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[Senate Hearing 106-]
[From the U.S. Government Publishing Office]

 
   EAST ASIA IN 2000: PROBLEMS AND PROSPECTS IN THE YEAR OF THE DRAGON

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

                                HEARING

                               BEFORE THE

             SUBCOMMITTEE ON EAST ASIAN AND PACIFIC AFFAIRS

                                 OF THE

                     COMMITTEE ON FOREIGN RELATIONS
                          UNITED STATES SENATE

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                            FEBRUARY 22, 2000

                               __________

       Printed for the use of the Committee on Foreign Relations

 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 senate

                    U.S. GOVERNMENT PRINTING OFFICE
64-691 CC                   WASHINGTON : 2000

                     COMMITTEE ON FOREIGN RELATIONS

                 JESSE HELMS, North Carolina, Chairman
RICHARD G. LUGAR, Indiana            JOSEPH R. BIDEN, Jr., Delaware
CHUCK HAGEL, Nebraska                PAUL S. SARBANES, Maryland
GORDON H. SMITH, Oregon              CHRISTOPHER J. DODD, Connecticut
ROD GRAMS, Minnesota                 JOHN F. KERRY, Massachusetts
SAM BROWNBACK, Kansas                RUSSELL D. FEINGOLD, Wisconsin
CRAIG THOMAS, Wyoming                PAUL D. WELLSTONE, Minnesota
JOHN ASHCROFT, Missouri              BARBARA BOXER, California
BILL FRIST, Tennessee                ROBERT G. TORRICELLI, New Jersey
LINCOLN D. CHAFEE, Rhode Island
                   Stephen E. Biegun, Staff Director
                 Edwin K. Hall, Minority Staff Director

                                 ------                                

             SUBCOMMITTEE ON EAST ASIAN AND PACIFIC AFFAIRS

                    CRAIG THOMAS, Wyoming, Chairman
JESSE HELMS, North Carolina          JOHN F. KERRY, Massachusetts
CHUCK HAGEL, Nebraska                RUSSELL D. FEINGOLD, Wisconsin
GORDON H. SMITH, Oregon              PAUL D. WELLSTONE, Minnesota
LINCOLN D. CHAFEE, Rhode Island      ROBERT G. TORRICELLI, New Jersey

                                  (ii)

                            C O N T E N T S

                              ----------                              
                                                                   Page

Roth, Hon. Stanley O., Assistant Secretary of State for East 
  Asian and Pacific Affairs, Department of State.................     3
    Prepared statement...........................................     8
Thomas, Hon. Craig, U.S. Senator from Wyoming, opening statement.     2

                                 (iii)

  EAST ASIA IN 2000: PROBLEMS AND PROSPECTS IN THE YEAR OF THE DRAGON

                              ----------                              

                       TUESDAY, FEBRUARY 22, 2000

                           U.S. Senate,    
                 Subcommittee on East Asian
                               and Pacific Affairs,
                            Committee on Foreign Relations,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:05 p.m., in 
room SD-419, Dirksen Senate Office Building, Hon. Craig Thomas, 
(chairman of the subcommittee) presiding.
    Present: Senators Thomas and Kerry.
    Senator Thomas. I think we will go ahead and begin. They 
are still having conference meetings. We will be on the floor 
soon, so hopefully we will be joined by other members, but in 
any event I thank all of you for being here. The Subcommittee 
on East Asian and Pacific Affairs meets to examine U.S. foreign 
policy priorities and challenges likely to emerge in East Asia 
during the coming year.
    We had a joint hearing recently with our counterparts in 
the House. However, this is the first subcommittee meeting of 
the second session, and I believe a fitting topic. We want to 
talk about where we think we are going and what looks to be 
ahead of us this year, as we enter into a new time. For those 
of you familiar with the lunar calendar, of course, the year 
2000 is a dragon year.
    I became chairman of this subcommittee about--well, 5 years 
ago, and pundits then were noting the significance, what many 
people were predicting is not to be just the 21st century, but 
also an Asian century, beginning under the sign of the dragon, 
the symbol of Asia.
    The regional surge, of course, in East Asia, also economic 
as well as political, the economy, tigers of China and Japan 
and South Korea, Indonesia, Singapore, Hong Kong, growing by 
leaps and bounds at that time, and everyone covered them 
routinely, suggesting that Japan was going to replace us 
shortly, was buying up Hawaii and California, and the economy 
in China was pushing 12 percent growth rate, a population that 
topped 2.3 billion and so on. Hong Kong and Singapore were 
vying with one another for the nerve centers of the region, and 
so it really was a very positive thing, one that was really 
growing, even the nations like Vietnam and China, Communist 
nations, were looking a little bit at democratic reform.
    Today, the picture is a bit different. The economic crisis 
of 1997, of course, had something to do with bursting the 
bubble there. The economies were having troublesome times. 
Political stability was threatened from time to time. Indonesia 
and Japan continued to hobble along some. ASEAN has lost some 
of its momentum. China's growth has slowed, leadership I think 
fearful that its initial flirtations with reform would weaken 
the party's control over the country, and had cracked down on 
some of its minority groups and so on.
    So given these, it would seem that the Asian century may be 
off to a little slower start, a little more shaky start than it 
appeared several years ago. This is, of course, not to minimize 
the role of Asia in this century, and so we are going to take a 
look at that today, and I feel like it still will be one of the 
most important regions of the world. Clearly, China, and by 
extension Taiwan, will be talking about WTO and the normal 
trade relations.
    We will be discussing the Taiwan Security Enhancement Act, 
which concerns me some. We are also looking, of course, at 
continuous crackdowns in China.
    So there are a lot of things to look at, and that is really 
what we wanted to do, Mr. Secretary, and I am so pleased you 
are here. We certainly have the newly independent East Timor, 
which is some concern, and about its ability to fend for 
itself. North Korean nuclear questions are still out there, 
even though the Perry report still remains unsettled, so we 
have issues in a number of places. At any rate, that is our 
chore, that is our job, that is what we are here for, so we 
appreciate very much your coming to be with us. Please share 
with us your views of where we are and where we need to go, and 
hopefully we will have some time for some questions when we 
finish.
    So thank you, Mr. Secretary. Glad to have you here again.
    [The prepared statement of Senator Thomas follows:]

               Opening Statement of Senator Craig Thomas

    Good morning. Today the Subcommittee on East Asian and Pacific 
Affairs meets to examine U.S. foreign policy priorities and challenges 
likely to emerge in East Asia in the coming year. Although we had a 
joint hearing with our House counterparts two weeks ago, this is the 
Subcommittee's first hearing of the Second Session of the 106th 
Congress and is, I believe, a fitting topic for us to begin with. I 
will keep my opening brief, so that we can get to our witness this 
morning; we have a lot of ground to cover.
    For those of you familiar with the lunar calendar, the year 2000 is 
a dragon year. In fact, it is a double dragon year--a rare intersection 
of the Chinese zodiac with the duodecimal cycle that happens only once 
every sixty years. When I became Chairman of this Subcommittee almost 6 
years ago, pundits were noting the significance of what many people 
were predicting would be not just the 21st Century, but also the 
``Asian Century,'' beginning under the sign of the dragon--the symbol 
of Asia.
    The regional surge in East Asia was both economic and political. 
Asia's economies, the Asian Tigers--China, Japan, South Korea, 
Indonesia, Singapore, Hong Kong--were growing by leaps and bounds. 
Magazine covers routinely predicted the demise of America's economic 
preeminence. Japan was going to replace us shortly, and was buying up 
Hawaii and California. China's economy was pushing a 12% per year 
growth rate, its population topped 2.3 billion, and it began expanding 
its military. Hong Kong and Singapore vied with each other to be the 
financial nerve centers of the region. Countries began asserting their 
own geopolitical interests--a phenomenon best illustrated by the 
growing importance of ASEAN in settling regional disputes. And even in 
communist nations like Vietnam and China, economic growth began to spur 
the first stirring of democratic reform.
    But today, as we begin that ``Asian Century,'' the picture is much 
different. The economic crisis of 1997 burst the Asian bubble. 
Economies began to collapse, and political stability was threatened. 
Rather than being surpassed, we found ourselves saving our former 
competitors. Economies were gutted; Indonesia's and Japan's still 
continue to hobble along. ASEAN has lost its forward momentum. In 
China, growth has slowed and the leadership, fearful that its initial 
flirtations with reform would weaken the party's control over the 
country, has cracked down hard on any perceived threats to its 
monolithic stability--most notably on the Falun Gong movement.
    Given these developments, it would seem that the ``Asian Century'' 
is off to a bad start. That is not to minimize the importance Asia will 
play in this century. I still firmly believe that, as a region, its 
importance both politically and economically will continue to grow; it 
may just be that it doesn't happen as fast, or as inexorably, as some 
originally thought. As Chairman, I feel that this year, as in the next 
decades, we will have to face a majority of our foreign relations and 
economics challenges in this particular region of the world.
    Chief among these clearly will be China, and by extension Taiwan. 
This year we have China's accession to the WTO and China PNTR, both of 
which I support, and the dubious Taiwan Security Enhancement Act, which 
I oppose, on our plate. We also have a Chinese government that is 
increasingly cracking down on elements such as ethnic minorities, pro-
democracy advocates, and religious groups.
    But China is not the only area of concern. There is a nascent 
democratic government in Jakarta which is still somewhat unstable due 
both to the country's economic woes and an increasingly restive 
military. Nearby, we have a newly-independent East Timor which is still 
incapable of fending for itself. The North Korean nuclear question, 
even in the aftermath of the Perry report, still remains unsettled. And 
there are issues in the Philippines, Cambodia, Japan, and even Mongolia 
that will continue to require our attention.
    I don't want to go into too much detail; that's what Secretary Roth 
is here for today and I am anxious to hear from him. Suffice it to say 
that it will be a busy year for both Congress and the Administration.

