VOLUME 5, NUMBER 11, MARCH 14, 1994
1.  Signing of a Framework Agreement for Peace
in Bosnia -- President Clinton, Secretary
Christopher, Bosnian Prime Minister Silajdzic,
Croatian Foreign Minister Granic, Bosnian-Croat
Representative Zubak
2.  A Foreign Affairs Budget That Promotes U.S.
Interests -- Secretary Christopher
3.  U.S. Perspective on Building Peace And
Prosperity In Central and Eastern Europe --
Stephen A. Oxman
4.  Export Controls and Non-proliferation
Regimes in the Post-Cold War World -- Lynn E.
5.  Resumption of U.S.-North Korea Negotiations
On Nuclear and Other Issues
6.  U.S.-Latin America Relations in the 1990s:
Toward a Mature Partnership -- Alexander F.
7.  Substantive Symmetry in Hemispheric
Relations -- Richard E. Feinberg
Signing of a Framework Agreement for Peace in
President Clinton, Secretary Christopher,
Bosnian Prime Minister Silajdzic, Croatian
Foreign Minister Granic, Bosnian-Croat
Representative Zubak
Statement by President Clinton, released by the
White House, Office of the Press Secretary,
Washington, DC, March 1, 1994.
I warmly welcome the signing today in
Washington of a framework agreement
establishing a federation in the areas of the
Republic of Bosnia and Herzegovina with
majority Bosnian and Croat populations.  This
framework agreement also provides the outline
of a preliminary agreement for a confederation
with the Republic of Croatia.  This is a major
step in the search for peace in Bosnia.  I am
especially pleased with the tireless efforts of
my Special Envoy, Charles Redman, and those of
Croatian Foreign Minister Granic, Bosnian Prime
Minister Silajdzic, and Mr. Kresimir Zubak,
representing the Bosnian-Croats.
I spoke this evening with President Alija
Izetbegovic of the Republic of Bosnia and
Herzegovina.  I congratulated him for his
leadership and the critical role he has played
in this achievement.  All of us are heartened
by the courage that he and the Bosnian people
have shown in their struggle for peace.
I also spoke with President Franjo Tudjman of
Croatia to convey my admiration for the
statesmanship he has shown in forging this
agreement.  I underscored the support of the
United States for the sovereignty and integrity
of his country.
A great deal of work remains to be done to
bring a full peace to Bosnia.  The United
States will continue to work closely with the
parties throughout this process.  I urge the
parties to continue to demonstrate the
flexibility and statesmanship that has brought
them to this point.  I urge them to persevere
over the coming weeks to help ensure that
today's accomplishments lead to the peace so
long overdue.
Remarks at the Signing
Remarks by Secretary Christopher, Prime
Minister Silajdzic, Foreign Minister Granic,
and Representative Zubak at the signing of the
federation framework agreement and the
preliminary confederation agreement,
Washington, DC, March 1, 1994.
Secretary Christopher.  I am extremely pleased
to be present at this hopeful and significant
moment in the history of the people of Bosnia
and Herzegovina.  There are many people to
welcome here today.  I see the Secretary of
Defense and Ambassador Harriman, and I see
General Shalikashvili.  I'm sure I'm leaving
out a number of other important American
I would like to welcome our many colleagues
from the European Union, who have been our
partners in this from the beginning and who
were good enough to make their way through the
snow and ice to be here tonight.
I am also happy to welcome representatives from
the Russian Federation, from the several
nations contributing forces to UNPROFOR, and
from the nations bordering the former
Yugoslavia--all of whom have played an
important role in the process which is
culminating here today.
After four days of intensive discussions, the
Bosnian Government has reached agreement with
the Croatian Government and representatives of
the Bosnian-Croat community on a framework
agreement for a bicommunal federation in
This new agreement sets out the structure for a
new federation of the Bosnian and Bosnian-Croat
communities in the country of Bosnia.  The
agreement provides for a strong central
government and substantial local self-
government.  Importantly, it defines the
responsibilities of each level of government
within the federation.  It provides mechanisms
to guarantee the human rights of all Bosnian
The agreement also creates a high-level
transitional committee composed of
representatives of the two parties.  This
committee will take immediate, concrete steps
to establish the new federation.  It will begin
its work this Friday and plans to complete by
the 15th of March a new constitution and an
agreement on confederation between Croatia and
the new federation described here.
The agreement shows how much can be
accomplished, even after bitter years of
violence, when the two sides sit down together
and work as hard as these two sides have to
reach an understanding.  It shows that peace is
possible--but only if disputes, once inflamed
by the arguments of force, are resolved by the
force of argument.
I want to extend my personal congratulations to
Prime Minister Silajdzic of Bosnia; Foreign
Minister Granic of Croatia; and Mr. Zubak,
representing the Bosnian-Croats, for the
statesmanship that they've displayed over the
last four days.
I want to also thank President Izetbegovic and
President Tudjman for their support and
cooperation all through this endeavor.  The
telephone lines have been very active between
Washington and Sarajevo and Zagreb to get the
involvement and full agreement of the two
leaders of the countries.
President Clinton has just telephoned both
President Izetbegovic and President Tudjman to
extend his personal congratulations on the
agreement that was reached here.
The people of both of these countries, Bosnia
and Croatia, should be proud of the efforts of
the last four days here.  We hope that these
agreements will set Bosnia firmly on the road
to reconciliation and encourage Croatia in its
efforts to integrate itself into the Western
community of nations.  We also hope that this
agreement will provide the basis for a larger
political settlement with the Bosnian Serbs.
If agreement can be reached, if an overall
settlement can be reached, the United States
stands ready to join its NATO partners in the
implementation of such an agreement and also
stands ready to assist in the reconstruction of
these sadly war-torn lands.
Much now will depend on the parties'
determination to sustain the momentum achieved
over these last four days.  If they act to
implement this agreement with the same good
faith they demonstrated in negotiating it, this
new federation can certainly succeed.  The
United States stands ready to do its part to
help achieve a larger settlement that will
ensure a viable Bosnian state, a secure
Croatia, and a lasting peace.
I will now ask Prime Minister Silajdzic,
Foreign Minister Granic, and Mr. Zubak to step
forward to sign this framework agreement.
[Three sides sign agreements.]
Now I'd like to invite each of the gentlemen to
make remarks if they wish.
Prime Minister Silajdzic.  Thank you, Mr.
Secretary.  We hope and pray this is the first
step toward peace.  We made a big step today,
and this would not have been possible without
the American leadership actively seeking a
negotiated settlement in Bosnia.  We deeply
appreciate the involvement of the American
leaders at the highest level.
A lot of people have been involved in this.  We
would like to, of course, thank President
Clinton for his direct involvement, Vice
President Gore, and also those who have been
with us here.  My thanks go to Secretary
Christopher for his patience and his
determination to bring peace to our country.
My thanks go to Ambassador Redman and all those
who have been with us in the last three or four
days, hoping with us to do what we just did.
We also hope that the American involvement will
continue in order to try and keep our countries
within the family of democratic nations.  We
also hope for--and will welcome--the commitment
of the United States of America and the other
allies to help reconstruct Bosnia-Herzegovina
and, most importantly, to implement the final
peace agreement once hopefully reached, because
this agreement does not exclude anyone.  We
hope that this will be an encouragement to
reach very soon the final peace agreement.
Thank you.
Foreign Minister Granic.  Mr. Secretary, ladies
and gentlemen, we have worked very hard for
this.  We had very difficult and serious
negotiations, but we finished the job.  There
is nothing like the great moral leadership of
the United States.  The Republic of Croatia is
deeply grateful to the President of the United
States, Bill Clinton; Vice President Al Gore;
Secretary Warren Christopher; Assistant
Secretary Oxman; and Ambassadors Charles Redman
and Peter Galbraith for their deep personal
involvement in making this historic first step
Croatia is also extremely thankful to those
European countries that have actively supported
and promoted this process.  Croatia hopes that
this process will continue in the same way in a
friendly and constructive atmosphere.  We
expect in the future very strong support for
the peaceful integration of the [inaudible] in
Croatia, the occupied territory in Croatia,
from the international community, especially
from the United States.
We will continue to work hard, and I hope we
will finish on the 15th of March the final
agreement.  Thank you very much.
Representative Zubak.  Ladies and gentlemen,
today the authorized representatives of the
Croat people and the Bosnian Muslim people
signed a preliminary agreement about the
establishment of a confederation between the
Federation of Bosnia-Herzegovina and the
Republic of Croatia and also a framework
agreement about the establishment of a
federation of Bosnia-Herzegovina.
Today, I am convinced that we took the first
step toward the establishment of peace in
Bosnia-Herzegovina and also for the protection
of the lives of the people of Bosnia-
The Croat people in Bosnia-Herzegovina always
opted for a peaceful solution to the crisis in
Bosnia-Herzegovina and supported all peaceful
initiatives searching for peace in Bosnia-
Herzegovina.  We are determined that the
initiative that is being undertaken by the
United States of America will be implemented
fully on our part.
I take the opportunity to thank the United
States of America; its highest officials; and
especially you, Mr. Secretary of State; and
your coworkers, Ambassadors Redman, Oxman,
Galbraith, and Jakovich, who mediated in the
search for and reaching of today's agreement.
I said--and I do not mean empty words--that the
political leadership of the Croat people in
Bosnia-Herzegovina will further undertake for
the implementation of this agreement.  And once
again, thank you.
Secretary Christopher.  I have noticed in the
audience, from the place where I was standing
there, Congressman Ben Gilman, the ranking
Minority Member of the House Foreign Affairs
Committee.  No Secretary of State would want to
miss recognizing Congressman Gilman.  We are
very pleased, Ben, that you have been able to
join us.
Thank you gentlemen very much for your remarks.
We hope that the process that you have started
here today will bring peace and reconciliation
to the entire territory of the former
If we are to bring an end to the tragedy in
Bosnia, we will all have to work together and
work as hard as these gentlemen have in the
last four days.
In the days and weeks to come, the United
States, working in concert with the European
Union and with the help of the Russian
Federation and the nations participating in
UNPROFOR, will do all it can to contribute to
the noble goal of achieving peace in the former
Yugoslavia; and I think we should all dedicate
ourselves to that noble aim.
I want to thank you all again for turning out
on such short notice.  This has been a rolling
deadline all day, hasn't it?  I'm delighted we
were able, before the end of the day, to crown
this achievement by this ceremony tonight.
Thank you again for coming.  Thank you, and
good night.  (###)
A Foreign Affairs Budget That Promotes U.S.
Secretary Christopher
Statement before the Subcommittee on Foreign
Operations of the Senate Appropriations
Committee, Washington, DC, March 2, 1994
Mr. Chairman, members of the Committee:  I am
pleased to be back before the Senate Foreign
Operations Subcommittee.  The President and I
benefit greatly from your expertise and your
counsel, and I look forward to a productive
I am here to outline the fiscal 1995
International Affairs budget and to highlight
the priorities and the other objectives it
advances.  I also will take this opportunity to
discuss the Administration's views on the
situation in Russia and on the recent tragic
developments in the Middle East.
For more than 40 years, our foreign policy
proceeded from the necessary premise that our
overriding national security objective was the
global containment of Soviet power.  Now we
have an opportunity and a responsibility to
remake American diplomacy and to reinforce
American security in a world unburdened by
superpower confrontation.
Last month, as you know, the President
submitted to the Congress the Peace,
Prosperity, and Democracy Act, which defines
the overall foreign policy objectives of the
United States in this new world.  Its passage
is a top legislative priority for this
The President's FY 1995 budget is consistent
with the objectives outlined in the act.  This
is the first true post-Cold War foreign affairs
budget.  It is not just about foreign aid; it
supports our core responsibility of maintaining
our national defense and promoting peace.  At
the same time, it broadens the concept of
national security by placing greater emphasis
on America's economic interests and by renewing
America's leadership on global issues such as
the environment and population growth.
Our International Affairs budget meets the
great challenges of our era by supporting the
six strategic priorities I have outlined as
central to this Administration's foreign
policy.  Let me describe briefly the
significant progress we have made over the last
several months in advancing each of these
Our first strategic priority is strengthening
America's economic security.  Last fall, I
pointed out that with NAFTA, APEC, and the GATT
Uruguay Round, there was an extraordinary
convergence of opportunity for the United
States.  I am pleased we pulled off that triple
play for America's economic future.
The Administration has attached a high
strategic priority to support for political and
economic reform in Russia and the other New
Independent States.  We do so not out of a
sense of charity but because that support is in
the overriding interest of the United States.
Despite recent setbacks, helping economic and
political reform move forward in Russia remains
a wise investment in America's security.
This Administration has strengthened America's
enduring political, economic, and military
links to Europe.  We have reinforced the
transatlantic partnership, not only by
successfully completing the Uruguay Round but
by renewing the NATO alliance.  We have
expanded NATO's cooperation with the East
through President Clinton's Partnership for
Peace initiative.  NATO has shown renewed
firmness and solidarity in forcing Serbian guns
from the hills of Sarajevo.  And we are hoping
to build on NATO's resolve by vigorously and
directly pursuing a negotiated solution to this
tragic conflict.
We have also deepened our engagement with Asia
and are working to bring a better balance to
our bilateral relationships with Japan and
China.  Next week, I will make my fourth trip
to Asia as Secretary of State.  On this trip, I
will emphasize that our economic relations with
Japan must be on as sound a basis as our
political and security ties.  I also will
stress that China must make significant overall
progress on human rights if the Administration
is to recommend renewal of most-favored-nation
status to the Congress.
Achieving a just and comprehensive Arab-Israeli
peace through direct negotiations has been a
key priority in the Middle East for me and this
Administration since our first day in office.
As the President has said, we must not let the
horrible violence last week "drag Arabs and
Israelis back into the darkness of unending
conflict and bloodshed."  We are committed to
seeing the enemies of peace fail.  And as you
know, the President has invited the parties to
come to Washington to meet continually to
achieve agreement on implementing the September
13 Israeli-PLO accords.  The President and I
will to play as active a role as necessary to
ensure that the peace process moves forward.
Finally, a hallmark of this Administration is
to put non-proliferation and other global
issues into the mainstream of the American
foreign policy agenda.  These challenges
include supporting democracy and defending
human rights, promoting sustainable
development, stemming the upsurge in refugees
and migration, and combatting terrorism and
illegal narcotics.
The International Affairs budget supports our
strategic priorities and our other foreign
policy objectives.  Let me now describe the
budget categories that support our priorities
and objectives, highlighting how each serves
the interests of the American people and
constitutes a wise investment for our nation.
Promoting U.S. Prosperity
President Clinton is pursuing the most
ambitious international economic policy agenda
of any President in almost half a century.
When Congress approved NAFTA, we created
opportunities for high-paying export jobs at
home, and we built a bridge of greater economic
and political cooperation to Latin America,
beginning with Mexico.  When the President
hosted a successful meeting of the APEC forum
in Seattle, we reached out to a dynamic region
that attracts an increasing volume of U.S.
exports and supports high-wage American jobs.
With the Uruguay Round, we concluded the most
far-reaching trade agreement in history, an
agreement to cut tariffs, lower barriers, spur
growth, create American jobs, and add $5
trillion to the world's output over the next
Ensuring our nation's economic security is the
central objective of this Administration.
