[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
CAMBODIA'S SMALL DEBT:
WHEN WILL THE U.S. FORGIVE?
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HEARING
BEFORE THE
SUBCOMMITTEE ON ASIA, THE PACIFIC AND
THE GLOBAL ENVIRONMENT
OF THE
COMMITTEE ON FOREIGN AFFAIRS
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 30, 2010
__________
Serial No. 111-128
__________
Printed for the use of the Committee on Foreign Affairs
Available via the World Wide Web: http://www.foreignaffairs.house.gov/
______
U.S. GOVERNMENT PRINTING OFFICE
61-519PDF WASHINGTON : 2010
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COMMITTEE ON FOREIGN AFFAIRS
HOWARD L. BERMAN, California, Chairman
GARY L. ACKERMAN, New York ILEANA ROS-LEHTINEN, Florida
ENI F.H. FALEOMAVAEGA, American CHRISTOPHER H. SMITH, New Jersey
Samoa DAN BURTON, Indiana
DONALD M. PAYNE, New Jersey ELTON GALLEGLY, California
BRAD SHERMAN, California DANA ROHRABACHER, California
ELIOT L. ENGEL, New York DONALD A. MANZULLO, Illinois
BILL DELAHUNT, Massachusetts EDWARD R. ROYCE, California
GREGORY W. MEEKS, New York RON PAUL, Texas
DIANE E. WATSON, California JEFF FLAKE, Arizona
RUSS CARNAHAN, Missouri MIKE PENCE, Indiana
ALBIO SIRES, New Jersey JOE WILSON, South Carolina
GERALD E. CONNOLLY, Virginia JOHN BOOZMAN, Arkansas
MICHAEL E. McMAHON, New York J. GRESHAM BARRETT, South Carolina
THEODORE E. DEUTCH, CONNIE MACK, Florida
FloridaAs of 5/6/ JEFF FORTENBERRY, Nebraska
10 deg. MICHAEL T. McCAUL, Texas
JOHN S. TANNER, Tennessee TED POE, Texas
GENE GREEN, Texas BOB INGLIS, South Carolina
LYNN WOOLSEY, California GUS BILIRAKIS, Florida
SHEILA JACKSON LEE, Texas
BARBARA LEE, California
SHELLEY BERKLEY, Nevada
JOSEPH CROWLEY, New York
MIKE ROSS, Arkansas
BRAD MILLER, North Carolina
DAVID SCOTT, Georgia
JIM COSTA, California
KEITH ELLISON, Minnesota
GABRIELLE GIFFORDS, Arizona
RON KLEIN, Florida
Richard J. Kessler, Staff Director
Yleem Poblete, Republican Staff Director
------
Subcommittee on Asia, the Pacific and the Global Environment
ENI F.H. FALEOMAVAEGA, American Samoa, Chairman
GARY L. ACKERMAN, New York DONALD A. MANZULLO, Illinois
DIANE E. WATSON, California BOB INGLIS, South Carolina
MIKE ROSS, Arkansas DANA ROHRABACHER, California
BRAD SHERMAN, California EDWARD R. ROYCE, California
ELIOT L. ENGEL, New York JEFF FLAKE, Arizona
GREGORY W. MEEKS, New York
C O N T E N T S
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Page
WITNESS
Mr. Joseph Y. Yun, Deputy Assistant Secretary, Bureau of East
Asian and Pacific Affairs, U.S. Department of State............ 9
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
The Honorable Eni F.H. Faleomavaega, a Representative in Congress
from American Samoa, and Chairman, Subcommittee on Asia, the
Pacific and the Global Environment: Prepared statement......... 6
Mr. Joseph Y. Yun: Prepared statement............................ 12
APPENDIX
Hearing notice................................................... 34
Hearing minutes.................................................. 35
The Honorable Eni F.H. Faleomavaega: Material submitted for the
record......................................................... 36
CAMBODIA'S SMALL DEBT: WHEN WILL THE U.S. FORGIVE?
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THURSDAY, SEPTEMBER 30, 2010
House of Representatives,
Subcommittee on Asia, the Pacific
and the Global Environment,
Committee on Foreign Affairs,
Washington, DC.
The subcommittee met, pursuant to notice, at 2:05 p.m., in
room 2172, Rayburn House Office Building, Hon. Eni F.H.
Faleomavaega (chairman of the subcommittee) presiding.
Mr. Faleomavaega. The subcommittee will come to order.
This is a hearing of the Foreign Affairs Subcommittee on
Asia, the Pacific and the Global Environment. The specific
topic for discussion this afternoon is ``Cambodia's Small Debt:
When Will the United States Forgive This Debt?''
I am going to begin the hearing by giving my opening
statement.
I do want to say, Mr. Secretary, I deeply appreciate your
taking the time to come again and make this appearance before
the subcommittee. I want to say that this town is practically a
ghost town ever since we took the last vote last night at about
1 or 2 in the morning, and everybody is out trying to get re-
elected. I thought we were going to still be in session next
week, but things change, and this is where we are now.
Between 1972 and 1975, Cambodia incurred a $276 million
debt to the United States through the provision of agricultural
commodities. General Lon Nol incurred this debt to support his
chaotic and dictatorial regime, which seized power through a
coup, making his an illegitimate government in the eyes of many
of today's Cambodians. Lon Nol did nothing to address this
debt.
The Khmer Rouge came to power in 1975. This regime also
failed to service the loan. In addition, it killed or starved
at least 20 percent of Cambodians, some 7 million people, and
neglected infrastructure and factories and reverted to ancient
agricultural techniques, all of which decimated the Cambodian
economy and any ability to repay the debt. Vietnam occupied
Cambodia for 10 years after the Khmer Rouge lost control, and
they also ignored the debt. Consequently, Cambodia now owes the
United States $444.4 million, including interest, as of
December of last year.
I want to give a little sense of perspective concerning the
history of U.S.-Cambodia relations because I think it is
important for the record that this be noted. At the height of
the Vietnam War, Cambodia was very much a part of our overall
military and strategic interests, and some highly questionable
decisions were made by officials of the Nixon administration,
including President Nixon himself.
Part of the U.S. frustration in dealing with Cambodia was
due to Prince Sihanouk. As ruler in Cambodia, he maintained a
position of neutrality on the war in Vietnam, yet, at the same
time, was unable to prevent North Vietnamese military forces
from setting up sanctuaries or strongholds along the border
between Cambodia and Vietnam. Prince Sihanouk's government was
later overthrown by General Lon Nol, supposedly with the
assistance of the United States, although this has never been
proven to be true.
