US Department of State Dispatch,
Vol 1, No 4, September 24, 1990
Title: Proposal to Forgive Egypt's Foreign Military Sales Debt
Eagleburger
Source: Deputy Secretary Eagleburger
Description: Statement before the House Appropriations Subcommittee
on Foreign Relations, Washington, DC
Date: Sep 19, 19909/19/90
Category: Speeches, Testimony, Statements
Region: MidEast/North Africa
Country: Egypt
Subject: Military Affairs
[TEXT]
Under Secretary [of the Treasury David] Mulford and I are here today
before you and the members of the Foreign Operations
Subcommittee to support the President's proposal to forgive Egypt's
foreign military sales (FMS) debt, a major component of the "Desert
Shield" appropriation request that was sent to the Congress last
Friday.
When Saddam Hussein's forces invaded Kuwait in the early
days of August, Iraq violated the sovereignty of a small, virtually
defenseless nation. His actions violated accepted standards of
international conduct and posed a preeminent threat to the hopeful,
but as yet fragile, world order which is emerging in the wake of the
Cold War. Saddam Hussein also threatened the vital interests of the
United States and the rest of the world by seeking a stranglehold
over a major share of an energy source which is critical to
economic growth and development, not only in the industrialized
nations but in the developing world as well.
As Secretary Baker noted before Congress 2 weeks ago, Iraq's
unprovoked aggression is a political test of how the post-Cold War
world will work. And the world has responded to Saddam Hussein's
aggression with unprecedented unity and resolve. The UN Security
Council has passed seven resolutions condemning Saddam's illegal
occupation of Kuwait and imposing economic sanctions. In addition
to the United States, over 20 nations have contributed either
troops, direct financial support, or humanitarian assistance to the
region--nations that range from the United Kingdom and France to
Korea; from Japan to Australia; from Bangladesh to Syria to Canada.
While Saddam Hussein would like to portray the current crisis as a
fight with the United States, it is not. It is Iraq against a united
world community.
US Leadership
What the United States can on its own take credit for, however, is
the political leadership which was necessary to marshal and to
mobilize the world coalition against Iraqi aggression. If there is
one thing which this crisis demonstrates, it is that the United
States alone possesses the will and the credibility to exercise
global leadership--the will to bear sacrifices commensurate with
our unique status and responsibility in the world, the credibility
needed to persuade others to share equally and equitably both the
risks and the burdens of our common effort.
We have, if I may say so, done our job well. But we have not
been alone. While our role is international in scope, the nature of
the crisis is such that courageous and compelling leadership at the
regional level has been equally critical to the success of this
unprecedented multilateral undertaking.
Egypt's Critical Role
Indeed, at the moment of gravest danger, when lesser men might
have succumbed to the intimidation or blandishments of the
aggressor, Egyptian President Hosni Mubarak stepped alone to the
fore and rallied an Arab consensus upon which all subsequent
international efforts have been based His actions have been timely,
they have been bold, and they carry with them obvious political and
military risks and economic costs.
President Mubarak quickly mobilized Arab opposition to
Saddam, convening in Cairo an Arab League ministerial meeting that
condemned the invasion and demanded an Iraqi withdrawal. He
immediately sent 5,000 Egyptian troops to Saudi Arabia to join the
international force gathering to defend that country from Iraqi
aggression; he is now sending an additional 15,000 troops. Egyptian
strategic cooperation also has been essential for our deployment
under Operation Desert Shield. In short, President Mubarak is and
must continue to be the solid foundation of Arab leadership in the
gulf crisis.
President Mubarak has done the right thing; we are all in his
debt as a result. But his actions have had very direct political and
economic costs to him and to the people of Egypt. An Egyptian
economy that was strained before August now faces serious
difficulties that are the consequence of Iraq's invasion of Kuwait
and of the Egyptian government's courageous response.
Costs to Egypt's Economy
It is estimated that, on an annual basis, remittances from Egyptian
workers in Kuwait and Iraq will decline by $500 million to $1
billion. Suez Canal receipts will fall by $150 million to $200
million. Revenues from tourism will decline by $500 million to $1
billion. And another estimated $500 million a year will be lost
because of exports, service contracts, etc.
And on top of all of these burdens, President Mubarak will
have to come up with the means to absorb one-half million
Egyptians--workers and their families--who are now returning to
Egypt as a result of the crisis. Housing will have to be built; jobs
will have to be created; and services will have to be provided.
Failure to meet these needs could threaten political stability in
Egypt, with potentially serious consequences for everything we and
our Egyptian friends are now doing to resist Saddam's aggression.
The exact costs of absorbing these Egyptians back into the fabric of
Egypt's economy are difficult to predict with accuracy at this time,
but they are conservatively estimated to run between $500 million
to $1 billion.
The President's Proposal
In light of Egypt's critical role in the current gulf crisis, the
longstanding, close political relationships between the governments
and people of the United States and Egypt, and the potentially
overwhelming financial burdens for Egypt that have resulted from
the crisis, the President decided to do two things.
First, he instructed Secretaries Baker and Brady to approach
the gulf states and the industrialized countries around the world,
countries that are vitally dependent on the free flow of oil, to
encourage them to share in the burden of opposing Saddam. This
burden-sharing, or responsibility sharing, is aimed at increasing
direct contributions of military forces, where possible, to the gulf
region; helping defray incremental US military costs associated
with Operation Desert Shield; and helping front-line states--such
as Egypt, Turkey, and others--absorb some of the economic burdens
brought on by the crisis.
Second, he proposed the elimination of Egypt's $6.7 billion of
FMS debt, the subject of today's hearing.
As you know, we have made important progress on the first
part of our program. Significant, generous pledges have been made
by several of our key friends and allies.
We are still engaged in the process of clarifying the pledges
and developing a follow-up system to ensure that the funds are
distributed appropriately--unconditionally at the outset (that is,
through the rest of this calendar year) and integrated with
appropriate conditionality through the medium term, which we have
defined as calendar year 1991.
We believe that the second part of the President's program,
the forgiveness of Egypt's FMS debt, is as important as the first.
President Mubarak's stand in the gulf crisis can be compared
with no risk of exaggeration to Egypt's decision to sign a peace
treaty with Israel in 1979. Indeed, Egypt's current efforts to turn
back Iraqi aggression should be viewed against the backdrop of more
than a decade of constancy and cooperation with the United States
on the Middle East peace process. Egypt paid a high price for its
decision to choose peace, having been kicked out of the Arab League
and ostracized by most Arab states. Nevertheless, it never altered
its course and, today, is back as the leader of an Arab League which
has rejected the extremism of a decade ago.
Another important result of the treaty with Israel was that
Egypt abandoned its dependence on Soviet- made military equipment
and turned instead to the United States as a military supplier.
Today, US equipment is being used by Egyptian soldiers who are
standing shoulder to shoulder with American soldiers in Saudi
Arabia.
Between 1979 and 1984, Egypt incurred $4.5 billion of FMS
loans that carried interest rates comparable to Treasury's cost of
borrowing. Interest rates on some of these loans are as high as
14%.
By 1984, the debt service burden on these loans--loans that
by their military nature drained rather than stimulated economic
activity--was beginning to strain Egypt's ability to pay. Between
1984 and 1990, the burden of servicing Egyptian FMS debt became
the largest political irritant in US-Egyptian relations. President
Mubarak consistently stated his view that FMS debt was political
debt and should be forgiven. We, in turn, consistently maintained
that debt was debt and had to be paid.
Because of the Brooke/Alexander amendment and its
requirement that military and economic assistance be cut off if a
country were to go more than 1 year in arrears on its military debt
service payments, the Egyptian government began to make its
required payments just short of the 1-year trigger. By the fall of
1989, Egypt's economic situation had reached the point where we
expected that Egypt would have to reschedule its official debt in
the Paris Club and that it would have to do so for at least the next 5
years. Our FY [fiscal year] 1991 budget estimates reflected this
judgment. President Mubarak told us in increasingly strong
messages that he would not be able to meet even these "brink of
Brooke" payments, which in 1990 would exceed $700 million; our
own analysis supported his conclusion.
Let me make it perfectly clear, however, that we were not
prepared to seek cancellation of Egypt's FMS debt on the basis of
these factors. Our decision to do so now is solely related to the
unique circumstances and, in particular, to the urgent political and
military challenges Egypt is facing as a consequence of the ongoing
crisis in the gulf. Our proposal should by no means be viewed as
setting any kind of a precedent for any future action on the part of
the United States.
Let me make another important point. We recognize that when
the dust settles in the Middle East, Egypt has a formidable task in
front of it in the area of economic reform. The United States will
continue to work with Egypt and the international financial
institutions to insure that the difficult choices are made, choices
that will be necessary to get Egypt's economy on a sound footing.
The forgiveness of FMS debt, in short, will not lessen in any way our
commitment to engaging the Egyptians on the kinds of structural
reforms which alone will enable them to profit economically from
the climate of stability which we expect to prevail in the wake of
this crisis.
These are not normal times. Egypt's bold and courageous
leadership in generating and maintaining Arab support for the
efforts against Saddam Hussein, and the sacrifices Egypt is making
incident to this exercise in leadership, make this the unique case it
is and make the forgiveness of Egypt's FMS debt the right thing to
do, and now the right time to do it. We do not support FMS debt
forgiveness for any other country. No other country meets the
unique combination of political, military, and economic factors that
I have described here today.
