US Department of State Dispatch Supplement VOL. 4, NO 2

Title:

Assistance to Russia and Other New Independent States of the Former Soviet Union

Yeltsin Clinton Christopher Bentsen Talbott Miyazawa Source: Office of Public Communication, Bureau of Public Affairs Description: Collection of Material Relating to the Vancouver Summit and Tokyo G-7 Ministerial Meeting, April 1993 Date: May, 15 19935/15/93 Category: Speeches, Testimony, Statements Category: Fact sheets Region: Eurasia, Europe, East Asia, North America Country: Armenia, Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan, Georgia, Japan, United States Subject: Military Affairs, Development/Relief Aid, Trade/Economics, International Organizations, Cultural Exchange, Arms Control ARTICLES IN THIS ISSUE: [Review the Table of Contents in F4] Vancouver Summit: 1. Vancouver Declaration -- President Clinton, Russian President Yeltsin 2. New Democratic Partnership Between The United States and Russia -- President Clinton, Russian President Yeltsin 3. Fact Sheets: Vancouver Summit -- US Assistance to Russia 4. Fact Sheet: Safe, Secure Dismantlement (SSD) Initiatives With Belarus, Kazakhstan, and Ukraine 5. Fact Sheet: START I and NPT (Lisbon Protocol) Tokyo G-7 Ministerial Meeting: 6. News Conference of April 12 -- Secretary Christopher 7. International Community Should Provide Russia "Help for Self- Help" -- Japanese Prime Minister Miyazawa 8. Bilateral and Multilateral Aid for Russia -- Secretary Christopher, Treasury Secretary Bentsen 9. G-7 Chairmen's Statement on Support for Russian Reform 10. Supporting Russia's Historic Struggle -- Secretary Christopher, Treasury Secretary Bentsen 11. US Must Lead a Strategic Alliance With Post-Soviet Reform -- Strobe Talbott 12. Assistance to Russia and the Foreign Affairs Budget -- Secretary Christopher [TEXT]

ARTICLE 1: President Clinton, Russian President Yeltsin: Vancouver Declaration

[Text of joint statement released by the White House, Office of the Press Secretary, Washington, DC, April 4, 1993] Having met in Vancouver, Canada on April 3-4, President Bill Clinton of the United States of America and President Boris Yeltsin of the Russian Federation declared their firm commitment to a dynamic and effective U.S.-Russian partnership that strengthens international stability. The two presidents approved a comprehensive strategy of cooperation to pro-mote democracy, security, and peace. President Yeltsin stressed his firm commitment to fostering democratization, the rule of law, and a market economy. As the United States moves to reinvigorate its own economy, President Clinton assured President Yeltsin of active American support for the Russian people as they pursue their own chosen course of political and economic reform. The Presidents agreed on a new package of bilateral economic programs and measures to address Russia's immediate human needs and contribute to the building of necessary structures for successful transition to a market economy. They recognized the critical importance of creating favorable external conditions in which the Russian economy can realize its maxi-mum potential. In this connection, the Presidents expressed their determination to promote access to each other's markets, cooperation in defense conversion, removal of impediments to trade and investment, and resumption of U.S. food exports to Russia on a stable long-term basis. President Yeltsin informed President Clinton about the Russian program of economic reforms. In particular, President Yeltsin stressed such key questions of the Russian reform as the necessity of combatting inflation and achieving financial stabilization by improvement of the banking system. He also emphasized the importance of privatization, encouragement of entrepreneurship, structural policy, and social support. In this context, the Presidents discussed the role of the international community in supporting specific elements of the reform program. The Presidents agreed that Russia's harmonious integration into the community of democratic nations and the world economy is essential. They therefore called for accelerated G-7 development of substantial and effective new economic initiatives to support political and economic reform in Russia. In this connection, the Presidents welcomed the extraordinary meeting of the foreign and finance ministers of the G-7 countries and the Russian Federation scheduled for April 14-15 in Tokyo. Presidents Clinton and Yeltsin also expressed their satisfaction with the successful conclusion of negotiations in Paris on the rescheduling of the international debt of the former USSR. The United States announced its support for Russia's intention to become a full member of GATT [General Agreement on Tariffs and Trade] and to begin, in the near future, official talks on the conditions of Russia's accession to GATT. The Presidents agreed to give fresh impetus to development of the U.S.-Russian relationship in all its dimensions. To coordinate and direct this effort and to activate a comprehensive and intensive dialogue, they agreed on measures to improve the mechanism for mutual consultations. In particular, working groups will be set up involving high-level officials of both governments with broad authority in the areas of economic and scientific and technological cooperation. The Presidents agreed to establish a United States- Russian Commission on technological cooperation in the fields of energy and space. They intend to designate Prime Minister Chernomyrdin and Vice President Gore to head this commission. The leaders of the United States and Russia attached great importance to the prevention of the proliferation of weapons of mass destruction and their delivery systems. They reaffirmed their determination to strengthen the Nuclear Non-Proliferation Treaty (NPT), make it universal, and give it an unlimited duration. The Presidents stressed their expectation that all countries of the former USSR which are not already NPT members will promptly confirm their adherence to the treaty as non-nuclear weapon states. They urged the Democratic People's Republic of Korea to comply fully with its IAEA [International Atomic Energy Agency] safeguards obligations, which remain in force, and to retract its announcement of withdrawal from the NPT. The Presidents agreed that efforts of the United States and Russia will be directed toward the entry into force of the START I Treaty and the ratification of the START II Treaty as soon as possible. They affirmed that the United States and Russia intend to cooperate, on the basis of their mutual interest, in environmentally safe elimination of nuclear forces pursuant to relevant arms control agreements, in construction of a storage facility for nuclear materials and in the controlling, accounting, and physical protection of nuclear materials. The United States reiterated its readiness to provide assistance to Russia for these purposes. The Presidents called for prompt conclusion, on mutually acceptable terms, of the negotiations on an agreement on the conversion and sale for peaceful purposes of nuclear materials removed from nuclear weapons. The Presidents underscored their determination to broaden interaction and consultations between Russia and the United States in the areas of defense and security. They instructed their Ministers of Defense to explore further possibilities in that direction. The Presidents noted the progress achieved at the recent United States-Russian talks on chemical weapons in Geneva. They welcomed the progress made in preparing the protocols necessary to submit the "Agreement on Destruction and Non-Production of Chemical Weapons" of June 1, 1990, for approval by the legislative bodies of the Russian Federation and the United States. They also welcomed progress achieved in developing agreement on the preparation and implementation of the second phase of the Wyoming Memorandum of Understanding of September 23, 1989, regarding a bilateral verification experiment and data exchange related to prohibition of chemical weapons. The Presidents agreed that it is necessary to achieve the earliest possible resolution of questions about cooperation in non- proliferation of missiles and missile technology in all its aspects, in accordance with the principles of existing international agreements. They also decided to work together to remove obstacles impeding Russia's access to the global market in high technology and related services. The Presidents agreed that negotiations on a multilateral nuclear test ban should commence at an early date, and that their governments would consult with each other accordingly. Mindful of their countries' responsibilities as permanent members of the UN Security Council, the Presidents affirmed that U.S.-Russian cooperation is essential to the peaceful resolution of international conflicts and the promotion of democratic values, the protection of human rights, and the solution of global problems, such as environmental pollution, terrorism, and narcotics trafficking. The United States and Russia stressed their determination to improve the effectiveness of peacemaking and peacekeeping capabilities of the United Nations, the CSCE [Conference on Security and Cooperation in Europe], and other appropriate regional organizations. Recognizing that the problem of mistreatment of minorities and ethnic communities is increasingly a source of international instability, the Presidents stressed the critical importance of full protection for individual human rights, including those of ethnic Russian and all other minorities on the territory of the former Soviet Union. They affirmed their commitment to the peaceful resolution of conflicts in that region on the basis of respect for the independence, territorial integrity, and security of all member states of the UN and the CSCE. The Presidents announced their intention to expand and improve their joint work in the area of environmental protection. They agreed to coordinate on joint ecological measures to be taken and research to be done, and on support for financing agreed programs. The Presidents agreed that the level of mutual openness achieved makes it possible to proceed with new forms of cooperation in science and technology, including programs in the field of outer space. The two countries will further develop bilateral cooperation in fisheries in the Bering Sea, the North Pacific, and the Sea of Okhotsk, including for the purpose of preservation and reproduction of living marine resources and of monitoring the eco-system in the Northern Pacific. The Presidents further agreed to expand significantly their contacts, exchanges, and cooperation in the areas of culture, education, the humanities, and the mass media. The joint efforts of both countries have succeeded in establishing a new character for Russian-American relations. The Presidents reaffirmed the principles and provisions of the Camp David Declaration of February 1, 1992, and the Charter of U.S.-Russian Partnership and Friendship of June 17, 1992, as a basis for relations between the two countries. Presidents Clinton and Yeltsin expressed their deep appreciation to Prime Minister Mulroney and the people of Canada for hosting their meeting in Vancouver. With a view to accelerating the development of U.S.-Russian partnership, the Presidents agreed to meet regularly at the summit level. President Yeltsin invited President Clinton to visit Russia. President Clinton accepted the invitation with appreciation.

ARTICLE 2: President Clinton, Russian President Yeltsin: New Democratic Partnership Between The United States and Russia

