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FEBRUARY 17, 1995

                       U.S. DEPARTMENT OF STATE
                         DAILY PRESS BRIEFING

                              I N D E X

                       Friday, February 17, 1995

                                       Briefer:  Eric Newsom
                                                 Christine Shelly

ARMS SALES (Mr. Newsom)
   New Conventional Arms Transfer Policy ...........1-11

   Assistant Secy Holbrooke's February 17-26 Trip ..11

   Signing of Peace Declaration Sponsored by Rio
     Protocol Guarantors ...........................11
   Deployment of Ceasefire/Border Monitors .........12

   Results of Arafat-Rabin Meeting/Easing of Israeli
     Restrictions of Palestinian Border Access .....11
   Status of Ross Travel ...........................11
   Status of Delivery of 200 Vehicles to the
     Palestinian Police ............................14-15,17
   Gulf States' Participation in Mideast Development
     Bank ..........................................15

   Human Rights Record vs. US Aid ..................13

   Egypt/Other Arab States Attitude toward Extending
     the NPT .......................................13-14

   Export of Oil in Contravention of UN Sanctions ..16
   Jordanian Trade in Oil/Goods ....................16

   Provisions of New Contact Group Plan ............17-19

   Assistant Secretary Lord's Trip .................19

   US Visa for President of Taiwan .................19
   Ongoing PRC-US Trade Talks ......................19
   Spratly Island Dispute ..........................25
   Purchase of Russia Cruise Missile Engines .......25

   Report of US Plan to Contract Out South Korean
     Model Light-Water Reactor to Westinghouse .....20
   Status of KEDO Consortium .......................20-21
   DPRK Position on South Korean Model LWR .........20-21

   Election in Jalisco State .......................21-22
   Chiapas:  Offer of Amnesty, Presence of Human
     Rights Monitors ...............................22-23
   Coast Guard Interception of Migrants from 
     Caymans .......................................23-24
   US Position on Sanctions, Helms' Bill ...........24

   Under Secy Davis' Meeting with Defense Minister .24


DPC #24

FRIDAY, FEBRUARY 17, 1995, 12:46 P.M.

MS. SHELLY: Good afternoon, ladies and gentlemen. In keeping with the recently established pattern of providing surprise guest speakers at our Daily Press Briefing, I'm pleased to introduce today Mr. Eric Newsom, who is the Principal Deputy Assistant Secretary in the Bureau of Politico-Military Affairs.

Deputy Assistant Secretary Newsom has spent over 25 years working on foreign affairs and national security in the Federal Government. Immediately prior to rejoining the Department of State, Mr. Newsom was a Staff Director at the Foreign Operations Subcommittee of the Senate Appropriations Committee from January l989 to March of l994. For nearly l2 years, in the l960s and '70s, he was an Officer in the Foreign Service.

Mr. Newsom will talk to you today about the just announced Presidential Decision Directive resulting from the comprehensive review of U.S. policy on conventional arms transfers.

We'll follow our usual pattern. He'll begin with some opening remarks, and then he'll be happy to take some of your questions; and then I'll do your questions on other topics when he finishes.

Mr. Newsom.

MR. NEWSOM: Thank you, Christine

I'd like to take just a few minutes to give you kind of a general overview of the announcement of the Presidential Decision Directive on Conventional Arms Transfer Policy.

As you know, the White House has announced the release of the Administration's policy on conventional arms transfers; and I think you all have copies of the White House announcement and fact sheets. This is known as Presidential Decision Directive 34.

The PDD codifies policies that the Administration has been following in this area for the past two years in making its decisions on individual arms transfers. It does not represent a new departure from our current national security and foreign policy goals in the area of conventional arms transfers.

The policy, as expressed in the PDD, is based on two fundamental premises.

-- First, we seek to promote restraint, both by the United States and by other arms suppliers, in the transfer of weapon systems that could be destabilizing or dangerous to international peace.

-- And, second, that we approve arms transfers to meet legitimate defense requirements to support our national security and foreign policy interests abroad.

And we believe the Administration's record over the last two years reflects these two premises; and this document is, in essence, a codification of what the Administration has been doing.

The policy is also predicated on the reality that the end of the Cold War has not meant an end to dangers to the United States or our national security and foreign policy interests abroad.

The policy also recognizes that conventional weapons, particularly with advances in modern technology, can do enormous harm in the hands of hostile states or groups and that therefore appropriate restraint measures can serve our national security interests.

Reflecting the continued role of conventional arms transfers for U.S. national security interests, our approach reflects continuity with past arms transfer policy. However, this Administration has given a new emphasis in its foreign policy and national security policies to regional security and stability; and that is one of the features of this statement of Conventional Arms Transfer Policy that I think is a significant difference with the past.

The major goals which this Conventional Arms Transfer Policy statement are to serve are:

-- First, ensuring that our military forces can continue to enjoy technological advantages over potential adversaries.

-- Second, helping our friends and allies deter or defend against aggression, while promoting interoperability with U.S. forces when combined operations are called for.

-- Third, ensuring regional stability in areas critical to U.S. interests, while preventing a proliferation of weapons of mass destruction and their missile delivery systems.

-- Fourth, promoting peaceful conflict resolution in arms control, supporting regional stability, avoiding human rights violations, and promoting other U.S. foreign policy objectives -- such as the growth of democratic states.