Conclusion
I noted at the outset that one of the principal tasks of American
diplomacy has been to achieve an equitable distribution of risks and
responsibilities in this multilateral effort. By any standard of
measure, Egypt has of its own accord accepted a lion's share of the
risks and a lion's share of the responsibilities, and this at a time
when its economy was beset with substantial difficulties. In this
context, our action on the question of FMS debt involves the same
principle of fairness which compelled us to seek equitable
contributions from the many nations around the world who have a
stake in our common cause. Your action on this matter will send an
important message to the people of Egypt--and to the peoples
united in the regional coalition which Egypt leads--that the United
States is willing to support fully a nation whose soldiers are
manning the front lines alongside American GIs.
At times of crisis and peril, there is no substitute for bold
and farsighted leadership. History will judge that President Bush
and President Mubarak, among others, have demonstrated this kind
of leadership. In our constitutional system, no less is expected
from the legislative branch. I hope and trust that this
subcommittee, and the Congress as a whole, will keep the Desert
Shield package together, and in so doing, respond quickly and
positively to our request for Egyptian FMS debt forgiveness.
(###)
US Department of State Dispatch,
Vol 1, No 4, September 24, 1990
Title: Country Profile: Egypt
Date: Sep 24, 19909/24/90
Category: Country Data
Region: MidEast/North Africa
Country: Egypt
Subject: History, Trade/Economics,
International Organizations
[TEXT]
Official Name: Arab Republic of Egypt
Geography
Area: 1,001,450 sq. km. (386,650 sq. mi.); slightly smaller than
Texas, Oklahoma, and Arkansas combined.
Cities: Capital--Cairo (pop. over 12 million). Other cities--
Alexandria (4 million), Aswan, Asyut, Port Said, Suez, Ismailia.
Terrain: Desert except Nile Valley and Delta--desert, wasteland,
urban (96.5%), cultivated (2.8%), inland water (0.7%). Climate: Dry,
hot summer, moderate winters.
People
Nationality: Noun and adjective--Egyptian(s).
Population (1989): 54.8 million.
Annual growth rate: 2.6%.
Ethnic groups: Egyptian, Bedouin Arab, Nubian.
Religions: Sunni Muslim 90%, Coptic Christian.
Languages: Arabic (official), English, French.
Education: Years compulsory--ages 6-12. Literacy--45%.
Health: Infant mortality rate--(1989) 93/1,000. Life expectancy--
59.3 yrs.
Work force: Agriculture--44%. Government, public service and
armed forces--36%. Privately owned service and manufacturing
enterprises--20%.
Government
Type: Republic.
Independence: 1922.
Constitution: 1971.
Branches: Executive--president, prime minister, cabinet.
Legislative--People's Assembly (448 elected and 10 presidentially
appointed members) and Shura (Consultative) Council (140 elected
members, 70 presidentially appointed). Judicial--Court of
Cassation, State Council.
Administrative subdivisions: 26 governorates.
Political parties: National Democratic Party (ruling), New Wafd
Party, Socialist Labor Party, Socialist Liberal Party, National
Progressive Unionist Grouping, Umma Party.
Suffrage: Universal over 18.
Flag: Three horizontal stripes--red, white, and black from top to
bottom--with a golden hawk in the center stripe.
Economy
GDP (FY 1987-88): $34.5 billion.
Annual growth rate: 2%. Per capita GNP (1987 ): $680.
Natural resources: Petroleum and natural gas, iron ore, phosphates,
manganese, limestone, gypsum, talc, asbestos, lead, zinc.
Agriculture: Products--cotton, rice, onions, beans, citrus fruits,
wheat, corn, barley, sugar.
Industry: Types--food processing, textiles, chemicals,
petrochemicals, construction, light manufacturing, iron and steel
products, aluminum, cement, military equipment.
Trade (FY 1988-89): Exports--$2.5 billion: petroleum, cotton,
manufactured goods. Major markets--US, Japan, Italy, FRG, France,
UK. Imports--$10.1 billion: foodstuffs, machinery and transport
equipment, paper and wood products. Major suppliers--US, FRG,
France, Japan, Netherlands, UK, Italy.
Free market exchange rate: 2.59 Egyptian pounds=US$1 (fluctuates).
International Affiliations
UN and some of its specialized and related agencies, including the
International Monetary Fund (IMF), World Bank, General Agreement
on Tariffs and Trade (GATT); Arab League; Nonaligned Movement;
Organization of African Unity (OAU); Organization of the Islamic
Conference (OIC).
(###)
US Department of State Dispatch,
Vol 1, No 4, September 24, 1990
Title: American Leadership in the Middle East
Kelly
Source: John H. Kelly, Assistant Secretary for Near Eastern
and South Asian Affairs
Description: Statement before the Subcommittee on Europe and the
Middle East of the House Foreign Affairs Committee
Date: Sep 18, 19909/18/90
Category: Speeches, Testimony, Statements
Region: MidEast/North Africa
Country: Iraq, Kuwait
Subject: Military Affairs, Terrorism
[TEXT]
Between September 5 and 17, I accompanied Secretary Baker on a
visit to eight countries in the Middle East and Europe. I want to tell
you at the outset that in every country we visited, American
leadership was acknowledged, appreciated, and recognized as
essential for resolution of the [Persian] Gulf crisis.
There is gratitude for the American military presence on the
Arabian Peninsula. There is recognition of the sacrifices being
made by the men and women of the American armed forces. There is
solidarity that Iraqi aggression must not stand, and there is
willingness to share the responsibilities for implementation of the
UN Security Council resolutions.
Politically, this was acknowledged in Arab capitals, by NATO
and the European Community, and in the joint statement issued by
Presidents Bush and Gorbachev in Helsinki. Militarily, this is
recognized by the decisions of many nations to contribute forces to
the effort in the gulf. Economically, the shared responsibility is
manifested by pledges of up to $20 billion to help share the costs of
the American defense contribution and to cushion the economic
shock resulting from Iraqi aggression.
Today, 7 weeks after the invasion of Kuwait, Iraqi occupation
forces remain dug in throughout that country and continue to
threaten the security of Saudi Arabia and neighboring states. Iraq
continues to hold hostage thousands of foreign nationals, including
about 1,600 Americans. Many US citizens have been incarcerated to
be used as human shields at Iraqi military and industrial facilities.
Since Iraq's invasion of Kuwait, the civilized world has spoken
with a nearly unanimous voice in its determination that Iraqi
aggression must be contained and reversed. As President Bush said
on September 11 in his address to a joint session of Congress, this
will require patience and strong will.
I last appeared before this subcommittee on July 31, at a time
when Iraqi threats and intimidation had raised tensions in the
region to very high levels. I said then that administration policy
was "to do all we can to support our friends when they are
threatened and to preserve stability" in the area.
Two days later, the Iraqi government demonstrated the depths
of its irresponsibility and its contempt for civilized standards of
behavior by carrying out an unprovoked act of aggression against
Kuwait.
In the weeks since then, the world has mobilized to reverse
Iraq's aggression. The United States has carried out a massive
military deployment of personnel and material to the gulf region.
We have been joined in our military efforts by many other states.
Today, 26 nations have responded to requests from Saudi Arabia and
Kuwait for assistance to deter further Iraqi acts of aggression by
contributing ground, air, or maritime forces.
We also have been active on the diplomatic front as we have
molded an international consensus to deter further Iraqi aggression.
We have met with an exceptionally high degree of international
cooperation in this effort. The UN Security Council has passed
seven resolutions on the gulf crisis. Three meetings of the Arab
League have produced strong condemnation of Iraqi behavior. At
least 98 countries have announced publicly that they support UN
Security Council Resolution 661 establishing mandatory sanctions
against Iraq and have taken, or will take, steps to implement that
resolution. A number of nations are providing financial and
economic support to those states enduring particular economic
sacrifices due to their adherence to the sanctions. OPEC nations--
such as Saudi Arabia, the United Arab Emirates, and Venezuela--
have agreed to increase production to offset the loss of Iraqi and
Kuwaiti oil exports.
Iraq today stands as an international pariah, an outlaw
isolated from the Arab League majority and condemned by the
international community. The Iraqi economy is feeling the bite of
sanctions. That bite will become more painful in the weeks and
months ahead. Iraq loses approximately 2.7 million barrels a day in
lost oil exports, or more than $2.4 billion per month, from its
inability to sell Iraqi oil on the international market.
Diplomatic Strategy
The President has clearly defined our objectives: the immediate,
complete, and unconditional withdrawal of all Iraqi forces from
Kuwait; restoration of Kuwait's legitimate government; the security
and stability of the gulf region; and the protection of the lives of
American and other foreign citizens held hostage by Iraq.
We have wide international support for this position. When I
accompanied the Secretary on his recent trip, I heard Arab and
European leaders agree strongly with this determination.
The joint communique issued by President Bush and Soviet
President Gorbachev at the conclusion of their September 9 meeting
in Helsinki stresses that "nothing short of the complete
implementation of the UN Security Council resolutions is
acceptable." During the Secretary's visit to NATO headquarters on
September 10, our European allies were united in rejecting the idea
of a partial solution.
