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U.S. Department of State 
95/10/25 Daily Press Briefing 
Office of the Spokesman 
                        U.S. DEPARTMENT OF STATE 
                          DAILY PRESS BRIEFING 
                                I N D E X 
                      Wednesday, October 25, 1995 
                                            Briefer:  Nicholas Burns 
Under Secretary Joan E. Spero/Deputy Assistant Secretary 
  Toni Verstandig: Briefing on Middle East/North Africa.. 
  Economic Summit in Amman, Jordan ........................1-15 
Membership in the European Union ..........................16 
Incident Involving Chairman Arafat in New York ............16-18 
Reaction to Congressional Vote to Move U.S. Embassy to 
  Jerusalem ...............................................18-21 
--President Clinton's Use of National Interest Waiver 
    Provisions ............................................19-21 
Perceived Influences on U.S. Policy .......................21-22 
Economic Resources of the Palestinian Authority ...........22-25 
Human Rights Abuses in Banja Luka/A/S Shattuck's Meeting. 
  with President Milosevic ................................25-29 
--Access of International Organizations/Western Press .....26,27,29 
--A/S Holbrooke's Letter to Milosevic .....................27 
--Activities of the War Crimes Tribunal ...................28,33 
--Role of Serbian President in Human Rights Abuses ........28-29 
--Access to Witnesses of Human Rights Abuses ..............32-33 
Representation of Bosnian Serbs at Proximity Peace Talks ..30 
--Schedule for Talks ......................................33-39 
Russia's Role in Peace Implementation .....................31-32 
Representation of Croatia at Proximity Peace Talks ........40 
Visa for President Milosevic ..............................42-43 
Capture of North Korean Infiltrator .......................40-42 
Restrictions on U.S. Companies ............................43-44 
Cooperation of Colombian Government Against Cartels .......44 


DPB #159

WEDNESDAY, OCTOBER 25, 1995, 1:06 P. M.

MR. DAVIES: Welcome to the State Department briefing room. We are postponing by a little bit the regular briefing. Nick will be here about 1:45 to 2:00 to do that, but first I am delighted to welcome Joan Spero to the briefing today.

As you all know very well, Mrs. Spero is Under Secretary of State for Economic, Business and Agricultural Affairs. She joins us today to talk with you about the Amman economic summit. The formal title of that summit is the Middle East/North Africa Economic Summit. It will be held in Amman, Jordan, October 29-3l.

Under Secretary Spero will make a few introductory remarks. She will be joined by Toni Verstandig, who is the Deputy Assistant Secretary of State for Near Eastern Affairs. Toni will be available, as well, to answer your questions.

This, I assume, will go for about a half an hour until the questions run out. Let me turn it over now to Under Secretary Spero. Thank you.

UNDER SECRETARY SPERO: Good afternoon, I guess. I thought what I would do is give just a few brief opening remarks and then Toni and I will be happy to answer your questions.

The upcoming Middle East/North Africa Economic Summit in Amman, Jordan, as you just heard from the 29th to the 3lst of October, is a very crucial part of our efforts in the Middle East peace process.

The support of regional economic development in the Middle East is an important part of this peace process strategy because we believe that lasting peace in the region is inextricably linked with concrete economic benefits for the people of the region.

The U.S. strongly believes in the potential of Amman to advance economic development and political stability in the Middle East.

We see this summit as an opportunity to capitalize on new business and commercial opportunities which have opened up because of the peace process.

Despite strong natural, geographic and cultural advantages, the region has not yet achieved its full economic potential.

Its traditional focus on political and security issues and outmoded statist approaches to development have hampered economic progress.

We are forging a new public/private partnership through the Amman Economic Summit. Government has a role in reforming the environment in which business operates, but only the private sector can marshal the resources necessary for long-term growth and development, which in turn can make permanent the peace that is now flourishing in the region.

We believe then that real economic progress ultimately depends on a public/private sector partnership and public/private involvement, and we are giving a high priority to involving U.S. and other business interests in the summit.

We see the summit then as an excellent opportunity to advance our business concerns in the area. We expect participation by up to 1,000 business people, including l50 from the United States, and government officials from over 60 countries.

At the summit, we will announce the creation of a development bank for the Middle East. A task force made up of over 30 regional and non- regional parties has engaged in intensive work so that we can announce this creation at the summit.

A substantial number of task force participants have already decided to join the bank, and others are going to be making up their minds.

The bank is designed to fill very specific needs in the region that are not now currently addressed by existing institutions, so it will focus on regional infrastructure and regional development and on the private sector, complementing the work that is being done already or work that potentially can be done by existing financial institutional

At Amman we will also launch a regional business council and a tourism board, all with regional, governmental and private participation.

We believe then that the Amman summit is an important step on the road to political and economic advancement in the region as a whole, and it has the potential to bring enormous benefits to all who participate.

I want to note in closing today that today is the first anniversary of the Israeli/Jordanian peace treaty. It is fitting that the Amman summit falls so close to this important anniversary. The summit will build directly on the cooperative potential opened up by the treaty and it is designed to help extend the economic benefits of peace to all nations of the region.

With that, I will ask Toni to join me at the podium. Toni, as you heard, is the Deputy Assistant Secretary. She has been very personally and directly involved in the peace process, and she and her team have worked very hard on the Amman Economic Summit. She will be happy to help answer the questions, as well.

Q Joan, so despite predictions to the contrary, the bank will be created. Can you give us some details of it? Who has signed on? Has Israel? Have the Saudi Arabians? What is going to be the share of financing? And the countries are going to take on, and so on and so forth?

UNDER SECRETARY SPERO: Sort of the over Bank l0l?

Q Yes, please.

UNDER SECRETARY SPERO: The bank -- actually we are very excited about this. I think it is a very important achievement.

The key countries that have signed on so far are, of course, the four regionals -- the Israelis, Egyptians, Jordanians and Palestinians. Let me remind you that the idea was their idea originally. Of course it has been elaborated and has evolved over the past year. So they will be participants.

We will have the U.S., Canada, Japan. We will have the Netherlands; and Italy, we believe, will be signing on soon. Have I missed any other key -- I mean, there are a number of others, but those are the key ones. Oh, Saudi Arabia -- pardon?

Q The Saudis?

UNDER SECRETARY SPERO: The Saudis have actively participated in all of the working efforts in the task force and in the experts' group. They have not decided yet whether they will join. They haven't said yes, but they haven't said no. They are keeping their minds open, and they are going to wait and see. That's also the situation for several of the European countries. And I think in the end, for Saudi, the key determinants will be how the peace process evolves and how the bank itself evolves.

So what will happen post-Amman is -- and this I think goes to the second part of your question -- we have almost finished the articles of agreement of the bank, and if any of you would like it for your reading pleasure, it is a long technical legal document.

A couple of issues still need to be completed. That will involve the shares of the bank. I think you asked that question. We still have to decide exactly how many shares, how they will be allocated, but we will leave whatever we do in number of shares open for those who would eventually like to join the bank, and that's what they would like to have happen.

The bank will be capitalized probably at about $5 billion, with about a billion and a quarter of paid-in capital that will be paid in probably over about a five-year period. That's not very large, but I want to stress that the idea here is not to replicate the Inter-American Development Bank or the African or the Asian Development Banks, but I have been describing it more as a merchant bank, which will have a small pot of money which it will use to put deals together, to put together transactions, to do co-financing with the World Bank or with a private institution or maybe even help leverage some concessional assistance.


DEPUTY ASSISTANT SECRETARY VERSTANDIG: If I could just add, Sid, I think on Saudi Arabia it's important to note that they were active participants, as Joan said, in the task force. The Saudis were supportive. They were very professional. They worked through the issues. And Joan is clearly right, they want to wait and see, but that's okay. I think that following Amman, as we finish up through December, we will reevaluate and take stock, and I think the process is clearly moving forward.

On the issues, Joan described the bank as a merchant bank. In our discussions with the private sector, we have heard repeatedly the importance of the bank that the private sector places. They need to be able to leverage money. The more sources that are available for them, the easier it is for them to put their money at risk. And when you are talking about projects that are regional in character, that are both a public/private dimension, this bank becomes more and more important.

So, from that aspect the private sector is very interested in seeing this bank move forward, and will, I think, be helpful players getting from here to there.

Q Just a follow up. Would it fair to say, then, for the Saudis and other Arab countries that adhere to the embargo of Israel, that that was the issue for them -- they don't want to participate in this with Israel until -- as long as the boycott remains in place in occupied territory?

DEPUTY ASSISTANT SECRETARY VERSTANDIG: That's not the issue. I think you need to remind yourself of the fact that last September the GCC signed on to getting rid of the secondary and tertiary aspects of the boycott. They have done so. If you'll look at the statistics, they are increasingly down in terms of boycott requests because governments are enacting measures to get rid of any boycott language in all the contracts and all the documents. It's moving forward.

Joan is right. It's a broader peace process issue. They're always calibrating their relations in the context of the bigger picture; especially the picture as it relates to the last two issues -- obviously, Syria and Lebanon.

Q Ms. Spero, what's in this bank and in this economic conference for Syria? What inducements might there be for Syria to come back and complete the negotiations with Israel?

