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                       U.S. DEPARTMENT OF STATE
                         DAILY PRESS BRIEFING
                               I N D E X
                       Thursday, July 20 l995

                                       Briefers:  Joan Spero
                                                  David Johnson

U.S./Japan Investment Arrangement ......................1-11
Civil Aviation Talks ...................................6-7
U.S./Japan Framework Agreement .........................8-9
War in Bosnia
--Safe Areas: Status of Zepa; Srebrenica, Bihac.........12,14-15
--Refugee Flow; Bosnian-Serb Denial of UNHCR/ICRC 
   Access ..............................................12,14
--Dutch Peacekeepers' Alleged Reports of Atrocities ....13-14
--Report re: Status of UN Commander of Ukrainian 
   Forces ..............................................12
--Use of Ukrainian Troops as Human Shields .............14
--Airdrops of Food .....................................14-15
--Talks in London: Christopher Discussions w/Rifkind,
   French & Russian Foreign Ministers ..................12-13
--Reports of Serbs Wearing Blue Helmuts ................13
--Report of Demand from Karadzic re: Recognition of
   Borders .............................................14
--Potential for Widening of War ........................15
Ambassador Donald McHenry Discussions in Region ........15-17
Internal Developments; Possibility of U.S. Sanctions;
   Aid; Anti-Drug Cooperation ..........................16-17
Taiwan Strait Missile Exercises ........................18,20
Taiwan Position on Relations with the U.S. .............18
U.S. One-China Policy ..................................18
Prospect of Former President Bush Travel to Region .....19
Ethnic Hungarian Party Leaders' Mtg. w/U.S. Officials ..19
Participation in Partnership for Peace Program .........19
U.S. Support for Political and Economic Reforms ........19-20
U.S Determination to Work with Parties .................20
--Work w/Indian Gov't. to Obtain Release of Hostages ...20-21
--Physical Condition of Hostages .......................21
Report of Development of Civil HEU Reactor Program .....21
Search for Fred Cuny ...................................21

DPB #108
THURSDAY, JULY 20, 1995, 12:56 P.M.

MR. JOHNSON: Good afternoon, ladies and gentlemen. We're going to start our briefing today with Under Secretary of State for Economic, Business and Agricultural Affairs, Joan Spero. She's going to talk to you about the U.S.-Japan Investment Arrangement which was signed earlier this morning by Acting Secretary of State Strobe Talbott and Japanese Ambassador Kuriyama. The Investment Arrangement, concluded under the U.S.-Japan Framework, is designed to facilitate foreign direct investment in Japan as well as increased foreign business presence and greater market access for U.S. suppliers. Once Mrs. Spero has concluded her presentation and answered all your questions, we'll proceed with other topics. UNDER SECRETARY SPERO: Thank you, David. Good afternoon. I'd like to just read an opening statement and then be happy to take your questions. Today, Acting Secretary Talbott, as David has said, and Japanese Ambassador Kuriyama signed and exchanged letters formalizing a U.S.- Japan Investment Arrangement designed to facilitate foreign direct investment in Japan. Foreign direct investment issues are an important component of the economic harmonization basket, which is part of our economic framework with Japan. That basket has been led by the State Department. In this basket, we have concluded an understanding on intellectual property rights and are working toward a shared agenda for improving access to technology. The investment arrangement signed today, we think, is a win-win proposition for the U.S. and Japan. It will support the efforts of U.S. and other non-Japanese firms to establish a larger presence in Japan's market and a greater role as suppliers to Japanese firms. This is critical to U.S. exports which are increasingly channeled through U.S. affiliates abroad. The arrangement will bring new talent and resources to Japan's market and also a wider range of goods and services. This comprehensive joint arrangement on investment is a product of over 18 months of intensive negotiations between both governments. Throughout this process, the U.S. interagency team, which I want to mention especially, was led very ably by Deputy Assistant Secretary of State, Al Larsen. His team benefited greatly from the input and counsel of the U.S. business community. They advised us on key problems they face in Japan and helped us devise solutions to those problems. Our team also reached out to exchange views with members of Japan's private sector who made very useful contributions. The Investment Arrangement creates significant new opportunities for U.S. firms to establish or expand their presence in Japan, the world's second largest national market. Japan accounts for 16 percent of the world's GDP, but hosts only one percent of its investment. By comparison, the U.S. accounts for 27 percent of global GDP, and we have 30 percent of world foreign direct investment. This arrangement lays out in detail financing programs and incentives available to foreign investors and provides a blueprint of the supportive role to be played by relevant agencies of the Government of Japan. In it, the Government of Japan has explicitly agreed that U.S. and other foreign firms will be eligible for many of Japan's economic development programs on a non-discriminatory basis. The Investment Arrangement specifically provides the foundation for, first, expanded financing for foreign direct investment by the Government of Japan, potentially in the billions of dollars