Given the inflexible Iraqi position, our diplomatic strategy
must focus on sustaining the international sense of firmness, the
unity of purpose, and the sense of cohesion that have confronted
Saddam Hussein. We must work to maintain and strengthen
sanctions against Iraq while increasing multinational military
forces in the area to deter further Iraqi acts of aggression.
Responsibility-sharing
We must assure that the military and economic burdens of deterring
aggression while the sanctions take effect are shared equitably. As
the President said on August 30,
"It is important that the considerable burden of the effort be
shared by those being defended and those who benefit from the free
flow of oil. Indeed, anyone who has a stake in international order
has an interest that all of us succeed. . . . We're more than willing to
bear our fair share of the burden. . . . But we also expect others to
bear their fair share."
We must also assure that those states, such as Egypt and
Turkey, whose economies have been hit particularly hard by
adherence to the sanctions are given the financial assistance
necessary to help them weather the storm created by Iraqi
aggression.
Jordan's economy stands to lose proportionately more than any
other nation as a result of strict adherence to UN Security Council
Resolution 661. We hope that Jordan will distance itself from Iraq
and vigorously enforce sanctions. We were shocked by the rally of
radical Arab forces held this weekend in Amman. We find it hard to
understand why some of the same forces who were driven out of
Jordan in 1970 because they undermined Jordanian stability are
today assembling in Amman to declare their support for Saddam
Hussein. We fail to understand the ambivalence of the Jordanian
government on the question of clear opposition to aggression
against a small nation. We look forward to Jordan's rejoining the
Arab League majority, lest there be irreversible erosion of
American and international support for Jordan.
Hostages in Iraq
Iraq still continues to hold about 1,600 American citizens hostage,
as well as hundreds of thousands of other foreigners.
About 3 weeks ago, I was at Andrews Air Force Base to meet
the first plane bringing home women and children from our embassy
in Kuwait. I saw families who had displayed great courage but who
also remained full of anxiety for relatives left behind. These
feelings are shared by thousands of families across the United
States and the world who have relatives still trapped in Iraq and
Kuwait. The US embassy in Kuwait remains open, and our flag still
flies, to demonstrate the commitment of the American government
and people to do all we can to protect our fellow citizens and
secure their safe return home. The men and women serving at our
embassy in Kuwait and our embassy in Baghdad have been an
inspiration to us all. They have displayed courage and resilience
under some of the most trying conditions imaginable. I know all
members of the committee join me in saluting the performance of
our fellow Americans who remain in Baghdad and Kuwait.
We and the civilized world demand that Iraq comply with UN
Security Council Resolution 664. We demand that the Iraqi
government facilitate the immediate departure of all foreign
nationals wishing to leave Iraq and Kuwait.
Conclusion
The international reaction to the Iraqi invasion of Kuwait is truly
unprecedented. The United States and the Soviet Union, emerging
from the Cold War, have taken a common stand. The Arab League
majority, the majority of the Organization of the Islamic
Conference, the European Community, NATO, the Organization of
American States, the Organization of African Unity, and members of
the Association of Southeast Asian Nations have spoken out
forcefully against Iraqi aggression. This is truly international
cohesion--and this cohesion exists because the cause is just. The
United States is leading, but the United States is not alone. The UN
Security Council has voted seven resolutions. On the issue of Iraqi
aggression, there is no East or West; there is no North or South.
There is unity that echoes President Bush's statement, "Iraqi
aggression will not stand."
Two weeks ago, in his testimony before the full committee,
Secretary Baker pointed out that the United States remains "The one
nation that has the necessary political, military, and economic
instruments . . . to catalyze a successful collective response by the
international community." We must continue to utilize our unique
assets to maintain the international consensus, strengthen the
sanctions regime, and continue to deter further Iraqi aggression so
that Saddam Hussein at last will be forced to face the fact that his
actions have been based on miscalculation and have caused severe
damage to the Iraqi nation.
(###)
US Department of State Dispatch,
Vol 1, No 4, September 24, 1990
Title: UN Security Council Resolution 666 on Iraq's Invasion of
Kuwait
Date: Sep 13, 19909/13/90
Category: Fact Sheets
Region: MidEast/North Africa
Country: Iraq
Subject: United Nations
[TEXT]
Resolution 666 (Sep. 13, 1990)
The Security Council,
Recalling its resolution 661 (1990), paragraphs 3 (c) and 4 of
which apply, except in humanitarian circumstances, to foodstuffs,
Recognizing that circumstances may arise in which it will be
necessary for foodstuffs to be supplied to the civilian population in
Iraq or Kuwait in order to relieve human suffering,
Noting that in this respect the Committee established under
paragraph 6 of that resolution has received communications from
several Member States,
Emphasizing that it is for the Security Council, alone or
acting through the Committee, to determine whether humanitarian
circumstances have arisen,
Deeply concerned that Iraq has failed to comply with its
obligations under Security Council resolution 664 (1990) in respect
of the safety and well-being of third State nationals, and
reaffirming that Iraq retains full responsibility in this regard under
international humanitarian law including, where applicable, the
Fourth Geneva Convention,
Acting under Chapter VII of the Charter of the United Nations,
1. Decides that in order to make the necessary determination
whether or not for the purposes of paragraph 3 (c) and paragraph 4
of resolution 661 (1990) humanitarian circumstances have arisen,
the Committee shall keep the situation regarding foodstuffs in Iraq
and Kuwait under constant review;
2. Expects Iraq to comply with its obligations under Security
Council resolution 664 (1990) in respect of third State nationals
and reaffirms that Iraq remains fully responsible for their safety
and well-being in accordance with international humanitarian law
including, where applicable, the Fourth Geneva Convention;
3. Requests, for the purposes of paragraphs 1 and 2 of this
resolution, that the Secretary-General seek urgently, and on a
continuing basis, information from relevant United Nations and
other appropriate humanitarian agencies and all other sources on
the availability of food in Iraq and Kuwait, such information to be
communicated by the Secretary-General to the Committee regularly;
4. Requests further that in seeking and supplying such
information particular attention will be paid to such categories of
persons who might suffer specially, such as children under 15 years
of age, expectant mothers, maternity cases, the sick and the
elderly;
5. Decides that if the Committee, after receiving the reports
from the Secretary-General, determines that circumstances have
arisen in which there is an urgent humanitarian need to supply
foodstuffs to Iraq or Kuwait in order to relieve human suffering, it
will report promptly to the Council its decision as to how such need
should be met;
6. Directs the Committee that in formulating its decisions it
should bear in mind that foodstuffs should be provided through the
United Nations in co-operation with the International Committee of
the Red Cross or other appropriate humanitarian agencies and
distributed by them or under their supervision in order to ensure
that they reach the intended beneficiaries;
7. Requests the Secretary-General to use his good offices to
facilitate the delivery and distribution of foodstuffs to Kuwait and
Iraq in accordance with the provisions of this and other relevant
resolutions;
8. Recalls that resolution 661 (1990) does not apply to
supplies intended strictly for medical purposes, but in this
connection recommends that medical supplies should be exported
under the strict supervision of the Government of the exporting
State or by appropriate humanitarian agencies.
VOTE: 13 for, 0 against, 2 abstentions (Cuba and Yemen)
(###)
US Department of State Dispatch,
Vol 1, No 4, September 24, 1990
Title: UN Security Council Resolution 667 on Iraq's Invasion of
Kuwait
Date: Sep 16, 19909/16/90
Category: Fact Sheets
Region: MidEast/North Africa
Country: Iraq
Subject: United Nations
[TEXT]
Resolution 667 (Sep. 16, 1990)
The Security Council,
Reaffirming its resolutions 660 (1990), 661 (1990), 662
(1990), 664 (1990), 665 (1990) and 666 (1990),
Recalling the Vienna Conventions of 18 April 1961 on
diplomatic relations and of 24 April 1963 on consular relations, to
both of which Iraq is a party,
Considering that the decision of Iraq to order the closure of
diplomatic and consular missions in Kuwait and to withdraw the
immunity and privileges of these missions and their personnel is
contrary to the decisions of the Security Council, the international
Conventions mentioned above and international law,
Deeply concerned that Iraq, notwithstanding the decisions of
the Security Council and the provisions of the Conventions
mentioned above, has committed acts of violence against diplomatic
missions and their personnel in Kuwait,
Outraged at recent violations by Iraq of diplomatic premises
in Kuwait and at the abduction of personnel enjoying diplomatic
immunity and foreign nationals who were present in these
premises,
Considering that the above actions by Iraq constitute
aggressive acts and a flagrant violation of its international
obligations which strike at the root of the conduct of international
relations in accordance with the Charter of the United Nations,
Recalling that Iraq is fully responsible for any use of violence
against foreign nationals or against any diplomatic or consular
mission in Kuwait or its personnel,
Determined to ensure respect for its decisions and for Article
25 of the Charter of the United Nations,
Further considering that the grave nature of Iraq's actions,
which constitute a new escalation of its violations of international
law, obliges the Council not only to express its immediate reaction
but also to consult urgently to take further concrete measures to
ensure Iraq's compliance with the Council's resolutions,
Acting under Chapter VII of the Charter of the United Nations,
1. Strongly condemns aggressive acts perpetrated by Iraq
against diplomatic premises and personnel in Kuwait, including the
abduction of foreign nationals who were present in those premises;
2. Demands the immediate release of those foreign nationals
as well as all nationals mentioned in resolution 664 (1990);
3. Further demands that Iraq immediately and fully comply
with its international obligations under resolutions 660 (1990),
662 (1990) and 664 (1990) of the Security Council, the Vienna
Conventions on diplomatic and consular relations and international
law;
4. Further demands that Iraq immediately protect the safety
and well-being of diplomatic and consular personnel and premises
in Kuwait and in Iraq and take no action to hinder the diplomatic and
consular missions in the performance of their functions, including
access to their nationals and the protection of their person and
interests;
5. Reminds all States that they are obliged to observe
strictly resolutions 661 (1990), 662 (1990), 664 (1990), 665
(1990) and 666 (1990);
6. Decides to consult urgently to take further concrete
measures as soon as possible, under Chapter VII of the Charter, in
response to Iraq's continued violation of the Charter, of resolutions
of the Council and of international law.
