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




            U.S. ASSISTANCE COMMITMENTS IN SOUTHEAST EUROPE

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

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                        INTERNATIONAL RELATIONS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 9, 2000

                               __________

                           Serial No. 106-119

                               __________

    Printed for the use of the Committee on International Relations


        Available via the World Wide Web: http://www.house.gov/
                  international--relations

                                 ______

                    U.S. GOVERNMENT PRINTING OFFICE
65-354 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 MENENDEZ, New Jersey
DANA ROHRABACHER, California         SHERROD BROWN, Ohio
DONALD A. MANZULLO, Illinois         CYNTHIA A. McKINNEY, Georgia
EDWARD R. ROYCE, California          ALCEE L. HASTINGS, Florida
PETER T. KING, New York              PAT DANNER, Missouri
STEVE CHABOT, Ohio                   EARL F. HILLIARD, Alabama
MARSHALL ``MARK'' SANFORD, South     BRAD SHERMAN, California
    Carolina                         ROBERT WEXLER, Florida
MATT SALMON, Arizona                 STEVEN R. ROTHMAN, New Jersey
AMO HOUGHTON, New York               JIM DAVIS, Florida
TOM CAMPBELL, California             EARL POMEROY, North Dakota
JOHN M. McHUGH, New York             WILLIAM D. DELAHUNT, Massachusetts
KEVIN BRADY, Texas                   GREGORY W. MEEKS, New York
RICHARD BURR, North Carolina         BARBARA LEE, California
PAUL E. GILLMOR, Ohio                JOSEPH CROWLEY, New York
GEORGE RADANOVICH, California        JOSEPH M. HOEFFEL, Pennsylvania
JOHN COOKSEY, Louisiana
THOMAS G. TANCREDO, Colorado
                    Richard J. Garon, Chief of Staff
          Kathleen Bertelsen Moazed, Democratic Chief of Staff
                  Mark Gage, Professional Staff Member
                   Joan I. O'Donnell, Staff Associate




                            C O N T E N T S

                              ----------                              

                               WITNESSES

                                                                   Page

The Honorable James Pardew, Principal Deputy Special Advisor to 
  the President and Secretary of State for Dayton and Kosovo 
  Implementation, U.S. Department of State.......................     8
The Honorable Larry C. Napper, Coordinator for Eastern European 
  Assistance (SEED), U.S. Department of State....................    10
Dr. Daniel S. Hamilton, Special Coordinator for Implementation of 
  the Stability Pact for Southeast Europe, U.S. Department of 
  State..........................................................    13

                                APPENDIX

Prepared statements:

The Honorable Benjamin A. Gilman a Representative in Congress 
  from New York and Chairman, Committee on International 
  Relations......................................................    36
The Honorable George P. Radanovich, a Representative in Congress 
  from California................................................    38
The Honorable Larry C. Napper....................................    40
The Honorable James Pardew.......................................    56
Dr. Daniel S. Hamilton...........................................    70

Additional material submitted for the record:

Questions submitted for response by the Administration, submitted 
  by Chairman Gilman.............................................    84

