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U.S. DEPARTMENT OF STATE
95/02/16 TESTIMONY ON FY-96 BUDGET
OFFICE OF THE SPOKESMAN


                        STATEMENT BY
            SECRETARY OF STATE WARREN CHRISTOPHER
                         BEFORE THE
            HOUSE FOREIGN OPERATIONS SUBCOMMITTEE
                      FEBRUARY 16, 1995


Good morning. I am pleased to appear before the House
Appropriations Subcommittee on Foreign Operations to provide
an overview of our proposed Fiscal Year 1996 budget, and to
highlight the foreign policy objectives that it supports.

We live in a world that has been profoundly transformed-- by
the end of the Cold War and by the triumph of democracy over
dictatorship in many nations.  It is a world that is taking
shape in ways that are remarkably consistent with American
ideals and conducive to American interests.  Indeed, it is a
world that has been shaped by the successful use of American
power -- and by the power of American principles.

But we must not be complacent.  Aggression, intolerance, and
tyranny still threaten political stability and economic
development in vital regions.  Challenges as diverse as
nuclear proliferation, terrorism, and environmental
degradation still endanger our security and prosperity.

Mr. Chairman, the American people have a right to expect
that their government will do what is necessary to protect
their security and prosperity.  No American wants to live in
a world in which nuclear weapons have fallen into the wrong
hands; or in which the United States has abandoned its
economic leadership; or in which the post-Cold War momentum
toward peace and freedom has been reversed.

At the same time, the American people rightly expect that we
apply the most rigorous standards to federal spending.  We
have a responsibility to ensure that our foreign operations
cost no more than is necessary to advance our nation's
interests.  Let me assure you, Mr. Chairman, that we have
been tough-minded in putting together what is an austere
budget.

The International Affairs budget of $21.2 billion represents
only 1.3 percent of total federal spending.  Our budget is
now substantially lower in real terms than it was a decade
ago.  Despite the extraordinary challenges we face, our 1996
spending request is essentially level with what we are
spending in the current fiscal year if the supplementals are
taken into account.  Indeed, the resources we are requesting
are the rock bottom minimum we need to support and advance
America's vital interests.

Mr. Chairman, I am convinced that the investment we have
made in diplomacy and foreign assistance has directly
contributed to the security and prosperity of the American
people.  From the Marshall Plan to NATO, the resources we
have invested have played a decisive role in containing
communism and keeping the United States and our European
allies strong and free.  The resources we have invested in
our global nonproliferation efforts over the past four
decades have kept the nightmare of a profusion of nuclear
weapons states from coming to pass.

Our investment in foreign assistance has ultimately put more
dollars in the pockets of the American taxpayer than it has
ever taken out.  American firms now enjoy annual export
sales to South Korea worth triple the amount of U.S.
assistance we provided to it in the decade following the
Korean War.  To cite another example, our exports to Latin
America in 1993 alone were more than two and a half-times
greater than the $30.7 billion in economic assistance we
provided between 1949 and 1993.  That investment has
certainly paid off--in American jobs supported by those
exports and in a hemisphere of expanding opportunity.

Consider the lost opportunities and likely threats that the
United States and the world would face without our
investment in American leadership in the last two years
alone.  We would have four nuclear states in the former
Soviet Union instead of one, with Russian missiles still
targeted at us; we would have a full-throttle nuclear
program in North Korea; no Uruguay Round GATT agreement to
expand world trade; brutal dictators still terrorizing
Haiti; very likely, Iraqi troops back in Kuwait; and a
deepening Mexican economic crisis threatening instability
along our border and in emerging market economies around the
world.

Last November's elections certainly changed a great deal.
But they were not a license to lose sight of our global
interests or to walk away from our commitments in the world.
This budget advances our interests and maintains our
commitments.  Approving it will be a stern test of our
willingness as a nation to dedicate the resources necessary
to protect the security and prosperity of the American
people.  It will be a test of our commitment to lead.

For Fiscal Year 1996, this Administration is requesting
$14.7 billion to fund Foreign Operations, about $400 million
more than our outlays for the current fiscal year.  Mr.
Chairman, allow me to explain how our Foreign Operations
request supports the overall principles guiding our foreign
policy, and the specific areas of opportunity that I will be
pursuing in 1995.

The United States seeks a world of open societies and open
markets in which American values and interests can thrive.
Our strategy is driven by four principles: that we continue
to engage and to lead; that we maintain effective relations
with the world's great powers; that we adapt and build
institutions that will promote economic and security
cooperation; and that we continue to support democracy and
defend human rights.

As several of our recent accomplishments suggest, American
leadership requires that we be ready to back our diplomacy
with credible threats of force.  To this end, President
Clinton is determined that the U.S. military remain the most
powerful and effective fighting force in the world--as it
certainly is now.