UNDER SECRETARY SPERO: I think those are slightly two separate questions. As far as the conference itself goes, the door has been open. The Jordanians have said repeatedly that the door was open to Syrian participation. I don't think that there will be Syrian participation. I think the reason for that is because they have not completed their piece of the peace process and they want to distance themselves for now.

So far as Amman goes, it's a business meeting as well as a government meeting. The door was opened to them. They have chosen not to come to Amman.

As far as the rest of the peace process, Toni, I don't know if there's anything you want to add on that.

DEPUTY ASSISTANT SECRETARY VERSTANDIG: I think at this point, we can just leave it there, if that's okay.

Q What do you expect in the scope and in the nature of the participation of the Egyptian private sector in Amman?

UNDER SECRETARY SPERO: Why don't you -- you know specifically.

DEPUTY ASSISTANT SECRETARY VERSTANDIG: The Egyptians are very engaged. We're going to see eight of their Ministers and a very fulsome private sector delegation.

Q The problem is, you can talk to the Ministers?

DEPUTY ASSISTANT SECRETARY VERSTANDIG: You're right, and the private sector. Let me remind you -- and Joan chairs for the Vice President the Gore-Mubarak Initiative -- we have been able to use the President's Council to our advantage in terms of getting the private sector more engaged in these issues. We worked very closely -- Ambassador Ned Walker -- had very active outreach with that President's Council. You will see a very good private sector delegation and representation.

They are very interested in this summit, and they're interested in the engagement post-Amman. There will be regional project presentations which the Egyptians have been extremely -- private sector -- involved in terms of looking at projects that would seek to include Egypt in a peace.

Q If I may just follow up. Do you anticipate that any of those participants will represent enterprises large enough to make any difference?

DEPUTY ASSISTANT SECRETARY VERSTANDIG: Yes, I do. I do. I feel pretty good about the Egyptian private sector delegation.

UNDER SECRETARY SPERO: There is a preliminary list, I think, of participants.

DEPUTY ASSISTANT SECRETARY VERSTANDIG: The problem with the list is, it changes by the minute. So what I give you now would not really represent -- I'd be happy to make it available, but it's not up to date because registration continues.

Q Joan, could you say something about the lending policy of the bank? Is the bank going to be lending money at market rates? Will there be concessional rates? Will it be targeting infrastructure or special projects? And will it be lending to both the governments and to private lenders? Or how will this operate?

UNDER SECRETARY SPERO: One of the things that we made very clear - - those of us who were potential donors or major contributors to the bank made by very clear from the beginning -- was that this was not to be a concessional bank. So it is to be lending at "market rates." That would be equivalent of World Bank rates.

We know, of course, that many institutions would not have access to lending at those rates, but this will not have a concessional window. So it will be, again, lending at World Bank type of rates, so hard lending.

The articles provide for a variety of activities of the bank: from lending directly to public or private sector entities, particularly, again, with a regional focus; it also provides for the possibility of lending through other commercial entities, say, as the EBRD does -- those of you who are familiar with these institutions -- the European Bank for Reconstruction and Development -- has done lending to commercial financial institutions for on-lending so that you can get to the smaller institutions, smaller borrowers.

There is also the possibility -- I think it's in there now -- of insurance and kind of guarantees. So it will have a whole panoply of a lot of strings to its bow. Exactly which ones it will deploy at what time remains to be determined by the management of the bank.

Q Can you tell us what American companies will be participating? And do you have a list?

UNDER SECRETARY SPERO: We do have a list. There will be broad range from small, medium -- Toni, do you want to comment?

DEPUTY ASSISTANT SECRETARY VERSTANDIG: We have good list -- ranging from Sprint, AMOCO, ENRON, Mobile, NYNEX, Lockeed-Martin, who just recently won the feasibility study for the Aqaba Airport which would be a feasibility study on a regional airport at a lot in Aqaba; Battle, Foster-Wheeler. This is just sort -- we've got Salomon Brothers, Harvey Kruger from Lehman Brothers. Very good representation from the financial sectors.

A good representation on the tourism hotel side. You'll see the Amman summit is going to be a much more focused summit. That doesn't mean there won't be political speeches because there will. It is a public/private summit. That means you have to have some of the political representations, but there is adequate time we factored in from Casablanca in this program for more networking between the government and private sector, more time for the private sector to sort to get together among themselves.

We're very pleased with the representation at this point.

Q How soon would the bank begin making loans, getting money on the ground? And would the priorities be set by the bank -- you mentioned, for example, infrastructure? Or would it be driven by who applies and what sort of private market needs are demonstrated?

UNDER SECRETARY SPERO: I think all of us recognize from either our direct or indirect historical experience that it takes a while to get a bank up and running. So probably -- it's hard to imagine that this bank will be fully capitalized before, let's say, a couple of years from now.

But one of the things that became very clear is that the participants want the activities to get going sooner. So one of the things that there is strong agreement on is that one piece of the bank, which is called "The Forum" should start sooner than the rest of it.

This bank is different, as I would sort of describe it. It is a combination of a merchant bank and a policy forum.

The Forum is a policy wing of the bank, I guess we could call it -- one dimension of the bank -- that will provide for economic policy coordination among participants from the region, to give an example. The thinking has been that if you're going to do lending or put together a package for, let's say, an electricity program, you really need to have governments working together -- if these are regional programs, they're going to have to work together on pricing of that electricity or you're going to probably have some misallocation of resources.

Therefore, the Forum would provide the mechanism for appropriate policy coordination, whether it's on use of water or transportation systems or electricity.

Now, there's a reason for that, because the bank is the carrot to encourage regional economic coordination and dialogue which is, again, how it feeds back in to not only economic development but also to the peace process. So that's a long explanation to say that the we hope that the Forum will get going sooner.

In addition, there is another idea that people want to get off the ground sooner. There was a lot of talk in the experts' group about the idea of a project preparation facility. We didn't have a better name -- a project preparation facility; some capability to do pre-feasibility studies that could then feed (inaudible) eventually into bank financing.

So one of the mandates that will be coming out of Amman, we just didn't have time to finish the work on that. So one of the things that the Task Force will continue to work on is whether it's possible to get a project preparation facility up and running to begin to set the stage for bank lending.

Again, I want to stress, we tried to learn lessons from the EBRD, where it took a lot of time. They had a nice building with a lot of marble and very large staff, and nobody wants that. It may be possible to get this thing going sooner, particularly if we get into the business of co-financing where the bank, as I say, could leverage funds from, let's say, the World Bank or the European Investment Bank or the private sector.

We want to get it going sooner, but we also want to be realistic about doing it the right way.

Q So it could, reasonably, a couple of years before loans are actually --

UNDER SECRETARY SPERO: I would say that would be the outside limit. I wouldn't rule out the possibility, particularly because of the co- financing, that we could get going sooner.

Q Is this only open to the front-line states -- Israel and its neighbors? Where are the other countries in this process? How many heads of state and government are going to be there? You call it a "summit meeting."

And, thirdly, is there any U.S. taxpayer contribution envisioned in this?

UNDER SECRETARY SPERO: I think there are two issues here. One is the bank and one is the summit. So maybe you want to comment on who is coming to the summit? Do you want to start with that?

DEPUTY ASSISTANT SECRETARY VERSTANDIG: The summit is -- you will see Prime Minister Rabin, Chairman Arafat, to name a few -- Foreign Minister Kono will be there; Kozyrev from Russia; Secretary Brown, Secretary Christopher on our side; Musa. You will have representation from both foreign-ministry level as well as commerce. Again, it's to underscore the focus and emphasis on trade and business.

On the bank, I think it's important to note the name of the bank -- the bank is intended also. It is inclusive. It is not just for the four regional parties even though those four regionals are the core. They are the ones driving the issue. Their idea came from the REDWG Monitoring Committee, the financial aspect. They are the ones driving the importance of this bank, but that doesn't mean it's to the exclusion of the others.

UNDER SECRETARY SPERO: Actually, it's called the Bank for Middle East and North Africa. The Moroccans and the Tunisians and others have all participated in it. I think the ones who right now are still watching are the Gulf States, and, of course, Syria and Lebanon.

Q I think the U.S. is one of the three.


Q U.S. taxpayer contribution?

UNDER SECRETARY SPERO: Eventually, if there will be the capitalization of the bank, all of us who would like to contribute to the bank will have to go to our legislators for capital contribution. But, as I say, that would be a little ways out.

Did we get all of your questions?

Q Is there any chance that the Europeans, such as Germany and the U.K., will sign on before the meeting? And, if not, how long do you think it will take --

UNDER SECRETARY SPERO: I don't think that we'll see Germany and the U.K. sign up by the time of Amman. But they've made it very clear that they want to leave the door open, they want to wait, they want to see, they want to have consultations. That's fine with us, and that's the agreement we have. They want to continue to work with us, they want to continue to participate in the Task Force. They might want to participate in the Project Preparation Facility. So the door is very much open. But I don't expect any change between now and Amman.

Q Algeria will attend this meeting?

DEPUTY ASSISTANT SECRETARY VERSTANDIG: I believe Algeria is but I'm not positive.

Q You said that Syria and Lebanon were a factor in the decision by Saudi Arabian Gulf States. You indicated that. Are you believing that Saudi Arabia will be at the summit, I presume?


Q But they will not participate in the banking sessions, or what is going to be the relationship --

UNDER SECRETARY SPERO: Let me differentiate between the summit and the bank. I maybe didn't explain that.

