[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]
FOREIGN OPERATIONS, EXPORT FINANCING, AND RELATED PROGRAMS
APPROPRIATIONS FOR 2001
_______________________________________________________________________
HEARINGS
BEFORE A
SUBCOMMITTEE OF THE
COMMITTEE ON APPROPRIATIONS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
SECOND SESSION
________
SUBCOMMITTEE ON FOREIGN OPERATIONS, EXPORT FINANCING, AND RELATED
PROGRAMS
SONNY CALLAHAN, Alabama, Chairman
JOHN EDWARD PORTER, Illinois NANCY PELOSI, California
FRANK R. WOLF, Virginia NITA M. LOWEY, New York
RON PACKARD, California JESSE L. JACKSON, Jr., Illinois
JOE KNOLLENBERG, Michigan CAROLYN C. KILPATRICK, Michigan
JACK KINGSTON, Georgia MARTIN OLAV SABO, Minnesota
JERRY LEWIS, California
ROGER F. WICKER, Mississippi
NOTE: Under Committee Rules, Mr. Young, as Chairman of the Full
Committee, and Mr. Obey, as Ranking Minority Member of the Full
Committee, are authorized to sit as Members of all Subcommittees.
Charles Flickner, John Shank, and Christopher J. Walker, Staff
Assistants,
Lori Maes, Administrative Aide
________
PART 2
Page
FY 2000 Emergency Supplemental Request for Assistance to Plan
Colombia and Related Counternarcotics Program..................... 1
Export Financing and Related Programs............................ 105
Department of State.............................................. 207
________
Printed for the use of the Committee on Appropriations
________
U.S. GOVERNMENT PRINTING OFFICE
65-494 WASHINGTON : 2000
COMMITTEE ON APPROPRIATIONS
C. W. BILL YOUNG, Florida, Chairman
RALPH REGULA, Ohio DAVID R. OBEY, Wisconsin
JERRY LEWIS, California JOHN P. MURTHA, Pennsylvania
JOHN EDWARD PORTER, Illinois NORMAN D. DICKS, Washington
HAROLD ROGERS, Kentucky MARTIN OLAV SABO, Minnesota
JOE SKEEN, New Mexico JULIAN C. DIXON, California
FRANK R. WOLF, Virginia STENY H. HOYER, Maryland
TOM DeLAY, Texas ALAN B. MOLLOHAN, West Virginia
JIM KOLBE, Arizona MARCY KAPTUR, Ohio
RON PACKARD, California NANCY PELOSI, California
SONNY CALLAHAN, Alabama PETER J. VISCLOSKY, Indiana
JAMES T. WALSH, New York NITA M. LOWEY, New York
CHARLES H. TAYLOR, North Carolina JOSE E. SERRANO, New York
DAVID L. HOBSON, Ohio ROSA L. DeLAURO, Connecticut
ERNEST J. ISTOOK, Jr., Oklahoma JAMES P. MORAN, Virginia
HENRY BONILLA, Texas JOHN W. OLVER, Massachusetts
JOE KNOLLENBERG, Michigan ED PASTOR, Arizona
DAN MILLER, Florida CARRIE P. MEEK, Florida
JAY DICKEY, Arkansas DAVID E. PRICE, North Carolina
JACK KINGSTON, Georgia MICHAEL P. FORBES, New York
RODNEY P. FRELINGHUYSEN, New Jersey CHET EDWARDS, Texas
ROGER F. WICKER, Mississippi ROBERT E. ``BUD'' CRAMER, Jr.,
GEORGE R. NETHERCUTT, Jr., Alabama
Washington MAURICE D. HINCHEY, New York
RANDY ``DUKE'' CUNNINGHAM, LUCILLE ROYBAL-ALLARD, California
California SAM FARR, California
TODD TIAHRT, Kansas JESSE L. JACKSON, Jr., Illinois
ZACH WAMP, Tennessee CAROLYN C. KILPATRICK, Michigan
TOM LATHAM, Iowa ALLEN BOYD, Florida
ANNE M. NORTHUP, Kentucky
ROBERT B. ADERHOLT, Alabama
JO ANN EMERSON, Missouri
JOHN E. SUNUNU, New Hampshire
KAY GRANGER, Texas
JOHN E. PETERSON, Pennsylvania
VIRGIL H. GOODE, Jr., Virginia
James W. Dyer, Clerk and Staff Director
(ii)
FOREIGN OPERATIONS, EXPORT FINANCING, AND RELATED PROGRAMS
APPROPRIATIONS FOR 2001
----------
Tuesday, February 29, 2000.
PRESIDENT'S FISCAL YEAR 2000 EMERGENCY SUPPLEMENTAL REQUEST FOR
ASSISTANCE TO PLAN COLOMBIA AND RELATED COUNTERNARCOTICS PROGRAM
WITNESSES
GENERAL BARRY McCAFFREY, DIRECTOR, OFFICE OF NATIONAL DRUG CONTROL
POLICY; RAND BEERS, ASSISTANT SECRETARY OF STATE FOR INTERNATIONAL
NARCOTICS AND LAW ENFORCEMENT AFFAIRS; AND BRIAN E. SHERIDAN,
ASSISTANT SECRETARY OF DEFENSE FOR SPECIAL OPERATIONS AND LOW-
INTENSITY CONFLICT
Chairman's Opening Statement
Mr. Callahan. We are going to go ahead and try to get
started so we can get the General on his quest to eradicate
drugs in South America and also to give our members an
opportunity to begin voting in the next couple of hours.
So, first of all, I want to take this opportunity to
welcome a new member to our subcommittee, certainly not a new
member to the Appropriations Committee, but this is the first
meeting for Congressman Roger Wicker of Mississippi. Roger, we
welcome you aboard.
Mr. Wicker. Thank you very much, Mr. Chairman. It is a
pleasure to be here.
Mr. Callahan. Today the subcommittee meets to consider the
President's proposal for the emergency supplemental
appropriation in support of Plan Colombia, and we are pleased
to hear today from General Barry McCaffrey, Director of the
Office of National Drug Control Policy. After General McCaffrey
we will hear from Rand Beers, the Assistant Secretary of State
for International Narcotics Control; and Brian Sheridan, the
Assistant Secretary of Defense for Special Operations and Low
Intensity Conflict.
I want to support the President's request. However, I
continue to have serious reservations about this request and,
more importantly, about the Clinton administration's long term
strategy towards Colombia. Without question the core of the
illegal narcotics problem in America is of its own making. I
thought you would like to hear that, Ms. Pelosi. The statistics
about cultivation, processing and smuggling of narcotics from
South and Central America are compelling, but in the end, this
problem is driven by American users, and until such time as we
can succeed in reducing the demand for illegal drugs here at
home, no amount of foreign aid to Latin American governments
will stem this flow.
Nonetheless, President Clinton is requesting from this
subcommittee $818 million in emergency supplemental funds for
fiscal year 2000 and an additional $256 million above the
regular fiscal year 2001 request to support Plan Colombia. It
is worth noting that since I became chairman of this
subcommittee the President has requested a total of $1.226
billion for counternarcotics programs. During this same period
we have approved $1.379 billion. That is $153 million more than
the President has requested in his budgets. So clearly this
subcommittee has met its obligation to the international war on
drugs.
Ms. Pelosi and I traveled to Colombia, Ecuador and
Venezuela recently to visit firsthand what prompted the
President's proposal. We spent several hours with Colombian
President Pastrana, and I believe he and his top advisors are
to be commended for their bold efforts in developing Plan
Colombia and in attempting to negotiate an end to the 40-year
guerrilla war in Colombia. Yet several key issues regarding
U.S. policy remain unresolved.
First, the Clinton administration must justify this
additional funding in light of the serious allegation of human
rights abuses committed by the Colombian military and of the
Army's relationship with the paramilitary forces. Regardless of
the widespread abuses committed by the guerrillas, the burden
falls on the Colombian government to ensure the military,
supported by U.S. Aid, is not involved in human rights abuses.
Second, the President's plan fails to recognize the
regional nature of this problem. There is no question the
Colombian government can use the money proposed in this
supplemental request, but this package is shortsighted when
dealing with the entire region. President Clinton's own
strategy calls for, and I quote, a push into southern Colombia.
Well, if this objective is successful, I am afraid the results
will be to simply push the problem into neighboring Ecuador or
Peru. Yet Peru and Ecuador together represent less than 4
percent of the President's entire request. Moreover, Bolivia,
which is succeeding in eradicating coca, who has a defined
plan, who hopes to have successfully accomplished this plan by
the year 2002, would receive a little more than 1 percent of
all of the funds under the President's proposal.
So we do have some concerns, General, and we will get into
those concerns later on in this hearing and after your
testimony, but first, I welcome Ms. Pelosi to our first hearing
of this century.
MS. PELOSI'S OPENING STATEMENT
Ms. Pelosi. Thank you, Mr. Chairman. Thank you for your
leadership and calling this important hearing as we prepare for
the supplemental. As you mentioned, we will review the
administration's request for $1.3 billion in support of Plan
Colombia and other regional needs in Latin America to fight the
scourge of illegal drugs.
I join you in welcoming General McCaffrey, thank him for
his hard work on behalf of the American people. As you have
mentioned, we will address some of our concerns about the Plan
Colombia directly to him in the question and answer period.
First, I want to make a few comments. As the chairman said,
we traveled to Colombia last week and other countries in the
region last week. We were fully briefed by Colombian officials
on Plan Colombia. Before commenting on the administration's
request, I want to commend all the dedicated Americans and
Colombians in the region who are working tirelessly to rid our
streets of illegal drugs. My personal view of this problem,
however, is and has always been that attacking consumption here
at home through awareness and treatment programs should be our
priority. Funding for those programs remains inadequate, and
this plan does nothing to address these needs.
I will have an amendment in full committee to that effect
but I want to say here that the RAND Corporation numbers
indicate that treatment on demand is 23 times more effective in
war on drugs than eradication of the coca leaf. It is eleven
times more effective than interdiction at the border. It is
seven times more effective than law enforcement. These dollars
for treatment on demand are in scarce supply in the U.S.
While I grant you that we should focus on elimination of
the coca leaf and interdiction at the border and law
enforcement, they must be part of our overall project. We are
fooling ourselves if we think that we are ridding our streets
of drugs by having the emphasis in that direction rather than
on the consumption. We will only reduce the drug problem in our
country when we reduce the demand. It is a good endeavor to try
to reduce supply, but demand is the problem.
The essence of Plan Colombia is the intention on the part
of the Colombian government to spend $4 billion of its own
resources in conjunction with $3.5 billion from the
international community. The problem with that plan is that the
Colombian economy is suffering from a recession, and the
disastrous fiscal policies of the former government have
practically bankrupted the country. Despite President
Pastrana's good intentions and willingness to confront the
myriad of problems in Colombia, his flexibility to devote
additional Colombian resources to the plan appear to be
limited.
And let me associate myself with the remarks of our
distinguished chairman in praise of President Pastrana and the
effort that he is making there, but the question is, where is
this $4 billion coming from? Frankly, on our trip, I didn't see
any evidence of it in our discussions.
The IMF plan recently completed for Colombia requires
reduction in their military and social budgets and limits their
ability to borrow from international financial institutions.
More importantly, this plan was negotiated with the IMF without
any consideration of the unique circumstances that Colombia is
in and without any awareness of the need for Colombia itself to
devote a significant and visible share of its own resources to
Plan Colombia.
The U.S. role in Plan Colombia has been primarily one of
designing a military strategy to deal with the situation in
southern Colombia. Without the fiscal commitment of the
Colombian elite, this plan cannot succeed. Without economic
investment, there is no chance of ridding southern Colombia of
coca cultivation. I think the emphasis on the military spending
in our plan is wrong. It is not going to get to the root of the
problem, no pun intended.
Of the $1.3 billion requested by the administration, $820
million or 65 percent is for military assistance. The United
States' role in Colombia has already shifted to one pushing for
direct confrontation with FARC forces in southern Colombia.
This fundamental shift in U.S. policy occurred over the course
of the last year without Congress ever voting or even being
consulted. If the Congress approves this package of assistance,
the U.S. is signing on to a 5 to 10-year commitment which will
cost U.S. taxpayers in excess of $5 billion.
United States personnel are intricately involved in
training, operations, planning, logistics, maintenance,
engineering and security with armed forces and police. While
current levels of U.S. personnel in remote locations in
southern Colombia are modest, they will increase as the plan
evolves and Congress will have little or no control over these
decisions.
The Colombian judicial authorities are overwhelmed by the
chaos and violence in their country. The system is antiquated
and short of resources. Efforts to rid the armed forces of
human rights abusers are welcome, and they are trying, but
military officers still routinely avoid judicial prosecution.
Recent reports of continuing contact between the Colombian
military and the paramilitary forces are quite disturbing. The
harsh reaction of the Colombian military to these reports is
unwarranted and unhelpful.
Let me be clear. I want to help Colombia. As we all know,
the situation in southern Colombia is grave. As the FARC and
the paramilitary forces battle each other for control of the
drug trade and the Army begins to assert itself, violence will
increase and the indigenous population will be severely
disrupted. In northern Colombia, FARC, ELN and paramilitary
forces will continue to commit atrocities, attack
infrastructure and expand the drug trade.
I, however, cannot support the administration's plan as
currently structured. There have been no concrete signs by the
Colombian government on the economic side of Plan Colombia, and
the IMF plan that is in place limits their ability to respond,
even if they wanted to. The armed forces are committed to an
aggressive posture in southern Colombia but have not made a
significant commitment to cease contact with the paramilitary
forces. The extent of U.S. involvement in both resources and
personnel will grow and will require U.S. significant
involvement for 5 to 10 years, as I mentioned earlier.
If we truly want to help Colombia, we should rethink this
plan. Consult with and involve our European allies, more fully
explore paths to peace with all the desperate groups in the
country, give Colombian government some economic leeway and
obtain an ironclad commitment from the Colombian armed forces
on the cessation of all cooperation with paramilitary forces as
a condition of our assistance. Without these elements the plan
is incomplete.
Mr. Chairman, on a separate note, that I understand we may
be dealing with Kosovo and perhaps even debt relief in the
supplemental as well. I don't know that we have any plans for
any hearings on those. I hope that is not an indication of any
less importance than we place on those very important issues as
well, and especially if we don't have any funding for the HIPC
trust funds, Bolivia will not get their debt relief until much
later, and some of the problems we are talking about will be
exacerbated by that.
Having said that, Mr. Chairman, I once again thank you for
the time, attention and leadership you have shown on this
important issue so that we can examine the President's proposal
very carefully and make the right decision for our country and
for Colombia. Thank you, Mr. Chairman.
Mr. Callahan. I thank you, Ms. Pelosi, and we will dance to
the tune of HIPC and Kosovo at the appropriate time. Save me a
place on your dance card because I do imagine we are going to
be addressing this at some point in this process.
We are very pleased today to have the chairman of the full
committee. General McCaffrey, before you make your opening
statements I want to recognize him, but to tell you that this
committee is now comprised of the full committee chairman, the
ranking Democrat on the full committee, the ranking Democrat on
the subcommittee, the chairman of the Defense Appropriations
Committee. Just about everybody on this panel is going to have
some voice in the decision making process we are going to make
in the next few weeks. So at this time I would like to first
welcome the full committee chairman, Mr. Young, to our
committee.
Mr. Young. Well, Mr. Chairman, thank you very much and I
know that you and Ms. Pelosi and staff have spent a lot of time
reviewing this particular issue with on site visits to the
region. General, I wanted to welcome you here today because of
the tremendous work that you have been doing in this whole
issue of the supply of drugs or interdicting the supply of
drugs or cutting off the supply at the source, and just be
assured that we want to do everything we possibly can to stop
the flow of drugs into the United States, and we will be
involved and get into these specific issues with you as we
discuss the President's proposal, a proposal that I am sure you
know the Speaker has given at least preliminary support to.
So we look forward to your testimony and look forward to
working with you to do everything we can to eliminate as much
as we possibly can the source of these drugs that are so
damaging to our own country, our economy and especially our
young people, and thank you for being here today.
Mr. Callahan. Mr. Obey.
Mr. Obey. Well, thank you, Mr. Chairman. General, I don't
want to take a lot of time here, but I do have a couple of
points I would like to make. You are a very fine, public
servant. You have a very tough job. My problem is that I have
been here before. For 10 years I chaired this subcommittee, and
I heard pledge after pledge from all kinds of administrations
about what they were going to do on drugs, and I have seen lots
of bright people and lots of well motivated people trying to
sell Congress on lots of packages.
I detest Vietnam analogies because nine times out of 10
they are all wet, but I have to tell you that this reminds me
very much of Vietnam. I don't know if we are going to wind up
with a bunch of Americans down there or not, but I do know that
whatever happens there are going to be a lot of mothers' sons
who are going to die, who may or may not be Americans. Maybe
they will be Colombians. That doesn't make it any less of a
problem morally.
I would be willing to give you every dollar that it took to
shoot down every plane that carried drugs if I thought that
that would accomplish the goal laid down by the
administration's policy, but the problem that I have is I have
been following developments in Colombia for over 30 years, and
I have minimum faith in the ability of the political elite in
that society to actually meet their responsibilities in
changing the conditions on the ground that must be altered if
any American policy or any American driven policy is going to
have a chance of a snowball in you know where of succeeding. I
believe that the elite in that society is just too used to
letting the poor in that society fend for themselves, and as a
result, I do not think that they have the will on the ground to
do what is necessary to engender support for that government,
especially if we wind up having an expanded shooting war, which
is where I think this policy will lead us.
In addition to that, while I certainly support our efforts
to work with the IMF, in this case what I see coming out of the
IMF is SOS, same old stuff, and I do not believe, given the
kind of agreement that Colombia has been entering into with the
IMF, that they are going to have the ability to attack their
own problems on the education front and social front, the
transportation front, the health front in a way that is
necessary in order to strengthen the ability of that society to
deal with the FARC or any other indigenous group of bandits.
And lastly, I agree with Chairman Callahan and Ranking
Member Pelosi that the root to the problem lies not in Colombia
but in the society, and to me, so long as we have one single
person who cannot get into a drug treatment slot when they need
it, we are inviting the kind of problem we have in Colombia. I
think that no matter where you squeeze that balloon in Latin
America it is simply going to expand somewhere else.
You have a virtually impossible job. I have great sympathy
for you, and I would like to help in any constructive way that
I can, but I really believe that this policy reminds me of
something that would be put together by the permanent president
of an Optimists Club. I think we have to look at it on this
side of the table with a little more skepticism. You have got
great goals. I am not convinced that the means match the goals,
and I am not convinced that Colombia in any way is able or
prepared to do what is necessary on their own to deal with the
problem, and absent that, I think it is like pushing wet
spaghetti uphill; you don't get very far and you wind up with a
mess.
Thank you, Mr. Chairman.
Mr. Callahan. About the president of the Optimists Club,
was that a compliment to the president of the Optimists Club or
was that indignation?
Mr. Obey. No. I am just suggesting that I am a little bit
more of a skeptic.
Mr. Callahan. I thank you. General McCaffrey, we will take
your entire statement for the record and invite you now to
submit your comments to the committee.
GENERAL MCCAFFREY'S OPENING STATEMENT
General McCaffrey. Well, Mr. Chairman, let me begin by
thanking you and your committee members for the chance to come
down and lay down our thinking. I look forward to responding to
your own questions and, indeed, hearing your own viewpoints in
further detail. With your permission, let me first of all put
in context what we are doing in the national drug strategy, and
I don't think we can discuss Colombia or the Andean Ridge or
indeed the interdiction or international component unless we
see it in its broader context.
Support out of Congress between fiscal year 1995 and the
fiscal year 2001 bill has increased from $13.5 billion to $19.2
billion. In an era of balanced budgets, of no deficits, you
have put serious resources behind this issue. If you look
internally in how you have allocated that money, there has been
a dramatic increase in the support and funding and energy
behind drug prevention and education programs. It has gone up
some 55 percent in four budget years, remarkable, and I think
it is paying off, and I think it will continue to do so in the
future, and this is a variety of programs, and I won't try and
address in any detail except to underscore that things like the
media campaign, we are on the radio, Internet, television,
billboards in the school system, the boys and girls clubs, the
YMCA sports programs, the community coalition building, we have
now increased from some 4,000 community coalitions to more than
5,000. This primary focus on prevention and education in our
view will continue to reduce drug abuse in America. So I
couldn't agree more fully with the general notions that you
have expressed, and indeed Congresswoman Pelosi and Mr. Obey.
Secondly, you have increased support for drug treatment
funding dramatically, 29 percent in five budget years. For the
first time in our history, we exceeded $3 billion in Federal
support for drug treatment, $3.8 billion. Incredible support
has been put behind scientifically based HHS block grants and
drug treatment, and I think that will pay off. We are nowhere
near where we need to be. We say, depending which study you
cite, there is probably four million who are chronically
addicted to drugs in America, illegal drugs. We may well be
just barely above half the treatment capacity we need, but
clearly not only are we putting the resources there but we are
hooking these systems into the criminal justice system, the
health care system and the welfare system.
So 4 years ago I would have told you there were a dozen
drug courts. Today there are more than 700. Now I say this
because I want you to understand, by law what you told me to do
was write a strategy, submit it to the House and the Senate,
and use it as the organizing intellectual construct behind what
we are doing. This is the updated strategy, not something from
the 1950s or something from 1982. This is how I am certifying
agencies and departments of government on whether their budget
submission and their programs are adequate. That is the
organizing construct.
If you will read that, you will find out it is really not a
breakthrough in Western intellectual thought. It is a very
common sense kind of approach. It has five goals and 31
objectives, and, I asked you in the law which you passed a year
ago to instruct me to develop performance measures of
effectiveness, which we have done. It took us 2 years to do it.
So my successor will come down here each year now and tell you
the extent to which we have delivered against these performance
measures of effectiveness.
And then finally under the law you instructed me to have a
5-year budget projection. I would argue we can no more make
progress on dealing with drug abuse in America with its legal,
social, medical and international implications with a 1-year
budget strategy than we could the national defense issues. So,
by law, my colleagues, the 14 cabinet officers involved in this
issue, now get certified on submitting a 5-year budget. That
will help bring coherence and more of a perspective in the
coming years.
Let me turn to this bill quite specifically and suggest to
you what we hope we are going to accomplish. I am going to use
three charts. First of all, let me just talk to the general
nature of where drugs consumed in America come from. Most of us
don't use drugs. It used to be 14 percent of us were using
them. Now it is 6 percent. It has gone down dramatically since
1979. Adolescent drug use in America went down 13 percent last
year. Drug abuse involving cocaine, casual use of cocaine, went
down 70 percent in the last 10 years. It is moving in the right
direction. But if you look at where the drugs come from, that
the 13 million of us who use an illegal drug last month used,
90 percent of the cocaine and heroin in America flows out of or
originates in Colombia.
The cocaine is grown in three countries essentially, Peru,
Bolivia and Colombia. There has been a persistent atmosphere
among many Americans, well, this is hopeless, we can't do
anything about it. In the last 4 years in fact we have reduced
the net production of cocaine by 18 percent. Those are not
arguable figures. They are based on the same kind of
technology, overhead satellite systems, human intelligence
gathering on the ground that we used against the Soviets for 40
years. Cocaine production, net cocaine production in the Andean
Ridge is down dramatically in the last 4 years.
Peru, really remarkably so. It is up in the high sixtieth
percentiles. You fly over the upper Huallaga Valley, the
Apurimac Valley now, the coca is gone. It is back up in the
mountain ranges. Bolivia is unbelievable to a person like me
who has followed this issue very closely, for probably the last
8 years. In Bolivia, for 7 years, we put a billion dollars into
the country. We saw no reduction of cocaine at all. In the last
3 years we have reduced coca production in Bolivia by 55
percent. You fly around the Chapare Valley now, the coca is
almost totally gone. It is back up in the Huallaga region and
it is out in their national parks. We absolutely have changed
the dynamics in Peru and Bolivia of coca production.
Turning to Colombia. Colombia is a huge, dynamic and
changing problem. It poses and is a regional threat. There is
no question that if you squeeze on the balloon in one part it
bubbles out in another. The brilliance of the approach of the
1980s was to protect south Florida, to operate in the Caribbean
against the air threat out of Colombia. It worked. The drug
criminal traffic then moved into Mexico. We do need a regional
approach. There is no argument there. However, Colombia itself
is in the midst of a rapidly evolving emergency.
I have watched Colombia off and on since I was a captain in
the United States Army when I first traveled in this region. It
has changed a great deal in the last 3 years. Drug production
has essentially tripled in 5 years. It has gone up 140 percent
in a little more than 2 years. Colombia is now producing 70
percent of the cocaine in the Andean Ridge. It is a nightmare,
and huge sums of money are coming out of this cocaine
production--I might add heroin is another new issue. Poor old
Colombia produces only 2 percent of the world's heroin, a tiny
fraction. But that represents 70 percent of the heroin seized
in America. When our kids drop dead from an overdose in
Orlando, Florida; in Plano, Texas; and New York City, the
heroin probably came out of Colombia. Volume went up 23 percent
last year. It is now eight metric tons. It is half the national
consumption and it is coming out of that country.
What is the amount of money that is generated by this drug
traffic? It is hard to say. The number that I am most confident
of is that we, Americans, the four million chronic addicts in
particular, spent around $57 billion last year on illegal
drugs. Most of us don't use these drugs, the ones that did
generate that amount of money. There is probably another
similarly huge amount out of Western Europe. That money is
fueling this crisis along with some small arms and possibly
aircraft, helicopters and other external forms of support. How
much money are these people, these criminal organizations
getting out of it? I don't know. The numbers range from 1.19
billion to a number that I believe, a half billion dollars a
year comes out of that drug production effort and flows into
25,000 armed narco-insurgents, narco-guerrillas, narco-
terrorists. I have been reluctant to get involved in the naming
the names of these groups but there is no question about what
is happening down there.
The FARC, the ELN and the AUC largely are involved in
struggling over money generated from of drug production. If it
was just from bank robberies, kidnapping, extortion, blowing up
the pipelines, if it was the normal level of violence in
Colombia, it would be bad enough. But now you have got FARC
battalions, seven FARC fronts down in the southern two regions
of Colombia, two provinces that are armed to the teeth,
thousands of people, far more machine guns than the Colombian
Army has. They are paying their recruits double the stipend of
a Colombian conscript. They are conducting nationwide offenses.
In 1999, they attacked 119 population centers. These were
coordinated, nationwide attacks.
In Putumayo and Caqueta provinces all the way down in the
south, bordering on Ecuador, you have got simply an explosion
of cocaine in a region that essentially has never had any
government services. 20 percent of the land area in Putumayo
province is under coca cultivation right now. I just flew into
an operating facility at Tres Esquinas. All you can see as far
as the eye can see is cocaine, and that cocaine is destroying
Colombian democratic institutions. It is involving their
neighbors, Ecuador, Peru, Bolivia, Panama, the Caribbean
islands and certainly the United States. That is the source of
the drugs.
Now, what do we do about it? Given the dramatic successes
in Bolivia and Peru, well, we should not walk away from them.
So this proposal, the 1.6 billion, does not walk away from Peru
and Bolivia. It enhances their support as their drug production
has plummeted. We maintain continuing support for what they are
doing. Those are the facts. We have upped the support to Peru
dramatically in the last 3 years, and the same with Bolivia,
and we have proposed to stay with them and indeed to slightly
enhance their funding. It also proposes money to support
possibly Venezuela, certainly Ecuador and indeed probably some
through Panama, modest amounts.
If you look at the package of the whole, 1.3 billion, 85
percent of it goes to Colombia, 15 percent to Bolivia and Peru.
If you look at the part that goes to Colombia, the package goes
from 5 percent last year of the total going to alternative
economic development, judicial system development, up to 20
percent. There is a shift in support for these other aspects of
confronting the drug issue. If you look at that part, that is a
$270 million package over the next 2 years, 270 million. I know
that is of direct interest to Congresswoman Pelosi. Of the
remainder of that package it goes to a variety of activities,
including funding the U.S. forward operating locations in
Manta, Ecuador; Curacao and Aruba. There is money in there that
is badly needed in particular in Manta, Ecuador, to get AWACS
and P-3s back into action in the Peruvian area in particular.
It also includes a substantial amount for human rights
protection, for development of judicial reform and reform of
the penal system, which is grossly in need of support, training
and reform.
And then, finally, if you look at the package in its
entirety, half of that package is 63 helicopters. It is 30
Blackhawks, it is 33 UH-1Ns, their purchase, their maintenance,
their operation and to train the crews, to give the Colombian
police and armed forces the opportunity to get back into the
south and to eliminate the cocaine and the heroin. Now, to put
63 aircraft in the proper perspective, when my division, one of
seven army divisions and two marine divisions, attacked into
Iraq, I had 108 aircraft. We are proposing 63 for the 240,000
people in the Colombian police and armed forces. We think they
need the mobility to get back into the south and reestablish
law and order and Colombian sovereignty over their own terrain.
I think basically it will work. I think it is the beginning
of a commitment that will make it work. First of all, there are
three problems we are talking about, drugs the one legally I am
being asked to address. The Colombian economy, which President
Pastrana has the guts to face up to, has registered 20 percent
unemployment, and a disastrous loss of foreign investment. Why
would anybody invest in petroleum or gas in Colombia with this
kind of a security situation? How could you run cattle ranching
outside of Bogota when you are subject to kidnapping? The
economy is directly linked to the drug problem. And then
finally, Pastrana has got to somehow achieve peace in Colombia.
The Colombian people are absolutely fed up with the chaotic
violence, the senseless violence in that country. But right now
the FARC is making a fortune out of drugs. We want to make it
more likely that they will see it as beneficial to talk, not
fight.
And we think finally we have to take into account that this
is a Colombian plan. It was my own view that we could not come
up with a U.S. strategy and impose it upon Colombia's political
democratic leadership. This represents their idea on how to go
about it, and I don't believe you can look at the 1.6 billion
U.S. effort unless you take into account the 7.5 billion
Colombian context of this effort, and indeed the 7.5 billion in
Plan Colombia which is buttressed by $4.6 billion out of
international financial institutions, which we are supporting
Colombia in obtaining.
At the end of the day, there are other considerations that
have to also be looked at. To what extent can Colombian
institutions, the police and the armed forces, act in
accordance with law with respect for human rights. What is the
situation on the ground? I have watched them at close range for
years. It is my view that President Pastrana, Defense Minister
Ramirez, their police commander General Serrano, who we think
is a dedicated officer of great integrity who has tried to root
corruption out of the police with increasing success, we think
General Tapias, the commander of their armed forces, is
committed to establishing a respect for the rule of law and
human rights in the armed forces. They have established an
ombudsman system, they have established training systems.
Complaints against the armed forces in fact have dwindled to
near zero.
Now, finally, because I sometimes have a hard time as I
listen to critics of the plan maintaining a sense of balance.
At the ballot box, the FARC and the ELN are never going to
achieve power. That is what I personally conclude from watching
the electoral behavior in Colombia over the past several years.
The people are not going to vote what are essentially terrorist
organizations that did have an ideology but now heavily
involved in criminal behavior.
If you look at the Gallup polls that come out every quarter
in Colombia, it is very instructive to look at the apparent
expressed viewpoint of the Colombian people, and just sort of
off the top of my head, the Catholic Church is at 73 percent.
The armed forces are at 69 percent. General Serrano, the police
commander, is at 71 percent. Poor Mr. Pastrana, it is hard to
be an elected official in a country in a crisis, is down in the
30 percentiles. The paramilitary forces run around 9 percent
public approval. The FARC is at 4 percent. The ELN is at 4
percent. These people who are carrying guns and are
assassinating mayors and journalists and corrupting legislators
are not supported by the Colombian people, which is why you
will hear President Pastrana talk about 38 million Colombians
against 25,000 armed insurgents.
Now I don't pretend to take a stance on the internal
political dynamics. What you asked me to do was reduce the flow
of drugs into America, and as a final note, what I would ask
all of us, which I clearly asked the Attorney General,
Secretary of State, Secretary of Defense and others, do we
believe our own rhetoric. This drug problem killed 52,000
Americans last year. It caused us $110 billion in damages. It
can explain as much as 80 percent of the prison population.
Now, clearly our central focus ought to be on prevention,
education and treatment and strong domestic law enforcement,
and that is where we are putting our money, but I would argue
that this $1.6 billion package will be a substantial
contribution to standing with a democratic ally, 38 million of
the Colombian people who are an enormous trading partner and
historical ally of the United States. A half million of them
have fled the country in the last few years. A million of them
have lost their homes in the last 4 years. There is more
refugees and displaced people in Colombia than in Bosnia, and
they need help. What we have tried to do in a very deliberate
way, rational way in consultation with our allies is sort out a
package that we think will serve the interests of the American
people.
I look forward to responding to your questions, Mr.
Chairman.
[The information follows:]
Offset Folios 28 to 39 insert here
TWO-YEAR PLAN
Mr. Callahan. Thank you, General, and naturally you are
going to have some questions from this committee and some from
me as well. Generally, just let me give you my observations of
what Ms. Pelosi and I saw when we visited Colombia and talked
to President Pastrana. One thing that really concerned me was
the fact that we are talking about a 2-year plan, and there is
nothing indicated in the President's request as to what is
going to follow the 2-year plan. Neither did we find from
President Pastrana or any of the officials we talked with any
written plan of action. You praised Bolivia, and let me tell
you that I support your views on Bolivia. We will address that
later on in this hearing. But absent the 2-year plan, which is
rather nebulous in itself because the Colombians couldn't
really produce a plan of where they are going to get the $4
billion to begin with, the very fact that they are cutting back
on their military expenditures, they cut back last year. Now
they say they are going to put $4 billion towards Plan
Colombia. The structure of a defined permanent plan is not in
place.
I asked President Pastrana and others there to give me some
barometer whereby we could gauge, as we do in Bolivia, what
will be accomplished by the year 2001, how many acres or
hectares will be eliminated, when will we see a total
eradication, what is the long range plan. They don't have that
plan or at least they couldn't produce it for us. So we need
more definition as to where they are going, when they are
going, and how they are going to fund it.
The international community, I understand are going to be
meeting in the future, and the international community is going
to make some contribution, but when is that going to be better
defined rather than just the United States putting up the
billion dollars?
BLACKHAWKS VERSUS HUEYS
The question of Blackhawks versus Hueys is going to be a
question that is going to be raised by Members of Congress. Why
do we need that many Blackhawks in lieu of the inexpensive cost
of modified Hueys, for example? Why is there such an emphasis
on sending Blackhawks?
There are some in the defense community are questioning why
we don't go ahead and send some used Blackhawks from our
existing inventory in the military and supplement our military
with the new ones. Why not start off the program and get it
underway more expeditiously by sending them existing
helicopters? And while we are on helicopters, Colombia already
has 28. Why are they not using any of these 28 Blackhawk
helicopters to start this program? Why do we have to wait 18
months for new Blackhawk helicopters to be manufactured and
sent down there before we begin addressing this problem?
These are concerns that are going to be coming up, General
McCaffrey, because members are already asking me these
questions. You say we have in your plan a 5-year domestic plan,
and yet Colombia has a 2-year domestic plan and it is nebulous
with respect to whether or not they are going to truly fund it.
What happens--you are the military person--when the Colombians
now tell us they have land to air missiles and rockets. All
they have to do is shoot down two of those helicopters and they
are not going to find any pilots to fly once they use shoulder
type of missiles. You are the military expert. The President
was elected to handle these international affairs. The
President is charged with the eradication program, and we have
a lot of questions.
In the beginning when I was first informed of this request
I didn't think it was going to be much of a problem, but we are
facing a serious problem in this Congress simply because of the
questions that are being presented to me and someone is going
to have to answer these, and you are the logical person to
explain these things sufficiently for those on this committee
to explain to our colleagues the total responsibility of this
overall plan. As Ms. Pelosi mentioned, it is going to be
complicated as we go through this process because we are going
to be talking about Kosovo. At the same time we are going to be
talking about HIPC, paying off poor countries' debts. There are
so many questions coming from all areas that I think if the
bill were to be brought up before the House today it wouldn't
pass. It is not going to be brought up today. I don't know when
we are going to bring it up, but it is a good thing it is not
being brought up today because there are numerous questions
that you are going to have to answer. I at this point intend to
support the package, as I said, to support the charge that the
President has to have these types of program.
I have every confidence in you, but let me tell you, the
program is in trouble today. The administration has to provide
this Congress with a lot of answers that we do not have. So let
me just let you respond to the lack of a defined program by the
Colombians. I know they have the 2-year plan, and just respond
to that briefly if you will now.
General McCaffrey. Well, Mr. Chairman, I think your
concerns are all obviously legitimate and require very
deliberate response on our part, and not just from me. I think
General Charles Wilhelm, the CINC of U.S. Southern Command,
needs to bear heavy responsibility in laying out his existing
campaign plan for Colombia. We do have targets and objectives,
we are walking through the time lines, and we think we know
what we are doing.
We owe you a response from Under Secretary Tom Pickering,
who is really the quarterback of the interagency process on
this whole effort. I think he has done brilliant work, going to
Colombia leading the interagency process and working in
conjunction with Colombian authorities to come up with this
effort.
Plan Colombia obviously needs to evolve. It needs more
definition. The architecture is there: this is a 3-year plan.
We will support it in our own thinking by building a fiscal
year 2002 request that supports the continued evolution of what
we are proposing. I personally think we have to consider it as
a 5-year effort. At the end of 5 years, it is my own judgment
we will achieve substantial reductions in drug production in
Colombia, and it will not merely bubble out someplace else. The
Peruvians and Bolivians, if we stay with them, are moving in
the right direction.
The southeastern part of Colombia is a unique area where
there is no government control, and there are 25,000 heavily
armed people ready to fight over drug production. The
Colombians plan on going in there with their navy and marine
corps to control the riverine system. They are starting
already. They were at Tres Esquinas when I was there last week.
They are going to put a trained brigade, counternarcotics
battalions, three of them in a brigade headquarters there in
the coming year. The first battalion is there now.
Mr. Callahan. I am convinced with respect--we visited the
same facility. We talked with the admirals in charge of that,
and I am convinced that the plan in their mind anyway is right,
but we are not planning ahead monetarily. That is the
responsibility of this committee. The Colombian government is
not providing past the $4 billion that they were unable to tell
us how they were going to dedicate that money, but they just
simply say we are going to put up $4 billion. Yet all of it
evidently is going to be spent in the first 18 months. What
happens after the 4 billion is gone? Are they willing to put up
another 4 billion, and consequently are we going to be
requested to put up another billion if that is the case? We
don't have a definite plan of action that would say we will
totally eradicate the coca growth in Colombia. We don't have
that defined. We had that in Bolivia. We had that written
explanation of what they were going to do and they have, as you
said, responded. They have fulfilled every promise they made in
that respect.
Quite frankly on Bolivia, maybe I will be overruled by the
committee or maybe the chairman will tell me not to or the
Speaker will, but I intend to make Bolivia's request whole. I
am not going to penalize Bolivia while rewarding Colombia
simply because Colombia hasn't had the initiative or doesn't
have the plan that Bolivia had. So I intend--I don't know
whether I am going to take it away from Colombia and give it to
Bolivia, but Bolivia is going to be funded adequately to make
certain they understand we are appreciative of what they have
done, same with Ecuador.
General McCaffrey. Mr. Chairman, I understand your
concerns. Again, we can provide certainly you more detail as
this planning effort moves forward. I would argue strongly,
though, that the $1.6 billion has nothing to do with rewarding
or punishing anybody. It is with achieving U.S. national
interests to reduce the production of cocaine and heroin in
Latin America. That is the deal. Colombian production is up
dramatically. Violence is up. Land area under their control has
diminished. We have a decent plan to get back in there and
allow Colombians to establish control. Production is down in
Bolivia and Peru dramatically. What we were trying to achieve
there worked.
So we are continuing to support their efforts, not to
reward them, but to ensure it doesn't roll back the other way.
I would just suggest the request we sent over here was
carefully thought through with our own country team to support
the outcome. I am not arguing against more money for Peru and
Bolivia, but merely saying the package we have got tries to
achieve U.S. national purpose and Colombia is the problem sells
it short. Remember, 90 percent of the drugs coming into
America, cocaine, and 70 some odd percent of the heroin
seizures in the United States last year. That is the problem,
and a half million people have fled the nation and a million
internal refugees created and hundreds of people have been
killed in nationwide attacks. It is our argument you have got
to stand behind that effort with balanced support, such as $270
million in alternative economic development. You have got to
put $6 million behind security for human rights representatives
and training. You have got to have a comprehensive program, and
we are prepared to listen very carefully to your own viewpoint
but that is a thought out position we are herein proposing.
Mr. Callahan. The administration during this process with
Bolivia tried to take money we had appropriated and instructed
the State Department to send to Bolivia and give it to
Colombia, and we had to intervene as a committee to stop that,
and it is my intention not to penalize you in any way in your
plans for Plan Colombia. I want to tell you at the same time
that Bolivia does have needs and that this committee or at
least they are going to consider it because when I write the
bill I am going to put it in there to fully fund Bolivia's
needs to show these countries that we are not going to let them
eradicate it and then forget about them. If you eliminate coca
growth in Colombia, it is going to move back into Bolivia. So
we must make certain they have the resources to do that, the
same with Ecuador. We may even consider increasing some of the
needs that we found in Ecuador that they are going to be faced
with as a result of this program, but in any event, I am sure
the members of the committee have some more defined questions,
and my statement was more in general, but nevertheless, at this
time, Mr. Chairman, do you have any questions?
Mr. Young. Mr. Chairman, I do have several questions.
First, let me ask, General, say again what the amount of this
drug production that is going to somewhere other than the
United States?
General McCaffrey. Well, these numbers are always somewhat
suspect. Essentially you have it in the written statement. It
is on the order of 700 plus metric tons of cocaine a year out
of the region, 520 metric tons out of Colombia. It would be my
best estimate that a quarter of the production comes into the
United States. A third of it gets seized by one of us in the
international community and the rest of it goes other places. A
huge amount of it gets consumed in Latin America. Drug abuse
problems in Bogota are intense and rising. Drug problems in
Caracas and in Rio and Lima are awful. A bunch of it is now
going to Europe, some 50 metric tons. That is why I went to
Europe and explained to the European Union commissioners that
it is their kids at stake; and, they are paying double the
amount per kilogram for cocaine than Americans are. My guess is
we are consuming a quarter of it.
ASSISTANCE FROM THE EUROPEAN UNION
Mr. Young. Well, General, when you put this plan together
and you discussed this with the European Union, did any of them
offer to assist in this effort?
General McCaffrey. Well, I think they have assisted in the
past. They will in the future. The estimate is some $900
million. That is an estimate. There will be a donors conference
hosted by the Spanish in June. There is an ongoing United
Nations effort in Colombia run by Mr. Pino Arlacci, and there
are other OAS programs of much more modest size that are being
supported. I think the challenge will be for us to convince the
Europeans that the drug production out of Colombia, which is
now going out through Venezuela by and large and into Spain and
the Netherlands, is a threat to their future, and for their own
self-interest they need to stand behind President Pastrana's
$7.5 billion plan. That case has been inadequately made so far.
Mr. Young. So, in effect, as of today they have made no
commitments to be partners in this?
General McCaffrey. The figure we are carrying is $900
million in support from, in some form or another, the
international community.
Mr. Young. General, you said that in southeast Colombia
there are 25,000 heavily armed troopers, did I say that right?
FARC
General McCaffrey. That is a notional estimate, and in the
two provinces in the south, the actual number is classified. I
have been saying publicly there are seven FARC fronts there up
from three about 4 or 5 years ago. Essentially there are more
FARC units down there because that is where the drugs are.
Mr. Young. When this program gets underway and of course
there has been a lot in the media, so every one of these
25,000, at least their leaders, know we are planning to do
this. What are they going to be doing while we are doing what
we plan to do?
General McCaffrey. They are dangerous people. I mean, if
you are an honest air force major, police officer, prosecutor,
judge or legislator in Colombia you are in trouble. The country
has undergone three nationwide offenses in the last 2 years
since Pastrana has been in office. I think right now they are
studying the situation. He has offered them peace, given them
the Despeje, tried to engage them in a national dialogue. They
are going to have to go through their own calculus and decide
is it in their interest to engage in the peace process or fight
for the drugs. I don't know how it is going to come out but the
more resolute our international community's support for the
democratic institutions of Colombia are, I would argue, the
more likely it is that they will engage in this peace process.
AMERICAN INTERVENTION
Mr. Young. The summary that I have before me and I guess
the other members do as well, on page two talks about aside
from their involvement in the drug trade the guerrillas and
paramilitaries are also engaged in a 35-year-old internal
conflict which has left 30,000 dead and more than a million
people displaced. My own concern is that these heavily armed
guerrillas or paramilitaries aren't going to just stand by idly
and watch while we do whatever we are going to do. So my
question is how many Americans will be on the ground in
Colombia, whether they are military, whether they are civilian,
whether they are police? What is the plan to have Americans on
the ground in Colombia to execute this project?
General McCaffrey. Well, I think the plan is going to be
absolutely transparent. That is the plan right here, Plan
Colombia. There is an associated dimension to it in U.S.
Southern Command that we can show you. There is a supporting
U.S. Interagency document that is in your packet. This is a
plan to support the Colombians with 63 aircraft, intelligence,
alternative economic development. So you can see the pieces of
it. There is no contemplation at all, zero, for U.S. military
intervention in Colombia. I say that not just as the Drug
Policy Director but as the father of a daughter who is a
captain in the United States Army and son who is an infantry
major. So there is no discussion on our part that this can be
anything but Colombian institutions facing up to a struggle
that has enormous importance to the rest of us, particularly in
the United States. This is what is killing our children. We
wish them well, and we owe them it seems to me political
support, resources, intelligence cooperation, training. That
would really be the answer.
Mr. Young. So we are to understand then that our
involvement as Americans would be to provide money, to provide
in kind----
General McCaffrey. Training, intelligence support.
Mr. Young. Would that be done in Colombia?
General McCaffrey. Well, I think we will have to watch this
carefully. The best way to do it ought to be sorted out by the
country team, by U.S. Southern Command by the interagency
process. Mr. Pickering will establish a permanent interagency
secretariat, and each one of these ought to be approached as a
rational, decision making exercise. But if we are going to
train Blackhawk helicopter crews, we ought to be doing it in
the United States, not in Colombia.
OPERATING LOCATIONS
Mr. Young. Aren't we considering establishing forward
operating locations?
General McCaffrey. We actually have forward operating
locations already in three places, in Manta, Ecuador, in
Curacao and Aruba, and we are looking for one somewhere in the
Central American region. We signed an agreement with the
Ecuadorians. We signed an agreement with the Dutch government.
So the FOLs, three of them are established and operating today.
We need to upgrade them to make sure we can get the AWACS
aircraft into Manta as an example. We have got some continuing
problems. We have got to find something in Central America.
There is a huge chunk of Pacific Ocean that is inadequately
covered right now.
Mr. Young. I think one of the major concerns that many of
our colleagues have is the fact that Americans may get heavily
involved on the ground in Colombia, and that is a worrisome
factor, and your statement, I hope that is the way it ends up,
that the Americans are not on the ground in Colombia.
Mr. Chairman, thank you very much.
Mr. Callahan. Ms. Pelosi.
Ms. Pelosi. Thank you, Mr. Chairman. Thank you very much.
US PERSONNEL
General McCaffrey, thank you for your testimony. It raises
some questions and reinforces others that our colleagues have
conveyed to many of us on this committee. We have a
responsibility to bring some answers to our colleagues. Quite
frankly, this package has come to us practically out of the
blue in terms of its size, $1.5 billion for this year 2000--for
the fiscal year 2001 coming up, is a total of 1.650, as you
know.
Following up what our distinguished chairman of the full
committee was asking about U.S. personnel, it is my
understanding that U.S. personnel, minimal personnel is
assigned to Tres Esquinas right now. We do have people on the
ground in Colombia right now; is that not correct?
General McCaffrey. On a given day--I wouldn't know what the
number is--on a given day there is probably 80 to 200 military
people in country. Most of them are TDY. It will go up when we
start training the next two battalions. When the training
mission has concluded, they withdraw.
Ms. Pelosi. Okay. So the comfort that we took from your
statement before that there wouldn't be any U.S. personnel in
Colombia was not exactly. Did I draw a wrong conclusion from
that?
General McCaffrey. No. I actually miscommunicated if you
got that out of what I said. I said there are 80 to 200
military people on the ground at any given time. There are
probably 400 in the U.S. embassy, and each of these training,
intelligence and management of the package requirements ought
to be looked at in a rational way. The right people with the
right skills in the right place.
Ms. Pelosi. So they might be in Colombia as well?
General McCaffrey. What I said was there would be no U.S.
military intervention in Colombia, that it must be the
Colombian police and armed forces, prosecutors and judges and
legislators that face up to this problem, not U.S.
FINANCIAL REQUEST
Ms. Pelosi. We will have to go into more detail on that,
but let me just talk about the money for a moment. Our total
budget last year out of our committee was about $15 billion.
About half of that was the kind of assistance that we are
giving to Colombia. It has been with the $150 million that was
in fiscal year 2000 the third recipient of U.S. Aid. This $1.5
for this year is 10 times what we gave last year and, 15
percent of all of our aid to any place. So this is a
significant amount of money.
General McCaffrey. Exactly.
Ms. Pelosi. And we are taking it up as an emergency. In our
budget, this is a huge amount of money. It might not look so
big in the Defense budget and other budgets, but in our budget
this is huge and we are taking it up as an emergency. As I said
earlier, if we have $1.5 billion to spend in Colombia, then we
should have $1.5 to spend on demand reduction in the United
States. We have an absorptive capacity for more treatment on
demand dollars and I think we have a moral responsibility to
spend our money here first.
General McCaffrey. May I correct one thing, though, the
supplemental is $952 million, not $1.5 billion. The emergency
request is $952, and I also remind you again just on a factual
basis the drug treatment total in the bill we sent over is $3.8
billion. This is not coming out decreasing the counterdrug
effort. This is part of an additional package to confront the
problem in Colombia.
Ms. Pelosi. I understand. But I am saying that if we are
going to give priority, as I said earlier, the RAND Corporation
says that money spent on treatment on demand is 23 times more
effective than elimination of the coca leaf, 11 times more
effective than interdiction at the border, and seven times more
effective than law enforcement. That isn't to say that we
shouldn't be doing some of that. But if we have more money to
spend how can we ignore the fact that we have people on waiting
lists for treatment on demand in the U.S.?
General McCaffrey. I couldn't agree more by the way. That
is why we have increased prevention education dollars by 55
percent in 4 years and treatment dollars by 29 percent and the
research budget by 36 percent. I fully agree with your point.
Ms. Pelosi. But our baseline is quite different than the
billions and billions and billions of dollars that we spend on
interdiction.
General McCaffrey. Oh, no, it is $3.8 billion in drug
treatment.
INTERDICTION/ERADICATION EXPENDITURES
Ms. Pelosi. How much do we spend on interdiction and coca
leaf eradication and law enforcement?
General McCaffrey. I have got it in pie charts and by
functions and by goals.
Ms. Pelosi. About $12 billion, wouldn't you say?
General McCaffrey. On what?
Ms. Pelosi. Interdiction and coca leaf eradication and law
enforcement.
General McCaffrey. Interdiction in the fiscal year 2001 is
2.2 billion.
Ms. Pelosi. That is a lot of money.
General McCaffrey. Yes, absolutely, and well spent on the
United States Coast Guard, Customs Service----
U.S. DRUG DEMAND
Ms. Pelosi. Let me just go to the next point. We are
talking about this interdiction and we are talking about coca
leaf eradication and crop substitution. Some people who are not
as initiated as you are in this area would say, gosh, it seems
to me that we wouldn't celebrate any victory and the Peruvians
should, the Bolivians should, that they have reduced
cultivation in their country, but isn't it clear this has moved
to Colombia, and what is to say that the supply is going to
continue to move around as long as we have demand in the U.S.?
So when you say the problem is in Colombia, I have to disagree
with your basic premise. The problem is in the United States
with the demand that we have here if our goal is to win the war
on drugs. If our goal is to help the Colombians economically or
defeat the FARC and the paramilitaries and the ELN, then that
is another. What is your goal? What is the U.S. goal? Is it to
bring peace to Colombia? Is it to improve their economic
situation? Is it to reduce drug use in the United States?
General McCaffrey. Well, when you look at the U.S.
strategy, the central part of the strategy is to reduce the
consumption of drugs particularly by focusing on gateway drug
taking behavior by American adolescents. That is clearly the
heart and soul of what we are doing. Then to take the addicted
population and get them into effective drug treatment. Another
aspect of it, around 8 percent of it, is to work with the
interdiction community, and an increasing amount of this plan,
if you take supplemental in account, it runs around 8 percent
of the total if I recall correctly, is to reduce the sources of
supply. It is actually working, you know, and I want to
underscore, that in fact cocaine production is down 18 percent
in 4 years. It is actually working. The problem is in Colombia.
That is the unique place, an empty, desolate land with lots of
cultivators and traffickers, heavily armed, making money out of
drug production. It is my view that if we can get Colombian
democratic authority back into the south we will substantially
reduce cocaine production in Colombia.
Ms. Pelosi. Two closing questions then, and I have so many
other questions. Do you think that that production is going to
move someplace else or the demand in the U.S. will draw the
drugs----
General McCaffrey. By the way, the demand in the U.S. is
going down. Demand in Rio de Janeiro is going up. Demand in
Mexico is going up. Demand in Europe is going up.
Ms. Pelosi. Let me just ask you. If there was a $1.3
billion to spend and that is all we had additionally to spend,
do you think it is better used in Colombia or in increasing our
treatment on demand programs in the United States as our drug
czar?
General McCaffrey. Now, I believe you have to take a
systematic approach to the drug issue. I simply don't believe
there is an either/or answer. You can either talk to sixth
graders with the DARE program in San Francisco or you can do
AWACS interception missions in Bolivia. I think there has to be
some balance, coherence. It has to be long term. You have to
watch the execution and change, modulate your program to see if
it works or not. So what we are proposing to have given you,
1.6 billion, is part of a $19.2 billion total effort. You have
to see it in that context.
Ms. Pelosi. I see that, but my point is, as long as we have
waiting lists in the U.S., we have not lived up to our
responsibility for treatment and demand in our own country. If
we had treatment on demand to capacity and everyone was served,
I could accommodate your view a little better, but I think we
have a moral responsibility to----
General McCaffrey. I don't think you can produce instant
Blackhawk capability in Colombia. I don't think we can produce
instant drug treatment in America. One of the hardest things
you and I will do together is build a drug treatment
infrastructure in America that works. It is based on NIDA
principles and protocols that have trained people, and
standards to grade how they are doing. That is going to be the
work of 5 to 10 years, and I hope you continue to support it.
You have in the past.
Ms. Pelosi. Well, There are four of us here on Health and
Human Services and Education Subcommittee which funds SAMHSA.
So we are watching it from two committees.
General McCaffrey. I applaud your effort. That is why Donna
Shalala can announce she has got $3.8 billion in drug treatment
in the fiscal year 2001 budget.
Mr. Callahan. Mr. Packard.
SUPPORT FROM OTHER COUNTRIES
Mr. Packard. Thank you, Mr. Chairman. You mentioned the
demand is up in other countries, Europe, Mexico, Brazil and
other countries. Are they participating in any way in this war
on drugs in Colombia or are we doing it all on our own?
General McCaffrey. I have been uncomfortable and again, I
just briefly would state this, in calling it a ``war on
drugs.'' What we think we are doing is we are moving in a
systematic way to reduce drug consumption in the United States.
It was 14 percent. It is now 6 percent. We are trying to get it
below 3 percent through a variety of measures, some of which
sound warlike--air interdiction in the Andean Ridge, Coast
Guard operation in the Caribbean--but much of it I think we
have caused ourselves, problems in going back to this metaphor
of a war on drugs.
Having said that, the Europeans are--let me choose my words
carefully because I will never be the mayor of Amsterdam with
my current reputation in the Netherlands--so if I can sort of
walk through this with delicate care. The Europeans are
incredibly energized about the growing problem of drug abuse in
Europe. I think they are quite serious about it. They are
establishing institutions, they are trying to find common ways
to go about it. There is a lot of things they do to work with
this that are spectacular. The Caribbean is a fully integrated
Dutch, British, French, U.S. and Caribbean operation now. It is
working quite well. Our intelligence systems are pretty well
operating in sync. Our police law enforcement groups cooperate
fully.
The European Union has provided support in this region with
some effectiveness. In Bolivia in particular, but also in
Colombia. The Brits are in Colombia right now assisting with
this mission. The United Nations is there. Pino Arlacchi has
been there twice in the last year. I have called upon them to
see this as a principal threat to their own future. I am not
sure we have adequately yet argued that case with the European
Union.
CORRUPTION IN THE COLOMBIAN GOVERNMENT
Mr. Packard. One last question, Mr. Chairman, if I may.
Corruption in the Colombian government and in their judicial
system, is that a part of the problem of trying to conquer the
drug problem there and to what extent--what are we doing about
that?
General McCaffrey. Well, it is a very difficult question to
get a real firm answer on. We watch it with as close a fidelity
as you can. Throughout the region the billions of dollars have
just a blistering corrupting effect and not just on the police
and air force radar operators but on journalists and
legislators. It is a huge problem. Having said that, the
Colombians, it seems to me, have been quite determined in
confronting that. General Serrano, fired 3,000 cops in his
first year in office 5 years ago. I think Operation Millennium
which we just concluded, one of the better police operations in
the history of international cooperation, had six Nations
involved in it. The Colombians kept the secret for 6 months,
and that included because they had to go to their Prosecutor
General to get legal authority to carry out some of these
operations. They kept them secret, and there were 30 major
criminals apprehended by the Colombian police. So I think they
are facing up to it quite nicely.
Having said that, it is a continuing challenge to them and
others to include us.
Mr. Packard. Thank you, Mr. Chairman.
Mr. Young. Mr. Packard, would you yield for one question?
Mr. Packard. Of course.
Mr. Young. General, you said the Brits are in Colombia.
Explain that. Are they there physically?
General McCaffrey. They are extremely helpful on training
missions.
Mr. Young. In Colombia?
General McCaffrey. Yes, and they are in Peru. Their
ambassador in Peru is very involved with carefully selected
amounts of money. There has been a European Union mission--this
is going back 4 or 5 years, in Bolivia, I think, and continuing
throughout that period. They are in the Caribbean. We have
worked with them in the Caribbean--eastern Caribbean. But what
I have argued is they need to see this as a drug problem that
is declining in the United States and searching for new
markets. It is going to cause huge damage in Brazil and Germany
and France; they need to understand that. The cocaine is coming
to Europe, and we are trying to make that argument so they see
their self-interests served by supporting this effort.
U.S. PRESENCE IN COLOMBIA
Mr. Young. Let me go back to a question I asked you earlier
about the presence of U.S. civilians, police or military, and
you said no, paraphrased.
General McCaffrey. Operating units, right.
Mr. Young. However, now you say that the British are there,
and I actually sent one of my staffers into the region this
last week and visited one of the forward locations and
discovered there were at least a dozen special service force
members there at Tres Esquinas, which indicates to me there are
American soldiers there on the ground.
General McCaffrey. Well, between 80 and 200 are on a given
day somewhere in Colombia exactly, and they have been for
years. I am trying to think of it as a sensitive number to tell
you at Tres Esquinas. Five days ago there were three Americans
there. They are a subject matter expert team on intelligence
working with the joint intelligence center that we helped them
set up with police, armed forces.
Mr. Young. I just want to make sure that the answer is
clear that there are Americans on the ground.
General McCaffrey. Operating forces. What I am suggesting
is the police and armed forces of Colombia are going to do
this, not the Americans.
Mr. Young. When I asked the question I didn't put any type
of qualification as to what they were doing. I just asked if
they were there.
General McCaffrey. There will be intelligence training
management effort sufficient to carry out this program
throughout the period.
Mr. Young. Thank you, Mr. Packard.
Mr. Packard. Thank you, Mr. Chairman.
Mr. Callahan. Mr. Obey.
Mr. Obey. Thank you, Mr. Chairman. General, you ought to
have your staff go back and look at the hearings of this
subcommittee since 1973, my first year on it, and see how many
times we have heard the same kind of message to the committee;
that in this country or that country production is down by huge
amounts, the number of hectares that have been wiped out are
impressive. I feel like a football coach who has had his team
score five touchdowns but we still don't have a point on the
board. It just doesn't kind of compute, and after a while you
wonder how much these numbers really do mean.
Let me just toss you a whole bunch of questions. I will
give you the advantage. You can have the last word, but let me
dump all the questions on you, and you can respond how you
want.
You say that this plan is essentially a Colombian plan.
What I have been told by people who I trust is that Colombia
originally developed sketchy plans focused largely on economic
actions; that the U.S. then countered with a heavily layered
addition of military activities; that in fact the Colombian
government, while appreciative, is disappointed at the level of
economic assistance that they are going to be given, especially
given the IMF deal that they were required to sign.
ECONOMIC ELITE IN COLOMBIA
In addition to that, I ask how much is the economic elite
in Colombia going to sacrifice to save their country, and how
committed are they going to be over the long haul? My
understanding right now was that there is a significant number
of families who have already moved to Florida, or at least the
women and children have. They sent their bank accounts with
them. That a number of the men stay in Colombia Monday through
Friday and go up to visit them on weekends. I don't know what
kind of a commitment that represents if you have got
significant numbers of people or significant amounts of the
country's wealth doing that.
High school graduates, as I understand, are exempt from
combat. That means essentially that you are going to have
largely the rural poor who are going to be brought into these
volunteer forces, and my question is, for those who after a
year don't leave the military and join FARC, how sustained is
their involvement on the right side going to be once the going
gets rough?
RETALIATION OF THE FARC
Another question, what is going to happen when the FARC
retaliates? What will happen to public support for that
government over the long haul if the violence escalates all
over the place? And if the Colombian forces get chopped up, is
Uncle Sam, given the attitudes in our Nation, going to then
say, well, we gave it a good college try but we are going to
pull the plug? I think that is unlikely, and that brings into
question what is the next step if this doesn't work in terms of
U.S. involvement.
Then you take a look at the question of how sustainable is
this effort in that society once you have an escalated military
situation.
DRUG TRADE INVOLVEMENT BY PARAMILITARY GROUPS
You then have the question of the involvement of
paramilitary groups in the drug trade. There has been some
debate about how much they rely on drug trade, but I am reading
from a document from the RFK Memorial Center for Human Rights
and it reads as follows: In an intelligence report aired last
Sunday, National Paramilitary Chief Carlos Castano confirmed
the longstanding accusations by Colombian and U.S. officials
that rightists are involved in the illegal drug trade. If we
come in and retake an area, we have to earn income from what
already exists, Castano said. Here coca is the economy and that
is how I finance myself. How are we going to deal with that end
of the problem?
And then I guess my main problem is the way this is being
considered. In my view, the U.S. is already a little bit
pregnant, and the reason is because through the DOD bill
Congress has allowed the administration to proceed with its
existing involvement so we are already sort of hooked. My
concern is that now this is being considered under a
supplemental so we don't have the normal time frame during
which people who know something about this region and know
something about the problem can bring in their arguments and
counterarguments. It is on a fast track in the Congress--that
is why I say this all to me sounds like Vietnam and although
this may have a very different result, the slipping in one
little stage at a time without Congress ever really in any kind
of a thoughtful fashion examining the issues is very, very
familiar to me because I have seen it before.
Your comments are welcome.
General McCaffrey. Well, Mr. Obey, I probably owe you
written answers on some of these things. Those are all serious
questions, and they deserve a well thought out response. I
would suggest the one thing that is not lacking in Colombia is
courage and commitment. A half million people have fled. It is
a dreadful painful decision for families to make, but the
Colombian police and armed forces and judges and mayors are
still out there, and there is nowhere for campesinos to flee.
No one has suffered more out of this drug production than
Colombians and their institutions, and they have not quit. They
have not left the country. These people still stand for office.
They run for mayor. They get elected, and they get assassinated
by FARC or paramilitary forces a week later. The policemen get
tried in front of their families in the village square and
executed and made an example. I see no lack of courage on the
part of these institutions to face up to it. Indeed, the
polling data I tried to cite was not really because I want to
persuade you of the political correctness of one group or
another but to say the Colombian people have been unmistakable
in their support of democratic institutions. They are not
voting for the FARC and they are not supporting the mindless
violence and the drug corruption that comes along with these
institutions.
I couldn't agree with you more, the paramilitary forces
which started in a sense as self defense, people got tired of
being vulnerable to nighttime assassinations from the FARC and
the ELN and they armed themselves and so did ranchers. A lot of
them have walked away from unguided terrorist organizations
into strictly criminal organizations. They are fighting over
drug money. I think you are quite correct. The Colombian police
and the armed forces are now increasingly being attacked by
them. The last assassination attempt on President Pastrana was
paramilitary, AUC. It was quite a serious one. Castano thinks
he is a threat to his drug business and he is.
Will the public support for the police and the armed forces
and democracy be jeopardized by FARC reaction, is this
sustainable? Well, I have to see. This is risky business. We
are involved in it for a lot of reasons. If this was North
Korea, I wouldn't be over here. It would be more of a
theoretical proposition, but these people are 3 hours flight
from Miami, and they are going to end up in south Florida.
Matter of fact, we are going to be pretty well off with the
bright people we are getting, but the motion is to stand behind
38 million hardworking Colombians and to try and support their
economy and the peace process, and a lot of it is driven by the
drug problem.
How much will the Colombian political elites sacrifice in
an economic and personal commitment? How about the high school
grads? These are all good, legitimate questions. I think
President Pastrana and these people are on the line to stand up
and do this. It is not going to be our sons and daughters down
there fighting. It is going to be their own children.
Mr. Obey. Let me simply say, I think Pastrana is a good
guy. However he is only going to be around a couple of years.
God knows what happens after he leaves, and God knows how long
the rest of his class will support what he is trying to do. He
is a welcome departure from what we have seen in the past.
Mr. Callahan. We are going to have to limit these questions
and answers to 5 minutes. We have excellent attendance here
today, but every member is entitled to ask his or her
questions. Mr. Porter.
HUMAN RIGHTS
Mr. Porter. Thank you, Mr. Chairman. General McCaffrey, I
have to express a great deal of skepticism about the whole
proposal. Our State Department just put out a report on the
repressive nature of the Colombian military and the ongoing
violation of human rights in that society. We have seen in our
hemisphere the repression of native peoples in almost all the
countries, including our own originally, and no real attempt to
address some of the real problems that they have in their
societies, and probably what troubles me most is that I don't
believe that there will ever be a solution to this very, very
serious problem by addressing the supply side if we can't get
the demand in our own country under control. It is going to
find its way in here, and if it isn't produced in Colombia, it
is going to be produced somewhere else.
And so putting a billion, six hundred million dollars into
this supply side effort it seems to me is money that probably
isn't going to get the result we hope it might get. It may help
Colombia and its institutions be more democratic. It may
ultimately help get the military to respect human rights
instead of to violate them. One would hope that. But if you
look at the money we have put in--this is, as I see it, the
chart. We have increased our aid hugely to the military, and at
the same time the problem of growing coca has increased. During
the time we have increased our aid coca cultivation has more
than doubled.
So I think you know if I am sitting there saying what could
we do to help this problem with a billion six, I am very
skeptical that we ought to put it there, and I can think of
some other places we could put it on the demand side or the
treatment side at home that might do a great deal more good
with the money than it would by simply helping in Colombia and
watching it go perhaps somewhere else or not doing any good
there.
Can you kind of address all those concerns, please?
General McCaffrey. Well, I think the logic you have
outlined I share. The central approach for the United States
for our own self-interest needs to be demand reduction. I think
you are quite correct. So that has been the reason why we have
put disproportionate investments over the last 5 years into
prevention, education, law enforcement and treatment and
research.
Mr. Porter. Yes, but if you look two-thirds of our money is
spent on the supply side, is it not?
General McCaffrey. Well, that is a very deceptive figure.
What you need to do is look at the pie chart I gave you where I
separated it by five goals and 31 objectives, and that is where
we are spending the money. Supply side wraps up prisons and law
enforcement and court systems. It doesn't give you a good feel
for where we are going. The facts are unarguable. We are now
putting huge, increased amounts into prevention, education,
treatment, law enforcement, drug court systems. We are moving
in that direction. What I hope you are going to see 5, 10 years
from now is a dramatic reduction in number of people behind
bars, in the welfare system, in the health care system because
of drug abuse. I hope that is the upshot of this, instead of a
$36 billion a year prison program, that 10 years from now it is
down to 20 billion or whatever. So I basically support your
logic.
When it comes to this program, is it hopeless to reduce
drug production? No. The historical evidence is there that you
can do something about Pakistan or Thailand or Peru or Bolivia
if you get organized. If the political leadership in the region
has a national commitment to it, you can turn the situation
around and far more quickly than I would have thought possible
5 years ago. This is actually working on the ground.
Mr. Porter. You can turn the situation around in that
region and it comes out in another region. The supply is not
down. It is meeting the demand that we have.
General McCaffrey. Well, you are quite right. The
consumption is so much less than the supply, that you can't get
at chronic addiction, I would agree, by going after supply. The
argument for support in the Andean Ridge is we don't want our
34 democratic allies in the hemisphere to go under and become
narco states. We don't want them fleeing by the millions to the
United States, Canada and other regions, Spain. We don't want
their economies devastated. They are important to us in a lot
of ways, and we do believe it is possible to get at that
problem. I don't believe Colombia represents just the latest
bubble and that if we do something definitive in the coming 3
to 5 years it will just move over into Ecuador. I think we are
actually going to continue the net reduction of cocaine in the
region. I think this will work. It is my considered opinion,
along with that of Tom Pickering and others of us, those who
have watched this region for the past years that it will
actually achieve its stated purpose in the coming years.
Mr. Callahan. Mrs. Lowey.
Mrs. Lowey. Thank you, Mr. Chairman, and thank you,
General. I would like to ask you a few questions and then have
you respond either to all of them or specifically to one.
IMPACT ON PEACE PROCESS
I would like to follow up on comments made and questions by
Chairman Young and Chairman Obey regarding the impact of all
this on the peace process. I have concerns in general following
our trips with the committee to Latin America about increasing
the United States' military involvement there in general, and
then in this case, I am especially troubled by the possibility
that the U.S. assistance will escalate tensions between the
Colombian military and the guerrilla groups. While the
resources we provide the Colombian military will be primarily
aimed at supporting counternarcotics activities, it seems to me
that the plan to push into southern Colombia will involve
serious counterinsurgency components.
And my first question is, how is it possible to
differentiate between counternarcotics and counterinsurgency
when narcotics and the guerrillas are so closely linked? Are
the counternarcotics battalions that we will support being
trained to carry out counterinsurgency operations with the
equipment we provided to them?
COORDINATION OF MILITARY OPERATIONS
Secondly, I am very interested in the coordination, if
there is any, of the military operations between state and DOD,
I am interested to know whether the humanitarian funds that we
are talking about appropriating are going to be implemented as
quickly as the military component, and what kind of
coordination is taking place. For example, if you can explain
the methods that are used to eradicate coca and opium crops, do
these methods allow farmers to immediately cultivate
alternative crops or do they require a substantial break from
agriculture? Have studies been conducted on the longer term
environmental effects of these eradication methods? And what
are the specific objectives of the alternative development
program? Do we already have NGO partners lined up to help us
carry out objectives? Perhaps Assistant Secretary of State Rand
Beers will be addressing that. If we are going to go in there
with the military, what is our next step to provide support for
the agricultural activities we are talking about?
HUMAN RIGHTS
And lastly, I have been a strong supporter of the Leahy law
and the protection it provides us against the use of United
States assistance to violate human rights, and I do believe
that until now the provision has been implemented in good faith
and that the agencies involved have made reasonable efforts to
provide personnel sufficient to enforce these provisions. The
proposed assistance, however, for Plan Colombia will not only
provide resources to the Colombian military far greater than
those we have been providing but will dramatically increase as
we have discussed today our overall assistance to Colombia.
What efforts are being made to ensure that the Leahy law and
whatever monitoring requirements are added to this legislation
as the process continues will be regularly and adequately
enforced? Are there plans to increase monitoring personnel at
the United States mil group or in the U.S. embassy in Colombia
or to devote a percentage of the overall package to monitoring
activities?
Perhaps you can comment on all or some of these questions.
I would be appreciative.
General McCaffrey. There is no question that we have to, in
our foreign policy objectives, in the supporting efforts by,
whether it is the Department of Justice, Treasury or Defense or
whoever, stand by the rule of law and respect for human rights.
That has to be implicit in what we are trying to achieve. The
Leahy law needs to be followed, the Leahy amendments. These
units, counternarcotics battalions, have to be vetted
individually and collectively, and their activities have to be
reported on so we can be in compliance with our own Federal
requirements, and I think that will happen.
Most of this package is 63 helicopters and it is going to
be used to support the activities of a counternarcotics Army
brigade to allow the DANTI police to get back into southern
Colombia and establish a rule of law and order which in and of
itself will be enormous contribution to human rights. The chaos
witnessed in Puerto Asis and places like this right now is
outlandish, with the FARC, ELN, criminal organizations of
hundreds of people who are heavily armed. I couldn't agree more
that we should stand behind the Leahy amendment.
To what extent can we coordinate simultaneous execution of
a program that involves eradication, introduction of riverine
and Army forces, police, can we get the fiscalia
representatives of the Prosecutor General's office in there so
that there is an independent branch of government to monitor
human rights; can we organize the NGOs and provide enhanced
security for them to be present in the south; can there be this
alternative economic development program thought out and
representatives of the Colombian government on the ground? That
is the requirement. That is what we have to achieve.
You know I went through the round of briefings. PLANTE, the
President's office, the Prosecutor General, the Attorney
General, the armed forces, they are doing this planning. They
are actually on the ground right now, something I have been
sort of reluctant to overstress. There are actually police
units in the south now in 30 and 40 manned detachments. The
Fiscalia has gone down through and is co-located in Tres
Esquinas. PLANTE does have planning reps in the region. This is
actually what they are now starting to execute.
Mr. Callahan. Mr. Knollenberg.
EUROPEAN UNION
Mr. Knollenberg. General McCaffrey, I have a question. I
would like to focus almost entirely on Europe and the European
Union and the possibility those countries sharing the burden of
this effort. Recently I had the opportunity to travel to
Europe, and we talked to a number of people in the EU with
respect to what they would do to help us support the idea of
the Colombia plan and related drug matters. I found that the
Europeans are very concerned about the cocaine problem. They
talk up the problem in a large way, and people from a number of
countries expressed concern.
The problem I found is that when the conversation turned to
the EU's efforts to help us, they fell silent. Plan Colombia
will cost a large amount money, and incidently, I am generally
favorable to what you are trying to do. I believe that you are
moving in the right direction. My concern is that the U.S. may
wind up being the only substantial contributor to this plan. It
is my understanding, and correct me if I am wrong, that some
1.9 billion is expected to come from the EU through
multinational banks or from the source that is within the----
General McCaffrey. Nine hundred million is what they are
planning on when you look at the 7.5 billion. What they are
carrying is 900 million. There is an additional 4.6 billion in
other needed economic support, sort of macroeconomic support.
Mr. Knollenberg. One of the experiences I had, which I
found interesting, is that when I talked to the drug czar in
Spain--and that wasn't the only figure we talked to--about the
areas of commitment, I discovered very simply that they have a
position paper, not money. I asked directly how much money they
are going to contribute as a part of the EU to the focus on
Colombia. Well, they have a position paper. In effect what they
are saying is we have our position paper, but you are going to
have to fund it.
Now the questions I have for you have to do with this: If
Congress approves the supplemental, and frankly I am moving in
the direction of suggesting that we do that, what assurances do
we have that the EU will follow through with their agreement?
And if they don't, the question I have is: where does the
additional funding come from? And will the U.S., for example,
should the EU back down on their burden sharing, be required to
pick up the deficit? These are a number of questions I know--
but can you give us here in Congress an estimate of the
ultimate U.S. commitment if the EU doesn't follow through with
their commitment? And perhaps you can also talk about what
specific things you are doing to urge the Europeans to build
support for this idea and make a contribution to Plan Colombia.
Thank you.
General McCaffrey. Those questions again probably deserve
an answer in writing or further hearings or presentations to
hit each one of those topics. I don't think we have adequately
made the case to the European Community that their self-
interests are directly engaged and will increasingly be so by
the ongoing problem in the Andean Ridge. I don't think we have
made the case.
I personally went to the European Commissioners, Minister
of Justice, Foreign Affairs, Sports, you name it, I have seen
them, the French are hard over, solidly supportive of our
general aims on countering drug production, so are the Brits.
Certainly the U.N. has been very supportive, but they haven't
produced the funding yet that is commensurate with their own
threat level. And now having said that, you and I, it seems to
me, have to focus on 90 percent of the drugs coming into this
country originate or transit through Colombia. That is where
the heroin that is killing our children is coming from. We are
doing this, we recommended 1.6 billion as part of the overall
plan in Colombia to serve American interests, though I would
argue that the support out of Europe is going to get generated
by the FARC over time because cocaine is going to start
wrecking their societies, also.
Mr. Knollenberg. I hope you are right about that. In terms
of more hearings, I would be in favor of that as well, but I
think the EU needs to be prodded, I really do, and I also think
here are countries that are paying twice per kilo what we are
here. Somebody is marketing it very well to them and they are
getting the price. You would think they would be concerned
about putting a stop to it at their borders. This is true both
in the Netherlands and of course in Spain and Portugal.
So I think I would like to see those hearings develop, and
perhaps from that we can get a better realization of just what
the EU is committed to do.
Mr. Callahan. Mr. Jackson.
Mr. Jackson. Thank you, Mr. Chairman, and let me also thank
you, General, for being here today. I associate myself with all
of the skepticism that we have heard from Members of Congress
concerning how this $1.5 or $1.6 billion is ultimately going to
be spent.
COLOMBIAN ECONOMY
I had two questions about monitoring and reporting that
Congresswoman Nita Lowey had asked before me, but I want to
touch upon something, General, that I thought you said that was
most important, at least from my perspective, and that was
about the state of the Colombian economy. I know a little
something about this. When I look at the economy of the Second
District of Illinois, where I represent, the top 11 businesses
only employ 11,000 people. I have the same number of
constituents that everyone on this panel has except that
because the economy fundamentally is not growing in my district
and I represent 30 municipalities outside of the City of
Chicago, we have high unemployment. The absence of a positive
growth, economic environment is creating a negative growth
environment, but since nature abhors a vacuum, it is also being
supplanted by its own drug economy, its own underculture.
I would imagine if I imposed the reality of some parts of
the Second District of Illinois on the country of Colombia
anytime someone mentions that you have unemployment in that
country as high as 25 percent, even after we spend 1.5 billion
or whatever the actual request, which there seems to be some
questions about by the panel, it appears to me that even if the
democratic forces in the country are successful, unless
Colombia's fundamental economic problems are resolved for the
38 million inhabitants of that country, it is just a matter of
time before another subculture begins to evolve, creating a new
group of leaders in the undereconomy, if you will, who begin to
export and create drugs.
If in fact we cannot find alternative crops, today's
democratic leaders, and I am not one to point a finger at
anyone, are simply tomorrow's drug barons. So I am wondering
what percentage of the time and what percentage of these
resources are going to any international efforts to coordinate
a new economy for Colombia to give the people of Colombia an
alternative that is fundamentally different than the one they
presently are experiencing. I know I have been fighting in my
own district for a new economy that would supplant the present
negative growth and negative environment associated with that.
I am just wondering what emphasis this administration and
this Plan Colombia has beyond the military approach to
providing troops and providing more weapons and helicopters and
burning crops, to providing the Colombian people in this global
economic environment with real export capabilities in something
that is legal and something that is also profitable that can
employ the people of Colombia and provide their country with a
future.
General McCaffrey. I think the questions go right to the
heart of it. You can't merely move 200,000 people out of drug
production and expect the problem to go away. The enemy in this
case are not campesinos who are being paid almost nothing for
living a desperate existence minus their families in many cases
under the control of criminal organizations in the middle of a
free fire zone with narco-guerrillas. So I couldn't agree with
you more, and I think heart and soul of this Plan Colombia does
include a substantial attention directed to this issue. There
is $270 million in that request to do just what you say.
Now there is a wider observation, if I can offer it for you
to consider. There is nothing wrong with the economy of
Colombia. This is a huge, wealthy nation sitting on deposits of
gas and petroleum, with a very creative, hardworking work force
with some of the most educated intellectuals in Latin America,
and they have been doing just fine, thank you, for 40 years.
