U.S. DEPARTMENT OF STATE DISPATCH 
VOLUME 6, NUMBER 26, JUNE 26, 1995 
PUBLISHED BY THE BUREAU OF PUBLIC AFFAIRS 
 


ARTICLES IN THIS ISSUE: 
 
1. The G-7 Summit: Addressing The Forces of Change -- President Clinton 
2. Mount Halifax: In Sight of the Summit -- Joan Spero  
3. U.S.-European Union Summit -- President Clinton, French President 
Jacques Chirac, European Union President Jacques Santer  
4. Fact Sheet: European Union  
5. Europe Must Avoid Being Held Prisoner By Its History -- Richard C. 
Holbrooke 
6. U.S. Policy on Bosnia and Assistance To UNPROFOR -- Peter Tarnoff  
 


ARTICLE 1: 
 
The G-7 Summit: Addressing The Forces of Change 
President Clinton 
Remarks prior to departure for G-7 Summit, Andrews Air Force Base, MD,  
June 15, 1995 
 
Good morning. As you know, I am leaving for Halifax for my third annual 
meeting with the leaders of the G-7 industrialized nations. This summit 
marks another concrete step in our efforts to advance the security and 
prosperity of the American people by seizing the opportunities of the 
global economy. 
 
At home, we are working hard to put our economic house in order. We are 
creating millions of jobs, working for economic growth, and cutting the 
deficit--which is already the lowest of all the advanced countries in 
the world. With our new budget proposal, we will wipe out the deficit in 
10 years, while still making room for the critical investments in 
education and training which our future demands. Going into this 
meeting, the United States is in a strong position to continue leading 
our allies in the fight for long-term global prosperity. 
 
From the beginning of our Administration, we have led the international 
effort to expand trade on a free and fair basis. We helped to expand 
world markets with NAFTA and GATT, with trade agreements with the Asia-
Pacific countries, and, here, with the nations of the Americas. We are 
helping the former communist countries convert   to free market 
economies. In all these areas, we have turned back the forces of 
isolation which tempt us to turn away from the challenges and 
opportunities of the world. 
 
In Halifax, together with our partners, we will focus on continuing to 
reform the institutions of the international economy--the World Bank, 
the International Monetary Fund, and others so that we can have more 
stable, reliable growth. For a half century, they have been a sound 
investment, and we are committed to maintaining our support for them. 
But now we have to give them new guidance in this new economy, so that 
they can continue to serve our national interests in a changing global 
economy. 
 
One of the key issues we will be   addressing is to create ways to 
identify and prevent financial problems from exploding into crises as 
they did in Mexico. We will embrace joint initiatives to contain and 
defuse any crisis that does develop, so that the United States is not 
the world's lender of last resort. We will continue to explore how 
international organizations--which have helped so many countries to 
improve the lives of their people--can better aid developing nations and 
expand the world's market economies. 
 
Finally, together with Russia, we will examine the challenges to our 
safety and well-being that no country can resolve alone. We will look at 
new ways we can work together to combat the scourges of terrorism, 
nuclear smuggling, drug trafficking, and organized crime. Of course, we 
will discuss a number of security issues that concern us all, including 
Bosnia and Iran's nuclear ambitions. 
 
When I arrive in Halifax today, I will be meeting with Prime Minister 
Murayama of Japan. Our relationship is strong, and we are cooperating on 
a broad variety of issues, including North Korea--which is terribly 
important to both of us--the environment, and the problems of terrorism, 
which have visited both our nations recently. But I also will make it 
clear to the Prime Minister that I am determined to carry through on my 
effort to open Japan's auto markets. Millions of American exports and 
thousands of American jobs depend upon our success. I will say again: It 
is in the long-term interest of both the Japanese people and the people 
of the United States that this trade effort succeed. 
 
All around the world, free markets, open trade, and new technologies are 
bringing countries closer together. Every day they are producing untold 
new opportunities for our people. They also lead us into uncharted 
territory with new problems. I believe, on balance, that the future is 
very bright if we have the discipline to face these issues as they 
arise.  
 
As the world's leading industrialized democracies, those of us in the   
G-7 have a very special responsibility to address these forces of 
change. That is what we will be doing at Halifax. Thank you very much.  
 
(###)

[BOX] 
 
Documents relating to the G-7 Summit in Halifax, Nova Scotia will be 
published in Dispatch Supplement, Vol. 6, No. 4.  [END BOX]

(###) 
 
 
 
ARTICLE 2: 
 
Mount Halifax: In Sight of the Summit 
Joan Spero, Under Secretary for Economic, Business, And Agricultural 
Affairs 
Address to the European Council of American Chambers of Commerce, 
Washington, DC, June 8, 1995 
 
Those of you who are old summit hands may know that those of us who 
organize the annual G-7 summits are given the peculiar title of 
"sherpa"--or, even more peculiar in my case, "sous-sherpa." The analogy 
with Himalayan Mountain guides and their heavy burdens seems 
appropriate. As the Halifax Summit looms into view, we sherpas are 
toiling up the final slope, peering into bureaucratic crevasses, and 
suffering from oxygen starvation in high realms of policy. We have made 
good progress, but visibility is still poor and we have some way to 
climb. I am pleased to be able to take this breather and share my 
thoughts on what Mount Halifax and the G-7 have to offer this year. 
 
Last year at Naples, with sherpas puffing to catch up, leaders set 
themselves a daunting task: to review the post-war economic architecture 
and its capacity to meet the challenges of the 21st century. Half a 
century ago, the U.S., the U.K., and a handful of other powers created 
the United Nations, the IMF, the World Bank, and the GATT to address the 
problems of the time: an uneasy peace; post-war reconstruction, a 
collapsed trading system; fragile currencies. On the whole, the system 
succeeded remarkably well. 
 
Yet, today, there are clearly stresses. From our base camp last year, we 
sherpas foresaw that leaders would have to surmount a number of global 
challenges. 
 
-- Right in the foreground is the "Mexico" issue: How can existing 
institutions such as the IMF deal with--or prevent--financial crises in 
a fast-moving global market?  
 
-- In the middle distance is an equally troubling question: How can 
institutions reach out more effectively to developing countries left 
behind by the global system?  
 
-- Finally, there are the looming global problems: environmental damage, 
crime, unsustainable population pressures, political instability, and 
the complex and treacherous humanitarian crises that result. 
 
Interestingly, trade is not a central issue this year. As a result of 
the Uruguay Round, we have a brand new institution in the World Trade 
Organization. Our goal will be to get it up and running. 
 
Before addressing these questions, I'd like to caution that Mount 
Halifax is not Mount Everest. No "new Bretton Woods" is going to emerge 
from the Nova Scotia woods. This is just one step on a longer journey, 
as these institutions slowly and painfully evolve to meet new needs.  
 
Managing the Global Economy 
 
Clearly, a more stable global financial system is one of these needs. It 
will be front and center at the summit. Mexico has shown us that we need 
both better prevention and better management of financial crises. There 
is a clear need for more "early warning" through transparency and 
surveillance. The IMF has undertaken to strengthen advice and warnings 
to countries pursuing unsustainable policies. But we must have reliable 
information on issues such as capital flows--and improve prudential 
regulation in emerging markets--to make the markets function better. 
 
Crisis management is the other side of the coin. The IMF needs more 
resources to counter balance-of-payments problems. We have been 
exploring a number of ways to provide the IMF the tools it needs. 
 
Finally, we need a way to manage national debt crises in an orderly 
fashion. In the past, a handful of central and commercial banks could 
reschedule debt and arrange new lending for indebted countries. Today, 
these countries face countless creditors in an anonymous market. Is it 
possible to arrange a workout in such a situation? How would we deal 
with "moral hazard?" 
 
We do not want to give an easy way out to countries that have mismanaged 
their finances. However, ignoring the problem could be far more 
hazardous to the health of our markets. 
 
Promoting Sustainable Development 
 
The second key challenge at Halifax is to reach out to countries that 
are falling behind in the development race. In many developing 
countries, living standards have stagnated or declined. Unsustainable 
population increases; environmental degradation, crushing debt burdens, 
and spreading political instability are poisoning the futures of their 
people. 
 
