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U.S. Department of State
96/03/20 Daily Press Briefing
Office of the Spokesman

               U.S. DEPARTMENT OF STATE
                 DAILY PRESS BRIEFING

                      I N D E X 

               Wednesday, March 20, 1996

                                       Briefers:  Glyn Davies
                                                  Strobe Talbott
                                                  Craig Johnstone

Foreign Affairs Budget for FY 97
   Overview by Deputy Secretary Talbott ..................  1-3      
   Craig Johnstone on Death of Thomas Enders .............  3-4      
   Real-Term Reductions of Function 150 Funding ..........  4        
   Presentation to Congress Versus Presentation to Public   5        
   Breakdown of Funds: Promoting Prosperity; Democracy
     Building; Promoting Sustainable Development; Promoting
      Peace; Humanitarian Assistance; Advancing Diplomacy   5-8      
   Need to Defend Foreign Affairs Funding ................  8,16-17  
   Programs Cut from Russia Assistance to Reduce Budget ..  8        
   Payment of UN Arrearages, Peacekeeping Dues ...........  9,14,15  
   Restrictions on Population Control Funds ..............  9        
   Assistance to Turkey ................            ........9-10     
   Counter-Narcotics, -Crime, and -Terrorism Funding .....  10-11    
   Development Funds for Africa .......................     11,14    
   Assistance to Bosnia ......................           .  11     
   Pakistan IMET Funding ..............................     11      
   Effect of Funding Reductions on State Dept Operations .  11-13    
   $97 Million Increase Requested .....................     13-14    
   Savings Through Elimination of Agencies Unlikely .  .....13       
   Embassy/Mission Closings, Openings ..................... 13-14    
   Purpose, Objectives of Foreign Assistance .............. 15-17    
   Delivery of Purchased U.S. Arms .........................18       
   Hizballah Attack on Israel Military; Israel Response ....18-19,26-27
   Transfer of Lavi Fighter Technology .....................19       
   Duma Vote on Illegality of USSR Dissolution  ......  19-20    
   Elections: Alleged US Efforts to Unify Reformers .  20-21    
   Possible Ring Magnet Sales to Pakistan ...............  21-22     
   Einhorn Non-Proliferation Discussions ................  21        
   PRC Reaction to Taiwan Arms Talks in Washington ..      22        
   Status of 30-Day Suspension of Ex-Im Loan Decision ...  23        
   Rice-Laden WFP-Chartered Ship Sinks in Taiwan Strait .. 22-23     
   A/S Pelletreau Visit ................................                     
..  23-24     
   Greater Assistance Needed for Civilian Reconstruction . 24-26     
   Pace of Alliance Expansion/Enlargement ..............   26       


DPB #46

WEDNESDAY, MARCH 20, 1996, 12:33 P.M.

MR. DAVIES: Welcome to the State Department briefing. Yesterday, President Clinton provided the details of the Administration's budget request for Fiscal Year 1997.

Today, I am pleased that the Acting Secretary of State, Strobe Talbott, and the Director of the Office of Resources, Plans, and Policy -- our very own budget brain -- Ambassador Craig Johnstone, are here to provide additional details of the Administration's 1997 request for international affairs funding.

We believe there is no substitute in today's complex world for American leadership and no quick-fix solutions to the challenges America faces in the world; our diplomatic efforts around the globe secure jobs for our country, combat terrorism, and build democracy. We strongly believe that our request for 1997 is at the lowest level consistent with maintaining American leadership.

Acting Secretary of State Talbott will say a few words and then must leave for another appointment. He'll be followed by Ambassador Johnstone who will make a more detailed presentation, and will take your questions. Afterward, I'll try to answer any other questions you may have.

ACTING SECRETARY TALBOTT: Thanks, Glyn, and good afternoon to all of you. Before Craig does the numbers and answers your questions, I wanted to say a word on behalf of the Secretary who is in Prague and with whom I spoke not long ago. He's asked me to underscore a general point about the context of the Fiscal '97 Function 150 Account, which, as Craig says, is the international relations portion of the Federal budget.

The point is this. You've heard the Secretary and others of us make it before but I think it deserves and requires reiterating on this occasion. If the United States is going to have a foreign policy that's worthy of its standing in the world and its interest and its opportunities and its obligations, it has got to put up the necessary resources.

That may sound self-evident, but the proposition is much in dispute at the moment, particularly in the United States Congress. I would like to suggest to this group here that the debate on this issue is, in fact, worthy of your attention and that of your readers and your listeners and your viewers.

I realize that many of your energies like ours here in the Department are focused right now on events in Bosnia, China, and the Middle East. That's very much as it should be because it's important that the American people know what's going on in those highly volatile places where the United States has vital interests. But I hope that you will find a story in what Craig has to tell you, as well.

Here, too, it's important that the American people know the facts so that they can participate in a knowledgeable and responsible way in the national debate about the Federal Government's spending priorities.

Right now, frankly, many Americans simply do not know the facts.

The University of Maryland recently conducted a poll showing that, on average, Americans believe we are spending 18 percent of the Federal budget on foreign aid. Fifty years ago, that wouldn't have been a bad guess.

Coming out of World War II, with the Marshall Plan in Europe, we did spend about 16 percent of the Federal budget on foreign aid. But those days are long gone. The International Affairs budget has been dropping steadily. It has dropped 50 percent in real dollars over the past ten years.

President Clinton's proposed 1997 international affairs budget of $19.2 billion represents only about 1.2% of total Federal spending; hence, the lapel button that Craig and I are wearing today, and we'll find one for Glyn as well when he comes back up to the podium. That is not just foreign aid. It's the entire Function 150 Account. That 1.2% pays for all of our embassies and diplomatic posts overseas. It pays for our foreign aid and economic assistance programs; for our participation in international organizations; our support for multilateral peacekeeping operations; for many of our arms control initiatives; and for our overseas public information services.

That is how much, or perhaps I should say how little, President Clinton is asking the Congress to approve, and the taxpayer to fund, in order to assure that Americans live, travel and trade in a safer, more stable, and more prosperous world.

Yet, some in Congress are trying to slice another 30 percent over the next seven years. If they prevail, the result will be deep, across-the-board devastation in all areas.

