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

                     DEVELOPMENTS IN WESTERN EUROPE

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

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                        INTERNATIONAL RELATIONS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                            OCTOBER 18, 2000

                               __________

                           Serial No. 106-195

                               __________

    Printed for the use of the Committee on International Relations

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

                                 ______

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                  COMMITTEE ON INTERNATIONAL RELATIONS

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

                            C O N T E N T S

                              ----------                              
                                                                   Page

                               WITNESSES

Charles Ries, Principal Deputy Assistant Secretary of State, 
  Bureau for European Affairs, U.S. Department of State..........     2

                                APPENDIX

Prepared statements:

The Honorable Benjamin A. Gilman, a Representative in Congress 
  from the State of New York, and Chairman, Committee on 
  International Relations........................................    19
Charles Ries.....................................................    19

Additional material submitted for the record:

Response submitted by Mr. Charles Ries in reply to Chairman 
  Gilman.........................................................    23

 
                     DEVELOPMENTS IN WESTERN EUROPE

                              ----------                              

                      WEDNESDAY, OCTOBER 18, 2000

                  House of Representatives,
                      Committee on International Relations,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:05 a.m. in Room 
2200, Rayburn House Office Building, Hon. Benjamin A. Gilman 
(Chairman of the Committee) presiding.
    Chairman Gilman. Committee will come to order.
    This morning's hearing on the developments in Western 
Europe will provide the Members of our Committee the 
opportunity to review our policy toward that region of the 
world in which our core national interests are most engaged. 
The majority of our allies are there, the bulk of our 
international trade and investment is with the countries of 
this vital region, and, of course, it is with these countries 
that we share our fundamental values and institutions.
    Although our overall relations with these nations are 
excellent, it would be a mistake to not take stock of them and 
stress those areas where we may differ and disagree. This is 
particularly true with regard to the members of the European 
Union as we continue to work on the European Project, creating 
the bonds and institutions that have already led to a single 
European currency, as well as efforts to forge a more common 
foreign and security policy that are the main attributes of a 
single sovereign state. The implications of these developments 
may be profound for the citizens of our own Nation, but which, 
in this time of unprecedented peace and prosperity, are not 
much discussed outside the bounds of policy-making circles and 
our institutions of higher learning.
    The European Project has not been without its own 
difficulties. The dramatic plunge in the value of the euro 
since it was launched last year is evidence of these problems 
as is the ongoing difficulty in agreeing to enlarge the 
European Union to include some of the countries of Central and 
Eastern Europe that have long regarded EU membership as a 
cementing of their status as independent states sharing in the 
free market and democratic traditions embodied in the countries 
of the West.
    Attitudes among Europe's elite toward America are also 
shifting in the aftermath of the Cold War. Comments by 
officials of one of our closest allies suggest, for instance, 
that Europe should be concerned about tendencies in our country 
to pursue neounilateral policies, and that European integration 
is necessary to provide a counterweight to curb the exercise of 
American power.
    How widespread these critical attitudes are among the 
countries we look to as partners for cooperative efforts to 
meet those challenges that confront all of us is a significant 
question which we hope our witness from the State Department 
will be able to address this morning.
    I would like to welcome Principal Deputy Assistant 
Secretary Charles Ries of the Bureau for European Affairs, and 
I want to thank Mr. Ries for his appearance at this hearing. 
Mr. Ries transferred to the Bureau earlier this year from our 
embassy in London where he served as the Minister Counselor for 
Economic Affairs. Prior to that assignment, he served at our 
mission to the European Union and has served in a number of 
interesting positions related primarily to our trade and 
economic policies.
    Mr. Ries, you may proceed with your testimony, which will 
be entered in full in the record, and you may abbreviate it as 
you deem appropriate, but first, I would like to call on our 
Ranking Minority Member, the distinguished gentleman from 
Connecticut, Mr. Gejdenson.
    [The prepared statement of Mr. Gilman is available in the 
appendix.]
    Mr. Gejdenson. Thank you, Mr. Chairman. I would like to 
also welcome our witness here today, and obviously from both a 
military and economic perspective, Europe is a critically 
important area for the United States. The issues we have dealt 
with them on are varied, from Milosevic to missile defense, to 
the economic kind of issues, whether it was the battle over 
hushkits, where the Europeans tried to use the EU to block 
American products, or whether it was our own missteps where 
changes in our own export laws has most of the European foreign 
ministers saying that they will try to exclude American parts 
from their satellites because of our convoluted satellite 
export policy.
    The Congress itself has been somewhat schizophrenic in 
response to the European defense initiative. The Congress 
condemns the Europeans on one hand for not being full partners 
and pulling full weight, but when the Europeans tried to 
coordinate their defense production and resources, the Congress 
seems anxious about that as well.
    I think that trade issues and the defense issues and issues 
like missile defense where America has an instinct to go it 
alone complicates not just our relationship with Russia, but 
also with Western Europe. So I join the Chairman in looking 
forward to hearing your remarks in these areas. It is obviously 
a very broad field of interest for the United States.
    Thank you.
    Chairman Gilman. Mr. Ries, you may proceed.

STATEMENT OF CHARLES RIES, PRINCIPAL DEPUTY ASSISTANT SECRETARY 
OF STATE, BUREAU FOR EUROPEAN AFFAIRS, U.S. DEPARTMENT OF STATE

