US Department of State Dispatch,
Vol 2, No 30, July 29, 1991
Title: Greece: The Enduring Dream of Democracy
Bush
Source: President Bush
Description: Remarks before the Greek Parliament, Athens, Greece
Date: Jul 18, 19917/18/91
Category: Speeches, Testimony, Statements
Region: Europe
Country: Greece, Turkey, Cyprus
Subject: Military Affairs, NATO, Democratization,
History
[TEXT]
Thank you, sir, for the welcome and may I pay my respects to
President Karamanlis, Prime Minister Mitsotakis, President of the
parliament, Mr. Tsaldaris; Mr. Papandreou [the former Prime
Minister], who I had the privilege of meeting not so long ago; and
members of the Vouli.
Let me first thank you for the extraordinary honor of speaking
to you. It means a great deal to follow in the footsteps of such
great men as Dwight Eisenhower and General Charles de Gaulle, who
spoke here.
No American can come to Athens without feeling a kind of
sacred awe. All that Americans are, all that Americans stand for,
all that we hold most dear has roots right here in a great city and
the great country where democracy was born 2,500 years ago.
Every American student learns to appreciate the magnificence
of the Parthenon and Delphi, the cool Aegean Sea. We learn that the
great disciplines--philosophy, theology, drama, literature,
mathematics, biology, zoology, and, of course, politics were born on
these shores. I expect all the rest of them are alive, but I'm sure
politics is still alive on these shores.
We see in your monuments and museums the seeds from which
our republic of freedom grew up. After 2,500 years, mankind is only
beginning to grasp the magnitude of what your forefathers achieved.
Through dozens of generations, through the rise and fall of great
empires, through wars and plagues, through depressions and
economic revolutions, through the triumphs and travails of human
affairs, one thing has endured. The dream of democracy.
And so today, as old despotisms melt away and a
commonwealth of freedom arises around the globe, we can truly say
that our future--the world's future--began right here. Although I've
not visited--well, I visited Greece in 1960, and then once again I
believe in 1979. I haven't been here that much lately, but I feel at
home here.
I have the honor to share this chamber today with the man who
symbolizes ancient Greek principles and modern Greek courage,
President Constantine Karamanlis. Then-Prime Minister Karamanlis
hosted President Eisenhower back in 1959 and has done business
with every American president since Harry Truman. He restored
democracy to Greece in 1974 and made it possible for Greece to
assume its present stature as a bulwark of stability. He built firm
relations with the West and helped secure Greek membership in the
European Community [EC]. He ensured that Greece would play an
important role in the Atlantic alliance, and he enlarged Greece's
international responsibilities, its international influence, its
international importance.
To honor this great man and to stress the special quality of
our renewed relations with Greece, I now would like to invite your
president to join us in Washington next year for a state visit, and I
hope you will accept, Mr. President. I hope you will accept so that
the American people can express their heartfelt gratitude to you,
their admiration for you, and their respect for Greece.
And today, I also want to repeat my invitation to another
great man, a man I admire and respect, your prime minister,
Constantine Mitsotakis. I have asked him to make an official visit
to our capital, and this trip would let the whole world know that
our friendship, like the ideals that link us, will endure.
As I stand here today, I'm happy to say that our relations are
stronger than ever. We have tightened our economic ties with
agreements on customs and civil aviation and tourism. We've made
great progress together in the international fight against terrorism,
and with this visit, I hope that we can make this special
relationship stronger still.
We can build a more vibrant economic relationship. While the
United States is the largest external investor in Greece, we want to
do more. We want to ensure that American capital and know-how
will be able to contribute to lasting Greek prosperity. And I,
therefore, ask our Secretary of Commerce [Robert Mosbacher] to
lead a presidential trade and investment mission to Greece this
autumn.
We can strengthen our security relationship. We already have
forged solid ties through NATO. This year the United States will
provide $350 million in security assistance to Greece. We've just
agreed to lease you two Knox-class frigates, and we will expedite
the shipment of 10 F-4E aircraft to you and deliver 18 more this
fall. These agreements express our determination to stand by you
now and in years to come.
You stood squarely with the international coalition that
liberated Kuwait from Saddam Hussein, and this kind of cooperation
is not new. In the Persian Gulf--as in Korea and the two world
wars--Greece sided with the forces of freedom. Now we face a new
world, a world in which military confrontation is being pushed
aside by constructive economic competition, a world in which
nations struggle to build and perfect democracy. Although we've got
no road maps to guide us through this world, we have a sure
compass in principles both our nations hold dear: peaceful
settlement of disputes, free enterprise, an open world economic
system, and--underlying it all--democracy.
Here in Greece, you command an especially vivid view of the
world. Here in your unique location at this historic time, we can
see the challenge and the promise of what we refer to as the new
world order. To the north, Europe's first post-Cold War crisis has
erupted. The peoples of Yugoslavia struggle to secure new-found
freedoms and overcome the pull of ancient hatreds. The
international community, rallied by the bold initiative of the EC,
appeals to the Yugoslavs to chart a new future, a democratic future,
through peaceful negotiations. And we call upon the leaders there
to spare their people from dreadful civil war.
As an EC country with a stable democracy, you can help
nations such as Albania and Bulgaria who struggle along the road to
freedom. Struggle they might, but look back at very recent history.
Who would have predicted that these countries now want to go down
freedom's road, democracy's road? Your Balkan neighbors, including
Yugoslavia, look to you for guidance and help and hope.
A kind of youthful optimism flourishes everywhere. The
emerging democracies of Europe, peoples throughout the Soviet
Union, men and women, young and old throughout the world, aspire
to achieve the ideals first sketched out here in Greece. But ideals
are important only if they can shape actions. You understand this.
We are encouraged that your government is advancing new ideas to
foster stability in the Balkans and the Aegean. The opportunity for
a new era of accommodation in this region beckons.
With that in mind, I must report that my meeting with Mr.
Gorbachev yesterday was in that spirit of cooperation as the Soviet
Union seeks to do more according to democratic principles. I'm
hoping that the arms control agreement that we worked out
yesterday with Mr. Gorbachev--the first to reduce these strategic
arms in history--proves to be of benefit to all the countries around
the world, particularly in this region.
You and Turkey face a great challenge to resolve these old
disputes that divide you. More than 60 years ago, Eleftherios--and
I've got to watch my pronunciation--Venizelos signed treaties of
friendship and commerce with the father of modern Turkey, Kemal
Ataturk. I pray that your two nations might follow the example set
by these giants.
Today, with new leaders of vision, your nations enjoy a unique
opportunity to overcome the misunderstandings of the past and
begin to heal the deep wounds that scar Cyprus, that divide families
and friends on that island. In the new world that I have discussed,
none of us should accept the status quo in Cyprus. Today I pledge
that the United States will do whatever it can to help Greece,
Turkey, and the Cypriots settle the Cyprus problem and do so this
year.
In the end, the ties that bind the United States and Greece go
far deeper than economic or military necessity. You see, as many of
you know, Greek-Americans have enriched our country enormously in
every profession, in every region, in every walk of life. Two
distinguished businessmen and old friends have accompanied me on
this trip, Alex Kortelas and Alex Spanos, both of whom have made a
tremendous imprint in our country. And, of course, our able
ambassador, Michael Sotirhos, serves our nation well.
We have subtler ties, too. Cities across America take their
names from such places as Athens, Corinth, Delphi, and Sparta. Near
one of my favorite fishing spots lies the town of Marathon, Florida.
And, of course, my country would not exist if your forefathers had
not developed the world's most revolutionary idea: democracy. Our
founding fathers studied your history closely and revered deeply the
works of the ancient Greeks. Thomas Jefferson, the author of our
Declaration of Independence, once observed, "Greece was the first
of civilized nations presenting examples of what man should be."
Yet we also must remember that the powers of ancient Greece fell
because they could not set aside old hatreds, because they refused
to acknowledge common ties, common principles, common acts,
common aims. We must resolve not to repeat their mistakes.
Tomorrow I have a wonderful opportunity. I shall visit the
Acropolis and stand near the temples where our ancient forefathers
charted ideals for the ages. As we gather here today, let us agree
to build a new Acropolis, a monument not of marble or steel but of
something far less fragile, a monument of deeds and ideals, a new
world order erected upon timeless ideas born right here.
That new world order can help us achieve our dreams of
collective security and individual liberty. Every nation must
assume some of the burden of building this order, and every nation
must accept its responsibilities for building a sound international
economy. Every nation must do its duty to preserve freedom and
enterprise.
America and Greece have special responsibilities in this
quest. The United States as the world's strongest democracy.
Greece is the world's first. But if we engage fully in the changing
world beyond our borders, we can build an order in which all nations
enjoy prosperity, democracy, and peace.
Eleutherios Venizelos once claimed "that America has realized
the ideals of ancient Greece. No two elements come closer to each
other than do the Greek and the American."
That tremendous compliment also outlines our common
challenge to work even more closely in securing a new world order
dedicated to freedom and enterprise.
We live in exciting times. Who would have dreamed that the
changes taking place in the Soviet Union would offer this promise of
freedom and democracy? Who would have dreamed the captive
nations of Eastern Europe are free and are on the path that you set
many thousands of years ago, the path to full and free and fair and
open democracy?
So, for those who are gloomy about the present, I say you
shouldn't be; there's plenty of room to be optimistic. And I'm
delighted; I feel more of a sense of optimism coming to democracy's
birthplace.
I want to thank you for the extraordinary honor of inviting me
to address this special session. I stand here surrounded by the
grandeur and echoes of the ages, a proud son of the ideals that your
land gave the world.
And so, like all friends of liberty, I leave you now. And I must
say, "zito i ellada." Thank you very, very much.
I'd like to just present to your president and your prime
minister, and really to the Greek people, a replica of our Declaration
of Independence, a document that symbolizes our profound ties to
you and our timeless debt to the people and the legacy of Greece.
