[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]



 
        UNITED STATES-SOUTH AFRICA RELATIONS: PRESENT AND FUTURE

=======================================================================

                                HEARING

                               BEFORE THE

                         SUBCOMMITTEE ON AFRICA

                                 OF THE

                              COMMITTEE ON
                        INTERNATIONAL RELATIONS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             FIRST SESSION

                               __________

                       Thursday, October 14, 1999

                               __________

                           Serial No. 106-101

                               __________

    Printed for the use of the Committee on International Relations






                    U.S. GOVERNMENT PRINTING OFFICE
64-474 CC                   WASHINGTON : 2000





                  COMMITTEE ON INTERNATIONAL RELATIONS

                 BENJAMIN A. GILMAN, New York, Chairman
WILLIAM F. GOODLING, Pennsylvania    SAM GEJDENSON, Connecticut
JAMES A. LEACH, Iowa                 TOM LANTOS, California
HENRY J. HYDE, Illinois              HOWARD L. BERMAN, California
DOUG BEREUTER, Nebraska              GARY L. ACKERMAN, New York
CHRISTOPHER H. SMITH, New Jersey     ENI F.H. FALEOMAVAEGA, American 
DAN BURTON, Indiana                      Samoa
ELTON GALLEGLY, California           MATTHEW G. MARTINEZ, California
ILEANA ROS-LEHTINEN, Florida         DONALD M. PAYNE, New Jersey
CASS BALLENGER, North Carolina       ROBERT E. ANDREWS, New Jersey
DANA ROHRABACHER, California         ROBERT MENENDEZ, New Jersey
DONALD A. MANZULLO, Illinois         SHERROD BROWN, Ohio
EDWARD R. ROYCE, California          CYNTHIA A. McKINNEY, Georgia
PETER T. KING, New York              ALCEE L. HASTINGS, Florida
STEVE CHABOT, Ohio                   PAT DANNER, Missouri
MARSHALL ``MARK'' SANFORD, South     EARL F. HILLIARD, Alabama
    Carolina                         BRAD SHERMAN, California
MATT SALMON, Arizona                 ROBERT WEXLER, Florida
TOM CAMPBELL, California             STEVEN R. ROTHMAN, New Jersey
JOHN M. McHUGH, New York             JIM DAVIS, Florida
BILL LUTHER, Minnesota               EARL POMEROY, North Dakota
LINDSEY GRAHAM, South Carolina       WILLIAM D. DELAHUNT, Massachusetts
ROY BLUNT, Missouri                  GREGORY W. MEEKS, New York
KEVIN BRADY, Texas                   BARBARA LEE, California
RICHARD BURR, North Carolina         JOSEPH CROWLEY, New York
PAUL E. GILLMOR, Ohio                JOSEPH M. HOEFFEL, Pennsylvania
GEORGE P. RADANOVICH, California
JOHN COOKSEY, Louisiana
THOMAS G. TANCREDO, Colorado
                    Richard J. Garon, Chief of Staff
          Kathleen Bertelsen Moazed, Democratic Chief of Staff
                                 ------                                

                         Subcommittee on Africa

                 EDWARD R. ROYCE, California, Chairman
AMO HOUGHTON, New York               DONALD M. PAYNE, New Jersey
STEVE CHABOT, Ohio                   ALCEE L. HASTINGS, Florida
TOM CAMPBELL, California             GREGORY W. MEEKS, New York
GEORGE RADANOVICH, California        BARBARA LEE, California
THOMAS G. TANCREDO, Colorado
                Tom Sheehy, Subcommittee Staff Director
               Malik M. Chaka, Professional Staff Member
        Charisse Glassman, Democratic Professional Staff Member
                 Charmaine V. Houseman, Staff Associate



                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

Susan E. Rice, Assistant Secretary, Bureau of African Affairs, 
  U.S. Department of State.......................................     8
J. Daniel O'Flaherty, Executive Director, U.S.-South Africa 
  Business Council...............................................    20
Judson Ray, Special Agent, Unit Chief, International Training and 
  Assistance, Federal Bureau of Investigation....................    22

                                APPENDIX

Prepared statements:

Chairman Edward Royce............................................    32
Chairman Benjamin A. Gilman......................................    33
Representative Donald Payne......................................    35
Asst. Secretary Rice.............................................    36
Mr. Judson Ray...................................................    43
Mr. J. Daniel O'Flaherty.........................................    51

Submissions:

International Republican Institute fact sheet on South Africa....    57
National Democratic Institute fact sheet on South Africa.........    58