It would mean scaling back the nuclear safeguards program of the International Atomic Energy Agency, which tracks and regulates nuclear materials all over the world, especially in the former Soviet Union, North Korea, Iran and Iraq.

It would mean stopping in its tracks the President's initiatives to combat international crime, terrorism and drug trafficking; and it would mean closing more than two dozen embassies and consulates around the world.

We would, as a result, be less able to replace an individual tourist's lost passport or to help an American company gain a foothold in a foreign market, or stop international criminals on their home turf before they reach ours.

So the bottom line on the numbers that you're about to hear from Craig is this: Because of cuts that have taken place over the past decade, but especially over the past couple of years, we have long since cut the fat out of our foreign affairs spending. Further cuts would be crippling in their effect on muscle, bone and vital arteries.

That's the sermon. Let me pass the pulpit over to Craig, who will give you chapter and verse.

Thank you very much.

AMBASSADOR JOHNSTONE: Thank you very much. I had hoped, actually, to be in New York today for the funeral services of Tom Enders. I thought I'd just make a quick note of the fact that Tom was a very distinguished American Foreign Service Officer. Those of you, I think, who knew him -- everyone who knew him -- had to respect his extraordinary intelligence. Those of us who knew him very well and who worked directly for him while he was here came to find that he was not only extraordinarily intelligent but he had a very strong moral compass and the strength of character and courage to pursue some extraordinarily difficult missions during his Foreign Service career.

I think on behalf of my Foreign Service colleagues and on behalf of the State Department, as a whole, we are proud to count Tom Enders as one of the best in the Foreign Service. Just a note on behalf of an old friend.

The story here, I think today, is the story, as Strobe laid out for you, of how small this budget is. At $19.2 billion, it is an extraordinarily small budget. You may say that that's a lot of money, but I would remind you that it is 1.2 percent of the Federal budget. It ranks as the smallest of the international affairs budgets, at least in my memory, submitted by an Administration to the Congress; so it is an extraordinarily austere budget.

It is not a budget about which we are ashamed in the least. We think it will get the job done. But quite frankly, it is the absolute bare minimum to get the job done.

So at $19.2 billion, the Function 150 budget is a budget that I think is suited to the times. It achieves two objectives: It maintains American leadership in the world; and, secondly, it helps to balance the Federal budget over a seven-year period.

Let me turn to this budget. This is the chart -- for those of you that were here last year -- this is the chart that I showed you last year with a 45 percent decline in real terms since 1984. Well, we decided to make a new one this year because it's even worse. It's a 51 percent decline now in real terms over the period since 1984.

This budget has been cut and cut and cut again. I will say the function of my office, like the function of OMB, is to sit and look at all of the original budget requests when they come in. Six months ago we were looking at budget requests from all of the program managers in this budget of $23.7 billion. That has been whittled down to the $19.2 billion level in the interest of trying to make our contribution to balancing the Federal budget in a seven-year time period.

It has been an extraordinarily painful process. I think, though, that we have been successful. What would be a tragedy is if it were to be cut even further by the Congress when this budget goes up there, or when the Secretary presents it starting later this week.

It represents one percent of the budget. We used this chart also last year; I don't have a new chart because if I made that little gray line here that represents our share any smaller you wouldn't be able to see it at all. So we left this chart absolutely intact, but you can see that it represents a very, very small percentage of the overall Federal budget.

Now, to turn to the budget itself. We can look at this budget in two different ways. We presented it to the Congress in a different way than we put it together ourselves, in a different way than we discuss it publicly because the Congress likes to get this budget by line item. The line items were largely determined in the Cold War and sort of have a Cold War mentality to them. The budgets have changed a great deal, so you'll see two different ways. The numbers, however, do add up to the same round numbers.

Basically speaking, the way the Congress sees the numbers, we are requesting $12.8 billion for the Foreign Operations budget; $5.3 billion for the Commerce, Justice, State budget; a billion dollars of agricultural funds; and $11 million out of the Labor Department budget -- so that we have a Labor Committee budget.

The total is the $19.193 billion. That is our budget request to the Congress.

We look at this thing differently than by the individual budget categories. We have environmental programs, for example, scattered in various areas in here, where there is multilateral development banks or development assistance funds. They're scattered throughout these different categories.

Here, we try and lump them together by objective. I'll run through these numbers here with you very quickly and then be glad to answer your questions.

We have $834 million that we call "Promoting Prosperity." This is the part of the budget that promotes American exports. It accounts for about 300,000 jobs in this country; about $15 to $20 billion worth of exports every year can be attributed to the expenditure of these funds.

I want to caution you, $834 million, this number has been going down, as you see. The program levels have not been going down commensurate with the reduction of the numbers. The reason is that the reflows from companies who pay fees for these programs have been going up so that the level of program content over these past three years is not going down with this decline in numbers.

This does not include all of the reflows and it doesn't include the tax benefits that we get out of the additional exports that these programs bring about. The fact of the matter is that this budget category probably pays for itself, if you counted all of the total net benefit to the country out of both the tax base and the reflows.

The second area of this budget is the "Building Democracy" section. Here, this isn't just sort of an airy-fairy-building-democracy kind of a concept. This is building democracy and market reform in geostrategically important countries around the world.

The bulk of this budget goes to the Newly Independent States of the former Soviet Union and to Central and Eastern Europe.

To give you some idea of it, this $640 million that we have, for example, for the Newly Independent States, when you break it out in this budget request, would yield $160 million for Russia. A hundred and sixty million dollars is about one-tenth of the levels of assistance that we provided to Russia in 1994. So that program has declined substantially.

This is a program that we use to try and consolidate the gains that we've made in the Cold War. We spent trillions of dollars on the Cold War. We're now spending $150 million in Russia trying to essentially consolidate the gains of the Cold War; make sure that we ensure market reform and a transition to democratic rule. It's a difficult challenge. It has a lot of ups and downs with it, but we're investing very, very little money in it -- $150 million.

I like to tell my colleagues on the Hill that I heard on NPR that we're expanding the Route 66 HOV lanes. It's going to cost $150 million this year. Just about the same amount of money that we're spending to try and ensure the consolidation of the gains of the Cold War, so you get some sense as to where our priorities are. This is a very, very small budget.