    Mr. Ries. Thank you very much, Mr. Chairman. I have a full 
statement that will be entered in the record. I will just make 
some introductory comments and look very much forward to a 
dialogue with you and the Ranking Minority Member.
    Chairman Gilman. Without objection, your full statement 
will be made part of the record.
    Mr. Ries. I thank the Committee for the invitation to meet 
with you today. We see our foreign policy as a partnership 
between the executive and the legislative branches in service 
to the American people, and this is an opportunity--this 
hearing today is an opportunity to have a dialogue, very much a 
true dialogue on our goals and objectives in Europe.
    Mr. Chairman, the great lesson of 20th century history is 
that the destinies of North America and Europe are joined. If 
Europe is secure, America is more secure. If Europe prospers, 
America does as well.
    The U.S. is focusing on three opportunities in our 
relationship. Our first opportunity is in Europe itself, 
ensuring the continuing integration of the continent so that 
conflict in Eastern Europe becomes as inconceivable as conflict 
in Western Europe, and hope for a better life is shared across 
the continent.
    The second opportunity is between Europe and America, 
strengthening and deepening the bonds between our societies in 
ways that make a positive, tangible difference in our daily 
lives.
    The third opportunity extends beyond Europe and America, 
improving our opportunity to deal with issues in a wider world 
that neither of us acting alone will be able to confront 
effectively.
    When we pull together, the transatlantic community is the 
engine in progress on every world-scale issue. When we pull in 
different directions, the engine is less efficient.
    To benefit from a stronger Europe, we need to work with 
Europeans to build a more democratic and stable Europe. In 
Brussels, on March 30th, we agreed with our European partners 
to launch $2.3 billion of quick start programs for Southeastern 
Europe. Of that amount, the U.S. share is $77 million, about 
3.2 percent of the total, but real structural change and future 
conflict prevention requires long-term engagement.
    Mr. Chairman, one area where that engagement will be 
critical is Serbia. The election and swearing in of President 
Kostunica is an extraordinary victory for the people of 
Yugoslavia, who have already chosen democracy and a future in 
Europe over dictatorship and repression. A democratic Serbia 
committed to the rule of law, the establishment of which 
President Kostunica has made one of his primary goals, will be 
a welcome addition to Southeast Europe.
    President Kostunica has affirmed the adherence of his 
government to the Dayton Agreement for Bosnia and to U.N. 
Security Council Resolution 1244 on Kosovo. A democratic 
Yugoslavia can provide a new basis for strengthening regional 
cooperation and advancing democratic and economic development 
throughout the region. We expect Yugoslavia to meet the same 
standards on human rights, rule of law and cooperation with the 
international community as other states.
    Key to the success of this effort will be doing our part to 
consolidate the democratic changes in Belgrade. We want to show 
the people of Serbia there is an immediate democracy dividend. 
We are working in close cooperation with our European allies to 
this end. One of our first steps has been to lift the oil 
embargo and the flight ban, as President Clinton announced on 
October 12th. Lifting the sanctions is part of the implicit 
promise we made when we imposed them, that a return to 
democracy by the people of Serbia would be rewarded.
    We should continue and, as appropriate, increase assistance 
to humanitarian needs and strengthen democracy in the FRY. We 
are consulting with Congress in the context of the 
appropriations discussions which are still ongoing and the fact 
that the new government is still in the process of forming to 
determine appropriate levels of assistance.
    Mr. Chairman, the United States is dedicated to conflict 
resolution and management in other parts of Europe as well. We 
are working closely with Greece and Turkey in the search for a 
solution to the Cyprus problem. In Northern Ireland we support 
local leaders and the governments of Ireland and the United 
Kingdom to achieve a lasting political settlement. We have also 
had enormous success in correcting wrongs of past conflicts in 
the area of compensation through forced and enslave laborers in 
World War II. We are addressing similarly difficult issues of 
property restitution.
    The United States is working with our European allies to 
strengthen defense capabilities in Europe, as you mentioned. 
NATO's open door policy and the Membership Action Plan are key 
elements in our work. Kosovo demonstrated the clear gap between 
U.S. and European military capabilities. ESDI and NATO's 
Defense Capability Initiative are a way for Europe to take more 
responsibility for its own defense. A stronger European 
military contribution will make the alliance stronger, lift 
some of the burden on the U.S. to act in crises, and make the 
U.S.-European relationship more of a partnership while in no 
way eroding the transatlantic alliance that we have worked so 
long to establish.
    We have a vibrant multifaceted relationship with the 
European Union as well, as embodied in the new transatlantic 
agenda of 1995. Mr. Chairman, you make a major contribution to 
this effort through your active participation and that of your 
colleagues in the transatlantic legislators dialogue. Your 
tireless efforts and those of others in Congress help us reach 
members of the European Parliament and national 
parliamentarians throughout Europe. In this way we can 
``design-in'' compatible approaches to common problems right 
from the outset.
    We are otherwise engaged with the EU across a range of 
economic foreign policy and global issues. We hope to resolve 
important trade disputes between us. We are acting together to 
advance our common foreign policy objectives worldwide, in 
Southeast Europe, the Korean Peninsula and Ukraine just to name 
a few examples.
    With the EU we are tackling new challenges. At the Lisbon 
summit last June, we crafted a safe harbor approach to data 
privacy protection. We have launched an important effort to 
find common ground on biotechnology and to fight HIV/AIDS and 
other infectious diseases. Similarly, we are working together 
to promote e-commerce and information society links between us 
and worldwide.
    Cooperation between the United States and Europe also means 
working closely to strengthen the OSCE, the Organization for 
Security and Cooperation in Europe. The OSCE has dramatically 
improved its ability to address emerging crises through rapid 
deployment of civilian expertise, using innovative tools such 
as the rapid expert assistance and cooperation teams, better 
known as REACT. OSCE missions in many countries funded through 
peacekeeping funds help alleviate conflict and reinforce human 
rights practices, and we are using OSCE as an important tool in 
our fight against trafficking in women and children.
    The United States encourages regional cooperation in 
Europe, not only with the stability pact in Southeast Europe, 
but in Northern Europe, in the Baltics, via the Northern Europe 
Initiative. I would like to thank the Committee and 
particularly you, Representative Gejdenson, for your support of 
the Northern Europe Initiative. You recognized that relatively 
modest U.S. funding for regional approaches is the key to 
leveraging greater support for the Baltics and Russia.
    Finally may I note that we are taking great strides to 
ensure that management of the European Affairs Bureau here in 
Washington contributes to greater policy success in the field. 
Reinforcing the security of classified information is at the 
top of our priority list. We have had European Eurowide town 
hall meetings and are closely reviewing our security 
arrangements and updating our standard procedures as part of a 
commitment on the part of the bureau leadership to an 
absolutely secure environment.
    This is just a brief list of EUR Bureau activities set out 
more fully in my written statement. Behind these policies are a 
great team of dedicated people. However, at this time we don't 
have the resources to fully realize our opportunities in 
Europe. We lack technology, infrastructure and enough people to 
do all that we are called upon to do. If we don't support our 
diplomatic readiness, our policies become harder to implement, 
and U.S. interests suffer.
    The bottom line, though, is that our partnership with 
Europe does real things for real people. It generates jobs. It 
stimulates investment. It reduces the threats we face from 
crime, terrorism, nuclear arms proliferation, drugs and 
disease. It increases our security and cuts the cost to the 
American taxpayer of achieving that security. When it works, it 
enables us to achieve goals we could not achieve alone. When it 
does not, stalemate and crisis can result. But making it work 
requires resources, personnel, facilities and funding to pursue 
expanding U.S. interests.
    Thank you very much.
    Chairman Gilman. Thank you, Secretary Ries, for your 
analysis.
    [The prepared statement of Mr. Ries is available in the 
appendix.]
    Chairman Gilman. Let me ask, many observers believe the 
time line for EU enlargement has slipped with no new entrants 
likely before 2003. How long do you expect the current round of 
enlargement negotiations to last, and has the EU's decision to 
expand membership negotiations through a greater number of 
countries led to a general slowing down of the negotiations, or 
rather than institutional process problems, is there simply a 