This meeting that's taking place in Amman, the summit, I think of it at least as having two parts. One part is what will happen on the business side, the private sector side. A large number of representatives. A lot of sessions focused on specific sectors and specific issues -- business interaction.

If any of who have ever been to the World Economic Forum meeting in Davos, you may have a sense of what I'm talking about. It's actually being run by the Davos people.

The second piece of is what the government officials will be doing. As Toni said, they'll be making speeches and meeting with each other, but they will also be making decisions about specific institutions -- three of them: the tourism group, the business group, and the bank.

So the bank will be launched at Amman.

DEPUTY ASSISTANT SECRETARY VERSTANDIG: Could I speak to the Saudi issue? I think you are overstating it. Saudi Arabia is supportive of the peace process. They're supportive today of the peace process. Prince Saud's attendance at the Washington Summit three weeks ago was a testament of that. Prince Saud's statement at the ad hoc Liaison Committee in which Saudi Arabia pledged an additional $100 million for the Palestinians was very important. It wasn't just a pledge; it was the spirit in which he pledged it.

Saudi Arabia and King Fahd has repeatedly said that they are supportive of the peace process. The reality is that the Gulf -- they're more cautious, they're a little farther away. They are always seeking to calibrate their response. They also have just come out of some financial difficulties. Their budget situation is now in good shape. Their economic situation is in good shape. So I think they're in the process of reviewing a number of factors.

We have not put the question to them because we haven't finished the work on the articles, which Joan pointed out will not occur until the end of December. So it's not as though the question has been put to them: You have to sign up now or not. So it's not. It's an evolving process. The Saudis have been engaged, and engaged favorably.

Their representation -- they have a very good private sector delegation coming to Amman, and they will be represented at the ministerial level. That's important.

Three weeks ago the GCC issued a statement, endorsing the Amman summit. That is important. That could not be done in the absence of Saudi support. They're small measures, but they're important, and the peace process is sort a building block constantly of some of the smaller blocks, building one on top of each other. So try to put it in context a little bit.

Q Is the United States going to be working, I assume, to try and help American businesses as well, particularly with respect to Israel? Correct me if my figures aren't exactly right, but I believe that about half of Israel's foreign business goes to Europe; only about 20 percent to the United States, and yet the political calculus seems to be completely the opposite.

I wondered if we're going to try and be pushing American interests - - business interests, commercial interests?

UNDER SECRETARY SPERO: A couple of comments on that. I don't remember the exact figures, but you've got the magnitudes roughly right, that the Israelis trade much more with Europe than with the U.S., but that's because they're a natural market. They're right there.

We have a free trade agreement with Israel. Actually, when Ambassador Kantor was in Israel and the West Bank last week, we extended that and planned to extend it in the agricultural sector, which actually will benefit us. So over time we're going to be opening up the FTA more in areas that it had not applied to before.

I know that I regularly meet -- we've been meeting twice a year -- with the senior Israeli economic officials, and part of our agenda is to open up commercial relations. So we actively work on that. But it's not surprising that Israel has greater trade with the EU than it does with the U.S. because of geography.

As far as the Amman summit goes, one of the reasons that we have been supportive of a significant U.S. delegation is we see this -- from a State Department perspective, we have really a couple of interests. I mean, one interest is, as I've said, the peace process, economic development undergirding our traditional security and political goals in the region.

But in addition, we like to open markets for American business. It's one of the things we do. We work very closely with our Commerce Department colleagues and with USTR. We think there are opportunities. We can lead the horse to water. Whether the horse wants to drink or not is something the horse has to decide.

DEPUTY ASSISTANT SECRETARY VERSTANDIG: May I just have one. On Israel, your statistics are about right. It's getting better. As Joan points out, she meets not only twice a year; she meets more regularly. We have the Israeli delegations here quite often. Joan was just recently out in Israel. It's a topic of discussion.

We have gotten more favorable response from the Israelis. Our Ambassador has done a very good job. This is a priority for him in Israel, and he has been very active in promoting the U.S. private sector in Israel.

Q Turkey wants to join this operation. Did they finalize their desire? Do you have any idea?

UNDER SECRETARY SPERO: Do you mean the Bank?

Q Yes.

UNDER SECRETARY SPERO: I'll have to get back to you. I'm sorry. You caught us.

Q You said you wanted to be able to open markets for U.S. companies. The banks historically have trouble getting information to the U.S. business community on business opportunities. How are you going to build into the articles and into the management of the bank information flow to the business community; particularly the Asian Bank, European Bank, the African Bank have real trouble getting information to the States for the business community? What are you doing now at the formative stages to ensure that there is a good information program to get this information back here?

DEPUTY ASSISTANT SECRETARY VERSTANDIG: We're doing a lot right now. We have a couple of examples for you. This summit process is one. The Commerce Department has a home page on the Amman summit. It has been very well utilized by the private sector. It will stay up and running. We are using that home page effort to update both with the world economic forum project information coming from Amman, and also, as you may recall, in Casablanca we established an Executive Secretariat, which is intended to help put this kind of private sector information together.

It's a process. We are engaged in the process. This is not about one summit. It's about our constant effort. By the time the bank actually occurs, it will be in a much better shape than others. Your point on some of the other regions -- in fact, we've been meeting with the Moroccans who chair the Executive Secretariat and trying to work with them on establishing a link with APEC, for example, because that's a natural.

So I think by the time the bank's up and running, they'll have a lot of project information, and things will occur much more quickly.

Q Go back to George's question. With all due respect, it sounds to me as if you have an agreement in principle to create this bank, because, as you said, the funding of it -- and that's the heart of the bank -- has to come from each country's legislature.

My question is, would you disagree? And, secondly, how on earth do you expect to get Jesse Helms and his crowd to authorize funding for this bank when they're not even -- they don't want to pay for U.S. Government operations?

UNDER SECRETARY SPERO: We've already had some dialogue with the Hill on the bank. They're aware of our preparations, and we've actually had very positive signals from them. We have not gone up with any specific request at this point, because we're not ready to do that.

We think that when it's ready and when the time is ripe, that we'll have to make a good case. We expect that we can make a good case, and we think it's a very good bargain.

As I said, the capitalization will be relatively limited -- $1.25 billion paid in over five years. That's total capitalization. If you said that the U.S. would take somewhere between 10 and 20 percent, this is not going to be a big chunk.

In fact, what a number of the countries have said to us is that this is a very good way to leverage funding. I think all of us realize that we are no longer in a position to do massive concessional flows to the Middle East or to any place else. The world has changed.

Not only has the world changed, but our thinking about economics has changed. I think if we look at the success stories in development, it is very often those countries that have taken small amounts of public concessional funds and leveraged it with open markets, with liberalization, and with trade flows, and that's sort of the Asian story.

So I think that the countries of the Middle East are recognizing -- and certainly the donors are recognizing -- that the best thing we can do, not only in terms of our own budget constraints but also in terms of the best route to economic development is to provide funds in the form of banks and in the form of packaging and coordinating the flows combined with openness to the private sector.

So we think this is a sort of a modern kind of institution and a modern approach to development. We think we have a very strong case, and we're prepared to make that case.

MR. DAVIES: One more question.

Q Let me just follow up. No one has committed funds to the bank yet, though?

UNDER SECRETARY SPERO: No. We all have to go. In fact, it says in the declaration that we all have to start our national legislative processes. Of course, we do.

Q How about one more? Where's it going to be?

DEPUTY ASSISTANT SECRETARY VERSTANDIG: The venue for the bank will be announced in the declaration. (Laughter)

UNDER SECRETARY SPERO: Stay tuned. Thank you all.

MR. DAVIES: Thank you very much.

(Under Secretary Spero and Deputy Asst Secretary Verstandig concluded their briefing at 1:39 p.m.)

(Mr. Burns began the Daily Press Briefing at 2:14 p.m.)

MR. BURNS: Good afternoon. Welcome to all of you to the State Department briefing. Welcome back to all of you who were with us in New York. We had a good time in New York. There were lots of briefings in New York. There was a briefing on Saturday. We briefed on Sunday. We had a couple briefings on Monday. There was a good one yesterday. I don't see many of the refugees here.

I just wanted to note for the record, there were briefings before some of the meetings. There were briefings after some of the meetings. The Secretary made himself available on Sunday morning to a number of your colleagues. We felt good about it and I hope you all did.

Q (Inaudible )

MR. BURNS: You got it, Tom. Ron, am I right? It was a good couple of days in New York.

Q (Inaudible.)

MR. BURNS: I'm looking for George. George, you have no questions, okay. Yes?

Q Early in the morning, the Foreign Minister of Cyprus had a meeting with Under Secretary Tarnoff here at the State Department. Immediately after the meeting, the Foreign Minister made a statement in which he said that the solution to the Cyprus problem is not a prerequisite for the acceptance of Cyprus in the European Union as a member.

Do you have any comment on that? Does the U. S. agree or disagree with this position?

MR. BURNS: The U. S. position is that we would support Cyprus's candidacy for membership in the European Union.

Q The entire island or part of Cyprus?

MR. BURNS: Well, Cyprus is a bizonal community.

Yes, Dave.