-- Fifth, supporting the ability of the United States defense industrial base to meet U.S. defense requirements and maintain long-term military technological superiority at lower costs.

As to the arms control or arms transfer policy criteria reflected in this Policy Directive, this Administration will allow a sale only if it meets a set of rigorous criteria.

The list is rather long and I won't read it all, but you'll find it in the materials that you've been given. These are the criteria which will guide decisions on conventional arms transfers, which will continue to be made on a case-by-case basis.

Now, as to the question of the relationship of conventional arms transfers to the support for U.S. industry, this policy reflects continuation of a policy view that our arms transfer decisions will not be driven by commercial considerations -- that is, our decisions will be made fundamentally on national security grounds.

However, once a decision has been made on national security grounds to approve a particular transfer, then it is important that U.S. defense firms receive the support of the United States Government in seeking to make that sale. And, therefore, under this policy the Administration will provide certain types of support to U.S. industry -- for instance, tasking our overseas representatives/mission personnel to support marketing efforts of American companies and bidding for defense contracts, supporting official Department of Defense participation in international air and defense trade exhibitions, actively involve senior U.S. Government officials in promoting sales of particular importance to the United States.

A fundamental point here is that we see support for a strong, sustainable U.S. defense-industrial base as a key national security concern of the United States rather than as a purely commercial matter.

At the same time, a critical part of our policy is the control and restraint of arms in the transfer.

We also seek to increase the transparency of arms transfers -- that is, the public awareness of the nature and level of arms transfers by the various suppliers.

We have made, and we are continuing to work, on a number of initiatives to establish a new global pattern of restraint on conventional arms transfers.

And one of the most important: We are continuing to negotiate for a successor regime to the COCOM arrangement.

We are also seeking to press for wider participation in the United Nations Register of Conventional Arms.

We are supporting regional initiatives, and there are some interesting ones, to enhance transparency of conventional arms transfers in a region.

We're also trying to continue to expand our successful programs in Central and Eastern Europe in helping them develop effective export control systems so that they will have greater ability to regulate and control their own arms transfers.

Finally, we'll continue our efforts with emerging new suppliers, such as South Africa and others, to provide them with information and assistance on how they might adopt and apply reasonable arms transfer policies.

In conclusion, let me just emphasize that the U.S. system of reviewing and considering arms transfers is the most rigorous and open in the world. We will continue to make our decisions on arms transfers on a case-by-case basis, applying the criteria that are listed in the material that you have. And we believe that the Administration's conventional arms transfer policy will achieve the goals that are stated here and will continue to serve the interests of the United States national security and foreign policy.

Can I take some questions?

Q Do you see any relationship between passing HR-7 yesterday in the House and this new White House policy?

MR. NEWSOM: No, I don't see any relation to that. We have been working on this policy for some time. The codification of the policy in this document has been coming to fruition here over the last several weeks, and I don't think there is any connection to that action.

Q Thank you, Mr. Newsom. Can you address the issue of arms, especially being manufactured in Russia -- being sold worldwide now, I believe, to the Iranians and recently delivered a submarine to the Chinese -- and the issue also of the Chinese proliferating their arms, once again to Pakistan and other places around the globe -- some of the dangers of these arms transfers; and what's getting through in Bosnia, in Croatia? What arms are being transferred in there in violation of the embargo?

MR. NEWSOM: I think that's about six or seven questions.

Q That's a lot of questions. I'm sorry.

MR. NEWSOM: Let me first make a point about one of the more significant trends in arms transfer patterns over the last several years has been the virtual disappearance of Russia -- states of the former Soviet Union; primarily Russia -- as major arms exporters. That's in keeping, actually, with the sharp decline and the volume of arms trade globally.

With respect to the particular types of transfers that you mentioned -- Iran. These are matters of very great concern to the Administration. As I'm sure, we have been engaged in discussions with the Russians on their arms transfers. Those discussions are continuing. This is a matter of high priority for the Administration and one that we will continue to pursue actively.

Q About Bosnia, can you tell us about who is supplying arms to whom in Bosnia? Give us some warning flags about that situation?

MR. NEWSOM: I'm sorry, I'm going to have to refer you to the Press Spokesman on that. I'm not an expert on Bosnia. I'm just here to talk about the CAT policy.

Q I'm a little bit unclear about the point of using U.S. Government officials to promote the sales of weapons abroad. There's always been a kind of implicit support given by the U.S. Government, but this makes it very explicit. This is actively involving senior government officials in promoting sales.

Why is this necessary? Aren't the companies capable, with their equipment of selling it on its merits? You have to have U.S. Government officials flogging it as well?

MR. NEWSOM: I think it's pretty clear that for other major suppliers around the world, companies have the very active support of their governments at all levels. Our goal here is simply to level the playing field for American companies.

I want to stress, though, that before we are prepared to support the efforts of a particular sector of the defense industry to gain a contract, we must first make a decision that that transfer is in the national security interest. Only then are we prepared to lend the efforts of the United States Government to assist the U.S. industry in having a proximate level playing field with their competitors where their competitors do receive a great deal of support from their governments.

Q What do you expect will be the net effect of PDD- 34? Is it going to essentially restrain or constrain conventional arms exports? Is it going to enhance the ability of companies to proceed? What is your bottom line on this policy? Should it be steady and unchanged from what has been the de facto case so far?