America's prosperity is directly tied to the
growth and integration of the global economy.
Exports are the fastest-growing source of high-
paying jobs in our economy.  We are working
aggressively to open markets to American goods
and services, and to help U.S. companies
penetrate those markets.
To cite one powerful example, the $6 billion
airframe contract Saudi Arabia awarded last
month to Boeing and McDonnell Douglas will
support thousands of American jobs.  Of course,
the main reason for the sale was the
superiority of the American product.  But the
State Department, our embassy in Riyadh, and I
myself worked hard from the outset of this
Administration, in conjunction with Secretary
Brown and Secretary Pena, to help make this
order possible.  I have instructed our
embassies around the world to attach the
highest priority to advancing the interests of
American workers, exporters, and investors.  I
believe that these efforts make a difference
for American businesses every day.
The Administration is requesting more than $1
billion for trade and investment programs
administered by the Export-Import Bank, the
Agriculture Department, the Trade and
Development Agency, and the Overseas Private
Investment Corporation.  These programs are
complemented by the export promotion efforts of
the Department of Commerce, the State
Department, and our embassies.  The sums we are
seeking will generate far more program activity
than indicated by the budget numbers alone.
For example, Eximbank's $796 million will
result in $17.5 billion in loans, guarantees
and insurance.  OPIC's $20 million will
generate $376 million in loans and guarantees.
The multiplier effect of these investments can
be measured in the thousands of American jobs
they create or sustain.
Building Democracy
Promoting democracy reflects our ideals and
reinforces our interests.  As President Clinton
noted in his State of the Union address, ". . .
the best strategy to ensure our security and to
build a durable peace is to support the advance
of democracy elsewhere."
Support for democratic and economic reform in
Russia and the other New Independent States is
a strategic priority for our foreign policy and
the focus of a substantial part of our
International Affairs budget.  I want to place
special attention on Russia in my testimony
today in light of recent events, including the
espionage revelations of last week.
We have made clear to the Russian Government
that the Ames case is a very serious matter.
We have had no illusions about this aspect of
Russian behavior.  As our arrest of the Ames
couple makes clear, we will remain vigilant in
protecting our national security interests.  We
will make sure that America's intelligence and
counter-intelligence capabilities remain the
best in the world.
This winter has brought renewed fears about
Russia's future.  While parliamentary elections
were a step forward in building democracy, they
gave a boost to opponents of reform.  Powerful
forces are arrayed against reform, not only in
the intelligence services but in economic and
foreign policy.  Many would undermine the
progress that Russia has made.  They would
countenance the hyper-inflation that corrodes
living standards and hampers investment and
trade.  And they would violate the independence
of Russia's neighbors.
Let me emphasize, Mr. Chairman, that our policy
is guided by a firm sense of our interests and
a clear-eyed understanding of the facts on the
ground.  We have always recognized the
difficulties facing reform in Russia.  We know
that Russia cannot overcome the Soviet legacy
overnight.  We expected setbacks; we expect
more in the future.  We must be realistic in
our expectations, steady in our support for
reform, and unequivocal in our opposition to
the enemies of reform.
It is inevitable that as we continue to develop
our relations with Russia, we will have
differences.  To name one example, President
Yeltsin insisted last week, as he has several
times since last summer, that any expansion of
NATO must include Russia.  However, as
President Clinton has made clear all along,
NATO, and NATO alone, will make decisions on
its future--including expanded membership, and
who gets in when.  NATO was not ready for
expansion at this time.  Virtually no one
supported the admission of any country now.
When we have differences with Russia, on this
subject and on others, we will address them
directly and manage them in a way that serves
U.S. national interests.
Mr. Chairman, despite the current difficulties
in Russia, we should not forget that the
transformation in Russia is allowing us to
achieve goals that eluded us for decades:  a
reduced danger of nuclear war; lower levels of
defense spending; and the ending of regional
conflicts, most notably but not exclusively in
the Middle East.
We must also keep firmly in sight the gains
that we have already made.  We and the
international community are safer as a result
of our cooperation with Russia and the New
Independent States.  We have reached an
agreement with Russia to retarget nuclear
missiles that were aimed at the United States
for four full decades.  With our assistance,
thousands of those weapons in the former Soviet
Union will be safely dismantled.  We have
signed an accord with Ukraine and Russia that
opens the way for the elimination of nuclear
weapons from Ukraine's territory.  We are
pursuing the full withdrawal of Russian troops
from the Baltic states by the end of this year.
And in recent days, cooperation from Russia
helped secure the withdrawal of Serbian guns
from the hills of Sarajevo, and now it may lead
to the opening of the Tuzla airport.
Russia also has made significant strides.  For
the first time in its history, it has an
elected president, an elected parliament and a
legitimate constitution.  A market economy is
beginning to emerge.  More than 40% of the
Russian workforce is now employed in the
private sector.  Some two-thirds of small shops
have been privatized.
Nevertheless, some say that because of recent
setbacks, we should suspend or curtail our
assistance to Russia.  I agree we must
constantly assess these events and their
implications for our policies.  But I firmly
believe we must not relegate ourselves to the
sidelines.  Instead, we must remain on the
front lines.  It is not in our interest to be
mere spectators toward the historic events
unfolding in the former Soviet Union.
American assistance is designed to reinforce
reform.  As President Clinton has said,
assistance to Russia is not an act of faith or
charity.  It is an investment in our security
and prosperity.
We have requested $900 million to support
reform in the former Soviet states.  Let us be
clear about what our assistance does and where
it goes.  Roughly half this amount would
promote privatization, market reform and
democracy in Russia, and the rest would go to
similar goals in Ukraine, Kazakhstan, and the
other New Independent States.  Most of these
funds would be spent at the regional or local
level.  Less than one-quarter would be managed
through central governments, and most of that
goes for privatization.
Our dollars provide capital to Russian
entrepreneurs and loan guarantees to American
exporters and investors.   Our dollars extend
technical expertise to democratic reformers,
from local councils to government ministries.
Our dollars are targeted to areas of reform
where success is most likely and where delivery
faces the fewest obstacles.  In short, we are
supporting those who are building a market
economy in Russia and those who have a stake in
sustaining stable democratic institutions.
If we disengage now, we would not be hurting
the enemies of reform; we would be hurting its
friends.  We would not be helping American
interests; we would be helping the forces
opposed to our interests.  That would be the
wrong course for Russia.  Most important, that
would be the wrong course for America.
For the last four decades, the United States
acted with steadiness of purpose to counter
Soviet communism.  We need that same
combination of patience and determination today
to support Russian reform, and we need it for
the same reason: it is in our overriding
national interest.
This budget also includes $380 million for the
new democracies in Central and Eastern Europe.
In addition to efforts to widen market access,
we are promoting Western investment and helping
these countries strengthen democratic
institutions and absorb the heavy costs of
reform.  Let me also report that each of these
countries has indicated an interest in
participating in the Partnership for Peace with
NATO.  This is an important step toward
enhancing the security of Europe and laying the
ground for the eventual expansion of NATO.
The nations of Central Europe are emerging as
stable democracies in the heart of Europe.  In
the "northern tier" countries--Poland, Hungary,
the Czech Republic and Slovakia--economic
reform already has produced significant
results.  Last year, in fact, Poland had the
highest rate of economic growth in Europe.  We
have begun to focus our efforts on the
"southern tier"--Romania, Bulgaria and Albania-
-where the need for assistance is greatest.
The fiscal 1995 budget request contains $143
million for a new account to assist countries
making the transition to democracy.  The
majority of this assistance will go to Africa,
Latin America and Asia.  Some $10 million of
these funds, and $17 million in sustainable
development funds, would go to Cambodia.  The
elections last year in Cambodia, which followed
a successful peacekeeping effort, opened the
door to democracy and stability.  The 370,000
refugees once camped along the Thai-Cambodian
border have now returned.  This modest
investment in democracy is designed to
consolidate the substantial gains the Cambodian
people have made and to ensure that they will
be able to rebuild their nation.  It will
ultimately reduce the need for humanitarian and
refugee assistance.  When I am in Tokyo next
week, Mr. Chairman, I will be attending a
conference on reconstruction in Cambodia.
In the Western Hemisphere, building democracy
advances the full range of our global
interests.  Stronger democracies can better
combat narcotics production and trafficking.
Our $78 million request for the Hemisphere
focuses on Central America, where we are
working to reintegrate former combatants into
society and to build military respect for
civilian rule.
Many African countries are also making the
transition to democracy.  We are requesting $20
million for electoral assistance and $4 million
for the training of military officers and their
civilian counterparts.  These programs help
encourage and solidify the region's movement to
democracy and improve the prospects for
sustainable development.
One African country of key concern is South
Africa.  We must help ensure that all that
nation's citizens can participate in a
peaceful, democratic election in April.  We are
developing an assistance package to help South
Africans overcome the legacy of apartheid and
secure the benefits of citizenship in a
democratic, non-racial state.  The success of
South Africa's democratic transition will have
dramatic implications for the stability and
development of the region.
In all these areas we will be combatting a
scourge with which you are very familiar, Mr.
Chairman:  the debilitating effects of anti-
personnel mines.  We have doubled our request
for demining efforts to $5 million.  Ridding
countries such as Nicaragua and Cambodia of
land mines prevents the tragedy of further
civilian casualties in places long ravaged by
war.  Removal also helps clear the way for the
repatriation of refugees and for economic
development.  We will continue to encourage
others to join us in a moratorium on exports of
anti-personnel mines.  I am grateful for your
leadership on this issue, Mr. Chairman, and I
will continue to work closely with you.
A key component of our democracy programs is
funding for the National Endowment for
Democracy, which strengthens institutions that
foster pluralism, democratic governance, civic
education, human rights, and respect for the
rule of law.  We are also requesting $1.43
billion for the United States Information
Agency.  To amplify our support for democracy,
we must harness contemporary communications
technology.  USIA is restructuring its
capabilities to play this role.
Promoting Sustainable Development
We have paid too little attention to the
interlocking threats of unsupportable
population growth, endemic poverty and
environmental degradation.  If we fail to do
so, the result will be widespread suffering
abroad and the loss of export opportunities for
American companies, workers and farmers.
 We are requesting almost $5 billion for
sustainable development activities.  These
funds include about $1.5 billion in bilateral
programs to stimulate broad-based economic
growth.  We are supporting child survival,
poverty lending, and micro-enterprise programs
to help the poorest of the poor acquire
sufficient food, shelter, and capital to become
productive and healthy members of society and
to provide for their children.  Micro-
enterprise programs and poverty-lending
institutions involve participants in making
loans and help them start businesses.  They
create community-based institutions that not
only are the basis for economic growth but are
building-blocks of democracy.  Since many
beneficiaries are poor women, these programs
also empower an often neglected segment of
society in developing nations.
These programs are effective.  Infant mortality
rates for U.S.-assisted countries in Africa
have dropped dramatically in the last decade.
In the same countries, vaccine coverage rose
from 20% of the population to 60% from 1982 to
Our request for 1995 for Population and the
Environment is up 20% from 1994 levels,
reflecting the high priority we attach to these
issues.  By increasing funding for population
and environmental programs, we promote
sustainable development and invest in America's
Population is especially critical because it
affects every other aspect of development.  We
are requesting $585 million for bilateral
programs and those of the United Nations Fund
for Population Activities (UNFPA).  Our
programs have helped nations such as Indonesia
and Thailand reduce their rates of population
growth, bringing them in line with available
resources and enabling those nations to better
promote economic growth and protect the
environment.  At the Cairo population
conference this fall, we will have an
unprecedented opportunity to use the money we
are providing to leverage assistance from
others and to make substantial progress.
Protecting and repairing the global environment
is another important goal that furthers the
interests of each and every American.
Pollution knows no national boundaries.
Greenhouse gases emitted in Brazil are as
dangerous to the future health of Americans as
gases emitted in the United States.  Yet the
costs of further cutting emissions here can be
as much as four times higher than making
comparable reductions in Brazil.  Our budget
contains $350 million to help address these
issues through bilateral and UN programs.
Roughly 70% of our aid returns to the United
States in the form of contracts for U.S.
suppliers of goods and services.  In addition,
our bilateral economic assistance programs
build markets overseas for U.S. companies.  By
the year 2000, four out of five consumers in
the world will live in a developing country.
Economic growth in the developing world leads
to increased demand for American products and
services.  In the case of South Korea, for
example, American firms earn export sales each
year that are triple the amount of assistance
we provided to South Korea over a decade.
South Korea now has its own program to aid
other nations.
Fortunately, the United States is not alone in
addressing these issues.  The multilateral
development banks and the International
Monetary Fund are essential to advancing market
reforms, attacking poverty, reducing population
growth, and protecting the environment.  These
institutions made more than $45 billion in
loans in 1993.  They are the largest
contributors to global sustainable development.
Our contributions to these organizations
multiply the effectiveness of our efforts.
Finally, this section of the budget funds the
Peace Corps, a program that projects American
idealism and expertise and that generates
immeasurable goodwill.  The $226 million
requested for the Peace Corps in fiscal 1995 is
comparable to the amount provided in previous
years and will help ensure its continued
contribution to achieving sustainable
Promoting Peace
The largest share of the budget request, $6.4
billion, is for promoting peace.  More than 80%
of this money is for maintaining and advancing
peace in the Middle East, a strategic priority
for our foreign policy.
The priority we attach to peace in the Middle
East is reflected in our fiscal 1995 request of
$5.2 billion for the Middle East peace process,
of which $5.1 billion, the same as last year,
is for Egypt and Israel.  Our support for the
peace process sustains more than two decades of
bipartisan diplomatic engagement and financial
investment in the region.  It also builds upon
the historic breakthrough for peace that we
witnessed last year at the signing ceremony
here in Washington.
Mr. Chairman, we must not let the horrendous
incident in Hebron lead to the triumph of
violence and extremism.  The President
condemned this terrible act and instructed me
to assure the parties that the peace process
would continue.  Prime Minister Rabin and
Chairman Arafat accepted the President's
invitation to move the Israel-PLO talks to
Washington as soon as possible.  As the
President said, "Our purpose is to accelerate
the negotiations on the Declaration of
Principles and to try to bring them to a
successful conclusion in the shortest possible
We understand that negotiations are affected by
the environment.  Palestinians must feel
secure.  The steps the Israeli Government
announced to contain extremists created
important precedents, and they should lead to
increased security for Palestinians if they are
But the Palestinians need more.  They also need
to see that they can achieve a different
future.  They need to see that realities are
changing on the ground.  And that requires the
implementation of the Israeli-PLO Declaration
of Principles.
Delaying or deferring implementation will
maintain a vacuum that will be filled by
extremists on both sides.  We must not let
extremists succeed in undoing this historic
opportunity.  Palestinians must see that the
process of withdrawal by the Israeli Defense
Forces is beginning and that Palestinians are
assuming responsibilities of self-government.
Israelis must see that Palestinians are
fulfilling their commitments and that Israeli
security is not jeopardized.