We cannot insulate ourselves from these problems. Environmental damage 
is global in its effects, and rising violence and the miseries of forced 
migration require massive humanitarian assistance and lead to political 
instability that spills across boundaries. We must break this cycle. 
 
Over the past 50 years, we have learned some lessons about sustainable 
development. One is that money and big infrastructure projects are not 
enough. Countries need an active private sector, economically and 
environmentally sound policies, and democratically accountable 
governments--in other words, open markets and open societies--for aid to 
be effective in the long term.  
 
Our development institutions--the World Bank, regional development 
banks, and the UN economic and social bodies--must incorporate these 
lessons into their programs; some have already begun. We need to 
encourage the multilateral banks to focus on areas where private capital 
is not available but development returns are high--health and primary 
education, for example. We must also ensure that countries that are 
ready to work toward sustainable development are not crushed under old 
debt. 
 
The international institutions must also manage their resources more 
effectively. Management is a development issue; every dollar lost to 
overhead is one less vaccination or textbook for people who need them. 
While most of the institutions could use better management, we are 
focusing heavily on the United Nations. 
 
The UN's economic and social machinery has grown enormously cumbersome 
over the last 50 years. The U.S. has proposed several strategies for 
making these bodies  more effective by: 
 
-- Consolidating agencies with similar or overlapping functions, such as 
humanitarian relief or development assistance; 
 
-- Taking a hard look at the mandates of existing bodies to see whether 
they are still relevant; and 
 
-- Reforming the UN Secretariat to bring it up to modern standards of 
efficiency and accountability. 
 
Legitimate questions have been raised about whether the G-7 should be 
seen to be dictating to the rest of the world--and in an organization 
where we have only 7 votes out of 185. We believe, however, that many 
developed and developing countries also question whether the UN can 
continue to function without serious restructuring. 
 
This is an issue of particular resonance for us. The President has made 
it clear that the U.S. must and will remain engaged in the multilateral 
system. He has put it on the line in resisting efforts to gut our 
foreign affairs budget. Americans have not turned their backs on the 
world; individually, they still open their hearts and purses to 
alleviate global poverty and misery. Increasingly, however, they 
question the value of the existing multilateral institutions. 
 
 In today's budgetary climate, we need to show that the UN and the 
development banks can use our resources effectively in responding to 
current global needs. At home, we have vowed to reinvent government to 
make it smaller, more effective, and more responsive. Reinventing 
multilaterally is even more complicated, but we must make a start. 
 
Group of Seven  
 
In my view of the peaks on the horizon, there is one I have not 
discussed so far: the G-7 itself--the least definable of the world's 
economic bodies. Is it a cabal of world financial powers, a currency 
cartel to push the dollar up or down, or merely the super bowl of the 
summit season? Perhaps the mystique is a major part of its attraction. 
 
Our French colleagues continually remind us that we are not a 
directorate; the reminder is hardly necessary. Macroeconomic 
coordination has proved difficult in the face of powerful domestic 
pressures. Our ability to prevail is limited even where the G-7 is most 
powerful, as in the IMF. The membership itself seems to represent a 
waning old order. One journalist recently dubbed it the "geriatric 
seven." 
 
Is the G-7 an anachronism? Should the sherpas retreat to a retirement 
home for elderly world powers? Not yet. The G-7 has changed with the 
times, expanding its scope to trade, employment, and other timely 
issues. In trade, the G-7 summit was an important catalyst in concluding 
two major GATT rounds. It has proved effective at mobilizing support to 
meet specific needs, such as helping Russia with its transition and 
Ukraine to stabilize its economy and cope with the lingering aftermath 
of Chernobyl. It has  kicked off useful initiatives in areas such as 
combating money-laundering and terrorism. It has become a critical, 
year-round player in the management of world financial issues. 
 
The G-7 has also become a valuable post-Cold War institution. Through 
the "G-7 Plus One" dialogue, it has provided Russia one more way to 
articulate its political interests and an opportunity to work with us on 
political issues. 
 
Finally, the G-7's real value is not as a directorate but as a voice of 
experience. The "seven" include the world's largest economies. We share 
a post-war history of democracy and commitment to the multilateral 
system. Moreover, it is a forum conducive to creative initiatives by 
leaders. The G-7 summit allows our heads--as they are known--to talk 
without script or audience; in that rarefied atmosphere, sometimes they 
find the political will to go beyond their cautious sherpas. This year's 
institutional review, which has turned out to be timely as well as 
challenging, was an inspiration of the "heads." 
 
So when you read the communique over which we have labored so hard, 
think of it not as a diktat from the reigning powers but as part of a 
dialogue. No easy fixes are in sight for the problem we have set 
ourselves. 
 
What we achieve at the summit will be only one step in the process; 
ideas for reform of the UN, the IMF, and other institutions must be 
pursued from within--and we will need to mobilize support from a much 
broader coalition of members. 
 
The Halifax Summit can add momentum to the reform process within the 
world's economic institutions. But the G-7 will not be finished with 
these issues on June 17; we need to keep pushing if Mount Halifax is to 
have meaning. Tune in next year for the expedition up Mont France. (###) 
 
 
 
ARTICLE 3: 
 
U.S.-European Union Summit 
President Clinton, French President Jacques Chirac, President of the 
European Union, Jacques Santer
Opening remarks at a press conference, Washington, DC, June 14, 1995


President Clinton. It is a great pleasure to welcome President Chirac 
and President Santer to the White House--the first visit for both 
leaders in their present positions to the Oval Office. 
 
I begin with congratulations to President Chirac on his outstanding 
victory last month. From our many contacts with him throughout his long 
public service, the United States knows that he is a true and reliable 
friend, and he will be a strong and effective leader for France and for 
Europe. 
 
In his short time as President, he has already demonstrated this 
leadership. We applaud his determination to create jobs and economic 
growth for his own country--and with Jacques Chirac as President, we are 
sure that the French commitment to peace, stability, and progress is in 
excellent hands. France, as all of you know, was America's first ally. 
We know that our relationship will grow even stronger in the coming 
years. 
 
It was a pleasure as well to meet President Santer, whose leadership in 
the cause of Europe follows in the great tradition that began with Jean 
Monet. More than 30 years ago, President Kennedy spoke of a strong and 
united Europe as an equal partner with whom we face--and I quote--"the 
great and burdensome tasks of building and defending a community of free 
nations." This is more true than ever.  And our summit today shows that 
the U.S. partnership with Europe is a powerful, positive force. 
 
The three of us reviewed a lot of economic and security issues: Our 
efforts to help the countries of Central Europe and the former Soviet 
Union. We reaffirmed our commitment to strengthening NATO and proceeding 
with the steady process of enlarging the alliance. We agreed to continue 
liberalizing trade. We agreed that senior representatives of the U.S. 
and the EU will work together to develop a common agenda for the 21st 
century. Secretary Christopher has already provided a road map for this 
dialogue  in his recent speech in Madrid. 
 
We discussed our efforts to strengthen the UN peacekeeping forces and to 
reduce the suffering in Bosnia. In the midst of the tragedy, we must not 
forget that the common efforts have already saved thousands of lives--
and we must continue to work together. 
 
We also explored a number of issues that the leaders of the G-7 will 
deal with in Halifax, and I'd like to mention a couple of them if I 
might. The Halifax conference marks another step in our effort to build 
the structures of the global economy for the 21st century. In the face 
of astonishing change--the growing economic ties between nations, the 
rapid movement of people and information, the miracles of technology--
our prosperity depends upon preparing our people for the future and 
forging an international system that is strong enough and flexible 
enough to make the most of these opportunities. 
 
At home we have been working hard to establish a steady record of 
growth, investment in our people, in bringing down our budget deficit. I 
am proud that our deficit today is now the lowest of all the G-7 
countries. Our new budget proposal to balance the budget in 10 years 
will permit us to do this and continue to invest in the education and 
development of our people. 
 
Abroad we have set out clear goals:  to open world markets; to help the 
former communist countries transform themselves into free market 
democracies; to promote economic reform in the developing world; and to 
speed reforms in the international financial institutions. These efforts 
have yielded tremendous successes--NAFTA, GATT, agreements with the 
Asia- Pacific region and in our own hemisphere. We have supported the 
nations in Central Europe, the New Independent States, and the 
developing world in their historic turn toward free markets. Now we have 
a chance to reap enormous benefits in better jobs, greater 
opportunities, and growing prosperity. 
 