 
            U.S. ASSISTANCE COMMITMENTS IN SOUTHEAST EUROPE

                              ----------                              


                        WEDNESDAY, MARCH 9, 2000

                          House of Representatives,
                      Committee on International Relations,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:20 a.m., in 
room 2200, Rayburn House Office Guilding, Hon. Benjamin A. 
Gilman (Chairman of the Committee) presiding.
    Chairman Gilman. The Committee will come to order.
    It is apparent that the region of Southeast Europe, the 
Balkans region, is not only demanding an increasing amount of 
attention from policy makers in our government, it is now 
making a claim on an ever-greater share of our budget 
resources.
    In the next few days we'll be introducing legislation which 
I hope will help us all to get a handle on just how much of our 
budget resources will, in fact, be claimed by programs intended 
to help the countries of that region over the next few years.
    Let me point out that during the last decade the United 
States provided roughly $7 billion in foreign aid and debt 
forgiveness to the 15 states that now constitute all of Eastern 
Europe, plus billions of dollars more in funds for peace 
keeping and military costs in the Balkans region.
    Last year we led our NATO allies in a 3-month military 
operation against Serbia that cost billions more to our defense 
budget.
    Today we find that our foreign aid budget for just the 
eight states of Southeastern Europe has ballooned up to well 
over $1 billion in the last fiscal year.
    The President has now submitted a supplemental 
appropriations request asking for more foreign aid that would 
raise our foreign assistance to the Balkans once again to well 
over $1 billion.
    We are informed that the President is now also asking for 
roughly $2 billion more for our defense budget for the cost of 
our military deployments in the Balkans.
    Finally, the President last year committed our Nation to 
participate in the multilateral assistance program for the 
Balkans, the total cost of which no one seems willing or able 
to tell the Congress.
    All of this comes at a time when the President is asking 
for large aid increases to fight the flow of illicit drugs in 
our hemisphere, to support the peace process in the Middle 
East, to fight the proliferation of technology related to 
weapons of mass destruction, and to support reforms and protect 
nuclear materials in nuclear-armed Russia.
    Last August our Committee on International Relations held a 
hearing on our growing American engagement in the Balkans. Many 
of our Committee Members took the opportunity raised by that 
hearing to send up some cautionary flags regarding the amount 
of our taxpayers' money that would be made available for the 
rapidly growing expenses in the Balkans.
    As we all know, the European Union has stated that it will 
take the lead in carrying the burden in the Balkans. That is, 
in fact, what many Members here in Congress would agree should 
happen.
    The legislation that I and other Members of the Committee 
intend to introduce next week would place a flexible cap on 
what our Nation should contribute over the next 5 years to the 
multilateral aid program for the Balkans. It is important for 
our Nation to set its priorities.
    We can continue under such a cap to provide generous aid to 
the region. We can, indeed, be very helpful to the Balkan 
countries through our continued aid. Our very considerable 
military costs, which are not covered by the cap in this 
legislation, will also likely continue for some time in the 
Balkan region.
    We must recognize, however, that the prosperous states of 
the European Union have taken on the task of leading the 
multilateral aid effort in Southeast Europe and should fulfill 
it.
    Setting clear policy on the extent of the role our Nation 
will play with regard to foreign aid for the Balkans region 
should help us achieve that outcome.
    Before I recognize our Ranking Member for his opening 
remarks, let me say that I believe our hearing today is timely. 
The daily news reports the continuing ethnic strife that 
afflicts the Balkans. We now have two U.S. military deployments 
in that region in support of peace--deployments with no clear 
end in sight.
    Our Reserve and Guard units are being called up for 
unprecedented, lengthy tours of duty in the Balkans that are 
having an impact on the morale and lives of our military 
personnel.
    In short, our bills are growing and will continue to grow. 
Our hearing this morning is intended to help us understand how 
much those bills might finally total.
    I'd now like to recognize our Ranking Member, Mr. 
Gejdenson, for his opening remarks.
    [The prepared statement of Chairman Gilman appears in the 
appendix.]
    Mr. Gejdenson. Thank you, Mr. Chairman. It does seem a 
shame that history will be deprived of our collective wisdom 
opening this hearing, but I am ready to go ahead anyway.
    Chairman Gilman. We'll submit our opening statements for 
the record, without objection.
    Mr. Gejdenson. Let me just say that I think all of us share 
the responsibility to make sure that when the taxpayers' money 
is used, that it is used effectively and that America, while it 
takes up its share of responsibility as the leading democracy 
in the world, that we make sure that our European allies and 
other countries, the developed countries, take on a fair 
responsibility.
    I think it is important to note that when we take a look at 
American security, we spend about a third of a trillion dollars 
on defense. That is an important part of our security without 
any question, coming from the arsenal of democracy. Our state's 
very focused on that part.
    We spend about 7 percent of what we spend in the defense 
budget in the account that deals with the State Department and 
foreign diplomacy. It is often hard in the short-term to look 
at the savings and the costs involved in these areas.
    I frankly think if there's a place in this budget that the 
American taxpayers get a great return--not that we do not make 
mistakes, not that we cannot be more efficient--it is in our 
foreign diplomatic effort.
    We spent over half a century in Germany, we spent over half 
a century in Korea with hardware, with personnel, with 
tremendous expense to make sure Americans' interests were 
defended, that peace in the world was defended. I think we have 
to recognize, as we sharpen our pencils and make sure the 
Administration is getting the best return for the taxpayers, 
that what we do in the Baltics and elsewhere in Europe is of 
immense importance to American security. Whether those East 
Bloc countries succeed as Poland and Lithuania, and the Baltic 
states are succeeding, or whether they become as Belarus is 
today, another Stalinist state, is of incredible importance to 
the United States.
    We have made most of Eastern Europe our allies and friends. 
I think we have a great opportunity to expand that and even 
build a long-term, solid relationship with Russia.
    So I think these are important hearings and we ought to 
make sure that we recognize that this is all part of America's 
economic and military security.
    Chairman Gilman. Thank you, Mr. Gejdenson.
    Is there any other Member seeking recognition?
    Mr. Lantos.
    Mr. Lantos. Just a moment, Mr. Chairman, I will not take 
much time.
    This is a region of the world which in many ways is the 
most complex. The failure over the years of our policy makers 
to grasp the complexity of Central and Eastern Europe has been 
an extremely costly enterprise.
    At the end of the Persian Gulf War, some of us publicly 
called on the Administration of President Bush to issue an 
ultimatum to Milosevic indicating that violence, military 
action, will not be tolerated. Just as we succeeded for two 
generations from keeping the mighty Soviet Union from taking 
military action any place in Europe, tiny Yugoslavia would have 
heeded such an injunction.
    The President, Secretary of State Baker, then Secretary of 
State Eagleberger, opposed these suggestions. The result has 
been close to 260,000 innocent people dead, and hatreds which 
are referred to as historic becoming very current.
    It is one thing to be upset about the battle of Kosovo in 
1389. It is another thing to be upset about your wife or 
daughter being raped or your son being killed 3 weeks ago.
    So we need to move into these areas in a preventive 
fashion, and that the Bush Administration failed to do in 1991. 
Had there been a clear message to Milosevic, none of these 
issues would be before us now. Not the billions and billions of 
dollars in cost, and not the quarter million people who are 
dead. Not the collateral damage of shipping on the Danube 
coming to a halt, basically impacting on the economy of Romania 
and Hungary in a very negative way, and none of the upsurge of 
anti-American sentiment in Russia because of our Kosovo 
activity.
    When the history books will be written about the last 
decade of the 20th Century, the failure to act intelligently 
and preventively in this region will go down as one of the 
colossal failures of American foreign policy.
    Let me just mention in contrast that the initiative taken 
by my good friend and colleague Congressman Bereuter and myself 
in recommending that a small American military contingent be 
placed in Macedonia played an indispensable role in preventing 
the bloodshed from moving over into that small republic.
    So I look forward to the testimony of our friends and 
guests, but I do so with regret. All of this could have been 
avoided had the Bush Administration, at the peak of its 
popularity following the victorious conclusion of the Persian 
Gulf encounter, moved resolutely in Yugoslavia. That failure is 
the failure we are dealing with today--the billions we have put 
into this effort, the vast numbers of people who have been 
innocently killed, the destruction of a fabric of a functioning 
society.
    I've been going to Kosovo and the region for years on an 
annual basis. All of this comes from the notion which is still 
so prevalent in this body that somehow we can look away from a 
problem and it will solve itself--whether the problem is 
Colombia today, Kosovo yesterday, East Timor the other day. We 
need to take preventive action, we need to anticipate events, 
and we must rise above what are cheap, short-term political 
considerations of not wanting to get into this conflict.
    Secretary of State Jim Baker said, ``We have no dog in that 
fight,'' Yugoslavia. We had plenty of dogs in that fight, and 
Jim Baker made one of the most horrendously irresponsible 
statements when he said that.
    We have learned in the following 9 years how many dogs we 
had in that fight. It is an appalling phenomenon to have a 
Secretary of State display this degree of a lack of 
sophistication in dealing with an impending crisis which could 
have been easily prevented.
    Thank you, Mr. Chairman.
    Mr. Bereuter. Will the gentleman yield?
    Mr. Lantos. I will be happy to yield.
    Chairman Gilman. Mr. Bereuter.
    Mr. Bereuter. I thank my colleague for yielding or being 
recognized on my own time here. I was not going to speak, but 
first of all, I appreciate the comments of my colleague from 
California with respect to what we encouraged the 
Administration to do in Macedonia, and we are, in my judgment 
so to speak, not out of the woods there yet. We need to focus 
in our bill upcoming on Macedonia as well as Albania.
    The gentleman points very much to the Bush Administration, 
and frankly, I do not disagree with him in most respects.
    It does seem to me that we, the North Atlantic Alliance, 
were not ready for the end of the Cold War. Our institutions 
were not ready to cope with what happened in Yugoslavia.
    As a Member then of the House Intelligence Committee, I was 
impressed with the quality of the intelligence and the 
predictions that we had available to us. We saw the scenario 
unfold, the disintegration of Yugoslavia and the violence that 
followed, exactly as predicted. Policy makers in the Bush 
Administration, and then in the Clinton Administration, were 
unwilling to act on that intelligence.
    I do think we needed to have something like we now have--a 
Combined Joint Task Force--so that coalitions of the willing 
could have taken on that problem at its earliest stage in 
Yugoslavia. We did not have that instrument, and Europeans 
certainly did not have any stomach for involvement.
    In fact, although well-intentioned, the German recognition 
of Solvenia's independence really precipitated the problem that 
we saw very shortly in Eastern Croatia between Serbs and 
Croatians. The Serbs were concerned about the protection of the 
Serbian ethnics living in that part of Croatia. That, I think, 
was the time when we should have used force and could have used 
it effectively.
    But we didn't. There's a lesson I think we also need to 
learn out of that, my colleagues. As difficult as it is for 
Americans to accept this fact, sometimes there are things that 
are more important than self-determination. The continued 
solidarity of the Yugoslavian state was more important than the 
understandable desire of Slovenians to have independence 
because ultimately, it precipitated in a matter of days a 
Croatian demand for a declaration of independence. Then we were 
off to the violent races.
    That's a lesson we need to learn, and it applies in places 
in Africa as well. Sometimes there are things that are more 
important than self-determination.
    I thank my colleagues for listening, and now I'd like to 
see if we have something to hear from our witnesses. Thank you.
    Chairman Gilman. Thank you, Mr. Bereuter.
    Ms. Lee.
    Ms. Lee. I will be very brief.
    Thank you, Mr. Chairman.
    First let me just say it is no secret where I was in terms 
of how I viewed the military bombing of Kosovo. However, I do 
understand that it is our responsibility that when the United 
States takes military action we must assume a responsibility to 
help rebuild. That's the price that we must pay.
    My concern is at whose expense and in what region of the 
world. We've got critical needs and issues in Africa, Latin 
American, and the Caribbean, so I am very anxious to hear from 
our witnesses to see how this is going to evolve.
    Thank you very much.
    Chairman Gilman. Thank you, Ms. Lee.
    If there are no other Members seeking recognition I am 
going to recess our hearing until the vote is over. Hopefully 
our reporter will get the equipment moving by the time we 
return.
    The Committee stands in recess.
    [Recess.]
    Mr. Rohrabacher [presiding]. This hearing is called to 
order. I will be temporarily in the Chair until Mr. Gilman or 
Mr. Bereuter returns.
    Mr. Radanovich has a short opening statement.
    Mr. Radanovich. Thank you, Mr. Chairman, for holding this 
important hearing today.
    As we are looking at exit strategies for the U.S. forces in 
the Balkans, let me make this one point. Democratization of 
Southeast Europe is one of the most important interests, and 
maybe even more so for our allies in the European Union and 
NATO.
    Every year U.S. taxpayers see their hard-earned dollars 
going toward ensuring peace in this region. Without 
democratization and economic prosperity there, our soldiers 
will remain perhaps for many years.
    By supporting Croatia's membership in NATO's Partnership 
for Peace program, and its accession into the World Trade 
Organization, we will not only be making a sound investment in 
the future stability of Southeast Europe, but we will also be 
sending a clear message to other countries in the region of the 
benefits that come from choosing a democratic path.
    Toward that end, I recently introduced H. Con. Res. 251, a 
resolution that both congratulates Croatia on its democratic 
elections and calls for U.S. support and facilitation of 
Croatia's goals for membership in the Partnership for Peace and 
the WTO.
    Croatia was so clearly a loyal and valuable ally to the 
United States during the Kosovo crisis, and I believe it 
deserves commendation for its stand with the United States and 
NATO during Operation Allied Force and SFOR.
    Croatia also needs direct investments, and I am thrilled 
about the opening of OPIC's office in Zagreb last week. I am 
sure this will prove to be beneficial to both sides. It will 
promote U.S. exports and encourage small business to flourish 
in Croatia, which will also help reduce unemployment in Croatia 
considerably.
    This year's U.S. assistance for Croatia is also critical 
for refugee return, and we must make sure that this assistance 
includes all ethnic groups.
    Clearly, if economic prosperity is enhanced and returning 
refugees see the opportunity to work, they will return more 
quickly and in greater numbers.
    Recently, Secretary of State Madeleine Albright commented 
on Croatia in an interview to Radio Free Europe. She said the 
recent democratic changes in Croatia are strong and exciting. 
She also said that the additional assistance has been 
announced, and that the U.S. is going to look directly at other 
ways to help Croatia.
    I would like to ask just a couple of questions, and to get 
the answers in writing would be just fine--that is, if this 
distinguished panel could comment on what the Administration 
meant when it said that we are looking at other ways to help 
Croatia.
    I would like to hear in more precise terms what U.S. 
assistance will consist of. Would you estimate that this is the 
right moment to reward Croatia's contribution to the success of 
the U.S.-NATO Operation Allied Force and SFOR? What might be 
the timeframe for that? Again, answers in writing would be just 
terrific. I'd appreciate it.
    Thank you, Mr. Chairman.
    Mr. Gejdenson. Will the gentleman yield?
    Mr. Radanovich. Yes.
    Mr. Gejdenson. I'd just be curious to hear from our 
panelists if they can calculate what would happen to that 
assistance if, say, a cap was placed at 15 percent on aid to 
the region, and what that would do to programs like the one in 
Croatia?
    Thank you.
    Chairman Gilman [presiding]. If we could hold that until we 
get to our questions.
    Thank you, Mr. Radanovich.
    Mr. Rohrabacher.
    Mr. Rohrabacher. I will make this very quick, and thank 
you, Mr. Chairman.
    Let me echo the praise of Mr. Radanovich about Croatia. It 
is something we should not overlook. Croatia had a democratic 
election during this turmoil, and not only did it have a 
democratic election, but the opposition party won and power has 
been transferred. This is a tremendous success for the cause of 
democracy and something that we should not forget.
    Furthermore, Croatia during the time period--this time 
period when there was this conflict and tensions were high and 
people were polarized--permitted some of their soldiers who had 
committed war crimes during the conflict to go and stand trial 
and to face justice, and several were convicted. That should 
not be looked at as a negative thing about Croatia, it should 
be a positive thing.
    The fact is that the war criminals are still in power in 
Serbia. The Croatians had a free and democratic election and 
sent their people that they thought might have committed crimes 
to face justice.
    So I would put my name on Mr. Radanovich's bill, first of 
all as a cosponsor.
    But with that said, let me note that it took a long time 
for the United States of America to decide who were the bad 
guys down there--a long time.
    Furthermore, I will just end it with this and say I do not 
think the United States has to pick up the lion's share of the 
cost for these type of operations, either ongoing or in the 
future. I want to know about why we are having to shoulder the 
military cost, and how much that was; and I want to know how 
much after the military action it is costing us now.
    We were told we were going to get out of the Balkans for 
just a couple of billion dollars and within a year or two. It 
has been many years now and it has cost us many billions of 
dollars. It is not realistic to think the United States and the 
people of the United States can continue carrying that load 
after the Cold War is over.
    Thank you very much.
    Chairman Gilman. Thank you, Mr. Rohrabacher.
    Now that the malfunctioning stenographic equipment has been 
repaired, I am going to ask the stenographer to make certain 
that the opening statements are fully recorded.
    We'll now turn to our witnesses for their testimony.
    Ambassador Larry Napper now serves as Coordinator of 
Assistance to Eastern Europe after a long career with our State 
Department.
    After serving with the U.S. Army, Ambassador Napper joined 
the Foreign Service and rose to a number of important positions 
with our diplomatic corps, including key positions at our 
Embassy in Moscow, Deputy Chief of Mission at our Embassy in 
Romania, Director of the Department's Office of Soviet Union 
Affairs, and Ambassador to Latvia.
    Ambassador Napper has also served as a Congressional Fellow 
with our former colleague Congressman Lee Hamilton in 1983 and 
1984.
    It is good having you back before the Committee once again, 
Mr. Ambassador.
    Ambassador James Pardew was appointed to his current 
position last year after having been appointed to the rank of 
Ambassador in 1997. Ambassador Pardew has a long record of 
service with our military from which he has a number of 
decorations.
    Among other positions, Ambassador Pardew served with the 
staff of the Joint Chiefs and the Army General Staff and 
completed a number of foreign tours of service.
    Ambassador Pardew served as a representative of the 
Secretary of Defense at the 1995 negotiations on the Dayton 
Accords for Bosnia. Then he served as Director of the military 
``Train and Equip'' program in Bosnia from 1996 to 1999.
    Dr. Daniel Hamilton is our country's Special Coordinator 
for the President's Southeast Europe Initiative and 
Implementation of the ``Stability Pact'' multilateral aid 
program for Southeastern Europe. Having served as Deputy 
Director of the Aspin Institute in Berlin from 1982 to 1990, 
and then as Senior Associate for European-American Relations at 
the Carnegie Endowment for International Peace from 1990 to 
1994, Dr. Hamilton took up new responsibilities for the State 
Department's policy planning staff as an advisor to our U.S. 
Ambassador to Germany and as an Assistant Secretary for 
European Affairs starting in 1994.
    He now continues to serve as Associate Director of the 
Policy Planning Staff while fulfilling his responsibilities 
with regard to Southeast Europe.
    Gentlemen, we welcome you and we appreciate your taking the 
time from your busy schedules to appear before the Committee 
today. You may summarize your written statements which, without 
objection, will be included in the record. Please proceed in 
whichever order you desire.