Overall, this is the $1.3 billion category. It includes the assistance that we have for Bosnia. There's $200 million for reconstruction assistance in Bosnia next year in that $1.3 billion budget request.

The "Promoting Sustainable Development" section of this budget had $3.754 billion. It includes all of our efforts to fight diseases around the world, to work on population problems, to solve environmental problems around the world. This is a combination of multilateral development banks, of bilateral assistance of AID, and the activities of international organizations.

We live in a world of rapidly growing population. I was trying to work out the numbers just before we came here. I know that we're adding a China every decade and a Mexico every year to our budget. I figured out that we're adding a Washington press corps every 17 seconds. You can see we have a budget here that is dealing with a problem that is sure to be a serious problem for us and for our children in future years.

The "Disease" portion of this budget addresses things like our efforts to combat polio. This is the part of the budget that funded the smallpox eradication effort. Things like HIV spread throughout the world and the Ebola virus and trying to contain it are all funded in this part of the budget.

The underlying point here is that this is not a budget that's designed to help people overseas as much as it is designed to try and help Americans and the future of Americans. So that we don't consider this to be a foreign aid budget per se; we consider this to be a budget that is responsive to the needs of the American people.

The "Promoting Peace" side of the budget -- $6.39 or $6.4 billion -- for promoting peace, of which $5 billion is for Egypt and Israel and the rest for other geostrategic activities around the world, including international peacekeeping, our efforts at counter-narcotics and crime, and non-proliferation and disarmament activities.

I know that we get every year the question as to why we're spending so much on Egypt and Israel, but I think at this particularly delicate time of the peace process, this $5 billion is money very well spent, and this isn't a time to be reneging on our commitments or showing a lack of interest in an area that is really on the threshold of achieving a substantial peace.

We have the $1.7 billion for humanitarian assistance. If there's any part of this budget that can be called "foreign aid," I suppose this is it. That is to say, this is not as geared to the specific interests of Americans as it is to trying to insure that we treat the world in a compassionate way. This is what goes to feed refugees, to provide food for starving people, to meet the needs of disaster assistance around the world.

Our final category in this budget -- the "Advancing Diplomacy" category, $5.3 billion -- is the part of the budget that actually carries out about 95 percent of what it is that we do. That is to say, all of the diplomatic activities when we have problems -- whether it's in the Taiwan Straits or whether it's problems in Bosnia and there's a need for a negotiation in Bosnia; the negotiation of trade agreements. The basic structures that advance American diplomacy in the world are covered in that "Advancing Diplomacy" category.

The State Department Operations budget at $2.5 billion is the largest single component of it, but it also includes the operating expenses of the other international affairs agencies as well as the United Nations -- the international infrastructure that we use to carry out a lot of our foreign policy objectives.

Now I'd go back to the basic theme. Here I'm going to need to appeal to you for some help. You heard Strobe Talbott talking about the University of Maryland polls, and I think The Washington Post ran a poll as well, that showed that the American people think that we give about 20 times as much to Medicare as we give to -- or that it showed the American people think we give more to Medicare than we do to foreign aid, when in fact it's 20 times as much that we give to Medicare.

Let me state that again. The American people believe that we're giving more to foreign aid than we give to Medicare, and in fact it's 20 times as much to Medicare as it is to foreign aid.

We have a serious problem. It isn't just a Public Affairs problem or the Department of State. I think it's a serious national problem. There has been a lot of demagoguery around the "foreign aid" budget. There is a perception out there that we are squandering billions and billions of dollars in give-away programs -- a sort of international welfare program.

We have to correct that perception. That perception is killing us. That perception is damaging the national interest. And my appeal to you is that you play a role in the solution to this problem. We are in desperate need of correcting the record -- getting the American people to understand that this is in fact a budget that is at 1.2 percent of the overall federal budget. It is a very, very small budget, and it is money very, very well spent on behalf of Americans and the future of America.

Now I'd be glad to take your questions.

Q Do you know enough about the Russian program to know what kind of activities have been sacrificed, compared with the period just a few years ago when the allocation was much larger?

AMBASSADOR JOHNSTONE: I think I'd be better off getting back to you with an answer to that. I know that the steady decline in the program has forced us to cut a lot of the privatization programs out of existence, but on a specific detail I'd have to get back to you on it.

Q Could I ask a couple of questions. I don't see any money in here for payment of past-due U.N. dues.

AMBASSADOR JOHNSTONE: In fact there is. Under the rubric here of international organizations -- and here let's go back to the line items in the budget here. We have under the Contributions to International Organizations, which are essentially our U.N. and other international organization dues -- and under our Contributions to International Peacekeeping activities, which are the funds that we pay for peacekeeping activities to the U.N. -- those two both contain a component that would allow us to pay off our arrearages in five years.

Q In full?

AMBASSADOR JOHNSTONE: In full in five years.

Q Another question. On the population control, I've forgotten, is there any restriction about any of the money going for abortions?

AMBASSADOR JOHNSTONE: Yes. Traditionally, there's always been a restriction on the funds going for abortion activities.

Q Let me get back to the fungibility issue, which is that those funds are not blocked. If that country then uses other money to force abortions, for example --

AMBASSADOR JOHNSTONE: Of course, money is fungible across all accounts, and, if you're to use that criterion, you wouldn't provide any funds to any country for any purpose at all, because you could argue that they could -- that would free up funds that could be used for abortion activities.

But no funds that are appropriated by the United States Government go for abortion activities.

Q Sir, the United States has emphasized their national interest and strategic importance of Turkey. At the same time to this year, for 1997 budget, they reduced the foreign aid, especially the foreign military sales, to 70 percent. How do you justify this kind of situation?

AMBASSADOR JOHNSTONE: I think it's actually fairly straightforward in the case of Turkey or in the case of any of these budget categories. We assess the needs. The Peace Onyx program in Turkey, for example, which ended this past year was completed. It justified the higher level. This year we have a sustainment level. We're providing the level of FMF loan guarantee to Turkey that will make it possible for Turkey to sustain the levels of equipment that it has been provided over the course of the year.

