partnerships, from something like 22 percent
to 34 percent.
Senator Leahy. I'm told it is 4 percent.
Mr. Atwood. No; in 1992, 24 percent of our aid went through
NGO's. In 1996, it was 34 percent, Senator.
Senator Leahy. Can you give me an example of the type of
NGO it might be going through?
Mr. Atwood. Well, there are hundreds of NGO's that we work
with. I mean, some of them are doing our humanitarian programs,
of course--the Catholic Relief Service, World Vision, and CARE.
A lot of them are working with us on microenterprise programs.
Some of them are working with us on family planning programs,
some of them on democracy programs.
It is a varied group. I would be happy to give you a list
of all the NGO's that we work with.
Senator Leahy. Yes; and I would also like to know whether
it includes for-profit contractors.
Mr. Atwood. No.
Senator Leahy. It does not?
Mr. Atwood. No; not that category. That is just NGO's.
Senator Leahy. Thank you, Mr. Chairman.
Senator McConnell. Thank you, Senator Leahy.
[The information follows:]
Private Voluntary and Nongovernmental Organizations
A nongovernmental organization (NGO) is defined broadly as
an organization organized formally or informally that is
independent of government. For-profit firms, however, are
excluded from this definition for USAID's internal coding
system, and data about the amount of assistance USAID provides
to NGOs does not include for-profit firms. Some for-profit
firms have established separate non-profit organizations which
meet the criteria for a private voluntary organization (PVO)
and have so registered with USAID. The terms NGO and PVO are
often used interchangeably, but USAID's definition of NGO for
internal coding purposes includes not only PVOs but also
universities and selected other non-profit organizations such
as research institutions.
The 24 percent and 34 percent figures I used above
represent development assistance funding for PVOs as a percent
of USAID's total development assistance funds.
With regard to NGOs and child survival, USAID's total
fiscal year 1996 child survival funding from all accounts was
$301 million. NGOs, including universities, received about 36
percent of this funding.
I do not recognize the 4 percent figure which you
mentioned. Until I know how it was calculated, the number is
difficult to comment on.
It might be helpful to note that some people think of the
Office of Private and Voluntary Cooperation in our Bureau for
Humanitarian Response (BHR/PVC) as the primary source of USAID
funding for PVOs. In fact, while BHR/PVC plays an important
capacity-building role for PVOs, this Office's funding for PVOs
in fiscal year 1995 was about 4.5 percent of USAID's total
development assistance funding for PVOs, which in fiscal year
1995 amounted to over $715 million.
Following is a list of registered U.S. private and
voluntary organizations.
registered u.s. private and voluntary organizations that work with
usaid
The Academy for Educational Development;
ACCION International;
AVSC International, Inc.;
Action for Enterprise Adventist Development and Relief
Agency International, Inc.;
African Christian Relief, Inc.;
African Community Resource Center, Inc., African Medical
and Research Foundation, Inc., The African Methodist Episcopal
Church Service & Development Agency
African Wildlife Foundation;
The African-American Institute;
African-American Labor Center;
Africare;
Aga Khan Foundation U.S.A. Agricultural Cooperative
Development International;
AICF/USA;
Aid to Artisans, Inc.;
Air Serv International, Inc.;
America's Development Foundation, Inc. America-Mideast
Educational & Training Services American Association for
International Aging, Inc.;
American College of Nurse-Midwives American Committee for
Shaare Zedek Hospital in Jerusalem, Inc.;
American Council on Education American Federation of
Teachers Educational Foundation American Institute for Free
Labor Development The American Jewish Joint Distribution
Committee, Inc. American Medical Resources Foundation, Inc.;
American National Red Cross;
American Near East Refugee Aid;
American ORT, Inc.;
American Red Magen David for Israel;
American Refugee Committee;
AmeriCares Foundation, Inc.;
Andean Rural Health Care, Inc.;
Appropriate Technology International;
Armenian Assembly of America, Inc.;
The Armenian Relief Society, Inc.;
Armenian Technology Group, Inc.;
The Asia Foundation;
Asian-American Free Labor Institute Bethany Christian
Services International, Inc.;
Bicentennial Volunteers, Inc.;
Blessings International, Inc.;
Books for Africa, Inc.;
Brother's Brother Foundation;
Caribbean Conservation Corporation;
The Carter Center, Inc.;
Catholic Near East Welfare Association;
Catholic Relief Services;
Center for Citizen Initiatives The Center for Health,
Education and Economic Research, Inc.;
Center for Marine Conservation Center for Strategic and
International Studies, Inc.;
Center for Victims of Torture The Centre for Development
and Population Activities;
ChildHope Foundation;
Children International;
Children of Chornobyl Relief Fund, Inc.;
Christian Children's Fund, Inc.;
Christian Reformed World Relief Committee;
Christian Relief Services, Inc.;
Church World Service, Inc.;
Citizens Democracy Corps, Inc.;
The Citizens Network for Foreign Affairs;
Community of Caring;
CONCERN Worldwide (U.S.), Inc.;
The Conservation International Foundation The Consortium
for the MBA Enterprise Corps, Inc. Cooperative for Assistance
and Relief Everywhere, Inc.;
Cooperative Housing Foundation Cooperative Office for
Voluntary Organizations, Inc.;
The Corporate Council on Africa;
COUNTERPART Foundation, Inc.;
Covenant House;
Credit Union National Association, Inc.;
Delphi International;
Dian Fossey Gorilla Fund;
Direct Relief International;
Doctors of the World, Inc.;
Doulos Community, Inc.;
Ecologically Sustainable Development, Inc.;
Education Development Center, Inc.;
Enersol Associates, Inc.;
Environmental Law Institute;
Esperanca, Inc. Ethiopian Community Development Council,
Inc.;
Eye Care, Inc.;
Family Health International;
Feed My People International, Ltd.;
Financial Services Volunteer Corps, Inc.;
Floresta USA, Inc.;
Food for the Hungry, Inc.;
Food for the Poor, Inc.;
The Foundation for a Civil Society, Ltd. Foundation for
International Community Assistance, Inc.;
Freedom from Hunger;
Fund for Democracy and Development;
The Fund for Peace The German Marshall Fund of the United
States;
Global Health Action, Inc.;
Global Operations and Development;
Goodwill Industries International, Inc.;
Habitat for Humanity International, Inc. Hadassah, The
Women's Zionist Organization of America, Inc. The Harry T.
Fultz Albanian-American Educational Foundation;
Health Alliance International;
Health and Education Volunteers, Inc.;
Health Volunteers Overseas;
Heart to Heart International, Inc.;
Heifer Project International, Inc.;
Helen Keller International, Inc.;
Hermandad, Inc.;
High/Scope Educational Research Foundation Holt
International Children's Services, Inc.;
Institute for a New South Africa;
Institute for Development Research, Inc.;
Institute for EastWest Studies;
Institute of International Education, Inc.;
International Center for Research on Women;
International Child Care (USA), Inc.;
International Church Relief Fund, Inc. International City/
County Management Association International Clinical
Epidemiology Network;
International Development Enterprises;
International Executive Service Corps;
International Eye Foundation, Inc. International Foundation
for Education and Self-Help;
The International Human Rights Law Group International
Institute for Energy Conservation International Institute of
Rural Reconstruction;
International Law Institute;
The International Medical Corps International Partnership
for Human Development International Planned Parenthood
Federation, Western Hemisphere Region;
International Rescue Committee International Services of
Hope/Impact Medical Division;
International Voluntary Services, Inc.;
IPAS, Inc.;
ISAR, Inc. Islamic African Relief Agency, United States
Affiliate;
Island Resources Foundation, Inc. Joint Center for
Political and Economic Studies, Inc. Katalysis North/South
Development Partnership;
Larry Jones International Ministries, Inc.;
The Life Link;
LightHawk;
Lithuanian Children's Relief, Inc.;
Lutheran World Relief, Inc.;
Magee-Womens Hospital;
Manomet Observatory, Inc.;
MAP International, Inc.;
Medical Benevolence Foundation;
Medical Care Development, Inc.;
MEDISEND Melwood Horticultural Training Center, Inc. The
Mennonite Economic Development Associates;
Mercy Corps International;
Minnesota International Health Volunteers;
Mission Without Borders International;
Missouri Botanical Garden;
The Mountain Institute, Inc.;
National Cooperative Business Association;
National Council for International Health;
National Council of Negro Women, Inc. National Council of
the Young Men's Christian Association of the USA;
National Fish and Wildlife Foundation;
National Planning Association National Rural Electric
Cooperative Association National Rural Electric Cooperative
Association--International Foundation;
National Telephone Cooperative Association;
The Nature Conservancy;
Nazarene Compassionate Ministries, Inc.;
Near East Foundation;
New York Botanical Garden;
New York Zoological Society Northwest Medical Teams
International, Inc.;
Obor, Inc.;
Operation California, Inc. Opportunities Industrialization
Centers International, Inc.;
OPPORTUNITY International, Inc.;
Organization for Tropical Studies, Inc.;
Pan American Development Foundation;
Park West Children's Fund, Inc.;
Parliamentary Human Rights Foundation;
Partners in Economic Reform, Inc.;
Partners of the Americas;
Pathfinder International;
The Pearl S. Buck Foundation, Inc. The People-to-People
Health Foundation, Inc.;
The Peregrine Fund;
Philippine American Foundation;
PLAN International USA, Inc., Planned Parenthood Federation
of America, Inc.;
Planned Parenthood of New York City, Inc.;
Planning Assistance Polish American Congress Charitable
Foundation;
The Population Council;
Population Services International Private Agencies
Collaborating Together, Inc.;
PRO Women Program for Appropriate Technology in Health;
Project Concern International;
Project Dawn, Inc.;
Project ORBIS International, Inc.;
Rodale Institute The Rotary Foundation of Rotary
International;
Sabre Foundation, Inc.;
Salesian Missions;
Salvadoran American Health Foundation;
The Salvation Army World Service Office;
Samaritan's Purse;
Save the Children Federation, Inc.;
Search for Common Ground;
Shelter Now International, Inc.;
Small Enterprise Assistance Funds;
St. David's Relief Foundation;
State of the World Forum;
Strategies for International Development;
Support Centers of America;
TechnoServe, Inc.;
Trees for Life, Inc.;
Trickle Up Program;
United Methodist Committee on Relief;
Viet-Nam Assistance for the Handicapped;
Vietnam Veterans of America Foundation Volunteers in
Overseas Cooperative Assistance;
Volunteers in Technical Assistance, Inc. Winrock
International Institute for Agricultural Development;
World Association for Children and Parents;
World Concern Development Organization;
World Education, Inc.;
World Emergency Relief;
World Environment Center;
World Learning, Inc.;
World Rehabilitation Fund, Inc.;
World Relief Corporation;
World Resources Institute;
World SHARE, Inc.;
World Vision Relief and Development, Inc.; and
World Wildlife Fund, Inc.
administration of justice programs
Senator McConnell. Senator Campbell.
Senator Campbell. Thank you, Mr. Chairman.
I, frankly, have no problem supporting the administration's
modest request for a budget increase. I think the efforts of
the USAID have made for stronger democratic nations. That has
led to better trading partners, increased sales of American
products, and certainly less conflict in those areas, too.
I note with interest in your testimony the efforts you have
made to streamline the Agency, to reduce regulations, to close
some of the offices, things of that nature, and I certainly
commend you on that point.
The bottom of page 11 in your testimony leads me to ask a
couple of questions. You talk about increased and escalating
violence, which I guess is one of the unfortunate parts of
democracy, and I would like to focus on this a little bit.
The AID Program funds the Administration of Justice Program
which primarily supports courts and prosecutors in developing
countries. Support for other law enforcement activities is
provided through the State Department's Bureau of International
Narcotics and Law Enforcement, and the Justice Department
operates an international criminal investigation training
program. There are a number of other law enforcement programs,
too.
I know that we probably have more expertise on what works
and what does not work in fighting crime, drugs, and gangs than
anybody in the world. We have had certainly more experience at
it.
I, like anybody else, read a lot of accounts of the
increased criminal activities in Russia, for instance, since
they have tried democracy.
I want to ask how do you ensure cooperation between your
agency and other Federal agencies to support various
international crime fighting programs so that we do not have
duplications of effort?
Mr. Atwood. I'm glad you asked because we have been
involved in Administration of Justice Programs for many, many
years, and there is more of a developmental aspect to our
programs. We work in partnership. We understand what is needed
in a country to create an institution that will do that kind of
work.
The State Department's relatively new Office on
International Crime has the obvious interest in making sure
that we can work with other governments to catch criminals and
to try to prevent the flow of narcotics through countries and
into our country, and the like. And then the Justice Department
likewise has interests in this area. They have a very good
operation that trains police officers.
We have gotten out of that business long ago because of a
lot of controversy. But it is an important function.
So we have an interagency group that meets to talk about
those issues and to talk about where we are working, what we
are doing, and how we can collaborate to make all of our
programs more effective.
Senator Campbell. Are there three agencies involved in that
interagency group?
Mr. Atwood. Three agencies. That's right.
Senator Campbell. How often do you meet?
Mr. Atwood. I don't know, exactly, Senator. I don't attend
the meetings myself. They are done at a lower level. But I
could get you that information.
Senator Campbell. OK, if you would, and I have several
other questions related to that.
[The information follows:]
Administration of Justice: Interagency Coordination
USAID participates in the inter-agency coordination
process, led by the Democracy, Human Rights and Labor Bureau at
the Department of State. The State Department's Bureau for
Narcotics and Law Enforcement (INL) chairs an Interagency
Working Group to coordinate various U.S. Government agencies'
respective law enforcement training programs. An interagency
working group meets regularly on ENI rule of law programs under
the direction of the Coordinator's Office. Interagency
coordination for other, long-term institutional building
administration of justice programs is carried out in countries,
through the country team under the direction of the U.S.
Ambassador.
Senator Campbell. I won't take any more time, Mr. Chairman.
But I did want you to know that that is kind of a special
interest for me.
I thank you for your testimony.
Mr. Atwood. Thank you, Senator.
Senator McConnell. Thank you, Senator Campbell.
Senator Lautenberg, your arrival is quite timely. As a
matter of fact, you can take your turn if you'd like.
Senator Lautenberg. That would be very nice.
Senator McConnell. This has probably never happened in your
entire Senate career, that you've arrived and immediately been
called upon.
Senator Lautenberg. That may be right.
Senator McConnell. Let me just say that we are limiting
this round to 5 minutes.
Senator Lautenberg. OK. So I ought not take all of it
trying to find my paper.
Mr. Atwood, it's good to see you.
Mr. Atwood. Likewise, Senator.
war crimes tribunal
Senator Lautenberg. One of the things that has concerned
me, and I'm sorry that I was not able to be here for your
testimony, but I will certainly read it with interest, is
implementation of a section of the Foreign Operations
Appropriations Act that gives the President authority to
withhold assistance from a country which knowingly grants
sanctuary to indicted war criminals. I do not know if this
subject has already been brought up.
Senator McConnell. No; so go ahead.
Senator Lautenberg. I am talking about countries that
provide sanctuary to persons evading prosecution by the
International Criminal Tribunal.
I believe our foreign assistance program can be used to
secure greater cooperation from the parties to the Dayton
Agreement in arresting and transferring indicted war criminals
to the tribunal.
Has any funding been withheld thus far under the provision
in fiscal year 1997?
Mr. Atwood. We are obviously trying in Bosnia to work with
officials who comply with the Dayton accords. We are also
working with the War Crimes Tribunal to enhance their capacity
to do their work. We are calling for the arrest of war
criminals in Bosnia and the like.
The answer to your question is that to date we have not
withheld resources because we think it is more important to
engage there and to try to change the conditions on the ground
that caused those war criminals to be harbored, not by
government officials in either Republika Srpska or the
Government of Bosnia and the Federation, necessarily, but by
other individuals within those societies.
republika srpska
Senator Lautenberg. It is a tough decision that you make,
only because we have a statutory obligation to try and do this.
It seems to me that we are walking delicately all over the
place. I'm not sure who is going to object to these people
being picked up and tried.
It is reported that more than one-half of the 75
individuals indicted for war crimes by the ICT have been seen--
this is in the papers--by journalists and nongovernmental
organizations that live in Croatia and Republika Srpska.
Earlier this year, my office was informed that our government
plans to allocate about one-third of the roughly $200 million
in funding appropriated by the Congress for Republika Srpska.
Is that still the plan?
Mr. Atwood. We are looking at what we can do. What we have
done in Republika Srpska is not to work with the government
that has been elected there, by the way, but more with
nongovernmental groups, independent media, and the like to try
to bring about reconciliation in the country.
If we work in the government in the area of Republika
Srpska, our intention would be to work to strengthen democratic
elements within that part of Bosnia, not in any way to aid
people who might be implicated, or whatever, but, rather, to
isolate them.
We need to pull that republic into the Bosnian Federation,
but, more importantly, into the international community, and we
cannot do it by just sitting back and not working with the
mayors, for example, of small villages that really do believe
that they ought to see a democratic change in those particular
municipalities.
On the other hand, our requirements ring hollow if we do
not indicate in specific ways our unwillingness to accept the
status quo.
Senator Lautenberg. Now I know that you and your department
are not in this alone by a long shot. But I would hope that our
government can intervene. Whether it is financially or
otherwise--I don't want to make the decision at this committee
table--we need to move this thing along and show that we are
serious.
It is an insult that they are able to thumb their noses at
us. The fact is that their conduct is unacceptable under any
condition in the civilized world. We are the only ones who can
really make a difference to impact on their behavior.
So I would hope that we could condition that funding in
some way and resist funding everything unless we get more
cooperation from the people we are entrusting.
Senator McConnell. Thank you, Senator Lautenberg.
nis assistance
Mr. Atwood, of the $900 million for the new NIS effort in
the President's proposed budget, the largest portion is, once
again, allocated to Russia. I am curious. What was the thinking
behind allocating Russia $241 million, flat-lining Ukraine,
reducing Armenia, and continuing support for Belarus, where a
dictator has recently seized control?
Mr. Atwood. The funding for Russia, as you know, Senator,
has gone down considerably from over $2 billion--I believe 1
year we handled about $1.2 billion of it--down to $95 million
last year.
We think, given the challenge that still exists there to
bring about a democratic market economy and the goodwill that
exists to try to pursue those issues under the Yeltsin regime,
it warrants our increasing funding to $240-$241 million under
this new arrangement of the partnership for freedom.
The technical assistance aspect will continue. We still
want to see that country break down the obstacles to trade and
investment so that we can, indeed, follow an exit strategy that
will have us leaving there within the next few years
altogether.
So I think the increase is in light of the fact that the
pipeline is being expended very fast, that we are moving away,
really, from government-to-government types of assistance to
outside of Moscow, into the hinterlands. This is a very large
country.
I am not saying that one country is more important than the
other. I think most people understand how important Russia is
to the entire region, including the people of Ukraine, who want
to see Russia become more democratic and a part of the
international community.
So that is our intention. It is our intention to begin to
phase down our program. But we see the need and we see the
importance of moving ahead with a program that will eventually
become taken over by trade and investment, we hope, and
linkages between democratic institutions.
Senator McConnell. Any response to my observations about
the other countries that I mentioned in my question?
Mr. Atwood. Again, you know, I give you credit. You pushed
us to some extent in a direction we wanted to go in the case of
Ukraine.
The problem, the only problem we face is that we had a
finite amount of money for the former Soviet Union and you
earmarked $225 million. I think that we have made some progress
there. We clearly would always like flexibility. If we don't
see reform happening, we'd like to move money from one place to
the other.
Nonetheless, I think we've made a great deal of progress
with President Kuchma. Right now, we are waiting for the Rada,
the parliament of the Ukraine, to vote for privatization and
for further economic reforms so that we can make more progress.
But we have made progress in Ukraine, and I think when the
history of this era is written, the name ``McConnell'' will be
part of it. [Laughter.]
Senator McConnell. That's certainly not required.
[Laughter.]
And what about Armenia and Belarus? Any thoughts about
those?
Mr. Atwood. Again, we are moving, in the case of Armenia,
from a mostly humanitarian program to really working with them.
I have to tell you that we are troubled by what happened in the
last election.
The Government of Armenia knows that. A new prime minister
has been named. We think that he is a real reformer and we are
working with all sides in Armenia, including the government and
the opposition. We have only requested $80 million this year,
as opposed to what we asked for last year for Armenia. But a
lot more of that is going to go to actual development
assistance, as opposed to humanitarian assistance.
I am not as familiar with the request for Belarus right off
the top of my head. I would be happy to give you more
information for the record on that country, Senator.
[The information follows:]
Continued USAID Assistance for Belarus
The USAID program in Belarus aims to promote a market-
oriented economy and democracy, including strengthening the
independent media, non-governmental organizations and private
enterprise. Because the environment for political and economic
reforms in Belarus is increasingly inhospitable, we will
provide assistance at only very modest levels ($5 million, or
less than one percent of the FSA request level).
However, we believe it important to encourage support for
reforms, and to do this by directing our assistance primarily
through non-governmental channels in the few areas where
progress has been made and where USAID can effectively counter
the weakening of democracy. Thus, our assistance request
reflects the fact that opportunities to support reforms are
limited under the current regime in Belarus, as well as the
fact that other NIS countries that are willing to reform and
seek U.S. assistance deserve the lion's share of our assistance
resources.
african elephants
Senator McConnell. On another subject, I recently sent you
a letter regarding the Zimbabwe Government's Communal Areas
Management Program for Indigenous Resources [CAMPFIRE] and that
is a mouthful. I have been contacted by a number of people from
my State who are worried that AID is contributing to the
wholesale slaughter of endangered species, such as elephants.
Understanding that it is AID's position that CAMPFIRE is
designed to ensure that the rural poor are active participants
in the national development process, I wonder if you are
prepared to address the concerns that were raised by the
communication that I sent you.
Mr. Atwood. First, yes. Any time you express those kinds of
concerns, we are concerned as well. We are certainly concerned
about the misinformation that has been going around the country
as a result of a National Enquirer article, a newspaper not
always known for its accuracy. In this case we can give you
very good details as to how inaccurate the article was.
But what I want to assure you of is, No. 1, we're looking
into your concerns. Very specifically, David Hales, the head of
our environment center, has been in Zimbabwe since last week.
He is coming back on Monday. I would be happy to have him come
up here and brief you and your staff on what his findings were
because there were serious allegations that, for example, the
group that we were supporting was lobbying to change the status
of elephants under the Endangered Species Treaty and a number
of other things that we believe not to be true. But David Hales
is there to investigate these charges for me.
What I want to emphasize here is that our interest is in
conserving the natural resource base of Zimbabwe, and that
includes the elephant, which is an endangered species. We tried
it every other way over the years. Because of poaching, and
because of corrupt governments, and because the communities
weren't involved, the park areas of these countries were
intruded upon. We saw the elephant population go down to about
32,000 in the 1950's.
That population is now up to 66,000 elephants because we
have adopted community-based conservation techniques. We give
the community a stake in taking care of the natural resource
base, which includes the elephant, which is obviously a tourist
attraction.
Now as in every case of any animal population, whether it
is deer here in this area or in Kentucky, or elephants in
Africa, you need to cull the herd on occasion. They have
created a tremendous amount of damage in the region. But there
are 3,000 more elephants being born every year and about 100 or
so taken as a result of hunting season permits that are granted
and strictly regulated by the community in the area.
If you don't give the community in the area a stake in
this, then you are going to see that elephant population going
down. Our interest is in preservation of the elephants and
helping the communities to preserve the natural resource base
of their own community and of their country.
There are serious allegations beyond that. But I wanted to
make it clear for the record that we are not sponsoring anyone
going in and hunting trophies on an indiscriminate basis. What
we are interested in is seeing that elephant population
continue to grow and to protect the park areas where they live.
Senator McConnell. I'm going to let Senator Lautenberg have
another round. Then I will have one final question to wrap it
up.
development assistance cuts
Senator Lautenberg.
Senator Lautenberg. Thank you. I will be fairly brief, Mr.
Chairman.
Mr. Atwood, what is the impact of the cuts on our ability
to carry out the Development Assistance Program?
Mr. Atwood. Well, Senator, we are losing some influence.
That is my most important message to you.
We have never claimed to do it all in terms of the gains
that we made in development. Over the last 30 years, we have
made some tremendous progress in reducing infant mortality by
one-half, by providing clean drinking water to 1 billion more
people, by increasing literacy rates by 75 percent, by
providing food for a growing world population through the Green
Revolution Program and by all of our contributions to
agricultural research. But we have maintained our leadership
capacity by convincing other countries to share the burden with
us.
In about 1960, we were providing 60 percent of all of the
official development assistance in the world. Today we only
provide 17 percent.
But if we do not go to the table with something other than
good ideas--and we continue to go to the table with good ideas,
I think--and if we go to the table as No. 4 in overall
contributions, compared to countries that are one-half the size
of our economy, we cannot influence the other donors. In fact,
we are influencing them in a negative way. They are cutting
back as well.
I think, given the progress that has been made and the need
that is still out there, American leadership is still vital in
this area. In addition, we've got diseases that we can control
that affect Americans, for example. We did succeed in
eradicating smallpox. We are able to save this country and all
of its people $280 million each year in immunization costs for
our children.
We are on the verge of eradicating polio. That will save us
$230 million per year for immunizations for our children
against polio.
Those kinds of things redound to the benefit of the
American people. In addition, our exports have soared, which is
why our economy is so strong versus that of other countries. We
still have a lot of room for growth, but we have to realize
that four out of five people will be living in the developing
world by the year 2000. Those are either going to be consumers
or they are going to be wards of the international community.
Either we are going to benefit in terms of increased
exports or we are going to lose in terms of increased costs for
peacekeeping, refugee assistance, and the absence of economic
growth.
Senator Lautenberg. Unfortunately, it is sometimes hard to
get the message through here, as we look primarily at the
budget cuts, to remember that moral leadership is incumbent
upon this democracy of ours because we are a nation with a
conscience. We are a nation with concerns about other people.
But also it follows on that our economic interests, as you
indicate, are also very well served. If you have friends, just
like within business circles in the country, if you have people
to whom you can present product ideas, development ideas, or
what have you and with whom you can work in cooperation, there
is an opportunity for you. That is not the primary mission, I
point out.
We are, again, a country with a conscience. So it should
be. Otherwise America is not the America that so many of us
think about and are so proud of.
But we are slashing away at programs where there has been
remarkable success. I think of river blindness, for instance.
We did not have to do much there but carry a product to the
source of this, and it has been almost eliminated. Can you
imagine? Hundreds of thousands of people each year are not
going blind who otherwise might, who would have to walk with a
young child in front of them to lead them to wherever they want
to go. There has been some marvelous work done and your agency
should be very proud, Mr. Atwood, for the contributions it has
made over the years.
Mr. Atwood. Thank you.
west bank and gaza microcredit program
Senator Lautenberg. I would ask one last question, Mr.
Chairman, and this has to do with the program, the development
program, that we had, the microcredit program for the West Bank
and Gaza.
It was part of a $500 million 5-year pledge to the
Palestinians. To date, if I am not mistaken, we have about $4.5
million worth of expenditures made. What are the plans for the
microcredit programs in the area? Will we continue to expand
the programs now in place in the West Bank and Gaza? What kind
of progress has been made in helping create financial
institutions that would specialize in the extension of credit
to these new enterprises?
Mr. Atwood. Senator, before I answer your question
specifically, let me say that I think we have made a major
contribution to peace in that region and in the West Bank and
Gaza in particular. We have done a lot to create wastewater
facilities to deal with the water issue, which is a huge issue
in that area. But there is something you may not be aware of.
In the case of the tense negotiations over the city of Hebron
at the last minute, one of the crucial issues was a road that
went through the center of the city and how that road would
look, how it could contribute to the peace. That was holding up
the final agreement on Hebron.
We sent a USAID engineer in from our office in Tel Aviv,
into Hebron, to look at that situation. He provided
architectural plans for redirecting that road and creating some
security barriers and the like that really did push that
agreement over the edge in the end.
So I feel very proud of the contribution that we made
there. We also have made a contribution generally in the sense
that when people in the West Bank and Gaza feel a hope that
their future is going to be better, indeed, that they will have
access to jobs and the like, the polls--which, by the way, the
International Republican Institute sponsors--are quite
positive. When they poll the Palestinians on their attitude
toward peace, they go all the way up to 70 percent in support
of the peace process now.
When you have problems, they tend to come down. The number
of people that will say in a poll that they support violence
against the State of Israel also goes way down when there is
more hope and when they can see that jobs are being created.
That is why, among other things, our credit programs are
very important. We provided $14 million for the microenterprise
sector--a loan guaranty facility, which has supported 270 small
loans, 8,500 short-term working capital loans to
microentrepreneurs, of whom 75 percent are women, equipment
loans to help more than 200 vocational graduates get started in
business, and loans averaging $23,000--which is not a
microloan--to small Gazan businesses that are creating
something like 800 to 1,000 jobs over a 3-year-period.
So we believe very strongly that this is one way of doing
it. There are other ways as well, and we need to continue, I
think, to be leaders there. While our program isn't the
largest--the World Bank's and the European Union's are--we
still have led the way in helping others see how we can create
a peaceful situation in that part of the Middle East.
Senator Lautenberg. Not only did we help in the pursuit of
peace, but we helped in the pursuit of expectation for an
improvement in life. I think you said it clearly, but I would
emphasize that unless the Palestinian people see some
opportunity for personal improvement, family improvement, and
so forth, they get disillusioned and I can understand why.
Thank you, Mr. Chairman.
polio programs
Senator McConnell. Thank you, Senator Lautenberg.
Just to wrap up, Mr. Atwood, you said that we sort of
pushed you to where you wanted to go in Ukraine. Would you put
the polio program in that category, too, that there also we
pushed you where you wanted to go?
Mr. Atwood. Absolutely, Senator.
rotary international
I had a wonderful meeting with Rotary International the
other day and I think that we are in accord with what we ought
to be doing together with Rotary. I have to commend them.
They've put something like $100 million of privately raised
money into this program and they deserve a lot of credit.
africa 10-year assessment
Senator McConnell. As a polio victim myself when I was a
youngster--and I was lucky--I've always taken a great deal of
interest in that. I am glad that you are doing the same.
While I think we probably do too many studies, last year
the subcommittee asked you to take a look at Africa in terms of
economic growth. We asked you to carry out a comprehensive 10-
year assessment of anticipated needs and the appropriate role
the United States might play in addressing those requirements.
I wonder if you have a status report on where you might be
going with that report?
Mr. Atwood. Yes, Senator. That report is being worked on as
we speak. We have even come to some preliminary findings. I
would be happy to provide those for the record.
[The information follows:]
Status of USAID's 10-Year Assessment for Development Assistance to
Africa
USAID's ``vision'' for development assistance to Africa
over the next decade is premised on a ``new vision'' for a 21st
century Africa--one in which elected leaders are committed to
equitable growth as a key principle of nation-building; where
Africans take the lead in maintaining peace and resolving
crises across the continent; where Africa's children are well-
fed, healthy, and in school; and where Africa's adults are
healthy, literate, active in civil society and working as
productive citizens in a global economy. This vision is based
on four principles:
(1) Africa's success depends on Africans themselves.--The
Development Fund for Africa (DFA) has long advocated that
consultation with and participation of our African partners
would enhance the results of our assistance. Today, nearly 10
years later, we can see that African leadership and ownership
of the ``development agenda'' are essential for success. Where
leaders have made hard choices for the good of their people,
USAID-supported programs have succeeded.
(2) Social and economic gains are not sustainable without
broad-based economic growth.--Growth, to be effective, must not
only focus on increasing the productive capacity of and
economic opportunity for all Africans, but support programs
that stabilize population growth, protect the environment, and
foster democracy and participation.
(3) Crisis prevention is critical.--While no nation is
immune from the spill-over effects of crisis, stronger nations
and economies are better able to cope. Addressing the critical
issues of food security, conflict resolution, and post-crisis
rehabilitation on a national and regional basis will help
instill this strength and resilience.
(4) Strategic coordination is essential.--Coordination
intensifies the effectiveness of our resources. USAID's
presence in Africa, while increasingly limited, nonetheless
gives us an understanding of conditions that is unmatched by
any other donor. This is key to influencing our partners and
ensuring that our collective investments will have the greatest
impact.
Our 10-year Report is guided by these four basic
principles, all of which are derived from experience in
implementing the DFA. Our vision for future assistance to
Africa is one that builds on past successes, adapts them to
future conditions, and positions the U.S. to take advantage of
new opportunities. Preliminary findings include:
(1) We must pay even greater attention to food security.--
Without access to adequate food, child survival is threatened;
without greater food production and the incomes to buy it,
child and adult health are compromised. USAID's Africa Food
Security Initiative will help promote food security in Africa
over the next decade by focusing on key aspects of agricultural
policy, regional trade, technology, infrastructure, and
integration of child survival and nutrition.
(2) We must strengthen the links between development
assistance and trade and investment.--The global economy is
growing, and African economies must become part of this growth.
USAID, with a view toward ``getting the enabling environment
right'', will help committed African nations become full
partners in the world's economy. A key outcome is enhanced
trade that is mutually beneficial to Africa and the U.S.
(3) We must continue social sector investments, especially
in health, child survival, and basic education.-- Such
investments must be linked to economic growth activities in
ways that help alleviate poverty and promote a better quality
of life for all Africans.
(4) We must sustain our support for strengthening civil
society and preventing crises.--Strong civil societies and
functioning democracies are essential for food security,
growth, social sector development, and trade and investment to
occur. These are also the building-blocks needed to avert or
mitigate the devastating effect of natural and man-made
disasters.
(5) We must emphasize regional approaches to regional
problems.--Promoting regional economic cooperation in Southern
Africa, through the Southern African Initiative; supporting
African-led efforts to achieve food security and overall
stability in East Africa, through the Greater Horn of Africa
Initiative; and promoting food security, regional cooperation,
and further democratic transition in West Africa, are some of
the more promising regional approaches USAID and other agencies
are using to complement and add-value to our bilateral
programs.
(6) We must continue our efforts to strengthen African
capacity.--This means increasing our engagement with a host of
public and private African institutions and networks in ways
that build leadership and self-reliance.
The Assessment, which is now being drafted, will be ready
for discussion with the Senate by May.
development fund for africa
Mr. Atwood. I want to say that your requesting us to look
strategically is a good complement to what has been done in
past years under the Development Fund for Africa, which is to
talk about the results that we achieved and assist those
countries that make greatest use of our assistance. This pushes
us to look forward.
We clearly believe that the food security request that we
have made is extremely important in light of the fragility of
some of these countries with respect to growing crops. We
believe that a great deal of progress has been made in opening
up African societies through the so-called Leland initiative,
the Internet and the like.
What we need to do is to put those kinds of changes that
are occurring in Africa in a strategic context as you have
asked us to do.
I am told that we are planning to provide that report this
spring. I will be happy to give you an exact date when I get
back to the office and look at it. But let me just say one
thing about Africa.
I think you can look at our programs in Africa from the
point of view of an optimist and say you can see real progress
there. The economic growth rates overall in 1995 were 4.4
percent and then 5.3 percent in 1996.
We also know that a lot of those African countries are
failing. So if you look at Africa and you say you are a
pessimist, that we have not succeeded much in the past--and one
has to give some credibility to that argument--then at a
minimum we need to prevent the worst from happening because it
is going to cost us a lot more money if we look at it from that
perspective.
We are looking at putting together a trade initiative for
Africa. As we look at that, we realize that African Governments
still need to reform their economies if they are going to have
any prospect of joining the global economy. I'd say there are
about a dozen countries that are ready to take off in Africa
now because the old East-West debate over whether or not they
ought to have a socialist economy has really ended. And we are
not working, in any case, in those countries which still do not
wish to reform their economies and privatize.
So I think whether your view is the glass is half empty or
half full, or whether you're an optimist or a pessimist, it is
important to look strategically. Again, you happen to be
pushing us in exactly the right direction.
Thank you very much, Mr. Chairman.
Additional committee questions
Senator McConnell. All right. Thank you very much. We are
going to leave the record open for any members to submit
questions and your response in the record.
[The following questions were not asked at the hearing, but
were submitted to the Agency for response subsequent to the
hearing.]
Additional Committee Questions
freedom house
Question. Your prepared statement also mentions a Freedom house
report which documents improvements in political freedom in 48
countries and a deterioration in 30 countries. You go on to say in 29
countries showing the most dramatic improvements, most were recipients
of U.S. aid.
--How many constitutes most?
--Of the countries where political freedom eroded, how many received
U.S. aid?
Answer. Twenty-seven of the twenty-nine countries that showed the
most dramatic improvement were USAID recipients during the period in
question. Benin, Mali, Malawi, South Africa, Mozambique, Chile,
Madagascar, Argentina, Uruguay, Bolivia, Central African Republic,
Nicaragua, Guinea-Bissau, Ethiopia, Congo, Guyana, Guatemala, Panama,
Haiti, Bangladesh, Jordan, Ghana, Philippines, Paraguay, El Salvador,
Guinea, and Pakistan. The others were Korea and Taiwan, both earlier
aid recipients. An improvement of 3 points or more on a scale from two
to fourteen was considered large.
Of the nineteen moderate improvers (a one or two point
improvement), seventeen were USAID recipients. Twelve of these
countries were in Africa.
Only seven countries showed large declines (3 points or more) in
political freedom--Dominican Republic, Kenya, Colombia, Sri Lanka,
Sudan, Gambia, and Nigeria. All have been USAID recipients, and USAID
has responded according to the circumstances. We have withdrawn from
Gambia and restricted programs in the other six countries.
Twenty-three other countries showed moderate declines impolitical
freedom. We have had little or no role in six of these countries:
Syria, Venezuela, Papua New Guinea, Malaysia, Greece, and Burma. We
have restricted programs or exited from ten others: Lebanon, Zimbabwe,
Ivory Coast, Zaire, Tunisia, Liberia, Costa Rica, Swaziland, Burundi,
and Rwanda. The remaining countries are Peru, Indonesia, Ecuador, and
Egypt (declines of two points): and Morocco, Honduras, and India
(declines of one point). In each of these seven countries we are
achieving important development results.
______
Questions Submitted by Senator Leahy
senior management
Question. You say in your statement that you have cut senior
management by 38 percent. How many people does that represent? Which
positions have been eliminated?
Answer. At the beginning of fiscal year 1993, there were 310 senior
managers at USAID. As of December 31, 1996, there were 186 senior
managers. This was a cut of 124 people, actually a cut of 40 percent.
These cuts resulted from our efforts to ``flatten'' USAID's
management structure. We eliminated a number of deputy positions, e.g.,
some deputy mission director, deputy assistant administrator, and
deputy office director positions. We also closed a number of missions,
eliminating several senior management positions with each closing. And
we consolidated several bureaus and offices in Washington further
reducing senior management position requirements.
Budget limitations, as well as streamlining our operations, are the
reasons for these cuts.
usaid deputy administrator position
Question. Does AID have a Deputy Administrator? Who is dealing with
the day to day operations of the Agency?
Answer. Since my Deputy, Carol Lancaster, left, we have used
several different means to fill the role of the Deputy. I first rotated
my Assistant Administrators to the Deputy spot for 30-day periods. I
did this to broaden their agency-wide knowledge as well as to provide
appropriate management controls. We are now actively recruiting with
the White House for a new deputy.
aid downsizing
Question. You say you have closed 26 missions overseas. Since when?
How many new missions have you opened during that same period?
Answer. As of September 30, 1996, 26 mission or country programs
have closed since fiscal year 1994. This counts as separate events the
Thailand bilateral mission closing in 1995 and the Regional Support
Mission in Bangkok, Thailand closing in 1996. During the same period,
USAID has opened eight missions, including West Bank/Gaza, Eritrea, and
Bosnia.
outreach for contractors
Question. The contracting process at USAID is legendary. There has
been a perception that USAID favors the beltway bandits, and that the
process of awarding contracts takes ages. I gather you have cut the red
tape considerably. What progress have you made in creating a level
playing field for contractors outside the beltway and not-for-profit
NGOs?
Answer. First, we put all of our upcoming procurement opportunities
on the Internet at the planning stage so all potential bidders get an
early, equal opportunity to know what USAID is planning to procure
during that fiscal year. Second, we have continued our outreach program
with vendor conferences in New Orleans, Chicago and Cleveland during
the past year. These conferences were widely attended and we hope that
the interest generated will lead to further diversification of our
contractor/grantee community. As a result of these and other outreach
efforts, 800 vendors new to USAID have begun working with the Agency
during the last three years.
indefinite quantity contracts
Question. One thing I have been concerned about is the use of
``indefinite quantity contracts.'' You give a large amount of money to
a contractor with few of the specifics spelled out. It gives you
flexibility to shape the program as you go, but it also cuts down on
competition and gives a few people control over a huge amount of money.
An example I recently heard about is $100 million indefinite
quantity contract with the ``International Resources Group'' and others
for environmental policy work. Why put so much money in this one
basket? How much of these funds will go to contractors, versus not-for-
profit NGOs? How do you make sure you are getting your money's worth,
and how do you hold anyone accountable?
Answer. Indefinite quantity contracts (IQCs), while usually having
a fairly high monetary ceiling, initially only obligate a small amount
of funds for a limited amount of services. They do provide the
opportunity for the ordering of additional services which are defined
at the time of order. They are a very necessary quick response
mechanism wherein USAID can define actual requirements and obligate
funds at the time of the actual need. Appropriately defined and awarded
IQCs can be crucial during times of emergency response.
However, the use of IQCs for program implementation is becoming
limited. Rather, we are, in accordance with the new Federal Acquisition
Streamlining Act (the Glenn Bill), awarding more Task Ordering
contracts. While Task Ordering contracts have several features of IQCs,
such as a limited original obligation with the capability of future
additional orders, they are generally awarded to more than a single
organization with the resultant orders subject to competition among the
contract holders. This permits USAID maximum flexibility, but also
provides the Agency with the advantages of multiple sources of supply.
The International Resources Group (IRG) contract was a task order
contract that for very unique reasons, went against our general policy
of multiple awards. A single contract was awarded because we needed
cohesive environmental policy from a coordinated source. An advisory
group had to be set up under the contract, and if multiple awards had
been made, the contractor selected to form the advisory group would
have had an unfair competitive advantage over the other firms competing
for task orders. The alternative, an advisory group for each
contractor, would create divergent policy groups and a costly
administrative burden for the Agency. While IRG is the prime
contractor, and ultimately responsible for performance, they have an
impressive array of subcontractors and plan to implement approximately
40 percent of their contract through non-profit organizations. The task
orders to IRG will contain performance-based scopes of work ensuring
better performance and achievement of desired results.
egypt
Question. Maybe Egypt is a good test of the effects of re-
engineering. We have been pouring economic aid into Egypt for years.
USAID talks a lot about getting results, and Egypt's centralized
economy is desperately in need of reform. The Egyptian Government says
it is committed to privatizing its economy. I have heard that for a
dozen years or more. Do you see any way to get more results from the
huge amount of aid we give to Egypt, especially in economic reform?
Answer. Since 1991, U.S. assistance has significantly contributed
to Egypt's progress on its reform agenda. The Egyptians have unified
and stabilized their three parallel foreign exchange rates into one
market-determined rate; liberalized interest rates; made deep cuts in
consumer subsidies; slashed the budget deficit from about 20 percent of
GDP to less than 1 percent, reduced inflation from 25 percent to around
7.2 percent and accelerated the process of public sector reform and
privatization. Substantial improvements have also been made in the
foreign trade sector, including reduction in non-tariff barriers and
cutting the maximum tariff on imported goods from 70 percent to 55
percent.
The international investment community has also taken notice.
Standards and Poors gave Egypt sovereign debt an investment grade
rating, on par with Greece and Poland, and over $300 million in new
foreign investment poured into Egypt in January and February alone.
USAID's programs have also had a significant impact on the quality
of life for all Egyptians. Over 80,000 Egyptian children are saved each
year through the use of USAID-financed oral rehydration therapy and
immunizations. Infant mortality rates have declined by over 25 percent.
Family planning programs have increased the contraceptive prevalence
rate to around 50 percent, resulting in a significant decrease in
fertility and a decline in the population growth rate from 2.9 percent
to 2.1 percent over the past ten years. USAID has built more than 1,950
primary schools. Our infrastructure activities have provided water and
wastewater services to over 22 million people; provided 12 million
residents of Cairo and Alexandria with reliable telephone service and
built 40 percent of Egypt's electricity generating capacity.
Much remains to be done. The cash transfer program, which supports
the GOE in making needed policy reforms, is a very persuasive method of
encouraging reforms. Furthermore, the high level dialogue directly with
President Mubarak, as a result of the Gore-Mubarak Initiative, has been
extremely successful in accelerating the pace of reform. Egypt is now,
more than ever before, at a point of take-off. We expect to see an
acceleration of reforms in the next year due in part to the influence
of the U.S. and other donors such as the IMF and the World Bank. This
should produce the kind of economic results that will enable Egypt to
create jobs and a decent standard of living for all its inhabitants.
egypt
Question. Otherwise, aren't we throwing away good money after bad?
Answer. As you can see from my previous response, we feel that
Egypt truly is at a turning point. The pace of economic reform is
picking up and key members of the government believe that not only is
reform something required by foreign donors, but that it is the only
long-term solution for Egypt's economic problems. Without reform there
can be no growth and, without growth, Egypt will not be able to create
enough jobs for its citizens.
I believe that you will see economic changes in Egypt. The
financial markets are growing and privatization is accelerating. This
will result in a stable Egypt, a key objective of our foreign policy in
the Middle East.
It would be a mistake to look at Egypt's past performance and judge
its future potential. The climate is changing and we, therefore, need
to keep up the pressure, and the incentives, to encourage the Egyptians
to make the needed change. With our continued technical advice and the
financial support provided by the USAID program, the outlook is more
optimistic than it has been.
As I stated previously, I think that USAID can demonstrate
tremendous results in Egypt, in all sectors. The results of our program
are particularly obvious in the power, telecommunications and water/
wastewater sectors. Without the improvements made in these sectors,
Egypt would not be in the economic position it is in now and economic
growth would be a dream and not the reality that it is today.
guatemala--fiscal year 1998 esf funding for the peace program
Question. The peace agreement signed in Guatemala in December ended
thirty years of one of the bloodiest wars in this hemisphere. However,
it will take a huge effort and a lot of luck for peace to survive
there. You expect to obligate $25 million in development aid to
Guatemala in fiscal year 1997. Yet you are requesting just $23 million
for fiscal year 1998. What does that say for supporting the peace
agreement there?
Answer. We have requested a total of over $60 million for Guatemala
in fiscal year 1998 in Development Assistance (DA), ESF and Public Law
480 Title II resources. Over 4 years (fiscal years 1997-2000), we are
planning to provide $100 million in ESF funding to help Guatemala
implement its historic peace accords. These ESF resources, in addition
to our ongoing DA and food aid programs, will bring the total planned
commitment to Guatemala to $260 million over the four years.
Question. How much ESF (Economic Support Funds) do you expect to
make available for Guatemala in fiscal year 1998?
Answer. We expect to provide $25 million in ESF for fiscal year
1998 under the LAC Regional Democracy Fund.
middle east development bank
Question. Can you explain to me why funding for the Middle East
Development Bank--which we incidently cannot afford--is coming out of
the Economic Support Fund, rather than out of the multilateral
assistance account, where the other development banks are traditionally
funded?
Answer. The Bank originated as a joint proposal by the key parties
in the peace process: Egypt, Jordan, the Palestinians and Israel. The
primary reason the Administration proposes funding the Bank from the
Economic Support Fund is that it is an integral part of the peace
process and is closely linked to the political and economic objectives
of the ESF resources. It is my understanding that a secondary reason
for this decision, on which Treasury and State consulted, is a concern
not to have to set aside resources within the Multilateral Development
Banks account for a new institution at a time when we are trying to
clear U.S. arrears to existing multilateral development banks.
tuberculosis
Question. In your statement you cite USAID's leadership in the
effort to eradicate polio. I think it is worth mentioning that Congress
had to push USAID to take that on.
What you didn't say is how little you are doing to combat
tuberculosis which kills more people than any other infectious
disease--3 million annually, even though it can be cured for as little
as $11 per person.
If current rates continue, more than 30 million people will die
from TB in the next decade.
I have tried to find out how much USAID spent on TB, without a lot
of success. I gather it's a few million dollars, which is hard to
comprehend. Why so little?
Answer. TB experts have recognized that treatment and control of TB
is among the most labor-intensive of health interventions, since the
most effective approach is Directly Observed Therapy Strategy (DOTS).
Under DOTS, the patient is observed actually taking the prescribed
medication by a trained health worker . The $11 per person you cited is
the additional cost of drugs in a situation where the DOTS approach
simply can be added on to an already fully functioning health care and
outreach system. However, we have found that in the vast majority of
the developing world where TB is most prevalent, we have had to start
more or less at the foundation of building a health care delivery
system before it would be appropriate or effective to launch DOTS. In
fact, a high proportion of USAID's health budget, ($27.4 million or
nearly 9 percent) is aimed directly at health systems development and
strengthening. Without this, efforts at TB control would be futile.
While we do not ``count'' this funding as TB-related because it has
effects on the control of virtually all major public health problems,
our efforts mean that the more closely targeted TB efforts of others
have a chance of succeeding where they otherwise would not.
These others include other U.S. government agencies (e.g., the
Centers for Disease Control and Prevention and the National Institutes
of Health) and universities, as well as other international agencies
and organizations (e.g., The Joint United Nations Programme on HIV/
AIDS, the World Health Organization, the International Union Against
Tuberculosis and Lung Disease). To maximize the impact of funds
available to combat tuberculosis, we are supporting work of these
groups in areas in which we have a comparative advantage. For example:
(1) Capacity Building: We have a cooperative agreement with the
Centers for Disease Control and Prevention (CDC) to develop operational
research projects related to HIV and TB, especially in sub-Saharan
Africa. Through the agreement, we support work of the World Health
Organization's (WHO) Global TB unit (approximately $650,000) on
incorporation of DOTS style interventions in home and community based
TB and HIV care through an operations research training project in
seven sub-Saharan countries.
(2) UNAIDS: USAID has also provided $1.75 million in TB-designated
funds to the Joint United Nations Programme on HIV/AIDS (UNAIDS) for
use in defining cost-effective TB treatment regimes, including DOTS-
style management, for HIV-infected individuals; for surveillance of
multidrug resistant disease as a part of a multi-donor international
effort; and for training of 200 national TB program managers worldwide.
(3) Prevention initiatives: In 1996, USAID allocated over $7.5
million for infant BCG immunization to minimize the complications and
shorten the course of pediatric tuberculosis infection.
(4) Disease Management and control: USAID is developing a CD ROM-
based interactive computer-based program for TB case management which
may be implemented throughout the developing and developed world, if
found to be effective. We are also supporting field evaluations of
national TB control programs and studies on the cost effectiveness of
different TB control interventions among HIV-infected persons, and on
the policy implications of the increasing threat of TB. About $500,000
is allocated for these purposes.
malaria
Question. Each year, more than 2 million children around the world
die from malaria. USAID has led the international effort to develop a
malaria vaccine and drugs to combat malaria. Yet your annual budget for
this and other anti-malaria programs, like the development of repellant
impregnated mosquito nets, is only about $8 million. Why so little?
Answer. USAID recognizes the importance of malaria as a leading
killer of children in Africa. Unfortunately, as overall funding levels
have decreased, we have been forced to cut back on resources for this
program and others. To maximize our investment, in the last few years,
we have strengthened the focus of the program making it more results
oriented.
--In vaccine development, USAID's Malaria Vaccine Development Program
(MVDP) is now focused on finding a vaccine that is effective
for children in high endemic areas. We have partnered closely
with the National Institutes of Health (NIH) and the Walter
Reed Institute of Research (WRAIR) to maintain a substantial
U.S. effort in all of the necessary stages of malaria vaccine
development, and coordinate well with WHO, EU and other donors.
This enables us to translate current knowledge into
experimental vaccines which can be tested in humans. In fiscal
year 1996, initial safety studies of a new USAID initiated
experimental malaria vaccine were conducted in cooperation with
other USG Agencies, and a second experimental vaccine is
scheduled for testing in fiscal year 1997.
--Africa Integrated Malaria Initiative (AIMI): Using the technologies
now known for combatting malaria, last year, USAID established
the Africa Integrated Malaria Initiative (AIMI) that promotes a
comprehensive ``package'' of approaches, including the first
large scale, sustainable impregnated mosquito net program in
Africa. The initiative is designed to make it easier for our
field missions to support malaria programs through a variety of
central, regional and country specific mechanisms, including
CDC, and we anticipate substantial growth in the program.
--Extensive malaria control activities take place under other USAID
programs. We are the lead bilateral donor in WHO's initiative
for the Integrated Management of Childhood Illness (IMCI),
which sets clear clinical standards for treating malaria and
its complications. Our support for the development of new
technologies has produced two promising diagnostic tests that
health workers in the field can use to rapidly confirm malaria
parasite infection in a cost-effective manner. USAID continues
to train national malaria program managers, in Africa
especially, in information systems and operations research.
family planning
Question. I am told there are very few family planning services in
the West Bank and Gaza, where the crush of people is already out of
hand. Does USAID have a family planning program there?
Answer. We agree that population growth is a big concern for the
West Bank and Gaza. None of USAID's bilateral program, which is
focussed on promoting the private sector, addressing the shortage and
economical use of water, and facilitating accountable democracy and
governance, is used for family planning. However, through centrally-
funded programs, USAID has provided a small amount of funds for
contraceptives and demographic data initiatives. USAID also provides
centrally-funded assistance to the International Planned Parenthood
Federation (IPPF) which, in West Bank and Gaza, assists with family
planning delivery services. The European Union and UNFPA are
contributing with $6 million and $7 million, respectively, for family
planning and reproductive health services in the West Bank and Gaza.
democracy
Question. While we are on the subject of the West Bank, there is a
lot of concern that the Palestinian Authority is becoming more and more
authoritarian. What are you doing to support civic organizations, human
rights groups, or other democratic institutions?
Answer. Democracy/Governance is a cornerstone of the USAID WB/G
program and promoting civic participation is a key part of our entire
program. This fiscal year, about 15 percent, or $11 million, of our
budget is for democracy activities. We are supporting civic
organizations and their increased participation in society through
grants to U.S. PVOs such as the International Republican Institute and
the National Democratic Institute. We estimate that their activities
reach more than 30,000 Palestinians through community level civic
forums and activities that increase the flow and diversity of
information to citizens. These programs involve Palestinians in
discussions on their rights and responsibilities in a democracy.
In addition, USAID soon will directly support selected Palestinian
non-governmental organization activities such as women's rights
watchdog groups, posting draft laws on the Internet, televising town
hall meetings on proposed laws, training for civil society organization
staff and reporting on Legislative Council and Executive Authority
actions. USAID is funding proposals from several local organizations to
increase their ability to conduct policy analysis and fulfill advocacy
and government monitoring functions. All these combined civil society
efforts reach, directly or indirectly, at least one-fourth of the
Palestinian population--over 600,000 people.
Other USAID democracy/governance activities entail working with the
Palestinian Legislative Council to help them be responsive to the
concerns of their constituents. We fund public opinion polls to inform
the Council and the Palestinian Authority of constituent concerns. We
are also promoting linkages between civic groups/non-governmental
organizations and the Council and the Palestinian Authority to help set
common policy goals and increase cooperation among them.
In supporting the creation of a democratic system, our total
democracy/governance efforts benefit the two million Palestinians in
the West Bank and Gaza, directly or indirectly.
______
Questions Submitted by Senator Campbell
administration of justice program
Question. USAID funds the Administration of Justice which supports
courts and prosecutors in developing countries to strengthen
democracies. Many developing countries are inflicted by rising crime
rates, increasing violence, and a breakdown of law enforcement.
Please provide the subcommittee with information on the current
activities of the Administration of Justice program and activities
which USAID plans to support in the coming year. Please include
information on the impact which these activities have on the justice
problems the activities were designed to address and any independent
evaluating which have been conducted.
Answer. USAID undertakes programs to strengthen the rule of law
(ROL) (including the administration of justice) as part of its overall
efforts to strengthen democracy and governance. Promoting democracy and
governance advances key U.S. foreign policy objectives and is an
essential part of USAID efforts to contribute to sustainable
development.
The approach undertaken by USAID in its rule of law (ROL) programs
is determined in part by the most pressing needs within countries or
regions. Crime control and law enforcement are important components of
USAID's rule of law work in many regions, and USAID works in close
coordination with the Department of Justice and the State Department in
undertaking activities.
For example, in Latin America, programs that address this issue
tend to focus on enforcing due process and reducing abuses of basic
human rights. A major element of these programs in several countries is
a component related to enhancing the crime fighting capabilities of the
police and investigative entities.
In the Europe and New Independent States (ENI) region, the initial
focus of USAID's rule of law (ROL) approach was related to creation of
market based economies, including rewriting of legislation and judicial
training in the commercial area. More recently, programs to address
crime control and the strengthening of police and prosecutorial
investigative capabilities have been undertaken.
USAID is currently developing strategies for applying lessons
learned in these regions to its programs in other parts of the world.
In Africa, crime and violence are problems in many countries, but their
solution is further complicated by cultural diversity, limited access
to the judicial system, and weak or nonexistent legal institutions.
In all regions there is now an added emphasis on the expansion of
access to justice for marginalized groups (including women) and, in a
number of failed states, efforts are directed toward recreating
institutions destroyed by internal violence and assisting with
reconciliation programs. The mix of objectives and the extent of change
sought varies from country to country.
USAID undertakes regular evaluations of particular projects. In
1993, an overall evaluation of all USAID programs in rule of law was
undertaken which documented the ``lessons learned'' so far in this
critical sector. A copy of the report, Weighing in on the Scales on
Justice is available upon request.
Results achieved in USAID's ROL programs to date have been
impressive. In Latin America, the region with the longest-running ROL
programs, documented progress has been made in reducing human rights
abuses and increasing the observance of due process rights. USAID
programs have created viable public defense systems in Bolivia, Panama,
and El Salvador, and are supporting their establishment in Colombia and
Guatemala. Uruguay has made measurable progress in reducing the average
time for handling of civil disputes. Cooperation from the judiciary
ranges from very high in El Salvador to negligible in Colombia.
However, the highest levels of judicial cooperation were reached with
the small Costa Rican project where USAID supported the creation of an
extremely active Constitutional Chamber; Costa Rican judges are now
promoting reform efforts throughout the region. The Panama program has
made significant progress in coordinating police and prosecutorial
investigations, and the methods used there are now being adopted in a
redesigned Guatemala program.
Despite these important gains, clearly a number of challenges
remain. The difficulties of reorienting and coordinating the activities
of four independent agencies (police, courts, defense and prosecution)
have taken time and required creative and flexible approaches. Mid-term
evaluations of progress in Colombia and El Salvador, while generally
positive, suggest the need for further actions to improve the skills of
legal practitioners and improve the coordination of the various
entities associated with the legal system.
Programs in other regions are newer and thus more difficult to
assess. An evaluation of the Russian program is scheduled for this
spring. Programs elsewhere in ENI and other regions will be subject to
normal evaluations.
Question. The United States has a wealth of expertise in ``what
works'' to fight crime, drugs, and gangs. Experts who have first-hand
experience in these areas could be invaluable resources to other
countries experiencing these problems if some technical assistance were
available. What additional steps can you take to expand the scope of
the Administration of Justice Program so valuable technical assistance
in the United States can be provided to those countries which need it
most?
Answer. USAID is already tapping into a variety of resources for
implementation of its rule of law programs, including administration of
justice (AOJ) activities. For example, the Department of Justice's
prosecutorial and police training entities--Office of Professional
Development and Training (OPDAT) and International Criminal
Investigative Training Assistance Program (ICITAP), respectively--have
been key components of USAID's AOJ programs in Latin America, the
Europe and New Independent States (ENI) countries and, most recently,
in Africa.
USAID also draws on the wealth of expertise available in the U.S.
non-governmental sector. For example, efforts to improve court
administration have drawn on resources from entities like the National
Center for State Courts. This Center, as well as the Reno Judicial
College, and various state entities have been used to improve judicial
and prosecutorial training programs. USAID is also attempting to draw
on state prosecutor organizations to assist with setting up basic
prosecutorial organizations and we have used U.S. juvenile court judges
and staff to give assistance in treating youth crime and gangs, and
supported NGOs to set up legal assistance, advocacy, and alternative
dispute resolution programs in disadvantaged communities.
USAID is constantly looking for additional U.S. sources of
specialized expertise in this area. This fiscal year, additional
mechanisms will be established to allow USAID to expand access to
appropriate U.S. technical expertise in this area.
Question. As I previously noted, USAID funds the Administration of
Justice program which primarily supports courts and prosecutors in
developing countries. Support for other law enforcement activities is
provided by the State Department's Bureau of International Narcotics
and Law Enforcement. And, the Justice Department operates the
International Criminal Investigative Training Assistance Program
(ICITAP) which is funded by the State Department's Bureau of Latin
American Affairs.
How do you ensure full coordination between USAID and the other
federal agencies which also support various international crime
programs?
Answer. Effective inter-agency coordination of all USG democracy
programs occurs in the field, under the direction of the Ambassador.
All overseas posts have established inter-agency coordinating
committees on democracy promotion, including rule of law programs. For
example, in the case of ICITAP's Latin American programs, agreement on
country program directions and benchmarks to measure progress toward
critical objectives related to these efforts is reached in a joint
exercise in which ICITAP, Department of State's Office of Inter-
American Affairs (ARA), and USAID all participate. U.S. Ambassadors in
Eastern Europe chair democracy commissions, which review programs
proposed by USG agencies and by various nongovernmental organizations
receiving US assistance.
In Washington, there are a number of task forces, usually focussed
on country specific issues, that also ensure close collaboration among
the various USG entities as well as coordination with other donors
engaged in similar efforts. Washington task forces are particularly
important for countries like Haiti, Guatemala and El Salvador where
major assistance efforts in this sector are underway and include not
just USG entities but a variety of other donors, both bilateral and
multilateral.
Question. Is there an inter-agency working group which would ensure
coordination of international crime programs: If so, which federal
agencies are represented and how often does the group meet?
Answer. USAID participates in the inter-agency coordination
process, led by the Democracy, Human Rights and Labor Bureau at the
Department of State. The State Department's Bureau for Narcotics and
Law Enforcement (INL) chairs an Interagency Working Group to coordinate
various U.S. Government agencies' respective law enforcement training
programs. An interagency working group meets regularly on ENI rule of
law programs under the direction of the Coordinator's Office.
Interagency coordination for other, long-term institutional building
administration of justice programs is carried out in countries, through
the country team under the direction of the U.S. Ambassador.
microcredit summit
Question. On February 2-4, 1997, the Microcredit Summit was held in
Washington, DC. This international conference considered the
microcredit program which provides small loans to the poorest of the
poor to help them become economically self-sufficient.
In 1994 USAID launched a microcredit initiative with half of the
resources targeted to the poorest to support loans under $300. Please
provide the Subcommittee with information on the status of this
initiative and its impact. Also, please provide the Subcommittee with
information on any plans to expand the microcredit program.
Answer. The Microenterprise Initiative was launched in 1994 and
renewed this year. Its primary goal is to assist the efforts of the
poor to increase their income and assets. Two additional goals are to
increase skills and productivity to enhance economic growth, and to
facilitate the development of ``economic democracy.''
USAID has worked conscientiously to fulfill the commitments it made
for the Initiative, though circumstances have required some adjustments
in targets.
USAID provided $137.4 million and $140.5 million of support to
microenterprise activities in 1994 and 1995, respectively. USAID's
budget contracted significantly in 1995 and 1996, forcing us to trim
overall funding targets for microenterprise. Provisional figures for
fiscal year 1996 show USAID directing $118.9 million to
microenterprise. USAID plans to continue supporting microenterprise at
the $123 million in 1997 and $122 million in 1998.
To spearhead the initiative, we established the Office of
Microenterprise Development in the Bureau for Global Programs, Field
Support, and Research to manage the Initiative. Accomplishments
include: The Microenterprise Implementation Grant Program has awarded
$30 million to 17 US PVOs and international organizations, expected to
be serving over 400,000 clients by the end of the grants. The Prime
Fund provided $17 million to USAID missions in 20 countries for
institution-building, promoting an enabling environment for
microfinance, and providing credit and savings services to over 300,000
clients. The Microenterprise Best Practices Subgrant facility, which
supports capacity-building, has awarded small grants to 13
organizations. USAID has also expanded microenterprise in other
programs: The Matching Grant and Cooperative Development Programs have
provided $25 million to 16 US PVOs and Cooperative Development
Organizations for microenterprise development in 29 countries. The
Micro and Small Enterprise Development loan guarantee program manages
loan and guarantee facilities supporting microenterprise credit in six
countries, as well as ``bridg funds'' for two US PVOs. At the mission
level, USAID has active microenterprise programs in all regions,
covering 45 countries, and serving nearly 5 million clients.
bulgaria economic crisis
Question. Recent news reports show that Bulgaria is in the midst of
a severe economic crisis. Bulgarians are facing a great deal of
deprivation, including a shortage of food and medicine. And, because of
a poor grain crop last year, there is a shortage of bread and bread
lines are forming.
Please provide the subcommittee with information on what steps
USAID is taking to provide assistance to Bulgaria, and what additional
steps you plan to take in the future.
Answer. The USAID/Bulgaria program has been designed to proactively
address the Bulgarian situation. Aware that this would be a hard winter
in Bulgaria, USAID/Bulgaria, U.S. Embassy/Bulgaria, and USAID/
Washington worked hard on an assistance package for the beleaguered
Bulgarians. USAID has committed $2.1 million to the procurement and
delivery of much needed pharmaceuticals to populations at risk.
Distribution to seven targeted cities is scheduled to begin as early as
April. An additional $400,000 has been designated for the International
Red Cross/Red Crescent to contribute to their ongoing emergency appeal,
mostly to support the distribution of food aid to over 41,000 needy
beneficiaries.
USAID/Bulgaria is working with other donors, especially the
European countries, and donor organizations, to coordinate relief
efforts in Bulgaria. USAID/Bulgaria is looking at potential follow-on
programs as a recent UNDP assessment reported that the need for
additional assistance is clear. USAID/Bulgaria continues to monitor
closely the political and economic developments that impact on the
standard of living for Bulgarians and remains ready to respond should a
crisis situation arise.
aid to the middle east
Question. In signing the Hebron agreement with the Palestinians,
Israel's Prime Minister, Benjamin Netanyahu, has demonstrated Israel's
continuing commitment to the peace process and to the willingness to
take risks for peace. Yet the toughest issues in the peace process now
will be addressed in the negotiations, making it more important than
ever that the U.S. stand by its friend and ally Israel. Do you think
that maintaining aid to Israel at current levels is important for the
peace process to succeed?
Answer. I fully support the President's fiscal year 1998 assistance
request for Israel. Assistance to Israel remains a concrete
demonstration of our unshakable commitment to the security and well
being of a key ally.
Question. What do you think the connection is between U.S. aid to
Israel and Israel's ability to take risks in the peace negotiations?
Answer. U.S. assistance to Israel represents a concrete
demonstration of our support for a key peace process partner.
Question. What message would a cut to Israel send to Israel's Arab
negotiating partners?
Answer. As I indicated, we support full fiscal year 1998 funding
for assistance to Israel as a clear demonstration of our unshakable
commitment to a key ally.
Question. How would you assess the effectiveness of our aid
programs to the other nations of the Middle East, particularly Egypt
and Jordan?
Answer. There is no question that our assistance to Egypt has had
significant impact on its development. During the past year, we have
seen significant policy reforms, essential to sustainable economic
growth, and we are optimistic that this trend will continue. Our more
modest assistance program to Jordan has produced significant results in
the key areas of water conservation and use and population planning. We
are requesting an increase in fiscal year 1998 funding levels to expand
programs designed to enhance Jordan's economic stability, thereby
bolstering its position as a key partner in the peace process.
Question. Given the helpful role that Jordan has played in
advancing the Middle East peace process, do you believe your request
for aid to Jordan is sufficient to meet Jordan's needs?
Answer. Ultimately, Jordan's needs must be met by market forces.
Jordan has experienced strong economic growth in the past year, but its
economy remains extremely vulnerable to regional events. Our assistance
can help create the conditions for growth, but it cannot substitute for
private sector growth. Obviously, we could do more with additional aid
and bring Jordan more quickly to a stable economic situation. Our
request for aid to Jordan is a compromise among Jordan's needs, the
needs of other countries, and our assessment of how our resources can
best be utilized.
foreign aid
Question. This year the Administration requested a modest increase
in spending on international affairs, after more than a decade of
successive annual cuts.
In your view, why is foreign aid so critically important? What does
foreign aid do for the United States? Can America continue to lead
without this program?
Answer. Our foreign assistance programs directly advance America's
interests in three ways: by helping to prevent crises; by generating
dynamic opportunities for expanded trade; and by providing protection
from specific global health and environmental threats. In the post Cold
War era it is arguably more important than ever for U.S. leadership.
One of the most profound areas of concern for the United States and
its allies is the growing phenomenon of failed states that trigger
conflict and economic collapse. The staggering human, financial, and
political costs of these conflicts are reflected in the increasing
scope and complexity of peacekeeping operations, the loss of human
life, and the exploding numbers of refugees around the globe. The U.S.
has a compelling national interest in preventing and averting crises
before they occur.
Development programs have a lead role to play in these efforts.
Crises erupt when countries lack the institutional capacity to deal
with internal conflicts. Two groups of countries are clearly the most
vulnerable in this respect, and most cases of failed states fall into
one of these two groups. First, many of the countries that were
formerly communist are struggling to establish new institutions to
replace those associated with Communism. Until they succeed in this
daunting task, they are highly vulnerable to crisis. Second, the least
developed countries of the world are (almost by definition) those with
the weakest human resources and institutions, e.g. Rwanda, Somalia,
Sudan, Zaire, Afghanistan, and Liberia. In contrast, developmentally
more advanced countries such as Sri Lanka, India, Indonesia, Malaysia,
and others have been able to avoid collapse despite serious internal
conflicts and tensions.
Our programs in developing and transitional countries are aimed at
enriching human resources, strengthening institutions, and supporting
political and economic reform. They are part of a much larger
international effort. By fostering stronger institutions, a richer
human resource base, and economic and social progress countries are
better able to manage conflict and avoid crisis and dissolution.
Where economic interests are concerned, developing countries
provide the most dynamic and rapidly expanding markets for U.S. goods
and services. U.S. exports to developing countries since 1990 have
expanded at 12 per cent annually, more than double the growth rate of
our exports to industrial countries. This trend has been evident since
the mid-1980's.
USAID programs that help create a better enabling environment for
markets make a significant and fairly direct contribution to expansion
of U.S. exports. While U.S. exports have expanded rapidly overall (much
more rapidly than those of our competitors), they have grown much more
rapidly to some developing countries than to others. The major factor
explaining the difference is differential progress among developing
countries in terms of improved policies and institutions that support
markets.
Finally, foreign assistance programs are vital in protecting the
United States against many dangers that are global in scope. By taking
on the challenging task of preventing and controlling infectious
diseases like AIDS, polio, and emerging viruses like Ebola before they
reach our shores, USAID lowers health costs here at home. Our
environmental programs help protect the air and water than Americans
share with the rest of the world.
No less important, our foreign aid programs provide a critical
foundation for continuing U.S. leadership in the global community. This
is increasingly important in the post Cold War era.
During the Cold War, U.S. leadership was central and unmistakable
as the protector of the free world against the threat of communist
expansion. U.S. military power and economic dynamism were seen as
essential to resisting that threat. But America's leadership, then as
now, had a foundation stronger than our military or our economy. The
United States projected a compelling, and widely shared vision of a
world order where democracy and open systems were respected. Our vision
of political and economic freedom, of social justice and respect for
the individual was as powerful as any missile or other defense system.
The U.S. offered the world not only security, but a better alternative
to the Communist vision.
Leadership in foreign aid, starting with the Marshall Plan and
renewed by President Kennedy, was a critical element of U.S. leadership
and vision during the Cold War. Others followed our example and non-
U.S. aid expanded rapidly, to the point where the share of global
foreign aid provided by the U.S. has fallen from about 50 percent in
1960 to around 15 percent today.
The Cold War is over. We still have the strongest military and the
strongest economy in the world. But leadership depends on more than
strength. America's position in the 21st century will increasingly
depend on the perception that we understand and appreciate the broad
interests of the international community, and that we act with these
interests in mind; and on the perception that we still have the best,
most compelling vision of a global world order. International
development cooperation, including foreign aid provided by rich
countries to needy countries that are making reasonable self-help
efforts, is a vital part of this.
Expressed negatively, a perception that America sees foreign aid as
simply a Cold War tactic cloaked in lofty rhetoric, to be discarded now
that the threat of Communist expansion has subsided, would cause
irreparable damage to any U.S. claim to international leadership.
Development cooperation, including support for countries making the
transition from Communism and humanitarian assistance for countries in
crisis, remains an essential part of a credible and compelling vision
of how the international community should function. A lead role for the
U.S. in development cooperation is a vital part of American leadership
in the post-Cold War era, arguably more important now than ever.
______
Questions Submitted by Senator Stevens
the u.s. russia investment fund (tusrif)
Question. Mr. Atwood, as Chairman of the Appropriations Committee
and the Senator of a State which is very interested in the continued
development of business relations with the Russian Far East, I have
heard some complaints about the performance of one of the enterprise
funds (TUSRIF). Would you explain to me the formula which USAID intends
to use when allocating funding to TUSRIF for fiscal year 1998? Please
detail to me the oversight responsibilities of USAID toward TUSRIF.
Answer. USAID has tentatively budgeted $33 million to TUSRIF in
fiscal year 1998. The final obligations will depend on TUSRIF's need
for funding based on their expenditure rate.
Oversight of the enterprise funds, including TUSRIF, has evolved
and expanded since the first grant agreements were signed for Poland
and Hungary in 1990. Oversight is based on periodic written reports
from the Fund Managers, on-site reviews and other interviews with Fund
Managers, review and authorization of specific types of activity and
documentation, and Inspector General reviews of external audits. The
written reports submitted by Fund Managers include annual reports,
including audited financial statements; semi-annual reports; monthly
cash transaction reports; and ad-hoc reports submitted by the Fund
Managers. In addition to USAID's oversight, the State Department
Coordinator for NIS Assistance meets with TUSRIF management regularly.
USAID Technical Office Reviews are comprised of semi-annual reviews in
Washington and/or the field; semi-annual field trips to host country
offices; site visits to selected investee firms; and annual visits to
U.S. offices. USAID Authorization of Specific Types of Activities
include structural changes; investments in financial institutions;
investments in defense related enterprises; changes/additions to the
Boards of Directors; non-investment related technical assistance;
articles of incorporation, bylaws, company policies, etc.; and detailed
statement of Fund objectives. In addition, the USAID Inspector General
reviews and audits working papers of Fund's external auditors and does
other ad-hoc reviews of enterprise fund activities.
projects outside moscow, especially the russian far east
Question. Mr. Atwood, I have been encouraging USAID to support
projects in the Newly Independent States, specifically in the regions
outside Moscow. Please explain your plans for increasing project
activity in these areas, specifically the Russian Far East.
Answer. Historically, about 75 percent of USAID's projects in
Russia have been located in regions outside Moscow. USAID has always
pursued a two-pronged strategy in Russia, working simultaneously with
national and ``grassroots'' organizations to accelerate the process of
economic and democratic reform. Under the Administration's proposed
fiscal year 1998 Partnership for Freedom (PFF) initiative, USAID
proposes to place even greater emphasis on the ``grassroots''--towns,
regions, local organizations both public and private, and business
associations and firms, both small and large. Other changes include
greater emphasis on the development of sustainable trade and investment
linkages between American and Russian companies and fostering mutually-
beneficial partnerships between American and Russian nonprofit and
nongovernmental organizations.
Even though most of Russia's population is concentrated west of the
Urals, the Russian Far East offers attractive investment opportunities
because of its rich natural resources, access to the ocean, and
proximity to Asia and the United States. As oil investments develop off
Sakhalin Island, we see that an increased role for USAID assistance on
economic planning, regional development, and training-related
activities might be extremely useful in underpinning the commercial
development of Sakhalin.
It is likely that the Russian Far East will be selected as one of
the regions to participate in the Regional Investment Initiative that
was signed by Vice President Gore and Prime Minister Chernomyrdin at
the February 1997 meeting of the Gore-Chernomyrdin Commission. Under
this new arrangement, U.S. Government assistance will be focused on
several regions in Russia to stimulate real economic growth by reducing
impediments to trade and investment.
former soviet union
Question. I am considering a Full Committee hearing on all facets
of our relationship with Russia and the former Soviet countries. Please
tell us what activities do you have in each area of the Former Soviet
Union. I'm interested in generic programs and the allocation for each
such country including Russia.
Answer. USAID would be pleased to participate in such a hearing.
Our programs in the twelve NIS (New Independent States) of the former
Soviet Union are broadly organized into four generic categories, each
with one or more ``Strategic Objectives'' (or generic programs). The
four categories are (a) economic restructuring, (b) democratic
transition, (c) social stabilization, and (d) cross-cutting and special
initiatives. As an example of the subdivision of these four broad
categories into Strategic Objectives, within ``economic restructuring''
there are five: privatization, fiscal reform, private enterprise
support, financial reform, and energy. Every program activity in each
NIS country falls within one of our twelve Strategic Objectives.
In order to provide you with the information you have requested on
each country, I am attaching the most recent Congressional Presentation
subsections on the twelve NIS countries. These subsections will give
you a feel for current programs, as well as plans for activities in
fiscal year 1998. The discussion on each country is organized by
Strategic Objective and contains information on proposed allocation of
funds in fiscal year 1998. I am also attaching a table that shows
cumulative obligations through the end of fiscal year 1996 for each
country, by Strategic Objective.
______
Questions Submitted by Senator Bennett
waste and favoritism in belarus
Question. Ambassador Richard Swartz was our envoy to Belarus until
January 1994. Did you ever receive warning cables from him warning of
waste and favoritism in our bilateral assistance programs? If so, what
action did you take regarding these warnings?
Answer. While we cannot cite specific cables from Ambassador Swartz
on this subject, we are aware of his concerns about waste and
favoritism, which he expressed in meetings with us and in his writings
on the subject.
Ambassador Swartz has been critical of USAID's conceptualization
and administration of the U.S. assistance program in Belarus. He has
argued that U.S. assistance should, but has not, supported assistance
efforts that show quick results to the people of Belarus and that
support reform-minded elements, especially through non-governmental
organizations. In fact, we can demonstrate that we have had some
success in our modest assistance program, especially considering the
difficult environment in Belarus, and that our program of working
through non-governmental channels and targeting the grass-roots level
has made in-roads in supporting reform in Belarus.
The U.S. assistance program in Belarus has been very limited due to
the unwillingness of the Government of Belarus to implement economic
and democratic reforms. Nevertheless, to encourage reform where
possible, U.S. assistance is geared toward grass-roots efforts in
small-scale privatization, democracy initiatives, humanitarian
assistance, and support for non-governmental organizations (NGOs). Most
assistance is provided through non-governmental channels.
Since late 1993, USAID has been funding the International Finance
Corporation's (IFC) small-scale privatization program, which has
resulted in a steady movement of communally-owned trade, catering and
service enterprises into the private sector. In November 1996, IFC
completed its 100th auction, with 14 percent of small-scale enterprises
now privately owned.
USAID also supports the democracy-building work of the American Bar
Association Central and East European Law Initiative (ABA/CEELI), which
contributed to the opening of Belarus' first publicly accessible
international law library. This program is also strengthening legal
organizations and the judiciary. An important new focus of the program
is strengthening independent media, with technical assistance provided
by the International Research and Exchanges Board (IREX) to expand
access to and distribution of international and domestic news to
independent media outlets, and help publishers, editors, and
journalists improve their effectiveness.
Since 1994, the USAID-funded Counterpart Humanitarian Assistance
Program has organized the delivery and distribution of humanitarian
shipments throughout Belarus with a total value of about $6 million.
The USAID-sponsored hospital partnership program has resulted in
Belarusian physicians being able to meet the pressing need to improve
detection and treatment of an increased number of pediatric thyroid
cancers resulting from the explosion of the Chernobyl Nuclear Power
Plant. The partnership program has also helped to establish a
contemporary poison information resource database and an intensive
training program for clinical toxicologists.
Finally, USAID has played a significant role in the development of
NGOs, having contributed to the creation and strengthening of a large
number of NGOs and having trained over 125 NGO leaders. The new NGO
Democratic Social Service Activity will focus on strengthening NGOs to
assist the elderly, disabled and other vulnerable groups in Belarus.
We recognize that Ambassador Swartz has not always agreed with
USAID's conclusions concerning the most cost-effective use of U.S.
assistance funds. However, both as Ambassador and now, his opinions
have been taken into account, with a final decision based on consensus
of a variety of government and non-government opinions. In our
selection of assistance activities, we have and will continue to choose
projects that best support U.S. foreign policy and have the greatest
potential for return on each assistance dollar. We are not aware of any
waste or favoritism in USAID assistance to Belarus.
russian inter-regional bar association
Question. What relationship, if any does the Russian Inter-Regional
Bar Association have with the Russian Intelligence services or their
Soviet predecessors?
Answer. USAID has no contacts with, nor knowledge of this
association.
lessons from privatization
Question. Will you please comment on the problems of fraud of U.S.
supported privatization programs in Russia, what the lessons are, and
how they are being addressed in the Ukraine?
Answer. The USAID financed programs have facilitated broad popular
participation in the market reform revolution taking place in Russia.
Privatization was an essential prerequisite for building a market-based
economy to replace the bankrupt Soviet command economy. The USAID
programs have actually restrained the influence of criminal activity as
demonstrated by the following facts:
The privatization program created 40 million Russian shareholders
in private enterprises across Russia, making Russia the country with
the largest group of shareholders in the world.
Entrepreneurs are getting together, buying blocks of shares, and
removing old managers. Boards of Directors are being formed with
outsider shareholder participation on the boards. Shareholder rights
groups have been formed which are lobbying to protect the rights of
investors. Self-regulatory organizations equivalent to the NASD
(National Association of Securities Dealers) have been created and are
establishing practices and ethical standards for their membership.
International investors are gaining control of enterprises.
New laws and reforms together with enforcement agencies such as the
Russian Securities and Exchange Commission are having an impact on
investor protection, transparency and fair play.
These are just a few examples of activities USAID is financing
which are helping create a stable, fair and predictable business
environment in Russia. Admittedly, there remain old policies, laws and
regulations that continue to provide an incentive for fraudulent
activities. For example, the high tax rates encourage corruption, pay-
offs and non-compliance through the use of mafia organizations.
[Anecdote: Ask a small shop owner whether he would rather pay 30
percent protection tax to the Mafia or 80-90 percent of his profits to
the tax authorities. The answer is obvious.]
The point is that progress has been made. But if we want to
continue to deepen these reforms and complete the enormous process of
economic restructuring, we must continue to work with the Russian
reformers to make this happen.
In the Ukraine, measures are being taken to protect the rights of
shareholders and investors, as the efficient and transparent operation
of capital markets is critical to mass privatization and the
restructuring of Ukraine's economy. Three independent share registrars
have been established to help ensure shareholder transparency; a
capital market monitoring unit has been established to monitor, on
behalf of the government, the activities of investment intermediaries;
the Ukraine Securities Commission is drafting regulatory normative acts
insuring shareholder and investor rights; model investment funds and a
self regulatory association have been established to increase
professional standards within the fund industry; mass privatization and
public awareness programs have provided training materials, seminars
for managers of privatized enterprises, and mass media education to the
public on the principles of shareholder rights and corporate
governance; an over-the-counter trading system has been established for
trading shares of privatized enterprises and a self regulatory
organization for broker dealers established to ensure shareholder
rights and broad market participation in the trading of shares; and
instituting the use of internationally accepted accounting standards
for reporting, disclosure and other purposes to standardize industry
practices and attract a broad range of domestic and international
investors.
privatization in russia
Question. On June 13, 1996, former CIA Director James Woolsey told
the House National Security Committee the following: ``The unfairness
of privatization in Russia, which has led to most ownerships being
concentrated in the hands of the former factory managers and
nomenclature, and increasingly also in the hands of organized crime
figures, adds substantially to the average Russian's dissatisfaction
with the current political and economic system.'' Is Director Woolsey's
analysis correct?
Answer. Director Woolsey has expressed some reasonable concerns
regarding Russia's privatization. However, it is important to
understand the broader institutional context which USAID and other
donors are establishing to mitigate such potential problems.
The privatization program in Russia envisioned 51 percent ownership
being retained by company managers and workers to encourage, in the
first instance, acceptance of the program. The mass privatization
program in Russia resulted in over 40 million individual ahareholders,
and 15,779 medium and large enterprises privatized in 86 regions of
Russia. This was the largest privatization in world history, and there
are now more shareholders in Russia than in the United States. Against
this background, individual cases of management manipulation and
malfeasance at individual firms, while unfortunate, cannot invalidate
the historical importance of dismantling a state-controlled economy and
giving market forces a chance to operate.
The design of the mass privatization program in Russia limited
criminal interference from the outset. Every Russian citizen was
eligible to receive and use only one Privatization Voucher upon
presentation of appropriate personal identification. In addition, the
methods for voucher distribution, cancellation, and destruction were
developed with anti-fraud controls and were very closely and
successfully monitored. Even if criminal elements attempted to use
outside means, such as creating investment funds, to control portions
of privatized enterprises, the investment funds are highly regulated by
the Russian Commission on Securities and Exchanges.
It is important to note that one of the main strategies behind
Russian privatization was to break the old branch Ministries' influence
over enterprises and distribute the ownership as widely as possible
among the entire population. The program was extremely successful in
this regard. Russia's enterprises are owned by 40 million shareholders,
and most branch ministries were completely cut out of the privatization
process. Shareholders are insisting on enterprise restructuring,
efficiency, and profits, and do not want criminals hijacking their
investments. USAID has responded to these demands by:
--Assisting Russian legal drafters on appropriate commercial
legislation, particularly for the tax code, law on pricing,
anti-monopoly law, contractual law, and securities law;
--Helping the Russian government establish appropriate regulatory
bodies such as the Securities and Exchange Commission and Anti-
Monopoly Commission;
--Fostering the development of capital market institutions, corporate
governance, independent share registries, and self-regulatory
organizations for capital markets professionals; and
--Assisting and training Russian law enforcement officials and
helping to develop the judicial system.
To further the objective of regulatory compliance and oversight in
the business community, the Russians have developed capital markets and
private sector self-regulatory organizations which promote professional
standards and business practices. An example is the Professional
Brokers Association that is creating a national trading system modelled
after the American National Association of Securities Dealers (NASD).
This association is promoting transparency and recognizes that it is in
their interest to restrict mafia or other criminal participation in
capital markets. The Professional Brokers Association started in May
1995 with 5 members and 8 privatized enterprises listed. It has since
expanded nationwide with hundreds of brokers and listed enterprises,
creating competition and transparency in the process.
The ultimate goal of these USAID interventions is to create a
stable, transparent, fair and predictable business environment. The
best defense against organized crime is promoting continued economic
stabilization and reform.
whistle-blower protection measures
Question. There have been some question of pressure on those who
criticized USAID programs in the former Soviet Union. Will you pledge
to protect whistle-blowers and honest critics from retaliation?
Answer. This Administration welcomes robust debate on important
issues, and strongly supports whistle-blower protection measures. It
has been and will continue to be my practice to encourage free
discussion that will help us improve the efficiency of our operations
and combat waste, fraud and abuse without fear of reprisal.
agriculture
Question. In previous administrations assistance to international
agricultural research had a high priority.
What is in your budget this year for crop research programs such as
the International Rice Research Institute (IRRI) in Manila?
How does this compare with prior years?
Answer. USAID's support to international agricultural research has
declined substantially since fiscal year 1993. The decreased funding is
the result of a severe and continuing decline in unearmarked funds made
available to the Agency. In some cases, although not in the case of
agricultural research, unearmarked programs have been eliminated
entirely.
There are three major components of USAID's support to
international agricultural research. The Collaborative Research Support
Programs (CRSPs) draw on the expertise of more than 40 U.S.
universities to pursue research on topics of mutual interest and
benefit to developing countries and U.S. agriculture.
The International Agricultural Research Centers (IARCs), sponsored
by the Consultative Group on International Agricultural Research
(CGIAR), constitute the major multilaterally supported agricultural and
natural resources research program for developing countries; the
International Rice Research Institute (IRRI) is part of the CGIAR
system of research centers.
Our third effort is through USAID funding to enhance the
effectiveness of National Agricultural Research Systems (NARS) through
our bilateral and regional programs. Together, these three approaches
bring the best tools of modern science to bear on the problems
affecting small-farmer agriculture and natural resource management in
Asia, Africa and Latin America.
All three of these efforts have suffered during the budget cuts of
recent years. After deep cuts in fiscal year 1994, the CRSP budgets
have recovered to approximately the level of previous years. In the
case of the CGIAR, USAID's funding declined from a fiscal year 1993
level of $38 million to $28 million in fiscal year 1994 and fiscal year
1995, and to $23 million in fiscal year 1996. In fiscal year 1997,
USAID will increase funding of the CGIAR centers to $26 million; of
this amount, $2 million will be used by the centers to increase their
collaborative research linkages with U.S. universities. Funding for the
third category of activity, National Agricultural Research Systems
(NARS), has declined even more sharply than CGIAR funding during the
last 4 years.
Turning to IRRI specifically, USAID's funding declined from $5
million in fiscal year 1993 to $2.9 million in fiscal year 1996, a
reduction of 42 percent. We recognize that rice research is a critical
factor in the global food supply equation; in Asia, rice production
must nearly double in the coming two decades to meet rising demand. For
fiscal year 1997, we have yet to allocate our exact level of support to
the center; however, it is certain that IRRI will emerge as our top
priority for a budget increase within the limitations of our overall
resource envelope for the CGIAR.
microenterprise
Question. In the Committee report of last year's Foreign Operations
bill, we requested a report from USAID on the amount of funding going
into poverty lending programs.
When can we expect this report?
Answer. USAID is preparing a survey of its 1996 portfolio, to be
completed in the fall of this year.
Question. In your 1994 Microenterprise Initiative you set a goal by
the end of 1996 of half of your total Microenterprise resources would
be devoted to loans of less than $300.
Have you reached this goal?
Answer. Analysis of 1995 programming shows that about 42 percent of
USAID's total microenterprise support was aimed at poverty lending.
Poverty lending amounted to over half of our support to microlending.
As I said to you earlier, USAID is preparing a survey of its 1996
portfolio and will provide the results to you as soon as they are
available.
______
Questions Submitted by Senator Allard
campfire
Question. Mr. Atwood, are you familiar with the USAID CAMPFIRE
program? Could you please provide a brief explanation of the purpose
behind the CAMPFIRE program, including the exact recipients, and their
allotment, of program funds?
Answer. USAID is the lead bilateral donor in the environment in
Africa, providing over $80 million a year to support biodiversity,
tropical forest management, and sustainable agriculture practices. The
CAMPFIRE program, one of our more successful efforts in Africa, seeks a
long range, sustainable balance of lands, people, and wildlife.
CAMPFIRE was established by Zimbabweans in the mid-1980s; USAID support
for CAMPFIRE began in 1989.
Our expanded assistance to CAMPFIRE (currently planned at US$20.5
million) supports:
--Wildlife conservation ($3.1 million). Primarily executed by the
World Wildlife Fund and the Zimbabwe Department of National
Parks, activities include research and field work on the
ecology of wildlife habitat, alternative resource options, and
other issues needed by the CAMPFIRE members.
--Community development ($3.9 million) including training staff at
the district level, and providing technical support so that
district councils can fulfill the technical and financial
requirements required if they are to make use of the
``appropriate authority'' provided them by the Government of
Zimbabwe. The majority of funds go via Zimbabwe Trust, which
works with district councils, wards, villages and households to
strengthen their capacity to manage their natural resources.
--Grants to communities and Rural District Councils ($6 million).
Includes capacity building activities, payments for animal
damage, and support for the establishment of nature-based
tourism infrastructure, such as electric game fencing,
waterhole development, trail establishment.
--Regional communications and training ($1.2 million). Includes
exchange of information between nations with similar resource
applications, and sharing lessons learned beyond Southern
Africa. This component is implemented by ACTION, an
environmental magazine; and the African Resources Trust.
--Planning and applied research ($2.1 million). Socio-economic and
biophysical research, monitoring and evaluation of program
impact, and coordination with the Government of Zimbabwe and
Southern African Development Conference (SADC). Under this
component the University of Zimbabwe (Centre for Applied Social
Sciences) collects and analyzes social and economic data from
participating project areas.
--Technical/administrative assistance ($2.7 million). Includes grant
management, assistance to the CAMPFIRE Association and other
members in setting up administrative, financial and technical
support systems. This component is primarily implemented by
U.S. consulting firms (Development Alternatives, Inc and Price,
Waterhouse and Company).
--USAID management/audit and evaluation. Technical oversight by USAID
mission, as well as audits and evaluations ($1.5 million).
Question. To your knowledge, are any USAID funds being used to
underwrite the cost of trophy hunting expeditions in countries targeted
by your CAMPFIRE program?
Answer. No. Taxpayer funds do not subsidize trophy hunting of
elephants and other wildlife.
However, CAMPFIRE does assist local communities, some of which do
generate revenues by granting licenses to hunters. The revenues earned
from these licenses are used to benefit the communities in a variety of
ways, such as building schools. At the same time, by helping
communities to manage resources in a responsible way, this has reduced
unregulated hunting and poaching, and benefited the animal population.
Question. What is the USAID time frame for completion of the
CAMPFIRE program? Are there any indications that USAID will need to
extend the time frame and/or the United States' commitment to the
CAMPFIRE program? If there is no need for extending the program, are
there indications that the CAMPFIRE program will arrive at its end goal
of self-sufficiency for the native people within the pre-established
time frame?
Answer. The USAID bilateral program is now in the process of
developing a revised strategic plan, targeting the year 2003 for
mission closeout. The CAMPFIRE program is meeting its intended results.
During the planned review of this plan, whether continued USAID
involvement will be necessary in order to successfully build the
institutional and individual capacity leading to improved rural
livelihoods will be considered. If there are continued CAMPFIRE
activities after the planned USAID/Zimbabwe mission closeout in 2003,
management of those activities probably would be transferred to the
regional mission in Botswana. Activities could include extending the
lessons learned under CAMPFIRE to other countries in the region. While
some rural district councils and communities will be self-sufficient at
the end of USAID bilateral involvement, we do not believe that this
will constitute the critical mass required to ensure the sustainability
of the greater CAMPFIRE program.
______
Questions Submitted by Senator Lautenberg
status of vitamin c pilot program
Question. The increasing awareness of the role of vitamin C in
preventative health care prompted Congress, beginning in 1992, to
recommend that A.I.D. increase the fortification level of vitamin C in
A.I.D. food/grain exports under the Public Law 480 Food Aid Program. In
subsequent years, congressional appropriations committees, relying on
studies which showed that new mothers and infants can readily improve
their health through vitamin C consumption, appropriated funds and
requested A.I.D. to perform a pilot program fortifying Public Law 480
Program food with higher levels of vitamin C. Would you please comment
on the current status of the pilot program, including: What is current
status of the pilot study?
Answer. USAID has assessed, at the point of manufacture, the
uniformity of vitamin C in both wheat soy and corn soy blends, at
conventional and elevated levels of vitamin C fortification. In
progress are reviews in Haiti, Tanzania and India to assess the
stability of vitamin C under actual field conditions. Assays of vitamin
C in the blended food samples collected from the field are being
conducted by a reputable laboratory in the U.S.
Question. What are your preliminary findings?
Answer. Vitamin C uniformity was poor in the corn soy blend at the
point of manufacture. Commodity manufacturers, USAID and USDA are
seeking to rectify this. Preliminary indications suggest some loss of
vitamin C potency during shipment and storage of the blended
commodities overseas. Preliminary results also indicate that vitamin C
is lost during the normal food preparation of these commodities.
Perhaps only a small part the vitamin C added may be consumed by food
aid program recipients. This still needs to be confirmed.
Question. When will you complete the pilot study and submit a
report to the Appropriations Committee?
Answer. We expect a preliminary report to be ready by mid-June and
a final report by Fall 1997, following an Institute of Medicine/
National Academy of Sciences review.
subcommittee recess
Senator McConnell. We appreciate your coming up. We look
forward to working with you on getting a more adequate, shall I
say, 150 account for the coming year. Thank you, the
subcommittee will stand in recess until 10:30 a.m., Thursday,
March 20 when we will receive testimony from FBI Director,
Louis Freeh and Hon. Robert Gelbard, Assistant Secretary of
State.
[Whereupon, at 11:40 a.m., Thursday, February 27, the
subcommittee was recessed, to reconvene at 10:30 a.m.,
Thursday, March 20.]
FOREIGN OPERATIONS, EXPORT FINANCING, AND RELATED PROGRAMS
APPROPRIATIONS FOR FISCAL YEAR 1998
----------
THURSDAY, MARCH 20, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 10:35 a.m., in room SD-138, Dirksen
Senate Office Building, Hon. Mitch McConnell (chairman)
presiding.
Present: Senators McConnell, Specter, Shelby, Campbell, and
Leahy.
DEPARTMENT OF JUSTICE
Federal Bureau of Investigation
STATEMENT OF HON. LOUIS J. FREEH, DIRECTOR
DEPARTMENT OF STATE
Bureau of International Narcotics and Law Enforcement Affairs
STATEMENT OF HON. ROBERT S. GELBARD, ASSISTANT
SECRETARY OF STATE
opening statement of senator mc connell
Senator McConnell. The hearing will come to order.
The ranking member, Senator Leahy, is in the Judiciary
Committee but will be here in just a little while.
With a Senate vote likely today on Mexico's cooperation in
the drug war and the continuing swirl of allegations about
Chinese influence peddling, our hearing on international
narcotics and crime is obviously timely.
I do not think our Founding Fathers' vision of America as a
land of opportunity includes foreign governments corrupting our
democratic system with illegal campaign contributions. And,
when they endowed our citizens with the inalienable rights of
life, liberty, and pursuit of happiness, they expected the
American Government to uphold and defend those principles. This
means taking the drug war seriously, not making excuses for
confusion, incompetence, or corruption. This means protecting
American citizens at home and abroad--citizens like Paul Tatum,
a well known U.S. businessman who was gunned down in Moscow 100
yards from the Radisson Hotel.
In 1993, when Senator Leahy and I visited Moscow, every
businessman we met with said that the problem of crime and
corruption, the lack of both enforceable laws and law
enforcement were the biggest impediments to investment.
Few ventured out without bullet proof cars and heavily
armed body guards. Most had been victims of extortion attempts.
Many had moved to the suburbs where they lived in fortified
villas, hoping to protect their families from kidnapping.
Four years ago, Senator Leahy and I returned with the
business community's message. We urged the administration to
develop a major effort to combat crime and corruption. Short of
a serious undertaking, investment and economic growth, the
foundation of real stability, would obviously crack.
Unfortunately, the business community's predictions have
now come true. There has been a steady increase in capital
flight and foreign investment is stagnant. Billions of dollars
in U.S. grant aid will not make a dime's worth of difference if
this problem is not solved.
Russian police now claim over 400 banks are controlled by
organized crime. Are these the same institutions that the
administration's new investment partnership intends to
financially back?
The Interior Ministry has said at least 40 percent of the
economy is in the mafia's hands, control gained through
exploiting the privatization process. Our privatization program
was the centerpiece of the U.S. effort from 1993 through 1995.
I think we need to be clear that we have not subsidized a
transfer of economic power to the mafia.
International crime is obviously not confined to Russia or
NIS borders. Los Angeles, Miami, and New York are among several
United States cities where 26 Russian organizations are basing
their drug trade, prostitution rings and extortion, fraud, and
counterfeiting operations. And if the stories are true, we are
facing a whole, new threat to our democratic process if foreign
governments are illegally contributing to our political system.
In this troubling context, let me be clear on one point.
Judge Freeh, you deserve the credit for the only serious effort
this administration has made to tackle international crime and
we thank you. In the face of strong opposition, you have
continued your fight to increase funding for global FBI
training programs and, more particularly, the International Law
Enforcement Academy in Budapest. ILEA is one of the most
impressive facilities I have ever had the privilege to visit. I
am proud to have offered support through foreign operations
funding for ILEA and we want to thank you for your leadership
in seeing this through. It is an organization that is making a
real difference.
When I was there in January, the academy was running an 8-
week class with 50 midlevel police officers from Latvia,
Lithuania, and Estonia. The deputy police commissioner from
Buffalo was lecturing for a week on community policing
techniques, a class each student could take with simultaneous
translation.
For a few million dollars a year, we are strengthening the
professional skills of hundreds--hundreds--of police officers
in Europe and the NIS as we improve regional law enforcement
cooperation and our cop-to-cop relationships that directly
serve American safety and security.
While I am pleased with the FBI's effort, let me note my
concern that, once again, the administration's international
crime budget fails to meet the urgent requirements and the ever
expanding scope of the problem. This year, the administration
has asked for a 44-percent increase in overall funding for the
NIS, an increase from $625 million to $900 million. Of that,
they are requesting $10 million to combat crime in Russia,
which triples the past budget request, but still is inadequate.
We have spent over $4.5 billion in aid to Russia; $10
million to combat a problem which directly affects America's
security is simply not enough.
Let me now turn to the second half of today's agenda, the
international narcotics control effort. The administration
seeks a sizeable increase, from $213 million to $230 million.
Before I make a decision to commit more resources, I must be
satisfied the effort is better managed.
Today, the administration's effort suffers from a
fundamental if not fatal flaw, which is the basic lack of
coordination between agencies.
Over the past several weeks, my staff has tried to respond
to my request to build a matrix identifying the dollars we
spend along with the agencies and number of personnel assigned
in each country where we engage in international narcotics
control efforts. They have been told it is not and cannot be
done.
For example, no one in the administration can provide an
accounting of the number of FBI, DEA, DOD, and INL staff in
Mexico. No one can tell me how much all agencies spend on
counter narcotics in Mexico. The most questionable response
actually came from the drug czar's office, where it was claimed
they simply do not have the resources or staff to develop the
data.
If no one knows which agencies and how much we are spending
in any given country, how can we possibly hope to measure the
cost effectiveness and success of the effort?
Judge Freeh, let us begin with your assessment of where we
stand in our effort to combat crime, corruption, and narcotics
trafficking. We will then hear from Ambassador Gelbard,
Assistant Secretary of State for International Narcotics and
Law Enforcement, the office with the key policy coordination
role.
I want to welcome my friend and colleague, Senator
Campbell, here as well. I am glad to have him.
As I said, Senator Leahy will be here shortly.
Judge Freeh, why don't you proceed.
summary statement of hon. louis freeh
Mr. Freeh. Thank you, Mr. Chairman and good morning,
Senator Campbell.
Let me just give a brief overview of what I think the
issues of continuing interest are to the committee and, with
your permission, I will submit a longer written statement for
the record.
The international training and law assistance programs that
the FBI are engaged in are, in my view, not only appropriate
but also a very good return for the tax dollars being expended.
In addition to the ILEA Academy in Budapest--which is a
partnership, a joint venture, between the State Department, the
FBI, the Department of Treasury and some other agencies--for a
very small amount of money, we are not only able to bring
training and assistance to many different countries, but we
have also established through our Legal Attache Program [LEGAT]
what I like to call our first perimeter of defense around the
world.
We have an interest certainly in giving to new democracies
and new police forces the fundamentals of policing. For
instance, I am very proud of the 375 students who have now
graduated from the ILEA. Upon completion of the course, we
asked them to rate the most important course for them and the
one from which they derived the most benefit. The course which
receives that vote is the course on human dignity, which we
think is a tribute to the curriculum. This course is designed
to teach policing in a democracy and the balancing of public
security with civil rights and human rights.
But more importantly, the presence of the FBI Legal Attache
Program and the in-country training which is supported in large
part by the Department of State gives us the ability to protect
Americans in a way that a global world with transnational crime
and no borders requires us to do.
Let me just sketch a couple of cases very, very briefly.
The Tatum case, which you referred to, Mr. Chairman, is a
case which is now being actively investigated by the Ministry
of Interior in Russia with the assistance and input of our FBI
legal attaches in Moscow. We have a strong and abiding interest
in the resolution of that case.
Very recently, we had a case involving Citibank. An
individual sitting in St. Petersburg, Russia, with access to a
laptop computer broke into Citibank accounts in New York and
moved several millions of dollars into his own accounts, or
attempted to move them into accounts where he would get access
to them. Because of our relationship with the Ministry of
Interior and our presence in that country, we were able to
quickly address that particular episode.
In another recent case, an individual in Sweden with a
laptop computer hacked his way into some switching systems in
the United States and proceeded to shut down several 911
systems in northern Florida for several hours at a time. Those
are systems which deliver not just police, but emergency and
rescue services too.
We recently have been successful in taking back many
fugitives, not only in counterterrorism cases but in homicide
cases. One in particular is an individual who is a member of a
very notorious drug gang here in the District, the First and
Kennedy crew. A member of this gang was responsible for walking
into Washington Metropolitan Police Headquarters in November
1994, killing two of my FBI agents and a metropolitan police
sergeant. A fellow gang member, an individual named Kobi Mowatt
who was wanted for a triple homicide in the District of
Columbia, fled first to Russia and then to Eastern Africa. He
was found as a result of our relationships with the MVD in
Russia, who traced some Aeroflot records, and through our Legal
Attache Program was apprehended, brought back, and pled guilty
to that particular crime.
There are many, many other instances where we are working
cooperatively in what we call our practical case training
program, where we actually partner up with police officers in
various countries--Kazakhstan, Uzbekistan, Latvia, and Russia
being some examples--and work on cases which impact directly on
the United States.
One particular case which we worked with Kazakhstan under
this program was responsible for the seizure by Russian customs
of 1.1 tons of cocaine. We are seeing to a greater extent
alliances between criminal elements and criminal groups in the
United States and organized crime groups, not just in Eurasia,
looking to now import and ship cocaine into what are
potentially vast markets in Eurasia.
In a recent case in Florida, a Russian national planned to
bring large amounts of narcotics into the United States. He was
involved in negotiations to purchase a submarine from the
Russians that would be used to clandestinely move cocaine from
South America to Florida.
There are a whole series of cases which give us the ability
to not only fulfill our mission but protect Americans--in the
counterterrorism area, in the drug trafficking area, and in the
financial crimes area, even coming down to the matters that
affect local jurisdictions, such as the triple homicide that I
mentioned.
We have now 81 agents overseas in our Legal Attache Program
and 30 different offices, which are up and running. We just
opened offices in Cairo, Tel Aviv, and Riyadh, which, for the
first time in the history of the FBI, gives us the ability to
directly deal with and work with our counterparts in that very
critical region where our counterterrorism interests are of
great particular moment.
The training that we have done through the FSA programs and
the SEED programs have been, in my view, extraordinarily
successful. The State Department supported all of our requests
for 1996, and our 1997 requests are being quickly attended to.
I want to take a moment to thank Ambassador Gelbard
particularly for his leadership in that regard for both the
ILEA Academy and FSA and SEED support. The Antiterrorism
Training Assistance Program, which is terrorism training that
the FBI performs at the request of the Department of State, has
also added at a very low cost, in my view, to extraordinary
relationships with our foreign counterparts and the ability to
project American law enforcement interests into places in the
world where, heretofore, we really had no representation.
Many of the other programs which are subject to funding by
this committee have given law enforcement a very immediate and
very successful derivative benefit. We routinely now, through
our Legal Attache Program, discharge leads for State and local
officers. Many of the police departments in the United States
are very small and do not have this capability, except through
Interpol, which is really a warrant service, not an
investigative service. So they come to the FBI with requests
which we pursue for them through our Legal Attache Program and
through the Department of State.
So all in all, I think the return on the dollar which is
being given to the American taxpayers in terms of security,
investigative capability, and protection is really very, very
well received, given the amount of money that is being spent.
Both the ILEA Program and the other training programs are, in
my view, being conducted very successfully. We trained
approximately 1,900 foreign police officers last year under the
FSA and SEED authority of the State Department.
We have a series of 40 courses which we regularly present
around the world, courses such as hostage negotiations. The
Russians asked us recently to teach their rescue team hostage
negotiations, which we are in the process of doing. There is an
internal control seminar on how to make a police force work
with the standards of integrity which are necessary for people
to have confidence in it. There are bomb detection courses,
courses in crisis management, money laundering, and financial
crimes. We have done that now in 21 countries just in fiscal
year 1996, all with State Department funding which comes from
this committee.
The other long-range benefit that is being derived from
this training is that the police officers being trained--the
officers that you saw, Mr. Chairman, in ILEA--will be in 5 or
10 years the chiefs of police or the commissioners of many of
their departments. Those relationships with the FBI and the
State Department will continue and will inure to the great
benefit of our country.
So both in terms of the dollars being spent, the return
that we are getting, and the coordination between the two
departments represented here, I think the benefits are very,
very high.
When we submitted to the Congress last year our 4-year
Legal Attache Expansion Program, it was written jointly with
Ambassador Gelbard and approved by the Attorney General and the
Secretary of State. That has given us the planning, the
knowledge and the coordination to take these very important
steps in an effective and manageable way.
prepared statement
I am very appreciative to you, Mr. Chairman, for your
continuing interest in law enforcement, particularly the
international capability that our country must have, and I
thank the other members of the committee for your continuous
support and your leadership in the area of international law
enforcement. As always, it is a pleasure to appear before your
committee.
I would be happy to answer all of your questions.
Senator McConnell. Thank you, Judge Freeh.
[The statement follows:]
Prepared Statement of Hon. Louis J. Freeh
Recognizing the fluidity of crime around the world, the FBI
has worked closely with the Department of State to develop a
strategy which facilitates our ability to protect Americans'
and American interests. Without the support and vision of
Ambassador Gelbard, Secretary Christopher, and now Secretary
Albright, the United States' response to international crime
would have been disjointed and inefficient. Their leadership
and assistance has been particularly helpful to the FBI as we
have developed a response to this problem. The FBI is
particularly indebted to Ambassador Gelbard for all he has done
for law enforcement over the last several years.
The United States cannot simply fight crime on our own
soil; we must be proactive to prevent these criminal
organizations from gaining strength. Therefore, the FBI has
underway a multi-faceted approach to better protect Americans
at home and abroad, and to train and assist our fellow law
enforcement organizations in fighting crime within their own
countries. We have expanded our Legal Attache program,
increased our international training efforts, and developed
programs to open the lines of communication among law
enforcement officials. Crime is a transnational phenomenon; it
knows no boundaries. By slowing the spread and development of
complex criminal enterprises in their home country, we can
prevent their establishing a foothold within the U.S.
One of the first areas where the FBI proactively sought
partnerships was the countries of Eastern Europe, the Baltics
and Russia. The responses of these countries to our offers of
assistance have been overwhelmingly positive. One of our first
activities in this region was the opening of the Legal Attache
office in Moscow to work closely with Russian police against a
variety of costly crimes. From July 1994 to the present, the
number of cases worked by the FBI agents in Moscow has
increased from 20 to approximately 275. Since that time, we
have also opened offices in Tallinn, Estonia; Kiev, Ukraine;
and Warsaw, Poland. Our 1998 budget proposes opening additional
offices in Almaty, Kazakhstan; Prague, Czech Republic; and
Tashkent, Uzbekistan; as well as other locations.
The strength and success of organized crime has become an
increasing problem in this region of the world as it is in the
United States. According to the Nezavisimaya Gazeta, (Moscow,
1996), Moscow police break up at least two organized crime
gangs each day, but each gang is replaced by a new one. There
are now more than 200 groups active in Moscow; bloody
``altercations'' between groups are an almost daily occurrence.
In Lithuania there are an estimated 100 organized criminal
groups with total core membership of about 1,200 criminals.
Latvian and Estonian police estimate that there are 10-15 such
groups operating in each of their countries. In Vilnius, the
crime rate is high, and it is estimated that 70 percent of the
offenses are not reported to police. The situation is far worse
in Estonia and only slightly better in Latvia.
Through cooperative efforts, we have begun to achieve
successes. The June 1995 arrest and subsequent prosecution in
New York City of Vyacheslav Kirillovich Ivankov and five of his
associates on federal charges of conspiracy to commit extortion
continues to be recognized in Russia and the U.S. as a shining
example of FBI-Russian police cooperation. Ivankov, convicted
in U.S. District Court last July, was sentenced in January to
over nine years in prison. More recently, in July 1996, an
Ivankov associate was killed in a gangland-style shooting in
Vienna, Austria. Efforts by the FBI Legal Attache office in
Vienna helped authorities identify and arrest two Georgian
suspects in the shooting.
In another successful cooperative effort, a major computer
fraud investigation continues into the diversion of over $10
million by a St. Petersburg, Russia, gang to dummy accounts at
Citibank in New York. Russian Ministry of Interior (MVD)
officers and FBI Agents have worked closely to investigate this
case. For instance, Russian police officers traveled to New
York last August to obtain evidence. Russian investigators
assigned to this case also attended the Computers Crimes
Conference in New York earlier this month.
However, the success of these cooperative efforts does not
lessen the danger which exists for these countries and the U.S.
The FBI is supporting the ongoing MVD investigation into the
November 1996 murder of American citizen Paul Tatum in Moscow.
Mr. Tatum was murdered November 3, 1996, in a subway station
outside of a hotel whose ownership he was disputing. While this
killing of a businessman was the first involving a U.S.
citizen, this use of force has become far too common in Russia.
The cooperation occurring in the investigation of this case
continues to strengthen our law enforcement relationship and
provides a glimpse into the crime and corruption problem which
still plagues the Russian democracy. Through our cooperative
efforts, we hope to help the Russian authorities develop law
enforcement tools and investigative techniques to assist them
in their battle against this problem.
One of the most difficult law enforcement problems facing
many of the New Independent States (NIS) and Eastern European
nations is drug trafficking. The scourge of drug trafficking
has had a devastating impact on the entire global community.
Russia, the NIS, and Eastern Europe are certainly not immune to
this epidemic. Criminal organizations in these emerging
democracies are taking advantage of the relaxed borders and
improved telecommunications systems that have emerged in recent
years to facilitate their illegitimate operations. These
countries are targets of opportunity for the major drug
trafficking organizations, like the Colombian cartels, which
seek to establish new and lucrative markets.
Our increased cooperation has netted some success. For
example, the FBI's Miami office in January 1997, arrested
Ludwig Fainberg on racketeering charges. Fainberg was indicted
by a Federal Grand Jury, along with two associates, on 30
counts of RICO conspiracy, narcotics conspiracy, interstate
transportation of stolen property, and other crimes. As part of
a plan which illustrates growing drug trafficking efforts
between elements in Russia and South America, Fainberg proposed
the purchase of a Russian diesel submarine to smuggle cocaine,
according to the charges.
The FBI, in coordination with the Department of Justice,
the Department of State and others, completed a four-year
expansion plan for our Legal Attache program. I am happy to say
that we have met our initial goals in this plan and continue to
open offices. Last fiscal year, we opened three offices (Cairo,
Egypt; Islamabad, Pakistan; and Tel Aviv, Israel) and this
fiscal year we have already opened four (Warsaw, Poland;
Riyadh, Saudi Arabia; Tallinn, Estonia; and Kiev, Ukraine). We
plan to open three more offices this year (Pretoria, South
Africa; New Delhi, India; and Buenos Aires, Argentina).
Presently, we have 82 agents and 61 support employees in 30
nations around the world. During fiscal year 1996, these
offices handled 3,355 cases and 5,767 lead assignments.
The FBI's Legal Attache program is the single most
significant factor in the Bureau's ability to detect, deter,
and investigate international crimes in which the United States
or our citizens are victims. By stationing agents abroad and
establishing operational links with foreign police, the FBI
substantially expands the nation's perimeter of law enforcement
protection.
The Legal Attaches play an important role as conduits for
information regarding international criminals and crime. They
also act as facilitators for our international training
programs. Through the Legal Attaches, foreign law enforcement
officials become aware of the training opportunities which are
open to them. At the host governments invitation, the FBI
conducts an analysis of that country's crime problem and police
training needs. We then provide the host government with
recommendations to enhance their techniques and capabilities
with FBI assistance and training initiatives. Several
assessments have been conducted in the last two years with
additional assessments planned for fiscal year 1997. The Legal
Attaches also screen potential students and make
recommendations regarding student's attendance.
Combating this growing international crime problem cannot
be done by the FBI alone. We rely on our partners within the
United States Government to work together to fight this
problem. Recently, the FBI and Department of State have
undertaken a number of efforts to clarify our roles and
increase cooperation between our employees. The most important
result of these efforts was the negotiation and signing of a
comprehensive Memorandum of Understanding (MOU) regarding the
Legal Attache's relationship to the Chief of Mission. This MOU
clarifies the importance of our relationship and the need for
cooperation in order to be successful overseas. In addition, a
Diplomatic Security Special Agent has been detailed to the FBI
to help ensure open and clear communication on policy and
operational issues. In the future, we also hope to implement a
comprehensive training program to sensitize DOS and FBI
personnel to interagency issues. Through these efforts, we have
strengthened our relationship and ensured a coordinated
strategy overseas.
The FBI also works closely with other government agencies
in one of the United States finest law enforcement
achievements--the establishment and opening of the
International Law Enforcement Academy in Budapest, Hungary. I
know, Mr. Chairman, that you recently visited the ILEA and saw
firsthand the importance that this facility plays in developing
working relationships among law enforcement officials. The ILEA
is a direct outgrowth of our trip to Eastern Europe in 1994 and
President Clinton's direction to U.S. Government agencies to
join together to build the world's capabilities in fighting
international crime. The Academy represents the combined
efforts of the Department of State (DOS), the Department of
Justice (DOJ), the FBI, the Drug Enforcement Administration
(DEA), the Internal Revenue Service (IRS), the United States
Secret Service (USSS), the Federal Law Enforcement Training
Center (FLETC), the Alcohol Tobacco and Firearms (ATF), and
other agencies and countries. It is truly a case where all of
these law enforcement agencies are working together as partners
toward a common goal. I cannot speak highly enough about the
contributions ATF, DEA, Secret Service, IRS, the Federal Law
Enforcement Training Center in the Department of Treasury and
the Department of State's Bureau of Diplomatic Security have
made in making the Academy succeed. The Academy brings together
seasoned investigators as instructors and law enforcement
officers from across Eastern Europe, Russia, and the NIS to
learn policing under the rule of law.
The opening of ILEA in April 1995, was an important step
toward establishing a mechanism for regional law enforcement
training in Eastern Europe. At ILEA, police officers from
Eastern Europe, Russia and the Baltic states are being trained
in techniques used to combat modern criminal activity,
including organized crime and terrorist groups. To date, 377
students from 19 countries have graduated from the eight-week
professional development seminar which is the cornerstone of
activity at the ILEA. In addition, 18 other courses have been
taught by six different U.S. Government agencies. For example,
the FBI taught a footwear and tire impression class for 20
students from Poland, Slovenia, Slovakia, Hungary, and the
Czech Republic. The United States Secret Service has taught two
counterfeiting courses for 53 students from Belarus, Ukraine,
Russia, Hungary, the Czech Republic, Slovakia, Slovenia, and
Estonia. In addition, ILEA instructors participated in the
United Nations sanctioned training initiative, under the
auspices of the Austrian Interior Ministry, for 300 Bosnian
police officers in Vienna.
The FBI also conducts training courses with funds allocated
to the FBI by the U.S. Department of State Bureau for
International Narcotics and Law Enforcement Affairs (INL) and
funding from Freedom and Support Act (FSA) and Support for
Eastern European Democracies (SEED) funds. In fiscal 1997, the
FBI will receive $1,341,000 from FSA; $1,074,000 from SEED; and
$3,168,700 from INL for a total of $5,583,700 in funding from
the Department of State. These funds are used to support the
teaching of a variety of courses designed to meet particular
needs of the host country.
Through the FBI's in-country training program, the FBI
conducts one and two-week schools in foreign nations which
concentrate on police operations and technical skills. Our in-
country training is very broad, ranging from basic
investigative techniques to police integrity internal control
courses. We use seasoned, senior FBI street agent instructors
who use their extensive practical experience in training our
foreign counterparts in policing under the rule of law. The
instructors in these programs have an established expertise in
criminal investigations, especially organized crime and white
collar crime. Their credibility is not only essential for
effective instruction but also is very effective in building
the cop-to-cop bridges that we so critically need.
During fiscal year 1996 the FBI, provided over 52 training
courses in 21 countries for 2,078 foreign law enforcement
personnel through FSA and SEED funding. In 1997, the FBI plans
to conduct 170 training courses for 59 countries for an
estimated 4,606 foreign law enforcement personnel. This
dramatic increase in training is due to the increase in funding
made available by the Department of State for world wide
training. The FBI projects a 10 percent increase in training
courses to be conducted in fiscal year 1998.
One beneficial part of this training is the opportunity it
provides the trainers and the trainees to interact about
specific crime problems being encountered in their countries,
how to address the problem, share experiences learned in the
process and forge new relationships for future cooperation on
matters of mutual interest and concern. To further build upon
these initial training courses, the FBI has also begun another
initiative--Practical Case Training (PCT). The PCT initiatives
allow the FBI to invite law enforcement officers from abroad to
take part in hands-on, on-the-job practical case training
regarding mutual investigative interests. The program also
sends FBI Agents to foreign countries to train their counter-
parts in the same methodology.
The PCT serves as a forum in which case information and
investigative techniques can be shared in effort to combat
those criminal elements that are common to both nations. This
program has been extremely well-received and successful.
Currently, an FBI agent with an expertise in financial crimes
is assisting the Czech government in its efforts to investigate
financial fraud, specifically irregularities in the Czech
banking system. As a result, Czech authorities are becoming
much stronger in their ability to thwart future criminal bank
failures. For example, the Czechs are in the process of forming
financial crime task forces modeled after US examples. The PCT
serves as a forum in which case information and investigative
techniques can be shared in an effort to combat those criminal
elements that are common to both nations.
In another example of this cooperative program, Russian
police officers have now worked side-by-side with Agents in ten
FBI field offices, resulting in testimony and other support by
Russians in major FBI cases such as the Ivankov organized crime
and Citibank fraud investigations. In Russia, an ambitious FBI
commitment to training has already resulted in 36 one-week
seminars throughout Russia, with at least ten more slated for
the remainder of this fiscal year. The practical result is that
there now exists a network of Russian investigators who are
better prepared to not only meet their own crime challenges but
to assist the FBI in its responsibility to protect American
citizens.
Under the auspices of the State Department's Antiterrorism
Training Assistance (ATA) program, and working with the
Department of Defense, the FBI has also developed two training
courses which attempt to counter threats of concern to the
United States--terrorism and those involving weapons of mass
destruction. In conjunction with the ATA program, the FBI will
be conducting multiple sessions of three specific anti-
terrorism courses this year. Countries being considered as
attendees include Brazil, Egypt, Morocco and Turkey. The first
two-week course, the Criminal Justice Executive Forum (CJEF),
provides senior level law enforcement officials with current
leadership, management, and organizational concepts and
experiences critical to the direction of national law
enforcement agencies and the coordination of multi-agency
crisis management policy and strategy. CJEF was first conducted
in May 1996, and the FBI plans to conduct three of these
seminars this year.
We are also working with the ATA program in developing a
Major Case Management course to provide the basis for managing
the investigation of terrorist crimes. It specifies the
procedure for forming an investigative task force. The course
will enhance the abilities of foreign criminal investigation
agencies to investigate, arrest, prosecute and convict
perpetrators of terrorist crimes. The first country to be
invited to participate in this training was El Salvador. From
March 3-14, 1997, the FBI taught this course to 25 law
enforcement officials from the government of El Salvador. This
course was the first time that judges, prosecutors and police
officers from El Salvador had been brought together under their
new constitution to discuss issues such as how to conduct a
major case investigation and how to form an investigative team.
We have also developed with ATA a two-week Terrorist Crime
Scene Investigation course. This course teaches investigators
the principles of crime scene management and seeks to provide
the participants with the skill to conduct crime scene
searches, to process physical evidence, and to provide
testimony in judicial proceedings. An important part of crime
scene management involves principles of searching for
perishable physical evidence, such as fingerprints and
impressions of tires and tools. The majority of this course is
conducted in an academic learning environment using lecture,
group discussion, case studies, and practical exercises.
Proliferation of weapons of mass destruction and their
delivery systems poses one of the greatest threats to our
national and international security now and for the foreseeable
future. A recent example illustrates the extent of this threat.
In December 1994, Czech authorities seized 2.72 kilograms of
weapons grade uranium 235 in Prague. Three persons were
arrested including the leader, a Czech nuclear engineer who had
been trained in the former Soviet Union and had personal ties
with two Russian businessmen. The Czechs had no information
about the destination of the shipment, but estimate that the
uranium was worth ``several million dollars.'' This case
represents the largest quantity of weapons-usable material
seized outside Russia. In another case, one man died and at
least four others were hospitalized from overexposure to
radiation after a tiny sliver of Cesium 137, a radioactive
source, was found inside the man's home in Estonia. The United
States must take a proactive role to assist these countries
with this serious threat.
Last July, Secretary of Defense William J. Perry and I
submitted a joint report to the Congress titled,'' DOD-FBI
Counter Proliferation Program'' which called for the
development of a training program to improve the ability of
states of the Former Soviet Union, the Baltic countries, and
Eastern Europe to prevent, deter and investigate any aspects of
crimes related to the proliferation and/or diversion of
nuclear, biological, and chemical weapons and their delivery
systems, as well as to prevent the illicit trade in related
materials. This training program will be developed for the
entire law enforcement community--from investigators to
prosecutors to judges. The plan calls for U.S. representatives
to discuss and evaluate the existing counter-proliferation and
anti-nuclear smuggling apparatus and the legal structures and
principles for the development of legislative, regulatory, and
law enforcement frameworks. In addition to the FBI and DOD,
participating agencies include the DOS, Intelligence Community,
DOE, DOC, and USCS. Training outside the U.S. will take place
at the ILEA.
The FBI realizes the threat which international crimes pose
to the American public and the importance that international
partnerships play in the effort to stop these crimes. However,
we cannot do this alone. Without the support of the Congress,
the Department of State, and our other law enforcement partners
here in the U.S., this effort will be fruitless. Through our
joint endeavors, we have seen positive results; however, we
cannot stop now. As long as criminals and their organizations
believe they can exploit the law, we must continue our quest to
educate and assist our law enforcement partners around the
world--and in turn receive their assistance and cooperation.
summary statement of hon. robert gelbard
Senator McConnell. Why don't we go to Mr. Gelbard and get
his opening statement. Then we will get to our questions.
Ambassador Gelbard. Thank you, Mr. Chairman.
I would like to submit a written statement for the record,
please.
Senator McConnell. Without objection, that will be made a
part of the record.
Ambassador Gelbard. The importance of the issues which we
are here to discuss has become ever more acute in recent years.
As Director Freeh has said, there has been a dramatic change in
the world. And, as you, too, said in your opening statement,
Mr. Chairman, the world has seen a dramatic shift, particularly
in the wake of the end of the cold war.
Senator McConnell. Why don't you pull the microphone a
little closer.
Ambassador Gelbard. In October 1995, President Clinton
spoke at the 50th anniversary of the United Nations in New
York. The subjects he decided to address were not the
traditional ones that one might have expected. Instead of
talking about issues related to what might have been expected
to be a geopolitical tour de raison, he focused on the issues
that this hearing is about. He focused on the new foreign
policy and international security issues, of drug trafficking,
transnational crime, terrorism, traffic and weapons of mass
destruction, and money laundering.
Along those same lines, he identified new instruments, new
tools, new weapons which we needed to bring to bear on these
problems.
On the one hand, we are focusing very strongly on the need
to protect American citizens because the nature of these
transnational criminal enterprises, as Director Freeh has said,
has now meant that either organizations are working worldwide,
as we particularly see in the case of Nigerian drug trafficking
and other criminal enterprises, or through linkages which we
see, that have been brought about between criminal
organizations on the basis of telecommunication advances,
transportation changes, and computers.
As a result, we in the State Department changed the shift
rather dramatically of what had traditionally been the Bureau
of International Narcotics Matters. When then-Secretary
Christopher asked me to take this job, we focused on the need
to change the focus, to broaden it to include law enforcement
issues, international crime issues, and other related matters.
Between my Bureau, and other law enforcement entities, and
other parts of the U.S. Government, we have developed new
relationships which now result in much stronger exchanges of
personnel, much stronger communication, and much closer working
relationships.
Director Freeh mentioned, for example, that we have jointly
worked to establish the International Law Enforcement Academy
in Budapest. We are now looking, between the State Department
and the rest of the law enforcement community, at establishing
another such regional entity for the Latin American and
Caribbean region in this fiscal year, and, funding permitting,
we want to look at the prospects of establishing a similar
entity in Southeast Asia in fiscal year 1998.
At the same time, the relationships between the State
Department and the FBI in particular have developed in closer
ways than ever before. I accompanied Director Freeh on his trip
to Russia, Ukraine, and other parts of central Europe in the
summer of 1994, which produced the idea for establishing the
International Law Enforcement Academy. The director of that
academy is, as you know, Mr. Chairman, an FBI official. We have
provided approximately $11.2 million in funding to support the
activities of that academy and have now earmarked approximately
$5 million for the establishment of the regional institution in
Latin America and the Caribbean this fiscal year.
As we deal with these problems, we recognize that this
involves a fundamental shift in the way we look at
international affairs. The issues of international crime, the
issues of drug trafficking, money laundering and other related
problems have clearly become among the fundamental priorities
for us not only as they affect American citizens but as they
affect the stability of our friends and allies around the
world.
We do not see to the degree as we did before the threats to
international security coming from the traditional left and the
traditional right. But instead we do see some fundamental
attempts to try to erode or destroy the efforts to develop
strong democratic institutions coming from international crime.
Clearly, the most dramatic example that we see of that is
in Colombia, where drug trafficking organizations and other
criminal enterprises have made woeful, successful attempts,
efforts to undermine democratic institutions, economic, and
social institutions in one of the oldest democracies in the
Western Hemisphere.
Similarly in Nigeria we have a regime which is completely
linked into criminal enterprises. And, of course, as you know
well, Mr. Chairman, in Burma, the SLORC has a strong alliance
with criminal enterprises. It is no accident that in these
three countries we see a complete disregard for the rule of law
and a complete alliance between those who would violate human
rights and those who are engaged in criminal action.
We are deeply concerned in central Europe and in Eastern
Europe with similar efforts by criminal enterprises to try to
attack the new democratic institutions as well as economic and
social institutions which those countries are trying to develop
and consolidate.
As a result of that, what we are trying to do, whether
based on the INL budget, my own bureau's budget, or funds we
receive from the Freedom Support Act or the Seed Act is work
with the Federal Bureau of Investigation and other law
enforcement entities to try to develop strong institutional
defenses in those countries, to try to develop what is needed
to combat these threats.
I should note, too, that we are also working in South
Africa to try to do the same. The government of President
Mandela has requested our assistance as they try to change what
were repressive law enforcement institutions, akin to those in
the former Soviet Union and central Europe, to democratic
police agencies and to try to develop the structures that are
needed to really defend against the threats that exist in that
country.
As a result, we are now working to provide support in
counternarcotics, border controls, advice to the Ministry of
Justice on developing reviews of their criminal laws and
criminal procedures, and the DEA and Customs have now set up
offices with the FBI scheduled in this fiscal year.
We see the efforts that are involved, whether it is in
Russia, Ukraine, South Africa, Colombia, Mexico, or in
Southeast Asia as fundamental to the establishment and
consolidation of democracy as well as for the protection of
American citizens.
prepared statement
As a result, we have tried to be as careful as possible to
support our colleagues in the law enforcement community as well
as in the Department of Justice and other parts of the U.S.
Government in our mutual efforts to train and equip their
counterparts and develop the appropriate institutional
frameworks that are needed in the effort against these
problems.
Thank you, Mr. Chairman.
Senator McConnell. Thank you, Mr. Gelbard.
[The statement follows:]
Prepared Statement of Hon. Robert S. Gelbard
international narcotics control budget and program
Good afternoon Mr. Chairman, Members of the Subcommittee,
ladies and gentlemen.
I appreciate the opportunity to discuss the program that
will be funded by $230 million requested by the President for
the International Narcotics Control account for fiscal year
1998. A unique specific purpose of this element of our Foreign
Operations account is to directly protect American citizens
within the U.S. from illicit drugs produced abroad, and from
other transnational crime.
new under the sun
Abuse of psychoactive substances, and criminal acts by one
person against another, are as old as human society. Protecting
individuals from crime is traditionally one of the fundamental
responsibilities of government. In an earlier time, it was an
area in which a government might occasionally ask assistance of
another, as when we sought extradition of Butch Cassidy and the
Sundance Kid when they evaded U.S. prosecution by fleeing to
Bolivia. Mostly, though, crime and criminals were a domestic
matter.
The extent to which things once exclusively domestic have
become internationalized is almost a cliche. What is true of
industry, science and trade is true of crime. Once, criminals
in one country might occasionally have dealt with those in
another. Now, criminal enterprise is as truly transnational as
any other business. The financial and geographic scope of
transnational criminal enterprise has grown beyond the reach of
any individual government. It equals or exceeds even the
proverbial scope of multinational corporations.
This is something new under the sun, as different as a
Butch and Sundance from the Cali Cartel. A global economy with
global communications compels governments to address new
issues, and in so doing to recognize that no one government can
respond without the effective collaboration of all. A truly
global reach of illicit drugs and other transnational crime is
similarly something new under the sun. It compels innovative
and nontraditional responses. The President's guidance
regarding the International Crime Initiative (PDD-42) and on
international efforts against cocaine and heroin (PDD-14 and -
44) has provided the basis for defining such responses. The
International Narcotics Control request for fiscal year 1998 is
an integral part of that response.
narcotics: old problem, new approaches
Illegal traffic in heroin and cocaine has existed since the
pharmaceutical industry discovered a century ago how to refine
these potent and tremendously addicting drugs. Both originate
from raw material produced outside the U.S. Raw material for
the entire world supply of cocaine originates in only three
South American countries. The international community worked
for decades to establish a treaty regime to regulate and
control production, traffic and abuse of these drugs, based on
the Single Convention on Narcotic Drugs and other elements of
the United Nations drug control regime.
More recently, a new level of multinationalization and
polycriminality arose in illegal international drug trade.
Transnational criminal enterprises originated with drug
trafficking in Colombia and Mexico, but grew to New York and
Houston, carrying other forms of crime and violence with them.
Asian criminal enterprises smuggle drugs and illegal aliens
alike into the U.S. and other countries.
Virtually all nations are now committed by treaty to
prevent cultivation of crops that are raw material for drugs of
abuse, illegal processing of those crops to dangerous drugs,
and international smuggling of such drugs to their consumers.
But treaty commitments, however significant, are of value to
the U.S. and other nations only if backed by government
capability to implement them. The International Narcotics
Control program is an essential element of the cooperative
effort of the international community to control production,
international smuggling and abuse of illegal drugs. It
implements elements of our National Drug Control Strategy
calling for reducing production of these drugs abroad, and
preventing their smuggling to the U.S. It provides training,
advice and material support to equip other governments with
institutional capabilities to make their treaty commitments
effective enough in practice to protect the American people
from dangerous drugs originating abroad.
In fiscal year 1998, the INC program will again fund
training by DEA, Customs, Coast Guard and other USG agencies to
improve capabilities of drug law enforcement agencies
throughout the world, and in doing so will build relationships
that enhance the ability of our law enforcement agencies to
carry out their own missions of enforcing U.S. law. The INC
program supports activities by the UN International Drug
Control Program and promotes support by other donors to reduce
production and attack trafficking in illicit drugs in
countries, especially the major Asian producers of heroin,
where our bilateral access is limited. Bilateral INC projects
in selected countries where heroin and cocaine trafficking are
most significant provide sustained training, advisory and
material support to enhance the capabilities of their drug law
enforcement institutions.
This program is not limited to drug trafficking. As
important as it is, taken alone, this is like giving aspirin
for a fever without antibiotics to cure the infection causing
it. Our National Drug Control Strategy prescribes a
comprehensive effort to break foreign drug sources of drug
supply and production. The INC program includes significant
elements whose purpose is not just to reduce the symptoms but
to cure the problem, to permanently reduce production of the
crops from which illicit drugs of abuse come.
The INC account includes a regionally funded aviation
component that supports reduction of illicit drug crops by
destruction with herbicides applied by USG-owned and -supported
aircraft. These have operated effectively in Colombia,
Guatemala, Panama, Venezuela and other countries. It also
supports aviation aspects of our bilateral country projects in
the three principal cocaine raw material source countries,
Peru, Bolivia and Colombia. In 1993, the President decided that
the INC account should include economic (formerly ESF) and
military (formerly FMF) assistance provided since the 1980's to
advance our drug control goals. The equivalents to these former
programs are also now included in the INC drug source country
projects.
In fiscal year 1998, over half of our INC request is
devoted to bilateral projects in the three coca source
countries, and aviation support for them. In these countries,
our goal is not limited to drug law enforcement. We promote and
support comprehensive programs by those countries to reduce
and, within the decade of our National Drug Control Strategy,
eliminate commercial-scale cultivation of coca destined for
illicit cocaine production. This demands robust, efficient host
government institutions for drug enforcement and interdiction,
to control prices the illegal drug industry can offer farmers
growing drug crops. It demands equally robust, efficient
development of licit economic livelihood, to enable farmers to
escape dependence on illegal coca and prevent re-establishment
of the crop.
INC-funded assistance has helped implement a design worked
out in the Peruvian government national drug control plan
approved in 1994. By 1996, coca cultivation was reduced by 18
percent, to the lowest level since the mid-1980's. The National
Drug Control Strategy identifies the enhanced support for INC
activities in Peru reflected in this fiscal year 1998 request
as one of its most important foreign drug supply control
initiatives for the coming decade. Implementing the important
long-term goal of eliminating illicit coca cultivation in Peru
and the other cocaine source countries, will not be quick or
easy. The INC program for 1998 and future years is an important
part of the means by which we intend to get there. With
continuing support from Congress, we are persuaded that it is
possible to do, and that we must do it.
crime and criminal justice: new occasions teach new duties
In fiscal year 1997, for the first time, the INC
appropriation included a separate sub-element devoted
specifically to assisting the criminal justice institutions of
other countries to define and implement activities against
forms of crime other than illegal drug production and traffic.
The types and manner of assistance are familiar to us: funding
the provision of training, professional and technical advice,
providing material and financial support to criminal justice
institutions, is something the INC program has been doing for
drug law enforcement for two decades. The reasons our
activities have been expanded to more aspects of the general
issue of crime and criminal justice institutions, and some of
the consequences of this expansion, are new and different
occasions for the INC program. I would like to devote somewhat
greater time and attention today to them.
Drug trafficking, in today's world, is far from the only
criminal activity that reaches from beyond a country's borders
to victimize its citizens. The same explosive economic,
technological and social developments that globalized legal
activities, and production and trade in illegal drugs, affected
other types of lawbreaking. Once, it took being in a village to
perpetrate a fraud. Today, a swindler can be physically half a
world away from a victim. As the scope for illegal activity
expanded, so did its organization; as legal businesses got
bigger, so did illegal ones. Criminal organizations like the
Sicilian Mafia, well known for centuries, expanded to global
dimensions. Criminal organizations that gained transnational
scope trafficking drugs from East Asia or Mexico entered allied
forms of illegal activity, like smuggling aliens.
Crime on an organized, transnational basis has become a
fact of the modern world. Cars stolen in the U.S. are sent
illegally to other nations to avoid high import tariffs. The
National Insurance Crime Bureau reports that 40 percent of all
vehicles stolen off U.S. streets ultimately are moved to other
countries, costing insurance companies and customers millions
of dollars a year. Illegal immigration and alien smuggling
reach into the U.S. and other industrialized countries; in
Washington a year ago, a seemingly legitimate U-Haul truck had
a minor accident, and was found to be packed with illegal
Mexican migrants who had been smuggled some 3,000 miles in
deplorable conditions.