[Opening statements at news conference following the US-Russian summit in Vancouver, Canada, April 4, 1993] President Clinton: Good afternoon. I have just completed 2 days of intensely productive discussions with President Boris Yeltsin. I want to join him in thanking Prime Minister Mulroney and the people of Canada for their hospitality. The beauty of Vancouver has inspired our work here, and this weekend I believe we have laid the foundation for a new democratic partnership between the United States and Russia. The heroic deeds of Boris Yeltsin and the Russian people launched their reforms toward democracy and market economies and defended them valiantly during the dark days of August 1991. Now it is in the self-interest and the high duty of all the world's democracies to stand by Russia's democratic reforms in its new hour of challenge. The contrast between our promising new partnership and our confrontational past underscores the opportunities that hang in the balance today. For 45 years we pursued a deadly competition in nuclear arms. Now we can pursue a safe and steady cooperation to reduce the arsenals that have haunted mankind. For 45 years our nation invested trillions of dollars to contain and deter Soviet communism. Now the emergence of a peaceful and democratic Russia can enable us to devote more to our own domestic needs. The emergence of a newly productive and prosperous Russia could add untold billions in new growth to the global economy. That would mean new jobs and new investment opportunities for Americans and our allies around the world. We are investing today not only in the future of Russia but in the future of America as well. Mr. President, our nation will not stand on the sidelines when it comes to democracy in Russia. We know where we stand. We are with Russian democracy. We are with Russian reforms. We are with Russian markets. We support freedom of conscience and speech and religion. We support respect for ethnic minorities. We actively support reform and reformers and you in Russia. The ultimate responsibility for the success of Russia's new course, of course, rests with the people of Russia. It is they who must support economic reforms and make them work. But Americans know that our nation has a part to play, too, and we will do so. In our discussions, President Yeltsin and I reached several important agreements on the ways in which the United States and the other major industrialized democracies can best support Russian reforms. First are programs that can begin immediately. I discussed with President Yeltsin the initiatives totaling $1.6 billion intended to bolster political and economic reforms in Russia. These programs already are funded. They can provide immediate and tangible results for the Russian people. We will invest in the growth of Russia's private sector through two funds to accelerate privatization and to lend to new small private businesses. We will resume grain sales to Russia and extend $700 million in loans for Russia to purchase American grain. We will launch a pilot project to help provide housing and retraining for the Russian military officers as they move into jobs in the civilian economy. Because the momentum for reform must come upward from the Russian people, not down from their government, we will expand exchanges between American farmers, business people, students, and others with expertise working directly with the Russian people. And we agreed to make a special effort to promote American investment, particularly in Russia's oil and gas sectors. To give impetus to this effort, we will ask Vice President Gore and Russian Prime Minister Chernomyrdin to chair a new commission on energy and space. Second, beyond these immediate programs, the President and I agreed that our partnership requires broader perspectives and broader cooperative initiatives, which I will discuss with the Congress when I return home. We expect to do more than we are announcing today in housing and technical assistance, in nuclear safety and cooperation on the environment, and in important exchanges. Third, this challenge we face today is clearly not one for the United States and Russia alone. I have asked our allies in the G-7 to come forward with their own individual bilateral initiatives. Canada and Britain have already done so, and I expect others to follow. President Yeltsin and I also discussed plans for the G-7 nations to act together in support of Russia's reforms. The foreign and finance ministers of the G-7 are meeting in Tokyo on April 14-15. Coordinated efforts are required to help Russia stabilize its economy and its currency. The President and I agreed that Russia and the G-7 nations must take mutually reinforcing steps to strengthen reform in Russia. And those will be announced on April 14-15. Beyond these economic initiatives, the President and I discussed a broad agenda of cooperation in foreign affairs. We reaffirmed our commitment to safe dismantlement and disposal of nuclear weapons. We discussed the need to strengthen the Non-Proliferation Treaty (NPT) and to assure that Ukraine, along with Belarus and Kazakhstan, ratify the START Treaty [Strategic Arms Reduction Treaty] and accede to the NPT as non-nuclear weapons states. I stress that we want to expand our relationships with all the new independent states. We also agreed to work in concert to help resolve regional crises, to stem weapons of proliferation, to protect the global environment, and to address common challenges to international peace, such as the tragic violence in Bosnia, advancing the promising peace talks we have co-sponsored in the Mideast, and continuing our cooperation to end the regional conflicts of the Cold War era. Many of the dreams Americans and Russians hold for their children and for generations to come rest on the success of Russia's reforms and, thus, on the long-term partnerships between our two nations. Our new democratic partnership can make a historic contribution for all humanity well into the next century. Both of us know that it requires effort and vigilance to make progress along the path toward democracy's ideal. And I believe we both see those ideas as rooted deeply in the human spirit. I think of the words of one of the great poets of democracy within our own country, Walt Whitman. In a poem about crossing the East River in New York where the Brooklyn Bridge now stands, he commands: Flow on, river; flow on. Of course, the river hardly required his permission. It has flowed on for centuries, and will continue to, whether old Walt Whitman decree[s] it or not. Yet, he bellowed his enthusiastic support for the river's timeless journey. Russia's struggle for democracy and America's support are much the same. We know that the attraction to freedom that animates democracy flows powerfully through the human spirit like a river. Our words do not cause that river to flow, and history has now proven that in the long run no tyrant can cause the river to stop. Yet, we bellow our support because it is right and because democracy's river can carry both our nations toward a better future. As we have looked out across the Pacific to the shores of Russia and its far east, over the last few days we have committed ourselves anew to that journey. I now return to the United States with a reaffirmed commitment to that course and a determination to engage Members of Congress in both parties and the American people in a rededication to the prospect that a successful and strong and democratic Russia is very much in the best interest of America and the world. President Yeltsin: First of all, I should like to thank you, Mr. President, for your kind words addressed to Russia. I should like to thank Canada's Prime Minister, Mr. Mulroney, for the excellent way in which this summit of two Presidents of two great powers was organized. I'd like to thank the people of Vancouver for being so hospitable, for having so warmly welcomed our delegations and us personally, the Presidents. I should like to thank the journalists, who, it seems to me, kept a round-the-clock watch at their posts. I am fully satisfied by the results and by the spirit and atmosphere of my encounter with President Bill Clinton. It was, in all senses, out of the ordinary. But it was made extraordinary by processes transpiring in the United States and Russia, conditioned by [the] very special relationships developing between ourselves and Mr. Bill Clinton. We met for the first time yesterday, but became partners back at that meeting in Washington. When Bill Clinton became President, we rapidly established good working contacts over the telephone. We candidly discussed the most intricate issues and stated at the outset that there would be [no] pauses in our dialogue and that we would rapidly manage to find time to meet and establish that right at the beginning, as I say, several months ago. We had no right to further postpone an encounter in the face of this world emerging from a wounded past, its thoughts preoccupied by what has occurred in two great countries, the United States and Russia. We immediately found common language in Vancouver, probably because we're both businesslike people and, at the same time, to some extent, idealists both. We also believe that freedom, democracy, and freedom of choice for people are not mere words and are prepared to struggle for our beliefs. We understand that everything that happens in the world is interlinked; that cooperation is not concession-making, but a vital necessity, a contribution to our future. At previous meetings, the nation's leaders discussed primarily the disassembly of confrontational structures; but here in Vancouver, we talked about building the new, laying the foundations of a future economy. This was the first economically oriented meeting of the two great powers. We adopted some signal decisions in the interests of the people of the Russian Federation, in the interests of the people of the United States of America, in the interests of the world's people. We decided to eliminate discriminatory limitations on trade with Russia. We, in fact, said that we were simply hurt. Russia had embarked upon the path of democracy, whereas America was still treating us as though we were a communist country. In fact, we're struggling against communism. I stated that quite clearly, and Bill Clinton agreed. We are prepared to compete, but compete honestly. We decided to alter our approach to trade in Russian uranium, space technology, [and] access to Russian military technology. We decided to do away with the Jackson-Vanik amendment and to resolve other legislative issues. There is considerably greater interest on the part of American investors in the fuel sector in Russian space technology. We decided to cooperate in this area and decided to join forces, the US and Russian Administrations. . . . Bill Clinton's economic package is predicated on the fact [that] America wishes to see Russia prosper with a blooming economy. America intends to support Russian entrepreneurs, particularly small and medium farmers, Russia's youth. It's going to cooperate in housing construction for the military and in other areas. All of this is in support of Russian reforms, a part of the strategic form of cooperation between us, stressed Bill Clinton. The figure that reflects that cooperation is $1.6 billion. We're looking forward to other steps to be undertaken by the United States of America and other major industrial countries to support real reform in Russia. The linkage between that set of measures and other political measures was avoided. Of course, military and political problems could not [be] skirted. We discussed what might be done to see to it that all participants in the Bosnian conflict support the UN position. Here, our positions match as to the main points. We devoted quite a lot of attention to problems of non-proliferation. We decided to extend our agreements on the avoidance of accidents, such as the near accident involving submarines very recently. We decided to strengthen cooperation between various areas of the military. All of this is reflected in the Vancouver Declaration [and] some of the principal elements of that declaration. Members of our delegation felt that the US side did not appreciate that support for Russia had to be timely. Our partners make it their goal to support Russia's reforms, which are not yet yielding major results as far [as] ordinary Russians are concerned. The meeting in Vancouver signals a shift from general assurances of support to Russia to pragmatic, specific, nitty-gritty projects. What we see dominating here are economic and not military strategic issues. . . . Another very important result is that we, with President Bill Clinton, did establish some pretty close personal contacts. Bill Clinton is a serious partner. He is prepared to tackle the major problems confronting our two countries in the interest of our two countries, in the interest of all free people throughout the world. I have invited Bill Clinton to visit Moscow, to render us an official visit at a time convenient to him.