They have had good fiscal discipline. They have had smart
people running the economy. The problem is the violence, and
now the problem is the violence and the drug money. So instead
of just dealing with kidnappings of their children, bank
robberies, extortion, now they have got to put up with
multibattalion attacks on police stations around the country
simultaneously on the same night.
I suggest strongly that when we have impeded the hundreds
of millions of dollars from supporting the FARC, ELN and the
paramilitary, you are going to find the economy of Colombia
comes back quickly. It has actually started to upturn already,
but right now you can't invest in Colombia, you can't visit,
you can't drill and you can't do a lot of things because of the
violence.
Mr. Callahan. Mr. Kingston.
Mr. Kingston. Thank you, Mr. Chairman. First of all,
General, it was a great honor to have you back in the
Hinesville-Savannah area 2 weeks ago.
Mr. Chairman, my question actually is to you. We have had a
lot of good questions asked today. Will this committee have
another hearing in terms of getting the answers to some of
these because everybody has had a lot of very pertinent
questions which would weigh in on how we ultimately vote?
Mr. Callahan. I don't think so but you have that
opportunity to discuss it further in full committee.
Mr. Kingston. Well, I appreciate that.
General McCaffrey. Mr. Chairman, I would be pleased,
between State, Defense, Treasury, NSC, we will come over here
and try to respond fully to your questions outside of the
hearing.
Mr. Callahan. I think also we are going to have to ask
General McCaffrey to give us answers to any written questions
we might have. Since there are numerous questions and since we
don't have the time today, we won't have another hearing with
General McCaffrey here. He is the one who is going to have to
answer the question. We are going to have to ask the General
to, that we will give each member say 3 days to submit
questions and then we will submit them to you, General, and ask
that you get this information back before we bring the bill to
the full committee.
General McCaffrey. Yes, sir.
Mr. Kingston. So, Mr. Chairman, the questions that were
asked verbally, unless they are followed up by each member in
writing, those questions won't be answered?
Mr. Callahan. Other than what the General has already
answered.
BLACKHAWK HELICOPTERS
Mr. Kingston. Okay. Well, let me then ask a question I
guess for rhetorical purposes until I put it in writing, if I
am following procedure. How much is the Blackhawk helicopters
going to be, 30 of them, and how much are they each
approximately?
General McCaffrey. Well, the real question is how much does
a system cost, not just a helicopter, and the answer is a
little over $400 million for the whole program.
Mr. Kingston. Now, when you say systems, you mean arming
it?
General McCaffrey. You have to buy it, train the crews, you
have to operate it for 2 years, do maintenance, provide fuel,
you have to station it, you have to make sure you have got the
hangars that support your general maintenance requirement. It
will be in my judgment 2 years to do this in a deliberate
manner to give the Colombian police and armed forces the
mobility to go in the south and confront this drug production.
Mr. Kingston. And the training will be in Colombia?
General McCaffrey. I think some of it, the Huey pilots by
and large can be transitioned in country, and again, I wouldn't
presume to step into what really is CINC U.S. Southern
Command's business, but the Blackhawk training I would imagine
a lot of it you have to do on a machine. You can't do it in the
air. So a lot of that will be done in the U.S.
Mr. Kingston. Now, there is nothing in this request for
fixed wings; is that correct?
General McCaffrey. The biggest single piece of the package
is 63 aircraft. By the way that doesn't include what the
Colombians are buying on their own. They are also going to buy
FMS, an additional 14 Blackhawks and other equipment. They are
producing some of it domestically. The riverine intervention in
the south is Colombian purchased, designed and built in
Colombia.
BURDEN SHARING
Mr. Kingston. Okay. Then two other questions, General, that
one I will follow up in writing, but I do believe the committee
members have a lot of concerns about burden sharing, what the
other countries, the Brits, Europeans, whoever, what they are
going to contribute, both in personnel and monetarily, but the
other part of that which you had mentioned in your opening
statement was about measurability of our effort, which your
office has done in a general sense. Will we be able to have
measure of this particular campaign?
General McCaffrey. Yes.
ECUADOR
Mr. Kingston. And our allies' efforts and that will be
something that I will ask. And the other thing, it is
interesting Ecuador kind of stands out kind of as a donut hole.
Why aren't they in this with Colombia, Bolivia and Peru?
General McCaffrey. They are in the plan. There is money in
this 1.6 billion for Ecuador.
Mr. Kingston. But they are not growing it as much as the
other three?
General McCaffrey. No, very little of it. The Ecuadorians
have been very good. They have been an island of calm between
Peru and Colombia for the last 10 years. They are being
threatened increasingly by it now, not necessarily cocaine
production so much as they are becoming a major transit route
for drugs going out through the Pacific coast and up to the
United States. They are also a base area now for the FARC
hospitals, retraining areas, and increasingly Ecuadorians are
working in coca producing regions in Putumayo Province.
Mr. Kingston. With their political, economic problems right
now are they more likely to get involved in it?
General McCaffrey. I think they are very determined. Even
with the terrible challenges we are watching them struggle with
now in Ecuador, the economy, the political leadership are
determined to try and keep Ecuador from being swallowed by
this. They are moving military units up on the frontier trying
to regain control of their border areas. They are supporting us
in Manta, Ecuador, with a forward operating location. They have
signed an agreement. They are supportive of that. They have
been good international partners on this drug issue for years.
Mr. Callahan. I thank the gentleman from Georgia. Mr.
Lewis.
Mr. Lewis. Thank you, Mr. Chairman. General McCaffrey,
thank you very much for being with us. I must say that when one
takes a look at the amazing challenge that you have and the
responsibilities you have taken on behalf of not just the
Clinton administration but for all of us, the task is daunting
indeed. The overall program involves a multibillion dollar
commitment. Indeed, there are educational efforts going forward
that are a reflection of the work that you have done during the
time you have carried forward this responsibility. I am very
appreciative of those efforts. The law enforcement, judicial
system costs, all of those elements are all part of a
comprehensive program.
In that connection, as I have been able to review your
work, I, as one member of this committee, want to compliment
you for that effort and compliment the Clinton administration
for putting its confidence in you.
We have before us today the elements of the supplemental,
which as I understand it are a little under a billion dollars.
That is the most immediate item that I think we in the
appropriations process have to be concerned about. The vast
percentage of costs out of that, something just short of a
billion dollars, is for the helicopters we have been
discussing; isn't that correct?
General McCaffrey. Yes, exactly. Essentially half the
package to Colombia is 63 aircraft.
HELICOPTERS
Mr. Lewis. In that connection I had a conversation recently
with General Shelton regarding both the training of the pilots
for these helicopters and the mix of the aircraft themselves. I
would ask the same questions of you for they came out of
discussion with General Shelton.
First, the per unit cost for a Blackhawk helicopter is
considerably greater than the per unit cost for an advanced or
upgraded Huey. Yet we were essentially dividing the numbers of
helicopters between those two kinds of aircraft. I need to know
very precisely why we are buying Blackhawks when for the same
dollar amount we could buy a significantly larger number of
aircraft overall or spend less money for the number of
helicopters we want to deliver. It is one thing for the
Colombians to just want Blackhawks. It is another thing to
convince the committee that they are going to produce an awful
lot more that justifies a differential in cost. After a couple
of years down in that region--I understand we are going to be
leasing helicopters to them as a matter of fact--what we get
back will be largely junk. I would much prefer we get the job
done with assets that will allow that job to be done without
having unnecessary expenditure. So could you just briefly
respond to that? Have you considered the Huey-Blackhawk
question and give the committee an idea as to what you think is
at least the reason for this division.
General McCaffrey. Well, I would tell you flat out I have
done this my entire professional life, and I know a great deal
about it. I didn't arrive at this decision myself, the 30
Blackhawks--and incidentally they have already got 28
Blackhawks. They have got 52 aircraft that we have provided
over the last decade. They are pretty good at their business.
They are forming army aviation elements. They are going to buy
14 more Blackhawks. There is a lot of aircraft for that
country--they are going to absorb in the next 2 to 5 years.
In the interim, the UH-1N aircraft primarily we get out of
Canada are rebuilt, pilots are easier to train, and can be put
into action more quickly. 15 are already there, 18 more will go
and so that is the first thing we can do. They are certainly an
upgrade from preceding capabilities. It will allow that lead
battalion to start operating this year. They are going to move
the aircraft down to Laranda here in the coming months.
Why the Blackhawk? It is simply the most effective piece of
rotary wing aviation in the world. This is a huge country. I
have urged the administration, to stop talking about the tiny
country of Colombia. We don't talk about tiny Germany or tiny
France. This is a giant, roadless area with jungle with
thousands of armed FARC, with 50 caliber machine guns. The
Blackhawk can pick up 21 soldiers fully equipped, fly them
hundreds of miles, it is night capable, and it can take
multiple hits from 20 millimeter groundfire and keep flying.
That is the reason for the Blackhawk aircraft and I think it is
a capability that if we expect these brave youngsters out of
the police and the armed forces of Colombia to confront this
issue will make a big difference. I am an unabashed supporter
of sort of the mixture they have got.
We ought to put this in context. There are 240,000 people
under Minister Ramirez who are charged with the security of the
country. Most of them have to guard banks, mayors, legislators,
the oil industry, the people and probably around 30,000 in the
army and maybe 2,500 in the police are capable of confronting
this heavily armed terrorist force. That is what they are going
to do.
Mr. Lewis. I will have some additional questions--are we
going to wait for new helicopters coming off the assembly line
or do we have some in the inventory that can get there more
quickly?
General McCaffrey. All of those, we have to do this in a
system. You can't send the Blackhawks until you have got the
maintenance, the pilots.
Mr. Lewis. I understand that but I don't think we can do
that. If we have a Blackhawk not being used, you don't have to
wait for the assembly line to produce one. It seems to me if
this is an emergency, and that is what a supplemental is, that
you go tap that Blackhawk and maybe replace it with something
coming off the assembly line. There is some logic behind that
sort of questioning.
I note with interest with information that has come from
the Department of Defense that in the 1998 season there was
some thousand flights from labs delivering HCL over the Andes.
In past efforts to impact flows of cocaine to the United
States, some of the other countries that have been very
successful have been successful because they have shot down
those aircraft that are transporting the cocaine. Does this
package include a specific piece that involves being able to
identify those planes that are carrying the cocaine? Are we
very strongly urging plans to shoot down those airplanes? That
has had a big piece of the effectiveness of that which has
occurred in other countries. I am wondering if this package
specifically has that design.
SHOOT DOWN POLICY
General McCaffrey. Well, I was privileged to be CINC U.S.
Southern Command when we designed the air bridge operation out
of Peru and Colombia, and I couldn't agree more that when you
put these criminal organizations at threat, it has an impact on
their behavior. Colombia does have a shoot down, force down
policy. It is in accordance with ICAO principles. They have put
it in effect. It is having a very dramatic effect on how drug
criminal operations are running.
Mr. Lewis. Can you tell me how many they have shot down in
the last 2 years?
General McCaffrey. Let me provide the answer for the
record. It is on the order in the last couple or 3 years of 20
aircraft. By and large what they do is they wait until they are
on the ground and then disable the aircraft and try and get
people on the aircraft to recover the drugs and make the
arrests. They have been less likely to shoot them down in air
transit, but it has had a big impact on them, and what you are
seeing now is a tremendous amount of this drug smuggling is on
the rivers. That is where the drugs are. The coca crops are
along the rivers, the labs are there, the drugs are moving on
the rivers. They are going out through Venezuela and Ecuador.
They are going out through Colombian ports off the north shore
into Panama, although we get a huge problem with Venezuela and
inability to operate in a regional cooperation in their air
space. So a continuing threat is Colombian drug flights across
Venezuela and out into the eastern Caribbean.
Mr. Lewis. General, I was just noting here that in 1998
season there were about 1,000 flights. I had information that
we had actually shot down maybe 10. You suggested that we often
hit these planes on the ground but with your experience, you
know full well planes being shot down in transit has a very
sobering effect upon those who would choose to try to fly them.
I would hope that there is an element at this package that
encourages the government to shoot down those planes. Make it
very dangerous. It wouldn't be a very expensive piece of this
package to do that.
General McCaffrey. Part of the package is radar upgrades.
It is better intelligence systems, better coordination. I would
just suggest to you though you have got to go where the drugs
are. You have to follow the threat and these people are less
vulnerable than the Peruvians were 5 years ago because the
precursor chemicals, the coca paste etc.----
Mr. Lewis. General, You have got to go where the drugs are.
Frankly, I am basically a sympathetic voice here, but you said
that 90 percent of the coke and the heroin coming into our
country is coming from Colombia, and it ain't going by boat. It
is being flown.
General McCaffrey. Actually it is. It is by boat. That is
what I am trying to suggest. They are going down the rivers,
out to the coast, into boats. The principle smuggling route
into the United States right now is the eastern Pacific by
noncommercial maritime transport into Central America and
Mexico and then across our border by truck. The next principal
drug smuggling route is the western Caribbean into Central
America, by and large by commercial air or boat, and finally
there is a huge piece of it that goes up the Pan-American
Highway if you can get into Panama. So actually it has moved to
largely a maritime threat. It is no longer a Caravelle aircraft
into Mexico. To some extent out in the eastern Caribbean it is
still light aircraft off Haiti, Dom Rep, Jamaica, et cetera.
Primarily it is maritime, that is what we are looking at.
Mr. Lewis. Mr. Chairman, I may have been misinformed about
the sobering effect of past overt efforts to shoot down
aircraft, it is intriguing to me at any rate. Maybe I will ask
you some more questions about that. The Department of Defense
information says there are 1,000 flights.
General McCaffrey. That is 1998.
Mr. Lewis. I realize that. This is only, you know, 2 years
later.
General McCaffrey. 2 years later. We have had in the last
couple of years the Colombian-Peruvian air bridge mechanism has
gotten a lot better. U.S. Coast Guard has changed the
dimensions to a lot of this. The threat is evolving, and it is
the rivers and the eastern Pacific and fast boats off the north
shore and noncommercial maritime, that is the central piece of
the nut we are trying to crack now.
Mr. Lewis. General McCaffrey, I want to express one more
time my appreciation for your work on behalf of all the
American people.
General McCaffrey. Yes, sir, thank you.
Mr. Callahan. Mr. Wicker.
Mr. Wicker. Thank you. I will say to my chairman this is my
first hearing before this subcommittee, and I can hardly
imagine a more gripping, sobering and interesting subject
matter or a more interesting exchange of views and information
than I have had in my maiden trip before this subcommittee.
And then to you, General McCaffrey, let me say that I am
one of those members of the House of Representatives who has
quoted you with approval on the floor of the House of
Representatives and cited you as an authority. I know where
your heart is. I, appreciate the work you have done and I want
to support you. I want to support this program. I want to
believe that it will work, but I think that you have heard the
skepticism here. Part of our role in this Congress is to be
skeptical about an expenditure of a very large, large amount of
Federal funds.
There are several things that could happen if we approve
this expenditure. Number one, it could be a howling success we
could all point 2 years from now as turning the corner. It
could also not amount to anything and we will have spent our
money needlessly. There is also the chance, I think you will
acknowledge, that this could make matters worse. There were
questions asked of other administration officials in the other
body about whether this might lead to a widening civil war in
the region and the consequences there. So we have got to be
careful about the unintended consequences if this should not
only not work but if it should go very, very much askew.
Let me ask you, to what extent is this plan based on theory
and to what extent is there a historic precedent to indicate
that this is going to be successful?
General McCaffrey. I think your central notion about, you
know, unintended consequences is a good one. We are going to
have to be very aware as we try and execute this program on
what is happening on the ground and respond to it, and I think
Congresswoman Pelosi and Mr. Jackson and others have also
talked to the central notion that you can't just do aerial
eradication and the ground security elements. You have to do
the alternative economic development. These 16,000 coca leaf
pickers have got to go somewhere. So we have designed a 90-day
package to move them out of these regions, and they are migrant
farm workers, and into other areas. I think we ought to be
concerned about that, you are quite right, and we are going to
have to respond to this thing. No plan, no concept will survive
its execution. We will have to adjust.
Will this make matters worse? I think you have got to focus
on what we are trying to do. We are trying to eliminate cocaine
production and heroin production in Colombia. The Colombians
are going to be a lot better off if we can do that. So is the
region and so is the American people. This is a huge problem to
us. We owe Detroit and other cities around the country,
Chicago, Miami, New York less tonnage of cocaine and I think it
will work.
I think we are going to be on the right track and I think
it has been a very reasoned judgment. We have seen Peru,
Bolivia very dramatically turn things around in 3 years. We
watched Thailand take 10 to 15 years to reduce heroin
production to 1 percent of the regional total. We have watched
the Pakistanis dramatically change drug production in their
country. Historically there is sound evidence that when people
are outraged and frightened and get organized and when their
neighbors stand with them they can do something about this
issue.
Mr. Wicker. Are you saying that this program, Plan
Colombia, is based on a history of this same approach having
taken place in those other countries that you just mentioned?
General McCaffrey. Well, I don't think--Colombia isn't
Peru, El Salvador, Vietnam, or Thailand. The are very uniquely
different characteristics. The threat situation is appalling in
Colombia, far more so than poor Bolivia ever had to face up.
Colombia is so unlike Mexico it is hard for me to explain to
people the difference between not fearing multiple battalion
attacks in the middle of the night in your police stations all
over the country. Colombia has a unique set of problems, and we
think this plan, hard work it represents--and by the way the
people who are behind this are Tom Pickering, Sandy Berger, me,
General Wilhelm, Ambassador Curt Kamman. There are a bunch of
us who are quite serious about this. We are experienced people.
We thought this through and we think this is going to work.
Mr. Wicker. Let me ask you about the risk to the
individuals that are going to have to sign on to this in
Colombia to make it work. We are going to have thousands of new
Colombia troops involved in this. We are asking farmers to
align themselves with the United States and our policy. We are
asking local governments to presumably help enforce the farmers
agreement to leave one crop and agree to grow another. I assume
we are asking the judicial system to right itself. Additional
prisons may have to be built there. Is there a risk to all of
these segments of society if the United States after 2 years
decides this is not the way to go and we pull the plug on this
program? What sort of faith are we asking these individuals to
place in the United States, that we will have a continuity in
this policy for as long as it takes to make it work?
General McCaffrey. Well, I think the Colombians are doing
this for their own self-interest. That has to be the central
logic behind their own commitment to this plan. They are doing
this because they want to maintain democratic institutions.
They actually want to grow coffee, flowers, cattle, grow light
industry, increase tourism. They are a peaceful people who have
been involved in savage violence which is intensifying because
of the drugs. I think they are doing this not because they are
casting their lot with the United States, because they are sick
of what drugs are doing to Colombia, and it is a good judgment
on their part.
COCA PRODUCTION
Mr. Wicker. We have a map here that has thousands of
guerrillas in certain areas of this country. Is a farmer that
abandons the production of coca to participate in this plan
taking a risk from the guerrillas in that area?
General McCaffrey. Well, first of all, we are going to have
to discriminate as we go about this. In a lot of these areas,
these are not rice farmers who have turned to coca. These are
single males organized by criminal organizations that are
growing coca and living like dogs and moving from plot to plot
to harvest it and getting paid scant wages. So that is a
different population. That is 16,000 coca leaf pickers. There
are some other places where these are family oriented
operations that used to grow subsistence level farm products,
had no electricity, no government presence, and then the nice
man came along and showed them how if you grow coca you can
make 5,000 bucks a year, and that group has to be stabilized
and returned to legal cultivation. You have to get police in
there. You have to get the fiscalia in there. You have to get
government support services. I think it depends on which part
of this area you are talking about.
Some of it the police are going to go in there and spray it
from the air and kill the coca and kill the heroin with a high
altitude spraying operations against opium. I think our purpose
is to keep our eye on the ball and make sure we don't, as you
say quite correctly, there is no unintended consequence out of
this, but make no mistake about it, the FARC is going to fight.
I cannot imagine them walking away from whatever the answer is,
500 million or 1.9 billion. They are not walking away from this
amount of money without a struggle, and I hope President
Pastrana and his team are smart enough to give them a reward
and a punishment that over time separates them from the drug
money. That is the thinking.
Mr. Wicker. Well, let me just ask one final question, if I
might, Mr. Chairman. In the midst of the very compelling
information that you have given us today, we have heard some
good news. I think you said that 14 percent of Americans used
to use some form of illegal drugs. That is down to 6 percent.
Is that correct?
General McCaffrey. Yes, sir.
Mr. Wicker. That cocaine production is down.
General McCaffrey. Net production is down in the region in
4 years, 14 percent. This is working. Colombia is in an
emergency.
Mr. Wicker. You also indicated that we are doing much
better in the countries that surround Colombia. What if the
Congress doesn't adopt this plan because of the skepticism?
Paint the scenario, why can we not expect a little more
incremental good news much as we have had over the last several
years?
General McCaffrey. Well, I think to be blunt, there is an
emergency in Colombia. It has been going on for a couple of
years. It has been intensifying, Colombians are fleeing their
homes. The police are being murdered and attacked. Government
institutions are under pressure. The economy is starting to
unwind because of the lack of security. Occidental Petroleum is
having trouble getting into drilling areas. They are a net
importer of food. They may be a net importer of energy by 2005.
This is devastating in its consequences on Colombia, and they
are right next door to us. It isn't 15,000 miles away. And so
we have argued not only are they important to us in a
historical and cultural way but they are also important to our
economy.
So our attempt, the $1.6 billion plan was meant to fit into
a $7.5 billion plan and to stand with an important hemispheric
partner. That is really what we are trying to achieve.
Mr. Callahan. I thank the gentleman for his patience. On
the next panel I am going to allow the gentleman from
Mississippi to go first and the gentleman from Illinois to go
second.
Ms. Pelosi. Will the gentleman yield?
Mr. Wicker. And that is on the record.
Mr. Callahan. I yield 15 seconds to the gentlelady from
California and her request.
Ms. Pelosi. Thank you, Mr. Chairman.
Mr. Callahan. And also that response can only be 15
seconds.
Ms. Pelosi. I thank the General for his testimony and for
his fine service. I wanted to join you in welcoming Mr. Wicker
to our panel. He also serves on Labor, Health and Human Service
and Education, which funds the treatment side of the domestic
part of the program, and I think we will be well served on this
issue by his service on both of those committees as well as
Chairman Porter, who is our chairman on Labor-HHS, and the
ranking member of the full committee and the ranking member on
HHS Dave Obey as well as Mr. Jackson. Mrs. Lowey and I serve on
that committee as well. So we see that issue from both sides,
but Mr. Wicker, welcome. We look forward to working with you.
Thank you, General. Thank you, Mr. Chairman.
Mr. Callahan. To clear up some question we have had about
the amount of money, the President has requested $954 million
for Plan Colombia in fiscal year 2000. In addition, $192
million for base assistance for Colombia for fiscal year 2000.
In addition is $318 million for the fiscal year 2001 Plan
Colombia request plus $142 million for Colombia in the base
FY01 budget. That is where we are getting the number $1.6
billion. All of that totals up to $1.6 billion. I just wanted
to clarify that.
General McCaffrey. It is a supplemental, the fiscal year
2001 and the fiscal year 2000 enhancement, yes, sir.
Mr. Callahan. There seemed to be some confusion over the
amount. General, there are a lot of questions that no doubt you
have the answers to. The problem is we don't have the answers
and you are going to have to make yourself available for a
conference on my side, maybe, Nancy, you would like to make a
request on your side to have the Democrats have a conference,
but I can't answer all the questions I am receiving based upon
the limited amount of evidence we have here today. So you are
going to have to be available. We are going to submit within 3
days questions from the committee. We ask for your expeditious
response and ask also that you be available some time in the
next 2 or 3 weeks to address questions from individual members
of our respective conferences.
I thank you very much for your testimony. Just give me one
yes or no answer, because this is something that is being--I am
getting concerned about. You mentioned your discussions with
General Serrano and President Pastrana. Are you convinced that
General Serrano is satisfied with the distribution formula as
his President has requested?
General McCaffrey. No, of course not. Neither is the
Commandant of the Coast Guard, the DEA, the Administrator of
the Vice President of Bolivia, the Prime Minister of----
Mr. Callahan. Well, I understand that, but the last----
General McCaffrey [continuing]. Peru----
Mr. Callahan [continuing]. With the Colombians over how we
are going to divide or the money here.
General McCaffrey. Mr. Chairman, what I am convinced of is
that Defense Minister Ramirez, the civilian head of the police
and the armed forces, has thought this through. They do have a
revised Colombian budget. I am persuaded there has been a
massive amount of support put into the Colombian police, a half
billion dollars in 3 years, and that we cannot expect 2,500
Danti cops, heavily armed as they are, to take on the FARC, the
ELN----
Mr. Callahan. I understand that. But then you have the
individual arms of the Pastrana government up here lobbying for
a redistribution of the formula. We have got to listen to one
person. I posed this question to all of the chairmen of their
military and police. I said, is this exactly what all of you
want. I don't want you lobbying individual Members or chairmen
who have some areas of jurisdiction of authorization. And now I
see he or someone is up here lobbying, to have me make a
decision to undermine the President of Colombia's request.
We have got to make our minds up. Are we supporting one
voice in Colombia, or are we going to support multiple voices
in Colombia?
General McCaffrey. Mr. Chairman, there is no question that
we should not design the national strategy of Colombia either
in Congress or within the administration. It needs to be the
Colombian leadership, Minister Ramirez, and then we need to
rely on our ambassador and CINC at U.S. Southern Command, and
Tom Pickering to put together a package and give it to you for
your consideration. That is really what we have done.
Mr. Callahan. We thank you very much, General, for your
time.
General McCaffrey. Thank you, Mr. Chairman.
Mr. Callahan. We are sorry to delay these very important
witnesses we have for our second panel. We now welcome Mr. Rand
Beers, the Assistant Secretary of State for International
Narcotics Control, and Brian Sheridan, the Assistant Secretary
of Defense. We will ask each of you to submit your written
testimony to the committee, but if you can--I understand that
we have a vote at about 6:15. If you could, abbreviate your
opening statements, and I will abbreviate mine, and I will
respectfully request the gentlelady from California to
abbreviate hers. As a matter of fact, since she is not paying
any attention, we will just skip my opening statement and hers
as well.
Ms. Pelosi. Thank you very much.
Mr. Callahan. The gentlelady from California.
Ms. Pelosi. Mr. Chairman, I know Members are eager to hear
the testimony of our witnesses, so I will follow your
leadership and heed your admonition.
Mr. Callahan. Mr. Beers.
MR. BEERS' OPENING STATEMENT
Mr. Beers. Thank you, sir, and thank you for this
opportunity to appear before you in your committee, and I look
forward to your questions. I will abbreviate my statement even
further because General McCaffrey covered a fair amount.
As he indicated, we have had some success in Peru and
Bolivia, but one of the consequences of that is the
displacement of the cultivation to Colombia. We have an
opportunity now, an opportunity that we think is important to
the United States, to Colombia and the region.
The threat with respect to drugs General McCaffrey has
outlined, but it is also true that it has led to a level of
lawlessness and corruption in Colombia that we cannot ignore.
In addition to that, we have the economy being undercut
significantly, in addition to the results of the Asian
financial crisis, by the illicit dollars flowing into the
economy and disrupting legitimate economic activity in the
forms of office buildings with no occupancy, hotels with no
occupancy, durable goods sold below market price in order to
launder money into the Colombian economy.
In addition, and often overlooked, is the massive affect on
Colombia and the world's rain forest environment as a result of
this. In search of coca gold, campesinos are cutting down large
areas of tropical rain forest in Columbia. Then in order to
process that coca leaf into cocaine, they are pouring massive
amounts of toxic chemicals into the river basin of the Orinoco
and Amazon Rivers. And this is having an enormous long-term
effect on this area of the world.
In addition to that, as Director McCaffrey indicated, the
insurgency has also become very much involved in this process
and fed by the drug dollars generated by narcotrafficking. It
is an interesting relationship that prevails here. The
traffickers are absolutely dependent upon the insurgents in
order to do what they are doing in southern Columbia. It is no
mistake that they moved to southern Colombia from Bolivia and
Peru because it was the last place in the region where there
was reasonable lack of government control in the area in which
they chose to cultivate the coca. As a result, this is an area
where they want to continue the insurgency, where they want to
ensure that there is no government control, because if there is
government control, if there is a peace process, if there is
some kind of political solution to this problem, then they are
going to lose the sanctuary that they currently have. That is
very much not in their interests.
What we have here is a Colombian solution to a Colombian
problem. Congressman Obey suggested earlier that their
preference was for an economic solution and that we turned it
around into a counternarcotic solution. I am not privy to the
information that he had, but the information I had acquired by
10 visits over the last 2 years is that I have heard every
single piece of this proposal provided independently, and prior
to the final development of Plan Colombia, to the United States
and to me personally by different elements of the Colombian
Government.
What the problem was, they had never put it together in a
single coordinated, integrated, comprehensive plan. That is the
important thing that has happened as a result of discussions
that began between the United States and the Government of
Colombia last summer, which resulted in the early fall in the
publication of Plan Colombia and are the result of what we are
doing here today in support of that plan. They have taken on
the counternarcotics task, and I want to come back to that in
the presentation of the U.S. support for that. They have taken
on the economy, although most of that is not in our proposal.
It comes from other external donors. They have taken on the
rule of law and human rights in this proposal, and we have an
important contribution to that. They have taken on the peace
process. While our contribution to that is modest, it is a part
of this.
They have taken it from the government's perspective for 3
years, the remainder of the Pastrana administration. Their goal
over the next 6 years is to reduce coca cultivation and
production in Colombia and by approximately 50 percent. This is
an integrated effort on their part. All of the parties interact
with one another. If we are successful against the drug
trafficking, it will reduce the resources with respect to what
the FARC can depend upon. And perhaps after the government's
attempt to get the FARC in--now the ELN--to come to the peace
table, they will be convinced that the peace table is the place
they ought to be negotiating and not in the fields of Colombia
bargaining with coca farmers on the price of coca leaves.
In addition to that, it is a coordinated plan. It is one in
which all elements of the Colombian Government are
participants, will have to cooperate with one another. In that
regard, in response to a question that occurred earlier, we are
working with the Colombian Government on that coordination
package. We have to coordinate within our own government, they
have to coordinate within their own government, and we have to
coordinate with them on a bilateral basis.
I can tell you from personal experience that Brian and have
I both had, we have had two senior-level meetings with the
government since the President's announcement in January about
this package, and we expect to have regular meetings with that
senior level of the government on a regular basis in addition
to the day-to-day working relationships that would be
established in Colombia between our embassy and their
government.
In addition to that, it is a balanced package. We can all
say there ought to be more here, and there ought to be more
there, and, Chairman, I am very sympathetic with your desire to
support Bolivia with a greater amount of that in this package.
But we had a dollar base, and we made the decisions, and we
have provided that to you, and you, as always, will make the
final decision on what the distribution of those dollars ought
to be. But this is the best that we could do.
I want to come back and talk a little bit more about the
regional package when we talk about our proposal because it is
not as bad as it looks.
Lastly with respect to Plan Colombia, it is, in the
Colombians' mind, a regional package, and it has and has to
have an international component, and they expect it to involve
donations from the outside. In that regard, in response to
questions by various Members, if one looks at the Bolivian
example, if one looks at the Peruvian examples, in both of
those cases, the original seed money came from the United
States. After success was proven on the ground, we found that
there was much greater responsiveness by the international
community to provide donor dollars in support of these efforts.
But it is also fair to say that the international donor
community is far more likely to want to provide assistance in
the form of alternative development, in support of judicial
systems, and in the general effort to strengthen the government
and the government capacity, and less likely to be prepared to
provide assistance in the areas of enforcement and
counternarcotics in the form that the U.S. is prepared.
As I have said, this is in dollar terms essentially a
counternarcotics proposal, but it is more than an enforcement
proposal in great measure. There is alternative development to
a large extent, and we believe at this point, too, the
absorptive capacity of the Colombian Government at this point
in time. But that is not to say that this is only a
counternarcotics package. It is very much about helping to
restore the rule of law, helping to build strong support for
human rights, and to prevent corruption from continuing to
raise havoc in Colombia.
These are not expensive programs. These are technical
assistance programs. These are support programs. They do not
cause a large dollar outlay. They are not large, expensive
pieces of equipment. Part of the distortion in terms of
perception with respect to this plan is the equipment in terms
of the helicopters and other major end items that are being
procured here, they happen to be expensive, but assistance in
training is not.
Finally, on the regional part of this, I just want to say
that while it is true that there are only $30 million
regionally for alternative development in the supplemental, and
there are only $47 million for regional programs in the
interdiction area, one has to recall that that is on top of the
regular budget base. INL proposes, and you have funded already
for fiscal year 2000, $48 million for both--each for Peru and
Bolivia, and in fiscal year 2001 we are asking for an
additional $52 million for Bolivia and 48 for Peru. There are
modest amounts for other programs, but it is important to
remember that this is on top of a very solid base which is
relatively, evenly distributed between Colombia, Bolivia, and
Peru.
Now, if I could turn to the chart up there, which most of
you have seen before, and if we could have the Colombia map on
top of the regional map below it. This program--no, no, there
is a regional map over there, a country map over there. Back
there if you could just put it on top of the regional map.
We talk about five components of this plan. I want to talk
about three of them in detail because I think it is important
to talk about them because they represent the heart of the
program. We have a program which we refer to as the Push into
Southern Colombia. It is really married also with the police
program in terms of the first and third items on the budget
chart that we have used as our summary budget chart.
The effort here is to take the forces that we will have
trained, one counternarcotics brigade plus other supporting
forces, together with the 63 helicopters, together with
eradication aircraft which will be added to the Colombian
inventory, together with the police forces, which will be able
to move into this area in order to effect in Putumayo and
Caqueta the following strategy.
There are three elements to the population in these areas
that are engaged in the drug trade. They are the
narcoenterprise activities, and they amount to approximately 80
percent of the coca cultivation in both of these areas. These
are large-scale agroindustries that are growing coca. These are
not innocent people. There are innocent people who are engaged
with them. Those are the migrant pickers that Barry McCaffrey
referred to. We estimate that there may be as many as 100,000
or more of these pickers in these two provinces combined.
Thirdly, there are the small families entrepreneurs, and they
are responsible for about 20 percent of the coca cultivation in
this region.
Our proposal here is to take the counternarcotics units,
the police, the eradication effort, the aid for displaced
persons in the alternative development in one single package,
and for those who grow agroindustry coca, the intention is to
eradicate it. For those who are small farmers, the intention is
to offer them the opportunity to move from illicit activity to
licit activity over a short period of time, short, 3 years, and
to do that with alternative development funds and other support
packages that will be able to be provided because the
government will be able to move back into this area with
security forces, which will allow the government to have a
presence there really for the first time in Colombia's history.
In addition to that, with respect to the pickers, these
migrant workers are only there because of the coca gold. Our
objective is to offer them emergency assistance initially, but
then to get them to move to other areas of the country where we
can offer other forms of gainful employment for them. That is
the Push into Southern Colombia strategy in the general sense,
and this is the process that we are engaged with the Government
of Colombia in planning in the detail that you, Chairman, asked
General McCaffrey about. The plan is not yet finished in that
detail, but I can tell you that we have spent a lot of time on
this effort, and the plan is moving along. It is not going to
be a finished----
Mr. Callahan. We are going to have to wrap this up. I
appreciate your professionalism and knowledge, which is so far
superior to anyone that we have talked to with respect to the
plan, even General McCaffrey's, but we are going to have to
wrap this thing up and give Mr. Sheridan an opportunity.
Mr. Beers. The only other things I wanted to say--it will
be very short, but I wanted to make that point because there
were a lot of questions about it.
Brian is going to talk about the interdiction package. That
is essentially a DOD package. I just want to talk briefly about
the technical assistance for boosting government capacity that
I talked about earlier. We have programs to combat corruption.
We have programs to enhance the professionalism of all of the
police forces. We have programs to support human rights
workers; that is, NGOs, government officials, judicial
officials. This is all a unified package with a number of small
elements, all of which are detailed in the budget proposal. It
has been put together with the Colombians and with the best
people in our government that we can bring to bear on that. I
think that----
PLAN OF ACTION
Mr. Callahan. I know you are attempting to give it to us
now, but I have been asking the Colombian Government. I asked
General McCaffrey for a definitive plan of action for the total
eradication of coca leaves in Colombia. There is nothing
anywhere that I have seen, other than his long-range 5-year
plan, for the total drug problem. There is nothing that tells
me that Colombia is looking past a 2-year period of some
nebulous funding, $4 billion from themselves, $2 billion from
the European and other communities, and a billion dollars from
us. We have that 2-year plan, but you won't reduce the growth
of coca leaves in Colombia by one hectare in 2 years. It is
going to take time to deliver helicopters. It is going to take
time to manufacture them, because for some reason we have
decided we have to manufacture new Black Hawk helicopters and
send them to Colombia.
If you have a total eradication plan, you should submit it
to us. I know what the 2-year plan is. I went through 8 hours
of hearings with these same maps in Colombia. We know what the
2-year plan is. But no one who can tell me where we are going
to be at the end of 2 years and what are we going to do at the
end of 2 years. Are you coming back requesting another billion
dollars? Those are the questions that we don't have answers to.
Mr. Beers. Sir, I can't answer to what the fiscal year 2002
request will be. That would be the next administration's----
Mr. Callahan. I understand that all of this will be the
next administration.
Mr. Beers. No, sir. We are trying to do the best that we
can in the years left in this administration----
Mr. Callahan. You only have months left in this
administration. I guess maybe you are going on the assumption
that there will be a continuity of this administration.
Mr. Beers. I am talking only about the funding of the
government request that we are still responsible for, even
though they will be expended by the next administration.
Mr. Callahan. Thank you.
[The information follows:]
Offset Folios 122 to 127 Insert here
Mr. Callahan. Mr. Sheridan.
MR. SHERIDAN'S OPENING STATEMENT
Mr. Sheridan. I will make four very quick points. First, I
am pleased to be here today. This is my first appearance before
this committee. I hope I do as well as Congressman Wicker has
done on his maiden turn out.
Four quick points from a DOD perspective. One, our purpose
in Colombia is a counterdrug one only. I don't have to recite
the kind of statistics that General McCaffrey does because of
the number of Americans killed every year because of drugs, the
damage to our economy, damages to our communities, et cetera,
but that is what drives the Department of Defense's interest in
Colombia.
Two, the programs that we have been running there, since
1989, are designed to destroy drug production. In particular
this supplemental package, the DOD portion of it, focuses on
programs that we started a number of years ago: Integrated air,
ground and river programs designed to box off the south of
Colombia, which, Randy has described, is out of control, the
coca cultivation is exploding; integrated programs to let the
Colombians get a handle on it and let them disrupt the flow of
precursor chemicals in and seize the coca base coming out.
I am sorry that Chairman Young left. He has been a very
stalwart supporter of our programs on the DOD side, and I would
have been able to tell him had he been around that, in fact, we
do have $70 million of the $100 million in the DOD part of this
program is precisely for the kinds of air interdiction programs
that Chairman Young and Chairman Lewis are very interested in.
Third, there has been understandable concern voiced in
every one of our briefings that the Department of Defense will
get dragged into a counterinsurgency campaign. I think those
questions are very legitimate, but let me simply say that the
Secretary of Defense is very knowledgeable about Colombia. He
has been there. He has met his counterparts numerous times. And
the Secretary has been very clear in his guidance on what he
would like to do and what he doesn't want to do. He supports
the kind of counter-drug work we have been doing for 11 years
in Colombia without being dragged into a counterinsurgency
campaign, and he has no interest in going beyond that.
How do we stay out of that kind of slippery slope? We do it
by having very strict controls of where our people are and what
they do. In 1989, the Congress in the 1989 Defense
Authorization Act, section 1004, told the Department of Defense
precisely the types of support that we are to provide, military
and law enforcement, and we have been providing that type of
support ever since. Every single U.S. serviceman who goes down
to Colombia on a deployment order has a deployment order signed
by the Secretary that tells him or her that they will not go
out and accompany host nation forces when they engage in
counterdrug operations. That in essence is how you stay out of
trouble.
We will provide them intel support, we will provide them
training support, we will provide them engineering support. I
will provide any amount of support I can that is allowed by
law. But at the end of the day, when they go out to perform a
counterdrug operation, they go out on their own. That is in
written guidance on every single deployment order by the
Secretary of Defense.
My last quick point is on human rights. There have been any
number of folks that we have briefed who are very concerned
about the human rights situation in Colombia, in particular the
human rights record of the Colombian military. Let me say this
is part of our regular discussions with them. In my discussions
with our embassy and in my discussions with the Colombians, we
have found it useful to break that discussion into three parts:
How is the Colombian military doing currently on current human
rights abuses by members of the security forces; secondly, how
are they doing on bringing people to justice for past abuses;
and third, how are they doing on links to the paramilitary
organizations.
On the first instance, on current abuses, they are doing
very well, and we must give them credit for that. But any NGO
that I have met with will tell you that abuses in the current
time frame by the Colombia security forces have dropped to
almost nothing.
Second issue, bringing people to justice for past abuses,
obviously that can be very difficult. President Pastrana has
taken measures. He has relieved a number of senior military
officers, but clearly they have more work to do there.
Lastly, on the issue of links to paramilitaries, very
difficult; also very difficult to prove, very difficult for the
NGOs to show conclusive proof, very fine-grained evidence of
these kinds of links in collusion. That said, I think President
Pastrana, Defense Minister Ramirez, General Topias has been
very clear that the activities of the paramilitaries are
abhorrent, they are not to be condoned, and the military is to
have nothing to do with them. That has been the very clear
message. Clearly they must do more to institutionalize that
attitude. They must do more to make sure that out in this vast,
largely uncontrolled country where you have very remote police
and military outposts, they must ensure that at the local level
those commanders are not in any way colluding with the
paramilitaries.
With that, I am happy to take your questions.
[The information follows:]
Offset Folios 132 to 140 here
Mr. Callahan. Mr. Wicker.
Mr. Wicker. Thank you very much.
PAST SUCCESSFUL EFFORTS
To either one of you gentleman: General McCaffrey in his
testimony and in a response to a question that I asked said we
have been successful in several countries in South America and
we have been successful in Asia. What is the best example that
either of you can point to from history to indicate that this
plan will be successful in Colombia?
Mr. Beers. I think there are two examples, and we have
talked about them. They are Peru and Bolivia. They are two
important aspects, and they are different. In Peru, as has been
indicated earlier, there was a very successful effort to force
down or shoot down Colombian traffickers flying from Colombia
to Peru to pick up product to bring it back for final
processing. As a result of a shoot-down policy, which ended up
shooting down only about 5 percent of the traffic that moved
through this corridor, the trafficker pilots stopped flying or
went into such a low operational tempo that there were simply
not enough movement to buy all of the leaf product produced by
all of the campesinos in Peru. As a result, there was a
collapse in the coca leaf market in Peru.
Farmers said, it is not worth it for me for I have to
expend money in order to do the initial stage of processing. I
have to expend some money on fertilizer. It is not worth it to
me to spend money on a product that I can't sell. I quit. A lot
of them just stopped producing it. Nobody had to go and
eradicate it, they just stopped producing it. That is what
provided us with a major decrease in the early days of the
Peruvian program. It was a clearly enforcement-driven operation
to affect the coca market within Peru.
Bolivia, it was different. In Bolivia we poured a lot of
money, as Director McCaffrey indicated, into alternative
development activity. The relationship of those dollars to the
program was, if you will cut down your coca voluntarily, we
will give you some money--this is the Bolivian Government--and
some government services. The farmers complied, they cut it
down, we verified they cut it down, they took the money, they
began to grow alternative crops. But since there was nobody out
there cutting it down, since there was no involuntary
eradication, they simply moved the plot of coca over the hill
out of sight. So what we had was an important rise in the licit
economy in Bolivia, but we had no corresponding decrease in the
illicit coca economy.
What happened with the Banzer administration, and this is
what is so significant about it, is they decided that wasn't
working. We are going to have to go in and cut it down
ourselves. We are not going to allow them to continue to do
this. We will continue to support the alternative development,
but coca growing will not be allowed to continue. We will cut
it down where we find it. They began systemically to cut it
down.
Mr. Wicker. That was a decision by the Bolivian
administration?
Mr. Beers. That was a decision by the Bolivian
Administration, by President Banzer. As Congressman Callahan
indicated, they presented a plan. We said we would support it,
they cut it down. Here it is, the combination of alternative
development. We don't believe that it has to take 10 years to
get it where we need it to.
Involuntary eradication. What we have proposed here with
respect to Colombia is to take the Bolivian model in the areas
where the coca is grown and put the air interdiction on top of
that, to do them both, so we have redundancy in our effort to
do this in order to effect it in the shortest possible time.
Mr. Wicker. Is it true that our success in Peru and Bolivia
directly resulted in the explosive production of coca in
Putumayo and west of Caqueta?
Mr. Beers. I believe that is the case, sir.
Mr. Wicker. I think that you have testified that there are
unique geographic and governmental characteristics to those
regions that made them attractive?
Mr. Beers. That is correct, lack of government control. It
happens to be in a region of the world where coca grows.
Mr. Wicker. Is there no other place in South America that
has a lack of government control along with the soil and
climate conditions that can grow coca?
Mr. Beers. There are other locations in Latin America that
have lack of government control, but don't have insurgency
forces that you could grow coca in. And we will, in conjunction
with Bolivia and Peru, hopefully prevent that from a resurgence
in those locations and, with modest programs in Ecuador, try to
identify any possible move to displace to those countries and
work on similar programs with Venezuela and Brazil. But again,
as Director McCaffrey said, the heart is to deal with this
problem here. You can't move coca quickly. The fact that this
explosion has occurred has to be taken in the context of it
occurred over time.
Mr. Wicker. You can't move coca growing quickly? How many
years does it take?
Mr. Beers. One to three years to have a crop grow to
picking, initial maturity. It takes 3 to 5 years for a crop to
grow to full maturity.
Mr. Callahan. Mr. Jackson now.
Mr. Jackson. Thank you, Mr. Chairman.
SPECIAL DEPLOYMENT FORCES TO COLOMBIA
I have just one question, Mr. Sheridan. On December 17 of
last year, I sent a letter to Secretary Cohen asking for
clarification about special forces deployments to Colombia.
Raising a few questions that had been previously raised in this
subcommittee, I explained that we need the details to evaluate
the administration's proposal for Colombia. The Defense
Department did send me back a report, and I found it helpful in
helping us delete some training which we thought had taken
place, but it still has not answered my fundamental questions.
I became particularly interested in what we were doing in
Colombia when a Colombian investigative reporter came seeking
my help in determining whether our personnel may have been
present around the time a massacre took place in Colombia back
in 1997. So I asked for details of where some of the training
had taken place, to which I have yet to receive an answer. I
have since learned, thanks to Senator Leahy and the Colombian
newspaper, El Espectador, that our special forces were training
the Colombian security forces near the massacre site both
before and after the massacre. I do now know that one of the
units trained a month after the massacre had its personnel
implicated in the massacre. These two reports which detail
operations in and around that particular area before and after
the massacre clearly and convincing show that we were very
present for those forces, those Colombian forces that were
involved.
My question is how could we train people that had been
involved in a massacre and not notice? Up to 30 individuals
were tortured and killed by paramilitary thugs in this massacre
that Colombia personnel facilitated in 1997. Clearly this
raises the importance of congressional notification of training
and security transfers, as well as the importance of having
clear and regular monitoring with detail.
Now, I have a press release from Amnesty International
which calls on the Defense Department to clarify the role in
training Colombia military personnel charged with facilitating
the 1997 massacre of civilians. I would like to insert this
into the record and strongly urge that the issue it raises,
including those raised by my letter, be clarified before we can
approve any substantial aid package for Colombia. I would like
your comments on my question, Mr. Sheridan.
[The information follows:]
Offset Folios 147 thru 148 HERE
Mr. Sheridan. First, Congressman, you asked for a
voluminous amount of data. We gave you an interim response. We
are preparing the rest of the information. I would also note
that the training took place in a period before the Leahy
amendment was in effect, which means it is, first of all, more
difficult for us to search records because we didn't keep
records as detailed back then. So we are doing the best we can
to get that information.
As to the massacre or alleged massacre and its proximity or
juxtapositioning of a training activity, that is something that
we will have to look at very carefully. I have been asked very
specific questions about where we did training, and we have
done our best to answer those questions. But people have not
been forthcoming to us on connecting the dots and why they are
asking those questions, what an alleged massacre was, did our
people train those people. So I am happy to take whatever an
NGO has or someone else has, and we will take a look at it.
Obviously our people do not teach torture, they do not
teach massacres. They teach human rights in every single class.
I think that is the way we have been doing our business for
years.
I would be happy to look into this specific question, but I
think the conduct of our military and what we are doing is very
straightforward.
Mr. Jackson. It was very interesting, Mr. Chairman. I think
this is worthy of very sufficient inquiry by this committee
because when the Chairman of the full committee asked General
McCaffrey about the presence and involvement of U.S. troops in
the region, I thought General McCaffrey was first oblivious,
and then somewhat ambiguous, and then not very clear about what
role they may have played. But it is very clear we do have
forces, at least from my perspective, and as it relates to an
alleged massacre, there are 30 people who are dead today, Mr.
Sheridan.
Mr. Callahan. The gentleman from Illinois has made the
inquiry of the Chair. I would be happy to submit any question
that the gentleman from Illinois presents to me within 3 days
so we can get expeditious responses before the bill comes up.
Mr. Jackson. I thank the gentleman.
Mr. Sheridan. May I make a comment?
Mr. Callahan. No, sir, not yet.
Mr. Knollenberg.
SUPPORT FROM OTHER COUNTRIES
Mr. Knollenberg. Mr. Chairman, thank you very much.
In the interest of time, let me make a very quick question.
It is for Assistant Secretary Beers. I am troubled by what the
U.S. burden will be with respect to the EU and some other
components of our so-called partnership, if you want to call it
that. I understand that Plan Colombia is to strengthen the
Colombian economy; it is supposed to strengthen the democracy
and to fight the narcotics trafficking. I am looking at some of
your written testimony on page 3 in the second paragraph, and
the concern is that we as the U.S. might be in this thing alone
in more ways that we might figure now.
The focus, you say, on enforcement-related assistance with
a so-called stick will allow other sponsors to provide support
for the carrot, the developmental, the humanitarian assistance
projects and activities in which they have special expertise
and interest. This suggests to me that before they do anything,
we do everything. All of our actions come first, including the
purchase of the machinery and showing we are on the ground
doing what we want to bring about democracy. Only until we have
done all of those things the EU and the other partners come
through. Would you just comment on the accuracy of my
assessment?
And also you state in the bottom paragraph that our
assistance for Plan Colombia is intended to meet the needs that
the other sources cannot. I am not trying to trip you up on
your own written testimony, but if it is written, it is on the
record. I want your answer as to what comes first. Do we have
to do all of the pedaling first before they get on their own
bicycle?
Mr. Beers. No, sir. I did not mean to time sequencing in my
intent to convey what the traditional division of labor has
been heretofore in many of the counternarcotics efforts around
the world. In addition to the United States, the U.N. drug
control program has been the other--probably the second largest
donor in the enforcement area around the world. There are some
other countries who have provided some specialized training,
but I think it is fair to say that by and large most of the
other donors have been far more interested in providing
assistance which assists with general economic development or
alternative development, crop substitution, or other ways in
which to build the licit economy in these countries or to boost
the government's capacity to, in fact, provide a basis in the
rule in law. Secondly----
Mr. Knollenberg. The only concern that I have is the stick
comes before the carrot.
Mr. Beers. No, they can come together, sir. It is our view,
and I tried to indicate it in my description of the Push into
Southern Colombia, that there are two parts to this effort.
There is an enforcement part which involves eradication. There
is also a part that in simultaneity would involve, one, the
humanitarian support for the displacement of workers in advance
of the eradication, if they so choose to leave that area, or
when it occurs, and for the alternative development programs
for the small plot holders. That is intended to begin at the
same time. What we have, though, is a step-by-step process. We
think our seed money can begin that process, but the effort
that General McCaffrey talked about in Spain is an effort that
we intend----
Mr. Callahan. Obviously, we are going to have to wrap this
up for we have Representative Farr. We are going to have to
have both of you back. Maybe we won't have a full hearing, but
I think the committee has so many questions that are unanswered
that you are going to have to come back before the committee to
answer just the questions that are unanswered.
Before we recess in 3 minutes, we are going to let
Congressman Farr, who has spent a lot of time in that region of
the world and is sort of a committee expert on some of their
problems, ask you a couple of questions. I would ask you to be
brief, Sam, and ask you all, Mr. Secretaries, to be brief in
your responses.
Mr. Farr. Thank you, Mr. Chairman. I think what I will do
is I will ask the questions, but ask that they be submitted,
the responses, in writing, because it would take too long.
PLAN COLOMBIA CONCERNS
Mr. Farr. I really appreciate you allowing me to sit in on
this committee, I am not a member of it, but I was a Peace
Corps volunteer. I lived in Colombia and have a keen interest
and passion for the country. The one thing that I think we all
know is you can't have peace and prosperity unless you have
domestic tranquility.
I see that all of the effort is to place a military effort
in southern Colombia, but not providing safety to the people in
the streets. The question I have, I am on the Subcommittee on
Agriculture, my question is where is the beef for really being
able to do economic conversion? It is not just about
eradicating coca in the fields, but about developing some
security within the country.
So my questions are twofold. One is of this U.S. support
for Plan Colombia, as I go through it, I don't see that this
money really goes to Colombia. It goes--it stays in the U.S. It
is for procurement of equipment made in the U.S. It goes to
United States firms, United States personnel. It goes to the
private sector. It goes to public and nongovernmental
organizations, and it goes to the U.S. Government agencies. I
would like a breakdown. You have a breakdown by category, but
how much of that ends up in Colombia versus ends up being paid
to American entities and NGOs?
The second part of the question is the bulk of the proposed
aid is focused on southern Colombia in the coca-growing areas,
but most of the kidnappings, extortion and human rights
violations occur in the northern regions. How will this aid
package curtail the internal violence in these regions and
provide a sense of stability and security to the Colombian
population? It does no good to eradicate coca in Putumayo when
you can't drive a car between Medellin and Bogota or
Barranquilla. If all of this investment is going to do nothing
to curtail the violence going on and the kidnappings going on,
you are not going to have the confidence of the country to have
an effective program.
I know our time is running out. I am sorry, I would have
loved to have been here before. I have been dealing with
unexploded ordinances all day.
Mr. Callahan. You are right. Your time has run out.
Secretary Sheridan and Secretary Beers, thank you very
much.
Mr. Sheridan. Thank you, sir. We look forward to another
opportunity.
[Questions and answers submitted for the record follow:]
Questions Submitted to Defense Department
Questions by Mr. Lewis
Question 1. Colombia, as you know, has been described by some as
the center of gravity of the cocaine trade. The distribution threat, as
I understand it, is best addressed by supporting eradication of illegal
coca and disruption of operations on the ground and denying the
smuggling of cocaine through the air. Can you provide some detail as to
the success of our air interdiction program to date of planes illegally
bringing cocaine from the region to the Caribbean and Mexico, which are
essentially weigh stations on their way to the United States? How many
planes have been shot down or intercepted, and how much effort has been
placed on this aspect of our overall drug strategy?
Answer. The interagency has a robust aerial detection and
monitoring capability in the transit zone between the north coast of
South America, Mexico and the Caribbean. The success of the aerial
interdiction can best be evaluated in the significant shift away from
airborne drug smuggling by the traffickers over the course of the
1990's. Early in the decade, airborne drug smuggling was the
predominant trafficking mode, by the end of the 1990's, airborne
smuggling had been reduced to less than 20 percent of the estimated
total cocaine flow through the transit zone. The Department's
Relocatable Over-The-Horizon Radar (ROTHR) played an instrumental role
by enhancing the interagency early warning/cueing capability which
prevented aerial smugglers from leaving South America undetected. While
end-games did not become routine occurrences, there were a sufficient
number of successful interdiction operations to cause the traffickers
to shift to a primarily maritime smuggling mode.
The Colombian Air Force has played a role in this effort by
intercepting and subsequently forcing or shooting down aircraft that
have been positively determined to be engaged in drug smuggling
activities, in accordance with international approved procedures. The
Colombian Air Force has engaged over thirty aircraft, a handful of
which have been shot down with the remainder being attacked following
landing, over the past couple of years. Most of these successes have
been in the northern part of Colombia where the Air Force has the
infrastructure to support such operations. Based in large part on the
success of similar operations in Peru, and the determination of the
Colombian government to address aerial smuggling, the proposed
supplemental includes almost $90 million to improve Colombia's air
interdiction capability. This includes funding for the completion of
the Manta Forward Operating Location to support US airborne early
warning aircraft operations. It is expected that the aerial
interdiction programs facilitated through the proposed supplemental
will allow the Colombian military to further extend its efforts in the
southern regions of the country.
Question 2. As you know, the delay between approval of funding for
Blackhawk helicopters and the delivery of these assets is estimated at
18 months. In your estimation, are new Blackhawks a necessary
ingredient in our efforts or could existing Blackhawk assets in our
defense inventory be used? Could other rotary wing assets be used in
place of the Blackhawks?
Answer. The required infrastructure to support the maintenance and
operation of this number of Blackhawks is not currently available in
Colombia--it will take time to make such preparations, therefore we do
not want them in theater now. The problem with transferring Blackhawks
from existing DoD inventory is the significant impact it would have on
Service readiness levels. There are no excess Blackhawks available to
transfer, and any such draw-down would immediately affect the readiness
of the unit that gave up the aircraft. Continued reliance on the 506
program to fulfill these requirements may not prove to be useful and
could have a negative impact upon military readiness. With respect to
alternatives, the Colombian military reviewed all the possible
candidates and selected the Blackhawk based on its capability and
sustainability.
Questions by Ms. Pelosi
Question 3. US military personnel are already integrally involved
in all aspects of the operations in Colombia, except perhaps actually
going out on operations. Although US personnel permanently assigned to
Tres Esquinas is currently minimal, my guess is that it will increase
over time based on the need to do follow on training and monitoring of
the Counter Drug Battalion activity? Do you agree, how will Congress be
informed of these decisions, and what are the specific rules of
engagement for US troops.
Answer. The additional training required by the Colombia anti-drug
supplemental will result in only a small increase in the number of
personnel temporarily deployed to Colombia, some of whom will be
located at Tres Esquinas. The Department has been training elements of
the Colombian military since the 1980's. With respect to your concerns
for personnel in Tres Esquinas, there are no US personnel permanently
assigned to this base, all are deployed on temporary duty (TDY). The
deployment of these TDY personnel will be handled in the same manner as
all other counterdrug deployments. The threat to US personnel will be
very closely scrutinized and if the risk is ascertained to be too
great, the deployment will be cancelled or directed to an alternative
location.
The Department is required to submit several periodic reports to
Congress which reflect the number of DoD personnel who are deployed to
Colombia, as well as other locations. This information is readily
available via US Southern Command.
Military personnel in Colombia are governed by the same rules of
engagements as those deployed to other regions of the world and are
authorized to act as necessary in self-defense. Of special note, the
Secretary of Defense has instructed that DoD personnel are prohibited
from accompanying U.S. drug law enforcement agents or host nation law
enforcement forces and military forces with counterdrug authority, or
actual counterdrug field operations or participating in any activity in
which counterdrug related hostilities are imminent. Also, the Secretary
of Defense has promulgated additional guidance to formalize the review
and approval of military support to counterdrug activities. This
comprehensive direction was most recently revised in an October 6, 1998
memorandum and amplified with focused guidance particular to Colombia
in a March 9, 2000 memorandum to the Chairman of the Joint Chiefs of
Staff. Copies of both memorandums are enclosed.
Offset Folios 160 to 164 Insert here
Question 4. As this plan evolves the Colombian military
envisions deploying the Counter Narcotics Battalions further
away from Tres Esquinas for operations. They will operate at
remote locations and be deployed for extended periods according
to the plan. How will the US respond. Will we continue to pay
for facilities and equipment for these forces as they operate
further and further into the jungle?
Answer. There will be additional expenses associated with
the larger counterdrug forces being developed using the funds
in the proposed supplemental. It is envisioned that a
significant portion of this cost will be borne by Colombia.
Undoubtedly, the US will share in some of these cost; however,
from the Department of Defense's perspective, this funding will
be sourced from within the current baseline program, and should
not require further supplemental requests.
Question 5. The Colombian officers we spoke with fully anticipate
that the FARC, when confronted with a capable military force in
southern Colombia will seek a cease-fire. They also felt that it would
be agreed to by the government. The disconnect is that the Colombian
military believes they could continue counter drug operations even
during a cease-fire with the FARC. What is your view of this scenario
and what would the US do in that event.
Answer. It is difficult to anticipate how the FARC will respond
when actually faced with more capable Colombian military units. A
cease-fire is certainly a possible response. I do believe, however,
that continued counterdrug operations--specifically aerial
interdiction--could continue during a cease-fire. Continued Colombian
military ground operations in support of interdiction operations is
also possible and must be pursued--the growing of coca and poppy, along
with the production of cocaine and heroin, is a criminal activity and
efforts to enforce the law must continue even during a cease fire.
Question 6. My view is that funding the Administration's plan will
commit US to 5 years and $5 billion dollars at a minimum to get the job
done. Most of those dollars will have to be used to prop up the
Colombian military and Police. Do you agree? How long do you feel this
will take?
Answer. The US commitment to support the Colombian government,
including the Colombian military and National Police, will continue for
the foreseeable future, in all likelihood for a period greater than the
five years that you estimate. It is difficult to estimate the required
magnitude of the US support, however, from the Department of Defenses
perspective, it is believed that we will be able to fund our supporting
programs within the current counterdrug baseline program which should
not require further supplementals.
Question 7. The Peruvians had great success in stopping narcotics
trafficking through the operation of surveillance radars and effective
shoot down of planes carrying narcotics. The Colombians have a similar
operation, but it remains ineffective because of gaps in coverage and a
limited shoot down capability. While there are some resources in this
package, some would ask why we haven't placed more emphasis on this
aspect of the strategy given our success in Peru. What is your
response?
Answer. The Colombian government has recently demonstrated the
political will to target and subsequently force or shootdown aircraft
that have been positively determined to be engaged in drug smuggling
activities, in accordance with international approved procedures. The
Colombian Air Force has engaged over thirty aircraft, a handful of
which have been shot down with the remainder being attacked following
landing, over the past couple of years. Most of these successes have
been in the northern part of Colombia where the Air Force has the
infrastructure to support such operations. Based in large part on the
success of similar operations in Peru, and the determination of the
Colombian government to address aerial smuggling, the proposed
supplemental includes almost $90 million to improve Colombia's air
interdiction capability. This includes funding for the completion of
the Manta Forward Operating Location to support U.S. airborne early
warning aircraft operations. It is expected that the aerial
interdiction programs facilitated through the proposed supplemental
will allow the Colombian military to further extend its efforts in the
southern regions of the country.
Question 8. What is the status of efforts to get Venezuelan
cooperation on the tracking of narcotics related air traffic?
Answer. The Department of Defense continues to strengthen its
military to military ties with the Venezuelan Armed Forces through
personnel exchanges, expenditure of CINC traditional activities funds,
and counterdrug support. The current impasse between the USG and GOV on
overflights, however, remains a Department of State priority. The
Department of Defense looks forward and is prepared to deepen our
counterdrug cooperation with Venezuela when the political environment
permits it.
Questions Submitted to State Department
Questions by Chairman Callahan
COLOMBIAN NATIONAL POLICE
The President's request proposes $95,000,000 for the Colombian
National Police. This is on top of the huge sums already provided to
the CNP in Fiscal Year 2000 budget.
When I was in Colombia recently, I met with General Serrano, the
head of the CNP. I asked him--as well as the other chiefs of the Armed
Services--if they supported the President's package or if they felt
they needed additional resources. General Serrano told me that he
supported Plan Colombia as submitted by President Pastrana. Yet, I
understand that some Members of Congress want to increase significantly
the amount for the CNP.
Question 1a. What is the Administration's view toward a large
increase in aid beyond the proposed level to the Colombian national
Police? Can the CNP absorb an additional $150-$200 MILLION in
resources?
Answer. The Administration has done its best to present to the
Congress a comprehensive package of assistance to Colombia, including
additional funding for the Colombian National Police. Because of the
large supplemental appropriated in 1999, almost all of which was
designated for the CNP, we do not believe that a significant increase
in the Administration's proposed level of funding would be warranted.
If a larger amount were to be appropriated, however, we would work with
the CNP to maximize their absorptive capacity and increase the
effectiveness of their counternarcotics operations.
Question 1b. How much funding has the CNP received in the past
three fiscal years?
Answer.
----------------------------------------------------------------------------------------------------------------
INCLE* Supplemental Total
----------------------------------------------------------------------------------------------------------------
FY 1997.......................................... $26,450,000
FY 1998.......................................... 40,300,000
FY 1999.......................................... 22,050,000 +173,160,000 =195,210,000
----------------------------------------------------------------------------------------------------------------
*International Narcotics Control and Law Enforcement portion of the foreign operations appropriation.
Question 1c. Have the CNP approached the State Department to
request additional resources above the $95,000,000 proposed?
Answer. No. The proposal for $95,000,000 was made in consultation
with the Colombian National Police, taking into consideration their
needs and their absorptive capacity.
FUTURE AID REQUIREMENTS
The bulk of the President's package is for procurement of military
equipment for the Colombian Armed Forces. Of this, nearly $400,000,000
is to purchase 30 Blackhawk helicopters. Yet, these funds will provide
only 2 years worth of spare parts and training. Therefore, I am
concerned that this Supplemental package will place a large mortgage on
the Foreign Operations bill in the future because of commitments made
today to Colombia.
Question 2a. How will maintenance, training and operation of these
Blackhawks be paid for in future years?
Answer. Until the government of Colombia is in a position to
undertake funding of those activities, we expect to fund them through
the International Narcotics Control and Law Enforcement portion of the
Foreign Operations appropriation.
Question 2b. Have you received any commitments from the Colombian
government that they will be able to pay for the maintenance and
operations of these Blackhawks in future years?
Answer. We are currently discussing this issue with the government
of Colombia.
Question 2c. How long does the Clinton Administration intend to
lease these helicopters to the Colombian Army?
Answer. Consistent with current practice, we plan to provide the
helicopters to the Colombian government under the terms of an
indefinite no-cost lease as long as the aircraft are necessary and are
appropriately used for counternarcotics operations by the Colombians.
OTHER DONOR COMMITMENTS
Plan Colombia, as designed by President Pastrana, calls for a total
of $7,500,000,000. The Colombian government plans to provide
$4,000,000,000 for this effort.
Therefore, $3,500,000,000 is to be provided by external donors,
including $1,600,000 from the U.S. alone. The rest is to be provided by
Europe and by the Multilateral Development Banks. I understand that
Spain is hosting a Donor's Conference for European Union countries this
June.
Question 3a. Can you explain which aspects of Plan Colombia the
Europeans and the Multilateral Banks will support? Which European
nations have actually agreed to provide assistance.
Answer. The Administration has raised the need for broad-based
international support for Plan Colombia in conversations with European
counterparts. The European Union and some of its member states have
expressed an interest in contributing support to Plan Colombia,
although a final dollar amount may not be put forward until after the
donors' conference in July.
The composition of our emergency supplemental package factors in
Colombian contributions and the expected contributions of other
supporters. A significant share of our supplemental package will go to
reduce the supply of drugs coming into the United States by assisting
the Government of Colombia in its efforts to confront the cocaine and
heroin industries. This focus on enforcement related assistance, the
so-called ``stick'', will allow other sponsors to augment our support
for the ``carrot,'' developmental and humanitarian assistance projects
for which they have special interests and expertise. Both the
Colombians and we fully expect additional support to be forthcoming
from bilateral and multilateral sources, including Europe.
Question 3b. Given the Europeans track record in Bosnia and Kosovo,
when do you think these other donors' funds will be available to the
Colombians?
Answer. It is impossible for us to predict when other donors' funds
might become available, but the Department of State will certainly
encourage the Europeans to provide funding on an expeditions basis.
Question 3c. Is there any commitment on the part of the Europeans
or the Multilateral Banks to provide additional resources to other
countries in the region to ensure that this problem is not simply
relocated to other countries?
Answer. Many countries in Europe and elsewhere already have ongoing
assistance programs in the Andrean region. We expect that these
programs will continue, and that they will support efforts to prevent
the relocation of narcotics cultivation and production from Colombia to
other countries in the region.
PROCUREMENT OF BLACKHAWKS
A central part of this request is for the 30 Blackhawk helicopters.
However, it is unclear to me exactly what mechanism the Administration
would like to use to procure these helicopters.
Question 4a. What is the Administration's view on proposed bill
language mandating that the procurement of these Blackhawks through the
Defense Security Cooperation Agency which is the traditional method of
procuring military equipment such as this?
Answer. In this instance the Administration would have no objection
to such a mandate.
Question 4b. The Colombian Armed Services already have 28 Blackhawk
aircraft in their inventory. Yet the majority of these helicopters are
not dedicated to the War on Drugs. Please provide for the record, the
routine uses for all 28 UH-60 aircraft.
Answer. The Colombian Air Force has 21 Blackhawk helicopters in its
inventory; the Colombian Army has 7. These aircraft are used primarily
for counterinsurgency operations.
ECUADOR
We know that may of the chemicals involved in the production of
narcotics in Colombia are shipped through Ecuador. And we know that
cocaine and heroin are smuggled out of Colombia through Ecuador to the
United States. Also, we know that much of the weaponry destined for the
guerrillas in Colombia transit Ecuador. Therefore, in the international
Drug War, Ecuador has long been considered a ``transit'' country, not a
``producing'' country. However, it may be time to reconsider this view.
Due to the economic and political crisis in Ecuador, and given
Ecuador's unprotected northern border with Colombia, it appears to be
an excellent location to begin full-scale production and trafficking of
narcotics. Further, FARG guerrilla activity is increasing in northern
Ecuador, making eradication efforts difficult.
Question 5a. If the government of Colombia is successful in pushing
the drug traffickers out of southern Colombia, shouldn't we assume that
the production and trafficking will increase in Ecuador?
Answer. Concerns over narcotic industry relocation are the reason
that the supplemental package includes additional funds to support
Colombia's neighbors. There is also a cultural factor that mitigates
the threat of large-scale migration of drug crops to those specific
countries. Like Bolivia and Peru, Colombia already had a history of
coca cultivation when the industry shifted there. The shift of
cultivation represented the expansion of an existing practice; not the
introduction of a new one as it would in Brazil, Venezuela, and
Ecuador.
The shift to Colombia from Peru and Bolivia was an instance of
narcotraffickers falling back on their base--where most of the
processing already took place--falling back not only to a remote area
but one where the FARC has kept the government out. It is not easy to
move to an area without narco-infrastructure and transportation
networks; it is not easy to move given the requisite time to grow coca:
18-36 months.
We will give intelligence assets to watch these border areas, and
we will work with governments to respond to any sign of incursion by
narcotraffickers. This readiness posture will not require substantial
funding.
Question 5b. Given the current political and economic situation in
Ecuador, what level of cooperation can the U.S. expect from that
government?
Answer. We have enjoyed a cooperative relationship with the
government of Ecuador for many years, and with the signing of a long-
term agreement to use the Manta airfield as a forward operating
location for counternarcotics operations we expect that relationship to
continue for the foreseeable future.
Question 5c. How do you think ``Dollarization'' in Ecuador will
affect the drug trade and especially money laundering?
Answer. While benefiting overall Ecuardorian stability,
dollarization will require more careful scrutiny by the government of
Ecuador with respect to the laundering of narco-dollars and concomitant
counterfeiting of U.S. dollars by Colombian criminal elements.
Questions by Mr. Lewis
Question. Colombia, as you know, has been described by some as the
center of gravity of the cocaine trade. The distribution threat, as I
understand it, is best addressed by supporting eradication of illegal
coca and disruption of operations on the ground and denying the
smuggling of cocaine through the air. Can you provide some detail as to
the success of our air interdiction program to date of planes illegally
bringing cocaine from the region to the Caribbean and Mexico, which are
essentially weigh stations on their way to the United States? How many
planes have been shot down or intercepted, and how much effort has been
placed on this aspect of our overall drug strategy?
Answer. The U.S. Government's interdiction efforts in the transit
zone are coordinated by the United States Interdiction Coordinator
(USIC), who oversees U.S. interdiction efforts worldwide. For a
response to this question I would respectfully refer you to USIC.
Question. As you know, the delay between approval of funding for
Blackhawk helicopters and the delivery of these assets is estimated at
18 months. In your estimation, are new Blackhawks a necessary
ingredient in our efforts or could existing Blackhawk assets in out
defense inventory be used? Could other rotary wing assets be used in
place of the Blackhawks?
Answer. Actual delivery times could differ, of course, but this
general 18-month estimated timeline is important because it will allow
Colombia to develop the required support infrastructure for the UH-60s
and train additional pilots that will be needed prior to the arrival of
the new aircraft. Existing Colombian pilots will need six-to-eight
weeks of transition training to make the move from other helicopters to
the UH-60. In addition, the influx of UH-60s and other helicopters will
require Colombia to train additional basic pilots. Transition training
for the UH-60s will begin before delivery of the first aircraft so that
crews are available as the aircraft are constructed. In addition to
this favorable schedule, new aircraft are preferable to ones from
existing stock because they can be more easily configured to match the
Colombian requirement.
While other aircraft, such as the Huey II have been considered as
alternatives, they cannot simply be substituted for the UH-60. The Huey
II is a fine aircraft and less expensive, but there are three reasons
we included the Blackhawk in the Colombian assistance package:
survivability, capability, and compatibility.
The Blackhawk has a large number of systems and protections
incorporated into it that make it more difficult to shoot down than the
Huey II. If it is shot down, or otherwise crashes, those systems and
protections make it much more likely that Blackhawk passengers and crew
will survive.
While questions regarding the technical capabilities of military
equipment are best left to other agencies, we note that the UH-60's
range (300 nautical miles), speed (150 knots), capacity (up to 20
people), and high altitude capabilities make it well suited for the
proposed mission. As many as two and a half times as many Huey IIs
would be needed to fulfill the same transportation mission that the UH-
60s are expected to perform. Using Huey IIs instead of UH-60s would
require additional support infrastructure and, more importantly,
greater numbers of pilots and crews, which are already at a premium in
Colombia.
The Colombians have made the decision to use the UH-60 as the
centerpiece of their helicopter fleet. The Colombian government
currently has 31 Blackhawks in its inventory and is in the process of
acquiring 14 additional UH-60s: seven each for the Air Force and the
Army. As a result, the Colombian infrastructure is already set up to
accommodate the Blackhawk. To ensure fleet standardization and
facilitate maintenance and training, additional aircraft should be UH-
60s.
Questions by Ms. Pelosi
Question. The Human Rights Watch report details specific, ongoing
and extensive contacts between Colombian armed forces and paramilitary
forces in all regions and cities in Colombia. The Colombian military
has vehemently denied these allegations and even accused Human Rights
Watch of working for the dark forces of drug traffickers. What is your
view of these allegations, and what has the Administration done on its
own to stop these contacts?
Answer. The February 2000 Human Rights Watch report alleges
collaboration by several Colombian Army Brigades with paramilitary
groups. We note that the report is based on information developed by
the Prosecutor General's Office (Fiscalia), which has ongoing
investigations into these cases. The U.S. has not verified these
allegations independently.
The Pastrana administration has taken concrete steps to ensure that
ties between security forces and paramilitaries are severed. Both
President Pastrana and Armed Forces Commander General Tapias have
stated repeatedly that collaboration with paramilitaries will not be
tolerated. President Pastrana has removed from service four generals
and numerous mid-level and non-commissioned officers for collaboration
with paramilitaries or for failure to confront them aggressively. For
its part, the U.S. regularly urges the GOC to continue to address this
issue and to ensure that security force members credibly alleged to
have committed human rights violations, including collaboration with
paramilitaries, are brought to justice.
Question. Paramilitary groups are now operating in Southern
Colombia with the express purpose of taking back control of the
narcotics trade from the FARC. How does the ``push into Southern
Colombia'' deal with this reality, and what steps has the U.S. taken to
ensure that the Counter Narcotics Battalions are not in contact with
these forces?
Answer. The security assistance that is to be provided is intended
for counternarcotics only. The majority of our assistance is aimed at
supporting Colombian counternarcotics operations and activities in the
key narcotics-producing areas of southern Colombia. To the extent that
the FARC or any other illegal armed groups are involved in the
narcotics-industry, they are potential targets.
Question. Amnesty International released a report indicating that
US forces may have trained a Colombian Army unit who facilitated a
paramilitary massacre of civilians in the village of Mapiripan in 1997.
The claim indicates that the U.S. 7th Special Forces Group conducted
this training. What is your response to these allegations.
Answer. For a response to this question I would respectfully refer
you to the Department of Defense.
Question. Military officers continue to enjoy special treatment in
the Colombian Justice system despite the passage of laws changing the
system. While the plan provides some resources to improve the judicial
system, it cannot address the need for the political will in Colombia
to address this issue. What have you done to create the political will
in Colombia to prosecute military officers accused of crimes against
civilians.
Answer. The U.S. supports efforts by the Pastrana administration to
reform and restructure the military forces, including reform of the
military penal code and the development of a Judge Advocate General
corps. We are exploring ways to provide training or technical
assistance to such a JAG corps. We also note the increased willingness
of the military justice system to cede jurisdiction to the civilian
justice system in cases involving military officers. U.S. Government
officials raise the issue of human rights, and especially the issue of
impunity, with GOC representatives at every opportunity and at every
level. These conversations address individual cases as well as discuss
ways to better protect human rights and to prosecute violators more
efficiently within the framework to the Colombian constitution.
The Pastrana Administration has shown its commitment to continue to
work to end impunity, especially in the armed forces. We believe the
political will is there to continue these efforts.
Question. Representatives of the Fiscalia in Colombia indicated
that they had not been consulted during the preparation of Plan
Colombia about their needs. The plan calls for the formation of
judicial police, the training of judges and prosecutors, and the
creation of a special unit of prosecutors and judicial police to
investigate egregious cases of human rights abuses. How is it possible
that this plan was created without the Fiscalia's input? The $45
million requested to begin this program is insufficient. Why does this
plan not provide enough resources to really address their needs?
Answer. The Minister of Justice was an integral part of our
conversations with our Colombia Counterparts. From these conversations
came our proposed support package for Colombia. Many of there projects
are parts of longstanding conversations and the supplemental will allow
them to come into being. The program is funded at a level that can
reasonably be absorbed, and additional funds will be provided in future
years as part of the regular budget process.
Question. Colombia engaged in negotiations with the IMF starting
last summer, and concluding in December. The resulting plan calls for
budget reductions, restrictions on the size of their fiscal deficit,
and limitations on their foreign borrowing. ``Plan Colombia'' calls for
the expenditure of $4 billion from Colombian resources. Where are the
Colombian resources for Plan Colombia going to come from and what are
they going to be spent for.
Answer. The Colombian government has proposed to dedicate
approximately $4 billion of assistance in support of the $7.5 billion
Plan Colombia Proposal. This funding will come from Colombia's own
funds and from pre-existing loans from international financial
institutions and will support Plan Colombia in the following areas:
Economic Policy:
Technical assistance on customs, tax, and bank
regulations;
Technical assistance on developing export markets;
Emergency employment programs; and
Social programs for vulnerable people.
Democratizaton and Social Development:
Alternative Development;
Environmental protection;
Strengthening local managerial capacity;
Local and regional infrastructure;
Assistance to displaced people;
Promotion of human rights;
Prison infrastructure;
Modernizing the judiciary; and
Strengthen anti-corruption mechanism.
Counternarcotics, Security and Judicial Cooperation:
Strengthen governmental authority and counternarcotic
efforts;
Interdiction efforts;
Military Intelligence; and
Assist CNP efforts.
Peace Process:
Negotiations support; and
Support for civil society involved in the peace process.
The IMF agreement is part of the comprehensive effort by the
Government of Colombia to confront its economic and social problems.
Plan Colombia does this well, while respecting the IMF agreement.
Question. The municipal government structure has been seriously
deteriorated in Colombia over time by corruption and mismanagement. Yet
the responsibility for education and delivery of most services in rural
areas lies with these municipalities. There appears to be nothing in
this plan to help these communities regain their capacity. Why?
Answer. The Administration proposal contains $145,000,000 for
economic development and $93,000,000 to boost governing capacity. Much
of these funds will go to support the kind of activities you mention.