VOTE: Unanimous (15-0)
(###)
US Department of State Dispatch,
Vol 1, No 4, September 24, 1990
Title: Taped Address to the Iraqi People
Bush
Source: President Bush
Description: Remarks in a videotape to the people of Iraq from the
Oval Office
Date: Sep 12, 19909/12/90
Category: Speeches, Testimony, Statements
Region: MidEast/North Africa
Country: Iraq
Subject: Military Affairs
[TEXT]
(The following message was broadcast in Iraq, September 17, 1990)
I am here today to explain to the people of Iraq why the United
States--and the world community--has responded the way it has to
Iraq's occupation of Kuwait. My purpose is not to trade accusations,
not to escalate the war of words, but to speak with candor about
what has caused this crisis that confronts us. Let there be no
misunderstanding. We have no quarrel with the people of Iraq. I've
said many times, and I will repeat right now, our only object is to
oppose the invasion ordered by Saddam Hussein.
On August 2, your leadership made its decision to invade, an
unprovoked attack on a small nation that posed no threat to your
own. Kuwait was the victim; Iraq, the aggressor.
And the world met Iraq's invasion with a chorus of
condemnation: unanimous resolutions in the United Nations.
Twenty-seven states--rich and poor, Arab, Muslim, Asian, and
African--have answered the call of Saudi Arabia and free Kuwait
and sent forces to the gulf region to defend against Iraq. For the
first time in history, 13 states of the Arab League, representing
80% of the Arab nations, have condemned a brother Arab state.
Today, opposed by world opinion, Iraq stands isolated and alone.
I do not believe that you, the people of Iraq, want war. You've
borne untold suffering and hardship during 8 long years of war with
Iran--a war that touched the life of every single Iraqi citizen, a
war that took the lives of hundreds of thousands of young men, the
bright promise of an entire generation. No one knows better than
you the incalculable costs of war, the ultimate cost when a nation's
vast potential and vital energies are consumed by conflict. No one
knows what Iraq might be today, what prosperity and peace you
might now enjoy, had your leaders not plunged you into war.
Now, once again, Iraq finds itself on the brink of war. Once
again, the same Iraqi leadership has miscalculated. Once again, the
Iraqi people face tragedy.
Saddam Hussein has told you that Iraqi troops were invited
into Kuwait. That's not true. In fact, in the face of far superior
force, the people of Kuwait are bravely resisting this occupation.
Your own returning soldiers will tell you the Kuwaitis are fighting
valiantly in any way they can.
Saddam Hussein tells you that this crisis is a struggle
between Iraq and America. In fact, it is Iraq against the world.
When President Gorbachev and I met at Helsinki, we agreed that no
peaceful international order is possible if larger states can devour
their neighbors. Never before has world opinion been so solidly
united against aggression.
Nor, until the invasion of Kuwait, had the United States been
opposed to Iraq. In the past, the United States has helped Iraq
import billions of dollars worth of food and other commodities. And
the war with Iran would not have ended 2 years ago without US
support and sponsorship in the United Nations.
Saddam Hussein tells you the occupation of Kuwait will
benefit the poorer nations of the world. In fact, the occupation of
Kuwait is helping no one and is now hurting you, the Iraqi people,
and countless others of the world's poor. Instead of acquiring new
oil wells by annexing Kuwait, this misguided act of aggression will
cost Iraq over $20 billion a year in lost oil revenues. Because of
Iraq's aggression, hundreds of thousands of innocent foreign
workers are fleeing Kuwait and Iraq. They are stranded on Iraq's
borders, without shelter, without food, without medicine, with no
way home. These refugees are suffering, and this is shameful.
But even worse, others are being held hostage in Iraq and
Kuwait. Hostage-taking punishes the innocent and separates
families. It is barbaric. It will not work. And it will not affect my
ability to make tough decisions.
I do not want to add to the suffering of the people of Iraq. The
United Nations has put binding sanctions in place, not to punish the
Iraqi people, but as a peaceful means to convince your leadership to
withdraw from Kuwait. That decision is in the hands of Saddam
Hussein.
The pain you now experience is a direct result of the path your
leadership has chosen. When Iraq returns to the path of peace, when
Iraqi troops withdraw from Kuwait, when that country's rightful
government is restored, when all foreigners held against their will
are released, then, and then alone, will the world end the sanctions.
Perhaps your leaders do not appreciate the strength of the
forces united against them. Let me say clearly, there is no way Iraq
can win. Ultimately, Iraq must withdraw from Kuwait.
No one--not the American people, not this President--wants
war. But there are times when a country, when all countries who
value the principles of sovereignty and independence, must stand
against aggression. As Americans, we're slow to raise our hand in
anger and eager to explore every peaceful means of settling our
disputes. But when we have exhausted every alternative, when
conflict is thrust upon us, there is no nation on earth with greater
resolve or stronger steadiness of purpose.
The actions of your leadership have put Iraq at odds with the
world community. But while these actions have brought us to the
brink of conflict, war is not inevitable. It is still possible to bring
this crisis to a peaceful end.
When we stand with Kuwait against aggression, we stand for a
principle well understood in the Arab world. Let me quote the
words of one Arab leader--Saddam Hussein himself:
"An Arab country does not have the right to occupy another
Arab country. God forbid, if Iraq should deviate from the right path,
we would want Arabs to send their armies to put things right. If
Iraq should become intoxicated by its power and move to overwhelm
another Arab state, the Arabs would be right to deploy their armies
to check it."
Those are the words of your leader, Saddam Hussein, spoken on
November 28, 1988, in a speech to Arab lawyers. Today, 2 years
later, Saddam has invaded and occupied a member of the United
Nations and the Arab League. The world will not allow this
aggression to stand. Iraq must get out of Kuwait for the sake of
principle, for the sake of peace, and for the sake of the Iraqi people.
(###)
US Department of State Dispatch,
Vol 1, No 4, September 24, 1990
Title: Gulf Crisis Needs International Solidarity
Baker
Source: Secretary Baker
Description: Opening statement from press conference following
meetings with Chancellor Helmut Kohl and Foreign Minister
Hans-Dietrich Genscher, Bonn, Federal Republic of Germany
Date: Sep 15, 19909/15/90
Category: Speeches, Testimony, Statements
Region: MidEast/North Africa, Europe
Country: Saudi Arabia, Iraq, Kuwait
Subject: Military Affairs
[TEXT]
As President Bush has made clear, our preference is to resolve this
crisis through diplomatic means. For that to happen, we really must
continue to have strong international solidarity: the unprecedented
international consensus that exists out there must be sustained and
sanctions, of course, must be fully implemented. In addition to that,
the responsibility must be shared equitably.
Our goal on this trip was to strengthen the international
consensus, and it was to take steps to sustain it. We also wanted to
signal Saddam Hussein that the isolation and pressure on him would
continue to build rather than diminish.
To simply say we are pleased with the results of the trip, I
think, would be an understatement. We have received financial
commitments that will ease the burden of those states who are
paying a very high price for implementing the sanctions, thus
helping make their actions more sustainable.
We have received unprecedented military commitments--for
troops, ships, aircraft and other support--from countries in the
region, as well as from our European allies. And with this support
came some political commitments, as well. Commitments to accept
no outcome of the crisis that does not provide for Iraq's
unconditional withdrawal and the restoration of the legitimate
Kuwaiti leadership, and commitments to consider additional
measures.
The international community has given the term
"responsibility sharing" real content. We are collectively making a
statement that, in this new era, responsibility sharing cuts across
alliances, embracing traditional friends, as well as others.
In an effort to give you some idea of how the world community
continues to maintain this unprecedented consensus continues to
build pressure on Saddam Hussein, let me sketch for you in broad
terms the commitments that have been pledged.
We began in the gulf states, where the leadership of Saudi
Arabia, Kuwait, and the United Arab Emirates pledged a total of $12
billion in contributions for the remainder of 1990.
This will provide both support for US defense costs and
economic assistance to the critical front line states: Egypt and
Turkey particularly, as well as to other worthy states contributing
troops or hit hard by the economic dislocations resulting from Iraqi
aggression.
We have completed our discussions with the leadership of the
German government, and as I related to you outside the Chancellor's
home, the German government has pledged $2 billion in economic
assistance and support for our military efforts to be dispersed
promptly during 1990, a measure--a commitment, I should say--
that we see as very positive, very forthcoming, and in which we are
very pleased.