ARTICLE 3: Fact Sheets: Vancouver Summit--US Assistance to Russia

[On April 3-4, 1993, President Clinton met with President Yeltsin in Vancouver, Canada. At the summit, President Clinton announced a package of US assistance for Russia totaling $1.6 billion for projects announced, expanded, or obligated after January 20, 1993. Grant assistance (food, technical cooperation, and Nunn-Lugar) totals $691 million, while $700 million is in Food for Progress credit sales, and $232 million is in Export-Import Bank and Overseas Private Investment Corporation credits. Following are fact sheets on the seven areas of assistance, released by the White House, Office of the Press Secretary, in Vancouver, Canada, April 4, 1993.]
Fact Sheet: Humanitarian/Health Assistance And Food Sales
Purpose
To respond to the need for humanitarian food and medical assistance and to help develop the proper infrastructure for health care delivery, the United States will provide grant food and medical assistance, health technical assistance, and concessional sales of US agricultural commodities to Russia.
Program
Grant Food Assistance. The United States will provide an additional $194 million in grant food aid to Russia, bringing total grant food assistance for Russia to $425 million in FY 1993. This is provided under the Section 416(b) and Food for Progress programs administered by the US Agriculture Department. Some of the commodities will be provided directly to the Russian Government for direct distribution or sales to needy individuals, while other commodities will be auctioned on private commodities exchanges. A certain amount of the commodities will be provided through American and Russian private voluntary organizations. ($194 million) Food for Mothers and Children. The United States will provide infant formula, whole fat milk, cereals, and nutritional powdered beverage to needy infants, children, and mothers in Magadan, Khabarovsk, and Vladivostok. ($10 million) Medicines and Medical Supplies for Russian Hospitals. The United States will provide medicines and medical supplies to hospitals in the Moscow area and medical supplies to hospitals and clinics in the Magadan region of the far east. ($15 million) Medical Partnerships. In an effort to increase contacts between American and Russian medical professionals, the United States will establish an additional four Medical Partnerships in Russia over the next several months. This will make a total of nine partnerships in Russia. ($3 million) Health Care Finance. An integral part of transition to a market economy will be the reform of the health-care system. To assist in this transition, the United States will work with the Russian Government to promote private health care alternatives. The United States will provide training and seminars and seek to establish replicable models of health care finance in reform-minded communities of Russia. ($2.5 million) Food for Progress Credit Sales. The United States will make available $700 million in agricultural credit sales to Russia under the Food for Progress program. These sales are an interim measure designed to restore Russia's access to US agricultural markets for grains and other commodities in the short term. The commodities will be delivered for the next several months, until Russia's domestic harvest begins to become available. ($700 million) Total, Humanitarian/Health Assistance and Food Sales: $924.5 million.
Fact Sheet: Private Sector Development
Purpose
The US private sector assistance program supports Russia's historic transition to a market-based economy, expanded trade and investment opportunities, and emergence of an indigenous private sector. US assistance reinforces Russia's strategy to transfer state assets to productive private sector use and to catalyze small and medium business development to create jobs. Where possible, the US assistance program links American businesses with Russian counterparts to transfer skills and create lasting market relationships.
Program
Russian-American Enterprise Fund. The Fund will target loans and investments to create and expand small and medium enterprises. It will support Russian businesses and joint ventures with US firms that disseminate Western business expertise and practices. Loans and investments will seek to increase employment, develop capital markets, generate foreign exchange, encourage private foreign investment, and support privatization. The Fund also will seek to demonstrate that good business investments are compatible with sound environmental practices. ($50 million) Privatization. This is the driving force behind economic reform in Russia. The initiative reinforces nearly every aspect of the privatization program that is giving all Russians their first opportunity to become private shareholders. US assistance supports enterprise auctions; privatization manuals; public education on private ownership; and legal, economic, and logistical advice to local privatization committees. Technical assistance for investment funds, stock exchanges, prudent regulation, and business support organizations will help create a fair and competitive marketplace. ($60 million) Bankers Training. A modern banking system and stable financial markets are indispensable to enterprise restructuring. Officials of US commercial banks, the Federal Reserve Bank of New York, and other specialists will train at least 250 Russian banking executives. American experts will work with Russian counterparts to introduce deposit mechanisms for business and household savings, functioning checking accounts, interbank credit and reserve lending systems, and an auction market in government securities that will facilitate relatively non-inflationary financing of public deficits. ($5 million) Fiscal Sector Reform. Effective decentralization and privatization will require new tax and expenditure systems for local and regional governments. Technical assistance in the fiscal area will help local and regional governments design and implement fiscal structures, including revenue systems needed to finance social services and other budgetary requirements currently financed by state enterprises. Assistance will start with Moscow oblast (state) and will be targeted at regions making significant privatization progress. ($4.4 million) Russian-American Agribusiness Partnership. This program pairs US agribusinesses with Russian partners to help private farmers, enterprises, and reform-oriented institutions create a market- driven food system. Technical assistance and training by US agribusinesses will help break bottlenecks between producers and consumers and create efficient input delivery systems. US agribusinesses will introduce US standards for harvesting, processing, and distribution. Under the project, they will invest about $60 million of their own funds. ($20 million) Farmer-to-Farmer Program. This activity will link over 300 American volunteer farmers with farmers in Russia in order to provide direct, practical agricultural marketing experience and expertise. These volunteers will build on the work of 80 volunteers already in Russia. Their technical knowledge will help new private farmers learn the skills needed to operate in a market economy, improve crop quality, reduce losses, and respond to consumer demand. ($5 million) Eurasia Foundation. The Foundation is a new, independent grant- making and technical assistance fund established with US Government financing. It will encourage collaboration with and contributions from private funding sources. The Foundation will support innovative, field-based programs throughout the former Soviet Union in areas such as management training, economics education, public policy advice, independent print and broadcast media, and science and technology development. ($4 million for Russia) Total, Private Sector Development: $148.4 million.
Fact Sheet: Democracy Corps Initiative
Purpose
Russia is embarking on the transformation of its political and legal framework from an authoritarian foundation to one based upon the rule of law, with emphasis on rights and responsibilities of individuals, popular participation in political and economic decision-making, open competition among interest groups, governmental accountability, transparency of political and legal processes, and predictability in social and economic relations.
Program
To assist this process, President Clinton is mobilizing the Democracy Corps, a broad coalition of American people and institutions devoted to expanding the momentum for democratization in Russia. As the coordinator for all US assistance efforts with the former Soviet Union, Ambassador Tom Simons will oversee Democracy Corps activities in Russia. Specific US Government-funded activities in 1993 will include: Democracy Summer. The summer of 1993 will be designated Democracy Summer, with the start-up of a $25 million program of people-to-people contacts between Russians and their American hosts. About 3,000 Russians will be brought to the United States for exchanges and training in 1993. Two kinds of contacts are envisioned: -- Exchanges. Exposure of Russians to life in a democracy can foster grass-roots understanding and attitudes supportive of democratic development. About 1,700 high school students will arrive this summer for a variety of programs. More than 300 will participate in short-term thematic group projects in areas ranging from culture and the arts to youth leadership. Some 650 students will participate in year-long exchanges during the 1993-94 school year, and 750 students will participate in month-long school-to- school linkages. About 450 undergraduate and 200 graduate-level Russian students will receive training in economics, business, public policy, government, education, and law. About 200 government officials and professionals will participate in short- term education programs designed to introduce them to their American counterparts. -- Training. In addition to exposure to democratic systems, visits by citizens of Russia to the United States can demonstrate US methods of solving technical, managerial, and other problems that are key to Russia's successful adoption of a free market system. About 400 Russians will be brought to the United States for study tours and short-term training programs in key technical areas, such as banking, energy, environment, health, and agriculture. Rule of Law. These programs will mobilize a broad range of US legal resources to assist the Russian reform of their legal structure to reflect democratic and free market principles and to institutionalize support procedures and practices in the areas of commercial law, criminal law and procedure, and legal education. In particular, the United States will directly support President Yeltsin's legal experiment, an innovative plan to advance legal reform, including the creation of a jury system in five regions. ($5 million) Effective Local Governance. The United States will assist reform- minded local governments in generating, managing, and expanding financial resources in ways which foster the private provision of social services and broad private sector growth. The first two cities targeted are Moscow and Nizhny Novgorod. ($7 million) Strengthening Civil Society. The United States will mobilize private US organizations (political and civic organizations, free trade unions, and advocacy groups) to work closely with counterparts in Russia--reformers, grassroots organizers, regional interests--to expand their participation in Russian political processes and in the dialogue on economic reform. ($2 million) Strengthening Independent Media. This program will allow the US media and journalists to share techniques and business and managerial skills essential for functioning of a free and open democracy. ($2 million) Developing Russian Volunteer-ism. A broad array of US private voluntary organizations will assist private Russian groups to meet emerging social service needs during this period of economic dislocation. ($4 million) Developing University Partnerships. The United States will mobilize US educators to develop linkages and exchanges between American universities and partner universities in Russia that focus on areas critical to the creation of free market and democratic institutions. The Administration will establish an American institute at the Institute of Foreign Languages in Nizhny Novgorod for study of American studies and language. ($3 million) Total, Democracy Corps Initiative: $48 million.
Fact Sheet: Energy and Environment Initiative
Purpose
This initiative will assist in the transformation of the Russian energy economy into a market-oriented, end-use efficient, and environmentally protected system. Reform of the energy sector is essential to the viability of the overall reform program, particularly enterprise restructuring and the overall macroeconomic balance. Structural reform of this sector should help remove some of the worst environmental excesses, by eliminating obsolescent production techniques and encouraging energy efficiency.
Program
This initiative represents a balanced approach targeted on several critical leverage points. Gas/Oil/Coal Production and Delivery System Improvement. US assistance will promote efficient use of gas and oil. Reform in these areas will increase hard currency exports and, in the long run, provide alternative fuel sources needed to decommission unsafe nuclear reactors. In addition, US programs will promote coal mine safety, productivity, and cleaner coal technologies. Funding will include engineering and financial analyses to help catalyze and accelerate substantial loans from the World Bank and the European Bank for Reconstruction and Development to revamp production, transmissions, and distribution systems. ($10 million) Efficiency and Performance Improvement. This program will focus on improving energy efficiency in electric power, refineries, industries, and residential buildings. Funding also will support the Moscow Energy Efficiency Center, which provides information on technology available from US companies as well as training. ($2 million) Pricing Policy and Institutional Reform. Market-driven approaches for energy supply and demand balance in Russia will be introduced. The program will focus on privatizing energy supply entities, supporting reform of the price and tariff structure, and improving institutions to raise efficiency standards and introduce a regulatory framework. ($5 million) Nuclear Power Plant Safety and Regulation. The United States will fund short-term operational safety improvements, risk reduction measures, and regulatory assistance for nuclear power plants. ($15 million) Environmental Policy and Technology Cooperation. This program will assist in the development of clearer national environmental policies and programs. The United States will implement high-impact demonstration projects to reduce severe pollution problems, including minimizing use of ozone-depleting substances. The first activity will focus on air pollution control in the Volgograd region. ($5 million) Environmental Non-Governmental-Organization Consortium. The United States will mobilize a consortium of public and private sector actors to strengthen collaboration between American and Russian NGOs. The consortium will finance joint US-Russian NGO projects that promote community environmental quality initiative, resource conservation, public awareness, and training. ($1 million) Total, Energy and Environment Initiative: $38 million in 1993.
Fact Sheet: Officer Resettlement Initiative
Purpose
The United States and the West have a historic opportunity to facilitate the return of troops to Russia by providing housing and job retraining for Russian officers who are being demobilized and returning to Russia. This initiative responds to a direct appeal from the Government of Russia.
Program
This initiative will focus on facilitating the resettlement of officers who are being demobilized upon return to Russia. In addition to building houses for these returning officers, it will provide employment retraining. Specifically, it will on a demonstration basis: -- Build 450 houses within 12-16 months for officers who are being demobilized and returning to Russia; and -- Provide employment training for the participating officers to facilitate their transition to civilian life. Houses will be built in areas where local authorities are committed to market economic reforms. These sites also will be selected based upon availability of land, adequate infrastructure, and proximity to good transportation routes. To the extent possible, we will seek to use local labor and locally available materials in the construction of these homes. Providing housing and job retraining for troops returning to Russia is a visible sign of Western support for the Russian people and the Russian Government. The United States will seek to encourage other donors to implement similar or complementary programs. The United States also will seek to expand this initiative in the future. Total, Officer Resettlement Initiative: $6 million in fiscal year 1993.
Fact Sheet: Trade and Investment Development Program
US bilateral trade with Russia is only $3.4 billion, and even though American companies are the largest investors in Russia, total US investment is estimated at only $400 million. A significant expansion in bilateral trade and investment is among the best ways to assist Russia in making the transition to market democracy. Creating the necessary business climate is a task that basically rests with Russia, but the US Government can play a catalytic role in helping to remove obstacles blocking projects already under discussion, improve the environment for business, and develop the commercial infrastructure. Business Development Committee. President Clinton is making bilateral trade and investment growth with Russia a major priority. Implementation is centered in the US-Russia Business Development Committee (BDC), co-chaired by Secretary of Commerce Ron Brown and Deputy Prime Minister Shokhin. Secretary Brown will travel to Moscow to begin the process in May. The BDC will be the primary vehicle to help identify and remove impediments to trade and investment, remove barriers to specific US investment projects, press for Russian Government policy reforms, and improve the commercial infrastructure for bilateral commercial growth. The BDC meeting will focus on eliminating obstacles to investment in the energy sector, and will include a high- level session of the Defense Conversion Subcommittee. Generalized System of Preferences. President Clinton seeks to extend the Generalized System of Preferences (GSP) to Russia to provide duty-free treatment for a broad range of Russian exports. More than $440 million of Russian goods would benefit. GATT. The United States will support Russia's application to become a member of the General Agreement on Tariffs and Trade (GATT) and will help build the institutions necessary for Russia to become a full GATT member. American Business Centers. The Administration will open four American Business Centers in Russia this year to help American and Russian companies do business with each other and to serve as business incubators. ($3 million) Export Control Development. Technical assistance will be provided to Russia to improve its export controls development. An effective Russian export control system would allow the sale of higher levels of technology to Russia to assist the reform and modernization of the Russian economy. ($2.2 billion) Eximbank Loan. The Export-Import Bank of the United States has just completed an $82 million loan to finance the sale of Caterpillar pipeline construction machinery for Gazprom. This equipment will be used on construction of a gas pipeline in the Yarnal Peninsula region of Russia. ($82 million) OPIC Investment Support. The Overseas Private Investment Corporation (OPIC) has approved its first loan and major insurance coverage to a private commercial venture in Russia, a $150 million package consisting of a $50 million loan guarantee and $100 million in investment insurance coverage to support Conoco's $300 million Polar Lights project. ($150 million) TDA Feasibility Study Grants. The US Trade and Development Agency (TDA) is granting $1.4 million for oil and gas feasibility studies, as part of a package of TDA grants totaling $3.8 million. Special American Business Internship Training (SABIT). A total of 300 additional internships with American companies are being created for business executives, entrepreneurs, and scientists under the Commerce Department's highly successful business internship program. This doubles the number of Russians who will acquire on- the-job experience in a market economy. ($2 million). Total, Trade and Investment Development Program: $243 million.
Fact Sheet: Safe, Secure Dismantlement (SSD) Initiatives With Russia
The Nunn-Lugar legislation, as amend-ed, provides up to $800 million from the Defense Department to assist in the safe and secure transportation, storage, and dismantlement of nuclear, chemical, and other weapons and to establish safeguards against their proliferation. The United States has pledged at least $400 million in Nunn-Lugar assistance for Russia. Previously, the United States signed an umbrella agreement that provides the legal framework for provision of assistance and seven implementing agreements providing up to $150 million in assistance. These agreements provide for: -- Armored blankets to enhance the safety and security of weapons and fissile material during transport; -- Safety and security enhancements for rail cars used in transporting nuclear weapons and fissile material; -- Emergency response equipment to upgrade capabilities to respond in case of a nuclear accident; -- Transportation and storage containers for fissile material removed from dismantled nuclear weapons; -- Assistance in the design of storage facility for fissile material; -- Assistance in chemical weapons destruction; and -- Establishment of a science center to employ former weapons scientists. Last week in Moscow, the United States concluded three additional SSD agreements that provide up to: -- $130 million to assist in the elimination of strategic nuclear delivery vehicles--ballistic missiles, submarines, and heavy bombers. This assistance will help defray the costs to Russia of carrying out reductions in these forces. -- $75 million to procure construction and operating equipment for a fissile material storage facility. These funds are designed to permit Russian plans for warhead eliminations to continue on schedule. -- $10 million in assistance to help establish national and facility- level systems for material control and accountability and for physical protection of civil nuclear material. Such systems will help to guard against the potential loss or proliferation of nuclear material. Total, Security Assistance: $215 million. These agreements demonstrate the importance the Clinton Administration attaches to the SSD program as an integral part of its broad policy of cooperation and partnership with Russia. US Assistance to Russia ($ million) Humanitarian/Health Assistance and Food Sales Grant Food Assistance 194.0 Food for Mothers and Children 10.0 Medicines, Medical Supplies for Russian Hospitals 15.0 Medical Partnerships 3.0 Health Care Finance 2.5 Food for Progress Credit Sales 700.0 Subtotal 924.5 Private Sector Development Russian-American Enterprise Fund 50.0 Privatization 60.0 Bankers Training 5.0 Fiscal Sector Reform 4.4 Russian-American Agribusiness Partnership 20.0 Farmer-to-Farmer Program 5.0 Eurasia Foundation 4.0 Subtotal 148.4 Democracy Corps Initiative Democracy Summer 25.0 Rule of Law 5.0 Effective Local Governance 7.0 Strengthening Civil Society 2.0 Strengthening Independent Media 2.0 Developing Russian Volunteerism 4.0 Developing University Partnerships 3.0 Subtotal 48.0 Energy and Environment Initiative Gas/Oil/Coal Production and Delivery System Improvement 10.0 Efficiency and Performance Improvement 2.0 Pricing Policy and Institutional Reform 5.0 Nuclear Power Plant Safety and Regulation 15.0 Environmental Policy and Technology Cooperation 5.0 Environmental Non-Governmental Organization Consortium 1.0 Subtotal 38.0 Officer Resettlement Initiative Russian Officer Resettlement 6.0 Subtotal 6.0 Trade and Investment Development Program American Business Centers 3.0 Export Control Development 2.2 Eximbank Loan 82.0 OPIC Investment Support 150.0 Trade and Development Agency Grants 3.8 SABIT Program 2.0 Subtotal 243.0 Security Assistance Strategic Nuclear Delivery Vehicle Dismantlement 130.0 Nuclear Warhead Storage Facility 75.0 Nuclear Materials Accountability and Control 10.0 Subtotal 215.0 TOTAL 1,622.9