US Department of State Dispatch,
Vol 2, No 30, July 29, 1991
Title: Strengthening US-Greek Security
Bush
Source: President Bush
Description: Excerpts from remarks to US and Greek Armed Forces,
Souda Bay Naval Facility, Souda Bay, Crete, Greece
Date: Jul 19, 19917/19/91
Category: Speeches, Testimony, Statements
Region: Europe
Country: Greece, Turkey, Cyprus
Subject: Military Affairs, NATO, Democratization,
History
[TEXT]
I am pleased to announce today during this visit a series of
initiatives designed to strengthen US-Greek security and to help
modernize the Greek armed forces. First, I have expressed to Prime
Minister Mitsotakis our readiness to lease your country two Knox-
class frigates for the Hellenic navy. Secondly, we will accelerate
the delivery of 10 F4-E aircraft to Greece this summer, with an
additional 18 to follow in the autumn. And finally, we plan to
transfer to Greece from existing NATO stocks a large number of
tanks and artillery that will measurably increase Greece's
defensive capabilities.
Each of these steps reaffirms our close and critical defense
relationship with our valued NATO ally, Greece. Our support for
Greek security will not waver.
Greece remains a valued ally, and our friendship with Greece
remains part of our destiny. The United States remains committed
to helping Greece maintain its ability to perform its vital NATO
missions. Greece can be certain that US support will remain
steadfast and strong.(###)
US Department of State Dispatch,
Vol 2, No 30, July 29, 1991
Title: US-Greek Economic Relations
Bush
Source: President Bush
Description: Excerpts from remarks before the Greek-American Chamber
of Commerce, Athens, Greece
Date: Jul 19, 19917/19/91
Category: Speeches, Testimony, Statements
Region: Europe
Country: Greece, Turkey, Cyprus
Subject: Trade/Economics
(Introductory remarks deleted)
[TEXT]
Let me just talk a little bit about improving economic relations
between the United States and Greece, and to express my support--
strong support--for the economic path that Prime Minister
Mitsotakis has charted for this great country. The prime minister
has taken a giant first step toward strengthening the Greek
economy by outlining some goals that sound very familiar to this
American President.
He wants to cut the red tape, privatize the economy, reduce
the cost and size of the government sector, and get his economy on
a growth path.
Prime Minister Mitsotakis deserves enormous credit for
working to lift the veil that for too long kept Greece out of the
international economic mainstream. He understands that free
markets, not state management, can help Greece invigorate its
economy, reduce its deficit, pay off its external debt, and remain a
member in good standing of the European Community.
We shouldn't underestimate, given the state of the world
economy, the difficulty of the prime minister's task. We shouldn't
underestimate its importance, either. So let me just tell you what
he and I talked about, what I told him.
First, we believe in the reform efforts. I might ask you to
take a rather global look at this point. It isn't simply Greece that is
moving on this important path that I have outlined above. Take a
look at what is happening in Eastern Europe. Take a look at the
aspirations inside the Soviet Union toward privatization and market
reform and convertibility and all of the things necessary to improve
the lives of the people through trade. Far better to do it that way
than through some aid program that screeches to a halt because it
has no underpinnings.
So we are embarked here on a program that really makes a
difference--this reform program. I think his reforms will work. I
think they can make a big difference in Greece. You see, we also
believe strongly in the benefits of trade. I left that economic
summit there in London more determined to press for open markets,
free and fair trade around the world, and open investment
opportunities everywhere. This isn't to benefit solely the United
States--and yes, we would benefit--but it is to benefit every single
country that participates in achieving these goals.
You see, the litter of communism provides eloquent testimony
to what happens when people forget about the virtues of free
enterprise and avoid the tough disciplines that competition
provides. If we want to make the most of the talent of our people in
America, in Greece, in Europe, and all around the world, we must
advance the cause of free and fair trade.
Our Administration remains totally determined to reach a
successful conclusion of the GATT [General Agreement on Tariffs
and Trade], of this Uruguay Round. I remain optimistic that we can
do so.
As I look at the various economies around the world, I am
absolutely convinced that Greece would benefit enormously from a
successful conclusion of the GATT round. The more Greece opens its
markets to foreign investment and the more it works to develop its
export industries, the more secure its future will be. I'm happy to
say that our trade relationship with Greece is growing stronger
every single day. The United States enjoys what I think is a special
and strong relationship with Greece. Again, I salute the prime
minister for his key role in all of this.
That relationship should make a lot of people happy. Consider
the bottom line. US exports to Greece increased 10% last year, and
Greek imports to the US increased by $30 million. But, you see, if
you look at the big picture--and you all understand this--that was
only a beginning. Our governments recently have signed a bilateral
customs agreement, a new civil aviation agreement, a joint
declaration on tourism. And I believe that these initiatives will
increase the number of commercial flights between the nations,
speed the flow of goods through customs, and generate more tourist
business. I couldn't help but stand there--Barbara and I talked
about this--standing there just in the wish that many and all
Americans could someday share the joys that we felt standing in
the midst of that history just a few minutes ago.
The Greek and the US Governments are cooperating effectively
in this worldwide fight against terrorism, and this effort is
obviously going to remain a priority for both countries. We are
trying to expand trade and investment opportunities for American
companies that want to do business in Greece. And we have worked
to protect intellectual property rights, patents, copyrights,
trademarks, and the like for American firms doing business in
Greece. We have worked with the Government of Greece to ensure
the swift and fair repatriation of profits. It has to happen. And we
hope to improve the prospects for American firms interested in
bidding on Greek Government contracts.
This progress--and I'm not saying there is not more that needs
to be done; there is. But this progress demonstrates that the
Greek Government is ready to do business with American companies
and that it welcomes American investment. This is a refreshing
change, and it explains why, for the first time in more than a
decade, OPIC--the Overseas Private Investment Corporation--can
offer insurance and financing for private sector investment
projects. The investment climate here seems more hospitable than
ever for Americans.
And now the United States needs to take advantage of the
welcome that the Prime Minister has given us. So, as I announced
yesterday in my speech to the legislature, I have asked Commerce
Secretary Bob Mosbacher, known to many in this room, to lead a
presidential trade and investment mission to Greece this autumn.
That mission can persuade even more American businesses to take
advantage of the opportunities that are already here and the
opportunities that will be here in the future.
In the days and months ahead, our governments will continue
working to improve economic relations and eliminate these
obstacles to growth. But in the end, good business is common
sense, and common sense ought to guide us as we work to build a
more prosperous future.
I am happy to say that I think, as you look at this country and
our country, things look good. In the United States, as everyone here
knows, we've been facing substantial, tremendous economic
problems. Our country has been in recession, albeit by historical
standards statistically rather mild. But some of our people have
been hurting because of this recession. Most of the indicators now
are [saying] that the recession is over and growth is beginning. It's
my own view that if that growth pattern continues, and I think it
will, this will benefit businesses all around the world. The
dynamism and the size of the American economy relates to
economies of small countries and medium-sized countries all
around the globe...
As one firm says, I am bullish on America. I'm not advertising
for one firm against some of the others I see around here, but I have
reason to be [bullish]. Let me just tell you something very
personally. This is a fantastic and challenging time, a rewarding
time to be president of the greatest and freest country on the face
of the earth. As you look around the world and you see what has
happened in Eastern Europe, as you see the changes that are already
beginning to take hold in the gigantic Soviet Union, as you see our
own hemisphere--the Western Hemisphere--with all but one
country moving down democracy's path. As you take a look at Asia
and the dynamic trade relationships that we have with Asia and that
they're continuing to grow, we remain, in spite of our affinity and
affection for the people of Greece and Europe--we are also a Pacific
power. And you see those trade relationships strengthening. I can
tell you, it is an enormously rewarding time, in spite of the
problems we face, to be President of the United States.
I happen to believe that the action that we took collectively
with allies--and I will always be grateful to Greece for its
participation--the action we took against Saddam Hussein gave the
United States a new respect and credibility around the world. I am
very grateful, obviously, to the men and women who served under
our banner. But the other day I had a chance to reward the French
general [and] the British general with high honors, expressing our
appreciation that this was not a US unilateral move--it was a
revitalized United Nations, and it brought together Greece, the
United States, and Turkey, and many other countries which stood up
for a common purpose, and that purpose is [that] aggression,
bullying, one neighbor against another, will not stand. It did not
stand. We've set a principle out there for the world. It will not
stand in the future. I am very grateful to everybody that
participated.
And so that achievement of that common purpose of turning
back aggression from a bullying and brutal dictator now leads us to
what I call a possibility of a new world order. And let me just
assure you--this isn't on the subject of commerce; it's on the
subject of political rivalries; it's on the subject of world peace--
that we will use every bit of this new-found political power or this
worldwide credibility to do our best to bring peace to the
historically troubled corners of the world.
As you see the changes that are taking place in your sphere,
and then you couple those with the changes that are taking place in
the political sphere, I think we all conclude that we have a historic
opportunity. I must tell you, I felt very strongly about that when I
sat down with Mikhail Gorbachev the other day in London. They are
trying. They've got enormous economic problems. But we sat there,
and we finalized a strategic arms reduction treaty--the first time
that we have been able to significantly reduce destabilization of
the world through intercontinental ballistic missiles. It is a
wonderful achievement--not just for the American people, not just
for the people in the Soviet Union--for I think it reflects on
everybody in Greece; the feeling that we can curtail the
unprofitability that goes into these massive arms and then bring the
power of private enterprise to bear, helping the people of the
countries around the world. These are exciting times. These are
not times to be pessimistic about the world in which we live.