We will build on our agreements last year in Naples when we meet in 
Halifax to focus on reforming the institutions of the international 
economy. The IMF, the World Bank, the regional banks have served us very 
well over the last half-century.  And they have grown, taken on new 
missions as the times demand. But to deal with a new economy, we have to 
give them new guidance and new momentum. 
 
First, we must work to identify and prevent financial problems like 
Mexico's before they become disasters and rock the global economy. And 
when crises occur, we must have efficient ways to mobilize the 
international community. 
 
Second, we have to examine how best to adapt for a new era the 
multilateral development banks and the social and economic agencies of 
the UN. These organizations have helped dozens of countries to build 
their economies and improve the lives of their people. We must not walk 
away from those banks and our obligations to the developing world. This 
is a point that President Chirac made to me in our meeting, and one with 
which I strongly agree. 
 
Finally, together with Russia, we will discuss a range of political 
issues that include Bosnia, Iran's nuclear ambitions, European security, 
and reform in Russia. We will consider new forms of cooperation to 
combat international crime, terrorism, and nuclear smuggling, because 
prosperity without security means little. 
 
Also, I will be having some bilateral meetings, as all of you know, 
including a meeting with the Prime Minister of Japan, at which time we 
will review the position the United States has taken on our trade 
disputes with Japan regarding autos and auto parts. 
 
As you know, we are going to be meeting about that again shortly after 
the Halifax Summit. My determination there remains as firm as ever. I 
believe we can reach a successful conclusion, and I intend to do 
everything I can to see that it is done. 
 
Let me again thank President Chirac and President Santer and offer them 
the opportunity to make a couple of opening remarks. Mr. President. 

 
President Chirac.  Mr. President, ladies and gentlemen. Mr. President, 
40 years ago, when I was a working as a soda jerk in the Howard Johnson 
Restaurant, I didn't think that one day I would be in the White House 
beside the President of the United States for a press conference. And I 
appreciate it very much. It is rather moving for me. Since that time I, 
unfortunately, forgot most of my English. That's why I'm going to speak 
French if you don't mind--just to say a few words to start with. 
 
First, I would like to thank you very much for the welcome you have 
extended to me. I'd also like to tell you how pleased I am to see that 
on the main issues we are facing in the world today, and namely, 
relations with France and with Europe, we have total convergence of 
views. 
 
We're living in a world that is becoming increasingly disintegrated. We 
see a rising trend of selfishness and isolationism in many, many 
countries. And so, it is very reassuring, indeed, to see that the 
world's greatest nations realize how important it is to have solidarity 
amongst one another. This is true in politics; this is true in the 
social and economic areas. It is also true when we face challenges 
together throughout the world and crises together throughout the world. 
And this is why I said that we are in agreement on most of the points, 
even if on some issues we do have divergent views. 
 
Mr. President, as the President of the European Union for a few more 
weeks, I would like to express my gratitude for the stance that you have 
taken on Bosnia, which is of great concern to me personally. I would 
like to say to you that we would like the entire Western world to be 
more attentive to the problems of the developing issues. And this is 
something that we will take up in Halifax. This is something that we 
must do something about. It's an ethical problem, a moral problem. It is 
also in our own interest, given the population growth that we see in 
many of these countries. 
 
I think that we must also work more closely together when it comes to 
addressing regional crises. We've seen the eruption of regional crises 
in many different parts of the world--in Africa, in Europe, elsewhere. I 
think that we must, again, think more carefully about the main issues--
the main challenges we are facing today, mainly employment. And this is 
why I am very pleased to make my request that a second G-7 meeting be 
held on employment and that you welcomed that. The first meeting was, 
indeed, a success. 
 
I also think that we ought to undertake great efforts to fight against 
organized crime. In the United States some recent successes have been 
achieved in the fight against drugs. And I think that everything that 
deals with money laundering, fighting against drug trafficking, fighting 
against the spread of AIDS--again,  we must pool our efforts, enhance 
our efforts, and make sure that we work together in a complementary 
fashion. In Halifax, I will be touching on those points as well. 
 
Now we have an additional issue: monetary insecurity; currency 
fluctuations. This is something that is a worldwide problem and a 
European problem, in particular. So these are the issues that I, as 
President of the European Union, have raised in my conversations with 
the President of  the United States and will also be discussed during 
our meeting in Halifax. 

 
President Santer.  Thank you, Mr. President. The wide range of issues we 
covered in our stimulating discussions today gives testimony to the 
importance of our mutual relationship. [Inaudible]--the world's most 
important bilateral partnership. The regular six monthly meetings 
between the United States and the European Union, as such, are catalysts 
for announcing our cooperation. The continued strengthening of the union 
allows this cooperation to be balanced and effective. 
 
Despite the excellence of our relations, there is no place for 
complacency. In a world searching for new equilibrium, every opportunity 
must  be taken to broaden and deepen the relationship. This will provide 
the foundation for global stability and prosperity. 
 
That is why I called at the beginning of this year for a review of the 
transatlantic partnership and--[inaudible]--with a transatlantic treaty. 
I am happy that since then, on both sides of the Atlantic, vivid debate 
is starting on the future of American and European relations. Today's 
meeting shows that there is a clear political will to explore the 
various means of structuring our relationship in view of the 21st 
century. 
 
It is too early to commit ourselves to precise concepts. This will need 
more time. But what we must achieve is a formula which would integrate 
the political, economic, and security components of that relationship. A 
lot will obviously depend on the outcome of the 1996 inter-governmental 
conference, which will define the future shape and role of the European 
Union itself. But it is not too early to immediately improve our 
consultation mechanism and to concentrate on concrete action, delivering 
tangible results in the short term. And that is what we have done today. 
 
We have also discussed the idea of launching a new transatlantic 
initiative at our next meeting in Madrid in December. I very much 
welcome that, as I welcome the decision to charge a small group of 
senior-level representatives to examine ways of strengthening the 
European Union and the United States relationship and prepare the Madrid 
meeting. 
 
Today's meeting has confirmed my belief that we are on the right track 
and that the transatlantic partnership will further prosper to the 
benefit of our peoples and, indeed, of the whole world.  (###) 
 
 
 
ARTICLE 4: 
 
Fact Sheet: European Union 
 
The European Union (EU; formerly the European Community) is comprised of 
three separate communities: the European Coal and Steel Community, 
established in 1951; and the European Atomic Energy Community (EURATOM) 
and the European Economic Community (EEC), both established in 1957. The 
EU currently has 15 members: Austria, Belgium, Denmark, Finland, France, 
Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, 
Spain, Sweden, and the United Kingdom. 
 
The Union had by the beginning of 1993 the elements of a true "single" 
or common market, with free movement of persons, goods, services, and 
capital, although portions remain to be fully implemented. In December 
1991, at Maastricht, Netherlands, EU members agreed to amendments of the 
EU treaties that would move the Union in the direction of greater 
economic, monetary, and political union, including more unified foreign 
and security policies. The Maastricht Treaty went into effect November 
1, 1993. On that date, the European Community formally became the 
European Union, and the Commission of the European Communities became 
the European Commission. Under the Maastricht Treaty, member states have 
formally begun intergovernmental coordination on Common Foreign and 
Security Policy (the "Second Pillar") and Justice and Home Affairs (the 
"Third Pillar"). 
 
U.S.-EU Relations 
 
The United States and the European Union maintain a continuing dialogue 
on political and economic issues of mutual interest, and engage in 
direct negotiations on trade and investment issues. The Union is the 
United States' largest trading partner. Total U.S.-EU trade was $195 
billion in 1993, up from $190 billion in 1991 and 1992. In 1993, U.S. 
imports from the EU were $98 billion and represented 17% of total U.S. 
imports. U.S. exports that year to the EU were $97 billion, representing 
21% of total U.S. exports. 
 