STATEMENT OF AMBASSADOR JAMES W. PARDEW, JR., PRINCIPAL DEPUTY 
  SPECIAL ADVISOR TO THE PRESIDENT AND SECRETARY OF STATE FOR 
   DAYTON AND KOSOVO IMPLEMENTATION, U.S. DEPARTMENT OF STATE

    Ambassador Pardew. Thank you, Mr. Chairman. I am very 
pleased today to testify on the U.S. assistance programs for 
Southeastern Europe. I do have a longer statement which I will 
submit for the record.
    Chairman Gilman. Without objection, it will be made part of 
the record.
    Ambassador Pardew. I will briefly summarize our overall 
policy as a framework for U.S. assistance programs, the goal of 
our programs, our successes and challenges that we face as we 
go forward. Ambassador Napper will speak on the specific 
aspects of our assistance programs, including the supplemental. 
Dr. Hamilton will address the Stability Pact for Southeastern 
Europe.
    Our assistance programs in the Balkans are directly linked 
to our fundamental interests there. As I've testified before 
this Committee before, that fundamental interest is regional 
stability.
    Military forces are not the solution to long-term stability 
in the region. They are certainly not the most cost-effective 
way of providing long-term stability.
    Rather, stability requires robust political and economic 
programs backed by sufficient resources to make the difference.
    In pursuit of our interests we've made considerable 
investments in civilian programs in the Balkans in the past few 
years. These investments have produced important returns which 
support our overall goals.
    In Croatia we share your enthusiasm and excitement about 
recent events. Recent elections promise dramatic transition to 
democratic governance, market reforms, and full partnership 
with European and international institutions.
    It is now possible to quickly open doors that were closed 
for so long for Croatia. PFP membership, membership in the 
international organizations, and greater financial assistance 
are open based on performance and support to the Dayton peace 
process.
    Since 1995, 600,000 refugees have returned to their homes 
in Bosnia, and last year 800,000 refugees returned in Kosovo. 
Humanitarian aid helped get them through the winter.
    We have caused reductions in many military forces in the 
area, transformed the Kosovo Liberation Army, held elections in 
Bosnia, and plan to hold elections in Kosovo this Fall.
    Throughout the region, along with our allies, we sponsored 
democratic processes and institutions, economic reforms, policy 
and judicial reforms, anti-crime programs, and independent 
media development.
    We also are using assistance to bolster the democratically-
elected government in Montenegro against pressures from 
Belgrade.
    In Serbia we are tightening financial sanctions and 
expanding the visa list, and supporting Serb opposition in an 
effort to change the regime in Belgrade.
    The job of stabilizing the region is not complete, however. 
We continue to face challenges every day. Hard-line 
nationalists in Bosnia remain in positions of influence. Kosovo 
remains an unstable and dangerous place. Milocevic continues to 
cause difficulties in Montenegro, Kosovo, and Bosnia. The 
transition to democratic and economic reform is simply not 
complete.
    I must highlight, in summary, the problem of crime and 
corruption as destructive forces which cross-cut the region and 
threaten the development of democratic institutions and reform. 
We have both bilateral and regional initiatives to tackle this 
serious problem.
    In Fiscal Year 2000, our bilateral SEED assistance to 
Southeast Europe is $516 million to fund political, economic, 
police and judicial reform, and humanitarian aid--the keys to 
long-term stability.
    Additionally, the Administration has requested supplemental 
funding for Southeast Europe for this year. This funding is 
critical if we are to move our objectives forward in the region 
and provide adequate and secure facilities for our diplomats 
who work in difficult and often extremely dangerous conditions.
    We are clear and consistent with our European allies that 
Europe must pay the lion's share of the financial burden in the 
region, and they have acknowledged this responsibility. In 
fact, the Europeans have pledged $731 million for Kosovo this 
year, which amounts to 60 percent of the pledges for Fiscal 
Year 2000.
    The U.S. share of this spending amounts to 13.9 percent.
    On police, European and Canadian commitments account for 40 
percent of the personnel. The U.S. pledge accounts for a little 
over 12 percent.
    We clearly understand the message from Congress on burden 
sharing and we will continue to work with you in that regard.
    Mr. Chairman, we certainly wish to work with the Congress 
on burden sharing further, and we look forward to receiving 
your bill and reviewing it carefully.
    The issue of flexibility which you mentioned is extremely 
important. We believe that restrictive caps which limit our 
flexibility are not a good idea.
    Now, Mr. Chairman, let me turn to Ambassador Napper who 
will speak to you on the details of the supplemental.
    [The prepared statement of Ambassador Pardew appears in the 
appendix.]
    Chairman Gilman. Thank you, Ambassador Pardew.
    Ambassador Napper.

   STATEMENT OF AMBASSADOR LARRY C. NAPPER, COORDINATOR FOR 
  EASTERN EUROPEAN ASSISTANCE (SEED), U.S. DEPARTMENT OF STATE

    Ambassador Napper. Thank you very much, Mr. Chairman. I do 
appreciate the opportunity to speak with you and the Committee 
again on the state of the SEED Program in Central and Eastern 
Europe.
    Building upon the success of that program over the past 
decade, the President has proposed $610 million in SEED funding 
for Fiscal Year 2001. This request focuses on Southeast Europe, 
a region which, as Ambassador Pardew has suggested, remains a 
region in transition where U.S. vital interests are at stake.
    In addition, the President has submitted a supplemental 
request for Fiscal Year 2000 funding in Southeast Europe. Given 
the urgency of this request, we do ask that Members of Congress 
support the rapid approval of this vitally needed additional 
funding.
    The supplemental requests $624 million in non defense funds 
for the following purposes: $194.5 million in SEED funding for 
Croatia, Montenegro, Kosovo, and Serbia democratization; $22 
million in USAID operating expenses; $31 million in foreign 
military financing to help PFP countries implement reforms to 
facilitate their cooperation with NATO; $2.875 million in 
international military education and training; $239 million for 
the construction of secure diplomatic facilities in Tirane, 
Sarajevo, and Pristina; $24 million in diplomatic and consular 
presence funding for the State Department's on-the-ground 
presence in the region; $107 million in contributions to 
international peace keeping activities to cover our assessed 
costs in Kosovo and also in East Timor; $3.622 million in 
education and cultural exchanges.
    Mr. Chairman, the President's supplemental request contains 
$92.8 million in SEED funds for Kosovo. If approved by 
Congress, this would bring the total SEED appropriation for 
Kosovo to $242.8 million in 2000.
    In addition to this vital SEED funding, we urge Congress to 
fully fund the President's request for $107 million to cover 
our assessed contribution for U.N. peace keeping costs.
    The recent events in Mitrovica underscore that both the 
SEED and peace keeping funds are essential to support UNMIK's 
efforts to establish public order, assure protection of human 
rights, and begin the process of economic recovery.
    UNMIK's success in these areas is vital to ensure that U.S. 
forces can accomplish their mission in safety and security.
    U.S. commitments in Kosovo represent our fair share of a 
broader effort in which our European partners play the leading 
role.
    European countries and the European Commission pledged more 
than 70 percent of the contributions to the Kosovo budget 
already pledged, and have disbursed more than 70 percent of the 
voluntary contributions received by UNMIK.
    In the broader perspective, our European partners pledged 
61 percent of the total amounts pledged up to now for Kosovo 
reconstruction in Fiscal Year 2000, and other non-U.S. donors 
pledged another 25 percent of that total.
    As Ambassador Pardew has suggested, our own percentages 
with regard to the Kosovo budgets--13.4 percent for police, 
12.1, and the overall for Kosovo reconstruction and recovery 
13.9 percent, so that's a very good burden sharing story.
    I want to support the remarks by Mr. Radanovich and Mr. 
Rohrabacher concerning Croatia. The President's request 
contains $35.7 million in supplemental SEED funding for 
Croatia, and if approved, this would bring the total funding 
for that country to $50.8 million in Fiscal Year 2000.
    The recent Croatian elections and the subsequent formation 
of a new government led by the opposition are the most hopeful 
developments in the Balkans since Dayton.
    The initial actions of the new government give us 
confidence that the change in Zagreb is real and profoundly 
hopeful.
    We have a historic opportunity here. With our support 
Croatia can go from a problem to a partner in the pursuit of a 
broad regional peace.
    Mr. Chairman, the President's request also contains $34 
million in supplemental funding for Montenegro. It is 
imperative that our assistance in Fiscal Year 2000 keep pace 
with Montenegro's needs as its democratically-elected 
government struggles to cope with unrelenting psychological and 
economic pressure from Belgrade.
    With the support of the Congress, the President's 
supplemental request for Montenegro would allow us to meet both 
urgent requirements for budget support and essential longer-
term developmental needs.
    If Congress approves the President's supplemental request, 
total SEED funding available for Montenegro in Fiscal Year 2000 
would be $58 million.
    The United States must also continue and broaden its 
support for the opposition to Milosevic within Serbia. American 
support encourages the Serbian opposition to come together 
around common goals of promoting democracy, building a market 
economy, and establishing the rule of law.
    We have allocated $25 million in SEED funds to support this 
process in Fiscal Year 2000. The President's supplemental 
budget request of $15 million would enable us to provide robust 
democratization assistance to Serbia's democratic opposition, 
and to help that opposition begin to prepare for a Serbia after 
Milosevic is gone.
    The current crack down on the Serbian opposition 
underscores the fact that those who have the courage to stand 
up to Milosevic expect and deserve our support.
    Finally, the President's supplemental request contains $17 
million in supplemental SEED funding for regional programs in 
Southeast Europe. These funds are needed to support small and 
medium enterprise, and to increase the effectiveness of our 
existing efforts to fight organized crime in Bosnia, Kosovo, 
and Albania, as Ambassador Pardew has suggested.
    If approved, the supplemental request would bring total 
SEED funding for regional programs in Southeast Europe to 
$106.87 million.
    Mr. Chairman, I recently returned from a trip to Southeast 
Europe, including visits to Kosovo, Croatia and Macedonia.
    I had the opportunity to see firsthand how our Embassies 
and USAID missions are using SEED funds to accomplish vital 
U.S. foreign policy objectives. Our people in the region often 
work in difficult and dangerous conditions. We owe them the 
support that would be provided by full funding of the 
President's request for State and USAID operating expenses, and 
the construction of secure diplomatic facilities in Pristina, 
Tirane, and Sarajevo.
    President Clinton's supplemental request for 2000 and 
budget request for 2001 are essential to implement peace and 
overcome the terrible legacy of ethnic cleansing in Kosovo and 
elsewhere in this troubled region.
    This funding would enable us and our partners to build a 
brighter future and to serve U.S. interests by taking full 
advantage of hopeful new developments, such as the new 
government in Croatia and the emergence of the Stability Pact. 
That is why we would welcome early Congressional enactment of 
the President's proposal for supplemental SEED funding for 
2000, as well as the Administration's 2001 budget request.
    Mr. Chairman, I do have a longer statement and I would 
appreciate it being introduced in the record. Thank you.
    [The prepared statement of Ambassador Napper appears in the 
appendix.]
    Chairman Gilman. Without objection, the full statement will 
be included in the record.
    Thank you, Ambassador Napper.
    Now we'll turn to Dr. Daniel Hamilton, with regard to the 
implementation of the Stability Pact.
    Dr. Hamilton.