        UNITED STATES-SOUTH AFRICA RELATIONS: PRESENT AND FUTURE

                              ----------                              


                       Thursday, October 14, 1999

                  House of Representatives,
                            Subcommittee on Africa,
                      Committee on International Relations,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to notice, at 2 p.m., in 
room 2200, Rayburn House Office Building, Hon. Edward R. Royce 
(Chairman of the Subcommittee) presiding.
    Present: Representatives Royce, Campbell, Payne, Hastings, 
Meeks, and Lee.
    Also present: Representative Gilman.
    Mr. Royce. Today's hearing of the Subcommittee on Africa 
will now come to order.
    Today the Subcommittee will look at the bilateral 
relationship between the United States and South Africa, one of 
the most important relationships our country has in Africa.
    Since it made its exceptional transition to a nonracial 
democracy, U.S. relations with South Africa have considerably 
broadened. No longer dominated by apartheid, the U.S.-South 
Africa agenda now tackles issues of security, health, and the 
environment. With the U.S. being South Africa's largest trading 
partner and South Africa being the dominant buyer of America's 
exports to Africa, economic issues have a heightened 
prominence. Needless to say, the new agenda, while challenging, 
is most welcome.
    The U.S.-South Africa Binational Commission, up and running 
for 4 years now, indicates the importance of South Africa to 
the United States. South Africa faces many challenges. Its 
economy is struggling. It faces a serious crime problem, which 
we will hear about. In these areas, it is in the U.S. interest 
to work with the new government of Thabo Mbeki through the 
Binational Commission for a better future in South Africa.
    Within Africa, the U.S. has given South Africa exceptional 
attention. While it is important that this not come at the 
expense of other African countries, South Africa's potential 
and importance warrants this attention. Today the Subcommittee 
will have a chance to better appreciate the challenges and 
opportunities of our important relationship with South Africa.
    Before proceeding, I would like to acknowledge the death of 
Julius Nyerere, the former president of Tanzania. He died last 
night in a London hospital. Nyerere is a man who defined his 
age, who will be remembered for his opposition to colonialism, 
and his opposition to apartheid, as well as his modest 
lifestyle.
    Mwalimu, Swahili for teacher, which he was commonly called, 
remained active in public life after leaving office in 1985. At 
the time of his death, he was working to resolve the conflict 
in Burundi. Our condolences go to the Nyerere family and to the 
Tanzanian people.
    I will now recognize the ranking member of the Subcommittee 
for an opening statement.
    Mr. Payne?
    [The prepared statement of Mr. Royce appears in the 
appendix.]
    Mr. Payne. Thank you very much, Mr. Chairman, for calling 
this very important hearing on South Africa. I, too, would like 
to mention former president of Tanzania, Julius Nyerere, the 
father of the independence movement. Today Africa has lost a 
great man. Commonly referred to as ``The Conscience and Teacher 
of Africa,'' President Nyerere was one of the leaders who led 
the drive to end the white minority rule in South Africa and 
Rhodesia and to stop apartheid.
    In 1979, he defied the OAU and sent troops to Uganda in 
outrage of Idi Amin's policies in Uganda. He has been at the 
forefront of helping countries in this region and has used 
diplomatic skills to end the war in Burundi and in the Congo. 
President Nyerere was among only a handful of African 
presidents to voluntarily leave office. I had the privilege of 
meeting President Nyerere for the first time in 1972 and have 
been a long admirer of his ever since.
    Like former president Nyerere, President Nelson Mandela is 
also universally regarded not as a hero but almost a saint. His 
refusal to enact vengeance on those who mistreated him goes 
beyond the tight-lipped resentment of a statesman. He, as you 
know, invited his jailor to his inauguration.
    Black South Africans had no democratic rights, no 
possibility of bringing about any peaceful change. They didn't 
even have basic human rights, as was made very obvious by the 
appalling massacre at Sharpeville in March 1960. The police 
fired indiscriminantly into an African crowd, killing 67 and 
wounding another 186, most of them shot in the back.
    Far from being repentant about this atrocity, the South 
African government became more repressive and declared the ANC 
to be illegal. After 5 years that culminated with the 1994 
elections, the ANC, under the leadership of President Nelson 
Mandela, and now under the presidency of Mr. Mbeki, is moving 
South Africa from an oppressive apartheid regime to give birth 
to a new democratic movement.
    South Africa has a diversified and productive economy and 
functioning democracy. Nevertheless, the legacy of racial 
inequality is still a problem. Let me share with you for a 
moment this report by the South African government.
    Since 1994, more than 22,700 former liberation fighters and 
black homeland soldiers have been integrated into the South 
African national defense force. Pockets of tension and 
resentment clearly remains. In a confidential report that 
became public last year, military officials documented 
troubling disparities in the disciplining of black and white 
soldiers and the pay of men of the same rank, which is still 
unequal.
    Moreover, unemployment is between 40 and 68 percent, with 
most black South Africans below the poverty line.
    In conclusion, let me say that I am glad to see that 
several central banks have backed away from the plan to sell 
gold. When Congressman Campbell and I traveled to Zimbabwe for 
the funeral of vice president Joshua Nkomo, and to South 
Africa, they reiterated the problem with the gold sales and the 
IMF.
    It has been reported that as many as 15 people are 
dependent on one South African gold miner. A possible layoff of 
20- to 25,000 miners, would impact hundreds of thousands of 
people.
    So, Mr. Chairman, once again, let me thank you for calling 
this very important hearing.
    Mr. Royce. Thank you. I thank you, Mr. Payne.
    Any other members wish to make an opening statement?
    Mr. Campbell. I do.
    Mr. Royce. Mr. Campbell?
    Mr. Campbell. We are joined by the Chairman of the Full 
Committee. I will certainly yield if he has to speak first, but 
don't forget me.
    Mr. Gilman. I do have an opening statement, Mr. Chairman.
    Mr. Royce. Mr. Chairman, if you would like to make a 
statement at this time. We will hear from Mr. Gilman of New 
York, Chairman of the full International Relations Committee.
    Mr. Gilman. Thank you, Chairman Royce, and I appreciate 
your Subcommittee's ongoing diligence and the wisdom of holding 
this hearing. There is a natural tendency for us to focus on 
the crisis of the day, and, regrettably, Africa seems to host a 
number of crises daily. This Subcommittee has not shied away 
from addressing the complex emergency situations in Congo, in 
Sudan, in Sierra Leone, Ethiopia, and Eritrea, among others.
    But it would be a mistake to neglect crucial countries like 
South Africa simply because chaos does not currently reign 
there. It was not very long ago when South Africa was itself in 
political crisis. Hearing after hearing was held on the South 
African regime, and most analysts predicted that the end of 
apartheid would come only through bloodshed.
    I remember when it became apparent that South Africa had 
developed nuclear weapons, and I shudder to consider what might 
have been. However, our relief at the positive developments in 
South Africa should not blind us to the serious challenges 
facing that nation and this region.
    Unemployment continues to be a major problem there. Nearly 
everyone in South Africa works, but only half the working 
population has a regular job. The rest eke out a marginal 
living from 1 day to the next. The infection rate of HIV/AIDS 
is shocking, and it appears to be growing. The murder rate in 
South Africa remains 10 times as high as our own unacceptably 
high rate.
    As if all of these challenges were not enough, it is now 
obvious that a rainbow coalition of transnational criminal 
organizations has set up shop in South Africa, threatening the 
very institutions of its hard-won democracy. I would like to 
focus for a moment on that topic.
    I am very grateful to the Subcommittee for inviting Special 
Agent Jud Ray of the FBI's International Training and 
Assistance Unit to testify today. Agent Ray provided me with an 
excellent briefing on the transnational crime situation in 
South Africa 2 years ago.
    At that time, we discussed the value of establishing in 
Africa an international law enforcement academy, ILEA, modeled 
after the highly successful program in Budapest, Hungary. 
Sophisticated international criminal organizations cannot be 
fought without cooperation among national law enforcement 
agencies. But as with NATO armies, those crime fighting 
agencies must share a common understanding and approaches in 
order to cooperate effectively. That cannot happen overnight, 
and it cannot happen without some capacity building.
    This Committee has urged the Department of State on 
numerous occasions to move forward with an ILEA Program before 
the Russian, Nigerian, Columbian, Italian, and Chinese mafias, 
all of whom are present in South Africa at this moment, become 
deeply entrenched.
    I know that Assistant Secretary Rice recognizes the value 
of that program. We thank her for being here today. I know that 
she and the African Affairs Bureau at the State Department have 
been calling for this program, and I am now hopeful that it 
will soon become a reality. But why it has taken so long I, 
frankly, cannot understand. I hope that Secretary Rice and 
Agent Ray may be able to shed some light on this matter and be 
able to help us move along this project.
    As one additional indication of the congressional support 
for this endeavor, I have offered language in a State 
Department reauthorization bill that directs the Secretary of 
State, in consultation with our Attorney General and our 
Treasury Department, to provide our Committee with a detailed 
operational plan for an African ILEA within 6 months.
    Mr. Royce, Chairman Royce, members of the Subcommittee, 
distinguished witnesses, I thank you for your efforts here 
today. If I must depart before the completion of the hearing--I 
do have another hearing--I would ask that you allow me to 
submit additional questions for the record.
    Thank you, Mr. Chairman.
    Mr. Royce. Thank you, Chairman Gilman.
    We will now go to Mr. Hastings of Florida for a brief 
opening statement.
    Mr. Hastings. Mr. Chairman, thank you very much for holding 
this hearing. I would like to thank the witnesses who are 
appearing before us and with particular emphasis on Assistant 
Secretary for the Bureau of African Affairs, Secretary Rice, 
our good friend, who has done an extraordinary amount of work.
    Sometimes hearings of this nature don't permit us to gain 
insight to the extraordinary information that she and the staff 
and others that work with her have gathered. Hopefully members 
will take advantage of opportunities to speak with Secretary 
Rice personally, who is an extremely accessible person, 
regarding matters ongoing.
    Mr. Chairman, I have a specific interest today, and the 
Chairman of the Full Committee has alluded to it, as has my 
colleague, the ranking member of this Subcommittee, and that is 
the major problem of HIV/AIDS. I know that there are numerous 
issues of necessity we must address our concerns for.
    I can't imagine any issue in South Africa, the whole 
continent of Africa, indeed, in the world, as pertinent as the 
issue of HIV/AIDS. I will be particularly interested in 
Secretary Rice's views in that regard once the questioning 
period begins.
    I feel, Mr. Chairman, as true leaders of democracy, the 
United States must continue to encourage the new South Africa 
to remain committed to its current direction and continue in 
the areas of economic liberalization. We must continue to work 
with South Africa and build a nation which truly belongs to 
all.
    I do urge that we be mindful, that in the period of time 
that I have been here we have continuously hammered the budget 
as it pertains to the continent of Africa. The DFA has usually 
$700 million--$513 million this year--but that doesn't include 
all of the moneys. But if we keep cutting, we are not going to 
look very good in the eyes of those who have the greatest need.
    Thank you, Mr. Chairman.
    Mr. Royce. Thank you, Mr. Hastings.
    Mr. Campbell of California.
    Mr. Campbell. Mr. Chairman, I thank you for holding this 
meeting. I thank you for authorizing the travel that has 
allowed me and Congressman Payne in particular to visit Julius 
Nyerere, and I just wanted to have a few comments about him to 
start.
    My thanks also go to the Chairman of the Full Committee, 
Mr. Gilman, who has authorized such travel and who has shown 
such a great interest in Africa, for which I am personally 
grateful.
    Mr. Payne was unavoidably detained, and I do want to just 
put into the record that I did sing his praises at the earlier 
part of our hearing today in the markup. He is the original co-
sponsor of both resolutions that passed, one dealing with 
Eritrea and Ethiopia, the other dealing with Somaliland, or the 
area of Somalia north, which formerly was called Somaliland. I 
give him tremendous credit for helping in that--in those two 
resolutions and teaching me so much about Africa.
    My thoughts about Julius Nyerere are very short but from my 
heart. He welcomed us to our home. He had one title and that 
was ``Mwalimu''--teacher. That was the title that mattered most 
to him, not president, not maximum leader, or any other 
military title. It was ``Mwalimu,'' teacher.
    He taught us--I think he taught Africa--commitment to human 
rights and a commitment to panafricanism, not that I or any of 
us agree with every aspect of his policy. The point is he cared 
to teach; he did not care to hold on to power. He succeeded in 
what he set out to do. So God rest his soul, and I yield back.
    Mr. Royce. Thank you.
    Mr. Meeks of New York.
    Mr. Meeks. Thank you, Mr. Chairman. Let me thank you for 
holding this hearing, and I want to join my colleague and 
friend, Mr. Hastings, in thanking the witnesses that are here 
to testify today, but, in particular, Secretary Rice, because I 
have found that she has always brought forth some very 
pertinent and formative information each time that we conduct 
these hearings. I want to say thank you to her.
    Since the election of Nelson Mandela in 1994, we have seen 
South Africa blossom into an economic and political force. Yet, 
as is the case with every new and emerging country, there comes 
growing pains, and South Africa proves to be no different under 
the new democratic republican regime that is now there in South 
Africa.
    While she benefits from a billion dollar economy, yet she 
struggles with high unemployment and an unskilled labor force. 
After prevailing over apartheid for 40 years, South Africa is 
succumbing to one of the fastest-growing number of AIDS cases 
in the world, which threatens to wipe out some six million 
people over the next 10 years.
    South Africa serves as a mediator across the continent of 
Africa. She is combatting a surge of high crime and corruption 
in her own backyard, and some of those similarities at times I 
draw to our own country.
    Mr. Chairman, although we say that that looks grim, with 
the reference to the high crime and the unskilled labor force 
and unemployment, I believe that South Africa has a bright, 
bright future. Under the leadership and direction of President 
Mbeki, South Africa will and has taken giant steps in securing 
her economic future by signing a trade development and 
cooperation accord with the European Union.
    I feel that the bill that we recently passed here in 
Washington with the African Growth in Opportunity Acts will 
also provide some additional strength for South Africa.
    Second, additionally, South Africa has taken the aggressive 
and often controversial position of dealing with pharmaceutical 
companies in obtaining inexpensive, preventive drug treatment 
and medicines to combat the spread of AIDS. I think that we 
have an obligation to help them in that mission, so that they 
can get the kind of drugs that are necessary to prevent the 
spread of AIDS.
    Not only does South Africa serve as a role model for other 
African nations, she continues to lead the Southern African 
Development Community (SADC) toward economic prosperity. We 
have an opportunity here in America to do the right thing 
toward South Africa. South Africa serves as a beacon of hope, a 
stabilizing force, to a war-torn and conflict-ridden continent.
    As we enter the 21st century, the U.S. policy needs to 
reflect a more progressive and proactive role in strengthening 
and fostering economic opportunities and political partnerships 
so that South Africa continues on course toward global 
prosperity.
    Again, Mr. Chairman, I thank you for conducting this 
hearing. I think that we will be able to go a long way.
    Mr. Royce. Thank you, Mr. Meeks.
    Ms. Lee of California?
    Ms. Lee. Thank you, Mr. Chairman, and I would like to also 
thank you and our ranking member for calling this hearing.
    I, too, am saddened today by the death of Julius Nyerere. 
As a very young student, I was deeply influenced by his 
leadership and his intellect, and I hope that all of us will 
remember him as we move forward in our overall development of 
our U.S. policy toward Africa, which I think is moving along in 
a very productive and positive fashion, thanks to Honorable 
Susan Rice and all of those who are helping us do this.
    Like so many in this country, I have a long history of 
involvement with South Africa, primarily as an anti-apartheid 
activist during the height of the anti-apartheid movement. I 
was actually working for Congressman Ron Dellums, and, as we 
know, Ron played a pivotal role in bringing sanctions against 
the apartheid regime of South Africa, putting the United 
States, I would say, on the right side of history.
    In 1994, as an international poll observer in South Africa, 
I had the humbling and incredible experience to witness the 
first free, peaceful, democratic elections in the country. It 
was really an opportunity for which I will always be grateful.
    Now, of course, in the 106th Congress, we have all been 
engaged in debate on creating a comprehensive national trade 
policy with Africa. I believe that that time is long overdue, 
and I am pleased that as a part of our hearing today we will 
address U.S.-South Africa economic partnerships.
    I also want to mention--and I mention this with pride--when 
I was in the California legislature, after many years of hard 
work and long hours, my home state of California opened the 
California Trade and Investment Office in South Africa, which 
is really the first state to do so subsequent to the end of 
apartheid.
    The investment of California businesses in South Africa 
continues to expand. We continue to take trade delegations, 
friendship delegations, to South Africa, which are incredible 
successes.
    Finally, let me just say in terms of our priorities, and in 
terms of economic partnerships, we must address, as my 
colleagues have said, in a substantial and comprehensive manner 
the pandemic of HIV and AIDS. We know that in South Africa 
there are 1,500 new recorded cases of HIV and AIDS each and 
every day. I had the privilege to travel to South Africa with 
the White House this year to look at the impact of HIV and AIDS 
on orphans. It is staggering what we found out.
    So we have been working very closely with the Embassy of 
South Africa to understand the scope of this crisis in South 
Africa and to support creative courses of action to really help 
combat this disease.
    I want to thank the Embassy of South Africa for supporting 
legislation, which is really the first country to support 
legislation that I have introduced, H.R. 2765, the Aids 
Marshall Plan for Africa. For this, again, I am thankful and 
grateful, and I think all of us here remain committed to fight 
the HIV and AIDS epidemic in South Africa.
    Thank you, Mr. Chairman. Thank you, Mr. Payne, for this 
hearing. I think the future success of South Africa depends on 
so many interconnected factors, among them the health and 
security of the people of South Africa.
    Thank you.
    Mr. Royce. Thank you, Congresswoman Lee.
    We will go to our first panel. We have Assistant Secretary 
of State for African Affairs, Susan Rice, who previously served 
at the White House as Special Assistant to the President and 
Senior Director for African Affairs.
    Dr. Rice earned a master's and a Ph.D. in international 
affairs from Oxford University. She recently was invited to 
return to deliver the 1999 Braham Fisher Memorial lecture on 
America's Africa policy there.
     Welcome, Dr. Rice. If you would keep your remarks to five 
to 10 minutes, we will put the full remarks in the record, but 
that way we will have more time for questions. Dr. Rice, thank 
you so much for joining us today.