Our role in facilitating this outcome and in
providing material assistance is absolutely
critical if this process is to go forward.  We
will work actively with the parties here in
Washington to help reach a negotiated outcome
and then to begin implementation.  We will do
all we can to mobilize the international
community to help ensure that as Palestinians
assume responsibilities, they will have the
means to succeed.
As for our bilateral assistance, we are working
to ensure that U.S. economic aid to Gaza and
the West Bank, proceeding from last October's
Conference to Support Middle East Peace, leads
to projects that improve the lives of the
Palestinians.  USAID and OPIC will implement
$500 million in projects over the next five
years.  We are also assisting private sector
efforts such as the "Builders for Peace"
project of Arab-American and Jewish-American
business leaders.
We are also working to break down region-wide
barriers to Arab-Israeli contact.  We are
pushing hard to end the Arab boycott.  We have
made some progress in lifting parts of the
secondary and tertiary boycott, and we are
determined to end the discrimination against
American firms that these practices inflict.
We will not stop there.  We will continue our
efforts until the boycott is lifted entirely.
The United States is exercising strong
leadership to promote peace and security in
Europe as well.  At the NATO summit in January,
the Allies approved President Clinton's
Partnership for Peace initiative to deepen
NATO's engagement with the East and to begin an
evolutionary process of NATO expansion.
Already, 10 nations have begun the formal
process to join the Partnership.  We expect
that more will follow soon.  In addition,
through our cooperation on the Uruguay Round,
Bosnia, and other issues, we have put our
political relationship with the EU and
individual states of Europe on an even stronger
Our budget request includes military assistance
for Greece and Turkey in support of our long-
standing security relations with two of our
NATO partners.  Also included is economic
assistance to Turkey, a nation that plays a
vital role in stabilizing this volatile region.
A signal aspect of this Administration foreign
policy is a new emphasis on advancing our
interests in the Asia-Pacific region.  Backed
by our military presence and treaty alliances
in the Pacific, we are participating in
regional security dialogues, including the
ASEAN Regional Forum, to ease tension and to
stem arms races.
We have also requested funds for UN
peacekeeping.  This budget funds expected
peacekeeping requirements in FY 1995 of $297
million, as well as $288 million of the $1
billion in arrears expected by the end of FY
1994.  Of this, $75 million is for voluntary
peace-keeping activities.
As you know, Mr. Chairman, we have completed a
comprehensive review of our peacekeeping
policy, and the Administration is unanimous in
support of its conclusions.  Our aim is not to
expand our peacekeeping commitments but,
instead, to establish a process for making
sound judgments about when we participate in
peacekeeping operations and to improve the way
the UN conducts peacekeeping operations.  We
will always reserve the right--and maintain the
capability--to act unilaterally to protect
American interests.  But when a collective,
multinational approach such as a peacekeeping
operation best serves our interests, we want to
ensure that it works effectively.
 If we believe that carefully defined UN
peacekeeping operations are an effective way to
defuse tensions and to deter violence, and that
the costs of such efforts should be shared with
others, we must live up to our obligations to
the UN.   By the end of the fiscal year, we
expect to be $1 billion in arrears to the UN
for peacekeeping.  If we do not find a way to
pay these arrears, the UN may have to end some
of its existing operations.  We expect to begin
consultations shortly with the Congress on how
we can work together to address an increasingly
urgent funding problem for peacekeeping.
We believe that the Departments of State and
Defense should share responsibility for
managing and paying for peacekeeping
operations.  We intend to ask tough questions
before we vote to approve each new peacekeeping
mission.  What U.S. and international interests
are at stake?  Is the mission clearly defined,
and is there an identifiable end point?  Are
resources available?  We also will continue
Ambassador Albright's efforts to reduce our
peacekeeping assessments and to establish an
independent inspector general at the UN.
I also want to address a critical part of our
policy: command and control of U.S. forces in
peacekeeping operations.  Let me state clearly
that the President will never relinquish his
ultimate command over U.S. forces.  And under
no circumstances will the men and women in our
armed forces be sent into situations in which
hostilities are likely, unless proper command
and control is present.
As a practical matter, when large-scale or
high-risk combat operations are contemplated
and American involvement is necessary, we will
be unlikely to accept UN operational control
over our forces.  Rather, we will rely on our
resources or those of a regional alliance, such
as NATO, or on an appropriate coalition, such
as the one assembled during Operation Desert
Finally, Mr. Chairman, we want to improve
cooperation and consultation between the
Administration and Congress on peacekeeping
operations.  We have a number of proposals that
we think will address your concerns, and we
look forward to working with you.
Also included in this section is $111 million
for non-proliferation and disarmament.  Of
particular concern today is North Korea's
failure to meet its obligations under the
Nuclear Non-Proliferation Treaty.  This poses a
challenge to security on the peninsula and to
the global nuclear non-proliferation regime.
The United States is working closely with South
Korea, Japan and others in the region to ensure
a non-nuclear Korean Peninsula and a strong
international non-proliferation regime.
We must also confront international criminal
activities, including narcotics trafficking and
terrorism.  We have budgeted $252 million for
these efforts.  Drugs and violence rob us of
our security, endanger democracy, undermine
economic development, and threaten the global
environment.  We have shifted our international
drug control strategy from interdiction to a
more effective focus on source countries.  We
will concentrate our efforts on strengthening
democratic institutions, creating economic
alternatives to the drug trade, stepping up
eradication, and dismantling drug cartels.
I know you have had concerns about our Andean
drug control strategy in the past, Mr.
Chairman.  The President and I feel strongly
that these programs are important to the
security of this country.  Counselor Wirth will
be working with you and other interested
members on our new strategy.   I hope we will
have your support.
Our effort to fight international criminal
activity is cost-effective.  Surely the price
of our anti-terrorist effort pales in
comparison to a single terrorist act such as
the World Trade Center bombing.   And the cost
of seizing drugs in Bolivia is one-tenth that
of a similar seizure in the United States.
Providing Humanitarian Assistance
Humanitarian assistance programs will always be
part of our foreign policy because they project
the values of the American people.  They also
reinforce our interest in sustainable
Our fiscal 1995 budget provides $1.6 billion
for refugees, food assistance and disaster
relief programs.  Most of the world's
humanitarian crises are man-made and therefore
preventable. By promoting peace, fostering
economic growth, and building democracy, we
hope, over time, to reduce future needs for
such assistance.
Our funding for refugee programs is only
slightly less than last year's levels.  This
reflects a lower expected level of admission
into the United States, primarily of Vietnamese
refugees.  We remain fully committed to our
refugee assistance effort and to working with
the private groups that help manage this
important program.
We are requesting $170 million for
international disaster assistance.  This
includes $20 million for a crisis and
transition initiative to help countries that
are recovering from civil conflicts and natural
disasters, and that face problems not addressed
by short-term disaster relief or long-term
development aid.  This program will begin in
fiscal 1994 using disaster assistance and
development assistance money.
Our humanitarian relief efforts include the
delivery of disaster relief supplies, including
P.L.  480-Title II feeding programs, medical
assistance, emergency shelter, and the
restoration of communications and basic social
Advancing Diplomacy
This budget request includes funds to support
the operations of the Department of State, the
Agency for International Development and our
assessed contributions to international
organizations.  Effective diplomacy, through
early reporting, crisis prevention and the
effective use of member- ship in the UN and
other international organizations, is critical
to achieving America's broad national security
We are investing in the skills of the people
who manage and execute our foreign policy and
international programs.  We are training them
in the diplomatic disciplines of the future,
including commercial promotion, economic
issues, and global environmental concerns.
The State Department and the other foreign
affairs agencies are undertaking major reforms,
working closely with Vice President Gore and
the National Performance Review.  The
Department has instituted broad-based
reorganization and reform of its operations to
keep pace with change here and abroad.  In
addition, the fiscal 1995 request strongly
supports the President's plan for reducing
administrative overhead and employment by
assuming substantial savings in these areas.
Similarly, USAID, under the able leadership of
Brian Atwood, has made admirable progress
restructuring itself to meet the challenges of
the post-Cold War world.  USAID has put in
place a new structure to simplify lines of
responsibility.  It has conducted an agency-
wide examination of the functions of every
employee to eliminate waste and ensure
efficiency.  The agency is reforming its
procurement and contracting procedures,
simplifying its paperwork requirements, and
streamlining the way it designs projects.  Most
important, USAID is evaluating its projects by
measuring their results, rather than the
resources it puts into them.  All these steps
will make the agency more effective.
The fiscal 1995 budget is consistent with the
President's deficit reduction plan.  Funding
for the 15 agencies in the Function 150 account
represents barely 1% of the federal budget.  It
is an austere request, reduced in real terms
from the already stringent 1994 budget.  It
will continue the cost-cutting efforts of the
last several years, during which we closed more
than 20 overseas State Department posts, and
have begun closing 21 USAID missions.
Mr. Chairman, we have presented the proposed
Peace, Prosperity, and Democracy Act and the
fiscal 1995 International Affairs budget to
realign our priorities, reorient our budget and
restructure our institutions in ways that will
promote our broader concept of national
security.  All the parts of this budget are
linked by a single, unifying theme:  investing
in the security and prosperity of the United
States.  (###)
U.S. Perspective on Building Peace and
Prosperity in Central and Eastern Europe
Stephen A. Oxman, Assistant Secretary for
European and Canadian Affairs
Address at Harvard University's Kennedy School
of Government, February 17, 1994
Distinguished faculty members, ladies and
gentlemen:  Good evening.  It is a special
pleasure to be here at the Kennedy School.  I'd
like to speak to you tonight about United
States policy toward Central and Eastern
Europe.  Let me begin, though, with a caveat.
Some of you may recall Adlai Stevenson's famous
words, delivered at the outset of a policy
speech.  "Your job," said Stevenson, addressing
his audience, "is to listen.  My job is to
talk.  Let us each hope that we finish our
respective tasks at approximately the same
Given the uncertain evolution of reform in the
former Soviet Union and the ongoing tragedy in
Bosnia, some would treat with benign neglect
those countries moving with less apparent
trouble toward democracy and market economies.
Such an "out of sight, out of mind" approach
toward Central and Eastern Europe could not be
more wrong.  The road to stable democracy and
functioning free market economies in these
countries is long, and it is winding.  We all
know of Russia's Zhirinovskiy and the
fundamental anti-reform, anti-democratic, anti-
Western reaction he represents.  What is less
well-known is that in many countries of Central
and Eastern Europe, little Zhirinovskiys and
other reactionary forces are emerging that seek
to appeal to societies tired from the tension
of transformation.  The point is that reform's
ultimate success cannot be taken for granted.
While we've knocked down most of the walls of
the past, much remains to be done to build a
free and prosperous future.
I propose to sketch for you the problems and
promise of Central and Eastern Europe.  Then
I'll explain why we, as Americans, should care
about this part of the world.  Finally, I'll
tell you what it is we are doing to secure the
success of reform.  As I will explain, the
bottom line is that this Administration--as
President Clinton demonstrated so forcefully in
Prague last month--is committed to an activist
policy in the region, a policy designed to help
consolidate democracy in two ways:  first, by
promoting prosperity and, second, by enhancing
security.  Our own interests demand nothing
Before commenting on the problems and promise
of the region, let me first define what I mean
by Central and Eastern Europe.  I'm referring
to 15 countries:
--  The four countries of the "Visegrad Group"-
-Poland, Hungary, the Czech Republic, and
--  The three Baltic Republics--Estonia,
Latvia, and Lithuania;
--  The three countries of what some call the
southern tier--Romania, Bulgaria, and Albania;
--  The five countries that were elements of
the former Yugoslavia-- Slovenia, Croatia,
Bosnia-Herzegovina, The Former Yugoslav
Republic of Macedonia, and Serbia-Montenegro.
The largest of these countries is Poland--about
half the size of Texas.  The smallest is
Slovenia--about the size of New Jersey.
Overall, the 15 countries cover an area roughly
twice the size of Texas.  The population is
large--about 135 million people, or about 2.5%
of the world's total.  Yet they produce only
about 2% of the world's gross product.  The
United States, by contrast, has about 5% of the
world's people and produces almost 25% of the
world's gross product.  In short, the economic
upside potential of Central and Eastern Europe
is very large indeed.
I.  The Problems and the Promise
It's been said that a pessimist is nothing more
than a well-informed optimist.  Recently, many
of my East European friends and colleagues have
complained that they've become too well-
informed.  Certainly, the euphoria of 1989,
when the people of Central and Eastern Europe
made an inspirational commitment to democracy
and free markets, has faded.  The aftereffects
of 45 years in the Soviet straitjacket make
that commitment difficult to maintain.
The core problems are economic.  Transition to
a market economy involves, at a first stage,
the decontrol of prices; freely tradeable
currencies; and the reduction, or even
elimination, of state support for industry--all
of which ensure efficient resource allocation
and competitiveness.  The short-term economic
results in Central and Eastern Europe have been
unsettling:  surging inflation, plummeting
production, and mounting unemployment.  We are
confident that these hardships will fade as
economic reform begins to bear fruit.  And,
indeed, some countries are coming out of the
trough--for example, GNP increased last year in
Poland, Albania, and the Czech Republic.  But
most of the economies in the region remain far
from robust.  The result is the kind of pain,
confusion, and frustration that are godsends to
demagogues of the left and the right.
At the same time as they face these economic
challenges, East Europeans are striving to
create democratic political institutions almost
from scratch.  Acquiring the habits of
democracy cannot happen overnight.  We should
find cheer in the fact that free and fair
elections have been held throughout the region-
-after nearly half a century of sham elections-
-and independent media and political parties
are sprouting on what seems to be a daily
basis.  Yet we cannot escape the irony that it
is through these institutions of democracy that
the discontent brought about by economic
hardship finds its expression.  Public opinion
polls show a marked resurgence in support for
the old apparatchiks, who have relabeled
themselves socialists or social democrats.  One
price we pay for freedom is that we cannot
select its beneficiaries.
East Europeans also have legitimate concerns
about their own security.  The potential for
conflict exists not only in the former
Yugoslavia but in many parts of the region, as
old nationalistic tensions frozen for almost
five decades by war, occupation, and
totalitarian rule are unleashed.  In addition,
worries about the ultimate outcome of reform in
the former Soviet Union make people "sleepless
in Slovakia" and elsewhere.
Yet, for all the gloom and doom, the region's
potential is real, and it is tremendous:  135
million well-educated, determined people now
have the freedom to speak their minds, to
create, to build, to prosper.  This dynamic
human resource--which even in the darkest days
of communism gave the world a Milan Kundera, an
Andrej Wajda, a Vaclav Havel--has been
Of course, we cannot rest on the laurels of
promise.  As my State Department colleague
Charles Gati puts it, we must close the gap
between big words and small deeds.  But we
mustn't lose sight of that promise as we
confront the difficult realities of political
and economic transition.  I am convinced that,
ultimately, the relevant questions for peace
and prosperity in the region are not "whether"
but "when," not "if" but "how."
II.  Why We Should Care
The last presidential election showed that
Americans of all political persuasions
understood that a strong and effective foreign
policy begins with a sound economic foundation.