The smugglers were tied to criminal organizations in
Mexico. Nigerian criminal groups are wreaking havoc with
American, European and Asian citizens. Last year, it is
estimated that Americans lost $20 billion to Nigerian fraud
scams--mostly in the insurance industry, but also with credit
cards. In one recent instance, the trail of a costly telephone
swindle in the U.S. led to Moldova, others to otherwise obscure
island ministates in the South Pacific. Asian criminal groups
in the U.S. and Europe exploit their own countrymen. Promising
a better life, these groups smuggle illegal aliens into the
U.S. or other countries, and then hold them hostage to large
sums of money they will never be able to pay. Money launderers
use sophisticated international banking and financial systems
to legitimize the illegal proceeds of drug trafficking or other
criminal activity, or illegally evade tax or other laws of
individual countries.
The reach and complexity of these activities is by itself
sufficient to compel us and the international community to
recognize them as a greater and more immediate threat than our
domestic law enforcement agencies have dealt with. However, the
matter does not rest with this. Transnational criminal groups
find a favorable business environment in debilitated legal
institutions of formerly totalitarian states, like the former
Soviet Union or Eastern Europe. Those criminal groups thus
acquire a vested interest in perpetuating that institutional
debilitation. They bring to corruption resources far greater
than weak governments can dispose to prevent it. Where
transnational criminality on a vast scale has an interest in
seeing that courts belong to the highest bidder, impartial and
authoritative judicial institutions essential to democracy will
be stillborn.
The advance of democracy thus brings with it special
challenges. As politically authoritarian or totalitarian
systems break down, whether of the left, as in Russia, or the
right, as in South Africa, their countries must develop new
legal and institutional capacities characteristic of
democracies to maintain law and order. Police officers whose
approach to investigation was to round up usual suspects are
utterly unequipped to deal with criminals experienced in
evading mature law enforcement institutions in established and
stable democratic states. The resulting political and social
environment has tremendous possibilities for individuals
interested in making money from others, without regard for law.
Transnational crime thus has two significant new
dimensions. It reaches to subject ordinary American citizens in
their home states and cities more directly to crime whose
perpetrators are beyond the reach of U.S. law enforcement than
has ever been the case before. The corrosive effect of
transnational crime can debilitate, subvert, even destroy the
institutions of a state responsible to act against it. Without
functioning criminal justice institutions, there is no law.
Without law, democratic political institutions that our foreign
policy is to promote cannot function.
These are the twin elements of explanation and
justification for this new component of the INC account.
Projects and activities begun over the past few years, and
sustained through fiscal year 1997 by the first INC criminal
justice appropriation, will be maintained and enhanced under
this requested appropriation for fiscal year 1998 to more
effectively protect Americans from crime initiated abroad, and
to further the development of criminal justice institutions
indispensable to our foreign policy goals of preserving peace
and stability and promoting democracy.
President Clinton used his address to the 50th Anniversary
session of the UN General Assembly to call the attention of the
global community to the emergence of nontraditional threats to
the security of nations and the safety of citizens, including
transnational organized crime. The U.S. has led industrialized
countries through groups of experts of the G-7/P-8 countries to
concert national policies and approaches to transnational crime
issues. The Summit of the Americas follow-up ministerial
meeting on money laundering in December 1995 approved a
declaration calling for enlargement and improvement of action
by governments in the hemisphere to prevent illegal money
laundering, and providing for mutual consideration of
government activities that once would have been jealously
argued to be of no legitimate international concern. Actions in
the Summit and other international fora to establish and define
international norms relating to governmental corruption
represent another aspect of growing governmental recognition of
the national security dimensions of transnational crime.
With this INC program, the U.S. has led the world in
developing programmatic responses to this global challenge in
specific situations. Our experience over two decades of
enhancing the institutional capabilities of other governments
to define and implement national efforts against illicit drug
trafficking is equally pertinent to law enforcement and
judicial institutions addressed to other forms of crime. The
Support for East European Democracy and Freedom Support Acts
provided training, advice and technical assistance, including
the establishment of an International Law Enforcement Academy
at Budapest, to strengthen institutional capacities of formerly
totalitarian governments in Eastern Europe and the former
Soviet Union to establish and maintain institutions of domestic
law and order appropriate to democratic society. The fiscal
year 1998 INC criminal justice appropriation, along with SEED
and FSA funding that will be allocated to INL, will help to
sustain and support these activities as vital elements of our
national foreign policy priorities in these regions. We
recently agreed to a wide-ranging program to provide advice and
assistance to South Africa to review, revise and improve its
domestic criminal laws.
Much has been accomplished already. In fiscal year 1995,
over 4,100 law enforcement officers from Central Europe and the
former Soviet Union received training, a level that was
sustained in fiscal year 1996. In 1996, 250 law enforcement
officials from this region participated in an 8-week ILEA
program for police managers, with the cooperation and support
of instructors from Germany, the UK, Canada, Italy, Russia and
the council of Europe.
In our immediate region, INC-funded training in stolen
vehicle detection and recovery in Panama, El Salvador, Honduras
and Venezuela supported an initiative, developed in cooperation
with the National Insurance Crime Bureau and the FBI, to
establish treaty arrangements to identify, recover and return
stolen vehicles to owners. In 1997, this initiative is being
expanded to Central Europe. A Caribbean Crime Initiative
against organized criminal activity has been developed, and
training such as, for example, a regional witness security
program has been provided to improve protection of witnesses
prior to and during trial.
New extradition treaties with Bolivia, France, Poland,
Cyprus and Spain better respond to the realities of modern
transnational crime, and reflect the willingness of governments
in a wide variety of nations to cooperate to prevent criminals
from evading prosecution by fleeing to other countries.
During fiscal year 1998, the requested INC appropriation
will fund law enforcement training programs and technical
assistance to the New Independent States, Russia, Central
Europe, Latin America, Africa and East Asia, provided by
federal, state and local law enforcement agencies, the
Department of Justice's International Criminal Investigative
Training and Assistance Program (ICITAP), and other
organizations. The program will place particular emphasis on
money laundering, alien smuggling, and enhancing the
institutional capabilities of other governments to combat
organized and financial crime.
In Russia and the New Independent States, and in Central
Europe, INL-managed training funded by INC, FSA and SEED funds
will be offered to strengthen the capacity of criminal justice
institutions to act against organized crime, including
financial and white collar crimes, illegal drug traffic, and
traffic in nuclear materials. Training is offered in basic law
enforcement techniques, and advanced technical assistance
programs will be continued in Poland, Czech Republic, Bulgaria,
the Baltics, Slovakia and Hungary, and support will be
maintained for the ILEA at Budapest. We will provide assistance
to the NIS, Russia and Central European countries to combat
alien smuggling by enacting anti-smuggling legislation,
training and cooperation through existing international groups.
A first regional training program on illegal migration was held
in 1996 at the ILEA. These activities are carried out in close
collaboration and coordination with Federal enforcement
agencies, including the FBI--represented today by Director
Freeh--and other Justice and Treasury agencies. These agencies
participate in an interagency working group which coordinates
training programs carried out for students from Central Europe
and the NIS.
In Latin America and the Caribbean, the fiscal year 1998
INC appropriation will support civilian law enforcement
training, and seek to establish a regional law enforcement
academy modeled on the ILEA at Budapest. INC funds will support
a third phase of the program to negotiate bilateral agreements
on stolen vehicles, to provide standard procedures for recovery
and return from Central America, and training for local law
enforcement officers, to reduce the annual loss to car theft of
several hundred millions of dollars by U.S. citizens. This
program will be expanded to South America and other parts of
the world where stolen U.S. vehicles are being marketed in
large numbers.
In Africa, law enforcement training and technical
assistance funded by the fiscal year 1998 INC appropriation
will emphasize respect for human rights by demonstrating how
U.S. criminal justice agencies function to enhance the rule of
law. INC funding will support technical assistance to law
enforcement agencies in South Africa responsible for preventing
illegal trafficking in nuclear materials and weapons. In East
Asia, INC-funded law enforcement training will be provided to
institutions responsible for action against organized criminal
groups involved in alien smuggling, and to prevent money
laundering.
conclusion: miles to go
Our National Drug Control Strategy emphatically states that
the metaphor of ``war'' must be recognized as totally
inappropriate to our nation's drug problem. It is equally
inappropriate to transnational crime. Wars are expected to end.
They involve enemies that are nations, not unnatural
transnational enemies whose only motivation is money. A
democratic nation must utterly reject the concept of a ``war''
against its own people. The new transnational challenges of
narcotics and crime demand responses different from the
traditional international diplomacy of war and peace.
After the Second World War, the United States and Western
Europe defined multinational security institutions in NATO,
whose integration of national security activities once seen as
exclusively sovereign prerogatives was unprecedented. We cannot
use capabilities and institutional arrangements we created to
confront the danger of war between sovereign nations to deal
with the dangers of transnational crime and narcotics. The
times and circumstances call upon us, however, to be equally
innovative, and not allow precedent or tradition to block
effective response.
The international community's response to transnational
crime remains less comprehensive and mature than to that of
illicit drugs. There is need for continued development of the
global policy recognition that the threats of transnational
crime and illegal drugs have become as much an element of
global foreign policy as war and peace.
One important consequence of this is that governmental
activities and agencies once considered purely domestic have
developed, and must continue to develop, operational
relationships on a permanent basis with comparable institutions
of other governments. Sustaining representatives abroad of U.S.
domestic law enforcement agencies such as the FBI, DEA, Customs
Service, ATF and others must become not an ancillary and
peripheral element of our diplomatic missions, but as central
as any part of traditional diplomacy. Practitioners of
traditional diplomacy, in our Foreign Service and others, must
become conversant with the issues and professional expertise of
law enforcement agencies. In turn, diplomats can offer to the
enforcement agencies the support of a profession whose essence
is leading other governments to do, or not do, that which is in
the national interest of one's own country.
In 1996, the Department of State worked with FBI to develop
a five-year strategy for FBI staffing and operations overseas.
The study published in June 1996 embodies the view that the
traditional foreign affairs community and U.S. law enforcement
entities must develop similar world views regarding the roles
of U.S. law enforcement agencies in overseas programs. There
has been good progress in recent years, but there remains work
to do in streamlining mechanisms for overseas law enforcement
staffing, law enforcement coordination within country teams
abroad, and appropriate reporting from missions abroad to
Washington agencies to facilitate coordination. In this
context, I stress again that the oversight authority provided
by law to the Chief of Mission in any country is central to the
ultimate success of all policies and programs in those
countries.
Our fiscal year 1998 INC appropriation is the broadest and
most effective means by which coordinated assistance by U.S.
law enforcement agencies is delivered to strengthen the
capabilities of counterpart foreign institutions. The INC
program is fundamental to framing and implementing U.S.
national foreign policy responses to production and traffic of
illicit drugs abroad, and transnational crime. It is a novel,
significant employment of known programs and capabilities to
respond creatively to foreign policy challenges of the next
century, as we and others formerly did for those of war and
peace. We must continue to define and implement new and
innovative forms of multinational cooperation and collaboration
against transnational criminal organizations. If the
international community cannot define institutions and
arrangements that respond to the imperatives of these
challenges, the ultimate result will be as destructive to our
nations and our peoples as any lost war in history. People die.
People are deprived of their personal liberty by addiction to
drugs. People are stripped of their property by criminals and
their crimes. As our Founding Fathers so eloquently declared
centuries ago, it is precisely for the protection of the
citizen from such threats that democratic governments and
institutions exist. Without effective institutions for the
preservation of law and order, democracy itself cannot long
hope to survive.
Mr. Chairman, I welcome your questions and those of your
Subcommittee, concerning this request.
remarks of senator patrick j. leahy
Senator McConnell. Our ranking member, Senator Leahy, would
like to make an opening observation, too, and then we will go
to questions.
Senator Leahy. Thank you, Mr. Chairman. We had the
Judiciary Committee meeting upstairs.
Senator McConnell. Right, and I mentioned that that is
where you were.
Senator Leahy. Thank you. You deserve a great deal of the
credit for giving the problem of international crime so much
attention, both as ranking member and chairman of this
subcommittee. You have been very, very strong on this and I
commend you for it.
Director Freeh, you and I have had many conversations about
this and I appreciate the effort you have made personally and
the effort that members of your staff have made to keep me
apprised, as well as other members, of the problem of
international crime.
As Mr. Gelbard, I, and all the rest of us know, as we
travel abroad and talk to people in these areas where we are
trying to help them build a market economy, to build up a
middle class, to support democracy, it all falls apart if crime
is so prevalent that it invades everything you do in business,
from getting your permits to being able to even open a door of
a business.
prepared statement
What we have done in Budapest and elsewhere I think is
extremely important and it will continue to have my support. I
think it is a daunting task. I did not even fully expect the
enormity of it when I first started looking at it and I
appreciate both of you being here and what you are doing.
I will put my full statement in the record.
[The statement follows:]
Prepared Statement of Senator Patrick Leahy
Mr. Chairman, you deserve a great deal of credit for giving
the problem of international crime the attention it deserves.
It would be hard to think of anything in this bill more
relevant to the American people. That is not to take away from
anything else. It is simply to point out how serious a problem
this has become--from Russia to Nigeria to Colombia, the power
of organized crime and the drug cartels has grown sharply.
These countries are unable to deal effectively with these
problems. Their police officers are under-paid, often poorly
trained, and in many cases involved in criminal enterprises
themselves.
The effect on foreign investment is devastating. American
companies are not going to put up with all the bureaucratic
headaches of doing business in Russia and the other NIS
countries, if the system is run by organized crime.
Director Freeh, this subcommittee has tried to give you the
resources to work with these countries to combat these crimes.
I have heard that the International Law Enforcement Academy at
Budapest is an excellent facility.
But training police is not enough. We also need to train
judges, court personnel, prosecutors and defenders. And we need
to help these countries rewrite their criminal codes. The State
Department is doing some of this work. Let's not forget that
the State Department is first and foremost responsible for
foreign policy. You need to work closely together.
I think Mr. Gelbard knows of my skepticism about the
international counter-narcotics program. We have spent an awful
lot of money to stop the flow of drugs into this country, and
it has not slowed one bit.
That is not to say we should not try, because I recognize
that the drug cartels threaten democracy itself in the
countries where they are strongest. But let's not fool
ourselves into thinking that we are going to make a dent in the
drug problem as long as the demand is there.
Let's also not repeat our mistakes. How many times have we
sent aid to the armed forces in these countries, and closed our
eyes to the human rights abuses, because of some misguided idea
that the ends justified the means?
Last year I wrote a provision that became law, with the
Chairman's support, which aims to keep our aid out of the hands
of people who violate human rights. This is very important to
me, and I want to be sure we agree on how to implement that
law.
Thank you, Mr. Chairman.
international crime
Senator McConnell. Thank you, Senator Leahy. I appreciate
your kind comments.
Director Freeh, we have all, of course, read the recent
stories about alleged efforts of foreign governments to
influence the American political process. Obviously, this is a
complex issue which the Governmental Affairs Committee and,
hopefully, an independent counsel will pursue in all
appropriate detail.
However, there are a few questions that I hope you can
answer as this issue potentially bears on international crime.
Do we have a legal attache in Beijing?
Mr. Freeh. No, sir; we don't. We have a legal attache
office in Hong Kong. The Congress has approved the opening of
the office in Beijing. It has been funded. We have not yet been
able to locate the agents who have already been selected to the
Beijing office, which we need to do, we think, before July when
Hong Kong reverts to the People's Republic of China [PRC]
control.
Senator McConnell. How would you characterize the FBI's
coverage of Chinese criminal activities? Obviously, I would
draw a distinction between individual or organized criminal
enterprise versus officially sanctioned activities, such as
have been at least alleged in the influence peddling stories.
Mr. Freeh. We have had quite a bit of law enforcement and
criminal justice associations with the Ministry of Public
Security--that is, the law enforcement agency in the PRC.
We had a recent case, actually, where we were able to
return to the PRC an individual who was an employee of the
Central Bank of the People's Republic of China, who embezzled
and attempted to move several millions of dollars out of that
bank in the PRC into North America. Working with the Ministry
of Public Security, we were able to locate and return most of
that money.
We work with them, as the DEA does and as the State
Department does, in drug interdiction matters. We have had a
number of the PRC police officers come to Quantico for some
training and high level exchanges. We also work with them on a
case-by-case basis through our legal attache, as the DEA does.
We have actually had some good successes with respect to those
law enforcement matters.
Senator McConnell. Jim Lilley, our former Ambassador to
China, has publicly confirmed extensive official Chinese use of
funds to attempt to influence the American political system.
Would you agree with his assessment that this is a widespread,
long-standing, serious law enforcement problem?
Mr. Freeh. One of the subjects that the grand jury and the
task force is currently investigating are allegations with
respect to not just illegal political activities and
contributions, but also to the national security aspect--
whether any of the funding, attempted funding, or planning
originated not by an individual per se but by a foreign
government, a state sponsor or ministry. That is really the
heart of part of what our grand jury is currently doing.
I think the most I could probably tell you is that the
allegations are in there. They are being treated very
seriously. I have assigned 25 agents and an inspector full-
time, with many other agents around the country and even in our
legal attaches, to follow leads in that investigation. There is
not a matter that has my attention to a greater degree right
now.
Senator McConnell. Including espionage, are you aware of
any other criminal activities sanctioned by the Chinese
Government?
Mr. Freeh. I don't know that I could go into this in a
nonclassified forum. I would certainly be happy to provide you
with some material, mostly of a classified nature, which has
indications of perhaps other activities not necessarily
relating to the Government, but to individuals perhaps
associated with the Government.
Because of the nature of it, I don't think I could do it in
open forum.
Senator McConnell. Fair enough.
The White House Press Office has taken the position that an
FBI agent and another NSC staffer misunderstood instructions to
protect sensitive information regarding illegal Chinese
activities.
[Clerk's note.--The White House claims crucial information
on Chinese activities was never provided to senior policymakers
or the President--that all these people were unaware or
uniformed about illegal campaign activities.]
Senator McConnell. I think it is very unusual that a senior
FBI agent with 25 years experience would not understand basic
instructions regarding the dissemination of protected
information and issue orders not to advise senior officials of
important information.
It is my understanding that the Commander in Chief is both
entitled to and should expect to have access to any and all
information developed by our intelligence and law enforcement
agencies.
Is there information not available to the President?
Mr. Freeh. With respect to national security matters?
Senator McConnell. Yes.
Mr. Freeh. I don't believe so, sir.
I know the Attorney General is looking at all of the
matters relating to the current investigations that are being
undertaken and will make a decision, as appropriate, as to
whether matters which are pursued or discovered in the context
of a criminal investigation are appropriately disseminated to
national security policymakers, including the President.
I believe that national security information at this point
is being appropriately reported.
Senator McConnell. Have you ever instructed an FBI agent
not to make information available to the President?
Mr. Freeh. No.
Senator McConnell. Did the FBI agent involved in this case
have a record of misunderstanding security guidelines and
procedures or a history of denying information to superiors?
Mr. Freeh. Not as far as I know sir.
Senator McConnell. Can you shed any light on how the
information was handled?
Mr. Freeh. I really don't know that I could say more than
has already been publicly discussed. My understanding was that
the national security staffers were going to be briefed on a
matter which the Attorney General and I thought was very
important and very significant. Neither I nor anybody on my
staff placed any restrictions with respect to that information
going up the chain of command in the National Security Council.
I don't think such a restriction would make much sense.
I also note that the White House counsel on Tuesday, I
believe, did issue a written statement which said, in effect,
that one of the staffers had a recollection that the
information should not be disseminated outside the room. The
second staffer had no memory and was relying on the first.
The statement also said that the staffers elected not to
brief that information up, even though the regulations they
were aware of in the NSC would have permitted that. I think
that is the state of the public record right now.
We certainly put no restrictions on that. When we came to
brief the committees, we briefed the Intelligence Committees in
the House and Senate, mostly senior staff. No restrictions were
put on that briefing as to reports to the members. Otherwise
the briefing wouldn't make any sense, in my view.
Senator McConnell. What is the basic standard or threshold
for advising a government official that he or she may be the
target or an unwitting participant in a criminal effort?
Mr. Freeh. It is really a decision which is a case-by-case
determination. We look at the information that we have and a
determination is made whether there is any basis to believe
that a criminal offense is being committed, whether or not the
person who may be the recipient of the effort or the attempt is
witting or unwitting. We weigh the national security concerns
in terms of making sure that an official is aware of an
unwitting attempt to influence him or her or some policy. But
that is always balanced against a determination, sometimes
based on very preliminary facts, that the person may
potentially be a subject themselves of a criminal case, in
which case we would reserve, perhaps temporarily, the advice
and the notification.
It is really done on a case-by-case basis, looking at all
the facts and determining and balancing national security
interests against the protection of a criminal case.
Senator McConnell. What I am trying to determine is if in
briefing White House and other officials, did the FBI provide
general warnings that an individual should be aware of possible
illegal overtures from or was the FBI more specific in advising
a course of action, such as United States officials should take
steps to avoid contact with specific Chinese officials or
individuals.
Mr. Freeh. Again, I could go into the subject matter of the
June briefing with you. I would be happy to do that. But, it is
a classified briefing, and I don't think I could do it here.
Senator McConnell. There seems to be some confusion about
why some members were advised of Chinese efforts which may have
been targeted against them and others were not. The New York
Times suggested you drew up a list of 30 individuals who might
be the target of Chinese efforts. Yet it is suggested you only
briefed a half dozen.
Is that accurate?
Mr. Freeh. That is basically accurate, sir. Six members--
actually seven members--who were briefed were briefed on the
basis of what we and the Department of Justice determined was
very specific information, more than just general interest, and
the determination was made on that basis. We also advised the
staffs of both intelligence committees before we briefed the
members.
Senator McConnell. Was the information treated as a counter
intelligence matter or as a criminal investigation? And did
that determination affect the manner in which the information
was handled or disseminated?
Mr. Freeh. It was treated strictly as counterintelligence,
national security information. There was no indication then,
and now, and in the period between that, that any of the people
to whom we made notification were in any way involved or
knowing of any improper or inappropriate activity, which is why
we certainly advised them quickly.
Senator McConnell. Do you believe all appropriate and
standard procedures were followed in this investigation, and,
more specifically, the handling and use of the information?
Mr. Freeh. We are reviewing, as we speak, that whole
process. I want to make sure that we did appropriately bring
the information as it was developed to the people who needed to
have it.
I am not 100 percent sure that that was done, but I will be
when I finish the review.
Senator McConnell. Finally on this issue, have all the
members with presumed interests in the matter been informed?
Mr. Freeh. They are being informed, sir. Yes.
Senator McConnell. Senator Leahy, have you any questions?
Senator Leahy. Yes.
Senator Specter. Mr. Chairman, might I interrupt for just a
moment?
We are in the course of hearings down the hall on Conrail,
so I cannot be present. But I wanted to come and say that I
consider this a very important hearing. I thank the chairman
for scheduling it and I will be following the transcript
closely and working with you, Mr. Director.
Thank you for the interruption, Mr. Chairman.
Senator McConnell. Thank you, Senator Specter.
Senator Leahy.
Senator Leahy. It's always good to have you here, Arlen.
Senator Specter. And the shorter the better, perhaps.
[Laughter.]
Senator Leahy. Along the lines of the question the chairman
was asking, have we found any indication of other countries
doing similar things and have Members of Congress been warned
about other countries?
Mr. Freeh. Not anywhere close to the degree that was
involved in this particular situation, no.
Senator Leahy. Have members been given warnings about other
countries?
Mr. Freeh. Not to my knowledge.
Senator Leahy. Director Freeh and Secretary Gelbard, you
have been both involved in the question of training police
officers. But there is also a need for qualified court
personnel, judges, court reporters, prosecutors, defenders, and
the revision of criminal codes.
When I have talked with some of the people in the Russian
court system, there are things that we take for granted--public
defenders, independent prosecutors, somebody who actually keeps
a transcript--and I wonder if the FBI and State coordinate on
this, and whether that further infrastructure training is in
there?
Ambassador Gelbard. Yes, Senator, we do.
We have an interagency group that is set up to examine on a
country by country and also subregional bases exactly the kinds
of programs we provide funding for. What we try to look at is
exactly as you say, Senator, the totality of what is required
in the justice sector. Whether it is in Russia or, as I was
mentioning earlier, South Africa, we are very concerned about
training police in the right kinds of techniques, starting with
the basic concepts of democratic, community based policing, but
also prosecutors, public defenders, judges, and the legal
framework that wraps it all up.
In Russia, for example, we have had two assistant U.S.
attorneys who have been working out of the Embassy, advising
various parts of the Russian Government, including the Duma, on
revisions of the criminal procedures code and the criminal
code--the Duma and their executive branch.
We have had programs that fund training of public defenders
and prosecutors working through the ABA, through the Justice
Department, and so on.
We are trying to work increasingly, too, through State and
local governments. Mr. Chairman, I would point out that we have
been working in particular with the University of Louisville
and the Southern Police Institute in Romania, Hungary, and
Ukraine on some of these issues, too.
Senator Leahy. Do you find that the private sector, the
companies that may invest there, do they check with you on
this? Do they ask you about this?
Ambassador Gelbard. Through our Embassy in Moscow, for
example, there is a liaison relationship to discuss issues.
Senator Leahy. Is it used?
Ambassador Gelbard. Excuse me?
Senator Leahy. Is it used? Is it an active one?
Ambassador Gelbard. Yes, sir.
Senator Leahy. Tell the two U.S. attorneys, the assistant
U.S. attorneys who are over there that if they get to stay in
townhouse No. 1 to be sure and lock the door. [Laughter.]
Ambassador Gelbard. I will do that, sir.
Senator Leahy. I'm sorry. That's an inside joke, so to
speak. [Laughter.]
Mr. Gelbard, we spent $103 billion between 1986 and 1996 on
combatting drugs, $20 billion for international counter
narcotics programs. During 1988 to 1995, drug cultivation, drug
related activities increased in Latin America, the Caribbean,
and Southeast Asia. The amount of cocaine coming into the
United States has remained steady since 1988. We spend billions
but the street price doesn't change.
We take money out of development assistance and put it into
counternarcotics. Another $17 million has been requested for
fiscal year 1998 for counternarcotics programs. Is it really
making any difference?
Ambassador Gelbard. Yes; it is, Senator.
First, these are problems which took us a long time to get
into, and the solutions are going to take a while. These are
not issues which can be solved through short term solutions
except in the cases of specific discreet arrests of
individuals.
What we are fundamentally talking about here is institution
building, trying to develop institutions in countries that
either are new democracies or are democracies which have
serious problems in terms of corruption. Whether those
institution building mechanisms relate to something as basic as
helicopter units or they involve longer-term problems, such as
being able to develop strong judiciaries, these take a while.
We have seen some good, important results. For example,
over the course of last year, we saw an 18-percent decrease,
net decrease, in coca cultivation in Peru thanks in significant
part, in overwhelming part, to efforts by the United States to
support alternative development, which have caused farmers to
walk away from the coca fields, along with strong interdiction
efforts, which meant support for the Peruvian police and
military to stop the transit of coca and coca paste.
Senator Leahy. But you know, in some ways I feel, with all
the good intentions of everybody involved, I feel in some ways
that some of these counter narcotics efforts are like King
Canute telling the tide not to come in. We have cut down
cultivation in Peru but the cultivation goes up somewhere else.
Frankly, I am becoming increasingly worried that we waste a
lot of money. We send equipment to other countries--and I have
an amendment on that that you are now supposedly following--to
stop this. But the problem is here.
If we are going to have a huge demand in the United States
for these drugs, with all the money from the United States, you
are going to continue to have corruption no matter what you do.
If you stop it in one country, it is going to come from
somewhere else as long as the demand is here.
I think maybe at some point, as we try to decide how we
presssure the Governments of Mexico, Colombia, Peru, and
elsewhere, we here in the United States are going to have to
ask ourselves are we doing that just to shift the blame to
somebody else. If we cannot find some way to stop our adults
and our children from using drugs, nothing you, I, the
chairman, or anybody else can do is going to stop it.
Ambassador Gelbard. Senator, I agree with you fully. That
is why this administration has developed a balanced strategy
with more emphasis on demand reduction and more emphasis on
supply reduction. But to continue the use of European metaphors
with King Canute, we can't have a Maginot type of defense line.
We cannot try to build a wall around the United States.
So what we are trying to do is put greater emphasis on both
sides of the equation.
Senator Leahy. I mentioned that I had written to Secretary
Albright about my amendment prohibiting the transfer of U.S.
equipment to units of security forces if members have been
implicated in gross violations of human rights, unless the
Government is taking steps to hold them accountable. I am told
the administration intends to apply that law to all
counternarcotics related assistance, including FMF and drawdown
equipment.
Am I correct on the administration's policy?
Ambassador Gelbard. Yes, sir.
We take this issue very seriously. We have put great
emphasis on this problem of end-use monitoring as it relates to
human rights.
We sent out a telegram to all diplomatic posts on this
issue. As I told your staff, I will be happy to supply a copy
of that to you.
We have explained the amendment concerning the use of funds
from now on. Posts were instructed that if gross human rights
violations are reported to have been committed by any recipient
units, they must report on steps taken by the host government
to bring those responsible to justice.
We are making sure that units that receive any of this
equipment, whether it is from our budget or FMF funds, have
been examined with the utmost care.
We have started that, particularly with Colombia because of
the overwhelming amount of assistance that goes to that
country. I have personally discussed this issue with the
Colombian Minister of Justice, with the former Colombian
Minister of Defense, who is now their Ambassador here. Our
Ambassador has worked this issue very carefully with all the
appropriate people in the Colombian Government, and we are
assuring, to the maximum extent possible, that any of this is
avoided.
My bureau and the Bureau of Democracy, Human Rights and
Labor also met recently with Amnesty International and reviewed
all the steps we were taking. I am told we received a very
positive reaction on that.
Senator Leahy. Thank you.
Thank you, Mr. Chairman.
Senator McConnell. Thank you, Senator Leahy.
Senator Campbell.
Senator Campbell. Thank you, Mr. Chairman.
I would like to associate myself with some of the comments
of Senator Leahy. To start with, I know that a lot of your
mission, that of both of you, has to do with interdiction. But
if Prohibition taught us anything some years ago, it was that
you almost cannot reduce the supply unless you can reduce the
demand, and as long as Americans, too many of them, think they
just can't get along without drugs, we are always going to have
to fight the war, which you are doing.
I know that both your agencies, as many Federal law
enforcement agencies in the last few years in at least some
circles in America, have sort of been under assault. I just
want to reaffirm, as the chairman has, that you do have friends
on this committee. I want you to know that I am certainly one
of them.
I want to get back a little bit to terrorism and
international crime, if I could, Mr. Chairman, just for a
couple of questions.
As you probably know, Director Freeh, we are going to host
the G-7 summit in Denver this year, which will bring leaders
from the seven major countries, major industrialized countries,
all into Denver at the same time.
We are also involved in this very, very difficult and
extensive trial of the people who have been accused of bombing
the Oklahoma City Federal Center.
I am a little bit concerned about how we are coordinating
our efforts from a national and local standpoint. Certainly,
Colorado does not have the resources to be able to keep a close
eye on things and we know that these big international events,
whether it is the Olympic games, the Super Bowl, or whatever,
seem to attract nuts now because they know they can get
international attention through the media if they do some
outlandish thing as they did in Atlanta.
I would like to know a little bit, though I know some of
the things you cannot talk about and I would not expect you to.
I know that some of this is very carefully guarded information
and that's fine. But I would like to know in what role, in
general terms, the FBI is providing assistance to the G-7
summit in Denver.
Mr. Freeh. Yes; surely, Senator.
We have a dedicated set of resources, including a command
structure back at headquarters. We call it our Special Events
Program, which is a freestanding unit. This unit's assignment
is to prepare for, assess, and then carry out the coordination
as well as the operational deployment of not just FBI
resources, but Federal resources integrated with State
resources, for certain major events. You mentioned several of
them. Certainly, there is the Olympics. In addition, this unit
was involved during both Presidential conventions and also
during the inauguration. Within 2 weeks last year, we had both
the 50th anniversary of the United Nations with 200 world
leaders and the Pope visiting. With the New York City Police
Department, the Secret Service, the Department of State, and
many other agencies, a plan was put together which was very
well coordinated and also, thank goodness, very successful.
We are doing the same thing with respect to the Denver G-7
Summit. We have already started the planning. Actually, the
planning has been going on for several months, coordinated by
the FBI but in close conjunction with the Secret Service, the
Department of State, and particularly the Bureau of Diplomatic
Security. We also use the intelligence agencies for collecting
any information which will be available pertinent to the
security of that event. All of the State and local authorities,
not just the police authorities but the rescue authorities, the
emergency response, and FEMA are part of that integrated
planning. It is actually a very complex written plan.
Senator Campbell. Excuse me for interrupting, but is that
done through what is commonly called the interagency task
force?
Mr. Freeh. Yes; that is one mechanism for doing that. But
just to give you an example, with respect to the Olympics
planning and some of the more recent events, we even liaison
with the military to insure that, if necessary, we have special
capabilities available for any extraordinary problems that
might arise.
I would be happy to brief you and actually show you the
plan that we have. It is being done very closely with the State
and local authorities of Colorado.
Senator Campbell. If I could arrange a time, I would like
to see that, and I think that Senator Allard, the other Senator
from Colorado, would also like to, too.
Ambassador Gelbard. May I add a point to that, please?
Senator Campbell. Yes; please do.
Ambassador Gelbard. An additional thing that I think would
be of interest to you is that, starting with the Lyons Summit
and now moving toward the Denver Summit, we have made working
with our allies in the G-7 and Russia, which is now a part of
this process, the issues of international crime, terrorism, and
drug trafficking fundamental parts of those summit processes in
terms of substance.
We are now chairing a major group comprised of those
countries that is working toward implementation and development
of some new major initiatives which would be announced at the
summit based on the work that was done at Lyons.
Senator Campbell. These will be announced in Denver?
Ambassador Gelbard. Yes, sir.
We had a first meeting under the U.S. leadership in
January. A second meeting will be taking place here in
Washington next month, and we are continuing to develop some
very strong initiatives dealing with transnational crime in
working with the G-7 and Russia in the PA context.
Senator Campbell. Maybe I should ask you the important
question since you are going into a great deal of detail. Do
you have the financial resources to do this?
Mr. Freeh. Yes, sir; we do.
Senator Campbell. Without any additional funds you think
you will be able to do this?
Mr. Freeh. Yes; I think so. I mean we don't have,
unfortunately, separate line item funding for those matters.
Funding is coming out of our general operations budget, just
like our investigation in New York in the TWA case. We spent
several millions of dollars. We don't have any special funding
or special appropriation for that, particularly in this case
because it has not yet been ruled a criminal act or an act of
terrorism. But, it's the same with the G-7 Denver planning.
That is coming out of our general operations funds.
Senator Campbell. There seems to be an escalation of work
for you, an unexpected one, such as the bombing or the disaster
that that plane went through. I was concerned that you have the
resources to be able to keep up with those, that unexpected
growth.
Let me just get to one other question, Mr. Chairman.
Director Freeh, perhaps both witnesses, mentioned about some of
the escalation of crime going on in the new democracies, the
countries that are trying the democratic way. There are some
increased activities in some very, very sophisticated
countries, too.
I have been interested in reading lately about the increase
of gangs in the Scandinavian countries. They certainly do not
have a new culture, but they have a new situation which they
have never dealt with before. I think maybe it is because they
don't have the equivalent of RICO or some of the statutes that
we have in place to combat this.
They have been using pretty strong firepower against each
other in control of the drug trade, including rocket launchers,
grenades, automatic weapons, and so on.
They were referred to in the newspapers as ``biker gangs.''
But, as I understand it, most of them do not ride motorcycles,
though some of them do and, therefore, they are called biker
gangs.
Because the Danish Government has called on the United
States for some help, I would like to ask you what is the FBI
doing to assistant Denmark in particular? Can you speak to
that?
Mr. Freeh. Yes, sir; I can.
We, not only in Denmark, but also in Sweden.
Senator Campbell. Yes; all three of the Scandinavian
countries.
Mr. Freeh. Their Minister of Justice and the heads of their
police agencies have been here. We have met with them. We have
given them briefings on our violent crime techniques and
investigative strategies. Since then, we have had an exchange
of officers and experts. We have also offered to furnish them
additional assistance.
As you point out--I understand that their statutory ability
to deal with certain types of enterprise crimes, even on a
simple conspiracy level, are not what they are in this country.
They don't have the history of statutory law or case law to
criminalize large enterprises. It is more of an individual
case-by-case determination.
They have asked us about our investigative techniques. We
have given them briefings on our use of informants, undercover
techniques, and wiretapping. But, they do not have a lot of
those authorities under their current statutes.
high intensity drug trafficking agency [hidta]
Senator Campbell. One report, Mr. Chairman, even said that
one of these so-called gangs rents a government building to
operate out of, which I found interesting. So we are way ahead
of them in some of our abilities to deal with these gangs.
Let me ask one other question, if I can, which deals with
another group, an agency, called the High Intensity Drug
Trafficking Agency [HIDTA]. We have had an increase in drug
traffic in Colorado. As you put more pressure on drug
traffickers in California, they look for the line of least
resistance, and we have found a marked increase in Colorado.
Last year we managed to get a HIDTA office set up in
Denver, one in Salt Lake City, and one in Laramie, WY, too,
which basically are to coordinate other agencies in the
reduction of drug trafficking.
I want to ask, Mr. Gelbard, if you could reflect on how
your agency is working with HIDTA.
Ambassador Gelbard. Well, Senator, we actually do not
because our programs are all international. But this is
something that General McCaffrey and the law enforcement
community work on very closely.
Senator Campbell. I assumed that since a lot of this is
coming up over the border into Mexico and then through New
Mexico into Colorado there might be some involvement with your
agency.
Ambassador Gelbard. Our programs are fundamentally directed
to working with agencies that work internationally and with
foreign governments.
Senator Campbell. I see. Thank you.
Thank you, Mr. Chairman.
Senator McConnell. Thank you, Senator Campbell.
This question is addressed primarily to you, Ambassador
Gelbard, but I might ask Judge Freeh if he has anything to add.
Focusing on Asia, I understand Singapore is becoming the
key money laundering haven of choice for Asian drug
traffickers. So it looks like they are busy not only in
Scandinavia but in other places.
Is this due to the bank secrecy laws? Either of you may
respond.
Ambassador Gelbard. We are very concerned about significant
money laundering efforts in a number of countries in Southeast
Asia. Singapore is certainly one of them.
We have been pressing the Government of Singapore to
undertake some fundamental legislative reforms to try to
develop internationally accepted standards and laws as
developed through the financial action task force.
This is a high priority for us because we are very
concerned about drug funds being laundered through there,
particularly funds from Burma. We are also pressing the
governments, particularly the Government of Thailand, which
assures us, most recently at a meeting that I had with their
Ambassador this week, that they will be presenting a law to
their parliament shortly. In fact, this was a subject that
President Clinton raised with their prime minister during his
visit there in November, and we are pressing other governments
in the region to undertake similar measures.
Senator McConnell. Do you have anything to add on that,
Judge Freeh?
money laundering
Mr. Freeh. We are, as part of the 4-year plan approved by
the Congress, planning to open up a legal attache office in
Singapore next year. My counterparts in the Singapore law
enforcement authorities have expressed an interest in
information about our money laundering strategies here in the
United States; the statutory authority that we use; and, how we
implement that on an enforcement basis.
I think that that presence over there, in addition to many
other matters of mutual interest including counterterrorism,
will help to begin to address the concerns that Ambassador
Gelbard has spoken about.
Ambassador Gelbard. I should add, Mr. Chairman, if I may,
that we have been pressing through the financial action task
force for the establishment of an Asian Financial Action Task
Force. This is now coming to fruition. We see this as a
mechanism to try to get regional cooperation to develop the
highest level standards that we can on this issue.
Senator McConnell. Ambassador Gelbard, shifting to Burma,
as you know I have been a leader of the movement to enforce
unilateral sanctions against Burma and I plan to try that again
this year. It was watered down on the floor of the Senate last
year so that we ended up with something considerably less
tough.
Focusing on Burma, I am convinced that only a democratic
ally with common principles could be counted on to engage in a
serious effort to combat narcotics. I also agree with
observations you made in the Far Eastern Economic Review that
SLORC officials are exploiting drug trafficking money and the
longer the political impasse continues, the more embedded the
drug trade is likely to become.
Given your views, can you explain why our Charge recently
hosted a meeting in his home involving U.S. Senators and drug
traffickers identified in the International Narcotics Control
Strategy Report?
Ambassador Gelbard. The meeting which took place, which was
in November of last year, was done on the occasion of a visit
by a Senator. This was done when there was a request for a
meeting with Aung San Suu Kyi. The SLORC requested that other
political parties be included, too, and Aung San Suu Kyi also
supported that view, as I understand it from our Embassy,
because, according to our Embassy, she felt that this would add
to her legitimization and support within the country because of
being seen with other political leaders.
Parties were asked to supply individuals to this meeting
and two individuals whom we, in my bureau, discovered later to
be associated with drug trafficking were present. In
particular, it was Matu Nao of the Kachin Defense Army, and Tin
Ying of the New Democratic Army.
We were obviously deeply disturbed and shocked to discover
this. We have instructed our Embassy about contacts with any
such individuals in the future and particularly organizations
which we feel might be associated with drug traffickers or have
drug traffickers involved and how they are to deal with them.
I should say that in the past I have noticed that the SLORC
has gone out of its way to try to make sure that when Members
of the United States Congress are in Burma that there are
suspicious individuals who do meet with them in a variety of
circumstances. And in the occasions with which I am familiar,
Members of Congress unknowingly have met with such individuals,
sometimes without having had contact with the U.S. Embassy or
the U.S. Government before they did this.
We are obviously very, very concerned about this. That is
why we sent out an instruction immediately afterward regarding
future conduct for the Embassy in terms of its contacts.
Senator McConnell. Are you saying, then, that it was
inadvertent and also unavoidable? Or is it avoidable in the
future? What are you saying?
Ambassador Gelbard. In this case it was inadvertent. There
are, obviously, as you very well know, sir, many organizations,
many ethnic group entities in Burma which have individuals
involved who are related to drug trafficking. It is not
unavoidable.
We want to have senior officials of our Embassy avoid
contact with those individuals and they have been so
instructed. And we obviously want to make sure that no Members
of Congress have contact with such individuals when we can have
any say in that matter.
burmese drug lord
Senator McConnell. Khun Sa, the notorious Burmese drug
lord, now lives in a Rangoon villa, openly enjoying the fruits
of his ill-gotten profits. Has the United States formally
requested his extradition?
Ambassador Gelbard. I believe we have, sir. In fact, I am
on record as having said over the last several years that we
have strongly believed that the SLORC had no intention of
really trying to get Khun Sa out of the business. I said so in
a press conference in June 1995 in Bangkok and was lambasted
for that by the SLORC. I felt good about that.
Senator McConnell. You should.
Ambassador Gelbard. But it is, in fact, our view that Khun
Sa is still in the business. We do not feel, I do not feel
personally, that he ever left the drug trafficking business and
I have reason to believe that he is back associated with heroin
trafficking and certainly associated with major amphetamine
manufacturing. This major amphetamine effort is not directed at
the United States. We have no reason to believe that this is
coming here. However, we are well aware that there is a massive
amount of amphetamines coming out of the area in which he was
located that now are being consumed in Thailand and in other
countries in Southeast and in East Asia.
We have every reason to believe, of course, that he is
under the protection of the SLORC. As you well know, Mr.
Chairman, he has been given the honorific of ``Gu,'' and he has
now been elevated to a position of great honor. I think it is
yet another demonstration, and I'm sure you would agree, Mr.
Chairman, of the criminal activities of the SLORC.
Senator McConnell. Since my proposal for unilateral
sanctions was defeated, there was a substitute offered by
Senator Cohen and supported by the administration. It did have
some criteria in it which I do not have in front of me. But I
am curious as to whether you think those criteria have now been
met.
Ambassador Gelbard. Sir; I couldn't hear you.
Senator McConnell. Have the criteria of the Cohen amendment
targeted at Burma now been met?
Ambassador Gelbard. We are studying that right now. There
is a policy review in the administration and I hope we will
come forward with a conclusion to that shortly.
Senator McConnell. When?
Ambassador Gelbard. Shortly. I recently discussed this with
Secretary Albright and I know she is deeply engaged and
concerned about this issue.
chinese cooperation on counternarcotics
Senator McConnell. Well, we are looking forward to hearing
from you soon. I am looking forward to hearing from you soon
because I think the criteria of the Cohen amendment have
obviously been met by the recent escalation of arrests and
activities which threaten Aung San Suu Kyi and others.
I have one final question before turning to Senator Shelby.
This is still focusing on Burma. Can you describe the
extent of Chinese cooperation on counternarcotics in that part
of the world? With an increase in local addiction rates, I
would think they would be increasingly willing to work with us
on a solution to shut down the Burma border. I just wonder what
you might be able to add on that subject.
Ambassador Gelbard. We have discussed this issue
periodically with the Chinese Government. I led a delegation to
China in January 1994, which included two officials from the
FBI, incidentally. In the course of that trip, I visited Yunan
Province, right across from the border.
It is exceedingly clear, tragically clear, as you state,
Mr. Chairman, that China is suffering seriously. Addiction is
up, which means HIV and AIDS infections are up. I visited, in
fact, a rehabilitation center and it was truly tragic to see
this.
The Chinese Government has been attempting, as I understand
it, to engage particularly with the northern ethnic groups near
their border on alternative development programs and on other
kinds of programs to try to wean peasant farmers out of opium
poppy cultivation.
They have a direct vested interest, obviously, and they
have been engaged also talking to the SLORC, trying to put
greater emphasis on greater action from the SLORC on this
problem.
One of the fundamental problems, though, that we continue
to have not just with China but with all the countries in
Southeast Asia, too, is their strategy of so-called
constructive engagement with the SLORC. I simply do not believe
that is feasible.
Senator McConnell. But that has been our strategy as well,
has it not?
Ambassador Gelbard. I wouldn't call it that, certainly not
on drug issues.
Senator McConnell. How would you characterize it?
drug issues
Ambassador Gelbard. On drug issues, unfortunately, because
we have no confidence at this point that they would be prepared
to use funds appropriately, we do not provide funds to the
SLORC. The only funds that have been provided have been those
to OSS-1, earmarked under last year's budget by the Congress.
Now I am interested in providing some funds to the U.N. drug
control program for eradication of opium poppy in the Wa area
with an alternative development program associated with it if
and when--and only if and when--I am satisfied with the
criteria that have been built into the program.
Senator McConnell. Thank you.
Senator Shelby.
Senator Shelby. Thank you, Mr. Chairman. Mr. Chairman, I
was chairing another committee and that is why I was not here.
I'm sorry that I missed the testimony and probably some of the
questions. But I hope I am not redundant.
Judge Freeh, it is good to see you today.
Going back into, Judge Freeh, when you briefed the national
security staff, or someone under you did. Is the purpose of the
briefing generally to impart very important information to the
national security staff that you believe they ought to know and
ultimately that the President should know?
Mr. Freeh. Yes, sir.
Senator Shelby. And you do this when there is a need to do
it?
Mr. Freeh. Yes; it is actually done on a very regular
basis.
Senator Shelby. A regular basis.
Mr. Freeh. The FBI staff to NSC staff communication, both
at a mid- and senior-level, is an ongoing process. It may
happen several times a week on whatever matters are of
interest.
Senator Shelby. Judge Freeh, as the director, is there an
expectation of some kind at the Bureau, at the FBI, that by
briefing the NSC staff, which you do, on very important news,
on explosive news, you are effectively notifying the President
through the chain? Is that basically right?
Mr. Freeh. It is my understanding and certainly----
Senator Shelby. That would be your hope, anyway, wouldn't
it?
Mr. Freeh. Well, it would be my understanding and my
expectation that we brief----
Senator Shelby. Expectation.
Mr. Freeh [continuing]. Someone on the staff of a matter of
interest, that that is a matter that is for the NSC. We don't
have any particular interest or any responsibility to brief any
single member of the NSC to the exclusion of anyone else.
Senator Shelby. Absolutely.
Have you been concerned with the breakdown in this case
that has been talked about in the press and otherwise in some
of the committees, that information, very explosive
information, was given to or allegedly given to the National
Security Council staffers and it never went anywhere, so they
say, from inside the NSC?
Mr. Freeh. Without characterizing the nature of the
information----
Senator Shelby. Well, you wouldn't call it routine
information, would you?
Mr. Freeh. Well, we have discussed what the information was
in a classified setting.
Senator Shelby. That's right, we have, and I cannot get
into that and you would not, either.
Mr. Freeh. Yes, sir. No. If somebody briefs a member of my
staff, even at midlevel, on a matter which----
Senator Shelby. It's important information.
Mr. Freeh [continuing]. If it's important information and
they are briefed on it, I expect them to use their sound
judgment to get it to me as appropriately as they can. That is
the nature of briefings in Washington. The Director, the
Attorney General, the head of the National Security Agency or
staffs, counsels, cannot, would not have the time all day to
just keep reporting things. That is why we rely on staff-to-
staff briefings.
intelligence information
Senator Shelby. But as the Director of the Federal Bureau
of Investigation, when you impart information, important
information to National Security Council staff, you need some
kind of understanding or assurance that this critical,
relevant, intelligence information--if that's what it was--is
able to reach the President of the United States. Isn't that
the purpose of why you're doing this?
Mr. Freeh. Depending on the particular information----
Senator Shelby. Absolutely, sure.
Mr. Freeh [continuing]. Depending upon the context in which
it is known and communicated, it is fair to say, and I would
agree with the proposition, that it is my understanding and
expectation that people at the NSC, just as people at the FBI,
would use their judgment and prudence to decide whether an
issue should be briefed up the chain.
Senator Shelby. Would it ever be appropriate, in your
judgment, for the FBI to attempt to restrict the dissemination
of intelligence information to the NSC or the President?
Mr. Freeh. I cannot think of any instance where that would
occur except in a very extraordinary instance, certainly not
one that applied here.
Senator Shelby. Are you aware, Judge Freeh, of any other
time that the National Security Council staff was briefed by
the FBI and that that information, when it was very important
information, was not passed up the chain of command?
Mr. Freeh. Yes, sir; I can recall one. I would be happy to
go into it with you at a different session.
Senator Shelby. Yes; I understand.
Was this the same basic National Security Council under the
Clinton administration?
Mr. Freeh. Yes; it was the current National Security
Council.
Senator Shelby. Mr. Secretary, shifting over to you for
just 1 minute, what about the hard targets that you are after
around the country? How are we going to deal with those? It is
difficult to assess them. I understand your report notes the
success and progress we have made against the drug trade in
1996. But I am concerned that it is difficult to actually
measure what success is. You know, we hear so many horror
stories and we hear all the others. And yet, we talk about
success. Gosh, I want success. I know that the Director wants
success. You want success.
But what kind of benchmarks or goals are in place to
measure what success is? Are we playing games with ourselves or
the American people? I hope not.
I know you are a serious person, but it seems like we are
going backward in a lot of areas. Do you want to comment?
Ambassador Gelbard. I don't think we are going backward,
Senator.
As I was saying earlier, before you arrived, this is a
process. Trying to solve, trying to have success in counter
narcotics is a medium to long-term proposition. This is a
problem that took us a long time to get into and it is going to
take us a long time to get out.
First, we have been on the domestic side trying to
establish some clear benchmarks in terms of reducing demand.
That is in the President's national drug control strategy, and
there has been over the last several years----
Senator Shelby. If we could do that, that would be a big
step.
u.s. consumption of heroin
Ambassador Gelbard. There has, in fact, been some
significant progress in terms of dramatic decreases in
consumption of heroin and some other drugs--excuse me--of
cocaine and some other drugs.
There is alarming news, as you are aware, Senator, in terms
of teenage consumption of marijuana, now of heroin to a small
extent, and a bit of cocaine.
U.S. consumption of heroin has been rising, but it still is
very small compared to worldwide consumption. It only
represents about 3 to 4 percent of worldwide heroin
consumption.
Senator Shelby. But aren't you disturbed by the fact that
it is rising, the demand?
Ambassador Gelbard. Absolutely. I am disturbed both in my
professional capacity and personally. As the father of a 16-
year-old girl who does not take drugs--as far as I know--I am
deeply disturbed when I see this happening nationwide.
Internationally, we try to set up benchmarks and goals both
short-term and long-term. We work with the law enforcement
community to establish both in the cocaine area and in the
heroin area targeting systems. I don't want to get into how we
do all that, but it is something where there is a clearcut
process.
We have had real success working with the Colombian police,
for example, and General Serrano, the head of the Colombian
police, has been very generous in expressing publicly his
support as they have been able to capture the leadership of the
Cali Cartel.
We have had similar success recently in some other areas,
in some other places around the world.
In Thailand, for example, our DEA, working with other
agencies of the United States Government and the Thai police,
have had enormous success in capturing some of Khun Sa's top
lieutenants in an operation with which you are familiar, Mr.
Chairman, called tiger trap. The Thai Government has started
extraditing its own citizens to the United States--
unprecedented.
We have targeted under the leadership of the Attorney
General certain ideas in terms of getting countries to accept
the extradition of their own nationals. We now have new world-
class treaties that facilitate the extradition of nationals. We
have just signed one with Argentina and Bolivia. Mexico has
started extraditing its own nationals last year for the first
time in history.
In eradication, we made dramatic progress last year. I
mentioned earlier that Peru is the largest producer of coca in
the world. You and I met, Senator, when you visited me in
Bolivia.
Senator Shelby. That's right.
coca production
Ambassador Gelbard. We have seen dramatic progress, an 18-
percent decrease in coca production in Peru. We saw a decrease
in Bolivia. Unfortunately, we saw an increase in Colombia, but
the Colombian police are working with great dedication spraying
these coca plants.
I am optimistic in that sense that we have set out some
clear benchmarks. General McCaffrey has shown great leadership
in bringing together the interagency community on this. The law
enforcement community on this I think is working better than
ever before in terms of trying to do this.
As Director Freeh said in his opening statement, with the
projection of more FBI personnel overseas, something we have
worked on cooperatively, more DEA personnel, and other agency
law enforcement personnel, we are now able to work on
enforcement and training in much better ways than ever before,
too.
Senator Shelby. How concerned are you with the poppy growth
in Colombia? You are dealing with coca and dealing with heroin.
Ambassador Gelbard. We are deeply concerned.
There was about a 7-percent increase in poppy cultivation
in Colombia last year to approximately, I think, about--it's
only about 15,000 acres. But that is high concentrate, with
three crops a year. Almost all of that is directed to the
United States market, and Colombians have taken over virtually
all of the heroin market in the Northeast. You cannot find
Southeast Asian heroin on the streets of New York anymore, I am
told.
So we have targeted this as part of our major effort. All
of Colombia's eradication efforts are financed through my
bureau, and the Colombian police have been doing a superb
effort in trying to target these very small patches of opium
poppies and trying to eradicate them with great support from
us.
We have now included American pilots to help train them on
an on-the-job basis. Very sadly, we lost one of our pilots last
year when his plane crashed. So we consider this one of our
very top priorities.
We are also spraying opium poppies in Venezuela because the
Colombian trafficking groups have now franchised into
Venezuela. We and the Peruvian Government have heard rumors
about moving into Peru.
We are working very closely with the Peruvian Government to
seek this out and they are eager to eradicate that, too. So we
are deeply focused on this issue.
Senator Shelby. If 80 percent of the drugs coming into the
United States, if this is true--I have heard those numbers
used--is coming through Mexico one way or the other--trucks,
cars, air, who knows--haven't we got, I would not say
insurmountable problems, but a tough road to plough there?
Ambassador Gelbard. I think the figure is a little lower.
We believe that probably it is somewhere between 50 and 60
percent of the cocaine, down from probably around 70 percent.
Senator Shelby. OK, it was higher at one time.
heroin and cocaine seizures
Ambassador Gelbard. It was higher. But we have embarked, we
have been working with the Mexican Government and particularly
with President Zedillo on what we consider to be very important
efforts.
When you look at the statistics, it is very clear that
arrests, eradication efforts, and seizures have all gone up
pretty dramatically since he came into office. The amount of
marijuana now being grown in Mexico has plummeted by one-half
over the last couple of years.
Heroin seizures went up 79 percent in 1996 over 1995 in
Mexico. Cocaine seizures went up a much smaller percent, about
7 percent, but the point is they are up.
What President Zedillo was faced with when he came into
office was this. He identified this as their No. 1 national
security problem, but he presses buttons, he pulls levers, and
nothing happens because he recognizes that he has little in the
way of institutional capabilities.
We are trying to work to support him, and the FBI, once
again, is giving terrific support to trying to help develop
institutional capabilities along with DEA, Customs, and other
organizations, funded by us.
But this has to be a source, a fundamental focus, the
biggest focus of our attentions.
Senator Shelby. This may have been asked by Senator
McConnell or others earlier when I was not in the room. I ask
both of you how can we deal with governments whose higher
officials that we have to deal with at the country to country
level from time to time have been, we find out, corrupted by
drugs or trade over the years? I know that some people would
say well, gosh, that is the business of these countries, like
Mexico or Colombia, whoever we deal with. But it is also our
business because the caliber of people we deal with depends to
a great extent on what we share with them, how much we trust
them. That will go a long way on how well we deal with the drug
trade down the road.
Judge Freeh.
Mr. Freeh. I think it is a two-part process. Part of it is
the long-range institution building that the Ambassador spoke
about. I mean, they need the training, the models, the
resources to put together a capable force, and one that is
honest and respected.
The other thing you do on an interim basis is you identify,
by trial and error sometimes, the people who have the honesty
and integrity to protect your investigations. For instance, in
the early 1980's, we found a young magistrate in Sicily,
Giovanni Falcone, who we found by experience could be trusted
with our most sensitive investigations. He was privy to title
III's, electronic surveillance informant information, and
worked, until he and his wife were murdered by the mafia, with
complete trustworthiness and courage.
In Russia, we have identified officers in the MVD with whom
we have worked in very sensitive cases. In a case in New York,
we arrested a guy named Ivankov, a very powerful member of a
Russian organized crime group, who was taking root in New York
City and organizing criminal elements there. We worked that
case in a clandestine manner for a period of time with Russian
officials.
We had Russian police officers with FBI agents in cars
doing surveillances in Brighton Beach.
So I think part of it is trial and error, developing people
through ILEA, through our training programs, who we can trust
and rely upon. It is a very time consuming and very perilous
process. We have to be very cautious how we proceed.
Ambassador Gelbard. There is another side to that coin,
too. When we identify individuals who are corrupt, one of the
new measures we have tried to really undertake with much
greater intensity is something as simple as revoking visas.
The U.S. visa is a very prized commodity, and we have used
this as a way of stigmatizing individuals. The President of
Colombia had his visa revoked, as well as several other members
of his cabinet and a significant number of members of their
congress. It is known and it is a mark of Cain.
We have done it elsewhere. For example, in Thailand it is
well known that two very senior politicians in Thailand had
their visas revoked. This has been a source of controversy. But
we are very confident about that view.
The good news, for example, is in the Western Hemisphere,
increasingly governments are themselves concerned about
corruption. For example, there has now been an inter-American
Anti-Corruption Convention that has been approved within the
hemisphere. Governments are coming to us and asking for
assistance in setting up anticorruption measures.
One of the things our law enforcement community is helping
with, or our police training people are helping with is setting
up internal affairs units. Increasingly, we are working with
governments to set up their own capabilities in those areas,
too.
Senator Shelby. Mr. Chairman, thank you for your
indulgence.
russian crime
Senator McConnell. Thank you, Senator Shelby.
Let's wrap it up. You mentioned Russian crime, Director
Freeh, so let's wrap this up with a Russian question.
Is the Russian mafia coming into the United States in a
particular way? Is it individuals or is it groups, networks,
and are they concentrating on sectors? Are they in drugs, are
they in counterfeiting, or are they all over the place?
What form is Russian mafia influence in the United States
taking?
Mr. Freeh. In respect to the first part of your question,
there is a continuing presence in terms of individuals
identified, sometimes prior to their arrival here, as members
associated with Russian organized crime groups, who then do
what other groups have done in the past. That is, organize
cells and groups as Ivankov did in Brooklyn. They engage, we
find, in a variety of different criminal enterprises across a
broad spectrum.
For instance, we have cases in California where Russian
organized crime members and fragments of groups here have
worked on gasoline excise tax schemes, which require quite a
bit of sophistication setting up paper corporations.
We had another group in the West who was investigated and
convicted for a multimillion dollar health fraud scam. Ivankov
was convicted in New York City for extortion, basic loan-
sharking type extortion. The case that I mentioned, indicted
recently in Florida, is a drug case in which discussions were
had about getting a submarine from Russia and using it to
transport drugs.
We find them involved in a wide variety of schemes,
including complicated, sophisticated crimes. The sophistication
of these groups and individuals is a symbol of their
capability.
Many of them have continuing contacts with Russia, both
financial and otherwise. They certainly look at the United
States as a great place to do criminal business. They are also
organizing, as they were in Florida, to bring drugs back into
Russia and central Europe. There are also combinations that we
and the DEA have seen between some of the Russian groups and
South American narcotics groups, which is a very dangerous
omen, I think, for everyone.
So there are individuals, they are organizing groups here,
and they are involved in a wide variety of sophisticated
criminal activity.
additional committee questions
Senator McConnell. Both of you gentlemen have your work cut
out for you and we wish you well.
There will be some additional questions which will be
submitted for your response in the record.
[The following questions were not asked at the hearing but
were submitted to the Department for response subsequent to the
hearing.]
Questions Submitted by Senator Patrick Leahy
mexico
Question. I do not believe that decertifying Mexico is a wise
approach at this point, but I am also very disappointed by how little
success we have had in getting the Mexican Government to deal
effectively with the corruption and human rights abuses by the Mexican
police and armed forces. What specific improvement in these areas are
you expecting from the Mexican Government?
Answer. Corruption and other abuses of official authority by law
enforcement and military personnel continue to be very serious problems
in Mexico. These abuses seriously impair the Government of Mexico's
ability to combat drug trafficking effectively or, on a broader scale,
to pursue needed reforms in other sectors.
President Zedillo recognizes that narcotics trafficking and related
corruption pose the greatest threats to Mexico's national security and
has vowed an all-out effort to combat them. The February 18 arrest of
the national anti-drug coordinator underscores the problem, but
likewise demonstrated the Zedillo Administration's determination to
address it forthrightly. Some critics cite such revelations of
narcotics-related corruption as evidence that the situation is getting
worse. We view it differently. These revelations came as a result of
Mexican government investigations, not external initiatives. We are
encouraged that such revelations are a sign that things are improving.
The Government of Mexico has launched a major reorganization and
reform effort within its criminal justice system, including creation of
a new anti-drug law enforcement agency and specialized investigative
units. The U.S. has offered to provide a comprehensive training and
technical support package, drawing on the talent and expertise of many
U.S. agencies. Training is underway, concentrating specifically on
skills and procedures relating to implementation of the newly-passed
Organized Crime Bill and anti-money laundering legislation.
This is clearly a long-term effort, and there will be failures and
further disappointments along the way. However, it is in the long-term
interests of both Mexico and the U.S. to keep pressing ahead.
In 1997, based on bilateral discussions, the two governments will
seek to achieve:
--Tangible progress in dismantling major narcotics trafficking
organizations, including arrest and prosecution of their
leadership.
--Strengthened investigative and prosecutorial capabilities, as
demonstrated by adequate screening, training and financing of
the bilateral task forces and organized crime prosecutors unit.
--Enhanced interdiction effort, encompassing maritime and overland
interdiction as well as air interdiction.
--Enhanced eradication campaign and other efforts to reduce the
production of illicit drug crops.
--Enforcement of newly-published regulations that require reporting
of financial transactions involving large sums of currency and
suspicious circumstances, and implementation of the money
laundering legislation passed in May 1996.
--Implementation of an effective asset forfeiture program.
--Implementation of an effective control system on diversion of
precursor and essential chemicals.
--Enhanced relationship with the U.S. on extradition and return of
fugitives.
--Expediting the mutual legal assistance treaty process.
--Investigation and prosecution of corruption at all levels of
government, and complementary action to strengthen governmental
institutions to prevent corruption and other abuses of official
authority from recurring.
colombia drawdown
Question. You want to use your 614 waiver authority to make
available $30 million in prior year military aid to the Colombian army
and police.
I understand why you want to do this. I also understand that the
police, who have a fairly good human rights record, cannot do the job
alone. But it seems like every week my office receives a report of some
atrocity by the Colombian army, or paramilitary groups they are linked
to. Is this another example of the ends, no matter how hopeless,
justify the means, no matter how contemptible? In other words, even
though we know the army is corrupt and violates human rights, we are
going to give them aid anyway because no one else can do the job? Isn't
that what is really going on?
Answer. We share your concerns about human rights abuses in
Colombia. As detailed in our human rights report, the situation is
grave and complex, with violations committed by many different groups.
The Administration believes that the type of assistance under
consideration for Colombia is not only critical to the types of
programs we must continue with elements of the Colombian government
committed to counternarcotics efforts, but is also vital to the
national security interests of the United States.
In this regard, the plan under consideration would provide
equipment to the Colombian National Police and those elements of the
Colombian Armed forces which support them. As a matter of policy, the
Colombian Army provides essential ground support for eradication
(spray) missions and seizes and destroys labs and drug shipments
jointly with the police.
In addition, training designed to improve performance on
counternarcotics activities, promote professional development, foster
respect for human rights, civilian control of the military and improved
military justice would be provided using International Military
Education and Training funds.
We are currently weighing carefully what types of equipment we
might provide to selected military units with a CN support role. Please
be assured that, in keeping with the spirit of recent legislation
requiring human rights conditions on International Narcotics Control
(INC) funds, we will extend the spirit of these human rights conditions
to all USG counternarcotics assistance to Colombia's security forces.
Embassy Bogota has been working to improve end use monitoring
(EUM), especially vis-a-vis human rights concerns. The finalized
procedures for the 506(a)(2) transfer will serve as the basis for
monitoring any equipment that might be provided under the 614 waiver.
We will review the human rights record of personnel in recipient units
prior to providing counternarcotics assistance. Ambassador Frechette is
finalizing an EUM agreement with the newly-appointed minister of
defense. The proposed agreement will safeguard against use of USG-
origin equipment by known human rights violators, and will provide a
mechanism for transfer out of the unit of any individual who is alleged
to have been involved in serious human rights violations, without
prejudice and in accordance with Colombian law, while the allegations
are investigated.
nigeria
Question. The Nigerian Government is notoriously repressive. I wish
they spent half as much effort fighting drug traffickers, as they do
repressing legitimate dissent by their own people.
Nigeria has become a major narcotics transit center. I don't know
if the Nigerian Government is directly involved in the drug trade, but
it clearly tolerates drug activity and the corruption associated with
it. The State Department called Nigeria's counter-narcotics efforts in
1996 ``inadequate'' and ``marginal.'' What hope do you see there for a
more cooperative relationship?
Answer. Although we characterized Nigeria's counter-narcotics
efforts in 1996 as ``inadequate,'' there were some positive
developments. For example, although the majority of drug-related
convictions were of minor traffickers, the Nigeria Drug Law Enforcement
Agency (NDLEA) reported that the GON did convict 537 narcotics
producers/traffickers in 1996. The NDLEA also improved performance and
cleaned up corruption within its ranks, firing 600 corrupt NDLEA
officers. In addition, in collaboration with the UN Drug Control
Program, Nigeria developed a national strategy to reduce demand for
drugs.
In December 1996, Jonathan Winer, Deputy Assistant Secretary in the
Bureau for International Narcotics and Law Enforcement Affairs, led an
eleven-member interagency team to Nigeria. Although the delegation's
principal mandate was the discussion of money laundering issues, the
Government of Nigeria (GON) was extremely forthcoming in providing
access to high-level officials across the board, and wide-ranging
discussions took place on a variety of law enforcement issues,
including narcotics trafficking, immigration and deportation issues,
extradition, ``419'' (advance-fee) fraud, international criminal
activity by Nigerians, and more effective sharing of crime-related
information. Team members identified with their Nigerian counterparts a
number of areas for future cooperation.
The team made it clear that the GON needed to provide evidence of
its good faith in cooperative efforts by resuming extraditions of
Nigerian nationals wanted in the United States on narcotics and other
criminal charges. Though the GON agreed with this request and promised
that extraditions would resume, to date none have taken place. When the
GON told us that all extradition packets previously submitted had been
lost and requested resubmission of new packets, the Department of
Justice quickly resubmitted the most significant cases. Although the US
Government continues to work towards a more cooperative relationship
with the Nigerian Government on counter-narcotics, we are discouraged
by the lack of progress so far on extraditions.
alternative crop production
Questions. I understand that a small part of funds in this program
go to support AID's efforts to teach farmers to cultivate legitimate
crops rather than coca. How much are we spending on these programs, and
where have they been successful? Should we be spending more resources
on these efforts?
Answer. The International Narcotics Control program for fiscal year
1997 includes $66,208,000, 34.3 percent of narcotics programs, for
illicit crop reduction by economic incentives, eradication and related
programs. $80,800,000, 37.8 percent of narcotics programs, is requested
for this purpose in fiscal year 1998. This includes opium poppy
substitution in Laos, Pakistan and Thailand, and coca crop destruction
by aerial herbicides in Colombia. The largest part, in excess of $43
million in fiscal year 1998, is to reduce coca cultivation in Bolivia
and Peru.
In Peru, AID is implementing an alternative development project
specifically designed to reduce coca cultivation by economic assistance
to communities that undertake to prevent new and reduce existing coca.
This began in May 1995, and is directly supported by coca crop
verification surveys by another Peruvian agency also supported by the
INC program. In 1996, the U.S. Government estimated coca cultivation in
Peru at 94,400 hectares, 18 percent less than in 1995, and the lowest
figure in Peru since these estimates began in 1986.
In Bolivia, since the 1980's, in conjunction with that government's
program for voluntary compensated eradication of coca by growers, AID
assistance greatly increased licit crops and economic activities in the
main coca region. Verified eradication of coca since 1988 exceeds
40,000 hectares. While planting of new coca has kept this from
correspondingly reducing net coca cultivation, we are reviewing this
program with a view to attaining net reduction on a national basis.
The 1997 National Drug Control Strategy recognizes that specially
designed rural development assistance can reduce coca destined for
illicit drug production. Our goal is to greatly reduce and hopefully
eliminate large-scale coca cultivation during the ten-year Strategy
period. However, it is vital to recognize that economic alternatives
cannot do this alone. These projects depend for success also on
reducing prices drug traffickers pay farmers for coca products, which
depends on effective action to control illicit drug trafficking. These
activities similarly depend on this appropriation. It clearly would be
advantageous to increase support for alternative development, but if
support for activities against illicit drug traffic is not also
correspondingly enhanced, alternative development by itself will fail
to produce its intended result.
subcommittee recess
Senator McConnell. Thank you, the subcommitee will stand in
recess until 11 a.m., Thursday, April 17 when we will receive
testimony from Charles Kartman, Acting Assistant Secretary of
State.
[Whereupon, at 12:10 p.m., Thursday, March 20, the
subcommittee was recessed, to reconvene at 11 a.m., Thursday,
April 17.]
FOREIGN OPERATIONS, EXPORT FINANCING, AND RELATED PROGRAMS
APPROPRIATIONS FOR FISCAL YEAR 1998
----------
THURSDAY, APRIL 17, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 11:10 a.m., in room SD-138, Dirksen
Senate Office Building, Hon. Mitch McConnell (chairman)
presiding.
Present: Senators McConnell, Bennett, and Leahy.
DEPARTMENT OF STATE
STATEMENT OF HON. CHARLES KARTMAN, ACTING ASSISTANT
SECRETARY OF STATE
ACCOMPANIED BY:
AURELIA BRAZEAL, DEPUTY ASSISTANT SECRETARY
JEFFREY BADER, DEPUTY ASSISTANT SECRETARY
opening remarks of senator patrick leahy
Senator Leahy. I am Patrick Leahy and the ranking member on
this subcommittee.
Senator McConnell has asked me to start the hearing because
he is tied up in the Rules Committee. And to make it more
difficult, the Rules Committee changed its schedule at the very
last minute. He will be here as soon as he can.
Mr. Secretary, we appreciate you coming down here to
testify. I know that discussions are underway in New York with
the North Koreans. And I realize that this means that you have
to do what, unfortunately, Senator McConnell and I have been
trying to do today, which is to be in two places at once.
I have talked with the President on occasion about what we
are trying to do in Korea, to feed starving people. But
obviously, we have some concerns, about where the food aid goes
and where not. We do not want to make it easy for the North
Koreans to do whatever they want militarily, while we send them
humanitarian aid.
I also want to say that I fully support Senator McConnell's
efforts in Burma. The SLORC regime stole the democratic
election. Aung San Suu Kyi remains in virtual house arrest.
Hundreds of her supporters have been jailed.
We had legislation passed last year. I believe those
conditions have been met. I think the President has to impose
the sanctions the bill calls for. And I intend to keep pushing
for that.
I have very serious concerns about the Chinese Government's
assault on civil liberties in Hong Kong. I have visited Hong
Kong many times. Anyone who does not see that the Chinese are
systematically dismantling the underpinnings of democracy, are
fooling themselves.
Perhaps some felt comfortable when former Prime Minister
Thatcher announced that this was all worked out. It now seems
that, to some extent she, too, was fooled. But we should not
allow ourselves to continue to be fooled. I think we need to
speak out very forcefully, and to be prepared to use our
economic leverage to counter that assault.
In Indonesia, the Suharto government, which is among the
world's most corrupt, has sought to intimidate, arrest and
brutalize its prodemocracy opponents. And in East Timor the
human rights situation remains deplorable.
The Indonesian Government has dismissed the reports of
political killings, disappearances, and torture and instead
engaged in a public relations campaign to bury the truth.
Cambodia is another example of a corrupt government doing
its best to subvert the forces of democracy. With Presidential
elections scheduled for next year, Prime Minister Hun Sen's
political opponents are being harassed and attacked on every
front. And I am afraid that we are not doing enough to stand up
for the forces of democracy there.
Having said all of that, I know the Pacific rim countries
hold enormous economic and strategic importance for the United
States. I saw that when I visited Vietnam, China, Hong Kong,
and Taiwan last November. And obviously, we have to be engaged
economically.
But we are the world's greatest democracy, the world's most
powerful democracy. And we have to stand up, whether it is
aggressively trying to prevent an arms race in the Far East or
standing up for basic democratic principles.
We have been joined by the chairman. And under his new
policy of trying to get look-alike Senators on either side of
him when he is here. [Laughter.]
We have Senator Bennett from Utah. And if I might, Mr.
Chairman, tell just one very quick story: And this is during
the height of President Dole--Senator Dole----
Senator McConnell. Thank you. We were hoping. [Laughter.]
Senator Leahy. I know you were. [Laughter.]
Senator, so was he.
In Senator Dole's campaign for the Presidency, I had a
Vermonter come up to me and say they were very, very pleased to
see me giving strong support to Senator Dole.
And I said, ``Well, Senator Dole is a very good friend of
mine. I think the world of him, but I am a Democrat, and I am
supporting President Clinton.''
They said, ``No, no; we have this photograph of you at a
fund raiser introducing Bob Dole.''
They brought out the photograph. And it was Senator Bennett
and Bob Dole. [Laughter.]
And I guess we just all--if you are tall, bald, and white-
haired, you all look alike. [Laughter.]
Over to you, Mr. Chairman.
opening remarks of senator mc connell
Senator McConnell [presiding]. I do not know how to top
that. [Laughter.]
I am sorry for the delay. It is the case around here, there
are a lot of things going on at one time.
Mr. Kartman, I understand you have been in New York
participating in the negotiations with South and North Korea.
We appreciate your interrupting that schedule to return here to
testify today.
The policy and programs developed by your bureau are
exceptionally important to U.S. security, economic and
political interests. I believe the administration has worked
and largely succeeded in assuring both friend and potential foe
that we are a Pacific nation determined to sustain our presence
and promote stability and mutual prosperity.
However, our strategic commitment is routinely challenged
by a host of tough, tactical issues involving trade, human and
civil rights, and both conventional and nuclear weapons
proliferation.
In spite of our difference, every nation continues to seek
active American leadership and engagement to maintain the
balance of power which has afforded unprecedented economic
growth and to a lesser, but still important extent, democratic
rights as well.
Our involvement has eased regional concerns about Japan's
and China's expanding strength as well as Japan's and China's
concerns about each others emerging roles.
A decade ago, it would have been difficult to imagine the
United States would join South Korea in responding to an
international appeal to avoid famine in North Korea, a subject
which dominates the front page of today's Washington Post.
And in the aftermath of Tiananmen Square, a peaceful
transition in Hong Kong was not the currency of conventional
wisdom.
But signs of progress are shadowed by some serious
problems. And let me just mention a few before we get to your
testimony.
With most favored nation [MFN] on the horizon, the debate
continues over China's long-term intentions. Are we
contributing to building a well-armed economic superpower with
expansionist ambitions; or will economic growth yield political
liberalization, with China increasingly assuming an important
role as a responsible global leader?
Obviously, our decisions and China's choices will have a
major impact on Hong Kong's future. In this context, let me
both note and welcome President Clinton's decision to see
Martin Lee. It sends a strong signal of American support for
democracy.
In striking contrast, in Burma, the administration's record
of support for democracy and Aung San Suu Kyi, has been
extraordinarily disappointing. After 6 years, on July 10, 1995,
Suu Kyi was formally released from house arrest.
Sadly as of last October, she seems to once again be under
de facto house arrest. In addition, thousands of Burmese have
been arrested, tortured, subjected to forced relocations and
slave labor.
The United Nations and every human rights organization I am
aware of has condemned SLORC's conduct and urged that Suu Kyi's
legitimately elected government be restored to office. Since
July 10, 1995, the administration has told me our policy has
been under review. Even on the slowest learning curve, 655 days
is a long, long review.
Finally, turning to North Korea: Last week, the
administration announced an additional contribution of
emergency food aid for North Korea, bringing this year's total
to $25 million.
I understand the World Food Program intends to target the
most vulnerable sector by providing food primarily for children
under 6. I think this is a position most of us will be able to
support.
But this appeal only responds to 4 million of more than 18
million estimated to be on the brink of starvation. I
understand from reliable sources that North Korea's public
distribution system will run out of food for the general
population, at the latest, by mid-July, obviously a worrisome
prospect.
I also have been told that soldiers are not starving
because the military runs its own farms to supply food. General
Shalikashvili's recent comments that there has been no
reduction in the level of military threat or exercises
underscores that point.
prepared statement
Adding to the volatile mix is the North's nuclear
capabilities. We are obviously engaged in a very delicate
balancing act with North Korea, hoping to secure a permanent
peace while trying to prevent a domestic crisis from erupting
which could unleash a still very strong military threat.
Those are some of the items I assume you will touch on
today and that we will be anxious to ask you about when we get
to questions.
[The statement follows:]
Prepared Statement of Senator Mitch McConnell
Mr. Kartman, I understand you have been in New York
participating in the negotiations with South and North Korea. I
appreciate your interrupting that important schedule to return
here to testify.
The policy and programs developed by your bureau are
exceptionally important to U.S. security, economic and
political interests. I believe the Administration has worked,
and largely succeeded, in assuring both friend and potential
foe that we are a Pacific nation determined to sustain our
presence and promote stability and mutual prosperity. However,
our strategic commitment is routinely challenged by a host of
tough, tactical issues involving trade, human and civil rights
and both conventional and nuclear weapons proliferation.
In spite of our differences, every nation continues to seek
active American leadership and engagement to maintain the
balance of power which has afforded unprecedented economic
growth and to a lesser, but still important extent, democratic
rights. Our involvement has eased regional concerns about Japan
and China's expanding strength, as well as Japan and China's
concerns about each other's emerging roles.
A decade ago, it would have been difficult to imagine the
United States would join South Korea in responding to an
international appeal to avoid famine in North Korea--and, in
the aftermath of Tiananmen Square, a peaceful transition in
Hong Kong was not the currency of conventional wisdom.
But, signs of progress are shadowed by some serious
problems. Let me tick off just a few of the issues I hope we
can discuss today:
With MFN on the horizon, the debate continues over China's
long term intentions. Are we contributing to building a well-
armed economic super-power with expansionist ambitions? Or,
will economic growth yield political liberalization with China
increasingly assuming an important role as a responsible global
leader? Obviously, our decisions and China's choices will have
a major impact on Hong Kong's future. In this context, let me
both note and welcome the recent Presidential decision to see
Martin Lee; it sends a strong signal of American support for
democrats everywhere.
In striking contrast, in Burma, the Administration's record
of support for democracy and its most vocal champion, Aung San
Suu Kyi, has been disappointing. After six years, on July 10,
1995 Aung San Suu Kyi was formally released from house arrest.
Sadly, as of last October she seems once again to be under de
facto house arrest. In addition, thousands of Burmese have been
arrested, tortured, subjected to forced relocations and slave
labor. The U.N. and every human rights organization I am aware
of has condemned SLORC's conduct and urged that Suu Kyi's
legitimately elected government be restored to office. Since
July 10, 1995 the Administration has told me our policy has
been under review. Even on the slowest learning curve, 654 days
is a long, long review period.
Finally, turning to North Korea. Last week the
Administration announced an additional contribution of
emergency food aid for North Korea bringing this year's total
to $25 million. I understand the World Food Program (WFP)
intends to target the most vulnerable sector by providing food
primarily for children under six--I think this is a position
most of my colleagues can support. But, this appeal only
responds to 4 million of more than 18 million estimated to be
on the brink of starvation. I understand from reliable sources
that North Korea's Public Distribution System will run out of
food for the general population, at the latest, by mid-July,
obviously a worrisome prospect. I also have been told that
soldiers are not starving because the military runs its own
farms to supply food. General Shalikashvili's recent comments
that there has been no reduction in the level of military
threat or exercises underscore this point. Adding to this
volatile mix, is the North's nuclear capabilities. We are
obviously engaged in a very delicate balancing act with the
North Koreans, hoping to secure a permanent peace while trying
to prevent a domestic crisis from erupting which could unleash
a still very strong military threat.
summary statement of hon. charles kartman
Senator McConnell. So why do you not proceed?
Mr. Kartman. Thank you very much, Mr. Chairman and members
of the committee.
Together with my colleagues, Aurelia Brazeal and Jeffrey
Bader, I thank you for this opportunity to present an overview
of the administration's policy in East Asia and the Pacific.
We have submitted a detailed statement for you.
United States interests in the Asia-Pacific region are
abiding and underpin our global foreign policy. Secretary
Albright has said our commitment to the region is solid because
it is solidly based on American interests.
We have strengthened our core alliances and reconfirmed our
intention to maintain a forward troop presence in the region.
We have also buttressed our other cooperative bilateral
security arrangements and actively supported multilateral
security dialogs such as the ASEAN regional forum.
We have aggressively promoted American economic interests
and elevated the diplomatic profile of our efforts to address
transnational problems in the region.
Secretary Albright has stressed that America has a vital
interest in remaining a Pacific power. She gave testimony to
that commitment in her meetings with leaders in Tokyo, Seoul,
and Beijing as part of her first overseas trip as Secretary of
State in February.
And last November, President Clinton underlined the United
States intention to remain deeply engaged in Asia and the
Pacific when he visited three important partners for regional
cooperation, Australia, the Philippines, and Thailand.
I would now like to mention briefly some, but by no means
all, of our key interests in relations in the region.
Any discussion of overall Asia policy should begin with the
cornerstone of United States engagement in the region, our
global partnership with Japan.
Most governments in East Asia see the United States-Japan
partnership as key to political and military stability and to
economic prosperity in the region. At the April 1996 summit in
Tokyo, President Clinton and Prime Minister Hashimoto signed a
joint security declaration reaffirming the importance of the
United States-Japan alliance.
We have an ambitious program on global issues known as the
common agenda. And we are encouraging Japan to promote strong
domestic demand for its products, open its markets further to
imports and to regulate its economy.
Although we have had some successes under the framework
agreement, we need better implementation of existing agreements
and outstanding issues such as civil aviation.
Let me now turn to Korea. Our goal in the Korean Peninsula
is to build a durable peace on the Peninsula and to facilitate
progress by the Korean people themselves toward national
reunification.
As you mentioned, I have excused myself from the
discussions that are going on in New York where, together with
our South Korean allies, we spent several hours in intense
negotiations with the North Korean delegation led by a Vice
Foreign Minister. I will return there tomorrow.
These discussions are an effort to persuade North Korea to
accept President Clinton and President Kim's proposal for four-
party peace talks involving the North and the South, as
well as the United States and China, concerning a reduction
of tensions in the peninsula and the establishment of a
permanent peace to replace the 1953 Armistice Agreement.
We are also discussing bilaterally with the North Koreans
other important issues, including efforts to recover the
remains of Korean war-era MIA's, proposals to end North Korean
development and export of missiles and missile technology, and
implementation of our commitment to exchange liaison offices in
Washington and Pyongyang.
On a strictly humanitarian level, we have provided
approximately $33 million in cash and in-kind support for
emergency relief assistance, basically medical supplies and
food for targeted sectors of the North Koreans.
It is difficult to predict the pace of progress in our
dealings with North Korea, however. North Korea's economic
difficulties have created opportunities for diplomacy, but they
also pose dangers.
Our approach, which is in full coordination with the ROK,
offers the DPRK a way to deal with its current crisis; that is,
through responsible engagement with the United States, the ROK,
and the international community.
Let me now turn to China. In recent months, few if any
foreign policy issues have been the subject of more intense
debate than China.
China is a major power whose influence will continue to
expand in the 21st century. We seek a productive relationship
with the secure, open, and successful China that is
increasingly integrated into the international system and a
responsible member of the international community.
The administration is convinced that we can best advance
our long-term interests by expanding and intensifying dialog
with China's leaders at the highest levels. In line with this,
we expect an exchange of state visits in 1997-98.
Secretary Albright's decision to visit Beijing as part of
her overseas--her first overseas trip reflected the importance
we attach to laying a firm foundation for bilateral relations.
Engagement with China should not be seen as implying
approval of Chinese Government practices or policies. It is a
vehicle by which we can expand areas of cooperation to advance
our strategic interests, such as the search for stability on
the Korean Peninsula.
It also enables us to deal forthrightly with China on
issues where we have differences, including human rights,
market access, and some of China's weapons and dual-use item
sales.
Our bilateral trade deficit with China is a source of
growing concern. Although the rate of growth of the deficit
with China is slowing, its size, $39.5 billion, is politically
unsustainable.
We strongly support China's entry into the WTO on
commercially acceptable terms.
We have had serious difficulty with China on
nonproliferation, largely over Chinese exports of arms as well
as sensitive goods and technologies, primarily to Iran and
Pakistan.
In the missile and chemical areas, we continue to have
concerns about the nature of China's commitment to abide by the
MTCR guidelines, and about China's willingness to strengthen
its chemical export control system and curb its dual-use
chemical-related transfers to Iran.
Human rights is an important issue in our relations with
China. And we raise it at every high level meeting. We urge
China to take steps to improve the human rights situation by
releasing political prisoners and allowing prison visits by
international human rights organizations.
In just over 2 months time, the world's attention will be
focused on the reversion of Hong Kong. We expect China to honor
its commitments to preserve Hong Kong's high degree of autonomy
and its unique way of life.
Vice President Gore and Secretary Albright expressed our
views regarding Hong Kong in meetings with Chinese leaders
during their visits in February and March. And Secretary
Albright will raise Hong Kong again when Vice Premier Qian
Qichen visits Washington later this month.
Secretary Albright will represent the United States at the
Hong Kong reversion ceremony, a measure of the importance we
place on this event, our support for the terms agreed to by the
British and the Chinese, and our interest in the future of Hong
Kong.
Let me briefly highlight other important interests we have
in the region.
One of the President's most significant, if sometimes
overlooked, foreign policy accomplishments has been the
elevation of the Asia-Pacific region in general on the foreign
policy agenda.
Through his vision of a genuine Pacific community of
interests, the President has elevated APEC to the leaders
level.
The administration has also played a prominent role in
shaping a new regional security architecture through the
creation of the ASEAN regional forum and other subregional
dialogs.
Regional dialog and architecture such as the ARF are
designed to complement our existing core alliances, as well as
cooperative security arrangements with other friendly nations.
However, as you noted in your statement, Mr. Chairman, in
sad contrast to the largely positive trends elsewhere in the
region, the people of Burma continue to live under a highly
authoritarian military regime.
The SLORC refuses to engage the democratic opposition in
dialog, and continues to engage in widespread human rights
violations.
The activities of Aung San Suu Kyi and her party, the
National League for Democracy, are monitored and circumscribed
by the regime.
The Cohen-Feinstein Burma sanctions provisions, which were
signed into law by the President on September 30, 1996, require
the President to impose a ban on new United States investment
in Burma under now well-known conditions.
We continue to watch the situation in Burma closely and
will impose such a ban if the President makes that
determination.
With the recent Senate confirmation of Pete Peterson as the
first American Ambassador to Hanoi, I am confident we will be
able to encourage more effective cooperation from the SRV on
issues of national interest, especially on obtaining the
fullest possible accounting for Americans missing from the
conflict, which remains our top bilateral priority.
We will also be in a position to urge greater political and
religious freedom in Vietnam.
Sometime this year, we hope to open a Consulate General in
Ho Chi Minh City, which will enable us to better process former
boat people for possible resettlement in the United States, as
well as provide consular and commercial services to American
citizens.
Mr. Chairman, in conclusion, I would like to note two
countries in East Asia which deserve the full support of the
United States as they continue their difficult transition to
democracy, Cambodia and Mongolia.
In Cambodia, the traditional threat posed by the Khmer
Rouge, while not eliminated, has receded considerably following
a series of large scale defections to the government side.
However, other internal threats, political violence most
notable among them, now pose a grave challenge to Cambodia's
transition to a democratic future.
The United States is equally committed to assisting the
Mongolian people with their remarkable transition to democratic
government through programs made possible by ESF and by
encouraging active involvement by NGO's.
Mongolia's 7-year democracy building experience and
experiment with a free-market economy is truly an Asian success
story.
So, Mr. Chairman, the breadth of our interests in the Asia-
Pacific region, our partnerships and alliances, and the
challenges we face there will increase in importance as we
enter the next century.
prepared statement
The successes I have reviewed with you today vastly
outnumber the problems, some admittedly serious, which remain.
With the cooperation of Congress, we plan to continue the
active pursuit of peace and stability, prosperity and
individual rights and liberties throughout Asia and the
Pacific.
Thank you very much. We will be glad to answer questions.
Senator McConnell. Thank you.
[The statement follows:]
Prepared Statement of Assistant Secretary Charles Kartman
introduction and overview
Mr. Chairman, Members of the Committee: Together with my
colleagues, Aurelia Brazeal and Jeffrey Bader, I thank you for
this opportunity to present an overview of the Administration's
policy in East Asia and the Pacific.
U.S. interests in the Asia-Pacific region--security,
political, economic, socio-cultural--are abiding and underpin
our global foreign policy. As Secretary Albright said on April
15, our commitment to the region is solid because it is solidly
based on American interests. Together with our partners in the
region, the Administration is committed to building a community
across the Pacific based on shared interests, economic
interdependence, respect for democratic principles, and a
common commitment to peace.
The United States has employed a multi-pronged, reinforcing
approach in providing leadership to seize the opportunity for
mutually beneficial cooperation in the region. On the security
front, we have strengthened our core alliances and buttressed
other cooperative bilateral security relationships. We have
reconfirmed our intention to maintain a forward troop presence
in the region, as Vice President Gore underscored in Japan last
month. At the same time, we have actively supported
multilateral security dialogues, such as the ASEAN Regional
Forum, which now includes both Russia and India as members.
We have aggressively promoted American economic interests
in this dynamic part of the globe, regionally through our
participation in APEC and bilaterally through negotiations with
Japan, the PRC and other prominent economies. The growth of the
ASEAN economies and their general commitment to market-oriented
free trade principles figures prominently in how the United
States pursues trade and other economic interests. The East
Asia and Pacific region has surpassed Western Europe to become
the largest regional trading partner of the United States.
Close to 40 percent of our global trade is with the countries
of the Pacific Rim.
In recent years, we have also elevated the diplomatic
profile of our efforts to address trans-national problems in
the Asia-Pacific region which by definition have no respect for
boundaries: weapons proliferation, terrorism, narcotics
trafficking, and environmental degradation. For example,
sustainable development and the environment figured prominently
on Vice President Gore's agenda during his visit to Japan,
China and Korea in late March.
In her confirmation hearings in January and in subsequent
Congressional testimony, Secretary Albright stressed that
America has a vital interest in remaining a Pacific power. She
gave testimony to that commitment in her first overseas trip as
Secretary of State in February. In Tokyo and Seoul, she
reaffirmed America's intention to do its part to help build a
secure and peaceful future for Asia and the Pacific and the
vitality of our strong security relationships with key allies.
In Beijing, the Secretary encouraged China's active and
responsible participation in the international community.
Last November, within days of being reelected to a second
term, President Clinton underlined his conviction that the
United States intends to remain deeply engaged in Asia and the
Pacific when he visited three important partners for regional
cooperation--Australia, the Philippines and Thailand. Secretary
Cohen has just returned from consultations in Northeast Asia.
General Shalikashvili is there now. And less than two weeks
ago, Treasury Secretary Rubin travelled to Vietnam where he
advanced the process of economic normalization between our two
countries.
Having briefly outlined the main elements of our Asia
policy, I would now like to lay out in more detail some of our
key interests and relations in the region.
japan
Any discussion of overall Asia policy should begin with the
cornerstone of U.S. engagement in the region: our global
partnership with Japan. The United States is committed to
working closely with Japan to meet the many international
security, political and global challenges of the 21st century.
Most governments in East Asia generally see the U.S.-Japan
partnership as key to political and military stability and to
economic prosperity in the region. The United States and Japan,
in close consultation with the Republic of Korea, seek
continued stability on the Korean Peninsula and the faithful
execution of the October 1994 U.S.-DPRK Agreed Framework which
froze North Korea's nuclear program. Japan joined the United
States and the ROK as founding members of the Korean Energy
Development Organization (KEDO). Japan has committed to fund a
significant portion of the multi-billion dollar light-water
reactor project for North Korea. Japan has likewise given
strong support for the proposed Four Party proposal involving
the United States, the ROK, the DPRK, and China.
Both we and Japan encourage and support China's active,
constructive role in the international community. Our
governments continue to engage China on a broad range of
issues, including nonproliferation, trade, human rights, and
Hong Kong. We both share an interest in seeing that China is
successfully integrated into the core institutions of the
international community and, in so doing, meets its
responsibilities and obligations.
In the United Nations, where Japan has the second largest
individual country assessment, we have worked together to
promote reform of the organization. We strongly support Japan's
bid for permanent membership on the Security Council. In recent
years, Japan has displayed greater willingness to participate
in UN peacekeeping operations, as it continues to be an active
leader in financing a range of international humanitarian
relief efforts such as Bosnia reconstruction, the Middle East
Peace Process and programs to cope with refugee crises in
Africa.
Under the U.S.-Japan Common Agenda, launched in July 1993,
Japan and the United States are cooperating on more than two
dozen initiatives covering a broad range of the world's most
pressing global problems such as health, rapid population
growth and the environment.
At the April 1996 Summit in Tokyo, President Clinton and
Prime Minister Hashimoto signed a Joint Security Declaration
which reaffirmed the importance of the U.S.-Japan alliance. At
present, there are about 43,000 U.S. military personnel in
Japan. Japan provides about $5 billion a year in Host Nation
Support (HNS), or about 70 percent of the non-salary costs of
maintaining U.S. forces in Japan. We will continue to maintain
our forces in Japan, as part of our 100,000 forward-deployed
troops in the region, for the foreseeable future.
The Joint Security Declaration also endorsed the then-
ongoing work of the U.S.-Japan Special Action Committee on
Okinawa (SACO), which completed its work in December 1996 by
announcing substantial consolidations of U.S. bases in Okinawa.
SACO reflected the recognition by both the United States and
Japan that the sensibilities of Okinawan communities regarding
the U.S. military presence needed to addressed in order to
sustain, for the long term, our forward deployments in Okinawa.
Japan is our largest trading partner after Canada. It is
also the world's second largest economy. However, except for
1996 when real GDP growth was 3.6 percent due to a large fiscal
stimulus and low interest rates, economic growth has been flat
since the real estate and stock bubble burst in 1990. The
government's plan to reduce spending and raise the consumption
tax is expected to constrain economic growth in 1997. Japan
remains a massive net exporter of goods to the rest of the
world. Although Japan's merchandise trade surplus with the
United States fell to $48 billion in 1996 from $59 billion in
1995, the surplus is expected to rise in 1997 as the weaker yen
increases Japan's exports and reduces its imports.
We are encouraging Japan to promote strong domestic demand
for its products, open its markets further to imports and
deregulate its economy. Excessive regulation and non-
transparent procedures, however, continue to be a drag on
Japanese growth and to impede the access of American firms and
products to Japanese markets. Prime Minister Hashimoto said
that deregulation is one of his administration's top
priorities. His strong leadership will be important in
overcoming bureaucratic and economic interests who favor the
status quo.
Our trade policy aims at opening Japan's markets, so that
foreign firms can compete on an equal footing. The Framework
Agreement, signed by President Clinton and then-Prime Minister
Miyazawa in 1993, governs our bilateral trade relationship.
Since then, we have negotiated 23 trade agreements. Under the
Framework, we have had successes not only in autos and auto
parts, but in insurance, semiconductors and intellectual
property rights protection. We have enjoyed similar success in
our WTO case involving distilled spirits. Nevertheless, Japan
remains a difficult market especially for new entrants owing to
government regulation, exclusionary private business practices,
and inadequate anti-trust enforcement. We are pressing Japan to
implement existing agreements, including on autos and auto
parts and government procurement, and to deregulate its
economy. We are also working hard to address outstanding issues
such as civil aviation and telecommunications.
korea
Mr. Chairman, I have just returned from New York, where
together with our South Korean allies we have spent several
hours in intense discussions with a North Korean delegation led
by Vice Foreign Minister Kim Gye Gwan. I will return to New
York tomorrow to continue those talks.
I would like to discuss briefly the Administration's basic
policy approach toward the Democratic People's Republic of
Korea (DPRK). Our overall goals in this policy are to build a
durable peace on the Korean Peninsula as a key contribution to
regional stability, and to facilitate progress by the Korean
people themselves toward national reunification.
Central to our strategy for managing North Korea is our
commitment to consult regularly and closely with our South
Korean allies, to ensure that our North Korea policy remains
tightly coordinated. Recent visits to Seoul by the Vice
President, Secretary Albright, Secretary Cohen and General
Shalikashvili have all contributed to that objective. The U.S.-
ROK security alliance, which has withstood nearly five decades
of challenges and changes, remains at the heart of our policy
on the Peninsula. Our joint ability to deter North Korean
aggression is stronger than ever. The Republic of Korea, which
emerged from the Korean War in ruins, has built itself into a
vibrant democracy with a robust economy. The United States is
rightly proud of the role we have played in this process, in
the first instance, by ensuring the security of our ally.
Negotiated in close consultation with our South Korean and
Japanese allies, the October 1994 Agreed Framework not only
provided a means to address our concerns about the North Korean
nuclear program, but also laid out a structure to pursue our
other diplomatic objectives with the DPRK. Since November 1994,
a freeze on key existing facilities in North Korea's nuclear
program has been in place and is being continuously monitored
by the International Atomic Energy Agency (IAEA) as well as by
our own national technical means. Under the Agreed Framework,
the North will forego the right to reprocess spent fuel and
will, instead, safely store and eventually transfer the
existing fuel out of the country.
I would note that the existing spent fuel contains material
which could be used to build nuclear weapons. Thanks to the
hard work of a team of experts led by the Department of Energy,
which is in North Korea working 12 hours a day, six days a
week, the task of putting this material into storage under IAEA
safeguards is more than half completed. Actual canning of the
spent fuel began in April 1996 and is planned for completion
later this year. Upon the completion of canning activities, the
spent fuel will remain at the spent fuel storage basin at
Nyongbyon where it will continue to be subject to monitoring by
the IAEA until it is transferred out of the DPRK.
The Agreed Framework also provides that, in return for the
freeze and dismantlement of the DPRK's present nuclear program,
the United States will organize under its leadership an
international consortium to finance and supply two light-water
reactors (LWR), as well as heavy fuel oil shipments, to the
DPRK. Under American, South Korean and Japanese leadership, the
Korean Peninsula Energy Development Organization (KEDO) has
grown into an important arm of our three countries' coordinated
diplomacy. KEDO currently has ten members, spread over five
continents, and has received financial contributions from over
twenty-one countries. The European Union (EU) recently
announced that it would join KEDO as the fourth member of its
Executive Board. The EU's commitment to contribute $20 million
annually to KEDO over five years will help put KEDO finances on
a more solid footing. Nonetheless, KEDO is running a serious
deficit in its oil funding account; the deficit was $2.7
million in 1995, and about $33.5 million in 1996.
The combination of new EU funding, the U.S. contribution to
KEDO, and the contributions of other countries is critically
important to ensure that KEDO's commitment to deliver heavy
fuel oil to the DPRK is met. These deliveries are essential to
the integrity of the nuclear freeze, since they help compensate
the DPRK for the loss of energy production from nuclear
reactors which were under construction before the Agreed
Framework. KEDO is also taking steps to ensure the proper use
of this fuel by the North. We are following this situation very
closely.
KEDO has negotiated five protocols to the LWR Supply
Agreement which define the terms and conditions for reactor
construction. It has sent seven teams of technical experts--
American, South Korean and Japanese--to the DPRK to gather
necessary geological, environmental, and structural information
about the proposed LWR site in the DPRK. We anticipate
groundbreaking on the project to begin in late spring. As the
LWR project progresses, North Korea's contact with the world
and with the ROK will rapidly increase. Most specialists
working on the project will be ROK citizens, and South Korea's
national power company--KEPCO--is the prime contractor.
Already, the LWR project has facilitated North-South contact
through almost constant KEDO-DPRK negotiations at KEDO
headquarters in New York City and through the regular visits of
South Koreans, under KEDO sponsorship, to the North to prepare
for the reactor project.
The Agreed Framework also called on the United States and
the DPRK to improve bilateral relations through resolution of
issues of importance to the U.S. The pace of change will
depend, of course, on the degree to which the DPRK is prepared
to move further along the positive path on which it embarked
with the signing of the Agreed Framework. Another key element,
which was written into the Agreed Framework at our insistence,
is the expectation of progress in North-South relations. In our
subsequent diplomatic contacts with the DPRK, we have stressed
consistently and frequently the necessity of such contact.
North Korea's agreement to sit down with the United States
and ROK on March 5 to hear our joint briefing on President
Clinton and President Kim's proposal for Four Party peace talks
was tangible evidence of the recent success of our policies in
engaging the DPRK and encouraging inter-Korean dialogue. This
joint briefing will, we hope, lead to discussions involving the
North and South, as well as the United States and China,
concerning a reduction of tensions on the Peninsula and the
establishment of permanent peace to replace the 1953 Armistice.
Two days after the joint briefing on the Four Party talks,
accompanied by officials from the Department of Defense and the
National Security Council, I met with the same DPRK delegation
to discuss the range of bilateral issues between our two
countries. Among the issues I raised in that meeting were
efforts to recover the remains of Korean War-era MIAs,
proposals to end North Korean development and export of
missiles and missile technology, and implementation of our
commitment to exchange liaison offices in Washington and
Pyongyang.
U.S. negotiators first met with DPRK officials in April
1996 to discuss our concerns about North Korea's development,
deployment, and proliferation of missiles and missile
technology. The DPRK has agreed to a second round of these
talks to be held May 12-13 in New York. Putting an end to these
threats is a top U.S. priority.
Under terms of the Agreed Framework, the United States and
North Korea agreed to exchange liaison offices--the lowest
level of diplomatic representation between countries--as soon
as technical issues could be resolved. Although we are still
discussing some of these matters, including arrangements for
supplying and supporting our office in Pyongyang and the
North's ability to find suitable offices in Washington,
conditions appear to be improving for the realization of this
commitment. The establishment of these small-scale offices
would be of practical benefit to both sides. We are very
grateful to Sweden for its willingness to act as our protecting
power in the DPRK. However, as American citizens increasingly
visit the DPRK--as journalists, academics, humanitarian relief
workers or specialists in the canning, remains, or fuel
monitoring projects--we feel the need to be able to provide
them directly with consular protection and support. A full-time
diplomatic presence in Pyongyang will also give us a first-hand
perspective on the situation and provide us with improved
access to North Korean officials.
In recognition of the progress made on issues of concern to
us, we have taken a number of modest steps since January 1995
to ease economic sanctions against the DPRK. In December 1996,
for example, we approved the license of a U.S. firm to pursue a
commercial deal to sell North Korea up to 500,000 tons of
grain, consistent with our policy of sympathetic consideration
of all applications for provision of foodstuffs on commercial
terms. We understand that negotiations to conclude this deal
for a limited shipment on a commercial basis were recently
successful. We will consider further sanctions-easing measures
as North Korea makes progress on issues of concern to us.
On a strictly humanitarian level, the United States has
participated in international efforts to alleviate the
suffering of North Korean civilians affected by recent flooding
and food shortages there. Over the past two years, we have
provided approximately $33 million in cash and in-kind support
for emergency relief assistance--basically, medical supplies
and food--for the North. These contributions have been made in
the spirit of the American tradition of providing assistance to
people in need, without regard to politics.
Our most recent donation, announced April 15 after close
consultation with the ROK and Japan, is a donation of 50,000
metric tons of corn valued at approximately $15 million for use
in feeding 2.6 million children under the age of 6 in North
Korea. This assistance, which will be in the form of PL 480
Title II Emergency Food Aid, is in response to the UN World
Food Program's (WFP) April 3 announcement that it was expanding
its outstanding appeal by an additional 100,000 metric tons,
bringing its total appeal to 200,000 metric tons, valued at $95
million. UN agencies with staff in North Korea will arrange the
delivery of our contribution. The WFP, which will monitor the
distribution, has demonstrated its ability to ensure that
assistance reaches the intended civilian beneficiaries.
The latest WFP appeal, even if fully subscribed, will only
meet 5 percent of the North's estimated 2 million ton shortfall
of grain this year. However, the appeal is designed to get food
in the pipeline now for delivery to those most vulnerable to
the threat of famine.
The United States has not acted alone in providing
humanitarian assistance to the DPRK. In February, the ROK
announced a $6 million contribution to the WFP appeal, and we
expect South Korea to respond to the WFP's expanded appeal.
Japan donated $6 million in response to the 1995 UN appeal and
is considering its response to the expanded WFP appeal. Canada
has contributed $4 million and Australia $2.2 million; Denmark,
Norway, and New Zealand have also announced contributions.
Experience has taught us that it is difficult to predict
the pace of progress in our dealings with North Korea, and
events can move quickly on the Korean Peninsula. Persistent
diplomacy by the United States, in close coordination with the
ROK, has laid the groundwork for a possible improvement of the
situation on the Peninsula. North Korea's economic difficulties
have created opportunities for diplomacy, but they also pose
dangers.
In summary, although there is clearly a long way to go, I
am cautiously optimistic about our effort to promote lasting
peace on the Korean Peninsula. It has at its foundation the
U.S.-ROK security alliance and our commitment to deter North
Korean aggression. It seeks to reduce tensions, but insists on
the principle of reciprocity enshrined in the Agreed Framework.
It recognizes the long-standing American tradition of offering
assistance to needy people regardless of the political views of
their leaders. And, it offers the DPRK a way to deal with its
current crisis--through responsible engagement with the United
States, the ROK, and the international community.
china
Mr. Chairman, in recent months few if any foreign policy
issues have been the subject of more intense debate than China.
Constructive relations with the PRC are of fundamental
importance to the preservation of world peace and regional
stability. As Secretary Albright noted in her address at the
Naval Academy two days ago, no nation is destined to play a
larger role in shaping the future of Asia than China. Already,
China is a major power whose influence will continue to expand
in the 21st century.
We seek a productive relationship with a secure, open and
successful China that is increasingly integrated into the
international system and a responsible member of the
international community. American interests are served best by
a China that does not threaten others. China, in turn, is less
likely to be hostile if it does not feel threatened. American
interests are not served by a policy that seeks to contain or
isolate China. We would not only eventually fail, but an effort
to do so would undercut the stability that all countries in the
Asia-Pacific region need for the future to be secure and
prosperous.
A China that evolves as a power that is stable, politically
and economically more open and non-threatening militarily--in
short, a China that is moving toward, not away, from a secure
international order--is profoundly in our national interest.
Ultimately, of course, China will determine its own course, and
there is no assurance that our policy of engagement will
succeed in moving China in the direction of the international
community, away from more nationalistic, self-absorbed
policies. But we can and should help shape its choices. This
can be accomplished most effectively by continuing our present
policy of deepening our strategic dialogue with China.
The Administration is convinced that we can best advance
our long-term interests by expanding and intensifying dialogue
with China's leaders at the highest levels. In line with this,
we expect an exchange of state visits in 1997 and 1998.
Secretary Albright's decision to visit Beijing as part of
her first overseas trip reflected the importance we attach to
laying a firm foundation for bilateral relations. Meetings such
as those during the Vice President's visit to China in March
are conducive to a productive dialogue in which differences can
be aired.
Engagement with China should not be seen as implying
approval of Chinese government practices or policies. It is a
vehicle by which we can expand areas of cooperation to advance
our strategic interests--such as the CTBT and stability on the
Korean Peninsula. It also enables us to deal forthrightly with
China on issues where we have differences--including human
rights, market access and some of China's weapons and dual-use
items sales.
Our relationship with China has many dimensions. We have a
positive agenda, where we seek productive dialogue on issues of
mutual interest: global and regional security cooperation--
including at the UN--on matters such as the situation on the
Korean peninsula; arms control and nonproliferation; trade and
investment; sustainable development and protection of the
environment; and the ongoing fight against drug trafficking,
alien smuggling, international crime and terrorism. On the
other hand, just as we try to expand areas of cooperation
wherever possible, so do we work assiduously on those areas
marked by differences. I would like to mention briefly some of
the key issues in the relationship.
Taiwan is a longstanding issue between us. As provided in
three joint communiques with the PRC, the United States
recognizes the Government of the PRC as the sole legal
government of China and acknowledges the Chinese position that
there is just one China, and that Taiwan is a part of China.
However, we maintain strong unofficial ties with the people of
Taiwan, in cultural, commercial and other areas. We welcome the
democratic transformation of Taiwan.
While the Taiwan issue is a matter for the parties involved
to resolve, we have a strong and continuing interest that any
resolution be peaceful. The United States has an abiding
interest in the region's continued peace and stability, and
under the Taiwan Relations Act (TRA), any effort to determine
the future of Taiwan by other than peaceful means would be of
grave concern to the United States. The TRA requires the United
States to make available to Taiwan defense equipment to
maintain a sufficient self-defense capability. The PRC has
always opposed arms sales to Taiwan, which it regards as
interference in its internal affairs, and they continue to be a
source of friction. Since differences between Beijing and
Taipei remain a potential source of instability, we have
stressed to both sides the importance of avoiding provocation
and of resuming cross-Strait dialogue as a possible route
toward eventual resolution of this problem.
A growing source of concern is our bilateral trade deficit
with China. Although the rate of growth of the deficit with
China is slowing, its size--$39.5 billion--is politically
unsustainable. We continue to press for implementation of our
bilateral market access and intellectual property rights
agreements, and we are seeking increased access for our goods
and services in the negotiations on China's accession to the
World Trade Organization. We strongly support China's entry
into the WTO on commercially acceptable terms. Both sides are
working to intensify negotiations.
Chinese cooperation is essential to achieve our regional
and global nonproliferation objectives, and we have made
progress. We engage the Chinese on nonproliferation frequently
and at various levels. We urge that China accept and abide by
international nonproliferation agreements and norms.
China's evolving attitude toward nonproliferation norms can
be seen in Chinese actions in the 1990s. In 1992, it acceded to
the Nonproliferation Treaty (NPT), in 1993, it signed the
Chemical Weapons Convention (CWC), which its National People's
Congress approved last December; in 1994, China stated it would
abide by the guidelines and parameters of the Missile
Technology Control Regime (MTCR), joined the United States in
calling for the negotiation of a multilateral agreement banning
the production of fissile material for nuclear weapons, and
played a constructive role with North Korea in obtaining its
agreement to eliminate its nuclear weapons program; in 1995,
China supported the successful effort to make the NPT
permanent; in 1996, China stopped testing nuclear weapons and
signed the Comprehensive Test Ban Treaty (CTBT); and this year,
China joined with other members of the IAEA in negotiating and
recommending that the IAEA Board of Governors adopt new
safeguards to strengthen the IAEA's ability to detect
undeclared nuclear activities in states with comprehensive
safeguards agreements.
We and China need to build on these steps. We will need
Beijing's active cooperation to help bring North Korea into
full compliance with its NPT and IAEA safeguards obligations,
to help avert a destabilizing nuclear and missile competition
in South Asia, and to help stabilize the Persian Gulf region by
curbing exports to Iran and supporting fully Security Council
resolutions on Iraq. We have urged China to join the new
Wassenaar Arrangement of 33 major arms suppliers that have
agreed not to sell arms and sensitive technologies to Iran.
At the same time, we have had serious difficulties with
China on nonproliferation, largely over Chinese exports of arms
as well as sensitive goods and technologies, primarily to Iran
and Pakistan. Our intensive engagement with the Chinese over
the last few years on nuclear export issues has begun to yield
some concrete results. China has shown a greater willingness to
scrutinize and restrain its nuclear exports and cooperative
activities, to strengthen their national export controls, and
to address more promptly and seriously our concerns. If we
continue to make progress, we would hope to be in a position to
implement the long-dormant 1985 U.S.-China Agreement for
Nuclear Cooperation, which would bring major benefits to both
countries. In the missile and chemical areas, however, we
continue to have concerns about the nature of China's
commitment to abide by the MTCR guidelines and about China's
willingness to strengthen its chemical export control system
and curb its dual-use chemical-related transfers to Iran.
Human rights is an important issue in our relations with
China, and we raise it at every high-level meeting. Our
concerns are well documented in the State Department's annual
country reports of human rights practices. We urge China to
take steps to improve the human rights situation by releasing
political prisoners and allowing prison visits by international
human rights organizations.
Some argue that the United States should restrict access
for Chinese goods to the domestic American market until China
improves its record on human rights. However, this
Administration believes that revoking or conditioning Most
Favored Nation (MFN) tariff treatment for China would not
advance human rights there. On the contrary, denial of MFN
would remove a beneficial influence for creating a more open
China; undermine American leadership in the region and the
confidence of our Asian allies; damage our economy, harm Taiwan
and especially Hong Kong, whose economies are intertwined
closely with that of the PRC; and would damage our ability to
work constructively with China. In the Administration's view,
renewing MFN unconditionally for China is the best way to
advance American interests, a conclusion reached by every
American president since 1979.
Although longstanding U.S. policy recognizes Tibet as part
of China, we strongly support the resumption by Beijing,
without preconditions, of negotiations with the Dalai Lama to
protect Tibet's distinctive heritage and culture. We would
welcome any formula for discussions agreed upon by
representatives of the Dalai Lama and of the PRC. The Dalai
Lama will visit Washington next week.
In just over two months' time, the world's attention will
be focused on the reversion of Hong Kong. Under the 1984 Sino-
British Joint Declaration, Hong Kong will become a Special
Administrative Region (SAR) of the PRC at midnight on July 1,
1997, after which it will continue to enjoy a high degree of
autonomy in all areas but foreign affairs and defense. We are
expressing at the highest levels our interest in a smooth and
successful transition, and in the future of Hong Kong. We
expect China to honor its commitments to preserve Hong Kong's
high degree of autonomy and its unique way of life. We believe
that the protection of civil liberties and individual freedoms,
including freedom of expression, is important to Hong Kong's
way of life and vital to continuing confidence there.
China has a strong self-interest in Hong Kong's continued
prosperity, and it understands Hong Kong's critical role in
providing and funneling the capital, technology, and
entrepreneurial skills that fuel China's economic growth.
Vice President Gore and Secretary Albright expressed our
views regarding Hong Kong in meetings with Chinese leaders
during their visits in February and March, and Secretary
Albright will raise Hong Kong again when Vice Premier Qian
Qichen visits Washington later this month. We believe the
Chinese leaders understand our interest, and they express their
intention to preserve Hong Kong's autonomy and way of life.
Secretary Albright will represent the United States at the Hong
Kong reversion ceremony, a measure of the importance we place
on this event, our support for the terms agreed to by the
British and the Chinese, and our interest in the future of Hong
Kong. As mentioned by the Hong Kong Policy Act of 1992, the
Administration will monitor the situation after reversion and
report on any erosion in Hong Kong's autonomy.
pacific community and regional architecture
Mr. Chairman, in any broad discussion of U.S. policy in
Asia, Northeast Asia tends to dominate. Today, I want to
briefly highlight other important interests we have in this
dynamic region.
One of the most significant if sometimes overlooked foreign
policy accomplishments of the First Clinton Administration was
the elevation of the Asia-Pacific region in general on the
foreign policy agenda. This elevation continues in the Second
Administration. Through his vision of a genuine Pacific
community of interests, the President has nurtured the APEC
process, founded in 1989, to the Leaders level. In November of
this year, APEC leaders will come to the North American
continent, where the city of Vancouver will play proud host.
This Administration has also played a prominent role in
shaping a new regional security architecture through the
creation of the ASEAN Regional Forum (ARF) and other sub-
regional dialogues. Since its inception in 1994, the
accomplishments of the ASEAN Regional Forum--whose membership
now numbers 21--have been significant. Regional dialogue and
architecture such as the ARF are designed to complement
existing core alliances--with Japan, the ROK, Australia,
Thailand and the Philippines--as well as cooperative security
arrangements with other friendly nations.
australia
Australia is the southern anchor of the U.S. presence in
the Asia-Pacific region. A stalwart and dependable ally,
Australians have fought by our side in every major conflict in
the 20th century. In addition to our military alliance, we and
Australia have a long and profound history of cooperation on
multilateral issues. Australia has provided timely and
important financial support to KEDO, and was instrumental in
helping bring about a positive outcome on the CTBT.
asean
With over 330 million people, the seven ASEAN nations--
Indonesia, Malaysia, Singapore, Thailand, the Philippines,
Brunei, and Vietnam--have become collectively our fourth
largest overseas market. U.S. companies have invested over $30
billion in the ASEAN countries, an investment which helped
produce two-way trade valued at more than $100 billion. ASEAN
boasts some of the world's fastest growing economies, and is
likely to remain a vibrant market for U.S. goods and services
for the foreseeable future.
ASEAN, together with the ASEAN Regional Forum, has become a
force for regional stability and a vehicle for increased
involvement in both regional and global affairs. The seven
ASEAN nations border the South China Sea in a region fraught
with historical tensions and overlapping territorial claims.
However, the economic and cultural ties which bind the ASEAN
nations have served to reduce volatility in this strategic
area. Thailand and the Philippines are treaty allies of the
United States, and we have a cooperative security arrangement
with Singapore. Both Malaysia and the Sultanate of Brunei have
contributed significant financial support for various
multilateral assistance efforts underway in Bosnia.
indonesia
In many respects, no country better symbolizes the dynamic
reality of ASEAN than Indonesia. By far the largest of the
ASEAN nations with its 200 million population, Indonesia has
chosen over the last 30 years to work closely with its
neighbors through that organization to encourage consensual,
constructive approaches to regional challenges. No other factor
is of greater importance to the region's long-term stability
and unparalleled economic growth. In the process, Indonesia has
played key roles in bringing democratic elections to Cambodia
and in using its chairmanship of the Organization of the
Islamic Conference to broker a peace agreement to end a
decades-long conflict in the southern Philippines. Indonesia
also hosted the 1994 APEC Leaders Meeting, where leaders agreed
to free up regional trade and investment by the years 2010 and
2020 for developed and developing countries.
Stability in the region and in Indonesia has provided the
necessary preconditions for one of the most remarkable economic
success stories of any developing nation. GDP growth has
averaged in the neighborhood of 7 percent over several decades.
This growth has been balanced by developing country standards;
World Bank studies show income gaps between the richest and
poorest ranks of society to be among the smallest of virtually
any developing country. This economic growth has benefited U.S.
interests as well. Our own bilateral trade has grown by nearly
60 percent over the last five years, to almost $12.3 billion.
U.S. investment, including outlays in the oil and gas sector,
totals in the vicinity of $20 billion.
We have important differences over human rights issues with
Indonesia. Administration officials, including President
Clinton, repeatedly have made clear that our relationship, as
strong as it is, cannot reach its full potential until
Indonesia improves its human rights performance. And we intend
to continue raising these issues and to ensure that our views
are known to the government and to the Indonesian people. The
United States looks forward to a more democratic Indonesia. We
believe the best way for that to happen would be through a
process of evolutionary change that does not threaten the kind
of stability that has brought so much to Indonesia and to the
wider region. To encourage these trends--and many trends in
Indonesia are positive--the United States needs a relationship
that will serve our broad interests in fostering regional
stability, prosperity, and representative government.
We also are concerned about the human rights conditions in
East Timor. We are encouraged by U.N. Secretary General Anan's
decision to appoint a special representative to focus on the
East Timor issue and the resumption of Indonesian-Portuguese
discussions. We view favorably proposals to give the Timorese
greater control of their political and economic life and to
accord recognition to East Timor's unique history and culture.
burma
In marked contrast to the largely positive trends in
Southeast Asia, the people of Burma continue to live under a
highly authoritarian military regime, the State Law and Order
Restoration Council (SLORC), which has made no progress in
recent months in moving toward greater democratization and
respect for human rights. The SLORC continues to dominate the
political, economic and social life of the country, refuses to
engage the democratic opposition in dialogue, and continues to
engage in widespread human rights violations.
Political party activity remains severely restricted. The
activities of Aung San Suu Kyi and her party, the National
League for Democracy (NLD), are monitored and circumscribed by
the regime. Several hundred political prisoners are in
detention, including 29 Members of Parliament elected in 1990.
Since late September 1996, Aung San Suu Kyi has been prevented
from addressing party supporters in front of her house, as the
SLORC puts up blockades to prevent gatherings there. Since late
December, the SLORC has generally allowed her to meet with
visitors at her compound if the authorities are notified in
advance. She meets relatively often with diplomats and her
supporters. Since the beginning of the year, she has had three
large gatherings of more than 1,500 supporters on her compound.
The Cohen-Feinstein Burma sanctions provisions, which were
signed into law by the President on September 30, 1996, as part
of the Fiscal Year 1997 Omnibus Appropriations Act, require the
President to impose a ban on new U.S. investment in Burma if he
determines and certifies to Congress that, after September 30,
1996, the Government of Burma has ``physically harmed,
rearrested for political acts, or exiled Daw Aung San Suu Kyi
or has committed large-scale repression of or violence against
the democratic opposition.'' We continue to watch the situation
in Burma closely and will impose such a ban if the President
makes that determination.
In an effort to promote democratic change in Burma, we have
engaged in a vigorous multilateral strategy to encourage the
EU, ASEAN, Japan and other nations to urge progress by the
SLORC in the key areas of our concern--democracy, human rights
and counternarcotics. The Administration has imposed visa
restrictions on senior leaders of the regime and their
families. We maintain other forms of pressure against the
SLORC: we have cut off economic aid and GSP benefits;
prohibited Eximbank financing and OPIC insurance; maintained an
arms embargo; blocked assistance from international financial
institutions; and downgraded the level of our official
representation to Charge d'Affaires. Further, in light of
Burma's abysmal performance in the area of counternarcotics,
for eight years we have decertified Burma as not cooperating
with the United States against narcotics production and
trafficking.
We also have strong concerns about the Burma Army's attacks
on the Karen near the Thai-Burma border. We have pressed the
SLORC to halt these attacks and to ensure safe passage for
returning refugees. Up to 12,000 Karen were forced to flee into
Thailand, the vast majority of them civilians, including women,
children and the elderly. Thousands of civilians were forcibly
conscripted to serve as porters for the Burma Army in its
offensive. We also expressed our deep concern to the Thai
Government regarding the incidents in which Karen civilians who
were fleeing the fighting in Burma were sent back across the
border. Thailand has stopped these incidents and has assured us
that it intends to return to its former policy of providing
refuge for such persons until conditions inside Burma permit
their safe and voluntary return.
vietnam
Mr. Chairman, we welcome the recent Senate confirmation of
Pete Peterson as the first American Ambassador to Hanoi. With
Ambassador Peterson's presence there, I am confident that we
will be able to encourage more effective cooperation from the
SRV on issues of national interest, especially in obtaining the
fullest possible accounting for Americans missing from the
conflict, which remains our top bilateral priority. It will
also bolster our ongoing efforts to urge greater political and
religious freedom in Vietnam. Another priority is to work with
the SRV to streamline the process known as ROVR (Resettlement
Opportunity for Vietnamese Returnees), whereby certain
Vietnamese returnees can be interviewed in Vietnam for possible
resettlement in the United States. Sometime this year, we hope
to open a Consulate General in Ho Chi Minh City, which will
enable us to implement the ROVR program more effectively as
well as provide consular and commercial services to American
citizens.
Vietnamese leaders have made emphatically clear that
integration of the economy into the region is a top national
priority. We support this process, as it would also serve the
interests of regional stability. We look forward to further
progress in normalizing economic relations between the United
States and Vietnam. During his recent visit, Secretary Rubin
signed a debt agreement between our two countries. We have also
launched a series of negotiations which we hope will lead to a
bilateral trade agreement. Other talks have begun on
intellectual property rights and civil aviation.
transition to democracy: cambodia and mongolia
Finally, Mr. Chairman, I would like discuss two countries
in East Asia which deserve the full support of the United
States as they continue the difficult transition to democracy:
Cambodia and Mongolia.
In Cambodia, the traditional threat posed by the Khmer
Rouge, while not eliminated, has receded considerably following
a series of large scale defections to the government side.
However, other internal threats--political violence most
notable among them--now pose a grave challenge to Cambodia's
transition to a democratic future. The March 30 assassination
attempt against opposition leader Sam Rainsy, which we strongly
condemned, is one example of the type of political violence
that must be eradicated. We call on all factions to commit
themselves to the development of the Cambodian nation and the
peaceful settlement of their differences.
We are committed to assisting the Mongolian people with
their remarkable transition to democratic government, through
programs made possible by Economic Support Funds (ESF) and by
encouraging active involvement by NGOs. Mongolia was the first
formerly communist country in Asia to embrace democracy,
holding elections in 1990. Senator Robb and former Secretary of
State James Baker joined American election monitors sponsored
by the Asia Foundation to witness the 1996 parliamentary
elections. No other monitors or officials came from any other
country, thus making our presence all the more important as a
concrete symbol of international support for Mongolia's bold
but arduous continuing democratic experiment. Like Cambodia's
return from Khmer Rouge terror, Mongolia's seven year democracy
building experience and experiment with a free market economy
is truly an Asian success story.
conclusion
The breadth of our interests in the Asia-Pacific region,
our partnerships and alliances, and the challenges we face
there will increase in importance as we enter the next century.
Through careful diplomacy, the nurturing of relationships with
other Pacific countries and the dynamism of our private sector
throughout the region, the United States remains a principal
actor and force for stability. Our future lies, in great part,
in the Pacific. The Administration, in consultation with
Congress, has been rigorous in promoting U.S. interests
throughout the region. The successes I have reviewed with you
today vastly outnumber the problems--some admittedly serious--
which remain. We will only surmount those challenges, however,
through the kind of proactive diplomacy which has characterized
this Administration. With the cooperation of Congress, we plan
to continue the active pursuit of peace and stability,
prosperity, and individual rights and liberties throughout Asia
and the Pacific.
Thank you.
burma
Senator McConnell. Let me start out with Burma, and then I
will turn to Senator Bennett.
On several occasions over the past few years, the U.N.
Special Rapporteur on Burma has reported on SLORC's widespread
abuses, including the use of slave labor and carrying out
forced relocations of ethnic groups, particularly in areas ripe
for economic development.
I would like for you to comment on SLORC's record in these
two areas, forced labor and forced relocation.
Mr. Kartman. Mr. Chairman, may I ask my colleague, Jeffrey
Bader, to reply?
Senator McConnell. OK.
Mr. Bader. Mr. Chairman, we have seen the reports on use of
forced labor, particularly in minority areas. We have condemned
them. International organizations including the ILO have been
looking into them.
We regard these as unacceptable practices. We have
highlighted them in our public commentary and on human rights
reports.
Senator McConnell. Am I to assume that you are going to be
answering all of the Burma questions?
Mr. Bader. Yes.
Senator McConnell. All right. The State Department Human
Rights Report indicates several hundred members of Aung San Suu
Kyi's National League for Democracy have been arrested for
political reasons. Amnesty International reported over 2,000
citizens were arrested last year for political reasons.
Do you see this as an improving or deteriorating political
situation?
Mr. Bader. The numbers you cited are the same numbers that
we have seen. We would certainly not characterize this as an
improving situation. The term we have used is that there seems
to be a pattern of rolling repression on the part of the SLORC.
We do not see any signs of imminent improvement or
liberalization. These steps, I think, continue a pattern on the
part of the SLORC that is very disturbing.
Senator McConnell. You would agree, though, that many
observers feel that things have actually deteriorated.
Mr. Bader. Yes; I would agree with that.
Senator McConnell. That may not be your view, but many,
many feel that.
Mr. Bader. Yes.
Senator McConnell. Has Aung San Suu Kyi been able to travel
freely beyond her compound since last October?
Mr. Bader. She has been able to travel beyond her compound,
but not consistently freely. For awhile after October, she was
restricted to her compound. Then toward the end of the year,
the beginning of this year, she was allowed out of her compound
for some meetings if she gave notification to the SLORC's
security. She has had a number of meetings outside of the
compound.
She still is under considerable restraint in her movements.
Senator McConnell. On how many occasions has she left the
compound for political meetings?
Mr. Bader. I will have to get back to you with an exact
answer. I am aware of three meetings. There may be more, but I
am aware of three.
[The information follows:]
Political Meetings Outside the Compound
Since the beginning of the year, Aung San Suu Kyi has met
both inside and outside her compound with a large but
uncountable number of Burmese and foreign visitors. Most if not
all of these activities could be characterized as
``political.'' Many of these meetings are held at U Kyi Maung's
house, a few blocks from her own. She has attended luncheons
and teas at various ambassadors' residences in Rangoon on an
average of two or three times a week until recently, when she
decided as a general rule to have diplomats call on her at her
compound.
The U.S. Charge meets her on average once every 2 weeks or
so, sometimes more often, both at her compound and at his
residence. She has also held four large public political
rallies or other events at her compound since the beginning of
the year: Independence Day, Unity Day, Resistance Day, and
Burmese New Year. She reports to our Embassy that she is in the
midst of intensive daily political activities inside the
compound focused on training NLD members and strengthening her
party organization.
slorc
Senator McConnell. She recently said that SLORC was
escalating attacks against her supporters and noted the
kidnaping of 12 NLD members, 1 of whom was left dead beside a
road.
Do you agree with her characterization that pressure is
escalating?
Mr. Bader. I would agree with that characterization.
Senator McConnell. Secretary Gelbard recently told this
subcommittee that SLORC refused to extradite Khun Sa with whom
we are all familiar, a notorious narcowarlord. In fact, he
lives a protected, lavish life in Rangoon.
Gelbard testified that there had been no improvement in
counternarcotics efforts by SLORC.
I am wondering if you can point to any initiative or effort
they have made to address this, the growing opium production
problem.
Mr. Bader. Burma remains the source of approximately 60
percent of the heroin that flows into the United States. We
have decertified them as a cooperating country in narcotics
cooperation with the United States.
So, obviously, we do not consider their cooperation close
to adequate. The only item I could cite of recent interest is
that we did recently conduct an opium crop survey in opium-
growing areas in Burma. The SLORC did cooperate in allowing us
to perform that survey.
Senator McConnell. Given the fact that the one thing they
are pretty good at is maintaining an army, have they not been
using their army against narcotics traffickers?
Mr. Bader. The assessment of most observers, including our
own, is what they have been doing with the army is dealing with
insurgencies or former insurgencies among minority peoples
along the border.
Those areas are traditionally the opium-growing areas of
Burma. And the highest priority of the army has been to achieve
cease-fires in order to improve stability in Burma.
They have not taken on, in anything like the way we would
like to see, counternarcotics activities.
Senator McConnell. Well, in fact, you use the word
``stability.'' That is really a euphemism for ``suppression,''
is it not, or ``repression''?
Mr. Bader. Well, they have achieved cease-fires with some
of these groups.
Senator McConnell. The Karen part of the National Coalition
of Burma, the Coalition of Ethnic Groups, which has called for
the restoration of Suu Kyi and the NLD to office, do you
consider this group part of the democratic opposition?
Mr. Bader. The Karen National Union has not reached
agreement with the SLORC, it has not reached a cease-fire. They
are the one ethnic group that has not.
There are certainly elements of the Karen Group that we
would consider to be elements of the democratic opposition
allied with Suu Kyi. On the other hand, the KNU is also armed.
It is a difficult question in looking at the KNU as a
whole, as to whether the KNU, since they are armed, constitutes
a democratic group or not.
But we certainly would say that there are democratic
elements among the Karen and that they have every right to be
considered as such when we are looking at the SLORC's treatment
of democratic opposition in Burma.
Senator McConnell. According to reliable refugee groups,
SLORC's recent attack on Karen camps is one of the most brutal
to date. Are these military attacks, in your view, an effort to
eliminate any opposition to SLORC?
Mr. Bader. They are an effort to eliminate Karen opposition
to the SLORC. The figures we have seen indicate that about
18,000 Karen were forced over the border into Thailand.
We were disturbed some weeks ago when some of these Karen
were forced back into Burma by elements of the Thai Army. In
the last 5 or 6 weeks, behavior in that regard seems to have
altered, and they have been receiving protection in Thailand.
Senator McConnell. Is it still the U.S. position that the
1990 elections were free and fair and that the NLD and Aung San
Suu Kyi were legitimately elected to office?
Mr. Bader. That is our position.
Senator McConnell. As a result of the Foreign Operations
appropriations bill last year, current law states:
Sanctions must be imposed if any action is taken to harm,
rearrest for political reasons, or exile Suu Kyi or if SLORC
engages in a wide-scale repression against the democratic
opposition.
You have just testified on the restrictions on her
movements, the escalation in attacks on the NLD and other
members of the democratic opposition.
If these actions do not meet the threshold, I would like
for you to tell me exactly what you are looking for in terms of
outrageous conduct by SLORC to meet the test under current law.
Is it the administration's view that anything short of the
assassination of Suu Kyi is not enough to meet the criteria of
the existing law?
Mr. Bader. No; that would not be our view, Mr. Chairman.
Mr. Chairman, I heard your opening statement, and you
referred to 655 days of review. All I can say is that this
matter remains under review, and it is getting high level,
intensive attention in the U.S. Government at this time.
A determination has not yet been made. We take the Cohen-
Feinstein law very seriously. There are a number of elements in
it that we have acted upon already, for example, the visa ban
on high level SLORC officials and their families traveling to
the United States, as well as organizing an international
campaign to try to apply multilateral pressure against the
SLORC.
With our European Union and ASEAN colleagues, we have taken
a number of steps in that regard and have achieved some
results.
The thrust of your question, I am sure, is directed at the
new investment ban. Secretary Albright, in a speech at the
United States Naval Academy on Tuesday, made it clear that the
SLORC is on notice that unless the clouds of repression over
Burma are lifted, then it could look forward to an investment
ban being imposed.
Senator McConnell. Well, that would be certainly a step in
the right direction. It seems to me that it is perfectly clear
that the administration has been--either because it was a low
priority or because of fear of offending our Asian trading
partners--has had little or no interest in this issue to this
point, and even gone to great lengths to avoid complying, in my
view, with even existing law.
It makes me wonder whether anything short of a
congressional mandate--congressionally mandated implementation
of sanctions is going to get your attention. I certainly hope
that this extended review may come to an end sometime soon.
Mr. Bader. I certainly note what you said, Mr. Chairman. I
will convey that to the appropriate executive offices when I go
back from this hearing. I understand the passion and the
intensity of your view.
If I could just make one other point on this: Our policy
with Burma has not been one of tolerance. Aside from this one
question of the investment ban, we have taken, as you know, a
large number of measures designed to show our abhorrence for
the behavior of the SLORC.
As you know, we have no Ambassador there or charge
d'affaires. We have withdrawn GSP benefits from Burma. We have
blocked international financial institution support to Burma.
We have decertified it as a narcotics cooperating country.
It receives no assistance. We have imposed an arms embargo.
And as I say, we have worked closely with our allies to achieve
some degree of coordination on this. But I certainly understand
the point you are making, and I will carry that back with me
today.
Senator McConnell. It seems to me nothing short of
sanctions plus U.S. leadership to try to encourage others to do
the same thing--and I think unilateral sanctions, candidly,
probably are not going to have a huge impact.
But if America coupled that with the kind of leadership
that it showed in the South African situation, I think there is
every reason to believe that if we were willing to use up some
chits on this issue, that we could get some results.
I would like now to turn to Senator Bennett.
remarks of senator robert f. bennett
Senator Bennett. Thank you, Mr. Chairman.
I will just comment: The reference to this being in the
focus of very high officials should be underscored. It is very
much in the focus of very high officials here, starting with
the chairman, but not stopping with the chairman.
There are a number of us who share his view on this, and
this is not something that the committee as a whole is going to
let go by.
That being said, Mr. Kartman, I would like to turn to you
for a moment. We have before us, first, a picture of a Navy
escort vessel, U.S.S. Stark, after it was hit by an Exocet
missile in 1987, 10 years ago.
Next to that is the Chinese version of the Exocet 10 years
later, the C-802, which the Chinese claim to be new and
improved; indeed much improved.
In this brochure seeking to sell that missile, the Chinese
describe the C-802 as a missile with mighty attack capability
and great firepower.
Would you agree with that characterization of the missile?
Mr. Kartman. Senator Bennett and Mr. Chairman, when I
introduced Jeffrey Bader, Deputy Assistant Secretary, to have
him answer questions on Burma, it appeared that he was our
resident Burma expert.
But in fact, he is probably the premier China
expert in the United States Government. So I am going to ask
him to answer this question also.
Senator Bennett. Mr. Bader, would you agree with the
characterization in the brochure about the missile being one of
mighty attack capability and great firepower?
Mr. Bader. I would agree that we are disturbed by the
reports of intentions to provide this missile to Iran, and that
it does constitute a threat to the United States Navy in the
region. I would certainly agree with that.
It is, as you have said, an Exocet-like missile with
capabilities that are very disturbing to us.
Senator Bennett. You have run ahead of me, and that is
fine. [Laughter.]
It is being marketed to Iran, and it is being marketed
again, in the words of the brochure, the sales brochure, for
attacking escort vessels. And the Stark, of course, is a U.S.
Navy escort vessel of exactly the kind that this is being
marketed as a target to.
Now, on the right, there is a picture of five Chinese
missile boats on their way to Iran with C-802's aboard. You see
the C-802 missiles on the back deck of those five Chinese
missile boats.
Recently, Deputy Assistant Secretary of State Einhorn
stated, ``These cruise missiles pose new and direct threats to
deployed U.S. forces.''
Do I assume from your comment that you agree with that?
Mr. Bader. Yes; I do.
Senator Bennett. Now, the other picture is of a land-based
version of this C-802. And Mr. Einhorn recently suggested that
the land-based version is on its way to Iran.
Do you agree that that is the case?
Mr. Bader. If Mr. Einhorn said it, I have no reason to
doubt it.
Senator Bennett. Well, the problem with all of this was a
statement, in response to a question that I raised, by
Secretary Albright that these missiles are not destabilizing
under the definitions in the Gore-McCain Act.
Now, has the State Department asked the U.S. Navy for its
evaluation of this threat?
If we could put up the map, that helps us understand why
the Navy might be a little bit--of a little bit different
attitude as to what is not destabilizing in the area.
This is the Persian Gulf. You see it comes down. Iran is
the country to the north of the gulf. The entire coastline of
the gulf is Iranian. There are 500 miles of coastline. And in
that 500-mile area, the land-based missile could be hidden in
caves or deployed from the back of trucks.
And when you come around the Gulf of Hormuz, it is
impossible for an escort vessel not to be within range of one
of these missiles.
So my question is: Has the State Department asked the U.S.
Navy for its evaluation of the threat these missiles might pose
to U.S. forces in the gulf?