ARTICLE 4: Fact Sheet--Safe, Secure Dismantlement (SSD) Initiatives With Belarus, Kazakhstan, and Ukraine

[Fact sheet released by the White House, Office of the Press Secretary, Vancouver, Canada, April 4, 1993.] Belarus, Kazakhstan, and Ukraine (along with Russia) have been certified by the Secretary of State as meeting the eligibility requirements for assistance under the Nunn-Lugar legislation. The United States has, to date, notified the Congress of approximately $40 million in proposed Nunn-Lugar obligations to the four states.
Belarus.
The United States has signed three implementing agreements with Belarus providing emergency response equipment to enhance capabilities to respond to the consequences of a nuclear accident, a continuous communications link (CCL) to allow the transmission of data and notifications under the INF [intermediate- range nuclear forces] and START [Strategic Arms Reduction Treaty] agreements, and assistance and training to help establish an effective export control system. These agreements total $8.3 million in assistance. In the wake of Belarus' ratification of the START and NPT [Non- Proliferation] Treaties, the United States has recently proposed to Chairman Shushkevich the outlines of an additional assistance package which could include up to $65 million in Nunn-Lugar funds for things such as defense conversion and missile site cleanup.
Kazakhstan.
The Congress has been notified of $14.5 million in proposed Nunn-Lugar obligations for Kazakhstan. These funds would provide a government-to-government communications link, emergency response equipment, [and] assistance and training in establishing an export control system as well as a system for the material control and accountability and physical protection of civil nuclear material. These agreements were discussed with a Kazakhstani delegation in Washington last month. The US objective is to sign these agreements during a return visit to Almaty in late April, after they have been reviewed by the Kazakhstani Government. The US also hopes to discuss Nunn-Lugar assistance in other areas, including the dismantlement of strategic nuclear delivery vehicles.
Ukraine.
The United States has agreed to provide Ukraine at least $175 million in Nunn-Lugar assistance, assuming it ratifies START and adheres to the NPT. The Congress has been notified of $27 million in proposed Nunn-Lugar obligations for Ukraine. Proposed agreements would provide a government-to-government communications link, emergency response equipment, assistance and training in establishing an export control regime, and a material control and accountability and physical protection system for civil nuclear material. In addition, the US is establishing a Science and Technology Center in Kiev. Ukraine has not yet signed an umbrella agreement providing the legal framework under which Nunn-Lugar assistance can be provided. No implementing agreements can be signed until this Kiev assistance in strategic nuclear delivery vehicle dismantlement, which would take up the bulk of the $175 million being pledged. This agreement would not be signed until Ukraine has ratified START and the NPT.

ARTICLE 5: Fact Sheet--START I and NPT (Lisbon Protocol)

[Fact sheet released by the White House, Office of the President, Vancouver, Canada, April 4, 1993.] In signing the Lisbon Protocol, Belarus, Kazakhstan, Ukraine, and Russia became parties to START [Strategic Arms Reduction Treaty] in place of the USSR; Belarus, Kazakhstan, and Ukraine also committed themselves to adhere to the Non-Proliferation Treaty [NPT] as non-nuclear states "in the shortest possible time." The status of each of the parties with respect to fulfilling their Lisbon commitments is as follows: -- Belarus has voted both to ratify START and to accede to the NPT as a non-nuclear weapon state. -- Kazakhstan ratified START but has not yet acted on NPT. -- The Ukrainian legislature has begun debate on the two treaties but has not completed its action. -- Russia has ratified START but has also said that the treaty could not enter into force until the other three fulfill all of their Lisbon obligations. -- The US Senate gave its advice and consent to ratification of START last October. The United States has continued to work hard to get START and NPT in place. The United States has offered substantial financial and technical assistance toward easing the other parties' dismantlement and destruction burdens and is also prepared to offer Belarus, Ukraine, and Kazakhstan certain security assurances. While the United States has been concerned about the delays in Ukraine, the US looks forward to its prompt action on both treaties and also expects Kazakhstan to accede to the NPT as a non-nuclear weapon state in the near future.

ARTICLE 5: Secretary Christopher--News Conference of April 12, 1993

[Opening statement at news conference en route to Anchorage, Alaska, April 12, 1993] This visit should be put in the broader context of three important parts of the framework of US foreign policy in the Clinton Administration. I made some notes here, as you can see, because I wanted to be able to record for you some of the feelings that I have as I go into Tokyo. As I say, I think that this visit has to be put in the context of these three key parts of our framework. First, that our fundamental overriding goal around the world is to promote democracy, human rights, and free markets. Nowhere is this issue more trenchantly involved than in the case of Russia, and I will come back to that in just a moment. Second, we want to remain a Pacific power and are determined to shoulder our responsibility in this area. And, third, in the new era, the economic aspects of our relationship with Japan must be addressed with a new intensity. In this context, let me mention some particular aspects of the meetings in Japan. First, they will certainly highlight the importance of the economic and political reform in Russia--and, as we have been trying to do over the last several weeks--will provide support or are intended to provide support for Yeltsin's courageous efforts. Second, as President Clinton emphasized the last few days, we are now moving to a new stage--the multilateral stage--in which we intend to build on the momentum created in Vancouver and in the related bilateral endeavors that have gone forward since Vancouver. Third, in a multilateral sense, we expect substantial additional support for the multilateral institutions--the World Bank, the EBRD, the IMF. The particular kinds of aid that we expect to come forth in this meeting and in those arenas are cooperative assessed assistance to stabilize inflation, structural reform in energy and agriculture, and support for privatization, that is, lending support for private business through privatization. We think that this meeting can provide joint action for the G-7 to maximize the efforts of each of the countries and, I want to say that I have a positive feeling about the results that will come out of the bilateral efforts in Tokyo. Clearly, this is a cooperative effort that will need the assistance of Russia and, for that reason, of course, it's essential that Russian Finance Minister Fyodorov and Foreign Minister Kozyrev are arriving tomorrow to join in the discussions with the G-7 Foreign Ministers and Finance Ministers. And, as hosts, the Japanese will undoubtedly play a particularly important role-- they are not only hosts, but they are the chair of the G-7 this year, and they have played a major role in organizing these meetings and will continue to play a major role as we move through the remainder of this year. Now, beyond these multilateral efforts, I'd like to mention the bilateral efforts that have gone on in the last several days since Vancouver. First, as you know, a number of countries have indicated additional bilateral support for Russia--the United Kingdom, Canada, Germany--and we expect that this trip, or even before we arrive, there may be indication of further bilateral efforts or assistance by Japan. As you know, in Vancouver, President Clinton indicated that the United States would be considering additional bilateral assistance based upon his conversation with President Yeltsin. Consultations on those additional bilateral efforts are going on actually as we are flying. President Clinton was necessarily diverted from those consultations for a couple of days over the weekend, but we are back at that effort now, and I think we can expect to hear something from that, although I'm going to be a little uncertain about the exact timing as to when that will emerge. Finally, in addition to the multilateral efforts of the G-7 and the bilateral efforts, this trip inevitably has some US-Japan bilateral aspects to it. I'll be meeting as soon as we arrive tomorrow-- almost as soon as we arrive--with the new Foreign Minister Muto, and I'm looking forward to that. And, then on the following morning, I'm going to be received by Prime Minister Miyazawa, and those meetings will obviously have significance as preludes to President Clinton's meeting on Friday with Mr. Miyazawa. Once again, I stress the importance of the US-Japan relationship and the very significant role that Japan is going to be playing in these meetings. One point I'd want to make about this is that these meetings should certainly not prejudice Japan's position with respect to the Northern Territories. Japan has cooperated by putting that issue to one side, but the United States continues to support the Japanese position, and nothing in these meetings should prejudice the Japanese position on that subject. With respect to the Japanese bilateral, I'd come back to the two points that I made at the beginning, and that is that the United States will be affirming or stressing its intention to remain a Pacific power and to shoulder our responsibilities in that regard and the second is that the economic aspects of the US-Japan relationship must be addressed with new intensity in this current period.

ARTICLE 7: Japanese Prime Minister Miyazawa--International Community Should Provide Russia "Help for Self-Help"

[Address before the G-7 ministerial meeting, Tokyo, Japan, April 14, 1993] It gives me great pleasure to welcome you all to this G-7 joint ministerial meeting on assistance to Russia. As the chair of the coming G-7 summit in July, Japan convened this meeting in the belief that a great deal is at stake not just for the Government and people of Russia but also for the international community as a whole. In the course of my political career spanning some 40 years, I have witnessed the world rise from the ashes of World War II; then languish under the strains of the Cold War confrontation; and, finally, begin to move toward the attainment of the universal values of freedom and democracy. Russia today embodies this great historic change now taking place. The success of Russia's reform efforts--political reform toward pluralistic democracy, economic reform toward market economy, and foreign policy reform to become a constructive partner in the international community--is crucial in achieving peace and prosperity of the world. Russia is now at a critical juncture, with the reform efforts under the leadership of President Yeltsin facing tremendous challenges both politically and economically. It is incumbent upon the international community to send a clear message that it expects Russia's reforms to be pursued irreversibly. The G-7 countries, who share major responsibilities for securing peace and prosperity of the world, must take the lead in rallying the international community in support of the reforms in Russia as well as in other reforming countries. In the final analysis, it is the Russians themselves who can make their own reforms work. The task of the international community is to help ease this sometimes painful transition for the Russian people by providing the necessary "help for self-help."
Considerations for Assistance
With this in mind, I would wish to outline the three principal considerations which should guide our endeavors. Firstly, our assistance should meet the true needs of the Russian people. It is the commitment and will of the Russian people themselves that really count for the success of their reform efforts. Therefore, they are the ones who should be the target of our assistance. Secondly, our assistance should encourage the Russian will to sustain the process of transition toward market economy. Competitive markets required for fostering small businesses, banking systems for providing capital to entrepreneurs, and education and training schemes for nourishing management ability are some of the examples of those institutions. Our assistance should aim at providing the Russian people with the instruments to carry on their reforms toward market economy and democracy. Last but not least, our assistance should be closely coordinated through constant consultations among the major donors and international organizations as well as close contact with Russia so that our combined efforts can produce the maximum results. The G- 7 countries should play a leading role in this respect, and today's meeting is expected to mark an important step forward in this process. Japan has been actively playing its part in such coordination: It was in this very room that I opened, last October, a conference to coordinate the international assistance to Russia and other new independent states.
Japan's Assistance to Russia
Here, let me touch upon Japan's cooperation to Russia. Bilateral assistance which Japan has announced hitherto shall be steadily implemented. I should like to take this opportunity to announce Japan's new assistance package to Russia which totals $1.82 billion, comprising $320 million in grant [assistance] and $1.5 billion in loan [assistance]. Japan's grant assistance of 37.44 billion yen, which is approximately 320 million in dollar terms, will be as follows: Firstly, the grant for emergency assistance is $100 million. This includes provision of foodstuffs and medicaments. The proceeds of the sale thereof will further benefit the Russian people through monetization. Secondly, the grant for human resource development is $90 million. This comprises a wide range of technical assistance and exchange programs so as to pave the way toward a market economy. Thirdly, the grant for fostering small and medium-sized enterprises is $30 million. Assistance to the Far Eastern International Center for Small and Medium Sized Enterprises is a case in point. Fourthly, the grant for dismantling nuclear weapons is $100 million. This applies to Russia as well as other new independent states. Japan's loan assistance comprises the following: Firstly, Japan is ready to underwrite trade insurance totaling $1.1 billion, with appropriate cooperation on the part of Russia. This will be focused on the reconstruction of the energy industry, a main source of foreign exchange receipt for Russia. Secondly, Japan is ready to extend an Eximbank loan of $400 million in total to appropriate projects focusing on the fields of energy and of small and medium-sized enterprises. Fostering small and medium-sized enterprises is essential for Russia's transition toward a market economy and will be an important topic for this meeting. Japan will actively take part in the studies for establishing international schemes for the support of these enterprises. Let me conclude by expressing my ardent hope that this meeting will carry us forward--in translating our deliberations into actions, thus equipping us with the actual multilateral framework and measures of assistance to Russia--toward the Tokyo summit in July. I hereby reconfirm Japan's determination to fulfill its role of the G-7 summit presidency, building upon the fruits of this meeting.