And so, things do look good. The President of this great
country and the Prime Minister have felt--we're back to bilateral
relations now--have helped forge what is a new beginning here--a
new beginning to an old friendship. And so my challenge to you all
is let's make things even better. (###)
US Department of State Dispatch,
Vol 2, No 30, July 29, 1991
Title: US-Bulgarian Relations
Boucher
Source: State Department Deputy Spokesman Richard
Boucher
Description: Washington, DC
Date: Jul 23, 19917/23/91
Category: Speeches, Testimony, Statements
Region: E/C Europe
Country: Bulgaria
Subject: Trade/Economics, Development/Relief Aid,
Democratization
[TEXT]
Acting Secretary of State Lawrence Eagleburger met today with
Bulgarian Deputy Prime Minister Dimitur Ludzhev. The meeting
focused on bilateral relations, Bulgaria's political and economic
development, and regional issues.
The United States welcomes the progress that the Republic of
Bulgaria has made in establishing a democratic system of
government and a free market-oriented economy. Bulgaria has left
behind its totalitarian past; it has shown that it is committed to
genuine reform, including respect for pluralism, the rule of law,
human rights, and fundamental freedoms. This commitment to
democratic principles has been the basis on which the United States
and Bulgaria have begun to build a new relationship of friendship.
This is a difficult transformation and one which will require
continued dedication and effort. The United States encourages
Bulgaria to continue working to build strong, democratic
institutions in order to safeguard the progress it has made and will
strongly support those efforts. The elections scheduled for
September will represent another major step for democracy and
peaceful transition in Bulgaria, a transition in which all political
forces are called upon to demonstrate their commitment to a
democratic and fair electoral process, tolerance, and respect for
civil peace.
The United States respects Bulgaria's significant
achievements in the area of economic reform. The Bulgarian people
have shown that they have the courage and the will to continue this
essential process, despite the short-term, severe hardships
necessary for long-term success. The United States reaffirms its
commitment to support the efforts of the people of Bulgaria to
build a market economy fully integrated into international economic
structures.
During this meeting, the United States and Bulgaria consulted
on the situation in the Balkan region. Each side noted its concern
about the developments in Yugoslavia, emphasizing the need for the
end of all use of force and the settlement of disputes by peaceful
means. Both sides stressed the vital importance of respect for
democracy, for the human rights of all citizens of Yugoslavia, and
for peaceful negotiations among all parties to decide the future of
Yugoslavia. Both the United States and Bulgaria reaffirmed the
position that nations in the Balkans should not make territorial
claims on neighboring states. Bulgaria emphasized that it seeks to
play a constructive role in promoting regional
cooperation.
The United States views Bulgaria as an important regional
source of stability and force for democratic change and will
continue to consult closely on issues of mutual concern.
The United States is pleased, on the occasion of this visit, to
announce the establishment of the Bulgarian-American
Agriculture/Agribusiness Enterprise Fund, with initial
capitalization of $5 million. This fund will promote the
development of the Bulgarian private sector through loans and
equity investment.
On July 22, 1991, the Vice President and Deputy Prime
Minister Ludzhev signed a $10 million agricultural sector grant.
This grant will be used to help Bulgaria to implement its
privatization law. This represents the US contribution to the G-24
[group of 24 developing country members of the International
Monetary Fund] balance-of-payments facility.
The US has taken these steps to demonstrate its support for
the Bulgarian reform program. (###)
US Department of State Dispatch,
Vol 2, No 30, July 29, 1991
Title: New US-Bulgarian Agricultural Fund Established
Fitzwater
Source: White House Press Secretary Marlin Fitzwater
Description: Washington, DC
Date: Jul 22, 19917/22/91
Category: Speeches, Testimony, Statements
Region: E/C Europe
Country: Bulgaria
Subject: Trade/Economics, Resource Management
[TEXT]
The President today announced his intent to establish a Bulgarian-
American Agriculture/Agribusiness Enterprise Fund. Vice President
Dan Quayle discussed the fund with the visiting Bulgarian economic
delegation led by Deputy Prime Minister Dimitur Ludzhev and
Minister of Finance Ivan Kostov at their July 22 meeting. The Vice
President welcomed the progress Bulgaria has made in political and
economic reform under the leadership of President Zhelev and Prime
Minister Popov and noted that the establishment of an enterprise
fund was designed to accelerate the process of privatization.
Similar to the funds already established for Poland, Hungary,
and the Czech and Slovak Federal Republic, the new Bulgarian Fund
will invest in the private sector, using its own funds and drawing
on other sources of venture capital as well. The Bulgarian Fund,
however will differ from the others in two important ways:
-- It will focus primarily (but not exclusively) on the
agriculture/agri-business sector, including agricultural inputs,
food processing and packaging, distribution, and other related areas.
-- It will be charged from the beginning to provide technical
assistance to complement its investment activities. The funding
for this technical assistance will come out of the capital stock of
the fund.
The Administration intends to make an initial grant of $5
million to the fund from money appropriated this fiscal year for
East European assistance in the Foreign Affairs Operations bill.
The Bulgarian-American Agriculture/Agribusiness Enterprise
Fund may make loans, grants, and equity investments, in addition to
sponsoring technical assistance, training, and other measures
designed to foster the growth of private business in all sectors of
the Bulgarian economy, with a particular emphasis on the
agriculture sector
The fund will be a private, non-profit organization. The
American members of the board of directors will be designated by
the President at a later date. The fund will maintain appropriate
records of its activities and will file an annual report that includes
a statement of an independent auditor. (###)
US Department of State Dispatch,
Vol 2, No 30, July 29, 1991
Title: US-Philippine Joint Statement
Description: Text of joint statement released by the Department of
State, Washington, DC
Date: Jul 17, 19917/17/91
Category: Speeches, Testimony, Statements
Region: East Asia
Country: Philippines
Subject: Military Affairs
[TEXT]
Secretary of Foreign Affairs [of the Philippines] Raul S. Manglapus
and Presidential Special Negotiator Richard L. Armitage have
reached agreement on all major issues involved in the Philippine-
American Cooperation Talks (PACT). These include economic,
scientific, technological, cultural, educational, health, defense and
security matters, and concerns of Filipino war veterans.
Regarding the use of Philippine military bases by US forces
after September 16, 1991, the Philippine and US technical panels
have ironed out the major details of an Agreement on Installations
and Military Operating Procedures and a Status of Forces
Agreement, which will replace the 1947 Military Bases Agreement.
The two panel chairmen will now submit the results of their work
to their respective Presidents for review.
The panel chairmen have agreed that, in view of the
calamitous effects of Mt. Pinatubo, the resources required to
restore Subic Naval Base to operational effectiveness justify a
tenure of 10 years for US forces beginning on September 17, 1991.
At the end of the ninth year, unless in the meantime a unilateral
Philippine review leads to discussions with the US on access
arrangements in accordance with the Philippine constitution, a
joint Philippine-US committee will be established to develop the
modalities of an orderly and expeditious US withdrawal which will
commence at the end of the tenth year.
The panel chairmen have also agreed that although the effects
of Mt. Pinatubo have rendered continued US operations at Clark Air
Base and the smaller facilities virtually impossible, there still
exists a requirement for orderly withdrawal and turnover of all
facilities to the Government of the Philippines. Clark Air Base will
continue cleanup and withdrawal operations and will be turned over
to the armed forces of the Philippines no later than September 16,
1992. The smaller facilities will be turned over to the armed
forces of the Philippines by September 16, 1991.
Secretary Manglapus and Special Negotiator Armitage have
also agreed upon a new and more rational framework for the often
controversial issue of bases-related compensation. Both panel
chairmen view the disaster wrought by Mt. Pinatubo as having
imposed on both governments an obligation to accord a very high
priority to the restoration of basic services, economic
infrastructure, and growth opportunities to Central Luzon.
Accordingly, the panel chairmen have decided to approach the issue
of compensation in the following manner.
-- Notwithstanding the operational and financial effects of
Mt. Pinatubo on the facilities used by the US forces and in view of
the impact the volcano has had on the lives of several hundred
thousand Filipinos, the US Administration has asked Congress to
provide all of the funds requested by President Bush for the
Philippines in his budget submission for FY 1992. This request is in
excess of $550 million and includes categories of assistance not
linked to military bases, such as the US contribution to the
Multilateral Assistance Initiative (MAI) and appropriations for food
aid. Starting in FY 1993, US appropriations for requests linked to
the continued use of Subic Naval Base by US forces will consist of
security assistance grants amounting to not less than $203 million
per year. These security assistance funds will enable the armed
forces of the Philippines to obtain defense equipment, services, and
training from the US, and will provide vital economic support to the
Government of the Philippines. Other forms of US appropriated
assistance, such as food aid, emergency disaster relief,
development assistance grants, and so forth, will not be linked to
bases and will be subject to discussions by a Program Review
Group.
-- The Government of the Philippines will receive, at no or
minimal cost, fully serviceable defense articles and medical
equipment declared excess to the needs of the US armed forces.
These deliveries shall be aimed principally at sustaining and
modernizing the armed forces of the Philippines. Although the US
side will not project a dollar value of articles and equipment to be
delivered, the Government of the Philippines will be expecting
materiel valued at $150 million per year on average for the armed
forces of the Philippines and other agencies.
-- The US will reinstitute the "Buy Philippine" Balance of
Payments Waiver established under the 1947 Military Bases
Agreement. This program--which permits US forces in the
Philippines and in the foreign areas under the command of the US
Commander-in-Chief, Pacific, to purchase Philippine goods--has
added more than $200 million per year to the economy of the
Philippines in recent years. The US will maintain this procurement
program for the 10-year tenure of US forces in the Philippines.
-- In addition to unilateral US relief efforts for Filipinos
affected by Mt. Pinatubo, the US will use its good offices to support
the Government of the Philippines in raising international
contributions to a "Regional Fund for Reconstruction and
Development" which will focus on Central Luzon. This vital effort
will be independent of the MAI and will focus on prospective
contributors not fully involved in MAI.
In terms of non-defense initiatives, the Philippines
recognizes continuing US efforts in assisting the Philippines in
obtaining concessional loans from international financial
institutions.
As a vital element in the enhancement of economic
cooperation between the Philippines and the United States, the
United States and the Philippines will work together to expand
trade relations, investment opportunities, and general economic
relations.