  STATEMENT OF HONORABLE SUSAN E. RICE, ASSISTANT SECRETARY, 
      BUREAU OF AFRICAN AFFAIRS, U.S. DEPARTMENT OF STATE

    Ms. Rice. Thank you very much, Mr. Chairman, members of the 
Committee. It is always a privilege and an honor to appear 
before this Subcommittee.
    I would like to begin, if I might, by joining you in 
expressing our deep condolences and sadness at the loss of a 
tremendous international statesman today, former president 
Julius Nyerere. We will all miss his leadership tremendously. 
It was leadership that he never tired of giving to the 
international community up until his very last months. I want 
to pay particular tribute to his most recent contribution to 
regional peace and security, his efforts to bring about a 
lasting peace in Burundi.
    The White House will be sending a high-level Presidential 
delegation to his funeral, the composition of which is still to 
be determined, but we intend to be well-represented on behalf 
of the United States, to share their sorrow.
    I will try to keep my remarks as brief as I can. If I might 
just thank you for the opportunity to testify on South Africa. 
It is a nation whose remarkable transformation continues to 
command the world's attention and admiration. Five years ago, 
South Africa stood at the threshold of a new era when its 
people went to the polls to elect their first democratic 
parliament. It in turn, of course, chose Nelson Mandela to lead 
a government of national unity.
    Now South Africa has entered a new and equally critical 
phase, and its resilient people again have put their best foot 
forward. The country's second democratic election on June 2nd 
marked a smooth and routine transfer of power, a critical 
indication of sustained progress in South Africa.
    Our stake in South Africa's success is significant. For the 
United States, South Africa's leadership as a pluralistic, 
market-oriented democracy is critical to the achievement of our 
goals in Africa, especially integrating Africa into the global 
economy and combating transnational threats to our mutual 
security.
    A half-decade after the end of apartheid there is general 
recognition, both inside and outside of South Africa, that the 
government of President Nelson Mandela and Deputy President 
Thabo Mbeki performed extremely well. The ANC-led government 
has fostered the difficult and lengthy process of national 
reconciliation, laid the groundwork for long-term democratic 
tradition, established a sound economic policy framework, and 
began to deliver essential social services to the previously 
disadvantaged majority.
     President Thabo Mbeki's government now faces the difficult 
task of fulfilling his promise to accelerate the pace of the 
transition. Since taking office on June 16th, President Mbeki 
has taken decisive steps to address the pressing issues of 
crime, economic growth, and job creation.
    In public forums, he has taken a tough line against 
military governments, corruption, and misrule, statements which 
we, of course, applaud. At the same time, he stood by the 
government's macroeconomic policies embodied in the Growth, 
Employment, and Redistribution Program, or GEAR, that 
emphasized fiscal discipline, removal of capital controls, 
lower tariffs, and privatization of the parastatal sector.
    U.S. policy seeks both to help South Africa consolidate its 
already remarkable progress and to strengthen our partnership 
in key areas of mutual interest. The most important of these 
key areas are the following: bolstering democratic institutions 
and processes, strengthening the institutional capacity of the 
South African government to develop socioeconomic policies, 
create jobs, and provide improved social services, working 
together diplomatically to prevent and resolve conflicts, 
cooperating to prevent the proliferation of weapons of mass 
destruction, working to open the South African and SADC markets 
to U.S. products and services, and to increase bilateral trade 
and to improve the climate for U.S. investment, helping South 
Africa develop an effective criminal justice system, supporting 
South Africa's pursuit of sustainable development, and, 
finally, supporting improvements to South Africa's health care 
system to ensure core needs of the majority are met, and to 
combat the spread of infectious diseases, particularly HIV/
AIDS.
    To help achieve those goals, the full panoply of the U.S. 
Government has been actively involved in providing support and 
training. The largest component of U.S. assistance to South 
Africa is, of course, USAID's efforts. Our current strategy 
being implemented under a 10-year, $435 million program, seeks 
to ensure a sustainable transition.
    The United States and South Africa, of course, have much in 
common--diverse and open societies, deep respect for democratic 
ideals and human rights, and a shared vision of a peaceful and 
prospering international community. Regular high-level contacts 
have been critical to the process of developing a strong U.S.-
South Africa partnership.
    President Mandela's visit to Washington in October 1994 led 
to the establishment of the U.S.-South Africa Binational 
Commission (BNC). This Commission has met six times since 1994 
and now comprises nine Committees.
    The BNC has been central to the process of renewing and 
strengthening our cooperation in many areas. Under its 
auspices, we have worked to open our markets, signed a trade 
and investment framework agreement, and established a Trade and 
Investment Council. We have negotiated a bilateral tax treaty 
and new pacts on civil aviation, extradition, and mutual legal 
assistance.
    Two recently established BNC committees, one on defense and 
another on justice and anti-crime cooperation, have led in 
short order to rapidly expanding collaboration in these key 
areas.
    Finally, in the area of foreign policy, South Africa has 
quickly emerged as one of Africa's leading political and 
diplomatic actors. The global scope of South African foreign 
policy notwithstanding, much of the government's focus is 
closer to home with the Southern African Development Community 
(SADC) and the Organization of African Unity (OAU). South 
Africa appears determined to make both SADC and the OAU more 
relevant and effective. We strongly support its efforts in this 
regard.
    In conclusion, Mr. Chairman, let me say that we consider 
our relationship with South Africa to be one of our highest 
priorities. But we all must be cognizant of the tremendous 
challenges still facing the country and its people. As 
President Mbeki said at his inauguration, ``South Africa is at 
the dawn of the dawn, when only the tips of the horns of cattle 
can be seen etched against the morning sky.''
    In many ways, the task of democratic institution building 
in this country is only just beginning. Crime, HIV/AIDS, and 
economic disparity all threaten South Africa, just as our own 
social problems and violence threaten U.S. progress in the 
century to come. We are committed to supporting not only South 
Africa's domestic strides, but its strong role in the region 
and its positive contribution worldwide.
    We look forward to strengthening and deepening our 
engagement with the new South Africa and its people. We believe 
their strength will ensure the success of their transition and 
the emergence of South Africa as one of the world's greatest 
powers and most respected leaders.
    Thank you very much.
    [The prepared statement of Ms. Rice appears in the 
appendix.]
    Mr. Royce. Thank you, Dr. Rice. I appreciate your 
summarizing your testimony as well.
    Before finishing here, on behalf of the Subcommittee, let 
me just say a few words. I would like to wish you and Secretary 
Albright a productive visit to Africa next week. In particular, 
I believe that the Secretary's visit to Sierra Leone could be 
most helpful in helping that war-shattered nation along the 
road to peace.
    As you know, the Subcommittee has taken a strong interest 
in Sierra Leone, and we look forward to hearing about your 
visit. Again, we thank you for coming here today.
    There are a few questions that I would like to ask you, and 
then we will turn to other members of the Committee. But the 
first has to do with the signing this week of the South Africa-
European Union trade development and cooperation agreement. 
This agreement will dismantle or reduce tariffs on about 95 
percent of South African exports into Europe, and at the same 
time South Africa will scrap its duties on about 86 percent of 
the EU imports over 12 years.
    I believe for South Africa that is a positive development, 
but concerns have been raised about this agreement 
disadvantaging American firms in South Africa. Does the 
administration share these concerns? And, if so, does it have a 
proposal to address this?
    Ms. Rice. Thank you, Mr. Chairman. We support regional and 
bilateral trade agreements that are liberalizing as a matter of 
principle. But we will be watching implementation of the EU-
South Africa free trade agreement very carefully to ensure that 
it is WTO consistent and that U.S. exporters and investors are 
not unfairly disadvantaged. Our initial analysis of this 
agreement and its effects on U.S. exporters is, at present, 
underway.
    As the President said during his trip to South Africa, we 
are very much open to the idea of exploring bilateral trade 
liberalization efforts with South Africa, including discussing 
a U.S.-South Africa free trade agreement at an appropriate 
juncture.
    Mr. Royce. Let me ask you also about press reports that 
Danelle, a South African government-owned defense contractor, 
presently has a delegation in town, is preparing to sell 
weapons to Libya. How would such South African weapon sales to 
Libya, or other countries considered hostile to U.S. interests, 
impact our relationship with South Africa?
    Ms. Rice. Mr. Chairman, we have seen the same reports that 
you have. This is an issue of concern to the United States. I 
do want to say that we have no information at present to 
confirm any sale by South Africa of such equipment to states 
that we consider pariah states. We continue to watch this 
situation very carefully. It is also obviously a subject that 
features regularly at the highest levels of our bilateral 
discourse with South Africa.
    I would not wish to speculate about the effect of such a 
sale. We have a number of laws on the books that govern our 
relationship with states that sell such equipment to terrorist 
list states. Those laws are well-known to the government of 
South Africa, and we continue to look forward to constructive 
discussions with the government of South Africa aimed at 
fostering our shared interest in preventing proliferation of 
weapons to countries that could well misuse them.
    Mr. Royce. Thank you. In your testimony, you mentioned that 
President Mbeki is serving as Chair of the Non-Aligned 
Movement, or Non-Aligned States. What is the significance of 
the Non-Aligned Movement to the United States?
    Ms. Rice. I suppose I could go on at some length about 
that. I will try to be brief. The Non-Aligned Movement (NAM), 
historically has played a prominent role in international 
affairs. It has long been the voice of the developing world and 
countries who have felt that their political and economic 
interests have not been fully taken into account by some in the 
developed world.
    It continues to be an important venue for policymaking and 
dialogue with the countries of the developing world. South 
Africa has taken its role as Chairman of the NAM very 
seriously, and we have been grateful for the opportunities we 
have had to work with South Africa in its role as Chairman of 
the NAM to pursue issues of mutual concern.
    Mr. Royce. OK. Last, let me bring up a question which I 
have discussed with you before, which is the view that South 
Africa and many other gold-producing countries have with regard 
to IMF's gold sales to fund the highly indebted poor country 
initiative which the administration supports. As you know, the 
opposition comes from the fact that it would drive down gold 
prices and harm the economies that, in theory, it is designed 
to help.
    This Subcommittee held a hearing on debt relief in the 
spring, and Treasury Department officials were dismissive of 
the concerns raised by the Committee members here at that time. 
How is the issue now being viewed by the administration, if I 
could ask?
    Ms. Rice. As you well know, providing debt relief to the 
poorest countries remains an important priority for the 
administration. The IMF has been examining a whole range of 
options that would allow it to participate fully in the HIPC 
initiative. It is partly due to considerations of gold-
producing countries, the United States and South Africa both 
being among them, that probably will lead compromise on the 
planned sale of 10 million ounces of IMF gold on the open 
market.
    So, at present, this is being reevaluated has been shelved, 
and we look very much to the Treasury Department, of course, to 