So I don't think you can look year to year and say, well, this country or that country is more important to the United States, because it is receiving more or less money than it did in previous years. We try and assess the needs, and we try and meet the legitimate needs, and I'm very pleased that we do have a component in here for Turkey this year.

It wasn't always clear that we would have, but I think we've all seen the geostrategic importance of Turkey, and the fact that Turkey is a good NATO ally. So therefore we have included an FMF component for Turkey this year.

Q Could you comment on the large increase for counter-narcotics and crime -- it's almost a 100 percent increase -- and then for anti-terrorism you're only going from $15, 16 to 17 million. Is that enough?

AMBASSADOR JOHNSTONE: Good questions. First of all, the request for counter-narcotics and crime is the same as the request last year. We had hoped to get a higher level of funding last year, and we have had substantially higher levels of funding in the past. These programs were cut pretty substantially in the course of the last two years, and we're trying to essentially restore them to previous levels. That is, with respect to the narcotics levels, because narcotics is a critical social problem in this country. It's at the base of an awful lot of the problems that we have in crime.

Plus in addition this year we have the President's crime initiative. There is a need for intensified cooperation because of the internationalization of crime; for intensified cooperation with other countries on crime; for programs to train other countries to combat crime, and those funds are included again this year.

And the second part of your question?

Q The second part was anti-terrorism. Seventeen million dollars for counter-terrorism? Where else in the government is terrorism being addressed in the budget?

AMBASSADOR JOHNSTONE: We have, for example, with respect to the anti-terrorism activities in Israel, for example, a supplemental request is currently pending before the Congress for anti-terrorism activities that I think would go a long way toward meeting the demand there.

We have also in the past used defense drawdowns in terms of where we're looking for funding. But this once again is a question of the assessment of the need. These funds go for training essentially. They go for trying to deal with other countries and train their capabilities for fighting terrorism.

I agree with you, it's a very small amount of money. We have not cut this budget dramatically in the process of trying to compile a budget. I think this reflects an adequate budget for the needs.

It is, though, I will point out, about one percent of what the World Trade Center bombing cost the City of New York, so it is a very small amount.

Q Do you know offhand how much development aid is going to Africa in this budget?

AMBASSADOR JOHNSTONE: Let's see if we have the Development Fund here. There's a $704 million development fund for Africa line in the request that we're asking the Congress for. So that would be the number to use. I should point out that within the multilateral development banks, there's also funding for IDA, and that IDA has a lot of its programs in Africa, so it's not the only way that Africa benefits by this budget.

Q What's the total Bosnian budget? Is the 200 -- is that all there is?

AMBASSADOR JOHNSTONE: The 200 is all that there is out of the SEED account. However, we would anticipate that some as yet not fully known portion of disaster assistance and refugee assistance would also go to Bosnia.

Q Is there any money in here for Pakistan at all -- any aid money?

AMBASSADOR JOHNSTONE: I think the only sums in here for Pakistan is a very small IMET program, which is a repetition of the program they had this year. If I'm not mistaken, it's $300,000.


Q Could you talk about needs not being met as a result of budget cuts over the years in terms of Embassies not being built, old cars not being replaced, that sort of thing?

AMBASSADOR JOHNSTONE: Here you're speaking specifically about the State Department budget. I would argue that there are substantial program fund needs that have not been met, particularly in the areas of environment and population over the years. But certainly one of the most graphic areas is in the area of the Operating Accounts.

We have had to cut back, I believe it's some 28 missions overseas as a result of budget stringencies over the past few years; and we have had to within what has been a declining budget -- a budget that has declined some 16 percent in real terms since 1993 -- we have had to absorb increased missions in all of the former Soviet states.

So this is a budget that is propelling the State Department into impoverishment -- that is to way, what has happened to us. We have asked for a modest increase this year in order to try and get us back on a firm footing. It's the first increase that we've asked for in some time, but it's badly needed. If you were to visit -- take a place like Bosnia. The contrast with the Department of Defense, I think, is remarkable.

In the Department of Defense, it is widely accepted, and I think quite properly accepted, that the budget is there to provide the basic infrastructure; and that if things have to happen, if additional money needs to be granted to carry out an activity, that that should be achieved through supplemental appropriations, and I think that's entirely right.

The State Department has had to absorb some $40 to $50 million of additional costs just surrounding the establishment of a mission in Sarajevo. Where did that money come from? We'll be lucky this year if we can pull down $1 or $2 million of it in supplemental appropriations. The rest has to come out of our hide.

What does it come out of? It comes out of all of the same kind of antiquated infrastructure that you all are exposed to on a constant basis. It means putting off the upgrading of our equipment one more year, and I think that you all have plenty of examples as to what the implications of that are for American diplomacy.

Q How about your computer system?

AMBASSADOR JOHNSTONE: How about my computer system? I mean, the computer systems in this building are ancient and are in desperate need of upgrading. We have achieved some very, very minor upgrades in the course of the last few years. We need a fundamental overhaul. We need it badly. I think the calculations done by the State Department's Budget Office show that we're probably up to $1 billion behind in pure infrastructure development. So we have a long way to go to get this place running in the way it ought to be running.

Q Exactly what is the modest -- how much is the modest increase you're asking for, and also if the Congress prevails in obliging the Administration to cut one of the three agencies that Senator Helms doesn't like, how much would be -- would the budget be affected? For example, ACDA?

AMBASSADOR JOHNSTONE: First of all, the budget increase is $97 million over the levels that we anticipate being appropriated this year, so that if you'll see the numbers on this chart. I think you all have copies of these charts, or should have.

Going from the 24/27 to the 25/24 as being the overall number, the all inclusive number, as to how the State Department's budget is being requested this year.

In terms of savings that would come about through elimination of agencies, I don't think anybody's talking about eliminating functions. They're not saying that we shouldn't have Comprehensive Test Ban Treaties, for example; tht we shouldn't carry out all of the functions that we're currently carrying out. I keep seeing people talking about massive savings coming out of eliminating this or that agency.

There are areas of duplication that can be eliminated, and we're working to eliminate those areas of duplication, but there are no massive cost savings that would come by eliminating any one agency.