Finally, Secretary Manglapus and Special Negotiator Armitage
have agreed that their respective governments should move
expeditiously to create a joint Program Review Group which will
meet annually to discuss modalities of US support to the
Philippines in terms of economic reform, economic development,
and armed forces modernization. The two panel chairmen anticipate
that the Program Review Group will hold its first annual meeting
before the end of the year in Washington.
The Secretary of Foreign Affairs and the Special Negotiator
have expressed the expectation that, provided the two Presidents
approve the work of the two panels, technical representatives of
the two parties will be able to finish the process of drafting
official texts very expeditiously and that Filipino and American
legislators will then be able to render their own judgments
concerning the results of the Philippine-American Cooperation
Talks. The panel chairmen expressed their satisfaction that they
were able, in the end, to bring this lengthy process to a close in a
manner which befits friends and allies.
The Secretary of Foreign Affairs will depart Manila tomorrow
for the ASEAN [Association of South East Asian Nations] conference
after consulting with President Aquino. Special Negotiator
Armitage will return to the US this weekend and consult with
Administration officials pending President Bush's return from
Europe. (###)
US Department of State Dispatch,
Vol 2, No 30, July 29, 1991
Title: Iraqi Non-Compliance With UN Security Council Resolutions
Bolton
Source: John R. Bolton, Assistant Secretary for
International Organization Affairs
Description: Statement before the Subcommittees on Human Rights and
International Organizations and on Europe and the Middle East
of the House Foreign Affairs Committee, Washington, DC
Date: Jul 18, 19917/18/91
Category: Speeches, Testimony, Statements
Region: MidEast/North Africa
Country: Iraq
Subject: Military Affairs, United Nations, Human Rights,
Trade/Economics
[TEXT]
I have a prepared statement which, with your consent, I will submit
for the record. I will confine my present remarks to commenting on
pending policy issues and their implications for the UN's future role
in bringing lasting peace and security to the Persian Gulf.
It is fortuitous that you have called this hearing at the
present time, Mr. Chairman. The political declaration that was
issued on Tuesday by the G-7 [Group of 7: Canada, France, Germany,
Italy, Japan, United Kingdom, and United States] summit contains
elements which bear directly on the matters before us. The leaders
said, among other things:
It is a matter for hope and encouragement that the UN
Security Council with the backing of the international community
showed during the Gulf crisis that it could fulfill its role of acting
to restore international peace and security and to resolve conflict. .
. . We commit ourselves to making the United Nations stronger,
more efficient and more effective in order to protect human rights,
to maintain peace and security for all and to deter aggression. . . .
We note that the urgent and overwhelming nature of the
humanitarian problem in Iraq caused by violent oppression by the
government required exceptional action by the international
community, following UNSCR 688. We urge the United Nations and
its affiliated agencies to be ready to consider similar action in the
future if circumstances require it.
Unfortunately, however, the events of the last few weeks have
provided further evidence of the fundamental untrustworthiness of
the Iraqi regime headed by Saddam Hussein. The Government of Iraq
has cynically violated its solemnly given commitment to abide by
the requirements of Resolution 687. It has lied to the UN in its
declarations on nuclear activities. It has ignored the requirement
contained in Resolution 688 to cease harassing and threatening its
own civilian population. It has refused to cooperate with the
provision of humanitarian relief to elements of that population and
has attempted to manipulate distribution of relief to its own
political advantage. In short, Saddam Hussein is a liar.
The behavior of Saddam Hussein, while no surprise to those
who have followed carefully the events which began last August 2,
does present a tough challenge to the United Nations and the
international coalition which expelled Saddam's forces from
Kuwait, and which has been providing relief and assistance to Iraq's
hard pressed Kurdish minority and other groups. In a nutshell, this
challenge is to effectively implement the complex requirements of
Resolution 687 and related Security Council directives.
The series of resolutions enacted since last August
concerning Iraq do provide the basis for continued pressure on the
Government of Iraq, and for the dismantling of its formidable
aggressive capabilities, and for seeing that those capabilities are
not redeveloped. The key to their success lies in maintaining the
pressure.
Ensuring Future Peace and Security in the Gulf
At the London summit, the leaders of the Group of 7 expressed their
desire to strengthen the role of the United Nations in fostering
international peace and security. In the aftermath of the Gulf war,
the United Nations had established new practical security
mechanisms that point the way for the international community to
maintain the peace in the future.
The Special Commission was established by the Security
Council as an instrument to oversee the elimination of Iraq's
weapons of mass destruction and ballistic missiles. Despite the
attempts of the government of Iraq to hide its capabilities and
obstruct the UN's work, the Special Commission and the IAEA
[International Atomic Energy Agency] have worked well. During a
program of intensive inspections, the IAEA and the Special
Commission uncovered a huge covert nuclear weapons-related
program. This revelation elicited a major international outcry.
Today, we expect the IAEA to decide that Iraq is in violation of its
obligations under the nuclear Non-Proliferation Treaty and Iraq's
Safeguards Agreement. This is the first such decision in IAEA's
history, and a potentially major step in the agency's development.
The head of the Special Commission and the Director General
of the IAEA briefed the Security Council last Monday. They
presented clear and incontrovertible evidence that Iraq was, indeed,
engaged in a clandestine nuclear weapons program. Indeed, Saddam
said only yesterday in a speech commemorating the anniversary of
the Baathist revolution that Iraq would one day strike back at its
enemies and that its capability to do so would be reconstructed.
The Special Commission had been able to react swiftly to
Iraqi violations because of the strong response of the Security
Council and the international community to its grave, serious
revelations about Iraq's nuclear program. The Special Commission
is a mechanism that is appropriate to its task, it has been staffed
with the caliber of experts who can do the job, and it is effective
because it has the full political support of the international
community. Iraq's failure to accept the judgment of the
international community--if it continues to hinder the work of the
Special Commission--can only have the gravest consequences.
This is exactly how the Special Commission should be
working. As such the Special Commission should serve as a model
for the future, when the international community is faced with a
clear danger and must assure that another brutal aggressor can no
longer threaten international peace and security with weapons of
mass destruction.
Similarly, the arms embargo which the Security Council has
maintained against Iraq will help check future Iraqi aggression. Its
success has also inspired world leaders to seek greater UN
involvement in helping to curb regional arms races, including the
proposal for a UN-monitored arms sales registration program,
which leaders at the London economic summit have endorsed. We
should understand, however, that Resolution 687's modification of
Resolution 661's sanctions regime (and possible future
modifications) make it operationally more difficult in preventing
evasions of the continuing arms embargo. This is a matter that will
require our careful and continuing attention in the months and years
ahead.
Sanctions/Humanitarian Assistance
President Bush has made it clear that we will not turn our backs on
the suffering of the Iraqi people, largely caused by Saddam
Hussein's cynical exploitation of hardship for political purposed.
Iraq, under normal circumstances, and under an ethical government,
had the full capability to take care of its own needs. We are fully
prepared to meet our humanitarian obligations. However, the cost
of assisting vulnerable populations should ultimately be born by
Iraq itself, as should the costs of implementing Resolution 687.
Under no circumstances should Saddam Hussein's regime to regain
total control of the considerable resources available if Iraq
resumes oil exports, even on a limited basis.
The most recent assessment of the needs of the Iraqi people,
undertaken by Prince Sadruddin Aga Khan recommends that Iraq be
permitted to export oil sufficient to pay for the import of
humanitarian necessities. This really brings us to the dilemma that
Saddam's conduct so starkly poses because of his manipulation of
existing food supplies. On the one hand, you could contemplate
simply the unlimited provision of humanitarian assistance with no
monitoring and no controls. That would be unacceptable, because
the clear record here is that Saddam Hussein would manipulate
those supplies for his own political purposes. Another alternate
would simply be to not provide any assistance at all, which would
lead potentially to grave suffering on the part of the vulnerable
groups in Iraq's population. There is, however, a third way, and that
is to provide assistance under a regime of tight controls and strict
monitoring. There has never been any question about President
Bush's willingness to see to the needs of vulnerable groups in Iraq.
The President has said that we would help and that humanitarian
needs can be met within the existing sanctions regime. But Saddam
Hussein has proven that he cannot be trusted. Any mechanism
developed to provide essential supplies to the Iraqi people must
include strict control and close monitoring by the international
community. We are now consulting closely with members of the
Security Council and our coalition partners on the appropriate
operational ways to do this.
We would note that food and other relief supplies from foreign
sources have been moving into Iraq at a steady rate for the past 2
months. Since food shipments were permitted by the Sanctions
Committee on March 22, very substantial amounts of food have been
notified to the committee. Substantial amounts have moved into
Iraq as well, physically. Donations from humanitarian organizations
and individual governments (including the US) have amounted to
hundreds of millions of dollars. Additionally, the Iraqi Government
has access to foreign exchange that can be used to buy food from
abroad. Recently, the Iraqis notified the Sanctions Committee that
they had purchased 100,000 tons of grain from Australia.
We would also note that a study by two Tufts University
nutritionists, commissioned by UNICEF, indicated that while there
are problems with malnutrition, particularly in southern Iraq, these
problems are endemic -- due to longstanding Iraqi government
policies. Dr. Jean Mayer, President of Tufts, said, "The Iraqi
Government appears to be using food as a weapon by cutting off the
shipment of food and medical supplies to the southern part of the
country. This situation must be monitored closely."
In the light of these facts, it is clear that while we are
prepared to move quickly to provide food to victims of Saddam
Hussein's regime, the international community must also be
prepared to ensure that none of this assistance ends up in any way
supporting that regime.
In this regard, Mr. Chairman, I would like to address the
resolution that has been offered by [Congressman] Penny which
would have the UN unfreeze Iraqi assets and turn them over to
UNICEF for the provision of relief in Iraq. While we are all
sympathetic to the needs of the Iraqi people and to the intentions of
this amendment, we believe that the first initiative must come
from Baghdad. They have shown no such humanitarian indications.