Against the advice of his Secretary of Defense Laird and
Secretary of State Rogers, President Nixon accepted the
recommendations of his military commanders by sending military
forces into Cambodia to destroy those North Vietnamese
sanctuaries along the Cambodian-Vietnam borders, raising the
specter of expanding the war in Vietnam despite an established
policy of supposedly winding down the overseas U.S. military
presence in Vietnam.
It is believed that the U.S. military action going into
Vietnam contributed to one of the greatest tragedies of recent
history. The American invasion of North Vietnamese forces
inside Cambodia unleashed thousands of tons of bombs on
Cambodia. It also caused North Vietnam to conduct large-scale
operations in support of the Khmer Rouge, who were fighting
against Lon Nol's government, which was supposedly supported by
the United States.
I quote from George Herring's book, ``America's Longest
War: The Ultimate Tragedy'':
``From beginning to end, the Nixon administration
viewed its new ally, General Lon Nol, as little more
than a pawn to be used to help salvage the U.S.
position in Vietnam, showing little regard for Cambodia
and its people.''
It should also be noted that President Nixon's decision to
invade Cambodia caused serious repercussions even within the
United States. College student demonstrations erupted all over
the country, and some might have said this was Nixon's worst
nightmare. One demonstration in particular resulted in four
students shot dead by the U.S. National Guard at Kent State
University in Ohio. Two students were also shot dead at Jackson
State University in Mississippi.
Some 100,000 more demonstrators showed up in our Nation's
capital to demonstrate against the President's decision to
invade Cambodia. Students at some 350 college and university
campuses went on strike, and more than 500 colleges and
universities were closed to prevent more violence. So this
little insight in terms of the history was not very pleasant in
terms of U.S. involvement, not only in Vietnam but what we did
to the people of Cambodia.
Cambodia has asked the United States to forgive its debt or
use a portion of the payment toward U.S. assistance programs,
which include health care, economic competitiveness, civil
society and land mine removal--especially land mine removal,
Mr. Secretary. However, the U.S. Treasury and Department of
State have showed remarkable inflexibility and simply a lack of
any cooperation on this issue.
Why does the United States insist on squeezing this little,
least-developed country out of $444.4 million? Why is debt
forgiveness not an option? Why do we not consider recycling the
debt payments for environmental conservation efforts or
swapping the debt for a much-needed educational exchange fund
similar to the Vietnam education exchange fund created by
Congress 10 years ago?
This is the second in a series of hearings I have held in
my capacity as chairman of the subcommittee on Cambodia's debt.
During the last hearing, held in February, 2 years ago, the
U.S. State Department testified that debt forgiveness or
recycling for Cambodia would set a pattern of forgiveness for
other nations indebted to the United States. In my opinion, Mr.
Secretary, this is absolutely ludicrous and without
justification.
We should note that a precedent has already been
established. Six years ago, the United States forgave $4.1
billion of Iraqi debt accumulated under Saddam Hussein's
leadership so as not to cripple the new government. Bosnia-
Herzegovina's debt of $24 million was forgiven in 1999, and
Yugoslavia's $538.4 million debt was forgiven in 2002.
But we must also consider the impact of U.S. activities in
Cambodia during the Vietnam War era. From 1969 to 1973, the
U.S. staged large-scale bombing campaigns in parts of Cambodia,
which still prevent the use of a vast majority of rich
farmlands in this country, Mr. Secretary. In certain regions it
has restricted agricultural development because many of these
bombs that were dropped never detonated and has caused a
serious hazard, not only to the citizens and to the people of
Cambodia and just simply because the ordnance is still there
and it is a real, real serious situation.
The legacy of losses inflicted by the Khmer Rouge also
continues today. The average Cambodian earns a mere $5.50 a
day, an amount comparable to Mauritania, Cameroon and several
other countries classified by the International Monetary Fund
as highly-indebted poor countries worthy of debt reduction. But
far worse living standards face 30 percent of Cambodians, who
live on less than 60 cents per day, according to the 2009
United Nations Development Program report.
Given Cambodia's status as a least-developed country and
acknowledging that the Khmer Rouge's brutal genocide continues
to afflict the country today economically, other nations and
organizations have shown considerably more flexibility in
addressing Cambodia's debt.
For example, Hungary forgave Cambodia's debt of $216
million in 2009. Russia forgave approximately $1 billion of
Cambodian debt in 2008. In 1995, Japan forgave all claims
against Cambodia incurred before 1975, which totaled $270
million. Additionally, the International Monetary Fund granted
Cambodia $82 million in debt relief 5 years ago, acknowledging
that Cambodia needed the funding to reach its Millennium
Development Goals.
Should the United States fail to forgive or recycle
Cambodia's debt, Cambodia may turn to other countries for
financial assistance. Already, China has forgiven at least $60
million of debt and extended loans to Cambodia for
infrastructure and historical preservation. Such Chinese
assistance often comes without conditions for political,
economic or environmental reform, thereby weakening the
position of the United States and other democracies to
influence Cambodia's leaders.
Greater engagement with Cambodia could help the United
States achieve our foreign policy goals in the region and
counter adverse influences. Requiring payment of a debt
incurred by an illegitimate government more than 30 years ago,
without consideration of Cambodia's historical trauma, runs
counter to the need for greater engagement, in my humble
opinion, Mr. Secretary. This is why I ask the Department of
State and Treasury to end their opposition to Cambodian debt
forgiveness and support our efforts to give this country a
brighter economic future.
The Department of Treasury could begin by taking this issue
seriously enough to send a witness to testify before this
subcommittee. Two years ago, and again for this hearing, the
U.S. Treasury Department refused to send a witness, which, in
and of itself, speaks volumes about the lack of commitment for
advancing American interests in Southeast Asia.
Finally, for the record, I want to express my opposition to
a bill that was introduced earlier this year, H.R. 5439, the
Cambodian Trade Act of 2010, which would prevent any
forgiveness of Cambodia's debt currently owed to the United
States and would ensure that no textiles or apparel produced in
Cambodia would be given duty-free treatment within the United
States.