provide specifics on future policy with respect to gold sales. 
But I don't see that as being an immediate concern with respect 
to funding of the HIPC initiative.
    Mr. Royce. Thank you. Thank you, Dr. Rice.
    I will go to Mr. Payne.
    Mr. Payne. Thank you very much, Dr. Rice. I, too, 
appreciate the fine work that you have been doing and wish you 
good luck on your trip to Africa with the Secretary. I also 
have a question regarding Libya, but not as it relates to the 
sale of weapons.
    Although Libya certainly has behaved as a pariah state for 
decades, and its leader, Mr. Gadhafi, has not been cooperative 
in world policies it appears to me that during the last 3 or 4 
years there seems to have been a change in Libya's interest in 
moving back into the world society. South Africa has a 
relationship with Libya, and if Libya did show that it 
sincerely was interested in changing its ways, since in the 
past it engagement with many African countries have been not 
always been constructive, with Charles Taylor of Libya starting 
out in Libya etcetera,--but what do you think would be the 
prospects of Mr. Mandela having discussions with Mr. Gadhafi? 
Does the U.S. at this time feel that its policy on Libya might 
be changing?
    Ms. Rice. Sir, I appreciate that the Subcommittee has 
jurisdiction over Libya. I am not the American official 
responsible for our policy toward Libya, and I would be remiss 
if I were to answer that question directly. I am happy to take 
it back, if you would be willing to provide it in written form, 
and ask the Near Eastern Bureau to provide an answer to it.
    Mr. Payne. That is great. There is the question of 
pharmaceuticals, intellectual property, and the question of a 
conflict between South Africa and the alleged demands from the 
U.S. regarding that whole situation.
    Could you try to clarify what the situation is now between 
the U.S. pharmaceuticals and South Africa, and the whole 
question of how AIDS victims can be assisted with the fact that 
the products that can combat AIDS are very expensive. There are 
certainly two sides to this issue, but what officially is the 
situation now between South Africa and the pharmaceuticals?
    Ms. Rice. Sir, as you perhaps have seen, last month the 
U.S. Government and the South African government reached a 
satisfactory resolution to the dispute over the South African 
Medicines Act and pharmaceutical patents protection. This was a 
welcome development. Many in the administration worked hard 
with counterparts on the South African side to achieve.
    The understanding that we have come to commits South Africa 
to honor fully its WTO commitments under the treaty respecting 
international property, while also affords South Africa the 
necessary flexibility to respond to its national HIV/AIDS 
health crisis. So this an amicable, and we believe very 
balanced, resolution to the issue and sets aside this 
contentious issue. We hope it will never again play a prominent 
role on our bilateral trade agenda.
    There is a continuing dialogue between the U.S. and South 
Africa to ensure that the Medicines Act is implemented in a 
manner that is consistent with South Africa's WTO obligations 
and in a manner that ensures the safety and the efficacy of 
patented drugs. So I think we have good news in that regard. A 
lot of hard work has gone into it, and I believe the 
governments of both the United States and South Africa are 
satisfied with the result.
    Mr. Payne. Thank you. I know President Mbeki was fairly 
involved in the agreement in the Congo. To your knowledge, is 
South Africa continuing to take the leadership in the cease-
fire there, and, to your knowledge, is the cease-fire still 
holding? I know this is a little outside South Africa, but 
indirectly it does involve South Africa.
    Ms. Rice. The South African government has played a highly 
constructive role at all stages in the effort to broker a 
peaceful resolution to the conflict in Congo. It did so under 
President Candela's leadership, and it has been very energetic 
in recent months under his leadership.
    President Mbeki and his new foreign minister, Mrs. Zuma, 
have engaged almost full-time, it might seem to an outside 
observer, in shuttle diplomacy and other efforts to bring 
particularly the rebel factions to an agreement on the issues 
that divided them, and to enable the rebel leadership to 
finally sign the Lusaka agreement. Their efforts continue.
    South Africa has made an important pledge to financially 
support the Joint Military Committee, which is an important 
element of the Lusaka agreement. It has expressed its 
willingness to participate in a U.N. peacekeeping effort there. 
We very much admire and are grateful for the contributions that 
South Africa has made and has promised to continue to make.
    Regarding the situation in the Congo, there, of course, 
have been some cease-fire violations and some incidents, 
particularly over the last 10 days or so, but by and large, to 
a large extent, since the agreement was signed back in July, 
there have not been major violations of the agreement; 
certainly, none that have been sufficient for either side or 
any party to declare its unwillingness to adhere to the terms 
of the agreement.
    Just earlier this week in Kampala was a very important 
meeting of the Joint Military Committee, where the parties to 
the conflict came together and made some important decisions 
that should lead to swifter implementation of key elements of 
the Lusaka agreement.
    Mr. Payne. Thank you very much. I am really glad to hear 
that.
    The third bell has rung, so I have to leave. Someone should 
be here in a moment, though, and I don't think we would have to 
have a recess. I ought to just increase aid to Africa by 
about----
    Ms. Rice. Go for it.
    Mr. Payne [continuing]. A couple hundred million dollars. 
When the Chairman comes back----
    [Recess.]
    Mr. Royce. Secretary Rice, again, we want to thank you very 
much for your testimony here today, we wish you well, you and 
Secretary of State Albright well, on your trip to Sierra Leone. 
That will conclude our first panel.
    Mr. Payne. Mr. Chairman, would you yield just for----
    Mr. Royce. I certainly will yield to the gentleman from New 
Jersey.
    Mr. Payne. I just had a quick question regarding the 
overwhelming issue about crime. Has the South African 
government asked the U.S. Government for any assistance in 
fighting crime? Or do they have the capacity to do it, 
investigating and that kind of work? I know President Mbeki in 
his inaugural address spent a great deal of time on the issue 
of crime. Will that issue come up? Or have they made any 
request to us for assistance?
    Ms. Rice. The issue of cooperation and countering crime, 
both domestic and internationally, is an increasingly important 
item on our bilateral agenda, so much so that the Vice 
President and then-Deputy President Mbeki agreed to create a 
justice and anti-crime cooperation Committee of the Binational 
Commission.
    That Committee was inaugurated last February when the 
Attorney General herself went down to South Africa as part of 
the Binational Commission. She went back again to South Africa 
in June to lead the U.S. delegation to President Mbeki's 
inaugural, and she met just last month with her South African 
ministerial counterpart here in Washington to conclude two 
important agreements on cooperation and law enforcement 
matters.
    There have been specific requests to the United States to 
help South Africa build capacity and train its police and 
enhance its law enforcement capability. A variety of U.S. 
Government agencies are on the ground actively pursuing that 
cooperation and providing assistance and training.
    We have much to gain together by cooperating in this 
regard, and we look very much forward to it, and we share 
Chairman Gilman's interest in the rapid establishment of the 
international law enforcement academy in Southern Africa, which 
will enhance our ability to cooperate on crime matters not only 
with the government of South Africa but with countries in the 
entire subregion.
    Mr. Royce. Thank you. We are going to go to Mr. Campbell of 
California for his questions.
    Mr. Campbell. Obviously, I apologize if they have been 
asked already, but the votes happen that way. I wanted to ask 
about ACRI and where we are on South Africa's participation in 
the Africa Crisis Response Initiative. Maybe you could give me 
an update. I was particularly interested in knowing if they 
might be willing to play a role, if Nigeria is playing a little 
bit less, maybe in the West Africa region. But if not, where 
are they on ACRI?
    Ms. Rice. South Africa has made it plain that it intends to 
play an increasingly important role in international 
peacekeeping activity. This is a relatively new policy approach 
coming out of the white paper that they published in December 
1998, and it has already been manifested in Lesotho, and we 
look forward to a South African role in the Congo.
    But in terms of the African Crisis Response Initiative, the 
South Africans have maintained the position that they prefer 
that initiatives for training and capacity building in 
peacekeeping in Africa be conducted on a multilateral basis 
under the auspices of the U.N. or the OAU or SADC.
    While we continue to talk at various levels and cooperate 
with the South Africans on peacekeeping activities--for 
example, our support for the Blue Crane exercise last year, and 
our bilateral military cooperation in other spheres--we are not 
at the stage where we anticipate a swift decision in South 
Africa to participate in the African Crisis Response 
Initiative.
    That is, of course, their prerogative. We continue to 
discuss ACRI participation with a number of other governments 
throughout Africa, including in Southern Africa. Malawi has 
joined ACRI, and others in Southern Africa may soon take 
similar decisions----
    Mr. Campbell. Who else has----
    Ms. Rice [continuing]. We look forward to that.
    Mr. Campbell. Pardon me for interrupting. Who else has 
signed on in Southern Africa? Is it just Malawi?
    Ms. Rice. Malawi is the only one that is actively in the 
program, although other countries in Southern Africa have 
expressed an interest. Our concern is given that our capacity 
under ACRI is not infinite, that we work with partners whose 
ability to make a meaningful contribution at the outset is 
already well-established.
    Mr. Campbell. I refer to notes that our Committee staff 
prepared in advance, and so it is not of my own knowledge, that 
President Mandela assured President Clinton during President 
Clinton's visit to South Africa that he ``fully endorsed the 
African Crisis Response Initiative.'' And so it is--I take it 
if that is an accurate description that there has been a 
cooling. Is that--speak to this. What do you think it----
    Ms. Rice. while the two Presidents talked about ACRI, I 
don't think that is an accurate description or conclusion that, 
as a result of that conversation, President Mendella committed 
South Africa to ACRI participation.
    Mr. Campbell. All right. That is fine.
    Apparently, the majority staff of this Subcommittee and 
President Mandela, I guess.
    Second, what happened, or is there an outcome regarding the 
patent issue on the parallel imports of the anti-HIV drugs? 
Where do we stand on that?
    Ms. Rice. Yes. I did respond to that a little bit earlier, 
and I----
    Mr. Campbell. Oh, I am sorry.
    Ms. Rice [continuing]. Said quite simply that we were very 
pleased that last month the governments of South Africa and the 
United States came to an amicable resolution of this issue that 
we believe--and I believe the South African government 
believes--manages our concerns that any policies and laws in 
South Africa be WTO consistent, as well as protect South 
Africa's concerns, that they have the flexibility necessary to 
provide the majority population with the types of drugs, 
including those for HIV/AIDS, that are needed.
    Mr. Campbell. Let me be specific.
    Ms. Rice. At reasonable cost.
    Mr. Campbell. Let me be specific. The issue is parallel 
importing, where the owner of the patent wants to restrict the 
distribution on a geographical country basis. We call that a 
vertical restriction in American anti-trust law. It is 
permitted if an international owner of a patent chooses to 
distribute in that manner.
    What South Africa was attempting to do was to say, ``Well, 
look''--and Zimbabwe as well--``you are sending the patented 
items into other countries at a lower price. We would like to 
be able to purchase them in that other price--at that lower 
price in that other country.'' That was where I left the issue, 
that that was their request.
    At least as I understand it, it is the patent owner's right 
to say, ``No, we choose to distribute in this manner.'' 
Nevertheless, I voted with Mr. Meeks on his resolution to say 
we shouldn't--that we should put that secondary to concern 