Due largely to the continued recession in Europe, the U.S. had a $1-
billion trade deficit with the EU in 1993, down from a $9-billion trade 
surplus in 1992. The United States and the Union are each other's most 
significant source of direct investment. By the end of 1992, the Union 
had more than $219 billion invested in the United States, and the United 
States had about $201 billion invested in the EU. 
 
The United States continues to support the EU's implementation of the 
single market program. It is in the interest of both sides that this 
integration be implemented in an open fashion without creating new trade 
barriers. The United States holds regular meetings with the Union to 
discuss a range of economic and political issues and to resolve trade 
differences, many concerning agriculture. In its negotiations with the 
Union on trade and investment issues, the U.S. Government works to 
ensure that American interests are fully represented. The global reform 
of agricultural policies was an important U.S. objective and a major 
goal of the Uruguay Round of multilateral trade negotiations. 
 
The United States long has discussed foreign and trade policy issues on 
an ad hoc basis with the Union. These arrangements were formalized by 
the Declaration on U.S.-EU Relations of November 23, 1990, which 
institutionalized regular consultation and cooperation on political, 
economic, scientific, educational, and cultural matters. As agreed in 
the declaration, the U.S. President meets twice annually with the head 
of state or government of the presidency country and the President of 
the European Commission. The Secretary of State meets twice annually 
with the EU foreign ministers and as necessary with the foreign 
ministers of the "troika" countries (the EU presidency country, its 
predecessor, and its successor). Discussions include a broad range of 
issues: maintenance of international peace and security in areas such as 
the Gulf, the Middle East, and former Yugoslavia; international trade 
issues; support for the emerging democracies of Eurasia; and cooperation 
in science and technology. 
 
EU Institutions and Presidency 
 
Since July 1967, the three communities have functioned with common 
institutions. Major EU institutions are the Commission, the Council of 
Ministers, the European Parliament, and the Court of Justice. Member 
states agree to relinquish a degree of national sovereignty to EU 
institutions and to cooperate in the joint administration of these 
powers. 
 
The 20-member Commission, appointed by common agreement of the 15 
governments and approved by the European Parliament, has primary 
responsibility for initiating and implementing EU policy in areas that 
fall under EU treaties; for example, the internal market, external 
trade, and agricultural policy. The Council of Ministers, representing 
the member states, occupies the preeminent position in the current 
institutional power balance and decides on the Commission's proposals. 
The Parliament, the only EU institution that directly represents 
European citizens, has significant power over budgetary matters and can 
amend or reject certain legislation approved by the Council. The Court, 
which has a role similar to that of the U.S. Supreme Court, is the final 
authority on the interpretation of EU treaties and laws. 
 
Each member state serves as President of the Council for six months in 
rotation. The presidency country presides at all meetings of the member 
states and serves as spokesman in dealing with countries on 
intergovernmental matters, including efforts to coordinate the foreign 
policies of the member states.  
 
This foreign policy coordination process, known as Common Foreign and 
Security Policy, is one of seeking consensus for joint action by the 15 
members on international political issues, such as the Gulf crisis and 
refugee aid, the former Yugoslavia, the Middle East peace process, South 
Africa, Central America, and the Organization on Security and 
Cooperation in Europe. Since ratification of the Maastricht Treaty, the 
presidency country now also presides over intergovernmental cooperation 
and consultation on justice and home affairs. 
 
European Integration 
 
The process of European integration was strengthened by the 
implementation, in July 1987, of the Single European Act (SEA), which 
increased the scope of the Union's legislative and executive authority. 
The SEA endorsed the objective of economic and monetary union and 
outlined a series of directives necessary to eliminate all physical, 
technical, and fiscal barriers to completion of an internal "single" 
market by January 1, 1993. It also formalized procedures for cooperation 
in the area of foreign policy. 
 
At the landmark Maastricht summit in December 1991, EU members approved 
additional proposals that will forge even closer economic, monetary, and 
political ties within the Union. The treaty calls for the EU to 
establish a European Central Bank (the European Monetary Institute is 
located in Frankfurt, Germany) and a single currency by the end of the 
decade, although all 15 member countries may not enter the new 
arrangements at once. The treaty also sets in motion a further 
acceleration of political integration, including elements of a common 
foreign and security policy and cooperation in justice and home affairs 
. 
 
The question of how fast to proceed with enlargement of the Union while 
strengthening EU institutions (the "widening" versus "deepening" issue) 
continues to be a major topic for discussion among member states. In the 
most recent enlargement, Austria, Finland, and Sweden joined the EU on 
January 1, 1995. Cyprus, Malta, Turkey, Switzerland, Poland, and Hungary 
have applied for membership, and other Central European states have 
indicated their desire to join.  
 
An intergovernmental conference is scheduled to be held in 1996 to 
evaluate the progress of economic and monetary integration and to 
consider greater coordination of foreign policy and security matters. 
 
EU Economy 
 
With the accession of Austria, Finland, and Sweden, the population of 
the EU is now roughly 368 million. The EU's gross domestic product at 
the beginning of 1995 was about $6.7 trillion, with a per capita GDP of 
$18,000. An important aspect of the EU's economy is its Common 
Agricultural Policy, a complicated system of price supports, subsidies, 
and protection to European farmers that consumes more than half of the 
EU budget. EU member states agreed to an important reform of that policy 
in May 1992. 
 
Relations With Other Countries 
 
The EU is the largest trading entity in the world. In April 1992, the EU 
and the seven-member European Free Trade Association (Austria, Finland, 
and Sweden were EFTA members before joining the EU) signed an agreement 
to broaden their existing free trade agreement and create a European 
Economic Area (EEA). The EEA establishes free movement of goods, 
services, capital, and labor throughout the combined territory. In a 
December 1992 referendum, Switzerland rejected participation in the EEA. 
 
The EU and its member states have long-standing political and economic 
ties with the formerly communist countries of Central Europe and the New 
Independent States (former Soviet republics). The EU has provided 
significant economic assistance to these new emerging democracies and 
has eased access to its markets for them. The EU created a new kind of 
association agreement for the countries of Central Europe.  
 
These agreements, also known as Europe agreements, cover industrial, 
technical, and scientific cooperation, financial assistance, and 
political dialogue. Most importantly, these agreements envision eventual 
EU membership for these Central European states. The EU signed 
association agreements with Poland, Hungary, and Czechoslovakia in 
December 1991; after Czechoslovakia's dissolution, the EU signed new, 
separate agreements with the Czech Republic and Slovakia in 1993. 
Association agreements were signed with Romania in February 1993 and 
with Bulgaria in March 1993. The EU signed separate association 
agreements with Estonia, Latvia, and Lithuania in June 1995. The EU is 
discussing an association agreement with Slovenia.  
 
In December 1994, the EU approved a pre-accession strategy designed to 
help the associated Central European states to move toward joining the 
EU. The EU also adopted a white paper in June 1995 describing some of 
the steps associated Central European states will need to take before 
joining the EU. 
 
In 1989, the European Commission began coordinating aid from the then-24 
countries (including the U.S.) of the Organization for Economic 
Cooperation and Development to Central and Eastern Europe; this process 
is known as the Group of 24. The objective is to strengthen the process 
of political and economic reform, with emphasis on improving the private 
sector. The European Bank for Reconstruction and Development (of which 
the United States is an active member) was established in 1990 to 
support investment and the development of market economies in these 
countries. 
 
In January 1992, the commission announced that it would negotiate new 
agreements with the former Soviet republics to replace the 1989 EU-
U.S.S.R. trade and cooperation agreement. In June 1994, the EU signed a 
partnership and cooperation agreement (PCA) with Russia which provides 
for political dialogue at all levels; possible talks in 1998 on a free 
trade area; EU support for eventual Russian accession to the World Trade 
Organization (WTO); and EU assistance on nuclear safety, restructuring 
state-run enterprises, and economic reforms. The EU also signed a 
similar PCA with Ukraine in June 1994. The EU has initialed less-
extensive PCAs with Kyrgyzstan, Kazakhstan, Belarus, and Moldova. The 
Union has placed priority on improving relations with developing 
countries.  
 
The Lome Convention provides a framework for EU development cooperation 
with 70 African, Caribbean, and Pacific (ACP) countries. In 1989, a new 
10-year agreement was signed with the ACP states to provide aid to 
development projects, free access to EU markets for almost all 
manufactured imports from those countries, and incentives to promote 
European investment. 
 