But it also is true that such a foreign policy
is an essential ingredient to economic well-
being at home.  Put another way, a strong and
effective foreign policy and domestic
prosperity are mutually reinforcing concepts,
not a zero-sum game.  Nowhere is that lesson
more clear than in Central and Eastern Europe.
For one thing, the events of the 20th century
have demonstrated that brush fires in Europe--
and especially in Central and Eastern Europe--
may well flare up into all-consuming
conflagrations that burn us badly, both in
material and human terms.  Nothing will better
assure stability and prevent dangerous
conflicts than vibrant democracy and free
market economies.  As Secretary of State
Christopher has put it, states that operate on
democratic principles tend to be the world's
most peaceful and stable, and --
". . . A world of democracies would be a safer
world.  Such a world would dedicate more to
human development and less to human
destruction.  It would promote what all people
have in common rather than what tears them
Perhaps nowhere else can the Administration's
goal of enlarging the community of free market
democracies be so readily advanced as in
Central and Eastern Europe.
Nor can we afford to be indifferent to those
135 million consumers in this region--not to
mention another 285 million in the former
Soviet Union.  Our future well-being calls for
reaching out to new trading partners as well as
expanding existing markets.  Actively promoting
the recovery and growth of the Central and East
European economies will go a long way toward
assuring our own prosperity by open-ing huge
new markets for Western goods and services.
So much for self-interest.  We must also help
the Central and Eastern Europeans because it is
right.  The United States challenged them to
cast away the shackles of communism.  Now that
they have done so, we have an obligation to
work with them to ensure that they receive the
rewards of freedom.
III.  What the U.S. Is Doing To Help
That President Clinton traveled to Prague on
his first official trip to Europe was no
accident.  The President underscored the
importance we attach to Central and Eastern
Europe and described what we are doing to help
consolidate democracy there.  Two distinct yet
connected concepts constitute the foundation of
our policy:  promoting prosperity and enhancing
security.  I'd like to elaborate on each one.
Promoting prosperity.  If the economies of
Central and Eastern Europe are to prosper, they
ultimately must be integrated into the global
economy.  For this to happen, we must overcome
two hurdles.
First, as my friends and colleagues from the
region argue eloquently--and correctly--we need
to continue improving access to our markets.
After all, we can hardly beckon these nations
to join the fraternity of democracies with one
hand while keeping them out of some of our
markets with the other.  Beyond this matter of
fairness, though, lies a strategic imperative.
For reform to endure, the nations of Central
and Eastern Europe must be able to deliver
tangible benefits to their people.  The
industrialized democracies can reward sacrifice
through our trade policies.  Ultimately, one
important measure of our commitment to the new
democracies of the East will be the degree of
market access we provide in the West.
Second, for increased market access to be
meaningful, the countries of Central and
Eastern Europe must manufacture goods that are
both needed and competitive.  Yes, they already
produce some such goods--for example, steel and
agricultural products.  But only the full
transition to vibrant market economies can
ensure these countries a thriving future as
traders.  This full transition will require
hundreds of billions of dollars.  I am hardly
revealing a state secret when I tell you that
the bulk of these monies must come from the
private sector, given the budgetary constraints
on official creditors and donors in the West.
This is as it should be.  After all, the goal
is to create self-sufficient, free market
economies, not dependencies.  Ultimately, trade
must replace aid.
In making this point, I would not want to
minimize the importance of our official aid.
Since 1989, the U.S. has given Central and
Eastern Europe about $8 billion in financial
and technical support and debt relief.  Our
assistance has been used for a staggering array
of projects.  To cite just a few, we've helped
the Czech Republic draft a modern bankruptcy
code, trained private commercial bankers in
Slovakia, supplied propaganda-free school books
in Albania, and provided equipment and training
throughout the region to help establish modern
and independent media.
This is money well spent.  Down the road, it
will pay large dividends in security and
prosperity for both the United States and
Central and Eastern Europe.  The return on our
Marshall Plan aid to Western Europe almost 50
years ago makes the point:  Adjusted for
inflation, we provided Europe with about $95
billion over four years in Marshall funds;
today, Europeans buy from us nearly $120
billion in goods and services every year.  And
these figures do not take into account billions
of dollars in defense spending that surely
would have been necessary had we been forced to
contend with instability, or even communism, in
Western Europe.
But as important as government transfer
payments can be, it is private capital that
must feed economic growth in the East.  Since
the collapse of communism, private investment
has been modest--about $11 billion.  This is
far short of its potential and a fraction of
what is needed.  Private capital flows are a
trickle, not a flood, in no small part because
of barriers to investment.  So, as we seek to
provide greater market access in the West, we
must also take steps to improve the investment
climate in the East.
I see several basic barriers to increased
investment, including:
(i)  Investor uncertainty about the ultimate
success of political and economic reform;
(ii)  Lack of a clear, complete, and consistent
legal, tax, and regulatory infrastructure,
which is crucial to winning the confidence of
(iii)  Insufficient physical infrastructure,
especially state-of-the-art communications
capability; and
(iv)  Inadequate domestic capital markets.
The United States Government has tried to help
address these problems.  Beyond the direct
assistance and debt relief I alluded to
earlier, we have led economic missions,
negotiated bilateral investment treaties, and
established privately managed investment funds.
We also strongly support early membership for
the CEE countries in the OECD, which provides
advice and tough peer pressure reviews to
ensure open investment and trade policies in
all member countries.
But for all these past and ongoing efforts,
President Clinton is convinced that the time is
right for a series of integrated initiatives to
improve the investment climate in Central and
Eastern Europe.  Many of the countries in the
region have now undertaken some of the reforms
necessary to build credibility with investors
and creditors.  Other countries are progressing
in the right direction.
That is why the President announced last month
in Prague several important measures to
demonstrate concretely our support for free
market reforms.  As a first step, we plan to
hold a major conference this year on trade and
investment in Central and Eastern Europe.  This
conference, which we are actively planning, has
one central objective:  to engage the Central
and Eastern Europeans in constructive efforts
to reduce obstacles to private investment.  The
United States Government hopes to serve as the
catalyst for an ongoing dialogue between
Central and East European officials and private
sector leaders in the West who control capital
investment decisions.  I must emphasize the
word "ongoing":  The conference will give way
to a series of follow-up measures that will
help transform good ideas into reality.
In tandem with the trade and investment
conference, we will increase our efforts to
help CEE governments deal with the social and
human dimension of change by providing
assistance targeted to social safety net
programs.  We will promote regional
infrastructure improvements, particularly
through projects in which our own companies can
enjoy commercial opportunities.  We will expand
the Overseas Private Investment Corporation's
activities in the region through additional
privately managed investment funds and a four-
fold increase in per-project lending limits.
And we are contemplating new initiatives with
the international financial institutions and a
post-privatization effort that would direct
assistance to formerly state-owned enterprises
and communities needing transitional help.
Enhancing security.  All these efforts to help
the countries of Central and Eastern Europe
thrive economically are likely to be in vain if
they are not coupled with steps to increase the
region's security.  Instability is, after all,
a strong disincentive to investment.  More
broadly, it can derail reform.  That is why I
am convinced that the recent NATO summit was a
signal moment for the emerging democracies in
the East.
There were two historic decisions at the
summit.  NATO made clear that it welcomes and
expects expansion of the alliance as part of an
evolutionary process.  In addition, it beckoned
its former Warsaw Pact adversaries and others
to immediately join the Partnership for Peace,
so as to begin the practical process of
enhancing security in Europe.
Those of you familiar with the opinion pages of
The New York Times, The Washington Post, and
the Boston Globe, not to mention the Harvard
Crimson, no doubt took note of the criticism
directed by some at our summit initiatives.
Pundits argued that we should have offered
immediate NATO membership to the countries of
Central and Eastern Europe instead of a
supposed "halfway" measure like the Partnership
for Peace.  It is true that NATO membership now
sounds like an easy solution to the security
problems facing Central and Eastern Europe.
But, as H.L. Mencken once said, "For every
complex problem there is a solution which is
neat, plausible, and wrong."
Let me tell you why the Partnership for Peace
is the right answer.  It will give partner
nations a chance to engage in very real, very
practical military and defense cooperation with
NATO and with each other and to develop the
capacity to assume the responsibilities of full
NATO membership.  It also will help create a
truly integrated Europe, without now drawing
new lines which exclude some countries.  And it
will do this without diluting NATO's
capabilities or impairing its current mission.
Some Partnership critics invoke the emotionally
powerful specter of Munich in 1938.  They argue
from this German analogy that it is
"appeasement" not to admit the countries of
Central and Eastern Europe into NATO and build
a new Iron Curtain to protect the rest of
Europe from Russia.  I submit that this is the
wrong German analogy.  Rather, I would ask you
to look at how we treated Germany after each of
the two World Wars in this century--and at the
results of each policy.
At Versailles, the victorious Allies left
Germany isolated and burdened by punitive
political and economic measures.  This approach
created conditions that facilitated the rise of
Hitler.  In it were planted some of the most
fertile seeds of the century's greatest
dislocations.  After World War II, on the other
hand, we worked to support Germany economically
and politically and to integrate it into
Western Europe.  As a result, we have enjoyed
half a century of unprecedented peace and
stability in Western Europe.
No analogy is perfect, and we must not seek to
write the future by reading exclusively from
the past.  Still, this history suggests that
our policy toward Eastern Europe and Russia
today should find inspiration from what we did
in 1945 rather than 1918.  And that is
precisely the approach we have followed with
the Partnership for Peace.  We want to see a
fully integrated Europe of democratic, free
market states, committed to each others'
security in the same way that the NATO
countries are today.
That goal can best be achieved if we reach out
and invite Russia to be part of this process
rather than leaving it outside the door of the
new Europe.  Of course, should reform
experience a reversal of fortune in Russia, we
can re-evaluate NATO's needs and those of the
Central and Eastern Europeans.  At the same
time, active participation in the Partnership
will go a long way toward enhancing their
military preparedness and allow partners to
consult with NATO in the event of a threat.
In the months ahead, we will seek to make the
Partnership for Peace operational, both
politically and militarily.  As a Polish leader
said to me last year, with the Partnership,
"the angel is in the details."  Through the
details, we will be able to craft the
Partnership into an effective instrument to
advance our goal of security throughout an
integrated Europe.
Virtually all of the nations of the former
Warsaw Pact have announced their intention to
join the Partnership for Peace.  As prospective
partners formally sign up, they will submit
proposals outlining the military assets they
will make available to the Partnership.  They
will describe the steps they plan to take to
ensure civilian control of the military and to
make their defense budgets open to public
scrutiny.  The partners will send
representatives to NATO Headquarters who will
work with each other and with NATO to plan
joint exercises and operations.  We expect the
Partnership to hold joint peace-keeping field
exercises later this year in which NATO troops
will actually work side by side with their
former adversaries.
This is what we mean when we say that the
Partnership for Peace will help the emerging
democracies develop, at a pace they can each
determine, the habits of cooperation and the
routines of consultation that are the lifeblood
of the NATO alliance itself.  Although
participation in the Partnership is not a
guarantee of NATO membership, it is the best
path to NATO.  And it will help ensure that
when NATO does expand, its new members are both
fully committed to the political principles
that underlie NATO and prepared to meet the
obligations of NATO membership.  The
Partnership for Peace is the right answer to a
complex problem.  It allows us to work toward
the best possible outcome for Europe while
keeping us prepared--just in case--for the
The Partnership is but the most visible--and
the most important--of several concrete
measures we are taking to demonstrate our
concern for the region's security.  For
example, we are actively reviewing the entire
range of export controls--and notably COCOM--to
bring them in line with the post-Cold War
world.  And we will intensify the efforts of
our bilateral working groups and military
liaison teams as a means of reinforcing the
Partnership for Peace.
The initiatives I've described that bolster
democracy through trade and security
cooperation are being augmented in a critically
important way.  We are working hard to promote
grass-roots democratic reform.  In Prague, the
President announced the "Democracy Network"--a
$30-million fund to support the work of non-
governmental organizations in Central and
Eastern Europe in such areas as social policy
and the rule of law.  While modest in funding,
this kind of effort can have a multiplier
effect disproportionate to its size.  Through
it and similar endeavors, we can hope to deepen
the roots of civil society in Central and
Eastern Europe.
I would also like to note that we intend to
play a watchdog role to ensure that freedom of
expression is not merely proclaimed but
practiced in all the fledgling democracies.  As
a great Justice of the U.S. Supreme Court, the
late Benjamin Cardozo, once said:  "Freedom of
expression is the matrix, the indispensable
condition, of nearly every other form of
freedom."  Progress has been made in Central
and Eastern Europe in securing freedom for the
print media, despite persistent restrictions on
the distribution and availability of newsprint.
An even greater obstacle to building open
societies is the lack of progress in broadcast
freedom.  Television is democracy's "biggest
megaphone."  It must not become the captive of
any one party.
IV.  Building Democracy
The fall of the Berlin Wall was a unique moment
of historical catharsis that we in the West
shared with the Eastern Europeans.  For 45
years, we worked together to free them from the
yoke of communism.  While we were determined in
our efforts, I suspect that many did not quite
believe we would ever actually succeed--at
least not in our lifetimes.  That the end came
so suddenly made the moment all the more
intense.  As a result, the "post-euphoria"
stress that we are now experiencing--which is
exacerbated by a recession in the West--is deep
and at times even demoralizing.
But we must not lose sight of all that has been
accomplished in such a very short time.  After
all, just five years ago, the countries of
Central and Eastern Europe were still captive.
At the same time, we must admit that
consolidating democracies takes time.
Democracy cannot simply be declared.  It must
be created and nurtured.
The Clinton Administration believes that the
United States has a fundamental stake in seeing
Central and Eastern Europe flourish.  By doing
what we can to improve the region's economy and
security and to support grass-roots reform
efforts, we are helping lay a strong foundation
for democracy.  This will be a lengthy,
difficult process, requiring the kinds of new
partnerships between East and West that emerged
from Prague.  But it will also be an
exhilarating, mutually beneficial adventure.
In that sense, I know that our engagement with
Central and Eastern Europe has only just begun.
Export Controls and Non-proliferation Regimes
in the Post-Cold War World
Lynn E. Davis, Under Secretary for
International Security Affairs
Statement before the Subcommittee on
International Finance and Monetary Policy of
the Senate Banking, Housing, and Urban Affairs
Committee, Washington, DC, February 24, 1994
The international security environment has
undergone tremendous change over the past few
years. The United States is faced today with an
entirely new set of threats and opportunities.
As a result, the need to revamp our export
control system has taken on a new sense of
urgency.  I would like to take this opportunity
to address the question of why the United
States will continue export controls in the
post-Cold War world and introduce how our draft
Export Administration Act contributes both to
the economic security of Americans and our non-
proliferation goals.
In the past, we and our allies had a clear
understanding of the need for export controls.
The Warsaw Pact countries, as well as other
communist countries, posed a serious and
clearly defined threat to the United States and
to the West generally.  We undertook to deny
them access to weapons, dual-use items, and
technologies.  We and our allies agreed upon
procedures for controlling exports to these
destinations, including allowing for any nation
to veto a specific export.