about AIDS and the spread of HIV, and that even if that meant 
that this rule of distribution would be impinged upon that 
there was a greater good.
    But I could not deny as a matter of patent and distribution 
law as I know it that that was the situation. Do you know 
enough more about that to inform me?
    Ms. Rice. You are well over my head on the legal issues, 
but----
    Mr. Campbell. Nobody asks me for my anti-trust advice 
anymore.
    Ms. Rice. And you are a lawyer and I am not. But----
    Mr. Campbell. I teach at a small college in----
    Ms. Rice. Small west coast university----
    Mr. Campbell. West coast university.
    Ms. Rice [continuing]. To which we both have a great 
affection.
    Mr. Campbell. Yes. Are your alumni dues in arrears?
    Ms. Rice. I really ought to defer to my colleagues from 
USTR----
    Mr. Campbell. No problem.
    Ms. Rice [continuing]. On that one.
    Mr. Campbell. Mr. Chairman, I have just one quick question, 
if I might--the Zulu ANC and the Incatha party's ANC strife in 
Natal. Any news on that? In the regional elections, there was 
some concern that the ANC had taken over so many of the local 
positions that Incatha might have felt dispossessed or felt out 
of the opportunity to participate? Is there anything new on 
that? And if the answer is no, that is fine with me, and I am 
done.
    Ms. Rice. I think that the large picture is that tensions 
in KwaZulu-Natal are way down, as they are across the country. 
The incidence of political violence is substantially 
diminished. The IFP continues to have representation in the 
government, including important cabinet ministries, and so I 
think the short answer is that that situation is a relatively 
stable one.
    Mr. Campbell. And UDF ANC as well? The United Democratic 
Front? Or is that a little bit more difficult?
    Ms. Rice. A little bit more complicated. There were a 
couple incidents, as you know, during the election campaign 
that were a source of concern. But I think again, the big 
picture has been one of remarkable political harmony and 
opposition and political parties competing peacefully, and 
there being open political debate in parliament, and there not 
being an inordinate number of incidents of political violence, 
as we have seen in years past.
    Mr. Campbell. Thank you.
    Thank you, Mr. Chairman.
    Mr. Royce. Thank you, Mr. Campbell. If could just respond, 
Mr. Campbell. The comment about the concurrence by Mr. Mandela 
in his conversation with President Clinton on the ACRI 
initiative, that was a press conference in Capetown, and we 
will willingly provide you that information, as reported in the 
press, but in point of fact----
    Ms. Rice. You were there, sir. Do you remember?
    Mr. Royce. I was there. I was there.
    In point of fact, there is documentation in the press about 
Mr. Mandela responding, about his conversation and responding 
in support of ACRI. But we will get you that information.
    Mr. Campbell. Mr. Chairman, I am informed and grateful for 
that. I wonder if it is not impolite to ask, has it been 
cooling, then, since then? Is that----
    Mr. Royce. Is----
    Mr. Campbell. Has the South African interest in ACRI been 
cooling, in your judgment?
    Mr. Royce. I understand how you are--I understand your tack 
here, but I don't think we can infer that. But let me just get 
you the documentation.
    Mr. Campbell. Thank you.
    Mr. Royce. Just for your own information.
    Ms. Rice. I would just say, sir, my sense is that it has 
been pretty steady state. There have been--there has been 
interest as well as concern, and I think for the moment we 
don't anticipate any radical change in the South African 
posture. They have not come back to us and said, for example, 
``We would like now to actively participate in the African 
Crisis Response Initiative.''
    They have indicated that it would be their strong 
preference that we work through SADC as a regional organization 
as we pursue this approach in the Southern African region. In 
the meantime, we have welcomed cooperation, as has the 
government of South Africa, on peacekeeping and other regards.
    As I mentioned earlier, this Blue Crane operation 
peacekeeping exercise that the South Africans hosted last year 
with the states of the SADC region, we had--we participated by 
providing airlift to countries in the region to be part of that 
exercise. We had observers there, and we do cooperate on 
peacekeeping issues in meaningful ways.
    Mr. Royce. And let me just add, if I could, I suspect your 
question to Secretary Rice went to the issue of South African 
involvement in West Africa. As I understood it or as I heard 
it. I think what you are probably going to find is a great deal 
of interest on the part of South Africa with respect to Congo 
or peacekeeping regionally in Southern Africa.
    But in terms of West Africa, I am not sure ACRI 
participation was ever broached, and so maybe that is the----
    Mr. Campbell. I appreciate it, and I will tell you what I 
had in mind was simply that if Nigeria's patience and 
willingness to contribute is wearing out, then there is a 
possibility we would look--that Africa would look elsewhere. 
But I agree with you, that has never been the primary focus of 
South Africa's involvement in the multilateral force.
    Mr. Royce. Right.
    Let us go to Ms. Lee of California.
    Ms. Lee. Thank you, Mr. Chairman.
    Mr. Royce. Thank you.
    Ms. Lee. Let me ask Madam Secretary, hopefully, a nonlawyer 
question with regard to the pharmaceutical issue. I am 
delighted that an agreement has been reached, and that now 
affordable medicines will be made more available in South 
Africa. One of the areas of concern that I am not sure has been 
resolved or not has to do with the pharmaceutical 
manufacturers' appeal, and has this appeal been withdrawn? Or, 
if not, do you know what is going on and why that appeal is 
still there, if, in fact, there has been a resolve?
    Ms. Rice. The short answer is I am not exactly sure of the 
status of the appeal at the moment. I am being told that the 
court case has been temporarily suspended, but I think I can 
get back to you with the precise details where----
    [The prepared Letter appears in the appendix.]
    Ms. Lee. Could you please? Because if it has been 
temporarily suspended, that is fine. But I think it would help 
if it is withdrawn. If it is suspended, I would like to at 
least know on what basis it was suspended.
    Mr. Campbell. Would the gentlelady yield just for a second? 
Maybe we can ask which court. You are talking about a 
proceeding within TWO or----
    Ms. Lee. There you go back to a lawyer requesting that.
    Ms. Rice. No, South Africa. In South Africa. There was a--
--
    Mr. Campbell. So the court----
    Ms. Rice. Yes, the companies----
    Mr. Campbell. Sued in South Africa.
    Ms. Rice [continuing]. Sued in----
    Mr. Campbell. Thank you. Thanks for yielding.
    Ms. Rice [continuing]. Sued in South African court.
    Mr. Campbell. Since you said it is pending in court, I need 
instantaneously to know which court.
    Ms. Lee. That is our lawyer. OK.
    Mr. Payne. If the lawyer would yield----
    Ms. Lee [continuing]. To the social worker. Thank you very 
much.
    Mr. Campbell. My clock is running.
    Mr. Royce. Yes. Mr. Payne?
    Mr. Payne. I think that----
    Ms. Rice. It is not the pharmaceuticals that----
    Mr. Payne. No. I think that the actual South African courts 
had a case in their courts to determine whether the law that 
was passed in South Africa would stand up----
    Ms. Rice. That is right.
    Mr. Payne [continuing]. In their Supreme Court.
    Ms. Rice. That is right.
    Mr. Payne. So the law was never really the law that 
everybody reacted to because it is still under the 
consideration of the courts of South Africa whether this 
legislation that was passed was constitutional.
    Ms. Rice. That is right. That is our understanding.
    Ms. Lee. OK. So you are going to get back to us with regard 
to the whole issue----
    Ms. Rice. The actual status is----
    Ms. Lee [continuing]. The status.
    Ms. Rice. But as I said, it has been suspended. We will let 
you know why and any of the further details we can provide.
    Ms. Lee. OK. Thank you very much.
    Mr. Royce. We thank Mr. Payne for clarifying that point. 
That is accurate, indeed.
    Mr. Payne. I am a lawyer, too.
    Mr. Royce. Ms. Lee?
    Ms. Lee. OK. Let me just ask you, with regard to the AIDS 
threat in South Africa as really a national emergency, how do 
you see it impacting the economic development of South Africa? 
Because during our discussions and putting together our AIDS 
marshall plan, we found that several companies now are hiring 
two individuals for one job, given the fact that the crisis is 
so devastating that one of those individuals may or may not 
live. I am wondering if we have had a chance to really make 
that assessment.
    Ms. Rice. Yes, and so has the government of South Africa. I 
think by any measure, there is great cause for concern about 
the potential impact of the HIV/AIDS pandemic in South Africa. 
South African statistics, as we understand them, indicate that 
an estimated 8\1/2\ percent of the population at present is HIV 
positive. In the 20- to 24-year old age group, it is as high as 
25 percent, and there are estimates that within a little more 
than 10 years perhaps as high as 25 percent of the entire 
population could be HIV positive.
    The economic implications of this are enormous in South 
Africa, as well as in other parts of the world and other parts 
of Africa. The government has taken a series of important steps 
to draw attention to the problems that HIV/AIDS poses, to 
increase education, to make available, as you well know, as we 
were just discussing, more affordable medicines and treatments.
    President Mbeki himself has I think done a remarkable job 
of shining the spotlight on this problem. I recall when we were 
in South Africa in February, then Deputy President Mbeki and 
Vice President Gore at their press conference wore badges to 
draw attention to the HIV/AIDS problem.
    So public education, which is the most important part of 
the challenge in many respects in the developing world, is 
something that the government has taken on with vigor. Much 
more will have to be done if this is to be turned around.
    Ms. Lee. Mr. Chairman, may I just ask one more question?
    Mr. Royce. Absolutely.
    Ms. Lee. Very quickly, with regard to U.S. companies and 
investment on behalf of United States corporations. How are we 
assisting U.S. companies in terms of their focus and their 
ability to support and to help in this pandemic that is 
transpiring now.
    Ms. Rice. As you know, back in the summer Vice President 
Gore unveiled a new anti-HIV/AIDS initiative called the Life 
Initiative, which had two principal components. One is a 
request that is now pending before Congress for $100 million in 
fiscal year 2000 to substantially increase our efforts to do 
prevention education and research on HIV/AIDS worldwide.
    The other part of it is a dialogue that is now well 
underway with representatives of the U.S. private sector and a 
broad cross-section of the senior-most officials in the 
administration to try to coordinate strategies overseas for 
dealing with HIV/AIDS in ways that our companies can make 
investments that will benefit the people at risk as well as 
their own long-term economic prospects.
    Ms. Lee. Good. Thank you very much.
    Mr. Royce. Thank you.
    Thank you, Secretary Rice. We will now go to our next 
panel.
    Ms. Rice. Sure. Thank you very much.
    Mr. Royce. J. Daniel O'Flaherty has been the Executive 
Director of the U.S.-South Africa Business Council since 1993. 
The Business Council represents U.S. companies doing business 
in South Africa. It serves as the private sector secretariat of 
the U.S.-South Africa Binational Commission.
    Mr. O'Flaherty has extensive background in trade policy 
issues and worked as a professional staff member in both the 
House and in the Senate. He has been working on South Africa 
issues since the late 1970's when he was a Senior Associate of 
the Carnegie Endowment.
    Judson Ray is Unit Chief of the FBI's International 
Training and Assistance Unit. He has more than three decades of 
experience in law enforcement. He has served with the FBI since 
1980. Special Agent Ray's extensive experience includes 
consultative services to the Department of State as the FBI's 
chief representative for international training and work in 
counterintelligence and in white collar crime.
    He was the first law enforcement officer in the Nation to 
be admitted to the state, Federal, and military courts as an 
expert in the profiling of serial killers. Special Agent Ray 
earned a bachelor's degree at Columbus College and master's 
degrees from Troy State University and Georgia State 
University.
    We thank you both for making the trip up here to testify 
today.
    Mr. O'Flaherty, if you would like to begin at this time.