When our vital interests are at stake, we must remain
prepared to defend them alone.  But sometimes, by leveraging
our power and resources, and by leading through alliances
and institutions like the UN, we can advance our interest in
global stability without asking our soldiers to take all the
risks, or our taxpayers to pay all the bills.  That is a
sensible bargain I know the American people support.

When the UN Security Council approves a peacekeeping mission-
-and the General Assembly approves a budget for that mission-
-every country in the world pays its share of the costs.  As
you know, the United States also conducts voluntary
operations to advance our interests, as we do today in
Bosnia and northern Iraq, and as we did during the Persian
Gulf War.  Other nations make substantial voluntary
commitments as well -- witness the French troop deployment
in Rwanda, Japan's contributions to the Cambodia peace
process, and many of our NATO allies' activities in the
former Yugoslavia.

Mr. Chairman, the National Security Revitalization Act (H.R.
872), now before the House, misses the crucial distinction
between UN missions and the operations we conduct
voluntarily under UN resolutions to isolate pariah states,
deter aggression, and protect humanitarian relief.  The bill
would reduce our peacekeeping dues by the cost of our
voluntary operations.  That would cancel our entire
peacekeeping payment, abrogating our treaty obligations to
the UN.  Other countries would surely follow suit.  The
effect would be to destroy peacekeeping as an instrument of
our foreign policy.

In other words, the effect of the bill would be to eliminate
an option that every American President since Harry Truman
has used to advance our interests.  It would leave us with
an unacceptable choice each time an emergency arose:  a
choice between acting alone and doing nothing.

That is the choice we would face in the Middle East if
peacekeeping was no longer an option, and UN troops were
pulled from the Golan Heights and the Iraq-Kuwait border.
That is the choice we would face if peacekeepers were
withdrawn from a host of other flash-points around the
world, including Cyprus and the former Yugoslavia -- and the
choice we would still face in Cambodia and El Salvador had
peacekeepers never been deployed.

This Administration has worked hard to ensure that
peacekeeping missions are precisely defined, that money is
not wasted, and that tough questions are answered
satisfactorily before new missions are approved.  In short,
our goal has been to ensure that UN peacekeeping is the
effective tool it must be to advance American interests.

What is at stake here is absolutely fundamental:  the
authority of the President to protect our national security,
and to use every effective option to advance the interests
of the United States.  The bill would deprive this and every
future President of the flexibility to make the right
choices.  It would impair the ability of the United States
to remain engaged and provide world leadership.  As
Secretary Perry and I indicated, we will recommend to the
President that he veto legislation that, in its current
form, would undermine national security in this and other
important ways.

We are requesting $100 million from this subcommittee for
contributions to regional peacekeeping efforts, including
those of the Organization for Security and Cooperation in
Europe, and the multinational force and observers in the
Sinai.  We are also separately requesting funding for our UN
peacekeeping assessment.

The second principle driving our strategy is the central
importance of constructive relations with the world's most
powerful nations: our Western European allies, Japan, China
and Russia.  These nations possess the political, economic,
or military capability to have an impact -- for good or for
ill -- on the well-being of every American.  The relatively
cooperative relations that these countries now have with us
and with each other is unprecedented in this century, but it
is not irreversible.

Our strategy toward the great powers begins with Western
Europe and Japan.  We must revitalize our alliances with
this democratic core.  We must also seize the opportunities
to build constructive relations with China and Russia,
countries that were not too long ago our fiercest
adversaries.  Both are undergoing momentous, though very
different, transformations that directly affect American
interests.

Our partnership with Japan is the linchpin of our policy
toward East Asia, the most dynamic and fastest-growing
region in the world.  This Administration has placed the
Asia-Pacific at the core of our long-term foreign policy
approach.  Realizing President Clinton's vision of a stable
and prosperous Pacific Community will continue to be a top
priority.  Moreover, the region figures prominently in many
of the central areas of opportunity that we are pursuing in
1995.

It is also imperative that we reinforce our security and
political ties with Japan -- as well as with South Korea and
our other treaty allies in the Pacific.  It is equally
essential that the strength of our economic ties with Japan
matches the overall strength of our relationship.  During
this year marking the fiftieth anniversary of the end of
World War II, we will highlight and heighten our close
cooperation on regional and global issues -- while
continuing to press for greater access to Japanese markets.

With China, we are pursuing constructive relations that are
consistent with our global and regional interests.  The
President's strategy of comprehensive engagement is designed
to address a broad agenda with Beijing and to maintain
momentum in certain areas even as we face problems on other
issues.  We want China to be fully integrated into the
international community.  For that to happen, it must accept
the obligations that come with membership in international
institutions and adherence to international norms.

We are encouraging China's participation in regional
security and economic organizations.  We are supporting its
accession to the World Trade Organization on proper terms.
We are seeking its full commitment to global
nonproliferation regimes.  And we are encouraging China to
demonstrate greater respect for human rights -- an interest
that is clearly connected to the issue of intellectual
property rights because both depend on the rule of law.