annually, through programs of the Japan Development Bank and other Japanese institutions. It provides for more active government facilitation of foreign direct investment into Japan through the support of the Japan Investment Council, the Japan External Trade Organization, and the Foreign Investment in Japan Development Corporation. That facilitation will include, first, support and fair treatment of foreign participation in mergers and acquisitions in Japan. Second, improved access for foreign investors in Japan to skilled labor, land, and facilities. Third, ongoing efforts to deregulate Japan's investment regime and to ensure non-discriminatory treatment of foreign investors, and steps by the two governments to support the building of closer ties between U.S. and Japanese firms at the design in and other key stages of the commercial process. Reaching agreement on the policies and measures each government intends to take is just a first step to enhancing conditions for U.S. investors in Japan. The bulk of our work lies ahead in the implementation of these understandings. We put mechanisms in place, including semi-annual consultations at the outset for active and effective implementation to assure that these policies and measures provide effective support for our firms. We intend to step up active implementation of the policies and measures in our investment arrangement by holding joint consultations in the early fall. The Government of Japan will have a critical role in encouraging foreign presence in Japan's market and supporting full internationalization of the Japanese economy, and they've taken a very positive step in signing this agreement. At the same time, we're committed to working with our firms to get the word out about the Government of Japan's programs and policies. We think in this way we can assure that the arrangement will yield positive results, greater U.S. direct investment that will support our exports to Japan, and making available a wider range of high quality goods and services available to the Japanese customers, and providing more and better jobs for workers in both countries. I will stop there. Happy to take your questions. Keith. Q Joan, I have two questions. First, with regard to the Japan Development Bank, has the JDB in the past discriminated against foreign investors? And have U.S. companies actively sought such financing? And, secondly -- I don't mean to sound cynical, but given the keiretsu system, given the very high cost of land in Japan, aren't these barriers, non-tariff though they are, sufficient enough to blunt any attempts by U.S. companies to get in there even this agreement notwithstanding? UNDER SECRETARY SPERO: Keith, let me start by giving a general comment. We are not claiming that this agreement is going to change the entire investment climate in Japan. As I said, Japan has a very minimal amount of total foreign world direct investment. A lot of that stems from the days when Japan had specific exclusions and heavy regulation of foreign investment. So we're not going to turn that agreement around overnight nor are we going to change keiretsu practices, nor are we going to change the value of the yen nor are we going to change land prices overnight. So I'm not trying to oversell what we've done. At the same time, what we did was to consult our industry about what problems there were that might be susceptible to change. This is going to be a long-term effort. One of the things they did tell us was that they wanted a better environment, more access to finance; the kind of financing that is available to Japanese firms now. For example, in the past, the Japan Development Bank and other financing has not been available for creating import infrastructure. So now they have broaden the categories which will be available for lending to foreign firms. There will be no question that the Japan Development Bank and other financial institutions, there is a thing called the private participation program, which puts in equity finance and other finance. All of this will now be open to foreign firms. There were other areas that our firms have mentioned. I can go over those -- tax problems. On the land issue, Keith, we're not going to change the price of land or the value of land, but there are a couple of things that can be done through this agreement -- again, as first steps. The Japanese have agreed to set up something called "foreign access zones" around major commercial areas. That will provide physical facilities. It will also provide certain financial support for investment in those foreign access zones. So I don't want to oversell it; I don't want to undersell it either. Q Did the Japanese ask that the United States change any of its barriers -- tariff or non-tariff? UNDER SECRETARY SPERO: The Japanese asked that we confirm our support for foreign investment. Their main concern was our so-called Exon-Florio provisions which give us a review on certain investment in the United States that might challenge U.S. national security. But the main emphasis of this negotiation really was on opening up the Japanese market. Q You had mentioned in your opening comments that Japan hosts one percent of the foreign investment in the world economy -- a much smaller portion than its overall share of GDP in the world economy. Is there a particular target or goal that you have in mind to try to get that up to? UNDER SECRETARY SPERO: No. This agreement does not have any target. Obviously, the more that Japan can move toward the OECD norm, the better. But there is no target involved. Q What is the (inaudible)? UNDER SECRETARY SPERO: I don't have the answer offhand. It varies from country to country. The Europeans actually have a higher level of foreign direct investment overall than we do. But if you think that we're about 27 percent and Japan is one percent, there's a lot of room for movement there. Q Which companies or industries pressed most for this agreement and might be most interested in moving in? UNDER SECRETARY SPERO: There was actually a very broad range of companies that we work with, including a number of the business coalitions -- the U.S.