ARTICLE 8: Secretary Christopher--Treasury Secretary Bentsen: Bilateral and Multilateral Aid for Russia

[Opening statements from news briefing, Tokyo, Japan, April 14, 1993] Secretary Christopher: We've had a full day. I might tick off some of the things that I've been doing, and then Secretary Bentsen will do likewise for himself. We met together this morning with Prime Minister Miyazawa and had a good session with him in which we foreshadowed to some extent the meeting with President Clinton this Friday, and we also talked about both the bilateral and multilateral aid packages that both countries would be working on. At noon today, I met with the G-7 foreign ministers, and we touched on several of the major topics that are political topics around the world. We had extensive discussions of North Korea, of Bosnia, of Cambodia, and of the Middle East peace process. Now we have just gone into the first session of the G-7 ministers, both finance ministers and foreign ministers, with respect to aid to--cooperation with--Russia. We've had, so far, the political discussion and some discussion of bilateral aid. One of the striking things is that each of the ministers who spoke talked about the need to have aid that was down-to-earth, that would reach the Russian people--aid that was certain to be felt on the ground among the people. I think there was a strong consensus of opinion there that it was important to aid President Yeltsin. I made the point that President Yeltsin was far superior to any of his likely successors in terms of commitment to the market process. His successors, if there were to be successors, would probably be less committed to the market reform process and in favor of slower reform, which probably wouldn't work. His likely successor, if he were to lose, would be not nearly as likely to be in favor of the ratification of START II. His likely successor would be not nearly as committed to democratic reform in the sense that he probably would be in favor of the present parliament, which is an undemocratic parliament. There is a whole series of reasons why President Yeltsin is far more likely to be attractive to the West, including the fact that his successor would be much less likely to maintain a constructive, benign foreign policy. With respect to aid, Secretary Bentsen is going to outline the multilateral aid that the United States will participate in. I touched briefly on the bilateral aid. With respect to that, let me say that President Clinton has approved an additional package and is now consulting with Congress on that. We'll not be able to tell you today the amount of that new package, because it is not ready for announcement until tomorrow. I know that's frustrating to you, but I can tell you that it's a substantial package. It has some very interesting new ideas in it. It involves a privatization fund to which the United States will make a contribution, and we'll be asking other nations in the G-7 to contribute to a privatization fund, which will be extremely important in privatizing the major Soviet industries. Another of the new ideas is the creation of a fund for dismantling the Soviet nuclear arsenal to which the United States will make a significant contribution, and we are asking our G-7 allies to do likewise. That has been the essence of the discussions so far; but I do want to ask Secretary Bentsen to tell you about the full day that he has had and to make some comments, if he would, on the meeting with Prime Minister Miyazawa, where he played a very significant role. Secretary Bentsen: Thank you very much. I have met with most of you earlier. So I won't have a lot to add to it other than to say that in my meeting with the Finance Minister, Mr. Hayashi, we went at length into: -- Their supplemental budget and what kind of a stimulus it would be to the economy here; -- How important it was that we try to work down that deficit in trade that we have with Japan; -- That it be an ongoing effort carried out year after year until we get these benefits more in balance amongst the participating countries; -- That we felt that creating demand within Japan was one of the best ways to approach this; -- That if we did not see these benefits brought more in balance over a period of time, that that could have a deteriorating effect on the relationship with other countries; -- That it was important that they keep that as a primary objective in seeing that they achieve a better balance of those benefits; -- That, otherwise, you would see around the world an increase in protectionism; and -- That that would be something that none of us want. With Mr. Miyazawa, the Prime Minister, in that situation we were talking about the utilization and the conversion of the facilities that you have available now for energy--for the export of oil and gas: -- You have approximately one-seventh of the wells in Russia that are closed down for lack of parts; -- You have pumps that don't work in the transmission lines to give you the appropriate pressure; and -- You have the flaring of gas--all wasteful practices. Here you can have a conversion of a resource to hard currencies rather quickly. And we were talking about how important it was that we work together to see that that was done. The other thing that we were discussing with him--as Secretary Christopher has stated--was the privatization fund as proposed by the President: -- With the United States committing to some $500 million if the other $1.5 billion was raised; and -- That that would be supplemented also by the World Bank and by the European development bank by another $2 billion--that would be our anticipation of what we'd be striving for that would result in co-financing for those major industries. The problem you have--some of those major industries are the only industry in the region, and the amount of jobs you are talking about is sometimes as much as 20,000 and 50,000 employees. So it is crucial to that region. In addition to that, it provides many of the social services. So what you have seen is the [Russian] Central Bank trying to keep them going in a non-productive way for products that were not selling to try to help them in that conversion--when you are going to see a lot of unemployed people, when you want to see retraining done. It's important that we make that kind of conversion--to help them to bring that about. Otherwise, you are not going to see the kind of help that we should get out of the Central Bank. What you are seeing today at that Central Bank is an expansion of credit to those industries and, in addition to that, a pumping out of rubles to the point now that the entire domestic production of Russia is equivalent--if you put it in dollars--to about $75 billion. If you look at the average wage now, in dollars, you are getting down to as much as $39 a month. So you can see [that] it has to be brought under control. We are encouraged by the fact that Deputy Prime Minister Fyodorov thinks that he has reached an agreement with the Central Bank where you will be able to slow down that fantastic expansion of credit that will result in an inflation rate of some 25% a month, bordering on hyper-inflation. If you want to destroy a country, destroy its currency.

ARTICLE 9: G-7 Chairmen's Statement on Support for Russian Reform

[Text of the Chairmen's Statement of the G-7 Joint Ministerial Meeting and the Following Meeting With Russian Ministers, Tokyo, Japan, April 15, 1993]
1. Introduction
At the request of the Heads of State and Government of the seven major industrialized countries and of the President of the EC Commission, and in the process of preparation of the Tokyo Summit, Foreign and Finance Ministers of G-7 countries and representatives of the European Community met in Tokyo April 14, 1993 to discuss support for reform in the Russian Federation. Prime Minister Kiichi Miyazawa of Japan opened the meeting, which was chaired jointly by Kabun Muto, Minister for Foreign Affairs of Japan and Yoshiro Hayashi, Minister of Finance of Japan. On April 15, 1993, the Ministers met with Mr. Boris Fyodorov, Deputy Prime Minister and Finance Minister of Russia, and Mr. Andrei Kozyrev, Foreign Minister of Russia for an extended discussion of the economic and political situation in Russia and to review how the international community could best support Russia's reform program. Our Russian colleagues reaffirmed the determination of President Yeltsin and his government to move forward with reform. They welcomed our determination to support the reform process in ways which complement the efforts of Russia.
2. Support for Russia's reform process with the aim of building a democratic society, establishing a market economy and improving the welfare of its people under the leadership of President Yeltsin
Russia has made courageous and extraordinary progress in the last two years. Russian reform and progress towards democratization are essential to world peace. We want to see a democratic, stable and economically strong Russia, firmly integrated into the community of democratic states and into the world economy. We are confident that the G-7 and Russia will continue to cooperate constructively and responsibly in international affairs. The Russian people themselves must bear primary responsibility for economic and political reform. The development of a market economy in Russia will be a long, arduous undertaking which will require difficult adjustments by the Russian people. We assure the Russian people of our support in coping with the inevitable hardships of the transition period. We remain resolved to work with Russia to develop lasting cooperation based on the principles of partnership and help for self-help laid out at the Munich Summit. Our assistance will be pragmatic, visible, tangible and effective, tailored to Russian absorptive capacity and phased with the progress of reform. We welcome the recognition by the Russian government that both monetary stabilization and further structural reform, including privatization, are critical. A positive environment for private reinvestment, including a proper legal and administrative framework, is crucial for the transformation of the economy. Better access to export markets is indispensable to structural reform in Russia.
3. Bilateral and Multilateral Actions
We have agreed on a series of multilateral actions which are closely interlinked with our bilateral efforts, as described in the Annex. Close coordination amongst our countries and the international organisations as well as close contacts with the Russian authorities will be necessary. Russia is currently experiencing a particularly difficult situation. We are also mindful of the challenging tasks facing other economies in transition. They too can continue to rely on our support. The success of the Russian reform program is in the interest of all countries. We encourage others to contribute to the actions we have taken today.
4. Next Steps
Our meeting in Tokyo has helped lay the foundation for the meeting to be held with President Yeltsin in July in Tokyo. The Heads of State and Government of the seven major industrial democracies and the President of the Commission of the European Communities will continue to pay close attention to developments in Russia. They look forward to a fruitful review in July.
Annex: Support To Be Provided to Russia
1. Support by the IMF for Macroeconomic Stabilization
Progress towards macroeconomic stabilization, especially the reduction of Russia's high rate of inflation by bringing monetary and credit expansion under control, is of paramount importance to the success of Russia's economic reforms. We encourage the IMF to play a more active role in this area, and we agree that IMF should be prepared to provide tangible support for the steps towards stabilizations. (a) We warmly welcome the proposal to create a new IMF Systemic Transformation Facility which could help countries in transition and provide Russia with up to $3 billion in financial support made available in two tranches. We urge that the first tranche be disbursed when Russia makes a political commitment to adopt an appropriate adjustment policy, as indicated by a policy statement. The second tranche should be disbursed when there has been satisfactory policy implementation with a focus on monetary policy measures to contain inflation, paving the way for a stand-by arrangement. (b) The IMF and Russia are strongly encouraged to develop a stand- by arrangement of up to $4.1 billion in more intensive support for economic stabilization, on the basis of a comprehensive macroeconomic stabilization program, as soon as possible and in any event before October 1, 1993. (c) We reaffirm our commitment to make available the currency stabilization fund of $6 billion to boost confidence in the rouble market, once macroeconomic conditions have stabilized.
2. Support by the World Bank For Structural Reforms
(a) Structural reform measures are essential for building a market economy and can most effectively be implemented in the context of macroeconomic stabilization. (b) The World Bank as a provider of long term support is well positioned to take the lead in supporting Russian structural and sectoral reform. (c) We urge the Russian authorities to improve their cooperation with the World Bank and to accelerate their efforts to utilize existing support by drawing down funds under last year's import rehabilitation loan, and to conclude the negotiation of the $500 million oil sector loan, which carries an additional $500 million co- financing, as rapidly as possible. (d) We back the World Bank's efforts to increase support for structural and sectoral reforms in parallel with the IMF's new Systemic Transformation Facility, including a second critical imports loan. We welcome the World Bank's willingness to pro- vide, for the coming 15 months, up to $4 billion in new commitments in the form of loans to support investment, the strengthening of institutions, and reform in several key sectors such as energy, agriculture and housing which will directly benefit the Russian people.
3. Support Mainly Through the EBRD for Small and Medium Sized Enterprises
(a) Small and medium sized enterprises are crucial for the development of a private sector in Russia. The EBRD should have a key role in this area. (b) We ask the EBRD to establish, in close cooperation with us, a $300 million fund financed half with its own funds to promote Russian small and medium sized enterprises. We invite other countries to contribute to this fund. We also request the EBRD to prepare the ground for creating a Russian Bank for small and medium sized enterprises.
4. Support for Privatization Of Large Enterprises
One of the crucial areas of structural adjustment in Russia is the restructuring and the privatization of large scale enterprises. We agree to set up a working group to explore how best to assist this process including possibly by combining bilateral and International Financial Institutions resources, with a view to reporting at the Tokyo Summit.
5. Debt Rescheduling
We welcome the agreement between 19 creditor countries and Russia on the rescheduling of the debts of the former Soviet Union, concluded at Paris on April 2, 1993, which represents a support of over $15 billion and which puts a heavy burden on creditor countries' budgets. The relief will substantially ease balance of payments constraints in the present stage of the reform process and paves the way for maintaining creditworthiness and for new capital inflows.
6. Export Credit Agency Activities and Cooperation
(a) The activities of the ECAs represent a major source of financing in our support for Russia. (b) It is important to ensure that their ECA financing supports Russia's structural reforms especially industrial restructuring in such key areas as energy. (c) To this end, it is highly desirable that there be opportunity for cooperation between the World Bank and the ECAs. (d) We are confident that the ECAs can provide export credits and guarantees for viable projects in an amount in the range of $10 billion.
7. Expansion of Trade
Improvement of access for Russian products to international markets strongly reinforces Russian structural reform. We intend to take measures to further open our markets. We will work with the Russian authorities for Russia's full integration into the international trading system through membership in the GATT. Existing trade regulations in the area of advanced technologies (including COCOM-related regulations) should be gradually liberalized, provided that Russia establishes effective export controls.
8. Energy Sector
We urge the rapid creation, in Russia, of an environment which encourages private investment and trade in the energy sector. In step with this, we intend to encourage relevant companies in our countries to expand their investment in Russia's energy sector. We emphasize the importance of an early conclusion of the Energy Charter Treaty.
9. Nuclear Safety
(a) Recent incidents highlight the urgency of achieving improved safety of nuclear power plants in Russia. This requires in the first place resolute action from Russia itself. We are committed to cooperate through the full and timely implementation of the multilateral program of action agreed at the Munich Summit. Concrete projects for safety improvements need to be undertaken without delay. We will work through the improved G-24 coordination mechanism to achieve early and significant safety gains. We also emphasize the importance of fully utilizing the Nuclear Safety Account managed by the EBRD in pursuing this aim. We call upon the international community to contribute to the Account. We emphasize the importance of close coordination between the EBRD and the G-24 in the operations of the Nuclear Safety Account. We will examine appropriate measures with our Russian colleagues on the basis of the World Bank and IEA studies and will carry forward the process initiated at Munich at the forthcoming Summit in Tokyo. (b) Ocean dumping of radioactive waste is a matter of great concern. We agree that this should be studied further.
10. Dismantling Nuclear Weapons
The importance of assistance to dismantling of nuclear weapons and the disposition and control of fissile materials derived from them is recognized as an issue relating to the security of the whole world. National cooperation with Russia in this area constitutes a part of multilateral efforts. Some G-7 countries are already working with Russia. We agree to consider how this work could be furthered and how other countries could be involved in these efforts.
11. Science and Technology
(a) With respect to the International Science and Technology Center, whose establishing agreement was signed last November, we stress the importance of necessary procedures to be taken in Russia to enable the International Science and Technology Center to commence its activities at the earliest possible date. (b) We see possibilities to proceed with new forms of cooperation in science and technology, including programs in the field of outer space.
12. Food and Medical Assistance
We are now providing food and medical assistance and remain ready, as in the past, to consider additional support in case of emergency.
13. Technical Assistance
We stand ready to assist Russia in attracting a broad flow of know- how and experience to benefit concrete projects and individual enterprises in the regions and localities. Teams of experienced advisors should engage in long-term cooperation on the spot and more Russians should come to our countries for training. The Russian Government should strengthen its ability to direct technical assistance to where it is needed. We urge the World Bank to activate without delay and make full use of the Consultative Group process agreed at the Munich Summit in order to achieve a more effective coordination.
14. Bilateral Cooperation
We welcome the recent decisions of G-7 countries to increase their bilateral support. Our bilateral efforts are an integral part of our common strategy to assist Russian reforms. We stand ready to continue our bilateral efforts, which are closely linked with and complement the above outlined actions program.
15. Support Implementation
Recognizing that the greater efforts to improve the effectiveness of our support are needed, we will work urgently to ensure such support is implemented as efficiently as possible. To that end we will seek, in close consultation with the Russian authorities and relevant international organizations, to establish arrangements to facilitate the use of technical cooperation and financial support, and to cooperate with the Russian authorities in removing bottlenecks so as to improve the efficient implementation of support.