My two colleagues who introduced this piece of legislation
are very dear to my heart, and we constantly work together on
many issues. My good friend from California, Congressman
Rohrabacher, and my good friend from Massachusetts, Congressman
Delahunt, who is retiring this year, unfortunately, are
certainly champions and senior members of this committee when
it comes to human rights.
While I have the utmost respect for my two colleagues who
introduced the bill, unfortunately, there was never any
consultation with me or members of this subcommittee. And I am
deeply concerned that a trade bill like this was introduced in
response to Cambodia's deportation of 20 Uighurs who entered
Cambodia illegally from China. I do want to note for the record
that I do oppose the provisions this bill.
Prior to the introduction of this bill, I was in Cambodia
and met with Prime Minister Hun Sen, Deputy Prime Minister Hor
Namhong, and the Minister of Finance Cham Prasidh, at which
time we discussed the deportation of Uighurs who were returned
to China in December of last year. The Government of Cambodia
provided me with the following account of events which
transpired, affecting the status of these Uighurs.
Three groups, with a total of 22 Uighurs, illegally entered
Cambodia in June, October, and November of last year. But the
United Nations High Commissioner for Refugees failed to
determine their status and failed to provide the Government of
Cambodia with any information relating to the Uighurs' entry in
November of last year. Two Uighurs fled the headquarters
without reporting to the Ministry of Foreign Affairs and
International Cooperation. Consequently, 20 Uighurs were
returned in December because they had entered Cambodia
illegally.
The Government of Cambodia has firmly stated that it
adheres to the principles of the rule of law and respects the
International Convention on Refugees. The Royal Government of
Cambodia also believes, and correctly so, in my opinion, that
the United Nations' High Commissioner for Refugees should do
its part by acting in accordance with its mandate to coordinate
the protection of refugees in a transparent and expeditious
manner.
While I fully support the rights of international refugees
and the mission of UNHCR, the Uighurs are a minority population
residing in China, not Cambodia. Therefore, if the intent of
the bill is to champion the cause of the Uighurs, it should not
offer up a superficial fix which pits Cambodia against China in
a match-up that should be, actually, between the United States
and China. Simply put, the bill should not use trade or debt as
a means to address the repatriation of Uighurs.
I remain firm in my position that the United States should
forgive or recycle Cambodia's debt, given that there is
historical precedent for both options. And I commend Cambodia's
ambassador to the United States, his Excellency Hem Hang, for
tirelessly working on behalf of the Royal Kingdom of Cambodia
to bring these serious matters to the attention of the U.S.
Congress.
The Kingdom of Cambodia's statement regarding the pre-1975
loans will be made part of the record.
[The prepared statement of Mr. Faleomavaega follows:]
Mr. Faleomavaega. At this time, I recognize our leading
witness and only witness willing to come and testify before
this subcommittee, the Deputy Assistant Secretary for the
Bureau of East Asian and Pacific Affairs, Mr. Joseph Yun.
Mr. Yun is currently the Deputy Assistant Secretary in the
State Department responsible for relations with Southeast Asia
and ASEAN affairs. He previously held the position of Director
of the Office of Maritime Southeast Asia at the Bureau of East
Asian and Pacific Affairs within the Department of State. He
served also as a senior counselor in our U.S. Embassy in Korea
and in other overseas posts, including Thailand, France,
Indonesia, and Hong Kong.
He has been a career member of the Foreign Service since
1985. He holds degrees from the London School of Economics and
the University of Wales.
Mr. Secretary, I want to sincerely thank you for taking the
time from your busy schedule to again appear before the
subcommittee for your testimony concerning the issue of
Cambodia's debt forgiveness.
Without objection, your statement will be made a part of
the record. If you have any miscellaneous materials or
documents that you would like to submit to be made part of the
record, you are welcome to do so.
So, Mr. Secretary, please, I would like to hear from you.
STATEMENT OF MR. JOSEPH Y. YUN, DEPUTY ASSISTANT SECRETARY,
BUREAU OF EAST ASIAN AND PACIFIC AFFAIRS, U.S. DEPARTMENT OF
STATE
Mr. Yun. Mr. Chairman, thank you for inviting me here today
to testify about Cambodia's outstanding bilateral debt to the
United States. With your permission, Mr. Chairman, I would like
to make a few brief remarks on this topic and submit a more
detailed written response for the Record.
Mr. Faleomavaega. Without objection.
Mr. Yun. U.S.-Cambodia relations have continued to improve
over the past few years. The tempo of interaction has
quickened, and there has been both a broadening and a deepening
of positive engagement in a number of areas. In order for
Cambodia to realize its full democratic and economic potential,
we continue to ask Cambodia to make progress on issues related
to human rights and rule of law.
A satisfactory resolution of Cambodian debt to the United
States can help accelerate development of this improving and
growing bilateral relationship. Such a move would also enhance
Cambodia's own economic development by improving its
creditworthiness and better access to international capital
markets.
Cambodia's debt to the United States stems from shipment of
U.S. agricultural commodities to Cambodia in the 1970s during
the turbulent Lon Nol era financed with low-interest rate loans
from the U.S. Department of Agriculture. Cambodia fell to the
Khmer Rouge in 1975, which ceased servicing this debt. By the
end of 2009, Cambodia's debt to the United States totaled
approximately $445 million, including arrears and late
interest. About $405 million of that amount was in arrears, and
it's due and payable immediately.
Debt relief can be an important means of achieving U.S.
goals of promoting economic growth, well-functioning markets,
and economic reform of our foreign partners. Long-standing U.S.
policy on debt relief and restructuring is to coordinate
internationally, primarily through the Paris Club group of
official creditors. In 1995, the Paris Club and Cambodia
reached an agreement to restructure Cambodia's debt on the so-
called Naples terms, at that time the most generous treatment
in the Paris Club's project.
Cambodia eventually signed debt agreements with France,
Germany, Italy, and Japan to implement the 1995 Paris Club
agreement and began repaying those countries accordingly.
However, the United States and Cambodia never concluded a
bilateral implementing agreement, in part because the Cambodian
Government refused to accept responsibility for debts incurred
by the Lon Nol regime and in part because of a disagreement at
the time over the amount of debt actually owed.
U.S.-Cambodian debt negotiations resumed over the 2001 to
2005 period. The U.S. ultimately offered concessions of nearly
$100 million, and the Treasury affirmed that, for legal and
policy reasons, this was the final best offer the U.S. could
make.