growing reluctance to actually take this step of enlargement?
    Mr. Ries. It is a difficult series of questions, Mr. 
Chairman. I would say that there is widespread recognition in 
Europe that enlargement of the European Union is an imperative 
for Europe and for the EU's relationship with its neighbors. 
Part of the task that the EU faces is that there are so many 
countries that have a valid claim on accession into the 
European Union. The European Union realizes that in order to 
bring in a substantial number of new members, it will have to 
make substantial institutional changes in its constitutional 
arrangements, number of commissioners, the way they handle the 
Presidency, the question of voting, matters that are decided by 
unanimity. These are very difficult questions for them and are 
the priority topic for the present Presidency of France and 
were the subject of a summit meeting last weekend.
    Because they are so difficult, though, they are hard to 
resolve, and it remains EU's objective to come up with a new 
institutional basis for relations among member states that 
would allow for accession and to do that at the summit at Nice 
in December. We very much hope that they succeed in that.
    You asked a question, though, whether the unprecedented 
large number of accession candidates--the difference in 
development levels between many of these candidates and the EU 
15 now--and these institutional problems may cause a further 
delay in the timetable. I certainly hope that is not the case. 
I think that the Europeans acting collectively in Brussels and 
many of our major European partners as a matter of national 
policy certainly favor entry as soon as possible with as many 
countries as qualify.
    It is a very difficult task though. The longer the EU goes 
on, the body of legislation that they have adopted over the 
years since the 1950's in the initiation of the organization 
becomes a bigger and bigger task. Each new entrant faces a 
larger legislative task. I would be loath to speculate exactly 
when the first tranche would come in, only to say we certainly 
hope it would be as soon as they possibly can.
    Chairman Gilman. What you are telling us then, is that 
there is no general reluctance.
    Mr. Ries. I don't think so. There are occasional 
politicians who occasionally suggest things. There was a great 
deal of attention placed in the comments, apparently offhand 
comments, of one commissioner in Germany that maybe there ought 
to be a referendum, and there was the suggestion that that 
might presage a general change in policy to slow up accession. 
I think the reaction to the reporting of that comment both from 
the Commission itself and from the German government and other 
governments involved indicates no slackening in the political 
commitment to enlargement as soon as possible.
    Chairman Gilman. Secretary Ries, which countries are up 
front on being considered as potential new members?
    Mr. Ries. If you ask any of the 12, they would say, ``me''.
    Chairman Gilman. Which 12 are there?
    Mr. Ries. Is this a trick question, I have to list them 
all?
    Chairman Gilman. Not at all. If you just tell us who are 
the dominant.
    Mr. Ries. The Baltic three, Latvia, Estonia, Lithuania; the 
Visagrad four, which would be Poland, Hungary, Czech Republic 
and Slovakia. That is seven. Then we have Bulgaria, Romania, 
that is nine; Cyprus, Malta, 10, 11.
    Mr. Gejdenson. Slovenia.
    Mr. Ries. Slovenia, thank you very much.
    Chairman Gilman. So these are all up front for future 
consideration?
    Mr. Ries. That is right. And the Turks are also, after the 
Helsinki summit, considered to be an accession candidate. They 
do not have accession programs under way.
    Chairman Gilman. Mr. Secretary, how can the inefficient, 
protectionist common agricultural policy which presently 
consumes half of EU's budget be sustained if EU membership is 
offered to poor, agrarian states in Eastern Europe.
    Mr. Ries. Well, the Europeans themselves recognize that the 
common agricultural policy requires further and substantial 
reform. They agreed to this a couple of years ago at Berlin. 
They understand that the current agricultural policy in its 
present form is unsustainable with the accession of many of the 
states, in particular Poland, which has a very large 
agricultural sector.
    Fortunately, this is something that would be good for the 
world anyway. We are just finishing the period of 
implementation of the Uruguay Round, which required the 
Europeans to make a substantial cutback in the export subsidies 
that they gave that supported the high-price common 
agricultural policy, and we are hoping that we will have very 
soon a new round of multilateral trade negotiations. In any 
case, it was agreed during the Uruguay Round that we would 
start, and we have started agricultural negotiations in the WTO 
to take on the next phase. In our view, the common agricultural 
policy disadvantage particularly the poorer countries around 
the world, because the Europeans--because they have this high-
price, high-production policy, have to export their surpluses 
at rock bottom prices, and that harms other producers of 
agricultural commodities it is particularly onerous for the 
Third World as well as our own agricultural exporters.
    So in sum they need to reform the common agricultural 
policy to meet their international trade objectives, and they 
need to reform the common agricultural policy in order to 
handle enlargement, and fortunately they recognize the need to 
do both.
    Chairman Gilman. So as part of their reforms, is there any 
real prospect of European liberalization of agricultural policy 
in the forthcoming trade negotiations?
    Mr. Ries. We think so.
    Chairman Gilman. It has been reported that some EU members 
are pressuring EU aspirant countries to sign contracts with 
European firms or give preferential treatment to European-based 
businesses at the expense of our own companies by hinting that 
it will enhance the prospects of their becoming EU members. 
Even more seriously, there have been reports that aspirants are 
being pressured to take diplomatic positions, including within 
NATO, that support certain EU members against the United 
States. Are those allegations accurate to some degree, and if 
so, what are we doing about that kind of blackmailing of 
Central and Eastern European countries to the detriment of our 
own interests?
    Mr. Ries. Well, we have heard reports of that nature, Mr. 
Chairman, and let me assure you we take them very seriously. I 
have since May, since actually arriving in my present job, led 
a dialogue with the European Commission in Brussels about 
enlargement, just give us a forum to take up these very 
matters, and I have raised a number of cases in which we had 
the indication or the concern that the European Union 
institutions or individual member countries were using their 
leverage, real or potential, over the aspirant countries for 
either commercial advantage or for policy advantage in terms of 
crafting European legislation. And we have really been quite 
clear with the Commission that we did not consider that to be a 
responsible way to proceed, and they have agreed with us, and 
they have agreed to look into any particular instances that 
raise concern with us, and they have done so.
    We don't, though, leave it there. We also, of course, have 
very important bilateral relationships with all of these 
countries. Many of the aspirant countries are themselves--some 
of them are members of NATO, and all of them have close 
relations with us, and those are relations that they value, 
they themselves value. And so when we hear tales of this sort, 
we also stand up and are counted in the capitals.
    Chairman Gilman. With regard to our good relations with 
them, despite U.N. Secretary General Kofi Annan's recent 
statements that words can inflame or soothe, that everyone 
needs a restoration of calm or quiet so as to create the best 
possible atmosphere for resumption of talks, according to 
Secretary General Kofi Annan, in the Middle East, the U.N. 
General Assembly plan s an emergency session today, as a matter 
of fact they are meeting now, in which a resolution will be 
considered which once again condemns Israel. It almost sounds 
to us like the U.N.'s racism resolutions of the past. And I 
have been calling on our colleagues to join with me in 
condemning the latest active incitement, but I wanted to ask 
you, Mr. Secretary, what is our Nation doing to build 
opposition to that kind of a measure to ensure that it will be 
defeated?
    Mr. Ries. Well, Mr. Chairman, I am sure that we are making 
an all-points effort to deal with this, as well as other 
aspects of the Middle East crisis that we have been within the 
last 2 weeks, and as we did with the last resolution. We will 
talk to our European allies that are permanent members of the 
U.N. Security Council--France and the UK--and our other major 
European allies, to make sure that they understand the 
implications of anything that is being considered and make sure 
that our views are clearly known there. We do this normally 
here, in New York and in capitals, and the Secretary, as you 
know, speaks to her European foreign minister colleagues 
several times a week, and she will and does raise these issues 
with them.
    Chairman Gilman. Well, I would hope that when you return to 
the office after this hearing, you will engage in that process 
before the resolution is adopted, and we would enjoin our 
Secretary of State to participate in that effort. I met 
yesterday with Mr. Holbrooke, and I know he is hard at work on 
this, but he needs some help from all of us in appealing to the 
European Union representatives to work along with us rather 