The Union is linked with a number of countries in the Mediterranean by 
either association or preferential trade agreements that provide duty-
free access for industrial products and direct grants and loans. EU 
economic ties to Asia and Latin America usually take the form of 
bilateral agreements that allow preferential access and certain types of 
development aid.  (###) 
 
 
 
ARTICLE 5: 
 
Europe Must Avoid Being Held Prisoner By Its History 
Richard C. Holbrooke, Assistant Secretary for European and Canadian 
Affairs 
Remarks before the North Atlantic Assembly, Budapest, Hungary, May 29, 
1995 
 
It is an extraordinary honor to be here today, to follow my friend and 
respected colleague Volker Ruehe, to be invited to address the North 
Atlantic Assembly, to speak in this inspirational chamber where 
democracy now reigns, and to speak to this distinguished gathering. I 
would like to take special note of our extraordinary, high-level, 
bipartisan American Congressional Delegation led by Senator Roth and 
Congressman Bereuter. 
 
The North Atlantic Assembly meets today for the first time, while only a 
few miles from here the situation in Bosnia has reached a turning point.  
I have not come here today to address the crisis itself. Response by 
NATO and the UN to the outrageous behavior of the Bosnian Serbs is being 
developed now through close consultation between the UN, NATO, the 
Contact Group, and the nations concerned, including Hungary, which is 
potentially a frontline state if the conflict spreads. The failure to 
respond properly in the first phase of the Yugoslav tragedy--the 
greatest collective failure of the West since the 1930s--only underlines 
the need to avoid any further backsliding in Central Europe in the 
future. 
 
It is ironic, but instructive, that even as we struggle with new 
problems, we have been commemorating the closing days of World War II in 
Europe--those dramatic days of liberation.  
 
Unfortunately, in Central Europe, liberation from the grip of the Third 
Reich did not lead to freedom as it did in Western Europe and in Germany 
itself. By the end of May 1945, Patton's advancing troops had already 
withdrawn from Western Bohemia, which they had liberated, leaving the 
Red Army in control not only in Czech and Slovak lands, but throughout 
the region. The hope of liberation soon gave way to the sober reality of 
foreign rule and a new Cold War. 
 
Forty-four years later, when the Iron Curtain crashed to the ground, 
Central Europeans again found themselves in the delirious throes of 
liberation. Romanians and ethnic Hungarians embraced one another in 
Transylvania; Bulgarians and ethnic Turks celebrated in the streets of 
Sofia; and Lithuanians and ethnic Poles cheered in Vilnius. 
 
The rejuvenation of parliamentary democracy throughout the region--so 
evident here in this magnificent National Assembly--is tribute to the 
progress that has been made toward a free and undivided Europe. In many 
ways, Hungary is showing the way. This time, it is real. And this time 
the United States is not going to retreat. Americans have learned the 
lessons of this century--America can and will remain a European power. 
We are here, and shall remain, to support democracy and free enterprise 
and to support the entry of the nations of Central Europe into the 
institutions of Europe--the European Union, NATO, the OECD, and the 
Council of Europe. 
 
Tomorrow, the foreign ministers of NATO will meet in the Netherlands for 
their regular semi-annual session. On Wednesday, they will be joined by 
the foreign ministers of the North Atlantic Cooperation Council--the 
NACC-- including the foreign minister of Hungary and his counterparts 
from other countries in Central Europe and most of the New Independent 
States of the former Soviet Union. They will reaffirm NATO's commitment 
to make careful yet steady progress toward enlargement of NATO. Later 
this year, a special NATO team will offer in the capital of each of the 
26 members of the Partnership for Peace a presentation on the "how" and 
the "why" of NATO enlargement. At the next NATO ministerial in December, 
we will evaluate the responses from each partner and decide how to 
proceed. 
 
Russia's plans to proceed with the Partnership for Peace and to develop 
a relationship with NATO have been delayed since December. Its important 
decision to go ahead will open the door for an enhanced dialogue between 
Russia and NATO, which will proceed in parallel with the process of 
enlarging NATO. 
 
Thus, the meeting that starts tomorrow in the Netherlands is an 
important step toward our goal: the creation of a stable security 
framework for post-Cold War Europe--one that provides stability and 
democracy in Central Europe while defining the role of Russia, which has 
been outside the European security structure since 1917, within that 
system. 
 
The challenge we face is not unlike the one we faced, and met, in 
Western Europe 50 years ago. Within four years of the end of World War 
II, the U.S. and its allies had launched the Marshall Plan, established 
NATO and the GATT, and laid the foundations for what became the EU and 
the OECD. 
 
As Secretary of State Warren Christopher has said,  
 
     These institutions helped produce unparalleled peace and prosperity 
for half a century--but only for half a continent.   
 
Now we have the opportunity--indeed, the necessity--to extend this 
Europe of the institutions to the Europe of the map, to erase forever 
the dividing line created by the Red Army in the late spring of l945. 
 
America is committed to help build this future. The United States has 
been at the forefront of providing transition assistance to Central 
Europe and the New Independent States of the former Soviet Union. Since 
l989, U.S. assistance to Central Europe has totaled over $10 billion--a 
very visible vote of confidence for the historic changes taking place. 
 
Seven Enterprise Funds, capitalized at $584 million, make available debt 
and equity capital for thousands of small businesses in 10 Central 
European countries. Five other Enterprise Funds, capitalized at $790 
million, are active throughout the New Independent States. 
 
While the hard work of the transition has been done by the people and 
governments of these countries, we are committed to helping where we 
can-- with technical advice, training, and investment capital--we can 
show some successes. 
 
-- The Polish-American Enterprise Fund, for example, has invested almost 
$200 million in 3,000 small- and medium-sized Polish businesses that 
employ a total of 61,000 people. It also created the first Mortgage Bank 
in Poland. 
 
-- We have worked closely with the successful Czech privatization 
program. Our transaction assistance resulted in 120 strategic foreign 
investments worth over $2 billion. 
 
-- In Slovakia, the Czech and Slovak-American Enterprise Fund is the 
second-largest foreign investor  behind K-Mart. The SEED-funded Orava 
project has introduced new curricula on pluralistic democracy to Slovak 
primary and secondary school classrooms. 
 
-- In Hungary, U.S. advisers are working with the government to 
restructure and privatize the banking system. The Hungarian-American 
Enterprise Fund played a key role in the creation of the Budapest Stock 
Exchange. It has directly invested $30.7 million in 25 Hungarian 
businesses, has provided loans to another 166 companies through its 
joint lending programs with local banks, and direct support to another 
47 small enterprises. 
 
-- In Romania, our assistance helped the National Federation of Mayors 
become an effective voice for bringing local concerns to the attention 
of the national government. 
 
-- In Bulgaria U.S. advisers, working in 22 communities, have helped to 
privatize state-owned real estate and small businesses through an 
innovative auction system. 
 
These are just a few examples of a very large program. We provide 
training in areas such as election organization, local administration, 
democratic media, and judicial procedure to help solidify democratic 
practices. Our technical assistance in reforming the financial sector, 
privatizing state-owned enterprises, and rewriting commercial codes has 
prepared the ground for private sector growth. Our support in the areas 
of housing, environmental clean-up, and health care has helped to soften 
some   of the social costs of the transition. 
 
The numbers and statistics behind the reforms become real when one 
attaches names and faces to them-- Tomasz Sielicki, for example, a 
bright young Polish entrepreneur who, with support from the Polish-
American Enterprise Fund, has turned his upstart company, ComputerLand 
Poland, SA, into a leading provider of computer hardware and software 
consulting in Poland, with 700 corporate customers and 1994 sales of  
$25 million. 
 
Or the Hungarian husband and wife team who, with a small loan from the 
Hungarian-American Enterprise Fund, was able to take what was literally 
a mom-and-pop greenhouse company-- the Hubai Company--and turn it into a 
thriving small business by hiring 12 new employees and adding 15 new 
greenhouses to their original five. There are thousands of similar 
stories--all very real evidence that reforms are taking hold and market 
democracies are taking root. 
 