The widespread pirating of computer software, videotapes,
and compact discs in China is unacceptable to the United
States and incompatible with China's responsibilities as an
emerging economic power.  The President has indicated his
willingness to act.  Let me add that every business leader I
have heard from on this issue supports our course of action.
And let me emphasize that China's leaders must understand
that attracting foreign investment and sustaining long-term
growth depend on their willingness to meet global standards
in this key area.

We are working to resolve our differences on this issue.
But we are not overlooking the other commercial and overall
strategic interests that we are pursuing with China.  We
will continue to pursue a strategy of comprehensive
engagement where it is possible and where it is in our
interest to do so-- such as North Korea, Cambodia and the
control of narcotics.  It will take time, but our goal
remains to cultivate a broad and full relationship with a
stable, open and prosperous China that is a full and
constructive member of the international community.

The United States, of course, has an enormous stake in the
outcome of Russia's continuing transformation.  A stable,
democratic Russia is vital to a secure Europe and a stable
world.  An unstable Russia that reverts to dictatorship or
slides into chaos would be an immediate threat to its
neighbors and once again a strategic threat to the United
States.

Like each of you, we have been deeply concerned about the
conflict in Chechnya -- about the tragic loss of life, the
excessive and indiscriminate use of force against civilians,
and the corrosive implications this episode can have for the
future of Russian democracy.  That is why we have emphasized
so strongly to the Russian government that the fighting must
end--a point that President Clinton reiterated strongly on
Monday in a telephone call to President Yeltsin.  I want to
reaffirm the importance of that today before this committee.
A process of reconciliation must begin that validates
Russia's commitment to democracy and takes into account the
views of the people of Chechnya.

The violence in Chechnya has not altered our fundamental
interest in helping Russian reformers build a nation that is
finally at peace with itself and its neighbors.  Our
assistance supports programs ranging from Russia's vitally
important and newly free press to jury trials, small
business development and free trade unions.  Most of the
assistance has gone to private organizations and to local
governments outside Moscow.  Those funds that do go to the
central government primarily support the institutional
reforms necessary for democracy and market reform, such as
election assistance, the drafting of commercial codes and
the setting up of privatization programs.

We are requesting a total of $788 million to support a wide
range of programs to advance democratic and economic reform
in the former Soviet Union, more than half of which will go
to states other than Russia.  Indeed, six of the 11 non-
Russian Newly Independent States will receive higher per
capita FREEDOM Support Act assistance than Russia.  Just as
the Nunn-Lugar program to secure dismantled Soviet warheads
is defense by other means, so too are the funds for the
FREEDOM Support Act an investment in a safer future.

Out of the total $788 million, we will devote $504 million
to projects that spur development of a viable private
sector.  Approximately $148 million will go to supporting
the development of political parties, civic organizations,
and independent labor unions.  And approximately $136
million will support activities designed to cushion the
shock of transition to a market economy.

It is precisely because the future of reform in Russia is
not assured that we have persevered in our support of the
people and institutions struggling on its behalf.  Cutting
assistance now would hurt the friends of democracy in Russia
-- the very forces that have been most critical of the
Chechnya operation.

Today, President Yeltsin gave an important speech to a joint
session of the Russian Parliament.  I have not yet had a
chance to review the speech in detail.  I do want to note,
though, that President Yeltsin reiterated his commitment to
proceeding with reform and to holding parliamentary
elections at the end of this year and presidential elections
next year.  It is very important that these commitments are
carried out.

There are also many vital security issues on which we are
working with Russia, such as Nunn-Lugar programs to secure
dismantled warheads, arms reductions agreements and
cooperation on regional conflict.  This aspect of our
relationship has paid off for every American -- from
reducing the nuclear threat to advancing peace in the Middle
East.

Chechnya has raised questions about Russia's commitment to
democratic processes, economic reform, and international
standards of conduct.  Our approach is designed to reinforce
democratic trends in Russia and to encourage the government
in Moscow to pursue policies consistent with these
principles.  We will assess Russia's actions in Chechnya,
its domestic programs and international initiatives in light
of this objective, and we will adjust our policy
accordingly.

The third principle guiding our overall strategy is that if
the historic movement toward open societies and open markets
is to endure, we must adapt and revitalize the institutions
of global and regional cooperation.  After World War II, the
generation of Truman, Marshall, Acheson, and Vandenberg
built the great institutions that gave structure and
strength to the common enterprise of western democracies:
promoting peace and economic growth.  Now, as President
Clinton said in his recent meeting with German Chancellor
Helmut Kohl, "We will consider how to move toward NATO's
expansion to Europe's new democracies and how to adapt the
international institutions to serve us for the next 50
years."

At the President's initiative, we and our G-7 partners will
chart a strategy in Halifax this June to adapt the post-war
economic institutions to the more integrated post- Cold War
world.  We will assess what changes need to be made, and
determine how to modernize these institutions for the
future.  We are also helping regional institutions and
structures like the Organization of American States, ASEAN,
and the Organization of African Unity to support peace and
democratic development.