than at opposite poles.
    Mr. Ries. We will do so.
    Chairman Gilman. Thank you, Mr. Ries.
    Mr. Gejdenson.
    Mr. Gejdenson. Thank you, Mr. Chairman.
    How does the creation of a distinct European defense 
identity play into Russia's present sense of unease about NATO 
expansion? Does it actually mitigate because it gives the 
appearance of multiple fields of interests, or does it enforce 
the anxious state of the Russian Government in seeing the West 
ever moving eastward and giving them a greater feeling of 
insecurity?
    Mr. Ries. That is an interesting question, Congressman. I 
am thinking about it. I would think that the development of the 
European Security and Defense Identity per se would not be 
considered to be an additional or grievous threat to Russia's 
security interests. It is taking place in the framework of 
NATO. After all, the European Security and Defense Identity is 
in a way the development of a European capability that would 
take place, be separable but not separate from NATO, and it is 
not changing, if you will, the boundaries of the NATO area of 
interest and operation. And in a sense, because it is in the 
context of NATO, the NATO Permanent Joint Council relationship 
with Russia gives Russia an ability to have a dialogue with the 
Europeans with respect to European defense. I have seen no 
indications that the Europeans are concerned to reassure 
Russia. I think that they are confident that the Russians 
understand that this capability is designed to deal with a 
variety of largely international tasks. Short of war, it is not 
an offensive capability. So I would be surprised if it was a 
major concern for the Russians.
    Mr. Gejdenson. There is apparently a recent agreement among 
six Western European countries to work toward a common export 
control regime. The impact on the United States seems to me to 
be, you know, one more step in isolating America's somewhat 
convoluted export policies in that there will be even more 
pressure within the EU not to do business with the United 
States.
    And I have referenced the actions taken by Daimler-Benz. 
Following the United States moving satellite export licensing 
from Commerce to State, I think almost every one of the NATO 
foreign ministers sent us a letter saying they would, where 
possible, now buy components from outside the United States 
because they see us as an unreliable supplier, and where there 
are no alternative suppliers, they will seek to create 
alternative supplies.
    And that ties into my next question, which I would like to 
combine here, and that is that the EU has been protectionist in 
places like agriculture and hushkits and jet airframes and 
things. I believe in a good economy. If the economy stalls, it 
seems to me the United States has to confront an EU that will 
be more focused on protectionism than it has been during that 
time of economic expansion.
    So in a combination of America's own stupidity in how we 
formulated our export laws, partly due to Congress and partly 
to European protectionism, I think we could have some serious 
problems in the critical fields where the growth of the 
American economy is at stake. They are not going to do this 
across the board. So, in a sense, it doesn't galvanize American 
public opinion. It will be in high technology and computers and 
jet engines and airframes and critical areas where the future 
is. Do you see that as a problem?
    Mr. Ries. Well there are a number of points in your 
questions, and let me see if I can address, them in this way.
    First of all, I think that we share an interest with the 
Europeans, a fundamental national security interest, in making 
sure that technology that assists adversaries or potential 
adversaries is adequately controlled. Obviously, there is the 
potential of countries around the world developing missile 
systems and weapons of mass destruction and other high-tech 
instruments that could threaten our security, and they also 
threaten the security of the Europeans. Both of us, therefore, 
have export control regimes, and through the Wassenaar 
Arrangement we actually coordinate our export control efforts.
    Mr. Gejdensen. You are not seriously arguing that Wassenaar 
is a real coordination? I mean, we didn't have real 
coordination during the Soviet era and COCOM where basically 
the Germans, the French and others had, you know, one of those 
things you go through on the subway without a coin, though, 
just a spinning rotation, whereas American export licenses 
could get bogged down for months here? You are not arguing that 
the Europeans take export controls with equal seriousness to 
which the Administration or Congress does?
    Mr. Ries. I am arguing that we both have similar 
objectives, and the Europeans in doing this six-nation 
agreement are doing it for similar objectives. The purpose is 
to try and focus controls and to keep technologies out of the 
hands of countries of concern. I am not a great expert, 
obviously would not want to speak to the actual effectiveness 
in specific cases, but what I would say is that we share this 
goal of protecting sensitive technologies, which is why we have 
the export control laws and regulations that we have and why 
they have the ones that they have, and we do have a forum for 
coordinating.
    We also, though, both sides, are interested in promoting 
transatlantic defense collaboration. The United States this 
spring announced a defense trade security initiative designed 
to simplify the parts of U.S. export control regulations that 
inhibit or seem to inhibit defense collaboration and trade 
between the United States and our European allies, and 
implementation of that defense trade security initiative is 
proceeding.
    I know that various participants in the satellite and other 
high-tech markets are concerned that the export control rules 
that we have and the way that we proceed to implement those 
rules inhibit their commercial flexibility, and that is, I 
suppose, to be expected when national security objectives have 
to interact with the rapidly changing largely commercial 
market.
    Your question, though, also turned to the point about 
whether the EU is turning more or would turn more protectionist 
in the context of an economic slowdown. There is always that 
risk, and obviously a good part of our trade policy is to 
confront any hint or aspect of such a turn that we should see.
    I think it is fair to say that with respect to Europe, as 
well as the rest of the developed countries, we have actually 
seen a gradual, if not dramatic, liberalization in trade 
barriers in the last decade. We feared very much that the 
creation of the single market in Europe would lead to Fortress 
Europe and raising of barriers toward our exports in high-tech 
areas as well as others, and, in fact, that really hasn't 
happened.
    The hypothesis that if the economy goes down, protectionism 
will increase has been one that we have seen many times and I 
have experienced several times in my professional career. I 
actually think that there is an alternative explanation that 
could also apply in that we have had such a period of rapid 
growth. Many of our industries and many European industries in 
the high-tech area have had trouble with keeping up with 
domestic demand. If there actually is a slowdown in domestic 
demand, it is more likely that high-tech industries are going 
to be looking more intensively at international markets, and 
that might actually add to the steam for further liberalization 
of international trade.
    Mr. Gejdenson. Thank you.
    Chairman Gilman. Mr. Secretary, does the present 
Administration view with alarm the French rhetoric articulated 
by both President Chirac and Foreign Minister Vedrine that 
implies that a motivating factor for European integration is a 
desire to challenge America's global preeminence? I know the 
French have never been very helpful in these areas.
    Mr. Ries. Well, Mr. Chairman, I think that we don't in 
general greet any ordinary sort of political rhetoric with 
alarm in Europe. We have a very mature relationship very much 
based on close cooperation and understanding, and the President 
has that kind of a relationship with President Chirac and Prime 
Minister Jospin, and we understand that occasionally in 
politics the rhetoric gets away from the reality, and so alarm 
is probably too strong a word.
    I think it is true that some European elites have concern 
about a world structure in which the United States has 
disproportionate power relative to other players in the 
international community, and we have done polling in Europe to 
try and understand this phenomenon. From what we can tell, the 
fundamental ties that unite us and the fundamental interest and 
support for America, American values and American positions in 
the world really remains quite widespread. There are ups and 
downs in attitudes that are often tied to short-term, 
transitory events and that we do not think that they presage 
some sort of serious undermining of the transatlantic 
relationship.
    Chairman Gilman. Well, Mr. Secretary, how widespread is the 
anti-Americanism feeling among the European elite, the policy-
makers?
    Mr. Ries. I think it varies by country. In no place is it 
fundamental or even dominant.
    Chairman Gilman. Mr. Secretary, Secretary of Defense Cohen 
told a recent meeting of NATO defense ministers that the U.S. 
viewed the creation of a separate EU defense capability outside 
of NATO as natural and inevitable. Why has the Administration 
apparently abandoned our concern that the European Union was 
developing military structures separate and apart from NATO and 
while many of us are concerned that that kind of a structure 
could eventually erode NATO?
    Mr. Ries. Well, I think, Mr. Chairman, we think that the 