ARTICLE 10: Secretary Christopher/Treasury Secretary Bentsen-- Supporting Russia's Historic Struggle

[Opening statements at news conference, Tokyo, Japan, April 15, 1993] Secretary Christopher: When I arrived here in Tokyo, I said these meetings would be critical, that we were here on a noble mission to determine how the world's industrialized democracies can best help unite behind and how we can support the historic struggle of the Russian people to build a free society and a vibrant market economy. Our deliberations over the last 2 days have been true to this mission. We've united behind reform in the new Russia. The degree of unanimity among the group that was meeting has been really quite remarkable. We would particularly like to thank the Japanese Government for its excellent organization of these meetings and for its leadership at the conference. Japan's role in this effort, as in so many other issues that will affect the future of the world, has been critically important. For the first time in its history, the G-7 foreign and finance ministers have met to discuss a single issue: the struggle of the Russian people to create a democratic future. Our meeting itself is a remarkable symbol of the progress we have made in creating a new relationship with Russia in just a few short years. We came to Tokyo out of convictions that the United States and its allies must stand squarely in support of the democratic political and market economic reform in Russia. I know that President Clinton felt strongly, as did his G-7 colleagues, that we simply could not wait for the annual summit in July to act decisively on behalf of the reform government in Moscow and to give support to the reformers throughout Russia at this critical time. I believe that we have met this challenge and that we've had a very successful conference. The United States is pleased with this conference's single greatest achievement, the agreement among the G-7 countries, Russia, and the major industrialized financial institutions--that is, the IMF, the World Bank and the EBRD--for a new and substantial multilateral package of economic support for Russian reform. We've divided our labors here today, as we did during the course of the conference. Secretary Bentsen will discuss this critical and most significant achievement, and I'll discuss briefly the political context and the bilateral aspects. As you know, at the Vancouver Summit, President Clinton announced that the United States will provide $1.6 billion in targeted, concrete assistance to Russia. After consultation here with our allies, with the Russian Government, and with the Congress, the President has decided it's in the interests of the United States and its citizens to build on the earlier package of assistance announced in Vancouver in order to promote even greater Western support for reform in Russia. Accordingly, I'm announcing here today for the first time that the President will request an additional $1.8 billion in support for Russian reform. This new package of American support includes roughly $1.55 billion in grants, $300 million of which will be directed to the other newly independent states, with the remainder for Russia. I say "roughly," because the President is still in the course of consultation with Congress on precisely how this new figure of $1.8 billion will be allocated. This package will encompass expanded US support for initiatives in energy and the environment, housing for military officers, assistance to the private sector, exchanges, medicine, and trade and investment. A principal new feature of this package is a $500- million grant to begin a new special privatization and restructuring fund. This amount is contingent on contributions from other G-7 governments. Our aim is to create a $2-billion G-7 fund with additional commitments from the international financial institutions on top of the $2-billion fund that we hope to create here. This new fund would provide loans and grants to newly privatized Russian enterprises and to local workers and communities undergoing the very difficult transition and conversion from a command economy to a market economy. In addition to this privatization fund, we discussed the creation of another new fund to support the process of dismantling and de- nuclearization in Russia and the other newly independent states. The United States has already committed $800 million in Nunn-Lugar funds to this effort, and the President is now requesting an additional $400 million from the Congress in FY 1994. We hope to have agreement by the Tokyo summit in July on this new G-7 effort to create much greater resources in this critical de-nuclearization area. I want to underscore to the American people, who may be viewing or listening to this announcement, that the United States effort at reform in the new Russia is in no way a program of charity; it is in no way a handout. On the contrary, President Clinton has decided to act here in support of Russian reform because it's in the self- interest of the American people. As I've said many times, the stakes simply could not be higher here. It's in our interest to move forward with this program of reform. Should the forces of reform, led by President Yeltsin--should they be thwarted or reversed, we would face increased instability in Russia, the loss of large potential markets for our businesses, the necessity to continue to invest dollars in defense and not in the urgent domestic needs of our people in the United States. On the other hand, if the Russian people succeed, all the world's people will succeed and will be benefited. We must take the long view here and make the investments that I've outline here. To sum up the conference here, I think we've made excellent progress in meeting the challenge of building a new relationship with the new Russia. The President is determined to continue the intensity and pace of the effort that we began in Vancouver here in Tokyo, yesterday and today, [and] in Tokyo, again, in July and in the months to come. He looks forward to a continued collaboration with the Russian Government and with Japan and our other G-7 partners. Secretary Bentsen: This week's meeting in Tokyo is truly unique. It's the first time that you've had a joint meeting of the G-7, of the foreign ministers and the finance ministers; and that's not the only thing that's different about it. Our agenda is no longer dominated by questions of nuclear security, the balance of power. It's one of economic cooperation and partnership that advances global peace and prosperity. Our meetings were extremely productive. Seven nations sat down and crafted a $28.4-billion multilateral economic support package for Russia. It will provide assistance tailored to help Russia succeed in one of the greatest political and economic challenges in history--creating a democracy and a vibrant market economy. That process is going to require a sustained transformation in Russia and continuing support from the rich G-7 nations and the international financial institutions. It's going to take many years, so we have to get started quickly. Secretary Christopher spoke about the bold bilateral initiatives that President Clinton has put forth to assist Russia. I will briefly describe the multilateral support package assembled here in Tokyo. We welcome the proposed systemic transformation facility, which we expect the IMF to create in coming weeks. It could provide Russia with up to $3 billion, half of that as soon as Russia takes the first steps toward stabilizing its economy. In addition, the IMF and Russia are working on a $4.1-billion standby loan which would clear the way to activate the $6-billion ruble stabilization fund. We also urge the World Bank to step up its support for Russian structural reform. The bank can furnish $4 billion in new commitments to help Russia rebuild key sectors, and that's especially energy and agriculture. The EBRD also must play a greater role in supporting Russia's private entrepreneurs. We urge the EBRD to develop a $300-million fund that will finance small and medium-sized private companies in Russia. We welcome indications from our G-7 partners that their export credit agencies also will provide resources in the range of $10 billion. The recently concluded US Export-Import Bank oil and gas framework should help provide up to $2 billion for rehabilitating Russia's oil wells while boosting US exports. With this kind of a far-reaching, multilateral program, we can walk with Russia down the road of reform, with each step backed by appropriate G-7 financial support. The multilateral effort we are announcing today represents a major coordinated effort to bolster Russia's reform revolution as well as its reformers.

