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FEBRUARY 8, 1995

                  U.S. DEPARTMENT OF STATE
                    DAILY PRESS BRIEFING
                          I N D E X
                 Wednesday, February 8, 1995

                                      Briefers: Christine Shelly

   Unresolved Issues in the Light-Water Reactor
     Project (Type of Reactor, Supply, Financing
     Contractual Arrangments, Safety, Liability,
     Assurances) ...................................1-6
   US Position re South Korean-Model Light-Water
     Reactor .......................................2,4-6,14
   Date for Formal Resumption of KEDO Talks ........3-4
   Kim Jong Il's Birthday ..........................5
   Resumption of North-South Dialogue as a
     Prerequisite for Framework Agreement/
     Regional Peace ................................7-8, 10

   Wednesday Morning Senior Staff Meeting with the
     Secretary .....................................6
   Major Issues in US-PRC Relationship .............7
   Report a US Satellite Caused Rocket Failure .....10-11

   French Proposal for EU Involvement ..............8
   Logistics of Feb. 12 Foreign Ministers Meeting ..8
   Arafat Crackdown on Militants in Wake of Attacks
     on Israelis ...................................8-9
   Shutdown of Newspapers by Palestinian Authority .9

   Mexican/Canadian Opposition to Border Fees ......9

   Senator Helms' Liberty and Solidarity Act .......10

   UN Report to the Security Council of Helicopter
     Violations of the FRY Sanctions/No-Fly Zone ...11
   FRY Compliance with UN Sanctions Overall ........11-12
   Bosnian Foreign Minister's Charges re FRY Troops
     inside Bosnia .................................12
   Reports UN Observers Banned from Airfields ......12
   US Position on French Proposal for an Interna-
     tional Conference/Invitees ....................12-13
   UN Security Council Statement re UNPROFOR's
     Continued Importance in Croatia ...............14-15
   Meeting of Krajina Parliament to Reconsider Z-4
     Plan ..........................................15


DPC #20

WEDNESDAY, FEBRUARY 8, 1995, 1:15 P.M.

MS. SHELLY: Good afternoon, ladies and gentlemen. I don't have any announcements, so I'll be happy to start with your questions.

Q No guest speakers?

MS. SHELLY: Oh, are you disappointed? I thought about having another surprise today, but I hated to have it become too much of a pattern. But we may have more guests. You know we have a guest tomorrow -- someone who is well and favorably known to you who is just itching to come back and get to this podium again and have the opportunity to field a few questions. But I don't have any guests for today, but I'll register for the others that it was a big disappointment.

Q How about the story on North Korea, that they want more than they've been promised?

MS. SHELLY: Okay. It's going to come as a big surprise to you that I have lengthy guidance on this issue. So let me start.

Under the Agreed Framework, our efforts to implement the light-water reactor project had two parts. First: The Agreed Framework called for the U.S. to organize under its leadership an international consortium to finance and supply the light-water reactor project to the DPRK.

The second element: The Agreed Framework called for the U.S. to make best efforts to secure conclusion of an agreement for the light-water reactor project between the DPRK and the international consortium within six months after signature of the Agreed Framework. This isn't a deadline. It's a target date.

With respect to the establishment of the international consortium, I think you're aware of the progress on that; the U.S., Japan, the Republic of Korea were on track to establish KEDO at the end of this month, with the headquarters to be in New York City.

With respect to the negotiations on the light-water reactor supply agreement, we've held two meetings, as you know, with the North Koreans on the project. The first was held in Beijing in December and in Berlin last week. Another round is scheduled for March. I don't think the location has been set yet. I'll check on that.

As expected, the light-water reactor negotiations have been tough. None of the details of the light-water reactor project are specified in the Agreed Framework. They were deliberately left for expert-level meetings to negotiate.

The issues that need to be resolved -- and even though we put out a press release on this on the first of February, let me just quickly list those off again -- include the type of reactor, the scope of supply, financial terms, contractual arrangements, nuclear safety and liability, and the necessary assurances in connection with the light-water reactor project. Those are all specified, as I mentioned, in our press release of February 1.

Some progress has been made in resolving the outstanding issues; but significant differences remain, especially on the politically sensitive issue of the reactor type. The North Koreans, as you know, have expressed opposition to South Korean reactors on technical and political grounds.