USAID has developed programs specifically designed to strengthen the
capacity of municipal governments. Furthermore, the expectation is that
other donors, from Europe and elsewhere, will fund some of these
activities.
Question. The Colombian military authorities we questioned on our
recent trip were completely unaware of the plans of PLANTE to obtain
commitments in Southern Colombia to stop growing coca in exchange for
alternative development resources. The military is in the process of
developing very specific operational plans, which call for military
operations in these same areas. The military also was unaware of the
agreement that spraying of coca would cease in communities who signed
these agreements. Can you address this glaring lack of coordination
between the military and PLANTE.
Answer. The government of Colombia continues to make every effort
to coordinate different aspects of Plan Colombia. In fact, the State
Department is already providing support to Colombian alternative
development projects in the opium poppy cultivation region of Colombia.
The program there, administered by PLANTE, is being carefully
coordinated with the aerial eradication program to ensure that the
programs reinforce, rather than undercut each other, and we expect that
the same coordination will occur when it is time to expand the program
into southern Colombia.
Question. This chart (US Support for Plan Colombia) details how
much money is proposed for each of the five program components in the
Colombian aid package and the agency that administers the funds.
Looking at the proposed expenditure of U.S. funds, how much of this
money stays in the U.S. either for military procurement, with U.S.
firms and personnel, or with private and public organizations including
NGOs?
Answer. While it is impossible to determine exactly how much of the
requested funding would stay in the U.S., at least $712,100,000 of the
$1,272,000,000 requested would be spent in this country. That would
include procurement of aircraft, parts, supplies, and other equipment,
as well as administrative expenses for AID.
Questions by Ms. Lowey
Question. As your office coordinates much of the assistance that
has gone to Colombia, and would be coordinating a great deal of the
Plan Colombia assistance, I would like some more information about the
internal preparations that agencies such as the Department of State and
USAID have been making to absorb the funding increases for the Colombia
program. I am particularly concerned that implementation of the
alternative development and resettlement components of the package will
not occur concurrently with the military and security components. Could
you please address these concerns? Do we already have initiatives and
NGO partners approved?
Answer. The State Department is already providing support to the
nascent Colombian alternative development program: $15 million over
three years, beginning in FY99. The money is being used to support
ambitious alternatives development projects in the opium poppy
cultivation region of Colombia. The program is being carefully
coordinated with the aerial eradication program to ensure that the
programs reinforce, rather than undercut each other.
The program provides for PLANTE, the Colombian government agency in
charge of alternative development, to sign an agreement with a
community in the region. In exchange for development assistance, which
could be crop substitution, infrastructure development, or a mixture of
both, the community agrees to abandon opium poppy cultivation
voluntarily by a set deadline. If the community meets its deadline, the
CNP does not eradicate near that community. If the deadlines are not
met, assistance is terminated and the CNP is called in to eradicate all
illicit crops. Compliance can be monitored by CNP aerial
reconnaissance.
We have so far confined our alternative development assistance to
the opium poppy region because the Government of Colombia has not been
able to exercise effective control over much of the coca region, due to
heavy guerrilla presence. That lack of control means that the GOC also
lacks the ability to effectively monitor and enforce in the coca region
the community-based agreements that are central to successful
alternative development. Our experience in Bolivia and Peru indicates
that, without this ability to monitor and enforce, alternative
development cannot succeed.
With the additional funding requested in the Administration's
proposed emergency supplemental, we hope to assist the Colombian
government to regain control of the coca-growing regions of southern
Colombia, so that we can expand our alternative development program
into those areas as well. Since the program has already begun in other
areas, we will be prepared to implement it in southern Colombia
concurrent with the planned aerial eradication.
Question. You mentioned that one reason for the relatively small
amount devoted to areas such as alternative development and refugees in
the Administration's proposed contribution to Plan Colombia is the
ability of other international donors and the Colombian government
itself to contribute to these endeavors. Could you please comment on
the efforts undertaken by Colombia and other, non-U.S. donors, to
resettle, clothe, feed, and educate Colombia's internal refugees?
Answer. The Administration has raised the need for broad-based
international support for Colombia in conversations with European
counterparts. The European Union and some of its member states have
expressed an interest in contributing assistance to Colombia, although
a final dollar amount has not been put forward. UNHCR is prepared to
help any Colombians who cross a border and apply for refugee status;
emergency assistance will also be available for those Colombians who do
not cross a border but become internally displaced persons (IDPs).
The composition of our emergency supplemental package factors in
Colombian contributions and the expected contributions of other
supporters. A significant share of our supplemental package will go to
reduce the supply of drugs coming into the United States by assisting
the Government of Colombia in its efforts to confront the cocaine and
heroin industries. This focus on enforcement related assistance, the
so-called ``stick'', will allow other sponsors to augment our support
for the ``carrot,'' developmental and humanitarian assistance projects
for which they have special interests and expertise. Both the
Colombians and we fully expect additional support to be forthcoming
from bilateral and multilateral sources, including Europe.
Questions by Mr. Jackson
Question. How labor intensive--how much staff is involved--is the
implementation of the Leahy Amendment by the U.S. Embassy in Bogota?
Answer. Implementation of Section 564 of the FY 2000 Foreign
Operations Appropriations Act entails effort by personnel throughout
the Embassy. While the responsibility for Leahy-associated human rights
vetting resides within the Political/Economic section, employees in
other offices provide reporting on accounts of human rights violations
that they come across in the media or elsewhere. In addition to the
officer designated to coordinate this monitoring activity, two
additional human rights positions have been authorized for the Embassy.
Question. What percentage of time does the U.S. Milgroup devote to
human rights vetting?
Answer. For a response to this question I would respectfully refer
you to the Department of Defense.
Question. What percentage of time do other Embassy personnel devote
to compliance with the Leahy Amendment?
Answer. Because of its nature, time spent on vetting is impossible
to quantify. Embassy Bogota regularly receives information on human
rights violations from a variety of government agencies, NGOs, press
reports, and international organizations and maintains records of this
information. When a unit is being considered for training, the Embassy
checks its records and consults its sources to determine if the unit
has any record of gross human rights violations. Once the Embassy has
concluded this process, the State Department in Washington searches its
own records for information on such violations. If any alleged
violations are uncovered, the Department, in consultation with the
Embassy, examines the following questions: a) Are the contents of the
allegations credible? b) If credible, do such allegations constitute a
gross human rights violation? c) Was the unit in question involved in
the alleged incident(s)? If all three questions are answered in the
affirmative, the Department then reviews the actions taken by the
Government of Colombia to bring the perpetrators to justice, and
determine whether they constitute effective measures.
End-use monitoring (EUM), another important element, is more
straightforward. There are two persons in Embassy Bogota officially
assigned to end-use monitoring (EUM) duties: one with the Narcotics
Affairs Section (NAS) and the other in the Military Group (MilGp).
Unofficially, however, all NAS personnel and advisors who spend time in
the field participate in the EUM process. In addition, the Embassy has
been given approval to hire an EUM Assistant and an auditor to work in
the NAS. The need for these two positions was identified prior to the
development of the proposed assistant package and is not a response to
it. We are confident that no new positions, beyond these two, will be
needed as a result of the package.
Currently, much of the monitoring is effectively performed by NAS
advisors in the field who work daily with their Colombian counterparts
and oversee the use of USG donated equipment. There is also a system in
place through which the CNP provides inventories to the NAS, who then
compares them against its own inventories and sends personnel on site
visits to perform spot checks. Whenever irregularities surface, the
official NAS EUM advisor informs the appropriate Colombia authority in
writing, requesting an explanation and coordinates the development of a
solution to avoid similar discrepancies in the future. Specific EUM
site visits generally occur once or twice per year. This number is
expected to increase now that the EUM officer has been relieved of some
collateral duties and with the addition of the EUM assistant.
Question. How does the Administration currently propose to allocate
sufficient end use monitoring resources to accommodate this large aid
increase?
Answer. There are two persons in Embassy Bogota officially assigned
to end-use monitoring (EUM) duties: one with the Narcotics Affairs
Section (NAS) and the other in the Military Group (MilGp).
Unofficially, however, all NAS personnel and advisors who spend time in
the field participate in the EUM process. In addition, the Embassy has
been given approval to hire an EUM Assistant and an auditor to work in
the NAS. The need for these two positions was identified prior to the
development of the proposed assistant package and is not a response to
it. We are confident that no new positions, beyond these two, will be
needed as a result of the package.
Currently, much of the monitoring is effectively performed by NAS
advisors in the field who work daily with their Colombian counterparts
and oversee the use of USG donated equipment. There is also a system in
place through which the CNP provides inventories to the NAS, who then
compares them against its own inventories and sends personnel on site
visits to perform spot checks. Whenever irregularities surface, the
official NAS EUM advisor informs the appropriate Colombian authority in
writing, requesting an explanation and coordinates the development of a
solution to avoid similar discrepancies in the future. Specific EUM
site visits generally occur once or twice per year. This number is
expected to increase now that the EUM officer has been relieved of some
collateral duties and with the addition of the EUM assistant.
Question. When can this subcommittee and Congresswoman Mink expect
to know what the DEA know what the DEA knows about the paramilitaries?
Answer. For a response to this question I would respectfully refer
you to the Drug Enforcement Agency.
Question. How does the Administration envision the dismantling of
paramilitary groups?
Answer. The United States Government strongly supports President
Pastrana's efforts to broker a negotiated settlement to end Colombia's
internal conflict. We remain convinced that the peace process is
integral to long-run prospects for fighting drug trafficking, reducing
kidnappings, and restoring respect for human rights. A military
solution is not possible for Colombia.
Question. Why is there little mention of paramilitary groups in the
aid proposal?
Answer. The objective of the package's counternarcotics component
is to confront and disrupt the narcotics trade. As long as any illegal
armed group, including the paramilitaries and the guerrillas,
interferes in counternarcotics operations, they are valid targets for
counternarcotics units. The plan also aims to sever the financial ties
between traffickers and all illegal armed groups.
Additionally, the human rights components of Plan Colombia include
measures to assist in combating the paramilitary phenomena, such as
strengthening the investigative and prosecutorial capacity of the
Fiscalia.
Question. The Dallas Morning News reported in August 16, 1999 that
the Colombia military, supported by U.S. airborne personnel, repelled a
FARC attack in Puerto Lleras in early July but in doing so, attacked
the civilian population. I'd like to insert this article into the
record and ask the Administration to clarify the points it raises. Can
you provide details about the civilian toll and the U.S. involvement,
direct or through contract personnel, in this counterattack.
Answer. For a response to this question I would respectfully refer
you to the Department of Defense.
Question. Even though U.S. aid to Colombia's security forces nearly
quadrupled between 1995 and 1999, coca cultication in Colombia more
than doubled. Why would more military and police aid produce any
different results?
Answer. While total production in Colombia has increased at an
explosive rate (with a 20 percent increase last year alone), those
increases have, as a general rule, occurred outside of the areas of our
focused efforts. That is why this package is so important. It will
allow for the expansion of counternarcotics operations into areas that
are beyond the reach of current efforts without sacrificing performance
in current areas of operations. In addition to expanding current
eradication efforts to new areas, the supplemental will improve
Colombia's interdiction capabilities and give new impetus to
alternative development and other social programs.
Expectations are positive for the programs supported by the
package, in part, because they are based on the lessons learned in our
counternarcotics cooperation with the governments of Peru and Bolivia.
Since 1995, despite the explosive growth in Colombian coca cultivation,
regional cultivation has declined because of the successes in those two
countries. Over that time period, Peru has reduced its coca crop by 66
percent and Bolivia by 55 percent. Colombia hopes to match that
performance, with the first meaningful reductions as early as 2001.
Question. What are the immediate objectives of this aid package,
and how will its elements contribute to achieving them? What sort of
benchmarks will be used to evaluate the success of this assistance?
Answer. As President Clinton has stated clearly, our policy in
Colombia is to support President Pastrana's efforts to find a peaceful
resolution to the country's longstanding civil conflict and to work
with the Colombians--along with other regional partners--on fighting
illicit drugs. In the counternarcotics arena, the government of
Colombia has stated that its goal is to reduce coca cultivation by
fifty per cent within five years. With the additional funds supplied by
the emergency supplemental, the Administration plans to assist Colombia
to stop the increase in coca cultivation by the end of 2000 and begin
reducing the number of hectares under cultivation in 2001.
The success of counternarcotics programs is already monitored on a
regular basis. Reports on aerial eradication efforts are provided from
the field on a weekly basis and the effectiveness of the campaign is
verified annually by U.S. and Colombians scientists through actual
visits to sprayed fields. The overall effectiveness of counternarcotics
efforts can also be measured through the annual analyses of crop yield
and drug production prepared by USG and GOC agencies.
Question. How will the U.S. military presence in Colombia change as
a result of this stepped-up program?
Answer. For a response to this question I would respectfully refer
you to the Department of Defense.
Question. The United States will help the Colombian Army find two
more counternarcotics battalions in March or April. Where will these
battalions be based? [``Southern Columbia'' is not a specific enough
answer.]
Answer. They will be stationed at bases in Caqueta and Putumayo in
order to conduct operations in those areas.
Question. It is U.S. Government policy not to fund alternative
development programs in areas not under the Colombian Government's
complete control. It is unlikely that the southern Colombia coca-
growing areas will come under complete Colombian Government control
anytime soon. Without a change in policy, how or where will the new
alternative development funding be spent?
Answer. The policy has been not to fund alternative development
programs that are in the despeje, the FARC controlled area often
referred to as the DMZ. Other projects are reviewed individually and
security for workers is a key consideration. The security needs of
assistance workers must be in each individual case.
Question. This aid package is focused on Putumayo and Caqueta
departments in southern Colombia, where two-thirds of coca is currently
grown. But the Amazon basin area of southern Colombia is about as big
as California. How will this plan guarantee that coca production won't
just move elsewhere into another zone of rural Colombia?
Answer. The plan does focus its initial efforts on southern
Colombia, but also supports efforts in other parts of the country as
well. That is why this package is so important. It will allow for the
expansion of counternarcotics operations into areas that are beyond the
reach of current efforts without sacrificing performance in current
areas of operations. In addition to expanding current eradication
efforts to new areas, the supplemental will improve Colombia's
interdiction capabilities and give new impetus to alternative
development and other social programs. The plan is not simply about
eradicating coca. It aims to diminish the allure of coca production and
provide the marginalized of Colombia with new ways to support their
families.
Expectations are positive, in part, because the plans are largely
based on the lessons learned in our counternarcotics cooperation with
the governments of Peru and Bolivia. Since 1995, despite the explosive
growth in Colombian coca cultivation, cultivation has declined in those
two countries. Over that time period, Peru has reduced its coca crop by
66 percent and Bolivia by 55 percent. Colombia hopes to match that
performance with the first meaningful reductions as early as 2001.
Question. What is the yearly maintenance cost of a BlackHawk
helicopter? [I believe the answer is $1-2 million per year, which would
mean a yearly maintenance cost of $30-60 million.]
Answer. The annual maintenance cost of a BlackHawk helicopter would
depend, among other things, on the number of hours it is flown. The
hourly rate to operate a BlackHawk is approximately $1,800. Assuming
normal operations of 25 hours per month, the resulting cost is $540,000
annually.
Question. The Colombian Army's new counternarcotics battalion will
be based in an area that has been considered a FARC stronghold for
decades. The guerrillas who operate in this zone know the terrain well,
they get intelligence from residents, and they have handed the
Colombian Army several notorious defeats there in the last few years
(including a battle at El Billar in March 1998 that decimated an elite
anti-guerrilla unit). The new counternarcotics battalions are bound to
encounter guerrillas during their operations. How are they being
prepared for this contingency?
Answer. The likelihood of confrontations between counternarcotics
units and the illegal armed groups (guerrilla or paramilitary) is the
very reason for the military portion of this assistance package. This
assistance is designed to provide Colombian security forces with the
protection they require to perform their counternarcotics mission in
such an environment.
Question. What next steps are envisioned if they suffer significant
losses?
Answer. The next steps would be to identify the leadership,
organizational, training, and other factors that led to poor
performance in the field and adjust the support program to correct
them. We would require the Colombian authorities to make the required
reforms before providing additional assistance.
Question. Is any effort being made to ``track'' recipients of U.S.
military training after they are trained?
Answer. Monitoring does continue after the initial approval of a
unit or individual.
Question. How do we know that they stay in units with
counternarcotics responsibilities and don't get transferred into areas
where counterinsurgency is the primary mission?
Answer. Monitoring of approved units and individuals is ongoing and
reported in the State Department's annual End-Use Monitoring Report.
Question. Leaving drugs aside, are Colombia's guerrillas considered
a significant threat to U.S. or regional security? If they do pose a
threat, is the new military assistance at least partly aimed at
containing them?
Answer. The guerrillas, like the paramilitary groups, are self-
sustaining: financing their activities through various illicit
activities. They threaten the internal stability of Colombia, and of
Colombia's neighbors, within whose borders they already conduct illegal
activities. We strongly support President Pastrana's efforts to find a
peaceful resolution to the country's longstanding civil conflict.
The U.S. assistance package is aimed at counternarcotics efforts,
not counterinsurgency. To the extent that any illegal armed group is
involved in narcotrafficking or cultivation, or interferes with
counternarcotics efforts, it becomes a legitimate target. This
assistance will provide Colombian security forces with the protection
they require to perform their counternarcotics mission in such an
environment.
Question. If the Colombian government again requested it, saying it
would be important to the peace process, would State meet with FARC or
ELN representatives?
Answer. Until the FARC takes steps to ensure that those involved in
the killing of the three U.S. citizen NGO workers in March 1999 are
turned over to the appropriate judicial authorities, the USG will have
no contact with the FARC.
As for the ELN, the question is premature as the peace process with
the ELN is just getting started. We would need to look at the ELN's
behavior before a decision would be made.
Question. The aid package claims to include $5 million for
``peace,'' but a closer look at the peace category reveals that this $5
million also includes aid for money laundering and banking controls.
Why is the amount of material support for the peace process so low?
Answer. We believe that to the extent Plan Colombia reinvigorates
the Colombian economy, enhances GOC governing capability, encourages
respect for and protection of human rights, strengthen democratic
institutions, and reduces the money available to guerrillas and
paramilitaries from involvement in the drug trafficking, it will
directly and positively encourage the peace process. Therefore, our
proposed assistance package will support all areas that are needed to
assist the peace process.
Specifically, this package will provide support to help train GOC
negotiators and advisors on managing conflict negotiations. Training
will draw on the lessons learned in Northern Ireland, the Middle East,
and Central America. The training will also examine the techniques for
reintegrating ex-combatants into civil society and seeking their
support for all aspects of Plan Colombia.
The package will also send a strong message to Colombia's
guerrillas that meaningful negotiations offer the best hope for peace
and social justice. They can hope to win neither military victory nor
political advantage through violence.
Question. Paramilitary groups tax the drug trade and even get money
from drug traffickers. Yet they hardly appear in the administration's
proposal. Is this an oversight, and are the paramilitary groups getting
a ``free ride?''
Answer. The objective of the U.S. assistance package's
counternarcotics component is to confront and disrupt the narcotics
trade. To the extent that they are involved in narcotics related
activities and interfere with counternarcotics efforts, all illegal
armed groups, including the paramilitaries and guerrillas, are valid
targets. The plan also aims to sever the financial ties between
traffickers and all illegal armed groups.
Question. Even though official policy demands that paramilitary
groups be combated, do Colombian military units still cooperate with
the paramilitaries at the local level?
Answer. The GOC has made real efforts to sever the ties that
existed between its forces and the illegal paramilitary groups.
Clearly, some ties do still exist, but they appear to be at individual
level and not institutional. The GOC is continuing to attack these ties
as well, but it is a lengthy process. For its part, the Administration
uses every opportunity in its discussions with the GOC to stress the
need to sever these connects and to sanction personnel who collaborate
with illegal groups.
Question. What units of the Colombian Army have been cleared to
receive assistance according to the Leahy Amendment? Have units been
turned down after being proposed by the Colombia government?
Answer. We do not normally release the names of cleared units, but
we would be happy to arrange a classified briefing to discuss them at
your convenience.
Question. Please discuss further what is meant by ``civilians
displaced by the push into Southern Colombia.''
Answer. Colombia is already suffering from massive internal
displacement as a result of its insurgency conflict. The
Administration's proposal in no way intends to inflict the appalling
and inhumane forcible displacement visited on the Colombia people by
illegal armed groups. Some of the population in southern Colombia may
flee for fear of the violence that may occur as traffickers' livelihood
is disrupted and as they lose control of the area to legitimate GOC
forces. It is very difficult to predict what the numbers may be.
To address this concern, the Administration's proposed assistance
package includes funding for emergency humanitarian assistance,
alternative development assistance to help growers switch to licit
crops and other legal enterprises, and funding to help those who may
decide to leave the area. We are aware of the indigenous communities in
southern Colombia and we are working with the Government of Colombia to
ensure that our humanitarian assistance is tailored to those specific
target populations.
Funding is also included to support civil society in peri-urban
areas in order to provide stability for internally displaced people who
relocate there.
Question. Current U.S. guidelines allow intelligence about
guerrillas to be shared with the Colombian military, even if it has
nothing to do with counternarcotics. Are any Colombian units restricted
from receiving intelligence on human-rights, corruption, or other
grounds? How do we ensure that the intelligence that gets shared does
not end up in the hands of abusive or other ``bad'' units, or--still
worse--get passed along to paralmilitaries?
Answer. Current guidelines allow intelligence about guerrillas to
be shared with Colombian authorities only if it pertains to
counternarcotics. While the specifics of the guidelines are
understandably classified, we would be happy to arrange a classified
briefing to discuss them more completely.
Furthermore, intelligence is treated like material assistance and
its dissemination is done in accordance with Section 564 of the FY 2000
Foreign Operations Appropriations Act and with Section 8098 of FY 2000
Department of Defense Appropriations Act.
Finally, because intelligence sharing is limited and the nature of
the shared intelligence quite specific, its use by anyone other than
the intended recipient would be readily apparent.
Questions by Mr. Farr
Question. The bulk of the proposed aid is focused on the Southern
Colombian coca growing areas. However, most of the kidnappings,
extortion, and human rights violations occur in the Northern regions.
How will this aid package curtail the internal violence in these
regions and provide a sense of stability and security for the Colombian
population?
Answer. Narcotics cultivation and trafficking is the scourge of
Colombia. It denigrates democratic institutions with its corrupting
influence and fuels the insurgency that results in horrendous violence,
kidnapping, and extortion. The U.S. assistance package targets the part
of Colombia with the highest level of illicit drug cultivation in the
country. We view Plan Colombia as an integrated, nationwide program and
our assistance package will strengthen governance throughout the
country, not only in the south. It is not possible to accurately
compared efforts solely in terms of dollar amounts because the
importance or effectiveness of a program is not directly proportional
to its cost. The funding we have requested to assist human rights
efforts and local government capacity will help increase stability and
security for the Colombian people.
[Clerk's Note.--Responses to questions for the record for
this hearing were not received from the Office of National Drug
Control Policy in a timely fashion and are part of the
Committee record.]
Thursday, March 2, 2000.
PRESIDENT'S FY 2001 BUDGET REQUEST FOR EXPORT FINANCING AND RELATED
PROGRAMS
WITNESSES
JAMES A. HARMON, PRESIDENT AND CHAIRMAN, EXPORT-IMPORT BANK
GEORGE MUNOZ, PRESIDENT AND CHIEF EXECUTIVE OFFICER, OVERSEAS PRIVATE
INVESTMENT CORPORATION
J. JOSEPH GRANDMAISON, DIRECTOR, US TRADE AND DEVELOPMENT AGENCY
Chairman's Opening Statement
Mr. Callahan. Gentlemen, it is our pleasure to welcome you
before our subcommittee again this morning. The President has
requested a very generous increase in funding for each of your
agencies, and this will be your opportunity to convince the
committee that your budget is fully justified by the facts.
It is no secret I have a special interest in American
exports and investments your three agencies promote. The
countries we are trying to help in this subcommittee cannot
grow, nor can their people prosper, unless they have enough
power, enough telecommunications and transportation to compete
in the global economy; and certainly the three of you play a
big role in this sector.
Next to our child survival and disease programs, programs
that promote exports and investments are what I am proud of is,
as chairman.
One thing I would like to introduce today, and to carry on
throughout our hearings, is the extent of cooperation and
coordination amongst your three agencies. There seems to be an
opportunity whereby the three of you could work more closely
and as a result be more productive for your individual
agencies. I am not advocating a merger. Maybe each of you could
comment on it. Maybe you could explain how you interact and if,
indeed, you have any suggestions for the future as to how you
could more closely interact.
Let me just, first of all, tell you that the House is going
to have no more votes today so we will be uninterrupted, but as
a result of that the Members have other opportunities they can
pursue. If I am willing to appropriate money for your
respective agencies with a two-page explanation, I think in
your presentations that you can abbreviate your testimony.
We know who you are. We know about your agencies. We
briefly want to know about your successes and failures during
this past year and your goals and aims and needs for the monies
that you have requested through the President this year.
So let me especially thank the Members who have gone beyond
the call of duty today to join us and hear your testimony,
because they certainly have interests, as I do. So I am going
to submit my statement for the record and you can read it at a
later time.
[The information follows:]
Offset Folios 405 to 406 insert here
Mr. Callahan. We have had the opportunity to read your
statements and, Jim, especially yours. It looks like the Old
Testament, but maybe it is the New Testament. In any event we
want to keep this meeting as--I think it is probably to your
benefit to keep it brief anyway. We get into too many questions
you might change my mind because I am pretty well sold on your
three agencies.
Mrs. Pelosi, I know better than to try to restrict your
time, but I will recognize you.
Ms. Pelosi's Opening Statement
Ms. Pelosi. Thank you very much, Mr. Chairman. Well, as a
supporter of the three agencies, I think that the agenda that
you put out on the table is one that is welcome by them. It
sounds very favorable to their case and to your review of their
documentation. So if I were they, I would want this meeting to
be as brief as possible as well.
I do want to join you in welcoming Jim Harmon of the
Export-Import Bank, George Munoz from OPIC, and Joe Grandmaison
of the Trade and Development Agency. Of course, we look forward
to their testimony.
I am pleased about the request, for example, in the--I want
to learn more in the course of our hearing about OPIC's $4
million increase in operating budget, of which $1.2 million is
to enhance OPIC's environmental and workers' rights monitoring
activity. I am pleased to see that request, Mr. Munoz. Some of
the issues that have come up over this past year, since last we
gathered, in all three agencies, Colombia, Indonesia, and,
again, environmental issues, so I have questions in that regard
for all three. But heeding the admonition of my chairman that
we want to move this along, I will save that for the questions
and hopefully some of this will come out in the statements,
again, and I will not have to even take that much time on the
questions, Mr. Chairman.
Respecting my leader's charge, I yield back the balance of
my time, and I want you to remember that.
I welcome all three of you.
Mr. Callahan. I am going to remember that. I am very
appreciative of that.
We are not going to recognize you in any direct importance
level or friendship level. We are going to recognize you in the
order of liberal to conservative. So we are going to start with
Mr. Grandmaison and come to the center with Jim Harmon and then
talk to the more conservative of the three of you. Mr.
Grandmaison.
Mr. Grandmaison's Opening Statement
Mr. Grandmaison. Mr. Chairman, thank you very much for the
opportunity to be here; Mrs. Pelosi; members of the committee.
We are going to have to discuss whether that actually is
accurate or not. I am not sure, but we will see.
It is great to be here today to present our budget for
fiscal year 2001. I take your counsel. We have submitted a
lengthy statement and I will just say a few words. I am also
pleased to have joined my two colleagues. We have been close
partners in this mission and actually enjoy one another's
company and we do not spend any time talking politics. I think
that is why I have to give thought as to whether from left to
right was the accurate pinpoint.
Mr. Callahan. I am talking about past history.
Mr. Grandmaison. In that case, I qualify. Thank you.
I realize you would rather get down to business and that is
great. Let me first address our recent successes at TDA. By all
of our benchmarks, in fiscal year 1999, we had our best year
ever. We have now added $3.7 billion in new exports to our
export total. These are investments that we have made resulting
in exports, bringing that figure for TDA to a whopping $16
billion.
That translates into $37.00 of exports being facilitated
for every $1.00 our agency has invested. We happen to think the
taxpayers are being exceptionally well served.
For fiscal year 2001, Mr. Chairman, we are requesting $54
million, an increase of $10 million. We do not do this, I
assure you, lightly, knowing how difficult your jobs are.
However, we believe that we must request an increase
because, quite frankly, TDA's core program budget, when
adjusted for inflation and the cost of doing business, has
actually declined in recent years. By stretching our resources
so thinly, we are now forced to turn away many good projects
each year.
Evidence of this is shown by our budget in the energy and
power sector. Five years ago, we invested roughly 25 percent of
our budget in the energy and power sector. Last year, it had
fallen to just under 15 percent. Now, the decline is not due to
the lack of demand, just the opposite. Investment in energy
infrastructure is valued in the hundreds of billions of dollars
each year. We have made the difficult decision, however, that
we cannot disregard new sectors with high export value, such as
the financial services sector and the emergency management
sector. With our current budget limitations, we simply cannot
meet the demand in all of the areas that we are involved in.
Finally, we must also acknowledge the vast amount of money
that most of our competitors spend on their TDA-type programs.
The French, the Germans, and the Japanese spend many times more
money than we do. We are not suggesting that we have to be
competitive dollar-for-dollar. We think the challenge for us is
really to work smarter and to be more effective and efficient
than they are.
However, we believe that we could assist more U.S. firms in
breaking through into lucrative infrastructure projects around
the world and to help continue to create jobs here at home if
we had a bit more money.
I hope this gives you a better understanding of the
challenges we currently face. I would like to, as a point of
personal privilege, introduce our new Deputy Director at TDA.
Her name is Barbara Bradford. She is a career professional. She
has been with TDA for 14 years. Nancy Frame, our former deputy,
whom many of you know, went out and got remarried and moved to
Paris. As it is, not exactly a difficult move to make.
Barbara is an experienced professional, and I know that I
am going to be relying on her heavily as the agency continues
to hopefully deservedly earn your support. I thank you very
much for the opportunity to be here.
[Mr. Grandmaison's statement follows:]
Offset Folios 412 to 417 insert here
Mr. Callahan. Mr. Harmon.
Mr. Harmon. Thank you. I hope my lengthy written testimony
will find room enough in the record to be included.
Mr. Callahan. Let me just put it this way, Jim. I have been
a supporter of the three of your agencies, and I am inclined at
this point to give you what the President has requested. I am
not going to give you any more so the only way you can go is
downhill. So I think it behooves you to recognize where you
are.
Mr. Harmon. I have the message. I appreciate it.
Mr. Chairman, and Mrs. Pelosi, because it is probably my
last opportunity to present the budget for the Export-Import
Bank of the United States, I will take a minute or two longer
than my colleague.
Mr. Callahan. Let me interrupt you. Is that a surrender? Do
you think that George Bush is not going to consider you? Or do
you think that Al Gore is not going to be here to reappoint
you?
Ms. Pelosi. Or does your wife want you to come home?
Mr. Harmon. It is more likely the latter and some other
responsibilities in New York that I have. That does not mean I
have not enjoyed myself greatly here.
But because it is probably my last one, I will take an
extra minute or two more than my colleague to give some
comments in my oral statement. But, it does occur to me that I
think my colleague did something very nice just now; and I
would like to also follow that and introduce our Vice Chair
Jackie Clegg, who should be behind me somewhere here, as well
as our new Director, Dan Renberg, both of whom, as you may
know, come from this great institution, Congress.
Ms. Pelosi. And Jackie, too, is newly wed.
Mr. Harmon. Yes. Since the last time, that is true.
Mrs. Clegg. Finally.
Mr. Harmon's Opening Statement
Mr. Harmon. We at Ex-Im have established a solid record of
effective management and policy reform, but we can continue to
make progress only if we have funding sufficient to meet the
needs of the exporters and enable Bank staff to administer our
programs.
For fiscal year 2001, we are requesting $963 million in
program budget. This is the part of our budget that allows us
to operate our loan, guarantee, and insurance programs, which
sustain U.S. jobs.
This compares to $756 million enacted for fiscal year 2000.
All of the increase in our program budget is due to a
recalibration of risk, which determines the amount of reserves
we need to set aside to cover the risk of doing business. If we
were operating under fiscal year 2000 risk assumptions, the
requested $963 million in fiscal year 2001, would be comparable
to $646 million.
In addition to recalibration, the request is also based on
the estimates of market risk and demand for the exports that we
expect to support in fiscal year 2001.
With respect to these factors, we anticipate slightly
higher demand and slightly less risk, which will ultimately
support $20 billion in U.S. exports. We are expecting demand to
increase in sub-Saharan Africa and parts of Asia as well as
Mexico, Brazil, Russia, India, and Algeria.
Mr. Chairman, our administrative budget is every bit as
important as our program budget. For fiscal year 2001, we are
requesting $63 million, an increase of $8 million over this
year's level. I hope that you and the subcommittee will
continue to support our efforts to modernize the Bank in order
to maintain our competitive position.
Of this increase, $1.7 million will be used for upgrades to
Bank technology, to help us reach more exporters, especially
small businesses, and to decrease processing time. Pay
increases, almost all mandated by law, would consume another
$3.6 million. Rent, supplies, and other necessities needed to
run the Bank take up the remainder of the increase.
Mr. Chairman, I would like my tenure at the Bank to be
remembered for three major achievements. First, we maximized
support for United States exports by opening in new markets and
expanding our presence in traditional ones as well as
maintaining our presence in certain markets, which faced the
most difficult economic times that these markets had ever seen.
In late 1997, the economies of Asia faced a serious
financial crisis. The commercial banks and other export credit
agencies literally ceased dealing with these countries. Ex-Im
Bank stepped in and offered short-term lines of credit for $1
billion each in Korea, Indonesia, and Thailand. Through our
efforts, over $2 billion in exports went forward to Korea,
representing over 2,500 transactions; and, most importantly, we
did not experience a single loss on any of this business.
Because we stayed, the private sector banks were encouraged
to return to the market. Ex-Im Bank was also a stabilizing
force in Indonesia and Thailand. We opened for business in the
public sector in Brazil after almost a decade of being closed,
and we persuaded the Government of Brazil to remove a
restriction that had prohibited short-term financing for the
purchase of raw materials and spare parts from the United
States.
In sub-Saharan Africa, we are now open in 32 countries for
traditional finance and open in all but one for project
finance. In fiscal year 1999, we provided loans and guarantees
of $600 million for this market, over 10 times the amount of
the previous year. And this year, we expect to support more
than $1 billion in exports to sub-Saharan Africa.
Just last week, I returned from India. Ex-Im Bank supports
about $200 million in exports a year to that market. Our
European competitors in the aggregate support, about four times
as much. To increase exports in this market, we concluded an
agreement that will allow Ex-Im Bank to guarantee up to $1
billion in loans in local currency.
We have also opened in Vietnam, and I recently traveled to
Algeria where the oil sector is very promising and could lead
to over $1 billion in demand for U.S. goods and services.
Second, we have expanded our outreach efforts, especially
to small business. We have made a maximum effort, through new
techniques such as expanding our Web site and through more
traditional means such as meetings and seminars all throughout
the country; but we have only begun. Our greatest challenge is
to be able to reach small businesses in multiples of what we
are doing now. That is not 2,000 exporters but 4,000 or higher.
We have an opportunity to create a portal through the Internet,
to communicate with tens of thousands of small businesses; but
this will cost money; more money than we have asked for in this
budget.
Third, we have brought sound management principles and
practices to the Bank. We have flattened our management
structure, downsized the number of committees to improve our
overall effectiveness and realigned our divisions by financial
product rather than geography.
A word about the future. There will be no lack of
challenges for Ex-Im Bank and U.S. exporters in the future. One
major issue will be market windows. A market window is a state-
owned institution that claims to operate on a commercial basis
but benefits from some level of government support, while not
adhering to the disciplines of the OECD. At present, Canada and
Germany are the primary users of this mechanism.
I believe that the United States should now explore the
possible development of our own market window.
Mr. Chairman, with congressional leadership in our 1992
rechartering, Ex-Im Bank took a positive step forward when it
adopted environmental guidelines in 1994. From 1996 to 1999, we
supported over $1.3 billion in environmentally beneficial
transactions. I call upon our OECD partners to recognize, as we
have, that environmental guidelines are the right thing to do
and, as we have seen, they can be good for business.
Mr. Chairman, the application of the Chafee amendment and
the way it may affect our procedures raises concerns. Last
year, we were prevented on very narrow grounds from approving a
transaction in Russia. This has added an element of uncertainty
to our operating procedures that could be very destabilizing.
Finally, I am concerned that next year is a rechartering
year for Ex-Im Bank and that this process could be well
underway when I have left, and before my successor has been
approved or even nominated.
I am prepared to answer any questions. Thank you for
listening.
[Mr. Harmon's statement follows:]
Offset Folios 425 to 450 Insert here
Mr. Callahan. Thank you, Mr. Harmon.
Mr. Munoz.
Mr. Munoz Opening Statement
Mr. Munoz. Thank you, Mr. Chairman. I am grateful to be
before this committee, and with such a large turnout we will
adhere to your requirement that we go quickly.
I am very pleased to be with my friends and colleagues from
the Ex-Im and Trade Development Agency.
I am pleased to report that OPIC is on very solid financial
footing and it accomplished its missions and goals for 1999.
The record is clear. In all measures that matter to this
subcommittee, to the Congress as a whole, and to the taxpayer
OPIC employees have performed with distinction.
OPIC's 1999 projects, for example, will support $2.7
billion in U.S. exports and approximately 6,300 American jobs.
OPIC has performed financially. In 1999, OPIC had net income of
$144 million and built a record level reserves of $3.7 billion.
We received a clean audit opinion from our outside private
auditors.
OPIC has performed in promoting small businesses, on which
this committee has asked us to concentrate. Last year we had
our largest percentage of small business projects in over 10
years. Thirty-four percent of all projects supported by OPIC in
1999 involved American small businesses, and we have performed
for the taxpayer. OPIC's FY 2001 budget will result in a record
return to the U.S. Treasury of $220 million after expenses.
But more than statistics, we recognize that our mission is
to help mobilize the private sector in countries of strategic
importance to the U.S. and promote development. We do this in
critical places, like countries in Central America and the
Caribbean which are recovering from national disasters; like
countries in Southeastern Europe rebuilding from wars and
violence; like countries in Africa facing demand for
infrastructure projects while facing human disasters which
require medicine, electricity, food production and potable
water; like countries in Asia recovering from an economic
collapse and capital flight.
In each one of these regions, OPIC's special efforts have
yielded favorable results. While the private sector may not
want to go to every country in every region, for those who do
want to make investments, who need financing and political risk
insurance and who are willing to pay for these, OPIC took the
leadership this subcommittee expects us to take and was there
to help.
For example, OPIC just completed its first finance projects
in Angola, Armenia, and Jordan, all tough countries with
important U.S. interests. The Central America-Caribbean credit
facility with Citibank that OPIC created one year ago to bring
investments and jobs to that region is working effectively. The
facility has approved 6 projects of loans totaling $68.5
million in five different countries, projects like $8 million
for a dairy production facility in Costa Rica; $14 million
loaned for a tourism facility in Jamaica; and a $5 million loan
for a retail warehouse in El Salvador.
OPIC and TDA have established a regional office in Croatia
to support the Southeastern Europe Initiative. OPIC tripled the
number of its projects in Africa in 1999 over 1998. OPIC's
support for U.S. investment in Africa rose by 36 percent from
1998 to over $1.2 billion in 1999.
Of special interest to the Appropriations Committee, OPIC
will continue to carry out its mission of strategic importance
and provide its leadership at no net cost to the taxpayer. As
mentioned, OPIC expects to contribute a record $220 million in
negative budget authority to function one fifty for this next
year. This record contribution is possible even after taking
OPIC's budget request into account.
OPIC requests the authority to spend $39 million of OPIC
revenues in FY 2001 for administrative expenses, a modest
increase, and $24 million for program support, the same as the
previous year.
The request includes an information technology improvement
program and funding requested by Congress to streamline and
enhance OPIC's environmental and worker rights activities.
In closing, Mr. Chairman, this subcommittee has been kept
closely informed of our challenges, our results, and
accomplishments, and you have always given us the helpful
guidance that is so much appreciated. We look to many measures
to see if we are truly making a difference, but perhaps the
best verification and validation that OPIC is making a
difference is last year's bipartisan approval by a 5-to-1 ratio
of OPIC's historic reauthorization, along with support for TDA.
Three hundred fifty-seven House Members supported
reauthorization and only 71 voted otherwise; and in the Senate
OPIC received unanimous endorsement.
I want to thank this committee for its strong and
unwavering encouragement of OPIC in private sector activities
to further U.S. foreign policy objectives. Your leadership, Mr.
Chairman and Congresswoman Pelosi, and that of your staff, is a
tremendous credit to the benefit of a bipartisan approach to
our national security.
I will be pleased to respond to your questions. Thank you.
[Mr. Munoz's statement follows:]
Offset Folios 455 to 463 Insert here
Mr. Callahan. We thank the three of you.
Out of deference to my colleagues who have gone beyond the
call of normal duty to come, I am going to yield my time to Mr.
Knollenberg and allow the Members to ask their questions first.
If Mrs. Pelosi chooses not to be as polite, that will be her
prerogative, but I will recognize at this time Mr. Knollenberg
and then I will recognize Mrs. Pelosi.
Mr. Knollenberg. Mr. Chairman, thank you very kindly. I
assume that I am being welcomed for a number of minutes?
Mr. Callahan. Whatever time you need.
Mr. Knollenberg. There you go. I could not have asked for a
better open than that.
Well, gentlemen, thank you very much for appearing before
us. Mr. Chairman, thank you again for your courtesy.
By the way, I think all of you do an amazingly good job. I
think that if there are any three activities that we tend to
agree on a bipartisan basis, it is the work that you gentlemen
do in the leadership capacity you have with your organizations.
But let me get into a couple of things that I need your
help in deciphering so that I can understand exactly what is
taking place.
Clean Energy Initiative
Let me talk about the Clean Energy Initiative. It is my
understanding that the President's budget request contained
some $95 million for a new program. I believe it is a brand new
program called the Clean Energy Initiative.
Now, the intended purpose of this program is to develop,
and I accent the word develop, and export technologies that
provide clean energy. My understanding also is that this
request is distributed as follows: Aside from the DOE getting
$45 million, USAID gets $30 million, Ex-Im $15 million, and TDA
$5 million.
Now, I support clean energy, as I am sure all of you do,
and I believe that developing countries can benefit from the
technology and the expertise of the U.S. companies. But I am
concerned about the administration's attempt to earmark funds
within Ex-Im and TDA. Exporting agencies should support U.S.
exports and provide funding where excessive risk is involved or
where it prevents the market from investing.
It is my understanding that TDA and Ex-Im were created to
respond to the demands of the market, not implement specific
administration policy initiatives. Through this brand new
initiative, the administration is now trying to pull Ex-Im and
TDA into a specific policy program by earmarking funds within
these agencies.
I am concerned about this. I suspect my chairman would be,
too, because of the precedent that this sets for future
earmarking. Ex-Im and TDA must remain, I think, independent to
react to the needs of the market. By including Ex-Im and TDA in
this new initiative, the administration is attempting to turn a
market-driven agency into a program-driven agency.
So the question I have, either for Mr. Harmon or Mr.
Grandmaison--I cannot say it as well as Mrs. Pelosi says it.
Mr. Lewis. You are great.
Mr. Knollenberg. Thank you. Is it not true that Ex-Im and
TDA are already involved in supporting exports of clean
technology, clean energy technologies, and they are doing it
without this earmark? Is that not true?
Mr. Grandmaison. If I might answer your question,
Congressman, the answer is, yes, we are. And what this
initiative does, which I would respectfully suggest to you is
market driven, is allows us to do more--and allow me to give
you a specific example.
Monday, Tuesday, and Wednesday of next week, TDA will be
the host of a conference in Nepal. We will have 45 project
sponsors from six South Asian countries meeting with U.S.
companies to talk about the development of energy projects that
they are anticipating. The total potential exports are $12
billion.
Now, we do not do this by ourselves and I should point this
out. We are working with DOE, the Department of Commerce, AID,
State, OPIC and Ex-Im.
Now, from that conference, we are going to get any number
of requests for our basic product: feasibility studies and
technical assistance. We are not able to meet that level of
demand, notwithstanding the market opportunities being there.
I share your concern philosophically, quite candidly,
relative to the question of earmarking. In this case, however,
I honestly do believe, at least as it relates to us, it falls
in the category of being market driven.
Mr. Knollenberg. Now, this is uncharacteristic, however, of
the past practices.
Mr. Grandmaison. Right.
Mr. Knollenberg. And I appreciate your comment about you
having some concern about that. You think it is market driven,
but what bothers me as much as anything is that the Bank itself
says, I am quoting from your charter, it does not allocate its
resources to any one region but reacts to the demand from the
market. That is the part, I guess you have some concern with,
too, if I heard you correctly. Mr. Harmon, do you want to jump
in?
Mr. Harmon. I do, because you are referring to Ex-Im Bank's
charter. First, my understanding is that the $15 million is not
part of the $963 million in our budget. It is supplemental to.
That is the first comment.
The second comment----
Mr. Knollenberg. You mean, it is not--it is an add-on to an
existing program? Is that what you are saying?
Mr. Harmon. I believe that the $15 million is part of the
$963 million.
Mr. Knollenberg. I thought it was $95 million for a new
program. That is how I understood it. Was requested by the
administration.
Mr. Harmon. The $15 million is included in the $963
million. It is an estimate actually of what we will use.
Normally, we would use more than that to support clean
technology exports.
I made a comment in my oral statement that we had already
financed exports totalling over $1 billion in environmentally
beneficial equipment. So we will probably provide funding for
considerably in excess of the $15 million, without regard to
this particular $15 million.
Mr. Knollenberg. Nonearmarked?
Mr. Harmon. Right, nonearmarked. Because in the United
States, and all over the world right now demand for
environmental improvement has grown significantly. I just last
week, had this discussion in India when I was there. But almost
every country has an interest in buying equipment from us which
is environmentally beneficial equipment, and we have expanded
that program. In fact, we have a very special provision for
these type of exports under project finance--if a project is
environmentally beneficial, we can provide additional funds
such as interest during construction. So we already have a
program to do that and it is a growing part of our work.
Mr. Knollenberg. Help me understand this, because as you
know, the U.S. has technology now that works very well. It
would seem to me that we could export that to developing
countries. Rather than going to the lab and trying to develop
within a laboratory arena new technologies, why do we not just,
as you have been doing, take the technologies, for example,
that work so well here?
Mr. Harmon. We do.
Mr. Knollenberg. Continue to do that? Cannot we do that
without establishing a new earmark specifically for a new
initiative?
Mr. Harmon. Well, first of all, we do exactly what you
said. We encourage the marketing, and we finance
environmentally beneficial equipment to all of the developing
world where we are open; and it is a growing part of our
business. I would predict that in the next 10 years financing
environmentally beneficial equipment will be an increasingly
large part of Ex-Im Bank's activities, as well as an
increasingly large part of U.S. business. We will, of course,
continue to be receptive.
The only comment that you made that I would put a slight
modification on is we are, quote, responsive to the market. But
increasingly, with the competitive scene that we have against
the other countries, we have to learn how to sell. So when I go
to India and I go to other countries, I push environmentally
beneficial equipment. I actually sell what we have to offer,
and so I think we have made a cultural shift from being totally
reactive to the market to trying to persuade the developing
world to buy what we have to offer such as, environmentally
beneficial equipment for an example. I do not know if I have
made myself clear, but that is our policy.
Mr. Knollenberg. I accept that. I guess what I am concerned
about is that if this money is dedicated to the research lab,
so to speak, it would be to go avenue breakthroughs and new
technologies. My concern is we have been through that in a lot
of other ways with biomass, wind and solar energy and I am
waiting for the day when the breakthrough comes. You folks have
been very good about being stewards of how you use the funds
you do use in a way to bring about successful opportunities.
My real fear is that perhaps we are going to devote too
much money to the laboratory without even exporting the
technologies that work and are commercially viable today, to
those countries. I guess that is the big part of my question.
Mr. Harmon. Maybe I did not make it clear. When I first
heard about the number, I never really focused on it too much
since it is less than what I know we are going to support. In
other words, we will probably support, without any, quote,
earmarking effort or without any targeting effort, a
significantly greater amount of environmental equipment to the
developing world. It is less than what I know we are going to
support.
Mr. Knollenberg. Would you support additional earmarks
then? I mean, if we can call this an earmark. You say it is
not.
Mr. Harmon. No.
Mr. Knollenberg. You are not looking at anything----
Mr. Harmon. We have a budget which is much tighter than
what is presented because of what I explained. Under the
recalibration, it forces us, frankly, to operate on a reduced
budget compared to last year. We will have great difficulty
next year, in my judgment, meeting all the demand we may have
since the developing world has now recovered. Then comes the
point that you made initially. During the course of the year,
we respond to the market. The first exporters into our shop,
October, November, December, get the response. We do not save
money for anything except for small business. But other than
that, we are responding to the market.
What we do, however, is when I am traveling around the
world, I try to encourage certain things in competition with
our competitors, one of which happens to be in the
environmental area.
Mr. Knollenberg. Thank you. Could I just ask--I can wait,
too, Mr. Chairman.
Mr. Callahan. Maybe we better not push this thing too far,
Joe.
Mr. Knollenberg. Okay. Thank you. I will come back.
Mr. Callahan. Let me just comment on the theme of your
conversation. The three of you are to be commended for having
concern for your agencies and the continuity of these agencies.
You have each prepared for your successors to come. This should
be of such grave concern to you.
Jim, you have been rather independent in standing up to the
White House and now you have, all of a sudden, an indication
coming from the White House where they are going to start
telling you how to spend your money, and this precedent is
very, very dangerous.
We are going to protect you this year with language. We are
not going to let the White House tell you who to make loans to.
We are not going to let the White House tell you how to spend
your money, or OMB. They can do it because simply they have
drafted the President's request this way.
But this should incense the three of you. You should not
tolerate OMB, the Vice President or anybody else, telling you
how to run your agencies. We are going to protect you this year
with language, but if you all permit OMB or the Vice President
or anyone else to start telling you how to spend your money,
then you are undermining the future success of your respective
agencies.
Mrs. Pelosi.
Ms. Pelosi. Mr. Chairman, before I yield to my colleague, I
want to just say, that I think there is going to be missed
market opportunity if we do not recognize that we have to be
out there selling U.S. technology as far as the environment is
concerned, because otherwise we will lose market share.
When I was on Commerce Justice, this was one of the issues
that we had with NIST and the rest. There are standards being
established in this area that can be Europeanized or they can
be internationalized, and we will miss the boat unless we are
making sure that they are not Europeanized so that every other
product that follows has to fit those standards rather than a
more general standard that includes the U.S.
This is a very big issue; and in giving these agencies the
freedom that you want to give them, I hope you do not bar them
from doing what is necessary as far as the free market is
concerned.
With that, Mr. Chairman, I will follow your courteous lead
and yield to my colleague. Our colleague spent so much time
listening to us, and it is always more enlightening when they
are talking and we are listening. So I am very pleased to yield
to the gentlewoman from New York, who came all the way back
from New York to be with us on this hearing.
Mr. Callahan. God bless you.
Environmental Impact Assessments
Mrs. Lowey. I thank you. It was important for me to be here
because I too appreciate the important work you are doing.
Mr. Harmon, whatever you choose, we would welcome you back
to New York, if that is your decision.
Thank you so much for your testimony.
Following up on the environmental issue, I personally was
disheartened that despite Ex-Im Bank's efforts to encourage
other OECD export credit agencies to develop multilateral
environmental guidelines, there has been little cooperation
among other member nations.
I recently sent a letter, it was a bipartisan letter, with
many of my colleagues in Congress, and other OECD
parliamentarians to the chairman of the OECD working party on
export credits and credit guarantees, encouraging, at the very
least, the adoption by export credit agencies of
internationally recognized practices for environmental impact
assessments.
I would be interested to know, Mr. Harmon, whether this
possibility was discussed at the meeting? Is there anything
Congress can do in addition to our letter to encourage other
OECD members to be more open to adopting common environmental
guidelines?
Mr. Harmon. Yes. Thank you very much. It is an item which I
feel very strongly about.
To be very candid, which often I am advised not to be, we
have not made as much progress as we should have, nor as much
progress as I had hoped for a year ago.
There was an agreement in Cologne, which encouraged me. In
fact, there were some references to language that I felt were
moving towards guidelines or standards. Most recently, however,
at the meetings in Paris, the other ECAs backed away from what
we felt there had been a general understanding on.
Now, I do not want to get too negative because they have,
in some cases, been willing to share environmental assessment
analysis and to work together to try to mitigate the areas that
we were concerned with. In other words, case by case, ECAs are
quite willing, which they were not in prior years, to sit down
with us and to give Ex-Im Bank and the United States the
leadership position in moving forward to mitigate what could be
very difficult resettlement issues and all sorts of other
serious issues.
The problem is, every time we move from that case-by-case
method to a general agreement on guidelines and standards, we
cannot seem to make any headway. Some day, we know the world
will agree on at least World Bank standards and our standards,
but it is two steps forward and one step back; and you are
catching me after the one step back of last week so I am not so
happy about it. But I personally have delivered letters and am
working to try to move us to the level that we should get to,
but it will not be an easy task.
Mrs. Lowey. Just to follow up, do the letters that the
Members of Congress send with other parliamentarians have any
impact, and are there other steps that you think we could take
or should take?
Mr. Harmon. I think that Congress plays a critical role in
some respects. I always like to know that the respective
Members of Congress meet with their respective counterparts in
other countries. It will only be through other countries'
respective counterparts that we get anywhere. Frankly, it was
Congress that initiated our guidelines and pushed us. The
business community in the United States and Ex-Im were not
volunteering to do this. I am proud that Congress did that, and
I am proud that we have that position. But unless we can get
the other equivalent parliamentarians to agree, we will not
make the kind of progress we need.
So every effort you can make is very helpful.
Mrs. Lowey. Thank you.
Small- and Medium-Sized Businesses
As you know, many of us on the committee have been very
interested in your work with small businesses because we feel
that many of the large corporations do just fine. It is the
small- and medium-sized businesses that benefit tremendously
from your help, and I have been pleased that recently a small
business in my district has received some help.
You mention in your statement that you are requesting--
well, I guess it would be the same amount of money, but you
were going to be investing heavily in technology to more
effectively reach out to small- and medium-sized businesses. I
wonder if you can expand upon that. How do you think it will
help compared to what you are doing now? If you invest in this
technology, where do you expect that you will be a year from
now? How many more small businesses will you be able to reach,
for example?
Mr. Harmon. In addition to managing the Bank well and going
through a difficult global financial crisis, the two areas I
was most hopeful that we could make serious progress on were
the environmental issue and small business. Those are the areas
which 10 and 20 years from now we will look back on and feel we
were pleased with what we achieved.
We are grinding out the yardage, to use Ohio State football
Woody Hayes' term, slowly to reach more and more by our
improved Web site, by more communications with small
businesses, and by working with trade groups and other
measures.
We have an opportunity now to hit a home run, in my
judgment. So does a lot of the business community, and that is
going to be through the Internet. For the first time, I have
seen the future and the future is through some portal in the
Internet with which we will eventually connect is not with just
4 or 8 or 10 or 12,000 buyers or sellers, but with hundreds of
thousands of U.S. businesses that export, and hundreds of
thousands of buyers around the world.
We are not far away from it. The cost, as estimated to me,
we could not put in this budget. The estimate was given to me,
and I felt torn between asking Congress for something that
could leap frog us into a different level of communication.
Instead of having 2,000 exporters a year, it is not
unreasonable to think that we could be reaching 4, 6, 10, 12,
20,000 companies in the United States, and it will be the
Internet which will do it. It will be business to business; and
it is all out there.
The question is how to do it. We have started to negotiate
with suppliers of this technology. I have said to them, if we
come into your proposed portal, it is such an enormous lift to
you I would like you to do this for nothing. That was the
beginning of the negotiations. They did not laugh at me. They
recognized that if Ex-Im Bank was part of this new company,
that this would give them an enormous standing for any future
public financing they might do.
I do not know what their response will be. I hope they will
come back with a number, and then I would have to think
seriously. But I think it is such a significant factor that we
could reach these small businesses.
We cannot reach the thousands of small businesses with 420
Bank employees, and no one is going to give us more full-time
employees. It is only through technology. But the Web site is
good because people read it; and we will take applications from
the Web site. We will see increases, but nowhere near the level
that the Internet could do. That will be the most significant
factor, in my judgment.
Years from now we will all look back on it and see what it
will have done on all business-to-business transactions.
Mrs. Lowey. Your vigorous enthusiasm is contagious. And if
the Chairman allows me, I do have another quick question?
Mr. Callahan. Well, we do not want to push this thing too
far, Ms. Lowey.
Mrs. Lowey. I will just go quickly. I guess that is the way
you do it around here.
Armenia and Azerbaijan Projects
I just wanted to mention--to Mr. Munoz, I wanted to comment
on the first finance project in Armenia in the form of an $18
million loan to investors who won a competitive bid for
privatization of the Armenia hotel complex in Yerevan.
I was very interested in this, and if you want to comment
briefly on the project, are there any other plans that OPIC has
to support projects in Armenia? As you know, some of us have
expressed concerns in the past about the involvement of export
financing in Azerbaijan and how that might affect a solution in
the Nagorno-Karabakh conflict.
I also noticed that OPIC approved its first project in
Azerbaijan this year. If you could bring us up to date on that
project and any others you might be considering in Azerbaijan.
This is an ongoing discussion in this committee and we have a
very definite commitment to try and end that conflict. So if
you can comment on both I would be appreciative.
Mr. Munoz. Congresswoman----
Mr. Callahan. That was one quick question. Now let's have
one quick answer.
Mr. Munoz. The best way to help the region is to be stable
and to be balanced, and I think that is what we are doing. We
are very much benefited by the Caspian Finance Center where all
three agencies are participating in making sure that we are
there and look for these opportunities for a balanced approach.
I am proud to say that beyond the Armenia Hotel, OPIC has
received a half dozen inquiries from U.S. investors for
potential projects in Armenia. Their total amount is about $200
million, and many of those projects came about from the Caspian
Finance Center that this Subcommittee had supported us on.
Mrs. Lowey. I will not push it.
So let me just thank you also, Mr. Grandmaison, for your
work.
Mr. Callahan. Let me tell you also, George, you might
expand on that in the record in some way. I think the
gentlelady's question is a good question that deserves a full
answer, and all of us have great interest in that. So maybe if
you could just brief us in writing on this particular issue,
what you are doing there and what you anticipate doing in the
future, it would be good information for us.
Mr. Munoz. I am proud to say that I think you will be very
happy with our report.
[The information follows:]
Mr. Munoz. In FY 1999, OPIC Finance committed an $18
million loan to the Armenia Hotel Complex, which will renovate
principal hotel accommodation in the capital city of Yerevan
under a privatization bid tendered by the Government of Armenia
in 1997. After renovation, the hotel will become the first
internationally branded hotel in the country. The project is
underway and will serve as an important catalyst for future
development.
OPIC Insurance is currently insuring an equity investor in
a travel service project in Yerevan. OPIC Insurance is also
considering support for a management services project.
OPIC has currently received about a half dozen inquiries
from U.S. investors for potential projects in Armenia. These
inquiries are in the diverse areas, including: energy,
manufacturing, agribusiness, financial services, power, mining,
and tourism. These projects are in the conceptual stages, which
if in the unlikely event all were to go forward, would amount
to more than $200 million total investment.
OPIC is kept well informed of investment developments by
OPIC staff at the Caspian Finance Center, who travel frequently
to Yerevan and report back on U.S. investment activity. We look
forward to increased privatization efforts, which will expand
the role that U.S. investors, and consequently OPIC, can play
in Armenia.
Mr. Callahan. Thank you.
Mrs. Lowey. I just want to thank you, Mr. Chairman. I just
want to say that I will submit a question, Mr. Grandmaison.
Mr. Callahan. For the record, all Members will have the 3-
days to submit, for the record, questions for our people here
today. And we would like your expeditious response when you
receive these.
Mrs. Lowey. I was particularly interested in your work in
the Middle East promoting economic cooperation, and I thank
you.
Mr. Callahan. She never gives up.
Mrs. Lowey. Thank you.
Mr. Callahan. They are like kids in a candy store. You can
get anything you want and then finally you have to call a stop
to it.
Chairman Lewis.
Mr. Lewis. Mr. Chairman, I certainly do appreciate Ms.
Lowey yielding me some time.
Gentlemen, you probably are not aware, but some years ago I
spent a good deal of time on this subcommittee. About the first
decade I was on the Appropriations Committee, I served on this
subcommittee and enjoyed it very much.
In those days, as we addressed Ex-Im Bank and programs that
are similar to yours there was great emphasis upon attempting
to shift the direction; less government-to-government activity,
more private sector activity, particularly activity that
involved encouraging small business in the United States to be
involved in foreign affairs matters.
I am not, frankly, from those days, nor in my past work on
other committees, used to quite this kind of love-in, and I was
very surprised to see my Chairman automatically kind of signing
off on it. And if I could get the Ranking Member's attention,
please.
Ms. Pelosi. Excuse me.
Budget Increases
Mr. Lewis. Both the Ranking Member and the Chairman both
surprised me, for I am used to subcommittees in which we are
reducing budgets, not increasing budgets. And just in a gross
level, I see TDA's budget at approximately a 20 percent
increase, and the Ex-Im Bank budget approximately a 25 percent
increase.
It is more difficult to calculate OPIC's circumstance, for
the request involves credit funding requests that are identical
between the 2 years and administrative expenses of $4 million
increase, and then there is a sub calculation of gross receipts
that show a profit. And why we need a budget when we show a
profit is confusing to me, but lest I be confused I will ask
you a question later.
First, could I get from both TDA.
Mr. Callahan. Mr. Chairman, let me respond to that to tell
you I did not mean to imply that what the President has
requested is automatic. I meant to imply that we are not going
up, but certainly this will be the will of the committee. I am
going to submit to this subcommittee my recommendations, and
all of it is subject to change. It is not a rubber stamp
approval of the President's request, except to inform them that
we are not going up so they cannot impress us in that regard,
above the President's request.
Mr. Lewis. I am sorry, Mr. Chairman, to have stimulated
that response because that was Mr. Wicker's question.
Ms. Pelosi. Will the Chairman yield on that?
Mr. Lewis. I am not sure I will yield any more time. You
have given it to Ms. Lowey, I am afraid.
Ms. Pelosi. I was just wondering about the Defense
Subcommittee cuts.
Mr. Callahan. Well, nevertheless----
Mr. Lewis. She will be supporting the Defense Subcommittee
reductions.
Mr. Wicker. Mr. Chairman, can I call for regular order?
Mr. Callahan. I will be supporting your suggested increases
over the President's request in your committee. I do not
anticipate I am going to ask you to increase the President's
request in this subcommittee.
Mr. Lewis. Well, I would suggest that if your Ranking
Member would support the Defense increases that would be very
helpful.
Ms. Pelosi. Let the record show that I have.
Mr. Lewis. I am sure she will use any savings to support
programs in Colombia that we are about.
Ms. Pelosi. I will support your bill.
Mr. Callahan. The gentleman from California.
Economical Benefits
Mr. Lewis. All right. Mr. Chairman, I would really be very
interested, as we look at that increase proposed, in you
describing for me how adjustments in your budget over the last
5 years have reflected directly upon increased benefits to the
United States that justify the adjustments. If we are going to
spend more money, how can we expect that to benefit our
economy?
Mr. Harmon. I will be glad to start.
Firstly, under the Federal Credit Reform Act of 1990, there
is a complicated method of determining how much of a reserve we
have to set up every time we make a loan or a guarantee of a
loan, and it has a direct bearing on our budget. Very few
people in the United States government really have the time to
follow the details of it, but I am going to take a crack at it
by saying as simply as I can that every time we make a loan or
a guarantee of a loan we have to put up a reserve. The amount
of the reserve is determined by the risk rating of that
country. So when we went through the crisis in Asia, following
it through to Russia and Brazil and Argentina, many of these
countries naturally had their risk rating go higher; that is,
there were greater risks to do business there. And the Office
of Management and Budget naturally came up with risk ratings by
the market itself, the Standard and Poors and Moody ratings in
the market which influenced the ratings they determined.
Unfortunately, there was a time lag. So the worst period of
the crisis was maybe in January of 1998, about 2 years ago.
Things really were beginning to pick up in 1999. There was a
recalibration done, which is required periodically by the OMB.
That recalibration made us, for next year, set up reserves
which will be much larger for the same transaction we could
have done last year. And the irony, or unfortunate aspect of
it, is by the time we do the business next year, the risks will
not be as great.
Now, in fairness to OMB, they are making an effort to be
more current in this recalibration effort so that it does not
happen with this kind of lag time. But I said basically that
what we are asking for in this almost 25 percent increase, in
budget to $963 million is the equivalent of $646 million in
this year's budget.
In other words, with our next year's budget that we are
asking for, we will not be able to do as much business as we
did this year if we do it in all the same countries. So it
really is unfortunate and complicated, and certainly the
newspapers cannot pick it up this way, but we are really not
going to be able to do as much business if we went in each
country as we did last year, because of this recalibration.
Then we know that starting next year they will begin work
on a new recalibration which will hit 2 years later or a year
later, and suddenly the sides could flip. So it is an unusually
complicated and difficult thing. In the private sector, We too
had a much quicker process what we called in the investment
banking world marking to the market daily or weekly what
happens in prices.
Technically, that is what we will get to in the United
States government, but I do not know when, 3 years, 5 years or
some time in the future. We are in this interim period, the
first 10 years of credit reform. So that is the unfortunate
thing.
To come back to your question of 5 years, our budget before
this budget was roughly flat for the last few years. We have
been trying to find ways to do more with less. We actually
announced--I did not have time to get into it--that we would
entertain proposals for submission by the private sector to
participate in some of our loans going forward in the future.
It is the first time that we have ever done that, and maybe the
first time anything like this has ever been done because we
went right on to the Web site with 1,500 pages about all the
details on Ex-Im Bank's securitizaiton plans. We expect to get
a proposal from the private sector institutions to see how much
they would be willing to participate.
I do not want to be optimistic because I have not seen the
results yet, but if we can get the private sector to
participate on some portion of our future loans, now we are
starting down the way of a private/public partnership with
which we could do more with less budget. That would be very
significant, in my judgment, for the future of Ex-Im Bank and
its future budget requests.
Mr. Lewis. When you were marketing to the market in the
private sector, I presume that as risk calculation increased in
a sector of your loan portfolio, that probably led to a
reduction in proposed loans or future year loans in that
increased risk category. Does it have the same affect upon the
loans you make in the world marketplace when there is an
increased calculation of risk?
Mr. Harmon. It did in the private sector, you are right. In
the public sector, as you or someone else said, we have to sort
of respond to the market and so technically we do not manage
our portfolio by where we want to be. In the private sector, we
might.
Question. Describe over the last five years how adjustments
in your budget have reflected directly upon increased benefits
to the United States?
Answer. Appropriations for program Budget Authority for the
Bank have averaged $704 million. this level has enabled the
Bank to authorize an average of $12.5 billion of loans,
guarantees and insurance each year, supporting an average of
about $15 billion of U.S. exports annually. This is an average
leverage ratio of over $20 in exports for every dollar of
program budget. For FY'2001, the Bank's program budget request
of $963 million is projected to support about $20 billion of
U.S. exports. The increase in program budget is necessary
primarily because of the fact that OMB determined risk premia,
which largely determine the amount of program budget necessary
for each transaction, have increased making FY'2001
transactions in higher risk markets more costly to the Bank
from a budget perspective than those same transactions would be
today.
As it turns out, our portfolio is pretty well balanced. No
one country represents much more than 10 percent. One country
is close to 10 percent. All the rest are less. I would worry if
one country got much higher. So for the moment we respond to
where exporters initiate a request to go and sell their
products into that market.
My final comment is, the size and importance of export
credit agencies globally has gone way beyond anything I
imagined when I took this post 3 years ago, or anything that
the private sector ever realized. The total amount of the G7
export credit agencies, in terms of funding the developing
world, now exceeds the World Bank and all the development banks
together.
The others have just moved way up. As we now move into a
possible boom period in the developing world, the French,
Germans, British, and Japanese are going to be very aggressive
in protecting their industries. So I predict we will see 5 and
10 years down the way now, much, much greater competition and a
much larger role for the export credit agencies; and,
therefore, we will be called upon to do more, not less. That is
my prediction.
I think next year we could have $20 billion of exports. In
7 years, the Ex-Im Bank has supported over $100 billion of
exports. It is a big jump over where we were. And most of it is
reacting to, what other export credit agencies do. If we do not
do it, not only will we lose the business, but also U.S. jobs.
Mr. Lewis. I was hoping that you would be able to tell me
that your activity is the direct reason for our expanding
export success in the world marketplace. I presume that your
response is not designed to suggest that.
Mr. Harmon. Well, we are responsive to the market.
Mr. Lewis. I mean, does the marketplace work or not? Are we
expanding our export marketplace because our industry and
products are excellent and compete in the marketplace or is it
because of Ex-Im's work?
Mr. Harmon. No, no, it is because of the market. I wish I
could tell you that we were brilliant enough to do that. We
have not had any impact.
We try to have exporters aware of our programs. The big
companies know about them and know how to work with them. The
small companies do not, unfortunately, which means it is our
task to get to them. But we are responding to the market. Our
products are competitive. But even with competitive products,
if a U.S. company can source out of Spain or Germany and get
financing from their export credit agencies and we do not give
it to them, which is happening all the time now or from time to
time, then they will just build the product in Europe. That is
what I see happening in the future.
Mr. Grandmaison. Congressman, if I might reply to your
question briefly from a TDA point of view. In some way, it ties
into the question, the point both the Chairman and Congressman
Knollenberg made. First of all, in terms of TDA, our core
program budget, in, real time dollars, has decreased 10 percent
between 1993 and the year 2000.
Now, the practical effect of that is that we are putting
more of our attention towards what are called transfer dollars,
and that is where money is provided to us under Freedom Support
or the SEED program or something of that nature. We are pleased
to work in that area.
But it is a mistake to believe those are the best market-
driven commercial areas. When you reach a point where companies
come to you and say that they are interested in Argentina, and
we are telling them, ``But we have money for Albania,'' there
is a problem. We cannot feed the primary market that we should
be servicing. That is where the strain is, to be quite honest
with you, and that is why we are asking for this additional
money. We believe we can invest it and maintain the sort of
numbers, a 37-to-1 return that, yes, I would respectfully
suggest serves the taxpayer very well.
Mr. Lewis. For the $4 million of adjustment in OPIC's
administrative expenses, it is suggested that that money will
be used for activities including financial, environmental and
worker rights activities.
Mr. Munoz. Yes, sir.
Environmental and Workers' Rights Activities
Mr. Lewis. Could you explain in some depth what
``environmental activities'' means and what ``workers' rights
activities'' means and how that relates to the responsibility
of OPIC?
Mr. Munoz. Yes, sir. This committee called for OPIC to
request that in its budget so we are responding to this
committee's request as contaned in the committee report of last
year. It requested that we make sure we have the resources for
two good reasons.
One, our clients would like to make sure that they abide by
congressional mandates that any project that we support not
harm the environment, and that is a congressional mandate.
Mr. Lewis. So you work at actually evaluating whether any
project you are involved in does not do----
Mr. Munoz. Does not do environmental damage.
Mr. Lewis. You must have a huge staff to be able to do that
kind of evaluation.
Mr. Munoz. No, we do not.
Mr. Lewis. How do you?
Mr. Munoz. We have about five people, I think, that do
that.
Mr. Lewis. Do you make the borrower pay for a lot of that?
Mr. Munoz. Yes, we do and they are willing to do it. In
fact, most----
Mr. Lewis. For awhile.
Mr. Munoz. Most of the businesses just want the transaction
to take place and they are more than willing and happy to
comply.
Mr. Lewis. Your response was that this committee mandated
it. That did not help me understand what the activities are.
Mr. Munoz. Okay. I will explain. The activities are when a
project is proposed, we want to make sure that that project
does not do environmental damage in a developing country--that
the U.S. Government not participate in promoting investment in
an environmentally harmful project.
To do that, they follow procedures that the World Bank and
all of our agencies basically require that they follow.
Our monitoring makes sure that those reports are filed. We
take a look at them. We confer with the investor who wants to
borrow money or have our insurance. If any project adjustments
are necessary to make sure that they meet World Bank
guidelines, then those adjustments are made and the project
goes forward. After the project goes forward, we want to make
sure that with any commitments that were made that there is
monitoring and follow-up. So this----
Mr. Lewis. And the same would apply to the worker rights
activity, I assume?
Mr. Munoz. The same thing with the worker rights, yes, sir.
Mr. Callahan. Mr. Lewis, if you would like further
elaboration on that, we will be happy to request within the
next week or so, they give you a more defined answer. I think
it deserves an answer. But we have instructed, primarily I
think at the insistence of Ms. Pelosi, the agencies to look in
this direction.
Mr. Lewis. It probably would be helpful, Mr. Chairman, to
have these agencies be more like the World Bank. I mean, they
have made such a great contribution over the years.
Mr. Callahan. Wait.
Ms. Pelosi. May I say something?
Mr. Callahan. Wait a minute.
Mr. Knollenberg. They are different.
Ms. Pelosi. Just 10 seconds?
Mr. Callahan. Okay, 10 seconds.
Ms. Pelosi. I think it would be useful for the gentleman to
know that years ago when I was on the Banking Committee, on the
International Banking Committee, there was something passed
called the Pelosi amendment to the International Banking Act,
which said that U.S. director--multilateral development bank
could not agree to any project unless there was an
environmental assessment made and that that assessment was made
public, both to the people in the country and internationally,
and this is the law. It was signed by President George Bush.
Mr. Lewis. Was it a law all by itself or was it just a
piece of a big package?
Ms. Pelosi. It was put on to the replenishment of IDA. It
was part of that legislation. It was called the International
Banking Environmental Protection Act but it went out on the
engine of the IDA replenishment.
Mr. Lewis. You wanted to take the environmental impact
studies and the positive effect it had upon our economy and
apply that to the world, right?
Ms. Pelosi. Assessments, yes, but at the time we were
burning--the size of the United Kingdom was burning in the
Amazon and they were building a highway through the Amazon at
the time and that helped in our getting the support and the
signature from the President as well.
Thank you.
Mr. Callahan. Before we recognize Ms. Kilpatrick, let me
clarify something, and, Jerry, very correctly brought it to my
attention that I was not real clear with respect to the rubber
stamping of the President's request. This is a long process, as
the three of you know and as the committee knows.
We do not have our allocation yet. We do not know what it
is going to be. As this process goes through, we do not know
what the subcommittee will do. We do not know what the full
House, the Senate or the Conference Committee will do, and then
we do not know what Jack Lew will demand when we finally get
into some reconciliation bill or some type of emergency bill
that throws them altogether.
So it is a long process. I meant to imply to you that your
three agencies, as far as I am concerned, have a good
reputation. I think you have done a good job. We are going to
try to facilitate your requests, but naturally within our
means.
Mrs. Kilpatrick.
Ms. Kilpatrick. Thank you, Mr. Chairman. It has been very
instructive this morning.
Good morning, gentlemen.
The three of you seem to be working pretty well together,
better collaboration than I have seen in the things that I have
read; and I want to commend you for that.
To Mr. Grandmaison and TDA, I want to thank you for the
work you are doing in Michigan and particularly in my district.
Next month TDA is sponsoring a conference in Michigan and you
will be there with some of your staff. I want to thank you, and
I intend to have many small businesses there. I commend you and
Mr. Munoz, as well, for really concentrating on small
businesses, because it is small business that fuels the
American economy, I want to thank you.
I want to invite my colleagues to a reception for TDA. One
of our Michigan companies, Black and Vetch, are hosting a
reception, and I am assisting them, next Tuesday, March 7, 5:30
for the new TDA deputy director, Ms. Barbara Bradford. You all
met earlier today. I invite you all to join us next Tuesday, at
5:30 here in Rayburn, Room 354, we look forward to being with
and to thank TDA for working with us in our community. You have
done a good job and we hope to expand that.
Mozambique
Mr. Harmon, in your Ex-Im presentation you mentioned
several things, but I noticed in your report you have a 48
million plus dollar exposure in Mozambique. As you know right
now, Mozambique, if it does not go into the ocean and we hope
that it will not, has severe problems.
What is that exposure? Are the other two agencies investing
in Mozambique and can we do anything to help with the crisis at
this time?
Mr. Harmon. I was in Mozambique last year and I was
impressed with the progress that Mozambique had made; and we
opened in Mozambique after being closed for 30 years. It was
something I was very proud to do.
Mozambique, as you know, is growing probably as fast as any
other country in the world, but at least more than all of sub-
Saharan Africa. So we opened up our programs there and we are
hopeful that we will be able to provide significant additional
support for exports to Mozambique.
Secondly, I met with the President of Mozambique when he
was in New York. He and I shared a podium together, and we
talked about it. Thirdly, I think he is even coming to
Washington soon, and if I am not mistaken we are scheduled to
see each other then.
Now, Ex-Im Bank's $48 million in exposure in Mozambique
dates back to the 70's and 80's. During this time, Ex-Im Bank
provided financing under our loan, guarantee, and medium-term
insurance programs. All exposure in Mozambique was sovereign
and supported such exports as diesel locomotives and sugar
plant equipment. Since March 19, 1987, Mozambique debt has been
rescheduled in six successive Paris Club reschedulings.
Ms. Kilpatrick. Six months prior?
The tragedy that is happening as we speak, are any of the
other two agencies involved in that country with projects,
business interests?
Mr. Grandmaison. Congresswoman, yes, we are, primarily in
the information technology sector in that the government had
indicated that that was their priority at that time.
Now, obviously this devastation is truly unbelievable.
Ms. Kilpatrick. It is.
Mr. Grandmaison. What we are becoming involved in is the
emergency preparedness area, and this is where the World Bank
and the other multinational development banks have turned the
corner and are now prepared to provide loans to countries in
anticipation or should a disaster occur.
The first effort along this line on our part was a
conference in Istanbul about 30 days after the earthquake, in
association with the American Council of Consulting Engineers,
where we actually brought close to 300 people together to talk
about code enforcement issues and that sort of thing.
Next month, we have our first big event Director James Lee
Witt of FEMA. This will be aimed at the Asian countries where
we have, 16 Asian countries with the, that people that should
be responsible in those countries coming together with experts
in the field, including U.S. providers of goods and services,
but not exclusively providers of goods and services because
there are a lot of policy decisions these countries have to
make.
Do we get involved in a situation like what is happening at
the moment? We do not. That is, as you know, AID.
Should we be working more closely with them, not to prevent
but to prepare should something like this happen? The answer
is, we should, and we are just beginning to.
Ms. Kilpatrick. I would like to assist and work with you on
that.
Mr. Grandmaison. Wonderful.
Ms. Kilpatrick. Mr. Munoz, is there any exposure for OPIC?
Mr. Munoz. We have no current exposure, although we do have
our activities in sub-Saharan Africa with our investment funds.
There is an economic development corridor in the country, the
Maputo corridor, that we are exploring.
Ms. Kilpatrick. You mentioned the fund, which is where I
was going next, with Mr. Sloan and his enterprise.
Mr. Munoz. Yes.
Ms. Kilpatrick. I understand it has been capitalized at
$350 million?
Mr. Munoz. Yes.
Ms. Kilpatrick. What is the status? What is happening?
Mr. Munoz. Well, once that was launched by OPIC and we made
our commitment, the private sector then would have to do its
part by raising the matching part that the fund requires.
Ms. Kilpatrick. I understand he is in that process?
Mr. Munoz. Yes, he is in that process.
Ms. Kilpatrick. How far along?
Mr. Munoz. We actually expect that to be done by June. So
by this summer, because offices are already established by the
fund manager, we expect that fund to be off and running.
Ms. Kilpatrick. I will submit some things in writing but I
would like a written up-to-date on that as it is progressing.
Mr. Munoz. I would be happy to provide that.
Ms. Kilpatrick. I kind of want to go back to what Chairman
Lewis said earlier. We sit on this committee, and it is always
difficult to get this budget out. We have two or three bites at
the apple most times. Because some of the domestic things that
go wanting, many of our colleagues feel that we ought to spend
our dollars here and not in the foreign market. We know, as
astute people on this committee under our Chairman and Ranking
Member's leadership, that we live in a global world and we have
to pay attention to that. That is why we support many of your
projects.