The people of Central and Eastern Europe now have a real opportunity to 
create a lasting peace. But to do so, they must be prepared for one 
final act of liberation--this time from the unresolved legacies of their 
own tragic, violent, and angry past. 
 
For untold generations, the nations of Central Europe have been 
extinguished and reborn, its peoples pushed across frontiers. The 
personal memories alone of those here today call forth the Warsaw ghetto 
in April 1943; the Warsaw rising in August 1944, Budapest in l956, and 
Prague in l968. Too often, hopes born in the delirium of liberation--
whether in 1848, 1918, 1945, or 1956--have been dashed by the 
continent's cruel realities. 
 
A typical 80-year old resident of Galicia, for example, has lived under 
Austrian, Polish, German, Soviet, and now, Ukrainian rule without ever 
leaving home. She has seen the two worst wars in history and the Cold 
War begin in her neighborhood. Walking down the streets of her hometown 
of L'viv--or Lvov, or Lwow, or Lemberg--she can see the past everywhere: 
in the marble steps of the Habsburgs, in the German names engraved on 
public fixtures, in the baroque church of the old Polish commonwealth, 
in the cracked windows of the synagogue or the courtyard of the Armenian 
church, and in buildings dedicated to Hungarian merchants or adorned 
with Yiddish or Cyrillic inscriptions. 
 
For the peoples of this region, the words Versailles, Trianon, Munich, 
Yalta, or Potsdam are not just names on the map; they are living 
legacies of conflicting historical resentments, ambitions, and, most 
dangerous, unresolved territorial or tribal quarrels--quarrels that 
allowed the false ideologies of fascism and communism to prosper, and 
that now threaten progress toward integrating Central Europe into an 
undivided Europe. 
 
Even as democracy and free markets sweep the continent, armed conflict 
and political instability are more pervasive and severe than at any time 
during the past half century. They are concentrated in Southeastern 
Europe, extending to the region beyond our NATO allies, Greece and 
Turkey. I submit to you that this vast region--including its neighbors 
in the Transcaucasus, and Syria, Iraq, and Iran--has become the most 
explosive region on earth. Ottomans and Habsburgs, czars and commissars 
have left behind them unresolved legacies that continue to roil the 
entire area. Some, such as Bosnia, Croatia, Moldova, Nagorno-Karabakh, 
and Chechnya, have already exploded. Others continue to fester, such as 
tensions over Cyprus or those between Athens and Tirana, Athens and 
Skopje, Bratislava and Budapest, Budapest and Bucharest, Bucharest and 
Kiev, Kiev and Moscow, even Rome and Ljubljana. 
 
These forces, if not contained, risk holding the new Europe hostage to 
its own history. In a sense, the city casting its shadow over the 
continent as this century ends is the same one as when it began: 
Sarajevo. Bosnia is a brutal reminder of the power of ethnic and 
nationalist hatreds, how dangerous this power is to the peace not just 
of a particular part of Europe, but to Europe as a whole, and how 
important it is to defuse ethnic grievances before they explode. 
 
The world is horrified by a Serb's willingness to kill a Muslim in 
revenge for ancestors who allegedly fought at Kosovo in the year 1389. 
Constantly stoked with intergenerational resentment, the memory of past 
horrors fuels their repetition in the future. The Scottish poet Edwin 
Muir once wrote of his despair over this murderous wheel of history: ". 
. . loves and hates are thrust upon me by the acrimonious dead, the 
buried thesis, long since rusted knife, revengeful dust . . . ." 
 
It is not my purpose here today to suggest that we circumvent history. 
History as our guide and teacher, history as a cautionary tale that 
informs us, is indispensable to our self-awareness. But can this region 
free itself from history's ghosts? We must learn from history--but not 
be imprisoned by it. 
 
When the Soviet empire collapsed, it revealed among the peoples of the 
entire region both a strong yearning for civil society and powerful 
ethnic passions. It was, perhaps, inevitable that there would be some 
tension between the two. "This post-communist Europe of ours is rent by 
a great conflict of two spiritual cultures," Adam Michnik wrote in 1990. 
"One of these cultures says, let us join Europe and let us respect 
European standards, while the other says, let us go back to our own 
national roots and build an order according to our national 
particularity." 
 
Tomas Masaryk saw the danger clearly a century ago. "I don't believe in 
a specially chosen nation," he said in 1895, "I have no need to belittle 
other nations in order that mine appear superior." And the Hungarian 
thinker Ishtvan Bibo warned decades ago that the greatest threat to 
democracy comes when "the cause of the nation separates from the cause 
of freedom." 
 
It is important, in building the new democracies of this promising 
region, that healthy national pride not turn into the narrow nationalism 
that depends on creating hostility between national groups, each with 
its own view of history. That route leads directly to the tragedy of the 
Balkans today. 
 
Of course, the dangers of narrow nationalism have never been confined to 
the eastern half of the continent. In 1915, the British historian Norman 
Angell said that every England-- every country in Europe--has its 
Ireland, and every Ireland has its Ulster. But 80 years later, the 
people of Northern Ireland have embarked on a quest for peace--a quest 
that Central Europe and Cyprus should examine and eventually, I hope, 
emulate. 
 
Let me share with you a recent experience that is relevant. I have just 
come from the White House Conference on Trade and Investment in Northern 
Ireland hosted by President Clinton and attended by hundreds of business 
and civic leaders from companies from the United States, Northern 
Ireland, and the Republic of Ireland. In a single room in a Washington 
Hotel sat representatives of every faction on that strife-torn isle--men 
and women whose sides had refused to speak to each other for 
generations. Now, astonished at their own boldness, with excitement and 
electricity in the air, they were busily discussing their common future. 
 
The success of this conference is testimony to the economic dividends 
peace can bring to a region once it turns away from its legacy of hate. 
Peace is creating conditions for economic progress, which, in turn, is 
solidifying a still-fragile peace. 
 
Northern Ireland is experiencing an economic turnaround. Exports and 
tourism are rising, and unemployment is falling. Retail sales in the 
war-torn city of Belfast are skyrocketing. At the city's major hotels, 
security stations are being turned into antique shops and souvenir 
stores. Where guards once searched for bombs and bullets, tourists now 
search for baubles and bangles. Northern Ireland offers a dramatic 
example of the opportunity we now have--to build a lasting peace in 
which ancestral hatreds no longer control and poison their descendants. 
 
While difficult to achieve, this kind of peace is real--not Utopian--but 
it can be seen in the ties that already bind the nations of North 
America and Western Europe, many of whom clashed regularly over the 
centuries. 
 
Western Europe, as far back as we can remember a fragmented and divided 
region, is abolishing its internal frontiers and has created a single 
market. Although the English and the French were mortal enemies for a 
thousand years, Shakespeare's fond wish "that never war advance his 
bleeding sword 'twixt England and fair France" is now a fact so ordinary 
that it goes unnoticed. The same is true of France and Germany, once 
almost hereditary enemies. Belgium, Switzerland, Spain, and the South 
Tyrol are all examples of efforts to reconcile the rights and 
responsibilities of minorities with those of majorities. 
 
Such problems will never be resolved completely. We fully recognize, and 
freely admit, that American society has its own share of tensions rooted 
in prejudice, poverty, and racial discrimination. But the common 
adherence to standards of civil society, human rights, and fundamental 
freedoms--while too often violated in practice--goads us forever to 
narrow the gap between our aspirations and our achievements. 
 
Every country in this region, no matter what the current state of its 
economy, can aspire to join in time this rich tapestry of nations. But 
joining the core institutions of the West is not the same as joining a 
country club. Countries aspiring to enjoy the benefits of membership 
also have the responsibility to meet its obligations. I am heartened 
that many governments in Central Europe understand and welcome that 
challenge. 
 
Prime Minister Horn has formulated this reality as well as anyone. "What 
do the EU and NATO want from us?" he asked, some weeks before the 
agreement with Slovakia. "They say very firmly that we settle our 
relations with our neighbors. Simply, neither the EU nor NATO is willing 
to admit states which have contentious border problems, unsettled 
minority issues, conflicts, and the like." 
 
On NATO membership, President Clinton has been equally clear:  
 
     Countries with repressive political systems, countries with designs 
on their neighbors, countries with militaries unchecked by civilian 
control or with closed economic systems need not apply.  
 