The fourth principle is the fundamental role that democracy
and human rights have in this Administration's foreign
policy.  Our commitment is consistent with American ideals.
It also rests on a sober assessment of our long-term
interest in a world where stability is reinforced by
accountability and disputes are mediated by dialogue; a
world where information flows freely and the rule of law
protects not only political rights but the essential
elements of free market economies.

The State Department recently issued its 19th annual report
on human rights practices worldwide.  The first reports were
prepared under my direction in 1977 during my first year as
Deputy Secretary of State.  Those early reports were small
in scale and narrow in scope compared to today's effort.
The Country Reports help us to shape our diplomacy,
assistance and trade policy.  We use them as we work with
foreign governments, international organizations, and NGO's.
They are also important in their own right, because they
shine a bright light on human rights violations that might
otherwise be shielded by a veil of secrecy and indifference.

In FY 1996, we are requesting $480 million through the SEED
program to maintain our assistance for democratic and
economic reform in Central and Eastern Europe.  These funds
will support social sector reform in areas like health and
housing.  They will help build accountable, responsive
public administration at the central and local levels.  And
they will promote small business development to spur job
creation.

Our budget requests funds for Countries in Transition such
as Haiti, Cambodia, and Angola.  In Haiti, our continued
support will help consolidate democracy and promote the
economic development that will enable the majority of
Haitians to overcome poverty and raise their living
standards.  Cambodia has struggled, so far with encouraging
success, to overcome a tragic legacy of war, repression, and
genocide.  We have designated funds to support democratic
and market reform, including the implementation of
transparent legal and judicial reforms.  Angola is trying to
lift itself up from the morass of Africa's longest running
conflict.  Our request for that nation can make a difference
on behalf of democracy and stability.

Part of this request will go to other African countries in
transition to support credible elections, respect for the
rule of law, and good governance.  And additional funds will
support a wide variety of programs in Latin America and the
Caribbean to promote and strengthen democratic institutions,
local government, police training, the media, and grass-
roots non-governmental organization development.

Mr. Chairman, the Summit of the Americas demonstrated that
this hemisphere has committed itself to democratic
institutions, respect for human rights, and free markets.
Only one country out of 35 was not invited to the Summit,
the one country that rejects the shared goals of those who
came to Miami in December.  That country is Cuba.

The fundamental goal of our Cuba policy is a peaceful
transition to democracy, respect for the human rights of the
Cuban people, and an open economy with opportunity for all.
This Administration is committed to a vigorous pursuit of
that objective.  We believe the best means of achieving this
goal is the course outlined by the Cuban Democracy Act.  We
believe the enforcement of the embargo, and the pressures it
brings to bear on the regime in Havana, are hastening the
day when democracy will return to Cuba.

OPPORTUNITIES FOR 1995

In 1995, guided by these four basic principles, I intend to
focus on five key areas that offer particularly significant
opportunities:  advancing the most open global trading
system in history; developing a new European security order;
helping achieve a comprehensive peace in the Middle East;
combatting the spread of weapons of mass destruction; and
fighting international crime, narcotics, and terrorism.

Open Trade, Exports and Jobs

First, we must sustain the momentum we have generated toward
the increasingly open system that is vital to American
exports and American jobs.  A core premise of our domestic
and foreign policy is that our economic strength at home and
abroad are mutually reinforcing.  I believe that history
will judge this emphasis to be a distinctive imprint and a
lasting legacy of the Clinton Administration.

This year, we will take steps to implement the Uruguay Round
and ensure that the new World Trade Organization upholds
essential trade rules and disciplines.  We will work with
Japan and our other APEC partners to develop a blueprint for
achieving open trade and investment in the Asia-Pacific
region.  We will begin to implement the Summit of the
Americas Action Plan for open trade.  And last week,
Ambassador Kantor announced that we will also begin to
negotiate Chile's accession to NAFTA.

At the same time, American companies and workers must be in
a position to take advantage of the opportunities that these
negotiations are helping to create.  That is why this
Administration is sparing no effort to make sure that our
companies can compete on a level playing field.  That is why
I sit behind what I call the America Desk at the State
Department, and why I am determined to keep economic and
commercial diplomacy at the core of the Department's work.

This Administration has achieved an unprecedented degree of
focus and coordination in our export promotion efforts.
Over the past two years, our export promotion efforts have
created more than one million high-paying American jobs.
This budget will help sustain that performance.

In FY 1996, we are requesting approximately $750 million
from the Foreign Operations Subcommittee to promote trade
and investment opportunities for American businesses through
programs run by the Export-Import Bank (Ex-Im), the Overseas
Private Investment Corporation (OPIC), and the Trade and
Development Agency (TDA).