 STATEMENT OF DR. DANIEL S. HAMILTON, SPECIAL COORDINATOR FOR 
IMPLEMENTATION OF THE STABILITY PACT FOR SOUTHEAST EUROPE, U.S. 
                      DEPARTMENT OF STATE

    Dr. Hamilton. Thank you, Mr. Chairman and Members of the 
Committee for the opportunity to testify on our efforts to 
stabilize Southeastern Europe.
    I want to complement the presentations made by Ambassadors 
Pardew and Napper by focusing on our cooperation with our 
European partners through a Stability Pact for Southeastern 
Europe, which we believe is an important vehicle to bring 
lasting peace and prosperity to the region.
    I also have a longer statement which I'd like to submit for 
the record, and I will simply summarize it here.
    Chairman Gilman. Without objection.
    Dr. Hamilton. Thank you.
    Mr. Chairman, over the past decade there has been a 
bipartisan effort on the part of the United States to create 
what President Bush called a ``Europe whole and free,'' and 
President Clinton has called a ``peaceful, undivided, 
democratic Europe.'' That Europe is truly within our grasp, but 
it is not there yet because we still need to stabilize 
Southeastern Europe.
    This Europe is within our grasp, however, because 50 years 
ago we recognized that the strategic challenge facing the 
United States in Europe was to defend Europe itself and 
transform Western Europe. Countries that we had talked to 
having ancient animosities at that time, and that had dragged 
the United States into successive wars.
    Because of our success there, after the Cold War we were 
able again, in a bipartisan manner, to turn to stabilize 
Central and Eastern Europe. Through our efforts, through NATO 
enlargement, through the EU's own efforts, and through such 
efforts as the U.S.-Baltic Charter, that part of Europe is also 
on track and is stable.
    We would argue that our core strategic challenge again 
today is to stabilize Southeastern Europe, to do in many ways 
what we had done previously. Due to our earlier success, we 
have strong and prosperous partners to help us do the job. Our 
European allies, particularly the European Union should take on 
the lion's share of this effort. They have agreed with that. 
The President and Secretary Albright have insisted upon it. We 
believe that will, in fact, be the case, and that the Stability 
Pact for Southeastern Europe can be a vehicle to advance that 
bargain.
    The Stability Pact boil-down is really a bargain between 
integration and reform.
    We and our European allies and other institutions--
international institutions, international financial 
institutions--agree to stabilize, transform, and work on a 
long-term plan to integrate the countries of this region into 
the European and trans-Atlantic mainstream.
    The countries of the region, in turn, have agreed to work 
individually and together more than before to create the 
conditions by which that can be possible--in economic terms, 
through economic reforms; in security terms, through security 
cooperation; and by promotion and consolidation of democracy 
and human rights throughout the region.
    We have been working since the Sarajevo Summit, which 
launched this pact last summer, to work ahead on specific 
elements of the bargain. As I said, there are three baskets, if 
you will--security, economics, and democracy/human rights. We 
have some early signs of success in that area.
    Just briefly, on the economic area. The international 
financial institutions--the World Bank, the European Bank for 
Reconstruction Development, the European Investment Bank--have 
all now devised regional strategies for Southeastern Europe 
which they had not before.
    They all support the goals of the Stability Pact, and each 
of them are committing or are looking at commitments on their 
part for further financing for projects throughout this region.
    All the countries of the region through the Stability Pact 
have agreed on what we call an investment compact. That is, to 
commit to country-specific action plans--we have an action plan 
before that--on what they will do to create a climate conducive 
to private investment.
    In the end, it is private sector, private investment, not 
assistance that will transform this region. What we are doing 
through the Stability Pact is creating the conditions conducive 
to private enterprise, not just foreign investment, but 
domestic investment as well, and each of the countries in the 
region have agreed now through this plan and through a 
mechanism that we have to work on concrete action steps to 
create that kind of environment.
    We have also created a business advisory council for the 
region which consists of U.S., West European and companies from 
the region itself, that will work directly with each country in 
the region on private sector advice and what needs to be done 
to transform, again, their investment climates.
    In the security area, the main issue that is focused on 
this region has been corruption. As Ambassador Pardew said, we 
have been very focused on this issue, and that U.S. 
initiative--all the countries of the region through the 
Stability Pact have agreed to what we call an Anti-Corruption 
Initiative. It is not just a piece of paper. It outlines 
commitments of these countries and has an Action Plan to be 
implemented country-by-country on what these countries will do 
to fight corruption. It is tied to specific steps, and we have 
an implementation mechanism, again, country-by-country to work 
on that as well.
    The countries of the region have also signed a Memorandum 
of Understanding that has created a regional Customs Directors 
Association which will facilitate a World Bank loan that's been 
prepared by the Southeast Europe Cooperative Initiative to 
upgrade border crossings and revamp the Customs services of the 
entire region, which I am sure many of the Committee Members 
know has been an issue in terms of corruption and other 
elements. We are trying to marry the anti-corruption elements 
with reform of Customs facilities throughout the region.
    The countries of the region, through the Stability Pact, 
have all agreed on efforts to control, seize, and destroy small 
arms and light weapons throughout the region. They have agreed 
to work on aligning their arms export policies with major 
European and international standards, and to devise a common 
end-user certificate through the region so that such exports 
can be tracked.
    They have all signed on to a declaration confirming their 
commitments to implement conventions against weapons of mass 
destruction and have all agreed--including I note, the Bosnian 
Serbs--have all agreed and called on the Federal Republic of 
Yugoslavia to accede to the chemical weapons convention.
    In the area of democracy and human rights, the country's 
experts from around the region have agreed to examine their 
history. We think an important development that they have said 
together, they will stand together and use historians and their 
education ministries to review textbooks with a view to 
eliminating bias and prejudice, to have an ongoing series of 
efforts to review history throughout the region.
    We think it is an important development, and we would like 
to continue to support it.
    We are working through the Stability Pact on the promotion 
of free and independent media through the region as well.
    Hungary has taken an important initiative called the 
``Szeged Process,'' which is to link efforts to support the 
Serb opposition by working with Serb opposition mayors in 
various countries in Serbia. It has been a helpful initiative 
that we support.
    As I mentioned, the President and the Secretary fully 
expect, and our European colleagues have agreed, that Europe 
must take on the lion's share of this effort.
    The European Union in December took some important steps in 
that regard by announcing that they would begin, and they have 
since begun, accession negotiations with Romania and Bulgaria, 
in addition to Hungary and Slovenia, which were already on 
track. They have agreed that Turkey is a candidate for European 
Union membership. They have taken the further steps that are 
needed to implement their financial commitments.
    President Prodi of the European Commission has announced 
that the European Commission would devote $11.5 billion euros 
to this region over the next budget cycle of 7 years. We think 
that's an important pledge. You can believe we are working on 
holding our colleagues to that.
    If you step back just briefly and look at other things that 
have been achieved, and why the Stability Pact--what's the 
value added of this effort? Let me give you just two examples.
    Bulgaria and Romania had disagreed for 10 years over a 
bridge over the Danube, which created a 500-kilometer detour 
for road traffic. They could not agree on the location or the 
financing.
    Through the Stability Pact, they have now agreed on both 
with no U.S. financial commitments involved. These are totally 
European commitments. We believe it is a significant 
development. It helps not only close that 500-kilometer gap, 
but starts to link these countries again with the European 
mainstream.
    Commission Member Chris Patten recently announced, and we 
have, I think, an announcement today as well, a resolution of 
the congestion at the Blace border crossing between Macedonia 
and Kosovo. Again, through the auspice of the Stability Pact, 
we have devised a way to relieve that congestion and get a 
regional cooperation mechanism in place in that area.
    The last one I would just mention is that NATO and the 
World Bank in a unique partnership, have agreed on 
demobilization and training of retired military officers 
throughout the region. If you will ask officials from those two 
institutions, they never would have come together in this kind 
of partnership if it hadn't been through the good auspices of 
the Stability Pact.
    Our goal now is to take these pledges and these early signs 
of success and turn them into on-the-ground realities to make a 
difference in people's lives so that they see that this is not 
just an abstract international gathering, but something that 
makes a difference.
    We try to aim to advance both parts of our bargain--reforms 
by the countries and commitments by the international 
community--at a regional conference scheduled to be held at the 
end of this month on the region as a whole. We do believe that 
the international financial institutions and the European Union 
will pledge significant figures toward what they call a quick-
start package of regional infrastructure projects and projects 
in the areas of democracy and human rights.
    They are matching the funding to the projects that have 
been proposed through the region now, so the exact figures 
simply are not there, but they should be available very soon. I 
believe we will certainly be in touch with the Congress as we 
know that, and certainly, Ambassador Napper and I would like to 
continue to be in touch with the Committee staff about the 
details of that as it evolves.
    The Stability Pact is really an effort in crisis prevention 
as was mentioned by a number of Members earlier. Crisis 
prevention is cost prevention. With the Stability Pact we can 
transform what has been a primary area of instability 
throughout this region into a stable and prosperous part of the 
mainstream of Europe and the trans-Atlantic community.
    We are not naive enough to believe this will happen easily 
or quickly, but we do believe it is a core strategic challenge 
that we must engage in because we have looked, and as I said, 
we have learned history's lesson. American failure to invest in 
defending American vital interests in Europe has always meant 
we have paid a higher price later. That was the lessons of the 
last century in Europe, and is one we are trying to avoid and 
learn from today.
    Thank you.
    [The prepared statement of Dr. Hamilton appears in the 
appendix.]
    Chairman Gilman. Thank you, Dr. Hamilton.
    We'll now proceed with a few questions.
    Gentleman, in a recent meeting with our Committee staff on 
the issue of aid for Southeast Europe, a State Department 
representative stated that the President would not provide any 
statement of intentions as to how much our Nation would pledge 
or commit to aid in the region over the next 5 or 6 years. Of 
course after the Dayton Accords and the NATO deployment in 
Bosnia, the President clearly stated that what the U.S. wanted 
to pledge and commit as part of a multilateral aid package for 
that country over a 4-year period.
    As representatives for the President's implementation of 
the multilateral aid package for the Southeast Europe region, 
an aid package to which the President committed our Nation at 
the Sarajevo summit last July, can you please tell us why the 
Congress will not be provided with an outline of just how much 
the Executive Branch wants to pledge and commit to any 
multilateral aid package for the Balkans so that the Congress 
may assess the future pattern of the appropriations challenges 
in our overall foreign aid program?
    Any of our panelists? Ambassador Napper.
    Ambassador Napper. Mr. Chairman, thank you for the question 
and I appreciate it. It is a good one. Obviously the Congress 
would like to know something of the Administration's 