MR. NEWSOM: As I stated in my remarks here, and is made clear in the White House announcement, there is a very strong element of continuity in this policy articulation. It codifies what this Administration has, in fact, been doing since its earliest days in office. It does reflect the approach of the United States Government to conventional arms transfers going well back many years.

I think that says a lot about a broad consensus about the role of conventional arms transfers and our national security policy.

What will be different? I think that this, by putting in a clear statement -- a comprehensive statement -- of all of the elements of policy, will give clear guidance to the agencies and bureaucracies that are involved. I think it will be of use to industry in giving them a clearer sense of what the U.S. Government will take into account as it makes it decisions.

Will it mean there will be more sales or less sales? That's an impossible question to answer. Because one of the core features of this policy is that we will continue to make decisions on a case-by-case basis. That makes it impossible to predict in advance whether any particular case is going to be approved or not.

Q Let me (inaudible) a little different way. The year the Administration has been in office, the overall volume of conventional arm sales has declined, which people say is a good thing. But the U.S. share of that diminished pie has substantially grown. Do you expect the U.S. share of world conventional arms trade will continue to grow? Would you like to see it continue to grow?

MR. NEWSOM: The U.S. share of the world's arms trade has gone up significantly. Some estimates are that it's over 50 percent now. In fact, the actual volume of our sales has not increased and, if anything, has stayed at roughly $10 to $12 billion for several years. It's likely to remain approximately at that level for another -- at least, as far as we can project -- for another few years.

The reason that our percentage of the market has gone up, of course, as you recognize in your question, is that the global market, as a whole, has dropped from I think approximately $60 billion four/five years ago down to something on the order of $30 billion or less now. We have people here who can give you the accurate figures.

So, obviously, if the volume of our sales is staying approximately roughly constant, while the overall market is falling, obviously, our percentage of that market is going to go up.

It's difficult to say, but I don't think we expect our share will rise much above what it is now, at least as far as we can project.

Is it a good thing that we have a large share of the market? I would say yes, it is a good thing that we have a large share of the market. The United States is a responsible arms supplier. We have, as I stated in my remarks here, obviously the most comprehensive, elaborate set of controls, I think, of any country in the world on our arms transfers.

Internally, within the Executive Branch, we have a very elaborate system of reviewing every arm sale. All significant arms sales have to be notified to Congress, and Congress has its voice. All of arms sales are public -- there's public scrutiny. Just intrinsically, in the very way that we handle individual decisions, we have, I think, a strong build-in restraint.

Q Can you go back to my earlier question? You said that it was not a level playing field, and yet you're describing volume being as high as it could be practically and percentage growing of the market growing. So where is there not a level playing field now?

MR. NEWSOM: I think that would have to be looked at on an individual basis. You have to look at a particular case into whether a government of another country was providing unusual or very aggressive support to its industry.

I think that what we're stating here is not particularly revolutionary. We're saying that U.S. representatives should seek to assist U.S. companies to gain contracts once we have decided it's in the national security interests of the United States that that particular sale should go forward.

It seems reasonable at that point that we should be of assistance to U.S. companies to compete for that sale.

Q But it seems to me that you're not backing up your own point about there not being a level playing field? You must have some specific backup that can demonstrate. You've got to send out top officials now to actively lobby for arms sales, which is what your position says.

MR. NEWSOM: I've already stated that the volume of U.S. sales is not rising. There seems to be implicit in your question that somehow we are cornering the market. What I'm explaining is that the reason our share of the market has risen is not because we are out selling more weapons than we ever had before; it's because the overall market has declined dramatically in the last four or five years.

Q You mentioned the difference between this Administration and past is the emphasis on regional security considerations.

MR. NEWSOM: That's one of them.

Q Can you maybe elaborate on that a little bit? Give an example of what you've done differently or would do differently from the past?

MR. NEWSOM: We think that the end of the Cold War means that we are both freer to look at the implications of a transfer for regional security and stability; and, in fact, it's more important because the role of these arms in a particular region may take on more significance. Therefore, while we are expressing this policy as a global policy of conventional arms transfers, we will seek to give a great deal more weight to regional considerations, the implications of a particular sale for regional stability and security, the affect on our friends and allies.

I'm sorry, what was the second part of your question?

Q An example of a case maybe where concretely you would end up doing something differently than maybe would have happened in a past Administration?

MR. NEWSOM: I'm afraid I can't cite you a particular case. I can tell you that we do pay a great deal more attention when we look at a particular case. We try to understand the regional security dynamic much more thoroughly. We try to weigh what this particular sale might do in terms of a regional balance, in terms of relationships among countries of the region.

This is an element which is receiving a great deal more attention than it has been possible to give it in the past.

Q What is the concern about increasing the arms sales -- the share of the United States and the international community -- in a way encourage some arms competition among the countries in the world that they want to buy, you want to sell them, they have the means to do it. You want to increase the volume of sales. Isn't this -- you are entering into the arms race instead of reducing the tensions around the world?

MR. NEWSOM: I have not said that we're seeking to increase the volume of U.S. arms sales. I said that the percentage of the market has gone up, even though the actual volume of our arms sales has remained relatively flat.

