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U.S. Department of State
93/04/20 Testimony on Assistance to Russia & Foreign Affairs Budget
Office of the Spokesman



Statement by
Secretary of State Warren Christopher
before the Senate Foreign Relations Committee
Washington, DC
April 20, 1993

It is a pleasure to appear again before you and this committee. Three 
months have passed since our first official meeting at my confirmation 
hearing.  Much has transpired in that time.  We have conducted an 
activist, internationalist, democracy-oriented foreign policy.

I look forward to exploring the full range of challenges we confront.  I 
will limit my formal remarks to two key issues.

First, I want to update you on our single-most important foreign policy 
priority:  the effort to help reform succeed in Russia.

Second, I will review the Administration's foreign affairs budget 
requests and management strategy.

Assisting Reform in Russia:  From Vancouver to TokyoMr. Chairman, the 
last few weeks have witnessed important developments in Russia's 
relations with the United States and the West.  The Vancouver summit 
between Presidents Clinton and Yeltsin marked a milestone.  It was the 
first truly post-Cold War summit, where talk about economic reform and 
democracy played as central a role as negotiations over nuclear weapons 
did in the past.

At the summit, the presidents agreed on a new package of bilateral 
programs designed to address Russia's immediate human needs and 
contribute to the building of a market economy.  It targets areas of 
high priority.  This includes a resumption of US food exports; support 
for privatization and new businesses; help in dismantling nuclear 
weapons; a housing program for demobilized soldiers to speed Russia's 
withdrawal from the Baltic countries and parts of the former Soviet 
empire; funding for programs to enhance nuclear safety; help in 
resurrecting Russia's energy sector; and an increase in people-to-people 
exchanges.

These programs are designed to deliver quick, tangible benefits to the 
Russian people.  They will support Russia's long-term transformation to 
the market, and--most importantly-- directly serve US interests by 
reducing the former Soviet nuclear arsenal and opening new markets for 
our workers, farmers, and businesses.

While America's increased support and leadership will be critical for 
promoting reform, we cannot do it alone.  Our help must be part of a 
much larger partnership between Russia and the international community.  
Building that broader cooperative effort was precisely the purpose 
behind last week's extraordinary meeting in Tokyo between foreign and 
finance ministers of the G-7 [Group of 7 industrialized] countries and 
Russia.

At that meeting, Russia's Deputy Prime Minister Fyodorov outlined a bold 
new plan to control Russia's money supply, reduce its budget deficits, 
and achieve macroeconomic stabilization.  In response, we and our G-7 
partners--working through the international financial institutions--
announced a major new multilateral initiative to support reform.  In 
addition to the Paris Club's recent rescheduling of $15 billion of 
Russia's foreign debt, the $28-billion Tokyo package will include 
helping Russia to stabilize its currency, to finance critical imports, 
to restructure key sectors of its economy, and to reduce the threat of 
its deadly nuclear legacy.

The vast majority of this new support for Russian reform will come from 
the international financial institutions.  But it is also going to 
require contributions from G-7 members, as well as other countries in 
Asia, the Middle East, and Europe that are capable of participating.  
Here, America must be willing to pay its fair share.

As President Clinton stated in Vancouver, our strategy to assist Russia 
consists of three steps.

--  The first is the $1.6 billion package of bilateral programs 
announced at the US-Russian summit.  As you know, the monies for this 
package have already been appropriated by the Congress.  

--  The second step is the new multilateral support program announced in 
Tokyo.  One of the most important and innovative parts of that program 
could be the creation of a G-7 privatization fund.  This fund is 
designed to help Russia cope with the economic and political 
consequences of privatizing the huge--and hugely wasteful--state-owned 
enterprises that are bleeding its budget dry and fueling inflation.  Our 
share of this effort would amount to some $500 million, and would take 
the form of a "challenge grant."  That is, it would be contingent on 
other G-7 members contributing another $1.5 billion.  We would then look 
to the international financial institutions to commit an additional $2 
billion in co-financing, bringing the fund's total resources to $4 
billion in grants and loans.

--  The third step in the President's plan to support Russian reform is 
to work closely with the Congress to develop further bilateral 
assistance efforts.  A starting point will be the funding requests in 
our fiscal year (FY) 1994 budget to continue current programs to 
dismantle nuclear weapons, deliver humanitarian help, and promote 
democracy and privatization.  In recent talks with the Russians, our G-7 
partners, and the Congress, we have reached the conclusion, Mr. 
Chairman, that even more must be done.  As I announced last week in 
Tokyo, the President has decided to seek an expanded package of US 
bilateral programs, to build upon the ones announced at Vancouver, and 
in addition to the requests contained in our FY 1994 budget.

This package reflects the intensive consultations that we have had.  It 
focuses on what Russia's reformers say they most need, as well as the 
areas where Members of Congress have suggested our efforts should be 
aimed.  This will build on our assistance efforts in energy, 
privatization, and housing for demobilized soldiers and also provide 
support for the environment, medicines, trade and investment, and 
exchange programs.