Now we face a very different threat.  There are
still serious dangers, but there are more
uncertainties.  The spread of weapons of mass
destruction and sophisticated conventional arms
is perhaps the single most important security
threat.  The demand for such weapons remains
high, as in Iran and Libya.  With the collapse
of the Soviet Union, the New Independent States
in Central and Eastern Europe have new
commercial incentives to expand trade in arms
and sensitive dual-use items.  In many cases,
they also inherit weak control systems.
Our export control system for the post-Cold War
world needs to respond to these new security
threats.  The overall Clinton Administration
approach is to:
--  Reduce the demand for dangerous weapons and
technologies through support for international
non-proliferation norms and through strategies
to reduce regional instability;
--  Pursue a multilateral export control
approach to achieving our non-proliferation
goals through the MTCR, the Australia Group
(AG), and the Nuclear Suppliers Group (NSG);
--  Design a new multilateral arrangement to
replace COCOM, involving transparency and
restraint in arms and sensitive items;
--  Liberalize export controls and redesign
export control procedures and processes in
light of the dramatic changes in the world, and
keep controls focused only on weapons of mass
destruction, missiles, dangerous conventional
arms, and other threatening military
capabilities; and
--  Reserve the right to impose unilateral
controls in those limited and extreme
circumstances that may require them.
Let me describe each of these briefly, focusing
specifically on how the Administration's
proposed new Export Administration Act
contributes to each of these goals.
Clinton Administration Non-proliferation
President Clinton unveiled the overall U.S.
non-proliferation policy in his speech to the
UN General Assembly last September.  In that
speech, he pointedly elevated the importance of
preventing the spread of weapons of mass
destruction and sophisticated conventional
weaponry on the international security agenda.
In addition, the policy sets out broad
strategic aims and goals for the United States.
We will reinforce international norms against
proliferation by strengthening existing
international agreements and proposing new ones
to meet the challenges of the new international
security environment.  This will include, among
other steps, seeking the indefinite extension
of the Non-Proliferation Treaty in 1995 and
negotiating a Comprehensive Test Ban Treaty.
We will try to reduce demand for dangerous
weapons, through regional diplomacy--as in
North Korea, the Middle East, and South Asia--
to respond to the underlying sources of
insecurity and instability.
Multilateral Non-proliferation Regimes
Our policy recognizes that unilateral steps to
control exports will not stop the supply of
dangerous items to proliferators.  Technology
has diffused to many countries.  We need to
persuade other suppliers to support
multilateral approaches to constrain the supply
of sensitive equipment, material, and
technology.  We are seeking to ensure that NPT
parties with full-scope safeguards who continue
to maintain clandestine nuclear weapons
ambitions, such as Iran, cannot receive items
of concern from the members of the Nuclear
Suppliers Group.  We are encouraging the MTCR
partners to focus on missile-related exports
from non-partner countries like North Korea.
We are engaging in dialogue with key suppliers
like Russia and China that are not members of
all the key regimes to ensure their export
policies do not undercut the international
Multilateral Regime To Replace COCOM
COCOM's future came to the fore when we
undertook to respond to the new security
challenges and design a multilateral approach
to our non-proliferation goals along with
multilateral approaches to export controls.
President Yeltsin raised COCOM--along with
other Cold War era restrictions--at the
Vancouver summit and expressed concern that it
was harming reform and standing in the way of
building a new strategic partnership with the
The end of the Cold War, the disintegration of
the Soviet Union, deep cuts in the strategic
arsenals of both sides, and the goal of
assisting economic and political reform in
Russia and the other New Independent States--
rather than retarding their economic
development--all led us and our allies to the
view that the COCOM arrangement had outlived
its strategic rationale and could not be
That said, rather than sweeping away the COCOM
arrangement, we decided there were good reasons
for an orderly transition in which the
arrangement would be closed down with care and
a new regime established to respond to the new
security threats.  Though COCOM's mandate was
restricted to East-West transfers, it had
served over the years as a useful body for
Western countries to expand cooperation among
themselves in various ways--e.g., elaboration
of control lists, licensing standards, etc.--
patterns of Western cooperation we wished to
preserve and which we considered very valuable
in addressing new dangers to international
peace and security through coordinated action
with friends and allies.
High on our list of concerns was the need to
ensure stability in the Middle East and South
Asia--to deter destabilizing buildups of
conventional weapons and other sensitive
technologies and prevent the acquisition of
such items by dangerous states, such as Iran.
These factors led us to approach our allies in
mid-1993 with a proposal to create a new, more
broadly based mechanism with a security
rationale tailored for the post-Cold War world.
We outlined multiple objectives in our
--  To deal firmly and creatively with
dangerous states--e.g., Iraq, Iran, North
Korea, and Libya--that are contributing to
tensions in regions such as the Middle East;
--  To further the process of engaging Russia
and other New Independent States in
establishing effective export control systems
and combating the global proliferation of
weapons and sensitive dual-use technology;
--  To close gaps in the non-proliferation
regimes and improve our ability to enhance
regional stability by controlling conventional
arms and sensitive dual-use sales on a
multilateral basis for the first time; and
--  To remove disadvantages placed on U.S.
exporters by the lack of adequate multilateral
coordination on sensitive transfers to
terrorist states and on other threats.
A series of international expert meetings,
convened to consider the U.S. proposal, led to
a high-level meeting of the 17 COCOM
governments last November 16 in The Hague.  At
that meeting, our Western partners agreed on a
set of political principles that endorsed the
broad outlines of our proposal and also agreed
on a work program for phasing out COCOM and
inaugurating a new arrangement.  The timetable
is to achieve both by March 31, 1994.
Moreover, discussions among the 17 COCOM
governments have recently been broadened to
include the European neutrals and New Zealand.
Russia has expressed interest, at the highest
levels, in participating in the new arrangement
and being among the founding members.  At the
Moscow summit, Secretary Christopher and
Foreign Minister Kozyrev issued a joint
statement in which they welcomed the decision
to establish a new multilateral regime for
enhancing responsibility and transparency in
the transfer of armaments and sensitive dual-
use technologies and also agreed to
consultative arrangements.
Despite the very substantial progress, there
are a number of outstanding issues.  For one,
how far will our European allies and Russia go
in joining with us to keep dangerous
technologies away from dangerous states?
Second, will the new regime have real teeth--
particularly when it comes to conventional
weapons?  We have proposed a regime which
involves a serious information exchange and the
scope for consultation and concerted action
where the risks are acute.
There is also the further issue of Russia's
acceptance of the obligations entailed by
membership in the new arrangement--in
particular, its commitment to a responsible
export control policy--a question we are
continuing to discuss carefully and in detail
with Russian authorities.
With regard to these outstanding issues, we
will continue to press vigorously for a
credible regime that will advance our mutual
security interests as well as the interests of
regional peace and security.
With the phasing out of COCOM, we will be
putting in place guidance for American
exporters concerning areas in which there will
be liberalized treatment and other areas which,
because of their military sensitivity, will
continue to be subject to careful national
control.  As part of the phasing out of COCOM,
we also are negotiating common understandings
with our partners about those areas which
should continue to be treated with extreme
Liberalization of Controls and the New Export
Administration Act
The Clinton Administration is committed to
providing economic security for all Americans--
a goal that requires us to support expanded
trade and opening markets, as well as revisions
in export controls.  In light of the dramatic
changes that have taken place in the world, we
will focus our export controls on those items
which lead to the development of weapons of
mass destruction, missiles, and dangerous
conventional arms.
By raising the control threshold for the export
of computers and super-computers, the
Administration has decontrolled several billion
dollars' worth of exports.  This will enhance
our competitiveness and expand American trade.
We have revised the control lists for
multilateral regimes to focus on those items
and technologies that actually pose a serious
In parallel, we have developed the
Administration's proposed Export Administration
Act to streamline the export control licensing
process, enhance its responsiveness to U.S.
exporters, and discipline our use of all export
controls--unilateral as well as multilateral.
Let me set our efforts to streamline the system
in context.  Today's dual-use export control
system is quite different from the system as it
functioned only a few short years ago.  In the
mid-1980s, during the height of the Cold War,
the United States Government reviewed about
120,000 dual-use licenses per year.  Last year,
only 27,000 licenses required review, and this
year, due to liberalized controls on computers
and telecommunication equipment, only about
16,000 dual-use licenses will be reviewed.  The
relative impact of U.S. export controls on both
government and industry has diminished
considerably, but licensed exports still remain
important to some of our technologically
advanced industries competing globally.
As for the U.S. export control process, it must
be understood that the vast majority of dual-
use license cases--approximately 97%--are
processed within statutory timelines.  Further,
of the 27,000 dual-use licenses that were
reviewed last year, only 145 cases required
interagency review at the Assistant Secretary
(ACEP) level.  Fifty-six of these were computer
cases which would no longer be captured under
the new control policies.  Although there are
difficult licenses that take extensive time to
process, overall the system does, in fact,
Our bill will streamline the export control
system by reducing substantially the time
allotted for license processing and by speeding
the process of interagency review, thus forcing
decisions to be made in a more timely manner.
Further, to provide increased guidance to
exporters and the public about our policy and
goals, a high-level policy committee will be
created.  Comprehensive annual reports on how
the system works will provide guidance to
licensing officials as well as exporters.
We also propose to harmonize the various
sanctions laws that exist for missiles and
chemical and biological weapons.  By so doing,
we hope to make our sanctions laws more
coherent, more predictable, and, hence, more
effective.  This approach also endorses the
proposals sponsored by Senator Glenn which deal
with nuclear-related sanctions.
I should also mention that we are working with
other agencies to eliminate unintended overlap
between the U.S. Munitions List (USML) and the
Commerce Control List (CCL).  Following on the
Trade Promotion Coordinating Committee (TPCC)
report, we have also introduced a number of
changes in the Department's munitions licensing
process--more than 100 companies are submitting
licenses electronically.  At the State
Department, we have consolidated most of our
export control functions into one bureau, which
also has responsibility for non-proliferation.
This will ensure a more coordinated approach to
export control policy.
Disciplines on Unilateral Controls
The Administration's bill will enhance our
ability to achieve important nonproliferation
and foreign policy goals by placing an emphasis
on multilateralism, while maintaining the
prerogative to use unilateral controls when
absolutely necessary.  We will do so in a
disciplined way to deal with objectionable
behavior--such as support for terrorist
activities or violations of human rights.  By
implementing all the above-stated reforms, we
believe that we will create an export control
process that addresses all our national
security, non-proliferation, and foreign policy
concerns--including our economic interests--
while imposing the minimum burden necessary on
U.S. exporters.  We are engaged in a process to
create the framework for an export control
policy for a new era.  We strongly believe that
we must not and cannot fall back from our
responsibility to carry out an effective non-
proliferation policy and support our foreign
policy interests.  We do believe that
unilateral controls are not the controls of
choice and that they should be used sparingly.
On the other hand, we also believe that the
President must have the authority to control
exports to countries engaged in terrorist acts
or egregious human rights abuses, for example.
Iran is a case in point, and the lessons we all
learned from the Iraq experience compel us to
hold firm to these principles.
The bill provides for greater discipline in our
use of export controls by subjecting all
controls--unilateral as well as multilateral--
to tougher criteria and greater transparency.
Prior to the imposition, extension, or
expansion of any control, the President must
determine that the control is, in fact,
essential to the advancement of our national
security, non-proliferation, or foreign policy
objectives.  For unilateral controls, we have
not only maintained the current tough criteria,
but also we have provided for the
identification of all unilateral controls by
As recommended by the Trade Promotion
Coordinating Committee report of September 30,
we also are working with other agencies to
eliminate unilateral controls where this can be
done without undermining our foreign policy
goals or jeopardizing the viability of the non-
proliferation regimes.
To ensure that the system responds to the
problems that exporters encounter, our bill
expands the grounds on which exporters can seek
relief from export controls as well as the
scope of items subject to such relief
provisions.  In addition to a foreign-
availability provision, the bill provides
exporters an opportunity to seek relief on two
other grounds:  when our own domestic controls
are believed to be ineffective, or when a U.S.
company believes itself to be at a competitive
disadvantage vis-a-vis its foreign competitors.
Mr. Chairman, I must be honest with you and say
that none of these efforts are easy.  These are
tough issues that deserve high-priority
attention.  We are committed to doing that.  We
look forward to working with your committee to
redesign our export control system in the
months ahead.  We need to work together to
build a system that has the flexibility needed
to deal with the new, serious non-proliferation
and foreign policy threats we face, while
supporting legitimate exports.  (###)
Resumption of U.S.-North Korea Negotiations on
Nuclear and Other Issues
Statement by Department Spokesman Michael
McCurry, released by the Office of the
Spokesman, Washington, DC, March 3, 1994,
including the text of the U.S.-North Korea
agreed conclusions.
The United States Government has been informed
that a team of inspectors from the
International Atomic Energy Agency (IAEA) has
arrived in Pyongyang to begin work at North
Korea's Yongbyon nuclear research facility.
The IAEA team will carry out activities aimed
at verifying that nuclear material at these
facilities has not been diverted since earlier
IAEA inspections and facilitating future
verification.  The team expects to complete
these inspections, necessary to ensure
continuity of safeguards in North Korea, in
about two weeks.
We have also been informed that representatives
of the Republic of Korea (R.O.K.) and the
Democratic People's Republic of Korea
(D.P.R.K.) resumed discussions earlier today,
in the Joint Security Area at Panmunjom, on the
exchange of special envoys who will address
intra-Korean issues, including the nuclear
In light of these steps, the United States has
agreed with the D.P.R.K. to meet in Geneva,
Switzerland, on March 21 to begin a third round
of negotiations.  The talks will aim at a
thorough and broad resolution of the nuclear
and other issues that separate the D.P.R.K.
from the U.S. and the rest of the international
Assistant Secretary of State Robert L. Gallucci
will head the U.S. delegation to the third
round of talks.
Also, the Government of the Republic of Korea
has announced that it and the U.S. Government
have decided to suspend the combined military
exercise, Team Spirit, in 1994.  The U.S.
agrees with that decision.  The long-standing
security relationship between the R.O.K. and
the U.S. remains strong, and the suspension of
Team Spirit '94 will not weaken our joint
defensive capabilities.
The undertakings of the U.S. regarding Team
Spirit '94 and a third round of U.S.-D.P.R.K.
talks are based on the premise that the IAEA
inspections will be fully implemented and the
South-North nuclear dialogue will continue
through the exchange of special envoys.
Agreed Conclusions
The United States of America (USA) and the
Democratic People's Republic of Korea (DPRK)
have held a series of talks in New York, with
the purpose of making continued joint efforts
to resolve the nuclear issue through dialogue
according to the principles of the U.S./DPRK
Joint Statement of June 11, 1993.
Pursuant to the consultations, both sides have
agreed to take four simultaneous steps on March
1, 1994 as follows:
1.  The USA announces its decision to agree
with the Republic of Korea's suspension of the
Team Spirit '94 joint military exercise.
2.  The inspections necessary for the
continuity of safeguards as agreed between the
IAEA and the DPRK on February 15, 1994 begin
and will be completed within the period agreed
by the IAEA and the DPRK.
3.  The working level contacts resume in
Panmunjom for the exchange of North-South
Special Envoys.