We are not out actively trying to corner the world market. We are attempting to make our decisions on arms transfers on a case-by-case basis. That means we don't try to lump -- we don't have a great strategy for going out and peddling arms to everybody who's willing to buy them. We try to look at every single case on its merits individually.

Q A question about Ecuador and Peru. A few weeks ago you decided to freeze any transfer of arms to Ecuador and Peru. Could you be more specific what kind of agreement has been freezed? And also are you going to keep this policy now that both countries agree on cease- fire?

MR. NEWSOM: Again, I'm not able to get into that. That's a subject I have not come prepared to address, and I'll have to defer that to the Press Spokesman. I'm just here to try to address the outlines of this CAT policy.

Q In accordance with this policy, are you going to ask North Korea not to transfer the conventional arms to Middle East?

MR. NEWSOM: I'm sorry. Are we going to --

Q Ask North Korea not to transfer the conventional arms to Middle East.

MR. NEWSOM: I'm not able to speak to that. That deals with a set of issues of which I'm not personally involved. I'm sorry, I can't help you there.

Q Mr. Newsom, one of the complaints one hears from the Russians when we ask them to stop selling arms to places like Iran is that the United States, like it or not, has locked up the market in selling arms to the good guys, and they're only left with the bad guys. Do they have a point?

MR. NEWSOM: They're not excluded from going out and trying to sell weapons to the good guys, but it is a very great problem for us when they try to sell weapons to the bad guys. We're not going to be able to turn away from sales the Russians might make in countries which are clearly inimical to our national security interests. We're going to have to oppose that as a threat to our national security interests.

MS. SHELLY: We'll do one more question.

Q Could you be more specific about the U.S. assistance to defense conversion in Central Europe? Have you something on that?

MR. NEWSOM: Just that we will continue the policy which has been carried on now through this Administration and into the previous one of trying to be of assistance to defense industries in Central and Eastern Europe in converting from defense production to civilian production. We intend to continue that effort, and we think it has been relatively successful so far.

Q One more brief follow-up, Christine?

MS. SHELLY: One last question -- the very last one.

Q Okay, all right. On the subject of China and Russia again, and alluding to the previous question, are we trying to lead the Russians specifically to follow our criteria or an enlightened criteria with regard to arms sales?

MR. NEWSOM: We are seeking to engage the Russians in working with us and other responsible suppliers to apply sensible guidelines to their arms sales abroad, so that they do not pose national security threats to us, our friends and allies or to themselves.

MS. SHELLY: Thank you very much.

MR. NEWSOM: Thank you.

(Mr. Newsom concluded his briefing at 1:14 p.m., at which time Ms. Shelly began her briefing.)

MS. SHELLY: Questions on other subjects.

Q Assistant Secretary Holbrooke is leaving next week for Europe. He's supposed to visit Hungary, Romania, Slovakia, I think Turkey, and some other countries. Have you something more on this?

MS. SHELLY: I don't have the full details on his trip. I can tell you that he's leaving this evening to visit several of his posts. The bookends of his trip will be attending the Chief of Mission meetings that are going to be held in Madrid and Budapest. He's also going to be visiting Turkey, since he was unable to complete that portion of his trip to the region last month. He will also be visiting Bucharest and Bratislava before returning on February 26.

Q Do you have something on Ecuador and Peru and the cease-fire they agreed yesterday?

MS. SHELLY: Yes, I do. The Deputy Foreign Ministers of Ecuador and Peru signed the Itarmaraty Peace Declaration on behalf of their two countries at 2:45 a.m. in Brasilia on February 17. The Declaration was signed in the presence of representatives of the four guarantor countries of the 1942 Rio Protocol.

We are gratified that the intense effort by the four guarantors -- that's Brazil, Argentina, Chile and the United States -- and the cooperation of the two parties, has now resulted in agreement. The guarantors press communique expresses great satisfaction with the signing of the Declaration and also their willingness to carry out their further responsibilities under the Protocol by lending their support to bilateral discussions to find a durable solution to the remaining problems. We understand that the cease-fire is holding.

Q I understand that you also are willing to send service to the (inaudible) and you are preparing the team. Would you give us some timetable of how the preparations are going or how many people will go there?

MS. SHELLY: I don't have a lot of details on that for you. The Peace Declaration does call for the guarantors observer group to monitor the cease-fire, separation of forces and the demilitarization of the zone of conflict, as well as the withdrawal of forces from the border area not involved in the fighting.

As you know, there were also military technical talks related to the guarantors' observer group which began on February 15 in Brasilia. We are working with the other guarantors to organize and to deploy as soon as possible an observer mission.

I don't have any further details for you on exactly how that observer mission will be -- how that will be actually put together, and certainly as soon as we have details on that, we'll be happy to make them available.

Q Do you have any --

MS. SHELLY: Sorry, is there anything else on that subject? Okay, sorry.

Q Do you have any comment on Arafat and Rabin's meeting yesterday and the result of that meeting?

MS. SHELLY: I just have a short comment on that. From what we've been told about the meeting, the parties had a very good result. Clearly, they recognized each other's needs and are moving in the right direction to address those needs.

The Israeli announcement of the partial lifting of the closure is clearly in response to what they consider serious initial steps by the Palestinians to address Israel's security concerns.

The parties also agreed to intensify their negotiations in an effort to reach overall agreement.

Q As a follow-up to that Christine, does Dennis -- or Ambassador Ross have any plans to go to the region?