I too, as Chairman Lewis was mentioning, would like to see
the coalition. I think I heard Mr. Harmon say the market is the
reason why things are excelling and not necessarily your
agencies, though you play a role in that.
Mr. Harmon. Yes.
Ms. Kilpatrick. That is probably not tangible enough. We
probably can get 218 but never 300 votes for what we do here.
We want to work with you, certainly this Congressperson does,
to make sure that you are effective, not only in sub-Saharan
Africa but around the world.
The partnerships that you build really help to stimulate
the businesses that we represent, so we always want to be able
to recommend businesses to you and to bring businesses to you
that we feel will help the global world to meet some of that
demand.
Thank you, Mr. Chairman. I will put mine in writing, if I
can.
Mr. Callahan. Thank you very much. You are welcome to.
Mr. Wicker.
Mr. Wicker. Thank you very much.
Colombia
Mr. Munoz, let me start off by asking you to comment about
Colombia. You were there last month. In your written testimony,
you speak about the significant development and employment
benefits already taking place.
Now, as you are aware we had a hearing earlier this week in
which General McCaffrey presented the administration's very
extensive plan for eventually spending $1.6 billion on the drug
war in Colombia. It involves the United States paying for
Colombian troops even to be involved in that drug war.
On the one hand, I heard General McCaffrey say sort of what
you said, that things were going pretty well in the economy
down there and then on the other hand I heard him say that
things were in such turmoil and crisis that we needed to invest
this huge sum of American dollars to keep the country from
collapsing.
So I would like to just invite your comment about that and
tell us what your assessment is of the prospects for success in
Colombia.
Mr. Munoz. Colombia, as you know, is a very important
country in the region of Latin America in which it sits. In
fact, it has been able to manage its economy very well, this
decade, until this problem of insecurity has surfaced to the
level that it has.
Prior to this current crisis that Colombia is going
through, it actually showed very good economic management and
we, in OPIC, I know all of our agencies, our activities with
Colombia, have been fairly good. The U.S. investment and trade
community, likes Colombia for those reasons. But the insecurity
coming from the guerilla warfare and from the drug lords is
threatening the economy. This last year Colombia saw the worst
dip in its economy in decades. And even though there is a
slight chance of a rebound, I think the Administration, Members
of Congress, have expressed concern that if the drug war and
guerilla warfare that is being, in part, fed by the drug war
gets out of hand, it could in fact do harm to the country that
will then spread to the region and cause instability.
I can just say that OPIC is not part of the package that
you addressed yesterday, but we are part of the program. That
is, that we are part of the Administration's efforts to help
bring U.S. private sector investments in the regions of
Colombia that are safe. The major cities are still safe for
investments and there are still going to be some investments
that need to take place. We have nearly a billion dollars of
projects in our portfolio of insurance and financing, and that
is going fairly well. We have in our pipeline an approximate
billion dollars of potential investment, and part of that is
holding back to see whether or not stability comes forward.
All I can say is I think that given that Colombia provides
more than three-quarters of the cocaine and heroin that comes
into the United States, this is clearly a problem that I am
glad that Congress is addressing.
Our little agency is part of the program. We are not part
of the supplemental budget package.
Mr. Wicker. Well, I hope we are prepared to face it in the
correct manner. What I think I hear you saying is that at least
from your standpoint there is no need to hold off on the
billion dollar expenditure that you are planning--or the
billion dollar exposure that you are currently making in
Colombia, and that there is no reason for us to think that the
economy is in such a turmoil or that the country is in such a
shambles that we are likely to risk losing our neighbor down
there.
Mr. Munoz. Actually, I said that insecurity is rising to
the level that it has given pause to the investors, according
to what we hear from clients. I was in Colombia speaking to the
American companies and they are actually worried about their
security. There are parts of the major cities right now where
there seems to be some security, but if this violence gets out
of hand I think it is just a question of it encroaching on the
rest of the economy. But if I am not mistaken, part of the plan
that came to Congress is really not just for the benefit of the
Colombians. It is really for the benefit of the United States.
It is in our own interests that we try to curtail the drugs
that come from Colombia to the United States.
Mr. Wicker. And I appreciate that.
Corruption
Let me shift then quickly, Mr. Munoz, to the issue of
corruption, and I will direct this question to any of the three
of you. Last year, Mr. Munoz, in your testimony for the record
you indicated OPIC's diligence to implement procedures which
detect corruption before supporting a project. This included
getting customers to certify that they have not been or are not
involved in corrupt practices. I wonder how effective you feel
that particular program is.
Then, Mr. Harmon, in your testimony, particularly with
regard to Russia, you say we are also aware of the possibility
of corruption in our dealings with Russia. However, you say
that you believe that Russia is more creditworthy today than it
has been in many years. I would just like for any of you to
comment on the problem that we have internationally with
corruption. It is not a fact that corruption among our trading
partners and would-be trading partners globally is one of our
most significant problems? How are we doing as compared to
previous years?
Mr. Munoz. Let me agree with you that corruption is a very
significant obstacle to trade and investment globally and it
has been estimated that it actually keeps the global economy
from growing. Corruption is an attack on commerce. What I can
say is that from OPIC's perspective, and I am sure my
colleagues will agree, we address it transaction by
transaction.
When we are working on transactions, representations are
made and we rely on them so that it does not have corruption in
it. It does not mean that the country or other parts of the
country may or may not be experiencing corruption. But I have
to say, we have a very rigorous rule that applies. When someone
is asking for money for financing, we want to make sure that
every dollar that is being loaned by OPIC on a project finance
actually gets used the way it was intended to be used, and
there are auditing procedures, there are monitoring procedures
and in fact we can very confidently say that is how the funds
are used.
That is not to say that that country in which the project
is in may not suffer from corruption and there may be other
corruption elsewhere, but we are very rigorous with the
projects that get financed or insured by OPIC and we are pretty
confident with the representations that are made. If there are
any indications of a problem, we follow up aggressively. But I
have to say the American companies involved with OPIC, are very
reputable companies.
Mr. Harmon. For our part, first it is important to keep in
mind that no money ever leaves the United States. So we enjoy
probably the most inviable position. Equipment leaves the
United States, not dollars. So equipment goes. Dollars go to
the U.S. exporter. So we do not have quite the problem of the
flow of funds going out. First point.
Russia
Second point, the comment about Russia, I believe, is true.
It is interesting to note, but not generally known that the
Russians have serviced their debt to Ex-Im Bank and the United
States slightly, if not somewhat better than the rest of the
world Ex-Im Bank has a little more than a 1 percent loss
experience on our one billion six dollars in Russian final
commitments, which is not that great. Our average is slightly
better than 2 percent in the last 20 years.
In any case, Russia has been quite creditworthy with Ex-Im
Bank.
The third point, I have found over my lifetime is where
things look the darkest and we are the most frightened was
usually near the bottom. Conversely, when things were so
brilliant everyone was investing. This is the case with the
Internet where everyone is going to make their next fortune.
That is usually the time to be somewhat cautious.
There is so much down perception of the problems in Russia
that I suspect, and I am pretty confident, that it is not quite
that bad. Russia's economy has improved; and they have a better
handle on their inflation. With any reasonable leadership,
Russia will recover so it is probably a good moment to support
U.S. exports to Russia if we can find a creditworthy
transaction.
Having said that, we have not done anything for over a year
except one transaction last month, which was just an amendment
to a transaction that was approved before the moratorium in the
summer of 1998. But I was predicting in my statement that
probably we will be doing things because it is creditworthy
there today.
Mr. Grandmaison. Congressman, our problem is a little bit
different. We provide a grant to a foreign entity, public or
private. They then hire an American company to do the grant, to
provide the technical assistance. They then sign off and we pay
the American company directly.
In a country where we understand U.S. companies are not
being treated fairly, on a level playing field, where we
believe there is a ball game that is involved behind the scenes
or whatever, quite candidly we just do not invest there.
We follow the guidance of the State Department, the
ambassador there, or the commercial officer who suggests that
it is not a prudent investment because at a point in time there
will be a side bar transaction that takes place. So we just
stay out of that country and invest where we have more
confidence that through our involvement we can generate the
U.S. exports.
Mr. Wicker. Thank you.
Mr. Callahan. Following up on Congressman Wicker's concerns
about corruption in the former Soviet Union especially, there
may not be--it might not be immediately perceived as
corruption, but in a sense it is corruption. It could be
tolerated corruption. Case in point, was one American
businessman, probably not insured, George, by you or involving
any of your agencies, put a deposit in a bank because he had
opened a new business in the Ukraine, only to be informed a
week later that the local officials in the Ukraine had
established suddenly an 80 percent deposit tax. So his $100,000
deposit into the bank suddenly was $20,000.
You know, that is corruption and yet it is not labeled
corruption because under that system it is permissible.
I do not want to put any of you guys under the necessary
burden of paperwork, but I think it would be interesting if you
could inform us, in writing, not necessarily now, of say the 5
countries that concern you with respect to your investments. If
someone came to you, Jim, and said I have an investment in X
country that I want a loan from you to handle, or you for
insurance, or you for TDA activities, what five most countries
give you the greatest concern and why?
Secondly, if you could give me especially, Jim, you and
George, an indication of the dollarization plan in Ecuador and
what you think is going to take place and what will happen in
Ecuador if the dollarization plan is not adopted by the
Congress or is actually vetoed by the Congress in Ecuador, some
comment on that.
But first let me thank Mrs. Pelosi for her patience and let
her now----
[The information follows:]
Mr. Harmon. Mr. Chairman, we have experienced what might be
termed ``croneyism'' in some countries in Asia, such as the
Philippines and Indonesia, and perhaps Thailand. This has been
a problem for us. Now, in my conversations with other export
credit agencies. I have learned that they have had problems in
Russia and some of the countries of the former Soviet Union.
So, the experiences can vary.
I would also emphasize that these situations can change for
the better. We are very hopeful that the new government in
Indonesia will work for improvements. Over the long term, I am
optimistic about these markets.
Mr. Munoz. The countries where OPIC programs are currently
available include several, (e.g., Argentina, Indonesia, Russia,
Nigeria, Turkey and India), where corruption has been noted as
an issue affecting foreign investors.
OPIC has long been attentive to this issue worldwide.
Indeed, in 1978, immediately after passage of the Foreign
Corrupt Practices Act, amendments were made to OPIC's
legislation that imposed additional penalties for engaging in
corrupt practices in connection with OPIC-supported projects.
Currently, applications for OPIC support, OPIC's
underwriting process, and the contracts under which support is
provided address the issue, and compliance with applicable
corrupt practices laws is required. The consequences of
misstatements in applications and breach of contract terms are
severe. OPIC could terminate its support for a project, and the
investor could be prosecuted.
Moreover, if a project that OPIC supported were tainted by
corruption, OPIC would have remedies that should protect OPIC's
financial interests and reputation while insulating U.S.
taxpayers against losses due to corrupt acts. These remedies
include declaration of default under finance agreements,
termination of insurance contracts, and denial of compensation
otherwise payable under insurance contracts. Finally, investors
who have been convicted of a FCPA violation relating to an
OPIC-supported project may be declared ineligible for any OPIC
support for a period of up to five years under regulations
enacted in 1978.
Mr. Grandmaison. Regarding the countries that give us the
most ``heartburn,'' it is difficult for us to come up with a
list as different countries offer different challenges. As I
noted in my testimony, we make decisions about which projects
to avoid on a project-by-project basis, usually with input from
the foreign commercial service or embassy personnel in the
field. It is possible that we could have perfectly good
dealings with a foreign government on one project, whereas we
might suspect unfair practices with regard to another project
in the same country. As a matter of practice, when we become
suspicious, given the demands on or resources, we invest
elsewhere. Therefore, we believe it is in our best interest to
be as thorough as possible in considering each project
individually, rather than making blanket condemnations of
particular countries.
Furthermore, as I also mentioned during the hearing,
payment to TDA grants goes directly to the U.S. company
selected by the foreign project sponsor. Therefore, we have no
real concerns about corruption involving our actual grants.
Response to Congressman Sonny Callahan
Question. What is the dollarization plan for Ecuador? What
do you think is going to take place? What will happen if the
dollarization plan is not adopted by the Congress or is
actually vetoed by the Congress?
Answer. As you know, the Ecuadorean Congress passed the
necessary legislation in support of the Government of Ecuador's
dollarization program. We are following with interest these
developments. Dollarization alone, however, will not solve
Ecuador's economic problems. Undertaking the necessary
structural adjustments to make dollarization ``work'' is needed
for there to be a restoration of confidence, reversal of
capital flight, and economic growth.
Ex-Im Bank is encouraged that the move to dollarize seems
to be allowing the Ecuadorean government to make some progress
on structural reforms to reduce the fiscal deficit, strengthen
the financial sector, and privatize more companies. The
question now becomes: what happens if the attempt to dollarize
fails, for political, technical, legal, or economic reasons?
The obvious response is that Ecuador runs the risk of another
bout of devaluation and high inflation, which would delay its
recovery. Confidence in the new Government of Ecuador would
erode and there would be another setback to developing a
coherent medium-term economic policy. We are pleased to see
authorities trying to implement the types of economic policies
that will attract foreign capital and put the economy on a path
of sustained economic growth, but we recognize they have a
difficult task.
Ms. Pelosi. Now, go ahead.
Ecuador
Mr. Callahan. If you want to briefly respond to those, you
could do it in writing or briefly you can tell me now. The five
country question--you can tell me that. But the dollarization
just generally what happens in Ecuador if the dollarization
plan is not--my understanding is that the President has
submitted it to the Congress and the Congress has 30 days to
change it, or else the President's plan, as presented to the
Congress, becomes law. So sort of a reverse veto here. But what
about Ecuador?
Mr. Munoz. The administration has not taken a position in
favor or against, but when I visited Ecuador a couple of weeks
ago, clearly Ecuador has gotten into a financial crisis that is
spilling over into a political and social crisis.
The dollarization plan is a very bold move by the country
that it is doing unilaterally. The U.S. government is not
involved in that, but everybody has made it clear that it must
be accompanied by other modern reforms in the economy in order
to make the dollarization work. That is, they need reserves
which open up for privatization and the like.
That is what Congress in Ecuador is having problems with,
and it is possible that they will adopt the dollarization
without adopting all the other necessary reforms, in which case
then I do not think it is meaningful. The investors I have
spoken to basically said even if Ecuador's Congress were to
pass dollarization, it is not going to give investors the
confidence right away unless the other reforms are passed.
The other concern is that dollarization, if in fact were
fully implemented, will keep the poor of the poorest, who do
not have enough sucres to put together for a one dollar bill,
let's say, and so if there is a combination of dollarization
plus still authority to produce sucres, local currency, it may
end up not really being a successful effort.
Nonetheless, having said that, Ecuador is a very strategic
country in the same region we talked about next to Colombia,
and it is a country that we have to care a lot about and we
just hope that they do take all the reforms that are necessary.
Mr. Harmon. We decided to put Ecuador on administrative
hold and watch it closely and not do any business there, except
if something came in on a special basis. So we have been
following it. My own experience is dollarization done during a
crisis does not work. It usually has to be done on some kind of
long-term planning basis, but I do not want to step on
Treasury's toes, because they have done a lot more work in this
area than I have. But I am a little bit skeptical on that.
Concerning corruption, you will be interested to know that
in Davos last year, they asked 100 people in a room to give the
two or three countries where they thought the greatest
corruption existed. Russia hit the top of the list with eighty-
eight percent of the people. Indonesia was number two, and then
a number of other NIS countries and a few African countries
followed in roughly that order. It would be interesting to see
that test taken today. But we will be glad to respond to you
with the five that we have and our risk in those countries.
Mr. Callahan. Ms. Pelosi.
China
Ms. Pelosi. Interesting, because a million people gathered
in Tianamen Square. Some of it was about human rights but a lot
of it was about corruption in the Chinese Government. You did
not mention them as one of the countries that people saw as
corrupt or risk taking. In any event, I will move on to my
questions.
First, I also want to associate myself with the remarks of
the Chairman earlier in praising the three of you for your
work. I do indeed think you will leave your agencies in good
shape to go forward into the future. You all have done an
excellent job, have been leaders, have great knowledge clearly
of your brief, and I commend you for all of that.
Earlier, Mr. Harmon used the word leap frog, which is music
to my ears because I hope that is what we all would be doing,
and I am sorry that the circumstances are such that you would
not have made the budget request that you think really would
have been appropriate to match the opportunities that could be
there, especially those provided by the Internet in terms of
the increased distribution for your services; that the interest
in your services being much better known to so many more
businesses.
Coming from San Francisco, where we breathe the air and the
water we drink, the entrepreneurial spirit and these
information technology companies abound, we see that we are
going to have to make adjustments in Washington, D.C. if we are
really going to exploit the opportunities we have for U.S.
business abroad. So I was glad to hear, Mr. Grandmaison, what
you said about information technology at least in Mozambique,
and I would hope that the Southern Hemisphere, particularly
Africa, in terms of high tech, which, Mr. Harmon, said earlier
was one of your opportunities and focus; that there would be
collaboration plus the opportunities that Africa presents, that
they could leap frog over opportunities they have not had in
infrastructure and technology into the information technology
age. And we have to, at some point, be thinking differently
about what these three agencies can do, and I think, it is a
good investment to promote U.S. products abroad but also to
lift the developing world, particularly in Africa.
You look at the map of the wired world, the Northern
Hemisphere, Asia, Europe, the U.S., abound. If you look south,
something going on in Latin America; almost nothing in Africa.
You, I think are the linchpins that could make something
really happen if we had a decision. I hope your fund, Mr.
Munoz, will do some of that.
Speaking in terms of environment, I appreciate your
comments of disappointment of the statement last week, but not
because of your enthusiasm and leadership, and I commend you
for that, Mr. Harmon. I think that in addition to U.S.
leadership and Members of Congress to members of parliament, et
cetera, we cannot do all the heavy lifting. There has to be
mobilization or will in these countries, on the part of their
own electorates, to lobby their own members of parliament to
make this a priority. The more the public in those countries
are aware of the obstacles that they are presenting I think the
better the issue will be served.
Thank you very much for your considerable leadership in
that area.
Again, this being our last visit, as far as we can tell
anyway, with these three gentlemen, I think that the
administration has been very, very well served and the country
therefore by their leadership. Part of their legacy will be
this spirit of leapfrogging in addition to the fine work that
they have done with the opportunities that they have had.
In that spirit, I just wanted to ask three specific
questions, if I may, Mr. Chairman.
First to Mr. Munoz, last year Congress provided OPIC with
the authority to initiate a new maritime fund. My understanding
is that OPIC is awaiting responses from the private sector and
will be selecting the best proposal sometime this spring.
Will you carefully explain to the committee how these
proposals will be evaluated and what criteria will be used for
the final selection?
Mr. Munoz. Thank you. We have now called publicly for
proposals for the maritime fund. We expect them to be in by the
end of April. We have made it very clear, based on the
Committee's direction, which we very much support and welcome,
that it be a very transparent process. We have a select
internal career-based committee that will be reviewing all the
proposals. We already have the guidelines ahead of time.
Everybody knows exactly what the scorecard is going to be and
how they are going to be graded. Then it will basically be a
question of grading the best responses, who gives us the best
most prudent approach to the fund.
It basically has a whole new transparent merit-based
selection process.
Ms. Pelosi. Thank you, Mr. Munoz.
I am always interested, Mr. Grandmaison, in the
collaboration and cooperation among some of the agencies that
we fund. TDA is attempting, I understand, to expand its roll at
the multilateral development banks to help U.S. companies get
more business. Both Japan and Germany have been aggressive in
using this mechanism to benefit their private sector. Could you
explain briefly what TDA is doing to expand its role and with
which banks specifically?
Mr. Grandmaison. Well, actually, Mrs. Pelosi, we have
investments at what we call Evergreen funds, at all of the
MDBs, with the exception of the African Development Bank, and
that has to do with some process questions. I take that back.
The African Development Bank and the Asian Development Bank. So
we are at the World Bank, the IFC, as a separate unit, the
EBRD, the Inter-American Development Bank.
What we are able to do is take advantage of the fact that
through their process at the bank, a project manager gets
approval of what is called a sector loan. That is a commitment
by the host country for, we will say, $300 million. Projects
then have to be developed to pull from that sector loan, and
that is where we come in.
We work with the host country and the project manager at
the bank by providing them technical assistance to design those
projects, specifically the technical requirements of the
projects. By doing so, what you are in essence doing is you are
at the very least making certain that the technical
specifications fit our international standards, so that our
companies can compete, and in the best of circumstances are
flavored to be helpful to U.S. companies.
We also then require the person who is providing the
technical assistance, in developing the package, to
voluntarily, quote/unquote, come to TDA to meet with American
businesses and brief them as to how they should go about making
use of the project and the funding that is now in place.
So we try to close the whole loop on it. We work with all
of them. We happen to work most effectively with the EBRD.
In the case of the Asian Development Bank, quite candidly
they have so much Japanese money that we have not been able to
figure a way to go in and use our money strategically in what
we consider to be a productive fashion.
They want anything that we provide to be untied. We do not
see that as the way that we should be doing business.
Ms. Pelosi. What about the African Development Bank; what
is the problem?
Mr. Grandmaison. Well, it is interesting because one of the
things we are revisiting is the reestablishment of a fund at
the African Development Bank. For the longest period of time,
we had a fund there. We considered it to be inoperative. We are
not able to process-wise do business with them.
We have a new regional director for Africa who comes aboard
the middle of this month, with 20 years of experience in the
private sector. We are very excited about his joining us. His
name is Henry Steingass.
One of the first things that he will be doing is to
reevaluate that, because we would like to have one there as
long as we understand the fund would function in a way that is
consistent with what we consider to be the responsibilities
that we have.
Ms. Pelosi. I would like to be kept up to date on both of
those, if I may.
Mr. Grandmaison. Right.
Ms. Pelosi. Thank you very much, Mr. Grandmaison.
Mr. Harmon, I wanted to ask you a question. The State
Department recently used its authority to halt Ex-Im board
action on a Russian oil deal involving American and Russian
investors.
Can you explain why State took that action and what is Ex-
Im's position is and what you expect will happen next? Again,
in the interest of collaboration among our various agencies
which we fund.
Mr. Harmon. I almost escaped without that question,
although I get that question all over the country. In the most
remarkable cities, people ask me that question and, of course,
as I said in my testimony, it does concern me somewhat, the
implications.
This is a case involving a Russian oil company called
Tyumen Oil. That is how it has become known. It is a case which
came to this board at Ex-Im for the second time last June and
was passed by the board and submitted to Congress, and came
back from Congress. At that point, we heard there were some
problems about it, we studied it very extensively, probably
more extensively than any case I have ever studied maybe my
entire business life.
We visited Russia to do that. There also were mutual visits
with Ex-Im Bank staff going to Russia and Tyumen oil personnel
coming to the U.S.
We concluded that the transaction was creditworthy or we
would not have brought it to the board and sent it to Congress.
But, as you may know, under the Chafee amendment, which exists
in our charter, the Secretary of State or the President has the
right, within the category of national interest, to ask us to
defer a transaction. We sometimes call it a veto over the
transaction. State did exercise their right of veto the day of
the board meeting. As we have always done at Ex-Im, we have
honored the request by the Secretary and that transaction has
now been deferred pending any potential action to be taken by
the State Department some time in the future. This transaction
supports about $500 million in exports from two major exporters
and is waiting for a decision by State Department.
Ms. Pelosi. Well, again, gentlemen, I certainly have more
questions and I will submit them for the record, but I want to
again thank you.
Mr. Harmon, I want to particularly thank you. As we talk
about small and medium-sized businesses, women- and minority-
owned businesses, I want to thank you all for your emphasis on
that. I invite you all always to our area to meet with our
people there. Our area was built on trade. I want to
particularly thank Mr. Harmon because he on more than one
occasion has made himself available to our NGOs and grass-roots
people and representatives of women- and minority-owned
businesses to make them aware of what Ex-Im is doing and it is
probably the most conducive to those groups.
Thank you all for what you are doing in this area and for
your service to our country. Once again, thank you. Thank you,
Mr. Chairman.
Mr. Callahan. Thank you. Mr. Knollenberg, and also, Joe,
would you preside just for a second? After you have your
questions, Mr. Jackson is here and he is next.
Mr. Knollenberg. All right.
Mr. Callahan. I will be right back.
Yerevan
Mr. Knollenberg [presiding]. Thank you, Mr. Chairman.
Very briefly, I wanted to commend, again, the panel and,
Mr. Munoz, I wanted to congratulate or thank you for the way
that you worked with us on the matter of Yerevan by keeping us
in touch with the progress of things. I know that U.S. jobs
obviously will increase by virtue of this. That is the aim at
least, and I think that is proper. Increased U.S. exports are
also bound to be a result of this. So we look forward to that
project in Yerevan, the hotel that you were instrumental in
moving along to a successful end. It is not finished but
certainly we are in a position to make it grow into something
successful due to your leadership.
Very quickly, on the Ex-Im side, Mr. Harmon, I know that
what you do works and the activities, for example, that affect
the companies in Michigan and in my district I think have been
substantial. One number that comes to mind is--this is since
1995, activities within Michigan that result from your agency
have resulted in some $91 million or almost $91 million in
exports from my district but some $561 million from Michigan
alone. Can you tell me how that translates into employees or
jobs, if you will? Is there a number that could be expressed?
It would be a division obviously of that total number of sales.
If not, we can do it for the record. I would just like to
have that information for my own use.
Mr. Harmon. Right. We will give you such a number. The
Commerce Department uses a number and we tend to follow that
number. We supported about $100 billion of exports in 7 years
and using a conservative number we would have supported a
million jobs in the U.S. paying $100,000. If you translate that
down, the number used is lower than Commerce Department's
number. That is a conservative way of estimating jobs. The
Commerce Department would have a higher number.
So you would have to now interpolate down from a billion--
it is about 1 percent so that would be about $90 million of
business, was that the number you had?
Mr. Knollenberg. That is the number I had.
Mr. Harmon. On $90 million of business, it would be about
20 percent or about 1,200 jobs.
That was done very quickly. I might have made a mistake,
but I think that is about right.
Mr. Knollenberg. I guess the thing is if we did not have
Ex-Im, it would be certainly a lower number.
Mr. Harmon. Yes.
Mr. Knollenberg. That is what I would be interested in. If
you can supply that.
Mr. Harmon. I will do that.
[The information follows:]
Response to Congressman Joseph P. Knollenberg's Question
Question. How many U.S. jobs does the $91 million in
exports supported in my District in Michigan represent?
Answer. The $91 million of exports supported 1,250 jobs.
Mr. Knollenberg. In writing would be fine, too.
The other thing I would mention is that on April the 18th,
my colleague, Ms. Kilpatrick, who just left and I are
sponsoring a symposium, a TDA symposium in Detroit, that I am
sure you are aware of. The purpose of this symposium is to show
small business how they can work or benefit, rather, from your
agency. I think we are very fortunate that Detroit was chosen
for that.
With that, I am going to conclude my questions and I will
recognize the gentleman from Illinois, Mr. Jackson.
Mr. Jackson. I thank the chairman.
Let me begin by thanking Mr. Grandmaison and Chairman
Harmon and Mr. Munoz for being before our committee today.
I also want to associate my substantive questions on policy
with the gentlelady from California, our Ranking Member, Ms.
Pelosi.
Administrative Requests
I think this applies to all three of you. This committee is
notorious for cutting monies to your general operating and
mission-fulfilling responsibilities. If you could each take a
few minutes just to express to us the importance of your
administrative requests this cycle so that, for the record,
when we begin these negotiations we might be able to refer to
the vital aspects of your administrative requests.
Last year I did not focus on this in my testimony or in my
inquiry, and the end result is I did not have the information
for the record to show, from your perspective, how important
these requests are.
Why don't we begin with Mr. Munoz.
Mr. Munoz. Thank you, Congressman. We have a modest request
of approximately $4 million over our current $35 million base.
Most of it, sir, is going to make sure that we monitor and
follow up on all of the portfolio exposure that we have. We are
proud to say we still have annual net income. We have not had
any negative net income in any of the years that we have
operated in terms of after you take into account all the
revenues that come in and subtract all the expenses and all the
exposure that we have, we still are on the plus side. In order
to continue doing that and in order to be responsive to the new
requests that we are getting, we have to make sure that we are
staffed up. Our request reflects that.
I also want to say that as we focus on small business,
small business usually requires more time and attention. It is
just the nature of small business--and that means more
resources.
We are using a balanced approach for our $4 million
increase, primarily in technology and other areas including the
environment and worker rights, which we spoke about earlier
that this committee had requested that we do, and the remainder
is to make sure that we are responding to all the requests that
we can.
Mr. Jackson. Thank you, Mr. Munoz.
Mr. Harmon.
Mr. Harmon. We are requesting an increase of $8 million,
from $55 million to $63 million. Of that amount, about $3.6
million, or almost half, is pay increases, almost all mandated
by law; $1.7 million additionally is towards Bank technology.
Again, that is the technology we need to reach all the small
businesses and others. So it is a very important part of our
budget. I did not focus enough on this 3 years ago and now I
see how important it is for us to do our job now. We need to
have these funds available to upgrade our own technology so
that we can reach out to all the businesses.
Mr. Jackson. Mr. Grandmaison.
Mr. Grandmaison. Congressman, we are not displeased at all
with the support on our administrative budget. We tried to be
very honest with you at the end of each fiscal year to have
enough money left over in our administrative budget to push it
into our program budget because that is where we are actually
able to create the jobs by investing in our basic product in
the countries in which we work. But we have suffered from the
same thing. The fact is that it is more costly to do business.
There are the mandatory cost of living increases, which we
obviously support for other reasons. But we are just concerned
about that core budget.
We try to run as lean an agency as is possible. We do not
want to be a big agency, to be very candid with you. We think
that there is a direct relationship between one's ability to be
responsive to one's client, whether the client is the U.S.
business or a foreign entity, and an ability to reach into an
agency quickly. So we would like to stay as small as we are, to
be very honest with you, and do not see ourselves building much
beyond.
We use the services of other agencies. Without, as an
example, the Department of Commerce's senior commercial
service, we would be out of business. They are our eyes and
ears. We do not want to duplicate that. That would be a foolish
investment in terms of taxpayer dollars.
So we would like to stay exactly where we are and grow in a
thoughtful, prudent fashion. The immediate concern really is
the program budget.
Mr. Jackson. Thank you, Mr. Grandmaison.
Thank you, Mr. Knollenberg.
Mr. Knollenberg. Well, we are awaiting the return of the
Chairman. So I am going to yield time, if she would like to
utilize it, to Ms. Pelosi, the Ranking Member.
Ms. Pelosi. Thank you very much. That would be great. Thank
you very much, Mr. Knollenberg. If you have further questions,
though, please.
Mr. Knollenberg. Go right ahead.
Colombia
Ms. Pelosi. I am going to submit questions for the record,
and they talk about a variety of issues. But one, since we have
a moment, that I thought I would ask Mr. Harmon, deals with
Colombia since that is going to be part of our supplemental
that we are scheduled to mark up next week.
Colombia is scheduled to purchase 17 Black Hawk helicopters
for its Armed Forces. This is independent of our aid package.
This is their own purchase. A portion of which is Ex-Im funded.
Can you explain what authorities were invoked to justify this
sale of military equipment using Ex-Im resources? Can you tell
us what your current policy is with respect to using Ex-Im
financing of military or dual use equipment worldwide?
Then following up to that, while I was in Colombia with the
Chairman last week, we were informed that in order to use the
Ex-Im financing for these Black Hawks, Colombia will have to
seek a waiver of its international debt ceiling from the IMF.
Are you aware of this? Is the administration helping Colombia
seek this waiver? Do you think such a waiver is wise given the
current cuts being made to Colombia's social programs because
of the IMF's imposed ceilings? And by the way, the lack of
those social programs exacerbating the situation in Colombia
all along the way?
I invite your comment. If you want to submit that for the
record I would be happy to take it that way as well.
Mr. Harmon. I will submit that for the record, for one
reason. I am not sure if I know the answer to the last part on
the IMF request, but I would say that as Members of the
Committee you may be aware we are prohibited from providing
funding for defense-related items. However, there are certain
exceptions under Ex-Im Bank's charter such as dual-use,
humanitarian and drug-interdiction. In the case of a national
interest exemption under the drug-interdiction exception, the
procedure is that the country or the buyer goes through the
State Department, the State Department then provides a national
interest determination to Congress. It normally does not come
back to us until it has run that full route, which is what
happened with the Colombia Blackhawk helicopters case.
We have, to date, approved five helicopters which did
follow that route. We have not received a preliminary
application for others; however, State Department is processing
the request for a presidential determination, which would allow
the Bank to provide financing under the exception.
Ms. Pelosi. I see. Okay.
China
Mr. Munoz, can you bring us up to date on the status of
OPIC funds for China?
Thank you, Mr. Harmon.
Mr. Munoz. I would be happy to.
I first want to go back to the question my friend and
Congressman from Illinois, Mr. Jackson, asked about our budget.
I do have to say, and we are very happy that the reason why we
were able to perform as positively and as aggressively as we
did in 1999 was that this Committee did give us our full
funding request and we are very appreciative. Every indication
that we have in working with the Committee is that when our
needs were expressed, the Committee has been very responsive,
and I very much appreciate the support.
With respect to China, we were suspended from operating in
China after the Tianamen Square event, and we are kept from
operating in China until we get the signal from the appropriate
body, be it the President waving sanctions or Congress repeals
sanctions and asks that we reengage with that country.
Ms. Pelosi. Thank you. Thank you, Mr. Munoz.
As the Chairman approaches, I just want to ask Mr.
Grandmaison, for the record, you can submit, we were again in
Colombia and we were talking to the--the committee was recently
notified of two TDA studies to improve cargo-handling studies
in the Port of Cartagena. I was curious about these studies, if
you want to make them available to the committee or perhaps you
already have, any other work you anticipate in Colombia?
Mr. Grandmaison. Yes. We did provide the notification. As
of the moment, we have not finalized the grant, the specific
grant, so therefore the study has not begun. It just so happens
that our country manager that handles Colombia is in Colombia
either this week or next week on a Venezuela/Colombia trip, and
presumably we will be able to update you as soon as she returns
as to the further status of it.
Ms. Pelosi. We may have to go back and revisit after we
read those reports, Mr. Chairman, to Cartagena.
Thank you, gentleman, again for your excellent testimony
and your excellent service.
Thank you, Mr. Chairman.
HIPC
Mr. Callahan [presiding]. Mr. Harmon, the HIPC debt
forgiveness program that the President is proposing, is Ex-Im
debt forgiveness under the President's proposal, are they
advocating that you forgive any debt?
Mr. Harmon. We have not received any such indication to
date.
Mr. Callahan. Do you expect to do new business in a country
that is declared HIPC eligible? I mean, how do you do business
in a highly indebted country where they are going to forgive
all the debt?
Mr. Harmon. It is a very difficult question, and I almost
said to you sarcastically, when you said how do you do
business, cautiously would be one answer. I do think it is a
problem.
For example, I have in front of me a list of maybe 40
countries and some of them are servicing their debt and
obviously a number of them are African countries that do not
intend to request relief. They intend to go forward and have
communicated that to us.
But we watch it very closely. We are concerned about that,
but we try to determine ourselves whether the country is moving
in the right direction in its own program. Often, of course,
they may be private sector transactions which would not qualify
for relief under HIPC. So we can continue to do business in the
private sector. It is in the public sector where we would have
the problem, which is with the government.
Mr. Callahan. Well, then could you provide me later on with
the amount of Ex-Im debt outstanding in countries eligible for
HIPC? And then second, a list of the HIPC countries where Ex-Im
is currently open for business or where you might plan to open
some activity in the year 2001? You can just provide me those
for the record.
Mr. Harmon. Yes, I will
[The information follows:]
Offset Folio 543 Insert here
MARKET FEASIBILITY
Mr. Callahan. To Mr. Harmon or Mr. Munoz, we have talked
about your agencies cooperating with one another and working
together. Can either you, George, or, Jim, give me a specific
instance where a TDA feasibility study or conference has
resulted in either Ex-Im or OPIC financing?
Mr. Munoz. The question is a TDA conference?
Mr. Callahan. The question is, we talk about cooperation
and we talk about working together and we talk about your
responsibilities, has Mr. Grandmaison ever brought to you,
either of you, a project as a result of his feasibility studies
that has resulted in Ex-Im financing or either OPIC guarantees?
Mr. Munoz. Yes, there are a couple of examples I could give
you. This past fiscal year we had a project in Angola that was
brought to us where TDA provided the sponsors with funding for
the market feasibility. Based on that market feasibility, which
was used by OPIC, we did the Mampeza fish canning and
processing project in the agri-business sector.
The prior year in the Republic of Georgia, we had a similar
project, a hotel project. TDA provided the sponsors with
funding for the market feasibility there.
With respect to Ex-Im, we have a working relationship in
Indonesia. One of the larger power projects in Indonesia is the
Paiton project where both Ex-Im and OPIC have worked together
and have shared some intelligence on that project.
Mr. Grandmaison. Mr. Chairman, I mentioned in my testimony
that we have documented $16 billion worth of exports generated
by--facilitated through TDA investments. Of that, a third of
it--.
Mr. Callahan. I know. That is why you are in business.
Mr. Grandmaison. And a third of that would have been
financed by Export-Import Bank, and we are happy to provide you
a listing of those.
Mr. Callahan. That would be good.
Thank you very much, gentlemen, for your testimony. The
meeting is adjourned.
[Questions and answers for the record follow:]
QUESTIONS FOR THE RECORD SUBMITTED TO EX-IM BANK QUESTIONS BY CHAIRMAN
CALLAHAN
Question. As you and I discussed, we share a concern about how the
different programs funded in the Foreign Operations appropriations bill
work together. I'd like you to explain how the Highly Indebted Poor
Country (HIPC) initiative will affect future Ex-Im Bank financing in
the countries that qualify?
Answer. At present, it is unclear how the HIPC initiative will
affect Ex-Im Bank lending in these markets. Under the HIPC initiative
there are currently 40 HIPC eligible countries. 32 of the markets are
in Africa, four in Latin America, three in Asia and one in the Middle
East. Of these 40, Ghana is the only country that has indicated it will
not seek relief under the HIPC initiative. Of the remaining 39
countries, Ex-Im Bank is currently open for short and medium-public
sector transactions in seven of these markets. These markets are Benin,
Kenya, Senegal, Uganda, Bolivia, Vietnam, and Yemen. Ex-Im Bank is
legally prohibited from providing financing in three of the markets-
Laos, Myanmar, and Sudan. For the remaining 29 countries, Ex-Im Bank
does not know at this time if economic conditions will support opening
to the public sector in FY2001.
Question. Is Ex-Im Bank debt forgiven under the President's pending
$472 million request for debt relief? How much?
Answer. According to the Treasury Department, the President has
asked for $350 million in BA for debt relief of which $200 million is
Ex-Im Bank debt.
Question. What I really want to know is this. Do you expect to do
new business in a HIPC country immediately after its debt is written
off? Does it make sense to extend new credit to countries that have
effectively declared bankruptcy?
Answer. Ex-Im Bank does not anticipate opening for business in any
of the HIPC countries immediately after its debt is written off. Ex-Im
Bank policy is to go ``off-cover'' for a minimum of six months after a
debt forgiveness, then monitor the situation thereafter and only change
the cover policy if the debtor nation's performance improves.
Question. Could you provide two other items for the record? First,
the amount of Ex-Im Bank debt that is outstanding in countries eligible
for HIPC.
Answer. As explained above, there are 40 countries that are
eligible under HIPC. However, Ghana has indicated that it will not seek
relief under the initiative. Therefore, Ex-Im Bank's total exposure in
the 39 remaining countries is $1,962,253,742 of which $1,707,487,631 is
sovereign exposure.
Question. Second, a list of the HIPC countries where Ex-Im Bank is
currently open for business, or where you plan to open in 2001.
Answer. Attached is a list of HIPC countries where Ex-Im Bank is
currently open for public sector or any business. At this time, Ex-Im
Bank does not know whether economic conditions in the remaining 29 HIPC
countries will support opening in FY2001.
Offset Folio 549 Insert here
COMMERCIALLY-VIABLE ENERGY EFFICIENT POWER PROJECTS
Background
With the Asian financing crisis easing, the market for
private sector power projects is opening again. Mr. Munoz tells
me that he is hopeful that OPIC can recover its costs of taking
out a major power project in Indonesia. I am told that the
President is planning to announce new American power projects
when he visits Bangladesh and India at the end of the month.
Question. Mr. Harmon, what role do you expect Ex-Im Bank to
play in ensuring that American goods and services are used in
these new power and energy projects? How will a HIPC country
such as Bangladesh repay loans for these projects?
Answer. Ex-Im Bank is open for the public sector in
Bangladesh; and, therefore, would be comfortable financing a
power project on a sovereign basis. If asked to finance a
private power project, Ex-Im Bank would consider the request if
it was clear that the purchaser of the power, or the
government-owned power utility, had the full backing of the
sovereign government. By this I mean that the sovereign
government would stand behind the contractual obligations,
including payment, of the utility with the private power
company. Ex-Im Bank would carefully assess the risk sharing
proposed by the project sponsors (i.e. the level of cash and
contingent equity), the price of the power to the utility as
well as consumers, the demand for power, other proposed new
generating capacity, and the strength of the legal and
regulatory environment in the country. To date, Ex-Im Bank has
provided a Letter of Interest (LI) to an exporter for a series
of small power projects; however, we have not yet received a
formal application for financing.
I would like to point out that though Bangladesh is poor,
it is not highly indebted so it does not qualify for HIPC
relief.
cooperation among agencies to promote exports and investments
Question. Your three agencies work together on occasion. I
am told that you work with other programs funded through AID,
World Bank, and the regional banks. Could each of you give an
example of how your agency operates in places where doors have
been opened for you by AID or a multilateral bank? Who trains
the regulators and officials who evaluate private sector
proposal that you finance?
Answer. Both USAID, the U.S. bilateral development
assistance agency, and the MDBs, the multilateral development
banks, provide critical developmental assistance to foreign
countries for economic and infrastructure growth. Assistance
from these entities plays an essential role in fostering
economic development. MDB assistance, in particular, provides
an environment that encourages outside investor interests in a
market, which is necessary for a country's economic growth.
However, I do not necessarily believe that a causal
relationship can truly be claimed between their operations and
Ex-Im Bank operations.
Question. Who trains the regulators and officials who evaluate
private sector proposal that you finance?
Answer. When Ex-Im Bank is working on transactions with foreign
governments, negotiations are deal specific and do not involve
discussions of this nature. We are aware, however, that many countries
hire outside advisors, both legal and financial, to advise them in the
area of reform. Some of those studies were funded over the years by
TDA. In addition, some governments have AID grants for advisors who are
often high level advisors to the ministers. For example, the Indonesia
Minister of Science and Technology (formerly Habibie) had a U.S.
advisor that was funded by AID for several years. To our knowledge,
these grants were directed to advising to government ministers and did
not involve training.
Question. Mr. Harmon, can you recall specific instances where TDA
feasibility studies or conferences have resulted in Ex-Im Bank or OPIC
financing?
Answer. Ex-Im Bank has provided financing on a wide range of
projects where TDA funded the feasibility study such as satellite
communications equipment for the Indonesian Palapa C Satellite Project,
a significant number of the oil and gas transactions under the Russian
Oil and Gas Agreement, and more recently an emission reduction project
for a power plant in Turkey.
______
QUESTIONS BY MR. LEWIS
Question. Mr. Harmon, your written statement outlines the fact that
the increase in the FY 2001 budget request-some $207 million-is the
result of a downturn in international markets over the past two years.
I find of particular interest your point that if the Ex-Im Bank did the
same volume of business next year as it did this year, your present
budget would be inadequate. What mechanisms do you use to determine
your budget needs in light of the ever-changing international economic
conditions? Do you envision a scenario where improving economic
conditions in the world could result in the Ex-Im Bank asking for less
money in the future?
Answer. Regarding how Ex-Im Bank determines its program budget
needs, Ex-Im Bank's senior staff obtains information on market demands
from our customers-exporters, guaranteed lenders, brokers, borrowers-
and from Ex-Im Bank's country economists, business development officers
and credit officers. This information is evaluated by senior staff and
then program budget estimates are derived from this analysis.
As to your question of why Ex-Im Bank's present program budget
would be inadequate if Ex-Im Bank did the same volume of business in
next year as it did this year, the reason is that there were increases
in the OMB determined risk premia, effective in FY 2001, due to the
economic downturn in international markets over the past two years. As
a result, dollar for dollar, Ex-Im Bank's program budget for FY 2001
will not support as many exports as in FY 2000 (assuming the same mix
of business).
Let me also take this opportunity to clarify several points in your
question regarding the impact of the global economy on Ex-Im Bank's
program budget needs. Indeed, the program budget demands are related to
the global economic cycles as shown by the following examples. First,
during an economic downturn, there is an increase in demand for short
and medium-term Ex-Im Bank support since foreign borrowers are not
likely to be undertaking large capital expenditures; instead, these
borrowers are importing spare parts, raw materials, quasi-capital goods
and modest-size capital procurement. Furthermore, during these
difficult economic periods, private capital and credit flows to these
markets drop sharply, thereby increasing the need for Ex-Im Bank.
Conversely, during more favorable economic conditions, the capital
markets return; however, these same foreign borrowers are now more
likely to significantly increase their capital expenditures to such a
level that the capital markets are unable or unwilling to satisfy such
demands in the more riskier markets. Consequently, where previously Ex-
Im Bank's short and medium-term support was needed in these markets
during difficult economic times, with the improved global economy the
volume of the larger dollar size foreign projects significantly
increases and so does the U.S. exporters' demands upon Ex-Im Bank's
long-term financing.
Question. You may not be aware of my particular interest in India.
I'm interested in learning more about the specific role you envision
for the Ex-Im Bank in this region which I believe provides incredible
opportunity for U.S. exporters in the coming years. Can you comment?
Answer. I strongly agree with you regarding the incredible
opportunity for U.S. exporters in this market. In fact, that is why I
recently visited India, a very important market for Ex-Im Bank, to
explore ways to partner with their government, business and banking
sectors to increase U.S. exports. I am pleased to advise you that there
were several initiatives announced during my visit. One announcement
was Ex-Im Bank's approval to guarantee loans denominated in rupees,
India's currency, under Ex-Im Bank's foreign currency guarantee
program. It is believed that the rupee guarantee is going to be a
powerful tool for helping Indian businesses of all sizes access U.S.
goods and services. Another initiative was the signing of a memorandum
of understanding (MOU) with the Indian government-owned Power Finance
Corporation to collaborate on projects. It is envisioned that such an
initiative will provide new sources of financing for power projects
involving Indian buyers and U.S. exporters of clean energy technologies
that will contribute to the economic and job growth in both countries
while protecting the environment.
During my visit to India, I utilized every opportunity to discuss
Ex-Im Bank's commitment to India and its importance to the U.S. In
accomplishing this goal, I gave major speeches in New Delhi, Chennai
and Mumbai and conducted many interviews with the Indian press, both
television and print. Since my trip, the Bank has received expressions
of interest in learning more about Ex-Im Bank financing. Because of
these efforts, I am optimistic that Ex-Im Bank will experience an
increase in business from India.
Question. Your statement outlines the very positive impact that the
Ex-Im Bank had in protecting U.S. exporters from certain financial ruin
during the Asian Financial Crisis. What would have occurred without the
Ex-Im Bank being engaged in the region?
Answer. Ex-Im Bank's activities in Korea are a good example of our
crucial role during this crisis. In 1998, Korea's economy shrank by 5.5
percent, American exports to Korea declined by 40%, and private capital
and credit flows dropped sharply. Ex-Im Bank put in place a $1 billion
financing program that kept trade flowing to this crucial market,
supporting nearly 2,500 export transactions to Korea in the last nine
months of 1998, compared to 50 in 1997. Without Ex-Im Bank, the
probability is that foreign competition would take advantage of this
window of opportunity to increase their market share at the expense of
U.S. exporters. In such a scenario, U.S. companies would likely
experience a significant decrease in their sales revenues as well as
profitability, which would, in turn, have a negative impact upon
employment and U.S. jobs.
Another example is Ex-Im Bank's willingness to work with the small
and medium-sized companies, which have guaranteed loans under the
Working Capital Guarantee Program that have experienced financial
difficulties during the Asia-led global financial crisis. In certain
situations, Ex-Im Bank accommodated these companies with forbearance
agreements. Without such forbearance, the companies would have faced
the possibility of bankruptcy, which would have had a negative impact
upon U.S. jobs.
Question. If you would, peer into your crystal ball and tell us
where you believe the Ex-Im Bank will be focused ten and twenty years
from now. Is it China? India? Latin America? Eastern Europe? Paint a
picture for us of where you see a role for the Ex-Im Bank in pursuing
opportunities for U.S. investment abroad.
Answer. The countries and regions you mentioned in your question,
China, India, Latin America, and Eastern Europe are likely to be areas
where Ex-Im Bank will be active in the future. However, it is difficult
to forecast Ex-Im Bank demand for the next ten to twenty years since
Ex-Im Bank's activity is directly related to the demands and needs of
customers--the U.S. exporters--as well as the global economic
environment.
______
QUESTIONS BY MS. PELOSI
Question. The $204 million increase in your subsidy budget
is the result of a worldwide recalculation of credit risk, and
despite this increase, you anticipate a reduction in program
scope. It has become more expensive for you to do business
apparently because of exporters working in riskier markets. Is
this assertion true, has the actual risk of loss increased
worldwide in your view. In what risky markets are you seeing an
increased demand from U.S. business for Ex-Im financing.
Answer. In response to the varying debt repayment problems
in Asia, Brazil and Russia in 1997 and 1998, the private market
is today pricing all risk levels higher than before and the
highest risks have fewer interested lenders than before.
Whether these reactions are merely a conservative perception or
an accurate forecast will not be known for some time.
Question. In what risky markets are you seeing an increased
demand from U.S. business for Ex-Im financing.
Answer. Ex-Im Bank is seeing an increase in demand from
U.S. businesses in Russia, the Newly Independent States,
Southeast Europe, and the Caucuses.
Question. While in Colombia I was informed that in order to
use the Ex-Im financing for these Blackhawks, Colombia will
have to seek a waiver of its international debt ceiling from
the IMF. Are you aware of this? Is the Administration helping
Colombia seek this waiver? Do you think such a waiver is wise
given the current cuts being made to Colombia's social program
because of IMF imposed ceilings?
Answer. According to the Government of Colombia, the
Blackhawk helicopter purchase was discussed with the IMF from a
very early stage and the purchase will not put the Colombians
in violation of either their international debt ceiling or
fiscal target. Furthermore, Ex-Im Bank is not aware of any
United States government initiative to seek a waiver for
Colombia. Colombian officials believe a small increase, not
reduction, in social spending is possible this year. There may
also be a small decline in real terms in federal revenue
sharing with the provinces (which is a source of funding for
provincial social programs), since revenue from tax collections
which flows through to the provinces is likely to be adversely
affected by the weak economy. The Colombian federal government,
however, intends to use some supplemental revenue from oil
sales to increase federal social spending to shore pension
programs. Thus, overall, combined social spending is expected
to slightly increase.
Question. Update the Committee on the status of the Paiton
Energy situation in Indonesia. I understand that you have given
the parties one year to work out new financing arrangements,
however, Ex-Im may still lose over $100 million on this deal.
Has the Indonesian partner selling coal to the plant at premium
prices been removed as a participant in this deal.
Answer. The Paiton Energy sponsors have been working to
resolve disputes with PLN, the government-owned power company
of Indonesia. Since December of 1999, PLN and the Paiton Energy
sponsors have withdrawn legal actions against one another and
have signed an Interim Agreement under which Paiton Energy will
see power to PLN at a reduced rate. During this time, PLN and
Paiton Energy will work towards a more permanent agreement.
The Committee's understanding about the extension is
correct. The Export-Import Bank of the United States (Ex-Im
Bank) extended the availability period of its direct loan to
Paiton Energy to December 2000, after the Project was unable to
meet conditions for Ex-Im Bank's direct loan by the original
deadline of October 15, 1999. The parties will use this time to
resolve disputes with PLN and work out new financing
arrangements. Paiton Energy will pay commitment and other fees
to keep Ex-Im Bank's direct loan option available for this
year.
Ex-Im Bank has not lost any money on this deal. Moreover,
in extending the availability date, Ex-Im Bank asserted
additional conditions that will require Paiton Energy to be
both financially viable and economically sustainable. If Paiton
Energy meets these conditions and qualifies for a direct loan
disbursement, by definition the project would be one that Ex-Im
Bank considered capable of repaying debt. If there is no direct
loan, Ex-Im Bank will have no commercial liability on this deal
and liability under Ex-Im Bank's political risk coverage will
be limited to damages caused by events before October 15, 1999.
Ex-Im Bank is not aware that the Indonesian partner selling
coal to the plant at premium prices has been removed as a
participant. We do understand that no premium prices will be
charged for coal delivered to the plant this year.
------
QUESTIONS FOR THE RECORD SUBMITTED TO TDA--QUESTIONS BY CHAIRMAN
CALLAHAN
Question. Your three agencies work together on occasion. I
am told that you work with other programs funded through AID,
the World Bank, and the regional banks. Could each of you give
an example of how your agency operates in places where doors
have been opened for you by AID or a multilateral bank?
Answer. A good example of how TDA has worked effectively
with an MDB is in Southeast Europe. TDA has been working
aggressively to help inform U.S. companies about project
opportunities in war-torn Southeast Europe, and particularly
those projects that have financing already in place from an MDB
or other source. One such source of funding is the European
Investment Bank (EIB), but because this bank seriously favors
European firms, it has been difficult to penetrate the EIB even
to ascertain whether U.S. companies are eligible to compete for
their projects, or whether they only offer tied aid. In
contrast with the EIB, we have a close relationship with the
European Bank for Reconstruction and Development (EBRD), where
we maintain a trust fund. One of our main contracts at the EBRD
is the head of the transportation division, who has worked
closely with TDA on a number of projects and participated in
our Southeast Europe Opportunities Tour last October. In the
end, we were able to use this contact at the EBRD to gain
entree to the EIB through a series of meetings and
introductions he was able to arrange for us. In this way, the
EBRD ``opened the door'' for us to the EIB, and as a result we
have established a relationship with this significant player in
Southeast Europe. We are hopeful that this new relationship
will lead to U.S. exports to some of the lucrative projects
being financed by the EIB.
Question. Who trains the regulators and officials who
evaluate private sector proposals that you finance?
Answer. TDA contracts with independent technical
consultants to assist us in evaluating both private and public
sector project proposals. We use two different types of
contracts for this due diligence stage: a desk study and a
definitional mission, and both are reserved exclusively for
small businesses. In a desk study, which typically costs
$2,500, we contract with an expert to analyze the proposal and
provide us with a recommendation as to whether we should fund a
feasibility study. Definition missions, on the other hand, are
more involved analyses, which involve travel to the host
country. These cost roughly $25,000. Both types of
consultants--desk study and definitional mission consultants--
have demonstrated expertise in their areas of specialty.
Question. Can you recall specific instances where TDA
feasibility studies or conferences have resulted in Eximbank or
OPIC financing?
Answer. TDA has been involved in the planning stages of
numerous projects that, in turn, have received support for
implementation from OPIC and/or Ex-Im Bank. A good example of a
project that had the involvement of all three agencies is a
liquid natural gas (LNG) plant and delivery system in Trinidad.
This project, with U.S. export potential exceeding $360
million, received TDA feasibility study assistance in 1994,
followed by Ex-Im Bank financing and OPIC risk insurance. The
project was scheduled to be completed in 1999, and associated
projects--with export potential in the $1 billion range--are
currently being contemplated.
Question. Mr. Grandmaison, you are leaving tomorrow for South Asia
to meet with American and local businessmen to promote partnerships and
investments that will provide clean and efficient power in that region.
What has happened to make those socialist countries more open to
cooperation with our companies?
Answer. Historically, U.S. companies have faced numerous challenges
in developing partnerships and investments in South Asia. Traditionally
socialist economies such as India and Bangladesh have been slow to
change their investment climates, particularly in strategic economic
sectors such as energy and power. However, a number of reforms have
been undertaken in the 1990s, and U.S. government programs such as
TDA's have actively supported the development of infrastructure in
South Asia. As a result, the U.S. private sector has been increasingly
involved in the development of these key sectors, and U.S exports to
the region have grown to over $3.7 billion in 1999.
With the growth of domestic markets and the increasing need to
integrate into a global economy, both India and Bangladesh have been
their infrastructure needs soar in the past decade. Moreover, projected
needs in this sector far exceed the governments' ability to meet them
using domestic resources and capabilities. Recognizing this, the
governments of both India and Bangladesh have taken measures to
implement economic forms that will attract foreign investment in key
infrastructure sectors. In addition to simplifying rules and
procedures, steps are being taken to disband the licensing system and
promote domestic private sector participation in large projects.
Topical discussions and projects highlighted at TDA's recent Energy
South Asia conference, which was held in Kathmandu, Nepal from March 6-
8, demonstrated the opportunities and challenges that exist in the
region's energy sector for American businesses. The conference
attracted nearly 250 participants, exceeding our expectations and
reflecting the growing interest in developing projects in the region.
Most of the 45 projects that were presented during the 3-day conference
were being developed by the region's private sector companies, and
their interest in working with top-notch U.S. equipment and service
providers was evident through the extensive one-on-one meetings that
were scheduled.
In addition to this conference, TDA's activities in India and
Bangladesh have been rising. U.S. companies are competing actively with
their European and Asian counterparts for business in the region. While
several deals have taken a long time to mature and have been caught up
in bureaucratic delays, U.S. companies are starting to see success in
South Asia. Likewise, TDA is also beginning to see the result of our
earlier investments, with $8.5 million in exports from Bangladesh, and
over $468 million in exports from India. We expect that President
Clinton's visit to the region will also be helpful in renewing old
commitments and forging new partnerships in the public and private
sectors.
______
QUESTIONS BY MR. LEWIS
Question. Mr. Grandmaison, as I listened to your testimony, and the
testimony of the other witnesses today, I am reminded of my work
several years ago as Chairman of another Appropriations Subcommittee.
As you may know, that subcommittee oversees some 20 federal agencies,
both large and small, some of them with redundant functions. In some
cases, we were able to make a credible argument for consolidating
agencies that performed similar functions. Do you see a consolidation
of the U.S. Trade and Development Agency, OPIC, and the Ex-Im Bank as a
viable option? In other words, does the federal government need three
separate agencies to conduct similar missions?
Answer. Without question, the three trade finance agencies work
closely and cooperatively on a variety of initiatives and projects.
Therefore, it is not inappropriate to examine whether consolidation
could make them more effective. We have considered this issue several
times, however, and continue to reach the conclusion that consolidation
would not be feasible or desirable.
The primary policy rationale for consolidation is that a single
entity would be more efficient and effective in providing government
support to assist U.S. companies investing or exporting overseas. We
believe that with one agency closely coordinating U.S. trade promotion
efforts, there is a danger that the agency's mission would evolve into
providing ``cradle-to-grave'' project support from feasibility study to
project financing to trade financing to insurance. We believe that this
would be a step in the wrong direction. Although a ``one-stop financing
shop'' approach may appeal to some of the U.S. businesses seeking
assistance, a closer look at the end result of such an approach reveals
a fundamental philosophical defect. If the government attempted to
provide such comprehensive assistance to U.S. companies, then companies
need apply less of their own resources--both time and money--to
pursuing overseas business. Currently, these programs leverage private
sector resources; as a consolidated agency they might very well
displace private sector resources. The overall strength of the programs
would be reduced and the government would be providing precisely the
type of ``corporate welfare'' to which both the Administration and the
Congress are adamantly opposed.
In the case of TDA, for instance, we provide relatively small
amounts of government assistance to fund feasibility studies that
better position an American companies on projects that are frequently
financed by a multilateral development bank or the host country. A
consolidated entity, on the other hand, might be expected to provide
government funding not only for the feasibility study grant but also
for the project financing, regardless of other available financing
sources. Unless the budget for trade promotion activities grows
dramatically, this approach would result in fewer U.S. companies having
access to the available government assistance. Though the benefits for
some would be more complete, those benefits would be monopolized by the
few. The new consolidated entity could find itself in the unenviable
position of picking relatively few overseas projects to support, start
to finish, and relatively few U.S. firms to undertake these projects.
Understandably, U.S. companies chosen as recipients of seamless
government support from the beginning to the end of the project would
find this approach more attractive. From a government policy
perspective, however, we do not believe this is the appropriate
direction for maximizing the impact of public expenditures in the
export promotion field.
As the TDA program currently operates, government funds are able to
leverage private sector resources in winning overseas contracts.
Assistance is targeted to business opportunities where it can make a
difference for U.S. firms in beating the competition. In the proposed
arrangement, the government's ability to leverage additional non-
government resources would be impaired. The emphasis would shift from
providing a critical intervention to hand-holding throughout the entire
process.
We also seriously doubt that consolidation would in fact create a
more efficient and cost-effective agency. Among the assumptions that
have led to consideration of a proposed consolidation are: the three
agencies have similar mandates, the agencies duplicate functions, the
same companies work with all three agencies, and that current levels of
coordination among the agencies do not meet the needs of U.S.
companies. In fact, the mandates of the agencies differ significantly:
Ex-Im finances U.S. exports; OPIC helps U.S. investors; and TDA gets
U.S. companies into infrastructure projects. Also, in practice, few
companies work with all three agencies as each agency provides a
specialized service that benefits a distinct constituency. As a result,
the constituencies, the approach, and the organizational culture of
these agencies differ. Forcing them to merge would result only in
confusion and inefficiencies. Therefore, consolidation would only work
if the agencies' mandates were drastically changed, and we do not
believe that its warranted.
Nor would a proposed consolidation result in significant
administrative savings by staff reductions or combining certain
functions. We do not believe that the staff of any of these three
agencies is currently underutilized or that redundancies in fact exist.
To the extent that staff in each agency can take on entirely new
functions and operate more effectively, those positions should be
eliminated or changed for the sake of good government regardless of
whether the agencies were consolidated. With respect to TDA in
particular, we believe that our 41-person staff is already operating
efficiently and would not achieve any perceived savings by joining the
other two agencies. In fact, one area in which there would be a clear
cost increase for TDA would be in relocation; any physical move from
its economical Rosslyn office space would be costly for TDA.
Finally, placing TDA under the umbrella of a larger bureaucracy
would inevitably result in the loss of decision-making flexibility and
the loss of autonomy and ability to respond quickly (which is what we
believe gives the program its edge). In practice, getting a feasibility
study grant could be perceived as the first step to getting a foot in
the door for further government assistance, placing more pressure on
TDA to approve funding requests from companies which now currently pay
for their own feasibility studies, and diverting funds from projects
where it could make the difference for U.S. involvement. Ultimately, as
a grant-making entity within a consolidated operation, TDA's
effectiveness would be diminished and would become a service bureau for
the newly created Ex-Im-OPIC hybrid.
As currently structured, TDA's strength lies in its ability to
provide foreign project sponsors with U.S. engineering expertise, and
to leverage often non-U.S. sources of financing (World Bank, regional
banks, country's own resources) for implementing the project and
procuring goods and services from U.S. companies. Therefore, we do not
believe that any real savings would be realized from a consolidation,
nor do there appear to be any specific policy reasons warranting such
an action.
It is important to note, however, that a high level of cooperation
exists--not only between the three trade finance agencies, but also
with the Departments of State, Commerce, Energy, and Transportation. We
believe that the benefits derived from these relationships are the
result of the fact that our specialized staffs complement each other,
offering different perspectives and information, rather than redundant
viewpoints.
A clear example of the cooperation between the trade finance
agencies is in the Caspian Finance Office established by the three
agencies and operated out of our Embassy in Turkey to promote
development associated with the oil and gas industry in the region.
Despite our close relationship, however, the agencies found it
necessary to send staff representing each agency to pursue each
agency's unique mission.
In some instances, whoever, closer collaboration does make sense,
and the three agencies are open to combining resources and efforts when
they do. For example, the three agencies developed an outreach program
in Africa in the fall of '98 in which a TDA staff member was trained in
the Ex-Im and OPIC programs so that he could promote all three agencies
during a three-month business development mission in Southern Africa.
This individual's job was to meet with as many U.S. and African project
sponsors as possible, present the programs of the three agencies, and
be available to support agency-specified activities being led from the
U.S. Each of our agencies generally relies heavily on our Embassies and
the Foreign Commercial Service for this type of marketing, but in this
case it was worthwhile to have more knowledgeable program officer in
the field. So, while this was an extremely effective marketing tool,
there was never any consideration given to consolidating all of our
activities in South Africa because each of our objectives in the
county--and the process of reaching those objectives--is so different.
Question. I note with interest the $10 million increase requested
for your FY 2001 budget. Your statement describes the pressure placed
on the agency by relatively flat budgets in recent years. You also
state that you are turning away good projects each year due to a lack
of resources. Can you describe in real terms the difference $10 million
would make to the work you perform?
Answer. $10 million in additional resources would have a profound
impact on TDA's ability to meet the demand for our program. Projected
increases in our operating expenses are estimated at $450,000 for FY
2001, which means over $9.5 million of a $10 million increase would go
directly into our program budget. This increase could translate into an
additional 40 grants for feasibility studies and technical assistance--
nearly a 25% increase over FY 1999 levels. Looked at another way, based
on our multiplier ratio--the amount of exports leveraged by each TDA
dollar invested--an additional $10 million would generate approximately
$370 million in U.S. exports.
Question. During a previous exchange, you mentioned USTDA's work
with James Lee Witt and the Federal Emergency Management Agency (FEMA).
Can you elaborate on this partnership and its effectiveness in the work
you do?
Answer. TDA and the Department of Commerce have identified the
emergency management sector as a new infrastructure sector with
significant export potential, and TDA is making a number of investments
in this area to help U.S. companies capitalize on the competitive edge
that their products and services currently enjoy. After years of
watching major infrastructure investments literally wash away in
floods, hurricanes, typhoons, and other disasters, the World Bank, the
Asian Development Bank, and other MDBs and funding entities are in the
process of preparing loans for disaster mitigation projects in several
countries around the world. Obviously, many U.S. companies are
interested in these project and the export opportunities they
represent.
Although we are in the beginning stage of our involvement in this
sector, one fact became readily apparent; the U.S. Federal Emergency
Management Agency (FEMA) has more credibility on this issue than
perhaps any other organization in the world. Due to this credibility,
FEMA is regularly approached by foreign governments for guidance on how
to establish their own FEMA-like organization. FEMA's mandate does not
cover international activity, so partnering with TDA allows us to work
together on projects that coincide with both of our agencies' missions.
Therefore, FEMA can help disaster-prone countries develop national
action plans for adopting aggressive mitigation strategies, and then,
once such workplans are in place, TDA can get to work at identifying
specific projects for U.S. company involvement.
One of our first joint efforts in this regard were the TDA-Turkish
Earthquake Reconstruction Symposia in Ankara and Istanbul December
1999. FEMA participated on a panel at these symposia to present the
FEMA model of approaching disaster mitigation. Next month, a more
comprehensive example of how this partnership can work in practical
terms is our TDA-FEMA co-sponsored conference Building a Disaster
Resistant Asia. We are expecting over 175 participants at this event.
James Lee Witt will be the keynote speaker and has been active in
encouraging U.S. companies to participate. FEMA's support for this
conference is critical to its success because they allow us to place an
emphasis on developing policy roadmaps to address each participating
country's unique concerns. We are also considering other ways in which
our agencies can work together. For example, we are considering funding
a visit of FEMA representatives to South Korea to conduct a needs
assessment to determine where TDA could be most helpful. Although we
are, as noted above, in the early stages of our collaborative work,
early indications are that FEMA and TDA can have significant success
working together internally in the emergency management sector.
______
QUESTIONS BY MS. PELOSI
Question. TDA has requested an increase of $10 million this year,
$5 million of which is for the Clean Energy Initiative. These funds
will be used to do feasibility studies to develop new projects around
the world. Can you explain TDA's role in the government wide
initiative, and where specifically you will be developing projects?
Answer. As you know, the energy and power sector has historically
been one of TDA's strongest sectors. Unfortunately, however, budgetary
pressures in recent years have forced us to make some difficult
choices, which have led to a decline in our investments in this sector.
This decline has been precipitous: five years ago, we invested roughly
25% of our budget in energy and power; last year, it has fallen to just
under 15%. This decline is not due to lack of demand--investment in
energy infrastructure is valued in the hundreds of billions per year.
For example, at our Energy South Asia Conference last week, 45 projects
representing total investment value of $10-15 billion were highlighted.
We have decided, however, to also invest in new infrastructure sectors
with high export value, such as the financial services sector,
information technology and the emergency management sector.
Unfortunately, investing in new sectors means we simply cannot meet
the demand in all of the areas in which we work. Therefore, we view the
International Clean Energy Initiative as a means of rehabilitating our
level of investment in the energy and power sector, while still
maintaining a presence in the other infrastructure markets.
Philosophically, we would typically be concerned about any sort of
earmark on our program; but because this initiative is so entirely
consistent with our program, we were less resistant to it.
We are very concerned about the erosion in our core program budget,
which is why we feel so strongly about our requested increase of $10
million. As you know, our budget has been stagnant over the last
several years in the $40-44 million range. When inflation is taken into
account, our program budget has declined nearly 10% since FY 1993. The
downward pressure on our program budget is exacerbated by mandatory
increases in our operating budget, such as cost-of-living adjustments.
If we do not receive our requested budget increase, the energy and
power sector--along with our entire regional program--would continue to
be underfunded, to the detriment of U.S. exporters in this and other
sectors. With a $10 million increase, we estimate that we could fund an
additional 40 feasibility study or technical assistance grants, which
would go a long way toward bolstering our core program.
As a demand-driven agency, we cannot predict with any specificity
the subsectors and regions in which we will have projects.
Nevertheless, we anticipate continuing strong demand in the areas of
clean fossil fuel technologies; gas development, expansion, and grid
integration projects; clean transportation technologies; and combined
heat and power (CHP) projects. We also expect demand in the energy
sector to be strong in all of our regional programs.
How much has TDA received from AID and State by Transfer and for
what purposes and regions?
The transfers are broken down as follows:
------------------------------------------------------------------------
Fiscal year--
--------------------------------------
1998 1999 2000
------------------------------------------------------------------------
Freedom Support Act.............. 6,000,000 7,800,000 \1\ 5,000,0
00
SEED--SBDI....................... 8,000,000 8,000,000 0
SEED--Bosnia..................... 4,000,000 1,000,000 1,000,000
SEED--Southeast Europe........... 0 0 \2\ 6,425,0
00
ATRIP--Nigeria \3\............... ........... 1,500,000 1,500,000
------------------------------------------------------------------------
\1\ FY00 $5,000,000 transfer anticipated.
\2\ FY00 $6,425,000 transfer pending for TDA's Southeast Europe
Initiative Efforts.
\3\ FY99 $1,500,00 transfer is pending; FY00 $1,500,000 transfer is
expected.
Question. The Committee was recently notified of two TDA studies to
improve cargo handling facilities in the port of Cartegena, Colombia.
Having just visited there, I am curious about these studies, and any
other work you anticipate in Colombia. Are US companies compete willing
to invest in Colombia?
Answer. TDA has approved $320,400 in funding for a $375,400
feasibility study for a Cargo Handling Facility feasibility study for
the Port of Santa Marta, in Santa Marta, Colombia. TDA has secured an
agreement from the Santa Marta Port Authority (Grantee) to share in the
cost of the study in the amount of $40,000. The U.S. company that wins
the award would contribute the balance of the unfunded study cost
($15,000).\1\
---------------------------------------------------------------------------
\1\ When U.S. companies compete to conduct a TDA-funded feasibility
study, there is often a minimal implied cost share. However, when a
U.S. company is sole-sourced for a study, the cost-share is normally
50-50. Furthermore, in sole-sourced projects, TDA requires a success
fee or repayment, of the TDA grant from the U.S. company as a
percentage of their subsequent economic benefit.
---------------------------------------------------------------------------
The project would be developed in two stages, and the current TDA
funding request is for the first stage only. The total project cost for
Stage I is estimated at $60 million, of which $18 million represents
the U.S. export potential. During Stage I, the Santa Marta Port
Authority (SMPA) would upgrade and modernize Berths 2 and 3 for
container handling. This would provide one Post-Panamax berth, one and
a third Panamax berth or two handy-size berths in Stage I. In Stage II,
the dock would have to be expanded south to provide a second berth.
TDA also recently notified Congress that it may provide funding for
a feasibility study for a Grain Terminal Project at the Port of
Cartagena in Colombia. This project is currently being developed, and
TDA approval has not yet been given. The cost of the $250,000
feasibility study budget would be shared by TDA, the Port Authority of
Cartagena, and the US contractor to be selected by the Port Authority
of Cartagena via a competition. The exact amount of the potential TDA
grant has yet to be determined.
With regard to the interest of US companies in investing in
Colombia, it is true that Colombia is a tough market and we do not see
much demand for our program there. In the port sector, however, we have
had several US firms contact TDA expressing their interest in the
aforementioned port projects.
QUESTIONS BY MRS. LOWEY
Questions. We have spoken before about my support for TDA's
initiatives that encourage Middle East peace through economic
cooperation. I am encouraged by the heavy demand for your resources in
the Middle East and North Africa, and I would imagine that as the peace
process moves forward on many fronts this year, you might see even more
demand. As you know, water is scarce in that region of the world, and
the issue of water rights is the subject of ongoing multilateral
negotiations. I would like to known more about the TDA's Middle East/
North Africa Water Conference in 1999. What projects have resulted from
the conference. How has this conference complemented efforts that the
United States has made to advance multilateral negotiations on water in
the region?
Answer. Our October, 1999 Africa and the Middle East Regional Water
Conference, was designed to provide project-specific solutions to some
of the regions pressing water problems. As a non-policy making agency,
our efforts cannot be tied directly to any specific negotiations.
Nonetheless, as you note, water scarcity and water rights have been
difficult issues in the region, and provided the backdrop for our
conference. Clearly, if we can assist in advancing projects with the
goal of increasing water supply in the region, tensions can be reduced.
Toward that end, the conference profiled 44 projects from 16 African
countries and 6 Middle Eastern countries including Egypt, Jordan,
Lebanon, and the West Bank/Gaza Strip. Of course, we particularly like
to be involved in areas where U.S. foreign policy objectives intersect
with U.S. Commercial interests, and this conference was no exception.
The projects presented at the conference represented almost $2 billion
in potential exports. Due to the long-term nature of the infrastructure
business, it is premature to assess which of the projects will be
implemented, but the turnout and enthusiasm at the conference make us
optimistic that the U.S. will ultimately win significant exports in the
water sector in this region.
______
QUESTIONS FOR THE RECORD SUBMITTED TO OPIC BY CHAIRMAN CALLAHAN
Cooperation Among Agencies To Promote Exports and Investments
Question. Your three agencies work together on occasion, I am told
that you work with other program funded through AID, the World Bank,
and the regional banks.
Could each of you give an example of how your agency operates in
places where doors have been opened for you by AID or a multilateral
bank? Who trains the regulators and officials who evaluate private
sector proposals that you finance?
Answer. When a country embarks on improving its infrastructure,
physical or financial, it is often assisted in forming a development
plan by U.S. AID or the World Bank. U.S. AID provides grants for
industry experts or market consultants. Often, these consultants are
from the United States. The grant money can be used for consultants who
develop regulatory frameworks or who may assist in the actual bid
process of privatizations or concessions. They also make
recommendations as to what actions the host country should take in
order to attract private sector investment. With the implementation of
these recommendations, the stage may be set for OPIC participation and
further private investment.
In Gaza, for example, a U.S. electricity company was hired through
a U.S. AID grant to work with the governing Authority to develop
standardized agreements. These include power purchase agreements and
implementation agreements.
In Bangladesh, the International Finance Corporation worked with
regulators to open the power sector. Through its negotiation efforts,
it made host country officials realize what business practices were
required for private investment. A regulatory framework was established
allowing for the elements of what private financiers require. OPIC was
able to follow the lead set by the IFC by committing and disbursing its
own $87 million loan to a private power.
In the Philippines, the World Bank helped develop the geothermal
development plan for the advancement of renewable energy resources.
OPIC financed two out of three of these plants, one in conjunction with
U.S. Ex-Im Bank.
Question. Mr. Munoz, can you recall specific instances where TDA
feasibility studies or conferences have resulted in EXIM Bank or OPIC
financing?
Answer. Yes, Mr. Chairman. We work closely with TDA and Ex-Im Bank,
and, where appropriate, we have joint participation in projects.
Because our services are each somewhat unique, there are only
occasional projects in which we are jointly involved. An example of
that cooperation took place last year in a fish canning and processing
project in Angola. TDA provided feasibility studies for this project in
1997 and 1999, and OPIC subsequently provided a $1.8 million direct
load to the project in 1999. Also, in the Republic of Georgia OPIC
provided a $20 million direct loan to a hotel project to which TDA
provided a feasibility study.
There are also examples of OPIC and Ex-Im Bank working together on
projects including power projects in India, Philippines and Turkey in
1994, a telecom project in Argentina in 1995, and a power project in
Morocco in 1997.
______
QUESTIONS BY MR. LEWIS
Southeast Europe
Question. Mr. Munoz, I am intrigued by OPIC's desire to pursue
investment opportunity and the work of rebuilding portions of
Southeastern Europe. Explain, if you will, the future role you envision
for OPIC through the office you hope to maintain in Zagreb, Croatia. Do
you envision a presence for OPIC in other countries in the region?
Answer. The Zagreb office will serve to coordinate OPIC's on-the-
ground business and policy development in the region, working closely
with the existing team in Washington which will provide an overall
perspective for these functions. OPIC's physical presence in the region
will facilitate its ability to execute a quick and quality response to
the call of the Stability Pact nations for rebuilding and stabilizing
Southeast Europe. It will also help level-the-playing-field and provide
U.S. businesses with enhanced guidance in this difficult, yet highly
competitive, European investment environment. The Zagreb office will
serve the entire region. Unless at a future date it is deemed that
additional resources would be highly productive for meeting these
objectives, OPIC does not have any commitments for establishing a
presence elsewhere in the region.
INVESTMENT IN COLOMBIA AND SURROUNDING REGION
Question. As you know, our Subcommittee is working diligently on a
Supplemental Appropriations package relating to our drug efforts in
Colombia and other countries. Explain the types of investment that you
see as a viable alternative to the drug-based economy in Colombia,
Bolivia, Peru and these other countries. What can be done through
private sector investment to bolster these economies?
Answer. OPIC recognizes the importance of bringing both economic
stability and viable alternatives to those countries that have a strong
illicit drug industry, such as Bolivia, Colombia and Peru. OPIC
envisions investments in the following areas as viable alternatives:
light manufacturing; petroleum and mining; agribusiness; and
infrastructure development (particularly expansion in the power,
transportation, and water/wastewater sectors).
These are economic activities in which U.S. companies have high
levels of technical expertise, and which also employ large numbers of
local workers. There is much that can be done through the private
sector to bolster these economies, provided U.S. firms are able to
obtain timely information about available opportunities, and provided
investors are able to find ways to mitigate the most significant
political and economic risks found in these markets.
THE STRATEGIC FUTURE OF OPIC
Question. As you know, each of us has the tendency to focus on the
crisis of the moment. If you would, peer into your crystal ball and
tell us where you believe OPIC will be focused ten and twenty years
from now. Paint a picture for us of where you see a role for OPIC in
pursuing private sector opportunities abroad in the coming years.
Answer. OPIC's overall strategic goals for the next ten to twenty
years will remain rooted in the notion of promoting development in less
developed countries, maintaining a level playing field for American
businesses investing in developing countries, and promoting the
creation of U.S. jobs. At the same time, OPIC must be flexible enough
to react to the changing needs of U.S. business within the evolving
global economic system. Although the specific list of countries where
OPIC operates may change as developmental needs change and countries
take steps to improve their local investment climate, OPIC will remain
an effective facilitator of U.S. investment and job creation well into
the future.
In terms of specific sectors where OPIC can be helpful in the
future, the availability of potable water and adequate housing will be
an increasing challenge in future years. OPIC is looking into
developing facilities and programs that can address these important
human needs.