In February, 2006, the Cambodian Minister of Finance
indicated that Cambodia agreed with the United States that the
amount of principal it owed was $162 million. He also agreed to
move forward in drafting a bilateral agreement implementing the
1995 Paris Club agreement. Based on this understanding, the
United States drafted a bilateral agreement that retroactively
implemented the 1995 Paris Club agreement, including USDA's
concessions, and presented it to the Cambodia Government in the
summer of 2006.
Nevertheless, to date, the Cambodian Government has been
unwilling to sign the draft bilateral agreement and now seeks
additional concessions. Cambodia is seeking a low interest
rate. However, long-standing U.S. debt policy is to retain the
same interest rate of the original loans in any rescheduling of
those loans. Offering a lower interest rate would be an
unauthorized form of debt reduction.
Another concession requested by the Cambodian Government in
the past has been debt for assistance swaps. The only general
debt swap program that the United States currently offers is
through the Tropical Forest Conservation Act for which Cambodia
is not eligible because of its arrears. Cambodia, however, has
focused on the swap arrangement that the United States
established with Vietnam in 2000 and is seeking a similar
program.
In 1993, Paris Club creditors provided Vietnam debt
rescheduling terms similar to those of Cambodia's in 1995.
Vietnam signed a bilateral agreement with the United States in
1997 and resumed making scheduled payments and was in good
financial standing when Congress created the Vietnam Education
Foundation several years later. This program, authorized by
law, directs about 40 percent of Vietnam's total debt payments
to the foundation for joint education initiatives. There are no
special programs authorized for Cambodia, however, and existing
programs are not available so long as Cambodia is not making
scheduled payments. An individual debt program, therefore, is
not a possibility.
The administration is concerned that creating a special
statutory debt with option program for a country that is
accumulating large arrears, despite payment capacity, sets a
poor precedent for other countries in similar circumstances and
sends the wrong message about prudent debt management.
In Cambodia's case, I would note that Cambodia has
accumulated arrears to the United States while paying other
creditors on time. The administration has, therefore, urged the
Cambodian Government to sign the bilateral agreement and
reestablish a track record of timely repayments under that
agreement. We have communicated to the Cambodian Government
that if it makes scheduled payments for at least 1 year the
U.S. Government would signal to the IMF that efforts are under
way to resolve the country's official arrears. Should Cambodia
then obtain an IMF program, end the future Paris Club
treatment, this action could pave the way for generous
rescheduling of accumulated arrears on debts owed to the United
States.
We have also informed the Cambodians that we would work
with Congress to explore the possibility of enhancing mutually
beneficial U.S. development assistance projects Unfortunately,
the Cambodia Government thus far has not responded to this
overture and continues to accumulate arrears on debts owed to
the United States.
In sum, the administration is very much of the view that
Cambodia should resolve U.S. debt claims by concluding a
bilateral agreement implementing the 1995 Paris Club agreement.
This would eliminate this long-standing issue in the overall
context of otherwise very much improving bilateral relations.
We also believe that an agreement to address the U.S. bilateral
debt issue would also enhance Cambodia's creditworthiness and
Cambodia's ability to access international capital markets.
Mr. Chairman, I appreciate this opportunity to appear
before you today and I welcome any questions you may have.
[The prepared statement of Mr. Yun follows:]
Mr. Faleomavaega. Thank you, Mr. Secretary. I appreciate
your statement and your testimony. I would like to have a
little dialogue in that respect in terms of some of the issues
that have been raised on this question.
Can you explain what exactly the procedure the United
States currently has for granting debt forgiveness to countries
that owe money to the United States? Is it in statute, or does
the administration have discretion, or is it a given policy of
the Treasury as well as the State Department? I would like to
know.
Mr. Yun. Mr. Chairman, as you can appreciate, that issue is
a very implicated issue, so I will try my best to explain what
the U.S. policy is, with the provision that you do understand I
am a diplomat.
Mr. Faleomavaega. I will note that for the record, sir, you
are going to give a very diplomatic response to the question. I
thank you.
Mr. Yun. First of all, let me say your remarks earlier on
about the economic position Cambodia finds itself in and the
historical remarks you made are very persuasive. However, it is
not U.S. policy at this point to forgive Cambodia's debt, and
let me explain that point.
In that situation you do have creditor and a debtor. In our
case, U.S. is the creditor. U.S. interest is very much in
protecting the creditor interest, and so in any situation we
understand why countries get into debt difficulty, and so there
is a general procedure.
Once a sovereign country is in a debt difficulty, what do
we do about it?
Number one, the first step generally is that sovereign
country must show that it is in debt difficulty. How do they
show it? Typically they enter into an IMF program. Essentially,
what the IMF does is go through the country's books, including
its ability to finance, including how much money it has in
reserve. And so they are the bookkeeper, or I guess you could
say almost like a bankruptcy court internationally.
So with the IMF help, usually the creditors, there are two
types of international creditors, sovereign creditor or we call
it official creditor. They will reschedule their debts in Paris
Club. Private side, mostly bank side, will reschedule their
debt at the London Club.
In Cambodia's case, in 1995, as I mentioned, we had a Paris
Club arrangement; and by perchance I happened to be there at
that time. I was working for the U.S. Embassy in Paris, and I
attended that debt rescheduling. And it is a negotiation
process with IMF acting as the official data keeper saying how
much debt relief they would need.
So at that time all the countries went through their debt
and reached an agreement, what we characterize as Naples terms.
And so we reached an agreement and each country from there on
went back to their countries and negotiate the terms of Paris
Club agreement and how each country would implement. And, as I
mentioned to you, Cambodia reached that agreement with many
countries and thereafter started paying them. With the U.S., we
never got to that, and that's the bilateral agreement that is
in question.
And so our policy is we do have a bilateral agreement that
is outstanding, that implements the Paris Club. Now, the debtor
country should sign the bilateral agreement so their debt
relations with us is normalized. So the U.S. policy very much
is to reschedule debt, forgive debts, debt reduction or
anything, do it under the auspices of the Paris Club.
Mr. Faleomavaega. In terms of the IMF's involvement, as you
had mentioned, pursuant to the Paris agreement that was made in
1995, how much influence does the United States have in the
operations of the IMF? Don't we have about somewhere between
25-30 percent of the assets, votes, and influence within the
IMF? Does the United States have that much influence in the
process?