Q Can we go over the events at the Lincoln Center? Do you regard the way that Mayor Guiliani treated Chairman Arafat as an embarrassment?

MR. BURNS: Well, I think the way that that Chairman Arafat was treated was an embarrassment, certainly, to the City of New York. It was an embarrassment, I think, to all Americans who would like to treat the leader of the Palestinian people with dignity and with respect. This is an individual with whom we have had great differences in the past, but who, in recent years, has signed two peace agreements with Israel, who has renounced violence as a tactic to achieve political objectives; an individual who has met with both President Clinton and Secretary Christopher on numerous occasions.

We expect that when an individual like this, who represents an entire community of people across the Middle East, the Palestinian people -- when he visits the United States, whether it is Washington, D. C. or any other place -- he will be treated with respect and dignity.

That did not take place the other night, and I don't think anyone in this government agrees with the way he was treated. In fact, we very much disagree with the way he was treated, and we have made that view clear to everyone involved, the city officials, but also to the Palestinian officials, as well.

Q How was this communicated to city officials?

MR. BURNS: I don't know how it was communicated, but I know that we have communicated with them. We have also taken the liberty of making several public comments about this. We don't think it was right at all to treat him this way.

Q Didn't the Mayor of New York know about it when you listed all the heads of state who were coming to the United Nations special session that Yasser Arafat would be coming to New York?

MR. BURNS: I am sure they did. I mean, Arafat is a prominent person. He was prominently part of the Sunday proceedings at the U. N. when all the leaders were present. He gave a speech on Sunday. There was no reason for anyone in the City of New York to go out and just flagrantly try to embarrass him. That is not, I think, the way that most Americans would want anyone to be treated when they visit this country, but certainly not someone who, in the past couple of years, has made a rather dramatic turn towards peace.

Q Did the State Department apologize to Mr. Arafat, and have you asked Mayor Guiliani to apologize?

MR. BURNS: I think Chairman Arafat and his colleagues know that the United States Government, the federal government here, had nothing to do with the particular event which he attended. This was a decision made by the City of New York. So, I'm not quite sure that it is our responsibility to apologize for this, but certainly we have let the Palestinian officials know that we feel very badly about it, and that we are opposed to it, and that we have spoken out publicly against it.

Q Has Mr. Arafat or anyone from his delegation complained? I ask because I actually spoke to Chairman Arafat and he said to me that in fact he had a scheduling conflict and had to leave around that time anyway, and so he took no offense.

MR. BURNS: I do know this, David. I know that a lot of Palestinians, among them Palestinian officials, are upset about this. When asked to comment, we are very clear in saying this is not the way, the proper way to treat a guest in this country, specifically someone who is making the contribution that he is.

Q Has the PLO communicated with the federal government its displeasure at the way this is -- ?

MR. BURNS: That I don't know. That I don't know, but I'll be glad to look into that for you.

Q Do you think it is possible to wipe away all the people the PLO has killed over the years? Doesn't this really sort of highlight the problems many Americans, many people around the world, have with the peace process, regardless of the good it may have done?

MR. BURNS: Sid, to be direct in response to you, of course no one in this government -- I don't think you or anybody else -- would condone any of the terrible atrocities of the past committed by the PLO. But the PLO has now renounced violence. The PLO has made peace with Israel. The PLO has said, and Chairman Arafat has said consistently, that the Palestinians now want to live side-by-side with the Israelis in the Middle East. That is a positive sign.

The fact that he has been received at the White House and at the State Department very recently, last month, is an indication of the respect that we have for Chairman Arafat, and of the fact that we believe that redemption is possible, and that peace is the highest objective, and here is someone who is making peace.

Q Can we go to Bosnia, unless anybody else has more?

Q Can I ask one more about the Middle East? Have you been reading the comments from some of the Arab countries, some of them quite angry about the Congressional action on Jerusalem?


Q And how do you respond to such Arab comments?

MR. BURNS: The way we would respond to those who are concerned, both in the United States and in the Middle East and perhaps throughout the world, is that of course the Administration did not support, and does not support, the Senate action. And the President, as the President's Press Secretary, Mike McCurry, said yesterday, will not sign this action. The President will use the waiver provisions that are incorporated into this bill to make sure that the United States Government does nothing to impede the peace process, that we act in a way that is consistent with our support for it.

I think, in a nutshell, you know our position is grounded in the fact that we don't believe any outside body, whether it is a country or whether it is a group of people, should take any precipitous actions that would get ahead of the parties, who will be discussing this particular issue, the issue of Jerusalem in the final status talks.

We don't believe that is helpful to the peace process. We pledged not to do it and we will not do it. The President, as Mike McCurry said yesterday, will take advantage of the waiver provisions to make sure that this Administration, at least, will not be a party to any attempt by people here in the United States to disrupt the progress towards peace.

Q Does the mere fact of the Senate or the Congressional action make any difference in the attitudes of the people that you are dealing with? In other words, even though the President will use his waiver, does the mere existence of this legislation make a difference?

MR. BURNS: In one sense, Jim, it does make a difference. I think it creates a climate where perhaps some people feel they may not be able to depend upon the United States and the commitments that the United States has made. But I think it is important for those people, some of the people we have heard speak out today in the Middle East, to understand the nature of our government, the nature of our political system here, and the fact that, at least in this case, the one silver lining in this cloud, is that there is a waiver provision that President Clinton and future presidents can use, should they determine that it is not in the national interests of the United States to be way out ahead of the Israelis and the Palestinians on the most sensitive issue in these negotiations, which is Jerusalem, and to somehow put the United States out with a public position that at least is precipitous in terms of where the negotiations may be at that point in time.

Q Did Prince Saud bring it up in his meeting with the Secretary today?

MR. BURNS: Well, you have noticed some conversation at the photo op --

Q Yes, but at the meeting itself?

MR. BURNS: I don't know if that issue was raised. I was not in that meeting, but I can check that for you.

Q Nick, on the waiver, it requires the President to certify that there is a vital national security interest, I gather.


Q Would there be a vital U. S. national security interest at stake?

MR. BURNS: Yes. The vital national security interest at stake here is United States interest broadly defined in the Middle East. And the heart and soul of our bipartisan attempt, over the last five, six administrations has been to try to use the influence of the United States to help Israel and the Arab people, specifically here the Palestinians, make peace, and we have been influential in that regard, I think, in both President Bush's administration, but also President Clinton's, and specifically President Clinton's administration. The specific vital national interest is in not torpedoing the Middle East peace negotiations on the most sensitive, and some would say the most difficult issue which will be involved in the final status talks.

When Mike McCurry said yesterday that the President would use this waiver, of course he was linking that to the fact that we believe there is a vital American interest at stake here, David.

Q Why would this torpedo the Middle East peace process when the Embassy will be located in West Jerusalem? It sort of makes it a moot point, doesn't it?

MR. BURNS: Sid, I mean, you've been to Jerusalem at least as many times as I have, and I think you understand as well as I do how sensitive the issue of Jerusalem is for both Palestinians and Israelis and people beyond those two groups of people.

It's always been regarded as the most sensitive and most difficult issue. That is one of the reasons why it's been put in the final status group and not as an issue for the other tracks that come before that.

I think it's obvious to anyone who knows anything about the Middle East why this is sensitive for historical, political, religious reasons, and we are sensitive to that. The United States, as one of the benefactors of this peace process, does not want to take any initiative that would in any way disrupt it -- from a unilateral perspective, from our perspective, for whatever reason the people here have for having put this resolution up in the first place.

So that's a very clear position. I would bet that this is a position that future Administrations, should this issue not be resolved in the life of this Administration, will also be sensitive to. It is interesting to note that there has been, in essence, a bipartisan consensus on this issue for a very long time.

So the fact that this national interest waiver is there is a good thing. We would have preferred that this resolution in this bill not have come up in the first place. We can't do anything about that now.

Q Two questions or two issues. Can you address the environment which is prevailing in this country now that there are outside elements coming and meddling in the affairs of U.S. foreign policy -- politicians who come in the shape of the Likud, the representatives here -- for instance if Binyamin Netanyahu is in town, he will be in town by Monday or Tuesday -- and some elements, for instance, Senator Arlen Specter, who is running for Presidential nomination, was called the man of the hour because he is committed to oppose any financial assistance to the Palestinian National Authority. And I saw a press statement come out from some of these elements here in town.

Is this conducive to creating a good atmosphere for really playing good politics, or this is the season to be jolly in the election campaign which kicked off yesterday or day before yesterday?

MR. BURNS: I'm going to have to differ with at least part of the way the question was phrased. I wouldn't consider Senator Specter to be an outside influence. He's a respected member of the Senate and he's a Presidential candidate, and he has every right to put himself forward and to speak out on foreign policy issues.

He may disagree with the Administration sometimes, but that's his right, and members of Congress have a constitutional obligation to speak out on foreign policy issues.

As for Mr. Netanyahu, we have not always agreed with him on a number of issues, but he's a leader of the opposition in Israel. He is certainly welcome to come to this country -- this is a free country -- and to speak out. From time to time we in the Administration speak to him. The Secretary met him many months ago -- I think back in March -- for a briefing meeting in Jerusalem. I know that Ambassador Indyk has seen him recently.