Mr. Bader. There is, as you know, legislation on the books
the Iran-Iraq Nonproliferation Act, which does set up the
criteria of whether or not something constitutes a threat to
the stability of the region as a basis for determination for
whether sanctions will be imposed.
We do have an interagency process for evaluating questions
like this. The Defense Department, the Navy and JCS would be
active players in that process.
The determination of whether or not a particular system
reaches the threshold of satisfying the requirements of that
act or is in itself destabilizing is a complex process.
I do not sit on that committee. I would not want to
prejudge the factors that they weigh in determining what is
destabilizing.
There are all manner of weapons that are being provided to
the region by all manner of players.
My understanding is that the administration has not yet
made a decision that what we have seen to date is
destabilizing. It is disturbing, absolutely. And I share the
points that you have made.
And the Navy has been a player in this process.
Senator Bennett. Well----
Mr. Bader. If I could just add one more point----
Senator Bennett. Yes.
Mr. Bader. Senator, we have made it very clear to the
Chinese how we feel about this, during the visits of Vice
President Gore and Secretary Albright to Beijing.
We have also highlighted our concerns over these weapon
systems to the Chinese in nonproliferation talks, so they can
have no illusions about the strength of our feeling on this
subject.
Senator Bennett. I listened carefully, but I did not quite
hear an answer to my question, which is: Has the State
Department asked the Navy for its evaluation of the threat?
I heard that there are consultations going on, and that
there is a group that is worrying about this, and that it is
highly complex.
But I did not hear, ``Yes, we have asked the Navy,''
because my next question is: If we asked the Navy, what did the
Navy tell you?
Is there any way you can provide that for the record?
Mr. Bader. Can I get back to you for the record on that? I
was trying to give you a sense of the interagency process, but
I do not know the specific answer----
Senator Bennett. OK.
Mr. Bader [continuing]. As to whether there has been a
formal request and a formal answer.
Senator Bennett. I have a sense that the Navy may be a
little more worried than the State Department.
Mr. Bader. We are very worried about it, as well, I assure
you.
Senator Bennett. Well, I am glad to know that you are
worried about it.
I have a letter to Secretary Albright which I would ask
you, Secretary Kartman, to deliver to the Secretary, asking
that the administration either enforce the Gore-McCain Act in
this circumstance or come up with some kind of alternative plan
of equal strength.
We have in excess of 15,000 United States service personnel
in this area, who are in direct harm's way as a result of these
missiles going to Iran. And I think for those 15,000 people and
their families--let alone, of course, American interests in the
area with respect to the free-flow of oil through the Strait of
Hormuz--that this one ought to move up the scale pretty
quickly.
And that is why I have engaged in these questions to
Secretary Albright and have this letter for the Secretary,
which I would ask you to deliver to her.
And I would ask, Mr. Chairman, that the letter be included
now at the conclusion of my questions.
Senator McConnell. It will be made a part of the record.
Senator Bennett. Thank you, Mr. Chairman.
Senator McConnell. Thank you, Senator Bennett. That was
very interesting.
[The letter follows:]
Letter From Senator Robert F. Bennett
U.S. Senate,
Washington, DC, April 17, 1997.
Hon. Madeleine K. Albright,
Secretary of State,
Washington, DC.
Dear Secretary Albright: During 1996 Chinese defense companies
delivered a number of missile boats to the Iranian Revolutionary Guard
Navy. Each missile boat was armed with four C-802 cruise missiles.
Recently, Deputy Assistant Secretary of State Robert Einhorn told the
Senate, ``These cruise missiles pose new, direct threats to deployed
U.S. forces.''
It is now my understanding that China is about to deliver the land
variant of the C-802 to Iran. When the Iranian Revolutionary Guard
acquires C-802's in quantity, it will have a weapon with greater range,
reliability, accuracy, and mobility than anything currently in its
inventory.
The delivery of advanced cruise missiles to Iran is a violation of
the Gore-McCain Act. However, in answer to my query on this issue in
January, you answered, ``The Administration has concluded at present
that the known transfers (of C-802's) are not of a destabilizing number
and type.''
However, I believe that the arrival of additional C-802's in Iran
is a matter of grave concern to the United States, and the
Administration has an obligation either to sanction the perpetrators or
put in motion an alternative policy of equivalent strength.
Sincerely,
Robert F. Bennett,
U.S. Senator.
fuel oil for north korea
Senator McConnell. Mr. Kartman, over the past year, the
United States has led a very aggressive effort to raise funds,
as you discussed in your testimony, to support fuel oil for
North Korea.
It was especially significant that the European Union
looked beyond its immediate regional requirements in the
Balkans and pledged $20 million annually for the next several
years.
What I thought was rather shocking was the anemic and
declining contribution offered by Singapore. They dropped from
a $300,000 pledge to $200,000.
Adding to this problem are recent reports that Singapore, a
government with severe penalties for drug use and trafficking,
has actually become the banking facility of choice for Burma's
drug thugs.
Singapore considers itself a major player in Asia politics,
and certainly has economic interests, as we all know, in
securing regional stability.
Could you give me some explanation?
Mr. Kartman. May I first address KEDO fund raising?
Senator McConnell. Yes.
Mr. Kartman. And then I would like to turn to Ambassador
Brazeal with your permission to respond on your other questions
regarding Singapore.
I was recently in Singapore, and went over our KEDO efforts
with senior officials of the Foreign Ministry there. I found
that they are in broad and fundamental agreement with what we
are trying to achieve.
I underscored for them that it seemed that European efforts
were more substantial than those closer to home within the
region. And they took that aboard. They expressed some
understanding of the view I was expressing.
But they demurred that they were not a very wealthy
country, and they noted that at least they had made a
commitment for a multiyear contribution which is, after all, of
some significance to us. We would like to see more of that from
others.
This is one that we are going to come back to. So I think,
basically, I agree with your characterization. Maybe I would
not use the word ``anemic,'' but something less than they are
capable of doing or than what I think they ought to be doing.
With respect to the other issue you raised, banking, may I
turn to Aurelia Brazeal, please?
Ms. Brazeal. Thank you.
I would just add regarding KEDO that we hope Singapore,
also being a leader, will consider the levels because that
encourages other countries also to consider higher levels. We
have raised that point with them, and we will continue to do
so, as well as joining KEDO.
On money laundering, we have worked with the law
enforcement authorities in Singapore on that question. And in
1996, they seized $20 million of laundered drug money in a DEA-
assisted investigation.
So we are engaged in the issue of money laundering and drug
trafficking.
I note that Singapore is also a member of the financial
action task force that looks into these questions, narcotics-
associated money.
Money laundering is a criminal offense in Singapore.
Bankers can be held personally liable in such cases.
But the most recent efforts we have underway are to work
with the Government of Singapore to begin negotiations for a
designation agreement that would permit our two countries to
better pool our resources to combat more effectively drug
trafficking and money laundering.
We had our last meeting the end of March. We would hope to
begin negotiations fairly soon on that.
Senator McConnell. Mr. Kartman, is there anything you can
add beyond your testimony about your discussions in New York?
Mr. Kartman. Mr. Chairman, I would like to be able to give
you a very complete description of where things are in a more
private setting, if that would be convenient for you.
But for the record, these talks are underway. The North
Koreans have raised over and over again their highest priority,
which is food. And we have raised over and over again our
desire to see them enter these peace talks.
Both sides have agreed that the two things are not linked.
But there we are.
Senator McConnell. Do you agree with General
Shalikashvili's statements that the North continues to pose a
significant military threat to the South?
Mr. Kartman. Absolutely, I do agree. One of the principal
problems for South Korea and American forces for many years has
been a heavy emphasis on North Korean artillery that is forward
deployed.
And we suspect there is a possible plan to use weapons of
mass destruction, perhaps chemical, biological weapons. We also
have watched with some concern the growth of their special
operations forces, which are designed to be inserted behind the
lines to disrupt communications and the forward flow of forces
to the front lines.
Senator McConnell. And all of these people are pretty well
fed and ready to go, right?
Mr. Kartman. Actually, we do not know that, Mr. Chairman.
Senator McConnell. Is there any division in North Korea to
speak of between the military and the civilian leadership?
Mr. Kartman. We are hearing that more and more. Sometimes
we hear that from North Koreans themselves. For instance, the
recent high-level defector, Hwang Jang Yop who is still in the
Philippines, has noted that he has some concern about the
growing influence of the military in North Korea.
It is not clear to us what precisely that means in terms of
their future policies or intentions. But we have always felt
that one of the fundamental structural flaws of the North
Korean regime is the over-reliance on the military as an
instrument for all things and the fact that it is getting about
25 percent of their gross domestic product.
If they would change that, we think that would solve a lot
of their internal problems.
Senator McConnell. They could not change that overnight,
though. I gather from reading the paper that we are looking--
and you may have alluded to this in your statement; I cannot
remember--that we are looking at a huge crisis by midsummer.
And I assume the Chinese, the Japanese, and the South
Koreans are not at all interested in having a massive wave of
starving refugees.
Is there a plan being developed to provide food aid on a
much more massive scale than is currently being conducted
should that come to pass this summer?
Mr. Kartman. Well, Mr. Chairman, there are two things I
would like to mention in that regard.
First, we feel that North Korea must make some important
changes in their system. You have noted that there may not be
much time before the present situation reaches crisis
proportions. The delay in North Korea making those changes is
hard to explain, and it seems to be completely internal to
their own system, the death of Kim Il Sung and the 3-year
period of mourning, among other factors.
There is an international----
Senator McConnell. But my question is----
Mr. Kartman. Yes.
Senator McConnell. They are not going to become a thriving
capitalist country by July or able to feed themselves. My
question is this: Are there plans underway should this food
crisis hit the level it could in July to feed these people, to
avoid the kind of out-migration that would probably follow
that?
Mr. Kartman. Well, if I may, we are in a very intense round
of discussions with all of the countries in the region who are
the principal food providers for North Korea. And those would
be China, South Korea, and Japan.
The Chinese recently announced a 70,000-ton food aid
donation to go along with the donations that had been
previously announced by the United States and the ROK. We are
still in discussion with the Japanese.
Those amounts, as you noted, may not be sufficient to feed
the North Koreans through what may become a crisis. However, we
do to some extent rely on the judgments of those countries that
are closest to North Korea.
If there is a serious problem, I imagine that the world
community is going to have to step in and help the North Korean
people be fed.
Is there a plan for it? No; there is not a plan. The
present state of affairs is that we are responding to
international appeals as they are issued by the relevant
international organizations.
Senator McConnell. Finally, let me shift to Hong Kong. Like
the Secretary of State, I am planning on being there on July 1.
I have taken an interest in Hong Kong for some time--I do
not know whether you are familiar with the United States-Hong
Kong Policy Act which President Bush signed in 1992. The act
basically wrote into United States law, language consistent
with the joint declaration so that United States and Hong
Kong's bilateral relationship would be sustained intact after
July 1, 1997. We are all watching with great interest, as I am
sure you are, the various steps that are being taken leading up
to July 1.
You probably noticed in today's Washington Post the George
Will column referring to a new book by Bernstein and Monroe
called ``The Coming Conflict With China.''
They argue that China's political evolution may not be
toward pluralism at all, but down toward something like early
20th century fascism.
Will adds to the argument that attributes of concern also
include a cult of the party state, a state dominated by the
army and allied with financial interests, coupled with a
powerful sense of nationalism.
I am wondering if you could comment on that thesis that our
engagement policy is, as George Will put it, ``a pedestal
without a statue.''
Mr. Kartman. May I----
Senator McConnell. It is a good thing you were here, Mr.
Bader.
Mr. Bader. Mr. Chairman, I did see the George Will piece.
First of all, I would not agree with the general direction that
he foresees as most likely. That does not mean that I discount
it.
We are talking about unknowns here. Predictions here are
extremely dangerous. I think what we can predict with some
certainty is that we are looking at a country that has been
growing about 10 percent a year for the last 20 years. That is,
you know, among the most explosive economic growth in human
history.
This is a country that sees itself as a major regional
power, certainly. Its top priority is economic modernization.
It has been undertaking a more modest program of military
modernization.
What will China look like 20 years from now? Well, if you
look at what China looked like 20 years ago, despite the
considerable human rights abuses, and the failure of the system
to evolve politically, I think we have to say that the China we
are looking at now is a more open and liberal China than what
we saw 20 years ago.
The trend since Deng Xiaoping opened up China to the West
and toward greater options for the Chinese people has been for
greater integration of China in the world community.
China has joined the major international organizations and
has become accepting of the disciplines of those organizations.
There is a long way to go. Their behavior is not
satisfactory in the area of weapons of mass destruction. They
have not come close to meeting WTO standards yet. There is
still considerable concern in the region about China's
behavior.
And the program of political reform which was in its
rudimentary stages before 1989 has essentially been halted
since 1989 except for some changes in statutes in the last
couple of years which provide the beginning, rudimentary steps
toward the rule of law.
The jury is out. I would not discount the Will thesis as a
possible outcome. I think that by a policy of engagement with
China--and that does not simply mean engagement with China's
leadership--but engagement at all levels of Chinese society, we
maximize the chances for having a liberalizing and a softening
effect upon the direction that China will be going in the next
20 years. That, I think, is the impact that we have had in the
last 20 years.
But one cannot say with confidence, since our ability to
affect the situation is only marginal, what the outcome will
be.
Senator McConnell. Almost as interesting as watching the
evolution in China is watching the evolution of policy in the
administration. The President in 1992 campaigned for the
termination of MFN has done a 180-degree turn and supports
extension of MFN. The Vice President, a couple of weeks ago
went to China but did not go to Hong Kong, yet we know the
President is going to meet with Martin Lee tomorrow.
Do we--are we witnessing here an evolution of policy in the
administration with regard to how to handle China?
Mr. Bader. The administration has set clear lines for its
China policy for the next several years. I mean, I----
Senator McConnell. Clear?
Mr. Bader. Certainly, a policy was pursued in 1993 with
regard to MFN that is no longer the policy of the
administration. But the basic outlines of the policy of where
we are going for the next few years have been laid down.
We are planning state visits by President Jiang Zemin and
President Clinton over the next 2 years. In the lead-up to
those visits, and during those visits, we hope to build a
stronger basis for the relationship and to make progress on the
outstanding bilateral issues which are numerous, where we have
problems.
We do not believe that an approach of making China a pariah
or----
Senator McConnell. Well, why did Gore not go to Hong Kong?
Mr. Bader. I would have to leave that to Vice President
Gore to explain which stops he chose. I know he did raise Hong
Kong in virtually all of his meetings in Beijing.
He raised our concerns in three or four of the meetings I
saw in considerable detail, but cannot go to every place on
every trip. He went to China, Japan, and Korea. I cannot give
you more of an answer than that.
But Secretary Albright did announce that she would be going
for the reversion.
Vice President Gore's not going to Hong Kong was not meant
in any way to suggest indifference to Hong Kong. As I said, he
raised it forcefully with the Chinese leaders.
Senator McConnell. The Hong Kong and Shanghai Banking
Corporation said back in 1990 that it had detected a
significant increase in capital flight, about $2.8 billion in
private, nontrade capital in 1989.
Do you have any current figures to reflect the capital
flight situation in Hong Kong.
Mr. Bader. We can give you figures on that, Mr. Chairman. I
know we do have figures.
My impression is that was a temporary phenomenon in the
wake of a severe loss of confidence in 1989. My understanding
is that the Hong Kong dollar is trading at the upper end of the
peg to the United States dollar at the moment, and that United
States dollar reserves in Hong Kong are upward of $60 billion.
Hong Kong has, I think, about the third largest reserve funds
in the world, of any currency.
There are no controls on capital in and out of Hong Kong.
There are flows all of the time outward and inward, depending
upon levels of confidence.
I think the economic indicators over the past year in Hong
Kong have been, for the most part, positive. I do not think we
have seen any indication of capital flight.
Senator McConnell. My recollection was--and I could not--
this may no longer be accurate. My recollection from a couple
of years ago is that there were 22,000 Americans living in Hong
Kong, many of them working for American businesses.
Are you pretty comfortable that these American businesses
are going to still be able to operate and thrive?
Mr. Bader. The American businesses are pretty comfortable.
I mean, if you looked at the surveys of the American Chamber of
Commerce, which was done confidentially, they generally show
that about 95 percent of the companies have confidence in the
future of Hong Kong.
They have a number of concerns which mostly involve issues
of danger of corruption coming from the North and the future of
the rule of law in Hong Kong. They are not without worries.
And a number of companies have set up corporate
headquarters outside of Hong Kong in order to assure protection
of their assets. But----
Senator McConnell. Would you describe the mood in Hong Kong
these days as less apprehensive than it was in 1989 after
Tiananmen, or more?
Mr. Bader. I would describe it as less apprehensive than in
1989. But of course, that was a low point. You had a million
people in the streets demonstrating in sympathy for the
students up in Beijing.
There was an outflow of people from Hong Kong in 1989-91,
in the wake of that. But since then, the immigration flows have
decreased, and population has stabilized.
There is no question that there are concerns though, Mr.
Chairman. And I think that your statements, as I recall,
alluded----
Senator McConnell. Do you think the abolishing of LEGCO is
consistent with the joint declaration?
Mr. Bader. Mr. Chairman, we have strongly criticized the
abolition of LEGCO. We have strongly criticized the creation of
the provisional LEGCO. We have not taken a position----
Senator McConnell. In fact, the joint declaration, did it
not, described the makeup of LEGCO post July 1, 1997? Did it
not?
Mr. Bader. The joint declaration said that there shall be
an elected LEGCO----
Senator McConnell. Yes.
Mr. Bader [continuing]. I believe was the language. So what
we have said is it should not have been abolished; the
provisional LEGCO should not have been created; and we expect
to see an elected LEGCO created as soon as possible in order to
assure that there is conformity with the requirements of the
joint declaration. But we have not taken an----
Senator McConnell. Do you think the Chinese basically just
do not view the joint declaration as binding on them in any
way?
Mr. Bader. No; I think that the Chinese do see the joint
declaration as binding. They have a different view of the joint
declaration, of course, that we do not share in many respects.
But, you know, the way they approach the joint
declaration--I do not like to come up here speaking for China.
But since you asked the question about the Chinese perception,
let me try it for a minute.
The Chinese view the joint declaration as essentially
freezing the situation in 1984. They felt that whatever system
was in place in 1984, that that was what was being bequeathed
to them in 1997.
So they have seen changes since then as contrary to the
joint declaration. That is not a view we share. But that is why
they have attacked certain changes in statutes since 1984.
Senator McConnell. Well, thank you very much. We appreciate
all three of you being here today.
Good luck in New York, Mr. Kartman.
Mr. Kartman. Thank you, Mr. Chairman.
Additional committee questions
Senator McConnell. There will be some additional questions
which will be submitted for your response in the record.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing.]
Additional Committee Questions
Question. Which Asian countries have ratified the CWC so far?
Answer. The following countries have ratified the Chemical Weapons
Convention as of September 15:
COUNTRIES THAT RATIFIED THE CHEMICAL WEAPONS CONVENTION
Australia............................ May 6, 1994 Maldives................ May 31, 1994.
Bangladesh........................... Apr 25, 1997 Mongolia................ Jan. 17, 1995.
Brunei Darussalam.................... July 28, 1997 Papua New Guinea........ Apr. 17, 1996.
China................................ Apr. 25, 1997 Philippines............. Dec. 11, 1996.
Cook Islands......................... July 15, 1994 Singapore............... May 21, 1997.
Fiji................................. Jan. 20, 1993 Sri Lanka............... Aug. 19, 1994.
India................................ Sept. 3, 1996 Tajikistan.............. Jan. 11, 1995.
Japan................................ Sept. 15, 1995 Turkmenistan............ Sept. 29, 1994.
Korea (Republic of).................. Apr. 28, 1997 Uzbekistan.............. July 23, 1996.
Laos (P.D.R.)........................ Feb. 25, 1997
Question. Of those who haven't, what is your assessment of their
reluctance?
Answer. There are several factors contributing to the reluctance of
some states to ratify the Convention, including:
--difficulties in the legislative process;
--concerns regarding the costs and complexities associated with
implementation;
--reluctance to submit facilities to intrusive inspections; and
--in the case of North Korea, aversion to destroying CW stockpiles.
Question. What about biological weapons? Is there the same
reluctance to sign off on eliminating these weapons as well?
Answer. No, we do not see a similar reluctance to ratify the BWC,
which has 140 States Parties (including North Korea) compared to the
CWC's 99.
Question. Can you offer some impressions on Asian perspectives on
regional security pressure points?
For instance, how do the Southeast Asian nations, such as Indonesia
or Singapore, perceive the nuclear and conventional capabilities of
India?
What would factor into a Japanese decision to expand their
capabilities to project conventional force or acquire a nuclear
capability?
india
Answer. The Southeast Asian nations do not perceive India as a
threat. They do however, encourage India to take a responsible position
on nuclear and security issues. For example, on the Comprehensive Test
Ban Treaty which is supported by all ASEAN nations, India has been
urged by ASEAN to change its stance and sign the ban. India was made a
member of the ASEAN Regional Forum in 1996 in order to encourage
constructive Indian participation in regional security efforts.
japan
We do not expect that Japan will either expand its capabilities to
project conventional force or acquire an indigenous nuclear capability.
Under Article 9 of the Japanese Constitution, the Japanese people
``forever renounce'' the ``threat or use of force as a means of
settling international disputes.'' Under its interpretation of the
constitution, the Government of Japan limits the use of military force
to the defense of national territory in the event of an attack.
Barring dramatic changes in the regional strategic landscape, we
think that these issues are strictly hypothetical and are extremely
unlikely developments in the foreseeable future.
______
Questions Submitted by Senator McConnell and Senator Leahy
cambodia
Question. Last Easter Sunday, a grenade attack on an opposition
rally outside the National Assembly in Cambodia killed 16 people and
wounded more than a 100, including an American citizen. The
demonstration's leader, Sam Rainsy, who himself barely avoided the
deadly blast, was in Washington last week appealing to the United
States to take concrete steps to support the democratic process in
Cambodia. There is a growing fear among international observers in the
country that this attack will not only subdue political expression in
the future, but may delay indefinitely national elections in Cambodia,
scheduled for late 1998.
It seems clear that unless steps are taken immediately, the
democratic progress Cambodia has made thus far will be supplanted by
more intimidation, terror and political killings.
What specifically is the United States Government doing to bolster
the democratic movement in Cambodia?
There have been accusations made that Prime Minister Hun Sen, and
his Cambodian People's Party were responsible for the terrorist attack.
Do we have any concrete evidence to back the assertions that Hun
Sen, or any other political group, was directly responsible for this
attack?
Have the Cambodian authorities committed to a thorough and
comprehensive investigation into this attack?
Mr. Secretary, do you believe the United States should condition
any future economic assistance to Cambodia on the progress in this
investigation?
Answer. We share your concern that acts of political violence such
as this could put at risk the significant progress toward democracy
Cambodia has made since the U.N.-sponsored elections in 1993, and
possibly disrupt the elections scheduled for 1998.
We issued a press statement on March 30 condemning the grenade
attack and calling upon the Cambodian government to take all possible
steps to identify and punish the perpetrators.
The State Department called in the Cambodian ambassador on March
31. We condemned the attack and urged the Cambodian government to take
steps now to prevent further political violence and bring to justice
those responsible. Similar demarches were delivered in Phnom Penh to
Foreign Minister Ung Huot and to the Co-ministers of the Interior.
Deputy Secretary of State Strobe Talbott met with Mr. Sam Rainsy and
his wife on April 9. Mr. Talbott expressed relief that Sam Rainsy had
escaped without serious injury and outrage that others had not. We have
called on Cambodia to conduct a speedy credible investigation of the
incident and to identify and punish the perpetrators.
We do not have concrete evidence indicating who was responsible for
the attack.
The United States does not provide direct assistance to the
Government of Cambodia. Because of the government's weak accountability
and implementation capacity, USAID's program is being implemented
through direct USAID contracts, grants and cooperative agreements to
NGOs. We do not believe that conditions linked to the investigation of
the grenade attack should be placed on our humanitarian assistance.
______
Questions Submitted by Senator Leahy
ngawang choephel
Question. Ngawang Choephel, a former Fulbright Scholar at
Middlebury College who returned to Tibet to make a documentary film,
was sentenced to 18 years in a Chinese prison for espionage. The
Chinese have never produced a shred of evidence to support the charge.
I raised this case with President Jiang Zemin in Beijing, and have
written numerous times to top officials in China. I appreciated that
this case was included in the State Department's Annual Human Rights
report.
What, besides saying you are upset, can we expect the
administration to do on behalf of Ngawang Choephel and other political
prisoners in China? Do you have any reason to believe that the Chinese
will pay attention?
Answer. I, and other senior levels of this Administration, have
raised--and will continue to raise--our concerns with Chinese leaders
at the highest level about human rights in China, including Tibet. The
case of Ngawang Choephel is of serious concern to the U.S. Government.
Our Embassy has sought more information from the Chinese government
about the evidence involved, but has gotten no substantive reply beyond
what you have received. In testimony on May 13 before the Senate
Foreign Relations Committee, we said, ``We cannot understand why such a
sentence should have been imposed when there has been no public
explanation of why his activities were unlawful.''
We will continue to raise our concerns over China's treatment of
those who peacefully express their political and religious views, and
urge China to release those incarcerated for exercising their basic
rights. Raising China's violations of basic freedoms in such
multilateral fora as the U.N. Human Rights Commission also serves to
focus world attention on China. The Chinese Government is concerned
about its international image. It is noteworthy, for example, that in
response to international pressure, China announced that it would sign
the International Covenant on Economic, Social and Cultural Rights by
the end of this year, and is actively considering signing the
International Covenant on Civil and Political Rights.
indonesia
Question. The Suharto Government has shown no tolerance for
political opposition candidates, even declaring the main opposition
leader ineligible for the coming election. The administration states
that democratization is a priority for our policy toward Indonesia.
What is the administration doing to promote a democratic transition and
political freedom in Indonesia?
Answer. Over the last 30 years, Indonesia has made remarkable
progress, becoming one of the major engines of economic growth in
Southeast Asia and increasing per capita income from $100 to about
$1000. Political progress has not kept pace with economic growth,
however. As former Secretary Christopher stated in testimony before the
Senate Foreign Relations Committee last year:
At the present time, I think that there's a strong interest in
seeing an orderly transition of power there that will recognize the
pluralism that should exist in a country of that magnitude and
importance. So we will be encouraging a transition there that expresses
the popular will.
The United States has long encouraged greater respect for human
rights, democracy, and worker rights in Indonesia. For example, the
U.S. is the leading international supporter of non-governmental
organizations in Indonesia that are working for good governance,
greater democracy, and sound environmental policies. U.S. AID programs
also contribute to Indonesian efforts to develop greater transparency
in government decision making to reduce corruption.
In addition, we make it a practice to raise human rights in all of
our senior-level meetings with Indonesian officials and to speak out
publicly about human rights problems when this is warranted. With
regard to worker rights, we have negotiated benchmarks with the
Indonesian Government that have helped improve the labor situation in
certain areas. We intend to continue this process, and to urge the
Government to adhere to internationally accepted labor standards.
The Indonesian military is the key to improving human rights in
Indonesia. International Military Education and Training (IMET)
provides the opportunity for Indonesian military personnel to be
educated in the United States, to observe our commitment to
international law and American values, and to acquire additional
skills. Our experience is that IMET graduates are more professional,
more committed to improving their own armed forces, and more likely to
be at the forefront in reforming their own services. IMET is
particularly important to educate senior officials of Indonesia's armed
forces in greater respect for civilian control of the military,
improvements in military justice, and responsible defense resource
management in accordance with internationally recognized human rights.
If we are to speak frankly about Indonesia's human rights problems,
it is also important in our view to acknowledge Indonesia's
accomplishments in other areas. Indonesia is a key contributor, for
example, to regional stability that has helped produce the remarkable
economic growth in Southeast Asia. Indonesia's own economic policies
have ensured widespread benefits for its own population as well. U.S.
trade with Indonesia is growing rapidly, and contributes to prosperity
in both countries, while helping open the Indonesian economy to
positive outside influences.
Congressional funding for the programs mentioned above has been
extremely important, and we hope that it will continue. We want to
encourage the positive trends and policies we see in Indonesia
particularly regarding more respect for human rights. Ultimately,
however, it is up to the Indonesian Government and people to shape a
democratic society at a time and in a manner they think best.
Question. After the crack down against political opposition groups
last September, I and several other Members of Congress spoke out
against the sale of F-16s to Indonesia. Yet just days after the
administration put the sale on hold because of these human rights
concerns, Secretary Lord announced in Jakarta that the sale would
proceed in 1997. Does the administration intend to complete the sale.
If so, on what conditions?
Answer. As we said last fall, the U.S. remains committed to the
sale. However, the Administration has decided not to notify the
Congress of the transfer at this time.
Our arms sales decisions are based on a number of considerations
including regional, bilateral, and domestic political factors.
When we decide to move forward, we will do so in a context that
offers the greatest assurance of success.
We will continue to consult closely with the Congress as the
process moves forward.
Question. I know the State Department has tried to inject a degree
of restraint into the Administration's policy on arms sales.
Unfortunately, the Commerce and Defense Departments seem to
consistently win out. If there is money to be made, they support it,
regardless of the potential consequences down the road. I thought that
might change with a Democratic administration, but if anything, you
have outdone your predecessors.
Too many times, we have seen our weapons come back to haunt us,
whether landmines or tanks. We saw that in Somalia, the Persian Gulf,
and Bosnia.
What is the administration's policy on arms sales to the Asian
countries, especially those where the armed forces are involved in
suppressing democracy?
Answer. The U.S. policy on arms sales to Asia follows the
President's Conventional Arms Transfer (CAT) Policy of February 1995
which declares we will transfer arms to support the legitimate security
needs of friends and allies, and that we will refrain from transfers
that may adversely affect regional security or contribute to violation
of human rights and democracy. The policy contains an extensive list of
generic decision-making criteria to be used in evaluating all proposed
U.S. arms transfers.
The CAT policy requires that we seek to enhance multilateral
restraint, but recognizes that only rarely will our interests be served
by unilateral restraint. Although decisions on U.S. arms transfers are
to be made primarily on foreign policy and national security grounds,
the policy takes into account the implication of transfers for
preservation of the defense industrial base.
We are seeking to strike a proper balance between the imperatives
to transfer arms and the need for restraint to avoid destabilizing arms
races and diversion of resources from economic and social needs. We
make full use of the Intelligence Community to ensure we have the best
information available for arms transfer decision, are improving our
oversight of weapons technology-sharing negotiations between DOD and
foreign militaries and are applying the evaluative criteria in the CAT
policy in the interagency arms transfer process.
In the case of countries in the region where human rights problems
exist, the CAT policy requires us to take into consideration the effect
of weapons transfers on the specific situation. For example, in Burma
we are not willing to make any arms transfers given the human rights
situation there. In Indonesia, we have a formal policy that prohibits
the transfer of small arms, crowd control, and other related equipment.
In other countries, we have imposed temporary bans of specific weapons
transfers when the situation warranted.
Question. It is obvious that the Chinese Government is losing no
time to whittle away at democracy and political freedom in Hong Kong.
If this assault continues, what are the Administration's options for
responding to it?
Answer. The United States has long supported development of open,
accountable, and democratic government in Hong Kong. Such a government
has become essential part of Hong Kong's successful business and
political environment. We have told Chinese leaders at the highest
level that we expect China to honor its commitments in the 1984 UK-PRC
joint declaration and the 1990 Chinese Basic Law to preserve Hong
Kong's way of life, basic freedoms, civil liberties and rule of law.
The key question is whether China will live up to its commitments
to preserve Hong Kong's high degree of autonomy. In some areas, such as
economic and immigration matters, China's statements and actions have
been reassuring. In other areas, such as respect for political
institutions and the freedom of expression, Beijing has done things
that represent a step backward. In the event Hong Kong's autonomy is
damaged, the U.S. will act consistent with the U.S.-Hong Kong Policy
Act of 1992, which calls on the President to report to the Congress if
Hong Kong is unable to carry out its bilateral obligations to us. A
roll-back in freedoms and democratic development would also negatively
affect U.S.-China relations. We have made that clear to the PRC in our
diplomatic dialogue and our public statements. We will continue to
convey to both the Chinese and to the new Hong Kong Special
Administrative Region Government our expectation that Hong Kong's
autonomy, stability and prosperity be preserved consistent with the
principles of the joint declaration.
We are encouraged that the new Chief Executive, C.H. Tung, has
stated his commitment to maintaining Hong Kong's high degree of
autonomy, its economic system, and its way of life, and has announced
plans to hold elections for a new legislature in less than a year. As
the Secretary said in Hong Kong, we will be watching closely and
discussing developments with both Chinese and Hong Kong authorities.
korea
Question. I understand the North Koreans have finally agreed to
attend Four Party Talks with officials from the U.S., China, and South
Korea. I want to stress how important I believe it is that the aim of
these discussions be to promote dialogue between North and South Korea.
There is only so much we can do, and we cannot substitute ourselves for
the South Koreans. What do you expect these talks to accomplish?
The freeze on North Korea's nuclear program has been in place since
November 1994. How do you explain that a government as paranoid as
North Korea would give up its ambition to be a nuclear power? How
certain are you that there is no cheating going on?
What portion of KEDO's budget are we paying? Who pays the rest?
Answer. The goal of the Four Party talks is to reduce tension and
increase peaceful cooperation between the two Koreas, and ultimately to
replace the 1953 Armistice Agreement with a permanent peace treaty.
Another important area for discussion will be economic cooperation,
both to address North Korea's immediate needs and its long-term
problems. Institutionalizing North-South dialogue will be central to
this process.
For this reason, the U.S. expects South and North Korea to be the
leading negotiators within the Four Party talks. This reflects our
longstanding policy that the future of the Korean Peninsula is for the
Korean people to determine. However, the U.S. will be a full and active
participant in the talks.
North Korea has not yet fully agreed to attend Four Party Talks,
but has indicated that it will continue to discuss its participation
with U.S. and South Korean officials.
Regarding North Korea's decision to enter into the Agreed
Framework, although we cannot know for certain the DPRK's motives, we
assume that North Korea agreed to freeze and eventually dismantle it
nuclear program in exchange for perceived benefits, including increased
dialogue and potential political and economic relations with the United
States.
We are confident that we can monitor North Korea's compliance in
fulfilling the provisions of the Agreed Framework. Inspectors of the
international Atomic Energy Agency (IAEA) have maintained a continuous
presence at the DPRK's Nyongbyon nuclear facility since 1994 and visit
the nearby nuclear support facilities on a weekly basis. Moreover, a
U.S. team also resides at Nyongbyon and works inside the nuclear
facility in a joint project with North Koreans to place the spent
nuclear fuel from the DPRK's reactor into safe, long-term storage,
under IAEA monitoring. In addition, our National Technical Means can
detect any significant activities at the construction sites where work
on two nuclear power plants has been suspended in accordance with the
Agreed Framework.
Through these various means of monitoring and verifying North
Korean compliance with the Agreed Framework, we have ascertained that
the DPRK is complying with the freeze provisions of the Agreed
Framework. The DPRK's 5-megawatt nuclear reactor is not operating, and
its reprocessing facility and fuel fabrication facility have also been
shut down. North Korea has also ceased construction at both the 50-
megawatt reactor at Yongbyon and the 200-megawatt reactor at Taechon.
Regarding KEDO's budget, the three founding members of the
organization--the U.S., Japan, and South Korea--share KEDO's
administrative and operating costs. In the past, the U.S. has paid
roughly a third of those expenses. Funding for KEDO's projects,
including the provision of proliferation-resistant LWRs to North Korea
(costing several billion dollars), will be provided primarily by South
Korea and Japan. In addition to supporting a portion of KEDO's
administrative costs, the U.S. contribution to KEDO will also help fund
heavy fuel oil (HFO) deliveries to the DPRK, which are required until
the first LWR is completed. Additional funding for HFO will come from
members of the international community. To date, over 22 countries
other than the U.S., as well as the European Union, have contributed or
pledged over $100 million to KEDO for this purpose.
china-tibet
Question. You reiterate in your statement that ``longstanding U.S.
policy recognizes Tibet as part of China.''
Hasn't this policy, unintentionally but effectively, given China a
green light to destroy Tibet's cultural autonomy? By the time China is
willing to enter into negotiations with the Dalai Lama, as you have
urged, what will be left to negotiate about? The way things are going,
Tibet as a unique entity will exist in name only. Does your policy mean
anything?
Answer. We share your concerns, but should point out that no
country recognizes Tibet as a sovereign state. The United States,
however, along with many other countries seeks improved human rights in
China, including in Tibet. In particular, we support the preservation
of Tibet's unique cultural and religious heritage and raise our
concerns about Chinese policies with Chinese leaders at the highest
levels.
The United States has urged China to respect Tibet's unique
religious, linguistic and cultural traditions, and the human rights of
Tibetans as it formulates its policies for Tibet. The United States
encourages China and the Dalai Lama to hold serious discussions aimed
at resolution of the differences at an early date, without
preconditions. We have consistently asserted that any questions
surrounding Tibet and its relationship to Chinese authorities in
Beijing should be resolved by direct dialogue between the Tibetans, in
particular the Dalai Lama, and the Chinese.
The Dalai Lama would obviously be a key player if discussions
develop between the PRC and Tibetans living outside China. As a sign of
the great respect the President and Vice President have for the Dalai
Lama as a religious leader, they have met with him on a number of
occasions, most recently on April 23. The Dalai Lama has the respect
and affection of the Tibetan people, and the PRC should take advantage
of this and talk with him. We urge a resumption of the dialogue between
the Chinese government and the Dalai Lama and his representatives as
the best way to defuse tensions--and potential violence--in Tibet and
believe the Chinese Government recognizes that it is in its own self-
interests to resolve the issue peacefully.
China has said it will not resume the dialogue until the Dalai Lama
publicly acknowledges that Tibet is part of China and that he does not
seek an independent Tibet. The Dalai Lama has told us that he seeks
autonomy for Tibet, not independence, and that he is prepared to resume
the dialogue any place, any time. We have urged him to use every
channel available to communicate that position directly and clearly to
the Chinese. We have made clear to the Chinese the importance we attach
to resuming the dialogue. We see a basis for a dialogue here and
encourage both parties to pursue its restoration.
korea
Question. I am told that North Korea recently agreed to accept
Taiwan's nuclear waste, in return for $200 million. Is this true? How
has South Korea reacted to this?
Answer. Taipower announced in January that it had concluded a
commercial contract with North Korea to ship low-level nuclear waste to
the DPRK. The contract is worth approximately $200 million. We
understand that the waste material contains no uranium or plutonium,
but consists of contaminated clothing, filters, sludge, tubing, etc.
Concern is therefore environmental rather than a matter of
proliferation.
South Korea announced almost immediately its total opposition to
this transaction, and has lobbied in international fora and bilaterally
to have this transshipment deal terminated.
______
Questions Submitted by Senator Bennett
Question. What is the Administration's position regarding the
Taiwan-North-Korea Nuclear Waste-Agreement?
Answer. We are mindful of Taiwan's need for viable storage options
for its low-level nuclear waste. We also understand the ROK's concerns
and have encouraged Taiwan to take into account South Korean and
regional views. To verify to the international community the exact
nature of the materials and that shipment and storage will conform to
internationally accepted guidelines, we have urged Taiwan to request
the assistance of the International Atomic Energy Agency (IAEA). The
IAEA is the principal international body with the technical ability to
independently address the issues involved. Ultimately, Taiwan must
demonstrate that all steps in this transaction are in accordance with
international guidelines.
Question. If the Administration has concerns over this agreement,
what are they and how does the Administration intend to address them?
Answer. Our concerns are noted above. We continue to raise them
with the Taiwan authorities and other interested parties.
______
Questions Submitted by Senator Campbell
east timor
Many Members of Congress and the Portuguese-American community are
concerned about human rights in East Timor, Indonesia. The East
Timorese have suffered a campaign of repression since Portugal withdrew
from the colony in 1974 and Indonesia annexed East Timor. The country
was closed to the outside world until 1989, and even now access is
still restricted. Journalists and international human rights monitors
are rarely granted permission to visit.
Question. (A) What is your agency doing to help protect the rights
and civil liberties of the East Timorese left in Indonesia?
Answer. (A) We share Congressional concern for the people of East
Timor, and we are actively seeking to improve human rights in the
province.
The United States strongly supports resumption of the direct
discussions, facilitated by the UN Secretary General, between Indonesia
and Portugal to resolve their differences on East Timor. We are
encouraged that Secretary General Kofi Annan's recent decision to
appoint Ambassador Jamsheed Marker to be his Special Representative for
East Timor will give new impetus to these key discussions. On May 7,
John Shattuck, Assistant Secretary for East Asian and Pacific Affairs
and Aurelia E. Brazeal, Deputy Assistant Secretary for East Asian and
Pacific Affairs met with Ambassador Marker.
The situation in East Timor has long been an important part of our
dialogue with the Government of Indonesia. President Clinton, for
example, has raised our concerns directly with President Soeharto.
Secretaries of State Christopher and Albright have discussed them
extensively with Foreign Minister Alatas, as have Ambassador Roy and
his embassy colleagues with their counterparts in Jakarta. President
Clinton has also discussed the East Timor situation with Portuguese
Prime Minister Guterres.
While many of our efforts involve quiet diplomacy, we also have not
been reluctant to support public expressions of concern where
appropriate. For example, we have supported action on East Timor at the
United Nations Human Rights Commission. Only last month, the Commission
passed a resolution, with U.S. cosponsorship, that expresses deep
concerns over Indonesian policies there.
It will be important for an overall solution in East Timor to
incorporate proposals that give East Timorese themselves greater
control over their economic and political life, in keeping with their
unique history and culture. In the meantime, we have urged the
government to reduce troop levels, to allow increased access to the
province, and to release prisoners of conscience. We have also called
on the East Timor resistance to forswear violence and join efforts to
achieve a peaceful resolution of the dispute. Two U.S. Congressmen,
Ambassador Roy, and Assistant Secretary of State for Democracy, Human
Rights, and Labor, John Shattuck, recently visited the area, and other
embassy officers have visited six times in the past ten months.
Assistant Secretary Shattuck also visited the imprisoned East Timorese
activist Fernando de Araujo last March.
Over the years, we have been the largest international aid donor to
East Timor, with eight projects now currently under way with a total
budget of $15.8 million. Our aid programs are designed to improve the
lives of average Timorese, while helping them achieve more control over
their own economic future.
Question. (B) What type of foreign assistance is most beneficial in
a difficult situation such as this?
Answer. (B) USAID has the largest donor assistance programs in East
Timor. Between 1991 and 1995 USAID directed approximately $11 million
to Indonesian and U.S. non-governmental organizations for rural and
community development activities such as teaching skills to develop
local NGOs, drilling wells, draining land, monitoring human rights,
improving farming technology, educating orphans, increasing practical
business skills, training community self-help groups, establishing
micro-enterprises, strengthening the institutional capacity of the
University of East Timor, assisting rural cooperative improve product
development and marketing, training journalists, expanding coffee
cooperatives, and providing investment in urban environmental
infrastructure such as shelter, water supply, and sanitation. USAID has
also supported the work of the International Committee of the Red Cross
to reunite families and to monitor the human rights situation in East
Timor.
Given East Timor's rural economy and political situation, the most
beneficial use of funding would be on programs to increase rural
incomes, to provide vocational training for Timorese youth, to manage
its water supply, to assist East Timorese protect their human rights
and to advance the peace process would be most beneficial. One of the
largest constraints on our aid program has been the ability of East
Timor NGOs to absorb our assistance.
crime in asia
Question. As we are aware, China, North Korea, Vietnam and other
East Asian countries are often in the news for committing abuses
against human rights. But what many of us are less familiar with is the
other types of crime in East Asia. These include visa fraud, drug
smuggling, murder, bribery and corruption. Some of this rampant crime
can be attributed to frustration at the pace of reform and backlash
against a repressive government.
The Chinese authorities have launched a highly publicized campaign
of prosecution and punishment, called the ``Strike Hard'' attack on
crime, which goes along with a harsh anti-corruption campaign. In 1996,
news sources reported that the Chinese had publicly executed over 1000
citizens in this crackdown.
Lacking training in criminal justice, many countries resort to a
system of complete intolerance, resulting in large-scale punishment and
public executions.
In the past, Congress has funded programs that aid in law
enforcement and corrections training abroad. What type of aid programs
can the U.S. fund to aid in crime prevention measures in East Asia,
without seeming to support such arbitrary and extreme punishments?
What recommendations would you like Congress to consider in fiscal
year 1998 to help adequately fund crime prevention and law enforcement
measures abroad?
Answer. USG funds appropriated to the Bureau of International
Narcotics and Law Enforcement Matters are used for the following kinds
of programs in East Asia: demand reduction training, alternative
development (in opium producing countries such as Laos), and law
enforcement support and training. Law enforcement training includes
specific training programs offered by DEA, Customs, the Coast Guard,
the U.S. Secret Service, etc., which are directed at drug interdiction,
smuggling, counterfeiting and other forms of financial fraud. Some
funds go to equipment purchases to help modernize counternarcotics
police units, with purchases ranging from motorcycles and radios to a
drug testing laboratory. USG funds also support advisors who may be
made available to specific host government institutions for
consultations on a range of law enforcement-related activities, such as
writing laws affecting money laundering, advising banks on methodology
for detecting and protecting against various financial fraud schemes,
running a court system, etc.
INL has presented a budget proposal for counternarcotics and law
enforcement programs in Asia for fiscal year 1988. Our recommendations
are contained in this package.
asian organized crime
Question. What is your bureau doing to help fight this type of non-
territorial organized gang violence?
To what extent does your agency coordinate with the FBI and with
federal agencies to reduce the amount of criminal activity perpetuated
by Asian gangs?
Answer. While the State Department and its bureaus do not focus on
domestic organized crime gangs, the Department does coordinate closely
with those USG law enforcement agencies which have overseas as well as
domestic missions. Members of the FBI, INS, Customs, DEA and DOD serve
on detail to the Department of State in the Bureau of International
Narcotics and Law Enforcement. While most of their work, once again, is
not focused on Asian gangs in the United States, they do work with
personnel of the Department of State to coordinate such issues as
repatriation of smuggled (largely Chinese) aliens and the extradition
for prosecution in the United States of drug traffickers whose
activities in the United States doubtless contributes to some of the
crime in American Asian communities.
The Department of State also has an active policy with regard to
denying visas to identified criminals. As the parent agency for our
Embassies and Consulates abroad, the Department is also fully engaged
in helping USG law enforcement agencies to further investigations
abroad, to negotiate mutual legal assistance treaties which facilitate
information exchanges with other governments on law enforcement matters
and plays a key role in seeking the cooperation of host governments on
issues such as drug trafficking, credit card fraud, alien and other
smuggling and other financial crimes which impact on Asian and other
communities in the United States.
subcommittee recess
Senator McConnell. We appreciate all three of you being
here today, the subcommittee will stand in recess until 2 p.m.,
Tuesday, May 6 when we will receive testimony from Ambassador
Morningstar of the Department of State and Thomas Dine from the
Agency for International Development.
[Whereupon, at 12:15 p.m., Thursday, April 17, the
subcommittee was recessed, to reconvene at 2 p.m., Tuesday, May
6.]
FOREIGN OPERATIONS, EXPORT FINANCING, AND RELATED PROGRAMS
APPROPRIATIONS FOR FISCAL YEAR 1998
----------
TUESDAY, MAY 6, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 2:40 p.m., in room S-128, the
Capitol, Hon. Mitch McConnell (chairman) presiding.
Present: Senators McConnell, Campbell, Leahy, and Murray.
DEPARTMENT OF STATE
STATEMENT OF HON. RICHARD L. MORNINGSTAR, AMBASSADOR,
SPECIAL ADVISOR TO THE PRESIDENT AND
SECRETARY OF STATE ON ASSISTANCE TO THE NEW
INDEPENDENT STATES
AGENCY FOR INTERNATIONAL DEVELOPMENT
STATEMENT OF HON. THOMAS A DINE, ASSISTANT
ADMINISTRATOR, BUREAU OF EUROPE AND THE NEW
INDEPENDENT STATES
OPENING REMARKS OF SENATOR MC CONNELL
Senator McConnell. The hearing will come to order.
I am sure Senator Leahy will be here momentarily. We have
been upstairs voting. And I am sure he will be down shortly.
I welcome, Mr. Dine and Mr. Morningstar, here today. And I
would like to make essentially three points this afternoon,
before going to your statements.
First, I believe the administration's request for Russia,
once again, is disproportionately large relative to the overall
request and our broader regional interests. Second, I am
concerned that in order to sell an overall increase, the
packaging seems more important to the administration than
developing a sound product. Third, the legal and law
enforcement issues, which Senator Leahy and I have been talking
about for 4 years, still do not receive the emphasis that I
think they should. So let me elaborate just a bit on that.
In a recent letter to congressional leaders, the President
urged us to fully fund his request for foreign aid. For the
record, his general position is one that I, as you all know,
strongly support. He pointed out one of the reasons why full
funding is so important is the sharp decline in our assistance
to the NIS since fiscal year 1994. And he pointed out that that
means we are investing very little in many parts of the former
Soviet Union.
For example, we have only $44 million for Kazakstan,
Turkmenistan, and Azerbaijan, countries whose huge energy
resources make them major economic interests. That is a quote
from the President. The congressional funding levels have
little to do with the fact that the administration has only
provided $44 million for these three countries.
The squeeze is in fact the result of a significant drop in
the administration's NIS request last year, combined with
chronic overspending on Russia. To put the problem in context,
we should compare $44 million for these three countries with
the request for Russia of $241 million, which is only a small
share of the total of more than $4 billion provided for Moscow
since 1993. Having drawn attention to the pressures which tend
to compromise our interests in the non-Russian states, the
administration still provides Russia both the largest share and
the largest increase, this year, from $95 million to $241
million.
Now, Russia certainly deserves some support. But I continue
to believe the private sector is far more important to Moscow's
future than any assistance we may provide. In contrast, our aid
is vital to the survival of the smaller states. I intend to
provide the highest level of NIS aid possible within budget
constraints. But, I do not share the administration's
priorities. Just as one example, given the remarkable reforms
engineered by President Shevardnadze, it is my hope to
substantially increase United States support for Georgia.
While the administration seems sure of its commitment to
Russia, its commitment to develop a sound, substantive basis
for these programs, it seems to me, comes up short. I
appreciate the shift in the marketing strategy and the new
emphasis that the Partnership for Freedom places on trade,
investment and business priorities--activities which, in
principle, I think we all support. However, the request
included $160 million for a new business development program,
to be administered by the Eximbank. I think we have learned
through discussions with the Bank this initiative is simply not
supportable. Traditionally, Exim uses local banks to support
its transactions.
Given how weak the banking institutions are in virtually
every country, Exim staff has told us they would have to use
nearly one-half of the $160 million to field staff to assure
the appropriate lending and financial analyses could be
prepared to prevent major losses. Even then there would be
serious reservations about how soon and effectively the program
could be implemented.
While I wonder why the commitment was made in the first
place, I understand you have dropped that idea. I do hope you
will be able to answer how you plan to spend the $160 million
now available.
Finally, let me turn to crime and corruption. Senator Leahy
and I have been calling attention to this problem since 1993.
The first year I chaired the subcommittee, the Senate report
stated:
The incidence of crime and corruption have markedly
increased since last year's recommendation. The committee is
deeply concerned about reports that more than 5,000 organized
criminal enterprises have developed throughout the NIS.
Our primary concern was and is simple: The private sector
is the key to jobs and economic stability. If businesses refuse
to invest because of corruption and crime, obviously there will
be no growth. I only wish the administration spent as much time
developing solutions to this problem as it does fighting Senate
earmarks. Unfortunately, another year has passed without
significant action. There continues to be fresh compelling
evidence of how widespread and acute this crisis is.
Whether it is the murder of an American in Moscow over a
sour business deal or routine allegations that contracts are
moving legal targets and very difficult to enforce, it seems to
me we are now bearing the bitter fruit of neglecting this
critical area. The problems which have surfaced in Ukraine in
the last several months are the most recent examples of the
spread of crime and corruption.
Obviously, recalcitrant parliaments, unwilling to pass or
enforce reforms, must assume a share of the responsibility.
But, what we see unravelling is a dangerous cycle, where crime
and corruption, reaching the most senior levels of government,
are sapping investor confidence, which in turns stalls economic
growth. And stagnant growth means stagnant wages for the
average citizen, including members of the police force. And if
their wages drag, so do their enforcement efforts. Which means
the cycle of crime and corruption spirals ever downward.
To arrest this cycle we need to target and increase our
commitment to meaningful legal and law enforcement training.
After spending over $500 million on privatizing companies, it
seems worthwhile that we be able to protect them. One example
of what we can do is evident in Ukraine. For 3 years, the
Government has asked for and not received support to establish
an FBI-like training academy to teach its law enforcement
community how to combat crime, especially the white-collar
variety.
I intend to make this kind of project and combating crime
and corruption a high funding priority, particularly since I
believe it serves our interests as well as the interests of the
region.
So let me at this point turn to you, Mr. Dine, and you, Mr.
Morningstar, for your opening statements. And then we will go
to questions.
summary statement of ambassador morningstar
Mr. Morningstar. Thank you, Mr. Chairman and members of the
subcommittee.
The issues that you have raised in your opening statement
are all very important issues, and I hope during the course of
the hearing today to answer most of those. And if the
opportunity does not arise to deal with every issue, I look
forward to the opportunity of meeting with you later to go over
each and every one of the issues that you raised.
I appreciate the opportunity to appear before you today to
discuss one of the President's top priorities in the foreign
affairs budget, the Partnership for Freedom. The fiscal year
1998 request for NIS assistance is $900 million. And this
request is based on a strategic refocus of our assistance
efforts as we move into the 21st century.
The Partnership for Freedom rests on a very simple
principle. And I do not think we can say it enough. And that is
that we, the United States, have no greater national security
interest than the stability of Russia, Ukraine, and the other
New Independent States, and the consolidation of their
transition to market democracies.
Our most dangerous adversary of all time, the former Soviet
Union, is no more. We have an enhanced opportunity today to
influence and shape the future of the New Independent States
that were the Soviet Union. Stability in this region over the
next 5 to 10 years is dependent on the achievement of economic
growth.
With respect to Russia specifically, a recent article in
the Financial Times, I think, framed the issue quite well. Will
Russia choose open and fair capitalism or the corrupt
monopolistic capitalism and all that could entail? The article
pointed out that it might take more than a generation to answer
this question, but that recent changes in the government could
present some opportunities.
This is why the Partnership for Freedom is important. How
can we help all of the countries of the New Independent States
give their citizens a more tangible stake in the reform? The
first way to do this, I would submit, is by mobilizing capital
and increasing investment, to create jobs and ultimately
utilizing the private sector as we suggested. This will require
NIS leaders to take on more aggressive legal and policy reforms
to improve the environment for business. This will require more
capital, particularly in the region and to smaller businesses.
And this will require, as you pointed out, increased efforts in
the NIS to fight crime and corruption.
Second, we need to stay engaged to strengthen the
democratic organizations that will allow citizens to influence
government and to advocate change. We must continue to persuade
and cajole. The real change will come from the bottom up, as
well as from strong leadership. And I know this is something
you have pointed out many times in the past.
Why did we ask for a larger budget this year? And why is
our opportunity to have an impact greater than it ever was?
First, the Partnership for Freedom responds to the need for
a second phase of engagement in the NIS, which builds on the
foundation of basic structural reform, such as privatization,
such as macroeconomic stabilization that is taking place in
most of these countries. Our active engagement, which will
focus on the push for real growth in these economies, is
crucial.
Second, we look hard at what we can do with our assistance
resources to make the biggest impact. On the subject of
investment, for example, we have identified that a major gap
exists in financing small business, particularly in the
regions. This finding is based on over 50 interviews that I and
my staff have done with professionals and experts both here and
in the NIS, as well as at least eight business roundtables,
getting the views of American and NIS business people.
In fact, since I originally wrote this, there have been a
couple more. It is quite interesting that just a year ago, I do
not think we could have made the same findings that we make
now. A year ago we were hearing about the lack of a qualified
demand for financing, emphasizing the word ``qualified.'' Now
that has changed. And we have learned from the EBRD's small-
loan program, from NGO's, like the Eurasian Foundation, CCI,
the Consumer Citizens' Initiative, and FINCA, which does a lot
of microcredit work, that the demand far outstrips the supply
of capital.
In fact, we have also found, from the EBRD program as well
as some of our enterprise fund programs, that with respect to
small business lending, there are banks within the regions--
many banks in the regions--that can be worked with and can be
used to help distribute money, to help lend money to small
businesses. And we can talk more about that later.
Another crucial opportunity in our proposal is that we do
propose to more than double the amount of resources we direct
to anticrime and law enforcement. And these last few years have
built the foundations that allow us to do more to fight crime
and corruption.
Third, now is the time that we really need to emphasize
also the cooperative mutually beneficial activities. U.S.
business, universities, scientific organizations, hospitals,
towns and cities all over the United States see the benefits in
developing close linkages with the NIS. These ties do more than
our governments could ever do to achieve constructive
relationships and have an impact on a community level every
week.
I see new evidence of the value of these partnerships.
Yesterday, for example, I spoke to 43 Ukraine bankers and
faculty members from the International Management Institute in
Kiev. The have a partnership with Carnegie-Mellon in
Pittsburgh. IMI sponsored a study tool for this group that is
getting a master's degree in Kiev to promote banking in the
United States and show how they can improve their banking
systems. These, I think, can be extremely valuable and have a
long-term effect.
Fourth, we continue to hear from our Ambassadors in the NIS
and from notable leaders of reform, such as Andrei Kozyrev, for
example, and Grigori Yavlinsky, that one of our largest returns
on investment and assistance dollars are some exchanges and
support for the hundreds of nascent democracy NGO's, human
rights groups and political parties that are springing up in
that region. I would submit that these programs cannot be done
by anyone but the United States. We represent the clearest
vision of the future.
The Partnership for Freedom proposes specifically to double
the number of exchanges. We have proposed to do more democracy
work in countries in Central Asia and the Caucasus that are
lagging in some ways.
Another recent illustration on exchange is Ambassador
Courtney of Georgia--and by the way, we would be increasing
Georgia by something like 60 percent in the Partnership for
Freedom--sent in a cable. We have a graph with respect to the
country dollars that are back there.
In any event, Ambassador Courtney sent in a cable,
outlining the profound impact that the alumni of United States
exchange programs are having in Georgia. He mentioned that the
chairs of two key parliamentary committees, a leader of the
independent media, and several others doing high-profile
community work have been graduates of those programs.
Particularly in his case, he is referring to the Muskie
fellows.
Fifth, the regions have emerged as the most promising bases
for reform and growth. When we talk about doing small business
in the regions, we are talking about doing it in regions where
there has already been indications of success and where we
think we can build on that. One illustration, for example, is
the Novgorod region in northwest Russia. That is really a model
where we need to be working. The regional government there is
taking aggressive steps to improve the investment climate and
encourage growth. Tax incentives for foreign investors and
strong early results in getting investment targets actually
done have occurred. And it is action, not just words.
This region and others like it--the Russian Far East is
another area where we clearly intend to develop our regional
initiative--are where we can and must do more and where we will
see the kind of results that push and pull the country along.
We are developing a Partnership for Freedom pilot program with
existing funds, using Novgorod as the pilot, utilizing more
investment and more partnerships.
I must add here, as I am sure you know, that the new
Russian Cabinet includes two notable leaders of Russia's most
progressive regions, Nizhny Novgorod and Samara. And hopefully
this will bode well for increasing our efforts in the regions
and how success there now will affect the center. We need to
encourage pressure from the bottom up to make the changes that
need to be made.
Let me just say a few words about Ukraine. I did return
from Kiev late the week before last, where I met with Ukrainian
leaders to discuss our concerns about the downturn in the
investment climate and the treatment of various United States
companies. And there are very serious issues with this country.
Mr. Lemire from Gala Radio is sitting here in the audience
today.
But let me say in the strongest possible terms that the
development of Ukraine as a stable market democracy is in our
national interest and certainly in Ukraine's national interest.
If they show the political will to deal with these issues, we
have to be prepared to work with them, particularly relating to
transparency in business/government interactions.
On the other hand, if these concerns are not addressed
completely, we should consider scaling back assistance in
certain sectors where backtracking of reform has been a
problem. The ultimate issue, the real ultimate issue when all
is said and done, is that Ukraine's future and all that they
have achieved in the last 5 years is at stake, and we need to
do everything we can, through whatever methods we can, to help
ensure that future.
And as you know, President Kuchma is scheduled to come here
the week after next.
Senator Leahy. Is that still on?
Mr. Morningstar. That is still on.
I think it is critical that trip take place. This is an
opportunity for the President and the Vice President and
Members of Congress such as yourselves to discuss with him the
magnitude of these issues and the large stakes that are
involved. President Kuchma announced on April 10 an
anticorruption decree, which, if implemented, could solve a lot
of these problems. And you have to establish that that
political will does exist and, if it does, we need to help as
much as we can.
But, in the meantime, the kinds of investment disputes,
such as Mr. Lemire has, really do have to be solved. They are
symptoms of underlying problems. But until they are solved,
there is going to be constant pressure that we are all up
against.
Senator McConnell. Can I just interrupt you on that point.
Given the current state of affairs, how much would that
decree be worth in terms of the likelihood of it having an
impact?
Mr. Morningstar. We will have to see. The decree itself,
when you read it, if it were all implemented, deals with all of
the issues that need to take place.
Senator McConnell. That is really my question.
Mr. Morningstar. What I kept trying to impress upon the
Ukrainian officials when I was there was that the real issue is
not the American assistance program. The real issue is not
President Kuchma's visit. The real issue is that Ukraine will
develop and thrive as a market democracy. As long as you have
the kinds of problems we are talking about, which discourage
investment--not just United States investment, but also
Ukrainian domestic investment, European investment, investment
wherever it is--unless you solve all of these problems,
whatever problems you come up with, it is not going to do any
good, because you cannot grow. And you just have to face up to
these issues.
I think that President Kuchma understands that. I think
many of the senior officials do understand it. And all we can
do is to keep impressing upon them the importance that this
needs to be done. And there are some very--at the risk of
elaborating--I am basically done with my opening statement
anyway--but there is tremendous short-term risk. It is not just
our assistance program. It is the World Bank Program for
leveraging, in which there are really millions and millions--
probably over $1 billion at risk at this point by Ukraine if
Ukraine does not heed the conditionality with respect to those.
So there are leverage points. But, at the same time, we
have to keep our eye on the ball and recognize that what we
need to accomplish, the ultimate goal, is a strong Ukraine. And
that is very important to all of us. I think we all agree on
that goal.
And it is an example, I think, that, with respect to our
programs in general, that we have to respond appropriately to
both the setbacks and breakthroughs that are inevitably going
to be part of this transformation, whatever the country will
be. In Ukraine, hopefully what we are talking about is a short-
term setback.
prepared statement
In Russia, at least on the economic front, there appear to
be some breakthroughs. We have to recognize that this is an up-
and-down process. And for this reason, frankly, I am more
certain than I ever was that our request for fiscal year 1998
is in the right direction and is the way that U.S. assistance
should be refocused in the future. We need to be able to stay
engaged and we need to retain the flexibility to respond to
both the setbacks and the breakthroughs with appropriate
support.
[The statement follows:]
Prepared Statement of Ambassador Richard L. Morningstar
Mr. Chairman and members of the Subcommittee, I am very pleased to
have the opportunity to testify here today about the Administration's
plans for assistance to the New Independent States of the former Soviet
Union, and most importantly about one of the President's top priorities
in the foreign affairs budget, the Partnership for Freedom. The fiscal
year 1998 budget request for NIS assistance is $900 million, up from
$625 million in fiscal year 1997. The Partnership for Freedom supplies
the vision and the framework for sustainable, mutually-beneficial
cooperation between the people of the United States and the people of
the New Independent States, and thus for a more secure and prosperous
future.
Partnership for Freedom rests on a simple principle: the security
of the United States and the rest of the world is immeasurably enhanced
if Russia, Ukraine and the rest of the NIS are stable market
democracies. We must take specific actions to help these countries
attain economic growth. Lack of growth will ultimately lead to
destabilization which could raise new threats to our national security.
We must also accept the fact that reform in the NIS is a complex
generational process, the outcome of which is, today, not yet secured.
For example, although last summer's presidential election in Russia was
remarkably free and fair, a monumental signal in its own right of
reform's progress, 40 percent of Russian voters opted for the past.
Many people in the NIS are still significantly worse off economically
than they were in the Soviet Union.
We must stay visibly and materially engaged to help ensure that
lasting democratic and market institutions take root and prosper in the
region. Over the next few years, we must help give people throughout
the NIS region a more tangible stake in reform. The cost of this
investment is small relative to the far-reaching benefits that stable,
democratic New Independent States hold for the American people.
Presidents Clinton and Yeltsin issued a joint statement in Helsinki
outlining their commitment to stimulating investment and growth in
Russia, and to advancing Russia's membership in international
organizations. Included in this statement was President Yeltsin's
agenda to launch Russia on to its next phase of reform, including
comprehensive tax reform, laws to strengthen the Production Sharing
Agreements needed for energy sector investment, tough anti-crime laws,
and ratification of the U.S.-Russia Bilateral Investment Treaty.
Presidents Clinton and Yeltsin also applauded plans announced by Vice
President Gore and Prime Minister Chernomyrdin to launch a regional
investment initiative, that will attract resources to key regions,
including the Russian Far East. This initiative will demonstrate the
impact of joint efforts on policy reform, investment finance, and the
creation of new channels of commercial cooperation between regions in
both countries. Although the primary responsibilities, and
capabilities, for advancing the economic growth and reform agenda lie
within Russia, this recognition that joint efforts between the United
States and Russia play a significant, mutually beneficial role in the
process is an underlying assumption of the Partnership for Freedom.
With Congress' support, the Partnership for Freedom will respond to
this imperative. The United States represents the potential of
democracy like no other nation in the world, and thus our visible
engagement in the reform process provides a crucial boost to the
hundreds of thousands of people with a new voice, and new economic
opportunities, in the future of their nations.
The Partnership for Freedom will deliver a strategic refocus of our
approach to assistance, focused on fostering economic growth and
investment, and no less important, on strengthening the myriad of new
democratic institutions, most of them non-governmental, that have
emerged over the past five years. These dual tracks for a reinvigorated
program will give us the greatest chance of success in sustaining the
political impetus for reform and democracy.
It is particularly important that Partnership for Freedom will be
even more significant at the times that tensions between our nations
are high. Business, people-to-people, and community ties are mechanisms
which increase the survivability of stable market democracies over the
long term, whatever the political situation is at a given point in
time.
phase i--u.s. assistance from 1992 to the present
We can consider the first phase of our engagement in the NIS to be
complete when basic structural and institutional changes to a market
democracy have taken place, such as:
--Private ownership--the private sector's share of GDP is now over 60
percent in Russia, 50-60 percent in Moldova, 50 percent in
Ukraine, 40 percent in Kyrgyzstan, and 35 percent in
Kazakhstan. Privatization to this degree is a key building
block for future economic reform and growth.
--Elections--reasonably fair and open elections have had a
significant impact the political process in Russia, Ukraine,
and Moldova-Russia now has held parliamentary, presidential,
and regional elections since December, 1995. In those countries
whose commitment to elections and independent political parties
appears more tenuous, and where elections have been tainted,
political leadership has had to accept the consequences of
international scrutiny and condemnation.
--Civil society--non-governmental organizations (NGOs) did not exist
in the NIS in 1992. Since that time, there has been explosive
growth in this sector, particularly in civic associations,
policy think tanks, private universities, business and industry
associations, citizen action groups, environmental groups, and
many more varieties of public interest and advocacy
organizations.
In addition to what is outlined above, other key building blocks
are the rule of law, independent media, and functioning capital markets
and financial institutions. Russia is closest to meeting these
criteria, and Moldova, Kyrgyzstan, Ukraine, and Georgia are next in
line. The other NIS countries are reforming at a slower pace.
The Administration's current proposal for introducing the
Partnership for Freedom creates a staggered transition for the NIS
countries from broad-based technical assistance programs to the
concentration of resources on fewer actitivities. For example, over 91
percent of the fiscal year 1998 program in Russia will be under PFF, in
Ukraine, 51 percent under PFF and in Kazakhstan, 53 percent. Over the
next four to five years, technical assistance will phase out in each
country, and the longer term framework for remaining Freedom Support
Act activities in the New Independent States will be the Partnership
for Freedom package.
phase ii: partnership for freedom
The United States and the New Independent States ultimately want
constructive bilateral relationships based on mutual respect and mutual
geopolitical, economic and trade interests, not relationships based on
assistance as such.
The Partnership for Freedom will include the following activities:
I. Investment and capital mobilization
1. Increase investment support in the regions, emphasizing small
business and microcredit.--Implemented through Eurasia Foundation,
selected USAID grantees, EBRD Small Loan Program, USAID Loan Guarantees
for Micro & Small Enterprises, Eximbank, OPIC, Trade and Development
Agency, science & technology foundation up to $163 million.
2. Continue support for NIS enterprise funds.--Up to $64 million.
3. Remove impediments to trade and investment.--Targeted technical
assistance for tax reform, WTO accession, legal reform accounting
standards reform $20 million.
4. Facilitate and accelerate World Bank and other IFI loans to NIS
governments.--Help NIS governments meet the structural reform
conditions required by the World Bank and IMF for the release of major
loans $12 million.
5. Link business training to specific investment projects involving
U.S. companies and capital.--Improve capabilities of enterprise
managers, particularly in the regions, in those enterprises engaged in
trade and investment with U.S. companies, small loan programs, and
enterprise funds, $17 million.
II. Consolidation of democracy and civil society gains
1. Significantly expand law enforcement and criminal justice reform
activities to address problems of crime and corruption.--Increase
training in financial fraud, money laundering, organized crime, anti-
narcotics, bank inspection; increase support to the International Law
Enforcement Academy (ILEA) in Budapest for training NIS law enforcement
professionals; provide non-lethal material support, such as forensics,
computer and communications equipment; increase training for judges and
prosecutors, $29 million.
2. Endow foundations to create sustainable support for new
democratic institutions.--Create long-term vehicles for U.S. support
for democratic institutions such as NGOs, independent media, citizens'
advocacy groups that will carry on beyond the end of U.S. bilateral
assistance activities; select foundations to be endowed partially on
the basis of private matching funds, $41 million.
3. Expand institutional partnerships to support cooperative
activities at community levels, and expand cooperative activities in
such areas of mutual interest as health, environment, energy, and
technology commercialization.--Support partnerships between business
associations, hospitals, universities, cities, bar associations,
charities, and other non-governmental organizations to foster and
deepen commitments to participatory civil society and productive,
mutually beneficial relationships between the NIS and the United
States; work through binational commissions with Russia and Ukraine,
$59 million.
4. Increase professional and academic exchanges with emphasis on
young leaders.--Seek to more than double the number of NIS citizens
coming to stay in the U.S. for month, semester, and academic year
programs; recruiting business interns, young professionals, and
students; emphasizing community-based, home stay programs, $58 million.
5. Strengthen democratic political organizations as they become
part of the greater network of citizens organizations.--Continue
political party development through IRI and NDI, and support for
election reform, and related NGOs and human rights organizations, $28
million.
The fiscal year 1998 request for $900 million is a 44-percent
increase above the current fiscal year's budget for the NIS. This level
of funding, combined with the strategic refocus of the program, will be
able to support at least double the number of exchanges and
partnerships. These funds will direct more than five times the amount
of resources into investment programs, and more than double the level
of effort on law enforcement and anticrime activities compared to
fiscal year 1997.
Another major effect of these additional funds will be more
resources for democracy and economic restructuring work in Central Asia
(+60 percent), Georgia (+60 percent) and Azerbaijan (+90 percent)--
countries of key geopolitical and economic interest to the United
States, that have not been adequately supported due to overall budget
constraints combined with congressional earmarks. Russia's budget will
be up significantly from this year's $95 million to $241 million. Over
91 percent of the Russia budget will be directed to PFF activities. The
amount allocated to Russia is still only 15 percent of that allocated
in fiscal year 1994.
The Partnership for Freedom is structured to operate in parallel
with U.S. government security-related programs to promote arms control,
nonproliferation, and regional stability. These include Department of
Defense programs for Cooperative Threat Reduction,
Counterproliferation, and Warsaw Initiative/Partnership for Peace
efforts, as well as Department of Energy programs such as the Materials
Protection, Control & Accounting activities. The PFF helps to
strengthen our efforts in these security areas, and vice versa. All of
these programs should be reviewed as a cohesive package, which together
fulfill U.S. national security objectives.
lessons learned
I have been in this position now for over two years. The approach
that I have taken in this time period, and presented to this committee
on numerous occasions, has been aggressively focused on the notion of
continuous improvement to maximize our effectiveness in meeting U.S.
national interests, and to maximize our return on the investment of
U.S. taxpayer dollars in the reform process. The implementing agencies
and organizations have accomplished a tremendous amount in this regard,
and Mr. Dine will get into more of that detail for USAID later in this
presentation.
We have learned how far small amounts of funding can go to support
reformers in real and lasting ways. Smaller, regionally based programs,
that are encouraged to be flexible and adapt to local needs, work best.
We have never, and will never, invest as much as it would take to do it
all, to make ``the'' critical difference. I actually do not believe
that is even possible. But, we have made, and must continue to make,
many small differences. Today, regions in Russia such as Novgorod,
Samara, Nizhny Novgorod have become models of accomplishment for the
rest of the country on what is achievable by taking advantage of
targeted assistance programs. We must and will do more in regions to
create visible community-based impact. The heros of the new market
democracies in the NIS are not USAID, not the World Bank, not the EBRD;
they are the people that we have supported, educated and made small
loans to over the past five years--reformers, entrepreneurs, and
advocates for change from all levels of society, who deserve the credit
for all the real and lasting accomplishments. They are winning a
courageous battle.
We have learned that cost sharing works. Programs such as USAID's
small business service centers and the Morozov small business training
project in Russia have achieved 40 percent to 50 percent cost recovery
from fee-for-service. The programs that recruit volunteer experts to
assist and train private entrepreneurs and farmers all rely on major
cost sharing with their NIS clients, in addition to the valuable,
donated time of the skilled Americans who volunteer. One of our most
important exchange programs, Community Connections, (also known as PEP
in some regions), is achieving great success in a pilot effort to have
the professional exchange participants pay all of their travel costs to
the United States, and some of their per diem expenses while they are
here. All of these community-based exchanges receive a tremendous
amount of in-kind contributions of organizing time, accommodations,
local transportation and training from American communities all over
the country that host these NIS groups. We have found that people who
have a financial stake in the program will make the best use of it.
We have learned that the time lag between capital availability in
our investment programs, such as TUSRIF, OPIC, EXIM and our various
funds, and the disbursement of that capital has been partially
unavoidable, as the NIS entrepreneurs come up the learning curve, and
the impediments to investment in these countries remain numerous.
Nonetheless, we have also observed that with skilled shepherding, and
high quality training of local financial institutions, more can be
achieved--particularly with smaller projects and companies, and that we
can now direct more resources where there are gaps, and make the
necessary adjustments to the programs.
We have learned that it doesn't make sense to spend assistance
dollars on restructuring large, formerly state-owned companies.
Companies with a chance of pulling through this transition will be able
to find the resources to pay for the consulting or training that it
needs. Many business services providers exist now, both indigenous and
foreign. We have ended programs that were funded back in 1994 and 1995
to do this kind of work, and retargeted private enterprise training
resources to small and medium enterprises. NIS governments must play a
critical role, as reform legislation is required to allow enterprises
to sell land and other assets, shed some of the burdens of social
services, and make a fair return on investment in a rational tax
environment.
We have learned that we can accomplish tremendous leverage by
focusing our technical assistance in some instances on helping the NIS
meet structural reform conditions for major loans from international
financial institutions. We, and most importantly the NIS side, achieve
a tremendous return on our assistance investment through this kind of
coordination.
We have also re-learned some old lessons about U.S. assistance--
that well managed, internationally coordinated humanitarian assistance
efforts can save lives and help to maintain the stability of a region
or country. In Armenia, Georgia and Azerbaijan, a region that faces
numerous ethnic and cross-border conflicts since the break-up of the
former Soviet Union, U.S. resources and leadership to bring in food,
fuel and medical commodities and to fund the Caucasus Logistics
Advisory Unit, have made a difference in helping these nations get
through their most challenging early years. President Shevardnadze has
stated on several occasions that it was U.S. humanitarian assistance
that made the critical difference in helping Georgia maintain its
stability and independence. The leverage that we have been able to
achieve in our humanitarian program since inception in the NIS is huge
and has often gone unnoticed--$1.6 billion worth of 100 percent donated
and surplus commodities delivered to 12 NIS countries in 480 airlifts,
costing under $174 million in transport(through the end of calender
year 1996). We should be very proud of this accomplishment.
russia
While recognizing that some crucial forms of technical assistance,
particularly those that address key impediments to investment like tax
reform, will require continued work, the implementation of the
Partnership for Freedom in Russia will create a much greater emphasis
on Russia's regions and will address the following goals:
--1. Working with regional governments to address key obstacles to
investment, helping them to gain access to international
capital markets, and strengthening regional financial
institutions.
--2. Increasing the availability of financing in the regions through
EXIM, OPIC, the U.S.-Russia Investment Fund, other small and
medium-sized lending and equity investment programs, and
microcredit activities.
--3. Increasing the level of support for exchanges and regional and
community-based institutional partnerships, that will link
cities, universities, law schools, policy think tanks, and a
variety of NGOS and citizens' organizations.
This regional approach to the PFF in Russia has been developed
through extensive consultations with numerous American and Russian
professionals and policymakers in the field of investment and economic
development in Russia, who have identified the gaps in programs to date
to be a lack of credit for smaller businesses in the regions--the major
engine for growth and real incomes for the Russian people. Vice
President Gore and Prime Minister Chernomyrdin highlighted the
importance of a regional investment initiative in a joint statement at
the last meeting of the U.S-Russia Binational Commission in Washington
this past January. The Russian Far East has been acknowledged by both
the U.S. and Russia as a region of great economic potential and will be
included in this initiative. Other potential participating regions
include oblasts in the Urals region and the Southern Russia-Volga
region.
One extremely promising oblast in the Northwest of Russia,
Novgorod, has been identified as an appropriate area to launch a
``quick start'' demonstration of the PFF and the regional investment
initiative, due to the regional government's reform action, strong
interest from the U.S. business community in Russia, and a significant
level of existing assistance resources and programs on which to build.
The Novgorod region, with a population of about 750,000 people,
today provides one of the most compelling illustrations of Russia's
promise to become a prospering market economy. Although the region
suffers from the same fundamental economic and structural problems as
the rest of Russia, it leads Russia with the highest per capita foreign
investment. Perhaps not coincidentally, Novgorod has one of the oldest
traditions of democracy in Russia. Founded in the 9th century, medieval
Novgorod was governed by an assembly of its citizens, the ``veche'';
and prior to the establishment of St. Petersburg, was the major trading
center of Northwest Russia. Now, through the dynamic leadership of its
elected governor, Novgorod has established an investment-friendly
climate, and has been recognized by the American Chamber of Commerce in
Russia as one of the most progressive regions of Russia today. This
region is not waiting for a handout, but instead is working diligently
to enact reforms that have mobilized capital investment. This region,
and others like it, should be the foci of our assistance effort through
the Partnership for Freedom; there is no point to these programs if the
local leadership, both in government and in the private sector, is not
a major part of the solution, and willing to act to create real
opportunity for the future.
One component of the PFF, ``partnerships and cooperative
activities'' is best understood through the examples of working
partnerships in the region. One notable example happens to be in
Russia--the partnership between the World Institute for the Disabled
and the All-Russia Society of Disabled. With the material support,
know-how, and encouragement of their U.S. partner the Russia group's
membership has climbed to 2.4 million in 78 different regions. They
have helped members set up over 1700 enterprises, as well as
manufacturing companies that make wheelchairs and other equipment for
the disabled. Their public education and outreach, leadership training,
legislative advocacy, and efforts to bring disabled children more into
the mainstream of Russian life add up to an incredibly powerful lesson
for all NGOs in the NIS. Partnerships such as this one must have an
important place in our long term engagement with Russians through the
Partnership for Freedom. Many more existing relationships between U.S.
and Russian organizations will be able to have significantly greater
impacts on their communities with relatively small amounts of money.
Securing and advancing reform also requires leadership, and we are
very encouraged by the newly invigorated government's approach to
taking on some pressing issues such as demonopolization and public
administration reform.
ukraine, central asia, the caucasus
The non-Russian NIS are still facing the most fundamental
challenges of building new market democracies. These nations are
building all of their government institutions from the ground up. The
rule of law, media, and basic market institutions, such as banks,
capital markets, and regulatory institutions are also at early stages
in their development.
Our national interest in supporting these countries through their
transitions to becoming stable, independent, market-oriented
democracies is extremely strong. The Partnership for Freedom approach,
and the Administration's fiscal year 1998 budget request of $900
million, will allow the appropriate level of assistance resources to be
directed to the non-Russian nations.
In Ukraine, with the second largest population and economy of the
NIS, stability and growth are crucial to a secure and undivided Europe.
In 1996, several important actions, including the removal of the last
nuclear weapons, ratification of a new constitution, and the successful
introduction of a new currency, gave us great confidence in increasing
assistance to Ukraine. Since last October, we have grown increasingly
concerned about backtracking on key reforms--particularly in
privatization, agriculture, and the energy sector, and about
bureaucratic obstacles and corruption, particularly as these affect
U.S. investors. I raised these issues in Kyiv last week with Ukrainian
leaders. If these problems are not addressed concretely, we will
consider scaling back assistance in certain sectors where backtracking
on reform has been of greatest concern. We are also consulting with
other donors and the IFIs to ensure that all of our programs are
conditioned on measures of reform.
We have supported Ukraine because it is is our national interest to
do so, and this has not changed. Ukraine's reforms, as in all of the
NIS, are part of a generational process that will have setbacks as well
as great breakthroughs. We must be prepared to stay engaged through
this process, and we must retain flexibility in our assistance program
so that we can respond to both the setbacks and the breakthoughs with
appropriate levels and forms of support. We must be realistic and have
the ability to be flexible in meeting changing circumstances
Assistance to the fledging market democracies of Central Asia and
the Caucasus are strongly in our national interest. Their strategic
location between Russia, the Middle East, and China, coupled with vast
energy resources, make their stability vital to U.S. interests. We will
continue to help nascent democratic organizations and institutions,
such as the independent media, non-governmental citizens groups, and
educational institutions, establish active, effective roles in these
countries. Economic restructuring and support for small businesses will
also continue to be a prominent part of our assistance program in
Central Asia.
The Administration continues to oppose Section 907 of the Freedom
Support Act, which since its inception in 1992, has hindered U.S.
policy interests in the Caucasus region and Azerbaijan by severely
limiting the promotion of U.S. investment, the encouragement of
democratic and market development, and the advancement of the Nagorno-
Karabakh peace process. We view our assistance efforts in the Caucasus
region as a vehicle for furthering our policy objectives and interests
in the region. The loss of U.S. influence in Azerbaijan threatens to
undermine overall efforts for peace in the region.
conclusion
The courage of the citizens of Russia, Ukraine, and all the New
Independent States to stay on the path of reform is bolstered by our
investment in democracy, free markets, and building strong people-to-
people linkages with Americans. We must consider the strategic
importance of the NIS both in a historical context, and as a part of
our vision of the world that our children will inherit. The New
Independent States greatly appreciate U.S. assistance, but do not want
to rely on aid. The Partnership for Freedom is one of the top
priorities of the Administration's foreign affairs budget. This is
because the vital importance of constructive, mutually-beneficial
relations with the NIS, and, as Secretary Albright recently expressed
it in recent testimony, ``the ultimate victory of freedom over
despotism'' are so important for the security of every American. U.S.
assistance to date, and looking ahead to the Partnership for Freedom,
is one of the smartest investments we can make to help insure the
security, health and prosperity of future generations.
ukraine
Senator Leahy. Is President Kuchma going to be told very
strongly--is it going to be made very clear to him that the
Congress is not going to continue sending money with this kind
of corruption going on? One of the news items indicated
Motorola walked away from an investment that could have been
extremely helpful to them.
It is even the little things like gouging people who are
there. I saw it myself when I stayed there, in a cockroach-and
rat-infested room at $280 a night, and things like this. It is
outrageous. And if they think they can just keep on doing it,
even though they realize they are killing the goose that lays
the golden egg, they are in for a surprise.
Mr. Morningstar. We had a hearing a few weeks ago, prior to
my going to Ukraine, on the House side. And I quoted him. It
was not just from one congressman, it was from several members.
And I quoted them. And I told all of the officials at these
high levels that you have got to understand, why should we be
giving money to Ukraine? This is what we are facing on the
Hill. Why should we give any money to Ukraine if you are
treating our businesses this way?
And I think they understand it. And as far as the message
goes, I have been involved very deeply in the preparations for
the meetings between Vice President Gore and President Kuchma.
In fact, I am the chairman of the Committee on Joint Economic
Cooperation. And I can assure you that the message, in a very
constructive way, will also be presented very strongly by the
Vice President.
Senator Campbell. Would the gentleman yield for a question
on this point?
Senator Leahy. Yes.
Senator Campbell. I have always been a believer that there
should be some linkage between American aid and how they treat
our businesses. But I guess we are just supposed to keep giving
it away and let our businesses take a bath. But I have one
particular point, and I am sure there are many, but I just
happened to pull something from our own files. One of my
constituents entered a 10-year contract with authorities in the
Ukraine to sell advertising time on television. And then, one
of the two national channels, after he had a contract and after
he got off the ground for a couple of years, simply managed,
through government authority, to take the contract away from
him and just virtually left him hanging. And he is now in the
courts to try to get some redress.
Obviously, I think somehow he is not going to prevail. And
I just wanted your opinion on whether we should not link some
of this aid. You are asking for $900 million, and to give that
without any kind of connection to how we are treated over there
is wrong to do that.
Senator McConnell. Let me add on, before you answer Senator
Campbell's question, since we have kind of gotten started here.
You mentioned setbacks versus breakthroughs. I would describe
this as a setback, another setback. After you deal with that, I
would like to know if there have been any breakthroughs in
Ukraine.
Mr. Morningstar. Sure. Yes, first, the question with
respect to the issue you have raised. You have raised, I think,
one of the more difficult issues that comes up and has come up
in Ukraine in a series of issues. And Mr. Lemire's case is an
example--basically the same thing that involves problems
relating to the National Broadcasting Council, in which there
literally are arbitration decrees that have been awarded. The
issue--and certainly in Mr. Lemire's case and some other cases
I can point to--is not, as it turns out, that there was not a
process by which one could go through to get relief. The issue
has been, once the arbitration decree was awarded, it has not
been enforced.
There is a promise outstanding, at least, with respect to
Mr. Lemire's case, that the issue will be solved before
President Kuchma shows up. We will see if that happens. What we
have found is that, with respect to cases which are, in
effect--and I do not want to shortchange the solutions, but
ones that are easier to solve--for example, that just require
the signature of the Prime Minister, even though there may be 6
or 8 months of delays in achieving that--that, it seems, we are
dealing with right now, because of pressure, the pressure that
has been shown.
Senator Campbell. How about reducing the amount of money
that their request is by the amount they have cheated American
businesses?
Mr. Morningstar. Well, we could do that. And that would
come pretty close to eliminating our Ukraine program.
Senator Campbell. Well, they are trying to eliminate the
American partners.
Mr. Morningstar. Let me answer that in a couple of ways.
And I think there will be, if in fact some of these disputes
are not solved, I think in fact there will be cuts. And I think
it will be beyond any individual's control. But one of the
things we have to be careful about is we do not want to cut our
nose to spite our face either. The whole purpose of the
Partnership for Freedom is to get into areas that are not
direct assistance to government-related activities, to do
things that will help the private sector, to create more
partnerships, and establish the kind of relationships between
communities that will help create pressure from the bottom up.
And I think that it is going to be very important that we
emphasize those activities and that we do not lose that and we
do not throw out the baby with the bath water.
Senator Campbell. I understand that, Mr. Chairman. But when
you go home, you have to justify giving $900 million of
American taxpayers' money to Ukraine and the Soviet Union. And
when you have businessmen in your own State that have been
cheated out of their part of the business in the same place you
are trying to give this money, it is a darn difficult thing to
justify.
Senator Leahy. You have the further problem, too, I might
say, when you see something in Russia, when you see the way
they jerk people around. Certainly like a very high profile
thing like the exhibit that was at the Corcoran. It is a kind
of shakedown that they are probably used to doing on the
streets of Moscow, but suddenly they are doing it on the
streets of Washington and the whole Nation is watching. And I
come from a State that is pretty internationalist in its
affiliations, and you know, they say we are making a mistake
because all this money is just being siphoned off or we are
being naive.
Our Ambassador in the Ukraine seems to take a far softer
attitude toward it than you do, Ambassador Morningstar. Somehow
we have got to get across that it is not a bottomless pit. I
commend the chairman, who has been as strong an
internationalist on this issue as anybody. But we all have to
go back home and explain why.
I have supported money for Ukraine, and we have supported
each other on the former Soviet Union, and we want it to work.
I do not think there is anybody in this room that does not want
it to work. Our business people want it to work. Our Government
wants it to work. But I do not think they are listening over
there.
Senator McConnell. My question was, are there any
breakthroughs to point to?
Mr. Morningstar. Sure, there have been some. It is easy to
look at the glass as half empty, or maybe today one might argue
two-thirds empty for the time being. The Ukraine has achieved
the enactment of a constitution. They did that last year. And
President Kuchma deserves a lot of credit for that.
From a macroeconomic standpoint, they have shown some very
significant successes in bringing the rate of inflation down
and introducing a new currency. That has maintained stability.
There is a lot of successful work that is going on out in the
regions. We have achieved a memorandum of understanding with
respect to Chernobyl. And we have had some success in our
negotiations with them just in the last few weeks in connection
with the sarcophagus. So there are successes.
And there are issues. And we have to address the issues.
And it is not just simply by cutting off the aid. It is
addressing the cause of the problems and trying to get
assurances for the political will that will allow us to help
them to create transparency, to create the deregulation which
is necessary to eliminate a lot of the opportunity for
corruption that has grown up over the years.
Senator McConnell. Well, let us get Mr. Dine's statement,
and then we will come back to questions.
summary statement of hon. thomas dine
Mr. Dine. Thank you, Mr. Chairman, Senator Leahy. I join
Dick Morningstar in urging this committee to seriously consider
the administration's request for the New Independent States of
$900 million under the FREEDOM Support Act. USAID is scheduled
and is planned to implement much of this appropriated number,
and I think it is a critical, critical effort on all our parts
to engage in this task.
AID has been and is a direct part of and involved with
overall genuine progress in the region. In my prepared
testimony, Mr. Chairman, I list a lot of results that AID has
been directly involved in, and I urge that our prepared
statements be inserted in the record, as I am sure they will
be.
Senator McConnell. Yes; they will be made a part of the
record.
Mr. Dine. It is also true that in several spots of the
region progress has been slow, uneven, among and in countries
and in sectors, as one would expect, in dismantling communism
and in building free market democracies.
The discussion that has just taken place among all of you
about Ukraine, about the treatment of American citizens and
American investments, I believe underlines three points: how
difficult this job is to promote change--to promote change from
where these places were for 70-plus years and if not even
before that, the necessity of building a foundation for these
societies, and, for the most part, Mr. Chairman and Senator
Leahy, the people we deal with did not grow up with a textbook
on capitalism. They did not grow up with a Constitution of the
United States, with Hobbs, Locke, Montesquieu, you name it. We
are dealing with people who are trying and having a great
difficulty in building market democracies.
transfer of expertise, not cash
And, finally, just to reiterate something or to correct
something that Senator Campbell said. He kept using the word
``give.'' I would say one of the important parts of this whole
program has been the fact that when Congress passed the SEED
Act in 1989 and the FREEDOM Support Act of 1991, you made sure
that this was technical assistance, the transfer of expertise
and not the transfer of cash. And so we are not giving anyone
any money. We are trying to promote the transfer of knowledge,
in fact, so that we can eventually get to that point that Dick
Morningstar just mentioned about partnership.
reform progress in the region
Let me move on now to some charts, to give you a snapshot
picture, a range of the progress that I mentioned.
Chart No. 1 shows the place of both the NIS and the central
and Eastern European countries on a trend line. And you notice
this is the average of economic policy and democratic freedoms.
The European Union countries are up here. This data is taken
from the European Bank for Reconstruction and Development
[EBRD] and Freedom House here in Washington.
As you can see, the countries of the northern tier of
central and Eastern Europe are by far in the lead. Then comes a
second category of countries, starting with Romania and the
first NIS countries roughly. Ukraine has been sliding backward
in recent times, but we will get to that in 1 minute. Some of
the NIS countries in the southern tier of the central and
Eastern European countries are in the second bunch.
The third bunch are basically NIS countries. Two others did
not make the chart frankly--Serbia and Bosnia--but they are
also in the portfolio that I have been assigned responsibility
for. You mentioned a couple of those, Mr. Chairman, in Europe,
in your statement. Others are not reforming countries as of
now, and that is a fact of life, although, I agree with you,
they have tremendous natural resources.
Our objective, it seems to me--and that is what we have
been trying to do--is, No. 1, get countries going this way and
to get this trend line, which is now headed this way, closer
and closer to the European Union standard. That is basically
the strategy we are pursuing right now with the technical
assistance, as well as with the World Bank, IMF, EBRD, European
Union and other bilateral programs.
policy reforms bring foreign investment
I have another chart. I just want to reconfirm what my
friend Dick Morningstar has just said. This chart shows that
countries that exhibit real policy reform--and again, the
northern tier of central and Eastern Europe and those with
natural resources you will see come up in this--but this chart
shows that real policy reforms have greater foreign investment
per capita. And this is what the Partnership for Freedom is all
about, to increase the investment, to lure people where reform
has taken place.
Changes are occurring. As I have indicated, USAID has had a
hand in basic changes. We have been engaged, over the last
couple of years, in privatization; 49 percent of the GDP of the
countries of the New Independent States is now produced by the
private sector. I have another chart for a different kind of
hearing, but if you took the central and Eastern European
countries, you would see that it is about 65 percent. Again,
more progress is being made in central and Eastern European
countries for a variety reasons, both historical as well as the
fact that they have a couple of years head start on the New
Independent States. Some 55 percent of the GDP in Russia is now
produced by the private sector.
So, again, Russia is ahead of all of the others.
Unfortunately, Ukraine is hovering around the 40-percent mark.
We have helped them with fiscal reform, we have been involved
with budgeting and helping them with tax codes, et cetera.
In enterprise development, a tremendous amount of work has
been involved in legal and regulatory reform, civil codes in
Moldova and Russia and other places, guaranteeing freedom of
contracts and protection of private property.
In the financial sector, we have been able to help set up
stock markets and other capital markets, working with the
national banks and commercial banks. But, as indicated in the
previous discussion, so much of this is spotty. So much of this
is still incomplete.
In the energy and environment area, we have had some
success, including in Ukraine, although that has slowed down
now. But among the Central Asian Republics, for instance, we
have gotten involved in the Aral Sea problems, and from that,
begun to work with all five countries of the Central Asian
Republics, so they would work together on the water problem and
water management and water financing. We have been a catalyst
to 13 short-term water-sharing agreements between these five
countries, and we look forward to more.
We have been involved in the Russian Far East on
environmental reform. We have been involved with environmental
NGO's, through the American NGO, ISAR.
And, finally, in democratic institution building, it could
not be tougher. It is easier to do economic reform, frankly,
than democratic reform. But we have been involved in civil
society work, media work, judiciary work, and political party
building. The overall point that I would like to stress here is
the value of the process, the idea of transparency.
Transparency is really foreign to these folks. It is
something that we are trying to transfer as we are engaged in
our work, whether it is democracy building, tax code, or
whatever. So while communism is defeated and even dismantled,
democracy is still not victorious. And I think we have got to
stay involved in this process.
ukraine
Finally, I want to contrast our activities in two NIS
countries, Ukraine and Georgia. As this discussion has already
indicated, Ukraine today faces excruciating difficulties the
confluence of political stalemate, the lack of reform, and
stagnancy in the economy that is showing signs of contraction.
This is a very, very important time, frankly. It is a
crossroads for Ukraine and for United States-Ukrainian
relations. We see continued dominance of monopolies, state
control of the agricultural sector, delay, again, in
privatization, failure to collect payments in the electrical
power arena, the resignation of the key reformer, Minister
Pynzanek, and an international and domestic barrage of
allegations and of corruption.
So this is coming to a head. And as Dick indicated, the
World Bank is seriously considering the suspension of three
major loans and delaying several new ones. The IMF has said it
will not go forward with the important extended facility fund
unless all conditions are met. Foreign investors, particularly
small and large American companies--and I am going to use your
words, because I have got them down--are walking away. And
Ukraine must face this particular dilemma.
President Kuchma will be meeting, as Dick indicated, with
high officials of this administration, as well as yourselves. I
believe this administration will be delivering a hard-hitting
message on the urgent need to turn this situation around and
get back on track, as it was 6 months ago, and implement
economic reforms in a way that reinforces the reasons for the
Congress earmarking so much technical assistance in fiscal
years 1996-97.
Mr. Chairman, slowly but surely, Ukraine had been
progressing, and we ought to keep that in mind. And USAID can
show results in privatization and a modern constitution, in the
energy sector, in local governments, in community-based
projects, and an independent media.
georgia
Let me turn to Georgia. Georgia faced a turning point 2
years ago, and held elections in December 1995--a nationwide
election in which Edward Shevardnadze was duely elected
President of the nation-state and a parliament was elected as
well. That parliament has turned out to be not only very
active, but very proreform. Together, the executive and
legislative branches in that particular small country have been
engaged together on reform policies. Therefore, we see a
tremendous contrast there from the Ukraine. Again, like the
Ukraine, Georgia has a new constitution. AID has helped set up
a Center for Economic Policy and Reform, which has been at the
heart of so many of these economic reform policies.
We have seen a frontal attack on corruption. President
Shevardnadze has fired his finance minister after all kinds of
allegations. There is macroeconomic stabilization. Inflation is
way down. Prices are liberalized. Currency has stabilized.
There has been a real development of reform for us and our
involvement in energy restructuring, where we have seen the
sale of hydro powerplants, a new national regulatory body for
the power sectors, an agreement with the Azerbaijan
international oil consortium and the Government of Azerbaijan
on the oil pipeline issues, and the new Black Sea port of
Sokhumi.
And, finally, we see a lot of investment coming into
Georgia. And I believe, as Dick indicated, it is important that
we increase the amount of assistance to Georgia, to reward
reform.
prepared statement
So, Mr. Chairman and Senator Leahy, I hope this committee
supports USAID's continuing efforts to help the NIS countries
reform, and to vote for the full $900 million appropriations in
the FREEDOM Support Act request for fiscal year 1998. It is in
the U.S. national interest to sustain changes, or lock them in,
to make them irreversible, and to continue to work on economic
stabilization and structural change, so that these translate
into growth and investment and the societies themselves head
toward the victory circle of full participatory democracies.
Thank you.
[The statement follows:]
Prepared Statement of Thomas A. Dine
Mr. Chairman, Members of the Committee: I am pleased to have the
opportunity to testify today in support of the Administration's request
for $900 million under the FREEDOM Support Act for USAID's activities
in the Newly Independent States (NIS). I believe, and this testimony
will demonstrate, that overall progress in dismantling communism and in
building democratic governments and free market economies in its place
merits your strong support. I also wish to restate the Administration's
support for an appropriation of $492 million under the Support for East
European Democracy (SEED) Act for our activities in Central Europe, $15
million in economic support funds (ESF) for Cyprus to support
bicommunal activities and scholarships, and $50 million in ESF for
Turkey plus $4 million for family planning. The Administration requests
as well $19.6 million in ESF for the International Fund for Ireland
which, like our Cyprus request, is designed specifically to promote
peace between two communities sharing an island. I also wish to state
that the Administration strongly opposes Section 907 of the Freedom
Support Act because its restrictions impede the United States
government's ability to implement more effectively our development
assistance program in Azerbaijan and thereby slows the advancement of
U.S. interests in a strategically significant region.
The President's request for $900 million for the NIS, an increase
from $625 million this year, follows three years of falling
appropriations levels. After the large fiscal year 1994 appropriation
of $2.5 billion, assistance levels fell to $850 million in fiscal year
1995, $641 million in fiscal year 1996 and $625 million in fiscal year
1997. Resources for most of the New Independent States have dropped
below the levels needed to spur and cement fundamental reform. The
United States relationship with Ukraine, Russia, and other key states
in the NIS remain vital to our national security, and we need a
framework for a new phase of U.S engagement, focused on trade and
investment and building enduring ties between their citizens and ours.
The proposed Partnership for Freedom would be established for those
purposes.
First a word on Ukraine. As reported extensively in the media,
there are real problems in Ukraine. The perceived level of official and
unofficial corruption is pervasive and deep. Internal reform appears
stagnant and the economy is beginning to show signs of contraction. The
Deputy Prime Minister, the country's leading reformer, recently
resigned. Major and small U.S. companies, faced with harassment,
intimidation, and bribery are leaving the country. Business disputes
are on the increase and because of continued state control over the
agricultural sector, delays in privatization, and failure to collect
payments in the electricity sector, the World Bank is seriously
considering the suspension of three critical loans. Corruption, of
course, is nothing new in the areas of the former Soviet Union.
Ukraine, no less than anywhere else in the former Soviet Union, lived
under a regime that was conceived in corruption and governed corruptly
until its fall from power. That is, in fact, why we are in the former
Soviet Union--to help Ukraine, Russia and the others establish economic
and governmental systems that are honest, transparent and fair. We
cannot expect American investors to do business in Ukraine or any of
the NIS countries if they are not going to be treated fairly. That is
why the state of economic reform and the transparency of economic
decision-making have been high on our agenda in discussions with the
Ukrainian government and will be at the top of the agenda at the Gore-
Kuchma Commission meetings next week.
It is the intention of the Administration to let the Ukrainian
government know, in no uncertain terms, that we will not support the
continued stalling of reform and transparency initiatives and certainly
not the mistreatment of our citizens. We will be looking not only for a
verbal response; we will also hold the GOU to a series of actions which
it has, in various international loan and assistance agreements, agreed
to undertake during the coming weeks and months if we are to continue
our support. We are examining our program in Ukraine to gauge which
activities are dependent on progress in reform. This committee has seen
fit to earmark over one-third of total FREEDOM Support resources to
Ukraine in 1997 and 1996. You have every right to know that these
resources are being utilized to provide the maximum protection to U.S.
interests including U.S. investors. You may wish to provide the
Administration with sufficient flexibility on earmarked funds to ensure
that your concerns, and ours, are being met. But, rest assured, in this
case as in others, no one is more determined than USAID to ensure that
corruption does not taint our efforts and that our assistance is
buttressing actions to root out corruption at all levels.
It has now been five years since this Committee took the historic
step of funding assistance to the NIS. This action reflected the
decision by Congress, and President George Bush, that the United States
would seize the opportunity provided by the break-up of Soviet
Communism to help the states formerly incorporated into the Soviet
Union make the transition to democratic market economies. It was based
on the premise that the people of these nations wanted to transform
their entire way of existence and that reformers welcomed US technical
assistance. It was based on the hope that our involvement would
forestall the return of totalitarianism and state socialism and help
ensure democratic futures for the people of the former Soviet Union.
Today the American people have every right to hear if the programs they
are funding have produced tangible results.
I am pleased to report that, at this juncture, we are witnessing
broad and unmistakable signs that reform is achieving demonstrable
results. Communism is being dismantled, and a viable middle class based
upon the empowerment of the individual is being created--not evenly,
not everywhere in the NIS and often in fits and starts--but across
enough of the region, and in enough sectors, that we can say that its
roots have taken strong hold of people's outlooks and expectations.
Reform has given oxygen to the life blood of civil society and private
enterprise. And it has produced some remarkable results.
That is especially remarkable when we consider the context. We are
speaking here of the former Soviet Union, for seventy years under the
fists of Brezhnev, Stalin, and Lenin.
Under Communism, there were no market institutions, no legal
foundations for a market economy, no democracy and no basic
institutions for citizen participation. All real power rested with the
Communist party and the thoroughly corrupt central government. The
individual was powerless, with no control over his or her personal
destiny--much less over the destiny of his community or nation. Today,
just six years after the hammer and sickle flag was lowered at the
Kremlin, I am able to report to you about a region in transformation,
about people suddenly empowered both economically and politically.
A quick snapshot. In Russia, the private sector now accounts for 60
percent of GDP and employs about half of the labor force. In Ukraine,
some 400 formerly state-owned companies a month are being auctioned
off. The Central Asian Republic of Kazakstan opened its first private
stock exchange in Almaty in April 1995. In Kyrgyzstan, economic
stabilization has helped make the local currency, the som, the most
stable currency in the region, at times appreciating against the
dollar. Eleven individual television stations operate in Georgia,
independent and free of government control.
I am pleased to say that the United States, led by USAID, has had a
part in each of those changes and the others I will attempt to describe
for you today.
These results testify to a U.S. assistance program that has had a
strong positive impact. Would I claim that change would not have
occurred without the United States? No. The collapse of the Soviet
system, and its history of eight decades of failure, ensured that much
of the old system would be swept away as soon as the people of the
region had the opportunity to rid themselves of it.
But, at the same time, I can state with confidence that without our
assistance program, a program not of cash giveaways but of hard
technical and practical assistance, change could have taken any number
of paths--including authoritarian, nationalist approaches which would
not safeguard personal freedoms and would have been inimicable to U.S.
national interests. The wrong kind of change might even have reignited
the cold war and all the costs the renewed threat of confrontation
would entail.
Modern free enterprise does not just happen. You cannot expect a
modern banking system or stock market to just evolve from the ruins of
state socialism. Someone has to show the way, offer the models and the
counsel. That is what we are doing. Similarly, democracy is an idea, a
worthy political goal. But nations with little or no democratic
tradition need someone to show the way to create a system that will
support democracy. That means election laws and codes and
constitutions. Again, the U.S. shows the way. And, although other
nations and multilateral institutions are playing an important role in
the building of the NIS, it is appropriate that the United States play
a central role. The former Soviet bloc was governed by the principle
that the state counts and that individuals do not. The United States,
the world's oldest democracy, is built on just the opposite idea; the
rights, privileges and opportunities for the individual is the bedrock
of our nation's greatness. Our goal is similarly to help empower
individual citizens who, under the previous system, were considered
insignificant or not considered at all.
The USAID program pursues three strategic goals in the region:
economic restructuring, democratic transition and social stabilization.
It is under these rubrics that USAID has achieved our results.
Economic Restructuring: Since 1992, USAID programs have contributed
to sweeping economic changes, including mass privatization, land
privatization, fiscal reform, development of modern financial systems
and energy sector restructuring. Establishment of private property
rights and the growth of entrepreneurship have given ordinary citizens
a stake in the new economic system. With USAID assistance, most
countries have made systemic changes such as creation of laws and
institutions to permit private business, as well as specific changes in
practices such as adopting Western accounting principles and banking
practices. The severe output declines experienced by most NIS countries
since the collapse of the Soviet Union appear to have bottomed out.
Economic restructuring is pursued through privatization, fiscal reform,
enterprise development, financial sector development and energy/
environment reform.
Privatization: Almost 50 percent of GDP in the NIS is now generated
by the private sector, as compared to less than 10 percent when the
Soviet Union collapsed in 1991 USAID has been instrumental in this
process. In Russia, for example, a recent agricultural land
privatization law gives citizens the right to buy and sell land for the
first time since the 1917 revolution. Titles to nearly a thousand
parcels of land had been transferred to privatized industrial
enterprises throughout Russia by October 1996.
Fiscal Reform: Throughout the region USAID has helped governments
adopt more effective budgeting and expenditure procedures, reform tax
regimes to make them more conducive to business growth, and improve tax
administration to raise the revenues essential for good governance. For
example, with USAID assistance, Kazakstan's new tax code was approved
in April 1995 and introduced in June 1995. Regarded as the most
efficient and equitable code to be adopted in any former Soviet
republic, it is serving as a model for draft codes elsewhere. A new tax
code has been completed in Uzbekistan and awaits enactment by Congress.
A budget law and a treasury law are near completion.
Enterprise Development: In nearly every country in the region,
USAID is assisting enterprises to operate more competitively, and
helping reduce government interference in the marketplace. For example,
in Russia, passage of the Civil Code, guaranteeing freedom of contract
and protection of private property, is a major advance in creating a
legal and regulatory environment to support a market economy.
Financial Sector Development: USAID is helping establish stock
markets and improve commercial banks so that businesses get access to
investment and operating capital and buy and sell assets. For example,
Moldova is the first NIS country to establish an independent securities
market agency with ministry status. The Moldova stock exchange opened
in June 1995 and, by the end of the year, 300,000 shares had been
traded.
Energy and Environment: Throughout the region, USAID is helping to
reduce waste in the production and use of energy and improve the
reliability of power supplies. It is also working to prevent further
environmental damage and to reverse the effects of decades of
indifference to the environment under the Communist regimes. For
example, since 1995, with USAID assistance, 13 short-term water sharing
agreements have been signed between countries in Central Asia. Three of
seven agreements approved this past year have included provision for
hydroelectricity generation in the Aral Sea.
Economic restructuring is starting to show results in terms of
economic performance. The output decline which followed the collapse of
the Soviet state has slowed considerably with preliminary estimates
indicating that eight NIS countries experienced positive economic
growth in 1996. Even more encouraging, impressive gains in inflation
reduction bode well for future growth.
It is clear that foreign investment follows economic reform. All
the countries of the NIS, with the exception of oil/gas-rich Kazakstan,
Azerbaijan, and Turkmenistan, fall neatly along a trend line
associating economic policy reforms and per capita foreign investment.
This tells us that our efforts to assist reform will result in growth.
Democratic Transition: Democratic governance is critical to these
formerly authoritarian states. Under communist rule, there was
widespread abuse of civil and human rights and little access to
information or citizen participation in political decisionmaking. Now
free and fair elections are being held across the region, governments
are being decentralized, independent media access is making information
available and increasing government accountability, and NGOs are
attracting support and influencing policy as they help articulate
citizens' needs. USAID's democracy and governance programs help make
recipient governments transparent and responsive to the public by
creating checks and balances against the arbitrary power of political
leadership and the state bureaucracy. They also create the legal and
informational environments which facilitate community initiative
outside government and protect individual rights. Increasingly, USAID's
support for the development of commercial laws provides the environment
necessary for individuals to enjoy economic freedom on a par with newly
acquired personal freedom. Progress in building democratic institutions
has been just as dramatic, and USAID has been just as central to this
progress.
Civil society: In promoting citizen participation in civil society,
USAID has helped install the machinery of free and fair elections,
strengthened competitive political parties, assisted the development of
NGOs, and aided the growth and independence of public broadcast and
print media. In 1996, for example, Azerbaijan, Kyrgyzstan, Kazakstan
and Russia all received election-related training and technical
assistance which complemented ongoing long-term political process
programs. In 1996, Russia held a free and fair presidential election
after which the defeated parties accepted the results, pledging to
continue their activities through the democratic process rather than
seek to overturn the results.
We have helped build and strengthen the all-important nongovernment
sector. In 1991, only a handful of NGOs operated in Russia; now there
are more than 40,000. USAID has assisted numerous activities intended
to support citizen and NGO participation in community and national
life. We have helped establish free and independent media. Internews,
an American NGO supported by USAID which trains print and electronic
media professionals, has helped transform Russia from a nation which,
in 1991, received all its news from one source to one in which there
are more than 500 broadcasting companies. The new independent media
coverage of the war in Chechnya is widely credited with having fostered
public awareness of the situation there.
Rule of Law: USAID is also assisting countries throughout the
region to strengthen the rule of law. We have helped draft
constitutions, train judges, prosecutors, and trial attorneys, and
establish jury trial systems. For example, in June 1996, after
considerable input from USAID grantees, the Ukrainian parliament
ratified its first post-Soviet constitution. Georgia is drafting a new
civil code.
Local Government: USAID is helping to bring good government closer
to the people by assisting with decentralization of power from the
national to local level and working with mayors and municipal
authorities to improve governance and delivery of essential public
services. For example, in Kazakstan, USAID grantees have established
housing associations, new institutional mechanisms by which citizens
can get maintenance work performed.
Social Stabilization: When social dislocation is ignored or
inadequately addressed, citizens suffer. Citizens associate their
plight with reforms, and in some cases have used newly acquired voting
rights to elect politicians who exploit these concerns. Neither USAID
nor other donors can finance social ``safety nets,'' but the agency can
provide targeted technical assistance to strengthen the countries' own
social protection systems. For example, helping Russia and Ukraine to
move away from virtually free housing for all to market-based rents and
maintenance fees has improved the quality of housing while freeing
municipalities' resources for targeted subsidies for the most
vulnerable groups. In areas affected by civil strife, USAID has played
a major role in alleviating suffering, particularly in the Caucasus and
Tajikistan.
Reproductive health programs are being funded in Central Asia,
Moldova, Russia and Ukraine. Preliminary data indicate that service
improvements have resulted in reduced abortion rates and increased
contraceptive use. In Central Asia, the USAID-supported Aral Sea
initiative has fostered regional cooperation in protecting the Sea from
further degradation and will ultimately provide potable water to over a
million people.
Noting these successes, it is reasonable to ask why, if things are
going so well, do we need an increase in funding? The simple answer is
that it is in the national interest of the United States to sustain
these changes, lock them in, make them irreversible. Economic
stabilization and structural change do not automatically translate into
investment and growth, nor do new political systems automatically
develop into full participatory democracies. As the political and
economic transitions in the region proceed, we will move from guiding
and advising on the mechanisms of structural change to maintaining
connections to these countries in ways that sustain these transitions.
Our engagement will evolve towards more normal, mutually beneficial
bilateral relations.
The New Independent States still have far to go. This region is too
critical to U.S. strategic interests for us to abandon. The stakes for
the United States are still high in terms of promoting regional
stability independence from disruptive regimes in the region, and
growing markets for American businesses.
We need a longer time frame and more resources than we had
anticipated a year ago. Much remains to be done, including further work
in improving the policy/legal/regulatory environment that has been
discouraging trade and investment, reform of the tax regimes to
facilitate business investment and provide the revenues necessary for
legitimate public functions, developing capital markets and commercial
banking so that private enterprise can flourish, restructuring wasteful
energy systems, like those in Central Asia, continuing support to
grass-roots NGOs and to the development of political parties and
independent media that spur popular participation in civil affairs,
strengthening of judicial systems to fight crime and corruption and
facilitate the settlement of commercial disputes, and continuing the
decentralization of power and authority from central governments to
local governments in which local citizens have more say.
Accordingly, the Administration is proposing the Partnership for
Freedom that would change the emphasis of our engagement with the
countries that are ready for such a change--from assistance to
partnership. It builds on successes in our assistance program while
focusing on trade and investment, exchanges and cooperative activities.
This initiative will support opportunities for U.S. business and help
support partnership activities by private U.S. organizations. A key
aspect of Partnership for Freedom activities will be their mutuality.
U.S. assistance is not charity, and the Partnership for Freedom
stresses areas in which both sides will benefit.
The results and successes I have just cited do not come out of the
air. They are not the product of guesswork. Through a collaborative
process with USAID development partners, field missions defined sets of
results, performance indicators and targets for measuring progress
against the achievement of strategic objectives. With these tools in
place, USAID is systematically incorporating performance information
into program reviews, planning and decisionmaking.
Country progress monitoring examines macroeconomic performance,
democracy and governance, and social sector data to help determine
whether continued assistance is necessary or justified. In combination
with other factors, this information helps form the basis for country-
level resource requests as well as decisions on country graduation from
U.S. assistance.
By managing for results, USAID has confirmed that many of the
countries in the region are implementing the policy and institutional
changes needed to make reform real. Not all the indicators are good.
While we applaud the successful completion of the first democratic
Presidential election in Russia's history, we also must take into
account that some 40 percent of Russian voters chose the anti-reform
candidate. In several countries, economic reform has advanced far
faster than democratic reform. The undermining of parliamentary
independence by the government in Belarus, a repressive regime in
Turkmenistan, and the disputed Fall 1996 elections in Armenia remind us
that progress toward democracy in the NIS is far from uniform.
Some social trends are also troubling, indicating that economic
reform has not always led to economic growth and equitable distribution
of wealth. Some of the NIS countries--most notably Russia--are now
experiencing income inequalities comparable to Latin American levels.
Although this may be attributable, in part, to wealth creation among a
few, poverty has also increased significantly. There is also the growth
in crime which is a serious threat to democracy and to the willingness
of US business to operate in parts of the NIS environment.
While five countries in the NIS witnessed an increase in life
expectancy since 1991, on balance, the region experienced a decrease.
Life expectancy among Russian males has plummeted--from 64 years in
1989 to 59 in 1993 and possibly as low as 57 today. In addition, six
countries in the region have experienced an increase in infant
mortality since 1991.
Just as the overall improvement in conditions in the NIS argues for
our continued involvement to help sustain and deepen reform, so too do
the less successful transitions argue for redoubled effort. The
building of free enterprise democracy in nations that have primarily
known despotism is not an exact science. There are no books that tell
USAID how to confront the withering of both a nation's industrial
capacity and its spirit after decades and decades of centralized
repression. No books, no manuals, except the ones we are writing. We
learn from our successes and we learn from our mistakes. That is why
the program I am describing today bears so little resemblance to the
program that the United States envisioned at the time the Soviet Union
dissolved. At that time we thought that our immediate mission was to be
the eradication of hunger; we discussed massive food relief. We
envisioned humanitarian assistance. But almost immediately we realized
that pure humanitarian assistance was not the answer. As the old adage
goes, it is better to teach the hungry how to fish for themselves
rather than to provide a one-time supply. Thus we have developed our
program of cooperation and partnership.
This year, in contrast to past years, I decided that our
Congressional testimony would not be arranged by country. I decided
instead that our testimony would reflect the way we actually do
business--by strategic objective. USAID's program in the NIS is not a
potpourri designed to produce a variety of salutary effects on life in
this or that country. It is rather a tightly focused program of
targeted assistance to promote U.S. economic and security interests by
supporting economic reform, democratic transition and social stability
in each respective country and across the region as a whole.
We have every right to be proud of our accomplishments in the NIS.
And when I say ``we,'' I mean two succeeding administrations, and the
three Congresses. Back in 1992, it was President Bush who saw the fall
of the Soviet state not merely as cause for celebration (which it was
and is) but as an opportunity to build peace and trade relations with
nations which, for decades, we essentially had neither. The FREEDOM
Support Act, which funds our assistance program, was the vehicle this
Committee sponsored and Congress enacted to facilitate this transition.
Upon his inauguration, President Clinton continued and advanced his
predecessor's vision.
I wish we could say that we have finished the job and are ready to
pack our bags and come home. I cannot say that. But we have made
progress throughout the entire region. As you will see in the appendix
to this testimony, we have had successes in every country and in every
area of reform. Reform is happening. But not overnight. As we have
learned over and over, the revolutions that accomplish things overnight
are those that tear down. Building takes time but we are doing it. I am
bullish about the future of this region.
Mr. Chairman: Again, thank you for inviting me to appear today. I
look forward to working with you over the coming years.
______
Appendix
Results in the Newly Independent States
building market economies
Russia:
As a direct result of USAID assistance, Russia's mass privatization
program (completed in mid-1994) transferred ownership of approximately
120,000 businesses from the state to over 40 million private
shareholders. The Russian people now have a stake in the economy and in
reform, and have the opportunity as entrepreneurs and investors to make
their own economic choices.
The private sector now accounts for 55 percent of GDP and employs
about half of the labor force. New businesses are springing up,
creating thousands of jobs. More than 200 institutions and
organizations which support entrepreneurship and innovation, such as
business incubators and business support centers, are flourishing.
A recent agricultural land privatization law gives citizens the
right to buy and sell land for the first time since the 1917
revolution. Titles to nearly a thousand parcels of land had been
transferred to privatized industrial enterprises throughout Russia by
October 1996.
A nascent residential mortgage market has been formed on the heels
of privatization of over half of Russia's housing stock. Some 25 banks
are now making housing mortgage loans on market terms--so Russians can
buy and sell. Where public housing remains, 80 percent of
municipalities have means tests for housing allowances, permitting them
to move to cost recovery.
The legal and regulatory framework to make the marketplace
transparent and businesses subject to the public interest is beginning
to be put in place. More needs to be done to make the tax system fair
and non-confiscatory, to prevent money laundering and other forms of
corruption, and to improve corporate governance, but a good beginning
has been made:
Passage of the Civil Code, which guarantees both freedom of
contract and protection of private property, is a major advance in
creating a legal and regulatory environment to support a flourishing
market economy. The passage of scores of other laws and regulations has
begun to establish the basis for trade and investment.
Capital markets are up and running, and regulatory mechanisms are
in place. Stock exchanges, clearing and settlement organizations, share
registries and depositories, and a securities commission are operating.
Several legal reform programs specifically address capital markets
issues, including corporate governance and shareholder rights.
Ukraine
Just two years into its serious economic reform program, Ukraine
has made considerable progress in monetary stabilization, trade
liberalization, and a substantial reduction in inflation, meriting
support of the World Bank and IMF.
USAID-assisted enterprise privatization is now well underway.
Bolstered by World Bank loan conditionality, some 400 companies a month
are entering the auction process. Approximately 30,000 of Ukraine's
estimated 40,000-45,000 small-scale state enterprises and over 3,500
medium and large enterprises have been privatized.
The National Bank of Ukraine (NBU) has taken significant steps
toward establishing a sound banking sector. NBU's Interbank Payment
System is fully functional with technical execution of payments now
taking minutes rather than weeks. Prudent banking regulations have been
enacted and approximately 1750 employees from over 100 banks have
attended training at the National Center for Training Bank Personnel,
which was created with substantial investment from NBU.
Parliament approved a broad strategy that establishes an open and
competitive structure for the long term evolution of capital markets in
Ukraine. An Association of Investment Businesses has been established,
uniting 140 investment funds and trust companies under a common code of
conduct. An Over-the-Counter trading system and a self-regulatory
organization to govern it have been established. Live trading began in
June 1996.
With USAID support, Ukrainian Government introduced targeted,
means-tested subsidies for housing and utilities in conjunction with
IMF-mandated price increases. More than 3.2 million families were
reached through the subsidies program, enabling price increases for
housing and communal services. As a result, net savings of $600 million
was estimated for the 1995 national budget.
Moldova
Moldova is a reform leader, with a stable currency, low inflation,
liberalized prices and open trade, and substantial privatization of
state assets.
The mass privatization program has nearly been completed, with the
participation of 90 percent of the eligible population and resulting in
the privatization of an estimated two-thirds of the Republic's agro-
industrial assets.
It is the first NIS country to establish an independent securities
market regulating entity (SEC) with Ministry status. The Moldova Stock
exchange opened June 1995 and by the end of the year, over 300,000
shares had been traded.
The Caucasus
Despite a necessary preoccupation with meeting humanitarian needs
resulting from the region's conflict, Armenia has made progress in
developing a market economy. It has moved into real economic growth,
first in the former Soviet Union to do so; taken initial steps in
privatizing agriculture and industry; and begun the legal, regulatory
and policy framework needed for competition and growth.
Armenia was the first of the former Soviet republics to adopt a
real property law which defines basic private property interests and
rights. Housing stock is being privatized and a real estate market is
developing.
The Central Bank of Armenia has greatly strengthened its primary
functions, with U.S. technical assistance; bank examiners are enforcing
bank laws and regulations, and installing an electronic accounting and
payments system.
Efforts are well under way in Armenia to de-monopolize the
electricity sector, rationalize energy pricing, and improve tariff
collection. Armenergo, the power utility previously responsible for all
electricity generation, transmission, and distribution, has been
effectively ``unbundled'' into three generation companies, one
transmission and dispatching company, and approximately 52 distribution
companies.
Georgia has made progress in macro-economic stabilization, reducing
inflation, liberalizing prices and stabilizing its currency.
Restructuring in Georgia's energy sector has resulted in the sale
of a number of hydro power plants to private investors, and creation of
a national regulatory body for the power sector. Georgia is
participating in an agreement with the Azerbaijan International
Operating Company and the Government of Azerbaijan on oil transit
issues.
in central asia
Accession to GATT/WTO. Both Kazakstan and Kyrgyzstan are well along
the way regarding the steps in the submission process for accession to
the World Trade Organization. The memorandum on the Foreign Trade
Regime of Kazakstan was prepared with assistance of advisors from
USAID. Negotiations, which will take at least one year, are expected to
begin in mid-1997. Accession would provide a certain level of comfort
for foreign and domestic investors that a legal framework is in place.
It would also provide for dispute resolution mechanisms, again, adding
to the comfort level of foreign and domestic investors.
New tax codes in Kazakstan and Kyrgyzstan. With USAID assistance,
both countries have signed into law the most comprehensive and systemic
bodies of law dealing with taxes that have been introduced within the
NIS. As such, they will serve as models for other Central Asian and NIS
countries that seek to improve fiscal systems and strengthen government
revenues. When fully implemented, both codes will have a tremendous
impact on the establishment of a sound fiscal policy which is fair,
transparent, enforceable, and non-confiscatory. Businessmen have long
told us that lack of such codes has been a major constraint to
investment and is a factor in business corruption.
Commercial Law. A commercial law training program for judges,
attorneys, and prosecutors is being implemented in Kazakstan and
Kyrgyzstan. This training is designed to address problems of white-
collar commercial crimes which are a growing problem as these two
societies undertake market reforms.
Capital Markets. In both Kazakstan and Kyrgyzstan, a Securities
Commission has been established as a fully independent body apart from
the Ministry of Finance with full regulatory authority over the capital
market. The Central Asian Stock Exchange in Almaty has been operating
for two years; the Kyrgyz Stock Exchange has approximately 25 companies
listed on its exchange although trading volume is as yet very light.
Microenterprise Support. The FINCA Program (Foundation for
International Community Assistance) in Kyrgystan is only a little over
a year old, but has already started to show amazing success in
mobilizing resources for the growth of microenterprises. Focused
primarily on women entrepreneurs (98 percent), FINCA has created 264
village banks with trained staff and an active membership of over 3,000
depositors. These community institutions have lent $500,000 to over
8,000 microentrepreneurs in the past year. While only a small amount of
money in traditional USAID project terms, this credit is not only
attaining its objective of accelerating growth of microenterprises, but
in many cases these enterprises are now stimulating development of new
agricultural production and distribution systems in the rural sector.
Internet Homepage, a first for Kazakstan. You may be interested to
know, Mr. Chairman, that Kazakstan's Stock Exchange is reaching out to
investors worldwide, and with USAID assistance, has established an
internet homepage. Available in both English and Russian, it provides
company specific information on privatization and the Kazakstani
securities market. The Homepage includes databases on joint stock
companies, upcoming company sales, and legal information related to
business activities. It is also the only location on the Internet that
carries news from the Kazakstani press. USAID's objectives of ``more
sustainable private business operations'' are being launched to new
heights with the Homepage. Address: http://www.matrix.ru/stockinfo
Eurobonds. In December 1996, Kazakstan offered $200 million dollars
of three-year maturity Eurobonds to international investors; interest
was so high that the offering was oversubscribed. This offering came
after USAID-funded U.S. Treasury advisors provided assistance to the
Ministry of Finance. This bond offering is of critical importance
because proceeds from this issue will be used to reduce government wage
arrears, purchase electrical power and fuel, as well as fund the
acquisition of medicines and other supplies for the health sector.
Energy Sector Reforms. As a result of USAID technical assistance
and partnerships between Cincinnati Gas and Electric and Kazaki
utilities, 70 percent of electrical generation in Kazakstan is being
sold to the private sector, including American investors such as AES of
Alexandria, Virginia. This reform represents billions of dollars of
private capital. Soon to follow will be distribution companies. In the
Caspian Sea context, the largest new petroleum potential in the world,
USAID is currently helping to develop an oil and gas legal, regulatory
and environmental framework based on international standards to further
private investment.
establishing democratic institutions
Russia
In 1996, Russia held presidential, parliamentary, and local
elections all in the space of one year. And the process had real
credibility among the citizenry and international election observers.
The fact that 40 percent voted against reform in the Presidential
election tells us there is still much to be done to win support for
further change, but it also attests to the legitimacy of the elections.
Judicial reform has resulted from workshops, training and
exchanges, including a pilot program to reintroduce jury trials for
serious criminal offenses in selected regions. USAID has provided
copies of the Civil Code, Part I, to all judges and trained over 40
percent of them in commercial law.
There are now 40,000 registered NGOs in Russia, up from just a
handful in 1991, representing citizens' interests and advocating policy
change at the national and local levels.
One of the most striking differences between the Russia of 1991 and
today is the variety of media outlets bringing information to people.
In 1991, all Russia received its televised news from only one source,
the government controlled service. Today there are at least 500
broadcasting companies producing original programming in Russia. The
Russian government can no longer keep a war in Chechnya or the health
of its leader a secret from its citizens. Internews, an American NGO,
has played a key role in Russia with USAID funding by training and
networking both broadcast and print media in the private sector.
Ukraine
A fundamental first step in the establishment of the rule of law
was accomplished with the June 28, 1996 adoption of a new constitution.
The U.S. Government's programs in Ukraine contributed significantly by
sponsoring town meetings to encourage wide public debate; providing
lawmakers with information on comparative constitutional systems;
assisting Ukraine's independent media, which provided extensive
coverage; and supporting a public education campaign.
With USAID assistance, local governments are becoming more
responsive to their constituents. They have introduced a variety of
democratic reforms such as more open budgeting, town meetings, citizen
task forces, constituency outreach and local government watchdog
groups, many of which have never before existed. Municipal services are
more efficient and better financed.
USAID developed a network of 25 Press Clubs throughout Ukraine
where journalists can meet on a weekly/biweekly basis with GNU
officials to discuss different issues of privatization and economic
reform. Weekly meetings at the Kiev Press club meetings are shown
nationally during the main news program on UT-1, providing a very
effective means for GNU officials to reach a large audience.
Caucasus
Armenia has made strides and had setbacks in its democratic
transition in the past year. It held parliamentary elections and
approved a new constitution in 1995. In late 1996, presidential and
local elections were held but international observers described them as
flawed.
An objective, professional and independent journalistic cadre is a
necessary component of democracy, and its development is a major USAID
focus. USAID helped to organize Armenia's independent television
stations into a network with a capacity for objective, professional
journalism.
Progress in democratic political processes is further along in
Georgia than elsewhere in the Caucasus. The parliament is one of the
most progressive in the former Soviet Union. There is a perceptible
strong will in the political leadership, in the media and among civic
groups to advance and protect the new democracy, to establish a
transparent system of public administration and the rule of law.
Georgia is drafting a new Civil Code.
USAID support has led to the creation of 50 new Georgian NGOs
participating in democratic and market reform.
An independent television network was created in Georgia with 11
individual stations.
In Azerbaijan, USAID and its NGO partners have made headway in
strengthening the NGO sector, independent media These nascent entities
are critical to support a transition toward democratic governance.
Central Asia
NGO Development. Turkmenistan is not a democracy, yet USAID
provides critical support for the growth and development of country-
wide citizen initiatives. We are providing this support through the
ASSAYER (formerly the Institute for Soviet-American Relations) grant
program for assistance to environmental non-governmental organizations.
While government policy prohibits the import of foreign magazines and
newspapers, the Turkmen NGO, Catena, working with its U.S. partner, the
Sacred Earth Network, provides free NGO access to information from all
over the world through Catena's Internet link-up. Catena pays for its
work with local NGOs by offering reasonable and reliable paid Internet
service to Turkmen businesses and government officials.
Turkmen NGO Promotes Civic Education. Another Turkmen NGO, Dialog
Center for Civic Education, can be counted along with Catena, as one of
the few indigenous groups actively working in the rather restrictive
environment of Turkmenistan. With USAID funding through the National
Endowment for Democracy and a grant from the USAID funded NGO,
Counterpart, Dialog recently took a significant step towards wide
dissemination of the concepts of civic education by publishing a book
entitled ``The ABCs of Civic Education.'' This book has been well
received as a vehicle for disseminating and promoting democratic
principles and the concepts of civic education.
Media Support. Internews, an organization funded by USAID through
the Soros Foundation, promotes independence and diversity of the
broadcasting media in Kazakstan, Kyrgyzstan, and Uzbekistan. Internews
has been a prominent voice in promoting democracy through the
establishment of independent television stations. It is helping to
establish independent television stations by providing equipment,
technical, and business training. Numerous independent stations have
benefited from workshops and instructional materials. The impact of the
work of Internews is greater access by the public to an increasingly
strengthened and diversified broadcast media.
National Elections. USAID provided funding to the American Bar
Association and the American Legal Consortium to prepare analyses of
the Kazakstani Constitution which was passed by national referendum in
September 1995. According to the Kazakstani government, 90 percent of
the population turned out to vote.
Responsive and Accountable Local Government. With USAID funding
through International City Managers Association (ICMA) technical
assistance, the Semipalatinsk region of Kazakstan is benefitting from a
determination to reform local government. The region has privatized
housing, established open and competitive contracting for providing
goods and services and established a short-term safety net for those
who are most affected by the transition process to a market economy.
When housing was originally privatized, the government discovered it
could no longer provide maintenance services. ICMA provided assistance
in the formation of housing associations, the new institutional
mechanisms through which homeowners may channel requests for
maintenance services. Fledgling results are that homeowners now get
maintenance work done much sooner and the government gets out of the
recurrent cost business of apartment and home repairs and maintenance.
Eurasia Foundation. In the last couple of years, the Eurasia
Foundation has blazed the trail in responding effectively to on-the-
ground reform needs as seen by NIS citizens and institutions
themselves. In the Central Asian Republics, the Foundation has invested
roughly $6 million to support reform minded grassroots initiatives such
as the liberalization of laws governing media and the free press, the
development of new modes of citizen-government relationships through
linkages between university and training programs on public
administration reform, and the strengthening and expansion of the
nonprofit sector through newly established NGO resource centers.
Finally, to better address the growing demand such new and innovative
programs in this area of the world, the Foundation has opened a smaller
satellite office in Almaty that broadens its outreach ability.
strengthening the social sectors
Russia:
Social impacts of societal change are also critical. Reform efforts
could be jeopardized if, for example, citizens cannot access basic
health services or other services essential to their welfare. Likewise,
failure of Russia to address its serious problems of environmental
pollution and unsustainable management of natural resources will both
undermine long-term economic growth and produce substantial negative
global environmental impacts.
Health reform has produced new policies, laws, and models that are
helping Russia improve the quality, organization, and financing of its
health care system. Health care is no longer always controlled from the
center, and is becoming more efficient and responsive to patient needs.
U.S.-Russian hospital partnerships have taught Russian health
professionals state-of-the-art practices in several specializations,
including women's clinical services, and contributed to improved
hospital management. Modern contraceptive use is increasing and
abortions are decreasing.
Modern economic tools are being incorporated in to environmental
policy-making, e.g., introduction of user fees and regional forestry
codes. Environmental NGOs are vigorously pursuing public education,
clean-up projects, and legal and legislative efforts.
Ukraine
Ukraine is making progress in protecting the most vulnerable
members of society during the economic transition and making serves
more efficient and financially sustainable. Universal price subsidies
are giving way to assistance based on need. The income-based benefits
program on housing and utilities, developed with USAID support, is a
model for a broader program of means-tested benefits for the needy. It
has resulted in a savings of $600 million in 1995 and a projected $1
billion in 1996.
The number of NGOs has grown markedly, from roughly 40 in 1990 to
an estimated 5,000 in 1995, with almost half working to provide social
services that the government may no longer be able to afford. USAID
programs have trained over 1,200 NGO leaders, partnered U.S. private
and voluntary organizations with Ukrainian NGOs, and provided critical
support to social service, public policy, human rights, and women's
NGOs and civic organizations. Recently, USAID launched a new program to
strengthen social service and advocacy NGOs and to improve the legal
and regulatory environment for NGOs.
Health care efforts are combatting a diphtheria epidemic, reforming
delivery and financing at local levels, for better responsiveness to
citizen needs, improving water quality, and making modern family
planning methods available instead of abortion.
Caucasus
U.S. assistance to the Caucasus has been predominantly
humanitarian, given the severe hardships engendered by regional
conflict for all the peoples of this area. Food shipments have fed
needy citizens, refugees and displaced persons; fuel shipments have
increased electric power; winter warmth programs have provided heat for
houses and schools. School attendance in Armenia rose significantly as
a direct result of this heating program. Pharmaceuticals have met
medical needs and large segments of the vulnerable populations have
received vaccines against infectious disease.
Central Asia
Privatization in the Health Sector. In Kazakstan, the state-owned
pharmaceutical distribution and retail system known as ``Farmatsiya''
has been almost completely privatized, helped along by USAID-funded
technical assistance. Of 1,378 pharmacies, 691 have been auctioned and
562 were privatized by the end of 1996.
Health Reform in Kyrgyzstan. A critical element of USAID's health
sector reform in the NIS is empowering consumers by promoting choice
and responsibility. For the first time ever, Kyrgyz consumers have an
opportunity to choose their health care provider. In June 1996, the
health reform program launched a family medicine enrollment campaign in
which 86 percent of residents in Karokol city and 96 percent of
residents in Tyup in eastern Kyrgyzstan selected from a newly
refurbished group of family practices.
Women's Health in Central Asia. USAID has allocated $22 million
since 1993 to reduce high maternal mortality in the Central Asian
Republics related to high fertility and the use of abortion for
fertility control. As you may know, in the former Soviet Union abortion
was the main method of birth control and many women had multiple
abortions in their lifetimes. The American International Health
Alliance (AIHA) received funds in 1996 to establish two women's health
clinics in partnership hospitals in Kazakstan and one in Uzbekistan.
USAID reproductive health programs support modern, effective, and
well-financed family planning services by providing assistance in
strategic planning for nation-wide approaches, clinical training,
expanding contraceptive marketing and informing men and women about
modern contraceptives as an alternative to abortion. In 1997, USAID
will support family planning training for Kyrgyz general family
practitioners in group practice to expand services beyond women's
clinics, and continue to expand and strengthen contraceptive marketing
programs in Kazakstan and Uzbekistan. Project sites reported a 58-
percent increase in modern contraceptive use and a 30-percent reduction
in abortions in 1994.
In 1996, a single center, Marriage and Family Center in Bishkek,
Krygyz Republic reported an almost 50 percent decrease in the numbers
of abortions since 1994 and a 200 percent increase in the use of oral
contraceptives (1994-1,333 clients to 1996 4,140 clients) during that
period. Clearly there is a hunger for modern methods which can lead to
nation-wide impacts.
Aral Sea: In Kazakstan, Turkmenistan, and Uzbekistan, the US
through USAID provided technical assistance for upgrading and improving
water systems to supply potable water to populations at risk. By
focusing on providing safe drinking water supply, which is an
environmental problem of the highest priority to each national
government, U.S. credibility and access was greatly enhanced. USAID's
tangible investments in potable water improvements have helped in turn
to create strong working relationships with the region's new
governments on issues of water management. Beginning in 1995, this
credibility was used to establish a new USAID-supported regional
program on water resources management to introduce concepts of water
economics and conservation prevalent in the United States and Europe to
the broader Aral Basin.
contrasting georgia to the ukraine
Senator McConnell. I did find it interesting, your
contrasting Georgia to Ukraine. Georgia has certainly made
significant progress, and I think it is reasonable to assume
that this subcommittee, at least in the chairman's mark, is
going to reward that progress with additional support. Ukraine
is certainly, for all of the reasons you all have outlined, a
mixed bag.
I think of Ukraine's decision not to sell turbines for the
Iran nuclear reactor, something which the Russians continue to
support, as clearly something on the plus side for Ukraine. I
mean it cost them $400 million or $500 million to refuse to
sell those turbines to Iran, while our good friends, the
Russians, continue to help the Iranians with that facility.
When I asked you, Mr. Morningstar, to give us some of the
breakthroughs, you did give us some. But one does get the
impression that it is really quite a mixed bag.