Q You mentioned closing 28 missions. During that time were others opened or inaugurated?


Q So do you know what the net is?

AMBASSADOR JOHNSTONE: (TO STAFF) Rich, do you know what the net is on this?

STAFF: It balances out to about zero. We basically opened as many as we closed. But what we opened turned into larger, full-service Embassies and what we closed were more smaller consulates.

AMBASSADOR JOHNSTONE: The issue here is do you need to be represented everywhere, and that's an issue that we have had to wrestle with ourselves. We were able several times during the course of the last couple of years to have diplomatic success on things like the Comprehensive Test Ban Treaty, because we were able to go into capitals and get votes in the middle of the night just before major decisions were to be taken.

We are a power that can do that and can still do it. We would like to be able to do it in the future as well. We think it's important for the American people.

Q I'm sorry, I didn't quite understand the figures you gave on the increase this year over the estimated level -- I'm sorry, the increases next year over the estimated levels for this year, which looks from here like about half a billion. Can you say where the increases are going to come?

AMBASSADOR JOHNSTONE: You can see the increases right down the -- by just doing the comparison down the line. A good deal of the increases come in the multilateral development banks where we were seriously under-funded this last year by the Congress. The United States did not abide by its commitments. It has a billion and a half dollars. Currently it's lagging on its commitments to the multilateral development banks.

So we are in need of restoring funding to the multilateral development bank accounts, so that's a big chunk of it. We're asking for additional funds for development assistance around the world, but in Africa in particular. It's been particularly hard hit.

And with respect to trying to pay back some of our arrearages or at least not accumulate more arrearages to the United Nations and other international organizations and for our peacekeeping dues, we have increases there.

Aside from that, most of the increases are fairly modest in here, and are modest as compared to what was the dramatic cutback this past year. This $18.6 billion level for 1996 corresponds to a $21.2 billion request level for 1996. So you can see that we were appropriated dramatically less than what we requested in 1996, and this year we are requesting a full $2 billion less than what we requested last year.

Q Is that estimated level -- that $18 billion for this year -- is that what you are getting under the Continuing Resolution?

AMBASSADOR JOHNSTONE: Let me tell you exactly how that's derived. It's a combination of the bill that was passed for foreign operations, because there we have a piece of legislation. The conference levels for the CJS -- for the Commerce, Justice, State bill --

Q They're going to veto that.

AMBASSADOR JOHNSTONE: These are the conference levels of the appropriation which are then picked up in the Continuing Resolution -- so that though the bill may end up being vetoed, the levels are established for the Continuing Resolution. Plus our additional supplementals and a couple of areas that are currently in negotiation for add-backs, particularly as they relate to U.N. dues and peacekeeping dues.

Q This is not 25 percent of the previous year's funding? Under the Continuing Resolution, aren't you getting 25 percent less than what you got last year?

AMBASSADOR JOHNSTONE: No. Actually, that 25 percent formula is extraordinarily misleading. The 25 percent is a save rate. That is to say, 1996 agencies or programs are reduced to no lower than 25 percent below the levels which they had last year. If, on the other hand, they already have their bill, they get this year's levels; or, if they're already in conference, in the case of the CJS bill, they get this year's levels.

The bottom line is that 25 percent reduction -- that 25 percent save rate -- actually ends up costing more overall for the budget than if we just had this year's appropriated levels.

Q Now you're asking quite a low figure this year -- much lower than you asked last year. Aren't you afraid that you're going to get chopped from -- you're asking a low level, aren't you? You mentioned that there are some people that want -- or Strobe mentioned that some people want to cut 30 percent out of this budget.

AMBASSADOR JOHNSTONE: They would like to cut 30 percent out over the several years. I've not heard of anybody wants to cut 30 percent this year. But certainly there will be people who will want to cut back on this budget. I think we have cut this budget back as far as it can be cut.

Is there a risk? Of course, there is risk. We wanted to have a budget on the table that represented a budget that took the blend of two requirements. One is to preserve the national security and the other is to balance the budget in seven years. I think that we've come with the best possible mix that achieves those two objectives.

Q Have you met with any of the appropriations people on the Republican side, to show them, to work with them on this budget?


Q And what did they say? Are they on board?

AMBASSADOR JOHNSTONE: I think that there's been a very positive reaction, at least at the staff level, up on Capitol Hill to this budget request. I think it's a budget that people think that they can live with.

I think that there are a lot of competing forces up on the Hill and not just between the parties but within the parties as to what the appropriate level of international affairs funding is. I think it's a much more sober look that people are giving it today than they gave a year ago at this time when the rhetoric of slashing foreign aid and cutting foreign aid and where people would stand up and give speeches. The first thing they'd say, "We have to balance the budget. We have to cut foreign aid."

Well, you can see, you can't balance this budget by cutting foreign aid. In fact, this budget really isn't even foreign aid, and I think that that realization is beginning to sink in.

Q You said that your greatest problem, and you appealed to us to help you on it, is that the American public doesn't seem to understand what a minor part of the budget foreign aid is and the whole foreign policy budget.

Do you think that the Department is deficient in any way? Do you accept some of the blame for that, and are you going to do anything besides appealing to us to try and change that perception?

AMBASSADOR JOHNSTONE: I was very careful not to say that you were part of the problem but part of the solution. But do I think that we have been a part of the problem? Yes, I think we have been part of the problem. There's no question about it. In fact, I think we have been the bulk of the problem.

We leaned for 40 years on the Cold War to provide us our funding. There was a great bogy out there. It was a real bogy, but it was a bogy, and it was leaned on in order to insure that we had the adequate levels of funding that we needed.

During the course of that time, the funding kept getting lower and lower, and in the post-Cold War era the bogy wasn't there any more either. So we needed desperately to demonstrate what the utility of this budget is for the American people. We need to do that.

It is an absolutely indispensable budget for the American people. We have to get out now and sell that story and make people understand that.

Q (Inaudible) Michael Mendelbaum wrote an article in which he said that this foreign policy appears to be one of social work. The amount of foreign aid that the United States gives is making a very small impact on the problems in poverty around the world. Do you think it's conceivable that -- is the goal to eventually alleviate poverty around the world, or is it just to sort of put a bandaid on some of the worst situations?