intentions, and I hope we've laid those out to the degree we 
can today.
    If you look at the 3-year pattern of the last fiscal year, 
this fiscal year, and the President's budget request for 2001, 
I think it does give you a sense of where we are headed.
    We went from a level of $430 million, for instance, in the 
SEED program in Fiscal Year 1999 to a budget this year of $533 
million. If we did get the supplemental which the President has 
requested, the level after that supplemental, if we got it 
fully, would be $727.5 million. For 2001 we've requested $610 
million.
    So as you can see here, we are not talking about a 
progression of at least the SEED assistance. I think the SEED 
Program is something of an accurate barometer for the entire 
effort in Southeast Europe. We are not talking about a program 
here which is on an ascending scale off the charts. We are 
talking about relatively moderate increases which have been 
necessary because of the events that have transpired on the 
ground in order to respond, and where possible to anticipate 
these developments in a very turbulent region.
    Precisely because it is a turbulent region and very 
difficult to read, it is very difficult to project out beyond 
that 3-year cycle of funding and to begin to talk about exactly 
where the program will be. To begin to give you figures for 
2002, 2003, or 2004 simply seems to us not to be the most 
responsible behavior for the Administration at this juncture.
    I guess that would be my response, Mr. Chairman. We tried 
to give the lay of the land as we see it to your staff and to 
the Committee, and I think that would have to be my response at 
this juncture.
    Chairman Gilman. Thank you, Ambassador Napper.
    Any other panelists care to comment on that issue?
    Ambassador Pardew.
    Ambassador Pardew. Mr. Chairman, I would only like to add 
that it has been extremely difficult for us to project the 
direction that this would go in the out years, but to the 
degree that we've had success, we've also been very careful to 
reduce our commitments.
    For example, we started in Bosnia with 60,000 NATO and 
allied troops. I forget the original number of U.S. troops, but 
it was about 20,000. That number has declined to where we'll 
have about a total of 20,000 international troops in Bosnia 
this year. The U.S. commitment will be less than 5,000.
    Our SEED and other spending has been on the decline as well 
as we have achieved some success in implementing the Dayton 
Agreement. But it is very difficult, we could not see Kosovo 
coming, so in some cases it is just impossible to project 
future requirements.
    Chairman Gilman. What's the number of our troops now, 
Ambassador Pardew?
    Ambassador Pardew. The total number of NATO and allied 
troops will be around 20,000 this Spring.
    Chairman Gilman. How about U.S. involvement?
    Ambassador Pardew. The U.S. percentage of that is 4,600. 
Our total percentage of SFOR is 23 percent.
    Chairman Gilman. Are we proposing to reduce our troops----
    Ambassador Pardew. We have reduced them down to those 
numbers, and we'll reassess from that level, Mr. Chairman, as 
to whether or not there should be further reductions.
    Chairman Gilman. When will that reassessment take place?
    Ambassador Pardew. There is to be a review in NATO probably 
in the Fall.
    Chairman Gilman. So until then we'll stay at the 4,600 
level?
    Ambassador Pardew. That's the plan. Yes, sir.
    Chairman Gilman. Thank you.
    The already-enacted Fiscal Year 2000 Foreign Operations Act 
requires the Secretary of State to certify that our Nation has 
pledged no more than 15 percent of the total resources pledged 
by all donors of assistance to the Kosovo region. The Secretary 
has, in fact, already provided such a certification to 
Congress.
    Why would a certification that our Nation has pledged no 
more than 15 percent of all resources pledged by all donors for 
the entire region of Southeast Europe prove a problem for our 
Secretary, or would it not be a problem for her ability to 
provide such a certification for the region?
    Ambassador Napper. Mr. Chairman, you're exactly correct 
that the Secretary did certify that, but let me explain the 
provision and the context.
    The provision in the appropriations bill applied to one 
donor's conference for Kosovo which took place in November of 
last year. The provision was that the Administration could not 
expend funds for Kosovo until the Secretary of State had 
certified that our contribution at that donor's conference was 
no more than 15 percent, and we did so. That was an event in 
time which took place once and could be therefore relatively 
easily certified.
    The problem with a cap of this kind that would extend into 
the future is precisely the uncertainty of the world, and 
especially that part of the world where you have a constant 
train of unpredictable, unforeseen events. I would personally 
be very concerned as the responsible official for at least the 
SEED part of the account that we would not be able to respond 
to new challenges such as Kosovo or new opportunities such as 
Croatia.
    A couple of the Members have expressed how important it is 
to move quickly on Croatia and we agree 100 percent. If we'd 
been limited by a cap on what we could have put into Croatia 
immediately, we would not have been able to take care of that 
opportunity. So that would be my response, Mr. Chairman.
    Chairman Gilman. Thank you Ambassador Napper.
    We appear to be suffering from some further technical 
problems in that our timing system is not working. I've asked 
our staff to keep track of the time and I will advise Members 
when their time has expired.
    The last question. The European Union has announced that it 
is going to provide about $12 billion in direct assistance over 
a 6-year period to the countries of Southeast Europe, which may 
not be that much of an increase in aid to the region by the EU. 
Does that $12 billion figure include expected aid donations by 
the EU member states? If not, how much do you expect might be 
provided by those individual states over a 5 or 6-year period 
to aid the countries of Southeast Europe, and what other 
amounts of aid to the region other than that from EU or U.S. do 
you expect might become available to that region, such as aid 
from Japan or the World Bank?
    Dr. Hamilton. Mr. Chairman, the pledge to which you 
referred is the pledge by President Prodi of the European 
Commission's next budget cycle to the region, so it is limited 
to the finances by the Commission itself.
    We fully expect that EU member states will add 
significantly to that figure. They go through their respective 
budget cycles. Most of them do not do multiyear budgeting, so 
it is hard to do the same projection for each EU member state 
as the Commission has done through its cycle.
    We do, however, know for instance that the German 
government, and this has been a public statement, has said that 
they intend to invest 1.2 billion marks for the region in 
support of the Stability Pact over the next 4 years. This would 
translate into $300 million marks a year over this period.
    The Dutch government has made similar statements. I 
hesitate to go into the specifics because they have to go 
through their own parliamentary processes as well.
    What we are trying to do is ascertain the exact levels in 
advance of this regional conference, so that at the regional 
conference we fully expect EU member states and the Commission 
to be able to say what they will pledge over what period of 
time.
    The regional conference is intended for donors to pledge 
over an envelope of 2 years, and we do anticipate that our EU 
colleagues, as well as countries such as Japan, and countries 
such as Switzerland and Norway who are all members of the 
Stability Pact would also make those pledges known at that 
time.
    Chairman Gilman. Thank you, Dr. Hamilton.
    Let me remind our Members that, at the end of our hearing 
today, we will have a markup on two items. We hope that our 
Members will remain after our hearing, so that we can have a 
quick markup on two very important measures, one concerning 
Austria and the other one concerning Mozambique. So please bear 
with us and stand by.
    Mr. Lantos.
    Mr. Lantos. Thank you very much, Mr. Chairman.
    For the sake of moving the process, I will not ask any 
questions. I'd like to make just a very brief statement because 
my position was clear from my opening remarks.
    We are paying for past mistakes, and as is always the case 
when we fail to deal with an issue at a point when it is in its 
embryonic stage, we then pay for it heavily in blood and in 
treasure later on. That's what we are dealing with.
    I think this is a well crafted, serious, responsible 
proposal and I am in full support of it. I want to commend our 
witnesses and I want to commend the Administration.
    I do want to just make a very brief observation concerning 
your questions on draw downs of American troops. I think there 
is a real danger that we fall into the trap of considering draw 
downs as ipso facto positive. There comes a point where draw 
downs add to the danger that our troops face. I think it is 
very important to recognize that in dangerous situations, and 
certainly the Balkans qualifies, there is a great case to be 
made for overwhelming force being on the ground----
    Chairman Gilman. Make a comment on procedure.
    We'll continue with our hearing. Mr. Bereuter is going down 
to vote at this time and will come back. We will continue our 
hearing without any break.
    I am sorry for the interruption, Mr. Lantos.
    Chairman Gilman. The vote on the Floor relates to the 
Hansen Amendment to the airport bill.
    Mr. Lantos. Right.
    I think there is a very strong case to be made for having 
overwhelming force on the ground to deter the kind of violence 
which we have seen lately from both the Serbian and the 
Albanian side. I think this ritualistic incantation that draw 
downs are good contains very serious seeds of danger.
    We have had plenty of examples since the end of World War 
II where adequate U.S. presence, military presence on the 
ground--both in Europe during the Cold War, in South Korea, 
continuing as of today--have been successful in deterring 
violence and military activities. The Balkans are no different.
    I am no more inclined to support a U.S. force of 3,000 than 
I am a U.S. force of 4,600 or 5,900. These have to be military 
judgments made by competent military commanders on the spot.
    I believe strongly in the responsibility of Europeans to 
carry the bulk of the load, and our role at this stage should 
be a minor participant role. However, I do not think it is in 
our national interest to press for further reductions 
irrespective of the military judgments involved.
    General Clark is a uniquely qualified American military 
commander to make the judgment on the level of our 
participation, and I think it behooves Congress to support a 
proven and successful military leader following the conclusion 
of an incredibly successful military operation without a single 
American battle casualty, and recognize that some of these 
troops may be there for a long, long time to come. That is 
clearly preferable to a reemergence of hostilities in the 
Balkans, which is obviously the alternative we face.
    I thank you, Mr. Chairman.
    Chairman Gilman. Thank you, Mr. Lantos.
    Mr. Rohrabacher.
    Mr. Rohrabacher. I agree with Mr. Lantos in terms of making 
sure that we have adequate forces. We do not want Americans to 
die because we are being penny wise and pound foolish, but I 
also agree, Mr. Lantos, that the Europeans certainly need to 
carry the bulk of this weight.
    As of this time, over the last 6 years, how much money have 
we spent, and how much have our European allies spent? We are 
talking about military and all other spending.
    Ambassador Napper. On the developmental assistance side, 
Mr. Rohrabacher, the figures would be for the Europeans 
approximately $10 billion in developmental assistance over the 
period 1991 to 1999, and for the United States in a comparable 
period something on the order of $2.1 billion.
    Now, on the military side, I am not sure we have the 
comparable figures.
    Ambassador Pardew. I have some figures here, Mr. 
Rohrabacher which I will give to you, but I'd also like to take 
this for the record because I think it is an important 
question. Let me give you the information I have.
    The total figure for military and nonmilitary expenditures 
for Kosovo in Fiscal Years 1999 and 2000 is $6.3 billion.
    Mr. Rohrabacher. Excuse me. Could you repeat that again, 
please?
    Ambassador Pardew. The total figure for military and 
nonmilitary expenditures in Kosovo in Fiscal Years 1999 and 
2000 is approximately $6.3 billion. Of that amount, 
approximately $1.2 billion comes from the Department of State 
accounts. This sum includes a supplemental appropriation. 
That's what I have on Kosovo.
    Mr. Rohrabacher. I have a figure in front of me that says 
the U.S. has expended about $12.95 billion--so $13 billion on 
peace keeping and military operations in former Yugoslavia 
since 1991. Is that an incorrect figure?
    Ambassador Pardew. I cannot say if it is correct or 
incorrect, sir.
    Mr. Rohrabacher. OK.