-Japan Business Council, the National Council for Foreign Trade. There weren't any particular ones that -- I can't really categorize them as the "big guys" or the "little guys." There was very broad interest, and frankly we actively solicited their advice. We wanted to know where the companies saw barriers, and, as I say, they identified problems of high cost of entry, whether it's finance or tax issues. We tried to address those in the agreement. They talked about access to personnel. I know, having been in business and having dealt in the Japanese market, the ability to hire local personnel or the cost of sending in expats. So we have made sure, for example, that our firms will have access to the various employment and training programs of the Japanese Government. They've agreed to do things like support foreign schools for the expats. M&A was a big issue, because it's very difficult. One of the traditional ways you enter a new market is through mergers and acquisitions. That's been very difficult in Japan. In the process of this negotiation, the Japanese changed some of their corporate governance practices -- more transparency, more disclosure, more shareholder rights. So there was a very broad consultation with the business and a sort of a broad approach in the agreement. Q Could you expand on that? You said financing for foreign direct investment could go up potentially billions of dollars, I think you said, a year. Can you -- is this stuff that will be earmarked for foreign investment -- UNDER SECRETARY SPERO: No. Q -- or this would be just foreigners getting a bigger piece of stuff that's already -- UNDER SECRETARY SPERO: Yes. It's really foreigners having access to the Japan Development Bank. As I said, to this private participation program, which is money that came from the privatization of NTT, and it's a fund that is used to put equity in, to put other forms of financing. (TO STAFF) Ann, is it largely for smaller firms? STAFF: No. In fact, it's financed sometimes by (inaudible). UNDER SECRETARY SPERO: Okay. So it is really the pools of funds that are available in those institutions. Q Of the billions of dollars, is this a figure that Japan -- UNDER SECRETARY SPERO: This is a figure that's available in these institutions. I'm not claiming that billions of dollars -- that U.S. firms are now going to get billions of dollars of financing and take over the bulk of financing from those firms. What I'm saying is they have access to that pool of capital now. They also will benefit again from changes that were implemented in the process of this negotiation on loss carry forward. The Japanese have increased the period from seven to ten years. This is another way to facilitate payback in Japan. Q What about the prospects for the civil aviation talks between the two countries to be concluded successfully during this round of talks? UNDER SECRETARY SPERO: As you know, those talks are going on even as we speak today and tomorrow in Los Angeles. They'll be meeting at Vice Minister level today, and then at Ministerial level presumably starting tomorrow. I don't know. We hope that there will be a successful conclusion to those talks. As you know, the sticking point has been that the Japanese Government has not yet recognized that we have rights under our treaty, and we insist that those rights must be honored. Q You mentioned that the negotiations on this investment treaty took 18 months. What was so difficult about it? Why did it take that long? UNDER SECRETARY SPERO: I have to say it wasn't a contentious negotiation, but it was actually one that initially you had to get a handle on. We spent a lot of time consulting the business community and saying, well, how do you promote investment? We want it to go beyond simply another commission or simply another ombudsman, although we've expanded the role of the ombudsman here. We wanted to target specific sectors, so we had to work through the financing mechanisms. We had to work through the corporate governance. We had to work through the tax issues, and we tried to devise techniques that would improve and address some of these buyer/supplier issues. For example, we're going to have -- the Japanese Government has agreed to set up co-location facilities or business incubators, and the Keidanren has agreed to admit foreign firms more to its training and seminars. Each of those things just required a lot of work, but it wasn't as though there was a sort of an intractable issue. I think probably the most difficult issues were really the tax issues. Q You said that the bulk of the work ahead lies in the implementation. Will specific implementing agreements be required for any of this? UNDER SECRETARY SPERO: No. We don't have implementing agreements, but what we do have is a consultative process, both with the Japanese Government and with our own business community to see if they are following through on their commitments and if the agreements are working. What we said to our business community is let us know. Is this helping or not; and, if it's not helping, is it because the Japanese Government is not implementing, or is it because these aren't the right techniques, and do we need to adjust the techniques. I have to say that in this situation, the Japanese Government was very interested in working with us. It isn't that we necessarily agreed easily on financing or tax reform or other