We have always taken the position that the only viable option requires South Korean-type reactors because South Korea is the only country willing to play a central role in financing the light-water reactor project.

Clearly the central issue of reactor type will need to be resolved before the project can move ahead.

A less controversial issue involves the scope of supply. The Agreed Framework calls for provision, as you know, of two 1,000-megawatt reactors but does not specify what the facilities are that are to be included in the overall project. Light-water projects can include a number of different accessories, as we call them, or auxiliary facilities such as training and maintenance centers.

As expected, the opening position of the North Koreans is to request a maximum number of add-ons. We have no intention of agreeing to the add-ons which are outside of the normal scope of supply or which would significantly increase the cost of the project. However, we will carefully consider inclusion of those facilities which are necessary and desirable for safe and efficient operation of the reactors.

Q Can you tell us what it is -- what accessories -- the North Koreans want?

MS. SHELLY: Sid, I can't really get into a detailed discussion of that. We're trying to balance here between keeping the talks with the North Koreans on track and getting into what are obviously highly technical issues that have to be worked out because the details of it were not included in the Agreed Framework. We're trying to balance between the need to work that process and also have the maximum amount of transparency possible in terms of presenting this issue to you, to the public, certainly to the American Congress on this issue.

We're trying to give you as much information as we can and to tell you that there are problems where there are and to try to give you an idea of some of the considerations that are going into the talks right now. But, as you know, it's a process; the process is on-going; and the issues are very technical. We simply feel that it is best at this point not to get involved in a further and more detailed discussion of what some of the auxilaries or accessories, as we call them, are.

But the issues are there. We've mentioned a couple of those illustratively. We simply don't believe that the best approach on this is to get into a very detailed discussion of it publicly.

Q As to the discussion aimed to the resolution of these issues that we're discussing right now, is this now on- going between the DPRK and the United States? Are we going to have to wait until March to have another meeting? Can you tell us?

MS. SHELLY: We had meetings. We had meetings in February.

Q I understand. But these are things that are coming up from those meetings; is that correct?

MS. SHELLY: Those issues that were discussed in the meetings. That's right. And, again, it's a process; it's on-going. They obviously will reflect upon things that we've told them. We will reflect on things that they've told us. We agreed to resume. That will happen in March.

Obviously we're shooting for the target date of April 21 for the conclusion of the agreement on the project. But the important thing, obviously, is to address all of the details under this agreement in the context of the talks with them and of the process.

Q My question, though, Christine, are we still talking to the North Koreans, or are we going to have to wait until March to go back into these issues with them?

MS. SHELLY: I think it's a question of when there are formal talks held on this. We certainly have ways of communicating with them, and we've discussed what those ways are before.

I'm not implying that we are going to be totally out of contact with them on the issue. But it's clearly in terms of the next time when our experts sit down and try to work through the whole range of the technical issues. That's what will take place in March.

Q Are we negotiating with them at the present time on these issues, or do you know?

MS. SHELLY: We're not out of communication with them. Let me leave it at that.


Q Did this North Korean position come as a surprise to the United States? Or had you -- did they ask for something you weren't expecting them to ask for, or was this the sort of thing that you expect in a negotiation?

MS. SHELLY: I know that one press report indicates that this came as a surprise. I think that to most of those who have been deeply involved in this issue it doesn't come as any surprise.

In the context of the discussions leading up to the Framework, there were many, many different issues out there, as you know. It's a complex agreement. It has many different aspects to it.

They decided that what they wanted to do was leave it as a Framework; leave it to the experts to sit down in all of these different tracks and sort out what all the details were. The North Koreans have articulated this position before, but we've also made it very clear what our position is on this, and we are confident that the way the agreement will come out is with the type of basis that we have described.

Again, if I can go back to the key point, there is only one formula which has really emerged that we think is a practical basis for going forward, which is to use the South Korean reactor model.

Where the profession of surprise comes from, I don't know. They have articulated what their objections are to this. We've also articulated very clearly from the beginning what our position is on this issue and has been on the issue. So our position certainly doesn't come as any surprise to them. But I think we all felt, even at that time, that it was still possible to go forward with the Agreed Framework and to get the technical experts to work out all of the remaining details and address the issues.

Q At the end of this project, will North Korea own the reactor facilities, or will ownership be with KEDO? Who will own the facilities?