STATEMENT OF HON. STANLEY O. ROTH, ASSISTANT SECRETARY OF STATE 
    FOR EAST ASIAN AND PACIFIC AFFAIRS, DEPARTMENT OF STATE

    Mr. Roth. Thank you, Mr. Chairman. I am glad to be back. 
Let me begin by thanking the subcommittee for holding such a 
broadbased hearing. The overwhelming number of hearings that I 
do are country-specific, or problem-specific, and it does not 
give the administration an opportunity to try to lay out a more 
comprehensive view of what is going on in the region and what 
the policy is. Early in the new year it is particularly helpful 
to have a session that starts out with the big picture and then 
continues on to specific issues of concern.
    In my testimony, which is rather longer than usual, I have 
tried to cover a number of issues, and even so there are many 
countries you will find that are not even mentioned at all. I 
hope you will not consider it in any way a slight if a country 
is not mentioned, and feel free to ask questions on anything 
that is on your mind.
    Interestingly, I start out my testimony on a slightly more 
optimistic note than your opening statement. My starting point 
was not where Asian Pacific region was 5 years ago, or even 3 
years ago, but I compare it to the last 2 years, and it strikes 
me that one of the major events now that is different from when 
I testified a year ago has been the dramatic economic recovery 
in Asia. There is a great deal of optimism in the region that 
you simply did not see a year ago. We have had growth rates of 
almost 10 percent in Korea, compared to a very negative growth 
the year before, a growth rate of 5 percent in Thailand, growth 
in almost all of the region.
    When you go back and read what people were talking about 2 
years ago and a year ago, when people were talking about lost 
generations, about needing a decade to recover, talking about 
the social consequences, and the risk of political instability, 
Asia has done remarkably well.
    Now, this is not really to differ with you and your facts, 
but really to suggest a different perspective. Yes, Asia is 
different than it was before the financial crisis. Clearly, 
there is more unemployment. There have been more economic 
losers than winners in these individual countries.
    There is still the possibility that their recovery may not 
be as sustained as we would like, and certainly we are not 
seeing the kind of pervasive double digit growth rates that 
have characterized so much of the nineties. I am not arguing 
that Asia is back in the identical sense, but I am arguing that 
probably the single biggest change in the region over the last 
12 months has been the economic recovery.
    Another change, and I will not dwell on it unless you want 
to talk about it in the question period, is a rebirth of 
interest in regional institutions. You may recall last year 
there was a lot of talk about ASEAN being dead, about APEC 
being moribund and, not surprisingly, when countries were 
preoccupied with their economic survival there was less focus 
on the regional institutions.
    But as the countries are coming out of their economic 
difficulties, you are seeing a lot more interest once again in 
these regional institutions and particularly ASEAN, also a 
rather vibrant meeting in Manila, the so-called 10 plus 3 
meeting last fall, at which there was quite a bit of discussion 
about regional architecture and regional problems. They got the 
leaders of China, Korea, and Japan to come to the meeting. So 
you are seeing a rebirth of Asia thinking of itself as a region 
again, and ASEAN regaining some of its confidence. So again the 
wheel is turning, and the mood is quite different from a year 
ago.
    Having said that, what I would like to do is start my tour 
of the region with the alliances that we have. Too often we 
start with some of the problems, but I would like to start with 
some of our strengths, and let me begin with Japan. It is 
particularly appropriate, since Foreign Minister Kono was just 
in Washington over the weekend and had a series of meetings, 
including with the Secretary of the State, the President's 
national security advisory, and U.S. Trade Representative.
    We covered a wide range of issues, and my basic message 
here today is that the U.S.-Japan bilateral relationship is in 
excellent shape. On the security side we have made progress, as 
you know, on the defense guidelines. We have made progress on 
joint research on TMD. We have the possibility of progress on 
Okinawa base issues. There is a new Governor on Okinawa, which 
has helped to free up the political atmosphere in a way where 
it is now possible to try to come to closure on relocating the 
Futenma Base. And of course, we have the G-8 summit meeting 
coming up over the summer, which is a real opportunity for 
Japan to focus its attention on Asian issues.
    On the foreign policy side of the ledger, cooperation is 
strong as well. We have worked very closely with Japan, for 
example, both on Indonesia and on East Timor. Japan has been 
the largest donor in East Timor, and one of the largest donors 
to the Indonesian election campaign, generally supporting the 
same goals as the United States in both places.
    Japan, of course, was a major contributor to Asia, 
particularly Southeast Asia, throughout the financial crisis. 
Outside the region it has been very helpful on some of our 
issues such as Kosovo and the Middle East peace process in 
terms of its financial contribution. So we have strong 
cooperation on the security side of the ledger and on the 
foreign policy side of the ledger.
    Now, I am not suggesting we have no issues. That would be 
ridiculous. Clearly, we do. Obviously, one of the key issues 
this year will be renegotiating the agreement that provides the 
host nation support, which is one of the key components of how 
Japan supports our continued forward deployment of troops in 
their country. It amounts to roughly $4\1/2\ billion a year.
    This agreement needs to be renegotiated this year, and 
obviously we are interested in maintaining this very robust 
level of support. It has been crucial--and you would certainly 
know this better than I--to maintaining support for the forward 
deployment of troops in Asia in the Congress that the Japanese 
contribution has been so generous. This is really a strategic 
issue and not an accounting issue.
    On the economic side of the house, you are familiar with 
the difficulties of the Japanese economy. Despite huge fiscal 
stimulus programs, domestic demand remains weak, and the 
economy has had several difficult quarters. This was certainly 
a major contributing factor to our record bilateral trade 
deficit in 1999, because Japanese demand for our exports 
remained depressed even though our burgeoning economy was 
having the opposite effect. We continue to urge Japan to use 
all tools for domestic-led growth, including fiscal and 
monetary policy, deregulation and restructuring, and more 
openness to foreign direct investment.
    Particular sectors we are concerned about include prospects 
for telecommunications liberalization. We are concerned about 
cutting telecom interconnection rates. We want to increase 
competition in the marketplace.
    Let me turn briefly to Korea. This is a major year, marking 
the 50th anniversary of the duration of the Korean war. Our 
ties are probably in the best shape they have been in recent 
memory. I have already mentioned the economic recovery. In 
terms of our policy with respect to North Korea, there is great 
cooperation between the ROK and the United States as well as 
Japan.
    You are probably familiar with this horrible acronym, TCOG, 
which describes the trilateral process by which the United 
States, Japan, and Korea cooperate in formulating policy toward 
North Korea. It is a direct outgrowth of the Perry process, and 
one of the successes. When you recall where we were roughly a 
year ago, when we had concerns about the suspect site, when we 
had concerns about the possibility of another North Korean 
missile test, when we had concerns about the unity of policy 
between the three allies, I we have made a whole great deal of 
progress throughout the last year.
    Now, obviously, the point you made in your opening 
statement is correct. The fact that we have made this progress 
does not mean it is immutable, and does not mean the problem is 
fully solved. It is not. We are still awaiting the high-level 
visit from appropriate North Korean officials to the U.S. We 
would like to make progress in the course of that visit on 
codifying the moratorium that we now have on the long-range 
missile test. We would like to get serious negotiations resumed 
both on missiles and on weapons of mass destruction.
    So there is a lot of work left, and I do not mean to 
minimize it, but again, when you look at it from a short term 
perspective I think there has been significant progress over 
the past year. We remain supportive of South Korean policy, 
which is engagement with North Korea, and we think that this 
policy under Kim Dae Jung's leadership has opened up prospects 
for more creative diplomacy. We will see if we are able to 
collect the fruits of that policy this year.
    In my statement, I then go through some of our other 
alliance relationships. Mr. Chairman, I do not think we should 
just focus on Japan and Korea when we talk about allies, and so 
I reviewed the Philippines, Australia, and Thailand. In the 
interest of time I suggest I will skip over it orally, but we 
can come back to it in the question period, as I think I want 
to make some comments moving past our alliances to other 
countries, starting with China.
    Obviously, 1999 was a difficult year in U.S.-China 
relations. I will not take up the committee's time with 
detailed explanations about what you already know about the WTO 
process, Zhu Rongji's visit, and the accidental bombing of the 
embassy. I think you are fully aware of where we are now, that 
we have reached the agreement on payments with the People's 
Republic of China, subject to congressional appropriations, but 
that, I think, is helping us to put that issue behind us. We 
have now reached a bilateral agreement on WTO accession, and 
the President has publicly enunciated on many different 
occasions his commitment to secure permanent normal trade 
relations this year.
    Obviously, the next step is to see if China completes its 
other bilateral agreements during negotiations resuming with 
Europe, which will be critical. I cannot give you an exact 
timetable, much as I would like to, of when this issue will be 
ready for congressional consideration, but we are determined to 
deal with it as early in the year as possible.
    Too many people, in thinking about the China relationship, 
will focus on the negative side. There have been a lot of dire 
predictions about the prospects for the relationship in an 
election year. I would like to think that we do have 
opportunities, building on the WTO agreement, building on the 
agreement on the embassy bombing payments, to move the 
relationship forward, and there have been some encouraging 
signs in that regard.
    The fact that there has been a resumption of the military-
to-military dialog, with them sending a high-level official 
here, is significant, although I would not want to overstate 
the specific accomplishments. Deputy Secretary of State Talbott 
just led a high-powered delegation to China to engage in a 
wide-ranging strategic dialog on a number of subjects, and they 
felt that they had good talks on a wide range of issues.
    Not that we closed our differences on everything, but we 
made progress, so I think it is possible, despite the coming 
election, and despite the seriousness of the issues, for us to 
work together with China on some issues this year to try to 
keep the relationship on a stable footing. Obviously, our 
ability to secure congressional approval for PNTR will be 
critical to that effort.
    I also should make clear I am not trying to minimize in any 
way the significant problems that remain in the U.S.-China 
relationship. For example, just to take the issue of human 
rights, we obviously have major differences with China. We 
believe that the situation went backward over the last 12 
months, and there has been a deterioration in the human rights 
situation, whether it was the crackdown on Falun Gong, the 
handling of political dissidents, the failure to ratify either 
of the two covenants that have been signed.
    It was not a good year for progress, and for that reason 
the administration has announced very early its decision to 
cosponsor a resolution in Geneva at the Human Rights Commission 
meeting. It is not that we seek a confrontation with China for 
the sake of confrontation, but we feel it important that we 
speak our mind and call it as we see it on these human rights 
issues, even as we are trying to make progress in other arenas.
    At this point, Mr. Chairman, in my written statement I turn 
to a brief discussion of Taiwan issues. Since my testimony was 
put to bed prior to the release of the white paper that came 
out yesterday, there is no reference to it in my testimony 
itself. I think that may be of the greatest interest, so why 
don't I just offer a few comments now on that subject.
    Clearly, the PRC white paper statement, particularly the 
aspect stating that an indefinite delay in cross-strait 
negotiations would be a reason to use force, is a source of 
concern to us. We are in the process of expressing this concern 
to China, both here through their Embassy and in Beijing 
through our Embassy.
    The threat of the use of force to resolve the Taiwan 
question is contrary to the commitments contained in the 
communiques that are the bedrock of U.S. policy, and to 
developed longstanding positions that issues between the two 
sides should be resolved peacefully. We have a clear and 
longstanding position on cross-strait relations, including our 
insistence on peaceful resolution of differences between the 
PRC and Taiwan. We support cross-strait dialog as the best way 
to resolve those differences, and we will continue to adhere to 
our one-China policy.
    We urge the PRC, as well as Taiwan, to refrain from actions 
or statements that increase tensions or make dialog more 
difficult to achieve, and to take steps that foster dialog, 
reduce tension, and promote mutual understanding. Of course, 
the U.S. has consistently stated that it is up to the PRC and 
Taiwan to determine what constitutes a basis for dialog, but 
again, the key point in U.S. policy is that we have an abiding 
interest in the peaceful resolution of differences between the 
PRC and Taiwan.
    Obviously, I would be willing to come back to this in the 
question and answer period.
    Finally, in my statement I had a long section on Indonesia 
in which I talk about the priority which we are according to 
Indonesia as one of the Secretary's four democratic countries 
we are focusing on this year. Over the past year much of the 
attention was, of course, on East Timor. I will not dwell on 
that, since we did hold a separate hearing on that about a week 
ago.
    But on Indonesia itself I want to emphasize just how much 
attention and support the administration is putting into this 
account, ranging from what you might call public diplomacy, or 
open support for the regime, inviting President Wahid early in 
his administration to the White House. We have already had two 
Cabinet members out to visit Indonesia, as well as numerous 
mid-level officials.
    We have increased U.S. aid levels, although they are still 
relatively modest compared to the needs. We have been 
supporting the IMF and the World Bank, each of which has 
resumed disbursements. We have sent out an interagency 
assessment team, which is designed to look at our aid programs 
and see if they need to be reshaped, restructured, or enlarged 
to better deal with Indonesia's many problems, and we are 
trying a different concept.
    With the relatively modest resources available to us in the 
foreign aid budget, we are not going to be doing large-scale 
development projects. Instead, the Secretary is trying to focus 
on institution-building, strengthening various institutions in 
Indonesia where we have a lot of expertise. Whether it is 
press, the parliament, the local parliament, or civil society, 
we are trying to see how we can strengthen institutions, and 
that is where we are going to funnel our resources, rather than 
into the traditional kind of large-scale development projects. 
That will be much more the purview of the World Bank, the Asian 
Development Bank, and the other multilaterals.
    In my statement I list a lot of the positive developments 
that have taken place thus far under the new Government. I will 
not review them here, but the point I want to make is, there 
should not be any expectation, and there certainly never was an 
expectation by the administration, that the new Government, no 
matter how legitimate, was going to be able to solve all of 
Indonesia's formidable problems in the first 100 days.
    Many of these problems were created under the 30-plus years 
of the Suharto regime, and whether it is reviving the economy, 
changing the balance of power between Java and the other 
islands, or resolving the very tough regional issues, like 
Aceh, whether it is finishing the refugee business in West 
Timor, gaining control over the military, and the issue of 
civilian supremacy, there is an enormous amount of work 
remaining to be done in Indonesia. Our point is, we are in it 
for the long haul. This is going to be a very important 
country, with a lot of problems and a lot of issues for us for 
the foreseeable future.
    Why don't I stop at that point, Mr. Chairman.
    [The prepared statement of Mr. Roth follows:]