things, but they very much want more foreign investment. So I think it will be open - they will be open, I expect, to ongoing work about how we can facilitate that. But there is a consultative process built into this agreement. I think you had a question, and then there and there Q Was there much, was there any discussion of macro-economic issues as part of this, because, I mean, is there much incentive for U.S. companies to, say, invest in Japan if the Japanese economy remains in the dumps because consumers aren't spending? UNDER SECRETARY SPERO: Well, this is not an agreement for this week or next month. It's an agreement for the long haul. And again I don't want to say that immediately the investment picture is going to turn around. Companies will go into Japan, both when the macro-economic situation looks good and when they think they need to be there for their own business purposes. I mean, what companies are increasingly finding is that in order to get into a market you have to be there. You have to have a physical presence, either to develop your products, to provide services in the after-market, or simply because the Japanese are significant competitors. So this is not something that is designed for any particular cyclical situation. It really is an effort to begin to get at a structural problem in Japan. But given the recession right now in Japan, given exchange rates, these are obviously not incentives; they are disincentives. These other problems are offsetting factors. In the back. Q You said this was kind of the economic harmonization basket. What's left in that basket, and what's the status of the framework? UNDER SECRETARY SPERO: Well, the framework now -- we've made significant progress in a lot of the areas of the framework. If I may refresh your memory, the framework included -- for those of you who don't have that on the tips of your tongue -- the framework had a macro- economic component. It had a component that had to do with various sectoral problems. It had a component that had to do with structural problems. And then it also had this common agenda, which was a cooperative mode dealing with the environment and health and other kinds of global issues. On the macro-economic environment, we continue to have a dialogue with Japan. Japan continues to try to seek the key to stimulating its economy, and so that effort goes on. On the sectoral side, we've reached a huge number of agreements, the most latest one being the automotive agreement. So in many of the sectoral issues, we've accomplished our goals in the first two-year period of the framework. On the structural issues, we've reached an agreement on financial services. I guess you could call that structural or sectoral. We've reached an agreement on patents, on investment. What we have ahead -- a couple of big issues we have ahead are competition policy. That was one that was on our list, not for the first two years but ongoing, and we want to complete this technology agreement that we have been negotiating. So many of the issues that are left in the framework -- and we and the Japanese agreed at the Halifax summit that we would continue the framework -- many of the issues fall in the category of the structural agreement -- what I would call structural change in Japan. We need to keep - another very important factor is that we need to keep monitoring the agreements that we have reached. We don't just want to reach an agreement and walk away. We want to make sure that those agreements are implemented, and so we have to make sure that the automotive agreement, that the glass, all of the other agreements are followed through on, which is why in our investment agreement we had this built-in follow-up process. Let's see, yes. Q Many U.S. companies cite keiretsu system as a reason for the difficulty to trade with Japan or invest there, and yet you said earlier you didn't expect this agreement to have a substantial impact on dismantling the keiretsu system. Does it touch -- will it have any impact at all on the keiretsu, and do you expect these future talks on competition policy to pick up that area of difficulty with Japan? UNDER SECRETARY SPERO: Regarding keiretsu, you're not going to change that system overnight. In fact, many U.S. companies have discovered that there are certain advantages of buyer/supplier relationships -- the design-in process. So the question is not trying to overthrow the system but how can you reduce its impact on foreigners and how can you encourage relationships to develop between foreign firms and Japanese firms. There is no silver bullet here. We've tried several things. First of all, the Japanese Government has agreed to set up, as I said, these collocation facilities. These will be opportunities for American firms to invest to do research in Japan and for other Japanese firms to be present. So there will be opportunities, if you will, for them to develop work jointly. There is a proposal for an incubator facility. I don't know if you're familiar with these. These are sort of research development zones. If you think of something like the triangle in North Carolina or sort of trying to model the Silicon Valley, where you create environment for research facilities in the hope that firms will not only come but find partners there. Keidanren has agreed to open its doors much more to foreign firms. They will be included in seminars. They will be allowed to attend meetings. I am not saying that any of these is a silver bullet or even, added up, that they are the answer. But what we're trying to do is to find techniques that will begin to change the system and open it up. I think that answers the question. There was a question back here, yes? Q I guess this sort of follows what he was just asking. What