Mr. Yun. Again, Mr. Chairman, I regret very much, like you,
my Treasury colleague not being here. So let me try as best I
can----
Mr. Faleomavaega. Well, I just want to say that you are
more senior than the Treasury Department anyway. I have always
held the belief that the Secretary of State is the most senior
member of the President's cabinet. In that sense, as far as I
am concerned, the Treasury is second to the State Department,
as far as formulating policies by the President. Now, correct
me if I am wrong on that.
Mr. Yun. Thank you for your confidence.
On the IMF issue, we do, I believe, have about 19-20
percent of contribution, and that contribution is reflected in
our voting size. So, of course, when a country goes there for a
program, the U.S. reveals that program is very much a factor. I
would agree with you. But I think in these cases what IMF does,
the IMF program is essentially to put the house in order.
Mr. Faleomavaega. I understand that, Mr. Secretary. Can you
tell me how we were able to forgive Iraq's debt for some $4.1
billion 6 years ago? I assume that they went to the Paris Club,
they went to the IMF, the same procedures. Somehow we were
able, through the goodness of our hearts, to say, Iraq, we
forgive you for $4.1 billion.
That is not a pittance. That is a lot of money that we
forgave and apparently Iraq qualified for this debt
forgiveness?
Mr. Yun. In Iraq's case, they did go through IMF, and it
was rescheduled at IMF. What has happened between 1995 and 10
years down the road is that terms change and the amount of debt
forgiveness a nation can do change. So after Naples terms that
Cambodia was beneficiary of, we had other, more generous terms.
I mean, at that time, in 1995, the Naples terms were the most
generous.
And, also, we are going to have, throughout debt history,
special cases. I believe Iraq was one of them; and there were
special cases also for Poland, Egypt, countries that underwent
significant transformation.
Mr. Faleomavaega. Mr. Secretary, with all due respect, I
know what you mean. Iraq was a very special case. Given the
fact that we have spent almost $1 trillion in fighting this war
in Iraq, not only for the loss of lives and 2 million Iraqi
people that died as a result or displaced, as you said, there
are special cases given to each country, I grant that. That is
an important consideration.
So it now comes down to our basic foreign policy and
political consideration. We bombed the hell out of Cambodia
when we invaded Cambodia. This was one of President Nixon's
defining moments, a legacy of his administration, when we sent
military forces into Cambodia, supposedly to go after North
Vietnamese forces, which was true. They had sanctuaries. The
North Vietnamese had strongholds along the Vietnam-Cambodian
borders, and with some justification. I can understand that.
But what I am really troubled by all of this is that Cambodia
is considered a least-developed country by the United Nations.
How many countries are in the LDC classification within the
United Nations?
Mr. Yun. I would say quite a few.
Mr. Faleomavaega. Can you submit that for the record? I
believe there are about 50 LDCs----
Mr. Yun. Yes.
Mr. Faleomavaega [continuing]. Within the United Nations of
190-some countries that make up the United Nations.
[The information referred to follows:]
Written Response Received from Mr. Joseph Y. Yun to Question Asked
During the Hearing by the Honorable Eni F.H. Faleomavaega
Currently, the United Nations classifies forty nine countries as
Least Developed Countries (LDCs). Cambodia is classified as an LDC.
Mr. Faleomavaega. I just wanted to pry into this issue a
little more. Some of our policymakers, including me, ask, why
can't we recycle? What is wrong with recycling the debt
process? I think there seems to be not so much the money here
but it is the principle.
Somehow, somebody seems to be so annoyed by Cambodia.
Whatever it was historically. I can talk to you about the
killing fields. I have been there. It is one of the saddest
legacies of modern history--the genocide that was committed
against the Cambodians. And by implication we were very much a
part of what happened in that country. Really, really a sad
history. I consider our involvement in Cambodia as very special
in that it cost so many lives. Some 20 percent of the country's
population was decimated through genocide.
And this was because we wanted to continue the
Vietnamization process. President Nixon had tried very hard to
get us out of Vietnam. And, as you know, instead of getting out
of Vietnam, we ended up invading Cambodia--Nixon's private war,
as some have said.
So I don't see where the comparison could be said that
Cambodia is not special enough, in the same way that we were
able to forgive Iraq's debt of some $4.1 billion and
Yugoslavia's debt incurred under Marshal Tito. He was no
democratic person.
I mean, during the time of Yugoslavia's problems, we
forgave Yugoslavia's debt of $538 million. So I just want to
say by comparison Yugoslavia and Iraq do not come to the same
status as Cambodia with the problems and the complications and
the difficulties that our country faced when dealing with these
people.
I don't mean to suggest you are just throwing out numbers
and figures, but I want to say that these are people. I just
wonder, is there an existing policy that we have toward
Cambodia that continues to allow or to say that our standing
policy is that they must pay their debt because we don't want
to set a precedent? The problem is that we have already set
precedents. We have already forgiven debts of several
countries.
As you said, it is complicated. There are exceptions. There
are special cases. I happen to believe that Cambodia is a
special case, and we ought to give due consideration to them
for what we did to these people, their lands, and the misery is
still there.
We have not even cleaned up the mess that we created in
Cambodia from the hundreds of thousands of tons of bombs that
we dropped on its people. A lot of innocent people died as a
result.
Mr. Yun. Thank you, Mr. Chairman.
I would say that the overriding factor on debt issues is
the capacity to pay. And if you look where Iraq was, where
countries like Egypt were, where they went when they had a debt
program, they could not sustain the amount of debt they had,
which was why debt reduction was possible for those countries.
In the case of Cambodia, admittedly, they are a least
developed country among them, but their capacity to pay is
there in terms of foreign exchange earnings.
Mr. Faleomavaega. I didn't mean to interrupt you, and I
appreciate that term, that they have the ``capacity to pay.''
So then it raises the question of principle. The principle is
that it was an illegitimate government that caused the debt to
be incurred during General Nol's military takeover against
Prince Sihanouk's government.
Now was that a legitimate government that we supported?
There are still a lot of questions raised right now whether our
intelligence agencies had anything to do with overtaking Prince
Sihanouk's government when General Lon Nol became the new
dictator, if you will. And, of course, later on, a civil war
broke out between the Khmer Rouge and Lon Nol, who was kicked
out.
So this is another gray area. To say that, on the one hand,
they might have the capacity to pay, but then, as a matter of
principle they say, Why should I pay when it wasn't us that
were there? I mean, why is it that we are being targeted as the
government to pay for these debts?