Is it your view, either of you, that in addition to the
problems of organized crime in Ukraine, that there is also a
problem, a significant problem, with official government
corruption as well?
Mr. Morningstar. At various levels and in various
instances, I think it is pretty clear that corruption is
existent. I think if anyone has to look at the cause of some of
that corruption and what one does about it, part of it, as I
mentioned earlier, is a result of the incredible amount of
bureaucratization and regulations that literally give the
opportunity for government officials to assert undue influence.
Senator McConnell. So it is more systemic?
Mr. Morningstar. I would say it is a combination. I think
too often we simply say the problem in Ukraine is corruption.
Yes; corruption is a problem. It is a problem in a lot of the
NIS countries and other countries in the world as we all know.
But it also is a systemic issue relating to some of the archaic
laws and the bureaucracy and regulations in the country as
well, and the opportunity, as I said before, to exert undue
influence. We need to work on it.
Senator McConnell. To the extent that it may also be
individuals in key places, is it widely known who those
individuals are? And if it is, in your view, why has not
President Kuchma just dismissed them?
Mr. Morningstar. The answer is I have no idea why President
Kuchma has or has not dealt with various officials. Anything
that I would say about any individual would be pure speculation
and not based on any hard evidence. I do know that President
Kuchma, over the last month, as a result of his new clean hands
campaign on anticorruption--at least I have been told--has had
some very, very hard meetings with good government officials.
And it is my understanding that some officials have in fact
been dismissed over the past month for corruption.
transparency
Mr. Dine. Mr. Chairman, I would just like to add one item,
and come back to the term I used before, ``transparency.'' The
deregulation package that we and the IMF have proposed will
enhance the theme of transparency that will start to overcome
the official corruption that has been engaged in. So there are
ways of working on this problem. But, basically, it is an
internal problem that has to be faced up to.
american values
The thing that always amazes me, in the 3\1/2\ years I have
been in this job now, every time I come back to this country, I
always ask myself, how are we different? And the two things
that always strike me is, No. 1, the Puritan ethic. And, yes,
we have our problems with corruption, but it is considered a
value, a no-no value. It is something that is ingrained in all
of us about right and wrong.
And, second, it is the Constitution, the flexibility, the
ambiguity, the genius of our Constitution. And these countries
are still in a straitjacket of the past. The burden of history
overwhelms them. If you read Russian literature even before
communism, it is all about corruption. Most of our literature
is about victory.
Senator Leahy. Mr. Chairman, I just wondered, Ambassador
Morningstar, in your answer to the question, among the people
involved in corruption, would that include Prime Minister
Lazarenko? I mean he is accused, in the press anyway, of all
kinds of corruption.
Mr. Morningstar. I think it would be unwise for me to make
any kind of direct allegation with respect to the Prime
Minister. I certainly do not have any specific evidence of
corruption on his part. But I am well aware of everything that
has been written.
prepared statement of senator leahy
Senator Leahy. I just want to make sure you are aware of
what has been said.
Mr. Chairman, can I just leave my statements and questions
for the record? I have to go back to another committee.
Senator McConnell. Yes; Senator Leahy's statement will be
made a part of the record. And you are also submitting
questions, are you?
Senator Leahy. I am. I raise some of the same skepticisms
as you. And I think we both want to help in any way we can. But
they are making it harder and harder to pull this sled.
[The statement follows:]
Prepared Statement of Senator Patrick Leahy
Mr. Chairman, it would be hard to think of a more important
foreign policy goal that supporting democracy and market
economies in the former Soviet Union. I was pleased to see the
increase in funding for aid to the NIS in the President's 1998
budget request.
These countries are really starting over from scratch--in
fact it may be even harder because they have to reverse so much
of the damage that was done over the past 70 years.
We have to be realistic in our expectations--the problems
there are not going to solved overnight. But we also need to
learn from our mistakes. As far as I can tell, our efforts have
been plagued by poor design, poor management, and often
disappointing results.
Some of that was predictable--we are talking about
countries where there are powerful forces opposed to change.
But we have seen some of the same problems of other hastily
conceived aid programs. I am reminded of what happened in
Panama after the overthrow of General Noriega. We rushed a lot
of money down there, and a lot was wasted. We did the same
thing in Nicaragua. Then, just to show how little we learn from
our mistakes, we repeated some of them in Russia and Ukraine.
That is not to say that nothing has been accomplished. When
you consider where they started, a lot has been accomplished--
from hospital partnerships to legal reform. But many AID
personnel were ignorant of the language and culture, and relied
on foreign nationals who took advantage. High-priced
contractors with past connections to AID but no previous
experience in the NIS, ``reinvented'' themselves to get AID
contracts from NIS funds.
Today, many Russians, who have not received a paycheck in
months, have lost faith in their government and in our ability
to help them. I am sorry to say that I share some of their
disillusionment.
Add to that the rampant corruption and organized crime, and
the picture becomes pretty bleak.
I want to see this program succeed. I think the new
``Partnership for Freedom,'' as much as I dislike slogans,
represents a step in the right direction. I am a big fan of
partnerships and exchange programs. Like Chairman McConnell, I
strongly support programs to combat organized crime. And I
certainly favor doing all we can to promote trade and
investment.
But if someone asked me whether AID and the State
Department are capable of carrying out a cost effective program
in the NIS, I would have to say ``I don't know.'' The record is
mixed.
I have supported aid to Ukraine, and believe President
Kuchma is trying to do the right thing. But the corruption that
has infested his government, which has plagued American
businesses trying to get a foothold there, is outrageous.
Investment contracts don't seem to be worth the paper they are
printed on. Company representatives have been threatened, their
property stolen, and several large businesses have simply
pulled out. Millions of dollars have been lost. Others are
fighting their cases in the Ukrainian courts, with little hope
of getting justice. The Gala Radio case is one appalling
example.
I know Chairman McConnell is concerned about this, as I am,
and we will be watching the situation there very closely.
I know you both--Mr. Morningstar and Mr. Dine, are also
concerned. But it is no longer enough to say you are ``raising
these concerns at the highest levels.'' The situation is worse,
not better, and the Ukrainian officials' response has been to
dismiss most of the complaints as fabrications. They are not.
Mr. Chairman, I am going to support the President's request
for the NIS, because I believe it is in our national interest.
But I also want to work closely with you so we get the maximum
results for our money, and American investors are treated
fairly.
Thank you.
corruption
Mr. Morningstar. Is it possible, since you did ask, just
quickly before you leave, Senator Leahy--you did ask a
question--why should we continue to pour money into these
countries? Could I just briefly respond to that?
I think that we need to have the discipline, all of us, to
do what is rational and to do what makes sense. And in my view,
that means doing what is in our national interest and carrying
out those programs which make sense, which continue to make
sense, depending on whatever the circumstances may be. I think,
for example, to cut assistance simply as a pure punishment does
not make sense.
I think what makes sense is that if the Ukraine, for
example, is making no progress--if we determine, in
consultation, that in fact they are making no progress in the
agricultural area--and I could make a very strong case that
they are not--then, yes, maybe that program should be suspended
or deferred until certain conditionality takes place. That, in
effect, is what the World Bank is doing. I think you could say
the same with respect to the energy market and with respect to
privatization.
But I think it would be a mistake and against our own
national interests simply to take the punishment approach,
whether it be with respect to Ukraine, Russia or any of the
other countries. But, again, we want to help the private
sector, to help the communities, to help the individual
citizens.
Senator Leahy. Thank you.
ukraine
Senator McConnell. The dilemma, it seems to me, is
fundamentally this. Because of size and strategic geographic
location, I am sure we would all agree--with all due respect to
the other former Soviet republics--that Ukraine is potentially
the most important of all the non-Russian republics. Although
we have had some tussles over just how much emphasis you put in
Moscow at the expense of the other republics, helping Ukraine
achieve its potential is in our national interest, we would all
agree.
At this juncture, having seen the mixed bag of progress--
and, clearly, when contrasted with Georgia, they do not a have
good record--the dilemma is what is the best way to go from
here?
Now, the administration--any administration--would prefer
to have no earmarks, and we have had those tussles in the last
4 years. I have felt we needed to have them or you would spend
all the money in Russia. You have wanted the flexibility, and I
understand. If I were in your shoes, I would want it as well.
But this year, after 4 years of this subcommittee's steady
support for Ukraine, with the earmark I find myself
disappointed in what those 4 years have brought. And I am
trying to think through--and I am thinking out loud here with
you--as to where we go from here.
Even though you would like to have a blank check, I think
we are probably not going to give you a blank check. But in
filling in some of the lines in the check, I am torn this year
as to what is the best way to send a message, the carrot or the
stick. It seems to me it is not clear.
Mr. Dine.
Mr. Dine. I think you and I have experienced other accounts
in which this question has come up. There is no doubt in my
mind, that, after all of this effort, if things seem to be as
bad as we all agree, you have to hold out the opportunity, but
only if they perform. To me, that is natural, that is human
nature. And that is often how we get over some stumbling.
You know, if you look at Georgia before that December 1995
election, it was mired in corruption, assassination, and the
whole Abkazia situation had complicated things further. And we
were very, very concerned. The election itself happened to be a
liberating event. And all of the attributes that we have so
respected Mr. Shevardnadze for and also the parliament--you may
have met the 33-year-old speaker when he was here--he was
impressive. And there are many more like him.
And I think, with patience, with hard work, patience,
carrots and sticks, Ukraine is going to bust out of itself,
too. We have got to help them get beyond the past.
Senator McConnell. I like having the Georgian example in
the neighborhood.
Mr. Dine. They butt up against Hungary, too. And Hungary,
in foreign investments, is No. 1. And it drives them crazy
every time we use it as an example. Again, the basic
fundamental stuff of private property, of individual rights,
and of limited government has to get through to them. After
all, that is our revolution, and it is still going on.
Senator McConnell. Let me ask you one more question in this
round, then I will turn to Senator Murray.
I know, of course, you would like to have no earmarks at
all. On the assumption you are going to have some, which would
you rather have? Given where we are today with Ukraine and
where we could like to go, where would you put your priorities?
Mr. Morningstar. Do you mean from a country earmark
standpoint?
Senator McConnell. Let me rephrase the question. Assuming
we gave you essentially unearmarked funds for Ukraine, tell me
again what your priorities would be for the next 12 months.
partnerships
Mr. Morningstar. I would say that the priorities should be
in four or five different areas. First, I think we should
institute in Ukraine as many Partnership for Freedom-type
activities as possible. I think we ought to emphasize
activities that are at the local and community level, and
increase exchanges and increase partnerships and use those as
vehicles and mechanisms to get assistance and cooperation to
the local level. That, in turn, will generate pressure on the
national level.
Second, I would want to continue to work with Ukraine in
the area of legal reform--to the extent that we have determined
that in fact there was a will and there is a chance of moving
forward to continue to work with them on criminal codes with
respect to criminal procedures codes and generally with respect
to the rule of law.
Next, I would want to get into areas where they really
showed a genuine commitment to move forward. If President
Kuchma can convince all of us that in fact he is serious about
the issues relating to corruption, I think we do need to help
with respect to transparency issues, both in connection with
the regulation--work with him on things such as conflict of
interest, open tender processing, the kinds of things that
basically will show that they have a fair process. I think we
should continue working with small business.
Senator McConnell. What about the law enforcement training
issues?
Mr. Morningstar. I would include that. The law enforcement
training continues to be important. I think those programs are
beginning to show some results.
Senator McConnell. How about the economy? They are doing
great work.
Mr. Morningstar. Everything I hear about it is sensational.
We ought to be increasing what we can do in that area. I think
that, with respect to Chernobyl, we are going to have to make
sure to continue that. A memorandum of understanding and some
of the earmarks with respect to that assistance should continue
to move forward. The issues are basic, in the area of energy
reform, the area of agriculture, the area of privatization,
whether or not Ukraine shows that they are serious.
I can make a very strong argument that given the continuing
development of Parastatal, the failure of the privatized grain
elevators, the issue relating to grain embargoes, all the work
we have done on commodity exchanges is going to naught because
of state control over that issue. And that is an area that we
gave some very serious consideration to suspending or deferring
until they show that they are moving ahead.
I think we also need to work very closely with the World
Bank, in coordinating with them with respect to their
conditionalities and when they feel that they can go forward in
the areas of central agriculture, energy and public
administration and privatization, that we should work with them
in a coordinated way.
reformists' triumphs in bulgaria and romania
Mr. Dine. I fully agree with what Dick just said. We faced
a similar situation a couple of years ago in Bulgaria. The
socialist government ruled from the center and refused to
reform. We were knocking our heads up against the wall. And our
mission director there said let us go to the cities, let us go
to the municipalities. And we started working in 10
municipalities, even with socialists. And after the elections,
reformers had won 9 out of 10. These folks wanted to reform as
fast as possible--privatization, housing, you name it, land,
urban land, utilities, urban waste, great.
And Romania had its breakthrough on its election. There is
a new day there. And we are working very closely with the
government. And now there is the Bulgarian situation. And so if
we do the steady work, the fundamentals, I believe time takes
care of itself.
Mr. Morningstar. The type of thing we ought to be doing--
just to give a plug to a program--a prominent member of the
Ukrainian art community came up with a program that AID is now
funding that is exactly the kind of thing we need to be
emphasizing, which is pushing the relationship between cities
and using relationships between cities as vehicles to provide
assistance to Ukrainian communities.
For example, if a given community has a problem with
respect to sewage or a problem where it wants to learn more
about municipal bond financing or whatever it may happen to be
that these are the kinds of things we need to do.
Senator McConnell. Senator Murray.
Senator Murray. Thank you, Mr. Chairman.
And thank you, Mr. Morningstar and Mr. Dine. It is good to
see you again. I appreciate all of your work, particularly, of
course, in the Russian Far East.
As you know, we have had continuing conversations about
that. And, as you know, that is an area that my State is very
interested in, both dealing with the challenges and the
tremendous opportunities that are there. And I appreciate the
work that has been done there.
I just have a couple of questions. And you probably know my
first one, which is the funding for the west coast group, for
the Gore-Chernomyrdin Commission. I heard there is a little bit
of progress in that. Can you tell me about it?
Mr. Morningstar. The commitment was made, as you know, by
me some months ago. And as I understand, a letter went to you
from Mr. Kalicki of the Commerce Department, pledging the
$216,000 that would go to the secretariat. In any event, there
is no question that money will be provided. And it is necessary
that it be provided for the activities.
exchange programs
Senator Murray. I am very much looking forward to receiving
that letter. If you can make sure that that happens.
The other area I really wanted to ask you about today is
exchange programs that have been funded by USAID. And of
particular importance to me is the Newly Independent Youth
Exchange Program. I wondered if you could update me on where
you see that going, particularly with the consolidation in the
State Department.
Mr. Morningstar. This is something we were concerned about
in our office when we announced the consolidations would take
place. And in fact we confirmed with USIA that there would be
no interference at all with how the exchange programs are run,
at least through fiscal year 1998, as a result of this
consolidation. And we can give you and the staff some more
information with respect to that.
The Partnership for Freedom program budget, you might note,
wherever it is on one of these charts here, if we can pull it
out, would show a doubling of moneys that would be going to
exchanges. It is going from about $30 million in fiscal year
1998 to $59 million, as that chart shows. And we think that the
efficiencies in the program would literally more than double
the exchanges.
Senator Murray. Efficiencies meaning?
Mr. Morningstar. Lower cost per exchange. And we have been
successful in the last couple of years in reducing the cost of
exchanges significantly, in many cases by as much as one-half,
by doing more with respect to home stays and doing more with
respect to, at least on a professional level as opposed to the
student level, people paying their own way. And it is
interesting, by paying their own way, they are able to use
Aeroflot, which is much, much less expensive than American
carriers, I have to say.
Senator Murray. I appreciate that. And let me just say for
the record that I think this is extremely important that we
keep those programs intact. The real way we are going to have
democracy in the future, the real way that Russia is going to
succeed in the future is for those young people to have those
kinds of experiences that allow them to go home and share with
their fellow students and to become leaders for tomorrow. And
so I want to make sure that we keep those intact as we go
through some of these changes in those programs.
Mr. Morningstar. And that is the basic underpinning of our
new initiative.
Senator Murray. Thank you.
Thank you, Mr. Chairman.
Senator McConnell. Thank you, Senator Murray.
OK, let us go to Russia. Last year, the Russian GDP
declined 6 percent. A lot of the problem seems to result from a
tax system, described by the New York Times as ``a hodgepodge
of Soviet-era law, ad hoc new taxes and favors granted to the
well connected.'' Because of the revenue shortfalls at the end
of January, workers were waiting for $8.6 billion in overdue
wages, a problem compounded by the fact that the soldiers have
not been paid in 4 months.
Last year you came up here and said the IMF and the
administration had confidence that laws were on the verge of
being passed to rationalize the tax system. In fact, just
before the elections, the IMF had enough confidence to release
an additional installment of a $10 billion loan--a decision
some viewed as rather political. Since then, the IMF has
withheld three installments because of a lack of tax receipts
and the absence of any budget reform. Apparently, last week,
based upon commitments by President Yeltsin to reform
telecommunications, energy and rail monopolies, the IMF
announced plans to release more than $700 million.
I guess the question is this: Is the appearance of reform
rather than concrete results all that seem to matter to IMF,
and, for that matter, to the administration?
Mr. Morningstar. Obviously my answer is ``no.'' But I will
elaborate. First of all, the whole area of tax reform is one of
the few areas of technical assistance in Russia that I think we
need to stay very much involved in. In fact, in our new
program----
new investment initiative
Senator McConnell. Assuming we have any credibility at all
in tax reform.
Mr. Morningstar. Part of the new investment initiative
includes continuing to provide moneys with respect to obstacles
to trade and investment. The whole situation with respect to
the Tax Code is obviously very important. Things went very
slowly in the last year, obviously. And it is very frustrating
and had a lot to do with elections, and it had a lot to do with
President Yeltsin being sick and all sorts of excuses.
That does not matter. What does matter is that because of
our work with the appropriate officials in the Russian
Government, a tax code, a rational tax code, was finally agreed
to by the government just a couple of weeks ago. There was an
article about it, I think, in today's Wall Street Journal. And
that code has been submitted to the Duma. Or if it has not been
submitted, it is within hours of being submitted.
Senator McConnell. Does that have a pretty good chance of
passing, do you know?
Mr. Morningstar. There is some optimism. What happened is,
one of the debates that has been going on in Russia over the
last couple of months is whether it should be submitted as a
full code or whether it should be submitted in pieces. What
they finally decided to do was submit it as a full code, which
includes total revision of the value-added tax. It includes a
revised corporate profits tax, which allow for basic business
expenditures, for example, that never existed before. It allows
for depreciation and for revisions with respect to tax
administration. And there are other aspects as well.
And so what their strategy was to do was to submit it as a
full code, and then, if necessary, break it up into individual
pieces. But they are optimistic that it can pass, hopefully
during this year. And one of the things that I found in my
trips to Russia, in dealing with government officials at high
levels, as well as the Duma members and members of the Budget
Committee, who were very much involved with the tax codes, and
frankly members of all parties, is that they all requested tax
assistance. And it really does need to be cleaned up. So we do
hold out some optimism.
Also, one of the more positive things that happened is when
the finance minister came in, one of the changes that was made
virtually right away was the change in the new director of tax
estate services, who was appointed. And there was also a note
in the paper this morning that said that Gazprom--and this is
just a note in the paper, I do not have any other information--
had agreed to pay $2.5 billion in back taxes. And again, they
are getting serious about the issue.
Mr. Dine. The government has agreed to pay Gazprom several
more billion more dollars, though.
Senator McConnell. I was just thinking, if the Russians
pulled this off and successfully reform their tax code, we may
have them testify over here before the Finance Committee.
[Laughter.]
Mr. Dine. But, overall, Mr. Chairman, the economy in Russia
is on the right course. In the month of April, they had only 1
percent inflation. This is the first time it has reached 1
percent. Whether or not it is going to continue to go down, we
will see.
Senator McConnell. What statistic did you use in the
percentage of the economy in private hands in Russia?
Mr. Dine. I said 55 percent.
Senator McConnell. Fifty-five percent; I thought you said
65. Was it 55?
Mr. Dine. I said 55 percent of GDP comes from their private
sector.
That is the official statistic. In all these countries, if
you look at the gray economy, it changes. But those are the
official statistics.
Senator McConnell. On the corruption issue, we spent a lot
of time on corruption in Ukraine. It is a fairly serious
problem still in Russia. Have there been any examples in the
last year or so of any senior Russian officials being indicted
or prosecuted for corruption?
organized crime
Mr. Morningstar. I do not know. I am not saying it is not
the case, but I do not know of any senior official that has
been actually indicted. I know people have been removed from
the government. But I do not know of any.
Senator McConnell. Is the organized crime problem still
about where it was 1 year ago?
Mr. Morningstar. It is still obviously a very significant
problem. If you talk to Russians, they will argue that in fact
the situation has gotten somewhat better. If you talk to
American businesses in general, they think the problem is
handleable--handleable from the standpoint that I think that
most business people, American business people, who I have
spoken to, will say that if you know who you are dealing with
and if you lay down the ground rules right up front as to how
you are going to deal with your partners and people within the
government, that they can generally avoid many of the problems.
That is not true in every case. I can give you horror
stories in Russia, as is the case in Ukraine. But there seems
to be the view that the problem is manageable, but that we need
to keep working very, very hard with respect to it.
Mr. Dine. And again, in conversations I have had recently,
individuals have indicated that they do not have to park their
money anymore in Cyprus or Switzerland.
Mr. Morningstar. One of the other factors that has happened
in the last couple of months--and we will see how it all works
out--is that Nemtsov, who really, if you take what he is saying
at face value, is really trying to do some very remarkable
things with respect to demonopolization and corruption. I had
an opportunity to meet with him a few times in his prior life,
when he was the Governor. And he really is a very impressive
person. And I tried to explain myself and not get too excited
about some of these breakthroughs, just like we do not want to
get overly excited about some of the setbacks.
Senator McConnell. Ambassador Morningstar, with regards to
your testimony for a minute, you had a section on lessons
learned that was refreshingly frank. I was particularly pleased
to see you acknowledge the subcommittee's longstanding interest
in seeing an emphasis on more small-scale, grassroots
initiatives. However, I am somewhat stunned by your statement,
``We have learned that it does not make sense to spend
additional dollars on restructuring large, formerly state-owned
companies.'' And that is a quote from your statement.
According to one private study, we spent more than half-a-
billion dollars on privatization and follow-on activities. And
so I am curious as to when you figured out that was the wrong
approach and why.
Mr. Morningstar. Well, I very early came to the conclusion
that we were not going to be very successful at our efforts
with respect to larger-scale enterprise structures. We had a
program--and Tom and I agreed to cut it very shortly after I
came into my position--called the Powers Program, in which we
were given $800,000 each, through a group of consultants, and
to then take that $800,000 and go into a specific company and
tell them how they were going to restructure things.
What we found out very quickly was, one, that it did not
work, and, second, that these companies can afford to do it
themselves. They have plenty of assets. And even beyond that,
if we simply hand out the money for programs such as this, they
are not going to have anywhere near the commitment to following
through on the recommendations that in fact are made. These
companies have to have a piece of the action if they are really
going to believe or they are really going to appreciate and
follow through on the advice that they are getting. And we have
taken that approach now through all of our business training
programs.
The Morozov Institute, which has, I think, been a very
successful, now Russian-run, training program, is very much on
a cost-sharing basis.
Senator McConnell. What is happening to all of these
megaenterprises? Are they fading away, downsizing, going out of
business? What is happening to these massive, state-run
enterprises?
Mr. Dine. It depends on which country you are in.
Senator McConnell. We are talking about Russia.
state-owned companies in russia
Mr. Dine. Well, there is a whole range. Some of them look
like they are petrified at a period in time and they are just
standing still. Nothing is going on inside. Some are paying or
pretend to be paying workers still, but nobody wants to buy the
whole thing or part of the dinosaur. And so they are just going
to languish until somebody comes in and buys the land and
starts all over.
Senator McConnell. Well, they are presumably not making a
profit if they are laying people off.
Mr. Dine. They are not making a profit and not laying
people off.
I remember one discussion outside of Moscow less than 1
year ago with a company manager. He was railing about all of
the expenses he had because he had to run the hockey team, he
had to run the high school and the grade school, he had to run
a dormitory, he had to run a food servicing unit, and he also
had to do some products. And he was not breaking even. But he
could not break--the state cannot pick up--there is no social
safety net, or not a sufficient one, and, therefore, he was
stuck with all of these expenses. It was not a dead dinosaur;
it was alive. He was trying to take part of the factory and
make it profitable.
Mr. Morningstar. They are having some successes, I guess,
with respect to some of these companies, with people coming in
and purchasing bits of it.
But if there is any issue that keeps me up in the middle of
the night, this is the one. Because I have a really hard time
figuring out how these large-scale enterprises are going to
come down in size in a way that is balanced by the growth of
new business and the creation of new jobs. And that is why I
keep coming back to the point that we have got to do as much as
we possibly can do in these countries to build from the bottom
up and build the private sector. And even then, it is still
going to be a major, major issue for years to come.
Senator McConnell. Are not a huge number of these
enterprises, by Western standards, bankrupt?
Mr. Morningstar. Sure.
Senator McConnell. Is there such a thing as bankruptcy in
Russia?
Mr. Dine. Yes; but there is not enough case law even in the
civil codes. They comment on the bankruptcy, but----
Senator McConnell. It probably ought to be in receivership
or bankruptcy, the assets.
Mr. Dine [continuing]. But they are still owned by the
state.
Mr. Morningstar. This is one of the things that I believe
Nemtsov is trying to do. And the value of doing it is at least
this whole question of hidden unemployment will disappear. When
they talk about their unemployment numbers being in the low-
single digits, it is ridiculous. I mean you have all of these
people that are sitting, doing nothing, in these large
enterprises. And they need to recognize the situation for what
it is, and then determine how do we take care of these people
if there are not any jobs coming fast enough to take their
place.
Senator McConnell. I will never forget, I was at a seminar
4 or 5 years ago, there was a speaker there who was talking
about one Russian enterprise that made SS-18 or SS-24 missiles
and Christmas tree lights. Obviously, some central planner in
Moscow said, now, who are we going to assign the Christmas tree
lights to? And they found a place on the map. That kind of
thing is still hanging on.
Mr. Dine. Well, the ministries, politically, hold on to
these useless companies. And this gets to, again, given the
broader brush, the 35-year-olds and below are not interested.
Senator McConnell. They are all starting small businesses.
That is the good news.
Mr. Dine. And the interesting thing to me is that those
above that, who came out of these factories, who came out of
these enterprises, who are now major entrepreneurs, I mean
clearly, in the human chemistry, they just knew how to take off
without stealing.
Senator McConnell. But there is the vitality in the
economy, people are starting little businesses and growing off
to the side.
Mr. Morningstar. Absolutely. That is what the Partnership
for Freedom is all about. And the problem with the large
enterprises, if I might, is it affects other areas of reform as
well.
One of the things we are concerned about in Ukraine is the
energy reform. Over the last year, the World Bank is
complaining the tax collections are coming down, overall
collections are coming down. There is a reason why that is
happening. One, it is harder to collect in winter than in the
summer. But what is happening in the winter is that the
government is continuing to provide subsidies to its large
enterprises with respect to electricity. And so that is grossly
inflating the problem of nonpayment. So how do you do energy
reform when you have these kinds of issues?
Mr. Dine. Just one other point. Do not forgot that in this
whole account, there are other countries. There are economies
beginning to move quickly. And it is proliferating with the
small businessmen. For the most part, they are really moving
and they are showing real growth. I will mention Georgia and
Moldova. There are varying degrees of progress here. And it is
going to be the middle class, the entrepreneurial middle class,
that will build these countries for the future.
Senator McConnell. Just a couple of things to close. The
Russian Enterprise Fund has been a big disappointment, I
gather. They have spent more on legal fees than on successful
investments. And Mr. Morningstar, you were going to review it.
I am curious if you could give us any hope.
Mr. Morningstar. I think there is some hope. We have been
working very, very hard with all of the enterprise funds, not
just the United States-Russian investment fund, over the last 6
months, to work with them to develop performance measures and
to develop strategic objectives that will in fact increase the
rate of investment. They have had, I think, a difficult time
over the last few years.
Even successful enterprise funds in Eastern Europe have
taken some time to get up and going. We are caught in between
the need for and the importance of making rational business
decisions. We do not make investments in projects that they do
not expect to be successful--that is not going to teach anybody
anything--while at the same time trying to get money.
We are emphasizing small business lending in the regions,
which we think can be very successful--it already is--and can
be a more successful major activity. And we are encouraging
them to be open to projects that they think can be commercially
profitable and, when that is the case, to take the risk.
We think that the new CEO understands the importance of
moving forward. He has told me he is concerned. He wants to
move faster. And one of his principal objectives is to get more
reasonable projects out the door more quickly, including in the
Russian Far East. And that is where Senator Stevens' staff and
Senator Murray are working.
ukraine health earmarks
Senator McConnell. Finally, last year I put a couple of
earmarks in for breast cancer and for children of Chernobyl,
and I wonder if you could give me an update on where
implementation of those stand.
Mr. Dine. These are beginning to work out pretty well. On
the Ukraine earmark on birth defects, we have received a
proposal from the University of South Alabama. We have reviewed
it. We have provided preliminary comments. And we are
optimistic that we can develop that into a good program.
On Ukraine childhood mental and physical illness, we are
going to issue a request for applications during the next few
months regarding screening and treatment of mental and physical
illness and children. And we understand the birth defects
requirements to be technically and operationally distinct from
the broader mandate to address childhood mental and physical
illness related to Chernobyl. So we are taking those very
seriously.
Additional committee questions
Senator McConnell. All right. Well, thank you both for
being here. I appreciate it very much and we will continue to
talk.
There will be some additional questions which will be
submitted for your response in the record.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
Additional Committee Questions
Agency for International Development
independent media outside moscow
Question. I have read recent news reports regarding the
consolidation of broadcast media in Moscow by powerful economic
powers, leaving concerns that the sovereignty of the media will
succumb to political forces as well. What is USAID doing to
support decentralized, independent media outside of Moscow?
Answer. USAID/Russia works with Internews and the Russian
American Press and Information Center (RAPIC) to support the
development of independent television, print, and electronic
media--almost exclusively outside of Moscow.
Internews provides training and advisory services on both
technical and business issues, seed grants of equipment, and
program support to more than 90 regional independent television
stations. Although most of these stations started from scratch
in the early 1990's, by the end of 1996, more than 20 stations
were grossing in excess of $100,000 in monthly revenues.
Internews now estimates that up to 30 percent of the prime-time
viewing audience is now watching regional stations.
RAPIC works principally with independent, regional
newspapers. Through the Media Development Program (which RAPIC
and Internews jointly implement), RAPIC has deployed a number
of consulting teams which bring American media specialists to
Russia on a volunteer basis to work with independent media
organizations on business practices, including financial
management and advertising. RAPIC is also exploring mechanisms
to encourage alternative investment mechanisms, particularly
leasing mechanisms, which would provide cash-strapped
independent regional media organizations with an alternative to
state-owned presses, transmitters, and other capital equipment.
The competition for advertising revenues is tough and the
availability of needed capital financing is still limited. Top
quality independent media operations are, however, increasingly
seen as good investment opportunities. The U.S.-Russian
Investment Fund (TUSRIF) has already invested in media
companies in St. Petersburg. Metromedia (U.S.) continues to
pursue its business interests in radio and television. And, as
the question notes, major Russian companies with apparent
political biases are also purchasing media outlets.
In USAID's view, Russian television managers hold the keys
to the two factors most likely to ensure the continued
independence of independent media in the regions: Presentation
of high-quality and unbiased presentation of news and managing
financially-sound businesses.
Therefore, USAID's strategy is to continue to work with
regional media managers on these highly-related goals. Without
a good quality product capable of attracting a growing
audience, advertising revenues are not going to grow. Without
good management of those advertising revenues, the media
company is unlikely to attract larger equity investments or
secure needed loans.
This strategy may not prevent a biased investor from taking
over a regional media operation but it should ensure that
managers can turn down such potential investors if they wish.
------
Questions Submitted by Senator Leahy
american college of physicians partnership program
Question. Mr. Dine, I have been approached, as I believe
you have, by representatives of the American College of
Physicians, about their idea to develop a partnership program
dedicated to professional medical education in the NIS.
The idea is to send American doctors, who would volunteer
their time, to the NIS to provide continuing medical education
in the diseases that contribute the most to excess morbidity
and mortality, and where appropriate medical care could bring a
measurable benefit to health. They are talking about
cardiovascular disease, infections, diabetes, oncology,
respiratory disease.
They believe this would be complementary to the hospital
partnership program and other efforts we are making to improve
healthcare there. What do you think?
Answer. A partnership between representatives of the
American College of Physicians and a counterpart institution or
institutions in the NIS focussing on professional medical
education in the NIS would certainly complement current USG
efforts to improve health care in the NIS, including the
hospital partnership program.
The current hospital partnership program under the American
International Health Alliance agreement with USAID is scheduled
to conclude in December of 1998.
Beginning in fiscal year 1998, USAID plans to compete a
follow-on partnership program, the specific parameters of which
have yet to be determined. However, such a partnership as
proposed by the American College of Physicians may be
considered during any future solicitations for follow-on
partnership programs. All future partnerships are contingent on
the availability of future funds.
agriculture
Question. Mr. Dine, let me read you a quote from a recent
``L.A. Times'' article about the current state of agriculture
in Russia: ``Agriculture reform's most visible result has been
to create a new underclass of rural poor, tied to the land
because they have no money to leave, with little more hope of
freedom or well-being than their serf ancestors had more than a
century ago.''
I hear that USAID is pretty much out of the agriculture
business. Grain harvests in Russia are steadily shrinking. Have
we neglected an important part of the Russian economy?
Answer. It is true that USAID support for the Russian
agriculture sector has been limited. Because of the magnitude
of the economic problems and the fact that this sector has been
one of the least reform-minded, USAID (as well as some other
donors) felt that in helping to create a market economy,
agriculture was not the place to begin. Instead, we
concentrated on promoting systemic changes such as tax and
legal reform and development of capital markets (which would
also benefit agriculture), and in other areas where
opportunities for short term success were greater. In the past
3 years, with USAID/Russia's increasingly severe budget
constraints and little progress in agrarian policy reform, we
continued to give relatively low priority to agriculture.
Nevertheless, USAID's Russia program has undertaken some
significant activities in farm reorganization and post
restructuring support. Over 400 new, smaller, more efficient,
privately owned agricultural enterprises were created from 64
reorganized farms in 15 oblasts. An institutional capacity was
also established for Russians to expand farm reorganization in
these oblasts and to new regions. Through the Market-Oriented
Farm Support Activity (MOFSA), we are developing replicable
pilot models for agribusiness, credit, and social services.
Recognizing the success of the farm reorganization activity,
the Russian government requested USAID to extend the program;
however, because of budget restrictions we were unable to do
so. Similarly, MOFSA, while designed to be implemented in four
oblasts, was cut back to two.
With reformers now back at the helm of the federal
government, personnel changes in the Ministry of Agriculture,
and a number of regional governments taking progressive
approaches to agrarian reform, we hope to begin a dialogue with
Russian federal and regional authorities on a range of
agricultural reform initiatives.
center for citizen initiatives
Question. I know you are familiar with the Center for
Citizen Initiatives, and its efforts to develop a sustainable
agriculture extension program in Russia.
USAID has supported this in the past, and I understand you
are going to find some money for them this year. I want you to
know that I support this. Environmentally safe agriculture
makes as much sense in Russia as it does anywhere else. If we
can help them promote these techniques--if there are people
there who want to learn, we should help them. Would you like to
comment?
Answer. In all of USAID's agricultural projects, we are
concerned with promoting environmentally safe and sustainable
agriculture. We agree that CCI's work in this field has been
useful. We are now carefully considering CCI's proposed new
activities. Development of a full-scale agricultural extension
system is a long term and ambitious undertaking, which the
current Russia budget will not allow. We are encouraging CCI to
focus on providing extension-type information that will give
privatized farms access to technology and help them to better
manage their resources, thus enabling them to compete in a
market economy.
------
Questions Submitted by Senator Bennett
title viii funding
Question. The complex post-Soviet transition requires the
United States to continue maintaining the domestic intellectual
resources that have helped shape our policy. At present, the
only program currently devoted to this objective is the program
on research and training on Eastern Europe and the Independent
States of the former Soviet Union (Title VIII). Do you support
the continuation of the Title VIII program? If so, how do you
propose to best ensure the integrity of this important program?
Answer. We share your confidence that the Title VIII
program has historically produced significant research on the
countries of Central and Eastern Europe and the NIS. We
continue to support the Title VIII program. The budget for
Title VIII will be $4.2 million for fiscal year 1997, with
$900,000 from the SEED budget (for Central and Eastern Europe)
and $3.3 million from FREEDOM Support Act funds (for the NIS).
Congress enacted Title VIII to promote the U.S. national
interest by funding important research that otherwise was not
financed by private and academic sources. We are happy to see
that Central and Eastern Europe is increasingly the subject of
privately funded American research. For example, institutions
which did not exist when Title VIII was conceived, such as the
Central European University, the American University in
Bulgaria, and the Soros Foundation, are now promoting long-term
research by American scholars in this critical region.
Congress urged funding of Title VIII in the SEED and
FREEDOM Support Act budgets. While we understand why this was
done, it is a very tenuous arrangement. The non-Bosnia funding
under the SEED Act continues to decline. Further, we expect
SEED, as a temporary program, to be greatly reduced by the year
2000. We have recently announced the ``graduation'' of five
more Central European states from SEED over the next three
years. As a result, we have had to apply cuts to the Title VIII
program along with the rest of the SEED program. To preserve
the long-term integrity of Title VIII, a more durable funding
vehicle than SEED must be found.
At the request of the State Department's Bureau for
Intelligence and Research (INR), we have agreed to seek fiscal
year 1998 funds for Title VIII within the combined resources of
the SEED Act and FREEDOM Support Act accounts. Traditionally,
funding for Title VIII has come from the INR Bureau's budget.
We look forward to working with Congress to find a better
lasting funding arrangement than the SEED Act and FREEDOM
Support Act accounts.
russian demonopolization
Question. A recent Russian Government initiative has been a
prominent anti-monopoly drive designed-ostensibly-to break
apart the communist era monopolies that inhibit further
economic reform.
Yet the major monopolies-such as Gazprom and the Unified
Electrical System-are to remain under government control. And
the Russian government is now moving to create a state monopoly
in the telecommunications industry.
First Deputy Prime Minister Boris Nemtsov has even stated
that ``the richer Gazprom is the richer Russia is.''
Are any U.S. assistance funds being provided to what
amounts to a Russian policy of claiming demonopolization, while
at the same time strengthening them?
Answer. U.S. foreign assistance funds have, in fact, been
deployed to assist the Government of the Russian Federation
(GOR) in formulating recent reform initiatives related to
natural monopolies, i.e., those sectors such as utilities where
the magnitude of infrastructural investments make more than one
provider inefficient or impractical). U.S. foreign assistance
is also being used to strengthen regulatory commissions whose
purpose is to foster competition and prevent monopolistic
entities from exploiting their market position. The combined
assistance in these two areas has been approximately $4 million
since 1994. However, it should be clear that U.S. assistance is
not returning Russia to Communist era monopolies, but rather
supporting a series of structural reforms and improved Western-
style regulatory actions.
The Russian Government's commitment to the reform process
was demonstrated on April 28, 1997, when President Boris
Yeltsin signed Decree No. 426 approving a concept of structural
reforms in the natural monopolies and a three year plan to
improve the system of regulation of the natural monopolies,
including price regulation, deregulation of activities that are
not ``natural monopolies,'' and promotion of competitive
markets for natural monopoly products and services. These
reforms are to include the privatization of certain areas
controlled by monopolistic entities, such as Gazprom and the
Unified Electrical System Rossii (UES Rossii).
Presidential Decree No. 426 specifically calls for Gazprom
to be demonopolized to the extent that exploration, development
and production functions-which are not, in reality, natural
monopolies-will be opened up to other competitors. In addition,
regulatory steps will be taken to ensure that these competitors
will have non-discriminatory open access to the pipeline
network and reasonable transportation tariffs.
The Decree also calls for UES Rossii restructuring from a
monolithic entity, to separate entities in the fields of power
generating supply, power transmission, the operation of the
national wholesale energy market, and local distribution of
power.
The GOR exercises the regulatory control necessary to
ensure competitive and economic pricing and fair access to
transportation services; however, it does not control the 75
percent of stock required under Russian law to effect the
reorganization of the two companies advocated in Decree No.
426. In fact foreign investors own large blocks of UES Rossii
stock. It is hoped that the restructuring proposed under Decree
No. 426 as well as the influence of foreign investors will
result in enterprises that are well-managed, appropriately
regulated, and prosperous.
A comprehensive reform of the telecommunications industry
is also addressed in Presidential Decree No. 426. Although the
GOR does plan to combine the monopoly in local service with the
monopoly in long-distance, this is, in fact, an effort to
package the telecommunications entities so that large parts of
them can be privatized. The GOR has stated that the sale of 49
percent of the combined monopoly is imminent, subject to
signature of the Presidential Decree. Plans for the sale are
virtually complete. Provided the sale goes forward as planned
and the new Federal Communications Regulatory Commission is
formed-which will be due in large measure to U.S. assistance-
the reform of the telecommunications industry will, in fact, be
significantly advanced. In addition, expanding cellular
telephone networks are already creating substantial competition
within the telecom industry which serves to mitigate
monopolistic tendencies.
property rights or freedom of speech
Question. The development of property rights and the
creation of a free and independent press are key objectives of
American assistance policy in the NIS.
Yet these two fundamentals of a democratic society are now
in conflict as Lukoil, Russia's largest oil company, has
attempted to censor Izvestiya, a leading pro-reform newspaper.
Piotr Nayev, a Lukoil spokesman, summed up the conflict by
concluding that ``property rights are [more] important and
freedom of speech * * * must be in second place.''
What provisions has the administration made to handle
America [sic] policy in the event of conflict between
fundamental assistance priorities? Will it support property
rights or freedom of speech?
Answer. USAID does not envision a fundamental ``trade-off''
between property rights and freedom of speech issues. Property
rights--so long as governed by rule of law and accepted anti-
monopoly limitations (which have not yet taken hold in
Russia)--should, in principle, go hand in hand with freedom of
the press. The development of diversified capital markets, as
free as possible from corruption or from state domination,
would maximize the range of lending and investment sources
available to the mass media, enabling the free development of a
broadly pluralistic range of media outlets. In principle,
property rights as well as freedom of speech constitute
mutually-supporting components in democracy and in democratic
media systems.
USAID supports the freedoms of speech and press through
many programs, including the RAPIC-supported Standing
Commission on Freedom of Information, the Glasnost Defense
Foundation, and the Media Law and Policy Center. These and
other USAID programs promote legal progress toward a regulatory
environment that is conducive to the continued development of a
free press.
USAID's Media Development Program (MDP) and Media Viability
Fund (MVF) are working to expand the range of lending and
investment sources available to the independent media. These
programs, in addition to the LUKOILs of the world, will provide
independent media outlets with many additional sources of
capital infusion.
In terms of property rights, USAID has provided technical
support for privatization, legal drafting, and improved
regulation of natural monopolies in the public interest,
including in the telecommunications area. A broadened range of
legally recognized property rights, with careful limitations
placed upon monopolistic tendencies, will serve to provide
important preconditions for a more pluralistic range of
ownership in the media sector as well.
subcommittee recess
Senator McConnell. The subcommittee will stand in recess
until 2 p.m., Tuesday, May 20, when we will receive testimony
from the Secretary of the Treasury, Hon. Robert E. Rubin.
[Whereupon, at 4:05 p.m., Tuesday, May 6, the subcommittee
was recessed, to reconvene at 2 p.m., Tuesday, May 20.]
FOREIGN OPERATIONS, EXPORT FINANCING, AND RELATED PROGRAMS
APPROPRIATIONS FOR FISCAL YEAR 1998
----------
TUESDAY, MAY 20, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 2:41 p.m., in room SD-138, Dirksen
Senate Office Building, Hon. Mitch McConnell (chairman)
presiding.
Present: Senators McConnell, Bennett, and Leahy.
DEPARTMENT OF THE TREASURY
STATEMENT OF HON. ROBERT E. RUBIN, SECRETARY OF THE
TREASURY
ACCOMPANIED BY DAVID LIPTON, ASSISTANT SECRETARY FOR INTERNATIONAL
AFFAIRS
opening statement of senator mc connell
Senator McConnell. The hearing will come to order.
Secretary Rubin, we apologize for being a few moments late;
we had a vote. And that always comes first.
Mr. Secretary, there is good news and bad news. The good
news is the Budget Committee resolution, as it currently
stands, essentially protects the President's request level for
the 150 account. It also specifically allows for adjustments in
the discretionary caps if we decide to appropriate funds to
cover U.S. arrears, the most notable being $234 million for the
International Development Association.
The bad news is I believe Congress will be reluctant to
fulfill the new pledge of $800 million to IDA 11 and provide
the $234 million to complete the IDA 10 pledge unless there is
an immediate positive decision, allowing United States
procurement access to money segregated by donors in the interim
trust fund.
Let me provide my understanding of where I think we stand.
Last year, IDA donors expressed their frustration with U.S.
arrears by establishing a separate account, allegedly as a
bridge to cover fiscal year 1997 project funding shortfalls.
Although our obligation at the time was $934 million, the ITF
set aside $3.3 billion, which only companies from ITF donors
could bid on. At the same time, the subcommittee strongly
recommended the United States withhold all fiscal year 1997
funds unless this idea was abandoned. Our views reflected the
longstanding fact that the U.S. share of procurement has
consistently been less than our share as the single largest IDA
donor. So a decision to link procurement with contributions was
inconsistent, ill-advised and, for that matter, just plain
unfair.
Nonetheless, the administration voted to approve that
arrangement. It should not have come as a surprise when the
Congress decided to withhold funds until March 1997, when you
were to report on efforts to dismantle the ITF and open up
procurement. That report was a helpful review of the
administration's efforts to overcome considerable legal,
political and practical obstacles presented by the ITF. Not the
least of the problems was the fact that by the time a key
deputies meeting was held in February, nearly two-thirds of the
ITF resources has been obligated for projects, leaving a
balance of roughly $1 billion.
After intensive negotiations, I understand you now have a
tentative agreement which potentially will make the balance
available for U.S. competition. The exact status of a decision
on this balance will have a clear impact on our recommendation
in the coming weeks regarding your fiscal 1998 request, as well
as clearing up the arrears. And we are obviously hopeful you
can make a report on that today.
Let me turn for a moment to some specific concerns about
the management of the World Bank and IDA. I want to commend Mr.
Wolfensohn for his declared intent to increase the development
impact of lending as he improves cost effectiveness and
services. His agenda has been well outlined in a recently
released report, known as the strategic compact. I hope this is
not one more study in a long line of studies which have failed
to produce real progress.
Some 5 years ago, the Bank's portfolio management task
force report identified serious performance problems related to
project structure as well as the policy and practical
impediments to development posed by borrowing nations. While
the Bank continues to attempt to address past task force
recommendations, and no doubt will respond to Mr. Wolfensohn's
new challenges, there are ongoing systemic concerns. The Bank
has been slow to effectively implement, coordinate and make
improvements in the country assistance strategies which link
new lending with ongoing assessments of performance.
The consequence of not enforcing benchmarks is evident in
the Bank's internal assessment that the percentage of problem
projects has not declined since 1992. Their documents reflect
the fact that of the 737 projects funded between 1985 and 1993,
32 percent of World Bank and 41 percent of IDA projects were
rated unsatisfactory. Reviewed by region, the numbers tell
another important story. In the Pacific, 81 percent of projects
received a satisfactory rating, but in Africa--the target of
one-third of IDA loans--only one-half the projects were
considered satisfactory.
Let me just note that these projects are not exactly
failing a particularly tough test. The standards for meeting
the satisfactory test are not only lenient, the evaluations are
largely administered by the loan managers, consulting from
headquarters with the borrower. Rigorous independent field
audits are not currently conducted, but I think they must be
considered to establish integrity and credibility in the
evaluation process.
Obviously concerns such as these are what prompted Mr.
Wolfensohn's review. However, I am dubious about the
congressional support, given the strategic compact's solutions
will cost $100 million to $150 million a year, largely to get
rid of so-called redundant staff, while at the same time, Bank
officials are enjoying the luxury of a new gold-leaf executive
dining room, which Newsweek reported cost $25 a square foot.
Mr. Secretary, I raise these issues because I respect how
hard you have worked to restore congressional confidence in the
multilateral banks. In light of these observations, it may seem
a thankless task on your part, but let me assure you it is
because I believe these institutions are vital to leveraging
resources to serve development interests that we intend to work
with you to try to improve them.
Let me now turn to my good friend and colleague, the
ranking member, Senator Leahy.
opening remarks of senator leahy
Senator Leahy. Thank you very much, Mr. Chairman.
Mr. Secretary, I want to commend you and the Treasury
Department for what you have done over the past couple of years
in negotiating replenishments for the international financial
institutions. It probably reflects some of your skills from
Wall Street or some magic or something, but you were able to
reduce the amounts of U.S. contributions at a time when are not
even able to pay our past debts.
I suspect it also reflects that some of the other donors
can and should pay more. Our pledge to IDA has dropped from
$1.25 billion to $800 million. I am sitting here with the
chairman trying to figure out where we get the $800 million,
but it is a lot better than $1.25 billion.
We have seen similar reductions at the other banks. You
have also negotiated some important reforms. The African
Development Fund is an example. The institution has squandered
hundreds of millions of dollars, and it is now headed in the
right direction. I do not know if we are going to be able to
come up with the $50 million pledge, but I want to applaud you
because you pushed for changes that were long overdue.
These institutions are extremely important to the United
States. They are extremely important to their client countries.
In many ways, they are also the bane of our existence. They
have far more than their share of arrogant, overpaid staff.
They strike me, at least, as not having the time of day for
anyone unless it is a government official. I can get through
easily if it is Senator Leahy calling. If it is somebody else
who they don't know, it is a different story.
They pay attention to a government official. They prefer
one, I think, that is equally disinterested in the views of the
very people who are most likely to be affected by their
decisions.
I suppose a lot of bureaucracies act like that, but it is
amazing. I cannot think of very many that could rival the
arrogance of some of the bureaucracts at IMF and World Bank.
They treat representatives of the nongovernmental community
like pests to be pacified, grudgingly--it's an old boys
network.
Now, having said that, I know exceptions, like Jim
Wolfensohn. I think he is the right man for the job. Nobody
else has been able to get control of the place. And his
strategic compact, if it gains broad support within the
institution, could make a real difference. But if I cannot get,
or my staff cannot get, the Bank's or the IMF's attention on
even the little tiny issues, I hate to think what other people
have to go through.
The people who the long-time bureaucracy ought to emulate
are the people who are most respected, like Mr. Wolfensohn. He
is capable of understanding. He is accessible. He does
understand what is needed. And I wish some of those below him
would. It makes me wonder if we should sit things out for a
year to see if they might change their attitude, or maybe
somehow we might end up with a new crop of middle managers who
do not act like they own the place.
I guess they know we are not going to walk away for a year.
They figure that presidents of the Bank will come and go,
Members of Congress come and go, Secretaries of the Treasury
will come and go. Certainly even some of the countries they are
supposed to help, unfortunately, come and go. But, by God, they
and their perks stay on.
And I do not fault you, obviously. You have done more to
try to improve this than anybody I know. But I have stood up
for these institutions in the past, notwithstanding some of the
arrogant indifference of some people down there. I have done it
because I thought that our national interest and world interest
demanded that. But I am finding it more and more difficult to
defend, especially as more and more people come to me with
examples that, if it was my staff doing that, they would be
fired on the spot.
I mention that for whatever it is worth. But again, I want
to compliment you for what you have done. And if I could say
anything at all, it is just keep it up.
Thank you, Mr. Chairman.
Senator McConnell. Let me just say before turning to you,
Mr. Secretary, we had a similar problem to the one Senator
Leahy was describing with regard to burley tobacco programs in
Malawi. The top managers were as responsive as the desk
officers were abusive. They actually told my constituents that
they were wasting their time. That is a direct quote. It is
really an astonishing state of affairs. Nevertheless, Mr.
Secretary, please proceed. And we are glad to have you here.
[Laughter.]
I bet you are delighted.
summary statement of secretary rubin
Secretary Rubin. Very nice to be here, Senator.
I do not know that I have a very meaningful response, other
than to----
Senator McConnell. I am not expecting you to. Go ahead.
Senator Leahy. We are not. We just want to put this on the
record. And not that anybody is going to pay the least bit of
attention down there to what we say.
Senator McConnell. Yes; we feel so much better. [Laughter.]
Secretary Rubin. Well, you transfer your grief, I guess.
[Laughter.]
You know it is interesting, though. Having run a large
private sector organization for a while, the people at the top
in our place I thought were always very responsive. The more
junior you got in the organization, the more arrogance seemed
to be a problem. So I think it is not a problem unique to the
World Bank or the IMF, though it may exist in exacerbated
levels there; I do not know.
In any event, let me say, Mr. Chairman, Senator Leahy, that
it is a pleasure to be here. And as you both have said, this is
a concern that all of us share and all of us recognize the
vital importance of these institutions to our national
interests. And it is my hope that the spirit of bipartisanship,
that has prevailed in recent weeks in regard to the budget
agreement and the CWC before that, can be applied to dealing
with these very important institutions.
The President has said on a number of occasions that we are
truly the indispensable nation, and I can see it as I go to G-7
and other meetings. We are truly the only Nation in the world
today who can provide effective leadership on the issues of the
global economy. But I think it is also equally clear that if we
are going to maintain the ability to do that, we have got to be
seen as bearing our fair share of the burdens. And that very
much includes full participation in these institutions--in the
United Nations and the various international financial
institutions--the World Bank, the IMF, and the regional
development banks.
The contributions that we make to these institutions and
other international programs, as you know, Mr. Chairman, are
less than 1 percent of our budget, but they give us enormous
leverage. We have calculated, with respect to the multilateral
development banks, that our roughly $1.2 billion contribution
put us in a position to have enormous, enormous influence over
roughly $46 billion of lending. And that is the kind of
influence that, it seems to me, is enormously in our Nation's
self-interest to maintain.
We have worked forcefully for reforms, as Senator Leahy
suggested in his comments--even as we have negotiated major
reductions in our budgetary commitments. If you go through this
account by account, we have negotiated, on average, a 40-
percent reduction in future U.S. obligations to the
multilateral development banks. And once we pay our arrears,
then on an ongoing basis, we will be at a level of about $1.2
billion.
We have also taken the lead in securing broad-ranging
reforms in the international financial institutions with
respect to both the multilateral development banks and the IMF.
There are programs to reduce overhead. There are programs to
become more open, and to do more to prevent corruption--a more
recent but I think very important focus of both institutions.
And lending has been shifted to provide the underpinnings for
the private sector, rather than to try to substitute for what
the private sector can otherwise do. There has also been an
increased sensitivity with respect to environmental issues.
I have in my written statement a number of examples. I will
leave that for the written statement and not repeat them here,
other than to mention two. One is, as you mentioned, Jim
Wolfensohn's strategic compact at the World Bank, which we
think is very responsive to the issues of the World Bank and
which we have supported very strongly, while at the same time
continuing to work with Jim Wolfensohn and the World Bank with
respect to minimizing the costs associated with the program.
And second is the African Development Bank, which has had
serious problems. They have now instituted a sweeping
reorganization, including term limits and replacement of 70
percent of its managers.
All this notwithstanding, we are now behind in our payments
to the multilateral development banks by $862 million. And
though we are by far the world's largest and richest economy,
we are the largest debtor in the United Nations. And we account
for the great preponderance of the arrears to the multilateral
development banks and the global environmental facility.
Our budget request of $1.6 billion for the multilateral
development banks includes something over $300 million to
partially pay down those arrears. And that is the first payment
on a proposed 3-year payment plan, which will then eliminate
the arrears altogether. The remainder, of course, would go to
meet our annual commitments.
I do not think there is any question, Mr. Chairman, that if
one goes to the G-7 meetings and attends meetings at these
institutions that we are getting to the position where, if we
do not both pay our arrears and participate fully on an ongoing
basis, that we very much put at risk our ability to continue to
have a quite disproportionate influence on shaping economic
policy with respect to the developing countries. We also put at
risk achieving various of our foreign policy priorities through
the international financial institutions, which have been very
active in Bosnia, the former Soviet Union, and Africa as just
three examples.
As I said a moment ago, our budget request is based solely
and simply on the view that it is in our national self-
interest, both in terms of our economy and our national
security. As developing nations grow, their markets become
larger. And as their markets become larger, we export more to
them. And that, of course, increases American jobs and
standards of living.
Let me just, if I may, focus on one particular area of the
world, because I think it has now become front and center in
our thinking, and that is Africa. The IMF's ESAF, IDA debt
reduction, and African Development Fund requests are integral
to a broader effort on the part of the administration to foster
growth in Africa, which is clearly that part of the world that
lags furthest behind the global economy.
A growing and dynamic Africa, an Africa with democracy and
open markets, economic reform and sustainable development would
not only provide higher standards of living to its people, but
it would provide new and better markets to the United States.
It would deal with environmental problems that affect not only
Africa but affect us. And it would contribute to our national
security, particularly, hopefully, enabling us to avoid the
costs that are involved in dealing with the crises that have
developed from time to time in Africa.
We have proposed a bold initiative to foster solid
macroeconomic conditions, open trade and other economic reforms
to attract private sector capital to Africa, and to promote
growth in Africa. And we are working with Congress on a
bipartisan basis to do that. The international financial
institutions play a critical role in that effort. The
international financial institutions' work in promoting growth
in developing nations clearly has benefited American businesses
and workers. United States firms exported more than $25 billion
worth of goods and services to the 79 very poor countries that
are eligible for IDA--or that were eligible--for IDA funds in
1995, and roughly $60 billion to IDA graduates.
The IMF, for its part, has been critical with respect to
fostering stability in the global financial markets, preventing
crises, and when crises did develop, in dealing with those
crises. And that is very much in the interest of all members of
the global financial community, very much including ourselves.
In effect, they have become the guarantor, of this vastly
increased global financial market, with the vastly increased
flows of capital that have enormous benefits, but also carry
with them risks.
Before I close, let me mention one final issue. Our fiscal
year 1998 budget includes a request for $3.5 billion for the
U.S. participation in the IMF's new arrangements to borrow.
This new line of credit would build on the general arrangements
to borrow, and in effect, would provide a larger reserve for
the IMF in the event of threatened systemic crisis.
The idea for the NAB really grew out of the Mexican
situation, when, looking at that situation, it struck us that,
in these vastly enlarged global financial markets, there could
come a day when there might be a crisis that could be of such
size and such systemic significance that it could not be dealt
with adequately with the resources currently available.
We are also reviewing the adequacy of the IMF's normal
quota reserves. And if--and I stress if--that review shows that
a quota increase is necessary for the IMF to do its job over
the medium term, and if we can negotiate a satisfactory
arrangement--and that is a second very important if--then we
will request an increase in the U.S. quota. Obviously we will
continue to consult very closely with Congress on this matter.
In both cases, as you know, the funds that would be used
both in the NAB and in the quota, if called upon, would not
count as outlays in the budget process, and, therefore, would
not increase the deficit.
prepared statement
Mr. Chairman, let me close by saying that the
administration stands ready to work with you, with your
committee, to maintain the bipartisan commitment to these
institutions that has existed for over 50 years, and which I
believe enormously serves the economic and national security
interests of our country.
Thank you very much. Assistant Secretary Lipton and I would
be delighted to respond to any questions you may have.
[The statement follows:]
Prepared Statement of Secretary Robert E. Rubin
Mr. Chairman, it is a pleasure to testify today on the President's
fiscal year 1998 budget request for foreign operations. Over the last
few weeks, we have seen how much we can accomplish when we act together
in a bipartisan manner: Congress passed the Chemical Weapons Convention
and, of course, we've reached an agreement on a plan to balance the
budget. We should now carry that spirit of bipartisanship to other key
priorities that are facing the nation and we will be working on issues
such as fast track authority and most favored nation status for China
in the near future. Today, I would like to discuss one of our most
important priorities: the imperative of maintaining U.S. leadership in
the global economy by fully funding our share in the international
financial institutions.
As President Clinton has said, the United States is the only
country that can provide effective leadership in today's world--and it
is more important than ever for our own well-being that we do so.
However, for us to function as the world's indispensable nation, we
must participate fully in the international institutions and the global
economy. We must fully commit to our foreign affairs budget, which pays
for the United Nations, bilateral assistance programs and the
international financial institutions (IFI's)--the World Bank, the
International Monetary Fund and the regional development banks.
Accounting for less than one percent of the federal budget, these
programs provide an enormous return for American taxpayers. Abroad,
they help bring peace and stability, foster democracy, build free
markets and free trade, and promote sustainable development. At home,
that leads to increased exports, high quality American jobs and greater
economic and national security.
The Clinton Administration has worked hard with Congress to
maintain support for the multilateral development banks (MDB's). We
have achieved increases in social sector lending by the MDB's and
worked forcefully for continued reforms, even as we have negotiated
major reductions of our budgetary commitments. We have, in fact, made
significant progress on all fronts. Account by account, we have
negotiated, on average, a 40 percent reduction in future U.S.
obligations to the MDB's, which, after we pay our arrears, will lower
our total annual commitment to $1.2 billion. On the basis of this
annual U.S. investment, we are able to strongly influence the $46
billion that the MDB's lend.
The Administration, working with Congress, has taken the lead in
securing needed administrative reform in the IFI's. The MDB's and the
IMF are reducing overhead, becoming more open, doing more to prevent
corruption and promote the private sector, and becoming more sensitive
to environmental concerns. They are, in fact, providing us with better
value for the money than at any time in their history. To cite a few
examples:
--The World Bank, long a target of criticism, has become more open,
and has cut its administrative budget 10 percent in real terms
over the last two years. The Bank has now embarked on a new
reform program, the Strategic Compact, which is very responsive
to U.S. reform priorities. We support President Wolfensohn's
efforts to reform and we are working closely with him to
minimize the costs associated with this program.
--The IMF has also controlled its administrative budget, cutting it
by one percent in real terms over the last three fiscal years.
It has made substantial advances in transparency and
strengthened its capacity to detect financial crises.
--The Inter-American Development Bank has cut its budget by 5 percent
in real terms since 1995 and staffing is down 12 percent from
its peak in 1988. Yet loans managed by the bank have increased
48 percent since 1991.
--The African Development Bank has instituted a sweeping
reorganization including term limits and replacing 70 percent
of its managers.
Despite this progress, we are now behind in our payments to the
MDB's by $862 million. We are the world's largest and richest economy
yet we are the largest debtor to the United Nations, and account for
the lion's share of arrears to the MDB's and the Global Environment
Fund. Nations around the globe, who look to us for leadership, are
seriously questioning our willingness to lead. Our budget request of
$1.6 billion for the MDB's includes over $300 million to partially pay
down those arrears, the first payment on a proposed three year plan,
with the remainder going to meet our annual commitments.
This year is critical. If we do not meet our commitments, we will
put at risk our leadership in these institutions and thereby our
ability to shape policy with respect to developing countries. This
risks affecting foreign policy priorities in places from Bosnia to the
former Soviet Union to Africa. Failure to meet our commitments would
also undercut our ability to direct ongoing reforms. We cannot lead
with other people's money.
We make this budget request purely and simply because it is in our
economic and national security interest. The IFI's are important to our
interests for two basic reasons. First, they help foster growth in the
developing world. That, in turn, promotes global prosperity and
stability, which creates new markets for U.S. goods.
The IFI's have been instrumental in the economic renewal of Asia,
Latin America, and central and Eastern Europe, helping foster economic
reform and democracy which has turned these regions into dynamic
emerging markets. The MDB's are also building the essential foundations
for growth in the poorest countries by funding child survival, and
improvements in health, education and basic infrastructure. The IMF's
Enhanced Structural Adjustment Facility (ESAF) lays the groundwork for
the banks' efforts through the macroeconomic and structural conditions
attached to ESAF loans.
Last month, I traveled to Vietnam, a very poor country in the midst
of transformation from a state run economy to a market economy,
struggling to build the infrastructure of a modern economy. I met with
the general secretary of the Communist Party, the prime minister and
the finance minister. These officials--the leaders in what is still a
communist country, a country that fought a war with the United States
only 25 years ago--were keenly focused on what constitutes a market
economy, how you get there, and how to attract more foreign investment.
It is precisely this kind of help in developing a modern market-based
economy that the IFI's can provide.
While in Vietnam, I visited a school outside Ho Chi Minh City. I
saw how World Bank funds provided for a new school building and
textbooks for children. I only wish that every member of Congress could
see what our money buys.
The ESAF, IDA, debt reduction and African Development Fund requests
are integral to the Administration's effort to foster growth in Africa,
an area vastly behind in development. A growing and dynamic Africa--an
Africa committed to democracy, economic reform, and sustainable
development--will provide higher standards of living for its people and
be more stable politically and socially. That, in turn, will present
new markets for American businesses, create jobs and increase standards
of living in this country. It will also strengthen our national
security as stability in any part of the globe contributes to our
national security. Hopefully, it will save us the very high costs of
responding to crises in Africa. We have proposed a bold initiative to
foster solid macroeconomic conditions, open trade and other economic
reforms to attract private sector capital and promote growth--and we
are working with Congress on a bipartisan basis to enact it. We will
need the help of the IFI's to move forward with our initiative.
The IFIs' work in promoting growth in developing nations has
clearly benefited U.S. businesses and workers. U.S. firms exported more
than $25 billion worth of goods and services to the 79 very poor
countries eligible for IDA funds in 1995 and roughly $60 billion worth
to IDA graduates. Of course, the MDB's also benefit American businesses
and workers directly through the projects they finance. In the past
year alone, U.S. firms received over $3.2 billion in direct business
from the MDB's.
The IMF is critical to fostering a stable, well-functioning global
financial system that facilitates the trade and investment flows
necessary to the growth and opening of markets around the world. The
IMF serves us very well as the guardian and guarantor of that system,
helping to integrate its newest participants and preventing and
containing severe financial shocks.
Before I close, let me mention one final issue. Our fiscal year
1998 budget includes a request for $3.5 billion for U.S. participation
in the IMF's New Arrangements to Borrow. This new line of credit would
build on the General Arrangements to Borrow and provide a larger
reserve tank for the IMF to respond to financial shocks that create
systemic risk, and do so in a manner that reduces our share of the
burden. We are also reviewing the adequacy of the IMF's normal quota
resources. If that review shows that a quota increase is necessary for
the IMF to do its job over the medium term--and if we are able to
negotiate a satisfactory agreement within the IMF--then we will request
an increase in the U.S. quota. We will continue to consult closely with
Congress as this process develops. Like funds for the NAB, use of these
funds would not be scored as outlays, as they are offset by the
creation of a counterpart claim on the IMF that is liquid and interest
bearing.
Mr. Chairman, there has been a tremendous movement over the past
decade toward a global economy. Countless U.S. workers and businesses
depend on trade--and a thriving global economy--for their livelihoods.
The World Bank, the regional development banks, the IMF, the United
Nations and bilateral assistance programs, play vital roles in the
global economy by promoting economic growth, democracy, free markets,
the rule of law, a stable international monetary system and sustainable
development. They advance the interests of the American people.
But our ability to advance those interests will be gravely
jeopardized if we do not begin this year to pay what we owe and to
fully fund our current commitments. The Administration stands ready to
work with you to maintain the bipartisan commitment to these
institutions that has existed for fifty years and which gives us the
power to guide global economic growth and reform. Thank you very much.
burma
Senator McConnell. OK, thank you very much. I am going to
ask that your full statement be made a part of the record and
lead off with a question about Burma. At the Asian Development
Bank meeting in Japan recently, Burma was lobbying for a
resumption of funding. And the President of ADB, the Asian
Development Bank, Sato, indicated Burma ``badly needs economic
aid.''
What is the current U.S. position on resumption of loans to
Burma?
Secretary Rubin. Well, we are in the process, as you know,
of imposing sanctions on Burma, although the content of those
sanctions are still under discussion in the administration.
Senator McConnell. On that issue, when do you expect that
to be finished and the sanctions to be imposed?
Secretary Rubin. I am not sure, Mr. Chairman.
Do you know when the work on that will be done?
Mr. Lipton. It should be in the next day.
Secretary Rubin. The next day.
Mr. Lipton. I believe so.
Secretary Rubin. That is tomorrow.
Mr. Lipton. On the Executive order? I think it is coming.
Secretary Rubin. OK. Well, in the relatively near future,
then. [Laughter.]
Senator McConnell. But what about the question of ADB
loans?
Mr. Lipton. Well, as far as we know, there are no
operations being prepared. I was unaware of the statement of
President Sato to which you referred. But it would be our
position not to favor--not to vote to support any loans that
they might choose to----
Senator McConnell. I am sorry?
Mr. Lipton. I say, it would be our position to oppose any
loans that they might bring to the board. But it is not our--it
is our understanding that they have no planned operations in
Burma.
Senator McConnell. But if they did, we would oppose it?
Mr. Lipton. It would be our position that we would oppose
those.
Senator McConnell. Good.
You spent some time speaking about IDA. I can see we may
get into a chicken and egg problem, where other donors are
insisting we fulfill the fiscal year 1998 commitment and clear
arrears or they will not release the $1 billion from the ITF,
while we insist the funds be released before further
appropriations. I just want to make it clear that the blackmail
did not work last time and it is not going to work this time.
We have been the largest contributors over the longest time
to IDA, and, frankly, demanded very little in return. Without
specific action, there may be a serious backlash and there
might be little support for funding even here in the Senate. I
am just curious, how do we solve this problem?
Secretary Rubin. It is a good question, Mr. Chairman. As
you know, we worked very vigorously. We have sent letters. When
I spoke at the World Bank, I referred to it in my remarks. And
sometime in the last two or three G-7 finance ministers
meetings, I brought it up there. We abstained--we did not vote
in favor of this, by the way--we abstained at the meeting.
We are very much opposed to this being done. On the other
hand, the view of the other donors was that many of them had--
in fact, probably all of them--had worse deficit problems than
we did, and they were contributing and we were not. And they
had parliamentary problems of their own. And so they said that
the only way they could warrant or justify this with their
parliaments was to say that if we did not participate, then we
would not have procurement opportunities.
We opposed that, we strongly opposed it, but it succeeded
nonetheless. We did manage to get this billion dollars put
aside. And I think you are right, we are in a bit of a chicken
and egg situation. We have exerted every bit of energy and
resource that we can think of to get this thing reversed now
for the very reason you just said--so that it would not create
a burden in terms of our working with Congress. And thus far at
least, we have not been successful, although we will continue
to try. But I do not know how we get it unraveled at this
point, Mr. Chairman.
But I must say, we are totally opposed to what they did. I
think it was a mistake. I think it was foolish. I think it has
interfered with their ability to get funding. And it was a very
unwise thing to do. But from their perspective, they have said
that they have worse deficits than we do. We have been for some
years now, the most successful major industrial country in the
world economically, and yet we are the one country that is not
willing to contribute. So they felt, from that point of view,
this was the position they needed to take with their
parliaments.
Senator McConnell. Obviously we have a continuing dilemma.
Secretary Rubin. We have a continuing dilemma that we will
do our best to unravel, but I cannot promise you that we are
going to be successful--although it is not for lack of trying.
Senator McConnell. In the justification materials for IDA,
your Department stated, ``IDA increasingly conditions its
lending on implementation of specific economic reform programs,
rewarding those who reform and denying loans to those who do
not.''
I am curious as to whether or not you could give me some
examples of nonreformers who have been denied loans.
Mr. Lipton. Well, first, to make a summary statement, if
you look at the IDA-eligible countries, the top--if you look at
the best performances, the top 50 percent, they have been
receiving 84 percent of the funds from IDA. So that is a
measuring, of course, in terms of the results of their reforms,
but I think it shows that the World Bank has attempted to
channel the funds, in general, to those that are embarking on
reforms.
I think, clearly, there are examples--and I can get you a
list of examples--from Africa, where countries that are not
embarking on reform are not receiving support. And there are
also a number of countries where there is a prospect for
reform. The World Bank negotiates a structural adjustment or a
sectoral adjustment loan, but withholds the go-ahead for
funding until the reforms that have been promised have been
carried out.
And to give an example there, in Haiti, a country that is
very important to us, the World Bank has negotiated a loan last
year, but it is awaiting further reform steps by the Haitian
Government in order to begin the disbursement.
Senator McConnell. Well, I would like the list of all the
nonreformers who have been denied loans.
[The information follows:]
Information on IDA Selectivity Based on Economic Reform
Countries with the best policy performance received much higher IDA
funding per capita over the last 3 years than countries with below-
average policy performance. IDA-eligible countries who received the top
rating in terms of their progress on economic reform received $13.4 per
capita in IDA loans over the 1994-96 period. Those with the lowest
rating received $1.1 per capita. Overall, 84 percent of IDA lending
over this period went to countries rated average or better.
Countries with very poor policy performance do not receive any
funding from IDA. For instance, there has been no lending to Myanmar,
Nigeria, Sudan or Zaire for a number of years. Other countries where
poor policy performance has resulted in minimal levels of lending
include Angola and the Central African Republic.
IDA's objective is to concentrate its efforts in the poorest
countries and in countries with the social and economic policies more
conducive to development. Bolivia, Cote d'Ivoire, Mauritania and
Vietnam are among the IDA-eligible countries with better policy
performance and are also among the highest recipients of IDA lending.
At the same level of income, the better the country's policies the
larger the lending program IDA is prepared to undertake. For instance:
--Mali and Niger have per capita GNPs in the $200-250 range but
Mali's superior policies are reflected in recent annual lending
averaging $9 per capita compared to $5 per capita for Niger;
--IDA lending to Laos averages $9 per capita per year, while
Cambodia's weaker policy performance results in lending of only
$6 per capita there;
--Malawi's policies have allowed IDA to lend an annual average of $12
per capita to this very poor country (GNP per capita equal
$160), while even poorer Tanzania (GNP per capita equal $130)
received less than $4 per capita because of its much weaker
policy performance; and
--Senegal and Guinea both have GNP per capita in the $500-600 range
but Senegal's policy performance warranted annual IDA lending
of $12 per capita while Guinea's performance led IDA to limit
lending to about $7 per capita.
world bank
Senator McConnell. The World Bank reports that 81 percent
of the projects in Asia are in satisfactory shape--I think I
mentioned this in my opening statement--compared with a 51-
percent approval rating for African projects. Given this
disparity, why are we only making a down payment, roughly, of
$50 million out of $237 million on the Asian Development Fund's
arrearage, while clearing all of IDA's, where more than a third
of the lending is to Africa?
Secretary Rubin. Let me take the first shot at that and
then let me ask David to participate.
I guess it would be my view, Mr. Chairman, that IDA is
really dealing with the most difficult problems that we face
right now in the developing world, and particularly in the case
of Africa. And I think that that is where the largest amounts
of money exist. That is where our influence can have the
largest effect on the developing world. And I think it is where
our credibility is most at stake if we do not pay back our
arrears.
So I think that clearly in IDA, which is the flagship
multilateral development bank, and also the one that is in many
ways dealing with the most serious issues that we need to face,
we need to get ourselves back where we need to be. That would
be my sort of overall, if you will, strategic----
Senator McConnell. But in this particular situation, is not
saying the poorer your performance, the more we will award you?
Secretary Rubin. I do not think so, because I think you are
dealing--and I will let David answer, because he can probably
give you, in many ways, a more specific answer than I can--but
I think that you are dealing with much more difficult
circumstances in many cases when you look at the full range of
the IDA portfolio than when you look at it from the point of
the Asian Development Bank.
David.
Mr. Lipton. I think that we are concerned about the problem
that you mention, the performance of projects and loans. We
have tried to approach getting improvements in the banks by
negotiating replenishments that we think suit the needs of the
Bank, and trying to see that the lending is kept within the
bounds of the resources available. We would like to see the
arrears paid down to all the institutions.
I think the reason we have focused on IDA first is, as
Secretary Rubin mentioned, because it is the flagship bank and
because of the very great attention that other donors have
brought to bear on the arrears that we have had there for some
time period.
Secretary Rubin. You know, it just occurs to me, too, I was
at lunch a few weeks ago over at the World Bank, and Jim
Wolfensohn was talking with the representatives of the Board
about the focus that he intends as he goes forward. He intends
to have a heightened focus on the quality of the loan
portfolio.
And I think, you might be influenced by where you think
they are going. Basically I think it is a strategic judgment of
which institution should priority--of the importance of IDA and
the importance of our making up our arrears, and of what they
do with the breadth of countries they deal with, including, as
I say, a lot of the most difficult problems in the developing
world.
Senator McConnell. Well, I look forward to getting the list
of nonreformers who have been denied loans. My general reaction
is that we have a different standard at work here. I think I
hear you admitting that we have a different standard here,
because of the problems.
Secretary Rubin. You know, I am not sure it is not
necessarily a different standard as much as it is that if you
are going to deal with more difficult countries, I think you
are going to wind up with lower success rates.
Mr. Lipton. Yes; surely the problems in Asia in World Bank
loans were greater when the Asian countries were not doing as
well. And I think that their performance is surely improved in
part because of the work that they have gone through with the
World Bank, and now the performance numbers at the Asian
Development Bank, in some measure, reflect that.
Secretary Rubin. Just, if I may, make one other comment. I
think it was last year that we did not fund the African
Development Bank, was it not, because we really had lost
confidence in the top management.
Mr. Lipton. It was 2 years ago.
Secretary Rubin. It was 2 years ago. If you felt at the
World Bank you had a real lack of confidence in top management,
then I think, Mr. Chairman, all of what I said notwithstanding,
it seems to me that you might take the position that we are
going to withhold funding or reduce it or one thing or another.
But just exactly the opposite is the case--we have a president
who we really have enormous confidence in, although I think he
has got a very difficult job ahead of him.
Senator McConnell. Well, speaking of Asia, why is IDA in
China at all? I mean China is still getting IDA loans. Given
the huge influx of private capital, why have not we graduated
China from this kind of concessional lending?
Secretary Rubin. David.
Mr. Lipton. We have negotiated with other IDA donors that,
following the next replenishment, the IDA 11 replenishment,
China will be graduated. At present, we vote against all loans
to China, all World Bank loans to China, besides those that
satisfy basic human needs requirements, as a part of our China
policy. We have a very great sympathy with the idea of
graduation. And we have also been urging, I think with success,
that the amount of funds that China will receive during IDA 11
is diminished, and that then they are graduated thereafter.
Senator McConnell. OK, I am going to stop my first round.
Senator Leahy.
Senator Leahy. Thank you, Mr. Chairman.
I notice the budget agreement calls for $19 billion for
international affairs, which is good; an additional $415
million for U.N. and MDB arrears, but only if the Congress
appropriates this additional money. Why this kind of
arrangement?
Secretary Rubin. You mean the arrearages money?
Senator Leahy. Yes.
Secretary Rubin. Well my understanding----
Senator Leahy. Why not just put it in the budget right to
begin with?
Secretary Rubin. Yes; my understanding was that that was a
function of some different views and degrees of enthusiasm
amongst some of the participants. Your chairman is shaking his
head, probably with respect to doing this. And so that was the
technique that was developed. Is that a fair characterization?
Senator McConnell. I think that is a fair characterization.
Senator Leahy. Well, unfortunately, a lot of the Members of
Congress have been able to contain their own enthusiasm for
these arrearage payments. And this probably will not kindle--
this arrangement probably will not kindle enthusiasm. But we
will see what happens.
Secretary Rubin. Well, it may not have been optimal, but it
may have been the art of the deal.
Senator Leahy. I understand. So you are telling me what I
suspected.
The MDB's do not really talk to many local people about
what they are going to do on their loan decisions--at least I
get that impression. It is sort of like an Olympian--we know
better than all of you folks, so we will just kind of make up
our mind in our board rooms and over our lunches and so on.
I know the World Bank conducts environmental impact
assessments before approving loans. But would it not make sense
for them to go down and actually consult with the local people
who are going to be affected, rather than just the Government
or just some very high-level parts of government--especially in
some of the countries where there is a lot of corruption at the
highest levels?
Mr. Lipton. Yes; I think that that is correct and I think
it is something that we have been pressing the World Bank and
the other development banks to do. I think it is something that
Jim Wolfensohn has focussed on right now. An important part--
perhaps the most important part of his strategic compact--
involves moving to the field people with the responsibility to
make decisions about the World Bank's lending operations, and
having what they call greater front-line contact, in part, to
increase the interactions that their staff have with people,
not just the Government, but people who are affected by the
operations that they undertake.
Senator Leahy. Well, we also see this with the IMF. I mean
the IMF has all this confidentiality, which strikes me as, you
know, confidentiality is cover your ass kind of
confidentiality. That is a parliamentary expression.
[Laughter.]
It is from an old Jefferson manual that is rarely used
today. Mr. Lipton does not know quite what to do with that.
Mr. Lipton. No; I appreciate the expression. [Laughter.]
Senator Leahy. It is not unknown in the hallowed halls of
the Treasury?
Mr. Lipton. No; I have heard that. I have heard that
expression. [Laughter.]
Again, we have urged the IMF to publish its board papers.
We have now gotten to a point where they publish the so-called
recent economic developments papers. There are other member
governments who probably allegedly heard that expression and do
not want the so-called confidential assessments that the staff
make of their economic policies to be published unexpurgated.
Senator Leahy. And I understand that. But it is also you
can kind of spin it out too far.
Mr. Lipton. Oh, no; I agree.
Senator Leahy. It is like for years the Department of
Defense, the CIA, and everybody else in our own Government,
everything was classified. Well, everything was classified
because a lot of mistakes get covered up that way. Those who
resist the Freedom of Information Act in our country, it is so
often because it covers mistakes.
And I realize you do not want to start looking for an
assessment on a loan and topple a government doing it because
of too much candor, but what I am concerned about, and I think
it underscores my point, is that many times that is not the
reason. Many times it is that a lot of these things just go
belly up and nobody wants to ever have to take responsibility
for it.
Mr. Lipton. I think that is part of it. And I think that
the point you made in your opening remarks about culture is an
important part of it. I think that there has been a culture of
closed, confidential operations at the IMF in particular, but
also at the World Bank, for a long time. And I think,
especially at the World Bank, Wolfensohn is trying to address
that.
And at the Fund, we continue to press for further
disclosure of reports. There is now going to be so-called press
information notices that summarize, somewhat expurgated, the
conclusions that the IMF has made about a country's policies.
We will continue to press to have candid assessments of the
staff made public.
Secretary Rubin. David, is not there also a new information
disclosure--well, these new disclosure requirements that
started about 6 months ago or something like that?
Mr. Lipton. Yes; that is different. That is to get
countries to reveal the data in a very transparent way, the
data that describe economic developments in their countries.
Senator Leahy. I am looking at a couple of the different
things in the budget--the Middle East Development Bank, the
North American Development Bank. You propose to fund the Middle
East Bank with economic support funds rather than multilateral
assistance. I suspect we are going to have precious few
economic support funds, or ESF, to play around with, to say
nothing about putting it in something like the Middle East
Bank. And then we are already giving one-half our foreign aid
to the Middle East. And we have got to rob this from somewhere
else if we are going to put it there.
Then you look at the North American Bank, which is on our
border, there is pollution, a need for water treatment, waste
disposal and all, that affects an awful lot of Americans very
directly. If we have to choose between the Middle East
Development Bank or the North American Development Bank, which
one do we go with?
Secretary Rubin. We would recommend you do both.
[Laughter.]
Senator Leahy. There are going to have to be choices. Do we
go with U.S. interests along our border? Or do we say that we
are already spending billions of dollars in the Middle East and
maybe somebody else ought to help out?
Secretary Rubin. Well, could I take one shot at that?
Senator, if you take a look at the budget, at least as we have
submitted it, all of this would fit within the budget that was
part of the budget agreement. So I do not think you would
actually be forced to make that choice unless----
Senator Leahy. Well, if we take ESF funds, I mean we are
going to take them from somewhere. There is not enough money to
do some of the things we are now doing.
Secretary Rubin. For the Middle East Development Bank you
are talking about?
Senator Leahy. Yes.
Secretary Rubin. Yes, David?
Mr. Lipton. Yes; I mean----
Secretary Rubin. But that would not be a choice between
that and the NAD Bank, I do not think.
Senator Leahy. No; I know. But I am just saying that I do
not think everything can be funded. That is what I am saying.
Secretary Rubin. The use of the ESF funds, that is another
question. David?
Mr. Lipton. The Middle East Bank funding request is in the
ESF mainly because it is understood that the success of that
bank will come along with progress in the peace process. That
is one where there would be multilateralization of our
contribution. We hope still to entice other countries who have
not yet joined that effort to do so.
The North American Bank is very important to us.
Senator Leahy. Which is more important?
Mr. Lipton. I think that is a very hard question to answer.
Senator Leahy. Well, I know it is a hard question. That is
why I am asking you.
Mr. Lipton. OK, I would say that the--in terms of the time
priorities, I think it is unlikely that the Middle East Bank
will be up and running until the peace process makes further
strides and there is a greater coming together among the
parties in the region about working together in such a
cooperative way. So in terms of time priorities, I think that
the North American Bank is now beginning to operate and will
need these funds and is a very high priority.
Secretary Rubin. But I guess I still do not quite
understand why you frame the choice that way. And I do not
profess----
Senator Leahy. Well, because I think, Mr. Secretary, I am
looking at this budget, and somehow everything that the
administration wants is funded in here, but there are other
things that the Congress wants that are different from the
administration that are not funded if we fund all of the
administration's priorities. So we are going to be making some
choices. And I realize one is ESF and one is not.
Secretary Rubin. That is what I meant.
Senator Leahy. But at some point we have got to make
choices. Do we really break arms and knuckles and all to fund
one or fund the other? And if it is a question of which is more
important to U.S. interests, which of the two?
Secretary Rubin. The only reason I made my comment--I know
there are a lot of people who felt the NAD Bank was sort of a
concomitant part of NAFTA, to deal both with problems in
communities with trade displacement problems as well as
environmental problems, and that is listed in our list of
multilateral development banks and the like, whereas the Middle
East Development Bank was moved over to the ESF--was this year
the first time?
Mr. Lipton. This year.
Secretary Rubin. Yes; this year for the first time. So I
would have thought maybe--maybe this is wrong--but I would have
thought maybe the choice with respect to the Middle East
Development Bank was versus other items in that ESF account.
That is all I meant.
Senator Leahy. I would note just a couple of points in
here, Mr. Chairman--that while our law says that the
administration should oppose loans to countries that give
sanctuary to war criminals, about 1 week ago Senator Lautenberg
and I sent a letter to the Secretary urging a delay of a vote
on a World Bank loan to the Government of Croatia for its
failure to live up to its commitment to arrest and turn over
war criminals.
And I understand from a letter just received from Secretary
Rubin that they had to support the loan because the State
Department said to support the loan. And I understand that. I
am not questioning, on a foreign policy issue like this, the
ultimate call on something like that should be with the State
Department. But a few days ago, I think the State Department
was criticizing Croatia for not arresting war criminals. So I
think it is an issue that, when Secretary Albright comes here,
we should ask about. Because we either go after them or not. We
are going to support the war crimes tribunal or not.
Another thing I should note is that the World Bank is
negotiating an agreement with Croatia. And they said they will
support demining programs only if the Croatian Government
agreed not to lay more land mines in their territory. I wish
all the banks, if they are going to give countries money--and
I, as you know, strongly supported demining efforts worldwide--
they should be able to give you the money, but you should have
to agree to stop using mines.
I have other items that I will put into the record, Mr.
Chairman. I probably caused enough confusion already this
afternoon, or problems.
Secretary Rubin. No, no; we appreciate the comments, and it
gives us good things to focus on.
Senator Leahy. And everybody else. My phones will be
ringing off the hook now. Thank you.
Senator McConnell. Thank you, Senator Leahy.
Senator Bennett.
Senator Bennett. Thank you, Mr. Chairman.
Welcome, Mr. Secretary. I appreciate the opportunity of
visiting with you in this forum, somewhat different from the
one where we usually have contact.
You talk in your formal statement about visiting Vietnam.
Secretary Rubin. Yes.
Senator Bennett. And you say, and I quote:
I visited a school outside Ho Chi Minh City. I saw how
World Bank funds provided for a new school building and
textbooks for children. I only wish that every Member of
Congress could see what our money buys.
I have been to Vietnam and realize, with you, how poor a
country that is and how much they need any kind of help they
could get. But I would like to now go over the border, up to
China, and raise the issue of whether or not the money that the
World Bank is putting into China is going for schools and
textbooks for children or in fact, since money is fungible, is
it going for something else?
Now, it may just be coincidence that World Bank loans for
China last year were about $2.5 billion and Chinese purchases
of weapons from Russia were about $2.5 billion. But, again,
money is fungible, and it could well be that they say, well, we
are spending your money on school buildings and textbooks for
children, while we are spending our money on weapons from
China.
Are you aware that China has been engaged in a very
extensive and expensive program of modernizing its strategic
rocket forces and purchasing advanced weaponry from Russia?
Secretary Rubin. Senator, I have a general awareness from
discussions that I have been part of that they have been
modernizing their military forces. You say, on the one hand,
the World Bank--we do not support any loans with respect to
China that do not go for what we call basic human needs. On the
other hand, you correctly say that money is fungible. And in
the final analysis, there is probably no way to really be
strictly enforcing with respect to that.
I think it may have been before you came in, but Secretary
Lipton mentioned to the chairman that we have been a very
strong supporter of China no longer receiving IDA funds. And
they will graduate at the end of this IDA 11.
Senator Bennett. Yes; I heard that, and I have the figures
in front of me. Here is a report: ``China and the Multilateral
Development Banks,'' done for the Congress by CRS over at the
Library of Congress. Just from this report--and quickly, I will
not expect you to get the numbers, but they are in the report
and I will just run them down in a hurry--the World Bank gave
China $1.5 billion--this is in 1996--$1.5 billion for
infrastructure, $400 million for industry, $60 million for
agriculture, $10 million more social sectors, $500 million for
the environment--and the author of the report makes it clear
that the word ``environment'' is being stretched enormously to
cover just about anything--and nothing for economic reform.
But you go down to IDA, they have nothing for
infrastructure--$90 million for industry, 100 for agriculture,
220 for social sectors, 50 for the environment, and nothing for
economic reform. You begin to put these together--then you go
down to the Asian Development Bank, they have got $652 million
for infrastructure, 280 for industry, 70 for agriculture, 28
for social sectors, 112 for the environment, and nothing for
economic reform.
You have three sources. You end up with $4 billion. And you
blend them in these various categories, and each category gets
funded fairly well. And they can say, yes, the IDA money is
getting cut off, but we are going to pick it up from the Asian
Development Bank or from the World Bank. And we are still going
to buy weapons from the Russians, trying to build up a nuclear
capability and maybe cause problems for their neighbors, and
eventually for the United States. I think it is something worth
raising and being concerned about.
Secretary Rubin. When you say pick it up from the World
Bank, Senator, I am sorry? Are you talking about the hard
dollar window?
Senator Bennett. Yes.
Secretary Rubin. Yes; I would imagine--David, I do not
know--that if they did not borrow it from the World Bank,
giving that it is a hard dollar window, they could probably get
comparable money in the private sector, I would think.
Mr. Lipton. In some cases, I think that is true.
Senator, I think you put your finger on a very important
problem of fungibility which applies to China and other
countries around the world. The World Bank tries as best it can
to overcome the problem by trying to see that its loans, where
it is supporting policy reform, are bringing changes that
promote sound economic policies--our economic values. And there
is some of that in the case of China.
When they do project loans--and there is the issue of
fungibility--they try to ensure that they are carrying out
projects where there is some additionality, whether it is
conveying expertise or in some way, whether it is working on
environmental projects, where they can show that the Government
would not or might not have done this on its own.
But in the case of China, I think we concur with you that
the overall risk of this is too great that China's policies are
those that we do not support. We do not support lending there,
and we try to convince other member countries of the World Bank
to join us in this effort. We only support loans that are in
the area of basic human needs, essentially for this family of
reasons.
Senator Bennett. Thank you. I appreciate hearing that. I am
one who supports MFN for China. I think the worst thing we
could do in terms of having an impact on China would be to
withdraw, so that there would be no American influence there at
all in economic terms. And the strongest American influence I
think we exercise there is in terms of American companies who
are there, who would be forced out if we were to deprive China
of MFN. So I am not one who says, in the name of human rights
or arms purchases or anything else, we should kill MFN for
China.
But I did want to raise the issue of Western money, using
the term in a nongeographic sense--an ideological sense--
Western money going into China so that they can then use the
fungibility of that money to purchase weapons of mass
destruction from the Russians and perhaps then import them for
additional profits to the Iranians and the North Koreans, and
there is some indication they are doing some of that.
Thank you, Mr. Chairman. I have nothing further.
Senator McConnell. Thank you, Senator Bennett.
Just a couple of more, Mr. Secretary.
As a lot of people predicted, the Bank has been pretty slow
to achieve any measurable results in Bosnia. One of the
explanations has been the requirement that the Bank work
directly with the counterpart development agencies, which were
of course shattered by the war. I wonder if you could give us
an update on the Bank obligations in Bosnia. What have they
actually accomplished and where?
Secretary Rubin. Mr. Chairman, David Lipton has been the
lead person in the United States Government on dealing with
Bosnia with respect to all economic issues.
Senator McConnell. OK.
Secretary Rubin. David?
Mr. Lipton. I think the Bank has played a remarkably
constructive role in Bosnia. First, even before the Dayton
negotiations, they helped to map out a reconstruction plan for
Bosnia. They had relations with the Muslim authorities, the
Bosnians, going back into the summer of 1995. They developed a
recovery plan that had recovery, over the period to the year
2000, rising to two-thirds of the prewar income. They developed
sectoral plans for reconstruction, and they developed a basic
policy framework.
They began with the very difficult problem that Bosnia had
inherited claims and debts to the World Bank upon the
dissolution of Yugoslavia, and worked hard to find an
imaginative way to in part get those repaid and in part get
those rescheduled. And they began a lending program in the
early part of 1996.
They had to be a little unconventional in beginning to
support Bosnia before there was an IMF agreement with Bosnia.
This support came in essence, before the state institutions had
come together. And so what they did was work with the Republic
of Bosnia and with the Federation entity--one of the two
entities under the Dayton process.
At this point, the Bank has made one very substantial
program loan. It is called a TAC loan. It was disbursed late
last year. They have a number of project loans that they have
prepared. They are awaiting--and I think it makes sense for
them to--to await an IMF agreement. The IMF has been
negotiating for most of this year with the State Government of
Bosnia and the two entities, the Federation and the Republic of
Srpska, to try and come together on a set of economic
institutions, where the parties will cooperate, and a set of
macroeconomic policies that makes sense for Bosnia.
We believe that further large loans from the World Bank
should wait until there is this overall cooperation structure
and policy structure, but that then the World Bank should
resume policy lending in that context.
Senator McConnell. OK. Finally, I want to touch on the
European Bank. It is rather impressive that the Bank has
committed to self-sufficiency after the current capital
increase. I am curious as to how they achieve that result and
if we can expect any other bank to accomplish the same results.
Secretary Rubin. David?
Mr. Lipton. The European Bank is in a bit of a unique
situation in that it supports transition in Eastern Europe and
in the former Soviet Union. And I guess we all are hoping that
transition will in fact be temporary. The replenishment doubles
their capital base from $10 billion to $20 billion, roughly
speaking. And they will have the ability to lend or invest out
of the reflows from the first installment.
But already the EBRD is beginning to graduate certain of
the countries in central Europe, something that we have
supported as long as graduation is not a cutoff that is
absolute for countries. We believe that many of the countries
in central Europe can be graduated from certain kinds of
support as the private sector can pick that up, and that the
Bank should turn its attention to the southern tier--Bulgaria
and Romania--and to the parts of the former Soviet Union that
really are now in greater need.
But the approach that leads to declaring that they will not
need any further capital is the idea that in another 10 years
or so, really, the transition should be, as far as reforms are
concerned and creating private sector institutions, the
transition should be completed. And then a process of income
convergence would continue for some years after that.
Senator McConnell. Since we are the largest shareholder in
that Bank, do you find it curious that we are between fourth
and sixth in all of the procurement categories?
Mr. Lipton. Yes; I believe that the last data I saw had us
at fifth, with about 8-and-some-odd percent of the procurement,
with about a 10-percent share. Typically, our shares for
procurement are somewhat less than our shares of contributions,
because borrowing countries are able to be in the procurement
pool along with contributing countries. It is true that we are
behind a couple of the borrowing countries, where there is a
lot of local procurement that is allowed. I think we can
provide you with a list of those.
[The information follows:]
EBRD PUBLIC SECTOR PROCUREMENT
[Top 10 countries--1991-96]
------------------------------------------------------------------------
Country ECU million\1\ Percent
------------------------------------------------------------------------
Germany................................. 204.77 11.3
Italy................................... 183.63 10.1
France.................................. 161.13 8.9
United States........................... 124.14 6.9
Russia.................................. 116.27 6.4
Hungary................................. 115.37 6.4
United Kingdom.......................... 89.41 4.9
Slovenia................................ 89.12 4.9
Poland.................................. 79.53 4.4
Finland................................. 57.95 3.2
------------------------------------------------------------------------
\1\ Exchange rate on December 31, 1996 was 1ECU=$1.24.
Senator McConnell. Anything we can do to improve that?
Mr. Lipton. Well, I will grant that--I have heard
complaints from U.S. companies who say that they feel that they
should be doing better. And they suspect that the Bank is not
being fair. We have pressed and will continue to press to see
that American companies are treated fairly in this process. But
I think that it would not really make sense to try to block the
regional countries, the borrowing countries, from being
involved in the procurement. It is really part of the effort to
promote their private sectors, to try and get their private
companies--in particular, construction companies--into the
process.
Senator McConnell. Senator Bennett, would you like another
round?
Senator Bennett. No, thank you, Mr. Chairman.
Senator McConnell. I think we are essentially through, Mr.
Secretary. Thank you very much for coming.
Secretary Rubin. Mr. Chairman, thank you for having us.
Additional committee questions
Senator McConnell. There will be some additional questions
which will be submitted for your response in the record.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing.]
Additional Committee Questions
Question. Mr. Secretary, I am concerned about the current number of
cases involving expropriated property of American citizens abroad.
Could you provide the subcommittee with a comprehensive list and
approximate values of properties expropriated by foreign governments in
which claims by American citizens have not been satisfied?
Answer. This information is outside Treasury jurisdiction. I will
have to refer this question to other agencies in the U.S. Government.
[Clerk's note.--The Department of Treasury, or any other U.S.
Government agency, was unable to provide an answer to any part of this
question as of December 31, 1997.]
______
Questions Submitted by Senator Lautenberg
upcoming votes on assistance to countries that may be harboring war
criminals
Question. What upcoming votes are there at the World Bank or any
other international financial institutions for which you are seeking
advice from the State Department with respect to implementing Section
568 of the Foreign Operations Appropriations Act, 1997, concerning
sanctions against countries that are harboring war criminals? What
countries have you been advised are on the ``watch list'' because of
their lack of cooperations with the war crimes tribunal?
Answer. The State Department has cited concerns about Croatia's
implementation of the Dayton accords, including its cooperation with
the International Criminal Tribunal for Former Yugoslavia (ICTY). In
March, at the State Department's request we instructed the U.S.
Executive Director at the IMF to abstain in the vote on the proposed
Extended Fund Facility arrangement for Croatia. Indeed we seek guidance
from the State Department on all proposed IFI loans for Croatia. Also,
we seek guidance from State on all IFI loans to Bosnia-Herzegovina that
would benefit the Republika Srpska. Since Serbia-Montenegro is excluded
from IFI membership under the ``outer wall'' of sanctions agreed by the
international community, it is not eligible for loans from the IFIs.
Rwanda is also on this list.
Question. I have run up against obstacles in trying to obtain
information about votes that are taking place in the IFI's. Can you
provide me with a list of all World Bank and IMF votes related to
Croatia, Serbia, and Bosnia that are projected to take place between
now and the end of 1998, including a description of the projects to be
voted on and the projected dates of consideration?
Answer. The following is a tentative list of upcoming projects in
the IFI's.
croatia
July
World Bank Investment Recovery Project loan to four commercial
banks for on lending to private sector and enterprises to be
privatized; $30 million.
EBRD equity investment to help establish the first venture capital
fund in Croatia, the Croatia Capital Partnership Ltd; co-sponsors
include privatized Zagrebacka Banka (with about 24 percent remaining
ownership by State funds and State-owned companies, including State-
owned companies in the process of privatization) and a group of British
private investors; $5 million.
IMF completion of first review under EFF Arrangement; SDR 28.78
million (about $40 million).
MIGA guarantee to Danish investor Brodrene Hartmann A/S for an
investment in a privatized Croatian egg-packaging company, Hartmann-
Bilokalnik Ambalaza d.o.o.; to be approved on a ``no objections''
basis, unless 3 EDs request a Board discussion; $6.7 million guarantee.
EBRD loan to the Government-owned National Agricultural Wholesale
Market Company for on lending to 6 regional government-owned wholesale
market companies; the project aims to improve the efficiency of
wholesaling in Croatia's 6 largest cities; $17.9 million.
Late July
EBRD investment in privatization of Slavonska Banka; related to
World Bank Investment Recovery Project above; $19 million.
October
EBRD multi-project facility for $50 million of equity investments
with the Italian dairy products company, Parmalat SpA, in various
countries of eastern Europe and the former Soviet Union; EBRD
management would have the authority to decide on investing in these
sub-projects, including possibly in Croatia.
End of November
EBRD discussion of its proposed investment Strategy for Croatia.
December
IMF Board's second review under Croatia's EFF Arrangement; SDR
28.78 million (about $40 million) of immediate purchases will be
authorized by Board, provided that Croatia has satisfied the end-
September 1997 performance criteria. Another $40 million tranche would
be authorized automatically in February 1998, if management determines
that Croatia has satisfied end-December performance criteria.
EBRD investment to support privatization of Slavonska Banka;
related to World Bank Investment Recovery Project above; awaiting
Government of Croatia decision; $19 million.
Early 1998
World Bank Municipal Environmental Infrastructure Investment
Project loan to reduce environmental pollution by financing assistance
to 6 municipalities to improve their wastewater collection, treatment
and disposal systems; under preparation; $45 million.
World Bank Municipal Environmental Infrastructure Investment
Project loan to reduce environmental pollution by financing assistance
to 6 municipalities to improve their wastewater collection, treatment
and disposal systems; $41 million.
January through March
EBRD loan to a Croatian food company; at least DM 50 million.
February
IMF EFF tranche of SDR 28.78 million (about $40 million) becomes
available without Executive Board review, provided Croatia has
satisfied end-December 1997 performance criteria.
February through March
Possible IMF Board discussion of Article IV consultation on
economic policies.
March
World Bank Railway Rehabilitation Project loan to rehabilitate the
damaged railroad system including reintegrating the areas that had been
under rebel Serb control; $100 million.
No tentative date
World Bank Public Sector Adjustment Loan to reduce recurrent public
expenditures and improve the fiscal and regulatory framework of public
finances; under preparation; $100 million.
World Bank Public Sector Adjustment Loan to reduce recurrent public
expenditures and improve the fiscal and regulatory framework of public
finances; under preparation; $100 million.
IFC loan and equity investment in partly privatized paper
manufacturer, Belisce d.d., for modernization, environmental
improvements and refinancing some existing loans; $13.4 million.
bosnia-herzegovina (all dates tentative and subject to change)
July
EBRD investment in share capital of private sector bank, Market
Banka, based in Sarajevo; Board approved with U.S. support; $1.5
million.
August
IDA Interim Trust Fund credit for Emergency Wood Supply and Forest
Management Project to rehabilitate harvesting capacity and support
management of forest resources in the Federation and Republika Srpska;
$7 million.
IDA credit for Republika Srpska Reconstruction Assistance Project;
finance imports of farm machinery and livestock, repairs of public
apartment buildings, imports of road maintenance equipment and spare
parts, repairs of water supply and sewerage systems, imports of
critical parts to restore electric power supply and fiscal support;
policy objectives are to reform trade policy, link and reintegrate
infrastructure between the entities, and to assist RS economic
recovery; $26 million.
IDA Interim Trust Fund credit for Second Transport Reconstruction
Project; support for reconstruction and rehabilitation of roads,
bridges, tunnels, railways, and urban transit systems throughout the
Federation and RS; $30 million.
IDA Interim Trust Fund credit for Second Education Reconstruction
Project; finance reconstruction of war-damaged schools, emergency
delivery of textbooks and other educational materials, and support
teacher education in the Federation and RS; $11 million.
End-August
EBRD investment in Horizonte Enterprise Fund; joint project with
IFC; $5 million.
September
EBRD Emergency Power Sector loan; emergency renovations for three
public utilities in Bosniak, Croat and Serb regions; $15.6 million.
Possible IMF Standby Arrangement.
EBRD equity investment in Horizonte Enterprise Fund which will
invest in small and medium-sized enterprises in Bosnia and Herzegovina;
joint project with IFC and Scandinavian Government-owned funds; $5
million.
October
IDA Emergency Gas System Reconstruction Project credit to support
reconstruction of transmission pipeline and distribution system in
Sarajevo and to strengthen institutions; $25 million.
EBRD loan to Sarajevska Pivara, partly privatized brewery in
Sarajevo; joint project with IFC; $5.2 million.
November
IMF Board discussion of Article IV consultation on economic
policies and institutions.
December
IFC loan to small private sector Sarajevo-registered firm, Akmeat--
Akova Impex, to refurbish existing facilities and install new equipment
for the production of hot dogs and other meat products; $1.8 million.
IFC loan to socially-owned/state-owned pharmaceutical manufacturer
Bosnalijek to refurbish existing facilities and install new equipment
to modernize and expand production capacity for oral drugs; the company
is to be privatized; $2.4 million.
January
IDA Republika Srpska Emergency Pilot Credit to provide line of
credit to enterprises in Republika Srpska; $5 million.
No tentative date
EBRD Telecommunications Rehabilitation Project loan to 3 public
utilities in Bosniak, Croat and Serb areas for emergency renovations;
under preparation; $20 million.
EBRD investment in Bosnia & Herzegovina Reconstruction Equity Fund,
a small business venture capital fund; under preparation; $16 million.
IDA Banking and Enterprise Privatization Project credit to support
design and implementation of a privatization plan and to provide lines
of credit to banks for restructuring; under preparation; $30 million.
IDA Public Finance Reform Project credit to improve fiscal
efficiency and ensure policies conducive to private sector led growth;
under preparation; $million to be determined.
IDA Second Electric Power Reconstruction Project credit to support
rehabilitation of power stations and transmission and distribution
networks; under preparation; $25 million.
IDA Interim Trust Fund credit for Wood Supply and Forest Management
Project to rehabilitate harvesting capacity and support management of
forest resources in the Federation and Republika Srpska; $7 million.
IFC Wood Sector Agency Credit Line to provide a line of credit to
6-10 small and medium-sized wood sector enterprises in the Federation
and Republika Srpska using up to 5 local commercial banks as IFC's
agents; $10 million.
IDA Republika Srpska Enterprise Credit to provide line of credit to
enterprises in Republika Srpska; $5 million.
EBRD Emergency Power Sector loan; emergency renovations for three
public utilities in Bosniak, Croat and Serb regions; $15.2 million.
IDA credit for Reconstruction Assistance (Republika Srpska)
Project; finance essential reconstruction activities, including civil
works for housing repairs and water supply system rehabilitation,
imports for agriculture and repairs to electric power systems; also
support economic reintegration of Bosnia through trade reforms;
postponed from August 28 at U.S. request; $17 million.
prevent war criminals from benefiting
Question. In a recent letter to Senator Leahy and me, you mentioned
that the Treasury Department ``will continue to work closely with the
World Bank to ensure that monitoring takes place to prevent any
suspected war criminals from benefitting from Bank-administered
loans.''
Could you describe specifically what the Treasury Department and
the World Bank have been doing in this regard?
Answer. Treasury and State consult with World Bank staff in
implementing the conditionality policy agreed upon by the international
community to support those localities implementing the Dayton accords,
including cooperation on war crimes issues, and to withhold support
from those not implementing Dayton. These consultations include
discussions of the loan pipeline.
While the World Bank must be non-political, it wants to support the
Dayton accords. In designing its projects, the Bank consults very
closely with the Office of the High Representative, which advises
donors on conditionality issues, including war crimes issues.
Question. Are the ownerships and boards of recipient companies or
entities checked in some fashion to ensure that the indicted do not
benefit? Is there written material describing this process? Who is
responsible for doing so?
Answer. So far, the Bank has done very little lending involving
companies in Bosnia. The Bank's Project Implementation Units (PIUs) are
under a commitment to screen all proposed disbursements. The PIUs are
audited much more frequently in Bosnia than elsewhere, because of
general concerns about corruption as well as war criminals.
As part of its due diligence, the Bank audits the PIUs more
frequently, and consults with the OHR and with NGOs and other
particular groups about corruption and war crimes issues.
So far the Bank's projects have never benefitted war criminals.
middle east development bank
Question. The United States was a leader in the effort to create
the Bank for Economic Cooperation and Development in the Middle East
and North Africa (MEDB), and effort which I strongly supported. The
MEDB is a key element of the effort to strengthen the economic
foundation that will be essential if we are to have a lasting peace in
the Middle East.
Why has the Administration proposed funding the Bank out of
Economic Support Funds (ESF) instead of funding it directly as is done
with other regional development banks?
Answer. It is most appropriate to use ESF to support the Bank
because the mission of the Bank is closely linked to the political and
economic objectives of ESF.
The Bank originated as a joint proposal by the four core parties in
the peace process: Egypt, Israel, Jordan and the Palestinians.
The Bank will be a major presence in the Middle East, helping to
lock in the political commitment to peace and regional economic
cooperation. The regional parties will be able to demonstrate the
concrete economic rewards of cooperation.
Question. What do you see as the prospects for getting the Bank off
the ground during the coming year?
Answer. The MEDB Articles of Agreement will enter into force--
allowing the Bank to begin operations--when shareholders with 65
percent of the agreed subscriptions ratify the Articles. Since the U.S.
represents 27 percent of the agreed subscriptions, entry into force
could theoretically occur without U.S. involvement but it is highly
unlikely given the importance of a U.S. role.
international development association
Question. I am concerned about funding for the International
Development Association (IDA) which lends money on concessional terms
to the poorest countries of the world. Because of U.S. failure to pay
our entire contribution to the tenth replenishment to IDA, other donors
have had to fill in the gap for fiscal year 1997, and U.S. companies
have been excluded from a portion of this year's IDA procurement. I'd
like for you to clarify on the record what effect our arrears to IDA
have in poor countries and on the U.S. leadership role in the world?
How effective has IDA lending been in terms of economic development
and poverty alleviation?
Answer. Because of its focus on poverty alleviation, IDA has made a
significant contribution to poverty alleviation. Below are cited some
of the strongest indicators of how poverty has been reduced in the last
several decades. We believe that many of these improvements would not
have come about were it not for IDA. The U.S. role in guiding the IDA
and the other MDBs in the last 50 years has focused and shaped their
operations, tangibly improving the lives of millions in the developing
world, and making poverty reduction a primary goal. Even though it may
not always appear so, life in even the poorest countries has improved
dramatically in many respects, thanks in large part to the efforts of
the IDA and the other IFIs. Since 1970, in the poorest countries (with
incomes less than $700 in 1993) the following results have been
achieved:
--Fertility rates and infant mortality rates are both down 40
percent.
--The number of children enrolled in secondary schools has nearly
doubled from 22 percent to 42 percent and primary school
enrollment has increased 36 percent.
--Literacy rates have risen 33 percent.
--Life expectancy has increased from 54 to 62 years.
--The percent of people with access to safe drinking water has risen
from 22 percent to 69 percent.
Question. How effective has IDA lending been in terms of opening up
new markets for U.S. goods and services?
Answer. Building new markets in the developing world is critical to
U.S. economic interests as long as our domestic growth continues to
rely heavily on exports. Thirty-five percent of our economic growth
over the last five years has come in the export sector. With exports to
developing countries now 42 percent of total exports and growing at
nearly twice the pace of those to industrialized countries, we need to
nurture stable, growing trading partners to ensure our future
prosperity. IDA graduates purchased $65 billion in U.S. exports in
1996, up from $61 billion in 1995. Current IDA borrowers purchased $27
billion in U.S. exports in 1996.
Question. Has the United States lost influence with other donor
countries and the general direction of the IDA program because of its
failure to fully fund its contribution to the tenth replenishment?
Answer. When the U.S. does not make its payments, our influence
does indeed erode. We are regularly pushing the Bank to accomplish
reforms and enact policies that we believe are important to improving
the Bank's development potential, but by not paying IDA-10 on time, we
lost our leverage in pushing our initiatives forward.
Our IDA-10 payments should have been completed in fiscal year 1996.
The Bush administration negotiated the agreement and Congress
authorized it. In fiscal year 1997 we put no new money toward IDA and
instead put our full appropriation toward paying off arrears. The U.S.
was faced with being the only country to fall three years behind its
commitment. Prompt payment of arrears is essential for any country's
credibility, but particularly for the U.S. since we control such a
large part of the voting shares.
Our future commitments to IDA and the rest of the MDBs have been
reduced by 40 percent. With full MDB arrears clearance, we will be able
to fund all of the MDBs, including IDA, for less than we used to pay
for IDA alone.
Question. In your opinion, is the U.S. share of the next IDA
replenishment (the eleventh) fair?
Answer. The U.S. pledge of $800 million per year for two years is
40 percent less than the prior annual commitment to IDA-10 of $1.25
billion per year, which had been negotiated by the previous
Administration. The overall level of IDA concessional lending is
expected to average over $7 billion per year despite the U.S. reduction
in funding, with World Bank net income, carryover of IDA-10 resources,
and IDA repayments making up for lower donor contributions. Thus, the
U.S. share is fair not only for the U.S., but also for the Bank.
______
Questions Submitted by Senator Campbell
denver summit of eight
In June, my home state of Colorado will host the Denver Summit of
Eight, which will bring together leaders of the seven major
industrialized nations and Russia for three days to discuss economic
and monetary policy.
This meeting marks an historic change in the format for the G-7
Summit. For the first time in the 23-year history of these economic
summits, Russia will participate as a member, rather than as an
observer.
Question. The United States provides millions of dollars in foreign
aid to Russia. What additional steps can the United States take at the
summit to improve the climate in Russia for American businessmen and
women?
Answer. For the past five years, U.S. assistance to Russia has been
aimed chiefly at promoting the country's transition to a market-
oriented economy. Through our intensive work with the international
financial institutions and bilateral efforts through the Gore-
Chernomyrdin Commission, the US has helped Russia stabilize its economy
and advance the process of improving the country's investment climate.
We have been and continue to promote legal reform and the development
of regulatory mechanisms in Russia that are vital to enabling American
and other foreign investors to participate in the many opportunities
available in Russia on an equal footing with domestic investors, and to
create an environment in which investors can be confident of a return
ontheir capital as well as return of their capital. Our efforts have
been aimed at critical areas including:
--Reforming Russia's tax system to promote lower rates that are more
uniformly applied and enforced across taxpayers.
--Advancing Russian legislation pertaining to Production Sharing
Agreements (PSAs) that could open the way for US companies to
participate in the development of Russia's vast energy
resources.
--Reducing onerous licensing requirements faced by both foreign and
domestic firms, involving payment of fees and administrative
burdens, which could stop even a highly motivated entrepreneur
from starting a legitimate enterprise.
The upcoming summit provides us with an excellent opportunity to
engage Russia's leadership at the highest levels in an effort to
advance these critical reforms.
Question. What are some of your goals for the United States during
the Summit of Eight?
Answer. Treasury's work for the Denver Summit is focused on Summit
Leaders' economic and financial discussions. We anticipate three chief
themes: financial stability; development, with a special focus on sub-
Saharan Africa; and cooperating to combat international financial
crimes.
At the Denver Summit, we intend to build on the financial stability
accomplishments from Halifax and Lyon to manage the risks presented by
globalization of financial markets, such that a financial crisis
originating in a major financial institution or market is less likely
to spill over to other markets. Special working groups have been
preparing reports on improving prudential standards for emerging market
countries,
We will work to improve governance, which is crucial to sustainable
economic development, by asking IFIs to help countries combat
corruption and reduce incentives and opportunities for corrupt
practices, and regional development banks to collaborate fully with
World Bank efforts to raise public procurement standards worldwide.
We will seek Summit Leaders' endorsement of the OECD Ministers'
call to eliminate tax deductibility of bribes, and to negotiate by
year-end a high standard international convention to criminalize
bribery, to submit national criminalization legislation by April 1,
1998, and to seeks its enactment and convention entry-into-force by the
end of 1998.
We will particularly focus our development attention on Sub-Saharan
Africa, committing to improve their exports' access, and to consider
strengthened assistance for reforming countries with the greatest need.
We will examine our own bilateral aid and trade promotion programs to
ensure their support for climates conducive to economic growth, and to
strengthen cooperation among concerned institutions to facilitate and
coordinate capacity building efforts. We also will urge IFIs to
strengthen efforts to support reforming Sub-Saharan African countries,
reporting on implementation at the September World Bank/IMF annual
meeting.
We will seek Summit countries' commitments to help reduce
international financial crime, including money laundering, through
endorsing an expansion of the Financial Action Task Force, which is
leading the international fight against moneylaundering, and mandating
recommendations on strengthening international cooperation between law
enforcement and financial regulatory agencies on international cases
involving serious financial crimes and regulatory abuse.
Question. What are the implications for the United States from the
change in Russia's status at the summit?
[Clerk's note.--The Department of Treasury was unable to provide an
answer to any part of this question as of December 31, 1997.]
______
Questions Submitted by Senator Bennett
Question. When will the World Bank's new policy on child labor be
finalized and how will it be carried out?
Answer. The World Bank paper on child labor is expected by the end
of the year. We will work with the Bank on full and rapid
implementation of the measures in the paper.
[Clerk note.-- Prior to the subcommittee publication date, the
World Bank completed the Child Labor Report and Treasury has submitted
it to the subcommittee.]
Question. What is the U.S. position on Asian Development Bank
funding for the military regime in Burma i.e., the SLORC?
Answer. Public Law 104-208, the Fiscal Year 1997 Foreign Operations
Appropriation Act, requires the United States to vote against
assistance to Burma in any of the IFI's until the President determines
and certifies to Congress that Burma has made progress in improving
human rights practices and implementing democratic government. Since
1988, no new loans or technical assistance of any kind had been
extended to Burma from the ADB. The U.S. has been one of the most
active Bank members in ensuring that the military regime receives no
funding.
Question. The Congressional Research Service \1\ judges that the
Chinese Government will not borrow market rate money to fund social
programs and non-commercial agriculture. Does Treasury agree with this?
---------------------------------------------------------------------------
\1\ Document 97-518 F [summary page].
---------------------------------------------------------------------------
Answer. China has generally been unwilling to borrow at market
rates for social programs and non-commercial agriculture. We have no
reason to expect that this position will change.
Question. About how much has the World Bank lent to China since
1985?
Answer. The total amount from IDA and the IBRD since 1985 is $25.3
billion.
Question. Is it not true that the Chinese government has been
engaged in a multi-billion dollar strategic and advanced conventional
weapon acquisition program?
Answer. China is seeking to modernize its forces, but increases in
spending are not dramatic and much spending has gone for increased
personnel costs.
Most of China's weapons technologies are 30-40 years behind those
of the U.S. China's power projection capability is rudimentary and its
sustained power projection ability virtually non-existent.
Question. Does not World Bank Group support for social programs and
non-commercial agriculture allow the Chinese Government to divert
resources to modern weapons programs?
Answer. As China develops economically, it seeks funding from MDBs,
like other developing countries. Through our engagement policy, we are
attempting to develop a relationship that will encourage China to
accept what we believe to be true--that it will be able to find greater
security inside, rather than outside, the international system.
Encouraging China's economic reforms and its integration into the
world economy--including through MDB programs--is a key part of our
engagement strategy.
subcommittee recess
Senator McConnell. The subcommittee will stand in recess
until 10:30 a.m., Thursday, May 22 when we will receive
testimony on the fiscal year 1998 budget request from the
Secretary of State, Hon. Madeleine Albright.
[Whereupon, at 3:43 p.m., Tuesday, May 20, the subcommittee
was recessed, to reconvene at 10:30 a.m., Thursday, May 22.]
FOREIGN OPERATIONS, EXPORT FINANCING, AND RELATED PROGRAMS
APPROPRIATIONS FOR FISCAL YEAR 1998
----------
THURSDAY, MAY 22, 1997
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 10:35 a.m., in room SD-138, Dirksen
Senate Office Building, Hon. Mitch McConnell (chairman)
presiding.
Present: Senators McConnell, Specter, Bennett, Campbell,
Stevens, Leahy, Lautenberg, Mikulski, and Murray.
DEPARTMENT OF STATE
Office of the Secretary
STATEMENT OF HON. MADELEINE K. ALBRIGHT, SECRETARY OF
STATE
opening statement of senator mc connell
Senator McConnell. This hearing will come to order.
I want to welcome the Secretary of State again this year,
although in a different capacity.
This week the Senate will pass a budget resolution which
increases funding for the administration of America's
international relations. This is a very positive, important
development which you have vigorously promoted and for which
you deserve high praise. Senator Leahy and I have been waging a
campaign for several years to add $1 billion back to the
function 150 account, but were unable to persuade the White
House or the State Department of the urgency of the crisis in
previous years.
I want to say, Madam Secretary, I know that you weighed in
on this issue this year. I want to congratulate you for your
success in that regard. We intend to support your request here
in the Congress on a bipartisan basis.
Reacting to a perception of public indifference, the
administration has been fundamentally averse to accepting the
price of our global responsibilities. It has been clear to me
for some time that public opposition to all things foreign has
been greatly exaggerated. The proof is evident in the
consistently strong votes for the subcommittee's bills.
Unfortunately, it is also clear that we could not strengthen
funding levels without the administration's commitment to the
effort which, as I indicated, you have skillfully engineered.
Your fresh perspective has made a decisive difference and we
thank you for that.
The increase is vital to our interest and it is certainly
well-timed. The world today seems relatively peaceful,
particularly when compared to the past violence in Central
Africa, Central America, Bosnia, Chechnya, and Cambodia. For
more than a decade, few continents have been conflict free.
However, I believe we should all be cautioned. The absence of
conflict must not lull us into a false sense of security, a
sense which could suggest that it is time to withdraw from the
rest of the world. To the contrary, our times are framed by
high expectations and real risks, enormous opportunities and
steep costs. Stability, the hallmark of success, hinges on a
durable, believable American commitment to steady leadership
and sustained engagement.
Let me illustrate my point by turning to two examples,
Bosnia and Cambodia, where a heavy investment of American
credibility and resources has reduced tensions but not yet
solidified democracy or economic growth. Indeed, I worry that a
false sense of security risks a return to conflict.
A few weeks ago, I met with Bosnian Minister Silajdzic who
identified the three top issues which I agree must be addressed
for his country to survive. They are reconstruction, refugee
resettlement, and war crimes.
Tuesday, when Secretary Rubin testified, I raised my
concerns about the slow pace of the World Bank reconstruction
efforts. While our bilateral aid program is in reasonably good
shape, with more than $400 million committed of the $600
million pledged, standing alone it is insufficient to meet the
urgent and massive requirements. The bank must accelerate the
commitment of funds.
The more intractable issues which I urge you to focus on
today are the safe resettlement of the displaced and refugee
population and the arrest and prosecution of war criminals. We
probably all need a better sense of how our aid program is
facilitating solutions.
As an outspoken critic of the atrocities committed to
achieve ethnic cleansing, I know you share the view of many on
this subcommittee that reconciliation and peace in Bosnia are
not possible without the moral reckoning envisioned by the war
crimes tribunal. However, it seems this worthy idea is
foundering. Short of a major renewed effort when our troops
withdraw, I fear Bosnia will once again disintegrate into
conflict, and this time with an American arsenal. In this
context, I am especially interested in hearing your perspective
on how our assistance program might be used to prompt the
regions leaders to turn over war criminals.
Cambodia presents similar problems and opportunities to
leverage our aid. After $3 billion and a major international
peacekeeping intervention, we all had high hopes Cambodia would
recover from the savage legacy of the Khmer Rouge killing
fields. Instead, we have seen Hun Sen systematically destroy
the legitimate political opposition. Easter Sunday at a rally
against government corruption, four grenades were tossed into
the crowd, killing 16 and injuring more than 80 people,
including 1 American.
Madam Secretary, this incident is a part of an ominous
pattern which threatens Cambodia's future and the region's
stability. Our policy should express clear and unequivocal
opposition to political violence. Our aid must leverage
judicial reforms, the protection of a free press, and an
immediate end to the campaign of terror and violence against
legitimate political parties.
We also should concentrate our considerable influence and
resources in support of a regulatory framework and institutions
to assure the elections scheduled for next year are conducted
in a free and fair manner. We are 18 months from elections and
there is no census, no voter rolls, no independent election
commission, nor an agreed draft to electoral law.
These are two trouble spots that have the potential to
challenge, if not jeopardize, our political interests in
European stability and our economic stakes in expanding
prospering markets in Asia. As threats they hardly stand alone.
Beneath a surface calm, there are countless problems which U.S.
diplomacy and dollars are in a unique position to prevent or
resolve. To summarize just a few, NATO expansion, so key to
European stability, began and has been sustained, obviously, by
American security assistance and leadership. Peace on the
Korean peninsula assumes an American role. A solution to the
stalemate between Armenia and Azerbaijan depends on United
States aid and meaningful participation in the Minsk group.
Zaire's troubles are far from over and should Mr. Kabila commit
to a democratic course, he will need all the assistance we can
offer to reconstruct that shattered nation. And, finally, our
active leadership is essential in the effort to restore Aung
San Suu Kyi to office and democracy to Burma.
prepared statement
I welcome your energy and your activism. We are looking
forward to this hearing.
I am going to call on my dear colleague, Senator Leahy, the
ranking member, and then we will hear from you, Madam
Secretary. Senator Leahy.
[The statement follows:]
Prepared Statement of Senator McConnell
This week, the Senate will pass a budget resolution which
increases funding for the administration of America's
international relations. This is a very positive, important
development which you vigorously promoted and for which you
deserve high praise. Senator Leahy and I have been waging a
campaign for several years to add $1 billion back to the
function 150 account, but were unable to persuade the White
House or State Department of the urgency of the crisis.
Reacting to a perception of public indifference, the
Administration has been fundamentally averse to accepting the
price of our global responsibilities. It has been clear to me
for some time that public opposition to all things foreign has
been greatly exaggerated; the proof is evident in the
consistently strong votes for this Subcommittee's bills.
Unfortunately, it was also clear that we could not strengthen
funding levels without the Administration's commitment to the
effort which you skillfully engineered. Your fresh perspective
has made a decisive difference.
The increase is vital to our interests and well timed. The
world today seems relatively peaceful, particularly when
compared to the past violence in Central Africa, Central
America, Bosnia, Chechnya, and Cambodia. For more than a
decade, few continents have been conflict free. However, I
believe we should all be cautioned--the absence of conflict
must not lull us into a false sense of security, a sense which
could suggest it is time to withdraw from the world. To the
contrary, our times are framed by high expectations and real
risks, enormous opportunities and steep costs. Stability, the
hallmark of success, hinges on a durable, believable American
commitment to steady leadership and sustained engagement.
Let me illustrate my point by turning to two examples,
Bosnia and Cambodia, where our heavy investment of American
credibility and resources has not yet produced either
prosperity or stability. Indeed, I worry that a false sense of
security risks a return to conflict.
A few weeks ago, I met with Bosnian Minister Silajdzic who
identified the three top issues which I agree must be addressed
for his country to survive. They are reconstruction refugee
resettlement and war crimes.
Tuesday, when Secretary Rubin testified I raised my
concerns about the slow pace of the World Bank reconstruction
efforts. While our bilateral aid program is in reasonably good
shape, standing alone it is insufficient to meet the urgent and
massive requirements. The Bank must accelerate the commitment
of funds.
The more intractable issues which I urge you to focus on
today are the safe resettlement of the displaced and refugee
population and the arrest and prosecution of war criminals. We
probably all need a better sense of how our aid program is
facilitating solutions.
As an outspoken critic of the atrocities committed to
further ethnic cleansing, I know you share the view of many on
this Subcommittee that reconciliation and peace in Bosnia are
not possible without the moral reckoning envisioned by the war
crimes tribunal. However, it seems this worthy idea is
foundering. Short of a renewed effort on the order of magnitude
of the Dayton negotiations, I fear Bosnia will once again
disintegrate into conflict, and this time with an American
arsenal. In this context, I am especially interested in hearing
your perspective on how our assistance program might prompt
improved cooperation from the region's leaders.
Cambodia presents a similar problem and opportunity to
leverage our aid. After $3 billion and a major international
peacekeeping intervention, we all had high hopes Cambodia would
recover from the savage legacy of the Khmer Rouge killing
fields. Instead, we have seen Hun Sen systematically destroy
the legitimate political opposition. Easter Sunday, at a rally
against government corruption, four grenades were tossed into
the crowd killing sixteen and injuring more than eighty people,
including one American.
Secretary Albright, this incident is part of a ominous
pattern which threatens Cambodia's future and the region's
stability. Our policy should be clear and unequivocal in
opposition to political violence. Our aid should leverage
judicial reforms, protection of a free press, and an immediate
end to the campaign of terror and violence against legitimate
political parties. We also should concentrate our considerable
influence and resources in support of a framework and
institutions to assure the elections scheduled for next year
are conducted in a free and fair manner.
These two trouble spots have the potential to challenge, if
not jeopardize, our political interests in European stability
and our economic stakes in expanding prospering markets in
Asia. As threats, they hardly stand alone. Beneath a surface
calm, there are problems which U.S. diplomacy and dollars are
in a unique position to prevent or resolve. Peace on the Korean
peninsula assumes on an American role. A solution to the
stalemate between Armenia and Azerbaijan depends on U.S. aid
and meaningful participation in the Minsk group. Zaire's
troubles are far from over and should Mr. Kabila commit to a
democratic course, he will need all the assistance we can offer
to reconstruct his shattered nation. And, finally, our active
leadership is essential in the effort to restore Aung San Suu
Kyi to office and democracy to Burma.
I welcome your energy and activism and look forward to your
assessment of our place in the world today.
opening remarks of senator leahy
Senator Leahy. Thank you, Mr. Chairman.
Madam Secretary, it is a pleasure to have you here.
Secretary Albright and I have known each other I think almost
from the first month I came here to the Senate, and I do not
think there was anybody more pleased than I and the other
members of the Leahy family when she was nominated and then
confirmed to be our Secretary of State.
I want to echo what Chairman McConnell said about the time
and effort you have devoted to winning support for additional
resources for foreign assistance. Sometimes some of your
predecessors did not recognize what you obviously know so well,
that you can have the greatest policies in the world, but if
you do not have the resources to carry them out, they are not
much more than historical talking points that will be in
somebody's archives somewhere. You want them to be enacted, not
archived, and I agree with you on that.
Our foreign assistance budget has been dangerously
underfunded since the end of the cold war. Now, that in not to
say that some of the programs we had were not in dire need of
reform. We threw away money in Zaire and in Central America. We
propped up some of the world's worst dictators. We ignored
pressing development needs. We could have used our money more
wisely during that period.
But that time is gone. Now we have new challenges. The news
from the Budget Committee has been encouraging. As Senator
McConnell said, he and I have consistently called for the funds
necessary for the United States to play a leadership role in
the world. We have done this under both Democrat and Republican
Presidents. So, you have some dependable allies here both among
Republicans and Democrats.
I will make one other point. It is also a point you have
made very strongly. There is no substitute for American
leadership. We are the wealthiest, most powerful, Nation on
Earth. No democracy in history has ever attained what we have,
but we should not just slap ourselves on the back. It has a
whole lot of leadership responsibilities that go with it. We
are not or should not be an isolationist country. We have
responsibilities worldwide and you, Madam Secretary, have shown
a willingness to face up to those responsibilities and those
opportunities as much or more than anybody I know. Whether it
is protecting the Earth's environment or controlling the spread
of plutonium, or building global defenses against health
epidemics or fighting international organized crime, or banning
the use of antipersonnel landmines, it is not going to happen
unless we set the example and push forward. These are immensely
difficult challenges and I am going to do whatever I can to
support you when I can.
But I also hope that you will encourage the administration
to challenge conventional wisdom. Take risks. Not everything we
do is going to work out. Not everything is going to be
successful. Not everything is going to be politically popular.
I think of the Marshall plan. When President Truman
proposed that, I think it had around 10 percent support or less
in this country. Think what the world would be like today if he
had not persisted.
Take risks. It is the only way we can leave the past behind
and seize what I think are the opportunities of a very unique
period in our history as we go into this new millennium. You
and I spoke a little bit about these challenges yesterday, in
Bosnia and the Middle East, China and Central Africa. Your
plate is overflowing and more so all the time.
I think it is time for the United States to push hard for
solutions. Do not hold back.
Obviously, one area that I have always been concerned about
is antipersonnel landmines. They maim or kill somebody every 22
minutes. The United States has proudly taken strong steps on
the Test Ban Treaty on Nuclear Weapons by taking the initiative
and going first. We have taken strong steps in the Chemical
Weapons Convention by taking the initial steps unilaterally and
going forward. Landmines have killed a lot and maimed a lot
more innocent people than chemical weapons or nuclear weapons.
Yesterday the British Government announced they will sign a
treaty banning the weapons at Ottawa this December, the United
States should do that. We ought to be leading the world, not
sitting on the sidelines on such an important moral issue. We
need the kind of leadership, Madam Secretary, that you showed
so courageously at the United Nations, and I would urge the
President and the administration to look back at how well you
did there and let us move forward on this. Several of us,
including around this table, on both sides of the aisle, will
continue to push it. Thank you again for being here.
Thank you, Mr. Chairman.
Senator McConnell. Madam Secretary, before turning to you,
we have the honor this morning of having with us the
distinguished chairman of the full Appropriations Committee,
Senator Stevens. Do you have any opening observations, Mr.
Chairman?
opening remarks of senator stevens
Senator Stevens. Thank you, Mr. Chairman. I have just come
to welcome the Secretary to our committee for the first time
since I have been chairman. As we remarked coming in, we have a
longstanding, almost family relationship, and I am delighted
that you are here.
I have only one comment. I am sending you a letter, Madam
Secretary, about the recent statement of the Canadian
Government that they will once again put fines on fishing
vessels coming up into the waters off Alaska from Seattle and
Portland. We went through that once before and finally got a
bill passed that the President signed to repay all of those
people who paid fines to the Canadian Government before. It is
a government responsibility to maintain the freedom of the
seas, and I hope that we are able to do that.
I do not ask any questions now. Maybe Senator Murray will
ask questions about it when she gets the opportunity. I am
going back to the conference, but I do welcome you.
I want to say, as chairman, I have been very appreciative
of the State Department under your administration responding
promptly to our requests. We have had just excellent
cooperation with the committee since you have become Secretary,
and I welcome that. I am sure all the members do. Thank you
very much.
Secretary Albright. Thank you very much.
Senator McConnell. Thank you very much, Mr. Chairman.
We are going to have a vote in about 10 minutes, but what
we are going to try to do here is go on and get started, and if
we have to have a break, it will be a very brief one. We will
just run over and vote and come right back.
So, Madam Secretary, we look forward to hearing from you.
summary statement of hon. madeleine albright
Secretary Albright. Thank you very much, Mr. Chairman. I
really am delighted to be here this morning on such a fine day
in this auspicious spring, a spring in which two teams from
your State made it to the final eight at the NCAA basketball
tournament, in which Senator Mikulski's Orioles for which I
started out are in first place, and in which Senator Leahy can
look forward to a new Batman movie. [Laughter.]
And in which the executive branch and Congress are moving
rapidly toward agreement on a budget resolution.
I am most heartened by the budget resolution in that it
treats international affairs as the priority it is, and I very
much appreciate not only your kind words, but also the help of
many members of this subcommittee in achieving what we have
gotten. I think we are all in this together, and I thank you
all very much for your support on this.
Now that the action moves here to appropriations, I hope
that this subcommittee and the subcommittee chaired by Senator
Gregg will receive large enough allocations to fund our arrears
to the United Nations and the multilateral banks, while also
meeting the President's request for current year funding for
our foreign operations programs.
These programs are designed to protect the interests of our
citizens in an age when national borders are porous, markets
are global, and many of the threats to our safety and security
cannot be dealt with by any one nation acting alone.
Mr. Chairman, the subcommittee has my written statement
which, as I am assured by those who wrote it, is brilliant in
its entirety. [Laughter.]
Senator McConnell. That will be made a part of the record.
Secretary Albright. However, to save more time for
questions and to keep us all awake, I will focus my oral
remarks on programs or policies that relate directly to this
funding request as opposed, for example, to NATO enlargement or
our China policy and that I believe we also should focus on
things that require our particular attention.
I will begin for programs for maintaining the security and
safety of our people. Here I emphasize the importance we attach
to the Korean Peninsula Energy Development Organization [KEDO].
As you know, KEDO stems from our framework agreement for
freezing and ultimately dismantling North Korea's dangerous
nuclear weapons program.
Last February I had the opportunity to visit Korea's
demilitarized zone and talk to our Armed Forces there. I also
had the chance to meet with officials in Seoul and to reaffirm
our strong friendship for the Republic of Korea. I returned
from that visit more convinced than ever that KEDO is a
national security bargain for the United States. Our
contributions are helping to generate support from others that
will ultimately dwarf our own. We are asking $30 million for
the American share this year and I hope we will have your
support on that.
Also in the category of protecting our security is the $230
million we are requesting for the war against drugs. Obviously
there are many battles yet to be won, but I am encouraged by
the progress being made in reducing coca production, signing
law enforcement cooperation agreements, and disrupting the
profits of notorious traffickers such as the Cali cartel.
I am encouraged as well by the joint commitment we made
earlier this month with Mexico to work together as allies on
every aspect of our shared problem. The State Department will
be working hard with others to translate that commitment into
sustained progress on the ground, in the air, at sea, and in
our neighborhoods.
Mr. Chairman, when we support arms control and
antinarcotics initiatives, we advance the long-term interests
and safety of our people. The same is true when we help end
conflicts and reduce tensions in troubled regions around the
world. In the Middle East, we face an extremely difficult and
complex situation because Arabs and Israelis alike are doubting
their faith in the peace process and in one another. We believe
that the way forward begins with the restoration of competence
and a sense of shared interests. All parties must accept as a
starting point that there is no room for terrorism or violence
as a tool of negotiation. There can be no rationalizations or
room for debate on that central point.
Looking ahead, Israelis must see that violence or threats
of violence will not be used against them as a means of
leverage in negotiations. Palestinians must see that Israelis
are not taking unilateral actions which foreclose options on
issues reserved for permanent negotiations. And both must
assume responsibility for improving the negotiating climate.
Arab-Israeli peace remains a high priority for the
administration and for the United States. To support our active
diplomacy, we must maintain appropriate bilateral assistance to
Israel, Jordan, and Egypt while contributing to economic growth
and the creation of democratic institutions within the
Palestinian authority.
It is also essential to American interests and to the
future stability of Europe that we fully implement the Dayton
Agreement for peace in Bosnia. Since Dayton was signed, our
initial security goals have been achieved and economic
reconstruction has begun.
Unfortunately, there remain important areas where progress
has been slow due to the failure of many Bosnian leaders to
embrace true political and social integration.
Now, President Clinton has approved measures to encourage
further and more rapid progress toward the core goals of
Dayton. Next week I will be visiting Sarajevo, Brcko, Banja
Luka, and other locations in the region to demonstrate
America's commitment to a single Bosnian state with two
multiethnic entities. I will also be making a more detailed
statement in New York tonight regarding the administration's
policy toward Bosnia.
The heart of our message is that the international
community, including both civilian and military components,
must make clear that those who contribute to peace in Bosnia
will be supported, while those who obstruct peace should pay a
price. For example, our new open cities support project
provides assistance to communities and only to communities that
have demonstrated a willingness to allow persons from ethnic
minorities to return safely to their homes.