are the main impediments to entry now that we haven't addressed in this agreement, and did we not address them because they're outside the framework of what the government can do, or are they just things that we and the Japanese couldn't agree on, and we put them off for later? UNDER SECRETARY SPERO: You know, some barriers -- non-tariff barriers or business practices -- are much harder to get at than simply sort of reducing tariffs or changing intellectual property laws. Our dilemma in this negotiation, and one of the reasons it was conceptually very difficult, was to try to figure out what the access points were, where we could try to change things that would open the system. And when we consulted U.S. business, we found a big problem with the high cost of entry financing -- land, taxation. So we tried to devise techniques in those areas. Again, I'm not saying we solved all of the answers, but we've tried to chip away at it. Secondly, regulatory policies; and, third, the whole environment for mergers and acquisitions. As I said, we've tried to push for changes in corporate governance laws so that it will be easier to do mergers and acquisitions -- more shareholder rights, more transparency, more financial disclosure. It's not going to change it overnight, but it will move in that direction. Huge issue of personnel -- hiring qualified Japanese personnel and the high cost of having EXPAT personnel there -- again, opening government programs, access to hiring or labor policy -- excuse me -- the Japanese Government employment policies, Japanese Government training. Then these buyer/supplier relations that I mentioned. And then, you know there's a whole category of problems that I would call attitudes or perceptions about the desirability of foreign investment. And here, the best that you can hope for, I think, is that the Japanese Government sends messages that it wants foreign investment, and it can do that by setting up institutions like this -- the Foreign Investment Development Organization -- I forget, it's called FIND -- which is an ombudsman that is there to try to help foreign investors navigate their way through the Japanese system. You can do that by signaling that the Japan Development Bank is open for foreigners. You can do it by having JETRO promoted. So you can begin to get that message out. So in all of those areas, we tried to define and devise solutions that would begin to address the problems. None of them is completely solved. There is a lot more work to be done, but I think we're going to try this first step. Yes? Q We do have the so-called priority area in the future -- the framework talks -- I mean, sectoral talks -- sectoral issues. UNDER SECRETARY SPERO: Well, we have not sat down -- we did with our Japanese colleagues at the beginning of the framework. We sat down and identified a whole series of priority areas, and I guess I would say the priority areas now are the ones that we have not completed. So, as I said, particularly in the structural -- competition policy, technology policy, continuing with financial deregulation will be very high on the agenda. But I want to emphasize one of the baskets of the framework was implementation of agreements under the framework and past agreements. And I think you can look to heavy focus on actual implementation in the future. MR. JOHNSON: Is there a final question? (None) Thank you very much. UNDER SECRETARY SPERO: Thank you. (Under Secretary Spero concluded at 1:22 p.m., at which time the Acting Spokesman, David Johnson, began the Daily Press Briefing.) MR. JOHNSON: Mr. Gedda. Q Could you tell us what you know about the situation in Zepa? MR. JOHNSON: I can tell you pretty much only what you already know according to the press reports that you have seen. The information we have is that that's come from U.N. sources over the last 24 to 36 -- excuse me, the last 12 to 24 hours. It has been conflicting. It's apparent that there is intensified pressure on Zepa. Whether or not Zepa has actually fallen or not is the subject of some continuing and conflicting reports, so I can't tell you exactly what the status of the situation there is, because we, of course, don't have people there on the ground, and the U.N.'s ability to contact their personnel there has been limited. Q What about the refugees? Has there been any significant refugee flow? MR. JOHNSON: I have seen reports that there has been some refugee flow out of Zepa, but I don't have anything concrete on that. As you may recall from last night, we issued a statement, imploring the Bosnian Serbs to allow international observers to enter the area. And as far as I know, that has not taken place yet. Q David, do you have anything on the press reports that the Ukrainian -- the U.N. Commander of the Ukrainian force that was in Zepa had actually gone over to the Serb side -- had left Zepa? MR. JOHNSON: I don't. I don't have anything on that at all. In fact, I haven't seen that report. But because there hasn't been reliable contact with the forces in Zepa, it's impossible for me to address that, I'm afraid. Q Is there anything that you can tell us about the talks that are taking place in London? MR. JOHNSON: Not a whole lot, but I will tell you what I can. During the meetings yesterday here with Secretary Rifkind, both at the State Department and at the White House, and today between the Secretary and Foreign Secretary Rifkind in London, we believe we've come closer to a united position. As we've said throughout the course of this week, we're determined to reach a united Alliance position which would strengthen UNPROFOR in some significant ways. The Secretary has also been speaking on the phone to the French Foreign Minister who's currently in Morocco and who will arrive in London