European security and defense structure that is being developed 
is being developed within the context of NATO, and we have long 
supported the idea of a European Security and Defense Identity 
that strengthens the alliance and contributes to our own 
security.
    The Europeans are developing a rapid reaction force of 
about a corps size that they could maintain in the field for a 
year or more, and this gives them the capability to act when 
the alliance is not engaged. That is the fundamental 
arrangement that was reached last year here in Washington at 
the 50th summit of NATO, and we think that the implementation 
and the development of this capability will strengthen NATO 
rather than weaken it. These forces will be--there is one pool 
of forces that could be drawn upon by NATO members for NATO 
contingencies as well as others.
    The Kosovo conflict demonstrates quite vividly the 
asymmetry in the forces available to NATO members and brought 
out quite obviously the need to build a bigger European 
capability. And the European security and defense proposals 
help make a case for that strength and capability, and we are 
very much engaged with the EU now in common planning, using of 
our planning assets to figure out what kind of force they need, 
how that force can be developed in such a way that it can be 
compatible with NATO standards and forces and use NATO 
contingencies as well as times that NATO, the alliance as a 
whole, is not engaged and Europeans choose to act alone.
    The long and short of it is we expect that the development 
of this force will strengthen the alliance.
    Chairman Gilman. Well, essentially won't they be calling on 
NATO for the military forces that they plan to utilize under 
this new structure?
    Mr. Ries. Well, they will have their own military forces. 
They may well call on some NATO assets, intelligence and 
communications assets, in specific contingencies, and that is 
part of what we are working out, the ways that they can have 
access to NATO assets. And the whole package is--there are a 
variety of different interfaces between the EU's effort and 
NATO. We are talking between the NATO 19 and the EU 15. We are 
having discussions. There are discussions being held between 
the EU, and its non-EU European allies in the so-called ``15 
plus 6'' format. The planners are talking. There is really a 
great effort being made by both sides to make sure that the 
development of the European Security and Defense Identity 
strengthens the alliance as a whole.
    Chairman Gilman. Will this new EU rapid reaction force need 
some aircraft or carriers, as some in the European Parliament 
have suggested?
    Mr. Ries. Well, it will certainly need aircraft, and part 
of the project is to get individual member states to pledge 
assets that can be used by this new rapid reaction force.
    Chairman Gilman. Well, some of it--there is question 
whether some of these European countries who have been cutting 
back on their military budgets are going to be able to manage 
this kind of an arrangement financially.
    Mr. Ries. And that is a fair question, and there are those 
in Europe who also question that. The Europeans are aware that 
they need to build political support for that, and they need to 
bring along their publics to support increased effectiveness in 
their military forces. The French are hosting a capabilities 
conference in November at which countries will come forward and 
talk about what specific kinds of forces they would make 
available for this European security and defense program. In 
many cases the Europeans use their military forces for a 
variety of different things, and they have a lot of men under 
arms, some of which are not trained or usable in a contingency.
    Some of the increased capability can be accomplished by 
spending smarter rather than spending more, but it is likely 
that some additional spending and certainly new weapons systems 
will need to be procured.
    Chairman Gilman. Well, Mr. Secretary, what do aircraft 
carriers have to do with the Petersburg test? Why aircraft 
carriers?
    Mr. Ries. It is news to me they would build an aircraft 
carrier.
    Chairman Gilman. Well some of the EP members have been 
talking about that.
    Mr. Ries. I see. The French and British, of course, have 
their own national aircraft carriers. I had not heard of any. 
There may be speculation of that nature, but I don't think that 
that is necessarily a part of the ESDI program.
    Chairman Gilman. Let me talk for a moment about the 
national missile defense. The Administration contends it has 
consulted with our allies on the ABM Treaty, beginning at a 
high level with Deputy Secretary of State Talbott's meeting 
with the North Atlantic Council back in 1999 and continuing 
with the sharing of intelligence estimates about the potential 
missile threat from North Korea, from Iran and Iraq. Our 
European allies have criticized this consultative process as 
having been neither sufficient nor timely. Would you be able to 
comment on that for us?
    Mr. Ries. I haven't heard such criticism lately. The U.S. 
actually undertook a very active program of consultations with 
the alliance on national missile defense. We sent not only 
Deputy Secretary Talbott, but a series of briefing teams to 
Brussels to brief, in NATO, on the threat and to talk about our 
analysis of the implications of building on deterrence and a 
variety of other--the arms control implications, why we see the 
ABM Treaty affected. We talked to them. We gave them several, 
numerous briefings on the substance of our conversations with 
the Russians.
    So it is probably true that there were some comments at the 
outset, 1998, early 1999, of the kind you mention, but I think 
more recently during the course of the past 12 months or so, 
they have been really quite pleased with the degree and the 
kind of consultations we have engaged in.
    I think it is fair to say that the Europeans share our 
analysis, the President's analysis, underlying his decision to 
postpone a deployment decision because they, on the basis of 
the briefings we have given them and otherwise, feel that the 
technology wasn't in the position where he could make a 
judgment, and so there certainly is no divergence between us on 
the question of deferral of deployment for the time being.
    Chairman Gilman. Well, Secretary Ries, is there a uniform 
position on NMD among our European allies, and if not, what are 
their different points of view on this proposal?
    Mr. Ries. We could get that for you, Mr. Chairman. I am an 
economist, so I would rather stay out of characterizing 
individual countries.
    Chairman Gilman. If you could submit a response for the 
record.
    [The response by Mr. Ries is available in the appendix.]
    Chairman Gilman. Can you tell us, how does a recent 
decision by our Nation to intervene and support the euro 
comport with Secretary of Treasury Summer's statement that a 
strong dollar is an important national interest?
    Mr. Ries. I believe the Secretary reaffirmed that as he--we 
have a firm and consistent policy of not commenting on exchange 
rate values, and if anyone says anything, it is the Secretary 
of the Treasury, and so consistent with that, I would stay away 
from characterizing our views. I think that the Secretary's 
statement on the occasion of the intervention along with other 
G-7 countries stands on its own, and I would rather keep it 
there.
    Chairman Gilman. With regard to the euro being now at low 
levels relative to the dollar that it was before the joint 
American, European and Japanese intervention, was our decision 
to participate in the intervention ill-considered?
    Mr. Ries. Mr. Chairman, I refer you to the Treasury for 
details on what it is we did and why, but clearly I would not 
think that it was ill-considered.
    Chairman Gilman. If the value of the euro continues to 
collapse, will we continue to intervene and support it?
    Mr. Ries. I am really not able to comment on any plans we 
might have for intervention or--at the State Department we 
leave all such matters to the Treasury Department.
    Chairman Gilman. Is there any discussion between State and 
Treasury on this since it is an important policy matter?
    Mr. Ries. Well, clearly the Treasury is in touch with the 
White House.
    Chairman Gilman. Have they been in touch with your office?
    Mr. Ries. Not my office specifically, sir.
    Chairman Gilman. With the State Department?
    Mr. Ries. I can't say.
    Chairman Gilman. Would you have any recommendations to 
make?
    Mr. Ries. On the matter of currency intervention?
    Chairman Gilman. Yes, with regard to the Euro.
    Mr. Ries. We do not comment on currency values.
    Chairman Gilman. Who in the State Department would comment 
on that?
    Mr. Ries. I don't think you would find anyone. Even the 
Secretary would be loath to comment on that.
    Chairman Gilman. You mean to say that no one in the State 
Department would comment on the Euro and maintaining its 
ability to finance the European community?
    Mr. Ries. I will be glad to comment on the Euro itself. It 
is the question of intervention and exchange rate values. The 
exchange rate, the exchange rates themselves are what we do not 
comment on.
    Chairman Gilman. Would it be left separate and apart from 
any policy consideration with regard to the Euro? It would seem 
to me that the State Department would want to be and should be 
involved in that kind of consideration. Do you feel that there 
is no role for the State Department in that kind of a policy 
decision?
    Mr. Ries. No. Obviously, the role of the State Department 
is in the formulation and implementation of foreign policy and 
to the extent that a policy or the implementation of a policy 