MS. SHELLY: No new plans to announce at this point.


Q A related subject on Egypt. In light of the State Department's criticism in its human rights report of abuses by the Egyptian Government in its crackdown on extremists and more recently the less than helpful Egyptian stance on the NPT, how does the United States justify its continued high levels of aid to Egypt?

MS. SHELLY: On the first point, the human rights point, promoting respect for human rights remains an integral part of our foreign policy. Our Annual Human Rights Report, as you know, is very carefully prepared and as balanced as we can make it; and we have an active and ongoing dialogue with the Government of Egypt on the full range of issues which are raised in the report.

On the assistance program, overall it reflects our close and cooperative bilateral relationship with Egypt. It reflects Egypt's continued role under President Mubarak as a strong partner in the search for peace in the Middle East.

Our aid strategy includes activities related to promoting political pluralism and openness and improving the welfare of the Egyptian people and their enjoyment of human rights. Projects to strengthen such things as the legislative and judicial systems, providing judicial and legal rights training programs and numerous other activities, contain important components that, in our view, do contribute to sustainable democracy in Egypt.

Q Do you have anything to say about the NPT?

MS. SHELLY: About the NPT? I can just touch on that very lightly. I don't have a lot new. The Secretary has talked on this publicly, as have we from here. Our position on the NPT continues to remain what we've articulated before, which is universal adherence to the NPT.

We continue to strongly support indefinite and unconditional extension, and we believe that an NPT of unlimited duration is in the interest of the entire Middle East and will best attract the adherence of states that are still outside the regime, than would a treaty that just had a limited future.

We don't believe that NPT extension should be linked to whether other member states join to the treaty or to a specific time frame for achieving our broadly supported non- proliferation goals in the Middle East.

I think other points related to some of the press play on this and particularly on Egypt's position, obviously also could and should be directed to the Egyptian Government.

Q Do you have any comment in this regard to the position of the Arab League which has been taken that the 22 countries of the Arab League almost in unison and agreement that they will not -- they would like to have the Middle East free of nuclear and mass destructive weapons, but they are linking this with other countries to join into this. It looks like there is a reluctance on the part of the Arabs to join into signing the Non-Proliferation Treaty after this session the last few days.

MS. SHELLY: I don't have much to say beyond that. As I have just mentioned, we don't support the point of linkage. We certainly have heard what those Arab League nations have had to say most recently on this.

We certainly embrace the hope and the aspiration that the Middle East one day through achieving tangible results through the peace process can be free from threats from all weapons of mass destruction. I don't think there's any difference of view on that.

But, again, we still continue to believe that indefinite extension is very, very important. It remains one of our top foreign policy and national security objectives, and we'll certainly continue to pursue that.

Q Couldn't this go back to the conference in Paris a few years ago about the chemical weapons, that the Arab countries said that they will not join that treaty of banning chemical weapons unless Israel will be signatory to the ban, or it will have these -- eliminating these weapons that it has, chemical weapons? Isn't this going back to almost the same circle that we had about, I think, three, four years ago when they talked about the convention in Paris for this?

MS. SHELLY: I think I'd have to go back and check the record on that one to see what was said and what was done at that time. I'm not an expert on what transpired in that meeting. Certainly, it's possible it may reflect some of the same sentiments; but again we believe that there's a very compelling case for the NPT renewal and the indefinite extension, and that's certainly what we're going to continue to pursue.

Q One last question. A senior Government official on Sunday at the White House or rather here at the State -- at the White House stated that the United States will be delivering 200 vehicles for the Palestinian national political -- the Palestinian police. Do you have anything to offer on this issue -- where the delivery will take place, and I think you are going to tell the Congress about that. Do you have anything -- any guidance about it today?

MS. SHELLY: Anything involving the use of aid monies which are committed are always subject to a Congressional consultation procedure. I don't have anything new to add to what was said on this already.

Q A new topic?

MS. SHELLY: Is this Middle East or is it off the Middle East?

Q No, something else.

MS. SHELLY: If we can stay on the Middle East for a minute and maybe wrap these up.

Q Are you concerned about the reluctance of the whole Gulf Cooperation Council to participate in the Mideast Bank Project?

MS. SHELLY: I saw that specific report in The New York Times this morning, and it suggests rather strongly that the Gulf Cooperation Council has chosen not to participate in the creation of the Regional Development Bank. I think it does not reflect what our understanding of the position of the parties is. It's still our view that there is a strong and growing regional consensus for a Middle East Development Bank. There has been agreement as well that we should explore the details of how best to structure a bank and to make it most effective.

I don't want to get into a kind of country-by-country position, but we've said before -- and it's my understanding it's still the same -- that some of the Gulf countries have raised questions about it, including looking over what their commitments might be and certainly how the institution would be structured. They've raised them before, so that's not anything that's new; but certainly as a bottom line, it's still very much our understanding that they're open to this idea.

Q You're not concerned that it's a reluctance to deal with Israel in this project?

MS. SHELLY: I think you've also seen a lot of indications that there continues to be very strong support for the peace process; so, no, I wouldn't draw that judgment or conclusion. The kinds of questions that they have raised before have related more to the structure of the institution; and, again, I'm not aware that overall that position has changed.