We do see him from time to time. As I say, we don't always agree, but we certainly respect Israel as a democracy and respect the right of Israeli politicians of differing political views to come here and to speak out and to, in essence, participate in our system of free speech, both with journalists and also with members of Congress and people in the Administration.

Q I tried this a couple of weeks ago. Perhaps you have an answer now. I bring it up again --

MR. BURNS: Excuse me. I'm sorry. Sid had a question. Sid was asking a question.

Q Will you see him on this trip -- this visit?

MR. BURNS: I don't know if there are any plans for anyone in the Administration to see him. I just don't know. I'll be glad to check on that.

Q The question of PLO resources. I tried you a couple of weeks ago, and there was no answer then. It comes up again, because Dan Burton again is saying the U.S. today should not be giving taxpayer money to the PLO. The PLO has enough money stashed away in accounts.

Has the State Department determined -- because you also talk about transparency -- I mean, the State Department does; Dennis Ross always talks about transparency when it comes to assisting the Palestinians.

Do they have resources -- vast resources that could be used to finance some of the economic projects that the people in Gaza and now in the West Bank so badly need?

MR. BURNS: I don't know, Barry. I don't know where the Palestinian Authority may have financial resources and what the extent is. But I find it kind of a curious question from this perspective.

The United States supplies economic assistance to Russia. Clearly, Russia has foreign reserves. Russia has gold reserves. Russia has the international capacity to do lots of things itself around the world. But we see it in our national interest to use -- to spend some of the taxpayers' money to provide financial assistance to spur economic reform in Russia.

By the same token, despite the fact that the Palestinian Authority may have its own bank account -- I hope it's got its own bank account; it now has to run the Gaza Strip, and it will soon run most of the West Bank -- we believe it's in our national interest to help the Palestinian Authority to improve the lives of Palestinians in the West Bank and Gaza, to build roads, to build schools, to help the Palestinians, those young Palestinians who are desperate for higher education.

This is how we spend some of this money. The Holst Fund to which we have contributed, of course, helps to pay the salaries of some Palestinian officials -- of police officials, of educational officials. This is money well spent. It's in the U.S. national interest to spend it.

So I don't see a direct relationship between the two parts of your question.

Q That's the answer to Congressman Burton and people like him, or is this just an answer to me?

MR. BURNS: No. That's an answer to Congressman Burton and to you and to anyone else who is interested in this subject. The Administration has put forward a request for financial assistance to the Palestinian Authority.

We do that not out of charity but out of national interest. We can make a case for it, and I'm glad to continue to make that case -- to him and to you.

Q We're talking about what he said. I happen to be the one relaying that point of view to you. So if I understand the State Department position, however much money the PLO might have -- and the State Department really doesn't know how much it has -- it's still in the U.S. interest to use the U.S. Treasury to finance Palestinian projects. Is that a fair assessment of what you said?

MR. BURNS: No. It's not a fair assessment. It may be that there's someone in the U.S. Government, whether it's somebody who's stationed in Jerusalem or someone in the depths of this building, who knows exactly how much money the Palestinian Authority has and doesn't have. It may be that we don't have anybody who knows the answer to that question.

But the fact is that no matter how much money is available, it's clearly not enough money to do everything that we think has to be done to provide for political stability in a very difficult and sometimes combustible environment in Gaza and the West Bank -- clearly not enough money to deal with all the challenges that are now on the shoulders of the Palestinian people as they now assume responsibility to run their lives and to run the cities that will soon be in their control -- in Jenin and Ramallah and other places.

They will now have responsibility for power and for heating and for education and for other public utilities that they did not have responsibility for before. That's going to be a very expensive endeavor, and it's going to be expensive and time consuming to train people who can run those facilities and services on a long-term basis.

They have some of their own resources to start down the road, but they clearly don't have sufficient resources to do the job themselves, and that's why the United States, Germany, France and other countries who are interested in peace in the Middle East have taken it upon ourselves to try to target some projects for financial assistance -- to the tune of around $500 million on the part of the United States -- over the next five years.

It's money well spent. It's money that's in the U.S. national interest. Interestingly enough, the government that would probably make as strong a case as I've made today is the Israeli Government. If you talk to Prime Minister Rabin and Foreign Minister Peres, they'll make a strong case for international lending and international financial assistance to the Palestinians.

Q It is an issue raised by the Congressman, speaking of American Treasury. He's not talking about whether it has the support of the Israeli Government or not. It might even have the support of the Japanese Government, for all I know. I don't know why you're bringing Israel in here.

MR. BURNS: The reason I am is because --

Q Well, you want to say it has the blessing of Israel. The Congressman says the PLO has a lot of money stashed away. You don't know how much money they have, but however much they have, it isn't enough to finance these projects is what you're saying.

MR. BURNS: I'm saying that I personally cannot give you a financial accounting on the financial position of the Palestinian Authority. There may be other people in our government who can do it. It is relevant that Israel is supporting international financial assistance efforts for the Palestinians -- relevant because Israel was enemies with the Palestinians for decades, and Israel has now made peace. I think Israel is well placed to have a comment on this particular issue.

Q One more question on that. Is it your opinion that the Palestinians will be able to meet the new compliance criteria that were adopted by the conferees yesterday?

MR. BURNS: Tom, I haven't seen the fine print on what those conditions may be, but we'll look at it and get back to you. You're talking about conditions that must be met before the Administration can certify that the Palestinian Authority is in compliance with the provisions of the bill so that assistance can be forthcoming. That's the question.

Our very strong hope is, of course, that that would be the case, because, as I said before, it's in our strong national strategic interest to support the Palestinian Authority. We would hope that the legislation would be written in such a way that this would be a fair playing field and an even playing field.

Q Anybody else on this subject here?

MR. BURNS: Judd had first dibs.

Q Before I came in here, there was a little snippet on the wires from the AFP, quoting Assistant Secretary Shattuck on the Bosnian Serbs reopening detention camps near Banja Luka. Can you give us more - - do you have more on that?

MR. BURNS: It's something that we are looking into today. To answer your question, let me just review, for those of you who aren't aware, that Secretary Christopher asked Assistant Secretary John Shattuck over last weekend to travel to the region to look personally into these allegations of human rights atrocities in Banja Luka.

He met with Mr. Milosevic yesterday in Serbia, in Belgrade, and had a long meeting with him. Mr. Shattuck gave President Milosevic a detailed personal account of his interview of the refugees whom he encountered at Zenica last week.

He gave him on behalf of the Red Cross and the UNHCR a list of 1200 people who we believe are missing as a result of the Bosnian Serb military activities in Banja Luka. These are family members of people who have been kicked out of their homes in Banja Luka by the Bosnian Serbs. These are Muslems and Croats who have made their way to Zenica and who have missing family members from some of the terrible events that took place over the last three weeks in Banja Luka. So that list was handed over.

Mr. Shattuck requested that the United Nations and the international community and the Red Cross be given direct and immediate access to the sites in Sanski Most, in Banja Luka and in Srebrenica and Zepa from the past nefarious activities of the Bosnian Serb military leadership, where we suspect that there were human rights abuses.

In a speech last night on Serbian television, Mr. Milosevic said he had met with Mr. Shattuck, that he had received the direct request of the United States Government, and that he would attempt to comply with it. We heard from the Serbian Government this morning -- in fact, from the Serbian Foreign Minister, Mr. Milutinovich -- that international organizations will be given access within the next day or two to Banja Luka and specifically to those areas where the refugees in Zenica say the human rights abuses occurred. This is a positive development.

The words have been very good and welcome out of Belgrade, but we are going to remain interested in positive deeds as well as words. What I mean by that is that we hope very much that we will be given full access -- we, meaning the United Nations, the International Committee of the Red Cross, the United States Government and other interested governments -- full access to these sites, unfettered access to these sites, and access to any individuals who may have additional information on the terrible events that we believe took place in Banja Luka.

So that is some of the good news in a very bleak situation that came out of Assistant Secretary Shattuck's trip. He will remain in the region. He will remain in the region to lead the Administration's efforts to look into these incidents personally. He is working very tightly, together with the United Nations and the International Committee of the Red Cross as part of this effort.

This was the third trip that he's made to the region in the last four weeks, which I think demonstrates quite clearly the fact that we in this government believe that whoever perpetrated these crimes ought to be brought to justice. This is the beginning of that effort.

Q You told us a few weeks ago about the letter that Holbrooke wrote Milosevic on this issue. A lot of the charges that have been made, a lot of crimes that were alleged to have been committed, in fact, apparently happened even after that communication took place. What was the response to that letter? In the meantime, was the matter just dropped, or what?

MR. BURNS: The letter, I think, was sent last week, Tom -- the letter that Dick Holbrooke sent. But even before that letter was sent, our Charge in Belgrade, Rudy Perina, had both spoken with Milosevic and Milutinovic on the phone and gone in to see Milosevic.

We have heard consistently from President Milosevic and his colleagues in the Serbian Government that they are opposed to summary executions and murders and human rights brutalities against Muslims and Croats; that they would assist the international community in trying to locate the people who committed them. Those are positive words. But as I said before, words are not really sufficient in a situation like this; only deeds are.

We are now beginning to see, at least, the appearance of action on some of those words. We now have a statement out of the Serbian Government just this morning that they will give the international community access.

