[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.
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    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