AMBASSADOR JOHNSTONE: I think Mr. Mendelbaum is viewing things through a Cold War optic on two scores. First of all, I think his analysis is strictly a geopolitical analysis, when many of the problems that we confront in the world relate to environmental issues, relate to population issues, which he doesn't address in his analysis.

Quite frankly, our future is as much tied to those issues today as it is to the geopolitical, and I think we need people who understand that commenting on this budget.

The other side of it is that he sees these funds essentially being a form of international welfare, and they are not that. We have very specific objectives with these funds. When we are trying to insure that the world ends up with a global population of somewhere around eight billion people in the year 2050, rather than 12 billion people, it isn't out of the goodness of our heart. It's because of our own self-interest. We cannot allow population to keep growing in the world at the rate that it has been growing, and we have programs that can deal with the problem.

AMBASSADOR JOHNSTONE: Thank you very much.

MR. DAVIES: Thank you, Craig.

(Ambassador Johnstone concluded his briefing at 1:13 p.m., after which Mr. Glyn Davies began his Daily Press Briefing.)

MR. DAVIES: David, just another note in answer to your question. We recognize that we're deficient in getting the word out to people, and that's one of the reasons that this year, as against last year, we're increasing the number of what we call "town meetings" from eight to 20. We're visiting 20 American cities this year to try to explain to the American people directly what it is we do with their tax dollar.

I don't have any particular announcements, so I'll go right to any questions you've got on other subjects.

Q I want to ask you about today's news story in The Washington Post and Washington Times that the Administration has decided not to block the military aid to Pakistan. What exactly is the position?

MR. DAVIES: It's true, and I can confirm that there were some senior Administration officials up on the Hill yesterday who were consulting Senators about the issue. But what I don't want to do is jump the gun, since consultations are continuing with the Congress, and tomorrow we hope to continue them.

Strobe Talbott, who was just up here, was on the Hill yesterday consulting with some Senators, along with Deputy National Security Adviser Berger on that issue. Beyond that, right now, I don't want to say anything, because our consultations with the Hill are continuing. They'll continue tomorrow.

Q Are you talking about aid or was it military sales which were paid for but not delivered?

MR. DAVIES: I'm talking about the military sales. Were you talking about something else, ma'am?

Q No, I was talking about --

MR. DAVIES: Military sales, right. I'm sorry, George, I skipped you.

Q There was another attack today, and an Israeli officer was killed, and I believe Hizbollah is claiming responsibility.

MR. DAVIES: That's right.

Q What do you have on that and have any protests been made to the Syrians?

MR. DAVIES: It's true. We've seen the same reports, and as far as we know it is the case that a suicide bomber, and we believe a member of the Hizbollah group, jumped into an Israeli military vehicle in southern Lebanon today, killing one Israeli and wounding several. Reports are still a bit sketchy.

We haven't yet seen any kind of an Israeli statement on the subject. I don't yet know what actions, if any, the Israelis are taking in response.

For our part, I would say that Hizbollah's recent attacks have created a dangerous situation in southern Lebanon. We, of course, as you would expect, are in touch with all of the parties concerned with stability in an effort to defuse the current situation, and we are encouraging all of those who have the ability to affect the situation on the ground to defuse current tensions and to try to avoid further escalations -- and that includes contacts with Syria and contacts with Israel.

Q Speaking of Israel, an Israeli paper, Davar Rishon, says that the United States has now officially accused Israel of transferring U.S. technology connected to the Lavi fighter project. Is that true?

MR. DAVIES: I don't have anything on that. I can't confirm that.

Q Can you look into that?

MR. DAVIES: Sure, I can look into that for you. Be happy to.

Q Glyn, if I could go to Russia, on the subject of the vote last week by the Russian Duma favoring -- I think it was a non-binding kind of referendum -- and then the Secretary of State's comments in the last few days about that. Do you have anything more to add to --

MR. DAVIES: It's hard to add anything to what the Secretary said. He gave a very strong speech today in Prague, and it had several elements to it. He spoke a bit about Russia. He stressed that it's critical that democracy take root in Russia, and that is that where our efforts are centered; and he also spoke in strong terms against the vote that occurred last week in the Duma, which symbolically nullified, I guess you would say, the dissolution of the Soviet Union, and his words are worth repeating, that, "History must not be reversed;" that "Russia's interests lie today in treating all of its neighbors as equals, as sovereign partners;" and that "Russia should turn its efforts toward an integrated Europe and not turn the clock back."

He spoke very strongly about that, and that speech is available for you in the Press Office.

Q I take it that this Department, this government, is seriously concerned that Russia is in a retreat and in a nationalistic channel at present, and the trend is disturbing. Is that accurate?

MR. DAVIES: Bill, we watch events in Russia very closely. I wouldn't characterize our current analysis as being one of serious concern about the situation. We deal with the Government of Russia, and the Government of Russia is headed by President Boris Yeltsin. He has said he's committed to reform, and we take him at his word.

But, obviously, we watch closely for any signs that there may be difficulties in Russia on the reform front -- on the, call it the geopolitical front. It's clear that this vote that occurred in the Duma was one that didn't please us at all because of the symbolism of it, if you will, the kind of turning-the-clock-back nature of the vote, even though it had no practical effect, as we understand it.

But I wouldn't translate that or the Secretary's words into any kind of a sea change in our analysis of what's occurring in Russia. We still think Russia's on track with reform, and we hope it will stay on track, and that's where our efforts are centered.

Q Has the State Department made any public or private statements or efforts aimed at reducing the splintering of the pro reformers who will be running in this June election?

MR. DAVIES: We're not getting involved in Russian internal politics. They are in the midst of a campaign season, and President Yeltsin himself declared not too many weeks ago for the Presidency. Others are involved in running for office. That's the democratic process underway, and we're just not going to make any comment about particular individuals or try to get the reformers together or any of that.

The Secretary has a couple of times in the past had something to say about the need for reformers in Russia to look at their strategy for the coming election, but we're not going to give any specific advice to anybody.