tonight, and he looks forward to seeing him, perhaps not tonight but in the morning, in order to take further steps in arriving at a united position. Also, I would note for you just in terms of calendar events, that the Secretary is currently meeting with Foreign Minister Kozyrev. Q David, you say you're coming closer to a united position after the talks with Mr. Rifkind. Are you talking about between the United States and the United Kingdom or among the group? MR. JOHNSON: I'm talking specifically about between the United States and the United Kingdom. We've also been consulting with the French Foreign Minister, but we expect to see him tonight or perhaps in the morning, and we hope to move even closer together after we've had a chance to have that discussion. But at this point, because activities are actually taking place in London, that's about as much as I can help you with that, I'm afraid. Q David, can you say whether the French position is moving to match that of Britain and the United States? MR. JOHNSON: I'd really rather not get into much discussion of the details of that, because I'm afraid I'm a little distant from where those conversations are taking place. Q David, there are reports from refugees in Tuzla who had come from Srebrenica that the first indication they had that the Serbs were moving into Srebrenica was when they discovered Serbs who were wearing blue helmets over their Serbian caps. Do you have any reports on that, on how they got this or what happened? MR. JOHNSON: As to how they allegedly got blue helmets? Q If there were other reports to this nature. MR. JOHNSON: I haven't seen any reports of that nature, and I don't know the origin of the blue helmets you referred to in the previous instance. Q David, there are also press reports that the Dutch Government has been circulating eyewitness accounts provided by their peacekeepers of atrocities during the fall of Srebrenica. Has this Department or anybody in the United States received those eyewitness accounts? MR. JOHNSON: Directly from the Dutch peacekeepers? I don't have any direct reports from that -- no, not from the Dutch peacekeepers as a source. We do have reports from the refugees who have strained into the area of atrocities which have taken place, but, and we've said, I think earlier in the week, that - how we found that outrageous that they continue to deny both the UNHCR and ICRC access, especially to the men and boys who had been detained. I do know that ICRC negotiators met with Bosnian Serb representatives last night, but the Bosnian Serbs are continuing to insist in defiance of international war conventions that they're unable to grant access to the men. Q David, have you received any assurances from the Bosnian Government that they would not use the Ukrainian -- that their forces will not use the Ukrainian peacekeepers as human shields? MR. JOHNSON: I haven't seen anything directly with respect to that, as to whether the Bosnian Government has responded to that or not. Q Have you seen a demand by Karadzic that the outer world, particularly a power such as the United States, recognize the Bosnian Serb nation? MR. JOHNSON: Have I seen demands from him? Q Yeah. MR. JOHNSON: I haven't seen those. Our position on the recognition of Bosnia-Herzegovina is quite clear. We don't plan to change that. We don't plan to change the recognition of the borders that we have already recognized there. We think that in order to come to any type of agreement like that, that we have to come to the conference table. That's the position we've made clear for months now. Q David, on Bihac, when it was set up as a safehaven, there was an agreement that there would be airdrops of food into it, because it's a very isolated area. Apparently now for at least one year, these airdrops have not been coming in. Can you tell me why? MR. JOHNSON: I think I'd refer you to the Pentagon for that, since it likely involves their aircraft and the safety of those aircraft. I think they'd be able to better address than I would. Q The agreements, however, were made in terms of the overall foreign policy consolidation of the safehavens. MR. JOHNSON: You're asking an operational question, though, as to whether and why they have not been continued, and I think that the Pentagon would be in a much better position to address that than I would. Q Another subject. MR. JOHNSON: If you wish. Q Do you have anything -- yesterday there was quite a bit of concern about Bihac and concern that if there was continued fighting in the area, that it might draw the Croats in. Do you have any readout on Bihac? MR. JOHNSON: I don't. I don't have an update on that. Are we still in Bosnia, or are we -- Q Yes, Bosnia. Several U.S. officials, including Mike McCurry, have said that the fear of a wider war could be one reason -- could be a U.S. national interest for getting involved. How great is the risk of a wider war, and how would that in your view play out? MR. JOHNSON: I'm not going to get into speculation about how a wider war might play out. Mike, and people standing behind this lectern, have made clear that we saw a vital interest in preventing the spread of this conflict. That was the reason that we had put our peacekeeping troops into Macedonia. That was one of the motivations for our backing of UNPROFOR, in addition to a humanitarian reason. It's a principle we hold to very much, but I'm not going to speculate about what a wider war would mean. I think Nick, earlier in the week, talked about how a wider war would spread throughout the Balkans, potentially affecting even our NATO partners, Greece and Turkey. It's something we take very seriously, but I don't think I want to speculate on how it might spin out. Are you ready? Q I am. Could you talk a little bit