The European Community is expected to announce soon its
significant commitment in community and member state
contributions. The Italian government told us in Rome of an initial
$145 million in bilateral economic assistance to the front line
states. And so the approximate total of the pledges that have been
received, including support for United States defense costs and
economic assistance to the front line states, is over $16 billion. If
you add Japan's $4 billion contribution to that, of course, the total
is over $20 billion.
Let me say a quick word about military commitments. As you
know, the United Kingdom is sending to Saudi Arabia ground combat
forces in the form of an armored brigade and a third squadron of
Tornados, adding to aircraft and Royal Navy ships which are already
on the scene. France today announced that it would send a light
armor brigade and associated combat aircraft. This, of course, is in
addition to attack helicopters and commandos already in the region
and it's in addition to the substantial French naval presence in the
gulf.
Canada announced yesterday a squadron of CF-18 aircraft in
addition to the two destroyers that are en route, Italy is sending a
squadron of eight Tornado aircraft and another frigate in addition to
the two frigates and other ships already committed. Egypt, as you
know from the visit there--the stop there--will put up to two
divisions in Saudi Arabia. Syria, again as you know from our stop in
Damascus, will send at least a division-size force.
So the summary demonstrates clearly that the whole world is
responding and responding in an unprecedented way to Iraq's
aggression. It is an unprecedented story and I think it conveys an
unmistakable message. That message is the world will not tolerate
this aggression.
(###)
US Department of State Dispatch,
Vol 1, No 4, September 24, 1990
Title: Country Profile: Saudi Arabia
Date: Sep 24, 19909/24/90
Category: Country Data
Region: MidEast/North Africa
Country: Saudi Arabia
Subject: History, Trade/Economics,
International Organizations
[TEXT]
Official Name: Kingdom of Saudi Arabia
Geography
Area: 2,331,000 sq. km. (830,000 sq. mi.); about one-third the size
of the continental US.
Cities: Capital--Riyadh (pop. 1.5 million). Other cities--Jiddah 1.4
million, Makkah 837,000, Taif 455,000, Dammam 426,000, Medinah
412,000, Tabuk 340,000.
Terrain: Mainly desert, with rugged mountains in the southwest.
Climate: Arid with great extremes of temperature.
People
Nationality: Noun--Saudi(s). Adjective--Saudi Arabian or Saudi.
Population (1988 est.): 11 million (7 million Saudi nationals, 4
million foreign nationals).
Annual growth rate: 3.5%.
Ethnic groups: Arab (90% of native pop.), Afro-Asian.
Religion: Islam.
Language: Arabic.
Education: Attendance (primary school)--80%. Literacy--men 50%;
women 25%.
Health: Infant mortality rate--78/1,000. Life expectancy--60 yrs.
Work force: 4.8 million (25% Saudi, 75% foreign): Agriculture--14%.
Industry--11%. Service, commerce, and government--53%.
Construction--20%. Oil and mining--2%.
Government
Type: Monarchy with Council of Ministers.
Unification: September 23, 1932.
Constitution: None; governed according to Islamic law (Sharia).
Branches: Executive--king (chief of state and head of government).
Legislative--None. Judicial--Islamic Courts of First Instance and
Appeals.
Administrative subdivisions: 14 provinces.
Political parties: None.
Suffrage: None.
Central government budget (1989): $38 billion.
Defense (1985): 35% of budget.
Flag: Green and white; bears the Muslim creed in Arabic script:
"There is no God but God; Muhammad is the Messenger of God." Under
the script is a white horizontal sword.
Economy
GDP (1989): $72 billion.
Annual growth rate (1987, current dollars): 2.9% overall; non-oil
share, 1.5%.
Per capita GDP: $7,700.
Avg. inflation rate (1987): 1%.
Natural resources: Hydrocarbons, iron ore, gold, copper.
Agriculture (5% of GDP): Products--dates, grains, livestock,
vegetables. Cultivated land--0.3%.
Industry (oil, 30% of GDP; nonoil; 4%): Types--petroleum production,
petrochemicals, cement, fertilizer, light industry.
Trade (1989): Exports--$24 billion (f.o.b.): petroleum and petroleum
products. Imports--$22 billion: manufactured goods, transportation
equipment, construction materials, processed food products. Major
markets--US, Western Europe, Japan.
International Affiliations
Charter Member of the UN and many of its specialized and related
agencies; observer status in the General Agreement on Tariffs and
Trade (GATT); Arab League; Gulf Cooperation Council (GCC);
International Wheat Council (IWC); Nonaligned Movement, Organization
of Petroleum Exporting Countries; INTELSAT; Organization of
the Islamic Conference (OIC); Islamic Development Bank (IDB); Arab
Satellite Organization (ARABSAT).
(###)
US Department of State Dispatch,
Vol 1, No 4, September 24, 1990
Title: The New Europe in a New Age: Insular, Itinerant, or
International? Prospects for an Alliance of Values
Zoellick
Source: Robert B. Zoellick, Counselor of the State
Department
Description: Address before the American-European Community
Association International's Conference on US/EC Relations and
Europe's New Architecture, Annapolis, Maryland
Date: Sep 21, 19909/21/90
Category: Speeches, Testimony, Statements
Region: Europe
Subject: Military Affairs, Trade/Economics
[TEXT]
The letter inviting me to speak to you tonight described this
conference as a "brainstorming" session. And I was asked to
speculate about the future. Since my speculation often starts with
an observation on history, that's where I'd like to begin this evening.
History books identify seminal events and years; they mark
the end of one age and the beginning of the next. But reality is more
complex, as patterns of thought evolve and leaders and publics shift
their thinking toward new challenges. We are living in a transition
between two eras. What came before was the post-war era--the
Cold War. So far, the next period has been labeled the post-Cold War
era. It does not even have a name of its own because we do not yet
know its dominant characteristics. But we must take actions today
that will shape this next age. So we need to speculate about both
continuing and new challenges. And we need to consider how the
United States, Europe, and others might meet them.
Tonight, I will focus on three questions about the new Europe
in this new age:
-- Will the new Europe be insular, itinerant, or international?
-- What are the primary challenges Europe will share with the
United States in the post-Cold War age?
-- What practical steps should the European Community (EC)
and the United States take to get on with the job?
Insular, Itinerant, or International?
Insular.
Imagine a place in the not-so-distant future, with tall
mountains, clear streams, and picturesque meadows. The cities are
clean. The people speak a number of languages--Romance, German,
and English. The political system is a federal republic, and the
citizens are prosperous. You may believe you already know the land
I'm envisioning. But when the flag comes into view--a white cross
on a red field--it's the ensign of Switzerland. Might the new Europe
be akin to a large Switzerland?
My European colleagues are startled when I suggest the new
Europe could be an insular Europe. After all, Americans and Asians
are supposed to be insular; Europeans are cosmopolitan. But
consider the possibility of insularity. The Germans could be
preoccupied with unification. The EC could be absorbed by the
economic, monetary, and political integration of Western Europe.
The new market democracies of Central and Eastern Europe could be
concentrating on making their reform efforts work and on drawing
closer to their Western neighbors. The EFTA [European Free Trade
Association] nations could be focusing on their relationship with
the Community. The Balkans could be intensely involved in
reconciling nationalisms with nationhood.
Some might reason that there's no shortage of work to be done
in Europe, which is, after all, where the "horizons" all come
together. Besides that, the outer reaches might be portrayed as
unappealing: Exports, especially from Asia or foreign farmers, could
disrupt European harmony; people to the south want to migrate
north or start deadly conflicts; and perhaps the Americans have had
a say in European affairs for too long. If that were not enough, the
new Europe is also going to have to accommodate and help
determine the place of its large, Eurasian neighbor, the Soviet
Union. Frankly, I do not believe the insular Europe is the most likely
new Europe. But some public and political currents, as well as some
policies, reflect this insular spirit.
Itinerant.
A second possibility for the new Europe would
be to become what I call the itinerant Europe. By this, I mean a
Europe that will engage around the world, but autonomously,
without much interest in new, durable alliance ties for this new
era. This itinerant Europe could reflect recovered self-confidence.
It also could draw from Europe's past, when wandering, unsettled
spirits from missionaries to colonial adventurers roamed the globe
carrying a singular European perspective. Indeed, as in the past,
this regional outlook on global issues could turn out to be a product
of intense intra-regional discourse that overlooks the perspectives
of non-Europeans. Or it might reflect the difficulty of
accommodating additional preferences after the European view has
been determined through a complex, negotiated process.
International.
My third speculation for the new Europe is as an international
Europe. An international Europe would be cognizant of its
capabilities and responsibilities. It would accept the importance of
cooperative, collective action in addressing the challenges of this
new era. Perhaps most important, this Europe would recognize that
the bonds of ideas and values are at least as important as
geographic propinquity.
The Economist recently offered a similar view, explaining
that "Euro-America," as the editors called it, grows from the
common roots of the Renaissance, the Reformation, and the
Enlightenment. Moreover, they pointed out that the politico-cultural
ties are backed by movements of people, trade, investment, and
thought.