    Our European allies have spent $10 billion in assistance to 
that area. Is that right? Is that what you testified?
    Ambassador Napper. That would be our estimate on the 
developmental assistance side. Yes.
    Mr. Rohrabacher. It seems to me that we are spending more 
than 50 percent, frankly, of what's going on down there. My 
guesstimate, from what you've said and what I am reading here, 
I think we are spending 50 percent. I think we are carrying the 
load at 50 percent. My guess is on the military side we are 
carrying. During the actual fighting that took place, we 
carried maybe much more than that.
    Ambassador Pardew. Let me give you a couple more numbers. I 
want to give you a Bosnia number. I think you said Bosnia too, 
right?
    Mr. Rohrabacher. OK.
    Ambassador Pardew. Let me just make a general comment and 
then we will, I think, get some numbers for the record.
    We are talking here largely about civil implementation 
programs, and we are working very hard to stay within the 
guidance that the Congress has sent to us.
    I cannot speak to military spending. However, to me, 
military spending is based on what it takes to prevail. If our 
military commanders believe that the forces are required--be 
they American or European or whatever--we need to prevail 
there.
    Mr. Rohrabacher. That makes sense if you were doing it on 
your own, what you just said makes all the sense in the world 
if you're doing it on your own. If you're not doing it on your 
own, then it could mean that we are being treated as a bunch of 
suckers by Europeans who are letting us fly all the missions, 
take all the risks, and then, of course, give us no gratitude 
in the end.
    I sat next to some Europeans here for a NATO meeting just a 
moment ago, and they were trying to tell me how the United 
States was actually at fault for World War II because we had 
gone in and helped in World War I, which prevented a compromise 
from happening, and of course because they didn't have a 
compromise from World War I, that led to World War II. That 
gave them a good reason not to be grateful for all the hundreds 
of thousands of Americans that gave their lives over there to 
save their hide. The Europeans are not going to be grateful to 
us.
    We have to do what's right, and we have to figure out what 
our role is in the post-Cold War world. It is not to bear the 
burden for people who are richer than us and have the 
capabilities of keeping peace in their backyard. We'll see. The 
Balkans is the first major operation after the close of the 
Cold War, and we'll see when all the accounting is done whether 
the American people feel that that's the appropriate role and 
the appropriate level of investment for the United States of 
America.
    I've got some questions on that obviously myself, but that 
does not reflect on you guys. You're trying to do your job in 
the executive branch with the President. Over here in the 
Congress, we are trying to make the right decision.
    Ambassador Pardew. My only point was that we cannot speak 
for military spending. You make some excellent points here.
    I would just say that within the civil side of this we are 
making every effort to ensure that we pay our fair share, but 
nothing more than that.
    Ambassador Napper. If I could just make one further 
comment----
    Mr. Rohrabacher. Could you hold on, I am worried I am going 
to miss this vote.
    Chairman Gilman. We have about 4 minutes remaining on the 
vote.
    Mr. Rohrabacher. I've got to run, I am sorry.
    Chairman Gilman. The Committee will stand in recess. Mr. 
Bereuter is on his way back and will reconvene our hearing as 
soon as he returns.
    Mr. Bereuter [presiding]. Ambassador Napper, I understand 
you wanted to respond further to a point that was made or an 
issue that was raised just before the temporary recess?
    Ambassador Napper. Thank you, Mr. Bereuter, I appreciate 
that opportunity.
    Mr. Rohrabacher did refer to some figures, but I thought it 
might be useful just to review a couple of figures that we put 
on the table earlier and reflect the Administration's 
commitment to burden sharing and our success in achieving 
burden sharing, particularly in Kosovo at this juncture.
    What I would call the key benchmark, the yardsticks at this 
point, are the contributions to the Kosovo consolidated budget, 
which is the budget that runs the territory, contributions to 
police deployments, and overall contributions to recovery and 
reconstruction in Kosovo. On each of those we have an excellent 
burden sharing story to tell.
    With regard to the Kosovo budget, we have contributed 
approximately 13.4 percent of the total contributions made for 
1999 and 2000. Of the number of police now deployed in the 
territory, a critical factor for maintenance of stability and 
the creation of order there, we are at about 12.1 percent of 
total police deployed.
    Mr. Bereuter. Which country is that?
    Ambassador Napper. The United States.
    Mr. Bereuter. In Bosnia or----
    Ambassador Napper. Kosovo.
    If we look at costs overall for reconstruction, economic 
revitalization, our percent is at 13.9 percent. Those are the 
best calculations we have right now. We've worked very hard on 
these numbers, and we feel that they are accurate.
    With regard to Bosnia, over time, over the 4 or 5-year 
period of the economic reconstruction and revitalization effort 
in Bosnia, our percentage has been pretty consistently at 18 
percent of the total international community effort there.
    So I do think we have good burden sharing. We work very 
hard at it, we take it seriously. It is a matter of discussion 
at the highest levels whenever Europeans and Americans meet on 
the Balkans.
    Thank you.
    Mr. Bereuter. Thank you.
    I'd like to proceed with some comments and questions. I 
thank you gentlemen for your testimony and for what you're 
doing to oversee our resources and to bring coordination to the 
area.
    I do have to tell you that I am very unsatisfied with 
what's happening in Kosovo and Bosnia, and ask for redoubled 
efforts in certain areas.
    One thing that is notable in your presentations is there is 
no focus on Macedonia. Macedonia has borne a higher cost for 
what has happened in the region, particularly in Kosovo, than 
any other country. You should address that issue, and Congress 
should be responsive to those concerns. They have a government 
headed by a prime minister who is a small ``d'' democrat, 
elected in 1998. They deserve our assistance and we are not 
giving it to them in any substantial way.
    Dr. Hamilton, I noticed your comments about that border 
crossing. I have seen it from the air. I understand we have, or 
will have, examples of road rage there with people waiting in 
line for up to 2 days. Undoubtedly, there are examples of 
corruption there as well. We have to solve that problem.
    I'd like to know who is blocking the progress on East/West 
rail service from Albania to Macedonia to Bulgaria. I'd like to 
know why that's not moving through the international financial 
institutions.
    I notice that the SACEUR Wesley Clark has called for more 
troops in Kosovo. I understand why he's made that call but it 
is the wrong call. It is international police that are not 
there, so military personnel are doing things that should be 
handled by the international police force.
    Having been in Kosovo 2 weeks ago, I am distressed to see 
the slaughter of Serbs by the Albanian Kosovars in those 
communities, despite the fact we are trying to give them 24-
hour-a-day protection. Across the border in Presevo you have 
ethnic cleansing by the Serbs of those Albanian ethnic 
communities.
    I noticed the tanks of the 1st Infantry Division deploying 
on high ground overlooking that border, and I hope they'll be 
given the order to fire if necessary to stop inappropriate 
conduct on the Serbian side of the border.
    I am concerned that the Europeans and other countries 
committed to providing civilian resources in Bosnia and in 
Kosovo are failing to deliver those resources, especially, of 
course, police.
    I notice the calls for additional funds for peace keeping 
in the Balkans and in East Timor. I hope you are living with 
what you should understand by now is a limitation, and that we 
are providing no more than 25 percent of peace keeping forces' 
cost to the United Nations. We are not providing 31.7 percent. 
Previous democratically-controlled and Republican-controlled 
Congresses have said we are providing no more than 25 percent. 
That's part of the reason we had the dispute regarding the size 
of our arrearages to the U.N.
    I know Ambassador Holbrooke is committed to trying to get 
those changes, but I am hoping that these figures are not 
intentionally or inadvertently taking us over the 25 percent 
level. If necessary, I will add an amendment to legislation to 
ensure that no more than 25 percent is provided.
    I intend to vote against the supplemental. If I vote 
against it, not that I am so powerful, you're not going to get 
it passed because a lot of people of the same view are not 
going to vote for that supplemental.
    We need to re-orient; we need to get a lot tougher on 
corruption. Somehow you've got to get a tough on corruption in 
Bosnia.
    We are getting no direct foreign investment there. I've 
never thought the Dayton plan was implementable, but it 
certainly is not implementable as long as we have this level of 
corruption from all parties in Bosnia.
    So unless you can provide us some assurance that you are 
going to provide some assistance, or be willing to take 
Congressional initiatives on Macedonia, and that we are going 
to get international police comprised of people from the 
European Union countries and other European nations, we are not 
going to pay more than 25 percent. I do not know why we should 
support the supplemental.
    Other than that, I am happy with things.
    Ambassador Pardew. Mr. Bereuter, you covered a lot of 
territory there. I cannot write fast enough to get all your 
points down.
    Let me just hit some high points if I could.
    First, on Macedonia, we agree that progress has been 
significant there. I will let my colleagues speak to what is in 
the works for them.
    On the Blace border crossing point, we hope that 
construction can begin on off site facilities which will allow 
these trucks to pool before they travel to the site and we can 
clear that up.
    Mr. Bereuter. Do you think you can move them across the 
border more quickly?
    Ambassador Pardew. Yes. Part of this is processing. There 
needs to be an offset place where they can go and be processed 
and then they can move through the border crossing site. 
There's just a limited road space to Blace, and to widen the 
roads and so forth is a huge investment, so we are trying to do 
it other ways.
    Mr. Bereuter. You know this is a major lifeline to the rest 
of the world. This is the Thesaloniki port connection.
    Ambassador Pardew. Yes, sir. Unfortunately the lifeline 
also goes through Serbia. One of the real problems here is the 
main four-lane highway through that region goes not through 
Kosovo, but actually through Serbia. We cannot use that route, 
of course. It is the lifeline to Kosovo.
    Now, there are two things to help the transportation 
system. Blace is one initiative we are working on, and we 
expect construction to start right away to fix it. The railroad 
connection there also has to be improved. The Germans have 
provided additional locomotives, and we are doing some things 
there to help as well.
    Mr. Bereuter. What about the East/West corridor?
    Ambassador Pardew. I cannot answer that. I wrote that down. 
Maybe Larry can speak to that.
    Ambassador Napper. Mr. Bereuter, we agree with you entirely 
about the importance of Macedonia. For that reason, in the 
Fiscal Year 2000 assistance budget, we are doubling the base 
assistance program for Macedonia.
    We began in Fiscal Year 1999 with a base assistance program 
there of $16 million. We are increasing that to $30 million in 
Fiscal Year 2000. So it is roughly doubling it. We intend to 
try to maintain that level provided for Macedonia because we do 
believe it is important and a vital country for the stability 
of the region.
    We want to support the multiethnic government that's been 
formed there. I was just in Macedonia, had good talks with the 
government about how we would use this assistance. I think we 
are trying to move vigorously to support them.
    Mr. Bereuter. I was there about 12 days ago with 12 Members 
of Congress. I do not know if that was before or after your 
visit.
    Ambassador Napper. It was just about the same time, as a 
matter of fact, because you had just been in there, I think, 
the day before.
    Mr. Bereuter. I noticed the French would not let us keep 
our airplane on the apron while we were there for 1 day, but 
that's a side issue with the French. We had to fly it all the 
way back to Italy, and then it came back to pick us up 6 hours 
later.
    Ambassador Napper. With regard to the East/West transport 
corridor which you mentioned, under our South Balkan 
Development Initiative, the United States has provided $30 
million over the last 4 years for the development of that East/
West corridor that links Albania, Macedonia and Bulgaria. We 