about your secret mission to Nigeria? MR. JOHNSON: My secret mission? Q Not your secret mission. MR. JOHNSON: Thank you for the promotion. In December 1994, the President asked Ambassador Donald McHenry, a private citizen, to approach leading Nigerians in the government, in opposition groups, as well private citizens, to ascertain how the United States Government could assist Nigeria in a rapid return to civilian government. Under that mandate, he's traveled to Nigeria a number of times. He's worked very closely with the State Department, particularly through Assistant Secretary for African Affairs, Moose, as well as Under Secretary for Political Affairs, Peter Tarnoff, and our Embassy in Nigeria, as well as with officials at the White House. He's made a total of six visits to Nigeria in the past seven months. His most recent visit was in the last month. We believe his discussions with the Nigerians have been useful. But as one could conclude from statements we've made here and other places over the last several days, the need to move to civilian rule and to respect human rights in Nigeria is something that we continue to press for. Q I guess the Post story suggested that he felt the mission had failed ultimately and that we're looking for other ways to try to bring pressure to bear on Nigeria. Can you talk a little bit about what your future strategy is? MR. JOHNSON: I don't think it's necessary to say that Ambassador McHenry has completed what he's attempting to do. We're continuing to press the Nigerians through our embassy, looking for other ways, working with our allies as well. We put out statements only just a few days ago that reflected our concerns about internal developments in Nigeria. We're continuing to press for a return to civilian rules, and we're not ruling out sanctions as a possible policy option. Q When you talk about sanctions, though, could this affect the oil industry? MR. JOHNSON: I don't think I'm going to define it any further. You're aware just as well as I am, that's the leading export of Nigeria. Q Do you have any brief summary of the sanctions taken to date since the elections were overturned in Nigeria? MR. JOHNSON: I'd be pleased to get you something a little more complete than I have. I know it has affected our visa policy with respect to Nigeria, but let me see if I can get you something that's a little more comprehensive than that. Q Has there been a cut-off -- Q (Inaudible). MR. JOHNSON: Yes, I think we're still there. Q (Inaudible) aid to Nigeria; I'm trying to recall? MR. JOHNSON: There may be some humanitarian assistance through NGOs, but there's no direct aid. Q The Nigerian military government have defended their existence by saying that they have been cooperating with the war on drugs. Does the United States Government think that is so? MR. JOHNSON: I believe that Ambassador Gelbard is addressing that in about 29 minutes up on the Hill. I'm going to leave that to him. I haven't had an opportunity to preview his testimony. Q (Inaudible) the talks are useful. Can you go into anymore detail? In the seven-month period, you mentioned the situation -- the country has essentially deteriorated. So what exactly has been achieved? If there is anymore detail you can give us? MR. JOHNSON: I can't give you much more detail, but I would point you back to the opening part of my statement where his discussions have been with a broader audience than just the government. He's also been talking to opposition groups and with private citizens in order to get a better understanding of how we might move forward in Nigeria. I'm not trying to overplay his success. I don't believe it's correct to assess it as a failure. Q Will Ambassador McHenry be going back? MR. JOHNSON: I don't have anything for you on a next trip. Q Is he there now? MR. JOHNSON: I do not believe so. Q You say there may be more trips? MR. JOHNSON: I'm not ruling it out; no. Are we still on Nigeria? We've exhausted Nigeria. We go to -- Q China. Has your Embassy in Beijing spoken to the Chinese authorities about the missile exercises? MR. JOHNSON: As I think Nick indicated yesterday, we're looking into the question of this exercise. I would note for you that at today's press briefing in Beijing, the Chinese Foreign Ministry spokesman characterized the missile exercise as a "normal missile test launch and a standard military exercise." He said that the training exercise will take place from the 21st to the 28th of July, but beyond that, I don't have anything for you today. Q Do you accept his statement? Do you have any concern about the stability in the strait area? MR. JOHNSON: It's been the long-standing policy of the United States to seek to promote peace, security, and stability in the area of the Taiwan Strait. We believe it's in the interest of the United States, the People's Republic of China, and Taiwan. We don't believe this test contributes to peace and stability in the area. Q Why -- MR. JOHNSON: I'm going to leave it right there. Q Have you found out anything about the exchange between Taiwan and the U.S. on the last remarks by an official of this Department? MR. JOHNSON: I can tell you that the Taiwan authorities have clarified their position on relations with the U.S. and have indicated that resuming an official relationship with the United States is one of their long-standing goals. Q Do you agree with -- MR. JOHNSON: The United States recognizes the government of the People's Republic of China as the sole, legal government of China and acknowledges the Chinese position that there is one China, and Taiwan is part of China. Within that context, we maintain cultural, commercial, and other unofficial relations with the people of Taiwan. Q David, another question. How do you see the prospect of