One city where it is especially critical that residents
work for unity and peace is Brcko. Because of its strategic
location and the terrible ethnic cleansing that occurred there,
a peaceful, multiethnic Brcko would be a powerful symbol to the
rest of Bosnia and a springboard toward success for the entire
Dayton process.
Our goal in Brcko, as in Bosnia more generally, is to
reconnect what has been disconnected to restore the flow of
transportation, communication, commerce, and social interaction
among the various ethnic communities.
There are those who resist this process and there are many
in Bosnia and elsewhere who are skeptical that it will succeed,
but these are the same people who said that the war could not
be ended, that Dayton could not be negotiated, and that the
United States and Europe, including Russia, could never come
together on behalf of a Balkans peace.
The administration does not underestimate the obstacles,
but neither do we underestimate the stakes. We are determined
to use our leverage and to press ahead with our partners both
in and outside Bosnia to support the work of the International
War Crimes Tribunal and to help create institutions that
improve security, permit more displaced persons and refugees to
return home, enhance civil liberties, and allow democratic
institutions to take root.
In this effort, we pledge regular consultations with this
subcommittee and with others in Congress and seek your support.
Switching continents, Mr. Chairman, today in the newly
renamed Democratic Republic of Congo, our goal is to encourage
a peaceful transition based on democratic principles. We
welcome Mr. Kabila's declared intention to form a broadly based
interim government, and we have made it clear that we would
like to see a government that is also transparent in its
activities so that the people of this long-troubled nation may
know that the days of secret looting and secret terror will not
return.
We also want to see a government that respects human
rights, assures due process, and cooperates with the
international community in caring for refugees and
investigating reports of atrocities.
Finally, we will look to the new authorities to adopt
democratic practices and build democratic institutions, to work
actively to prevent that vast country's fragmentation, and to
foster stable and peaceful relations with its neighbors.
The Democratic Republic of Congo is a nation rich in both
human and natural resources. In the weeks ahead, we will work
with officials in that country and elsewhere to improve
prospects for a democratic, prosperous, and peaceful future. We
will also consult closely with Congress concerning the
evolution of our policy.
Mr. Chairman and members of the subcommittee, America's
leadership is derived not only from economic and military
power, but also from the power of our ideals, and fundamental
to our ideals is our commitment to democracy. Accordingly, we
are asking your support for programs to strengthen democratic
institutions in the world, including central Europe and the New
Independent States, [NIS].
Mr. Chairman, the transition from communism to democracy in
central Europe is the product of central European courage,
energy, and vision. But the United States may be proud of the
role the SEED program, for which we are requesting $492 million
this year, continues to play in assisting the process of
economic and political reform. You all have mentioned the
Marshall plan, but what was once said about the Marshall plan
may fairly be said about this program. It has served as--and I
quote: ``the lubricant in an engine, not the fuel, allowing a
machine to run that would otherwise buckle and bind.''
A democratic Russia is also an essential partner in our
efforts to build a secure Europe. In Helsinki, Presidents
Clinton and Yeltsin expressed their commitment to stimulating
growth in investment in Russia while citing President Yeltsin's
plan to launch Russia on its next phase of reform.
In recognition of progress made and of our stake in
strengthening market democracies, we have this year revamped
our assistance program to Russia and the other NIS. Of the $900
million we have requested, $528 million will fund a new
partnership for freedom.
This initiative will concentrate on the promotion of
business, trade, and investment, and the rule of law, and it
will include increased professional and academic exchanges.
Mr. Chairman, before wrapping up, I want also to ask your
support for a full range of our programs in support of economic
and sustainable development. These include our requests for the
Export-Import Bank, the Trade and Development Agency, our
population programs, the global environment fund, important
U.N. programs, such as UNICEF and UNDP, and the multilateral
banks. Taken together, these programs make an enormous
contribution to America's well-being by promoting U.S.
investment and by helping our neighbors' trading partners and
friends to build healthier and more prosperous and more stable
societies.
I know, Mr. Chairman and members of the subcommittee, that
supporting foreign assistance is not the easiest vote for a
Senator to make. We are all concerned about priorities at home,
but I think as many of you have said, we also know that neither
our history, nor our character, nor our self-interest will
allow us to withdraw from the center stage of global,
political, and economic life.
There is, after all, no more immediate or local an issue
than whether our sons and daughters will some day be called
upon to do battle in big wars because we failed to prevent or
contain the small ones.
There are few more significant economic issues than whether
we will find ourselves forced into a new arms race because of
setbacks in the former Soviet Union or because nuclear weapons
have fallen into the wrong hands.
There are few goals more important to our workers than
opening new markets overseas.
There are few matters more urgent for our communities than
reducing the flow of drugs across our borders.
And there are few questions more vital to our children than
whether we will bequeath to them a world that is relatively
stable and respectful of the law or one that is brutal,
anarchic, or violent.
I will cease so you can go and vote.
Senator McConnell. I think probably the least disruptive
thing to do--and feel free to come back to the back room--would
be for us to recess the hearing, all go vote, and come right
back. If you would like to come back here, that would be fine.
Secretary Albright. Very good. Then I will give you my
final two paragraphs when you come back.
[A brief recess was taken.]
Senator McConnell. The hearing will resume.
Madam Secretary, had you completed your statement? If not,
go ahead.
Secretary Albright. Well, I had one more paragraph.
Senator McConnell. All right. We will take your last
paragraph.
Secretary Albright. I think it is germane actually because
it does talk about executive/legislative relations.
A half a century ago, a great American generation, led by
President Truman and supported by Members of Congress from both
parties, rose above the weariness of war's aftermath and the
temptation of isolation to secure the future. Working with our
allies, they made the investments and built the institutions
that would keep the peace, defend freedom, and create economic
progress through five decades.
I think it is clear that it is up to us in our time to do
what they did in their time, to support an active role for
America, protect American interests, keep American commitments,
and help where we can those from around the world who share our
values.
prepared statement
In that effort, I pledge my own best efforts as Secretary
of State and I solicit your support in it. From your opening
statement, I would say that we are on the same wavelength.
Thank you very much.
[The statement follows:]
Prepared Statement of Hon. Madeleine K. Albright
Mr. Chairman and Members of the Subcommittee, I am pleased
to have the opportunity to testify this morning, for the first
time in my new capacity. I hope very much that we will be able
to continue the frank relationship we enjoyed while I served as
our Permanent Representative to the United Nations. Together,
we have an important job to do, and I look forward to working
with you not only this year but in the future.
I want to acknowledge at the outset that this Subcommittee
and members on it have been leaders in supporting an active and
engaged U.S. foreign policy. We have not always agreed on all
subjects, but the disagreements have almost always been on
tactics not on goals. We all agree that the United States is,
and should remain, vigilant in protecting its interests,
careful and reliable in its commitments and a forceful advocate
for freedom, human rights, open markets and the rule of law.
I am heartened that the agreement on the Budget Resolution
worked out by the Administration and Congressional leaders
treats international affairs as the priority it is. I know that
Senator Lautenberg and others on this Subcommittee were
important actors in this process and I want to thank you for
your support.
Now, the action moves to appropriations. Consistent with
the Budget Resolution, I hope that this Subcommittee and the
Subcommittee on Commerce, Justice and State Appropriations will
receive allocations sufficient to fund both our regular
international programs and to pay our arrearages to the United
Nations and the multilateral development banks.
I hope that my testimony this morning will help persuade
any who may doubt that such an allocation would serve our
nation and our people well.
Mr. Chairman, I am here today to ask your support and that
of the Subcommittee for the President's request for funds for
the foreign operations programs of the United States.
Put simply, the goal of those programs is to protect the
interests of our citizens in an age when national borders are
porous, markets are global, and many of the threats to our
safety and security cannot be dealt with by any one nation
acting alone.
The President's request seeks to ensure that we will have
the foreign policy tools we need to sustain principled and
purposeful American leadership.
It includes funds for programs that will help us to promote
peace and maintain our security; to safeguard our people from
the continuing threat posed by weapons of mass destruction; to
build prosperity for Americans at home by opening new markets
overseas; to promote democratic values and strengthen
democratic institutions; to respond to the global threats of
international terrorism, crime, drugs and pollution; and to
care for those who are in desperate need of humanitarian aid.
Let me begin my discussion here this morning with our
programs for maintaining the security and safety of our people.
maintaining security
The Cold War may be over, but the threat posed by nuclear
and other weapons of mass destruction has only been reduced,
not ended.
Our efforts to reduce the number and stop the spread of
weapons of mass destruction contribute to what former Defense
Secretary Perry called ``preventive defense.'' We pursue these
initiatives not as favors to others, but because they are a
national security bargain for the American people.
With strong U.S. leadership, and bipartisan support from
the Congress, much has been accomplished. Achievements range
from the removal of nuclear weapons from Belarus, Kazakstan and
Ukraine to recent approval by the Senate--with the help of many
members of this Subcommittee--of our participation in the
Chemical Weapons Convention.
But arms control and nonproliferation are works in
progress, and we will need your help and that of the Congress,
as a whole, to continue that progress.
The 1994 Agreed Framework between the United States and
North Korea froze and established a roadmap for dismantling
that country's dangerous nuclear weapons program. With our
partners, we created the Korean Peninsula Energy Development
Organization (KEDO) to implement key aspects of the agreement.
Our earlier commitment helped jump-start KEDO and generated
contributions from Japan and South Korea that will ultimately
dwarf our own.
KEDO now has 10 members--and we will bring in at least
three more this year to share the burden. I appreciate the
support this Subcommittee has shown in the past for our
participation in KEDO, and ask your support for our proposed
$30 million contribution in fiscal year 1998. Those funds will
leverage the support of others, while contributing directly to
the safety and security of the American people.
I also ask your support for our proposed $36 million
voluntary contribution to the International Atomic Energy
Agency (IAEA). These funds will help that agency to verify
compliance with the Nuclear Non-Proliferation Treaty in more
than 820 locations in 61 countries.
We are also continuing efforts to fulfill the President's
call for negotiations leading to a worldwide ban on the use,
stockpiling, production, and transfer of anti-personnel
landmines.
Just last week, ACDA Director John Holum was in Geneva to
urge the Conference on Disarmament to begin that negotiation in
earnest. He also voiced U.S. support for the complementary
process now under way in Ottawa. As Director Holum made clear,
we don't under-estimate the challenges at the Conference on
Disarmament. However, that venue does provide the best
opportunity to negotiate an APL ban that is truly comprehensive
and effective. This issue remains a high foreign policy
priority for the United States, and I will continue to consult
closely with Senator Leahy--who has been an inspiring and
determined leader on this issue--and other Members of Congress
concerning it.
Finally, I join President Clinton in his call last Friday
for early Senate approval of the pending protocol on landmines.
By strengthening the restrictions on landmine use, this
protocol will help prevent many casualties and is, in the
President's words ``an essential step toward a total ban.''
Mr. Chairman, international narcotics trafficking also
endangers Americans. The President, and law enforcement
agencies and educators at all levels are committed to doing the
job at home. But we cannot hope to safeguard our citizens
unless we also fight this menace abroad, where illicit drugs
are produced and ill-gotten gains are hidden away.
Under the President's leadership, we have moved
aggressively and with results. This past year, our support for
eradication and interdiction helped knock coca production in
Peru to its lowest level in a decade. Cooperation with Paraguay
has improved. New law enforcement cooperation agreements with
Argentina, Brazil and Bolivia have been signed. And by
economically targeting individuals and front companies, we have
done much to disrupt the business and decrease the profits of
the notorious Cali cartel.
In Mexico, drug seizures and arrests are up. New laws have
been enacted to fight money-laundering. Mexico has set a
precedent by extraditing its own nationals to the United States
to be prosecuted for drug-related crimes. And amidst all the
publicity and real problems related to corruption, it is worth
remembering that 200 Mexican law enforcement personnel were
killed last year in the battle against drug trafficking.
During the meeting of the U.S.-Mexico Binational Commission
earlier this month, Presidents Zedillo and Clinton reaffirmed
the commitment of our two nations to work together as allies to
reduce demand, intercept shipments, arrest traffickers,
confiscate profits and professionalize every aspect of law
enforcement response. We will be working hard, in close
cooperation with representatives from the White House and other
agencies, to translate this commitment into further progress in
the war against drugs.
We are asking this Subcommittee to support our efforts in
Latin America and around the world by approving our request for
$230 million to combat international narcotics and crime. In
addition to other anti-crime initiatives, these funds support
our source country narcotics eradication and alternative
development programs, provide material and logistical support
for police and military in strategic areas, and finance our
comprehensive heroin control strategy.
America is the world's leader in the fight against
international terror, which continues to claim victims despite
steady improvements in multinational law enforcement and
information-sharing. We are persisting--and making some
headway--in encouraging our allies to refrain from business as
usual with Iran until that nation ends its support for
terrorism. And we remain steadfast in our support for United
Nations sanctions against Libya and Iraq.
To supplement our diplomatic initiatives, we have requested
$19 million for our anti-terrorism programs. These funds will
be used primarily to enhance the skills of police and security
officials in selected countries so that they may be more
effective partners in preventing and punishing terrorist acts.
promoting peace
When we support arms control and anti-terrorism efforts in
other countries and regions, we advance the long-term interests
and safety of Americans. The same is true when we help end
conflicts and reduce tensions in regions important to the
interests of the United States.
Today, I will cite three cases involving past, present or
potential conflicts where our budgetary resources are affected,
our interests are engaged and our participation or leadership
is required.
In the Middle East, we face an extremely difficult and
complex situation in the Arab-Israeli peace process.
Since 1993, the parties have made enormous gains in
transforming the political landscape of their historically
troubled region and laying the foundation for an enduring
peace.
In recent months, however, those gains have been threatened
and the people of the region have once again become the victims
of confrontation and acts of violence. The reason is that Arabs
and Israelis alike are doubting their faith in the peace
process and in one another.
We have, in the past, experienced setbacks to peace in the
Middle East, but we have persevered. Despite present problems,
we will continue to look for a way forward. That way begins
with restoration of the confidence, trust and sense of shared
interests upon which the peace process rests.
All parties must recognize and fully accept that there is
no room for terrorism or violence as a tool of negotiation.
There can be no rationalizations or room for debate on that
central point.
Looking ahead, Israelis must see that terror and threats of
violence will not be used against them as a means of leveraging
their position in negotiations. Palestinians must see that
Israelis are not taking unilateral actions which foreclose
options on issues that are reserved for permanent negotiations.
And both must assume responsibility for reversing the
deterioration in the negotiating environment. In that regard,
we have encouraged friends of peace in the Arab world not to
take actions which could make progress towards peace more
difficult.
Arab-Israeli peace remains a high priority for the
Administration and for the United States. We have an enormous
stake in the future of the region, and we remain in almost
continual contact with representatives of all sides. To support
our diplomacy, we must maintain appropriate bilateral
assistance to Israel, Jordan and Egypt, while contributing to
economic growth and the creation of democratic institutions
within the Palestinian Authority.
It is also essential to American interests and to the
future stability of Europe that we finish the job and fully
implement the Dayton Agreement for peace in Bosnia.
Fulfillment of these Accords would produce a stable,
undivided Bosnia that would cease to be a source of instability
in southern Europe.
It would also make possible over time the full integration
of the Balkans into European institutions; contribute to
regional prosperity; bolster democracy; prevent the area from
becoming a base for transnational crime; create a further bar
to meddling by Iran; and create a precedent-setting model for
resolving ethnic differences on the basis of justice and
respect for human rights.
Since Dayton was signed, our initial security goals have
been achieved and economic reconstruction has begun.
Unfortunately, there remain important areas where progress
has been slow due to the failure of Bosnian leaders, especially
in Bosnian Serb entity, the Republika Srpska, to embrace
political and social integration.
Today, and in days to come, we will be re-dedicating
ourselves to the goal of full implementation of the Dayton
Accords and to a single Bosnian state with two multi-ethnic
entities. Next week, I will be visiting Sarajevo, Brcko, Banja
Luka and other locations in the region. I will also be making a
more detailed statement in New York tonight regarding the
Administration's policy towards Bosnia.
The heart of our message is that the international
community, including both civilian and military components,
must re-energize its commitment to implement Dayton.
For example, while SFOR will remain principally focused on
enforcing the military aspects of the Dayton Agreement, it will
build on its past accomplishments by actively supporting
crucial civil implementation tasks, within its mandate and
capabilities. These include helping to create a secure
environment for managed refugee returns and the installation of
elected officials in targeted areas, and specific economic
reconstruction projects which could include inter-entity
telecommunications and restoring civil aviation.
Full implementation must be our goal in all sectors, and
the parties cannot pick and choose those elements they prefer
at the expense of others. If they are not complying on key
implementation tasks, it will not be business as usual for
their politicians or their military leaders. For example, if
the parties do not comply with their arms control obligations,
SFOR has the option to restrict military movements and
training.
On the civilian side, as well, we will move ahead with
fresh energy to help those in Bosnia striving to build a true
national community.
For example, our Open Cities Support Project provides
assistance to communities, and only to communities, that have
demonstrated a willingness to allow persons from ethnic
minorities to return safely to their homes.
To date, we have identified four municipalities in
different parts of Bosnia to participate at a cost of $3.6
million. We have an additional $5 million available to help
repair buildings, provide agricultural support and business
credit and to train workers in eligible communities.
One city where it is especially critical that residents
work for unity and peace is Brcko. Because of its strategic
location and the terrible ethnic cleansing that occurred there,
a peaceful, multi-ethnic Brcko would be a powerful symbol to
the rest of Bosnia.
Our goal in Brcko, as in Bosnia more generally, is to
reconnect what has been disconnected, to restore the flow of
transportation, communication, commerce and social interaction
among the various ethnic communities.
There are those who resist this process; and there are many
in Bosnia and elsewhere who are skeptical that it will succeed.
These are the same people who said that the war could not be
ended; that Dayton could not be negotiated; and that the United
States and Europe, including Russia, could never come together
on behalf of a Balkans peace.
The Administration does not under-estimate the obstacles,
but neither do we under-estimate the stakes. We are determined
to press ahead with our partners both in and outside Bosnia to
support the work of the International War Crimes Tribunal in
every way we can, and to help create institutions that improve
security, permit more displaced persons and refugees to return
home, enhance civil liberties, and allow the institutions of a
unitary, multi-ethnic and democratic state to take root.
In this effort, we pledge regular consultations with this
Subcommittee and with others in Congress, and seek your
support.
Mr. Chairman, of the many outbreaks of violence around the
world in recent years, the interrelated conflicts in Central
Africa have been the most deadly.
Today, in the Democratic Republic of Congo, formerly Zaire,
our goal is to encourage a peaceful and stable transition to a
new era based on democratic representation and popular
responsibility.
We note that the victorious Alliance leader, Laurent
Kabila, has said he intends to form an interim government that
includes representatives from various components of Congolese
society.
We welcome that intention and have expressed our
willingness to work with others to provide appropriate help to
a transitional government that demonstrates a commitment to
broad-based political participation, democratic practices, and
human rights.
We have made it clear that what we would like to see is a
transitional government that, in addition to being broadly-
representative, is also transparent in its activities, so that
the Congolese people know that the days of secret looting and
secret terror will not return.
We also want to see a government that respects the rights
of its people, assures due process to those charged with
crimes, and cooperates fully with the international community
in caring for refugees and investigating reports of atrocities.
Finally, we will look to the new authorities to adopt
democratic practices and build democratic institutions, to work
actively to prevent Congo's fragmentation, and to foster stable
and peaceful relations with its neighbors.
The Congo is a nation rich in both human and natural
resources. In the weeks ahead, we will work with officials in
that country and elsewhere to improve prospects for a
democratic, prosperous and peaceful future. We will also
consult closely with the Congress concerning the evolution of
our policy.
The United States supports international peacekeeping
activities that serve our interests through payment of our
assessments to United Nations peacekeeping operations and
through our voluntary peacekeeping account, for which we are
seeking $90 million in fiscal year 1998. Operations expected to
be funded by this account include, among others, peacekeeping
and observer activities in the Great Lakes region of Africa,
the Multinational Force and Observers in the Sinai, the Israel-
Lebanon Monitoring Group and peacekeeping and preventive
diplomacy missions of the OSCE.
As we work with others to resolve problems such as civil
conflict and proliferation, we need strong partnerships with
other leading nations. These are the bonds that hold together
not only our foreign policy, but the entire international
system.
By acting together, we are able to elevate standards of
international behavior, spur economic and social progress, and
strengthen the rule of law. We also leverage resources far
beyond our own.
Today, for example, many of the same countries that are
working to implement peace in Bosnia are also striving to build
lasting stability through NATO's Partnership for Peace. This
year we have requested $70 million in military assistance for
Partner countries. We are also requesting $20 million for
Central European Defense Loans (CEDL), to help recipient
countries build defensively-oriented, civilian-controlled
militaries with strong ties to the United States.
While preserving NATO's traditional purposes and strengths,
we are also adapting it to meet new missions and take in new
members. At the July summit in Madrid, NATO will invite a
number of Central European states to begin negotiations to join
the alliance. As President Clinton has repeatedly made clear,
this is part of a larger strategy, developed with our allies,
to build a future for Europe in which every democracy is our
partner and every partner is a builder of peace. Also
contributing to this goal is the historic ``founding act''
between NATO and Russia that was reached last week, and that
establishes the basis for long term cooperation on security
matters. In addition, a new Euro-Atlantic Council will provide
the framework for consultations involving NATO and Europe's
other democratic states.
In this context, Mr. Chairman, I might add that I
appreciate the counsel I have received from members of the
Senate's NATO Observer Group and from other Senators with an
interest in the evolution of Europe's economic and security
institutions. This is a process of enormous importance and can
only benefit from vigorous and wide-ranging examination of the
issues.
Meanwhile, the economic, political and military evolution
of nations in Asia will also have a profound effect on American
security and foreign policy.
Today, we are working with allies and friends to build an
Asia-Pacific community based on shared interests and a common
commitment to peace.
Over the last few years, we have reinvigorated our Asian
alliances while maintaining our forward deployment of 100,000
American troops in the Western Pacific. We are encouraging new
efforts to build security and resolve disputes peacefully
through bodies such as the ASEAN Regional Forum.
Our core alliances in Asia are as strong, and our
cooperation as broad, as they have ever been. Our relationship
with our closest Asian ally, Japan, is underpinned by our
shared commitment to open and democratic societies. We consult
regularly on issues from peace in Asia to development in
Africa. We appreciate Japan's generous financial support for
the Middle East peace process and for our Common Agenda of
environmental initiatives around the world.
We are working closely with the Republic of Korea, another
key ally, to maintain stability on the Korean peninsula and to
explore possibilities for permanent reconciliation. Our
cooperation is growing in numerous other areas as well, as
Seoul, anchor of the world's 11th-largest economy, takes on a
larger regional and global role.
We are also deeply engaged in managing our complex
relationship with China, as it emerges as a key Asian and
global power.
The evolution of our relations with China will depend
primarily on how China defines its own national interests
during the remainder of this century and into the next. Through
our strategic dialogue, we are encouraging the Chinese to
accept what we believe is true--that China will be able to find
greater security, prosperity and well-being inside a rule-based
international system than outside. Accordingly, the President
has decided to renew China's most-favored-nation trading
status, equivalent to normal trading relations, for the coming
year.
Currently, China is constructively engaged with the
international community in some areas; in some, it is not. We
have been able to work together well with respect to the North
Korea nuclear issue and banning nuclear tests. We have also
made progress on a range of specific commercial concerns and
laid the basis for cooperation on responding to global threats
of terrorism, crime, drugs and pollution.
We do, however, still have important differences with
China, especially on trade, arms-related transfers and human
rights, including Tibet. We do not hesitate to raise these
differences privately with China's leaders, or to express our
beliefs publicly concerning the need for all countries to
respect international standards. We will continue to voice
strong concern about the need for China to meet its commitments
concerning Hong Kong, a message that I will deliver, in person,
at the time of the former colony's reversion to Chinese
authority on July 1. And, while we will adhere to our ``one
China'' policy, we will also maintain robust unofficial ties
with Taiwan.
promoting democracy
Mr. Chairman, America's global leadership is derived not
only from our economic and military power, but from the power
of our ideals. And fundamental to American ideals is our
commitment to democracy.
Today, in Burma, as the Chairman has often and eloquently
reminded us, a legitimate democratic movement with demonstrated
popular support has been brutally repressed. That movement has
urged the international community to limit foreign investment.
What is more, Burma's government protects and profits from the
world's largest heroin trafficking enterprise.
Last month, in response to deepening repression in Burma,
President Clinton decided to impose investment sanctions under
a law approved last year by Congress. In combination with the
earlier actions we and other nations have taken, together with
shareholder and consumer pressure, we believe this step will
deal a further blow to investor confidence in Burma. It has
sent a message to the military regime that it will not attract
the capital investment it needs unless it begins a genuine
dialogue with its own people.
We also bolster democracy through our economic support and
development assistance programs in selected countries around
the world. For example, we are requesting $202 million in
economic support funds for democratic development in countries
such as Haiti, Angola, Cambodia and for regional programs that
promote respect for civil liberties and the rule of law.
We are also continuing major programs for strengthening
democratic transitions in Central Europe through the Support
for East Europe Democracy (SEED) program and in the New
Independent States (NIS).
The transition from Communism to democracy is the product
of Central European courage, energy and vision. But the United
States may be proud of the role the SEED program continues to
play in assisting the process of economic and political reform.
What was once said about the Marshall Plan may fairly be said
about this program, it has served as ``the lubricant in an
engine--not the fuel--allowing a machine to run that would
otherwise buckle and bind.''
Through SEED, for which we are requesting $492 million this
year, we have been able to serve as technical adviser on the
ways and means of building democratic institutions and
processes, developing financial sectors that attract investment
and coping with energy and environmental problems.
Clearly, progress has not been even either over time or
among countries in the region. But the overall direction has
been steady in the direction of less centralization, increased
reliance on private enterprise, more civil liberties and
greater development of the rule of law.
Central and eastern Europe remain as important to American
interests today as when the original SEED act was passed. The
nations here are proving that democracy and economic prosperity
can be built on the ruins of failed communist systems--a
valuable example for countries further to the east. Central
Europe is a growing market for U.S. goods and services, and a
gateway to the vast potential markets in Russia and Ukraine.
Finally, a peaceful, democratic Central Europe gives the U.S.
and the Atlantic alliance greater assurance of security at a
relatively low cost.
A democratic Russia is also an essential partner in our
efforts to build a secure Europe. Russia's transition has been
arduous and uncertain. More difficult times lie ahead. But open
markets and democratic institutions have taken hold. If Russia
is to become a full and productive partner in a Europe at
peace, that progress must continue.
The United States has a profound interest in encouraging
Russia to continue its democratic and economic reforms, to
respect fully the sovereignty of its neighbors, and to join us
in addressing critical regional and global issues.
In Helsinki, Presidents Clinton and Yeltsin issued a joint
statement outlining their commitment to stimulating growth and
investment in Russia, advancing Russia's integration into
international organizations and citing President Yeltsin's plan
to launch Russia on its next phase of reform.
In recognition of the progress that has been made, and of
the magnitude of our stake in the strengthening of market
democracies in the region, we have this year revamped our
assistance program to Russia and the other NIS. Of the $900
million we have requested, $528 million will fund a new
Partnership for Freedom.
This initiative will concentrate on activities to promote
business, trade and investment and those that would more fully
establish the rule of law. It will support opportunities for
U.S. business and help support partnerships with private U.S.
organizations. And it will increase professional and academic
exchanges.
In the aftermath of the Soviet Union's disintegration, the
NIS had to build their government institutions from the ground
up. In most cases, media and basic market institutions, such as
banks, capital markets and regulatory institutions remain at
early stages of development.
In several countries, economic reform has advanced faster
than democratic reform. We are concerned, for example, by the
undermining of parliamentary independence in Belarus, by
continued repression in Turkmenistan and by the disputed nature
of elections held last fall in Armenia.
We are concerned, as well, that in some sectors of the NIS,
weak institutions of government have led to a vacuum of
effective authority that has opened the way to a rapid increase
in criminal activity. This is hampering fledgling democratic
institutions, creating social instability and discouraging
foreign investment.
We have responded by substantially increasing the
proportion of our assistance that is designed to strengthen law
enforcement and judicial institutions and promote the rule of
law. Since 1995, for example, we have provided law enforcement
training to nearly 10,000 officials in Central Europe and the
NIS. We have developed regional criminal justice training
programs for more than 1,000 law enforcement officers and
prosecutors at the International Law Enforcement Academy in
Budapest. And we have greatly increased our formal cooperation
with Central European and NIS governments through agreements
that allow us to share information and coordinate
investigatory, prosecutorial and crime preventive activities.
Throughout this region and, indeed, the world, the United
States represents the potential of democracy. Wherever we are
visibly involved and engaged, we give hope to people who
believe in freedom and who want democratic institutions to
succeed. By building partnerships with other freedom-loving
peoples, we sustain the growth of open markets and democracy
that has enhanced our own security and prosperity, and which
has been the signature element of our age. If, however, we were
to abandon or walk away from our partners in these countries,
we would heighten the possibility that their societies would
retreat into repression or dissolve into the disorder within
which terrorists and criminals thrive.
Certainly, assistance to the strategically-located and
energy-rich democracies of Central Asia and the Caucasus is
strongly in our national interest. The purpose of our aid is to
help small businesses gain a greater foothold and to assist
nascent democratic organizations, such as the independent
media, public interest groups and educational institutions
establish active, effective roles.
In this connection, I note that the Administration
continues strongly to oppose section 907 of the Freedom Support
Act, which undermines U.S. influence and policy flexibility in
the Caucasus region and Azerbaijan.
The Administration continues to support assistance for
Ukraine as part of our long term strategic partnership with
that country. Last week's first full meeting of the U.S.-
Ukraine Binational Commission underscored the value we place on
a stable, democratic Ukraine that is working cooperatively with
us on a range of issues. During those meetings, we were able to
express our support for the process of economic and political
reform, while also expressing concern about the problem of
corruption that has been chilling outside investment in
Ukraine.
promoting prosperity
Mr. Chairman, peace and security are paramount goals of our
international programs, but promoting economic prosperity is
another top priority.
The Clinton Administration has had extraordinary success in
helping our economy grow at home by opening markets abroad. Our
exports have grown by 34 percent since 1993, generating 1.6
million new jobs. Since the North American Free Trade Agreement
entered into force three years ago, U.S. exports to Mexico have
risen by more than one-third and overall trade has more than
doubled. We have laid the groundwork for free and open trade in
our hemisphere by 2005 and in the Asia-Pacific region by 2020.
And we have put our full weight behind better enforcement of
intellectual property standards, and fuller consideration of
core labor rights, at the World Trade Organization.
Looking ahead, we all know that competition for the world's
markets is fierce. Often, our firms go head-to-head with
foreign competitors who receive active help from their own
governments.
Our goal is to see that American companies, workers and
farmers have a level playing field on which to compete.
As long as I am Secretary of State, our diplomacy will
strive for a global economic system that is increasingly open
and fair. Our embassies will provide all appropriate help to
American firms. Our negotiators will seek trade agreements that
help create new American jobs. And I will personally make the
point to other governments that if their countries want to sell
in our backyard, they had better allow America to do business
in theirs.
Fortunately, our diplomats are doing their jobs. One of the
pleasures of my own job is hearing about compliments from
American corporations like this one. After executing a contract
to build a power generating plant in Yemen, officials from CAE
Development of Lexington, Kentucky wrote that ``Every
Department of State employee contacted was top notch and eager
to help * * * we could not have obtained this contract without
their help.''
But our diplomats and our businesspeople need your
commitment as well, and your support for our requests for the
Export-Import Bank and the Trade and Development Agency.
The Overseas Private Investment Corporation, I am pleased
to say, is now self-sustaining. Its commitments have grown by a
factor of five over the last five years, and it has shown
profits repeatedly, reaching $209 million in 1996.
promoting sustainable development
Mr. Chairman, many of America's fastest-growing markets are
in developing countries, where the transition to an open
economic system is underway, but incomplete. Often, these
countries are held back by high rates of population growth,
lack of access to health care and education, a scarcity of
natural resources or conflict.
When democratic institutions in a developing country are
weak, that country will be less likely to grow peacefully, less
inclined to confront international terrorists and criminals,
and less able to do its part to protect the environment.
That is why our sustainable development programs are a
sound investment in American security and well-being.
This year, we have given them a new focus on one of the
most basic problems that stifles development and sparks
conflict--food security. Programs to improve the dependability
of crops and distribution of food in Africa can help make sure
hunger is no longer a constant threat to the lives of people
and the stability of societies.
Our financial support and pressure for reform have helped
the United Nations Development Program to become the central
coordinating and funding mechanism for UN development
assistance. Every dollar we contribute leverages $8-10 from
other nations in support of Bosnian reconstruction, Rwandan
judicial reform, and Cambodian de-mining--to name just a few
projects. I urge this Subcommittee to support the President's
full request of $100 million for UNDP.
We have maintained our request for funding for UNICEF at
$100 million for fiscal year 1998. Like UNDP, UNICEF plays an
important role in countries suffering from, or recovering from,
the devastation caused by civil or international conflict.
UNICEF helps protect children--a society's most vulnerable
members and its hope for the future--from the Balkans to
Liberia.
We have requested $795 million for population and health
programs. By stabilizing population growth rates, developing
nations can devote more of their scarce resources to meet the
basic needs of their citizens. Moreover, our voluntary family
planning programs serve our broader interests by advancing the
status of women, reducing the flow of refugees, protecting the
environment, and promoting economic growth.
We are developing forward-looking programs to protect the
global environment and promote sound management of natural
resources with our request of $341.5 million. Of this amount,
AID programs totaling $290 million are used for projects such
as helping to reclaim land for agriculture in Mali, cut
greenhouse gas emissions in the Philippines and acquire
American ``green technology'' in Nepal.
Our $100 million request for the Global Environment Fund
(GEF) provides loans for developing country projects to
preserve biodiversity, inhibit global warming, protect oceans,
and mitigate depletion of the ozone layer. A key U.S. priority
in the GEF is to increase support for private sector efforts on
behalf of sustainable development, including new tools such as
project guarantees and equity investments in promising
environmental technology firms.
As Treasury Secretary Rubin testified earlier this week, we
have also requested an increase to restore full funding and
begin to pay our debts to the multilateral development banks
and the IDA, where our support for reform has achieved results.
For example, the World Bank has increased accountability and
transparency while cutting its administrative budget by 10
percent, and the African Development Bank has tightened lending
rules, cut staff by 20 percent and appointed external auditors.
The Budget Resolution provides you with the flexibility to
respond favorably to our request, and we hope you will take
advantage of the opportunity to maintain U.S. leadership in
these institutions.
providing humanitarian assistance
The President's request of $650 million for Migration and
Refugee Assistance would enable the United States to continue
contributing to the relief of those victimized by human or
natural disaster. We have also requested that our international
disaster assistance and Office of Transition Initiatives
programs be funded at the same levels as last year.
conclusion
Mr. Chairman, I know that supporting foreign assistance is
not the easiest vote for a Member of Congress to make.
Americans, all of us, are deeply concerned about problems here
at home; about the budget, about the quality of our schools,
about crime.
No one understands better than the President that we cannot
hope to lead abroad unless we are first strong at home. That is
precisely why he has placed his primary emphasis on building a
strong and growing domestic economy.
But the Administration also knows that neither our history,
nor our character, nor our self-interest will allow us to
withdraw from the center stage of global political and economic
life. In today's world, domestic policy and foreign policy are
no longer separable things.
There is, after all, no more immediate or local an issue
than whether our sons and daughters will someday be called upon
to do battle in big wars because we failed to prevent or
contain small ones.
There are few more significant economic issues than whether
we will find ourselves forced into a new arms race because of
setbacks in the former Soviet Union or because nuclear weapons
have fallen into the wrong hands.
There are few goals more important to our workers than
opening new markets for American goods overseas.
There are few matters more urgent for our communities than
reducing the flow of drugs across our borders.
And there are few questions more vital for our children
than whether we will bequeath to them a world that is
relatively stable and respectful of the law, or one that is
brutal, anarchic or violent.
A half century ago, a great American generation, led by
President Truman, and supported by Members of Congress from
both parties, rose above the weariness of war's aftermath, and
the temptation of isolation, to secure the future. Working with
our allies, they made the investments, and built the
institutions, that would keep the peace, defend freedom and
create economic progress through five decades.
Members of the Subcommittee, it is up to us in our time to
do what they did in their time. To support an active role for
America on the world stage. To protect American interests. To
keep American commitments. And to help where we can those from
around the world who share our values.
In that effort, I pledge my own best efforts as Secretary
of State. And I earnestly solicit your support.
Thank you very much. And now, I would be happy to respond
to any questions you might have.
reduction in aid to israel and egypt
Senator McConnell. Thank you, Madam Secretary.
Given the attendance at the hearing today of members, we
are going to have 5-minute rounds, and I will lead off by just
referring to this morning's paper in which Bob Novak and
Rowland Evans suggest the administration is considering a
reduction in aid to Israel and aid to Egypt in order to provide
Jordan with roughly $100 million. I was curious, Madam
Secretary, whether that is something you are pursuing.
assistance for jordan and middle east
Secretary Albright. Mr. Chairman, we have for some time now
been seeking ways to provide substantial additional assistance
for Jordan and other friends of peace in the Middle East. The
President has asked us to do that. King Hussein has taken
genuine risks for peace and he deserves our support.
The President has had discussions with Prime Minister
Netanyahu who supports the establishment of a Middle East peace
and stability fund for this purpose. We are still examining
with Israel and Egypt the details of how to accomplish this,
and when our discussions reach a conclusion, we will consult
with you more closely. But we do very much believe that Jordan
and King Hussein, who have played such a crucial role, do in
fact need some assistance in this area.
Senator McConnell. We will look forward to discussing that
with you further.
I would like to shift to the NATO issue, upon which you
spent some time in your statement. I think it is accurate to
say that I was a supporter of expansion of NATO even before it
was Clinton administration policy, so I am very much in
sympathy with the direction that the administration is finally
taking.
You are familiar with the arguments that are being advanced
against NATO expansion, much of it related to the potential
cost to the United States. So, in the area of infrastructure
the suggestion has been made that the defense capabilities of
applicants are simply inadequate and that we would probably
have to fund a significant proportion of the increase in these
capabilities.
We have been told that our costs; that is, the American
costs associated with infrastructure could be roughly $150
million to $200 million annually and drawn from the defense
account. Is that your understanding of where that money is to
come from?
nato expansion
Secretary Albright. Yes, sir.
Let me just say, first of all, I appreciate very much what
you said in terms of support for the policy because I think
this is one of the major initiatives of our time and one that
we should be discussing and one that we truly do believe will
complete for central and Eastern Europe what was done for
Western Europe 50 years ago.
We are making it quite clear that NATO enlargement is not
cost free and that, as with many aspects of American security,
it is not free. We estimate that it will cost the United States
somewhere between $1.5 billion and $2 billion over a 10-year
period, which does come down to around $200 million a year, and
it would not come out of our budget, but the defense budget.
Senator McConnell. Is it your understanding that the
modernization of forces costs were to be borne by the new
members coming in?
Secretary Albright. Yes; and let me just also make that
clear, Mr. Chairman. First of all, one of the considerations
that is going to be taken into account in inviting new members
is the extent to which their national budgets do reflect a
commitment to modernizing their forces and having an
appropriate expenditure for defense.
Second, we are also not going to be the country bearing the
lion's share of the cost for NATO expansion. Other NATO
members, the European members, we expect will be picking up the
lion's share. So, the new members will pay for their
modernization. Other NATO members will pick up their share and
our cost is as I stated.
Senator McConnell. Is it further the assumption that most
of these armies are bigger than they should be, that the
reductions in forces in these countries should produce the
money that they need for modernization? Is that another
assumption?
Secretary Albright. That is one part of the assumption. I
think that they clearly have to restructure their forces and
some savings will be produced.
We are concerned, as I am sure you are, that they develop a
balance between what they are going to be spending on defense
and modernization versus what they need for their economic
advancement. But we are looking with them at an appropriate
percentage of their budget and urging them to either get up to
that point or come down to it. But we do think that some of
their restructuring of their forces should produce some savings
for them.
Senator McConnell. It is not clear that it will, though, is
it? The chairman and I recently were in Hungary and we were
talking to the Defense Minister. He said they had already
reduced their force by one-third, and it was not producing the
savings that they had anticipated. So, this may or may not
provide the money for modernization. Is that a correct
assumption?
Secretary Albright. That is true, but let me just say again
NATO enlargement is not a scholarship program. They are going
to have to pay their way and also be responsible members of the
foremost alliance of our time. So, one of the considerations
here is their ability to perform within the NATO alliance and
to modernize their forces and to pay their way.
Senator McConnell. I think it is important that we not let
that be used as a reason, however, not to expand NATO. Is it
safe to assume that the militaries of the countries currently
in NATO are not all exactly equal in capability?
Secretary Albright. I think that is safe to assume, but
they play their role. I think that it is a privilege to be a
part of NATO and these countries know that, and we believe that
the countries that would be under consideration would be those
that could in fact play their role on a calibrated basis as we
all do in NATO.
Senator McConnell. I see my red light is on, but I am going
to fudge here for 1 minute because Senator Leahy really is
entitled to go second as ranking member, assuming he gets here
fairly soon.
While we are on NATO, we all have followed with a good deal
of interest the agreement, if that is the proper terminology,
that has been concluded conceptually between Russia and NATO.
Are there any codicils, letters of intent, or other side
agreements with reference to that conceptual agreement that
exist and that need to be commented upon?
Secretary Albright. We are calling this the Founding Act,
and it is very straightforward. What you see is what you get.
What it does, Mr. Chairman, is basically codifies a lot of
existing NATO policy and states principles such as that we have
no intention, reason, or plan to station nuclear forces within
the new countries, which is a NATO doctrinal point. It creates
a joint council which is the mechanism whereby the cooperation
will take place. It restates generalized principles about no
subordination of NATO to other organizations, no second class
citizenship. It is a straightforward document which does not
have any side letters or codicils.
Senator McConnell. What has been the reaction of the former
Soviet republics and the Baltic countries to this agreement?
soviet/baltic reaction to nato enlargement
Secretary Albright. I think the reaction to the agreement
has been good. It is no secret that their reaction to NATO
enlargement is not good. They are making no secret of the fact
that they do not favor NATO enlargement. We know that and we
have operated on that basis.
Also, when I spoke with both President Yeltsin and Foreign
Minister Primakov, I made quite clear that our going forward
with NATO enlargement was not dependent upon them signing this
founding act. We had been prepared to go on to Madrid--that is
the conference where the invitations will be made to the new
members--whether there was a NATO/Russia document or not. We
now do not have to do that because they in fact are prepared to
sign such a document on May 27 in Paris.
I think their reaction to the document is positive. They
see it, as we do, as a way for the Russians to be part of a
European system.
Senator McConnell. I meant the reaction of the former
Soviet republics to the Russia/NATO agreement.
Secretary Albright. I am sorry. I think there we have not
heard anything specifically against the NATO/Russia document. I
think that others would like to have similar agreements with
either us or NATO. Ukraine, for instance. We are pursuing a
Ukraine/NATO document at the same time. We are developing a
relationship with the Baltics that I think shows our desire to
include them increasingly in all European activities and in a
Baltic plan.
Senator McConnell. What about as candidates for admission
to NATO themselves?
Secretary Albright. Well, we have said all along that the
first shall not be last, that NATO is open to all democracies
and market economies, and have made very clear that there are
no members that are automatically excluded. That includes the
former Soviet republics.
Senator McConnell. I may want to come back to NATO.
I am going to turn to Senator Lautenberg.
Senator Lautenberg. Thank you very much, Mr. Chairman. I
will be fairly brief.
I am delighted to see you, Madam Secretary, as usual and
continue to be impressed with your energy and your ability and
would encourage you onward and upward, to keep going.
I am working on a subject of interest to all of us here and
that is the budget, so I am sorry that I was not here earlier
to hear your full remarks.
You know a subject of significant interest to me is what is
happening with those accused of war crimes in the former
Yugoslavia, particularly where we have an ability to reach to
these people. I know that you met with the Croatian Foreign
Minister Granic last week. I appreciated the tough message that
you delivered about Croatia's need to cooperate with the War
Crimes Tribunal.
Now, following your meeting, a State Department spokesman,
Nick Burns, stated that there are individuals who are on
Croatian soil who are indicted and have not been turned over
and that you raised specific names of people who need to be
turned over to The Hague for the work of the crimes tribunal.
Burns reiterated those points at a later time.
Did you deliver specific names of war criminals? And I ask
you that because Burns has spoken about the many occasions in
the plural. So, were you able to identify any better who they
were, where we were looking to pick them up? Their availability
apparently is fairly obvious to lots of people and nothing is
happening. I wonder if you might be able to tell me whether----
Secretary Albright. Yes; first of all, Senator, I really
would like to thank you personally for all the tremendous work
you have done on the budget, and I think that we have all
recognized here this morning the pleasure that we are having
with the 150 account being prioritized. I think that makes a
big difference, and I am very grateful to you for what you have
done.
Senator Lautenberg. Senator McConnell as well in this
regard I must say.
war crimes tribunal
Secretary Albright. On your question, first of all, let me
say that this is an issue that we and I specifically take very
seriously. I delivered a very tough message to the Croatian
Foreign Minister generally, not just on the war crimes, but the
need for them to cooperate better in Eastern Slavonia and to be
generally more cooperative in supporting the Dayton accords.
What I said was that they needed to cooperate in greater
degree with the War Crimes Tribunal and a name that I used as
an example of the need for further cooperation was Kordic, and
they know the other names. I was using more as examples of the
kinds of things they needed to do to cooperate.
I did say to them that we were pleased that they had
finally transferred Mr. Aleksovski and that this was the kind
of cooperation that was required. It had taken them too long to
do that but I made it very clear that they needed to do more.
He and his delegation committed to apprehend any indicted
persons on Croatian territory and to use his Government's
influence with the Bosnian Croats because Kordic is not in
Croatia itself.
I think that what we need to do--and as I said, I am
delivering a speech on this tonight--is to be much more
assertive in terms of supporting the War Crimes Tribunal and
that is our intention.
Senator Lautenberg. As a matter of fact, if we complete our
work on the budget, I will hear your speech directly tonight in
New York.
You know that my view has been that any engagements with
multilaterals and bilaterals that are part of an aid program or
a development program with Croatia ought to be carefully
reviewed before we consent with our representatives. I am
trying to figure out why the State Department gave the go-ahead
for the United States to vote in favor of the $100 million
enterprise and the financial sector adjustment loan for Croatia
at the World Bank on May 13. It was just days before your
meeting in Croatia with the Croatians.
Secretary Albright. Let me explain that a little bit. First
of all, we had in fact held back on a previous vote in order to
get them to try to use that leverage on the Aleksovski
turnover. They in fact then did that and we felt it was a good
idea to show that if they cooperated, there was a sign that we
approved. I think we have other ways of maintaining leverage.
We will continue to do that.
I am going to go, Senator, to the region as soon as I
finish these meetings in Europe at the end of next week. I will
again deliver this message, but I think that it is wise to do
sticks and carrots a little bit here and that is our
opportunity to do it.
Senator Lautenberg. So, is it the stick's turn next?
Secretary Albright. Well, if we do not get something for
the carrot, there will be a stick; yes.
Senator Lautenberg. I would urge you to make sure that the
law is appropriately laid down.
I would ask one other thing, Mr. Chairman. You are
planning, I see by the papers, to be in Banja Luka. Is the
subject of war criminals going to be on the agenda when you are
there?
Secretary Albright. The subject of war criminals will be on
my lips wherever I go. It is something that I feel very
strongly about. I think that those of us that have followed
this issue as carefully as you all have know that in order to
have ultimate reconciliation and justice, it is important for
the war criminals to be surrendered and for there to be the
fullest support for the work of the War Crimes Tribunal. I have
spent a lot of time with Chief Prosecutor Luis Arbor in this
attempt.
Senator Lautenberg. I urge you to keep the pressure on,
Madam Secretary.
Thank you, Mr. Chairman.
Senator McConnell. Thank you, Senator Lautenberg.
Senator Specter.
Senator Specter. Thank you, Mr. Chairman.
Secretary of State Albright, I join my colleagues in
welcoming you here and compliment you on your extraordinary
work in a short tenure. You come with a great background and we
look forward to working with you.
In the limited time available to me, I will focus on
problems in the Mideast. You and I have talked about these
before and I gave you a little heads-up before the session
started after the recess. I want to talk to you about the
Palestinians and I want to talk to you about Egypt.
The terrorist attack in Israel which killed three Israelis
and wounded dozens more on March 21 was preceded by activity by
Yasser Arafat on March 9 holding a well-publicized meeting with
Hamas leaders and shortly, thereafter, released Maqadmeh from
prison, and Maqadmeh then made a speech on the day of the
bombing in Tel Aviv saying: ``Nothing can stop Israel except
holy warriors carrying explosives on their bodies to destroy
the enemies of God.''
Prime Minister Netanyahu then said that Arafat had given a
green light to carrying on the terrorist activities.
About the same time, there was a disclosure by El Ed, the
Deputy Education Minister, who said that Arafat had prior
knowledge of the 1993 plot to bomb New York City's World Trade
Center. I have asked the Attorney General to follow up on that
because if that is true, we could extradite Arafat to the
United States under our laws.
The question that I have is whether Arafat gave that green
light. You have not yet responded to the letter and I am not
saying you should have. It is not an easy question, but if it
is determined that Arafat did give a green light, as you know,
we have the provisions of the amendment which Senator Shelby
and I introduced which would cut off United States aid to the
Palestinians, the $500 million, if they do not change their
charter, which I think they have not done. But that is not the
more pressing issue. The more pressing issue is whether Arafat
gave the green light for terrorism. But if that proves to be
the case, should we not cut off United States aid to the
Palestinians?
terrorism
Secretary Albright. Senator, you have asked me this
question and it is a very serious question and I will do my
best to answer it. But let me put it a little bit into context.
I think we have to remember the remarkable achievements
that were made in the Middle East peace process when we were
all on the lawn at the White House, and it had a lot to do with
the development of a new set of relationships between Arafat
and Prime Minister Rabin and us. I think we all celebrated what
we thought was the beginning of a new peace era. All of that
was built on the necessity for there to be bonds of confidence
developed among the leaders.
Those bonds have now been very seriously stretched and
tattered in some respects, and there is a great deal of
frustration I think on all sides about the lack of progress in
the peace process and the resumption of activities, terrorist
bombings. There is absolutely no place for terrorism in the
Middle East or anywhere. We have spoken out very loudly against
it and see that there have been those who have said there is a
moral equivalence between bombs and bulldozers. We do not
accept that and believe that terrorism is totally unacceptable
and we have made that clear.
We have and had told Arafat privately at the time that he
had to do everything he could to stop terrorist acts. We have
no evidence that there was a green light. But clearly he----
Senator Specter. Madam Secretary, are you satisfied that
there was not a green light given by Arafat?
Secretary Albright. To the best of my knowledge, I cannot
show that there was a green light. What there was not was a red
light that made it very clear that terrorist acts were
unacceptable.
Senator Specter. Well, Madam Secretary, if there was
neither green nor red, it seems to me that is not acceptable. I
think we have to expect a red light from Arafat. I think that
is his commitment, and short of that, how can we fail to cut
off the aid to the Palestinians?
Secretary Albright. It is very hard to sort out all the
facts. I think we have to keep in mind what it is we are trying
to accomplish here, and that is ultimately some kind of a
resumption of negotiations between the Palestinians whose
leader is Arafat and the Israelis in order to move the process
forward and we need to keep looking forward.
We are all very frustrated at the moment. We have seen a
breakdown in a process that we all applauded, and I think we
have to be very careful in how we react at this stage to make
sure that we do not worsen the situation, but try to get the
peace process back on track.
Senator Specter. Well, Madam Secretary, I agree with you
about the importance of the peace process, but it seems to me
we just cannot compromise on the terrorist issue. I was very
much concerned--and this is not your bailiwick--when Marzook
was released from detention where he had been held for months,
years, and taken back on a military aircraft going to Jordan. I
just think we cannot wink at terrorism. And I know you do not
wink at terrorism. It is a tough judgment, but my own view is
that if there is not a red light, we ought not to give the
Palestinians the aid.
Let me ask you one final question. I ask the chairman if I
might raise an issue as to Egypt. Egypt has a commitment with
Israel not to have boycotts, and there is not a warm peace
there.
Now, on March 31 of this year, the Arab League foreign
ministers meeting in Cairo adopted a resolution which calls for
an Arab boycott. President Mubarak has been a very good friend,
very instrumental. We give $2.1 billion to Egypt along with $3
billion to Israel as a result of Camp David, and I have always
thought it is money well spent.
But if Egypt is not living up to its commitments on the
boycott issue--and that is just one of them. I will put some
papers in the record for further amplification--should we
consider withholding or reducing the $1.2 billion which we give
in foreign aid to Egypt?
[The letters follow:]
Letter From Senator Arlen Specter
U.S. Senate,
Washington, DC, March 24, 1997.
Hon. Madeleine Albright,
Secretary of State,
Washington, DC.
Dear Secretary Albright: According to the weekend press reports,
Israeli Prime Minister Benjamin Netanyahu has stated that Palestinian
Chairman Yasir Arafat has indirectly given a green light to the
terrorists resulting in the suicide bomb which killed and wounded many
Israelis last Friday.
According to the news reports, Chairman Arafat and the Palestinian
authority released Ibrahim Maqadmeh. Prime Minister Netanyahu further
stated that Chairman Arafat and the Palestinian authority have failed
to detain known terrorists and to confiscate weaponry.
In my judgment, it is very important for the State Department to
make a factual determination as to whether Chairman Arafat and the
Palestinian authority did give a green light indirectly to the
terrorists and whether there was a failure to detain known terrorists
and to confiscate weaponry.
I would appreciate your advice, as promptly as possible, on your
Department's conclusion as to whether Chairman Arafat and the
Palestinian authority gave an indirect green light to the terrorists.
As you know, an amendment offered by Senator Shelby and myself to
the Middle East Peace Facilitation Act of 1995 conditions the $500
million in U.S. aid to the Palestinian authority on presidential
certification that the Palestinian authority is complying with all of
its commitments under its peace accords with Israel, including its
commitment to prevent acts of terrorism and undertake ``legal measures
against terrorists, including the arrest and prosecution of individuals
suspected of perpetrating acts of violence and terror''.
The Senate Appropriations Subcommittee on Foreign Operations, on
which I sit, will soon be considering this issue for fiscal year 1998
so I would appreciate your prompt response.
In addition, I would appreciate your advising me as to whether
there is any U.S. aid in the pipeline which has not yet been turned
over to the Palestinian authority. If so, I request that such payments
be withheld until the determination as to whether the Palestinian
authority is complying with the Specter-Shelby amendment.
Sincerely,
Arlen Specter,
U.S. Senator.
______
Letter From Senator Arlen Specter
U.S. Senate,
Committee on Appropriations,
Washington, DC, May 13, 1997.
The President,
The White House,
Washington, DC.
Dear Mr. President: I am writing to you in response to recent
events in the Middle East.
On March 21, 1997, a bomb exploded in a Tel Aviv cafe killing 3
Israelis and wounding 40. The militant Islamic group Hamas claimed
responsibility for this attack. According to the press reports
following the attack, Israeli Prime Minister Benjamin Netanyahu has
stated that Chairman Yassir Arafat indirectly gave a green light to
terrorists resulting in this attack.
According to the Washington Post (March 24, 1997), this attack
followed months of warnings from your Administration to Yassir Arafat
that he was being too lenient with Islamic extremists. It has been
reported that in recent months Arafat has released 120 out of 200
arrested Hamas/Islamic Jihad activists that Israel specifically
requested be kept in jail, including Ibrahim Maqadmeh, who is regarded
as the head of a military wing of Hamas. In addition, Prime Minister
Netanyahu has stated that Chairman Arafat and the Palestinian authority
have failed to detain known terrorists and to confiscate weaponry.
In my judgment, it is very important that the United States
Government make a factual determination as to whether Chairman Arafat
and the Palestinian authority did give a green light indirectly to the
terrorists and whether there was a failure to detain known terrorists
and to confiscate weaponry. On March 24, 1997, I wrote to Secretary of
State Madeline Albright and requested that she advise me on the State
Department's conclusions on these issues. I have not yet received a
response to my letter.
Given the importance and urgency of this issue, I would appreciate
it if you would ask your national security staff to review the evidence
and advise me, as promptly as possible, on your conclusion as to
whether Chairman Arafat and the Palestinian authority gave an indirect
green light to the terrorists.
As you know, an amendment offered by Senator Shelby and myself to
the fiscal year 1995 Foreign Operations Appropriations Bill conditions
the $500 million in U.S. aid to the Palestinian authority on
presidential certification that the Palestinian authority is complying
with all of its commitments under its peace accords with Israel,
including its commitment to prevent acts of terrorism and undertake
``legal measures against terrorists, including the arrest and
prosecution of individuals suspected of perpetrating acts of violence
and terror''.
The Senate Appropriations Subcommittee on Foreign Operations, on
which I sit, will soon be considering this issue for fiscal year 1998
so I would appreciate your prompt response.
In addition, I would appreciate your advising me as to whether
there is any U.S. aid in the pipeline which has not yet been turned
over to the Palestinian authority. If so, I request that such payments
be withheld until the determination as to whether the Palestinian
authority is complying with the Specter-Shelby amendment.
On a related matter, I would appreciate your review of our large
foreign aid package to Egypt in light of Egypt's recent actions in
obstruction of the Arab-Israeli peace process.
On March 31, 1997, the Arab League foreign ministers meeting in
Cairo adopted a resolution which recommended: stopping the
normalization steps which have been taken with Israel * * * and halting
all dealing with it [Israel], including closing offices and missions *
* * and continuing to maintain the primary Arab boycott and
reactivating it against Israel * * * .
Egypt's support for this resolution appears to violate Article 3 of
the Egyptian-Israeli Peace Treaty of March, 1979 which stipulates that:
Each party * * * undertakes to refrain from organizing, instigating,
inciting, assisting, or participating in acts or threats of
belligerency, hostility, subversion or violence against the other Party
* * * . The Parties agree that the normal relationship established
between them will include * * * termination of economic boycotts and
discriminatory barriers to the free movement of people and goods * * * .
While it is my understanding that Egypt is exempt from
participating in this economic boycott, its efforts to get other
nations to participate in the boycott seem to violate both the spirit
and the letter of the peace treaty.
Unfortunately, the Arab League resolution is only the last in a
series of provocative Egyptian actions against Israel. As you will
recall, when fighting broke out between Israelis and Palestinians after
Israel opened an archaeological tunnel in Jerusalem this past
September, you invited President Mubarak, Prime Minister Netanyahu,
Chairman Arafat and King Hussein to Washington in an effort to solve
the crisis. President Mubarak was the only one of these leaders to
boycott your Washington summit.
Also, in recent years Egypt's Government-backed newspapers,
including Al-Ahram and Al-Goumhuriwa, have published many vicious anti-
Israel cartoons which are often nothing short of anti-Semitic. In the
cartoons that I have seen, Israelis are frequently portrayed as blood-
thirsty demons and Nazis. In many of these cartoons, Jews are depicted
as dark, bearded, hook-nosed men clad in black--an image which is
itself reminiscent of the Nazi era.
The United States gives Egypt over $2.1 billion in foreign aid each
year. Our country undertook this serious commitment to Egypt after
Egypt signed the peace accords with Israel. If Egypt's actions now
serve to undermine these accords, then the level of aid must be
reevaluated. As with every other country, Egypt's aid package should
reflect the extent to which Egypt's actions further U.S. policy in the
region.
Thank you for your attention to these important matters.
Sincerely,
Arlen Specter,
U.S. Senator.
peace process
Secretary Albright. Let me say that I think we need to
remember what you have said as part of your comment and
question, that Egypt has played a very important role in the
overall peace process. When President Clinton met with
President Mubarak when President Mubarak was here, we made very
clear the importance to them of playing a constructive role in
the whole peace process.
They continue to play a useful role and I think that we
would make a mistake if we had unilateral cuts here at this
time in dealing with Egypt.
If I might, Senator, it also goes back to your first
question. As I said, I think we are in a pretty tough patch. We
have been in tough patches before. We need to get through it.
We are basically optimistic because that is our nature, but
where I would be really concerned and would lead me to
pessimism is if we were to undue all the work that has been
done in the previous years of bringing the parties together.
After that meeting in Cairo, I called many Arab leaders and
asked them not to move the process backward. It is very hard to
unravel things, and, therefore, I would hope, even on our part
here, that as the United States we continue to press both
parties to get the peace process back on track, not take
actions that would make it more difficult for us to continue to
have our catalytic, honest broker role and to be vigilant but
always understanding that we need to move forward and that by
taking unilateral action in response to a specific action, we
in effect make it more difficult for ourselves to play an
active role, which we intend to continue to do.
Senator Specter. Thank you very much, Madam Secretary.
Thank you, Mr. Chairman.
Senator McConnell. Thank you, Senator Specter.
Senator Leahy.
Senator Leahy. Thank you, Mr. Chairman.
Senator Harkin had wanted to be here. His brother is quite
ill and so was unable to be. I have some questions he had
wanted to ask, and I would like to just submit those for the
record.
Senator McConnell. That will be done.
Senator Leahy. I mention them because they were things that
he is very, very concerned about and if it were not for the
illness, he would be here.
Madam Secretary, I know you talked about NATO enlargement,
and I have not made up my mind on that question. I am watching
it very carefully and am privileged to be part of the Senate
observer group on this. I think you have made great progress
with the Russians on it. My concerns have been numerous: the
cost to the American taxpayers, and I know that has been
discussed with Senator McConnell.
The implications the NATO/Russian charter has for the Start
II Treaty is another one. I am concerned about whether Start II
is going to be a casualty of this agreement. Are we expanding
NATO at the cost of undercutting progress in reducing a really
dangerous threat, 20,000 Russian nuclear warheads? Do see any
chance that Russia will ratify Start II this year?
ratifying start ii
Secretary Albright. Senator, this is very much a part of
the discussions that President Clinton and President Yeltsin
had and that I had had prior to that in Moscow, and we have
made very clear to the Russians the importance of their
ratifying Start II and then moving on to Start III.
While there clearly are complications within the Duma,
President Yeltsin had committed himself, as had Foreign
Minister Primakov to actively pursuing the ratification of
Start II. So, we will press that and press them also, once that
is done, to move on to Start III.
I agree with you. These were very important arms control
treaties. They are important to us. We will keep pressing the
case.
But what I believe has been so interesting in this phase is
how we are moving forward in new relationships that are built
on these kind of longstanding arms control agreements that
allow us to move into new areas to provide better security.
And to go into your original question, we did talk about
the cost of NATO enlargement, but I keep remembering that it
costs more to fight and have a war than to think about how to
preserve the peace. Even at the cost of $200 million a year, I
think it is a good deal for the American people.
Senator Leahy. I understand that. My concern is it becomes
less of a good deal if we lose major nuclear arms control
agreements because of it. It is one of the things that concerns
some of us who still have questions on NATO expansion. I have
always been a strong supporter of NATO. I think it is extremely
important.
I said to you before my concern that NATO would have become
irrelevant had we not bolstered it in Bosnia. Had we not made
that a significant NATO matter, we could have ended up with an
irrelevant meeting group that periodically would meet in
Brussels and feel good about the world but be otherwise
irrelevant, as compared to a situation where you could have a
relevant and significant NATO, which I think is important. I
think a military alliance of that nature run by democratic
nations is in our best interest, especially in that part of the
world.
Speaking of Bosnia, I was pleased to see you are going back
to Bosnia. You and I traveled there with the President about a
year and a half ago on the trip from hell. [Laughter.]
But actually I found it very interesting, and I think it is
important for you to go. If we are going to withdraw our
troops, we have got a lot of work ahead of us.
I saw an article in last Sunday's New York Times. ``It
would be a mistake to say there is peace in Bosnia,'' said a
top NATO commander. ``We have only the absence of war. We gave
the civilian officials the time and space to carry out the
Dayton agreement, but they failed. Nothing has been
accomplished. The moment we pack up and leave next year, the
war could well start over again.'' It went on to say that many
civilian administrators, while acknowledging their failures,
say the refusal by NATO leaders to arrest people indicted on
charges of war crimes and protect refugees who want to return,
has left them without the power to make the parties respect the
peace agreement.
I am sure that you have thought about the concerns of the
Bosnian, Serbs, and Croats, who do not want to live together.
You have thought about what happens if we leave, NATO pulls
out, and Karadzic is still in power.
What do you think it is going to look like a year from now?
I am not talking about just the date of pullout. What kind of
progress are we going to have a year from now?
Secretary Albright. Just one point back on the historic
question. Just the way we do not sign on and ratify treaties
that we do not think are in our national interests, we believe
that the Russians will see a ratified Start in their national
interests because if they do not do that, they are in a worse
strategic position than they would be otherwise.
Senator Leahy. I agree.
Secretary Albright. So, I think that they should do it. The
truth is that the Duma might have found objections to Start II
whether we were enlarging NATO or not, but I think the issue
here is that it is in their national interest.
On the question of Bosnia, you have heard me say this
before, but I think it does bear repeating. There are those who
are always talking about the deadline of the withdrawal of SFOR
without focusing enough on all the work that can and should be
done in the intervening period. As you know, I was a professor,
and this really reminds me of the student who comes in the
first day of the semester and sees that there is a paper due on
the final day and that student says, I would like an extension,
please. [Laughter.]
Senator Leahy. That never happened to you as a professor,
Dr. Albright.
Secretary Albright. And I would have said to that student,
do not worry about that. Let us get some work done. So, that is
what this is about and that is what my speech is about.
Clearly the military has performed brilliantly in Bosnia.
The civilian aspect of this has lagged, and what we need to do
now is to reinvigorate the civilian part of the Dayton
agreement and get full civilian/military cooperation in this
phase.
There is a great deal that can be done. The chairman, in
his opening statement, asked about what kind of programs there
were. Was there conditionality? How were we dealing with this
issue? What I will be talking about tonight is basically a way
to use our assistance to bring about our goals and that is a
multiethnic state, so that assistance would go to, for
instance, one initiative, open cities, where we would pick
certain cities, towns and support their projects that in fact
help to bring the various ethnic groups together. We obviously
favor the return of refugees, not only to majority areas, but
to minority where they are in the minority and that is where
these open cities are.
On the war criminals issues, I have made very clear that we
understand the cancerous effect that continues when there are
war criminals and the difficulty of having true reconciliation.
We are pledging our full, aggressive support to the War Crimes
Tribunal.
Senator McConnell. Thanks, Senator Leahy.
Senator Bennett.
Senator Bennett. Thanks, Mr. Chairman, and welcome, Madam
Secretary.
I would like to talk to you about the Iranian buildup in
the gulf. I talked to others from your Department about this
before, and I do not know whether they told you about it or
not, but we will go through some of the same ground.
Since the last hearing there has been a publication called
Worldwide Maritime Challenges, 1997, put out by the Office of
Naval Intelligence. I would like to turn to page 22 of that and
here is a copy of it so that you can read along. It says,
``Discoveries after the gulf war clearly indicate that Iraq
maintained an aggressive WMD procurement program.'' For those
in the audience, WMD means weapons of mass destruction,
nuclear, chemical, and biological weapons. Now, that is fine.
That is history.
Now, it goes on. ``A similar situation exists today in
Iran''--I underline the word ``today''--``with a steady flow of
materials and technologies from China to Iran. This exchange is
one of the most active WMD programs in the Third World, and is
taking place''--again the present tense, ``is taking place''--
``in a region of great strategic interest to the United
States.''
Do you agree with that assessment by the Office of Naval
Intelligence?
weapons of mass destruction
Secretary Albright. Well, let me say that we do share your
deep concern about what is going on in this area. We have
expressed our concerns to China and we will continue to do so.
We also are continuously monitoring, through all means
available to us, all advanced weapons transfers whether from
China to Iran and Iraq, or whether from China or any other
nation. We are watching the situation very, very carefully. We
are concerned. There is no question about it.
I do not know whether I would agree specifically with the
way that this is worded, but I can assure you that this is of
major concern to us.
Senator Bennett. Are there any new developments regarding
Chinese weapons transfers to Iran that you can share with us?
Secretary Albright. Well, let me go through this with you a
little bit. We have been concerned about China's sales of
chemical weapons, and yesterday we imposed sanctions on seven
Chinese entities for their export of chemical goods and
equipment to Iran which we believe could be used in Iran's
chemical weapons program.
The sanctions are against specific individuals and
companies and not against the Government of China and we have
no evidence that the Chinese Government was involved in these
exports.
The sanctions prohibit the U.S. Government from procuring
goods from the sanctioned entities and also prohibit the
importation into the United States of any products produced by
the sanctioned entities.
The Chinese Government has stated publicly its commitment
to the Chemical Weapons Convention, and we hope that this
action on our part will serve to encourage the Chinese
Government to improve its export controls so that these kinds
of entities are prevented in the future from assisting Iran's
chemical weapons program. This is to be published in the
Federal Register today.
Senator Bennett. Thank you. I find that very encouraging
and I appreciate your sharing that with the committee.
If I could shift now to advanced conventional weapons, I
would like to do with you the same thing I did with Mr. Bader
when he was here and just elevate the awareness, if I might.
This is a picture of the U.S.S. Stark, the American escort
vessel that was struck by a cruise missile 10 years ago this
month, and 37 American sailors died.
Now, here is a picture of Chinese missile boats that are
capable of carrying missiles equivalent or better than the
Exocet missile that struck the Stark. You see there are five
such missile boats on the back of this Chinese cargo ship. Each
one of those has four missile launchers on it, and they are
capable of launching the C-802 missile which is described by
Chinese missile salesmen as being available for use against
escort vessels. And that is exactly what the Stark was, an
escort vessel.
Now, if the Office of Naval Intelligence is right and the
Iranians are now receiving land-based versions of the C-802--we
know they have 60 C-802's in sea-based version. Here is the
land-based version of the C-802--they would then be capable of
attacking American naval vessels, escort vessels, from both the
sea and the land.
Now, it is against American law, namely, the Gore-McCain
Act, to deliver cruise missiles to Iran. What is the
administration's position on Gore-McCain and Chinese cruise
missile sales? I asked this question of Mr. Bader and he has
not yet responded.
One of the questions I asked him was, Have you asked the
Navy for its opinion as to whether or not the presence of these
missiles in the area is destabilizing? So, I would repeat to
you, have you asked the Navy if they think the presence of
these missiles are destabilizing, and if you have any comment
on the overall situation.
conventional weapons
Secretary Albright. Thank you very much, Senator.
We do in fact again share your deep concern about China's
transfers of sophisticated conventional weapons, particularly
this C-802 antiship cruise missile. As I expressed to you in a
response to a letter on April 17 that you sent to me, we have
expressed our concerns to China and we will continue to do
that.
We also continuously monitor through all the means
available to us all advanced conventional weapons transfers to
Iran and Iraq, as I said, whether from China or any other
nation, and we carefully examine every report and take
appropriate action when the information warrants.
As you know, the Gore-McCain Act provides for the
imposition of sanctions when a foreign person or country
transfers goods or technology so as to contribute knowingly and
materially to the efforts by Iran and Iraq to acquire
destabilizing numbers and types of certain advanced
conventional weapons.
I take very seriously our need to prevent Iran and Iraq
from becoming any more of a threat to regional stability than
they already pose, and you can be certain that we will--and I
personally will--continue to monitor any further development on
this issue. We remain vigilant and will continue to review this
with the appropriate agencies, including the Departments of
Defense and the Navy whether these transfers have met the
threshold specified in the Gore-McCain Act.
If I might, Senator, take advantage of both the questions
that you have asked to give a little bit of a broader context.
There clearly is a very serious problem in our society or in
the international system today about the transfer of weapons.
We are in a situation where there are a number of countries
that have sophisticated weapons systems that are selling them
to other countries and there is much more of a movement of
these kinds of weapons than previously because of the greater
availability.
We see it as a problem and we are doing everything we can
to control such movements. We have developed a variety of
international regimes to try, No. 1, to develop a system to
monitor them, and then No. 2, to develop a system of action
once that has been discovered. It is not perfect. It is far
from perfect. I think these are the major challenges we have as
we enter the 21st century.
It is a very different world and the United States has to
be out there up front creating these new missile controls or
conventional regimes, but it is a problem. And I am not here to
tell you that we have a perfect system. What we do have is a
functioning international system where we are the leaders and
we have to make sure that the others abide by it. I just want
to tell you that we are on the same side on this. We have to do
everything we can but it is very hard, and I am here to tell
you it is very hard.
Senator Bennett. Thank you.
If I could quickly, Mr. Chairman, in view of the
Secretary's response about sanctions brought against
individuals on the chemical transfer--and I am, as I say,
delighted to hear that. Are you aware of the allegation that
polytechnologies is the entity that brokered the Chinese
missile deal and are you looking at the possibility of
sanctions there? You can answer that for the record if you do
not have that.
Secretary Albright. I will have to answer that for the
record, sir.
Senator Bennett. And I have some other questions for the
record, but I thank the chair.
Senator McConnell. Thank you, Senator Bennett.
Senator Specter asked a couple of questions about the
Palestinian authorities. As you may know, Madam Secretary,
there is a current specific problem relating to an American
citizen--a Mr. Kuttab I think is his name--who has been tossed
in prison by the Palestinian authority. His crime was to
broadcast over an American-financed television network
proceedings of the Palestinian Legislature. So, as far as I
know, unless something has happened this morning, he is in jail
for this crime. I wonder if you are familiar with this case,
and if you are, what if anything we are doing to get this
American citizen out.
american citizen jailed
Secretary Albright. Yes, sir; we have been dealing with it
this morning. We obviously think it is unjustified. The Consul
General there has been to visit the journalist in question and
we have demarched the Palestinians on this and we will continue
to do so. We consider this a serious issue and will stay on top
of it.
What is troublesome I think is generally a sense that there
is not enough of an attempt to have a rule of law. This is a
problem, but on the specific case we are using all our
diplomatic channels to getting this person released.
Senator McConnell. I wish you well.
Turning to Burma, a subject you and I have discussed off
and on for years, first let me congratulate you for the step
that the administration took recently in implementing the
provisions of a law that I actually voted against because I
thought it was too weak--that was the Cohen-Feinstein measure.
The administration has responded to that and implemented a
variety of different sanctions including the bar on new
investment.
I might tell you, though, Madam Secretary, I am now hearing
the people who fought against sanctions earlier saying give
sanctions a chance, meaning I gather that they think they can
live with what has been done so far and it is not going to
pinch too much and their concern that we may go further, we
meaning either the Congress or the administration or both of us
working together.
So, my question really is this. Where do we go from here?
Are you going to lead an active effort to encourage the ASEAN
countries and other countries to follow our lead? What is the
next step? How are we going to try to influence the restoration
of democracy in Burma?
burma sanctions
Secretary Albright. Mr. Chairman, we have indeed discussed
the subject often and at length, and I am very pleased that we
were in fact able to get these sanctions imposed. They went
into effect at 12:01 a.m. yesterday. We want to make sure that
they are properly carried out.
Let me, if I might, just quite openly share with you a
concern. I read today that Aung San Suu Kyi is under even
greater pressure, that they are about to hold a congress or a
convention of her party, that a number of people have been
arrested, 50 I think, and others are being watched, and that
there is every indication that the SLORC is reacting to the
sanctions as well by putting additional pressure on her. It is
clear to me that they have no intention of responding to her
efforts in a dialog.
I think what we need to do is discuss with you and with
other sources about how to proceed on this because she in fact,
obviously, believes that the international pressure helps. But
at some stage, she is under increasing threats, and I think we
have to watch this carefully and I will.
As far as the other nations are concerned, we have not----
Senator McConnell. If I may interject, as you and I both
know, she would like for us to go further than we have gone.
Secretary Albright. I think she would. Having this
discussion right here is not the best idea, but I do think that
we need to talk about this because they are brutal. The SLORC's
are genuinely immoral, brutal leaders who do not seem to care.
So, I think we need to look at how these sanctions are going to
be carried out and the next steps.
As far as the ASEAN countries are concerned, I have written
to the various leaders. We would very much like to slow down
the possibility of Burma coming into the ASEAN. Their approach
to this, quite frankly, is different from ours. They believe
that they need to engage with Burma. We have obviously taken a
completely different step.
But I would welcome our continuing dialog on this. I am not
sure that taking further steps at this stage would improve the
situation, but here we have only had 24 hours. This is the
reaction that we are seeing.
But the only thing I can assure you of--and I have been
true to my word--is I will stay on this case with you.
Senator McConnell. Well, I do not want to put words in your
mouth, but do I correctly hear you saying that it is not your
current intention to encourage the ASEAN countries to follow us
in the steps that we have taken?
Secretary Albright. No; I mean, we have been in touch in a
variety of ways with the other ASEAN countries and we have
tried very hard to get them to follow our steps. They do not
seem to be interested in it because they have a different
approach.
But this subject will be very much on our minds as we talk
to them, and I will relook at whether we should take some
further action in terms of encouraging them further. We have
tried, Senator.
Senator McConnell. I want to stay in that part of the world
and turn to Cambodia. There is a growing fear among
international observers that the Easter Sunday grenade attack
is an early warning of a slide toward civil war in that
country. At the very least, the escalating problems are going
to delay or potentially delay national elections which are
scheduled for late 1998.
It is increasingly clear that unless steps are taken soon,
the democratic progress Cambodia has made could well be
destroyed by intimidation, terror, and political killings, all
of which that country is all too familiar with.
My first question is, What specifically is the United
States Government doing to bolster the democratic movement in
Cambodia?
violence in cambodia
Secretary Albright. First of all, again, Senator, I agree
with your assessment of the situation. We have done what we can
in terms of trying to help the Cambodian democratic forces. We
are concerned by these acts of violence and we have condemned
the attack and warned Cambodia's leaders that political
violence would jeopardize international support.
Mr. Chairman, I am planning to go to Cambodia on my way to
Hong Kong, also to Vietnam, and I will make very clear that it
is important for them to proceed down the democratic path and
will be happy to report to you on our return.
Senator McConnell. Let me go a little further. You may or
may not be ready to respond or actually know yourself the
answers to the following questions, but there have been
accusations made that the second prime minister Hun Sen and the
Cambodia People's Party were responsible for that particular
terrorist attack.
Do you know or your people know if there has been any
concrete evidence to back the assertions that Hun Sen or any of
his officials were directly responsible for that attack.
Secretary Albright. I will have to look that up, Senator.
We will get back to you.
Senator McConnell. I wish you would. I am going to be
interested in the status of the investigation into that matter.
We just talked about the ASEAN meeting in July in reference
to Burma. What is the administration's position on Cambodia's
inclusion in that organization?
including cambodia in asean
Secretary Albright. Well, again I think that our general
feeling had been that there would not be a problem about them
coming in, though I gather that what ASEAN wants is to bring
them in as a group. But I think we need to assess exactly where
they are as a result of the statements that we have just
exchanged about what is going on there now.
I do think that we should all remember what a remarkable
step forward the Cambodian elections were. I had been to
Cambodia shortly after those elections, and was proud of the
great job that the United Nations did in Cambodia where I think
over 90 percent of the people voted. Nevertheless, it is a
fragile democracy. We need to do whatever we can to support the
democratic forces, and if inclusion in ASEAN would assist them
at this stage, I think that it bears support. But I think we
have to see what the effect of these most recent problems are
and also to respond to your question as to who and how the
violence is sponsored.
Senator McConnell. Finally, on Cambodia the President
certified that Cambodia had cooperated fully with the United
States to meet international counternarcotics performance
standards. However, the Far Eastern Economic Review ran a
detailed cover story just recently questioning whether Cambodia
was the new narcostate in Asia. Specific evidence was presented
tying senior government officials to heroin traffickers.
Any observations about that?
Secretary Albright. I think, Mr. Chairman, we are very
careful in the way that we do the certifications. If there is
something different, we will look at it again, but I feel
fairly confident in the way that we certify.
Senator McConnell. Senator Leahy?
Senator Leahy. Thank you, Mr. Chairman.
I share your concern about Cambodia. I mention the donors'
meeting in July, to consider World Bank funding for Cambodia. I
worry that we are going to see them return to civil war and the
$3 billion we spent there down the drain and the terrible
killings that are going to take place.
I would be interested--it does not necessarily have to be
today, but I would be interested in knowing what the United
States position is going to be at the donors' meeting in July
because I think this is probably one of the last real chances
to send a very good message, a strong, unambiguous message to
Cambodia.
Secretary Albright. I do not have a position right now. I
will get back to you.
Senator Leahy. I understand. I just throw it out to follow
along the lines of what the chairman was saying because I think
it is a serious matter. In fact, I look forward to talking with
you when you get back from Cambodia, Vietnam, and Hong Kong,
all areas I have a great deal of interest in. We used the Leahy
war victims fund in both countries. Both countries have gone
through an awful lot. I suspect a lot more stability in Vietnam
now than in Cambodia, but your observations I think will be
important to all of us.
Just a couple of other points I want to make. In February
your very active help on the international family planning vote
was critical. I suspect we will see more votes on that. I would
encourage you to keep engaged in it.
I cannot understand those who want to keep cutting family
planning funds. It has reduced unwanted pregnancies. We showed
in one country tens of thousands of abortions were avoided
because of family planning.
I am going to keep in touch with your office. If you ever
hear anything more about Ngawang Choephel, the Tibetan arrested
by the Chinese--he was a former Fulbright scholar at Middlebury
College in Vermont. He is in a Chinese prison for making a
documentary film about traditional Tibetan music and dance. I
raised his case with President Jiang Zemin and others last fall
in China. They sentenced him to 18 years. It is ridiculous. I
pointed out that it was on the 50th anniversary of the
Fulbright Program which began with a scholarship to China, and
they sentenced a Fulbright scholar to 18 years. I would urge
our representatives to continue to raise it at the highest
levels.
Last--and this will be a question--we passed a law last
year that withheld antinarcotics aid to any unit of the
security forces of a foreign country whose members have been
implicated in gross violation of human rights unless the
government has taken steps to bring those people to justice.
The administration has worked to carry out the letter but the
spirit of the law, and I applaud you for that.
I wonder why we should not have the same law on all aid we
give and not just antinarcotics aid, but if you've got a
security forces unit of a foreign country implicated in gross
violation of human rights and the government is not taking
steps to bring the individuals to justice, why not hold all aid
to the police unit, or army unit? Would you give thought to
that?
Secretary Albright. I will. I have instructed all our posts
to monitor compliance with your amendment very closely,
including by seeking out information about suspected human
rights violations, and we will not be passive. We have put in
place also protections against the misuse of our funds.
Senators, you both have asked about Cambodia and some other
new democracies. What I really see is that the first wave of
democratization is one of euphoria and we somehow feel that
many countries have kind of gotten over the hump and we think
to ourselves, OK, the job is done. What I think we are seeing
more and more is that this is a very complex process as
countries emerge from civil wars or from totalitarian
repression or any number of very difficult periods, and that
while the United States cannot do everything for everybody and
it is essential that the parties, whatever the case is, do
things for themselves, we have to be aware of the very
important role we can play in getting countries over more than
the initial hump and the extent to which our funds serve as a
magnet for the attraction of other international funds.
That is why I am so grateful to you for everything that has
happened in terms of trying to get--not preserving our money
but for once that we have finally taken a step forward. I think
that American power is vital and we need to know exactly how to
use it. In this year of the anniversary of the Marshall plan,
we have a lot to learn about what role America can play in
putting democracies on their feet and how long a process it is.
We and the American people are beneficiaries when there are
stable countries that are good markets and do not support
narcotrafficking, a whole series of issues. So, I am very
grateful to you.
But what I think our questions really are--and you have
addressed them--is we get a country to a certain level and we
think that they have achieved something and like Cambodia there
still continue to be threats.
Senator McConnell. One final question here before we wrap
it up. I want to go back to Korea. You touched on Korea in your
opening statement.
I have accepted the conventional wisdom that food
assistance should not be held hostage to a change of direction
in the North Korean regime. But, it is interesting to note that
every time the food assistance is offered, nothing happens. It
is my view--and I suspect it is your view, and I am going to
ask you to comment on it--that there is no real hope of
progress there on the peninsula until the North and South speak
to each other. It will be very, very difficult to impose a
settlement from outside.
I wonder where we go from here because nothing we have done
to date--not that the things we have done to date are
necessarily a mistake--but nothing we have done to date has
produced bilateral discussions or, for that matter, four-party
discussions. Where are we and where do we go from here?
Secretary Albright. Well, first of all, on the four-party
talks, interestingly enough I think that there has been
progress, not definitive, but there has been. As you know, the
talks were proposed in April 1996 and we offered a joint United
States-Republic of Korea [ROK] briefing to the DPRK and that
was held March 5 this year.
Then on April 16, in response to the joint briefing, the
DPRK agreed in principle to the four-party talks, but then
stopped short of agreeing to the practical steps, such as dates
for the first meeting, and need to realize the talks.
We, with the ROK, have agreed to continue contacts with the
goal of beginning the four-party talks as soon as possible.
Obviously the reason for those is to replace the armistice
agreement with a permanent agreement. We are doing our best to
get those back on track.
We also are doing everything we can to encourage North/
South dialog in itself. I was in Seoul earlier this year. It
was a major subject of discussion, and we are going to keep
pressing. But as you know, the situation is difficult in the
DPRK and the Republic of Korea at this stage is also going
through an electoral process, but it is something that is very
much on our minds. We are very concerned about the stability of
the Korean peninsula and consider it one of our priority items.
Senator McConnell. Well, thank you very much, Madam
Secretary, for being here today. I congratulate you again on
your good work within the administration with regard to the 150
account request, and Senator Leahy and I are going to do the
best we can to see to it that when the smoke clears up here,
the money is still there. [Laughter.]
Thank you very much.
Secretary Albright. We are very grateful to you. Thank you
very much.
additional committee questions
Senator McConnell. There will be some additional questions
which will be submitted for your response in the record.
[The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
Additional Committee Questions
Question. There have been accusations made that the Second Prime
Minister Hun Sen and the Cambodian People's Party were responsible for
the Easter Sunday grenade attack. I am curious as to whether you or
your people know if there has been any concrete evidence to back the
assertions that Hun Sen or any of his officials were directly
responsible for the attack.
Answer. The State Department called in the Cambodian Ambassador on
March 31. We condemned the attack and urged the Cambodian Government to
take steps now to prevent further political violence and bring to
justice those responsible. Similar demarches were delivered in Phnom
Penh to Foreign Minister Ung Huot and to the Co-ministers of the
Interior. Deputy Secretary of State Strobe Talbott met with Mr. Sam
Rainsy and his wife on April 9. Mr. Talbott expressed relief that Sam
Rainsy had escaped without serious injury and outrage that others had
not. We have called on Cambodia to conduct a speedy credible
investigation of the incident and to identify and punish the
perpetrators.
We do not have concrete evidence indicating who was responsible for
the attack. The FBI investigation of the incident is still pending.
______
Questions Submitted by Senator Leahy
cambodia-world bank meeting
Question. I believe that the donors' meeting in July will consider
the World Bank funding for Cambodia. I worry that we are going to see
them going right back into civil war and the $3 billion we spent there
down the drain and the terrible killings that are going to take place.
I would be interested in knowing what the U.S. position is going to
be at the donors' meeting in July because I think this is probably one
of the last clear chances to send a very good message, a strong
unambiguous message to Cambodia.
Answer. At the Consultative Group meeting on Cambodia hosted by the
World Bank in Paris, the United States expressed serious concern about
lack of progress on election preparations, violence, threats and
continued human rights abuses. We noted that effective assistance
programs could not go forward in the face of political polarization and
fears of a return to violence.
In an informal political meeting on June 30, the U.S. reiterated
our core concerns about Cambodia's ability to protect human rights,
maintain political stability, conduct free and fair elections in 1998,
and foster economic growth. The U.S. urged all Cambodians to settle
their differences peacefully and reject violence and intimidation. We
condemned the March 30 grenade attack on a peaceful political
demonstration. The U.S. emphasized our policy that senior Khmer Rouge
leaders should not be brought into the Cambodian government and that
all those suspected of committing crimes against humanity from 1975-79
should be brought to justice.
Other bilateral and multilateral donors expressed similar concerns,
calling for political stability and emphasizing the importance of free
and fair elections in 1998.
Despite this clear message from the international donor community,
Cambodia was again plunged into violence during the weekend of July 5.
We have condemned the use of force to overturn the results of the 1993
elections and called on all parties to resolve their differences
peacefully. We have unequivocally condemned the execution of FUNCINPEC
officials and the intimidation of journalists, human rights workers and
others in the wake of the fighting. The U.S. is actively involved with
ASEAN and other signatories of the Paris Accords in an attempt to find
a solution to the crisis.
The U.S. has suspended assistance to Cambodia for 30 days
(beginning July 9). During this period our programs will be limited to
those activities that provide humanitarian assistance or support
democracy. All programs that provide direct support to the Cambodian
government are suspended.
______
Questions Submitted by Senator Bennett
expropriation sanctions
Question. Will you initiate sanctions against U.S. treaty partners
who expropriate the property of U.S. citizens without appropriate
compensation, and do you have adequate resources to ensure compliance
with our treaty partners' obligations in this area?
Answer. The United States has an active and vigorous policy of
protecting U.S. citizens' property abroad from unlawful expropriation.
Under international law, a state may lawfully expropriate the property
of a foreign national only if it does so for a public purpose, in a
non-discriminatory manner, affords due process, consistent with its
other commitments, and provides prompt, adequate, and effective
compensation for the property. The Department of State will continue to
press other countries to provide U.S. citizens with treatment that is
consistent with established principles of customary international law
and obligations under international agreements.
Specifically, the Department's expropriation policy has four
primary elements: (1) active negotiation of Bilateral Investment
Treaties and other international agreements to help protect the
interests of U.S. investors; (2) provision of general consular
assistance to U.S. businesses and property owners abroad; (3) active
diplomacy emphasizing to foreign governments the importance of
resolving expropriation claims involving U.S. nationals; and (4) formal
settlement of claims via government-to-government agreements where all
other avenues of redress have failed. The steps taken by the Department
in any particular claim or investment dispute depend upon the
circumstances and our judgment as to what would be the most effective
course of action to help resolve the dispute. In addition, Section 527
of the 1994-1995 Foreign Relations Authorization Acts provides that
certain types of bilateral assistance shall not be provided to a
government that has expropriated the property of a U.S. national in
violation of international law. Section 527 also requires the United
States to vote against loans by multilateral development banks and
international financial institutions to those governments unless such
assistance serves the basic human needs of the citizens of that
country.
The State Department and our diplomatic and consular posts closely
monitor U.S. citizen claims of expropriation and U.S. investor
disputes, bringing concerns to the attention of foreign governments on
a regular basis. As part of that effort, the Department annually
compiles the report required under Section 527(d). We believe that the
Department has sufficient resources to continue to pursue the
longstanding policy of protecting U.S. citizens abroad.
______
Questions Submitted by Senator Campbell
women in foreign policy
Vital voices: women in democracy
Question. Madame Secretary, you have gone on record as saying that
the advancement of women is in the interest of U.S. foreign policy.
That makes good sense to me, not only from a humanitarian viewpoint,
but also because women play a key role in building a civil society.
I've heard about 150 women leaders of formerly communist European
countries, who are coming to Vienna in July to learn how women in the
West are dealing with business, law, and politics. This sounds like a
good idea to me, and it will have a big, long-term payoff in terms of
building democracy.
I understand our Embassy in Vienna is putting this event together.
Can you tell us more about it?
Answer. This conference, which Ambassador Swanee Hunt has
organized, will convene women leaders from governmental and private
sectors of central and eastern Europe, the United States and the
European Union. Three hundred participants (approximately 75 from the
U.S.) will explore ways to strengthen the role of women in developing
open, democratic societies. First Lady Hillary Rodham Clinton will give
the keynote speech to start the conference. It will run July 9-11 in
Vienna, Austria.
--Sponsored by the U.S. and European Union governments, with
extensive private sector participation, the conference serves
important U.S. foreign policy goals.
--The ``Vital Voices Conference'' supports President Clinton's and
Secretary Albright's commitment to expand the circle of
democracy by incorporating themes related to women into the
mainstream of American foreign policy.
--U.S. participation in this conference is one of partnership, an
expression of our alliance of common values with the women of
central and eastern Europe.
--The U.S. acknowledges that much progress has been made to date in
these countries and that transition is difficult. However, true
democracy, which gives women access to the levers of economic
and political power, is worth striving for.
--Civil society, with women as equal participants, needs to take root
at all levels of society.
The conference's objectives are:
--to define the common challenges women face in the emerging
democracies and to explore concrete policy initiatives to meet
those challenges;
--to energize and equip women leaders to assert their influence in
their home countries;
--to establish wider East-West networks of women leaders in support
of democracy-building efforts in central and eastern Europe;
and
--to increase public understanding about the economic, political, and
social contributions women make to a democratic society.
There are three tracks of workshops--Law and Leadership, Politics
and Persuasion, and Business and Beyond. Presentations by high level
public figures will underscore the priority of empowering women as a
foreign policy goal.
The ``Vital Voices'' Conference puts into action many of the ideas
that came out of the UN Fourth World Conference on Women in Beijing.
By bringing women under thirty to the conference, we are
acknowledging the important role the next generation will play in these
democratic societies.
U.S. participants are strongly encouraged to explore ways to
maintain their connections with European participants after the
conference. ``Vital Voices'' is an event in the process of the
advancement of women and will generate much follow-up activity.
The State Department will work with U.S. participants and U.S.
Embassies in central and eastern Europe on follow-up to the conference.
______
Questions Submitted by Senator Harkin
child labor
Question. What kind of plans do you and the Administration have to
raise this issue of abusive and exploitative child labor? Do you bring
it up in bi-lateral and multi-lateral talks or do you leave it to the
Ambassadorial or lower diplomatic levels?
Answer. We have been and will continue to be very active in both
multilateral and bilateral meetings--and at every level.
On the multilateral level, we have urged the World Trade
Organization (WTO) to establish a working group to study the link
between labor standards and trade. Last December, at the WTO's
Ministerial conference in Singapore, we gained an explicitly political
statement reaffirming WTO members' commitment to observe
internationally recognized core labor standards. Since there is no ILO
Convention specifically prohibiting child labor, we have taken the lead
in the International Labor Organization (ILO) to create one. The new
Convention, which we are currently working on, will prohibit
exploitative child labor, and we expect it will be adopted in 1999,
after a two year-discussion. Our early and substantive contributions to
this drafting process should yield a Convention that we can recommend
to the Senate for advice and consent to ratification. We are also key
participants in the ILO's Working Party on the Social Dimensions of the
Liberalization of Trade, a policy level group that is designing
strategies for ensuring that adherence to core labor standards,
including those applying to child labor, accompanies a country's
increasing access to international trade. We also provide our views,
encouragement, and support to work being done on child labor by UNICEF
and in the OECD.
In addition to these multilateral forums, U.S. Ambassadors in
countries where the problem of child labor has been egregious have been
closely engaged. Our Ambassadors, particularly in Pakistan, Nepal, and
Bangladesh, have communicated both official U.S. Government concern and
noted, for local manufacturers and exporters, the adverse reaction of
American consumers to purchasing goods made by child labor. Our
Ambassadors' efforts have resulted in programs to turn the problem
around and have raised public, business, and governmental awareness of
the issue.
Work at the ground level is also important. Our labor attaches and
other mission officers are in contact on a daily basis with host
country trade unions, NGO's, journalists, and other public opinion
formers. They are helping raise the awareness and supporting the
activism of host country citizens--who are equally concerned at the
waste of their children's future and want to see their countries
substitute a generation of educated adults for one of illiterates.
Question. Given your active role in bringing foreign policy to the
American people, I would like to know if you plan to use the bully
pulpit to inform American consumers that goods they purchase may have
been made with abusive and exploitative child labor, such as hand-
knotted carpets and wearing apparel? Do you believe that labeling goods
made without abusive and exploitative child labor will help American
consumers make informed decisions?
Answer. Senator, you may rest assured that I will engage the
American public on this issue. And I would like to take this
opportunity to recognize your steadfast leadership and continuing
efforts to highlight and solve the problem of child labor. Your
appearance at the child labor labeling and codes of conduct workshop
that the Department of Labor sponsored at the International Labor
Conference on June 13 helped focus international attention on this
promising new approach. My colleagues and I in the State Department
appreciate the attention you have given this matter. We look forward to
continuing to work closely with you and other Members of Congress in
fashioning better responses to this problem.
Effective voluntary programs to label goods made without child
labor can be one way to empower consumers, and let them make informed
choices when they buy a soccer ball for their youngsters or other
articles for their family's use. Those consumer choices can encourage
manufacturers to pay adults to work and enable children to attend
school--if they want their products to be attractive to the American
consumer.
With White House encouragement, American businesses, trade unions,
consumer groups, and NGOs have put together the Apparel Industry
Partnership. As part of this ``No Sweat'' initiative, that group is now
grappling with the issues surrounding labeling of goods and monitoring
of labor conditions by U.S. businesses. I see this effort, which is
non-governmental and purely voluntary, as an excellent example of the
importance of Americans being informed and involved on U.S. foreign
policy. U.S. consumer pressure has helped encourage our businesses to
engage on child labor and bring home the point that the right of
workers to fair treatment must be respected.
Engaging consumers and NGOs in raising awareness about child labor
and encouraging its elimination is important. We believe that any
parent would rather see children receive an education, to expand their
opportunities in life ahead, than to toil now. These are values which
we hold in the United States and, as consumer and NGO groups are
demonstrating abroad, they also are values that have universal appeal.
Question. Does child labor make a difference in our relations with
other countries? When a country has a large child worker population,
does the administration take that into account when negotiating trade
agreements, granting access to our market, granting foreign aid, and in
working with international organizations, such as the ILO and UNICEF,
on projects in the region? Do you believe that a rider on foreign aid
funds linking progress on eradicating child labor to the release of
funds would be helpful? How would you feel about that? Do you think we
have the moral and economic strength to raise this issue with
meaningful effect?
Answer. In accordance with existing provisions of law, the U.S.
Government takes basic worker rights factors into account when
extending or denying preferential trade benefits under the Generalized
System of Preferences (GSP), the Andean Trade Preference Act, and the
Caribbean Basin Economic Recovery Act. Several countries have had GSP
benefits suspended for lack of progress on basic worker rights. The
Overseas Private Investment Corporation (OPIC) similarly takes basic
worker rights into account and has suspended coverage in several
countries on worker rights grounds.
A key element in our approach to eliminating child labor is to work
cooperatively with countries around the world that are interested in
resolving their child labor problems. As you know, strong Congressional
support has made possible U.S. Government participation in the ILO's
International Program on the Elimination of Child Labor (IPEC). The
U.S. Government contributed to IPEC in each of the last three fiscal
years--a total of $5.1 million. We strongly support maintaining these
contributions in fiscal year 1998 and fiscal year 1999 authorizations.
These funds enabled us to support IPEC projects in Bangladesh, the
Philippines, Brazil, Thailand, and Pakistan and to consider further
IPEC projects in several other countries. We also support the efforts
in this area of UNICEF, whose work complements that of the ILO. UNICEF,
along with the ILO, played a critical role in launching ``Rugmark'' in
India and Nepal and in signing an agreement with the Bangladesh Garment
Manufacturers and Exporters Association to phase out child labor from
the garment industry in that country.
We believe consumer/industry partnerships, along the model of the
``No Sweat'' initiative, have enormous promise in harnessing the power
of the market in behalf of worker rights. Such initiatives have the
advantage of focusing tightly on worker rights abuses in specific
countries and industries, can empower activist NGOs that promote worker
rights abroad, and are flexible enough to increase or decrease public
pressure in accordance with a targeted industry's demonstrated
willingness to reform. On the other hand, measures that seek to punish
countries where child labor persists run the risk of targeting the
innocent along with the guilty, inflicting pain on disadvantaged groups
along with those who exploit both children and adult workers.
Question. Do you think it would be helpful in raising the issue of
child labor in bilateral talks if you had more statutory authority
behind the issue of child labor? For instance, do you believe report
language calling on the Secretary of State to raise the issue of
abusive and exploitative child labor would aid you in raising this
issue? Or do you feel you already have enough power or authority to
raise this issue effectively? Do you believe the laws in other
countries pertaining to child labor have been effective? Do you believe
a law banning the importation of goods made with child labor would be
effective? Do you believe such a law would be bad for U.S. interests?
Answer. We welcome the participation of Congress, as well as of the
American public, in devising solutions to foreign policy issues that
trouble us in common. The persistence of exploitative child labor is
one such issue. However, regardless of whether or not Congress
reiterates again its abhorrence, this Administration will continue to
press for the speedy elimination of child labor wherever it is found.
As with all human rights issues, we will not be content to evaluate a
country's performance based solely on a superficial reading of its
laws. Laws are important in setting a standard. Unfortunately, such
standards are not always enforced. The bottom line is, and must remain,
a country's actual performance.
It is difficult for me to address the matter of changing U.S. law
in the abstract. While I suspect we could quickly reach agreement on
basic principles, finding the specific means of implementing those
principles--without, at the same time, inflicting harm on others--is
more difficult. Additional statutory requirements could raise questions
with respect to existing U.S. international obligations and policy in
other areas. I look forward to working with concerned Members of
Congress, along with representatives from the business community,
labor, academia, and other non-governmental organizations on this
issue.
______
Questions Submitted by Senator Mikulski
Question. One of the reasons for NATO's success is that it is a
true partnership with allies who share our values and interests. There
are no second class members. And every member is expected to pay his
way.
There have been disagreements over what the cost of NATO
enlargement will be.
In your discussions with potential new members do they recognize
that they will have to pay their own way? They will have to upgrade
their own infrastructure, modernize and restructure their own forces
and supply them with the necessary equipment.
Do our current and future NATO allies fully understand that the
United States will not bear the full cost of NATO enlargement?
Answer. We are confident that both current and new members will
bear their fair share of the costs. The Madrid declaration, signed by
all 16 NATO allies at the recent summit, acknowledges that enlargement
will entail resource implications but also expresses confidence that
the costs will be manageable and that the resources necessary to meet
those costs will be provided.
As noted in the Madrid Summit declaration, NATO will undertake its
own costs analysis now that the countries to be invited are known and
will report its results to NATO ministers at the December North
Atlantic Council meeting. We expect NATO's report will confirm the
essential elements of the U.S. government analysis.
Question. Last week, NATO and Russia reached an agreement on
Russia's role in NATO. As you have said, Russia will have a voice but
not a veto in NATO.
Would you discuss this agreement and how it will strengthen NATO?
Answer. The NATO-Russia Founding Act provides the basis for an
enduring and robust partnership between the Alliance and Russia. Under
the terms of the Act, NATO and Russia will consult and coordinate
regularly and, where possible and appropriate, act jointly--as they are
doing in Bosnia now. The Act has five principal sections:
The preamble notes that NATO and Russia do not consider one another
adversaries and cites the sweeping transformations in NATO and Russia
that make possible this new relationship.
Section I describes the principles governing the relationship,
e.g., restatement of the norms of international conduct in the UN
Charter and OSCE Helsinki Final Act and explicit commitments, such as
respecting the sovereignty, independence and territorial integrity of
states and settling disputes peacefully.
Section II creates a new forum, called the NATO-Russia Permanent
Joint Council, for NATO-Russia meetings and describes how this Council
will function.
Section III describes a host of issues that NATO and Russia will
discuss, including conflict prevention, peacekeeping, prevention of
weapons proliferation, and exchange of information on security policies
and defense forces.
Section IV describes the military dimensions of the relationship.
In this section, NATO reiterates aspects of its current defense policy
and strategy; references its March 14 statement concerning how the
Alliance will carry out its collective defense and other missions;
recognizes that NATO will require adequate infrastructure on new
members' territories commensurate with NATO's collective defense and
other missions, and commits NATO and Russia to work for prompt
adaptation of the CFE Treaty.
Section IV also provides mechanisms to foster closer military-to-
military cooperation between NATO and Russian militaries, including
creating military liaison missions in respective NATO and Russian
military headquarters.
Under this agreement, NATO retains its full prerogatives. While
Russia will work closely with NATO, it will not work within NATO. The
Act makes clear that Russia has a voice, not a veto in NATO, and that
the Alliance retains the right to act independently when it so chooses.
cyprus
Question. Last year, we all expected great progress to be made in
ending the occupation on Cyprus. But the crisis broke out over the
island of Imia--and the U.S. had to intervene to prevent an actual war
in the Aegean.
There is general agreement among all parties that Cyprus should
become a federation that is not occupied by any foreign force. But
still, an agreement eludes us.
We have another opportunity today. Thanks to your efforts since
your visit to Cyprus last summer, there has been some progress in
reducing military overflights of Cyprus.
In addition, the prospect of possible European Union membership may
lead to greater moderation.
What can we do to take advantage of these generally positive
conditions to reach a peaceful settlement to the issue of Cyprus? What
can we do to jump start the negotiations?
Answer. We agree that there are positive factors at play which
could contribute to the achievement of a Cyprus settlement. Prospective
EU accession for Cyprus is a particularly promising incentive for an
agreement. The recent naming of Ambassador Richard Holbrooke as the
Special Presidential Emissary for Cyprus manifests our strong
commitment to promoting intercommunal reconciliation. Ambassador
Holbrooke will be undertaking U.S. efforts toward this end and will
support the UN Secretary General's mandate to facilitate negotiations
between the Cypriot parties.
The first direct talks between the two Cypriot leaders since 1994
will open in Amenia, New York on July 9, under UN auspices. The session
will enjoy unprecedented international representation, including that
of the United States. Nonetheless, the essential requirement for
success will be no different in 1997 than in previous years: the desire
of the parties themselves for an agreement. As July 9 nears, we are
urging flexibility by the parties so we can achieve real progress
toward a settlement that will be acceptable to all involved. Acting
Special Cyprus Coordinator Carey Cavanaugh will represent the United
States in Amenia. Ambassador Holbrooke is meeting with both Cypriot
leaders while they are in New York.
israel/u.s. economic, science and technology cooperation
Question. What can we do to strengthen economic links and
scientific and technological research and development between the U.S.
and Israel.
Answer. The U.S. and Israel have a long and enduring history of
economic links and science and technology cooperation, and we are
strongly committed to expanding these ties. The United States-Israel
Free Trade Area Agreement (FTAA) was signed in 1985 and eliminated all
duties by January 1, 1995. The agreement eliminated many trade barriers
between the United States and Israel, substantially liberalizing and
thus encouraging trade between the United States and Israel. A follow-
on agricultural trade accord, signed in 1996, is providing steady
improvement in market access for agricultural products as well.
Exports to and imports from Israel have more than tripled since
1985 as a result of these agreements. The U.S. is Israel's largest
single trading partner and Israel is the U.S.'s twentieth most
important export market. U.S. market penetration in Israel (over 20
percent of Israel's imports) is the fifth highest of our major markets
in the world. Only Canada and the UK have more companies traded on Wall
Street.
In addition, since the mid-1980's the U.S. and Israel have engaged
in periodic economic consultations under the auspices of the Joint
Economic Development Group (JEDG). This group has a mandate to examine
and discuss Israeli economic policy at a high level, and played a key
role in shaping the successful 1984 economic stabilization program for
Israel.
On the science and technology front, the U.S. and Israel for many
years have had and will continue to have a very strong cooperative
relationship in research and development, reflecting the President's
commitment to sustain and enhance Israel's hi-tech edge. Three
binational foundations--the Binational Science Foundation (BSF), the
Binational Industrial Research and Development Foundation (BIRD), and
the Binational Agricultural Research and Development Foundation
(BARD)--which each have an endowment of $100-110 million, have been
funding cooperative projects between Israeli and U.S. scientists for
the last 15-25 years. Projects supported by BIRD--which funds the
development and commercialization of joint hi-tech industrial
projects--have provided measurable economic benefit to both countries
through increased sales, market access and job creation for
participating companies. The U.S.-Israel S&T Commission also focuses on
the private sector by funding support for joint S&T business ventures.
A number of U.S. technical agencies, including EPA, NOAA, the
Bureau of Reclamation, U.S. Geological Survey, HHS and NASA, also have
cooperative agreements with counterpart agencies in Israel to address
issues of common interest. Recently initiated cooperative activities
include the National Cancer Institute's efforts working with Israel and
its neighbors to establish the Middle East Cancer Consortium.
international drug interdiction
Question. Baltimore has the second highest per capita use of heroin
in the country--second only to San Francisco. Ending this epidemic must
be a priority of all sectors of our government--and a priority in our
foreign policy. The Administration is requesting $230 million for its
international narcotics and crime programs. Could you describe how
these funds would be used and how the State Department coordinates its
efforts with the FBI and other federal agencies to combat international
crime and drugs?
Answer. The illegal drug trade and growing transnational criminal
enterprises around the world are among the most serious threats to the
United States in the post-Cold War era. In response, President Clinton
has placed combating international narcotics and organized crime high
on our national security and foreign policy agendas. Within the State
Department, the Bureau for International Narcotics and Law Enforcement
Affairs (INL)--established nearly four years ago--has broad
responsibility for federal law enforcement policy and program
coordination in the foreign arena.
The President has directed the Administration to act aggressively
to neutralize and, where possible, eliminate international drug and
criminal activities at the source. For drug syndicates and other
criminal organizations, this means making it impossible for them to
ship their products, launder money, or carry out any other
international financial transactions. For the drug producing and
transit countries, it means eliminating illegal drug crops entirely or
reducing them to levels consistent with legitimate global medical
requirements. Programs in Latin America are heavily focussed at coca
crop reduction in the Andes. Political considerations preclude direct
engagement with Burma and Afghanistan, the world's largest producers of
opium poppies. However, bilateral crop eradication efforts are underway
in Pakistan, and we work through a variety of international and
regional fora, especially the U.N. Drug Control Program, to tackle the
heroin problem elsewhere in Asia.
The State Department and U.S. Embassies are working with all
federal law enforcement agencies to assure that a variety of criminal
justice assistance programs (training, technical assistance and non-
lethal equipment) complements overall U.S. Government foreign policy
interests. The INL-chaired Law Enforcement Inter-Agency Working Group
(LEIWG) is the mechanism by which all agencies' interests are
considered. U.S. embassy law enforcement teams ensure that the programs
offered adequately address the needs of host governments. In fiscal
year 1997, INL funded $20 million in crime programs to the federal law
enforcement agencies to conduct coordinated country and regional
programs. The breakdown is approximately as follows (in thousands): to
the Department of Justice $12,500, OPDAT/ICITAP $7,500, FBI $4,000, DEA
$1,000) and to the Department of the Treasury $7,100 (Treasury $2,000,
ATF $1,500, FLETC $1,000, INS $1,400, IRS $700, USSS $400, USCS $100);
in addition, $400 is provided to the U.S. Coast Guard. The programs
focus on criminal justice sector enhancements and confront the threats
posed by drugs and crime. Particular focus is on alien smuggling,
firearms trafficking, stolen vehicles, financial crimes and money
laundering, organized crime and racketeering, and community police
programs. Much of the criminal justice focus is on regional levels and
through the International Law Enforcement Academy (ILEA) in Budapest;
additional such academies are being established in Latin America and in
Asia.
INL would expect to provide federal law enforcement agencies with
approximately the same proportion of funding in fiscal year 1998.
Additional detail on INL programs and cooperation with U.S. law
enforcement agencies is contained in State's Congressional Presentation
Document.
______
Questions Submitted by Senator Murray
china
Question. I was recently in China. And one of my observations from
the trip continues to disturb me. And that was the message America
projects by our presence in that country. Our facilities are totally
inadequate--it's my understanding that we occupy space that was
abandoned by the Pakistani's.
In my mind, our relationship with China is among our most
important. We need to project an image in that country consistent with
the image of the United States. I also think our China facilities are
discouraging some of our best foreign service officers--particularly
those with young families--from seeking to serve in China.
What is the State Department going to do to address this clear
deficiency?
Answer. We agree that our facilities in China are in many ways
substandard and we are taking steps to rectify the problem. During
fiscal years 1994-96 the Department provided about $95.5 million in
direct support of facility requirements there. We are completing a
proposal to construct a cleared American Annex and refurbish the
Chancery in Beijing. Numerous projects related to fire and workplace
safety, including asbestos removal, have been undertaken in the
building. Some of our residential units in Beijing will be upgraded at
a cost of $30,000 each, and land has been purchased for construction of
a housing compound. Other projects in China include refurbishing the
Consulate Office buildings and upgrading the communications systems in
Shenyang and Hong Kong. We are striving to establish a family-friendly
infrastructure in China that will allow our officers to pursue their
professional interests without undue personal sacrifice to themselves
or family members.
Question. I also came away from China with the impression that we
do not have enough personnel fluent in Mandarin. Do we also have a
language deficiency in China?
Answer. A 1996 review of our worldwide language requirements
indicated that, of the 77 occupied positions which had been designated
as requiring full professional competence in Chinese, 62 were filled by
individuals at or above the required level of competence. Of the 15
incumbents who fell short of the mark, most were close to the desired
proficiency, and all had achieved minimal professional competence. The
fact that 80 percent of the incumbents had fully satisfied our language
requirements makes our performance in Chinese consistent with the
worldwide average for all officers assigned to language designated
positions.
In citing the above statistics, however, I do not intend to imply
that the Department is satisfied with the level and distribution of
Chinese language expertise in the Foreign Service Officer corps. We
readily acknowledge that we face problems in filling our positions, and
that we are especially concerned by the lack of Chinese language
expertise in our senior ranks. Living and health conditions in the
People's Republic of China further complicate the situation, especially
with respect to more senior officers. As officers progress through
their careers, medical conditions and family concerns are more likely
to preclude service in China, even though the officer is language
qualified and would otherwise be willing to serve. Improving living
conditions for our personnel will alleviate this situation to a certain
extent, but the unique challenges of life in China will continue to be
a problem as we seek to fill positions there.
Question. What does the State Department plan to do to address this
language deficiency? I am wondering if the State Department's
recruitment process is adequately meeting your needs for Chinese
language speakers?
Answer. We are working to build a cadre of Chinese speakers at the
lower to middle ranks who will continue to use their language skills as
they rise to senior positions. Our goal is to increase the number of
Chinese speakers at the junior levels to increase the chances of repeat
tours and to guarantee there will be a larger base of qualified senior
officers to fill key leadership roles in our mission. Our career
counselors are on the lookout for bright, flexible and linguistically
gifted officers who can make a contribution to our efforts in China.
Such prospects may be specially urged to consider vacancies at Chinese-
speaking posts. We have also recognized that our existing Language
Incentive program, which was established to encourage officers to
acquire, use and reuse skills in critical languages such as Chinese,
has not been fully effective. We are undertaking a review of the
program to make it more effective in terms of cost and results.
Our recruiting materials note that officer candidates with a
demonstrated proficiency in foreign languages are awarded ``bonus
points'' which give them an advantage with respect to their position on
the hiring register. We are also examining ways to better utilize the
linguistic skills of entering officers by more carefully matching these
skills with their first or second assignment. As business opportunities
increase in China, we face increasing competition from the private
sector in recruiting qualified linguists. Almost all of our most recent
entering classes of Foreign Service Officer candidates have included at
least one Mandarin speaker, and several classes have had two or three.
Even when these individuals require additional language training,
experience has shown their prior knowledge is a significant advantage
both to themselves and to the Department.
Question. I am also concerned that a number of key Asia posts at
the State Department and the Administration remain unfilled. When can
we expect to see a nominee for the Assistant Secretary for Asia post?
And when might we expect to see the Administration move to fill vacant
ambassadorial posts in Korea and Tokyo. These are all key posts and
they need to be filled as soon as possible.
Answer. We share your concern that these key positions be filled.
The White House has announced the President's intent to nominate
Stanley Roth for the position of Assistant Secretary for East Asian
Affairs. Once appropriate clearances are completed, the selectees for
the Tokyo and Seoul posts will also be announced and nominated by the
White House. I hope we can work together to ensure these candidates
receive swift and favorable consideration by the Senate so they are
able to begin their official duties.
pacific salmon
Question. I understand that the government-to-government talks on
the Pacific Salmon Treaty broke down with Canada earlier this week.
Where does this leave things? Where do we go from here?
Answer. At this point the U.S. has publicly stressed our
commitment, despite lack of an agreement, to restrained and responsible
fisheries in 1997. We hope Canada will exercise similar restraint,
although recent Canadian pronouncements on its planned Canadian fishing
activity indicate the intention to fish heavily on the Fraser River
stocks. Canadian Foreign Minister Axworthy has proposed binding
arbitration. We are considering our response, but have made clear to
Canada that this option has previously been rejected. We have also made
clear to Canada that we continue to believe the stakeholder talks offer
the most likely avenue for progress on these difficult issues.
Question. I am concerned about the Canadians once again escalating
this issue with dramatic actions such as the transit fees of 1994. Are
we prepared to respond to these type of actions? If so, how?
Answer. We are exploring our options for responding, should Canada
take aggressive action. A number of options are under consideration.
Foreign Minister Axworthy has stressed this week that Pacific salmon
problems should not be linked to other issues. We hope that this
attitude will prevail within the Canadian Government.
Question. I am interested in ways we can continue at the
government-to-government level the progress made by the stakeholders
process. Does the State Department know what the next step might be?
Answer. The stakeholders developed creative and far-reaching
proposals. We hope that the two nations can find a way to re-invigorate
the stakeholders process or at least to build on the contributions made
by the stakeholders. The earliest the stakeholder groups could
reconvene, however, would be in September after the summer fishing
season. Meanwhile we are remaining in contact with both the
stakeholders and the Pacific Salmon Commission as we discuss how to
proceed.
conclusion of hearings
Senator McConnell. That concludes our hearings, the
subcommittee will stand in recess subject to the call of the
Chair.
[Whereupon, at 12:28 p.m., Thursday, May 22 the
subcommittee was recessed, to reconvene subject to the call of
the Chair.]
FOREIGN OPERATIONS, EXPORT FINANCING, AND RELATED PROGRAMS
APPROPRIATIONS FOR FISCAL YEAR 1998
----------
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
NONDEPARTMENTAL WITNESSES
[Clerk's note.--The subcommittee was unable to hold
hearings on nondepartmental witnesses, the statements and
letters of those submitting written testimony are as follows.]
[The statements and letters follow:]
Prepared Statement of Amoco Corporation
Amoco Corporation is pleased to submit this statement for the
record to highlight the strategic importance of the Caspian Sea region,
specifically Azerbaijan, for U.S. commercial and national security
reasons.
Amoco Corporation ranks as one of the largest U.S. industrial
companies based on total assets. Domestically, we are a leading
producer of crude oil and natural gas and the nation's leading gasoline
retail marketer. The corporation, which is based in Chicago, oversees
and coordinates worldwide operations of its business groups. Its core
business segments are Exploration and Production, Petroleum Products,
and Chemicals. A subsidiary, Amoco Eurasia Petroleum Company, together
with its affiliates, is active in the Newly Independent States (NIS),
specifically, Azerbaijan, Kazakstan and Russia, with its most
significant investments in Azerbaijan.
Because of the importance of the Caspian Region to the economic and
political interests of the United States, Amoco requests that Congress
lift restrictions on aid to Azerbaijan, currently imposed by Section
907 of the Freedom Support Act.
Mr. Chairman, we urge you to consider the facts below in your
fiscal year 1998 Appropriations deliberations, and in any changes or
amendments to the Freedom Support Act or related legislation which may
impact (1) the viability of U.S. firms competing in the region, (2) the
ability to export the vast oil resources out of the Caspian region, (3)
peace and stability in the region, (4) resolution of the Nagorno-
Karabakh conflict; or (5) the political and economic independence of
Azerbaijan.
Over the last twenty years it has become clear that the United
States has a national interest in developing diversified sources of
energy outside of the volatile Persian Gulf region. We believe that
investment opportunities in Azerbaijan and the Caspian Region will
allow the United States such an opportunity for diversification.
Development of the Caspian reserves will also bring substantial and
desperately needed economic growth to the states in the Caucasus and
promote the transition to democratic, market-based economies.
Azerbaijan is aspiring to market-based principles and is the only state
in the Caspian region without a Russian military presence.
Since the breakup of the former Soviet Union and the turmoil that
followed with the war between Armenia and Azerbaijan, Russia and Iran
continue to inflict political and economic pressure on the Caspian
region. The resulting instability requires increased involvement by the
United States Government to encourage and support U.S. companies
proceeding with critically needed investments.
Unfortunately, America's ability to act is impeded by Section 907
of the Freedom Support Act, which denies humanitarian aid to Azerbaijan
and prevents participation in the region by government agencies such as
OPIC and the ExIm Bank. Section 907 also hurts the U.S. ability to act
as an honest broker in the OSCE process for peace in the region.
Restrictions also hinder Azerbaijan's evolution into a full free market
economy by curbing essential U.S. technical and financial assistance.
Section 907 puts U.S. businesses at a distinct competitive disadvantage
and contradicts the strategic interests of the United States. Foreign
competition is high for Caspian resources and foreign governments are
supporting their national companies to the hilt. Aggressive U.S.
Government support of American investments in the region would greatly
enhance U.S. industry's competitive position. But without changes in
current U.S. policies toward Azerbaijan, American economic interest
will ultimately lose to foreign competition.
Strengthened U.S. Government support for American investment in the
Caspian area, including Azerbaijan, would also contribute to
stabilizing the potentially volatile political environment of the
region. This would further encourage U.S. investments and provide an
opportunity to increase U.S. exports of technology, equipment and
services. An increase in exports will translate to an increase in jobs
for Americans.
Amoco's first contract in Azerbaijan was finalized and approved in
late 1994, under which the Azerbaijan International Operating Company
(AIOC) operates and develops the Azeri--Chirag Fields and deep water
portion of Gunashli Field in the Caspian Sea. Amoco is one of ten oil
companies that make up the multi-national consortium working with the
State Oil Company of Azerbaijan (SOCAR) on this project. Amoco is the
leading United States participant with a 17.01 percent interest in the
production sharing contract, and total American share amounts to 40
percent. The full field development will require approximately $8
billion investment to produce the projected 4 billion barrels of oil
reserves. Peak production of the fields is expected to be greater than
700,000 barrels a day which is equivalent to 10 percent of today's U.S.
imports.
Since the signing of the first contract, Azerbaijan has taken an
aggressive approach to attracting foreign investment and initially was
very receptive to U.S. business. Four additional contracts have been
signed on exploration prospects. One of these contracts involved the
Ashrafi and Dan Ulduzu structures in the Azerbaijan Sector of the
Caspian Sea with Amoco at 30 percent ownership and Unocal at 25.5
percent ownership, giving American business a 55.5 percent total share.
However, participation by non-U.S. companies has increased
significantly in other contracts to approximately 80 percent. This drop
in the American share is due to an increase in competition from
British, Japanese, Italian, Norwegian and French companies who enjoy
the aggressive support of their governments. Despite Azerbaijan's clear
preference for American participation, U.S. business interests have
been hurt due to the Azerbaijani's perception that the United States
has been unfair in singling out Azerbaijan as the only country
precluded by Congressional mandate from receiving direct humanitarian
assistance (Section 907 of the Freedom Support Act).
Export of Caspian Sea resources is a key issue with many countries
in the region vying for control over, or participation in, the
pipelines to be built. Enormous investments will be needed to bring
these resources to world markets. Achieving export solutions that
ensure American access to the resources and enhance regional stability
and prosperity will be a great challenge. Azerbaijan, as one of the
greatest resource countries, will play a central role in this process.
Constructive American policies toward Azerbaijan, and the whole Caspian
region, are essential to achieving success.
Mr. Chairman and members of the Subcommittee: Amoco hopes that,
upon consideration of the facts brought forth above, you will agree
that Section 907 of the Freedom Support Act serves neither American
national interests nor the interests of peace and prosperity in Central
Asia. We hope you will agree that it is time to repeal section 907.
______
Prepared Statement of Pennzoil Company
Pennzoil Company (``Pennzoil'') is an integrated oil and gas
company, headquartered in Houston, Texas. Its core business segments
are engaged in the exploration and production of oil and gas, the
refining/processing and marketing of motor oil and other refined
products and in quick lube operations, both domestically and abroad.
The oil and gas subsidiary, in addition to its domestic activity, is
actively engaged in several petroleum ventures in the Former Soviet
Union/Newly Independent States (FSU/NIS). The comments submitted in
connection with the appropriations deliberations reflect our
substantial investments in oil/gas production sharing arrangements in
the Caspian Sea region, particularly in the Republic of Azerbaijan and
the Azerbaijani sector of the Caspian Sea offshore Baku.
In particular, we would like to urge the committee, in the context
of the upcoming appropriations deliberations, to thoughtfully consider
any amendments/requests for changes in the Freedom Support Act or
related legislation, particularly as these measures affect Azerbaijan
or United States-Azerbaijani bilateral arrangements/relations to
determine the potential impact of such actions on the republic's
sovereignty, its territorial integrity and ability to govern, the
related implications for settlement of the Nagorno-Karabakh conflict
(consistent with international norms) and the promotion of regional
peace and stability, as well as the impacts of such amendments on
existing and prospective U.S. investments in the region and the effects
on regional energy and infrastructure development to move those
supplies to market.
Pennzoil Company has been involved in energy projects in Azerbaijan
since the early 1990s, first in connection with the Gas Utilization
Project (GUP) and more recently with the signing of production sharing
agreements (PSAs) aimed at developing the Azeri-Chirag-Guneshli (ACG)
structures and the Karabakh prospect. The Caspian region is thought to
contain as much as 200 billion barrels of recoverable reserves, ranking
it comparable to the largest middle east producers. The timely
development of these Caspian energy supplies will concurrently support
the continued independence and economic development of the various
Caspian republics and significantly contribute to world-wide non-OPEC
energy supplies. The economic and infrastructure improvements
coincident with the development of these resources will bring benefits
to the entire region and can be used to further the goals of regional
peace and stability. In fact, in addition to the vast energy potential
of the region, Baku's strategic importance is becoming increasingly
evident as a key transit point in the emerging Eurasian Transit
Corridor (ETC) that will ultimately link central Asia with the west.
From a U.S. foreign policy perspective, the success of these
ventures with American participation will serve multiple objectives,
including the fostering of improved ties to the new republics, the
diversification of (non-OPEC) energy sources, the reduced reliance on
oil imports from the Persian Gulf and the identification of regional
gas supplies as an alternative to Iranian sources.
American energy companies, including Pennzoil, Amoco, Unocal and
Exxon currently comprise some 40 percent of the international AIOC
consortium engaged in the development of the ACG block. This consortium
expects to expend between $8-10 billion (U.S.) over the life of the
project. In addition, American firms are also participating in various
other (multi-billion dollar) exploration/development ventures in
Azerbaijan (e.g., Karabakh, Ashrafi-Dan Ulduzu) and American suppliers
and service companies stand ready to assist these and other development
efforts. Notwithstanding these substantial investments in Caspian oil
development ventures, the restrictions placed on the provision of
direct U.S. bilateral aid to Azerbaijan by Section 907 of the Freedom
Support Act (adopted by Congress in 1992 over the objections of the
Bush Administration and opposed by the Clinton Administration) have
adversely affected U.S. activity in the region. From a strictly
commercial standpoint, having the United States as the only western
entity applying sanctions/restrictions on aid to Azerbaijan has clearly
had a dampening effect on American companies' ability to compete
against other foreign investors, whose host government policies are
more conducive to bilateral relations with Baku. And on a diplomatic
level, the 907 restrictions have adversely affected the U.S.
government's ability to serve as an honest broker to advance the peace
talks between Armenia and Azerbaijan. In addition, the restrictions
have precluded the United States from providing technical and financial
advisory assistance to Azerbaijan, competencies which would facilitate
Baku's ability to transform their economy and enter the international
marketplace. Democracy building assistance has also been restricted by
the 907 provisions.
Beyond the 907 issue, however, Pennzoil and other similarly
situated American companies operating or desiring to operate in
Azerbaijan have also been hamstrung by persistent efforts to complicate
or undermine the peace and investment opportunities by introducing
legislation aimed at redirecting U.S. policy to advantage specific
regional players. Our experience and observations of these misguided
efforts, regardless of their intentions appears only to produce a net
result of driving regional players further apart, making subsequent
efforts at peace even more elusive and difficult. We respectfully
suggest that efforts such as the Porter amendment to last year's
(fiscal year 1997) appropriations bill (which had the laudable
objective of providing humanitarian assistance to needy individuals in
the enclave of Nagorno-Karabakh, but overstepped by attempting to carve
out a special status for the region) and the recently-adopted Pallone
amendment to H.R. 1486 (a non-binding resolution calling for the
Administration to promote a specific Caspian pipeline route running
from Azerbaijan to Turkey via Armenia) are two such examples of
``remedies'' that need to be avoided in order to preserve the viability
of the patient.
Mr. Chairman, Pennzoil remains foresquare behind governmental
efforts (whether legislative or administrative) aimed at promoting
peace and stability in the Caucasus and supporting the independence and
economic prosperity of the various republics contained therein. We urge
the Congress and the Administration to take all available actions to
promote improved ties between the United States and Azerbaijan and
Armenia and to support efforts to promote regional peace and a
sustainable solution to the Nagorno-Karabakh conflict. At the same
time, however, we would urge our government to promote and protect
strategic American investments in the region and to work with the
private sector and qualified NGOs to advance bona fide commercial and
diplomatic objectives and positive regional relationships. We would
further recommend that as a significant first step, Congress repeal the
onerous restrictions imposed by Section 907 of the FSA, a recognized
impediment to our ability to affect positive change in the region in an
unbiased and even-handed manner.
______
Prepared Statement of Father Julio Giulietti, S.J., Director,
Georgetown University's Center for Intercultural Education and
Development [CIED], and Father Bill George, S.J.
Mr. Chairman and Members of the Subcommittee: We are Father Julio
Giulietti, SJ., Director of Georgetown University's Center for
Intercultural Education and Development (CIED), and Father Bill George,
S.J. We appreciate the opportunity to testify before this Subcommittee
on the following topics: (1) The Cooperative Association of States for
Scholarships (CASS); and, (2) The East Central European Scholarship
Program (ECESP).
Thank you and your Subcommittee for your generous support for the
cost-sharing program, the Cooperative Association of States for
Scholarships (CASS). We would also like to thank you for your
encouragement to the East Central European Scholarship Program (ECESP)
which provides scholarships for Poland, Hungary, the Czech Republic and
Slovakia.
We are grateful to the Subcommittee for its support of $13.75
million for Central America and the Caribbean and $2.75 million for
East Central Europe. We request of the Subcommittee that you recommend
the same amount of funding for fiscal year 1998.
(1) cooperative association of states for scholarships (cass)
Under a Cooperative Agreement with USAID, Georgetown University
administers CASS. The University's mission in fulfilling the will of
Congress is to provide peace scholarships to capable, economically
disadvantaged students from Central America and the Caribbean who
attend United States community-based institutions for academic
education and technical training.
CASS has been designed to contribute to the formation of more
effective work force resources and to foster the leadership and
technical skills required to meet social, economic, and democratic
needs in Central America and the Caribbean. CASS works closely with in-
country experts, support network members, United States PVOs, USAID
Missions and USAID Washington to determine which fields of study can
best support strategic objectives and contribute to the economies of
participating countries.
United States community-based institutions then develop or adapt
programs to provide students with the technical skills and experience
that are in demand in the region. Needs analysis and follow-up studies
of alumni are conducted periodically to modify course offerings based
on current and projected economic realities in the region.
``Experience America'' is an essential phase of the program. Its
three major components--academic training, experiential opportunities,
and personal and professional development--reinforce self-reliance,
self-responsibility, and commitment. Living with American families and
studying at community-based institutions, peace scholars develop an
understanding of U.S. culture and values, and our democratic processes.
These students in turn have a positive impact on their host
communities, heightening cultural awareness, geographical knowledge,
and political and personal insights about the Americas. The result is
the formation of lasting social, economic, and cultural links between
the United States and future leaders of Central America and the
Caribbean.
In 1991, 179 CASS participants arrived to begin two-year programs
of study. Eighty-five percent of these students successfully completed
their program and returned to their home countries in 1993. The
uncertain situation in Haiti had a direct impact on our success with
scholars from that nation. CASS' successful completion rate in 1993 for
non-Haitian CASS students is 92 percent.
In 1992, 311 CASS participants arrived in the U.S. to begin two-
year programs of study. Ninety-one percent of these students (284)
successfully completed their program and returned to their home
countries in 1994. This is a 6 percent improvement over the previous
year.
In 1993, 325 CASS participants came to the U.S. for two years of
technical training. Eighty-seven percent of these students (285)
graduated and returned to their home countries in 1995.
In 1994, 305 CASS participants arrived in the U.S. for two-year
training programs. 91.8 percent successfully completed their program of
study and returned home in 1996. It was the most successful of the
seven CASS cycles since 1989.
Today, 511 CASS participants in Cycles 95 and 96 are enrolled at 22
community-based institutions in 15 states. An additional 3 participants
are earning bachelor degrees under a cost-sharing program with
participating colleges in the State of Florida.
In 1997, 323 students will participate in CASS programs. 224
participants will begin two years of study at 14 community-based
institutions in the U.S. In addition, 30 more CASS participants from
Haiti will come to the U.S. for six-month programs in the fields of
health and education administration. Another 18 participants from
Central America and the Dominican Republic already arrived in the U.S.
in January for a special six-month program for strengthening of math
and science teachers. An additional 51 NPSP participants will be
selected as a part of Cycle 97 for a total of 323 CASS and NPSP
participants to be trained for Cycle 97.
In Nicaragua, CASS designed the Nicaragua Peace Scholarship Program
(NPSP). NPSP is an innovative program designed to teach young adults
who, because of social and/or economic circumstances, could not
complete secondary school educations during the past decade of civil
strife in Nicaragua. A small number of veterans from both sides of the
conflict are included in the target population. Training is focused to
equip Nicaraguan youth with technical and democratic leadership skills
so that they may increase their opportunities to be productive in their
communities upon return. Today a total of 96 NPSP participants are in
the U.S. studying English as a Second Language, courses leading to the
GED, and technical courses in public health, X-ray technology, solid
waste management, food science, industrial manufacturing management,
and electronic communication technology. They are placed at four
community-based institutions in four states.
Prior to U.S. studies, a three-month Academic Upgrading program is
conducted in Nicaragua emphasizing not only basic math and Spanish
skills, but personal development, self-esteem enhancement, leadership
practice and practice to participate in a culture of peace rather than
a culture of war. Two hundred twenty-five NPSP graduates returned home
between 1992 and 1996. Fifty Cycle 96 NPSP participants initiated their
18-month technical training in January 1997 and 46 Cycle 95
participants will complete studies and return home in June 1997.
It is noteworthy that in 1996, CASS and NPSP trained 64
participants in programs at Historically Black Colleges and
Universities (HBCUs), namely Harris-Stowe State College in St. Louis,
Kentucky State University in Frankfort, and St. Philip's College in San
Antonio. This is an increase of 25 percent over 1995.
Federal funds for CASS are being supplemented by states and private
sector contributions, increasing the total number of students served.
After an intensive effort in the first two years of CASS to identify a
model for cost-sharing funds to maximize the federal dollars allocated
to the program, we learned that no one policy or plan for state or
regional support of the program will evolve. Each participating CASS
state has its own funding formula for higher education which simply
means no one legislative approach can be applied to all states.
Colleges in our network are effective partners in providing significant
cost-sharing resources for CASS. We require all participating colleges
to contribute 25 percent of the total costs of the program. Colleges
are exceeding this goal. From 1990 through September 1996, we have
received $21.4 million (40 percent) cost-sharing from our colleges in
the form of tuition waivers, indirect cost waivers, and the funding of
other program components. The program has also received over $430,000
of in-kind support from private donors in the countries in which CASS
operates.
This year's follow-up survey of alumni activities solidly
demonstrates the success of the CASS program through sustainable
employment levels, continuance of education in-country and community
service. Data collected over the last three years shows that between 91
percent and 92 percent of all CASS alumni in the 8 participating
Central American and Caribbean countries are employed in their
countries. This figure is in stark contrast to the massive unemployment
in the region. One in ten CASS graduates owns his or her own business.
Of the 225 NPSP alumni, 94 percent are occupied as mid-level
technicians and managers and/or studying in a national economy where 56
percent of the working population are unemployed.
CASS has pioneered training opportunities for economically
disadvantaged disabled persons and is achieving impressive results. In
1990, CASS began a pilot program to offer computer business
applications training to hearing impaired students from Central America
and the Caribbean. Seventy-six percent of the CASS deaf alumni are
employed in their countries. Twenty-six percent of the deaf alumni
continue their studies; 73 percent are involved in community service
activities.
Since 1990, CASS has negotiated 19 credit transfer agreements for
CASS alumni with universities in Central America and the Dominican
Republic. This year, 23 percent of CASS alumni reported they are
currently continuing their studies, most working full-time and studying
concurrently. This is up 10 percent from last year.
Finally, 65 percent of all CASS alumni responded that in addition
to their work and/or studies, they continue to actively participate in
community leadership and service activities. This is up seven percent
(7 percent) from last year.
georgetown cass distance education
The Cooperative Association of States for Scholars (CASS) delivered
an innovative international distance education business program via the
Internet in 1996. Designed in 1995, the results of this creative
application of Internet technologies to education and training has been
a catalyst for providing continuing professional and personal
development opportunities to large numbers of people who because of
their employment, economic, or geographic location in Central America
do not have access to traditional classes. The program is called
``Tecnicas en Soluciones Empresariales'' (TSE).
The TSE program is offered to companies and organizations in
Central America who are employers of CASS graduates. Participants do
not have to leave the workplace to go to a classroom or university;
instead, they access class lectures and group discussions from their
computers at work. In 1996, the TSE course in business solution
techniques targeted mid-level managers and technicians to solve chronic
problems in real time. In 1997, the target was expanded to include
their supervisors. These new work groups, incorporating supervisors,
more effectively implement quality management strategies in the work
place.
Georgetown University administers TSE in Guatemala, Nicaragua, El
Salvador and Panama. In 1996, forty-four companies and 88 students
received 9-month training in Guatemala, Panama, and Nicaragua. In 1997,
TSE will have 150 participants, expanded to El Salvador and has
lengthened the training period to twelve months. The new 12-month TSE
program comprises three modules. Employers have input into the training
and a clearly defined responsibility to work with students to ensure
that training is applicable to their jobs. In addition to theory,
students are required to select topics for study and solution from
among chronic job-related issues that impact their performance as
employees and supervisors as well as the achievement of company goals.
Each project team is responsible for defining and researching the
selected project, recommending the solution and leading it's
implementation.
Instruction is delivered through the Internet, written books and
publications. It is supported by local instruction teams. Students
access class lectures and assignments from the Internet and use
ListServes for group discussions among participants in the four
countries. E-mail is the primary vehicle of communication between TSE
teams and participants.
Administered by Georgetown University and funded by the U.S. Agency
for International Development, CASS is now among the first to combine
training and Internet technologies, having devoted eleven years to the
invention and successful conduct of traditionally-managed technical and
leadership training for thousands of disadvantaged Central American and
Caribbean young adults.
(2) the east central european scholarship program (ecesp)
Founded in response to the rapid political, social and economic
changes in post-communist Visegrad countries, the East Central European
Scholarship Program (ECESP) became the first educational/training
program to be funded and implemented under a 1989 initiative of the
United States Congress to support democratization and privatization in
the Czech Republic, Hungary, Poland and Slovakia.
The goal of the program is to educate a core group of public
administrators and experts in regional/rural development, marketing,
trade, finance, banking and health care administration, who are
dedicated to accelerating the processes of democratization and
privatization in their native countries. Over the past years, these
experts have included: administrators of central institutions (high
ranking civil servants from the Ministry of Finance, Privatization,
Agriculture, Health, Environment, and Labor/Social Services, and from
State Property Agencies); members of provincial and local self
governments (governors, councilmen and councilwomen, as well as mayors
and vice-mayors); administrators of key state and private sector
financial institutions; managers and administrators of non-government
and non-profit institutions, including institutions of higher
education; educators involved in educational reform and planning,
curriculum evaluation, teacher training, minority and disability
education; and faculty from universities, colleges, and professional
schools working to introduce new courses into the curriculum of their
schools. In an effort to meet the ever-changing needs of the four
participating countries, ECESP introduced in 1995 a health care policy
and administration program designed to aid the processes of privatizing
and reforming the health care sector. In 1996, ECESP initiated a short
term training program for the National Bank of Poland with the aim of
building a stronger and more transparent banking industry in Poland.