______
QUESTIONS BY MS. PELOSI
OPIC Operating Budget
Question. OPIC has requested a $4 million increase in its operating
budget, of which $1.2 million is to enhance OPIC's environmental and
worker rights monitoring activity. These funds have been sought
partially in response to Congressional initiatives, and will improve
OPIC's ability to comply with transparency and monitoring requirements.
Mr. Munoz could you comment on why these funds make OPIC operations
more viable and transparent.
Answer. OPIC has found that timely and thorough monitoring of its
growing portfolio of projects and investment fund subprojects for
compliance with environmental and worker rights conditions requires a
labor-intensive effort. The effort involves not only a site visit and
reviews of technical issues but also meetings with diverse stakeholders
including project sponsors, host country officials, non-governmental
organizations concerned with the environment and human rights as well
as trade unions both in the U.S. and overseas. The information obtained
from these monitoring efforts is conveyed back to sponsors to ensure
compliance with OPIC's environmental and worker rights mandates.
Studies have shown that projects that operate in a manner that respects
the environment and worker rights are more viable than projects that do
not. Such projects are less likely to engender opposition on the part
of locally affected people and host country authorities than do
projects that merely operate in minimal compliance with local law.
Initial expenditure of time and resources pays long-term dividends when
expensive litigation or other project difficulties can be avoided.
OPIC's public disclosure policies during initial project review
generate unprecedented opportunities for transparency and participation
on the part of locally affected people and relationships generated
during this process continue throughout the life of the project.
INVESTMENT FUNDS
Question. OPIC has given the Committee an extensive report on the
status of all of the 26 emerging market investment funds. Can you
briefly outline the financial condition of these funds, explain how
your subproject review procedure has changed, and explain what role
U.S. intelligence agencies play in monitoring these funds.
Answer. To date, OPIC has not realized a loss on any of its
investment funds, and we believe that the investment funds program is
on a solid financial footing. Because of the nature of the risk
involved in any financial transaction, OPIC takes reserves against any
funds which might experience an impairment in their value some time in
the future. This does not mean that the funds have realized any loss of
value; rather, the reserving process reflects prudent financial
management on OPIC's part in accounting for potential loss. OPIC
consults with its independent auditors regularly to review OPIC's
reserve policies and positions and to confirm that they are
appropriate.
The investment funds typically expect to hold their investments for
a long period of time--often as long as 10 years. Because the
investments are purchased in the private market (i.e., they are not
listed on stock exchanges), the funds typically do not have definitive
information about the value at which their investments could be sold
until sales actually take place--often at the very end of the holding
period. Nonetheless, OPIC monitors the financial condition of each fund
throughout the holding period.
OPIC's monitoring includes a review of the financial condition of
each fund by two departments within OPIC--the Investment Funds
Department and the Internal Control and Credit Review function in the
Financial Management & Statutory Review Department. Investment Funds
receives financial statements on a quarterly basis from the funds,
attends fund board and committee meetings, and conducts internal annual
reviews of the funds. The Internal Control and Credit Review function
conducts quarterly risk ratings and reserve meetings as well as site
visits and credit analysis.
In late 1997, OPIC reviewed the Funds program to build on the
program's success by increasing transparency and public accountability
and enhancing financial management of the funds, which includes the
oversight of all the companies in which the funds have invested
(``portfolio companies''). To accomplish these goals, OPIC management
instituted a policy that requires three separate OPIC departments to
review the approval of each portfolio company application and
established an independent 12-member review panel representing all OPIC
departments to review fund investments before they are made. To further
monitor the funds and their portfolio companies, OPIC implemented the
annual fund review process that includes site visits of the funds'
portfolio companies. Finally, OPIC management authorized the
development of a new financial data management system that tracks
portfolio company information.
OPIC receives embassy cables as well as intelligence agency country
briefings as clients of U.S. intelligence services. This information is
used while OPIC is forming new funds and evaluating fund managers. It
is also used in the ongoing fund monitoring process. From time to time,
OPIC may involve the intelligence agencies if further information is
needed.
AFRICA FUND
Question. Update the Committee on the status of the recently
launched Africa Fund.
Answer. The Fund Manager is currently marketing the Fund to
prospective investors. Due to applicable securities regulations, OPIC
is refraining from public statements regarding details of the offering,
but is available to respond to questions from individual potential
investors regarding OPIC's role as lender to the fund. An information
memorandum has been completed and has been mailed to certain
perspective investors. OPIC and the Fund Manager have anticipated a
first closing of equity investors near the end of the second quarter of
the year 2000. OPIC and the Fund Manager are working in parallel with
the fund raising process to prepare the necessary documentation that
will enable the Fund to progress quickly to investing after the first
closing of private equity commitments from the limited partner
investors.
INDONESIA
Question. Last year OPIC paid a $210 million claim to a Nebraska-
based energy company from a project in Indonesia. Can you explain why
OPIC was forced to pay this claim, and what is the status of your
efforts to get repayment from the Indonesian government. What role have
or will the State Department and AID play in the repayment
negotiations.
Answer. OPIC paid a $217.5 million political risk insurance claim
to MidAmerican, a power company, in November 1999 after the company won
an international arbitration award against the Government of Indonesia.
OPIC's contracts with MidAmerican stipulate that one route to a
positive claims determination can be reached by winning a valid
arbitral claim against the Government of Indonesia, a lengthy and
difficult process. MidAmerican spent more than a year pursing an
arbitral award, handed down in their favor by a distinguished three-
judge panel, which awarded the company more than $570 million in lost
investment. The Government of Indonesia did not pay the award. OPIC
must honor its contracts--and is in the business of paying valid
political risk insurance claims.
OPIC is now in the process of negotiating a settlement with the
Government of Indonesia. OPIC has a team of experts in claims recovery
and workouts dealing with the designated Government of Indonesia
negotiating team. We also work in close consultation with the
Departments of Treasury and State as well as the U.S. Embassy in
Jakarta regarding negotiations. They are regularly briefed on the
status of our claim and any actions OPIC plans to take, and OPIC
receives their input. We have also coordinated with AID when necessary.
______
QUESTIONS BY MR. JACKSON
Minorities in Business
Question. Mr. Munoz, in the past I have been critical of the amount
of work OPIC does with large multinational corporations versus small
business. I am happy to see the amount of your budget that you are
directing to help small business invest overseas, and I congratulate
you on your efforts. It seems as though you have been quite successful
in this endeavor. Now I want to raise the bar a little higher for OPIC.
I am wondering if you can tell me the number of minority and women
owned business that you are working with overseas?
Answer. As part of OPIC's efforts to help U.S. small businesses
participate in the global marketplace, we are engaged in an extensive
outreach to the small business community. Last year, OPIC
representatives participated in almost fifty small business conferences
throughout the United States, many with a focus on minority and women
owned business. In addition, both our city partnership with Fort Worth
Texas and OPIC's California Pilot Program have included representatives
and organizations dedicated to helping small and minority businesses.
Although OPIC does not delineate specific categories within its small
business projects, we remain committed to helping all small businesses
interested in investing overseas.
OPIC IN AFRICA
Question. Mr. Munoz, I am also pleased to see the amount of work
OPIC is doing in Africa relative to other regions of the world. As you
may know, there are differing opinions on the way we should promote
investment in overseas, especially in Africa.
Can you tell me what you are doing specifically in Africa, and can
you comment on my proposed HOPE for Africa Act which conditions the
type of OPIC supported businesses which can business in Africa?
Answer. OPIC has been very active in promoting private investment
opportunities in Africa. To fulfill President Clinton's commitment and
Congressional guidance, last year OPIC established a $350 million fund
to support infrastructure investments in sub-Saharan Africa that is
managed by the joint venture of Sloan Financial Group & New Africa
Advisors of Durham, N.C. and Taylor DeJongh Inc. of Washington, D.C.
Sloan Financial Group and its subsidiary New Africa Advisors, under its
Chairman Maceo Sloan, manage over $4 billion and is the world's largest
African-American owned diversified financial services firm. Taylor
DeJongh is one of the world's leading firms for infrastructure project
development and financing having negotiated and financed major capital
projects in more than 60 countries totaling more than $5 billion.
The New Africa Infrastructure Fund will target infrastructure needs
of sub-Saharan Africa including telecommunications, electric power,
transportation, and water related services. The Fund benefits both
Africa and the U.S. by supporting up to $2 billion in new investments,
creating 6,800 new jobs for Africans, generating almost $50 million in
annual revenues for African countries, improving basic services to
people and businesses and strengthening economies of the region. The
fund will also direct resources in support of women entrepreneurs and
poor people.
The other OPIC fund recently created for sub-Saharan Africa is the
$105 million Modern Africa Growth and Investment Company fund. This
fund has made several investments that include partnerships with
Africans and African-American firms such as the $7 million investment
in the Phyto-Riker Pharmaceutical company in Ghana which was a
privatization project developed by Mr. Ken Brennan of New York. Another
partnership included the $6 million investment in Warsun Communications
headed by an Ethiopian American woman to provide international
connectivity and value-added support to African telecom carriers,
internet service providers, private networks and others.
As I understand the HOPE for Africa Act as it relates to OPIC, the
bill provides for targeted use of existing OPIC private equity funds
with $500 million to support infrastructure investments for basic
health, potable water, sanitation, schools, rural electrification, and
accessible transportation; and $150 million for sustainable
development. The bill would also require OPIC to allocate 70% of
Political Risk Insurance to women and minority owned businesses with at
least 60% African ownership. Fifty percent of funds for energy projects
will be used for renewable and/or alternative energy development.
Finally, the HOPE for Africa Act directs OPIC to create a board to
oversee the OPIC private equity funds, which should have a majority
private sector membership and public meetings.
With regards to the infrastructure question, as you know, OPIC is
required by statute to by self-sustaining and is therefore influenced
by market dynamics in addition to U.S. government policy. Specifying
the type of projects a fund must support could make it uneconomical and
unable to repay the OPIC debt.
Similarly, it would be unwise and economically unsound to earmark
the type of sponsors for OPIC projects. OPIC's portfolio ultimately
reflects those projects that have been submitted by private sector
companies based on their independent assessments of opportunities. To
expand the composition of sponsors OPIC exerts great effort on business
development and outreach initiatives both in the U.S. and abroad by
participating in conferences and forums as well as the recent
distribution of e-news, an electronic newsletter of OPIC activities and
events,
Additionally, OPIC's mission is to mobilize and facilitate the
participation of U.S. private capital and skills in the economic and
social development of less developed countries. It is therefore OPIC's
policy to provide support to majority U.S. owned companies.
OPIC's Board of Directors has recently approved the establishment
of an African Investment Council that addresses this issue raised in
the HOPE for Africa Act. We hope the Council will help identify new
projects and recommend new programs that will facilitate new investment
in sub-Saharan Africa.
Wednesday, March 15, 2000.
DEPARTMENT OF STATE
WITNESS
HON. MADELEINE ALBRIGHT, SECRETARY OF STATE
Chairman's Opening Statement
Mr. Callahan. Good morning, Madam Secretary. We know you
have been very busy and there are a lot of questions that many
of us no doubt will have today.
I would like to request of my subcommittee members that we
recognize that everyone on the panel deserves the right to be
heard. I think that we ought to limit our opening questions to
Secretary Albright to the strict five-minute rule. I do not
have a bell; those bells are obnoxious. The lights are even
more obnoxious. But I do have my little sandbox here and it is
pretty accurate. So we are going to have to stick to that.
Madam Secretary, I would also ask that you keep your
responses within that five-minute timetable, too.
Madam Secretary, I am asking Chairman Young, to give us the
maximum allocation that he possibly can for the needs you
suggested in the President's budget request. As you may know,
it is going to be a difficult year and I am sure Chairman Young
will respond as best he can.
I have reached the conclusion that more foreign aid will
not bring prosperity and peace to our neighbors in this
hemisphere until it is matched by bold leadership in this city
and in Latin American capitals. In some countries people are
losing hope. In Colombia, Venezuela and Ecuador, violence and
unemployment are at record high levels. The emergency
supplemental bill filed last night by Chairman Young may help
Colombia and I will return to Venezuela and Ecuador in just a
minute.
Then, Madam Secretary, there is Haiti. What can we say
about the billions we have spent in Haiti? Haiti demonstrates
the limits of our ability to bring about change and I am glad
you are cutting back on the request next fiscal year for Haiti.
More foreign dollars alone will not reverse the economic slide
and social crisis resulting from the spread of HIV-AIDS in much
of Africa. Do we know how much additional money can be usefully
absorbed in these programs? In Africa millions of people have
to change the way they think and act in order for our aid to
make a difference.
As chairman of this subcommittee, I have learned that an
abundance of resources can be a curse to a country without
sound leadership. Look at Venezuela, Nigeria, Indonesia. They
are all members of the Organization of Petroleum Exporting
Countries but more of their people are poor and miserable now
than was the case 10 years ago. New presidents in all of these
countries have promised to help their poor and restore their
newly impoverished middle class. Their citizens expect the oil
to improve their lives but they are poorer now than they were
before. A case can be made that oil resources have been a curse
for most of them.
And let us also, while we are talking about the OPEC
nations and some of our allies that we have really gone to the
defense of, no doubt this oil crisis is, in part, because of
them. By agreeing to cut back on their production of oil, they
is really causing us economic misery and someone in this
administration is going to have to emphasize this point to
them. These nations who expect us to come to their assistance
in every crisis, especially those we have already been to in a
crisis, have got to realize they cannot cause economic chaos to
our economy here.
Today, Madam Secretary, the news from Kosovo is not good. I
am sure you will comment especially about the article that
appeared in the Washington Post this morning, a very negative
article with respect to what we can expect in Kosovo and an
indication that no doubt to solve the problem, we are going to
have to send additional military forces there to stop the very
people we tried to protect from atrocities from committing
atrocities--a very serious concern here on Capitol Hill.
I would ask that you provide a written report to the
committee as soon as possible on the Kosovo issue and also the
Latin American issue. Members are very concerned about the
unfolding events in those regions and we just do not like to
keep hearing a rosy scenario of these situations. We expect to
be told the true and accurate facts, which I am sure you will
do.
In a few minutes our full committee chairman and ranking
Democratic members will have an opportunity to welcome you and
then it will be your turn. I hope you can convince Chairman
Young and others on our committee that your request merits
priority treatment from this subcommittee when the budget
allocations are made.
Mr. Chairman?
Mr. Young. Mr. Chairman, thank you very much.
Kosovo
Madam Secretary, I will be very brief. I want to welcome
you to our subcommittee this afternoon and say to you that I am
really anxious to hear your response to the issues that have
been raised by Chairman Callahan because they have certainly
been on my mind for a long time and I think in Kosovo
especially that we could be headed for a serious problem. On
the supplemental that we filed last night we did provide the
administration's request to replace the money spent in Kosovo.
But we are anxious to hear your viewpoint because the news is
not really good coming out of Kosovo.
But rather than hold up the subcommittee, and we would like
to get to your remarks as soon as possible, I will just thank
the chairman for yielding to me and I yield back my time.
Mr. Callahan. We have a vote on the floor. We will all go
vote and come back. The meeting is temporarily recessed.
[Recess.]
Mr. Callahan. Madam Secretary, while we are waiting on Mrs.
Pelosi, let me elaborate on some of my questions about Kosovo.
Let me just read you what my questions are.
A senior Pentagon official yesterday warned that U.S.
troops in Kosovo may have to fight ethnic Albanian guerrillas
who are threatening cross-border attacks against Serbia.
Second, Amnesty International has charged that NATO
peacekeepers may have failed to uphold international human
rights standards.
And finally, an internal U.N. report states that the Kosovo
Corps, which was set up at the insistence of the United States
and with U.S. military equipment, has engaged in illegal
activities and human rights abuses.
All of these, as you know, are very serious issues and the
American people need to know that we simply have not exchanged
one set of thugs for an other in Kosovo. They need to know
whether or not more U.S. troops will be committed in Kosovo.
They need to know whether U.S. troops will be engaged in combat
with the very people that they were sent there to defend. And
you may need to assure the American people, Madam Secretary,
specifically, if you can address these questions during your
opening comments.
Following up on that, while waiting on Mrs. Pelosi, also
address do you believe U.S. troops will be needed in Kosovo
beyond the 5,300 already there? And if so, do you anticipate
combat operations against the guerrilla units? And is the U.S.
monitoring the use of military equipment provided to the Kosovo
Corps? Is this assistance subject to the provisions of the
Leahy Amendment which prevents equipment from being used by
security forces that are engaged in human rights abuses? Are
you or will you review activities by the Kosovo Corps units and
take action to cut off U.S. assistance if they are found to be
engaged in human rights abuses, just as we have done in Latin
America?
Those are questions we would like answered sometime during
this process.
Mrs. Pelosi has undoubtedly gotten tied up, Madam
Secretary, so I think what we will do at this time is let you
go ahead and submit your statement for the record and then give
your comments to the committee and then we will come back to
Mrs. Pelosi. Madam Secretary?
Secretary Albright's Opening Statement
Secretary Albright. Thank you. If I might, Mr. Chairman, go
through my oral summary and then go to your questions on
Kosovo.
I am very pleased, Mr. Chairman, to be here again this
afternoon and have a chance to go through everything. You have
my written statement.
The President's request for fiscal year 2001 for programs
within the subcommittee's jurisdiction is a shade over $15
billion and we need every cent. Members of this subcommittee
understand better than most the compelling rationale for
international leadership in our time. You know that events
overseas have an increasing impact on our citizens here at home
and our security, jobs, health, even the safety of our schools
and streets. And you know that the term ``foreign aid'' has
become virtually obsolete because when we fight proliferation,
drug-trafficking, terrorism, disease and crime, we are aiding
America. The same is true when we work worldwide to open
markets, foster democracy and strengthen the rule of law.
Because our predecessors bore the costs of leadership, our
nation entered the new century strong and respected, prosperous
and at peace. It is now our responsibility to secure these
blessings for future generations of Americans and we cannot do
that unless we lead. We cannot lead without resources.
Most Americans are astonished when I tell them we devote a
smaller percentage of our wealth to assisting overseas
development than any other industrialized country. During the
past decade, our rate of investment has declined by half and
since the days of Marshall and Truman by more than 90 percent.
This reduces our influence, makes it harder for us to leverage
the help of others and often leaves us with no other choice
than to short-change one urgent need in order to cope with
another.
I thank the committee for acting quickly on our emergency
supplemental request for this year. These funds will help us to
stop the flow of cocaine and heroin into our country, bolster
democracy in Southeast Europe, and maintain security in Kosovo.
I am very concerned, however, that crucial parts of the request
were omitted. If not remedied, the lack of funds for
international peacekeeping will undermine our efforts to share
with others the costs and risks of preserving stability abroad
and create new unmet obligations to the United Nations.
We need resources for Kosovo not only to meet immediate
security requirements but also to revitalize the economy and
aid civil society. Denying funds for these purposes is denying
funds for our exit strategy. The sooner Kosovo gets back on its
feet, the sooner American troops can begin to come home.
Moreover, our effort to gain greater support from Europe is
undermined if we fall short in our own contributions.
As I said, I will respond to the questions you asked and
also to Chairman Young, indicating that, in fact, we did not
get everything that we wanted, but I will wait and do that at
the end.
I am disappointed, as well, at the lack of funds for
international debt relief for impoverished nations that are
reforming their economies. Among the affected is Mozambique, a
fragile democracy also confronted now by devastating floods. We
can turn our back on such countries or lend a hand, and helping
is the right thing, the smart thing and, I believe, the
American thing to do.
This afternoon I ask the subcommittee to support the
President's full supplemental request and do all you can to
help this emergency legislation move ahead rapidly. I also ask
your help on the fiscal year 2001 budget resolution, which I
understand is being marked up today by the House Budget
Committee. A proposal has been made to slash funding for the
international affairs function by $3 billion. This would
destroy the options of this subcommittee. Moreover, Mr.
Chairman, it would betray U.S. interests and take a meat-axe to
America's capacity to lead.
It is essential that Congress approve the President's
entire budget request for the coming fiscal year. I say this
knowing that most of this money will be spent in 2001 under a
new administration; thus, my urging has nothing to do with
parties or personalities but everything to do with America's
interests.
For example, our programs help keep our citizens secure.
The Cold War is over and our nation is strong but we still face
grave dangers. Our budget equips us to counter these dangers by
helping us assure the safe handling of nuclear materials and
expertise from the former Soviet Union, slowing the spread of
nuclear, chemical and biological weapons, countering
international terror and fighting international crime. Our
international programs also support American prosperity by
promoting U.S. exports, spurring overseas development and
helping other countries to achieve viable market economies.
In this connection I want to urge members to support the
President's request for permanent normal trade relations with
China. This request makes sense from whichever angle you view
it. Economically, it will dramatically increase our access to
Chinese markets without requiring us to further open ours and
it will strengthen protections against unfair trade practices
or surges of imports.
On human rights, the President's proposal is no magic wand,
but it should help move China in a positive direction. When
China joins the WTO, it will be required to accept
international trading rules, open its regulations to public
scrutiny, and diminish state-owned enterprises. This will
reduce government control over people's lives, promote the rule
of law and aid those within China who want to develop a more
open society.
On Monday I released a letter from six former Secretaries
of State from both parties urging your support for China PNTR.
They argue and I firmly believe this makes sense for America's
interests and values.
The third major objective of our international affairs
program is peace. Today in the Middle East we must operate with
a steady hand as we strive to help Israel and her neighbors
move toward a comprehensive settlement. In recent weeks we have
been reminded just how hard this job is and how deep the legacy
of mistrust is. But never before has the logic of peace been so
compelling or the opportunity for peace so clear. At this
critical time, America's commitment to provide appropriate
support to those who are willing to take risks for peace must
remain rock solid.
In Southeast Europe we are striving to foster stability and
tolerance. We will not succeed without international support
and we are counting on our friends in Europe to provide the
lion's share of muscle and money. As I saw this past week
during my visit to the region, the majority of people there are
more interested in plugging into the world economy than in
slugging it out with old adversaries. Huge obstacles do remain,
but I am convinced that with sufficient resources and the right
leadership, Southeast Europe can indeed become a full
participant and partner in the Euro-Atlantic community.
A fourth purpose of our international affairs program is to
promote values that Americans cherish, including democracy. We
do this not out of altruism but because democratic growth is a
part of the answer to many of the economic, political and
military challenges that we face.
For example, we have an urgent and obvious stake in aiding
Colombian President Pastrana's plan to rescue his country and
thereby help to rescue ours from the scourge of narcotics.
Nigeria's future development will determine whether it is a
source of chaos and corruption or a force for stability and
progress throughout West Africa. Indonesia has long been a
leader in Southeast Asia. It now has a chance, although under
severe stress, to become a model of multi-ethnic democracy, as
well.
Aside from Russia, Ukraine is the largest and most
influential of the former Soviet republics. The whole region
will be affected by whether it slides backwards or continues up
the democratic path.
The President's budget proposes significant investments in
each of these four key democracies and in promoting democratic
practices and values worldwide. Support for freedom is in the
proudest of American traditions and I ask your help in getting
a good start on what I hope will be known with a small ``d'' as
the democratic 21st century.
Finally, I urge your support for the President's full
request without unrelated restrictions for international family
planning, which reduces the number of abortions and saves human
lives.
Mr. Chairman, the bill for all of the programs and
initiatives I have described, plus many more I have not had
time to mention, adds up to roughly one penny out of every
dollar the federal government spends but that single penny can
spell the difference between hard times and good times for our
people, war and peace for our country, less and more freedom
for our world.
The annual budget debate in Washington typically revolves
around issues that relate to the appropriate role of the
federal, as opposed to state and local governments, in such
areas as education and health care. But under the Constitution,
the protection of our national security is one of the federal
government's most basic tasks. It is not our responsibility
that can be delegated or privatized. It is our responsibility
here in our nation's capitol to formulate plans for protecting
American interests and to come up with the resources needed to
make those plans work.
Mr. Chairman and members of the subcommittee, I know that
you understand this and I hope you will agree to support the
President's budget and American leadership in your
deliberations this year.
I will wait for Congresswoman Pelosi and then maybe go
back to the Kosovo questions if you would like.
[The statement of Secretary Albright follows:]
Offset Folios 592 to 607 Insert here
Mr. Callahan. Mrs. Pelosi.
Ms. Pelosi. Mr. Chairman, I will do my statement and then
you will do questions?
Mr. Callahan. Yes.
Ms. Pelosi's Opening Statement
Ms. Pelosi. Thank you very much, Mr. Chairman.
Madam Secretary, welcome. Thank you very much for your
statement and your distinguished service to our country. Since
this is a justification for a budget request from the
administration, I want to mention that the President is
requesting $15.1 billion. Last year we did $13.5, not including
the $1.8 in the supplemental.
As I understand it, our 150 request was cut by 13 percent
in the House Budget Resolution. If that were to apply to our
302(b) allocation it would mean we would be in a $13 billion
range. I believe we may not even get that much and these severe
cuts in the administration's request are once again likely to
be problematic for us.
So I think you made an excellent justification for the
amount requested by the administration but we are going to
have, it appears, a shortfall, and that would be most
unfortunate in light of the tremendous needs that you spelled
out and that we have to address.
I am pleased to hear your statement that there be no Mexico
City language, in effect, enacted into law this year. I hope
that will be the case but that will be a point of controversy
because, as you know, Madam Secretary, many of us were unhappy
with that.
And I am concerned about the budget numbers because of, for
example, one issue. I see great proclamations being made about
fighting AIDS in Africa and it is about time. We have been
talking about this issue for a dozen years. It has been no
secret. It has not crept up on us. This is something we have
known about for a very long time. Had we had the resources much
sooner, many more lives would have been saved and now we have
to request the highest possible level. But even at that, within
this budget allocation, it is going to be difficult to get that
money.
Madam Secretary, I was not going to go into it because I
thought your statement was going to be a justification on your
budget, but since you brought up the subject of China and now
have moved on to the policy side of it, at some point I will
ask some questions, questioning the premises that you put forth
about what our giving permanent normal trade relations to China
will do. I did not know that that was necessarily part of our
work here today, but I will ask what the administration is
going to do about the Human Rights Commission, the continuing
delays year in and year out about doing something real and with
some muscle, which have made it appear that the administration
was half-hearted in its interest in promoting human rights in
China.
In West Timor there are as many as 100,000 refugees from
East Timor whose return to the east continues to be threatened
by militias in the area. I am disappointed that the CIA
recently awarded a Distinguished Service Award medal to a high-
ranking CIA official who was fired for failing to report
Guatemalan military official linking to the killing of American
citizens, another place where we could send a message about our
commitment to human rights.
In Colombia, the human rights abuses continue unabated.
Most recently when we were in Venezuela, paramilitary groups
beheading numerous people from a particular village over a
four-day period with no response from military police.
The list goes on--General McCaffery calling into question
whether U.N. drug control programs should receive U.S. funding
because of possible contacts with the FARC and question the
wisdom of calling for changes in the judicial system, approving
a diplomat whom the Justice Department determined that this
individual was prosecutable under a 1992 law making torture a
crime, was sent back to Peru, and new stories indicated that
the State Department insisted on this. I do not know if that is
the case.
I am not blaming you for that, Madam Secretary, but I
believe that if we are--and I know that you are a champion of
human rights and if someone with your distinguished pedigree of
fighting for human rights in an administration that calls one
of its top principles promoting democratic values in our
everyday lives here, issues of major concern to us, we are
avoiding or ignoring opportunities, missing opportunities to
make a strong statement, then it just does not look consistent
and I would hope we would be a more consistent force for the
importance of high standards on human rights.
I believe that we can achieve our foreign policy goals
while, at the same time, insisting on strict adherence to high
standards of respect for human rights and human dignity on too
many occasions it seems what is diplomatically expedient drives
the U.S. decision-making.
I am not going to go into the failure of U.S. policy with
China in terms of improving the human rights record. Even your
State Department country report has indicted the regime as
recently as this year, and over and over again.
So I would hope that we can work together and again help
you, because this being your last appearance before our
committee, I hope that we can help you have the legacy of this
administration be one of consistent support for human rights
throughout the world because I believe that it is in our
national interest to do so, as you so eloquently declared in
your statement. And I will save my other comments for my
question period, thanking the chairman for the time. Thank you,
Madam Chairman.
Mr. Callahan. Thank you, Mrs. Pelosi.
I might just respond to a couple of your statements, Madam
Secretary. Number one, and to you, too, Nancy, with respect to
the amount of money we will have available to us, this
committee will have to play cards with the hand that is dealt
to us. The hand that is going to be dealt to us I am afraid is
not going to include the full amount of the President's
request.
Debt Forgiveness
Number two, let me talk briefly about the debt forgiveness
statement you made. Madam Secretary, I think you ought to
concentrate on State Department affairs and let Treasury
Department handle Treasury affairs. If indeed we are encouraged
or decide to take money out of the hand that is dealt to us and
put it in the hands of the Treasury Department, it is going to
cost your operations at the State Department.
So I think we ought to concentrate on responsibilities of
the State Department and talk about debt forgiveness at a
meeting with Secretary Summers. But let me encourage you to be
reminded that this committee will not object to debt
forgiveness if indeed there will be responsible debt
forgiveness. I am never going to agree to debt forgiveness
unless there are some conditions, that these countries cannot
borrow the next day the same money that U.S. taxpayers are
paying off to foreign banks. We are not going to agree to
permit a country who is heavily in debt, who is not paying
their debt, who is not paying their interest, to be forgiven
debt, have their slate wiped clean, only to give them the
ability to go right back into debt.
So when the administration comes to me with some
responsible legislation to accomplish the goal of providing for
the needy in these countries, responsible by saying they cannot
go right back into debt the next day, this committee will
probably consider that favorably. But that is really a question
for Treasury.
On the 1 percent or less than 1 percent, we have had this
discussion before. I agree with you that it sounds little, but
it does not include the military assistance we provide to the
world. The Japanese are not providing military assistance. The
French, very little, if any. The Germans none, if any. And yet
we are required to provide military assistance for every
country in the world that we consider our ally. We are expected
to send our billions of dollars overseas in the form of
airplanes and tanks and ammunition in the form of military
assistance to these countries.
And you have to include in your arguments with other world
leaders that they must recognize they should not criticize us
for only spending one penny because in reality, we are probably
spending 10 times as much as they are in all of our foreign aid
package because military assistance, such as in Kosovo, such as
in Haiti, such as in Panama, such as in Kuwait, is not included
in our bill but it is still an integral part of our
international policy that gives us an advantage and gives us
the ability to assist less fortunate nations.
With respect to the Constitution and foreign policy, I do
not think any committee has been as generous with respect to
decision-making policies, freedom being given to you by this
committee. We do not try to involve ourselves in policy. We try
to give you as much flexibility as we possibly can.
I probably will not be chairing this committee next year if
indeed the term limits are applied as currently the House
Republican rules say. Someone else will be chairing this
subcommittee. But I would admonish him to give the same
flexibility to George W. Bush that I gave to Bill Clinton in
this committee, to give them the amount of money we can afford
but, at the same time, do not restrict them on how every penny
of it is going to be spent.
I know that there are probably one or two parts of that you
would disagree with.
Secretary Albright. Right. Maybe ``her.''
Ms. Pelosi. The Al Gore part of it.
Mr. Callahan. And thirdly, let me say we cannot buy our way
to peace. I am afraid we are entering an era in our history
whereby we are so generous, not only this administration but
the Congress, has been generous to countries that many times we
go in and seemingly buy our way to peace. But if indeed we are
doing that, in my opinion we are encouraging divisions in
various political factions in countries around the world
because all they have to do is to threaten to go to war against
one another and then we will send a peacekeeper over there; we
will negotiate a settlement and give them each a couple of
billion dollars.
We must stop trying to think we can buy our way to peace by
encouraging divisions, so they can be resolved by monetary
gifts.
I just wanted to bring those out. You can comment on them
at this point.
Secretary Albright. You have put an awful lot on the table.
I would like to deal with Kosovo but you have brought up some
other issues and I think as a result this allows me to put some
of the comments that Congresswoman Pelosi raised also into
context here, I believe that the 21st century offers the United
States the most amazing opportunities and challenges ever. All
of us, at least those of us that are of similar age, have lived
through 50 years of a frozen international system in which the
world was divided into red, white and blue. And we had money
and the money was used, in fact, to try to figure out how to
make countries be on our side versus the other side. A lot of
the foreign aid budgets and a lot of the State Department
budgets were directed in that particular way.
We live in a much more complex world where all of the
various struggles have thawed at the end of the Cold War. We
have not invented these various divisions. These are divisions
that have existed for a long time or have come to the surface
as a result of the fact that we are not fighting proxy wars or
that life is not dominated by communists or our desire to have
people on our side.
Life is very different and I think that we have to look at
our role in that way. But you speak about money. In 1985 the
State Department budget was $22.8 billion. Now we are asking
for $22.4. That is a stunning difference, in terms of time, and
the fact is that we are really not asking for that much more
money. We have done a lot of analysis. If you do not like that
year, then 1986 again shows that we had a lot more money per se
than we do now to do a much larger job.
I think that clearly there is such a thing as a national
security budget. I understand your talking about the military
and telling me not to talk about the Treasury, but it all kind
of goes together in terms of how we project American leadership
at a very complex time.
I believe that the United States is better off when
countries are run by small ``d'' democratic leaders, when human
rights are respected, when the rule of law works, when people
are not hungry, and when there is a respect generally for
international regimes. That does not happen on its own and
foreign policy 101 is basically getting another country to do
what you want. In order to do that, I have to do more than be
able to go around and smile or shake my fist. I mean basically
we need your help in resources to get this done.
You said something else that I really would like to kind of
have as a slogan for this hearing--not to paint a rosy picture
of places. I am not going to do that in whatever case I discuss
with you, whether I answer Mrs. Pelosi's questions about China
or yours about Kosovo or Colombia or whatever. I would like you
to know that I have not done that in the past and I am not
going to do it now.
So within that context, Kosovo, I believe, and the Balkan
peninsula as a whole, making sure that they emerge from this
period of instability is very important and is a national
interest of the United States. If there is instability in the
Balkans and vast numbers of immigrants out of the Balkans into
Europe, there will be instability in Europe and therefore it is
of interest to us.
I have spent a lot of hours talking to my fellow foreign
ministers about this in Europe and we are all agreed on it and
they are, in fact, bearing the lion's share of the cost on the
civilian implementation of Kosovo, and we can go into that in
more detail.
I think that as of today we have accomplished a lot in
Kosovo. This is what has happened in less than a year. An air
campaign achieved all of NATO's stated objectives without a
single allied combat casualty. We halted and reversed a
premeditated campaign of ethnic cleansing and helped to return
800,000 refugees and displaced persons to their homes.
Everybody said that people would freeze or starve during the
winter. They did not, and that was due to what we did, along
with our allies.
We have managed, to a great extent, to establish public
order but not everything has been accomplished. For the most
part there have not been a lot of hostilities and we have, for
the most part, demilitarized the Kosovo Liberation Army.
We have a U.N. mission with an exceptionally strong mandate
and clear authority to administer Kosovo and develop some local
government and police entities. UNMIK, the U.N. operation, has
established an interim administrative council in which Kosovars
take part in the direct administration of the province. We have
established a successful program of police training that is
producing a basis for future return to local civilian control
of law and order and self-government in Kosovo. We have
appointed or they have appointed hundreds of judges and
prosecutors to begin the judicial process. And we have begun to
redress the deprivations of more than 10 years of mismanagement
under Serbian rule.
Those are the things that have been accomplished. There is
an awful lot left to do. There is no question about that.
Assistant Secretary Jamie Rubin and Ambassador Chris Hill have
just come back from there. They went there for a specific
purpose: to deliver a very tough message to the Kosovar
Albanians about our displeasure with some of the things that
have been going on and made quite clear that if there were
provocations or various other activities that pursued
divisions, that they were in danger of losing our support, that
we had understood their plight and we understand the major
plight of the Kosovar Albanians, but we cannot deal with these
kinds of provocations. It was a clear message.
But, at the same time, and I just had this conversation
with Jamie Rubin, he said what does not make the papers is the
fact that there is a starting up of life again in Kosovo. In
various bombed-out buildings they have set up hardware stores
and other shops and restaurants and in other towns life goes
on. What makes the newspapers are the conflicts. That is what
it is about. But I think that for people that go there to see
it, there has been some progress. And we have to understand
that, thanks to us, the U.S. is in the lead but others are also
responsible that progress is possible.
We are very concerned about what is going on there now. I
was in Europe last week. I stopped at NATO and also I think you
asked some questions about troops and where we are. SACEUR has
expressed the view that some additional forces are necessary to
address the situation in Mitrovica. Italy and France have
already offered additional units, which should be deployed in a
week or two, and NATO's military committee is refining
estimates of exact needs and we await their review. But what we
have made clear and General Shelton did also is that other
countries need to come forward and do most of the work in this,
but we have a responsibility.
I think we ought to be very proud of what we have done in
Kosovo. It is not over. We have not set any artificial
deadlines, but I think when we can honestly say that 800,000
people did not starve or freeze or die or be raped, then I
think that we have done something that is worthwhile. And, as I
have said before, Mr. Chairman, I am happier sitting here
answering your questions about where we are now than to be here
and have you say, ``Weren't you doing anything? Didn't you care
about what was going on in the Balkans? Didn't you understand
that this would affect U.S. national interests?''
I am sorry that this took more than five minutes, but I am
happy to answer more questions, but I think that kind of
generally----
Mr. Callahan. I am going to have to admonish myself for
taking more time than my committee members deserve that I take.
But once again on Kosovo, we have an interesting hearing coming
up in a couple of weeks before this subcommittee. And we have--
I do not know if they are Serbian nationals but they are
Yugoslavs and they are coming before our committee to ask us
questions involving U.S. policy.
I do not think you will deny that the same atrocities that
caused us to go into Kosovo, and that was the abuse of the
Kosovars, that has now been reversed and now you have the same
people we went in there and protected, the Albanians now doing
the same thing to innocent Serbs. They are committing the mass
murders now. They are committing the atrocities. They are
committing the human rights violations. They are arming
themselves. And we, in a sense, are standing by and assisting
them in this respect.
Now, the fact that we went in there, whether that was right
or wrong, history will determine that. We hope it was the right
decision. This committee supported you, supported the
President, supported the military in that endeavor. But we
cannot go in and say we did the right thing there; now these
people that are being attacked by the Albanian forces and being
put under the same type of punishment that prompted us to go
into there, we have to resolve that.
And it is going to be interesting to see what these people
say. They are not supporters of Milosovic, they want him out
but they say our policy is encouraging the stability of the
Milosovic administration because the Albanians are doing such
damage and committing such atrocities on the Serbs now that
that is building up Milosovic's political base. It is going to
be interesting and certainly we will report to you some of the
statements that they submit to us.
This is an issue that is becoming very, very serious and
very, very questionable with respect to what are we going to
tolerate?
Secretary Albright. May I?
Mr. Callahan. Yes.
Secretary Albright. First of all, I have met with some of
those people and I think that part of the problem here is, if I
might distinguish, that nobody is denying the fact that there
are provocations and various excesses going on by some Kosovar
Albanians. There are extremists who are dissatisfied for one
reason or another but I would say that the large majority of
Kosovar Albanians are trying to put their life together after--
and this is where the difference is--after a systematic
government-organized pillaging by the Milosovic Serbs into
Kosovo.
What is happening by the Albanians are excesses by some
groups but not by some non-existent Kosovar Albanian
government.
I do think that there are good Serbs who have been hurt. I
have met with many of them. I met with Bishop Artemea out of
Kosovo. We are trying to help them. He wants an independent
media in order to be able to not be under the control of the
Milosovic regime. Some of the money in the Kosovo supplemental
is money to help the Kosovar Serbs to be able to have an
independent media and live a life within Kosovo. Those are the
things that we are asking for.
But I think we have to be very careful not to equate what
extremist Kosovar Albanians, of which I am ready to admit they
exist, versus what was a government-directed policy by
Milosovic to kill and ethnically cleanse the entire Kosovar
Albanian nation.
Mr. Callahan. Just in closing on this particular area, let
me say that we recognize and we support those Kosovars,
Yugoslavs and Serbs who are trying to rebuild their lives and
we are happy that we have provided them this opportunity. But
there are also Serbian people who are trying to rebuild their
lives, who now are being prohibited from doing it by the very
same element of people that we went in to protect.
Mr. Wolf?
Mr. Wolf. Thank you, Mr. Chairman.
Madam Secretary, welcome. I supported the bombing in
Kosovo. I was one of, I think, 30 Republicans. But I do think
you have been slow to move into the area of reconciliation and
confidence-building and slow to get behind Rugova and do some
of the things that I think would have prevented us where we
are. But that is not a question; that is just a statement.
I have also been supportive of your numbers. I believe that
America has been blessed and it says in the Bible, ``To whom
much is given, much is expected.'' And we have been given much
and blessed.
But your policy on China--I was not going to mention it but
I do not believe it has been a blessing. There are Catholic
priests and bishops in jail, more today than when Clinton
delinked. There are 300 evangelical church leaders in jail.
I visited Tibet two and a half years ago. They have
plundered Tibet. There are TV monitoring cameras and the
Buddhist monks and nuns who we have spoken to talked of
torture. They are persecuting the Muslims in the northwest
portion of the country. There are more slave labor camps in
China today than there were when Solzhenitsyn wrote Gulag
Archipelago. They have an organ program where they shoot people
to sell the organs. In your own human rights report it talked
about 500 women a day in China commit suicide.
The policy is not a blessing. So we have differences and
this is not a question. I was not going to comment but I did
not want the record to be my silence was an indication that I
agreed with you.
The two questions that I have basically deal with one,
Sierra Leone. I am requesting today, and I know you visited
Sierra Leone. Congressman Hall and I were there in December and
spent several days. I am asking you that you do two things:
that you support Congressman Hall's diamond bill because
diamonds are the cause of this conflict and the administration
has been silent.
Secondly, the rebels should be told--Sanko, who we met
with, and Johnny Palkarome, who we met with, they should be
told and Charles Taylor in Liberia should be told if they do
not reach a conclusion to this killing and the maiming and all
these things that have gone on--I visited the same camp that
you did with the young people with their arms cut off--they
will be war criminals. And we will work with Great Britain.
They will never be able to visit London again. They will never
be able to visit Paris again. They will never be able to visit
the United States.
Charles Taylor in Liberia is in the same category. He has
children in the United States. They should be told, and you
have information that I do not have, by a certain date, whether
it be July 1 or June 1 or whatever date you feel comfortable
with, that if they do not fully comply, that they will be war
criminals and our intelligence will find them and we will track
them down and any time they go to any other country outside of
Sierra Leone and outside of Liberia, they will be picked up and
they will be prosecuted.
If you were to say that, because when we met with Sanko, he
was worried about becoming a war criminal. They are all
worried. They all want to travel. They all have assets in the
West. They have families in the West. They get medical care in
the West. They get shopping in the West.
So will you make this a policy--you pick the date; you pick
the time but that if this does not end, the atrocities, then
they will be war criminals and we will find them. But they
certainly will not be permitted to visit any other place
outside of Sierra Leone and outside of Liberia.
Secretary Albright. I will get to that but if I might do
the China thing----
SIERRE LEONE
Mr. Wolf. But I only have five minutes and you have spoken
on China. This Sierra Leone is something we can deal with
today.
Secretary Albright. I have, as you pointed out, I have been
to Sierra Leone. We have worked out an armistice. We want to
have a peacekeeping operation there.
What you are saying is very serious and I am going to look
into exactly how to frame what you are asking for because I do
think that these are very serious issues, the kind that you
have raised. You have a very strong record on human rights and
justice on this kind of thing and we have worked out an
armistice with these people. They are far from--there are
serious problems with them but what we have been trying to do
is to have the armistice carried out and get some peace for the
people so that there are not more camps with people with no
limbs and suffering various other atrocities.
Mr. Wolf. I would ask you to do that. If you could let us
know and respectfully suggest, as painful as it would be, that
you watch the film, the 28-minute film, which my office will
supply you, showing men carrying their arms around and showing
the brutality. It was the unedited version that CNN ran. If you
would watch that or have somebody in the department watch it.
SUDAN
The other question is with regard to Sudan. I think the
President frankly could have done more. I think with all due
respect, I think you could be speaking out more on this issue.
I appreciate that you have appointed Harry Johnson as a
special envoy, but there is slavery in Sudan; they are bombing
hospitals; they are destroying the villages along the pipeline
route that the Chinese government built. We are asking that the
government, that the Clinton administration, and you use your
prestige and efforts to keep the China National Petroleum
Company from being listed on the New York Stock Exchange, that
our SEC and the New York Stock Exchange say this will not be
listed because as it is listed, the government of Sudan, and
you have seen the briefings, too, has said they are going to
use that money that they get there from the pipeline to buy
arms to continue the war. They made the assassination attempt
on President Mubarak. You can go there and see slavery. The
atrocity is 2 million people killed. But that would send a
signal and I think bring the Sudanese to the peace table.
And I commend you. I have seen your comments about how you
personally feel about it but if you could make this the policy
of the Clinton administration, that they will not be listed on
the New York Stock Exchange because that is basically, in
essence, giving them the wherewithal whereby they can continue
to do what nobody wants them to do and I know you do not want
them to do.
Secretary Albright. Well, I obviously agree with you about
the horrors that are going on in Sudan and that it is a modern
form of slavery and I have spent a lot of time on this. I have
met with various people from the region, talked about the
bombings and have condemned those.
We have done a lot in terms of the concerns of Sudan. I
will again look into the oil company issue.
Mr. Wolf. Thank you. I yield back the balance of my time.
Mr. Callahan. Mrs. Pelosi?
Ms. Pelosi. Thank you very much, Mr. Chairman.
Madam Secretary, so many questions, so little time. My
chairman has addressed the Kosovo situation, so that allows me
to move into other areas.
PLAN COLOMBIA
I am concerned about Plan Colombia and the fact that we are
the only one who seems to be coming up with any money. The
military emphasis on the money that we are putting there,
especially in light of the State Department country report on
Colombia, the Human Rights Watch report, and the expected U.N.
report tomorrow, which will also be negative in terms of the
military.
President Pastrana has been very, very courageous and I
recognize what he has tried to do with the military there but
if you could just briefly, because I do not have much time,
comment on what is the basis for our focus on military? We did
not find that to be the overriding request when we were in
Colombia. I did not get that impression. The Colombians need
help; we want to help them. I happen to believe that this is
about reducing the drug problem in the United States. We should
be focusing on reducing demand in the U.S. rather than dealing
with what is going on in Colombia.
I just want to give you a moment to comment on Plan
Colombia and why military assistance on the part of the U.S.,
as the centerpiece of that, is a good idea for reducing the
demand for drugs in the United States.
Secretary Albright. I will do that but can I say a couple
of words on China?
Ms. Pelosi. But I am going to ask about China next, if you
would just do this briefly.
Secretary Albright. Fine, I will do Colombia. Let me say on
Plan Colombia that we have done everything we can to support
President Pastrana, who I think, as you have said, is a brave
man. We did not have the option of really working with the
previous government, where the president had ties to drug
cartels. President Pastrana, when he came up here to see
President Clinton before his inauguration, made very clear his
determination to work on the drug issue.
What the problem is is that he does not--the government in
Bogota does not control large portions of the country. And in
order to have the police be able to do its job as it works on
the drug problem, the police need kind of an envelope
protection by the military. So the assistance that we are
giving to the military is for their help in providing the
security for the police so that it can deal with the narco-
traffickers.
We are obviously, as you are, concerned about the human
rights aspects of the military, which has not had a great
reputation in the past, and what President Pastrana has done is
to create two units that are the ones that will provide this
envelope, so to speak. Each member of these units has been
vetted case by case to make sure that they are not in any way
involved with human rights abuses.
The overall effort here is for Pastrana and the government
in Bogota to be able to regain control of their country and the
military is part of protecting the police so that they can go
in and deal with the narco-traffickers.
I agree with you and others who state that a lot of the
problem is also here in terms of demand. That is something that
we have to deal with. I think that with President Pastrana we
have our best shot in trying to deal with the following kinds
of problems: the narco-trafficking, the insurgency, so that he
wants to deal with the peace process and we are supporting him
in that. On human rights issues, he has had his vice president
be in charge of it. He has put a lot of emphasis himself on it
and on providing alternative forms of agriculture and social
issues in Colombia.
I think that Plan Colombia is a comprehensive plan that was
developed there that we support and I think it is the right way
to go.
Ms. Pelosi. I appreciate that, Madam Secretary, and I guess
I would feel a lot better about it if I saw any of the money
that the Colombians were supposed to put up for this because it
seems to me the oligarchs and the elites in Colombia have not
yet made the decision that they have to do their share to solve
the problems of Colombia.
I appreciate what you are saying but the 1.5 million
internal refugees in Colombia--I fear that part of the plan,
the move into southern Colombia, is going to increase the
number of refugees there and I do not see a counterbalance in
terms of the human services that are going to be necessary. I
hope that in your communications with the Colombian government
and again respectful of President Pastrana, that the message is
a clear one. Our part of it is a discrete part but we want to
see the other part because we do not want to be an instrument
of increasing the number of internal refugees and displaced
persons in Colombia.
We will be having our own debate on that here, as well.
Since that is imminent, I appreciate your comments on it. Thank
you, Madam Secretary.
CHINA
Madam Secretary, on the subject of China, my colleagues and
I on both sides of the normal trade relations with China issue
wrote in January and in February to request that the U.S. begin
a real process of adopting a resolution on China at the U.N.
Commission on Human Rights. That is next week. We are very
pleased that you are moving ahead with the resolution but we
want to know, in light of the new evidence in the State
Department Human Rights Report, what effort is being made by
the administration to build a consensus in favor of the
resolution? Is the President as directly involved in lobbying
for the passage of that resolution as he is in promoting
permanent normal trade relations with China?
When we talk about opportunities and the missed ones that
we have experienced over the years, this seems like an
opportunity and I would just like to know what the resolve is
of the administration to do things differently this year so
that we can be successful.
Secretary Albright. Congresswoman, first of all, let me say
that this is one of the issues that I am dedicated to making
work. I cannot guarantee you success or myself but it is
something that I am spending a lot of time on.
First of all, what we have done is made a decision much
earlier than usual to have a human rights condemnatory
resolution in Geneva and we have been systematically trying to
get cosponsors for the resolution, and also to try to make sure
that people are with us on a no-action motion and then on the
resolution itself.
I am doing something that most people would think is
lunatic and that is that I am going with the President to
India, flying to Geneva in order to be able to give the speech
myself and then flying back to join the President in India, in
order to really underline the fact that this is something that
is very important to us.
And we are going to be talking more--I do in every time
that I have a conversation with any foreign minister about the
importance of supporting us. The President, when he talks to
heads of state, makes the same points. We will increase that.
We are hoping also that members of Congress will help us on
this in terms of dealing with your counterparts in parliaments
in various countries.
This is not easy but I think the no-action motion is
something we are arguing that at least the Chinese--we have to
be able to discuss this issue. We are doing a full court press
on it. I can assure you of that, and we consider it vital.
Ms. Pelosi. I appreciate that, Madam Secretary. I know my
time is up, Mr. Chairman. I just want to say this. That is the
Chinese have outsmarted us year in and year out because they
have used their economic and political leverage at the U.N.
Commission on Human Rights, almost making that body a joke.
So I would hope that when we make a real effort, we will
have some real results or else not decide to say we can deal
with human rights in its appropriate arena unless we are ready
to really make the fight. And I appreciate what you said and I
hope that the President is using his good offices for the human
rights agenda.
Mr. Callahan. Mr. Packard.
Ms. Pelosi. Thank you, Mr. Chairman.
Mr. Callahan. Mr. Packard.
Mr. Packard. Thank you, Mr. Chairman.
A very minor issue that is in my district that I would like
to just very briefly touch on and then a more substantive
question.
I have in hand a letter that I sent to you on the 14th of
February, which addresses a constituent of mine, a Mr. John
Ottley, who is a Ph.D. biologist that is imprisoned in Mexico.
I would appreciate your office following up to see that he gets
fair treatment and that his case is dispatched as quickly as
possible.
To a more substantive issue, for several years now I have
been concerned about corruption in the countries that we have
been giving significant assistance to and now we are adding
Colombia, of course, which has a history of problems.
Are we making progress in this area?
Secretary Albright. First of all, I will look into that
case.
Mr. Packard. I appreciate it.
Corruption
Secretary Albright. Second, I think corruption is really
the cancer of the international system at this stage in terms
of undermining democratic governments and nondemocratic ones
that control various enterprises and entities and it is of
great concern to us.
We have, I think, made some progress. We have managed to
get OECD to pass an anti-corruption and bribery convention. It
provides the leverage that we need. What we are finding is that
other countries are more and more interested in joining us in
dealing with the corruption issue.
We are systematically working at it. It is a huge problem.
I have spoken about it in speeches and I also raise the point
when I travel. But I do think we are making some progress, at
least in terms of developing a regime.
Mr. Packard. As you well know, foreign assistance is one of
the low priorities of our American taxpayers and part of the
reason is they feel that much of the money that we send
overseas is not going for the purposes for which it is
intended. It often filters into the hands of the wrong people,
and that is where corruption, of course, has its most
devastating effect. It certainly undermines the general
attitude on foreign assistance, even though I support our
efforts in that area in most instances.
IOP Funding
I also notice that on the budget you have virtually doubled
the area of international organizations and programs. Could you
explain that for us, please?
Secretary Albright. I will get you--it has to do with
UNICEF funding vaccines. I will get you the exact data on it.
Mr. Packard. It just stands out as especially----
Secretary Albright. Basically it allows us to--I believe
when we give funds to international organization programs, it
is a way to multiply what we get out of it because it gets
other countries to contribute additionally. And we are, I
think, getting a lot more out of them by contributing.
I think one of the issues that was raised here previously
was what we are doing on HIV-AIDS and vaccines. Some of that
money is going through those programs.
Mr. Packard. I appreciate----
Secretary Albright. But I will get you more details.
Mr. Packard. Thank you very much.
Thank you, Mr. Chairman.
Mr. Callahan. I might comment that UNICEF is currently
funded out of the child survival account and is going to be
funded next year out of the child survival account. So you do
not need to lose any sleep over that.
Mr. Jackson.
Mr. Jackson. Thank you, Mr. Chairman.
Good afternoon, Madam Secretary, and thank you for your
testimony. I have a number of questions which I will submit for
the record. I have also submitted them to your staff, Madam
Secretary, and I would like to read through a couple of them
and if you could answer them, I would be most appreciative.
Funding Levels
The House Budget Committee Chairman John Kasich has
proposed that the new congressional budget resolution should
assume total discretionary funding for fiscal year 2001 of
$596.5 billion, with $370 billion going for defense
discretionary programs and $289.5 billion for nondefense
discretionary programs. The $289.5 billion for nondefense
discretionary programs represents a reduction of about $20
billion or 6.4 percent below the level the Congressional Budget
Office estimates is needed to maintain funding for nondefense
discretionary programs at the level enacted for 2000, adjusted
for inflation.
I am wondering how these preliminary numbers that are
floated by the Budget Committee affect the function 150 budget.
I am also wondering; in your congressional justification you
state that one penny of every dollar spent goes to foreign aid.
I know you stated this in your testimony but I am interested
also in how you can explain to my colleagues how far our
function 150 budget goes.
Africa
With respect to the Development Fund for Africa, I am
pleased to see that the administration has asked for a separate
line item for the Development Fund for Africa instead of
rolling it all together in the development assistance account.
I have always been concerned that Africa has been neglected by
the international community. I feel that separating the DFA
from the regular development assistance account would be more
than a symbolic gesture of the U.S.'s commitment to Africa. I
am hoping that you can also explain to the committee why the
DFA should remain a separate account and the possible benefits
of this action.
Also with respect to Mozambique, I am concerned about the
U.S.'s response time to the crisis in Mozambique. I understand
that Mozambique declared an emergency on February 7, but we did
not have helicopters flying humanitarian missions even as late
as last week, about a month after Mozambique declared an
emergency.
I am wondering; can you comment on this particular
situation and what the U.S. role is and how the U.S. responds
to disasters like this around the world. I am hoping that you
can tell the committee what exactly the U.S.'s role is in the
relief effort in Southern Africa. And how does the U.S. decide
which disasters to respond to? And is there a method that we
should use to prioritize these types of emergencies?
Mr. Chairman, I have a number of other questions for the
record and if there is a second round I will ask them at that
time. Thank you, Mr. Chairman.
Secretary Albright. Thank you very much. Let me just
generally say, in terms of the questions you asked about the
budget resolution, that I am very concerned that the House
budget resolution will cut, as I mentioned before, the overall
international affairs budget by $3 billion. This will, in fact,
result in deep cuts--$2 billion or more--to the President's
request for these programs.
What it does is basically cut very specifically our
assistance in crucial stages of their transition to democracies
in such countries as Nigeria. Nigeria is one of the countries
that I believed and continue to believe is a crucial country
for us regionally in terms of moving it into the democratic
column. And with President Obasanjo's leadership and support
for the kinds of things he is doing we can not only put Nigeria
back into the column but make it play its crucial role in
Africa.
There are also programs to fight terrorists and narco-
traffickers and to stop the spread of weapons of mass
destruction that will be cut just when we see these as
increasing threats. Therefore it is totally counterproductive
to take that money away.
We also, and this has to do with some of the other
questions asked, are working to try to get our European allies
to contribute more funding to the Kosovo recovery and we will
not be able to contribute--if we cannot contribute our share of
it, then it reduces our effect of being the catalyst or the
magnet for getting things done.
Mr. Jackson. I am sorry, Madam Secretary. I did not ask any
questions about Kosovo. My question was about the Development
Fund for Africa and it was about why it has taken the United
States so long to respond to the Mozambique problem.
Secretary Albright. I thought you had asked a question
about how the possible budget reductions would hurt.
Mr. Jackson. Well, Madam Secretary, I did ask that question
and I am sorry. I thought you had moved on to other points.
Secretary Albright. But I would be happy to answer the ones
on Africa. Let me also say that I have specifically, and
President Clinton has as well spent more time and effort in
terms of trying to help Africa than any previous
administration. For instance, on Nigeria we have quadrupled the
assistance.
On the Development Fund for Africa, we have felt that it
needs to be separated so that we can really direct ourselves at
it. Our $533 million FY 2001 request for this, I think, is a
good amount. It is along with $304 million in the FY 2001 child
survival and disease account money also requested for Africa.
Thus, the total amount will be $837 million and this is a $99
million increase over FY 2000 sustainable development
appropriations.
On Mozambique, we have done the following. USAID has
provided $7 million in emergency food aid and $5.7 million in
assistance through the Office of Foreign Disaster Assistance
and this amount includes funding for search and rescue and
humanitarian assistance.
Additionally, USAID has sent a 25-member disaster
assistance response team to Mozambique and that team includes
14 paramedics who are trained in rescue techniques plus three
Zodiac inflatable boats. Our funds have also been used to pay
South African search and rescue aircraft.
DOD has deployed a humanitarian survey assistance team.
They did it on February 17 and a joint task force was deployed
by the U.S. European Command, EUCOM, and it arrived in South
Africa on March 7 and that has been operating off of the
drawdown authority for $37.6 million.
Our assistance package also includes $2.5 million for land
mine clearance to deal with the estimated half a million to one
million land mines that had been displaced by the flooding. And
the U.S. Department of the Treasury is moving to forgive the
official bilateral debt owed by Mozambique to the U.S.
government, and this is approximately $4.9 million.
We have also provided assistance to other countries that
have been hit by floodings--Zimbabwe, Botswana and South
Africa. We are assessing further needs.
I think one of the hardest questions that you have asked is
how we choose about what to help. I think we try to do the best
we can with the limited funds we have. I think this is when we
find that we are robbing Peter to pay Paul, and that we need a
larger pie in order to be able to help.
Some of the disasters are natural disasters over which
nobody has control and some of them are manmade disasters,
which we are trying to resolve through increasing support for
democracy initiatives, and reconciliation support for the
African Crisis Response Initiative that would provide forces
that could go in and help.
I forgot about the diamonds that you mentioned. We are very
concerned about the whole aspect of what the diamond culture is
creating in Africa and are looking at various ways to deal with
it.
I also would like, if nobody asks, to provide for the
record everything we are doing on HIV-AIDS in Africa.
Mr. Jackson. Thank you.
Mr. Callahan. Mr. Knollenberg.
Mr. Knollenberg. Madam Secretary, good to see you again.
Welcome. Thank you.
North Korea
I have a couple of questions that I want to ask that deal
with North Korea. As you mentioned in your testimony last
September, the U.S. reached an understanding with North Korea
that North Korea will refrain from any long-range missile
flight test as long as negotiations, to improve relations are
under way.
I am hopeful that there is some progress with these
negotiations but, as you might imagine, I have some serious
concerns, which I have registered here before.
To begin with, we have never received a written agreement
from the North Koreans regarding their suspension of missile
tests. Maybe we never will. Furthermore, the agreement reached
in Berlin last September is very limited. It is far from
explicit and it is of unknown duration.
In September the U.S. lifted trade, banking and other
sanctions. We lifted; they promised. They merely promised that
they would not test an intercontinental ballistic missile so
long as we had some normalization talks.
Now we have mentioned some negotiations underway in New
York but instead of emphasizing any kind of formal agreement on
missiles, this visit is being described as the opening of
discussions on terrorism. Apparently we are now trying to get
Pyongyang to make another public promise in exchange for being
taken off the department's list of nations supporting
terrorism.
I will submit questions for the record on the logic of
taking North Korea off the list but let me focus just on the
missiles for a moment. Can we have something from the Koreans,
the North Koreans, on missile tests? Is there anything in
writing that we could get our hands on as to just what it is
they promise?
Secretary Albright. First of all, the situation in North
Korea and the DMZ remains one of the most dangerous places in
the world. It is one of our most urgent national security
concerns and is urgent to our allies, and we still have 37,000
troops there. The worst prospect about it really is is that, as
we have pointed out, is that North Korea could develop both
nuclear weapons and ICBMs that are capable of reaching us. We
have worked very hard to try to assess where the policy has
been, where it is going, and I think that there were those
during this who argued that military intervention might be a
good course. But I think that, while we would prevail, it would
create huge losses.
We asked Dr. Perry to do the review, and I think that what
we are trying to see is whether the North Koreans will take the
correct fork in the road in order to change relations with us.
I would like to say, on the sanctions issue, what we did
was we announced a decision to ease the sanctions, but we have
not implemented that. So it is not that they have talked and we
have promised. To that extent the sanctions have not been
implemented.
Mr. Knollenberg. Could I interrupt?
Secretary Albright. Yes.
Mr. Knollenberg. Would the ongoing talks that are currently
taking place be on the issue of missiles, and what do we need
from them, in other words, to bring about a lifting of those
sanctions? One of the things that bothers me is the fact that
the agreed framework had nothing to do with missiles, and that
now we are using the agreed framework as the basis for an
ongoing discussion which concerns missiles. Should that not be
in writing in some fashion from our side, and should we not
expect from them some kind of commitment that goes beyond a
promise? They promised before, and it seems to me like their
promises continue to be ones that we challenge because they do
not come through.
Secretary Albright. There are a number of parts to this,
which is that the agreed framework was something that was done
in order to freeze North Korea's capabilities in nuclear
weapons material, and we believe that that is useful and that
it works. At the same time, we have been having talks with
them, and our dialogue, we think, has, in fact, produced
results because they did make this pledge to suspend the
launches of the long-range missiles. They announced----
Mr. Knollenberg. Should that pledge not be in writing,
though, Madam Secretary?
Secretary Albright. The talks are going on now. And if you
would permit me, I think it is really not a great idea to have
this discussion in a public forum. We are trying to move this
forward.
Mr. Knollenberg. Let me move to another subject real
quickly because I appreciate the concern that you have about
that very item.
Let us get into Kyoto because this is something I think we
can talk about. I have a question about the overall approach
that we seem to utilize Kyoto for in our negotiations with
North Korea. And in quoting from Secretary Perry last year, and
I think you have heard this before, ``The recommended
approach,'' he says, ``seeks to realize the long-term
objectives of the agreed framework, which are to move beyond
cooperation in the nuclear field to broader more normal US-DPRK
relations.'' And then in your fiscal budget jurisdiction in
this year's budget, it is stated that, again, and I am quoting,
``Using the agreed framework as a basis, the U.S. has initiated
discussions with the DPRK in an effort to satisfy our concerns
on North Korea, their activities in such areas as missile
development and clandestine nuclear activities.''
Could you please connect or explain the connection between
the support for Kyoto and negotiations on other issues such as
the missile development and proliferation?
Secretary Albright. First of all, I think that we were
concerned at one stage that there were some activities going on
on a site. We were able to get access to that site, and we will
continue to have access to it. And it was in the course of
those discussions that it was possible to also have discussions
about larger issues that are of concern to us about North
Korea. But we believe that they have carried out the--we have
no information that they are violating any aspect of the agreed
framework, and we continue to monitor that. And through the
talks, we were able to get access to these particular areas. At
the same time, we were concerned about what they were
potentially doing with missile testing, and that is how they
got----
Mr. Knollenberg. Is support for Kyoto necessary for these
other activities that are beyond the framework itself?
Secretary Albright. I believe that it is because it is part
of a deal, a contract that we made, and we think that----
Mr. Knollenberg. But the deal did not involve this latest
negotiating step, the deal you go back to----
Secretary Albright. What? The miss----
Mr. Knollenberg. You go back to 1995 on the deal, right?
Secretary Albright. But I think that we made the agreement
on the agreed framework because we thought it was in our--we
believe, I believe, it is in our national interests to have
been able to freeze what they were able to do and get access to
their sites and to then have the IAEA be able to continue to
monitor it. In order to do that, we made an agreement that had
to do with the provision of heavy fuel, light water reactors
and working with the South Koreans.
Mr. Knollenberg. You have been very good about explaining
that part of it. What bothers me a little, and maybe this has
to carry over into another round or something for the record.
Mr. Callahan. I think it is, Joe. We are ten minutes into
your first five minutes.
Mr. Knollenberg. That is my first question. But I would
enjoy having that opportunity.
Secretary Albright. I think we would very much like to
spend more time with you on this.
Mr. Knollenberg. Thank you.
Mr. Callahan. Mrs. Lowey.
Mrs. Lowey. Thank you, Mr. Chairman. Does that mean we all
have ten minutes, Mr. Chairman?
Mr. Callahan. Take as much time as you would like.
Mrs. Lowey. Oh, you are such a gentleman always. I thank
you.
INTERNATIONAL FAMILY PLANNING
And welcome, Secretary Albright. I want to thank you for
including $542 million for international family planning in
your budget request, and I want to talk about the terrible
policy restrictions that were added to this program last year.
As you very well know, I am a very strong supporter of an
activist United States role in the United Nations, and I fought
very hard to pay our shameful debt to that organization, as did
most of my colleagues. And that is why I was totally appalled
that some extremist elements in this Congress made us choose
between the United Nations and family planning.
Very simply, the facts show that family planning programs
save lives. Six hundred thousand women die each year of
pregnancy-related causes that are often preventable. More than
150 million married women in the developing world want
contraceptives, but have no access to them. And the simple fact
is that all of the demagoguery in the world is not going to do
a thing to reduce the number of abortions overseas, but access
to family planning will. I am working very hard with my
colleagues to ensure that the current restrictions are never
again included in the law. I hope we have your support in this
effort.
Please share with us the administration's position on these
restrictions and what steps you are taking to work with the
Congress to ensure that they are not included in next year's
bill.
Secretary Albright. First of all, I think one thing that we
need for the American public to know is that when we talk about
family planning, we are talking about family planning, not
promoting abortions. I think that has been a misunderstanding.
And I think that our work on family planning is among the most
important aspects of our foreign policy. As I travel around the
world, I always meet with women's groups, and the issue that
they talk about is their ability to have choice not only in
what jobs they have and how they live, but how they are able to
plan their families and are able to contribute to their
economies and their societies. As we know, in most countries
women are more than half the population, and I believe it is a
stability and democracy initiative to make sure that women's
issues and family planning issues are central to our foreign
policy.
I have to say that of the various decisions that I have had
to make as Secretary of State, one of the hardest and most
unpleasant was the choosing between the UN and the restrictions
that we had to take last year. I felt it was, frankly, an
abomination in terms of having to choose on these two issues,
and I think it is very important that we make up for it this
time.
President Clinton and I agree with you that the
restrictions on our family planning assistance hinder free
speech and are anti-democratic. And as the President has said,
we do not believe it is appropriate to limit foreign NGO's use
of their own money or their ability to participate in the
democratic process in their own countries. We will oppose any
kind of Mexico City language for these reasons. And we also are
asking for funding up to the previous levels.
Thank you.
Mrs. Lowey. Well, we thank you very much, and we look
forward to working with you.
Mr. Chairman, if I may turn to another subject, with the
generosity of the Chair.
MIDDLE EAST PEACE PROCESS
This year, like every year, the Middle East peace process
has experienced some high peaks and some very low valleys. And
I want to thank you and your Department for your vigilance in
pursuing peace in that region and your tireless commitment to
this critical and complicated issue. I do think that the
Congress and the administration have historically worked in
tandem to help Israel and her neighbors negotiate and maintain
important peace agreements. And American support is perhaps
more crucial this year than ever, as Israel seeks to close two
key peace deals; an accord with the Syrians and a final status
agreement with the Palestinians.
Could you discuss the guiding principles of U.S.
involvement in the peace process, and the extent of our
commitment to ensuring Israel's security, and could you address
the goals of the Palestinian-track talks that will reconvene
next week in Washington, and what you believe the United
States' role will be in reaching a final status agreement. And
if the Chairman allows you to continue, since we are all very,
very interested in the opening of the historic negotiations
between Israel and Syria and continue to be hopeful that they
will resume, I am unclear as to how the talks that have already
taken place between Prime Minister Barak and Foreign Minister
Al Shara [ph.] have actually moved the situation forward.
Maybe I should stop at that point. When do you anticipate
the Israel-Syria talks will reconvene? What are the major
hurdles that need to be overcome in the months ahead? There
have been very real concerns.
Mr. Callahan. Maybe the Middle East answer to the question
could be answered after the people on our committee have an
opportunity to ask their initial question because that is going
to require quite some time.
Mrs. Lowey. That is fine.
Chairman Kasich. At this time, I am going to yield to Mr.
Porter for five minutes and ask him to chair the meeting until
I get back. I will go vote and come immediately back in time
for you to get--Mr. Lewis is next to be recognized. Oh, Mrs.
Kilpatrick is next and then Mr. Lewis.
Mr. Porter [presiding]. Mrs. Kilpatrick is next.
Madam Secretary, it is good to see you.
Secretary Albright. Nice to see you.
Mr. Porter. I apologize for not being here. I was over
chairing my own subcommittee across the hall.
Human Rights in Turkey
In 1998, the State Department, working through Secretary
Shadduck, laid down with NGOs, and with Turkey's understanding,
a list of eight human rights benchmarks that were predicated on
remarks made by Turkish Prime Minister Yilmaz to the President
the previous December and made approval of an export license to
sell American arms to Turkey, contingent on meeting these eight
earmarks or benchmarks.
Right now, American Bell Textron remains on the list as a
possible contractor with Turkey for 145 attack helicopters. How
has Turkey progressed on the eight benchmarks, and what are you
going to do should Bell Textron be chosen the contractor?
Secretary Albright. Well, first, let me say that obviously
the issues of human rights and Turkey are of major concern to
us. We have raised the issue, and Prime Minister Ecevit's
Government I think has made progress on human rights and has
made democracy a priority and has taken a number of important
steps. Our human rights report, which was released on February
25th, notes that there are still serious problems, and it
discusses the areas in detail, and we can provide you with
additional material on that.
I think that it is important, though, for you to know that
we do not mince any words with Turkey on this. And the
President himself, when he was in Turkey and spoke to the
parliament there, made quite clear what our concerns are, and
we will continue to do that. And we have consistently raised
with them with the issues, particularly in the areas of freedom
of expression, torture, lifting the state of emergency in the
Southeast and expanding democracy. So it is out there, and we
cannot give it a clean report at this stage. But basically we
are dealing with it every time I see Foreign Minister Cem and
the President has made it quite clear.
On the specific issue of the helicopters, Turkey has not
yet decided which model of attack helicopter it wishes to buy.
And if it does choose a U.S. manufacturer, our export license
decision will be based on the full range of considerations
required by law and our arms export control policy, including a
thorough review of the human rights issues. And since they have
not made a choice, then I cannot comment further on it. But I
do think that you can be assured that the human rights
considerations are very much a part of our whole decision-
making process, in terms of how we deal with them.
Mr. Porter. Madam Secretary, Turkey, in deference to
Azerbaijan, continues to blockade Armenia. It is my
understanding that the administration is attempting to use its
good offices to encourage normalization of relations between
Turkey and Armenia. And I wonder if you could outline what you
have done in that regard and where we are in terms of the peace
process resolving the Nagorno-Karabakh conflict.
Secretary Albright. First of all, I think, again, we have
worked very hard, through the Minsk process, as well as taken
some initiatives ourselves to move the Nagorno-Karabakh process
forward. And I must say that the tragic assassination in
Armenia slowed things down. At various times, we have met with
both the--and, again, I point to the President's meetings in
Istanbul, where the specific subject of Turkey and Armenia came
up. Our desire to try to get them to work on some of the issues
that have been of concern, holocaust issues and other questions
of dealing with their history, has been very much a part of
trying to have some reconciliation between the two.
On the Nagorno-Karabakh aspect itself, we continue to work
with the Minsk co-chairs and try to press the issue forward.
But as I have said, the political situation in Armenia slowed
the subject down.
Mr. Porter. If we can turn to China for a moment. China
most recently has been arresting and intimidating members of
the Falun Gong, has been threatening Taiwan if they should
think about going an independent way, and most recently have
threatened the United States that if we do not grant them
permanent normal trade relations and pave the way for their
entry into the WTO, they will invite U.S. businesses out of
their country. And most recently, they have sentenced a Wigar
business woman, Rabia Kadir [ph.], to eight years in jail for
harming the national security. She was on her way to meet with
congressional staff visiting Beijing when she was arrested, and
her husband, who lives in the United States, had testified
before the Congressional Human Rights Caucus just a month
earlier on the plight of the Wigars in China.
I know what the administration is attempting to do, and I
know your position, but how do you read this? It seems like the
Chinese tend to be, and the Turks do also, often their own
worst enemies. They make all of the wrong decisions at all of
the wrong times, and this is particularly ``in your face'' for
the United States over Taiwan, over human rights, over trade.
This administration has consistently followed a policy of
reaching out to China, and they started out by slapping our
hand. Now they seem to be slapping our face. Does this lead to
any change in your thinking about the future relationship?
Secretary Albright. Well, let me say that we have never had
illusions about a relationship with China. China is a large
country, clearly; one becoming increasingly powerful and
important in its region and also globally, and I believe that
the most important aspect of our policy is that we need to
engage with China for the reasons of our national interest, in
order to be able to determine better what their intentions are
and to try to influence where it is possible.
I stated earlier, on the human rights issues, that I think
the situation has clearly gotten worse. We have made that quite
clear. That is why we made the decision to have a resolution at
the Human Rights Commission earlier than usual, and I have made
a lot of statements about the unacceptability of the Falun Gong
crackdown. We are looking into the case of the woman that you
described and generally making statements and taking action in
the appropriate forum on the human rights issues, which I think
have to be dealt with and on Tibet.
On the trade issue and our seeking permanent normal trading
relations, I think that we need to see that as a national
security issue. We are the ones that, in order to have
influence with China, it is important for us to have that
trading relationship. They have access to our market. We now
need to have access to theirs. And it is also an economic
issue.
In terms of human rights issues in China, I believe that
having access to them and opening up their society through
trade is an avenue. I found very interesting some of the
stories about people who are now able to be online on
computers, have access to outside information; that access to
information is the way that societies change. For a variety of
reasons, I favor engagement. I think that we have made very
clear the statements that they have made on Taiwan are
unacceptable in terms of our overall policy of finding a
peaceful resolution to that issue. And we are following what
needs to be done under the Taiwan Relations Act.
But I do not think that turning away from China or deciding
that we cannot deal with them is the right way to deal with a
country that has as much potential influence as China, and we
need to keep engaging, as difficult as it might be at various
times. And I agree with you, they, at various times, certainly
do not make it easier. But I think it is in our national
interests to engage.
Mr. Porter. I agree with you on that. And I agree that they
make it very hard for us to like them, to find common ground
with them. I also agree that we need to impact their society
with information truth and access to truth. Radio Free Asia is
one way to do it, and we are doing it. And I was just over
there last week, about two weeks ago to see the operation which
is very strong.
And I think we need to think in terms of how we can arm the
Chinese people with information technologies that get them into
the mainstream of the global life and let them get a true
picture of what is happening within their own country. And
anything we can do in that regard, it seems to me, alongside
turning the other cheek and moving toward a closer trade
relationship I think is productive.
IRAQ
What is happening with respect to Saddam Hussein and Iraq
and our efforts in that part of the world, which seems to get
very little attention in the press, but is still there and does
not seem to be improving? What are we doing there?
Secretary Albright. Well, we have a twofold approach to
this. First of all, we are continuing to contain Saddam, to
keep him in his box through the sanctions policy. And what we
are doing there, since clearly we are concerned about the Iraqi
people, more than he is, and through the sanctions policy at
the United Nations, we have developed an oil-for-food program
that allows the money from the sale of oil to be spent on
humanitarian goods and food for people in a way that he does
not allow.
The sanctions are in place. They will not be lifted until
he has fulfilled his obligations under the Security Council
resolutions. And when he does, as you know, UNSCOM has now been
replaced by an organization called UMIVIC [ph.] that has a new
head, Hans Blix, who was head of the IAEA. He is putting
together his team of experts. They need to go back in there,
and we are waiting to see whether Saddam Hussein will, in fact,
let them in. Now, if he does not let them in, he, in fact, is
throwing away the key to the box. Because unless we can figure
out if he is abiding by our resolutions, which means that he
cannot acquire weapons of mass destruction, we will not lift
sanctions. So that is one part.
The other part is we are working on regime change, which is
obviously not easy. We are working, through the Iraq Liberation
Act, with some of the Iraqi opposition groups, and generally
also fulfilling our responsibilities under which we are
monitoring and flying in the no-fly zone, and when our pilots
feel that they are under attack, we head back.
Mr. Porter. Madam Secretary, thank you very much.
I have to say that all of the years I have been in
Congress, you are by far the most candid Secretary of State
that there has ever been. Normally, if we ask questions of a
Secretary of State, we leave the room afterwards and say,
``What did they say?'' But you have given us some substance,
and you are doing a fine job, and we appreciate the work that
you are doing.
Secretary Albright. Thank you very much, Congressman.
Mr. Porter. Mr. Lewis.
Mr. Lewis. Thank you very much, Mr. Chairman.
Secretary Albright, it is indeed a pleasure to be with you.
You probably have no way of knowing this, but some years ago I
spent some time on this subcommittee. It has been an absence of
over a decade, but this is my first Congress to return to the
Subcommittee. And while I spend most of my time in the field of
defense, I have really been fascinated by opportunities to
spend some time with you and others who are related to the
whole arena that involves this shrinking world.
One of the things that has been most disconcerting to me
upon returning to the committee is the propensity for our
discussions often to be so highly polarized in a partisan way.
Foreign affairs, as well as national defense, should not be
partisan and yet it has been. As we have gone forward this year
with this supplemental, we found ourselves attempting, as a
committee, to figure out how to support both our efforts in
Colombia and our efforts in Kosovo. And the dialogue oftentimes
find us divided across a line that, to me, does not make any
sense.
COLOMBIA
But, first, relative to Colombia. After a hearing here,
there appeared to be maybe three members supporting the
administration's position relative to what we are doing in
Colombia, and all three of them happened to be on this side.
The Chairman appeared to be trying to be supportive, the
Chairman of the full committee, and I expressed some interest
in what we were attempting to do there as well.
But literally to a person on the other side, there was no
expression whatsoever of support but rather desire to amend in
a fashion that would undermine the supplemental itself.
Clearly, our effort in Colombia is not a perfect design, but it
is a very, very serious problem that impacts people here in a
dramatic way.
I have asked this of the Department of Defense. They have
been somewhat responsive, but let me ask you: What is the
Secretary of State and the State Department doing about
stimulating support, especially on the administration's side of
the aisle, towards the piece of the supplemental that involves
what is going on in Colombia?
Secretary Albright. Well, first of all, Congressman, let me
say how much I agree with you about the need to have a
bipartisan or nonpartisan foreign policy. I have found the most
difficult part of my job, actually, is having issues of
national security polarized because they are of national
interest and in the service of the American people. I am very
glad to have you say that and look forward to working with you
on it.