There are many legitimate claims against the frozen assets by US
citizens, and sorting that out will be a lengthy and difficult
process. President Bush has made it clear that he would not lift
sanctions against Iraq while Saddam Hussein remains in Power.
It is ironic, Mr. Chairman, that as Iraq's pleas to ease
sanctions become more high pitched, the Iraqi regime continues to
flout and challenge the UN. Iraq's well-documented attempts to
evade detection of its nuclear weapons program by the joint
IAEA/Special Commission inspection teams, its false declarations,
and its harassment of the Inspectors are unacceptable.
Two weeks ago, disturbing reports reached Geneva of intense
military harassment of a group of Shias thought to be trapped in the
marshes of Southern Iraq. The Secretary General's Executive
Delegate, Prince Sadruddin, went himself to look into the situation.
He was first denied permission by Iraqi authorities, then stalled
long enough for Iraq's forces reportedly to be withdrawn. Two days
ago, the UN staff, including UN guards, whom Sadruddin left to
remain in the vicinity of the marshes were told by the Government
of Iraq to leave the area because they were no longer needed. This
is a direct contravention of Resolution 688 requirements not to
interfere with UN relief efforts in Iraq. It also contravenes Iraq's
own memorandum of understanding with Prince Sadruddin.
These and other examples provide a clear pattern of Iraq's
intransigent refusal to comply with the UN's requirements under
Resolutions 687, and 688. The Iraqis are well aware that they are
fooling no one, yet their actions continue. Clearly the present Iraqi
regime cannot respond in good faith with the requirements of the
international community. Therefore, the only course left to us and
our allies is to maximize the pressure of the economic sanctions
and to maintain the active possibility that there are other options.
(###)
US Department of State Dispatch,
Vol 2, No 30, July 29, 1991
Title: US Trade Policy
Date: Jul 29, 19917/29/91
Category: Policy Briefs (Gist)
Country: United States
Subject: Trade/Economics
[TEXT]
Background
International trade presents challenges and opportunities for the
United States. Recent US trade policy consistently has focused on
opening foreign markets and promoting free and fair trade among
countries, which fosters growth internationally and in the United
States. The Omnibus Trade and Competitiveness Act of 1988
reinforced these directions in US trade policy. Several features of
the act open markets through multilateral efforts, such as
extending the President's authority on multilateral trade
agreements, implementing the international harmonized tariff
system, and reducing export control barriers. The act also
mandates Administration action under a revised Section 301
procedure in severe cases of unfair trade and makes it somewhat
easier for US firms to receive protection under anti-dumping and
safeguard provisions of US trade laws.
Trade protection has emerged as an issue commanding
national attention in the United States, partly because of concern
over large US trade deficits. The trade deficit was a record $159
billion in 1987 but has since declined to $102 billion in 1990,
because of a US export growth rate almost double that of imports.
Despite the improvement, support continues in Congress for
protectionist legislation.
Benefits of Free Trade
US policy favors free trade because it promotes robust economic
growth by fostering competition and an efficient allocation of
resources. It benefits the importing country by providing cheaper or
otherwise unavailable products and by enhancing competition and
efficiency. US industry depends in many ways on imported
materials, equipment, and components. Exports allow a country to
enjoy expanded markets for its most competitive and productive
industries. US trade policy emphasizes eliminating or reducing
trade barriers in order to increase the opportunities open to US
firms and the volume of trade and real incomes worldwide.
GATT
The General Agreement on tariffs and Trade (GATT) has 102
member countries and is the principal multilateral body on
international trade. A tenfold growth in the volume of international
trade and a lowering of import duties in most industrialized
countries since GATT's creation after World War II illustrate its
success. The average import duty in the United States, which had
been 60% under the Smoot-Hawley Tariff Act of 1930, was 3.4% in
1990 (including the one-third of US imports that entered duty free).
Other industrial countries have made similar reductions. The
current trade negotiations, the Uruguay Round, began in 1986 and
are designed to further liberalize trade. The United States is taking
the lead in extending GATT coverage to new areas, such as services,
trade in intellectual property, and investment.
A key US goal in the Uruguay Round is comprehensive reform
of agricultural trade. Other goals are expanded market access for
goods, greater discipline over trade-distorting subsidies, and
further integration of developing countries into the global trading
system.
Bilateral Agreements
The United States plans to negotiate a free trade agreement (FTA)
with Mexico and Canada to form a North American Free Trade Area.
This will build upon a US-Canada FTA, which went into effect in
1989 and which will eliminate all tariffs by 1998. The US-Canada
FTA also liberalized treatment of services and trade-related
investment measures. A similar US-Israel FTA went into effect in
1986.
Agricultural Trade
The United States accounts for about 40% of the world's volume of
wheat and feedgrains trade. US farm exports were a record $43
billion in 1981. After a decline in the mid-1980s, they climbed to
$40 billion in 1989 but fell, for the first time since 1986, to $39
billion in 1990. The surplus in US agricultural trade declined from
$18 billion in 1989 to $17 billion in 1990. Importing countries'
debt burdens, recession, subsidized agricultural exports from other
countries, and increased production overseas have been factors in
last year's decline in US agricultural exports. Liberalization of
world farm trade is a key US goal in the Uruguay Round.
Trade in Services
The role of banking, insurance, telecommunications, transportation,
construction, and other services in the US economy and
international trade has expanded dramatically in the last 25 years.
Services account for about two-thirds of US GNP and generate about
90% of new US jobs. However, few international agreements cover
trade in services. Extending multilateral rules for such trade is a
major US goal in the Uruguay Round.
Trade and Developing Countries
Trade with developing countries has grown increasingly important
to the United States, comprising about 35% of US exports in the
1980s. US merchandise exports to developing countries were $127
billion in 1990, while US imports totaled $190 billion. The
continued openness of US markets enables developing countries to
earn the foreign exchange needed to pay for US goods and to fulfill
external debt obligations.
GSP
Most of the industrialized countries offer developing countries
programs to encourage export diversification. The United States
allows specific products from developing countries to enter duty
free, with certain limits. In 1990, $11 billion in goods entered the
United States under this program. The Trade and Tariff Act of 1984
extended the Generalized System of Preferences (GSP) until July
1993 and redirected the program toward poorer developing
countries. In 1988, Hong Kong, Singapore, South Korea, and Taiwan
were graduated from the program because they were judged to be
able to compete in the US market without preferences.
Trade Protection
Protectionist policies remain a major impediment to trade. Tariffs
are high in many developing countries. As developed country tariffs
have declined, non-tariff measures have become the main barriers
to trade. These include quotas; orderly marketing and export
restraint agreements; unreasonable or unnecessary quality,
environmental, or health standards; "buy domestic" requirements for
government entities; government subsidies to protect domestic
industry; and government tolerance of private sector collusion to
resist imports.
President Bush has declared that the United States remains
opposed to protectionist policies. He has also warned that
protection is expensive and hurts US exporting industries because
of higher input prices and retaliation by our trading partners.
Relief From Unfair Trade Practices
US law and the GATT permit the Administration to take remedial
action when unfair import competition harms US producers. Anti-
dumping duties can be imposed if foreign companies sell goods at
prices lower than production cost or home market prices.
Countervailing duties may be used to offset foreign government
subsidies. If US producers are being injured by increased imports,
even if the imports are not the result of unfair practices, US law
and the GATT also permit action to restrain those imports
temporarily while US industry adjusts. Under a revised Title II of
the 1974 Trade Act, the US Government also can provide assistance
for people and industries affected during the adjustment period.
Under Section 301 of the 1988 Trade Act, the US Trade
Representative can take action whenever it is determined that a
foreign trade practice is unjustifiable, unreasonable, or
discriminatory and burdens US commerce or denies US producers the
benefits of a trade agreement. The United States can suspend or
withdraw trade concessions and impose duties or other import
restrictions. "Special 301" provisions deal explicitly with the
problems of the protection of intellectual property rights.
Composition of US Merchandise Trade With the World,
1990
US EXPORTS: $393.6 billion
Manufactured goods 80%
Machinery 30%
Transport Equipment 16%
Chemicals 10%
Other Manufactures 24%
Agricultural Products 10%
Crude Materials 10%
US IMPORTS: $495.3 billion
Manufactured goods 79%
Machinery 26%
Transport Equipment 16%
Chemicals 5%
Other Manufactures 32%
Agricultural Products 5%
Crude Materials 16%
Source: Department of Commerce
[TEXT]
US Merchandise Trade With the World, 1990
US Imports: $495.3 billion
European Community 25%
Canada 21%
Latin America 14%
Japan 12%
East Asia NIEs* 10%
Other Countries 18%
US Exports: $393.6 billion
European Community 19%
Canada 18%
Latin America 13%
Japan 18%
East Asia NIEs* 12%
Other Countries 20%
Source: Department of Commerce
*Newly Industrialized Economies--Hong Kong, Singapore, South
Korea, and Taiwan(###)
US Department of State Dispatch,
Vol 2, No 30, July 29, 1991
Title: US Exports: Foreign Policy Controls
Date: Jul 29, 19917/29/91
Category: Policy Briefs (Gist)
Country: South Africa
Subject: Terrorism, Security Assistance and Sales,
Arms Control, Human Rights, Nuclear Nonproliferation,
Trade/Economics
[TEXT]
Background
Exports are a vital part of the US economy. They provide jobs and
enable the US to import goods to meet domestic demand. The US
imposes certain controls, however, to ensure that exports are
consistent with US foreign policy. Most controls apply to equipment
and technology of importance to the economy of the importing
country. They affect less than 5% of the value of current US
exports.
These foreign policy controls are applied worldwide and/or to
specific countries under the authority of the 1979 Export
Administration Act (EAA).
Controls
Terrorism Equipment. Using the authority of EAA Section 6(j), the
Secretary of State has designated Cuba, Iran, Iraq, North Korea,
Libya, and Syria as countries that repeatedly have provided support
for international terrorism. Broad, country-specific export
controls are in place for these countries.