By the way, John Shattuck asked for access by the Western press as well. He felt, and we do feel, it's very important that cameras go into Banja Luka and that print reporters -- people who know the area and are expert in the area -- go into Banja Luka, people who will recognize, we fear, some of the same signs of Bosnian Serb brutality as you and others saw in 1991 and 1992.

We need now to see a fulfillment of the commitments that were made on Serbian television last night and directly to Mr. Shattuck and prior to that, to Mr. Holbrooke. We're counting on the Serbian Government now to give us every assistance that we're going to need -- we in the international community -- to pursue these allegations of brutality.

Q Nick, is there a selective use of Serbia's influence here? You make the request to open up these areas to outside inspection and they snap their fingers and say, it's going to be done. This follows two weeks of appealing to them to use their influence to stop the slaughter and they didn't do it.

MR. BURNS: I'm not here as an apologist for the Serbian Government. I am here as one who has said pretty consistently throughout this briefing in the last couple of weeks that deeds are a lot more important than promises and words. I've already said that we don't believe that there have been sufficient number of deeds to back up these words, but we may be beginning to see some action on the part of the Serbian Government.

We will remain skeptical about everything that we're told about these events by the Bosnian Serb leadership, certainly, until we have a chance to go in with our own eyes to verify some of these terrible stories that were told to Mr. Shattuck last week by the refugees in Zenica. We're going to keep at it because it is in the interest of the international community to strengthen the War Crimes Tribunal.

I should also say that as part of the discussion yesterday in Belgrade, Mr. Shattuck gave President Milosevic a very detailed description of the activities of the War Crimes Tribunal; the fact that a number of Bosnian Serbs have been indicted, including the two leaders of the Bosnian Serb community, Mr. Karadzic and Mr. Mladic, and a description of how the information that we have developed over the last two weeks or so concerning the situation in Banja Luka will be helpful to the War Crimes Tribunal. We thought that was a very important part of that discussion.


Q Three thousand Muslim draft-aged men disappeared and were feared killed by the Bosnian Serbs. You -- the State Department -- was asked if there was a connection to Milosevic. There was no evidence at that point.


Q There's been a lot of contact with Milosevic now -- Shattuck and others. At this point, you're looking to the future and saying, he's going to use his influence. These people are dead.

Can you now say whether there is any connection between those marauding bands of killers and the President of Serbia?

MR. BURNS: Barry, we have believed for a very long time that the Serbian Government, including Mr. Milosevic, have influence, obviously, on the Bosnian Serb community, in general, and we believe in the Bosnian Serb military.

I am not aware of any direct connection between President Milosevic and these events. I choose those words very carefully. Those are the same words I used in weeks past.

I am not aware of any information inside this government that I have seen or that anyone else has told me about that would link him personally to these events.

Given the situation, we are willing to pursue these leads wherever they may lead. That's always been our position, and that, in fact, is part of John Shattuck's mandate as he travels through the region. He's currently in Zagreb.

Q (Inaudible) Milosevic has protected him consistently since he committed crimes in '91 in Croatia. He seems to be the one that was responsible for this. Isn't that a connection?

MR. BURNS: We know something about Arkan's activities both in prior years and also, we think, about his activities over the last couple of weeks. He's a criminal. He runs a rogue paramilitary group. He is a Serbian. He does have a residence in Belgrade.

As to his personal relationship, Tom, with President Milosevic, I don't know. It's a question that I'm quite willing to be asked every day. It's a question that we're willing to look into, but I don't know anything about his personal relationship with Milosevic.

Q Nick, did the Serbian Foreign Minister also say that the Western press would be given access to those areas, or just the international relief organizations?

MR. BURNS: I know that John Shattuck gave a press conference just in the last two hours in Zagreb. I've not seen a transcript of that. I had two conversations with him this morning. It was not clear at that time just who would be given access. We think now it will definitely be the United Nations and the ICRC. I don't know if the Serb and the Bosnian Serb authorities will give -- in this case, the Bosnian Serb authorities -- will give the press access. We have requested that. We will continue to request it. We'd like to see it happen.

We think it would be a positive development to have independent people, objective people, journalists, investigate the situation for themselves.

Q I thought you said it was someone in Washington who spoke to Milutinovic, but it was Shattuck?

MR. BURNS: No. It was John Shattuck who spoke to Milutinovic. I don't know if I misspoke or not, but it was John Shattuck who spoke to him.

Q Another issue on --

MR. BURNS: John was in Belgrade, and he met with Milosevic and Milutinovic and then had subsequent phone conversations with Milutinovic.

Q Another issue on Milosevic.

MR. BURNS: Let's just go here to Bill.

Q If you've got one on the Tribunal, go ahead.

MR. BURNS: Why don't we just go ahead with your question.

Q Concerning Milosevic and the meetings with Secretary Christopher in New York, Nick, there was the issue last week, reports that basically the Bosnian Serbs would withdraw from the peace talks, or not participate in the peace talks unless Russian or other friendly troops were involved in the PIF force.

My first question to you, did this turn out to be true? Was this coming from Milosevic and the representatives of the Bosnian Serbs, this particular demand?

MR. BURNS: I don't believe that that demand has been made to Dick Holbrooke or to Secretary Christopher or anybody else involved in the peace effort. I've never heard of it.

The Bosnian Serbs and the Serbs will be in Dayton, Ohio, late on the 31st to convene the talks with us on November 1. I'm just not aware of this demand.

Q Then, may I ask, to follow up --

MR. BURNS: Perhaps they're saying things publicly but they're not being said to us privately. It's more important what they say privately, of course.

Q Okay. It's very important to know. And then the summit assignment that was given by the two Presidents to Perry and Grachev to get it together so the Russians could participate was then not a response to Bosnian Serb threats --

MR. BURNS: Not at all. The facts are that the United States and our NATO allies are planning to be the core of a peace implementation group -- military group -- after a peace agreement is secured.

We would very much like Russia to be part of the effort. Russia, of course, will not place its troops under NATO command. Russia will not be as tightly integrated with our forces, for instance, as will, say, Canadian and French and British forces. But we think there is a role for the Russians. President Clinton and President Yeltsin, I think, agreed on that. Now it's up to Secretary Perry and General Grachev, when they meet here tomorrow, to get into this issue very deeply, as they've already begun to do. We hope to produce a solution to this.

Q If a solution isn't produced -- just a minute, Barry, please - - if a solution isn't produced, this is not then viewed as a deal- breaker or something that's going to a priori, negate the --

MR. BURNS: No. We've never been told by the Bosnian Serbs that this is a concern that will impede their participation in the talks or their participation in the solution to these problems.

Q Nick, would there be a role for a military force as a non- combatant sort of role in a peace implementation force -- civil engineering types of things? How important would that be to --

MR. BURNS: For the Russians? For the Russian Government?

Q Right.

MR. BURNS: That's certainly along the lines of what we've been discussing with the Russian Government -- perhaps a role having to do with reconstruction, with engineering, with mine-clearing, that kind of thing. That kind of role was discussed at Hyde Park. It will be discussed when Secretary Perry and General Grachev get together.


Q Before we get off the Russians, you may have seen a Reuters story out of Brussels that purported to know what's going to happen, and said that a group of 2,000 crack troops would be sent and would be under some sort of a tactical Russian command but under the overall umbrella of the NATO commander, much along the lines of what the French have done in the past. Any accuracy in that report?

MR. BURNS: None, (Laughter) in the sense that President Clinton and President Yeltsin came out and spoke to you on Monday afternoon and said they did not have such an agreement. I know that there has been no follow-up since then at the senior level. That won't happen until the two Defense Ministers get together. So there's no truth to that report. I saw the same report you did and was amused by it.

Q A follow-up on the previous question. You mentioned that Mr. Shattuck asked, among other things, for access to individuals who might know more about what happened around Banja Luka.

MR. BURNS: That's right.

Q Do those individuals include Arkan?

MR. BURNS: I think that the international War Crimes Tribunal and anyone interested in human rights would appreciate the opportunity to talk to him.

Q (Inaudible) made available?

MR. BURNS: I don't believe that John Shattuck put forward a list of people with whom he wanted to talk. But, certainly, when the international community goes to Banja Luka, when the Red Cross and the U.N. does, they'll need to talk to people who we believe, or who local authorities believe, may have had either a role or some knowledge of these events.

These events were not carried out in secret. There have to be many, many people who either were a party to this or perhaps have some limited knowledge that could be helpful in piecing together the larger picture of what happened. That's of interest to us.

Q If I missed it, I apologize. Did Milosevic convey any sense that he would cooperate in giving access to relevant people?

MR. BURNS: I do know that he has specifically now said that he agrees the international community should have access, and that the Serbian Government will be helpful in this process through its influence with the Bosnian Serb authorities inside Bosnia.

I don't know if he had made any specific commitment that the United Nations will be able to question specific people. I just don't know.

Q You mean access to sites, not individuals?

MR. BURNS: Sites -- yes, that's right.

Q What about individuals?

MR. BURNS: I don't know if he has made any specific commitments about access to individuals. He has made a specific commitment about sites..

Q The international War Crimes Tribunal, earlier I think there were many problems -- they didn't meet, they didn't have funding to operate and everything. Are they functioning now normally and do they have a headquarters? I know that they were building a headquarters.


Q How is it functioning now? Did they meet?