by the Treasury Department involves foreign policy, yes, 
clearly we should be involved.
    Chairman Gilman. Well, I would hope your department would 
be involved as we look to what is happening to the Euro and 
what we should be doing and whether we should intervene or not 
intervene. It would seem to me that when the State Department 
engages in trade discussions or any concessions that there 
should be some consideration with regard to the Euro, and I 
would hope that you would encourage the Department to become 
more actively involved.
    Let me turn a moment to northern Ireland. In legislation 
now being moved in the British Parliament, the British 
government has watered down the most important recommendations 
of the Patton Commission on policing in northern Ireland and 
that is a very key consideration in the continued peace 
process. What position is the State Department taking on how 
that legislation fits in with the Good Friday Accord's 
requirements that the British government should advocate 
complete implementation of the Patton Commission's 
recommendations?
    We even sent over the former head of DEA and a former head 
of our New York State Police, Mr. Constantine, to assist the 
British government in implementing the Patton Commission 
report. It then went to the House of Commons and not too much 
was done. As a matter of fact, it eroded some of the Patton 
Commission's recommendations and had it shipped over to the 
House of Lords. Could you tell us where that stands, what the 
State Department is trying to do to make certain the Patton 
Commission report is going to be properly implemented?
    Mr. Ries. We--as you know, Mr. Chairman, we have long 
supported the process of developing peace and reconciliation in 
northern Ireland. The President has been second to none in his 
efforts to find the solution and support the Good Friday 
Accords. We have--as you allude to, we made available expertise 
from the United States to help Chris Patton in his work.
    The peace process in northern Ireland is at a delicate 
stage. It is important that the involved institutions function, 
and it is important that all the parties stay in the government 
of the province and we support the British and Irish 
governments in their efforts. In order that they have the 
flexibility to bring all parties to the table, we are not and 
have not specified a position on the individual issues before--
on the table between the parties.
    I note that the legislation has not been passed. It is 
still under discussion. There is no final resolution of a 
policing bill. My understanding is that Parliament is expecting 
to pass it sometime in November. So it is really at a delicate 
stage.
    Chairman Gilman. It is delicate to the entire peace 
process; and I would hope that your department, particularly 
your office, would weigh in with the British government to see 
what can be done to implement the Patton Commission report. We 
met with Mr. Patton not too long ago, and he was very much 
concerned about the implementation of the report which we 
considered to be a very substantial and very important report 
to reform the policing mechanism, the RUC in Northern Ireland. 
We would welcome your review of all of that.
    Mr. Ries. Thank you very much.
    Chairman Gilman. Just one or two more questions. Have we 
received any indication as to whether the EU or any of the 
European countries plan to contribute to Plan Colombia to help 
combat the serious narcotics problem there as we move ahead to 
authorizing funding for Plan Colombia to help President 
Pastrana and meet these threats to his country.
    Mr. Ries. I am not sure we have the specific numbers here. 
Yes, several European countries are planning to make 
contributions in support of Plan Colombia. I know the Spanish 
have pledged a substantial sum of money and several others 
have. The Spanish hosted a pledging conference in July; and my 
understanding is that they are hosting another one, I believe, 
this month or next on Plan Colombia. And several other European 
countries are interested in financing various aspects. 
Europeans may actually take up buttressing programs that 
support the objectives of Plan Colombia while not necessarily 
Plan Colombia itself. That seems to be the attitude of some 
countries. I do know that the Spanish have been steadfast in 
their interest in supporting Plan Colombia.
    Chairman Gilman. What about the EU itself? Does the EU plan 
to support Plan Colombia?
    Mr. Ries. The EU Commission, the European Commission, which 
is sort of the executive arm of the EU, has buttressing 
assistance programs in Colombia as I suggested.
    Chairman Gilman. And they will be providing funding to 
assist?
    Mr. Ries. They do provide funding, and presumably they will 
be doing more. That is an issue for the next pledging 
conference.
    Chairman Gilman. I have about one last question, Mr. 
Secretary.
    I understand that the Deutsche Telekom recently took 
concrete action to block the deployment of U.S. developed 
wireless technology in Europe. That technology is called Code 
Division Multiple Access, or CDMA. Specifically, Deutsche 
Telekom recently ordered Westel, which is a Hungarian wireless 
operator that was planning a trial U.S. technology to, and I 
quote, terminate any act, actions and measures regarding the 
utilization of CDMA, including testing, close quote.
    The Westel trial is the first major step of CDMA in Europe. 
Deutsche Telekom is a majority owner of Westel. Were you aware 
of that situation, Mr. Secretary, and what will the State 
Department do to ensure that American technologies have access 
to the European wireless marketplace?
    Mr. Ries. The specific situation in Hungary I have only 
recently been aware of. Let me come back to that via the 
overall policy.
    Mr. Chairman, in my period of time in London we worked very 
hard to make sure that the rules for so-called third generation 
wireless were technology neutral. Our view has been that there 
are various technologies including CDMA, as you mentioned, and 
TDMA and other kinds of technologies to increase the bandwidth 
and speed with which data is put over mobile networks and we 
thought that we should not be in a position of choosing a 
winner technology. So we fought in the international 
telecommunications union to get a technology neutral 
specification for third generation wireless.
    We are now in the phase of implementation of third 
generation wireless, and it is our feeling equally that the 
implementation should be technology neutral on the part of 
governments. We will follow up in this case that you mention to 
ensure that there is no improper influence brought to bear by 
the German government or others to prejudge a technology 
which--where the marketplace should really be the judge.
    Chairman Gilman. Mr. Secretary, we have been reading some 
comments in the press over the last few days regarding a secret 
agreement between Vice President Gore and Russian Prime 
Minister Victor Chernomyrdin regarding arms sales; and, if 
true, we would be dismayed to think that the Vice President 
accepted without protest a letter from Russian Prime Minister 
Chernomyrdin instructing him to keep their agreement secret 
from third parties including the Congress. If that be the case, 
it would indicate a disturbingly casual disregard by the 
Administration for Congress as an integral branch of government 
under our constitutional system.
    I don't expect the Vice President to be responsible for 
something a Russian official may have written in a letter, but 
I think the Congress and the American people have a right to 
expect their Administration to clarify that Congress is not a 
third party that can be kept in the dark and, if that is the 
case, it is the U.S. Constitution that should be the 
controlling legal authority. Are you familiar with this 
situation at all?
    Mr. Ries. I am afraid not, sir. As you recall, Russia and 
things Russian have been hived off of the area that we are 
responsible for.
    Chairman Gilman. Have been what?
    Mr. Ries. The European Bureau, the bureau that I work in, 
is not directly responsible for Russian affairs.
    Chairman Gilman. Which bureau is responsible for Russian 
affairs?
    Mr. Ries. Well, there is an organization that is associated 
with the Secretary's office that handles Russian affairs.
    Chairman Gilman. What organization is that, Mr. Secretary?
    Mr. Ries. It is the Office of the Special Representative 
for Russia and Newly Independent States.
    Chairman Gilman. Who is in charge of that organization?
    Mr. Ries. Operationally Steve Sestanovich.
    Chairman Gilman. And they consult with you with regard to 
any Russian problems?
    Mr. Ries. Well, surely if they involve the Europeans, yes.
    Chairman Gilman. Would this, do you think, involve 
Europeans, this recent contention with regard to a secret arms 
deal with Russia?
    Mr. Ries. I am not familiar with it in detail. It is--as 
you described it, it is not self-evident that it would.
    Chairman Gilman. I would hope you would familiarize 
yourself with it. It appeared in the Washington Times, it 
appeared in the New York Post within the last few days, and it 
is something that we are very much concerned about.
    Mr. Ries. I will take that back, sir.
    Chairman Gilman. I would hope you would take a look at it 
and get back to your Committee with regard to any information 
you may be able to provide.
    Mr. Ries. We will do that.
    Chairman Gilman. Thank you very much.
    Unless there are some further discussions from our staff, 
the hearing is adjourned; and I thank you for the appearance.
    Mr. Ries. Thank you, sir.
    [Whereupon, at 11:10 a.m., the Committee was adjourned.]
                            A P P E N D I X