               Prepared Statement of Hon. Stanley O. Roth

    Mr. Chairman, thank you for the opportunity to testify before your 
subcommittee this afternoon, and thank you particularly for choosing to 
begin the legislative year with an overview of developments in the 
region. I hope this hearing will establish a broad framework as we deal 
with particular issues across the region in the coming year.
    At this time last year, an overview of the region would have been 
cast in tones of measured pessimism. The continuing effects of the 
financial crisis seemed to offer the inevitable prospect of a long and 
difficult recovery. Talk of a coming Pacific century seemed to be an 
inconvenient relic of another time. Instead, regional leaders were pre-
occupied with the consequences of economic crisis and the potential for 
political instability. Some spoke darkly of a lost generation. But that 
pessimism has largely disappeared in the wake of the surprising 
economic recovery in most of the region. So I thought it would be 
appropriate, Mr. Chairman, to begin my testimony with some comment 
about the regional economy. After that I will briefly review some 
salient developments in countries of particular importance to U.S. 
interests in the region.
                           economic recovery
    This past year has seen a remarkable recovery from the Asian 
financial crisis. It was, by any measure, the major regional 
development of the past year. Two of the countries worst hit by the 
crisis--Thailand and the Republic of Korea--posted robust GDP growth 
figures of five and ten percent respectively. Other countries, 
including China and the Philippines, also ended the year with higher 
GDP growth than had been predicted at the beginning of the year. 
Inflation was reduced substantially across the region. With returning 
growth came renewed optimism.
    To be sure, we are not back to pre-crisis economic levels. Clearly 
there are challenges remaining. The financial crisis was a harsh 
reminder that economies must be transparent and financial institutions 
must lend responsibly. Market discipline and the rule of law must be 
strengthened to curb the corruption and cronyism that were responsible, 
at least in part, for the economic suffering of the recent past. Some 
Asian leaders and economists have ruefully suggested that the recovery 
may have come too soon, that in some countries the recovery may 
dissipate the motivation to make reforms that are still required to 
ensure the long-term health of the economy.
    In addition, workers in a number of countries have yet to regain 
the standard of living they had enjoyed during the previous boom times. 
Even in Korea, the fastest recovering economy, unemployment is still 
higher than it was before the crisis. Where workers have secured new 
jobs, many are earning less than they did before, while prices have 
risen. The social safety nets, which were so clearly and painfully 
absent during the financial crisis, have yet to be put in place in a 
number of countries.
    Finally, it should be recognized that there are two wild cards, 
which could slow or even derail the regional recovery. If U.S. economic 
growth should falter or Japan's economy take a severe downturn, this 
could significantly reduce markets and investment sources important to 
regional recovery.
                  the revival of regional institutions
    When they faced economic difficulties, countries in the region 
quite understandably turned inwards. As their economies have revived, 
there has been an equally understandable renewal of interest in 
regional institutions, such as APEC and ASEAN. To cite just one 
example, the ASEAN summit in Manila last November was the occasion for 
a successful ``ten plus three'' meeting between ASEAN, China, Japan and 
Korea which offered an opportunity for an unstructured dialogue on both 
economic and security issues which concern both Northeast and Southeast 
Asian nations.
                         alliance partnerships
    With that, let me turn to some of the specific countries and 
bilateral relationships that I know are of interest to the Committee. 
Let me begin with the alliance partnerships, which have been the firm 
bedrock of U.S. interests in the region since World War II. And, let me 
offer an unequivocal assessment: our alliance partnerships have never 
been stronger, have never been more important than they are today.
Japan
    No relationship is more important to the stability of the Asian 
Pacific region than the U.S.-Japan alliance. This statement has become 
such a mantra that we sometimes skip past it, but we cannot afford to 
do so for one simple reason: our security depends on it. Our bilateral 
security relationship with Japan is as strong as it has ever been, and 
our bases in Japan remain fundamental to our strategic presence in 
Asia. Japan is host to 47,000 U.S. troops, second only to Germany, and 
is home to the only carrier group home ported outside the United 
States.
    We have worked hard with the Obuchi government to strengthen the 
U.S.-Japan security alliance. We agreed on revising the Defense 
Guidelines to enable us to cooperate more effectively in response to a 
regional crisis. We agreed to fund joint research on Theater Missile 
Defense (TMD). With the 2000 G-8 Summit scheduled to take place next 
July in Okinawa, the Obuchi government has also been working hard to 
resolve U.S. basing issues on the island, particularly the relocation 
of the Marine Airstation in Futenma. On November 22, Okinawa Governor 
Inamine announced his support for relocating this base to a less 
crowded site in northern Okinawa. On December 28 the Japanese cabinet 
formally approved the Futenma relocation.
    The U.S.-Japan cooperation on a range of foreign policy issues 
remains a key aspect of our partnership. Japan has played a critical 
role in KEDO. It has agreed to fund a significant portion of the costs 
of the light water reactor, which KEDO will build at Yongbyon in North 
Korea, and it has joined in cementing a firm resolute trilateral 
approach with South Korea and the U.S. toward North Korea.
    In Southeast Asia, Japan assisted both Thailand and Indonesia in 
responding to the Asian Financial Crisis. Japan has also supported the 
referendum process in East Timor and helped fund the redevelopment of 
East Timor and its transition to nationhood. A Japanese official now 
serves as the Deputy UNSYG Special Rep for the UN Transitional 
Authority in East Timor under De Mello.
    Outside the region, Japan has provided political and financial 
backing for peace implementation and reconstruction efforts in Kosovo 
and is a major supporter of the Middle East Peace Process. In short, 
Japan's interests are global in scope, and as close allies, the U.S. 
and Japan share many of the same goals and work together on a broad 
range of issues.
    Let me turn now to issues that we and Japan are working to resolve, 
but let me underscore that these issues occur within the context of a 
strong and vibrant relationship.
    On the security side of the ledger, we must complete successfully 
negotiations begun earlier this month at the working-level to renew the 
five-year Special Measures Agreement, one of the two key components of 
Japan's Host Nation Support (HNS) for our troops stationed in Japan.
    Japan provides the most generous HNS of our allies, some $4.5 
billion. This is not merely a financial contribution, but, as Amb. 
Foley noted in an op ed in ``The Asahi Shimbun'' last week, it is 
Japan's investment in its own security and in the stability of the 
region in which it lives and which is essential to its economic well-
being.
    On the economic side, the health of the Japanese economy remains a 
continuing concern both for the government of Japan and for its trade 
and investment partners, including the United States. Despite 
continuing fiscal stimulus efforts by the Obuchi government, domestic 
demand remains weak, and Japan's economy continues to sputter. Japan's 
economic malaise was an important factor in our record high bilateral 
trade deficit in 1999, as Japanese demand for our exports remained 
depressed, while our strong economy continued to absorb their imports. 
We continue to urge Japan to use all tools for domestic demand-led 
growth, including fiscal and monetary policy, deregulation and 
restructuring, and more openness to foreign direct investment. We are 
particularly concerned about prospects for telecommunications 
liberalization, which would generate new jobs and business formation in 
Japan and opportunities for U.S. firms; in high level negotiations, we 
are asking Japan to cut telecom interconnection rates, to increase 
competition in the marketplace.
The Republic of Korea
    Later this year we will begin commemorating the fiftieth 
anniversary of the Korean War. This anniversary finds our relationship 
with the Republic of Korea closer than it has ever been. I discussed 
earlier Korea's remarkable economic recovery. Here I would like to 
focus on our continued and growing cooperation in managing the threat 
posed by North Korea.
    Dealing with the threat of North Korean nuclear and missile 
proliferation is one of the greatest challenges we face in East Asia. 
Thanks to the Agreed Framework and the Korean Energy Development 
Organization (KEDO), the very dangerous nuclear facilities at Yongbyon 
are frozen and under international inspections. South Korea and Japan 
have both assumed the vast bulk of the cost of the light water reactor 
(LWR) project. It is essential that the U.S. continue to fund our 
contribution to KEDO for heavy fuel oil. Only then will this freeze 
remain in place.
    However, a year ago, we faced a new crisis: North Korea's launch of 
a Taepodong missile over Japan in August 1998. Intelligence had also 
indicated that North Korea might be developing an underground nuclear 
site in violation of its Agreed Framework obligations. Amb. Chuck 
Kartman engaged in intense negotiations with North Korea to gain access 
to that suspect site to deal with our concerns. As you know, our 
determined pursuit of our concerns regarding the underground site 
resulted in access to it last year, and confirmation that it did not 
contain a reactor or nuclear processing facility, nor was it suitable 
to house either one. We will return to the site again this year.
    Over the past year, we undertook a fundamental review of our policy 
towards the DPRK. Thanks to the leadership of former Defense Secretary 
Bill Perry and State Department Counselor Ambassador Wendy Sherman, we 
have created a new framework for our approach to North Korea, built 
upon the principle that the U.S. remains ready to markedly improve its 
ties with the DPRK, but only as the DPRK deals with issues of concern 
to the U.S., particularly in the missile and nuclear areas.
    Significantly, as we pursued the policy initiatives recommended by 
Dr. Perry, North Korea agreed to suspend long-range missile testing 
while we carry on high-level talks to improve relations with Pyongyang. 
We have also laid the groundwork for the visit to Washington by a high-
level DPRK official--a visit which we expect will fix the dates for 
renewed talks aimed at eliminating the DPRK's long-range missile 
program, and new talks aimed at dealing with our remaining concerns 
about their nuclear weapons program.
    At every step along the way, we are consulting closely with our ROK 
allies, as well as with Japan, building a solid structure of greatly 
enhanced allied coordination and cooperation. The new policy approach 
we have developed is the product of that unprecedentedly close 
coordination.
    None of the progress we have made would have been possible without 
the visionary leadership of President Kim Dae Jung. Taking office in 
the midst of Korea's unprecedented economic crisis, he has not only led 
Korea through the challenges of economic recovery and restructuring, he 
has also undertaken a resolute engagement policy designed to expand 
contacts with the DPRK and seek reconciliation with Pyongyang.
    U.S. policy strongly supports and complements ROK efforts to engage 
North Korea in a process that holds the hope of reducing tensions, 
defusing distrust and misunderstanding, promoting dialogue, and 
enhancing stability on this troubled peninsula. Ultimately, the 
problems of peace and security on the Korean Peninsula must and should 
be resolved by Koreans.
    Pyongyang should be clear that we and our allies are serious in 
desiring to engage positively and build new ties. But we and others who 
seek better ties with the DPRK are under no illusions. Whether we are 
able to make further progress on these issues will depend on the 
North's willingness to engage seriously with us and to honor its 
commitments, including its Agreed Framework obligations. We have 
extended a hand of cooperation to Pyongyang. We trust the DPRK will 
have the wisdom to grasp it.
The Philippines
    Our security alliance with the Republic of the Philippines is among 
our oldest in the Pacific, and 1999 saw a significant revitalization of 
this relationship. On June 1, 1999, the Visiting Forces Agreement 
between the Philippines and the United States entered into force. Due 
in no small part to the strong support of Philippine President Estrada, 
the VFA has made it possible for us to resume normal military-to-
military contacts, including numerous ship visits and exercises. Last 
month, our two countries held the first large-scale joint exercise 
since 1993, one which involved over 2,500 U.S. military personnel.
    The Philippines has played an important part in the international 
effort to assist in East Timor. It provided 750 troops for INTERFET. 
Now, a Philippine general, Jaime Los Santos has taken command of the 
military component of UNTAET.
    The Philippine military requires significant modernization, yet 
faces very real funding constraints. We have agreed to help assess the 
Philippines' defense needs so that it can plan a cost-effective 
acquisition and training program over the next several years. We have 
already provided a number of excess defense articles, including coastal 
patrol craft and trucks. For the last two years, we have allocated $1 
million in FMF for the Philippines, and we are seeking an increase in 
FMF to $2 million for FY 01. This will support the Philippines' need 
for modern equipment as it expands its participation in peacekeeping 
while providing for its external defense and internal security in the 
face of an ongoing Communist insurgency.
Australia
    Australian-American cooperation is so consistently strong that it 
is hard for it to generate the kind of public attention it deserves. 
Australia has been by our side in every battlefield from Korea to 
Desert Storm. This past year, Australia demonstrated once again why it 
is such a valuable partner and leader in the region. When violence 
erupted in East Timor in September, Australia stepped forward to 
organize and provide the bulk of the personnel for the multinational 
force that was sent to East Timor under the authorization of the UN 
Security Council.
    By its actions, Australia provided a role model about how nations 
can take the lead in responding to crises in their own region. 
Expressions of support for Australia's initiative by you, Mr. Chairman, 
and others in the Congress were much deserved and, I believe, much 
appreciated.
Thailand
    Thailand was the first country to be hit by the Asian Financial 
Crisis, and the economic crisis led to a political crisis. One of the 
strongest democracies in the region, the Thai responded by installing a 
new government committed to making the tough economic choices necessary 
to enable recovery. Over the past two years, the government of Chuan 
Likphai has won international praise for its willingness to press 
forward with the reforms necessary to ensure renewed growth and greater 
prosperity for all Thai.
    Prime Minister Chuan has also led his country into a more active 
role on the international stage. We are pleased that Thai Deputy Prime 
Minister Supachai will succeed Mike Moore as Director General of the 
WTO in 2002. We have also welcomed Thailand's participation and 
leadership in INTERFET for which it provided the deputy commander. We 
are looking forward to Thailand hosting the ASEAN Regional Forum and 
Post-Ministerial Conference Meetings this summer.
                     other countries in the region
China
    To put it simply, U.S.-China relations went through difficult times 
in 1999. Despite enormous efforts and high expectations on both sides, 
it proved impossible to conclude a WTO bilateral agreement at the time 
of Premier Zhu Rongji's visit last April. In May, U.S. planes 
accidentally bombed the Chinese Embassy in Belgrade; Chinese 
demonstrators damaged a number of U.S. diplomatic facilities in China. 
The combination of these two events led to increased bilateral tensions 
and the suspension of much of our engagement efforts.
    President Clinton's meeting with President Jiang in Auckland in 
September turned the tide and provided the impetus for the conclusion 
of the WTO bilateral on November 15. This was followed by our December 
15 agreement on handling property issues connected with the bombing, 
helping to close that regrettable chapter. On January 10 of this year, 
President Clinton announced the Administration's determination to win 
permanent normal trade relations for China, stating the obvious but 
essential fact: ``Bringing China into the WTO is a win-win decision. It 
will protect our prosperity, and it will promote the right kind of 
change in China.'' We look forward to working with the Congress in 
coming months to make that win-win a reality.
    With bilateral relations on a positive course, we are working to 
engage China in a number of areas of fundamental national interest to 
the United States. Deputy Secretary of State Strobe Talbott, led an 
impressive group--including Under Secretary of Defense Slocombe, Vice 
Chairman of the Joint Chiefs of Staff General Ralston and Deputy 
National Security Advisor Steinberg--to Beijing last week for a 
strategic dialogue with senior Chinese officials. They discussed our 
respective strategic views of the world, including regional issues such 
as the Korean peninsula, Indonesia, and the strategic equation in South 
Asia as well as our concerns over the proliferation of weapons of mass 
destruction. While we should not have any illusions about our 
differences on some of these subjects, I think it is worth remembering 
that China believes its national interests, like our own, are best 
served by a world where stability and security are the norm.
    We are also carefully resuming our military-military contacts with 
China, in a manner consistent with U.S. national interests. It is 
important that our military leaders are able to clearly understand one 
another, avoid potential problems from lack of communication and be in 
a position to work together in areas where we have mutual interests, 
such as avoiding incidents at sea.
    Within this overall context, I should be clear that I am not in any 
way trying to minimize the significant problems that remain. Clearly 
there remain difficulties in our relationship with China. With regard 
to human rights, for example, we have regularly and vigorously 
expressed our concern with China's violation of internationally 
recognized standards of human rights. On January 11, the Administration 
announced that the United States would sponsor a resolution at the UN 
Commission of Human Rights when it meets in Geneva in March. We took 
this step because of the clear evidence that China's human rights 
record has deteriorated seriously over the past year.
    At this point, Mr. Chairman, let me offer a few points about Taiwan 
and cross-strait relations. I want to underscore once more the three 
principles that underlie the Administration's position on cross-strait 
relations:

   Our ``One China'' policy is unchanged;
   We have an abiding interest that there be a peaceful 
        approach by both sides to resolving differences; and
   We support dialogue as the best way for differences between 
        the two sides to be resolved.

    With that, let me review briefly some other issues regarding 
Taiwan. First, the Administration supports Taiwan's accession to the 
WTO on its merits, and we hope both Taiwan and the PRC will accede this 
year. Second, Taiwan is in the midst of an open democratic and 
energetic campaign to select a successor for Li Teng-hui as president. 
It is a fascinating and encouraging example of the democratic process 
at work. All three candidates have expressed their support for stable 
cross-strait relations. I hope that whoever wins--and, of course, the 
PRC's leaders as well--will set a high priority on restoring a 
meaningful cross-strait dialogue. Such a dialogue, more than any 
military equipment, is the key to Taiwan's stability and security.
    At the same time, there should be no doubt that the Administration 
will continue its faithful implementation of the security, arms sales, 
and other provisions of the Taiwan Relations Act. The efforts of some 
to amend this successful framework for our unofficial relations with 
Taiwan are not merely unnecessary, they actually weaken Taiwan's 
security. That is why, Mr. Chairman, like you, the Administration is 
strongly opposed to the Taiwan Security Enhancement Act.
Indonesia
    As you and I have discussed before, Mr. Chairman, Indonesia is a 
country of considerable importance to U.S. interests in the Asia 
Pacific region. The past twelve months have witnessed a successful 
transition from an authoritarian regime toward a pluralistic, 
representative democracy. Successful parliamentary elections in June 
and the selection of President Abdurrahman Wahid in October enabled 
Indonesia's first democratic government to take office since the 1950s.
    The new government came into office with the broad-based legitimacy 
necessary to begin to confront Indonesia's daunting economic and 
political difficulties. No one ever expected that President Wahid or 
his new government would be able to resolve all of Indonesia's problems 
in the first 100 days, or even 1000 days.
    With that caveat, the Government has made a promising start in a 
number of areas:

   President Wahid has successfully asserted civilian control 
        of the military. The suspension of General Wiranto from the 
        cabinet to await possible legal action for his role in East 
        Timor is only the most dramatic sign of this important 
        transformation.
   Indonesia signed a memorandum of agreement for a new IMF 
        program with the IMF on January 20, 2000, leading to the 
        release of a new tranche of IMF funding, and coinciding with 
        renewed disbursements from the World Bank.
   President Wahid freed virtually all the remaining political 
        prisoners from the Suharto era by December 1999, a total of 196 
        prisoners.
   In Aceh, the government has initiated a complex negotiating 
        process with some of the many different factions demanding a 
        new political arrangement for that troubled province. While the 
        outcome of the process is uncertain, the government deserves 
        considerable credit for seeking to resolve these difficulties 
        through negotiation rather than repression.

    In all of these areas, significant challenges remain ahead, but the 
crucial first steps have been taken, and I am convinced that 
Indonesia's prospects are positive.
    The U.S. has a profound interest in seeing a successful democratic 
transition in Indonesia--a fact reflected in the Secretary having 
identified Indonesia as one of the world's four priority emerging 
democracies. Nor is our commitment merely rhetoric. The President 
welcomed President Wahid to the Oval Office shortly after he assumed 
the Presidency. UN Ambassador Holbrooke and Secretary of the Treasury 
Summers have both visited Indonesia since President Wahid took office.
    In response to the urgency and importance of the need, U.S. 
bilateral assistance to Indonesia is being increased to $125 million 
for FY 2000. The bulk of this assistance will likely be used to help 
strengthen Indonesia's nascent democratic institutions. We are awaiting 
the recommendations of an inter-agency team that visited Indonesia in 
January to gauge how this U.S. investment can most effectively 
accomplish this and other goals. Helping the Indonesians build an 
effective and just judicial system, promote civil society, spur 
continued economic reform, and professionalize national and local 
parliaments will be among our priority concerns.
    Mr. Chairman, I recently had the honor to testify regarding East 
Timor before this subcommittee in joint session with its HIRC 
counterpart, so I will generally leave any concerns you might have on 
that subject to question and answer. There is, however, one issue 
affecting our future relations with Indonesia, which must be considered 
in the context of Indonesia's actions in East Timor. That is the issue 
of accountability for past atrocities. The President suspended U.S. 
military-to-military relations with Indonesia last September because of 
our concern over the actions of the Indonesian military in East Timor. 
Subsequently, as you know, the provision of certain types of military 
assistance was conditioned by the Leahy language contained in section 
589 of the Foreign Operations Appropriation for FY 2000. Until these 
conditions can be met, there will remain significant constraints on our 
ability to have a full normal relationship with Indonesia.
                           concluding remarks
    In the interest of time, I have not sought to comprehensively cover 
all of the countries within my jurisdiction, including some that I know 
are of interest to members of this Committee. I would be happy in the 
question and answer period to redress this selective focus to encompass 
all of the countries of the Asia Pacific region.