have been providing considerable assistance there.
    What we want to do now is to move that assistance into a 
multilateral framework under the Stability Pact. Dr. Hamilton 
can address that in a moment.
    Mr. Bereuter. Ambassador Napper, I thought there was a 
request pending before the World Bank, and it's been blocked in 
the World Bank. It seems to me the World Bank has a role in 
this and this would be a multilateralization of that 
assistance.
    Ambassador Napper. That's exactly what we are trying to do. 
We are trying to take a bilateral program, which we have been 
funding for the past 4 years, in advance of the international 
community, rally support for Macedonia and the other two 
countries, and trying to put it in and develop greater 
international assistance for it. I agree with that, and that's 
the clear direction that we are headed.
    Mr. Bereuter. International police?
    Ambassador Napper. On international police, yes. We agree 
with you that international police are, in fact, in many ways 
the key to the problem of maintaining public order. Here the 
story frankly is not--I agree with you, it is not as good as we 
would have perhaps hoped by this juncture.
    The total number of the police authorized for the Kosovo 
mission at this point is 4,718.
    Mr. Bereuter. The original request was 6,000 and cut back 
to that, I believe.
    Ambassador Napper. Actually----
    Ambassador Pardew. The new requirement now is about 4,800.
    Ambassador Napper. Right.
    Mr. Bereuter. The original request, a suggestion from the 
international people, was 6,000 and we are at, about 2,000?
    Ambassador Napper. The Security Council of the United 
Nations is the body that makes the decision as to how many 
police are authorized for the mission. They started out with an 
authorization of just over 3,000 police. That authorization was 
then increased at the suggestion of the people on the ground to 
this 4,718 figure.
    Mr. Bereuter. Is it true that we actually have a reduction 
in people there now? Are forces leaving and not being replaced?
    Ambassador Napper. No, I think the reverse is true. There 
is an increase in the number of police deployed. There are 
2,375 police deployed, that's the figures we have today, which 
leaves you with 52.3 percent of those authorized deployed.
    Now that is not adequate, and we are trying to get that 
figure up. That's one of the things we have in the request for 
the supplemental, which I hope you will reconsider your views 
of that and help us.
    Mr. Bereuter. It depends on how good you can make the 
Southeast Balkan ones, because my problem is throwing the money 
away in Colombia.
    Ambassador Napper. I would not be able to address that, Mr. 
Bereuter.
    But I do hope that at least the Southeast Europe part of it 
could earn your support. Part of that is to provide some 
additional U.S. police, and we are pressing very hard with our 
European allies to get their police number up.
    It has improved somewhat. They're now at 64 percent of 
their pledges for police and moving up in the right direction. 
So the police situation is not adequate there, we agree with 
that, but we are increasing our own commitments and we are 
urging others and having some success in getting them to 
increase.
    Ambassador Pardew. Let me just add a point, please. There 
are really three elements on police. First there's the 
international police, and those numbers are not adequate--2,300 
of 3,700 required.
    Then there's the Multinational Support Unit (MSU). These 
are units in Kosovo for riot control and so forth. We have 
three units that have volunteered so far, three countries that 
have volunteered. They have not yet arrived. It is an issue of 
facilities, but we are hopeful that facilities will be 
available, soon.
    The third element is the local police. We had to start from 
scratch creating local Kosovo police, creating from scratch a 
police training academy, recruiting people, and so forth.
    Mr. Bereuter. It is very difficult, I know.
    Ambassador Pardew. We've had two classes graduate. We are 
trying to increase the output to 500 every 8 weeks, and to find 
an additional facility outside of Kosovo, in Europe, where we 
could double the number of local police this coming year.
    Mr. Bereuter. Can they be trained in Budapest at the center 
there?
    Ambassador Pardew. The Hungarians have made an offer. The 
Swiss have made an offer, and other countries are looking at 
possibilities of using their facilities for off site training.
    Mr. Bereuter. I was told there are 173 graduates out there 
today, 8 of whom are Serbs.
    Ambassador Pardew. There are two classes of about 175 each. 
One just graduated before you got your number. A very, very 
small number of Serbs participate in this program and there are 
many reasons for that. The Serbs in the north are simply not 
promoting participation. Second, some Serbs are fearful of 
working with the Kosovars. We are encouraging Serbs to 
participate----
    Mr. Bereuter. We are trying to employ them at Bondsteel. A 
very small number said they are willing, as Kosovar Serbs, to 
be employed, but that Kosovar Serbs have been killed in a 
couple of instances or intimidated in others so they do not 
show up anymore.
    Ambassador Pardew. Intimidation is a major problem 
throughout Kosovo. That's true. We are doing everything we can 
to prevent that, and to work with the moderates, but the 
influence of extremists is still significant and it is a 
problem.
    Ambassador Napper. Just one other question that you had, 
Mr. Bereuter, was about the assessed U.N. peace keeping costs. 
I wanted to assure you that the level of peace keeping funding 
that we've requested in the President's supplemental would not 
exceed 25 percent of the U.N. assessment, so if we got 
supplemental, we would not exceed 25 percent.
    Mr. Bereuter. I am glad to hear it.
    Ambassador Napper. A couple of points briefly on the 
question of the Europeans.
    As I said, every time Americans and Europeans meet to 
discuss this issue--the Secretary will do so again tomorrow 
when she meets Patten and others in Brussels--we've had 
discussions continually on the question of European commitments 
and fulfilling those. We've seen some success on this.
    The budget cycles are different. They only begin their 
budget cycle at the beginning of January, and so disbursements 
come later than ours because we have a budget cycle that begins 
a bit earlier. But we have, for instance, seen considerable 
European commitments fulfilled on the Kosovo consolidated 
budget. They've just deposited $10 million in that and another 
$20 million is due at the middle of March. So these commitments 
are beginning to be fulfilled.
    Mr. Bereuter. What do you feel about their response to the 
need to keep their commitments on police?
    Ambassador Napper. I think they----
    Mr. Bereuter. I know the Danes are, but who else is?
    Ambassador Napper. I think there are a number of European 
governments that have begun to increase their commitments on 
police. For instance, the Austrians have deployed 49 out of 50 
of the ones that they had promised. Denmark is 26 out of 26. 
Finland is 20 out of 20. France is current with their 
deployment. Others are lagging. In fact, there are other--
because this is a worldwide police effort, there are other 
countries that are not European countries that, in fact, are 
the ones that are, if you will, lagging a bit behind.
    Mr. Bereuter. The Europeans provide about 40 percent? Is 
that correct--only 40 percent of the total police force?
    Ambassador Napper. They have provided----
    Mr. Bereuter. Pledged, I mean.
    Ambassador Napper. They have provided 64 percent of their 
total pledge.
    Mr. Bereuter. Overall, of the total police force, their 
commitment is only about 40 percent? Is that roughly correct?
    Ambassador Napper. If you take the European Union countries 
and the other OSCE countries, it is about 40.8 percent, yes.
    Mr. Bereuter. The OSCE countries enlarge dramatically 
beyond the EU countries.
    Ambassador Napper. Yes.
    Mr. Bereuter. It seems to me that the Europeans are playing 
a pretty small role if their overall commitment, even though 
they haven't met it, is only 40 percent.
    Ambassador Napper. They could be doing more, we are urging 
that they do so, and it is improving. The numbers are improving 
on the European commitment.
    Mr. Bereuter. The problem with having peace keeping forces 
from the rest of the world, in many cases, is that outside 
people are not culturally attuned at all to that environment. 
It is bad enough for a European or an American to go into that 
area, but forces from Southeast Asia or from Africa have 
problems from the beginning. They, in fact, create problems at 
times, unfortunately.
    If the Europeans cannot pick up a much larger role of the 
international police keeping force, I do not think you're ever 
going to get an effective police force there that meets the 
4,000-plus requirement.
    Ambassador Napper. We are certainly trying to. The police 
effort there certainly involves an effort to keep a certain 
standard, to have a certain standard in terms of the 
capabilities of the individual policeman to do his job. That 
applies across the board.
    It is not an ideal situation. We are relying on a 
multilateral force to be organized, and in part, as we do want 
to keep our commitment to a relatively small part, we have to 
encourage others to deploy. It is not to our satisfaction at 
this juncture, but there has been improvement.
    Mr. Bereuter. I will just look for what you can do through 
the Administration to increase the European commitment. You're 
stuck with me because I have no colleagues here, so you're 
suffering through my questions, but I haven't heard yet anyone 
address, and maybe I haven't given you a chance, the problems 
of corruption, particularly in Bosnia.
    Ambassador Pardew. Let me address what we are doing to 
solve the international police problem.
    The President is personally involved in this, making phone 
calls, discussing the issue with his counterparts. He's 
directly engaged and encouraging our European colleagues to 
contribute more police.
    Secretary Albright is meeting tonight with her colleague. 
This will be a major topic of discussion in that meeting.
    We are working this at every level because we recognize 
this is a critical issue holding us back.
    Mr. Bereuter. I would like to strengthen your hand, so I 
hope you will recognize that when you see my handiwork.
    Ambassador Pardew. On the issue of corruption in Bosnia, we 
are working this at two levels. First, there's the criminal 
element of this. In that regard we are improving the quality of 
our assistance there by providing FBI and other expertise. We 
are working, again, with our European allies, to create an 
armed international police element to participate in the 
investigative process of corruption at a high level.
    The second element of the anti-corruption program is 
economic reform. We have to break the link of the nationalist 
parties controlling economic enterprises. We are working with 
the World Bank, the IMF, and others to take a tough position on 
conditionality to force privatization and reform. We are not 
happy with the level of privatization in Bosnia at this point 
to get these companies out of the hands of these parties and--
--
    Mr. Bereuter. I think you understand the problem, and I 
just think you're going to have to do something really dramatic 
to break through here. Otherwise we are just not going to get 
direct foreign investment in there. You're not going to see a 
willingness for countries to put resources into Bosnia.
    Ambassador Pardew. We have passed that message to the 
leadership there as late as yesterday when Secretary Albright 
met with the presidents. We have told them there's no 
international commercial bank in Bosnia. We are hopeful that 
one will be there in the next couple of months.
    Our Ambassador to Bosnia, Tom Miller, has withdrawn 
assistance on privatization, specifically to make the point. I 
have worked through Treasury with the IMF and the World Bank to 
toughen the conditionality to force the issue on privatization.
    Congressman, this is one we are taking extremely seriously, 
and we are building in some very tough conditions to make it 
happen.
    We want the payment bureau taken down and we've got a 
schedule to do so. The payments bureau is a holdover from the 
old communist system, the system they used to move money 
through a government. We plan to have it dismantled by the end 
of the year, and we are going to take a very hard line with it.
    Mr. Bereuter. It may be helpful to you to provide some 
detail on that before we go to debate on these issues, and I'd 
be interested in seeing it.
    Ambassador Pardew. I'd be happy to.
    Mr. Bereuter. I need to go vote but I want to give Dr. 
Hamilton a chance.
    Dr. Hamilton. Just briefly, on Macedonia in particular. On 
Blace, part of the arrangement, the deal that's coming 
together, is a one-stop process, so that instead of stopping 
along the border they just go right through it one time.
    The construction would facilitate the off-road, and then 
when they're ready to go they'd just go across. As Ambassador 
Pardew said, the construction of that should start right away.