MS. SHELLY: One of the issues that we've touched upon, of course, is the financing issue. I think that you're aware that the North Koreans have always said, on the reactor issue, that they weren't looking for a gift, that they were talking about something that the financing could be made available for -- with arrangements regarding repayment -- to be worked out through the consortium. So I don't have any information that suggests that there's anything different in that score.

The plan of the consortium is to be able to provide the money up front, through all of the different international contributions, to enable the project to go forward and for the reactor to be built. But the financing arrangements which would flow from that are still something that have to be addressed.

Q Sort of a related matter. Does the Administration have anything to say to Kim Jong-Il on the occasion of his birthday?

MS. SHELLY: Not specifically that I'm aware of, but I'll be happy to check. Why didn't you tell me in advance you were going to ask that question? It's a great question. I'd like to know the answer, too. You caught me, Sid. What can I say.

Q Back in October there was a rumor in Geneva that the DPRK would refuse the South Korean type already. Then, at that time, there was also a rumor that possibly one of the two reactors might not be a South Korean type. This Administration's commitment to stick to the South Korean type, does it cover both of the reactors, or can there be a possibility of compromise?

MS. SHELLY: First of all, as I thought I had signaled, the issue is not a new one regarding the origin and the opposition of the North Koreans to the South Korean reactor. It's not a new issue. It simply has resurfaced again in the context in the aftermath of the Berlin meetings.

I'm not aware that there is any serious thought or consideration being given to try to make a distinction between either of the two reactors.

Q Winston Lord this morning was at a breakfast speaking about China and other related issues, and he had to leave earlier than expected because he said he had to go to a meeting that the Secretary was holding at 9:00 o'clock on China and that he was making a major presentation. I was wondering if there was anything you can say about the Secretary's deliberations today on China and why this was a subject --

MS. SHELLY: Did Winston say that at this breakfast?

Q He did.

MS. SHELLY: Did he say that? Get Winston on the phone for me, please, right after the briefing. (Laughter)

Okay, I'm about to reveal a major State Department secret. You're all listening. This is not that exciting.

On Wednesday morning, at 9:00 o'clock, we have a senior staff meeting which has a rather expanded participation; and it's an opportunity where many of the senior people in this building are able to not only hear from the Secretary as he meets with the senior staff, but it also provides an opportunity for us often to have either specific discussions or presentations on issues which are clearly topical. It also provides an opportunity for speakers from other parts of the U.S. Government -- senior-level speakers, I might add -- to also come over and address the senior levels of the State Department.

Mickey Kantor, for example, was here at the State Department last Wednesday and talked about some of the trade policy issues which obviously are of great concern to us. This morning we did have a meeting where the focus of the discussion was on China. I wouldn't characterize this as anything out of the ordinary except that China, particularly because of the IPR dispute right now, is certainly very much in the press, and certainly we are having a lot of Congressional consultations on the China relationship.

Winston Lord, of course, is a major player in all aspects of the China discussion; and so he was a participant along with other senior State Department officials in a discussion of the China relationship more broadly.

But I think I really need to leave it there because there are internal meetings, and so in a way I'm sort of surprised, but on the other hand I don't think there's any reason not to state the context in which the discussion took place.

Q Did this meeting, though, take place in the context of any expected near-term decision-making on China?

MS. SHELLY: Not specifically that I'm aware of. There are issues on China which are very active right now. Certainly the human rights issue in the aftermath of the release of the State Department's Annual Human Rights Report. There is certainly much more press and public focus right now on that issue. The trade issues are obviously very prominent. There are other trade issues and aspects which are out there as well, and they of course touch upon the overall relationship with China.

As you know, it's a broad relationship. It's one in which we have opted for engagement across a wide range of issues and activities. So I'm not of the impression that there's any change expected in that regard.

But I think in the case of all major relationships -- and certainly the prominence that the Secretary gives to this I think was made in his speech in Boston -- but all major relationships are something which are not only kept under review to try to be sure that we are approaching them in the best possible way and using the ways of communication and the tools of diplomacy that we have in the most effective way; it's also something which is of broad interest to others in the Department who also are involved in speaking on behalf of the State Department and also obviously face questions on issues which are not simply in their own areas of expertise.