The program cooperates with the U.S. Federal Reserve and the Office of
the Comptroller of Currency.
ECESP hopes that as a result of its education and training, the
four participating countries will reap the benefits of a more open and
structured policy-making process, an increased number of civic-minded
citizens, a better educated and skilled body of government officials,
and a pattern of cooperation between civil society and government in
solving key social, political and economic problems.
Since its founding in 1990, ECESP has sponsored 543 Czech,
Hungarian, Polish and Slovak participants. An additional 110
participants are scheduled for training in 1997.
On behalf of our President, the Reverend Leo J. O'Donovan, S.J., we
thank you for your support and leadership in the development of these
innovative programs.
participating institutions by state cooperative association of states
for scholarships (cass) including nicaragua peace
Scholarship Program (NPSP)
California: Kings River Community College, Modesto Junior College.
Florida: Florida Community College at Jacksonville; Santa Fe
Community College St. Petersburg; and Junior College.
Iowa: Iowa Western Community College; Kirkwood Community College;
and Scott Community College.
Kansas: Coffeyville Community College and Hesston College.
Kentucky: Kentucky State University (HBCU).\1\
---------------------------------------------------------------------------
\1\ (HBCU) Historically Black College/University.
---------------------------------------------------------------------------
Massachusetts: Berkshire Community College.
Missouri: Harris-Stowe State College (HBCU); \1\ and St. Louis
Community College.
New York: Broome Community College.
Ohio: Hocking Technical College.
Oregon: Mt. Hood Community College.
Pennsylvania: Mount Aloysius College.
South Carolina: University of South Carolina at Sumter.
Texas: Alamo Community College and District with St. Philip's
College (HBCU).\1\
Utah: Utah Valley State College.
Wisconsin: Fox Valley Technical College; Northcentral Technical
College; and University of Wisconsin Center-Marinette County.
Washington: Edmonds Community College.
East Central European Scholarship Program (ECESP)
Kentucky: University of Kentucky and Eastern Kentucky University.
Wisconsin: University of Wisconsin (La Crosse) and University of
Wisconsin (River Falls).
New York: Rensselaer Polytechnic Institute and State University of
New York (Syracuse).
Washington DC: George Washington University and Georgetown
University.
______
Prepared Statement of Claudine Schneider on Behalf of the U.S.
Committee for UNDP
Thank you for the opportunity to submit this testimony. My name is
Claudine Schneider and I am a former Republican member of Congress from
the Second District of Rhode Island, which I represented for ten years,
from 1980-1990. I submit these comments today as a founding member of
the U.S. Committee for UNDP--the United Nations Development Program.
But I also speak as an American citizen who is concerned about the
direction of U.S. development assistance and about U.S. standing in the
international community.
With this testimony, I would like to explain to the Senate
Appropriations Committee's Subcommittee on Foreign Operations why UNDP
is uniquely positioned to serve both the world's poor and American
interests in a way that no other organization or agency can, and how
agreeing to the President's request level of $100 million for UNDP will
not only go to help the world's poor, but will translate into real
returns for the United States in terms of investment and trade. It will
also save money that might otherwise be spent dealing with crises that
can be prevented.
I would like to start by pointing out that while a contribution of
$100 million to UNDP from the United States represents less than 10
percent of UNDP's total budget, that same $100 million has resulted in
purchases of American goods and services by the UNDP equivalent to
twice that amount. In simple financial terms, UNDP represents a very
good investment for the United States.
It is also important to note that UNDP is an independent agency of
the United Nations, which--since its inception in 1966--has always been
headed by an American. Traditionally, the United States has been the
largest of all the donors supporting UNDP. While this has changed
recently, and the United States slipped to seventh place last year, we
still have tremendous influence in UNDP and in the UN. Support for the
$100 million request will help to insure continued American leadership
of UNDP, and will support the critical role UNDP is expected to play in
a reformed United Nations. This testimony will explain how.
First, UNDP's mandate is to support sustainable human development
globally. This means helping countries--especially the poorest
countries--help themselves. UNDP does this by working with countries to
build indigenous capacities, enabling them to achieve important
development goals. These goals include: reducing the scourge of
poverty, creating jobs, regenerating and protecting the environment,
empowering women, instituting the rule of law, establishing systems of
accountable governance, and other democratic practices. Within the UN
system, UNDP is leading the effort to eradicate poverty throughout the
developing world, in particular by channeling 90 percent of its
resources to countries with a per capita income of less than $750 a
year. UNDP's role at the country level emphasizes the design and
implementation of national strategies based upon sustainable economic
growth, working at the country level to address the root causes of
poverty, and making extensive use of other UN agencies and
international and local NGOs to carry out these strategies.
UNDP brings this multi-sectoral approach to a system where the UNDP
representative serves simultaneously as UN Resident Coordinator.
Through the support of UNDP, the UN Resident Coordinator works
tirelessly to bring the various UN funds, programs and specialized
agencies together around the table, making it possible to design a
coordinated response to a country's development needs, while building
on the strengths of these agencies in fields like health, child
survival, food production, food security, and employment generation.
This is consistent with efforts currently underway by the new UN
Secretary-General to rationalize and consolidate the development
operations which the United Nations undertakes at the country level,
thereby avoiding duplication and inefficiency. UNDP can be seen as the
``glue'' which holds the system together. Hence an investment by the
United States in UNDP should be seen not simply as an investment in
UNDP per se, but rather as an investment which can reap benefits in
terms of a more effective and efficient United Nations presence in all
the countries which UNDP serves.
Second, the vast majority of developing countries, including the
countries of the former Soviet Union, have embraced democratic
institutions and free market principles, and UNDP is at the forefront
of the drive to help these countries deal with the transition from a
command to a market economy. UNDP has provided technical assistance to
some 70 developing countries to hold free and fair elections. This has
been followed by UNDP support to establish and strengthen executive,
legislative, judicial, and electoral institutions; in short, ``the
deepening of democracy.'' UNDP gives special attention to establishing
the ``rule of law'', which as we know is a ``sine qua non'' for
increasing foreign direct investment--including U.S. investment--in
those countries.
From the Baltics to Southeast Asia, in countries as diverse as
Latvia and Viet Nam, for example, UNDP is helping to strengthen
democratic institutions and promote democracy, while creating jobs and
employment opportunities. For example, UNDP is strengthening the
National Assembly, the Supreme Court, and the Ministry of Justice in
Viet Nam, rendering them more effective and transparent, while
sustaining the economic reform process. Also, UNDP has been at the
forefront of helping countries to ``reinvent government'' by
streamlining often bloated bureaucracies and introducing modern
management practices, thereby reducing the possibilities for corruption
and facilitating private investment. All these things are vital to U.S.
strategic and economic interests.
Third, UNDP plays an active, coordinating role in countries such as
Guatemala, Cambodia, and Rwanda, countries which are only now emerging
from years--and in some cases decades--of civil strife. While other UN
agencies like the UN Refugee Program and the World Food Program provide
the necessary humanitarian and emergency relief to these countries,
UNDP takes the lead in building viable and sustainable societies and
moving them along the road to self-reliance.
What truly distinguishes UNDP from the other agencies in the UN
system is that UNDP was created to approach development problems from a
broad-based, multi-sectoral, coordinated perspective; hence, UNDP is
not a ``single theme'' agency. It is uniquely placed, through its
worldwide network of 136 offices, to bring greater coherence to the UN
system at the country level. Striking examples of this role can be
found in Central America and the Middle East, where UNDP has
coordinated a broad-based, UN and bilateral effort, moving beyond
peacemaking and humanitarian relief to development which is
economically, financially and environmentally sustainable.
Finally, it is important to recognize that the United States and
UNDP have common objectives on issues such as democratization,
promotion of free market economies, the advancement of ``good
governance'' and of an environmentally sustainable world. Hence, for a
fairly modest investment, the U.S. can find in UNDP a trusted and
valued partner which serves to advance American values and interests
abroad. All of this has recently been confirmed by a GAO report on UNDP
which was released on May 1st of this year, which I commend to the
attention of all the members of the committee. ``In sum,'' reads that
report: ``UNDP is a cost-effective tool in our development arsenal.
Full funding of UNDP by the United States is the best way of stretching
our development dollar to promote U.S. interests.''
______
Prepared Statement of the International Education and Training
Coalition
introduction
The International Education and Training Coalition represents over
50 organizations with interests in areas such as child development,
basic education, literacy, higher education, vocational education and
work force training. The members of the Coalition include non-profit
organizations, commercial organizations, universities, and associations
with thousands of members throughout the United States.
The organizations of the Coalition share a common mission: to
enhance and strengthen human capacity within the developing world the
fundamental building block of United States and global prosperity and
peace. The Coalition believes that the United States should remain a
leader in international education and training. Furthermore, the
Coalition believes that these activities should command a higher
profile and more resources within the U.S. bilateral development agenda
than in recent years.
Human Capacity Development is a continuum of life-long learning.
Education provides the foundation in literacy, numeracy, and problem
solving skills. Education also transmits culture and establishes a
sense of civic responsibility, equipping people to play stronger roles
within their communities. Training provides specific skills needed for
an individual or institution to do a job and respond to constantly
changing economic environments.
It is a well documented fact that an educated and trained populace
is an essential prerequisite for sustained economic growth, political
stability and improved quality of life. Strengthening human capacity
through education and training enhances the achievement of every goal
of U.S. development assistance. Increased human capacity creates new
export markets, reduces poverty, promotes democratic government,
protects the environment, reduces population growth rates, and improves
child and family health.
The ultimate purpose of human capacity development is to establish
conditions which permit individual well being and growth. Knowledge and
skills empower people to participate directly in decisions which affect
their lives and improve their prospects.
While education influences all sectors of development, it also
represents a separate, unique sector that requires specialized programs
and skilled personnel. Understanding education as simply supportive of
other development objectives risks devaluing its importance as an
independent objective. The United States has a unique educational
system that reflects our democratic values, and U.S. educational
institutions play a crucial role in development assistance. Educational
institutions of nations throughout the world seek to work with their
U.S. counterparts to gain from our technical expertise and copy our
successful education model.
The U.S. Agency for International Development (AID) is in the
process of consulting with Congress and the public, as required by the
Government Performance and Results Act, about a strategic plan for the
agency. AID is considering adding ``building human capacity through
education and training'' as one of the top strategic goals of
development assistance. The Coalition believes the current position of
only basic education as a sub-objective under the ``economic growth''
goal has contributed to the inadequate attention and resources
dedicated to education and training. The Coalition supports the
addition of an international education and training goal as a way to
help ensure the continuation of U.S. leadership and capacity in this
area that is vital to successful development.
sustainable development: evidence of success
Despite progress over the last four decades in the provision of
education around the world, immense need persists. The average literacy
level in the least developed countries is a mere 46.5 per cent. The
numbers are declining not improving: enrollments of children in grades
1-3 in these countries is only 34 per cent. Meanwhile, 80 million new
people in need of education are added to the globe each year, 95 per
cent of them in the developing world.
Studies on factors contributing to economic growth have
consistently concluded that education and training are essential both
to create and sustain economic growth. A recent United Nations
Development Program (UNDP) report states that ``economic growth is not
sustainable without human development,'' and that ``a determined effort
to expand human capabilities--through improved education, health, and
nutrition--can help transform the prospects for economic growth''
especially in the poorest nations.
That same UNDP report concluded that ``high employment economies
have generally invested heavily in the development of human
capabilities--particularly education, health and skills. They have also
constantly upgraded technical skills to enable workers to adapt to
rapidly changing international conditions.'' In Ireland for example,
education has been widely credited as a major factor in its dramatic
economic growth over the past several decades. In 1961, when the Irish
government began an aggressive education reform effort, its Gross
Domestic Product (GDP) was less than 60 per cent of the European Union
average; in 1997, it has reached 100.7 per cent. At the same time, high
school enrollment has risen from 20 per cent to 80 per cent and college
and university attendance has risen from 7 per cent to 46 per cent.
The often cited ``East Asian economic miracle'' was also fueled by
significant investments in education by national governments. A World
Bank Report concluded that one of the critical factors of the economic
growth in the countries of this region was human resource development
and that growth in this region resulted from strong public policies
that ``were augmented with high household investments in education.''
U.S. assistance to countries such as Thailand and Korea, particularly
in the areas of education and training, aided the successful
transformation of those nations into valuable trading partners of the
United States. Congress has repeatedly emphasized the need for U.S.
foreign aid programs to be structured to create self-sufficiency in the
recipient countries so that they will eventually be able to
``graduate'' from international assistance. Korea is an excellent
example of the crucial role education plays in creating the conditions
necessary for self-sufficiency. From the 1960's successive Korean
governments invested heavily in education, and by 1985 adult literacy
had reached almost 92 per cent. As a result of this tremendous
investment in the education of its people, in just one generation Korea
left the ranks of countries qualifying for World Bank loans.
Thailand is another country where investments in education and
training helped produce a vital and successful economy. A study of the
role played by international assistance in Thailand's economic success
concluded that ``when one asks Thais in business, government, or
academia what they think has been the most important contribution of
the U.S. aid program to the country's development, the answer is
virtually always the same: training.''
As the experiences of Korea and Thailand illustrate, nations that
establish strong educational systems develop the human capital
necessary both to improve domestic conditions and collaborate with
other nations in solving global development problems. A comprehensive
educational system that includes primary, secondary, and higher
education creates the conditions necessary for developing indigenous
experts in areas from economics to agriculture experts who increase the
self-sufficiency of their own nations and are able to cooperate with
the United States to solve global problems such as environmental
degradation, emerging diseases, and food security.
Education and training are also essential components of equitable
development. Investments in human capital, particularly in education,
contribute to the equitable distribution of wealth and broad
participation in the governance of a country by providing opportunity
to individuals otherwise barred from participation by the shackles of
illiteracy and innumeracy. Focusing assistance on education and
training programs has proven an effective tool for improving the lives
of the world's poorest individuals. A recent study in Malawi of rates
of return on investment in education showed that increasing public
spending on primary education had ``a tremendous impact on alleviating
poverty as well as on decreasing inequality.''
U.S. investments in education and training are highly cost
effective, because, unlike many other development investments,
recipient countries regularly match education funds 10 to 1 by
providing funding for schools and paying teacher salaries. Furthermore,
the long-term return on investments in basic education average over 20
per cent in the developing world double the return from capital
investment projects. New theories on economic growth developed in the
1990's determined that, because educated people use capital more
effectively and spread those benefits more readily to coworkers,
raising the level of education in a society causes a rise in the
efficiency of all factors of production.
The returns on investments in education are especially obvious in
the case of girls' and women's education. The female literacy rate for
developing countries is three-fourths that of males. Evidence has shown
that even minor increases in the level of education of girls and women
have wide ranging positive effects on areas from economic growth to
child survival in addition to improving the status and incomes of
women. A study conducted in 13 African countries shows that a 10 per
cent increase in female literacy leads to a 10 per cent decline in
child mortality. Another study showed that four years of schooling
boosts farmers' annual productivity by an average of nine per cent.
u.s. comparative advantage
The United States currently enjoys a comparative advantage in
education. Our education system with its emphasis on interactive
learning, democratic principles, and decentralized management is
respected as a model throughout the developing world. U.S. institutions
of higher education are considered premier sources for research and
technical expertise in a broad range of development areas. U.S.
expertise in training has helped us to build partnerships with emerging
leaders in developing and transitional countries. United States
leadership in international education and training promotes our foreign
policy goals and brings economic benefits to communities throughout the
United States. Education is our fifth largest earner of foreign
exchange in the service sector, and the Commerce Department estimates
that foreign students spend nearly $8 billion dollars a year in the
United States producing over 150,000 jobs.
The U.S. is a leader in innovative approaches to addressing
development challenges in the fields of literacy and basic education
for children. Areas of U.S. expertise include improving classroom level
quality; curriculum development; alleviating resource inequities,
especially for girls and the poor; mobilization of community and parent
involvement in schools; decentralization of decision-making and
accountability; and application of cost-effective information
technology. In Guatemala where the government estimated in 1990 that
fewer than one quarter of its female population had completed grade 3,
an innovative AID-funded project has increased girls' enrollment in
grades 3 to 6 to an average of 37 per cent per class.
U.S. institutions of higher education work with developing
countries to address long-term problems related to agriculture, health,
population, and the environment. They also build innovative
partnerships among government, academic and business institutions. A
community college in Phoenix utilized a sister city relationship with
Chengdu, China and partnered with Motorola to provide training on
modern business practices to managers of state-owned enterprises. This
has helped generate a number of potentially lucrative investment
opportunities for Phoenix businesses in Asia
Participant training programs funded through AID have helped to
democratize societies and open up new markets to U.S. goods. For
example a Romanian who learned about community organizing through a
training program is engaged in a grass roots effort to reform election
laws in his country. After a Lithuanian newspaper editor came to the
U.S. on a training program, he has substantially increased reporting
about the U.S. in his paper and purchased over $700,000 in printing
equipment from a U.S. company.
u.s. leadership and capacity
Despite the tremendous benefits that accrue from America's
leadership in education, U.S. leadership and technical capacity has
been eroding. AID's resources for international education and training
have been dramatically reduced by over 30 per cent since the early
1990's. Although the Coalition recognizes that overall foreign aid
spending was cut back significantly during this same period of time,
the cuts sustained by education and training programs have been
disproportionate to cuts sustained in other areas. In addition to
program reductions, technical education staff within AID have also been
laid off disproportionately. Over the past several years, AID has not
signaled the critical importance of human capacity development to its
overseas missions. As a result, few overseas missions embrace education
and training as priority objectives and the United States' ability to
maintain its role providing critical and unique leadership in education
and skills training is in jeopardy.
The United States has pledged its support to the OECD's Development
Assistance Committee's goals on education for the 21st century. They
call for achieving universal primary education in all countries by 2015
and the elimination of gender disparity in primary and secondary
education in all countries by 2005. Other donors, including Japan, have
made education a centerpiece of their development assistance. Without
U.S. leadership in this area, however, these ambitious goals will not
be met. Given President Clinton's strong commitment to education as a
policy priority, it is appropriate that the U.S. should maintain its
leadership position in articulating the role of education for global
development.
As the examples here illustrate, building human capacity through
education and training is vital to U.S. development and broader foreign
policy objectives. Efforts to create new export markets, reduce
poverty, promote democratic government, protect the environment, reduce
population growth rates, and improve child and family health, are all
enhanced by raising the educational level of citizens in developing
societies. Moreover, investments in education and training,
particularly girls' education, are extremely cost-effective and produce
enormous benefits for developing countries and the United States. In
the past, Congress has encouraged AID to maintain at least a modest
level of support for education and training programs. There has never
been a more critical time for Congress to emphasize international
education and training programs, and their continuing role as a top
priority of U.S. development assistance.
The members of the International Education and Training Coalition
thank you for your thoughtful consideration of these concerns. We ask
the committee to encourage AID to increase funding in these areas, and
to continue to call on AID to identify education and training as a
priority in U.S. development assistance.
______
Statement of Alexander F. Watson, Vice President and Executive
Director, Latin American and Caribbean Programs of the Nature
Conservancy
The Nature Conservancy appreciates this opportunity to submit
testimony for the record concerning our views on foreign assistance
appropriations for fiscal year 1998. Our principal request is that the
Subcommittee strongly support continued funding for biological
diversity protection programs at the U.S. Agency for International
Development.
summary
Madeleine Albright, in some of her first statements as Secretary of
State, strongly endorsed former Secretary Christopher's environmental
initiative to ``integrate environmental issues into the mainstream of
our foreign policy.'' In testimony before the House Foreign Operations
Subcommittee on February 12, she called for funding AID's environmental
efforts at $290 million in fiscal year 1998 and also for funding of the
Global Environment Fund (GEF) at the full $100 million pledge level.
The Nature Conservancy commends this environmental activism and
believes that a U.S. leadership role remains critical in defending the
international environment in general and biodiversity in particular.
The Nature Conservancy is one of the world's foremost conservation
organizations. Supported by our 900,000 individual U.S. members and
1,300 corporate sponsors, we manage the world's largest system of
privately-held nature preserves. Less well known is the fact that the
Conservancy is also working in 24 other countries in Latin America, the
Caribbean, and the Asia and Pacific region. Since the beginning of our
international program in 1981, we have worked with local partners in
these countries to protect more than 74 million acres of biologically
significant land in the Western Hemisphere alone.
AID has been a critical partner in this effort through its funding
of the Parks in Peril (PIP) program, the Biodiversity Support Program
and its Biodiversity Conservation Network. These programs receive a
small share of the foreign aid budget, but deliver cost-effective,
innovative solutions and measurable results through partnerships with
the private sector. They also leverage private resources and funding
from the multilateral development banks.
For example, PiP--a program that has been extremely effective in
addressing the decline of biodiversity in this hemisphere while
promoting private enterprise and democracy--has received $23 million
from AID since its beginnings in 1989. TNC has matched this
contribution with $5 million. In addition, local in-country partners
and governments have contributed more than $10. 1 million.
Biological diversity does not respect national boundaries. One-half
of the bird species in the United States rely on winter migration to
Central America, the Caribbean, or South America. If they decline
there, typically because of loss of habitat, then we feel it here.
Species extinction and loss of biological diversity in developing
countries has rapidly accelerated in recent years. Each year an area of
tropical habitat the size of New York State is seriously degraded or
destroyed. Scientists estimate that, at current rates of deforestation,
tropical forests are likely to shrink to less than 10 percent of their
original size over the next fifty years. According to noted biologist
and author E. O. Wilson, present and future generations will lose one-
fifth of all living species by the year 2020, most of them in the
tropics.
It is in our national interest to fight against this sharp decline.
This ought to be a key foreign policy goal for the United States. TNC,
AID, and our allies at home and abroad are achieving real progress by
cooperating with private organizations in other countries and with
their governments. Later, in the body of this testimony, we give
chapter and verse to document the progress being achieved.
For now, we simply wish to emphasize that the leverage and
credibility provided by U.S. Government involvement at a policy level,
and the financial support of AID, are crucial to TNC's prospects for
continued success. We recognize that the Subcommittee is operating
under extremely tight budgetary constraints, as has become inevitable
in recent years. However, AID's biodiversity programs are a very small
portion of the foreign aid budget. They are doing big things in terms
of leveraging private funds and support, promoting democracy in the
developing world, and protecting globally critical areas which, once
lost, can never be retrieved. The Nature Conservancy urges the
Subcommittee to support the Parks in Peril Program, the Biodiversity
Support Program and the Biodiversity Conservation Network, as well as
the rest of AID's biodiversity programs in the fiscal year 1998
appropriations process. We also strongly endorse U.S. Government
support for the Global Environment Facility (GEF), which includes
biodiversity among its four planet-wide concerns. Thank you for the
opportunity to share our views with you.
the importance of international biodiversity protection
People in developing countries rely on natural resources for a
multitude of benefits: off-shore reefs support healthy fish populations
for fisheries; parks and natural areas attract tourism from around the
world; and forest cover keeps soil from eroding into waterways that
provide drinking water, irrigation, and transportation to millions of
people. Indigenous communities struggling to maintain their traditional
cultures rely on tropical rain forests for hunting and gathering
grounds, and use local plants for a wide range of medicinal purposes.
The world as a whole benefits from the biodiversity found in
developing countries. Mounting evidence shows that tropical forests are
essential for the regulation of climate and atmosphere. Biodiversity is
critical for the pharmaceutical industry, agriculture and a wide
variety of other industrial processes. According to the World Resources
Institute, 4.5 percent of the U.S. Gross Domestic Product is due to
economic benefits from wild species. Genetic diversity used in plant
breeding accounted for about one-half of all the gains in agricultural
yields in the U.S. between 1930 and 1980. All major U.S. crops now
depend on infusions of new genes from other countries. When U.S. corn
was struck by blight some years ago, scientists responded by breeding
for resistance using ``heritage'' strains from the wild. Our
agriculture needs to have continued access to renewal from natural
biodiversity, for direct immediate benefits and as a hedge against
disaster.
One quarter to one third of all the prescriptions drugs in the U.S.
contain compounds derived from wild species. According to research
published in the April 1997 edition of ``Scientific American'', 120
prescription drugs currently come from about 95 species of plants; of
these, 39 grow in tropical forests. The plant species that have been
used by indigenous peoples to treat their own maladies are vital in the
development of new pharmaceutical products. Botanists believe that more
than 35,000 plant species (mostly drawn from tropical forests) provide
traditional medicines to local peoples, hence are good candidates for
future pharmaceutical research. There is no way to know what new cures
we may be losing with each species that goes extinct or what the health
care costs can be of remedies never developed.
Moreover, the destruction of natural ecosystems in the developing
world is now widely viewed as a major threat to social and economic
stability. The degradation of resources and desertification leads to
poverty, hunger, disease and civil unrest. Massive shifts in population
density may occur when affected peoples migrate from areas that once
were productive but now cannot support them. The linkages between
natural resource depletion and national security are just now beginning
to be understood.
usaid's commitment to biodiversity protection
The Foreign Assistance Act states that the protection of tropical
forests and biological diversity is a goal of U.S. foreign policy. AID
is active in implementing this goal, and its biodiversity conservation
program has expanded in recent years in response to growing concerns
about the environmental and human consequences of the degradation and
loss of natural resources in developing countries.
AID has launched biodiversity conservation activities in more than
60 countries. These programs focus on developing sustainable economic
uses of biological resources; building local capacity for the
management of biologically diverse areas, including parks, protected
areas and buffer zones; supporting innovative programs for non-
governmental organizations in conservation and resource use;
encouraging participation of stakeholders, including women, indigenous
peoples, and local communities at every stage of decision making; and
facilitating the setting of conservation priorities at the local,
national and regional level.
TNC strongly believes that the U.S. Government should continue to
devote significant resources to the protection of biodiversity.
Administrator Brian Atwood has indicated that AID will look to
partnerships with NGO's in order to achieve AID's goals in the most
cost-effective manner possible. Some of AID's most successful and
innovative biodiversity programs, conducted in partnership with NGO's--
Parks in Peril, the Biodiversity Support Program and the Biodiversity
Conservation Network--are highlighted below.
parks in peril
During recent decades, many nations of Latin America and the
Caribbean have taken important steps to conserve their natural
resources by establishing protected area systems to safeguard critical
watersheds, coastal and marine ecosystems, wildlife, scenic
attractions, and other areas of significance. Unfortunately, these
nations often had not budgeted sufficient funds to hire personnel to
manage these areas and truly protect them from threats. Although their
boundaries had been legally decreed, many of these areas had not been
surveyed and remained unmanaged and unprotected--in effect, they were
``paper parks.''
To address this serious problem, in 1990 AID began supporting one
of the most successful environmental programs in the history of the
Agency--Parks in Peril. PiP is a public-private partnership that seeks
to protect the most threatened national parks and reserves in this
hemisphere. Parks in Peril was designed to secure minimum critical
management for a series of sites, transforming them from mere ``paper
parks'' to functional protected areas.
Parks in Peril is administered for the Agency by The Nature
Conservancy and its Latin American and Caribbean partners. The program
provides short-term grants to local non-governmental organizations so
that they may assist local government organizations in the
establishment of a permanent management presence in each protected
area. Parks in Peril is based on building a collaborative partnership
among national, international, public and private organizations. The
program has been widely supported by other governmental and non-
governmental constituencies in the U.S., Latin America, and the
Caribbean and many consider it to be one of the most important
collective actions taken to assure the preservation of biological
diversity and the conservation of tropical forests in our hemisphere.
Parks in Peril is designed to achieve four important objectives:
(1) To build on-site protection and management infrastructure for
the hemisphere's most imperiled ecosystems of outstanding ecological
significance.
Since merely declaring an area ``protected'' does not guarantee its
protection, the PiP program takes as its starting point areas that
already have some legal basis for protection and builds on that
foundation to make protection real and lasting. Parks in Peril attempts
to strengthen the local institutional capacity (both governmental and
non-governmental) to build infrastructure and implement on-the-ground
protection and management of these sites.
(2) To integrate these protected areas with the human societies
inhabiting their surrounding regions.
To succeed, any protected area must become an integral part of the
local economy and culture. Protected areas must be valued by people.
This will only happen when they receive tangible economic benefits from
them. PiP provides support for compatible resource-use opportunities by
promoting local and indigenous communities' direct participation in
resource management decisions and activities on the sites and in
adjacent buffer zones.
(3) To create long-term funding and policy mechanisms to sustain
the local management of the Parks in Peril sites.
The PiP approach is fundamentally different from one-time grants
for park protection, because it seeks to develop continuous funding
mechanisms to ensure the viability of parks over the long term. The
program also assists local NGO's to develop diversified local,
national, and international funding mechanisms such as debt-for-nature
swaps and promote policy revisions that support protected areas. The
AID commitment to PiP has already proven to be catalytic in promoting
other hi-and multi-lateral investments in the conservation of these
sites.
(4) To use the Parks in Peril site-based activities to influence
conservation in other sites in the region's most imperiled ecosystems.
The PiP program seeks to leverage the knowledge gained over the
past six years through a series of publications, case studies and
learning products, and the selection of a limited number of PiP sites
as ``learning centers''. These learning centers will serve both as
training grounds for those interested in successful park-based
conservation, as well as testing grounds for new techniques and
approaches.
A major tenet of the PiP program is that each park will ultimately
graduate (or be ``consolidated'', to use the technical term) from
receiving direct assistance out of the centralized AID program. In
order to achieve ``consolidation,'' a site must meet specific criteria
in the following categories: the establishment of minimum protection
activities to deter immediate threats; long-term management planning;
long-term financing; and the development of a supportive local
constituency. Therefore, while AID will not divest itself from PiP
projects without ensuring they are ready to be self-sufficient, the
goal from the outset is to eliminate the need for such an assistance
program. To date, 10 sites, totaling 7.919 million acres, have been
successfully ``consolidated'' from the program. These parks are in
Belize, Bolivia, Colombia, Costa Rica, Dominica, the Dominican
Republic, Panama, Paraguay, and Peru. Initial approval has been given
by AID to shift focus toward new sites, totaling more than 7 million
acres; these are located in Brazil, the Dominican Republic, Honduras,
Jamaica, Mexico, and Paraguay. Other sites are also being considered.
The Parks in Peril Program also has benefits that extend beyond
biodiversity conservation. Latin America has historically lacked strong
intermediary institutions by which ordinary citizens could, between
elections, communicate their wishes and concerns to their governments.
This lack was one reason for the repeated fragility of democracy in the
region. The assistance that AID and TNC give to NGO's in the region
helps them gain a stronger voice and empowers them to play an increased
role in influencing their national policies. Thousands of people are
becoming engaged in influencing the environmental issues that affect
their daily lives, such as clean water and healthy forests. The
development of such organized, non-partisan representation is making a
significant contribution to consolidating democracy in these countries.
Since PiP's inception, AID has obligated a total of $23 million on
the program. While this is a major commitment of dollars, on an annual
basis it makes up only about .04 percent of the entire foreign aid
budget. This relatively small investment by the U.S. government has
stimulated a total match of over $15 million by private organizations
(in the U.S., Latin America, and the Caribbean) and host-country
governments.
The Senate, in its fiscal year 1997 report on the Foreign
Operations appropriations bill, noted its ``strong support'' for Parks
in Peril; similar language was adopted also by the House.
The Parks in Peril Program has become the largest in-situ
biodiversity conservation project in the tropical world. The portion of
PiP that has received central AID support has recently been working in
28 protected areas, comprising 19 million acres in 12 countries. Over
150 headquarters buildings, visitor centers and other protection
facilities have been constructed or renovated and hundreds of rangers
and other staff have been hired and trained. Often, through
arrangements between the local government and the local NGO that is the
PiP partner organization, these park employees are private--hired,
trained, and paid by private organizations, hence bringing to their
duties the flexibility and accountability of private control.
PiP has worked to protect cloud forests, coral reefs, tropical
forests, and savannas. We note parenthetically that there are other PiP
sites that do not receive support from the central AID budget; that
portion of PiP works at more than 30 additional sites, helping to
protect more than 50 million additional acres.
PiP funding has supported efforts to demarcate critical boundaries;
recruit, train and equip rangers and community extensionists; build
protection infrastructure and provide transportation and communication
technology; promote compatible natural-resource use in local
communities; carry out baseline studies and biodiversity monitoring;
and establish sources of long-term financing for reserve operations. At
all PiP sites, local peoples have been involved in management
decisions, fostering support and pride for the preservation of their
natural heritage. In short, this program has increasingly become a
model towards which the rest of the world is looking.
A few recent examples of the many PiP success stories include:
Parks in Peril support laid the groundwork that enabled TNC's
partner organization Fundacion Amigos de la Naturaleza (FAN) to add
333,459 acres of critical habitat to the Noel Kempff Mercado National
Park in Bolivia, the first crucial step in a 1.8 million-acre expansion
that will nearly double the park's original 2.3 million acre size.
Institutional strengthening provided through Parks in Peril was a key
factor in ensuring that FAN had the capability to negotiate this
significant enlargement of the park. The Government of Bolivia has
awarded FAN a 10-year contract to manage the Noel Kempff park. The
Nature Conservancy also worked closely with FAN and Bolivian
authorities to achieve a greenhouse gas mitigation pilot project, by
which an American electric utility, American Electric Power (AEP), has
signed a long-term contract that provides Noel Kempff park with $7
million over the course of 30 years. Having attained its original PiP
goals, Noel Kempff has been consolidated.
Through the efforts of PiP's Paraguay partner, the Fundacion Moises
Bertoni, thousands of additional acres have been added to the Mbaracayu
Reserve in that country. Mbaracayu is one of the last remaining large
areas in the Americas of humid subtropical Atlantic forest. It shelters
thousands of endemic species that evolved to survive conditions that
can range from extreme heat to below freezing; hence, the genetic
material in Mbaracayu (particularly the flora) is of exceptional
interest and potential value. Once threatened with imminent
destruction, Mbaracayu is now a contiguous area covering nearly 160,000
acres. Over the entire course of PIP/AID involvement with Mbaracayu,
the park received $1.1 million from central AID/PIP funding. Building
on this base, the Moises Bertoni Foundation has raised over $7 million
of additional funds from groups including TNC itself, the MacArthur
Foundation, the European Union, the Netherlands, Japan, the United
Kingdom, and the Inter-American Development Bank (IDB). We plan to keep
a continued friendly eye on the Mbaracayu park, but it has met the
goals established under Parks in Peril and has been consolidated.
In Belize, the Rio Bravo Conservation and Management Area has
created necessary on-site infrastructure and trained park personnel.
The local PiP partner, Programme For Belize (PFB), enjoys an
exceptional level of public and private support. The park, totaling
over 228,000 acres, contains hundreds of bird species, flourishing
tropical hardwood forests, and the best jaguar habitat in Central
America. It is a private land trust held by PFB under an agreement with
the Government of Belize. The land was in danger of clear-cutting,
before it was acquired in the late 1980's with the help of grants from
TNC, the Coca Cola Company, the Audubon Society, and AID. Today, eco-
tourism is growing. Long-term planning has been completed and long-term
financial support (including a greenhouse gas mitigation project) has
been lined up. As a result, Rio Bravo also has been consolidated.
As we look ahead to the future of Parks in Peril, we are pleased
that success--leading to the consolidation of ten (10) sites covering
nearly eight (8) million acres--is opening the way for expansion of PiP
to new sites. We deeply appreciate the AID support which helps make
activities of this nature possible. Among the proposed new sites are
the Guaraquecaba park (Brazil, 774,000 acres), the Blue and Crow
Mountains (Jamaica, 196,000 acres), the Chaco (Paraguay, 1.926 million
acres), and the Pantanal in Brazil (the world's largest continuous
fresh-water wetland). These are typically places where TNC has already
begun work, and the initial steps toward making them functional
protected areas are already being taken. In the case of the Pantanal,
for example, TNC used $2 million of its own funds to acquire two large
ranches on the boundaries of the existing 338,000 acre park and has
donated them to a respected Brazilian environmental NGO, Ecotropica.
The former ranch land contains the only dry forest area within the
Pantanal, hence is expected to provide the locations for future park
infrastructure and eco-tourism. We are looking forward very much to
working with Ecotropica and IBAMA (the Brazilian park agency) to secure
the future of the Pantanal.
the biodiversity support program
In 1988, in an effort to respond to the global crisis of
Biodiversity loss, AID helped develop the Biodiversity Support Program
(BSP), a consortium of the World Wildlife Fund, The Nature Conservancy,
and the World Resources Institute. To date, the Biodiversity Support
Program has successfully facilitated Biodiversity conservation in
developing countries by supporting innovative, on-the-ground projects
that integrate conservation with social and economic development,
research and analysis of conservation and development techniques, and
information exchange and outreach.
The goal of the Biodiversity Support Program is improved
conservation of Biodiversity through integration of conservation and
development. In pursuit of this goal, the Biodiversity Support Program
works in AID-assisted countries in close collaboration with the local
AID country Missions and with central support from AID's Global (and
other) Bureaus, to facilitate conservation activities, as well as to
strengthen the capacities of individuals, local communities, non-
governmental organizations, governmental institutions and AID
assistance programs to conserve biological diversity.
Over the last seven years, AID has invested $42.9 million in the
Biodiversity Support Program supporting, assisting some 240 projects in
59 countries. Following are several examples of Biodiversity Support
Program projects:
--BSP has supported some 75 local NGO's and peoples' organizations in
six countries of Asia and Latin America to secure indigenous
peoples' rights to natural resources. Local NGO partners in
Asia have successfully used community-based maps (supported by
BSP) to convince national policy makers to respect traditional
homelands when making logging and mining concessions. A global
survey of more than 60 community-based mapping projects has
been produced.
--To better direct conservation investments in Latin America and the
Caribbean, the Biodiversity Support Program developed and
applied a regional Biodiversity priority setting exercise. The
resulting document ``A Regional Analysis of Geographic
Priorities for Biodiversity Conservation in Latin America and
the Caribbean'' is helping AID, governments in Latin America
and the Caribbean, and NGO's set priorities for conservation
action. BSP's consortium partners have adopted the methods from
this terrestrial exercise to their own planning and have
participated in companion exercises to determine freshwater and
coastal/marine priorities.
--In preparation for the Bolivia Summit on Sustainable development,
BSP convened biodiversity experts and key stakeholders from
throughout the Americas to form the Inter-American Commission
on Biodiversity and Sustainable Development. The Commission
proposed five hemispheric initiatives, and their final report
was adopted as the official technical paper on biodiversity. In
Santa Cruz, Bolivia, the Heads of State incorporated four of
the Commission's initiatives into the Summit's Action Plan.
--In Asia and the Pacific, BSP's projects spread the use of sound
knowledge and technologies to support a scientific basis for
conservation decision-making and to legitimize the role of
local communities in Biodiversity conservation.
--BSP's Conservation Initiatives Grants Program in the Ukraine is
helping scientists and NGO activists in that country bring
Biodiversity issues to the forefront. Over the next year,
grants of up to $5,000 will support applied conservation
initiatives in existing and potential protected areas. The
Ukrainian advisory panel formed to help select the grantees
represents a range of stakeholders with divergent views on
conservation. Through the process facilitated by SP, Ukrainians
are working together in an open and democratic process toward
common goals.
--In Mexico, the Biodiversity Support Program helped establish a
community forest reserve network in indigenous Tarahumara and
Tepehuan communities, protecting over 75,000 hectares of pine-
oak forests in the globally important Sierra Madre Occidental
mountains of Chihuahua. This work led to Mexican Federal
recognition of a 17,000 hectare reserve, with other reserves
planned. Last year, a survey to locate high-biodiversity, old-
growth forest remnants in the Sierra Madre identified the
15,000 hectare ``Carricito del Huichol'' as one of the last
remaining examples. The Mexican NGO ``CIPA-Mex'' is leading a
fight for its protection and, with the help of the Mexican
environment ministry, recently thwarted yet another attempt to
illegally log the area. Studies leading to declaration of
formal protected area status are under way.
--In Indonesia, BSP's KEMALA program encourages local Indonesian
NGO's and people's organizations to forge alliances and
undertake such activities as joint management of protected
areas, winning recognition of traditional forest and marine
management regimes, and establishing community-based businesses
whose viability depends on conserving local biodiversity. Also
in Indonesia, BSP assisted AID in establishing the Indonesia
Biodiversity Foundation (KEHATI), which administers an
endowment of $16.5 million to support conservation efforts by a
broad range of Indonesian institutions.
--In Papua New Guinea, BSP is currently working with The Nature
Conservancy to support background analysis and technical
studies necessary for development of a future Conservation
Trust Fund for that country.
--In India, BSP catalyzed the Biodiversity Conservation
Prioritization Project, which to an unprecedented degree is
bringing together multiple Indian stakeholders to develop
participatory methods for establishing conservation priorities.
This two-year effort will produce a set of Indian plans for
priority conservation strategies, sites, and species.
--In Africa, BSP assessed the training needs of more than 200
protected area managers working in 15 countries, established a
cross-regional network of protected area authorities, and
fostered unprecedented levels of conservation, collaboration,
and communication among the conservation NGO's working in
Africa.
biodiversity conservation network
In the early 1990's, staff at the Biodiversity Support Program and
their AID colleagues noted that if products from a biologically rich
area could be recognized for their economic value, then the community
living in that area would likely conserve Biodiversity in order to
secure some of those economic benefits. This observation provided the
incentive to evaluate enterprise-based approaches towards conserving
Biodiversity in greater depth. As a result, in late 1992, the United
States-Asia Environmental Partnership, a program led by AID, created
the Biodiversity Conservation Network, a $20 million, 6.5-year
environmental conservation program. Specifically, the Biodiversity
Conservation Network was established to measure the effectiveness of
enterprise-oriented approaches to conservation and to support
conservation efforts at specific sites throughout Asia and the Pacific
region.
As part of the Biodiversity Support Program, the Biodiversity
Conservation Network maintains a close partnership with The Nature
Conservancy. Currently, TNC is working on the following two enterprise-
oriented conservation projects:
--In Lore Lindu National Park, located in Central Sulawesi, we are
working with the Biodiversity Conservation Network and the
government of Indonesia (on both a local and national level) to
examine the feasibility and potential conservation impact of
two wildlife enterprises and a nature-based tourism enterprise.
--In the Arnavon Islands, located in the Solomon Islands, we are
working with the Biodiversity Conservation Network, local
community groups and the provincial and national government to
demonstrate the potential economic and ecological benefits of a
community marine conservation area. Local stakeholder
communities have obtained legal designation for the area,
developed a management plan, established a sustainable deep-
water fishing enterprise, and formed a group to advise
neighboring communities on starting similar projects. The
communities' regulations regarding the hunting of endangered
sea turtles are pending adoption at the national level.
We also take this occasion to note with approval the essential role
of the Global Environment Facility (GEF). A key lesson from many years
of conservation activism, and especially from protection of
biodiversity, is that the environment is ultimately a global issue. The
GEF is an essential financial mechanism, concentrating on projects and
programs in developing countries to protect the global environment and
promote sustainable economic growth. The GEF thus far has committed
$1.2 billion for 220 projects in 85 countries. The GEF can be more than
a short-term grant and loan disbursing agency. It is potentially a
strategic mechanism to assist countries to develop innovative and
effective means to deal with environmental threats, especially as it
develops new approaches to involving a broader array of stakeholders
through such efforts as its mid-size projects initiative. We hope that
the Subcommittee is able to fund GEF at the full $100 million pledge
level--a level proportionate to the grave threats that face the global
environment.
in conclusion
The Nature Conservancy urges the Subcommittee to support the Parks
in Peril Program, the Biodiversity Support Program and its Biodiversity
Conservation Network, the Global Environment Facility (GEF), as well as
the rest of AID's Biodiversity programs in the fiscal year 1998
appropriations process. Thank you for the opportunity to share our
views with you.
______
Prepared Statement of Fred Haynes, President, American-Turkish Council
On behalf of the American-Turkish Council, I am pleased to present
our views on Turkish-United States relations within the context of the
post-Cold War environment.
I. First, let us consider the evolution of Turkish-US relations:
Turkey's multi-party democratic tradition--spanning a half
century--has indeed fostered a unique partnership with the United
States. Turkey is the only predominantly Muslim secular democracy with
a free market economy.
During the Cold War, Turkey helped protect vital Western interests
in the volatile Middle East. Turkey contained potential Soviet access
routes to the Mediterranean through the Turkish straits.
Turkish troops fought alongside United States troops in Korea, in
support of the United Nations effort to control communist expansion in
the Pacific.
During the Gulf War, Turkey stood with the United Nations and the
United States to combat Iraqi aggression. Turkey's role was critical to
Allied success and sent a strong message to future aggressors. To date,
Turkey's cost of applying sanctions against Iraq totals roughly $30
billion.
Turkey hosted Operation Provide Comfort, the international program
using Turkish bases to deter Iraqi attacks against the Kurds of
Northern Iraq from 1991 through 1996. Turkey is now cooperating in
establishing a follow-up program to continue Allied flights over
Northern Iraq.
Turkey provided full support for the evacuation of Iraqi citizens
from Northern Iraq at the end of 1996.
Turkey continues to play a critical role in securing peace in many
of today's trouble-spots, including Bosnia, the Middle East, and the
Caucasus. Currently, Turkish troops are serving alongside US troops in
the NATO mission in Bosnia. Turkey is the only member of NATO to train
the Bosnian Army with the United States so as to preserve peace in the
region through military parity.
Turkey recognized Israel in 1949, and for three decades remained
the only Muslim country to have full diplomatic representation in Tel
Aviv.
In February 1996, Turkey signed an agreement with Israel, providing
for joint military training. In August 1996, Turkey signed a second
defense agreement with Israel which permits the two countries to
exchange military technology and conduct joint intelligence operations.
Turkey's secular democracy serves as an example to countries in the
Middle East, the Caucasus, and Central Asia, in stemming the tide of
extremism and religious fundamentalism. Turkey is dedicated to working
with the United States both in the Middle East Peace Process and the
Minsk Process.
Turkey's liberal market economy serves as a model for those
countries trying to make the difficult transition from communism to a
free market.
Turkey shares common traditions and languages with five Turkic
republics of Central Asia that emerged from the disintegration of the
Soviet Union. Enhanced relations with Turkey provide these countries
with an alternative to Russian dependence and expand the potential for
economic viability.
Turkey's government is committed to carrying out structural
reforms, including further privatization. With the realization of these
and human rights reforms, Turkey hopes to attain full membership in the
European Union (Turkey is already a member of the European Customs
Union).
In 1995, the US Department of Commerce designated Turkey as one of
ten ``Big Emerging Markets.'' It is projected that Turkey, with a
market of 62 million consumers, will match the performance of the East
Asian economies.
Turkey can be very instrumental in providing a secure outlet for
Caspian oil and gas reserves. The abundance of Caspian reserves will
provide the international community with an important alternative to
OPEC oil. Turkey's stability, location, and existing facilities on the
Mediterranean will best serve economic and commercial interests and
facilitate peace and cooperation in the region on a multilateral basis.
With the end of the Cold War, new threats to security emerged and
Turkey's role in the international arena was further enhanced. Today,
we are faced with ethnic and nationalist extremism, religious
fundamentalism, the revival of historic hatreds, international drug
trafficking, and terrorism. Turkey and the US can and do work
cooperatively in the name of shared values and principles to curb these
international threats and to preserve the rule of law.
II. Second, in addition to the numerous strides Turkey and the US
have taken and continue to take in promoting regional stability, a
number of factors highlight Turkey's relevance to the US and serve as
the rationale for strengthening Turkish-United States relations:
Turkey's critical geographic location is of major importance to the
United States. Turkey serves as a bridge between East and West in
geography, religion, culture and politics.
With respect to human rights, significant changes have been made in
Turkish law concerning pre-trial confinement, effectively reducing the
detention period.
Turkey has a large, young, well-educated population.
Turkey shares common ideals, values, and interests with the West in
general and the US in particular. In addition, this nation borders on
several countries of major interest to the United States. Three of
these countries are accused of sponsoring international terrorism and
have an involvement with weapons of mass destruction.
Turkey increasingly plays a role with respect to the sea lanes in
the Black Sea, the Aegean and the Eastern Mediterranean, which includes
a key role in the transit of oil and gas from the Gulf and Central
Asia.
In a region where water resources are scarce, Turkey has vast
quantities of fresh water available for export.
Turkey itself is an emerging commercial market for energy,
aerospace, defense, agriculture, environment, telecommunications,
transportation, construction, financial services, franchising, and
other key areas. US businesses are investing in Turkey and using the
country as a base of operations for regional investment.
Turkey is an important regional actor, contributing to peace,
stability and prosperity. In this framework, Turkey has long attached
great importance to fostering relations with Greece, a neighbor and
fellow NATO ally, as well as other countries in the area. Private
Turkish business executives have been working directly with Greek
private business executives to develop trade and investment between the
two countries, Turkey has similar private sector business councils with
virtually all her neighbors.
III. Third, US assistance to Turkey should be viewed within its
proper context:
Turkey has not received military grant assistance from the United
States since 1992. All military financial aid to Turkey in the last
four years has been in the form of loans, not grants. In fact, the
terms of the loans have evolved from concessional rates to Treasury
rates to market rates.
Unfortunately, Americans have been led to believe that Turkey
continues to receive large amounts of United States funding at a great
expense to the taxpayer. Nothing could be further from the truth.
United States loans to Turkey are mutually beneficial and are by no
means foreign policy ``give-aways.''
Since the United States instituted loans to Turkey, Turkey has
consistently adhered to pay-back schedules. Moreover, these loans
create jobs in the United States, as the funds are returned to the
United States through the purchase of American equipment. The equipment
is transported to Turkey via American shipping companies.
Excess Defense Articles provided to Turkey, which would otherwise
incur United States storage costs, are refurbished by United States
companies and transported by United States ships. Turkey assumes these
costs, which benefit the United States economy.
The United States receives a net cash flow from issuing military
loans to Turkey. For instance, in 1996, Turkey received $320 million
worth of loans, but will pay back $504 million in principal and
interest to the United States Government.
Most importantly, providing loans to Turkey serves international
security. This is not a one-way process. Fostering an atmosphere of
cooperation creates mutual benefits in the pursuit of common goals for
regional and international peace and stability.
IV. Finally, Mr. Chairman, there are several recent developments
that should be of interest to the Committee:
Visit by Mustafa Kalemli, speaker of the Turkish Grand National
Assembly, to Athens, Greece.
Visits by leading Turkish industrialists to Athens, Greece in
support of bilateral commercial and industrial relations. A successful
conference of the Black Sea Economic Cooperation Business Council,
which included participation by Greece and Turkey, was recently
completed in Istanbul.
Turkey supports the latest European Union initiative to establish
an independent Commission of Arbitration composed of ``wise men,''
including members from both Turkey and Greece, to come up with
solutions for Turkish-Greek differences.
The Turkish and Greek Foreign Ministers have met three times within
last two months, as have the Undersecretaries of the respective Foreign
Ministries.
Leaders of the Turkish Military have extended a friendly hand to
the Greek Military in past weeks.
In short, issues in the Black Sea, the Aegean and the Eastern
Mediterranean are being addressed in a very encouraging manner.
Thank you, Mr. Chairman, for allowing us the opportunity to present
these views.
______
Prepared Statement of Lane Vanderslice, on Behalf of the World Hunger
Education Service
``We are firmly convinced, and we act on that conviction, that with
nations, as with individuals, our interests soundly calculated will
ever be found inseparable from our moral duties''
--Thomas Jefferson, March 4, 1805
I am Lane Vanderslice, representing the World Hunger Education
Service (WHES). WHES is a non-profit educational organization providing
information and facilitating communication on issues of world poverty
and hunger. Its principal publication, Hunger Notes, has been providing
information and analysis on hunger issues for 21 years, and is now
beginning an edition on the World Wide Web. Our testimony will be on
three steps that the United States and this committee can take to
reduce hunger and improve the situation of poor people of the world.
Father Robert Drinan of our board, originally scheduled to appear,
regrets his inability to be here at this time.
1. We need country-by-country assessments of progress in major
areas, such as improving food security, as well as evaluations of major
programs of multilateral and bilateral assistance to improve the lives
of poor people, including programs of UN organizations such as UNICEF
and WHO, and bilateral programs such as USAID.
2. The most important problem facing the people of the world is
that they can be dominated by groups that have managed to achieve
dominance over them by--at bottom--military/physical threat means. We
need sustained attention to this problem by everyone, including the
people and political institutions of the United States.
3. We think the financial and intellectual commitment of the people
and political institutions of the United States to the poor people of
the world needs to be increased, not diminished, with the end of the
Cold War. The U.S. commitment to preventing world hunger, in
particular, needs strengthening. In our testimony to this committee we
will focus on the financial commitment.
1. The U.S. public, indeed the people of the world, need a more
accurate assessment of progress and performance on issues such as world
hunger and child survival.--We need: (a) a fuller description of where
we are with respect to major issues, and, (b) evaluations of major
programs. Let us explain.
A fuller description of where we are with respect to major
issues.--The various descriptions of these issues, such as UNICEF's
annual State of the World's Children Report and USAID's Report to
Congress on Child Survival are fine as far as they go. They do not get
down to ``where the rubber hits the road''--the country level. We have
recently read two reports, both of which we consider to be good
studies--the FAO studies on the world food situation prepared for the
World Food Summit, and the USAID study, ``Investments in Agriculture.''
The USAID study essentially says that if you don't have a good country
policy framework, money spent on agriculture will be wasted. We believe
this to be a key point. But where are the evaluations of ``country
frameworks'' on a country-by-country basis to be found? They do not
exist in a form that is accessible to the public. Yet surely the World
Bank, the Food and Agriculture Organization, and the United States
Agency for International Development have such assessments of progress
and problems or can prepare them relatively easily. Or independent,
relatively low cost ``delphi style'' evaluations can be done. It is
time to make them available. We would suggest starting with two key
issues: (1) food security/world hunger, and (2) child survival, and
limit the evaluation to countries that are the most food insecure and
with the highest rates of child mortality. These assessments needn't be
done every year necessarily, but they should be done every two years.
The Internet provides a way to make these assessments widely available
and at low cost. Once they are available, hunger advocacy and education
institutions can ensure even wider dissemination of the information.
Our recommendation to you is report language suggesting that those
institutions for which your subcommittee provide funding (or the U.S.
agency responsible for administering that funding, e.g., the treasury
for the World Bank) devise a plan for providing country policy and
performance information on a regular basis for the key areas of world
hunger and child survival.
Good publicly-available evaluations of the programs of major
institutions helping to combat hunger and poverty.--There are many
institutions to which we entrust taxpayer money in order to help those
in developed countries combat hunger and poverty. Hundreds of millions
and overall billions of dollars have been appropriated to UNICEF, the
United Nations Development Program, the World Bank, the International
Fund for Agriculture Development, the World Health Organization, and
the United States Agency for International Development. Hunger Notes is
very interested in such evaluations because of their importance and
tries to publish excerpts from them when available. For example we
published an evaluation of IFAD, and are about to publish excerpts from
the recently published GAO report on child survival Yet, as far as we
are able to determine, these evaluations are done much rarely than they
should be. This makes it very difficult to assess progress, evaluate
institutions and programs, and when, after discussion, it is seen to be
desirable, make changes. We are faced with situations like the
following. In the mid-1980s and into the 1990s WHO played a large role,
with significant appropriations from the United States, in the world
effort to prevent AIDS. Yet several years later--lo and behold--the
responsibility has been taken away from WHO and given to a new program,
UNAIDS, with, as far as we are able to determine, a substantial
decrease in donor funding. We didn't see any publicly available
evaluations of WHO's AIDS program? Did you? It seems to us that issues
of administration and program direction are best evaluated and
discussed on a regular basis with all the multilateral and bilateral
aid agencies, and we urge you to adopt report language suggesting this.
Congress must take this greater amount of evaluative material into
consideration but not, if negative, immediately use it as an excuse to
cut programs. The business of large international organizations is
complicated and worldwide in scope and it is possible for evaluations
to be mistaken or focus on different aspects of a complicated reality.
The parable of the five blind men examining an elephant is appropriate
here.
2. The most important problem facing the people of the world is
that they can be dominated by a group that has managed to achieve
dominance over them by--at bottom--military/physical threat means.--
Armed military groups in Somalia. Organized killing by those in charge
of the government in Rwanda. Death squads associated with those in
power in Guatemala and previously other Latin American countries. Often
the situation can be less dramatic but still very injurious to people's
welfare. Government corruption in Mexico, for example, is an important
part of the process, but by no means the only part whereby income is
steered to those with political power and away from the average person.
There has been progress in some regions and countries, such as
South Africa and many countries of Latin America. No longer does the
Argentinian military take people with whom it has political differences
and drop them from airplanes! The military in many countries, such as
Argentina, Bolivia and Chile, is permitting civilian elections, (though
the military in these countries still has a far greater political role
than would be considered appropriate in the United States). Though
there has been substantial attention to humanitarian emergencies/
conflict situations/emerging democracies around the world, there has
not been enough.
Table 1, abridged from the 1996 Freedom House survey, shows the
magnitude of the problem. We wish to point out two major aspects of
this table: A significant amount of the world's population--40
percent!--lives in countries that are not free. The percentage of the
population that lives in countries that are free has dropped
substantially, while those that live in countries that are only
partially free has risen significantly.
TABLE 1.--FREEDOM OF THE WORLD'S POPULATION AS ESTIMATED BY FREEDOM HOUSE
----------------------------------------------------------------------------------------------------------------
Free Partly free Not free
Date ---------------------------------------------------------------
Number Percent Number Percent Number Percent
----------------------------------------------------------------------------------------------------------------
1981............................................ 1,163.0 35.9 970.9 21.6 1,911.9 42.5
1988............................................ 1,924.6 38.3 1,205.4 24.0 1,896.0 37.7
1996............................................ 1,114.5 19.55 2,365.8 41.49 2,221.2 39.0
----------------------------------------------------------------------------------------------------------------
This is very possibly the most important part of the world hunger
problem. It has meant famine in the most extreme cases, and hunger and
poverty for many in a large number of other cases. Though this issue
has received significant attention over the years, it needs much more
attention, and from all of us.
Hunger Notes and the World Hunger Education Service is making this
a priority. We have, for example, undertaken a special issue on Rwanda,
``What Have Humanitarians Learned,'' which was an attempt to see what
PVOs and others interested in Rwanda might have done beforehand to
analyze and act to defuse violence, and what this might mean in terms
of a code of conduct that PVOs, bilateral aid agencies, and others
might begin to form and act on in other countries. We are, as well,
planning an issue on human rights approaches to development assistance.
From the Congress we ask the following:
We must understand the possibility and actuality of wrongful
violence against others as a fundamental part of human life, and must
be prepared to make a contribution to reducing it, as a key part of our
foreign policy. We have to realize it is an important problem that is
by no means confined to other countries. It is universal. It happens
frequently in Washington, for example, where ``crews'' sell drugs, rob,
and kill, and thus terrorize neighborhoods.
We have to realize on an international level that we cannot ``go it
alone'' but must in fact involve ourselves in cooperation with others.
This includes the United Nations. We have to understand that our
national sovereignty is not being usurped when we work in collaboration
with others, which is what part of Congress at least still does not
seem to have fully understood.
We must realize that progress will be imperfect and ``messy.'' We
must adopt to the greatest extent possible a bipartisan approach to the
situation of wrongful violence. We need much discussion on this issue
on the one hand, and on the other for fingerpointing to be kept to a
minimum.
3. We need a significant increase in support for programs that work
to end hunger and poverty.--The reduction in Cold War tensions should
have released intellectual and financial resources to address other
major world problems, such as violence, hunger, and poverty. For the
United States government, on balance, it seems to have done no such
thing. Three key points with respect to U.S. support for hunger and
poverty are:
1. The United States cut funding for foreign aid, including
initiatives to assist the world's poor, in fiscal 1996, and has
essentially not restored that cut subsequently. USAID development
assistance funding was cut by 24 percent, for example.
2. U.S. foreign assistance devoted to agriculture in particular is
down sharply. Table 2 gives the details.
TABLE 2.--ALLOCATION OF USAID RESOURCES TO AGRICULTURE, IN MILLIONS OF DOLLARS AND AS A PERCENT OF TOTAL
ECONOMIC ASSISTANCE, FISCAL YEAR 1989-94
----------------------------------------------------------------------------------------------------------------
1989 1990 1991 1992 1993 1994
----------------------------------------------------------------------------------------------------------------
Agriculture allocation.................................... $806 $577 $674 $626 $589 $418
Total economic assistance................................. $5,900 $6,684 $7,543 $6,572 $6,776 $6,641
Percent of total.......................................... 14 18 16 18 14 19
----------------------------------------------------------------------------------------------------------------
3. The United States contribution to development has continued to
decline as a percentage of GNP. Moreover, the United States is dead
last in its share of GNP devoted to foreign aid, as Figure 1 indicates.
We believe that the $70 million increase in development assistance
proposed by the Administration should be granted and, in fact,
increased by the committee. A key area should be programs to reduce
world hunger.
The United States and 180 other nations made worthwhile commitments
at the World Food Summit, the most important being the commitment to
reduce the number of undernourished people to half their present number
by 2015. However, this commitment does not seem to have shown up in an
overall increase in U.S. funding for the reduction of world hunger.
Two areas of increase that we would support are USAID's African
food security initiative and restoration of funding for the
International Fund for Agricultural Development (IFAD).
The African food security initiative is not a large initiative at
this point: five countries and $25 million, when compared to a total
$336 million request for ``encouraging broad-based economic growth'' in
Africa. It should be bigger.
In 1994, all of IFAD's member countries, including the United
States, agreed to an overall replenishment level of $600 million. The
United States was supposed to give just over $30 million a year for
three years, totaling $92 million. Unfortunately, the Administration
finally agreed to pledge just $5 million over six years, totalling $30
million.
We would also support increases, not reductions, in child survival
and microenterprise.
______
Prepared Statement of the American Society of Tropical Medicine and
Hygiene
The American Society of Tropical Medicine and Hygiene (ASTMH), a
professional society of 3,100 researchers and practitioners dedicated
to the prevention and treatment of tropical infectious diseases, is
pleased to submit the following public witness testimony in support of
the tropical infectious disease research and control activities of the
Agency for International Development.
``Tropical diseases'' can be defined as those major public health
problems caused by infectious agents that disproportionately affect
people living in developing regions. Infectious diseases, including
tropical infectious diseases, are world's leading cause of death,
killing 17 million people (most of them young children) every year.
They are responsible for one-third of all deaths and in 1990 they
killed more people than cancer, heart diseases, and cerebrovascular
diseases combined. In the developing world, the chance of dying is 40
times greater for a child than it is for his or her counterpart living
in an industrialized nation. Furthermore, these diseases take
tremendous health, economic, social, and emotional tolls on their
victims, communities, and countries.
America must care about tropical infectious diseases for three
reasons. These are the threats of emerging infections, exploding
population, and erosion of our humanity if we fail to provide effective
humanitarian (including health) assistance abroad.
1. Emerging Infections.--The threat of emerging infections is
increasingly recognized by the public as a result of the emergence of
major killers such as HIV (which has infected an estimated 20 million
adults worldwide) and by news accounts of exotic tropical infectious
diseases such as Ebola. As such, it is very fitting that the theme of
this year's World Health Day was ``Emerging Infectious Diseases.''
Despite remarkable advances in science, medicine, and public health
throughout this century, the threat of tropical infectious diseases
remains as serious as ever.
Approximately 2.5 billion people worldwide are at daily risk of
tropical infectious diseases and 500 million people presently suffer
from them. Parasites, bacteria, and viruses are becoming resistant to
our drugs. Approximately 30 new infectious diseases have been
discovered in the last 20 years and previously recognized diseases are
returning with new vigor. For example, dengue fever was reported at
approximately 30,00 cases annually from 1956-1980, at approximately
138,000 cases per year in 1981-1985, and at almost 268,000 annually in
1986-1990. This is nearly a ten-fold increase in less than 40 years.
Dengue is very common in Latin America and it is now seen in Mexico and
is lapping at America's shores.
Infectious and tropical infectious diseases are not solely a
``third world problem.'' The globalization of our food supply and
international travel bring increasingly worrisome infectious diseases
to our doorstep. While the average American supermarket had only 300
items on its shelf 40 years ago, it now exceeds 30,000 items, with
demands for fresh produce from tropical areas increasing each year.
Last year's outbreak of Cyclospora infection in over 800 people in 14
States and Canada was traced to Guatemalan raspberries. Ebola was
imported to the United States by research primates from the
Philippines. AIDS originated in central Africa and arrived in the
United States via Haiti. Further, the United States has been the site
of the emergence of serious infectious diseases in recent decades, such
as hantavirus pulmonary syndrome, drug-resistant streptococcal
infections, and chlorine-resistant cryptosporidial parasites. Between
1980 and 1992, the death rate due to infectious diseases increased 58
percent in the United States, making it the third leading cause of
death in the country (only half of this increase is attributable to
HIV).
There are many factors behind the increasing incidence of and
threat of infectious diseases. One of the factors is the overall
weakening of public health activities worldwide, including surveillance
activities and a deterioration of laboratory facilities. Population
shifts from rural areas to urban areas (200 million people worldwide
live in cities with populations greater than 10 million) and increased
international travel (500 million travellers annually) are also
factors. It took over a year for the lethal strain of influenza which
claimed millions of lives in the global pandemic of 1918-1919 to spread
from Southeast Asia, where it originated, to Western Europe. Today,
that flu bug could circumvent the globe in less than 2 weeks.
2. Exploding Population.--Exploding population in the absence of
good health poses a tremendous threat. Good health plays a critical
role in population control. In contrast to the widespread Malthusian
notion that only disease and famine will necessarily control population
overgrowth, in the modern world it is good health, not bad health, that
has consistently brought population growth under control. In
prospective surveillance for diarrhea in northeast Brazil, researchers
learned to their surprise that high childhood mortality and morbidity
was associated with the greatest population overgrowth. In contrast to
1 of 23 mothers in ``better'' homes, 17 of 32 mothers in the poorer
homes had a baby during a two and a half year study (American Journal
of Tropical Medicine Hygiene, Vol 51, pg 26-35, 1994). It is obvious
that the high rates of childhood illness and staggering 25 percent
mortality did not control but rather was associated with high birth
rates. The dramatic association of improved health with voluntary
reductions in population growth is apparent throughout countries across
the globe as well as in single villages throughout the histories of
developed countries.
3. Erosion of our Humanity. Controlling diseases is in our
humanitarian interest--it is our duty and our responsibility as a world
leader.--A recent report by the Institute of Medicine (IOM) reiterates
the importance of U.S. assistance from both a humanitarian viewpoint
and an economic viewpoint. In America's Vital Interest in Global
Health, the IOM Board on International Health notes that the current
level of foreign aid by the U.S. government is at its lowest point
since 1950, as measured by gross domestic product, and that the
proportion is lower than that of the other top 20 industrialized
nations. America's response and willingness to lead will determine if a
free system of government that recognizes the dignity of the individual
can effectively deal with the worsening plight of the disadvantaged.
Controlling infectious and tropical infectious diseases is also in
the United States's best economic interests. The IOM report appeals to
the self-interests of the United States, noting that developing nations
must have a healthy, productive population if their economies are to
flourish (and hence provide a new market for U.S. exports). A
prosperous international economy is beneficial to the U.S. with its
tremendous potential for exports and other business opportunities and
developing nations will ultimately require less assistance from the
U.S. and other developed nations as their economies improve. Further,
the economic impact of tropical infectious diseases on developing
nations is tremendous.
a.i.d. child survival program
The Agency for International Development's Child Survival Program
has long been at the forefront of international efforts to alleviate
morbidity and mortality among the world's most vulnerable populations--
children under 5 years of age. In collaboration with the international
community, including WHO and UNICEF, tremendous progress has been made.
For example:
--Since 1960, infant mortality has fallen from 130 to 60 per 1000
live births, and child mortality has fallen from 180 to 80 per
1000 live births.
--By 1995, the goal of 80 percent coverage against the vaccine-
preventable diseases of diphtheria, pertussis, measles,
tuberculosis and polio had been achieved globally (although it
was not achieved in every country).
--In 1980, 76 countries reported less than one neonatal tetanus death
per 1000 live births annually; by 1995 this had increased to
122 nations.
--Immunization programs have helped reduce the number of measles
cases by 70 percent and the number of measles deaths by 83
percent. Measles is targeted for elimination in the Americas by
the year 2000.
However, the Child Survival Program must not be cut, as much
remains to be done to save lives and build healthier, more independent
and productive lives.--For example, 25 countries reported coverage
below 50 percent for diphtheria, pertussis, measles, tuberculosis and
polio. Every year, 12 million children less than 5 years of age die of
infectious and tropical infectious diseases. Four diseases alone--acute
respiratory infection, diarrheal diseases, malaria, and measles--
account for two-thirds of this total. Further, approximately 25 percent
of these 12 million children suffer from malnutrition. Two of these
diseases, diarrheal diseases and malaria, are among the most common
causes of morbidity and death in children under the age of 5. For these
reasons, we are strongly opposed to the Administration's estimated $25-
30 million reduction in population, health and nutrition activities in
fiscal year 1998.
diarrheal diseases and malnutrition
Diarrheal diseases, which are primarily spread by contaminated
water or food, kill 3 to 4 million children annually. For example, in
some areas of Brazil 1 child in every 4 may never reach his or her 5th
birthday, over half of whom die of diarrheal diseases. The morbidity
from diarrhea and malnutrition may be even greater than their
staggering mortality--many children who survive experience 8 to 10
dehydrating, malnourishing diarrheal illnesses each year in their
critical developmental first 2 years of life.
New research is showing that malnutrition is in fact an emerging
infectious disease. Impaired intestinal absorptive function due to
enteric pathogens may be equally or even more important than inadequate
food intake as a determinant of malnutrition. Malnutrition is
associated with increased diarrhea incidence and duration among
children in tropical developing areas. Research advances are providing
novel interventions to address these threats.
malaria
Malaria was once a serious health problem in America, including
right here in our Nation's Capital. Many lives were lost to malaria
during the construction of Washington, D.C. Malaria remains one of the
world's most important parasitic diseases, taking a tremendous toll in
lives lost as well as in medical costs, days of work lost, and social
impact. While more than 90 percent of all cases are in sub-Sahara
Africa, malaria is a problem in almost 100 countries with 2.5 billion
people--40 percent of the world's population. An estimated 200 to 300
million cases occur annually and at least 1.5 million of these--and
perhaps more than 2.5 million--are fatal. Mosquito resistance to
pesticides and parasite resistance to drugs have resulted in a dramatic
resurgence of malaria. Resistance to chloroquine, sulfadoxine-
pyrimethamine, and mefloquine is emerging. Further, economic activities
such as logging, agricultural projects, and road building are resulting
in a spread of malaria.
The ASTMH is very encouraged by recent renewed attention to this
major killer. The complexity and importance of this disease requires
leadership from the U.S. and other developed nations and we were very
pleased by National Institutes of Health (NIH) Director Dr. Harold
Varmus's role in a recent gathering of international scientific leaders
in Dakar, Senegal. In 1998, the NIH will launch a new malaria clinical
research initiative to expand our understanding of human immunity to
Plasmodium falciparum, the etiologic agent of the most severe form of
malaria. Earlier this year, researchers at the Walter Reed Army
Institute of Research reported that an experimental vaccine devised by
the U.S. Army and a private pharmaceutical company worked well in a
preliminary test. This vaccine has been largely based on experimental
work done at New York University, supported until recently by the
A.I.D.
One of the most challenging problems is the general lack of
involvement by pharmaceutical companies in antimalarial drug
development, an issue that was discussed in Dakar. The ASTMH believes
that the A.I.D. should support the involvement of pharmaceutical
companies in this drug development. Further, we agree with the
recommendation of the Dakar Antimalarials Working Group that
departments of pharmacology, pharmacy and traditional medicines at
universities in sub-Saharan Africa should play an expanded role in
antimalarial research. We urge A.I.D. to provide support for malaria
vaccine research in 1998. With renewed international interest and with
scientific leadership from the United States, investigators can take
advantage of the promising research opportunities that exist to stem
the tremendous burden of malaria. However, it needs to be recognized
that the currently existing financial support is inadequate for
accomplishing this task.
summary
The global burden of age-old infectious diseases such as malaria,
diarrheal diseases, and tuberculosis is well documented, and new
infectious agents will continue to be discovered. Previously recognized
pathogens will also continue to reemerge as serious public health
problems in the developed and developing world. However, many
uncertainties exist. We do not know where or when they will appear,
what they will look like, or how they will behave. To be prepared, we
must have an adequate surveillance system and modern infrastructure
facilities, coupled with scientific expertise in both basic and applied
areas, to develop whatever tools are necessary to rapidly respond to
and control the threats posed by these diseases.
Through your leadership and commitment, Congress has provided
significant support for child survival and disease activities during
the last two fiscal years, and the ASTMH urges your continued support
of these indispensable activities. Further, we request that you provide
increased emphasis on the research and prevention activities for
tropical infectious diseases, particularly the most prevalent and
severe microbial diseases such as malaria and diarrhea. The impact of
these diseases is significant in health, economic, and social terms to
developing nations. Further, the United States has health, economic,
and humanitarian interests in these diseases. Research in this area is
progressing and with additional support we are optimistic that
significant improvements can be made in prevention and treatment.
Thank you for your consideration of our request.
______
Prepared Statement of the Johns Hopkins University, Paul H. Nitze
School of Advanced International Studies
The Johns Hopkins University Paul H. Nitze School of Advanced
International Studies (SAIS) is pleased to have this opportunity to
submit written testimony in support of fiscal year 1998 funding for the
American Schools and Hospitals Abroad (ASHA) Program.
We strongly believe that the ASHA Program serves U.S. interests. It
does so by supporting liberal arts institutions around the world that
promote freedom of expression, private initiative, and tolerance. ASHA-
funded institutions train a cadre of individuals who can communicate,
share values, and work with Americans in business, government, the
sciences, and other mutually beneficial endeavors, thus providing the
crucial educated human resource base necessary for any long-term
development.
Two of the Johns Hopkins programs have benefitted greatly from ASHA
support in the past.
the johns hopkins university-nanjing university center of chinese and
american studies
The Hopkins-Nanjing Center, a bi-lingual graduate school in the
People's Republic of China, has been bringing an American educational
experience to top Chinese professionals and pre-professionals since
1986. SAIS designed and administers the American component of the
Hopkins-Nanjing Center. Each year Chinese and American postgraduates
from all parts of China and the United States are selected for an
academic year at the Center through a merit-based (academic credentials
and language ability) application process. Each Chinese student is
paired with an American roommate in the Center's facility in Nanjing, a
feature that is unique to China where most foreign students are housed
separately from the Chinese students.
Johns Hopkins also brings to Nanjing a faculty of five American
professors who reside at the Center and teach the Chinese students
about the United States: U.S. history, government and politics,
society, economics, foreign policy. In turn, the American students
learn about contemporary China from Chinese professors and from their
Chinese roommates. Chinese students learn about American values and
institutions not only in the classroom but also from their American
roommates and peers in the Center. An integral part of this intensive
immersion of the students in each other's culture is the Center's
uncensored, open-stacks library, again unique in China.
The Hopkins-Nanjing Center provides its Chinese students with
unparalleled exposure to American ideas and educational practices. It
is an opportunity publicly advertised and open to anyone in China who
wishes to apply. With the severe restraints placed on Chinese academic
programs, it is more important than ever that the Center remain as a
resource of information for its Chinese students and as a forum of open
discussion and frank exchange of views among the Chinese and American
participants. Because fewer and fewer Chinese who travel to the United
States for study return to China, the Center becomes all the more
valuable as a place where Chinese can receive a solid American
educational experience on their own soil. They are then able to bring
that experience and their increased understanding of the United States
back to their home institutions and into their careers either in the
public sector or in the growing private sector in China.
The Hopkins-Nanjing Center serves U.S. policy interests and ASHA
goals in a number of significant ways:
--propagates American political ideals with the sanction of the
existing regime in China;
--keeps a window open to a select group of the new generation of
Chinese intellectuals who must not be isolated from the West;
--trains together young Chinese and American postgraduates who will
manage the United States-China relationship for decades to
come;
--provides Chinese intellectuals with an uncensored, open stacks
library that contains the most current western language
collection of books and periodicals on American studies in
China and on U.S. scholarship on China;
--exposes key Chinese to western economic principles and practices;
--produces China-savvy Americans for the American Corporate community
doing business in China; and
--trains U.S. government personnel for China duty.
The Center serves the U.S. national agenda in a uniquely effective
way by ``reflecting favorably upon and increasing understanding of the
United States'' and in ``demonstrating American ideas and practices''
to the talented young future leaders of a country important to the
United States now and for the long term.
the johns hopkins university bologna center
Established in 1955, The Johns Hopkins Bologna Center is unique in
that, unlike most U.S. educational institutions overseas, it is theory
full-time resident American graduate school of international relations
in Europe. As an integral part of SAIS, the Center offers an
interdisciplinary program of studies in international economics,
politics, history and law, with special emphasis on European studies.
The Center serves as a living example abroad of the American form
of graduate education with its small classes, low ratio of students to
faculty, and close, informal communication among students, teachers,
and administration. Academically, the Center exposes non-American
students to contemporary American approaches to the social sciences.
The Bologna Center is neither a vocational school--in the sense of
providing training for specific jobs--nor a purely liberal arts or
scientific school. Rather, it seeks to relate its academic instruction
to the expanding variety of private and public activities involved in
relations among governments and national societies.
The Bologna Center aims to promote the exchange of cultures and to
provide exposure to the basic tenants of free-market economics. The
current objectives of the Center are to reinforce its position in these
specific areas: European-American relations, East-West European
cooperation, and Mediterranean issues, the latter including both the
troubled Balkan region and Europe's relations with the developing
countries of the Middle East and North Africa. The ongoing attempts at
transformation to democracy and market economy in Central and Eastern
Europe, and the difficulties experienced in the moves to a single,
unified market in Western Europe give the Center a unique, bridge-
building position as educator to students from all over the world, who
in time will themselves assume top-ranking roles in government and
business. This endows the Center with a bold and essential role in
America's endeavors to maintain a constructive, positive profile and
relevance abroad.
Since its creation, the Bologna Center has been at the cutting edge
of political and economic developments in Western and Eastern Europe.
In fact, it was the American academic institution to establish close
ties with universities in Eastern Europe during the 1950's. The Center
currently has exchange agreements with institutions in Central and
Eastern Europe, including Poland, Hungary, Bulgaria, the Czech Republic
and Russia. These relationships have come about as a result of the
Center's efforts to expand its academic program to include all of
Europe and to encourage greater communication and cooperation between
Eastern and Western European institutions of higher learning.
In addition to providing graduate level education to train a new
generation of international leaders, the Bologna Center serves as a
meeting place for students of various nationalities to come together to
learn each other's history and culture, thereby increasing
international understanding. The Center conveys to future international
leaders a sense of American society and ideas which can only help to
facilitate communication and understanding with partner countries
around the globe.
Especially noteworthy is the international composition of the
faculty and the student body, which together represent 30 countries,
with more than half of the students being non-American. Since 1975,
more than seventy students from Eastern Europe and the former Soviet
Union have been educated in Bologna, and an increasing number of
students have been accepted from these countries. Significant numbers
of students also come from Canada and countries in the Middle East, the
Far East, Africa, and Latin America. Special efforts continue to be
made to enroll more students from developing countries.
This international atmosphere alters inaccurate preconceptions held
by U.S. and non-U.S. students alike, stimulating a greater
understanding of one another based on interaction, education, and
experience. By exposing its students to the American system of graduate
education and providing them with the experience of living and studying
together in Europe in a truly international environment, the Center
strengthens the bonds among future leaders of the United States,
Europe, and other areas of the world including developing countries.
Bologna Center graduates are in positions of importance worldwide
in foreign offices and ministries of foreign affairs, in other
governmental agencies, and in international and regional organizations.
Thus far the Center had educated more than 280 European specialists in
the U.S. government, more than 186 officials of West European
governments, and more than 170 international civil servants. Bologna
Center alumni are also employed in the private sector with
international corporations and commercial firms, in banks and other
financial institutions, non-profit organizations, media organizations,
and research centers and universities around the world. The notable
achievements of the Centers alumni, who come from 85 different
countries, clearly demonstrate the significance of the Bologna Center's
leadership role in the formation of future world leaders and in the
promotion of democracy and international market economics.
fiscal year 1998 funding request
We recognize and appreciate the Committee's support of the ASHA
program in past years. We are concerned that the Agency for
International Development (AID) continues to disregard the Congress'
intentions to ensure the continuation of this program, and hope you
will continue to take a strong position with AID to ensure that the
ASHA program is not terminated and continues to receive adequate
funding to conduct the competitive grant program. Therefore, we
respectfully request that you consider a direct appropriation for ASHA
in fiscal year 1998 of at least $15 million.
Thank you for your consideration of this request. Please do not
hesitate to contact us if you have any questions or require any further
information.
______
Prepared Statement of the World Wildlife Fund
World Wildlife Fund appreciates the opportunity to submit testimony
on the fiscal year 1998 Foreign Operations Appropriations legislation.
WWF supports the modest increase in the administration's fiscal
year 1998 budgets for bilateral and multilateral assistance in the
Department of State, the Agency for International Development and the
Department of Treasury. This increase will help ensure the
effectiveness of key environmental programs that had been threatened by
drastic cuts made in fiscal year 1996.
bilateral assistance
U.S. Agency for International Development
WWF strongly supports the president's proposed $998 million for
development assistance and $700 million for the Development Fund for
Africa. Of these amounts, $290 million is proposed for environmental
programs globally, an increase of $62 million over fiscal year 1997
levels ($227.6 million).
USAID's integrated approach to biodiversity conservation and
sustainable use recognizes the interdependency of humans, wildlife, and
their environments. USAID provides technical and financial support for
conservation projects around the world that emphasize community-based
conservation.
WWF applauds the administration's earmark of $700 million for the
Development Fund for Africa, as it assures U.S. commitment to the
countries of Africa to help achieve broad-based, sustainable economic
growth. Given the acute environmental problems in many African nations,
biodiversity has long been an integral part of the DFA's goals. Some
USAID-funded projects are:
--The WWF-managed L.I.F.E. project (Living in a Finite Environment)
funds several programs in Southern Africa, including one in
Namibia that teaches communities how to sustainably manage and
exploit their natural resource base. For example, in Caprivi
last year over $80,000 was generated for construction of
thatched grass roofs for tourist sites. In addition, to address
crop destruction by elephants, buffalos and other wildlife, the
program was instrumental in the construction of electric
fences. As a result, an estimated $6,000 was saved in crop
productivity in 1996.
--The Rwenzori Mountains Conservation Development Project, co-funded
by WWF and DFA, straddles the Uganda-Zaire border and
encompasses some of the highest peaks and richest biodiversity
in Africa. Project goals include collaborating with Rwenzori
Mountains National Park staff to develop a park management
plan, working with the community to pursue sustainable forest
use, and agricultural activities such as tree planting and bee
keeping to reduce human pressure on the park. For example, as
an alternative to collecting honey from wild bees in the
reserve which often resulted in burning the land and destroying
trees, bee keeping and tree planting have been taught. Better
relationships between the community and park staff have
decreased tension over such issues as burials in the park and
imposing fees on local inhabitants for crossing through the
park.
Of the $290 million USAID proposes for environmental programs in
fiscal year 1998, WWF strongly urges the increase in funding over
fiscal year 1997 be proportionally reflected in the agency's critical
work related to global climate change and biodiversity. This would
include increased funding for the Bureau for Global Programs, Field
Support and Research, which not only funds climate change and
biodiversity programs, but also acts as a catalyst to integrate
environmental concerns in USAID programs globally.
One example of the many successful programs supported by the Global
Bureau is the Biodiversity Support Program (BSP). A consortium of three
leading U.S. environmental organizations WWF, The Nature Conservancy
and World Resources Institute BSP supports innovative, on-the-ground
initiatives that seek to integrate conservation with social and
economic development. Since its establishment in 1988, BSP has worked
with over 95 local organizations to support more than 400 projects in
59 countries around the world.
--In Mexico, for example, the ORGANIZATE! project, funded by BSP, has
helped residents develop alternative, environmentally
sustainable livelihoods in the area of the El Cielo Reserve in
Northern Mexico, while raising awareness about the reserve's
importance. As a result, many of the reserve residents last
year opposed a logging enterprise proposal to resume logging in
El Cielo. Pressure from the local residents influenced the
Mexican government to deny the logging company permission to
resume logging.
--Last year, BSP's Peoples and Forests Programs assisted communities
and organizations from 25 localities in six countries. The
program, for example, supports an Indonesian NGO working with
the Bentian Dayak people of Indonesia to map their forest areas
and document traditional resource management practices which
preserve local rainforest ecosystems, meet subsistence needs
and generate cash income through the sale of forest-cultivated
rattan. As a result of this work, government officials were
persuaded to exclude the Bentian forest areas and rattan
gardens from a proposed reforestation site for a logging
concession.
--BSP's analyses of global climate change in Central Africa and its
initiative in creating new partnerships has led to the Central
African Regional Program on the Environment (CARPE). This new
partnership of five NGOs and four U.S. government agencies will
address deforestation in the second largest tropical rainforest
in the world.
BSP exemplifies the type of USAID/PVO partnership that successfully
and cost effectively uses U.S. taxpayer support to assist in
integrating conservation with social and economic development.
multilateral assistance
Department of State
While we support the administration's request for an increase in
the International Organizations and Programs account, WWF opposes the
Department of State's fiscal year 1998 request for no increase from
fiscal year 1997 levels for International Conservation Programs. At the
proposed level of $3.75 million, the U.S. last year was unable to
contribute its $1.3 million commitment to the core budget of the
Convention on International Trade in Endangered Species of Wild Fauna
and Flora (CITES). The department was only able to fulfill its
commitment to CITES through an additional amount resulting from the
reallocation of funds within International Organizations and Programs
account.
CITES is arguably the largest and most successful wildlife
conservation agreement. One hundred thirty-five countries are now
parties to the convention; the United States was one of the first
nations to sign in 1973. CITES has become an effective forum for
addressing broad wildlife conservation issues and needs, playing a
critical role in preventing the extinction of thousands of species in
trade. The U.S. contribution to CITES is critical to continue this
important work.
The continued U.S. contribution of $750,000 to the Ramsar
Convention also is important. The convention is a critical tool for not
only conserving but also promoting sustainable use of aquatic
ecosystems globally. More than 770 sites totalling over 52 million
hectares in over 90 contracting countries are designated as wetlands of
international importance and protected under the Ramsar Convention.
WWF urges the Congress to require the Department of State to fully
fund its obligations to CITES, the Ramsar Convention and other
international conservation programs.
United Nations Development Program
WWF supports the president's request for $100 million for the
United Nations Development Program (UNDP). For the past ten years, WWF
and UNDP have collaborated with considerable success to help national
governments and local communities develop and implement programs
supporting the long-term protection of Asia's biological diversity.
Specifically, WWF has closely worked with UNDP country programs in
Bhutan, pre-SLORC Burma, Cambodia, China, India, Nepal, Pakistan, Papua
New Guinea, Philippines, and Vietnam. In several of these countries,
UNDP support was critical to initiating innovative, sustainable
conservation efforts that otherwise would never have been realized. WWF
effectively engaged the credibility and resources of UNDP to kick off
outstanding conservation programs such as the world's first
environmental trust fund in Bhutan, the Indo-China Forum for
Biodiversity Conservation, Nepal's People and Parks Project, the
Vietnam Environmental Business Council, and current efforts to initiate
a Ecoregional Biodiversity Initiative in the Himalayas.
G-7 Pilot Program (PPG-7) to Conserve the Brazilian Rain Forest
WWF supports the Department of State's effort to organize U.S.
government funding support for the PPG-7's Rain Forest Trust Fund at $3
million to $10 million over the next three years.
The Brazil Pilot Program is a collaborative effort to reduce the
degradation of Brazil's Amazon and Atlantic forests, which cover an
area nearly the size of the U.S.'s lower 48 states. It was conceived at
the 1990 G-7 summit in Houston, Texas. In December 1991, a number of
donor nations pledged $250 million as initial support. Part of these
funds are managed by the World Bank through its Rain Forest Trust Fund
and the remaining funds comprise bilateral donor co-financing.
The PPG-7 is unique for its integrated participation by all sectors
of Brazilian civil society, the leadership provided by the federal
government of Brazil, and for its diverse international support. It is
the first instance in which the global community has joined hands to
address a local environmental challenge that is of worldwide
significance. This initiative has set a precedent for addressing the
global issues of greenhouse gas emissions, biodiversity conservation,
tropical deforestation, and sustainable development in ways instructive
to other localized but globally important environmental issues.
The United States has provided $7.5 million to PPG-7 over the past
five years (compared with Germany's $80 million). Each donor chooses
one or more components to finance. The United States has chosen applied
research, while Germany, for example, has chosen the small grants
component.
Most of the WWF staff in Brazil has participated in designing and
commenting on the different components of the project, e.g., small
grants for NGOs, forestry, environmental education, and state policies.
Most of the examples that the World Bank uses to showcase its future
plans under the project are current projects managed by WWF.
WWF urges the subcommittee to support the Brazil Pilot Program and
request the State Department to provide adequate funding for the PPG-
7's Rain Forest Trust Fund over the next three years.
multilateral development banks
International Development Association (IDA)
WWF supports the administration's request of $800 million for the
full scheduled payment to the eleventh replenishment of the
International Development Association (IDA) and payment of $234.5
million to clear accumulated arrearages.
IDA, the concessional window of the World Bank, is the single most
important source of development finance for the world's poorest
countries. Support for IDA is an attractive vehicle for U.S.
development assistance. Through investment in specific projects and
economy-wide or sector-specific reform programs, IDA can help to
address the root causes of political and economic instability such as
extreme poverty, environmental degradation, and weak institutions of
government and civil society.
IDA is also cost-effective: every U.S. dollar contribution
leverages several additional dollars from other donors. Finally, IDA is
responsive to U.S. leadership, which has been responsible for recent
reforms to make the institution more transparent and accountable.
While IDA and the World Bank more generally have been criticized
for failing to pay adequate attention to poverty reduction and to the
environment in its policies and loan-funded operations, WWF believes
that U.S.-led progress toward reform is sufficient to justify continued
support. Moreover, prospects for continued reform are strong: the World
Bank's Board of Executive Directors has recently approved a ``Strategic
Compact'' with Bank management to invest resources in improving the
Bank's efficiency and effectiveness as well as to focus its efforts in
such critical areas as social analysis, rural development, and
capacity-building in Africa.
Finally, from WWF's perspective, there is unexploited potential for
IDA and the World Bank Group to play a more proactive role in promoting
environmental sustainability in the context of individual borrower
countries and the global community as a whole. Indications that the
Bank is moving in this direction are ongoing discussions between the
Bank and the government of Kenya regarding the first-ever
``environmental adjustment'' loan, in which IDA resources would be
utilized to support macroeconomic and institutional change necessary
for sound environmental management. WWF believes that meeting the
administration's request for IDA funding this year would provide a
signal of support for such initiatives and for the important new
directions being taken by the institution as a whole.
Global environment facility
World Wildlife Fund supports the administration's fiscal year 1998
request of $100 million for the Global Environment Facility (GEF).
The focus of the GEF has been the protection of biodiversity,
reduction of global warming, protection of international waters, and
prevention of depletion of the ozone layer.
The GEF has a unique role in its funding mechanism in the
international system: it is the only multilateral funding institution
devoted exclusively to the protection of the global environment. It
serves as a potent symbol of the global community's shared commitment
to the goals of environmental protection and sustainable development.
The GEF serves two broad functions, both of which are critical to
declared U.S. national interests. The first of these functions is as
the funding mechanism for the Convention on Biological Diversity (CDB)
and the Framework Convention on Climate Change (FCCC). Money allocated
by governments is channeled through the GEF to support activities
called for in these treaties, both of which have been signed by the
United States (the CDB awaits confirmation by the Senate).
The second important function played by the GEF is as a catalyst
for reform in the policies and operations of its implementing agencies.
The United States has always supported a reform agenda within these
agencies, including issues of transparency, information sharing, and
NGO access. While widespread reform within these institutions has not
been fully realized, the GEF has played a modest but important role in
what progress has been achieved in setting policies and standards that
are slowly being internalized by the implementing agencies.
GEF is not without its problems. Disbursement of funds has been
hampered by a number of factors, including the slow development of
strategies and project criteria. These have now been put into place
and, along with GEF's new procedures to streamline NGO access to its
fund, hopefully will speed the flow of resources to critical
environmental problems.
U.S. leadership is crucial in the GEF's continued roles as a
catalyst for reform and as a funding mechanism for the two conventions
described above. U.S. funding to the GEF over this replenishment period
has fallen well short of the commitments made. Failure to meet these
commitments risks other donors following suit as permitted by GEF's
burden sharing agreement. This shortfall is starting to seriously erode
the U.S.'s capacity and voice in shaping the GEF, which has been
critical to date. Also threatened is the progress being achieved in the
Facility's roles outlined above. Insufficient funding would constitute
a serious setback to the pursuit of global sustainable development and
environmental protection. Full funding of the fiscal year 1998
Administration request would go a long way toward offsetting this trend
and restoring the U.S.'s preeminent role in this institution's
operations.
Some members of Congress have called for increased funding above
the administration's request for a number of important programs in the
150 account such as Child Survival, Newly Independent States and
Refugee and Migration Assistance. WWF urges the committee, in
considering these increased levels, to ensure that equally significant
conservation programs administered by the Department of State and
USAID, such as those outlined above, are not consequently underfunded.
Failure to adequately fund these environmental programs will deal a
serious setback to international environmental initiatives that affect
U.S. interests.
For more than three decades, the United States has been a key
participant and catalyst in global efforts to protect endangered and
threatened wildlife, to promote international cooperation on
environment and science, and to support community-based efforts in
conservation and biodiversity. In the past few years, drastic cuts by
the Congress in the foreign affairs budget have seriously undermined
the government's international role in environment-related activities.
WWF urges the subcommittee to support the administration's efforts to
restore much of past years' budget loss, thereby helping to regain U.S.
prominence in global environmental programs.
World Wildlife Fund looks forward to working with the subcommittee
on the Foreign Operations bill. Thank you.
appendix i.--proposed committee report language on biodiversity support
program
The Subcommittee commends USAID for its work in integrating the
conservation of biodiversity in its development assistance programs.
Conservation of biodiversity, the variety of all forms of life on
earth, not only is essential to human survival, but is also important
to the global economy. For example, the 20 best-selling pharmaceuticals
in the U.S., with combined revenues of about $6 billion worldwide in a
given year, all relied on plants, microbes, and animals for their
development.
USAID's Bureau for Global Programs, Field Support and Research has
played a pivotal role in ensuring that USAID bureaus and missions
successfully address environmental problems around the world.
Accordingly, the Committee requests that the Bureau for Global
Programs, Field Support and Research continue to be adequately funded
for programs promoting biodiversity and climate change. Specifically,
the Committee requests the Bureau's Center for Environment be funded
for $50 million in fiscal year 1998, of which $3.5 million fund the
successful Biodiversity Support Program (BSP), a consortium of three
leading U.S. environmental organizations--World Wildlife Fund, The
Nature Conservancy, and World Resources Institute. BSP exemplifies the
type of USAID/Private Voluntary Organization partnership that
successfully and cost-effectively uses U.S. taxpayer support to assist
countries with conservation of biodiversity linked with social and
economic development. BSP has effectively leveraged core funding from
the Bureau on Global Programs with many times more funding from USAID
missions overseas and regional bureaus.
appendix ii.--proposed committee report language on international
conservation programs
The Committee recognizes the importance of international
organizations and programs as crucial to protecting the health and
environment of the American people. These activities, such as the
Ramsar Convention on Wetlands of International Importance and the
Convention on International Trade in Endangered Species of Wild Fauna
and Flora (CITES), represent sound investments toward preserving fish,
wildlife and habitats for the benefit of future generations. The
Committee expects that committed funds be provided for these crucial
activities.
______
Prepared Statement of Thomas A. Nassif, Chairman, American Task Force
for Lebanon
The American Task Force for Lebanon is an organization whose goal
is to work towards reestablishing a secure, stable, independent, and
sovereign Lebanon with full control over all its territory. Our members
reflect most religious groups in Lebanon and include a prominent roster
of American talent in business, law, medicine, the professions, and the
arts, as well as public officials, including two members of Congress.
During its fifteen-year civil war, Lebanon sustained $25 billion in
direct damage to its infrastructure, according to a 1991 United Nations
assessment. This is an enormous burden on a country with an estimated
1996 GDP of $8 billion and a public debt of over $11 billion. This debt
is a direct result of the legacy of war, a weak tax base, and the
financial requirements of a reconstruction program in the absence of
sufficient concessional finance. The mounting debt is raising serious
concerns regarding its sustainability and its adverse impact on
development. Lebanon's reconstruction of infrastructure is designed to
accommodate an economy geared toward an era of Middle East peace, which
has unfortunately not been realized.
We are grateful that the United States hosted the Friends of
Lebanon Conference to assist Lebanon's reconstruction in Washington on
December 16, 1996. The Friends of Lebanon Conference was important
because the United States lent its prestige in assembling donor
countries and multilateral lending institutions. During the Conference,
the United States pledged $20 million to Lebanon.
For fiscal year 1997, Lebanon received only $2 million in spite of
its great need. Before the Friends of Lebanon Conference, plans were to
phase out all assistance to Lebanon by 1999. Let me say, Mr. Chairman,
that this would not be a welcome development, as it undercuts U.S.
efforts at promoting the peace process and democracy in the Middle
East. The Lebanese-American community will be vigilant in ensuring that
Lebanon continues to receive foreign assistance while it is
redeveloping, because it is in the interest of the United States.
The United States Agency for International Development has
projected a development program for Lebanon of $12 million per annum
over the next five years. USAID feels that much can be accomplished
with this level of foreign assistance. We concur. All USAID projects in
Lebanon are administered by U.S.-registered PVO's. Also, by the end of
May, USAID will permanently station an officer in Lebanon. The presence
of a USAID officer will enhance the level of cooperation between PVO's
and other donors and ensure that accountability meets Congressional
standards during this period of budget cutbacks.
The new USAID strategy has three objectives which we feel cover
niches receiving little attention from other foreign donors, who have
mainly targeted infrastructure. The objectives are reconstruction and
expanded economic opportunity; democracy and governance; and, improved
environmental practice. We especially want to applaud the work that
USAID is doing in the areas of rural community development, the Beirut
Stock Exchange, the Environmental Center for Research and Development
at the American University of Beirut, and the reorganization and
computerization of the central control agencies, such as the general
accounting office, central inspection board, and the civil service
board.
A proposal that the World Bank is considering has the potential to
address some of Lebanon's socioeconomic problems. Although Lebanon has
a prosperous banking sector, Lebanese banks have historically been
commercial banks offering trade finance. Long-term credit is almost
nonexistent. Banks are required to keep 10 percent of total deposits on
reserve with the Central Bank of Lebanon. It has been proposed that the
Central Bank make available 1 percent of this idle money for long-term
loans of between $5000 and $20,000 for small-and medium-size
enterprises outside of Greater Beirut. The loans would be administered
by commercial banks, which have over 200 branches in the villages. This
project is critical because 1.6 million out of Lebanon's 3.1 million
people reside in Greater Beirut due to lopsided development and rural
unemployment. Viable economic activity outside of Greater Beirut would
alleviate the tremendous strain on Beirut's physical and social
infrastructure. If this project proceeds, the U.S. could provide $2
million in start-up capital.
We urge direct funding of the American Schools and Hospitals Abroad
Program for fiscal year 1998. This program supports such fine
institutions in Lebanon as the American University of Beirut, Lebanese-
American University, and International College. In recognition of the
Lebanese army's role as the symbol of national sovereignty, we urge
continued training of Lebanese Army personnel under the International
Military Education and Training program and we urge that nonlethal
equipment continue to go to the Lebanese Army under Excess Defense
Articles.
______
Prepared Statement of Sidonie Chiapetta and Erik Haunreiter, on Behalf
of the National Wildlife Federation
executive summary
The National Wildlife Federation urges the Subcommittee to
appropriate $2 billion for bilateral Development Assistance, of which
$600 million should be available for population assistance, and $108
million for education, with programmatic emphasis on women and girls.
In the Multilateral arena NWF recommends appropriations at the level of
the President's request: $1.034 billion for the International
Development Association of the World Bank, $100 million for the Global
Environmental Facility, and $365 million for the International
Organizations and Programs account.
bilateral assistance
In our view the most urgent task facing your Subcommittee is to
increase levels of long-term development assistance. Long term
development assistance helps to prevent ecological disasters; and it
enhances U.S. security in very tangible ways: by reducing immigration
pressures, and by ensuring the stability of our trading partners
overseas. It also answers to the fundamental belief of the American
people that ours is a wealthy nation, and should do its share to help
those in need. Our recommendation is a return to the fiscal year 1995
level of $2 billion for development assistance, with special priority
on two areas: international population assistance, and education for
girls and women.
Population assistance
In previous years, NWF has addressed the Subcommittee on the urgent
need to stabilize human population; we have cited the importance of
this goal for U.S. food security, and for the protection of precious
biological assets like genetic diversity, and renewable resources, like
fresh water and forest cover. As the largest-ever generation of young
people enters its reproductive years, these concerns are with us, as
ever. However, this year, we wish to highlight the importance of
population assistance from a purely human perspective: that of its
impact on women's health.
NWF believes that U.S. population assistance is administered
responsibly, and with due concern for human rights. One cannot
overstate the need for a wide variety of contraceptive choices; for
patients to be completely informed about the possible ill-effects of
contraceptives (particularly when long-lasting methods are in question)
and for adequate follow-up to identify and deal with problems. The
potential negative impacts of contraception on women's health should
always be closely monitored, and we believe that USAID and its
Cooperating Agencies do so, and that they respond quickly to problems
and reports of problems.
The other aspect of this charge is that the state of women's
reproductive health in general should be monitored, and there should be
a response to the information that comes to light. New information has
come to light.
This past year, in its annual ``Progress of Nations'' report,
UNICEF published new data from a variety of sources about the incidence
of maternal mortality, and maternal morbidity around the world. This
report made such an unforgettable statement of the facts that we will
quote from it at length. UNICEF is an agency that has always had the
highest reputation within the U.N. system and on Capitol Hill. Even
during the current difficulties of the U.S.-U.N. relationship, it has
enjoyed immunity from major funding cuts, and from criticism. The
interesting thing about this is that UNICEF, in a circumstance where
parochialism could be expected to run rampant, has in effect used its
protected status to advocate on behalf of two other UN agencies: the
World Health Organization and UNFPA. There is certainly no particular
institutional advantage for UNICEF in producing a report that
highlights the lamentable state of womens' reproductive health. It
follows therefore, that the leaders of UNICEF want women to be healthy,
even if the dollars to do that work go to two different UN agencies. It
follows that they see a deep link between the health of mothers and the
health of children, and they wanted to use their most public
opportunity to say so. This truly is leadership.
What follows is remarkable not only for the new statistics, but for
the way it spells out what ``maternal mortality'' actually means. Men
who read this should realize that the information comes as shocking
news to most women as well. The problems it describes are so alien to
our experience that it seems almost improper to talk about them.
Fortunately, UNICEF was not too squeamish to bring us this information,
so we feel we have a duty to highlight it for members of the
Congressional Subcommittee that can actually make the situation better.
What follows is an excerpt from Peter Adamson's essay ``A Failure of
Imagination'' in the Progress of Nations Report.\1\
``For a decade, the figure of 500,000 maternal deaths a year has
been part of the statistical liturgy. In 1996, new estimates are
showing that the number of women who die each year in pregnancy and
childbirth is probably closer to 600,000 * * *
But before the new estimates replace the old as a way of packaging
up the problem, it should be said that a mistake has been made in
allowing statistics such as these to slip into easy usage. For these
are not deaths like other deaths, and death is only a part of the story
they have to tell.
They die, these hundreds of thousands of women whose lives come to
an end in their teens and twenties and thirties, in ways that set them
apart from the normal run of human experience.
Over 140,000 die of hemorrhaging, violently pumping blood onto the
floor of the bus or bullock cart or blood-soaked stretcher as their
families and friends search in vain for help.
About 75,000 more die from attempting to abort themselves. Some
have taken drugs. Others have submitted to violent massage. Many more
have inserted a sharp object--a straightened coat-hanger, a knitting-
needle or a sharpened stick--through the vagina into the uterus. Fifty
thousand women and girls attempt such procedures every day. Most
survive, though often with crippling discomfort, pelvic inflammatory
disease, and a continuing foul discharge. But many do not survive: with
punctured uterus, infected wound and creeping sepsis, they die in pain
and alone, bleeding and frightened and ashamed.
Perhaps 75,000 more die with brain and kidney damage in the
convulsions of eclampsia, a condition that is described by a survivor
as ``the worst feeling in the world that can possibly be imagined.''
Another 100,000 die of sepsis, the bloodstream poisoned by a rising
infection from an unhealed uterus or from retaining pieces of placenta,
bringing fever and hallucinations and appalling pain.
Smaller but still significant numbers die of an anaemia so severe
that the muscles of the heart fail.
And as many as 40,000 a year die of obstructed labor--days of
futile contractions repeatedly grinding down the skull of an already-
asphyxiated baby onto the soft tissues of a pelvis that is just too
small.
In the 1990's so far, 3 million young women have died in one or
more of these ways. And they continue to die at the rate of 1,600 every
day, yesterday and today and tomorrow.
Ratio of injuries
For the most part, these are the deaths not of the ill, or of the
very old, or of the very young, but of healthy women in the prime of
their lives upon whom both old and young may depend.
But the numbers of the dead alone do not reveal the full scale of
this tragedy. For every woman who dies, approximately 30 more incur
injuries, infections, and disabilities which are usually untreated and
unspoken of, and which are often humiliating and painful, debilitating
and lifelong.
It is part of the silence that has for so long surrounded the issue
of maternal morbidity that there is so little research into its
prevalence. But based on a few studies and many assumptions, the best
estimate that can be made puts the ratio of injuries to deaths at about
30 to 1.
This means that at least 15 million women a year sustain the kind
of damage in pregnancy and childbirth that will have a profound effect
on their lives. And even allowing for the fact that some women will
suffer such injuries more than once during their child-bearing years,
the cumulative total of those affected can be conservatively estimated
at some 300 million women, or more than a quarter of the adult women
now alive in the developing world.
It is therefore no exaggeration to say that the issue of maternal
mortality and morbidity, fast in its conspiracy of silence, is in scale
and severity the most neglected tragedy of our times.
Obvious signs
Many of the injuries sustained during pregnancy and childbirth are
distressingly obvious. Rupture of the uterus, prolapse,\2\ pelvic
inflammatory disease, and lower genital tract injuries, make life
miserable for millions.
Most obvious and distressing of all is fistula.
Fistula occurs when the tissues of the birth canal are deadened by
prolonged labor and days of pressure from the baby's skull. In the days
and weeks after the birth, the dead tissue falls away, leaving holes
which allow leakage from the bladder and rectum, or both, into the
vagina. Urine and feces now bypass the muscles that normally control
the flow. The woman is incontinent. And without an operation to repair
the fistula, she will remain so all her life. Special clothing is not
available. She must make do with cloths and rags which quickly become
soaked and soiled. The constant leaking abrades the skin of the genital
area and produces a permanent and painful rash. Washing is difficult.
Frequent bathing is impossible.
Soon, the woman is excluded from her husband's bed, and then, from
his home. Living in an outhouse or animal shed, she cannot visit anyone
or travel anywhere except by walking. Each year, unknown numbers decide
that suicide is preferable to such a life.
The best available estimates suggest that 80,000 women develop
fistula every year. Most cases go untreated, and somewhere between
500,000 and 1 million women are living with the problem at this
moment.''
The essay goes on to discuss a few of the more widespread chronic
health problems associated with childbirth, such as acute anaemia, and
the reasons why these dreadful problems so often go untreated. Then it
asks ``What can be done?''
``The first and most obvious step towards reducing the toll of
maternal mortality and morbidity is to make high-quality family
planning services available to all who need them. With today's
knowledge, it is possible to do this in ways that are acceptable to all
countries and cultures.
Meeting only the existing demand for family planning would reduce
pregnancies in the developing world by up to a fifth, bringing at least
an equivalent reduction in maternal deaths and injuries. Add in the
many other benefits of family planning for all--fewer abortions, better
health and nutrition of women and children, faster progress towards
gender equality, slower population growth, reduced environmental
pressures--and the costs are almost derisory.''
The rest of the recommendations involve educating birth attendants
to identify the pregnancies with complications, and arrange for skilled
obstetric care to be available; ensuring that all surgeons have
training in the correct way to perform a caesarean section, and other
measures. The report also has a special side-bar on how maternal
mortality and morbidity impact children:
``About half of infant deaths occur in the first month of life--and
most of those in the first week. Those lives can only be saved by clean
and safe births, maintenance of body temperature, initiation of
spontaneous breathing, and an almost immediate beginning of
breastfeeding. This comes down to the availability of the right skills
and care in pregnancy and childbirth. There is therefore a significant
overlap between the action needed to protect women and the action
needed to protect newborns. An even more obvious implication is that
the 585,000 women who die each year in childbirth leave behind them at
least a million motherless children. The physical and emotional cost is
immeasurable. But it is hinted at by one study in Bangladesh showing
very significant differences in the survival rates of children with and
without mothers (particularly for girls).''
On the positive side, birth spacing, through the use of family
planning, greatly enhances infant survival: babies born less than two
years after their next-older sibling have almost twice the chance of
dying in infancy, relative to babies born after a hiatus of more than
two years. This is because infants conceived too soon after a previous
pregnancy are more likely to have a low birth-weight. The heavy drain
of childbearing on the mother's body may also mean that her milk is
less abundant or less nourishing, giving the newborn two strikes
against it from the outset.
Clearly, providing family planning is a humanitarian mission of the
first importance. The long-term environmental benefits of stabilizing
population will be inestimable; and there is no trade-off between the
two: individuals can be saved now, and future generations' interests
can be safeguarded at the same time.
NWF proposes an expanded appropriation for bilateral activities in
Population and Health, such that $600 million could be allocated to
family planning and other population programs in fiscal year 1998. This
is not even half of what would be required if the U.S. were to attempt
to meet its 1998 share for the goal of universal access to family
planning by the year 2000. However, it would be a start in the right
direction.
Education
According to UNICEF, simply meeting the unmet demand for family
planning would prevent as much as one-fifth of pregnancies in the
developing world each year. However, surveys show that a much higher
proportion--between one-quarter and one-half--of all births in the
developing countries are either unwanted or mis-timed.\3\ This means
that there is a significant subset of those couples who have unwanted
or mis-timed pregnancies who aren't aware that contraception could
offer them a way out of their problem. The gap is one that can only be
closed by education--and particularly by educating women to the point
where they feel entitled to assert their rights as regards marriage and
childbearing: the right not to be coerced into marriage or into sexual
relations, and the right to control the timing and number of their
pregnancies. Education emancipates a girl or a woman personally, and it
also enhances her earning power. What is more, educating women seems to
impact directly on family size, and on the survival prospects of
children. In Asia, Africa and Latin America, women with seven or more
years of schooling have two to three fewer children than women with
only three years of schooling. Even very small amounts of schooling
seem to have an impact on family health: if a woman has just one to
three years of education, the likelihood that her children will die in
infancy declines by 15 percent relative to a woman with no schooling at
all.\4\
NWF urges that a total of $108 million to be allocated for basic
education activities through USAID, and that at least one tenth of that
should be spent on programs focused on women and girls.
multilateral assistance
The Multilateral Development Banks
Mr. Chairman, as you know, in the past, the National Wildlife
Federation has been a vocal critic of the policies and practices of the
multilateral development banks (MDB's) and an advocate for change in
these institutions. By coordinating our efforts with non-governmental
organizations in the U.S. and in affected countries, combined with
pressure by members of congress, we have succeeded in bringing about
many important changes in the MDBs. Although there has been progress
made in the policies of the MDBs, especially in areas of improved local
public participation and transparency, full implementation of these
policies has yet to occur. If the MDBs are to remain effective as
institutions committed to poverty alleviation, the pace of reform must
quicken.
Presently, there are many efforts, both within the MDBs and
outside, to bring about further change within the banks and to ensure
their adherence to their own progressive policies. In a recent draft
report entitled ``The United States and the Multilateral Development
Banks,'' to be released by the Center for Strategic and International
Studies, a number of recommendations for reforming the MDB's and U.S.
policy towards these institutions were outlined. Among recommendations
included were: greater efforts at ``graduating'' countries from MDB
loans, improved local participation in MDB projects, improved
transparency, and ``fixing the gap between rhetoric and reality.'' \5\
The task force, which included NWF's International Office Director,
Barbara Bramble, argued that the cycle of dependency which persists for
so many borrower nations can be broken by (1) a more efficient
allocation of resources and (2) by limiting the time frame for loans.
This would allow the MDBs to return to their traditional role of
facilitating the transition from aid-dependency to economic self-
reliance. It would also allow them to become more active in non-lending
activities such as consulting.\6\
At the most well known and influential of the MDBs, the World Bank,
a number of important new policies and initiatives have been formulated
under the leadership of World Bank president James Wolfensohn, which
have the potential to make the Bank more effective in achieving its
goal of alleviating poverty in the world's poorest countries. Some
examples include: the Heavily Indebted Poor Countries Debt Initiative,
a project to help the poorest countries alleviate the debt burdens
which have impeded progress on development; the ``partnership for
capacity building'' to expand the Bank's efforts to train local experts
in the Africa region; and the Bank's Participation Mainstreaming
initiative, a program to encourage and facilitate stakeholder
participation which has been shown to increase prospects for project
success. Implementation of these projects has been slow at best. The
Bank has, however, recently committed itself to further reform through
its Strategic Compact, a document which outlines the Bank's goal to
become ``more efficient and to increase the development effectiveness
of everything it does.'' \7\
United States interests in the MDB's
In outlining the U.S. interests in the MDBs, the CSIS draft report
states:
``The MDB's objectives of reducing poverty, stimulating broad-
based economic growth, and promoting environmental sustainability in
developing countries continue to be important U.S. interests. They are
key prerequisites to reducing political and social instability abroad,
which, if left unchecked, has enormous security, economic, and social
costs for the United States and the developing world. The United States
has a very large stake in the environmental choices made by developing
countries, and pervasive poverty often results in migration, drug
production, and crime.''
As we have argued in the past, we feel that it is in our nation's
economic and security interests to maintain continued support for the
MDB's and their efforts in alleviating poverty, achieving economic and
social stability, and improving natural resource management policies.
The United States can benefit greatly from a stable international
political climate that is conducive to trade and foreign investment,
and the MDB's will continue to play an influential role in this arena.
Implementation of reforms
The National Wildlife Federation supports the new policies being
formulated by the MDB's, and we believe that these institutions are
continuing to move in the right direction. We feel, however, that the
pace at which these policies are being implemented is inadequate. A
case in point is the World Bank's evaluation of country performance.
Aware that conventional measures of Gross Domestic Product (GDP) do not
tell the full development story of a country, the Bank has developed
measures that better account for social and environmental factors and
their contribution to a prosperous economy. However, the Bank has
failed up to now to include its own important research, which was
initiated in 1989, in its advisory and lending operations. Without full
and immediate implementation, the commitments made by these
institutions may never be realized. The commitments have been made; now
its time to follow through.
It is therefore important that the U.S. maintain pressure and play
a leadership role in getting these institutions to carry through with
their commitments and make changes that really count. The only way the
U.S. can continue to remain influential in the MDB's, and to ensure
that our global interests are served, is to fully support these
institutions and to meet our own obligations. This includes, most
importantly, our financial obligations toward the International
Development Association (IDA), the branch of the World Bank that lends
to the world's poorest countries. Currently, we are not meeting our
pledges for the 11th replenishment of IDA, nor have we paid our arrears
for the 10th replenishment. It is absolutely essential that the U.S.
meet its financial obligations toward IDA. NWF therefore urges the
Subcommittee to appropriate the President's request of $1.034 billion
to meet our commitments to the International Development Association.
By fulfilling our obligations, the U.S. can continue to play an active
role in IDA, and bring about positive change.
International organizations and programs account
NWF supports the President's request of $365 million for the
International Organizations and Programs Account.--Although the
programs in this account amount to a small percentage of the entire
foreign operations budget, they enable the United States to meet its
global commitments to environmental protection as agreed to in
international treaties and conferences. The potential benefits to be
gained from supporting agreements such as the Convention on
International Trade in Endangered Species (CITES), the Montreal
Protocol for the protection of the ozone layer, and the Ramsar Wetlands
Conservation Agreement far outweigh the relatively small expenditures
required. In addition, NWF strongly supports appropriating the
President's request for the UN Development Program and the UN
Environment Program to their fiscal year 1995 levels. Both agencies
have long needed reform, but they are now engaged in that process. In
the case of UNDP reform is happening under the enlightened leadership
of Gus Speth. The United Nations Environment Program is responding to
sensible prodding by the Department of State. As with the World Bank,
such leadership cannot be exercised if the U.S. is not a major
financial player among the member governments.
Global environment facility (GEF)
NWF supports the President's request of $100 million for the GEF.--
The GEF is the major funding mechanism for realizing the goals
expressed in international environmental treaties on climate change,
biodiversity conservation, ozone depletion and the conservation of
international waters. The GEF has established funding subcategories or
``Operational Programs'' in three of the four areas, and has funded
what it calls ``Short-term response measures'' in the area of Ozone
depletion. In our view, the most valuable work of the GEF has been its
support of pilot projects in energy technologies with low greenhouse
gas emissions rates, and its portfolio of projects in renewable energy
technologies for rural electrification. It has also funded a number of
significant projects in the management of biological diversity reserve
areas, and buffer zones around ecological reserves. Over the last three
years, the GEF has organized 20 workshops helping representatives from
60 recipient countries to develop project designs that will meet its
guidelines for environmental protection. It has worked closely with the
Conferences of the Parties to two of the major environmental accords
(the Framework Convention on Climate Change, the Convention on
Biodiversity) to develop Operational Programs that will best promote
environmental goals. As it was hoped, the availability of funding
through the GEF has stimulated governments' interest in (and technical
capacity for) implementing development projects that try to maximize
the efficiency of natural resource use while minimizing ecosystem
damage.
Conclusion
National Wildlife Federation urges you, Mr. Chairman, and all the
members of the Subcommittee to reflect on the tremendous power that you
have to right the wrongs we have spoken about. We urge you to be bold
in exercising your power. The U.S. budget will never be balanced by
cutting the foreign aid programs mentioned here, programs which the
majority of your constituents support. On the other hand, increasing
the levels of assistance by the very modest amounts we suggest will do
inestimable good. Be generous in framing your Bill.
endnotes
1. The Progress of Nations: The nations of the world ranked
according to their achievements in child health, nutrition, education,
family planning and progress for women, 1996, UNICEF.
2. Prolapse of the uterus is a condition in which the musculature
and ligaments supporting the uterus are so weakened (usually by
excessive childbearing or by obstructed labor) that the uterus
partially or wholly slides out of the body through the vagina. A woman
with the most severe form of prolapse is unable to sit or squat down
normally, but must hold her uterus back with her hand. This condition
is almost never seen in industrialized nations because fertility is
lower here, and the strain of an obstructed labor is usually relieved
by a caesarean section.
3. ``A Response to Concerns About Population Assistance'' Susan A.
Cohen, Alan Guttmacher Institute, 1997.
4. ``Accelerating Girls' Education: A Priority for Governments''
fact sheet published by the Population Council, quoted in ``High
Stakes'' a report by the Rockefeller Foundation, 1997.
5. ``The United States and the Multilateral Development Banks''
Draft Final Report, Center for Strategic and International Studies,
March 1997.
6. Ibid.
7. ``The Strategic Compact: A Summary Note.'' The World Bank, 1997.
appendix i. selected letters from citizens
Scottsdale, AZ, April 23, 1997.
Hon. Senator Mitch McConnell,
Chairman, Foreign Operations Subcommittee, Senate Appropriations
Committee, U.S. Senate, Washington DC.
Dear Mr. Chairman: I am writing this letter to express my concern
and support for funding for the overseas population programs which are
currently being reviewed by you and your subcommittee. I feel very
strongly that it is important that every government of every country on
this earth, recognize the need for population planning in an effort to
reduce the impact that humans have on the environment. I urge you and
your committee to carefully consider the consequences of your decision.
This goes beyond a quality of life issue to a matter of existence.
Let's not wait until more plant and animal species become extinct as a
result of our inability to realize our responsibility as humans to
limit the impact we have on this planet. Thank you for your
consideration.
Sincerely,
Teresa Steimle.
______
Oklahoma State University, April 7, 1997.
Hon. Mitch McConnell,
Chairman, Foreign Operations Subcommittee, Senate Appropriations
Committee, U.S. Senate, Washington, DC.
Dear Senator McConnell: I urge you and your committee to support
extensive funding for family planning programs, both in the United
States and in the international arena.
Family planning programs prevent women from having more babies than
can be supported and they represent freedom and a chance at a better
life for millions upon millions of women and children.
Married women, with the help of well-funded family planning
programming, can have fewer babies, allowing the family to concentrate
often-scarce resources on a smaller number of children. This greatly
increases the chances that those children will receive nutritious food,
medical care, sufficient housing and clothing, and a chance at social
mobility. Without family planning for poor families, the limited money
available is spread even more sparingly over an increasing number of
children, all of whom have a diminished chance at a good, healthy life.
Even from an economic standpoint, spending more on family planning
now makes sense. It is less expensive to pay now for contraceptives
than to pay later for another million starving adults in countries with
disastrously high birth rates and disastrously low contraceptive
availability. As a world leader, it is the United States'
responsibility to prevent imminent starvation (not to mention a
dangerous strain to the world's natural resources) by allowing parents
the opportunity to sensibly limit the number of babies they bring into
the world to a number that they can support.
Thank you for your time and consideration.
Sincerely,
Eva Foster.
______
St. Augustine, FL, April 21, 1997.
Hon. Mitch McConnell,
Chairman Foreign Operations Subcommittee, Senate Appropriations
Committee, U.S. Senate, Washington, DC.
Dear Senator McConnell: Please show your support by voting to
expend additional funds for voluntary family planning programs that
will stabilize world population, and protect the environment. If a
safe, voluntary family planning is made accessible to all, we will go a
long way towards ensuring more abundant resources and a clean
environment for future generations.
Sincerely,
Sarah G. Thompson.
______
Miamisburg, OH, April 20, 1997.
Hon. Senator Mitch McConnell,
Chairman, Foreign Operations Subcommittee, Senate Appropriations
Committee, U.S. Senate, Washington DC.
Dear Senator McConnell: I am writing concerning the budgeting of
crucial family planning funds overseas. I feel it is extremely
important to support more funds for voluntary planning programs that
will stabilize world population, thus aiding in the protection of our
environment. It is our duty to aid in population control around the
world. As the population increases and the land and sea are destroyed
to satisfy the rising global demand needed in order to feed the rapidly
growing countries, the damages are not only to their countries but also
to our world. We must aid in not only providing much-needed
contraceptive devices but also in educating women. For the reasons
above, Rep. Callahan, please support making voluntary family planning
available to all so that future generations can experience the same
clean and beautiful environment that we are able to enjoy today.
Thank you,
Laura Sennet.
______
Columbus, OH, May 4, 1997.
Hon. Mitch McConnell,
Chairman, Foreign Operations Subcommittee, Senate Appropriations
Committee, U.S. Senate, Washington, DC.
Dear Senator McConnell: I am writing express my support for
continued U.S. funding of international family planning. I think
America should continue to help the poor and uneducated folks that we
share the planet with. If we don't continue to invest in such an
important program, overpopulation of the earth will only bring about
its demise sooner than necessary.
Rapid human population growth is having detrimental effects on
natural resources, because growth is happening faster than nature can
adjust. Overfishing of our oceans and destruction of the tropical rain
forests are just two examples of what can happen. Population growth
must be curtailed to give people time to learn how to do things in a
sustainable manner. I became so worried about environmental problems, I
enrolled in the School of Natural Resources at The Ohio State
University. Here I'm learning not only about natural resources, but
about other values held by society as well.
A sensible way to settle disagreements is to come to a compromise.
Since it is illegal to use funds allotted family planning for abortion,
a compromise has already been reached with anti-abortionists. Since no
religious morals are now being broken, education for family planning
should continue. Funding for family planning actually needs to be
increased to account for the vast numbers of people now living on the
planet. World population ``clocks'' now estimate that there are at
least 5.8 billion people living on the planet. Approximately 80 million
people have been added within a year's time.
I've learned that insect populations will grow quickly past
outbreak levels until their source of food becomes exhausted.
Populations may reach an equilibrium if there is a continued, limited
supply. If we don't control of our reproductive rate, we run the risk
of exhausting our base of support. I shudder when I think that we may
be no more intelligent than the rest of the organisms on the planet,
and when realizing that we also do more damage. Please continue to
support international family planning. Thank you.
Sincerely,
T. Hissom.
______
Winona State University, Communication Studies Department,
Winona, MN, April 27, 1997.
Hon. Mitch McConnell,
Chairman, Foreign Operations Subcommittee, Senate Appropriations
Committee, U.S. Senate, Washington DC.
Dear Senator McConnell: I understand that the Foreign Operations
Subcommittee will hold public hearings soon about U.S. support for
population programs, like family planning and better education for
girls, in many parts of the world. This is a letter of support for
maintaining U.S. aid to programs that will help save the environment
from population pressure that are killing coral reefs, rain forests,
and humane human communities.
International family planning programs have been attacked by
Congressional foes of family planning. They are determined to choke off
these services overseas because of a misguided fear that family
planning funds will be used for abortion, which is illegal in most
developing countries. It is irresponsible and short sighted to suspend,
cut, and restrict U.S. funding for much-needed contraceptive services
in developing countries. Please continue to support family planning
programs overseas.
Sincerely,
Bruce Dorries.
______
Columbia, MD, April 22, 1997.
Hon. Mitch McConnell,
Chairman, Foreign Operations Subcommittee, Senate Appropriations
Committee, U.S. Senate, Washington DC.
Dear Senator McConnell: This letter is to express my concern over
the crisis in regards to the world population. The tremendous increase
in the number of people in the past few decades and the continued
increase in the rate of population expansion is very alarming. The
continued increase in world population may seriously deplete the
world's natural resources and diminish the quality of life for all. We
as a caring nation should do all we can to help other nations and our
own people to understand the seriousness of the situation. I urge you
to support more funds for voluntary family planning programs. These
programs will help stabilize the world population, protect the
environment, and in the end ensure that future generations will have a
healthy environment in which to live.
Sincerely,
William J. Kautter.
______
Dumfries, VA, April 19, 1997.
Hon. Mitch McConnell,
Chairman, Foreign Operations Subcommittee, Senate Appropriations
Committee, U.S. Senate, Washington, DC.
Dear Senator McConnell: We need to appropriate more money for
overseas population programs in 1998. Despite impressive family
planning successes over the past 25 years, the world population
continues to grow. Significant cuts and unnecessary delays made in the
past two years have disrupted family planning services and women are
suffering.
Unchecked population growth means depletion of water resources,
vanishing fish stocks, eroding agricultural lands, disappearing
forests, fuel wood scarcity, famine and suffering. It forces people to
graze on land that cannot support it and clear rain forests which leads
to expansion of deserts worldwide. Continued rapid growth imperils
species and habitats around the globe.
World population continues to grow at 90 million people a year. We
need to ensure that those want to limit the size of their families can
do so safely and cheaply. We are already damaging and wasting precious
natural resources in our struggle to sustain our current population of
5.8 billion. Improving the overall standard of living and conserving
wild places can only be harder when the population doubles, as it is
expected to.
Lower population growth means fewer women and children suffering
and dying, a healthier environment and enhanced protection of our
natural resources. The U.S. should do more to educate girls and women
in the poorest countries, as well as provide more and better family
planning services. Family planning saves lives, reduces suffering and
prevents abortions.
Thank you,
Brian Hotchkiss.
______
May 9, 1997.
Dear Senator McConnell: Please support more funds for voluntary
family planning programs that will help to stabilize the world's
growing population thereby taking pressure off of the environment.
Thank you for your support.
Sincerely,
Shana Wales.
______
April 5, 1997.
Hon. Mitch McConnell
Chairman, Subcommittee on Foreign Operations, Senate Appropriations
Committee, U.S. Senate, Washington DC.
Dear Senator McConnell: Human population growth is by FAR the
greatest threat to ecosystems, human happiness and political systems. I
urge you to take whatever steps possible to encourage people everywhere
in the world to curtail the growth in human population. Even with the
most optimistic estimates and the best plans in place, it will not be
long before the growth will be checked by very unpleasant natural means
and/or severe and draconian political solutions.
The costs of dealing with the problems of overpopulation will be
huge compared to the cost of any plan to reduce the growth.
The immediate goal should be inform every woman on earth that she
need not bear any children SHE doesn't want, and to educate every one
that there are many other routes to an enjoyable, happy life.
ALL legal, cultural, educational and economic barriers to women's
ability to choose any kind of life they desire should be eliminated.
Sincerely,
James Henkel.
______
Fairfax, VA, April 8, 1997.
Hon. Mitch McConnell,
Chairman, Foreign Operations Subcommittee, Senate Appropriations
Committee, U.S. Senate, Washington DC.
Dear Chairman McConnell: Please support increased funding for
voluntary family planning programs. By doing this you will be helping
to stabilize the world population and protect the environment, thereby
ensuring more abundant resources and a cleaner world for future
generations.
Thank you for your support.
Sincerely,
Bryant Bullock.
______
Alexandria, VA, April 9, 1997.
Hon. Mitch McConnell,
Chairman, Foreign Operations Subcommittee, Senate Appropriations
Committee, U.S. Senate, Washington DC.
Dear Chairman McConnell: Please support increased funding for
voluntary family planning programs. By doing this you will be helping
to stabilize the world population and protect the environment, thereby
ensuring more abundant resources and a cleaner world for future
generations.
Thank you for your support.
Sincerely,
Scott Francis.
______
April 11, 1997.
Hon. Mitch McConnell,
Chairman, Foreign Operations Subcommittee, Senate Appropriations
Committee, U.S. Senate, Washington DC.
Dear Senator McConnell: There are many very important issues facing
the world today, but a fundamental one is population growth. This
problem affects everything from natural resources to personal well-
being. In the next couple of weeks, you and other representatives will
be debating the importance of funding voluntary international family
planning. I hope that you will agree with me about the importance of
providing more funding to these vital programs.
As the population in a region increases, the need for land, energy,
food, educational opportunities and other basics increases as well.
Unlike the population rate, which seems to be an inexhaustible
resource, the other resources are finite--and disappearing. The by-
products of too many people in a region include pollution, over-
cultivation of land which reduces the fertility and productivity of the
soil, clearing of natural areas and over-hunting which leads to
extinction of many animals and plants, and many other negatives.
Failing to make a concerted effort now to slow the population growth
promises more irreparable damage to the earth and the natural resources
that we all need.
Women who receive education about family planning (along with
traditional subjects) tend to make choices to have children later and
to have fewer children. They also usually have jobs which allow them to
support their children (with or without spouses). They are better able
to care for and educate the children they have--which begins a positive
cycle of smaller families and prioritizing education for children. This
is the kind of cycle that we need to foster and to encourage. This is
the kind of cycle that will lead out of the cycles of poverty and
starvation that grip many families in many countries.
It is imperative that we continue to fund voluntary international
family planning. I appreciate your attention to this issue.
Yours very sincerely,
Emily Shortridge.
______
April 16, 1997.
Hon. Mitch McConnell,
Chairman, Foreign Operations Subcommittee, Senate Appropriations
Committee, U.S. Senate, Washington, DC.
Dear Mr. Chairman: It is very important that you support more funds
for voluntary family planning programs that will stabilize world
population, and protect the environment. Safe, voluntary family
planning is one great way to help provide more abundant resources and a
clean environment for future generations.
Thank you for supporting this great and worthy cause.
Sincerely,
Christopher Tovell.
______
April 20, 1997.
To Members of the House and Senate Committees: I strongly support
continued funding of population programs as part of the U.S. Foreign
Policy. Such programs are CRITICALLY important in checking the most
dangerous threat to the world: man.
Funding for population programs help countries to control their own
population growth. Countries such as Mexico and the Philippines, to
name two, have populations that are growing at unsustainable levels.
Uncontrolled population growth correlates directly to increased
levels of poverty, and accelerated levels of environmental damage. The
National Wildlife Federation can quote the statistics to you, but I
wish to express my support of this program.
Senators and Congressmen, you need to consider not only the short
term interests of the United States, but its long term interests and
needs, and those of the world community. The U.S.' strategic needs are
increasingly coupled with those of the world at large, and to deny
funding for population programs is both short-sighted, and
irresponsible in light of the long-term interests of this country. Not
appropriating and spending funds for population planning means that
this country would have to spend even more money later for resources
that have become in increasingly short supply, such as fish stocks, and
have to provide even more money in economic aid for those countries
that we support, because those countries will probably not be able to
even afford to feed themselves, among other problems.
Sincerely,
Jeffrey Harris.
______
Prepared Statement of the Faith Action for People-Centered Development
Policy
overview
The development paradigm of the past twenty-five years is
undergoing a fundamental revision. An approach in which government is
the dominant actor is giving way to a more dynamic process in which
both the market and civil society sectors assume greater leadership and
responsibilities.
Market and civil society sectors are bringing to bear the lessons
and experiences garnered over recent decades. The approaches of these
two sectors are compatible in some respects, but are in tension in
others. Although the market approach has tended to dominate recent
debate, it is important that policy makers give equal consideration to
the perspectives of civil society.
The two sectors differ in their view of the role of government. The
market sector advocates minimal regulation and a well-defined and
circumscribed role for government. Civil society, while supporting
efforts to reform government institutions to improve their governance
capacity, insist that government must fulfill its role in protecting
human rights and ensuring the common good. Specifically, government
must regulate the market and work to facilitate greater market access
for those otherwise excluded and to address market failures and
limitations.
Proponents emphasize the dynamism and creative potential markets
bring to economic growth and development. They call for government
policies and institutions that will give the market freedom of movement
and opportunity.
Civil society organizations are helping construct a new paradigm at
the global level that begins with the conviction that the productive
and sustainable development potential of local communities and
grassroots groups are key. Resources, technical assistance, and
policies that help to unleash and strengthen the productive capacity of
men, women, and youth directly improve the quality of their lives and
contribute to economic growth and development for society as a whole.
At a national and global level responsive, transparent and accountable
institutions are needed that will support development efforts at the
local level.
In this model, foreign aid should support developing country
efforts to expand access to the market and mobilize the productive
potential of local groups. Donor governments can help to create the
conditions that would make these efforts both possible and effective.
Resources should be targeted to those countries and peoples who are on
the margins of national and global economies or whose rights may be
threatened by unregulated market forces.
Failure of donor governments to target assistance in this way will
strengthen the trend toward new and greater disparities at the global
level and within developing countries. While private entities are now
the greatest source of financial resources for development, the vast
majority of this private finance has gone to a handful of countries
including China, Indonesia, Malaysia, and Thailand. By contrast, ``many
of the world's poorest countries are still virtually unable to access
the $159 billion in private finance that the developing countries as a
whole received in 1995. They attracted almost no foreign direct
investment or loans from international banks.'' \1\
Official aid agencies, including the U.S. Agency for International
Development, need to keep a people-focus at the center of their
efforts. Concern about the quality, structure, and distribution of
economic growth should be integral to all efforts to develop markets
and promote growth. This concern also should extend beyond aid programs
to market development activities of other U.S. government agencies,
including the Departments of Agriculture and Commerce.
moral principles
We are convinced that it is both appropriate and necessary to
reflect on the moral underpinnings of government policy decisions.
These decisions embody moral values that reflect our national
character. The ability of the U.S. to ensure ``liberty and justice for
all'' depends on the strength of the moral fabric that holds us
together as a people. As churches and faith-based organizations, we
offer the following moral principles as guidelines for foreign
assistance.
1. All people--male and female--are created in the image of God,
loved by God and equal in worth, dignity and fundamental rights.--
Bearing the divine image, everyone is entitled to participate
meaningfully in the political, social and economic decisions that shape
society. In harmony with the rest of creation, all people are entitled
to an equitable share of the fruits of the earth. The economy exists
for the people, not people for the economy.
Development aid, therefore, should enhance human dignity, equity
and basic human rights. Aid should strengthen human potential and
foster universal access to resources and employment. It must assist and
equip people and communities to select, design and implement their own
plans for sustainable development. Aid programs should be accountable
to the political, civil, economic, social and cultural rights codified
in international treaties.
2. As redeemer and liberator, God calls all human beings to
demonstrate a special concern for people living in poverty and
oppression.--Nations will be judged on the basis of how they treat the
hungry, homeless, and other vulnerable members of society. Thus,
economies must give preference to the dignity of those who labor, to
human rights, gender equity and sustaining the earth, above the
interests of capital. As instruments of the common good, governments
have a duty to regulate national and global economies so that all
people are ensured equitable access to dignified, sustainable
livelihoods and the basic necessities of life.
Development aid, therefore should express our nation's historic
commitment to the emancipation of people who are oppressed. Aid should
be directed toward freeing people trapped in poverty and empowering
people who are disenfranchised. It should be focused in areas and with
groups that the market cannot or does not serve, or that have been
marginalized or harmed by market mechanisms. Aid must not, however, be
a substitute for public actions which appropriately regulate the market
so that the fundamental rights and basic needs of all are served.
Programs to promote democracy should be aimed at enfranchising those
who are most marginalized.
3. Human beings are persons-in-community, intended to live in
covenant relationships according to the norms of love and justice.--
They are neither isolated individuals nor faceless members of
totalitarian collectivities. All people are created and called to love
God and neighbor--across the divisions of ethnicity, class and nation.
``Justice is love distributed'' and requires that everyone have access
to sufficient resources to live in dignity, meet their family's needs
and fully participate in the shared life of their community. This means
that great extremes in the distribution of income and wealth must be
avoided. Our covenant with God and one another is violated when a few
people have much more than they need while many others lack the basic
necessities.
Development aid, therefore should express love of neighbor and
covenant community among the human family. Aid should foster people-
centered development that increases the equitable distribution of
resources and helps overcome vast disparities of wealth among nations
and peoples. It should support and strengthen local communities and
cooperative development processes. It should not undermine existing
forms of community and cooperation.
recommendations for fiscal year 1998 foreign assistance
Based on the principles outlined above we offer recommendations on
fiscal year 1998 foreign assistance funding and policies.
I. Funding: Overall level, priorities, and offsets
A. Overall assistance level
We urge the subcommittee to approve the Administration's total
request of $13.4 billion. The proposed $1 billion (or 8.8 percent)
increase over fiscal year 1997 represents a modest but essential
recognition of the importance of international engagement. We are
keenly aware that in the past lower overall levels of foreign aid
invariably have resulted in lower levels of development assistance.
B. Priorities
We urge the subcommittee and the Administration to give greater
priority to those regions and sectors that are increasingly
marginalized in the world and national economies. We suggest below
specific regions and sectors that we believe should be given priority
consideration in foreign aid funding.
1. Low-income developing countries and poor people within them,
with particular attention to sub-saharan Africa.--Only $3.1 billion or
34 percent of bilateral assistance \2\ requested for fiscal year 1998
is designated for low-income countries.\3\ Two-thirds of that aid goes
to Egypt ($2.1 billion), leaving just over $1 billion (of the total
$9.2 billion) for the more than forty low-income aid recipient
countries. Israel, with a per capita income of $13,920, receives three
times the amount allocated to these poor countries.
While there is tremendous variation in levels of development among
African countries, over half (33 out of 56) of the low-income countries
in the world are in sub-Saharan Africa. U.S. foreign aid priorities, as
reflected by aid allocations, require a radical revision.
In contrast with bilateral aid programs, concessional lending by
the World Bank and regional development banks, including the Inter-
American Development Bank's Fund for Special Operations, represent the
most important source of development finance for most low-income
countries. These are precisely the countries that are least likely to
have access to private sources of finance. While we share long-standing
concerns about the quality of the programs of these institutions, we
believe strongly that the external finance they provide poor countries
needs to be maintained, even as we intensify our work with others to
bring about reform of the institutions.