ARTICLE 11:Strobe Talbott, Ambassador-at-Large and Special Adviser to the Secretary for the New Independent States-- US Must Lead a Strategic Alliance With Post-Soviet Reform

[Statement before the Subcommittee on Foreign Operations of the House Appropriations Committee, Washington, DC, April 19, 1993] Mr. Chairman and distinguished members of the committee, thank you for the opportunity to discuss the Clinton Administration's policy toward Russia and the other new independent states of the former Soviet Union. The task of your subcommittee, Mr. Chairman, is to draft legislation, just as the task of our Administration is to draft policy. But on the issue before us in this hearing, what we are really doing--what we are doing together--is nothing less than helping to shape history. There have been three great struggles in this century. The first was World War I, a conflagration that ignited the Russian Revolution of 1917; the second was the World War against fascism and imperialism of 1939-1945; the third was the Cold War against Soviet communism and expansionism. Now a fourth great struggle is underway in Eurasia. It pits those who brought down the Soviet communist system against those who would like to preserve its vestiges if not restore its essence. It pits those who are determined to build a proud future against those who are clinging to a cruel and shameful past. In short, it pits reform against reaction. We have a stake in the outcome of that struggle. Until now, many Americans have been led to see our stake primarily in terms of what we do not want to happen: We do not want economic distress and political turmoil to trigger a civil war that could rage across 11 time zones; we do not want a nuclear Yugoslavia in the heart of Eurasia; nor do we want to see the rise of a new dictatorship that represses its people, threatens its neighbors, and requires the United States and its allies to return to a Cold War footing. Mr. Chairman, while those concerns are entirely valid, I believe we need to think of our objectives in much more positive terms: An investment now in the heroic effort of these new democracies to restructure their economies will pay dividends down the road. A Russia, a Ukraine, a Kazakhstan fully integrated into the international economy will be a reliable source for raw materials and manufactured products, a reliable market for American goods and services, and a reliable partner in diplomacy and in dealing with global threats to human welfare and the environment. In other words, Mr. Chairman, our policy should not be only to prevent the worst that can happen, but should focus on nurturing the best. Russia is undergoing a transformation in its very nature as a state. We, therefore, should undertake a corresponding transformation in the role we play. Having successfully led an international coalition against the Soviet Union for nearly half a century, we must now lead a strategic alliance with post-Soviet reform. A strategic alliance implies a policy intended to serve us, and our allies, for a long time. And so ours must. Yet, while taking the long view, our Administration has also had to act quickly. The beginning of this Administration has coincided with a crisis in Russian politics. Exactly 1 month after President Clinton's inauguration here in Washington, President Yeltsin threw down the gauntlet in Moscow before a parliament that is dominated by reactionaries. Six days from now, on April 25, Mr. Yeltsin faces a referendum in which the Russian people will express their views on his leadership, on his economic policies, and on whether there should be new presidential and parliamentary elections. We all hope that the referendum will strengthen the reformers' ability to pursue their course. We want the Russian people to understand that the world stands with them as they make the transition from communism to democracy and free markets. But we recognize that April 25 may not be conclusive, either for better or for worse. And the referendum alone is unlikely to end the struggle between competing interests and conflicting visions. Both on April 25 and in the months and years that follow, the showdown between the reformers and the reactionaries will be waged largely over the issue of which camp represents the interests of the Russian people. One of the main reasons that President Yeltsin is embattled today is that too many Russians identify reform with hardship--with skyrocketing prices, falling living standards, and deteriorating social order. Unless the reformist government is able to build a broader and more active constituency for its policies in the months to come, those policies--and that government--will be in jeopardy. Thus, the Administration has had to move boldly, in a way that reflects our sense of urgency yet demonstrates our commitment to the long haul. In what we have done already--and in what we are asking you to do now as you go about drafting foreign aid legislation in the weeks ahead--the United States must advance two objectives: First, we must do what we can from the outside to make the benefits of reform visible and tangible to the people on the inside-- that is, average Russians--and to do so as soon as possible. Second, we must find targets for support that will last [and] that represent trends we hope will become irreversible, so that we are supporting an ongoing process that can survive the buffeting of political and economic setbacks. While the first of these objectives is short term and the second is long term, they are, we believe, entirely compatible. Indeed, they are mutually reinforcing. We believe that both objectives are evident in the four steps the Administration has taken in support of reform: the $1.6-billion initiative that President Clinton unveiled in Vancouver on April 4; the $28.4-billion package of multilateral measures to which the G- 7, led by the United States, committed itself last week; the additional $1.3 billion in bilateral programs that the Administration announced at the same time; and, finally, the $704 million FREEDOM [Freedom for Russia and Emerging Eurasian Democracies and Open Markets] Support Act component of the FY 1994 budget. Let me say a bit about each. At the conclusion of the Vancouver summit 2 weeks ago yesterday, the President announced a plan for accelerating, intensifying, and redirecting existing programs so that their benefits will be apparent to the Russian people this year. Moreover, the Vancouver package is intended to meet the key needs that the Russian reformers themselves have identified: in the areas of energy and environment, housing, exchanges, private sector development, and trade and investment activities. The Vancouver package also included $700 million in concessional loans for foods sales, which permit a resumption of US food exports to Russia. It has been President Clinton's determination from the outset to use US-Russian bilateral cooperation as a catalyst to multilateral support for Russian reform. In that spirit, 10 days after the Vancouver summit, Secretary of State Christopher and Secretary of the Treasury Bentsen traveled to Tokyo for a meeting of the Group of 7. The Tokyo meeting delivered a clear message of support for Yeltsin and the reform movement. That support took the form of a commitment on behalf of the G-7 to help Russia restructure key sectors of its economy, divest itself of inefficient state enterprises, finance critical imports, and stabilize its currency. Significantly, the Tokyo meeting was the first joint meeting of finance and foreign ministers in the history of the G-7. It was intended to underscore the connection between politics and economics in Russia: Market reform is likely to succeed only in a pluralistic society governed by the rule of law; democracy is more likely to thrive in a vibrant economy. Tokyo also demonstrated two vital themes in this Administration's policy: First, that we, the United States, are in partnership with our fellow industrial democracies; and Second, that we, the industrial democracies, are in partnership with the Russian reformers who are trying to transform their country into an industrial democracy in its own right. Just as the contents of the Vancouver package reflected the discussions between Presidents Clinton and Yeltsin, so the contents of the Tokyo package reflected what [Russian] Foreign Minister Kozyrev and Deputy Prime Minister Fyodorov told Secretaries Christopher and Bentsen and their assembled G-7 colleagues: namely, that Russia needs Western help to maintain the pace of reform. Minister Fyodorov and his colleagues were actively involved in the discussions leading up to Tokyo. They helped shape a number of the elements of the multilateral package. Their involvement focused the G-7 effort on developing a realistic set of short- and medium-term objectives for reform. Ministers Fyodorov and Kozyrev participated fully in the second day of the G-7 meetings. The G-7, in turn, made clear to the ministers that it is up to the Russians themselves to control inflation before our support can be effectively used. The Tokyo G-7 package includes approximately $4 billion in fast- disbursing funds from the International Monetary Fund [IMF] and World Bank. These are targeted at the primary objectives of reigning in the credit policies of the Russian Central Bank and providing critical imports to slow the economic contraction. Disbursements could be made in a matter of weeks. They would allow the Russian Government to undertake some politically tough measures necessary to stabilize the economy. These initial steps would, we hope, yield substantial progress in the campaign against inflation. The government could then translate success on that critical front into a more comprehensive economic stabilization program. The G-7 has agreed to support $10 billion over the coming year for this endeavor. This includes $4 billion for a new IMF standby program and a renewed commitment to a $6- billion currency stabilization program. Unlike last year's G-7 program to support Russian reform, this year's program sets what we believe to be realistic standards for Russian performance. The Russian economy must walk before it can run. Each incremental step must be matched by prompt, demonstrable benefits to the Russian economy and to the Russian people. The third component of multilateral support is directed toward reforms in specific sectors of the economy. While long-term viability depends on the success of the stabilization program, efforts in sectors, like energy and agriculture, can complement and enhance the stabilization program by increasing foreign exchange earnings and making improvements in the local market visible to the general population. In Tokyo, the G-7 leaders committed $14 billion to this effort, most of it in the form of new export credits. The US has already made a significant contribution in this area. In Tokyo we announced with the Russians an agreement on a $2-billion Eximbank framework for export credits in the oil and gas industry. The US equipment and services financed under this agreement will substantially increase Russian exports and foreign exchange earnings. At the same time, there will be benefits here at home. The first tranche of $500 million in guarantees alone will support thousands of jobs in US companies that were hit hard by the recent recession. We also laid the groundwork at Tokyo for a number of what we believe to be promising additional multilateral measures. We hope to persuade the G-7 to join us in providing assistance for the safe dismantlement and destruction of nuclear weapons in keeping with the terms of international agreements. We were pleased that the Japanese announced last week that they will contribute $100 million toward this end, but we think more needs to be done by them and by other G-7 members. We agreed in Tokyo to establish a working group on how to expand the nuclear-weapons dismantlement program by the July G-7 summit. The second new proposal put forward by the United States at Tokyo was for the creation of a special privatization and restructuring fund. This fund--which is an American idea strongly endorsed by the Russian reformers--would help ease the economic and social consequences of privatizing some of the more than 20,000 medium- and large-scale enterprises. The fund would help make the newly privatized firms self-sustaining with loans to modernize plants, retraining for workers, and technical assistance to managers who are making the adjustment to operating in a market economy. The Russian economy and society are cursed by huge--and hugely inefficient--state-owned enterprises that utterly dominate entire cities. The special privatization and restructuring fund would be used to help municipal governments in these one-company towns cope with the consequences of breaking up and selling off these monoliths. Outlays from the funds could be used to invest in local infrastructure to support the smaller, newly privatized companies and the communities of which they are a part. To be effective on the ground, this program must be carefully targeted, phased, and monitored. The funds would be directed toward enterprises and communities that are selected as the most promising and deserving. The US proposed in Tokyo that the G-7 create a support implementation office. The office would be headed by a person with strong administrative and managerial capabilities--as well as experienced in Russian affairs--and with a small staff of technical experts. This office would also be responsible for working with the Russian reformers to remove bureaucratic obstacles to implementation of G-7 programs and for ensuring that Western funds are spent effectively. At Tokyo, the US told the G-7 that the Administration would seek from Congress $500 million for the privatization fund as a "challenge grant," to be matched by at least $1.5 billion in contributions from other countries, as well as up to $2 billion in co- financing by the World Bank and the European Bank for Reconstruction and Development. Here again, Mr. Chairman, please note one of the central elements of our policy: The US is not only demonstrating its leadership--it is using that leadership to leverage from the international community considerably more money than we are putting on the table ourselves. The G-7 has agreed to establish a working group on the special privatization fund, with a view toward making a decision by the July summit. Finally, Mr. Chairman, let me say a bit about the new package of US- Russian bilateral initiatives that President Clinton announced simultaneously with the G-7 meeting. You will recall that, at Vancouver, the President indicated his intention to go beyond the $1.6-billion program he announced there. He would, he said, seek additional funds for certain high-priority areas after he had a chance to take into account what he had heard from President Yeltsin and what he learned from further consultations with Congress. The congressional consultations have begun in earnest, and I regard my appearance before you here today as part of that process. The Administration is committed to seeking approximately $1.3 billion in additional bilateral assistance to support reform in Russia and the new independent states. Those funds would be used to strengthen programs in the priority areas of energy and environment, housing, the private sector, exchanges, trade and investment, and humanitarian assistance. How exactly the $1.3 billion will be apportioned is still a matter we are discussing. Our discussion will, as I just indicated, depend in significant measure on our deliberations with you and your colleagues, both on the details of the package and on the appropriate funding mechanisms. While I cannot, therefore, get into a detailed breakdown of the package, I can say a bit more about the areas on which we intend to concentrate. In energy and environment, a substantial portion of the funds would be used to finance improvements in nuclear reactor safety. With nearly two dozen water-cooled nuclear power plants, there is an urgent need for additional assistance to upgrade the safety systems and protect against potentially catastrophic accidents. We also hope to expand significantly our efforts to improve oil production and restore oil and gas pipelines that are an environmental hazard and that waste precious resources. Other industries are also major polluters and desperately need the benefits of US technology. In Vancouver, President Yeltsin identified housing for returning and demobilized officers as a top priority. It is in our interest as well as his to see the continued withdrawal of the troops of the former Soviet armed forces from neighboring countries, especially the Baltics. The success of continued political reform, is, in part, dependent on the military staying out of politics and allowing the democratic transformation to continue. Expanded US support could finance the construction of several thousand housing units for returning officers. This initiative seeks to include the US private sector and American private and voluntary organizations in building houses and developing the local construction capacity. There is also a need to expand efforts to help Russia's farmers and institutions create a market-driven food system. If more US agribusinesses are linked with Russian partners, it will help break marketing bottlenecks and make delivery systems more efficient. Expanded programs would respond to the ever-growing demand to help small businesses and entrepreneurs overcome the enormous obstacles that are the vestige of a command economy. Additional funding would also be used to dramatically increase the number of people-to-people exchanges. There is no substitute for making training and firsthand experience in America available to people who lived their entire lives under a system that discouraged creative initiative and independent thinking. It is our hope that thousands of students, teachers, and budding entrepreneurs could be given the chance to study and train in this country. They would take back not just facts and know-how but a view of a successful democracy and free market based on a real experience. To expand bilateral trade and investment, the Administration would also intend to provide additional credits and guarantees through the Export-Import Bank and the Overseas Private Investment Corporation [OPIC]. Beyond the oil and gas sector already being targeted, the Eximbank and OPIC could use additional funds to support financing in areas like mineral extraction, telecommunications and air-traffic control, and defense conversion. With US companies and exports directly supported by these programs, the mutual benefits are obvious. Still, there must be a continuing component of humanitarian assistance as well. Americans have always responded generously to medical emergencies around the world, and the need in Russia is acute. The recent congressional delegation, of which several of you were a part, saw the appalling lack of supplies for hospitals. Some of the funds we are requesting in the follow-up bilateral package would be used for supplying vaccines and responding to critical shortages of medicines, especially those that will help children. But in this area, too, we are guided by the adage: Give a man a fish, and you feed him for a day; teach him how to fish, and you feed him for a lifetime. Our hope is that over time, Russia and the other new independent states will move away from a reliance on foreign donations. To that end, we want to provide technical assistance to build up local capacity for the manufacture of basic pharmaceuticals, particularly in areas outside of Moscow. Let me reiterate that I have purposely not attached specific dollar figures to the programs I have mentioned here, because we hope over the next few weeks to have continuing consultations with members of this committee and other Members of Congress before making final decisions on the components of the additional request. I would welcome your views on the areas I mentioned as priorities as well as programs you think we missed. I should add that Ambassador Thomas Simons will shortly be assuming the post of coordinator of our assistance programs to the new independent states. After serving for several years as ambassador to Poland, he has a great deal of experience in helping former communist countries make the transition to democracy and market reform. He knows what works and what doesn't, and he has the proven leadership and management skills to ensure that the many agencies involved remain focused on key objectives and are complementary to each other. I expect Ambassador Simons to work closely with members of this committee and its staff in shaping our program and carrying out his duties. Ambassador Simons will coordinate US assistance programs, including those funded under the FREEDOM Support Act, which was passed last year and on which we intend to build. As you know, we have requested $704 million in the FY 1994 budget to continue many of the successful programs under the FREEDOM Support Act into next year. Those funds will be used in the same key areas I have just outlined. Before making myself available to your questions, let me make a final point. Much of what the Administration has done so far--and much of what I have said here this morning--has been focused on Russia. That is appropriate, given the sheer size of the country as well as the magnitude of the problems it poses and of the opportunities it represents. However, this Administration's efforts will be directed at reform in all of the new independent states. A significant share of the grants and credits announced in Vancouver and Tokyo will be directed toward the other countries. A number of the multilateral programs announced in Tokyo, like the new IMF facility, will be available to these countries as they move along the path to reform. Substantial amounts of our own Nunn- Lugar nuclear-weapons dismantlement funds will also be used in Ukraine, Belarus, and Kazakhstan. So will funds from whatever dismantlement program emerges from the G-7. The funds we are requesting for the FY 1994 FREEDOM Support Act will be weighted toward states other than Russia in the hopes that many will have followed Russia's lead in reform. In conclusion, Mr. Chairman, my overall point is that as you and your colleagues examine the specifics of our policy, I think you will see that they reflect our determination to support reformers wherever they are to be found--whether in capitals like Moscow or Kiev or Bishkek or in the farthest reaches of those countries, large or small; whether in the Kremlin or the parliament or the regional governments or municipalities, down to the grass roots. We have also concentrated, to the greatest extent possible, on the non-governmental sector. Since we are trying to nurture the growth of the private sectors in the new independent states, it is natural that we should enlist the American private sector. That is another common denominator of the initiatives we have put forward. In general, Mr. Chairman, when we speak about US-Russian economic "engagement" and "partnership" instead of "assistance" and "aid"-- when we speak about building a "strategic partnership with Russian reform"--we are not resorting to euphemisms. We are expressing what we believe to be a fundamental aspect of our policy. All the programs I have outlined for you today are intended to benefit both Russia's people and our own.