Crime Control Equipment
. These controls
regulate the export worldwide of crime control and detection
instruments and equipment and related technology, except to NATO
member countries and to Japan, Australia, and New Zealand.
Generally, licenses are issued unless the United States has human
rights concerns about the government of the importing country.
Regional Stability.
Exports of equipment
used to manufacture military arms and equipment and some military
transportation equipment are reviewed to ensure that such exports
would not contribute to the destabilization of the region or country
of destination.
Anti-Apartheid.
The United States prohibits
the export to South Africa of all military and police equipment,
computers to apartheid-enforcing government agencies, facilities
for nuclear production and utilization, and
all items covered by the UN mandatory arms embargo. (The
Department of the Treasury prohibits US importation of 13 product
categories from South Africa, including all agricultural produce and
products, iron, steel, uranium, and gold in all forms.)
Missile Technology
. The United States
assists other countries in the peaceful uses and exploration of
space but seeks to halt the
development of weapons-delivery systems. On a worldwide basis,
the US controls the export of dual-use equipment and materials that
are commercial in nature but also useful in the development of
missile systems.
Chemical/Biological Weapons
. Licenses are
required worldwide (except for the NATO members, plus Australia,
Austria, Ireland, Japan, New Zealand, and Switzerland) for the
export of 50 chemical precursors useful in the production of
chemical weapons and the export of a broad range of bacteria, fungi,
protozoa, toxins, viruses, and viroids. All are prohibited to Iran,
Iraq, Libya, and Syria. Licenses are required to specified regions
and states for certain dual-use equipment that might be relevant to
chemical or biological weapons programs.
Nuclear Controls
. The United States assists
other countries to use atomic energy for peaceful purposes but also
seeks to halt the spread of nuclear weapons. Thus, the US controls
exports of goods or technology that, if misused by the recipient
country, could contribute to the production of nuclear explosive
devices. The Atomic Energy Act of 1954, as amended by the 1978
Nuclear Non-Proliferation Act, establishes the controls. Before
permitting an export, the US Government reviews the item's
proposed use, whether the government of the purchasing country has
signed the nuclear Non-Proliferation Treaty, and whether the US has
acceptable assurances that the item or nuclear material produced
from it will not be diverted to develop nuclear weapons.
Short Supply
. Controls occasionally are
necessary to protect the domestic economy from an excessive drain
on scarce materials. Congress has legislated restrictions on the
export of crude oil and natural gas, refined petroleum and gas
products, helium, ammonia, unprocessed Western red cedar logs, and
horses for export by sea (to prevent unauthorized slaughter abroad).
Supercomputers
. For foreign policy reasons,
the US requires the individual licensing of supercomputer exports
worldwide.
Treasury Department Controls
The Treasury Department embargoes most trade and financial
transactions with Cambodia, Cuba, Iraq, North Korea, Libya, and
Vietnam. It also controls some financial transactions with South
Africa and regulates certain imports from Iran and South Africa.
Guidance for Exporters
Exporters should consult the US Export Administration regulations
(copies are available from the US Government Printing Office, 202-
783-3238--stock no. 903-014-00000-8) and the Commerce
Department's Office of Export Licensing, Exporter Counseling
Division, 202-377-4811.
For information on the Treasury Department's trade and
financial controls on Cambodia, Cuba, Iran, North Korea, Libya,
South Africa, and Vietnam, exporters should call the Office of
Foreign Assets Control, US Department of the Treasury, 202-566-
2701.(###)
US Department of State Dispatch,
Vol 2, No 30, July 29, 1991
Title: US Exports: Stragetic Technology Controls
Date: Jul 29, 19917/29/91
Category: Policy Briefs (Gist)
Subject: Military Affairs, Trade/Economics
Background
The export of strategically significant technology to former
Warsaw Pact and certain other countries is controlled in order to
deny them access to technology that would increase their military
effectiveness. Because modern weapons depend on many advanced
supporting technologies that have both civilian and military ("dual-
use") applications, some commercial technology transfers could
undermine US national security. Consequently, under the Export
Administration Act, the Commerce Department must issue a license
before any such dual-use technology or equipment can be exported
from the United States to a potential adversary. US officials must
ensure that transfers of dual-use technology do not occur under the
guise of civilian projects.
The US, acting alone, cannot effectively control strategic
technology because it is not the sole source of many of these
products. International cooperation, therefore, is required.
COCOM
The Coordinating Committee for Multilateral Export Controls
(COCOM), established in 1949, is important in facilitating
multilateral cooperation to control strategic goods and technology.
Its 17 members are Australia, Belgium, Canada, Denmark, France,
Germany, Greece, Italy, Japan, Luxembourg, Netherlands, Norway,
Portugal, Spain, Turkey, UK, and the United States. COCOM is not
based on a treaty or executive agreement. It operates by informal
agreement and according to the rule of unanimity. COCOM
agreements are implemented by each member on a national basis.
COCOM has no formal relationship to NATO.
A permanent COCOM secretariat is located in Paris. All 17
member countries are represented by permanent delegates. These
representatives are joined routinely by teams of technical experts
and policy-level personnel from their countries during substantive
meetings and negotiations on new or revised export controls.
Major Functions of COCOM
Member countries cooperate in three major areas:
-- Publishing national control lists of embargoed equipment
(the lists are grouped into three categories--dual-use, atomic
energy use, and direct military use) and enacting effective export
control systems;
-- Considering proposed exports of specific embargoed items
from member countries to proscribed countries; and
-- Harmonizing national licensing practices for strategic
exports and coordinating export control enforcement activities.
Developments at May 1991 Meeting
Since 1981, a series of high-level COCOM meetings has set policy
guidelines to ensure COCOM's effectiveness. At the meeting on May
23, 1991, COCOM members adopted a completely new list of
controls on dual-use goods and technologies. This International
Industrial List (IIL) is designed to cover only the most strategic
goods and technologies. The agreement concluded an intensive year-
long negotiation initiated in response to President Bush's May 1990
call for a comprehensive modernization of COCOM to reflect the
changing strategic environment brought about by the dramatic
developments in Eastern Europe and the Soviet Union.
The new IIL will go into effect on September 1, 1991. It is
more than 50% shorter than the dual-use Industrial List that it
replaces. The new computer controls, for example, should cut US
export license requests for such goods by about 70%.
The IIL will ensure that COCOM does not block legitimate civil
trade. At the same time, it will continue to protect truly strategic
technologies that, if acquired by the proscribed countries, would
qualitatively undermine the West's strategic technological edge
that is crucial to our security.
General features of the IIL include: limiting of coverage to the
specific items cited in the list; alignment of control parameters
with current industry technical standards; decontrol of readily
available "off-the-shelf " items in everyday commerce; and
improved harmonization with the standard international customs
nomenclature system.
To ensure that COCOM's new controls truly constitute a
"higher fence around fewer items," all member governments agreed
to implement equal and effective control enforcement provisions,
the so-called Common Standard, by January 1, 1992.
The IIL also provides wide-ranging favorable export licensing
treatment for East European countries that represent a lesser
strategic threat--Poland, Czechoslovakia, and Hungary. This
preferential access was agreed to at the June 1990 high-level
meeting and enacted early in 1991. These countries have
established Western-style export control systems and agreed not to
transfer COCOM-controlled technology to prohibited destinations.
They now receive a presumption of approval for all but a few
controlled dual-use items. In addition, the May 1991 high-level
meeting expanded this preferential treatment by allowing all
telecommunications equipment (except encryption gear) to go to
these countries at national discretion, without prior COCOM review.
Relations With Non-COCOM Countries
COCOM tries to inhibit the export or re-export of embargoed
commodities from non-COCOM countries to the countries of concern.
The US deals with this problem in part by requiring licenses to re-
export US-origin embargoed products. COCOM members discuss
cooperation on export controls formally and informally with a
number of non-COCOM countries. Some non-member countries have
adopted export control systems similar to those of COCOM; in
return, they receive certain licensing benefits.
Munitions Controls
Commercial export of arms and other defense articles and services
is controlled in the US by the Arms Export Control Act and the
International Traffic in Arms Regulations (ITAR). Export licenses
must be obtained from the State Department's Office of Defense
Trade Control (formerly the Office of Munitions Control), 703-875-
6644. Licensing decisions for munitions exports are based on
compliance with the ITAR and US arms control, national security,
and foreign policy considerations. (###)
US Department of State Dispatch,
Vol 2, No 30, July 29, 1991
Title: Gist: International Investment
Date: Jul 29, 19917/29/91
Category: Policy Briefs (Gist)
Country: United States
Subject: Trade/Economics, International Organizations
[TEXT]
US Policy
Direct investment flows promote economic growth and development
and benefit the investing and host country alike. Because freely
functioning markets ensure the most efficient and productive
allocation of capital, the US Government promotes market-oriented
international investment free of discriminatory treatment and
opposes measures by other governments that impede or distort
investment and related trade flows. US policy continues to be
guided by the September 1983 "Statement of International
Investment Policy" by President Reagan.
The United States welcomes foreign investment and extends
to it the same non-discriminatory treatment that it seeks for US
investors abroad. An indication of the favorable US environment for
investment is the fact that foreign direct investment grew from
$68 billion at the end of 1980 to more than $400 billion at the end
of 1989. (For official US accounts, foreign direct investment in the
United States is defined as ownership by an organization or person
of 10% or more of the voting stock of a US-incorporated firm.)
In 1976, the Organization for Economic Cooperation and
Development (OECD) issued a declaration and several related
documents on investment. This benchmark consists of
understandings on national treatment, incentives and disincentives,
and guidelines for multinational enterprises. In 1984, OECD
members strengthened another agreement liberalizing capital flows
and the right of establishment of foreign firms. The United States
seeks to strengthen the understanding on national treatment and to
encourage broader support for these principles by other countries.