Q Yesterday in New York Times' story about Iraqi oil sales, several officials make a comment about it, including Secretary of State and several Congressmen. The story blames Turkey also, using or selling Iraqi oil. Do you have anything about it on this subject? Do you believe, or do you contact with the Turkish officials on this subject?

MS. SHELLY: Oh, yes. We're definitely in contact with Turkish officials on this subject. There was an awful lot of detail in that article, and I don't think, at least insofar as what I have today, I'm not in a position to get into the kind of point-by-point. As you noted, the Secretary did testify on this yesterday; and I don't think there's a lot that I can add to that.

Two countries in particular were obviously mentioned: both Jordan and Turkey. Those reports of there being some leakage of oil or gasoline -- oil supplies reaching them, they're not new reports. There was testimony on this last October, I believe, by Assistant Secretary Pelletreau in which those reports were also raised. We acknowledged that those reports had also reached us and also said that when reports of that kind do arise, we do take them up very quickly and at senior levels within those governments, because it certainly is our view that any sale of oil at all or any exporting of oil is in contravention of U.N. sanctions. We would like that regime to be as airtight as possible.

Q The oil money is going to go to Baghdad or to the Kurdish -- northern part of the Iraqis -- the Kurdish people?

MS. SHELLY: I don't have anything on that.

Q Is there an agreement that Jordan will take oil, since it doesn't have oil resources, from Iraq? My understanding was that according to the sanctions, they allow for the consumption in Jordan, that they will be able to get Iraqi oil?

MS. SHELLY: I'm not an expert on this. I recall that there was a reference in at least one Security Council resolution of Jordan's difficult situation, because Jordan was nearly entirely dependent upon Iraqi oil, before the total U.N. sanctions went into effect.

But I think before I could answer your question more precisely, I'd have to go back and look at exactly the language of the resolution before I could be more specific.

Q Since we're still on the Middle East, could I go back to the question of the 200 vehicles that was raised by an Administration official last week? As I understood it in a briefing, these are excess Defense Department surplus vehicles and while Congress was mentioned as being told about it/consulted, it wasn't required to go back and get authorization for that. I may be wrong, but that's my recollection. I wondered if you would take the question to see where that stands and when these vehicles would be delivered.

MS. SHELLY: I'll check and see if we can be any more specific about that. I'll check after the briefing.

Q (Inaudible) medical supplies. It was also mentioned.

MS. SHELLY: I'll check on that one also.


Q Another peace process. In the Balkans, there's a report in the Times today that the French are putting out the word there are some new concessions to be offered to the Serbs in an attempt to bring them into this conference. Can you confirm, are these points accurate that are mentioned in the Times? I can be specific, too.

MS. SHELLY: If I can take a minute to give you what I hope will not be a boringly long response.

I think you're aware that when the Contact Group met in Paris a few days ago, they agreed on an approach to Serbia with the following proposal -- I don't need to get into all the details, but it was basically that Serbia would recognize the borders of Croatia and Bosnia- Herzegovina without equivocation. Enforcement mechanisms, including sanctions monitoring missions, would be kept in place, and the border monitoring mission would be expanded. Access to international lending institutions or EU assistance was not a part of this offer. Serbia would have to endorse the Contact Group Plan, and Serbia would also need to endorse in some way the Z-4 Plan.

In return, the Contact Group indicated it was prepared to offer the suspension of sanctions for a limited period, and I think it was specified that this could be two months, which could be renewed after that if the U.N. Security Council members determined that Serbia continued to comply with all of the above-indicated commitments.

The plan was to present this possible approach to Milosevic at some time within a week or so following that meeting.

The press reports of today that suggest there are additional concessions involved are wrong. Access to international financial institutions, economic assistance, full participation in international organizations, and similar benefits would still be denied to Belgrade.

There's a reference to a phrase on "parallel treatment" for Serbs in Bosnia. This cannot be offered by the Contact Group. This is a question of external ties for Bosnia's constituent parts. Those would be for the parties to work out among themselves.

The Serbs would benefit from guarantees of human and minority rights in the peace plans for Bosnia and Croatia as would all persons in those countries. That's nothing new at all. That's been an element that's been part of all of the different approaches to trying to find a peaceful resolution to this crisis.

The new Contact Group approach offers rewards for Serbia-Montenegro for steps that are strictly within its control rather than making suspension of sanctions on Belgrade dependent on activities or actions by Serb leaders in Bosnia and Croatia who, at least up to the present, have shown very little interest in cooperating.

We believe that this approach, as it has been developed and embraced by the Contract Group, could potentially move the region away from war and closer to a settlement. It's one which should be pursued.

The Contact Group has not yet discussed the details of their approach with leaders in Belgrade.

Q Now, in saying that this "parallelism" would not be offered. There is something in the Contact Group's own discussions previously about treating the Serb and Croat sides in this equation in a parallel way. Can you be any more precise about what is and what is not to be offered to Milosevic?

MS. SHELLY: I really can't. I think I've already put this forward rather amply for a proposal that, in fact, has not even been presented. Those are the major elements of it. But because of the fact that there were a couple of very specific references on this which simply were not right, I worked up as much as I could say on this at this point.

Certainly, I'm aware of your interest in knowing more on this. As we can get some additional details, I'll certainly try to do so.

Q Who will Winston Lord be meeting with and what will he be discussing on his tour of northeast Asian capitals starting next week?