4.  The USA and DPRK announce that the third
round of U.S./DPRK talks will begin on March
21, 1994 in Geneva.
Each of these simultaneous steps is required
for the implementation of these agreed
conclusions.  (###)
U.S.-Latin America Relations in the 1990s:
Toward a Mature Partnership
Alexander F. Watson, Assistant Secretary for
Inter-American Affairs
Address before the Institute of the Americas,
La Jolla, California, March 2, 1994
I am very pleased to have been asked to open
the Institute of the Americas 1994 Hemispheric
Policy Forum.  Your topic, "Reform and
Integration--The Challenge for a New
Generation," is right on the mark.  I think the
most useful contribution I can make to your
deliberations over the next couple of days is
to lay out for you the views of the Clinton
Administration on our relations with the
The ratification of the North American Free
Trade Agreement, following a dramatic national
debate, signaled clearly the intention of the
United States to engage the major challenges
that confront our new post-Cold War world.
Resisting a natural tendency to withdraw after
victory in an epic struggle, the United States
under President Clinton is committed to active
international leadership.  NAFTA, along with
the successful completion of the GATT
negotiations in the Uruguay Round, represent
decisive steps toward the more open and
competitive world economy that the United
States has sought for the last half-century.
The NAFTA victory is also the first tangible
evidence of a new, mature partnership this
Administration is prepared to forge with our
closest neighbors.  What I wish to speak about
with you today is the exciting vision we in the
Clinton Administration share of a new U.S.-
Latin America relationship--one based on mutual
respect, support for democracy and human
rights, economic growth, expanding free trade,
improving the welfare of our people, reducing
international tensions and threats to
stability, and cooperation in addressing
transnational issues that affect us all:  the
environment, narcotics trafficking, migration,
labor rights, population, and proliferation of
Convergence in the Western Hemisphere
You have heard similar pronouncements of other
Administrations about a new era in U.S.-Latin
American relations.  From the Good Neighbor
policy to the Alliance for Progress, the United
States has often stated its noble intentions
for the hemisphere, only to see them
undermined.  Why should you not be incredulous
this time?
Predicting the future is hazardous business,
but I believe that changes in the United
States, in the region, and in the world are
bringing about an extraordinary convergence of
values, interests, and objectives throughout
the hemisphere.  This convergence permits us to
pursue more energetically and consistently the
core values of U.S. policy in our relations
with Latin America and the Caribbean.  This, in
turn, will increase domestic support for those
policies.  Indeed, our relations in this
hemisphere promise to be a paradigm for our
overall foreign policy in the post-Cold War
era.  Let me discuss this phenomenon of
convergence for a moment or two.
First, security:  In the past, the lofty goals
we announced for our relations with the
hemisphere were often subverted by events in
the region and especially beyond the region
that drew us to emphasize the security
dimension of our policies.  Our efforts in the
Americas frequently became characterized by a
concern with stability above all else and,
therefore, often by support for regimes that
contradicted the fundamental values of our
democratic society.
The Clinton Administration is properly
concerned with protecting the security of the
United States, but the end of the Cold War
permits a profound redefinition of our security
interests in the hemisphere.  For the first
time since the Monroe Doctrine, the United
States and the region face no external threats-
-whether from former colonial powers or
totalitarian regimes--that distort and pervert
our relations.  Thus, we can fashion our
relations on their own terms.  Our security
interests are now most affected by the
character of governments in the region and
their ability to deal effectively with the
political, economic, and social problems they
Fortunately for us, civilian, elected leaders
predominate in the hemisphere, and the vast
majority are committed to deepening democratic
processes and promoting the vibrant civil
societies that are the best guarantors of
democracy.  There is a general consensus in
favor of democratic political institutions and
processes which are responsive and flexible in
addressing the demands of a citizenry
increasingly accustomed to shaping its own
destiny.  Democracy is understood to be the
form of government most reflective of the will
and rights of the people, most able to maximize
the creative talents of the population, and
least likely to promote war and violence as a
means to achieve national objectives.  It is,
in the 1990s, the legitimate form of government
for our hemisphere.
The obvious exception to this consensus is
Cuba.  Its leadership not only rejects
democratic values but disparages the diversity
of a civil society and multiparty articulation
of interests that are essential to democracy's
functioning.  We see our policy toward Cuba,
based on the Cuban Democracy Act, as consistent
with our commitment to support and defend
democratic values in the hemisphere.  Absent
profound and, so far, undetected political and
economic change in Cuba, we will continue to
maintain the pressure of an economic embargo as
one means to encourage change on the island.
But we are also using the Cuban Democracy Act,
as its authors intended, to reach out to the
Cuban people with improved communication and
dramatically increased humanitarian assistance.
Second, in addition to their adherence to
democratic pluralism, almost all governments in
the hemisphere are now committed to market
economics and to achieving financial balance
through tax reform, monetary and fiscal
discipline, and privatization.  They are
gaining real international competitiveness as
they open up their economies to international
trade and free up internal markets.
Capital inflows are at record levels.  For 1992
and 1993, preliminary estimates indicate that
new investment is almost three times the
average level of the 1980s.  Inflation is
receding in most countries and is below or near
single-digit levels in a number of countries
which not so long ago were struggling with
three-digit rates--for example, Argentina,
Bolivia, Chile, and Mexico.  Latin America is
experiencing its third year of solid growth.
The Economic Commission for Latin America and
the Caribbean (ECLAC) anticipated that growth
in 1993 would be around 3.6%.
This combination of market reform and renewed
growth is clearly positive for the U.S.
economy.  The Western Hemisphere has become one
of our largest and most dynamic markets.  U.S.
exports to Latin America and the Caribbean have
more than doubled in six years, to about $76
billion in 1992; that is considerably more than
we sell to Japan and about what we sell to all
the developing countries of East Asia.  In
fact, adding Canada into our trading
relationship with the Western Hemisphere--as we
now should, thanks to NAFTA--makes the Western
Hemisphere our most important trading partner,
with 1992 U.S. exports of about $166 billion.
By comparison, U.S. exports to Western,
Eastern, and Central Europe plus Russia,
combined totaled about $112 billion; and to all
of East and South Asia, including Japan, about
$141 billion.
Here at the University of California at San
Diego, with a window on the Pacific, you
recognize the importance of the Asia-Pacific
Economic Cooperation forum, which the first
Latin American nations are now joining.  But
for all the attractiveness of the Asian
markets, it is not a region that shares the
commitment to democratic values evidenced in
this hemisphere.
A third element of convergence in our
hemisphere is the recognition of the importance
of transnational issues and the awareness that
they must be addressed multilaterally.  We
simply cannot cope with them alone.  We must
focus more actively on the long-term
implications for the hemisphere of massive,
international migrations, the flow of drugs,
weapons proliferation, human rights violations,
the continued deterioration of the environment,
threats to constitutional order and to
effective democratic governance, and the
increasing integration of the United States
demographically and economically with Mexico,
Central America, and the Caribbean.  We address
these transnational issues bilaterally and
I am not saying that all the leaders and
peoples of the hemisphere agree on everything;
there is no end of ideology or history in this
hemisphere.  No one will ever accuse U.S.-Latin
American relations of being boring.  Many of
the reforms that have taken place are still
fragile.  But this convergence of values is of
historic proportions and offers us the
opportunity to forge patterns of behavior and
fashion institutional settings that will
promote, if not guarantee, peaceful and
cooperative resolution of disputes and
facilitate common approaches to issues that
concern us all.
Clinton Administration Policies
The Clinton Administration not only recognizes
this convergence, this changed reality, in our
hemisphere.  Our policies flow from it.
1.  Multilateral and bilateral instruments to
support democracy and economic reform.  A
starting point of our policy is a fundamental
commitment to strengthening multilateral and
bilateral instruments to achieve our foreign
policy objectives in the region.  Therefore,
this Administration is taking an active
interest in how we can strengthen bilateral and
multilateral institutions which already exist
and build new ones to address the new issues
which arise as technology changes, new
priorities emerge, and citizens' needs change.
This Administration believes that it is in the
interest of all democracies to defend others.
The OAS and the UN are now more effectively
fulfilling specific roles in resolving
conflicts in the region.  The UN's global
capacities have helped bring peace to Central
America and are essential in El Salvador and
Guatemala, while the OAS is helping to protect
human rights in the Nicaraguan countryside.
Central America's conflicts are largely over,
but this international presence continues to
contribute enormously to the ability of this
region--which has been the object of so much
U.S. attention--to make the transition to a new
political and economic order.
The OAS, unlike the United Nations or other
similar regional organizations, is explicitly
committed to defending democracy and is
contributing to the democratization of the
hemisphere.  Examples of OAS activities that
receive our strong support include the new
Democracy Unit, which coordinates such efforts
as election observation in countries as diverse
as El Salvador, Peru, and Antigua-Barbuda.  We
worked closely with both the United Nations and
the OAS in fashioning our response to the coup
d'etat in Haiti and in support of sanctions
aiming to bring about a political settlement
and restore democracy in that country.
Learning from events in Haiti and Peru, the
Administration worked closely with the OAS to
reverse the threat to democracy in Guatemala
represented by the auto-coup of former
President Serrano.
We have taken an active role in the process of
selecting a new Secretary General of the OAS
later this month.  We believe that this is a
critical moment for the OAS, when the selection
of a dynamic leader could do much to improve
prospects for multilateral cooperation in the
region.  If we miss this historic moment, the
OAS, which should play a central role in our
newly convergent hemisphere, could be relegated
to a sideshow.  That is why we have encouraged
the members of the OAS to look for candidates
who have the highest possible qualifications
and experience.  The decision of Colombian
President Cesar Gaviria to seek election to the
office is a positive sign of the seriousness
with which the OAS is now seen by the
hemisphere, and we support his candidacy.
There are also examples from the economic arena
of this new commitment to cooperative
approaches.  USAID Administrator Brian Atwood
led a high-level delegation last month to the
recent Special General Assembly of the OAS in
Mexico that discussed ways of addressing
poverty and development.  We were pleased also
to contribute to the restructuring of the OAS
Trade Committee, whose new charter replaces the
old pattern of confrontation with a new
emphasis on dialogue aimed at encouraging trade
liberalization throughout the hemisphere.
The international financial institutions, and
particularly the Inter- American Development
Bank, are playing a greater role in assistance
to the region.  This trend will strengthen as
levels of bilateral U.S. aid continue to
decline.  That is why, in the negotiations that
we hope will conclude successfully next month
in Guadalajara, we have strongly supported a
large capital increase, resulting in almost a
doubling of the bank's capital.  This would
guarantee current or increased levels of
lending for many years.
The region is also developing new multilateral
mechanisms to address specific problems.  You
are familiar, I am sure, with the U.S. role in
the peace process in El Salvador, where we were
an important actor but an adjunct to  the "Four
Friends" formula devised by the United Nations
to support the peace process.  You may not be
aware, however, that Guatemalan peace talks
begin tomorrow in Mexico with direct UN
mediation.  In this peace process, the United
States participates directly in a new set of
Friends, giving testimony to our credibility as
an "honest broker."  I could mention as well
the numerous regional meetings to discuss
security and confidence-building measures and
the extraordinary efforts to control weapons
proliferation in Brazil, Argentina, and Chile.
We had particularly good news last week on this
issue.  On February 25, Brazil ratified the
Quadripartite Safeguards Agreement for
comprehensive safeguards on nuclear activities
in Brazil.  This, together with Argentina's
earlier ratification of the same full-scope
nuclear safeguards agreement with the
International Atomic Energy Agency (IAEA), will
bring their landmark nuclear non-proliferation
agreement into full effect.  At a time when we
are so concerned about nuclear proliferation
around the world, it is particularly gratifying
that Argentina and Brazil have clearly
demonstrated their commitment to arresting the
global spread of nuclear weapons.  Their
example will serve as inspiration to others.
Similarly, with our support Argentina became
the first developing country to join the
exclusive Missile Technology Control Regime,
and Brazil has indicated it will adhere to MTCR
guidelines prior to formal membership.  These
unparalleled developments will facilitate
greatly scientific and technological
cooperation between the United States and those
countries.  Moreover, Argentina and Chile
recently deposited their instruments of
ratification of the Treaty of Tlatelolco, and
Brazil is expected to follow suit soon.
In addition to our participation in and strong
support for multilateral approaches to issues
in our hemisphere, another critical part of our
policy is vigorous, more comprehensive
bilateral arrangements.  Here, our relationship
with Mexico can serve as something of a model
for what we should be working toward with our
other neighbors.
What we are seeking--and have to a significant
extent already achieved with Mexico through the
Binational Commission--are mechanisms for
addressing the many problems which inevitably
arise between neighbors.  Frequent meetings
provide clear understandings of our mutual
interests and available resources and venues
for dealing with misunderstandings or
unanticipated issues.  Such mechanisms, if we
get the rules and the structures for
consultation right, enhance understanding,
predictability, and flexibility.
Obviously, our geographic proximity and the
intensity of our interrelationship make Mexico
something of a special case.  But the issues
between us are certainly not unique.
I have spoken so far only of inter-governmental
relationships.  But increasingly, as our
societies and economies mature and as
technology shrinks the distances between us,
most of the threads in the fabric of relations
among nations will be made up of private
relationships among citizens and non-
governmental groups of different nations.
The participation of non-governmental
organizations in the political process is
growing everywhere in Latin America, the
Caribbean, and the United States.  Citizens
expressing their views--through political
parties and the ballot box and groups which
represent more specific interests and concerns-
-help keep governments responsible, able to
identify and articulate new issues, and
responsive to new needs and changed
A regional network of private relationships in
the hemisphere is now beginning to develop.
Labor has a long history of transnational
organization.  Business also has transnational
associations.  But many other groupings across
the spectrum--indigenous peoples; women;
professional groups like journalists and
scientists and lawyers and health specialists;
citizens interested in environmental
protection, children's welfare, protection of
historical sites, safeguarding of human rights-
-are forming.
The development of a network of articulate and
well-organized citizen groups within and among
countries is one of the strongest guarantors of
democracy and responsive government.  An
indicator of our own faith in this process is
the series of agreements we have signed with
seven countries which will use savings from
debt reduction to provide some $20 million this
year to help fund the environmental and child
development activities of NGOs.  In addition,
our USAID programs foster the development of
NGOs throughout the hemisphere.
2.  The key role of NAFTA in advancing economic
reform.  As I mentioned at the outset of my
remarks, NAFTA was the signal event in U.S.
policy toward our neighbors last year and a
foundation on which future policies will rest.
The NAFTA debate in the media and in Congress
made clear that NAFTA is far more than a trade
First, the NAFTA debate was a defining moment
for this Administration's commitment to free
trade.  Protectionism, jingoism, and Ross Perot
lost; free trade, equitable treatment for our
neighbors, and Bill Clinton won.
Second, NAFTA and its side agreements represent
the consolidation in international law of the
commitment which the Mexican Government first
undertook almost a decade ago to market-based
policies.  By opening markets, stimulating
growth, creating jobs, and supporting reforms,
NAFTA and its supplementary agreements should
promote democracy and good government in
Mexico.  NAFTA offers the promise of a more
predictable and stable relationship between our
two countries and Canada.