    Senator Thomas. OK, Mr. Secretary. Thank you.
    We have been joined by Senator Kerry. Do you have any 
comment, Senator?
    Senator Kerry. Mr. Chairman, thank you very much. Thank you 
for holding this hearing. I know we had the joint hearing with 
the House the other day, but this is this committee's first 
effort to begin examining our policies in the region, East 
Asian region in the year 2000, and I think it is important that 
we do so on our own.
    I was on a trip to the region in December, and I had gotten 
to Myanmar and had a very interesting luncheon with Ang San 
Suchee and some meetings with the junta there and proceeded to 
Bangkok, having stopped in India for the World Economic Forum, 
and regrettably the events of the fire in Worcester, 
Massachusetts require that I cancel my trip and return, which I 
regretted enormously, because I had an important meeting with 
the prime minister on the tribunal and some meetings with 
President Wahid and Senior Minister Lee Kwan Yu, who we will 
receive here, I believe tomorrow, Mr. Chairman, and whom I look 
forward to meeting with again.
    So much of the purpose of my trip, which was also to visit 
East Timor, and perhaps Aceh, and come back with a better sense 
of things personally, had to be postponed, and I regret that. I 
was hoping to be able to think about these issues in that 
context.
    I also had the privilege of being invited to speak before 
the Woodrow Wilson Institute on China a couple of weeks ago, 
and we had a massive snowstorm in the city, and so I did not do 
that, and so it seems that my efforts to try to move forward 
here are--Mother Nature has other notions.
    Senator Thomas. We are delighted you are here today.
    Senator Kerry. But let me just say a couple of things, if I 
may, because we are gathered here in a very different context, 
and I think it is refreshing that we are. The region we are 
talking about has been through a huge amount of turmoil in the 
last few years, financial, economic turmoil, and I think we 
ought to feel pretty good about where we now find ourselves, by 
and large, and there is one large caveat there, and I will 
speak about it in a moment.
    But the experience of Thailand and South Korea particularly 
where they vigorously embraced the suggestions of the IMF, the 
international community, where they undertook banking reforms, 
where they put in place transparency, accountability, really 
has resulted in a very significant turn-around markedly ahead 
of those other countries that have resisted that, and I think 
we are beginning to perhaps see some lessons coming out of that 
that I hope other countries will note. Obviously, the story is 
not fully written, but the strength of the recoupment, if you 
will, and the general investor confidence that has returned to 
those economic arenas is not insignificant.
    Japan, on the other hand, I think many of us remain very 
worried about, and I think in your statement, Mr. Secretary, 
which I just read quickly, you reflect that. I mean, you are 
very diplomatic about it, as you ought to be and need to be, 
but the bottom line is, there are some real fundamentals of 
deregulation, of market access, of some of the other kinds of 
structural reforms that other countries have embraced which 
Japan still resists, and which I think does not auger well for 
the sort of longer-term transition that Japan faces, and I know 
there are great tensions in Japanese society between 
generations about their expectations and how they will approach 
these issues.
    So I think it bears watching, and we need to cooperate. 
There is the summit there coming up, and there are many 
opportunities for us to continue to do that, and I know you 
share that belief.
    In Indonesia, I think President Wahid's approach has 
generally been salutary, and I think you appropriately point to 
the positive measures that he has taken which, if there is 
sufficient follow-through with respect to the accountability 
for the military actions in Timor, as well as for the process 
of holding the Suharto years accountable and so forth, I think 
augers well, and I think we can hopefully hold some very 
fragile threads together and perhaps even weave a stronger 
cloth.
    Let me speak to the one issue--I was going to talk at great 
length, I said a couple of weeks ago, and I will be speaking 
next month in New York at the Foreign Relations Council on the 
subject of China, and I am not going to go into it all now, but 
I was a little disappointed in your comment today. The white 
paper comments are unacceptable. There is no other way to pout 
it, and the United States has to be very clear in my judgment. 
There is a clarity that to some degree has not always been 
present in our relationship.
    It is clumsy. Perhaps that is a charitable word, to suggest 
that it is merely clumsy. We know the leaders of China, whom we 
have great respect for in many ways, though we disagree with 
them deeply in many ways, are usually more strategic, and I 
think many of us were surprised by the bluntness and 
inappropriateness of this particular challenge.
    Now, if it is merely an effort to try to affect the 
elections in Taiwan in a month, it is not a very shrewd way to 
do that, and it carries with it far more profound dangers for 
the longer-term interest of the United States and China and, 
indeed, the globe, which expects more from our relationship 
than this kind of saber-rattling. It is inappropriate in terms 
of how it ties the use of force to negotiations, and the 
negotiating process, and it is inappropriate with respect to 
the expectations that it places on arms sales and on our rights 
with respect to the Government of Taiwan that we have asserted 
over a longer period of time.
    I think you are correct, and I do not argue at all with 
your reassertion of the one China policy, nor even with our 
hope for negotiations, but where we disagree in the most 
stringent, urgent sort of terms, it is very important for China 
not to misinterpret where we are in any way whatsoever, not 
just behind the scenes in diplomatic communication, but in 
public, a clear and unconfused forum, and I think the 
administration has to be absolutely clear and adamant about 
this, lest it somehow escalate and, more importantly, lest it 
give rise to forces in the U.S. Congress that could have a 
profoundly negative impact on all the other things we want to 
try to achieve in the course of these next months, which are 
vitally important to our countries.
    I would hope China's leaders would rethink and perhaps 
rearticulate, as they sometimes do, what they mean in hopes of 
clarifying for everyone concerned where this might take us, 
because I think that it is a most inadvisable and unfortunate 
statement, with potential serious implications to America's own 
policies over the course of the next months.
    Thank you, Mr. Chairman.
    Senator Thomas. Let me followup on that a little bit. 
First, let me say that I agree entirely. And I know it is 
difficult, but I do think that we need to articulate more 
clearly where we are in terms of our policy so that we 
understand it and they understand it.
    My question is, do you have any feel for what prompted the 
timing of this so-called white paper? Would it have been the 
election, do you think? Is it the efforts on the Taiwan 
Security Enhancement Act? What is your notion as to the timing 
here, Mr. Secretary?
    Mr. Roth. It is obviously difficult for me to speak on 
behalf of the Chinese Government in terms of their exact 
motives. Clearly there has been a lot of supposition that this 
was related to the election. In fact, the most important point 
is that we have seen a great increase in the number of 
statements and the breadth of the statements on Taiwan for a 
period of time now.
    In other words, this is not, in and of itself, out of the 
blue. There was a major speech by Vice Premier Qian Qichen on 
Taiwan that attracted a lot of attention a couple of weeks ago. 
Zhu Rongji met with a prominent group of American businessmen 
around the Shanghai conference and had some significant things 
to say. And I think what this is is the cumulative impact of 
the enormous angst in China itself about the outcome of the 
election, where they do not know who is going to emerge.
    China obviously has a hard time with democracy, and they 
are indicating their concerns that, whatever regime it is had 
best stick to the one China policy and come back to the table 
on the cross-strait dialog. I give you this analysis not by way 
of agreeing with it, and please do not associate me with those 
comments, but I'm just trying to answer your question as best I 
can about what might be motivating them.
    The important point from our side is we have been as clear 
as we can be--and I am sorry I did not meet your standards, 
Senator Kerry--on the absolute priority which we give to 
peaceful resolution of the issue. Ultimately, we have said, 
China needs to avoid provocative actions in the period leading 
up to the election, and needs to avoid trying to interfere in 
the election. We have called for restraint on both sides, and, 
afterwards, for pragmatism on both sides, in order to get the 
cross-strait process restarted.
    What is very striking to me has been the moderate positions 
on the cross-strait issue taken in the Taiwan election 
campaign. We have seen remarkable statements. When the DPP 
party comes out and the leader says, we will not declare 
independence unless Taiwan is actually attacked, that is a 
major change in policy and a very moderate step.
    Last week the KMT candidate came out with a 10-point 
proposal, including suggested confidence-building measures for 
cross-strait relations. So we are at a moment where all three 
candidates in Taiwan have been trying to emphasize pragmatic, 
flexible positions that could get the two parties back to the 
negotiating table. We believe that that is the aspect that 
should be encouraged, and that Chinese policy should encourage 
this rather than discourage this with the type of statements we 
saw in the white paper yesterday.
    Senator Thomas. Sometimes it is hard to detect whether or 
not these statements that are being made are for outside 
consumption or whether they are simply expressing the sort of 
insecurity in terms of the leadership as some changes occur in 
China, in terms of retaining control. How do you react to that?
    Mr. Roth. My guess is that it is both. You cannot go to 
China and talk to the senior leaders without seeing how 
intensely important the Taiwan issue is. I would call it a 
preoccupation with them, both in its own terms--meaning cross-
strait--and in terms of its relationship with the United 
States. In both cases, it dominates the issues.
    At the same time, I think they are looking at the impact 
that it might have in Taiwan itself as they approach the March 
18 election. So I do not think it is either/or.
    Senator Thomas. Well, I hope we make our position clear. I 
am sometimes a little confused by--even the President visited 
last time--make it clear and then stay with that. It seems to 
me that we ought not be excited about every statement that is 
made.
    On Indonesia, tell me what kind of success you think the 
new President is having in terms of repositioning the military 
into more of a civilian police role as opposed to as much 
leadership as they have exercised in the past and control over 
government.
    Mr. Roth. There has been significant progress, but I do not 
want to overstate it--meaning there is a long way to go. Let me 
add some details on that. First of all, President Wahid has 
started the process and had quite a bit of success in 
demonstrating the principle of civilian supremacy. That is a 
new concept in Indonesia, and not one that was built into their 
political structure, where the military was really built into 
the politics under the so-called dual function policy, and was 
the key institution at least under Soeharto.
    Now you have a position where, by his appointments, whether 
it was of a civilian defense minister for the first time in 
decades, whether it was the appointment of an admiral to be 
commander of the armed forces rather than an army general, the 
replacement of some key generals, including the Jakarta 
command, including in the intelligence side, with his own 
people, and of course the confrontation with General Wiranto, 
which has led to his suspension, all I think is a pretty 
impressive package, in a total of 4 months, in terms of 
reasserting civilian supremacy.
    And, interestingly, despite all the talk about coup 
attempts, we never saw any evidence that the military was 
actually contemplating it or that Wiranto was trying to 
organize it. It was a feared outcome and one which we warned 
about very forcefully, publicly as well as privately, but the 
good news is they really did not seem to be planning it. So 
even within the Indonesian military, there appears to be a 
recognition that the Wahid Government has tremendous legitimacy 
and that a coup is not the way to go if they have problems with 
the government's policies.
    So, in that sense, they are off to a good start. That does 
not begin to deal with the whole dimension of your question, 
however, which is, how do you restructure the Indonesian 
military and the Indonesian police to get them out of politics, 
to get them playing more professional military roles, and to 
separate the police function from the military function?
    They have started down that path, but are not finished, in 
terms of separating the police from the military. And they need 
to expedite that. We will be working to see if we can find ways 
to help them with training the police, which is one of the 
greatest problems they have in maintaining law and order.
    Senator Thomas. Let me just ask this, and I know it is a 
broad issue. You mentioned the Perry report. How would you 
summarize the Perry report? What did the Secretary suggest that 
we do, other than to continue to communicate?
    Mr. Roth. The key point of Secretary Perry's initiative was 
to suggest to the North Koreans when they address our serious 
concerns, particularly relating to missiles and weapons of mass 
destruction, than we are prepared to have a different 
relationship with them, a relationship that was not 
fundamentally adversarial, that was not committed to trying to 
bring them down. Instead we are saying, we are prepared to 
accept, as is the ROK, the existence of the DPRK as long as it 
is addressing our concerns on the security side.
    It is an effort to try to change the relationship 
fundamentally away from the patterns of the past 50 years. We 
are requiring them to address our hard core security concerns. 
In that regard, we have made some initial progress, 
particularly the testing moratorium, on long-range missiles. If 
you think back to last summer, there was a lot of speculation 
that there was going to be another missile test. That has not 
taken place.
    Ambassador Kartman was able to get the agreement in Berlin 
that this would not happen. So there has been some initial 
progress. It is not all rhetoric. But it is still in an early 
stage and we need to try to move on it. That is why we are 
seeking the high-level visit, which would be the reciprocal 
visit by the North Koreans responding to Perry's earlier visit 
to the DPRK. In that context, we would hope to make more 
progress on these security issues that I just mentioned.
    Senator Thomas. Senator Kerry, would you like to ask some 
questions?
    Senator Kerry. Thank you, Mr. Chairman.
    Let me pick up a little bit on China. Mr. Secretary, I 
certainly do not want to be in some kind or any kind of 
contentious exchange with you. I am not trying to hold up some 
sort of silly standard or something or take some senatorial 
position here that somehow we have a different view of this.
    My point is simply that if our response is merely--and it 
is interpretive as much as anything perhaps--if our position 
is, in response to something they do like this, to simply say, 
well, we hope for a peaceful resolution, we have said that 
100,000 times. I mean we have always said--that is our policy--
we hope for a peaceful resolution. So there is really no change 
in tone, tenor or sort of substance of what we are saying. So 
they come out raising the ante, at least in my judgment, and 
other people's, and our response is the same: Oh, we hope for a 
peaceful resolution.
    Whereas what I think we should be saying is what I said in 
my statement, a more clear calling to account for this 
unilateral escalation. Now, some might argue that this is not 
that much of a unilateral escalation. Last time it was 
missiles; this time it is words. In 1996, they required us to 
put two aircraft carriers into the region. And this time they 
are firing a paragraph right before the election instead of 
doing the missiles.
    So I suppose someone could turn around and say, hey, it is 
a change for the better. The problem is that, if you read the 
paragraph, it says that if the Taiwan authorities refuse sine 
die, and I suppose it is subject to interpretation when that in 
fact is--the end of the final negotiations--and that could be 
years from now, the peaceful settlement of cross-strait 
reunification through negotiations, then they will be forced, 
forced, to adopt all drastic measures, including use of force, 
to fulfill the great cause of reunification.
    I have heard private statements to that effect. I 
personally, after discussions with former Secretaries of State 
and others who have held your position, I have no doubt that if 
Taiwan declared independence unilaterally, China would go to 
war. I have no doubt of that. And I think the leaders should 
know that some of us in the United States believe that indeed a 
unilateral action by the Taiwanese would probably invite that 
reaction.
    That is one of the reasons why we bend over backward to try 
to make certain that no Taiwanese leader could misinterpret our 
interpretation of that potential or the Chinese interpretation 
or what it might do in terms of our role in the region. And 
that is obviously quite different, if they were to invite that, 
from a sort of unilateral declaration by the Chinese, oh, we're 
frustrated over the negotiations, to hell with all of you, we 
are taking it.
    And indeed, there, there is a different level of what our 
response might be. And I agree with all of that. But I think we 
have got to be, again I say, much more clear about their 
responsibility for these kinds of words and these kinds of 
unilateral departures from a lot of hard work that has tried to 
bring the parties together at this point.
    Now, let me ask you, with respect to the region and our 
current relationship with Taiwan, does the administration at 
this point have any list of quality or quantity of weapons that 
we believe we ought to be selling to Taiwan that we are not 
that might have an impact on their security, or do we believe 
that the current status is sufficient to ensure Taiwan's self-
defense as specified in the Taiwan Relations Act?
    Mr. Roth. As you probably know, there is an annual process 
by which we review, with Taiwan, what their requirements are, 
and make our decisions for each year about what we are prepared 
to sell. It is not a static process. We never take the position 
that simply the status quo is adequate.
    We look at it in terms of, on the one hand, Chinese 
military modernization, how their capabilities are changing on 
one side of the strait; second, we look at what are the 
defensive requirements on the Taiwan side, what is their 
absorptive capacity, financial capacity. And we have a pretty 
vigorous process which results, each year, in decisions on arms 
sales, which, as you know, are always protested by the PRC.
    But at no point have we ever suggested that we can simply 
afford to freeze the arms sales given current developments 
going on.
    Senator Kerry. No, I am not asking about freezing. I 
understand the fluidity of it. I am just asking about the 
assessment, as we are here today in February 2000, what is the 
assessment?
    Mr. Roth. All I can say in general terms is we have not met 
and decided as a government yet on what the specific arms sales 
package is going to be this year. That is something that 
happens later on in the session. But I believe that there are 
requirements on Taiwan's side that need to be addressed. And 
there will be recommendations and you will see additional 
sales.
    Senator Kerry. So are we currently considering sales of 
additional type and/or quantity that would affect the balance 
in our judgment?
    Mr. Roth. I am not quite sure how to answer that question, 
because each sale is, in and of itself, incremental. I do not 
think that we are talking about anything which so dramatically 
shifts it in one way or another. Your question seems to imply 
some dramatic shift, and I do not think that is the case. We 
are talking about a steady process.
    If you would like, I can submit for the record a list of 
the very significant arms sales over the 7 years of the Clinton 
administration.
    [The following information was provided subsequent to the 
hearing:]