I believe that shared ideas and values will become
increasingly important as we create the "alliances," institutions,
and regimes that will address the challenges of this new era. The
Cold War alliance structure was fastened together primarily with
the glue of anti-communism. Our bond was the hostile threat to our
common values, rather than just our mutual commitment to these
principles. As the perception of that threat recedes, neither the
United States nor Europe can take these associations for granted.
New generations may not proceed on the basis of old assumptions.
For example, an insular or itinerant Europe might instead define its
connections or policies on the basis of geographic separateness, not
shared values.
It will be no small achievement in coming decades just to
maintain the assumption that the United States, the European
Community, and Japan are colleagues in pursuit of common ends. The
three of us together could, however, accomplish a great deal more.
We can be the catalysts and major contributors toward addressing
the post-Cold War problems. We can draw other nations into
existing or new international structures that support our common
interests and objectives. With the changes in what had been labeled
the second world, the concept of a residual third world has lost
much of its meaning. Many of the nations in that heterogeneous
group may find it in their interest to associate with us through new
or adapted international structures.
An international Europe is the only Europe that will enable us
to take on the work ahead. An insular Europe would ignore its
responsibilities within an interdependent world. An itinerant Europe
would be incompatible with and would disrupt the development of a
global system that can address our new challenges.
Primary Challenges of the Post-Cold War Age
Turning then to my second question, what are the primary
challenges for the United States and an international Europe in this
post-Cold War era? I will briefly describe four topics on our
common agenda.
First, perhaps the surest indicator that the Cold War age of
containment has passed is the crumbling of the communist nemesis.
This development offers both opportunity and risk. Empires in
transition can prove dangerous, both internally and externally.
Fearing the erosion of power, a challenged leadership, or the
counterreaction it provokes, can strike back violently, as we
witnessed in the People's Republic of China (PRC) in 1989. Or old
problems, submerged by repression, can be revived, as is the case
with smoldering nationalities throughout the Soviet Union and
Eastern and Central Europe. New, dangerous figures can prey on
fears and frustrations rising out of the turmoil. And the devastation
long wrought by communist systems--to individual initiative, civil
structures, economic capabilities, the environment--may take many
years to overcome. Yet the people of these nations have high
expectations and modest patience. These are the dark sides of the
new instability; when combined with still-mighty military force,
the bubbling brew threatens to spill over and ignite.
The reform or abandonment of communist systems also offers
enormous opportunities. People are experimenting with economic
and political freedoms. Their leaders want to embrace democratic
and market institutions. They are looking for ways to overcome
conflicts and dangers around the globe, not to fuel them. There is
no simple formula for moving beyond containment to seize the
opportunities and overcome the threats of a crumbling communism.
Indeed, it would be a mistake to assume that the task will be the
same for dealing with the Soviet Union, the PRC, the old Eastern
bloc in Europe, Vietnam, or other residual communist outposts. Each
involves unique national characteristics and circumstances. This
shift will be of such scope and duration as to require sustained
management by new structures and regimes.
Our second challenge is to stop or dampen regional conflicts,
now made even more threatening by the proliferation of advanced
weaponry. Throughout the post-war era, regional disputes were the
most probable points of conflict, violent or otherwise. While the
tanks, missiles, and massive armies faced off in Europe, the
greatest likelihood of people dying turned out to be elsewhere. And
although regional protagonists might have maneuvered for
superpower support, the superpowers also maintained a rough
capability to restrain clients, or at least prevent an escalation to
the verge of obliteration.
In the post-Cold War era, regional conflicts remain as highly
probable as before, but the proliferation of dangerous technologies-
-especially missiles and chemical and nuclear weapons--has raised
the costs of encounter exponentially. Moreover, some of the
superpower restraints have been lifted. As the threat of East-West
conflict recedes, new powers are seeking to establish regional
influence. Some, such as Iraq, demonstrate no respect for
international norms. There are many old scores to be settled,
territories in dispute, and ethnic rivalries ready to flare up.
We need collective approaches to resolve or deter regional
conflicts before they spark. We also need joint action to address
those that nevertheless erupt. And since our record is unlikely to be
perfect given the causes of potential conflict that have been
amassed over generations, we need to turn back or at least limit the
proliferation of new weapons technologies that can transform
battle into regional and even worldwide tragedy.
Our third task involves international economic policy. The
post-war system produced an array of highly beneficial economic
structures, particularly the IMF [International Monetary Fund], the
development banks, the OECD [Organization for Economic
Cooperation and Development], and the GATT [General Agreement on
Tariffs and Trade]. These institutions will continue to play key
roles, although they will need to continue to evolve to meet changed
circumstances.
Indeed, foreign economic policy will face no shortage of
challenges with commensurate political implications. Successful
policies will necessitate strong support from international
structures. For example, the democracies of Central and Eastern
Europe need economic support, market access, and links to Western
institutions. Each new stage of economic perestroika is bringing the
Soviet Union's reform program closer to a market system that can
benefit from international interaction. Eventually, new stages of
development in the PRC, both economic and political, will need to
draw from abroad. Many Latin American nations want to unshackle
their economies from statist, autarkic constraints in favor of
private initiative, markets, and economic liberty. Increasingly
successful Asian countries are recognizing both the benefits and
responsibilities of the international economic system, but they are
worried that the developed "club" will close the doors of
opportunity just as they enter.
Nor can we take for granted cooperation among developed
economies. The interdependence of markets--finance, production,
trade--requires greater attention to policy coordination at both the
macroeconomic and micro levels. Given the range of development
challenges, the domestic political implications of economic
performance, and the related political benefits of global adherence
to a market system, both Europe and the United States need to
strengthen the capabilities of international economic institutions
and arrangements.
Fourth, to an increasing degree, our publics view their
security as dependent on our management of dangers that we have
not traditionally viewed as priority matters among nation states.
Transnational threats posed by narcotics, terrorism, environmental
dangers, immigration, and disease continually score high in public
polls that rank topics of concern. But governments are just
beginning to learn how to create international regimes to address
these problems, which derive primarily from the actions of
individuals and groups outside the realm of official governmental
relations.
We have to learn how to integrate these issues into regular
statecraft. In addition, we need to calculate carefully what
features will make new regimes most effective in addressing these
problems while considering the effects in other areas. For example,
voting arrangements and veto rights, decision principles, reliance
on private sector involvement and market-based solutions, and
arrangements for regulating tradeoffs have become important
elements of the relatively well-developed structure of
international economic institutions; similar decisions will need to
be made as we consider devising new collective efforts to cope
with the transnational issues.
Practical Steps To Be Taken
Finally, I will turn to my third question: What practical steps should
the European Community and the United States take to address the
new challenges of the post-Cold War age? I'd like to offer a
personal list of 10 suggestions.
First, we should further institutionalize the US-EC
relationship by negotiating a framework agreement; at some future
point, it might even evolve into a treaty. This idea builds on
President Bush's call in May 1989 for "new mechanisms for
consultation and cooperation on political and global issues" and
from Secretary Baker's proposal in his December 1989 Berlin
speech. The agreement would reflect the shared ideas and values
that we would plan to apply in addressing the new challenges. The
intent would be to encourage the development of common, or at
least complementary, approaches. To support this aim, the
agreement could establish regular consultation procedures at
various levels to enhance the practice and expectation of joint
action--or at least avoid presenting either side with non-negotiable
or surprise positions.
Second, we should give content to this form of association by
working together on the problems of regional conflict and
proliferation. This effort is already proceeding. For example, the
United States and the EC are already examining needs and means to
alleviate economic dislocations of the Iraqi embargo. We have also
begun cabinet and subcabinet discussions on other regional
problems. If we are to avoid an itinerant European policy, this close
working relationship will become increasingly important as the
European Political Cooperation (EPC) mechanism assumes a greater
role. We should develop our cooperation in a fashion that encourages
a reinforcing network of other multilateral efforts directed at
similar objectives--such as the Missile Technology Control Regime,
which was created by the G-7 and which is now expanding its
membership.
Third, we can employ the consultative arrangements of a
framework agreement to address the transnational agenda. The new
regimes that we develop, whether formal or informal, should
reflect our shared values. They will also require decisionmaking
systems that protect our interests. From the vantage point of the
EC, cooperation in these areas may prod the [European] Commission
and Council [of Europe] to reconcile their respective roles on
matters of so-called mixed competency.
Fourth, we should recognize that there is likely to be an
overlap between NATO and EC processes in the future that we need
to manage flexibly and pragmatically. NATO is the vehicle for the US
defense and security presence in Europe. It is also a brilliantly
successful expression of how democratic nations sharing common
values can work together to maintain their security. I hope that
Europeans will want to maintain this tie. It serves as a stabilizing
force and insurance against any threat to 16 like-minded
democracies. In addition, NATO has the potential to be a forum for
organizing the West to cope with regional conflicts, such as those
in the Middle East, that also threaten our security. And from the
perspective of this side of the Atlantic, the United States has good
reason to be interested in the security of Europe: Europe's conflicts
not only swept us into one cold and two hot wars this century, but
also reached our shores in earlier centuries, for example during the
Seven Years War and the Napoleonic Wars.
There are several ways that both the European pillar of NATO
and NATO itself can adjust to new missions and times while
ensuring European stability and the common defense. For example,
NATO discussions leading to cooperative operations among the
United States and other member states with the Western European
Union (WEU) could supply a valuable mechanism for tackling regional
security problems. We used this combination in the Persian Gulf in
1987 and are employing it with Iraq today.