On the Plan Colombia. The administration believes that it
is a good plan. It is comprehensive. It is developed by the
Colombians. It is not imposed by us. We are supporting a plan
that they have put together. President Pastrana I think gives
us the best opportunity to try to get a country that is very
important to us primarily because of the narco-trafficking
issue which disrupts the entire region and obviously also has
an effect on our own society.
We are working very hard to make clear that the
comprehensiveness of it, dealing with the narco-trafficking,
the peace process, the social situation, and also the economic
situation there, that it provides a view that deals with
Colombia as a whole. Therefore, I would hope that we could get
bipartisan support for it. And we are talking to as many
members as we can about it and working very hard and will
continue to do so.
I think that it is a good proposal.
Mr. Lewis. Madam Secretary, in the full committee we had
limited bipartisan support, and we successfully moved the bill
from committee. We did not have that in this subcommittee, and
this is the leadership of foreign affairs matters, at least
from an appropriations perspective. I would suggest we could
have some serious difficulty on the floor, which would be
disastrous not only for Colombia, but also for our foreign
relations responsibilities in Latin America.
Is there an aggressive program going forward that
recognizes that we have difficulty? Because, first, there are
some people on my side of the aisle who would like to see it go
down just for the sake of the administration having a defeat.
But without leadership support from the highest level in this
committee on the Democratic side, it is going to have trouble.
Secretary Albright. I understand that. And talk about being
candid, but anyway----
[Laughter.]
Secretary Albright. Let me say that we want this package to
go through. We think it is very important. The Colombians
believe it is important, the region believes it is important. I
think that there is an issue that needs to be dealt with about
how you deal with demand in this country, and we all recognize
that this is part of an overall program. But I think we need to
do Plan Colombia. It deals with Colombia, it deals with other
countries in the region, and it has balanced itself. And I can
assure you that I am devoting a large portion of my time to
this and getting our budget passed as a whole. And we will work
with everybody on this.
Mr. Lewis. I am pleased to hear that you are focusing upon
this.
Secretary Albright. Yes.
THE BALKANS
Mr. Lewis. In January, I went back to the Balkans, and
during that trip, visited both Kambonstil [ph.] and Pristina, I
know you have heard a bit about this before, but I continually
heard expressions of grave concern about the spring thaw and
what might occur with ethnic Albanians reacting.
About the time we were there, Ted Stevens was heard to say,
``We went over there to protect the Albanians from the Serbs,
now we are in the business of having troops there to protect
the Serbs from Albanians.''
You remember those very poignant meetings at the White
House in which that same Senator said, ``If we are not careful
here, in terms of our planning, we will be there for 30
years.''
There is a story today in The Post about Kosovo, expressing
some concern about this. I understand you have made some
diplomatic efforts in March. But having said that, if we see
another major confrontation, if we do not effectively impact
the potential expansion of bloodshed, it will be more than just
a black eye to the congressional, as well as the
administrative, efforts there.
Do you have advice for our military leaders relative to
what we do about the spring thaw? Do your sources say it is a
serious problem? And if so, what is the advice?
Secretary Albright. Well, first of all, spring has not been
kind in the Balkans, and it is a time where historically there
have been problems. We are doing everything we can to mitigate
what is going on. We have just sent Jamie Ruben with Ambassador
Hill. We gave a very tough message to the Albanians. I gave it
myself in Toronto, saying that we had supported what they had
been doing. We continue to believe that the Kosovar Albanians
were ethnically cleansed and underwent horrors, and I think we
are very proud of what our military and the military of NATO
accomplished.
But at the same time now, that they our support for them,
these--not all of them, but there are extremists there who are
carrying out some of these activities that it really undercuts
generally our course, and that we are not there in order to
allow them to be able to take revenge on the Serbs.
But I think that the point, and I made this point to the
Chairman, is that this is not all Kosovar Albanians. If one
goes there now, you can see that there are large proportions of
them trying to build up their lives again. But extremists
always are out there pushing.
I stopped in Brussels last week, and SACEUR is looking at
ways to estimate how the troops, what the troop needs are. He
has asked for additional troops from the European countries.
The French and Italians are going to be contributing additional
troops, and the Military Committee is reviewing the needs. I
think that the American forces there are playing a vital role.
Camp Bonasteil is one of the great enterprises, and they have
done a terrific job.
We are at a tough period. I said I was not going to paint
any rosie pictures here. But I think we have done the right
thing, and we need to continue to get a better linkage between
the military operation and the civilian operation. Everybody
has to do his part in providing resources for the civilian
operation.
What has happened here now in the budget resolution is that
the military has gotten support. But the civilian operation is
the exit strategy. That is what we have to remember. We have to
get a civilian operation going. UNMIK has to be able to help
the Kosovars create their provisional institutions. We have to
get police there. We have to get the judiciary functioning, we
have to get reconstruction, and the Europeans have to do their
share. And in order for all of us to be operating together, we
need the Kosovar supplemental on the civilian programs, not
just the military. And it is that link-up between the military
and civilian that is so important.
Mr. Lewis. Madam Secretary, you will remember, I am sure,
that statement by Ted Stevens at those wonderful meetings that
took place at the White House. The best of nonpartisanship;
Democrats, Republicans, House members, Senators, all on several
sides of this issue.
First in a Friday meeting he said, ``We'll be there for 30
years if we go in.'' The following Tuesday it was apparent that
Ambassador Holbrooke was wheels-up at the time, but it was
apparent we were going to be taking action, and the same
Senator rose and said, ``A decision apparently has been made
here, and we want you to know that, from my perspective, I will
be supporting our troops.''
Those troops know why they are there, but tell us, was the
Senator more right than wrong? We could very well find
ourselves there for 30 years? Certainly, it is hard to be
optimistic when you look at conditions presently. Is this going
to be an extension way beyond what we experienced in other
parts of the Balkans?
Secretary Albright. We have said publicly that a mistake
was made when we said that we would be in Bosnia one year, if
you remember.
Mr. Lewis. I do remember.
Secretary Albright. And I think that you haven't--you know,
we all came up and said that it was a mistake and that putting
artificial deadlines was not the way to do it. We needed to
have benchmarks and that is where we are on Bosnia.
On Kosovo, I think we have to remember why we are there. I
look back on this year and it is about a year that we did all
of this--and I said this before you came in, but if you will
allow me to repeat it--is that we were watching people in
mountains, freezing cold, wondering whether they would ever be
able to return to or whether they would be killed by forces
that we knew were gathering on the border with Serbia. We
prevented that: 800,000 people have been able to go back. And
no, people haven't starved, and they haven't died. Things are
slower, I think, than--you know, we would like to have things
happen very quickly. We are a very generous country but we want
things to be done more quickly than they can be done.
I am not going to predict how long we are going to be
there. I think that we are on our way here with an
international backing that is not--I think is uncharacteristic
really of other places. We have been able to do this with NATO.
I talk with my European colleagues practically on a daily
basis about how we are going to proceed. This is a very
difficult problem but it is worth solving or doing the best we
can because we are going to be able to have in the 21st Century
for the first time in history a Europe that is whole and free
and democratic if we can manage to get the Balkans right.
And having a Europe like that, I think helps in terms of
our relations with the Middle East and Russia and it is worth
doing and it is in U.S. national interests. Now, I don't want
you to misinterpret what I have said; we are not going to be
there 30 years, but I can't tell you how long we will be there,
but we are doing the right thing. And I think we would regret
it if we weren't there and people were wondering where the U.S.
leadership was on an issue where people were being ethnically
cleansed and raped and thrown out of their homes and we have
allowed them to come back.
Mr. Lewis. Thank you, Madam Secretary.
Thank you, Mr. Chairman.
Mr. Callahan. Thank you.
Ms. Kilpatrick.
Ms. Kilpatrick. Thank you, Mr. Chairman.
BUDGET REQUEST
Madam Secretary, it is something about being last when you
are in a Committee such as this, I certainly have benefitted
from all the testimony that you have given thus far. One of my
colleagues mentioned earlier that our Congress doesn't take
lightly or kindly, in many instances, our foreign aid budget. I
disagree with this position. I think it plays a major role in
the world and whether we are talking about Bosnia, Kosovo,
South America, Central America, Korea, China, or Africa, we
have a role to play in the world economy and I am happy that I
am a member of this Committee. Your leadership has been good
since I have been here and beyond, and I appreciate you for
that.
Given the President's request of some $15 billion and
understanding that we are looking--at a 13 percent cut, what
kind of decisions will you make considering all that you have
heard today? Where will you go? Where will you go if you have
less than that 13 percent? That is significant. How will you
determine whether you fund HIV or the United Nations or some of
the other controversies that we have been talking about all
afternoon?
Secretary Albright. Well, I think it puts any Secretary of
State in a very difficult position because the budget that we
present in the first place is one that we have reviewed very
carefully. I took more of an interest in this budget than I
think many Secretaries have or I have before in terms of
reviewing every single area of the State Department, looking at
where we wanted to put our funds in order to get the most out
of them. And I think where we would be cutting is we would have
to make some of the hardest decisions. Do we want to cut on the
threat reduction that we are doing with Russia in order to make
sure that their nuclear weapons are dismantled, or that their
scientists are not running--are not selling their brains to
other countries, or do we not assist on--as you mentioned--on
HIV/AIDS? Do we not decide that democracy in Indonesia and
trying to get some resolution of East Timor? These are not--I
could go on at length. Kosovo is clearly, as I just mentioned,
key, and I think what we need to do is--frankly, we need to
expand the pie, not cut it in half.
Nothing has made me prouder than to represent the United
States. To be Secretary of State of this country is the most
amazing opportunity that anyone has ever had, and U.S.
leadership is respected, and it needs to be, and we are the
leaders, but we cannot do it with nothing, and I think a cut of
that size would be very detrimental to our national interest.
MOZAMBIQUE
Ms. Kilpatrick. Thank you. On another subject, earlier
today many of us met with the ambassador to Mozambique. He
pointed out to us that the devastation is much greater than
what we have heard and seen. I know you have visited several
countries within Africa many times in the last 24 months. The
ambassador tells us that 85,000 children are without parents
and homes; that over 400,000 people are now reported dead and
that number will at least double, maybe triple; that over the
last 48 hours it has stopped raining and bodies are now coming
up muddied and the like. They have been devastated by the
cyclone and are really desperately seeking assistance from the
world community, not just the United States. Will this
administration be requesting a separate supplemental for
Mozambique, as a supplemental is now going through, and we
still have time until conference? I offered an amendment in
last week's meeting that replenishes some of our international
council in order to meet that need. The Chairman urged me--and
I supported him--to withdraw my amendment with the number in
it, because he assured me that I had his as well as Chairman
Young's commitment to do what we could and what is necessary to
assist Mozambique. Will you be requesting a supplemental?
Secretary Albright. We are making--we are assessing what
the further damages are, and on the needs of Mozambique, and as
I mentioned, all of the things that we are already doing and
the debt forgiveness, but I want to be able to fully assess
what our needs are before I come to you more specifically.
Ms. Kilpatrick. What is required in the assessment?
Secretary Albright. Excuse me?
Ms. Kilpatrick. What is required in the assessment?
Secretary Albright. Well, I think we need to find out
exactly what has happened, what other countries are
contributing, where we can make our best contribution, what
funds--what tools to use, you know, how much to do through the
UN, how much to do bilaterally. But we are all deeply concerned
about what happened, and have tried to move as rapidly as
possible on it, and we are just trying to sort out what the
best way to do this is, not in any way to be heartless about
it. We know it is tremendously----
Ms. Pelosi. Would you yield on that point?
Ms. Kilpatrick. Certainly, I would yield to my member,
certainly.
Ms. Pelosi. Thank you for yielding.
Madam Secretary, I understand that there was some assurance
that the administration would be ready by March 21st, the day
of the full committee meeting on the Senate side, with this
assessment, one week from----
Secretary Albright. I think that is what we are trying to
accomplish.
Ms. Kilpatrick. That is what I mean when I ask, because we
need hard dates and targets. It is that critical, it really is.
DEBT FORGIVENESS
You mentioned earlier the debt forgiveness, and I heard my
Chairman say he is for it, if it means you cannot turn around
the next day and ask for another, and I support him on that.
You used a figure of 4.9 million. The ambassador said 5.2 today
in terms of hoping it could be forgiven. You mentioned that you
are working with Treasury. Can we see something on that
movement or some announcement that is firm by the established
date as well. What kind of timetable are you working on for
that as well?
Secretary Albright. We are working with Treasury on that.
Again, we are trying to move this as quickly as we can,
honestly. I have 4.9, but we will have to talk to Treasury and
move it quickly.
Ms. Kilpatrick. I certainly appreciate your commitment as
well as the Administration's. I think time is very much of the
essence. There are children's lives at risk, and millions of
people who are homeless in Mozambique and the Southern Region
of Africa. So when we talk about Foreign operations budget that
may be cut 13 percent, some of our colleagues do not think that
one penny ought to be spent for flood relief for Africa. Some
Members of the Committee and certainly the Chairman has been
supportive of flood relief for Africa, and I would hope that
they will continue to be.
Secretary Albright. If I could just say, there are a lot of
people who wonder, actually, you know, how a Secretary of State
and foreign ministers work. When this happened, I got on the
phone with some of the other foreign ministers from Europe,
where people were saying, ``Who has the helicopters? How can we
get there? Who has got what?'' I mean, we all got very
operational on this, and trying to really make it move, and we
will continue to do so, because it is a horrendous situation,
but I can assure you that it is at the top of our agenda.
The problem that we have with this budget generally is even
the amount we request does not allow us much flexibility. We
look at everything very carefully, and part of the problem, as
we come for supplementals, is that we cannot always foresee
everything, certainly not a cyclone, and so our problem is that
in the first place our budget is very tight. I think some of
you legitimately ask how come we come for supplementals? And
part of it has to do is that there is no flexibility within it,
and then if it is even cut, it really is asking us--I, as a
mother, you know, it is like trying to choose among your
children. It is impossible. Putting us into----
MOZAMBIQUE
Ms. Kilpatrick. I am sorry to cut you off. I see the
Chairman's finger is on the button. So, lastly, the Chairman
says that there is a $135 million now in the disaster--going on
what you just said, Madam Secretary--in the Disaster Assistance
Account--is that enough to take care of our current problems
and now the addition of Mozambique? Have you any way of
monitoring that, or will we have additional appropriations for
that?
Secretary Albright. I think it is very hard to tell. I
mean, we have enough for some steps. It depends on what
happens. That is part of the problem. It is very hard to tell.
Ms. Kilpatrick. Thank you, Madam Secretary. I appreciate
it.
Mr. Callahan. Following up on Mrs. Kilpatrick's concerns
about Mozambique--and I applaud your efforts to look at it very
wisely, and to see what the international community is going to
do to see what their true needs are. Obviously, they have some
serious needs at this point, and that is the reason for the
$135 million in the International Disaster Account, and I think
the United States should be over there now. I think we should
be providing whatever we can give to them now with respect to
the human misery that exists, in the form of health care. I
mean with 400,000 people dead, with the obvious homeless
situation that is there, with the infrastructure, there is
ample money already appropriated, whereby we could begin the
process while we weigh the long-term needs of Mozambique. And I
would encourage you, through USAID, to concentrate immediately
towards the needs of Mozambique. Mrs. Kilpatrick asked what
role we in the Congress would have over how the $135 million in
the Disaster Account would be spent. And I would remind you and
her that we have the ability, as Chairman of the Subcommittee
and full Committee, to put holds on the Disaster Account, and
we are going to make certain the money is going to be utilized
in Mozambique. We should be there right now. USAID should be
exerting a great deal of their abilities at this point in this
area of the world at this time.
Secretary Albright. Mr. Chairman, we are. And what we have
done, USAID has provided 7 million in emergency food aid, 5.7
million in assistance through the Office of Foreign Disaster
Assistance, and they have sent 25-member disaster assistance
response teams that include paramedics, and we are involved in
search and rescue operations. DOD has deployed assistance, and
we are constantly putting additional assistance out there.
I think the question that we have to look at, and which we
are in the process of doing, is how we can--what more we need
and what more we may need to ask for, but we are fully engaged
in this and are trying to provide assistance as rapidly as
possible.
The problem is that while this is--there is money in the
Disaster Assistance, it goes beyond that in a number of areas,
and what it will then do to other things that we have asked for
in terms of--we do a lot of our assistance by region--other
areas in Africa that need help, and how this goes into the
question that the Congresswoman asked, is how do you make
choices when in fact your budget is theoretically being cut by
that huge percentage? That is where we get into trouble. We can
deal with the immediate, but then how do you replenish.
Mr. Callahan. Well, your budget for Africa has not been
cut. Your requests for Africa have been fulfilled, but it makes
no difference. You have an emergency situation in Mozambique
and you have bipartisan support of this Committee to use some
of your emergency authority to be more aggressive in
Mozambique, and I would encourage you to do that.
Secretary Albright. I appreciate your support.
Mr. Callahan. Let me ask you a couple of questions.
Ms. Pelosi. Would you yield on that point, Mr. Chairman?
Mr. Callahan. Yes.
Ms. Pelosi. It seems to me, Mr. Chairman, that of its
nature, Disaster Assistance Account is an emergency fund. In
light of the budget discussions we have had earlier about the
request, the shortfall in light of the House budget resolution,
that we should, at the very least, put in what we would
ordinarily put in the regular bill as we would have proceeded
under regular order, into the Emergency Supplemental, so that
we have taken care of that, and it gives us some breathing room
in the regular bill when we take up our normal foreign ops.
bill. Because whatever it is, we know it is going to be a large
amount that is needed. We have another chance in Africa. We
missed it. And it was Rwanda. If we had acted differently, if
the international community had acted differently, many more
people would be alive today. We have a chance now, because of a
natural disaster--God forbid, it is of biblical proportion, we
know the needs are going to be vast. I think you are right, the
Secretary should be careful and prudent in terms of the needs
assessment. But I would hope that in recognition that is going
to be a large amount of money--we do not know the price right
now, but we know that it is going to be big--that we could at
least just talk about putting something similar to our normal
amount into Disaster Assistance.
Mr. Callahan. We probably will, but I remind the gentle
lady that the purpose of the International Disaster Account is
for disasters, for emergency reasons, and that is what----
Ms. Pelosi. Exactly, and that is what this is.
Mr. Callahan. Well, I know that, we put the 135 million in
there last year to give the administration flexibility in the
event of a Mozambique.
But I think we have made our point, Madam Secretary. We all
are concerned. We know we have done some things in Mozambique.
We think the administration should be a little bit more
aggressive in affording more relief to Mozambique. We do not
even know if there is going to be a supplemental bill passed.
We cannot wait. Mozambique cannot wait. We are hoping that a
supplemental bill will be passed.
Let me ask you a couple of questions. I would ask you to be
brief in your response, and I know I almost admonished you
about worrying about Secretary Summers's department when you
talk about debt forgiveness. But do you agree with me or
disagree that we ought to have a provision that makes these
countries responsible, if we are going to forgive debt or if we
are going to give them money, to pay off some foreign bank? We
are not talking about American bilateral banks; we are talking
about foreign banks. If we are going to give them money to
reduce their debt, don't you think we ought to require that
there be a moratorium on their ability to put themselves right
back into debt?
Secretary Albright. I think that it is very important for
us to be watchful over what they are doing and be careful not
to encourage them in any way to recreate a debt. On the other
hand, I think we have to also not put them in a position of not
being able to rebuild their economy, but I think that it is
just common sense to think that we do not want them to start
rebuilding a debt when we have forgiven them another.
DEBT
Mr. Callahan. Well, we are going to have the opportunity to
put that into law, Before we pay off debt to some foreign banks
so they can have money to provide for the needy in their
countries, it must be clear they are not going to have the
ability to go right back into debt. That is a very serious
concern. The missionary community has been lobbying this
Congress and through the pulpits of America, lobbying the
American people to support debt forgiveness, but with the
misconception that this is going to free up money to provide
for human services in these countries. Some of these
countries--are not paying any of the principal, and some of
them are not even paying the interest, so we are not going to
really free up cash flow to provide for human needs.
If we permit some of these corrupt leaders who are going to
benefit by ultimately wiping the slate clean of any debt, by
giving them the ability to go right back in the next day and
borrow money to put in some Swiss bank, then I think we are
misleading the missionary community. Those groups believe this
is going to ultimately be beneficial to suffering people so
much in these developing countries. So I see nothing wrong
whatsoever with a simple statement saying ``We will wipe your
books clean, but we are not going to permit you to get right
back into debt the next day.'' So there should be a moratorium.
As to whether it should be 5 years, 4 years or 4 months, is
something we can negotiate with Treasury. But I think this
administration and this country should be demanding responsible
debt forgiveness, and that is, you cannot go right back into
debt.
If one of my children comes to me and says, ``Dad, I have
overspent. My Visa card is full. You know, I am going bankrupt
unless you help me.'' Do you think I would not say to them,
``Listen, I will help you, but I am not going to allow you to
go right back in debt the next day. I am going to take that
Visa card away from you for a while.''
We have got to tell this same thing, this same philosophy
to these countries who are salivating at the fact that suddenly
they will have a balance sheet with no debt. As a result of
that, it will put them in a position to borrow more money, and
I think that we should be very cautious in debt forgiveness.
Secretary Albright. If I could--this is Treasury's
business, but let me just make the following point. I think it
is--while a lot of what you say is common sense, there is a
problem about a kind of blanket approach on these things, and I
think what we are trying to do is make these countries credit
worthy and get their economy so that they are dealing with them
in an appropriate way and undertaking the proper economic
reforms. So while what you are saying makes sense vis-a-vis
your children, it may not on some of these economies, that each
of which is slightly different. Treasury will work with you and
we will, but I think that every one of these places is somewhat
different, and we need to make them credit worthy and make them
capable of operating within a global economy.
Mr. Callahan. I do not think we need to make them credit
worthy. I think that is what their problem is. They are in debt
because they were irresponsible with respect to credit
worthiness. I think what we are trying to do is to free up cash
flow so they can provide for their own people. And if we permit
them to borrow additional money, then we are negating the
possibility of freeing up cash flow in order that they can
provide for their needy populations. So in any event----
Secretary Albright. They need to reform. They need to----
Ms. Pelosi. Will the gentlemen yield on that, or will I
have a chance to talk about that?
Mr. Callahan. I will be happy to yield to you.
DEBT FORGIVENESS
Ms. Pelosi. Thank you, Mr. Chairman. The Chairman, as you
know, has a definite view on this loan forgiveness, and as one
who has been part of the initiative in the House on the loan
forgiveness for a while, I am very pleased to participate in
Jubilee 2000 for the loan forgiveness plan.
I want to just make the following comment. I could not
accept the gentleman's amendment in full committee on my
amendment for loan forgiveness, which said that if they had
loan forgiveness, these countries could not take out another
loan for four years, and I will tell you why.
First, many of the countries that we are talking about are
the highly impoverished countries, and some of them have met
the conditions for loans. Among them are countries in Africa
like Mozambique, Uganda, and Tanzania, in Central America,
Honduras, South America, Bolivia, and other countries.
The fact is that, Mr. Chairman, that when these countries
have a clean slate--some of the debts were incurred by previous
corrupt regimes, who are no longer there. So we are saying in
this year of the millennium, as the Bible does, every thousand
years, let us forgive, and in this case, let us forgive the
debt. When we do, it will enable these people not to then say
we are not going to develop our economies, but them go to the
IMF or the multi-lateral development banks, and yes, borrow so
they can invest in their economies and meet the social needs of
the people of their countries. To further that point, I would
say with your children in mind, if they were going to buy a
house--you might not want to give them another credit--but if
they were going to buy a house, they could not make that
capital investment unless they could take a loan to do it with
a payment plan accompanying it.
I think that I share the Chairman's view, of course, that
we do not want the countries to be irresponsible, take the debt
forgiveness, pay down their debt in order to incur more
frivolous debt of the same kind. But if we are talking about
investments in their own country according to the World Bank
and to the African Development Bank, et cetera, then I think
that a four-year period would be debilitating to these
economies. We have to recognize that there is debt and there is
debt. And debt that is involved in investing in people and
infrastructure in their countries is what we want them to do.
So in any event, I respectfully disagree, with the emphasis on
the ``respectfully'', disagree with the Chairman on that I know
that we will have a fuller debate on this, but this debt
forgiveness is very important and in no way----
Mr. Callahan. I would respectfully remind the gentle lady
that she is on my time. [Laughter.]
Mr. Callahan. And let me correct something too, or else
when I get home, I know I am going to get a phone call from a
bunch of my kids. I should have said, ``What if I overspent and
I went to my kids and asked them to bail me out?'' [Laughter.]
Mr. Callahan. Wouldn't they say to me, ``Dad, we are going
to bail you out this time, but we are going to cut up your Visa
card.'' So let me correct that for the record.
Chairman Lewis, you have any?
Mr. Lewis. Thank you very much, Mr. Chairman.
Madam Secretary, as a freshman on the Appropriations
Committee, I remember introducing a bipartisan resolution, one
that eventually got most of the signatures of most of the
members of the House. But when I was carrying around this
resolution, they were saying, ``You want to do what?'' The
resolution called for the creation of a national commission
dealing with the problems of AIDS. With that resolution was an
amendment that eventually involved $200,000 of the first money
that went to research on AIDS. Now, that was in 1981, and here
we are all these years later. You suggested that you hope that
we would have some discussion of the impact of this horrid
disease upon Africa. I do not know the numbers, but these
countries are being devastated. Whole populations or age
categories of populations are being wiped out. Would you
discuss that at least for me for the record for a moment?
Secretary Albright. Absolutely. And let me congratulate you
on having done that at that time.
THE LIFE INITIATIVE
We have--the administration has taken some unprecedented
steps I think to really profile this issue now. In July of last
year, President Clinton announced the Leadership in Investment
in Fighting an Epidemic, the LIFE initiative, that was aimed at
strengthening our government response to HIV/AIDS, especially
in Africa and India. And he sought, and Congress provided an
additional $100 million for the LIFE Initiative.
The LIFE Initiative supports expanded activities in primary
prevention of HIV/AIDS and home and community based care for
those who have been affected, and support for AIDS affected
children and capacity building of institutions to plan and
deliver services, including surveillance. And key
implementation agencies of that are USAID, HHS and Center for
Disease Control.
In January the President outlined his Millennium Vaccine
Initiative, and that new initiative combats HIV/AIDS as well as
other infectious diseases. Here the administration proposed a
generous tax credit that would provide a specific and credible
commitment to purchase future vaccines. A couple of weeks ago
the President had a meeting in the Cabinet Room with a variety
of private individuals who would also be very supportive of
this, and he felt that it was one of the most interesting and
provocative meetings that he had had in terms of trying to move
that process forward.
Then in January Vice President Gore, I think--and at the
UN, took quite an unusual step of deciding that the spread of
AIDS was basically a security issue, because it destabilized so
many countries, and that is why it was raised in the Security
Council. There were a lot of people who wondered why this was
in the Security Council, but it was because we see it as a
security issue. The Vice President spoke to it.
Then what the Vice President's Office has now done is to
bring together the Office of National AIDS Policy, and the Vice
President's Office and the National Security Council to co-
chair an interagency group that is now working on this. In
February, when the President spoke before the National Summit
on Africa, he announced our intention to develop a plan for new
initiatives to address further on AIDS.
Let me just say also that in individual countries, what we
have been telling them is that they cannot sweep this under the
rug. The country that has actually managed to move the process
forward is Uganda, where President Museveni has made very clear
what the problems are in a public campaign. When I was in Kenya
last--a few months ago--again, we made it very public. We have
been trying it in South Africa. I can assure you it is a
subject that is going to come up on the India trip, and we are
profiling it and trying to get the funds that are necessary for
it, and I congratulate you for having----
Mr. Lewis. I gather that the deaths involve not just
thousands and hundreds of thousands, but millions of people,
either already or potentially.
Secretary Albright. More people have died of AIDS in
Africa, for instance, than through all the various fighting
that has gone on. We will get you some figures on it. I mean,
the figures are--when you are saying biblical proportions on
Mozambique, I mean these are stunning figures of whole
populations and the younger populations in these countries.
Mr. Lewis. And when you mention India, the world's largest
democracy with this huge population, a system dominated by
caste. What do you propose to----
Secretary Albright. Well, I think that basically they all--
if one takes the example of countries such as Uganda, where it
becomes a public cause, and they begin to teach children in the
schools, and they have public campaigns and use whatever media
is available. I think that this is what we have to work with
them to--first of all, they have to admit it. I think that is
part of the problem in a lot of the countries. And then there
are various practices that make it difficult in many countries
to bring it into the public view, but we will be pressing it.
It is part of our foreign policy program.
Mr. Callahan. Mrs. Lowey.
Mrs. Lowey. Thank you, Mr. Chairman.
PEACE PROCESS
Secretary Albright, as you know, I posed several
questions--just to review briefly--if you would first address
the goals of the Palestinian track talks that will reconvene
next week in Washington, and discuss what you believe will be
the United States' role in reaching final status agreement. And
secondly, I would like to hear you comment on the anticipated
Israel/Syria talks. It has been very disconcerting, as you well
know, to many of us, that there have been some discussions, but
then to see Syria and Lebanon rally the Arab League against the
unilateral withdrawal from Lebanon, stopping just short of
threatening cross-border attacks, is very disconcerting, and it
makes wonder how can we reconcile these actions with
negotiating a peace agreement with Israel in good faith. So if
you could discuss the first and then the second, and the United
States' role in both, I would appreciate it.
Secretary Albright. Yes. First of all, let me say that we
have all--all believe that there is a historic opportunity to
move forward on all tracks of the peace process. The President
has spent an incredible amount of personal time on this.
Ambassador Ross has dedicated his life to it. And I have spent
an awful lot of time also in terms of it, and it is a priority.
It is an opportunity that I think needs to be seized.
On the Israeli/Palestinian track, we are very glad that
Prime Minister Barak and Chairman Arafat have agreed to restart
the permanent status negotiations and to resolve their
differences on a number of outstanding interim issues. We are
going to be hosting the parties in Washington or in the region,
in the area, next week to continue their discussions, focusing
primarily on the permanent status issues. In my judgment, Prime
Minister Barak and Chairman Arafat remain committed to reaching
a comprehensive agreement on all permanent status issues by
September 13th, 2000.
We have tried to be of help as we can in this issue. We
cannot want peace more than the parties involved. We have
served as a facilitator. When I was in Jerusalem last time, I
was asked about my role, and I said ``handmaiden.'' Whatever
works, I think, in terms of trying to move this forward. I
think we are trying in every way, but as I said, it is the
parties themselves that have to come to the difficult
decisions. And I have used every analogy I can think of. When I
was in--we were talking about the Middle East in Davos, I said,
``Well, it is like skiing. You get off the track and on the
track, and up and down mountains.'' I mean, we have had a lot
of ups and downs in this, but we are, I think, moving in a more
positive direction now.
On the Syria track, I think that we were obviously very
encouraged when we began the talks, first at Blair House and
then at Shepherdstown. There were four areas that need to be
talked about, and it has to do with the border, the early
warning aspects of it, water, normalization. Those are the
issues that are out there that need to be dealt with, and one
of the problems has been is that each side wanted its needs
addressed first. We continue to work with them in order to be
able to restart the negotiations and find a way to be able to
deal with those issues.
We also had thought it was very important to deal with the
Lebanese track, that what we have always talked about is a
comprehensive peace. And we were very--had been, and have, and
are very concerned about the violence in Lebanon on the border,
and have made clear that it is unacceptable that--and we have
been trying very hard to get the monitoring group going. We
almost had a meeting of the monitoring group going, and then
there was an attack by the Hezbollah.
Part of the problem here, if I might divert, is that
whenever you are getting closer to peace, that is when the
extremists kind of come out. They do not have a stake in it,
and I think that is part of what the problem has been. As you
know, also Prime Minister Barak has indicated that Israel is
going to withdraw unilaterally. As former Prime Minister Peres
said, when they were--out of the Arab League Summit, he has
never heard of a country being criticized for withdrawing, but
I think it is very important to cool the rhetoric and to be
able to try to get back to the negotiating table.
We are going to be--obviously, we are, I think because all
of us are eternal optimists--we hope very much that the
historic opportunity will be seized, at which point, clearly we
are going--every time we have had an agreement, there has been
a cost to it, and there will be to this. We will be coming back
to you to talk about that, because I think that--I think it is
very important to be able to support those who take the risks
for peace, and there will be a package that we will come up and
talk to you about at an appropriate time.
I think this is one of the issues that is the highest issue
on our agenda. We could make a huge difference. We believe that
Israel needs to be able to maintain its qualitative edge. We
have our unquenchable relationship that has gone on with them.
We want to also make sure that the Palestinian people are able
to live properly. And we are working on it, and we will be back
to you.
Mrs. Lowey. Thank you, Madam Secretary. Thank you, Mr.
Chairman.
Mr. Callahan. Thank you. Madam Secretary, let me say that I
have seen you grow in this job, and during these last several
years, I guess, with you, I have seen your professionalism grow
to the point where you realize that a 30-minute answer to a
question negates any further questions.
[Laughter.]
Mr. Callahan. A very wise move on your part.
THE BALKANS
Let me just comment on a few concerns we have that do not
require a verbose response. One is Kosovo, and with respect to
the supplemental request last year, the Congress put a 15
percent ceiling on our participation, saying this is the
responsibility of the European community, and that they were
going to have to come up with 85 percent of cost sharing on any
activities in Kosovo. Our share is now up to 20 percent. The
European Commission reduced its initial pledge this year from
$480 to $350 million, and that is a concern. You are going to
have to insist to the European nations that the 15 percent
ceiling is law, and that that is as much as we are going to
participate in any activities with respect to Kosovo.
Let me say also that Bosnia is still a big concern. You
know, I sat in the White House meetings with you and others and
talked about how long we were going to be in Bosnia. That has
already been discussed, but it is a serious concern, the
continuing cost, the billions of dollars we have spent in
Bosnia, and the seemingly endless need for additional active
support in Bosnia.
Montenegro is a concern to us. We understand that Milosevic
has increased the number of troops in Montenegro who are loyal
to his own regime, and they are taking such action as closing
down some of Montenegro's facilities such as the airport,
threatening its border with Albania, and I am concerned about
what our position is going to be indeed if Milosevic were to
move into Montenegro. Many members of this Congress, including
me, support the independence Montenegro has displayed, and we
are anxious to help them prove to the people of Montenegro that
that type of response is what we in the United States want, and
as a result we want to assist them while not giving the
indication that we want to assist Milosevic. So Montenegro is a
concern that we are going to be talking about during this
budget process, because I think it is the will of the Congress
that we assist Montenegro and prove to them that if they move
in the direction they appear to be moving in, that the United
States is going to be there to help them. I do not know what we
would do if Milosevic decided to have some aggressive action
into Montenegro.
In closing, unless you have some further comments, Madam
Secretary, let me tell you that this has been a unique
experience. You know my history of involvement in foreign aid.
I have not been a tremendous vocal supporter or even voting
supporter of foreign assistance or until I assumed the
chairmanship of this Subcommittee. But it has been interesting.
One thing that has been a great mystery is why is it that the
Republicans are fighting this administration's battle? We did
not support President Clinton when he ran. Thus, we did not
really support you, because we were supporting another
President. But we believe that the Constitution gives foreign
policy to the administration, and we have tried to assist the
administration, the President and you, in almost every
endeavor, constantly being blocked by the minority, the
President's own party blocking those things we are trying to
do. And that has been a mystery that has been hard for me to
understand.
BUDGET PROCESS
The situation Chairman Lewis mentioned about Colombia is a
classic example. The President of the United States came to me
and said, ``Sonny, I need $1.3 billion for Plan Colombia'', and
lo and behold, I am fighting with my Republican colleagues to
give assistance to this administration in order that we can
provide the resources the President of the United States has
come to us and told us he would need.
Time after time this has taken place. I have sat with you
in the Oval Office. I have sat with you in the White House in
the Cabinet Room with other members of Congress, talking about
such things as Bosnia, talking about Kosovo. I have been
against every single one of them, Madam Secretary, but in every
case in the end, I have been the one who has brought the
President's requests back to this Congress, and tried to push
them through Congress because I really believe, truly believe,
that foreign policy decisions, as well as military decisions,
lie in the hands and responsibility of the President of the
United States. So I am going to continue to do this for the
next 7 or 8 months and even into the next administration,
regardless of who it is.
But this 6 years with you has been enjoyable to me. We have
had our differences, and we are going to have differences for
the next 9 months over some policies, but it has nothing to do
with your professionalism. I think that you have been a great
Secretary of State. I imagine this is the last time you will
appear before this full Committee unless it is in here to
possibly request some assistance for the Czech Republic.
[Laughter.]
Mr. Callahan. But nevertheless, it has been an educational
opportunity for me, and I have watched you and I have seen the
admiration you have had worldwide and within this country, and
it has been a tremendous pleasure working with you, even though
we have had violent--not violent, but great disagreements on
some particular issues.
And as this year comes to a close, I hope that you and I
can work out a resolve to the needs of the State Department. I
hope that it is you and I who do final negotiations, rather
than me and Jack Lew. You will get more out of me than Jack Lew
will get out of me, I will tell you that. You would have got
more last year than you got, had Jack Lew agreed with a private
conversation I had with him, but Jack Lew must involve too many
other things in his negotiation agenda. He has got to worry
about the Democrats gaining the majority. He has got to worry
about Dick Gephardt. He has got to worry about all these other
things, and if you get outside of the responsibilities of the
State Department, it complicates the issue. So I hope this year
we will be able to sit down and to toast one another for a very
amiable year and a very amiable career with you as Secretary of
State, and to always remember that I have tremendous respect
for you, and that I consider you a close friend, and I hope to
share that friendship for many decades to come.
Mrs. Lowey. Would the gentleman yield?
Mr. Callahan. Unless you want to disagree with me.
[Laughter.]
Mrs. Lowey. Well, I just would like to express my
admiration for both the Secretary and for our distinguished
chairman, and I do hope that the leadership of your party will
listen to your wise comments. And I do believe, from working
with you and talking with you, that you want to support this
Secretary and this administration and their foreign policy, and
you have said that many times.
So I do hope as the budget is being put together, this
leadership in the Congress will respect the administration's
and the Secretary's request for the dollar amount that they
think will be needed to address our foreign policy priorities.
And in fact, as the Secretary said, we are not even near the
22, I think he said, 22 that it was in 1985.
Mr. Callahan. Let me reclaim my time and just inject here
that these cuts took place when the Democrats were in charge of
Congress, not the Republicans.
Mrs. Lowey. Oh, absolutely, but I hope with your gracious
response to our standing Secretary, that you will accept the
administration's request for the dollar amount, you will
respect their views on international family planning, and that
we could all work together, because as you have said many
times, it is the role of the Secretary and this administration
to conduct foreign policy. So I thank you for your gracious
comments.
Mr. Callahan. Thank you. Mrs. Pelosi?
I told the Secretary she could be gone by 5:00 o'clock, but
I am sure she would like to hear what you are fixing to say.
Ms. Pelosi. Okay. Well, another minute.
Madam Secretary, I want to join my distinguished chairman
and my colleagues. I know they would associate themselves with
our remarks in praise of the distinguished service that you
have provided to our country as Secretary of State. It--must be
an enormous privilege to speak for our country. The American
people are great. They are committed to democratic values. They
are committed to promoting human rights, and that is really the
strength of our country, our values. So they are great people
to represent. Each of us has \1/435\th of that, and we
understand the honor it is to represent the American people. So
thank you for what you have done.
Mr. Chairman, if I may say to you that one of the joys of
serving on this Committee is that it is not partisan. We agree
and disagree in a kaleidoscopic way. Sometimes some of us are
together in a bipartisan way, half one way, half another.
Sometimes it is a partisan. But I think that by and large--
speaking for myself--I know that I have supported the
administration on many issues, be it Haiti, Bosnia, Kosovo, the
list goes on and on. But that does not mean just because the
administration happens to be Democratic, that they do my
thinking for me and for any of the other members on the
Democratic side. They have to work with the majority. They put
a package together working with the majority for this package
to Colombia. Some of us have problems with it. They may be
resolved. We are just asking the question, what is the
justification for this? And we always reserve the right to do
that.
But I appreciate the gentleman talking about his support
for the administration, and it has been good, and you have
given latitude to the administration, and I hope that that
principle will carry forward when we do our loan forgiveness
package, respectful of the administration's point of view at
that time as well. But I join you in this last appearance
probably of the Secretary in that capacity before us. Well, who
knows? Anyway, in this administration, and again, thank her for
her distinguished service.
And I think you would join me, Madam Secretary, and others,
in praising our Chairman for the bipartisan way and the
gentlemanly way--he is truly the gentleman from Alabama--in
which he has chaired our Committee and our hearings. Thank you,
Mr. Chairman.
Mr. Callahan. The Secretary has visited my home town, and
she knows that all of the members from Alabama are gentlemanly
and polite. [Laughter.]
Secretary Albright. If I might, Mr. Chairman, it has indeed
been a great pleasure to work with you, and with you,
Congresswoman Pelosi and Congresswoman Lowey.
Fortunately, I am not done yet, and we have a lot of work
to do in the next months. You have always been incredibly
gracious in terms of taking my phone calls and listening, and
working through what are very complicated problems. I think
that we are operating in an entirely different world, and as we
deal with the needs that we have within this world, I think it
is perfectly appropriate that we question each other on how it
works.
I guess I was a little presumptuous at the beginning of my
tenure when I said I was going to be the last Secretary of the
State of the 20th century. It turns out I was, and the first of
the 21st. And I think being in that position is a great
privilege.
I have been many things. I have been a Senate staffer, and
a professor, and a talking head, and now Secretary of State.
But in each of those positions I have believed in the goodness
of American power and in what this country can do in terms of
representing America's best which are our values and
principles. It has been an honor for me and it is a genuine
honor to work with all of you, because you are true patriots.
And we are going through this.
And I must say this has been a really fun hearing. We have
gotten through a lot of issues, and it has been feisty and
interesting and challenging, and I thank you very, very much.
[Questions and answers for the record follow:]
QUESTIONS FOR THE RECORD SUBMITTED BY MR. CALLAHAN
Bureau or Agency Program Managers
Question. Currently, a number of Bureaus of the Department of
State, as well as the Agency for International Development, are
involved in managing funds appropriated under several appropriations
accounts of the annual foreign operations appropriations act. For each
program, project, and activity identified in the Congressional Budget
Justification, please identify the program managers by Bureau within
the Department of State, or by agency if managed by another entity such
as the Agency for International Development or the Department of
Justice. Please provide this breakdown for the following appropriations
accounts: Economic Support Fund; Nonproliferation, Anti-terrorism,
Demining, and Related Programs; and Peacekeeping Operations.
Answer. Please see the attached tables identifying the State
Department bureau or U.S. Government agency program managers for each
of the accounts requested.
Offset Folios 706 to 709 Insert here
New Economic Support Fund Programs
Question. For each new country program proposed for the
Economic Support Fund for fiscal year 2001, please provide a
description of the activities that would be funded and how such
activities differ from current programs funded either through
the development assistance accounts or regional funding
mechanisms.
Answer. We have requested Economic Support Fund (ESF)
funding for the following new country program in FY 2001:
Yemen.--Due to resource constraints, the USAID mission in
Yemen has been closed and Development Assistance programs
phased out. ESF-funded programs, more appropriate for a non-
presence country, will allow the USG to help Yemen address
pressing needs in health and education. Requested ESF funding
of $4 million will support a scholarship program and a
maternal/child health program.
India.--ESF funding of $5 million will complement USAID's
efforts to re-start the FIRE (Financial Institutions Reform and
Expansion) program, building on successful but unfinished (due
to Glenn Amendment sanctions) measures that liberalize the way
the capital markets do business and that strengthen regulatory
institutions. Additional reforms are essential for generating
the billions of dollars needed in foreign and domestic private
capital to finance India's accelerated economic growth and to
reduce the government's role in the economy.
Philippines.--USAID will use ESF funding of $5 million in
Mindanao (the Philippine island with one-quarter of the
Philippine population) to intensify its program of assisting
Mindanao's Muslims with transition programs for ex-combatants.
Bolivia.--In Bolivia, ESF funding of $3 million will help
expand Administration of Justice assistance outside of
narcotics-related activities and strengthen the performance of
the judiciary, the legislature, and municipalities. The overall
approach will be balanced by Development Assistance-supported
civic participation activities.
Nicaragua.--In Nicaragua, a multi-faceted approach to
expand civic participation and strengthen civic culture, using
DA, is reforming and improving the performance of government
institutions and building public confidence in democratic
institutions. As part of a comprehensive assistance package,
ESF funding of $1.45 million will assist the judicial sector,
improve electoral systems, strengthen the capacities of
municipal governments, and support the Nicaraguan government's
efforts to improve transparency and ethics in the management of
public finances.
Question. On page 604 of the Congressional Budget Justification,
the line for ``Program Management'' for the Anti-terrorism Assistance
(ATA) program is identified as $5,074,000 for fiscal year 1999,
$7,014,000 for fiscal year 2000, and $8,400,000 for fiscal year 2001.
What is the reason for a 65% increase in two years? Please provide a
breakdown, by object class, of the program management budget, as well
as staffing levels for each fiscal year.
Answer. Upon review of the original table submitted in the
Congressional Budget Justification, we discovered that some of the
figures reported were either missing or incorrectly displayed. We have
attached revised tables that reflect the breakdown of the ATA program
budget (Table 1), program management details (Table 2) and staffing
levels (Table 3).
Offset Folios 714 to 715 insert here
Center for Antiterrorism and Security Training (CAST)
Question. Please indicate the sites reviewed for possible use as
the new Center for Anti-terrorism and Security Training (CAST). Provide
the Committee with the cost/benefit analysis, if performed, for each
site. If no cost/benefit analysis were performed, please indicate the
reasons why.
Answer. The State Department and Diplomatic Security Service (DSS)
have surveyed four sites as possible locations for the Center for Anti-
terrorism and Security Training (CAST). Only U.S. military reservations
were considered as possible hosts, since firearms, explosives, and
protective driving are integral parts of the curriculum of the State
Department's Anti-terrorism Training Assistance (ATA) program.
The four sites evaluated are: Quantico Marine Corps Barracks,
Virginia; Stump Neck at the Indian Head Naval Base, Maryland; Fort
McClellan, Alabama; and Fort A.P. Hill, Virginia.
Quantico has been evaluated as the best available option according
to five criteria:
Proximity to Washington, D.C.
Cost and construction parameters.
Potential use of existing facilities.
Cooperation with tenants.
Training access for partners (DSS and Capitol Police).
We are currently discussing with the USMC possibilities for use of
Quantico for the CAST site.
FY 2000 costs for the ATA program are $33 million, but the current
management arrangement is not as efficient as it could be and there are
some duplicative costs because ATA/DA must contract at 7 different
facilities throughout the United States.
Consolidating CAST training activities into one central location
will generate costs savings by streamlining management, consolidating
training activities, and creating economies of scale for operations and
maintenance. It will also increase the training capacity of the ATA
program and will improve the quality of training.
A cost comparison of the four sites is as follows:
------------------------------------------------------------------------
Site Estimated Cost Comments
------------------------------------------------------------------------
Fort McClellan infrastructure. $40 million...... Needs renovation and
tech range
development.
Quantico MCB.................. $60 million...... Needs additional
ranges to support
Capital Police.
Stump Neck.................... $116 million..... Needs substantial
utility and
infrastructure
improvement.
Fort A.P. Hill................ No cost data..... Eliminated from
Consideration as too
far from DC area.
------------------------------------------------------------------------
Fort McClellan was the lowest cost option evaluated, but it does
not meet 3 out of 5 of evaluation criteria, including proximity to
Washington, at-grade utilities, and access for DSS and Capitol Police
for in-service training. Environmental concerns arose after the initial
cost estimate was completed. Ft. McClellan was judged insufficient on
technical merit as a viable option.
Stump Neck is judged as cost prohibitive and did not meet other
criteria, including use of explosives and the potential for cooperation
with existing tenants.
Fort A.P. Hill was judged too far from Washington, D.C., therefore
detailed cost estimates were not produced.
THE TERRORIST INTERDICTION PROGRAM (TIP)
Question. The Terrorist Interdiction Program (TIP) request of
$4,000,000 included $2,500,000 for a border monitoring program. Are
these activities not provided through the Export Control program funded
in the same account? What other government agencies are performing
similar work? Is this request duplicative of such work?
Answer. The Export Control Assistance Program and the Terrorist
Interdiction Program (TIP) have entirely different focuses. The Export
Control Assistance Program enables other countries to deter, detect and
intercept illicit shipments of material and equipment related to
weapons of mass destruction. The TIP program is intended to interdict
individuals and the type of weapons most commonly used in terrorist
attacks.
Furthermore, because of the differences in purpose, the priority
countries for each program also differ. TIP assistance would focus
primarily on countries that are key transportation hubs into their
region and there is reason to believe that they might be used by
terrorists crossing international borders. The Export Control
Assistance Program focuses on Russia, the other NIS, Central and
Eastern Europe, and increasingly the Indian subcontinent and countries
that are home to significant free ports.
Other State Department bureaus and Executive Branch agencies also
assist friendly countries in certain aspects of border security, such
as the Department's Bureau of International Narcotics and Law
Enforcement and the Immigration and Naturalization Service. They focus
on other types of problems, however and they have different priority
countries. We are in contact with them and coordinate with them to
avoid any duplication of effort and to work together where countries
are of mutual concern. Through interagency meetings and follow-ups, we
have drawn upon their experience in developing the TIP concept and we
intend to continue working with them.
ECONOMIC SUPPORT FUND FY 1991-2001
Question. Please provide a summary of the funding provided or
proposed (by region and by nonregional program, as appropriate) under
the account ``Economic Support Fund'' for all countries and programs
other than the Camp David countries (Israel and Egypt) for each fiscal
year beginning in 1991 and ending in 2001.
Answer. Please see the attached table displaying Economic Support
Fund (ESF) funding by country or program from FY 1991 to FY 2001.
Funding levels for FY 1991 to FY 1998 reflect actual obligations.
Offset Folios 723 to 725 Insert here
ESF AND DA SINCE FY 1970
Question. Please provide the Committee with a chart similar to that
provided on page 685 of the Congressional Budget Justification for
Foreign Military Financing program/Grants for the following accounts:
Economic Support Fund (including the account or accounts that preceded
ESF); and the combined development assistance accounts (in the
aggregate, including account that preceded the current account
structure). Please begin with fiscal year 1970.
Answer. Please see the attached chart displaying the levels of the
Economic Support Fund and Development Assistance since 1970.
Offset Folios 727 to 729 Insert here
SLOVAKIA
Question. The Administration proposes no bilateral assistance
program with Slovakia through the account ``Assistance for Eastern
Europe and the Baltic States'' for fiscal year 2001. Please justify
that decision.
Answer. Slovakia has achieved significant progress in its
democratic, free market transition, especially since the 1998
elections, and we remain committed to its continued success. While that
transition is not yet complete, Slovakia has shown its readiness to
meet the challenges of becoming a modern, democratic state. Therefore,
we determined that fulltime management of our bilateral assistance
program on the ground in Slovakia was no longer needed. The USAID
mission in Bratislava will close on September 30, 2000, ending the
formal bilateral assistance program, and Slovakia will join seven other
Eastern European and Baltic States as a SEED ``graduate.''
Nevertheless, while most bilateral USAID activities in Slovakia
will conclude by this September, the country will continue to be
included in various regional assistance programs. U.S. assistance to
Slovakia under these programs will total about $2 million for the
current fiscal year. They are tailored to respond effectively to the
Slovak Government's highest priorities of: (1) ameliorating the current
economic crisis; (2) combating crime and corruption; and (3) assisting
Slovakia's integration into Western institutions by furthering
democratic reforms.
MANAGEMENT AND ADMINSTRATIVE COSTS
Question. Please provide a breakdown of the State Department
management and administrative costs that are being funded from certain
specified accounts for each of the fiscal years 1999, 2000, 2001, and
the reasons such costs are not being borne by the regular
administrative accounts of the Department of State. Please also provide
the legal authority that is being used to allocate such costs against
the program accounts. The accounts are the Economic Support Fund;
Assistance for Eastern Europe and the Baltic States; Assistance of the
Independent States of the Former Soviet Union; Peacekeepng Operations;
and Nonproliferation, Anti-terrorism, Demining, and related programs.
Answer. The attached table provides the dollar breakout by fiscal
year, account, and program/activity of funds being used to support
certain administrative costs associated with program management.
The Foreign Assistance Act of 1961, as amended (``FAA''), provides
that funds appropriated for purposes of the FAA may be used to pay for
a variety of specified costs when such functions are directly related
to the purposes of the FAA. Similarly, the Foreign Operations
Appropriations Act provides funding for necessary expenses to carry out
various provisions of the FAA. Other statutes, such as the Fulbright-
Hays Act, also contain specific language that provides similar
authorities when conducting activities in furtherance of that act.
There are various reasons why these costs have on occasion been
charged against the relevant foreign assistance program accounts.
First, administrative support for unanticipated foreign assistance
program requirements that emerge during the fiscal year may need to be
funded from the relevant foreign assistance program account, as regular
operating budgets could not reasonably have planned to support costs
associated with the administration of such programs. Further, in some
cases the bureau responsible for oversight of the program (e.g.,
International Narcotics and Law Enforcement, or ``INL'') is funded
primarily from the foreign assistance appropriation, and does not
receive administrative support from the Department's central operating
budget. Accordingly, all costs attributable to management of that
program may be charged against that program account. In addition, some
programs--such as the Science Centers, Anti-terrorism assistance, INL,
and the Non-proliferation and Disarmament Fund--have a longstanding
practice of using program funds for administrative support. They have
done so after ensuring Congressional awareness of the Department's
intent to use program funds for such purposes, either through the
annual Congressional Presentation Document, or through a congressional
notification.
Finally, Congress has specifically limited the extent to which
program funds can be used to pay the administrative expenses associated
with those programs, such as for the Humanitarian Demining program (up
to $500,000) and under the FREEDOM Support Act (up to 5%).
Offset Folio 735 Insert here
INCREASES IN U.S. VOLUNTARY CONTRIBUTION TO THE IAEA
Question. Why is funding for the voluntary contribution to the
International Atomic Energy Agency (IAEA) increasing by 17.5% over two
years?
Answer. The International Atomic Energy Agency (IAEA) is the sole
international mechanism by which the location and use of nuclear
materials is monitored worldwide. The IAEA provides on-site inspection
for the Nuclear Non-Proliferation Treaty. Through its unique system of
nuclear materials measurement, on-site inspection and verification,
known as international safeguards, the IAEA provides essential
assurance that nuclear materials subject to safeguards are used
exclusively for peaceful purposes. This knowledge is critical to the
security of all states, since some nuclear materials and technology
could be diverted from peaceful to nuclear weapons uses by a determined
potential proliferator. U.S. technical and financial support is
critical to the effectiveness of IAEA safeguards. Every U.S.
Administration has strongly supported the IAEA since the organization
was created in 1957.
For many years the workload of the IAEA has increased
significantly. More states are accepting safeguards and the number of
nuclear facilities and the amount of nuclear materials subject to
safeguards are increasing steadily. Most importantly, the IAEA is
beginning to implement strengthened safeguards measures that will
improve its ability to detect undeclared nuclear facilities in order to
prevent a repeat of Iraq's efforts to circumvent its safeguards
agreements. At the same time, the IAEA has been called upon by its more
than 130 members states to expand considerably its work in nuclear
safety. As a consequence of many years of zero real growth, these
increases in workload can no longer be funded through reductions in
other IAEA activities also mandated by the IAEA Statute and the NPT.
While the Agency's workload is expanding, the Agency's budget has
been held to zero real growth. For almost twenty years, the United
States and other major donors have applied a zero-growth policy to the
assessed budgets of the largest international organizations. As a
consequence, the IAEA is unable to fully implement needed improvements
to the nuclear safeguards system. Major efforts over the past several
years to put in place new safeguards measures to detect secret,
undeclared nuclear activities have been hampered by lack of funding.
Indeed, implementation of the existing safeguards system is
increasingly under-funded in the regular budget. In 1997, 1998 and
1999, expenditures for safeguards totaled approximately $95 million/
year. Of this only $82 million/year was available from the IAEA's
regular budget.
In an effort to compensate for some of the growing shortfall in
regular-budget resources to support existing safeguards application and
other commitments under the NPT, and especially to move ahead with new,
strengthened safeguards measures, the United States provides an annual
voluntary contribution to the IAEA. This contribution provides
essential support to safeguards, but falls short of the full program.
The U.S. voluntary contribution to the IAEA has varied considerably
over the last ten years. On average, it has grown as the U.S. has
sought to sustain the funding needed for the IAEA safeguards system
while adhering to a policy of zero growth in the Agency's regular
budget. Congressional appropriations have varied, however, and in some
years the voluntary contribution has fallen substantially. Compared
with the $40 million contributed in 1995, an increase to $47 million in
2001 would constitute an average annual growth rate since 1995 of 2.7
percent, or near zero when adjusted for inflation. Such an increase
would provide funding for immediate, critical needs for equipment,
training, and personnel for the safeguards system.
EAST TIMOR ESF/PKO FUNDING
Question How does funding for East Timor through the Economic
Support Fund differ from that requested through Peacekeeping
Operations?
Answer. Economic Support Fund (ESF) assistance supports economic
assistance programs while peacekeeping operations funding covers costs
associated with a continued U.S. civilian police presence. The UN
Transitional Administration in East Timor (UNTAET) and the World Bank--
with strong support from the U.S. and many other donors--are leading
the international effort of reconstruction, capacity-building, and
development in East Timor. After the devastation there in 1999, and
given the challenges inherent in transforming a poor, small territory
into a democratic, economically active, independent nation over a 2-3
year transition, the needs of the East Timorese people are huge.
U.S. Economic Support Fund (ESF) assistance (FY 2000 $25 million
ESF) for East Timor--mainly but not exclusively used to support
bilateral programs--has been substantial and quickly deployed at the
beginning of the transition. Specifically, the U.S. is spending about
$20 million in FY 2000 ESF to expand existing USAID and USAID Office of
Transition Initiatives (OTI) bilateral projects in East Timor. USAID's
$8.1 million project to assist coffee farmers is having a particularly
rapid and positive impact on the East Timorese economy. Coffee
production is expected to be the primary source of employment and
economic activity within East Timor over the long term. As UNTAET and
the World Bank operations gear up, USAID and OTI are also providing
quick employment in community projects to East Timorese to help
stabilize urban and village populations by increasing their purchasing
power, stimulating economic activity, and reducing unrest. The U.S.
objective in most OTI projects (about $10 million ESF in programs and
$1.5 million more in International Disaster Assistance funds in
administrative support) is to encourage the growth and development of
local civil society and other institutions that will be critical to
democratic governance in East Timor.
Other FY 2000 ESF U.S. programs are addressing East Timor's urgent
need for assistance on forensics and human rights training. We expect
are spending about $1.4 million in FY 2000 ESF in helping East Timorese
responsible for documenting past human rights abuses on the ground in
East Timor (both UNTAET officials and NGO workers) to gain the
specialized training needed to conduct such investigations, to achieve
access to forensic expertise, and to provide necessary specialized
equipment. This assistance is to help East Timorese to monitor current
human rights abuses and prevent future abuses.
In addition, we expect to expend about $1 million in FY 2000 ESF
for judicial training, justice sector institution building and
promotion of the rule of law in East Timor, another priority need.
These funds will support the training of judges, prosecutors, and
public defenders; the revision of the legal code, and overall planning
for the development of an independent East Timorese judiciary.
In FY 2000, we are also using ESF monies to support the
multilateral effort in East Timor with contributions to the UNTAET
Trust Fund ($4 million) and to the World Bank Reconstruction Trust Fund
($500,000). The UNTAET Trust Fund is vital to ensuring that basic
public services are fully restored in East Timor and that East Timorese
develop the skills to provide them on a continuous basis. Most of the
UNTAET Trust Fund will be used to benefit East Timorese immediately and
directly by paying salaries for public workers, most of them teachers
or health care workers. Some of the fund will go to critical projects
that support democracy and governance. Our small ($500,000)
contribution to the World Bank Trust Fund is to support the Bank's work
as the main coordinating body for the multilateral effort to rebuild
East Timor into a self-sustaining economy over the long-term.
Internal security is another immediate priority in East Timor and
this is where FY 2000 voluntary PKO funds have been utilized. The U.S.
has increased its civilian police (CIVPOL) contingent (which is
distinct from the peacekeeping force) in support of UNTAET and,
consistent with what is permissible under U.S. law, is helping to
establish a local police force capability and critical judicial
functions. These last activities will require expenditure of about $8.5
million in voluntary PKO funds in FY 2000.
Looking ahead to next year, the Administration has requested $10
million in FY 2001 ESF, $1.5 million in international development
assistance funds, and $18 million in voluntary Peacekeeping Operations
(PKO) funds. USAID's role this year has been primarily to provide a
bridge for the East Timor transition until World Bank and UNTAET money
comes fully on line. Assuming that this will happen shortly, the
Administration's FY 2001 $10 million ESA request should be sufficient
to allow the U.S. to continue to make a valuable contribution in East
Timor, despite our ESF levels being down from the FY 2000 level of $25
million. Precise details of our FY 2001 projects are not yet determined
but will in many cases involve continued support for programs already
existing, as described above.
The FY 2001 request for $18 million is voluntary PKO funds is
expected to be used to fund the bilateral costs of continued U.S.
civilian police functions as part of the CIVPOL element of UNTAET (i.e.
not the UNTAET peacekeeping force). These civilian police are
exercising responsibility for law enforcement functions until UNTAET
stands up a new East Timor police service. Approximately $8.5 million
in voluntary PKO funds would cover the costs of recruitment, selection,
equipment, preparation, and logistical support through calendar year
2001 for 80-83 U.S. police assigned to the 1,640-member CIVPOL mission.
Operationally, CIVPOL may be armed in some districts. The remaining
$9.5 million in voluntary FY 2001 PKO funds will likely be used for
field training and equipment to assist in establishing a 3,000-member
East Timor Policy Service capable of functioning once the UN
Administration ends, and for other bilateral or multilateral activities
important for facilitating East Timor's transition to independence.
It is also important to note that the UN assesses the U.S. for part
of the costs of the UNTAET peacekeeping mission. For FY 2000 and FY
2001 these assessments are approximately $186 million per year, paid
from the Contributions for International Peacekeeping Activities (CIPA)
account, or non-voluntary PKO funds.
AFRICAN REGIONAL STABILITY PROGRAM
Question. Under the Foreign Military Financing Program, $18,000,000
would be provided for the program ``Africa Regional Stability''. Does
the Department intend to allocate these funds by country in the process
mandated by section 653(a) of the Foreign Assistance Act? If not, why
not? Please provide the Committee with a list of countries that the
Department intends to be eligible for funding through this program and
the kinds of goods and services that would be funded.
Answer. Funds requested under the ``Africa Regional Stability''
program will be allocated and notified to Congress in accordance with
applicable provisions of law, including sections 653(a), 634A, and 515
of the Foreign Assistance Act.
The $18,000,000 request for the Africa Regional Stability program
will support U.S. efforts to bring stability and peace to troubled
nations in Africa by enhancing African capacity to conduct bilateral
and multilateral peacekeeping and humanitarian operations and assisting
their efforts to revamp military forces in ways that will instill and
sustain the principles of democracy. These funds will enable the
Department to fund priority programs that may include: continued
efforts with the Government of Nigeria in undertaking comprehensive
military reform to help transform the militarized culture into a
democratic system; support for the Economic Community of West African
States (ECOWAS), the regional peacekeeping center for West Africa, to
continue peacekeeping in various areas and to ensure interoperability
with U.S. and other coalition forces; build and equip a Crisis
Management Center with the Organization of African Unity (OAU)
headquarters that will support expanding peacekeeping and mediation
roles; enhance military interoperability and peacekeeping capacity of
the countries comprising the East African Commission; and reenergize
cooperation with the Front Line States to contain terrorism emanating
from Sudan.
NORTH KOREA: KEDO FUNDING
Question. What is the current estimate of funding that will be
needed in the remainder of fiscal year 2000, and in fiscal year 2001,
for the heavy fuel oil costs of KEDO? Also, please indicate the
budgeted contribution of the United States compared to the total
revised estimate. If there is a shortfall in available funding,
indicate how the Department of State intends that shortfall be met.
Answer: In 1999, the U.S. contributed a total of $53.1 million to
KEDO for heavy fuel oil (HFO) and administrative costs. This amount,
when combined with the EU contribution of nearly $15 million and
smaller contributions from others, was sufficient to meet KEDO's HFO
needs and begin to reduce KEDO's debt from past HFO years. KEDO's
commitment to provide the DPRK with 500,000 metric tons of HFO has not
changed in any way. Unfortunately, the price of HFO has.
The high cost of oil has led to a serious shortfall in heavy fuel
oil (HFO) funding. Prices spiked in March at $200 per metric ton, and
have decreased only slightly since then. Factoring in season price
trends, KEDO estimates that the total bill for HFO this year will be at
least $90 million, with a funding shortfall of at least $43 million
after other anticipated contributions are accounted for. Based on this
estimate, the U.S. budgeted contribution for FY 2000, of which about
$31 million will go for HFO expenses, will pay for only about 34
percent of KEDO's annual HFO costs.
The United States continues to work hard to secure contributions to
KEDO from other countries. Some 22 other countries have contributed to
KEDO since 1995. KEDO already has contributions and pledges totaling
more than $15 million for HFO deliveries in 2000, and we expect more
nations to contribute as the year progresses. We are currently
considering how best solicit even greater support, focusing initially
on persuading the EU to increase its annual contribution. To this end,
Ambassador Wendy Sherman is among those leading a series of USG visits
to key European capitals in early May, in advance of decisions on
future funding.
Nevertheless, we expect a considerable funding shortfall due to the
high price of HFO. To meet this shortfall, we anticipate the need,
later this summer, to reprogram the $20 million held in reserve in the
NADR account for FY 2000. If funds are still insufficient, we will need
to consult further with the Congress on how to address the problem.
Given the recent volatility of oil prices, it is impossible to
estimate FY 2001 HFO costs with any confidence. We requested $55
million for KEDO next year, based on the average cost of HFO shipments
in recent years. Should oil prices remain near their current levels,
however, it is possible that this amount will be insufficient, in
combination with other contributions, to cover FY 2001 costs.
BOSNIA AND HERZEGOVINA
Question. Please provide the position of the Secretary of State on
the so-called ``Lautenberg amendment'' (section 566 of the fiscal year
2000 Appropriations Act), and whether the Secretary opposes, supports,
or has no opinion on inclusion of this language in the fiscal year 2001
Appropriations Act.
Answer. The Department proposes to work with congressional
representatives to sharpen and improve the language currently in
Section 566. Proposed changes would make clear that assistance could be
given to countries or entities with indictee presence only for certain
carefully circumscribed categories of assistance that support Dayton
implementation, e.g., minority return or democratization.
It should be possible to develop language that meets these ends
with recourse, or with very limited recourse, to waivers. It goes
without saying that regular and detailed consultation on such aid
programs with the Hill and concerned NGOs would continue unchanged.
Question. Madame Secretary, as you know the House voted last year
to deny funding to the School of the Americas. In conference, funding
for the school was restored. Can I get your commitment that you will
support funding for the School of the Americas this year, and actively
oppose efforts to close it down?
Answer. Funding for the U.S. Army School of the Americas is
included in the President's budget request. The Administration believes
that the U.S. Army School of the Americas can play an important role in
developing civil-military relations, consolidating democracy, promoting
regional stability, and pressing for the highest standards in respect
for human rights.
Much of the controversy about the School stems from human rights
abuses committed by some of its past graduates. Clearly, there have
been abuses, which we condemn. But the School's curriculum has been
revised to strengthen and accentuate training and instruction on
civilian control of the military, the promotion of democracy, and
respect for human rights, so that these abuses have less likelihood of
occurring in the future.
The School also encourages regional stability and cooperation
through training in peacekeeping, demining, counterdrug operations,
medical assistance, leadership development and military justice.
These goals are in our national interest, and we should support the
efforts of the School of Americas to help achieve them.
MONTENEGRO
Question. Madame Secretary, President Milosevic of Serbia has been
intensifying pressure on Montenegro, a part of the Federal Republic of
Yugoslavia that maintains pro-western policies. Mr. Milosevic has
increased the number of troops in Montenegro who are loyal to his own
regime. These troops have taken such actions as closing Montenegro's
airport, threatening to close its border with Albania, and installing a
radio transmitter in Montenegro to override local broadcasts with their
own propaganda. The State Department has stated clearly that it does
not support independence for Montenegro. If conflict erupts between
Serbia and Montenegro, or if the government of Montenegro is
overthrown, how will the United States and NATO respond?
Answer. Mr. Chairman, while I cannot give specific responses to
hypothetical scenarios, I can say that we are not taking any option off
the table at this point.
We have repeatedly emphasized over the past year that we have an
important interest in the security of the region, including Montenegro.
Should Milosevic use violence against the democratic Government of
Montenegro, he should anticipate a strong international response.
KOSOVO
Question. According to Administration estimates, the U.S. paid well
over half the costs of the allied air campaign against Serbia. The
President assured this Congress that the Europeans would pay the lion's
share of the Kosovo reconstruction effort. Yet, after receiving more
than $150 million in the fiscal year 2000 appropriations act, the
Administration has requested an additional $92.8 million for Kosovo
this year and $175 million in fiscal year 2001. The supplemental
request for this year would already bring the U.S. share up to 20%--
well above the 15% ceiling that Congress established last year.
Meanwhile, the European Commission reduced its initial pledge from more
than $480 million to $350 million, and it has disbursed only a fraction
of that amount. We are meeting our pledge. Why should this Congress
appropriate substantial additional funds for Kosovo as long as the
Europeans are dragging their feet?
Answer. We have requested an additional $92.8 million in emergency
supplemental funds for Kosovo this year, and ask Congress to
appropriate these funds, because we believe the needs--for a stronger
police force, for funds to restart the Kosovo economy, and for building
a free media and functioning democracy--are important for the success
of the mission.
Peace has not come as quickly and easily to post-conflict Kosovo as
everyone in the international community had hoped, and the need to take
the pressure off KFOR by introducing and then strengthening an armed
international police force in Kosovo left many of the originally
planned economic and political reforms severely underfunded.
Furthermore, the Europeans are sharing the burden and contributing
the lion's share of reconstruction costs for Kosovo.
Our European partners seem to disburse their pledges slower than we
do for two reasons: first, most European states and institutions,
including the EC, have fiscal years that start in January. One quarter
into the U.S. fiscal year 2000, most European donors had just begun
processing their own expenditures.
Second, European money has been slower to reach Kosovo because
European donors are undertaking most of the long-term reconstruction
assistance, while the U.S. has responsibility for many short-term tasks
of peace implementation. Reconstruction projects typically have a long
implementation period and a correspondingly more measured disbursement
rate. This division of labor became necessary when the FY 2000 FOAA
prohibited the U.S. from undertaking large-scale physical
infrastructure and reconstruction in Kosovo. In effect the legislation,
in part, mandated the discrepancy in spending rates.
While Congress may find the relative contributions of donors to be
a useful guideline, it wisely did not establish as 15% ceiling on
overall U.S. contributions to Kosovo, but placed the constraint only on
pledges at the November 1999 Kosovo donors' conference. The
Administration agrees that our aid should be relatively small but
strongly opposes a specific cap such as the proposed 15 percent ceiling
on assistance to the Balkans.
Such a cap is arbitrary and quickly becomes impractical if adhered
to strictly. The level of 15 percent is based on a perception that the
U.S. funded the lion's share of the war, therefore the Europeans should
fund the lion's share of the peace. But ``15 percent'' was chosen
before actual relative contributions were clearly understood. We now
know that our allies contributed 42 percent of costs of the NATO air
campaign. They now contribute over 60 percent of the costs of KFOR. The
principle of 15% reciprocity can not even be justified by the relative
proportion of European assistance during recent crises in the Western
Hemisphere. For example, Europeans paid substantially more than 15
percent of all aid to Central America and the Caribbean after
Hurricanes Mitch and George (61%), support for the Guatemalan peace
program (34%), and El Salvador (33%).
We need the flexibility to solve problems when they arise. Delay of
funding until next fiscal year will sap momentum and credibility, as
well as open up avenues for Belgrade to regain the political
initiative. We put at risk the people of Kosovo and the success of the
mission if we follow arbitrary percentage rules on contributions. As
recent outbreaks of violence in Mitrovica demonstrate, further delay in
bringing order and viable economic opportunities to the province will
expose U.S. soldiers to avoidable risks.
The U.S. joined our partners in Kosovo to help bring stability to
the region. The Administration believes that achieving this goal,
rather than the relative contribution of donors, should be the
principle guideline in determining U.S. assistance levels.
Question. Madame Secretary, as part of the Oslo Peace Agreement in
1993 the United States pledged to provide $375 million in grant
assistance to the West Bank and Gaza over five years. That pledge
expired at the end of fiscal year 1998. However, the Administration has
requested, and the Congress has reluctantly approved, funding for $75
million per year for the last few years. For fiscal year 2000, the
President requested $100 million; Congress approved $75 million.
However we also passed the Wye River supplemental that includes $400
million for the West Bank and Gaza. Despite the fact that Congress
provided $475 million for the West Bank and Gaza, the State Department
apparently believes that this is not enough. You've proposed $85
million for the base program in 2000, $10 million above the level
approved by the Congress. Why was Congressional intent ignored? Should
we consider a cap on funding for the West Bank and Gaza?
Answer. We have reached a critical stage in the Arab-Israeli peace
process and are hopeful that a permanent status agreement between
Israel and the Palestinians can be reached this year.
Recognizing the enormous economic development challenges facing the
Palestinians, in November 1998 the President committed the U.S. to
provide $400 million as part of a supplemental to meet needs arising
from the Wye River Memorandum, in addition to our annual ESF
contribution, for which the President requested $100 million in the FY
1999, 2000, and 2001 budgets. In a year when we hope the parties will
finalize a peace agreement, it is extremely important that we try to
meet these commitments.
The Palestinian people need to see tangible improvements in their
lives as a result of the peace process. Demonstrating U.S. economic
support to the Palestinians is critical at this time.
While the administration requested $100 million in FY 2000 ESF for
the West Bank and Gaza, in light of Congressional concern, we agreed to
the lower level of $85 million.
The additional $10 million above report language is making possible
the funding of programs to support mother-child health care, as well as
programs to strengthen economic development and good governance, such
as strengthening the independent media, civil society organizations and
capital markets in the West Bank and Gaza. Progress in these areas will
contribute to the economic and political development of the West Bank
and Gaza.
NORTH KOREA: FY 2001 KEDO FUNDING
Question. Madame Secretary, once again the Administration is
proposing a large increase in funding for KEDO. And there still seems
to be no end in sight to our funding of heavy fuel oil for that
Communist dictatorship. You are requesting $55 million for 2001, an
increase of $20 million over the fiscal year 2000 appropriated level.
Given the dramatic increase in oil prices in the past year, will that
be enough to pay for the heavy fuel oil? If more is needed, will you
once again be coming back to the taxpayer for additional funds, or will
you seek to share the burden of this funding with our allies in the
region?
Answer. The Agreed Framework calls for the annual shipment of
500,000 metric tons of heavy fuel oil (HFO) to North Korea until the
completion of the first light water reactor. The United States has
assumed primary responsibility for funding the HFO program while the
Republic of Korea and Japan are providing the bulk of the funding for
the reactor project.
Our request for $55 million for FY 2001 is an increase of $20
million over the FY 2000 appropriated amount, but is the same as our
budget request for FY 2000. Actual U.S. contributions to KEDO over the
past two years, including reprogramming, were $62 million in 1998 and
$53.1 million in 1999. These figures include $3.6 million in
administrative costs in 1998 and $3.5 million in 1999. The $55 million
request does not, therefore, represent an increase in our estimate of
the funding needed to carry out the HFO program.
In 2000, we expect a considerable funding shortfall due to the high
price of HFO. To meet this shortfall, we anticipate the need, later
this summer, to reprogram the $20 million held in reserve in the NADR
account for FY 2000. If funds are still insufficient, we will need to
consult further with the Congress on how to address the problem.
Given the recent volatility of oil prices, it is impossible to
estimate FY 2001 HFO costs with any confidence. Our request of $55
million for KEDO next year was based on the average cost of HFO
shipments in recent years. Should oil prices remain near their current
levels, however, it is possible that this amount will be insufficient,
in combination with other contributions, to cover FY 2001 costs.
The U.S. continues to make every effort to secure contributions for
KEDO from other countries. We are currently considering how best
solicit even greater support, focusing initially on persuading the EU
to increase its annual contribution. To this end, Ambassador Wendy
Sherman is among those leading a series of USG visits to key European
capitals in early May, in advance of decisions on future funding. We
cannot guarantee, however, that even stepped-up contributions from
other KEDO members and supporters will be sufficient to avoid seeking
additional U.S. funding if prices remain high.
KOSOVO
Question. ``Do you believe additional U.S. troops will be needed in
Kosovo beyond the 5,300 already there? If so, do you anticipate combat
operations against ethnic Albanian guerilla units?''
Answer. On March 31, the U.S. announced that we are reinforcing
U.S. forces already in Kosovo with 125 reconnaissance troops who will
help monitor Kosovo's boundary with southern Serbia. In addition, a
company of the 1st Armored Division already in Macedonia is being
reinforced with tanks and artillery. These additional deployments
provide U.S. forces with additional force protection capabilities while
sending a clear deterrent signal to would-be troublemakers.
NATO military planners are in the final stage of a review of KFOR's
troop requirements, in cooperation with military planners of the member
states. At this time, Allies have made no final decisions on sending
additional troops to Kosovo nor have we made any final decisions about
sending additional U.S. forces beyond the reconnaissance troops. We
will be working closely with our Defense Department colleagues on this
issue.
On March 16, U.S. KFOR conducted successful raids on Kosovar
Albanian weapons caches in the U.S. sector in fulfillment of KFOR's
difficult mission to provide a secure environment in Kosovo. There was
no resistance to the raids. The raids were designed to prevent a group
of extremists from provoking further hostilities. We do not anticipate
that U.S. forces will need to engage in combat. However, similar
preemptive measures could be taken should the situation warrant them.
We continue to call upon all ethnic groups in Kosovo to cease violent
acts and confrontations and to seek a political solution to grievances.
In the long run, it will be up to Albanian and Serb Kosovars themselves
to understand that they must move beyond the events of the past if they
are to enjoy a peaceful and secure future.
Question. Is the U.S. monitoring the use of military equipment
provided to the Kosovo Protection Corps? Is this assistance subject to
the provisions of the Leahy amendment, which prevents equipment from
being used by security forces that are engaged in human rights abuses?
Are you reviewing or will you review activities by Kosovo Protection
Corps units and take action to cut off U.S. assistance if they are
found to be engaged in human rights abuses, just as we have done in
Latin America?
Answer. As you may know, KFOR is exercising close day-to-day
supervision over the KPC. Total number of KPC personnel authorized by
KFOR to carry weapons (small arms, mostly handguns) at any one time is
300. Weapon authorization cards are tightly controlled by KFOR and may
(and have been) revoked.
On March 1, UNMIK and KFOR put into force the KPC Disciplinary Code
(DC), which applies to all KPC members and constitutes the authority
for enforcement of the rules for compliance and disciplinary action
against offenders. On March 17, UNMIK and KFOR signed the Compliance
Enforcement Framework Document, which assigns responsibility for
investigating criminal actions to UNMIK, administrative discipline to
KPC, and compliance violations to KFOR.
Disciplinary action has already been taken in a number of cases,
consistent with the Compliance Enforcement Framework, against KPC
personnel found in violation of the Disciplinary Code.
We take seriously any allegation that members of the KPC have
committed human rights violations. It is in no one's interest to have
such individuals serving in the KPC, an organization designed to
provide civilian emergency services to the people of Kosovo and which
provides important employment opportunities for many demobilized KLA
veterans.
We would also take steps to ensure that no U.S. assistance reached
members credibly alleged to have committed gross violations of human
rights regardless of whether the Leahy Amendment technically applies to
a drawdown not involving the use of foreign assistance funds or whether
the KPC is or is not a ``security force.''
When we furnished nonlethal equipment and funding to UNMIK for use
by the KPC, we took steps to confirm that UNMIK had put in place an
effective procedure to ensure that assistance would not be provided to
persons credibly alleged to have committed gross violations of human
rights.