                              ----------                              

               Material Submitted for the Hearing Record

       Prepared Statement of The Honorable Benjamin A. Gilman, a 
 Representative in Congress from the State of New York, and Chairman, 
                  Committee on International Relations
    This morning's hearing on Developments in Western Europe will 
provide the members of this Committee the opportunity to review our 
policy toward that region of the world in which our core national 
interests are most engaged. The majority of our allies are there, the 
bulk of our international trade and investment is with the countries of 
this vital region, and, of course, it is with these countries that we 
share our fundamental values and institutions.
    Although our overall relations with these nations are excellent, it 
would be a mistake to not take stock of them and assess those areas 
where we differ and disagree. This is particularly true as the members 
of the European Union continue to work on the ``European Project'' 
creating the bonds and institutions that have already led to a single 
European Currency, as well as efforts to forge a common foreign and 
security policy that are the main attributes of a single sovereign 
state. The implications of these developments may be profound for the 
citizens of our own country, but in this time of unprecedented peace 
and prosperity, are not much discussed outside the bounds of policy 
making circles and our institutions of higher learning.
    The European Project has not been without its own difficulties. The 
dramatic plunge in the value of the euro since it was launched last 
year is evidence of these problems, as is the ongoing difficulty in 
agreeing to enlarge the European Union to include some of the countries 
of central and eastern Europe that have long regarded EU membership as 
a cementing of their status as independent states sharing in the free-
market and democratic traditions embodied in the countries of the West.
    Attitudes among Europe's elite toward America are also shifting in 
the aftermath of the Cold War. Comments by officials of one of our 
closest allies suggest for instance that Europe should be concerned 
about tendencies in this country to pursue ``neo-unilateral'' policies, 
and that European integration is necessary to provide a counter-weight 
to curb the exercise of American power. How widespread these critical 
attitudes are among the countries we look to as partners for 
cooperative efforts to meet those challenges that confront all of us is 
a significant question which we hope our witness from the State 
Department will be able to address this morning.
    I would like to welcome Principal Deputy Assistant Secretary 
Charles Ries (REESE) of the Bureau for European Affairs, and thank him 
for his appearance at this hearing. Mr. Ries transferred to the Bureau 
earlier this year from our Embassy in London where he served as the 
Minister Counselor for Economic Affairs. Prior to that assignment, he 
served at our Mission to the European Union and has served in a number 
of interesting positions related primarily to our trade and economic 
policies.
    Mr. Ries you may proceed with your testimony which will be entered 
in full in our record.
                               __________
    Prepared Statement of Charles Ries, Principal Deputy Assistant 
  Secretary of State, Bureau for European Affairs, U.S. Department of 
                                 State
    Mr. Chairman, I am pleased to have this opportunity to meet with 
you today to review US objectives and challenges in Europe. The policy 
landscape shifted dramatically during the 90's, as the fall of the 
Berlin Wall, the collapse of the Soviet Union, the break-up of 
Yugoslavia and a new phase in European integration created a very 
different set of problems and opportunities. We believe that we are 
well positioned now, at the beginning of this new American century, to 
protect American interests in Europe, and in partnership with Europeans 
around the world, through the changes we have put in place: an enlarged 
NATO; a deeper US-EU relationship; and a strengthened OSCE.
    The great lesson of the 20th century is that the destinies of North 
America and Europe are joined. If Europe is at peace, America is more 
secure. If Europe prospers, America does so as well. In an increasingly 
integrated and globalized world, our security, prosperity and democracy 
depend on each other, so our work in Europe is not complete. Old lines 
of division have given way, but we still must complete new networks of 
cooperation. And, although no power today menaces Europe or the US, 
terrorism, weapons of mass destruction, and environmental degradation 
are just some of the critical challenges that must be addressed, and 
are best addressed by Europe and the US together. Thus, our goal is to 
build an enhanced relationship with Europe that is:

         La relationship with Europe as a whole, not just the 
        western half.