Third, NAFTA also promotes a pattern of
cooperation between the United States, Mexico,
and Canada that will be essential to dealing
effectively with increasingly important
transnational issues such as labor standards,
environmental degradation, narcotics
trafficking, law enforcement, migration, and
Finally, NAFTA advances a vision for the U.S.-
Latin America relationship as a community of
nations committed to democracy, bound together
by open markets and rising standards of living,
and dedicated to the peaceful resolution of
disputes.  This vision has been a powerful
stimulus to reformist Latin American leaders to
intensify their efforts to restructure their
economies and societies.
Latin American leaders have been telling the
United States for a decade that trade, not aid,
is the key to mutually advantageous
relationships and real economic progress.
NAFTA and succeeding agreements will open
demands for investment as well as trade, thus
attracting resources from private sectors of
our economies that far surpass what can be
provided by public funds from either domestic
or international sources.
Our leadership in the Uruguay Round and NAFTA
signals that the U.S. will continue to lead the
world toward a more open trading system as we
have for half a century and that we, as a
nation, have the long-range vision and
confidence to compete effectively in the world
As a direct result of meetings between
President Clinton and leaders from the
Caribbean and Central America, we will announce
momentarily measures that will address the
concerns of CBI countries about the impact of
NAFTA on their trade with the U.S.  We are also
very close to producing--as required by
legislation--a list by May 1 of those countries
which are most likely to be eligible for the
next free-trade negotiations.
The U.S. will take another step to stimulate
regional cooperation through the hemispheric
summit of all the democratically elected heads
of states that was announced by Vice President
Gore on his trip to Mexico.  We are actively
engaged in preparing for the summit, both
substantively and logistically.  We envision
the summit as a confirmation of hemispheric
convergence and a generator of new initiatives
to strengthen the Americas.  I should note also
that later this month, Vice President Gore will
visit Bolivia, Argentina, and Brazil.
3.  Sub-regional economic integration.  I have
talked about multilateral institutions and
bilateral arrangements as tools for
consolidating the new, cooperative relationship
between the U.S. and Latin America.  Another
important aspect of that relationship in the
future will be the sub-regional integration
which is underway in Latin America and the
Latin America, of course, has a long history of
inward-looking and protectionist integration;
today, the old groupings are being completely
revamped to be outward-looking and export
oriented.  All the integration groupings are
committed to implement common external tariffs
which are generally no higher than 20%.  As
barriers drop, both within these groups and
with the outside world, trade among Latin
American countries is booming, with the
corollary benefit of increased opportunities
for U.S. exporters as well.  The list includes
arrangements such as those between Chile and
several other countries; between Venezuela,
Colombia, and Ecuador; as well as the Central
American Common Market; the Andean Pact;
Contrary to some opinions, the U.S. welcomes
these trends.  We want to see a region of
countries which are open to each other and to
the world, with increased trade, investment,
and other exchanges throughout the hemisphere
and the globe.  And we see the growth of sub-
regional trade, economic liberalization, and
integration as a sound base for further
progress toward hemispheric free trade.
Next, I would like to turn briefly to two major
problems which seriously threaten the still
fragile political and economic evolution of our
4.  The challenge of poverty.  The poverty
which exists in Latin America and the Caribbean
is a challenge which we must address if we hope
to maintain support for both democracy and
market economics.  That challenge is enormous.
By UN estimates, about 45% of Latin America's
people live in poverty.
Per capita income in 1992 for the region was
still 7% below that for 1981.  Regretfully,
income inequality is greater in Latin America
than in any other region of the world.
Moreover, the disparities between wealth and
poverty are increasingly apparent--and
politically volatile--with increasing
urbanization and improved means of
Major efforts are underway to increase the
economic and political participation of
marginal groups.  But the keys to a sustained
expansion of the middle class and diminution of
poverty are continued rapid economic reform and
the institutionalization of responsive,
democratic government.  Economic reform is not
incompatible with efforts to address poverty in
a structural way, as some assert.  Indeed, it
is essential to it; for instance:
--  The progressive lowering of inflation in
the hemisphere may be the single biggest
benefit for the poor and the middle class,
whose incomes tend to be fixed and quickly
eroded by inflation.
--  Eliminating artificial protection or
subsidies for inefficient industries lowers the
cost of living, which is of greatest benefit to
the middle class and the poor.
Growth fostered by market-based policies also
provides increased resources for social
programs.  More effective democratic
institutions, including free labor unions,
build the political basis for addressing
problems of poverty.
It is a measure of the deepening democracy and
social responsibility in the region that many
countries are beginning to refocus their
spending away from programs that benefit elites
toward basic education and primary health care
and safety nets for the most vulnerable.
U.S. assistance programs and the Inter-American
Development Bank, under Enrique Iglesias's able
leadership and with our strong support, are
focused increasingly on reducing poverty and
addressing other serious social issues.
5.  Effective democratic governance.  As
democracy and economic reform flourish, we face
another major challenge:  improving the
functioning of government, its efficiency, and
its honesty, throughout the hemisphere.
Failure to meet this challenge will threaten
not only specific governments but political
systems themselves.  The commitment to
effective governance is growing--and not just
in Latin America.  In the United States, the
effort to reinvent government led by Vice
President Gore is a major attempt to improve
governance here--to make our government more
efficient and responsive.
In Latin America, there is a growing, new
perception of government's role that is more
limited and more realistic, which focuses on
those functions which only government can do
and which government must do.
Government is becoming leaner and more
efficient throughout the region.  It is also
becoming cleaner.  In the past year, presidents
in several countries were forced from office
for malfeasance and replaced through
constitutional means.  The OAS has formally
recognized the need to improve legal and
administrative structures so as to prevent
corruption and improve effectiveness.  And the
Inter-American Development Bank is adopting
"modernization of the state" as one of the
guiding principles of its Eighth Capital
Replenishment.  Only through such modernization
can democratic governments effectively meet the
needs of their increasingly insistent peoples.
Market-based economic reform is a major part of
the recipe for improving governance and
controlling corruption.  With privatization of
state enterprises and the elimination or
liberalization of controls on prices, foreign
exchange, and trade, economic decisions are
shaped by impersonal market forces rather than
bureaucracies which can become subject to
improper influence.
Progress toward honesty and efficiency in Latin
America's governments will also substantially
benefit exporters and investors--including
those in the U.S.; that means benefits for U.S.
workers and communities.  At present, foreign
competitors not subject to U.S. ethical and
legal constraints can sometimes outmatch even
the most efficient U.S. businesses.  Our
embassies in the region will strongly support
American commercial interests with their host
governments as necessary to restore a
competitive balance.
The Clinton Administration strongly encourages
effective democratic governance, which is so
crucial to the great experiment unfolding in
our hemisphere.  Many of our diplomatic and
assistance efforts are devoted to this end.
6.  The future of U.S. assistance.  Finally,
let me end on an issue which has dominated our
relations with the Americas in the past but
promises to change dramatically in the future:
foreign assistance.  This Administration is
committed to a fundamental overhaul of the
foreign assistance legislation, rooted in the
Cold War, which has guided our aid relations
for the last 40 years.  That reform of foreign
assistance will, I hope, help to make a better
case to the American people and the Congress
about the reasons for and the costs of our
involvement in the world.
As I also have noted, our relations with Latin
America and the Caribbean will be more trade-
based and less aid-based in the future.  This
is desirable from the perspective of our
foreign policy as well as from our necessary
focus on domestic priorities.
Also, with continued strong support from the
international community, the multilateral
development banks will compensate to a great
extent for reduced U.S. bilateral assistance.
Nevertheless, there is still a very great need
for sharply targeted U.S. aid.  We must assist
the countries of Central America in completing
their extraordinary transition from civil war
to peace.  We must help the valiant governments
in the Andes battle the powerful international
narcotics cartels, and we must help our
neighbors eradicate poverty and strengthen
democratic governance and respect for human
But recently, under the pressure of budget
deficit reduction and essential aid for Russia
and the Middle East, assistance levels for our
hemisphere have plummeted.  We will even be
hard pressed to fulfill the international
commitments we made in cooperation with a
number of other donors to provide essential
balance-of-payments support for such important
countries as Peru, Nicaragua, and El Salvador.
As I have indicated, I believe that we have an
opportunity for unparalleled peace and progress
in the Western Hemisphere.  Modest investments
in the region will pay big dividends.  We must
find the necessary resources for Latin America
and the Caribbean and channel them in ways that
will protect recent gains and ensure the
I have suggested to you in my remarks today
that we have an extraordinary opportunity to
shape our relations with Latin America and the
Caribbean in a dramatically new historical
context.  The rebirth of democracy and the
remarkable economic changes taking place in the
region remind us that the historical
differences dividing us are now exceeded by
extraordinary affinities that make the nations
of Latin America and the Caribbean logical
partners of the United States in a world of
increased regional strife and divisiveness.  We
in the Clinton Administration are determined
not to waste this opportunity.
I appreciate this opportunity to speak with you
today, and I look forward to working closely
with all of you on the important and
challenging issues facing us in Latin America
and the Caribbean.  (###)
Substantive Symmetry in Hemispheric Relations
Richard E. Feinberg, Special Assistant to the
President for Inter-American Affairs, National
Security Council
Address to the Latin American Studies
Association, Atlanta, Georgia, March 10, 199l4
It is a great pleasure to be back with so many
friends today.  Working now in government, I
recognize more than ever the vital importance
of the world of ideas.  The Clinton
Administration frequently calls upon the
scholarly community for informed advice, and
numerous scholars have even been brought into
government service.  Newly confirmed
ambassadors are now regularly briefed by
academics.  We launched our review of
hemispheric policy with a conference of leading
U.S. Latin Americanists.  And we are looking to
you to help us prepare for this year's Summit
of the Americas.
Hemispheric relations are entering a new era in
which all countries--north and south--face a
similar agenda rooted in their common
participation in the one-world economy.  This
is the era of substantive symmetry.
Compare key themes of the Clinton
Administration with its hemispheric
--  At home, we are rebuilding a sense of
community and social inclusion.  Many Latin
American nations are pursuing political
reconciliation and democratic deepening.
--  We are making our economy more competitive
and promoting exports.  Latin America is
inserting itself more and more into the global
--  We are reforming our health, welfare, and
educational systems.  Latin America is turning
to its own social agenda.
This substantive symmetry makes possible the
new promise in hemispheric relations.  Let me
address these themes in turn:  promoting
democracy, advancing economic growth, and
addressing the social agenda.
Promoting democracy and protecting human rights
are among President Clinton's key strategic
foreign policy objectives.  This ranking flows
naturally from his domestic vision of an
America that is revitalizing democracy and
rebuilding communities.
Today, the United States enjoys a historic
opportunity to promote democ-racy in the
hemisphere unshackled by the fears of external
threats.  We are freer to pursue a foreign
policy that better aligns our ideals and our
As the President's Assistant for National
Security Affairs, Anthony Lake, has said, the
successor to a doctrine of containment must be
a strategy of enlargement of the world's free
community of market democracies--
. . . we have arrived at neither the end of
history nor a clash of civilizations but a
moment of immense democratic and
entrepreneurial opportunity.  We must not waste
In this hemisphere, the President has called
for the construction of a community of
democracies linked by growing economic ties and
convergent political beliefs.  Only the
illegitimate military leadership in Haiti and
the dictatorship in Cuba lie outside these
promising trends.
I reject the pessimistic notion that the
current democratic wave in Latin America is
only a passing phase, only a pendulum swing
away from a return to authoritarian rule.
There are dangerous counter-currents and there
will be setbacks, but the moment is propitious
for democracy to take root definitively.  As
Americans--whether policy-makers or scholars--
we cannot be passive witnesses to this drama.
The final outcome will depend, in some measure,
on our actions.
The broad spectrum of American interests which
reach toward Latin America--business,
religious, environmental, humanitarian,
academic--now see democracy as the best means
for securing their goals.  There is thus a
broad foundation of domestic sup-  port for the
Administration's promotion of a hemispheric
community of democracies.
To help prevent the pendulum from swinging back
toward authoritarian rule, we are working on
four fronts in the Americas:
First, we are seeking to deepen democracy in
the hemisphere by helping to improve the
quality of democratic governance--by making the
state more efficient and accessible.
Second, we are fostering national
reconciliation and domestic dialogue--in
Nicaragua, El Salvador, Haiti--and the
formation of broad national coalitions to
facilitate democratic reforms.
Third, we have made it clear that, while the
United States firmly supports democratic
procedures, we are strictly neutral in
electoral contests.  Latin Americans now know
that we tilt toward no particular party or
personality.  We stand ready to work
constructively with whomever wins through the
ballot box in the dozen elections scheduled
this year.
Fourth, we are working to strengthen the
hemisphere's multilateral mechanisms for the
collective defense of democracy.  We are
supporting a very strong, dynamic candidate to
lead the OAS in our newly convergent
Good Governance
The challenge of the 1970s was the protection
of basic human rights.  The triumph of the
1980s was the transition to free elections.
The task today in Latin America and the
Caribbean is to institutionalize the protection
of human rights and make democratic
institutions function--to create a state that
works for all the people.
Everywhere the state must adjust to the swiftly
evolving patterns of technological innovation
and trans-national markets.  In the United
States, we are seeking to reinvent government--
to make our government more cost effective and
results oriented, more open to the public and
responsive to the consumer.
Suddenly, Brazilians, Venezuelans, and
Hondurans are no longer willing to tolerate
official ineptness, corruption, and impunity.
As in the movie Network, Latin America is
uttering in unison, "We won't take it anymore."
This collective awakening signals a new epoch
of healthy protest and citizen participation.
This outpouring of popular protest must be
channeled into institutional reform.  It is
imperative that democracy capture the good
governance banner.  "Democratic governance"
must not be an oxymoron.
The Administration is making good governance--
buen gobierno--a central theme of our
hemispheric discourse.  History warns us of the
pitfalls of paternalism, and we will work
closely with hemispheric leaders whose agenda
we share.  We applaud such dedicated democrats
as President Sanchez de Lozada of Bolivia,
President De Leon Carpio of Guatemala, and
President Carlos Roberto Reina of Honduras, and
their courageous efforts to advance clean
government in their own countries.  We salute
the integrity and quality of Chilean
institutions such as its Controleria and
Central Bank.
We are improving coordination among the
numerous U.S. Government programs promoting
good governance in the hemisphere, and we are
urging multilateral agencies to direct their
own efforts toward democratizing the Latin
American state.
--  USAID, often working with the Departments
of State and Justice, has a large portfolio of
good governance projects, including election
assistance, judicial reform, civil-military
relations, and support to legislatures.  And
USAID, itself, is being renovated and right-
--  USIA provides training in investigative
journalism and is planning conferences on
democracy and corruption.
--  The Treasury Department is working with the
World Bank and the Inter-American Development
Bank to sensitize their economists to the
importance of institutional settings and
grassroots participation in projects--that is,
to practice political economy.