______
QUESTIONS FOR THE RECORD SUBMITTED BY MR. PORTER
EAST TIMOR REFUGEES
Question. I am extremely concerned about the approximately 100,000
East Timorese who are still living in West Timor refugee camps. Reports
of militia intimidation and life-threatening disease are widespread. Of
particular concern is the recent deadline set by the Indonesian
government to cut off humanitarian assistance to the camps on March
31st. What is the U.S. Administration doing to influence the Indonesian
government and military to separate the militias, arrest militias, open
access for humanitarian workers and most importantly return those
people who want to go home to East Timor?
Answer. We share your concern about the 80-100 thousand refugees,
many of them children, who are still living in West Timor. Recent
reports of returnees are encouraging, but many of the refugees who
would ultimately like to return home are not going back to East Timor
because of misinformation or concern about the situation that awaits
them. Militia intimidation remains a problem in some areas. Those who
do not want to go home have not been sufficiently encouraged or enabled
by the Indonesian government (GOI) to resettle elsewhere in Indonesia.
President Wahid has ordered his generals to resolve the militia
problem and to facilitate the repatriation or resettlement of refugees.
The GOI in fact lifted its March 31 deadline to cut off humanitarian
assistance to the camps. However, the GOI has not done enough to
resolve the refugee situation swiftly.
The United States has repeatedly pressed the GOI at the highest
levels to take decisive action on the refugee problem, to live up to
its financial obligations for the care and maintenance and
repatriation/relocation of the refugees, and to address the root
causes--many of which you have identified--that cause the camps to
linger in existence.
Our concern about the refugees was a key element behind President
Clinton's September 1999 suspension of military-military relations with
Indonesia. Legislation (section 589 of the FY 2000 Foreign Operations
Appropriations Act as enacted in the Consolidated Appropriations Act
for FY 2000 (PL 106-133--the ``Leahy Amendment'') specifically requires
a determination that the GOI, as one condition for resumption of E-IMET
and FMF for Indonesia, allows displaced persons and refugees to return
home to East Timor, including providing safe passage. We have mobilized
international demarches to urge Indonesian fulfillment of all its
responsibilities toward the refugees. On April 27, Ambassador
Holbrooke, the U.S. Permanent Representative to the United Nations,
strongly emphasized the same points in an open briefing on East Timor
as part of our efforts to keep up the pressure.
INDONESIAN MILITARY REFORM
Question. It is my understanding that the current restrictions
concerning the Indonesian military are having a positive impact on the
government's effort at developing civilian rule and reform. Under
Secretary Pickering and Assistant Secretary Roth have just returned
from visiting Indonesia. Could you give us their impressions of the
situation and inform us of any possible plans for any level of military
reengagement with Indonesia?
Answer. President Wahid deserves the credit for progress in
asserting civilian authority over the Indonesian military (TNI) and
stimulating internal military reform. He has placed civilians in senior
Indonesian government (GOI) positions previously held only by military
officers, removed General Wiranto from the cabinet, dismissed senior
TNI officials who defied his constitutional authority, ensured that
reform-minded officers were promoted into key command positions, and
issued orders to TNI to take the right steps to clear up the refugee
and militia situation in East Timor, a situation which elements of TNI
played a major role in creating and sustaining. He has set in motion
other initiatives to professionalize TNI and end its traditional
involvement in economic and socio-political roles. Military reform is
proceeding slowly, but it is advancing step-by-step.
How and when to resume U.S.-Indonesia military-to-military
relations is an issue of great import of U.S. policy toward Indonesia.
In September 1999, in reaction to violence in East Timor, President
Clinton suspended U.S.-Indonesia military-to-military relations. At the
time of his decision, those ties were already restricted. The only
permissible U.S. arms transfers/sales were material clearly intended
for use in Indonesia's external defense. We did not approve transfers/
sales of weapons and equipment that might be used for internal security
purposes by the TNI, and Indonesian military personnel had been limited
to the Expanded International Military Education Training (E-IMET)
program (and did not have access to the full catalogue of IMET
programs). The Congress, also reacting to violence in East Timor,
passed legislation (section 589 of the FY 2000 Foreign Operations
Appropriations Act as enacted in the Consolidated Appropriations Act
for FY 2000 (PL 106-113--the ``Leahy Amendment'') which conditions
resumption of FMF and IMET or E-IMET with Indonesia.
As President Wahid made progress in bringing about reform in TNI,
we have monitored developments on the assumption that a point would
come when a gradual, phased resumption of U.S. bilateral defense links
with TNI could help strengthen his efforts. One purpose of the visits
to Indonesia by Under Secretary Pickering and Assistant Secretary Roth
in March 2000 was to consult with President Wahid about whether a
carefully calibrated program of re-engagement could help reinforce
changes underway, promote civilian control, and help move TNI toward a
new, professional, de-politicized role. President Wahid agreed that
they would, but asked that the timing be carefully considered. Since
then he and other senior GOI officials have urged us to begin
resumption of bilateral defense ties.
The Administration has invited Indonesian Navy and Marine
participation in the annual regional CARAT exercise and also invited
Indonesian Air Force observers to the upcoming COBRA GOLD exercises in
Thailand. The CARAT exercises themselves focus largely on humanitarian
assistance, disaster response and anti-piracy.
We believe that positive developments along the East Timor border,
with refugees in West Timor, and progress on general military reform
allow us to move forward with these two limited initiatives at this
time. We are confident--and are assured by the GOI that this is the
case--that this gesture supports President Wahid's progress in
reforming the military and consolidating civilian control. We are
making it clear to the GOI and TNI at senior levels that these steps
are ad-hoc, and reversible. Only continued progress on West Timor
security issues, accountability for human rights abuses, and military
reform will lay the foundation for further interaction.
We do not consider that the invitations to CARAT and to observe
COBRA GOLD constitute a renewal of our military-to-military
relationship, which will require a formal decision. We have discussed a
``roadmap'' and even identified some activities that are not prohibited
by law and could be suitable for an actual initial phase of gradual,
step-by-step resumption of ties. That roadmap is currently under
review. In our discussions, we have been particularly mindful of the
restrictions in the Leahy Amendment and the conditions that must be met
before resumption of IMET or the sale of defense articles. Additional
steps to widen the range of U.S.-Indonesia defense activities, even
below the threshold of the Leahy amendment, will require further
coordination and authorization within the Administration. We will brief
the Congress fully.
KAZAKHSTAN
Question. Recently, I have been made aware of reports of repression
and corruption on the part of the current government of President
Nazarbayev. Concerns have also been raised over the fair treatment of
American investors and other business interests by this government. To
address these concerns, former Prime Minister Kazhegeldin has
recommended promoting a national dialogue within Kazakhstan, including
participating by political opposition groups. What is the State
Department's opinion on this recommendation? If not promoting a
national dialogue, what is the State Department planning on doing to
address these concerns?
Answer. Certainly we support political dialogue, but we believe we
shouldn't tie ourselves down to any one view of how it should be
carried out.
As I made clear during my visit to Astana, the capital of
Kazakhstan, promotion of democracy and human rights is a fundamental
part of our policy toward Kazakhstan. We're doing what we can to
support the development of non-governmental institutions there. Embassy
Almaty works closely with the OSCE Office in Almaty. We also support
prompt implementation of the many excellent recommendations contained
in the OSCE election report.
In that regard, we have been promoting and encouraging the OSCE's
proposal to initiate a political roundtable, which would bring together
the Kazakhstani Government and the opposition (including parties not in
the parliament), plus media and NGOs, to address the recommendations of
the final OSCE report on the elections.
TURKEY ATTACK HELO SALE
Question. Madam Secretary, right now, American Bell Textron remains
on the list as a possible contractor with Turkey for 145 attack
helicopters. How has Turkey progressed on the eight benchmarks, and
what are you going to do should Bell Textron be chosen as the
contractor?
Answer. Turkey has not yet decided which model of attack helicopter
it wishes to buy. One U.S. manufacturer and two non-U.S. companies
remain in the running.
If Turkey chooses a U.S. manufacturer, our export license decision
will be based on the full range of considerations required by law and
our arms export control policy, including a thorough review and
evaluation of Turkey's progress on improving human rights.
Since the Government of Turkey has not made a choice in the attack
helicopter competition, we cannot comment on what we might or might not
decide.
______
QUESTIONS FOR THE RECORD SUBMITTED BY MR. PACKARD
INTERNATIONAL ORGANIZATIONS AND PROGRAMS
Question. I notice in the budget that you have virtually doubled
the area of international organizations and programs. Could you explain
that for me, please?
Answer. The FY 2000 enacted level for the International
Organizations and Programs (IO&P) account looks significantly lower
than our FY 2001 request level mostly because funding for the United
Nations Children's Fund (UNICEF, $110 million) for FY 2000 were
appropriated by Congress in USAID's Child Survival account instead of
IO&P.
The FY 2001 request also reflects the Administration's request of
$50 million for the Global Alliance for Vaccines and Immunizations
(GAVI) to purchase and expand the delivery of existing vaccines that
will help save millions of children. GAVI is a new collaborative effort
among international organizations, governments and the private sector,
to make vaccines more readily available in developing countries. A
significant U.S. contribution will serve to encourage additional
contributions from other governments, private industry and
philanthropic institutions.
In addition, the FY 2001 request for the IO&P account includes a
new contribution of $1 million for the World Trade Organization Global
Trust Fund for Technical Assistance. These funds will be used to assist
some of our least developed trading partners to integrate into rules-
based economic and trade regimes, which will enhance economic
prosperity in all WTO member countries by increasing overall trade.
After adjusting for UNICEF and the two new funding initiatives, our
FY 2001 request for existing activities in the IO&P account is only $10
million higher than the FY 2000 appropriation. This amount reflects the
Administration's desire to increase our contribution to the United
Nations Development Program (UNDP), a major partner in our global
efforts to alleviate poverty, promote democratic governance, and
restore stability in countries devastated by conflicts or natural
disasters.
QUESTIONS FOR THE RECORD SUBMITTED BY MR. KNOLLENBERG
CLIMATE CHANGE
Question. In the State Department FY01 Budget Justification for the
IPCC/UNFCCC, it states ``the Parties to the UNFCCC, at their Fourth
Conference in 1998, agreed to the Buenos Aires Plan of Action and, most
recently at the fifth conference in November 1999, the Parties took
steps to further its implementation. The plan of action outlines a
process that seeks to elaborate the rules for international, market-
based implementation mechanisms (i.e., emissions trading, joint
implementation and the Clean Development Mechanism), the underlying
compliance regime, the treatment of carbon sinks and other key U.S.
climate change objectives.'' The Budget Justification further states,
``we will focus our efforts on developing rules, guidelines and
modalities for the international mechanisms . . .''
Included in both the FY2000 Foreign Operations Appropriations Act
as well as the FY2000 Commerce, Justice, State Appropriations Act is
the following restriction, commonly referred to as the Knollenberg
language: ``None of the funds appropriated by this Act shall be used to
propose or issue rules, regulations, decrees or orders for the purpose
of implementation, or in preparation for implementation, of the Kyoto
Protocol. . . .''
Where does the State Department claim authority in U.S. law or
otherwise to participate in activities regarding emissions trading and
the Clean Development Mechanism?
Answer. Legal authority for the United States to negotiate with
foreign governments derives from the President's Constitutional powers
(Article II) to conduct foreign relations. The reference above to
``developing rules, guidelines and modalities for the international
mechanisms'' refers to negotiations with foreign governments to develop
the international rules and procedures under which the mechanisms would
operate. In his statement made upon signing the Consolidated
Appropriations Act for FY 2000, which contains the Knollenberg
language, the President said that:
``I continue to believe that various provisions prohibiting
implementation of the Kyoto Portocol in this bill are unnecessary, as
my Administration has no intent of implementing the Protocol prior to
ratification. I will consider activities that meet our responsibilities
under the ratified U.N. Framework Convention on Climate Change to be
consistent with this provision. Finally, to the extent these provisions
could be read to prevent the United States from negotiating with
foreign governments about climate change, it would be inconsistent with
my constitutional authority. Accordingly, I will construe this
provision as not detracting from authority to engage in the many
activities, both formal and informal, that constitute negotiations
related to climate change.''
Question. What guidance has been issued by the State Department on
compliance with the Knollenberg language? Please provide any and all
documents that issue guidance.
Answer. The State Department sent a notice concerning the
Knollenberg language in a cable to all diplomatic and consular posts on
February 12, 2000. The same notice was also sent to all Department
employees on February 17, 2000.
Offset Folios 783 to 785 Insert here
Question. Efforts by the State Department (such as those
indicated in the budget justification) to develop rules for
market-based implementation mechanisms such as emissions
trading and the Clean Development Mechanism are strictly
prohibited by the Knollenberg language. How can you justify
these activities in the face of the Knollenberg language?
Answer. As noted above, we do not interpret the Knollenberg
language to interfere with the President's Constitutional
prerogatives to conduct negotiations related to the Kyoto
Protocol.
Question. What assurances do we have that U.S. taxpayer
dollars appropriated to the UNFCCC will not be spent on
implementation mechanisms?
Answer. The Administration has given assurances that it
will not implement the Kyoto Protocol in advance of
ratification based on advice and consent by the Senate. Efforts
to negotiate the Kyoto mechanisms do not constitute
implementation of the Protocol and are not prohibited by the
Knollenberg language.
Questions. The FY 2001 Budget Justification states: ``the
Administration has made it clear that the President will not submit the
agreement for Senate advice and consent to ratification until there is
meaningful participation by key developing countries.''
The Kyoto Protocol does not contain meaningful participation by key
developing countries, as defined by the Byrd-Hagel Resolution. In order
to amend the Protocol, it must first be submitted for Senate advice and
consent.
How does the Administration plan to amend the Kyoto Protocol
without submitting it to the Senate first?
Answer. The Protocol's provisions concerning amendment of the
Protocol would not apply before the Protocol enters into force. While
the Protocol cannot, strictly speaking, be ``amended'' before it enters
into force, if the Conference of the Parties (COP) so decides, it could
adopt a further legal instrument which would be an integral part of the
Kyoto Protocol and would enter into force at the same time as the
Protocol.
NORTH KOREA
Question. In light of North Korea's record, why should the country
be removed from the list of nations supporting terrorism? Will the
State Department pursue a written and signed agreement with North Korea
on international terrorism as a necessary step to removal from the
list?
Answer. At this time, the State Department is not proposing that
North Korea be removed from the list of state sponsors of terrorism. We
are, however, discussing with North Korea the steps it would have to
take in order for the U.S. Government to find that the DPRK no longer
deserves to be on that list.
There are two ways that a country can be removed from the list of
state sponsors of terrorism; both contain the concepts of cessation and
credible forswearance of terrorism. The law does not require a written
agreement on terrorism, and we are not currently discussing such an
agreement with the DPRK.
Following are excerpts from the relevant law, the export
Administration Act of 1979, as amended:
In order for a country to be removed from the list of state
sponsors, `` . . . the President submits . . .
(A) Before the proposed rescission would take effect, a report
certifying that
(i) There has been fundamental change in the leadership and
policies of the government of the country concerned;
(ii) That government is not supporting acts of international
terrorism; and
(iii) That government has provided assurances that it will not
support acts of international terrorism in the future; or
(B) At least 45 days before the proposed rescission would take
effect, a report justifying the rescission and certifying that
(i) The government concerned has not provided any support for
international terrorism during the preceding 6-month period; and
(ii) The government concerned has provided assurances that it will
not support acts of international terrorism in the future.''
Question. Is the State Department pursuing a written and signed
agreement with North Korea on missile testing?
Answer. In the context of our bilateral discussions aimed at
improving relations, the DPRK pledged publicly in September 1999 to
suspend launches of long-range missiles of any kind while our high-
level talks to improve relations are underway.
This is an important step that the DPRK thus far has respected.
In our discussions with the DPRK, we have made absolutely clear
that the proper atmosphere necessary for improving bilateral relations
cannot be maintained if North Korea launches long-range missiles of any
kind. We are seeking to formalize the DPRK's September pledge.
status of the nagorno-karabakh negotiations
Question. The current status regarding the Nagorno Karabakh
conflict remains a great concern. Armenia and Nagorno Karabakh accepted
the latest Organization for Security and Cooperation in Europe (OSCE)
compromise peace proposal, while Azerbaijan rejected it. What is the
current status of these negotiations? Have the Azeris expressed any
willingness to accept the current proposal?
Answer. Resolving the Nagorno Karabakh conflict remains a major
U.S. priority. Both Azerbaijani President Aliyev and Armenian President
Kocharian are committed to achieving a settlement. Over the last year,
they have conducted an intense and productive private dialogue. The
rhythm of their contacts slow in the wake of the October 27 killings in
Armenia, but their talks and the peace process continue.
All three proposals presented to the parties by the OSCE Minsk
Group Co-Chairs since 1996 remain on the table. Azerbaijani officials
have given no indication that they will accept the latest OSCE
proposal, nor have Armenia or Nagorno Karabakh been prepared to accept
either of the previous two proposals. The Minsk Group Co-Chairs
announced in December that they are now working on a new proposal which
will build upon the discussions between the two Presidents.
CAUCASUS
Question. The State Department's FY 2001 budget proposes decreasing
aid to Armenia by 27% while increasing aid to Azerbaijan by 78%. What
is the purpose of Armenia's reduction? What is the purpose of
Azerbaijan's increase? How do you justify this enormous change from FY
00?
Answer. Support for both Armenia and Azerbaijan is clearly in the
national interest of the United States. The Presidents of Armenia and
Azerbaijan have been engaged in a constructive dialogue on resolution
of the Nagorno-Karabakh conflict, which we want to succeed. Our FY 2001
request for Armenia is roughly the same as our FY-2000 request and will
enable us strongly to support the reform process. Armenia would
continue to receive one of the highest per capita assistance levels of
any country in the region.
Our ability to encourage economic reform and fight corruption in
Azerbaijan has been limited by Section 907 of the FREEDOM Support Act,
which prohibits most forms of direct assistance to the Government.
We believe there is an opportunity to achieve a Nagorno-Karabakh
settlement, and our FY-2001 request is designed so that we could
support its implementation, including in Azerbaijan.
Question. I have strong concerns that much of aid to Nagorno-
Karabakh has been slow in reaching its intended recipients. What are
the Administration's plans to provide aid to Nagorno-Karabakh?
Answer. The Administration is quite concerned over the lingering
human consequences of the Nagorno-Karabakh (N-K) conflict and the
hardships experienced by the civilian population. USAID, the USG agency
responsible for implementation of assistance to N-K, has acted
according to Congressional instructions by providing funding to address
the humanitarian needs of the people in and in the vicinity of Nagorno-
Karabakh and our Administration remains keenly aware of concerns about
conditions in the region.
In FY 1998 and in FY 1999, USAID obligated a total of $11.8 million
in two tranches for projects within Nagorno-Karabakh. It should be
noted that progress in US assistance activities within N-K, largely
managed under an ``umbrella'' grant with Save the Children (SCF), was
slow at the outset, due in large part to the newness of humanitarian
operations within the enclave and due to the N-K authorities' lack of
experience with such assistance. However, by March 1999 significant
strides in implementation had been made.
The second tranche was obligated in August 1999 and USAID extended
its implementation agreement with SCF through February 2001. These
additional funds permit a tripling of the number of shelters to be
rehabilitated, compared with funds provided under the initial grant,
and will result in the rehabilitation of a significant proportion
(i.e., 40 percent) of the houses damaged by the conflict. The new end-
date for the SCF program permits the expenditure of funds beyond May
2000, and at least through February 2001. We have provided another $6.7
million to Azerbaijani refugees in the vicinity of N-K.
With regard to future provision of assistance to N-K proper, beyond
the $11.8 million already obligated, USAID has held off on decisions,
primarily as a result of developments over the past six months. Because
prospects for a peaceful resolution of the conflict appeared relatively
good at the end of last year, it made sense to wait and see whether we
would soon be able to provide more comprehensive assistance in other
areas including economic development.
In addition, we must be careful to ensure the most effective and
efficient use of assistance funds. First, assessments conducted to date
have not indicated the existence of acute humanitarian needs among
victims of the conflict inside N-K, especially when compared to
Azerbaijani refugee camps. Second, our humanitarian assistance to date
has provided an extremely high level of support to the population in N-
K. Third, while construction industry capacity to provide basic shelter
within N-K has not been reched yet, we are close to approaching the
point that it will become a constraint.
Any peace deal will require substantial international assistance to
make it viable. We are working with the World Bank, UN and other
appropriate international organizations to make sure we can respond
quickly if a deal is reached. U.S. participation will be the key to
attracting international financial support. Of late we have been
working closely with our Minsk Group partners to send a multilateral
team which will perform a comprehensive needs assessment in the region
in order to determine the level of resources for N-K conflict victims
needed to support a peace settlement. That assessment will provide a
much more accurate sense of needs--both humanitarian and
developmental--than we currently have. We will consult closely with
Congress on this as the settlement process moves ahead.
Our assistance team is actively discussing, but has not yet come to
a decision on, the obligation of additional funds for humanitarian
assistance to N-K. For the moment, we do not perceive this to be a
problem because project implementers continue to carry out a high-level
of humanitarian assistance activities in N-K with funds that are
obligated but not yet spend. We are closely monitoring this situation
to ensure that the valuable humanitarian work already achieved and
still required in N-K is not undermined, or does not come to a halt.
IRANIAN WEAPONS OF MASS DESTRUCTION
Question. We have seen for some time Iranian development of
advanced missiles and efforts to develop a nuclear weapons program.
What is your assessment of Iranian progress of these programs? (Rep.
Knollenberg)
Answer. As I made clear in my recent public statements on improving
relations with Iran, its behavior as a proliferator and our concern
about its actions in this regard have not changed. Despite its
adherence to international nonproliferation treaties, Iran maintains
active nuclear, chemical and biological weapons programs as well as a
long-range missile program and seeks both to develop indigenous
capabilities and to acquire technology, material, and knowledge from
abroad. As a result of these and other Iranian policies, the U.S.
implemented a comprehensive trade embargo on Iran and has urged other
supplier states to refrain from assisting Iran's procurement efforts.
Iran's nuclear weapons program remains heavily dependent on
foreign suppliers. Working closely with other supplier states
and nonproliferation regimes, our efforts to slow and frustrate
Iran's acquisition of important facilities and capabilities
have met with some success. Most supplier states have adopted
policies ending nuclear cooperation with Iran. However, Iran
continues to receive nuclear assistance from Russian entities,
including assistance that goes beyond the scope of the Bushehr
nuclear power reactor.
We believe Iran is engaged in efforts to achieve an
indigenous WMD-capable missile capability. The United States
views Iran's aggressive efforts to further develop its
ballistic missile capabilities as a serious threat for the
region and for our nonproliferation interests. We continue to
work extensively with members of the Missile Technology Control
Regime and others to stop the proliferation of missile
technology and equipment to Iran.
Iran has had a chemical weapons (CW) production program
since the 1980's, and put a high priority on that program in
the 1990s. Despite having ratified the Chemical Weapons
Convention (CWC), we remain concerned that Iran has not yet
declared the full extent of its CW program as the CWC requires.
We remain concerned that Iran is pursuing weaponization and
the stockpiling of biological weapons agents. We monitor Iran's
attempted procurement efforts vigilantly and work closely with
supplier states to thwart Iran's efforts.
Question. What is your view of Russia's involvement in the
transfer of weapons technology to Iran? (Rep. Knollenberg)
Answer. The United States and Russia have developed an
action plan to address our most pressing concerns. While Russia
has established the legal basis for stronger export controls
and has stopped several activities of concern, enforcement has
been spotty and inconsistent and we are not satisfied.
We continue to press the Russian Government to improve its
controls and we will continue to assist Russia in doing so.
Under the programs funded in part through the Expanded Threat
Reduction Initiative (ETRI), we will provide significantly
increased export control training and equipment assistance for
Russia to strengthen export controls at the government and
enterprise (company) level.
The United States has taken unilateral action against
eleven Russian aerospace and nuclear entities because of their
cooperation with Iran's proliferation programs. On April 24, we
announced our intention to impose administrative and trade
penalties against a Russian individual for that person's
material contributions to Iran's missile program. At the same
time, we also announced our intention to lift penalties imposed
in 1998 on the Russian entities INOR Scientific Center and
Polyus Scientific Production Association. We are satisfied that
INOR and Polyus have ceased cooperation with Iran and have
taken the necessary remedial actions to warrant lifting of
penalties. Our lifting of these penalties reinforces the
message that there are concrete benefits for nonproliferation
cooperation. However, this is only the beginning of what must
be a sustained effort by the Russian government to cut all WMD
and missile assistance to Iran. We have made it clear that, if
necessary, we are prepared to impose similar penalties against
additional Russian entities that engage in proliferation
activity.
When President Clinton signed the Iran Nonproliferation
Act, he reaffirmed that this issue remains at the top of our
agenda with Russia as well as with other countries that may
consider providing such assistance to Iran.
GREENLED GROWTH
Question. The Frontiers of Freedom Foundation sent you personally,
Secretary Albright, a letter on January 18, 2000. The letter included
with it an outline of a program that has been favorably peer reviewed
at Ohio State University by a top agricultural scientist. The proposal,
labeled Greenled Growth, offers several benefits:
1. the ability to achieve vastly improved carbon usage in soil;
2. clearly defined and measurable objectives which would help your
foreign policy comply with the Government Performance and Results Act
over which Senator Fred Thompson wrote you a critical letter citing a
lack of linkage between agency goals and actual projects;
3. the capability to bring billions of the Poorest of the Poor out
of poverty if fully implemented;
4. the program comes with a complete feasibility study for
application of Greenled Growth in Haiti as a demonstration project;
5. the program was formulated with the help of appropriate Haitian
experts and has the support of the Archbishop of Port-au-Prince;
6. the faculty of Ohio State University stands ready to provide
immediate management and technical assistance.
Are you willing to ask some people to take a look at this program,
say former ambassadors Clayton Memanaway (sic) and Robert Oakley?
Answer. The Administration believes that activities that sequester
atmospheric carbon while promoting sustainable development in poor
countries have an important role to play in international efforts to
combat the threat of global climate change. We appreciate having the
Greenled Growth proposal brought to our attention as a potential
vehicle for carrying out such activities. We will give this proposal
due consideration.
______
QUESTIONS FOR THE RECORD SUBMITTED BY MR. KINGSTON
Question. We are looking for leverages in Congress with some of the
major oil producer countries. You are probably familiar with Chairman
Ben Gilman's bill to tie our arms sales contracts to OPEC members based
on their price/supply controlling activities. This could be a helpful
component in the Administration's diplomatic effort to relieve short
supplies. Have you reviewed the bill? Do you have comment.
Answer. We believe the Administration's diplomatic efforts with oil
producing states, including OPEC members, are the most effective means
of addressing supply shortages and promoting stability in the world oil
market. We doubt compulsion would produce useful results and believe it
could harm a broad web of essential relationships.
In our conversations with senior officials of major oil-producing
states, we have noted the importance of adequate, reliable oil supplies
in facilitating global economic growth. We also have reiterated our
longstanding view that the free market is the best tool for ensuring
adequate, reliable supplies.
At their March 27 OPEC meeting, OPEC ministers agreed to put
substantial new volumes of oil on the market, effective April 1. Since
this decision, world oil prices have remained well below their March
peak. Oil companies should be able to pass these savings along to
consumers.
We will continue to remain vigorously engaged with our oil
suppliers to achieve what are key U.S. foreign and economic policy
interests.
FUEL PRICES
Question. I had a related idea along the same lines--something that
may actually be passable in a reasonable amount of time. I also sit on
the Agriculture Subcommittee, and we could use the Gilman arms sales
model and adapt it (in reverse) to food and medicine. We currently
maintain food sanctions on some of the OPEC members, particularly Iran
and Libya. In your view how feasible and how helpful would a new law
exempting food and medicines from unilateral sanction regimes as
leverage for more steady oil supplies?
Answer. The President relaxed restrictions on sales of food and
medicine to countries otherwise subject to Executive Branch
comprehensive controls in April 1999. Since then sizable U.S. exports
of agricultural products have taken place under this policy, including
to Iran and Libya.
Libya and Iran do not, due to sanctions, supply any oil to the
United States. To the extent that they supply oil to world oil markets,
these two countries, working through OPEC, do exert a limited influence
on the price of oil. Libya was a signatory to the March 28 OPEC accord
which has put additional oil on the market, starting April 1. Iran was
not a signatory to this agreement, but unilaterally indicated that it
too would increase exports. Given the centrality of oil revenues to
their own economies, they are likely to determine oil policy
principally on the basis of internal, revenue goals.
Question. I am still very concerned about the situation in
Russia: continued weapons-related cooperation with rouge
states, an alleged ``lawless'' military looting, raping, and
torture campaign in Chechnya, detention by the military and
then unknown fate of a journalist covering Chechnya, continued
dominance of organized crime in the domestic economy, and a
seemingly growing popular hunger for a strong, old-style leader
which Putin may just become. We are now a decade out of
communism in Russia, but we may not be that much better off. I
don't believe this situation was inevitable. What needs to be
changed in our diplomacy, our foreign assistance programs, or
otherwise?
Answer. Over the last decade, first President Bush and then
President Clinton have pursued two basic goals in our relations
with Russia. The first is to increase the safety of the
American people by working to reduce Cold War arsenals, stop
proliferation, and create a stable and undivided Europe. The
second is to support Russia's effort to transform its
political, economic and social institutions at home.
Neither of these goals has been fully achieved, but neither
has been lost. We are constantly modifying our diplomatic
approach to build on methods that produce results, and discard
those that do not.
We are deeply troubled by Russia's action in Chechnya and
have raised our concerns with Russia's leaders at every
opportunity. We have not been as effective as we would have
preferred in convincing Russia to change its course of action.
Russia has taken some limited steps to meet the concerns of
the international community, but more must be done. We will
continue to press Russia to answer the call of the UN
Commission on Human Rights meetings in Geneva to convoke an
independent national commission of inquiry into the credible
allegations of human rights and humanitarian law violations in
Chechnya.
On assistance, two thirds of our assistance dollars to
Russia go to programs that lower the chance that weapons of
mass destruction or sensitive missile technology will fall into
the wrong hands. Our assistance programs have helped deactivate
almost 5,000 nuclear warheads in the former Soviet Union;
strengthen the security of nuclear weapons and materials at
more that 100 sites; and purchase more than 60 tons of highly
enriched uranium.
However, the job is not complete. That is why we are
pursuing the Expanded Threat Reduction Initiative. This
includes measures to help Russia tighten export controls,
improve security over its arsenals, and provide opportunities
for former Soviet weapons scientist to participate in peaceful
commercial research ventures.
Question. I am encouraged by recent talks between Israel
and Syria. I am interested in your assessment of the progress
in this area and whether we are close to more historic
developments in the Middle East. As you know, a peace agreement
could lead to Israel's withdrawal from the Golan, probably
subject to a referendum. Is this a likely scenario? If so, on
what estimated time table? For our subcommittee this is
important not only for all of the important benefits of peace
in that region, but also because it means a major new security
request would probably be forthcoming to help compensate Israel
for withdrawal? Can you speculate first on the prognosis for
agreement between Israel and Syria, and then on a time line and
whether that will translate to another supplemental request or
increased assistance in 02? Has Israel broached the subject of
Golan withdrawal-related aid with you?
Answer. Since Shepherdstown we have stayed in touch with
both sides to ascertain their needs and what they were prepared
to do to meet the needs of the other side. On March 26 the
President met with Syrian President Assad in Geneva to convey
Israel's needs and what Israel was prepared to do to meet
Syria's needs. The meeting made clear that gaps remain. In real
terms, they are relatively small, but in psychological terms,
they are significant. Since the Geneva meeting we have received
additional communications from the Syrians and remain in touch
with them and the Israelis. We are not prepared to give up, and
both Assad and Israeli Prime Minister Barak told us they remain
committed to the path of peace. Nevertheless, it would be
unwise to speculate on the likelihood or timing of a resumption
of direct negotiations. Similarly, under the present
circumstances, it is premature to discuss possible assistance
to Syria in the context of a negotiated peace agreement. It is
simply too early to enter into a speculative discussion on this
issue.
ECUADOR
Question. In FY00, this Committee requested a report from the State
Department evaluating the Ecuadoran judicial process, its protection of
due process rights, and protection of other legal and human rights.
That report was due on February 1, 2000. What is the status of this
report?
Answer. The final report on the judicial system of Ecuador was
delivered to the Committee on April 6. We regret the delay in the
submission of the report.
______
QUESTIONS FOR THE RECORD SUBMITTED BY MR. LEWIS
SUPPLEMENTAL APPROPRIATIONS BILL
Question. This Committee has, in recent weeks, worked very hard to
develop and support a Supplemental Appropriations package providing
emergency funding to meet the Administration's goals and needs relating
to both Kosovo and our drug-war effort in Colombia and Latin America.
More than a few of us are extremely disconcerted by the
Administration's lack of active support and involvement with the
Supplemental thus far. The day General McCaffrey appeared before this
subcommittee, there were only three members who appeared inclined to
support it. The full Committee did support the package last week but
this package still faces an uphill challenge in the House. My question
is quite simple, Madame Secretary: Does the Administration still
support the Supplemental and, if so, what specifically is this
Administration doing to help Congress pass this package?
Answer. The President's budget included $1.65 billion in FY 2000
supplemental funding requests. These funds are urgently needed in three
key areas:
Colombia--$818 million for the international affairs part of the
effort to support President Pastrana and Plan Colombia. Overall, the
Administration seeks $1.273 billion in new resources over two years
(FY2000-2001). In Colombia, the exploding narcotics plague foments
guerrilla attacks and spawns human rights violations. In the United
States, it inflicts $110 billion in social costs and results in 54,000
deaths every year.
Balkans--$625 million for Kosovo and Southeast Europe to support
peacekeeping efforts in Kosovo, assist economic and democratic reform
in the region, construct secure facilities, and fund diplomatic
operations.
Funds also are needed to help establish quickly an effective civil
administration to speed the withdrawal of U.S. troops from Kosovo and
make their environment safer. We also need to bolster Montenegro and
the Serb opposition to Milosevic as well as support Croatia's new
reform government.
HIPC--$210 million for the U.S. contribution to the Heavily
Indebted Poor Countries (HIPC) trust fund administered by the World
Bank.
Several countries have already qualified for debt relief under the
HIPC Initiative and more are expected to qualify over the next few
months. Until we secure funding for the HIPC Trust Fund, these
countries cannot receive all of the debt relief for which they are
eligible and will be unable to finance fully their poverty reduction
strategies.
In addition the President has requested $200 million for flood
relief and reconstruction in Mozambique and other countries in Southern
Africa to help them recover from the destruction of crops and
infrastructure caused by natural disasters earlier this year.
The Administration strongly supports these emergency supplemental
requests and urges rapid Congressional approval. Without these funds,
we cannot carry out a vigorous foreign policy that serves the nation's
national security interests.
Question. Madame Secretary, Iraq is back in the news again. Just
last week, the Washington Post reported that the Administration was
considering easing sanctions on the government of Iraq. There has also
been a stepped up effort to end international sanctions for
humanitarian reasons. What effect do you believe our sanctions are
having on the Iraqi government? What is the Administration's position
on lifting these sanctions? In your view, who bears the responsibility
for the suffering of the Iraqi people--the international community of
Saddam Hussein?
Answer. We are not considering easing sanctions on Iraq. Sanctions
will not be lifted until Iraq has met its obligations to the Security
Council. Nor can there be any consideration of suspension of sanctions
until Iraq fulfills the requirements of 1284: fulfillment of key
remaining disarmament tasks and cooperation with weapons inspectors.
Sanctons deprive Saddam Hussein of the financial wherewithal to
pursue his manifest goal of acquiring, and using, weapons of mass
destruction (WMD). Lifting sanctions would enable Saddam to rebuild his
military and put his WMD programs on the fast-track, but would not
guarantee a better life for the average Iraqi. On the contrary,
conditions for many Iraqis--especially in the north--could deteriorate
if oil-for-food and the UN presence disappeared.
However, UN sanctions have never been aimed at the Iraqi people.
That is why sanctions never prohibited or limited imports of food and
why the U.S. first proposed an oil-for-food program in 1991.
Unfortunately, Iraq rejected oil-for-food until 1996. We believe that
the oil-for-food program, properly managed, can effectively mitigate
the impact of sanctions on Iraq's civilian population for as long as
sanctions remain in effect.
The impact of oil-for-food is measurable and increasing daily. Per
capita intake is up from 1,300 calories per day before the program
began to over 2,000 now, thanks to a UN ration basket which is
augmented by locally grown food. Food imports are now at about pre-war
levels. In the year before the program began, Iraq imported about $50
million worth of medicines. Over the past three years more than $1
billion worth of medicines have been approved. Similarly, over a
billion dollars worth of goods for the water, sanitation, electrical
and agricultural sectors have been approved.
In the three northern provinces, where the UN manages the program
without interference from the regime, the effect of oil-for-food has
been dramatic. A UNICEF study last year showed that infant mortality in
the north had fallen below pre-war levels. Yet in south/central Iraq,
where the Iraqi government handles distribution of oil-for-food goods,
the study revealed a disturbing rise in child mortality--to more than
double the pre-war level. These numbers show that oil-for-food can meet
the needs of the Iraqi people if the regime's cynical manipulation can
be overcome.
Question. Historically, the Administration and Congress have
together played an indispensable role in helping Israel and her
neighbors negotiate and maintain important peace agreements. This was
the case with Egypt and Jordan and clearly, American efforts are very
important as Israel negotiates with the Palestinians talks in
Washington next week? Is the United States now assuming a greater role
in these negotiations? I understand that the Palestinians are now
talking about unilaterally declaring statehood in September. What will
be the U.S. position on such a declaration?
Answer. The Israelis and Palestinian negotiating teams conducted
their most recent rounds of talks at Bolling Air Force Base in
Washington. The first lasted from March 21 to March 29, the second from
April 7 to April 16. Both rounds were serious, intensive, and
productive. The sides have agreed to continue their negotiations in
Eilat beginning on April 30. The sides have agreed that the United
States will play an active role in future rounds.
During their recent visits to Washington Prime Minister Barak and
Chairman Arafat reiterated their commitment to conclude a Framework
Agreement on all permanent status issues as soon as possible, and a
comprehensive agreement by September 13, 2000. Both sides are working
seriously and intensively, and President Clinton came away from his
meetings with Prime Minister Barak and Chairman Arafat with a sense
that both were committed to moving forward rapidly to reach agreement.
We have told both sides that all permanent status issues should be
resolved through negotiations and that we oppose any unilateral action,
including a unilateral declaration of statehood, that prejudges the
outcome of those negotiations.
IRAQI MISSILES
Question. CIA Director George Tenet has recently testified that
Iraq is rebuilding its weapons of mass destruction facilities damaged
in Operation Desert Fox. According to Mr. Tenet, within 15 years, Iraq
will be capable of threatening American cities with ballistic missiles.
Madame Secretary, how would you describe the state of Iraq's missile
and weapons programs today? What plans does this Administration have to
address both the near- and long-term threat posed by Iraq's effort to
develop these capabilities? (Rep. Lewis).
Answer. UNSCOM was successful in reducing Iraq's pre-war missile
program. UNSCOM verified the destruction of over 100 SCUDs, over a
dozen missile launchers, and nearly 300 missile warheads. Iraq is
therefore less capable than it was in 1991. However, there are still
unanswered questions, and the continued refusal of Iraq to accept UN
inspections gives concern for the future.
We are concerned by activity at Iraqi sites known to be capable or
producing WMD and long-range ballistic missiles, as well as by Iraq's
long-established practice of covert procurement activity that could
include dual-use items with WMD applications.
In December 1999, the UN Security Council adopted Resolution 1284,
which chartered a new disarmament & monitoring body, UNMOVIC, with the
same mandate, rights and privileges as UNSCOM.
UNMOVIC's mandate includes accounting for prohibited ballistic
missile systems (over 150km range). Examples of outstanding issues
include unaccounted for complete missiles, CBW warheads, missile fuel
and spare parts. While UNSCOM documented these and other issues for the
Council in January 1999 (UN doc S/1999/94), the reliability of this
data decreases the longer inspectors are denied on-the-ground access to
sites of concern in Iraq.
To prevent Iraq from importing items for its missile programs, we
continue to assist the UNMOVIC/IAEA joint unit in refining its export/
import mechanism. The USG is prepared to provide UNMOVIC and the IAEA
any other support they request.
The American intelligence community will continue to focus its
capabilities on Iraqi activities, and will continue to monitor all
information received regarding possible efforts by Iraq to reconstitute
WMD and missiles. Saddam Hussein has shown no hesitation in developing
WMD in the past and it is only prudent to assume that he is still
intent on such development.
If Saddam Hussein reconstitutes his weapons of mass destruction
programs, we maintain a credible force in the region, and we are
prepared to act at an appropriate time and place of our choosing.
Question. The government of Iran continues to support a number of
terrorist groups throughout the Middle East and around the world. Some
of those groups, such as Hamas, have mounted attacks on American and
are among the leading forces opposing the Middle East peace process. In
addition, Iran continues to acquire weapons of mass destruction and
recently tested a medium-range ballistic missile capable of hitting our
allies and U.S. forces serving abroad. Nonetheless, over the last
couple of years, the administration has taken a series of unilateral
steps in the hope of beginning the process of restoring relations with
Tehran. In your vivew, are their signs that Iran is decreasing its
support for terrorism or its efforts to acquire weapons of mass
destruction and the missiles to deliver them? In light of recent gains
by ``reformers'' in Iran's parliamentary elections, is the
Administration planning any unilateral gestures toward Iran? Would you
elaborate?
Answer. While we have been encouraged by the real progress Iran has
made in the past three years domestically, we have not yet seen that
translated into significant changes in the foreign policy issues, such
as terrorism and the pursuit of WMD and missile technology, that are of
greatest international concern. We have offered to engage Iran in a
direct dialogue on these and other issues. Until Iran is prepared to
address these issues constructively, our principal sanctions will
remain in place.
101 PROJECT OLD SOLDIER
Question. Madame Secretary, as you know, 101 Project Old Soldier is
a unique crop substitution program among the Katchin and other Highland
peoples of Burma. The principal tribe of the region, the Katchin, has a
long and proud history of friendship with Americans that dates back
more than a century to the humanitarian efforts of early missionaries.
Nowhere was this friendship more evident than during World War II when
Kachins not only remained loyal to the Allied Forces but, in the early
days of conflict, literally oppposed the invading forces with primitive
weapons. Some 20,000 Kachins served in the American Kachin Rangers, a
unit recruited, organized and led by the men of OSS Detachment 101
during nearly three years behind Japanese lines. The Kachins and
Americans built a friendship that endures to this day. Now, in spite of
the passage of almost 50 years, surviving Kachin veterans and their
descendants are working with 101 veterans in a unique and effective
crop substitution program to combat opium production. Can you comment
on the success on this program thus far?
Answer. I know that you, Mr. Lewis, and many of your colleagues in
the House and in the Senate, are very strong supporters of Project Old
Soldier. We in the Administration also have a high regard for the
project and its impressive acacomplishments. You certainly did not
exaggerate when you characterized the program as ``a unique and
effective crop substitution program to combat opium production.'' As
you noted, the foundaiton of this project is the relationship
established between Kachin veterans and American veterans during World
War II. That relationship continues to the present day and makes the
project unique.
Although located in Burma's Shan State, the project is totally
independent of the Government of Burma. In fact, in the summer of 1998,
the Government of Burma, or purely political grounds, attempted to
close the project. Bilateral political frictions, including Burma's
belief that the U.S. does not recognize or appreciate its own
counternarcotics efforts, prompted government officials to withdraw
authorization for the project to continue operations. That step forced
the project's American administrators and advisers to leave Burma and
to scale back the project's plans and operations somewhat. U.S. efforts
to secure Burmese authorization to continue the project under the
auspices of the UN Drug Control Program (UNDCP) promptly collapsed in
retaliation for the U.S. boycott of the Interpol International Heroin
Conference held in Rangoon in February 1999.
Despite those developments, the local Kachin project managers
remain in place, and they and member farmers and villages continue
working tenaciously and tirelessly to maintain and expand the program.
The 101 veterans and agricultural advisers from Texas A&M University
are in constant touch with the local managers by phone, and some have
been allowed to visit the project sites. Although Burmese military
authorities in the area have questioned the project's local managers on
occasion about their continued involvement with a project ordered shut
down more than a year ago, the project has, thus far, been allowed to
operate without interference from the Government of Burma.
Since its modest beginnings just about three-and-one-half years
ago, the project has achieved remarkable success. It has eliminated the
dependency on opium poppy cultivation for over two thousand farmers in
more than seventy villages by helping them grow economically viable
alternative crops, such as corn and buckwheat. The enthusiasm of the
farmers remains extremely high, and they view their lives with new
hope, grateful to have a means to liberate themselves from opium
production, drug traffickers, and drug addiction.
All individuals and participant villages working as part of 101
Project Old Soldier are forbidden from engaging in poppy cultivation,
opium production, and drug use. Project regulations and community
sanctions stringently uphold that requirement. Although opium poppy has
been observed growing in hill country adjacent to the project area,
reports from our Embassy and from independent monitors confirm that no
village associated with the project has engaged in opium cultivation,
collection, or use since joining 101 Project Old Soldier. In many
instances participant villages set up structures to help addicts kick
their habits and live drug-free lives.
As a sign of its success, this remarkable program maintains a
waiting list of villages in the environs of the current project area
eager to join the program. The project has clearly had a positive
impact on the Kachin people of northern Burma. It gives poor farmers
with little or no education valuable knowledge of alternative farming
methods and the tools to grow a variety of crops that supplement their
daily diets and their incomes. It has provided them with a way to break
their total reliance on poppy cultivation and opium gathering, both of
which continue to be increasingly lucrative endeavors for many
impoverished farmers in Burma.
Project Old Soldier has achieve impressive successes in a short
period of time, and we agree with you that this effective program is
one we should continue to support. Through our Bureau for International
Narcotics and Law Enforcement Affairs (INL), we provided $600,000
between FY97 and FY99, and we plan to fund a new two-year project grant
for $510,000 for FY00 and FY01.
AIDS DEATHS
Question. Madame Secretary, as a freshman on the Appropriations
Committee, I remember introducing a bipartisan resolution, one that
eventually got most of the signatures of most members of the House. The
resolution called for the creation of a national commission dealing
with the problems of AIDS. With that resolution was an amendment that
eventually involved $200,000 of the first money that went to research
on AIDS. That was in 1981, and here we are all these years later, and
you suggested that you hope that we would have some discussion of the
impact of this horrid disease in Africa. I do not know the numbers, but
these countries are being devastated. Whole populations or age
categories are being wiped out. Do you know approximately how many
deaths have resulted from this deadly disease--thousands, hundreds of
thousands, or millions?
Answer. The Joint United Nations Program on HIV/AIDS (UNAIDS), in
its ``AIDS Epidemic Update'' published in December 1999, estimated that
16.3 million people, of whom 13.7 million were sub-Saharan Africans,
had died of AIDS since that disease appeared. UNAIDS also estimated
that 33.6 million people were living with AIDS at the end of 1999, of
whom 23.3 million lived in sub-Saharan Africa. These UNAIDS statistics,
although based on very incomplete data, are widely regarded as the best
available; accessible by Internet at www.unaids.org, they are updated
regularly and broken down by region and country. UNAIDS estimates that
in some countries in southern Africa, such as Zimbabwe, nearly one-
third of the adult population is HIV-infected.
______
QUESTIONS FOR THE RECORD SUBMITTED BY MR. WICKER
AID TO EMERGING DEMOCRACIES
Question. Last week, the full Appropriations Committee marked up an
aid package to Columbia which is partly aimed at assisting President
Pastrana build on a fragile democracy. This year's State Department
budget calls for significant resources to aid Nigeria ($107 million--up
from $34 million in FY 1999), Ukraine ($179 million), and Indonesia
($150 million), other countries trying to establish democratic
governments. (The FY 2001 budget requests $2.3 billion to support the
economic and foreign policy interests of the United States by providing
assistance to allies and democracies in transition.)
Can you give us specifics of what you hope to accomplish in these
nations and provide us with an outlook of the coming year in these
emerging democracies? Are there any factors on which this aid is
contingent?
Answer. As you know, I have designated Colombia, Indonesia,
Nigeria, and Ukraine as priority countries. All are pivotal
democracies, in the midst of historic transitions, in strategically
important regions of the world. Each nation confronts formidable
challenges in consolidating democratic governance and instituting the
rule of law. And in each case, the stakes are high for U.S. interests.
The outcome of these efforts to establish firmly or bolster democracy
will have a significant impact on the future stability and prosperity
of their respective regions. In this respect, successful consolidation
and stabilization will advance U.S. national interests in these states
and their regions.
For these reasons, I have instructed that high-level policy
attention and resources be brought to bear to support these countries'
transitions to fully functional democracies. Funding sources and
amounts are tailored to meet each country's specific requirements:
For Ukraine, we are seeking a total of approximately $179 million
in FY 2001, primarily from FREEDOM Support Act (FSA) funds, to further
democratic and economic reforms, including a new focus on grassroots
programs oriented toward the next generation of Ukrainian leaders.
In particular, over the next year, the new ``Next Generation
Initiative'' will result in a significant increase in the number of
students, policy makers, and other young leaders coming to the United
States for practical and academic programs. This will enhance the
linkages between individuals, businesses, institutions, and communities
in the United States and Ukraine.
Economic assistance towards small business development will
continue to move forward, but technical assistance to the central
government will be dependent largely on the implementation of reforms
by the government.
For Colombia, we are proposing a two-year $1.6 billion package as
our contribution to Colombia's overall $7.5 billion Plan Colombia, a
comprehensive plan to address the multiple challenges facing one of
Latin America's oldest formal democracies. Our package includes $1.273
billion of new resources to help Colombia address the interlocking
problems of narcotrafficking, human rights abuses, internally displaced
persons, and economic deterioration and to provide for support for the
peace process.
In the coming year, we intend to get programs in these areas well
started so that they will be fully operational before President
Pastrana leaves office in 2002 and provide the framework for our
ongoing cooperation with his democratically-elected successor. The
objectives of U.S. policy and law related to counternarcotics,
counterterrorism, and human rights will be fully incorporated.
For Indonesia, we hope to devote approximately $150 million,
primarily in FY 2001 ESF, Development Assistance, and Child Survival
funds, to help ensure the success of Indonesia's democratic transition.
Our assistance programs will target key sectors and subsectors vital to
this outcome and will complement the much larger collective efforts of
the IMF, the World Bank, UNDP, and other bilateral donors.
U.S. programs underway or under consideration include technical
assistance to the newly empowered parliament, decentralization, advice
to the Attorney General's office on human rights prosecutions, judicial
reform programs, police training, training investigators of financial
crimes and money laundering, civil society development, media
development, banking regulation and supervision improvement, and
environmental initiatives. We believe that the U.S. is uniquely
positioned among major donors, by dint of technical competence and
commitment, to deliver assistance in these areas.
Finally, for Nigeria, our request includes approximately $106
million, primarily in ESF, Development Assistance, and Child Survival
funds, to promote democratic civilian rule, political stability,
improved health and education, respect for human rights and the rule of
law, sound economic policies, regional peacekeeping, and counter
narcotics efforts.
In the coming year, we will work to help the Nigerians rebuild and
strengthen the democratic institutions which were dismantled or
seriously weakened under previous military governments. We will also
work with the Nigerian military as it seeks to transform itself from a
governing institution to a national defense force.
The outlook for the coming year is positive, as the new
democratically-elected government is beginning to build the framework
for economic reform and revitalization of political and social
institutions. But the history of Nigeria has shown that democratically-
elected governments are often at risk. The moral and financial support
provided by the United States will be important to Nigeria.
Our assistance to Nigeria is contingent on the country's complying
with legal restrictions, such as the Brooke amendment, as well as the
sustainability of civilian, democratic government.
SECURITY CONCERNS
Question. What steps have you taken since this incident, and what
measures will you take, to ensure this type of security breach doesn't
happen again? Can you give a brief overview of the State Department's
efforts to address security lapses?
Answer. Since November of 1999 Security Engineering Officers from
the Bureau of Diplomatic Security, in coordination with other
organizations, have performed routine inspections of the Main State
building in search of clandestine listening devices, technical hazards,
and technical vulnerabilities.
Diplomatic Security's Security Engineering Services Branch has
inventoried existing equipment, identified replacement equipment, and
identified funding of $276,000 to purchase the replacement equipment.
DS has increased domestic Technical Security Countermeasures (TSCM)
personnel by adding 2 SEOs and 3 contractors who are experienced in
performing TSCM assessments.
DS has ordered over $250,000 worth of specialized TSCM equipment
for domestic use.
DS has coordinated with other Federal Agencies in revising the
Department's domestic technical security standards.
DS is working to establish a Sensitive Compartmented Information
Facility (SCIF) certification program.
Detailed procedures are being enforced in all SCIFs throughout the
building. These procedures for SCIFs include: a visitor log; escorting
of all non-Sensitive Compartmented Information cleared personnel;
prohibition of personal computing devices and cell phones; nominations
of special security officers (SSOs) to be trained by Diplomatic
Security (DS); development of procedural handbooks; and reporting to DS
preconstruction surveys and security plan development.
Enhanced security has been put in place at some perimeter access
control points within Main State and identification of other
vulnerabilities continues.
Visitor access control and escort policy was put into effect on
August 23, 1999.
Enforcement policy has been enacted with respect to the escort
policy to include accountability for visitors.
Replacement of less effective locks to more secure combination
locks are being installed within Main State.
Procurement of an Automated Visitor Access Control System to
facilitate the control of visitors is in its final stages and,
Security training has been provided as part of initial training
upon entering on duty with State and refresher training upon request.
Over 4000 employees were provided briefings and specialized training
last year. On May 22, 2000, mandatory refresher training begins.
NORTH KOREA
Question. What do you expect the Kumchang-ni team's findings to be
upon its second visit to the site? How do you alleviate the fears of
those who question the effectiveness of our efforts toward the DPRK on
nuclear nonproliferation?
Answer. Analysis of data from the successful first U.S. visit to
Kumchang-ni in May 1999 resulted in a finding that the site, as
configured, was unsuitable for either a nuclear reactor or a
reprocessing facility, and was probably not configured to support any
large industrial uses. Our preparations for the second visit are now
underway, and we expect that visit to confirm these conclusions.
Kumchang-ni demonstrates the Administration's continued determination
to address any U.S. concerns that may arise about potential DPRK
nuclear activities.
The Agreed Framework successfully froze the DPRK's key nuclear
facilities at Yongbyon and Taechon, and the IAEA has been continuously
monitoring the freeze since its inception in 1994. This freeze
prevented the DPRK from producing enough plutonium for several bombs
each year. Under the terms of the Agreed Framework, the DPRK will not
receive key components for the first Light-Water Reactor until it has
fully complied with its Non-Proliferation Treaty and IAEA safeguards
commitments.
Additionally, we have obtained DPRK agreement to pursue new talks
aimed at building on the Agreed Framework to address future U.S.
concerns about any potential DPRK interest in nuclear activities.
EXPANDED THREAT REDUCTION INITIATIVE--SCIENTISTS
Question. You are requesting continued funding for the ETRI for FY
2001 in the amount of $141 million. I understand that the Departments
of Defense and Energy contribute as well, bringing the amount of US
dollars requested to $974 million. The ETRI is supposed to steer
scientists in the former Soviet Union towards peaceful civilian
research and keep them from working for rogue states or terrorists.
Considering the amount of money you've requested for this, is there
credible evidence that this is working and is not simply some type of
scientific community welfare program.
Answer. Strict oversight is exercised regarding U.S. funded
research projects designed to redirect former Soviet weapons of mass
destruction scientists to peaceful, civilian activities. Projects are
reviewed by an interagency panel; assistance is tax exempt with
payments made directly to the scientists and the U.S. regularly
exercises audit and examination rights on assistance provided under the
Science Center intergovernmental agreements. We know with certainty
that proliferators like Iran and North Korea do search for NIS
scientists and scientific institutes in distress and prey on them. We
know with certainty that institutes and scientists have made decisions
not to deal with proliferators, because they do not want to endanger
their relationship with the U.S. under assistance programs like the
Science Centers. For a very small amount of money, these programs have
taken the cream of WMD expertise in the NIS and put it out of reach of
proliferators and terrorists. If this expertise had been recruited by
them, it would have inflicted billions of dollars of damage to national
security.
The economic crisis that affected Russia and the NIS region over
the past year increased the risks of weapons proliferation while making
it more difficult for these countries to continue to fulfill arms
control commitments and strengthen nonproliferation efforts. There is
credible evidence that wage arrears and the ruble devaluation had a
devastating impact on former Soviet weapons scientists and engineers--
increasing the risk that they may be tempted to engage in
proliferation--related activities to earn cash.
While Science and Technology Nonproliferation is a primary focus of
State Department assistance programs under the Expanded Threat
Reduction Initiative (ETRI), the initiative is multi-agency and also
addresses Nuclear Security, Non-Nuclear Weapons of Mass Destruction
Proliferation; and Military Relocation issues. Science and Technology
Nonproliferation programs increase transparency of previously closed
facilities; provide access to valuable technologies for
commercialization and help integrate former Soviet weapons scientists
into the international scientific community. There is a target
population of over 50,000 former Soviet weapons scientists with
critical weapons of mass destruction expertise, generally unpaid or
underemployed at risk of becoming WMD proliferators. In total, over the
past seven years, U.S. supported programs have provided peaceful,
civilian alternative research and development opportunities for an
estimated 30,000 former Soviet weapons scientists and engineers. These
programs seek to engage the most talented individuals and advanced
institutions previously associated with Soviet WMD.
FY2000 NIS Account funds allocated at $59M for Science Centers,
$15M for Civilian Research and Development Foundation and $18M for
Biological Weapons redirection will provide civilian employment
opportunities for an estimated 8,000-10,000 of the target population
for one-two years. The threat of doing nothing or too little
unfortunately may only be known after the proliferation has occurred.
KOSOVO
Question. There are 37,000 NATO-led troops in Kosovo right now.
However, incredible levels of criminal activity continue, including
revenge killings, smuggling, and attacks on peacekeeping troops (16
French peacekeepers were injured in Mitrovica last week). Five days
ago, you met with our European allies at NATO headquarters to discuss
ways of avoiding what you called a ``hot spring'' of new violence.
General Shelton visited eastern Kosovo a week ago to see if the threats
to our troops (5,000 of them) had been reduced. The President does not
think this finding should depend on the contribution of European
countries to the efforts in Kosovo. ``What information did General
Shelton provide you regarding the safety of our troops following his
visit? Did you receive any indication from your meeting with NATO
allies that more troops and other support from those nations are on the
way?
Answer. General Shelton reports to the President and the Secretary
of Defense on the safety of U.S. troops. I would, therefore, refer you
to the Pentagon on this issue.
During the last period on which KFOR has reported, February 23-
March 22, the overall level of violence in Kosovo declined, despite
numerous acts of violence in the Mitrovica area. The most serious
incidents took place in the first half of the reporting period, and
consisted of clashes between ethnic communities near the bridges over
the River Ibar. With the establishment of a confidence area in the
vicinity and an increase in the KFOR presence, levels of street
violence have reduced and Mitrovica, has become calmer. Outside
Mitrovica, levels of violence have remained constant, although there
have been an overall downward trend in acts of violence in Kosovo since
the arrival of KFOR. In June 1999, just after the air campaign ended,
the murder rate was close to 50 per week; it is now down to an average
of 5 per week. However, tensions remain high, with potential for both
isolated and widespread renewals of violence.
KFOR reports that, over the reporting period, a number of acts of
violence were committed against KFOR and the UN. At Srbica in MNB
(North) a Russian soldier died after being shot twice in the chest.
During the bridge violence in Mitrovica, 16 French KFOR soldiers were
injured in a grenade attack and four French KFOR soldiers were injured
in stoning attacks while establishing part of the confidence area in
the proximity of the bridges.
On March 31, the U.S. announced that we are reinforcing U.S. forces
in KFOR's MNB-East with 125 reconnaissance troops who will help monitor
Kosovo's boundary with southern Serbia. In addition, a company of the
1st Armored Division already in Macedonia is being reinforced with
tanks and artillery. These additional deployments provide U.S. forces
with extra self-protection capabilities while sending a clear deterrent
signal to would-be troublemakers.
NATO military planners are in the final stage of a review of KFOR's
troop requirements, in cooperation with military planners of the member
states. At this time, Allies have made no final decisions sending
additional troops to Kosovo nor have we made any decisions about
sending additional U.S. forces. Naturally, we will be working closely
with our colleagues at the Pentagon on this issue.
CHINA/TAIWAN
Question. This Administration's support of Beijing has clearly
given Taiwan cause to worry about or commitment to them. The Pentagon
is currently considering a Taiwanese request to buy four Aegis
destroyers and advanced Patriot air-defense systems. Based on the close
relationship with Administration has had with China, what exactly is
our commitment to Taiwan?
Answer. We take very seriously our commitment to fulfilling the
security and arms sales provisions of the Taiwan Relations Act. The TRA
provides that the ``United States will make available to Taiwan such
defense articles and defense services in such quantity as may be
necessary to enable Taiwan to maintain a sufficient self-defense
capability.'' The Act further provides that it is U.S. policy ``to
consider any effort to determine the future of Taiwan by other than
peaceful means, including by boycotts or embargoes, a threat to the
peace and security of the Western Pacific area and of grave concern to
the United States.'' We will continue to assist Taiwan in meeting its
legitimate defense needs in accordance with our obligations under the
TRA and consistent with the 1982 U.S.-PRC Communique. We have made
clear to the PRC government on many occasions that the future of Taiwan
must be determined by peaceful means.
In April, the Administration completed a careful interagency review
to determine what systems Taiwan needed for its defense. There was a
strong interagency consensus behind the arms sales package put forward
by the Pentagon--a robust arms sales package which meet Taiwan's
legitimate defense requirements.
The Administration has briefed Senate staff members on the package;
we plan to brief House staff soon.
Question. With Taiwan's presidential election days away, outgoing
President Lee Teng-hui was quoted at a rally for his vice-president as
saying, ``This time everyone is worried because if they choose the
wrong candidate . . . bad things will happen to the country.'' How will
this election affect China-Taiwan relations? Can you give us an
indication of your policy after the election?
Answer. Our policy has not changed with Chen Shui-bian's victory in
the March 18 Taiwan presidential election. We will continue to uphold
our longstanding and consistent policy, based on the Taiwan Relations
Act and the three joint U.S.-PRC communiques. The three pillars of our
policy are: the ``one China'' policy; insistence on peaceful resolution
of cross-Strait differences and support for cross-Strait dialogue.
Since the March 18 presidential election, the cross-Strait
situation is delicate. During this time of transition, there is a risk
of increased tension. We are monitoring the situation closely. There
are no signs of unusual PRC military activity. Since his election, Chen
Shui-bian has made a number of positive statements regarding desire for
better cross-Strait relations. So far, PRC leaders have responded
cautiously to Chen's election. They say they will ``listen to what he
says and watch what he does.''
We have been encouraging the two sides to exercise restraint,
refrain from statements or actions that would increase tensions. We
have also been urging both sides to resume cross-Strait dialogue and
take steps that would increase mutual trust and confidence. We believe
dialogue is the best way for the two sides to peacefully resolve their
differences.
INDONESIA
Question. How do you justify the cut from $25 million provided by
Congress in FY 2000 for East Timor to only $10 million requested for FY
2001?
Answer. In FY 2001, we plan to continue to assist the East Timorese
with their transition to independence. In response to urgent
requirements arising from the immediate post-conflict situation in East
Timor, we decided this fiscal year to devote approximately $35 million
to programs that could quickly support the development of East Timorese
civil society, aid economic recovery, build the capacity of new
democratic and economic institutions, and support the maintenance of a
secure environment through U.S. civilian police participation in the UN
mission.
For FY 2001 we are requesting a total of $28 million in economic
support and voluntary peacekeeping operations funds ($10 million in ESF
+ $18 in PKO) which is sufficient to allow us to continue funding a
substantial level of development activities, continue U.S. civilian
police participation, help to recruit, train, advise and equip a new
East Timorese police force capable of functioning once the UN
Administration ends, and contribute to ongoing efforts to establish
critical judicial functions. It is also reasonable to expect that by FY
2001, other bilateral and multilateral assistance will be in place to
help meet these and other requirements.
This $28 million request is of course in addition to the
substantial contributions the U.S. has made and will continue to devote
to humanitarian relief (estimated $50 million to date in FY2000) as
well as assessed costs related to the UN mission and efforts made by
the World Bank and the Asian Development Bank.
______
QUESTIONS FOR THE RECORD SUBMITTED BY MS. PELOSI
INDONESIA--LEAHY AMENDMENT COMPLIANCE
Question. What is the Administration's view of the Indonesian
government's compliance with the conditions of the Leahy amendment,
including allowing East Timorese refugees in West Timor to go home and
prosecuting members of the civilian militia, before restoring IMET and
military sales?
Answer. In reaction to violence in East Timor, President Clinton
suspended U.S.-Indonesia military-to-military relations in September
1999. In reaction to the same events, the Congress passed legislation
(section 589 of the FY 2000 Foreign Operations Appropriations Act as
enacted in the Consolidated Appropriations Act for FY 2000 (PL 106-
113--the ``Leahy Amendment'') which conditioned resumption of FMF and
IMET or E-IMET with Indonesia.
Our assessment is that, while Indonesia has made substantial
progress on overall reform--including military reform and human rights
accountability--and the direction of Indonesian efforts in West Timor
on militias and refugees is right, the achievements are not yet
sufficient to meet the Leahy requirements embodied in the current
fiscal year's Foreign Operations appropriation. On the positive side,
the top Indonesian leadership has pledged to bring about democratic
change, as demanded by the Indonesian people. President Wahid has
continued to establish civilian authority over the Indonesian armed
forces (TNI), to promote real reform within its ranks, and to pursue
accountability for gross human rights abuses by TNI in East Timor, Aceh
and elsewhere in the archipelago. He also has pledged to disarm and
disband the West Timor militias and to end cooperation by elements of
TNI with them, and has ordered his generals to take steps to achieve
those objectives. Indonesia's attorney general has established a team
and taken other credible steps to pursue accountability investigations,
including against TNI members and militia leaders, on human rights
violations. Indonesia has signed an agreement of cooperation with the
UN Transitional Administration in East Timor (UNTAET), the UN
peacekeeping force in East Timor, on accountability. The TNI has also
signed an agreement with UNTAET on managing the border between East and
West Timor. Many refugees in West Timor have voluntarily returned home.
However, despite pledges and initial actions by President Wahid and
senior TNI leaders, we are not satisfied yet that the Leahy amendment
conditions which relate to justice and accountability for human rights
violations in East Timor, unfettered return of refugees from West to
East Timor, and preventing incursions of militia groups into East Timor
have been met. The accountability process is not yet close enough to
completion, some militias continue to exist as corporate entities and
to work against safe repatriation of East Timorese refugees in West
Timor camps, and local elements of the Indonesian Army continue to
cooperate with them. While there has been a welcome break in militia
incursions into East Timor since a spike in March, the militias still
represent a potential threat to UNTAET and the East Timorese people. We
are strongly pressing the Indonesian government to continue addressing
these problems.
Question. In Aceh, violence is increasing, with civilians targeted
by both Indonesian security forces and the separatist movement. Do you
think the Indonesian government is doing enough to address the many
grievances in Aceh, including the lack of accountability for human
rights abuses?
Answer. President Wahid has opened up a number of channels of
communication with Acehnese representatives in an effort to negotiate a
resolution to the Aceh problem. In addition, on April 17 the Indonesian
Attorney General's office opened the first of what is expected to be a
series of Aceh-based human rights trials targeting abuses committed by
Indonesian security officials in the province during the last several
years.
The United States strongly supports efforts by the Wahid Government
to find a peaceful solution to the problems in Aceh, within the context
of preserving the territorial integrity of Indonesia. We have
encouraged all parties--including the Indonesian military and Acehnese
separatist groups--to focus their efforts on a negotiated political
settlement that addresses the grievances and aspirations of the
Acehnese people, including that of justice for past human rights
abuses.
While there is reason for optimism, it is too soon to tell whether
President Wahid's efforts to address the problem are sufficient or will
be successful. In spite of Wahid's diplomatic efforts, both Indonesian
security forces and Aceh's armed separatist group (GAM) have continued
to engage in violence, and innocent people continue to suffer. We have
encouraged the Government of Indonesia to take advantage of the
existing window of opportunity to resolve the situation by offering a
comprehensive package of solutions that credibly addresses political,
economic, cultural, and justice issues.
RUSSIA/CHECHNYA
Question. The administration has spoken out on abuses committed in
Chechnya, yet the statement issued by the administration last week
regarding its priorities for the upcoming UN Commission on Human Rights
makes no reference to Chechnya. What does the administration intend to
do at the Commission? Does the U.S. support a commission of inquiry to
investigate alleged war crimes in Chechnya?
Answer. Chechnya has been and remains a priority for the
administration, including at the U.N. Commission on Human Rights. As
U.S. Ambassador and Head of Delegation Nancy Rubin stated during
Commission discussion on Chechnya on April 11, ``This session should
not conclude without meaningful action to respond to the issues raised
by the High Commissioner's report.''
The Administration supported and co-supported the EU resolution on
Chechnya at the Commission on Human Rights that was adopted by a vote
of 25 to 7. That resolution called for the establishment of a national,
broad-based independent Commission of Inquiry in Russia, which will
operate according to recognized international standards. We would hope
that such a commission would include international participation.
Unless the Russian government moves swiftly to provide a credible
response to the legitimate questions that have been raised about its
compliance with international human rights and humanitarian law, the
skepticism of the international community and supporters of human
rights inside Russia can only mount.
TURKMENISTAN
Question. Turkmenistan is one of the most repressive countries in
the world. The State Department Human Rights Report states that
Turkmenistan is a ``one party state dominated by its president and his
closest advisers [that has] made little progress in moving from a
soviet-era authoritarian style of government to a democratic system''
in which last year ``the government's human rights record remained
extremely poor.'' What implications does the situation in Turkmenistan
have for its chances to obtain US ExIm Bank credits?
Answer. In the first instance, I would have to defer to ExIm Bank
on Turkmenistan's overall chances of obtaining credits for any given
purpose. Without impinging on ExIm's independent status, I think I can
safely say that they, like any prudent banker, they would undertake a
thorough financial analysis of any application from Turkmenistan before
reaching a decision. However, under ExIm Bank's Charter, the President
has the authority (which he has delegated to the Secretary of State) to
determine that it would be in the national interest to deny an
application for nonfinancial or noncommercial considerations ``where
such action would clearly and importantly advance United States policy
in such areas as international terrorism, nuclear proliferation,
environmental protection and human rights.'' Should the State
Department receive any applications from Turkmenistan for ExIm credits,
we would certainly review them very carefully taking these concerns
into account.
Question. Does the State Department have an HIV specific human
rights strategy linked to the overall effort to expand care in other
nations?
Answer. The U.S. regularly supports U.N. resolutions before the
Commission on Human Rights for the protection of human rights in the
context of the human immunodeficiency virus (HIV) and acquired immune
deficient syndrome (AIDS). The resolutions set out guidelines nations
may follow in dealing with the health crisis and human toll of AIDS and
HIV. Such resolutions ask the U.N. Secretary General to solicit input
from countries, specialized agencies, and related governmental and non-
governmental organizations in order to provide a progress report to the
Commission on follow-up.
The State Department will continue to include HIV/AIDS-related
discrimination and human rights abuses in regular embassy reporting and
represent these interests before the Human Rights Commission.
Information from post reporting is used in connection with requests
for asylum and are used in U.S. Government consideration of asylum
requests. The Department provides information and advisory opinions to
immigration judges and Immigration and Naturalization Service asylum
officers.
The U.S. helped to negotiate a partnership arrangement between the
Office of the High Commissioner for Human Rights (OHCHR) in Geneva and
UNAIDS. The U.S. strongly supports the efforts of the OHCHR to
mainstream human rights into the activities of other U.N. departments
and agencies and especially the cooperation this partnership represents
on combating the devastating worldwide crisis of HIV/AIDS.
GLOBAL AIDS
Question. In December, the National Academy of Sciences issued a
report stating that the State Department had insufficient expertise in
scientific matters and called on the department to increase both the
number and stature of these experts. One of the most important of these
matters is the AIDS pandemic, which has now infected some 50 million
people and is expanding at a terrifying rate.
Do you agree that the State Department needs to increase scientific
expertise within its ranks? On AIDS, do you think there should be
greater expertise within the department on this issue considering that
the situation could become much greater in the future?
Answer. Yes. As evidence of the Department's commitment to increase
scientific expertise and heighten scientific awareness, the Secretary
recently issued a policy statement on science, entitled ``Science and
Diplomacy: Strengthening State for the 21st Century,'' and a report,
``Science and Foreign Policy--The Role of the Department of State,''
(copies of which are attached), that address the need to integrate
science more fully in the foreign policy process. This important effort
stems from the Secretary's request last year to the National Academy of
Sciences to conduct a study of the role of science, technology and
health in foreign policy at the State Department. Recommendations made
by the National Academy guided our efforts to enhance our capabilities
in the above areas.
Several measures have already have been undertaken. For example, in
January, a medical doctor from the Department of Health and Human
Services became the Department's first health advisor. Also, a vigorous
recruiting effort is underway to appoint a high-level Science and
Technology Adviser to ensure that science, technology and health issues
are properly integrated into our foreign policy. Among other steps, we
intend to establish a standing science policy group to institutionalize
the integration of science, technology and health issues into our
foreign policy fully.
In the case of the HIV/AIDS pandemic, among our health advisor's
responsibilities is to heighten the Department's leadership in
promoting international efforts to combat HIV/AIDS. Also, an
interagency working group on HIV/AIDS is preparing recommendations for
the President on how the United States Government can accelerate its
efforts to fight HIV/AIDS internationally. As part of these efforts,
the Department is expanding its diplomatic initiative on HIV/AIDS that
instructs U.S. ambassadors to meet with their host governments to
discuss HIV/AIDS not just as a health issue, but also as an economic,
political, and security issue.
science and diplomacy--strengthening state for the 21st century
In a world being transformed by technology, good science is vital
to good diplomacy.
That may seem obvious, but even now, not everyone is comfortable
with it. For often--as was once the case with economic or human
rights--it takes time for something different to be accepted within the
mainstream of U.S. foreign policy.
But today, there can be no question about the integral role science
and technology (S&T) must play in our diplomacy. Whether the issue is
countering weapons of mass destruction, dealing with infectious
diseases, or expanding the global economy while protecting the global
environment, if we are to get our international strategies right we
must get our science right.
The Department's S&T capabilities have not always been as
substantial as they should be. Because of resource constraints in
recent years, our people with science responsibilities have been
stretched thin. But they have done a great job under the circumstances,
and deserve our thanks and support.
At my request, the National Research Council of the National
Academy of Sciences has completed a study of the ways and means by
which the Department may better fulfill its S&T responsibilities. I am
using that report, received last fall, as a guide in our efforts.
What I envision is not a one-shot quick fix, but a multi-year,
multi-Administration, bipartisan mission. To succeed, we must make
changes affecting our organizational structure, our personnel, and our
relationship with the science community.
Structure: First, we will strengthen our science leadership and
management structure. Shortly, I shall appoint a Science and Technology
Adviser who will have direct access to me and other senior Department
officials and who will be located within the Under Secretariat for
Global Affairs. The Adviser will lead a Department-wide effort to
ensure that science, technology and health issues are properly
integrated into our foreign policy. The Adviser will also serve as the
Department's principal liaison with the national and international
scientific community.
Other structural changes in the Department will also reflect and
support the enhanced role of science and technology. By the end of
April, I will re-establish a Science Directorate within the Bureau of
Oceans and International Environmental and Scientific Affairs (OES).
Under the leadership of the Principal Deputy Assistant Secretary, this
Directorate will bring together three separate OES offices currently
focused on science, technology and health issues.
Further, all regional and policy bureaus in the Department will
designate a Deputy Assistant Secretary-level person to be responsible
for S&T-based issues. These bureau representatives--along with the
Under Secretary for Global Affairs, the Under Secretary for Arms
Control and International Security, the Science Adviser to the Bureau
of Arms Control, the Chair of the Arms Control and Nonproliferation
Advisory Board, and the Science and Technology Adviser--together will
form a standing science policy group.
Personnel: The Department's effectiveness on any issue is only as
good as its people and the quality of information available to them. I
want to ensure that we have the right people in the right places with
the right training, expertise and information to provide strong
leadership on science-related issues. The Director General and other
senior officials are currently reviewing the Department's recruitment,
training, assignment and promotion policies to broaden and deepen our
in-house science and technology expertise. The Science and Technology
Adviser will work closely with the Director General in this effort.
It should be a priority of the Department to ensure that, at a
minimum, all foreign service and civil service personnel, at home and
abroad, have a basic understanding of science-related issues. They
should also know whether and when science can inform our policy, where
to go for this expertise, and how to make sure it is incorporated in
the formulation and execution of our policies.
The Department has begun a survey to identify those overseas
posts--such as New Delhi--where science, technology and health issues
are most vital to the success of our bilateral or regional agenda.
Based on those results, we will examine our current science positions
to determine whether new positions are needed, assess the upgrading of
existing positions, and identify those overseas locations where our
interests would especially benefit by assigning scientists to key
positions. I expect this work to be completed by this September.
Partnership: We must do more than marshal our resources
effectively; we must marshal help from other places. The Department
will establish an active, long-term partnership with the science,
engineering and technology community--in academia and the private
sector as well as in government. That means more and better dialogue on
policy issues; collaboration in training our people; and temporary
assignments in the Department and overseas.
To help us get the science right, we will continue the program of
policy roundtables on key issues, such as those we have already held on
biotech agriculture and carbon sinks. And to help us work faster and
smarter, we are also striving to enhance our access to the latest
advances in information technology.
Strengthening the Department's S&T capabilities will be a long-term
effort requiring new fiscal and human resources. This will require the
support of Congress as well as the science community. And I have no
illusions that it will be quick or easy; it doesn't take a physicist to
know that change is harder than inertia.
But this is a mission worthy of our utmost shared efforts. For
enhancing science at State is not about the foreign service versus the
civil service; nor is its appeal limited to only one end of
Pennsylvania Avenue or one side of the aisle. To the contrary, it is a
goal that should unite us all.
If America is to continue to lead in the new century, then we must
lead the way in integrating science in our diplomacy. So we will move
forward aggressively. As I told the American Association for the
Advancement of Science in February, while it will take time and money
to realize this vision, we must and will begin now.
SCIENCE AND FOREIGN POLICY
THE ROLE OF THE DEPARTMENT OF STATE
Science-based issues are increasingly prominent on the foreign
affairs agenda, from nonproliferation and arms control to global
environmental threats, such as ozone layer depletion and global climate
change, to HIV/AIDS, to international science and technology
(S&T)* cooperation agreements. The Department of State is
responsible for assuring that science and technology considerations are
taken into account and integrated into U.S. foreign policy, and that
opportunities for fruitful international cooperation involving the U.S.
science community are identified and exploited. Annex A, attached,
contains a review of the history of how the Department has organized to
carry out this responsibility.
---------------------------------------------------------------------------
* The term S&T is being used in this paper to encompass those
positions that deal with science, technology, health, and environment
issues and that are variously described by the acronyms EST, ESTH, and
STH.
---------------------------------------------------------------------------
The Department's and ACDA's (Arms Control and Disarmament Agency)
mechanisms and procedures for building sound science into national
security policies, such as arms control, export controls, and
nonproliferation, have functioned well over the years. (ACDA was
incorporated within the Department of State in 1999.) The Bureau of
Economics and Business Affairs also has long-standing and well-
functioning mechanisms for accessing needed S&T advice and input with
respect to its areas of responsibility. (These mechanisms and
procedures are described in Annex A.)
The Bureau of Oceans and International Environmental and Scientific
Affairs (OES) has managed interagency processes and led international
negotiations on issues from the building and operation of an
international space station to controlling substances that deplete the
stratospheric ozone layer and change global climate. OES has also taken
the lead within the U.S. Government (USG) in developing accords and
creating an extensive network of advisory and regulatory mechanisms to
protect oceans and fisheries, and negotiating S&T umbrella agreements
and coordinating their implementation.
A combination of reduced resources and the increasing number and
significance of science-based issues in recent years has raised
questions regarding the Department's readiness and capacity to deal
with this increasingly important set of issues and regarding how the
Department incorporates scientific and technical expertise into its
policy making. For example, the Deputy Assistant Secretary (DAS) for
Science position in OES was eliminated in 1997, along with the science
and technology functional specialization, or ``cone''. Also, dwindling
resources have forced the Department to downgrade or eliminate more
than half of the overseas science counselor positions over the past
decade.