The United States aims to place discipline on the use of
trade-related investment measures in the current Uruguay Round of
multilateral trade negotiations under the General Agreement on
Tariffs and Trade (GATT). These government-imposed measures
include local content, export performance, technology transfer, and
similar requirements that distort trade and investment flows to the
detriment of the United States and the global economy.
The US objective, both bilaterally and multilaterally, is to
ensure high international standards of protection for intellectual
property. For example, the US Government is seeking to bring the
trade-related aspects of intellectual property under GATT
discipline and to promote international standards for the protection
of biotechnology, computer software, and semi-conductor chips.
US Programs
The United States has a bilateral treaty program to facilitate
investment by establishing a framework of standards in key areas
such as treatment of investment, expropriation and compensation,
transfer of funds, and dispute settlement. It has negotiated and
signed such treaties with 13 countries in Africa, Latin America,
Eastern Europe, and Asia; eight are in force. Negotiations continue
with other countries.
The United States has a number of treaties of friendship,
commerce, and navigation that contain investment provisions on
national and most-favored-nation (MFN) treatment, expropriation,
and transfers. US embassies provide services and assistance to
American investors and help ensure that their investments are
treated in accordance with bilateral treaty obligations and
international law.
Principles of International Investment
The best way to foster a liberal market-oriented international
investment system is by widespread adherence to the following
four principles.
National Treatment
. Foreign investors should
be treated no less favorably in like situations than domestic
enterprises. Exceptions should be limited to those required to
protect national security and related interests.
Most-Favored-Nation Treatment
. Foreign
investors from one country should be accorded treatment no less
favorable than the most favorable treatment granted to foreign
investors from any other country.
Protection of Investors' Property.
This is
necessary to maintain a proper international investment system.
Under international law, expropriation of investment is considered
appropriate only if it is done for a public purpose; is accomplished
under due process of law; is non-discriminatory; respects previous
contractual arrangements; and is accompanied by prompt, adequate,
and effective compensation.
Protection of Intellectual Property.
International recognition of patents, trademarks, copyrights, and
other proprietary rights to technology is needed to reward
innovation and foster investment flows. (###)
US Department of State Dispatch,
Vol 2, No 30, July 29, 1991
Title: Agriculture in US Foreign Policy
Date: Jul 29, 19917/29/91
Category: Policy Briefs (Gist)
Country: United States
Subject: Cultural Exchange, Trade/Economics
[TEXT]
Background
Expansion of agricultural exports is an important component of US
trade policy. The two major goals of US international agricultural
policy are:
-- A more open, equitable international trading environment
to improve export opportunities for US agricultural products, as
well as those of emerging democracies and developing countries;
and
-- Greater cooperation on food aid, security, and agricultural
development in developing countries.
The United States participates in global efforts to address
food issues and is a member of the UN Food and Agricultural
Organization, the World Food Program, and the International Fund
for Agricultural Development. It also belongs to these commodity
organizations: International Coffee Organization, International
Sugar Organization, International Wheat Council, International
Cotton Advisory Committee, International Institute for Cotton, and
International Jute Organization.
US Agricultural Trade
The United States is the leading exporter of coarse grains and
soybeans and is a large supplier of wheat, cotton, meat, and
horticultural products. Major competitors are the European
Community and several other developed and developing countries. In
1989 (the latest year for which world data are available), the US
world market share was 15%, compared with 12% in 1987.
The combination of relatively strong agricultural exports and
relatively weak agricultural imports has resulted in more than
three decades of positive US agricultural trade balances. In FY
1990, agricultural products accounted for 11% of US exports and
earned $40 billion, one of the highest levels in history but still
below the FY 1981 peak of almost $44 billion. The value of FY 1990
exports dropped from previous year levels for key commodities such
as grains and oilseeds but rose significantly for fruit and poultry.
The United States imports agricultural products from
countries throughout the world. US imports in FY 1990 totaled
$22.5 billion. Coffee was the largest single import in terms of
value.
Challenges to International Agricultural Policy
The volume of world trade in agriculture rose in the 1980s, but the
unit value (price per ton) of traded commodities declined slightly.
World food trade totaled $300 billion in 1989. Worldwide
government policies and support programs cushioned agricultural
producers from the need to adjust to market changes caused by
improved technology and slower growth in demand. The results
were chronic surpluses and huge government expenditures to
support agriculture.
However, the increased market orientation of US agricultural
production resulted in reduced US spending on farm programs from
the 1989 level of $10.5 billion to $6.5 billion in 1990. The 1990
farm act aims to further increase market orientation, to maintain
farm income growth by expanding exports, and to protect the
environment. However, without a change in agricultural policies by
all major producers, the problems caused by oversupply, low prices,
and competition between the United States and other governments
that subsidize exports have begun to re-emerge.
Agricultural Trade Policy
The Bush Administration places a high priority on resolving
agricultural problems at the multilateral and bilateral levels. The
United States has promoted the need for agricultural reform through
the Organization for Economic Cooperation and Development and,
more importantly, through the Uruguay Round multilateral trade
negotiations under the General Agreement on Tariffs and Trade. The
United States was instrumental in putting agriculture on the agenda
for the round and has worked to achieve agreement on substantial,
comprehensive reform of agriculture as a key to the negotiations.
In April 1989, the Uruguay Round trading partners successfully
concluded a mid-term agreement on agriculture specifying the
objectives and timetable for multilateral agricultural negotiations.
In October 1990, the United States presented a comprehensive
proposal for substantial cuts in the three key areas of internal
supports, border protection, and export subsidies.
The Uruguay Round negotiations were suspended in December
1990 after failure to agree on reform of agricultural policies in
those three areas. The negotiations resumed in February 1991 when
all participants agreed to negotiate "specific binding commitments"
on domestic supports, market access, and export competition, and
to reach an agreement on sanitary and phytosanitary (plant health)
issues.
Bilaterally, the United States aims to improve market access
for US products. Bilateral negotiations or other dispute settlement
procedures often are in progress on a variety of agricultural
commodities at any given time. For wheat and certain other
commodities, the United States selectively provides export
subsidies through the Export Enhancement Program to compete with
subsidized agricultural exports from other countries and to put
pressure on those countries to negotiate toward a freer and fairer
agricultural trade system.
US Export Programs
The Department of State supports US Department of Agriculture
(USDA) trade promotion programs, particularly through US
embassies, as important means of increasing agricultural exports.
Commodity Credit Corporation (CCC) credit guarantees are the
largest US agricultural export program. In FY 1990, US agricultural
exports registered under CCC credit guarantees were $4.3 billion.
Algeria, Egypt, Iraq, Mexico, Pakistan, South Korea, and Turkey
accounted for almost 85% of the total.
PL 480 (Food for Peace) aid is a long-term market
development, food assistance, and humanitarian relief tool and a
means of meeting economic development and other foreign policy
goals. Several countries, including Brazil, South Korea, Turkey, and
Yugoslavia, have "graduated" from the PL 480 program to become
large commercial customers for agricultural products formerly
provided on concessional credit.
Cooperator Market Development Program joins more than 29
non-profit agricultural commodity associations with the USDA's
Foreign Agricultural Service in market development activities
throughout the world. The program enables the US Government and
private industry to pool resources so that each gets more mileage
out of these activities.
Market Promotion Program, authorized in the 1990 farm act at
a level of $200 million annually, helps US producers increase US
exports through consumer and trade promotions, media advertising,
educational programs, and technical services. More than 45 non-
profit organizations, producers cooperatives, and other private
firms have been allocated funds in FY 1991.
Export Enhancement Program (EEP) is primarily a trade policy
tool and helps US exporters compete with subsidized competition in
selected countries, particularly the European Community. Exporters
who have completed sales to targeted countries are awarded
bonuses in the form of surplus CCC commodities. EEP bonuses
totaled $312 million in FY 1990 and were more than $410 million in
FY 1991 through April 15, 1991.
US and Foreign Direct Investment, 1989 ($ billion)
Total US Direct Investment Abroad: $373.4 billion
Canada: 66.9
United Kingdom: 60.8
Germany: 23.1
Switzerland: 20
Netherlands: 17.2
Japan: 19.3
Other: 166.2
Source: US Department of Commerce
Total Foreign Direct Investment In the United States: $400.8
billion
United Kingdom: 119.1
Japan: 69.7
Netherlands: 60.5
Canada: 31.5
Germany: 28.2
Other: 91.7
Source: US Department of Commerce
(###)
US Department of State Dispatch,
Vol 2, No 30, July 29, 1991
Title: Developing Country Debt
Date: Jul 29, 19917/29/91
Category: Policy Briefs (Gist)
Subject: Trade/Economics, Development/Relief Aid
[TEXT]
Background
The ability of many developing countries to pay their foreign debt
deteriorated in the 1980s. The United States and other creditors
responded by developing a flexible, case-by-case approach. The
United States has encouraged debtors to undertake economic reform
and has persuaded banks, governments, and international financial
institutions to support such efforts. In 1985, the United States
introduced a debt strategy designed to improve and sustain growth
in debtor countries (the Baker Plan). In March 1989, US Treasury
Secretary Nicholas Brady outlined proposals for strengthening the
strategy. In 1990, the United States complemented the Brady Plan
with efforts to reduce official (government-to-government) debt
and to encourage other creditor governments to do the same.
Origins of the Crisis
Several factors contributed to the debt crisis of the early 1980s.
Inappropriate domestic policies in many debtor countries resulted
in overvalued exchange rates, large budget deficits, heavy
investment in inefficient public enterprises, and excessive
restrictions on trade and investment. Many countries borrowed to
promote consumption rather than build infrastructure or productive
enterprises. Commercial banks often were lax in their oversight as
they lent large amounts of "petrodollars."1 External shocks such as
the 1979 oil price jump, an increase in international interest rates,
a drop in commodity prices, and recession in developed countries
also hurt developing countries. Many borrowers relied on short-
term, variable-rate loans that made them vulnerable to rising
interest rates.