We could have said the same thing about Tito's government
and his reign in Yugoslavia. The succeeding government of
Yugoslavia, whatever existed then, should have been
responsible. In the same way, in Iraq--the government was
legitimate even though it was controlled by a dictator. How do
we say that a government's legitimacy comes from the fact of
whether you are a dictator or whether you are ruled by a
dictator?
Mr. Yun. Mr. Chairman, in regard to that issue of what
happens to the debt as it gets passed from one government to
another, it is the policy of the U.S. Government and is
standard international practice that whoever takes over the
government assumes responsibility for all previous government.
There is a class of debt called ODS debt, but that is very
narrowly defined.
In the case of Cambodia, these were agriculture, PA 480
debt, mostly for foodstuffs. I think it would be another thing
if, say, Lon Nol bought tanks with them and started, you know,
fighting or, you know, forces that were, say, loyal to Prince
Sihanouk at the time and so on. So it is very hard to classify
agriculture commodities in that class of ODS debt.
Secondly, even in countries like Iraq, Afghanistan, they
have assumed their previous debt. You are right. A lot of them,
you are right, were forgiven, but there are some debt they have
assumed. I don't think it was 100 percent forgiveness. I will
get the data for you----
Mr. Faleomavaega. Please.
Mr. Yun [continuing]. How much they were forgiven.
[The information referred to follows:]
Written Response Received from Mr. Joseph Y. Yun to Question Asked
During the Hearing by the Honorable Eni F.H. Faleomavaega
Afghanistan qualified for treatment as a Heavily Indebted Poor
Country (HIPC) according to the eligibility requirements established by
Congress in the Enhanced Heavily Indebted Poor Countries Initiative
(Title V of Appendix E of H.R. 3425, as enacted into law by Section
1000(a)(5) of P.L. No. 106-113) and we signed the bilateral agreement
with Afghanistan authorities in July, 2010. Congress authorized funds
for the forgiveness of 100 percent of Iraqi debt in section 135 of the
Continuing Resolution (P.L. 108-309)(CR), enacted into law by Section
569 of the FY 2005 Foreign Operations Appropriations bill, H.R. 4818,
as passed by the House of Representatives on July 15, 2004. U.S.
government forgiveness of both Afghanistan's and Iraq's official debt
was coordinated through the Paris Club of creditor nations which
requires, as a condition on such forgiveness, that the debtor nation
have an IMF program. Cambodia does not have an IMF program.
Mr. Yun. So that policy is very much based on capacity to
pay, Mr. Chairman.
Mr. Faleomavaega. I make an observation that one of the
things that really riles me up is all the resources and the
amount of money that we spent in the war in Iraq. And, all of a
sudden, overnight, after spending almost $1 trillion and
causing the suffering that we have caused the people of Iraq,
and then when the new government came up it says they are going
to have a bidding process for oil companies that could come and
help extract the oil so that they could start, go back to
prosperity and all of that.
So 30 major oil companies conducted their bidding, and
guess what country won the oil contract? The People's Republic
of China, which didn't lift a finger, not even an ounce in
terms of having it any way associated with all the resources
and the sufferings and the commitments that we made. China
ended up tapping into the resources of the oil that, I thought,
as a matter of policy, was why we had to go to Iraq to make
sure to secure the oil supply, that we don't lose that.
Well, after the bidding, as we like to do free enterprise
market system and letting the markets control, China ended up
getting the oil contracts. So that was a special condition, to
say the least.
Here is just a question for you, Mr. Secretary. Is there a
strategic argument for offering Cambodia debt relief? Many have
argued that economic dependence has made Cambodia one of
China's strongest allies in Southeast Asia. Do you agree, and
would debt relief from the United States change this dynamic?
Mr. Yun. Mr. Chairman, I believe debt relief should be
offered in the context of our debt policy. So in that sense we
did make progress in 2006. We did come to terms on the actual
amounts owed. So, right now, I think the way forward is for us
in Cambodia to at least come to terms on the bilateral
agreement so that Cambodia is current for, say, 1 year or so,
which we have asked them. After 1 year, we can review the
situation, but it is very hard to commit to up-front debt
forgiveness, debt reduction, debt swap.
I mean, that really isn't the domain of Congress. If you
allow us--if you allow us to do that, because what it means is
that our budget, the U.S. Government budget, has to reflect
that. If you allow us that, sure. I mean, we can do it.
Mr. Faleomavaega. I remember a couple of years ago there
was a newspaper article that said we had forgiven Jordan $500
million in debt, just like that. And Jordan isn't exactly a
least-developed country, may I add. So, here again, I guess one
word that comes to mind is contradiction. I am a little puzzled
when you mention there have to be special circumstances to
forgive debt.
I would deeply appreciate if you could submit for the
record what exactly is both the State Department policy as well
as that of the Treasury Department, since they are not here, to
outline exactly what process and what specifics these countries
have to follow in order to qualify for debt forgiveness.
Because, as you said, it is complicated.
[The information referred to follows:]
Written Response Received from Mr. Joseph Y. Yun to Question Asked
During the Hearing by the Honorable Eni F.H. Faleomavaega
The fundamental principle underlying debt forgiveness is that debts
owed to the United States are assets of the United States and that
federal officials generally lack authority to dispose of such assets
without both: (1) statutory authority from Congress; and (2) a
corresponding appropriation to pay the ``subsidy cost'' of the debt
forgiveness under the Federal Credit Reform Act of 1990 (2 U.S.C. Sec.
661, et seq.). Further, any additional conditions on that forgiveness
included by Congress in the authorizing statute(s) must also be
satisfied. When debt is forgiven, the Federal Credit Reform Act of
1990, 2 U.S.C. Sec. 661, et seq., requires that Congress have
appropriated sufficient funds to the Treasury Department's Debt
Restructuring Account to pay the ``subsidy cost'' of the forgiveness on
the government's books. Foreign government debt is maintained on the
account books of the United States Government as an asset. Changes to
loan contracts, including debt forgiveness, are considered
modifications to the original loan agreements under the Federal Credit
Reform Act and require an appropriation amount to pay the value of that
modification. Essentially, this is double entry bookkeeping with the
``subsidy cost'' of the debt forgiveness offset by an appropriation
enacted by Congress to pay the cost of the forgiveness. The Office of
Management and Budget (OMB) has issued detailed rules on how this
amount is ``scored'' for budgetary purposes.