Faith Action recommends that the Committee:
Reallocate significant amounts of bilateral assistance away from
high income countries in favor of low-income countries in Africa, Latin
America and the Caribbean, and Asia and to poor people within those
countries. We urge an increase in funding for the Development Fund for
Africa to the fiscal year 1995 level of $781 million.
Approve the President's full request for the World Bank
International Development Association (IDA) and the Inter-American
Development Bank Fund for Special Operations (FSO).
Approve the Administration's request for funding for International
Organizations and Programs, including $100 million for the U.N.
Development Programme, to strengthen coordinated follow-up to the U.N.
summits and conferences.
Consider the proposals presented in the Microcredit for Self-
Reliance Act of 1997 (H.R. 1129) introduced by Reps. Hall and Houghton.
Of particular interest is the proposed $20 million for a special
initiative for the support of community-based micro-finance
institutions through the International Fund for Agricultural
Development (IFAD), which has been a pioneer in this area.
2. Support for food security programs.--Last year's World Food
Summit refocused world attention on the plight of the more than 800
million people who are chronically undernourished and living on the
margins of human existence. The assembled world leaders declared that,
``The problems of hunger and food insecurity have global dimensions and
are likely to persist, and even increase dramatically in some regions,
unless urgent, determined and concerted action is taken, given the
anticipated increase in the world's population and the stress on
natural resources.'' \4\
The Summit Plan of Action emphasizes the importance of
participatory development and recognizes the critical role of women in
achieving food security. It also emphasizes the importance of access by
poor family farmers to land, technical assistance, credit and other
production assistance. The community of nations agreed to various ways
of mobilizing additional resources for food security efforts.
AID funding for agricultural activities has decreased dramatically
in recent years. We believe that this decline must be reversed and that
additional resources must be dedicated to achieving global food
security. The Administration's proposed Africa Food Security Initiative
is an important step in this direction. We urge Congress to renew and
strengthen U.S. support for the International Fund for Agricultural
Development, with its decades of effective work with poor farmers. We
note Congress' past efforts to provide adequate funding for IFAD, most
recently by authorizing the transfer of funds from AID development
assistance. We would urge instead of earmarking AID funds to be
disbursed at the discretion of the Administration, that the U.S.
contribution be appropriated specifically for IFAD at a level
consistent with past contributions.
Faith Action recommends that the Committee:
Increase resources for agricultural development including approval
of USAID's proposed $30 million African Food Security Initiative.
Restore a separate funding line for the International Fund for
Agricultural Development (IFAD) in the International Organizations and
Programs account and increase the U.S. contribution to $17.5 million,
the ceiling level authorized for transfer from development assistance
in the fiscal year 1997 appropriations legislation.
3. Support debt relief for highly indebted poor countries.--We
recognize the Heavily Indebted Poor Country Initiative (HIPC) approved
by the World Bank and International Monetary Fund last year as a
potentially helpful first step toward authentic relief for poor
countries from unjust debts. The initiative would provide bilateral and
multilateral relief to poor countries with debts deemed unsustainable.
We are, however, concerned that the relief offered under the Initiative
will be substantially less than the level needed to free up resources
for investments in human development. In our view, the eligibility
requirements are too narrow, the conditions attached to debt relief are
too stringent and the requirements are not sufficiently focused on
poverty reduction. Further, the length of time before an eligible
country gets debt relief is far too long.
Experience in the initial cases of Uganda and Bolivia suggest that
the World Bank/IMF analyses are overly optimistic about countries'
potential to grow and reduce their debt to sustainable levels. Despite
extremely high levels of poverty, government commitment to improve
health, education, and nutrition and ten years of successful economic
stabilization and restructuring programs, the debt relief for these
countries may amount to only 10 percent or less of their total debt
stock.
Faith Action recommends that the Committee:
Approve full funding of the Administration's $22 million request
for bilateral debt relief under the HIPC initiative.
Encourage the Administration to use its leadership in the World
Bank and IMF to support substantial and ``up-front'' multilateral debt
relief within the HIPC Initiative for the full range of heavily
indebted poor countries. Further, the Committee should urge the
Administration to take into account the precarious situation of poor
countries, especially those in sub-Saharan Africa and Latin America,
when assessing their need for debt relief. Finally, it should call on
the Administration to take the lead within the Paris Club to revise the
Naples Terms, which currently govern bilateral debt reduction, to allow
more debt stock to be eligible for rescheduling and reduction.
4. Support programs that provide an alternative to child labor.--
The quest by transnational corporations to lower production costs has
led increasingly to the use of child labor, at a fraction of the
already low wages paid adults in developing countries. Too often the
result is exploitation of children as docile, underpaid workers who
labor long hours in unsafe and unhealthy working environments, and are
unable to attend school. Increased exploitation of child workers points
to the need for mechanisms that ensure protection of children's basic
human rights. In the end, governments are responsible for these
protections. In this regard, we will follow with interest the
implementation of the Workplace Code of Conduct developed by the
Apparel Industry Partnership, which was recently announced with the
backing of the Clinton Administration.
The Foreign Operations Subcommittee has supported increased funding
for child survival activities. We urge the Committee to extend that
concern for children beyond the early years when their very survival is
tenuous, to their later years, when many are deprived of opportunities
for schooling and the possibility of fully developing their human
potential.
Faith Action recommends that the Committee:
Look into the serious problem of child labor and to talk with the
Administration about additional efforts that could be made to address
this problem. AID should consider the possibility of targeting some of
the educational programs for girls in areas where child labor
conditions are particularly problematic.
C. Funding offsets
We urge the committee to offset increases recommended above by
shifting funds from the following programs, which we oppose.
1. Foreign military finance (FMF) and international military
education and training (IMET).--Together, these represent the single
largest expenditure in the foreign aid appropriation. Two countries,
Israel ($1.8 billion) and Egypt ($1.2 billion), account for 90 percent
of FMF.
While the defense of strategic allies throughout the world against
foreign attack may be the rationale for the FMF and IMET, the weapons
and skills acquired often create invulnerable militaries that become
the enemies of their own people and violate human rights of dissenters
with impunity. IMET, for example, has helped to finance the School of
the Americas, which has been implicated in training of Latin American
military officers known to be responsible for human rights violations
in their countries.
Looking at these programs in their larger context, military aid
comes on top of $266 billion defense budget, much of which is used to
project U.S. military force overseas. This Cold War strategy, fostered
as a check on the expansion of the Soviet Union and its regional
allies, is an anachronism in a world where the threat of nuclear
annihilation has diminished markedly and where several regional wars or
threats of such wars, have been set aside in favor of negotiations.
It is time for a new foreign policy more in keeping with new global
and regional realities. Some of the military aid to Israel and Egypt
should be redirected to support conflict resolution, peace processes,
sustainable development and regional economic development within the
Middle East, and eventually redistributed toward development aid for
other parts of the world. Increased efforts are needed to deal with the
scourge of the 100 million anti-personnel landmines remaining in the
ground in more than 60 countries, which continue to maim and cripple
people and societies long after the fighting ends.
Faith Action recommends that the Committee:
Approve the $15 million FMF requested for demining operations. We
hope the Committee will urge the administration to participate in
negotiations and sign a treaty banning landmines before the end of
1997.
Reject the Administration's request for an FMF increase and instead
reduce FMF by 10 percent annually for seven years, with those funds
being added to development assistance.
Reject the Administration's request for an increase in IMET and
reduce funding except for ``expanded IMET,'' which goes toward training
military officers and civilians in, human rights, responsible resource
management and principles of civilian oversight of the military.
2. Anti-narcotics aid.--This is by far the fastest growing account
in the foreign aid bill, with the fiscal year 1998 request of $230
million representing a more than 100 percent increase over the fiscal
year 1995 level of $110 million. In our view, these increases are
attributable in large part to political opportunism around an issue
about which the electorate is deeply concerned. While sharing this
concern, we oppose much of the funding for this program both on the
basis of its lack of effectiveness and its negative effect on the human
rights situation in source countries. We support funding for
multilateral institutions and agencies working to combat international
narcotics trafficking and believe more progress could be achieved
through increased efforts to control money laundering, precursor
chemicals and firearms, and to establish well-functioning justice
systems in source and transit countries.
Drugs continue to enter the United States in large amounts. Cocaine
and heroin remained ``readily available in all major U.S. metropolitan
areas during 1995'' according to a report by the National Narcotics
Intelligence Consumers Committee, as cited by GAO.\5\ Constant
adaptations by narcotics producers and traffickers means that
reductions in one area may simply result in increases elsewhere. For
example, the Administration reports an 18 percent reduction of coca
cultivation in Peru in 1996 while also citing a 32 percent increase in
cultivation in Colombia.\6\
The GAO report cites a number of obstacles to the success of these
anti-narcotics efforts, including a lack of oversight in the use of the
assistance. This is particularly troubling because some 40 percent of
the assistance is used to support government agencies, including
security and military forces in the source countries. The militaries of
Peru, Colombia, and Mexico are responsible for serious on-going human
rights abuses. Anti-narcotics assistance seeks to strengthen these
forces, but does not address human rights concerns.
Faith Action recommends that the Committee:
Transfer resources for alternative development projects aimed at
reduction of coca cultivation to the Agency for International
Development.
Reduce dramatically the funding for International Narcotics control
and strengthen prohibitions on anti-narcotics assistance to military
and security forces responsible for human rights abuses.
3. Middle East development bank.--While we are not opposed in
principle to U.S. participation in and support for the Bank, we believe
that any U.S. contribution should come from existing resources to the
Middle East.
Faith Action recommends that the Committee:
Reject the Administration's request for $52.5 million in ESF for a
U.S. contribution to the Middle East Development Bank. The Committee
should require the Administration to use existing resources to the
Middle East for any U.S. contribution to the Bank.
4. Export promotion programs.--The Administration is requesting
more than $800 million for the Export-Import Bank, the Overseas Private
Investment Corporation and the Trade and Development Agency for fiscal
year 1998. The effectiveness of these programs in enhancing U.S.
exports and creating jobs in the United States has been questioned by
the GAO. The programs tend to concentrate resources in upper-middle
income countries rather than poorer countries in Africa, Latin America,
and Asia. During a time of scarce budget resources, U.S. taxpayer
dollars should not give priority to programs that subsidize
corporations. The market itself can and should provide the needed
incentive for these companies to invest and develop new markets abroad.
Faith Action recommends that the Committee:
Reduce funding for the Export-Import Bank, the Overseas Private
Investment Corporation, and the Trade and Development Agency below the
Administration's request level, and shift the resources to the priority
programs outlined above.
II. Institutional reform
Agency for International Development.--We believe that reform
efforts at AID need to be intensified. Current efforts to develop a new
strategic plan provide an opportunity for AID to focus its mission and
goals more sharply. We urge AID to formulate its mission and goals with
a clear commitment to poverty reduction and people-centered
development.
We also believe that AID should accelerate the development of new
working relations and methods of collaboration with other governmental
and non-governmental actors. We favor the cooperative partnership
approach advocated by the Development Assistance Committee of the
Organization for Economic Cooperation and Development. We believe AID's
New Partnership Initiative has developed important conceptual
frameworks and methods for supporting local development. We urge AID
leadership to move quickly to integrate these methods throughout the
agency and to provide necessary resources to ensure widespread
implementation of the Initiative.
World Bank International Development Association.--While reform of
the World Bank has moved ahead under the leadership of President
Wolfensohn there continues to be a gap between the discourse coming
from the headquarters and the programs on the ground. An assessment by
OXFAM International gives highest marks for attention to the need for
debt reduction and promoting greater participation and conclude that
much greater efforts are needed in the area of equity, poverty
reduction and increased transparency and accountability of Bank
operations.
One important area in which non-governmental organizations are
pressing for change at the Bank concerns the participation by groups
and communities in the borrowing countries that are affected by Bank
operations in the identification, design, implementation and evaluation
of projects and policies. The Bank has carried out a learning process
on participation over the past decade and steps are being taken to
establish methods to increase participation, but it must now take steps
to ensure consultation with affected peoples, especially at the
earliest stages of its lending, with necessary resources made available
for such consultation.
We also would like to draw the Committee's attention to a new
effort just getting underway. The Structural Adjustment Participatory
Review Initiative (SAPRI) is a joint World Bank--civil society exercise
to assess the impact of the Bank's structural adjustment programs from
a grassroots perspective. Reviews will be carried out in ten countries,
including El Salvador, Ghana, Mali, Uganda, Zimbabwe and Bangladesh. We
believe that this effort will help to advance civil society-Bank
dialogue on an issue that has been of profound concern to our
organizations.
Inter-American and African Development Foundations.--Since their
inception, these Foundations have been on the leading edge of effective
methods to promote and support grassroots development. In recent years,
bilateral and multilateral official aid agencies have been trying to
reform their structures and methods to emulate the approach of the
Foundations. Thus far, however, they have not been able to address the
obstacles inherent in their size, complexity, and lack of familiarity,
knowledge, and experience at the grassroots level. Among government
institutions, the Foundations remain in the forefront of the people-
centered approach that our organizations advocate.
Faith Action urges the Committee to approve the requested level of
funding for the Foundations and together with U.S. non-governmental and
private and voluntary organizations to engage the Foundations in
identifying and responding to the new challenges of grassroots
development in a changing global environment.
conclusion
Changes in the global economy, accompanied by corresponding
political and social changes recast the development process in ways
that require careful thought and insight. Moral underpinnings are
especially important at a time when missions and goals are being
reconsidered. We hope that the moral principles outlined above will
provide useful guidance to the Committee as it decides foreign aid
priorities this year. We would like to work with the Committee to
ensure that improved quality of life for poor people around the world
is the measure of effectiveness of our foreign assistance.
endnotes
1. OECD Development Assistance Committee. ``Efforts and Policies of
the Members of the Development Assistance Committee:'' 1994 Report.
Paris: OECD, 1997.
2. Including development assistance, ESF, military assistance, NIS/
SEED, international narcotics control, and debt restructuring.
3. GNP per capita of $694 and below in 1993.
4. World Food Summit, ``Rome Declaration of World Food Security,''
Rome, 1996.
5. U.S. General Accounting Office. ``Drug Control: Long-Standing
Problems Hinder U.S. International Efforts.'' GAO/NSIAD-97-75, February
1997.
6. International Narcotics control Strategy Report, 1996.
7. Op.cit.
8. OXFAM INTERNATIONAL, ``Report Card on James D. Wolfensohn and
The World Bank, June 1995-August 1996.''
______
Prepared Statement of the National Council for International Health
``No matter how selfish our motives, we can no longer be
indifferent to the suffering of others. The microbe that felled one
child in a distant country yesterday can reach yours today, and seed a
global pandemic tomorrow.''
--Nobel Laureate Dr. Joshua Lederberg, 1996
Thank you for allowing the National Council for International
Health (NCIH) to submit public testimony regarding the prioritization
of US foreign aid appropriations. NCIH is a membership organization
with over 100 member organizations including the American Medical
Association, the American Public Health Association, American Dental
Association, the American College of Preventive Medicine, the American
Nurses Association, the American Association of Critical Care Nurses,
the Association of Schools of Public Health (representing 28 Schools)
and dozens of other international health and development organizations.
Most of these organizations, and thousands of individual health
professionals are in support of this Subcommittee re-examining its
fundamental priorities in light of both pressing human needs around the
world and the rapidly growing threat to our nation's security from new
and re-emerging infectious diseases.
A serious and growing threat to US security.--Four esteemed reports
over the last 6 years have identified `new and re-emerging' diseases as
a serious threat to Americans. More than a threat, these pathogens are
already costing more lives, both American and foreign, than any other
`threat' humanity has known. Over 150,000 Americans died last year from
infectious diseases, raising it from the fifth greatest killer of
Americans to third place in just 12 years. HIV/AIDS represents only
half of this increase. Another 24,000 Americans died from `unknown'
causes that were `likely' due to infectious agents. These numbers are
climbing and unlike the top two causes of death in America, heart
disease and cancer, reducing our risk to infectious diseases will
require a global and multi-dimensional approach.
Fifty years ago the Marshall Plan was launched to control the
spread of Communism. Today, overwhelming evidence suggests a new
initiative of comparable commitment is needed to protect Americans from
the global spread of infectious diseases. Foreign aid and the
appropriations of this subcommittee will play a decisive role in waging
this new `hot war'. Slowing and stopping the global spread of
infectious diseases can rationally become a primary directive of US
foreign policy. The evidence is overwhelming and American lives are
already being lost with a rapidly growing potential for assured
catastrophic consequences if we continue to delay an adequate response.
A more far reaching approach to human welfare by the US in the previous
decades could have lead to the early detection of the emergence of HIV/
AIDS. In the mid-1960's African doctors were noting the effects of the
``Slims diseases'' along the Kinshasa hiway. Our interest then, would
have given our scientific community as much as a 20 year head start in
combating this virulent and rapidly mutating virus. Hundreds of
thousand of US lives may have been saved as well as the $30 billion or
more now annually spend in the US fighting this one disease.
This testimony will not focus on documenting the problem already
detailed in the numberous prestigious reports, journals, books,
articles and documentaries over the last few years and the panelist you
will hear from today. We will instead highlight solutions. Particularly
those solutions that could be implemented with adequate funding by this
Subcommittee.
Domestic problem/global Solutions.--We have basically three places
to address the global spread of infectious diseases. We can go on as we
are, addressing each disease as it reaches our lungs, our schools, our
blood supply or our hospitals. We could react to isolationist ideas and
try endlessly to close or restrict microbial entry at US borders and
airports. Or, we can take the cheapest and most effective approach of
launching pre-emptive strikes on the microbes home turf--the conditions
of poverty, hunger, illiteracy, squalor and chaos in which the majority
of pathogens prolifically breed and mutate.
* * * the emergence of the most harmful diseases can be countered
not only for pathogens that are recognized as threats but also for
those posing threats that are not yet recognized. Providing pure water
supplies, reducing attendant-borne transmission, reducing vector-borne
transmission preferentially from ill people (e.g., by providing
mosquito-proof houses) should guard against the emergence of virulent
pathogens, whether the pathogens are unidentified or are highly
virulent variants of identified human pathogens.
--Paul W. Ewald, Dept. of Biology, Amherst College. ``Guarding
Against the most Dangerous Emerging Pathogens: Insights from
Evolutionary Biology'', Emerging Infectious Diseases, CDC, Vol. 2, No.
4, Oct.-Dec. 1996.
There are risks and costs to a program of action. But they are far
less than the long-range risks and costs of comfortable inaction.
--John F. Kennedy
The CISET Report's recommended actions.--The Committee on
International Science, Engineering, and Technology (CISET) Working
Group (including specialists from the Department of Defense, the
National Security Council and the Center for Disease Control and
Prevention, and more than a dozen other federal agencies) outlined four
basic strategies needed to safeguard our nation. These actions include:
--A. Surveillance (a global health network of adequately trained
health workers and adequate supplied clinics with access to the
Internet).
--B. Response (fully trained and supplied response teams).
--C. Research and Development. (sufficient knowledge base, research
and production capacity.)
--D. Prevention (universal access to primary health services, clean
water, safe sanitation, basic education, adequate nutrition,
income generating opportunities and a safe political and
natural environment).
(CISET report is available: http://www.whitehouse.gov.White__House/
EOP/OSTP/CISET/html/ciset.html For a copy of the report call CDC, 404-
639-2603 or fax your request to 404-639-3039.)
Appropriations by this Subcommittee have the greatest application
in the first and last actions noted above--surveillance and prevention.
While existing foreign aid funds directed in these areas are extremely
inadequate, the total amount needed is not beyond the capacity of this
committee to appropriate. A shift of approximately 20 percent of the
existing aid budget (approximately what the Department of Defense
spends for a single B-2 Bomber) could provide Americans with
significant protection against global microbial threats, be they
introduced by nature, by accident or by hostile human antagonists. The
US economic benefits from the early global eradication of polio and
measles, the significant global reduction of malnutrition, illiteracy,
Tuberculosis (TB), HIV/AIDS, cholera, malaria, Hepatitis A, and dozens
of other lethal and disabling diseases, would alone make such an
investment worth while.
Solutions (in more detail):
A. Surveillance.--A global health network of adequately trained
health workers and adequate supplied clinics with Internet access would
be our nation's early warning system regarding the emergence of any new
or old microbial threats as well as being our first strike force for
preventing or combating their initial spread.
Appropriations from this Subcommittee provides support to: Foreign
Government Health Departments; USAID Missions; NGO/PVO organizations;
University Training & Research facilities; WHO Collaborative Centers.
(Other Subcommittees support DOD and CDC programs also important in
these efforts).
B. Response--As with fires, response time is critical in
controlling a microbial blaze. Our capacity to rapidly deploy fully
trained and adequately supplied teams of experts into `hot zones' is
well worth the investment. Some appropriations from this subcommittee
for WHO, Schools of Public Health and USAID field capacity contribute
greatly to overcoming technical, logistical or cultural barriers.
(Appropriations from other Subcommittees support CDC, DOD, or PHS
collaborative efforts)
C. Research and Development.--The number one rule in any war is
`know your enemy'. Our ability to identify and understand each pathogen
is essential in developing a timely and effective medicine or method
for dealing with it. Expanded research efforts can provide us with a
sufficient knowledge base to do both rapid genetic identification and
development of effective technological/social treatment or control.
Technological advances have given US troops an overwhelming advantage
on regular battle fields. The best pharmaceutical weapons we can afford
will now be valuable from both a military and a civilian perspective on
every battle field we must now prepare for. In addition, short term and
long term cross disciplinary strategic studies are needed. Such studies
should be carried out cooperatively between government and universities
with extensive input from corporations, industry and communities.
Progress now will enable effective response to the natural, accidental
or intentional release of many different pathogens. This subcommittee
has played an important role in funding efforts through US Universities
research programs. Pharmaceutical Companies, NIH, and CDC will also be
critically important.
D. Prevention.--It is within this arena that the appropriations of
this subcommittee can have the most impact on preventing or reducing
the global spread of many infectious diseases. WHO estimates that 80
percent of all human disease in the developing world is caused by lack
of clean water and proper sanitation. Current appropriations for such
programs are now minimal. Some may argue that universal access to clean
water and safe sanitation is a desirable goal, but the development of
vaccines to combat infections of water born diseases would be more cost
effective. On a `dollar spent/life saved' criteria this is true. But
such a limited investment will do nothing to protect us (or those
without such basic services) from the new pathogens that may emerge or
old pathogens that may adapt under such inadequate hygienic conditions.
Universal access to adequate nutrition.--Adequate nutrition is the
human body's first line of defense against the majority of the world's
pathogens. Malnutrition is a preventable, underlying cause of a high
proportion of infectious diseases. Congress has already undertaken
substantial action to address this problem in the Food, Agriculture,
Conservation, and Trade Act of 1990, which established food security
for the poorest and the prevention of malnutrition as priorities in
food assistance programs administered by the United States Agency for
International Development (USAID) under the Agriculture Trade
Development and Assistance Act of 1954. More is needed.
Micronutrients.--Preventing key micronutrient deficiencies of
vitamin A, iodine, iron and zinc is a low-cost, practical and effective
approach to boosting the human immune system and building the human
capacity to protect the health of billions of people throughout the
world.
Vitamin A deficiency is a scourge of approximately a quarter of a
billion children in poor countries. Vitamin A helps the body build an
effective barrier against pathogens entering via the skin, respiratory
or digestive systems. Research financed by the USAID and other donors
has convincingly demonstrated that vitamin A supplementation and
fortification can reduce childhood infections and thus reduce childhood
mortality by 30 percent or more. An estimated 20,000,000 children are
likely to die and 3,500,000 children are likely to go blind in the next
decade if access to vitamin A is not available. The World Bank has
estimated that vitamin A supplementation only costs approximately $9
for every life year saved adjusted for disability. A single capsule of
Vitamin A costs only five cents and a single dose administered only 3-4
times a year per child, will provide maximum protection. Not less than
$17,000,000 for fiscal year 1998 and not less than $20,000,000 for
fiscal year 1999 should be made available only for implementing Vitamin
A deficiency prevention strategies, especially supplementation and
fortification programs.
Iodine, Iron and Zinc.--Today 1,600,000,000 people are at risk of
iodine deficiency disorders, with the fetus and infant being the most
vulnerable to permanent brain damage. Iodine deficiency is the most
prevalent cause of mental retardation world-wide. Iodizing salt can go
far in preventing this tragedy and thus enhancing the intellectual and
economic performance of future generations. The World Bank estimates
that iodizing salt only costs $8 for every year of life saved adjusted
for disability. Nearly 2,000,000,000 people are iron deficient,
particularly women of child bearing age and young children,
approximately 1,000,000,000 of whom suffer from anemia. Iron deficiency
anemia during pregnancy can increase the risk of both maternal and
infant illness and mortality. Moreover, iron deficiency can hinder
learning among school age children and work productivity among adults.
The World Bank has estimated that iron supplementation costs only $4 to
$13 for every year of life saved adjusted for disability. With adequate
support for the necessary interventions, vitamin A and iodine
deficiencies could be virtually eliminated, and iron deficiency anemia
reduced by one-third, by the first decade of the 21st century. New
studies show that diarrhea, pneumonia and malaria may be reduced by the
correction of zinc deficiencies. In addition to amounts available for
micronutrient programs we recommend this subcommittee appropriate
$13,000,000 for fiscal year 1998 and $15,000,000 for fiscal year 1999
for iodine and iron deficiency prevention programs, especially
fortification and supplementation programs, with particular emphasis on
alleviating deficiencies in pregnant women.
Breastfeeding.--Increased funding for the promotion of
breastfeeding alone may be as productive in boosting the immune system
as micronutrients with breastfed infants four times less likely to die
of acute respiratory infections and up to 25 times less likely to die
from diarrheal disease. Breastfeeding also helps to delay conception
which leads to fewer and delayed births which in turn contributes to
the health of the mother and ultimately the family. We recommend a ten-
fold increase in efforts to promote the use of breastfeeding in the
developing world.
Universal access to primary health services.--Antibiotics,
Immunization, ORT, reproductive health services, health information,
growth charts * * *. We recommend no less than $200 million be
committed to establishing a global network of basic health clinics,
with trained staff, adequate supplies, and Internet capabilities.
Reducing antibiotic resistance.--While more outbreaks of new exotic
pathogens like Ebola or Lassa Fever will most certainly occur, WHO and
CDC insist that the greatest threat to our health is from the gradual
loss of our antibiotic arsenal. While much needs to be done within the
US, control and appropriate use of antibiotics in developing nations is
also critical. Increasing global trade, global travel and urban
crowding in developing countries with weak health systems will lead to
the increased rise and spread of resistant microorganisms. At least two
development programs funded by this committee play a direct and
enormously significant role in the early detection of resistant strains
and in reducing the factors that lead to newer drug-resistant strains.
The training of public health workers and basic education. These will
best leverage the basic research that is also needed.
Training of health workers is essential to the proper diagnostics
and treatment of infectious diseases and other health problems.
Intensive instruction for health practitioners in infectious disease
management and prevention here and in developing countries is a vital
weapon against infectious diseases. Of over 5000 students graduating
from US schools of Public Health in 1996, only 200 specialized in
international health. Time is crucial in an outbreak and persons in or
from developing areas who can pacify the spread of disease before it
reaches unmanageable proportions will be the first line of defense in
secondary prevention of diseases outbreaks.
Infant and child mortality.--Child survival (CS) activities which
utilize simple, available technologies have proven to be particularly
effective in saving lives and improving child health. Both UNICEF and
the USAID have provided strong leadership as well as financial and
technical support for these efforts. Interventions at all levels of
society will be required to improve and sustain the health of children.
Child survival programs implemented by United States-based Private
Voluntary Organizations (PVOs) and other Non-Governmental Organizations
(NGOs) are documented to be extremely effective in reaching the very
poor at the community level and in achieving long-term reductions in
child mortality and morbidity. `Not-for-profit' PVO/NGOs implementing
CS projects leverage significant amounts of private resources, a
minimum of 25 percent, to match public funds. We recommend UNICEF for
an appropriation of $100,000,000 for fiscal year 1998, and $105,000,000
for fiscal year 1999. For other CS activities we recommend no less than
$350,000,000 for fiscal year 1998 and no less than $380,000,000 for
fiscal year 1999 for activities with a direct measurable impact on the
reduction in the rates of child death and disease, focusing on the poor
with a particular emphasis on delivery of community-based primary
health care and health education services. These activities should
primarily be limited to the direct provision of health services, such
as improved and expanded immunization programs, oral rehydration to
combat diarrheal disease, and health education programs aimed at
improving nutrition and sanitation and at promoting child spacing,
which all have a direct measurable impact on the rates of child death
and disease. A special focus on the poor in communities with a
particular emphasis on delivery of community-based primary health care
should also be mandatory. Only on an exceptional basis should these
appropriations be used for purposes other than the direct provision of
these basic health services. Of the total recommended, not less than
$40,000,000 for fiscal year 1998 and not less than $60,000,000 for
fiscal year 1999 should be provided to private and voluntary
organizations under the PVO Child Survival grants program carried out
by USAID. All of these CS funds should be in addition to the funding
directed at micronutrient efforts, international disaster assistance,
AIDS prevention and control, or any other appropriations for health,
migration or refugee assistance.
These US investments in international child survival efforts will
be paid back to the US many times over with the accelerated global
eradication of polio and measles alone. The $32 million US investment
in the global eradication effort of Smallpox 20 years ago has already
saved the US over $3 billion in domestic expenses.
More emphasis should also be put on getting resources where they
are most needed. The two regions of the world where infectious disease
deaths are still highest receive the least amounts of US aid--Africa
and Asia. Vaccines, ORT, antibiotics and Vitamin A are essential but
not enough to sustain child survival and development. Other health and
development programs are also essential.
Tuberculosis (TB).--It is estimated that 15,000,000 individuals in
the United States are infected with TB. Last year, a single patient
from another country who was hospitalized in California passed the TB
bacillus on to 12 of the 17 health care providers who took care of her,
two of whom developed full blown TB, and we may never know if they in
turn passed the disease on to other patients before it was realized the
infection had been transmitted to them. And we have no idea how many
people this patient infected on public transportation. The TB threat to
Americans consists of two elements: (A) The global spread of TB in
general, including its resurgence in the United States, and (B) the
emergence and spread of strains of TB that are multi-drug resistant.
The elimination of TB in the United States can only be achieved by
controlling the disease in developing countries were TB is spreading as
a result of inadequate treatment. TB is the largest infectious killer
of adults, causing more deaths than AIDS, cholera, malaria, tetanus,
meningitis and typhoid fever combined and takes many individuals in
their most productive years of life. No other infectious disease
creates as many orphans as TB. Nearly 170,000 children die of TB
annually, because of infection usually by an adult family member. The
World Health Organization has stated that the best curative method for
TB is Directly Observed Treatment (DOT), in which health workers
directly monitor that patients with TB for the purpose of ensuring that
such patients take their full course of medicine. By guaranteeing that
the treatment regimens are completed, DOT prevents the further spread
of infection and development of strains of TB that are multi-drug-
resistant. Few public health expenditures provide so much value for so
little money as expenditures for the prevention and treatment of TB. In
some parts of the world, the cost of curing TB is as little as 90 cents
for every year added to the life of the patient. Drugs for the
treatment of TB cost as little as $11 per person in some parts of the
world and such drugs are more than 95 percent effective. Deficient TB
treatment practices anywhere in the world can cause the TB bacteria to
become multi-drug resistant. Strains then imported into the US will
cost as much as $250,000 per patient to cure. In the developing world
TB can be prevented for well under $100 per patient. Treatment of TB in
the US now costs hundreds of millions of dollars per year while our
international efforts at TB control are virtually non-existent.
According to the World Bank, the control of TB is among the most cost-
effective of all health interventions. In order to control TB in the
United States in a more effective manner, it is necessary to ensure the
effectiveness of TB control programs worldwide. US funding for the
global control of TB should be no less than $40,000,000 for fiscal year
1998 and $50,000,000 for fiscal year 1999.
Maternal survival and health, which are vital in and of themselves
and also vital for child survival, are not currently a fiscal priority
of our international aid package. Universal access to nurse-midwives
and essential obstetric care could help prevent a significant number of
the 580,000 women who will die this year as a result of complications
in pregnancy or child birth. No less than $25 million should be made
available for this.
Maternal and child mortality resulting from AIDS.--As of 1992,
nearly 5,000,000 women of childbearing age and over 1,000,000 children
were infected with the human immunodeficiency virus (HIV), the virus
that causes the acquired immune deficiency syndrome (AIDS). The vast
majority of these women and children live in developing countries. We
can expect the maternal and child mortality rate in many developing
countries to increase dramatically, as will the number of orphans with
HIV/AIDS, until HIV/AIDS prevention and control efforts are successful.
HIV/AIDS is renowned for its ability to mutate. There are already over
100 minor variations of the virus with nearly half a dozen major
subtypes. Preventing the emergence of new strains is highly desirable.
Development of a vaccine is critical, but public education, protected
sex and economic alternatives for sex-industry workers (women and
children) are also needed. The most effective efforts to respond to
HIV/AIDS are based at the community level and involve non-governmental
organizations as well as government agencies. USAID should expand its
assistance to developing countries for community-based prevention, care
and control programs and activities relating to HIV/AIDS, and should
participate in coordinated efforts with other donors. Coordination of
efforts of bilateral, multilateral and non-governmental agencies is
essential. While highly controversial, AIDS vaccine trials will most
likely be conducted in the developing nations. Progress anywhere should
bring direct benefits to both the US population and people in
developing nations. International AIDS Prevention and Control Fund--
Section 104(c) of the Foreign Assistance Act of 1961 (22 U.S.C.
2151b(c); relating to development assistance for health related
activities) should be amended by adding at the end the following new
paragraph: ``(4)(A) In carrying out this subsection, the President
shall promote, encourage, and undertake community-based prevention, and
control programs and activities relating to the human immunodeficiency
virus (HIV) and acquired immune deficiency syndrome (AIDS) in
developing countries.'' This subcommittee should appropriate
$140,000,000 for fiscal year 1998 and $150,000,000 for fiscal year 1999
for use in carrying out this paragraph, which shall be in addition to
other amounts made for health purpose. Amounts appropriated for these
efforts should be authorized to remain available until expended. The US
government was one of the main proponents of the creation of The Joint
United Nations Programme on HIV/AIDS in 1996. It is successfully
coordinating multilateral activities and working with communities and
countries in national strategic planning which makes bilateral aid
better directed. It should receive financial backing from the US at no
less than $20,000,000.
Basic education.--Primary education, early childhood development
activities, and programs to achieve literacy are essential for
increasing the productive capacity of people and their ability to earn
income and improve family health. Basic education, usually defined as
early childhood education, primary and lower secondary schooling, as
well as adult literacy, has been shown to be the one of the most
economically productive investments that brings numerous beneficial
health and social impacts. Widespread education leads to more equitable
income distribution and ultimately, to political stability. Wars and
political instability are a significant contributor to the spread of
infectious diseases.
More than 100,000,000 school aged children, the majority of them
girls, are not enrolled in primary school. Basic education, especially
for girls, contributes to increased child health, survival and overall
life expectancy and lower birth rates. It is estimated that every
additional year of schooling for girls lowers child death rates by 5 to
10 percent. US assistance for basic education in developing countries
has accounted for less than 2 percent of US foreign assistance in
recent years. We recommend that no less than $120,000,000 for fiscal
year 1998 and not less than $140,000,000 for fiscal year 1999 be
appropriated for basic education.
Universal access to clean water and safe sanitation.--Not less than
$200 million.
International family planning and child spacing.--Universal access
to quality voluntary family planning will significantly help prevent
the spread of HIV/AIDS and other Sexually Transmitted Diseases (STDs).
It could also helps improve child health by reducing the occurrence of
prematurity and low birthweight and allowing longer breastfeeding. The
risk of maternal death or illness in the developing world is highest
for women who bear children when they are under the age of 18 or over
age 35, for pregnancies spaced less than two years apart, and for women
who already have 4 or more children. Universal access to voluntary
family planning could prevent up to one-third of the 585,000 maternal
deaths annually. The inability of couples to plan births decreases
undermines women's opportunities for education, for earning income, for
improving the care of existing children, and for community activities
and personal development. We suggest appropriations of no less than
$550,000,000 for fiscal year 1998 and no less than $600,000,000 for
fiscal year 1999.
Universal access to affordable credit for income generating
opportunities.--A families ability to earn is directly related to their
access to health care. We urge this subcommittee to appropriate and
earmark $85 million for microcredit programs serving the poorest and
$170 million for microcredit overall.
Refugees.--In 1997 there are 27 million people of concern in
refugee-like situations in areas from Northern Iraq, to Angola, to the
former Yugoslavia. Additionally there are estimated to be more than
20,000,000 internally displaced persons. Whenever they travel,
illnesses travel with them. Funding for Refugee Assistance Programs
should not be less than $730,000,000 for fiscal year 1998 and
$780,000,000 for fiscal year 1999, and should be appropriated for the
``Migration and Refugee Assistance'' account, of which not less than
$470,000,000 for fiscal year 1998 and $500,000,000 for fiscal year 1999
should be available only for programs of refugee assistance overseas
(in addition to the amounts available for programs for refugees from
the former Soviet Union, Eastern Europe, and elsewhere who resettle in
Israel). Not less than $100,000,000 for each of the fiscal years 1998
and 1999 should be appropriated for the ``Emergency Refugee and
Migration Assistance Fund'' account.
Debt relief.--Debt Relief to countries like Uganda will assist
political leaders to better meet the health and education needs of
their own people.
Multilateral programs.--NCIH supports $1.035 billion for the
International Development Association (IDA) of the World Bank to cover
both fiscal year 1998 contributions and past arrears. We are also
hopeful Congress will press the World Bank to promote popular
participation in Bank operations, especially by consulting local
communities prior to approving loans.
other important considerations for the control of infectious diseases
Freedom from war and violence.--War is a very significant factor
contributing to the migration of people and the destruction of existing
health efforts. Both war and migration are significant factors in the
spread of disease. Civil wars bring with them refugee camps, mass
internal migrations, disruption of medical and health services, a lack
of food and sometimes rape (i.e. unprotected sex). It should not go
unnoticed that the current conflict in Zaire resembles a simulation
exercise carried out in 1989 by the American Society of Tropical
Medicine & Hygiene in Honolulu. In their simulation an airborne Ebola
is detected--but not before some infected westerners have returned home
to New York, Paris, Montreal, etc.
The worst-ever outbreak of Lassa fever, a deadly hemorrhagic
disease, is now threatening to spread to Sierra Leone's capital,
Freetown. Britain's Medical Emergency Relief International (MERLIN)
said the case numbers had doubled since December. Refugees fleeing the
6-year old civil war were packing into the town of Kenema, 60 miles
from the capital, and conditions are appropriate for the spread of this
highly virulent disease. ``This is the worst outbreak of Lassa fever
since records began,'' said Richard Allen, medical adviser to MERLIN.
``Now we are concerned that Lassa fever may spread from the bush to the
capital city, Freetown. The first suspected case of Lassa fever was
admitted to a Freetown hospital this week.''
Reducing military aid can free up valuable resources for improving
health and development conditions.
Control of land mines.--Land mines kill and maim hundreds of
thousands of people a year. Each non-fatal injury requires the use of
antibiotics. The elimination of land mines is ideal but additional
lives and limbs can be saved and resistant pathogens prevented with
access basic health services.
Reducing STD's.--War and sexually transmitted diseases (STDs) go
hand in hand. The Vietnam War produced a drug resistant form of
Gonorrhea, now a major US problem.
One of the most dangerous activities for US troops outside of
waging war is trying to stop a war or quell civil unrest. Given the
escalating cost and risk of peace keeping, preventing the breakdown of
nation states deserves increased attention. A recent CIA report studied
the factors related to the breakdown of nation states in order to
predict and possibly prevent future conflicts where US troops might be
needed. After looking at hundreds of variables, the CIA identified the
infant mortality rate as the number one indicator. While it is obvious
that child survival programs alone are insufficient to keep nations
from imploding, the value of reducing child deaths should not be
underestimated as a critical factor in keeping populations more docile.
Exposing US troops to chaos does expose them to higher rates of
infectious diseases but, not sending US troops to quell conflicts could
result in even greater chaos spurring increased microbial travel.
The intentional use of biological weapons by terrorists is perhaps
the most frightening future prospect. There is really no way to defend
against such an attack if an agitated force is committed to delivering
pathogens to US citizens. While the threat of retaliation by a powerful
US military force might prevent major adversaries from using biological
weapons, the same US military force of unconfrontable power will force
smaller aggressor groups into covert actions to achieve their
objectives. The smaller the force, the more likely it could immunize
its members against an infectious agent and then deliver that agent,
undetected, to its target population. Essentially, the US should be
very hesitant in causing harm to any group except the microbes. It is
not possible to overstate our vulnerability to use of biological
weapons. Even trying to defend against biologicals may carry serious
health side effects as now possibly manifested by the Gulf War
Syndrome. Adequately supporting the four basic recommendations of the
CISET report would help neutralize the effects of an intentional
biological attack. Just as important, this Subcommittee should not
overlook the degree to which US leadership in helping the world meet
the most basic of human needs globally will reduce the likely hood of
future conflicts and covert aggression.
History has taught us that wars produce hunger, but we are less
aware that mass poverty can lead to war or end in chaos. While hunger
rules, peace cannot prevail.
--Willie Brandt, Chairperson of the Brandt Commission. 1981
Freedom from environmental degradation.--Human movement into
previously undisturbed environments increase the risk of coming into
contact with exotic pathogens. Destruction of natural habitats also
reduces the number of species that may provide humanity with genetic
information to produce newer miracle drugs. Toxic substances in the
environment increase the mutinogenic factor for all pathogens as well
as debilitating human and animal immune systems. Environmental
alterations will result in increased migration of both infectious
agents and human populations. Appropriations by this committee to
protect and restore environmental habitats is also crucial.
From peace keeping, to conflict resolution, to the clearing of land
mines, creating livable and sustainable environments must become a much
higher priority. To date, too small a portion of US foreign aid has
been directed at improving human health, economic and environmental
conditions where they are most lacking. To make matters worse,
development programs have received deeper and more disproportionate
cuts than any other sector in the foreign aid budget. This must be
reversed.
Social and behavioral changes.--Long-term solutions to improving
human health will ultimately involve more than the right pill, world
peace, alleviating poverty or protecting the environment. Without
profound social and behavioral change the full potential for human
health will not be achieved. Generations of culture and tradition can
have as much influence on health as the availability of technology.
Funding for the involvement of cultural anthropologists, psychologists
and sociologists in the battle for worldwide health is something this
subcommittee should not shy away from.
With a focus on prevention, this Subcommittee can do more to
protect the security of Americans than any other government agency,
including the Department of Defense. Secretary of State Madeline
Albright recently said that foreign aid represents only 1 percent of
our federal budget but it will determine 50 percent of our history. In
the context of infectious diseases, 50 percent could be an
underestimate. Given the severity of the situation, there has never
been a more profound rationale for shifting foreign aid priorities and
funds.
There are basically three ways to provide more resources.--(1) From
within the existing foreign aid budget; (2) From with in the existing
federal budget; or (3) from an additional tax or levy specifically for
such a purpose. If sufficient money is not added to the foreign aid
appropriations budget to meet this new security need, this Subcommittee
will have to make the tough decisions on where it will be found within
the existing aid budget. A shift of 20 percent of the current foreign
aid appropriations could accomplish significant international health
and development objectives the Preamble of our Constitution aligns
with:
``We the people of the United States in order to form a more
perfect Union, establish justice, insure domestic tranquillity, provide
for the common defense, promote the general welfare, and secure the
blessings of liberty to ourselves and our posterity, do ordain and
establish this Constitution for the United States of America.''
Some aid constituencies will not be happy with such a shift; but
they can make their case to the American people if their needs are
indeed more urgent or important than this.
If this Congress cannot find the money within the existing budget
to implement these essential security measures then the powers of the
US Constitution sanction you to generate the resources.
Article 1. Section 8. of the Constitution says that ``The Congress
shall have Power to lay and collect taxes, duties, imposts and excises,
to pay the debts and provide for the common defense and general welfare
of the United States * * *''
Taxing air travel.--In all fairness, it is the global trade and the
traveling public (approximately 10 percent of the US population) and
the millions of foreign visitors to the US each year that most closely
link the rest of the US population with the infectious diseases found
scattered throughout the rest of the world. It is estimated that over
25 million people travel virtually unrestricted between the developing
world and North America each year and that number is growing rapidly.
While diseases are imported into the US on a regular basis it must also
be noted that lethal drug resistant pathogens are also exported from
the US to other parts of the world where limited or non-existent
medical facilities are unable to deal with them. A 2 percent increase
in the current 10 percent air travel tax could generate much of the
revenue needed ($2 billion annually) to dramatically reduce the global
impact of infectious disease. While the idea of any `new' tax is
repulsive to most members of Congress, the idea of a global epidemic
taking the lives of 2 million to 5 million Americans should generate
far more concern. There is nothing preventing the resurgence of a flu
virus (or some other pathogen like TB) with the same or higher
virulence as the ``Spanish'' flu that killed nearly 700,000 Americans
at the early part of this century. A similar 1`bug' today, with the
advantage of modern air travel, could take out 1-3 percent of the US
population in the matter of months. Such an plague will be catastrophic
by any measure. An additional dollar or two per air flight would not be
beyond the majority of flyers to afford to ensure better health
security for the rest of the US population. Food imports are another
source of infectious agents and also deserve consideration. While such
a tax is not within the jurisdiction of this subcommittee, such an idea
deserves close public scrutiny and debate.
Other creative funding mechanisms could generate addition millions
for our common defense. The domestic savings from the not-to-distant-
future global eradication of Polio and Measles, and the reduction of
TB, could now be targeted for future domestic and international health
and development efforts. Minor US global expenditures yield enormous
domestic savings as demonstrated by the eradication of Small Pox
mentioned earlier. This year, protecting US children against polio will
cost Americans $231 million, plus an additional $14.3 million for a
second vaccine to prevent ``7 to 8'' Americans from getting polio as a
rare reaction to the first vaccine. All of these current expenditures
will be saved when polio is eradicated. Eradication of measles will
save Americans over $250 million a year while reduction of TB could be
saving us up to $500 million annually.
We support the President's request for a $1.45 billion increase in
the foreign aid budget. We strongly disagree, however, with the
President's fiscal year 1998 budget for USAID, where funds for
population, health and nutrition have been targeted for a reduction of
approximately $25-30 million dollars. This is unacceptable. While other
categories in the USAID budget, such as agriculture and environment or
aid to the former Soviet states, must certainly be increased, these
increases should not come at the expense of health and child survival
programs. We strongly urge any budget increase to be applied in a fair
and proportional manner.
More US aid is needed to address global poverty. According to
Church World Service/Lutheran World Relief, ``Only 34 percent of
bilateral assistance (including development assistance, ESF, military
assistance, NIS/SEED, international narcotics control, and debt
restructuring) requested for fiscal year 1998 is designated for low-
income countries (GNP per capita $695 and below in 1993). Two thirds of
that aid goes to Egypt ($2.1 billion), leaving just over $1 billion (of
the total $9.2 billion) for the more than forty low-income aid
recipient countries. Israel, with a per capita income of $13,920,
receives three times the amount allocated to these poor countries.''
While it may be obvious for political reasons why two nations receive
over $5 billion in US aid, it is indefensible that development efforts
focused on the poorest half of the world would receive so little. The
old national security approach of `peace-through-strength' must now be
tempered with `containment' by prevention and compassion. Given the
potential for human (American and foreign) devastation, we must
reorient our appropriations to achieving a broader security and lasting
peace.
conclusion
Previous warnings unheeded.--Nearly two decades ago, Congress was
given a clear warning by no less than a Presidential Commission after
an exhaustive study of the issue of world hunger. At the end of the
Carter Administration, this prestigious group of experts concluded:
In the final analysis, unless Americans--as citizens of an
increasingly interdependent world--place far higher priority on
overcoming world hunger, its effects will no longer remain remote or
unfamiliar. Nor can we wait until we reach the brink of the precipice;
the major actions required do not lend themselves to crisis planning,
patchwork management, or emergency financing * * *. The hour is late.
Age-old forces of poverty, disease, inequity, and hunger continue to
challenge the world. Our humanity demands that we act upon these
challenges now * * * .
--Presidential Commission on World Hunger, 1980.
Policy makers then failed to respond to that warning but the
microbes didn't. They were already in the process of fulfilling on the
Commission's prophecy. Less than 2 years after the release of the
Commission's report, our nation began to feel the sting of the HIV/AIDS
pandemic. Now, science, wisdom, experience and the Bible tell us of the
consequences of failing to follow the golden rule. HIV/AIDS was not the
first disease in modern times to be brought into America and it will
not be the last. More will come. A new strains of HIV, Polio, or
Tuberculosis? Or an infectious disease we've not seen before. In
whatever form, they will come and this Subcommittee funds our first
lines of defense.
Wide spread poverty and chaos, and the associated lack of basic
health services, clean water, sanitation, nutrition, and education, are
perhaps the greatest contributors to the vitality and virulence of
pathogens. These fertile microbial breeding grounds, combined with the
modern air travel of over a million people a day across all national
borders, creates a truly `global village' where political, economic, or
social boundaries become nothing more than a figment of our human
imagination. Microbes are indiscriminate predators of the human family.
Until we become as indiscriminate in caring for one another, we will
continue to give advantage to their numbers and their virulence.
``Public health is purchasable. Within natural limitations, any
community can determine its own death rate.''
--Herman M. Biggs, MD, Msc, LLD (1859-1923).
______
Prepared Statement of Lucinda A. Low, Chair, American Bar Association
Section of International Law and Practice, on Behalf of the American
Bar Association
Mr. Chairman and Members of the Committee: Mr. Chairman and members
of the Committee, the American Bar Association (ABA) appreciates the
opportunity to present testimony on the fiscal year 1998 Foreign
Operations Appropriations budget. My name is Lucinda Low and I am the
Chair of the American Bar Association's Section of International Law
and Practice. This written testimony is being submitted on behalf of
the ABA at the request of N. Lee Cooper, President of the Association.
In my non-volunteer life, I am a member of the Washington, D.C.-
based law firm of Miller & Chevalier. As the attached curriculum vitae
indicates, I practice in the area of international business law,
representing principally U.S. companies doing business overseas.
This testimony describes the ABA's global Rule of Law projects
that, through development of ``legal infrastructure,'' promote
democracy around the world. With over 348,000 members, the ABA is the
world's largest professional voluntary organization. Through these
projects, our lawyers, judges, law professors, and sister institutions
have achieved extraordinary results. Due in large part to a
sophisticated volunteer network, the ABA has been able to play a
crucial role in ensuring that the U.S. maintains its commitment to
engagement and leadership in the international arena in a very cost-
effective manner. It is our hope that these programs continue to
receive U.S. contributions.
background
Embracing the rule of law through respect for and commitment to
legal institutions is the linchpin of the democratization process. The
benefits of a credible and predictable legal system, anchored by
institutions committed to the rule of law, cannot be underestimated. To
the extent that U.S. businesses can depend on a country's legal system,
foreign markets become a much more attractive export opportunity.
Conversely, where there is no rule of law, corruption and favoritism
may flourish, often to the detriment of U.S. interests.
The ABA's global Rule of Law projects have been important in
fostering legal reforms and democracy which have in turn increased U.S.
exports in emerging markets. Even so, the vast human potential and
contribution of developing countries has largely been unrealized.
Because of the central role democracy and legal infrastructure play in
protecting fundamental freedoms, human rights, and liberties,
continuing effort to strengthen the rule of law is necessary. But for
the development of legal infrastructure, many transitional societies
would never realize democracy. These are the goals to which ABA
projects are committed.
aba projects
All ABA rule of law projects have been guided by three principles.
First, these projects are designed to be responsive to the needs and
priorities of the host countries; the countries, not the ABA, define
the need. Second, the design of these programs recognizes that U.S.
legal experience and traditions offer only one approach that
participating countries may wish to consider. Third, these projects are
public service endeavors, not avenues for developing business
opportunities. The result of these programs has always been to take a
modest grant and leverage those sums to yield a much larger benefit for
the host governments and people.
A. The Central and East European law initiative (``CEELI'')
The most comprehensive technical legal assistance project of the
ABA is the Central and East European Law Initiative, or ``CEELI''.
Shortly after the fall of the Berlin Wall in 1990, CEELI was conceived
and organized by the ABA Section of International Law and Practice to
provide technical legal assistance to the emerging democracies in
Central and Eastern Europe. Our Section also provided the initial seed
capital for CEELI. By 1992, CEELI began to provide assistance to the
Newly Independent States of the former Soviet Union (``NIS'').
Through a variety of program components, CEELI is making available
U.S. legal expertise to assist countries that are modifying or
restructuring their laws and legal systems. CEELI has focused on work
in several critical priority areas: constitutional reform; judicial
restructuring; bar reform; criminal law and procedure reform;
commercial law; and legal education reform. CEELI has also helped
develop and/or institutionalize self-sustaining indigenous non-
governmental organizations (NGOs) in more than 22 countries.
Designed to respond to the needs of the countries, CEELI has
emphasized long-term engagement and nurtured projects that facilitate
extensive consultations with policy makers, legal scholars, judges, and
attorneys in each country. Accordingly, CEELI has developed individual
country plans that address the particularized circumstances of each
locale. CEELI accomplishes its work primarily through resident liaisons
and legal specialists, working pro bono, who spend one to two years
working on a daily and continuous basis with local partners. CEELI
liaisons often live and work in places where the comforts of life that
you and I often take for granted do not exist.
Over the course of the past four years, CEELI has established
itself as a fundamental force for law reform in Central and Eastern
Europe and the NIS. To date, CEELI has conducted 241 Technical Legal
Assistance Workshops; assessed over 305 draft laws; placed 139 long-
term liaisons and 146 legal specialists in the region; hosted 47
Central and Eastern European law school deans; sent dozens of U.S.
legal reform experts to assist in law school reform; and has placed
over 50 students from the NIS in LLM programs throughout the United
States. The credit for this remarkable achievement goes to the over
5,000 American attorneys, judges, legal scholars, and private
practitioners, who have, as acts of public service, given their time
and expertise to make this project successful.
When calculating the in-kind contributions of volunteer legal
professionals at an understated rate of $150 per hour, CEELI has
yielded over $77 million of pro bono service. Considering the modest
CEELI budget in comparison to funding allocated to consulting firms,
the exceptional programmatic impact and financial leverage that an NGO
can achieve by using qualified volunteer professionals in a public
service project is indisputable. This model of a volunteer professional
assistance project is a viable and cost-effective alternative to other
uses of U.S. government funding by, for example, for-profit firms.
Congress has voiced strong support for programs like CEELI and their
ability to leverage U.S. taxpayer dollars (H.R. Rep. No. 524, 103d
Cong., 2d Sess., 82 (1994); S. Rep. No. 287, 103d Cong., 2d Sess., 76
(1994); H.R. Rep. No. 128, 104 Cong., 1st Sess., 80 (1995); H.R. Rep.
No. 143, 104th Cong., 1st Sess., 31 (1995); S. Rep. No. 143, 104th
Cong., 1st Sess., 42 (1995); S. Rep. No. 000, 104th Cong., 1st Sess.,
40 (1995); H.R. Rep. No. 600, 104th Cong., 2d Sess., 31 (1996)).
B. The ABA Cambodia democracy & law project
The Cambodia Law and Democracy Project (``Cambodia Project'') was
launched by the ABA Section of International Law and Practice during
1992 at the request of Cambodian institutions seeking assistance with
Cambodia's law modernization process. The principal purpose of the
Cambodia Project is to assist Cambodia in planning and implementing
legal and judicial reforms to promote democracy, a market economy, and
the rule of law, and in building the other infrastructure (e.g., bar
associations) necessary to support the legal system. In reality, the
Cambodian legal system is being reconstituted from the ground up.
Breaking from its past, Cambodia, since the formation of its new
government, has embraced the common law system. U.S. input is therefore
particularly critical.
Under a grant from the Asia Foundation in 1993, the Cambodia
Project provided a collection of legal materials in Phnom Penh
principally through ABA donations. In late 1996, the Cambodia Project
established a Legal Research and Documentation Center at the Bar
Association of the Kingdom of Cambodia (BAKC) which has now secured
over 1,800 donated books and publications, which include Khmer laws and
selected translations, the Official Journal of the Kingdom of Cambodia,
and foreign and American legal materials. Since its official opening in
March of 1997, the Center--which I had the privilege to visit last
month--is fulfilling requests for information from lawyers, law
students, NGOs, and the National Assembly Legal Research and
Documentation Center.
During 1993-94, the ABA Constitutional Law Advisors assisted in
drafting the new Constitution, and legal education advisors provided a
needs assessment of Cambodia's legal education programs and
institutions. Short-term advisors traveled to Cambodia to assist in the
areas of foreign investment, contract law, and commercial arbitration.
U.S. legal experts provided commentary in the areas of border disputes,
intellectual property, penal code issues, environmental law, family
law, and bar association development. During this period, an ABA
resident legal advisor was placed in Phnom Penh to oversee all ABA and
Asia Foundation legal initiatives. This action led to a request from
USAID that the ABA take on a larger role in the law development process
in Cambodia, which resulted in a cooperative agreement between USAID/
Cambodia and the ABA in 1995.
The Cambodia Project currently has three long-term resident
advisors in Cambodia. They assist the Ministry of Commerce and the
BAKC, providing institution-building, teaching, and legal drafting
assistance. By working in close coordination with the Ministry of
Commerce, the Cambodia Project has effectively extended efforts to
improve Cambodia's legal system into Cambodia's market economy. The
completion of Cambodia's Bankruptcy Law, Business Organizations and
Contract Law, Products Liability Law, and Contracts Law is evidence of
the project's successful advancement. In addition to the their roles in
law drafting, the advisors have conducted classes at a local
university, seminars in the provinces, and daily discussion and
training sessions at the Ministry of Commerce. The purpose of these
events has been to train Cambodian officials and lawyers to understand
and utilize the laws created to advance the rule of law and foster
Cambodian social and economic prosperity.
As with all legal technical assistance programs, the ABA Cambodia
Law and Democracy Project develops all program components at the
request of, and in close consultation with, participating country
institutions. The bulk of the assistance continues to be provided by
U.S. lawyers on a pro bono basis utilizing donated materials, allowing
a small grant to be leveraged for the benefit of democracy in the host
country. The Cambodia Project has received $1,639,679 over the last
four years, and the ABA has contributed an additional $1,033,360 to
this project.
C. African initiatives
1. U.S./Africa judicial exchange program
The Robert A. Shuker USIA U.S./Africa Judicial Exchange Program
grew out of a proposal by Mr. R. William Ide, III, a former president
of the American Bar Association. After an official trip to Africa
during which he met with judges, lawyers, and government officials, Mr.
Ide suggested that the United States Information Agency develop
programs so that African judges, public defenders, and bar association
officials could learn from each other and from their American
counterparts. The ABA sponsored the effort with the National Judicial
College, and the Superior Court of the District of Columbia joining as
cosponsors. The main goals of the program were to enhance the
development of the participating countries' legal systems, strengthen
the rule of law and the independence of the judiciary, and create long-
term linkages between African and American participants. The United
States Information Agency provided $250,000 with the other sponsoring
organizations providing contributions of over $400,000.
Phase I took the form of a one-month study tour. In April 1995,
twelve judges from the four participating countries Tanzania, Malawi,
Uganda, and Zambia traveled to the United States to study and work
together for over a month to identify innovations that could improve
the quality of justice in their courts back home. Ten days were spent
in Reno, Nevada, at the National Judicial College (NJC) in specialized
workshops led by faculty of the National Judicial College. The
remaining twenty days hosted by the American Bar Association (ABA) and
the District of Columbia Superior Court in Washington, DC included
panel discussions, seminars, and court visits.
For Phase II, an American delegation of judges and of
representatives from the NJC and ABA traveled to Malawi, Tanzania,
Uganda to conduct a series of specialized seminars and training
sessions with justices, magistrates, judicial officers and
administrative personnel, legal educators, and attorneys. At the end of
each visit, the delegation submitted detailed recommendations on
improving legal system of the participating country. Particular
attention was given to Alternative Dispute Resolution.
For Phase III, an American assessment team visited each country to
assess the effectiveness of Phases I and II and identify future needs
of their respective judiciaries. The Phase III team also provided Phase
II training for Zambia. All parties United States officials in Africa,
the delegation team, the judiciaries of the four hosting countries, and
members of the respective African bar associations concluded that the
overall program had exceeded all expectations. Malawi and Uganda had
already implemented the recommended new rules and procedures, while
Zambia and Tanzania were expected to implement similar changes in the
near future.
2. African law initiative sister law school program
An indispensable part of the foundation for a sustainable rule of
law in countries transitioning to democracy is the legal education
system. The ABA has received three successive grants from the USIA
Office of Citizen Exchanges to assist law schools in Africa. The
African Law Initiative Sister Law School Program was initiated in 1994
and continues to assist eleven law schools in eight African countries:
Eritrea, Ethiopia, Ghana, Kenya, Tanzania, Uganda, and Zambia. Over
thirty United States law schools have been involved with this program.
The program has created and supported links between US and African law
schools and helped to improve the capacity of the African law schools
to train lawyers able to respond to the new needs brought about by
democratic and free-market reforms in their countries. Solid links have
emerged over the course of the program.
In addition to bringing African and American law school deans and
professors together to lay the groundwork for linkages, the program has
assisted with faculty training and curriculum development, most
recently in the area of clinical legal education. The program has
shipped or facilitated the shipment of many law books and journals,
helping to update the collections at the law libraries. The newest USIA
grant will support a program that will create or strengthen courses in
areas of law, such as human rights law, constitutional law, commercial
law, and others that are vital to the training of lawyers in these
societies. US law schools have been generous with their time and
resources, with professors and deans participating on a pro bono basis,
so that the project has had a significantly wider impact than would be
possible only with the USIA funds.
3. Other developing projects
The Section of International Law and Practice, together with two
other ABA sections, provided partial funding for a recent trip of
Ambassador Robert van Lierop to Rwanda to observe the work of the
Rwandan war crimes tribunals, and to assess the needs of the Rwandan
legal system for technical assistance. We are in the process of
reviewing his recommendations and have also been asked to evaluate the
feasibility of several other proposed projects in Africa.
D. Arab legal institute
A new rule of law project of the Association since we reported to
this Committee last year is the Arab Legal Institute. Initiated and
organized by the ABA's Section of International Law and Practice and
its Standing Committee on World Order Under Law, the Arab Legal
Institute (``ALI'') is the first pan-Arab effort to promote the rule of
law in the Arab states of the Middle East and North Africa, to train
Arab lawyers, to train judges as independent adjudicators, and to
promote human rights. Since the Institute itself will be led by the
Arab Lawyers Union (which includes a number of Arabs of high standing)
its significance will be substantial.
While technical assistance to the Palestinians will be offered,
what is most important is that the Arab Lawyers Union (representing the
legal profession in the Middle East and North Africa) has agreed to
lead a pan-Arab project designed to educate and to consider reforms
conforming to internationally accepted standards. Such a program is
critical to creating conditions for economic stability and opportunity
and respect for the rule of law, principal ingredients for regional
development and civil society. The strong pan-Arab support is
exemplified in ALI's board which is made up of members of the Arab
Lawyers Union. We are confident that such strong Arab involvement means
that the project will have a sustained and continuously substantial
regional effect.
The Arab Lawyers Union will lead ALI, supported by a coalition of
international bar associations. Since this is the first Arab-directed
rule of law project, it is almost certain to have a positive impact. In
fact, our Arab partners are so committed to this effort that they and
several of their governments have offered material assistance
regardless of current events in the region.
We are planning to open the Arab Legal Institute in May 1997 at a
meeting of the Arab Lawyers Union in Tunisia. ALI's headquarters will
be in Cairo with additional facilities in Tunis, Amman and perhaps
elsewhere. Rather than restricting itself solely to Gaza and the West
Bank, the Institute will be concerned with all Arab states of the
Middle East and North Africa. It is agreed, however, that the West Bank
and Gaza will be among the Institute's first projects. This early
attention to a particularly sensitive region will contribute to the
success of Builders for Peace and other U.S. initiatives directed
toward stabilizing the Palestinian economy and promoting investment. It
will also furnish essential support to our Government's program to
provide for duty-free treatment to products of the West Bank and Gaza
and qualifying industrial zones.
The Arab Legal Institute has united the legal profession in the
Arab states of the Middle East and North Africa in a common effort to
upgrade the legal education of the profession and the judiciary, and to
conduct research and to provide counseling on different aspects of the
law and legal systems prevailing in the Arab states. The underlying
premise is the common recognition that regional peace and prosperity
depend in part on educating those who develop the laws and administer
the legal system and on looking at ways to improve the legal structure.
The Arab Lawyers Union has invited the U.N. High Commissioner for
Human Rights to participate in the project. The International Bar
Association, the Law Society of England and Wales and the Paris Bar are
also joining with the ABA to provide technical assistance and to secure
financial support.
Our Arab colleagues believe this project will enable them to
address fundamental problems existing throughout the Arab world. In
varying degrees from state to state, their history and contemporary
concerns have left Arab states with legal systems and institutions that
cannot cope effectively with some important problems and that cannot
take advantage of opportunities, particularly in areas of economic
development. Progress is inhibited by the lack of a legal profession
equipped to deal with trade, economic development, privatization and
capital market issues as well as insufficient acceptance of the role of
a judiciary in enforcing legal rights and in settling public and
private disputes. The Institute will contribute to the prospects for
fundamental reform by equipping the Arab legal profession with critical
resources to pursue its own agenda and at its own pace. The functions
of the Institute will be educational and not political.
The Constitution for the Institute was agreed upon at a meeting in
Berlin in Fall 1996, and bylaws and final documents were approved early
in 1997 at a meeting of the Permanent Bureau of the Arab Lawyers Union
and by the participating non-Arab bar associations. Now, the Institute
will be established as its own legal entity by a protocol with the
Egyptian government. Land near Cairo is being furnished for the
Institute's headquarters. Facilities also are being contributed in
Tunis and Amman. The government of Lebanon has indicated its wish to
participate and its willingness to offer support.
According to the agreed Constitution, the Board of Directors'
members will be from Arab states, and a Board of Trustees will be
composed of Arab and non-Arab representatives of the supporting bar
associations. We have agreed to establish an Academic Advisory
Committee composed of Arab and non-Arab lawyers, judges, law
professors, and others with relevant experience of high standing and
expertise. The Academic Advisory Committee will be responsible for
advising on matters relating to the academic programs, including the
appointment of lecturers and professors, the establishment of courses,
and more generally to facilitate the development of rule of law
programs in the Arab states.
Funds or services have already been donated by several of the
collaborating bar associations. Most recently, the International Bar
Association (``IBA'') has developed a list of projects which it is
committed to undertake to support the Arab Legal Institute. Among the
initiatives proposed by the IBA are a series of workshops addressing
the independence of the judiciary, of the bar association and of legal
practitioners; translation into Arabic of the IBA International Code of
Ethics, IBA General Principles of Ethics, and other similar documents;
and articles on selected human rights issues written for insertion into
Arab journals and newspapers.
European governments likely will furnish grant funding. The ABA has
dedicated a portion of its staff time and resources to seeking grant
funds in the U.S. for this important endeavor. Thus far, the U.S.
government has not committed any funding, although we understand the
State Department is supportive of the project.
We estimate that the value of the facilities offered by the Arab
states is in excess of one million dollars. We expect to receive
shortly non-U.S. grants in excess of $500,000. Pro bono time and
expense outlays by representatives of the American Bar Association have
exceeded $200,000. For every dollar contributed to the project's
support, approximately $3 in pro bono time can be expected to be
contributed.
The Association anticipates that this initiative, which unites
Arab, European and American lawyers in shared principles of
professionalism and respect for the rule of law, will advance our
mutual interests. We are looking forward to the commencement of the
initial programs, the first of many we expect will flourish under the
aegis of the Arab Legal Institute. We believe that this effort will
positively affect the present dynamics in the Arab states and will
contribute to a future based on accepted rule of law principles. We
hope the U.S. government will join with other governments and financial
sponsors to support ALI's courageous Arab leaders and this ABA-
initiated rule of law program.
E. Latin America
Over the years, the ABA has conducted a number of rule-of-law
projects in Latin America. These have included a series of programs in
Central America in the late 1980's on the judicial system and
alternative dispute resolution, a Latin American Sister Law School
Program in 1993-94, and others. One current project and one developing
project in the region, both involving regulatory reform, are described
below.
1. Latin America administrative law project
This project is designed as technical assistance to CITEL (the
Inter-American Telecommunication Commission), which functions under the
auspices of the OAS. The specific counterpart within CITEL for this
project is the Joint Working Group on Legal Matters, with participation
from each of the three standing committees of CITEL. This project is
jointly sponsored between the ABA Section of International Law and
Practice and the Inter-American Bar Association (IABA), and ultimately
may include participation by other ABA sections as well as other
regional bar associations within Central and South America.
The focus of the project is the creation of information resources
and the publication of a report summarizing the salient structural and
procedural features of developing telecommunications regulatory
authorities in Latin America. The original impetus for this project,
which was initiated in 1994, was the increasing emergence within the
region of new telecommunications regulatory frameworks and authorities
as an outgrowth of the privatization and liberalization in the
telecommunications sector. The interest in this project originally
reflected a recognition that: (i) the success of telecommunications
reform would be dependent in large measure on the perception by private
sector investors of the stability and fairness of regulatory processes;
(ii) the best available models for telecommunications regulation were
from countries with other legal and political systems such as the U.S.
and the U.K.; and (iii) a wide diversity of approaches was emerging in
the countries of common legal and political systems in the region,
creating a need for a common basis of understanding of the significance
of the differences.
Since the inception of the project, the effort has gained
additional importance due to the focus of the Summit of the Americas on
the development of the telecommunications sector and the critical role
of transparent regulatory frameworks in the implementation of the new
WTO Agreement on Basic Telecommunications Services.
The project consists of two parts: The first is the creation of a
database of information on telecom regulatory structures and procedures
in each country of the region. A questionnaire is currently being
prepared by CITEL. The resulting information will be available for
reference in the drafting of the report. The report itself constitutes
the second part of the project. The report will be a descriptive
reference, and is not intended to include any specific proposals or
model rules. A detailed outline of the report has been prepared and
approved by the CITEL Joint Working Group. Specific drafting
assignments are now being made and drafting has begun. A preliminary
draft will be presented to the next Joint Working Group meeting which
is scheduled to take place the first week of August 1997.
At this stage, the project is being funded and staffed entirely
from internal resources.
2. CONASEV--National Securities Exchange Commission of Peru
In October 1996, the Council of the Section of International Law
and Practice approved a project proposal regarding the preliminary
drafting of a cooperative agreement. This agreement establishes the
basis for technical assistance and exchange of information between
CONASEV (National Securities Exchange Commission of Peru) and the
Section. The purpose of the agreement would be to provide assistance in
the areas of securities and capital markets regulation.
A steering committee formed by members of the Section was created
to supervise the drafting of an agreement in close collaboration with
representatives of CONASEV. The Steering Committee has finished
reviewing the Spanish version of the agreement and has started working
on the English version. Additionally, the Steering Committee is in the
process of identifying potential funding sources to develop a tentative
project to provide technical assistance to CONASEV.
F. Other projects
1. Hong Kong and the People's Republic of China
This Spring, an ABA delegation which I led visited Hong Kong to
study the implications of the impending reversion of sovereignty for
the rule of law. The delegation met with government officials,
opposition leaders, business leaders, and bar groups to discuss the
effect of the reversion on the legislative body, the courts,
independent agencies such as the Independent Commission on Corruption,
and the legal system in general. The trip was funded by the ABA and by
the participants themselves; a report of the meetings and our
conclusions is in preparation. Next week, our Council will be reviewing
a proposal to seek outside funding for several follow-up visits to Hong
Kong in each of the three years following the reversion.
We are also in discussions with outside funding sources concerning
possible rule of law projects in mainland China. Our Section sustained
a substantial loss three years ago when a joint seminar with the All-
China Lawyers Association in China was unilaterally cancelled by the
Chinese on the eve of the program; as a result, we have been cautious
about projects in China. However, it is apparent that the continued
development of the rule of law in China is an important priority, both
for China itself and for the future of Hong Kong. We will therefore be
looking closely at project opportunities in China over the next year.
conclusion
Foreign assistance is very much maligned and misunderstood, partly
because its benefits are not often apparent. The ABA appreciates the
difficult task your Subcommittee has in dealing with the fiscal year
1998 Foreign Operations Appropriations bill. Yet Mr. Chairman, we hope
that your decisions will be guided by the goal of protecting America's
vital interests. Since the United States is the only country capable of
providing effective global leadership, it is more important now than
ever for our own self-interest to accept this challenge. Accordingly,
for this nation to function as a super power, we must fully participate
in the global economy through engagement and a commitment to foreign
assistance.
Only one percent of the federal budget is devoted to foreign
assistance, to programs which yield an enormous return for American
taxpayers. Internationally, these programs foster democracy and human
rights, build free markets and free trade, combat corruption, and
promote sustainable development. Here at home, U.S. foreign assistance
leads to increased exports, high quality American jobs, and greater
economic and national security.
The ABA believes that its global rule of law projects are one means
to this end. Our programs have yielded tremendous leverage on a
relatively modest U.S. financial investment. This is largely due to the
vast amount of free legal technical assistance available to us. A
strong commitment to legal and commercial infrastructures supports the
ability of emerging markets to purchase U.S. products.
Mr. Chairman, let me conclude by reiterating how important foreign
assistance is to America's success. Our national interests are
increasingly becoming more intertwined with the political stability of
other nations, whose policies can promote or disrupt the free flow of
goods and services. In that regard, countless American workers and
businesses depend on trade and a thriving global economy for their
livelihoods, which is fostered by the support of rule of law projects.
There has been a tremendous movement in recent years toward economic
and political openness. We cannot afford to reverse the tremendous
gains that rule of law democracy projects have made in fostering growth
in the global economy. For the aforementioned reasons, we urge this
committee to continue its support for the ABA's technical legal
assistance programs through the appropriations process.
______
Prepared Statement of Hobart C. Gardiner, President and CEO,
International Executive Service Corps
The International Executive Service Corps accelerates the sound
growth of a free enterprise system in the world's developing countries
and emerging democracies. Long-term sustainable development in
developing and emerging countries depends upon economic growth. The
private sector is widely recognized as the engine of growth and is the
most reliable source of efficiency and innovation, giving rise to a
healthy, educated populace.
IESC supports this private sector development by supplying
managerial and professional skills and knowledge rather than financial
aid. We make American executives available to individual enterprises in
the countries we want to help. As a business-to-business (and people-
to-people) kind of foreign aid, we furnish three elements frequently
lacking in large scale government-to-government assistance. First, we
present to the American private sector, both individuals and U.S.
companies, an opportunity to participate directly in the building of a
strong private sector overseas. Second, we draw on the vast resources
of managerial and professional talent that have built the American
economy and for which financial aid alone is no substitute. Third, we
foster stable foreign business climates for direct foreign investment
by U.S. companies.
Over the past 32 years, we have helped create new businesses,
increase sales, increase employment and raise standards of living in
over 120 countries. During this time, 20,000 clients have been served,
one million jobs have been created or saved overseas, and our clients
have purchased three billion dollars worth of American goods, equipment
and services. Two hundred eighty clients have entered into joint
ventures or other alliances with American businesses.
Historically, forty percent of our activity is repeat business. The
reason is the quality of our volunteers. For instance, early on, the
Hungarians asked IESC to help them establish a stock exchange in
Budapest. We sent Bob Bishop, who retired from the New York Stock
Exchange as Senior Vice President. He did a magnificent job--teaching
them to set up and manage a stock exchange, and the importance of SEC-
type rules. He told them what to watch our for and what to insist on.
They were very pleased. As the project was coming to an end, they asked
Bob if he would conduct a seminar on ``capital formation'' at the local
university. He said he would be delighted to, what university? They
said, ``Karl Marx University.'' Since then, they changed its name to
the University of Budapest.
The International Executive Service Corps is the most effective
business-development organization of its kind in the world. Our
business is not just doing good, but doing good business. We have
taught African women to support themselves and their families by
carving and selling wooden sculptures. We have shown Russians how to
manage formerly state-owned manufacturing plants. We have coached the
new owners of a sawmill in Ghana. We have built a hydroponic greenhouse
in Egypt and taught mentally-handicapped adults to grow and sell
lettuce to major hotels in Cairo and Alexandria. We helped a retailer
in Guatemala become a creative merchandiser who just opened the first
full-fledged modern department store in Guatemala.
IESC assistance is cost-effective because our experts are not paid.
Over the past 32 years, one million executive days have been
contributed to IESC projects. This contribution has leveraged the
funding we have received from AID, from other grants, contributions and
the fees we charge our clients. In 1996, 62 percent of the cost of the
IESC operation came from the private sector and 38 percent came from
the public sector.
IESC makes sure that the world knows about U.S. business
leadership, initiative and creativity. Recognizing our impact, nineteen
other industrial countries around the world have formed their own
versions of IESC, and are now sending their own business executives to
teach modern business techniques to the developing world. The Japanese,
for example, have studied IESC and created their own service corps in
order, as they put it, to be sure ``Japan's face is visible.''
Incidentally, these foreign organizations now have aggressively active
programs in Latin America and the Caribbean while IESC has had to
curtail our operations there because of a lack of funding from AID.
Imitation, indeed, may be the sincerest form of flattery, but it is
ironic and sad that as other industrialized countries copy our program
AID is reducing support for our activities right in our own backyard.
This retreat jeopardizes U.S. trade and investment opportunities which
IESC could foster for U.S. business.
We do, however, have one new program in Panama. We recently signed
an agreement to assist the Panamanians make appropriate use of the U.S.
properties there that will revert to Panamanian control. It will also
provide linkage for U.S. business to participate in this
transformation. We were happy to do this because of the importance of
the Canal to our shipping interests and in the interests of a
successful transition.
IESC believes that giving a hand out is one thing: giving a hand-up
is another. We break the cycle of dependency in developing countries by
teaching self-sufficiency, independence, competence and responsibility.
We also teach realistic business practices by charging our clients a
fee. So far, we have collected over $200 million in fees from our
clients, which has allowed us to do more projects.
In the former communist countries, a primary barrier to foreign
business has been the government's unfamiliarity with the need to
create an enabling environment. Therefore, IESC's public administration
program is designed to teach local, regional and national government
officials to understand the most effective role of government in a
market economy. Since ``open governments and open markets go hand-in-
hand,'' the public administrators trained by IESC offer critical
support to the private sector in a free market economy. We have sent
359 leaders from municipal, and federal government to help accomplish
this objective.
IESC has also been active in the former Soviet Union in defense
conversion activities. In fact, you probably recall when listening
devices were found in the American Embassy in Moscow. IESC was assigned
the task of converting the manufacturer of these listening devices from
military to other uses. Thanks to the hard work and creativity of
several IESC volunteer experts, that plant is now a major manufacturer
of hearing aids in Russia.
More important, our defense conversion activities have changed
attitudes. Thomas Reed, former Secretary of the Air Force, served as an
IESC volunteer on several of these projects. Tom pointed out the long-
term importance of IESC's programs in this area when he noted ``The
point of all this is that Defense Conversion has little to do with the
conversion of facilities. It has everything to do with the conversion
of the mindset of the leadership of these societies. In this
undertaking, IESC has played a historic role. From my experience, IESC
has set the stage for a winding down of the Cold War, defusing the
Soviet threat, and in opening new vistas to the Soviet old timers.
That's the best part, because they are basically good people who
deserve a better system.''
The new deputy prime minister of Russia, Boris Nemtsov, who had
been governor of Nizhny Novgorod, wrote the following to the U.S.
embassy in Moscow: ``Despite the occasional appearance here of other
sources of technical assistance, IESC's efforts offer an unmatched
mixture of knowledge of our people and region; knowledgeable Russian
staff with invaluable data on Russian enterprises to assist potential
investors; and evidence of understanding the importance of long-term
strategies and relationships.''
IESC operates efficiently. We just finished surveying the companies
we helped in 1995. According to these studies, every dollar that IESC
spent on business assistance projects in 1995 increased sales for our
overseas clients by almost $6, generated $2 in new financing, and
almost $4 in capital investments--all in just the first year after IESC
assistance. IESC also helps American business. During that same period,
in the first year after we worked with them, those companies bought $38
minion worth of U.S.-made goods and services--more than the total cost
of IESC assistance that year.
IESC itself operates ``lean and mean.'' Last year we reduced our
headquarters payroll by 15 percent without reducing the number of
projects. We employ for ourselves the same good business practices that
we urge for our business clients. In fact, we recently received
recognition from Independent Sector and AID for our cutting-edge
approach to quantitative measurements of our effectiveness. IESC is the
leader among business volunteer organizations in tracking the
performance and developmental impact of our programs.
IESC is a people-to-people program. Our major resource is the
13,000 industry experts who have registered with us, offering to go
abroad on one of our projects for up to three months of intense
management and professional assistance. They don't get paid--in money.
They do get paid in the satisfaction of helping those who need it--and
appreciate it. The value of these donated services has been estimated
at over half a billion dollars over the life of the organization.
In summary, IESC is good for the United States, is good for
American business, and is good for people around the world who are
struggling to make better lives for themselves and their children. It
is efficient and effective. It supports American foreign policy
objectives and extends America's commercial reach. It shows America's
real self to the world--its knowledge, experience and generosity. It is
a balanced approach to business--not just for profit, but for human
development.
______
Prepared Statement of John H. Costello, President, the Citizens Network
for Foreign Affairs
overview
Mr. Chairman, I am John H. Costello, President of The Citizens
Network for Foreign Affairs. I appreciate the opportunity submit this
written testimony on the U.S. foreign assistance program.
The Citizen's Network for Foreign Affairs is a unique international
economic development organization dedicated to stimulating economic
growth and policy reform in the world's emerging economies. Founded in
1985 on the idea that global economic growth is critical to future
American prosperity and that American private enterprise is essential
to promoting it effectively, CNFA champions the catalytic role of
investment and technical assistance as one of the most potent and
sustainable engines of development.
Through innovative partnerships CNFA creates market-oriented,
economically-viable enterprises where none or few existed before.
Public-private partnerships match U.S. firms interested in market
expansion with local organizations that want to increase capacity and
production, improve technologies and expand the number of jobs.
Volunteer partnerships match Americans with technical know-how and
practical experience to emerging country organizations in need of
business, association and agricultural expertise. Taken together,
CNFA's partnerships strengthen the economic well-being of both emerging
country and American citizens. As vehicles for delivering American
foreign economic assistance, there is no other idea or mechanism as
powerful.
Working with leading American agribusiness firms, CNFA manages
programs on behalf of the U.S. Agency for International Development to
innovatively create private enterprise as a means of restructuring
outdated, inadequate, and inefficient food and agricultural systems.
Its results-oriented win-win projects combine the goal of achieving
economic development in emerging economies and new democracies with the
private sector's desire to expand markets. Since the public-private
partnership program's ground-breaking inception in 1993, CNFA has
leveraged more than $150 million in direct private investment and
technical assistance from U.S. agribusiness with $45 million from
public sources to replace aging and inefficient state-owned communist-
style enterprises with privately-owned and operated joint ventures.
CNFA's latest project is expected to leverage an additional $100
million in private sector assets, with $30 million of appropriated
development assistance funds. The participating American agribusinesses
two-thirds of which are small businesses say their anticipated long-
term return has the potential to justify their continued commitment to
the business they have helped create in the target countries.
Equally important is the role CNFA plays in generating a
governmental policy and legislative environment that is fostering
private enterprise by linking policy reform to the incentives of
substantial new investment and technology. At the request of U.S. firms
with operations in the target countries, CNFA undertakes a range of
initiatives to encourage government at the local and national levels to
pursue legal, bureaucratic and regulatory policies that are conducive
to private farming and that encourage foreign trade and investment.
Nowhere has this been more important than in Ukraine.
foreign assistance in the post cold war era
The end of the Cold War and dismantling of state-managed economies
across the globe has ushered in a new era of democratic regimes and
economic expansion, one based on less government intervention and
greater reliance on the marketplace. It has emerged from the
convergence of two powerful forces in the post World War II period: a
transportation revolution that has made the world's geographic barriers
irrelevant and an information revolution in terms of computers and
other forms of communications that has contributed mightily to breaking
down repressive political barriers. Together they have done much to
accelerate the pace of economic growth, even among the world's poorest
peoples. And today's market liberalizing multilateral and regional
trade pacts, which are rapidly expanding the world's middle class, are
doing much to ensure that future economic growth is widely shared.
The Citizen's Network recognizes the critical significance of these
changes. As the federal government ponders over how to reinvent its
traditional role in delivering foreign assistance in the absence of the
Soviet menace, CNFA has forged ahead, in effect, creating a new model
in the post Cold War period. This model recognizes the crucial role of
U.S. assistance as the catalyst in persuading the U.S. private sector
to invest, trade and form joint ventures to achieve economic
development more rapidly and sustainably. In the end this is arguably
the best way to put and keep dollars in the pockets of people.
Government neither has the expertise nor the capacity to go it alone in
assisting the world's less developed economies. Long lasting economic
and per capita income growth occurs best when government and the
marketplace work in partnership to achieve mutual goals.
But for the past twenty years, indeed as far back as President
Truman's Point Four Program, U.S. economic development has largely left
American business out of the economic development process. While
universities, non-governmental organizations and other development
specialists have practiced ``development,'' we have largely excluded
the energy, capital and creativity of the American enterprise sector
from the development process. It is not that private voluntary
organizations and universities do not have an important role to play in
economic development. It is not an either orscenario. However, if we
are interested in achieving a significant, sustainable impact in
promoting economic opportunity for millions of people everywhere, poor
and rich alike, then there is an overwhelming case for linking trade
and development.
The last decade has witnessed unprecedented change. We have seen
the collapse of communism, and the failure of centrally planned
economies. The free market is in ascendancy everywhere and the results
are striking. A recent series detailing the importance of trade and
investment and its links to economic development in The Washington Post
said it plainly: ``More than any other government program, more than
any aid agency or any international bank, the rapid spread of free
trade, free markets and investment across borders by private companies
and investors a phenomenon economists are calling globalization is
proving to be an effective weapon against poverty in many nations
around the world and, in some places, arguably the most effective anti-
poverty measure ever known.''
Between 1987 and 1994, according to the World Bank, the number of
poor people in China decreased by more that 50 million. Today
investment flows into the developing world represent 72 percent of all
financial flows dwarfing aid flows which have fallen from 53 percent in
1984 to 28 percent in 1995. In 1995, the flow of private capital into
the third world totaled more than $170 billion, a 200 percent increase
in just five years!
This concept not only results in real and sustainable
``development,'' it is an idea that the American public understands. It
produces win-win partnerships. If we are to see any change in reversing
the shrinking ``development pie'' we must find creative ways to link
development resources, trade, and investment by leveraging the
dwindling public resources with private capital. Aid, trade and
investment results in real and sustainable development. It works.
The win-win approach also challenges the zero-sum opinion of aid.
Many Americans believe that aid even when they support it takes
something off the American balance sheet. It is often viewed as a cost
which provides little or no economic return to Americans. Until we
clearly appreciate that investing in development is effective and
results in an economic returns to the United States we will be faced
with a fading horizon of resources and opportunities. Also, investing
in development and leveraging the creativity, energy and capital of the
enterprise sector increases economic opportunity for American workers.
The new economy is global and it is competitive. The emerging markets
are the most dynamic potential opportunity for growth for just about
every sector of the U.S. economy from corn flakes to sneakers. It is a
factor of demographics. We will add an additional 12 billion people by
2025 just 28 years away. This is not a zero sum game; we need economic
development to provide economic opportunity jobs for Americans.
The ingredients for development, technology, capital and trade are
readily available from our allies in the G-7 and from the Asian tigers.
It is our choice. We can win and the emerging economies can win. But we
must be a player.
cnfa model is the right approach for foreign assistance in 21st century
We believe the CNFA model has broad, fundamental indeed historic
implications for how foreign assistance should be delivered and
measured in the post Cold War era where the ubiquitous ascendancy of
the global marketplace is transcending geopolitical concerns and
redefining our notions of national security. Put simply, the model's
bottom-up, public-private cooperative approach brings together the
public interest and the profit-motive of the marketplace to leverage
investment, technology transfer and income-generation quicker and
stronger than if the same resources were tendered by the public sector
alone.
At the end of the day we have found nothing to match the
creativity, entrepreneurial spirit and tenacity the private sector
whether its companies or individuals who volunteer their expertise
brings to bear on achieving rapid and sustainable developmental change.
We at the Citizens Network are proud of our role in creating win-win
private-public partnerships in emerging economies countries that link
trade, investment, technology and know-how to create long-lasting,
financially viable private sector food and agricultural systems. The
fact is, economically-viable partnerships that require a financial
stake in ventures by all potential beneficiaries Western firms that
wish to establish new markets, emerging-country organizations that want
to increase capacity and production, improve technologies and expand
the number of jobs, and the helping hand of U.S. assistance programs
will yield extraordinary results.
The CNFA partnership model is a proven and effective way to
strengthen economic systems, quality of life, and the prosperity of
citizens everywhere in emerging countries as well as in America. Thank
you.
______
Prepared Statement of Ihor Gawdiak, Director, Washington Office,
Ukrainian American Coordinating Council
The following statement is submitted on behalf of the Ukrainian-
American Coordinating Council by Ihor Gawdiak, its Director of the
Washington Office. The UACC is one of two Ukrainian-American umbrella
organizations and represents the two largest Ukrainian-American
fraternal organizations, the Ukrainian National Association and the
Ukrainian Fraternal Association, with a total membership of over
75,000, as well as a number of the most prominent civic, social,
charitable, and cultural organizations in the Ukrainian-American
community nation-wide. Our constituents are very active in and support
both the Democratic and Republican parties.
Recently, significant attention has been given in the House of
Representatives to some of Ukraine's most pressing problems. Likewise,
there has been much press attention given to Ukraine's difficulties in
implementing economic reform and overcoming public corruption.
The Ukrainian-American community is also disappointed in the lack
of progress in these areas and is much aware of the need for Ukraine to
solve quickly pressing problems. We share our American government's
frustration over the continuing corruption and the slow pace of reforms
in Ukraine. We also share the sense of frustration with Ukraine's own
reformers who face daily the task of overcoming the legacy of Soviet
Communism and its systemic corruption.
Like you, however, we see an independent and democratic Ukraine as
vital to American interests and expect Ukraine to develop into a truly
democratic, law abiding, stable, and economically strong nation. We
believe, therefore, that it is critical for the United States to show
its support for Ukraine by continuing the ``strategic partnership''
begun only in the last few years. Such a partnership must include aid
to Ukraine at current or increased levels. Frustration with the
difficulties experienced by American businesses, while of critical
importance and the proper subject for diplomatic intercession, must not
overwhelm the vital interests the United States has in encouraging the
growth of independent and democratic Ukraine.
We believe that in your discussion of aid to Ukraine you should
consider carefully many factors in the evolution of Ukraine, successes
and failures. Corruption is endemic not only to Ukraine, but to the
entire region. The pace of reforms has been excruciatingly slow
throughout the region. Ukraine, unlike Russia and some of the other INS
countries, faces particular difficulties--the enormous burden of the
Chornobyl catastrophe cleanup, extensive dependence on Russian oil for
its energy needs, an entrenched communist dominated bureaucracy, and
constant pressure from Russia to rejoin it in some sort of a Russian
dominated union. Nevertheless, Ukraine has made remarkable strides in
maintaining its international obligations and advancing domestic
reforms. Ukraine has voluntarily given up its arsenal of nuclear
weapons, has participated very closely with NATO in its Partnership for
Peace program, has joined the European Union and has promised to end
the death penalty, has by far the best record on human rights issues of
any NIS country, and its treatment of minorities has won praise
throughout the world. On the domestic front, Ukraine, despite
tremendous difficulties, has been making slow but steady progress as
well. It has had a peaceful transfer of power in two presidential
elections, it has enacted a new constitution, it has introduced a new
and stable currency, it has reduced inflation by almost 10,000 percent,
and it has privatized almost 50,000 enterprises.
In spite of great political pressures against it, Ukraine's
President Leonid Kuchma has steadfastly maintained a course of
developing close ties with the West and strengthening the strategic
partnership with the United States. He has been equally firm, despite a
strong leftist opposition in the Parliament, in promoting reforms in
Ukraine. There are presently a number of bills before the Parliament
that if passed would go a long way to create a better climate for
investment in Ukraine and would make it possible to more effectively
fight crime and corruption. Only in the last few days, President Kuchma
has created an agency akin to our FBI with specific instructions to
combat crime and corruption.
Ukraine is unique in its importance to European security, and the
international self interest of the United States. It is not unique,
however, in the hurdles of economic reform and public corruption it
faces. Of all the countries in the region, Ukraine should not be
singled out for discipline because of such shortcomings.
Cuts in U.S. foreign assistance to Ukraine at this point would
critically undermine President Kuchma's efforts and the efforts of
other, less well known but equally dedicated, reformers in Ukraine.
Withholding aid would send the wrong message to reformers and would
give comfort to the very interests responsible for many of the
problems. In the next two years Ukraine faces two critical elections,
parliamentary elections in March 1998 and presidential elections a year
later. The President and the pro-Western, democratic forces must
convince voters across Ukraine and especially a skeptical pro-Russian
electorate in Ukraine's eastern and southern oblasts (provinces) that
their pro-Western, reform and market oriented policies are in the best
interest of Ukraine and all its citizens. They can do so only with U.S.
help, including substantial and well-thought out foreign aid. A victory
of the leftist, communist forces in the next parliamentary elections
would significantly delay further meaningful reforms in Ukraine, would
drastically change its pro-Western, pro-NATO foreign policy, and could
push Ukraine into a Belarusian-type union with Russia. The United
States and the West would lose a pivotal strategic partner in Eastern
Europe, and peace and security in the region could be greatly
endangered.
While we must work to help Ukraine reform, the U.S. Congress and
the Executive Branch must show greater patience and understanding
toward Ukraine. The development of a law-abiding citizenry and a
society and governmental infrastructure that does not operate on graft
and corruption takes a long time under the best of circumstances. It is
not a process that can be easily legislated, especially not from
abroad. It must evolve gradually and over time. Let us not forget our
own American experience with the ``robber barons'' of the 1890s,
Prohibition era crime lords, and subsequent recurring episodes of
corruption in public life. While we must encourage and push reform, we
cannot expect Ukraine to achieve developments in five years that took
many decades in our own country. The systemic evil and corruption that
permeated Soviet society cannot be swept away overnight. The United
States called for the ``strategic partnership'' with Ukraine. We must
have a commitment to that partnership and to those in Ukraine fighting
to build democratic institutions and the rule of law.
The people of Ukraine, by and large, have shown a desire to live in
a democratic lawful society, and they are capable of democratic
governance. Withholding or cutting aid to Ukraine could result in a
disastrous economic regression, would punish the segments of Ukraine's
society and government who are most committed to reform and cooperation
with the United States, and, worst of all, could possibly force Ukraine
toward a political course that is the least desirable for the national
interests of the United States.
______
Prepared Statement of Joseph Lemire, President, Gala Radio & TV
Company, Olympic Champions, Ltd., Kiev, Ukraine, and on behalf of the
Several Members of the American Chamber of Commerce in Ukraine
synopsis
On July 18, 1996, three thugs broke into the studio of Kiev's Gala
Radio, the first Voice of America (VOA) affiliate in Ukraine, to steal
the station's equipment, its music library of CDs, Gala's sign-on and
jingles. The men threatened to hurt employees who tried to stop them.
Less than an hour later, the same men broke into my private residence
and repeated the action. Within two hours these same men were
broadcasting as ``Gala Radio'' and have continued to this day to
broadcast with the full support of the Ukrainian government, working in
conjunction with the son of the personal advisor to the President of
Ukraine.
On January 17, 1997, Ukrainian police walked into Ukrainian
Olympian Oksana Baiul's Beauty Salon in Kiev and padlocked the door.
They provided no explanation for their actions other than that we had
refused to pay a ``questionable payment'' a few days before.
Our company, the Gala Radio and TV Company, is an American-
Ukrainian joint venture with more than $1 million in direct U.S.
investment, which was the basis for what was to become a Gala Radio
network in 12 Ukrainian cities. The Gala Radio FM station in Kiev was
expropriated in July 1996 by the Ukrainian government a month after
Gala Radio turned its first profit. Our plight has been reported in a
number of newspapers, including the Wall Street Journal, New York
Times, International Herald Tribune, and Los Angeles Times. We decided
to invest in Gala Radio because of its VOA affiliation.
Retrieving only part of our investment in Gala Radio (and the
retrieval is tenuous) has entailed nearly 100 pages of reports from the
American embassy in Kiev (the reports can be consulted for details);
one Supreme Court of Ukraine decision in our favor that has been
ignored by the Ukrainian government; innumerable meetings in Kiev among
embassy officials, my company representatives, and Ukrainian government
officials; and more than 30 trips in the last year on my part to the
United States to talk with officials from the U.S. Congress, the White
House, the State Department, the World Bank, the Ukrainian embassy, and
other institutions.
Our other company, Olympic Champions, Ltd. (OCL), is a wholly owned
subsidiary of our American company with ownership interest by Oksana
Baiul, Viktor Petrenko, and other Ukrainians involved in the Olympics.
Half a dozen Ukrainian Olympians hoped to become investors in the Gala
Radio network, which in turn would have employed several hundred wage-
earning, tax-paying Ukrainian citizens.
Our OCL Beauty Salon investment in Ukraine was expropriated in
January of this year after we refused to pay a ``questionable payment''
which was outside of our legal lease to purchase agreement. Shortly
thereafter, the Ukrainian government literally walked in without notice
and padlocked the entrance, refusing us access. The government then
moved our equipment out and has moved another company into the
location. We have invested more than $200,000 in this venture.
After the considerable attention our matters have received, several
high level Ukrainian officials are now saying our matter has been
resolved when in reality, and as setforth in the detail Chronology of
Events, it has not been resolved. The following problems continue to
exist:
1. The Ukrainian Government allows another company to broadcast and
to use our name, stolen equipment, jingles and signon.
2. The Ukrainian government refuses to issue the other 11 broadcast
licenses we had paid to be allocated to us and were the basis of our
investment.
3. The Ukrainian government refuses to honor our damage claim
based on the Ukrainian Supreme Court decision.
4. The Ukrainian government refuses to honor our agreement on the
Oksana Bauil Beauty Salon and return the location and our equipment.
These problems are similar to problems being encountered in Ukraine
on a daily basis by small companies like R&J Trading and Perekhid Media
Enterprises, to large companies like Dupont, Motorola, Monsanto and
Luscent Technologies. These are not isolated instances nor are they the
result of a ``few bad Ukrainian partners.'' All these problems exist
because of the Ukrainian government's refusal to honor contracts,
establish a rule of law and enforce their own law and court decisions.
criminal complaints
Individuals have been identified who unlawfully and forcibly took
property belonging to the Gala Radio Company, including equipment, its
jingles, sign-on, and much of its CD library. Affidavits and criminal
complaints have been filed with the Kiev police, and the American
embassy has officially requested that these matters be investigated by
the procurator's office. We have filed other criminal complaints as
well. Yet all the complaints have been dropped or ignored by the
procurator general of Ukraine. In addition, the procurator general
refused to enforce the Supreme Court decision in our case, which was in
his power to implement.
I have received intermittent death threats over the phone since
August 1996. In November 1996 I was stopped in my car at gunpoint by
off-duty police officers in uniform, who demanded that I accompany
them. I refused. I was told in that same month, by a member of the
Ministry of Internal Affairs, in the presence of American Embassy
officials, that the ministry could not guarantee my safety.
At present, an elite police unit is keeping a presence in the
vicinity of my Kiev residence and radio studio. I am assuming that they
are there to protect me and my employees. Perhaps their presence is to
provide Gala Radio with protection against retaliation in light of
impending action by the government of Ukraine to resolve our matter. I
have no idea.
Also at present, the procurator general is preparing to visit the
United States at U.S. taxpayer expense. This is wrong. He first should
be held accountable for his actions--or lack thereof--in the Gala Radio
case and other matters, such as the case of the U.S. company R&J
Trading, which also has numerous court rulings in its favor that are
not being enforced. I believe a number of you ladies and gentlemen are
familiar with R&J's problems in Ukraine.
the mendacity of the ukrainian government
Even though the high court in Ukraine ruled last December in favor
of the Gala Radio Company regarding one area of our investment
problems, the court's ruling was long ignored while we continued to
fight the Ukrainian government's breathtaking mendacity at all levels.
When Vice President Gore broached the Gala matter with Ukrainian
President Leonid Kuchma last December, the vice president was not told
the truth. When Secretary of State Albright broached the Gala matter
with Ukrainian Foreign Minister Hennadiy Udovenko in March, she was not
told the truth. When Ambassadors Richard Morningstar and William Green
Miller have broached the Gala matter with various Ukrainian officials
over past months, they were not told the truth.
Believe me when I say that this account of Gala's difficulties is
far from exhaustive, but this narrative alone should give you ladies
and gentlemen some idea of the effort required to stay on top of this
situation. The government's bad faith runs so deep, mendacity and
distortions are so pervasive, that any U.S. official trying to resolve
this matter would need to be familiar with more than 100 pages of
documentation to set straight the continuous onslaught of Ukrainian
excuses. Thankfully, our Ukrainian attorneys are tremendous, and have
been very diligent.
This behavior on the part of the Ukrainian government is far from
an isolated event. Many foreign companies cite ``changing conditions,''
``telephone law,'' lack of contract sanctity in Ukraine, enabling
Ukrainian officials to change the story when they are pinned down on
violations of their own laws. The so-called ``grain ban'' of last year
is a case in point. The government expropriated grain slated for sale
to countries around the world, affecting the U.S. firms of Monsanto,
Dupont, and Kiev Atlantic Ukraine (an EBRD backed venture), to say
nothing of what the ban did to the farmers of Ukraine and other
international buyers. Incredibly, a recent statement from the Ukrainian
Cabinet of Ministers published on April 18 in Kiev, responding to a New
York Times story of April 9, stated that there was no proof of the
alleged ``grain ban.'' Denying the existence of the grain ban, which
affected a vast portion of Ukraine, is not unlike denying the explosion
at Chornobyl--a refutation tried and abandoned by the Soviets in 1986.
But if changing the story does not work, then documents may be changed
and backdated, as happened in the cases of Gala Radio and R&J Trading.
current investment situation in ukraine
Other American investors in Ukraine are fighting similar battles,
while some of the largest U.S. companies, such as Marathon Oil and
Motorola, have come to Ukraine, surveyed the business landscape, and
gone elsewhere. Smaller companies, attracted to Ukraine several years
ago by favorable investment laws that have since turned sour, find
themselves in protracted, messy, and expensive predicaments. I am not
the only investor who has reason to be concerned about his safety in
Ukraine. As a result of Ukraine's treatment of foreign investors, that
nation's total foreign investment after nearly six years of
independence is a paltry $1.4 billion--in a country with 52 million
citizens that is the largest country in Europe after Russia. Both large
and small investors are needed in Ukraine on a massive scale, but the
government of Ukraine is impeding its development. Ukraine, at $25 per
person, has the lowest foreign investment per capita of any former
Soviet Union country other than Belarus. Yet the Ukrainian government
declares it needs foreign investment at the same time it forces foreign
companies out of the country. The adage among investors in Kiev is,
``Ukraine wants foreign money all right--minus the foreign investors.''
problems of other u.s. companies
On April 18, 15 U.S. companies met at the American Chamber of
Commerce (AmCham) to discuss problems in Ukraine. Some of these wish to
go on the record today; their statements are contained in attachments
or have been provided to your staff. In addition, several multinational
companies provided background material for the AmCham to present to
this committee. These companies are Dupont, Monsanto, Arthur Andersen,
PME, R&J Trading, Grand Hotel, and several others.
Bill Sinkew, managing partner of Arthur Andersen Ukraine, recently
noted that in Ukraine ``it is not three steps forward and two steps
back in Ukraine. It is 101 steps forward and 100 steps back--and that
is considerable effort for just one step.'' He went onto to say that
the biggest obstacles for business in Ukraine are retroactivity of tax
laws, arbitrary licensing and quotas, lack of respect for any laws--
theirs or international laws, excessive penalties, and the lack of
accounting reform and a reasonable tax system.
Luscent Technologies noted that it participated in a tender to
modernize a telephone network in Ukraine. After properly following
tender rules and actually being announced the winner, President Kuchma
himself announced another tender with new rules. Luscent has been
working on this tender for almost one year.
Several multinationals are saying ``this is a make-or-break year''
for them in Ukraine. One multinational said it is ``surprisingly
difficult to work with the Ukrainian government to promote our
enterprise and create the business environment we need to be
successful. We deal every day with stonewalling by government
officials, from high levels right on down to the last man in customs.
We see constantly changing legislation, which rarely seems to change in
favor of promotion of industry. And as for existing rules and
regulations, the ability to have an Ukrainian official interpret these
rules and regulations logically seems to be tied to the amount of money
one is willing to put into the official's pocket.'' Many multinationals
are afraid to go on the record for fear of their employees' safety,
among other reasons. Nonetheless, they have provided us with
considerable background material.
Finally, I remind the Senate that every failed U.S. investment in
Ukraine--from Motorola to Marathon Oil to Gala Radio and R&J Trading--
is more American assistance in the form of tax write-offs, which cost
the U.S. Treasury millions of dollars in indirect subsidies sacrificed
to unlawful and unethical business practices in Ukraine. Every
successful venture is good for the United States and the foreign
partner. A multinational communications company has five investment
projects in Russia and one in Belarus, but it can't get one investment
project off the ground in Ukraine. Am I pleased to report these facts?
Not at all because this investment climate makes return of our
investment near impossible.
the message is not getting to washington
On April 19, during a visit to Kiev, Harvard economist Jeffrey
Sachs said, ``I meet more foreigners leaving Ukraine than I do coming
into Ukraine right now. There are too many bribes, too many taxes, and
too much instability'' (Reuters, April 19). It is unclear to
businessmen why Washington is not getting this message. During a
meeting with American businesses in February 1997 in Kiev, members of a
congressional delegation headed by Sen. Roth and Rep. Solomon noted
their dismay at learning of U.S. business problems in Ukraine only
after the delegation had met with Ukrainian officials. The businessmen
raised issues of nationalization by the Ukrainian government of a
telephone investment by an American multinational, expropriation of a
TV contract, threats of violence, and other matters. The Wall Street
Journal on April 23 noted that 24 of 34 companies that are registered
with the American Embassy in Ukraine are having ``serious
difficulties'' in Ukraine.
While business problems were flaring up in Ukraine last summer and
fall, a concurrent resolution was passed on September 4, 1996 in the
U.S. Congress congratulating Ukraine on its progress pursing economic
reforms. Ironically, on that date, U.S. embassy officials were meeting
with Gala Radio representatives and the Ukrainian Cabinet of Ministers
on the illegal actions taken against my company. At that time, the
grain ban was at its peak. Other U.S. investor problems were mounting.
In the Gala case, there have been more than 10 official letters
from the U.S. administration and its embassy in Kiev to President
Kuchma and other high level officials of the Ukrainian government. But
there has not been one written response involving Gala Radio or Olympic
Champion's Beauty Salon.
all we ask is a level playing field
A level playing field for business is not achieved when special
treatment is allowed to Ukrainian companies in violation of tender
rules, local laws, or when the Ukrainian government fails to prosecute
criminal violations. It is worse when U.S. assistance goes to support
the old system. For example, U.S. assistance helped train Ukrainian tax
inspectors. This practice assisted a venal, corrupt tax system, the
vindictiveness of which can be attested to by any American or other
foreign company operating in Ukraine. Instead of first using U.S.
assistance to improve the tax code, tax inspectors were out harassing
and auditing businesses (in some cases resorting to 10 audits per
year).
the u.s.-ukraine bilateral investment treaty
Gala and Olympic Champions have made a decision at present to go
forward with an action under the U.S.-Ukraine Bilateral Investment
Treaty (BIT) to pursue our additional claims. With little news on the
regional licenses, another company using our name, and the Ukrainian
government refusing to return our Beauty Salon location we are left
with limited alternatives. This expropriation is near criminal
according to our lawyers.
Based on our prior experience with enforcing a Ukrainian court
decision we will immediately be pursuing these matters pursuant to the
BIT if they are not resolved prior to President Kuchma's visit to
Washington next week. We are working with the U.S. Administration to
resolve these matters prior to that date and hope they will be. However
we have been promised resolution by the Ukrainian government for almost
one year and we are not hopeful. However we are hopeful that our
message will get to Washington and at a minimum help other American and
foreign investors in Ukraine.
what happens if the free money stops flowing?
Last year the U.S. Congress appropriated $225 million in assistance
for Ukraine with no strings attached, while there is a litany of
American investor problems that has been ignored by the Ukrainian
government. We need an oversight mechanism to connect American
assistance to Ukrainian progress.
As one company put it, ``as long as the United States pays lip
service to reform and continues to dump money in Ukraine, there is no
incentive to develop the infrastructure of the country. There is only
incentive to continue to misdirect money to buy the new Mercedes
automobiles, build the dachas, and siphon excess cash out of the
country. The continued flow of Western assistance, especially when
coupled with weak admonitions to reform, has not encouraged the kind of
restructuring that Ukraine needs. It never will. Not until the
officials who are supposed to nurture Ukraine to health are forced to
rely on Ukraine's own resources, and this means forced to create an
environment in which there is incentive to develop the industrial bases
that must be the foundation of the economy, will there be any reason
for officials to change their old Soviet ways or get out of the way so
that those who do want to help Ukraine may have the chance to do so.''
U.S. assistance to Ukraine should therefore be conditional. So
should the assistance offered by the World Bank, EBRD, IMF, and other
multilateral financial organizations. To quote a recent Kiev Post
editorial, ``If the [Ukrainian] economy needs any help reforming, that
is the task for multilateral lenders like the International Monetary
Fund and the World Bank. To the degree that these have any real calling
it is to ease the pain of real economic change. Quietly, the United
States can and should stop arm-twisting the multilaterals into issuing
loans Ukraine does not merit. Let it compete for the IMF's goodwill
with regimes genuinely interested in the welfare of their subjects.''
Conditions on U.S. and Multilateral Assistance:
1. U.S. assistance to Ukraine should be tied to demonstrable
progress against corruption and resolution of American investors'
problems.
2. The United States should use its influence to condition IMF,
World Bank, and EBRD loans to similar progress in Ukraine.
3. An efficient reporting system needs to be set up to inform
Washington expeditiously of problems being faced by American investors
in Ukraine.
4. A mechanism should be funded immediately to address the 20 or so
American investor problems in Ukraine. At present such a mechanism does
not exist at the U.S. embassy in Kiev, while the Gore-Kuchma Commission
has not yet proved to be the answer.
In closing, I would like to thank you for the opportunity to
present these matters on behalf of Gala Radio, Olympic Champions, Ltd.,
and other U.S. companies under the auspices of the American Chamber of
Commerce.
chronology of events involving the gala radio company
In July 1995, U.S. and Ukrainian investors bought out the previous
Ukrainian shareholders in a VOA-affiliate radio station in Kiev, which
had a 24-hour broadcast license. The U.S. investors had a maximum 30
percent interest in Gala Radio by law, though they provided the lion's
share of capitalization, with an initial contribution of nearly
$200,000 and subsequent investment of more than $1 million.
On July 18, 1995, the Ukrainian government's National Council for
Television and Radio Broadcasting (Ukraine's version of the FCC) issued
an order instructing that to facilitate foreign investment, Gala Radio
would receive a license for a frequency in Kiev and a regional license
for frequencies in 11 Ukrainian cities. Gala had paid money to help
clear the frequencies in these cities. In the same month of July, Gala
Radio began broadcasting in Kiev from 5:30 a.m. to midnight. In October
1995, the National Council issued Gala a letter with permission to
broadcast 24 hours per day on a lower band frequency, similar to an AM
frequency. Things looked promising.
But on July 29, 1995, unbeknownst to the U.S. investors, the
National Council proposed that it would issue 12-hour broadcast
licenses at a cost of $12,000 each and has proceeded to sell multiple
and even overlapping licenses to stations on the same frequencies. The
licenses often do not give specific broadcast hours but allow only for
various numbers of hours of ``unspecified broadcast time.''
In September 1995 Gala Radio paid $30,000 for a 24-hour broadcast
license for its FM frequency. The National Council insisted on payment
because Gala's previous license had been issued by a state agency
preceding the existence of the National Council. However, Gala Radio
was given a license for only 12 hours of unspecified broadcast time.
Gala Radio demanded that the license be changed to reflect its payment
for 24 hours. The National Council told Gala that the license would be
changed in January 1996, when more hours would be allocated to
broadcasters. In the meantime, the National Council told Gala that it
needed the money that Gala was paying for the 24-hour license, and that
if Gala did not pay for the additional 12 hours now, those hours would
be sold to someone else.
In January 1996, Gala Radio began broadcasting from 5:30 a.m. to
3:30 a.m with the agreement of the National Council. The Ukrainian
government, however, did not change Gala Radio's license to reflect
payment for 24 hours, despite Gala Radio's repeated requests.
In February 1996, unbeknownst to Gala Radio, the National Council
allowed the registration of a radio station called ``Leader'' by one of
Gala Radio's employees, who was also Gala Radio's representative to the
National Council. The National Council two months earlier had refused
to allow anyone but this employee to represent Gala Radio at the
National Council. The Leader company is apparently connected to high-
level officials in the Ukrainian government. He showed up at my
personal residence at 2:00 am one morning with the son of the personal
advisor to the President of Ukraine. The son demanded 30 percent of
Gala Radio otherwise ``we were to have problems''. We refused to bow to
such extortion.
Five months later, in the beginning of July 1996, also unbeknownst
to Gala Radio, the National Council issued a 12-hour broadcast license
to Leader Radio on Gala Radio's frequency.
On July 18, 1996, Gala Radio's accredited reporter at the Atlanta
Olympic Games was preparing for direct remote coverage of the games for
Gala Radio's Kiev audience. Gala Radio was an official sponsor of the
Ukrainian Olympic Team and had spent considerable sums to support the
team and to advertise its coverage. But on that same day--a month after
Gala Radio turned its first profit--the Ukrainian government terminated
Gala Radio's prime-time broadcasts, giving the most lucrative hours of
8:00 a.m to 8:00 p.m. on Gala Radio's frequency to Leader Radio. After
breaking into Gala's studios to steal equipment and its music library,
Leader Radio immediately began broadcasting as ``Gala Radio,'' using
Gala's jingles and sign-on in violation of international copyright and
trademark conventions.
Within several weeks, Gala Radio went from revenues of $27,000 per
month to $0 dollars per month and is suffering losses of approximately
$1 million and loss of a regional radio network estimated to be worth
$15 million.
Myriad Ukrainian government officials, including the prime
minister, continually promised that our problems would be resolved
shortly. But weeks dragged on into months; promises turned into
refusals to meet with us. And then, right in the middle of a visit by
Ambassador Richard Morningstar to Kiev in October 1996, Gala Radio was
taken off the air completely on the FM and lower bands. Ambassador
Morningstar and U.S. Ambassador to Ukraine William Green Miller met
with Ukrainian officials, including Ukrainian President Leonid Kuchma,
to resolve the Gala Radio matter. No resolution was achieved other than
promises to look into the issue. Only on November 15 was Gala returned
to the air with the intervention of the American embassy, while we had
suffered tremendous financial losses. And we continued to suffer losses
when we returned to the air, since the Leader company continued to
broadcast on our frequency during the most lucrative 12 hours of the
day.
On or about December 2, Vice President Gore raised the Gala issue
with President Kuchma in Lisbon. President Kuchma said he was under the
impression that Gala Radio owed taxes to the Ukrainian government.
Immediately after President Kuchma's remarks, tax inspectors descended
on Gala Radio only to discover that Gala Radio was not the entity that
owed taxes; in fact, the government of Ukraine owed Gala Radio $12,000
in excess VAT paid by the company in 1996. Gala Radio was informed by
President Kuchma's office on December 26 that the president had been
``misinformed'' during his meeting with Vice President Gore.
On December 9, 1996, the Supreme Arbitration Court of Ukraine ruled
in Gala Radio's favor, stating that the National Council had violated
Ukrainian law by granting a license to Leader Radio and by allowing
Leader to broadcast on Gala's frequency. The decision also allowed Gala
to pursue damages against the government of Ukraine. On December 17,
1996, the National Council appealed the court's ruling and also
rejected the court's jurisdiction.
In January 1997, U.S. Commerce Department Ombudsman Jan Kalicki
raised the Gala issue with President Kuchma per a letter from Vice
President Gore. In February 1997, a U.S. congressional delegation in
Kiev, headed by Sen. William Roth and Rep. Gerald Solomon, gave a press
conference, during which Rep. Herb Bateman noted that though the
delegation was not expert in the details of the Gala Radio case, it was
nonetheless inconceivable to the delegation that the court order in the
case was being ignored by the Ukrainian government.
On February 26, 1997, the Supreme Arbitration Court of Ukraine
rejected the appeal of the National Council and left all elements of
its December 9, 1996 ruling in place. Subsequent to this ruling,
pressure was applied to the Ukrainian government, and after the Gala
Radio matter was raised at a Congressional hearing, Gala on March 11
returned to 24-hour broadcasts on the FM band.
But in April 1997, the Leader company with the backing of the
Ukrainian government began broadcasting on another FM frequency in Kiev
using the Gala Radio name, jingles, and stolen equipment. Although
Leader's use of our company name is also a violation of Ukrainian law,
the Leader company broadcasts its own telephone number to call for the
purchase of advertising on ``Gala,'' noting that ``no other telephone
number for Gala Radio exists.'' Leader is also duplicating Gala's
programming and is advertising itself throughout the city on billboards
and in promotional material as the ``new'' Gala Radio. These actions
have materially damaged my company's efforts to recoup the near million
dollars lost over the past 10 months by wreaking havoc among
advertisers and listeners. My company recently lost a $30,000
advertising contract negotiated a month ago due to the existence of two
FM stations in Kiev calling themselves ``Gala Radio.'' The government
of Ukraine has actually managed to accomplish expropriation on top of
expropriation.
The National Council also informs us that despite a court ruling
allowing us to pursue damages, the National Council is not liable for
them. Further, the National Council refuses to issue the Gala Radio
Company licenses for frequencies in the other 11 cities in Ukraine that
were to make up the Gala Radio network.
______
Prepared Statement of Eugene T. Rossides, on behalf of the American
Hellenic Institute Public Affairs Committee, Inc.; the Hellenic
American National Council; the Cyprus Federation of America, Inc.; the
Pan Laconian Federation of U.S.A. and Canada; the Pan Cretan
Association of America; and the Pan Karpathian Educational Progressive
Association
Chairman McConnell, Senator Leahy and Members of the Subcommittee:
I am pleased to present testimony to the Subcommittee on behalf of the
organizations listed above on the Administration's foreign aid
proposals.
We stand at a diplomatic crossroads in the Aegean and Eastern
Mediterranean. The Clinton Administration's support of Berisha in
Albania, Gligorov in FYROM and the appeasement of Turkey have proven a
failure. It is past time for the United States to reevaluate its
policies in the region. The United States must now ensure that the
policies it follows will advance American interests. Specifically, the
U.S. should work with the sensible, moderate, pro-American governments
of Greece and Cyprus to promote its regional interests.
The appeasement of Turkey by the White House and the State and
Defense Departments is the main obstacle to the settlement of the
Cyprus problem and tensions in the Aegean.
Greece is the strategic and economic key for the U.S. in the
Balkans and Eastern Mediterranean to bring peace, stability, economic
progress and democracy to the region.
In the interests of the United States:
1. We oppose all military and economic aid to Turkey because of its
horrendous violations of internationally recognized human rights, its
violations of the rule of law, its threats against Greece and Cyprus,
its unreliability as an ally and its minimal strategic value to the
United States.
Turkey, as demonstrated by the record, was an unreliable ally
before Prime Minister Erbakan took office. Since Necmettin Erbakan
became Prime Minister, Turkey has more openly opposed the U.S.
particularly in its relations with Iran, Libya and Iraq. Turkey's deals
with Iran and Libya are in violation of U.S. laws, including the
D'Amato Act. Turkey is the cause of the tensions in its region, not the
solution.
We particularly oppose any military or economic aid to Turkey at
this time of diplomatic tension in the region. U.S. military sales
would exacerbate the tension and set back efforts for reaching a
solution to the region's long standing problems.
Turkey is highly militarized and U.S. military aid simply adds to
the arms buildup by Greece and Turkey to the detriment of the people of
Greece, Turkey and Cyprus.
Where is the threat to Turkey? There is none. Who is threatening
Turkey? No one.
As a matter of law, Turkey is presently ineligible for foreign aid
under Sections 116 and 502B of the Foreign Assistance Act of 1961, as
amended, because of its ``consistent pattern of gross violations of
internationally recognized human rights'' in Turkey and in Cyprus.
Turkey is the destabilizing country in the region with its massive
ethnic cleansing amounting to a genocidal war on its Kurdish citizens,
its violations of human rights in Turkey generally, including the
widespread use of torture, its irredentist threats against Greece, its
illegal occupation of Cyprus (now in its 23rd year), its illegal
economic blockade of Armenia, its supplying of arms to Azerbaijan and
its maneuvering in the Balkans.
In considering aid to Turkey, the U.S. Government report released
last week titled, ``U.S. and Allied Efforts To Recover and Restore Gold
and Other Assets Stolen or Hidden by Germany During World War II,''
should be taken into account. The report documents that Turkey held $44
million in Nazi assets and $5 million in looted gold, but made no
restitution. The report also documents Turkey's collaboration with Nazi
Germany by supplying Hitler's armaments industry with the vital alloy,
chrome. Albert Speer, Hitler's armaments chief, provided Hitler a
memorandum in November, 1943 on ``Alloys in Armaments Production and
the Importance of Chromium Imports from the Balkans and Turkey,'' which
stated that the loss of chromium supplies from Turkey would end the war
in about 10 months. (A. Speer, Inside the Third Reich 316-17, 405, 550
n.10 (1970)). It has been estimated that Turkey's supplies of chromium
to Nazi Germany prolonged World War II by seven months.
2. We support military aid for Greece as long as Turkey keeps its
illegal 35,000 man army of occupation and its 80,000 illegal colonists/
settlers in the occupied territory of Cyprus, and maintains its 125,000
man Army of the Aegean aimed at Greece's Aegean islands.
We condemn Turkey's threats on Greece's national sovereignty over
the islets of Imia in the Aegean, Turkey's threats of war against
Greece in the Aegean regarding Greece's internationally recognized
right to extend its territorial waters from 6 to 12 miles (see infra,
section on Aegean) and Turkey's threats of military action against
Cyprus regarding the purchase by Cyprus of defensive anti-aircraft
missiles.
Turkey is the main security threat to Greece. For anyone to this is
to deny reality.
3. We support the amount of $15 million in humanitarian aid for
Cyprus and the demilitarization of Cyprus. We are dismayed at the
Clinton Administration's condemnation of the purchase by the government
of Cyprus of anti-aircraft defensive missiles, the refusal of the U.S.
to sell such equipment to Cyprus, and the Administration's refusal to
support the immediate demilitarization of Cyprus. The appeasement of
Turkey by the White House and the State and Defense Departments is the
main obstacle to the settlement of the Cyprus problem.
4. The current crisis in Albania has created a dangerous situation.
Greece has been particularly helpful in trying to bring order,
stability, and humanitarian aid to Albania and its efforts have been
recognized and commended by the U.S. and European governments. Greek
peacekeeping troops are presently in Albania alongside Italian troops.
They are part of a 6,000-member multinational force sent to safeguard
aid shipments to Albania.
The Berisha government has been discredited and practically all
parties and groups want him removed from office. Elections are
scheduled for June 29, 1997. The current crisis highlights the errors
in U.S. policy in Albania. The Executive Branch backed Berisha, a
hardline communist and brushed aside Greece's concerns for the minority
and human rights of the substantial Greek minority.
5. We oppose any sale of advanced U.S. weapons to the Turkish
Government as contrary to the best interests of the U.S. (see infra,
Arms Sales to Turkey).
6. We oppose any assistance to Turkey, of whatever nature, until
the Turkish Government:
--(a) removes all Turkish troops including Turkey's illegal
occupation forces from Cyprus;
--(b) removes all illegal Turkish colonists from Cyprus and
authorizes a census of the illegal Turkish colonists under UN
auspices;
--(c) restores to their original condition the churches illegally
converted to mosques in violation of the 1949 Geneva
Convention;
--(d) returns to the government of Cyprus under United Nations
auspices the occupied areas of Famagusta/Varosha and Morphou
for the immediate resettlement of displaced persons.
--(e) releases, returns, or accounts for the 5 American citizens who
were abducted by the Turkish invasion forces in 1974 and the
1,614 Greek Cypriots who have been missing since the Turkish
invasion; (See infra, Denktash statement on missing Americans
and Greeks);
--(f) ensures the proper protection and safety for the Patriarchate,
the Ecumenical Patriarch, the Patriarchate and its personnel,
and establishes conditions to ensure that the Patriarchate is
free to carry out its religious mission, and provides for
religious freedom generally for all Christians and Jews
residing in Turkey;
--(g) authorizes the reopening of the Halki Patriarchal School of
Theology; and
--(h) stops its state terrorism (massive ethnic cleansing amounting
to genocide) against its 20 percent Kurdish minority and grants
them full minority and human rights.
7. We believe the Congress should consider economic sanctions
against Turkey.
8. We support the brave Turkish citizens struggling for human
rights and the rule of law. Our dispute is not with the Turkish people,
but with the Turkish military, political and diplomatic leadership.
9. We call on the Senate Foreign Relations Committee to hold
hearings on a critical review of U.S. policy towards Turkey. Such a
review should deal with:
--(a) Turkey's violations of law and human rights;
--(b) U.S. violations of law regarding Turkey and the failure to
apply the law to Turkey's actions;
--(c) the myth and reality of Turkey's alleged value and reliability
as an ally;
--(d) the right of the Kurdish citizens in Turkey to human rights,
the rule of law and autonomy;
--(e) Prime Minister Erbakan's deals with Iran and Libya which
violate U.S. law;
--(f) the anti-Christian and anti-Semitic rhetoric of Erbakan's
supporters;
--(g) the actions of those brave Turkish citizens and human rights
activists who are struggling daily for human rights and the
rule of law for all Turkish citizens;
--(h) a re-examination of the lifting in 1978 of the rule of law arms
embargo on Turkey; and
--(i) Turkey's retention of $44 million in Nazi assets and $5 million
in looted gold with no restitution, and Turkey's extensive
collaboration with Nazi Germany.
The Clinton Administration's failure to apply the rule of law in
international relations to Turkey will come back to haunt us elsewhere
in the world. Instead of supporting the basic American values of
democracy, the rule of law, protection of minority and human rights,
the Clinton Administration is supporting the law of the jungle by
Turkey.
Following this statement is a memorandum on Greek American Policy
Statements which is submitted to the Subommittee as part of my
testimony as Exhibit I. These policy statements were prepared by the
American Hellenic Institute and approved by the Order of AHEPA and the
Hellenic American National Council. These organizations are the three
major Greek American membership organizations. Other organizations
approving the Policy Statements are listed in the memorandum.
I also refer the Members of the Subcommittee to my testimony of May
1, 1996 before this Subcommittee which extensively documents the
positions stated herein. The table of contents to that testimony is
attached hereto as Exhibit II.
There have been and there are currently in progress congressional
investigations into potential unlawful conduct by Administration
officials regarding domestic matters.
We urge the Congress to investigate the failure of Administration
officials to apply the rule of law in international matters regarding
Turkey.
The following are several examples of the United States not
applying the rule of law to Turkey, all to the detriment of U.S.
interests:
--(1) the failure to apply U.S. and international law to Turkey's
ethnic cleansing and genocidal war against its 20 percent
Kurdish minority;
--(2) the failure to apply U.S. law and international law to Turkey's
several invasions of northern Iraq, including a massive
invasion with 35,000 troops;
--(3) the periodic bombing of Kurds in Iraq;
--(4) the failure to apply international law to the Aegean Imia
islets crisis;
--(5) the failure to apply the D'Amato Act to Turkey's deals with
Iran and Libya;
--(6) the failure to apply U.S. and international law to Turkey's
violations of religious freedom against Christians and Jews in
Turkey, including the illegal closing of the Halki Patriarchal
School of Theology;
--(7) the failure to denounce Turkey's anti-Christian and anti-
Semitic policies and actions;
--(8) the failure to apply international law to Turkey's illegal
embargo on Armenia;
--(9) the failure to apply U.S. and international law to Turkey's
continuing occupation of 37.3 percent of Cyprus with 35,000
troops;
--(10) the failure to apply the Geneva Convention of 1949 to Turkey's
80,000 illegal settlers;
--(11) the failure to apply the terms of the NATO Treaty to Turkey
for its invasion of Cyprus;
--(12) the failure to condemn Turkey's violation of the UN Charter by
Turkey's threats of war against Greece in the Aegean regarding
Greece's internationally recognized right to extend its
territorial waters from 6 to 12 miles.
Ms. Elaine Sciolino, the distinguished diplomatic correspondent of
The New York Times and former chief of its United Nations bureau,
authored The Outlaw State, Saddam Hussein's Quest for Power and the
Gulf Crisis (1991) stemming from Hussein's invasion of Kuwait and the
conflict that followed. Ms. Sciolino could just as easily have written
a book titled Turkey-The Outlaw State dealing with Turkey's invasion of
Cyprus and violations of law and human rights in Turkey. Turkey's
violations of law exceed those of Iraq under Saddam Hussein.
Thank you Mr. Chairman.
Exhibit I.--Greek American Policy Statements
The following Policy Statements were prepared by the American
Hellenic Institute (AHI) and approved by the Order of AHEPA and the
Hellenic American National Council (HANC). AHEPA, HANC, and AHI
comprise the three major Greek American membership organizations. Also
approving the Policy Statements are the Cyprus Federation of America,
Panepirotic Federation of America, Pan Cretan Association of America,
Pan-Macedonian Association, Pan Laconian Federation of U.S.A. and
Canada, the Pan Karpathian Educational Progressive Association, and a
number of Greek American leaders. These statements were also reviewed
at three Legislative Policy Conferences held in New York City, January
11; Los Angeles, January 25; and Chicago, February 11, 1997.
main themes
Greece
Greece is the key to stability and peace in the Eastern
Mediterranean and the Balkans. We call upon the United States to
develop a ``special relationship'' with Greece commensurate with this
reality.
Cyprus
The continuation of the Cyprus problem is an affront to
international law and to U.S. values, as well as a threat to regional
stability. We call upon the United States to intensify efforts to reach
a fair settlement based on democratic principles that respect the
rights of all Cypriots.
The Aegean
The territorial disposition of the Aegean Islands and islets as
between Greece and Turkey has been settled in a series of treaties and
agreements, including the 1923 Lausanne Treaty, the 1932 Italy-Turkey
agreements, and the 1947 Paris Peace Treaty. We support adherence to
these treaties and call upon the United States to recognize and uphold
them. We call upon the United States to oppose any unilateral challenge
to these documents.
Turkey
We believe that Turkey's continuing violations of international
law, its unreliability as an ally, its destabilizing actions toward
Greece and Cyprus, and its recent anti-western foreign policy
initiatives require a critical review of United States-Turkey
relations.
list of issues
The following issues facing the United States are of particular
concern to Greek Americans: 1. Aegean; 2. Albania; 3. Armenia; 4. Arms
Sales; 5. Cyprus; 6. Ecumenical Patriarchate and the Halki Patriarchal
School of Theology; 7. Former Yugoslav Republic of Macedonia (FYROM);
8. Greece; 9. Kurds; 10. Turkey; 11. NATO
policy statements
The policies set forth herein are based in each case on the
question of what is in the best interests of the United States.
Aegean
1. We support the adherence to internationally recognized law,
treaties and agreements regarding the territorial integrity and
sovereign rights of a state, including the United Nations Charter and
the NATO Treaty. Regarding the Aegean, we specifically refer to the
1947 Paris Peace Treaty, under which the Dodecanese Islands and
adjacent islets were ceded by Italy to Greece, the 1932 Italy-Turkey
agreements which delineated Turkish and Italian borders, the Lausanne
Treaty of 1923, and the Law of the Seas Convention.
2. We call upon the U.S. Government to recognize and uphold the
aforementioned treaties and agreements, specifically in regard to
Turkey in the Aegean.
3. We condemn Turkey for its numerous and continuous threats on the
territorial integrity of Greece, including the January 30-31, 1996
incident over the islets of Imia in the Aegean (see below) and the May
31, 1996 Turkish dispute of Greek sovereignty over the island of Gavdos
(see below).
4. We call upon the U.S. Government to recognize the islets of Imia
as Greek sovereign territory in accordance with the 1947 Paris Peace
Treaty under which the Dodecanese Islands and adjacent islets were
ceded by Italy to Greece, the 1932 Italy-Turkey agreements which
clearly state that Imia belonged to Italy, the Lausanne Treaty of 1923,
and international law. On February 15, 1996 the European Parliament
passed a resolution (342 to 21 with 11 abstentions) stating the islets
of Imia belong to Greece and condemned Turkey's aggressive threats to
established sovereignty in the Aegean. In a February 1, 1996 statement
to Greece, Italy supported the Greek legal position regarding the 1932
Italy-Turkey Protocol. Also, on February 7, 1996 France stated that it
unequivocally recognized Greece's sovereignty over the Imia islets.
5. We call on Congress to pass a joint congressional resolution
stating that the islets of Imia are Greek sovereign territory based on
the aforementioned treaties and agreements.
6. We condemn Turkey's threats of war against Greece in the Aegean
regarding Greece's internationally recognized right to extend its
territorial waters from 6 to 12 miles, and note that Turkey itself has
exercised this right by extending its territorial waters from 6 to 12
miles in the Mediterranean Sea and Black Sea despite the fact that it
is not a signatory of the Law of the Seas Convention. The United States
has also extended its territorial waters to 12 miles. The Turkish Grand
National Assembly passed a resolution on June 8, 1995, authorizing the
Turkish government to use force if Greece extends its territorial
waters to 12 miles.
7. We note that Turkish threats of war and the June 8, 1995 Turkish
National Assembly resolution are violations of the United Nations
Charter, article 2 paragraph 4, and the NATO Treaty preamble and
article 1. The U.N. Charter, article 2 (4) states: ``All members shall
refrain in their international relations from the threat or use of
force against the territorial integrity or political independence of
any state, or in any other manner inconsistent with the Purposes of the
United Nations.''
The NATO Treaty contains similar language.
8. We call on the U.S. Government, in its own self interests and as
the world's leader, to make a formal protest of Turkey's threats of war
(causa belli) regarding the Aegean, made on a number of occasions.
9. We refute the Turkish claims concerning the application of the
Law of the Seas Convention to the continental shelf and territorial
waters, and questions pertaining to national air space. Turkey is free
to go to the International Court of Justice at the Hague, if it thinks
it has a supportable case.
Albania
1. We are concerned with the campaign of the Albanian government to
drive out of the country the Greek Orthodox community by denying and
restricting the full legal, educational, religious, and employment
rights guaranteed to the minority by international agreements signed by
Albania.
2. We condemn the efforts of the Albanian government to persecute
Greek Orthodox Christians in the country by restricting the Orthodox
Autocephalus Church of Albania and denying its leader, Archbishop
Anastasios, legal status. We call on Tirana to return to the Church all
property, sacred religious articles and records seized and still being
held by the former Stalinist regime.
3. We denounce the Albanian government for trying to restrict the
right of ethnic Greeks in Albania to learn and study their mother
tongue, and we call on Tirana to authorize the establishment of
minority schools, both public and private, and to offer Greek language
instruction in existing schools at all grade levels and in all areas
where Greek communities exist, not just in arbitrarily designated
``minority zones.''
4. We condemn the harassment and forced resignations of ethnic
Greeks in public service, and call on Tirana to offer equal opportunity
in the armed forces, the police, the judiciary, and in public
administration to all minorities.
5. We call on the Albanian government to seriously engage in the
democratization process so as to allow equal access to state media by
the Greek minority.
6. We call on the United States government, in its own interest and
the interest of maintaining peace and stability in the southern
Balkans, to halt all assistance to Albania, of whatever nature, until
all issues of the rule of law and human rights cited above are
resolved.
Armenia
1. We support the Humanitarian Aid Corridor Act which was passed by
the Congress and signed into permanent law as part of the 1997 Foreign
Aid Bill. The act calls for a halt in U.S. economic and military
assistance to any country blocking U.S. assistance to another country,
which consequently includes the Turkish blockade of U.S. assistance to
Armenia. The Turkish embargo on aid to Armenia includes U.S.
humanitarian and pharmaceutical aid.
2. We believe it is in the interests of the United States to insist
that the Turkish government lift its blockade of Armenia.
3. We strongly disagree with President Clinton's waiver, on
national security grounds, of the Humanitarian Aid Corridor Act as it
applies to Turkey. The application of this waiver is contrary to the
national security interests of the United States. We urge Congress to
pass legislation removing economic aid from the President's waiver
authority.
4. We believe it is in the interests of the United States to
commemorate on a regular basis the Armenian Genocide of 1915-23 and to
strongly urge Turkey to recognize this tragic historical event it its
past.
5. We support legislation similar to H. Con. Res. 47 in the 104th
Congress and other efforts which commemorate the Armenian Genocide, and
call for the recognition of the Genocide by the Government of Turkey.
This includes initiatives which place sanctions on U.S. aid to Turkey
until the Turkish Government takes all appropriate steps to acknowledge
and commemorate the Genocide committed against the Armenian population
of the Ottoman Empire from 1915 to 1923.
Arms sales
1. We oppose any sale of advanced U.S. weapons to the Turkish
Government as contrary to the best interests of the United States and
to order in the region.
2. We believe the continued sale of advanced U.S. weapons to the
Turkish Government jeopardizes the balance of military power between
Greece and Turkey and threatens regional stability.
3. We oppose the sale of any U.S. arms to the Turkish government as
such sales violate U.S. laws because of Turkey's massive human rights
violations in Turkey and Cyprus and the continuing illegal occupation
of 37 percent of Cyprus, now in its 23rd year.
4. U.S. arms deliveries to Turkey have stimulated an arms race
between Greece and Turkey to the detriment of both nations and to
regional stability. We deplore this and call upon the United States to
do everything possible to halt the arms race.
5. We support the reintroduction of S.326 and H.R. 772, ``The Code
of Conduct on Arms Transfers Act'' introduced by Senate Appropriations
Committee Chairman Mark Hatfield (R-OR) and Representative Cynthia
McKinney (D-GA), respectively, on February 1, 1995. This legislation
would condition arms exports on certain minimum good behavior: basic
respect for human rights; non-aggression; democratic form of
governance; and participation in the U.N. Register of Conventional
Arms.
6. We congratulate the congressional and grassroots efforts against
the sale of 10 U.S. ``Super Cobra'' helicopters to Turkey due to the
documented evidence by the U.S. State Department, Human Rights Watch,
and Amnesty International of the use of these helicopters by Turkey
against its Kurdish citizens (including the loss of civilian life and
destruction of villages) in Southeastern Turkey. Turkey cancelled its
purchase of these attack helicopters. The Washington Post reported that
Turkey rescinded its bid to purchase the helicopters, citing
frustration by the Turkish General Staff with the ``months-long
stalling'' of the sale. Wash. Post, Nov. 28, 1996, A40. However, the
grassroots community must remain alert to any Turkish attempts to
revive the purchase of such helicopters, or any other advanced weapons
systems beyond the amounts stipulated by U.S. laws.
We oppose the sale of four U.S. Navy Sea Hawk helicopters to
Turkey;
8. We congratulate the efforts of Senator Paul Sarbanes (D-MD) and
the Greek American community for their successful opposition to the
delivery of 3 U.S. Navy ``Perry'' class frigates to Turkey. The issue
still remains however, as Turkey is continuing its efforts to obtain
these ships. We call on the Greek American community to remain vigilant
on any action to move this sale forward.
Cyprus
1. We support the unity, sovereignty, independence and territorial
integrity of the Republic of Cyprus.