  STATEMENT OF J. DANIEL O'FLAHERTY, EXECUTIVE DIRECTOR, U.S.-
                 SOUTH AFRICA BUSINESS COUNCIL

    Mr. O'Flaherty. Thank you very much, Mr. Chairman, members 
of the Committee. I appreciate the opportunity to appear today.
    Mr. Royce. And we appreciate your summary testimony because 
your full testimony will be in the record, so we are going to 
hold you to 5 minutes. Thank you, sir.
    Mr. O'Flaherty. Thank you.
    I would like to congratulate the Subcommittee on holding 
this hearing on our relationship with South Africa, which is 
not only Africa's largest market but is also a country whose 
peaceful transition to free market democracy is widely admired 
in this country.
    Passage by the House of the Africa Growth and Opportunity 
Act earlier this year, and the prospect of an early vote in the 
Senate, indicates that the Congress is serious about 
strengthening our commercial ties to all of Africa.
    Perhaps I can best contribute to the Subcommittee's 
understanding and review of relations with South Africa by 
describing the U.S. private sector's current role in South 
Africa, how that country is perceived as an investment 
destination by U.S. firms, and what the U.S. and South African 
governments can do to increase the positive contribution that 
U.S. business can make to South Africa's development.
    The perception of the private sector--by the private sector 
of South Africa at this point here can best be summarized in 
three statements. No. 1, South Africa has chosen and maintained 
sound fundamental economic policies, but has so far failed in 
its efforts to attract the magnitude of foreign investment its 
economy requires.
    Second, U.S. companies are making a significant 
contribution to the social, as well as the economic, 
development of South Africa.
    Third, South Africa is a challenging business environment 
for American companies, especially in sectors that may be 
affected by South Africa's free trade agreement with the 
European Union, and those dependent on government procurement 
contracts for profitability.
    Now, economic growth in the past year in South Africa has 
been just above zero, although the likelihood is that for this 
year it will be between 1\1/2\ and 2 percent. The South African 
government's economic management has been very prudent. It has 
conformed to international standards that are desired by 
world--by the international financial institutions and by 
international businesses.
    But the fact is that growth in South Africa is too low to 
absorb the enormous rate of unemployment, which is between 35 
and 40 percent, depending on how you count the informal sector. 
In addition, 100,000 jobs a year have been lost since 1994 due 
to globalization and integration of South Africa into the world 
economy.
    So given the natural increase of population, combined with 
immigration from neighboring countries, the country is falling 
behind.
    Now, my second point relates to the contribution that U.S. 
companies are making both in terms of investment and 
noneconomic activity. Our company's presence has returned to 
pre-sanctions levels of the mid-1980's, but this isn't the mid-
1980's and the world has changed. Companies no longer need to 
invest in countries where they want to market.
    They export to them more easily, and as a result there has 
been some disappointment in the amount of direct investment--
that is, investment in plant facilities that directly employs 
people--by South Africans, in particular, who wanted to see the 
status quo ante come back into place.
    We do have an investment stock in the country right now of 
about $3\1/2\ billion. Employment of South African workers has 
risen back up to the pre-sanctions level of around 80,000. In 
1998, the United States was the largest foreign direct investor 
in South Africa, as an individual country but not as large as 
that of the combined European Union nations.
    The business environment--and this is my third and final 
point--in South Africa is a challenging one, which is to say 
that it has negative aspects to it. The South African 
government is in many respects best understood as a labor 
government. It has not, consequently, adopted the investment 
incentives common in many other parts of the world trying to 
attract investment. It must reconcile its labor political base 
with the prudent economic policies expected by the 
international investing community.
    U.S. companies operating in South Africa have to balance 
global competitiveness with this local labor and black 
empowerment considerations that have political resonance. That 
is the central tension which our companies face in South 
Africa, and from which a lot of other issues derive that you 
will find in my written testimony.
    Mr. Chairman, thank you.
    [The prepared statement of Mr. O'Flaherty appears in the 
appendix.]
    Mr. Royce. Thank you, Mr. O'Flaherty.
    Now we will go to Special Agent Judson Ray.
    Mr. Ray?