         La relationship in which defense and security remain 
        priorities, but in which economic prosperity and addressing 
        global threats receive increased attention.

         La relationship that considers conflict prevention and 
        crisis management as priorities for cooperation.

         La relationship where the US and Europe share, risks 
        and burdens, but also the responsibility to find solutions to 
        threats and crises beyond Europe, and

         La relationship that recognizes the realities of the 
        new global economy.
Three Opportunities
    Building this new relationship means addressing three 
opportunities. Our first opportunity is in Europe itself--ensuring the 
continuing integration of the continent, so that conflict in Eastern 
Europe becomes as inconceivable as conflict in Western Europe and hope 
for a better life is shared across the continent. This means working 
with our partners to complete the integration of Europe's democracies 
into NATO and the EU, strengthen our partnerships with Russia and 
Ukraine, and transform southeastern Europe--including Serbia--from a 
primary source of instability to a fully integrated part of the 
transatlantic community, and improve relations between Greece and 
Turkey--the key to lowering tensions and increasing cooperation in the 
Aegean.
    The second opportunity is between Europe and America--strengthening 
and deepening the bonds between our societies in ways that make a 
positive, tangible difference in the daily lives of our citizens. Our 
societies are more integrated than at any time in our respective 
histories. More than 14 million workers on both sides of the Atlantic 
owe their livelihoods to our $1 trillion trade and investment 
relationship, the largest and freest in the world. European companies 
are the largest foreign investors in 41 of the 50 states, and American 
companies continue to invest about as much in Europe as they do in the 
rest of the world combined. This is why we view the Euro not as a 
threat but as a sign of our continuing partnership with Europe.
    But the bonds are not just economic. The North Atlantic Treaty 
Organization (NATO) is as vibrant as ever, and more countries ate 
clamoring to join. We have an interest in more balanced burden- and 
responsibility-sharing. That is why we actively support the Partnership 
for Peace and the candidate countries' efforts to reform and modernize 
their military forces. And that is why we support a European Security 
and Defense Identity that strengthens the trans-Atlantic relationship 
and enhances Europe's defense capabilities.
    Our third opportunity extends beyond Europe and America improving 
our ability to deal with issues in the wider world that neither of us, 
acting alone, will be able to confront effectively. When we pull 
together, the !transatlantic community is the engine of progress on 
every world-scale issue. When we pull in different directions, the 
engine is less efficient.
The Challenges Ahead
    How do we pursue this relationship with Europe? First and foremost, 
we need to work in Europe's southeast comer. Our immediate challenge 
there is to help build democracy, which is the key to our strategy for 
the;,region. Open, integrated democracies built on the rule of law 
don't occur overnight, but when democratic governments emerge, the 
international community needs to nurture them.
    The swearing-in of Vojislav Kostunica as the democratically-elected 
president of the Federal Republic of Yugoslavia is an extraordinary 
victory for the people of Yugoslavia, who have clearly chosen democracy 
and a future in Europe over dictatorship and repression. Along with our 
European Allies, we look forward to engaging President Kostunica's 
government and to bringing Belgrade into the international community. A 
democratic Serbia committed to the rule of law--the establishment of 
which President Kostunica has made one of his primary goals--will be a 
welcome addition to Southeast Europe. President Kostunica has affirmed 
adherence to the Dayton agreement for Bosnia and to UNSCR 1244 on 
Kosovo. A democratic Yugoslavia can provide a new basis for 
strengthening regional cooperation and advancing democratic and 
economic development throughout the region. We expect Yugoslavia to 
meet the same standards on human rights, rule of law and cooperation 
with the international community, as applied to others.
    Key to the success of this effort will be doing our part to 
consolidate the democratic changes in Belgrade. We want to show the 
people of Serbia there is an immediate democracy dividend. We are 
working in close cooperation with our European Allies to this end. One 
of our first steps has been to take steps to lift the oil embargo and 
the flight ban, as President Clinton announced on October 12. Lifting 
sanctions accords with the implicit promise we made when we imposed 
them--that a return to democracy by the people of Serbia would be 
rewarded. Moreover, sanctions-lifting is a promise we have made 
explicitly over the past weeks, as we sought to strengthen the 
opposition during the FRY electoral campaign. We will also ensure that 
such measures do not allow Milosevic supporters to continue the 
systematic theft of resources that have marked the last thirteen years. 
In that vein, we will continue to enforce a ban on travel to the US by 
top members of the Milosevic regime, and keep in place measures that 
help the new government deter a looting of the national patrimony.
    We will also review our restrictions on Serbia's participation in 
international financial institutions as Serbia makes its democratic 
transition and meets its international obligations. Our positive 
engagement with Croatia, which led to that country's turnaround in 
cooperation with The Hague, will serve as a valuable model.
    We should continue and, as appropriate, increase assistance to meet 
humanitarian needs and strengthen democracy in the FRY. We are 
consulting with Congress in the context of the appropriations 
discussions, which are still ongoing, and the fact that the new 
government is still in the process of forming to determine appropriate 
levels of assistance. We welcome the initiative of the European Union 
to invite the European Commission and the World Bank to lead in 
evaluation of needs and coordination of economic and financial 
assistance to the FRY.
    Europe is leading the partnership to reconstruct Kosovo. Europe and 
Canada have 82 percent of the troops on the ground there. According to 
the World Bank, Europe has contributed 63% of total donor assistance--
excluding humanitarian assistance--to Kosovo in 2000. The US has 
pledged 14%. In Kosovo--and through the Stability Pact for Southeastern 
Europe--we and our partners have acted decisively on our conviction 
that Europe's future will be shaped by the democratic integration to 
which most people in the region aspire rather than by the demagogic 
exploitation of ethnic and other differences that have brought untold 
tragedy to this region over the past decade. On March 30 in Brussels, 
we agreed with our European partners to launch $2.3 billion-worth of 
``quick-start'' programs to get these countries back on their feet: to 
rebuild transportation, water and energy infrastructure; to reopen 
borders; and disarm local militias. Out of that $2.3 billion, the US 
share is $77.65 million--only about 3.2 percent. The United States has 
also nurtured the growth of regional cooperation among the frontline 
states through the Southeast European Cooperative Initiative to combat 
cross-border crime, facilitate regional trade and transportation and 
lower barriers to commerce and investment.
    While we have accomplished a great deal in the region, we face very 
real risks and tensions at present. Ethnic hatred remains very much 
alive in Kosovo, and Albania and Bosnia are fragile. Important 
elections in the region will be held in the next 60 days. They must 
succeed. We are committed to working with our European partners to 
transform this region from a primary source of instability to a fully 
integrated part of the transatlantic community. We welcome their 
contribution as part of a more balanced partnership, where the US does 
not always carry the biggest burden. But, we must have the resources 
available in the future to continue to make our contribution, to 
respond flexibly and swiftly to changing circumstances, and to continue 
our SEED programs to stabilize, transform and integrate Bosnia and the 
remainder of Southeast Europe into the European and transatlantic 
mainstream.
    There is much work to be done at NATO and on European security 
issues. We will continue to work with the members of the European Union 
to implement this year's decisions on the European Security and Defense 
Identity (ESDI). Kosovo demonstrated the clear gap between US and 
European military capabilities. ESDI and NATO's Defense Capabilities 
Initiative are the way for Europe to take more responsibility for its 
own defense. A stronger European military contribution will make the 
Alliance stronger, lift some of the burden on the US to act in crises, 
and make the US-European relationship more of a partnership, while in 
no way eroding the transatlantic Alliance.
    We need to keep NATO's door open to new members, perhaps as early 
as the Summit in 2002, through the Membership Action Plan and our 
bilateral security assistance programs (FMF and IMET). We should help 
the nine candidates--Estonia, Latvia, Lithuania, Romania, Bulgaria, 
Slovenia, Slovakia, Macedonia, and Albania--become the best candidates 
they can be, Furthering NATO enlargement continues the process of 
developing a Europe that is whole and free, and consistent with our 
security interests. At the same time, membership of new candidates will 
be decided on the basis of their contributions to the Alliance.
    We must continue to deal with threats posed by weapons of mass 
destruction (WMD) and the means of their delivery with our European 
allies and partners. The Allies recognized that proliferation can pose 
a direct military threat to Allied territory, populations and forces. 
This was the starting point of the NATO summit's WMD initiative. On 
that basis, we have consulted closely with our Allies on development of 
a national missile defense system. The President's decision in 
September to defer deployment reflected these consultations as well as 
the three other key issues of the threat, technology, and cost 
effectiveness. The consultations with Allies confirmed that WMD and 
missile proliferation remains a serious concern to the Alliance and a 
threat to which Allies must respond militarily.
    At the same time, Allies want to preserve deterrence and arms 
control as a means of responding to the WMD threat. We have made clear 
to our Allies that we need to continue to deal with the issue of 
missile defense. We will need to continue to consult with them about 
how to cooperate on common missile defense efforts which meet our and 
their security needs and maintain the unity of the Alliance in this 
critical area.
    We want to strengthen the Organization for Security and Cooperation 
in Europe (OSCE) by working closely with the Chairman-in-Office, the 
Secretary General and member.states and improve its ability to address 
emerging crises through rapid deployment of civilian expertise using 
innovative tools such as REACT. OSCE missions in many countries, funded 
through PKO funds, help alleviate conflict and reinforce human rights 
practices. And we are using OSCE as, an important tool in our fight 
against trafficking in women and children.
    Our relationship with the European Union is a multifaceted one. We 
strive for ways to work effectively with the EU on common challenges 
worldwide and to reduce barriers against us. Two-way trade between the 
US and EU is robust and we are each other's largest foreign investors. 
Yet significant trade disputes between us remain stubbornly unresolved. 
We will be making strenuous diplomatic--and public diplomacy--efforts 
to find a basis for opening European markets consistent with world 
trade rules. We also will use the early warning and problem prevention 
principles agreed upon at the Bonn US-EU Summit to prevent regulatory 
and other minor differences from becoming major disputes. Our ultimate 
goal remains building a barrier-free, simple, transatlantic marketplace 
that sets world standards for protection of consumers, the environment 
and labor.
    But our relationship with the European Union reaches far beyond 
trade and economics, just as the Union itself extends beyond its 
origins as the European Coal and Steel Community. Together, we continue 
to knock down global economic barriers and advance peace in 
Southeastern Europe, the Korean Peninsula, and the Middle East. 
Together, we promote nuclear safety in Ukraine and Russia, respond to 
natural disasters, attack trafficking in women in Eastern Europe, and 
defend human rights. We fight infectious diseases--including AIDS--in 
Africa, arrest child pornography on the Internet, and develop a global 
early warning network against communicable diseases. And together, we 
prevent the proliferation of weapons of mass destruction and fight 
criminals, terrorists and drug traffickers wherever they may be.
    We continue to advance US interests in the Eastern Mediterranean. 
We are working with the parties toward a bicommunal, bizonal settlement 
on Cyprus. We will continue to encourage Greece and Turkey, two allies, 
to develop closer ties between them. We will work with Turkey to put it 
in the strongest possible position to attain its European aspirations 
in the economic and security spheres. But our tasks are made more 
difficult, not just in the eastern Mediterranean, but in the Caucasus 
and Middle East as well, by actions that alienate a key regional ally, 
the Republic of Turkey.
    In Northern Ireland, we support the efforts of local leaders and 
the governments of Ireland and the United Kingdom to achieve a lasting 
political settlement. The US contribution to the International Fund for 
Ireland promotes private investment and free enterprise, while the 
Walsh Visa Program provides needed vocational training and 
multicultural experience to disadvantaged youth that might otherwise 
turn to violence.
    We have also made enormous progress in correcting the wrongs of the 
past. The Department worked closely with Deputy Secretary of the 
Treasury Stuart Eizenstat in reaching an international agreement to 
provide payments to individuals who served as slave laborers for German 
firms during World War II. We are on the verge of completing a similar 
agreement with Austria. We estimate that over a million people, 
including several thousand Americans, are eligible for payments under 
these arrangements. In addition, we played an important role earlier 
this month at the Vilnius Forum which furthered international efforts 
to assure the return of Nazi-looted art works to their rightful owners.
    Through the Northern Europe Initiative, we seek a Baltic Sea region 
in which its countries have developed a vibrant and multifaceted 
culture of cooperation in key areas of political, economic, and social 
development, characterized by positive, constructive Baltic-Russian 
relations, greater Russian engagement with its Baltic Sea neighbors, 
and continued regional engagement by the Nordic countries and Germany. 
Small amounts of SEED, FSA, and D&CP funding leverage support from our 
Nordic partners to pursue an increased number of NEI projects and 
greater involvement of Russia. Here I'd like to acknowledge the support 
that this committee, and particularly Rep. Gejdensen, has given to our 
initiative with the passage this summer of H.R. 4249, the ``Cross-
Border Cooperation. and Environmental Safety in Northern Europe Act of 
2000.'' This Act recognizes the importance of promoting regional 
cooperation in the Baltic Sea region and, most importantly, the need 
for continued funding to do this important work. We appreciate this 
support.
    The bottom line: our partnership with Europe does real things for 
real people. It generates jobs. It stimulates investment. It reduces 
the threats we face from crime, terrorism, nuclear arms proliferation, 
drugs, and disease. It increases our security and cuts the cost to the 
American taxpayer of achieving that security. When it works, it enables 
us to achieve goals we could not achieve alone. When it does not, 
stalemate and crisis can result. But making it work requires the 
resources--the personnel, facilities, and funding--to pursue expanding 
US interests.
 Question for the Record for Principal Deputy Assistant Secretary for 
  European Affairs Charles Ries from Representative Benjamin Gilman, 
           Chairman, House International Relations Committee
Question:
    Is there a uniform policy among our European allies on the U.S. NMD 
effort?
Answer:
    Although many of our European Allies expressed initial skepticism 
and even opposition to NMD1, there is no ``uniform'' view among them. 
We also believe that their final views on this issue are far from set.
    Starting last fall, we initiated a regular pattern of briefing the 
Allies on NMD, the threat posed by missile proliferation, and our 
discussions with the Russians on ABM Treaty issues and further 
strategic arms reductions. These consultations have been useful in 
building greater appreciation among the Allies about the extent and 
nature of the threat and the need to respond to it. This has already 
led to more openness among Allies to consider the issue of missile 
defense.
    At the same time, many European Allies want to preserve deterrence 
and arms control as means of responding to the WMD threat. They 
continue to be concerned about the implications of abrogating the ABM 
Treaty, believing:that doing so could undermine what they see as a 
major pillar of global strategic stability. Allies also continue to 
stress the importance of our maintaining a dialogue with Russia on this 
subject.
    We have made clear to our Allies that we will have to continue to 
deal with missile defense. We plan to continue our pattern of briefing 
European Allies and partners on this issue, as well as maintaining 
dialogue with the Russians. We also intend to consult with them about 
how to cooperate on common missile defense efforts which meet our and 
their security needs and maintain the unity of the Alliance in this 
critical area.

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