              Major Systems Notified/Reported to Congress

                            FY 1993-2000 \1\
---------------------------------------------------------------------------

    \1\ Listings are for notifications of Foreign Military Sales (FMS) 
cases pursuant to Sec. 36(b) of the Arms Export Control Act (AECA) and 
for sales of Excess Defense Articles (EDA) under Sec. 524 of the 
Foreign Operations, Export Financing, and Related Programs 
Appropriations Act, 2000, and previous.
---------------------------------------------------------------------------
1993
   C-13OH aircraft (12)
   HARPOON anti-ship missiles (38)
   Supply Support Arrangement (FMSO II)
   Logistic Support Services for 40 leased T-38 Aircraft
   Modified Air Defense System (MADS)
1994
   MK-46 MOD 5 torpedoes (150)
   MK-41 MOD (Short) Vertical Launch System
   KNOX-class frigates (3) (lease to sale)
   AN/ALQ-184 ECM pods (80)
   MK-45 MOD 2 5"/54 gun system
   Weapons, Ammunition, and Support for 3 leased Frigates
1995
   PHALANX shipboard weapons system (MK-75 gun)
   Supply Support Arrangement (FMSO II)
1996
   Improved Mobile Subscriber Equipment (communications)
   M60A3TTS tanks (300)
   TH-67 training helicopters (30)
   STINGER missiles (465)
   MK-46 MOD 5(A)S torpedoes (110)
   STINGER-RMP missiles (AVENGER)
1997
   HARPOON anti-ship missiles (54)
   TOW 2 anti-tank missiles (1,786)
   AH-1W Super Cobra helicopters (21)
   OH-58D helicopters (13)
1998
   PATHFINDER/SHARPSHOOTER navigation/targeting pods (26)
   Dual mount STINGER missiles (61)
   KNOX-class frigates (2) (sold)
   MK-46 MOD 5(A)S torpedoes (131)
   HARPOON anti-ship missiles (66)
   Chaparral anti-aircraft missiles (50)
   STANDARD SM-1 surface-to-air missiles (100)
   Supply Support Arrangement (FMSO II)
   Pilot training
1999
   CH-47 SD Chinook helicopters (9)
   AGM-114K3 HELLFIRE II missiles (240)
   SINCGARS (5) radios with IEW systems (5)
   E-2T Hawkeye 2000E aircraft (2)
   LSD-38 ANCHORAGE-class landing ship (1)
   Newport-Class Landing Ship Tank (2)
   Supply Support Arrangment (FMSO II)
2000 (through May)
   HAWK anti-aircraft missiles (162)
   Radar modernization: TPS-43 to TPS-75