Fifth, we share a common interest in the future shape of the
CSCE [Conference on Security and Cooperation in Europe]. CSCE may
prove to be a valuable process for supporting the efforts of the
nations of Central and Eastern Europe, including the Soviet Union, to
build local institutions based on democratic and free-market
values. It might also further develop means to build confidence
against security threats. But it will be up to the EC, the United
States, and a few others to ensure that new CSCE institutions and
processes complement the institutions we constructed in the post-
war era, instead of seeking to supplant them with hopeful but
untested concepts.
Sixth, the United States and the EC can create new ways to
encourage others to embrace democracy and development based on
market principles. The Group of 24 for Central and Eastern Europe
offers a good example. That's why we hope to work with the EC to
form an analogous group to help Central America. We will need to
coordinate our economic and political institution-building
approaches toward the Soviet Union as well.
Seventh, we face the near-term task of snatching a market-
opening Uruguay Round from the jaws of protectionist interests. It
is selfish and ultimately destructive for agricultural, textile, and
other lobbies to threaten GATT at the exact time struggling
developing nations are turning to the rules of economic liberty.
This, too, is a first test of the post-Cold War order.
Eighth, the United States and the EC need to consider what
new or changed economic regimes will be necessary to manage our
increasing interdependence. The Group of Seven's macroeconomic
coordination is still nascent, and must adapt to possible Community
moves toward monetary union. On the microeconomic front, we need
to continue to prevent the single market program from creating new
barriers to outsiders. And, over time, we may wish to expand our
OECD discussion of structural microeconomic barriers, as the
United States has begun to do with Japan.
Ninth, the events of the past month have reemphasized that
both of us need to be alert to Turkey's place and prospects. As a
NATO ally, Turkey offers a valuable foundation for our mutual
security in a dangerous part of the world. While recognizing that the
EC must make its own determinations about future members, I hope
that together we can help draw Turkey closer to us politically and
economically.
Tenth, North America and the EC need to welcome Japan as a
colleague in this new alliance of values. It will take all three of us,
plus the Soviet Union and others, to meet the new challenges of the
post-Cold War order. Together, we can extend our effectiveness
considerably. I recognize, of course, that many Europeans, as well
as Americans, are suspicious of Japan's willingness to take on this
responsibility. But I also know that Japanese leaders will never be
able to move their public to accept their appropriate global duty if
we do not include them.
Conclusion
In this same month, in this city, 204 years ago, delegates from a
number of states met to discuss their commercial relations. The
quality of their discourse, led by Alexander Hamilton, was notable,
but the delegates decided there were too few of them to proceed
productively. As a result, that initial Annapolis Convention urged
the 13 states to send commissioners to a new convention to be held
in Philadelphia in May 1787. Its purpose would be even broader: to
discuss all matters necessary "to render the constitution of the
Federal Government adequate to the exigencies of the Union."
That early Annapolis meeting is a good precedent for this
conference of representatives of 13 states, as we consider the
challenges of building a new order for a new age. We need to unite
Europe and the United States in a common approach to the
challenges of our generation. Europe and America are the trustees of
the values and ideas that enlightened those delegates two centuries
ago, and it's those principles that offer the best blueprint for the
new international architecture.
(###)
US Department of State Dispatch,
Vol 1, No 4, September 24, 1990
Title: Enterprise for the Americas Initiative
Date: Sep 24, 19909/24/90
Category: Fact Sheets
Region: South America, Central America, Caribbean,
North America
Subject: Trade/Economics
Background
On June 27, 1990, President Bush announced the Enterprise for the
Americas Initiative--a major new initiative to help forge a genuine
partnership of free market reform to promote economic growth and
political stability in Latin America and the Caribbean. At that time
he noted that "prosperity in our hemisphere depends on trade, not
aid" and that "the future of Latin America lies with free government
and free markets."
Over the past decade, countries in Latin America and the
Caribbean have confronted an economic crisis which also has
affected the United States. As many of these countries have cut
imports, postponed investment, and struggled to service foreign
debt, the United States has lost trade, markets, and opportunities
for investment.
A new generation of democratically elected leaders in the
region has made progress in coping with this crisis. Their countries
are beginning to move away from excessive government control and
toward greater reliance on free market forces. The Enterprise for
the Americas Initiative would support the efforts of these leaders,
increasing the prospects for prosperity throughout the hemisphere.
The Initiative's Three Pillars
The initiative rests on three pillars through which the United
States can support economic reform and sustained growth:
-- Expanding trade by working with the countries of the region
through the Uruguay Round of the General Agreement on Tariffs and
Trade and by entering into free trade agreements with the ultimate
goal of a hemisphere-wide free trade system;
-- Promoting investment in the region and helping countries
compete for capital by reforming policies that have discouraged
private investment;
-- Building on successful US efforts to ease debt burdens and
to increase incentives for reform by offering additional debt
measures. As part of this approach, the US would support natural
resources management as a key element of protecting the
environment and building a strong future for the hemisphere.
Legislative Proposal
On September 14, 1990, President Bush sent to Congress a
legislative proposal to implement the investment, debt, and
environmental parts of the initiative.
Investment. The proposal provides for US contributions to the
Enterprise for the Americas Fund, a multilateral fund to be
established at the Inter-American Development Bank (IDB). The
President will seek authorization for $100 million a year over 5
years for the fund, and the Secretary of the Treasury will seek
contributions from other countries.
Disbursement of fund grants would encourage market-oriented
investment policy initiatives and reforms and finance technical
assistance for privatization efforts, business infrastructure, and
worker-training and education programs.
The fund would complement country reforms undertaken as
part of a new IDB lending program for nations that take significant
steps to remove barriers to international investment.
Debt and Environment. The legislation would establish the
Enterprise for the Americas Facility to administer debt reduction
for countries meeting investment reform and other policy
conditions. Latin American and Caribbean countries can qualify
under the facility if they:
-- Have in effect an International Monetary Fund program or
the equivalent;
-- As appropriate, have World Bank structured or sectoral
adjustment loan;
-- Have undertaken major investment reforms in conjunction
with an IDB loan or are implementing more liberal investment rules;
-- As appropriate, have negotiated satisfactory financing
programs with commercial banks.
The Secretary of the Treasury would lead a US government
interagency process that would determine country eligibility based
on these criteria. This interagency process would make decisions
on the extent of debt reduction on Agency for International
Development and PL 480 (concessional) obligations of eligible
countries. It also would determine debt reductions, sales, or
cancellations of Eximbank and Commodity Credit Corporation
obligations. These would be made solely to facilitate debt-for-
equity or debt-for-nature swaps.
The US would seek an environmental agreement with each
eligible country that would allow it to make interest payments in
local currency on new obligations resulting from debt reduction.
These interest payments would be deposited in an Environmental
Fund that would be jointly programmed by the United States and the
debtor government to provide grants for environmental projects.
Key Components of Proposed Legislation
-- Creation of the Enterprise for the Americas Investment
Fund to be administered by the Inter-American Development Bank
(IDB).
-- Creation of the Enterprise for the Americas Facility
within the Treasury Department to support debt reduction
operations for eligible nations.
-- Reduction of Agency for International Development and
"Food for Peace" (PL 480) debts.
-- Use of interest payments on reduced concessional
obligations to support environmental programs in the debtor
country.
-- The sale, reduction, or cancellation of Export-Import Bank
loans and Commodity Credit Corporation assets to facilitate debt-
for-equity or debt-for-nature swaps.
(###)
US Department of State Dispatch,
Vol 1, No 4, September 24, 1990
Title: US-Mexico Relations
Date: Sep 24, 19909/24/90
Category: Fact Sheets
Region: North America
Country: Mexico
Subject: Trade/Economics, Democratization
35=one2>Chart: US-Mexico Trade
[TEXT]
The scope of US-Mexican relations goes far beyond official contact
between the two national capitals. It entails extensive
commercial, cultural, and educational links. Current foreign policy
objectives include:
-- A stronger trade partnership based on further relaxation
of trade barriers on both sides. A strong Mexican economy is a
basic US interest.
-- Responsible and prudent action toward payment of
Mexico's international debt, about $30 billion of which is owed to
US financial institutions.
-- Control of illegal emigration to the United States, while
facilitating the flow of documented workers and preventing the
abuse of those who do cross illegally.
-- An increase in investment opportunities for both
countries.
-- A reduction in the flow of illegal narcotics to the United
States by engaging in bilateral efforts to curb supply and demand.
Most aspects of the US-Mexican economic relationship can be
traced to two factors--a long common border and the relative size
of the two economies (US gross national product is about 25 times
larger than that of Mexico). Despite divergent economic interests,
the two countries have close economic ties, particularly in trade,
debt, and investment. This economic relationship is important to
the stability and growth of both countries.
Trade:
With a 1988 total of $44 billion in
two-way trade, Mexico was the United States' third largest trading
partner after Canada and Japan. Two-thirds of Mexican exports and
imports are with its northern neighbor. Mexico also was the third
largest export market for US products and the fifth largest supplier
of US imports. Chief US exports to Mexico are motor vehicle parts,
office equipment, and agricultural products. Imports from Mexico
include crude oil (to help fill the US Strategic Petroleum Reserve),
cars, piston engines, and coffee.