Each NATO member constitutes for the United States the most solemn of 
all commitments: a bilateral defense treaty that extends the U.S. 
security umbrella to a new nation. This requires ratification by two-
thirds of the U.S. Senate, and one can be sure that the Senate will 
examine the democratic credentials of every candidate closely. To admit 
states in which the strength of such values remains uncertain would only 
weaken the alliance. 
 
By the same token, let me say that as the nations of this region develop 
strong democratic institutions, growing market economies, and 
responsible foreign policies, it will be very much in our interest to 
add your many strengths to ours. Neither NATO nor the European Union 
would have begun the process of enlargement had we not been confident 
that prospective members would before long carry their own weight. 
 
The lessons of reconstruction and renewal in Western Europe after World 
War II are clear: Those seeking to join a broader security community 
must contribute to their own security. European stability cannot be 
based solely on external guarantees; it must be built from within. New 
constitutions, legal structures, and elections    are all necessary but 
insufficient to guarantee a viable democratic civil society. It demands 
an open marketplace of ideas, facilitated by independent institutions, 
especially trade unions and professional groups. It demands a free 
press--an essential factor limiting those who seek to manipulate 
legacies of mistrust. In this regard, we remain troubled by the 
continuation of government control over the mass media in certain 
Central European countries, and the use of economic pressure to 
undermine the free press in others. 
 
Democratic pluralism demands regional cooperation. Gyorgy Konrad has 
said that the great challenge Central Europeans face "is living side by 
side: developing a common system of values, establishing a neighborly 
ethic and sticking to it . . . proving that we can work together and 
with the world makes us more attractive, riper, for pan-European 
integration." 
 
Above all, civil society demands respect for human rights and 
fundamental freedoms. Assertions of self-determination that are based 
solely on ethnic identity or historic claims, in an area in which 
peoples and borders do not match, do not guarantee individual freedom. 
In fact, they are likely to narrow human rights rather than expand them. 
Respect for individual human rights, on the other hand, does make 
possible the free expression of ethnic, linguistic, and cultural 
identities. It also underpins a fundamental principle of international 
order: borders should not be changed by force. 
 
For example, it is clear that throughout Southeastern Europe, the 
treaties that followed World War I have left a heavy and contentious 
legacy. This is an important and legitimate subject for historians and 
others to debate. But unless those who feel aggrieved by history seek 
justice through reconciliation and unless they respect the individual 
rights of all concerned, they will remain prisoners of the past, and the 
future will recede before them. 
 
Recently, we have seen a major step forward under the leadership of 
Prime Minister Horn and Prime Minister Meciar. The recent agreement 
between Bratislava and Budapest is a step away from the vicious cycle of 
history--a step toward an integrated Europe. But a similar effort 
between Hungary and Romania has not yet succeeded. 
 
The United States has been what I would call an "active observer" in the 
discussions Hungary undertook with Slovakia and Romania during the past 
three months. While we are delighted that the Hungarian and Slovakian 
Governments reached the agreement they did in March and look forward to 
its approval by the Parliaments, we    are disappointed that Hungary and 
Romania have not yet reached an agreement and look forward to their 
doing so soon. 
 
A host of outstanding issues remain, and the agreements that have been 
signed must now be implemented. We stand ready to provide our good 
offices as an honest broker committed to reconciliation on the basis of 
respect for individual human rights. But the West cannot do for Central 
Europeans what Central Europeans cannot--or will not--do for themselves. 
 
We can note some other successes. We played a constructive broker role 
in the recent improvement of relations between Tirana and Athens and 
have been actively seeking to help bridge continuing differences between 
Rome and Ljubljana. Special Presidential emissaries are working on both 
the Cyprus issue and the dispute between Athens and Skopje over the 
name, flag, and relationship between Greece and the Former Yugoslav 
Republic of Macedonia. 
 
The peace we seek in this region has deep roots. It was advanced decades 
ago by those Western and Central European historians who collaborated to 
publish the journal The New Europe during the years 1916-20. They 
offered a generous vision of liberal patriotism that contrasted sharply 
with the obsession with righting wrongs, real and imaginary, that have 
dominated--and damaged-- Central Europe for much of this century. Their 
vision, rooted in shared European and American ideals, extended to the 
entire continent. "A new Europe," they insisted, "can only be one in 
which liberated nationalities consent to create, by cooperation and 
tolerance, a new type of federal community both large enough to secure 
freedom from all menace without, and large-minded enough to secure 
liberty for all races and sects within." 
 
Although history took a different turn for this region, the vision 
remained. It animated the courageous writers and furnace-stokers of the 
Czech underground, the shipyard workers and intellectuals of Poland's 
Solidarity, the Hungarian journalist who telexed the world in the final 
moments of the 1956 Hungarian Revolution to say: "We are going to die 
for Hungary and for Europe." 
 
Their vision, shared in the West by Monnet and Marshall, Schumann and 
Spaak, encompassed all of Europe; the reality of the times could not. It 
would be a tragedy of the highest order if now, in our time, when the 
vision of free nations in a broader European commonwealth is closest to 
reality, it were denied by divisions persisting within Central Europe 
itself. 
 
So let us use these days of remembrance and reflection for rededication 
and renewal. Ultimately, you who threw off communism's yoke must build 
your own futures. We will welcome you into NATO and other Western 
institutions; we will encourage the EU to enlarge, but you must show the 
way. You must decide to transform liberation's promise into lasting 
peace. 
 
This time, as President Clinton said earlier this month in Kiev, "You 
should know this. As you build your future, the United States will stand 
with you."  We will stand with you because a strong, free, and 
democratic Europe is essential to America's own security and prosperity, 
to the health of our    own democracy, to the success of our common 
future. That is history's  lesson.  (###) 
 
 
 
ARTICLE 6: 
 
U.S. Policy on Bosnia And Assistance to UNPROFOR 
Peter Tarnoff, Under Secretary for Political Affairs 
Statement before the Senate Foreign Relations Committee and the House 
Committee on International Relations, Washington, DC, June 8, 1995 
 
Mr. Chairman: Thank you for the opportunity to appear before the 
committee to discuss the Administration's views and policies on Bosnia. 
As you know, Secretary Christopher had hoped to be able to appear before 
you, but his travel schedule this week--which included Haiti and the 
Middle East--made it impossible to find a mutually satisfactory time. I 
bring you his regards. 
 
Today, my colleagues and I will address three main issues: our strategy 
for dealing with the conflicts in the Balkans, which remains unchanged; 
how we view recent developments;   and our continuing support for 
UNPROFOR, which is consistent with U.S. interests. I will address our 
overall goals and diplomatic strategy. Under Secretary Slocombe will 
then discuss the meetings last weekend in Paris among ministers and 
military chiefs of defense from NATO and EU countries and how the steps 
they endorsed will strengthen UNPROFOR. Under Secretary Slocombe will 
also outline current and possible future U.S. military operations in the 
region. Then, Generals Clark and Estes will address a number of 
operational military questions related to our support to allies and 
UNPROFOR under various circumstances. 
 
U.S. Interests in the Balkans 
 
Our principal goals in the Balkans remain to contain and help bring to 
an end the ongoing conflicts which threaten our interests in European 
stability and integration. 
 
From the outset of these conflicts, we have sought to preserve Bosnia-
Herzegovina as a multi-ethnic state, support the peaceful restoration of 
Croatian sovereignty throughout the country, assist the peacekeeping and 
other activities of our NATO allies and the UN, and relieve the human 
suffering. 
 
To achieve these ends, we have led efforts to achieve negotiated 
settlements, led NATO military responses to calls by the UN for 
assistance in protection of its forces and safe areas for the people of 
Bosnia, deployed peacekeeping troops in the Former Yugoslav Republic of 
Macedonia, and conducted the longest humanitarian airlift in history. 
 