Of this amount, the Administration is requesting $823
million for the Ex-Im Bank loan subsidy program and $47
million for the bank's operations in FY 1996.  Direct loans,
loan guarantees, credit insurance, and capital guarantees
from the Bank help American exporters to meet government-
supported competition from other countries and to otherwise
finance sales.  Since opening its doors in 1934, Ex-Im has
helped finance almost $300 billion worth of U.S. exports.
We will request $95 million in budget authority and -$191
million in negative budget authority for OPIC.  And we are
requesting $67 million for the TDA, which will fund
feasibility studies critical to private sector involvement
in foreign markets.

Let me add a word about an issue that has occupied the
attention of the Administration and the Congress in recent
weeks: the Mexican financial crisis.  Two weeks ago, the
President decided that the situation had to be addressed
without further delay.  With the support of the
congressional leadership of both parties, he took decisive
action to safeguard the prosperity of our people, the
security of our borders, and the stability of our closest
Latin neighbor and of other emerging markets in which we
have a growing stake.

In the long run, of course, stability in Mexico will depend
on the Mexican government's ability to consolidate economic
and political reform.  As you know, President Zedillo last
week ordered the arrest of the leaders of the rebel movement
in Chiapas.  We recognize that the Mexican government,
indeed, all governments, have a responsibility to protect
their citizens against violence and lawlessness.  We are
pleased to note that President Zedillo also called for a
special session of the Mexican Congress to address the
underlying problems in the region.  Two days ago, President
Zedillo ordered Mexican forces to cease fire and not to
advance further into rebel-controlled territory.  He
reiterated his offer of amnesty to rebels who lay down their
arms.  The United States agrees with President Zedillo that,
in his words, "a solution to this conflict should come
through full respect for the law, through political channels
and through conciliation."

European Security Architecture

In our second area of opportunity, we are taking concrete
steps to build a new European security architecture.  Deep
political, economic, and cultural bonds continue to make
Europe's security and prosperity essential to ours.  Our
efforts will focus on maintaining strong relations with
Western Europe, consolidating democracy in Central Europe
and the former Soviet Union, and engaging Russia as a
responsible partner.

We are pursuing these goals through continued development of
NATO and its outreach to the east, strengthening the
Organization for Security and Cooperation in Europe,
building our relationship with the European Union, and
developing a cooperative NATO/Russia relationship in
promoting European security.

NATO remains the anchor of American engagement in Europe and
the linchpin of transatlantic security.  NATO has always
been more than a transitory response to a temporary threat.
It has been a guarantor of European democracy and a force
for European stability.  That is why its mission has
endured, and why its benefits are so attractive to Europe's
new democracies.

NATO has previously welcomed new members who shared its
purposes and who could add to its strength.  With American
leadership, NATO agreed last December to begin a steady,
deliberate process that will lead to further expansion.  We
have already begun to examine with our Allies the process
and objectives of expansion.  We intend to share our
conclusions with the members of the Partnership for Peace
this fall so that at the December Ministerial we can
evaluate the results of our consultations and be ready to
consider next steps.

Our strategy encourages new democracies to become
responsible partners in a new European security order.  The
Partnership for Peace is a critical tool for cooperation
between NATO and the 24 partner states.  It is also the best
path to membership for countries wishing to join the
Alliance.  The President's budget request meets the
commitment he made in Warsaw last July to help the states of
Central and Eastern Europe participate in the Partnership
for Peace, and to help potential members prepare for the
obligations they will assume if they join NATO.  Our budget
includes $85 million for that purpose.

Our step-by-step approach to NATO expansion is designed to
ensure that each potential member is judged fairly and
individually, by its capacity to contribute to NATO's goals
and the strength of its democratic institutions.  By
following this approach, we give every new democracy a
powerful incentive to consolidate reform.  We remain
convinced that arbitrarily locking in advantages for certain
countries, or setting specific timetables, could discourage
reformers in countries not named and foster complacency in
countries that are.

The tragic war in Bosnia underscores the importance of
building an effective new architecture for conflict
prevention and resolution in Europe.  Together with our
partners in the Contact Group, we are seeking a negotiated
solution.  The Contact Group plan with its 51/49 territorial
division must be the basis for a settlement, and Bosnia's
territorial integrity and independence must be respected.

As you know, a ceasefire and formal cessation of hostilities
have been achieved and are largely holding.  We are taking
advantage of this opportunity to intensify our diplomatic
efforts to bring an end to the war.  Last week in Munich,
Defense Secretary Perry and Assistant Secretary of State
Richard Holbrooke met with Bosnian Muslim and Croat leaders
to bolster support for their planned confederation.

 We believe the French proposal for a conference involving
the Bosnian, Croatian and Serbian Presidents -- if properly
structured--could advance our goals for the former
Yugoslavia, including political settlements in Bosnia and
Croatia.  We would want the conference to be held in the
context of Contact Group efforts.  And we would not favor
participation of the Bosnian Serbs until they have accepted
the Contact Group plan.