Q Back to Korea for a second. You've remarked several times that North-South dialogue is essential to the Framework Agreement going forward. Does that mean there has to be progress on North-South dialogue by this April 21 deadline?

MS. SHELLY: We certainly would like to see progress in the North-South dialogue. That's been no secret. But I don't think that we are trying to define it in terms of formal linkage. There were some ideas that were tossed out there by the South Koreans recently for possible issues to be discussed in the context of North-South cooperation. We thought at the time that those were put out publicly that they represented very good ideas, and certainly it is a channel of communication that we would like to see early progress in.


Q French Foreign Minister Juppe in Damascus said that the European Union would like to get involved in the Middle East Peace Process if the parties deemed it necessary. How does the United States react to that potential involvement?

MS. SHELLY: Certainly we recognize that the European Union has a lot of interest in the Middle East and that they are keenly interested in the peace process and its progress. They also recognize that there are a number of different channels for progress on that, and I don't have any impression from what's been happening most recently that they're working on any other track than we are, vis-a-vis trying to see a long-term improvement in the situation on the ground.

I haven't had a chance to study his specific remarks, and I think I'd like to do that before engaging in anything more specific on it.

Q A follow-up. Is there anything more you can tell us about Sunday's meeting here?

MS. SHELLY: No. I still don't have really much more in the way of detail to put out on that. It's my expectation that on Friday we'll actually be setting the scene for that in some way here in some kind of a briefing, and I simply don't have the details on that yet.


Q The self-rule authority in Gaza has apparently initiated a crackdown of sorts with arrests and apparently some talk of special courts to be set up for security matters. Do you have any reaction or comment to that?

MS. SHELLY: Yes. I have, I think, a sort of general reaction. Certainly we've seen the reports indicating that a greater crackdown is underway. We believe that Chairman Arafat understands what is a very serious threat posed by the acts of terror and violence that occur, not only to the Israelis but to the peace process, to the Palestinian people, and to, of course, the Palestinian Authority.

We have called upon the Palestinian Authority to do everything in its power within the area that it controls to investigate, to arrest, and to prosecute those responsible for the violence and terror.

Q They also shut down a couple of newspapers. Is that in keeping with the democratic ideals you'd like Chairman Arafat to be carrying out in the areas he controls?

MS. SHELLY: No, we continue to support freedom of the press. That is something which is always a mainstay of our policy. We're aware of some of the reports about connections between the publications and some of the groups which continue to espouse terrorism. We continue to affirm our strong commitment to freedom of the press. We're also aware of the difficulties of the issue for the Palestinian Authority and the complexities of it.

I think some of the actions that we see are indications of their efforts of trying to come to grips with the problem, but I think that to delve any more into it specifically, I think, is probably not a productive exercise.

Q Both NAFTA partners of USA -- Mexico and Canada - - are strongly opposing the border fee that the Administration is proposing. I would like to know, is there any risk that this can badly harm the relationship between the three countries?

MS. SHELLY: There are a number of different proposals out there, and I think that we have had some discussions already with the neighbors on our border about those proposals. I don't have anything specific I would want to say which would characterize those exchanges, but I think that those governments themselves have made some public remarks about it. We're certainly aware of them, and we're also working this through our private channels of communication with them as well.

Q As far as I am aware, Mexico verbally opposed yesterday night this fee. Is there any response to that?

MS. SHELLY: I'll have to check on that. I have not seen the remarks that you're referring to specifically.


Q You said yesterday when I asked you about Cuba, the people coming here -- you said that the State Department might try and arrange alternate ways for these people to get here. Do you have anything else to announce today on that?

MS. SHELLY: No, I don't. Nothing new on that.

Q Secretary Helms may propose some legislation that would radically --

MS. SHELLY: Secretary?

Q Oooh! (Laughter)

MS. SHELLY: I got a new boss?

Q Chairman, thank you. Sorry, Mr. Christopher. (Laughter) -- that would impose even more of an embargo on Cuba. Has this building been in touch with him on this legislation?

MS. SHELLY: We've actually seen press reports on the legislation. I'm told by our Congressional side that we have not actually seen the legislation, and therefore I should be very circumspect before commenting on it in any detail. So we'll look forward to getting it and looking at it, and then maybe see at that time if we want to comment more specifically.