    Senator Kerry. I understand that. I am just trying to 
understand where we are going from here in the context of this 
current standoff.
    Mr. Roth. More of the same I would say, that we will 
continue to try to----
    Senator Kerry. With respect to China itself, Strobe Talbott 
has just visited. I would assume some of the substance of his 
conversation was, do not do anything to upset the apple cart. 
Or in fact, he may have proffered ways in which we could be 
more helpful in sort of working through the problems we have. 
Specifically with respect to that, there has been an increase 
in arrests, an increase in the crackdown on religious 
activities. Those areas where you most have an ability to stir 
emotions around the world and in the United States, they seem 
to have been the least respectful of recent times.
    Can you speak to that a little bit? Can you assess for the 
committee what insecurities and/or, if they are not, what 
judgments is the leadership of China making that in the face of 
the difficulties we have on permanent status, on other issues--
you are familiar with them all--they would choose to act this 
way? What is your judgment about that?
    Mr. Roth. Again, without putting myself in the position of 
speaking for the Chinese Government, I will try to offer an 
explanation. It is not an endorsement of Chinese actions. 
Clearly, some of the developments in China over the past year 
have created a sense of threat to the leadership.
    Obviously the appearance of 10,000 Falun Gong 
demonstrators--or ``supporters'' is a better word--outside the 
gates of the leadership compound greatly rattled the 
leadership, particularly the fact that it was not predicted or 
known about in advance. This led to a decision at the very 
highest levels to pursue what we call a crackdown on Falun 
Gong, despite enormous international criticism.
    I must say it really is one of the more extraordinary 
issues that I have worked on. When I went out to China in July, 
the foreign minister, who does not always receive me, not only 
received me but literally spent 30 minutes talking about Falun 
Gong, trying to persuade me that it was a cult and a danger and 
we would do the same thing.
    When President Clinton met President Jiang in Auckland in 
September, President Jiang spoke about Falun Gong at great 
length and gave the President several books laying forth his 
position. So this is clearly something that at the highest 
level has struck a nerve and therefore led to this crackdown, 
which, I should say again, I am by no means justifying. We 
think it is completely unjustified and represents a suppression 
of people trying to peacefully represent their views that pose 
no security threat whatsoever to the regime and are not a 
political movement.
    In trying to answer you, again, I am not trying to justify 
Chinese behavior. But when you look at the pattern, whether it 
is the Falun Gong crackdown, actions taken against the 
democracy activists, some of the steps on the house churches, 
recent steps on Tibet, there is a general pattern of 
retrenchment, of pulling inwards, and of consolidating control. 
It seems to be internally driven, with that dominating over the 
external aspects of the foreign policy costs.
    Senator Kerry. I probably have some followup, but, Mr. 
Chairman, my time is up.
    Senator Thomas. Thank you.
    Today's paper talks of a group called the Blue Team. And, 
among other things, in the paper at least, it says that this 
team of chronic, frustrated Hill aides says the lack of access 
to raw intelligence about China many suspect the administration 
holds back data that might put Chinese developments in a more 
ominous light. How do you react to that?
    Mr. Roth. They should read the Washington Times.
    Really, I am kind of astonished by it. I think that there 
has been an incredible amount of information out, both through 
open sources and of course through leaks. For example, there 
has been quite a bit of discussion of Chinese missile buildup. 
I really do not think there has been any repression at all of 
information.
    Senator Thomas. Another from this says America's weakness 
is the real danger. Again, how do you respond to that?
    Mr. Roth. I am tempted to say that that is a better 
question for Secretary Cohen, but the reality is, when you look 
at the trends in the military budget and some of the things 
that are being done to increase readiness, to improve O&M and 
the like--all things out of my jurisdiction--I do not find that 
an acceptable way of characterizing our policy. I also think 
that we have a pretty good track record in terms of cross-
strait issues about our strength. It is not that long ago since 
March 1996, and I think that act still speaks for itself. So I 
do not accept that characterization of our own weakness.
    Senator Thomas. What is the plan for the administration 
with regard to normal trading relations? I presume that is an 
element that is necessary if you want to move forward with WTO 
or closer trade relationships.
    Mr. Roth. The difficulty is in determining at what point to 
present the legislation to the Congress. The desire has been to 
get this done as early in the year as possible, as far away 
from the election and the polemics as possible. But at the same 
time there has been a very strong desire, for understandable 
reasons, in the Congress to see the exact deal. They want to 
see China concluding its negotiations with Europe and with 
several others, and to see the protocols before voting on 
something as significant as PNTR.
    So there has been a bit of a race between a desire to get 
the vote as early as possible and the desire to see the package 
completed. The initial wisdom was that the Congress would 
insist on waiting until all the t's have been crossed and all 
the i's have been dotted. Now there is some consideration as to 
whether there could be a conditional package. But that is being 
debated at a higher level in the White House. I cannot give you 
a specific plan yet. We are still in consultation with the 
Congress.
    Senator Thomas. I see. Malaysia, there seems to be signs 
that the prime minister there is beginning to snuff out 
political opposition by arresting opposition leaders, as was 
the pattern before. How do you react to that? Do you think that 
is a fact? And if so, what position do we take with respect to 
that?
    Mr. Roth. Well, it is clearly a fact, regrettably. If we 
look at the arrests of people from the opposition party, not to 
mention the treatment of Anwar Ibrahim, it is very clear that 
there has been a policy now for over a year of crackdown on 
people that could be labelled the opposition. And we have been 
quite open as an administration in deploring this crackdown. 
Each time we do, we get a complaint from the Malaysian foreign 
minister or deputy prime minister, but I think that is a price 
we are prepared to pay.
    We regret the notion that commenting on the human rights 
situation in Malaysia is interference in their internal 
affairs, which is, of course, what they insist. This time the 
real shock was the fact that most people, most Asians that I 
have talked to about Malaysia, including many of their 
colleagues in ASEAN, assumed that once the election was over, 
once Prime Minister Mahatir had won reelection and his party 
had done well, that that would be the occasion for lightening 
up, for ending any further crackdown and possibly finding a way 
out with respect to Anwar Ibrahim himself.
    Instead, quite unexpectedly, there was an additional 
crackdown, with more individuals arrested, and the pursuit of 
further charges against Mr. Anwar. So this has taken even ASEAN 
by surprise, and I think damaged Malaysia's reputation and 
image in the region.
    Senator Thomas. A shift a little bit again. If East Timor 
is to successfully become an independent country, with 700,000 
people, with no real economic base, apparently not any real 
guideline as to how they will establish a democratic government 
and so on, who is going to move in there to provide the kind of 
assistance that apparently they are going to need to make this 
a successful venture?
    Mr. Roth. First of all, we have to define what is success. 
I think East Timor is never going to be a wealthy place, and 
that we have many poor island countries throughout the South 
Pacific and Western Pacific, many with smaller populations than 
700,000, if you look at some of the countries around. So it is 
not as if one cannot be an independent country without being 
prosperous.
    My sense is that it is going to take a long time to try to 
create some kind of industry in East Timor, whether it is 
tourism, or whether it is coffee agriculture, which has started 
but needs to be expanded. In the short term, they are going to 
be very heavily dependent on foreign assistance. I mentioned at 
the hearing last week that we are talking about international 
pledges of over $500 million for the next 2 to 3 years.
    That is a lot of money when divided amongst 700,000 people. 
So I think there will be significant aid. From the perspective 
of the American taxpayer, there is a good distribution. The 
majority of this money is coming from others, not from us. 
Japan is playing a large role, Portugal, Australia, the 
international development banks. And so this is not a burden 
that is falling primarily or solely on U.S. shoulders.
    But one cannot project that those levels will continue 
indefinitely into the future. Timor is going to have to work 
hard to develop sources of income. One of the most important 
that is just being negotiated now is the question of access to 
revenues from the Timor Gap oil and gas reserves that may be 
out there in the waters between Australia and Timor. There had 
been an agreement between Indonesia and Australia about these 
revenues, and now this has to be renegotiated to reflect East 
Timor's independence. That could be a very significant source 
in and of itself.
    Senator Thomas. Senator Kerry.
    Senator Kerry. Just quickly, and I am not sure you can 
answer it, what is your current readout on the Aceh and Irian 
separatist efforts?
    Mr. Roth. Aceh is at a slightly more hopeful moment than it 
was a couple of months ago, because I believe the government 
has been able to create the belief amongst the opposition 
factions, of which there are many, that it is prepared to 
negotiate, unlike all of previous history. So you now have 
several different processes going on.
    While we were in Davos, there were very important 
negotiations taking place between a Swiss NGO and two of the 
armed resistance movements that sent representatives there. And 
they are trying to work out an agreement for a cease-fire and 
then humanitarian aid. They did not reach an agreement yet, but 
they agreed to meet again. And if it happens, that would be a 
major breakthrough.
    There is also an element, through the minister of state for 
human rights, Hasballah Saad, who is Acehnese, to negotiate 
with the Acehnese, first of all, on a delegation. There are so 
many different factions--students, armed resistance, religious 
leaders, businessmen--that Gus Dur says all the time, what is 
the address? You tell me I am supposed to negotiate, but with 
whom? About what?
    So there is an effort, a creative one, to try to come 
together with a group that is not determined by the Indonesian 
Government, but rather is representative of most players--they 
may not get unanimity--in Aceh to negotiation. But that has 
changed the notion that this will inevitably be fought out on 
the ground.
    So, in that sense, things appear slightly more hopeful. At 
the same time, you should be aware that there is still 
significant fighting taking place in Aceh, that a lot of people 
are being killed every week, and that the fighting is in both 
directions. Partially, it is an effort by the government to 
reassert control which had lapsed in much of Aceh at the end of 
last year. So there has been a counteroffensive.
    Part of it is violence by the GAM, the free Aceh movement, 
against the government forces and the police. So there are high 
levels of violence on each side. I cannot tell you that we are 
at the point of a solution, but at least a solution is 
theoretically possible now, and the government appears 
committed to trying to get it. And more Acehnese seem 
interested in this than just a few months ago.
    On Irian, the situation is not as far along either respect. 
The good news is in terms of the violence, there is some, but 
not at the levels in Aceh. In terms of the political demands, 
Irian leadership is far more fractious. And so it is not quite 
on the same front burner as is Aceh.
    Nevertheless, it is clear to us that the conceptual 
solution has to be the same combination as in Aceh. It is going 
to have to be some mix of increased political autonomy, greater 
control over natural resources, accountability for human rights 
abuses of the past, something that is a comprehensive package 
that can address Irianese concerns within the context of 
remaining with Indonesia and preserving its territorial 
integrity.
    Senator Kerry. It is probably dangerous to do it, but are 
there any kind of hopes? How would you characterize our 
expectations or hopes with respect to either Aceh or Irian?
    Mr. Roth. I would say--this makes me sound like a 
diplomat--cautiously optimistic. Which is different from where 
I would have been under the two previous regimes. But I do 
think the government wants to settle these. I think the Gus Dur 
government recognizes the previous behavior is a blot on 
Indonesia's record and, furthermore, that if they are going to 
preserve the country's territorial integrity, they have to 
address some of the concerns. So you do have the President 
involved himself. You do have the creation of a new minister of 
state for human rights.
    Conceptually, they are on the right track. But now the 
question is, can they get to closure on two difficult sets of 
issues?
    Senator Kerry. Let me just explain that the chairman is 
testifying at another committee. He had expected to be 
testifying a little bit later, but they have just called him to 
go now. So in a rare display of bad judgment, a Democrat holds 
power. And I promise not to abuse it.
    My sense is that President Wahid has surprised, pleasantly, 
that he has taken steps that were more forceful and more prompt 
than one might have anticipated. I think he has shown a sort of 
clarity here about some of the things he needs to do to pull it 
together that is positive in terms of the international 
community's assessment certainly. Would you agree with that?
    Mr. Roth. Absolutely.
    Senator Kerry. Would you say also that, at least till this 
moment, the suspension of General Wiranto and the efforts to 
perhaps hold the military accountable are also bona fide and, 
if there is follow-through, that that could be a very positive 
step in helping to restore credibility to the government?
    Mr. Roth. Once again, absolutely. And you have identified 
the key point, which is follow-through. As good as the report 
of the human rights commission was, that, in and of itself, is 
not justice or accountability. It has to be followed through to 
the next steps. It is now in the hands of the attorney general, 
whom I believe you know personally, Marzuki Darusman, to make 
recommendations for prosecution. And then there is the court 
process.
    But I agree with you, it is a very good start. To get a 
report from an Indonesian institution that names names, 
including senior generals, the Governor of the province, and 
key militia leaders. If you had sat down to make a list and 
asked staff to draw up who they thought should be looked at, 
those are the names that were in that report. So that is a very 
good start.
    Senator Kerry. Good. With respect to North Korea and the 
delegation visiting here next month and the talks that we will 
have, can you share with us perhaps what assurances and/or 
verifiable actions we might want the North Koreans to take 
regarding the missile program, sites of weapons-related 
technology and support for terrorism in order to achieve their 
goal of lifting economic sanctions and treating them 
differently with respect to the terrorism, state sponsored 
terrorism?
    Mr. Roth. What I would really like to do is offer you a 
classified briefing so I can give you an exact answer rather 
than speak around it in open session. I do not want to preview 
our tactics with the North Koreans in a public hearing.
    Senator Kerry. Fair enough.
    Mr. Roth. But there is no desire to withhold that 
information from you.
    Senator Kerry. Fair enough. I understand that. Can you 
share at all publicly whether or not the North Korean 
negotiators are mindful of U.S. efforts to develop a defense 
program with respect to their missile program and how that 
might bear on missile defense itself and the ABM treaty?
    Mr. Roth. Well, of course, one of the interesting things 
when you talk to the North Koreans is they view themselves as 
the threatened party, not the threatening party. So they always 
refer to the predominance of American military power, U.S. 
nuclear weapons and the threats we pose to them rather than 
ever conceding that any weapon system under development there 
could possibly be a threat to us. So it is a bit of a dialog 
that passes each other in the night.
    Nevertheless, we make sure they understand just how 
important these issues are to us. While I would not want to bet 
on how precise their understanding is of the American political 
system I think they are getting the message that this issue is 
hugely important, not just to the administration but to the 
Congress and the American people.
    Senator Kerry. Is there some effort with respect to China 
at this point, which has proven to be a successful interlocutor 
with respect to North Korea in the past? It would seem to me 
they also have interests in perhaps seeing their acceptance of 
that reality. And I wonder if initiatives are underway to try 
to assist in making that happen.
    Mr. Roth. We hold regular, extensive and detailed talks 
with China making exactly that point. They should have 
identical interests with us in this regard. They do not want to 
see missile proliferation or proliferation of weapons of mass 
destruction. And furthermore, if North Korean programs threaten 
other countries, that is going to heighten the pressure for a 
TMD, if it is in Japan, or heighten the pressure for NMD in the 
United States, two things which China does not want to see. But 
China cannot insist that other countries make themselves 
vulnerable to threats. That is not an acceptable position.
    Senator Kerry. Mr. Secretary, I would just like to say to 
you I underscore your own answer to that. As a 16-year veteran 
here now, I can remember when we first began on this committee, 
arms control was at the height of our concerns, and we were 
obviously still in the high throes of the cold war.
    We have just reconstituted the arms control observer group 
here--under a new name, but nevertheless. Many of the more 
senior Senators--Carl Levin and John Warner and many others--
are involved in it, and I am pleased to be part of that. And I 
simply want to assert that it seems to me this is a very 
propitious moment for the administration to raise the 
visibility level a little bit of these kinds of efforts.
    I think the President has to do it personally. I am going 
to personally chat with him to do that. I know the stakes are 
always high when you do engage in that kind of high profile 
effort. But I think, given the stakes with respect to the ABM 
treaty, the summer decision timing and the current relationship 
with China, it seems to me that here is an area of mutual 
cooperation, that if it were to be more augmented might produce 
enormous results for all of us. And I would encourage every 
member of the administration to try to see if we could find 
creative ways to raise the profile and energize our 
nonproliferation efforts and particularly focused on North 
Korea, but obviously elsewhere, too.
    Mr. Roth. Fair enough. That was one of the objectives of 
Strobe Talbott's trip, but it is something we do across the 
board. The Secretary has done it. The President has done it at 
some of his meetings. But I will relay your advice back, as 
well.
    Senator Kerry. I respect that, and I know that is going on. 
As I say, there is always a measured danger of raising the 
public profile before all the ducks are lined up. On the other 
hand, when you raise the public profile, sometimes it creates a 
global impetus that helps to line the ducks up. And there is 
always that balancing act; I understand that. The stakes are 
high enough now, with the pressures we have internally in the 
Senate and elsewhere with respect to large financial and long-
term arms control commitments that may or may not be made, that 
I think one cannot expend enough energy in the next few months 
on this effort, personally.
    Is there any area that you wanted to retouch on that either 
of us asked about?
    Mr. Roth. Just an area of personal interest to you, where 
we are probably going to continue to need your help, which is 
Cambodia and the tribunal. Thanks to your initial conversation 
with Hun Sen that started the process of getting people focused 
on a possible compromise, we have been pursuing that diligently 
and it has been a roller coaster, up and down.
    But the most important recent development is that UN 
Secretary-General Kofi Annan was in Cambodia. He met with Prime 
Minister Hun Sen, and agreed that they would send a team out to 
talk. So rather than reaching deadlock or getingt into a battle 
over what is acceptable or unacceptable, there is a process 
which we of course have encouraged on both sides to try to get 
this to ``yes'' and come up with something that fully respects 
Cambodian sovereignty and at the same time fully respects the 
legitimacy of international concerns. This has to be not a show 
process but a genuine judicial process.
    We are not there yet, but, as of today, the process is on 
the right track in terms of this team going out.
    Senator Kerry. Well, I am very appreciative of that. I know 
you have expended energy on it, as has the Secretary General. 
In my conversation with the prime minister, he made some 
mention of perhaps my being out there in a month or so. And I 
suggested that if I thought it could be helpful, I was willing 
to try to do that.
    Mr. Roth. We may call on you.
    Senator Kerry. If it is, I would be happy to try to do 
that, and see if we could leverage that. It would be good to 
get it included.
    A final question just very quickly. When we were both in 
Davos, there was some conversation with people there about the 
transition of Hong Kong and what that might or might not augur 
with respect to Taiwan ultimately. Do you have any concerns 
about the ways in which things have transpired with respect to 
Hong Kong since the hand-over? And what would your judgment, 
just quickly, be about the status of Hong Kong at this point in 
time?
    Mr. Roth. Well, let me give you a quick snapshot and give 
you a longer answer for the record, because I think it is 
complex.
    [The following response was received subsequent to the 
hearing:]