The United States has had a trade deficit with Mexico since
1982, although the gap narrowed last year to $2 billion out of total
bilateral merchandise trade of $52 billion. Under an umbrella
Framework of Understanding on Trade and Investment reached in
1987, the United States and Mexico have concluded separate accords
on trade in textiles, steel, beer and wine, and, outside the
framework, on civil aviation.
The two countries are exploring ways of broadening and
deepening their trade relationship. In June 1990, Presidents Bush
and Salinas endorsed the goal of a comprehensive free trade
agreement between the United States and Mexico. The Presidents
directed their trade ministers to undertake the necessary
consultations and preparations to initiate negotiations and to
report back to them before the next Bush-Salinas meeting in
December 1990. Both countries understand that any possible free
trade agreement must not undermine the international trading
system or the principles of the General Agreement on Tariffs and
Trade (GATT). Mexico became a member of the GATT in 1986.
Debt:
Mexico has the second largest external
debt in the developing world, but that burden has diminished during
the past several years. Compared with a peak debt of $107 billion
at the end of 1987, Mexico's external debt now is about $80 billion
because of an historic agreement with more than 450 foreign
commercial bank creditors. In February 1990, after 8 months of
intense negotiations, the banks agreed to receive Mexican
government bonds in return for reducing Mexican debt principle and
interest. The settlement has helped Mexico's effort to attract more
domestic and foreign private investment.
The United States played an important role in the debt
agreement. The Brady plan, announced in early March 1989 by US
Treasury Secretary Nicholas Brady, provided the necessary
framework and financial support for the original debt package in
July 1989. The Mexican bonds are backed by $3.5 billion that have
been used to buy US Treasury zero-coupon bonds and by an additional
$3.5 billion held as a guarantee of 18 months of interest payments
by Mexico. The United States recently has proposed that the Inter-
American Development Bank (IDB) add its resources to those of the
International Monetary Fund and the World Bank to support further
commercial bank debt reduction in Mexico and other Latin American
countries.
Investment:
The United States has an
important investment stake in Mexico. By the end of 1988, US
direct investment there totaled $5.5 billion, most of it ($4.6
billion) in a wide variety of manufacturing industries. Significant
US investment is in the Mexican maquiladora plants, which
assemble goods along the US border for export, mostly to the United
States.
The Salinas administration is encouraging greater private
investment, both domestic and foreign, in the Mexican economy. It
is counting heavily on foreign capital to finance much-needed
infrastructure projects, such as roads, ports, and irrigation and
electricity facilities. The government also is privatizing some
state-owned enterprises. Recently, the lower house of the Mexican
congress passed a bill that would allow foreigners to own up to 30%
equity in 18 commercial banks that are to be privatized. The
Mexican government has designated infrastructure projects,
tourism, and privatization of certain government-run industries as
areas open to foreign investors participating in debt-for-equity
swaps (where the Mexican government and its lenders transfer
Mexican external debt to investors in return for equity in Mexican
investment projects).
The United States fully supports the efforts of the Salinas
administration to encourage foreign investment and the return of
Mexican flight capital. In addition, President Bush has proposed the
creation of a new investment fund, administered by the IDB, that
could provide up to $300 million a year in grants in response to
market-oriented investment reforms in Latin America. The United
States intends to contribute $100 million to the fund, some of
which could go to Mexico.
Immigration:
Because Mexico is the largest
source of undocumented aliens in the United States, immigration is
a major issue. In November 1986, the United States enacted the
Immigration Reform and Control Act, and in 1987 the Mexican and
the US governments established two joint working groups to reduce
violence against undocumented aliens.
Narcotics:
The United States and Mexico have
worked closely to combat narcotics trafficking. The United States
wants to resolve the problem of narcotics traffic from Mexico by
working with Mexican authorities to curb supply. At the same time,
the United States is working with state and local officials to
reduce US demand for drugs. Although both governments have
allocated additional resources, traffickers have compensated by
increasing production and using sophisticated countermeasures to
frustrate eradication and interdiction efforts. US law requires that
countries be certified as cooperating with the United States before
they can benefit from certain assistance programs and tariff
benefits. Mexican officials say that about 60% of their attorney
general's budget and 25% of their army's personnel are deployed in
the war against drugs. The attorney general's budget in 1989
exceeded $26 million, up from $19.5 million in 1987.
Other Issues
The United States and Mexico share other political interests.:
-- Strengthening democratic institutions in the hemisphere,
which includes finding a peaceful solution in El Salvador and
consolidating the Nicaraguan government to create conditions for a
stable, peaceful, and demilitarized region; and
-- Continuing to exchange views as Cuba becomes
increasingly isolated internationally by changes in Central and
Eastern Europe and in the Soviet Union and by internal problems
such as human rights.
(###)
US Department of State Dispatch,
Vol 1, No 4, September 24, 1990
Title: Third World Debt
Date: Sep 24, 19909/24/90
Category: Fact Sheets
Subject: Trade/Economics
35=one3>Chart: Third World Debt by Region, 1988
Background
Many Third World countries saw their ability to pay foreign debt
deteriorate between 1980 and 1982. The United States and other
creditors responded by developing a flexible, case-by-case approach
toward Third World debtors. It has encouraged debtors to undertake
economic reforms and persuaded banks, governments, and
international financial institutions to support such efforts. In
1985, the United States introduced a program to improve and
sustain growth in debtor countries (the Baker plan). In March 1989,
US Treasury Secretary Nicholas Brady outlined proposals for
strengthening the international debt strategy.
Scope of Problem
Total Third World debt was about $1.2 trillion at the end of 1989.
Brazil owed $113 billion, followed by Mexico ($103 billion) and
Argentina ($62 billion). Others include Indonesia ($53 billion),
Egypt ($50 billion), Poland ($42 billion), Nigeria ($31 billion), and
the Philippines ($29 billion).
Origins of the Crisis
Several factors caused the debt crisis of the early 1980s,
especially inappropriate domestic policies in many debtor countries
that resulted in overvalued exchange rates, large budget deficits,
investment in inefficient public enterprises, and restrictions on
trade and investment. Many countries used substantial borrowing to
fuel consumption rather than build infrastructure or productive
enterprises. External shocks, such as the 1979 oil price jump, a
sharp increase in international interest rates, and recession in the
developed countries, also hurt Third World economies. In addition,
many borrowers relied on short-term, variable-rate loans that made
them vulnerable to rising interest rates.
US Policy
In 1982, the United States and other creditors developed rescue
packages to deal with the immediate cash-flow problems of major
debtors. This approach succeeded in averting default by major
debtor countries and in keeping the international financial system
intact. By mid-1985, however, commercial lending to developing
countries had declined sharply. Debtor governments were concerned
about inadequate economic growth.
In October 1985, the United States proposed the Program for
Sustained Growth (Baker plan). Building on the earlier debt
strategy, it was a broad, long-term strategy to restore
creditworthiness of debtor countries by promoting sustainable
growth.
The program's main element was the pursuit of comprehensive
economic policies leading to structural reform and growth in the
debtor countries. A second element involved new commercial bank
lending. A third element comprised credits from international
financial institutions that were linked more closely to reforms.
Economic reforms would permit market forces and private
enterprises to play a larger role in the economy, encourage greater
domestic savings and investment, reduce budget deficits, and
liberalize trade and financial systems.
In April 1987, the United States encouraged the development
of various market-driven financial instruments to help meet the
diverse interests of debtor countries and banks in devising new
financing packages.
Progress Under the Baker Plan
The Baker plan helped developing countries recognize that long-
term growth requires a strong commitment to market-oriented
policies. In addition, US banks reduced their Third World debt risk
by adding to bank capital and selling or swapping some debt. An
array of voluntary debt reduction mechanisms sprang up. The 1988
Toronto economic summit expanded Paris Club (official bilateral
creditors) debt relief for poorer African countries that were
undertaking adjustment programs.
Brady Proposals
Despite the progress made under the Baker plan, low investment
and capital flight continued to weaken future economic prospects,
while commercial banks declined to provide new loans in a timely
fashion. Many debtor countries applied economic reforms
inconsistently, and they failed to achieve adequate growth on a
sustained basis.
In March 1989, Secretary Brady outlined a series of proposals
to strengthen the debt strategy. His proposals build upon the Baker
strategy but recognize the role of voluntary debt and debt service
reduction as an adjunct to new commercial bank lending. The Brady
approach also places more emphasis on new domestic and foreign
investment and the return of domestic capital that has left debtor
countries.
Progress Under Brady Proposals
Secretary Brady's proposals have received worldwide support. The
International Monetary Fund and World Bank play a central role in
the strengthened debt strategy by encouraging debtor policy
reforms and catalyzing financial support. Japan pledged $10 billion
to support the strategy. In addition, creditor governments have
made substantial contributions through Paris Club rescheduling of
official bilateral debt, both interest and principal. In 1989, the
United States announced a program to forgive up to $1 billion in
economic assistance loans to sub-Saharan African countries that
are pursuing reforms.
To date, Mexico, Costa Rica, the Philippines, Venezuela,
Morocco, and Chile have negotiated agreements under the Brady
proposals. Others, including Bolivia, Nigeria, Ecuador, and Uruguay,
are undertaking reform efforts to obtain support under the
strengthened debt strategy.
(###)