Q May I go back to Korea again? The South Korean Government seems to believe that the South and North Korea dialogue is prerequisite condition to open the (inaudible) peace in Pyongyang and Washington, D.C. I met the South Korean Foreign Minister, Mr. Gong, who met here Christopher a couple of days ago. According to him they have successfully persuaded U.S. Government that the South and the North dialogue is prerequisite to open the (inaudible) peace. Could you give me your comment on that?

MS. SHELLY: I think I have just indicated already the importance that we attach to progress on that dialogue. I certainly would reiterate that. And on whether there is any more formal kind of linkage about the timing of that, I'm not aware of any. I'll be happy to check on that and see if there's anything more to say. But I don't have anything further on that.

Q Do you have anything today on the question I asked yesterday on the Chinese allegation that the failure of their recent satellite launch may have been a foreign sabotage attempt? And I have a follow-up.

MS. SHELLY: I have something very tiny on that for today. I'm trying to be better about following up on things we're looking into.

On that, and claims about the possibility of a U.S. satellite having caused the explosion, we have seen no evidence to support press reports that the satellite may have caused the Chinese rocket's explosion. We understand that the Chinese and the satellite manufacturer are conducting a detailed investigation at the present time, and I would not wish to speculate on the cause of the explosion.

Q Will this incident have any impact on future U.S.- Chinese cooperation on the satellite launch?

MS. SHELLY: I'm simply not in a position to make that kind of call.

Q Question on Bosnia. There's a report in the Times this morning that the U.N. is quite concerned about -- or maybe the U.S. -- that the U.N. is concerned about violations of the sanctions regime and of the "no-fly" zone. Do you have anything on that? And also on the more general question of whether there have been significant violations, crossing of equipment from Serbia into Bosnia?

MS. SHELLY: On that, we have also seen increased reports of this, and of course it is a source of concern for us. Yesterday U.N. Under Secretary General Garekhan reported to the Council that U.N. troops in Bosnia had observed eight separate instances of helicopter flights, totaling 62 helicopters, between the 1st and the 4th of February, near Srebrenica and near the Serbian-Bosnian border in northeast Bosnia.

Garekhan said that although the helicopters had not been observed crossing the Serbian-Bosnian border, the location of the observations and the heading of the helicopters strongly suggested that they had come from Serbia. We are seeking additional information on this. It's obviously important to evaluate all of the information and to get a complete picture before deciding exactly how we and the United Nations ought to respond.

So the reports are certainly a point of concern for us, but again we would want to get all of the available information on this before then determining what would be the best way to react.

Q What about the broader question of violations of the regime that Silajdzic made in public when he was here last week?

MS. SHELLY: As you know, we have a mechanism in place for that. We are concerned about reports. We have also indicated before that there have been some violations. We also have a regime in place. I think we've got something like 50, 60 Americans who are part of that monitoring regime.

I think we've felt reasonably confident that most of the areas where border crossings have taken place before have now been plugged. There occasionally are reports of other types of violations. We try to get information on those. We discuss them through the monitoring mission.

If it appears that there is solid evidence, we try to take that up with the Serbs, including their own efforts at compliance from their side of the border. I think we feel overall that the compliance has been pretty good. In most situations where borders are sealed and where sanctions regimes are in place, there is always an element of violation which does occur. It's a long border, and in some places it's very difficult to police.

But reports of violations are something we take very seriously, and we try to get the best possible information on them that we can and then pursue them as appropriate through the agreed upon channels, through the international community.

Q As part of this serious (inaudible), can you say whether Mr. Silajdzic's claim is accurate or inaccurate -- of last week? He also talked about thousands of troops coming in.

MS. SHELLY: Okay, I know that, because you've questioned before on some rather specific information that he is said to have circulated up on the Hill. I've checked on that point here. The issue was touched in his discussions with the State Department; the issue was touched upon here. I'm simply not aware from my efforts to determine how much this was the focus of his meetings here. It's not my impression that he was providing the same detailed kind of information in his exchanges with American officials here that he may have been with the Congress.

I know the issue, as I mentioned, was discussed; and we also discussed with him our commitment to try to make sure that that border can be as effectively closed as possible.


Q Is Belgrade not allowing U.S. observers access to certain observation posts along the border?

MS. SHELLY: I don't know. I don't have the answer to that. I will check.