    Question When we were both in Davos, there was some conversation 
with people about the transition of Hong Kong and what that might or 
might not augur with respect to Taiwan, ultimately. Do you have any 
concerns about the ways in which things have transpired with respect to 
Hong Kong since the hand-over? What is your judgment about the status 
of Hong Kong at this point in time?
    Answer. The transition of Hong Kong from British to Chinese control 
has gone very well. Before July 1997, many people expressed concerns 
about freedom of the press, the ability to conduct business, and the 
presence of the PLA. On each count, the record has been quite 
encouraging. Many of the unique characteristics of Hong Kong have 
continued to flourish.
    While we have some concerns, Hong Kong remains a free place that 
extends basic civil liberties to its citizens, defines its identity in 
terms of being an open international city, and largely continues to 
make its own decisions in terms of its vision, identity, and economic 
interests. Its export control policy and procedures remain world 
class--centered on its interest in access to high technology from the 
industrialized countries in order that Hong Kong can develop into a 
leading international information technology center. Bilaterally, we 
continue to work closely with the Hong Kong authorities to counter 
transnational crime, including narcotics trafficking and alien 
smuggling. We coordinate efforts to block the illegal transshipment of 
arms and the proliferation of weapons of mass destruction.
    At the same time, there have been some developments that cause 
concern. The Hong Kong Government's request in June for an 
interpretation of the Basic Law by the National Peoples Congress in 
Beijing in order to change the prospective effect of a particular Hong 
Kong Court of Final Appeal ruling, no matter how understandable in 
terms of motivation, raised questions about the authority of Hong 
Kong's highest court--questions that can only be resolved by looking at 
how subsequent cases are being handled. The jury is still out. If this 
use of the interpretation mechanism were truly exceptional, then the 
impact on Hong Kong's autonomy could be negligible. In this regard, I 
would note that Hong Kong's particular strength is the large number of 
individuals and organizations (such as civic organizations, Legislative 
Council, the Court of Final Appeal) that speak up about their concerns 
on a regular basis and whose voices are fully reported by Hong Kong's 
active media.
    We have also been disappointed by Beijing's unwillingness, after 
our accidental bombing of the Chinese embassy in Belgrade, to leave 
Hong Kong out of the vicissitudes of U.S.-PRC relations by suspending 
for a period approvals for U.S. naval ship and aircraft visits to Hong 
Kong. Fortunately, these visits appear to be back on track now; Hong 
Kong recently received both the U.S.S. Blue Ridge and the U.S.S. 
Stennis carrier task force. Again, further recourse to this sort of 
action raises questions about Hong Kong's status as an open, 
cosmopolitan city.
    Overall, we continue to watch developments closely. The United 
States has a significant interest in Hong Kong's future stability, 
prosperity, and democratic development. Like many economies emerging 
from the Asian financial crisis, Hong Kong faces challenges on this 
score.

    Mr. Roth. If you asked me the bottom line, the Hong Kong 
transition has gone very well. When you look at some of the 
fears prior to reversion and the actual situation now, in terms 
of freedom of the press, in terms of the ability to do 
business, in terms of not importing Chinese styles of 
corruption, in terms of not having a heavy handed military 
presence, there are many different indicators that lots of 
aspects of Hong Kong have stayed the same.
    There are some areas where there has been trouble, 
particularly some of the questions of the courts and the 
question of the applicability of Chinese law to Hong Kong and 
whether China serves as a final arbiter on the right of abode, 
a contentious case. So it has not been perfect, and I will give 
you a more detailed answer for the record, but, in general, it 
has been good.
    Unfortunately, in terms of your specific question, though, 
it is largely irrelevant. Taiwan repeatedly insists that it is 
not interested in Hong Kong as a model, that a one country/two 
systems is an irritant, not a solution, and that they do not 
view themselves as in any way comparable to what took place in 
Hong Kong. Therefore they resent the notion that the same 
formula should be applied to them.
    We have suggested to the parties that they try getting 
beyond the semantics. It is not a question of one country/two 
systems, because China has already made it clear that it is 
prepared to do some things very differently vis-a-vis Taiwan--
for example, in relationship to military forces. So rather than 
get stuck on the label, where they are stuck, they should try 
to come up with pragmatic solutions. But I suspect that Taiwan 
is not looking at Hong Kong really, much, one way or the other. 
A very negative situation in Hong Kong would affect Taiwan, but 
the positive side of the ledger does not change their basic 
view.
    Senator Kerry. I think that is good advice. On that, Mr. 
Secretary, thank you very much for taking time to appear before 
the committee. And thank you for your good work.
    And would you also pass this along. I think the 
administration should be thanked and congratulated for the 
initiative which you have asked Bill Perry to follow through 
on. And he and Wendy Sherman I think have done a terrific job 
of helping to steer us in the right direction there. And 
hopefully that will bear fruit. He has been a wonderful 
communicator with the Congress on all sides, and we are very 
appreciative of that initiative.
    Thank you. We stand adjourned.
    [Whereupon, at 3:15 p.m., the hearing was adjourned.]

                              
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