At a meeting in Paris on February 14, the Contact Group
decided on a bold initiative that would tie President
Milosevic's recognition of Bosnia and other former Yugoslav
republics, as well as even tougher sanctions enforcement
against the Bosnian Serbs, to sanctions relief for limited,
renewable periods.  We have consulted with Bosnian President
Izetbegovic and he fully supports this approach.  This
package would provide a firm foundation for Bosnian
sovereignty within the peace plan.  It would undercut Pale
Serb claims of legitimacy.  The proposal we will present to
Milosevic is fully consistent with the principles of the
Contact Group plan.  Our objective remains what it has
always been: Bosnian Serb acceptance of the Contact Group
plan and map.

I remain convinced that only a negotiated settlement has any
chance of lasting.  I am committed to pursuing that goal.
What we must not do is to worsen the situation by
unilaterally lifting the arms embargo.  We have always
believed the embargo is unfair and worked to end it
multilaterally.  But going it alone would lead to the
withdrawal of UNPROFOR and more violence.

Such a course would leave Sarajevo and the enclaves
extremely vulnerable to Serb offensives.  It would
effectively Americanize the conflict, and lead others to
abandon the sanctions on Serbia.  It would undermine the
authority of all UN Security Council Resolutions, including
resolutions that impose sanctions on Iraq and Libya.

Middle East Peace and Security

Our third area of opportunity is advancing peace in the
Middle East.  Our budget allocates $5.24 billion to sustain
our efforts at a decisive moment for the peace process.
This includes traditional amounts of economic and military
support for Israel and Egypt to enable them to meet their
legitimate security needs and promote broad-based economic
growth.  Our $75 million request for the West Bank and Gaza
is intended to promote Palestinian self-government through
economic development and institution building.  Our proposed
assistance program for Jordan is designed to address both
economic development and border security needs.  It includes
$30 million in military assistance and $7.2 million in
economic support.

Last Sunday, President Clinton convened an unprecedented
meeting at Blair House, attended by ministers from Israel,
Egypt, Jordan, and the Palestinian Authority.  I believe
this meeting helped to improve the atmosphere between the
parties and get negotiations back on track.  At the end of
the day, the parties produced two important documents.  The
first came out of my meeting with Israeli Foreign Minister
Peres and Nabil Sha'th of the Palestinian Authority.  In it,
Israel and the Palestinians vowed that there could be no
turning back in the peace process.  And the Palestinian
Authority underscored its commitment to preempt terror,
punish those responsible and deny safehavens to those who
plan and carry out terror.

The second document was the Blair House Communique,
reflecting the discussions of the full ministerial.  The
ministers identified a series of cooperative goals that must
be met in four key, related dimensions:  the peace process,
security, economics, and people-to-people.  The ministers
directed their experts to work urgently on implementing
their recommendations.

For our part, President Clinton on Sunday proposed that the
United States extend duty free treatment to products from
future industrial zones on the West Bank and Gaza and free
trade zones in Taba, Eilat, and Aqaba.  This proposal can
probably do more over time to help the region's struggling
economies than any aid program.  We look forward to further
consultations with the Congress on this important matter.

The momentum for a comprehensive peace must be maintained.
Israel's negotiations with Syria are entering a crucial
phase.  We have made progress in narrowing the gaps between
the parties.  But if a breakthrough is to be achieved in the
next few months, critical decisions must be made and the
process must be accelerated.  President Clinton and I will
do everything we can to help the parties reach such a
breakthrough.

Non-Proliferation

Our fourth area of emphasis is to intensify our efforts to
stop the spread of weapons of mass destruction and their
means of delivery.  We face a year of decision for global
nonproliferation.  Indeed, our global and regional
strategies for 1995 comprise the most ambitious
nonproliferation effort in history.  We will carry out that
effort in close consultation with the Congress.

The centerpiece of our strategy is to obtain the indefinite
and unconditional extension of the Non-Proliferation Treaty,
which is up for renewal this year--and which I think history
will record as one of the most important treaties of all
time.  Achieving this objective is a key priority of our
diplomacy around the world.

With the agreements President Clinton signed last December
in Budapest, we can also begin to implement the START I
nuclear reduction treaty.  Prompt ratification of START II
will in turn enable us to complete the work we began with
START I.  Its elimination of missiles with multiple
independently targeted re-entry vehicles will further
enhance stability and lower the chances of a massive nuclear
conflict.  At the same time, it will enable us to retain a
strong and capable deterrent.

Mr. Chairman, North Korea is also central to our non-
proliferation objectives.  We have stressed to the North
Koreans the need to accept South Korean light water reactors
and to resume North-South dialogue.  Both conditions are
essential to full implementation of the Framework Accord.
We are holding talks with North Korea to ensure
implementation of the Framework.