The State Department recognizes the growing significance of science
and technology based issues in foreign policy and is aware that this
trend will continue and accelerate. The Department is determined to do
what is necessary to respond to this challenge and to meet its
responsibilities in this area, including seeking additional resources.
To assist in this effort, the Secretary asked the National Academy
of Sciences and the National Research Council (NRC) to look at the
contributions Science, technology and health can make to foreign policy
and how the Department of state might better carry out its
responsibilities. The recommendations of the NRC report, The Pervasive
Role of Science, Technology, and Health in Foreign Policy--Imperatives
for the Department of State, published in October 1999, are contained
in the attached Annex B, along with the Department's responses to them.
This paper elaborates the steps the Department is taking and
intends to take to strengthen its ability to carry out its leadership
role on science-based issues in foreign policy. It reflects the
Department's commitment to dealing effectively with those issues as we
move forward into the 21st century. The approach outlined draws on the
excellent analysis in the NRC report and is responsive to a number of
its principal recommendations, as well as to suggestions from others in
the science community.
Building long-term leadership for science and technology-based issues
The key elements of the approach to strengthening the integration
of science and technology issues into the work of the State Department
are the following:
A policy framework set forth by the Secretary of State that
highlights the importance of science and technology-based issues in
foreign policy, reaffirms State Department leadership within the USG in
this area, and identifies the effective handling of such issues as a
high Departmental priority;
A leadership and management structure that will both foster high-
level attention to science-based issues and opportunities and enhance
the Department's capacity to integrate those considerations into
foreign policy and to oversee and coordinate the international S&T
activities of U.S. Government agencies. Developing better-equipped
personnel to handle these issues will call for targeted recruitment,
expanded training opportunities, and enhanced rewards for S&T work.
Partnership with the science community in academia, the private
sector, and other agencies dealing with science and technology issues
within the U.S. Government, buttressed by the use of upgraded
information technology (IT) to foster greater dialogue on policy issues
and improve interconnectivity with the science community outside the
Department.
AN AFFIRMATION OF LEADERSHIP
The Secretary is issuing a policy statement concurrent with release
of this report that will recognize the importance of science-based
issues in foreign policy and reiterate the Department of State's
leadership role in this area. This statement delineates the framework
to ensure appropriate integration of scientific and technical knowledge
and expertise into policy making. It makes clear that meeting its
responsibilities in the area of science and technology is a high and
permanent priority in the Department of State.
STRUCTURED FOR SUCCESS
A leadership and management structure will be put in place that is
designed to assure that science considerations, and access to the
appropriate expertise, are properly integrated into our foreign policy.
This structure will include the following: (1) establishment of a
Science and Technology Adviser, reporting to the Under Secretary for
Global Affairs and with direct access to the Secretary and other senior
officials; (2) reestablishment of the Science Directorate in OES; and
(3) designation within each State bureau of a DAS-level official who
will serve as the bureau point person for S&T issues.
These organizational steps will complement each other in assuring
that:
(1) Science receives high-level attention throughout the
Department;
(2) Access to the expertise and resources of the science community
is secured; and
(3) State leadership is maintained in coordinating interagency
processes and overseeing the USG's international science and technology
activities.
Three science and technology based entitles within OES--Space and
Advanced Technology (SAT), Science and Technology Cooperation (STC),
and Emerging Infectious Diseases (EID)--will be organized as offices
within the Science Directorate under the leadership of the Principal
Deputy Assistant Secretary (PDAS) in OES. This will give added weight
and coherence to OES's science-based activities, which provide a key
support function for the rest of the Department, as well as being
central to State's interagency leadership role in assuring that science
considerations are built into U.S. foreign policy.
The Science and Technology Adviser, an individual with strong
credentials in the science community, will be located within the Under
Secretariat for Global Affairs (G), and will have direct access to the
Secretary and to other senior officials throughout the Department. The
Science Adviser will establish strong ties to the science community
both within and outside the U.S. Government, and foster collaboration
between them and the Department of State.
An important role of the Science Adviser will be to elevate
awareness of the significance of science and technology matters
throughout the senior levels of the Department. The Science Adviser
will, for example, maintain links with the network of DAS-level
officials in the regional and policy bureaus who have been designated
to serve as the bureau's policy-level point person on S&T issues.
The Science and Technology Adviser will participate and offer
advice in the development and implementation of U.S. foreign policy on
global science and technology-based issues that impact or will impact
the international community and U.S. interests. As State's principal
interlocutor with the national and international science community, he
or she will seek assistance from and inform the community of science
and technology based foreign policy initiatives supported by the
Department of State.
The Adviser will maintain close working-relationships with other
USG agencies that deal with science and technology based issues,
including, particularly, the Office of Science and Technology Policy
(OSTP) and the National Science and Technology Council in the White
House. He/she will generally speak for the Department in his/her
dealings with those agencies.
The Science Adviser will work closely with existing advisers and
advisory mechanisms on science matters within the Department. In
particular, the Adviser will serve as liaison with the ACNAB (Arms
Control and Nonproliferation Advisory Board). He or she will coordinate
with the Office of the Under Secretary for Arms Control and
International Security in exploring the feasibility of broadening the
scope of the science and technology issues addressed by that advisory
committee.
A major responsibility of the Science Adviser will be to organize,
in consultation with senior State Department officials and outside
experts, several roundtables annually on science-based issues with high
impact on the United States and its foreign policy priorities.
Importantly, he or she will be responsible for assuring effective
follow-up on the results of those roundtables. The Science Adviser will
also explore other sources and mechanisms for obtaining external
advice.
The Department is currently undertaking a survey of overseas posts
regarding the adequacy of S&T staffing, particularly with respect to
Science Counselor positions. The Science Adviser will assist in
reviewing the current status of the Science Counselor program, taking
into account the results of that survey. The Adviser will make
recommendations regarding any changes in the program that he or she
believes are called for. The purpose of the review is both to help
determine the appropriate number and location of such positions and to
assist the Department in assuring that persons appointed to those
positions have the necessary credentials and qualifications. (A
decision has already been taken to re-establish the Science Counselor
position in New Delhi and to staff it with a scientist from a U.S.
technical agency.)
Resources will be sought to provide staff support to the Science
Adviser. He or she will receive policy support from the OES Science
Directorate. Further, the Adviser will call on the G (Under Secretariat
for Global Affairs) and T (Under Secretariat for Arms Control and
International Security) bureaus for specific issue expertise and
support.
The PDAS (Principal Deputy Assistant Secretary) in OES will head
the re-established Science Directorate in that bureau, which will bring
together staffs of three entities:
Science and Technology Cooperation (STC), Space and Advanced
Technology (SAT), and Emerging and Infectious Diseases (EID).
The PDAS will work closely with the Science Adviser, other State
Bureaus, and U.S. scientific and technical agencies. He will coordinate
with the Science Adviser on the development of policy and on
maintaining links on science and technology-related matters to the
private sector, Congress, other USG agencies, and international and
non-governmental organizations. He will keep OES productively engaged
with the other bureaus in the Department on S&T issues.
The PDAS will be a key policy point for the interagency science and
technology community in their dealings with the Department. He, and the
Science Directorate he heads, will, for example, play a central role in
expediting requests for clearances from other agencies to enter into
agency-to-agency agreements with other countries and to proceed with
international S&T activities.
BUILDING PARTNERSHIPS
The Department will build on its ties to the science community,
both within the U.S. Government, as well as in academia and the private
sector, and will create strong partnerships to advance U.S. interests
in pursuing science-based issues in foreign policy. These partnerships
are important both in keeping the Department aware of relevant
developments in science and technology and in mobilizing the resources
of the science community in addressing these issues. The Department
will seek the advice and assistance of its partners, for example, in
training and preparation of Department personnel to better understand
and manage science-based issues in a foreign policy context, for
example, and in helping to identify qualified candidates for S&T
positions.
These partnerships will also provide valuable support for the
Department's efforts to conduct a series of roundtables on S&T issues
of concern to high-level Department officials. Building effective
partnerships will be a top priority for the Department's new science
structure under the leadership of the Science Adviser and the PDAS in
OES.
Continued improvement of the Department's information technology
will be an important element in achieving this goal, and State's five-
year Information Technology (IT) plan will continue to be supported.
Enhancing the Department's ability to use IT for communication and to
access pertinent technical data will permit improved interconnectivity
with the S&T community outside the Department and facilitate
interagency coordination within the USG. A pilot project is being
developed to explore how to improve data links between science centers
of excellence, the Department, and Environment, Science and Technology
(EST) officers in the field.
INCREASING EXISTING S&T EXPERTISE
Meeting this need requires steps in a number of areas, including:
Increased use of training to achieve broadened science literacy
within the Foreign Service;
Improved career incentives for successful service in S&T positions;
Enhanced efforts to recruit employees who are knowledgeable about
S&T issues and who have academic credentials in S&T subjects;
Expanded use of technically qualified personnel from other
agencies, academia, and the private sector, and from the Department of
State's Civil Service employees, in S&T positions both overseas and
within the Department.
Training: The Foreign Service Institute (FSI), as noted in the NRC
Report, provides high quality training for Foreign Service Officers
with S&T responsibilities. In seeking to strengthen training on science
and technology-based issues, representatives of the science community
have suggested that our goal should be raising the level of
understanding and sensitivity to science and technology issues across
the wide range of Department officers--both Foreign Service Officers
and Civil Service personnel, and both officers who are specifically
charged with S&T responsibilities as well as those who carry out other
aspects of our foreign policy. This goal, strengthening ``science
savvy'' at the Department, addresses the need to prepare officers to
know when they need scientific advice; know how to get the advice; and
know what to do with it once they get it.
The Department believes that actions have been and can be taken to
pursue this goal through Department-sponsored training. For example,
currently, the Foreign Service Institute offers six courses
specifically targeted toward EST issues for Foreign and Civil Service
officers. This includes one tradecraft course specifically for EST
officers. In addition, in 1999, FSI began a training program for
Foreign Service national employees (FSNs) with responsibilities for
environment, science and technology issues at overseas posts. FSI is
planning to hold another session for FSNs in September 2000. In
addition to the courses specifically devoted to science-based issues,
approximately 20 other courses contain EST modules. These include
nearly every economics and commercial course, as well as many political
and negotiation courses and a large proportion of the regional studies
programs.
Other recent FSI initiatives include:
1. The National Research Council (NRC) report on the Science at
State has been shared with various tradecraft courses and with the
Senior Seminar.
2. Course instructors have been encouraged to make greater use of
the science expertise (AAAS Fellows, Foster Fellows, other scientists
on assignment in T and G) within the Department in panels and
presentations across the FSI curriculum.
3. The PDAS in OES recently served as a mentor to the FSO Junior
Officer class, and we are identifying ways systematically to expose FSI
students to key Department policymakers in the area of S&T and other
global issues.
4. Another senior OES official, who is a current member of the
Senior Seminar, is working with FSI division directors and faculty to
identify additional ways in which S&T modules might be included in
current courses or, or resources permitting, new ``stand-alone'' S&T
courses be added to the current offerings.
The Department and FSI plan to undertake several new initiatives to
further strengthen training in science and technology-based issues.
These initiatives seek to weave science and science-based issues into
our curriculum through speakers, development of course materials and
the holding of targeted roundtable discussions. Thus, our ability to
more forward most effectively will depend on our ability to obtain
additional resources and to develop partnering arrangements with the
scientific community to provide the needed expertise. Such partnerships
will be critical to these initiatives--as well as to our ability to
undertake further initiatives in the future. Initiatives now under
review include:
1. Senior-level roundtables with world-class scientists and
science-policy thinkers designed to alert us to emerging and future
issues that will affect international relationships and our foreign
policy in the future.
2. A pilot one-day Forum on Global Health Issues, hosted in
cooperation with the National Institutes of Health.
3. New case studies, role plays and other teaching tools on science
and technology-based issues for use in FSI's courses. We hope to work
with the science community to obtain the services of an expert in
science and foreign policy (such as an AAAS fellow who has already
worked in the Department for a regular tour) who may be able to work
further with OES and other bureaus in the Department and FSI on
training.
Career incentives--The Department is actively exploring ways to
develop and nurture experience in global fields essential to its
mission, such as S&T work. For example, the promotion boards for the
traditional Foreign Service personnel cones (Political, Economic,
Administrative, and Consular) will be instructed to give weight to such
credentials.
The G and T bureaus may nominate candidates for overseas positions
designated of particular interest to the work of their bureaus. They
will be responsible for consulting with the regional bureaus that fund
those positions and seeking to reach a consensus on proposed
assignments.
A pilot program will be established to designate a limited number
of ``linked'' assignments that will provide for a two-year assignment
to a domestic position in one of the G or T bureaus followed by a
specified onward assignment overseas. The two assignments will be
advertised as linked and made simultaneously.
Regional bureaus will consult with policy bureaus before abolishing
or reprogramming any positions primarily focused on the functions of
the concerned bureau.
Other initiatives designed to enhance career opportunities for
officers working in S&T and global functions include the following:
(1) Guidelines will be developed to ensure that the description of
work in performed in the G and T bureaus underlines the skills,
abilities, and experience that make candidates competitive for
promotion;
(2) Senior officers from G and T bureaus will be identified to
serve on promotion panels;
(3) G and T bureaus will be called upon to develop their intranet
websites, providing information on bureau activities, position
openings, and career opportunities for Foreign Service officers.
Recruitment--The Department will seek to attract more candidates
who are knowledgeable about science and technology issues and who have
science credentials. More information on science-related issues in
foreign policy will be included in recruitment materials, and increased
recruiting effort will be targeted at science and technology
departments in universities.
Non-career outreach--The Department will pursue non-career
appointments from other specialized agencies to address unmet needs for
S&T qualified personnel. We will seek funding support from those
agencies in order to increase the number of such assignments that can
be put in place. Such assignments also open up opportunities for
Department employees to gain relevant experience serving in specialized
agencies, while, in the process, strengthening interagency ties.
The Department will also seek to identify individuals in academia
and the private sector who could be brought in on a non-career basis to
meet particular requirements for S&T qualified personnel. In that
regard, for example, State will continue to fully support, and explore
the possibility of expanding, its program for bringing AAAS Fellows
into the Department.
The use of other-agency candidates, with funding support from their
agency, might, for example, permit the Department to move more
expeditiously in reestablishing additional Science Counselor
positions--and getting fully qualified incumbents in place promptly--at
posts where there is a demonstrated need. A case in point is the U.S.
Embassy in New Delhi, where the Science Counselor position will be re-
established. The Department intends to seek a scientist from a USG
technical agency to fill it.
THE RESOURCE CONSTRAINT
The steps that have been outlined call for some new positions and
additional funding. Given current budget stringency, even a small
increase will be difficult to achieve and will require tradeoffs with
other priorities. Moreover, while it will position the Department to
significantly upgrade its performance, the planned approach will not be
fully successful over time without a significant commitment of
resources.
OES, for example, suffered a significant reduction of science and
technology-related positions beginning in 1995--an 18% cut in the
number of Foreign Service Officers and just under a 10% cut in its
Civil Service complement--while the requirements it must meet are
rapidly expanding. The FSI notes that is capacity to expand S&T
training is limited by personnel and funding shortages. Because of
budget pressures, the Bureau of Intelligence and Research (INR) has had
to reduce in recent years the resources it devotes to intelligence
analysis in science and technology-related fields.
A crucial task of the Department's revitalized science leadership
and management structure will be to identify clearly the need and
establish the case for additional resources. Without adequate
resources, the Department of State cannot in the long run meet its
responsibilities in this area.
ANNEX A
SCIENCE AT STATE--A REVIEW OF THE ORGANIZATIONAL HISTORY
BACKGROUND
In the wake of World War II, the State Department, like the rest of
the national security agencies, took a hard look at how they were
organized to deal with developments in science and technology. To an
extent not seen before, advances in science and technology, e.g.,
radar, nuclear fission and fusion, and jet and rocket propulsion, were
becoming dominant factors affecting national security. Further, it was
clear that the pace of development in science and technology was
accelerating and that these developments would have an increasingly
strong impact on international relations.
FIRST STEPS
The first formal establishment of a science function within the
State Department's structure occurred in 1950 with the establishment of
the Office of Science Advisor and Special Assistant to the Secretary of
State. This office did not thrive and was hit hard by the government-
wide retrenchment of the early 1950s. It had been reduced to a staff of
three by 1956. In 1957, however, the Soviet Union launched Sputnik, and
science and technology once again became a matter of immediate and
intense national security concern.
As part of the response to Sputnik, additional resources and
renewed prominence was given to the Science Advisor's office. Its new
focus was on providing technical interpretations to policy-makers,
securing access to scientific research and to scientists, and enhancing
State's capacity to monitor scientific developments internationally,
particularly those relating to strategic space and defense
technologies.
In 1965, the Science Office was elevated to ``bureau'' status in
recognition of the expanding role of science and technology in
strategic areas of communications, space, defense, and computerization.
The Science Advisor's office was enlarged to an Office of International
Scientific and Technological Affairs, and its director was officially
designated as ``equivalent to an Assistant Secretary of State''.
CREATION OF OES AND AFFIRMATION OF STATE LEADERSHIP
In 1973, Congress acted on its perception of the increasing
importance and complexity of international scientific, technological,
environmental, and oceans issues. Legislation was passed calling for
the establishment of the Bureau of Oceans and International
Environmental and Scientific Affairs (OES). OES was established in
1974.
In 1978, the Congress passed further legislation reaffirming that
the State Department had responsibility for incorporating science into
the conduct of foreign policy. It gave the Secretary of State ``primary
responsibility'' for the coordination and oversight of all major
agreements and activities in this area with any foreign government or
international organization. OES has been the lead bureau in discharging
this responsibility and has headed numerous international negotiations
and managed the inter-agency processes supporting them.
The basic structure created during the 1970s remains substantially
in place. However, the directorate for nuclear affairs was transferred
from OES to PM (Bureau of Political and Military Affairs) in 1993.
Also, in 1997 the position of Deputy Assistant Secretary for Science
was eliminated, and the elements of the Science Directorate--space and
advanced technology, science and technology cooperation, emerging
infectious diseases--were redistributed within OES.
THE T BUREAUS (ARMS CONTROL; NONPROLIFERATION; POLITICAL-
MILITARY AFFAIRS; VERIFICATION AND COMPLIANCE)
In 1961 Congress established the U.S. Arms Control and Disarmament
Agency (ACDA), staffed by a unique combination of professional
scientists, foreign policy specialists, and professional diplomats.
ACDA's charter was to integrate scientific and technical considerations
into foreign policy in the fields of nonproliferation, arms control,
treaty verification and compliance, as well as intelligence. For more
than 35 years the ACDA model worked successfully.
None of the mechanisms used by ACDA was unique; what was innovative
was the close working relationships among scientists and non-
scientists. That cooperation resulted in the negotiation of highly
technical arms control agreements such as the ABM Treaty which, for
possibly the first time in history, introduced an equation of physics
directly into a treaty; the verification protocols to the Threshold
Test Ban Treaty (TTBT), which defined ways in which complex experiments
might be carried out; and the Chemical Weapons Convention, which
required the cooperation of scientists from DOD and from industry as
well as ACDA's own professionals, all operating under the direction of
professional negotiators and diplomats.
ACDA found that the ability to negotiate a treaty was not confined
to professionals from either of the two cultures: Ambassador C. Paul
Robinson who negotiated the TTBT protocol was a physicist, as was
Ambassador Herbert F. York, who sought a comprehensive test ban treaty
(CTBT) in the late 1970s, and their efforts were supported by teams
composed of both diplomats and scientists. Conversely, the equally
technical ABM, SALT, and START Treaties were negotiated by diplomats,
supported by professional scientists.
In 1999, ACDA was integrated into the Department of State, forming
the nuclei of the new Bureau of Arms Control, Nonproliferation, and
Verification and Compliance. Former ACDA staff also augment the
capabilities of PM. The new ``T Family'' bureaus continue to integrate
technical expertise into foreign policy by creative use of the
Intergovernmental Personnel Act to bring outstanding scientists into
the Department of State such as William C. Foster Fellows and to
utilize staff members of the Department of Energy's National
Laboratories for extended periods of time. Consultants with specific
scientific expertise are routinely used to augment staff during, for
example, the negotiation of the CTBT and the Biological Weapons
Protocol. T-family staff serve on interagency working groups and
senior-level committees such as the Committee for National Security and
other subcommittees of the National Science and Technology Council
(NSTC); a co-chair of the Nonproliferation and Arms Control Technical
Working Group (NPAC-TWG), which coordinates government-wide priorities,
is a member of the Verification and Compliance Bureau and also has
responsibilities for critical infrastructure protection R&D; the AC
Science Adviser represents State on several subcommittees of the NSTC.
What makes the T-Bureaus' fusion of science, policy, and
negotiating expertise work is the simple fact that officers from every
profession work together in teams. Scientists learn policy skills from
policy professionals, and foreign service officers and civil service
professionals learn the relevant science concepts working alongside
scientists on the same issues and absorbing the essentials of the
chemistry, physics or other disciplines involved.
E AND THE BUREAU OF ECONOMIC AND BUSINESS AFFAIRS
The Bureau of Economics and Business Affairs (EB) was established
in 1944 and was followed in 1946 by the creation of a position of the
Under Secretary of State for Economics and Agricultural Affairs, later
renamed the Under Secretary of State for Economics, Business and
Agricultural Affairs. As the issues of economics, business, and
agriculture coming before State have become more technical, the Bureau
has responded by integrating technical and scientific specialists into
its core of economic specialists. To further support its policy-making
role in the increasingly technical environment, formal private sector
advisory committees have been established.
Two separate Department advisory bodies: the United States
International Telecommunication Advisory Committee (ITAC) and the
Advisory Committee on International Communications and Information
Policy (ACICIP), advise the Bureau's Office of Communications and
Information Policy (CIP). These advisory committees consist of
technical experts, members of scientific and industrial organizations,
and senior-level officers from a broad range of companies and
institutions. They are integral to the formulation of U.S. policy,
particularly with regard to our efforts to extend the availability of
new technologies to consumers and address specific technical issues in
bilateral and multilateral fora.
Re-created in its current form from a past advisory committee with
a similar mandate, the ACICIP was chartered in 1994. It serves to
advise the Department on major economic, social, and legal issues and
problems in international communications and information policy.
Members of the committee provide policy advice, as well as carry out
research on a range of issues including electronic commerce,
interoperability, competition policy, export control, and the Internet.
ITAC, also chartered in its current form in 1994, covers
substantive issues in three sector areas: telecommunications
standardization, telecommunications development, and
radiocommunications. The committee was established to aid in the
preparation of U.S. positions for meetings of international treaty
organizations and other regional policy fora, including the
International Telecommunication Union (ITU), the Organization of
American State Inter-American Telecommunication Commission (``OAS/
CITEL''), the Organization for Economic Cooperation and Development
(``OECD''), and the Asia-Pacific Economic Cooperation (``APEC'') forum.
Close collaboration between private sector experts, representatives of
public institutions, and government officials provides a level of
technical and economic insight critical to foreign policy development
and the protection of U.S. interests.
In addition, the Bureau of Economic and Business Affairs maintains
an Advisory Committee on International Economic Policy. This Committee
serves the United States Government in a solely advisory capacity
concerning major issues and problems in international economic policy.
Membership is drawn from a broad cross-section of private sector, non-
government organizations and academics with an interest in
international economic policy.
ANNEX B
THE PERVASIVE ROLE OF SCIENCE, TECHNOLOGY, AND HEALTH IN FOREIGN POLICY
IMPERATIVES FOR THE DEPARTMENT OF STATE
NRC Report Recommendations and Department of State Responses
(1) The Secretary should articulate and implement a policy that
calls for greater attention to the science, technology and health (STH)
dimensions of foreign policy throughout the department and provides
guidance as to sources of STH expertise available to Department
officials both in Washington and abroad.
The Secretary of State has set forth, via a public address to the
science community on February 21, 2000, and in a directive to the
Department concurrent with this report, a policy framework that
highlights the importance of science-based issues in foreign policy,
and reaffirms State Department leadership in this area. This policy
framework establishes as priorities the effective handling of such
issues and the effective integration of S&T knowledge and expertise
into the work of the State Department.
(2) The Secretary should provide continuing leadership that ensures
consideration within the Department of the STH aspect of issues. To
this end, the Secretary should delegate to an under secretary
responsibility for ensuring consideration of STH factors in policy
formulation, especially during meetings and consultations involving the
Secretary and/or the Secretary's senior advisors and during day-to-day
activities at all levels of the Department. The title of the selected
under secretary should be amended to include the phrase ``for
Scientific Affairs,'' reflecting the new authority and responsibilities
across a broad spectrum of STH aspects of foreign policy.
The Senior Adviser for Arms Control and International Security and
the Under Secretary for Global Affairs already exercise significant
oversight responsibility for development of science-related policy,
although other under secretariats and bureaus also formulate policy
with S&T content. The present structure will be reinforced by the
appointment of a Science and Technology Adviser (see (3) below), who
can advise these and other under secretaries and senior officials,
foster Department-wide collaboration with the scientific community and
help ensure that appropriate consideration is given to science,
technology and health matters in the policy process.
While it is generally acknowledged that the Global Affairs Under
Secretariat's science portfolio is significant, if not predominant in
the Department, the recommendation to amend the G title was not
accepted. The reasons are twofold: vesting responsibility for science-
related policy in a single under secretary would impede rather than
further the goal of raising STH capabilities and integrating them into
the policy process across all bureaus over the long run. Also, while a
title change might have a cosmetic appeal and some symbolic value, it
would accomplish nothing by itself. Moreover, STH matters are truly
global, but they share that distinction with other competing global
concerns: human rights, international law enforcement, and population
and migration flows. Elevating one above the other is neither necessary
nor wise.
(3) The Secretary should select a highly qualified STH senior
Adviser to the Secretary and to the selected under secretary to provide
expert advice, drawing on the resources of the American STH community
as necessary, on current and emerging issues.
A Science and Technology Adviser for the Department of State
position, with supporting staff, will be established. The search for a
highly-qualified candidate to the fill the position has already begun.
The Adviser will have Department-wide responsibilities and will work
with all senior officials in the Department. he or she will report to
the Under Secretary for global Affairs and will have direct access to
the Secretary. The Adviser will participate and offer advice, as
appropriate, on science and technology-based issues in the formulation
and implementation of foreign policy with respect to those issues.
The Science and Technology Adviser will be the principal State
Department liaison with the science community. He or she will maintain
close working relationships with the other USG agencies that deal with
science and technology based issues, including the Office of Science
and Technology Policy (OSTP) and the National Science and Technology
Council in the White House. The Adviser will also promote collaboration
throughout the Department on S&T issues as they affect the policy-
making process.
(4) The Department should adopt the most appropriate organizational
structure for the relevant bureaus and offices in order to meet its STH
responsibilities. If legislation is necessary to accomplish this, the
Department should seek Congressional authorization.
The Department intends to implement two measures in the coming
weeks in order to help integrate science issues more fully into the
policy process, and to strengthen the management of this process. As a
first step, the Secretary will ask the Executive Secretary to direct
all bureaus each to designate a Deputy Assistant Secretary or
equivalent level person who will have the lead on S&T issues in his/her
bureau. These senior officials, along with the Science and Technology
Adviser, the Under Secretary for Global Affairs, the Under Secretary
for Arms Control and International Security, the Science Adviser to the
Bureau of Arms Control, and the Arms Control Nonproliferation Advisory
Board, will constitute a standing science policy group. Secondly, the
Department will establish a Science Directorate in the Bureau of Oceans
and International Environmental and Scientific Affairs (OES). The
Principal Deputy Assistant Secretary (PDAS) in OES will head the
reconstituted Science Directorate that will include three entities:
Science and Technology Cooperation (SCT), Space and Advanced Technology
(SAT), and Emerging Infectious Diseases (EID). The Department
recognizes, however, that other structural changes may need to be made
and expects the policy group, led by the Science and Technology
Adviser, to engage in periodic assessments of the Department's
organizational capacity to keep pace with S&T developments.
(5) The Department should establish an STH Advisory Committee to
the Secretary and take other steps to further expand the roster of
external experts actively engaged in advising the Department's
leadership on emerging STH-related issues.
The Senior Task Force on Strengthening Science at the State
Department carefully weighed the recommendation to establish an STH
Advisory Committee. While this may be an option for the future, the
Task Force consensus was to use other existing mechanisms to provide
frequent, expert advice to the Department in a manner that was equally
effective, more flexible, and less costly. Chief among these would be
hosting of frequent roundtables on specific issues of current and
emerging interest to policy-makers. This is already underway, with a
Roundtable on Carbon Sequestration/Sinks that was held on March 28, and
others on Invasive Species and Emerging Infectious Diseases being
planned for later in the year. Also, the Science and Technology Adviser
will work closely with the existing Arms Control and Nonproliferation
Advisory Board (ACNAB) and with the other individuals and processes
through which various entities within the Department obtain advice on
scientific affairs. Further, he or she will explore the possibility of
broadening the scope of scientific issues addressed by ACNAB and will
work with the science community to expand the roster of eternal experts
available to advise the Department.
(6) The Department should increase the resources available to meet
the essential STH-related requirements that are recommended in the NRC
report.
It will be possible--but only though difficult trade-offs involving
other priorities--to take some initial steps towards upgrading the
Department's capacity to deal with science-related issues within the
Department's current constricted resource base. But we need more than a
zero-sum game. A truly reinvigorated commitment to science and
technology will require new resources.
The Department has begun by asking embassies to carefully assess
STH-related needs and to factor them into Mission Program Plans,
beginning in March 2000, for Fiscal Year 2002. The Department will use
this input, together with its July 1999 survey and the Washington-level
Bureau Program Plans review this year, to explore longer-term staffing
and resource needs and prospects for: (1) increases in its operating
budget; (2) funding from the Foreign Operations appropriation; and (3)
partnerships with the science community, including USG technical
agencies, to develop additional resources. It will be a priority task
of the new Science and Technology Adviser, the Under Secretary for
Global Affairs, the Senior Adviser for Arms Control and International
Security, and the Principal Deputy Assistant Secretary in the Bureau of
Oceans and International Environmental and Scientific Affairs to help
identify the needs and join in making the case for the necessary
additional resources.
(7) The Department's leadership should expect all FSOs and other
officials of the Department to achieve a minimum level of STH literacy
and awareness relevant to foreign policy while stimulating attention to
STH throughout the Department by establishing promotion and career
incentives for successful service in STH-related positions.
While no one definition satisfies everyone, many in the Department
would agree that, at a minimum, ``scientific literacy'' for its
officers would include: (a) working knowledge of the parameters of
science-based issues with which the Department is involved, including
familiarity with the broad outlines of the science involved as well as
with the positions of the various stakeholders in the issue; (b)
knowledge of the basic elements of the American system of science and
the infrastructure of the science community and; (c) a grasp of the
science information resources that would point to the proper source of
more detailed scientific advice. The Department agrees that more needs
to be done to raise the profile and level of understanding of science-
based issues of all its officers, whether in the Foreign Service, Civil
Service or third-country nationals (FSNs) in overseas missions. It has
already taken some steps towards this goal. For example, environment,
science and technology (EST) modules are now in virtually every
economics and commercial course provided by the FSI, as well as in many
political and negotiations courses. Courses have also been offered to
FSNs both overseas and in Washington. Such modules are also included in
the Senior Seminar and in many area studies courses. Importantly, EST
and health issues are dealt with in many of the gaming and roundtable
events run by Special Programs for the benefit of State and other
agency officials with operational responsibilities. The use in FSI
programs of well-designed case studies on science-based issues has
increased dramatically in recent years. The Department will also work
with the science community on training, for example, on the development
of a multi-year program that would involve designing and implementing a
comprehensive S&T curriculum for the Foreign Service Institute.
The Department is encouraging the global Affairs (G) and Arms
Control and International Security (T) bureaus to have their senior
officials brief at the junior officers' A-100 course, and their Under
Secretaries to address the Deputy chief of Mission and Ambassadorial
courses. The PDAS in OES served as the mentor to a recent junior
officers' course.
Distance learning programs and strategic partnerships with area
universities to advance S&T training are under consideration, subject
to identifying the resources to support them.
The Department is actively exploring ways to develop and nurture
experience in global fields essential to its mission, such as S&T work.
PER is also directing promotion boards for the traditional Foreign
Service personnel cones (Political, Economic, Administrative, and
Consular) to give weight to S&T credentials and service. The
Department's Director General of Personnel has directed that the G and
T bureaus may put forward candidates for overseas positions designated
of particular interest to the work of the bureaus (e.g., science
counselors and officers). A pilot program will be established to
designate a limited number of ``linked'' assignments that will provide
for a two-year assignment to a domestic position in one of the G or T
bureaus followed by a specified onward assignment overseas.
The bureaus in the G and T areas will also be called upon to
develop their intranet websites, providing information on bureau
activities, position openings, and career opportunities for FSO and
Civil Service officers.
(8) The Secretary, the Administration, and Congress should ensure
that the Department's five-year information technology modernization
plan stays on course and is fully funded for its successful
implementation and also for necessary ongoing maintenance and upgrades.
The Department recognizes that it must embrace the best available
technical means to improve and promote communication and information
accessibility among State and the technical agencies. In that regard,
the Department will work to keep its five-year Information Technology
(IT) program on track, expand availability of unclassified workstations
with internet access, and establish easy E-mail connectivity for its
officers.
The Department is developing a pilot program to improve data links
to between its domestic and overseas personnel, and science centers of
excellence, and to facilitate interagency communication, coordination,
and sharing of expertise. This could lead to a broader approach that
would include the science community outside the government.
(9) The Department should assign at least 25 carefully selected
Science Counselors to embassies in countries where STH-related
activities are of major interest to the U.S. Government.
The Department of State has begun a review, which will be completed
with participation of the Science and Technology Adviser, to determine
how many Science Counselor positions are required and how they might be
funded. This will be done in partnership with the regional bureaus in
State, our missions overseas, and the technical agencies, in
consultation with the science community. A survey of overseas posts is
being conducted to solicit input into this process. A decision has
already been made to re-establish the Science Counselor position in New
Delhi, as a first outcome of this process, and to staff the slot with a
scientist from a USG technical agency.
(10) The Department, in consultation with other departments and
agencies, should transfer responsibilities for STH activities to other
appropriate and willing departments and agencies whenever there is not
a compelling reason for retaining responsibilities within the
Department.
The Department of State cannot transfer its statutorily mandated
responsibilities to develop and implement foreign policy. Likewise, it
cannot relinquish its core role to coordinate and oversee the
international S&T activities of the U.S. Government to ensure that they
are consistent with overall U.S. foreign policy objectives. It can and
must, however, carry out that responsibility efficiently and facilitate
the international activities of technical agencies. The Department
considers that the best way to do this is through a concerted effort,
with the help of affected departments and agencies, to secure the
needed resources to do the best possible job, rather than to transfer
responsibilities to other parties. The Department invites and welcomes
input and assistance from other agencies in this regard. It is long-
standing practice by the Department that U.S. delegations to
international, regional and bilateral meetings include representatives
from relevant technical agencies to participate fully in negotiations.
At the same time, however the Department acknowledges that some sharing
of administrative duties with concern agencies may be feasible, and is
prepared to investigate further what may be possible from a legal
standpoint.
(11) The Department, in consultation with the Office of Management
and Budget (OMB) and other departments and agencies, should streamline
the Circular 175 process, which calls for interagency reviews of
proposed international agreements and bilateral memoranda of
understanding.
Where applicable, the Department has adopted the ``short form'' C-
175 process, which does not require a legal memorandum, and is now
using it for 90% of international S&T agreements initiated by U.S.
technical agencies. Nevertheless, we acknowledge that the process can
be improved. The Department will work more aggressively to have U.S.
technical agencies involved as partners to keep required clearances to
a minimum, obtain them in a timely manner, and help us continue to
streamline the process. This is a prime example of an area where shared
administrative responsibility may be feasible.
(12) Increased use of specialists from other Departments and
agencies as rotating employees assigned to positions in Washington and
abroad, as participants in international negotiations, and as advisers
on topics in their areas of expertise.
The Department is currently using the skills of specialists in a
variety of scientific disciplines in short-term assignments in
Washington and abroad, and normally invites representatives from USG
technical agencies, occasionally along with non-USG representatives, to
participate in overseas negotiations. The Department recognizes the
value of increased use of such specialists, however, and is open to
greater involvement of outside specialists in these areas. The
Department will seek non-career assignments from other agencies to
address unmet needs for S&T qualified personnel. Selected Science
Counselor and EST (environment, science, and technology) positions will
be opened up to interagency science community experts with
international experience to compete for a Limited Foreign Service
Appointment (overseas) or a Limited Non-Career Appointment (domestic).
The Department will also seek to expand rotational assignments for
Foreign Service and Civil Service employees in State to technical
agencies within the USG.
Subject to a review of requirements and consultation with the
concerned ambassadors, the Department anticipates that it will be
seeking to establish Science Counselor positions at selected embassies.
The Department will explore opportunities to fill such positions with
candidates from technical agencies who have appropriate backgrounds,
experience and training. At least initially, with respect to newly
established positions, the technical agency may have to provide funding
to cover the costs of its candidate's assignment due to the State
Department's resource constraints. The Department has already decided
to re-establish the Science Counselor position in New Delhi and will be
considering qualified candidates from other agencies.
The Department will continue its long-standing practice of drawing
heavily on specialists from other departments and agencies to be
participants in international negotiations and advisers on topics in
their areas of expertise.
Beyond the interagency community, if suitable arrangements can be
made to cover the costs, the Department would like to increase the AAAS
Fellowship Program in order to allow for the assignment of Fellows to
bureaus other than OES and the Bureau of Democracy, Human Rights and
Labor. The Department would be open to considering fellowship programs
sponsored by other scientific organizations.
Question. With respect to Colombia, Gen. McCaffrey recently sent a
letter to Mr. Callahan indicating that insisting that cases involving
Military personnel could not be tried in civilian courts because the
Colombia Constitution would not permit it. This is not only inaccurate,
but certainly contradicts what we have been trying to achieve in
Colombia, that is a judicial system that works. What is the basis of
his position? Does the Administration support it? What do you suggest
as a method of achieving necessary changes in Colombia?
Answer. We remain committed, as a matter of highest priority, to
working with the Government of Colombia in order to improve the human
rights environment. Colombia, like the United States, has a
constitutional form of government that separates power among the three
branches of government. We respect and encourage the independence of
the Colombian judicial system as a matter of course. However, we are
not in a position to interpret Colombian law nor are we in a position
to dictate which courts must try armed services members for human
rights abuses.
My understanding is that when there is a question as to which
judiciary has jurisdiction in a particular case, the Superior Judicial
Council (CSJ) makes that decision. The Superior Judicial Council is an
independent administrative judicial body that is not/not subordinate to
the Executive branch. In some instances, the CSJ has turned a case over
to the military judiciary for prosecution.
We fully support the Constitutional Court decision of 1997 that all
cases of alleged human rights abuses committed by members of the
security forces should be tried in the civilian judiciary and believe
that these jurisdictional issues should be decided in accordance with
Colombian law.
As we noted in the Department's Human Rights Report on Colombia,
during 1999, the military judiciary demonstrated an increased
willingness to turn cases involving security force members accused of
serious human rights violations over to the civilian judiciary as
required by the 1997 Constitutional Court ruling.
We remain concerned about impunity within the military judiciary as
well as the civilian judiciary in Colombia. That is why a key component
of the Clinton Administration's proposed assistance package for
Colombia is for creating and training special units of prosecutors and
judicial police to investigate human rights cases involving GOC
officials and training public defenders and judges. We also envision
providing assistance to the Ministry of Defense for implementation of
military penal reform.
Question. With respect to Paramilitary activity, Plan Colombia
seems to have been prepared in a vacuum in the sense that it completely
ignores the continuing escalation of violence and drug trafficking by
these groups. Why does the plan ignore this aspect of Colombia's
problems and what kind of assurances should Congress expect on the
cessation of contacts between Colombian military and paramilitary
forces?
Answer. Plan Colombia, and our proposed assistance package for it,
is aimed at enhancing the Colombian government's ability to combat
narcotrafficking and those who protect it. This is the case whether the
groups providing protection are guerrillas, paramilitaries, or common
criminals. Southern Colombia is the focus of our initial efforts
because it is the location of the largest coca growing areas.
President Pastrana has made a firm commitment to improving the
protection of human rights in Colombia. He has demonstrated his
Government's commitment to human rights by the dismissal of four
generals and numerous mid-level officers and NCOs (non-commissioned
officers) for collaboration with paramilitaries or for failure to
confront them aggressively.
On our end, U.S. assistance to Colombian military and police forces
is provided strictly in accordance with Section 564 of the FY 2000
Foreign Operations Appropriations Act and with Section 8098 of FY 2000
Department of Defense Appropriations Act. No assistance is provided to
any unit of the security forces for which the USG has credible evidence
of commission of gross violations of human rights unless the Secretary
is able to certify that the Government of Colombia has taken effective
measures to bring those responsible to justice. We are firmly committed
to this in spirit and in practice, and have a rigorous process in place
to screen those units being considered for assistance.
We remain committed, as a matter of highest priority, to working
with the Government of Colombia to improve the human rights
environment.
HUMAN RIGHTS--COLOMBIA
Question 3. Gen. McCaffrey indicated in writing that working
through the UN Drug Control Program in Colombia was not wise because
they ``have under consideration the possibility of funding alternative
development projects in the zone temporarily under the control of the
FARC.'' UNDCP has ongoing programs in Bolivia, Peru and Colombia, and
is well respected in the region. I wonder what your position is on this
matter, and also would ask how you anticipate that alternative
development programs in southern Colombia planned in areas now
controlled by the FARC can work.
Answer. I have a great respect for the United Nations Drug Control
Program and the work that it does. In fact the United States is one of
its key supporters and we currently work with them on a number of other
projects around the world. However, we will not contribute to UNDCP's
projects in FARC-controlled areas in Colombia. In part, this is because
the FARC is officially designated as a terrorist organization and we
will not participate in projects that may benefit from it. We are also
concerned for the safety of assistance workers in the area. On more
than one occasion, the FARC has kidnapped and/or killed human rights
workers and missionaries.
KOSOVO
Question. The Committee-reported Supplemental cuts the $92 million
requested for Kosovo development because approving those funds would
cause the U.S. contribution to exceed the 15% share that was agreed to
for this effort. It is also an unfortunate fact that the European
country pledges of assistance have largely not materialized into viable
programs on the ground in Kosovo. The U.S. has also had to accelerate
its share of UN funding because the Europeans were dragging their feet.
What have we done to light a fire under our European allies, and what
is your response to the Committee's recommendations on the
Supplemental.
Answer. We have requested an additional $92.8 million in emergency
supplemental funds for Kosovo this year, and ask Congress to
appropriate these funds, because we believe the needs--for a stronger
police force, for funds to restart the Kosovo economy, and for building
a free media and functioning democracy--are important for the mission
to succeed.
Peace has not come as quickly and easily to post-conflict Kosovo as
everyone in the international community had hoped, and the need to take
the pressure off KFOR by introducing and then strengthening an armed
international police force in Kosovo left many of the originally
planned economic and political reforms severely underfunded.
Furthermore, the Europeans are sharing the burden and contributing
their fair share in Kosovo
We disagree that ``European country pledges of assistance have
largely not materialized''. For example, our European partners have
already disbursed $119.2 million, tantamount to more than 86% of their
pledge, to support UNMIK's civil administration.
Continuous action of the Administration has helped achieve this
good performance. Repeated demarches and constant pressure from the
President on down have resulted in accelerating EC disbursements of
budget support, which reached euros 30 million in March alone.
Our European partners give the appearance of disbursing their
pledges more slowly than we do for two reasons: first, most European
states and institutions, including the EC, have fiscal years that start
in January. One quarter into the U.S. fiscal year 2000, most European
donors had just begun processing their own expenditures.
Second, some European money has been slower to reach Kosovo because
European donors are undertaking most of the long-term reconstruction
assistance, while the U.S. has responsibility for many short-term tasks
of peace implementation. Reconstruction projects typically have a long
implementation period and a correspondingly more measured disbursement
rate. This division of labor became necessary when the FY 2000 FOAA
prohibited the U.S. from undertaking large-scale physical
infrastructure and reconstruction in Kosovo. In effect the legislation,
in part, mandated the discrepancy in spending rates.
While Congress may find the relative contributions of donors to be
a useful guideline, it wisely avoided placing the constraint on
anything more than pledges at a single donors' conference. The
Administration agrees that our aid should be relatively small but
strongly opposes a specific cap such as the proposed 15 percent ceiling
on assistance to the Balkans.
Such a cap is arbitrary and quickly becomes impractical if adhered
to strictly. The level of 15 percent is based on a perception that the
U.S. funded the lion's share of the war, therefore the Europeans should
fund the lion's share of the peace. But ``15 percent'' was chosen
before actual relative contributions were clearly understood. We now
know that our allies contributed 42 percent of costs of the NATO air
campaign. They now contribute over 60 percent of the costs of KFOR. The
principle of 15% reciprocity can not even be justified by the relative
proportion of European assistance during recent crises in the Western
Hemisphere. For example, Europeans paid substantially more than 15
percent of all aid to Central America and the Caribbean after
Hurricanes Mitch and George (61%), support for the Guatemalan peace
program (34%), and El Salvador (33%).
We need the flexibility to solve problems when they arise. Delay of
funding until next fiscal year will sap momentum and credibility, as
well as open up avenues for Belgrade to regain the political
initiative. We put at risk the people of Kosovo and the success of the
mission if we follow arbitrary percentage rules on contributions. As
recent outbreaks of violence in Mitrovica demonstrate, further delay in
bringing order and viable economic opportunities to the province will
expose U.S. soldiers to avoidable risks.
The U.S. joined our partners in Kosovo to help bring stability to
the region. The administration believes that achieving this goal,
rather than the relative contribution of donors, should be the
principal guideline in determining U.S. assistance levels.
DEMOCRATIC REPUBLIC OF THE CONGO
Question. Can you elaborate on how the newly formed peacekeeping
operation for the Democratic Republic of Congo will work? Do we have
any clearer understanding of how and whether the signatories to the
Lusaka Agreement will live up to their promises on providing security,
access, and cooperation with peacekeeping forces?
Answer. The UN plan provides for the phased implementation of the
peacekeeping operation (MONUC) based on the continued adherence of the
signatory parties to the Lusaka Agreement. The first phase, a UN
military liaison operation, is completed. As the phase II military
observer mission deploys, it will monitor the cease-fire and and
disengagement of forces at the front lines of the conflict. During
Phase II, MONUC would also develop plans for the implementation of a
comprehensive settlement under an eventual third and final phase of
peacekeeping. UN military officers will operate in close cooperation
with their counterparts of the Joint Military Commission (JMC) at MONUC
headquarters and at command posts in the field.
The Lusaka signatories have indicated they are anxious to resolve
the conflict in the DRC without the resumption of full scale
hostilities. They have publicly reaffirmed their commitment to the
Lusaka agreement on numerous occasions, most recently at the April 8
meeting of the Joint Political Committee and Joint Military Commission
in Kampala. The signatories have agreed to provide security guarantees
and access to MONUC personnel. Congolese President Laurent Kabila has
said he will sign a status of forces agreement with the UN.
On April 8, at a meeting in Kampala, the signatories implemented a
new disengagement plan which calls for a new cease-fire agreement and
for all forces to pull back 15 kilometers from their front lines,
creating a 30-kilometer buffer zone between belligerents.
We continue to call upon all the Lusaka signatories to abide by
their commitments. Ambassador Holbrooke will be leading a delegation of
UN Security Council Permanent Representatives to the region in May.
Phase II UN peacekeepers cannot be deployed unless the UN Secretary
General determines that conditions on the ground e for adequate
security and cooperation between the belligerents and UN peacekeepers
exist.
EAST TIMOR/INDONESIA--MILITIAS AND REFUGEES
Question. The most recent reports from East Timor indicate
continued militia interference in reuniting families on the border
areas with West Timor, continued harassment and attacks on
international aid workers. The Indonesia government meanwhile has
imposed a March 31 deadline for refugees in West Timor to decide
whether to return to the East. I am concerned as I indicated in my open
statement that the U.S. has shifted its focus to the internal problems
of Indonesia, and is largely ignoring the continuing problems in East
Timor. What have we done to indicate to the Indonesians the importance
of the safe return of refugees to the East, and the cessation of
harassment and attacks by militia forces?
Answer. The U.S. is focused on helping with the democratic reform
process underway after decades of autocracy in Indonesia, but we are no
less attentive to the needs of East Timor as it begins its historic
transition under UN auspices to a future as an independent nation. A
key aspect of our concern is the fate of the 80-100 thousand refugees,
many of them children, who are still living in West Timor. Recent
reports of greater unimpeded access by humanitarian workers to the
refugees and of a quickened pace of returnees are encouraging. However,
many of the refugees who would ultimately like to return home are not
going back to East Timor because of misinformation or concern about the
situation that awaits them. Militia intimidation remains a problem in
some areas. Those who do not want to go home have not been sufficiently
encouraged or enabled by the Indonesian government (GOI) to resettle
elsewhere in Indonesia.
President Wahid has ordered his generals to resolve the militia
problem by disarming and disbanding them, and to facilitate the
repatriation or resettlement of refugees. The GOI in fact lifted its
March 31 deadline to cut off humanitarian assistance to the camps.
However, the GOI has not done enough to resolve the refugee situation
swiftly.
The United States has repeatedly pressed the GOI at the highest
levels to take decisive action on the refugee problem, to live up to
its financial obligations for the care and maintenance and
repatriation/relocation of the refugees, and to address the root
causes--including militias and support by elements of the Indonesian
military (TNI) for them--that allow the camps to linger in existence.
Our concern about the refugees was a key element behind President
Clinton's September 1999 suspension of military-military relations with
Indonesia. Legislation (section 589 of the FY 2000 Foreign Operations
Appropriations Act as enacted in the Consolidated Appropriations Act
for FY 2000 (PL 106-113--the ``Leahy Amendment'') specifically requires
a determination that the GOI, as one condition for resumption of E-IMET
and FMF for Indonesia, allows displaced persons and refugees to return
home to East Timor, including providing safe passage. We have used this
bilateral leverage to keep the pressure on the GOI to follow through on
its stated good intentions. We have mobilized international demarches
to urge Indonesian fulfillment of all its responsibilities toward the
refugees. On April 27, Ambassador Holbrooke, the U.S. Permanent
Representative to the United Nations, strongly emphasized the same
points in an open briefing on East Timor as part of our efforts to
ensure that Indonesia fashions a good relationship with East Timor and
its people.
INDONESIA--IMPACT OF U.S. ASSISTANCE
Question. The large increase in aid to Indonesia is supposed to
address police training, bank fraud and corruption, and democracy
building. How do you expect these programs to produce real change in a
country the size of Indonesia, given its past history of cronyism,
repressive governments and violence?
Answer. We believe the new democratic government has shown a
commitment to making cronyism and repression things of the past. The
Wahid administration faces many challenges and will need to rely on the
resources and experience of the international community. We can have an
impact because the will is there.
The challenge is indeed daunting, but we are hardly alone in
tackling it. Our work is designed to complement the much larger
collective efforts of the IMF, the World Bank, UNDP and other bilateral
donors, all of which have recognized the critical importance of doing
whatever we can to ensure the success of Indonesia's democratic
transition. Our assistance programs will target key sectors and
subsectors vital to this outcome.
U.S. programs underway or under consideration include technical
assistance to the newly empowered parliament, decentralization, advice
to the Attorney General's office on human rights prosecutions, police
and judicial reform programs, training investigators of financial
crimes and money laundering, civil society development, media
development, banking regulation and supervision improvement, and
environmental initiatives. We believe that the U.S. is uniquely poised
among major donors, by dint of technical competence and commitment, to
deliver assistance in these areas.
HUMAN RIGHTS ISSUES
Question. 1. Can you explain the basis of the US decision to allow
the release of the Peruvian diplomat despite the Justice Department's
position that he should be held and prosecuted? My understanding is
this individual did not hold a diplomatic passport giving him immunity.
Would you supply a written response for the record?
Answer. We share the frustration of those who would have preferred
to see Anderson prosecuted under U.S. law in light of the serious
allegations of torture, a crime for which Mr. Anderson was convicted in
Peru, although his conviction was overturned. We condemn torture,
wherever it may occur.
The Government of Peru sent Mr. Anderson to the United States as a
member of a delegation to the OAS Inter-American Human Rights
Commission, an organ of the OAS, to testify on behalf of Peru at a
hearing. He was given a G-2 visa as a temporary representative of a
member country to an international organization.
Given the circumstances of his travel and the provisions of the
1975 agreement between the United States and the OAS on privileges and
immunities, which accords diplomatic immunity to representatives and
advisers of member states to the OAS, we determined that Mr. Anderson
was entitled to immunity and thus we had to allow him to depart. The
type of passport Mr. Anderson held was irrelevant to the issue of
diplomatic immunity in this case.
It is very important that, as a host nation to international
organizations such as the UN and OAS, we honor our obligations in
international agreements under which they operate. Diplomatic immunity
is vital to the safety and security of thousands of American officials
around the globe. This principle must be upheld, despite our abhorrence
for Mr. Anderson's alleged crime of torture and our profound dismay
that the Government of Peru chose to present such a witness before the
Inter-American Human Rights Commission.
TURKEY ATTACK HELO SALE
Question. What is your position with respect to whether Turkey has
met the human rights benchmarks you laid out in January of 1998 as
being necessary before any export license could be issued for the sale
of U.S. helicopters?
Answer. Turkey has not yet decided which model of attack helicopter
it wishes to buy. One U.S. manufacturer and two non-U.S. companies
remain in the running.
If Turkey chooses a U.S. manufacturer, our export license decision
will be based on the full range of considerations required by law and
our arms export control policy, including a thorough review and
evaluation of Turkey's progress on improving human rights.
Since the Government of Turkey has not made a choice in the attack
helicopter competition, we cannot comment on what we might or might not
decide.
MOZAMBIQUE/SOUTHERN AFRICA DISASTERS
Question. The Administration is in the process of a needs
assessment of the damage caused by recent flooding in Mozambique and
surrounding countries. Our chairman has pledged to work with us in
responding to those needs in the supplemental. When will your needs
assessment be translated into a budget request to the Congress?
Answer. The supplement budget request was sent to the Congress by
the President on April 21. The request levels were based on the needs
assessments done by our USAID missions in the region.
MOZAMBIQUE/SOUTHERN AFRICA DISASTERS
Question. Can you give us an indication of how the U.S. will
respond to the needs, which are vast?
Answer. The U.S. in responding by requesting a supplemental in the
amount of $200 million. In the supplemental request, $183 million is
requested for Economic Support Funds (ESF), $10 million for
International Disaster Assistance and $7 million for USAID operating
expenses.
The $183 million in ESF would be primarily used in Mozambique where
the rehabilitation and rebuilding of roads, bridges, railroads has been
identified as a priority. In addition, assistance to the agriculture
sector, water and sanitation systems, child health and education have
been identified as areas in need of urgent assistance. Funding will
also be provided to South Africa, Madagascar, Zambia, Botswana and
Zimbabwe, who were also affected by the recent flooding. In response to
the disaster, funds have been reprogrammed from existing programs.
The UN and the Government of Mozambique will host an International
Donor Conference May 3 and 4 in Rome to seek assistance. AID
Administrator Brady Anderson and AID Assistant Secretary for Africa,
Vivian Derryck will represent the United States.
MOZAMBIQUE/SOUTHERN AFRICA DISASTERS
Question. The Administration is in the process of a needs
assessment of the damage caused by recent flooding in Mozambique and
surrounding countries. Our chairman has pledged to work with us in
responding to those needs in the supplemental. When will your needs
assessment be translated into a budget request to the Congress?
Answer. The supplemental budget request was sent to the Congress by
the President on April 21. The request levels were based on the needs
assessments done by our USAID missions in the region.
EXPANDED THREAT REDUCTION INITIATIVE
Question. It is my understanding that State's current intention is
to spend $175 million of $835 million appropriated for the New
Independent States on Expanded Threat Reduction programs in FY2000.
While many of us stressed the need for these funds last year, it was
not our intention that other important development programs be cut as a
result of increases for ETR programs. Given that ETR programs received
about $50 million in 1999, a more appropriate number for FY2000 is in
the $135 million range. This would stop the 33% cuts now slated for our
development programs in Russia, Ukraine, Moldova, and other republics.
This is a question of whether we cut ongoing, successful programs in
health, environment and microenterprise in order to more than double
the ETR programs. Do you agree that $135 million is enough for ETR
programs in 2000?
Answer. Threat reduction remains one of the Administration's top
assistance priorities. Congress appropriated substantially less in
Fiscal Year 2000 for State programs in the New Independent States (NIS)
than the President requested. This forced us to make some tough trade-
offs between ETRI and traditional economic, technical, and democracy
assistance programs. You and others in Congress have expressed your
concerns about our allocation to the ETRI programs. We are discussing
these issues and will consult closely with you and your colleagues as
we resolve this question. We all agree that this issue must be resolved
quickly since continued delay is already having severe, negative
effects on several of these important, non-proliferation programs. We
also would like to point out that the ETRI programs work
synergistically, not competitively, with our traditional health,
environment and business development programs. We would be happy to
provide more detailed information on this.
NIS
Question. Health indicators for Russia, Ukraine and most other
Independent States continue to drop. Overall nutrition is worsening,
access to family planning is largely not available, and many children
suffer even from iodine deficiency because of the lack of iodized salt.
Why is it that our aid programs continue to provide minimal funding for
these needs, despite the fact that this Committee has consistently
emphasized them?
Answer. We, too, wish that we could do more to ameliorate the
deteriorating health situation in Russia, Ukraine, and elsewhere in the
NIS. As the current tuberculosis and HIV/AIDS situations in Russia
illustrate, the needs within the sector are huge and the challenges
complex. We are proud of USAID's accomplishments in such areas as
women's and infant health, health partnerships and controlling a
diphtheria epidemic. Moreover, for FY2000 USAID has committed $2
million to be used exclusively to support the Kiwanis-UNICEF campaign
worldwide to eliminate iodine deficiency disease (IDD); in fact, IDD
programs will be introduced in Georgia and Armenia this year.
Despite a sharp decline from FY1999 to FY2000 in the level of
USAID's funding for programs in Russia and other Independent States,
the Agency has moved to protect its health budget. I'm happy to report
that in the case of Russia the percentage of USAID assistance to the
health sector has more than tripled in the last three years, with the
health sector making up 16.5% of the USAID budget in FY2000 (and only
5% in FY1997).
______
QUESTIONS FOR THE RECORD SUBMITTED BY MS. LOWREY
Question. Can we anticipate Israel's acceptance into WEOG
this year? What is currently holding up Israel's membership,
and how can we help move the process along?
Answer. Israel's exclusion from the UN's regional group
structure is unfair and inconsistent with the principle of
sovereign equality of member states enshrined in the UN
Charter. Correcting this injustice remains a priority for the
Administration. Participation in the regional group structure
is a critical element in any member's effective participation
in United Nations activities. Administration officials,
including the President and Vice President, have repeatedly
engaged the other members of WEOG to bring this issue to
closure, as have I.
Enormous progress has been made and was reported in detail
to the Congress earlier this year in the annual report on this
issue. We have secured EU agreement on Israeli participation in
the WEOG at the expert and political director levels.
Dick Holbrooke is now engaged in discussions in New York
with the other WEOG members to finalize the implementing
details that will allow Israel to assume its rightful place as
a participant in the regional group structure. Throughout these
efforts, we have coordinated closely with appropriate Israeli
authorities and will continue to do so. We hope to bring this
matter to a successful conclusion within the next several
months and will keep the Congress informed of our progress.
Question. I am extremely concerned about many aspects of the
current situation in Russia. Pervasive corruption, crime, and capital
flight remain problems, and there is evidence that the government has
been cracking down on press freedoms as well. I am also troubled by the
rampant anti-Semitism in Russia, which has contributed to the sharp
rise in immigration levels to Israel from the Former Soviet Union. I
want to thank you for the administration's continued support for the
program to resettle these Jewish refugees in Israel, and am confident
that the FYOI request for $60 million will ensure the continued success
of this program. Can you discuss how our relationship with Russia has
evolved since former President Yeltsin stepped down? What are your
impressions of Acting President Putin's commitment to real reform in
Russia, and to maintaining a commitment to democracy, the rule of law,
and cracking down on anti-Semitic violence?
Answer. We are deeply troubled by anti-Semitic incidents and
statements in Russia, including the recent media coverage in the final
days of the presidential election campaign attacking supporters of one
candidate.
We have raised this issue many times, in both public and private
meetings with the Russian leadership. Our Ambassador at Large for
International Religious Freedom, Robert Seiple, testified before the
Commission on Security and Cooperation in Europe, on February 19, 2000,
that we will continue to use every opportunity to confront the
Government of Russia when we find failures of their resolve to promote
religious freedom and to fight anti-Semitism. Most recently, the State
Department hosted a ``Roundtable on Religious Freedom in Russia'' on
April 15 to discuss the current status of religious freedom and further
actions to promote it in Russia.
The Russian government has made tough statements condemning anti-
Semitism and other expressions of ethnic or religious hatred. Under
instructions from President elect Putin, Ambassador Ushakov sent a
letter March 15 to Senator Gordon Smith saying the Russian leadership
makes every effort to counteract anti-Semitism and xenophobia. In
addition, we have received a copy of the Russian government plan to
promote religious and ethnic tolerance. It is important that the
Russian leadership continue to take a firm public stand on the
importance of tolerance.
On the broader question of the Russian Government's adherence to
democratic principles and the rule of law, we note that Putin has made
a number of statements reiterating his commitment to democracy and rule
of law, although the government's handling of the Babitsky case has
been deeply troubling.
We will continue to monitor closely how the Russian government's
actions adhere to the commitments of its leadership. The key for us
lies in implementation.
Question. The years since Iranian President Khatami took office
have been characterized by a startling lack of progress in improving
relations between our two countries. Despite Iran's continued support
for terrorist organizations like Hamas, the United States has taken a
series of unilateral steps over the last few years aimed at beginning
the process of restoring relations with Tehran. It is troubling then,
that our actions, including removing Iran from the list of drug
producing and trafficking countries and waiving sanctions on an energy
development project in Iran have gone unanswered. Have the internal
splits between the hardline clerics and President Khatami and his
followers resulted in any signs that Iran is changing its foreign
policy toward the United States? Can we expect that recent gains by
``reformers'' in Iran's parliamentary elections will contribute to the
process of restoring relations?
Answer. While we have been encouraged by the real progress Iran has
made in the past three years domestically, we have not yet seen that
translated into significant changes in the foreign policy issues, such
as terrorism and the pursuit of WMD and missile technology, that are of
greatest international concern. We have offered to engage Iran in a
direct dialogue on these and other issues. Until Iran is prepared to
address these issues constructively, our principal sanctions will
remain in place.
Question. Iran has charged thirteen Iranian Jews with spying for
the United States and Israel, a charge that carries the death penalty.
It is my understanding that this trial will take place next month, and
I'd like you to comment on the most recent developments with this case.
Answer. On May 1, judicial authorities in Iran are expected to
resume the trial of thirteen Jews arrested in February and March, 1999
and accused of spying for Israel. A brief hearing was held on April 13,
at which the accused met their court-appointed defense counsel for the
first time. One-day trials are not uncommon in Iran's revolutionary
courts, but this case could possibly continue for months.
The Iranian authorities have deprived the thirteen Jews of every
means of defense. Confessions were coerced from four of the defendants,
but the confessions have not been made public. Ten of the Jews have
been held without charge and denied access to their own legal counsel
for over a year. The presiding judge in the trial--who also acts as the
prosecutor and jury in this closed trial--has appointed attorneys of
his own choosing for ten of the defendants, thereby violating their
right under Iran's constitution to select their own legal
representation. We believe that he recently compelled the other three
defendants to accept his court-appointed counsel as well.
This trial has become a political weapon to intimidate Iran's small
Jewish community and its other minorities. In a comparable case, Iran's
courts recently handed down a death sentence against a group of Bahais.
The politicization of the case against the Jews could result in a
similar outcome. I have been engaged in an intense diplomatic effort to
ensure that such a travesty of justice does not repeat itself in this
case.
IRANIAN WEAPONS OF MASS DESTRUCTION
Question. I have expressed to you before my continued concern with
Iran's efforts to develop advanced missiles such as the Shahab-3 which
is designed to threaten U.S. forces and allies in the Middle East, as
well as nuclear capabilities. DCI George Tenet recognized the threat
that Iran poses in his testimony before the Senate Armed Services
Committee last week, when he stated that regardless of the outcome of
the elections in Iran, its ``foreign policy next year will still
exhibit considerable hostility to U.S. interests.'' Can you comment on
Iran's progress in the missile nuclear arenas? Can you assess for us
the current performance of the Russian government on limiting
technology to Iran? (Rep. Lowey)
Answer. I would certainly agree that Iran's efforts to develop WMD
and ballistic missile delivery capabilities pose a threat to the region
and to our nonproliferation interests. As I made clear in my recent
public statements on improving relations with Iran, its behavior as a
proliferator and our concern about its actions in this regard have not
changed. Iran maintains active nuclear weapons and long-range missile
programs that seek both to develop indigenous capabilities and to
acquire technology, material, and knowledge from abroad. As a result of
these and other Iranian policies, the U.S. implemented a comprehensive
trade embargo on Iran and has urged other supplier states to refrain
from assisting Iran's procurement efforts.
We believe Iran is engaged in efforts to achieve an indigenous WMD/
capable missile capability. We continue to work extensively with
members of the Missile Technology Control Regime and others to stop the
proliferation of missile technology and equipment to Iran.
Iran's nuclear weapons program remains heavily dependent on foreign
suppliers. Working closely with supplier states and nonproliferation
regimes, our efforts to slow and frustrate Iran's acquisition of
important facilities and capabilities have met with some success. Most
supplier states have adopted policies ending nuclear cooperation with
Iran. However, Iran continues to receive nuclear assistance from
Russian entities, including assistance that goes beyond the scope of
the Bushehr nuclear power reactor.
The United States and Russia have developed an action plan to
address our most pressing concerns. While Russia has established the
legal basis for stronger export controls and has stopped several
activities of concern, enforcement has been spotty and inconsistent and
we are not satisfied.
We continue to press the Russian Government to improve its controls
and we will continue the assist Russia in doing so. Under the programs
funded through the Expanded Threat Reduction Initiative (ETRI), we will
provide significantly increased export control training and equipment
assistance for Russia to strengthen export controls at the government
and enterprise (company) level.
The United States has taken unilateral action against eleven
Russian aerospace and nuclear entities because of their cooperation
with Iran's proliferation programs. On April 24, we announced our
intention to impose administrative and trade penalties against a
Russian individual for that person's material contributions to Iran's
missile program. At the same time, we also announced our intention to
lift penalties imposed in 1998 on the Russian entities INOR Scientific
Center and Polyus Scientific Production Association. We are satisfied
that INOR and Polyus have ceased cooperation with Iran and have taken
the necessary remedial actions to warrant lifting of penalties. Our
lifting of these penalties reinforces the message that there are
concrete benefits for nonproliferation cooperation, but this is only
the beginning of what must be a sustained effort by the Russian
Government to ensure all assistance to Iran in WMD and missiles is cut.
Nevertheless, we have made it clear that, if necessary, we are prepared
to impose similar penalties against additional Russian entities that
engage in proliferation activity.
When President Clinton signed the Iran Nonproliferation Act, he
reaffirmed that this issue remains at the top of our agenda with Russia
as well as with other countries that may consider providing such
assistance to Iran.
EAST TIMOR--FY 2001 ESF REQUEST
Question. I was extremely upset that, despite indications that last
year's independence referendum would be accompanied by violence, the
United States took few proactive measures to help ensure peace and
security in East Timor. As the most active supporter of democracy in
the world, the United States has a responsibility now to follow through
in its support for East Timor--to see it through this difficult time
and help ensure it receives the resources it needs to become a stable,
democratically. USAID is currently doing excellent work in East Timor,
supporting development in the NGO community and initiating a much-
needed jobs program. But there is still a lot to be done--including
building an entire infrastructure and all government institutions from
the ground up. I believe the FY01 request for East Timor, $10 million,
is not enough to ensure that the United States has a strong, positive
impact on East Timor's development efforts. Could you comment briefly
on the success of the ongoing efforts to rebuild and develop East
Timor, and how the United States can most effectively contribute to
those efforts?
Answer. The United States fully supported the UN process that led
to the August 1999 referendum in East Timor. We sent U.S. civilian
police (CIVPOL) to join the UNAMET operation which prepared for the
ballot and pressed ahead with holding it in spite of difficulties. When
militia violence erupted in the wake of the overwhelming vote by East
Timorese for independence, we provided strategic logistical, lift, and
communications support to the Australian-led INTERFET multinational
force which intervened, with Indonesia's permission, to restore order.
With East Timor's formal separation from Indonesia and UNTAET now in
place, we remain strongly committed to East Timor.
We agree that USAID is doing excellent work in East Timor. The U.S.
is spending about $20 million in FY 2000 Economic Support funds (ESF)
to expand existing USAID and USAID Office of Transition Initiatives
(OTI) bilateral projects in East Timor. USAID's $8.1 million project to
assist coffee farmers is having a particularly rapid and positive
impact on the East Timorese economy. Coffee production is expected to
be the primary source of employment and economic activity within East
Timor over the long term.
As UNTAET and the World Bank operations gear up, USAID and OTI are
also providing quick employment in community projects to East Timorese
to help stabilize urban and village populations by increasing their
purchasing power, stimulating economic activity, and reducing unrest.
The objective of OTI projects (funded through about $10 million in ESF
for programs and $1.4 million more in International Disaster Assistance
funds for administrative support) is to encourage the growth and
development of local civil society and other institutions that will be
critical to democratic governance in East Timor.
Other U.S. programs funded through FY 2000 ESF are addressing East
Timor's urgent need for assistance on forensics and human rights
training. We are spending about $1.4 million in FY 2000 ESF in helping
East Timorese responsible for documenting past human rights abuses on
the ground in East Timor (both UNTAET officials and NGO workers) to
gain the specialized training needed to conduct such investigations, to
achieve access to forensic expertise, and to provide necessary
specialized equipment. In addition, we expect to expend abut $1 million
in FY 2000 ESF for judicial training, justice sector institution
building and promotion of the rule of law in East Timor, another
priority need.
In FY 2000, we are also using ESF monies to support the
multilateral effort in East Timor with contributions to the UN
Transitional Administration in East Timor (UNTAET) Trust Fund ($4
million) and to the World Bank Reconstruction Trust Fund ($500,000).
The UNTAET Trust Fund is vital to ensuring that basic public services
are fully restored in East Timor and that East Timorese develop the
skills to provide them on a continuous basis. Most of the UNTAET Trust
fund will be used to benefit East Timorese immediately and directly by
paying salaries for public workers, most of them teachers or health
care workers. Our small ($500,000) contribution to the World Bank Trust
Fund is to support the Bank's work as the main coordinating body for
the multilateral effort to rebuild East Timor into a self-sustaining
economy over the long-term. The international community has also geared
the amount of its spending in East Timor to the emerging country's
capacity to absorb new assistance.
Thus, U.S. ESF assistance (FY 2000 $25 million ESF) for East
Timor--mainly but not exclusively used to support bilateral programs--
has been substantial and quickly deployed at the beginning of the
transition. After the devastation there in 1999, and given the
challenges inherent in transforming a poor, small territory into a
democratic, economically active, independent nation over 2-3 year
transition, it has been important to get off to a fast start to meet
the huge needs of the East Timorese people. The U.S., which had
existing assistance programs in place, was in the best position to
ensure this happened.
Ultimately, however, it is the UN (UNTAET) and World Bank--with
strong support from the U.S. and many other donors--which are leading
the international effort of reconstruction, capacity-building, and
development in East Timor. Therefore, looking ahead to next year, the
Administration has requested $10 million in FY 2001 ESF, $1.5 million
in international development assistance funds, and $18 million in
voluntary PKO funds. USAID's role this year has been primarily to
provide a bridge for the East Timor transition until World Bank and
UNTAET money comes fully on line. Assuming that this will happen
shortly, the Administration's FY 2001 $10 million ESF request should be
sufficient to allow the U.S. to continue to make a strong and valuable
contribution in East Timor, despite our ESF levels being down from the
FY 2000 level of $25 million. Precise details of our FY 2001 projects
are not yet determined but will in many cases involve continued support
for programs already existing, as described above.
In addition to ESF support for East Timor, the FY 2001 request for
$18 million in voluntary PKO funds would allow us to maintain a U.S.
civilian police presence (by covering U.S. bilateral costs for our
contingent) as part of UNTAET's 1,640-strong CIVPOL force, which is
exercising responsibility for law enforcement during the transition
period. Those PKO funds would also enable the U.S. to assist UNTAET in
establishing a local East Timorese Police Service, and to contribute to
other critical or bilateral or multilateral activities helping with
East Timor's transition to independence. The United States also pays
assessed costs for the UNTAET peacekeeping mission, estimated for FY
2000 and FY 2001 at approximately $186 million per year. These
assessments are paid from the Contributions for International
Peacekeeping Activities (CIPA) account, or non-voluntary PKO funds.
______
QUESTIONS FOR THE RECORD SUBMITTED BY MR. JACKSON
EMERGENCY SUPPLEMENTAL--COLOMBIA
Question 1. Why can't the more controversial pieces such as the
``Push into Southern Colombia'' be considered in the regular
appropriations process so that members can discuss the implications
fully? Shouldn't Congress exercise very close oversight of this
package?
Answer. Colombia faces many problems. The strength of Plan Colombia
is that it recognizes that those problems are interconnected and
addresses them comprehensively rather than individually. The narcotics
industry is one of the principal threats to Colombia and our support of
counternarcotics efforts in southern Colombia is essential to that
portion of Plan Colombia. Unwarranted delay of that assistance would
undermine the plan's counternarcotics efforts and, by extension,
greatly weaken the plan as a whole.
Congress should carefully consider this and every other piece of
the assistance package. That is the legal and ethical duty of Congress,
and is why these hearings are so important.
Question. Are you aware that there are indigenous people in
southern Colombia? We understand that in the two regions (Putumayo and
Caqueta), there are more than 100 indigenous villages. What is going to
happen to them? Surely you aren't going to relocate them? And, given
that your plan anticipates displacing people, how many people do you
plan on displacing in this ``push''?
Answer. There is a possibility of increased numbers of Internally
Displaced Persons (IDPs) resulting from the increased counterdrug
activity within Colombia. It is difficult to predict what the numbers
will be, but for planning purposes, we are using 4,000 families for
CY2000. In CY2001 another 3,000 families and 15,000 day pickers may
need alternative support.
To counter this problem, our assistance package includes funding
for emergency assistance to relocate those affected, as well as
alternative development assistance to help growers switch to licit
crops and other legal enterprises. We are aware of the indigenous
communities in southern Colombia and to this end we are working with
the Government of Colombia in order to ensure that our humanitarian
assistance is tailored to the specific target populations.
Funding is also included to support civil society in peri-urban
areas in order to anchor internally displaced people relocated there.
Question. And what is the difference between what you are proposing
for southern Colombia and the classic counterinsurgency population
control models such as the ``model villages'' of the Guatemala or the
``strategic hamlets'' of Vietnam?
Answer. The first difference is that the efforts supported by the
proposed assistance would be counternarcotics, not counterinsurgency,
in nature. Nor is there any intent to conduct forced relocations.
These efforts will not be a Shermanesque March of destruction.
Instead, they will consist of aggressive efforts to eradicate large-
scale coca cultivation and disrupt the region's drug processing
infrastructure. Disrupting the drug trade and improving the security
situation will allow the government, too long absent from the region,
to establish a presence and begin to provide the very government
services that those populations need.
Some of the population that may leave will flee for fear of
violence that may occur as traffickers and their allies lose valuable
revenue. Others, whose livelihood is closely tied to the cocaine trade,
will need to seek new economic opportunities. Because of this
possibility, the package contains funds especially intended to assist
displaced persons from southern Colombia to find legal employment.
Question. Amnesty International and other NGOs have said that this
package will more than likely result in a human rights and humanitarian
catastrophe. What is your information that leads you to think
otherwise?
Answer. The Government of Colombia's comprehensive strategy, ``Plan
Colombia'', recognizes the country's severe economic and social
problems and is designed to address them. Plan Colombia contains
initiatives on economic reform, counternarcotics strategy, justice
sector reform, democratization and social development (including human
rights protection, assistance to the displaced population, and
alternative development), and the peace process.
Our proposed assistance package will commit $240 million over two
years to alternative development, enhancing good governance, anti-
corruption, human rights and humanitarian assistance. Specific
initiatives include increasing protection of human rights NGOs,
supporting human rights information and education programs, creating
and training special units of prosecutors and judicial police to
investigate human rights cases involving Government of Colombia
officials, and training public defenders and judges.
Our proposed assistance is in addition to the $4 billion the
Government of Colombia is committing to Plan Colombia from its own
resources and from loans. This will be used for the implementation of
Plan Colombia, which includes programs such as economic development and
humanitarian assistance.
Other donors, including the International Financial Institutions,
are providing additional hundreds of millions of dollars aimed
primarily at social, humanitarian and infrastructure development as
well as economic revitalization.
U.S. assistance to Colombian military and police forces is provided
strictly in accordance with Section 564 of the FY 2000 Foreign
Operations Appropriations Act and with Section 8098 of FY 2000
Department of Defense Appropriations Act. No assistance is provided to
any unit of the security forces for which the USG has credible evidence
of commission of gross violations of human rights, unless the Secretary
is able to certify that the Government of Colombia has taken effective
measures to bring those responsible to justice. We are firmly committed
to this in spirit and in practice, and have a rigorous process in place
to screen those units being considered for assistance.
President Pastrana has also made a firm commitment to improving the
protection of human rights in Colombia. He has demonstrated his
Government's commitment to human rights by the dismissal of four
generals and numerous mid-level officers and NCOs (non-commissioned
officers) for collaboration with paramilitaries or for failure to
confront them aggressively.
W I T N E S S E S
----------
Page
Albright, Hon. Madeleine......................................... 207
Beers, Rand...................................................... 1
Grandmaison, J.J................................................. 105
Harmon, J.A...................................................... 105
McCaffrey, Gen. Barry............................................ 1
Munoz, George.................................................... 105
Sheridan, B.E.................................................... 1
----------
I N D E X
----------
Export and Investment Assistance
(James A. Harman, President and Chairman, Ex-Im Bank; George Munoz,
President and Chief Executive Officer, OPIC; and J. Joseph Grandmaison,
Director, TDA)
Page
Administrative Requests.......................................... 185
Armenia and Azerbaijan Projects.................................. 164
Budget Increases................................................. 166
Chairman's Opening Statement..................................... 105
China..........................................................180, 187
Clean Energy Initiative.......................................... 158
Colombia.......................................................174, 186
Corruption....................................................... 176
Economical Benefits.............................................. 167
Ecuador.......................................................... 179
Environmental and Workers' Rights Activities..................... 170
Environmental Impact Assessments................................. 162
HIPC............................................................. 188
Market Feasibility............................................... 190
Mozambique....................................................... 172
Mr. Munoz Opening Statement...................................... 147
Mr. Grandmaison's Opening Statement.............................. 109
Mr. Harmon's Opening Statement................................... 118
Ms. Pelosi's Opening Statement................................... 109
Russia........................................................... 176
Small and Medium-Sized Business.................................. 163
Yerevan.......................................................... 183
Department of State
(Madeleine Albright, Secretary of State)
Africa........................................................... 242
Budget.........................................................256, 267
Chairman's Opening Statement..................................... 207
China............................................................ 239
Colombia......................................................... 252
Corruption....................................................... 241
Debt Forgiveness.....................................230, 258, 261, 262
Funding Levels................................................... 242
Human Rights in Turkey........................................... 248
International Family Planning.................................... 247
IOP Funding...................................................... 241
Iraq............................................................. 251
Kosovo........................................................... 208
Middle East Peace Process........................................ 248
Mozambique.....................................................257, 258
Ms. Pelosi's Opening Statement................................... 229
North Korea...................................................... 244
Plan Colombia.................................................... 238
Secretary Albright's Opening Statement........................... 209
Sierre Leone..................................................... 237
Sudan............................................................ 237
The Balkans.....................................................253, 266