MR. BURNS: The Tribunal is functioning in The Hague. It's headed by Judge Richard Goldstone, a South African jurist is highly respected. It has an international staff.

The United States has provided some of the staff members from the U.S. Government. We've also provided several million dollars in financial assistance. We have an obligation -- all of us -- to keep this organization well funded so that it can do its business.

Q Nick, what can you tell us about the pre-Dayton -- the summit meeting that's been arranged with Boris Yeltsin? What's the purpose of it? How does it advance the Dayton talks?

MR. BURNS: Let me just take you through, I think, what will happen in the next couple of days leading up to that meeting and the November 1 meeting.

First, the Secretary is going to be having an all-day discussion tomorrow with the Bosnian peace team and a number of his closest advisors at a U.S. Government facility outside of Washington. He wanted to get everybody in one room together before he, the Secretary, leaves for Amman and Dick Holbrooke and his peace team get into the final days of preparation for the peace talks.

The Secretary will review our diplomatic agenda for the talks -- both our strategy and our tactics; the proposals we may be making to the parties once these talks convene -- to discuss some of the press and logistical arrangements for the Wright-Patterson talks, and also to talk about how we can use our contacts around the world and our alliance with our Contact Group friends and colleagues to further the peace talks, how we'll work with them -- the Russian Government, the French, British, and German Governments -- throughout the talks.

So it's going to be a full day of discussions tomorrow.

The Secretary then will go off to Amman on Saturday morning. He'll be returning on Monday evening. During that time, Dick Holbrooke and his diplomatic team will be working through the weekend with all the members of the Contact Group to prepare for the talks.

On Monday, you all will be given access to Wright-Patterson. The State Department will be setting up a tour of the facilities for anybody in the media who is interested in going. Cameras are welcome. This is your opportunity to take some footage of the conference hall and the other places where these meetings will take place.

On Tuesday, President Yeltsin has invited Presidents Izetbegovic, Tudjman, and Milosevic to Moscow for a meeting which we would expect would last a couple of hours.

The purpose of the meeting, as described by the Russian Government this morning, is for President Yeltsin to give his very strong personal support to the talks at Dayton and to the effort to make peace; to indicate that the United States and Russia are closely engaged together in this effort; and for President Yeltsin to give some of his personal views to the three Presidents so that we might enforce some momentum in the peace process as these talks are convened.

The three leaders will fly from Moscow to Washington on the 31st. I believe they'll be arriving in Dayton late on the 31st. You'll have an opportunity -- at least those of you from television -- to view and film the arrival at the airports.

Then on Wednesday morning, November 1, the Secretary will fly from Washington to Dayton. He will convene the talks, meaning he will likely have meetings with the three Presidents -- probably individual meetings. Then he will convene a group meeting of the three Presidents, their delegations, and the other delegations -- Russia and the Contact Group partners who will be present. That is an open media event. All of you are welcome to be there. There will be public remarks. They'll be quite extensive remarks, I think, by the Secretary and others.

After that, I know it's the Secretary's strong view, Dick Holbrooke's strong view, that then the negotiators should retreat into privacy.

What we would expect is for we in the State Department -- in fact, specifically me, here -- to keep you apprised on a daily basis of what is happening inside the military base. I'll be speaking with Dick Holbrooke many times a day.

From time to time it may be possible for Dick or Secretary Christopher to make public statements. But I think that these negotiations will be carried out pretty much in private. The Secretary intends from time to time to visit Dayton to participate in the talks.

As Dick Holbrooke told you a couple of weeks ago when he was here, the objective here is to keep the parties there until they produce, themselves, a peace agreement which would be ready then to be signed at Paris when the French host the peace conference. Those are the objectives and some of the things that we're working on.

Q (Inaudible) just ask why it was necessary that they start off in Moscow? Will the three of them meet Boris Yeltsin together? In other words, will it be a group of four together in one room?

MR. BURNS: The purpose of these talks, as the Russians intend them, is to have a group meeting -- President Yeltsin and the three Presidents. This was an issue that President Clinton and President Yeltsin discussed at Hyde Park the other day.

President Clinton thought it was an excellent idea when President Yeltsin raised it with him. President Clinton encouraged President Izetbegovic and President Tudjman to attend; and last night Dick Holbrooke had a phone conversation with Mr. Milosevic, and we encouraged him to attend.

We think it's a positive development because we think it strengthens the peace process, it strengthens international unity and resolve on the eve of the Dayton peace talks, and it makes clear to all the parties involved -- all three of them and their supporters everywhere -- that the United States and Russia are together; that we cannot be played off against each other; that we not only have the same strategy for these diplomatic negotiations, we have the same tactics; and that Russia fully supports the fact that these proximity peace talks will be taking place here in the United States, and that Russia will be an active participant, in fact a co-sponsor of those talks.

So we thought it was actually an important opportunity to grab hold of when it was suggested to us by the Russian Government.

Q Will this be the first time these three have been together in a room?

MR. BURNS: I don't know the answer to that question. I can check. It's an interesting question that we probably ought to be able to answer. Betsy's shaking her head, but --

Q I don't think so. I think they've met together in Geneva. It may have been a couple of years.

MR. BURNS: Let us check that and try to tell you the last time they met, if in fact they did meet.

Q What time on Wednesday is the main event?

MR. BURNS: It hasn't been scheduled yet, but early enough in the day that everyone will have an opportunity to cover the event and deal with it in terms of your deadlines. Certainly, we've got that in mind.

Q Nick, is the Secretary considering taking press along with him on his plane?

MR. BURNS: That's an option that we are looking into. It's something, in fact, that we'll be making a decision on very shortly, and we'll let you know as soon as we can on that.

Q And on Wednesday will there be briefings from Dayton or will the briefings you're referring to be here in Washington?

MR. BURNS: I'm glad you asked the question, because that's an important aspect of this.

We're not going to be establishing a press center in Dayton. There will be people on Wright-Patterson Air Force Base -- a few members of my staff, a few members of the European Bureau, along with some of the Public Affairs staff from the base -- who will be present on a daily basis to answer questions.

But we're not going to establish a media center. There will be no briefings from Dayton. None of the participants will brief. Dick Holbrooke will not be briefing, and our intention is that I will be briefing here in Washington through the briefing at one o'clock. I will have been in touch with Dick Holbrooke, he and I hope a couple of times during the morning, so that I can give you his best sense of what is happening in all of its dimensions.

I imagine some days we'll have relatively little to say. Other days we might have quite a lot to say. All of the heads of state who will be present and all of the delegation heads from France, Britain, Germany and Russia have pledged along with us that they will not make themselves available to the media. This is not to be tight-fisted. It is simply to try to enhance the prospects that these negotiations will succeed.

I think all of us agree -- all the participants agree -- that the chances for the talks going more smoothly are enhanced if there isn't a requirement for them to posture, frankly, on television or on radio, and there isn't a requirement for them to think at the end of every meeting, "Oh, what are we going to say to the press now?"

They're going to be negotiating much as they did at Camp David, without access to the media. But we understand that it's our obligation and specifically my obligation to keep you as well informed as we can. I want to tell you I take that obligation very seriously, and we'll try our very best. But we really think this is the best way to conduct these talks.

Q Nick, what about a press center for the day that the talks open? Will there be some sort of --

MR. BURNS: I think for the day before, when I think a lot of the networks will be there to film the arrival of these three heads of state and for the day that Secretary Christopher is there with them, we will have enough people down there to support you and to help you do your job. Whether it's a formal media center or whether it's putting enough people on the job to make sure that everything runs efficiently, we'll get that job done.

Beyond that, the media center is really right here in the State Department after that day.

Q We need to know specifics about that for planning purposes.

MR. BURNS: Right. And I've agreed to meet some of your colleagues at 4:15 this afternoon to talk specifically about the media's requirements, and any of you in fact are welcome to come up to my office for that meeting. I'll be meeting with the leadership of the State Department Correspondents' Association. But, if you have special needs, you can either come to the meeting or let me know by telephone or after the briefing what you think they are.

I think we have a pretty good sense of what the network requirements are, radio and also print. I think we're going to try our very best to help you cover the story. It's a story that we would like to see covered, and we will try to provide you, as best we can, in a very limited way with the information that we have. There won't be total silence. We'll have something to say every day.

Q "Limited" is the word, right? (Laughter)

MR. BURNS: Some day we'll say they met for three hours and they wore blue suits, and it was a good meeting; and other days we'll have a lot more than that to say.

Q Nick, so just to recap the highlights. Monday is a media tour?

MR. BURNS: Monday is a media tour.

Q Tuesday, access for arrivals of the three principals and any other delegations?

MR. BURNS: At the airport.

Q At the airport.

MR. BURNS: At the airport, not on the base.

Q At the airport, not at the base?

MR. BURNS: Right. Because they'll be arriving -- they'll be greeted at the airport by Assistant Secretary Holbrooke.

Q (Multiple questions)

Q It's an Air Force base.

MR. BURNS: Yes, on the landing strip but not inside the facility. You see, we have essentially taken part of the base for the meeting and housing for their compound, and their arrival is not at that part of the base but a different part of the base.

Q And on Wednesday, the big opening.


Q Are there going to be statements or just shooting arrivals on Tuesday?

MR. BURNS: I don't know yet. I'll get back to you on that.

Q Does the pledge of silence apply to the arrival, in other words?