This expanded package of bilateral steps, together with our $500 million 
contribution to the prospective G-7 privatization fund, would require an 
additional appropriation of approximately $1.8 billion.  We are now 
consulting with this committee and others in Congress to determine how 
best to structure such a request.  Mr. Chairman, I realize this is a 
difficult proposal at a time when so many Americans face hardships here 
at home.  But President Clinton and I are convinced that this investment 
in Russia's democratic future is an essential investment in America's 
future.  By making this investment, we can help turn our most dangerous 
enemy into an enduring partner.  That, I believe, is a critical--indeed, 
a noble--mission.

The President and I will continue to make the case to the American 
people that a focused program to assist Russian democracy is in our 
deepest self-interest.  We are counting on the members of this committee 
to join us in this effort.

International Affairs BudgetMr. Chairman, let me now turn briefly to a 
discussion of our FY 1994 international affairs budget.  It is a budget 
that accurately reflects the times we live in.  In its funding requests, 
it recognizes the tight fiscal constraints confronting our government 
today.  And in its priorities and objectives,  it marks a first but 
important step toward addressing the new challenges of the post-Cold War 
era.

One of our highest priorities will be promoting democracy and human 
rights.  I have already described the especially high stake we have in 
helping freedom triumph in Russia and the other new states of the former 
Soviet Union.  But our efforts must be worldwide.  The lesson of this 
tragic century is clear:  The best check against international 
aggression is the emergence of governments that encourage tolerance, 
pluralism, and respect for the individual.

Our budget also places a new emphasis on promoting multinational peace-
keeping and peace-making.  The end of the Cold War has unleashed long-
suppressed conflicts in Eastern Europe, the former Soviet Union, and 
elsewhere.  But it has also opened up new possibilities for 
international cooperation.  Our task is to harness that cooperation to 
contain, and far more importantly, to prevent conflict.  The tragedies 
of the Balkans and Somalia bear grim witness to the price of 
international delay.  International peace-keeping--especially by the UN-
-can and must play a critical role. Capabilities must be enhanced to 
permit prompt, effective, preventive action.

We in the United States must be ready to do our part.  In this 
connection, the President and I believe that millions spent now on 
preventive diplomacy and peace-keeping can save hundreds of millions in 
defense and international relief later.

These priorities, as well as others highlighted in our budget, represent 
an important effort to reorient our scarce resources to the realities of 
the post-Cold War era.  The budget reflects a commitment to using the 
taxpayers' dollars wisely and efficiently, in full support of the 
President's economic and deficit-reduction programs.

Reforming the Institutions

As important as how much we spend on foreign policy, however, is how we 
spend it.  I'm convinced that the Department of State cannot hope to 
respond effectively to new challenges unless we improve the way we deal 
with complex problems that cut across traditional bureaucratic 
boundaries.  A stifling bureaucracy, an obsolete division of labor, or 
cumbersome decision-making are luxuries we cannot afford.

As a first step in remaking the State Department, I announced a broad-
based reorganization plan in February.  The plan shifts portfolios and 
creates new positions to mirror post-Cold War missions.  It will reduce 
excessive layering within the Department and streamline the policy 
process.  Our objective is simple:  quicker policy-making, more open 
policy-making, and, most importantly, better policy-making.

We also need to refocus our foreign assistance priorities and programs.  
Specifically, the US Agency for International Development must be 
overhauled.  I have asked Deputy Secretary Wharton to examine the 
Agency's role in the post-Cold War era and report his recommendations to 
me by the end of this month.  We look forward to working closely with 
this committee and the full Congress in this effort.

Conclusion

Before I conclude, Mr. Chairman, I would like to depart from my prepared 
remarks to say a few words about the worsening tragedy in Bosnia.  Upon 
taking office, our Administration was faced with a condition of advanced 
deterioration.  Frankly, it was a situation that would have been better 
dealt with by the West more than a year ago.  Nonetheless, we now face a 
worsening environment in eastern Bosnia that has horrified the world.

In response to the Serbs' relentless aggression, the United States 
joined our partners in the Security Council this weekend in passing a 
resolution that will dramatically tighten existing economic sanctions.   
The steps are, indeed, severe--and entirely fitting.  When implemented, 
they will significantly increase the pariah status of Belgrade and its 
Bosnian allies. We intend to press for total isolation so long as they 
continue their aggression.

If Bosnia's Serbs fail to halt their aggression and agree to a peace 
plan within 6 days from today, Serbia will confront a series of harsh 
new measures, including the following:

--  All ships will be banned from entering Yugoslav territorial waters;

--  No country will be allowed to ship goods by land across Serbia;

--  Every Yugoslav plane, ship, truck, rail car, and cargo container 
outside the country will be subject to impoundment;

--  Barges will be prohibited from passing through Serbia along the 
Danube River unless they have special permission and submit to UN 
monitoring; and

--  All bank accounts and other financial assets held by Yugoslav 
institutions abroad will be frozen.

These steps will also apply to Serb-held areas of Bosnia and Croatia.

The President remains deeply concerned [about] the situation.  The 
Administration is now urgently reviewing a wide range of options 
available to the world community to further punish Serbian aggression 
and bring an end to the violence.  As the President has said, this 
includes options that have previously been unacceptable.  We will stay 
in close touch with members of this committee and the full Congress as 
our deliberations proceed.  (###)

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