Mr. Faleomavaega. Secondly, there are special
circumstances.
Thirdly, I am totally puzzled as to what are these
exceptions or special cases that makes Cambodia different from
these other countries that I have just shared with you where we
have forgiven debt.
[The information referred to follows:]
Written Response Received from Mr. Joseph Y. Yun to Question Asked
During the Hearing by the Honorable Eni F.H. Faleomavaega
Cambodia's situation is different from other countries that have
been given debt relief in a number of important ways. For example,
whereas Cambodia has paid other creditors on time or early, it has made
no attempt to pay the United States despite there being a Paris Club
agreement. Also, Cambodia is the only country that has refused to pay
the United States on the grounds that the debt is ``odious.'' We do not
agree with the Cambodian view that this debt is ``odious'' or that
Cambodia is relieved of payment obligations. Finally, every country
that has had debt forgiven by the United States has had an IMF program.
Cambodia is requesting debt forgiveness even though it does not have an
IMF program.
Mr. Faleomavaega. Could I ask if you could do that for the
record? So at least, assuming I get re-elected in November, you
will see my ugly face again. And I don't know if we are going
to take a majority of the House, but I assure you we are going
to revisit this issue again, maybe by introducing a bill that
will reflect the concerns of my colleagues here and me.
I fully understand the standard policy. We don't want to
set a precedent. But when I look at the number of countries
that have had their debts forgiven, that is where I raise more
questions and say, Well, we have a standing policy, but there
are exceptions to the rule.
If you could, Mr. Secretary, if you could submit for the
record all the countries for which we have forgiven their
debts. It would also be helpful to explain what gave rise to
our justification in forgiving those countries of their debts.
I think that would really help the record.
Mr. Yun. We will do that, sir.
[The information referred to follows:]
Written Response Received from Mr. Joseph Y. Yun to Question Asked
During the Hearing by the Honorable Eni F.H. Faleomavaega
Attached please find Table A5 from Treasury's Foreign Credit
Reporting System's Salmon Book, which lists U.S. bilateral debt
reductions from FY 1990 through FY 2009 and the statutory authorities
under which those debts were forgiven. Since the table was published,
Tropical Forest Conservation Act (TFCA) agreements with Peru (2008--
$25.1 million) and Brazil (2010--$20.8 million) have been finalized.
Mr. Faleomavaega. All right. I really thank you.
I think I have already asked a question, and you have
already raised the conditions that Cambodia has to come up with
in order for them to properly pay their debts. Whatever
documentation or things that relate to that, I would appreciate
if you could submit that for the record, and maybe even the
terms of the Paris Agreement, do that as well.
[The information referred to follows:]
Written Response Received from Mr. Joseph Y. Yun to Question Asked
During the Hearing by the Honorable Eni F.H. Faleomavaega
The 1995 Paris Club Agreed Minute is attached along with the draft
of a proposed bilateral agreement between the U.S. and Cambodia, which
was never signed. Also attached is a copy of the February 2010 letter
from Under Secretary of State Hormats to Cambodia's Deputy Prime
Minister Hor Namhong, which offers a generous rescheduling of arrears,
provided that certain basic conditions are met. We have not received a
reply to this letter.
Mr. Faleomavaega. What about the suggestion by some of our
policymakers--including myself--about the recycling of this
debt forgiveness? Is that a poor option? Has it been done in
other countries about recycling resources?
Mr. Yun. It has been done quite a bit, sir, I would say.
There is, as I said, one program in the U.S. Government called
Tropical Forest Conservation Act. And essentially what that
program does is payment is made in local currency, and that
money goes toward protecting forests. And we have done it in
several countries.
Mr. Faleomavaega. I didn't mean to interrupt you, but I
think there is one standing issue that has been brought to my
attention, that some of the richest cultural, historical
sites--I don't know if it is an ancient city or ruins--that sit
right on the border between Thailand and Cambodia. It has been
suggested by some of the NGOs and other organizations that some
kind of funding process could be brought about so that these
countries, rather than fighting over their borders in this very
historic area between Cambodia and Thailand, that maybe some
kind of an international cultural heritage, some type of thing
that would be beneficial to visitors, tourists coming from--
whether you are from Cambodia or from Thailand, certainly as a
means of giving a greater economic boost for the tourism
industry of both of these countries. I have been informed
that--this was one suggestion that was offered, that maybe the
recycling of the debt could be done in that format. But what is
your best sense about recycling as another option to consider
in dealing with Cambodia's debts?
Mr. Yun. I think recycling, or debt swaps as we call it, is
certainly something that could complement our debt program with
them.
However, one real difficulty currently doing something like
recycling is that Cambodia is in arrears in the sense that they
have stopped paying us. And so, as in any creditor/debtor
relation, when a debtor stops paying you, the creditor is not
going to say let's think about these creative options. I mean,
those options only come as we negotiate and normalize debt
relations. So I would say, Mr. Chairman, certainly those are
great ideas and we should and we will explore them, but please
understand they can only be done as debt relations become
normal.
Mr. Faleomavaega. So, in other words, you are making a
precondition. Before you may consider recycling, you have to
start paying up your debts to kind of show that in good faith
you are sincere in your efforts to try and pay your debts. Am I
sensing this is our policy on recycling?
Mr. Yun. That is very much it. Our U.S. Government is a
tough creditor, sir.
Mr. Faleomavaega. Well, $4.1 billion, that is a pretty
sizeable debt forgiven for Iraq, which has a huge amount of
oil. I think number two or three largest oil reserves in the
world.
So what does Cambodia have to depend upon? Not very much.
The textile industry is really the only thing that is really
putting this poor country on the strings of trying to get
economic billing. And when you compete against the largest
textile industry, like China or Bangladesh or India or other
countries, you are living in a real tough market situation
there where these 14 million people in Cambodia are struggling
to make ends meet and survive.
So basically you are saying that the basic policy on the
recycle issue is that we do have this precondition that you
have to start paying your debt before we talk about recycling.
Is that basically the administration's position on this?
Mr. Yun. I would say in order for us to discuss issues like
that, Cambodia really should come to terms--and Cambodia and
us, it is negotiations--should come to terms on what to do
about arrears and what to do about payments coming due. Once we
can come to terms on those, I am pretty sure we can discuss
some of the options you have outlined.