former President George Bush going to China as a special envoy? MR. JOHNSON: I read the same articles that you have, and I don't have any further reaction for you on that. Q I had a question yesterday, taken up, regarding Slovakia. Do you have something on it? MR. JOHNSON: If I'm responding correctly to your question, you were asking about a recent visit by Slovak leaders. Q (Inaudible) MR. JOHNSON: During the week of July 10, the leaders of three ethnic Hungarian parties, represented in the Slovak parliament, came to Washington and met with Administration officials from the National Security Council staff and the State Department's Bureau of European and Canadian Affairs and the Bureau of Democracy, Human Rights, and Labor. We described our overarching objective to them for Central Europe, and that is, to build a stable, secure, and democratic Europe. Specifically, in Slovakia, we told them that the United States Government supports democratic and economic reforms, and efforts to improve ethnic relations within Slovakia and with Slovakia's neighbors. Q Was there any comment about removing Slovakia from the Partnership for Peace? MR. JOHNSON: The United States supports Slovakia's active participation in the Partnership for Peace program. We're pleased that Slovakia plans to send a unit to participate in the "Cooperative Nugget" exercise, which we will host in Louisiana in August. We also welcome the Slovak Government's interest in hosting a Partnership for Peace exercise, possibly later this year. Q One more question. There have been some communications that maybe President Clinton, Congress, or the State Department are going to take some sharper steps to maintain democracy in Slovakia. Did the subject come up about taking some steps -- specific steps, I mean? MR. JOHNSON: All I can say to that -- not directly responsive to that question -- is that we support a democratically elected government in Slovakia, and its political and economic reform efforts, and we continue to encourage improved ethnic relations with Slovakia's neighbors. Q Back to China, very quickly. Have you spoken to the Chinese, either here in Washington or in Beijing, about your view of the missile exercise? MR. JOHNSON: I don't have anything for you on any direct conversation we've had. That's not to foreclose it, but I don't have anything directly responsive to that question. Q Despite the urgency of Bosnia, I think the issue of Cyprus received quite some attention, both in this building and over at Capitol Hill. A number of meetings were held. I think Mr. Beattie will be visiting the region in the Fall. What's the overall Administration policy at this point to resolve the Cyprus issue? Is it, for example, to revive the confidence-building measures despite the fact that the Greek Cypriots declared them dead? MR. JOHNSON: I would only say that we remain determine to work with the parties to achieve a peaceful solution to the problem in Cyprus. I will be pleased to look into your question about what our overall strategy is in more detail and see if we can come back to that another day. Q It's for the mechanism, you know -- operational terms. Q Do you have anything on the attempts by the Indian Government to try and secure the release of those people being held by the Kashmiri rebels? MR. JOHNSON: I don't really have anything of much detail. I know that we're continuing to work with Indian authorities in their efforts to obtain the release of the hostages. We've continued our appeals to the kidnappers to heed our pleas and others for the humanitarian release, and for it to take place immediately. We continue to keep our officer on station in Srinagar, and we continue to hope for a peaceful resolution to these kidnappings. Q The flyers are saying that the rebels have issued a statement saying that the talks have broken off. Do you have any information on that? MR. JOHNSON: I don't. We've seen conflicting reports over the last several days, and I don't think we're going to want to be responding to each and every one. Q One more. Do you have any information at all about how these hostages are faring; what their physical condition is? MR. JOHNSON: I don't have anything directly related to that. I've seen the same press reports that you have, but I don't have any information more direct than that to relate to you. Q Do you have anything on the Post story concerning a nuclear program being developed in Germany? MR. JOHNSON: A bit. It's the policy of the United States that civil use of highly enriched uranium reactors be minimized in order to lower the risk of diversion and proliferation. That's a global policy, and it's not directed toward any particular state. We've made that position on civil HEU reactors known to other states, including Germany, and we've encouraged them to adopt a policy similar to ours. Whether to construct that reactor and the type of reactor to be constructed are decisions for the Germans to make. We would also note that the Germans have unassailable non- proliferation credentials and they fully share our commitment to stop the spread of nuclear weapons. Q Fred Cuny: Do you have any information about him? MR. JOHNSON: I don't have anything beyond what we've said over the last several days. Q The FBI team has been there now for a couple of weeks. MR. JOHNSON: The FBI team has been there for about that length of time. They are in Moscow working with Russian officials, trying to get a better handle on the case. There are no plans for them to return to the United States. Q Any plans for them to go down to Chechnya? MR. JOHNSON: Possibly later on, but I don't have anything on a specific date for you. Q Thank you. (Press briefing concluded at 1:44 p.m.) (###)

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