We will also continue close consultations with our allies.
I met last week with the new Foreign Minister of South
Korea.  He reaffirmed South Korea's determination to move
forward with the accord.  We agree that we must remain
vigilant.  But careful implementation of the Agreed
Framework is far preferable to the alternatives we were
facing:  a North Korea going forward with its nuclear
program, a return to the Security Council for sanctions, and
a costly military build-up.

Our FY 1996 International Affairs budget dedicates $166
million to meet the threat posed by proliferation.  Of that
amount, $90 million is within this committee's jurisdiction.
We are requesting $25 million from this committee to
replenish the Non-Proliferation Fund we use to implement
specific non-proliferation projects.  These include a
program to eliminate stocks of highly enriched uranium of a
former Soviet state, a project intended to terminate the
space launch capability of a newly democratic country in
Central Europe, and destruction of certain weapons
stockpiles in the Middle East.  We are requesting $43
million for a voluntary contribution to the International
Atomic Energy Agency.  And we are asking for $22 million for
our participation in KEDO, the Korean Peninsula Energy
Development Organization that will coordinate implementation
of our Agreed Framework with North Korea.

Crime, Terrorism, and Drugs

Our fifth area of opportunity for 1995 is combatting
international terrorists, criminals, and drug traffickers.
This Administration is aggressively fighting these threats
at home.  But we recognize their global dimensions, and we
are actively mobilizing other nations to help us defeat
them.

Altogether, our budget requests $240 million for these
efforts.  It more than doubles our funding to fight
international crime.  And it will support a comprehensive
global strategy that we are developing with our colleagues
at Justice, Treasury, and other law enforcement agencies.

This strategy will include intensive diplomacy to ensure
that other nations fulfill their international obligations;
broader international cooperation in asset forfeiture and
money laundering; and consideration of tougher requirements
for obtaining U.S. visas.  And, as the President announced
last week, the Administration will be proposing legislation
to combat alien smuggling and illegal immigration.  We will
be consulting closely with Congress as we put the final
elements of this strategy together.

The budget also supports our battle against international
terrorism, in which we have made substantial progress in
just the past few weeks.  The President's Executive Order
freezing the assets of certain terrorist groups and
individuals sent a message that we intend to cut off the
financial pipeline that supports their activity.  The
spectacular arrest of Ramzi Yousef, the alleged mastermind
of the World Trade Center bombing, in Pakistan and his
transfer to the United States reminds those who target
Americans and America that they cannot escape forever the
long arm of American law enforcement.  Also last week, the
President transmitted to the Congress our proposed Omnibus
Counterterrorism Act of 1995, which, if enacted, will give
the Executive Branch new tools to improve prevention,
investigation, and prosecution of terrorism.

                            * * *

Beyond these five key areas of opportunity for 1995, I want
to stress that we will continue to address many other issues
important to our nation's interests and to this Congress,
such as promoting stability and democracy in Asia, Africa,
and Latin America.  American engagement in the world is also
reflected in our willingness to take on global challenges
that call for international partnership, but require the
leadership that only the United States can provide.

We can no longer escape the consequences of environmental
degradation, unsustainable population growth, and
destabilizing poverty beyond our borders.  Increasingly,
they threaten not just our continued prosperity but our
security.  Countries with persistent poverty, worsening
environmental conditions, and feeble social infrastructure
are not just poor markets for our products.  They are
seedbeds of conflicts and crises that can only be resolved
by costly American intervention.

That is why the Clinton Administration is dedicated to
restoring America's leadership role on sustainable
development -- an approach that recognizes the links between
economic, social and environmental progress.  We are putting
this global challenge back where it belongs: in the
mainstream of American foreign policy and diplomacy.  The
President's FY' 1996 request includes $5.2 billion for
Promoting Sustainable Development.  I believe strongly that
these funds will yield lasting dividends for the American
people.

The programs they fund reinforce our other foreign policy
goals.  They strengthen free markets and modernize vital
sectors in developing economies.  They lift living standards
and multiply future demand for American goods.  And they
contribute to stability in new democracies struggling to
overcome legacies of repression and conflict.

Of this amount, we are requesting $2.37 billion for U.S.
contributions for the multilateral development banks, the
International Monetary Fund (IMF), and for debt reduction.
This sum represents an investment in the fastest growing
markets for American goods.  It also enables us to leverage
our assistance dollars in meeting our objectives.  The
multilateral development banks and the IMF made about $55
billion in loans in 1994--roughly the same amount by which
our exports to developing countries increased between 1990
and 1993.  Indeed, these exports are growing ten times as
quickly as those to our traditional markets in Europe and
Japan.  I note, also, that American companies win more
multilateral development bank contracts than do firms from
any other country.

Over the years, these multilateral development banks have
contributed significantly to global development.  Since
1970, life expectancy in those countries supported by the
World Bank's International Development Association (IDA),
for example, has increased on average from 52 to 62 years;
infant mortality has decreased from 109 per 1,000 live
births to 64 per 1,000 live births.  Put simply, the funding
we provide to the IDA and other multilateral development
banks saves lives.