    On your issue on the rail, the Committee has made clear our 
effort here is to leverage European and IFI funding. Through 
the Stability Pact, what we have done is provide a package on 
energy, on transportation, and on environment and water. At 
this regional conference we expect that the Europeans and the 
international financial institutions will approve a solid 
package for Macedonia in these three areas which connects the 
Macedonians to their neighbors in energy, transportation and 
water, and that these projects would be able to start.
    The project you mentioned has been part of the vetting 
process by the international financial institutions so that 
they would hopefully be able to fund that. That is what is 
underway.
    The other part we have made clear to our European 
counterparts is the need for the European Union to open its 
market further to access for not only Macedonia, but the other 
countries in the region. As Secretary Albright made that point 
as recently as yesterday, she will be seeing President Prodi 
tomorrow and making the same point.
    We are working very carefully with the Macedonians right 
now because they are the Co-chair of the economic table for the 
Stability Pact. The international community met in Skopje about 
a month ago, and the government pledged good things in that 
area. But they have signed this investment compact which 
pledges them to work on specific reforms in the economic area.
    We have created a country team mechanism by which the donor 
community works with key decisionmakers in each country 
government, including Macedonia. The team just met on Tuesday 
with the senior levels of the Macedonian government on their 
next steps on economic reform. It is a supportive group. It 
includes all the donors, and it is proceeding.
    So there are a number of things that are focused on 
Macedonia. We hope to have more.
    Mr. Bereuter. Thank you. I have an educational initiative 
that I will offer. I hope you will look kindly on if you can.
    Does the gentleman from California have questions? 
Otherwise I am going to dismiss the witnesses.
    Mr. Sherman. Yes, I do.
    Mr. Bereuter. Just let me say a couple of things here 
first.
    The Committee will submit questions for answers in writing 
to our witnesses, and I want to say before I leave that I 
appreciate your testimony and your responses.
    I am going to turn the chair over to Mr. Lantos and hope 
for the best here. The other gentleman from California, Mr. 
Sherman, can ask his questions after which time, if Chairman 
Gilman is not back, Mr. Lantos is free to dismiss the 
witnesses. Then we'll have a short break, pending Mr. Gilman's 
return, at which time the Committee will markup the two bills.
    Thank you very much.
    Mr. Lantos.
    Mr. Lantos. Mr. Sherman.
    Mr. Sherman. Japan is physically closer to Bosnia and 
Kosovo than my district in California. How much money, how many 
troops, how many lives have been put on the line by the 
Japanese to defend peace and security in Southeast Europe?
    Ambassador Pardew. First of all, as you know, Congressman, 
Japan, I think, has some restrictions on that. Their military--
--
    Mr. Sherman. So they benefit economically by having 
restrictions--Is there any restriction in the Japanese 
constitution that would prevent them from sending money to pay 
for the American troops?
    Ambassador Pardew. The Japanese are contributors to the 
Kosovo----
    Mr. Sherman. How much money have they sent?
    Dr. Hamilton. Japanese contributions and disbursements to 
UNMIK, the total pledged is $7.3 million, which is 4.1 percent 
of the total pledged.
    Mr. Sherman. That's of that particular agency. But when you 
look at the cost of establishing peace, first in Bosnia then in 
Kosovo, when you look at putting American lives on the line, 
you would not say that the Japanese effort is 4 percent of the 
American effort in terms of the total cost, including the cost 
of maintaining military presence there.
    I realize that's comparing apples and oranges. I am just 
bringing this question up to illustrate the fact that other 
rich countries are shirking their responsibilities. It is 
absolutely absurd that we still have peace keeping troops doing 
the job that Europeans should be doing, and that we are still 
incurring a cost to do that. I think historians are going to 
have to compare this to our reaction in southern Sudan where 
neither Europe nor the United States is doing anything. A 
Europe that cannot keep peace in Europe obviously makes it more 
difficult for us to do anything in southern Sudan.
    Ambassador, I can see that you wish to respond.
    Ambassador Napper. I just wanted to add one other fact for 
the record, Mr. Sherman. For our calculations with regard to 
the overall burden sharing effort in Kosovo, Dr. Hamilton has 
mentioned the contributions to the consolidated Kosovo budget, 
but taken as a whole, the Japanese contribution thus far is 
$88.7 million out of a total of $1,210,000,000. So it is a 
little over 7 percent.
    Mr. Sherman. It is tough enough that the foreign services 
of Europe and Japan do everything possible to overstate their 
effort and to understate ours. My fear is that our own foreign 
policy establishment does likewise. If anyone thinks that the 
total effort in Kosovo was a $1.5 billion effort, that the 
total effort in Kosovo of all countries was less than it costs 
to build a freeway interchange, then they must have been 
sleeping through the entire war.
    I do not know what figure you used, but to look at what was 
the primary focus of American military power for many months 
and to attribute less than one-half of 1 percent of our 
military budget during the period of hostilities toward what 
was the focus of our entire military establishment illustrates 
the fact that our own foreign policy establishment is working 
hard to explain, to understate the fact that American 
taxpayers, American men and women in the military are bearing a 
very disproportionate share of the load. Even today, George 
Bush, Governor of Texas, is able to say quite poignantly that 
even if we are forced by circumstances to be the peacemakers, 
why are we stuck being the peace keepers?
    What especially concerns me is we were told to get involved 
in Kosovo because Europe was so much more important to us than 
Africa, because Europe was so economically powerful and 
significant, yet this powerful European continent cannot patrol 
a tiny area, an area where less than two million people live.
    It strikes me as odd that we are told that Europe is so 
important that we must go and defend them, that they are so 
powerful that they deserve our help, and yet so powerless that 
they need it. It is disappointing, to say the least, that we 
are still carrying European responsibilities at the cost of the 
American taxpayer. To try to claim that Japan is doing 5 or 10 
percent of the load-carrying in Kosovo and Bosnia, I think 
strains all of our understanding of the situation.
    I will yield back the balance of my time.
    Ambassador Pardew. I just wanted to say, Congressman, that 
of course our engagement in this region--as I said in my 
opening statement--is based on our interests there. We do think 
the European interest is greater than ours. It is their 
continent. But we are a partner with Europe. We are partner in 
NATO. This is a NATO-led operation, and we should participate 
in that partnership.
    Mr. Sherman. We have deliberately structured this 
situation. We could have formed a new organization, including 
Japan, and invited Japan to contribute more money. We could 
have invited the European exclusive organizations to 
participate. We are a partner of every nation in the world, 
virtually. We've even told we have a strategic partnership with 
China. Certainly we are members of the United Nations. So 
simply by picking which organization will intervene here or 
there, we can declare that any corner of the world is a place 
where America must bear a disproportionate share of the burden.
    The fact remains that 5 and 10 years from now the Japanese 
will be selling more manufactured product in Kosovo than we 
are. That 10 and 20 years from now Europe will continue to 
engage in trade practices that show that they are indeed 
powerful diplomatically when they want to be--powerful in 
fighting for their own economic interests and powerful in 
twisting American policy to meet their economic objectives.
    You have a variety of different hats and flags that can be 
flown over different trouble spots, and we've chosen the words 
NATO to try to imply that the people of Los Angeles have a 
greater responsibility for assuring peace in Pristina than the 
people of Tokyo. That's a conclusion that we reached only 
because we wanted to. Geographically, that is not the way God 
designed the planet.
    Ambassador Pardew. I would only like to assure you that the 
foreign policy establishment is making every effort to ensure 
that others pay their share. As Ambassador Napper and others 
have mentioned this morning----
    Mr. Sherman. I believe I still have time, and I will say 
that every effort possible means every effort that doesn't 
unduly trouble, inconvenience or anger those who are foisting 
their responsibilities on us. Every effort possible would be 
announcing that it is up to Europe to carry this and that we 
are leaving except for perhaps some technical assistance that 
they're unable to do.
    We were told during the war that we had to do all the 
bombing because their planes didn't work. Of course they were 
unwilling to buy any of ours before then or in the future. Now 
we are told we have to patrol because every effort possible 
means everything that doesn't make them too angry.
    I believe my time is expired.
    Mr. Rohrabacher. As much as the Chairman appreciates the 
comments of my friend, we have to move on.
    Does any other Member have----
    Ms. Lee. Yes, Mr. Chairman. I will be very quick.
    As to what our policy is now this year with regard to the 
reconstruction efforts, the infrastructure-building--I know 
last year the President made statements that we were reluctant 
to do that because of the fact that Milosevic was still there. 
But given that the bombing, of course the bridge and all of the 
other buildings that were damaged, what are we doing, if 
anything? Does any of this money go toward that? Or do we still 
have a kind of hands-off approach on actual reconstruction 
efforts?
    Dr. Hamilton. Do you mean for Serbia particularly or for 
the region?
    Ms. Lee. In Kosovo specifically.
    Ambassador Napper. With regard to Kosovo, the 
appropriations bill that was passed last fall precludes an 
American involvement in large-scale physical reconstruction in 
Kosovo. That was a prescription in the law, so we are not doing 
that. We are undertaking a number of programs to promote the 
economic revitalization of Kosovo, and this goes across a whole 
gamut of activities, from encouraging the growth of small and 
medium enterprises, to a revival of agriculture in Kosovo, to 
providing assistance to the authorities there and those 
authorities that will be elected later in the year, local 
municipal governments, in structuring their finances and taxes, 
technical assistance in that regard. So across a whole gamut of 
activities we are trying to promote the economic revitalization 
of Kosovo, but we are precluded by law from engaging in large-
scale reconstruction of, for instance, rebuilding power plants 
or the airport or roads or things of that nature.
    With regard to Serbia, fundamentally the guidelines are 
still as we discussed them with you the last time we were here. 
That is, as long as Milosevic is in power, we will not be doing 
any reconstruction assistance in Serbia.
    Ms. Lee. Thank you.
    Mr. Rohrabacher. Any other Member have questions?
    Seeing none, the Chair will indulge in one question.
    I understand there are reports that the communist Chinese 
government has invested big sums of money in Serbia. Do you 
have any indication of that?
    Ambassador Pardew. There were reports some months ago that 
there was some investment, some financial dealings between the 
Chinese and Milosevic. We have discussed this with the Chinese 
and have been assured that it had stopped, but let me get you 
an answer for the record on that.
    Mr. Rohrabacher. As far as all the witnesses, do you know 
of any communist Chinese investment in Serbia?
    Ambassador Napper. I know of nothing more than what 
Ambassador Pardew has just stated, Mr. Rohrabacher.
    Mr. Rohrabacher. All right. That would be a matter of 
concern, obviously.
    I would ask any Members of the Committee who would like to 
ask further questions to submit them in writing for our 
witnesses. We do appreciate our witnesses and thank you very 
much for spending this time. We've had to run in and out here.
    We will now excuse you, and the Committee stands adjourned 
pending the Chairman's return.
    Without objection, written questions for witnesses will be 
submitted within 1 week.
    [Whereupon, at 12:14 p.m. the Committee was adjourned.]
      
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                            A P P E N D I X

                             March 9, 2000

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