Despite many disappointments and frustrations, the international 
community's efforts have yielded significant benefits. UNPROFOR's 
presence has diminished the level of killing. NATO's operation DENY 
FLIGHT, which enforces the "No-Fly Zone" has ended aerial bombardment of 
cities. UNPROFOR provides essential support to the UNHCR in the delivery 
of relief to 2.2 million people throughout the former Yugoslavia, 
including 787,000 refugees and displaced persons. The war between the 
Croats and the Muslims was brought to an end in March 1994 with the 
formation of the Federation, which has sharply reduced the need for 
humanitarian relief. UNPROFOR has also performed well in monitoring the 
peaceful implementation of the Washington accords between the Muslim and 
Croats. The monitors that we and other members of the ICFY deployed on 
the border between Bosnia and Serbia/Montenegro have reduced the Bosnian 
Serb army's ability to wage war over the past year. Without these UN and 
national programs, the situation would have been much worse in Bosnia. 
 
The Search for Political Settlement 
 
Our diplomatic goal in Bosnia remains to end the war consistent with the 
internationally agreed Contact Group effort. Several weeks ago, the 
Contact Group decided to explore an initiative, backed by Bosnian 
President Izetbegovic, that would tie Milosevic's recognition of Bosnia 
and acceptance of tighter control over his country's borders with Bosnia 
and Croatia to sanctions suspension for Serbia. 
 
Last month, Contact Group representatives met in the Hague to review 
this initiative, and agreed that U.S. Ambassador Robert Frasure should 
travel to Belgrade to further discuss Belgrade's recognition of Bosnia-
Herzegovina, the bolstering of the monitoring regime along the Serbia-
Bosnia border, and the nature of sanctions suspension to be granted by 
the UN in response to these steps. Although we have made some progress 
in these discussions with Milosevic, he continues to demand a more 
unqualified formula for sanctions suspension than we can support. 
Ambassador Frasure left Belgrade yesterday for consultations here and 
with Contact Group representatives and the Bosnian Government. We have 
consistently advocated an incremental approach that offers limited 
initial relief, with significant incentives for further steps, all 
reinforced by the ability to reimpose sanctions if Belgrade does not 
abide by its part of the bargain. 
 
We have engaged in this dialogue with Milosevic because we think he can 
play a useful role in bringing about a peace settlement in Bosnia. For 
the past several months, Belgrade has distanced itself from the policies 
of the Pale leadership, both by closing its border with Serb-held Bosnia 
and, most recently, by Milosevic's condemnation of the hostage-taking by 
Pale and efforts to secure their release. By recognizing Bosnia, 
Milosevic would frustrate the dreams held by many in Pale of merging the 
territory under their control to Greater Serbia, thus enhancing the 
chances that Pale would negotiate seriously with the Bosnian Government. 
 
We do not expect Milosevic to "deliver" the Bosnian Serbs to the 
negotiating table single-handedly. The Serbs in Pale have a large 
measure of political independence from Belgrade, so much so that 
Milosevic views Karadzic more as a rival than a partner. However, 
Belgrade exercises substantial persuasive influence with Serbs in 
Bosnia, as witnessed in Belgrade's partially successful efforts to win 
release of the UN hostages. Should Belgrade agree to the recognition 
package under discussion, this influence would fall squarely behind the 
Contact Group efforts to bring the parties back into negotiations. 
 
Detained UN Personnel 
 
In recent days, the Administration has worked closely with Contact Group 
partners and the UN to secure both release of UN personnel held by the 
Bosnian Serbs and further information on the U.S. F-16 pilot shot down 
last Friday. We have endeavored to ensure the immediate and 
unconditional release of all UN personnel. As of June 7, 229 of the 
detainees have been released by Bosnian Serb forces. Another 149 UN 
personnel are still being detained or blocked in their positions. 
Efforts to secure their release are ongoing. 
 
Support to Allies and UNPROFOR 
 
We believe UNPROFOR's mission should continue, if at all possible, 
because of the substantial contributions it has made to assist the 
people of Bosnia. Withdrawal now would trigger an even worse 
humanitarian disaster, including many allied casualties and risk of 
spill-over of the conflict. But in order to remain, UNPROFOR must be 
able to conduct its mission more effectively and in greater security. 
Under Secretary Slocombe and General Clark will elaborate on the 
measures to achieve this end endorsed by defense ministers and military 
chiefs of staff at their meeting in Paris last weekend. 
 
We are convinced that these steps to enhance UNPROFOR's ability to 
protect itself offer the best prospect of enabling it to continue its 
missions. These efforts are not designed to  
set the stage for withdrawal of UNPROFOR. On the contrary, our   
European allies have demonstrated their resolve to do more to make this 
mission work. They are determined to ensure that humanitarian relief 
efforts get through to those in need and to maintain a presence that 
will continue to mitigate the level of violence. Only if such conditions 
prevail can efforts to find a peaceful solution continue. 
 
As the President noted, we have a long-standing commitment to help our 
allies by using our unique military capabilities to support a NATO-led 
operation to withdraw all or part of UNPROFOR safely from Bosnia, should 
that become necessary. Last week, the President said we would assist 
NATO, as requested, in emergency operations to extract certain units 
serving with UNPROFOR to safe locations in Bosnia. We do not expect 
there to be much demand for such support, as my colleagues will explain.  
 
To reiterate, should the President consider it necessary to commit U.S. 
ground forces, for either emergency extraction or withdrawal, I can 
assure you that there would be close consultation with Members of 
Congress and that the President would seek the support of Congress as 
well as the American people. 
 
Lift the Embargo 
 
We have always felt the UN arms embargo unfairly penalizes the Bosnian 
Government, which is the victim of Serb aggression. In 1993 and 1994, we 
advocated multilateral action to end the embargo but lacked sufficient 
support in the UN Security Council. In compliance with the Nunn-Mitchell 
Amendment, we have ended our participation in enforcement efforts 
against Bosnia but continue to honor the arms embargo. 
 
We still firmly oppose unilateral lifting of the arms embargo. It would 
lead to a wider and bloodier conflict, with a very uncertain outcome, 
for which the U.S. would have ultimate responsibility. Such a conflict 
would cause major strains in NATO and the UN and risk direct 
confrontation with Russia which, along with Serbia, might choose to 
provide military assistance to the Bosnian Serbs. It would undermine 
other UN resolutions and sanctions regimes, such as Iraq and Libya, that 
serve critical U.S. interests. I know Under Secretary Slocombe wants to 
address this issue further. 
 
Other Efforts 
 
Our efforts to stabilize the situation in Bosnia are complemented by 
several other initiatives. 
 
In Croatia we are working with the parties and the UN to prevent 
escalation of fighting in the aftermath of the Croatian action to regain 
full control of UN Sector West and the Knin Serb retaliation on Zagreb 
and other areas. Ongoing clashes in Croatia and violations of agreements 
on cease-fires, separation zones, and economic cooperation demonstrate 
the need for an effective UN peacekeeping presence there. These clashes 
could trigger a widening of the conflict and threaten the maintenance of 
UN peacekeeping operations throughout the region. 
 
Having helped persuade President Tudjman to maintain a new UN force of 
peacekeepers and border monitors in Croatia, we are working with Contact 
Group partners and others to minimize the danger of renewed hostilities 
and advance the cause of a negotiated settlement. This includes 
encouraging the parties to agree to the UN force's expeditious 
implementation of a new mandate. 
 
We have also redoubled our efforts in the last few months to support the 
Bosnian Federation, which remains the best hope for building democracy 
and ethnic tolerance in the region. To date, our efforts have helped end 
the fighting and reopen humanitarian convoy routes in parts of central 
Bosnia, thereby improving the prospects for long-term reconciliation 
between the Muslim and Croat communities there. We have been working 
with the 21 other governments who form the Friends of the Federation to 
expand international economic and political support to ensure that the 
Federation becomes a durable entity and a model of ethnic harmony and 
tolerance in this troubled region. Withdrawal of UNPROFOR would gravely 
damage our efforts to bolster the Federation. 
 
Overall Assessment 
 
Taken individually, each of these efforts may seem modest. Certainly 
they have not produced peace in Bosnia. But taken together and on behalf 
of the international community, these actions do represent a substantial 
undertaking that many governments have committed forces and funds to 
achieve. This Administration is convinced that the American people see 
our interests sufficiently at stake to warrant the U.S. doing its part 
to achieve peace in Bosnia.

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[END OF DISPATCH VOL. 6, NO. 26]

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