Baker Plan
In 1982, the United States and other creditors developed packages
to deal with the immediate cash-flow problems of major debtors
arising from commercial debt. 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 poor economic growth.
In October 1985, the United States proposed the Program for
Sustained Growth (Baker Plan), a broad, long-term strategy to
restore creditworthiness of debtor countries by promoting
sustainable economic growth. The program's main element,
structural reform, was the pursuit of comprehensive economic
policy changes leading to growth. A second element involved new
commercial bank lending. The program also relied on new credits
from international financial institutions that were linked more to
economic reforms. These reforms 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. The Baker Plan helped
developing countries recognize that long-term growth requires a
commitment to market-oriented policies.
Despite progress made under the Baker Plan, low investment
and capital flight continued, and commercial banks declined to
provide new loans in a timely fashion. US banks reduced their
developing country debt risk by adding to bank capital and selling or
swapping some debt. An array of voluntary debt reduction
mechanisms sprang up. Many debtor countries applied economic
reforms inconsistently and failed to achieve adequate growth on a
sustained, non-inflationary basis.
Brady Plan
In March 1989, Secretary Brady outlined a series of proposals to
strengthen the US debt strategy. His proposals, while building on
the Baker strategy, recognize the role of voluntary debt and debt
service reduction as well as new commercial bank lending to
provide financial support for economic reforms. The Brady approach
also places more emphasis on new domestic and foreign investment
and the repatriation of domestic capital.
Dramatic progress has been made under the Brady Plan. Seven
countries (Chile, Costa Rica, Mexico, Morocco, Philippines, Uruguay,
and Venezuela) have reached agreements that have debt-reduction
options. Nigeria has a preliminary agreement, and bank negotiations
are continuing with Argentina, Bolivia, Brazil, Ecuador, and Poland.
Some countries, notably Mexico and Chile, are making progress
toward attracting private foreign capital by their ability to regain
access to international capital markets. The International Monetary
Fund and the World Bank play a central role in this strategy by
encouraging debtor policy reforms and catalyzing financial support.
Official Debt
The success of the enhanced debt strategy in gaining voluntary,
market-based reduction of commercial debt has shifted some
emphasis from commercial to official debt. Creditor governments
have supported country reform efforts by rescheduling official
bilateral debt, both interest and principal, through the Paris Club,
an informal affiliation of creditor governments. In 1989, the United
States announced a program to forgive up to $1 billion in economic
assistance loans to Sub-Saharan African countries and other heavily
indebted, low-income countries that are pursuing economic reform.
The United States has forgiven more than $650 million owed by 15
African countries and is expected in 1991 to forgive $292 million
owed by Bangladesh. The US Congress has provided authority for
similar action on food assistance debt owed to the United States by
relatively least developed countries.
In fall 1988, the Paris Club implemented the Toronto
economic summit mandate to provide debt relief to Sub-Saharan
African countries. The Toronto terms offer three options for
providing debt relief: debt reduction, extended maturities, or
concessional interest rates. In 1990, these terms were extended to
certain other poor countries on a case-by-case basis.
In response to a mandate agreed at the Houston economic
summit in July 1990, the Paris Club devised more generous terms
for lower middle-income countries--those severely indebted (i.e.,
debt more than 50% of GNP) but not poor enough to qualify for the
Toronto terms. Congo, El Salvador, Honduras, Morocco, and Nigeria
have received debt reschedulings on such terms, which extend the
repayment period to 20 years with a 10-year grace period for
official development assistance (ODA) and 15 years with an 8-year
grace period for non-ODA loans.
In April 1991, the Paris Club agreed to a special rescheduling
designed to reduce Poland's debt by 50% in the context of a multi-
year economic restructuring agreement. The United States, citing
the need to provide extraordinary assistance to Poland in its
transition from a centrally planned to a free market economy,
approved a 70% reduction. Creditor countries also have committed
to a generous reduction of Egypt's official debt. The United States
forgave Egypt's military debt of $6.7 billion at the end of 1990.
Enterprise for the Americas Initiative
In June 1990, President Bush proposed the Enterprise for the
Americas Initiative (EAI), an integrated program to increase free
and fair trade, promote capital flows, ease debt burdens, and
improve the environment. The EAI supports the process of
democratic change and growing economic reform in the Western
Hemisphere. To reinforce incentives for economic reform, the
United States proposed to reduce existing non-military debts to the
United States of Latin American and Caribbean countries that:
-- Undertake macroeconomic and structural reforms;
-- Liberalize their investment regimes; and
-- Have negotiated agreements with commercial creditors (if
commercial debt is a sufficiently large part of total external debt).
Interest payments on new, reduced development assistance
and food aid debt would be made in local currency into an
environmental fund in each country and used to support
environmental projects identified by public/private local
committees. A portion of non-concessional debt to the US Export-
Import Bank and the Commodity Credit Corporation would be sold to
facilitate investment and environmental or development projects.
Developing Country Debt, 1990 ($ billion)
Brazil: 115
Mexico: 88
India: 60
Argentina: 60
Indonesia: 53
Poland: 42
Nigeria: 35
Egypt: 32
Philippines: 29
Subtotal: 514
Others: 836
Total 1,350
Source: World Bank
Developing Country Debt by Region, 1990
Western Hemisphere: 31%
Asia: 28%
Africa: 17%
Middle East: 14%
Europe: 10%
Source: World Bank (###)
US Department of State Dispatch,
Vol 2, No 30, July 29, 1991
Title: Oil and Energy
Date: Jul 29, 19917/29/91
Category: Policy Briefs (Gist)
Subject: Science/Technology, Resource Management,
Environment
[TEXT]
US international energy policy seeks to ensure adequate supplies at
reasonable prices for America and its friends and allies. It
emphasizes reliance on free market mechanisms, international
cooperation, and strategic oil stocks for use in time of severe
supply disruptions.
US energy policy also is concerned with the impact of energy
use on environmental objectives, including greenhouse gas emission
reductions. The United States has taken the lead in adopting
prudent energy strategies, such as the Clean Air Act and the
National Energy Strategy, which benefit the economy and the
environment.
Background
Saddam Hussein's brutal invasion of Kuwait in August 1990 reduced
free world oil production by about 9%. Because world supply and
demand sets the price of oil, prices rose dramatically for all
consumers. To handle the shortage, the United States urged other
major oil-producing countries to increase output and worked within
the International Energy Agency (IEA) to coordinate planning among
industrial countries. When war began in January, the IEA's member
countries made available 2.5 million barrels per day of oil from
strategic stocks to the international market, restoring market
confidence that supplies would remain ample.
Although the oil price shocks of the 1970s contributed to high
inflation and unemployment, the United States is less vulnerable to
oil shocks today for several reasons. First, energy accounts for a
smaller share of GNP, so the economy is less sensitive to energy
price changes. Second, consumers use energy more flexibly, and oil
substitutes are more readily available. Third, more consistent
macroeconomic policies allow oil price shocks to pass through the
economy with only minor impact on long-run economic growth.
In the 1970s, price controls and rationing schemes magnified
the negative impact of oil price shocks. In the 1980s, by contrast,
oil and gas prices have been largely decontrolled. Free market
policies have prompted US consumers to use less energy and in more
flexible ways. Market-driven developments in conservation and
energy technology have reduced energy use. And unshackled markets
have increased energy investment and the diversity of energy
supplies, further adding to the flexibility of energy use. Flexible,
market-based pricing makes adjustment to oil shocks much easier.
US and world dependence on insecure sources of oil supplies
from the Persian Gulf, however, is expected to grow from about 28%
today to more than 40% by 2010. Moreover, 65% of all oil reserves
are in this volatile region. So despite improvement, energy security
is a major concern.
"Energy independence" is no solution for America. Price
shocks would affect the United States even if it and its Western
Hemisphere neighbors produced all the energy they consumed. In the
short term, the major challenge is reducing vulnerability to shocks.
Over the long term, energy security is best enhanced by expanding
and diversifying US sources of oil and energy supplies and finding
solutions to the sources of instability in key producing regions. The
Bush Administration is pursuing domestic and foreign policy
initiatives to address those issues.
US Energy Policy Initiatives
The National Energy Strategy (NES), announced in February 1991,
will further open and deregulate US energy markets, improve
efficiency and flexibility in energy use, and support diversification
of world energy supplies. Specifically, it will:
-- Reduce domestic oil demand and increase domestic oil
production;
-- Maximize the diversity of global conventional energy
resources;
-- Foster use of alternative transportation fuels;
-- Increase electricity produced from renewable sources such
as solar, hydropower, and geothermal; reduce growth in electricity
demand; and increase the use of nuclear power.
The NES, building on major environmental laws such as the
Clean Air Act, the Clean Water Act, the Resource Conservation and
Recovery Act, and other measures, will help reduce air and water
pollution from energy-use and minimize the growth in energy-
related pollution. The keys are development of new, advanced
energy efficient technology and improved energy use practices,
including the use of clean coal technology, natural gas, and nuclear
energy. In improving environmental quality, the NES will:
-- Hold US emissions of greenhouse gases at or below 1990
levels after the year 2000;
-- Improve air quality; and
-- Mitigate solid waste problems from burning coal.
Internationally, US energy policy stresses a collective
approach to energy security issues centered on the 21-member IEA
and discussions with a wide range of producing countries. Just as
at home, the cornerstone of US international energy policy is the
extension of market mechanisms. The United States works toward
more increased trade in energy, deregulation of foreign energy
markets, and the removal of barriers to international energy
investment.
The US Government engages in vigorous and extensive
discussions with energy producing countries and all other oil sector
participants to improve understanding and technical cooperation.
These efforts, plus America's strong ties with Saudi Arabia, the
United Arab Emirates, and Venezuela, were instrumental in
promoting their quick increase in oil production during the Gulf
crisis. The United States seeks to further expand the scope and
frequency of such energy discussions, with the aim of encouraging
increased investment for energy development. (###)