The multilateral banks have also been important catalysts
for market-oriented reforms with direct benefits for the
United States.  With support from the IMF and the World
Bank, for example, India since 1991 has launched tariff
reductions that have helped spur a $1 billion increase in
U.S. exports to that country from 1991 to 1993.

This portion of the budget also includes $110 million for
the Global Environment Facility, the multilateral
institution established to finance investments to protect
the ozone layer, guard against global warming, protect
aquatic resources and preserve biodiversity.  Every dollar
we contribute leverages almost three dollars from other
nations.  This kind of cooperation is essential if we are to
meet global challenges like protecting the environment with
global solutions that engage all donor nations.

The $5.2 billion in sustainable development funds that we
ere requesting also includes $1.35 billion for USAID
programs and voluntary contributions to international
organizations promoting economic growth.  Of that amount,
$1.12 billion will go toward USAID-supported programs on
economic reform, microenterprise generation, child survival,
prevention of AIDS and other sexually transmitted diseases,
and education.  We are requesting that the remaining $231
million out of $1.35 billion be used to fund contributions
for economic growth-related multilateral programs including
the UN Development Program, UNICEF, and the World Food
Program.

Our FY 1996 request for stabilizing world population growth
is designed to complement our efforts to promote economic
development.  Unsustainable population growth affects all
aspects of economic development.  That is why population
growth stabilization has commanded bipartisan support since
President Nixon first established American leadership in
this area.  The Clinton Administration is determined that we
have the resources to maintain that important commitment.
To do so, we are requesting $635 million for USAID and
multilateral population programs in FY 1996.

We must sustain the momentum that we did so much to achieve
at last September's Cairo Conference on Population and
Development.  There, an overwhelming majority of nations
agreed to stabilize global population by providing family
planning for those who want it, educating children,
promoting their health through programs such as
immunization, and strengthening families.  Our funding
request supports those goals, including through $580 million
to finance USAID programs such as those funded by the
Development Fund for Africa.

The combination of too many people in too little space
competing for too few resources can have clear, tragic and
costly consequences for our environment.  As Secretary of
State, I see environmental degradation damaging the fragile
economies of the new democratic states of the former Soviet
Union.  I see it complicating already complex conflicts over
water supplies in the Middle East.  I see it depressing
exports to our most rapidly growing markets in the
developing world.  In short, I see its impact on our
national interests.

This Administration is requesting $378 million for FY 1996
for USAID and multilateral programs to protect the
environment.  We are extending aid and expertise overseas
through USAID and international organizations.  With
partners such as Japan, we are funding environmental efforts
in third countries and devising new environmental
technologies.  We are helping Poland to clean up the air in
Krakow, Pacific Island nations to preserve coral reefs,
Colombia to take lead from gasoline, and nations from
Bolivia to Madagascar to save endangered species.

This section of the budget also funds the Peace Corps, a
program that furthers sustainable development, projects
American idealism and expertise, and generates immeasurable
goodwill.  Peace Corps members help community development in
Niger, small farm business management in Latvia, child
health education in Guatemala, reforestation in Costa Rica,
and small business training in Russia.  We are requesting
$283 million to fund their activities, as well as those of
two other small agencies that work at the grass-roots level:
the Inter-American Foundation, and the African Development
Foundation.

The FY 1996 budget request also harnesses the will and
capacity of our nation to respond to famine, natural
disasters, and the displacement of peoples.  We are
requesting $721 million for Refugee Assistance and $200
million for International Disaster Assistance.  This funding
is integral to our overall development strategy because it
not only provides relief, but helps victims of violence and
disaster return to the path of recovery and sustainable
development.

                            * * *

Mr. Chairman, at the outset of my testimony I noted some of
the remarkable opportunities we face in the post-Cold War
world.  It is important to remember that most of these
opportunities are themselves the product of many years of
enlightened American leadership.

Most of our closest allies and friends are nations that we
helped rebuild after the Second World War.  The structures
and institutions through which we advance our interests,
including NATO, the GATT, the UN, and the Bretton Woods
institutions, were created largely by American leadership.

As we consider our most promising export markets, it is
useful to remember our role in creating those markets.
There is South Korea -- once a recipient of massive U.S.
assistance, now an aid donor in its own right.  There is the
Philippines, long a treaty ally and another recipient of
American assistance, now entering the dynamic mainstream of
southeast Asian economies.  In Poland and South Africa, our
support for human rights helped to end dictatorship and our
support for democracy is encouraging remarkable reforms.  In
such countries as Mexico and Brazil, our support for open
trade has been an incentive and a catalyst for market
opening and economic growth.

In short Mr. Chairman, the United States is one of the few
countries on earth with the power to create its own
opportunities.  With your support, we will continue to use
that power to build a world in which America's interests and
values
will flourish -- a world of open societies and open markets.
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