MR. BURNS: I don't know if we'll restrict them to that. We'll just have to see what they're interested in doing.

Q (Inaudible) sizes of the delegations yet?

MR. BURNS: We are negotiating that issue with the delegations. There are a finite number of rooms available in that very spacious base. We can't take several thousand participants. We were hoping for about 200 from nine delegations. They will all be housed there. They'll all have their specific housing areas, which I think is convenient for them. There are dining facilities. There's a meeting hall. In fact, there are several meetings places. There's one big meeting hall that we'll take you through next Monday and show you.

Q These Presidents are going to have to continue to run countries from Dayton.

MR. BURNS: That's right. And there will be communications facilities available to them.

Q Are some of them bringing them their own?

MR. BURNS: I assume that some of them will be bringing their own, yes, but I don't know specifically what that means. I can tell you that it was pretty clear from President Tudjman after the meeting with President Clinton yesterday that he will not be participating throughout the length of this conference; that he will be participating for the first couple of days, and then I think he intends to go back to Zagreb. He may or may not come back. His delegation will stay and his Foreign Minister -- Minister Granic -- will represent the delegation.

This is not surprising -- I think Dick Holbrooke mentioned this a couple of weeks ago -- because many of the issues, of course, have an impact on Croatia -- the Eastern Slavonia issue -- but not all of them; but all of the issues have an impact on Bosnia and Serbia and the Bosnian Serb representatives. So we would expect that Mr. Milosevic and Dr. Izetbegovic will be there for the length of these proceedings.

Q Didn't Secretary Christopher last week say something to the effect that Croatia is the biggest question mark in the whole Yugoslav conflict now, over in the Senate Foreign Relations?

MR. BURNS: I don't remember that specific comment, but I'll be glad to maybe take -- if you want to take another tack at it.

Q I don't remember the exact words either, but there was -- he did make a statement saying that -- sort of focusing on Croatia as being potentially a problematic player in this process.

MR. BURNS: We very much would encourage Croatia to look upon these proximity peace talks as the avenue and channel for resolving the Eastern Slavonia problem. Some of the statements that we saw last week and even in recent days from the Croatian Government are not at all encouraging, and we've let them know that personally. President Clinton raised this personally with Tudjman yesterday, that there is no excuse for using force to resolve the problem in Eastern Slavonia. I'm not quoting him. I'm just giving you a figurative sense of what was said -- that there's a negotiating channel for it in these proximity peace talks, and we think an agreement can be reached.

So we think these statements out of Zagreb are a little bit discordant, and we are not pleased by them, and we've made that known directly to the Croatian Government.

Q Nick, doesn't this cast a cloud when Tudjman would say, well, if it doesn't succeed in Dayton, that we're going to take military action in Slavonia.

MR. BURNS: I think he ought to try very hard, along with the Serbs, to make it succeed at Dayton. I don't think it's a cloud. I think we're hearing a lot of things in the days running up to these negotiations for public effect. A lot of things are being said that we don't think really are an accurate description of the private positions of these countries.

Q (Inaudible)

Q I'm sorry -- give me a chance.

MR. BURNS: I'll be glad to give you a chance.

Q Do you have any comment on the North Korean agent infiltration of South Korea?

MR. BURNS: North Korean -- excuse me?

Q Agent infiltration of South Korea?

MR. BURNS: Yes. I'm looking for the right -- yes.

Q I think there's a lot more on Bosnia.

MR. BURNS: Well, I would just like to answer this question. This gentleman has been waiting very patiently. I'll be glad to go back to your question.

We have seen reports in the press that, following a shoot-out with South Korean police and soldiers, a man identified as a North Korean infiltrator has been captured. The circumstances of this incident are not clear and we are now seeking additional information on it.

The infiltration of agents into the Republic of Korea is a provocative action not in keeping with North Korea's stated desire to reduce tensions with the Republic of Korea. That's a fairly clear statement about our views on this particular incident.

Q (Inaudible) that he seems to have gotten so far south?

MR. BURNS: Excuse me, Betsy. I didn't hear the first part?

Q How concerned are we that this man was able to get so far south?

MR. BURNS: Well, again, I understand from our Embassy in Seoul that the circumstances surrounding this man's appearance are not clear to us, and we are now seeking further information from the South Korean Government on this incident.

We clearly do not believe this is a -- this kind of act is helpful, and it is provocative, and we are against it, obviously.

Q Authoritative reports say that the relations between North and South Korea are deteriorating. Could you comment on that?

MR. BURNS: We are a strong ally of the Republic of Korea, South Korea. We stand by the Republic of Korea. We have a security commitment. We have U. S. forces, and we are doing everything we can to help the tensions be reduced between North and South, and doing everything we can to keep the agreed framework in place, and it is in place.


Q Nick, can we go to --

MR. BURNS: Yes. Let me just go back here now.

Q A simple one. What is the latest about Mr. Milosevic's entry visa? Would it be a kind of restricted, so-called Fidel Castro visa, or a regular entry visa?

MR. BURNS: I'm not sure we are going to have to study this application quite as seriously as we studied the Castro visa application, which was quite complicated.

But I understand that President Milosevic has not yet applied for a visa. I would expect that he will be doing so in the next couple of days because he has got to travel next Tuesday to the United States. Once the application has been received, we will issue a visa to facilitate his travel to Dayton, Ohio. As Secretary Christopher said on television on Sunday when he made himself available to the American press corps and to the American people -- and he also made himself available after that press appearance, by the way, once again to the wires -- after speaking out to members of the press and sharing views with them and taking questions, he said that there was only one reason for President Milosevic to come to the United States, and that was to go to Dayton, Ohio, to participate in these talks.

So of course we are going to give him a visa. There has been some talk by some people here in Washington that we shouldn't give him a visa. Well, the surest way to torpedo the peace process is to not allow the person who is going to be negotiating on behalf of one of the parties to come to the United States.

So we have every reason to give him a visa and we will do so, and we expect that he will go directly to Dayton, Ohio, and stay there until peace is made.

Q (Inaudible)

MR. BURNS: Excuse me?

Q Can you and would you restrict the visa to just Dayton or 25 miles around Dayton?

MR. BURNS: I haven't been a Consular Officer in about l2 years and my consular law is rusty. I don't know if we have the ability to write in on a tourist visa -- it's not a tourist visa, it's an official visitor's visa -- you can only go to certain places.

We can for people like Fidel Castro; but in this case, I just don't know if it's a 25-mile radius around Dayton, Ohio, or whatever it is.

Q (Inaudible)

MR. BURNS: Excuse me?

Q There is a large Serb community in Chicago.

MR. BURNS: There is not going to be any time to go to Chicago because President Milosevic will be in Moscow on the 3lst of October. He has got to leave Moscow early enough in the day to fly back directly to Dayton, Ohio. There won't be any time to stop any place else. And once he gets to Dayton, he will be ensconced in the comfortable confines of the Wright-Patterson Air Force Base. Our intention is that he and the others will stay there until there is a peace agreement.

Q (Inaudible) another issue?

Q I have another issue also. The U. S. apparently has joined the European Union in complaining to Slovakia. What's the issue with Slovakia?

MR. BURNS: Well, you know, Ron, just before I came out here, I saw the same press report, and I thought to myself, what's this all about, so I guess I had better check into it and get back to you.

Q You still don't know?

MR. BURNS: Well, it is not that I still don't know. I don't know. (Laughter.)

Q Tomorrow?

MR. BURNS: I'll be sure to know tomorrow. Write this down, Charity. Charity and I will know tomorrow, right? We'll know tomorrow.

Q Nick, following President Clinton's Executive Order to stop companies in the U. S. doing business with companies that serve as fronts for the Cali cartel --


Q There have been reports in Colombia that some of these companies like Nestle, Colgate-Palmolive, and Lever have already stopped doing business with these companies. Do you have anything on that?

MR. BURNS: I can't account for you what business has been stopped since Sunday morning when President Clinton made that appeal and when he issued his instructions to the Attorney General and the State Department; but it is a priority for us now. We would expect that everyone in the private sector would abide by these restrictions.

Q Can you take one more, if you please? Thank you.

Going back to President Clinton's address on Sunday, what specifically is he expecting from the Colombian Government right now on this whole issue?

MR. BURNS: We are specifically expecting the highest level of cooperation in the fight against the cartels, among them the Cali cartel. I think the Colombian Government is well aware of the specific agenda that we have. It has been transmitted to them by our ambassador, Ambassador Frechette, and also by Assistant Secretary Bob Gelbard.

Q Can you give me a couple of details, specifics of what it is?

MR. BURNS: Well, we think that the drug cartels should be broken up. We think that the people who lead them should be brought to justice by the Colombian Government. We think people who deal in drugs should be arrested and incarcerated for very long periods of time, if not forever, and those are fairly specific. We are willing to use -- when these people step onto our turf, our territory here in the United States, they are subject to our laws, and they ought to be aware of that. That's what President Clinton was speaking about on Sunday morning.

Q What about extradition? Are you guys still seeking that?

MR. BURNS: Well, we have used the extradition procedure in a number of cases, a number of narcotics cases, in order to help in this fight against drugs.

Q Will you use that again?

MR. BURNS: I am sure we will use that, yes.

(The briefing concluded at 3:15 p.m.)


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