      STATEMENT OF JUDSON RAY, SPECIAL AGENT, UNIT CHIEF, 
   INTERNATIONAL TRAINING AND ASSISTANCE, FEDERAL BUREAU OF 
                         INVESTIGATION

    Mr. Ray. Mr. Chairman, members of the Committee, fellow 
panel members, I appreciate the opportunity, too, to appear 
before the Committee today to discuss U.S.-South African 
relations, present and future.
    Secretary Rice has already summarized the Binational 
Commission and the role that that Commission plays in both 
domestic and international matters involving both South Africa 
and the United States. The Committee which has relevance to my 
comments, is, of course, the Subcommittee on Justice and Anti-
Crime Cooperation.
    As you know, Mr. Chairman, that Committee--that 
Subcommittee is chaired by the Attorney General, Attorney 
General Janet Reno, and she recently traveled to Capetown, 
South Africa, in February of this year to chair this first 
meeting. The Committee established basic terms of reference for 
future meetings and came to the agreement on a wide range of 
law enforcement issues, including training, technical 
assistance, and cooperation.
    Following that meeting, Attorney General Reno came back to 
this country and has put together experts from the Department 
of Justice, the Department of Treasury, and, of course, the 
Department of State, and has developed a comprehensive strategy 
to consult and provide assistance to South Africa and other 
African nations regarding training and other justice-related 
issues.
    Now, the reason why this is important to the Justice 
Department, and, of course, to the FBI is somewhat clear to us, 
but I would like to explain it here. Because of the global 
mandate of many of the FBI and other Federal law enforcement 
investigative initiatives, we must make training investments in 
police systems of countries where the FBI's investigative 
mission is affected.
    In virtually all major FBI investigations for the past 20 
years, a significant international aspect develops. Now, to 
balance its interest in addressing the international aspects of 
investigations, with the requirement to respect host country 
sovereignty, the FBI and other U.S. law enforcement agencies 
must rely on the capabilities of the host country's law 
enforcement community.
    It is important to note that due to differences in judicial 
systems, or due to absence of appropriate treaties and 
agreements, the FBI is unable at times to undertake 
investigations in foreign countries and to bring them to 
successful conclusion.
    I need not point out that the FBI is largely dependent upon 
the local criminal justice system and the level of police 
training and judicial training that its members have. The 
recent bombings in East Africa, the World Trade bombing, 
Russian money laundering investigations, the old BCCI 
investigations, and other high-profile cases are but a few 
examples of the increased threat to the United States caused by 
international crime.
    Now, in order to ensure that such cases are brought to 
successful conclusion, the establishment and maintenance of 
effective liaisons through training and other cop-to-cop 
initiatives must be developed and enhanced.
    Now, with respect to the emerging democracies in Eastern 
Europe, the United States Government's response to that, from a 
law enforcement perspective, was the establishment of an 
international law enforcement academy. That academy, as many of 
the members of the Committee know, is effectively operated in 
Budapest, Hungary.
    To date, that academy has trained well over 1,000 law 
enforcement mid-level officials from approximately 23 different 
countries in Eastern and Central Europe. Another 4,000 people 
have been trained in short courses such as drug interdiction, 
counterfeiting, and a host of other crime-specific issues that 
affect some of the strategic interest in operations of many of 
the Federal law enforcement agencies in this country.
    I can point to many occasions where we have seen examples 
of cooperation between the bordering countries in major cases 
that could only have been brought to successful conclusions 
because of the relationships established there in that 8-week 
course in Budapest. There is a sense on the part of many people 
in Justice that we think that this simple approach could bear 
fruits in Southern Africa.
    Two years ago, I, at the request of the State Department, 
was invited to conduct an assessment of the state of training 
in South Africa. I met with a number of police, judicial, 
political, community leaders, and university people in my 
analyses of the state of police training in South Africa.
    The one thing that I came away with is this, and I think 
that we can safely say that in any democracy or emerging 
democracy, there is tremendous weight, tremendous 
responsibility placed on the shoulders of police officers from 
day to day. As Mr. Gilman pointed out, many cops have been 
killed in South Africa as we speak probably.
    It seems to me that the police in these societies are the 
only people who are duly constituted often times by the 
constitution to, based on an intuitive grasp, take the live of 
a citizen. When I recognized the state of training in South 
Africa, it had a chilling effect on me as a police practitioner 
over the years having policed many communities in this country. 
That is an awesome responsibility?
    But, more importantly, it struck me that most citizens, as 
I travel around the world, are tired of investing in bankrupt 
police systems. They would just rather put their money 
somewhere else, so that it is imperative that we find a way to 
begin to assist this part of the world in bringing about the 
kind of changes that needs to be brought about.
    Simply stated, South African police service must find a way 
to shift from a confessional-based investigative approach to a 
forensic investigative approach to ferreting out crime in that 
country.
    I was recently on a trip led by the Department of State, 
and I was reading the paper. Commissioner George Fivaz, who I 
met the last time that I was there, stated, ``A quarter of my 
cops can't read. Functional illiteracy is ripe within the 
police department, making it difficult for about 30,000 
officers to handle even the most basic task.''
    Commissioner Fivaz went on to state that, ``Considerable 
progress has been made in the transformation of the SAPS. 
Across the force as a whole, 55 percent are now black, and the 
rest of the Department is white.'' Those figures are not that 
representative as you move up the ladder in terms of mid-
management and upper management.
    We think that under the Binational Committee and the 
strategy that the Attorney General has mandated we see a number 
of programs now being implemented. Secretary Rice spoke to 
those issues. I think critical to that is one of the first 
initiatives was to assist the South African police service in 
developing a civilian-based complaint review. A lot of time and 
attention was spent on this. In fact, we assigned a person for 
a year, working with the Justice Ministry, in order to make 
that come about.
    But looking at the crime picture in this country, there are 
a number of things going on there. You see the rise in what 
would be commonly referred to as vigilante groups. When 
institutions within the government are weak or does not have 
the capacity to respond to crime, often times the vacuum is 
filled by organized crime elements, and certainly we have seen 
that.
    In the interest of time, I will stop at this moment to 
entertain questions from the Subcommittee.
    [The prepared statement of Mr. Ray appears in the 
appendix.]
    Mr. Royce. All right. Thank you, Mr. Ray. Let me just say 
that, is the establishment of a program, of an international 
law enforcement academy, is it feasible? Then, how do the South 
Africans respond to the concept? And is it in the 
administration's plans to do that? Let us just have you recap 
on those three quick questions quickly.
    Mr. Ray. I think in the first instance we recognize, based 
on at least my speaking with a number of people in the police 
service, that there are already systems in place to move these 
kinds of issues forward. The Southern African Police 
Commissioners Organization is very, very interested, but want 
to be empowered in any decisions as it relates to the 
establishment of an ILEA in Southern Africa.
    Because of the alliance that all of these police 
commissioners have, we think it prudent to certainly consult, 
negotiate, empower, and to ensure that these things are done 
before we become prescriptive in anything that the USG might do 
in this area.
    Mr. Royce. So at this point in time, the establishment of 
an ILEA in South Africa is not in the administration's plan. 
You have traveled there twice on this mission in order to 
assess the viability of all of this. It is feasible. You are 
still in negotiation. I am just trying to get a determination 
of exactly where we are, or where the administration is, in 
terms of pushing the concept.
    Mr. Ray. Mr. Chairman, would be something that Ms. Rice 
would----
    Mr. Royce. I see.
    Mr. Ray [continuing]. Could answer.
    Mr. Royce. Right.
    Mr. Ray. That is a foreign policy issue dealing with 
another government----
    Mr. Royce. Right.
    Mr. Ray [continuing]. Our mission was to look at a number 
of countries in South Africa to determine the feasibility. That 
report is being drafted now by the head of the delegation, 
which was out of State, and should be made available to Ms. 
Reno and Mr. Johnson and to Ryan Beers at State Department.
    Mr. Royce. Under the definition of ``feasible,'' the bottom 
line is it is feasible.
    Mr. Ray. It is feasible to establish an international law 
enforcement academy in Southern Africa.
    Mr. Royce. All right. OK. Let me ask you a question about 
the bombing of the U.S. Embassy there because I--since we have 
you here, and given your expertise, there was a suspect Kalfin 
Khamus Mohammed in that bombing, recently apprehended in 
Capetown. He was extradited to the United States.
    In the summer of 1998, suspected Muslim extremists bombed a 
Planet Hollywood Restaurant there in Capetown, and 60 bombs, 
six directed against police stations, were set off in the first 
half of 1999 in South Africa.
    In your written testimony, you mentioned that Islamic 
extremism is a growing threat in South Africa. Do the Muslim 
extremists in South Africa have links to Osama Bin Ladn, to 
your knowledge? Or to other international terrorist groups? How 
great a threat are their activities to the U.S., in your 
opinion?
    Mr. Ray. Mr. Chairman, I think it is largely known that Mr. 
Bin Ladn has a worldwide organization which sells in many parts 
of the world. In view of the fact that this is a very sensitive 
ongoing investigation, I don't think it would be----
    Mr. Royce. I understand.
    Mr. Ray [continuing]. Appropriate to comment openly.
    Mr. Royce. Right. I understand. I concur on that.
    OK. Let me turn to Mr. O'Flaherty and ask him, in your 
testimony you mentioned that South Africa has not adopted the 
investment incentives common in many parts of the world. What 
investment incentives might American businesses find attractive 
if they were offered by the South African government? What 
particularly are you referring to there?
    Mr. O'Flaherty. Many countries, particularly in South Asia 
or in East Asia, chose to offer tax breaks, tax holidays, 
subsidies of one sort or another, to companies to come in and 
invest, produce in those countries. South Africa made an 
explicit decision in 1994 that it would--those kinds of 
incentives often attract the wrong sorts of investors. 
Investors leave once the incentive runs out.