Q Still on Yugoslavia, or the issues. Any comment or any new thoughts about the French proposal for an international conference to, in a sense, supplant the Contact Group?

MS. SHELLY: We actually had something on that yesterday and it didn't come up. Let me just take a second and see if I still have it here. I don't have it with me today.

Our feeling on the conference generally was that it should have a connection to the negotiating process. We also feel that it should be certainly very well prepared, with a view to achieving the desired result, which is obviously getting the peace process re-energized or jump- started or sort of back on track.

It's my understanding that at this point the kind of conference that they're talking about hosting is one which simply involves Milosevic, Tudjman, and Izetbegovic. I think that's what the invitations are at this point.

As I said, I think that's sort of the gist of what that said. You might check with the Press Office. We may have had a few more details on that.

Q But we're not ruling that kind of conference out, then?

MS. SHELLY: I'm sorry.

Q It sounds like you're not ruling out American participation in a conference with that limited number of invitations.

MS. SHELLY: I think that the French proposal for a conference is a fairly narrowly-focused one. They're trying to stimulate this in the context of their role in the presidency of the European Union. And again, as to the exact details on when it would take place and who else would be invited, those are appropriately addressed to the French since it's their proposal.

Q (Inaudible) on National Public Radio a couple days ago, Karadzic would not be invited.

MS. SHELLY: Again, details on that --

Q You would not attend a conference at which Karadzic was invited?

MS. SHELLY: It's my understanding, again, that he isn't invited. But on that issue, I think you need to put that to the French. I don't have anything beyond what Assistant Secretary Holbrooke said on that.

Q Let me go back to Korea again. What's the major reason that North Korea still avoids acceptance of a Korean (inaudible) reactor?

I need the U.S. statement, the Government's official explanation or analysis. Why do they dislike the Korean- type reactor? That question could be stupid or foolish, but I need a State Department official explanation or viewpoint about that reason.

MS. SHELLY: I don't think it's up to us to address that. I have said that they have raised political and technical concerns. I think I have to leave it at that.

Q Do they need another condition, for example, to accept a Korean type? They are going to ask another request to the U.S. Government? You don't believe so?

MS. SHELLY: As I said, I gave you the information that I have and I'm really not prepared to go beyond that.

Q To Croatia for a moment. On Sunday, I believe Secretary Perry was quoted as saying that there was no progress in Munich that he had to report on the Croatian issue.

On Monday he was quoted as saying, other things were being tried -- other approaches were being tried. And then today --

MS. SHELLY: You should direct questions on Perry's statements to the Pentagon, if that's what's at the heart of your questions.

Q No. No, it's not at the heart of my question. The U.S. Ambassador today said, in a CNN report, that he did not see any progress in retaining UNPROFOR's supervision, at least as of the moment. That's what Mr. Perry had been talking about -- progress about UNPROFOR in Croatia.

So my question to you is, what other things are being tried? What was Mr. Perry alluding to that the State Department might be involved in?

MS. SHELLY: Mr. Perry works at the Pentagon, as you know, so I want to keep the jurisdictional issue straight.

There was a Security Council discussion yesterday relating to UNPROFOR and its withdrawal from Croatia. You might want to check up at the U.N. on that. My understanding is the Security Council reaffirmed the desire of having UNPROFOR stay and issued some kind of a statement that conveyed that to the Croatians, that they hoped the decision can be reconsidered.

As you know, the Krajina Serb parliament was scheduled to meet today. I think there was some hope that there might be another look at the elements of the plan that had been considered previously, the so-called Zagreb-4 Plan. We hope that in the context of those meetings they will take a look at the Z-4 Plan, which at this point is the only proposal that's on the table.

We still continue to believe that it offers the best hope for peace in Croatia, and we hope that they will give it a serious look.

Q The Krajina Serb parliament? Is that a new country in the Balkans or something? Krajina Serbia?

MS. SHELLY: No, Krajina Serbs are a portion of Croatia.

Q And you recognize their parliament as a legitimately elected --

MS. SHELLY: We recognize that they have a parliament within Krajina; that it's a body, it exists. It doesn't in any way suggest that we have a different position regarding Croatia and its international borders.

Q Thank you.

MS. SHELLY: Thanks.

(Press briefing concluded at 1:49 p.m.)


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