MS. SHELLY: I don't have anything on that, but let me check. I'm sure I can give you something roughly comparable to what we put out on Assistant Secretary Holbrooke's travel. I don't have it with me, so let me try to do that this afternoon.

Q On Taiwan and China. First of all, on Taiwan's President Li Teng-hui's wish to visit the U.S. How long can he stay in the country on an extended transit visa, as indicated by Ambassador Lord?

And, secondly, can he receive the degree from Cornell University on an extended transit visa?

MS. SHELLY: I don't have anything. What is the specific reference by Assistant Secretary Lord that you're referring to?

Q In testimony on Capitol Hill earlier this week, he said the U.S. can issue an extended transit visa for President Li to probably come to this country.

MS. SHELLY: This is a complicated and also very sensitive issue. I'd like to start by looking to see what Ambassador Lord actually said in the testimony and then see what, if anything, we would say to amplify that.

Q On China, do you have any progress report on the U.S.-Chinese negotiations on the intellectual property rights in Beijing?

MS. SHELLY: No, I do not. I think what we're going to do on that is probably try to give some kind of a readout when the talks are actually completed. I understand, from earlier today, that they did not finish today and that they're going to spill over into the weekend. So that's about all I know on that one.

Q The Chinese have threatened today, in fact, to cancel probably $2 billion worth of orders with Boeing if the talks fail. Do you have any response to that?

MS. SHELLY: No, I don't have any reaction to that, not without studying the statement.

Q (Inaudible) reports that South Korea may construct the LWR's from North Korea? Under the brand names of aliases, just like Westinghouse, for the North Korea --

MS. SHELLY: You're referring to the story that was in the Washington Times this morning; is that right?

Q Uh-hum.

Q MS. SHELLY: There was a report about the possibility of using a U.S. firm in a kind of nominal contractor way for construction of this project. I'm told that this report is without foundation.

The issue of the type of reactor to be supplied will be taken up in the next round of the expert-level talks on the light-water reactor project, which are to resume, as you know, in March.

Our position continues to be that the Republic of Korea- style reactor is still the only viable option for the light- water reactor project.

Q And to follow, what, Christine, is the response of the North Korean Government? We hear from their channel at the U.N. that they would be delighted to have some kind of United States-front organization to provide the expertise for that reactor? Is Bob Gallucci still engaged in trying to get this KEDO thing worked out? And where do we stand at the moment?

MS. SHELLY: I'm not even sure how to approach the answer to that since you've tossed about four different angles in. Bob Gallucci returned back to Washington late last evening. I think he's trying to recover from an extended stretch of working every day and working hard, and also possibly a little jet lag tossed in. So I don't have anything new from him specifically to report.

As you know, he was out having consultations with other countries that might possibly be interested in participating in KEDO. So that is still something we're very much working on.

The other angle --

Q The issue of the reactor -- do you have an update on the reactor issue as it regards the North Koreans accepting the South Korean's participation in this reactor?

MS. SHELLY: I don't have anything beyond what I've said several times in the last week or two on this, and that is we still believe that's the only viable option. It also has a large measure of financial support based on that model that goes with it from the Republic of Korea, as I mentioned before.

The North Korean concerns about the South Korean reactor model are not new. That was one of the reasons the Agreed Framework had the commitment in it where the U.S. would organize, under its leadership, the international consortium to finance and supply the light-water reactor project.

That whole approach and internationalizing the approach to it and then to the letting of contracts and the implementation of the project, was done precisely in response to the same points raised by North Korea and precisely to ensure for them that the project would be insulated from what we would consider to be unrelated political issues.

So it's still our view that those general concerns expressed have been satisfied through the creation of the consortium approach to implementation of the project.

Q Do we have, in fact -- do we have a deal? Do we have a deal- breaking situation, or do we know yet?

MS. SHELLY: We think it's very clear on our side that there simply isn't any other viable option out there. We certainly look forward to resuming the talks on this issue which will occur in March.

Q Christine, do you have any assessment on the recent elections of the Mexican state in Jalisco where the opposition party, the PAN -- P-A-N -- won? Also, is this a sign that the country is trying to move to a more democratic direction, just as President Zedillo promised during his political campaign?

MS. SHELLY: I think the commitments which the President made during the campaign, certainly, are reflected in terms of the way that the election took place. We did have some more on this in the Press Office, so you might want to get some additional detail from them. I don't have our kind of official guidance on that with me.

I can say that as far as we know, about the way in which the election transpired, it seemed to have occurred in a normal fashion. We're not aware of any major reports of difficulties at this time. The fact that the opposition party was elected also suggests that the democratic processes and the possibility for opposition candidates to make successful campaigns -- that the evidence of that is there through the election of PAN.

We were certainly very mindful of the commitments by President Zedillo on this and his whole desire conveyed in his speech that he gave early in January to having electoral reforms in such issues as campaigns and party finances. He also, of course, signed on January l7, as you know, the multiparty political pact; and he's also tried to work on issues like improved media access and autonomy of the electoral bodies.

So I think they put into practice commitments that he made to reform the electoral process; and I think the evidence is certainly there.

Q Also, do you have an update on Chiapas, where three days ago President Zedillo ordered the troops to cease fire and he offered amnesty to all the rebel leaders? Do you have something on that?