    They don't contribute to the account. They would prefer to 
do it the old-fashioned way, by getting their policies right 
and attracting investors that would be there for the long term 
and make money and generate incomes and jobs. I happen to 
believe that is a very reasonable decision, but the fact is 
that American companies looking for extra reasons, other than 
the fundamentals to invest in South Africa, don't find them.
    Mr. Royce. I think I concur with you in terms of the long-
term interests of South Africa probably. Probably stand with 
good, consistent policies without creating subsidies. But on 
the policy front, what policies discourage investment there, if 
I could ask you?
    Mr. O'Flaherty. I think it is not accurate to say that 
their policies have discouraged investment. What you have in 
South Africa is a system of government--private sector-
government relations left over from apartheid that has 
generated huge inefficiencies, enormous distortions, and 
created relationships where the regulators were in bed with the 
regulated and where the government was not truly an objective 
force in managing the economy.
    We have--that system has broken down. It has been reformed 
to a very large extent, but our companies still face problems 
in getting procurement. There are challenges in the 
transparency of the government procurement system which I 
enumerated at some length. But in the interest of time, I will 
just say that there are oddities about a way business is done 
in South Africa that sometimes make it difficult for American 
companies to enter the market.
    Mr. Royce. I see.
    Mr. O'Flaherty. That is entirely independent of the 
international agreements that we have alluded to before, such 
as the EU trade agreement.
    Mr. Royce. I thank you. Before I turn to Mr. Payne, I 
should mention that Chairman Gilman has submitted some 
questions for you, and we will provide you with those questions 
later, if we could. We are just going to do that for the 
record. I thank you very much.
    Mr. Payne?
    Mr. Payne. Mr. Ray, do you think that Africa, in general, 
would benefit from the creation of an international law 
enforcement agency in Africa. Or do you know whether there has 
ever been any discussion about that? I guess, in addition to 
that, do you think that by creating such an institution, there 
would be some suspicion on the part of some African leader or 
heads of state that this might be a counter-intelligence 
operation? Going back to the old Cold War, I guess there are 
still feelings, remnants of that sort of thing.
    Mr. Ray. Yes, sir. These issues came up with the 
development of the international law enforcement academy in 
Budapest, with some--with our Russian counterparts. At that 
time, we sat down with all of the governments and reassured 
them that this academy's goal was to develop and to 
professionalize criminal investigators.
    On point, we are very candid that we still had our national 
security interest at heart, and we would never blend those two 
in that setting. The Russians were satisfied with that, and to 
date we have tried to keep those two separate in that academy.
    So in the instance of Africa, while I have not personally 
heard that as a concern, in terms of the center being an 
intelligence center, the Africans are concerned about their 
sovereignty, and they are concerned about too much of a U.S. 
role. But they recognize that this academy will aid and assist 
them in developing a professional law enforcement base, and 
from what I can gather are enthusiastically wanting to pursue 
this.
    Mr. Payne. I guess, under apartheid you didn't have 
investigations and Miranda rights, and all the things that a 
just law enforcement operation would have.
    Do you think that because of the way that policing was run 
in the past where, perhaps the officers were judge and jury, 
and executioner, too, I guess, that there is a lack of 
detective work and that kind of work being done in the South 
African police department? It seems like there has just been, 
an explosion of petty crime, and even not so petty crime, and 
that perhaps the police department is lacking those kinds of 
expertise by virtue of the past when they didn't have to go 
through all of that.
    Mr. Ray. Yes. I think that many of the leaders in the South 
African police service recognize that because they operated so 
long on this confessional base system that the rules of 
criminal procedure, forensic applications, they are just behind 
in those areas. But I think that there is a willingness on the 
part of the people that I met to recognize that and to look out 
for donor countries, not only the U.S. but other countries that 
are operating.
    But to answer your question, yes, the police--the South 
African police have a deficit in that area. But they recognize 
it. I think that is more--that is very important.
    Mr. Payne. That is great.
    Let me ask Mr. O'Flaherty. There is talk of a lack of 
investment in South Africa, but what about the 90-plus percent 
of the assets of South Africa that also in the hands of the 
minority white South Africans? Have they decided to invest in 
their country yet? I know this would unleash much needed 
investment, but have they found fit yet to invest in their own 
country?
    Mr. O'Flaherty. In fact, they have not been able to invest 
anywhere else for a very long time because of exchange 
controls. So that because of exchange controls there were 
distortions in the pattern of investment. When you have been to 
South Africa, you will have noticed the enormous number of 
shopping malls that exist.
    You will have possibly gone to Sun City or to other of the 
casino resorts. Many of these were created by virtue of the 
absence of normal investment opportunities that people would 
have taken advantage of abroad. So that exchange controls have 
kept money in South Africa.
    The question is whether that meant that the money was used 
in the most efficient way or in a way that benefited the 
majority of the population, and the answer to those two 
questions is definitely no. The money is there. It is a 
question of where it goes.
    Mr. Payne. Finally, since my time has run out, and still 
there is a question to the FBI that Mr. Gilman would like 
answered too I will actually submit that, in writing so that 
you can respond to that.
    Finally, have any of the sort of programing we had when we 
were in an economic downturn, such as the WPA in the 1930's, 
and the CCC camps that President Roosevelt started, public 
works, and I know South Africa does not have the--necessarily 
the capital that it needs.
    But has the project of housing development or road 
construction done by the government had any impact on job 
creation, that is, in addition to creating better a living 
environment? Has the government implemented any kind of counter 
cyclical program to break the cycle of this unemployment by 
investing Federal dollars?
    Mr. O'Flaherty. Congressman, they are in a bind. They are 
trying to get their government deficit down in order to attract 
foreign investment, in order to meet the standards of the world 
economic community. In order to do that, they can't engage in 
deficit spending. They can't engage in traditional pump 
priming, New Deal programs, which would be very attractive to a 
government in their position.
    They have, instead, chosen to engage in training and 
education programs. But as far as creating direct government 
employment of the sort that you are talking about, there hasn't 
been very much of it. I think it does go back to their need to 
demonstrate fiscal discipline to the world.
    Mr. Payne. Thank you very much.
    Mr. Royce. Thank you.
    Ms. Lee?
    Ms. Lee. Thank you very much.
    Mr. O'Flaherty, let me just ask you briefly about the U.S.-
South Africa Business Council's involvement and discussions 
with regard to the whole HIV/AIDS pandemic. I notice in your 
testimony you say all U.S. employers are participating in 
workplace education, which I think is great, and I hope that it 
is all U.S. employers that are doing that.
    Beyond that, I am concerned about the benefit packages that 
U.S. employers have for South African workers, as well as 
clinics, health care services, access to medicines. Have you 
had a discussion with regard to strategies on this pandemic?
    Mr. O'Flaherty. Congresswoman, yes, we have. But I must 
tell you that these discussions need to go into much greater 
depth. This crisis has--the awareness of the crisis and the 
sense of real crisis has only evolved in the last 9 months to a 
year. South Africa had a spreading AIDS problem long before it 
was publicly acknowledged by anybody.
    So I think one of the important contributions that an 
organization like ours can make is to help our companies, along 
with the American Chamber of Commerce in South Africa, to 
cooperate, collaborate, and to focus their efforts in similar 
ways. Obviously, workplace education is the place where they 
can most effectively operate, but clinics is certainly another. 
Of course, some companies like the pharmaceuticals have special 
expertise and special resources.
    But it is something that affects all American companies and 
all South African companies. So we have work to do.
    Ms. Lee. Thank you. Let me--we heard Secretary Rice talk 
about the discussions now with regard some strategies that are 
taking place. Are you involved in those discussions?
    Mr. O'Flaherty. Yes, absolutely. We have been participating 
in discussions with the Vice President's office now for--since 
last summer.
    Ms. Lee. Very good. Thank you.
    Let me ask Mr. Ray. Just briefly, I don't know a lot about 
the international law enforcement academy, and it has been 
fascinating to hear your presentation this morning. Following 
up on Mr. Payne's question, with regard to the law enforcement 
academy being perceived as a place for investigations or 
intelligence gathering--is, in fact, that--could that be part 
of the operation, if, in fact, we wanted it to be? Are covert 
actions allowed or not allowed?
    Mr. Ray. My personal opinion would go something like this. 
All things are possible. But one would have to balance the need 
for our desire to correct the criminal investigative process in 
this country against the benefits that might be gained by what 
you have suggested. In that sense, on balance, it just wouldn't 
make any sense.
    The history here with these academies is that under no 
circumstances do we allow, at least under leadership of the 
FBI, to allow that kind of thing to creep in.
    It has never been--it was an issue with the Russians up 
front. We came to the table, put the cards on the table. They 
were satisfied with our position, and I have been involved with 
this process probably longer than anybody in the government, 
and not----
    Ms. Lee. Do you coordinate with the CIA?
    Mr. Ray. There is no coordination with the CIA on these 
issues.
    Ms. Lee. Thank you very much.
    Mr. Royce. I thank our witnesses.
    Before we adjourn, I would like to recognize one of our 
interns--this is her last week with us--Saadia Lababidi is with 
us, and I would like her to stand at this time. She is 
originally from Lagos, Nigeria. She has resided in Cairo and 
Colorado, and she has been of great help to our Subcommittee, 
and I thank her very much.
    I thank you, gentlemen, for making the trip down here to 
testify today before our Committee. Thank you so much.
    The meeting is now adjourned.
    [Whereupon, at 4 p.m., the Subcommittee was adjourned.]
      
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                            A P P E N D I X

                            October 14, 1999

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