2. We support a settlement for the Republic of Cyprus based on a
constitutional democracy with key American principles of majority rule,
the rule of law, and the protection of minority/human rights, as called
for by former President George Bush, and the provision for and
implementation of the three basic freedoms, namely, freedom of
movement, of property and of settlement. A constitutional settlement in
Cyprus should be based on democratic principles that respect the rights
of all Cypriots. AHI supports efforts by the international community to
reach a practical formulation of these principles.
3. The Cyprus problem is fundamentally a question of invasion and
occupation by Turkish armed forces with the illegal use of American-
supplied arms and equipment. There is no legal difference between
Turkey's invasion and occupation of Cyprus and Iraq's invasion and
occupation of Kuwait.
4. We call for: the removal of all Turkish troops including
Turkey's illegal occupation forces from Cyprus; the removal of all
illegal Turkish colonists from Cyprus and a census of the illegal
Turkish colonists under UN auspices; the restoration to their original
condition of the churches illegally converted to mosques in violation
of the 1949 Geneva Convention; the speedy return to the government of
Cyprus under United Nations auspices the occupied areas of Morphou and
Famagusta/Varosha for the immediate resettlement of displaced persons.
5. We support the introduction of legislation similar to S. Con.
Res. 11, introduced by Senator Olympia Snowe (R-ME), and H. Con. Res.
42, introduced by Congressman Elliot Engel (D-NY), known as ``The
Cyprus Demilitarization Bill,'' which calls for the complete
demilitarization of Cyprus. We support the use of NATO forces for
security purposes in Cyprus upon the demilitarization of Cyprus.
6. Pending demilitarization we support the fundamental right of the
Republic of Cyprus to acquire arms to defend itself. We condemn the
State Department's condemnation of the Republic of Cyprus for
purchasing defensive anti-aircraft missiles. We call on the U.S. to
supply sufficient arms and equipment to the Republic of Cyprus to deter
any potential attack by Turkey.
7. We call on President Bill Clinton and the U.S. Congress in the
interests of the United States to halt all assistance to Turkey, of
whatever nature, until the issues cited above are resolved, and to
consider sanctions if Turkey fails to cooperate. We support the
introduction of legislation similar to S. 578 introduced on March 20,
1995 by Senator Al D'Amato and the companion bill in the House H.R.
1274 introduced on March 21, by Congressman Rob Andrews (D-NJ) for
himself and representatives Bilirakis (R-FL), Maloney (D-NY), Manton
(D-NY) and Zimmer (R-NJ), which call, among other things, for
conditions on all aid to Turkey.
8. We applaud the European Court of Human Rights for its December
18, 1996 decision which found Turkey accountable for the continuing
violation of human rights by its 1974 invasion and present day
occupation of 37.3 percent of Cyprus. The 11 votes to 6 ruling in the
case of Loizidou vs. Turkey stated that the denial of access to the
applicant's (Loizidou) property and consequent control thereof is
imputable to Turkey, and amounts to a violation of the applicants
property rights under Article 1 of Protocol No. 1 of the European
Convention on Human Rights.
9. We strongly condemn the four murders and the actions of the
illegal Turkish Cypriot regime, the Turkish military commander in
Cyprus, and the Turkish Government and military leadership, for their
illegal and barbaric recent actions in Cyprus. The incidents include:
October 13, 1996, Turkish troops shot and killed Mr. Petros Kakoullis,
58, a Greek Cypriot who accidentally wandered into the zone illegally
occupied by Turkey while collecting snails with his son-in-law.
According to eye-witness reports, Mr. Kakoullis was observed standing
stationary and with his hands up. He was shot by two Turkish soldiers.
After he fell to the ground he was shot again. August 11-14, 1996--
Turkish Cypriot security forces, led by the Turkish military, murdered
two Greek Cypriots during a peaceful demonstration at the Green Line.
Tassos Isaac was beaten to death on August 11 by a ravenous gang of
Turks, the Grey Wolves, with Turkish security forces looking on.
Solomos Spirou Solomou (Isaaks cousin) was shot to death, also by
Turkish Cypriot security forces on August 14. June 3, 1996--Turkish
troops shot and killed an unarmed Greek Cypriot guardsman inside the
U.N. buffer zone.
10. We call on the U.S. government to publicly condemn the recent
murders of the four Greek Cypriots and call for the apprehension and
trial of the perpetrators.
11. We note the statement by Turkish Cypriot leader, Rauf Denktash,
that members of the Turkish Cypriot militia, which was and is today
under his control, in 1974 killed all the missing 1614 Greek Cypriots
and 5 Americans in their custody. We call on the U.S. Government to
thoroughly investigate the validity of the Denktash statement and
determine the whereabouts of the 5 missing Americans who were abducted
by the Turkish invasion forces and the Turkish Cypriot militia in 1974
and the 1614 Greek Cypriots who have been missing since the Turkish
invasion.
12. We condemn Turkey's attempts to hinder the negotiations
concerning accession of the Republic of Cyprus into the European Union,
and further condemn the Turkish threat of annexation of the occupied
part of Cyprus with Turkey if such accession transpires.
Ecumenical Patriarchate and the Halki Patriarchal School of Theology
1. We condemn the chronic persecution of Orthodox Christians in
Turkey, the harassment of the Ecumenical Patriarch and the attacks on
the Patriarchate in Istanbul, including the: September 29, 1996, hand
grenade explodes in the early morning, damaging the physical structure
of the grounds, most notably the Agios Georgios Church. May 28, 1994,
three bombs discovered in the living quarters of the Patriarch,
subsequently diffused; March 30, 1994, molotov bomb thrown by unknown
perpetrators inside the back court-yard of the Patriarchate.
2. We condemn the desecration of Orthodox Christian cemeteries in
Istanbul.
3. We condemn the recent concerted effort by Islamic politicians to
step up the rhetoric against the Patriarchate. On September 12, 1996,
Ahmet Jamil Tudc, Turkish Minister to the Prime Minister, made promises
that the Agia Sofia Byzantine cathedral would be converted into a
mosque. These threats are a clear attack on the religious freedom of
and basic respect for Orthodox Christians worldwide.
4. We condemn the inflammatory remarks of the fundamentalist Mayor
of the Fatih District of Istanbul where the Patriarchate is located,
who declared to the press on March 31, 1994 following his election,
that under his mayorship all ``activities'' of the Patriarchate will
stop. He also announced his intention to enter the Ecumenical
Patriarchate through its main gate under which, in 1821, the Ecumenical
Patriarch Gregorius V was hanged and which remains closed since then.
5. We condemn the restrictions imposed by the Turkish Government on
the celebrations of the Saint Nicholas Festival, a saint worshipped by
Christians throughout the world.
6. We call on the U.S. government to protest these actions and to
call on the government of Turkey:
--(a) to ensure religious freedom in Turkey;
--(b) to provide for the proper protection of the Patriarchate and
the Ecumenical Patriarch;
--(c) to establish conditions which would prevent the recurrence of
threats against the Patriarch and ``to ensure that the
Patriarchate is free to carry out its mission;'' and
--(d) to permit persons to work at the Patriarchate without being
Turkish citizens.
7. We condemn the illegal closing by the Turkish Government in 1971
of the Halki Patriarchal School of Theology, which closing is also in
violation of Turkey's obligations under the UN Charter and other
international agreements, and call on the U.S. Government to make a
formal request to Turkey to reopen the Halki Patriarchal School. We
call for the halt of all aid to Turkey until the Halki Patriarchal
School is reopened.
8. We support the introduction in the 105th Congress of H. Con.
Res. 6 on January 9, 1997 by Congressman Mike Bilirakis (R-FL), which
calls on the United States to use its influence with the Turkish
government and as a permanent member of the United Nations Security
Council to suggest that the Turkish government:
--(A) ensure the proper protection for the Patriarchate and all
Orthodox faithful residing in Turkey; reopen the Halki
Patriarchal School of Theology; provide for the proper
protection and safety of the Ecumenical Patriarch and the
Patriarchate personnel; establish conditions that would prevent
the recurrence of past terrorist activities and vandalism and
other personal threats against the Patriarch; establish
conditions to ensure that the Patriarchate is free to carry out
its religious mission; and do everything possible to find and
punish the perpetrators of any provocative and terrorist acts
against the Patriarchate.
--(B) the Administration should report to the Congress the status and
progress of the concerns in subsection A on an annual or semi-
annual basis.
H. Con. Res. 6 is similar to legislation introduced in the 104th
Congress; H. Con. Res. 50 introduced on March 28, 1995 by Congressman
Michael Bilirakis (R-Fl), and S.Con.Res. 25 introduced by Olympia Snowe
(R-ME) and Carol Moseley-Braun (D-IL) on August 11, 1995.
9. We call for legislation similar to S. 578 introduced on March
20, 1995 by Senator Al D'Amato, and the companion bill in the House
H.R. 1274 introduced on March 21 by Congressman Rob Andrews (D-NJ) for
himself and Representatives Bilirakis (R-FL), Maloney (D-NY), Manton
(D-NY) and Zimmer (R-NJ), which call, among other things, on the United
States to halt all assistance to Turkey, of whatever nature, until
Turkey removes official restrictions on Christian churches and schools,
and protects Christian clergy and property from acts of violence.
10. We support the introduction in the 105th Congress of
legislation similar to S. Con. Res. 71, introduced by Senator Don
Nickles (R-OK) for himself and Senators Sam Nunn (D-GA), Dan Coats (R-
IN), John Ashcroft (R-MO) and Jesse Helms (R-NC), on September 17, 1996
regarding the persecution of Christians worldwide.
Former Yugoslav Republic of Macedonia (FYROM)
1. We support the introduction, in the 105th Congress, of
legislation similar to H. Con. Res. 31 introduced in the House by
Congresswoman Carolyn Maloney (D-NY) and Michael Bilirakis (R-FL) which
expresses the sense of Congress that the U.S. should support the
efforts of Greece in its negotiations with the FYROM, to find a
solution which promotes a solid, cooperative relationship between these
two neighboring countries.
2. We call on the United States, in its own self interest, to
support a name for this Former Yugoslav Republic which does not include
the word ``Macedonia.''
3. Classical Macedonia's Hellenic Heritage is well documented by
archaeological evidence and the writings of internationally known
historians. Since antiquity, the name Macedonia has referred to a
geographic region and not to a specific nationality.
Greece
1. We call on the United States to develop a ``special
relationship'' with Greece as it has with the U.K. and Israel. The
United States and Greece share common interests in the Eastern
Mediterranean and Balkans. Greece is the key source of stability and
peace in the Eastern Mediterranean and the key nation in the Balkans
for the advancement of U.S. strategic, democratic, economic and
stability interests in the Balkans.
2. Greece, a proven ally since WW I, played a crucial role in the
defeat of Hitler in World War II and an historic turning point role in
the defeat of communism in the Greek civil war (1946-49) with U.S. aid
under the Truman Doctrine but no U.S. combat troops. Greece, Great
Britain and France are the only nations which were allies of the U.S.
in the four wars in this century.
3. The main security threat to Greece is Turkey. Foreign military
aid to Greece should be sufficient to deter aggression from Turkey and,
at a minimum, to ensure a military balance in accordance with
congressional policy and the U.S.-Greece Defense Cooperation Agreement.
Kurds
1. We believe the United States should support greater cultural
autonomy, political freedom and the right to self determination for the
Kurds in Turkey and Iraq
2. We believe it is in the best interests of the United States and
to stability in the region, to support the political rights of the
Kurdish minorities in Turkey, Iraq, Syria and Iran. If the popular will
of the Kurds call for a federal solution to their problem, the U.S.
government should honor that decision. Such a decision will bring
stability to a volatile region, and help establish the foundations of
the civil society and economic progress. We note that Turkey refuses to
give minority rights and human rights to its 20 percent Kurdish
minority, while claiming equality for the 18 percent Turkish Cypriot
minority.
3. We call for the immediate halt by the government of Turkey of
its military and paramilitary operations (with the use of U.S. designed
and produced weapons) against the Kurdish minority and its massive
violations of the human rights and ethnic cleansing of its Kurdish
minority which is genocidal in nature.
4. We cite the recent reports by the U.S. State Department, Human
Rights Watch, and Amnesty International which highlight Turkey's use of
U.S. weapons in committing human rights violations against its Kurdish
citizens.
5. We call on the United States Government to stop supplying arms
to the government of Turkey based on the stated reports.
6. We call on the United States in its own self-interest to halt
all assistance to Turkey, of whatever nature, until Turkey ceases its
military and paramilitary operations and its massive human rights
violations against its Kurdish minority. Turkey's actions against its
Kurdish minority is ``state terrorism'' on a massive scale.
Turkey
1. We believe that Turkey's continuing violations of international
law, its unreliability as an ally, and recent foreign policy
initiatives, require a critical review of United States-Turkey
relations. Such a review is long overdue.
2. We call on the U.S. Government to conduct: a reassessment of the
thesis that Turkey's strategic value to the U.S. is such that the U.S.
must acquiesce in all aspects of Turkish policies; a reassessment of
the U.S. policy of appeasing Turkey in current issues of dispute
between Turkey and Greece and between Turkey and Cyprus.
3. We offer the following recent actions by the Turkish government
as reasons for such a review: In January 1996 Turkey sought to provoke
hostilities with Greece over Aegean territories that are overwhelmingly
accepted by the international community as Greek. (See section on
Aegean); In August 1996 Foreign Minister Tansu Ciller claimed that the
green line between the Government controlled area of Cyprus and the
illegally occupied northern zone represented one of Turkey's
international boundaries; From August to December 1996 Turkey concluded
significant commercial contracts with Iran and Libya in violation of
U.S. laws and policy; and concluded a trade agreement with Cuba in
opposition to U.S. policy; In September 1996 Turkey refused to assist
the U.S. in its operations against Iraq. In October 1996 shoot-to-kill
policies by Turkish troops in Cyprus claimed another Greek Cypriot
civilian life. (See section on Cyprus).
4. Turkey's numerous and continuing violations of United States
laws, the United Nations Charter, the North Atlantic Treaty and
international law by its continuing aggression in and occupation of
Cyprus, its illegal shipment of arms to the Azerbaijanis and to the
Balkans, its threats against Greece in the Aegean and Western Thrace,
its massive and horrendous human rights violations against its Kurdish
citizens and its policy of torture nationwide, must not be tolerated or
condoned any longer. The appeasement of Turkey's violations of the rule
of law and the application of a double standard on the rule of law and
human rights to Turkey must end. Turkey is the source of tension in its
region, not the solution.
5. Turkey has publicly stated that its goal is to be the ``regional
superpower from the Adriatic to the Wall of China.'' It is not in the
interests of the United States, Israel and the Arab countries in the
Middle East to have Turkey, or anyone else, as a regional superpower in
the Middle East.
6. We oppose the U.S. plan to allow Turkey to lead the equip and
train mission to the Bosnian Muslims. Foreign affairs expert Katherine
A. Wilkins, in a commentary titled, ``A New Balkan Blunder--Turkey
Shouldn't Be Training the Bosnian Army'' (Wash. Post, Feb. 11, 1996, p.
C2) strongly argues against such a plan. In her analysis, Ms. Wilkins
states that ``The current plan to let Turkey lead the `equip and train'
mission is a badly misguided one and should be scrapped immediately * *
*. Handing the training and arming of the Bosnian army over to Turkey
could be likened to putting Germany in charge of training the
Palestinian police force.''
As support she offers (1) the historically ``provocative nature''
of the Turks in the Balkans, (2) the open support of the Bosnian
Muslims by Turkey throughout the war, (3) the recent Anti-Western
Islamic party victory in the Turkish elections, (4) ``Turkish
nationalism'' i.e. Cyprus, Aegean, etc., and (5) continued and
``rampant'' human rights abuses by Turkey.
7. We call for the introduction of legislation similar to S. 578
introduced on March 20, 1995 by Senator Al D'Amato and the companion
bill in the House H.R. 1274 introduced on March 21, by Congressman Rob
Andrews (D-NJ) which would call for a halt on all aid to Turkey and
economic sanctions against Turkey until:
--Turkey allows free and unfettered monitoring of the human rights
environment within its territory by domestic and international
human rights monitoring organizations, including but not
limited to the Turkish Human Rights Association, the Conference
on Security and Cooperation in Europe, Amnesty International,
and Human Rights Watch;
--Turkey recognizes the civil, cultural, and human rights of its
Kurdish citizens, ceases its military operations against
Kurdish civilians, and takes demonstrable steps towards a
peaceful resolution of the Kurdish issue;
--Turkey takes demonstrable steps toward the total withdrawal of its
military forces, and illegal Turkish settlers from Cyprus and
demonstrates its support for a fair settlement recognizing the
sovereignty, independence and territorial integrity of Cyprus
with a constitutional democracy based on majority rule, the
rule of law and the protection of minority/human rights;
--Turkey completely lifts its blockade of U.S. and international
assistance to Armenia;
--Turkey lifts official restrictions on Christian churches and
schools, and offers sufficient protection against acts of
violence and harassment against the clergy and vandalism
against church and school property; and
--is in compliance with the United Nations Charter and relevant UN
resolutions, the North Atlantic Treaty, the Helsinki Final Act
of the Conference on Security and Cooperation in Europe, the UN
Universal Declaration of Human Rights, the European Convention
on Human Rights and is not engaged in a consistent pattern of
gross violations of internationally recognized human rights
(within the meaning of sections 116 and 502B of the United
States Foreign Assistance Act of 1961, as amended).
NATO
We call on the U.S. Ambassador to NATO to propose the suspension of
Turkey from NATO until the government of Turkey is in compliance with
the clear and unambiguous language of the NATO Treaty.
______
Prepared Statement Dr. Richard L. Bernal \1\ on U.S. Foreign Assistance
and Sustainable Growth in Jamaica
Thank you for providing this opportunity to submit testimony
highlighting Jamaica's views on the Clinton Administration's fiscal
year 1998 Request for Latin America and the Caribbean.
---------------------------------------------------------------------------
\1\ Dr. Richard L. Bernal is Jamaica's Ambassador to the United
States and Permanent Representative to the Organization of American
States.
---------------------------------------------------------------------------
i. introduction
Over the years, the United States and the Caribbean Basin nations
have developed an important economic partnership, partly as a result of
U.S. assistance and trade programs. Since the 1980's, U.S. foreign aid
to the region has averaged about $200 million. At the same time, during
this period, U.S. exports to the Caribbean have expanded by over 150
percent and Caribbean exports to the United States have climbed by more
than 100 percent. The Caribbean Basin now comprises the tenth largest
market for the United States, and it is one of the few regions where
the United States consistently posts a trade surplus. With combined
trade exceeding $30 billion in 1996, United States/Caribbean commercial
links support more than 317,000 jobs in the United States and countless
more throughout the Caribbean and Central America.
For Jamaica, the United States is an important economic partner and
supporter of its development program. Indeed, over the past decade,
Jamaica has been a major recipient of U.S. foreign aid to the Caribbean
region. The United States has been a vital source of funding for the
following programs:
--facilitating economic liberalization and private sector-led growth;
--promoting institution-building and public sector efficiency;
--supporting debt reduction;
--providing assistance to the social sectors to cushion the effects
of economic adjustment on the poor;
--improving natural resource management;
--assisting in efforts to combat the international narcotics trade;
and
--funding environmental protection.
Ultimately, Jamaica is seeking to reduce its traditional reliance
on official assistance and to finance development through a combination
of domestic and foreign private capital flows. However, this long-term
goal can only be achieved with continued United States support for
Jamaica's comprehensive economic reform and development programs.
Jamaica is acutely aware of the budgetary constraints in the United
States. Furthermore, given the end of the Cold War and pressing
domestic concerns, Congress and the American public opinion favor a
reduction in foreign assistance programs. The Government of Jamaica
welcomes the refocusing of the U.S. aid program towards sustainable
development, with an emphasis on entrepreneurial development,
assistance to the social sectors and popular participation in the
development process. Nevertheless, while the rationale for this new
approach is clearly understood, a reduction in assistance resources to
be a phased process which is sensitive to Jamaica's development needs.
Sudden and drastic foreign aid cuts would adversely affect Jamaica's
structural transformation efforts.
ii. support for sustainable economic growth
During the past few years, the United States has supported the
process of economic reform and trade liberalization in Jamaica. The
Jamaican Government is now implementing a comprehensive and
uncompromising economic reform program which has brought positive
results and which has created private sector-led, market-driven
economic growth. U.S. assistance--principally in the form of Economic
Support Funds, which now have been totally phased out--have helped
Jamaicans make that adjustment by providing the government with
budgetary allotments to facilitate economic reform. It should be noted
that, as the economy has expanded, so too has our ability to import
from the United States, our largest trading partner. Jamaica currently
imports 70 percent of its goods and services from the United States and
since 1985, annual growth of U.S. exports to Jamaica has averaged 13.6
percent.
Development Assistance (DA) has also played an important role in
sustaining Jamaica's economic growth and reform programs. DA has helped
Jamaica undertake critical social programmes in areas such as education
and public health, and economic programs, through the promotion of
micro-enterprise development. Jamaica has collaborated with USAID to
improve financial management in the Ministry of Health, to establish
better and more widely understood family planning practices, and to
prevent the transmission of AIDS and other deadly diseases. U.S.
funding has also contributed to the construction of low-cost housing
and provided low-income families with access to potable water.
Currently, USAID is assisting the government to address the problem of
unemployed youth through an ``Upliftment of Adolescence'' project.
Food aid to Jamaica through the PL480 program has been a tremendous
success, benefitting vulnerable and disadvantaged groups. Since the
1970's, Jamaica has graduated from the Title II grant program and now
receives a combination of Title I (the soft loan program) and GSM, the
credit guarantee program administered by USDA and guaranteed by the
Commodity Credit Corporation.
iii. supporting private sector development: the multilateral investment
fund
The United States has been an important supporter of private sector
development via the Multilateral Investment Fund (MIF). In fact,
Jamaica was the first country to receive funding from the MIF. The $1.5
billion development facility is being used to support micro-enterprise
and human resource development and strengthen private sector activities
in Jamaica and other activities throughout the region. In fact, the
first MIF project provided $1.8 million to support the establishment of
an Employee Share Ownership Plan (ESOP) to expand the participation of
Jamaica's labor unions in Jamaica's privatization program. Additional
projects in Jamaica have included:
--$1.27 million to establish an Office of Utilities Regulation.
--$3.5 million to fund a human resource development pilot project--a
unique collaboration between organized labor and employers to
expand private sector capacity to retrain displaced workers and
improve labor market exchange mechanisms.
--$1.9 million for institutional strengthening of the Jamaican
Cooperative Credit Union League.
--$1 million for computer-aided technology and training in rural
Jamaica--an extension of a private sector initiative: Jamaica
2000.
The United States' leadership in the MIF has played an important
role in guaranteeing matching contributions from other donor
governments, including the Japanese, thereby ensuring the success of
this program. The Government of Jamaica supports the President's
commitment to request continued U.S. contributions to the MIF, both in
fiscal year 1998 and in the coming years.
iv. supporting private sector development: private sector investment
funds
In the face of aid cuts, the government is also looking to private
sector sources and foreign direct investment to generate additional
capital to finance Jamaica's development needs.
U.S. Government support has been instrumental in facilitating
private investment in Jamaica, strengthening a complementary
partnership that ultimately generates U.S. jobs and exports. The
Overseas Private Investment Corporation has supported dozens of
projects in Jamaica--to the amount of $835 million--since it opened for
business there in 1963. OPIC provided more than $40 million in
political risk insurance during 1996 alone. Moreover, over the past ten
years, the Section 936 program generated more than $2 billion in
investment throughout the Caribbean, one quarter of which was in
Jamaica. Combined, these programs have supported much of the foreign
direct investment targeted for Jamaica over the past decade.
Regrettably, however, the Section 936 window was closed by the Congress
last year while the future of OPIC remains in doubt.
Several programs may provide a mechanism to help the Caribbean fill
this funding gap. First, OPIC itself may provide a solution through the
creation of an OPIC Equity Fund for the Caribbean Basin. OPIC currently
supports 4 sector-specific funds as well as 24 regional funds operating
in virtually every region of the world. Conspicuously absent is an
OPIC-supported regional fund for the countries of Central America and
the Caribbean Basin. Several investor groups are already petitioning
for the creation of such a fund as a way to help accumulate sufficient
capital to invest in the region. This fund would help attract the risk-
averse investors to the Caribbean Basin economies while strengthening
OPIC's portfolio in the region--a fact that may also benefit OPIC,
given the widespread constituency of support for regional trade links.
A related concept is the creation of an Enterprise Fund, which has
recently been suggested by House Foreign Operations Subcommittee
Chairman Sonny Callahan (R-AL). Although enterprise funds have posted
mixed records in Eastern Europe, they have provided an important
mechanism to encourage the development of a viable private sector in
the former communist countries. Such a model could be replicated in
Jamaica to encourage the development of a vibrant private sector among
micro-entrepreneurs and the sectors of society traditionally overlooked
by other development programs. Moreover, an enterprise fund could
provide a structured way for Jamaicans living throughout the United
States to participate in the development of their homeland.
v. the promotion of trade expansion
In the context of the foreign aid debate, Congress should also give
due consideration to the strengthening of our mutually beneficial
trading partnership. In the long-term, as foreign aid is phased out, it
can only be replaced by a sound, and commercially viable, trade and
investment relationship. Jamaica has long recognized the importance of
such a relationship with the United States. Bilateral trade flows have
expanded by more than 10 percent a year since the mid-1980's. Moreover,
U.S. investors are playing an active role in Jamaica's growing private
sector.
The Caribbean Basin Initiative (CBI) has formed an important basis
for the United States/Jamaican and United States/Caribbean partnership
to flourish. The Administration is currently developing a proposal to
strengthen this CBI framework to help CBI countries cope with trade and
investment diversion from Mexico under the NAFTA and prepare a road-map
for their full participation in the FTAA. In this regard, Jamaica is
ready and committed to further cementing that partnership by
undertaking the obligations of a free trade agreement with the United
States. Indeed, in the past two years alone, Jamaica and the United
States have taken steps in that direction by signing a Bilateral
Investment Treaty (BIT) and an Intellectual Property Rights (IPR)
agreement. Jamaica has also led the Caribbean in negotiating tough
textile anti-circumvention language with the United States.
vi. debt reduction
Jamaica continues to face heavy debt service obligations, owed
primarily to bilateral donors such as the United States. Recently, the
United States. has made valuable concessions which have provided
important debt relief to support reform efforts. This debt relief frees
scarce foreign exchange resources for crucial imports and reduced debt
servicing helps to lower fiscal expenditure, thereby contributing to
Jamaica's growth. The program has also channeled local currency debt
repayments into environmental management funds, building a sustainable
environmental framework for development. Ultimately, because of debt
relief, Jamaica has been one of the few countries to reduce its stock
of external debt and debt servicing. The stock of debt currently totals
approximately $3.23 billion, down from $4.5 billion in 1990. U.S.
Treasury Department figures report that about $683.1 million is
currently owed by Jamaica to the United States--about half of which
includes concessional USAID obligations.
Nevertheless, debt service obligations remain high and currently
absorb approximately 49 percent of the Government's annual budget. By
comparison, in the United States, where public debate has highlighted
the burden of the U.S. Government budget deficit, debt service is
roughly 14 percent. As Jamaica allocates such a high percentage of the
public sector budget for debt servicing, it is unable to pursue other
on-going development priorities. In this regard, Jamaica welcomes the
enactment in recent appropriations bills of a new mechanism to effect
debt reduction through buybacks and swaps, based on the Enterprise for
the Americas Initiative (EAI). Jamaica endorses efforts to renew this
program for fiscal year 1998, and has engaged in discussions with the
Administration about how this program can be deployed to assist in
reducing Jamaica's debt burden while providing the mechanisms to
sustain the mutual development efforts of both Jamaica and the United
States.
vii. counter-narcotics support
The Jamaican government is irrevocably committed to maintaining a
comprehensive anti-drug campaign based upon a two-pronged approach,
focusing both on supply and demand reduction. To curtail the supply of
drugs, the government is engaged in a campaign to eradicate marijuana
growing in the remote mountainous regions of the country and to
strengthen capabilities to interdict and punish drug offenders. Already
Jamaica has succeeded in reducing marijuana production by nearly 75
percent since 1990. Jamaica has also recently passed legislation on
asset forfeiture and money laundering, implemented a Mutual Legal
Assistance Treaty (MLAT) with the United States, and is now preparing
to consider legislation to prevent trade in pre-cursor chemicals. The
United States has made an important contribution through the support of
economic and security assistance, training, and other material and
assets, and we are actively working with U.S. government agencies to
strengthen cooperation across a range of activities.
Jamaica also recognizes that without a demand for illegal drugs,
there would be no industry. To stem demand for drugs in Jamaica,
critically acclaimed programs are being funded that focus on
rehabilitating former drug addicts and on providing drug education to
vulnerable groups. These supply and demand-related programs place
considerable pressure on the Jamaican government's budget, particularly
at a time when there is considerable effort to fund other social
programs while curtailing the growth of fiscal expenditure. With
continued U.S. assistance, Jamaica can maintain its aggressive efforts,
both to stop the harmful flow of drugs into the United States and to
provide viable alternatives for Jamaicans to induce them out of illegal
narcotics activities.
While we understand the U.S. domestic debate regarding counter-
narcotics assistance, our fear is that reduced counter-narcotics
funding may be interpreted as a signal to international drug cartels
that Jamaica has a reduced capability to effectively engage in
international narcotics interdiction. Similarly, such reductions would
put additional financial burdens on the Jamaican Government at a time
when it is undertaking critical economic reforms. U.S. assistance
sustains an important partnership in the effort to combat international
narcotics trafficking.
viii. conclusion
Jamaica is now moving decisively to promote economic growth--both
by attracting foreign investment and mobilizing domestic savings. In
March 1996, the Jamaican Government finalized and issued a National
Industrial Policy that outlines a framework under which different
sectors of the economy--government, private firms, and organized
labor--can work together to ensure growth and prosperity in Jamaica
through the 21st century. This policy provides an important long-term
blueprint for Jamaica's economic development, focusing on growth
through investment and export promotion.
U.S. assistance is making an important contribution to Jamaica's
development. USAID--Jamaica has been particularly effective at the
grassroots level, funding programs which seek to incorporate the poor
into the economic growth process. This is crucial for sustainable
development, which in turn will further stimulate trade and investment
with the United States.
The U.S. foreign assistance program in Jamaica, should be viewed as
an investment in the economic well-being of the United States, not as
outflows of money. The mutual benefits of foreign assistance are well-
documented and need to be clearly recognized in order to forestall any
further cuts in aid programs. If aid must be reduced, it must be done
in a phased and orderly manner. One way to ensure this is through the
creation of a Development Fund for Latin America and the Caribbean,
which can offset aid cuts while providing a comprehensive policy
vehicle for new types of assistance in the future. Strengthening our
common economic relationship will provide an additional framework
through which aid flows can be replaced by advantageous commercial
linkages.
NUMBER OF U.S. WORKERS DEPENDENT ON TRADE WITH THE CARIBBEAN BASIN
NATIONS
------------------------------------------------------------------------
Number of New
Year Total number of U.S. jobs created
U.S. workers \1\ per year
------------------------------------------------------------------------
1985.............................. 118,840 .................
1986.............................. 127,240 8,400
1987.............................. 138,120 10,880
1988.............................. 153,800 15,680
1989.............................. 165,800 12,000
1990.............................. 191,380 25,580
1991.............................. 200,260 8,880
1992.............................. 225,262 25,002
1993.............................. 248,552 23,290
1994.............................. 268,814 20,292
1995.............................. 306,120 37,306
1996.............................. 317,400 11,280
Average annual job creation....... 18,051
------------------------------------------------------------------------
\1\ Assuming that $1,000,000,000 in U.S. exports creates 20,000 U.S.
trade-related jobs.
Source: U.S. Department of Commerce and U.S. International Trade
Commission. Updated: April 2, 1997.
UNITED STATES/JAMAICAN TRADE STATISTICS (1985-96)
[Millions of United States dollars]
----------------------------------------------------------------------------------------------------------------
Annual United States--
Year -------------------------------- Percent of Trade balance
Imports Exports export growth
----------------------------------------------------------------------------------------------------------------
1985............................................ $267 $404 .............. $137
1986............................................ 298 457 13.1 159
1987............................................ 394 601 31.5 207
1988............................................ 441 762 26.8 321
1989............................................ 527 1,006 32.0 479
1990............................................ 564 943 -6.3 379
1991............................................ 576 963 2.1 387
1992............................................ 599 938 -2.6 339
1993............................................ 720 1,113 18.7 393
1994............................................ 747 1,066 -4.2 319
1995............................................ 847 1,421 33.3 574
1996............................................ 839 1,491 4.9 652
Average annual U.S. export growth............... 13.6
----------------------------------------------------------------------------------------------------------------
Note: U.S. trade surplus in 1996 is the 12th straight year of trade surpluses.
Source: U.S. Department of Commerce and U.S. International Trade Commission. Updated: April 2, 1997.
U.S. FOREIGN ASSISTANCE TO JAMAICA (FISCAL YEAR 1985-FISCAL YEAR 1998) \1\
[In millions of United States dollars]
----------------------------------------------------------------------------------------------------------------
Public Peace
Year ESF DA Law 480 MIL Narc Corps Total
\2\ Prog
----------------------------------------------------------------------------------------------------------------
1985................................ $81.0 $34.3 $40.1 $7.6 ......... $2.4 $165.6
1986................................ 58.6 26.1 37.6 8.0 $1.5 2.6 134.3
1987................................ 26.0 18.1 39.9 3.4 3.3 2.5 93.1
1988................................ .5 39.2 35.7 .3 1.9 3.0 80.7
1989................................ 12.9 51.8 47.1 3.8 1.0 3.0 119.6
1990................................ 13.2 14.0 44.2 1.3 1.0 2.3 76.6
1991................................ 10.0 17.2 44.7 1.9 1.4 2.4 77.6
1992................................ 15.9 22.3 32.6 3.2 1.0 2.1 77.0
1993................................ 2.0 13.7 30.0 .4 1.3 2.3 49.7
1994................................ ......... 8.9 14.0 .5 .6 2.2 26.2
1995................................ ......... 10.5 ......... .2 .6 1.9 13.2
1996 \3\............................ ......... 7.8 2.2 .5 .7 1.9 13.1
1997 \3\............................ ......... 11.2 ......... .5 .8 1.9 14.4
1998 \3\............................ ......... 11.1 ......... .5 .8 1.9 14.2
----------------------------------------------------------------------------------------------------------------
\1\ 1998 request levels equal 9.6 percent of 1985 actual levels.
\2\ Public Law 480 includes titles I, II & III.
\3\ Figures for fiscal year 1996 represent obligations, for fiscal year 1996 represent actual appropriations.
Figures for fiscal year 1998 are based on request levels.
Note. Figures may not total exactly due to rounding.
Source: USAID, Obligations and Loan Authorizations fiscal year 1946-fiscal year 1992. Congressional
Presentation, fiscal year 1995, fiscal year 1996, fiscal year 1997, fiscal year 1998. Last Updated: April 2,
1997.
______
Prepared Statement of Rev. J. Bryan Hehir, Counselor, Catholic Relief
Services, on behalf of the U.S. Catholic Conference and Catholic Relief
Services
I present this testimony on behalf of the U.S. Catholic Conference
(USCC), the public policy agency of the Catholic bishops of the United
States, and Catholic Relief Services (CRS), the development and relief
agency of the bishops presently working in over eighty countries
throughout the world.
Today, I address the topic of U.S. foreign assistance and
development policy. At the General Meeting of the National Conference
of Catholic Bishops in November 1996, the bishops voted to address both
President Clinton and the Congress on the steady decline in the 1990's
of the U.S. foreign aid budget. The bishops are concerned that this
pattern of declining U.S. involvement in aid to the world's poor fails
to meet even minimal moral obligations of a country of our stature and
resources. In addressing this vital issue of the role of foreign aid in
the 1990's, I seek to share two of our own resources with the
committee: the perspective on international relations and foreign aid
found in Catholic social teaching, and the experience of CRS in its
half-century of service to the poor beyond our shores.
In my testimony I will address three themes: (1) a moral vision
about international society; (2) a perspective on the choices U.S.
policy faces on foreign aid; and (3) specific comments on foreign aid
policy.
I. The World of the 1990's: Framing a Moral Argument
All analysts of international relations agree that in the 1990's
the world is passing through a fundamental moment of change and
realignment. The last comparable period was fifty years ago as the
world emerged from a global war and struggled to put in place
institutions which would prevent a third global conflict in this
century. The consequence of the policies put in place in the 1940's has
been the creation of the first truly global international order. A
convergence of factors over the last fifty years--decolonization, the
rise of modern means of transportation and communication, the emergence
of economic and financial ties in a global market--has transformed the
fabric of world politics. Today in the 1990's, as we struggle to
understand and respond to both the end of the Cold War and the process
of socio-economic globalization, we are writing another chapter in a
story begun five decades ago.
It was also in the 1940's, in the midst of World War II, that Pope
Pius XII (1939-1958) grasped the depth and degree of change sweeping
the world and recognized the need to address the moral structure of
international relations required if states and individuals are to
understand and assume their appropriate roles in a world order
profoundly different from the past. In a process inaugurated by Pius
XII but continued by every pope through John Paul II, Catholic social
teaching has sought to develop ideas, principles and values which can
provide moral direction to the political, military and economic forces
shaping the post-war world. The moral vision thus developed has three
characteristics: (a) while rooted in a religious community, it is
shaped by concepts and principles which can be used in a pluralistic
society; (b) it is a form of a ``realist'' moral vision in the sense
that it takes seriously the dominant features of world politics: the
lack of a center of political authority and a fragile legal structure;
but, (c) it is not confined to a ``realist'' answer in addressing the
needs of a world divided by politics and ideology, but increasingly
united by transnational linkages and institutions. Rather, it is based
on the conviction that moral values and principles must guide the
political order, particularly at the level of international relations.
This moral teaching invites states and citizens to recognize three
fundamental moral principles. First is the human dignity inherent in
each person, a value which is the basis for a complex fabric of human
rights and duties that creates responsibilities and relationships
across national borders (Pius XII). Second is the existence of an
international common good, a set of shared interests, values and
obligations which sovereign states can recognize and should pursue
despite differing political systems (John XXIII). Third is a bond of
solidarity--both an attitude toward others and a sense of duty--which
makes it impossible to consign part of the human community to a status
beyond our care and compassion when they are faced with threats to
their life and dignity (John Paul II).
These three principles--human rights, common good and solidarity--
are the foundation of the work which the bishops of the United States,
through the United States Catholic Conference and Catholic Relief
Services, seek to do in the world; we are an institutional expression
of a church which teaches and is committed to these ideas. But we
believe the scope of these truths extends beyond religious communities
and organizations. We are convinced that, precisely because the still
developing status of the international community leaves an increasingly
interdependent world in the hands of interdependent states, a vision of
how we are related to each other and responsible for each other is an
essential requirement for a peaceful world.
In 1967, Pope Paul VI said that ``development is the new name for
peace.'' That phrase causes debate among students of international
affairs, but it expresses a profound truth, however complex its
implementation. The truth is that peace and stability, elusive but
necessary objectives in the world, cannot be built upon a world marked
by radical inequality and injustice. There are undoubtedly multiple
sources of conflict in the world, but none more troubling than an
international order where everyone knows the benefits which science,
technology and economy can provide, yet only a fraction of the globe
has any real prospect of experiencing these benefits. The threat from
that kind of world (dis)order is not only to our hope for peace but to
our human decency.
What do these ideas of human dignity, common good and solidarity
say to the U.S. role in the 1990's? The argument of this testimony is
that sustainable human development, grounded in a conception of human
dignity, structured by an understanding of human rights and accepted by
citizens and states as an obligation of the international community,
should be a principal objective of U.S. foreign policy. The U.S.
foreign assistance program is the primary way for the United States to
express its commitment to this obligation. Hence, I seek to make the
case that this program deserves not only consistent support but a more
central role in U.S. foreign policy. That role can only be created by
clear policy choices. It is to those choices that I now turn.
ii. the united states in the world: options for foreign aid
The U.S. foreign aid program was conceived and initiated in the
context of the Cold War. The program always had a double objective: to
respond to poverty, hunger and disaster and to be an instrument of U.S.
policy in the struggle against communism. These objectives coexisted in
a fragile alliance which guaranteed funding for foreign aid, but often
corrupted its first goal of meeting human needs. Few doubted that there
had to be a foreign aid component to a successful policy of countering
communism, and most doubted that such a program could primarily be a
humanitarian policy.
The collapse of the Cold War swept away the foundation and
framework in which U.S. foreign policy (including foreign aid) was
conceived and conducted. The new setting of world politics in the
1990's opens new possibilities for foreign aid, yet it also presents
substantial challenges to sustaining a commitment to any foreign aid
program.
On the one hand, there now exists the possibility of establishing a
truly moral rationale for U.S. foreign assistance, one directed by
clear purpose and sufficient means to meet basic human needs among the
world's poorest people. Such a program would not only clarify U.S.
purpose; according to recent polling data it is also the only basis on
which to regain public support for foreign aid. Once the idea of such
aid is clearly stated as direct assistance to people in dire need, U.S.
public opinion solidly supports it. In one recent study conducted by
the University of Maryland and the Center for the Study of Policy
Attitudes, 80 percent of Americans polled said they support foreign aid
directed toward ``those in the world who are in great need.'' \1\
---------------------------------------------------------------------------
\1\ Steven Kull, ``Americans and Foreign Aid: A Study of American
Public Attitudes'' (Washington: Program on International Policy
Attitudes and College Park, MD: Center for International Security
Studies at Maryland, 1995, p.3.
---------------------------------------------------------------------------
Such public support is critical because the Cold War rationale--
that we need a foreign aid program to ward off threats to basic U.S.
interests--has now been substantially eroded. That erosion is the
product of new forces at work in the international system. The Cold War
system had the artificially imposed character of a unified arena of
competition in which the two superpowers engaged in multiple forms of
conflict across the globe. The end of that competition has produced a
much more fragmented pattern in world politics, which in turn poses
quite different challenges and choices for U.S. foreign policy.
Some U.S. policy choices are not in doubt; they concern issues
which remain demonstrably linked to U.S. national interests. These
issues cut across two broad dimensions of world politics: first, what
might be called ``great power politics;'' second, foreign economic
policy. The major powers of the post Cold War era (China, Europe,
Russia, Japan and the United States) will clearly attend to the issues
which either unite or divide them. These include the future of Russia
and China, the role of a uniting Europe, the future role of NATO, the
problem of proliferation of weapons of mass destruction and
relationships with the United Nations. In addition, the G-7 states will
continue to pursue the ever growing agenda of international economic
issues which are now so central a part of foreign policy. While there
are multiple policy decisions to be made in these two areas, there is
no doubt that the choice to engage them is a foregone conclusion.
The choice which remains quite open, however, is whether there will
be a sustained, coherent, generous and just policy of the United States
to engage countries which fall outside great power politics and beyond
the pale of the economic interests of the advanced industrial
democracies. More specifically, will there be a sustained interest in
and engagement with those nations which represent the poorest 25
percent of the global population? In the Cold War era, some resources
were guaranteed for these nations because they fitted into the
overarching framework of East-West competition. Today that ``strategic
location'' is gone, but the United States' direct moral obligation to
help rebuild societies where it had interests during the Cold War
remains.
There are a substantial number of states and people today who can
neither threaten us in any classical sense of that term nor demand our
attention--yet the human conditions of their existence lay claim to our
conscience. The clearest example of this phenomenon is found in the
poorest of the African states, and--to some degree--the African
continent as a whole. Clearly I do not want to describe Africa only in
terms of massive problems. Such a view, too common today, overlooks the
complex reality, within states and in the continent, containing also
success stories of people struggling against overwhelming odds to
guarantee a future for their children. In spite of this fact, however,
it is dramatically clear that Africa is a continent where human life
and dignity is mortally threatened each day. The threats are multiple--
some are military, some political--but the economic devastation is
pervasive, cutting across governments of different orientations,
intensifying civil conflict and stunting any effective strategy
development. Except for South Africa, the African states which have
been most visibly in the media in the 1990's have been ``the failed
states'' of Somalia, Rwanda, Burundi and now the collapsing colossus of
Zaire. These failed states pose no direct security threat to the United
States, and they contain few attractive economic possibilities at this
time. Hence, responding to their needs will require a clear choice on
the part of the United States. We will be neither compelled nor
constrained to expend time, treasure or talent on their behalf.
Only a conscious choice, supported by both moral and empirical
reasons, will sustain a long-term U.S. commitment to foreign aid as
part of a broader commitment to human development. Hence, in the 1990's
foreign aid should not be debated simply as a line item in the budget.
Such an approach will consign it, over time, to death by diminishment.
The fundamental foreign aid question of the 1990's resembles the
Marshall Plan debate of the 1940's. It is a question about the U.S.
conception of its role in the world. The U.S. role will be shaped by
multiple factors, but a capacity for moral vision, expressed in an
effective commitment to the poorest members of the global community,
should be a visible part of the U.S. understanding of its role in the
world. From this fundamental vision, policies and programs will follow.
To ask the foreign aid question in terms less expansive than this is to
do us all a disservice. It is not a foregone conclusion that the United
States will support and sustain a well conceived, carefully developed,
coherently structured and generously motivated foreign aid program. But
we should neither forsake the program nor simply extend its marginal
existence without a serious public debate about its political
significance for U.S. foreign policy and its moral significance for our
conception of a common humanity--a humanity we share with those beyond
our shores and beyond a narrow definition of what constitutes U.S.
interests.
Such a broad-ranging public discussion is properly located in the
first instance with the President, as it was fifty years ago. The
future of a vigorous foreign aid program resides fundamentally with
presidential commitment to a specific form of U.S. leadership in the
world. It also resides, as it did in the 1940's, with the Congress. The
congressional leadership supporting both NATO and the Marshall Plan is
today remembered as having made a lasting contribution to the stability
and peace of the world.
The choices of the 1990's are not the same as those of the 1940's.
While a strong foreign assistance program is certainly still in the
U.S. national interest, the foreign aid choice today no longer is seen
having the same imperative role for U.S. policy as was obvious in the
1940's. To some degree, however, this means that the kind of vision
needed to sustain a policy choice today is more demanding. When persons
or states are not compelled to act, the reasons and motivations for
their choices are more clearly tested and displayed.
Finally, a choice to sustain a generous foreign aid program rests
with the American public. Clearly the impression is abroad that foreign
aid has few friends among policy elites or the electorate. But a hasty
impression may overlook the documented fact that a reservoir of public
support does exist for a foreign aid program with three
characteristics: it meets the needs of the poor, it works, and it is a
shared effort with other countries. Our experience as a church and in
CRS, where we must depend in part every year for our work in the
poorest countries on the voluntary contributions of American Catholics,
convinces us that an approach can be made to the American public for a
more expansive foreign aid program. In coming before this subcommittee,
we call for a morally grounded conception of U.S. capabilities and
duties in the world today, and we promise the support of our religious
leadership to sustain a renewed effort for the foreign aid program.
iii. foreign aid and human development: concepts and choice for the
1990's
The perspective of this testimony is that the U.S. foreign aid
program now stands at a juncture similar to its founding moment in the
1940's. Then as now, a basic systematic change in world affairs
presents new opportunities and challenges; the Marshall Plan's response
to the post-war world is recognized as a moment of creative genius and
political courage. The quite different challenges of the post Cold War
world invite us to a choice rooted in comparable vision and courage.
A. The Nature of Development.--The process of development is a
multi-dimensional reality. The concept of development found in recent
Catholic teaching, in the encyclicals of Paul VI and John Paul II,
emphasizes the moral character of development. This view roots the idea
of development in its subject, the human person, possessed of rights
and duties and in need of a social system which protects rights and
facilitates the fulfillment of duties in society. Placing development
policy within a moral framework leads to the distinction between
economic development and human development. The economic dimensions of
development policy are a means to a broader end; human development
addresses the spiritual, material and social needs of the person.
Catholic social teaching supports economic development and sees it
contributing to, but not substituting for, human development. Economic
growth, therefore, is one element of successful development strategy.
Its primary objective should be poverty reduction within the context of
an equitable growth strategy.
In Catholic teaching, the fundamental criteria for evaluating
development policy are the dignity of each person and the principle of
the option for the poor. Within a strategy directed toward the dignity,
rights and duties of all, there should be a specific priority given to
the basic needs of the poorest and most vulnerable sectors of the
population. The option for the poor should shape policy choices of
nations to be assisted, as well as development policies within
countries. With this framework in mind, the bishops continue to seek a
refocusing of attention and resources away from military and trade
objectives and toward the goal of eliminating poverty and promoting
human development. Specifically, foreign assistance should be
redirected away from military and export promotion assistance and
toward humanitarian and development assistance.
Around the world, as in our own country, women and children are
disproportionately and increasingly the victims of poverty. Solving the
problem of poverty among women and children is essential to the
elimination of poverty in the world, and reduction in foreign aid will
have the greatest detrimental impact on women and children. It is not
only important to focus development programs on women and children, but
policies and programs should empower women to improve the quality of
their lives and those of their children. At the same time we need to
listen to the concerns of women; they should be involved in the
decision making processes.
While some have invoked concern for women as a basis for giving
priority to population control efforts, we hold that the contrary is
true: developed nations' efforts to control population in poorer
nations ought not substitute for real solutions to the problems of the
poor. As the U.S. bishops said in 1966, ``it is the positive role of
government to help bring about those conditions of family freedom which
will relieve spouses from * * * material and physical pressures to
limit family size.''
B. The Elements of Development Policy.--Foreign assistance must be
seen as part of a broader policy of measures to reduce poverty and
assist growth and development. Several concerns should work together:
(1) the protection and promotion of human rights; (2) securing peace
processes and supporting democratic transitions; (3) trade policy; (4)
a comprehensive strategy of debt relief; (5) U.S. participation in
multilateral development institutions; (6) U.S. bilateral assistance;
and (7) support for the United Nations. It is the coherent integration
of these elements which yields effective development. U.S. policy
should reflect a commitment in principle and allocation of resources to
these dimensions of human development.
1. Human Rights.--A strong consistent human rights policy should be
the foundation of U.S. development policy. The protection and promotion
of human rights (political-civil and socio-economic) is one of the
fundamental elements of a moral conception of development policy. For
this reason, U.S. foreign military aid should be conditioned on human
rights criteria, and governments demonstrably involved in gross and
systematic patterns of human rights violations should not be recipients
of such aid. At the same time, the United States must maintain its
ability to reach the poorest of the poor in special circumstances
through humanitarian and development assistance programs even in
countries where there is no effective government or where governments
do not meet human rights criteria.
It is necessary to distinguish two kinds of criteria as a condition
for foreign assistance, namely, human rights and democratization. The
United States should pursue both in its foreign aid policy, but it
should not forsake the people of some of the very poorest countries
which are still years away from meeting standards of democratization.
Countries receiving U.S. foreign assistance should uphold
internationally recognized human rights norms. Criteria which hold
countries to standards of democratization set a higher goal; it is an
altogether desirable goal, perhaps the best guarantee that human rights
will be observed. But, I suggest, the democratization standards must be
implemented with great prudence. If aid is conditioned on standards
that are set too high or too early, they could have a perverse effect
on the lives of the poorest populations in the world. I say this
because it seems likely that some countries are capable of enforcing
basic human rights policy and the rule of law but may be years away
from the more complex task of creating democratic institutions.
Human rights policy should respect the most basic human rights,
especially the right to live, throughout the spectrum of human life.
The USCC and CRS therefore favor reinstatement of the ``Mexico City''
policy barring population assistance to organizations which perform
abortion as a method of family planning. The United States should also
refuse to be part of any effort to repeal other nations' laws
protecting human life at its most vulnerable stage.
2. Peace and Democracy.--Support for democratization is tied in
several key countries to support for a multidimensional effort to move
from war to peace. In view of the current impasse in the Middle East
peace process, the need to sustain U.S. credibility, and the importance
of building trust between the parties, it is vitally important that
development aid to the Palestinians be allocated and released.
Likewise, in Central America and Southern Africa, peace processes have
been impaired by a lack of funding and insufficient political will. To
succeed, these efforts demand the U.S. financial support and diplomatic
assistance they were promised.
3. Trade.--In the U.S. policy debate some contrast trade vs. aid as
alternative strategies for responding to the problems of poverty and
injustice in developing countries. This testimony advocates a
correlative conception of trade and aid. The significance of trade
policy and assuring market access for developing countries is critical.
But it is clear that while expanding trade is a highly relevant
possibility for some countries, others, particularly the poorer
countries of Africa, Latin America, and Asia, will find very marginal
improvement, or even decline, in the immediate future. Export promotion
assistance mainly benefits upper-middle income countries and
corporations whose primary interest is not human development. Trade
policy should be crafted to assist the poorest countries to develop in
a way economically most beneficial to them. A just international
trading system should create economic benefits that enhance the life
and dignity of all people. Trade agreements must respect the rights of
workers and protect the environment, particularly in countries with few
legal protections for either. Development policy without a substantial
component of fostering trade is defective; development policy without
aid as an essential element fails to address the needs of some of the
most vulnerable populations in the world today. In the short term, some
of today's poorest countries will need the support of aid before they
can compete successfully in the world of trade.
4. Debt Relief.--Foreign assistance without attention to debt
relief simply gives with one hand and takes with the other. The burden
of external debt for many developing countries is an obstacle
preventing progress toward development goals. In many of the poorest
countries of the world, particularly in Africa and Latin America, the
debt burden forces governments to use scarce financial resources,
including external aid, on debt repayments rather than on critical
investments in health, nutrition, or education. Many indebted countries
have already paid back the principal on their outstanding loans but are
unable to pay the interest which grows larger over time. The
international financial institutions and bilateral creditors have
recognized the need for debt relief but have not yet committed
sufficient financial resources to finance it. We urge the international
financial institutions, particularly the World Bank and International
Monetary Fund, to expand eligibility for debt relief to the full range
of heavily indebted poor countries, to provide more substantial debt
relief than currently projected, and to shorten the time frame for debt
relief. We urge the United States to use its leadership within the
international financial institutions to convince other governments to
do the same. I would also like to emphasize our support for lenders
holding governments accountable to investing in their people through
education, health, nutrition, and other programs that support human
development, but we do not favor conditions that force radical
restructuring of economies in ways that cause short or long-term harm
to the poor. Still less should debt relief or other foreign assistance
be conditioned on programs of population control.
5. Multilateral Assistance.--Assistance provided through
multilateral institutions has a double benefit. On the one hand, it
facilitates burden-sharing for development. On the other hand, it
enhances the role of those institutions which are essential for an
interdependent world. Multilateralism is no threat to the United
States. As a world leader, we are obligated both morally and
practically to participate in multilateral institutions. The fabric of
global interdependence must be given structure, purpose and methods for
enhanced cooperation. Interstate policies alone are not adequate to the
challenge of development today. In particular we wish to support full
funding for U.S. commitments, including payment of its arrears, to the
International Development Association (IDA). As the loan fund of the
World Bank designated for the poorest countries of the world, IDA
provides essential funding for rural health facilities, primary
schools, sanitation and transportation systems, and other programs
integral to human development. IDA meets two crucial objectives of
development policy: it is directed to the poorest populations and it
facilitates an international covenant of collaboration in support of
the poor. We urge you to support the full scheduled payment of $800
million for IDA-11 and $234.5 million overdue from IDA-10, a total of
$1.035 billion. We also urge congressional support for continued U.S.
leadership role in the multilateral institutions.
6. Bilateral Assistance.--We support full funding of the
President's request for bilateral assistance. The cuts in both
multilateral and bilateral assistance over the last four years have
been crippling. Without U.S. foreign assistance many organizations,
including CRS, would have to change the scope and content of their
programs drastically. Indeed cuts in the U.S. foreign aid budget of the
1990's have already substantially affected CRS's work. Reductions in
the PL 480 Title II food assistance programs have had a direct effect
on our service to the poor. From orphanages in West Africa to Mother
Teresa's work in India and Ethiopia, CRS has had to discontinue
programs and other activities in support of mothers and children. The
President's request this year should be seen as a first step back
toward a U.S. policy of assistance which corresponds to our position of
leadership in the world. The experience CRS has had with both the Child
Survival Program and Microenterprise Initiatives leads us to support
full funding for these programs. USAID is funding only one of every
four applications for child survival grants, turning down agencies with
proven track records in places such as Kenya and Tanzania. We request
that $40 million be set aside in fiscal year 1998 and $60 million in
fiscal year 1999 for the child survival programs of citizen-supported
private voluntary organizations. In both program areas, CRS is prepared
to expand collaboration if more funds--beyond those requested--can be
appropriated. Our hope is that both programs will grow in the future.
Migration and Refugee Assistance.--Similarly we wish to highlight
and support the need for generous support to migration and refugee
programs. The USCC Office of Migration and Refugee Services (USCC/MRS)
can attest to the critical needs of refugees in an age when internal
conflict, generating huge flows of refugees and internally displaced
persons, has become the most visible example of war in the world. The
series of failed and failing states since the end of the Cold War have
resulted in recurring complex emergencies that have sharply challenged
the ability of the international community to respond. The cost in
treasure has been immense and in human suffering even greater. Further,
the international community has yet to learn how to deal effectively
with such emergencies. Far better to deal first with their root causes,
but once the emergency is upon us, we must learn how better to
ameliorate its cost and suffering. As ever, U.S. leadership is critical
to this effort and without adequate resources, effective leadership
will be severely hampered. Like CRS, Migration and Refugees Services is
both funded from church resources and yet enormously expanded in its
outreach by collaborative engagement with U.S. Government programs. Of
first importance in this respect is the admission and resettlement of
refugees to the United States. USCC/MRS is the largest of the private
agencies assisting in the domestic resettlement of refugees in the
United States. In recent years, refugee admissions have dropped sharply
from 130,000 in fiscal year 1992 to about 75,000 this year. Many,
including concerned members of Congress, believe that these numbers
have fallen too low, especially in light of ongoing requirements to
complete the Indochinese refugee program and growing needs for the
resettlement of Bosnian refugees. We believe that admission numbers
should be restored to pre-1995 levels of 100,000-110,000 persons. We
recognize that refugee admission numbers are set by the President in
consultation with the judiciary committees but urge that adequate funds
be available to fund needed admissions. We urge that you allocate at
least $700 million for Migration and Refugee Assistance and $100
million for Emergency Refugee and Migration Assistance.
7. U.S. Support for the United Nations.--The President's request to
the Congress for funds adequate to address both present U.S.
commitments and unfulfilled U.S. debts deserves support. Recent polling
data indicate that the U.S. public supports foreign aid only if the
U.S. bears a ``fair share'' with others.\2\ Such burdensharing,
however, requires institutions which can facilitate and implement a
shared policy vision. This is one reason why U.S. policy should support
the role of the United Nations. From a broader perspective, Catholic
teaching has endorsed an expansive role for the United Nations since
its inception. Three times in the last twenty years, Popes have come to
the United Nations to attest in person to the essential moral and
political role this institution plays in an increasingly interdependent
world still governed by independent states. It is both possible and
necessary to affirm the indispensable role the United Nations plays as
well as call for reform of how it plays that role. The Holy See has
differed with UN policy in specific instances, but never eroded its
fundamental support for this institution. Our hope is that U.S. policy
can strike a similar balance. Specifically, this testimony supports:
(1) payment of U.S. arrears to the United Nations; (2) support for UN
peacekeeping activities; (3) support for funding international
organizations and programs, and in particular, increasing the
contribution to the United Nations Development Program to $100 million
and the International Fund for Agricultural Development to $20 million;
and (4) cessation of funding for the UN Fund for Population Activities
so long as it supports China's coercive family planning and abortion
programs.
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\2\ Steven Kull and I.M. Destler, An emerging Consensus: A Study of
American Public Attitudes On America's Role in the World (College Park
Maryland: Center for International Security Studies at Maryland, 1996)
pp. 3-7.
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In closing, I wish to mention the USCC's and CRS's appreciation for
the positive comments often heard in congressional debate about the
role of faith-based organizations in directly meeting the needs of the
poor. As a church committed to the ideas outlined in this testimony, we
will always be involved in relief and development efforts. But I can
assure you today that the legislation you are considering makes a
dramatic difference in how we and other citizen-supported private
voluntary organizations function in a world of expanding human needs
and declining budgets.
The President's request for a higher level of foreign assistance
than we have seen in several years gives us hope that a new discussion
of the U.S. role in the world might begin on this fiftieth anniversary
of the Marshall Plan. Only the combined effort of a creative foreign
policy and renewed public support for it will be sufficient to reverse
the damaging decline foreign aid has suffered in the 1990's. The
Catholic Church in the United States was privileged to be part of the
post-war reconstruction of Europe; we wish now to be part of a wider
effort to shape a development process in the service of the human
community and in response to basic American values.
______
Prepared Statement of Reed Hertford, President, Association for
International Agriculture and Rural Development
Mr. Chairman, my name is Reed Hertford. I am submitting this
testimony in my capacity as President of the Association for
International Agriculture and Rural Development. AIARD is a 33 year old
association of professionals who represent universities, private
commercial firms, private voluntary organizations and other national
and international organizations from both the public and the private
sectors. Our members are from every state in the Union and have
dedicated their careers to alleviating world hunger and advancing
agriculture and rural development around the world.
Request for Action.--Mr. Chairman, the purpose of this testimony is
to submit our association's urgent request that the United States renew
public investment in international agriculture and rural development to
a level that: (1) accurately reflects the impressive economic benefits
realized by the United States as a result of these programs, (2) is
adequate to address the daunting challenge of feeding a world
population projected to double in 20 years, and, (3) reflects the fact
that the agriculture sector is predominant in developing nation
economies--helping agriculture is key to stimulating overall developing
country economic growth. Specifically, the Association for
International Agriculture and Rural Development, in coalition with
other public and private sector partners who will testify separately
before your committee, requests Congressional action to:
--Support the U. S. Campaign for Global Leadership's effort to
increase the 150 (International Affairs) account;
--Designate at least $500 million for international agriculture and
rural development, in the USAID appropriation for fiscal year
1998, continued annually at not less than this amount (in
inflation adjusted funding). This should include calling for a
minimum of five senior agriculture officials appointed at
USAID;
--Encourage multilateral development banks to strengthen
international agriculture and rural development efforts
dedicated to broad-based economic growth, poverty reduction and
environmentally sustainable development, which serve U.S.
interests and international stability. The U.S. obligation to
the International Development Association (IDA) should be fully
funded and used as a vehicle for agriculture and rural
development in the poorest areas of the world;
--Support lowering of trade and investment barriers internationally,
inducing renewing fast track trade agreement authority.
Rationale for Investment.--In response to pressures to re-
prioritize and reduce U.S. foreign operations expenditures, resources
must be re-dedicated to programs that are clearly in the best interest
of the United States and yield a high return on investment. Public
investment in international agriculture and rural development has a
proven track record in meeting both criteria. And yet, paradoxically,
U.S. involvement and leadership have fallen precipitously. This must be
reversed so that the United States can accelerate economic growth in
developing countries that will produce more exports, more jobs and more
income here at home; help poor nations increase their readiness for
private investment alleviate food insecurity, and subsequent demands
for U.S. disaster and famine relief; and meet the World Food Summit
commitment to help halve the number of undernourished people by 2015.
Why should grassroots constituencies care?--You might ask ``who
cares?'' The answer is simple: international agriculture has become an
important local issue in cities and rural communities across America.
As barriers to trade have come down, and the free flow of commodities,
inputs, technologies and information has expanded, what happens in
countries around the globe can have an economic impact on most any town
in Kentucky, or any other state in the union.
In 1995, U.S. agricultural exports were valued at $55.8 billion,
representing fully one quarter of total U.S. gross farm income. These
agricultural exports produced a total economic boost to our economy
that has been estimated at $132 billion. About 17,300 jobs are now
being created for each $1.0 billion of agricultural exports, with four
fifths of these export-linked jobs being created off the farm in
upstream or downstream agricultural industries. Mr. Chairman, in your
own state of Kentucky, according to Economic Research Service data,
agricultural exports grew from a total of $863.2 million in 1992 to
well over a billion dollars in 1996.
In addition to addressing the humanitarian concerns of Americans
and our desire to alleviate human suffering, helping developing
countries is key to our own economic future. About 52 percent of U.S.
agricultural export sales are to developing countries. Sales there
spurted by 84 percent between 1988 and 1994--more than twice the growth
rate of exports to developed regions of the world. Most demand growth
will occur in developing countries in the future because they have more
room to grow than do we here at home, or than do other industrialized
nations. As the United States helps to ``grow'' those developing
economies through agriculture and rural development programs, we invest
in creating our future customers.
What should the United States do?--On January 23rd, the Association
for International Agriculture and Rural Development sponsored a Forum
on Capitol Hill to begin a policy dialogue in the United States and to
entertain concrete proposals for innovative future action in
international agriculture and rural development. Over 200 people
attended--testimony to a growing interest in world food and agriculture
issues. Drawing on results of the Forum, materials emerging from the
World Food Summit, the World Bank's new vision for agriculture and
rural development, and the reports of the National Center for Food and
Agricultural Policy's Commission on International Trade, Development,
and Cooperation, our Association has worked with a broad-based
coalition of institutions to achieve agreement on the areas of emphasis
required for future efforts in international agriculture and rural
development.
Overall economic growth emphasis.--The economic growth goal must be
emphasized more strongly in all development programs. Only when
countries have more income in hand can poverty be abolished, the
environment protected and children nourished and cared for so they will
survive and thrive. Because of the pivotal role of agriculture in most
economies around the world, achieving growth requires getting the rural
sector moving.
That challenge cannot be met by a U.S. development assistance
budget which assigned only 8.0 percent of its resources in fiscal year
1996 to agriculture and rural development, down from 16 percent just
six years earlier. The agriculture community views this sharp decline--
to say nothing of the meager budget share now assigned to agriculture--
with deepest alarm. The recommended $500 million for fiscal year 1998
would partially rectify this disturbing trend and modestly raise the
percentage that agricultural and rural development programs comprise of
the total to 13 percent (based on USAID fiscal year 1996 figures).
We believe that, to maximize the impact of the additional
resources, three programs should be emphasized: agricultural
technology, trade liberalization and reform, and human and
institutional capital.
Agricultural technology.--Earned rates of return on investments in
international agriculture research and technology development are
documented to exceed 100 percent annually and 40-50 percent
consistently. I challenge you to find better payoffs on public
investment. Furthermore, research conducted overseas consistently
provides economically-important benefits to U.S. agriculture. By
raising the productivity of each unit of land, agriculture technologies
also conserve the natural resources upon which the future of
agriculture depends. Yet, U.S. government investment in international
agricultural research has dropped by two thirds in the past ten years.
The United States, once the leader in international agricultural
research and technology development, is underinvesting in agricultural
research at home, in the global network of international agricultural
research centers and in national research systems in developing
countries. U.S. investment must be expanded to leverage stronger links
between the United States public and private sector agricultural
research system and the global agricultural research system. Targeted
cooperation is necessary to assure full access to global plant and
animal genetic resources and to information on new technologies and
management systems.
A major increment of funding, involving new public and private
partnerships in the United States, as well as between this country and
foreign advanced and developing nations, should be provided. The
initiatives should reflect the complex challenges at hand of achieving
growth and increased competitiveness, while preserving the natural
resources on which the future of agriculture depends.
Trade liberalization and reform.--Efforts by the United States to
support an open, globalized food system, with reduced trade and
investment barriers, should be continued and reinforced. The future
prosperity of the U.S. food and agricultural sector will be
increasingly dependent on the growth of markets in the developing
nations and on our access to those markets. However, freer trade may
impact some groups in some countries adversely, and the United States
should be prepared to deliver expertise and resources that will help
alleviate the adjustment costs that impact these disadvantaged groups.
Core examples of cooperation in this field include establishing
phytosanitary control procedures, improving trade policy and analytical
capacity, strengthening market systems, creating mechanisms for coping
with extreme price fluctuations, modernizing communications and
transport, and creating private credit and accessible legal
institutions necessary for private sector growth.
Human and institutional capital.--Long-term U.S. investments in
improving human and institutional capacity are a proven means of
helping poor nations develop their economies. Successful U.S. efforts
have strengthened people and institutions essential for private sector
growth, international trade and participatory governance. The United
States has earned a world leadership role in education and training
programs related to agriculture and rural development. Expanding U.S.
investment in human and institutional development would bring the
strengths of this country to bear on (a) raising the quality of life
and providing a foundation for economic growth and private investment
in developing countries, (b) expanding markets for U.S. export sales,
and (c) improving agricultural technology through research.
In conclusion, I would like to underline the fact that, due to the
nature of our work, the need for action and investment is urgent. The
World Food Summit's major commitment, joined by the United States, is
to halve the number of undernourished people by 2015. We know it takes
10-15 years for new agricultural technologies to be fully developed and
adopted. Therefore, action is urgently needed if we are to feed a
population projected to double in 20 years and satisfy higher living
standards.
Thank you, Mr. Chairman, on behalf of AIARD for the opportunity to
provide this testimony.
______
Prepared Statement of Robert Karl Manoff, Director, Center for War,
Peace, and the News Media
I very much appreciate the opportunity to provide testimony to the
Senate Foreign Operations, Export Financing, and Related Programs
Subcommittee of the Senate Appropriations Committee.
The comments I am offering here are presented as the result of more
than a decade of work with the media in Russia and the former Soviet
Union. In fact, I have been working with the media in the former USSR
since 1985, when the New York University Center for War, Peace, and the
News Media (which I co-founded and head) began conferencing with and
training Soviet journalists in order to encourage them to push the
boundaries of press freedom which Mikhail Gorbachev was just beginning
to expand under his policy of glasnost. In 1992, in order to provide
nationwide assistance on a wide variety of media issues, the Center
founded the Russian-American Press and Information Center, which is now
one of the two principal media assistance organizations in Russia.
The NYU Center now has the longest continuous track record of
providing media assistance of any organization operating in Russia. By
profession, I myself am a journalist (for example, as Managing Editor
at Harper's) an academic (having taught journalism and/or Russian/
Soviet studies at several universities and authored books and articles
on the same subjects), and director of the NYU Center.
It is against this background that I would like to touch briefly on
four issues: First, the overall future of American assistance to
Russia; second, the importance of assistance to the media within this
overall program; third, the centrality of the print media to a
successful media effort; and, lastly, the contributions that the
Russian-American Press and Information Center (RAPIC) is prepared to
continue to make to the success of the overall American effort in
Russia.
1. american assistance to russia
It may easily be construed as self-serving for the person in charge
of an American program in Russia to urge support for the increased
levels of funding for Russian assistance requested in the fiscal year
1998 Appropriations bill. Indeed, as I note below, we do hope that the
Russian-American Press and Information Center, which has been created
through a partnership between the U.S. government and private
foundations, will continue to be the recipient of Federal support.
But I would like to note that the NYU Center had been providing
assistance to the media in Russia for nine years before it received any
U.S. Government funds and that its commitment to working with the media
in Russia is, in fact, a generational one that we expect to sustain
well after Federal assistance has come to an end under even the most
long-term scenario. Our commitment to this activity, in other words, is
driven by our own sense of the importance of this mission, not by the
availability of Federal dollars.
Indeed, it is the importance of this mission that I would like to
emphasize here. There are experts on both sides of the aid-to-Russia
debate, and there is little I can contribute to this complex
geopolitical, budgetary, and realpolitik issue in a paragraph or two.
Except, perhaps, to emphasize one point: The dozens of staff members of
the six RAPIC Centers are on the ground across Russia day-in, day-out,
and have been so for years. Together with the members of the RAPIC
nationwide Media Assistance Network, we are working intimately with
thousands of Russian managers, journalists, advertisers and business
people of all description, almost hour-by-hour in many instances. I can
report two things as a result of this work.
First, a half-decade ago not even the most foolhardy optimist would
have dared predict the extent of the changes that have since taken
place in Russia. In our daily work with the Russian people all over the
county we see the vibrant pulse of economic life in places where not
long ago homo economicus was moribund. We see entrepreneurs who seem to
have mastered the disciplines of hard work, creativity and management
almost overnight and as though by instinct. We see tens of thousands of
citizens' groups and independent organizations springing to life as
individuals join together to take back control of their lives from the
state. And among scores of millions of Russians we see a thirst for
political and economic freedom that is literally unquenchable.
Second, extraordinary obstacles remain on the path to full
democracy and functioning markets. We see these, too, every day. We see
political figures who bully their constituents and enrich themselves
from the public trough, Russian organized-crime kingpins who terrorize
the business community and deform the market system, and angry and
fearful citizens inclined to accept all too readily the desperate
programs tabled by ultranationalists and communists. Most important, we
see how fragile the successes are, and how important it is to continue
to nurture and protect them.
Amidst such victories and such defeats, our daily on-the-ground
experience everywhere in Russia has taught us that continuing,
ambitious (and therefore costly) American engagement is an absolute
necessity: Over the last half-decade, the U.S. and our allies in Russia
have established numerous beachheads for democratic politics and free
markets, and it is in the national interest of the United States that
we continue to protect, consolidate, and expand them.
2. assisting the independent media in russia
One of the most important beachheads we have established is with
the media. As a result, a mere six years after the collapse of the
Soviet Union, the Leninist vision of the media as the ``mass
propagandist'' and ``mass organizer'' lies in shambles. The Russian
press is no longer a party press; journalists have become increasingly
professional, and have begun to master the task of truly informing
readers and citizens; and media managers have begun to learn the
complexities of the business side of publishing as the press everywhere
becomes subject to market forces. The media have become just another
product vying for the attention of Russia's new consumers.
And yet, the media are not merely another commodity. In all mature
industrial democracies, the press is an institution central to both
democratic governance and free markets. Media may make money for their
proprietors, but they make democracy possible, as well. Modern
industrial democracies, in fact, can neither be created nor sustained
without a free press.
Despite the progress they have made, however, the Russian media are
still for the most part neither economically viable nor up to the
demands that democratization is making of them. Continuing government
subsidies, undercapitalization, management failure, government control
of monopolistic providers of services such as printing and
distribution, direct and indirect political pressure, and inadequate
journalistic and business practices are among the conditions that still
cripple the development of the free and viable press that Russia's
democracy and markets will require.
Few Russian publications or broadcasters make money. As a result,
most are still dependent on the state directly or indirectly. The
government still dominates the flow of information and the terms of
government debate. Journalists are being killed in alarming numbers:
almost three-dozen have died violently in Moscow since the fall of
Communism; the same number died countrywide in 1996 alone.
American policymakers have recognized the fact that a free press is
critical to the development of political democracy and free markets.
Assistance to the independent media has been a top priority in the
past. We believe it should continue to be a top American priority in
the future.
3. increasing american support for the print media
It is important to point out that most American media-assistance
dollars have been spent supporting Russian television stations and
related projects. Television is important, of course. But a media
development program that does not devote significant resources to the
print media will neither accomplish the democratization of the news
media as such nor be able to establish the vibrant public realm that is
a prerequisite for a vital civil society, real democratic politics, and
an open and informed public policy process.
For this reason, even though the Russian-American Press and
Information Center is a sector-wide media development program, we have
devoted particular attention to the print media over the last several
years and intend to continue to do so. In fact, we feel it is critical
for the American government to support a far greater emphasis than
previously on assistance to the print media, for the following reasons,
among others:
--Recent surveys have shown that most Russians get their local news
primarily from newspapers. As the economic and political
decentralization of Russia continues, local newspapers have
become the locus of exchange of key economic, social,
political, and other information necessary for the regional
development on which Russia's future depends.
--Studies have repeatedly shown that Russians trust their local
newspapers more than any other source of information, a finding
with important implications for all those interested in the
development of democratic politics in the country.
--The print media remain the only significant source of in-depth news
and analysis for Russia's political, business, and intellectual
elites. As a result, newspapers are where debates of major
policy issues take place and the quality of their coverage can
have a major impact on the public policy process.
--Given the influence of the government over the major television
networks, only newspapers support the pluralism of views and
diverse policy viewpoints that are essential for informed
decision-making in a democratic society. Newspapers have also
become the principal vehicle for legitimate political
opposition on all sides of the issues.
--In Russia, as elsewhere, television media take their cue from print
coverage. It is the print media that set the news agenda. In
fact, local news broadcasting very often consists of an
announcer reading selections from the local press.
--The quantity and quality of television news and public affairs
programming is and will continue to decline as television is
integrated into the market (as has been the case in every major
democratic market economy) and the need for high ratings drives
stations to feature the most popular entertainment programming.
This makes the print media all the more important to the
process of economic and political transformation.
4. the role of the russian-american press and information center
RAPIC works to promote democratic politics, free markets, and the
free expression on which both ultimately depend, through a complex of
economic, political, professional, and legal initiatives that promote
the political and economic independence of the entire media sector.
Overall, RAPIC plays a unique role as the only media-sector-wide
assistance program in Russia, promoting foreign investment, improved
management practices and business development, and legal guarantees to
ensure political independence and economic sustainability. We are also
working to break the Russian government's monopoly over printing and
distribution, as well as its domination of the information Russian
citizens receive about such critical issues as the enlargement of NATO
or Russian strategic, economic, or environmental policies.
As noted above, within this media-sector-wide strategy, our
particular focus on the print media makes us the only organization
working on a nationwide basis with Russia's thousands of newspapers.
Since 1992, RAPIC's efforts to help the Russian media have led to more
than 2,000 consultancies, training workshops, conferences, and
briefings with an aggregate participation of more than 100,000. More
than 5,500 outside experts have taken part in over 40 cities. Managers
from over 700 regional newspapers have gone through RAPIC's management
training programs. Over 30,000 searches of on-line information sources
have been conducted by RAPIC's Information Services both to strengthen
the reporting of specific issues and to promote the virtues and
techniques of fact-based journalism.
But numbers do not tell the story. They cannot reflect the fact
that RAPIC has now become a central fixture in the developing Russia-
wide media sector--an institution run by Russians for Russians around
which clients, participants, and colleagues have increasingly rallied.
With program facilities in six cities, a Russian staff and nationwide
Media Assistance Network of dozens, RAPIC has developed and refined a
comprehensive sector-wide program that addresses economic,
institutional, legal, professional, and educational issues. Among
RAPIC's recent accomplishments:
--RAPIC recently installed the first modern printing press to be
owned by an independent regional newspaper in Russia. A
landmark project established under the USAID-funded Media
Development Program (MDP) for Gorodskie Vesti in Volgograd, the
project also includes important production management training
for sustaining the press. The project was publicly hailed by
USAID as ``historic.''
--Thousands of journalists throughout the country have benefited
dramatically from RAPIC's newspaper management programs and
direct, hands-on consulting. Evidence of success is abundant:
For example, Gubernskie Vedomosti, in Stavropol, reported a 30
percent increase in advertising revenue; for Rezhevskaya Vest
in Perm Oblast, a RAPIC seminar on advertising was the turning
point in the newspaper's dramatic transformation from a heavily
subsidized local mouthpiece to a dynamic and fully independent
news organization. There are numerous similar stories.
--RAPIC's Freedom of Information Standing Commission has led the way
in promoting free access to government-held information and
educating journalists on exercising their information rights.
President Yeltsin has publicly endorsed FOI Commission
recommendations.
--Through regional seminars, workshops, conferences, and consulting,
RAPIC has provided mid-career training to thousands of
journalists on topics ranging from coverage of nuclear security
issues to election campaigns to the media's role in the
prevention of ethnic and national conflict.
--RAPIC paired Moscow's Skate Press with the American company
Bloomberg LP to create a Russian news service devoted to
providing the first detailed corporate profiles of publicly
traded Russian companies--a significant contribution to the
transparency which is essential for the creation of free
markets.
--RAPIC has worked with hundreds of American community-based
organizations, commercial enterprises, experts, and citizens.
For example, it has established partnerships between Russian
and American newspapers to promote improved management and
profitability of the papers in Russia. Among the American
newspapers participating in just this one RAPIC project are 14
publications in Alaska, Arkansas, California, Florida, Indiana,
Michigan, North Carolina, Pennsylvania, and Washington.
Through the wide geographic and substantive reach of these and many
other programs, RAPIC has earned a reputation as one of the leading
media NGO's in Russia, and the only one implementing a comprehensive
sector-wide approach. Against the background of this significant record
of accomplishment, RAPIC is now preparing for its transformation into
the National Press Institute of the Russian Federation (NPI), a Russian
NGO pursuing the same comprehensive media-development agenda, but now
in partnership with American journalism organizations and community-
based news media.
Animated by its nationwide media-sector strategy, RAPIC/NPI will
become a permanent institutional mechanism for the continuing
development and consolidation of Russia's independent media
organizations, its newspapers, and other print media. RAPIC/NPI has
been created over the past half-decade through a partnership between
the American government and private foundations with this agenda in
mind. It is now poised to become an important legacy of the American
assistance effort as this effort evolves into a framework for
meaningful, sustained, and mutually beneficial bi-national cooperation.
Contributing to the establishment of such a permanent NGO in the
Russian media sector would be an important American contribution as
assistance becomes focused on ensuring a sustainable American legacy.
As a Russian organization working in close partnership with a huge
number of American and Russian media companies, NGO's, and educational
institutions, RAPIC/NPI is ideally suited to play such a role.
Specifically, RAPIC/NPI will continue to pursue work in the following
critical areas in the media sector:
--Promoting Equity and Debt Financing, Leasing, and Other Mechanisms
to Capitalize the Media Industry. Printing presses, facilities,
and delivery vehicles are the key building blocks of economic
and, ultimately, editorial independence, but the media are
starved for the capital to acquire basic production and
distribution assets. For this reason, business development, and
specifically media debt and equity financing, will be the
highest RAPIC/NPI priority, along with a program to promote the
importation of American printing presses.
--Developing Media Management Capacity. RAPIC/NPI has pioneered a
system of intense management consulting that is addressing the
concrete needs of struggling independent newspapers across
Russia. Over the next years, RAPIC/NPI will continue this
successful Targeted Consulting Team (TaCT) program, considered
the gold standard among media management assistance initiatives
in the country. In addition, RAPIC/NPI will develop a CD-ROM-
based newspaper management simulation that will enable RAPIC/
NPI to train virtually every senior newspaper manager in the
country within several years groups at a low marginal cost.
--Participating in the Development of the Legal and Administrative
Infrastructure. Legal barriers to media independence and
sustainability include lack of access to information,
legislative obstacles to business development, the violation of
civil rights, and ignorance or unwillingness to enforce the
rule of law when it comes to the mass media. RAPIC/NPI will
continue to work aggressively in all of these areas.
--Fostering the Development of a Mature Information Culture. To
undertake and coordinate its future work in this arena, in
which RAPIC/NPI has long been a leader, it will establish a
Center for Cyberjournalism in Moscow. The first of its kind of
Russia, the RAPIC/NPI Cyberjournalism Center will offer
training in computer-assisted reporting, will develop an
Internet Media Service for industry professionals, will promote
and instruct in on-line publishing, and will inaugurate
distance-learning programs on journalism and publishing issues.
--Promoting Industry-Wide Trade Organizations and Professional
Associations. Accustomed to working in isolation, and
mistrustful of the top-down control connected with associations
and other forms of group coercion, media professionals do not
now have the mechanisms to exhibit the strength in numbers that
industries must develop in order to play a role in resource
allocation through the political process. As a result, RAPIC/
NPI will be helping to organize the trade and professional
associations that can help the media industry pursue and
protect its economic, legal, and professional interests.
--Overcoming Government Domination of Information. Governmental
domination of information and the terms of public debate must
be overcome for two fundamental reasons. First, the
accountability of state institutions must be established in
principle and in fact. Second, the actors who constitute civil
society must be able to communicate with each other and their
government by means of the media if a democratic polity is to
be established. Numerous RAPIC/NPI programs have been and will
continue to be devoted to achieving these ends.
--Raising the Level of Journalistic Professionalism. Journalistic
professionalism is a civic issue: corrupt, poorly trained, or
uninformed journalists short-circuit the information flow that
is the lifeblood of democratic politics. But journalistic
professionalism is also an economic issue because, first,
markets must have information to function, and, second, because
journalistic professionalism ensures the marketability of the
product which media organizations must sell in order to
survive. With this in mind, RAPIC/NPI will be increasing both
its mid-career training and university journalism education
programs.
--Establishing the RAPIC/NPI Far East Program. The Russian Far East
has been a RAPIC priority since 1992, and it has conducted many
programs in the region. Now that the Far East has been
identified under the Partnership for Freedom as one of the
three priority regions in the country, RAPIC/NPI is seeking to
establish a program, based in Vladivostok, that will serve the
media throughout the region, where newspapers are subject to
significant political pressure, prey to corruption and crime,
and hobbled by the continuing state control of capital assets.
As American policy toward Russia enters a new stage, RAPIC is an
ideal American legacy to leave behind. In fact, RAPIC's strategy has
been developed to enable it to take root as a permanent, self-
sustaining NGO promoting the free market and democratic politics
through the media for decades to come.
______
Prepared Statement of the Humane Society of the United States
The Humane Society of the United States (HSUS), this nation's
largest animal protection organization, on behalf of its more than 4.1
million members and constituents nationwide, thanks the members of the
Subcommittee for considering our testimony on funding appropriations
for the U.S. Agency for International Development (USAID).
Although we recognize that USAID can play a constructive role in
international development assistance, The HSUS is strongly opposed to
USAID programs that, in the interest of pursuing development, encourage
consumptive use of wildlife for international markets. Specifically, we
strongly oppose the use of American tax dollars to support programs
that promote or enable international trade in, or trophy hunting of,
endangered or threatened species.
Over-exploitation of wild plant and animal species for
international commercial trade is becoming an increasingly important
factor contributing to the loss of global biodiversity. Each year,
thousands of species of plants and animals and their products are
traded internationally in a marketplace worth billions of dollars. Many
plants and animals in trade are taken from wild populations. Two
familiar examples are the rhinoceros and African elephant. Over the
last two decades alone, 90 percent of the world's rhinos and half of
Africa's elephants have been killed to satisfy demand for rhino horn
and ivory. For some species, including parrots, orchids, cacti,
lizards, fishes and other species, unsustainable trade constitutes the
chief threat to their survival.
The HSUS has learned that USAID funds a number of programs, all in
southern Africa, that encourage and enable consumptive use of wildlife
for international markets. One such program is the Communal Areas
Management Programme for Indigenous Resources (CAMPFIRE) in Zimbabwe,
which is funded through USAID's Natural Resources Management Program.
The program received over $7 million dollars from USAID between 1989
and 1996, and USAID plans to provide another $20 million between now
and August 1999. Through extensive research, made more difficult by
USAID's poor response to our request for documents under the Freedom of
Information Act, The HSUS has learned the following facts about the
CAMPFIRE program:
--CAMPFIRE is based primarily on trophy hunting of African elephants,
a species considered threatened with extinction under the U.S.
Endangered Species Act. A 1995 USAID audit of CAMPFIRE
acknowledged that one of the purposes of the program is the
``establishment of viable wildlife management schemes to
encourage income generation from safaris and hunting.'' USAID
has also acknowledged that they used tax dollars to provide
assistance to two Zimbabwe government officials to attend the
an annual meeting of Safari Club International, where they
represented the Zimbabwe trophy hunting industry. 84 percent of
Americans oppose elephant trophy hunting and the same number
oppose taxpayer dollars being used to promote or enable
elephant trophy hunting. These were the results of a December
1996 nationwide poll conducted by Penn & Schoen Associates,
Inc. Yet, through USAID, taxpayer funds are being used to
promote and enable elephant trophy hunting.
--CAMPFIRE advocates the resumption of the international ivory trade.
The ivory trade caused the continental African elephant
population to plummet by more than 50 percent between 1979 and
1989. In 1989, the ivory trade was banned by the Parties to the
Convention on International Trade in Endangered Species of Wild
Fauna and Flora. The U.S. has opposed the resumption of the
ivory trade since 1989. Yet, through USAID, taxpayer funds are
being used by CAMPFIRE implementing agencies to lobby for the
ivory trade, in opposition to U.S. policy.
--CAMPFIRE has lobbied to weaken the U.S. Endangered Species Act to
make it easier for endangered and threatened species to be
imported to the U.S. for commercial purposes. CAMPFIRE
implementing agencies have misused taxpayer dollars to
facilitate this lobbying.
--CAMPFIRE is environmentally unsound. The methodology used to
monitor wildlife populations is questionable and there a lack
of quantitative assessment of the potential impacts on wildlife
resulting from the project. More elephants are being killed on
CAMPFIRE lands than can be sustained by the population.
--CAMPFIRE implementing agencies, notably the Zimbabwe Department of
National Parks and Wild Life Management as well as the Campfire
Districts are plagued by corruption and mismanagement.
--CAMPFIRE funds have been poorly managed by USAID-Zimbabwe which,
according to a USAID auditor, did not always ensure that
project commodities were properly accounted for and used as
intended. As a result, commodities valued at about $470,000
were not being used effectively.
--CAMPFIRE provides more financial benefits to the implementing
agencies than it does rural villagers.
--CAMPFIRE is not socio-economically sound and has not successfully
involved local people in wildlife management. CAMPFIRE is
driven from the top-down by the Zimbabwe government and the
implementing agencies, not from the villagers themselves. A
consulting firm, hired by USAID to provide a mid-term
evaluation of the program said that such an approach is subject
to collapse once donor funding is withdrawn.
--CAMPFIRE is a waste of taxpayer dollars. Since 1989, USAID has
invested approximately $7 million dollars in trying to make
CAMPFIRE work. For every taxpayer dollar USAID has spent on
CAMPFIRE, CAMPFIRE itself has earned only 52 cents, of which
only five cents reached village households. With no hope for
self-sufficiency, and with villagers receiving comparatively
little financial benefit from the program, CAMPFIRE is a waste
of taxpayer dollars.
--One CAMPFIRE implementing agency, Africa Resources Trust, has been
granted approximately $600,000 per year in American taxpayer
dollars by USAID to open offices in several important capital
cities around the world, including in Washington DC, to
influence national and international policies (including,
apparently, to weaken the U.S. Endangered Species Act and to
lobby CITES Parties for resumption of the international ivory
trade), to produce lobbying documents, to challenge
environmental protection organizations and causes, and to
promote trophy hunting of threatened species in Zimbabwe. USAID
should not be using taxpayer dollars to fund anti-environmental
lobbying activities.
In summary, the HSUS strongly recommends that the Subcommittee
ensure through report language that taxpayer dollars are not used to
promote or enable consumptive use of wildlife for international
markets, specifically for trophy hunting of or wildlife trade in
endangered or threatened species.
In addition, The HSUS believes that the CAMPFIRE program cannot be
reformed to address the concerns we have raised in this testimony.
CAMPFIRE is not environmentally, socially, or economically, or
ethically sound. It is a program that subsidizes trophy hunting,
promotes the ivory trade, and uses taxpayer dollars to lobby for
changes in U.S. laws and regulations. Therefore, HSUS recommends that
funding for the CAMPFIRE program should be immediately terminated. The
HSUS certainly has no objection to helping impoverished people in
Zimbabwe or elsewhere. However, such activities must not promote or
enable consumptive use of wildlife for international markets or provide
taxpayer dollars to anti-environmental organizations who promote such
wildlife use and trade.
Across Africa, people have embraced less destructive means of
living with and profiting from wildlife through well-planned,
community-based ecotourism or community development programs that are
based on development and enhancement of cottage industries that are
unrelated to wildlife. These are the types of projects USAID should be
funding. The are economically and biologically sustainable, and will
help both people and wildlife in the long-term.
______
Prepared Statement of Dr. Raymond E. Bye, Jr., Associate Vice President
for Research, Florida State University
Mr. Chairman, thank you and the Members of the Subcommittee for
this opportunity to present testimony. I would like to take a moment to
acquaint you with Florida State University. Located in the state
capitol of Tallahassee, we have been a university since 1950; prior to
that, we had a long and proud history as a seminary, a college, and a
women's college. While widely-known for our athletics teams, we have a
rapidly-emerging reputation as one of the Nation's top public
universities. Having been designated as a Carnagie Research I
University several years ago, Florida State University currently
exceeds $100 million per year in research expenditures. With no
agricultural nor medical school, few institutions can boast of that
kind of success. We are strong in both the sciences and the arts. We
have high quality students; we rank in the top 25 among U. S. colleges
and universities in attracting National Merit Scholars. Our scientists
and engineers do excellent research, and they work closely with
industry to commercialize those results. Florida State ranks seventh
this year among all U. S. universities in royalties collected from its
patents and licenses. In short, Florida State University is an exciting
and rapidly-changing institution.
Mr. Chairman, as you are aware, the major challenge facing the
economies of the Caribbean Community (CARICOM) and Eastern Caribbean
(OECS) States is learning to survive in the era of trade
liberalization. Lawyers specializing in international trade issues are
relatively few, and legal commentary relating to the general issues of
trade liberalization arrangements and application of these issues to
the CARICOM and OECS countries is relatively sparse.
The Caribbean States have been strengthening intra-regional trade
through CARICOM and other initiatives for several decades. The
Caribbean Law Institute (CLI), a joint project between Florida State
University and the University of the West Indies, has played an
important role in this process through its law reform efforts. CLI was
formed to promote the reform and harmonization of commercial laws in
the Commonwealth Caribbean. As a result of this activity, company
legislation has been passed in Trinidad and Tobago, St. Vincent,
Grenada, Antigua, Dominica, and St. Lucia.
Mr. Chairman, this Subcommittee has been highly supportive of
Florida State University's efforts in this important area. Last year,
report language supporting our discussions about our Caribbean Law
Institute were most helpful in our proposal to USAID. With that
proposal in its final phase for funding, and with the work of FSU's
Caribbean Law Institute noted in the fact sheet and communique from the
Caribbean Summit, I wanted to express my appreciation for this
Subcommittee's efforts and support.
The Caribbean Law Institute is currently focusing on providing
model legislation as a basis for harmonization of laws relating to
intellectual property. Intellectual property legislation is important;
not only to protect domestic products from piracy and domestic markets
from unfair competition, but also to assure reciprocal protection of
intellectual property internationally and to enhance the status of
Caribbean countries as trace and investment partners. In addition,
intellectual property protection has taken on a special dimension in
the light of developments in computer and electronic technologies--both
hardware and software--and in the liberalization of trade in services.
The CLI is working closely with the Caribbean and Latin American
Bureau of the U.S. Agency for International Development to provide
assistance to the Caribbean nations on standardizing legislation
related to international trade. The areas being discussed cover three
additional project areas related to international trade in the
Caribbean region: trade in services, antidumping, and trade-related
investment measures. In addition, the intellectual property component,
which is being discussed with the Global Bureau of US AID, would
provide similar legal analyses in this important area as well. It is
expected that the overall goal for all four areas--producing model
legislative bills--will be accomplished by December 31, 1998.
This type of international trade project--and its support by
USAID--means new trade and economic opportunities for the Caribbean
States and, more importantly, new trade and enhanced economic
opportunities for American citizens and businesses. The ability to
trade with new partners because of standardized legislation--
legislation that is consistent with U.S. statutes--is a major economic
benefit for the U.S. This is a very productive and effective way to
utilize our tax dollars.
I commend this Subcommittee for its support of this specific
project, and I strongly encourage broader support for these kinds of
economically-beneficial investments by USAID. Thank you again for your
continued support.
______
Prepared Statement of Ambassador Robert O. Blake, Chairman, Committee
on Agricultural Sustainability
I am Bob Blake, Chairman of the Committee for Agricultural
Sustainability. The Committee is a coalition of fifty American
organizations working to eradicate hunger around the world, a goal
which we believe is in the highest American humanitarian tradition and
national interest. The failure of the United States and other countries
to recognize the frightening dimensions of the fight against hunger is,
in our view, truly alarming. Hunger must be attacked vigorously and
quickly. We believe the most effective way to combat hunger is not
principally through food aid, as important as that often is. Rather it
must, in no small part, be through helping farmers in the developing
countries grow more food to feed their families and fellow countrymen.
This is especially important in countries that not only do not produce
enough food, but also do not generate enough dollars to import the food
they need. As global populations balloon, the number of countries that
don't generate enough foreign exchange to cover their food production
shortfall is increasing. Somewhere around 100 developing countries now
fit this description--some by a large amount, some less so.
We believe that the United States has a special interest in helping
these countries help themselves to combat hunger. Some such support is
already being given by the United States through several development
agencies--principally the United States Agency for International
Development (AID), the World Bank, and the regional development banks.
But much more must be done if we are to do our full part in defeating
hunger. And that is why our committee urges Congress to appropriate
$2.4 billion to AID for development assistance as requested by the
President, and to designate at least $500 million of this sum for
international agricultural and rural development. We also urge Congress
to appropriate $1.04 billion to fulfill the U.S. pledge to the World
Bank's International Development Association (IDA) plus $220.6 million
for the regional development banks. But before I explain our reasoning
for supporting the appropriation of these funds, I want to tell you
about our committee.
The Committee on Agricultural Sustainability which I chair is made
up of fifty organizations, many of which have a considerable number of
members among citizens of your own state. These are scientific,
religious, environmental, and educational groups with a combined
national membership of some seven million people. Our committee is
totally non-partisan. We concentrate on promoting global food security,
agricultural sustainability, and rural development in the countries of
``the South''. We receive no funding from any development agency or
company.
Prior to my becoming chairman of the Committee on Agricultural
Sustainability, I spent thirty years in the United States Foreign
Service including service as ambassador in top-level positions in the
Department of State and U.S. embassies abroad. I served under seven
presidents, Republican and Democrat. In several of my overseas posts I
had responsibility for, and therefore saw at close hand, rural
development programs, particularly those of AID and the World Bank.
why our committee supports collaboration with developing countries
Mr. Chairman, most of what I have to say today will address how we
believe the United States can help developing countries combat hunger.
But first I want to explain why we should care enough about doing so to
advocate spending scarce U.S. taxpayers' money for this purpose. It has
no doubt become as obvious to you as it has to me that with each
succeeding year, the United States and every other country in the world
are becoming more interdependent. The prosperity and well-being of our
friends and trading partners is becoming increasingly important to our
own prosperity. Their ills--hunger, sickness, drugs--all too soon
become our ills. Combating these ills must increasingly be major
elements in U.S. foreign policy. But there is a brighter side to this
growing interdependence: the prosperity of our friends and allies
clearly promotes our own prosperity--through trade and jobs for
Americans.
All this means we must pay more and more attention to the rapidly
growing developing countries of Africa, Asia, and Latin America. They--
not the countries of Europe--are the source of most of the problems
I've just cited. They will be the principal source of illegal
immigration to our country, and this can only increase if their poor
and their politically oppressed cannot build decent futures in their
own countries. On the other hand, their huge and growing number of
consumers constitute the biggest future market for our farmers' and
manufacturers' products. In the next decades ninety percent of the
world's population will be in the developing countries of ``the
South''. In ten years, developing countries' trade with the U.S. has
tripled, with much of this growth in countries where successful
agricultural development has through recent decades been the engine
that has jump started broader economic development and in turn trade
with our own country. Infinitely more opportunities for growth in U.S.
trade and investment lie ahead in those countries.
But increased trade is not the only interest at stake. Why should
we give special thought and priority to hunger and rural development in
the developing countries? Why should we care whether the hungry of
Africa, Asia, and Latin America can feed themselves? Can't they just
buy U.S. corn and wheat? Of course, many do. But they are the lucky
ones who have the necessary dollars or other hard currency to pay for
our agricultural products. Unfortunately, too many of the countries
with large numbers of hungry people don't have the dollars. For them,
the options are to rely on food aid (increasingly an unrealistic option
when such big food shortfalls are involved), grow most of their own
food, or migrate to someplace where they can feed their families.
What I've just said, however, does not begin to capture the
dimensions of the potential hunger crisis the world faces--and
therefore the urgency, from the viewpoint of U.S. interests, of taking
effective and early action to head it off. How does this urgency arise?
First and foremost, from the world's unprecedented population growth
and from the worrisome deterioration of the soils and the growing
scarcity of the water needed for expanded agricultural production. Mr.
Chairman, if there is one point I want drive home today it is this: it
is now generally agreed that the world must double food production in
twenty-some years in order to meet global population growth from 3.8
billion people to 5 billion people and in order to meet demand of the
growing middle class in the developing countries for more and better
food--principally meat, eggs, poultry, dairy products--all foods that
require huge quantities of feed grain to produce. And not only must
food production be doubled, it must be doubled on less land and with
less water: on less land because very little untilled and arable land
is left and because about a third of the land being presently farmed
has lost much of its productivity from erosion, salinization, and water
logging; with less water because more and more, farmers are having to
share finite water supplies with rapidly growing cities and industries.
For a few decades, farmers from the United States, Europe, Canada,
Australia, and Argentina can probably produce enough to cover food
deficits in countries that can pay for agricultural imports. But the
number of countries that can't pay is projected to increase. The
situation is particularly worrisome in strife-torn sub-Saharan Africa.
Already, most of these countries cannot feed their citizens from local
production and are having real difficulties in filling the gap with
imported food. Alarmingly, hunger is growing in Africa even in peaceful
times, even in years when rainfall is good. I found this to be the case
in Mali during the nearly three years I was there as Ambassador. Add
bad weather and poor soils to the shocks of civil war and ethnic
tension--particularly in the times for planting or harvesting--and you
have the formula for famine.
Another part of the world where agricultural production is
predicted to fall behind population growth unless agricultural
productivity is raised very substantially is South Asia--Pakistan,
Bangladesh, Nepal, Sri Lanka, and particularly India. And China--with
its record for huge crop failures--could in time be in the same
situation. These are countries which taken together have more than half
the world's population. Experience shows that food insecurity is a root
cause of both disorder and suffering. The threats from food riots that
spark political instability and from mass migration arising from famine
must not be taken lightly. Food insecurity has already been a major
factor in several recent breakdowns of governments in Africa. We can't
afford not to fight to prevent such results. In addition to our moral
compulsion to fight hunger, we need the cooperation of developing
countries in combating drugs and crime, and in controlling threats to
the global environment.
I want to emphasize, Mr. Chairman, that as serious as these
problems are, our committee does not take a ``gloom and doom'' approach
to the possibilities of defeating hunger. The world already knows how
to defeat hunger. The political cure is to mobilize the resources that
can do the job. The scientific cure is to develop the technologies that
will make this possible. Make no mistake, the United States--our
government, our universities, our scientific institutions, and our
great private organizations--can make a critical difference in bringing
this about, and do so at a relatively low cost.
whose job is it to fight hunger?
Of course, we recognize that AID, the World Bank, or any outside
group can in no way do the whole job. Urgent and effective action by
the governments and the peoples of the developing countries concerned
is the precondition to success. They must make the political decisions,
mobilize most of the investments, and take the inevitable risks. And
most of all, they must support what will have to be a major
reorientation of their country's agriculture.
What, then, can and should we in the United States and others in
the industrial countries do to fight hunger in time to prevent
avoidable tragedy? What must be done to head off the need for massive
humanitarian relief to prevent starvation? I will suggest five
principal areas where our committee is convinced that key developing
countries and people can be given absolutely essential and locally
unavailable help--help which will allow them to make the massive
transformation of doubling food production on less land and with less
water.
But before going into detail, I want to make two points. The first
is to answer the question of why we advocate investing American money
in the fight against hunger instead of leaving solutions to ``the
market'' and private enterprise. Our answer is quite straight forward:
we do believe in leaving economic solutions to the private sector
whenever and wherever this is realistically possible and whenever this
will lead to an equitable outcome for rural people. We recognize the
need to move a maximum number of small-scale farmers (which now
constitute the vast majority of the world's farmers) out of the
subsistence or near-subsistence mode and into the market as quickly as
possible. Poor farmers in India get their best chance to provide food--
and income to buy food--when they are helped to produce to meet rising
demand, then get their products to the market. But for geographical,
historical, and economic reasons, agriculture in food deficit areas is
largely the province of small-scale farmers. In fact, the number of
places in these largely tropical countries where large or even medium-
scale mechanized agriculture exists is very small. Moreover, where it
does exist much of it is dedicated not to the production of food for
local consumers, but to the growing of tropical products for export--
coffee, tea, palm oil, pineapples, coconuts. In the view of well-
informed American entrepreneurs this is unlikely to change, and for one
principal reason: it's hard to realize a good enough return on
investments in the production of food for relatively poor consumers,
when investors can earn more elsewhere.
This inevitably leaves, at least initially, most of the improvement
of small-scale agriculture to the not-for-profit sector--development
agencies, international research centers, and non-governmental
organizations (NGOs). American organizations like Catholic Relief,
CARE, Save The Children, World Neighbors, World Vision and many others
do amazing work in this field. But their experience leads them to
believe they cannot be expected to expand sufficiently to help meet the
rural development challenges of the dimension I've suggested with just
the funds they raise from generous private givers, let alone finance
all their other very worthwhile activities.
Another point that I ask you to think about is the degree to which
almost everything we suggest for financing by public monies involves
capacity building--training, institution-building, education, and the
diffusion of technology. We want to be in the ``teaching people how to
fish'' business, as opposed to just ``giving them fish'', as has been
done in the past. This is an area of American strength. Our
universities, our scientific organizations, are by tradition outwardly
oriented and quite experienced in the communication of ideas and
technologies--including very especially through the Internet. We have
also been pioneers in bringing women into the development process more
intimately. This is especially important in rural development, for
women today make up a majority of the farmers in developing countries.
how our committee proposes that americans attack hunger
How, then, does all this translate into an American agenda for the
fight against hunger? As I indicated, I will suggest five areas for the
concentration of American efforts directly through AID or through
international development agencies: 1. expanding and improving
agricultural research; 2. helping farmers apply this research in ways
which will increase production and better manage their soils and water;
3. helping provide farmers with the infrastructure needed to move their
products to profitable markets; 4. helping reform developing country
policies that hold back rural development; and 5. helping build the
kinds of democratic civil societies that will promote and politically
sustain all these efforts. This is a pro-active, forward-looking, and
admittedly ambitious agenda. However, it is one that our committee
believes to be realistic and financially sustainable--for AID, the
World Bank, the regional banks, and the other smaller development
agencies and groups supported in whole or part by Congressional
funding.
Of course, working in the five areas I just listed is not all that
AID and the international institutions we support should be doing to
fight hunger. We of course strongly support emergency food aid in
places where we have not succeeded in preventing hunger; likewise, no
program for increasing food production is likely to be sustainable
unless the populations of the developing countries stabilize in the
decades ahead. That is why our committee strongly supports investment
by AID and the World Bank in voluntary family planning. In the same way
we also support programs by AID and the development institutions to
improve and expand educational opportunities and health services,
particularly rural education and health services, and even more
particularly for women and girls. Healthier and better educated rural
people must be the base for not only controlling population growth, but
also for realizing the technologically complex reorientation of
agricultural development that will be necessary. And improvements in
the lives of rural people in the developing countries will be
undermined unless the total ecological health of the forest, the river
basins, and the sea coasts is sustained. That is why we strongly
support the environmental programs of AID, the World Bank, and the
regional development banks. I will not, however, speak about any of
these programs in any detail because sister organizations specializing
in these areas are testifying about them.
What this short list suggests is that there are many interconnected
facets in the war against hunger--the fight against rural poverty, the
fight against environmental degradation, the fight for democracy and
greater rural equity. They all add up to a fight to improve the well-
being of rural peoples and their urban consumers. In our view,
agricultural sustainability, food security, and rural welfare are links
in the same chain. Why then does this testimony put so much emphasis on
the importance of the farmer as the key actor in the fight against
hunger? Why do we place such importance on finding ways to raise
farmers' productivity and intensify food production? Because we believe
this is the key stone in the arch. Because we believe that without
sustainable intensification of food production, famine looms ahead for
millions more poor people.
agricultural research
Now to the five areas that our committee thinks should have greater
priority. First, agricultural research. I've already suggested that any
intensification of production and better protection of the land, water,
and plants on the scale required today must be science-based and
farmer-tested--science based, because the food plants and production
systems available today are, by most scientists' estimates, not
numerous enough and productive enough for the job ahead; farmer-tested,
because farmers will accept advanced technologies only if they find
them profitable and within the limitations of their labor. Past
rejections of agricultural technologies developed by agricultural
scientists were largely the result of farmers' unwillingness to adopt
them. Today, scientists recognize that the only sure way to avoid this
is to involve real farmers in the planning, testing and adaptation of
their research.
Much remains to be done in agricultural research. Today's pipeline
of technologies could too quickly dry up unless better nourished.
Likewise, every effort must be made to preserve and better utilize the
fast disappearing genetic resources on which crop improvement--in the
United States as well as in the developing countries--depends. That is
why we believe that in the next few years, the world must at least
double its investment in agricultural research in the developing
countries. This is all the more urgent because it normally takes ten to
fifteen years from the planning of agricultural research to the
adoption of its results by an economically meaningful number of
farmers.
How does all this translate into U.S. action? First, we should
increase our support for the international agricultural research
centers operating under the aegis of the Consultative Group of
International Agricultural Research (CGIAR) plus a few other highly
successful international research efforts--the International Fertilizer
Development Center in particular. The United States Government--under
both Republican and Democratic presidents--and two great U.S.
foundations were largely responsible for the establishment of these
centers. The U.S. was formerly the CGIAR's largest financial supporter.
With decreasing AID budgets, however, that has had to change.
Recognizing the importance of these centers, AID is projecting
increased support for them in the coming year. But that increase will
be far from what is needed in the years just ahead.
Fortunately, the World Bank has been willing to take the place of
the U.S. as the principal financial supporter of the CGIAR. And, more
and more the Bank is integrating the CGIAR centers' research results
into its rural development programs. The Inter American Development
Bank and the other regional banks are playing a lesser role; we are
urging them to do more for and with the CGIAR.
Another urgent need is to strengthen the national agricultural
systems of the developing countries which together provide 95 percent
of the developing world's agricultural scientists. The United States,
formerly the leader in helping strengthen the national systems, now
does much less than the World Bank. Strengthening the national research
systems is necessary precisely because qualitatively and quantitatively
the international centers cannot take on all the tasks of adapting
successful agricultural research to all the agro-ecological situations
that farmers in developing countries face. The national research
systems must take on the largest part of this load. A growing number of
willing not-for-profit, production-oriented non-governmental groups is
beginning to do more in this regard. AID has to some extent helped to
strengthen NGO capacity for this work. But it can and should do much
more. The United Nations Development Programme has also supported NGOs
engaged in agro-ecological research--not the least CLADES, an
especially active and talented group of Latin American NGOs.
Still another tier of support for agricultural research, a largely
American-financed approach, is through the American land grant
universities and AID's Collaborative Agricultural Research Programs
(CRSPs). As many members of your Committee know, each of the CRSPs
attacks a particular area of concern--soils, integrated pest
management, or sorghum and millet, for example. The CRSPs are basically
teams formed by research people from several American universities and
non-governmental organizations. Together they set up a program for
collaborating with research colleagues in one or more developing
countries, and with the international agriculture research centers and
the farm communities working on the same problem. The skill and
ingenuity of the CRSPs in helping developing country farmers raise
their productivity is an important asset that deserves special support
from your Committee and the Congress in general.
I should add that U.S. support for international agricultural
research has had a high pay off for American agriculture in terms of
sturdier and more productive food plants for the American farmer. If
you consider U.S. investment in the CGIAR system alone, for every
dollar invested by AID, American agriculture has enjoyed roughly a 40
percent, and sometimes over a 100 percent return.
helping farmers find better ways to produce and prosper
The second part of the strategy to defeat hunger that our Committee
supports is work to help farmers adopt--and adapt--to their own farm's
plants and production systems that fellow farmers have tested and found
useful. It's not enough for scientists in a lab to come up with a
better way to grow corn, if the farmers don't buy into that technology.
Farmers must be convinced that suggested changes proposed by others are
doable and will not threaten their carefully developed ``failsafe''
systems designed for times of hunger. So far, none of the development
institutions has as yet done enough in bringing farmers--particularly
women farmers--into the adaptation process. In theory, the developing
countries' ``extension'' services should do the job. But in practice,
most are weak, under-funded, and have too little interest in the small-
scale farmer. The World Bank has tried--not always successfully, we
believe--to build more efficient national extension services. It is now
changing its approach to build more from the bottom up. We hope they
will go further.
We are also encouraging the World Bank and AID to do much more to
bring the private sector--small businesses and a growing number of
NGOs--into their strategies for helping the farmers adapt the best
research. A number of the leading American relief and development
organizations--CARE, Catholic Relief, Save The Children, World
Neighbors, World Vision, to name a few--are already doing a remarkable
job in helping organize farm communities for the many tasks of
agricultural development. We continue to urge AID and the World Bank to
seek out such organizations and their developing country allies as
partners in rural development.
better rural infrastructure
The third element of our strategy to defeat hunger is helping to
provide farmers in the developing countries with the basic
infrastructure needed to move their products to profitable markets.
Increased production is to no avail if farmers cannot sell their crops
profitably. This requires at least adequate rural infrastructure:
primary and secondary roads; storage; market places; facilities to
convert their crops into value-added products; rural credit; water and
irrigation systems; and, on a different level, information about market
opportunities and help in presenting agricultural products in ways that
make them competitive. Some kinds of infrastructure are expensive,
particularly the construction and maintenance of all-weather roads. AID
is largely out of this business, except for helping with the building
of some secondary roads. But appropriately the World Bank, the Inter
American Development Bank, and the other regional banks are heavily
involved. And interestingly, some of the big U.S.-private voluntary
organizations, usually working through local sister organizations, are
also beginning to help farmers build not only secondary roads, but also
storage facilities and markets.
The U.S. ``public foundations''--particularly Appropriate
Technology, Incorporated, and the InterAmerican Foundation--have been
very successfully involved in helping farmers organize to process their
crops, as have NGOs like World Vision. They and their local allies
deserve more support from AID, the World Bank, and the development
banks.
better rural policies
The fourth pillar of the fight against hunger is reform of
governmental policies and institutions hurtful to rural development
and--the other side of the coin--the establishment of policies that
will promote agricultural sustainability, rural prosperity and rural
equity. Few indeed are the developing country governments that don't
show a big anti-rural bias. There are several reasons for this:
agriculture is not considered ``modern''; governments decide they have
higher priorities; and earlier experience with agricultural development
may not have been that happy. But in my view, the most important reason
is that rural people seldom have the political power to force attention
to their problems. There are exceptions--India, for example. In
contrast, in country after country city dwellers are usually able to
command the attention of political leaders because leaders depend on
them to stay in power.
Both AID and the World Bank have for over several decades been
engaged in providing advice and funding for policy reform. They have
with varying degrees of success helped in securing the abolition of
inefficient and expensive state-run agricultural enterprises and of
price controls that punish farmers. AID and the World Bank have also
provided governments with useful technical advice in such areas as
trade liberalization, agricultural subsidies, and land tenure. Just a
few years ago, both AID and the World Bank provided a considerable
amount of funding to finance reform through structural adjustment
programs. The World Bank and the International Monetary Fund still do.
In the past, too many structural adjustment programs tended to penalize
rural people and poor people in general by cutting back the few
services governments had offered them and by too quickly or too
drastically cutting subsidies on fertilizers and other inputs.
Fortunately, the Bank is becoming more sensitive to the need to avoid
reforms that hurt the poor.
While important changes in rural policy have been made in a number
of countries, rural reform still has a long way to go. AID and
particularly the World Bank can and must use their leverage to bring
about policies that are more equitable and more efficient for the poor
and for rural people. In AID's case this largely involves technical
assistance and institution building.
stronger and more democratic civil societies
Our fifth priority in the fight against hunger is to encourage and
help developing countries to strengthen their civil societies in ways
that will promote and politically sustain attention to the needs of the
poor and especially to the needs of the rural poor. We believe that in
many subtle ways defeating hunger will depend on the political
empowerment of rural people. It is absolutely critical to ensure that
they get their fair share of government services. Rural people must
also be given a voice--a deciding voice--in planning and implementing
programs that affect their lives. And urban leaders must also be helped
to see how their own interests will be served in helping poor rural
people to realize their potential. Of course, rural empowerment should
be only one part of broader programs for democratization.
All such programs can only be built by the people of developing
countries and must reflect their values. Even low-key and indirect
political intervention by outsiders in the governance of any country
must be managed tactfully. Nevertheless, we believe that the United
States must use its leverage and influence to bring autocratic and
corrupt governments to change their ways. If this is not possible,
neither the United States nor the development banks should waste
precious resources on such governments. The World Bank for its part
seems determined---correctly we feel---not to loan funds to corrupt
governments and is, through its programs for institution building,
increasingly emphasizing democratic values.
The United States has taken the lead in the fight to strengthen
civil societies. For the most part these programs are modest and cost-
effective. Congress established the National Democratic Institute and
the International Republican Institute precisely, as AID says, to help
developing countries ``build stable democracies...that have an active
civil society.'' Our committee supports the work of these institutions
but urges that more attention be paid by them to promoting rural
democracy.
a special aid program for africa
Finally, a word about Africa, as the problems on that continent
have long been of special concern to members of your Committee. Our
committee urges congressional support for AID's new initiative called
``Promoting Food Security: Africa & Beyond'' This is planned as a ten-
year program to promote African food security and to help head off
costly food crises. The proposed first year budget is $30 million. It
is targeted at addressing major bottlenecks in agricultural policy,
technology, rural infrastructure, and human and institutional
development. In the first year the funds will be used in five
countries--Ethiopia, Uganda, Mali, Malawi, and Mozambique--and will be
carried out by a variety of organizations, including U.S. and local
private voluntary groups, U.S. universities, and the CGIAR centers
working in Africa. We have urged AID to work closely with the World
Bank in its African programs since the Bank's African programs are--or
can be--much larger and more comprehensive. We believe this initiative
is a good one and deserves your Committee's support.
the need for greater cooperation between aid and the world bank
I should note here that I have spoken of AID and the World Bank as
if the two institutions were providing somewhat equal support for rural
development. This is quite obviously not so. If Congress meets the
Clinton Administration's funding requests, AID will at best be able to
invest somewhere around $500 million in rural development. Compare that
with the $2.6 billion that the World Bank, working through the
International Development Association, plans to invest in rural
development in the year beginning next July 1. This represents a
substantial and much needed increase in the Bank's investment in
agriculture (and normally results in leveraging five times as much
investment by others). The Bank's president, Jim Wolfensohn, has
continually emphasized that a huge percentage of the poor of developing
countries are rural people. Further, this increase reflects the thrust
of the World Bank's excellent rural development strategy that was
recently approved by the Bank's Board of Directors. If--as we believe
it will--the Bank is able to implement this strategy aggressively--in
no small part due to Congress' willingness to honor U.S. pledges to
IDA--the World Bank will remain by far the largest contributor to the
global fight to defeat hunger. This in no way means that AID's
contribution is not important. AID and, through AID, the U.S.
universities and American private voluntary organizations have
unparalleled experience in rural development and continue to be leaders
in breaking new ground that makes rural development more effective and
more equitable.
the urgent need to invest in the fight against hunger
All this being said, our committee must emphasize our belief that
nowhere near enough U.S. resources are being devoted to the fight
against hunger. At current levels, neither the humanitarian nor the
security interests of Americans are being well served by the paucity of
our efforts. We must emphasize once again the urgency and the
difficulty of doubling food production in two to three decades, and
doing so with less land and less water. We call on your Committee--and
the Congress as a whole--to take a hard look at the stark dimensions of
this challenge. We recognize that the developing countries will, as we
have said, have to make the most of the required investments. But most
desperately need help.
The United States can and should provide much greater leadership in
the fight against hunger. True, U.S. representatives along with the
leaders of 181 national governments assembled at the ``Food Summit''
held in Rome last November did at least recognize the urgency of the
fight against hunger by pledging to reduce the number of hungry people
by one half by the year 2015. But while halving the number of hungry
people may be a good start, it is not nearly good enough. To our
committee it is shocking that world society seems willing to settle for
this. What about the other half of the hungry? What about the nine
hundred million people who now go to bed hungry? And how can we achieve
even this lower standard, Mr. Chairman, unless every nation, every
organization that has a stake in fighting hunger does a lot more--and
quickly? As we have said time and again, the United States can and must
be a leader in that fight. All that is why we call on the Congress,
beginning with your Committee, to take a hard look at the problems of
food security and to begin this year by designating at least $500
million for AID's investment in rural development, and by appropriating
$1.04 billion for the World Bank and $220.6 million for the regional
development banks.
______
Prepared Statement of Rotary International
The Rotary Foundation of Rotary International is grateful for this
opportunity to submit written testimony in support of the polio
eradication activities of the U. S. Agency for International
Development.
Rotary International is a global association of 28,000 Rotary
clubs, with a membership of 1.2 million business and professional
leaders in 155 countries. We are the world's first service club, having
been established in Chicago in 1905. In the United States today there
are more than 7,400 Rotary clubs with some 400,000 members. All of our
clubs work to promote humanitarian service, high ethical standards in
all vocations and international understanding.
Rotary is submitting this testimony on behalf of a broad coalition
of child health advocates, including the American Academy of
Pediatrics, the Task Force for Child Survival and Development, the
March of Dimes Birth Defects Foundation and the U.S. Committee for
UNICEF, to seek your support for the global program to eradicate polio.
Rotary and our coalition would first like to express our sincere
gratitude. A year ago we made the case for increased funding for the
Polio Eradication Initiative. You responded enthusiastically,
recommending that $25 million be channeled through the U. S. Agency for
International Development for the delivery of polio vaccine and the
development of the infrastructure necessary to implement the program.
progress in the global program to eradicate polio
We would like to use this opportunity to inform you about the
extraordinary progress toward eradicating polio that has been achieved
during the past twelve months:
--Some seventy-five countries conducted National Immunization Days in
1996, taking extra measures to protect over 450 million
children against polio--more than one half of the world's
children under the age of five.
--Preliminary indications are that reported polio cases for 1996 will
be only half that of 1995--from 7,000 to approximately 3,500.
This dramatic one-year decline is due to the tremendous success
of National Immunization Days (NIDs) in South Asia and Africa.
--During its second year of NIDs, India was able to immunize 113
million children on one day in December 1996, and over 123
million on January 18, 1997--the largest single public health
event in history. India's tremendous success provides more
evidence that ``Target 2000'' is a reachable goal. Pakistan and
Bangladesh coordinated their NIDs with India's to achieve the
maximum effect over the entire region.
--Twenty-eight sub-Saharan African countries conducted National or
Sub-National Immunization Days during 1996 and the first months
of 1997, as part of the continent-wide ``Kick Polio Out of
Africa'' campaign, reaching nearly 70 million children. Forty-
nine African countries have agreed to undertake NIDs in 1997-
98.
--The third year of the ``Operation MECACAR'' immunization campaign
is currently underway. This three-year campaign is designed to
virtually eliminate polio from 19 contiguous countries
stretching from the Middle East to Russia.
--As a result of three years of successful NIDs, China reported no
laboratory-confirmed indigenous polio cases in 1995. Reported
polio cases in the Western Pacific are confined to the Mekong
Delta and the region of China bordering Myanmar. The entire
region has started on the process of certifying polio
eradication.
the role of the u.s. agency for international development
USAID was one of the driving forces behind the eradication of polio
in Latin America and the Caribbean. Since the certification of polio
eradication in the Americas in 1994, AID has turned its attention to
the polio-endemic countries of Africa and Asia, and to finding ways to
use American expertise to enhance immunization services globally. A
major breakthrough was the development of the heat-sensitive vaccine
vial monitor, which will save $10 million annually by reducing vaccine
wastage. AID developed the monitor in conjunction with a private US
firm, at the request of World Health Organization and UNICEF, and it is
now in place on every vial of oral polio vaccine produced world-wide.
In April 1996, with the support of the 104th Congress and in
response to the strong urging of your Subcommittee, AID launched its
own Polio Eradication Initiative, to coordinate agency-wide efforts to
help eradicate polio by the year 2000. Congress directed $20 million
for AID's polio eradication efforts in fiscal year 1996, and increased
that amount to $25 million for fiscal year 1997. Here are some of the
reported results of AID's Polio Eradication Initiative to date:
Fiscal year 1996
--AID's technical and programmatic expertise were critical to the
success of India's 1995-96 and 1996-97 National Immunization
Days. AID, through grants to UNICEF, WHO, and Rotary, has
helped support India's cold chain, surveillance, training, and
social mobilization efforts. Nepal and Bangladesh have
benefited similarly over the past year.
--AID provided nearly $2 million for polio eradication activities in
Egypt.
--In fiscal year 1996, AID allocated nearly $10 million for the polio
eradication initiative in sub-Saharan Africa. AID's support,
through its grant to WHO and its African Missions, was critical
to the success of NIDs in 16 countries. Activities focused on
three priority areas: social mobilization, planning and
training, and cold chain.
--AID has supported the 1996-1997 NIDs in Russia and four Central
Asian Republics by providing technical assistance to more
effectively manage issues of vaccine supply, storage and
delivery, improving sustainability and reducing vaccine
wastage.
Fiscal year 1997
--For fiscal year 1997, AID will increase funding for the Polio
Eradication Initiative in Africa to nearly $16 million. These
funds will flow through WHO and UNICEF for country-level NID
support and strengthening disease surveillance systems.
--In 1997, AID is programming nearly $4 million to support India's
third year of NIDs and enhance nationwide surveillance.
--An additional $5 million is to be programmed through USAID's
Washington office, after discussion with partner agencies to
determine where needs are greatest.
eradicating polio will save the united states at least $230 million
annually
Even though there has not been a case of endemic poliomyelitis in
the United States since 1979, we cannot be complacent. Our children are
not protected from polio unless the entire world is free of polio. If
we succeed in eradicating polio by the target year 2005, no child will
have to be immunized against polio ever again. The United States
currently spends at least $230 million annually to immunize its
newborns against polio, a disease no longer occurring naturally
anywhere in the Western hemisphere. This figure is expected to rise as
the U.S. switches from an immunization program using inexpensive oral
polio vaccine (OPV-Sabin vaccine) to one based on the higher-priced
inactivated polio vaccine (IPV-Salk vaccine). Globally, over 1.5
billion US dollars are spent annually to immunize children against
polio. This figure does not even include the cost of treatment and
rehabilitation of polio victims, nor the immeasurable toll in human
suffering which polio exacts from its victims and their families. Once
polio is eradicated, tremendous resources will be unfettered to focus
on other diseases.
Humankind is on the brink of a historic opportunity. Poliomyelitis
is the second major disease in history that is close to eradication.
The case to invest in polio eradication is compelling. We celebrated
the eradication of smallpox in 1979. No child in the United States or
in the world will ever suffer from smallpox again. The annual global
savings of nearly $1 billion per year in smallpox disease and control
costs far exceeds the approximately $300 million that was spent over
ten years to eradicate smallpox. The United States was a major force
behind the successful eradication of the smallpox virus, and has
recouped its entire investment in smallpox eradication every 2\1/2\
months since 1971.
In 1988 and again in 1993, the member nations of the World Health
Assembly, including the United States, affirmed their commitment to
eradicate polio by the year 2000 and to achieve certification of
eradication by the year 2005. But even with these great intentions and
with the tremendous reduction of polio cases being achieved in many
countries, there is concern that other more pressing demands will
divert attention and funding from this program. If we hesitate in our
commitment to eradication, we will lose momentum and risk substantial
setbacks in the fight against the polio virus, including the risk of
re-introducing the wild polio virus into North or South America. The
risk of virus importation remains high, particularly when routine
immunization levels are allowed to fall below acceptable levels.
eradicating polio will help develop the infrastructure needed to fight
other diseases
Investing in polio eradication means helping countries to develop
the public health and disease surveillance systems necessary to
effectively implement the WHO-recommended polio eradication strategies.
Not only does a strong surveillance system help eradicate polio, but it
helps to control the spread of other infectious diseases. Already, much
of Latin America is free of measles, due in part to improvements in the
public health infrastructure implemented during the war on polio. The
campaign to eliminate polio from communities has also led to increased
public awareness of the benefits of immunization, creating a ``culture
of immunization'' and resulting in higher immunization rates for other
vaccines.
resources needed to finish the job of polio eradication
Although most of the costs of polio eradication efforts are borne
by the governments of polio-endemic countries themselves, the World
Health Organization estimates that at least $140 million in special
contributions per year, for the next four years, is needed to help
polio-endemic countries carry out the polio eradication strategy. We
are asking that the United States continue to take the leadership role
in meeting this shortfall.
The United States' commitment to polio eradication is stimulating
other countries to increase their support as well. We are not
requesting an increase in US funding for polio eradication this year
because we strongly believe that as the developed nations of the world
will gain the greatest financial benefits of polio eradication, so must
they share its costs. The US commitment to meet over fifty percent of
the global shortfall is sending a strong message that America cares
about the health of the world's children, and is challenging other
countries to follow its lead. Belgium, Canada, Finland, France, Italy,
Norway, Sweden and Switzerland are among those countries which have
followed America's lead and have recently announced grants for polio
eradication campaigns in Africa, Eastern Europe, and South Asia. Japan
and Australia have been and will continue to be major donors in
Southeast Asia and the Western Pacific. And both Denmark and the United
Kingdom have recently made major grants that will virtually guarantee
that India eradicates polio by the target year 2000.
Rotary International has been working for more than a decade to
help eradicate polio from the world, and the end is in sight. This has
been one of the largest private/public sector initiatives ever
organized. By the time polio has been eradicated, Rotary International
will have expended nearly $400 million on the effort, making it the
largest private contribution to a public health initiative ever. Of
this, $277 million has already been allocated for polio vaccine,
operational costs, laboratory surveillance, cold chain, training and
social mobilization in 118 countries. More importantly, we have
mobilized tens of thousands of Rotarians to work together with their
national ministries of health, UNICEF and the World Health
Organization, and with health providers at the grassroots level in
thousands of communities. Together with our partners, we have achieved
some remarkable successes. The reported number of cases worldwide has
decreased from over 38,000 cases in 1985 to an estimated 3,500 cases
for 1996--a decline of over ninety percent! The attached chart depicts
this dramatic progress.
fiscal year 1998 budget request
For fiscal year 1998, we are again requesting a $25 million earmark
for global polio eradication in USAID's budget, through their Polio
Eradication Initiative, for the delivery of vaccine and the development
of the infrastructure necessary to implement the program. This would
maintain funding at the fiscal year 1997 level, and ensure that the USA
remains the decisive factor in the success of the global initiative. In
addition, we are seeking report language similar to that included in
the fiscal year 1997 Committee report, specifying that this funding is
meant to be in addition to the resources for the regular immunization
program of AID, and is intended to supplement other related activities.
Lastly, we would ask that the Committee again request a report, by
December 1 1997, on AID's plans to fully implement this program.
Polio eradication is an investment, but few investments are as
risk-free or can guarantee such an immense return. The world will begin
to ``break even'' on its investment in polio eradication only two years
after the virus has been vanquished. And the financial and humanitarian
benefits of polio eradication will accrue forever. This will be our
gift to the children of the twenty-first century.
Thank you for this opportunity to submit testimony.
LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS
----------
Page
Albright, Hon. Madeleine K., Secretary of State, Office of the
Secretary, Department of State................................. 215
Prepared statement........................................... 225
Allard, Hon. Wayne, U.S. Senator from Colorado, questions
submitted by................................................... 53
American Society of Tropical Medicine and Hygiene, prepared
statement...................................................... 288
Amoco Corp., prepared statement.................................. 265
Atwood, Hon. J. Brian, Administrator, Agency for International
Develop- ment.................................................. 1
Prepared statement........................................... 8
Bader, Jeffrey, Deputy Assistant Secretary, Department of State.. 97
Bennett, Hon. Robert F., U.S. Senator from Utah.................. 119
Letter from.................................................. 121
Questions submitted by.......................................
49, 134, 182, 212, 255.....................................
Bernal, Dr. Richard L., on behalf of U.S. Foreign Assistance and
Sustainable Growth in Jamaica, prepared statement.............. 351
Blake, Ambassador Robert O., chairman, Committee on Agricultural
Sustainability, prepared statement............................. 373
Brazeal, Aurelia, Deputy Assistant Secretary, Department of State 97
Bye, Dr. Raymond E., Jr., associate vice president for research,
Florida State University, prepared statement................... 372
Campbell, Hon. Ben Nighthorse, U.S. Senator from Colorado,
questions submitted by.........................................
43, 134, 211, 256..............................................
Chiapetta, Sidonie, on behalf of the National Wildlife
Federation, prepared statement................................. 298
Costello, John H., president, the Citizens Network for Foreign
Affairs, prepared statement.................................... 332
Dine, Hon. Thomas A., Assistant Administrator, Bureau of Europe
and the New Independent States, Agency for International
Development.................................................... 137
Prepared statement........................................... 156
Faith Action for People-Centered Development Policy, prepared
statement...................................................... 308
Freeh, Hon. Louis J., Director, Federal Bureau of Investigation,
Department of Justice.......................................... 55
Prepared statement........................................... 60
Gardiner, Hobart C., president and CEO, International Executive
Service Corps, prepared statement.............................. 330
Gawdiak, Ihor, director, Washington Office, Ukrainian American
Coordinating Council, prepared statement....................... 334
Gelbard, Hon. Robert S., Assistant Secretary of State, Bureau of
International Narcotics and Law Enforcement Affairs, Department
of State....................................................... 55
Prepared statement........................................... 67
George, Father Bill, S.J., Georgetown University, prepared
statement...................................................... 268
Giulietti, Father Julio S.J., director, Georgetown University's
Center for Intercultural Education and Development [CIED],
prepared statement............................................. 268
Harkin, Hon. Tom, U.S. Senator from Iowa, questions submitted by. 256
Haunreiter, Erik, on behalf of the National Wildlife Federation,
prepared statement............................................. 298
Haynes, Fred, president, American-Turkish Council, prepared
statement...................................................... 283
Hehir, Rev. J. Bryan, counselor, Catholic Relief Services, on
behalf of the U.S. Catholic Conference and Catholic Relief
Services, prepared state- ment................................. 356
Hertford, Reed, president, Association for International
Agriculture and Rural Development, prepared statement.......... 363
Humane Society of the United States, prepared statement.......... 370
International Education and Training Coalition, prepared
statement...................................................... 273
Johns Hopkins University, Paul H. Nitze School of Advanced
International Studies, prepared statement...................... 291
Kartman, Hon. Charles, Acting Assistant Secretary of State,
Department of State............................................ 97
Prepared statement........................................... 105
Lautenberg, Hon. Frank, U.S. Senator from New Jersey, questions
submitted by...................................................
54, 207, 218...................................................
Leahy, Hon. Patrick, U.S. Senator from Vermont...................
72, 97, 187....................................................
Prepared statement...........................................
73, 168....................................................
Questions submitted by.......................................
38, 93, 129, 130, 180, 254.................................
Lemire, Joseph, president, Gala Radio & TV Co., Olympic
Champions, Ltd., Kiev, Ukraine, and on behalf of the several
members of the American Chamber of Commerce in the Ukraine,
prepared statement............................................. 336
Lipton, David, Assistant Secretary for International Affairs,
Department of the Treasury.....................................
Low, Lucinda A., chair, American Bar Association Section of
International Law and Practice, on behalf of the American Bar
Association, prepared statement................................ 323
Manoff, Robert Karl, director, Center for War, Peace, and the
News Media, prepared statement................................. 365
McConnell, Hon. Mitch, U.S. Senator from Kentucky................
1, 55, 99, 137, 185, 215
Prepared statements..........................................
100, 217...................................................
Questions submitted by....................................... 129
Mikulski, Hon. Barbara, U.S. Senator from Maryland, questions
submitted by................................................... 259
Morningstar, Hon. Richard L., Ambassador, Special Advisor to the
President and Secretary of State on Assistance to the New
Independent States, Department of State........................ 137
Prepared statement........................................... 143
Murray, Hon. Patty, U.S. Senator from Washington, questions
submitted by................................................... 261
Nassif, Thomas A., chairman, American Task Force for Lebanon,
prepared statement............................................. 297
National Council for International Health, prepared statement.... 314
Pennzoil Co., prepared statement................................. 266
Rossides, Eugene T., on behalf of the American Hellenic Institute
Public Affairs Committee, Inc.; the Hellenic American National
Council; the Cyprus Federation of America, Inc.; the Pan
Laconian Federation of U.S.A. and Canada; the Pan Cretan
Association of America; and the Pan Karpathian Educational
Progressive Association, prepared statement.................... 342
Rotary International, prepared statement......................... 379
Rubin, Hon. Robert E., Secretary of the Treasury, Department of
the Treasury................................................... 185
Prepared statement........................................... 191
Schneider, Claudine on behalf of the U.S. Committee for UNDP,
prepared statement............................................. 271
Specter, Hon. Arlen, U.S. Senator from Pennsylvania, letters from 241
Stevens, Hon. Ted, U.S. Senator from Alaska...................... 220
Questions submitted by....................................... 48
Vanderslice, Lane, on behalf of the World Hunger Education
Service, prepared statement.................................... 285
Watson, Alexander F., vice president and executive director,
Latin American and Caribbean Programs of the Nature
Conservancy, prepared statement................................ 276
World Wildlife Fund, prepared statement.......................... 293
SUBJECT INDEX
----------
AGENCY FOR INTERNATIONAL DEVELOPMENT
Page
Additional committee questions................................... 37
Africa:
Development fund in Africa................................... 36
Ten-year assessment.......................................... 35
African elephants................................................ 31
Agency move...................................................... 7
Agriculture...................................................... 4
Aid, suspension of............................................... 20
Budget request, USAID............................................ 22
Child survival and NGO's......................................... 22
Democracies, fledgling........................................... 21
Development assistance cuts...................................... 32
Foreign aid, changing............................................ 5
IRI rapid response request....................................... 19
New management systems........................................... 7
NIS assistance................................................... 30
Programs:
Administration of justice.................................... 26
Polio........................................................ 35
Republika Srpska................................................. 29
Rotary International............................................. 34
Soviet Union, former............................................. 5
United States leadership......................................... 8
War Crimes Tribunal.............................................. 28
West Bank and Gaza Microcredit Program........................... 33
DEPARTMENT OF JUSTICE
Additional committee questions................................... 93
Burmese drug lord................................................ 85
Chinese cooperation on counternarcotics.......................... 86
Coca production.................................................. 90
Crime:
International................................................ 73
Russian...................................................... 92
Drug issues...................................................... 87
Heroin:
And cocaine seizures......................................... 91
United States consumption of................................. 89
High Intensity Drug Trafficking Agency [HIDTA]................... 83
Intelligence information......................................... 88
Money laundering................................................. 84
DEPARTMENT OF STATE
Additional committee questions...................................
93, 128, 180, 254..............................................
Aid, reduction in to Israel and Egypt............................ 234
American:
Jailed citizen...............................................
Values....................................................... 168
ASEAN, including Cambodia in..................................... 251
Burma............................................................ 115
Sanctions.................................................... 249
Burmese drug lord................................................ 85
Cambodia, violence in............................................ 250
Chinese cooperation on counternarcotics.......................... 86
Coca production.................................................. 90
Corruption....................................................... 169
Crime:
International................................................ 73
Organized.................................................... 175
Russian...................................................... 92
Drug issues...................................................... 87
Exchange programs................................................ 173
Georgia.......................................................... 155
Heroin:
And cocaine seizures......................................... 91
U.S. consumption of.......................................... 89
High Intensity Drug Trafficking Agency [HIDTA]................... 83
Intelligence information......................................... 88
Jordan and Middle East, assistance for........................... 234
Money laundering................................................. 84
NATO:
Enlargement, Soviet/Baltic reaction to....................... 236
Expansion.................................................... 235
New investment initiative........................................ 174
North Korea, fuel oil for........................................ 122
Partnerships..................................................... 171
Peace process.................................................... 243
Policy reforms bring foreign investment.......................... 153
Ratifying Start III.............................................. 244
Reform progress in the region.................................... 153
Reformists' triumphs in Bulgaria and Romania..................... 172
Russia, state-owned companies in................................. 177
SLORC............................................................ 116
Terrorism........................................................ 239
Transfer of expertise, not cash.................................. 152
Transparency..................................................... 168
Ukraine..........................................................
149, 154, 170..................................................
Contrasting Georgia to the................................... 167
Health earmarks.............................................. 179
War Crimes Tribunal.............................................. 237
Weapons:
Conventional.................................................
Of mass destruction.......................................... 246
DEPARTMENT OF THE TREASURY
Additional committee question.................................... 206
Burma............................................................ 194
World Bank....................................................... 196