Q I guess there has been some reports out of Moscow that there had been cables going to Moscow, meant to try to get these reformers to rally together, to winnow out the pool somehow.

MR. DAVIES: I'm not familiar with any specific efforts to do that. As I said, we're going to stay out of Russian internal politics. We're certainly not arranging meetings of reformers or trying to get them together. They're free to do what they will. But we've made plain -- and I'll repeat it -- that it's very important that the reform process in Russia continue.

Our policy toward Russia right now is predicated on that reform continuing, both economically and politically, and we hope to see it continue.


Q Do you have anything on the discussions in Beijing about ring magnet sales to Pakistan?

MR. DAVIES: Well, it's true that Deputy Assistant Secretary Robert Einhorn, who is the Deputy Assistant Secretary for Non-Proliferation in the Politico-Military Affairs Bureau is out there right now having some talks with the Chinese. I'm not going to lay out for you what it is that he's discussing beyond saying that these discussions are part of our ongoing dialogue with the Government of China on issues of mutual concern that he's talking with them about nuclear export issues and our non-proliferation concerns in general.

These talks were arranged without reference to the difficulties that are occurring now over the Taiwan Strait. As I said, they're part of our larger dialogue with the Chinese.

Q Is he talking about Pakistan, Iran, and North Korea?

MR. DAVIES: He's talking about non-proliferation concerns. There are some items in the news that pertain to China and possible shipments of prohibited items to other countries. Obviously, he'll be talking with the Chinese about those and other concerns as well.

Q Specifically, did you -- has the Government concluded that these 5,000 ring magnets were delivered to Pakistan by China and that they have a utility which is only connected to nuclear weapons?

MR. DAVIES: We haven't reached any conclusions yet on the so-called ring magnets issue, the reported sale of some 5,000 ring magnets to China. That's a matter that's still under consideration in the government. I would imagine that's on the docket of the talks that Deputy Assistant Secretary Einhorn is undertaking now in Beijing.

Q Glyn, do you mean to say that you haven't concluded that the sales have been made, or you haven't concluded whether to --

MR. DAVIES: We haven't reached any conclusions that we're going to make public announcements on about that matter at all. In the fullness of time, we'll have something to say about it, but we don't right now.

Q Will he brief us when he comes back?

MR. DAVIES: We'll see what we can do about getting him to talk to you.

Q That's not a budgetary item. He can do it for nothing.

MR. DAVIES: The price of his time, which is very valuable.

Q Can we stick on China for a second?


Q On China: Have you heard anything from the Chinese side about the Taiwanese arms talks here in Washington yesterday?

MR. DAVIES: Have we heard anything from the PRC about the arms talks?

Q Right.

MR. DAVIES: I don't know of any communications from the Government of China about those talks, so I don't have anything for you on that.

Q Do you have anything on the ship that went down in the Taiwan Strait?

MR. DAVIES: Yes. It's true that a World Food Program vessel -- this is very unfortunate; in fact, tragic -- went down yesterday in the Taiwan Straits, apparently in high seas. Given the bad weather that's been occurring in that area, the ship foundered. The name of the ship was the Chengda. This is, in fact, a PRC vessel that was carrying some 5,635 tons of World Food Program rice and 903 tons of rice that the World Food Program was carrying for another organization -- Caritas.

The World Food Program rice consisted of donations from this country -- the United States as well as Switzerland and Australia. The ship was due to arrive in the Port of Nampo on March 23. Unfortunately, some lives were lost. There were 15 crew members who were reported missing and only nine have been rescued so far.

We regret very much the delay in the arrival of this food aid. The vessel was insured. So the World Food Program will move quickly -- they assure us -- to repurchase food and ship it as quickly as possible.

Q Is the sinking in any way caused by the live fire exercises changing shipping patterns in the Straits?

MR. DAVIES: What I've got on the sinking is that it was caused by weather; that there's very bad weather in the Taiwan Straits. Again, it's what's been apparently hampering the PRC's ability to carry forward this amphibious exercises that they had planned for the northern end of the Straits, and that it was the stormy seas created by that weather that sank the Chengda and caused this tragedy.

Q The ship -- spell it?

MR. DAVIES: Sure. What we've got is C-H-E-N-G-D-A, Chengda. A PRC merchant vessel which had been chartered by the World Food Program to carry this aid.

Q Do you know what percentage of the tonnage on board was U.S.?

MR. DAVIES: I don't know what percentage. I asked the question and was told that all $2 million worth of our aid was on board. So that's what I know. That's what makes it important for the World Food Program to move quickly -- they've said they will -- to get another shipment underway to North Korea. But there was other food aid on board the ship as well.

Q Also on China -- the 30 days of the suspension of Ex-Im Bank credits to China is Saturday. Has the Secretary sent another letter asking for a longer extension or time period, or is there any action?

MR. DAVIES: I don't have any action to report to you. For the time being, I'll let the Secretary's correspondence remain confidential.

We continue to review reports that China has provided this sensitive nuclear assistance to Pakistan. We're engaged with the Chinese to determine the facts of the case, and that's part of why Bob Einhorn is out there. But there's been no decision made or other action that I have to announce for you.

Q Would you characterize Mr. Pelletreau's visit in Algeria?

MR. DAVIES: I can't do much to characterize it except I can confirm that, in fact, he has been in Algeria visiting the region and holding meetings with Algerian officials. He, I believe, is still there. We hope to get some word from him that I can pass onto you. He may, in fact, be able to say something himself out in the region.

But the decision to go out there was made in order to get a first-hand look at the situation.

Ambassador Pelletreau, who is Assistant Secretary for that region, said during his December visit to North Africa that he looked forward to visiting Algeria when he could, when the situation warranted.

We're pleased, of course, that the Algerians came to the Sharm al-Sheikh summit. I can tell you that Pelletreau's visit to Algeria is not related to the fact that Algeria attended Sharm al-Sheikh.

Q Did you see the story in the Times today quoting a Pentagon study saying that the aid needs of Bosnia are far beyond what is envisaged by the United States; and if that level is not approached, there is no chance of the operation succeeding?