MS. SHELLY: Yes, I've got a little bit of an update on that.

As you know, the president issued an order to halt the military offensive; and we understand that order still holds. We don't have any confirmed reports of confrontations between military and rebel forces.

President Zedillo offered an amnesty to rebel troops to lay down arms and pursue their demands through a peaceful political process. According to reports -- I think mostly press reports that we've seen -- the Attorney General indicated the amnesty could be extended to rebel leader Marcos.

The Interior Minister, I think two nights ago, announced that restrictions on access in Chiapas had been lifted. He also said there had been full respect for human rights during the operations carried out by the military and the Attorney General's office.

Some human rights groups, had expressed some concerns that there had existed a potential for violations to occur if human rights monitors were not present. It's our understanding that monitors have been moving about and have been able to hear any potential concerns or complaints.

The Mexican National Commission for Human Rights increased the number of investigators it had in Chiapas and had also written to the Attorney General to seek full cooperation with any investigations that the Commission might conduct. So we certainly look forward to receiving reports from the Commission or from other human rights groups if there are any substantiations of human rights violations.

Q Christine, do you have anything on --

Q Mexico?

MS. SHELLY: Still on Mexico, or is this Mexico?

Q Yes, please..


Q Are you helping Mexico in any way in this operation in Chiapas with intelligence or with any kind of resources?

MS. SHELLY: That is something that, if we were doing so, it would be highly unlikely that I would be getting into a public discussion of it. So I'm afraid on that one I'm just going to have to pass.

Q I just have a quick question. Do you have anything on a group of Cuban refugees that were picked up in U.S. waters? I think there are two or three groups that have arrived on U.S. territory. And what exactly is the U.S. going to be doing with them?

MS. SHELLY: Yes, I've got some information on that.

Over the last two days, a total of l2l Cuban migrants from four unseaworthy and dangerously overcrowded ships have been taken aboard Coast Guard vessels. The migrants all appear to have departed from the Cayman Islands with the intention of entering the United States without proper documentation. The migrants are being held pending a determination of the circumstances surrounding their attempted entry into the United States. We've asked the Cayman Government, through the British Government, to investigate.

Q When you say "attempted entry," does it look like they may have paid somebody to take them up to a certain point? Could it be a smuggling operation? Are you looking back to return them to the Cayman Islands? Could they be taken to Guantanamo?

MS. SHELLY: I don't have answers to those, and I think the questions are probably most appropriately directed to the INS at this point -- or possibly, since I just mentioned they do remain aboard Coast Guard vessels -- one of those two places would be probably a better place to direct your question.

Q Christine, on this Cuba question, has there been any change in the way that legal immigrants from Cuba will be coming to this country?

MS. SHELLY: Not yet. I have no announcements on that beyond what I said a few days ago.

Q Do you have anything on numbers coming to this country legally?

MS. SHELLY: In terms of how many have come in, or --

Q Yes.

MS. SHELLY: Yes. I don't have that with me. We usually have a daily update on that available in the Press Office. I don't have that right now.

Q Do you have a position about a bill that Senator Helms put out about Cuba? Have you?

MS. SHELLY: I was kind of hoping that you weren't going to ask me that question because in the effort to chase down things that I know are of very strong interest out there, I actually do put this question out to my own people every day. So far I've been getting the same thing, which is: "We're still studying the bill." I think it's probably taken a while for us to get our views fully pulled together on it.

As to our position on sanctions generally, we still have a very strong commitment to the Cuban Democracy Act; and, as you know, in August of '94 we put some additional sanctions in place against the Castro regime.

We also, at the same time, have tried to continue our practice of reaching out to the Cuban people through improved licensing and telecommunications and through the private humanitarian aid channels.

So those key elements of our policy remain in place. I'm certain at some point we'll have more to say on the Helms bill, but today is not the day.

Q Apparently, Assistant Secretary Lynn Davis had a meeting, I think yesterday, with the Polish Defense Minister. According to one report, she promised him that the United States was prepared to sell Poland a more modern category of arms than in the past. Do you know anything about it?

MS. SHELLY: Yes. I don't know how much detail we would put out on that meeting, but let me check and see if I can get a readout.

Q Has the Philippine Government asked the U.S. Administration to intervene in the dispute over the Spratly Islands with China? If so, what was the reaction from the U.S. Government.

MS. SHELLY: I'm going to take that question. I haven't seen an answer on that one.

Q There's a follow-up on China, an issue among many. With regard to arms, the Russians have been exposed as selling or providing engines for cruise missiles. The Chinese, apparently, have tried to buy these advanced type engines in the United States. Does the Administration have anything to say about this particular development regarding advanced cruise missiles by the Chinese?

MS. SHELLY: Didn't you check on this a day or two ago?

Q Did I?


Q Did I ask you?

MS. SHELLY: Yes, I thought you did. I thought we had a little something that we gave you; is that not right?

Q On the Spratlys, I think it was, Christine.

MS. SHELLY: You've got me confused with all this.

Q No. I don't have anything on that at all.

MS. SHELLY: We'll check on this one.

Q Another angle on arms development and proliferation problems here with the Chinese. And do you have anything about Hazel O'Leary's visits with the Chinese tomorrow?

MS. SHELLY: No. Ask the Department of Energy.

Q All right.

Q Thank you.

(The briefing concluded at l:49 p.m.)


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