Mr. Faleomavaega. So it isn't a question of whether the
government was illegitimate. It is a question of whether you
are a dictator or whatever it is, you are responsible for the
debts that incurred in that given period, obviously. Because
this is what happened historically with Cambodia and why we are
slapping this $400 million debt because of something that
General Lon Nol did in receiving these agricultural
commodities.
Is this also one reason why our assistance in ordnance,
trying to clean up the mess that we created, the bombings in
Cambodia, is this also one of the reasons why we are not
forthcoming in helping Cambodia get rid of the mess that we
created, because they haven't repaid their debt?
Mr. Yun. We are in a kind of, I would say, contradictory
situation. We do give assistance. Our USAID programs in
Cambodia are in the region of $60 million or so. And we do that
every year. There is a substantial USAID program in terms of
health, public health programs, HIV/AIDS programs. We also have
education exchanges and some fellowships there.
Mr. Faleomavaega. Can you submit for the record total U.S.
assistance programs----
Mr. Yun. Yes, happy to do so.
Mr. Faleomavaega [continuing]. Loans and stuff that are
currently given to Cambodia every year.
[The information referred to follows:]
Written Response Received from Mr. Joseph Y. Yun to Question Asked
During the Hearing by the Honorable Eni F.H. Faleomavaega
In Fiscal Year 2010, the United States provided $72.6 million
dollars in assistance to Cambodia. That amount includes development
assistance, economic support, military financing, health, education,
and non-proliferation and anti-terror programs.
Mr. Yun. So for a lot of people looking at this situation,
it would seem ironic that we are insisting on debt payments
while we are giving assistance. But these are two, we believe,
separate issues. Matters of debt follow their own policy issue.
Matters of assistance--and I think it is correct that we do
that. We cannot withhold assistance because of some disputes
over what is owed and what is not owed. That will take time
coming to terms, and we are coming to that.
So in terms of assistance on unexploded ordnance and so on,
we continue to give them. We have programs both in Cambodia,
Laos, and Vietnam--we call it UXO programs. And we work with
NGOs on cluster bombs, especially in Laos and Cambodia. And we
also work somewhat on education programs so that people are, I
would say, watchful of these UXOs.
Mr. Faleomavaega. I appreciate you mentioning the situation
in Laos. I visited Laos recently. We dropped 2 million pounds
of bombs, probably the most bombed country per capita in the
world. What we did in that country, both Laos and Cambodia, as
a result of that a lot of unexploded ordnance remains in the
farmlands and all over. Approximately 300 people--mostly
children and women, because they look for scrap metal--end up
getting into a lot of these bombs that were unexploded and
ended up getting blown up themselves. And so for the Unexploded
Ordnance Program that is currently being carried out right now,
for example, in Laos, we contribute only $3 million a year to
do this. And I will say, Mr. Secretary, I sincerely hope the
administration is going to change the policy of giving a little
more than the measly $3 million to clean up the mess that we
created both in Laos as well as Cambodia, especially for all of
that. It is still there.
I am not going to get into the cluster bomb situation. I
don't know if many Americans know what a cluster bomb is.
Although I have seen a bombie--they are called little bombies--
these cluster bombs are dropped from planes and in midair would
explode, putting out 50, 100 bombs like little grenades. I
mean, it is amazing how man can invent machines and things on
how to kill in a more perfect way, but probably put it in other
terms, the worst way in killing other human beings, and we did
this to the Cambodians. A lot of innocent people died as a
result of these cluster bombs that we dropped on them. But
worst is that thousands or millions of these bombies are all
over the country, and because they haven't exploded, children
get--I think 300 people get killed a year because of what we
have left that we never cleaned up, the situation that we did
there.
So I hope in some way that, as much as we are giving
assistance, that we can give a lot more than $3 million a year
to clean up the unexploded ordnance that we have left both in
Cambodia as well as in Laos.
Mr. Secretary, I know I have retained you for quite a long
time here, and I don't want to hold you any further.
As I understand it, you mentioned earlier that debt
forgiveness is an entirely different issue from the current
U.S. assistance programs for Laos. What is your best estimate
as to the total amount of money that we provide in assistance
programs, Mr. Secretary, to Cambodia?
Mr. Yun. We will get the exact figure for you. By my
recollection, it is about $60 million a year.
[The information referred to follows:]
Written Response Received from Mr. Joseph Y. Yun to Question Asked
During the Hearing by the Honorable Eni F.H. Faleomavaega
In Fiscal Year 2010, the United States provided $72.6 million
dollars in assistance to Cambodia. That includes development
assistance, economic support, military financing, health, education,
and non-proliferation and anti-terror programs.
Mr. Faleomavaega. Could you also provide for the record
total exports, imports of products?
[The information referred to follows:]
Written Response Received from Mr. Joseph Y. Yun to Question Asked
During the Hearing by the Honorable Eni F.H. Faleomavaega
In 2009 total trade with Cambodia was approximately $2 billion.
Total exports to Cambodia amounted to $127 million, and total imports
from Cambodia equaled $1.9 billion. U.S. exports to Cambodia include
motor vehicles, textile fibers, waste, professional and scientific
instruments, and vegetables and fruit. Cambodian imports to the United
States include apparel, textile yarn and fabric, footwear,
miscellaneous manufactured goods, and fish.
Mr. Faleomavaega. Does the United States have any trade,
any export relations, import/export ties with Cambodia?
Mr. Yun. We have very good export-import relations. As you
mentioned, textile trade--of course, textile exports from
Cambodia is a very big source of U.S. imports of textiles.
There is substantial U.S. investment there, especially in the
mineral sector and the oil and gas side. And I would say the
economic relations is really improving, as is the Cambodian
economic situation in general. They are very hardworking
people, and they are doing quite well.
Mr. Faleomavaega. Mr. Secretary, I want to thank you for
your participation in this dialogue. I sincerely hope that one
day both of us will travel to Cambodia and meet with officials
of that government and find a solution to the current problem
with this debt issue that we have discussed this afternoon.
Thank you very much. The hearing is adjourned.
[Whereupon, at 3:15 p.m., the subcommittee was adjourned.]
A P P E N D I X
----------
Material Submitted for the Hearing RecordNotice deg.
Material submitted for the record by the Honorable Eni F.H.
Faleomavaega, a Representative in Congress from American Samoa, and
Chairman, Subcommittee on Asia, the Pacific and the Global Environment