An efficient and participatory state is crucial
to democratic governance.  But democracy also
requires a vibrant civil society to provide the
means whereby ordinary citizens organize and
communicate with government.  As many of you
know from your own field work, non-governmental
organizations (NGOs) are mushrooming throughout
the hemisphere.  The flowering of NGOs is one
of the most exciting and promising new
political developments in Latin America today.
Working with non-governmental organizations is
now a routine component of many U.S. programs.
USAID has been staffed with many individuals
who formerly worked in NGOs.  As officials,
they will work hard to support
instrumentalities that encourage people to work
together and organize themselves.  They will
also urge governments to begin their
interventions with the people who are to
benefit from them.
The role of the state and of civil society in
the Western Hemisphere--I know that this
audience is packed with expertise on these
critical subjects.  We heartily welcome your
counsel and advice on how best to promote
democratic governance in the diversity of
specific settings that characterize the region.
Domestic Dialogue
Just as democracy needs good governance, so
does it require mechanisms for conflict
resolution and a political culture of tolerance
and compromise.  Too often, in Latin America,
absolutist ideologies have polarized politics.
Too often, authoritarian institutions shut down
possibilities for peaceful change and drove
reformers into the mountains, and too often,
international ideological and geopolitical
clashes have stoked the fires and further
divided mothers from sons and brothers from
With the end of the Cold War, the United States
can play its part in lowering the decibels of
debate and reuniting the Nicaraguan and
Salvadoran families.  Our purposes can be   to
help demine and demilitarize, to reconcile and
During the 1980s, many Central Americans
traveled to Washington to seek support for
their partisan political programs--rather than
focusing on building working coalitions at
home.  In Managua, Ambassador John Maisto
repeats this mantra:  "Nicaragua's problems
must be solved in Nicaragua by Nicaraguans."
We can contribute to an environment conducive
to dialogue, but only Nicaraguans can make
their own democracy work.
All Nicaraguans willing to live by the
democratic rules of the game--whatever the
color of their faded uniforms--should be part
of that domestic dialogue.  We endorse
President Chamorro's desire to break with the
winner-take-all tradition of victors and
vanquished.  We have made it clear that we have
absolutely no sympathy for renewed recourse to
violence--not by any group.  Nor do we express
a preference for any particular political
faction.  But we are not neutral on all issues.
In Nicaragua, as elsewhere, we favor civilian
control of the security forces, respect for
human rights, the peaceful resolution of
property disputes, an honest and impartial
judiciary, and an operative legislature.  These
are difficult achievements--but essential steps
on the road toward effective democratic
governance and economic progress.
Non-partisan Engagement
Some critics have misinterpreted the new style
of American diplomacy in Central America as
indifference or benign neglect.  In fact, it is
precisely because we are genuinely interested
in the long-term security of the region that we
are refraining from supporting particular
individuals and factions.  It  is our genuine
interest in the region's future prosperity
which motivates our advocacy of durable
democratic practices and institutions.
We are also following this policy of non-
partisan engagement in El Salvador.  In just 10
days, that country will celebrate the
culmination of a miraculous peace process--UN-
monitored elections in which former combatants
will cast ballots for peaceful change.  One
demonstration of U.S. engagement will be a
presidential delegation of Members of Congress,
human rights advocates, and other concerned
American citizens who will travel to San
Salvador to witness this historic passage.  The
U.S. Government will work constructively with
whomever emerges as the people's choice.
Throughout Central America, our Embassies are
serving a new function:  a sanctuary where men
and women of conflicting political persuasions
can congregate on safe ground to meet   and
mingle and to recognize each other's
fundamental humanity.  Our Embassies have also
become cross-roads where senior officials rub
shoulders with leaders from non-governmental
organizations.  These  are small, but concrete,
contributions  to conflict resolution and
democratic reconstruction.
Collective Defense of Democracy
In a grave threat to hemispheric
democratization, the President of Guatemala,
last spring, sought to assume dictatorial
powers against the wishes of Guatemalan civil
society.  That very afternoon the Organization
of American States convened to condemn
unambiguously the auto-golpe and urge the
immediate, peaceful return to constitutional
democracy.  Mexico's response was indicative of
the depth of hemispheric outrage.  Modifying
its long-standing views on sovereignty, Mexico
warned that its ability to cooperate with
neighboring Guatemala was in jeopardy.  OAS
Secretary General Baena Soares promptly led a
delegation of foreign ministers to Guatemala
City, where he transmitted the opinion of the
international community.  Simultaneously, the
United States suspended its military and
economic aid and alerted the Guatemalan
business community that their trade preferences
were at risk.  Official U.S. warnings were
circulated widely by fax and broadcast over the
Voice of America.  In addition, the
multilateral development banks ceased to
consider new loans.  This determined
international response reinforced equally firm
domestic opposition to President Serrano's
illegal and intemperate act.  Within days,
Serrano was in exile and the Guatemalan
Congress elected as its new president a leading
human rights advocate.
Thus transpired a stunningly successful
exercise in the collective defense of
democracy.  Many Guatemalans remain
dissatisfied with their political system but
recognize that a pendulum swing backward was
averted.  Imagine how different Central
American history might have been had the
international community acted in 1972 to
safeguard the overwhelming electoral victory of
Napoleon Duarte--and how many lives might have
been saved.
The task before us today is to learn from the
failures and successes of the past and build a
stronger hemispheric regime capable of
reinforcing domestic efforts to keep threats to
democracy at bay.  We need an early-warning
system coupled with effective preventive
diplomacy.  The upcoming Summit of the Americas
offers an excellent opportunity to strengthen
the OAS's mechanisms for democracy promotion
and coup prevention.  As is apparent from the
Haiti case, it is far more difficult to reverse
consolidated coups than it is to deter them.
In a fully multilateral drive to restore the
democratically elected President Aristide to
office, the OAS and UN have called on member
states to enforce an unprecedented embargo on
shipments of arms and petroleum.  In addition,
the U.S. is denying visas and freezing assets
of all Haitian military officers, and we are
working for a UN resolution which will seek,
for the first time in history, to universalize
such targeted sanctions.  The Four Friends--
France, Canada, Venezuela, and the U.S.--have
been applying this leverage to promote broad-
based negotiations to end military domination
of Haitian politics.
So far, the deep schisms in Haitian society
have frustrated these diplomatic initiatives.
Nevertheless, in anticipation of a return to
constitutional rule, the international
community has announced a package of $1 billion
to assist Haiti in building democratic
governance, strengthening non-governmental
organizations, and creating jobs.  We remain
committed  to seeking Haiti's integration into
the hemispheric community of democracies.
When President Clinton arrived in office, he
pledged to focus like a laser beam on the
domestic economy.  At the same time, it would
be hard to imagine a U.S. economic policy more
propitious to Latin America than that in place
today.  If it is true that when the U.S.
sneezes, Latin America catches cold, it is
equally true that when the U.S. economy
recovers--with low inflation, low interest
rates, and open markets--Latin America
benefits.  Most dramatically, the recent sharp
drop in market interest rates has reduced Latin
America's debt service burden by as much as--
and more than--all the Brady plan debt
reduction agreements combined.
Sustainable economic growth in the United
States is the best mechanism we have for
promoting economic growth in Latin America.
Today, there is no contradiction between
restoring American prosperity and promoting the
prosperity of Latin America and the Caribbean.
The United States has major stakes--political
and economic--in the prosperity of Latin
America.  Certainly democracies are more likely
to endure when the economic pie is expanding.
But we also have strong economic interests of
our own in hemispheric prosperity.  Exports
have become a major engine of our economic
growth, and Latin America is one of our most
dynamic markets.  U.S. exports to Latin America
have more than doubled in seven years, to
nearly $80 billion in 1993--more than we sell
to Japan and about what we sell to all the
developing countries of East Asia.  Latin
America is the only major region in the world
where we enjoy a substantial trade surplus.
For these reasons, President Clinton fought
hard for NAFTA passage.  But there was another
reason as well.  At the signing of the NAFTA
side agreements, the President asserted:
This is an opportunity to provide an  impetus
to freedom and democracy in Latin America and
create new jobs for America as well.
There are several ways whereby the NAFTA adds
momentum to democratic trends in Mexico.  It
helps decentralize economic and ultimately
political power.  Through the side agreements,
it encourages cross-border linkages among
environmental, labor, and human rights groups,
and offers new opportunities to Mexican NGOs.
And it draws Mexico more into the global
Compare the reactions of the Mexican
authorities to the student disturbances in 1968
and to the recent rebellion in Chiapas.  This
past January, the spotlight of international
opinion helped stay the hands of those Mexicans
with repressive reflexes and bolstered those
Mexicans preferring dialogue and social reform.
The NAFTA is too young to have touched the
livelihoods of the Zapatistas, but some rebels
may be alive today because of it.  In the wake
of the NAFTA debates and Chiapas, the prospects
for genuine electoral reform in Mexico have
never been brighter.
Open Regionalism
Passage of the NAFTA has generated a palpable
excitement throughout Latin America.  Not since
the Alliance for Progress has there been such
intense interest--and optimism--in prospects
for inter-American cooperation.  Nations which,
not long ago, feared American political
intervention now actively seek inclusion in
hemispheric free trade.  One leader after
another from Central and South America and the
Caribbean has expressed interest in coupling
with NAFTA.  In response, on the very evening
of the NAFTA vote, President Clinton reaffirmed
his intention to ". . . reach out to the other
market-oriented democracies of Latin America,
to ask them to join in this great American pact
that I believe offers so much hope to our
The President has directed his trade
representative and other senior advisers to
study the modalities and criteria for expanding
trade throughout the Americas.
By the year 2000, U.S. exports to Latin America
could well exceed U.S. sales to Western Europe-
-and could add 1 million new jobs for U.S.
workers.  U.S. exports could grow even faster
if barriers to trade continue to come down.
For that reason, the Administration strongly
supports subregional agreements which create--
rather than divert--new trade, and which are
the building blocks for hemispheric trade
integration.  We seek an open regionalism--a
hemisphere tightly intertwined through commerce
and capital flows, yet open to competition with
the rest of the world.
Tonight, our chief trade negotiator, Mickey
Kantor, is in Chile to represent President
Clinton at the inauguration of Eduardo Frei.
Ambassador Kantor will reaffirm the President's
pledge to pursue an FTA with Chile, a pledge
made in part to honor Chile's socially aware
As a direct result of meetings between
President Clinton and leaders from the
Caribbean and Central America, we expect to
announce measures intended to allay their
concerns over the impact of NAFTA on their
economies and to increase trade and investment.
We are also working on a report--as required by
legislation--of countries which would be the
best prospects for expanded U.S. trade.
Streamlining the State
Within this hemispheric community there is a
growing convergence of views with regard to the
proper role   of the state in development.  A
strong, efficient state must invest in physical
infrastructure and human capital while
providing an enabling environment for private
enterprise and regulating imperfect markets.
But there are still some politicians who harken
back to an omnipresent state that protected
domestic firms behind high tariff walls and
that subsidized middle-class urban consumers.
The search for a return to a mythological
golden era of state capitalism has spawned
unholy alliances among traditional rivals--
between monopoly capitalists and orthodox
leftists.  What they share in common is
adherence to an outmoded vision of a
paternalist state.  As we enter the 21st
century, efforts to adhere to such dated models
of development will only result in inefficient
production patterns, fiscal deficits and
uncontrolled inflation, declining real incomes,
and rising poverty--with the ultimate victim
being democracy itself.
Another dangerous myth is that structural
reform requires authoritarian techniques.
Examples abound--from Jamaica to Argentina,
from Costa Rica to the Czech Republic--which
demonstrate that democracy can adapt to changes
in the global marketplace.
The answer to today's problems will not be
found in a futile effort to return to past
patterns.  But it is equally true that
governments have responsibilities to assist
those who are hurt by change --who lose their
jobs, who need new skills.  This is why
President Clinton wants to transform America's
outdated unemployment system into a
reemployment system--to create a new system of
education and training that gives people real
skills and the ability to learn new ones.  That
is why many Latin American governments are also
placing education and welfare reform at the top
of their agendas.
In the 1980s, Latin America made progress in
financial stabilization and structural
adjustment but postponed the social agenda.
Today, about 45% of Latin Americans live in
poverty.  At the same time, enormous new
fortunes were being amassed, widening the
already yawning gap between rich and poor in a
region long infamous for displaying the world's
worst distribution of income.  The time has
come to place people first--throughout the
A more equitable development model will also
safeguard the political and economic gains of
the 1980s.  Democracy must deliver better
living standards--or the pendulum could indeed
swing back to authoritarianism.  And business
executives in Latin America are increasingly
aware that the best antidote to adjustment
fatigue is more social equity.  Workers that
are smarter and healthier are more productive--
and more likely to be better citizens and
better democrats.  Improving education and
health--especially of women--helps equalize
opportunity and stabilize democracy.
But shifting resources toward the poor
inevitably encounters the resistance of some
vested interests.  In this struggle, the
international financial institutions, with the
encouragement of the United States, are allying
with the poor and disenfranchised.  The World
Bank and the Inter-American Development Bank
are focusing their programs on the social
agenda--to fulfill their own social mandates
and increase the legitimacy of economic reform.
Information is power.  So the Inter-American
Development Bank will be promoting the
collection of better data on social indicators,
producing more in-depth county studies of
poverty, and analyzing the financial gap for
social- sector development in each country.  To
enable the IDB to respond to these revealed
needs, we are seeking to boost its capital by
$40 billion to a total of $100 billion.
Development strategies must take into account
subregional differences.  At a White House
meeting with Central American leaders,
Guatemalan President De Leon Carpio proposed a
partnership to promote sustainable development
in his region--to the evident delight of Vice
President Gore and USAID Administrator Brian
Atwood.  In response, USAID  is working
intensively to adjust its own reformulated
sustainable development agenda to the needs of
Central America, to focus on refugee
resettlement and grassroots participation, good
governance and private sector rejuvenation,
poverty alleviation, and environmental
So, throughout the hemisphere we can promote
the social agenda by emulation, exhortation,
and technical and financial assistance--
bilateral and multilateral.  Poverty
alleviation will also be a central theme at the
Summit of the Americas.
President Clinton will host the Summit of the
Americas later this year.  This hemispheric
summit will be the first since 1967, the first
of solely democratically elected leaders, and
the first ever held in the United States.
The summit offers a unique opportunity to
capitalize on the unprecedented convergence of
democratic values and economic thought
throughout the hemisphere.  Leading summit
themes are likely to include:  good governance
and civil society; the collective defense of
democracy; regional integration and trade
expansion; and sustainable development and
poverty alleviation.  In this age of
substantive symmetry, the summit will test
whether hemispheric leaders can transform
shared values into concrete workplans.
We envision the summit as a process.  Leading
up to the event, non-governmental
organizations, business associations, and
government officials will build new networks
and formulate new initiatives for the summit
leaders and themselves.  A productive summit
will catalyze consensus, give impetus to fresh
ideas, set in motion a series of ministerials,
and fortify multilateral mechanisms.
I invite all of you, individually and
collectively, to share your ideas with us for
the summit.  Let us work together to make the
most of this once-in-a-generation opportunity.
If the Summit of the Americas succeeds, it will
inspire hemispheric relations for the rest of
this century and beyond.  (###)

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