MR. DAVIES: Jim, everybody saw the story, obviously. We've always known that the civilian effort in Bosnia was going to be the hard part of the challenge out there. There's no magic wand to solve the challenges that exist on the civilian side in Bosnia. But there is solid progress that's been made, and we can report solid progress on everything from putting election machinery into place, to starting to work on the infrastructure of that country which was decimated. Obviously, these things don't happen overnight.

The military end of the Bosnia operation, which dominated, of course, the first 90 days -- separating the forces and the other rather dramatic events associated with IFOR's deployment -- those have largely been accomplished. They will remain in place and keep the forces separated.

But this piece of it is about changing people's minds, getting into their hearts, if you will, and trying to bring about a change in the way people act towards each other.

The international community is doing a number of things. All members of the community are working on a $6 billion program of multilateral and bilateral assistance to meet the challenge that was spoken of in that article.

This week, the Congress is considering the President's package of $200 million as the U.S. contribution for the first year. Then, of course, we're all looking forward to an international donor's conference to be held in Europe on April 12 that we hope will solidify support for that effort.

The other aspect of all of this, of course, is the question of the federation and the progress that's being made -- or, in the words of some not being made -- on the federation front. We think there is progress being made. Of course, the Dayton agreements envision two entities forming one central government and the steady process of ethnic reconciliation and reintegration.

It's a process here. It's not a panacea by any means. Already we've seen some developments that have borne fruit. One symbolic thing that happened today was that the anti-sniper barriers in downtown Sarajevo came down. They were truly a symbol of the war's cruelty. So that is one symbol that's occurred.

Then, of course, the Secretary's work in Geneva -- just to wrap this up -- his meetings with the three leaders -- the signatories to the Dayton Agreement -- where he obtained their commitment, their re-commitment to the process. The international community was there to witness that. Of course, there will be the meeting in Moscow at the end of the week to discuss these issues further.

So there are things happening. But this is, admittedly, the tough part of the slog in Bosnia.

Q Does the State Department agree that a massive infusion of aid is going to be required, more than what is going in now?

MR. DAVIES: I think this is a work-in-progress. We've got our $200 million package that we're trying to move forward on now. Some very good humanitarian work has already been done. We have to measure the progress there, supplying winter coats to children -- just one example among many -- in that area.

We have to see how these things are developing. Whether what we've got on the books is enough as Spring comes to that country and people begin to plant and rebuild and deal with the devastation that is uncovered when the snow melts. We'll just simply have to see what the international community has come up with will be sufficient.

But $6 billion is a serious chunk of money, and it's important now to make sure that $6 billion commitment on the part of the international community, is actually followed through on and met.

Q Glyn, I'd like to go back to the subject of Russia and its relations with China, and how it relates especially to NATO. Secretary of State Warren Christopher served clear notice today that NATO will expand into the former Soviet bloc despite the objection of some Russians. I think that might be even a majority in the Duma from what we saw from that previous question.

I would ask, with the Russians aligning -- with the more pro-Soviet government -- the Primakov government, I should say -- aligning with China, standing by China on this recent showdown in Taiwan, Glyn, I wonder if going slower or waiting until the election might be wiser. Is this a wise course, is my question, at this time to push NATO?

MR. DAVIES: This is clearly a very wise course to pursue right now. The Secretary's speech in Prague discussed NATO and the way forward in NATO. His basic point is that NATO enlargement is on track, and it will happen.

The December meeting of NATO Ministers will be an important meeting at which the members of the alliance will get together and decide on next steps. But there's been no slowing or changing of our policy on NATO enlargement. We're going forward with it, and that was one of the primary messages that the Secretary had in Prague today.


Q Back to another subject?

MR. DAVIES: Sure, Barry.

Q Back to the Lebanese fighting. Israel has been attacked three times now by Hizebollah -- one a suicide bomber. Israel responding with artillery, and has been consulting with the Clinton Administration.

Has the Administration urged Israel not to strike back hard?

MR. DAVIES: Barry, what I've said is as far as I'm going to go, which is that we have been in touch with all parties to the conflict in south Lebanon. We are encouraging all parties -- that includes the Lebanese, that includes the Syrians, that includes the Israelis -- to restrain themselves in an effort to defuse the current situation which is clearly heating up with this recent terrorist attack.

We're in diplomatic contact with them today as a result of these bombings. We'll remain in contact with them to do our part to try to calm the situation and prevent an escalation.

Q It's a familiar position but it isn't the position the Administration took after the suicide bombings in Israel -- the series of four attacks. The State Department, or the Administration, seems to be reverting to its traditional position of urging restraint on all sides.

When Israel was under attack by suicide bombers and you were trying to demonstrate -- the Administration -- its steadfast support, using words like "shoulder-to-shoulder with Israel," all sorts of quiet things were -- nothing was said, really, we could understand. I think even the President said that Americans would be climbing the walls if they were under this kind of attack; that whatever Israel chose to do was their decision.

Do I detect a reversion to the old -- you're appealing to Hizebollah and to Israel equally to restrain themselves; is that the point?

MR. DAVIES: No two situations are alike. Clearly, the situation in southern Lebanon is different from the situation among civilians in the streets of Jerusalem or Tel Aviv. But that doesn't mean that this act wasn't deplorable. It was. Any suicide attack is a deplorable act. Any terrorist attack is a deplorable act.

But the situation in southern Lebanon is a complicated one. We've chosen, for the time being, to confine ourselves publicly, simply to saying that we are urging restraint on all the parties; that we're doing it equally across the board in all three capitals. That will be our stance. We would like very much for the tensions to subside.

Q You say all three capitals -- Syria, --

MR. DAVIES: I'm talking about Syria, I'm talking about Beirut, and I'm talking about Jerusalem.

Q Jerusalem being the capital of Israel?

MR. DAVIES: Right.

Q You mean Tel Aviv --

MR. DAVIES: No, Jerusalem.

Q You don't want to do that, do you?

MR. DAVIES: Our diplomats in Tel Aviv are going, I'm sure, to the Foreign Ministry in Jerusalem and --

Q And telling them to tell Jerusalem? Okay. Registered. I understand your position now.

Thank you.

MR. DAVIES: Thanks.

(Press briefing concluded at 1:39 p.m.)


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