ARTICLE 12: Secretary Christopher-- Assistance to Russia And the Foreign Affairs Budget

[Statement before the Senate Foreign Relations Committee, Washington, DC, April 20, 1993] It is a pleasure to appear again before you and this committee. Three months have passed since our first official meeting at my confirmation hearing. Much has transpired in that time. We have conducted an activist, internationalist, democracy-oriented foreign policy. I look forward to exploring the full range of challenges we confront. I will limit my formal remarks to two key issues. First, I want to update you on our single-most important foreign policy priority: the effort to help reform succeed in Russia. Second, I will review the Administration's foreign affairs budget requests and management strategy.
Assisting Reform in Russia: From Vancouver to Tokyo
Mr. Chairman, the last few weeks have witnessed important developments in Russia's relations with the United States and the West. The Vancouver summit between Presidents Clinton and Yeltsin marked a milestone. It was the first truly post-Cold War summit, where talk about economic reform and democracy played as central a role as negotiations over nuclear weapons did in the past. At the summit, the presidents agreed on a new package of bilateral programs designed to address Russia's immediate human needs and contribute to the building of a market economy. It targets areas of high priority. This includes a resumption of US food exports; support for privatization and new businesses; help in dismantling nuclear weapons; a housing program for demobilized soldiers to speed Russia's withdrawal from the Baltic countries and parts of the former Soviet empire; funding for programs to enhance nuclear safety; help in resurrecting Russia's energy sector; and an increase in people-to-people exchanges. These programs are designed to deliver quick, tangible benefits to the Russian people. They will support Russia's long-term transformation to the market, and--most importantly-- directly serve US interests by reducing the former Soviet nuclear arsenal and opening new markets for our workers, farmers, and businesses. While America's increased support and leadership will be critical for promoting reform, we cannot do it alone. Our help must be part of a much larger partnership between Russia and the international community. Building that broader cooperative effort was precisely the purpose behind last week's extraordinary meeting in Tokyo between foreign and finance ministers of the G-7 [Group of 7 industrialized] countries and Russia. At that meeting, Russia's Deputy Prime Minister Fyodorov outlined a bold new plan to control Russia's money supply, reduce its budget deficits, and achieve macroeconomic stabilization. In response, we and our G-7 partners--working through the international financial institutions--announced a major new multilateral initiative to support reform. In addition to the Paris Club's recent rescheduling of $15 billion of Russia's foreign debt, the $28-billion Tokyo package will include helping Russia to stabilize its currency, to finance critical imports, to restructure key sectors of its economy, and to reduce the threat of its deadly nuclear legacy. The vast majority of this new support for Russian reform will come from the international financial institutions. But it is also going to require contributions from G-7 members, as well as other countries in Asia, the Middle East, and Europe that are capable of participating. Here, America must be willing to pay its fair share. As President Clinton stated in Vancouver, our strategy to assist Russia consists of three steps. -- The first is the $1.6 billion package of bilateral programs announced at the US-Russian summit. As you know, the monies for this package have already been appropriated by the Congress. -- The second step is the new multilateral support program announced in Tokyo. One of the most important and innovative parts of that program could be the creation of a G-7 privatization fund. This fund is designed to help Russia cope with the economic and political consequences of privatizing the huge--and hugely wasteful--state-owned enterprises that are bleeding its budget dry and fueling inflation. Our share of this effort would amount to some $500 million, and would take the form of a "challenge grant." That is, it would be contingent on other G-7 members contributing another $1.5 billion. We would then look to the international financial institutions to commit an additional $2 billion in co- financing, bringing the fund's total resources to $4 billion in grants and loans. -- The third step in the President's plan to support Russian reform is to work closely with the Congress to develop further bilateral assistance efforts. A starting point will be the funding requests in our fiscal year (FY) 1994 budget to continue current programs to dismantle nuclear weapons, deliver humanitarian help, and promote democracy and privatization. In recent talks with the Russians, our G-7 partners, and the Congress, we have reached the conclusion, Mr. Chairman, that even more must be done. As I announced last week in Tokyo, the President has decided to seek an expanded package of US bilateral programs, to build upon the ones announced at Vancouver, and in addition to the requests contained in our FY 1994 budget. This package reflects the intensive consultations that we have had. It focuses on what Russia's reformers say they most need, as well as the areas where Members of Congress have suggested our efforts should be aimed. This will build on our assistance efforts in energy, privatization, and housing for demobilized soldiers and also provide support for the environment, medicines, trade and investment, and exchange programs. This expanded package of bilateral steps, together with our $500 million contribution to the prospective G-7 privatization fund, would require an additional appropriation of approximately $1.8 billion. We are now consulting with this committee and others in Congress to determine how best to structure such a request.Mr. Chairman, I realize this is a difficult proposal at a time when so many Americans face hardships here at home. But President Clinton and I are convinced that this investment in Russia's democratic future is an essential investment in America's future. By making this investment, we can help turn our most dangerous enemy into an enduring partner. That, I believe, is a critical--indeed, a noble-- mission. The President and I will continue to make the case to the American people that a focused program to assist Russian democracy is in our deepest self-interest. We are counting on the members of this committee to join us in this effort.
International Affairs Budget
Mr. Chairman, let me now turn briefly to a discussion of our FY 1994 international affairs budget. It is a budget that accurately reflects the times we live in. In its funding requests, it recognizes the tight fiscal constraints confronting our government today. And in its priorities and objectives, it marks a first but important step toward addressing the new challenges of the post-Cold War era. One of our highest priorities will be promoting democracy and human rights. I have already described the especially high stake we have in helping freedom triumph in Russia and the other new states of the former Soviet Union. But our efforts must be worldwide. The lesson of this tragic century is clear: The best check against international aggression is the emergence of governments that encourage tolerance, pluralism, and respect for the individual. Our budget also places a new emphasis on promoting multinational peace-keeping and peace-making. The end of the Cold War has unleashed long-suppressed conflicts in Eastern Europe, the former Soviet Union, and elsewhere. But it has also opened up new possibilities for international cooperation. Our task is to harness that cooperation to contain, and far more importantly, to prevent conflict. The tragedies of the Balkans and Somalia bear grim witness to the price of international delay. International peace- keeping--especially by the UN--can and must play a critical role. Capabilities must be enhanced to permit prompt, effective, preventive action. We in the United States must be ready to do our part. In this connection, the President and I believe that millions spent now on preventive diplomacy and peace-keeping can save hundreds of millions in defense and international relief later. These priorities, as well as others highlighted in our budget, represent an important effort to reorient our scarce resources to the realities of the post-Cold War era. The budget reflects a commitment to using the taxpayers' dollars wisely and efficiently, in full support of the President's economic and deficit-reduction programs.
Reforming the Institutions
As important as how much we spend on foreign policy, however, is how we spend it. I'm convinced that the Department of State cannot hope to respond effectively to new challenges unless we improve the way we deal with complex problems that cut across traditional bureaucratic boundaries. A stifling bureaucracy, an obsolete division of labor, or cumbersome decision-making are luxuries we cannot afford. As a first step in remaking the State Department, I announced a broad-based reorganization plan in February. The plan shifts portfolios and creates new positions to mirror post-Cold War missions. It will reduce excessive layering within the Department and streamline the policy process. Our objective is simple: quicker policy-making, more open policy-making, and, most importantly, better policy-making. We also need to refocus our foreign assistance priorities and programs. Specifically, the US Agency for International Development must be overhauled. I have asked Deputy Secretary Wharton to examine the Agency's role in the post-Cold War era and report his recommendations to me by the end of this month. We look forward to working closely with this committee and the full Congress in this effort.
Conclusion
Before I conclude, Mr. Chairman, I would like to depart from my prepared remarks to say a few words about the worsening tragedy in Bosnia. Upon taking office, our Administration was faced with a condition of advanced deterioration. Frankly, it was a situation that would have been better dealt with by the West more than a year ago. Nonetheless, we now face a worsening environment in eastern Bosnia that has horrified the world. In response to the Serbs' relentless aggression, the United States joined our partners in the Security Council this weekend in passing a resolution that will dramatically tighten existing economic sanctions. The steps are, indeed, severe--and entirely fitting. When implemented, they will significantly increase the pariah status of Belgrade and its Bosnian allies. We intend to press for total isolation so long as they continue their aggression. If Bosnia's Serbs fail to halt their aggression and agree to a peace plan within 6 days from today, Serbia will confront a series of harsh new measures, including the following: -- All ships will be banned from entering Yugoslav territorial waters; -- No country will be allowed to ship goods by land across Serbia; -- Every Yugoslav plane, ship, truck, rail car, and cargo container outside the country will be subject to impoundment; -- Barges will be prohibited from passing through Serbia along the Danube River unless they have special permission and submit to UN monitoring; and -- All bank accounts and other financial assets held by Yugoslav institutions abroad will be frozen. These steps will also apply to Serb-held areas of Bosnia and Croatia. The President remains deeply concerned [about] the situation. The Administration is now urgently reviewing a wide range of options available to the world community to further punish Serbian aggression and bring an end to the violence. As the President has said, this includes options that have previously been unacceptable. We will stay in close touch with members of this committee and the full Congress as our deliberations proceed. (###)